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P050762

 ICRR 11150 Report Number : ICRR11150 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 06/27/2002 PROJ ID : P050762 Appraisal Actual Project Name : Br- Fundescola I Project Costs 125 138\.72 US$M ) (US$M) Country : Brazil Loan /Credit (US$M) Loan/ US$M ) 62\.5 62\.5 Sector (s): Board: ED - Primary Cofinancing education (55%), US$M ) (US$M) Sub-national government administration (17%), Central government administration (14%), Tertiary education (14%) L/C Number : L4311 Board Approval 99 FY ) (FY) Partners involved : Closing Date 06/30/2001 06/30/2001 Prepared by : Reviewed by : Group Manager : Group : Helen Abadzi John R\. Heath Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The development objective of the School Improvement Project --Fundescola I -- was to strengthen primary schools and the public institutions that are responsible for them within a coordinated management framework, in order to increase the participation, promotion and graduation rates, and achievement levels of children in the North and Center-West regions of Brazil, where poverty is \. particularly high\. The project was limited to the biggest cities in each region and neighboring municipalities b\. Components Components were: (a) raising schools to minimum operational standards through educating and certifying teachers, supplying basic furniture and equipment, financing school improvement investments, and financing school-managed rehabilitation of physical facilities; (b) establishing a school development process by designing and supporting school development plans and financing school subprojects; (c) carrying out school microplanning, developing and testing standard architectural plans for additional school places; (d) building management capacity in schools, municipalities, and states through: specialized teaching and learning improvement programs; fostering community participation; strengthening national education information systems and programs; and financing project management\. c\. Comments on Project Cost, Financing and Dates The project closed as scheduled\. The Bank's loan was disbursed fully, and the government increased its counterpart to cover more schools\. 3\. Achievement of Relevant Objectives: The development objective was largely achieved \. Enrollment rates of children attending schools that met minimum operational standards were raised from an initial 10% to an average of 42% in all targeted areas by June 2001\. Integrated planning was done in the majority of participating schools \. Over 50% of students now attend schools with integrated school development plans, up from 2% in project areas\. 4\. Significant Outcomes/Impacts: About 10,975 classrooms were equipped, reaching about 558,00 students or 41% of children in targeted areas\. Efforts were made to raise the 4164 target schools to minimum operational standards, and the project met its goals for physical improvements\. Enrollments in somewhat more advanced grades, where much dropout often takes place, grew significantly between 1996 and 200; by 15\.9% for grade 4 and by 33\.9% for grade 8\. Other grades also showed growth, although many factors besides the project may have been responsible \. The project met its goal of offering 25,000 places for a teacher certification program \. A total of 1347 teachers had been certified before project completion, and another 26,025 were enrolled in the four-module course at that time\. School development plans were created in 1724 schools, and 1513 of them signed agreements and received resources to fund their own school-based development needs\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Though the project was to serve regions of Brazil where poverty was particularly high, it included many schools serving lower-middle class students\. Few rural schools were supported \. The component focused on training of uncertified teachers was initially underfinanced, because teachers needed more support than had been anticipated \. Test scores showed a small but significant drop between 1995 and 2000, possibly because more students who might have dropped out stayed in school and took the test \. Some municipalities failed to comply with teacher training participation requirements, thus resulting in fewer trained teachers in their areas \. Architectural plans for various types of schools were drawn up but not implemented \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: - Microplanning, i\.e\. detailed planning focused on small areas that have distinct problems may be more successful in improving quality of education than wider and more diffused targeting of poor schools\. - When working with state and municipal governments, extra care must be made to recognize early on and incorporate in the design the decisionmaking capacity and efficacy of grassroots organizations, such as parents' associations\. - Empowering schools through direct interventions that are designed to generate greater school commitment to the project's development objectives may motivate and train school staff and parents, who might otherwise remain inactive\. 8\. Assessment Recommended? Yes No Why? Part of a Country Assistance Evaluation 9\. Comments on Quality of ICR: The ICR is comprehensive and satisfactory \.

REVIEW

P074236

Document of The World Bank Report No: ICR00003742 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H0870 IDA-49650 TF-93177 TF-53226 TF-10466) ON A GRANT AND CREDIT FROM THE INTERNATIONAL DEVELOPMENT ASSOCIATION IN THE AMOUNT OF SDR 26\.8 MILLION AND SDR 26\.0 MILLION (US$ 40\.0 MILLION AND US$ 42\.0 MILLION EQUIVALENT) AND GLOBAL ENVIRONMENT FACILITY GRANTS IN THE AMOUNT OF US$ 19\.0 MILLION (US$ 9\.0 MILLION AND US$ 10\.0 MILLION) AND A JAPAN SOCIAL DEVELOPMENT FUND GRANT IN THE AMOUNT OF US$ 1\.9 MILLION TO THE REPUBLIC OF MADAGASCAR FOR A THIRD ENVIRONMENTAL PROGRAM SUPPORT PROJECT (EP3) June 28, 2016 Environment and Natural Resources Global Practice Madagascar, AFCS2 Africa  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2015) Currency Unit = Malagasy Ariary - MGA SDR 1\.00 = US$ 0\.72 US$ 1\.00 = MGA 3,222\.5 FISCAL YEAR [January 1 – December 31] ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD French Agency for Development/ Agence Francaise de Développement ANAE National Association for Environmental Action / Association Nationale pour les Actions Environnementales ANGAP National Agency for Protected Areas Management / Association Nationale pour la Gestion des Aires Protégées (now Madagascar National Parks) CAS Country Assistance Strategy CAZ Corridor Ankeniheny Zahamena CPS Country Partnership Strategy CELCO EP3 Project Coordination Unit / Cellule de Coordination CI Conservation International CITES Convention on the International Trade in Endangered Species of Wild Fauna and Flora CLP Community Park Committee/ Comités Locaux de Parcs CLS Community Surveillance Committee / Comités locaux de surveillance COBA Community Forestry Management Group/ Communauté de Base COFAV Forestry Corridor Fandriana Vondrozo/ Corridor Forestier FAndriana Vondrozo COSAP Park Support Committee/ Comité de Soutien aux Aires Protégées CRO Regional Orientation Committees DEAP Protected Area visitor entry fees/ Droits d’Entrée dans les Aires Protégées DFNs Debt-for-nature swaps DGE Directorate General of Environment DGF Directorate General of Forests DREF Regional Directorate of Water and Forests/ Direction Régionale des Eaux et Forêts EMP Environmental Management Plan EP3 Madagascar Third Environmental Program Support Project ERPA Emission Reduction Purchase Agreement ERR Economic Rate of Return ESMF Environmental and Social Management Framework FAPBM Madagascar Foundation for Protected Areas and Biodiversity; the Foundation / Fondation pour les Aires Protégées et la Biodiversité de Madagascar FCPF Forest Carbon Partnership Facility FID Intervention for Development Fund Project/ Fonds d’Intervention pour le Développement GDP Gross Domestic Product GEF Global Environment Facility GELOSE Locally secured management/ Gestion Locale Sécurisée GEO Global Environment Objective(s) GIZ German Agency for International Cooperation (formerly GTZ) HIPC Heavily Indebted Poor Countries IDA International Development Association IFC International Finance Corporation IPDP Indigenous People Development Plan ISN Interim Strategic Note IUCN International Union for Conservation of Nature JSDF Japan Social Development Fund KfW German Development Cooperation Agency / Kreditanstalt für Wiederaufbau M&E Monitoring and Evaluation MAMABAY Landscape comprising Masoala National Park, Makira Forestry Corridor and the Antongil Bay/ Masoala - Makira - Baie d'Antongil MAP Madagascar Action Plan MDG Millenium Development Goals MECIE Madagascar’s environmental impact assessment legal framework/ Mise en Compatibilité des Investissements avec l’Environnement MEF Ministry of Environment and Forests MNP Madagascar National Parks MRV Monitoring, Reporting and Verification system MTR Mid Term Review NAP New Protected Area/ Nouvelle Aire Protégée NEAP National Environmental Action Plan NGO Non-Governmental Organization NPV Net Present Value ODA Official Development Assistance ONE National Environment Office / Office National pour l’Environnement ORAF Operational Risk Assessment Framework PA Protected Area PAD Project Appraisal Document PAP Project Affected People PCU Project Coordination Unit /Cellule de Coordination (CELCO) PDO Project Development Objectives PF Process framework for social safeguards PIU Project Implementation Unit PRPSE Regional Plateform for environmental planing and monitoring/ Plateforme Régionale de Planification et Suivi Environnementale PSDR Rural development support project/ Projet de Soutient au Développement Rural REDD+ Reducing Emissions from Deforestation and Forest Degradation, and fostering conservation, sustainable management of forests, and enhancement of forest carbon stocks R-PP REDD+ Readiness Proposal SAGE Environmental management support services/ Service d’Appuis à la Gestion de l’Environnement SAPM Protected Area Network in Madagascar / Système des Aires Protégées de Madagascar SDR Special Drawing Rights SESP Social and Environmental Safeguards Plan TAMS Savoka restoration project/ Tetik'asa Mampody Savoka UNEP United Nations Environment Program TTL Task Team Leader UCPE Environmental Projects Coordination Unit/ Unité de Coordination des Projets Environnementaux UNDP United Nations Development Program USAID United States Agency for International Development VOI Community Forestry Management Group/ Vondron’Olona Ifototra WB World Bank WCS Wildlife Conservation Society WWF World Wildlife Fund Senior Global Practice Director: Paula Caballero Sector Manager: Benoit Bosquet Project Team Leader: Giovanni Ruta ICR Team Leader: Giovanni Ruta  REPUBLIC OF MADAGASCAR THIRD ENVIRONMENTAL PROGRAM SUPPORT PROJECT (EP3) CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph Main Text 1\. Project Context, Development and Global Environment Objectives, and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 10 3\. Assessment of Outcomes \. 20 4\. Assessment of Risk to Development Outcome and Global Environment Outcome \. 32 5\. Assessment of Bank and Borrower Performance \. 33 6\. Lessons Learned \. 35 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 36 Annex 1\. Project Costs and Financing\. 38 Annex 2\. Outputs by Component \. 40 Annex 3\. Economic and Financial Analysis \. 56 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 63 Annex 5\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 65 Annex 6\. Comments of Cofinanciers and Other Partners/Stakeholders \. 66 Annex 7\. Overview of EP1 and EP2 \. 68 Annex 8\. List of Supporting Documents \. 76 Map \. 77 A\. Basic Information Third Environment Country: Madagascar Project Name: Program Support Project IDA-49650,IDA- P074235, P074236, Project ID: L/C/TF Number(s): H0870,TF-93177,TF- P113976 53226, TF-10466 ICR Date: 06/28/2016 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL,SIL Borrower: MADAGASCAR Original Total XDR 26\.80M, USD XDR 52\.20M, USD Disbursed Amount: Commitment: 9\.00M 8\.83M, USD 10M Environmental Category: B,B Focal Area: B Implementing Agencies: Ministry of Environment and Forests Cofinanciers and Other External Partners: World Wildlife Fund (WWF), Wildlife Conservation Society (WCS), and Conservation International (CI) B\. Key Dates Third Environment Program Support Project - P074235 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/10/2002 Effectiveness: 08/21/2004 09/13/2004 04/01/2008 01/12/2009 12/18/2009 06/15/2011 10/12/2011 Appraisal: 01/07/2004 Restructuring(s): 05/28/2013 02/26/2014 06/30/2014 11/30/2014 12/20/2015 Approval: 05/11/2004 Mid-term Review: 07/13/2007 Closing: 06/30/2009 12/31/2015 Madagascar Third Environment Program Support Project - P074236 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/30/2002 Effectiveness: 08/21/2004 09/13/2004 04/01/2008 Appraisal: Restructuring(s): 12/18/2009 Approval: 05/11/2004 Mid-term Review: 04/15/2007 06/15/2007 Closing: 12/31/2009 12/31/2011 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes Moderately Unsatisfactory Global Environment Objectives, GEO Outcomes Moderately Satisfactory Risk to Development Outcome High Risk to GEO Outcome High Bank Performance Moderately Unsatisfactory Borrower Performance Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry Government: Unsatisfactory Unsatisfactory Moderately Implementing Moderately Quality of Supervision: Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Unsatisfactory Performance Unsatisfactory Performance C\.3 Quality at Entry and Implementation Performance Indicators Third Environment Program Support Project - P074235 Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Project Yes Quality at Entry (QEA) None at any time (Yes/No): Problem Project at any Quality of Supervision Yes None time (Yes/No): (QSA) DO rating before Moderately Closing/Inactive status Unsatisfactory Madagascar Third Environment Program Support Project - P074236 Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Project No Quality at Entry (QEA) None at any time (Yes/No): Problem Project at any Quality of Supervision No None time (Yes/No): (QSA) GEO rating before Moderately Closing/Inactive Status Satisfactory D\. Sector and Theme Codes Third Environment Program Support Project - P074235 Original Actual Sector Code (as % of total Bank financing) Central government administration 25 15 General agriculture, fishing and forestry sector 45 60 Other Renewable Energy 10 15 Sub-national government administration 20 10 Theme Code (as % of total Bank financing) Biodiversity 25 40 Climate change 13 15 Environmental policies and institutions 25 15 Other environment and natural resources management 24 15 Participation and civic engagement 13 15 Madagascar Third Environment Program Support Project - P074236 Original Actual Sector Code (as % of total Bank financing) Forestry 100 100 Theme Code (as % of total Bank financing) Biodiversity 50 70 Environmental policies and institutions 50 30 E\. Bank Staff Third Environment Program Support Project - P074235 Positions At ICR At Approval Vice President: Makhtar Diop Calixto Madavo Country Director: Mark Lundell Hafez Ghanem Practice Manager/Manager: Benoit Bosquet Richard Scobey Martien Van Nieuwkoop Project Team Leader: Giovanni Ruta Cristophe Crepin ICR Team Leader: Giovanni Ruta ICR Primary Authors: Giovanni Ruta, Michael Carroll Madagascar Third Environment Program Support Project - P074236 Positions At ICR At Approval Vice President: Makhtar Diop Calixto Madavo Country Director: Mark Lundell Hafez Ghanem Practice Manager/Manager: Benoit Bosquet Richard Scobey Martien Van Nieuwkoop Project Team Leader: Giovanni Ruta Cristophe Crepin ICR Team Leader: Giovanni Ruta ICR Primary Author: Giovanni Ruta, Michael Carroll F\. Results Framework Analysis Project Development Objectives, PDO (from Project Appraisal Document) The Objectives of the Project are to improve the protection and sustainable management of critical biodiversity resources at the field level, mainstream conservation into macroeconomic management and sector programs, and facilitate the establishment of sustainable financial mechanisms for the environment, thus contributing to the improvement of the quality of life of the population\. Revised PDO (as approved by original approving authority) To enhance the protection and sustainable management of targeted protected areas (PA)\. Global Environment Objectives, GEO (from Project Appraisal Document) The global objective of the project is to contribute to the preservation of the quality of regional and global commons through improved natural resources management and biodiversity protection in critical ecological regions, defined as national PA and their corresponding buffer zones and corridors\. Revised GEO (as approved by original approving authority) GEO remained unchanged throughout the life of the project\. Results Framework Indicator Restr\. Baseline Target Value Actual values value Achieved A Project Development Objective Indicators 1 Rate of degradation of forest and 0\.90 0\.44 wetland resources is less than half the 1993-2000 degradation rate of 0\.9%/year (Percentage, Custom) Date 15-Jun-00 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008, see below 1\.1 1\.1 Rate of degradation of the forest and 2008 0\.83 0\.44 0\.53 wetland cover declining from 0\.88% a year to 0\.44% a year (Percentage, Custom)  Indicator Restr\. Baseline Target Value Actual values value Achieved Date 15-Jun-00 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: the indicator has been more correctly specified from a baseline of 0\.88%/year to 0\.44% a year based on satellite data\. Substantially achieved (83%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 2 Protected areas management efficiency 41 70 index increases from 41% (baseline) to 55% (mid-term) to 70% EOP Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008, see below 2\.1 2\.1 Protected area management efficiency 2008 45 70 68 index increases from 45% (baseline to 70% by EOP (Percentage, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: minor adjustment on the baseline\. Substantially achieved (97%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 3 Mangrove cover maintained at 2004 area 2,209 2,209 of 2,209 km2 Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. Indicator 3 was eliminated and replaced (together with indicator 4) by indicator 3\.1 4 Maintenance of coral reef target indicator species (e\.g\. Ludjanidea family) in all established no-take zones The indicator was revised following the restructuring in 2008\. Indicator 4 was eliminated and replaced (together with indicator 3) by indicator 3\.1 3\.1 Threat Index in the ANGAP PA 2008 107 20 31 Network reduced from 107 to 20 (Number, Custom)  Indicator Restr\. Baseline Target Value Actual values value Achieved Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: indicator 3\.1 replaced indicators 3 and 4, as part of IUCN standard composite threat index which was considered more relevant to monitor habitat maintenance\. Substantially achieved (88%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 3\.2 Level of threat in project PAs, threat 2011 28 15 index (Percentage, Custom) Date 11-Jan-12 31-Dec-14 Comments (incl\. % achievement) AF 2011: indicator 3\.1 was revised to 3\.2\. In Feb 2014, the measurement unit was revised (see below 3\.3)\. In Nov 2014 the target was revised (see 3\.4) 3\.3 Level of threat in project PAs, (number 2014 1 395 980 989 of fires declared) Feb Date 31-dec-15 31-dec-15 Comments (incl\. % achievement) Restructuring in Feb 2014: Indicator measurement unit and target were revised during the restructuring of Feb 2014, as the original target was too obscure\. Target was set at realistic level\. Achieved (101%) 5 Sustainable financing mechanisms 8 70 including government contribution cover 70% of core staff and operational costs of the PA system (baseline: 8%; mid- term: 30%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008, see below 5\.1 5\.1 Capital mobilized by Foundation for 2008 3,700,000 33,000,000 34,000,000 Protected Areas and Biodiversity – from US$3\.7 to US$33\.0 million Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: The indicator is equivalent to the original specified in the PAD\. Achieved (103%)\. This indicator was dropped in 2009\. However, the current capitalization of the Foundation has currently reached 50 million 5\.2 Surface of PA network with recurrent 2011 130,000 1,050,000 1,050,000 costs supported with revenues from the  Indicator Restr\. Baseline Target Value Actual values value Achieved combined project endowment and previous EP3 endowment to the Foundation (ha) Date 11-Jan-12 31-Dec-14 31-Dec-14 Comments (incl\. % achievement) AF 2011: This indicator was introduced in 2011\. Achieved 100%\. The monitoring stopped in 2014\. 6 National park visitor numbers increase 100,000 134,000 5% annually from the 2003 baseline (1 00,000 visitors) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. Indicator 6, 7 and 8 were combined, see below 6\.1 7 Increase of park entrance fees by 500,000 670,047 US$ 670,047 (2003 baseline: US$500,000; mid-term: US$579,000) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. Indicator 6, 7 and 8 were combined, see below 6\.1 8 Sustainable NRM investments generate 0 12,000,000 US$12 million over 5 years (baseline: 0; mid-term: US$ 4 million) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. Indicator 6, 7 and 8 were combined, see below 6\.1 6\.1 Number of tourists visiting PAs 2008 88,000 134,000 68,755 increasing from 88,000 to 134,000 Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: This indicator corrected the 2003 baseline\. Partially achieved (51%)\. The final target of 134,000 tourists was attained in 2008 but the number of tourists was halved in 2009 due to the political unrest in the country\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009\. 9 Improved voice of communes in PAs 0 80 management as reflected in representation on ANGAP's Board of Directors (by mid-term) and by the % of CROs complying with their rights and  Indicator Restr\. Baseline Target Value Actual values value Achieved obligations as defined in PA management plans (baseline: 0; mid- term: 50%; EOP: 80%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. Indicator 9 and 10 were combined, see below 9\.1 10 Improved community empowerment in 0 80 NRM through fully performing GELOSE/GCF arrangements as measured by the % of beneficiary communities who have successfully obtained long-term follow-up contracts after the initial 3 year trial period baseline: 0%, mid-term:70%; EOP: 80%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. Indicator 9 and 10 were combined, see below 9\.1 9\.1 Percentage of revenues from PA entry 2008 22\.50 50\.00 22\.00 fees redistributed to community projects surrounding the parks (from 22\.5 to 50%) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: The restructured indicator measures exactly the same impact as the original indicator, but is more quantifiable and precise, and easier to compile across several parks\. Partially achieved (44%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 11 Reduction of burned areas to 50% of 2008 0 50 46 baseline (650,000 ha a year) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: New indicator but consistent with the original forest degradation measurements specified in the original PAD\. Substantially achieved (93%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009\. 10\.1 80% renewal of natural resources 2008 Restructuring 2008: equivalent of indicator 10 management transfer contracts (see above)  Indicator Restr\. Baseline Target Value Actual values value Achieved 12 70% of public and private investments 30 70 69 comply with MECIE legislation (percentage, custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Following the restructuring in 2008\. Three indicator were added to indicator 12: 12\.1\.a, 12\.1\.b and 12\.1\.c (see below)\. Substantially achieved (99%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009\. 12\.1\.a Number of regional development plans 2008 2 22 na integrating environmental considerations (from 2 to 22) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: the indicator was added but was not monitored\. 12\.1\.b Rate of environmental claims settled 2008 50 90 na (from 50% to 90%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: the indicator was added but was not monitored\. 12\.1\.c Rate of integration of environment in 2008 5 40 na school curricula (from 5% to 40%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: the indicator was added but was not monitored\. 13 Logging and species collection license 80 95 fees in line with projected revenues (baseline: 80%; mid-term 87% and EOP: 95%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. See below, indicator 13\.1 13\.1 Volume of wood traded following a 2008 0 30 70 traceability system (in % of amount of nationally harvested timber) – from 0% to 30% Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: This indicator was considered a more meaningful and measurable indicator of the shift towards legal forest harvesting\.  Indicator Restr\. Baseline Target Value Actual values value Achieved Achieved (233%)\. The supervision team found the figure of 70% provided by the PCU unlikely in a context of collapse in forest governance\. 14 Track record of satisfactory OSF unsatisfactory satisfactory governance audits (mid-term and EOP targets are satisfactory) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. See below, indicator 14\.1 14\.1 Rate of efficiency of forestry control 2008 0 80 na units (from 0% to 80%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Restructuring in 2008: the indicator was added but was not monitored\. 15 70% of MinEnvEF's budget executed at 30 70 field level (province or lower by EOP (baseline: 30%; mid-term 50%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) The indicator was revised following the restructuring in 2008\. See below, 2 indicators were added 15\.1\.a and 15\.1\.b 15\.1\.a Financial and administrative efficacy 2008 0 100 na index (from 0 to 100%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: This revised indicator measure the progress of the broader institutional for of the Ministry (including its budget efficacy)\. The indicator was not monitored\. 15\.1\.b Implementation of the new E- 2008 0 50 na governance system within the Ministry (from 0% to 50%) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: This revised indicator measure the progress of the broader institutional reform of the Ministry (including its budget efficacy)\. The indicator was not monitored\. 16 Cost reduction strategy and action plan na na na developed and implemented within ANGAP, Date  Indicator Restr\. Baseline Target Value Actual values value Achieved Comments (incl\. % achievement) Restructuring 2008: The indicator was not monitored\. In addition, though critically important, this indicator was considered an output (not an outcome) indicator\. 17 Increased PA management efficiency See indicator 2 and 2\.1 above index from 41% to 70% 18 Number of households adjacent to the 2011 0 90 000 PAs that benefitted from off park natural resource livelihood activities (number of households) Date 11-Jan-12 2014 Comments (incl\. % achievement) The indicator was revised following the restructuring in Feb 2014\. See 18\.1\. Of which are female beneficiaries 0 240,000 67,955 Date 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Partially achieved (28%) 18\.1 Number of households adjacent to the 2014 0 86,000 36,310 PAs that benefitted from off park natural Feb resource livelihood activities (social safeguards, local community organizations, and Mature PA micro projects and community ecotourism projects) Date 11-Jan-12 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Restructuring in Feb 2014\. Partially achieved (42%) 19 A precious woods stockpile use plan has 2014 N Y Y been submitted to the Convention on Feb International Trade in Endangered Species of Wild Fauna and Flora (CITES) (Yes/No, Custom) Date 25-Nov-14 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Restructuring 2014: Achieved (100%) 20 All illegal precious woods stockpiles 2014 N N Y seized by Government have been audited Feb and secured\. (Yes/No, Custom) Date 25-Nov-14 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Restructuring 2014: Achieved (97%)\. 97 percent of stockpiles secured and 60 percent marked by SGS\.  Indicator Restr\. Baseline Target Value Actual values value Achieved 21 Government has validated and adopted a 2014 N Y Y schedule for the reform of protected Feb areas managed by Madagascar National Parks (MNP) (Yes/No, Custom) Date 25-Nov-14 31-dec-14 31-Dec-15 Comments (incl\. % achievement) Restructuring 2014: Achieved (100%) B Global Environmental Objective Indicators 22 Priority habitats and species in 1,700,000 2,253,848 Madagascar brought under effective conservation: increased area of ecosystem included national PA system managed by ANGAP to 2,253,848 (Hectare (Ha), Custom) Date 13-Sep-04 31-Dec-09 Comments (incl\. % achievement) Following the restructuring in 2008 the indicator was revised (see below, indicator 22\.1) 22\.1 PA surface under provisional or definite 2008 1,700,000 5,000,000 5,155,632 status increased to 5 million ha Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008 Achieved (103%) 23 Indicator species maintained at baseline 59 species of levels: a) 59 species of lemurs, and b) lemurs and 105 species of endemic birds 105 species of birds Following the restructuring in 2008 the indicator was revised (see below, indicator 23\.1)\. Maintenance of species at baseline levels not meaningful as Madagascar has discovered several new species of lemurs since appraisal 23\.1 Representation rate of habitats in system 2008 87 96 91 of PA increased from 87 to 96% Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Restructuring 2008: This is simple indicator recommender by biodiversity expert in Madagascar for the system of PA\. Substantially achieved (95%)\. 24 Level of threat in project supported PAs 2014 1 395 980 989 (number of fires declared) (Number, feb Custom) Date 31-Dec-15 31-Dec-15  Indicator Restr\. Baseline Target Value Actual values value Achieved Comments (incl\. % achievement) Restructuring in 2014: Same as 3\.3\. Achieved (101%) C Intermediate Results Indicators of original project 25 Surface reforested (Hectare(Ha), 0 7,968 10,167 Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Achieved (128%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 26 Number of Dinas (traditional 0 500 361 agreements) operational for fire control (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Partially achieved (72%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 27 Households adopting alternative energy 0 5,000 0 (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Not achieved (0%)\. This activity never started and the monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 28 Number of Environmental Tableaux de 5 20 24 Boards operational (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Achieved (127%) The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 29 Number of Sectors with Environmental 4 15 22 Units in place and operational (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Achieved (147%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 30 Number of Environmental Impact 35 61 65 Assessment permits delivered through a unified system (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Achieved (107%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 31 Number of Autonomous Control Units 0 22 11 in place and operational (Number, Custom)  Indicator Restr\. Baseline Target Value Actual values value Achieved Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Partially achieved (50%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 32 New staff recruited, integrated and 0 435 139 trained by the Ministry (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Partially achieved (32%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 33 Quarterly Planning carried out with the 0 75 31 involvement of regional stakeholders and disbursements implemented according to the agreed norms (Percentage, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Partially achieved (41%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 34 Number of Park Support Committee, 0 22 21 COSAP, Operational (Number, Custom) Date 13-Sep-04 31-Dec-09 31-Dec-09 Comments (incl\. % achievement) Substantially achieved (95%)\. The monitoring stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 35 Direct project beneficiaries (Number, 0 26,000 9,261 Core) Date 13-Sep-04 25-feb-11 30-Jun-11 Comments (incl\. % achievement) Partially achieved (36%) 36 Female beneficiaries (Number, Core 0 12,000 4,000 Supplement) Date 13-Sep-04 25-feb-11 30-Jun-11 Comments (incl\. % achievement) Partially achieved (33%) 37 Number of Safeguards plans validated (9 0 11 10 UG) (Amount(USD), Custom) Date 13-Sep-04 31-Dec-11 31-Dec-11 Comments (incl\. % achievement) Substantially achieved (91%)\. 10 plans have been adopted (representing 8 UG) all of them related to parks managed by MNP\. 38 Rate of implementation of safeguards 0 100 0 measures (Percentage, Custom)  Indicator Restr\. Baseline Target Value Actual values value Achieved Date 13-Sep-04 31-Dec-11 Comments (incl\. % achievement) Not achieved (0%)\. Only Sahamalaza and Mikea safeguard measures were under implementation 39 Number of squares surveyed and 15,426 559,090 589,586 controlled (Number, Custom) Date 13-Sep-04 31-Dec-11 31-Dec-11 Comments (incl\. % achievement) Achieved (105%)\. Indicator dropped during the 2011 restructuring and additional financing\. 40 Circuits managed and maintained 0 1,312 2,367 (Kilometers, Custom) Date 13-Sep-04 31-Dec-11 30-Jun-11 Comments (incl\. % achievement) Achieved (180%)\. Indicator dropped during the 2011 restructuring and additional financing 41 Additional Surface of PA (ANGAP and 0 491,500 336,136 outside ANGAP) created (Hectare(Ha), Custom) Date 13-Sep-04 31-Dec-11 30-Jun-11 Comments (incl\. % achievement) Partially achieved (68%)\. Indicator dropped during the 2011 restructuring and additional financing\. C’ Intermediate Results Indicators for AF 42 Aggregated Management Effectiveness 69 80 72 Tracking Tool Scores for the targeted protected areas Date 11-Jan-12 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Substantially achieved (90%) 43 Number of surveillance grids monitored 0 489,291 424,540 in 30 national parks and 3 corridors (Number, Custom) Date 11-Jan-12 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Substantially achieved 87% 44 Number of paid patrolling days of local 0 126,861 160,382 surveillance committees (Number, Custom) Date 11-Jan-12 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Achieved (126%) 45 Km of PA boundaries materialized and 0 7,224 6,552 maintained (Kilometers, Custom) Date 11-Jan-12 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Substantially achieved (91%) 46 Number of regional civil society 0 1 na monitoring groups operational and undertaking regular reporting of results  Indicator Restr\. Baseline Target Value Actual values value Achieved Date 11-Jan-12 31-Dec-14 47 Rate of total affected households (PAP) 25 100 na economic losses compensated by safeguards plans 11-Jan-12 31-Dec-14 48 Number of PAs in the national network 10 65 na complying with national technical standards for social safeguards 11-Jan-12 31-Dec-14 49 Number of PAs with operational 1 33 na community co-management structure 11-Jan-12 31-Dec-14 50 Surface of forests legally managed by 0 250 000 Na local communities 11-Jan-12 31-Dec-14 51 Index of management efficiency of na na na Foundation in implementation of PA network financing Km of tourism circuits established and 0 60 98 maintained to operational standards 11-Jan-12 31-Dec-14 31-Dec-14 Achieved (163%) 52 Number of community and private 0 23 na sector ecotourism investments commenced in supported PAs 11-Jan-12 31-Dec-14 53 Generated funds from direct and indirect 100 000 300 000 na fiscal revenues from ecotourism and carbon credits made available for conservation and communities ($/year) 11-Jan-12 31-Dec-14 54 Number of carbon finance pilot sites 1 4 na generating revenues 11-Jan-12 31-Dec-14 55 Index of management efficiency of 60 90 85 Project Coordination Unite (PCU) in implementation and monitoring of project (Number, Custom) Date 11-Jan-12 31-Dec-15 31-Dec-15 Comments (incl\. % achievement) Substantially achieved (94%) G\. Ratings of Project Performance in ISRs Actual Disbursements Date ISR (USD millions) No\. DO GEO IP Archived Project 1 Project 2 Project 3 P074235 P074236 P113976 1 06/10/2004 S S S 0\.00 0\.00 0\.00 2 11/30/2004 S S S 1\.05 0\.30 0\.00 3 06/29/2005 S S MS 4\.31 0\.70 0\.00 4 12/21/2005 MS S MS 6\.72 1\.18 0\.00 5 06/30/2006 MS S MS 8\.66 2\.35 0\.00 6 12/17/2006 MS MS MS 11\.04 3\.50 0\.00 7 06/26/2007 MU MS MU 19\.08 3\.90 0\.00 8 12/18/2007 MU MS MU 22\.74 5\.60 0\.00 9 05/30/2008 MS MS MS 24\.39 6\.25 0\.00 10 12/01/2008 MS MS U 27\.90 6\.49 0\.00 11 05/29/2009 MU MU MU 28\.89 6\.57 0\.00 12 09/11/2009 U U U 28\.89 6\.57 0\.00 13 06/12/2010 MS MS MS 33\.73 7\.52 0\.00 14 03/27/2011 MS MS S 37\.81 8\.11 0\.00 15 12/26/2011 S MS MS 40\.27 8\.95 0\.00 16 07/09/2012 MS MS MS 44\.79 8\.83 10\.00 17 03/07/2013 MU MS MU 48\.88 8\.83 10\.00 18 09/29/2013 MU S MU 55\.57 8\.83 10\.00 19 02/16/2014 MU S MU 61\.60 8\.83 10\.00 20 10/04/2014 MU S MS 66\.70 8\.83 10\.00 21 03/05/2015 MU S MU 71\.26 8\.83 10\.00 22 09/30/2015 MU S U 73\.36 8\.83 10\.00 23 12/21/2015 MU -- U 74\.53 8\.83 10\.00 H\. Restructuring (if any) Amount Disbursed ISR Ratings at Board Approved at Restructuring Restructuring Restructuring in USD millions Reason for Restructuring & Date(s) Project 2 Key Changes Made PDO GEO DO GEO IP Project1 and Change Change Project 3 Number of components increased from three to four; 04/01/2008 N N MU MS MU 23\.97 6\.25 change to RF (indicators); reallocation of proceeds\. 01/12/2009 N N MS MS U 28\.34 6\.57 Reallocation of proceeds\. 18 months extension to June 2011; Reduced project scope: 12/18/2009 N N U U U 33\.15 7\.33 finance PA costs and safeguards action plan\. 6 months extension to December 06/15/2011 N N MS MS S 38\.80 8\.43 2011\. 3 years extension to December 2014; AF; Substantial change to 10/12/2011 Y N MS MS S 39\.81 8\.61 components and simplification of inst\. Arrangements, change to RF (PDO and indicators)\. 40\.29+ 8\.83 Change in disbursement 05/28/2013 N N MU MS MU 12\.57= categories\. 52\.86 Allow law enforcement activities 40\.29+ for precious woods; change in 02/26/2014 N N MU S MU 21\.30= 18\.83 scope of components; change in 61\.59 disbursement categories; change to RF (indicators)\. 40\.29+ Allow continuation of law 06/30/2014 N N MU S MU 24\.87= 18\.83 enforcement activities\. 65\.16 12 months extension to 40\.29+ December 2015; change to RF 11/30/2014 N N MU S MS 26\.99= 18\.83 (PDO level indicators and 67\.28 revision of some targets); reallocation of proceeds\. 40\.29+ Reallocation of proceeds to 12/20/2015 N N MU S U 33\.84= 18\.83 create a livelihood compensation 74\.13 sinking fund at FAPBM\. I\. Disbursement Profile P074235 P074236 1\. Project Context, Development and Global Environment Objectives, and Design 1\. Madagascar‘s biodiversity is a unique, irreplaceable global public good representing 5 percent of the world‘s biodiversity on just 0\.4 percent of the global landmass\. The country has been labeled the “eighth continent” in recognition of its unparalleled biological values\. As an example, fifty new species of lemurs, Madagascar’s flagship primate, have been discovered during the last 20 years\. However, these unique ecological assets are challenged by the country’s high levels of poverty, particularly in rural areas\. 2\. In 1989, the Government of Madagascar (GoM) adopted an ambitious investment program known as the Madagascar Environment Action Plan (PAE or NEAP)1, whose goal was: “natural resources are conserved and wisely utilized in support of sustainable economic development and a better quality of life”\. It was implemented in the form of a three-phase Environment Program with a total budget of approximately US$400 million\. The first phase of the Environment Program (1990 to 1995) created institutions and implemented pilot activities, including the first protected area (PA) to be established under the NEAP, and put in place the policy and regulatory framework for PA management and for environmentally compatible development\.2 The second phase (1996 to 2004) financed on-the-ground activities at a larger scale and sought to integrate environmental issues into sector and macro-economic policies\. 3 The long-term programmatic approach which EP1 launched, and EP2 sustained, was key in addressing long-term, complex issues of environmental degradation\. While the NEAP implementation programs in other countries commonly started as long-term multi-phased undertakings, they seldom lasted beyond the first (usually five-year) phase and left most of their agenda unresolved\. EP2 was a rare exception of a NEAP-inspired project that continued to pursue the original long-term agenda and brought it to the final phase under EP3\. 3\. The third phase (2005 to 2015) continued the work of the two previous phases and aimed at improving the protection and sustainable management of critical biodiversity resources at the field level, 1 Since 1990, the World Bank together with United States Agency for International Development (USAID), Swiss Development Cooperation, and Global Environment Facility (GEF), and more recently United Nation Development Program (UNDP) and the German Agency for International Cooperation (GIZ, formerly GTZ, and KfW) and Agence Française de Développement (AFD), have worked with the three large international Non-Governmental Organizations (NGO) present in Madagascar: Conservation International (CI), World Wildlife Fund (WWF), Wildlife Conservation Society (WCS), and others such as Durell Foundation and Birdlife International to support the Government in the implementation of the NEAP\. 2 Project objectives were the: (a) conservation and management of Madagascar's biodiversity, (b) promotion of the sustainable development and management of the country's natural resources, (c) improvement of the population's living conditions, and (d) development of the country's human resources and institutional capacity\. 3 The original development objectives of EP2 were to (i) reverse current environmental degradation trends and to promote sustainable use of natural resources, including soil, water, forest cover, and biodiversity; and (ii) to create conditions for environmental considerations to become an integral part of macroeconomic and sectoral management of the country\. 1 mainstreaming conservation into macroeconomic management and sector programs and establishing sustainable financing mechanisms, while also commencing activities in marine PA\. 4\. The combined results of the three phases of the Environment Program are impressive: the creation of 2\.4 million hectares of national parks, and 4\.5 million hectares of forestry corridors being managed predominantly by non-government organizations (NGOs) on behalf of the State; the establishment of institutions for the management, financial control and monitoring of environment related activities; and the reduction of the rate of deforestation by 75 percent in 20 years\. The Bank’s contribution to the Environment Program has been through a series of Environmental Support Program projects\. 1\.1 Context at Appraisal 5\. In January 2003, the Government was restructured in a way that was highly significant for the rural/environmental sector\. The reform included: (i) the integration of economic programs, land use planning, transport and public works into a single 'super-ministry' under the leadership of a vice Prime Minister, which facilitated an integrated approach to national spatial development planning and represented an important opportunity for the sector to incorporate rural and environmental dimensions into national spatial planning; (ii) the combination of agriculture with livestock and fisheries into a single ministry, which regrouped the 'food production' sectors putting a greater emphasis within the fisheries sector on food security, rural development and poverty reduction; and (iii) the combination of water and forests with environment into a single ministry, which was seen as a radical move to create a forests sector more oriented towards conservation and biodiversity preservation as opposed to extractive production\. The latter would greatly facilitate the development of conservation programs outside PA, improve sector governance, and facilitate the efficient capture and distribution of benefits from biodiversity\. 6\. In line with this significant reform, the President of the Republic announced at the World Parks' Congress in Durban in September 2003, that Madagascar, in line with International Union for Conservation of Nature (IUCN) norms, would increase the area under effective conservation arrangements (covering forest, wetland and marine ecosystems) from 1\.7 million ha to 6\.0 million ha\. 7\. The Third Environment Program Support Project (EP3) – the final project in support of the NEAP – aimed to leave a lasting impact by bridging the gap between conservation and development and was fully consistent with the main goal of the Country Assistance Strategy, (CAS, November 2003)\.4 Acknowledging the close linkage between poverty and environmental degradation, the CAS recognized that "Madagascar’s unique biodiversity resources offer[ed] interesting revenue generating potential, which, if realized, could contribute to the reduction of poverty as well as the conservation of these resources"\. To unleash potential 4 The grant was financed through a combination of International Development Association, IDA (US$40 million) and GEF (US$9 million) funds\. EP3 followed EP1 approved on February 6, 1991 and closed on June 30, 1997, and EP2, initiated in 1997 and ended in December 2002\. EP3 was developed initially by the Ministry of the Environment through the National Environmental Office (ONE), well before the closing of EP2\. After EP2 closing, the Ministry created a Committee of experts composed of the Adviser to the Minister, head of this Committee, and representatives of the General Directorate of Forests (DGF), General Directorate of Environment (DGE), the Association Nationale pour la Gestion des Aires Protégées (ANGAP), the National Association for Environmental Action (ANAE), the Environmental Management Support Service (SAGE) and ONE\. This Committee was responsible for finalizing the original project document and ensuring implementation\. The project was declared effective on 13 September 2004\. 2 in this arena, there was a need to set access to biodiversity resources on a more rational and transparent footing as well as to develop revenue generating sources from non-extractive forest products and environmental services, of which eco-tourism, hydrological services, carbon storage and non-timber forest products were seen as the most promising\. Following this principle, the CAS lending scenario included the EP3, which the Bank was uniquely positioned to support, given its prior engagement in the implementation of the two previous phases\. In line with sector-specific goals, it was expected that the project would reduce poverty by contributing to broad-based economic growth, sustainable natural resources management and improving governance\. The CAS recognized that "considering that Madagascar is a mega-diversity country, this project [was] also of crucial importance to attain the sustainable environmental management objectives as specified under the Millennium Development Goals"\. 8\. Most of Madagascar's biodiversity occurs in forest areas\. While 15 percent of the area of these forests was located within a relatively well-managed PA network under the National Agency for Protected Areas Management (ANGAP), the vast majority of forests were unmanaged or poorly managed, constituting a de-facto free access resource\. The EP3 proposed a two-pronged approach in line with the Government's objective to increase the area of natural forest under effective conservation arrangements\.5 First, EP3 would support an aggressive move towards the creation of about 4 million ha of conservation sites (corridors)\.6 Second, based on the lessons and experiences generated during the second phase of the NEAP, the management transfer of forest resources to communes would be scaled up significantly\. 9\. Institutionally, ANGAP had built a solid reputation as a relatively effective manager of the country’s system of national parks and reserves, through effective donor coordination under earlier phases of the NEAP\. In terms of conservation management, however, ANGAP’s IUCN-based index for effective management stood at only 41 percent\. Areas that specifically required attention included: (i) strengthening management and implementation capacity at the field level; (ii) establishing more effective measures to reduce encroachment; and (iii) developing tourism potential\. 10\. The relations between ANGAP and communities were predominantly at the level of consultation, thereby falling short of providing decision-making power to local stakeholders whose livelihoods were affected by the creation of PAs\. Consequently, there was a need to enhance participation of local stakeholders, while strengthening community-based natural resource management systems that would provide conservation-compatible means of assuring local livelihoods\. 11\. Further, the project was to facilitate the development of the eco-tourism industry through expansion and improvement of park infrastructure and facilities, and also develop mechanisms so that an appropriate 5 ANGAP was responsible for the management of 46 Pas covering roughly 3 percent of the country’s total area and 15 percent of its forests\. Not all ecosystems were adequately represented in the national PA system, particularly coastal zone and marine ecosystems as well as some key terrestrial ecosystems\. For this, ANGAP had prepared a five-year action plan (2001-2006) for the management and expansion of the existing PA system\. 6 Delimited zones with legal status classified according to ecological and socioeconomic criteria\. These conservation sites were seen as an ecological and economic necessity given their importance for the conservation of biodiversity, eco-tourism and the hydrological services they provided for people, agriculture and industry\. 3 share of revenues generated by eco-tourism would support ANGAP’s budget\. The project also meant to explore the establishment of markets for environmental services under which downstream beneficiaries (e\.g\. farmers owning irrigated lands and urban water consumers) would compensate upstream providers of hydrological services\. Given the high incidence of poverty among downstream beneficiaries, actual revenues were reasonably expected at very modest levels, at least in the short run\. Most importantly, the project intended to support the sustainable financing of the PA system through the newly established Malagasy Foundation for Protected Areas and Biodiversity (FAPBM), seen as the center-piece of the project's efforts in the sustainable financing arena\. Finally, the initial stages of the development of reforestation initiatives for carbon sequestration purposes as a means to capture international willingness to pay for climate change containment measures was to be supported\. 12\. EP3 was implemented in two distinct phases, with a number of restructurings in between: (i) the original project phase that went from 2004 to 2011, passing through a temporary suspension of activities during the political crisis of 2009; (ii) the Additional Financing (AF) phase that went from 2011 to 2015 (although the AF became effective on March 23, 2012)\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 13\. The original Project Development Objectives was “to improve the protection and sustainable management of critical biodiversity resources at the field level, mainstream conservation into macroeconomic management and sector programs, and facilitate the establishment of sustainable financial mechanisms for the environment, thus contributing to the improvement of the quality of life of the population\.”7 14\. The following key performance indicators and associated targets were developed for the project\. A detailed list of PDO level indicators and their applicability throughout the project lifetime is presented in Annex 2\. (1) Rate of degradation of forest and wetland resources less than half of the 1993-2000 rate of 0\.9% per year (Percentage, Custom); (2) PAs management efficiency index increases from 41% (baseline) to 55% (mid-term) to 70% by EOP (Percentage, Custom); (3) Mangrove cover maintained at 2004 area of 2,209 km2; 7 This is the objective that appears in the Grant Agreement (H087 MAG)\. The PAD refers to this as the overall (Government) EP3 objective but notes that the IDA/GEF financing was geared towards assisting the GoM in the implementation of selective elements of EP3, for which two subsidiary Development Objectives were specified: (i) The biodiversity and renewable natural resources of representative eco-regions is conserved and managed on a sustainable footing with active multi-stakeholder participation; and (ii) The framework for sustainable environmental management is further strengthened through the incorporation of said management objectives into public policy making and investments\. 4  (4) Maintenance of coral reef target indicator species (e\.g\. Ludjanidea family) in all established no-take zones; (5) Sustainable financing mechanisms including government contribution cover 70% of core staff and operational costs of the PA system (baseline: 8%; mid-term: 30%); (6) National park visitor numbers increase 5% annually from the 2003 baseline (100,000 visitors); (7) Increase of park entrance fees by US$670,047 (2003 baseline: US$500,000; mid-term: US$579,000); (8) Sustainable NRM (natural resources management) investments generate US$12 million over 5 years (baseline: 0; mid-term: US$ 4 million); (9) Improved voice of communes in PAs management as reflected in representation on ANGAP's Board of Directors (by mid-term) and by the % of CROs complying with their rights and obligations as defined in PA management plans (baseline: 0; mid-term: 50%; EOP: 80%); (10) Improved community empowerment in NRM through fully performing GELOSE/GCF arrangements as measured by the % of beneficiary communities who have successfully obtained long-term follow-up contracts after the initial 3 year trial period baseline: 0%, mid- term:70%; EOP: 80%); (11) 70% of public and private investments comply with MECIE legislation (percentage, custom); (12) Logging and species collection license fees in line with projected revenues (baseline: 80%; mid-term 87% and EOP: 95%); (13) Track record of satisfactory OSF governance audits (mid-term and EOP targets are satisfactory); (14) 70% of MinEnvEF's budget executed at field level (province or lower by EOP (baseline: 30%; mid-term 50%); (15) Cost reduction strategy and action plan developed and implemented within ANGAP\. 1\.3 Original Global Environment Objectives (GEO) and Key Indicators (as approved) 15\. The global objective of the Project is “to contribute to the preservation of the quality of regional and global commons through improved natural resources management and biodiversity protection in critical ecological regions, defined as national PAs and their corresponding buffer zones and corridors\.” 1\.4 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 16\. “To enhance the protection and sustainable management of targeted PA\.” 5 17\. Project indicators had been revised in 2008 under the original PDO\. With the project was restructured for a fifth time with the restricted exception to OP7\.30, in 2011, a new PDO was put in place and new and modified activities included in the AF\. Four of the original PDO indicators and fifteen of the intermediate results indicators were continued or revised\. Subsequent to the restructuring, monitoring was entirely focused on the activities financed by the AF\. The major changes during the Project timeline are summarized in Figure 1 below\. Table 9 in Annex 2 provides the sequence of PDOs and their changes throughout the project’s life\. Figure 1\. Project timeline with major changes from 2004 to 2015 1\.5 Revised GEO (as approved by original approving authority) and Key Indicators, and reasons/justification 18\. The original GEO remained unchanged\. 1\.6 Main Beneficiaries 19\. The Project had direct and indirect beneficiaries\. The direct beneficiaries included local households and communities living around the targeted PAs where livelihood improvement were supported through income and employment generation in conservation and tourism\. Local communities also benefited from remunerated participation in Community Patrols (CLPs), employment in civil works during project implementation (such as construction of infrastructure), as well as from technical training on conservation and productive skills and technologies\. The formalization of community associations promoted by the project has also strengthened local-level communities’ and individuals’ capacity to undertake new 6 businesses\. Community subprojects also generated meaningful revenue for local communities\. Communities around the PAs likewise benefitted from higher fees collected by the PA administration\. Other than the number of communities benefitting from reforestation and efficient charcoal production (700), no specific number related to beneficiaries was included in the PAD\. 20\. While at the time of writing the PAD there was no requirement to measure direct beneficiaries, it can be inferred that other beneficiaries included management and technical staff of project-related institutions, both at the national level (i\.e\. ONE, ANGAP, FAPBM) and particularly at the regional and PA level, who received salaries, training and improved working conditions (infrastructure and equipment)\. 1\.7 Original Components (as approved) 21\. EP3 was implemented through three components: 22\. Component 1: Forest ecosystems management (IDA: US$ 18 million) - supporting the Department of Water and Forests to better conserve natural forests and streamline the use and management of national forests; 23\. Component 2: PAs Management (IDA US$ 13\.5 million; GEF: US$ 9 million) - addressing issues related to PA management, eco-development, eco-regional planning, ecotourism and the endowment of a trust fund; 24\. Component 3: Environmental Mainstreaming (US$ 8\.5 million) - supporting selected elements of the environmental mainstreaming agenda through improved knowledge and information, as well as the creation and/or strengthening of environmental units in all sectoral ministries\. 1\.8 Revised Components 25\. As a result of the Mid Term Review (MTR) conducted in June 2007, a fourth component was added to strengthen the core functions of the Ministry of Environment and support the renovation of its staff\. 26\. Following the political crisis in March 2009, OP 7\.30 on “dealing with de facto governments” was applied\. Due to the context of OP 7\.30 and the adoption of an Action Plan in 2009, an exception was granted to allow continuation of Component 1, while the remaining three Project components were suspended\. 27\. The original components were revised and re-activated as part of the AF approved by the Bank in 2011\. The revised components were as follows: 28\. Component A: PA and landscape management (IDA: US$ 16 million) (across 2\.7 million hectares including three forestry corridors and one pilot landscape) - including surveillance, conservation infrastructure investment and piloting of integrated management approaches in one landscape and support to the institutional reform of Madagascar National Parks (MNP); 29\. Component B: Local community support and development (IDA: US$ 14 million) (approx\. 90,000 households and over 1,000 grassroots community organizations) - including monitoring of safeguards implemented under EP3, implementation of compensation for communities surrounding two 7 new forest corridors, mitigation of remaining conflicts around established PAs, and support to community based organizations to increase involvement in PAs management notably through the community based forestry management contracts; 30\. Component C: Sustainable financing mechanisms for PAs (IDA: US$ 9 million; GEF: US$ 10 million)- including a US$10 million endowment to FAPBM from GEF, ecotourism infrastructure development / Public-private Partnership (PPP) investments to optimize the generation and use of tourism revenue to support the PA network, and development of market mechanisms (carbon finance and other payments for environmental services); and 31\. Component D: Project management (IDA: US$ 3 million) - including Project implementation, coordination, supervision, monitoring and evaluation\. 1\.9 Other significant changes Restructuring 32\. The project experienced ten restructurings, four of which incorporated significant changes to adapt project implementation to both identified shortcomings of original project design as well as the major disruption caused by the protracted political crisis that developed in 2009 (Table 1)\. Table 1\. Restructurings of EP3 Appr\. Chg\. Chg\. to Chg\. to Chg\. Restr\. Level Comment and Chg\. to Design to Impl\. Closing to date (* if background fin’g Arrang\. Date RF signif\.) Number of components increased from three to 04/01/ four; change to RF This RP follows MTR in VP (*) No No No Yes 2008 (indicators); June 2007\. reallocation of proceeds\. 01/12/ Reallocation of CD No No No No -- 2009 proceeds\. 18 months extension to This RP follows the June 2011; Reduced 12/18/ political crisis, and senior CD (*) project scope: finance No No Yes No 2009 management decision to PA costs and tackle safeguard issues\. safeguards action plan\. To minimize PA and 06/15/ 6 months extension to safeguards financing gap CD No No Yes No 2011 December 2011\. before effectiveness of AF\. 3 years extension to December 2014; AF; Substantial change to Exception to OP7\.30; 10/12/ Board components and Focus on PA Yes Yes Yes Yes 2011 (*) simplification of inst\. management, safeguards Arrangements, change and sustainable financing\. to RF (PDO and indicators) 8  05/28/ Change in disbursement CD No No No No -- 2013 categories\. Allow law enforcement activities for precious woods; change in scope 02/26/ CD of components; change No No No Yes -- 2014 in disbursement categories; change to RF (indicators)\. 06/30/ Allow continuation of law CD No No No No No 2014 enforcement activities\. The Bank resumes normal 12 months extension to operations following the December 2015; change elections in December to RF (PDO level 2013 and extension 11/30/ VP (*) indicators and revision No No Yes Yes allows to finance MNP 2014 of some targets); and precious woods reallocation of activities while eventual proceeds\. new operations are prepared\. Reallocation of proceeds 12/20/ to create a livelihood CD No No No No -- 2015 compensation sinking fund at FAPBM\. 33\. EP3, which supported two thirds of the established network of national parks, originally was scheduled to close in December 2009\. Following the MTR in 2007, the project was restructured into four core components to better align activities and indicators with national priorities\. This restructuring also provided the needed resources for the implementation of environmental and social mitigation measures, leading to the preparation of eleven social safeguards plans\. Following the political crisis of 2009, an assessment carried out by the World Bank in the context of applying OP 7\.30 concluded that the reputational risk to the Bank that would result from the suspension of EP3 activities was unacceptably high\. As a result, the restructuring in 2009 authorized implementation of an Environmental and Social Safeguards Action Plan and allowed continuation of a limited number of activities linked to PA management (the other three project components were dropped)\. 34\. As the political crisis continued into 2011, the rationale to extend the project closing date and provide more resources through AF was supported by the assumption that ending the project would cause the immediate suspension of surveillance measures across 1\.9 million hectares of PAs, including 28 established national parks and one newly created forest corridor, as well as the termination of social safeguard activities for 26,000 households\. This posed a particularly grave risk to the country’s environmental assets, given the increased pressures from illegal logging and poaching that had resulted from the political instability\. The Government of Madagascar was unable to cover the financing gap, while donors were unlikely to commit funds given the prevailing political uncertainty\. 35\. Following Board approval in 2011, the AF provided bridge financing to 33 PAs (four additional PA were included to the ones supported by the original project) covering 2\.7 million hectares, with a focus on surveillance and implementation of safeguards-related activities\. Four additional PAs were included: two national parks in the northeast where illegal logging was the most intense and two forestry corridors with high potential to generate carbon revenues\. In addition, the AF was designed to support the creation 9 of sustainable financing mechanisms and the promotion of longer-term community development\. The AF was expected to address in the situation in the remote rural areas surrounding the 33 PAs, where around 200,000 households live in absolute poverty\. Institutionally, the AF was structured to be implemented without the direct involvement of the central government, which had not been recognized by the African Union (AU) and the international community\. Community support through sustainable cotton private sector partnerships around Mikea PA 36\. As part of EP3, in 2008 an agreement was reached for a grant from the Japanese Social Development Fund (JSDF) in the amount of US$ 1,875,650 (TF-93177), but approval of the grant was delayed by the Bank’s suspension of disbursements\. The grant agreement was eventually signed on June 13, 2012\. The objective of the project was to pilot environmentally sustainable cotton production, and to establish a cotton-to-garment value chain\. The grant recipient was the Wildlife Conservation Society (WCS)\. The project was implemented in the cotton growing areas adjacent to the Mikea National Park in southern Madagascar\. As designed, the project’s strategic link with the objectives of EP3 was to improve the incomes of the cotton farmers in order to reduce the pressure of communities on the resources of the Park\. Additionally, the development of organic production systems would reduce the use of chemicals affecting the health of communities and the overall environment\. Addressing governance challenges related to precious woods 37\. In light of the deleterious impact of precious wood illegal logging as well as the EP3 AF legal covenant stipulating that the Government shall not repeal or waive the Decree prohibiting illegal extraction and export of precious woods, the Bank agreed to support the Government in its endeavor to combat illegal logging\. A non-lending technical assistance (TA) (P144062) was then the Bank’s first attempt to find practical ways to improve environmental governance, having come under criticism for financing biodiversity conservation in a poor governance context\. As part of the TA, and following extensive local consultations, the Bank agreed to allow the use of EP3 AF proceeds to undertake three technical studies to provide necessary analytical information to formulate a detailed national action plan to dispose of illegal precious wood stockpiles: i) a legal study identifying options available under the law for seizing and disposing of felled rosewood and ebony; ii) an inventory and labeling feasibility study; and iii) a disposal options and feasibility study\. The studies helped to fill the information gap on the costs and methodological best practices for various possible courses of action, taking into account the political context at the time\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 38\. Soundness of background analysis\. Preparation of EP3 was rich in background analysis and knowledge of the sector and was partially guided by the experience and lessons learned from the implementation of the predecessor projects EP1 (1992-1996) and EP2 (1997-2002)\. The lessons taken into consideration, to various degrees, were (i) the need to pursue a streamlined program approach to avoid fragmentation of efforts, a lesson that was taken on only partially, owing to the inherent difficulty of the multi-donor program; (ii) the importance of improved coordination with other programs, in particular the Bank-financed rural development project (PSDR), which turned out to be challenging; (iii) to incorporate 10 performance-based implementation mechanisms and explicit measures to address governance weaknesses, a lesson taken up to a relatively good extent; and (iv) in terms of desired operational features, the recommendation to justify design features through a robust economic analysis and a decision-oriented M&E system, also implemented to a good extent\. 39\. Adequacy of government’s commitment and stakeholder consultations\. In 2004, government commitment was strong\. Government participated in project design, which coincided with a period of political stability and a high-level government vision and decisions aimed at the protection of the country’s biodiversity, of which the most important was the President’s commitment to increase the area under effective conservation from 1\.7 to 6\.0 million ha, formally announced at the World Parks' Congress in Durban in September 2003\. This positive environment combined with the challenge to support the ambitious government target had a significant influence on project design\. Consultations were carried out during the preparation of the required safeguards instruments, but the PAD has no information on stakeholder consultations regarding the design of the project\. 40\. Assessment of the project design\. The objectives of EP3 were complex and required the collaboration and coordination of a large number of stakeholders and sectors\. The range of activities to be supported was very broad and the surface to manage very extensive, increasing the project’s complexity\. This was partly the consequence of the encouraging political momentum, driving expectations upwards, and the fact that the Project was linked to a multi-phase and multi-donor government program, tying the project to a broader agenda\. In fact, project design was aligned with the government’s vision, which was in itself rather ambitious and broad ranging8\. 41\. In addition, the intended and well-justified focus on supporting the conservation of Madagascar’s unique biodiversity was somewhat expanded by the overall poverty reduction objectives imposed by the framework and guidelines of the Heavily Indebted Poor Countries (HIPC) initiative and IDA grants\. As a result, one of the challenges of Project design was to generate strong links between environmental benefits and poverty reduction\. In 2011, the AF Project Paper involved a substantial simplification of project objectives, institutional arrangements and results indicators\. 42\. Within this design scenario, one element that had later on strong implications for implementation was the fact that all activities related to community development would not be funded by EP3 but rather by companion projects such as the Rural Development Support Project\. This was possibly a sound decision at the time but was later affected by both the Bank’s suspension of the Rural Development Support Project (and the exception granted to EP3) together with the internal restructuring of the Bank that replaced the single ESSD with two operationally independent sectors (agriculture and environment)\. 43\. Assessment of risks\. While the project’s risks were rated ‘Substantial’, the assessment of ‘critical risks’ in the project document did not foresee the risk of political instability\. This was an eventuality that, if taken into account, could have led to a more resilient design for example by envisaging activities at the 8 The government’s contribution to Project design was framed by a Letter of Environment Policy based on the Environment Charter\. 11 local level that could continue even in the case of a change in government\. No risk was deemed ‘high’\. A number of risks were deemed ‘substantial’ such as: low capacity of local communities, mitigated through capacity building; low ability of the Ministry to promote environmental stewardship across sectors, mitigated through the strengthening of environmental units in sector ministries; inability of the Ministry to streamline existing environmental institutions, mitigated through an institutional assessment that would link budget decentralization to a consolidation process at central level; the lack of required funding in trust funds, mitigated through the effort to develop sustainable financing mechanisms\. 2\.2 Implementation 44\. Implementation was marked by high political turmoil, following the relative stability during project preparation, and the World Bank’s response both at the senior level and at the technical level\. The project had 10 restructurings which reflected the proactive stance on the part of the task team operating in a difficult and changing environment\. 45\. Political instability\. Shortly after the restructuring that had followed the Mid-Term Review (MTR), in the onset of the political crisis of 2009 resulted in the unconstitutional departure of President Marc Ravalomanana and the installation of a de facto transitional government which was not recognized by the international community\. In the case of the Bank, this led to an assessment of the portfolio in line with OP/BP 7\.30, and the subsequent suspension of the implementation of various programs and projects, including EP3\. In 2011, a transition government was put in place but election only took place in December 2013\. The election did not result in a clear majority in parliament and the President had to build an alliance of parliamentarians that would be willing to support him\. Between April 2014 and the closing of EP3, in December 2015, two different Prime Ministers and two different Ministers of Environment were in office\. Factors that gave rise to problems\. 46\. In face of political turmoil, the Bank consistently decided to stay engaged in the sector\. This was a deliberate decision, involving senior management and the technical team, which however exposed the project to considerable failure risks\. In May 2009, an internal Bank assessment of the implications of OP 7\.30 for the Project concluded that the continued suspension of Project activities would: (i) leave approximately one-third of Madagascar’s PAs (covering 1\.9 million hectares) and the forest corridors under creation at risk without environmental protection, (ii) place approximately 26,000 households without access to socio-economic mitigation measures\. The assessment also concluded that the reputational risk for the Bank was unacceptably high and needed to be addressed\. Consequently, the Project was granted exceptional conditions by the Bank, which allowed for partially resuming implementation and an extension of the closing date to June 2011\. In line with the decision to stay engaged, the conditions imposed by OP 7\.30, and the lessons learned from EP3, the Bank agreed to the design and approval of a 3-year AF, for a total amount of US$52 million (US$10 million from GEF4 and US$42 million from IDA15)\. 47\. The decision to suspend activities and dialogue with senior government officials\. In particular, the Bank: (i) suspended disbursements on all projects (with the exception of some human development lifeline activities which the continued activities under the project were deemed part of) between March 2009 and May 2011 (22 months); (ii) applied OP 7\.30 between March 2009 and December 2013 (57 12 months)\.9 In addition, the Bank suspended dialogue with government and teams on the ground were not in contact with senior government officials\. The Bank may at this stage have underestimated the importance of government ownership when it decided to proceed with the project restructuring without allowing the government to implement activities directly (a political move dictated by management, more than a technical one)\. Thus, implementation of the AF was affected by very low government ownership, whose role as implementing agency had been banned by the restrictions imposed by the application of OP 7\.30\. This meant, for example, that key aspects of the community development approach, such as the official approval of management transfers between government and local communities, took place at a slower pace\. 48\. An over-ambitious AF and a departure from government capacity building\. While the objective of the project had been simplified, the scope of the project was extremely ambitious, with US$42 million to be disbursed in a limited span of 3 years (eventually four, following the extension of closing date in 2014)\. The Bank possibly overestimated the capacity of the PCU and implementing agencies to carry out the required activities\. This anticipated a level of disbursement never experienced before during EP3\. Moreover, while the design of the AF was characterized by simplified operational and institutional arrangements, these were at the same time far from ideal and departed from the primary objective of strengthening all the entities involved in the NEAP, one of the pillars of the three-phase program supported by the Bank\. Factors that contributed to mitigate the risks of failure\. 49\. Close implementation support\. The Bank’s overall supervision efforts benefited by the fact that all four Task Team Leaders (TTL) responsible for the project (a relatively small number considering the nearly 12 years of implementation) were senior environmental specialists/economists who were based in Madagascar\. Because they were based in country, implementation support was undertaken as an ongoing activity, but was at the same time formalized through regular multidisciplinary missions and comprehensive reporting through well prepared Implementation Status and Results Reports (ISRs)\. This presence of the TTL also allowed rapid responses to critical situations\.10 As described in the fiduciary section, project supervision included adequate support to the TTL in dealing with the complexities and problems associated with procurement, financial management and especially safeguards\. 50\. Mid-Term Review in 2007\. After 3 years of implementation, at the MTR (June, 2007), project performance was well below expectations and considered to be affected by a combination of design flaws (over-ambitious targets, institutional complexity, geographic dispersion, and lack of budget for safeguard compliance), as well as a series of internal institutional, governance and managerial weaknesses, all of 9 The application of OP7\.30 was particularly strict with the first emergency projects being approved in November 2012 (after 38 months)\. 10 The project team dealt proactively with huge challenges, with mixed success\. Examples include the renewal of project staff contracts on the night of the coup, to allow continuity in technical dialogue; the efforts to reform the forestry staff; to argue for the contracted Madagascar Protected Areas staff to be given the right to bear arms and to harmonize their terms and conditions vis-à-vis forestry staff; to rotate cases of illegal logging away from known corrupt judges\. 13 which challenged the realism and operational consistency of project design\. As a result, an initial restructuring was processed, scaling down a number of results indicators, adding a component to strengthen core institutional functions, as well as a sub-grant category to support safeguard compliance under OP 4\.12 (Involuntary Resettlement)\. 51\. Adaptive safeguards supervision\. With the resumption of disbursement in 2009, the implementation of an Environmental and Social Safeguards Action Plan was authorized for a limited range of activities under a single project component related to PA management through a US$12 million budget\. Moreover, with the AF a much greater emphasis was placed on social safeguard compliance (i\.e\. compensation)\. 52\. An AF with a narrower focus\. The Bank identified critical areas for attention and provided the elements for a much focused project\. The AF included a comprehensive restructuring of EP3 that among other things included formalizing the cancellation of the three suspended components of EP3\. The PDO, components and activities were modified in line with the exception granted under OP 7\.30 to allow a refocusing of project activities for the enhanced protection and sustainable management of targeted PAs\. As part of the alignment with OP 7\.30, major institutional changes were introduced, removing government participation from project implementation, while enhancing the roles of parastatal or private institutions such as FAPBM, MNP (formerly ANGAP) and two international NGOs, CI and WCS\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 53\. M&E design\. Project design included the establishment of a robust system for monitoring project activities, consistent with the indicators in the Results Framework\. However, the original PDO was overly ambitious and complex including five distinct outcomes\. Some of the outcomes were open to interpretation, i\.e\. protection and management of critical biodiversity resources could include species, representation, targeted habitats and ecosystems\. Also, ‘mainstreaming conservation’ was poorly defined\. The alignment of the original PDO to the PDO indicators was weak with, for instance, no PDO indicators directly capturing mainstreaming\. Furthermore, the number of indicators was exceptionally high, 15 PDO indicators (PAD pp\. 52-58), and placed an undue burden on the M&E system\. Many of the original targets were overambitious, requiring subsequent adjustments during implementation, particularly at the time of the restructuring under the AF, where a considerable number of indicators were dropped in order to align the M&E system with the revised PDO and components\. The PDO was revised in the 2011 restructuring to become more focused but an important outcome on poverty/livelihoods was not included while the project continued to have a component on livelihood support to the local population\. 54\. M&E implementation\. The M&E system was managed by CELCO (the Project Coordination Unit /Cellule de Coordination), which was renamed the Unité de Coordination de Projet Environnemental (UCPE) under the AF, and was headed by a specialized professional\. The M&E framework was updated on a regular basis by the dedicated specialist\. Reporting by implementing agencies, particularly MNP, was of mixed quality, making implementation of the M&E difficult\. The numerous indicators were difficult to track on a regular basis\. Following the political crisis, in March 2009, there did not appear to be a follow up on indicators and it was not until the additional financing in 2011 that a revised results framework was available\. During the additional financing, reporting on the safeguards and community development activities was slow and often inaccurate, requiring periodic revisions\. 14 55\. M&E utilization\. The M&E framework played a marginal role during much of project implementation\. This was partly due to reporting delays and data inaccuracies attributable to the implementing agencies (e\.g\., information on safeguards and community development activities and information on infrastructure construction progress)\. This marginal role of the M&E system may have also resulted from the PCU’s coordination focus on delivering a very large number of outputs spread across many implementing agencies\. 2\.4 Safeguard and Fiduciary Compliance 2\.4\.1 Procurement Compliance Rating: Unsatisfactory 56\. As explained previously, the project was implemented in two distinct phases: an initial phase covering the period between 2004 and 2011 (“original project”), and a second phase, AF, covering the period between 2012 and 2015\. Overall procurement performance for the entire project is rated Unsatisfactory\. 57\. During the implementation of the “original” project, procurement performance was rated Moderately Satisfactory, mainly due to the low implementation rate of the procurement plan and the lack of proactivity in preparation of procurement activities\. Performance was affected by several issues: occasional noncompliance with the procurement guidelines by the Regional Directorate for Environment and Forests (DREF); difficulties with the verification of land titling (which is a Bank requirement for the construction of buildings, such as Park interpretation centers); slow preparation of technical specifications and Terms of Reference; limited participation and interest by service providers (supplier, enterprises) caused by the earlier experience with EP2, during which payments had been slow and irregular; and lack of coordination between technical and procurement teams within the CELCO\. 58\. During the implementation of the AF, procurement performance was rated Unsatisfactory\. Procurement activities encountered a number of issues related to the recruitment processes and the execution of contracts\. In 2013, a senior procurement consultant and a procurement technical assistant were recruited to support the procurement team to improve compliance with the Bank procurement guidelines and to reduce delays\. Initial procurement arrangements were revised during project implementation; in particular, the management of the majority of infrastructure contracts planned for MNP was delegated to the Intervention for Development Fund (Fond d’Intervention pour le Développement, FID) project PCU, which was more familiar with management of infrastructure construction works\. However, construction works experienced delays even under this arrangement\. 59\. Concerning activities related to the management of precious woods stockpiles, feasibility studies were conducted on time\. However, the subsequent field operations to undertake the counting and physical marking of seized stockpiles were initiated with major delays, and some activities were initiated only 45 days before the project closing date\. In spite of this, except for a limited number of sites for which the team conducting the marking could not obtain access authorization, the activities were completed according to the contract\. 15 60\. Ex-post reviews were conducted regularly throughout project implementation\. Recommendations were formulated in the mission Aide Memoires with the aim of improving the management of procurement matters (e\.g\. compliance with the proposal/offer preparation timelines, payment periods, and inadequate charging procedures with respect to the IDA funds)\. Every mission verified the compliance with the recommendations of the previous mission and monitored the preparation and approval of Annual Work Plans and Procurement Plans for the corresponding period\. The ex-post review of providers’ contracts by the Bank led to the identification of a number of episodes suggesting noncompliance with the Bank procurement guidelines\. 2\.4\.2 Financial Management Compliance Rating: Moderately Unsatisfactory 61\. Financial Management performance varied between Moderately Satisfactory and Unsatisfactory\. The main reasons were questionable and ineligible expenditures identified resulting mainly from undocumented expenditures\. The 2014 EP3 financial statements audit pointed at anomalies with respect to financial management and procurement procedures as part of the implementation of component B, especially the income-generating activities around the PAs managed by MNP\. An independent external “value for money” audit carried out during the October 2013 - July 2014 period identified US$ 2 million in potential ineligible or questionable expenditures, and the subsequent review by the fiduciary team carried out between June 2014 and November 2015 confirmed that a total of 885,054,310 Ariary (US$ 307,000 equivalent) were not disbursed in accordance with Bank rules and procedures\. These expenditures were declared ineligible\. A notification letter was sent to the Government including a request for reimbursement\. Following a downward adjustment in the amount deemed ineligible and progress achieved in the resolution of the issue (i\.e\. notification sent to the Government and letter received from the Government with commitment to pay by June 2017, although at the time of this ICR repayment had not begun yet), the final Financial Management rating was Moderately Unsatisfactory\. 2\.4\.3 Safeguards 62\. The project was rated throughout as “B – partial assessment” in terms of environmental category, and four safeguards policies were triggered at approval: Environmental Assessment (OP 4\.01), Natural Habitats (OP 4\.04), Indigenous Peoples (OP 4\.10) and Involuntary Resettlement (OP 4\.12)\. There was no significant deviation or waiver from the Bank safeguards policies and procedures during preparation and implementation\. Three safeguards instruments (Environmental and Social Management Framework (ESMF), Process Framework (PF) and Indigenous People Plan (IPP)) were prepared by the borrower, approved by the Bank and disclosed in-Country and through Infoshop during project preparation\. Environmental Aspects Compliance Rating: Satisfactory 63\. At the end of project implementation, the environmental safeguard rating was Satisfactory\. The PAs had been delimited in compliance with the conservation management plans developed with local communities based on the sensitivity of ecosystems and biodiversity found in individual sites\. 16 64\. In compliance with the ESMF, an Environmental Impact Assessment with an Environmental and Social Management Plan (ESMP) was prepared for each PA created or extended with project financing\. This was done using a participatory approach to delimit and elaborate the zoning in the PA\. Mitigation measures were developed and appropriately implemented by the project, with the aim of preserving ecosystems and maintaining the existing biodiversity\. The environmental safeguards documents were disclosed in the project area and through Infoshop before the implementation of project activities\. Local communities actively and satisfactorily participated in the management of the PAs\. Conservation measures were implemented, including: community surveillance groups; preparation of fire breaks to avoid wild fires in the PAs; ecological and biodiversity surveys\. The ESMPs developed and implemented by the project were appropriate and sufficient to reduce the identified risks and potential impacts\. Social Aspects Compliance Rating: Moderately Unsatisfactory 65\. At the end of project implementation, the social safeguards rating was Moderately Unsatisfactory\. 66\. In compliance with the ESMF and the Process Framework, 13 safeguard plans were prepared, approved by the Bank, and disclosed in Country and through the Infoshop\. In addition, the Government of Madagascar submitted a commitment letter, accepted by the Bank, that all creation and extension of PAs in the country would be conducted in a manner that would not cause any physical displacement of communities and local populations\. Therefore, no Resettlement Policy Framework (RPF) was prepared for the project\. The 13 safeguard plans were prepared following a participatory approach to identify all impacts on communities due to the access restrictions and the loss related to the restricted collection of natural resources in the PAs by the local populations\. Mitigation measures to reduce the impacts on the daily activities of local communities were proposed, and local communities were meant to play an active role in the restoration of economic well-being\. 67\. The financing strategy for social safeguards intended to piggyback on parallel rural development projects\. EP3 was prepared in parallel with three other Bank financed projects: (i) the Rural Development Support Project; (ii) the Community Development Project; (iii) the Rural Transport Project\. The social safeguard aspects of EP3 were designed in a way that all impacts on communities caused by access restrictions to natural resources in the EP3 project zones and the consequent community development activities would be financed and implemented by these three ‘companion’ projects\. During project implementation, supervision missions confirmed that local populations living inside PAs were maintained in their own villages\. The process of PAs delimitation was done through strong public consultations led by the project itself\. However, despite all the efforts and coordination put in place across the different projects, implementation was affected by conflicting project implementation schedules, interventions and programming which in the end resulted in no funds available for the social activities from the other projects\. Since the original EP3 had allocated no budget to the social safeguard dimensions in the cost table (i\.e\., to finance the activities in the safeguard plans such as community development activities and compensation of household income lost due to the access restrictions to the natural resources), at MTR the project was restructured to reallocate US$ 2 million to finance the mitigation measures to reduce all impacts of access restriction to natural resources with the activities identified in the safeguard plans\. 17 68\. Since the budget allocated at MTR was insufficient to implement the restoration of economic activities for project-affected households, the AF contributed US$ 6 million in additional budget\. The initial safeguards plan survey had identified 26,952 Project Affected People (PAPs) (Table 2)\. A survey conducted in 2015 showed that 4,028 PAPs dropped out of project-financed income restoration activities (because of relocation, migration, death or other reasons)\. Thus, the project ended up supporting the restoration of economic activities to the 22,924 PAPs in and around supported PAs\. In general, the principles and directives of the process framework and the safeguards plan for each PA have been respected\. The project- financed activities aiming at restoring the economic well-being of households affected by the access restrictions due to the creation of the PAs have been implemented\. However, the survey conducted in 2015 showed that the affected households have not seen their incomes restored to the levels before the creation of the PAs\. The audit noted that 7,819 of the 22,924 identified PAPs saw their incomes restored to appropriate levels, resulting in a 34 percent compensation rate\. 69\. The results of resettlement audit on the implementation of safeguards plan in each PA have been approved by the Bank and are considered coherent\.11 Detailed activities with action plans and budget were identified for every household that has not yet seen its income restored to a level commensurate to the one before the creation of PAs\. With the aim of supporting the realization of such activities beyond project closure, EP3 AF proceeds equivalent to US$ 2,900,000 were transferred to a Sinking Fund managed by FAPBM during the last EP3 restructuring in December 2015\. Table 2\. Summary of PAPs situation PA Number of PAPs Number of PAPs having Number of PAPs Number of identified by the dropped out of restauration fully compensated PAPs still safeguard plan economic activities From resettlement requiring survey (relocated, migrated, audit compensation (1) deceased, other reasons) (3) (1)-(2)-(3) (2) MNP (10 11,058 1,366 3,962 5,730 PAs) CAZ 2,500 1,488* 1,012 COFAV 10,947 2,287 1,116 7,544 Makira 2,447 375 1,253 819 Total 26,952 4,028 7,819 15,105 * This figure is the sum of (2) and (3) for CAZ 70\. Implementation of safeguard instruments in the sector has recorded an improvement on the management of social and environmental dimensions to be taken into account to ensure the correct implementation of the Conservation Management Schemes of PAs and to improve understanding in terms 11 According to paragraph 24 of OP 4\.12 and to paragraph 16 of BP 4\.12: “The borrower is responsible for adequate monitoring and evaluation of the activities set forth in the resettlement instrument\. The Bank regularly supervises resettlement implementation to determine compliance with the resettlement instrument\. Upon completion of the project, the borrower undertakes an assessment to determine whether the objectives of the resettlement instruments have been achieved\. The assessment takes into account the baseline conditions and the results of resettlement monitoring\. If the assessment reveals that these objectives may not be realized, the borrower should propose follow- up measures that may serve as the basis for continued Bank supervision, as the Bank deems appropriate”\. 18 of ownership of PA management by the PAPs and potential threats in terms of PA integrity in the future\. Following one of the project activities, the Government now counts on background studies that would allow it to develop national standards for the implementation of social safeguard aspects related to the management of PAs (including those financed by the project)\. 2\.5 Post-completion Operation/Next Phase 71\. Madagascar’s unique biodiversity is not only a world heritage but can be a growth engine favoring poverty reduction efforts and shared prosperity\. While the World Bank’s 26 years of uninterrupted engagement reaches a key milestone with the closing of the Environment Program, efforts to preserve biodiversity while promoting better livelihoods are as important as ever\. The Bank is currently pursuing a suite of options to support the agenda, including: (i) the sustainable management of resources at the landscape level; (ii) the support of a national strategy for Reducing Emissions from Deforestation and Forest Degradation, and fostering conservation, sustainable management of forests, and enhancement of forest carbon stocks (REDD+) and the development of forest carbon purchase deals with international donors; (iii) technical assistance on dealing with precious woods\. 72\. The Bank and GOM have agreed to the preparation of the US$ 65 million Sustainable Agriculture Landscape Project (P154698/P157909), which to a large extent is expected to fill the vacuum created by the closing of EP3\. The project PDO is to improve agricultural productivity and management of associated natural resources in selected landscapes, a multi-sectoral objective grounded in the principle that the sectoral approaches adopted so far, of which the Environment Program is a notable example, are ill-suited to address risks that are found outside the boundaries of the sector\. The Environment Program implementation showed that pressures on PAs and forests come from low agricultural yields, weak enforcement and rule of law, and little participation of decentralized government\. EP3 implementing agencies, such as MNP, FAPBM, CI and WCS have only partial control over these factors\. Deforestation has to be dealt with by giving sustained development opportunities to local communities, while agricultural productivity relies on effective watershed planning and water resources management\. In the past, these problems have not been dealt with in an integrated way\. The vision for the future of watershed management is to strengthen the links between agriculture and environment, both on the Malagasy and the Bank sides\. The design would contemplate the full spectrum of the agriculture-environment and development- conservation nexus\. 73\. Achieving sustainable financing of conservation at scale will take time and in the short term, the country should exploit the opportunities linked to carbon finance\. The work to establish a forest carbon reference level done under EP3 showed that there is a largely unexploited potential for generating carbon credits from avoided deforestation and from degraded forests restoration\. The Bank is providing ongoing support to scale up REDD+ capabilities in Madagascar\. Through a grant made available through the Forest Carbon Partnership Facility (FCPF), the Bank is supporting Madagascar in reinforcing institutional capacity for REDD+, develop a national strategy, develop a national reference level for emissions from deforestation and forest degradation and other aspects necessary for implementing REDD+ at a national scale\. This support has allowed the country to enter the Carbon Fund pipeline for a potential Emission Reduction Purchase Agreement (ERPA) of US$ 50 million\. If successful, this ERPA will provide important co- financing to the Sustainable Agriculture Landscape Project mentioned above\. 19 74\. With respect to local community development, the AF has played a key role in financing income restoration for local communities, in spite of mixed results on the ground\. To ensure a smooth transition after project closure, funds were reallocated in December 2015 to a sinking fund managed and set up at FAPBM that will allow implementing entities managing relevant PAs (MNP, CI, WCS) to support sustainable revenue generating activities (rice growing, chicken farming, honey production, fishing, cattle ranching, and other generally small scale activities linked to the agricultural, livestock and fishery sectors) benefitting households whose livelihoods have been affected by the enforcement of PAs\. It is estimated that livelihood restoration activities will amount to about US$ 2 million and will benefit an estimated 15,000 households (this was estimated based on the experience with previous safeguards work financed by the EP3 Support project)\. The sinking fund, established in December 2015, is governed by agreements between the FAPBM and the PAs managers (MNP, CI, WCS) establishing the eligible activities to be financed, the calendar of disbursement, and the reporting procedures\. A portion of the sinking fund will be used to cover fund management fees by FAPBM and fees of implementing agencies, and to hire the services of a third party auditor that will provide quarterly reports to Government and the World Bank\. 75\. Following the EP3 support to the implementation of the CITES action plan for the species of Dalbergia and Diospyros from Madagascar, the World Bank, in partnership with the World Resources Institute, is finalizing an assessment of the scientific needs to correctly identify and monitor the status of these species, a critical condition for the CITES action plan and the eventual development of sustainable silvicultural activities\. The assessment, which constitutes the first systematic effort in this direction, has revealed significant gaps in the knowledge and available tools needed to implement the CITES action plan and to support the sustainable management of precious hardwoods in Madagascar\. But it has also revealed that a solid foundation exists for overcoming each of these gaps\. The country has a unique opportunity to harness the engagement and commitment of Malagasy experts and their international partners in a coordinated effort to develop the information base and tools that will be required to help transform the government’s aspirations into a structured and organized industry that makes a significant contribution to the national economy\. If the required resources can be mobilized, the successful establishment and implementation of such a program would be the first of its kind in the developing world\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation Rating: Substantial 76\. The relevance of the original project objective remained substantial throughout the project\. The objective clearly identified the need to contribute to the improvement of the quality of life of the population while improving management of biodiversity and mainstreaming conservation into sector programs\. This was in line with the Madagascar Action Plan (MAP), established in 2004, and is in line with the National Development Plan (NDP) 2015-2019, approved in 2014, as well as GEF’s Biodiversity Conservation Focal Area\. Specifically, the NDP 2015-2019 puts an accent on “inclusive growth and territorial anchoring of the development process” (Axis 3 of the NDP) and on “harnessing the value of natural capital and strengthening resilience to disasters” (Axis 5)\. The NDP recognizes that the fast pace of environmental degradation brings a heavy cost in terms of water, transport and agricultural infrastructure\. Moreover, law 2015-003, which updates the Malagasy Environment Charter established the general principles for environmental 20 management in the country and confirmed the key role PAs play in the country’s sustainable strategy\. Finally, the Environmental National Policy for Sustainable Development, stresses the importance of environmental conservation for promoting healthy livelihoods (e\.g\., by improving food security and access to energy, and by reducing environmental health risk factors)\. The relevance of the original project objective is substantial vis-à-vis the Country Assistance Strategy (2007-2011), which aimed at better management of the environment and explicitly referred to the establishment of 6 million ha of PAs, more transparent management of forest concessions, and better mainstreaming of environmental considerations into national policies\. Relevance was substantial with respect to the Interim Strategy Note (FY12-FY13), which explicitly refers to the continued protection of at least 32 national parks and to the social safeguards work\. Finally, relevance is substantial vis-à-vis the Systematic Country Diagnostic (SCD), which identifies the importance of closing the link between conservation and livelihoods\. 77\. The relevance of the original project design and implementation is modest\. The complex design proved difficult to implement and led to redesigning part of the project components to mirror the government’s priorities\. 78\. The relevance of the revised project development objective remained substantial throughout the implementation of the additional financing\. Its relevance is substantial to the MAP and the NDP\. Its relevance is also substantial vis-à-vis the country’s Interim Strategy Note, approved in 2011 and natural capital is a key opportunity for shared prosperity in the SCD elaborated in 2015\. The objective identified the need to target conservation efforts, an issue that is important today in light of the very limited, both nationally and globally, financial resources for conservation\. 79\. The relevance of the AF design and implementation is substantial\.12 The rationale for the AF stated that the political situation in Madagascar was not conducive to the use of other lending tools, such as a repeater project or a new project\. Termination of Bank support to PAs and conservation in Madagascar was not considered a feasible option given the status of the country’s natural resources as a global public good and the international community’s obligation to contribute to their conservation and their importance for the rural poor\. As such, AF was selected as the preferred mechanism\. Justifying a higher rating on this dimension is the fact that the design of the additional financing put a strong accent on critical PAs, community development and safeguards\. Implementation, moreover, has showed adaptability and flexibility in using project proceeds to address important governance issues related to the precious woods crisis\. On the other hand, the design removed the government from actual implementation, drastically reducing ownership by the client\. 80\. In terms of the GEO, the project was fully aligned with the Bank emphasis on climate change mitigation and adaptation, particularly with respect to the rural land use sectors of forestry and agriculture\. The vision promoted by the project, namely linking conservation to economic growth and to rural poverty 12 It is important to note how the PDO of the additional financing dropped the reference to improving livelihoods, somehow reducing the relevance of the PDO to the Bank’s and the GoM’s focus on reducing poverty\. It has to be noted however that the additional financing has a much more developed livelihood improvement component compared to the original project\. 21 reduction through nature-based tourism development, remains highly relevant to the Bank’s current natural resources management strategy\. 3\.2 Achievement of PDOs and GEOs Rating: Modest Original PDO: To improve the protection and sustainable management of critical biodiversity resources at the field level, mainstream conservation into macroeconomic management and sector programs, and facilitate the establishment of sustainable financial mechanisms for the environment, thus contributing to the improvement of the quality of life of the population\. (Overall achievement: Modest; Period: 8/2004 – 12/2011; Disbursement: US$40\.29 million)\. 81\. While monitoring and evaluation under this project has been particularly challenging, the assessment of each outcome is based on the progress of targets and indicators for which data is available\. When possible, additional information has been used to provide more detail and a better evaluation of project outcomes\. To improve the protection of critical biodiversity resources at the field level 82\. This objective was achieved to a “modest” extent\. The results of the Bank’s support to the environmental program are impressive in terms of establishment of PAs\. The project was instrumental to the increase of PA surface from 1\.6 million ha in 2004 to over 5 million hectares in 2009, enabling the formalization of a major effort toward habitat and biodiversity preservation\. Specifically, EP3 contributed to the materialization of the Durban Vision (September 2003)\. The project did less well in terms of representativeness of ecosystems: the level of representativeness of habitats in the system of PAs went from 87 percent in 2004 to 91 percent in 2009 (rather than 96 percent as originally envisaged)\. Moreover, PAs continued to be threatened by slash-and-burn practices and by illegal exploitation of timber and other natural resources (though at a significantly lower rate than other non-PAs)\. To improve the sustainable management of critical biodiversity resources at the field level 83\. This objective was achieved to a “modest” extent\. Despite the effort shown in the maintenance of areas of natural forests, and the relative success in conserving PAs, the results obtained on the management of forests and reduction of the process of degradation of natural resources outside PAs were disappointing\. The efforts made to promote sound forest management, reforestation, and combating forest fires were ineffective in reducing or stabilizing the deforestation rate, or in discouraging the use of wood for fuel or charcoal production\. The annual rate of deforestation rose from 1 percent during the initial phase of EP3 to 1\.9 percent from 2010 to 2013, considerably higher that the target of 0\.44 percent by the end of the project\. PAs however were less affected than other areas (0\.2-0\.5 percent versus 2\.4), demonstrating the relative success of the project in protecting the most critical ecosystems\. The current deforestation rate is equivalent to a loss of 122,957 ha of forest per year\. The highest deforestation rates have been recorded in Menabe (4\.05 percent), Atsimo Andrefana (2\.80 percent) and Alaotra Mangoro (2\.14 percent) Regions\. 22  To mainstream conservation into macroeconomic management and sector programs 84\. This objective was achieved to a “modest” extent\. On the one hand, a substantial number of projects and program conformed to the MECIE law on EIA (69 percent in 2009, against a target of 50 percent), but on the other hand, sector laws and policies have not adopted environmental sustainability as a key objective\. Moreover, training programs for government staff by the Ministry of Environment have progressed slowly (with 41 percent of the target being achieved between 2004 and 2009)\. To facilitate the establishment of sustainable financial mechanisms for the environment 85\. This objective was achieved to a “modest” extent\. The creation of the FAPBM as a private institution was part of the design of the initial phase of EP3\. FAPBM was created with the aim of generating sustainable financing for the PA system\. The US$ 7\.5 million of the original grant helped capitalize the FAPBM and place it as a key player in the sustainability of PAs management\. 86\. The project supported eco-tourism activities\. However the political crisis and insecurity have affected the number of tourists\. The number of tourists went from 88,000 in 2004 to 69,000 in 2009 (against a target of 134,000)\. To contribute to the improvement of the quality of life of the population 87\. This objective was achieved to a “negligible” extent\. While during the period 2004-2011 the project did not contribute in any substantive way to livelihood activities, the AF was key in covering a financing gap for community development and safeguards work\. In spite of this, the project outcomes were largely unachieved\. Only 42 percent of households adjacent to PAs have benefitted from park, natural resources and livelihood activities\. This was in large part due to implementation issues: MNP’s limited capacity to perform community development work, and lack of appropriate control on service providers leading to less than optimal allocation of resources and ineligible expenditures\. 88\. Households located adjacent to the PAs supported by the project benefited directly from technical and financial support to improve their livelihoods\. The number of subprojects awarded was 25,777 in 2014 and 27,182 in 2015, compared to the original target of 90,000 (revised down to 86,000)\. In the same years, compensation subprojects to eligible PAP benefited 7,840 and 9,245 PAP respectively, representing 63 percent and 74 percent of the annual target of 12,414 beneficiaries\. During interviews conducted in 2015, households living around only 5 of the 26 PAs surveyed expressed appreciation for the quality of the support provided by the project, including training, inputs, materials and tools\. In terms of indicators the number of direct project beneficiaries was 46,305 against a target of 129,605, of which female beneficiaries were 20,000 against 65,000 targeted\. In addition, the number of households adjacent to the PAs that have benefitted from park, natural resource and livelihood activities totaled 27,182 against a target of 86,000 households\. 89\. In addition, the majority of beneficiaries also participated in conducting community patrols (CLP)\. Although CLPs represent a valuable project initiative that contributed to raise awareness and increase understanding of the value of conservation among communities surrounding the PAs, participants of community patrols highlighted the risks faced when encountering illegal activities (hunters, miners, or precious wood loggers) and the low remuneration received during patrols (5,000 Ariary/day)\. 23 90\. Ecological monitoring, patrol activities, participatory ecological restoration and reforestation all helped recipients to become accountable for the conservation of biodiversity and ecosystem services, and to strengthen their capacity to undertake these activities\. As a result, unsustainable practices such as slash and burn and bush fires have largely been abandoned by the population targeted by the project in buffer zones surrounding the PAs, providing evidence of a positive behavioral change in favor of biodiversity conservation\. As noted above, deforestation has increased more in areas not targeted by the project than in areas targeted by the project\. 91\. A positive example of sustainable livelihood improvement is the community support through sustainable cotton private sector partnerships around the Mikea PA, supported by the JSDF grant added in 2012\. The project’s attempts to promote organic cotton production around the Mikea PA were largely unsuccessful due to the unusually high levels of pest infestation during the cotton growing season, which made impossible the total elimination of chemicals\. Still, the project has made substantial progress in promoting uptake of integrated pest management (IPM) practices, which allowed the cotton produced to be marketed under the African Better Cotton Initiative (BCI)\. Helvetas, the institution hired to implement key project components, is not only promoting this alternative among more than 2,000 cotton smallholder producers, but it also has identified a potential buyer for BCI cotton, thus improving the likelihood that the project will achieve its objective of developing a sustainable value chain\. As part of this effort, a farmer training center is being constructed in partnership with a local entrepreneur (Bionex) on land provided by the rural Comune of Ankililaoka\. The project closed in June 2016\. Revised PDO\. To enhance the protection and sustainable management of targeted PAs\. (Overall achievement: Modest; Period: 3/2012 – 12/2015; Disbursement: US$36\.35 million) To enhance the protection of targeted PAs\. 92\. This objective was achieved to a “substantial” extent\. The AF supported the definitive creation of an additional 1\.7 million ha of PAs\. By 2015, a total of 122 PAs were gazetted in Madagascar, of which 43 are managed by MNP, 63 NAPs are administered with support of international organizations and 16 are administered by the Ministry of Environment\. From the initial ecosystem representation rate of 87 percent, the expansion of the PA system has allowed the rate to increase to 100 percent by 2015\. Although the project allowed to control threats to the biodiversity of Madagascar, they still remain high\. The number of points of wild fires detected by satellites in PAs reached a high of nearly 2000 in 2013\. While the number had fallen to 990 in 2015, it was still very high\. The socio-political and economic crisis of 2009 affected the pace of progress and conservation efforts significantly, while poaching, gold and precious stones, and illegal logging of precious wood continue to challenge the biodiversity of the PAs\. To enhance the sustainable management of targeted PAs\. 93\. This objective was achieved to a “modest” extent\. In spite of the project’s support, the PA network remains largely dependent on external financing\. 94\. The AF supported a study for an institutional reform aiming at the financial sustainability of MNP management efforts\. The study identified a number of recommendations at the institutional level (e\.g\. role of the State and governance of MNP) and operational level\. Some of the study’s recommendations were 24 taken up, e\.g\. the increase in PA entry fees\. Other recommendations, e\.g\. diversification of management strategies by type of PA, outsourcing of ecotourism activities, have not yet been followed\. 95\. The AF contributed an additional US$ 10 million to the FAPBM endowment, bringing it to an impressive US$ 50 million\. The performance of FAPBM in the management of the invested capital (5\.3 percent return from capital investments abroad in 2014; Source: FAPBM, Annual Report 2014) has earned the Foundation considerable confidence of donors in the implementation of its activities\. During the AF, more specifically by the end of 2014, the added value generated by the FAPBM was estimated at US$ 5,725,780\. The Contribution of GEF/IDA, totaling US$ 17,500,000 (which represents 34\.8 percent of the total Capital of the FAPBM to date) has contributed US$ 1,992,571\. With these funds, the Foundation has been able to finance 40 percent of the recurrent costs of the 10 PAs managed by MNP\. 96\. Thanks to the support of EP3, a number of carbon projects have made their way into actual carbon deals\. The Makira carbon project, the most advanced of the REDD+ projects in Madagascar, is located in the Eastern humid forests in the northeast of the country\. The project is managed by WCS and is expected to have a 30-year life span, with an estimated 38,000 tons of avoided carbon emissions during this period\. A REDD+ sale of about US$ 400,000 was concluded in 2014 with Microsoft\. The CAZ carbon project is also located in the country’s Eastern humid forest and is being managed by CI\. The CAZ project has certified over 3 million Emission Reductions (ER), of which the BioCarbon Fund (BioCF) has agreed to purchase 430,000, for an equivalent of US$ 1\.5 million (expected to be finalized in 2016)\. 97\. In terms of eco-tourism, the number of visitors was stable at around 150,000 visitors per year (after having recovered from the 2009-2010 drop)\. In 2012-2013 the political environment was still very tense, with elections taking place in December 2013, and in 2012-2013 the protracted crisis was having consequence on security with a number of accidents involving tourists (sometimes in PAs) taking place\. The project had envisaged support to Public-Private Partnerships in eco-tourism but partly owing to the crisis and low capacity in MNP, no tourism concession has been fully achieved during the project’s course\. GEO: To contribute to the preservation of the quality of regional and global commons through improved natural resources management and biodiversity protection in critical ecological regions, defined as national PAs and their corresponding buffer zones and corridors\. (Overall achievement: Modest) To contribute to the preservation of the quality of regional and global commons\. 98\. This objective was achieved to a “substantial” extent\. The network of PAs supported by the project is important not only in terms of area, but also in terms of diversity, because it affords broader representation of the different ecosystems that comprise the natural wealth of Madagascar\. From the initial ecosystem representation rate of 87 percent, the expansion of the PA system has allowed the rate to increase to 91 percent by 2009 and to 100 percent by 2015\. To improve natural resources management and biodiversity protection in critical ecological regions, defined as national PAs and their corresponding buffer zones and corridors\. 99\. This objective was achieved to a “modest” extent\. See explanation in related sections above\. 25 Summary 100\. Overall, 27 percent of the project indicators exceeded target, 22% achieved target and 57% were not achieved\. The table below summarizes the overall indicator achievement\. Table 3\. Indicators achievement Total Achieved Not achieved indicators On target Over target PDO 15 6 40% 3 20% 9 60% GEO 3 0 0% 2 67% 1 33% Int\. Result 33 5 15% 9 27% 19 58% Indicators Total 51 11 22% 14 27% 29 57% 101\. Because some of the project objectives under each of the PDOs and the GEO overlap, one can identify five key objective categories: (i) biodiversity protection; (ii) mainstreaming conservation into macroeconomic management and sector programs; (iii) sustainable management for the environment; (iv) sustainable financing; (v) improvement in the quality of life of the population\. The bearing of each of outcome category to the original PDO, the revised PDO and the GEO is summarized in Table 4 below\. 102\. Overall achievement of the objectives was modest\. EP3 contributed substantially to achieving the objectives stated in the Durban Vision\. Over 860,000 hectares of PAs (five new PAs and six expansions) were developed under EP3\. In addition, the project provided support to the management of 1\.9 million hectares of PAs, representing nearly one third of the network, including 60 percent of national parks (28 parks covering 1\.6 million hectares) and 10 percent of new PAs (the COFAV covering 0\.3 million hectares)\. Safeguards were implemented for 26,000 households, but only 60 percent of targeted PAPs were compensated\. EP3 supported the initiation of sustainable financing sources for the network, notably through capitalization of the Foundation and preparation for the entry of Madagascar into the carbon market\. Table 4\. Outcome categories under PDOs and GEO of EP3, importance to PDO/GEO and degree of achievement Outcome Outcome category Original PDO Revised PDO GEO achievement (i) Biodiversity and PA High (explicit) High (explicit) High (explicit) protection Achievement Modest Substantial Substantial Substantial (ii) Mainstream conservation into macroeconomic High (explicit) Negligible Negligible management and sector programs Achievement Modest n/a n/a Modest (iii) Sustainable management of biodiversity High (explicit) High (explicit) High (explicit) and PAs Achievement Modest Modest Modest Modest (iv) Sustainable financing High (explicit) High (implicit) High (implicit) 26  Achievement Modest Substantial Substantial Substantial (v) Improving the quality of Modest (explicit) High (implicit) Negligible life of the population Achievement Negligible Modest n/a Negligible Overall achievement of Modest Modest Modest Modest objectives 3\.3 Efficiency Rating: Modest 103\. Efficiency is rated “modest” for both the original project and the AF\. 104\. As shown in Table 5, the Net Present Value (NPV) of the project is slightly negative, with a value US$ -4\.6 million\. This value however switches sign, i\.e\. the NPV is nil, for a slightly higher global value of biodiversity, i\.e\. US$ 3\.425 per hectare instead of US$ 3 per hectare (a 14 percent increase) assumed at appraisal\. The economic analysis shows how the assumed value may actually be quite conservative and how a US$ 5 per hectare may be a better benchmark\. 105\. Total project costs, including conservation management costs and forgone revenues for farmers and communities faced with access restrictions, came to about US$ 305 million\. Costs were higher than originally envisaged\. This was in large part due to the increase in forgone revenues for farmers compared to the counterfactual without project, since PAs experienced much lower deforestation rates than non-PAs\. Forgone revenues from unsustainable timber production also contributed to this difference\. 106\. Total project benefits are estimated at US$ 300 million\. The most important contribution is from watershed management services provided by the area under protection\. REDD+ carbon revenues, which came towards the end of the period of analysis, contributed relatively little to benefits, but are likely to become a growing source of revenues for conservation efforts\. Table 5\. Ex-post cost/benefit of natural forests conservation (US$ million) Present value (10%, 15 years) Protected Conservation Management Total Areas Sites Transfer sites Management costs -48\.3 -33\.3 -8\.5 -90\.0 13 Tavy foregone revenues -64\.9 -74\.7 - -139\.6 Fuelwood foregone revenues -20\.2 -23\.9 - -44\.1 NTFP foregone revenues -10\.4 -15\.7 -5\.2 -31\.3 13 Tavy: conversion of forest into agricultural land through slash and burn 27  Total costs -143\.8 -147\.6 -13\.7 -305\.0 Biodiversity conservation 32\.5 39\.4 71\.9 Eco-tourism 58\.7 58\.7 Watershed protection 60\.7 87\.0 147\.7 REDD+ 0\.6 0\.6 Sustainable fuelwood collection 8\.5 8\.5 Sustainable NTFP collection 13\.1 13\.1 Total benefits 151\.9 127\.0 21\.6 300\.4 NPV 8\.1 -20\.6 7\.9 -4\.6 IRR -- -- -- -- 107\. From a financial point of view, one can identify three key stakeholders: (i) Madagascar National Parks; (ii) farmers and local communities; (iii) the global community\. 108\. With respect to MNP, results are mixed\. While the Foundation has surpassed its capitalization target of US$ 50 million, a slump in the financial markets has meant that the revenues generated have been less than originally expected\. Moreover, the political crisis has held back much of the tourism development potential of the country, which means in turn that this source of endogenous financing has not grown as much as it should have\. As a result, MNP today still depends on international partners for the financing of about 80 percent of its recurrent costs\. With the closing of the AF, MNP faces a financing gap of Euro 10 million over the next five years\. 109\. From the local communities’ standpoint, the analysis shows that net costs to farmers and local communities could have been in the order of US$40 million\. This was due to relatively high forgone slash and burn and unsustainable timber harvesting earnings (compared to the without project scenario)\. This estimate excludes the efforts made to compensate farmers both directly through EP3-financed community development support activities and indirectly through the support provided by companion projects such as the Social Protection and the Rural Development Support IDA-financed projects\. However, the economic analysis shows that even if 100 percent of the additional financing project proceeds used for livelihood development and safeguards are accounted for, this would not be enough to fully compensate the opportunity cost imposed by the project on communities\. 110\. From the point of view of global biodiversity, it is estimated that the Project produced sizeable benefits, i\.e\. in the order of US$ 70 million (see Annex 3)\. This compares very well to the GEF financing which totaled US$ 17\.5 million over the project period\. 3\.4 Justification of Overall Outcome and Global Environment Outcome Rating Overall Outcome Rating: Moderately Unsatisfactory 111\. The overall outcome of the original project (2004-2011) is rated moderately unsatisfactory, based on substantial relevance of objectives, modest relevance of design and implementation, modest achievement of objectives, and modest efficiency\. Although partially justified by the prevailing positive environment at project preparation (including the Durban Declaration), project objectives and design were assessed as overambitious, a major quality-at-entry factor which negatively affected implementation\. Achievement of outcomes has been mixed\. On the one hand, the project effectively increased the areas 28 under protection, but on the other hand, it only partially achieved the mainstreaming objective and the sustainable financing objective\. 112\. The overall outcome of the AF (2012-2015) is rated as moderately unsatisfactory, based on substantial relevance of objectives, modest relevance of design and implementation, modest achievement of objectives, and modest efficiency\. The realistic focus of the objective is still relevant today, but the exclusion of government staff from implementation was a major drag on ownership\. Achievement of outcomes has been mixed\. The AF effectively allowed the continued protection of targeted PAs during a very difficult historical period for the country\. The project also allowed to increase the FAPBM endowment fund and provide valuable support for REDD+\. Moreover, the project allowed the Government to tackle, for the first time, the important governance challenges around precious woods\. However community development and safeguards implementation faced serious shortcomings and represented a major constraint affecting the project’s overall outcome\. 113\. In general, the outcomes of EP3 can be summarized as having achieved significant levels of conservation with limited relevance for development\. Project support contributed substantially to impressive levels of conservation in PAs, but with insufficient results in areas surrounding the PAs, and limited progress in addressing threats\. In spite of the achievements in biodiversity conservation, the project was affected by a number of design shortcomings and implementation delays that affected the overall outcomes, particularly in relation to a number of the original indicator targets, which by the time of the MTR had been recognized by both the Bank and the counterpart as having been too optimistic\. 114\. Efficiency results are mixed\. Sustainability is threatened by a lack of strong political will, limited capacity-building for the administration, and most importantly the shortcomings in developing self- financing mechanisms and achieving the necessary interaction between PAs and communities\. Other than ecotourism, few, if any, meaningful results were achieved regarding the development of economic opportunities valuing biodiversity and making it an engine of sustainable economic development\. The influence of the political and economic crisis resulted in the increased utilization of natural resources more as a safety net than a sustainable source of improved livelihoods\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 115\. Employment: The rate of 'official' unemployment in Madagascar remains low (2\.2 percent)\. Unemployment is primarily an urban phenomenon, reported as 5\.5 percent in towns and only 1\.4 percent in rural areas\. In areas peripheral to the PAs, the unemployment rate is very low thanks to activities related to ecotourism: employment in hotels and restaurants, provision of guide services, production and sale of agricultural products and accessories\. However, the results of the sub-projects compensation or income- generating activities (sub-projects of social safeguards, sub - CLP, VOI, AP mature, community ecotourism projects) are far from being satisfactory\. 116\. Health: Malaria, diarrhea and respiratory diseases are the main diseases in areas peripheral to the PAs\. Tangible impact of the project on population health included opportunity to access medical treatment 29 for people living around PAs\. In general, the health care services are funded by PA visitor entry fees or funds from sub-projects\. 117\. Education: The impact of the construction and rehabilitation of schools in the outlying areas of PAs is significant at the local level\. Sometimes accompanying measures such as the training of teachers and the establishment of school canteens are indispensable\. Concerning environmental education, since 2007 the rate of integration of environment into the curriculum remains stable: 50 percent in 25 percent in private institutions and public institutions\. (b) Institutional Change/Strengthening 118\. The initial phase of EP3 included considerable resources to support institutional strengthening and reform, spanning from agencies directly involved in environment and biodiversity conservation at the central and regional level, as well as other public institutions, where efforts to mainstream environmental aspects were actively pursued\. However, these much-needed activities were unfortunately discontinued with the enforcement of OP 7\.30, as support to public institutions was suspended\. 119\. Following the exception granted to the project, the AF was designed to maintain the status quo in terms of the well performing implementation arrangements of EP3, while at the same time responding to the prevailing political instability in Madagascar\. The existing PCU (known locally as CELCO) which had been operating autonomously since the beginning of the political crisis, including during the exception phase (January 2010 – June 2011), has been proven to be relatively competent and staffed with IDA- financed professional specialists\. As such, CELCO remained in place as the implementing unit for the AF\. 120\. Two additional project implementing entities were included in AF design to undertake operational activities\. MNP – an institution that is legally and financially autonomous and that works at arms-length from the administration – carried out activities in 30 national parks, while the FAPBM – an equally autonomous entity – was expected to carry out activities aimed at strengthening its own technical and management systems and provide financing to 10 PAs using the revenues from the Endowment Fund\. In addition, a subset of activities was implemented by the private sector, namely the three main international conservation NGOs (CI, WWF and WCS) involved in the management of three corridors\. 121\. Specifically, the IDA contribution to the AF was managed by the existing CELCO, which was further strengthened and supported by the Bank\. The IDA funds were channeled directly through the PCU to contract the autonomous project implementing entities (MNP and the civil society organizations - CI, WWF and WCS), and indirectly through FAPBM\. 122\. The significant changes regarding the institutional arrangements for the different phases of EP3 are illustrated in Table 6\. Table 6\. Evolution of institutional arrangements of EP3 Institutions EP3 EP3 Extension AF CELCO/UCPE X X X ANGAP/MNP X X X DGF X X DGE X ONESF X 30  ONE X FAPBM X X X WCS X CI X 123\. The provision of equipment helped to improve the general working conditions within the implementation agencies, both from the technical and managerial point of view\. Time-saving, good reporting, staff motivation were among the main benefits\. However, it is important to mention that the acquisitions suffered from inadequate operation and maintenance\. 124\. At the decentralized level, the project made efforts to support the integration of the environmental dimension through the creation and operation of regional environmental boards at the national and regional levels (24 out of the 20 planned); 22 environmental cells have been set up against the 15 planned\. Out of a forecasted number of 61 environmental permits, a total of 65 permits have been issued in the context of the implementation of the MECIE Decree\. 125\. The Steering Committee of the project (CPP) was introduced on January 30, 2012 according to order No\. 1395/2012/MEF on the establishment of the CPP of the AF of the PE3\. The Committee was composed of 12 members, including the Coordinator of UCPE which provided its secretariat\. Following the recommendations of the Bank, the number of CPP members was increased to 17\. In addition to 12 representatives of the Ministry of environment and forests, the Ministry of finance, MNP, the Foundation and three NGOs, five other members were appointed, including three representatives of the three Corridors (Makira, CAZ and COFAV), one each for the National Tourism of Madagascar and the communities around 30 parks in the MNP network\. 126\. The creation of FAPBM as part of the project is a key feature and represents a highly relevant factor towards achieving the PDO\. The creation of the FAPBM as a private institution was included in the design of the initial phase of EP3\. It was created for the sustainable financing of the PA system\. Thus, its performance is closely linked to the performance of both the initial EP3 and the subsequent AF, since US$ 7\.5 million of the original credit helped establish the FAPBM capital and an additional US$ 10 million were allocated for the financing of 10 PAs as part of the AF\. Its creation is therefore aligned with the national policy to increase the area of PAs\. The Foundation’s demonstrated effectiveness and efficiency in the management of the invested capital (11\.9% return on capital investments) has earned the Foundation considerable confidence of donors in the implementation of its activities\. 127\. The relevance of FAPBM has been reduced by the fact that the sustainability of the actions financed by the resources mobilized is not entirely guaranteed, mainly due to its limited financial coverage and to a lack of integration of conservation with development\. Given that FAPBM is assessed not only by financial outputs, its performance is affected by the absence of actions to attend the basic needs of local communities\. The creation and operation of the FAPBM therefore follows (or continues to follow) an approach to conservation which has already shown as being ineffective to ensure the integrity and sustainability of the individual PAs and the entire system\. (c) Other Unintended Outcomes and Impacts (positive or negative) -- 31 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 128\. A beneficiary survey was conducted from October to December 2015\. The survey covered 32 PAs and 766 beneficiaries participated in the survey\. The survey concluded that beneficiaries were satisfied with the overall project results\. However, the majority of PAPs were not satisfied with the compensation activities\. 129\. A stakeholder workshop was held on December 22, 2015\. Over 200 people participated in the workshop, including Government, technical and financial partners, international and national NGOs, civil society and private sector representatives\. The majority of the participants agreed that creation of PAs was relevant\. Nevertheless, 19 percent of the participants argued that PAs were not well-managed and a number of improvements in terms of management were crucial to ensure sustainability and local community ownership\. 4\. Assessment of Risk to Development Outcome and Global Environment Outcome The risk to development outcomes is High 130\. The main risks are linked to the political fluctuations that took place during the life of the project, which rendered policy dialogue difficult\. Moreover, a variety of factors generated negative perceptions on the part of stakeholders (e\.g\. slow progress on community development activities generated frustration by farmers and forest users)\. Had the Bank closed the EP3 Support project in 2009, as originally scheduled, it would have exposed the country’s unique biodiversity and would have placed at risk nearly 20 years of successful Bank support for the protection of Madagascar’s biodiversity assets\. Without a continuation of this support, permanent losses of the unique global patrimony are likely to occur, arguably giving rise to an emergency situation that will increase the reputational risk to the Bank as existing environmental and social safeguards will lapse, and completion of safeguards for all PAs supported by EP3 will not be achieved\. 131\. The AF was expected to build on this experience of the Bank in the environment sector in Madagascar to optimize project efficiency and manage the risks associated by establishing adequately robust implementation arrangements, specifically by ensuring that key institutions involved in project implementation were independent and had the technical and fiduciary capacity to fulfill their project related responsibilities\. 132\. MNP sustainability: sustainability remains uncertain, because it is obvious that the organization can survive only if revenues from ecotourism can cover research costs and other expenses\. The revenue generated through the FAPBM are still far from sufficient\. Although the operational sustainability of the Foundation itself is guaranteed through the returns of the endowment fund, it has to be reflected on the real impacts of actions on sustainable development, and therefore on the integrity of the PA system\. The main potential risk that could affect the sustainability of the Foundation would be the interference by external actors (such as the State or Technical and Financial Partners)\. Good governance in the financial and technical management of the Foundation (transparency, accountability and participation), and active fundraising for the identification and development of new sources of financing are key factors to the long- term contribution of the Foundation to the sustainable conservation of Madagascar’s biodiversity\. 32 133\. EP3 has been affected by bad governance (widespread corruption), which has undermined its ability to contribute to the eradication of illegal trafficking, mainly of precious woods, in PAs\. The political crisis in 2009 led to the non-recognition of the government by the international community (2009-2013)\. Thus, funding was suspended and the project was restructured in 2009 and 2012\. The pursuit of the intervention rationale of the three Bank-funded phases was disrupted\. It has contributed significantly to the major risks of potentially rapid deterioration of the PDOs and GEOs\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 134\. The initial preparation of EP3 was strongly influenced by three major factors (i) the prevailing optimism (and challenge) resulting from the Durban Declaration; (ii) the guidelines imposed by HIPC and IDA policies for countries such as Madagascar; and (iii) the fact that EP3 represented the last phase of the Bank’s support to Madagascar’s EP\. 135\. Despite the commendable preparation efforts to accommodate these somewhat opposing elements, project design was clearly impacted and resulted in some weaknesses\. These included overly ambitious objectives, targets, and institutional arrangements, an unrealistic project scope, and the need to develop the required link between environmental benefits and poverty alleviation as required by IDA and HIPC\. (b) Quality of Supervision Rating: Moderately Unsatisfactory 136\. The Bank proactively identified and addressed threats to the achievement of relevant development outcomes (see Section 2 for details)\. The team proactively identified and resolved threats during a turbulent period when the project faced a very dynamic context which included a political crisis in 2009, the establishment of a transition government in 2010, a new (elected) government in 2014 and a government reshuffling in 2015 (the project was overseen by at least five ministers of environment) (see also section 2)\. Proactive project supervision is exemplified by the ability to tackle governance issues related to precious woods traffic and by the ability to make progress on key issues such as REDD+ readiness\. Sector/Global Practice Management provided adequate support to the team with timely guidance (e\.g\., to deal with slow progress on community development and infrastructure construction during the AF) and continued attention\. Supervision budget was not reported to be a constraint\. 137\. However, the decision to resume disbursement after the political crisis and to extend the closing date to June 2011, and the subsequent decision to process an additional financing and extend the closing date by three years (and then one more year), while not working directly with government, increased substantially the risk of failure\. These decisions were deliberate and taken in order to avoid the (higher) risks of inaction, but put the project against a very difficult reality\. After 2009 the project faced increasing 33 difficulties including: weak government ownership; virtually absent law enforcement by forest agents; increased pillage of natural resources from PAs; very little private sector appetite to invest in ecotourism infrastructure\. All these factors limited the project’s chances to achieve its objectives\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 5\.2 Borrower Performance (a) Government Performance Rating: Unsatisfactory 138\. The Government’s ownership and commitment to the successful implementation of EP3 can be split in two dimensions: (i) a high-level political dimension; and (ii) an operational dimension\. High-level political commitment was marked by the signature of the 2003 Durban Declaration, with its engagement to increase the PAs network, and the stated intention to curb the illegal exploitation of precious woods\. The government also contributed to the ambition of the EP3 agenda\. At the operational level, honoring of these commitments fell very much short of expectations, as evidenced by the negligible public budget allocated to PAs management, the very limited number of forest law enforcement agents detached to parks, the reported corruption in dealing with offenders of the forest laws at the judicial level, the inadequate implementation of the law on land management transfers to local community (GELOSE, from its French acronym), among other things\. The political crisis of 2009, and the resulting decision of the Bank and other development partners to withdraw financing have contributed to this weak performance\. (b) Implementing Agencies Performance Rating: Moderately Unsatisfactory\. 139\. The project was implemented by CELCO (which changed its name to UCPE for the AF), ANGAP (which changed its name to MNP in 2008), ONE, FAPBM, WCS and CI\. CELCO/UCPE performed in an unsatisfactory manner, particularly in terms of readiness for implementation (hiring of the Director of Operations was done way into the project implementation), timely resolution of implementation issues (action to address delays in infrastructure work took time), procurement issues (noncompliance with the procurement guidelines, slow preparation of technical specification and terms of reference), fiduciary issues (particularly related to ineligible expenditures on community based support), adequacy of monitoring and evaluation arrangements (reflections on the results framework were often an afterthought)\. ANGAP/MNP also performed in a unsatisfactory way\. While implementation of the conservation activities work plan took place as envisaged, delays kept accumulating requiring periodic amendments to the subsidiary agreement with UCPE\. MNP showed tangible weaknesses in implementing and supervising infrastructure construction works and in community development activities\. FABPM performed satisfactorily, particularly in terms of its ability to consult regularly with MNP and in coordinating with other partners\. WCS and CI performed in moderately satisfactory way as they executed their contracts in a timely manner\. 34 (c) Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory\. 6\. Lessons Learned 140\. Multi-donor projects may impose constraints that could affect quality at entry\. The EP3 project was built on the government-led EP3 multi donor program\. The latter was characterized by a very ambitious and all-encompassing set of objectives, reflected in the project’s ambitious and overly complex results framework\. For future projects, it would be important to clearly identify a narrow and well defined area of the government program that the Bank would support\. 141\. While operating under OP 7\.30, the Bank should favor the use of fast-track operations such as under the provisions for “Situations of Urgent Need of Assistance or Capacity Constraints” rather than additional financing of existing ones\. Although possibly justified by the prevailing circumstances, the Bank used the additional financing instrument to implement a project with objectives, components and institutional arrangements substantially different from the ones in the original operation\. This resulted in a markedly different project following the restructuring\. This also meant that government expectations about its involvement in the project were frustrated and created a tension that the additional financing phase had to deal with until closing\. Going forward, the closing of the project according to the timeline, and the development of an emergency operation would provide the team with a more effective dialogue with government\. 142\. Government ownership and public sector capacity is an essential element of project implementation\. The EP3 project was managed by parastatal organizations: initially ONE, then CELCO and finally UCPE\. The AF, moreover, required that neither the central nor the local government could implement project activities\. As a consequence, learning by doing and capacity building through the project mostly benefitted staff that did not work for the government and resulted in a weakening capacity of the public sector\. This also had negative impacts on project implementation, such as the limited presence of forest law enforcement agents in PAs and the slow progress in management transfers\. The choice to work ‘at arm’s length’ with government was ill-conceived\. As a recommendation, future projects in the sector should seek implementation arrangements that involve government structures directly, while strengthening their capacity\. Governance constraints force us to think in a new way how to engage with government at national level and at local level, placing environmental issues more squarely at the center of the Government agenda\. 143\. Bank support for biodiversity needs to be reconciled with the Bank’s inability to use IDA funds for livelihood compensation\. It was not possible to pay for compensation for lost access to PAs through the EP3 project proceeds\. The team identified companion projects that would facilitate compensation through community development activities\. This however turned out to be an inappropriate solution as the different projects followed different implementation schedules\. Even the efforts made under the additional financing to bring conservation and livelihoods restoration activities were affected by implementation difficulties\. Going forward, it is important for the Bank as a whole to reflect on how the application of safeguard policies can be made compatible with the Bank’s efforts to protect global biodiversity\. 35 144\. Since poverty and natural resource degradation are closely linked, economic development needs to be part of all conservation efforts, and local communities need to have economic incentives to engage in conservation activities\. The project has done an unsatisfactory job at addressing the needs of local communities\. The AF had established that economic development support would be provided by conservation implementing agencies, such as MNP\. These often lack the experience and knowledge about what works and what doesn’t in development\. The arrangement turned to be an inadequate one and led to severe delays\. The original project had delegated economic development activities to companion projects, but this turned to be ineffective as implementation schedules did not align\. As a recommendation, a shift towards a more integrated approach of conservation and development partnership is necessary\. 145\. Related to the above, efforts to promote conservation should be clearly embedded in a national development strategy\. EP3 was designed and implemented under the assumption that the country’s natural resource base can “pay its own way”\. This may be true in the long term but in the short term, natural resources management requires government engagement and a clear budget commitment\. Going forward, it is crucial that the government allocates sufficient human and, if possible, financial resources to achieve conservation goals\. At the same time, it is important that conservation goals are set in a way that contributes to poverty alleviation\. 146\. Community participation is instrumental in reducing pressures on natural resources\. Community participation in natural resources management has been underutilized in EP3 and has not produced the expected results\. Despite the inherent complexities, the Bank must make all possible efforts to identify effective and suitable models of integration between PAs and communities\. 147\. Addressing the illegal exploitation of flora and fauna species requires a set of skills often found in enforcement agencies\. EP3, particularly following the approval of the AF, supported the efforts of the government to curb the traffic in precious woods\. It was thanks to the collaboration with Interpol and the World Customs Organization that the satellite surveillance activities financed by EP3 could help track shipments of precious woods from Madagascar\. Future projects dealing with natural resources poaching should be designed in partnership with organizations such as the ones that form the International Consortium on Combating Wildlife Crime (ICCWC), of which the Bank is a partner\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 148\. The ICR was shared with the government and the implementing agencies, who were overall in agreement with the ICR conclusions and commended the team for having taken a balanced approach in assessing the Bank’s and borrower’s performance\. Counterparts agree with many of the identified lessons learned and consider these very useful as the government embarks on a new set of operations in the sector\. 149\. It was noted that, at the time of conception of the environment program, the government probably had not invested enough time and resources in understanding the poverty-environment linkages in and around PA and forestry corridors\. What resulted was a program that had a bias towards conservation and against community livelihoods\. The Durban vision was in itself a fruit of this vision\. Going forward, it is important that farmers’ livelihoods and poverty reduction be put at the center of conservation strategies\. For this, the government needs capacity and resources\. 36 150\. It was also noted that the role of decentralized authorities has been underplayed during the design and the implementation of the environment program\. The project has relied heavily on central government institutions, on parastatal organizations and on the deconcentrated services of the central administration\. This has meant that the project has lacked a territorial anchoring and exchange with local authorities\. Preparation of the Sustainable Agriculture Landscape Project should take into account the role of mayors and region chiefs from the outset, build their capacities and involve them in project implementation\. 151\. Implementing agencies noted that conservation and development should not be mixed together but kept separate and be treated with separate interventions, given the different skill sets required to tackle the issues in each\. Conservation/development mega projects, in their opinion, should be avoided\. A counter- argument to this comment, which goes against one of the lessons learned identified above, is that when conservation and development intervention are dealt with separately, coordination may be a challenge, as experienced in the early phases of the EP3 Support project\. Implementing agencies also noted that conservation efforts should look at the whole system of natural resources to be conserved (i\.e\. PA and forests outside PA)\. Weaknesses in the management of one side will necessarily impact the other side\. 152\. The financing gap left by the closing of the EP3 project has been noted\. The international community has a role to play, following its support to the Durban declaration in 2003 and the ensuing financial support\. Inaction by the international community carries the risk of losing an important portion of the world’s biodiversity\. PA will be exposed to pillage just week after the payment of salaries of park rangers are suspended\. 153\. Implementing agencies noted the rushed preparation of the AF (preparation started in February 2011 and Board approval took place in June 2011\. The borrower, affected in its capacity to interact with the Bank by OP 7\.30, was unable to contribute and had to accept the design of a project that it considered nevertheless vital for the country’s environmental management\. More in general, the application of OP 7\.30 seem to have missed an opportunity by putting administration and politics on the same side\. It was noted that there cannot exist a strong project with a weak administration\. 154\. Purchases of equipment by the project are often sub-utilized or damaged\. A case in point is the purchase of the four speed boats in 2015\. These have not been utilized since the delivery, owing to the lack of budget for their operation, and they risk being damaged by lack of use and maintenance\. 155\. The document, it was argued, has missed a reflection on the Bank’s exit strategy\. The exit strategy for the EP3 Support project should have been an issue for discussion between the Bank and the government during project preparation and should have been explicitly dealt with in the project documents\. 37 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Third Environment Program Support Project - P074235 Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 2004-2011 1\. Forest Ecosystems Management 18\.00 9\.44 52 2\. Protected Areas Management 13\.50 16\.77 124 3\. Environmental Mainstreaming 8\.50 5\.40 64 4\. Governance Strengthening \. 8\.40 \. 2011-2015 1\. Protected Areas and Landscape 16\.00 19\.76 124 Management 2\. Local Community Support and 14\.00 8\.92 64 Development 3\. Sustainable Financing Mechanisms for PAs and 8\.90 8\.90 100 Landscapes 4\. Project Management, Implementation, Monitoring and 3\.10 3\.95 127 Evaluation Total Baseline Cost 82\.00 81\.54 99 Physical and Price Contingencies14 n\.a\. 0\.00 0\.00 Total Project Costs 82\.00 81\.54 PPF n\.a\. 0\.00 0\.00 Total Financing Required 82\.00 81\.54 Madagascar Third Environment Program Support Project - P074236 and P113976 Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 2004-2011 1\. Protected Areas Management 9\.00 8\.83 98 2011-2015 3\. Sustainable Financing Mechanisms for PAs and 10\.00 10\.00 100 Landscapes Total Baseline Cost 19\.00 18\.83 99 Physical and Price Contingencies 0\.00 0\.00 0\.00 14 The team tried to reconstruct the value of Physical and Price Contingencies, but the information available and the tables in the PADs were contradictory and inconsistent\. For this reason n\.a\. is used\. 38  Total Project Costs 19\.00 18\.83 PPF 0\.00 0\.00 0\.00 Total Financing Required 19\.00 18\.83 (b) Financing P074235 - Third Environment Program Support Project Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Financing Appraisal (USD millions) (USD millions) US: Agency for International 27\.70 n\.a\. n\.a\. Development (USAID) Borrower 29\.20 n\.a\. n\.a\. FRANCE, Govt\. of (Except for Min\. of n\.a\. n\.a\. 8\.10 Foreign Affairs-MOFA) SWITZERLAND, Govt\. of (Except for n\.a\. n\.a\. 5\.10 FOFEA) IDA GRANT FOR POOREST 40\.00 81\.54 203\.85 COUNTRY GERMANY: KREDITANSTALT FUR 12\.40 n\.a\. n\.a\. WIEDERAUFBAU (KFW) UN Development Programme 6\.30 n\.a\. n\.a\. Non-Government Organization (NGO) 11\.10 n\.a\. n\.a\. of Borrowing Country Japan Social Development Fund 0 1\.87 n\.a\. P074236 and P113976 - Madagascar Third Environment Program Support Project Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Financing Appraisal (USD millions) (USD millions) Borrower 0\.00 0\.00 \.00 Global Environment Facility (GEF) 9\.00 19\.00 109\.00 39 Annex 2\. Outputs by Component 156\. Overall, the project has focused on four key issues: (i) biodiversity protection and sustainable management; (ii) mainstreaming conservation into macroeconomic management and sector programs; (iii) sustainable financing for the environment; (iv) improving the quality of life of the population\. Each issue is reviewed below\. A more detailed review of outputs by components for each of the two key phases of EP3 is provided later on\. Key outcomes 157\. EP3 has contributed to the achievement of Durban Vision to triple PA area in Madagascar\. The graph below shows the evolution of PA area over the last 10 years\. PA area (m ha) 8000 7000 6000 5000 4000 3000 2000 1000 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 158\. The impact of EP3 activities on ecosystem were substantial\. PAs represent different ecosystems that are unique and built the natural richess of Madagascar\. At the beginning of EP3, the rate of ecosystem representativeness was 87 percent\. It means 87 percent of Madagascar ecosystems were represented in PAs\. This rate increased to 100 percent in 2015\. The graph below shows the evolution of the rate of ecosystem representativeness\. 40 Table 7\. PAs supported by AF PA Name Area (ha) PA Type Ambatovaky 78,139 National Park Ambohitantely 5,600 National Park Analamerana 34,700 National Park Andohahela 76,020 National Park Ankarana 18,225 National Park Baie de Baly 79,160 National Park Namoroka Bemaraha IUCN Category II National Park 156,710 Bemaraha IUCN Category IV National Park Cap Sainte Marie 3,610 National Park CAZ * 371,000 Forestry corridor COFAV 290,281 Forestry corridor Forêt de Mikea 184,630 National Park Isalo 81,540 National Park Lokobe 1,042 National Park Makira* 372,470 Forestry corridor Mangerivola 11,900 National Park Manongarivo 113,822 National Park Tsaratanana National Park Mantadia National Park 16,290 Analamazaotra National Park Masoala* 230,000 National Park Nosy Manga Be* National Park Midongy du Sud 192,198 National Park Montagne d'Ambre 30,812 National Park Foret d‘Ambre National Park Nosy Hara 125,471 National Park Nosy Ve 92,080 National Park Ranomafana 41,601 National Park Sahamalaza - Iles Radama 26,035 National Park Zahamena IUCN Category I 63,898 National Park Zahamena IUCN Category II National Park Zombitse Vohibasia 36,803 National Park Total 2,735,037 (*Indicates a PAs that was not included in EP3 but is included in the additional financing) 159\. The number of tourists visiting national park system has increased by 5 percent on average\. The 2009 political crisis had a substantial negative impact as tourist visits dropped 50 percent\. 41 160\. Infrastructure has been constructed or rehabilitated, including offices, interpretation centers, schools, bridges, and water and sanitation infrastructure\. The table below shows the status of 16 infrastructure visited during the project evaluation\. Table 8\. Status of infrastructure Operational Operational but Not Not not sustainable operational completed Out of 16 Infrastructures visited 11 (68\.75%) 1 (6\.25%) 1 (6\.25%) 3 (18\.75%) Detailed review of outputs 161\. The PDO level indicators use throughout the project are listed in Table 9\. As can be seen in the table the project had overall a very large number of indicators many of which, as shown in the Data Sheet, were not monitored\. PDO indicators were revised four times\. The 2008 restructuring was quite substantial, as was the 2011 restructuring, which coincided with the AF\. The other changes, in February and November 2014 were much less important\. Table 9\. The PDO level indicators throughout the project’s life\. Years  Project Development Objective  PDO  04  05  06  07  08  09  10  11  12  13  14  15  Rate of degradation of forest and wetland resources less than half of the                               1990-2000 rate of 0\.9% per year (Percentage, Custom) Rate of degradation of the forest and wetland cover declining from 0\.88% a                         year to 0\.44% a year (Percentage, Custom) PAs management efficiency index increases from 41% (baseline) to 55%                               (mid-term) to 70% by EOP (Percentage, Custom) PAs management efficiency index increases from 45% (baseline to 70% by                         EOP (Percentage, Custom) Mangrove cover maintained at 2004                         area of 2,209 km2 Maintenance of coral reef target indicator species (e\.g\. Ludjanidea                         family) in all established no-take zones Threat Index in the ANGAP PA Network reduced from 107 to 20 (Number,                         Custom) Level of threat in project PAs, threat                         index (Percentage, Custom) Level of threat in project PAs, (number                         of fires declared) Sustainable financing mechanisms including government contribution cover                         70% of core staff and operational costs 42 of the PA system (baseline: 8%; mid- term: 30%) Capital mobilized by Foundation for Protected Areas and Biodiversity - from                         US$3\.7 to US$33\.0 million Surface of PA network with recurrent costs supported with revenues from the combined project endowment and                         previous EP3 endowment to the Foundation (ha) National park visitor numbers increase 5% annually from the 2003 baseline (1                         00,000 visitors) Increase of park entrance fees by US$ 670,047 (2003 baseline: US$500,000;                         mid-term: US$579,000) Sustainable NRM (natural resources management) investments generate                         US$12 million over 5 years (baseline: 0; mid-term: US$ 4 million) Number of tourists visiting PAs                         increasing from 88,000 to 134,000 Improved voice of communes in PAs management as reflected in representation on ANGAP's Board of Directors (by mid-term) and by the % of                         CROs complying with their rights and obligations as defined in PA management plans (baseline: 0; mid- term: 50%; EOP: 80%) Improved community empowerment in NRM through fully performing GELOSE/GCF arrangements as measured by the % of beneficiary communities who have successfully                         obtained long-term follow-up contracts after the initial 3 year trial period baseline: 0%, mid-term:70%; EOP: 80%) Percentage of revenues from PA entry fees redistributed to community                         projects surrounding the parks (from 22\.5 to 50%) Reduction of burned areas to 50% of                         baseline (650,000 ha a year) 80% renewal of natural resources                         management transfer contracts 70% of public and private investments comply with MECIE legislation                                (percentage, custom) Number of regional development plans integrating environmental                         considerations (from 2 to 22) Rate of environmental claims settled                         (from 50% to 90%) 43 Rate of integration of environment in                         school curricula (from 5% to 40%) Logging and species collection license fees in line with projected revenues                         (baseline: 80%; mid-term 87% and EOP: 95%) Volume of wood traded following a traceability system (in % of amount of                         nationally harvested timber) – from 0% to 30% Track record of satisfactory OSF goveerance audits (mid-term and EOP                         targets are satisfactory) Rate of efficiency of forestry control                         units (from 0% to 80%) 70% of MinEnvEF's budget executed at field level (province or lower by EOP                         (baseline: 30%; mid-term 50%) Financial and administrative efficacy                         index (from 0 to 100%) Implementation of the new E- governance system within the Ministry                         (from 0% to 50%) Cost reduction strategy and action plan developed and implemented within                         ANGAP, Number of households adjacent to the PAs that benefitted from off park natural                         resource livelihood activities (number of households) Number of households adjacent to the PAs that benefitted from off park natural resource livelihood activities (social safeguards, local community                         organizations, and Mature PA micro projects and community ecotourism projects) Of which are female beneficiaries                         A precious woods stockpile use plan has been submitted to the Convention on International Trade in Endangered                         Species of Wild Fauna and Flora (CITES) (Yes/No, Custom) All illegal precious woods stockpiles seized by Government have been                         audited and secured\. (Yes/No, Custom) Government has validated and adopted a schedule for the reform of protected                         areas managed by Madagascar National Parks (MNP) (Yes/No, Custom) Global Environment Objectives GEO                                     Surface of PAs under Permanent and Temporary Status (Hectare (Ha),                             Custom) 44  PA surface under provisional or definite                         status increased to 5 milion ha Representation rate of habitats in sytem                         of PA increased from 87 to 96% Lemur species are maintained at                                    baseline levels No loss of any known lemur or endemic bird species in the national PA system                         managed by ANGAP Level of threat in project supported PAs (number of fires declared) (Number,                                 Custom) 162\. Overall, 27 percent of the project indicators exceeded target, 22% achieved target and 57% were not achieved\. The table below summarizes the overall indicator achievement\. Table 10\. Indicators achievement Total Achieved Not achieved indicators On target Over target PDO 15 6 40% 3 20% 9 60% GEO 3 0 0% 2 67% 1 33% Int\. Result 33 5 15% 9 27% 19 58% Indicators Total 51 11 22% 14 27% 29 57% Mother Project (2004 – 2011) 163\. Component 1: Forest ecosystems management\. This component consisted in supporting the Department of Water and Forests to better conserve natural forests and streamline the use and management of national forest estate\. Overall, IDA support primarily focused upon activities to address issues including: (i) governance; (ii) conservation sites, economic and management tools; (iii) management transfers; (iv) reforestation and (v) domestic energy\. These activities were developed, implemented and monitored with all entities involved in development of sector\. 164\. Component 2: PA Management\. The component addressed issues related to PA management, eco-development, eco-regional planning, ecotourism and endowment of a trust fund\. Specifically, the activities planned under this component were organized as follow: (i) reducing pressures, capacity building, awareness and civil society involvement around selected PAs (ii) enhance complementarity value, alignment and eco-regional representativeness of the PA System (iii) conservation management programs to consolidate the national PA system (iv) sustainable use of PA System and improve governance within ANGAP (v) endowment of the Foundation for Protected Areas and Biodiversity of Madagascar (FAPBM) for long term funding\. 165\. Component 3: Environmental Mainstreaming\. The objective of this component was to support selected elements of the environmental mainstreaming agenda including efforts aimed at: (i) strengthening in-house institutional capacity of ONE to generate environmental information for policy decision-making, 45 education and communication purposes; (ii) improving knowledge about the environment through selected environmental educational and communication activities, including those aimed at the Comités Communales de Développement covered by EP3; (iii) increasing DGE's institutional capacity as far as its environmental regulatory and policy-making functions are concerned, with a special emphasis on the development of sustainable financing mechanisms for the environment; (iv) ensuring adequate application of Madagascar's MECIE legislation; and (v) putting in place the necessary conditions for the effective management of the MEEF as well as the functioning of environmental units in all sector ministries\. 166\. The program implementation was slower than expected due to: (i) delays in fund flow and weak understanding of the results-based reported which would trigger funding advances\. This has primarily affected components 1 and 2 which depended on results-based contract with field offices, (ii) The Management of Forest Systems component funding remained problematic, due to delays in transfer of funds to DGEF, weak capacity, and continuing governance issues, and (iii) critical institutional reforms that have slowed down the pace of field activities\. The table below shows the degree of achievement of EP3 initially identified indicators\. Table 11\. Table 01: Degree of achievement of indicators 15 Ref\. Indicators Baseline End Target Reportedly Degree of RF 13-Sep-04 achieved achievement table 31-Dec-09 Project Development Objective Indicators 11 Rate of reduction of burned area to 50% 0 50 46 92% of baseline (650,000ha a year) (Percentage, Custom) 12 70% of public and private investments 30 50 69 138% comply with MECIE legislation (Percentage, Custom) 2 Protected areas management efficiency 45 70 68 97% index increases from 41% (baseline) to 55% (mid-term) to 70% EOP (Percentage, Custom) Global Environmental Objective Indicators 22 Surface of Protected Areas under 1,700,000 5,000,000 5,155,632 103% Permanent and Temporary Status (Hectare(Ha), Custom) Intermediate Results Indicators 25 Surface reforested (ha) (Hectare(Ha), 0 7,968 10,167 128% Custom) 27 Households adopting alternative energy 0 5,000 0 0% (Number, Custom) 28 Number of Environmental Tableaux de 5 20 24 120% Bords operational (Number, Custom) 15 In order to facilitate reading, the indicator number in the first column of the table corresponds to the numbering used in the Data Sheet (Section F)\. 46 167\. One PDO indicator, one GEO and two intermediate results indicators were achieved: (i) 70% of public and private investments comply with MECIE legislation, (ii) Surface of Protected Areas under Permanent and Temporary Status, (iii) Surface reforested, and (iv) Number of Environmental Tableaux de Bords operational\. 168\. Three indicators were not achieved: (i) Rate of reduction of burned area to 50% of baseline (650,000ha a year), (ii) Protected areas management efficiency index increases from 41% (baseline) to 55% (mid-term) to 70% EOP\. The monitoring of these indicators has stopped when the project was given an exception to OP 7\.30 and 3 out of 4 components were dropped in 2009 and (iii) Households adopting alternative energy: this activity has never really started\. 169\. The program indicators have been revised by all EP3 partners to be consistent with the Ministry of Environment's own program indicators\. In 2007, the program has become Marginally Unsatisfactory, due to a confluence of initial design issues, internal weaknesses, and external risks which required significant restructuring to allow the project to achieve its original development objectives\. 170\. The project was therefore restructured to scale down results indicators, group activities around main deliverables for which the executing agencies have clear responsibilities or sound experience, and add a new component to strengthen the Ministry's core functions and renovate its staff\. Moreover, from the start, the project's physical targets were over-ambitious relative to the institutional and policy reforms that it was seeking to implement\. The March 2008 restructuring addressed this by scaling down physical indicators while emphasizing the program's governance and institutional focus\. However, forestry activity targets (those mostly dependent on Ministerial staff) suffered from critical delays in institutional reform and successive changes in managerial positions which followed the appointment of three Ministers in the space of 3 years\. The table below shows the degree of achievement of indicators following the restructuring in 2008\. Table 12\. Degree of achievement of indicators Indicators Baseline End Target Reportedly Degree of 13-Sep-04 achieved achievement 31-Dec-09 Project Development Objective Indicators 1 Rate of degradation of forest and 0\.83 0\.44 0\.53 83% wetland resources less than half of the 1993-2000 rate (Percentage, Custom) 6 National park visitor numbers increase 100,000 134,000 na na 5% annually from the 2003 baseline (1 00,000 visitors) 6\.1 Number of tourists visiting National 88,000 134,000 68,755 51% Park System (ANGAP) (Number, Custom) 7 Increase of park entrance fees by US$ 500,000 670,047 na na 670,047 (2003 baseline: US$500,000; mid-term: US$579,000) 8 Sustainable NRM investments generate 0 12,000,000 na na US$12 million over 5 years (baseline: 0; mid-term: US$ 4 million) 47 5 Sustainable financing mechanisms 8 70 na na including government contribution cover 70% of core staff and operational costs of the PA system (baseline: 8%; mid- term: 30%) 5\.1 Capital mobilized for Protected Areas 3,700,000 33,000,000 34,000,000 103% Foundation (Amount(USD), Custom) 3 Mangrove cover maintained at 2004 2,209 2,209 na na area of 2,209 km2 4 Maintenance of coral reef target na na na na indicator species (e\.g\. Ludjanidea family) in all established no-take zones 3\.1 Threat Index in the ANGAP Protected 107 20 31 65% Area Network (Number, Custom) 9 Improved voice of communes in PAs 0 80 na na management as reflected in representation on ANGAP's Board of Directors (by mid-term) and by the % of CROs complying with their rights and obligations as defined in PA management plans (baseline: 0; mid- term: 50%; EOP: 80%) 10 Improved community empowerment in 0 80 na na NRM through fully performing GELOSE/GCF arrangements as measured by the % of beneficiary communities who have successfully obtained long-term follow-up contracts after the initial 3 year trial period baseline: 0%, mid-term:70%; EOP: 80%) 9\.1 Percentage of Revenues from Protected 22\.50 50\.00 22\.00 44% Area Fees Redistributed to Community Projects Surrounding the Parks (Percentage, Custom) 10\.1 80% renewal of Natural Resource 0 80 18 23% Management Contracts (Percentage, Custom) 13 Logging and species collection license 80 95 na na fees in line with projected revenues (baseline: 80%; mid-term 87% and EOP: 95%) 13\.1 Volume of wood traded following a 0 30 70 233% traceability system (in % of amount of nationally harvested timber) – from 0% to 30% (Percentage, Custom) Global Environmental Objective Indicators 23\.1 Rate of representation of the 46 habitats 87 96 91 56% in the system of protected areas (SAPM) (Percentage, Custom) Intermediate Results Indicators 26 Number of Dinas (traditional 0 500 361 72% agreements) operational for fire control (Number, Custom) 48  29 Number of Sectors with Environmental 4 15 22 147% Units in place and operational (Number, Custom) 30 Number of EIA permits delivered 35 61 65 107% through a unified system (Number, Custom) 31 Number of Autonomous Control Units 0 22 11 50% in place and operational (Number, Custom) 32 New staff recruited, integrated and 0 435 139 32% trained by the Ministry (Number, Custom) 33 Quarterly Planning carried out with the 0 75 31 41% involvement of regional stakeholders and disbursements implemented according to the agreed norms (Percentage, Custom) 34 Number of COSAP Operational 0 22 21 95% (Number, Custom) 171\. Nine indicators were revised following the 2008 restructuring in addition to the original indicators\. 172\. Two PDO indicators and two intermediate results indicators were achieved: (i) Capital mobilized for Protected Areas Foundation, (ii) Volume of wood traded following a traceability system (in % of amount of nationally harvested timber) – from 0% to 30% \. However, the figure provided by the PCU (degree of achievement 233%) seemed to be unlikely in a context of collapse of forest governance, (iii) Number of Sectors with Environmental Units in place and operational, and (iv) Number of EIA permits delivered through a unified system\. 173\. Five PDO indicators, one GEO indicator and five intermediate results indicators were not achieved\. There are two main reasons explaining this poor performance (i) Forest Management activities were under the responsibility of the Ministry and its deconcentrated offices\. The Minister changed three times since 2005, with concurrent changes in Directors and DREFTs heads\. With such institutional instability, there was no clear direction on how to execute project activities; (ii) The second limiting factor was the relationship between the Coordinating Agency (CELCO) and the Executing Agencies\. From the start, CELCO emphasized procedures and control over results\. This was necessary at times where the Ministry was known for its lax fiduciary oversight, but it also led Executing Agencies to feel disempowered and unaccountable for results, particularly when the Ministry was undertaking reforms and their posts were less than certain\. Moreover, as a result of the political and economic crisis, population pressures over the System of PA increased significantly\. All the indicators linked to governance performed weakly\. Concerning the number of tourists visiting the National Park System (degree of achievement 51%), the indicators were not achieved mainly due to the political crisis that was beyond the project’s control\. 174\. Limited range of activities under a single project component related to PA management was authorized following the political crisis in Madagascar in 2009\. The three other project components of EPIII were terminated, and monitoring of their indicators stopped\. The extension of project closing to June 2011 was agreed\. 49 AF (2012 – 2014) 175\. The AF was signed at the Madagascar World Bank Country Office on October 12, 2011 and was scheduled to begin in January 2012\. The new closing date was December 31, 2014\. The additional financing was structured into four components: Component A: Protected area and landscape management; Component B: Local community support and development; Component C: Sustainable financing mechanisms for protected areas and landscapes; and Component D: Project management, monitoring and evaluation\. 176\. Component A: PA and landscape management\. This component was structured around five sub- components: (i) PA surveillance that involved updating of surveillance plans, and ranger patrols and aerial surveillance of 33 PA (30 MNP national parks and 3 corridors); (ii) conservation infrastructure including firebreaks, guard stations, park boundary markers and other essential conservation infrastructure in 33 PA; (iii) provision and renewal of essential equipment for park management in 30 MNP national parks, including vehicles and office equipment; (iv) strategic landscape management in one pilot landscape - the Mamabay landscape in the northeast - including natural resource baseline creation, support to stakeholder platforms, land use and natural resource planning, and increased regional civil society involvement in natural resource monitoring; (v) Madagascar National Parks institutional reform to improve the organization’s structure and thus its operational efficiency\. 177\. The delays in effectiveness, which took place on March 23, 2012, were largely due to difficulties related to the political situation led to delays of activities\. Further delays were incurred in early 2012 as mounting pressure led to the dismissal of the minister of Environment in relation to a decree that was seen to facilitate the export of illegally logged precious wood\. 178\. Moreover, several components suffered considerable delays during the project's initial months, due in particular to: (i) the delayed recruitment of technical assistants by UCPE, resulting in significant delays in the preparation of key documents; (ii) delays in the establishment of contracts with NGOs, and (iii) the difficulties associated with the engagement of beneficiaries that are new to IDA financing, including the NGOs and FAPBM\. 179\. A new restructuring was done in June 2014 to allow the financing of law enforcement operations in the fight against illegal precious woods exports\. To support the government in managing rosewood stockpiles, new activities were added to the components\. In particular, Component D included the following additional activities: three studies on the legal status of rosewood stocks, inventory and disposal options; an action plan for the securing of stockpiles already seized by government; execution of the action plan for the securing of stockpiles already seized by government; organization of a process for the sale of stockpiles already seized by government\. Component A included the procurement of radar satellite information to support coast and forest surveillance activities; operating costs of coast surveillance operations\. The table below shows the achievement of indicators for component A\. 50  Table 13\. Degree of achievement of indicators for component A of the AF Indicators Baseline End Reportedly Degree of achievement Target achieved Date Value Percent Date age Project Development Objective Indicators 21 Government has validated and 25-Nov-14 N Y Y 100% 31-Dec-15 adopted a schedule for the reform of protected areas managed by Madagascar National Parks (MNP) (Yes/No, Custom) 19 A precious woods stockpile use 25-Nov-14 N Y Y 100% 31-Dec-15 plan has been submitted to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (Yes/No, Custom) 20 All illegal precious woods 25-Nov-14 N N Y 0% 31-Dec-15 stockpiles seized by Government have been audited and secured\. (Yes/No, Custom) Global Environmental Objective Indicators 24 Level of threat in project 1,395 980 989 101% 31-Dec-15 supported PAs (number of fires declared) (Number, Custom) Intermediate Results Indicators 39 Conservation infrastructures 11-Jan-12 0 34 21 62% 31-Dec-14 built or renovated (Number, Custom) 40 Study on the reform of the PA 11-Jan-12 N Y Y 100% 31-Dec-14 network management is approved (Yes/No, Custom) 48 Number of validated studies on 11-Jan-12 0 3 3 100% 31-Dec-14 the strategy of illicit rosewood stockpile management (Number, Custom) 42 Weighted management 11-Jan-12 60 71 72 101% 31-Dec-15 effectiveness tracking tool score for targeted protected areas (Percentage, Custom) 43 Number of surveillance grids 11-Jan-12 0 489,291 424,540 87% 31-Dec-15 monitored in 30 national parks and 3 corridors (Number, Custom) 44 Number of paid patrolling days 11-Jan-12 0 126,861 160,382 126% 31-Dec-15 of local surveillance committees (Number, Custom) 45 Km of Protected Area 11-Jan-12 0 7,224 6,552 91% 31-Dec-15 boundaries materialized and maintained (Kilometers, Custom) 51 180\. Seven indicators were achieved\. Overall, the project has ensured that targeted protected areas were adequately protected, even during periods of political crisis\. These covered 1\.9 million ha during the initial project, expanded to 2\.7 million ha during the additional financing – more than a third of the country’s System of Protected Areas (SAPM)\. An important project contribution has been the support lent to the precious woods stockpile management and law enforcement activities\. During project implementation Madagascar piloted a system of coastal surveillance\. The pilot has shown that there are weaknesses in the system, particularly with respect to the response capacity and the confidentiality in the transmission of information (allowing traffickers to have early warning of a potential law enforcement operation)\. But the system has also allowed to transmit key information on vessels carrying illegal shipments to international authorities later leading to the seizure of important amounts of illegally exported wood in Singapore and Hong Kong SAR, China\. 181\. Despite these successes, 4 key indicators for the success of the project were not achieved: (i) The audit and securing of all illegal precious woods stockpiles seized by Government was not finalized (degree of achievement 60%)\. While Government prepared and submitted the precious wood use plan and audit to CITES by the November 12, 2015 deadline, the CITES Standing Committee deemed the report inadequate; (ii) Conservation infrastructures built or renovated (degree of target achievement was 62%)\. The construction or rehabilitation of several conservation and management infrastructures has been dropped given procedural delays, difficulties of access and the imminent project closure, (iii) Number of surveillance grids monitored in 30 national parks and 3 corridors (degree of target achievement was 87%); and (iv) Km of PA boundaries materialized and maintained (degree of target achievement was 91%)\. Delays have been experienced in particular for the realization of PA boundaries, which have proven technically problematic for marine parks\. 182\. Component B: Local community support and development: This component was structured around two sub-components: (i) social safeguard implementation and monitoring that involved auditing of the eleven safeguards plans implemented under EPIII, preparation of safeguards plans and implementation of compensation sub-projects for two corridors (Ankeniheny – Zahamena corridor and Makira), evaluation of outstanding conflicts between established national parks and local communities and implementation of resolution /mitigation measures in 19 locations, and development of technical standards for safeguard implementation in PA creation; and (ii) support to or creation of 900 local park surveillance committees, support to 400 community development subprojects, support to 30 Park Support Committees in the vicinity of 30 PAs, as well as for 175 Community Forest Management Groups (75 new and 100 existing groups) around the 33 PAs, including establishment of new management contracts and capacity building for newly established groups, involvement in restoration activities in protected areas, trialing of methods for increased involvement in PA surveillance and management, development of income generation projects, and strengthened capacity for management of natural resources\. 183\. Implementation delays have been experienced throughout the project lifetime\. Prior to the 2009 extension, delays affected in particular for the implementation of safeguards plans in new or expanded PAs, forest management transfers, the provision of energy alternatives and land certification\. During the AF, delays affected in particular components related to community compensation and development, the fight against illegal logging, infrastructure development and rehabilitation, the MNP reform and concessions\. Such delays have partly been the result of institutional weakness and instability: in addition to the political crisis and temporary suspension, there have been 6 Environment Ministers and a Prime 52  Minister as acting Minister during the entire project duration, as well as multiples changes at the General Directorate level\. In addition, project planning, management and procurement capacity have been low\. The table below shows the achievement of indicators for component B\. Table 14\. Degree of achievement of indicators for component B of the AF Indicators Baseline End Reportedly Degree of achievement Target achieved Date Value Percentage Date Project Development Objective Indicators 18 Number of households adjacent 0 90 000 to the PAs that benefitted from off park natural resource livelihood activities (number of households) 18\.1 Number of households adjacent 11-Jan-12 0 86,000 36,310 42% 31-Dec-15 to the Protected Areas that have benefitted from park, natural resource and livelihood activities (Number, Custom) Intermediate Results Indicators 32 Direct project beneficiaries 13-Sep-04 0 26,000 9,261 36% 30-Jun-11 (Number, Core) 33 Female beneficiaries (Number, 13-Sep-04 0 12,000 4,000 33% Core Supplement) 34 Number of Safeguards plans 13-Sep-04 0 11 10 91% 31-Dec-11 validated (9 UG) (Amount(USD), Custom) 35 Rate of implementation of 13-Sep-04 0 100 - 0% 31-Dec-11 safeguards measures (Percentage, Custom) 41 Number of affected households 11-Jan-12 0 12,414 9,245 74% 31-Dec-14 (PAP) that benefitted from social safeguards sub-projects (Number, Custom) 42 Number of PAs with a 11-Jan-12 0 30 28 93% 31-Dec-14 restructured Park Support Committee and strengthened technical capacity (Number, Custom) 43 Number of management transfer 11-Jan-12 0 173 101 58% 31-Dec-14 contracts established or renewed (Number, Custom) 184\. None of the component B indicators were achieved\. Particularly, (i) the rate of implementation of safeguards measures as for 2011 (degree of achievement were 0%)\. This component has been difficult to implement due to the many micro-projects it entailed and the low capacity of executing agencies; (ii) Number of households adjacent to the Protected Areas that have benefitted from park, natural resource and livelihood activities (degree of achievement 42 %); (iii) Direct project beneficiaries (degree of achievement 36%)\. There have been weaknesses and delays in the technical implementation of ecotourism infrastructure works and support to local communities\. These can be linked to an unclear division of labor between implementing agencies\. Moreover, community development sub-projects have not kept up with 53  communities’ expectations\. Most, but not all, communities visited during the field mission reported being responsible for the selection of the subprojects they benefitted from\. 185\. Component C: Sustainable financing mechanisms for protected areas and landscapes: This component comprised three sub-components: (i) technical support to a national conservation trust fund to generate and manage revenues to co-fund the recurrent costs of ten national parks; (ii) support to ecotourism development including upgrading of park access roads and visitor interpretation centers, and construction of tourist circuits and signage in 18 national parks, mechanisms to facilitate Public Private Partnership investments in 8 national parks, and development of 15 community based eco-tourism sub-projects in selected protected areas, including infrastructure and capacity building; and (iii) development of baseline of carbon stocks for three forestry corridors in preparation for avoided deforestation activities together with an evaluation of the legal and institutional framework for carbon finance activities, and technical studies on causes of deforestation and degradation and carbon governance, and pilot projects for the valuation of hydrological services provided by one forestry corridor most likely the Ankeniheny-Zahamena forest corridor\. The table below shows the achievement of indicators for component C\. Table 15\. Degree of achievement of indicators for component C of the AF Indicators Baseline End Reportedly Degree of achievement Target achieved Date Value Percentage Date Project Development Objective Indicators 5\.2 Surface of Protected Area 11-Jan-12 130,000 1,050,000 1,050,000 100% 31-Dec-14 network with recurrent costs co-funded from revenues from the combined project endowment and previous EPIII(IDA) endowment to the Foundation (Hectare(Ha), Custom) Intermediate Results Indicators 36 Number of squares surveyed 13-Sep-04 15,426 559,090 589,586 105% 31-Dec-11 and controlled (Number, Custom) 37 Circuits managed and 13-Sep-04 0 1,312 2,367 180% 30-Jun-11 maintained (Kilometers, Custom) 38 Additional Surface of PA 13-Sep-04 0 491,500 336,136 68% 30-Jun-11 (ANGAP and outside ANGAP) created (Hectare(Ha), Custom) 44 Ratio of the operational costs 11-Jan-12 21 20 20 100% 31-Dec-14 of FAPBM to the amount of financing delivered to PAs (Percentage, Custom) 45 Km of tourism circuits 11-Jan-12 0 60 98 163% 31-Dec-14 equipped to operational standards (Kilometers, Custom) 46 Km of access roads delivered 11-Jan-12 0 94 31 33% 31-Dec-14 (Kilometers, Custom) 54 47 Number of reference scenarios 11-Jan-12 0 3 3 100% 31-Dec-14 for emissions linked to deforestation defined for the Eastern Humid Forest ecoregion (Number, Custom) 53 Number of concessions signed 11-Jan-12 0 1 1 100% 31-Dec-15 with the private sector (Number, Custom) 54 Number of established 11-Jan-12 0 13 6 46% 31-Dec-15 community ecotourism projects (Number, Custom) 186\. 7 indicators were achieved\. FAPBM has shown a great capacity to establish a working relationship with MNP and an MOU has been signed to define the process for earmarking and financing selected protected areas\. Infrastructure delivery management has been outsourced to FID (Fonds d’Intervention pour le Developpement)\. 187\. 3 indicators were not achieved: (i) Additional Surface of PA (ANGAP and outside ANGAP) created (degree of achievement 68%)\. The figure was low because the political situation has prevented the status of protected areas to be turned from temporary to definitive; (ii) Km of access roads delivered (degree of achievement 33%) and (iii) Number of established community ecotourism projects (degree of achievement 46%)\. There have been weaknesses and delays in the technical implementation of ecotourism infrastructure works and support to local communities\. These can be linked to an unclear division of labor between implementing agencies\. Moreover, there was recurrent delays in the delivery of services or materials by service providers and recurrent poor quality of goods and services delivered\. 188\. Component D: Project management, monitoring and evaluation: This component financed project management, and monitoring and evaluation of the additional financing activities\. It also supported the implementation of measures to strengthen the Project Coordination Unit (PCU) to ensure it had adequate institutional capacity to collect, analyze and report on project results and towards a future supervisory role as Secretariat of the Project Steering Committee\. It financed the introduction of technical functions at the national coordinator level and will support strengthening of the internal audit and monitoring and evaluation roles of the PCU\. This involved technical assistance, expertise, consultant services, salaries and operating costs, logistical support, supervision mission expenses and equipment\. 189\. The component D indicator was not achieved\. The degree of achievement of the indicator, index of management efficiency of PCU in implementation and monitoring of project, was 94%\. The 2014 EPIII financial statements audit pointed at anomalies with respect to financial management and procurement procedures as part of the implementation of component B, especially the income-generating activities around the PAs managed by the MNP\. An independent external “value for money” audit carried out during the October 2013 - July 2014 period identified US 2 million potential ineligible or questionable expenditures and the subsequent review by the fiduciary team between June 2014 and November 2015 confirmed that a total of 885,054,310 Ariary (USD 307,000 equivalent) were not disbursed in accordance with the IDA rules and procedures\. These expenditures were declared ineligible\. 55 Annex 3\. Economic and Financial Analysis 190\. This annex presents the results of the economic and financial analysis both in ex-ante terms, as envisaged at appraisal of the EP3 original project, and in ex-post terms, by modifying key parameters in line with the actual evolution in the context and in the project activities\. 191\. The results for the ex-ante analysis below have been reconstituted based on the assumptions described in the project documents\. For this reason, slight discrepancies are to be found in the ex-ante results compared to those that appear in the original project’s PAD\. The analysis does however remain close in terms of order of magnitude\. Economic Analysis 192\. Broadly speaking, the project benefits that most easily lend themselves to economic analysis consisted in: (i) the increase from 1\.5 million to 6 million hectares in the surface area of natural forests under conservation; and (ii) the development of economically viable alternatives to deforestation caused by farmers practicing slash and burn agriculture and unsustainable charcoal production\. The ex-ante economic analysis clearly distinguished three management modalities for natural forests conservation: PAs; conservation sites; and management transfers\. Initial assumptions 193\. Key assumptions for the economic analysis refer to: (i) projected deforestation (rate, areas, yields, revenue losses); (ii) natural forest management costs; (iii) natural forest management benefits; (iv) natural forests management benefits distribution; and (v) alternatives to deforestation\. 194\. Background deforestation was assumed to be 1 percent per year which was roughly the deforestation rate observed through comparison of satellite images Landsat 5 and 7 over the 10 years before project appraisal (0\.86 percent)\. Yields under slash and burn agriculture was assumed to be approximately 1\.5 ton of paddy per hectare per year\. It was also assumed that slash and burn agriculture follows an 8 years cycle: rain fed rice cultivation during the initial three years and fallow for the following five years, before undertaking new slash and burn in the area\. Fuelwood collection is assumed to generate 10 tons per hectare on the first year of the cycle16\. 195\. Based on the appraisal economic analysis, recurring management costs for PAs was assumed to be US$ 5 per year per hectare of area under conservation\. For conservation sites, a set up costs of US$ 5 per hectare on the year of establishment and a recurring management cost of US$ 1 per year per hectare were assumed\. For management transfer sites, a set up costs of US$ 10 per hectare on the year of establishment and a recurring management cost of US$ 1 per year per hectare were assumed\. 16 The original project’s PAD actually states 25 tons per hectare but the actual numbers in the relevant annex seem to suggest 10 tons/ha, which is the number used in the reconstituted economic analysis\. 56 196\. Benefits from conservation were of two types: global benefits and national benefits\. Global benefits were estimated at US$ 3 per hectare per year and these were assumed to decline over time at an annual rate of 5 percent\. National benefits include eco-tourism and watershed protection\. Benefits from carbon sales of emission reductions from avoided deforestation, forest degradation and sustainable forest management were not included in the analysis\. Eco-tourism benefits were assumed to be equal to US$ 60 per tourist times an estimated number of visitors (100,000 visitors in 2004) what was expected to grow at a rate of 5 percent each year\. Watershed protection benefits were estimated at US$ 3 per hectare per year, and expected to grow at an annual rate of 5 percent\. 197\. Alternatives to deforestation capable of producing economic benefits were assumed to be the sustainable collection of fuelwood and the sustainable collection of non-timber forest products\. Sustainable fuelwood collection was expected to generate US$ 2\.6 per hectare per year in benefits, whereas non timber forest products collection was estimated to generate US$ 4 per hectare per year\. Ex-ante results 198\. The reconstituted ex-ante economic analysis shows that the project was, a priori, economically beneficial for the country, with a Net Present Value of benefits equal to about US$ 10 million (using a discount rate of 10 percent) and an Internal Rate of Return of 27 percent (Table 16)\. As mentioned in the original project’s economic analysis, the costs and benefits are to be treated as conservative\. Table 16\. Ex-ante cost/benefit of natural forests conservation Present value (10%, 15 years) Protected Conservation Management Total Areas Sites Transfer sites Management costs -78\.7 -26\.7 -13\.3 -118\.7 Tavy foregone revenues -42\.1 -44\.0 -14\.1 -100\.2 Fuelwood foregone revenues -11\.8 -13\.2 -4\.3 -29\.3 NTFP foregone revenues -10\.4 -15\.7 -5\.2 -31\.3 Total costs -143\.0 -99\.6 -36\.9 -279\.5 Biodiversity conservation 33\.1 30\.8 63\.9 Eco-tourism 60\.3 60\.3 Watershed protection 57\.4 70\.5 128\.0 REDD+ - - Sustainable fuelwood collection 14\.8 14\.8 Sustainable NTFP collection 22\.8 22\.8 Total benefits 150\.9 101\.3 37\.7 289\.9 NPV 7\.8 1\.8 0\.8 10\.4 IRR 34% 21% 16% 27% Revised assumptions 199\. For the purposes of the ex-post analysis, a number of initial assumptions were revised to reflect changes in the country’s economic and sector context and in project activities\. Key changes included: (i) the actual rate of deforestation outside and inside conservation sites; (ii) the actual evolution of tourism visits into PAs; (iii) the observed cost of PAs management; and (iv) the initial REDD+ carbon sales\. 57 200\. Deforestation in Madagascar first decreased in the years following project appraisal and then sharply increased\. The political crisis of 2009 was accompanied with a strong deterioration in the rule of law, which in rural areas manifested itself in a rapid increase in wild fires and land clearing\. EP3 financed a study to establish a reference level for carbon stocks and emissions for the entire eastern humid ecoregion\. The study shows that, over the whole region, deforestation averaged 0\.5 percent per year between 2005 and 2010 and 0\.94 percent between 2010 and 2013\. These rates are likely conservative if applied to the country as a whole\. There is anecdotal evidence that deforestation rates were much higher in the dense dry forest areas (to the West) and in the spiny forest areas (to the South)\. Table 17 shows the change in assumptions made in the economic analysis\. Table 17\. Change in deforestation assumptions between ex-ante and ex-post analysis Ex-ante assumptions Ex-post assumptions 2005-2010 2010-2013 2005-2010 2010-2013 Deforestation PA 0\.00% 0\.00% 0\.08% 0\.22% Deforestation CS 0\.00% 0\.00% 0\.32% 0\.53% Average 0\.00% 0\.00% 0\.23% 0\.42% Deforestation outside 1\.00% 1\.00% 1\.30% 2\.39% conservation sites 201\. A further assumption was that areas under management transfer (i\.e\. areas whose management was delegated to local communities through contracts with the forest administration) would have no deforestation, similar to areas under protection\. A World Bank study17 showed however that management transfer has not performed better than comparable sites that were not subject to management transfer\. For this reason, the ex-post economic analysis assumes that deforestation in management transfer sites is equivalent to deforestation outside conservation sites\. 202\. Tourism visitation had been assumed to grow at an annual rate of 5 percent per year, and the actual growth rate was actually of the same order of magnitude (4\.6 percent, Figure 2)\. The trend shows a massive slump in 2009, the year of the political crisis, which however recovered quite well\. The ex-post analysis uses the actual numbers and assumes a linear trend following 2014\. In 2015, MNP increased individual park entry fees by about 50 percent, but this change is not recorded in the analysis as it occurred at the very end of the analysis period\. 17 World Bank, 2015\. Analysis of Community Forest Management (CFM) in Madagascar\. World Bank: Washington DC\. 58 Figure 2\. PA tourist visits (2004-2014) 203\. PA management costs\. The project completion report provided by the project’s PCU shows that the management costs and average investment costs of Madagascar National Parks between 2010 and 2014 have been hovering around US$ 3 per hectare\. This is lower than the cost of US$ 5 per hectare assumed at project appraisal, and the lower value has been used for the ex-post analysis\. 204\. In spite of the political crisis, Madagascar has made important advances in terms of positioning itself globally in terms of REDD+\. The EP3 project has been instrumental in keeping the momentum, particularly by financing the development of an ecoregional emissions reference scenario for the eastern humid forest\. This work has allowed the country, once allowed to actively participate in Forest Carbon Partnership Facility meetings following the end of the political crisis, to prepare an Emission Reductions Program Idea Note which in 2015 allowed the country to enter the Carbon Fund pipeline for a potential Emission Reduction Purchase Agreement of US$ 50 million\. Without the project, much of today’s institutional capacity would be much weaker\. Today the strategic and operational direction for the REDD+ is guided by the Ministry of Environment, Ecology and Forests (MEEF), which will maintain the key role of validating and implementing REDD+ policies\. The Secretary General (SG) of the MEEF provides operational oversight for the REDD+ program and the operational body for delivering REDD+ Readiness, the National Coordination Office (BNC-REDD+)\. 205\. Against this backdrop, and thanks to the work done over the year, a number of carbon projects have made their way into actual carbon deals\. The Makira carbon project, the most advanced of the REDD+ projects in Madagascar, is located in the Eastern humid forests in the northeast of the country\. The Project is managed by the WCS, and has a 30-year life span with an estimated 38,000 tons of avoided carbon emissions during this period\. A REDD+ sale of about US$ 400,000 was concluded in 2014 with Microsoft\. The Ankeniheny Zahamena Corridor (CAZ) carbon project is also located in the country’s Eastern humid forest and is being managed by CI\. The CAZ project has certified over 3 million Emission Reductions (ER), of which the BioCarbon Fund (BioCF) has agreed to purchase 430,000, for an equivalent of US$ 1\.5 million (expected to be finalized in 2016)\. The Holistic Forest Conservation Program (PHCF) REDD+ initiative is 59 being managed by the non-governmental organizations (NGO) EtcTerra and WWF and is distributed over five sites from the northeast to the southeast of Madagascar\. Ex-post results 206\. As shown in Table 18, the Net Present Value of the project’s net benefits were, according to the ex-post analysis, negative, with a value US$ -4\.6 million\. Total project costs increased 9 percent (from US$ 279 million to US$ 305 million)\. This was in large part due to the increase in foregone revenues for farmers, since PAs saw much lower deforestation rates than non-PAs\. Foregone revenues from unsustainable timber production also contributed to this difference\. Total project benefits increased 4 percent (from US$ 290 million to US$ 300 million)\. This was mostly the result of increased watershed management services provided by the higher than initially envisaged area under protection\. REDD+ carbon revenues, which came towards the end of the period of analysis, contributed relatively little to this increase\. The slightly lower performance of the tourism sector had a negative impact on the project benefits, but the impact is relatively small (i\.e\. the present value of benefits went from US$ 60 million to US$ 59 million)\. 207\. Table 18\. Ex-post cost/benefit of natural forests conservation Present value (10%, 15 years) Protected Conservation Management Total Areas Sites Transfer sites Management costs -48\.3 -33\.3 -8\.5 -90\.0 Tavy foregone revenues -64\.9 -74\.7 - -139\.6 Fuelwood foregone revenues -20\.2 -23\.9 - -44\.1 NTFP foregone revenues -10\.4 -15\.7 -5\.2 -31\.3 Total costs -143\.8 -147\.6 -13\.7 -305\.0 Biodiversity conservation 32\.5 39\.4 71\.9 Eco-tourism 58\.7 58\.7 Watershed protection 60\.7 87\.0 147\.7 REDD+ 0\.6 0\.6 Sustainable fuelwood collection 8\.5 8\.5 Sustainable NTFP collection 13\.1 13\.1 Total benefits 151\.9 127\.0 21\.6 300\.4 NPV 8\.1 -20\.6 7\.9 -4\.6 IRR -- -- -- -- 208\. It is important to note that the economic analysis might be using a very conservative estimate of global biodiversity values, i\.e\. US$ 3 per hectare\. This is the assumed value that foreigners would be willing to pay to protect biodiversity in Madagascar (thus not including the value of ecosystem services, which are captured by residents of the country)\. A switching value, i\.e\. the value necessary to bring the NPV of the overall project to nil, was estimated\. The analysis suggests that a modest increase of 14 percent in the global value of biodiversity (from US$ 3 to US$ 3\.425 per hectare) would provide such switching value\. 209\. Pearce and Moran (1994), which is still a key reference to estimating global biodiversity’s total economic value, suggest that Debt-for-nature swaps may constitute one possible way of uncovering the size of global existence values\. Debt-for-nature swaps (DFNs) involve the purchase, usually by an international conservation organization, but also by governments and even individuals, of developing countries' secondary debt in the secondary debt market\. Such secondary debt is sold by existing holders at a discount, 60 reflecting the market's judgement on the probability of repayment\. In a DFN, the holder then offers to give up the debt holding in exchange for an undertaking by the debtor country government or an acting conservation organization to protect a given area, train conservationists, etc\. The idea of valuing the biodiversity so conserved through DFNs is that the payment made reflects some kind of willingness to pay on the part of the conservation body purchasing the debt\. Finding a benchmark from such an analysis, Pearce and Moran (1994) conclude, “is hazardous but something of the order of $5/ha seems appropriate”\. This value is considerably higher than the one use in the analysis\. Financial Analysis 210\. Key project stakeholders include MNP, which manages the majority of the PAs subject to strict conservation, and the farmers that live in and around PAs\. The financial analysis focuses on these two groups of stakeholders\. MNP 211\. The ultimate goal for financing the PAs network was a reduced reliance on external financing sources to ensure that in the future, a large proportion of MNP and the new forestry corridor’s running costs were covered by: (i) the net revenue of the Foundation; (ii) park entrance fees and other direct and indirect fiscal revenues from tourism; and (iii) carbon finance (through the voluntary carbon market and in the longer term avoided deforestation performance payments through Reducing Emissions from Degradation and Deforestation Initiatives – REDD+)\. 212\. The original EP3 project and the additional financing were meant to facilitate a shift from the current approach of providing direct financing, to an approach that provides more proactive support for the creation of sustainable financing mechanisms\. It was envisaged that such a shift would, in the medium to long term, create a sustainable revenue stream for the PA network to cover a sizeable proportion of total costs\. 213\. Results are mixed\. While the Foundation has overcome its capitalization target of US$ 50 million, a slump in the financial markets has meant that the revenues it generates are less than originally expected\. Moreover, the political crisis has held back much of the tourism development potential of the country, which means in turn that this source of endogenous financing has not grown as much as it should have\. As a result, MNP today still depends on international partners for the financing of around 80 percent of its recurrent costs\. With the closing of the Additional Financing, MNP is facing a financing gap estimated in Euro 10 million over the next 5 years\. Moreover, Madagascar National Parks continues to capture only a fraction of the fiscal revenues generated by its Parks\. The most visited national parks of Madagascar are currently generating significant tax and fee revenues for the country, whereas the Government’s contribution to pay for PAs costs remain very limited\. Farmers and local communities 214\. From the local communities’ standpoint, the ex-ante economic analysis predicted that the external benefits of the project (watershed protection services) would outweigh the external costs (opportunity cost)\. The ex-post analysis however shows that, in all likelihood, this was not the case (Table 19)\. In fact, the 61 calculations show that net benefit to farmers and local communities could have been in the order of US$40 million\. Two important caveats apply\. The first is that this financial cost is to be understood as being the cost relative to a counterfactual in which, in the absence of PAs, deforestation and unsustainable practices in the same areas would have taken place at the much higher pace observed elsewhere\. The second caveat is that this estimate excludes the efforts made to compensate farmers both directly through EP3 financed community development support activities and indirectly through the support provided by companion projects such as the Social Protection and the Rural Development Support IDA projects\. Table 19 shows that even if the additional financing project proceeds used for community development activities and safeguards are accounted for, this would not be enough to fully compensate the opportunity cost imposed by the project on communities\. 215\. Moreover, the winners and losers are not the same households\. Even assuming that compensation activities did make up for the losses, there remains one of the classic problems in cost-benefit analysis of projects: how can beneficiaries directly compensate losers? A system of payments for environmental services in these watersheds is worth exploring, but the challenges linked to finding payment vehicles and creating institutions should not be dismissed\. Table 19\. Costs and benefits to farmers and local communities Costs and benefits (US$ million) Protected Conservation Management Total Areas Sites Transfer Sites Ex-ante Costs (forgone slash and burn; (64\.35) (72\.85) (23\.62) (160\.83) unsustainable fuelwood; unsustainable NTFP) Benefits (Watershed protection; 57\.43 70\.52 37\.66 165\.61 sustainable fuelwood; sustainable NTFP) Net (6\.92) (2\.34) 14\.04 4\.78 Ex-post Costs (forgone slash and burn; (95\.48) (114\.30) (5\.22) (214\.99) unsustainable fuelwood; unsustainable NTFP) Benefits (Watershed protection; 60\.73 87\.00 21\.58 169\.31 sustainable fuelwood; sustainable NTFP) Net (34\.75) (27\.29) 16\.36 (45\.68) Project proceeds utilized for community 8\.2 development activities and safeguards 62 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Martien Van Nieuwkoop Practice Manager GFA12 Team Leader Christophe Crepin Sector Leader GEN02 Team Leader Environment Bienvenu Rajaonson Senior Environmental Specialist AFTN1 - HIS Specialist Agricultural Ziva Razafintsalama Sr Agricultural Spec\. GFA07 Specialist Financial Joseph Byamugisha Sr Financial Management Specialist GGODR Management Lova Niaina Ravaoarimino Senior Procurement Specialist GGO07 Procurement Environment Paul-Jean Feno Senior Environmental Specialist GEN07 Safeguards Renganaden Soopramanien Consultant LEGAF-HIS Counsel Charles Di Leva Cousel LEGAF-HIS Counsel Rondro Malanto Rajaobelison Program Assistant AFMMG Team Support Supervision/ICR Adele Faure Consultant AFTN1 - HIS Technical Support Arbi Ben Achour Consultant GSU11 Technical Support Environment Bienvenu Rajaonson Senior Environmental Specialist AFTN1 - HIS Specialist Ellena Rabeson Operations Officer AFMMG Operations Francois Marie Maurice Financial Sr Financial Management Specialist AFTME - HIS Rakotoarimanana Management Giovanni Ruta Sr Environmental Economist GEN07 Team Leader Gordon Appleby Consultant AFRDE Technical Support Financial Jean Charles Amon Kra Sr Financial Management Specialist GGO13 Management Jean-Christophe Carret Country Manager AFMCF Team Leader Protected Areas Juerg Brand Consultant AFTN1 - HIS Management Specialist Sustainable Forest Klas Sander Senior Environmental Economist GEN04 Management Specialist Liliane Randrianarivelo Consultant AFTME - HIS Technical Support Lova Niaina Ravaoarimino Senior Procurement Specialist GGO07 Procurement Mahefasoa Philippe Consultant AFTPR-HIS Technical Support Randriamamonjy Martien Van Nieuwkoop Practice Manager GFA12 Team Leader Michael Carroll Consultant GEN07 Co-Author of ICR Mohammed A\. Bekhechi Consultant GEN05 M&E Specialist 63  Environmental Olivia Rakotomalala Operation Analyst AFTN1 Specialist Environment Paul-Jean Feno Senior Environmental Specialist GEN07 Safeguards Rondro Malanto Rajaobelison Program Assistant AFMMG Team Support Sofia Bettencourt Lead Operations Officer GFDRR Team Leader Sylvain Auguste Rambeloson Senior Procurement Specialist GGO07 Procurement Vohangitiana Josiane Rarivoson Team Assistant AFCS2 Team Support Agricultural Ziva Razafintsalama Sr Agricultural Spec\. GFA07 Specialist \.Hélène Bertaud Senior Counsel LEGSG Counsel \.Nathalie Munzberg Senior Counsel LEGAF Counsel Olga Gavryliuk Consultant GENDR Technical Support Mynah Nassila Consultant GENDR Technical Support Jana Plananska Consultant GENDR Technical Support Giovanni Ruta Senior Environmental Economist GEN07 Team Leader (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending and Supervision 1,931\.50 Total: 1,931\.50 ICR 60\.00 Total: 60\.00 64 Annex 5\. Summary of Borrower's ICR and/or Comments on Draft ICR The borrower has not sent a Completion Report\. Comments on Draft ICR were provided verbally and are summarized in the main text\. 65 Annex 6\. Comments of Cofinanciers and Other Partners/Stakeholders Beneficiary Survey Results 216\. A beneficiary survey was conducted from October to December 2015\. The survey covered 32 PAs and 766 beneficiaries participated in the survey\. 217\. The survey concluded that beneficiaries were satisfied about the results of the project intervention in terms of (i) biodiversity valuation, (ii) environmental education, (iii) spinning effect for population around PAs and (iv) ownership of local stakeholders\. 218\. The survey also concluded that beneficiaries were partly satisfied about the activities related to the extension of PA system, forest management and reduction of degradation of natural resources\. 63 percent of the beneficiaries were satisfied about the project methodology\. Beneficiaries confirmed that the Project met their expectation\. However, the majority of PAPs were not satisfied about the project\. 219\. The majority of the beneficiaries are not satisfied about the choice of service providers\. 220\. The co-management was satisfactory but the participatory approach during the identification of subproject were not fully effective\. Beneficiaries were satisfied about the capacity building activities\. 221\. The main recommendations based on the beneficiary survey findings are: a\. Reinforce the communication on environmental issues/benefit to strengthen beneficiaries ownership; b\. Improve the beneficiaries request procedure for subproject to allow sufficient time for application; c\. Increase beneficiaries involvement during the project identification; d\. Improve the monitoring of service providers to ensure the quality of services; e\. Strengthen the support to PAPs regarding compensation and training; f\. Prioritize infrastructures targeting community but not individual; g\. Ensure that support activities are adequate to the local context; h\. Strengthen the sustainable development actions by involving more government entities; i\. Strengthen the PAs control, particularly to fight against bush fire; j\. Strengthen the management transfer aiming at involving local community and improve sustainability\. 66 Stakeholder Workshop Report and Results (if any) 222\. A stakeholder workshop was held on December 22nd, 2015\. Over 200 people participated in the workshop, including Government, technical and financial partners, international and national NGOs, civil society and private sector representatives\. 223\. Stakeholders’ comments were based on 12 statements related to the project components/activities and their results\. The participants were divided into small groups to discuss about each of the statement\. The table below summarizes the participants’ feedback\. Percentage of participant Strongly Strongly Statements Agree Disagree Agree disagree Component 1: PAs management S1: PA creation was a good idea 81% 19% 0% 0% S2: PAs were not well-managed 0% 81% 19% 0% S3: People were mistaken to think that PAs creation would attract tourists\. 31% 31% 25% 13% S4: The relationship between populations living in the PA peripheral area would be harmonized when boundaries are clear and recognized\. 44% 31% 25% 0% Component 2: Forest ecosystem management S5: I did not benefit from forest management transfer\. 38% 50% 13% 0% S6: If any improvements are done for the forest management contract, the manager will likely to conduct activities that are not specified in the management plan\. 63% 25% 13% 0% S7: Malagasy consumers do not worry about the wood traceability and it will remain the case for the 5 coming years\. 31% 25% 25% 13% Component 3: Environmental mainstreaming S8: In case of environmental issues, people are generally not equipped to mitigate\. 31% 38% 25% 0% S9: I have responsibility in the lack of environmental- friendly behavior\. 38% 31% 25% 0% Component 4: Forest and environmental governance S10: It was planned to create a National association for forest management\. There was good reason for not doing that\. 25% 50% 19% 0% S11: I would have contributed in avoiding illegal rosewood and turtle exploitation\. 19% 44% 31% 0% S12: Subproject activities (irrigations, schools, seeds, …) did not meet expected impact on lowering the pressure on natural resources\. 63% 31% 0% 0% 67 Annex 7\. Overview of EP1 and EP2 Environment Program 1 (EP1) 224\. EP1 represented Phase I of the first environmental program (EP) of its kind, magnitude and complexity implemented in Africa\. It was a groundbreaking effort supported by the GOM and a number of international donors as an initial step in what was recognized as a long term process for which local expertise and capacity would need to be developed in order to achieve program objectives\. In response, a cautious two staged approach was adopted in project design divided into institutional building (2 years) and pilot implementation (3 years)\. The experience derived from the EP initial phase was expected to be consolidated in the program's second phase before its further expansion and diversification into other sectors in the program's final phase (EP3)\. 225\. The first phase program (EP1) was meant to be the initial five year slice of a fifteen year National Environmental Action Program (NEAP) prepared in 1987/88 and was implemented between 1991 and 1996 at the cost of US$ 110 million, largely focusing on biodiversity conservation in PAs\. Project objectives were the: (a) conservation and management of Madagascar's biodiversity, (b) promotion of the sustainable development and management of the country's natural resources, (c) improvement of the population's living conditions, and (d) development of the country's human resources and institutional capacity\. 226\. EP1 consisted of seven components: (a) protection and management of biodiversity; (b) soil conservation, agro-forestry, reforestation and other rural development activities in priority areas; (c) mapping in priority areas and the progressive establishment of a geographic information system (GIS); (d) boundary delimitation and improved land security through land titling in priority areas; (e) environmental training, education, and awareness; (f) environmental research; and (g) a range of activities supporting institution building, the establishment of environmental assessment (EA) procedures and data base, studies, and monitoring and evaluation (M&E)\. In addition to the above, selected components from the Bank- supported Forest Management and Protection Project (Cr\. 1878 MAG) were transferred to EP1 at its closure in 1994\. 227\. EP1 was cofinanced by IDA (US$ 26 million), the Norwegian Government (NKr 25 million, equivalent to about US$ 3\.8 million), and other cofinanciers represented by Switzerland, France (FAC), Germany (KfW), USA (USAID) and UNDP (US$ 38\.1 million)\. The contribution of the GOM was estimated at US$ 17\.1 million, including US$ 13\.2 million in duties and taxes\. Implementation Experience and Results 228\. The outcome of the various program components and their respective activities was mixed\. EP1 established three new institutions charged with specific environmental tasks in conformity with program objectives (ANGAP, ANAE, and ONE)\. In addition, EP1 also achieved or sometimes even exceeded many of its physical objectives (i\.e\., classification and definition of boundaries of 44 PAs, implementation of about 1,000 demand-driven sub-projects, and a vast study program)\. Finally, despite the difficulty of monitoring biodiversity and the corresponding lack of hard data, there was a general feeling amongst donors as well as environmental experts that Madagascar's biodiversity was at less risk at project closure than at the advent of EP1\. 68 229\. Nevertheless, although one of EP1's main objectives - to establish the required institutional framework for a sustainable environment program- was achieved by the establishment of three new agencies, their long term future was assessed as uncertain\. Moreover, at the end of EPI there was still no government-adopted policy framework in place, no comprehensive policy-related action plan had been designed, and inter- and intra-coordination between and within government agencies, the executing agencies, the donors, and NGO's remained weak\. 230\. Moreover, the approach to environmental protection and management was largely based on isolated, self-standing activities, rather than integrated interventions\. Coupled with EP1's overly broad objectives, the geographically widely dispersed activities have tended to overstretch the capacity of the implementing agencies, especially in the new institutions\. Finally, the absence of an objective-oriented M&E system prevented an adequate assessment of program impact\. 231\. In spite of these shortfalls, EP1 considerably advanced both international and national consciousness of the importance of conserving Madagascar's environment\. Of particular importance, it instilled a much greater awareness in government about the need for environmental protection and management, established common grounds for donor participation and its lessons were taken into account when designing EP2\. At the level of local communities in and around the PAs, the ICR reported evidence of increased sensitization and readiness to assume ownership than at the onset of the program\. For these reasons the outcome of the first phase of the EP was rated as satisfactory\. Summary of Findings, Future Operations and Key Lessons Learned 232\. Perhaps the most important finding of the ICR was that environmental protection and management requires much more than the establishment of mandate-specific institutions and the execution of a physical action program\. In contrast, under EP1 agencies were established without clearly defined common goals and objectives\. As reflected in the lack of both vertical and horizontal coordination between agencies/institutions concerned, the holistic (program) approach was never achieved\. Furthermore the proliferation of agencies led to a fragmentation of responsibilities, overlaps and gaps, both at the executive and field level, and the differentiation in institutional status contributed to rivalries and to an uncertain future which, if not properly addressed during EP2, were considered to potentially undermine the sustainability of the NEAP\. 233\. The key next steps and lessons learned from EP1, were: (i) developing an end-strategy and "roadmap" leading to the resolution of existing conflicts associated with parallel public and the newly created semi-private institutions involved in environmental planning and management; (ii) evaluating the different Integrated Conservation and Development Project (ICDP) approaches supported under EP1 as a basis for the design of EP2 activities particularly under the newly adopted regional (AGERAS) approach; (iii) program objectives and implementation responsibilities should be realistic and as specific as possible reflecting the local environment in which it will be implemented; (iv) allocating financing on a component- by-component basis to different executing agencies can undermine program synergy and objective achievement; (v) community participation in management and maintenance of the rural environment can be facilitated through demonstrated financial attractiveness (e\.g\. ANAE's mini-projects); (vi) changing human behavior and developing community-based approaches to managing PAs will likely require a long- 69 term commitment (ICDP experience); and (vii) a communication strategy is essential to the development of successful management strategies for PAs; Environment Program 2 (EP2) 234\. The Environment Program Phase 2 Project (EP2) was the second phase of the fifteen year, three- phase, US$ 410 million program, implementing the 1998 Malagasy National Environment Action Plan (NEAP)\. The second phase was implemented between 1997 and 2003 at the cost of 150 million\. EP2 focused on integrating biodiversity conservation with development, and was envisaged to generate the enabling conditions for the final third phase (EP3) to mainstream conservation into macroeconomic management and sectors programs and establish sustainable conservation financing mechanisms\. 235\. The original development objectives of EP2 were to (i) reverse current environmental degradation trends and to promote sustainable use of natural resources, including soil, water, forest cover, and biodiversity; and (ii) to create conditions for environmental considerations to become an integral part of macroeconomic and sectoral management of the country\. 236\. The EP2 objectives were highly responsive to Madagascar circumstances of continued environmental degradation and the need to preserve economically valuable and globally unique biodiversity and other natural resources\. They were supported by the 1994 Country Assistance Strategy (CAS) and the subsequent 1996 revision\. They were also reflected in the 2000 Madagascar Interim Poverty Reduction Strategy Paper (IPRSP)\. In addition, EP2 objectives were consistent with the priorities of a large number of donors – including multilateral agencies such as EU, GEF, IFAD and UNDP; bilateral donors such as USA, France, Germany, Japan, Norway, Switzerland and the Netherlands; and international NGOs such as WWF, CI, WCS, and Care International – who contributed substantial resources – US$ 65\.05 million toward project implementation\. 237\. The design of EP2 was assessed as conceptually strong – in fact, the Quality at Entry Assessment (QEA) considered some elements of the design as best practice – but it lacked realistic work program and practical implementation arrangements\. The strong features of EP2 were long-term approach, donor coordination, and linking biodiversity conservation with the development agenda\. 238\. The long-term, programmatic approach which EP1 launched, and EP2 sustained, was key in addressing long-term, complex issues of environmental degradation\. While the NEAP implementation programs in other countries commonly started as long-term multi-phased undertakings, they seldom lasted beyond the first (usually five-year) phase and left most of their agenda unresolved\. EP2 was a rare exception of a NEAP-inspired project that continued to pursue the original long-term agenda and brought it to the final phase under EP3\. Appropriately for a long-term approach, EP2 was designed flexibly, with annual programming and budgeting reviews allowing the project to adjust its focus and operations as necessary\. 239\. The focus on systematic donor collaboration – especially through the active Multi-Donor Secretariat and joint preparation and supervision missions – helped to ensure continued and coordinated donor support during EP2\. The multi-sector, comprehensive approach that EP2 adopted went beyond the narrow biodiversity conservation focus of EP1 and focused on links between biodiversity conservation and natural resource management on one side and rural development and economic development in natural 70 resource based sectors – e\.g\., tourism and forestry – on the other\. Such an approach was viewed as important in the effort to sustainably capture the economic potential of Madagascar’s unique natural resource endowment for the country’s development\. 240\. However, while the project was conceptually and technically progressive and well-timed, it had significant weaknesses that hampered its implementation\. In particular, the inaccurate and inconsistent presentation of project objectives created unnecessary confusion among the implementing agencies; its complex and impractical design lead to serious implementation difficulties\. EP2 design also had a number of negative aspects, especially regarding realism of work programming and practicality of implementation\. As Quality Enhancement Review (QER) in February 2001 noted, EP2 – with fourteen components and seven implementing agencies – was too complex to understand easily or implement efficiently\. The strain from design complexity on implementation was made worse by a lack of an adequate monitoring and evaluation system that would have allowed to determine progress, identify problems and guide adjustments\. In addition, missing links between the ambitious objectives and targets of the program and the specific outputs of annual work programs made it difficult for the implementing agencies to understand how the short-term actions relate to long-term objectives\. Finally, an inadequate reporting regime under EP2 failed to provide the management information needed for steering and supervising such a complex operation\. 241\. Although some of shortcomings of EP2 quality at entry were not avoidable (e\.g\., there are few effective alternatives to establishment of semi-autonomous implementing agencies to ensure effective program implementation), many of the key shortcomings, e\.g\. unclear objectives, ineffective monitoring and evaluation system and complex should have been addressed before project’s entry into implementation\. In retrospect, these shortcomings outweighed the progressive design features and earned an Unsatisfactory rating for Quality at Entry\. Achievement of Objective and Outputs 242\. The achievement of EP2 objectives was satisfactory\. Measured against the key performance indicators, EP2 largely met or exceeded the planned targets and brought significant accomplishments in both (i) increasing the sustainable use of natural resources in target areas; and (ii) establishing conditions for mainstreaming sustainable environmental and natural resources management at the national level\. There were several areas, however, particularly in regard to the second objective, where EP2 achievements fell short of targets\. 243\. In respect to the first objective – increasing the sustainable use of natural resources (e\.g\., soil, forests, biodiversity) in the target areas – EP2 achievements were satisfactory\. Concerning forest and land management, EP2 substantially contributed to reducing the deforestation\. The NASA satellite imagery and the decadal deforestation map constructed by Conservation International showed that deforestation rate in PAs was four times lower than outside the parks\. Importantly – both for confirming the positive impact of EP2 and guiding the future interventions under EP2 – an ongoing multivariate analysis of the data by UC Berkeley, Conservation International and the World Bank suggested that the relationship between the parks effect and decreased deforestation was causal, and could not be explained only by the placement of parks in less accessible or agriculturally less attractive areas\. EP2 interventions also contributed to controlling the incidence of unsustainable slash-and-burn (tavy) agriculture in the target areas\. Tavy incidence decreased by 72% during the first 4 years of the project\. 71 244\. Following EP2 mix of interventions promoting conservation agriculture and soil management, soil erosion was reported to diminish from the prevailing 8 tons per hectare to 1\.6 ton per hectare annually, a substantial 80% decrease while the agricultural productivity remained stable or increased\. This reduction was particularly valuable given that the target areas were areas selected because of their high population, high soil vulnerability and sizeable agricultural sector\. 245\. The improved use of forest resources in the target areas reduced degradation of sensitive ecosystems and decelerated the loss of biodiversity\. Measured through a biodiversity index, the loss of biodiversity diminished from a level of 1\.66% to a level of 0\.62% during EP2\. The expansion of the PAs based tourism that EP2 catalyzed strengthened the sustainable, non-consumptive uses of biodiversity resources and demonstrated potential to generate new revenues while meeting global conservation objectives\. 246\. Policy reform to mainstream environmental considerations into economic sectors with greatest impacts on the environment have advanced substantially in mining, fisheries, aquaculture and industry sectors\. The policy reform, however, progressed less than planned\. Several policies – tourism development policy, intellectual property protection policy, urban development policy and pesticide use policy were drafted, however not adopted or implemented by the government\. The forestry policy, which was developed and adopted during EP2 preparation as a condition of EP2 effectiveness, was not adequately implemented\. Incomplete progress of the policy reform was a significant shortcoming of EP2\. Sustainability 247\. EP2 sustainability was rated as likely\. EP2 introduced key elements of sustainable financing of biodiversity conservation and environmental management, including (i) improved system of logging fees for financing of the forestry department (DGEF); (ii) adjusted park entrance fees to increase revenues for the national park service (ANGAP); (iii) transfer of natural resource management to the communities, thus lowering the exploitation pressure on PAs and forests and reducing the enforcement and operating costs of the management agencies; and (iv) preparatory work for establishing conservation endowment trust to generate revenue for conservation activities in perpetuity\. 248\. Other EP2 accomplishments also enhance its sustainability\. At the national level, these include, forexample, effective long-term mobilization of donor resources, permanent integration of environmental education into national curricula, institutional integration of ministries responsible for environment and natural resources management, sectoral policy reform and strengthening of the EIA system, continued presentation of environmental issues in the mass media, and high profile of natural resources utilization in the public policy debate on Madagascar development\. These EP2 outcomes were seen as likely to ensure that environment will actively remain in the forefront of general awareness, government action and donor support in the medium and long term\. At an agency level, successful conversion of some of the EP2 implementing agencies into independent service providers after project restructuring demonstrated that these were able to sustain themselves in a competitive environment from the revenues earned for their services\. It is important to note that the EP2 sustainability was evaluated in the context of the entire Madagascar environment program, and was therefore largely dependent on the successful implementation of EP3\. 72 Bank and Borrower Performance Bank 249\. The Bank’s lending performance was rated as unsatisfactory\. Overall, the Bank's performance during identification, design and appraisal of EP2 was mixed, with many positive and negative aspects\. In retrospect, the consequences of the negative aspects during implementation were significant enough to consider the lending performance unsatisfactory\. Conversely, the supervision performance was rated as satisfactory, based on the assessment that the Bank's overall handling of the project, particularly during the post-restructuring period, overcame the shortcoming of project design and brought strong results\. The overall Bank performance was rated as satisfactory\. Despite the weak quality at entry, the Bank's exceptionally strong supervision effort succeeded in turning around a problem project\. The excellent supervision during the second half of the project is a best practice example of focusing on development impact during implementation and responding to core problems with relevance, timeliness and effectiveness\. Borrower 250\. The borrower preparation performance was rated unsatisfactory\. The government fully and adequately participated in EP2 preparation, made the necessary policy and financing commitments, and timely met the conditions for project effectiveness by carrying out the necessary studies and creating the new implementing agencies\. At the same time, the government promoted the project with its unclearly stated objectives, overly complex design, poor monitoring and evaluation system and other shortcomings\. The unsatisfactory rating reflects the responsibility of the government for its role in launching EP2 with serious shortcomings of design and implementation arrangements\. 251\. The government implementation performance was uneven but is rated satisfactory overall\. The weak aspects of government implementation performance included high turnover in the leadership positions; high turnover of technical staff in the environment sector; weakened commitment at the highest levels of the government during the first half of EP2; poor governance in the natural resource sectors, particularly forestry; and weak support of the policy reform in some sectors\. During the second half of EP2, the main weakness of government performance was its inability to promulgate several of the new sectoral policies required to improve environmental and natural resource management in the country\. 252\. The strong aspects of government implementation performance were the efforts to improve governance in the forestry sector by tightening controls on logging and biodiversity permits, canceling illegal or non-paying contracts, establishing a transparent oversight mechanism through the Forest Sector Observatory, and imposing a moratorium on the transportation and export of species listed under CITES\. 253\. Performance of implementing agencies was also assessed as satisfactory, although with some gaps\. The agencies management was effective\. Management personnel was recruited competitively\. The agencies generally met or exceeded their performance targets, operating in a decentralized manner and providing strong field support, which was crucial for successful implementation of community level activities\. 254\. The weak aspects of implementing agencies performance were procurement and financial management which caused implementation delays before the financial management systems were 73 harmonized; poor coordination of their activities in the field, especially between ANGAP and ANAE, uncoordinated performance reporting which made it difficult to provide a consolidated picture of EP2 progress as well as high staff turnover and overstaffing\. Lessons Learned 255\. The design and implementation of EP1 and EP2 generated a number of important lessons\. The main lessons which were specifically oriented towards improving the design of EP3 were: 256\. Prepare robust economic analysis\. Robust and credible economic analysis of environmental projects is important, particularly as the ample availability of concessionary funding, enthusiasm for preserving unique natural resources for future generations and sense of urgency tend to detract from rigorous selection, design and implementation of interventions\. A lack of good economic analysis makes it difficult to integrate environmental and natural resources management considerations into the mainstream of the country’s economic development\. A lack of good economic analysis also makes it difficult to assess efficiency and effectiveness of various interventions and determine how to best allocate resources in the future\. 257\. Define triggers for the next phase\. In multi-phase programs, it is important to define targets the achievement of which will trigger the launch of the next program phase\. Otherwise, difficult but critical issues – such as implementation of key policies or fiscal sustainability of key agencies – may be carried over to the next phase without being properly addressed\. In the case of EP2, the carryover of outstanding issues from EP1 – for example the failure to integrate conservation and development – handicapped the start of EP2\. Similarly, EP2 insufficient progress on the policy and financial sustainability fronts was considered likely to handicap implementation of EP3\. 258\. Avoid brain-draining line ministries through project implementing agencies\. Creation of overly strong implementing agencies drains qualified staff and lowers morale in the line ministries\. To balance the short term interests of the project with long term interest of sector development, it is important to approach sector capacity building comprehensively, with a clear understanding of division of responsibilities among the line ministries and implementing agencies, especially those envisioned to stay in place permanently as service providers\. A lack of comprehensive approach leads to staffing strain on line ministries and high staff turnover among implementing agencies as they compete for qualified staff\. 259\. Coordinate environment with other programs\. To integrate environmental program into the mainstream development agenda, maximize development effectiveness and capture potential synergies, environmental projects should coordinate their focus and interventions with other development projects in the country\. This is particularly important since environmental protection depends on improved natural resource management, better agricultural production and social development interventions\. In Madagascar, EP3 should coordinate with projects such as the rural development, rural roads, rural infrastructure, micro- finances, energy and tourism\. The coordination should focus on both policy level and implementation level, where different sector operations target the same area, such as buffer zones surrounding the PAs\. 260\. Develop regional and local environmental management capabilities\. Strategically placed regional and local capacity for environmental management – in terms of trained staff and basic office 74 support – is essential for efficient implementation of field-level project activities in target zones\. Such capacity forms an important link between central structures and local communities\. In EP2, such capacity created in the regional environmental cells and ANGAP officers proved effective in successfully implementing community level activities\. 261\. Use results-based implementation\. For complex projects with a large number of multiple implementing agencies (key implementing agencies, local governments, NGOs, independent service providers) use results-based or performance-based contracts as a main vehicle of project implementation instead of the traditional disbursement arrangements\. Results-based contracts simplify the management of multiple implementers and enhance their independent functioning as service providers\. 262\. Ensure financial sustainability of environmental agencies\. Fiscal sustainability of environmental agencies established under the project is crucial in ensuring overall sustainability of project achievements\. The project should develop a fiscal sustainability strategy appropriate for the specific conditions in the country and in the sector, and a timeline for achieving fiscal independence overtime\. A lack of such strategy in EP2 made transition of some implementing agencies to independent service providers risky and difficult\. 263\. Address weak governance\. To contribute to sustainability of specific measures that improve natural resource management, the general governance in the key sectors must be addressed\. Focusing on technical aspects of environmental degradation without giving adequate attention to governance issues will not generate satisfactory results – as demonstrated in the forestry sector during the first half of the implementation period before EP2 introduced an action plan to address key governance issues\. For new operations, it is preferable to identify weak governance during preparation and address it systematically from the project beginning rather than reactively during project implementation\. 264\. Support modern resources management technologies with adequate extension services\. Adoption of modern natural resource management technologies – e\.g\., various conservation agriculture technologies – introduced by environmental projects frequently requires intensive knowledge and efficient initial promotion\. Their firm establishment within the target areas and their spontaneous adoption outside of the target areas requires availability of adequate extension services\. The quality of extension service providers, as EP2 showed, is instrumental in the success of the project\. 265\. Focus on rural livelihoods\. To ensure sustainability, environmental projects must complement the field-level conservation measures with a provision of alternative livelihood opportunities\. Alternative livelihoods, based, e\.g\., on agricultural intensification or ecotourism, help to reduce the pressure on natural resource overexploitation and degradation, and enhance the effectiveness and sustainability of direct conservation measures\. 266\. Use monitoring and evaluation for project management\. A clear and practical monitoring system is essential, not only for assessing final outcomes of the project, but also for periodic evaluation of interim progress, particularly in complex projects\. Monitoring indicators should be simple, robust, easily measurable, and, most of all, continuously used as one of the basic project management tools\. Quantitative monitoring indicators should be complemented by enough qualitative data\. 75 Annex 8\. List of Supporting Documents Critical Ecosystem Partnership Fund 2015\. Ecosystem Profile Madagascar and Indian Ocean Islands, Antananarivo Fondation pour les aires protegées et la biodiversité de Madagascar 2015\. Rapport annuel 2014\. Government of Madagascar 2016\. Cabinet ECR - Evaluation D’impacts Des Interventions Du Projet D’appui De L’IDA/GEF – Rapport National Consolidé, Antananarivo Government of Madagascar 2015\. Ministere de L’environnement, de L’ecologie, de la Mer et des Forets - Unité de Coordination des Projets Environnementaux - Projet D’appui de L’IDA/GEF Au PE3 – Extension Du Financement Additionnel Rapport D’activités (Janvier – Décembre 2015), Antananarivo Madagascar Foundation for Protected Areas and Biodiversity 2015\. Annual Report, Antananarivo Madagascar National Parks 2016\. Business Plan 2015-2020 Antananarivo Mazars Fivoarana 2015\. Evaluation du Programme Environnemental, Phase 3 et du Financement Additionnel – Rapport d’achevement, Antananarivo Pearce, D\.W\. and Moran, D\., 1994\. The economic value of biodiversity\. Earthscan\. World Bank 1998\. Madagascar Environmental Program (EP1) – Implementation Completion Report, Washington World Bank 2003\. Madagascar Environmental Program Phase II Project – Implementation Completion Report, Washington World Bank 2004\. Madagascar Third Environment Program Support Project: Project Appraisal Document, Washington World Bank 2004-2015\. Madagascar Third Environment Program Support Project: Implementation Status and Results Reports, Washington World Bank 2004-2015\. Madagascar Third Environment Program Support Project: Supervision Mission Aide Memoires, Washington World Bank 2008\. Madagascar Promoting Environmentally Sustainable Organic Cotton; JSDF Grant Agreement TF093177 Washington World Bank 2011\. Madagascar Third Environment Program Support Project: Additional Financing Project Paper, Washington World Bank 2015\. Analysis of Community Forest Management (CFM) in Madagascar, Washington World Bank 2015\. Madagascar: Assessing Options for the Disposal of Precious Wood Stockpiles Non-lending TA (P144061), Washington World Bank 2015\. Sustainable Agriculture Landscape Project (P154698/P157909) Project Concept Note, Washington 76 Map 77

REVIEW

P125799

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) Report Number : ICRR0020823 1\. Project Data Project ID Project Name P125799 MA-Judicial Performance Enhancement Country Practice Area(Lead) Morocco Governance L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IBRD-81750 31-Dec-2016 15,800,000\.00 Bank Approval Date Closing Date (Actual) 12-Jun-2012 31-Dec-2016 IBRD/IDA (USD) Grants (USD) Original Commitment 15,800,000\.00 0\.00 Revised Commitment 2,387,139\.73 0\.00 Actual 2,088,396\.37 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Malathi S\. Clay Wescott Lourdes N\. Pagaran IEGEC (Unit 1) Jayawickrama 2\. Project Objectives and Components a\. Objectives The Project Development Objective (PDO) is to strengthen the capacity of the Borrower's justice sector to deliver efficient, timely and transparent services to citizens and businesses through: (a) piloting of a participatory reform process involving judges, administrative staff, judicial auxiliaries and users in selected courts in the project area; and (b) strengthening the institutional capacity of the central functions of the Ministry of Justice and Liberties (MdJL) to better support and monitor the court system (Project Appraisal Document, PAD, p\. 6-7 and Loan Agreement, p\. 5)\. Page 1 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) b\. Were the project objectives/key associated outcome targets revised during implementation? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? No d\. Components Component 1: Improving Court Performance (appraisal, US$7\.77 million; actual US$0\.66 million)\. This component supported: preparing court performance improvement plans (PAPJs) following a participatory approach involving key stakeholders in the project area; organizing a functional separation between a “front office” and a “back office”; and upgrading and developing critical ICT tools that would allow systematizing and automating jurisdictional and administrative processes in the pilot courts\. Component 2: Upgrading the Strategic Planning and Management Capacities of the MdJL (appraisal, US$3\.89 million; actual US$0\.52 million)\. This component was to improve the MdJL’s capacity to monitor the performance of the courts and provide them with adequate support, to attain the strategic objectives of Component 1\. Overall, this Component was to provide support to the MdJL's Directorates entrusted with a cross-support function, and to the Superior Judicial Training Institute\. Component 3: Project Management, Monitoring and Evaluation (appraisal, US$0\.91 million; actual US$0\.82 million)\. This component supported MdJL's capacity to manage, monitor and evaluate project activities\. As such, this Component was to provide support to the Project Management Unit (UGP) responsible for coordinating day-to-day project activities and administering loan funds e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: At appraisal, the total project cost was estimated at US$15\.8 million or EURO 12 million\. The actual disbursement was US$2\.09 million (ICR datasheet)\. Total project cost is alternatively given as $12\.63 million and actual expenditure $2\.03 million (ICR, Annex 1, p\. 22)\.　The remaining amount was cancelled upon request by the Borrower in a letter from the Bank dated June 21, 2016 (ICR, p\. 11)\. Project Financing: The IBRD Loan was approved for Euro 12 million (US$ 15\.8 million equivalent)\. There were no other external sources of financing or Borrower contribution\. Dates: The project was approved on June 16, 2012\. Effectiveness was delayed until March 22, 2013 because of challenges in meeting effectiveness conditions\. The project underwent a Level 2 restructuring on December 9, 2015, to move the location of one of the pilot courts of the program from Sidi Kacem to El Jadida, as the Sidi Kacem First Instance Court was to be included in a development program of the Council of Europe\. The PDO, budget, scope of beneficiaries, and the locations of the other pilot courts remained the same\. Page 2 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) 3\. Relevance of Objectives & Design a\. Relevance of Objectives The project’s objectives were relevant to country conditions at the time of appraisal and remained so at project closure\. In 2011, in response to a call for curbing corruption and a more inclusive development process, Morocco adopted a new Constitution strengthening the Parliament and the Judiciary, empowering local government, and promoting a more open governance system and public administration\. The objectives were relevant to the Government’s 2012-2016 program, which, under its second pillar, reflects consolidating the rule of law, strengthening good governance, democratic participation, and advancement of regionalization and decentralization, in the context of accountability and true citizenship\. The objectives were pertinent to the World Bank’s Country Partnership Strategy (CPS, 2014-2017), which proposed to scale up its support for Morocco's open governance and green growth agendas\.　The CPS is built around three results areas: promoting competitive and inclusive growth; building a green and resilient future particularly with respect to the third results area of strengthening governance and institutions for improved service delivery to all citizens\. Rating Substantial b\. Relevance of Design The project’s components and planned activities were broadly linked to the PDO\. Preparing PAPJs involving a participatory approach, where each PAPJ included modernizing court management, standardizing application procedures to reduce delays, and increasing regular interaction with court users were intended to enhance court performance in the project areas\. Upgrading the strategic planning and management capacities of the MdJL was expected to improve MdJL’s capacity to monitor the performance of the courts\. However, the activities were not sufficient to achieve the multi-dimensional objectives of efficient, timely and transparent services to citizens and businesses\. 　 The design was envisaged to be kept flexible to support implementation of the National Dialogue, which was ongoing at the time\. The pilot approach was also appropriate given the evolving justice reform agenda of the government\. However, for the project’s bottom up approach to be effective, broad consultations with pilot courts and other stakeholders at the local level should have been started at preparation and not left until implementation\. In short, the approach was unrealistic and overly ambitious, given that the sector had no experience with bottom-up approaches to justice reform and involvement of civil society organizations, and in the context of a highly centralized operating environment\. Page 3 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) Rating Modest 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective Strengthen the capacity of the Borrower's justice sector to deliver efficient, timely and transparent services to citizens and businesses\. Rationale Morocco’s efforts in modernizing its court system were motivated in large part by the Association Agreement (2000) creating a free trade area between Morocco and the EU, and requiring Morocco to harmonize its legal framework with that of the EU\. In justice reform, the country had established specialized courts\. Despite these improvements, the justice sector was perceived as being inefficient and lacking trust of the citizens\. Improving efficiency remained a key challenge\. This included reducing the backlog of cases, staffing the justice sector and using existing resources efficiently, and strengthening organizational management, including increasing MdJL’s capacity to monitor court performance and follow modern management techniques\. To achieve the objective, the project intended to pilot reform processes in selected courts, and strengthen the institutional capacity of MdJL to support and monitor the court system\. 　 Outputs and Outcomes Except for the analytical work, none of the outputs were delivered\. As a result, none of the four PDO outcome indicators were achieved\. One intermediate outcome indicator (out of 13) on structuring two MdJL budgets around the updated Medium-Term Expenditure Framework, was achieved, but independently of the project (ICR, Data Sheet)\. Following effectiveness delays and a slow start, in 2014, consultants were hired to deliver analytical work (by 2015), which needed to be completed prior to launching project activities\. According to the ICR, this work is unlikely to be of benefit due to weak design and client perception that the consultant profiles and their work were of little value\. By project closure, no pilot courts had set up consultations\. Rating Negligible PHREVDELTBL PHREVISEDTBL 5\. Efficiency The project disbursed only US$2\.09 million compared to the original commitment of US$15\.8 million or Page 4 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) roughly 13 percent of the original project cost\. Except for the analytical work that is unlikely to be of value as mentioned in Section 4, none of the outputs were delivered\. However, while the project had negligible outputs, roughly 90 percent of the project management cost was disbursed compared to the appraisal estimates, which suggests inefficient use of project resources\. Efficiency Rating Negligible a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0 Not Applicable 0 ICR Estimate 0 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The relevance of the PDO was high, and relevance of design was modest; efficacy and efficiency were both rated as negligible\. 　The design did not include key activities that were necessary for the project’s bottom-up approach to succeed, and to achieve its objectives\. a\. Outcome Rating Highly Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating As there was negligible achievement, there is negligible risk to development outcomes\. a\. Risk to Development Outcome Rating Negligible Page 5 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) 8\. Assessment of Bank Performance a\. Quality-at-Entry The project was strategically relevant and built on background analysis\. However, the Bank proceeded to prepare the project before the government’s own justice reform agenda was finalized\. While the project was designed to be flexible to accommodate possible changes during implementation, the flexible design approach was not adopted with agility as will be noted later in the quality of supervision section\. Overall, the project was not ready to be implemented at board approval and resulted in long effectiveness delays\. The project was based on the bottom-up approach in an environment with a top-down institutional culture\. 　 This approach, which was intended to drive project implementation, was overly ambitious, given the sector had no previous experience with bottom-up approaches to justice reform and civil society organizations in this process\. At a minimum, the project could have laid the foundations for this approach by building reform momentum from the bottom-up during project preparation\. This was left until project implementation, and did not happen\. The lesson identified from a previous operation, Bank-supported Legal and Judicial Development Project (P063918) to involve a wide range of stakeholders as early as possible in the project, was not taken on board\. During project preparation, the government’s priorities shifted away from this project (with the change of leadership in MdJL in early 2012), and focused on implementing the National Dialogue to develop the Charter of Reform for the judicial system\. The PAD identified overall implementation risk as moderate, which may have been overly optimistic\. The stakeholder and capacity risks were correctly identified as high and did materialize; however, the rating of the program and donor risk as low turned out to be unrealistic\. Overall, the design was strategically relevant, and could not have anticipated the more attractive support offered by the EU during implementation\. However, there were major shortcomings in quality of entry, including insufficient consultation with stakeholders during preparation, and other design features not helpful in adapting to the evolving political environment\. Quality-at-Entry Rating Unsatisfactory b\. Quality of supervision The Bank did not make much effort to resolve project issues and risks\. The Task Team Leader (TTL) was changed between Board approval and effectiveness\. According to the ICR, there were no regular follow-up video conferences, the supervision reporting was not done in a timely manner- for example, all seven Implementation Status and Results Reports were late, with three being significantly late (i\.e\. one over 20 weeks)\. As mentioned above, the Bank was not proactive in revising the project\. For example, although implementation problems were already identified early in 2014, a mid-term review could have beeen carried out to address issues in a systematic manner\. The team could have proceeded with a major restructuring even without undertaking an MTR\. While a simple and very limited restructuring was submitted on June 24, 2015, it took over five months to be approved\. The project dragged on without any progress for three years until the closing date\. The availability of grant-based EU funding for the justice sector was a significant factor in the Page 6 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) declining Government commitment to the project\. The limited government ownership could have been mitigated if the Bank made the effort to build synergies with the EU funded operation\. The ICR states that by the fall of 2015, it was evident that the project had completely lost support from the government\. In September 2015, the Moroccan authorities requested the Bank in a letter to the Country Director to cancel the project which the Bank concurred\. The decision to close the project was appropriate in light of limited government ownership and to minimize the cost of keeping the project open when it was not likely to achieve its objectives\. Quality of Supervision Rating Highly Unsatisfactory Overall Bank Performance Rating Highly Unsatisfactory 9\. Assessment of Borrower Performance a\. Government Performance Although the Government of Morocco was supportive of the judicial reform effort in general, it appears that the authorities’ commitment was limited and diminished during implementation\. For example, the project was approved on December 6, 2012; but, budget was allocated only following the Prime Minister’s intervention in November 2013 and the first request for disbursement took place only in January 2014\. Overall, the authorities were not proactive in addressing factors that were causing implementation delays\. The Government also did not proactively respond to the World Bank’s proposal to restructure the project that may have addressed shortcomings\. As mentioned below, when other donor support to implementing the Charter became available (i\.e\. by mid-2014, the EU was also preparing a new project with grant funds), commitment to this project seems to have diminished further\. Yet the Government only requested that the project be closed in December 2015 (ICR, para 31, page 11)\. Overall, the government’s performance toward ensuring quality of preparation and smooth implementation, and progress toward achieving the PDO had major shortcomings\. Government Performance Rating Unsatisfactory b\. Implementing Agency Performance MjDL’s was initially committed to the project; however, its commitment and ownership weakened over time\. Change of leadership in MdJL in early 2012 also resulted in a change in the institution’s priorities, as mentioned above\. Consultations with local stakeholders for this project commenced only in 2013, but stalled for 14 months while the consultation process for the development of the Charter was ongoing\. One of the key factors in MdJL’s limited interest in this project was the EU was providing grant money\. The grant money offered by EU was attractive for the Moroccan authorities and presented advantages compared to the funds available under the Bank project, as they did not require the MdJL to carry out procurement and financial management activities, and provided the authorities with what they wanted: experienced practitioner experts (ICR, p\. 10)\. Page 7 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) Implementing Agency Performance Rating Unsatisfactory Overall Borrower Performance Rating Unsatisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The Technical Steering Committee and the UGP were responsible for supervising M&E activities at the PDO level and at the component level, respectively\. The design also included perception-based indicators, which were to be detailed after conducting the initial surveys aimed at establishing baseline indicators among the public and users of public courts\. A contractor selected by the UGP was to oversee the development of the M&E framework for Component 1\. The selection of project indicators and their measurement were kept modest, given the capacity and the time expected to follow the bottom-up approach\. The targets for the first two years were also conservative to allow for MdJL and the pilot courts to commit to the targets\. Despite the project’s focus on improving the performance of the judicial system in terms of service delivery, there were no baselines for any of the key performance indicators\. This project could have developed a system in pilot courts at the preparation stage to collect data on key judicial performance indicators that could have be used as a baseline for the project; however, this was not done (ICR, p\. 11-12)\. b\. M&E Implementation The arrangement for the Technical Steering Committee and UGP to monitor activities, and for the contractor to develop an M&E system never became operational\. There were delays in the procurement process for the contractor for designing and implementing surveys and project M&E\. Analytical work was finally delivered in late 2015, two and a half years into implementation\. However, the Directorate of Research, Cooperation and Modernization did not give the consultants access to the relevant data, citing security reasons\. c\. M&E Utilization M&E data were not collected or generated\. Hence, the M&E framework was never utilized\. M&E Quality Rating Negligible Page 8 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) 11\. Other Issues a\. Safeguards This was an environmental category "C" project\. According to the ICR, no safeguard policies were triggered nor did any safeguard issues arise during implementation\. b\. Fiduciary Compliance Financial Management (FM)\. At appraisal, the FM assessment concluded that MdJL had sufficient capacity to manage project finances and administer loan funds, and FM risks were low\. During implementation, the FM ratings were satisfactory until they were downgraded to moderately satisfactory in November 2014 due to a late audit\. The rating remained until closing\. Procurement: The PAD considered the overall risk for procurement as substantial due to lack of experience in Bank procurement procedures, and the absence of training provided to MdJL staff working on project implementation\. Mitigation measures included training and recruitment of a procurement specialist\. The ICR reports that although procurement was rated satisfactory throughout implementation, progress was slow and the quality of procurement documents very low (ICR, p\. 13)\.　 c\. Unintended impacts (Positive or Negative) None d\. Other None 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Highly Unsatisfactory Highly Unsatisfactory --- Risk to Development Negligible Negligible --- Outcome Major shortcomings in quality Bank Performance Unsatisfactory Highly Unsatisfactory of entry and severe shortcomings in supervision\. Page 9 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) Borrower Performance Unsatisfactory Unsatisfactory --- Quality of ICR High --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons The ICR offers several good lessons, including on the need for client ownership\.　These are summarized below using somewhat different wording\. 　 Client ownership is a critical factor in successful project implementation\. The implementing agency (MdJL) initially requested budget support; however, the Bank proposed this modest investment operation as a first step towards a sector reform program that might lead to future budget support to the sector\. Although the agency agreed, to be consistent with the government, they were not fully on board, and ownership decreased further following a change in leadership and priorities at MdJL\. The modalities offered by the World Bank in support of reform efforts need to be aligned with the country’s institutional absorptive capacity and preferences\. In this case, the loan amount was limited, implementation required a major effort to follow applicable World Bank procurement and financial management rules, and there was increasing perception that this effort and the amounts spent had low value added in comparison to the support to the sector from the EU\. Project design should not be disconnected from the reality on the ground and should adequately reflect political economy factors\. For a bottom-up approach to work effectively, it would have required both the client and the Bank to ensure effective involvement with pilot courts, local stakeholders, and civil society organizations at the earliest stages and certainly during preparation\. These efforts could not be left to the implementation stage\. IEG adds another lesson: Institutional development support requires an agile approach that can adapt to changing circumstances to ensure ownership\. This project’s flexible design could have been easily adjusted to align with the government’s National Charter for Judicial Reform as it evolved\. Instead, the project went on for too long without necessary decisions by the Bank or the borrower to make changes to improve its performance\. Given the diminished ownership, a joint decision could have been reached earlier to close the project, and thus minimize costs of processes not leading to expected results\. 14\. Assessment Recommended? Page 10 of 11  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MA-Judicial Performance Enhancement (P125799) No 15\. Comments on Quality of ICR The ICR is clear, candid, and suitably critical of the project’s shortcomings, especially with respect to its readiness for implementation\. The ICR team also presents useful lessons\. It would be helpful to have an explanation of the different amounts for project cost at appraisal and closing in the ICR Datasheet, and in Appendix 1\. Overall, the ICR is of good quality and the ICR team is commended\. a\. Quality of ICR Rating High Page 11 of 11

REVIEW

P071115

 Document of The World Bank Report No: ICR2567 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-72390 IBRD-74870) ON A LOAN IN THE AMOUNT OF EURO 34\.8 MILLION (US $44\.9 MILLION EQUIVALENT) TO THE REPUBLIC OF TUNISIA FOR A SECOND EXPORT DEVELOPMENT PROJECT March 28, 2013 Finance and Private Sector Development Group Maghreb Department Middle East and North Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective January 28, 2013) Currency Unit = Dinar 1\.0 TND = U\.S\. $ 0\.63 U\.S\. $1 = 1\.58 TND FISCAL YEAR 2013 ABBREVIATIONS AND ACRONYMS AAEU Association Agreement with the European Union ADEMAR Acceleration of Maritime Forwardings (Accélération des expéditions maritimes) AMC Authorization for Consumption (Autorisation mise à la consommation) APE Provisional Authorization for Lifting (Autorisation provisoire d'enlèvement) CAS Country Assistance Strategy CBT Central Bank of Tunisia CEPEX Center for Export Promotion (Centre de promotion des exportations) CNI National Data Processing Center (Centre national de l’informatique) COTUNACE Tunisian Company for the Insurance of Export Credit (Compagnie tunisienne pour l’assurance du commerce extérieur) ECAL Economic Competitiveness Adjustment Loan EMAF Export Market Access Fund EU European Union FDI Foreign Direct Investment FEDEX Federation of Private Exporters (Fédération des exportateurs privés) FOPRODEX Export Promotion Fund GDP Gross Domestic Product GoT Government of Tunisia IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding INNORPI National Institute of Standard and Intellectual Property (Institut national de normalisation et de propriété intellectuelle) MENA Middle East and North Africa Region LCAE Central Laboratory for Analysis and Testing (Laboratoire Central d’Analyse et d’Essai) MFA Multi-fiber Agreement MOP Manual of Procedures PCMU Project Coordination and Monitoring Unit PEFG Preshipment Export Finance Guarantee PREM Poverty Reduction Economic Management Unit SBD Standard Bidding Documents SINDA Tunisia Customs Information System SMEs Small and Medium Enterprises TD Tunisian Dinar TTFSE Trade and Transport Facilitation in South Eastern Europe TTN Tunisie Trade Net WTO World Trade Organization ii Regional Vice President: Inger Andersen Country Director: Simon M\. Gray Sector Director: Loic Chiquier Sector Manager: Simon C\. Bell Task Team Leader: Djibrilla Adamou Issa ICR Team Leader: Mehdi Benyagoub iii  TUNISIA Second Export Development Project CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 6 3\. Assessment of Outcomes \. 15 4\. Assessment of Risk to Development Outcome\. 29 5\. Assessment of Bank and Borrower Performance \. 30 6\. Lessons Learned \. 34 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 38 Annex 1\. Project Costs and Financing \. 39 Annex 2\. Outputs by Component \. 41 Annex 3\. Economic and Financial Analysis \. 47 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 52 Annex 5\. Beneficiary Survey Results \. 53 Annex 6\. Stakeholder Workshop Report and Results\. 54 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 55 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 56 Annex 9\. List of Supporting Documents \. 57 Annex 10: Summary of Impact Analyses……………………………………………\.58 MAP iv A\. Basic Information TN-Export Country: Tunisia Project Name: Development II IBRD-72390,IBRD- Project ID: P071115 L/C/TF Number(s): 74870 ICR Date: 03/21/2013 ICR Type: Core ICR Lending Instrument: SIL Borrower: GOVT\. OF TUNISIA USD 42\.00M Original Total (36M+6M in additional Disbursed Amount: USD 41\.01M Commitment: financing in April 10, 2007) Revised Amount: USD 41\.82 M Environmental Category: C Implementing Agencies: Ministry of Commerce, Center for Export Promotion (CEPEX), Compagnie Tunisienne Pour L’Assurance du Commerce Extérieur (COTUNACE), National Institute for Standardization and Industrial Property (INNORPI), Tunisian Customs Administration Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/27/2002 Effectiveness: 01/14/2005 01/14/2005 Appraisal: 02/10/2004 Restructuring(s): 01/13/2010 Approval: 06/29/2004 Mid-term Review: 10/31/2007 11/12/2007 Closing: 03/31/2010 09/30/2012 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory v  Moderately Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Moderately Overall Borrower Satisfactory Performance: Satisfactory Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No Satisfactory at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Agro-industry, marketing, and trade 15 15 Central government administration 30 30 General industry and trade sector 30 30 Other industry 20 20 SME Finance 5 5 Theme Code (as % of total Bank financing) Export development and competitiveness 40 40 Micro, Small and Medium Enterprise support 20 20 Other public sector governance 20 20 Trade facilitation and market access 20 20 E\. Bank Staff Positions At ICR At Approval Vice President: Inger Andersen Christiaan Poortman Country Director: Simon M\. Gray Theodore O\. Ahlers Sector Manager: Simon C\. Bell Zoubida Allaoua Project Team Leader: Djibrilla Adamou Issa Hamid Alavi ICR Team Leader: Mehdi Benyagoub Mehdi Benyagoub & Peter ICR Primary Author: McConaghy vi F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The focus of the project was to build upon and anchor more deeply the institutional reforms started under the first Export Development Project (EDP I) with the intention of creating a conducive export environment and encouraging trade\. The project's development objectives were to improve access to export markets and finance, and enhance the efficiency and performance of trade clearance processes including customs operations and technical controls, thereby making trade logistics more efficient\. By building on the lessons and achievements of the EDP I, the implementation of the Second Export Development Project (EDP II) was expected to strengthen market institutions for export development, enhance competitiveness of Tunisian exporters, and strengthen public-private interface to administer and promote exports\. Revised Project Development Objectives (as approved by original approving authority) The components were not revised during implementation\. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Total Exports Generated (USD 000) Value US$787 million (quantitative or 0 ($528 EMAF+ US $665 million qualitative) $259 PEFG) Date achieved 01/17/2005 09/30/2012 09/17/2012 The project achieved 84% of this target\. Comments (incl\. % The target was comprised of two sub-figures, a $528 million target for EMAF II achievement) (matching grants; component 1); and a $259 million target for PEFG (pre- shipment export finance guarantees facility)\. Original Target Actual Value Values (from Formally Revised Achieved at Indicator Baseline Value approval Target Values Completion or documents) Target Year Indicator 2: Maximum Clearance Time for Movements of Goods (days) Value 8\.1 2 N/A 3 (quantitative or vii qualitative) Date achieved 01/14/2005 09/30/2012 09/17/2012 Comments (incl\. % The project achieved 83% of this target\. achievement) (b) Intermediate Outcome Indicator(s)* Original Formally Actual Value Target Values Formally Revised Achieved at Indicator Baseline Value (from Revised Target Target Completion or approval Values Values Target Years documents) Indicator 1 : Number of Firms Assisted Through EMAF II Value (quantitative 1,000 (revised 0 500 800 (2008) 1,239 or 01/2009 Qualitative) Date 01/17/2005 11/01/2007 06/2008 10/01/2009 09/28/2012 achieved EMAF II exceeded initial target values of number of firms assisted by 146% \. Comments EMAF II exceeded targets revised in 2008 by 54%\. (incl\. % EMAF II exceeded targets revised in January 2009 by 24%\. achievement) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Number of export and professional associations assisted by EMAF II Indicator 2: Value 50 (revised (quantitative 0 40 93 01/2009) or Qualitative) Date achieved 01/17/2005 03/30/2009 09/30/2009 09/11/2012 Comments The project exceeded target values by 133%\. (incl\. % achievement) viii  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 3: Additional Exports by Firms Supported by EMAF II (000 USD) Value (quantitative 0 $528 N/A $550 or Qualitative) Date achieved 01/17/2005 09/30/2012 09/17/2012 Comments EMAF II exceeded its target by 4% or $16\.8 million in exports ($550M realized (incl\. % versus $528 M planned)\. achievement) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years INNORPI – Reduced Time for Notification to WTO of New Technical Indicator 4: Regulations (months) Value (quantitative 6 2 N/A 2 or Qualitative) Date achieved 01/17/2005 12/01/2007 09/30/2012 100% of target achieved\. Comments Notification to WTO TBT Committee of draft mandatory technical control (incl\. % requirements reduced to two months since Dec 2007; Time to access WTO achievement) notifications of new foreign technical control requirements reduced to 2 months since 2006\. Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years PEFG - Amount of Export Working Capital Loan Guaranteed (US $ mil\.) Indicator 5: Value (quantitative 0 210 N/A 54 or Qualitative) Date achieved 01/17/2005 09/30/2012 10/05/2012 Comments 26% of target was achieved\. (incl\. % achievement) ix  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 6: PEFG - Additional Exports Generated (US $ mil\.) Value (quantitative 0 259\.3 N/A 115 or Qualitative) Date achieved 01/17/2005 09/30/2012 09/30/2012 Comments 44% of target was achieved\. (incl\. % achievement) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 7: Reduced Time for Processing of Technical Control Requests APE (days) Value (quantitative 2 days 0 to 2 days N/A 3 hrs or Qualitative) Date achieved 01/17/2005 11/15/2007 10/05/2012 Comments 100% of target achieved\. (incl\. % achievement) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Reduced Time for Processing of Technical Control Requests AMC for other Indicator 8: goods (days) Value (quantitative 11 0-2 N/A 2 or Qualitative) Date achieved 01/17/2005 11/15/2007 03/31/2012 Comments (incl\. % 82% of target achieved\. achievement) x  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Reduced Time for Processing of Technical Control Requests AMC for Goods Indicator 9: Re-Exported (days) Value (quantitative 11 0-2 days N/A 3 hours or Qualitative) Date achieved 01/17/2005 11/15/2007 09/17/2012 Comments (incl\. % 100% of target achieved\. achievement) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 10: Reduced Processing time of Customs Declaration (minutes) Value (quantitative 3\.6 days 15 15 or Qualitative) Date achieved 01/17/2005 06/01/2007 10/05/2012 Comments 100% of target achieved\. (incl\. % achievement) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Percentage of Import Declarations Assigned to the Green Channel (immediate Indicator 11: release) Value (quantitative 6% 80% 50% or Qualitative) Date achieved 01/17/2005 09/30/2012 03/31/2011 Comments 63% of target value was achieved\. (incl\. % achievement) xi G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 06/30/2004 Satisfactory Satisfactory 0\.00 2 12/20/2004 Satisfactory Satisfactory 0\.00 3 04/29/2005 Satisfactory Satisfactory 1\.48 4 10/31/2005 Satisfactory Satisfactory 2\.51 5 05/12/2006 Satisfactory Satisfactory 6\.63 6 09/15/2006 Satisfactory Satisfactory 10\.35 7 12/21/2006 Satisfactory Satisfactory 11\.07 8 06/22/2007 Satisfactory Satisfactory 13\.63 9 02/19/2008 Satisfactory Satisfactory 16\.34 10 01/28/2009 Satisfactory Satisfactory 25\.25 11 11/13/2009 Satisfactory Satisfactory 29\.06 12 12/03/2009 Satisfactory Satisfactory 29\.06 13 06/23/2010 Satisfactory Satisfactory 35\.94 14 01/16/2011 Satisfactory Moderately Satisfactory 38\.15 15 01/11/2012 Satisfactory Moderately Satisfactory 42\.04 16 06/17/2012 Satisfactory Satisfactory 42\.31 17 11/24/2012 Satisfactory Moderately Satisfactory 42\.56 H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Addressed very strong demand 01/13/2010 S S 33\.79 for EMAF II program\. xii I\. Disbursement Profile xiii 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. The project was developed during a period in which Tunisia’s commendable export performance was coming under increasing pressure due to changing economic, competitive, and structural conditions\. The phasing out of the MFA (Multi-fiber Agreements) in 2004-2005 caused increased competition for Tunisia’s primary export articles (subcontracted apparel exports from the offshore sector) from countries such as India, China, Bangladesh and Eastern Europe\. Tunisia encountered a more competitive environment following the dismantling of trade barriers with the EU through the Association Agreement with the European Union (AAEU)\. In 2008, the agreement was fully implemented with trade barriers being reduced completely for industrialized goods\. 2\. In addition, Tunisia’s past impressive export performance was no longer sustainable because of a number of structural vulnerabilities\. Tunisian exporters were often sub- contractors for large foreign companies rather than arms-length exporters\. Export growth had been led almost exclusively by the off-shore garment firms (composed of firms exporting more than 80 percent of their production) that had benefited from preferential export incentives\. These firms established little linkage to domestic firms\. As a result, Tunisian exporters generally produced relatively simple goods (mainly garments) that could be easily replaced with similar products from lower cost locations\. Structural vulnerabilities were further exacerbated by the fact most on-shore firms remained largely unprepared for the international competition arising from Tunisia’s international agreements (AAEU and MFA)\. 3\. Inefficient procedures and institutional structures made conducting trade in Tunisia time intensive and costly\. For example, Tunisia's procedures for external trade required that documents be processed by multiple entities including the Ministry of Commerce, banks, the port authority, and the customs agency, as well as the usual professional organizations such as customs brokers, shipping agents, and freight forwarders\. Documents were exchanged manually\. Hard copies of documents had to be delivered and in some cases picked up again (after several days) for processing\. 19 distinct steps were required for import transactions and 15 steps were required for export transactions\. These cumbersome processes severely impeded the ability of Tunisian companies to respond to or accept short-notice orders, further undermining their competitiveness\. Rationale for Bank involvement 4\. The proposed project built on an already strong dialogue on competitiveness (e\.g\., ECAL I, II, III, EDP I, Trade Strategy Note) with the Tunisian authorities and the private sector\. In addition, it was expected that the Bank would bring a multi-dimensional cross-country perspective and experience with the design and implementation of matching grant schemes, e- government solutions and trade facilitation mechanisms\. The Government of Tunisia had been very selective in accessing IBRD financial assistance and had determined that export development continued to be a high priority where Bank assistance has proved to be beneficial\. Through EDP II, Tunisia leveraged the ability of the Bank to assist in creating market oriented institutions for trade promotion and finance, as it has also done with EDP I\. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as outlined on page 3 of PAD) 5\. The focus of the project was to build upon and anchor more deeply the institutional reforms started under the first Export Development Project (EDP I) with the intention of creating a conducive export environment and encouraging trade\. The project's development objectives were to improve access to export markets and finance, and enhance the efficiency and performance of trade clearance processes, including customs operations and technical controls, thereby making trade logistics more efficient\. By building on the lessons and achievements of the EDP I, the implementation of the Second Export Development Project (EDP II) was expected to strengthen market institutions for export development, enhance competitiveness of Tunisian exporters, and strengthen public-private interface to administer and promote exports\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 6\. The PDO was not revised during project implementation\. 1\.4 Main Beneficiaries 7\. The main beneficiaries were private-sector firms and trade associations as well as Government ministries and agencies involved in the Tunisian trading system\. The Second Export Market Access Fund (EMAF II) was intended to benefit firms and professional trade organizations including export associations, chambers of commerce, and professional consulting organizations\. Beneficiaries also included Government agencies who received technical assistance related to market access, technical controls, and trade facilitation\. For example, the Tunisian Standards and Intellectual Property Institute (INNORPI) received technical assistance for the collection, analysis, and dissemination of standards material\. The Tunisian Ministry of Commerce received financing for the implementation of an automated work flow system across seven technical control agencies\. The Tunisian Customs Agency received financing to streamline customs clearance procedures in order to reduce border clearance delays while simultaneously strengthening internal control processes\. In addition the unit in charge of trade facilitation and logistics received financing to support a data collection program on supply chain barriers in transportation and logistics\. 1\.5 Original Components (as approved) 8\. Component 1: Second Export Market Access Fund (EMAF II) – (total cost was US$37\.6 million of which IBRD was to finance US$21\.1 million); ï‚ Provide non-reimbursable co-financing of 50 percent for individual firms and 70 percent for professional associations on a demand-driven basis to help implement investments in market research and pre-competitive programs that increase export market access and competitiveness, with the remaining 50 to 30 percent mobilized from participating private sector firms and professional organizations\. 9\. Component 2: Pre-shipment Export Finance Guarantees (PEFG) Facility – (total cost is US$1\.0 million of which IBRD was to finance US$ 0\.8 million); ï‚ Strengthen the management of PEFG program that was set up under the EDP I, with the aim of further encouraging financial institutions to provide pre-shipment working capital financing to emerging exporters with viable export contracts\. Eligible sub-loans financed by 2  the PEFG facility (see Annex 4) was guaranteed for up to 90 percent of the outstanding principal amount, which represents nonperformance risks of SMEs and emerging exporters which the participating financial institutions bared for up to 180 days (and in cases where the period of production is high, up to 300 days)\. 10\. Component 3 – WTO Technical Barriers to Trade Enquiry Point – (total cost is US$1\.0 million of which IBRD was to finance US$1\.0 million); ï‚ Strengthen the capability of the Standards and Intellectual Property Institute (INNORPI) for collection, analysis and dissemination of standards information\. As such, it supported both the efforts of Tunisian firms in meeting voluntary standards critical to export expansion, and Tunisia’s efforts to meet multilateral trade obligations and prepare for regional and bilateral Free Trade Agreements (European Union and others)\. This assistance also helped enhance transparency of technical regulatory control requirements in Tunisia for importers by providing more rapid access to these regulations\. This assistance was particularly important given the strategic trade policy objectives of the Government shaped, in part, by on-going negotiations in the Doha Development Agenda of the WTO\. Specifically this component included: a\. Assistance to the Ministry of Industry (INNORPI) to strengthen its capacity related to the WTO Enquiry Point for TBT Agreement\. b\. Procurement of computerized systems to strengthen WTO Enquiry Point, including creation of a new digital database of Tunisia technical control regulations, developed jointly with the Ministry of Commerce\. c\. Training of INNORPI and Ministry staff in best practice management of information on standards and technical control regulations to meet WTO obligations in the TBT Agreement, drawing on best practice in other countries\. d\. Technical assistance for dissemination in the following areas:  Activities to disseminate information to private firms on voluntary, de-facto international standards, such as those of the International Standards Organization, International Electro-technical Commission, CODEX, ANSI, and others;  Publications and dissemination of a manual of international standards (CODEX, ISO, IEC, and others); and  Assistance to expand web-based information dissemination on standards, through the new INNORPI website\. 11\. Component 4: Trade Logistics: Extends the trade facilitation component of the EDP I and consisted of a set of actions aimed at: (i) rationalizing technical control regulations, (ii) disseminating of information on standards and technical control regulations to emerging exporters, (iii) increasing efficiency, timeliness and effectiveness of customs control procedures, and (iv) providing technical assistance to generate comprehensive logistics indicators\. 12\. Sub-component 4\.1 - Enhanced integration of technical control procedures and strengthened risk management protocols – (total cost is US$1\.41 million of which IBRD was to finance US$1\.13 million)\. This sub-component consisted of the following activities: ï‚ Automation of workflow and decision making processes of technical control agencies ï‚ Implementation of an integrated risk management system at the level of each of the technical control agencies ï‚ Implementation of the technical control digital dataset 3  13\. Sub-component 4\.2 - Streamlining and Strengthening of Customs Procedures – (total cost is US$12\.9 million of which IBRD was to finance US$10\.32 million)\. This sub-component consisted of the following activities: ï‚ Further streamline customs clearance procedures in order to reduce border clearance delays while at the same time strengthening control processes\. This would be achieved by a comprehensive set of complementary customs procedures and capacity building\. ï‚ Technical assistance for the implementation of the risk analysis, management and selectivity techniques to customs control and administration\. This included developing a risk management information system that responds to and streamlines inspection and monitoring requirements of both technical control agencies and customs\. ï‚ Techniques for deferred control and post event audit within Tunisian customs\. These procedures acted as a safety net for facilitation by providing a range of control mechanisms (documentary, physical, and accounts verification) that also acted as strong deterrents to customs fraud and smuggling\. ï‚ Improving the management information system of Tunisia Customs by adding database definitions for collection of data within SINDA (Tunisia Customs Information System) which enabled regular analysis of customs operations effectiveness, productivity measures, fraud cases, detection rate, and other management indicators\. This also enabled the automated collection of data for performance indicators for this component\. ï‚ Strengthen technology infrastructure to support these changes; procurement was to consist of scanners, computer hardware and other equipment\. 14\. Sub-component 4\.3 - Trade Logistics Performance Indicators\. (total cost is US$1\.25 million of which IBRD was to finance US$1\.0 million\. This sub-component consisted of the following activities: ï‚ A detailed assessment and data collection program on supply chain barriers in transportation and logistics 15\. Component 5: Project Management – (total cost is US$310,000 of which IBRD was to finance US$250,000) ï‚ Training in procurement and modern techniques of financial management, as required by Bank Guidelines\. ï‚ Training and consulting services to enable the PSCU to effectively perform the following functions: a\. the coordination of executing agencies and monitoring the performance indicators of the project; b\. the preparation of the progress reports and working documents required by the supervision missions; c\. the provision of information and reports to the Steering Committee and the Bank; the monitoring and consolidation of the project's financial management, and assistance to the executing agencies in procurement and financial management and in meeting the reporting requirements of the Bank; d\. Computer and office equipment; 4 Cost Breakdown of Project Components (as outlined in approved PAD): Indicative % of Bank % of Bank Cost US $ Total financing Financing Component Million US$ Million EXPORT MARKET ACCESS FUND - EMAF II 31\.60 56\.6 16\.60 0\.52 -Consulting and training services 5\.00 8\.9 4\.00 0\.80 -Vendor development program 1\.00 1\.8 0\.50 0\.50 Total EMAF II 37\.60 67\.0% 21\.10 0\.56 % PEFG MANAGEMENT 1\.00 1\.8% 0\.80 0\.02 WTO TBT ENQUIRY POINT 1\.00 1\.8% 1\.00 100% Indicative % of Bank % of Bank Component Cost US $ Total financing Financing Million US$ Million TRADE FACILITATION -Technical Control 1\.41 2\.50 1\.13 0\.80 -Customs 12\.90 23\.00 10\.32 0\.80 -Logistics indicators 1\.25 2\.23 1\.00 0\.80 Total Trade Facilitation 15\.56 27\.80% 12\.45 0\.80 PROJECT MANAGEMENT 0\.31 0\.50 0\.25 0\.80 Total Project Costs 55\.47 0\.99% 35\.60 0\.64% Front-end fee 0\.36 0\.01 0\.36 0\.01 Total Financing: 55\.83 1\.00 36\.00 1\.00 1\.6 Revised Components 16\. The components were not revised during implementation\. 1\.7 Other significant changes 17\. There were no significant changes to the design of the project or the implementing arrangements\. 18\. Regarding scale of the project, output indicators were revised upwards to reflect strong demand for the matching grant program (component 1; EMAF II)\. The original output called for 500 firms and 40 association assisted through EMAF II funding by year 5\. As of 30 September 2006, FAMEX 2 approved 500 individual export plans (representing a total value of $ 18\.33 million)\. Six million in additional financing became effective in March 2008 specifically to finance the scaled-up activities associated with increased demand for EMAF II\. The intended target for number of firms assisted was increased from 500 to 800 in early 2008 and later to 1,000 after additional financing from the Government was put into the project in January 2009\. At project closing (September 30 2012) 1239 firms and 93 associations had been services by EMAF II\. 19\. The project was extended three times to reflect changes in project performance and the external environment\. An initial extension from March 2010-March 2011 was designed to ramp up 5  highly successful components, particularly EMAF II and reforms within the customs administration, as well as allow more time to complete activities that were not going to be completed in the given time frame, for example, technical control procedures\. In March 2011 the Government requested a 12 month extension because of delays in implementing IT equipment and staff training related to enhancing technical controls (sub-component 4\.1)\. In addition, EMAF II and the PEFG facility needed to be given more time to complete remaining activities (completion of export plans and awareness campaigns)\. Uncertainty created by the Tunisian revolution created delays in completing remaining tasks, including training, procurement, and institutional capacity building given high turnover of key personnel during this period\. 20\. The project was extended a third time for six months from March until September 2012 to complete wrap up activities under EMAF II (finalizing last batch of export plans and database management), ensure administrative and other follow-up to consultant work, under the EMAF II component; (ii) completing procurement procedures for the installation of new equipment for the Customs Administration; (iii) installing and testing equipment for the technical control component\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 20 The project’s preparation, design, and quality at entry are considered satisfactory and comprehensive\. 21 The QEA7 assessment determined the project’s overall quality at entry to be satisfactory\. The assessment was based on review of key project documents and a lengthy interview with several members of the task team and two representatives from the Government executing agencies\. The report cites staff continuity from EDP I, effective use of experience from the first project, and the project being part of a robust framework of overall assistance for Tunisia by the Bank\. The assessment also assigned a Satisfactory rating to the eight quality dimension and to the Bank’s Inputs and Processes\. These ratings reflected the panel’s judgment on the good use made during project design of internal experience with export development and the experience gained under EDPI I, as well as the team’s careful selection of components that have a high likelihood of being implemented successfully\. 22 The QEA7 assessment found that it was likely the project would be sustainable given project design and past experience given the first EDP\. The panel also found that the lessons learnt in the ICR for EDPI I was fully reflected in the design of EDP II\. In addition, the assessment notes that the overall arrangement for monitoring implementation and evaluating impact was appropriate given sound indicators outlined in the PAD and the extensive M&E system developed under the first project\. The assessment stated the M&E system was strengthened by the sub-component related to logistics performance indicators that was included within the project design\. 23 With regards to preparation, the project built on past work completed on export competitiveness by the Bank and the Government, specifically EDP I (2000-2004) and four economic competitiveness development policy loans (ECAL I, II, III, and IV)\. The project was closely aligned with the FY2005-2008 CAS which called for the strengthening of the business environment to support the development of a more competitive, internationally integrated private 6  sector, and to improve the competitiveness of the Tunisian economy\.1 The CAS also called for improvements to the education system and improved linkages between research, higher education, and the marketplace to achieve greater innovation and competitiveness\. 24 The project design reflected lessons learnt from export development projects in other emerging markets\. PEFG schemes have played a pivotal role in exploiting export potential: about half of the export value added has been generated by SME exporters in successful economies (World Bank 2005)\. PEFG was structured on schemes developed in Korea and Taiwan, China\. With regard to customs and efficient border crossings, the project drew on international experiences such as ADEMAR, which is an electronic logistics network in France that interfaces customs computer systems with container terminal operators, the port authority and market players in the transport business (shipping agents, freight forwarders, haulers)\. 25 The project design reflected the economic, sectoral (trade), and political-economic context of Tunisia during project preparation\. Institutional settings at that time were seen as “rigidâ€? with options for institutional reorganization and addressing public-sector inefficiencies limited\. There was little flexibility within public agencies in terms of finding ways to improve services to enterprises\. The Government would not consider any type of activities that involved a change of the existing institutional context of public agencies\. This included measures affecting the incentive structure of public agencies\. As a result, EMAF II relied on staff composed of consultants and managed based on volume targets\. This was not an option considered feasible within a public institution such as CEPEX, the public agency responsible for export promotion in Tunisia\. Connected, international experience with export promotion demonstrated that independent entities were largely more effective from a financial and managerial standpoint\. 26 Project preparation was further strengthened by incorporating lessons from the first EDP project\. Important lessons that were incorporated from EDP I included incorporating a public-private approach to export promotion, which is more effective and sustainable than purely public and centralized support on a demand-driven basis without targeting\. Similarly, EMAF II reinforced market creation benefits of the matching grant schemes through providing assistance to business associations as well as firms, increasing substantially the number of firms assisted by the program, and focusing on a broad cross-sectional set of sectors targeted\. Because of the multiplicity of actors involved in trade and export transactions, the project incorporated structures to help promote collaboration amongst Government entities and market players\. This included a steering committee and a technical committee composed of key stakeholders at early stages of the process\. Project management also underlined the importance for strong Government commitment and strong PCMU management\. 27 With regards to export financing guarantees (component 2), the project incorporated the key lessons from EDP I that export finance schemes should not be managed as export credit insurance schemes, but rather require a strong and credible management team focused on cultivating strong relations with financial institutions\. This is particularly true given many banks are risk averse in Tunisia and are reluctant to finance exporting firms\. 1 2004 CAS for Tunisia: http://www- wds\.worldbank\.org/external/default/WDSContentServer/WDSP/IB/2004/07/13/000012009_20040713125947/Rend ered/PDF/287910rev\.pdf 7 28 The project also incorporated leading research on the importance of trade facilitation reform on export development into project design\. Leading research2 demonstrated that trade facilitation reforms do improve the export performance of developing countries\. This is particularly true with investment in physical infrastructure and regulatory reform to improve the business environment\. Research showed that activities seeking to enhance export activities must be coupled with important trade facilitation reforms including customs efficiency reform, standards harmonization, and streamlined border and technical control procedures\. Component 4 (trade logistics) sought to operationalize this research through reform of customs, integration of the technical controls database, and the development of trade logistics indicators\. Risk Identification and Mitigation: Foreseeable risks were well outlined in project documents and mitigation strategies were built into project design as well as the monitoring and evaluation framework\. 28 Three critical risks were identified upon entry: i) external market dynamics and the demand for Tunisian exports; ii) inefficiency of the PEFG management team (as experienced under EDP I); iii) risk of agencies involved in trade transactions continuing with their manual processing of trade documents and existing inefficient clearance procedures\. 29 The first risk was deemed manageable because of the country’s commendable export performance leading up to EDP II and the strong institutional history Tunisia possessed with regards to export performance given EDP I\. Tunisia’s growth and development successes over the past decades have largely been fuelled by export of goods\. The export sector grew at an average yearly rate of about 5\.3 percent between 1997 and 20103\. Over the years, Tunisia had initiated two waves of economic structural changes in its export sector\. The first wave of transformation entailed a diversification away from oil toward light manufacturing and tourism\. This was done by the creation by the Government of an “offshoreâ€? sector with generous fiscal and financial incentives to attract foreign direct investments (FDI) and boost exports\. In the second, major shifts occurred with the manufacturing sector\. Within the manufacturing sector, electrical and mechanical products emerged as important exporting sub-sectors\. The sectors have been able to attract investment, raise factor productivity and boost job creation\. Overall, Tunisia was seen as a regional leader with regards to export promotion\. Similarly, under EDP II the Government was addressing export competitiveness directly\. The risk of export demand was considered moderate, however, because of the overall high trade transaction costs imposed on Tunisian firms and increased competitive pressures (see section 1\.1 for greater detail)\. 30 The second risk was also seen as moderate given project design of PEFG, strong project oversight by the project coordination and monitoring unit (PCMU), and the institutional commitment to the project shown by the Tunisian Company for the Insurance of Export Credit (COTUNACE) – the institution that managed PEFG\. The project team studied the limited success of the export guarantee scheme under EDP I and built lessons learnt into project design moving into EDP II\. These lessons included the need for a strong and credible management team and the need to develop strategies to overcome the challenging relations between banks and firms in Tunisia\. Under EDP II PEFG was designed with the use of expert consultants that were allowed to operate relatively independently from COTUNACE management\. This included developing appropriate terms of 2 See: “Export Performance and Trade Facilitation Reform: Hard and Soft Infrastructure,â€? World Development Vol\. 40, No\. 7, pp\. 1295–1307, Portugal-Perez, A\., & Wilson, S\.J\. Note John S\. Wilson was a member of the project preparation team\. 3 - This rate is however slightly below the growth rate of world exports in goods and services which stood at 7 percent over the period\. 8  reference and incentives for management\. Similarly, banks were made aware of the scheme as early as possible through consistent marketing and education\. COTUNACE management had dedicated personnel to outreach to Banks in order to overcome risk aversion that prevented participation of the program under EDP I\. All of these measures helped promote Bank commitment in the program, moderated the risk of inefficiencies in PEFG management, and helped increase the chances of program success\. 31 The third risk was mitigated through the requirement for electronic processing of trade clearances by key agencies within the project\. A core section of the project was the requirement of technical control agencies to process their clearances on line as well the modernization of customs processing that would contribute to enhanced transparency, efficiency, and electronic processing of exports\. The project also included the development of trade facilitation indicators to track progress amongst customs and other Government ministries involved in automation of trade processes\. These measures were also meant to act as risk mitigators and encourage the use of information technology and selectivity in customs clearance and efficient border crossings\. 32 At the project level, the World Bank had strong confidence in the institutional capacity of the Government in light of EDP I, as well as the overall commitment of the Government to achieve project objectives\. The benefits of automatic processing of trading procedures to enhance the overall efficiency of trade were well understood by Government ministries and discussed at lengths during project preparation\. Earlier experience from EDP I reinforced this dialogue\. These factors as a whole helped mitigate the risk of continued manual processing of documents amongst Government ministries\. 2\.2 Implementation 33 The strong capacity of the executing agencies and high level of ownership at the onset of EDPII were key factors in the successful implementation of the project objectives\. The PCMU was set up within the Ministry of Commerce and was responsible for project management and timing, reporting to Government and to the Bank, and coordination amongst implementing agencies\. The PCMU was in charge of ensuring that budgetary, procurement, contracting, disbursement, administrative, accounting, auditing, and reporting arrangements were undertaken according to Bank’s procedures\. The PCMU was very effective at program management, consistently overseeing component implementation, reporting to the Bank in a timely manner, identifying challenges and opportunities within various components as they came up, and encouraging synergies through dialogue between executing agencies and the steering committee\. When the PCMU did encounter challenges, for example difficulties surrounding understanding the day-to-day progress of particular components given the project complexity, they responded accordingly with action plans to overcome such challenges\. For example, in March 2011 when the PCMU was assessed as lacking the required personnel and capacity, it promptly hired a new program coordinator which helped refocus the PCMU and successfully carry out needed activities prior to the project’s closing in March 2012\. 34 The structure of the PCMU was designed to maximize organization and coordination while minimizing decision-making authority over the implementing agencies of specific components\. This design was structured to minimize bureaucracy and allow implementing agencies to apply their expertise and complete project components\. The various components had a relatively high level of independence from each other as well as from the PCMU within the Ministry of Commerce\. The autonomy helped ensure effective implementation, as each implementing agency was able to focus on their specific component\. This autonomy also helped World Bank staff identifies critical implementation issues early on within specific components and act accordingly\. Similarly, the use of independent consultants to manage certain components (PEFG, EMAF II) provided an experienced 9  set of personnel to manage the project, which also enhanced efficiency, transparency, and a focus on results\. 35 The implementation of these structures allowed for a high degree of independence and did contribute to the project component achieving their goals, often ahead of schedule\. Similarly, the use of consultants throughout EMAF II and PEFG helped reinforce the capacity of executing agencies and enhanced efficiency of the project\. Particularly towards the end of the project, however, the scheme did suffer from a lack of coordination that prevented synergies from fully emerging\. The leadership of the PCMU changed three times throughout the project\. Each leadership change brought administrative and coordination challenges and often delays\. The PMCU made serious efforts over the last 6 months of 2010 to ensure procurement procedures were being followed according to Bank standards and that delayed financial management audits had been completed\. In March 2012, however, a new head was appointed which helped refocus the project and used the remaining six month to finish necessary tasks and keep the project on course\. Coordination issues must be analyzed, however, within the context of both the financial crisis and the December 2010 revolution which caused significant changes to Government personnel and social and economic instability that made project progression more difficult\. 36 At the level of the individual executing agencies, the project was largely satisfactorily implemented, with key personnel demonstrating strong commitment and in many cases delivering ahead of schedule\. This is particularly true of EMAF II (component 1) and INNORPI (component 3), who were successful in attaining results targets (serving firms with matching grants and developing a system of WTO notifications of trade respectively) well ahead of schedule\. Executing agencies that did experience challenges in implementation were often successful at listening to Bank suggestions and implementing strategies to overcome roadblocks and deliver\. For example, the automation and harmonization of technical control procedures was significantly delayed because of coordination delays between Government ministries and consultant non-performance\. The primary executing agency DQPC accelerated their work schedule significantly in 2010 and was able to successful complete procurement, purchase, testing, and installation of the system by September 30, 2012\. Similarly, administrative procedures and strong aversion of banks and firms to work together made initial performance of PEFG slow\. However, COTUNACE showed strong commitment to overcoming bank risk aversion by expanding synergies with banks and other executing agencies in EDP II and engaging in extensive education and marketing outreach to banks\. 37 With regards to scope and scale, output indicators were revised upwards to reflect the fact that targets for the EMAF II matching grant facility had been achieved relatively early in the project lifecycle\. The original output called for 500 firms and 40 associations assisted through EMAF II funding by year 5\. As of 30 September 2006, FAMEX 2 approved 500 individual export plans (representing a total value of $ 18\.33 million)\. By March 31, 2007 FAMEX approved 529 export plans (representing a total value of $ 18\.46 million)\. Six million in additional financing became effective in March 2008 specifically to finance the scaled-up activities associated with increased demand for EMAF II\. The intended target for number of firms assisted was increased from 500 to 800 in early 2008 and later to 1,000 after additional financing from the government was put into the project in January 2009\. At project closing (September 30 2012) 1239 firms and 93 associations had been serviced by EMAF II\. 38 The project was extended three times to reflect changes in project performance and the external environment\. An initial extension from March 2010-March 2011 was designed to a) complete specific projects that were not going to be completed within the given time frame; and b) ramp up highly successful parts of the project that needed to be reinforced, particularly EMAF II and reforms within the customs administration\. 10 39 In addition, EMAF II and the PEFG facility needed to be given more time to complete remaining activities (completion of export plans and awareness campaigns)\. Uncertainty created by the Tunisian revolution created delays in completing remaining tasks, including training, procurement, and institutional capacity building given high turnover of key personnel during this period\. Disbursement in 2011 (post-revolutionary period) was US$2\.13 million, decreasing from US$6\.22 million in 2010\. \. 40 In March 2011 the Government re quested a 12 month extension because of delays in implementing IT equipment and staff training related to enhancing technical controls (sub- component 4\.1)\. In addition, EMAF II and the PEFG facility needed to be given more time to complete remaining activities (completion of export plans and awareness campaigns)\. Uncertainty created by the Tunisian revolution created delays in completing remaining tasks, including training, procurement, and institutional capacity building given high turnover of key personnel during this period\. Disbursement in 2011 (post-revolutionary period) was US$2\.13 million, decreasing from US$6\.22 million in 2010\. 41 The project was extended a third time for six months from March until September 2012 due to delays and uncertainty associated with the political transition in the country and the formation of a new Government\. The six month extension was used to address four outstanding issues: (i) ensuring administrative and other follow-up to consultant work, under the EMAF II component; (ii) completing procurement procedures for the installation of new equipment for the Customs Administration; (iii) installing and testing equipment for the technical control component; and (iv) addressing the weakened capacity of the Project Coordination and Monitoring Unit (PCMU) to monitor the project sub-components in a timely and effective manner\. The project closed on September 30, 2012\. Environmental and Institutional Context Affecting Implementation: 42 At the onset of EDP II the country and economic context was favorable\. There was strong support from the Tunisian Government (Ministry of Commerce and Ministry of International Cooperation) as well as from World Bank management\. The institutional setting was stable with an effective and hierarchical bureaucracy considered capable of implementing the project\. Further, there was historically in Tunisia little turnover among heads of agencies and director level positions\. The strong implementation structure put in place - whereby implementing agencies were given significant autonomy and the operation was overseen by the PCMU, steering committee, and oversight committee – reinforced the successful implementation of the project\. 43 The December 2010 revolution caused significant change to the environmental and institutional context\. The revolution made project implementation more difficult because it saw a high level of turnover within the Ministry of Commerce, CEPEX, and INNORPI, among others\. It created a context where implementing sensitive measures became more challenging\. For example, a measure that would be unpopular among employees - such as the installation of a more transparent information system within Customs - was now made significantly more difficult\. The revolution caused significant political upheaval, which meant Government policy was often unclear for months at a time as the Government moved from revolution to elections\. Disbursement rates dropped slightly during and after the 2010 revolution because of institutional and environmental instability\. For example registered payments slowed from 9TND in 2010 to 3\.4 TND for the first 9 months of 2011\. 44 The Government demonstrated strong commitment to maintaining sound project management during period of high political and environmental volatility\. For example, noticing management 11  lag in the PCMU due to staff turnover associated with the administrative changes due to the revolution, the Government appointed a new project coordinator and redoubled efforts to make progress on remaining activities\. Because the project’s main implementation role was left largely to the agencies in charge (INNORPI, CEPEX for FAMEX) project implementation continued to progress\. For example, average delays at Rades port (sub-component 4\.2) increased only slightly between 2010-2011\. For example, average delays from boat cargo increased 3\.55 days to 3\.65 day from 2010 to October 2011\. With regards to technical controls (sub-component 4\.1), the DQPC completed significant work in 2010 and 2011 (at the height of institutional instability) with regards to digitizing technical control procedures (road-map development and follow up software procurement and implementation)\. 45 The project effectively used the final six month extension (March 2012-September 2012) to complete remaining activities, some of which were delayed significantly\. For example, the last batch of FAMEX export plans were completed, the technical import control software was installed and tested, and the export guarantee application component was finalized for the PEFG (sub- component 2)\. Finalizing acquisition and installation of customs equipment was delayed due to changes in the Government procurement policy adopted after the revolution\. Overall, project implementation from 2010-2012 should be commended given that despite high levels of institutional and political uncertainty, implementing agencies were for the most part able to complete remaining tasks and in some instances (e\.g\. technical controls) advance activities that were significantly delayed\. Personnel within implementing agencies demonstrated strong commitment to the project despite acting often with high levels of information asymmetry\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 46 The M&E of the project was considered robust and worked well throughout project implementation\. The project had a good monitoring and evaluation framework design, with the original set of PAD indicators tracking performance at all stages of the project implementation\. M&E was completed by supervision missions and mid-term reviews, supported by the PCMU which provided semi-annual reports to the Bank on project achievements, issues, and performance indicators\. The original PAD tracked indicators for the project’s major components and sub- components on an annual basis\. The PCMU effectively compiled performance updates from the specific implementing agencies on a quarterly basis\. The PCMU also acted as a point of reference for Bank staff in the event they had additional questions regarding performance management of a particular implementing agency\. EMAF II developed a well-documented data base on SMEs and their export patterns which was particularly useful for tracking progress and analyzing project effectiveness\. 47 Indicators were effectively monitored, with the PCMU providing timely quarterly reports on progress of the project components in accordance with the outcome indicators\. Aide memoires provided qualitative analysis in addition to tracking those indicators outlined in the PAD\. Indicators were updated in response to progress implementation\. For example, the intended target for number of firms assisted through EMAF II increased from 500 to 800 in early 2008 and later to 1,000 after additional financing from the Government was put into the project in January 2009\. At points throughout the project, delays in reporting and evaluation were noted\. The results monitoring framework did not always adequately capture implementation complexities amongst sub-components\. For example, the results monitoring arrangements (annex 3 of the PAD) did not include specific outcome indicators for sub-component 4\.3 – Trade Logistics Performance Indicators\. While interviews with relevant government counterparts indicate the sub-component was successful initially in constructing data sets and assessing performance related to customs and border clearance times, additional M&E could have better integrated this sub-component\. 12 48 Results for the project further benefited from two impact evaluations conducted on EMAF II (see section 3\.2 for an analysis of the full results)\. The impact evaluations assessed changes in export performance that can be directly attributable to EMAF II by comparing what would have happened without EMAF II assistance by using treatment and control groups\. The impact evaluations add statistical causality to the results captured in the M&E system\. 49 The first evaluation was conducted in 2011 by outside academics with Bank assistance\.4 The evaluation compared changes in relevant outcome before and after across firms that had EMAF II support with firms but did not receive EMAF II support\. Given that the authors did not have an ideal ex-ante identical control group, they randomly selected similar Tunisian firms as a control group, and then compared the ‘treatment’ and the ‘control’ groups after controlling for differences along observable dimensions such as size, age, sector, and prior exporting status\. The second impact evaluation5 was conducted by economists within the World Bank Development Economic Research Group Trade and International Integration Unit (DECTI)\. It used PSM and weighted least squares (including difference-in-differences combined with propensity-score matching (PSM-DID) and difference-in-differences weighted by propensity scores) to evaluate the effects of EMAF II on the performance of beneficiary firms\. The evaluation looked at both short and long-term effects of the program\. 2\.4 Safeguard and Fiduciary Compliance 50 Procurement, financial management practices, and the environmental review process for the operation were supported by the operational manual with guidance for the PCMU and implementing agencies\. The well-developed operational manual and a diligent PCMU helped ensure effective implementation of these issues\. There were no social and environmental safeguards applied to the project\. Procurement was satisfactory, with each of the executing agencies carrying out their procurement in line with the applicable procedures given their respective procurement plans\. This was particularly true during the transitional period of the project closing\. 51 The adequacy of the project's financial management system was initially assessed, as required by the Bank (OP/BP10\.02), based on interviews with the project’s executing agencies (CEPEX, COTUNACE, the Tunisian Customs, and the Ministry of Commerce)\. The analysis found that management and rules of financial management and accounting in the private sector and the public finance systems did not represent major risks\. All financial management aspects related to implementation were satisfactory\. The ministry of commerce had worked with the World Bank before (Export Development Project (EDP), Economic Competitiveness Adjustment Loan (ECAL) I, II, III, and IV) and was very familiar with the Bank’s fiduciary requirements related to procurement, disbursements and applicable safeguards\. There were minor concerns regarding financial management brought up through audit reports of the project\. For example, a 2009 audit exercise revealed certain internal control weaknesses and non-eligible expenses by COTUNACE and the Ministry of Commerce due to an application error in the financing rate of transferred funds\. All issues related to ineligible expenses identified, however, had been resolved by the project closure dates\. 4 Gourdon, J\., JM Marchat, S\. Sharma, and T\. Vishwanath\. Ex-Post Impact Evaluation of an Export Promotion Matching Grant: Tunisia's EMAF II\. Rep\. No\. 40\. Washington: World Bank, 2011\. Print\. MENA Knowledge and Learning\. 5 Cadot, Olivier, Ana M\. Fernandes, Julien Gourdon, and Aaditya Mattoo\. Are the Benefits of Export Support Durable? Evidence from Tunisia\. Report\. Policy Research Working Paper\. Washington: World Bank, 2012 13 2\.5 Post-completion Operation/Next Phase 52 Post-completion operations are robust and comprehensive\. They are supported in three ways\. First, there are a number of components of the project where systems launched during the project’s lifecycle are fully operational and continue to contribute to efficiency gains with regards to export promotion\. For example, with respect to information on WTO technical barriers to trade (component 3), the electronic information service “Export-Alertâ€? setup by INNORPI in collaboration with the Canadian Council on Norms (CCN) continues to be operational and well used by the private sector (currently close to 600 firms are registered)\. Procedural reform related to customs processing (sub-component 4\.2) have resulted in an average reduction of 40\.2% (10\.1 days to 6\.04 days on average based on October 2011 estimates)\. Meetings with customs in December 2012 during ICR preparation suggest that these times have been maintained\. Customs operations have also benefited from the development of indicators related to customs and border clearance times developed by the Ministry of Commerce and adopted into periodic reporting (sub-component 4\.3)\. 53 Second, there are significant market creation benefits related to EMAF II that provide post- completion sustainability\. The project demonstrated that a public-private system of export assistance can be very successful at boosting exports amongst firms and associations through a targeted cost sharing demand driven technical assistance scheme\. It demonstrated that firms were willing to pay for such services using market-based principles with the added advantage of increasing accountability and result driven incentives not seen under purely public schemes\. In addition to the direct export benefits, the project led to the creation of a private consulting industry of over 80 firms that help Tunisian companies bring their goods to foreign markets\. In addition 115 firms successfully installed a branch in foreign markets\. 54 EMAF II was successful at getting firms to think strategically about market opportunities abroad\. The program provided firms the skills and experience necessary to capitalize on these market opportunities\. Assistance provided would force participating firms to identify their strengths and weaknesses and develop plans to incorporate these points into an export promotion strategy\. 55 The project has helped position Tunisia as a regional leader with regards to trade facilitation infrastructure\. This is particularly important given the country’s limited natural resources and the ongoing political transition that is continuing to cause economic challenges (particularly unemployment) for the country\. The project has helped Tunisia develop firms engaged in strategic trade activities that contribute to the development of a value-added economy\. Tunisia enjoyed a 4\.8 percent average annual growth in GDP over most of the 2000’s, placing the country among the leading performers in the group of emerging economies\. The export sector grew at an average yearly rate of about 5\.3 percent between 1997 and 20106\. The ratio of export value to GDP is 47%\. 56 At the project design level, sustainability of the project is reinforced by the fact the project is being replicated in Bank projects in EAP region (e\.g\. Laos – P085071; Cambodia – P106736)\. Other components of EDPII, notably customs reform (sub-component 4\.2) have been replicated in other Bank projects (e\.g\. Vietnam; P085071)\. The impact evaluations done on the project are well referenced around the world and act as important documents for policy debate on export competitiveness\. 57 A third export development project is currently being prepared and seeks to deepen progress made within specific components as well as address deficiencies in continuity and project design\. For example, the EMAF II scheme will be managed within CEPEX as opposed to an 6 This rate is however slightly below the growth rate of world exports in goods and services which stood at 7 percent over the period\. 14  independent entity populated with consultants\. The project would further anchor the gains made under EDP II with a particular focus on innovation, competitiveness, and strengthening Government institutions for long-term sustainability\. The project is in appraisal stage with Board approval planned for spring 2013\. Although there is no direct post-completion program with regards to EMAF II or PEFG, institutional history exists within both CEPEX and COTUNACE that will be applied to the third export development project\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 58 The objective, design and implementation of the project remain highly relevant to the development of Tunisia, particularly with regards to private-sector led growth, productivity enhancement, and structural transformation towards a high value-added services based economy\. 59 With regards to objectives, the project built on past work completed on export competitiveness by the Bank and the Government, specifically EDP I (2000-2004) and four preceding economic competitiveness development policy loans (ECAL I, II, III, and IV)\. The project was closely aligned with the FY2005-2008 CAS which called for the strengthening of the business environment to support the development of a more competitive, internationally integrated private sector, and to improve the competitiveness of the Tunisian economy\. 60 The 2008 financial crisis followed by the December 2010 revolution have further underscored the importance of an efficient trading system and export support as a part of broader economic stability\. Following the revolution, unemployment increased to 19 percent in 2011, a 6 point increase over the previous year\. Fortunately, the unemployment rate in 2012 declined to 17\.6 percent but this is not enough to reduce the stock of largely unemployed young educated job seekers\. Due to the deterioration of the trade balance, tourism and FDI receipts, the current account deficit widened considerably to 7\.3 percent of GDP in 2011\. A new Interim Strategy Note (ISN) for Tunisia covering FY13-14 was endorsed by the Board in early July 2012\. The ISN outlines a program focused on contributing to the Constituent Assembly Government’s short and medium-term employment creation objective\. The program aims at promoting private-sector led recovery and job creation, with a focus on openness, opportunity and accountability\. This focus is congruent with the core objectives of EDP II\. The fact that the team has nearly completed preparing a third export development project further underscores the continued relevance of the project\. 61 The design of the project remains highly relevant to Tunisia, the broader MENA region, as well as Bank operations in other regions\. EDP II was one of the first projects within the Bank to use a large-scale matching grant scheme to promote export development\. The matching grant was highly successful and exceeded its goals in terms of export volume and number of firms and businesses associations assisted (see section 3\.2 for a full description of results)\. This model has since been applied to Bank projects in EAP region (e\.g\. Laos – P085071; Cambodia – P106736)\. The matching grant mechanism has been applied within regional FPD project in complementary sectors, for example with SME upgrading in Yemen (P128161)\. The export finance guarantee facility (component 2-PEFG) was an innovative mechanism for Tunisia to address a critical challenge in developing the country’s financial sector, specifically overcoming the risk aversion of Tunisian banks to lending to exporting companies\. Other components of EDPII, notably customs reform (sub- component 4\.2) have been replicated in other Bank projects (e\.g\. Vietnan; P08507)\. The fact the Government has prioritized the preparation of a third project that includes both a matching grant and 15  export financing guarantee facility underscores the continued relevance and effectiveness of the project design\. 62 The project has been used as an important demonstration piece for further study and analysis on the benefits of matching grant schemes in private sector development\. The project benefited from two impact evaluations that established with statistical certainty the effectiveness of the scheme at enhancing export growth amongst recipient firms (see annex 10 for full description of impact evaluations)\. Thus, the project is a great example where the Bank’s research and operations departments working together to come to a better understanding of how effective particular interventions can be\. Furthermore, the incorporation of trade facilitation components into the project operationalized contemporary research arguing for a comprehensive approach to export development that combined subsidy with broader institutional reforms\. Trade facilitation has become an increasingly central component of the global trading regime\. Research and policy development on trade facilitation has been prioritized by the WTO and leading research institutions such as the OECD and DECTI within the World Bank\. EDP II provided a successful early example of how trade facilitation reform can be operationalized\. 63 The implementation experience further underscores the relevance of the project to the broader development agenda of Tunisia and the region\. The project’s design - structured on providing a high degree of autonomy amongst implementing agencies, heavy use of consultants, and a central PCMU and steering committee –allowed for efficient implementation of project activities, often ahead of schedule (see section 3\.2 for full results analysis)\. The design encouraged effective central reporting, a particularly difficult task given the multiple components and the high level of overall project complexity\. Implementation brought significant learning on how to best manage complex projects\. Particularly towards the end of the project, however, the scheme did suffer from a lack of coordination and prevented synergies from fully emerging\. The leadership of the PCMU changed three times throughout the project\. Each leadership change brought administrative and coordination challenges and often delays\. 64 The project effectively identified coordination and operational issues throughout implementation and modified operations accordingly\. For example, output indicators were revised upwards to reflect the fact targets for the EMAF II matching grant facility had been achieved relatively early in the project lifecycle\. Six million in additional financing became effective in March 2008 specifically to finance the scaled-up activities associated with increased demand for EMAF II\. Project extensions were used to complete outstanding project components, to accelerate delayed work (e\.g\. technical control agencies component 4\.1)\. These extensions also allowed the project to adapt given the change in personnel due to the revolution and the associated economic uncertainty given the global economic slowdown beginning in 2008\. Delays, for example with customs procurement of new IT equipment or finalizing applications with respect to EMAF II or PEFG, were well outlined in supervision missions and as a result the Government and Bank were able to develop strategies to move forward the project accordingly\. 65 Despite challenges caused by the political and economic instability associated with the December 2010 revolution, EDP II continued implementing key sections of the project between 2010-2012\. This was largely a function of commitment to the projects within implementing agencies and amongst Bank staff\. For example, with regards to technical controls (sub-component 4\.1), the DQPC completed significant work was completed in 2010 and 2011 (at the height of institutional instability) with regards to digitizing technical control procedures (road-map development and follow up software procurement and implementation)\. Similarly, despite a slowdown in applications processed, export plans payments were finalized under EMAF II and PEFG\. The project effectively used the two extensions to complete remaining activities and address key challenge areas\. The 16  additional financing was also effectively used to meet demand for EMAF II\. Unfortunately acquisition and installation of new IT equipment for the customs administration (component 4\.2) was delayed due to significant staff changeover after the revolution and to new procurement procedures\. 66 Project implementation from 2010-2012 should be commended given that implementing agencies were able to complete remaining tasks and in some instances (e\.g\. technical controls) advance activities that were significantly delayed, despite high levels of institutional and political uncertainty\. Personnel within implementing agencies demonstrated strong commitment to the project despite having to adjust quickly to changing conditions (both economically and politically) that made it more difficult to complete remaining tasks\. Weaknesses were reported in the PCMU during 2011 because the head of the unit, sitting in the Ministry of Commerce, was unable to dedicate full time to the project due to the political situation\. In March 2012, however, a new head was appointed which helped refocus the project and used the remaining six month to finish necessary tasks and keep the project on course\. The fact the PCMU made serious efforts over the last 6 months of 2010 to ensure better coordination and preparation of procurement documents also helped ensure sound project management\. 67 The fact that project implementation went largely according to plan, with project components having met their deadlines and targets (with the exception of the procurement of new IT equipment for the customs component), is a significant accomplishment given the challenging external environment the project faced\. The project was thus particularly relevant as a learning tool for how to manage projects given dramatically deteriorating external environments, in this case due to the drastic change in the political situation as well as the slowdown in the global economy\. 3\.2 Achievement of Project Development Objectives 68 The PDOs were satisfactorily achieved\. 69 Analysis of Achievements by Development Objectives outlined in PDO: a\. Improve access to export markets and finance b\. Enhance the efficiency and performance of trade clearance processes including customs operations and technical controls, thereby making trade logistics more efficient a) Improve Access to Export Markets and Finance: This objective is rated satisfactory\. 70 The program was highly successful in addressing market deficiencies and knowledge gaps preventing Tunisian firms from reaching their export potential\. Because of sound project management and the effective promotion of the program to both exporters and buyers in foreign markets abroad, the component was successful in attracting a significantly higher level of demand than initially envisioned\. EMAF II was initially slated to serve 500 firms and 40 associations (as outlined in the PAD) by year 5 of the project\. By the mid-term review in March of 2007 424 firms has received FAMEX assistance and completed marketing plans while an additional 188 were in the process of finalizing plans\. At project closing EMAF II processed 1239 firms and 94 export associations, representing an estimated $374 million in additional exports\. 870 export plans were finalized\. The results indicators were twice updated (from 500 to 800 in early 2008 and later to 1,000 after additional financing from the Government was put into the project in January 2009) to reflect the success of EMAF II of reaching targets early\. EMAF II management was highly efficient in 17  reviewing proposals and processing payment and services, taking on average only 10 days for reimbursement\. In addition 115 firms successfully installed a branch in foreign markets\. 71 The 2011 impact evaluation found that annual export growth was 38\.9% higher for assisted firms compared to control firms in 2004-2008\. Similarly, annual growth in destination markets reached was 4% higher for firms assisted by EMAF II\. 72 EMAF II was successful at targeting firms who had little capacity in export development\. 75% of firms served had fewer than 100 employees\. 350 plans (28%) were of new exporters\. 651 (53%) reached new markets, while 238 plans (19%) engaged in new activities\. The number of firms and export associations assisted far superseded the number original intended in the PAD (500 firms and 40 business associations)\. EMAF II also promoted foreign market penetration\. Out of 273 firms applying for support to open a foreign branch, 115 succeeded mainly in newer non-traditional markets (Maghreb and other parts of Europe)\. 52% of those were seeking new export markets, indicating the correct anticipation that Tunisian export increasingly sought new markets and product to diversify\. Firms receiving assistance were found in relatively diverse industries (see figure 1)\. Figure 1: Participation of Firms in EMAF II by Sector and Size Services (350) 2\.20% 4\.10% 2\.30% 0\.60% Textiles and Clothing 6\.10% (222) 8\.80% 28\.40% Miscellaneous Industries (128) Food and Agriculture 18% (126) Mechanical and 8\.90% Electrical (110) 10\.20% Artisinal Products (108) 10\.40% Chemicals (75) Increased Sustainable Export Capacity at the Business Association Level: 73 In addition to directly assisting firms with technical assistance related to export promotion, EMAF II was successful at getting firms to think strategically about market opportunities abroad\. The program provided firms the skills and experience necessary to capitalize on these market opportunities\. Assistance provided forced participating firms to identify their strengths and weaknesses and develop plans to incorporate these points into an export promotion strategy\. It also proved that technical assistance could be provided to firms on a competitive commercial basis and as such, helped in the creation of an associated consulting industry\. 74 Minor shortcomings included the fact that certain firms expected assistance to continue long- term\. The question of whether matching grant assistance should have been provided for longer was raised by certain stakeholders as well as in both impact evaluations completed (see section 2\.3 and Annex 10 for additional information)\. Similarly, certain stakeholders felt the program could have been more strategic about which sectors to target to maximize development impact\. As demonstrated in figure 1, the program provided assistance broadly across sectors\. Similarly, certain CEPEX 18  representatives felt the program could have placed more attention on assisting first time exporters\. Out of the 1232 firms assisted, 350 firms were first time exporters\. This could be easily modified with eligibility criteria designed to support smaller first time exporters\. A third export development project currently being prepared focused on a small number of sectors of strategic importance to Tunisia\. 75 A number of additional outcomes help ensure the sustainability of EMAF II\. First the project contributed to supporting and developing a local consulting industry which provides expertise in developing export plans and facilitating export finance\. Today in Tunisia there are some 80 export consultants that have become more specialized under EDP II\. Second, the technical assistance received under EMAF II coupled with a number of training activities have allowed firms to develop a strategic approach to export operations\. Beneficiary firms now have enhanced knowledge of the technical, competitive and technical market environment in which they operate\. These firms are conscious of the importance of knowledge over direct financial assistance, as evidence by the strong demand for cost sharing technical assistance throughout the project and even after its closure\. Impact Evaluations Conducted on EMAF II: 76 The project further benefited from two impact evaluations conducted on EMAF II\. The impact evaluations assessed changes in export performance that can be directly attributable to EMAF II by comparing what would have happened without EMAF II assistance by using treatment and control groups\. The impact evaluations establish with statistical certainty EMAF II was successful at promoting export growth, particularly in the short to medium term\. 77 The first evaluation was conducted in 2011 by outside academics with Bank assistance\.7 The evaluation compared changes in relevant outcome before and after across firms that had EMAF II support with firms but did not receive EMAF II support\. Given that the authors did not have an ideal ex-ante identical control group, they randomly selected similar Tunisian firms as a control group, and then compared the ‘treatment’ and the ‘control’ groups after controlling for differences along observable dimensions such as size, age, sector, and prior exporting status\. The treatment and control groups were compared with respect for export promotion after controlling for size, age, sector, and prior exporting status of the firms\. Using propensity score matching (PSM), the study found that annual export growth was 38\.9% higher for assisted firms compared to control firms in 2004- 2008 (see chart 1)\. Similarly, annual growth in destination markets reached is 4% higher for firms assisted by EMAF II\. The evaluation also found that EMAF II has a positive effect on the number of products exported, although this finding was not statistically significant\. 7 Gourdon, J\., JM Marchat, S\. Sharma, and T\. Vishwanath\. Ex-Post Impact Evaluation of an Export Promotion Matching Grant: Tunisia's EMAF II\. Rep\. No\. 40\. Washington: World Bank, 2011\. Print\. MENA Knowledge and Learning\. 19  Chart 1: EMAF II Key Outcomes (Growth rates) 38\.90 40 30 18\.5 20 4\.00 Without PSM 4\.30 10 With PSM 2\.8 0 2\.5 Exports Destination Markets Products 78 The same dataset was also used to assess the employment impact of EMAF II\. Although not a direct objective of EMAF II, the employment impact is important given Tunisia’s persistent unemployment and ongoing economic and social uncertainty due to the December 2010 revolution\. The PSM approach yields similar results though the gap is larger: annual growth of 10\.2 % for EMAF II firms against 5\.1 % for the control group\. This suggests EMAF II had a positive impact on employment, though it must be noted that the small sample size implies results are sensitive to the specification used and not always statistically significant\. 79 In addition to firm-level data, Gourdon et al completed the impact evaluation exercise on a larger sample of customs data\. Transaction-level export data with exporter ID, transaction value, country of destination, and produce code were obtained from Tunisian Customs for 2000-2008 for 3000 firms, including 400 EMAF II firms\. The sample represents approximately 55% of export of goods (excluding oil) in Tunisia\. 80 Using PSM on this customs data, the authors found that EMAF II support had increased the difference in growth rate in the two years of treatment for export outcomes, specifically the volume, number of destinations and number of products\. Increase in growth was slightly higher than with the firm level survey data\. The customs data, however, had limitations because it did not take into account firms in the services sector, which represent approximately 30% of EMAF II firms\. Using customs data the authors found that over the long-term, outcomes do not differ much from random non-EMAF II firms (see chart 2)\. 20  Chart 2: EMAF II Key Outcomes Over time (Assisted Firms; % Growth) 37\.9 40 30 17\.7 16\.1 20 11\.2 Products 10 3\.9 Countries 0\.3 0\.3 0\.3 Exports 1\.8 0 0\.3 0\.3 0\.3 2005 2006 2007 2008 Source: Authors’ calculations based on custom’s data 81 Conclusion: Although the short duration of the impact and limited additionally for a specific class of manufacturing firms joins earlier criticisms of matching grants, overall results using PSM based on two different data sources suggest the EMAF II was successful\. It had a statistically significant, positive impact on firm performance along targeted dimensions of total exports, number of export product and export destinations\. It is also likely to have a positive impact on employment\. 82 The second impact evaluation8 was conducted by economists within the World Bank Development Economic Research Group Trade and International Integration Unit (DECTI)\. It used PSM and weighted least squares (including difference-in-differences combined with propensity-score matching (PSM-DID) and difference-in-differences weighted by propensity scores) to evaluate the effects of EMAF II on the performance of beneficiary firms\. 83 The evaluation looked at both short and long-term effects of the program\. The evaluation found that beneficiaries initially saw faster export growth and greater diversification across destination markets and products\. However, longer-term effects surpassing three years are moderate as export growth rates were not found to be significantly different from those of non-beneficiary firms\. However exports of beneficiaries did remain more diversified\. The evaluation also found no evidence that the program produced spillover benefits for non-beneficiary firms\. The evaluation suggests that EMAF II may have been most useful for diversifying exports over the long-term with limited impact on increases in volume on exports\. 84 The authors suggest that the results must also be understood in the context of the global economic recession\. Similarly, there may be a bias in that firms participating in FAMEX may have ventured into riskier markets\. Their evidence demonstrates that the increased diversification of beneficiary firms did not result in reduced volatility of exports\. Given that exports were not sustained and that effects did not spillover to non-treated firms, the authors suggest that matching 8 Cadot, Olivier, Ana M\. Fernandes, Julien Gourdon, and Aaditya Mattoo\. Are the Benefits of Export Support Durable? Evidence from Tunisia\. Report\. Policy Research Working Paper\. Washington: World Bank, 2012 21  grants programs alone may not be the best use of public funds for long-term sustained export development\. 85 The authors conclude that their research adds to the small existing literature by taking a longer view of impact of interventions\. They find that EMAF II had a durable impact in terms of export destinations and products but provided only a temporary boost to exports\. The results are statistically robust\. 86 See Annex 10 for more information regarding both impact evaluations of EMAF II\. 87 Overall, the impact evaluation are noteworthy because they establish with statistical certainty the effects of EMAF II, confirming that the project was successful at boosting export and establishing export diversification, at least in the short to medium term\. Key personnel within the World Bank that prepared EDP II as well as key stakeholders within the Government underscored that they welcomed and accepted the results of the impact evaluations completed\. They stressed, however, that EMAF II was at its core a short-term intervention designed to create market linkages and boost exports for those firms assisted\. EMAF II would be complemented by other measures designed to promote trade such as the pre export finance guarantee and continuing the improvements on trade facilitation undertaken under EDP I\. These stakeholders encouraged readers to analyze the results of the impact evaluation keeping in mind the short-term nature of the EMAF II intervention\. Facilitate access to pre-shipment export finance: 88 Overall COTUNACE was successful in implementing an export finance guarantee program targeted to Tunisian SMEs both in the capital and regionally\. COTUNACE guaranteed $54 million in working capital for exporters, generating an additional $115 million dollars in exports for approximately 225 exporters (see figure 2 below)\. 89 In 2007 the project achieved the objective outlined in the operations manual of having applications processed in 13 days\. Average application processing was down to 6 days in 2011\. The project was successful at extending the scheme to regional economic centers\. As of October 2011, approximately 78% of credit guaranteed and 77% of exports realized occurred outside of Tunis (see exhibit 5 below)\. The guarantee facility was able to develop strong links with Banks through a communication campaign and subsequent workshops designed to capture the adherence of bankers\. In terms of operational effectiveness COTUNACE was able to reduce its processing time from 12 days in 2007 to 8 days in 2012\. 90 COTUNACE reported challenges working successfully with commercial banks given their insistence on real collateral in addition to the export financing guarantee itself to cover the non- performance risk of guaranteed firms\. The risk of firms not repaying can even in isolated cases can significantly disincentivize participation from the banking sector\. This is a long-term problem in financial sectors in many developing countries\. The PEFG scheme is an important step in overcoming this risk aversion problem by incentivizing banks to finance exporting firms through guaranteeing losses\. The COTUNACE management team should be commended for consistent outreach to the Banks during the project life cycle\. COTUNACE engaged heavily in marketing and educational initiatives to ensure Banks were familiar with the program’s benefits\. This was a major improvement from EDP I where a lack of communication prevented bank participation in the program\. 91 PEFG was also hampered by the global financial crisis and subsequent recession\. The European Union (EU) accounts for over 70 percent of Tunisia’s exports in 2010 (mostly France, Italy and Germany which alone accounted for 56 percent of all exports in 2010 (IMF World Economic 22  Outlook)\. Tunisian trade was thus directly affected by the deterioration of economic conditions in the EU\. The amount of credit guaranteed under PEFG fell nearly 48% between October 2009 and December 2010 (see figure 2 and 3 below)\. COTUNACE also found it difficult to extend the credit guarantee scheme beyond the planned closing date of March 2011 (the project was extended ultimately until September 2012)\. COTUNACE stopped pre-shipment financing in July 2011 given the intricate nature of export finance, the time taken to complete due diligence, and communications challenges due to the number of partners involved\. Given the intricate nature of the scheme, the early stopping of the program is understandable\. Figure 2: Credit Guaranteed and Exports – March 2005 to December 2010 (Cumulative) 30000 27,224 25,892 25000 20,787 21,079 20000 16,610 14,475 15000 12,711 12,160 Credit Guaranteed 10000 7,292 6,920 Exports 5000 0 March Nov 05 â€? April 06â€? Nov 06â€? Nov 07 â€? July March Oct 09 â€? June 10 Jan 11 â€? 05 â€? Oct March Sept 06 Oct 07 June 2008 â€? 2009 â€? May 10 â€? Dec 10 Mid Oct 05 06 2008 Feb 09 Sept 09 11 Source : COTUNACE statistics Figure 3: Evolution of Credit Guarantees – PEFG Facility 15000 12233 12526 10000 7189 9177 5439 6059 5591 5000 0 2006 2007 2008 2009 2010 2011 2012 Source: COTUNACE statistics 92 Following the revolution, more attention was devoted to address the need of firms outside the Tunis region\. As a result about 78 % all credit guarantees for 2011 benefited firms located outside the Tunis area (see figure 4 below)\. 93 Overall, the project succeeded in implementing an export finance guarantee scheme for SMEs across Tunisia\. Among its indirect outcomes, PEFG has raised awareness among participating bankers that the guarantee provided by COTUNACE could replace collateral that often exporters lacked to conduct their operation, particularly for first time exporters\. 23  Figure 4: PEFG – Activities outside of Tunis (%) 100 80 60 40 20 0 Value of Guaranteed Number of certificates Additional Exports Credit processed Life of Project (March 05â€?Oct 2011) Jan 2011â€?Oct 2011 Source: COTUNACE statistics B) Enhance the Efficiency and Performance of Trade Clearance Process Including Customs Operations and Technical Controls, Thereby Making Trade Logistics More Efficient: This objective is rated satisfactory\. Enhanced interactions and compliance with WTO: 94 Strengthening the capacity of INNORPI to collect, analyze, and disseminate information resulted in significant enhancements to interaction and compliance with the WTO\. Since 2006, the notification delay to the WTO TBT committee of draft mandatory technical control requirements was reduced to the objective outlined in the PAD of 2 months\. In 2005 these delays averaged 5-6 months\. Similarly the delay for accessing texts on WTO notification of technical controls for export was reduced to the objective outlined in the PAD of 2 months since 2006\. In 2004 these delays were 5-12 months on average\. Tunisian norms related to ISO 15,000 were numerised and put on INNORPI’s website in 2008\. The electronic information service “Export-Alertâ€? setup by INNORPI in collaboration with the Canadian Council on Norms (CCN) continues to be operational since May 2009 and has over 500 firms who are members\. The Export-Alert system created an electronic platform for fast and efficient dissemination of changes with regards to TBT or associated norms and technical specifications\. The Export-Alert electronic platform has enhanced coordination amongst suppliers and government agencies involved in trade, improved the ability of firms to access information on TBT, and overall simplified and made more efficient trade activity in the country\. The system is sustainable in that it remains functional and well used by firms after project closing\. 95 A communications strategy was developed in the last two years of the project\. An educational seminar targeted to firms and Government stakeholders on INNORPI services and tools developed throughout the project took place in July 2011\. Regional seminars were planned for outside of Tunis but were not completed due to administrative delays\. 96 INNORPI successfully collaborated bilaterally (across governments) and multilaterally via international institutions involved in technical barriers to trade policy\. INNORPI’s management successfully completed study tours in China and Thailand (2009) and Turkey (2010) of complementary public institution involved in standards and intellectual property\. INNORPI received training from the Canadian Council on Norms (CCN) on the implementation of the Export Alerte system and associated back office support\. Similarly, the team worked with the European Commission’s committee on technical barriers to trade (TBT) for further harmonization of Tunisia’s 24  TBT procedures with EU policy\. Overall, the level of international cooperation was extensive on the project and helped ensure INNORPI’s activities were congruent with international norms\. 97 The project continued progressing satisfactorily despite leadership changes within INNORPI\. A new Director General was appointed as the head of INNORPI in September 2011\. Bank staff commended INNORPI for their commitment to the project despite these leadership changes and a deterioration operational and economic environment associated with the December 2010 revolution\. Bank staff encouraged INNORPI to highlight results of the project through sector workshops after the project closes as a way to encourage sustainability of project results\. Enhanced Efficiency of Technical Control Clearance: 98 This sub component sought to build on reforms started under EDP I to streamline the workflow of technical control procedures, specifically the back-office procedures carried out by Government employees and agencies\. Through this streamlining, which would be done through the automated trading system (Tunisia Trade Net – TTN) setup under EDP I, processing times would be reduced for technical control requests for goods placed in warehouses (autorisation provisoire d’enlèvement – APE) and goods allowed to be placed on the market (autorisation mise a la consummation - AMC)\. 99 The Directorate of Quality and Consumer Protection (DQPC) was the technical control institution that realized the largest number of processing efficiency gains throughout the project\. The DQPC had been able to decrease time needed for processing technical requests for goods to leave the customs sites and be placed in a warehouse (autorisation provisoire d’enlèvement – APE) from 2 days to 2\.75 hours\. Processing times for goods to clear customs and be placed on the market (autorisation mise à la consummation- AMC) was reduced from 11 days to 3 hours as of November 2007\. There is no evidence that may not have been maintained\. 100 Processing times amongst other agencies within the Tunisian Government vary significantly\. The average processing times for all other agencies is 24\.96 hours, making aggregate (including the DQPC) average delays across all institutions to be 9\.84 hours\. While DQPC automated their processes in 2008 and CERT in 2008, other agencies involved in technical control procedures continue to complete procedures manually\. 101 Figures for technical request processes were produced through a study on the Radis Port dating from November 2007\. The Bank had requested more updated figures specifically with regards to APE and APC although none were produced prior to the closing of the project\. The project was unable to connect all agencies to a new web-based information system, citing administrative and project management delays amongst certain ministries\. This contributed to an inability to quantify recent progress forcing Bank staff to rely on the November 2007 figures\. 102 Work on the technical controls database accelerated significantly from 2009-2011\. The project used the final six month extension to successfully i) install the IT equipment; ii) test/operationalize the system; and iii) settle supplier contracts\. The team should be commended for achieving the installation of the automated customs clearance database despite early challenges including administrative delays, departure of consultants, and difficulty at achieving the full commitment and organization from various ministries contributed to such delays\. The project provided important insight into the challenges of working with multiple different Government Agencies on a single automation system (see section 6 – lessons learned for more information)\. 103 Significant diagnostic and preparatory work was completed on designing the integrated risk management system at the level of each technical control agency\. A consultant completed 25  diagnostic work regarding the system structure and approach to be taken, which was described in outlined in a technical specification document\. Developing the risk management system was delayed by nearly two years\. This delay made it significantly more difficult to get the risk management system developed, tested, and operational across all technical control agencies by the project’s closing\. This process was completed in March 2012\. Reduced transactions and trade logistics costs by improving and streamlining customs clearance and border crossing procedures: 104 The project was successful is developing robust performance indicators measuring trade logistic performance (sub-component 4\.3)\. The team adopted methodologies from the World Bank (Trade and Transport Facilitation in Southern Europe (TTFSE) and the World Customs Organization (Time Release Study) to analyze different time segments in the customs clearance process\. A number of studies evaluating customs and supply-chain procedures were completed throughout the project, providing empirical estimates to trade facilitation delays\. The unit, however, was not able to sustain this early effort and was unfortunately unable to continue coordinating with customs and sharing logistics data throughout the project lifecycle\. 105 With regards to customs procedures (sub-component 4\.2) the project was successful in reducing average delay times for customs process (reduction of approximately 40\.2%; delay decrease from 10\.1 to 5\.95 days)\. Processing time due to customs (between declaration and release) passed from three days in December 2005 to half a day in October 2011\. The percentage of customs declarations in the green channel was 50% as of October 2011, against a PAD objective of 80%\. 106 The transition from the current customs information system (SYNDA) to a modern and more transparent information system was not completed\. One option was the UNCTAD supported system (ASYCUDA) but the Tunisian authorities decided against because of they had built up institutional knowledge of the existing system\. Activities to improve the risk management function of customs were also not completed as was the acquisition of computer equipment for customs due to new approval guidelines by the National Procurement Office\. Customs decided that the procurement process needed to be re-launched to comply with new public procurement guidelines adopted after the revolution\. In general administrative and strategic changes due to the revolution have significant impacts on team formation of the Customs Administration\. This has helped explain delays in the final two years of the project\. During ICR preparation it was difficult to get updated data and a summary of activities for the last two years of the project\. 3\.3 Efficiency 107 The project can be considered efficient in terms of its overall PDO which was to generate exports in relation to the amount of matching grant fund allocated\. Both the economic analysis and EMAF data show that every $1 of grant money allocated under EMAF II generated over $8 in additional exports\. Peer reviewers and trade specialists noted this is an excellent return, particularly given the challenging domestic and international environment Tunisian firms faced during that period\. For PEFG for every dollar used in the guarantee, the facility generated close to $3 in additional exports\. The project estimated net present value (NPV) is around $485\.7 US millions with approximately $665 US Millions ($550 US + $115 US) millions in additional exports generated\. Furthermore additional value added from salaries generated, financing cost, and profits are estimated to be around income from fiscal receipt are estimated to be around $215 US millions for EMAF II\. Annex 3 provides full details on the economic analysis used to derive this figure\. 26 3\.4 Justification of Overall Outcome Rating (Combining relevance, achievement of PDOs, and efficiency) Rating: Satisfactory 108 Based on the relevance of the project, achievement of the PDO, and efficiency, the project is rated satisfactory\. The development objectives of the project remain highly relevant for the Government of Tunisia as well as the Bank at the time of ICR preparation\. The GoT’s strong commitment to developing a third export competitiveness project deepening gains and addressing shortcoming of EDP II further reinforces the project’s relevance to the country\. The project was effectively implemented\. Its major achievements included contributing to increased export activity (both volume and diversity) amongst firms through EMAF II and PEFG II, and more strategically creating a commercial industry for export development services\. Two independent impact evaluations established with statistical certainty that firms that participated in EMAF II saw increased export growth (in the short term) and greater diversification amongst markets and products\. The project also provided the skills and experience necessary to firms to think strategically about export opportunities and implement appropriate associated policies\. The project also created a market for business consulting services with regards to export promotion\. Base on available estimates the project was efficient (see paragraph 106 just above)\. 109 The project led to improvements in the enabling environment for trade\. This was done through policy reform which caused significant decreases in the time and cost of customs processing, increased coordination amongst technical control agencies, enhanced use of trade facilitation performance indicators, and greater use of modern information systems amongst key stakeholders (Government ministries, firms) that enhanced efficiency and transparency\. In certain instances the project was successfully at coordinating and bringing market actors together who traditionally did not work together\. For example, the PEFG facility was able to encourage greater banking sector involvement in facilitating finance for exporting firms across Tunisia, a significant achievement given banks in Tunisia are risk adverse and generally do not serve first time exporters\. 110 The December 2010 revolution led to a deterioration of macro-level economic stability and public-sector stability\. This often translated into changes in key personnel and procedures within Government ministries as well as the PCMU that contributed to project delays\. For example, the acquisition of computer equipment for customs was delayed due to a new approval guideline by the National Procurement Office adopted after the revolution\. Administrative hurdles, particularly with regards to procurement and decision-making through the PCMU, also contributed to operational delays that affected project implementation\. Despite these delays, a significant majority of outcome indicators were met, a testament to the resilience, adaptability, and commitment of both the Government and key personnel within executing agencies\. 111 The project also acted as a model for export development strategies within the MENA region, within the Bank, and to a broader set of policymakers and researchers\. The project is notable not only for the successful implementation of a large-scale matching grant scheme to expand exports, but an integrated project that combined a diverse set of activities related to trade\. For example, matching grants were combined with export finance guarantees, and a broad set of trade facilitation measures designed to decrease the cost and time of trading\. The project has helped position Tunisia as a regional leader with regards to trade facilitation infrastructure\. This is particularly important given the country’s limited natural resources and the ongoing political transition that is continuing to cause economic challenges (particularly unemployment) for the country\. The project has helped Tunisia develop firms engaged in strategic trade activities that contribute to the development of a value-added economy\. 27 112 The project was successful at getting research and operational communities (both within and outside of the Bank) to dialogue, at both the project design stage and at the impact evaluation completion stage\. An essential difficulty in preparing and managing a matching grant scheme is demonstrating the counter-factual\. The team deserves recognition for the fact the project has been subject to some significant impact evaluation work that genuinely tries to assess the counter factual\. The impact evaluations establish with statistical certainty that firms receiving EMAF II assistance were successful at boosting export growth, export diversification, and in many instance employment across the period of the project\. While the long-term results of the second impact evaluation are noted, it is important to keep in mind the methodological limitations of these impact evaluations, particularly the fact the control group was randomly selected ex-post\. Few projects are able to match this level of rigor in terms of establishing not only achievement of results indicators but also effectiveness of PDO based on empirical rigor\. 3\.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development 113 The project’s impact on poverty was indirect as it helped export and enhanced trade logistics to minimize the cost and time associated with trading goods\. These outcomes are associated with economic growth and job creation, both of which can decrease poverty\. At the macroeconomic level, the project supported expanding export activity, which contributes to economic growth and social development\. Connected, within both EMAF II and PEFG activities significant efforts were made by implementing agencies to expand into underserved regions within Tunisia\. For example, within PEFG’s operation, 78% of credit guaranteed and 77% of exports realized occurred outside of Tunis (see figure 4 for further detail)\. 114 The project supported gender indirectly\. Although women may have benefited through additional job opportunities and increased income from expanding exporting firms and an improved overall trading environment, gender disaggregated indicators were not included as part of the M&E framework of the project\. (b) Institutional Change/Strengthening 115 The project has clear and significant benefits in terms of institutional strengthening\. All Government institutions involved in the project (from CEPEX to Customs) stated in ICR preparation qualitative interviews that they are far more aware of the importance of export promotion to overall economic development\. Coordination and integration of activities was an important component of their individual work plans\. For example, technical control agencies are now much more aligned with each other on standardized steps needed to enhance efficiency and coordination of goods\. The partial automation of workflow through TTN and through the diagnostic development of an integrated risk management reinforces this coordination\. CEPEX is looking to replicate the successes of FAMEX in current operational settings\. This institutional strengthening and awareness is a significant achievement for the project and remains an important component of enhancing overall export competitiveness in Tunisia\. (c) Other Unintended Outcomes and Impacts (positive or negative) 116 In addition to export growth and diversification supported directly through PEFG and EMAF II or indirectly through strengthening trade logistics, the project has important market 28  demonstration effects\. EMAF II demonstrated that firms are willing to pay on a commercial basis for export promotion services and technical assistance\. Demand far exceeded intended targets for EMAF II\. Many firms continue to ask for associated technical assistance after project closure\. The project also led to the development of a commercial consulting industry for export assistance\. Today there are 80 export consultants providing such services (according to qualitative interviews with project managers)\. In addition to the market demonstration effects, an enhanced knowledge of reaching export markets has helped develop a culture of value-added entrepreneurship in the country\. This will enhance Tunisia’s competitiveness moving forward\. Finally, the EMAF II concept is currently being replicated in other developing/emerging economies\. For example, Malaysia – a country with significantly higher income and institutional complexity than Tunisia – is studying the semi-commercial matching grant model put forth through EMAF II\. 117 The project also had unintended positive outcomes on employment\. The 2011 impact evaluation found that employment in EMAF II firms grew annually by 5\.5 % in 2004-2008 and by 4\.6 % for firms in the control group\. Although not a stated objective of the EMAF II matching grant program, the employment impact is important given Tunisia’s persistent unemployment and ongoing economic and social uncertainty due to the 2010 revolution\. It is important to note that the small sample size implies results are sensitive to the specification used and not always statistically significant\. 4\. Assessment of Risk to Development Outcome Rating: Moderate 118 Risks to the project outcomes encompass general country risks, risks to macroeconomic stability and export competitiveness, and project specific risks\. 119 EDP II was prepared and began implementation well before the events of the Tunisian revolution\. The political situation in Tunisia has changed dramatically since 2005\. The revolution has affected key ministries, administrative procedures, Government priorities, and overall public-sector capacity\. These events were outside the control of the project yet had significant impacts on project completion\. In many cases the heads of implementing agencies were replaced (three times in the case of the technical controls component) and as a result institutional memory was fractured\. The revolution and the 2011 general elections caused daily economic and political uncertainty, which made implementing complex project components more challenging\. For example, new procurement rules adopted after the revolution caused delays in the finalizing acquisition and installation of equipment for the Customs Administration\. Despite these political-economy challenges, the project was successful in moving forward activities, for example maintaining levels of assistance to exporters and pushing through trade logistics reforms, in part due to multiple project extensions\. The long-term benefits of the project, including enhanced ability of firms to access markets and enhanced knowledge of trade logistics amongst Government ministries, have remained and are in many ways are now more important given Tunisia is squarely focused on maintaining growth and competitiveness and addressing the country’s unemployment issue\. 120 Another key risk to sustained project outcomes is the macroeconomic situation\. Following the revolution, growth fell to -1\.1% for fiscal year 2011, largely because of downturns in tourism and foreign direct investments, decreased in trade remittances from both neighboring countries (also in political transition) and from recessionary conditions in Europe\. Growth started to recover in 2012 and is expected to increase to approximately 3\.7 percent in 2013 and 4\.9 percent in 2014 as a result of the sustained recovery in exports, tourism and FDI, the continuation of major public investments, and reform measures adopted by the Government\. The state of the economy impacts significantly export 29  demand\. Similarly, a deteriorating economic situation generally strains public budgets making it more difficult for reforms under EDP II to be maintained\. 121 With regard to project specific risks, the largest risk relates to implementation capacity and long-term follow through of trade facilitation reforms as governments ministries continue to change personnel and procedures\. This risk is mitigated by extensive documentation of reforms related to trade facilitation and by the institutional memory within the Ministry of Commerce\. The Government can play a coordination and strategic planning role post project to ensure implemented reforms continue\. Similarly, the Bank is currently preparing a third competitiveness project which seeks to further anchor the reforms begun under EDP II and ensure development outcomes are maintained\. Under the third competitiveness project the matching grant portion will be housed within CEPEX (a permanent Government structure) and the focus will be on capacity building of CEPEX stand to ensure long-term implementation of the matching grant scheme\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 122 The quality at entry assessment determined the project’s overall quality at entry to be satisfactory\. The assessment was based on review of key project documents and a lengthy interview with several member of the task team and two representatives from the Government executing agencies\. The report cites staff continuity from EDP I, effective use of experience from the first project, and the project being part of a robust framework of overall assistance for Tunisia by the Bank\. The assessment also assigned a Satisfactory rating to the eight quality dimension and to the Bank’s Inputs and Processes\. These ratings reflect the panel’s judgment on the good use made during project design of internal experience with export development and the experience gained under EDPI I, as well as the team’s careful selection of components that have a high likelihood of being implemented successfully\. 123 The project’s identification and design were compatible with the CAS, the project built on the lessons learned under the first EDP, and it was consistent with the Government’s development strategy for the sector as also noted in section 2\.1\. Importantly, the project had the benefit of learning from a predecessor operation, the first EDP, and it was able to refine the project to ensure a successful implementation\. Learning from EDP resulted in innovation in project design including a greater focus on technical control harmonization to enhance overall trade facilitation, ambitious volume targets for PEFG and EMAF II components, and integration of Government and private agencies involved in trading through online platforms\. A particular strength was the development of a detailed operational manual, which helped ensure that the project was implemented effectively and that the PCMU was following bank procedures and effectively coordinating between the many implementing agencies\. 124 While outcome indicators in the PAD generally reflected project objectives and associated activities well, certain indicators could have been more fully developed during project preparation to capture project complexity\. For example, clearer outcome indicators related to sub- component 4\.3 (trade logistics performance indicators) in the results framework could have a) better guided the client during project implementation, b) provided clarity for how the expected results with regards to developing trade logistics indicators for Tunisia and for the customs administration, and c) 30  provided better insight into how sub-component 4\.3 linked with larger components\. Similarly, outcome indicators for component 2 (PEFG; export financing guarantee) were too ambitious given structural complexities of implementing a pre-shipment financing guarantee scheme in an emerging market where bank are highly risk adverse\. (b) Quality of Supervision Rating: Moderately Satisfactory 125 The Bank was proactive in the identification of opportunities and resolution of problems\. Throughout project implementation, the focus remained on development impact, and the task team did not shy away from changing project elements to reflect project design, for example working through the $6 million in additional finance to meet market demand for EMAF II, or extending the project twice to maximize the possibility of project activities being met, particularly with respect to procurement and other administrative delays\. Similarly, the Bank encouraged high performing components to achieve stretch targets\. EMAF II indicators were twice increased and both EMAF II and PEFG were encouraged to serve firms outside of Tunis towards more underdeveloped geographic locations\. Similarly, the Bank provided constructive feedback to executing agencies encountering difficulties and developed strategies to overcome bottlenecks (e\.g\. sub-component 4\.1 (technical controls and sub-component 4\.2 customs)\. 126 Bank supervision remained strong despite changing TTLs three times\. Issues related to external and market volatility after 2010 were highlighted in aide mémoires\. Mitigation measures were well outlined\. The Bank supervision team was successful at coordinating with many different Government agencies given the large number of components and complex structure of the project\. Mitigation plans were made with appropriate implementing agencies to complete or accelerate remaining tasks and to address bottlenecks- often surrounding procurement and launching of new systems – preventing full completion of sub-components\. Similarly, Bank staff and the Government pursued project extensions to allow components to be completed given the challenging external environment (see paragraph 19 for summary of extensions)\. Bank staff should be particularly commended for outlining key issues and liaising with client counterparts effectively given the high turnover in staff following the December 2010 revolution\. 127 While project supervision was generally satisfactory, Bank supervision documents were not systematically updated\. The ISRs were not always fully completed\. Particularly with regards to customs and technical control components, aide memoires and ISRs repeated positive achievements from past years while failing to provide adequate attention to problem areas (institutional capacity, willingness to complete project activities) that prevented effective completion of all components\. Similarly, the accuracy of performance indicators used can be questioned as data was at times out of date or would change depending on which document was being referenced (e\.g\. aide memoir versus ISR versus Government quarterly report)\. While aide-memoires were well written, and reflected accurately key issues (as determined by stakeholder interviews conducted for ICR preparation), they at times had to rely on old performance indicators (in the case of technical control indicators – although this was outlined as an issue) and had a tendency to be repetitive in their outlining of issues from one mission to the next\. 128 Particularly in the final two years of the project, World Bank staff could have been more proactive regarding delays in activity completion\. They also could have paid more attention to operational changes, modifications to Government policy, and administrative turnover that contributed to project delays\. Between 2010-2012 additional attention and possibly resources could have been given to implementing agencies in order to ensure project deliverables above that of a project extension\. This could have taken the form of additional technical assistance or even just 31  enhanced reporting on project advancement to better understand how the political situation was affecting the project and what (if anything) the Bank could have done to support the project during this time\. Given the challenging domestic environment from 2010 onwards, supervision mission could have been increased to twice a year during the 2010-2012 period in response to deteriorating market and internal conditions in the country (see section 6 lessons learnt for more on this)\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 129 Based on the above analysis, the overall Bank performance can be considered moderately satisfactory\. While the Bank’s performance is commendable given the changing economic and administrative conditions due to the December 2010 revolution and given the project was highly complex, additional attention to outcome indicators in project preparation and closer monitoring of project delays during the last two years was needed\. The Bank could have provided more direct support to the PCMU and struggling executing agencies during this time\. Overall, while the team responded to the changing project conditions, the Bank could have gone further to maximize the conditions for success for each project component\. 5\.2 Borrower Performance (a) Government Performance Rating: Satisfactory 130 The Government’s performance in creating an enabling environment for project success during both preparation and implementation was satisfactory\. Government ownership and involvement remained high following the completion of EDP I\. This was demonstrated by the relatively quick transition to EDP II (six months between closing and effectiveness of second project)\. This helped ensure the continuation of the current consultants (for both EMAF and PEFG) which helped minimize disruptions in project activities and sent a positive signal to private operators\. The Government endorsed the project at the highest level and facilitated the communication campaign for key components of the project such as EMAF II as well as for the PEFG\. 131 The fact that many agencies were involved in project implementation made coordination and stakeholder commitment critical\. The Government played a significant role in coordinating the implementing agencies through project preparation, specifically through diagnostic work related to how to best deepen EDP I reforms, determining implementing arrangements amongst the sub- components, and acting as an interlocutor between the implementing agencies and the Bank\. This work was often complex\. For example, sub-component 4\.1 (technical control enhancement) had over 7 different Government agencies involved in migrating to a central operating system and information sharing platform\. Managing the administrative and operational structures within each agency to move forward outputs for the entire project was very challenging for the PCMU\. 132 Similarly the Government rightly anticipated strong demand for EMAF II and asked, shortly into the second year of the project, for additional financing from the Bank\. This additional financing was crucial in ensuring demand was met for EMAF II components and market creation benefits were realized\. 133 Government ownership throughout project supervision was also satisfactory\. Regardless of significant economic and political changes associated with the revolution, the Government kept EDP II a priority, as evidenced by the multiple project extensions asked for and consistent reporting on project deliverables through quarterly reports\. Personnel within implementation agencies should be commended for maintaining (to the best of their ability) their commitment to accomplishing 32  project deliverables despite changes in senior management and uncertainty regarding basic Government structure during the last two years of the project\. The government’s commitment to the project is also evidence by the ongoing negotiations over a third EDP project that incorporates much of the lessons learned from this project\. 134 The PCMU, thorough quick follow-up and early involvement with corrective actions, contributed to a satisfactory implementation of the project\. The PCMU made serious efforts over the last 6 months of 2010 to ensure better coordination and preparation of procurement documents and to complete back-logged financial management audits\. This helped ensure sound project management\. The PCMU’s effectiveness has however declined slightly towards the end of the project – specifically following the events of the revolutions\. The change in project managers (3 during the course of the project) caused certain administrative delays\. Implementing agencies cited delays from the Ministry of Commerce (often directed through the PCMU) as an occasional impediment to accomplishing objectives\. In March 2012, however, a new head was appointed which helped refocus the project and used the remaining six month to finish necessary tasks and keep the project on course\. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 135 EMAF II implementation performance has been commendable\. Starting early on with effective management and a smooth transition, existing EMAF II staff played an important role in the design and implementation of the project\. EMAF II team also demonstrated a good capacity of adaptation to a changing environment\. Following additional financing and the global financial crisis and revolution, the management team was able to respond to increased demand and reduced its response time to firms while remaining focus on client requirements\. EMAF II management provided timely reports of progress to date to the PCMU and was able to increase the efficiency with which it processed firm applications throughout the course of the project\. EMAF II staff could have had a broader geographical representation within Tunisia\. There was no EMAF II staff members located in regional offices a directive outlined in the original approved PAD (page 30)\. 136 COTUNACE has made good progress by significantly improving its management from EDP I\. It ensured adequate implementation in terms of required resources and capacity needed, as well as working on the participation of banks early on\. Its activities decreased following successive project extensions due to uncertainty in future commitments among operators (banks and firms alike)\. This decrease in activities is more due to the intricate nature of export financing guarantees rather than management performance\. COTUNACE also encountered challenges working with participating banks on certain guarantee cases, specifically because of Bank often insisted on collateral in addition to export financing and the general non-performance risk of firms\. This is an endemic long-term challenge to financial sectors in many developing and emerging markets\. COTUNACE should be commended for showing strong commitment to overcome the risk aversion of banks through educational outreach throughout project implementation\. COTUNACE should be commended for using EDP II as a launching pad for related endeavors\. After assessing feedback from participating firms in the PEFG program, they are currently designing plans to expand investment insurance to help Tunisia firms move into African markets\. 137 INNORPI’s management team ensured satisfactory implementation of all sub components through thorough and systematic follow up of activities\. Most targets had been met ahead of project closure\. There were instances where the implementation of some activities with respect to procurement and acquisition were delayed because of lack of coordination with the PCMU\. INNORPI continued activities largely uninterrupted despite changes in the director general of the institutions in 33  September 2011\. Despite stated plans, INNORPI was unable to hold a seminar for private sector firms and Government representatives on INNORPI services in regions outside of Tunis\. 138 Customs made significant strides toward implementing the project activities, particularly in terms of reduction of processing time (from 9 days to half a day by 2010 ), adopting a new code des douanes aligned on international standards, working toward a single windows at the Port of Rades, and improving the access to green channel for merchandise\. Processing times increased somewhat in 2011, although this was largely understandable given administrative changes associated with the December 2010 revolution and subsequent political changes\. Certain reforms included in the work program were not realized, such as modernizing the custom’s information system and finalizing the risk management system\. This was due to a variety of administrative and strategic delays that were prolonged over the second half of the project\. Similarly, there were procurement delays with respect to upgrading to an internationally recognized management information systems (ASYCUDA)\. 139 The Unit in charge of Trade facilitation and Logistics (Unité de Facilitation du Commerce International et de la Logistique) was successful at delivering performance indicators measuring trade logistic performance\. A number of studies evaluating customs and supply-chain procedures were completed throughout the project, providing empirical estimates to connectivity and trade facilitation delays\. The DQPC and other technical control agencies were successful at reinforcing information infrastructure, developing a new database on technical controls, and increasing coordination amongst technical control ministries\. The unit faced operational challenges at the beginning of the project because they had a relatively undefined PDO and little instruction from the Ministry of Commerce\. While coordination was strong with the Customs administration during the first three years of the project, it was unable to sustain this early effort and unfortunately was unable to continue coordinating with customs and sharing logistics data throughout the project lifecycle\. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 140 Overall the Borrower showed a high level of commitment and ownership despite significant challenges the financial crisis in Europe, the Tunisian revolution, and the high staff turnover on both sides (Bank and government)\. Two project extensions enabled some of the project component that were delayed to further project activities (EMAF, DQPC, and Customs)\. Project delays did, however, create some operational uncertainties (particularly for EMAF II and COTUNACE) and prevented a smooth transition to a third project\. World Bank staff and the PCMU reported that implementing agencies were occasionally reluctant to share information in a timely manner, which resulted in isolated cases of reporting delays\. The coordination unit managed to carry on despite significant lack of human and financial resource during the last year of the project\. The remaining implementing agencies demonstrated resourcefulness and creativity in ensuring the completion of their activities\. 6\. Lessons Learned The Importance of Coordination, Clearly Defined Procedures, and Mitigation Measures in the Event of Unanticipated Changes 141 Due to the multiplicity of Government agencies, projects such as EDP II require strong and effective coordination\. Almost all implementing agencies reported administrative delays and difficulties because of the need to directly correspond with to the World Bank through the PCMU\. Similarly, leadership changes within the PCMU (3 changes to project manager) and with key Bank 34  staff (3 TTLs) throughout the project lifecycle contributed to administrative delays\. This was a major point of discussion in qualitative interviews held during ICR preparation\. It is understandable the EDPII would encounter administrative challenges, particularly given the complexity of the project components (5 components and 3 sub-components) and the country-specific challenges (Tunisian revolution, political and economic instability)\. From the Bank and PCMU perspective, the lack of information sharing from implementing agencies made effective reporting and integration a significant challenge through the project\. 142 The main lesson to retain is striving to find a balance between the need to improve synergies among project components and coordination particularly with regards to the flow of information and administrative duties between project components and the coordination unit\. Key lessons to draw include: ï‚ Importance of clear procedures with regards to reporting and administrative management; ensuring these procedures are followed through strong supervision from project management and Bank supervision teams ï‚ Need for constant communication between project stakeholders to minimize administrative delays ï‚ Need for back-up reporting procedures in the event of change in PCMU leadership and other managerial changes ï‚ Importance of documentation in order to ensure that during the event of a change in management within the PCMU, reporting procedures remain in place and transitions become less troublesome\. Program Complexity: 143 EDP II was a very complex program, with five major components, 3 sub-components, and 6 different implementing agencies\. The technical controls component involved migrating 7 different Government agencies to a common information platform\. Effectively supervising, tracking progress, and identifying problem areas were made more difficult because of this complexity\. While issues were raised during World Bank supervision missions, the mere number of components made effective identification of core problems and tracking associated resolutions difficult given competing priorities\. Project complexity was further increased after 2010 when key Government personnel changed and in many cases (for example EMAF II and customs) operational priorities were modified\. 144 Future projects must balance the benefits with the challenges of project complexity\. Although multiple components provides an opportunity for greater development impact, managing this complexity is a challenge even for high performing PCMUs and experienced TTLs, both of whom have many competing priorities in project implementation and supervision\. This project demonstrates that simplifying projects to focus on core deliverables should be further considered, particularly given the MENA region’s current volatility\. Developing Synergies between Components to Ensure Maximum Development Impact: 145 Implementing units reported a lack of integration with other project components, noting they often had limited contact with other project components despite the significant cross-over in the work being pursued\. A steering committee comprised of management from each implementing agency was launched although the frequency with which it met was limited\. For example, while there were natural synergies in the firms receiving EMAF II assistance with the firm profile receiving 35  PEFG assistance, there were no direct integrated efforts to cross-market\. COTUNACE officials were present at all FAMEX events, but there was nothing in the project design that integrated these components to truly leverage synergies\. While many of the project components were successful at achieving outcome indicators, a heightened focus on component integration may have helped increase development impact\. Efficiency versus Sustainability in Project Design 146 Within project design, there is a trade-off between efficiency and sustainability\. The project relied extensively on consultants throughout implementation, particularly for management of FAMEX and COTUNACE, as well as systems development and capacity building for the trade facilitation components\. In many cases consultants were highly successful at project implementation\. For example, FAMEX had achieved its outcome indicators by late 2007 and demand outweighed supply throughout the project’s lifecycle\. FAMEX was considered an island of excellence within CEPEX\. There was nothing in the project’s design to integrate FAMEX into CEPEX, which may have helped ensure efficiency in the short-run while placing much less emphasis on overall sustainability\. 147 Future export development projects should recognize the importance of striving for both efficiency and sustainability\. Consultants and independent entities may be recruited by Government to help achieve outcomes more efficiently, however, without building public sector capacity, long- term sustainability may be sacrificed if Government is unable to implement activities once the project is closes\. At the time of writing, a third EDP project is being prepared that will seek to achieve greater sustainability by integrating matching grant activities within CEPEX structures\. Importance of Strong and Complete Monitoring and Evaluation: 148 EDP II demonstrates that the Bank team will have to pay close attention to monitoring the achievement of the intermediate targets, and if necessary amend Annex 1 of the PAD throughout the project life cycle\. Outcome indicators in the PAD were inconsistent and incomplete for certain project components\. In a number of cases targets were set too low or too high\. For example, the original indicators listed for FAMEX (assisting 500 firms and 40 professional associations) were accomplished in 2007, while outcome indicators for COTUNACE were never achieved, despite the project being run in a satisfactory manner\. Similarly there are no outcome indicators for sub-component 4\.3 (trade logistics performance indicators) included directly in the PAD and subsequent aide memoires\. 149 As a result we suggest additional analysis was needed in drafting key components of the results framework\. There is a strong need for robust analysis within project preparation documents and outcome indicators to ensure effective indicators exist to capture the complexities of development objectives we are looking to achieve\. The project could have benefited from revisiting outcome indicators during project implementation to reflect changes in operational and environmental performance (this was done for FAMEX component 1 but not for other components)\. Responsiveness to Changing Market Conditions Reduces Implementation Delays: 150 The revolution coupled with economic deterioration due to the global economic recession had a profound impact on this project\. Certain implementing agencies were able to mitigate these risks through repositioning key staff, effectively communicating with the PCMU regarding changes in key personnel, and changing operational priorities (for example in the case of customs)\. The need for 36  effective project management and Bank supervision is critical in such changing market conditions\. The components that were less successful at weathering these changes could have been more proactive on implementing response strategies\. Similarly, the Bank could have been more proactive at monitoring and providing implementation support\. Communication and Ownership: 151 Mechanism such as EMAF II and PEFG require effective but also sustained communication campaigns\. In the case of PEFG the participation of banks would have added benefit to the project had it been sustained\. Impact Evaluations: 152 Projects such as EPD II that contain matching grants can benefit significantly from impact evaluation studies built into the project’s design\. Both impact evaluations completed for EDP II pointed to the need for generating information early on through surveys that include real control groups as opposed to simulated control groups\. The third export competitiveness project for Tunisia – currently being prepared – will incorporate an impact evaluation explicitly into its project design\. Similarly, impact evaluations must be backed by a coordinated dissemination strategy for policymakers inside and outside of the Bank, as well as the Government counterparts\. The methodology and results of the impact evaluations for EDP II continue to be regularly debates\. It is important to accurately understand their results as to ensure the results are not taken out of context\. Supervision Missions: 153 Given the complexity of multi agencies projects in order to follow the project targets and goals more closely, increasing the number of supervision mission accordingly may be warranted \. Gender: 154 We cannot provide an adequate assessment on gender outcomes for EDP II because indicators were not included in annex III of the PAD and subsequently not tracked during project implementation\. An export development project such as EDP II can benefit greatly from tracking gender disaggregated indicators as well as dedicating project resources and activities specifically to targeting women beneficiaries\. PREM Trade has done significant analytical and sectoral work regarding gender and trade\. Future export development projects should incorporate this work into project design\. 37 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies None raised\. (b) Cofinanciers N/A (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society) N/A 38 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) A\. Export Market Access S\.1 Export Market Access Fund 31,600 EMAF II Assistance Consulting and Training Services 5,000 Vendor Development Program 1,000 Sub-Total Export Market Access 37,600 B\. PEFG Management 1,000 C\. WTO TBT Enquiry Point 1,000 (INNORPI) D\. Trade Facilitation S\.1 Technical Control Services 1,410 S\. 2 Streamlining Customs 12,900 Procedures S\. 3 Trade Logistics Performance 1,250 Indicators Sub-Total Trade Facilitation 15,560 E\. Project Management 310 Total Baseline Cost 55,470 Physical Contingencies 362 0\.00 Price Contingencies 2,187 0\.00 Total Project Costs 58,019 Front-end fee PPF 356\.00 \.00 Front-end fee IBRD \.00 Total Financing Required 58,375 (b) Financing Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Cofinancing Appraisal (USD millions) (USD millions) Borrower 4\.83 4\.83 \.00 39  International Bank for Reconstruction 36\.00 41\.82 \.00 and Development FOREIGN SOURCES (LOCAL 15\.00 15\.00 \.00 PRIVATE SECTOR) Financing (as of 05-Nov-2012 ) Key Dates Revised Ln/Cr/T Effectiveness Original Closing Project Status Approval Date Signing Date Closing f Date Date Date P07111 IBRD- 30-Sep- Closed 29-Jun-2004 02-Jul-2004 14-Jan-2005 31-Mar-2010 5 72390 2012 P07111 IBRD- 30-Sep- Closed 28-Aug-2007 20-Oct-2007 31-Mar-2008 31-Mar-2010 5 74870 2012 \. Disbursements (in Millions) % Ln/Cr/T Currenc Project Status Original Revised Cancelled Disbursed Undisbursed Disburs f y ed P07111 IBRD- Close 35,820,000\. 180,000\.0 USD 36,000,000\.00 37,787,377 1,457,861\.04 110\.00 5 72390 d 00 0 P07111 IBRD- Close 6,000,000\.0 3,219,208\.5 USD 6,000,000\.00 0\.00 2,853,602\.87 54\.00 5 74870 d 0 0 40 Annex 2\. Outputs by Component Component 1: Second Export Market Access Fund (EMAF II) EMAF II processed 1239 firms and 94 business associations, largely exceeding the initial objectives of 500 firms and 40 associations served by the end of the project\. EMAF II finalized projects with 1,232 firms\. This resulted in successful export operations for 870 firms and 54 business associations\. Furthermore additional financing of $6 million was provided in 2008 by the World Bank in order to respond to greater demand for assistance to enable firms to enter export markets and to maintain the momentum EMAF II had created\. Through EMAF II beneficiaries firms generated incremental exports of $550 million thus exceeding its development target of $528 mn in additional exports\. 30% of those firms were new exporters, 52% targeted new markets and 19% of firms exported new products\. Extending the project from March 31-September 30 2012 allowed the completion of the remaining marketing plans as well as to finalize pending administrative transactions related to remaining export plans\. Beneficiaries firms operated in a diverse set of sectors (see figure below) with a more significant share of services (28%) compared to EMAF I, which focused on manufacturing\. EMAF II also promoted foreign market implementation\. Out of 273 firms applying for support to open a foreign branch, 115 succeeded mainly in newer non-traditional markets (Maghreb and other parts of Europe)\. 52% of those were seeking new export markets, indicating the correct anticipation that Tunisian export increasingly sought new markets and product diversification\. In addition a number of consortia and business associations were assisted through EMAF II\. 38 firms formed consortia to realize export operations, resulting in 54 export plans\. It remains unclear, however, whether the business association had been formed with the goals of benefiting from EMAF II assistance\. Figure 1: Participation of Firms in EMAF II by Sector and Size Services (350) 2\.30% 2\.20% 0\.60% Textiles and Clothing (222) 4\.10% 6\.10% Miscellaneous Industries 8\.80% 28\.40% (128) Food and Agriculture (126) Mechanical and Electrical 18% (110) 8\.90% Artisinal Products (108) 10\.20% Chemicals (75) 10\.40% International Business Associations (50) Ceramics and Glass (28 firms) 41 Component 2: Pre-Shipment Finance Guarantees (PEFG) Facility The Pre Export Finance Guarantee scheme generated around $115 mn of additional exports and allocated $54 mn in working capital guarantees\. 225 firms benefited from the guarantees through the participation of 18 banks in the scheme\. Particularly in the initial years of the project the guaranty facility was able to develop strong links with Banks through a communication campaign and workshop designed to capture the adherence of bankers\. In terms of operational effectiveness PEFG was able to reduce its processing time from 12 days in 2007 to 8 days in 2012\. The total export generated through assisted firms (EMAF II + PEFG) amounted to $665 Million, representing 84% of the initial target of $787 million, which represents the total additional export generated by both components (FAMEX and PEFG)\. This is the case despite EMAF II exceeding its targets of by $16\.8 mn (550-528) and is due to the ambition PEFG target of $259 million additional firms supported by EMMAF\. Component 3: WTO Technical Barriers to Trade Enquiry Point Strengthening the capacity of INNORPI to collect, analyze, and disseminate information resulted in significant enhancements to the interaction and compliance with the WTO\. Since 2006, the notification delay to the WTO TBT committee of draft mandatory technical control requirements was reduced to 2 months (PAD objective, against 5-6 months on average in 2005-2006)\. The delay for accessing texts on WTO notification of technical controls for export has been 2 months since 2006 (PAD objective, against 5-12 months on average in 2004)\. The electronic information service “Export-Alertâ€? setup by INNORPI in collaboration with the Canadian Council on Norms (CCN) continues to be operational since May 2009 2008 and has over 500 firms who are members\. Tunisian norms related to ISO 15,000 were numerised and put on INNORPI’s website in 2008\. Outputs for component 3 are as follows: # Output Amount Date English language training for INNORPI 1 USD20,000 April 2006 staff Consultant to prepare terms of reference for a technical assistance mission for the 2 design and implementation of the USD 20,000 2006 INNORPI technical barriers to trade (TBT) information system Selection of a consulting firm for the 3 preparation of the digitization and Euro 30,000 2006 numbering of Tunisian trade norms Technical assistance for the development and implementation of the TBT- 4 USD 100,000 July 2007 INNORPI information portal (completed by Samarcande consulting firm) Evaluation of existing information portals 4\.1 on TBT in preparation for INNORPI USD 33,000 October 2007 system Four study trips to examine other 5 USD 105,000 June-July 2007 information portals 42  Training on Information Communications 6 Euro 42,000 March 2008 Technology (by ADBS consulting firm) Software necessary for the digitization 7 TND 94,160,000 September 2008 and numbering of the TBT database Implementation of the INNORPI 8 CAN $40,000 November 2008 information system “Export Alerteâ€? Technical assistance to choose an 9 information systems solution for the PNI- Euro 85,000 2008-March 2012 INNORPI information system Training ‘sur les techniques de veille 10 normative et réglementaire’ by ADBS Euro 42,000 December 2009 consulting firm Purchasing manuals related to 11 Euro 16,000 management of technical trade norms Public relations/advertising campaign for new PNI-OTC-INNORPI information 12 TND 45,000 June 2009 service (implemented by Kahia Productions) Acquisition of information systems for 13 TND 206,350,000 PNI-OTC-INNORPI information system Research publication: developing a 14 national strategy of trade norms for 2011- Euro 16,000 2015 November 2009 (China Study Trips to study information systems 15 USD 20,000 and Thailand); October for technical barriers to trade 2010 (Turkey) Training: third party auditors 16 Euro 78,063,000 3rd quarter 2010 (implemented by AFNOR) Development of an online publicity 17 TND 28,000 November 2009 campaign for TBT Training: back office support for Export 18 Alerte in Canada with the Canadian USD 20,000 September 2010 Council on Norms (CCN) 19 Equipment: information management TND 305, 500,000 March 2011 Delivery of education seminars on TBT 20 TND 10,000 July 22, 2011 and INNORPI’s services Study trip: European Commission to 21 study technical barriers to commerce and TND 8,500,000 December 7, 2011 trade Training activities on the implementation  of information research services 22 concerning normative, regulatory and  USD 25,000 June 2012 patent issues (specialized training bureau)  Organized but not 23 Training of INNORPI trainers (ToT) N/A completed 24 Dissemination seminars USD 14,000 September 2012 43 Component 4: Trade Logistics Sub-Component 4\.1: Enhanced Integration of Technical Control Procedures and Strengthened Risk Management Protocols: The Directorate of Quality and Consumer Protection (DQPC) was the technical control institution that realized the largest number of processing efficiency gains throughout the project\. The DQPC had been able to decrease time needed for processing technical requests for goods to leave the customs sites and be placed in a warehouse (autorisation provisoire d’enlèvement – APE) from 2 days to 2\.75 hours\. Processing times for goods to clear customs and be placed on the market (autorisation mise à la consummation- AMC) was reduced from 11 days to 3 hours\. These figures, however, were measured in November 2007\. Bank staff repeatedly called for these figures to be updated using more recent data, however this never occurred\. Processing times amongst other agencies within the Tunisian Government vary significantly\. The average processing times for all other agencies is 24\.96 hours, making aggregate (including the DQPC) average delays across all institutions to be 9\.84 hours\. While DQPC automated their processes in 2008 and CERT in 2008, other agencies involved in technical control procedures continue to complete procedures manually\. A risk management system designed to improve efficiencies across technical control agencies was delayed by nearly two years\. The system was eventually developed and tested but full implementation was not achieved before project closing\. See section 3\.2 for full analysis of managerial and administrative delays related to technical controls component\. With regards to customs procedures (sub-component 4\.2) the project was successful in reducing average delay times for customs process (reduction of approximately 40\.2%; delay decrease from 10\.1 to 5\.95 days)\. During that period, processing time due to customs (between declaration and release) passed from three days in December 2005 to half a day in October 2011\. The % of customs declarations in the green was 50% as of October 2011, against a PAD objective of 80%\. Outputs procured within sub-component 4\.2 include the following: Hardware # Output Contract Amount of Date of No Amount Amount Date Contract Objection paid to paid by the the World Supplier Bank 1 500 micro-computers 09/25/2006 TND 09/11/06 TND Euro 765,570,000 765,570 355,873\.22 2 500 printers 09/25/2006 TND 09/11/2006 TND Euro 351,320 343,750 159,538 3 165 micro-computers 02/25/2009 TND 01/29/2009 TND Euro 221,799 221,799 95,521 4 Computer equipment 07/20/2009 TND 07/01/2009 TND Euro for renovation of the 1,809,184 1,809,184 945,861 “Sindaâ€? information system 5 Computer equipment 07/20/2009 TND 07/01/2009 TND Euro 147,092 147,092 62,516 6 4 Scanners/inspection 08/21/2007 Euro 07/05/2007 4,034,088 Euro systems 4\.128,000 (93,912 4,034,088 44  penalty) 7 X-ray inspection 08/29/2009 Euro 08/11/2009 Euro Euro system 1,315,000 1,315,000 1,315,100 8 Mobile customs 01/27/2011 USD 08/01/2011 USD Euro processing systems 1,054,309 948,878 668,695 (vehicles and associated supervision/scanning software; GPS/GPRS software) 9 Acquisition of Estimated Not achieved; computer equipment 1,500,000 new procurement methods adopted in 2011 (after the revolution) prevented completion of activity; activity to be completed under new competitiveness project currently being negotiated Training and Consultancies # Output Contract Amount of Date of No Amount Amount Date Contract Objection paid to paid by the the Supplier World Bank 1 Transition from 05/26/2008 USD 279,675 12/04/2007 USD Euro SYNDA to ASYCUDA 279,675 155,392 information system (consultant: CNUCED) 2 Assistance in change 08/18/2008 TND 52,640 07/11/2008 TND Euro management 52,640 25,036 implementation processes (consultant: Samef) 3 Study on risk 08/06/2009 TND 61,600 07/15/2009 TND Euro management and 61,600 26,193 selectivity procedures (independent consultant: Hatem Ben Ameur) 45 Project objectives were largely achieved regarding the development of robust performance indicators measuring trade logistic performance (sub-component 4\.3)\. The team adopted methodologies from the World Bank (Trade and Transport Facilitation in Southern Europe (TTFSE) and the World Customs Organization (Time Release Study) to analyze different time segments in the customs clearance process\. A number of studies evaluating customs and supply-chain procedures were completed throughout the project, providing empirical estimates to connectivity and trade facilitation delays\. 46 Annex 3\. Economic and Financial Analysis At appraisal, the Bank team undertook a socio- economic assessment of EDP II\. The design of the project which contains multiple components and sub components as well as a significant institution and capacity building dimension made it challenging to capture its overall social and economic impact\. Spillover benefits such as the development of an export consulting industry, the opportunity costs resulting from goods manufactured by beneficiaries firms that would otherwise have been imported, jobs created and added fiscal revenues could not be adequately quantified\. Using estimated and real actual figures allows us to test the robustness of the initial model design\. In both cases we find that the design and the mechanics of the model used for projections are adequate in terms of projections if used with more conservatives’ assumptions ( see summary result table below) Table 1\. Summary result EMAF II EMAF II PEFG PEFG projected realized Projected realized Accumulated 528 550 259 115 exports EMAF II Economic impact EMAF II economic impact was estimated based on a total of 540 beneficiaries with a grant of US$34 million\. The following assumptions were used: - Benefits for the business associations (40) and the firms (500) were grouped because it was believed that the number of trade association would remain modest and therefore did not justify using a different trade ratio multiplier for the associations\. - The EMAF II grant would be disbursed over a four year period plus two additional years to measure the benefits through year six\. The number of beneficiaries would be spread over the four years of disbursement\. The trade ratio multiplier increased form 2 during the first year to 4 , 6 and 8 for the last year\. - The discount rate used was 8% - The value added distribution of the export stream was based on EDP I which was inspired from countries with similar trade profiles (Ecuador, Mauritius) - Taxes on export were based on average fiscal recovery, with 17\.5% for payroll and 20% for income corporate tax\. Likewise for employees of exporters with 9\.3% on salaries and 3% on VAT paid up salaries\. 47  Table 2\. EMAF II Summary results of simulations (US$ million) EMAF II 4yr EMAF II 4 yr EMAF II 4 yr US$34 Million US$44\.8 US$44\.8 (estimated at Million Million appraisal) (reverse Actual simulation) Accumulated 528 952 550 exports NPV of exports 367 676\.3 N\.A Salaries generated 56\.7 104\.4 N\.A Financing costs 74\.4 137\.1 N\.A Depreciation 29\.3 54\.1 N\.A Profits 54\.5 100\.5 N\.A Total value added 215 396\.3 N\.A According to Table 1 and 2 the initial projected figures of EMAF II show significant gains in incremental or additional exports as well as on total value9\. The initial assumptions attempted to account for a number of factors\. It was therefore estimated at appraisal that EFAM II would yield approximately US$528 million in accumulated export over 6 years with a Net Present Value of US$367 million for a total value added of 215 (see table 1)\. We attempt to replicate the model using the same initial model design and assumption which shows that EMAF II yields total incremental exports of US$952 million\. Under the hypotheses used at appraisal, the model overestimates the actual number realized (US$ 550 million)\. Lessons learned A number of challenges presented themselves in order to replicate the models\. The EMF II accounts had not been finalized at the time this ICR was written10 so the annual actual numbers for disbursement and beneficiaries were not readily available especially for the last year which was estimated\.11 The initial model used at appraisal for EMAF II generates optimistic figures\. The assumptions that the exports effects will accrue over 2 years after the life of the project seems to be reasonable but the magnitude of the effect accrued is in our view was too large\. In addition the trade ratio multipliers was also large as it based on an overall average and in reality can vary significantly\. It would be more realistic to be conservative with this ratio\. In fact it has been observed that it tends to diminish with time instead of increase\. A potential future model should attempt to present scenarios (sensitivity analysis) based on different disbursement rates, revised export growth rates of past beneficiaries and diminishing trade ratios\. Table 3\. Economic Impact of EMAF ((US$ million) PROJECTED EMAF 2 # Firms 540 Amount 31\.6 U\.S Million 9 Accounting for employee’s income and taxes collected from additional exports for both firms and employees 10 The fact that the final Financial management audit had not yet been conducted for EMAF II because the consultants left at project closing illustrates some of the sustainability challenges that confronted the project\. 11 In addition the economic impact analysis was designed for a four year period but EDP II was extended and EMAF II benefited from added financing from both the bank and the Tunisian government\. The initial planned total grant of US$34 Million was exceeded (EMAF II total grant was approximately US$44\. million over a 7 year period)\. 48 Period 4 Years year 1 year 2 year 3 year 4 year 5 year 6 Assumed ratio of additional exports to one $ of grant 2 4 6 8 Number of exporters assisted by EMAF2 80 120 160 180 Total matching grant 1\.50 5\.50 11\.60 13\.00 Exports generated by exporters assisted in year 1 3\.0 6\.0 9\.0 12\.0 Exports generated by exporters assisted in year 2 11\.0 22\.0 33\.0 44\.0 Exports generated by exporters assisted in year 3 23\.2 46\.4 69\.6 92\.8 Exports generated by exporters assisted in year 4 26\.0 52\.0 78\.0 Additional annual exports generated by EMAF 2 3\.0 17\.0 54\.2 117\.4 165\.6 170\.8 Cumulated exports 3\.0 20\.0 74\.2 191\.6 357\.2 528\.0 NPV of additional exports $367\.01 Investment (matching grant) -1\.50 -5\.50 -11\.60 -13\.00 Mgmt & Operating costs -1\.1 -1\.65 -1\.8 -1\.45 Additional annual exports 3\.0 17\.0 54\.2 117\.4 165\.6 170\.8 Flow of Funds 0\.4 9\.9 40\.8 103\.0 165\.6 170\.8 NPV $337\.21 Value Added 215\.07 Including Salaries 56\.70 Tax revenues form exporters 83\.32 Tax revenues form salaries 7\.01 EMAF 2 ICR # Firms 870 U\.S year year Amount 44\.8 Million year 1 2 year 3 year 4 5 year 6 year 7 year8 Period 7 Years Assumed ratio of additional exports to one $ of grant 2 4 6 8 8 8 Number of exporters assisted by EMAF2 75 349 36 144 247 19 Total matching grant 14\.50 5\.00 7\.30 8\.00 7\.0 3\.0 Exports generated by exporters assisted in year 1 29\.0 58\.0 87\.0 116\.0 116\.0 116\.0 Exports generated by exporters assisted in year 2 10\.0 20\.0 30\.0 40\.0 40\.0 40\.0 Exports generated by exporters assisted in year 3 14\.6 29\.2 43\.8 58\.4 58\.4 58\.4 Exports generated by exporters assisted in year 4 16\.0 32\.0 48\.0 64\.0 64\.0 Exports generated by exporters assisted in year 5 14 28 42 56 Exports generated by exporters assisted in year 6 6 12 18 Additional annual exports generated by EMAF 2 29\.0 68\.0 121\.6 191\.2 245\.8 296\.4 216\.4 196\.4 49 Cumulated exports 29\.0 97\.0 218\.6 409\.8 655\.6 952\.0 1168\.4 1364\.8 NPV of additional exports $908\.66 NPV of additional exports ( 4yr) $676\.29 Investment (matching grant) -14\.50 -5\.00 -7\.00 -8\.00 -7\.60 -3\.00 Mgmt & Operating costs -1\.1 -1\.65 -1\.8 -1\.45 -1\.5 -1\.5 Additional annual exports 29\.0 68\.0 121\.6 191\.2 245\.8 296\.4 217\.6 198\.8 Flow of Funds 13\.4 61\.4 112\.8 181\.8 236\.7 291\.9 217\.6 198\.8 NPV $867\.55 Value Added 532\.48 Including Salaries 140\.39 Tax revenues from exporters 206\.30 Tax revenues from salaries 17\.37 PEFG economic impact The initial analysis was based on fund of shows an estimate based on an initial fund of US$5 million with improved management compared to EDP I and the following assumptions ï‚ The guarantee coverage fund ratio will gradually increase from 2 in the first year to 4 in the second and third year to 5 and 6 respectively for year 4 and 5\. Representing a more conservative estimate over EDP I\. ï‚ The average yearly turnover of pre-shipment export finance is equal to 2, with a maximum maturity of 6-months\. ï‚ For an export order of US$1 the PEFG covers US$0\.81, which is 90 percent loan share times 90 percent guarantee share\. ï‚ The net default rates decline from 3% in the first year to 2\.5% in the second year 2% and 1\.5 % for the third and fourth year and 1% for the last year\. These rates reflect the technical assistance supplied to SMEs\. ï‚ Additional annual exports of US$1 million generate 100 jobs\. ï‚ The administrative costs would initially represent 1\.7% of the guarantee outstanding and decrease to 1% in the final year\. ï‚ The annual premium fate applied to the guarantee outstanding is 1\.8%\. ï‚ The fund’s annual interest earnings are 4%\. It was estimated that US$1 would covers US$2\.47 on annual exports with a PEFG coverage ratio of 1 (1/90%*90%) * 2 =2\.4\. This meant that with a coverage ratio of 6 at the end of the 5th year, one dollar of fund would cover 2\.47*6= 14\.8 Therefore a US$5 million fund had the potential to cover US$74\.1 50 million of exports\. The NPV of the benefits would represent US$200 million for the first 5 years; while the NPV of net social benefits represented US$92 million for the same period\. We obtain these figures by using the same model and actual figures12 Again we find that some of the assumptions seemed slightly overly optimistic, particularly with regard to the guarantee coverage ratio which was the main driver of export generated, and the percent guarantee share – set at 90%\. Our results show that the total export generated over 7 years was US$149\.4 million with a NPV of additional export of US$118\.78 million compared to an initial estimated gain of NPV US$200 million and total exports of US$259 million\. The actual export generated was around US$115 million thereby showing the model to overestimate\. We revise assumptions as follow: - On average the actual annual of pre shipment export coverage ration should not exceed 3\. loan maturity revolved around 160 to 147 and 196 but varied across industries so it is reasonable to keep it at 180 days - The percent guarantee share varied between manufacturing and services with around 20% in services to 80: max in industries\. An estimated average rate should be around 45% Using these assumptions and going back to the original formula the model estimates US$1 covers US$ 6\.3 of annual exports with a PEFG coverage ratio of 1 (1/40%*90%) * 2=4\.5 Therefore according to the model US$5 million could cover 22\.5 million of additional exports in year 1 as opposed to US$74 millions as originally estimated\. Overall we find that the assumptions could be revised as per the result mentioned\. The assumption that the $US 5 million capital of the fund could be available every year to generate exports (based on the 5 million fund capital being exhausted annually) is unlikely and therefore exports and NVPO could be overestimated , along with overly optimist coverage ratio and credit outstanding explain the discrepancies between projected and actual\. Readjusting the coverage ratio and credit outstanding assumption could generate more realistic projections\. 12 As for EMAF II , the team ran into some challenges in obtaining actual accurate data and had to estimate 51 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Senior Private Sector Development Hamid R\. Alavia EASFP TTL Specialist Mehdi Benyagoub PSD Specialist MNSF1 Steve W\. Wan Yan Lun Operations Analyst MNSF1 Supervision/ICR Djibrilla Adamou Issa Anas Abou El Mikias Consultant MNAFM Radia Benamghar Transport Specialist SASDT Salim Benouniche Lead Procurement Specialist MNAPC Allen Curtis K\. Dennis Senior Economist DECPG James C\. Hanna Consultant MNSF1 Nora Kaoues Senior Operations Officer OPSRS Lead Private Sector Development Jean Michel Noel Marchat AFTFW Specialist Peter McConaghy Junior Professional Associate MNSF1 John S\. Wilson Lead Economist DECTI Michel Zarnowiecki Consultant PRMTR (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY01 2\.31 FY02 58\.02 FY03 183\.30 Total: 243\.63 Supervision/ICR FY04 155\.76 FY05 148\.75 FY06 117\.99 FY07 125\.75 Total: 548\.25 52 Annex 5\. Beneficiary Survey Results N/A 53 Annex 6\. Stakeholder Workshop Report and Results (if any) No stakeholder workshop was conducted\. 54 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR A draft ICR was shared with the borrower for comments\. No comments were raised and the borrower did not provide its own ICR for the project\. 55 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders N/A 56 Annex 9\. List of Supporting Documents Cadot, Olivier, Ana M\. Fernandes, Julien Gourdon, and Aaditya Mattoo\. Are the Benefits of Export Support Durable? Evidence from Tunisia\. Report\. Policy Research Working Paper\. Washington: World Bank, 2012 Export Development Project (EDP I) Implementation Completion Report No: 31785-TN, March 2005 Financial reports for CEPEX, COTUNACE, INNORPI, DQPC and technical agencies, and customs administration From Privilege to Competition: Unlocking Private-Led Growth in the Middle East and North Africa\. Report\. MENA Development Report\. Washington: World Bank, 2009 Gourdon, J\., JM Marchat, S\. Sharma, and T\. Vishwanath\. Ex-Post Impact Evluation of an Export Promotion Matching Grant: Tunisia's EMAF II\. Report\. Vol\. 40\. MENA Knowledge and Learning\. Washington: World Bank, 2011\. Operational Manual for EMAF and CMU Policy Note on SMEs and Access to Finance in Tunisia\. Report\. Washington: World Bank, 2009 Project aide memoires, Back-to-office reports, ISRs, etc Rocha, Roberto R\., Zsofia Arvai, and Subika Farazi\. Financial Access and Stability: A Road Map for the Middle East and North Africa\. Report\. MENA Development Report\. Washington: World Bank, 2011\. Second Export Development (EDPII) Project Appraisal Document, Report No: 29178-TN, June 2004\. 57 Annex 10: Summary of Impact Evaluations Completed on Project Summary of: Gourdon, J, JM Marchat, S\. Sharma, and T\. Vishwanath\. Ex-Post Impact Evaluation of an Export Promotion Matching Grant: Tunisia's EMAF II\. Rep\. No\. 40\. Washington: World Bank, 2011\. Print\. MENA Knowledge and Learning\. Method: The authors evaluated EMAF II by comparing changes in relevant outcomes (such as exporting) before and after EMAF II across firms that got EMAF II support (the “Treatmentâ€? group) and firms that are similar but did not get EMAF II support (the “Controlâ€? group)\. Ideally, these groups should have been ‘identical’ prior to EMAF II, so that it can be safely assumed that changes in the relevant outcomes during this period would have been the same across the treatment and control groups, had it not been for EMAF II\. One way to ensure that such ideal treatment and control groups existed would have been a randomized acceptance of applicants to EMAF II\. Unfortunately this best-case strategy was not possible, since acceptance into the program was not random, and that the most promising applicants are systematically more likely to have been accepted\. Keeping this is mind, the author’s designed a strategy that attempted to come as close to the idealized approach as possible\. The authors wanted to identify a control group which is the most similar to the treatment group, so that it can be argued that changes in outcomes across this control group is a good measure of what would have happened to EMAF II firms during this period had they not received EMAF II support\. Given that the authors did not have an ideal ex-ante identical control group, they randomly selected similar Tunisian firms as a control group, and then compared the ‘treatment’ and the ‘control’ groups after controlling for differences along observable dimensions such as size, age, sector, and prior exporting status\. They controlled for observable differences using Propensity Score Matching (PSM), a statistical matching technique that attempts to estimate the effect of a policy or program by accounting for the covariates that predict receiving the treatment\. The logic behind this approach is that once these observables are controlled for, all other differences across these two groups of firms in outcomes before and after EMAF II are due to their different EMAF II status\. This approach was applied to two datasets\. One is an in-depth survey of 196 EMAF II firms and 232 similar control firms while the second dataset is based on detailed customs data and compares 400 EMAF II firms to 2600 Tunisians firms\. Results: In contrast with the raw comparison (without PSM), PSM gave higher and statistically significant differences for growth in export volume and growth in number of destinations (light shades mean no significant differences in Chart 1 below)\. Estimates suggest that participation in EMAF II is associated with an increased growth in firms’ total exports\. The annual export growth is 38\.9 % higher for EMAF II assisted firms compared to controls firm with similar propensity scores in 2004-2008\. Similarly, annual growth in destination markets reached is 4 % higher for firms assisted by EMAF II\. Finally, the impact of EMAF II is positive but not significant on another output that captures the extensive margins in exports: the number of products\. The same dataset was also used assess the employment impact of EMAF II\. Although not a stated objective of the EMAF II matching grant program, the employment impact is important given Tunisia’s persistent unemployment and ongoing economic and social uncertainty due to the 2010 revolution\. Employment in EMAF II firms grew annually by 5\.5 % in 2004-2008 and by 4\.6 % for firms in the control group\. The PSM approach yields similar results though the gap is larger: annual growth of 10\.2 % for EMAF II firms against 5\.1 % for the control group\. This suggests EMAF II had a positive impact on 58 employment, though it must be noted that the small sample size implies results are sensitive to the specification used and not always statistically significant\. Chart 1: EMAF II Key Outcomes 38\.90 40 30 18\.5 20 4\.00 Without PSM 4\.30 10 With PSM 2\.8 0 2\.5 Exports Destination Markets Products Customs Data: In addition to firm-level data, another ex-post impact evaluation exercise was completed based on a larger sample of customs data\. Transaction-level export data with exporter ID, transaction value, country of destination, and produce code were obtained from Tunisian Customs for 2000-2008 for 3000 firms, including 400 EMAF II firms\. The sample represents approximately 55% of export of goods (excluding oil) in Tunisia\. Using PSM on this customs data, the authors found that EMAF II support had increased the difference in growth rate in the two years of treatment for export outcomes, ie volume, number of destinations and number of products\. Increase in growth is slightly higher than with the firm level survey data\. The impact is for two years instead of the four years and the impact on extensive margins is higher\. The limitation with customs data used is that firms in services, which represent approximately 30% of EMAF II firms, are not taken into account as they are not reported in custom’s data\. This, however, allows for i) a more robust matching and disaggregation of results by types of treated firms and ii) to test for the duration of impact of EMAF II\. The authors consider here that the impact of EMAF II for a firm receiving support in 2005 should be measurable on export transactions in 2005 and 2006\. Over the long-term, outcomes do not differ much from random non-EMAF II firms (see chart 2)\. The authors suggest that perhaps the duration of support by EMAF II was not sufficient to allow managers to be on their own in export markets\. Similarly, the results suggest that limits to production expansion may have been reached after a first large increase\. 59  Chart 2: EMAF II Key Outcomes 37\.9 40 30 17\.7 16\.1 20 11\.2 Products 10 3\.9 Countries 1\.8 Exports 0 2005 2006 2007 2006 Source: Authors’ calculations based on custom’s data Conclusion: Although the short duration of the impact and limited additionally for a specific class of manufacturing firms joins earlier criticisms of matching grants, overall results from the PSM based on two different data sources suggest the EMAF II was successful\. It had a statistically significant, positive impact on firm performance along targeted dimensions of total exports, number of export product and export destinations and is likely to have a positive impact on employment\. Summary of: Cadot, Olivier, Ana M\. Fernandes, Julien Gourdon, and Aaditya Mattoo\. Are the Benefits of Export Support Durable? Evidence from Tunisia\. Report\. Policy Research Working Paper\. Washington: World Bank, 2012 This paper evaluates the effects of the FAMEX export promotion program in Tunisia on the performance of beneficiary firms\. While much of the literature assesses only the short term impact of such programs, the paper also considers longer term impact\. using a menu of estimation methods, including difference-in- differences combined with propensity-score matching (PSM-DID) and difference-in-differences weighted by propensity scores, designated henceforth as weighted least squares regressions (WLS)\. The author’s find that, compared to a control group, FAMEX beneficiaries successfully diversify in terms of export destination markets and products, and durably so\. However, the beneficiary firms‘ total exports diverges only temporarily from the control group‘s total exports\. See Chart 1 for graphical representation\. One year after treatment, the differential in growth rates of total exports is not significant anymore\. Three years after treatment, even export levels are no longer significantly different\. Even though export destination and product counts remain significantly different throughout the sample period, the treatment group‘s diversification does not seem to translate into reduced export volatility\. These results suggest that FAMEX has a stronger and more durable effect on firms’ exports at the extensive margin (destination and product growth) than at the intensive margin (total export growth)\. 60 The authors also examine the existence of program spillovers by estimating FAMEX‘s indirect impact on the performance of control firms\. This is an important—although typically underexplored—part of program impact evaluation, because in the presence of spillovers, the absence of a positive measured treatment effect could reflect a positive true treatment effect transmitted to the control group through positive externalities, which is precisely the combination that would justify Government intervention\. In the case of FAMEX, the central result- the lack of persistence of treatment effects on export values – might reflect catching up by control firms rather than vanishing benefits for treated firms, although catching up through imitation should apply equally – perhaps even more – to the extensive margin for which there is observable permanent divergence\. For instance, FAMEX beneficiaries’ actions, such as participating in trade fairs or hiring export-marketing consultants, could have been visible to and easily imitable by other firms in their sector or location\. Regressing firm outcomes on exposure to FAMEX beneficiaries, the results fail to suggest any positive externalities\. The only instance of significant coefficients for total exports and for the number of products is negative, which would certainly not suggest spillover benefits occurred\. Finally, the authors study heterogeneity in treatment effects as a function of the beneficiaries‘ objectives and use of assistance\. When applying to FAMEX firms had to state an objective, whether they wanted to: (i) become a significant exporter, (ii) export to a new destination markets, or (iii) export a new product\. Given the way FAMEX application packages were structures, firms could state only one of these three objectives\. The authors re-estimate cumulative treatment effects of FAMEX allowing for these effects to differ across objectives\. Firms seeking to expand into new markets or to develop new export products benefit more than firms seeking to become more substantive exporters\. Also, market prospection and promotion activities correlate more significantly with export outcomes than other components of FAMEX, like firm or product development, suggesting that informational barriers are the most amenable to effective government assistance\. These findings support the broad view that firms seeking and using assistance to expand along the extensive margin are less likely to be disappointed with the longer-term outcome than 61 those seeking and using assistance to expand along the intensive margin\. Together, these results suggest that export promotion is most effective in helping firms break into new markets and new products\. Concluding Remarks: The authors conclude that their research adds to the small existing literature by taking a longer view of impact of interventions\. They find FAMEX had a durable impact along the extensive margin in terms of export destinations and products but provided along a temporary boost to exports along the intensive margin\. The results are robust\. The authors suggest that the results must also be understood in the context of the global economic recession\. Similarly, there may be a bias in that firms participating in FAMEX may have ventured into riskier markets\. Their evidence demonstrates that the increased diversification of beneficiary firms did not result in reduced volatility of exports\. Given that exports were not sustained and that effects did not spillover to non-treated firms, the authors suggest that matching grants programs alone may not be the best use of public funds for long-term sustained export development\. 62  7° 8° 9° 10 ° 11 ° Mediterranean 600 Bizerte Sea BIZERTE 00 10 37 ° Gulf of Tunis 37 ° Nefza ARIANA Ariana B E J A a TUNIS NABEUL Beja rd je Ben Arous JENDOUBA ed M e 0 an BEN 40 ili AROUS TUNISIA M Jendouba Zaghouan TUNISIE 100 0 el le gu e H\. Zriba Nabeul M ZAGHOUAN 600 El Kef ELEVATIONS IN METERS: ALTITUDES EN METRES: SILIANA 1000 Siliana Gulf of Hammamet 36 ° 600 200 EL KEF 36 ° uf 0 ro Sidi Bou Ali aa M CHOTTS Sousse CHOTTS SOUSSE Monastir RIVERS OUED A ECOULEMENT PERENNE SEASONAL RIVERS Kairouan OUED A ECOULEMENT INTERMITTENT MONASTIR Jemmel ANNUAL AVERAGE RAINFALL IN MM\. 40 0 200 KAIROUAN Zermedine PRECIPITATION ANNUELLE EN MM\. Mahdia EXPRESSWAYS AUTOROUTES MAIN ROADS K A S S E R I N E ud El ro ROUTES PRINCIPALES Ha Ze MAHDIA SECONDARY ROADS te b ROUTES SECONDAIRES RAILROADS Kasserine CHEMINS DE FER 35 ° INTERNATIONAL AIRPORTS 35 ° AEROPORTS INTERNATIONAUX PORTS Sidi PORTS Bou GOVERNORATE CAPITALS Zid CAPITALES GOUVERNORATS SIDI BOU ZID NATIONAL CAPITAL SFAX CAPITALE NATIONALE GOVERNORATE BOUNDARIES 200 FRONTIERES DES GOUVERNORATS Sfax Maknassy INTERNATIONAL BOUNDARIES GAFSA Kerkenna Islands FRONTIERES INTERNATIONALES Gafsa Gulf 34 ° of Gabes 34 ° TOZEUR Tozeur Metouia Djerba Island Gabes Houmt Souk 10 0 GABES Chott el Jerid Kebili 20 0 MEDENINE K E B I L I Medenine 33 ° ALGERIA 33 ° Tataouine 10 0 TUNISIA T A T A O U I N E 32 ° 32 ° 7° 8° SPAIN ITALY GREECE Mediterranean L I B YA Tunis MALTA Sea 31 ° 31 ° TUNISIA This map was produced by the Map Design Unit of The World Bank\. ALGERIA The boundaries, colors, denominations and any other information shown on 0 25 50 75 100 this map do not imply, on the part of L I B Y A The World Bank Group, any judgment KILOMETERS on the legal status of any territory, or IBRD 32056 any endorsement or acceptance of JULY 2002 such boundaries\. 9° 10 ° 11 ° NIGER

REVIEW

P104405

Document of The World Bank Report No: ICR00003211 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-92182) ON A GRANT IN THE AMOUNT OF US$ 6\.02 MILLION TO Health Insurance Fund FOR A Pre-paid Health Scheme Pilot in Nigeria (P104405) January 30, 2015 Health, Nutrition and Population Global Practice Africa Region This document is being made publicly available after Bank approval\. This does not imply a presumed outcome\. This document may be updated following Bank approval and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information\.  ABBREVIATIONS AND ACRONYMS ANC Antenatal care CAPDAN Computer and Allied Products Distribution Association of Nigeria CBHIS Community-based health insurance schemes CHAT Choosing Health Plans All Together COHSAS The Council for Health Service Accreditation of Southern Africa CPS Country Partnership Strategy FFS Fee-For-Service FIRR Financial Internal Rate of Return GPOBA Global Partnership on Output-based Aid HBL Hygeia Better Life HCHC Hygeia Community Health Care HIF Stichting Health Insurance Fund HMB Hospital Management Board HNP Health, Nutrition and Population HWs Health workers ICR Implementation Completion and Results report IEC Information, education and communication IFC International Finance Corporation ILI Intensive learning ICR ILO International Labour Organization ISR Implementation Status and Results Report JCI Joint Commission International LHFMAA Lagos Health Facility Monitoring and Accreditation Agency LMW Lagos Market Women M&E Monitoring and Evaluation MDD Medical Due Diligence MDG Millennium Development Goal MILK Microinsurance Learning and Knowledge MRC Market Research Consultancy NPV Net present value NGN Nigerian Naira NGOs Non-governmental organizations NHIS National Health Insurance Scheme NSHDP National Strategic Health Development Plan OBA Output-Based Aid PAF PharmAccess Foundation PDO Project Development Objective PPF Project Preparation Facility ii PSS Price Sensitivity Study QEA Quality at Entry QSA Quality of Supervision SOPs Standard Operating Procedures SPN Service provider network UHC Universal Health Coverage HNP Senior Director: Timothy Evans Practice Manager: Trina Haque Project Team Leader: Chris Atim ICR Team Leader: Samuel Mills ICR Author: Samuel Mills iii  CURRENCY EQUIVALENTS Exchange Rate Effective November 19, 2008 Currency Unit = Naira Euro 1\.00 = US$ 1\.34 US$ 1\.00 = 128\.00 FISCAL YEAR January 1 – December 31 iv  NIGERIA Pre-paid Health Scheme Pilot in Nigeria (P104405) CONTENTS Data sheet A\. BASIC INFORMATION\. VII B\. KEY DATES \. VII C\. RATINGS SUMMARY \. VII D\. SECTOR AND THEME CODES \.VIII E\. BANK STAFF \.VIII F\. RESULTS FRAMEWORK ANALYSIS \.VIII G\. RATINGS OF PROJECT PERFORMANCE IN ISRS \.XII H\. RESTRUCTURING (IF ANY) \.XII I\. DISBURSEMENT PROFILE \.XII 1\. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN \. 1 1\.1 Context at Appraisal \. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators \. 3 1\.3 Revised PDO and Key Indicators \. 3 1\.4 Main Beneficiaries \. 3 1\.5 Original Components\. 4 1\.6 Revised Components \. 5 1\.7 Other significant changes \. 5 2\. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES \. 5 2\.1 Project Preparation, Design, and Quality \. 5 2\.2 Implementation \. 7 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization \. 9 2\.4 Safeguard and Fiduciary Compliance:\. 11 2\.5 Post-completion Operation/Next Phase \. 12 3\. ASSESSMENT OF OUTCOMES \. 12 3\.1 Relevance of Objectives and Design \. 12 3\.2 Achievement of Project Development Objectives (efficacy) \. 14 3\.3 Efficiency \. 19 3\.4 Justification of Overall Outcome Rating \. 19 3\.5 Overarching Themes, Other Outcomes and Impacts \. 20 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops: \. 20 4\. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME \. 21 5\. ASSESSMENT OF BANK AND BORROWER PERFORMANCE \. 21 5\.1 Bank Performance \. 21 5\.2 Borrower Performance \. 23 6\. LESSONS LEARNED \. 24 v ANNEXES \. 27 ANNEX 1\. PROJECT COSTS AND FINANCING \. 27 ANNEX 2\. OUTPUTS BY COMPONENT \. 28 ANNEX 3\. ECONOMIC AND FINANCIAL ANALYSIS (INCLUDING ASSUMPTIONS IN THE ANALYSIS) \. 39 ANNEX 4\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES \. 43 ANNEX 5\. BENEFICIARY SURVEY RESULTS \. 45 ANNEX 6\. STAKEHOLDER WORKSHOP REPORT AND RESULTS \. 51 ANNEX 7\. SUMMARY OF BORROWER’S ICR AND/OR COMMENTS ON DRAFT ICR \. 55 ANNEX 8\. LIST OF SUPPORTING DOCUMENTS\. 65 ANNEX 9\. MAP\. 67 Figures FIGURE 1\. NUMBER OF ENROLLEES BY MONTH, JULY 2009 - DECEMBER 2013 \. 15 FIGURE 2\. ACTUAL AND PLANNED ENROLLMENT\. 31 FIGURE 3\. AVERAGE NUMBER OF VISITS PER ENROLLEE PER MONTH, AUGUST 2009 – FEBRUARY 2014 \. 31 FIGURE 4\. NUMBER OF ANC VISITS PER PREGNANCY, SEPTEMBER 2009 – SEPTEMBER 2013 \. 32 FIGURE 5\. AVERAGE ASSESSMENT SCORES FOR HEALTH FACILITIES IN NIGERIA \. 34 FIGURE 6\. RE-ENROLLMENT RATE PER MONTH, SEPTEMBER 2011 - OCTOBER 2013 \. 35 Tables TABLE 1\. BENEFITS PACKAGE OF CAPDAN\. 4 TABLE 2\. PDO INDICATORS AT PROJECT DESIGN \. 10 TABLE 3\. PLANNED AND ACTUAL PREMIUMS, SUBSIDY AND CO-PREMIUM LEVELS\. 15 TABLE 4\. RISKS AND MITIGATION MEASURES\. 29 TABLE 5\. CAUSAL CHAIN FOR THE PREP-PAID INSURANCE SCHEME\. 30 TABLE 6\. UTILIZATION OF OUTPATIENT AND INPATIENT SERVICES, AUGUST 2009 – DECEMBER 2013 \. 31 TABLE 7\. SERVICE PROVIDERS’ UTILIZATION CAPACITY \. 32 TABLE 8\. SERVICE PROVIDERS SAFECARE ANNUAL ASSESSMENT SCORES 2011 -2013 \. 33 TABLE 9\. HEALTH FACILITIES PHYSICALLY UPGRADED WITH PROJECT FUNDS \. 36 TABLE 10\. HCHC IT/ILO PROJECT ON ITC SOLUTIONS \. 36 TABLE 11\. SERVICE PROVIDERS FOR THE LMW & CAPDAN \. 37 TABLE 12\. SUMMARY OF ANALYSIS OF COSTS OVERRUN/UNDERRRUN \. 40 TABLE 13\. COMPARISON OF DISBURSED AND UNDISBURSED FUNDS BY TYPE OF EXPENDITURE \. 40 TABLE 14\. SUMMARY OF RESULTS OF THE CBA ANALYSIS \. 42 vi A\. Basic Information Pre-paid Health Scheme Country: Nigeria Project Name: Pilot in Nigeria Project ID: P104405 L/C/TF Number(s): TF-92182 ICR Date: 01/30/2015 ICR Type: Intensive Learning ICR Lending Instrument: SIL Grantee: Health Insurance Fund Original Total USD 6\.02M Disbursed Amount: USD 4\.13M Commitment: Revised Amount: USD 4\.13M Environmental Category: C Implementing Agencies: Stichting Health Insurance Fund (HIF) Hygeia Community Health Care Limited (HCHC) PharmAccess Foundation (PAF) Cofinanciers and Other External Partners: Nil B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/21/2006 Effectiveness: 05/15/2009 Appraisal: 06/20/2007 Restructuring(s): 06/25/2013 Approval: 11/19/2008 Mid-term Review: 09/30/2012 12/04/2012 Closing: 06/30/2013 04/30/2014 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Grantee Performance: Moderately Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Unsatisfactory Government: Not applicable Implementing Agency/Agencies: Quality of Supervision: Moderately Unsatisfactory HCHC Moderately satisfactory PAF Satisfactory HIF Moderately unsatisfactory Overall Bank Overall Borrower Moderately Unsatisfactory Moderately Unsatisfactory Performance: Performance: vii C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at No Quality at Entry (QEA): None any time (Yes/No): Problem Project at any time Quality of Supervision Yes None (Yes/No): (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Health 17 100 Non-compulsory health finance 83 Theme Code (as % of total Bank financing) Health system performance 100 100 E\. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Marie Francoise Marie-Nelly Onno Ruhl Practice Manager/Manager: Trina S\. Haque Eva Jarawan Project Team Leader: Chris Atim Carmen Nonay ICR Team Leader: Samuel Lantei Mills ICR Primary Author: Samuel Lantei Mills F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objective (as stated in the Grant Agreement) was to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees (and their families) of small businesses in Computer and Allied Products Distribution Association of Nigeria (CAPDAN) of the lkeja computer village in Lagos\. Revised Project Development Objectives (as approved by original approving authority) The project development objective was not revised\. viii (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years Indicator 1 : Total number of people enrolled in pre-paid health insurance scheme Value quantitative or 0 22,500 22,500 4,884 Qualitative) Date achieved 11/19/2008 12/31/2013 01/24/2013 12/31/2013 Comments Number of enrollees increased steadily to a peak of 13,473 in December 2011 and then (incl\. % gradually decreased to a low of 4,884 in December 2013 (21\.7% of the target of 22,500)\. achievement) However, 38\.6% (8,682) was achieved in April 2013 when enrollment was discontinued Indicator 2 : Provider network capacity Value quantitative or No baseline No target value Adequate Qualitative) Date achieved 11/19/2008 10/31/2013 Comments Provider network capacity refers to the ability of the entire HCHC network to adequately cater (incl\. % to the needs of current and projected enrollee population demands\. There was no target value achievement) in the operations manual\. Number of service providers in compliance with the service quality standards specified by Indicator 3 : PAF Value At least 14 of the 15 quantitative or 0 15 service providers Qualitative) Date achieved 11/19/2008 01/15/2015 04/30/2014 Comments At project closing, all service providers were in compliance with the service quality standards (incl\. % specified by PAF\. 100 percent of target achieved\. achievement) Indicator 4 : Monthly re-enrollment rates Value quantitative or 0 No target value 58% Qualitative) Date achieved 11/19/2008 10/31/2013 Comments The renewal rates increased from 48% in October 2010 - September 2011 to 58% in (incl\. % November 2012 - October 2013\. Factoring in an estimated outmigration rate of 24%, the achievement) adjusted renewal rate in October 2013 was 77%\. ix (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years Indicator 1 : Total number of visits to health facilities Value (quantitative 0 no target value 112,827 or Qualitative) Date achieved 11/19/2008 01/22/2015 12/31/2013 Comments This indicator was not in the project commitment paper (equivalent of the project appraisal (incl\. % document) but was monitored during project implementation\. achievement) Indicator 2 : Number of pregnant women who received antenatal care (ANC) services Value (quantitative 0 No target value 3,753 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper (equivalent of the project appraisal (incl\. % document) but was monitored during project implementation\. achievement) Indicator 3 : Number of deliveries in health facilities Value (quantitative 0 No target value 1,785 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl\. % implementation\. achievement) Indicator 4 : Average number of visits per enrollee per year Value (quantitative 0 No target value 3\.8 or Qualitative) Date achieved 11/19/2008 10/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl\. % implementation\. achievement) Indicator 5 : Client satisfaction rate Value (quantitative No baseline No target value 72 percent or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl\. % implementation\. achievement) Indicator 6 : Service provider capacity Value No baseline No target value underutilized x  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years (quantitative or Qualitative) Date achieved 11/19/2008 10/31/2013 Comments In a July 2011 study, of 15 health care providers 9 were determined to be of optimum capacity (incl\. % (60%), 2 (13%) were underutilized, and 4 (27%) were over utilized\. However, there was achievement) underutilization at the project closing due to the low enrollment levels\. Indicator 7 : Number of service providers removed from the network Value (quantitative 0 No target value 0 or Qualitative) Date achieved 11/19/2008 04/30/2014 Comments No service provider was dropped as a result of poor quality of care\. However, three service (incl\. % providers left the networks mainly because of non-profitability\. achievement) Indicator 8 : Annual average SafeCare quality assessment scores Value (quantitative no baseline No target value 79 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments Assessment scores for the five CAPDAN health facilities that were in assessed in 2011 as well (incl\. % as 2013 increased by 24 points from 55 points in 2011 to 79 points in 2013\. achievement) Indicator 9 : Number of health facilities constructed, renovated, and or/equipped Value (quantitative 0 No target value 16 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl\. % implementation\. achievement) Indicator 10 : Number of beneficiaries Value (quantitative 0 No target value 21,963 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments Unlike the number of enrollees at any given time, the total number of beneficiaries is the (incl\. % cumulative number enrolled at one time or the other during the project period\. achievement) xi G\. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No\. DO IP Archived (USD millions) 1 10/30/2009 Moderately Satisfactory Moderately Satisfactory 0\.72 2 06/28/2010 Moderately Satisfactory Moderately Unsatisfactory 0\.72 3 03/22/2011 Satisfactory Satisfactory 1\.17 4 12/27/2011 Satisfactory Satisfactory 2\.27 5 07/01/2012 Moderately Satisfactory Moderately Satisfactory 2\.67 6 11/30/2013 Moderately Unsatisfactory Moderately Satisfactory 3\.24 7 05/14/2014 Moderately Unsatisfactory Moderately Unsatisfactory 3\.45 H\. Restructuring (if any) ISR Ratings at Amount Restructuring Board Approved Restructuring Disbursed at Reason for Restructuring & Key Date(s) PDO Change Restructuring in Changes Made DO IP USD millions Level II restructuring – extension of closing date from June 30, 2013 to 06/25/2013 N MS MS 3\.24 April 30, 2014 and reallocation of funds between grant categories\. Approved by Country Director\. I\. Disbursement Profile xii 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Country and sector background 1\. Nigeria is the largest oil exporter, has the largest economy, and is the most populous country (174 million) in the Africa region\. It is ethnically diverse and has more than 400 linguistic groups in 36 decentralized states in the federal republic\. Lagos state, with a population of over 9 million, is the second largest populous state after Kano state\. Nigeria, a lower middle-income country, has had a strong economic growth rate at about 6 to 8 percent annually in the last decade\. However, 46 percent of the population live below the poverty line and 67 percent live on less than US$1\.25 a day\. The life expectancy at birth is 52 years\. 2\. Nigeria is not on track to achieve the health Millennium Development Goals (MDGs)\. Nigeria accounts for 13 percent of all under-five deaths worldwide and the under-five mortality rate in 2013 was 117 deaths per 1,000 live births, which is far higher than the MDG 4 target of 71 in 2015\. The maternal mortality ratio has decreased from 1,200 maternal deaths per 100,000 live births in 1990 to 560 in 2013 but the average annual percentage decline is below the expected 5\.5 percent needed to achieve MDG 5\. According to the 2013 Demographic and Health Survey, while 61 percent of pregnant women had at least one antenatal care (ANC) visit (51 percent had the recommended 4 or more visits, slightly higher than 45 percent in 2008), only 36 percent delivered in a health facility (35 percent in 2008) and a mere 11 percent of women use modern contraceptives (same in 2008)\. Further, only 25 percent of children age 12-23 months are fully immunized (23 percent in 2008) and 25 percent of children under-five are underweight (23 percent in 2008)\. The HIV prevalence among adults aged 15 to 49 years is 3\.2 percent and 19\.8 percent of eligible children and adults are receiving antiretroviral treatment\. 3\. Health expenditure per capita is US$94 and out-of-pocket health expenditure (percent of total expenditure on health) is high at 66 percent 1\. The private and public health expenditures account for 4\.2 percent and 1\.9 percent, respectively, of gross domestic product\. In 1999, the Nigeria Government established the National Health Insurance Scheme (NHIS), a social healthcare scheme\. It was officially launched in 2005 but had only 1\.2 million beneficiaries (almost all civil servants) in 2009\. Health insurance remains rare among the poor and those in the informal sector\. Rationale for Bank assistance and link to Country Assistance Strategy 4\. This project was to provide health insurance coverage to a low-income group in the private sector (that is not covered by the NHIS) who were not necessarily the poorest and could afford pay co-premium, thereby contributing to reducing out-of-pocket expenditure\. The project was to contribute to Nigeria’s higher-level objectives such as the MDGs, commitment to establishing pro-poor financial protection systems including a Community-Based Social Health Insurance schemes (CBHIS) as outlined in the 2010 – 2015 National Strategic Health Development Plan (NSHDP) and the 2004 revised National Health Policy\. 5\. The project was consistent with the World Bank’s Country Partnership Strategy (CPS)\. Easy access to health insurance for all Nigerians was one of the key activities to be addressed in the 2010-2013 CPS pillar II: sustained improvement in access to, quality and utilization of human development services\. 1 Source: 2014 World Development Indicators\. World Bank\. 1 The project was to also contribute to preventing poverty due to illness (by improving financial protection), one of the four strategic objectives of the 2007 World Bank’s Health Nutrition and Population (HNP) Strategy\. Nigeria Pre-Paid Health Scheme Project 6\. The project subsidized the insurance premium for low-income employees and their families of small businesses in CAPDAN in Ikeja, Lagos\. New enrollments were on a monthly basis and the enrollees were provided an identification card after payment of the co-premium for a full year\. Apart from the annual co-premiums, the enrollees did not make any payment at the point of service (see Table 1 for benefits package)\. Each enrollee selected a preferred primary care provider among the Service Provider Network (SPN) and was eligible to access the provider after a maximum 30-day wait period\. 7\. The three main implementing agencies were Stichting Health Insurance Fund (HIF), PharmAccess Foundation (PAF), and Hygeia Community Health Care (HCHC)\. The International Development Association, acting as administrator of the Global Partnership on Output-based Aid (GPOBA), signed a grant agreement with HIF 2 on October 23, 2008 to: manage the flow of funds from GPOBA for the project; submit semi-annual withdrawal requests to GPOBA; provide scheme oversight through its board of directors; publicize the project and lobby donors to fund further replication; select an external auditor to review the use of GPOBA funds; and enter into an implementation, monitoring and evaluation agreement with PAF\. 8\. The main functions of PAF 3 (agreement signed on May 15, 2009) were: manage project implementation; independently verify outputs that will trigger disbursements to HCHC (bi-monthly audits of enrollment levels and co-payments; and semi-annual service provider quality assessment); conduct medical due diligence to determine upgrading needs for service providers and quality targets; work with HCHC to create and approve upgrading plans for providers; provide oversight for the upgrading of providers; facilitate the upgrading process by supporting training for service providers; financial management of project including regular reporting to HIF; manage payment to HCHC; manage reporting process with HCHC; and provide financial and operational reporting to HIF\. 9\. HCHC is part of Hygeia Nigeria Limited, the largest private health care provider in Nigeria\. The main functions of HCHC, contracted by PAF on May 15, 2009, were: manage all aspects of the health insurance scheme, including enrollment, co-payment collection, claim processing, payments to providers, and data collection; draft upgrading plan for providers; manage provider upgrades (with oversight from PAF) and procure required goods and works; market the project to the target population; implement the project’s anti-fraud mechanisms including providing ID cards to all plan participants; work to prevent fraud by analyzing beneficiary utilization data; divulge all necessary information that PAF and HIF may need to verify revenues, costs and profits associated with this project\. 2 HIF is a Dutch non-profit organization which provides targeted subsidies to stimulate demand for pre-paid health insurance schemes in Africa using donor funding and an output based aid approach\. In 2006 it received 100 million euros from the Netherlands Ministry of Development Cooperation to implement health insurance scheme in four African countries, with Nigeria being the first\. 3 PAF, founded in 2000, is also a Dutch non-profit organization with local offices in Nigeria and other countries\. Its core functions include designing and implementing health insurance schemes and improving quality of care\. 2 1\.2 Original Project Development Objectives (PDO) and Key Indicators 10\. The PDO (as stated in the Grant Agreement) was to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees (and their families) of small businesses in CAPDAN of the lkeja computer village in Lagos\. 11\. In the operations manual, the PDO is stated as: to increase access to quality basic health care in Nigeria by providing pre-paid health insurance plans to low-income small business employers (whose annual income is below 300,000 NGN) and their households and employees and their households whose businesses belong to the Computer and Allied Products Association (CAPDAN) in Lagos\. The Grant Agreement PDO referred to only low-income employees but the operations manual indicated both employees and employers\. Considering the Grant Agreement stipulated that “in the event that any provision of the operations manual shall be in conflict with any provision of this agreement, the provisions of this agreement shall prevail”, the ICR employed the PDO in the grant agreement in the assessment of the achievement of PDO (efficacy) (described in section 3\.2)\. 12\. The project commitment paper 4 had no overall objective but had four specific objectives: I\. Encouraging low-income Nigerian families to enroll in pre-paid health insurance plan as a way to access affordable primary and maternal care, as well as treatment for prevalent diseases; II\. Increasing the utilization and efficiency of idle private sector capacity to meet the country’s healthcare needs, instead of constructing new public facilities; III\. Establishing and strictly enforcing standards of care in the private health sector, thereby restoring confidence among insurance beneficiaries; and, IV\. Demonstrating the viability and long-term sustainability of community health plans to encourage other HMOs to offer affordable and appropriately designed health insurance plans to low-income populations\. 13\. The key PDO indicator (in the operations manual 5 and project commitment paper) was number of enrollees in the pre-paid health insurance scheme (target value of 22,500 beneficiaries)\. 1\.3 Revised PDO and Key Indicators 14\. The PDO and key indicators were not revised\. 1\.4 Main Beneficiaries 15\. The main beneficiaries are the low-income small business employers and their families (whose annual income is below 300,000 Nigerian Naira [NGN] and whose businesses belong to the CAPDAN6 4 This is the equivalent of the WBG project appraisal document\. 5 The Grant agreement indicated that April 2009 operations manual would outline the “project performance indicators and the procedures for the monitoring and evaluation of the Project”\. There was no key outcome indicator in the grant agreement\. 6 CAPDAN is a well-organized group that is registered with the Nigerian Government and represented by an elected secretariat\. It represents approximately 2,000 registered small business owners who operate kiosks selling mobile phones, computer accessories and other electronic hardware\. The average enterprise employs 3-6 people and has annual sales of about US$75,000\. The median income for employees and employers in 2008 were US$1,019 (NGN120,000) and US$4,077 (NGN480,000), respectively, with a combined median of US$1,529 (NGN180,000)\. 3 in Lagos) together with their employees and their families\. Of the estimated CAPDAN target population of 27,500, the project was expected to provide funding to subsidize access to the pre-paid health insurance plan service for 22,500 people\. The insurance packages would provide the beneficiaries coverage for primary care, maternal care and treatment for high-risk diseases such as HIV/AIDS, malaria and tuberculosis through a SPN of clinics and hospitals\. 1\.5 Original Components The project had the following components: a) Insurance Premium, Marketing and Upgrading Subsidies (total cost - US$4,574,000) Insurance Premium subsidies (US$4,143,000): Project was expected to subsidize health insurance premiums of enrollees from 85 percent in year 1 to 42\.8 percent in the final year\. Marketing subsidies (US$197,000): HCHC Limited, the implementing agency, was to be paid US$8\.14 per new beneficiary enrolled to cover the education of the enrollees about the scheme, principles of insurances, the insurance package as well as extensive information, education and communication (IEC) outreach to the target population\. Upgrading subsidies (US$234,000): HCHC had an established SPN of 10 primary care providers and 3 referral providers\. However, two new medical service providers needed to be upgraded (to replace outdated medical equipment, improve physical infrastructure, install essential administrative systems, and training of health and administrative personnel) to join the SPN to expand access to care to CAPDAN enrollees\. b) Monitoring and evaluation (total cost - US$953,000) Stichting HIF, the GPOBA grant recipient, was to establish an implementation, monitoring and evaluation agreement with PAF to ensure a) accuracy of the financial and medical reports submitted by HCHC, and b) quality assurance (minimum standards of care at the provider level)\. c) Project Management (total cost - US$261,000) Funding of the operating costs associated with project management by HIF\. Benefits Package Table 1\. Benefits Package of CAPDAN BENEFITS EXCLUSIONS Primary and Outpatient Care High Technology Services (CT Scan, MRIs) Specialist Consultation Drug abuse / addiction Hospital care and admission (up to 5 days) Injuries from natural disasters, wars, riots,etc\. Prescription drugs Epidemics (affecting >10 percent of the population) Laboratory Tests (Hematology, Family Planning (provided by other Microbiology, Serology, Clinical Chemistry) organizations) X-ray, Ultrasound Inpatient care is limited to 15 days, but exceptions are made on a case by case basis Minor Surgery Major/Complex Surgery Intermediate Surgery (including Cataracts) Cancer (chemotherapy, radiation therapy) Pre and post natal care and delivery (including Provision of spectacles, contact lens Caesarean deliveries ) 4  BENEFITS EXCLUSIONS HIV/AIDS: counseling, testing, treatment, Ear-Nose-Throat (hearing aids, etc\.) monitoring, provision of anti-retroviral drugs Eye examination and care Dental Immunizations (BCG, Measles, DPT, Oral Polio, Intensive care, dialysis Hepatitis B) Preventive Education (HIV, Hypertension, Pediatrics (congenital abnormalities) Diabetes, TB) 1\.6 Revised Components 16\. The amounts allocated to the project components were revised in June 2013 as follows: a reallocation of funds in the amount of US$547,516 from Category 1a (Insurance Premium Subsidies) to a new Category 6 (medical services) and c) a reallocation of funds in the amount of US$206,106 for the implementation of the exit strategy and for management cost from Category 1a (Insurance Premium Subsidies) to Category 1b (Marketing Subsidies), Category 2 (HIF Project Management), Category 3 (Monitoring and Evaluation), and Category 4 (Audit)\. Original Revised allocation Components (US$ million) 1\. Subsidy 4,574,000 3,871,126 a) Insurance Premium Subsidies 4,143,000 3,389,378 b) Marketing Subsidies 197,000 247,748 c) Upgrading Subsidies 234,000 234,000 2\. HIF Project Management 261,000 288,118 3\. Monitoring and evaluation 953,000 1,067,930 4\. Audits 108,000 121,310 5\. Unallocated 119,164 119,164 6\. Medical Services 0 547,516 Total Baseline Cost 6,015,164 6,015,164 1\.7 Other significant changes 17\. The project closing date was extended from June 30, 2013 to April 30, 2014\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design, and Quality 18\. Project preparation: An existing Lagos community health insurance program for Low-income market women (in 10 markets), which had been established by HIF, PAF and HCHC (the same 5 implementing agencies) informed the project design 7\. Consequently, the same SPN which had two years of previous experience with the Lagos market women scheme was enlisted in this project, and two new service providers were added and upgraded to expand access to health care for CAPDAN enrollees\. Similarly, previously tested independent verification and monitoring processes were employed in this project\. 19\. HCHC undertook a market survey to identify 12 potential target groups for the project including the Lagos State Taxi Drivers Association, the Nigerian Association of Hairdressers and Cosmetologists, the Nigerian Union of Tailors, the Performing Musicians Association of Nigeria, and CAPDAN\. The latter was selected as the target group for the project based on two key criteria: a) sustainability (ability to pay the full premiums when the subsidy ends based on their incomes and willingness of the employers to share the cost of the insurance premium), and b) geographic concentration (which was expected to facilitate marketing, enrollment, collections and customer satisfaction monitoring)\. Additionally, the findings of a target population study informed the project design\. 8 20\. Project design: The project design was reportedly consistent with the six core concepts of Output- Based Aid (OBA) (described in detailed in section 3\.1 on relevance of design)\. According to the project commitment paper, the annual premium of US$68\.06 in the first year was comparable to those of similar schemes that the NHIS regulates\. It was expected to increase gradually to $92\.92 in the final year of the project (Table 3)\. To ensure sustainability of the project, the co-premiums of enrollees were expected to increase from 15 percent in year 1 to 57 percent in year 5\. Although CAPDAN employers and employees indicated a willingness to pay NGN2,000 (US$15) per annum per individual with a gradual increase in the co-premium to cover the total insurance premium within ten years, HCHC and PAF thought that was not affordable\. Instead they recommended an initial co-premium of NGN1,200 (US$9), or 15 percent of the total first year premium cost of US$60, to motivate enrollment of entire families\. 21\. HCHC was expected to pay 80 percent of the premiums (premium subsidies from GPOBA and co- premiums from enrollees) to services providers and retain the remaining 20 percent to cover its costs and profit\. Considering that at project design, HCHC’s operating costs were higher at 26 percent, HCHC was expected to be more efficient in curtailing its operating costs\. 22\. Of the 80 percent of premiums that HCHC paid to service providers, 70 percent were capitation fees (fixed up-front monthly payments to cover primary care) and 30 percent were fee-for-service (for more complicated services which needed prior authorization of HCHC and after which the HCHC would reimburse the provider based on an invoice)\. Thus, the service providers were to bear the risk of the cost of primary care delivery exceeding the capitation payment while HCHC were to bear the risk of excess fee-for-service claims\. 7 In January 2007, HCHC, PAF and HIF partnered to implement donor subsidized community health insurance schemes for low income Nigerian populations\. This was to promote access to healthcare for low income groups and strengthening the capacity of enlisted public and private healthcare providers to deliver quality healthcare services\. The Lagos market women program was financed by the Dutch Government\. Apart from the Lagos market women program, the three agencies also run a community health insurance scheme for farmers in Kwara state\. 8 Target population report CAPDAN, October 2008\. The survey was carried out in May/June 2008\. 6 23\. In the project design enrollment was to be stopped in December 2012, 6 months before the original closing date of June 2013\. Considering that in the project commitment paper a follow-on Phase II project was envisaged, setting a pre-determined date for stopping enrollment during Phase I would reduce the number of enrollees at project closure\. 9 As described in the section on achievement of project development objectives, this adversely contributed to the project not meeting the enrollment target\. 24\. Assessment of risks and mitigation measure: Some critical risks were identified during appraisal and remedial measures put in place, as described in Table 4 in Annex 2\. Notably, the willingness to pay for increasing co-premiums by the enrollees was underestimated\. 25\. There was no formal quality at entry review for this project\. 2\.2 Implementation 26\. Enrollment and registration started in June 2009 and enrollees started accessing care in July 2009\. PAF regularly submitted semi-annual progress (verification) reports to HIF and noted any implementation constraints and recommended corrective actions\. Additionally, the World Bank team produced Implementation Status and Results Reports (ISRs) which provided an update on implementation progress\. A midterm review was undertaken in December 2012 and the project was restructured in June 2013\. Level II restructuring-delay in approval of extension of project closing date 27\. The World Bank approved a Level II restructuring on June 25, 2013, which entailed: a) extension of closing date from June 30, 2013 to April 30, 2014 and b) reallocation of funds between grant categories (noted above)\. HIF put in a formal request on April 27, 2012 for the amendment of the grant agreement (but discussions started in June 2011 and HIF recommendations for restructuring were noted in the 2011 semi-annual progress) and on May 25 2012, a GPOBA Panel of Experts endorsed the proposal for restructuring and emphasized that the lessons learned in the initial phase of the project should be incorporated in the restructuring paper\. This was discussed further during the midterm review in December 2012 and the restructuring was approved 6 months later\. The long deliberative discussions focused on the viability and sustainability of the scheme, and the reputational risks in abruptly closing the project\. Nevertheless, this delay created some uncertainty, and may have modestly affected the achievement of the target enrollment\. Joint review missions and midterm review 28\. The WBG team and the implementing agencies (HIF PAF, and HCHC) undertook joint review missions\. The findings were presented in Aide Memoires and 7 ISRs\. The December 4-6, 2012 midterm review assessed implementation status, the pros and cons of the extension of the project closing date, and lessons learned\. Key elements affecting implementation are described below\. Increased co-premium and decreased enrollment 29\. The co-premium was expected to increase steadily from US$10\.21 in 2009 to US$53\.16 in 2013 (Table 3)\. During project implementation, the co-premiums were increased twice: in February 2011 from US$10\.16 to US$11\.33 and in January 2012 from US$11\.33 to US$19\.53\. Although these were modest increases compared to the planned increases, the increase by US$8\.20 in January 2012 negatively affected 9 In the project commitment paper, the scheme was designed as a 10-year program divided into two phases and enrollees were expected to be able to afford the full premium at the end of the 10 years\. 7 enrolment with a downward trend until project closing (Figure 1)\. In addition to the increase in the co- premium, other measures implemented in 2012 to reduce costs (such as exclusion of meals from the package for inpatients, and reduction in HCHC enrolment staff) further contributed to the decline in new enrolments in 2012 (see Figure 1)\. Discontinuing enrollment 30\. A decision was made to discontinue enrollment from April 30, 2013, which contributed to the continuing downward trend in number of enrollees which began in January 2012 (see Figure 1 in section 3\.2)\. As result of the delay in the decision to extend the closing date, HCHC limited its marketing and IEC activities to new enrollments\. The number of HCHC enrolment staff 10 was reduced by over 80 percent\. The remaining enrolment staff catered to re-enrolment via text messages and phone calls\. Additionally, monthly performance reviews of enrolment staff was curtailed to quarterly reviews\. Overutilization capacity of service providers 31\. Maintaining optimum capacity utilization of the service providers was imperative to improve efficiency\. A utilization capacity assessment in June/July 2012 revealed overutilization at Crystal Specialist Hospital (more than the recommended 85 percent utilization capacity), HCHC suspended new enrollments at the hospital and identified a new service provider in the vicinity to cater to new enrollees\. Besides, Crystal hospital undertook an extension of the hospital to cater to the expanded CAPDAN enrollees\. Inadequate marketing subsidies 32\. HCHC undertook extensive marketing outreach, which was costly and quickly exhausted the funds allocated to marketing subsidizes (details in Annex 2)\. These subsidies were output-based with a fixed amount (US$8\.14) paid for each new enrollee\. Some marketing activities was necessary to stimulate demand prior to enrollment, though\. There were high fixed costs such as salaries of canvassers, which had to be paid irrespective of the number of enrollees\. Instead of salaries, paying commissions to the insurance sales personnel would have reduced the marketing cost\. Excess medical payments 33\. The medical payments for both capitation and fee-for-service exceeded the budget and a request for reallocation of expenditure categories was made to the WBG\. The payment for fee-for-service were in excess 11 due to the increased utilization of services (particularly maternity services and hypertension treatment)\. The list of fee-for-services is in annex 2\. In 2012, HCHC realized the payment for the treatment of hypertension was higher than the actual cost of treatment and accordingly reduced the fee for hypertension and instituted a new hypertension treatment protocol\. It is possible that the high fee for hypertension motivated service providers to unduly treat hypertensive cases\. Besides, the high proportion of females of reproductive age in the target population contributed to the increased payment for maternity services\. Nevertheless, some service providers experienced increased cost over and above the capitation payments\. 12 For instance, two Lagoon hospitals which reportedly experienced steep losses dropped out of 10 There were 20 full-time canvassers and 1 enrollment officer in 2011 11 Excess medial payments per enrollee increased from about US$6 per enrollee in 2010 to about US$30 per enrollee in 2013\. 12 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014\. 8 the provider network since the capitation fees were much lower that the regular fees that were charged to non-CAPDAN patients\. 13 Service providers that joined and exited 34\. Eighteen service providers participated in the project\. A map showing the location of the facilities is in Annex 10\. Shortly after implementation commenced there were 10 service providers but three left the network (Lagoon Hospital Ikeja, Lagoon Hospital VI, and Topaz Clinic) mainly because of non- profitability\. Eight new providers joined (see Table 11 in Annex 2)\. No service providers had to leave the network as a result of poor quality of care\. Training on family planning 35\. Given the high fertility rate in Nigeria, service providers expressed concern that family planning services were not part of the benefits package\. Accordingly, in November 2012 PAF and HCHC conducted a 1-day training for service providers on family planning counselling and referral of enrollees to public facilities where family planning commodities were free or subsidized\. Studies that informed implementation 36\. A number of studies were carried out which informed implementation including; a) the project financed Market Research Consultancy (MRC) to conduct a Price Sensitivity Study (PSS) in 2011 which recommended a maximum co-premium of NGN4,000; b) HIF with funding from the Dutch Ministry of Foreign Affairs organized Choosing Health Plans All Together (CHAT) sessions in November and December 2011 to solicit the views of market traders on the benefit package – primary health care and maternity care were high priority; and c) a consultancy firm Milliman (from the Netherlands, India and New York) was contracted to carry out a costing study in 2011 which informed the decision to increase capitation fees from 475 Naira to 525 Naira effective January 1, 2012\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 37\. M&E Design\. As noted in section 1\.2, the PDO was to provide affordable pre-paid health insurance plans to low-income employees in CAPDAN\. The four specific objectives (in the June 2007 project commitment paper 14) and corresponding indicators (in the operations manual 15) are shown in Table 2\. Instead of the overall PDO (in the grant agreement) and 4 specific objectives (in the project commitment paper), the PDO could have been better formulated as follows: to improve access to and quality of primary health care services among poor CAPDAN employees and families by increasing enrollment in pre-paid insurance scheme\. Of the four specific objectives, measurable PDO indicators were specified in the operations manual for two of the objectives but the remaining two had no associated PDO indicators\. Some more appropriate outcome indicators for this project are percentage of poor people who have received essential Health, Nutrition and Population services, percentage of people experiencing impoverishment due to out-of-pocket health care expenditures and percentage of people experiencing catastrophic health expenditures but these were not measured or data was not available\. 13 The Lagoon Hospital Group, which is of part of the Hygeia Nigeria Limited, is pioneer of advanced medical care in Nigeria and caters to rich clients\. Lagoon hospital is closest of the CAPDAN village and had the highest enrollees\. 14 The project commitment paper is the equivalent of the WBG project appraisal document 15 The operations manual has a number of indicators in its annex A that were to be reported in the semi-annual progress reports\. 9 38\. For objective 1, the indicator 1) total number of people enrolled in pre-paid health insurance scheme is appropriate and has a baseline value of zero and a target of 22,500 people\. The other relevant intermediate results indicators that were tracked in the semiannual reports (or project administrative data when available) but not in the ISRs were 16 : 2) total number of visits to health facilities; 3) number of pregnant women who received ANC services; 4) number of deliveries in health facilities; 5) average number of visits per enrollee per month; and 6) client satisfaction rate\. 39\. Regarding objective 2, no indicator was provided in the operations manual\. However, special studies were carried out to provide data on two indicators: 7) provider utilization capacity (ability of individual service providers to adequately cater to current enrollee population demands); and 8) network utilization capacity (ability of the entire HCHC network to adequately cater to the needs of current and projected enrollee population demands)\. For objective 3, there were two indicators in the operations manual but they were not consistently tracked: 9) number of service providers in compliance with the service quality standards specified by PAF (with a target of at least 14 of the 15 service providers meeting the pre-defined quality standards) and 10) number of service providers removed from the network for not complying with quality standards\. The intermediate results indicator that was tracked was 11) annual average (and individual service providers) SafeCare quality assessment scores\. While there was no indicator for objective 4 in the operations manual the l2) monthly re-enrollment (or renewal) rates was tracked in the semiannual reports\. 40\. The operations manual appropriately indicated that all the indicators were to be monitored in the semiannual progress report\. The baseline values were zero for most of the indicators except for the annual average SafeCare quality assessment scores\. Targets values were set for only two indicators: enrollment numbers and number of service providers in compliance with the service quality standards specified by PAF\. Considering this was a pilot project, the absence of an impact evaluation in the project design is a missed opportunity as it would have provided concrete evidence, which would have contributed to the body of evidence on the efficacy and efficiency of community insurance programs\. Table 2\. PDO indicators at project design Objective Indicators in operations manual 1\. Encouraging low income families of CAPDAN to Total number of people enrolled in pre-paid health enroll in the insurance scheme to have access to health insurance scheme care 2\. Increasing the utilization and efficiency of idle No indicator private sector capacity 3\. Establishing and strictly enforcing standards of care Number of service providers in compliance with the in the private health sector service quality standards specified by PAF Number of service providers removed from the network 4\. Demonstrating the viability and long-term No indicator sustainability of community health plans 41\. M&E implementation\. HCHC regularly produced bi-monthly progress reports, which were verified by PAF\. These fed into the semi-annual progress reports that PAF regularly submitted to HIF 16 There indicators have been included in this ICR in assessing the achievement of the PDO\. 10 within two months of the closing date for the respective period\. This conformed to the report format specified in the operations manual and covered the indicators numbered 1, 2, 5, 11, and 12 above while the remaining seven indicators were either presented in some of the reports or were in project administrative records\. Further, each report had sections on implementation constraints and recommendations\. The World Bank team also produced seven ISRs during project implementation (which was adequate for the duration of the project) and included sections on issues for management actions\. However, the ISRs only monitored the following indicators: enrollment numbers, number of service providers in compliance with the service quality standards specified by PAF, annual average SafeCare quality assessment scores, re-enrollment rates, and number of health facilities constructed, renovated, and or/equipped\. The latter is a World Bank core sector indicator\. Two other core sectors that should have been tracked were: number of deliveries and number of pregnant women who received ANC\. 42\. M&E utilization\. Based on the semiannual reports and findings from supervision visits, HCHC and PAF periodically provided feedback to the service providers as well as CAPDAN executives and employees\. Nevertheless, the reports were not shared with the Lagos State Government, a major stakeholder regarding the sustainability of the project\. The reports provided timely information, which informed the implementation of the project\. The project produced a wealth of community health insurance data (including enrollment, co-payment collection, claim processing, payments to providers, and utilization data) which will be useful to the Government in its plan to expand health insurance coverage in Nigeria\. It also informed the follow-on project designed by HCHC and PAF\. The overall quality of M&E is rated as modest\. 2\.4 Safeguard and Fiduciary Compliance: 43\. Procurement The project components entailed minimal procurement activities such as the upgrading of two health facilities (minor renovations and equipment) and the recruitment of an external auditor\. Nevertheless, initially HCHC had low procurement capacity (there was no dedicated procurement officer), it was not familiar with the World Bank procurement guidelines, and procurement filing was poor\. However, it improved over time\. HCHC staff worked very closely with the Bank’s fiduciary team, and made constant and regular recourse to the team to clarify procurement issues\. Additionally, the World Bank procurement officer provided hands-on training, which enabled the HCHC project staff to substantially implement the procurement activities successfully up to project closure as reflected in the reports of Post Procurement Reviews carried out on the project\. 44\. Financial management HIF regularly submitted interim financial reports along with the semiannual progress reports\. Annual external audits were carried out, as per the grant agreement, and all the external auditor’s opinions were unqualified\. For most years, there were no serious internal control and accountability issues identified but there were a few administrative issues identified in the last two years; these were however addressed by November 2014, after project closure\. The issues were non-provision of other supporting documents (apart from the semi-annual progress reports) for Categories 1 and 2 in line with the Disbursement Letter and non-replenishment of the Designated Account balance to agreed ceiling\. This resulted in the Client using its own fund to pre-finance project activities\. 11 45\. Safeguards According to the project commitment paper and Integrated Safeguards Data Sheet, the project was classified as category C (i\.e\. minimal or no adverse environmental impact), but this classification was not appropriate\. The project should have been properly classified as category B (potentially adverse environmental impacts) due to the healthcare waste generated from the increased utilization of services in the health facilities that participated in the insurance scheme\. Nevertheless, during implementation safeguards issues were appropriately addressed\. 17 2\.5 Post-completion Operation/Next Phase 46\. HCHC has designed a follow-on unsubsidized project Hygeia Better Life (HBL) Scheme without financial contribution from HIF or the World Bank\. 18 It was designed based on lessons learned from this project as well as the one for the Lagos market women (LMW)\. HBL is unsubsidized and is open not only to CAPDAN and LMW but also to other urban poor groups, markets and communities\. It has a reduced benefits package\. Unlike this project which was marketed to individuals, HBL mainly offers a family package with a maximum of two adults and 6 children\. The premium for a family of 1, 2 or 3 is NGN23,000 per annum as opposed to the NGN2,500 per individual in the previous project\. There is a co- payment of NGN100 per visit\. Service providers receive only capitation payments with no fee-for-service payments and there is a longer waiting period\. The established HCHC administrative structures will be used for running the HBL\. For instance, two Quality Managers and one Project Accountant previous project are involved in HBL\. 47\. The key performance indicators that can be used to monitor the implementation of HBL are total number of people enrolled in pre-paid health insurance scheme, re-enrollment rates, and annual average SafeCare quality assessment scores\. A rigorous impact evaluation should be incorporated in the HBL design and implementation to capture evidence for the NHIS\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives and Design 48\. Relevance of objectives\. The project’s overall objective of providing affordable pre-paid health insurance plans to low-income employees and their families in CAPDAN was highly relevant at project design and at the time of project closure\. It was consistent with Nigeria’s health sector priorities and with the World Bank Group’s current country and sector strategies\. The 2010 – 2015 NSHDP which is to contribute to financial protection from catastrophic expenditures, mentioned CBHIS being implemented jointly by HIF, PAF, and HCHC\. The Presidential Summit on UHC in Nigeria on March 10, 2014 strongly recommended all levels of Government to make progress towards UHC 19\. Additionally, in the 2014-2017 World Bank Group CPS, the International Finance Corporation (IFC) proposed to support at least 2 states with CBHIS in the engagement area coverage and quality of health services for the second strategic cluster quality, effectiveness and efficiency of social service delivery at state level for greater social inclusion\. 17 During an implementation support mission, the World Bank team visited three service providers (Blue Cross Hospital, Osuntuyi Medical Centre [Obanikoro], and St\. Mary's Hospital) and noted that two had appropriately put in place some basic healthcare waste management processes such as a) sharp disposal boxes in areas of the hospital in which they are used; b) color coded mops; c) color coded waste bins; and d) posters indicating the basic cleanliness processes\. 18 As noted earlier, a two-phase 10 year program was envisaged in the project commitment paper but during implementation it was realized that the scheme was not sustainable\. 19 Almost a decade after launching the NHIS, financial risk protection is 4 percent of the population\. 12 Further, enabling countries to achieve UHC is the main mechanism that the World Bank HNP Global Practice uses to achieve its goal of helping countries to end preventable deaths and disability through Universal Health Coverage\. \. 49\. Relevance of design\. Lessons learned in the implementation of CBHIS for LMW and in Kwara state for poor farmers informed the project design such as identifying an experienced local insurer, independent verification, and ensuring the provision of quality of care\. The project design was in line with the six core concepts of OBA: I\. providing insurance premium subsidies to low income employees and their families (the median income for employees in 2008 was US$1,019 [NGN120,000]; II\. accountability for results (HCHC and service providers were to take performance and finance risks; this did not fully materialize since during implementation some service providers were reimbursed as a result of overutilization of services and HCHC was reimbursed for high marketing and administrative cost after restructuring\. Thus, the risk was eventually transferred to the GPOBA); III\. encouraging innovation and efficiency (hospitals had special desks for CAPDAN enrollees and the SafeCare initiative was launched); IV\. using incentives to serve the poor (providers used the premium and upgrading subsidies to provide quality services to the poor); V\. conducting output verification and monitoring of results (payment of subsidies to HCHC were contingent on verification of outputs by PAF); and VI\. fostering sustainability (users were to pay lower monthly payments in line with affordability but as described later it turned out that the premium were only affordable up to US$11\.33 despite careful selection of the target group; also the project experienced adverse selection with a high proportion of pregnant women and clients with chronic illnesses)\. 50\. However, there were some drawbacks to the design\. This was one of the initial health projects financed by the GPOBA when the World Bank HNP technical team 20 were not involved with project preparation and may account for some of the foreseeable design drawbacks\. A major flaw in the project design was limited consultation with the Lagos State Government which was necessary for the long term sustainability of the project\. The first year premium subsidy of US$57\.85 was 78% higher than the per capita public health expenditure (US$32\.53) in 2008 21 indicating the government could not afford the scheme and raising the issue of sustainability from the outset 22\. Another factor which contributed to the low enrollment at project closure was the expectation that CAPDAN enrollees and employers and their families would afford US$53\.16 in the final year of the project when the median income for CAPDAN employees was US$1,019\. Additionally, enrollees were expected to pay increasingly higher co-premiums without a concomitant expansion of the benefits package\. Having comprehensive benefits package at the outset guaranteed resistance from enrollees when the co-premiums were increased and indeed the increase in co-premium from US$11\.33 to US$19\.53 (a 72 percent increase) in January 2012 led to a precipitous drop in enrollment\. 20 A team from GPOBA and IFC led the design and initial implementation of the project and the HNP team got involved from 2011\. 21 Source: 2014 World Development Indicators\. World Bank\. 22 In 2012, the actual premium subsidy was US$39\.76, which was higher than the 2012 per capital public health expenditure US$29\.38 13 51\. Regarding the results framework, the objective of the project was clear but the enrollment target was unrealistic given the drawbacks in the design noted above\. 23 The three subsidies (insurance premium, marketing and upgrading) in the project components were appropriate in achieving the project objective but the amount allocated to the marketing subsidies should have been higher given that the concept of health insurance was new to CAPDAN\. The rating of the relevance of design is modest\. 3\.2 Achievement of Project Development Objectives (efficacy) 52\. Although both the project commitment paper and the operations manual had no structured results framework, based on the project documents the ICR team developed the causal chain in Table 5 (Annex 2) and elaborated on the performance indicators in section 2\.3 on the M&E design\. 53\. As noted earlier in section 1\.2, the PDO in the grant agreement (to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees and their families of small businesses in CAPDAN) was the basis for assessing efficacy\. However, no PDO indicator or target was mentioned in the grant agreement, which deferred to the operations manual\. The key target in the operations manual and the project commitment paper is 22,500 enrollees at project closing\. Thus, the ICR team considered the project’s achievement of this enrollment target and the affordability of the pre-paid health insurance plans to low-income employees and their families as the basis for the efficacy rating\. Additionally to provide a fuller picture of the project’s achievements, the assessment of the three other specific objectives in the project commitment paper are described and rated separately below\. Enrollment in affordable pre-paid insurance plans and access to care 54\. The achievement of this objective is rated modest\. Enrollment 55\. Of the enrollment target of 22,500, only 4,884 (21\.7 percent) was achieved at project closing\. However, the total number of beneficiaries (i\.e\. cumulative number enrolled at one time or the other during the project period) was higher at 21,963\. The number of enrollees increased steadily from 134 in July 2009 to a peak of 13,473 in December 2011 and then gradually decreased to a low of 4,884 in December 2013 (see Figure 1)\. The annual highest percentage of the planned target achieved was in 2011 when 81\.7 percent of the target was achieved (13,473/16,500) (see Figure 2, Annex 2)\. The decline in enrollment began when the co-premium was increased from N1,450 to N2,500\. A smaller increase, in February 2011, when the co-premium increased from N1,300 to N1,450 had no effect on the enrollment numbers\. Given that enrolment was discontinued from April 30, 2013 (section 2\.2), one could make the case that the ICR should use this date as the cut-off for assessment of the enrollment target\. If so, 8,682 (38\.6%) was achieved in April 2013\. Thus, with either cut-off dates, the project only partly achieved the enrollment target\. Affordability of insurance Premium subsidies 56\. The project appropriately targeted low-income employees of CAPDAN (the median income for employees in 2008 was US$1,019 [NGN120,000]) but employers with a median income of US$4,077 [NGN480,000] also enrolled in the scheme\. 24 The enrollees were expected to afford co-premium amount 23 The M&E design is described in detail in above\. 24 The per capita income for Lagos state was estimated at US$2,900\. Source: Renaissance Capital\. Nigeria unveiled: thirty- six shades of Nigeria\. Economics & Politics\. Nigeria\. May 7, 2013\. 14 of NGN6,803 (57\.2 percent of the total premium) in the final year of the project (Table 3)\. Despite the fact that CAPDAN was selected from the list of potential poor target groups based on its relatively higher income bracket, enrollment dropped precipitously when the co-premium was increased from NGN1,450 to NGN2,500 in January 2012\. Thus, the annual planned co-premiums from 2011 (Table 3) were not affordable and the effort to optimize both enrolment and co-premium payments was not realized\. Figure 1\. Number of enrollees by month, July 2009 - December 2013 In January 2012, co-premiums 14,000 increased from N1,450 to N2,500 12,000 In February 2011, co- premiums increased Enrollment 10,000 from N1,300 to 1,450 discontinued 8,000 6,000 4,000 2,000 - Jul-11 Jul-12 Jul-13 Jul-09 Jul-10 Sep-11 Sep-12 Sep-13 Nov-12 Nov-13 Nov-11 Sep-09 Sep-10 Nov-09 Nov-10 May-12 Jan-13 May-13 Jan-10 May-10 Jan-11 May-11 Jan-12 Mar-12 Mar-13 Mar-10 Mar-11 \. Table 3\. Planned and actual premiums, subsidy and co-premium levels 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 Planned Actual planned Actual planned Actual planned Actual planned Actual Enrollees 9,000 13,5000 16,500 19,500 22,500 Premium $68\.06 $73\.57 $67\.97 $79\.52 $74\.22 $85\.96 $79\.30 $92\.92 $79\.30 N8,712 N9,417 N8,700 N10,179 N9,500 N11,003 N10,150 N11,894 N10,150 Co- 15\.0 21\.0 14\.9 29\.3 15\.3 40\.9 24,6 57\.2 24,6 premium percent Co- $10\.21 $15\.42 $10\.16 $11\.93 $11\.33 $35\.19 $19\.53 $53\.16 $19\.53 premium 1,307N N1,413 N1,300 N1,527 N1,450 N4,864 N2,500 N6,803 N2,500 amount Premium N7,400 N8,050 N7,650 N7,650 subsidy Exchange rate at design was EUR/USD 1\.34; NGN/USD 128\.00 Utilization of services 57\. The enrollees had access to and readily utilized health services\. The average number of visits per enrollee per month from August 2009 to February 2014 was 0\.26, which is about 3\.1 visits per enrollee 15 per year\. There was an initial high use of services (0\.43 per enrollee per month) which then dipped to 0\.16 in March 2010, and finally picked up again and was generally above 0\.20 (2\.4 visits per enrollee per year) for the remaining period (Figure 3, Annex 2)\. 58\. As shown in Table 6 in Annex 2, there were a total of 112,827 visits to the health facilities in 2009- 2013 (outpatient attendance constituted 97 percent)\. The most frequent illness treated was malaria (42,848) followed by upper respiratory tract infection (17,561) and hypertension (10,341)\. The least treated cases were tuberculosis (64) and HIV (38) presumably because there were public sector health programs that specifically addressed these diseases\. A study carried out in 2013 by Microinsurance Learning and Knowledge (MILK) Project (financed by the Bill and Melinda Gates Foundation) revealed that enrollees utilized hypertensive services twice more than the uninsured and enrollees were four times more likely to participate in hypertension educational sessions\. 25 This indicates that enrollment in the insurance scheme might have contributed to the increased access to services\. 59\. Similarly, use of maternity services was appreciable\. There were 4,218 registered pregnancies for a cumulative number of 21,963 enrollees\. This implies that 19 percent of the enrollees used maternity services (although it is possible that some women were pregnant two or more times during the project period)\. Considering that ANC, delivery and Cesarean deliveries are among the list of services for which providers are paid fee-for-service (Annex 2), the high use of maternity services might have contributed to excess medical payouts noted earlier\. There was an average of 4\.8 ANC visits per pregnancy (Figure 4, Annex 2) which meets the WHO stipulated minimum of 4 visits per pregnancy\. 60\. The 44\.7 percent of deliveries 26 is higher than the 36 percent of institutional deliveries in Nigeria overall but lower than the 77\.3 percent for Lagos; however, the Cesarean delivery rate of 26\.2 percent (much higher than the WHO optimum range of 5-15 percent) is 13 times the reported national rate of 2 percent and higher than the 6\.5 percent for Lagos\. In some selected health facilities in the service provider network, Cesarean delivery rates for non-enrollees were over 20 percent indicating that the rates for enrollees and non-enrollees were similar and that these service providers have a higher propensity for Cesarean delivery\. 27 Utilization of private sector capacity 61\. The achievement of this objective is rated substantial\. The project sought to increase utilization and efficiency of provider capacity, that is, ensuring optimum capacity utilization and preventing overcrowding among the service providers in the network\. The HCHC strived to maintain a sufficient balance between provider capacity and demand for services from enrollees thereby curtailing underutilization or overutilization of provider capacity and minimizing inefficiencies 28\. 25 Laura Budzyna, Taara Chandani and Barbara Magnoni\. 2013\. MILK Brief #24: "Doing the Math" - Health Insurance and Chronic Disease in Nigeria\. http://www\.microinsurancecentre\.org/resources/documents/policyholder-value-of- microinsurance/milk-brief-24-doing-the-math-health-insurance-and-chronic-disease-in-nigeria\.html 26 1,390 normal deliveries plus 495 caesarean / complicated deliveries divided by 4,218 registered pregnancies 27 Osuntyi Medical Center (25%), Orilele Agege Generla Hospital (23%), Crystal Hospital (21%), and Subol (25%)\. 28 There is a school of thought that public resources should not be used to subside under-utilized capacity in the private sector but this section is referring to optimizing capacity among the provider network that have signed service agreement with HCHC\. 16 62\. In July 2011, HCHC undertook a study of capacity utilization of 15 health facilities\. Both provider capacity evaluation 29 (ability of individual providers to adequately cater to current enrollee population demands) and network capacity evaluation (ability of the entire HCHC network to adequately cater to the needs of current and projected enrollee population demands) were assessed\. 63\. Of the 15 health care providers, 9 were determined to be of optimum utilization capacity (60 percent), 2 (13 percent) were underutilized (below capacity utilization in relation to the provider’s ability to accommodate more enrollees), and 4 (27 percent) were over utilized (Table 7, Annex 2)\. The results were better than those of Kwara state where only 3 out of 8 (37\.5 percent) were of optimum capacity\. 30 Based on the findings, a ceiling of 3,000 enrollees was recommended for service providers in the project\. In June/July 2012, a capacity evaluation exercise indicated that Crystal Specialist Hospital again had exceeded the recommended 85 percent utilization capacity\. 64\. Regarding network capacity in the Lagos service provider network 31, the expected number of service providers is 11\. Since there were 15 service provides in July 2011, the network capacity was deemed adequate\. Establishing and enforcing standards of care 65\. The achievement of this objective is rated high\. The quality of care of the service providers improved considerably over time\. At project closing, all service providers were in compliance with the service quality standards specified by PAF (the target was at least 14 of the 15 service providers)\. Quality of care assessment 66\. In 2009 and 2010, quality of care was monitored by the progress made against an agreed upgrading plan per service provider\. Subsequently, PAF launched SafeCare 32 in 2011 to improve the quality and safety of healthcare services in low-resource settings by rating and benchmarking across healthcare facilities, provider networks and countries\. Service providers are rated based on an elaborate scoring system presented in Annex 2\. 67\. For the service providers that were assessed more than once by PAF, the SafeCare quality assessment scores for 2013 were higher than those for 2012 except for the May clinic where the 2013 score was lower (Table 8 in Annex 2)\. The three most improved service elements were information management, risk management, and diagnostic imaging while the three least improved service elements were primary healthcare, laboratory, and support services\. The Lagoon Clinic, VI and Lagoon Hospital, Ikeja were accredited by the JCI in May 2011 (the first such accreditations in sub-Saharan Africa)\. 29 The assessment employed three proxies for capacity utilization or adequacy: a) burden of enrollee utilization (utilization per enrollee; proportion of total hospital utilization), slack capacity available, and waiting time complaints 30 The insurance scheme in Kwara state was for rural farmers whereas CAPDAN catered to urban vendors 31 The methodology used assumed that all providers have the same propensity to attract enrollees and brand perceptions are at par among the providers within the network; all providers enlisted into the network are able to provide quality health care services; 3,000 maximum enrollee benchmark and a target population of 32,575 (for both CAPDAN and market women) were employed in the computation, 32 SafeCare was initially jointly launched in 2010 in Amsterdam by the Joint Commission International (JCI) of the U\.S, the PharmAccess Foundation of the Netherlands and the Council for Health Service Accreditation of Southern Africa (COHSASA)\. 17 68\. HCHC routinely carried out a semiannual quality assessment of all service providers and agreed on a quality improvement plan and subsequently followed up with its implementation\. Service providers that made improvements in quality of care were awarded certificates of recognition\. Further, a HCHC Community Relations Officer on a weekly basis obtained feedback from enrollees on the quality of care and shared this with the service providers\. Moreover, PAF conducted trainings to build the capacities of HCHC and service providers\. Some of the trainings were on: quality management for hospitals, management of common conditions such as hypertension, diabetes, pediatric and obstetric cases for doctors and nurses, family planning counseling, laboratory training, and customer service for front office staff of health facilities\. 69\. HCHC and PAF also periodically carried out Medical Due Diligence (MDD) to engage new service providers to take off some caseload from service providers experiencing overcapacity\. For instance, in August 2012 MDD was carried out in six health facilities and two new service providers (Krown Hospital and Promise Hospital) were selected to join the network in December 2012\. Similar exercises were carried throughout implementation\. 70\. As shown in Figure 5 (Annex 2), the assessment scores for the CAPDAN health facilities increased by 24 points from 55 in 2011 to 79 in 2013, which is much higher than the 13 percent improvement for other facilities in Nigeria\. Sustainability of community health plans 71\. The achievement of this objective is rated modest\. The indicator employed to assess the sustainability of the insurance scheme was the re-enrollment or renewal rate\. As noted earlier, enrollees were unable to afford the planned higher co-premiums\. Re-enrollment or renewal rates 72\. The insurance renewal rate gives an indication of the satisfaction of the enrollees with the insurance scheme and its continuous use and hence the sustainability of the scheme\. Available data show that renewal rates increased from 48 percent in September 2011 to 58 percent in October 2013 (Figure 6) indicating that enrollees valued the product even during the time that the new enrollment had ceased and the project was winding down\. Factoring in an estimated outmigration rate of 24 percent, the adjusted renewal rate in October 2013 was 77 percent\. Apparently, adverse selection played a role here with pregnant women and enrollees with chronic illnesses more likely to re-enroll\. For instance, the prevalence of hypertension among enrollees increased from less than 10 percent in 2009 to nearly 40 percent in 2013\. Other sustainability factors 73\. Involvement of the Lagos State Government and the NHIS in the project design and implementation would have ensured sustainability of the scheme\. Nevertheless, the Dutch Government through HIF financed the LMW insurance scheme and the existing healthcare and administrative structures benefited this project\. HIF was to lobby and raise additional funds for a follow-on Phase II project for CAPDAN but did not materialized\. HIF attributed this to the delay in the approval of the project restructuring\. Nevertheless, the project produced an enormous database on community health insurance that informed the design of the follow-on CAPDAN project HBL Scheme which is unsubsidized, the expansion of the scheme in Kwara state and the new community insurance scheme in Ogun state\. 18 Additional inputs and outputs that contributed to development objective 74\. Other inputs and outputs that also contributed to the development objectives such as marketing subsidies, upgrading subsidies and claims processing are described in Annex 2\. 75\. Efficacy rating 76\. The ratings for the four specific objectives in the project commitment paper are: enrollment and affordability is modest; utilization of private sector capacity is substantial; establishing and enforcing standards of care is high; and sustainability of community health plans is modest\. As explained above, enrollment and affordability was the basis for assessing the efficacy\. Thus, the efficacy is rate modest\. 3\.3 Efficiency 77\. Administrative and operational efficiency\. Available aggregate expenditure categories shows that of the total grant amount of US$6,015,164, 35 percent was undisbursed at the end of project\. The insurance premium subsidy constituted the largest share at 78 percent of the total undisbursed amount followed by monitoring and evaluation at 9 percent\. Although there was a cost underrun for the insurance premium subsidy, as noted above there was excess payments for capitation 33 and fee-for-service payments 34 for those enrolled as a result of adverse selection and there was US$83,077\.97 cost overrun of the marketing subsidies\. 78\. Despite the above, project interventions increased efficiency in the areas of service quality and utilization capacity of service providers, as noted earlier\. The project also leveraged other resources such as previously established service provider network and monitoring and evaluation processes\. Additionally, ILO provided US$250,000 to improve the claims processing and managements system\. 79\. A cost benefits analysis resulted in a negative Net present value (NPV) of NGN100 million (US$781,250) and Financial Internal Rate of Return (FIRR) of 10 percent\. The negative NPV came as a result of excess medical payouts by the HCHC, which resulted in significant net loss to the HCHC over the entire project period\. Similar analysis was conducted at appraisal, which generated an 11 percent FIRR\. However, NPV was not calculated at appraisal\. This ex post analysis shows both NPV and FIRR, which provide a clear picture of the financial strength of the HCHC (see annex 3 for a detailed explanation of the analysis)\. 80\. Efficiency is rated modest\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately unsatisfactory 81\. The outcome rating (a measure of the project’s overall performance) is derived from the ratings for the relevance of objectives and design, efficacy (extent of achievement of the project’s objective), and efficiency\. As noted above, the efficacy and efficiency were both modest\. However, there were split sub- ratings within relevance: the relevance of the objective is high but the relevance of the design was modest\. 33 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014\. 34 It was envisaged that 70 percent of the payment to service providers would be capitation fees and 30 percent fee-for- service\. 19 Aggregate relevance was judged to be ‘substantial’ given the combination of high and modest ratings\. Therefore, given two modest ratings for efficacy and efficiency and ‘substantial’ for relevance, the overall project rating for outcome is moderately unsatisfactory\. 3\.5 Overarching Themes, Other Outcomes and Impacts Poverty Impacts, Gender Aspects, and Social Development 82\. The project provided financial protection to some poor CAPDAN employees who would otherwise not have been able to afford the services they received\. 35 On the other hand, some well-off CAPDAN employers also unduly gained from the scheme although they were not the target beneficiaries\. Institutional Strengthening 83\. The capacity of service providers was improved through the various trainings that PAF and HCHC provided\. Further, the launch and successful implementation of SafeCare improved the quality of health services\. This is likely to have restored some trust among enrollees of the healthcare system\. A SafeCare Quality Workshop organized by HCHC, PAF and the IFC in June 2014 highlighted its success and was widely covered by the news media also raised public awareness of the insurance scheme\. 36 The Lagos State Ministry of Health expressed interest its scale-up in Lagos\. Similarly, the Ogun State Minister who was in attendance, mentioned that the state was in the process of finalizing the design of a similar community health insurance scheme\. Although PAF and HCHC had been in partnership prior to the initiation of this project, this project provided further opportunity for PAF to build the local capacity of HCHC\. HCHC also benefited from procurement training from the World Bank team\. Other Unintended Outcomes and Impacts (positive and negative): 84\. The huge actuarial and utilization data generated in the implementation of the project will be invaluable to the NHIS in the design of programs geared towards achieving universal health coverage\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops: 85\. The methodology and findings of the beneficiary survey is presented in Annex 5\. It had a small sample size of 10 beneficiaries who generally expressed favorable views on the project but were unwilling to pay higher co-premium\. Further, summary notes on the stakeholder workshop held in April 2014 are in Annex 6\. The findings of the borrower ICR were discussed including lessons learned\. The buy-in from the Lagos State Government was considered critical to the sustainability of the new HBL scheme\. 35 For instance, in one of the participating hospitals, the regular registration fee to see a doctor is NGN3,000 which is higher than the co-premium for NGN2,500 that enrollees paid for a whole year\. Similarly, maternity services particularly caesarean deliveries would have been unaffordable for some enrollees\. 36 It was attended by over 50 people including administrators of health facilities, representatives from Shell, the Federal Ministry of Health (MOH), Lagos State MOH, Ogun State, IFC and the World Bank\. 20 4\. Assessment of Risk to Development Outcome Rating: Substantial 86\. Although the objective of the project remained highly relevant at project closure, there is substantial risk that development outcomes will not be maintained\. Follow-on project 87\. In the project commitment paper, the project was designed as a two-phase 10-year program with the GPOBA/World Bank financing the Phase I and HIF seeking additional sources of funds (public and private) for Phase II\. However, the Phase II did not materialize as noted earlier\. Co-premiums and enrollment numbers 88\. As described in detail in section 3\.2, following the increase in co-premium from N1,450 to N2,500 in January 2012, enrollment declined steadily till project closing\. Quality of care 89\. The launching of SafeCare during project implementation contributed to improved quality of care and the Lagos State government has requested PharmAccess to perform SafeCare assessments, train quality teams and develop Quality Improvement Plans for three healthcare facilities, namely General Hospital Epe, General Hospital Alimosho and General Hospital Apapa, as well as assist in the development of a Quality Policy for Public Sector Healthcare Facilities under the Lagos State Ministry of Health\. Additionally, the implementation of HBL will entail enforcing standards of care\. Sustainability of community health plans 90\. While re-enrollment figures were high during project implementation, this might not be maintained in the HBL scheme given that it is unsubsidized and therefore unaffordable to poor employees and their families\. 37 The limited consultation with the Lagos State Government in the design and implementation of the CAPDAN also contributed to the limited sustainability\. Further, the huge marketing costs incurred in the CAPDAN project may even be higher for the HBL\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately unsatisfactory Quality at entry: 91\. The project was consistent with Nigeria’s development priorities in the health sector and the Nigeria CPS\. The project appropriately targeted low-income CAPDAN employees and their families but 37 For instance, where a family of 3 will pay a premium of NGN20,000 ($156 using an exchange rate of N128=US$1) in the HBL scheme which is three times the NGN7,500 co-premium in the CAPDAN project\. The former may not be affordable given that that the median income for CAPDAN employees is about $1,019\. HCHC may want to partner with the Lagos State Government to provide some subsidy to the HBL scheme\. 21 some CAPDAN employers (who were non-poor) also benefited\. The project leveraged resources that the Dutch government had invested in an existing service provider network for the LMW program\. It also employed a previously tested independent verification and monitoring process, which had been established by HCHC, PAF and HIF for the LMW program\. Appropriate fiduciary (financial management and procurement) procedures were incorporated in the project design\. Regarding safeguards it was classified as C instead of category B which would have allowed more appropriate measures to be put in place for healthcare waste management, but during implementation safeguards were proactively addressed\. Regarding M&E design, there were no PDO indicators for some of the specific objectives and a rigorous impact evaluation should have been incorporated in the project design\. Two flaws in the design were the planned increasingly high co-premiums (which was unaffordable) over the project period (without a concomitant expansion of the benefits package) and the unrealistically high endline target\. (b) Quality of Supervision Rating: Moderately unsatisfactory Quality of supervision 92\. The World Bank-GPOBA team undertook joint review missions with the implementing agencies and submitted 7 ISRs, at least one per year\. The ratings in the ISRs were largely appropriate\. The World Bank ensured that during its last implementation support mission, a stakeholder workshop was held to disseminate the findings of the borrower ICR\. The team also provided technical support for the costing and price sensitivity studies\. Hands-on procurement was provided to HCHC staff and this contributed to resolution of procurement issues by project closure\. In the annual external audits, the external auditor’s opinions were unqualified\. However, there were shortcomings\. For instance, outstanding financial management issues were only resolved in November 2014\. It took over a year and half to approve the HIF request to extend the closing date, albeit, as noted earlier this was carefully discussed over a period\. Nevertheless, this delay created some uncertainty and adversely affected the achievement of the target enrollment\. A short deliberative period could have improved the rating for efficacy\. When the project was restructured, the number of target enrollees could have been reduced\. The limited consultation with the Lagos State Government in the design and implementation of the CAPDAN contributed to the limited sustainability\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately unsatisfactory 93\. Given that both the rating for quality at entry and quality of supervision are both moderately unsatisfactory, the rating for overall Bank performance is moderately unsatisfactory\. 22 5\.2 Borrower Performance 94\. The Government was not involved in the execution of the project and was therefore not assessed\. The three main implementing agencies assessed were: Stichting HIF, as the grant recipient; PAF, as the monitoring agent; and HCHC as the local insurer\. (a) Implementing Agency Performance: HCHC Rating: Moderately satisfactory 95\. HCHC duly signed service agreements with each service provider and appropriately supervised and trained them\. It adequately developed the upgrading plans, procured the required good and works for two service providers\. Its staff had limited procurement capacity but eventually with training from World Bank procurement staff were able to fulfill the procurement responsibilities\. Together with PAF, it appropriately supervised the service providers in ensuring they provided good quality care to enrollees and proactively monitored service provider capacity\. However, the fee-for-service payments were high\. HCHC selected CAPDAN as the target group following a market survey of 12 potential target groups\. It carried out extensive marketing and IEC to enroll CAPDAN employees and their families but ended up overrunning the budget allocated to marketing subsidies\. Although the target enrollment was not achieved, it must be pointed out that during project preparation, HCHC appropriately cautioned against the high co- premiums and together with PAF recommended for project extension in 2011\. It reduced its staff, particularly the marketing staff, when the project closing date was in a limbo\. It duly registered enrollees and provided them with ID cards\. The service providers also maintained photos of the beneficiaries, crosschecked prior to providing services and reported impersonation to HCHC\. HCHC then investigated and delisted the culprits accordingly\. Claims processing was initially manual but with funding from ILO, automated claims processing for 5 service providers became possible\. On time claims processing increased from 3 percent in 2010 to 52 percent in 2013\. HCHC undertook studies and ably coordinated its work with PAF, but did not adequately coordinate with the NHIS and Lagos Sate Government during implementation\. (b) Implementing Agency Performance: PAF Rating: Satisfactory 96\. PAF regularly submitted semi-annual progress reports to HIF within two months of the closing date for the respective period and the reports conformed to the report format specified in the operations manual\. The reports specified whether the quality standards of each service provider met the upgrading plans for each service provider, enrollment levels, status of implementation, enumerated constraints and recommended follow-on actions\. PAF verified the enrolment levels and co-premiums more frequently than stipulated (monthly instead of bi-monthly) and reported verified number of first time enrollees (to trigger Marketing Subsidy) and people enrolled (to trigger insurance premium subsidy)\. PAF paid regular visits to HCHC, CAPDAN market and service providers to follow-up on implementation and to provide feedback\. PAF together with HCHC determined the upgrading needs and service quality standards for each service provider, monitored the adherence and regularly trained both the service providers and HCHC\. PAF launched and implemented Safecare in Lagos which contributed to the hallmark achievement of this project: the provision of high quality of care in the private sector\. However, as noted above on HCHC performance, the major drawback was that only a fifth of the enrollment target of 22,500 was achieved\. In its 2011 semi-annual reports, PAF appropriately highlighted and recommended extension of 23 project closing date\. Similarly, during project preparation PAF cautioned against high co-premiums which as noted earlier contributed to the low enrollment levels\. PAF ably coordinated its work with HCHC but did not adequately coordinate with the NHIS and Lagos Sate Government during implementation\. (c) Implementing Agency Performance: HIF Rating: Moderately unsatisfactory 97\. HIF provided inputs into the project design, which drew on the existing LMW program, which had been established by HIF\. This allowed the project to leverage resources that the Dutch government had invested in the same service provider network\. Additionally, HIF managed to engage the Dutch Government pay for the high expenditure on marketing in 2012\. HIF ensured a number of studies were carried out which informed implementation\. Further, semi-annual reports together with interim financial reports were timely submitted to the World Bank\. The procurement issues identified earlier during implementation were largely resolved at project closure\. Annual external auditors’ opinions were unqualified but there were still outstanding financial management issues which were only resolved in November 2014\. Regarding M&E design, there were no PDO indicators for some of the specific objectives and a rigorous impact evaluation should have been incorporated in the project design\. HIF followed up its request to the World Bank to restructure but the process took longer\. Nevertheless, the restructuring request did not include a reduction in the number of target enrollees despite evidence that it was unattainable\. HIF clarified that in the July-December 2011 semiannual report, it recommended a revision of the target and discussed this with the WBG project team\. The limited consultation with the Lagos State Government in the design and implementation of the CAPDAN contributed to the limited sustainability\. Besides, HIF was to lobby and raise additional funds for follow-on Phase II project for CAPDAN but at project closing this had not materialized\. This led to HCHC designing an unsubsidized follow-on scheme\. Nevertheless, HIF clarified that the delay in approval of the extension of the closing date “created great uncertainty for the implementing agencies and affected the lobbying process for mobilizing resources”\. (d) Justification of Rating for Overall Borrower Performance Rating: Moderately unsatisfactory 98\. Given that the ratings for HCHC and PAF are in the satisfactory range while the rating for HIF is moderately unsatisfactory, the overall borrower performance is moderately unsatisfactory when the overall outcome rating is considered\. 6\. Lessons Learned • Integrating impact evaluation in the design of an innovative pilot project is critical for documenting lessons learned\. If an impact evaluation had been carried out, it would have helped in understanding the counterfactual (i\.e\. what would have happened in the absence of the project), and particular questions, such as what premium level and benefit package could support the required outcomes, or whether the insurance scheme impacted health outcomes among the beneficiary population\. This could contribute to the body of evidence on the efficacy and efficiency of community insurance schemes, and inform NHIS efforts on achieving universal health coverage\. 24 • Coordination with multi-levels of Government in the design and implementation of community- based health insurance scheme is key to ownership and financial sustainability\. In this project, the Lagos State Government and the NHIS were not involved in the design and implementation, which limited the opportunity for the government to participate in the follow-on project or scale up\. In contrast, the Kwara state insurance program has been expanded since the Government was part of the process\. Further, the involvement of government and other relevant stakeholder groups in decision-making around the insurance scheme could have been tracked to monitor participation\. • In-depth target group analysis during project preparation is necessary to inform the project design, including establishing the co-premium, selecting the appropriate target group, and minimizing adverse selection, moral hazard and other insurance risks\. Although a target population study informed the project design, it was limited in scope\. If extent covered by the 2011 price sensitivity study had also been carried out during project preparation it would have helped in the proper setting of the premium, co-premium, and informed the benefits package\. The premium in the first year was twice the per capita public expenditure indicating the project was not sustainable from the outset\. • Reviewing the acceptability of premium rates and benefit packages for enrollment by low-income employees (and their family members) at design and during implementation is critical to increasing enrollment and renewal rates\. The small increase in co-premium in February 2011 did not affect enrollment but the large increase in co-premium in January 2012 did adversely reduce enrollment in the scheme, compromising targeted outcomes\. Expecting enrollment numbers to rise while continually increasing premium levels without any perceived additional benefits by the enrollees was not realistic\. • Rating service providers in the health insurance scheme network and monitoring progress against quality improvement plans, contributes to enhanced compliance with the service quality standards\. The launch of the SafeCare initiative immensely contributed to the improvement in quality of care at both public and private health facilities in the service provider network\. This was one of the main successes of this project\. Service providers received targeted training in areas identified in a quality improvement plan\. They were assessed on a semiannual basis and awarded certificates of recognition and two hospitals were accredited by the Joint Commission International (the first such accreditations in sub-Saharan Africa)\. • Engaging expensive private hospitals for community based health insurance scheme can lead to excess payments by the health care management organization or lead to providers prematurely dropping out of the scheme\. Two high-end hospitals which initially participated in the CBHIS had to drop out when they made huge loses but they were reimbursed with funds from the Dutch Ministry of Foreign Affairs\. \. • Developing a low cost behavior change campaign and marketing strategy stimulates enrollment and re-enrollment\. Investment in marketing by a properly trained dedicated team was critical for sharing knowledge with the enrollees about the insurance scheme\. The project supported an extensive Information, 25  Education and Communication campaign that quickly exhausted the resources available, and made a request to re-allocate additional project funds to marketing subsidies\. Such campaigns also require monitoring instruments to ensure they are effective in influencing community behaviors\. 7\. Comments on Issues Raised by Implementing Agencies 99\. The full text of the comments by the implementing agencies is in Annex 7\. The borrower ICR is also attached\. 100\. The implementing agencies; a) acknowledged that the design should have incorporated impact evaluation; b) clarified that they would have preferred a two-year extension of the project instead of 1 year; c) explained that the delay in approving the request for restructuring by the World Bank contributed to the low enrollment numbers; d) disagreed that the they had not adequately engaged with the Lagos State Government (the ICR author together with representatives of the implementing agencies visited the Lagos state Government in June 2014 and it was clear that prior engagement had been minimal); e) pointed out that the draft ICR report had incorrectly compared the total premium with the public health expenditure (this was rectified in the final ICR with the latter having have compared with the premium subsidies\. However, the conclusion remained the same that the premium subsidies were unaffordable by the government); f) clarified the issues regarding discontinuing enrollment and Phase II extension\.; and g) were concerned about the disbursement issues raised in the draft ICR (these issues were resolved in November 2014)\. 26  ANNEXES Annex 1\. Project Costs and Financing (a) Project Cost by Component (in US$ million equivalent) Appraisal Reallocation on Disbursed Undisbursed Estimate 06/25/2013 (US$ million) (US$ million) Components (US$ million) (US$ million) 1\. Subsidy 4,574,000 3,871,126 2,206,229\.37 1,664,896\.63 a) Insurance Premium Subsidy 4,143,000 3,389,378 1,770,197\.35 1,619,180\.65 b) Marketing Subsidy 197,000 247,748 280,077\.97 (32,329\.97) c) Upgrading Subsidy 234,000 234,000 155,954\.05 78,045\.95 2\. HIF Project Management 261,000 288,118 249,987\.05 38,130\.95 3\. Monitoring and Evaluation 953,000 1,067,930 883,365\.15 184,564\.85 4\. Audits 108,000 121,310 52,836\.70 68,473\.30 5\. Unallocated 119,164 119,164 0 119,164\.00 6\. Medical Services 547,516 551,071\.98 (3,555\.98) Total 6,015,164 6,015,164 3,943,490\.25 2,071,673\.75 (b) Financing Appraisal Actual/Latest Percentage of Source of Funds Type of Financing Estimate Estimate Appraisal (US$ million) (US$ million) GPOBA Grant 6,015,164 6,015,164 100 27 Annex 2\. Outputs by Component List of services that were fee- for- service Specialist Consult Specialist Consult for hypertension Specialist follow up consult Admission fee Transportation Ambulance Physiotherapy visit ANC ANC - follow up visit Neonatal care: For opthalmia neonatorium, infections, mild to moderate sepsis, physiologic and other jaundice Uncomplicated Hypertension lab check Complicated Hypertension lab check Hypertension drug fee complicated Hypertension drug fee uncomplicated Diabetes fee Tuberculosis fee Sexually transmitted diseases Vaginal delivery Multiple/Assisted Vaginal delivery Caesarean section Evacuation of uterus (dilatation and currettage) Hysterectomy; in case of postpartum hemorrhage Repair vesico-vaginal/recto-vaginal fistula Herniorrhaphy: repair femoral hernia Cataract extraction Urethral catheterization Circumcision Ear piercing Ganglionectectomy Pterygium excision Surgical drainage of anal abscess Herniotomy In-grown toe nail Excision of any mass Hydrocoelectomy Marsupialisation (Bartholin’s Cyst) Excision of breast lump Varicocoelectomy Endoscopies (Proctoscopy, Sigmoidoscopy, Gastroscopy) Appendectomy Haemorrhoidectomy Incision and drainage of abscess for trauma cases Low fistulectomy Ileus - Only for children Unilateral salpingectomy 28  Uncomplicated fracture Orchidectomy Orchidopexy ECG HIV confirmatory** HIV viral load** Blood transfusion(regular)- per pint Blood transfusion (Rhesus neg)- per pint Histopathology Rhogam Table 4\. Risks and Mitigation measures Risk Mitigation In-depth target group study A target population study which was carried out in May-June 2008 to inform the to inform the project design design (report was released In October 2008 around the time the grant agreement was signed) and contingency budget was also allocated to cater to subsequent changes in the design Affordability/Willingness CAPDAN employers/employees have a slightly higher income than the LMW so to pay by the enrollees\. were expected to be able to pay higher co-premium\. Besides, HCHC advised that instead of reduction in subsidy to zero at the end the 5-year period (as proposed in the concept note), a two-phase declining subsidy program would allow for a more gradual decline in the subsidy over a 10-year period\. It was envisaged that HIF would find an alternative donor in Phase II\. Market Uncertainty Should adjustments be necessary as a result of uncertain response of the target group, HIF was to submit a proposal to GPOBA detailing the changes\. Low Enrollment or re- Extending marketing and education along with quality of care should stimulate enrollment enrollment\. PAF and HCHC would modify the product pricing and benefits semiannually based on consumption data\. Relatively New Product Both PAF and HCHC had previous experience, and PAF was to continuously monitor implementation and advise on appropriate corrective action\. Fraud Rigorous monitoring by PAF and external audits were to mitigate the risk\. Sustainability To mitigate the risk of beneficiaries’ inability to pay, the two-phase approach over a 10-year period noted above would give beneficiaries sufficient time to realize the long-term benefits of pre-paid insurance and inculcate willingness to pay the full premium\. Regarding funding of phase two, HIF had a strong network of donors that would be lobbied during phase one\. 29 Table 5\. Causal chain for the prep-paid insurance scheme Causal chain Performance indicators Outcomes Percentage of poor people who have received essential Health, Nutrition and Population services Percentage of people experiencing impoverishment due to out-of-pocket health care expenditures Percentage of people experiencing catastrophic health expenditures Intermediate outcomes Total number of people enrolled in pre-paid health insurance scheme Provider network utilization capacity Number of providers with optimum utilization capacity Number of service providers in compliance with the service quality standards specified by PAF Monthly re-enrollment rates Total number of visits to health facilities Number of pregnant women who received ANC services Number of deliveries in health facilities Average number of visits per enrollee per month Client satisfaction rate Number of service providers removed from the network as a result of poor quality of care Annual average SafeCare quality assessment scores Outputs Number of Information, education and communication marketing outreach activities to CAPDAN Number of co-premiums collected Number of provider claims processed and payments to providers Number of health facilities constructed, renovated, and or/equipped Number of service providers trained Number of administrative personnel trained Inputs Insurance premium subsidies Marketing subsidies Upgrading subsidies Training of service providers 30 Figure 2\. Actual and planned enrollment 25000 22,500 19,500 20000 16,500 15000 13,500 13,473 9,000 9,140 8,802 10000 6,629 5000 1,187 0 2009 2010 2011 2012 2013 Actual Planned Figure 3\. Average number of visits per enrollee per month, August 2009 – February 2014 0\.45 0\.40 0\.35 0\.30 0\.25 0\.20 0\.15 0\.10 0\.05 0\.00 Aug 2012 Aug 2013 Aug 2011 Nov 2013 Aug 2010 Aug 2009 Nov 2010 Nov 2011 Nov 2012 Feb 2013 Feb 2014 Nov 2009 Feb 2011 Feb 2012 Feb 2010 May 2011 May 2012 May 2013 May 2010 Table 6\. Utilization of outpatient and inpatient services, August 2009 – December 2013 Attendance/cases treated Number Total attendance 112,827 Out-patient attendance 109,111 In-patient attendance 3,716 Bed days 10,215 Diseases treated Malaria 42,848 Upper respiratory tract infection 17,561 Hypertension 10,341 Muscle pain / Myalgia 6,095 Diabetes 3,517 Enteric fever 4,038 Immunization 1,926 Musculoskeletal disease 458 31  Surgical procedures 64,023 Tuberculosis 64 HIV 38 Death 6 Maternity Cases ANC visits for 3,966 pregnancies 19,196 Normal Deliveries for 3,966 pregnancies 1,390 Caesarean deliveries / Complicated 495 delivery for 3,966 pregnancies Figure 4\. Number of ANC visits per pregnancy, September 2009 – September 2013 8\.0 7\.0 6\.0 5\.0 4\.0 3\.0 2\.0 1\.0 0\.0 May-12 May-13 May-10 May-11 Aug-12 Aug-13 Aug-10 Aug-11 Nov-12 Aug-09 Nov-10 Nov-11 Nov-09 Feb-12 Feb-13 Feb-10 Feb-11 Note: Number of visits for pregnancies starting in May 2013, are reported in Feb 2014, when data from all 9 months are available\. Table 7\. Service providers’ utilization capacity Providers HCHC Ownership Categorization Under or enrollee overutilization population LAGOS Aniyun Medical Centre, Gbagada 1,349 Private Primary Health Optimum Centre Crystal Specialist Hospital, Akowonjo 10,035 Private District hospital Overutilized Heals Hospital, Isolo 462 Private Primary Health Underutilized Centre Lagoon Clinic, Ikeja 6,784 Private Primary Health Overutilized Centre Lagoon Clinic, V\.I 635 Private Primary Health Optimum Centre Lagoon Hospital, Apapa - Private Referral Centre Optimum Lagoon Hospital, Ikeja - Private District hospital Optimum (referral) 32  Providers HCHC Ownership Categorization Under or enrollee overutilization population Lagos State University Teaching - Public Tertiary Optimum Hospital, Ikeja (teaching) hospital (referral) May Hospital, Ilasamaja 5,681 Private District hospital Overutilized Orile Agege General Hospital 637 Public District hospital Optimum Osuntuyi Hospital, Iju 3,292 Private District hospital Overutilized Osuntuyi Hospital, Obanikoro 1,554 Private Primary Health Optimum Centre Subol Hospital, Egbeda 1,531 Private District hospital Optimum Surulere General Hospital 234 Public District hospital Optimum Topaz Hospital, Surulere 381 Private Primary Health Underutilized Centre KWARA Afon General Hospital, Afon 2,555 Public District hospital Underutilized Ilera Layo Medical Centre, Aboto Oja 15,267 Private Basic Health Optimum Centre Lafiagi General Hospital, Lafiagi 10,294 Public Primary Health Overutilized Centre Ogo Oluwa Hospital, Bacita 10,959 Private District hospital Overutilized (PCP and referral) Ola Olu Hospital - Public Basic Health Optimum Centre (referral) Resource Access Centre, Iyana Bacita 1,235 Private Basic Health Underutilized Centre Shonga CHC, Shonga 10,423 Private Primary Health Overutilized Centre University of Ilorin Teaching Hospital - Public Tertiary Optimum (teaching) hospital (referral) Table 8\. Service providers SafeCare annual assessment scores 2011 -2013 Facility 2011 2012 2013 Adefemi Hospital 34 Aniyun Hospital 51 64 78 Blue Cross Hospital 70 Crystal Specialist Hospital 47 70 85 Hillstar Hospital 50 67 Krown Hospital 39 Lagoon Clinic, VI 77 Lagoon Hospital, Ikeja 63 Longing Medical Centre 70 33  Facility 2011 2012 2013 May Clinic 55 71 54 Osuntuyi Medical Centre (Iju) 57 86 90 Osuntuyi Medical Centre 66 90 90 (Obanikoro) Promise Hospital 33 St\. Mary's Hospital 47 67 Subol Hospital 70 82 The four key dimensions for assessment are: a) management (management and leadership; human resource management; patient and family rights and access to care; management of information; and risk management), b) clinical (primary health care services; inpatient care; and operating theatre and anesthetic services), c) clinical support (laboratory services; diagnostic imaging service; and medication management) and d) technology (facility management services; and support services)\. Figure 5\. Average assessment scores for health facilities in Nigeria 90 79 80 76 70 66 Average assessment score 62 60 55 49 50 40 30 20 10 0 Lagos Nigeria First Assessment Second Assessment Third Assessment The data for ‘Nigeria’ refers to SafeCare assessments done in other selected facilities in Nigeria\. Source: SafeCare: international standards, local solutions\. PowerPoint presentation\. Sharing lessons learnt from the CAPDAN Program in Lagos\. June 17, 2015 34 Figure 6\. Re-enrollment rate per month, September 2011 - October 2013 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jul-12 Jul-13 Jun-12 Jun-13 Nov-11 Nov-12 May-13 Apr-12 May-12 Apr-13 Aug-13 Dec-11 Aug-12 Dec-12 Mar-13 Sep-11 Jan-12 Feb-12 Mar-12 Sep-12 Jan-13 Feb-13 Sep-13 Oct-12 Oct-13 Oct-11 Renewal rate without adjustment for migration Renewal rate adjusted for migration (assumed 24%) Additional inputs and outputs that contributed to development objective Other inputs and outputs that also contributed to the development objectives such as marketing subsidies, upgrading subsidies and claims processing are described in Annex 2\. Marketing subsidies The allocated marketing subsidies of US$197,000 (US$8\.14 per new beneficiary enrolled) proved to be insufficient to sustain the extensive IEC outreach and marketing activities to enroll and re-enroll the CAPDAN employers/employees in the scheme\. These activities include a) sensitization of community members (such as distribution of posters, flyers and brochures, billboards), b) community marketing (community members as well as CAPDAN executives were involved in reaching out to those who had not enrolled as well as their families), c) telemarketing campaign (SMS notification and telephone calls to all enrollees that were due for renewal at the beginning of each month), d) medical outreach (including free blood pressure checks, screening for diabetes and referral, and health education), e) stakeholder meetings (with CAPDAN executives and Medical Directors of the service providers to update them on progress and to respond to questions and encourage them to do their part to encourage enrolment or re- enrollment) and f) enrollee forum to increase customer care (enrollees meet with HCHC staff and service providers)\. Additionally, HCHC undertook monthly (and later quarterly) performance reviews for all enrollment staff (review of past enrollment and re-enrolment figures, successes and challenges, and appropriate corrective action)\. It turned out that outreach for enrolment was more costly than re-enrollment which mainly entailed sending text messages and phone call reminders\. In 2010, the Dutch government agreed to pay HCHC $50,000 to cover administrative cost in addition to the amount allocated to this project\. 35 Upgrading subsidies A total of 16 health facilities were constructed, renovated, and or/equipped\. Of the US$234,000 allocated for the upgrading of two new health facilities to join the service provider network, US$155,954 was spent in 2012 to upgrade Adefemi Hospital and Blue Cross Hospital (Table 9)\. Additionally, the 14 other health facilities that were renovated without project funds either through HIF fundraising or service providers using their own funds (presumably form profits made) are: Aniyun Hospital, Crystal Specialist Hospital, Hillstar Clinic, Krown Hospital, Lagoon Hospital (in Ikeja), Lagoon Hospital VI, Longing Medical Centre, May Clinics, Orile Agege General Hospital, Osuntuyi Medical Centre (in Iju), Osuntuyi Medical Centre (in Obanikoro), Promise Medical Centre, Subol Hospital, and Surulere General Hospital\. The two lagoon hospitals together with Crystal hospital specifically constructed annexes to cater to the CAPDAN enrollees\. Claims processing During the project period, an electronic claims processing and managements system was introduced\. A retrospective review conducted by PAF and HCHC in 2012 recommended continued improvement of medical filing and patient data management\. The percentage of claims paid on time to the service providers (less than 90 days between submission and date claim processed by HCHC data management department) increased steadily over the project period: from 3 percent in 2010, to 28 percent in 2011, to 34 percent in 2012, and to 52 percent in 2013\. HCHC received a grant of US$250,000 from the International Labour Organization’s (ILO) micro- insurance innovation facility in 2010 to augment the use of ICT in the claims processing and management system\. The proposed solutions and the achievement are shown in Table 10\. Five service providers (Crystal Hospital, Osuntuyi Hospital, St\. Mary Hospital, Osuntuyi Hospital, and May Hospital) were selected for the initial rollout of the automation of claims processing and its implementation continued after the closing of the project\. Table 9\. Health facilities physically upgraded with project funds Provider Package Adefemi Hospital Defibrillator, pen torch, oxygen concentrator, suction machine, stop watch, thermometer, AVR, UPS (including transportation, installing/training and maintenance) Blue Cross Hospital Defibrillator, pen torch, autoclave, infant weighing scale, ultrasound scan machine, oxygen flow meter, stop watch/timer, angle poise lamp, rocking platform, AVR, UPS (including transportation, installing/training and maintenance) Table 10\. HCHC IT/ILO Project on ITC solutions Proposed IT solutions What has been accomplished so far Enrollment enabled biometric The system is being implemented in 4 Providers out of the 5 identification & verification system: to selected for the pilot in Lagos\. The system is been fully utilized tackle the problem with enrollee eligibility in 1 provider\. The 3 other providers could not utilize the and the possibility of abuse by the enrollees system fully across all the system process flow due to during hospital visits\. infrastructural challenges\. A similar system is currently under-going testing, customization and modifications for scale up to Kwara State\. 36 Optimization of financial and enrollment Synchronization of the enrolment and financial system has system: to allow premium payment in been done but advance payment capabilities were tuned-down advance before expiration of existing due to recent changes in premium contract\. Mobile payment system: to improve policy This could not be piloted in Lagos due to vendor capacity renewals due to restricted/inconvenient constraints but will piloted with the new HCHC scheme distribution channels (limited sales agents to cover all our existing target groups in Lagos)\. Integrated insurer and providers’ HCHC procured and implemented a system in 2012 to (utilization and claims) system: to improve automate claims processing and increase efficiency\. However, the processing and turnaround time for the system did not suit HCHC’s unique business requirements claims payment\. due to its non-flexibility\. HCHC is currently testing new systems based on the lessons learned\. The new systems are being customized to suit HCHC’s peculiar business requirements and as to be piloted in 2014\. Table 11\. Service providers for the LMW & CAPDAN Facility Name When they Type of Category Exits as at Reason for exit joined the Provider of 31/10/2013 Network Provider Adefemi Hospital Apr 2012 Private/PCP III Aniyun Medical Centre, Sep 2009 Private/PCP III Gbagada Blue Cross Hospital Apr 2012 Private/PCP III Crystal Hospital Jan 2007 Private/PCP III Hillstar Hospital Apr 2012 Private/PCP III Krown Hospital Nov 2012 Private/PCP III Lagoon Hospital Ikeja Jan 2007 Private/PCP III Dec2011 Business-related Lagoon Hospital VI Jan 2007 Private/PCP III Dec 2011 Business-related Longing Hospital Apr 2012 Private/PCP III May Clinic Jan 2007 Private/PCP III Orile Agege General Hospital Jan 2007 Public/PCP II Osuntuyi Medical Centre, Iju Jan 2007 Private/PCP III Osuntuyi Medical Centre, Sep 2009 Private/PCP III Obanikoro Promise Hospital Nov 2012 Private/PCP III St Mary's Hospital Aug 2011 Private/PCP III Subol Hospital Dec 2010 Private/PCP III Surulere General Hospital Jan 2007 Public/PCP II Topaz Clinic Jan 2007 Private/PCP III May 2013 Complaints of tariff 37 SafeCare Certification definition (6 - Accredication) Excellent quality systems in place: healthcare provider has a proven track record of continuous quality improvement, is in substantial compliance with the SafeCare standards, and meets the decision rules for accreditation by independent organization COHSASA\. (5 Safecare V) Demonstrates long-term commitment to continuous quality improvement, ready for accreditation program and self-sufficiency of continuous quality improvement\. Very limited technical assistance required\. (4 Safecare IV) Strong quality systems in place, but high-risk areas still in need of attention\. Limited technical assistance required\. (3 Safecare III) Medium quality strength, acceptable but vulnerable to changing environment\. Focus on self-evaluation of quality improvement processes using quality indicators, guidelines and standard operating procedures\. (2 Safecare II) Modest quality strength, requiring medium technical assistance\. Healthcare quality is still likely to fluctuate\. Focus on the securing of quality systems and processes especially in high risk areas\. (1 Safecare I) Very modest quality, with continued need for periodic technical support\. Focus on implementation of processes and quality systems and the availability of financial means to ensure availability of proper infrastructure and assets\. (0 Entry level) Poor quality however the organization has shown leadership commitment and a strong desire to provide safe health care and recognizes that significant improvements are needed to reach levels of consistent, efficient, safe quality care for each patient\. It has fluctuating quality healthcare provision due to the unavailability of services at times\. 38 Annex 3\. Economic and Financial Analysis (including assumptions in the analysis) The PDO was to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees (and their families) of small businesses in CAPDAN of the lkeja computer village in Lagos\. To this end, the project interventions aimed at making the scheme financially viable and sustainable\. This analysis focuses on the costs efficiency of the project, and it includes: (i) an analysis of operational and administrative efficiency, including analysis of cost overruns/underruns (ii) a cost-benefit analysis to ascertain the financial and economic viability of the scheme\. Administrative and operational efficiency\. The project experienced seven months delay after the signing of the grant agreement to meet effectiveness conditions, and the over one and half year delay in the approval of the project closing date led to significant cost underruns at project closure\. Available aggregate expenditure categories shows that of the total grant amount of US$6,015,164, 35 percent was undisbursed at the end of project\. The insurance premium subsidy constituted the largest share at 78 percent of the total undisbursed amount followed by monitoring and evaluation at 9 percent\. Although there was a cost underrun for the insurance premium subsidy, as noted above there was excess payments for capitation 38 and fee-for-service payments 39 for those enrolled as a result of adverse selection\. Service providers experienced increased cost over and above the capitation payments 40 due to increased utilization of primary care services (particularly maternity services and hypertension treatment) 41\. The medical payments for both capitation and fee-for-service exceeded the budget and a request for reallocation of expenditure categories was made to the Bank on June 25, 2013\. On the other hand, there was US$83,077\.97 cost overrun of the marketing subsidies\. Various financial management supervision reports showed that project management did not provide detailed breakdown of expenditures incurred and at project closing there was inadequate documentation to support such expenditures\. Tables 12 and 13 provide a summary of project the analysis of costs overruns and underruns\. 38 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014\. 39 It was envisaged that 70 percent of the payment to service providers would be capitation fees and 30 percent fee-for- service\. 40 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014\. 41 It was envisaged that 70 percent of the payment to service providers would be capitation fees and 30 percent fee-for- service\. 39 Table 12\. Summary of analysis of costs overrun/underrrun Amount Amount Amount Amount undisbursed Appraisal Amount Amount disbursed disbursed undisbursed Expenditure Reallocated Share of Estimate Disbursed Undisbursed ( Share of share of share of Category Amount (US$) Appraisal (US$) (US$) US$) Appraisal Reallocated Reallocated Estimate Estimate (%) Amount (%) Amount (%) (%) Insurance 4,143,000\.00 3,389,378\.00 Prem Subsidy 1,770,197\.35 1,619,180\.65 42\.7 52\.2 39\.1 47\.8 Marketing 197,000\.00 247,748\.00 Subsidy 280,077\.97 -32,329\.97 142\.2 113\.0 -16\.4 -13\.0 Upgrading 234,000\.00 234,000\.00 Subsidy 155,954\.05 78,045\.95 66\.6 66\.6 33\.4 33\.4 HIF Project 261,000 288,118\.00 Management 249,987\.05 38,130\.95 95\.8 86\.8 14\.6 13\.2 Monitoring 953,000 1,067,930\.00 and Evaluation 883,365\.15 184,564\.85 92\.7 82\.7 19\.4 17\.3 Audits 108,000 121,310\.00 52,836\.70 68,473\.30 48\.9 43\.6 63\.4 56\.4 Unallocated 119,164 119,164\.00 0 119,164\.00 0\.0 0\.0 100\.0 100\.0 Medical 0\.00 547,516\.00 -3,555\.98 Services 551,071\.98 #DIV/0! 100\.6 #DIV/0! -0\.6 Total 6,015,164\.00 6,015,164\.00 3,943,490\.25 2,071,673\.75 65\.6 65\.6 34\.4 34\.4 Table 13\. Comparison of disbursed and undisbursed funds by type of expenditure Expenditure category Amount Amount Share of Share of Disbursed Undisbursed total total (US$) ( US$) disbursed (%) undisbursed (%) Insurance Premium Subsidy 1,770,197\.35 1,619,180\.65 44\.9 78\.2 Marketing Subsidy 280,077\.97 (32,329\.97) 7\.1 -1\.6 Upgrading Subsidy 155,954\.05 78,045\.95 4\.0 3\.8 HIF Project Management 249,987\.05 38,130\.95 6\.3 1\.8 Monitoring and Evaluation 883,365\.15 184,564\.85 22\.4 8\.9 Audits 52,836\.70 68,473\.30 1\.3 3\.3 Unallocated 0 119,164\.00 0\.0 5\.8 Medical Services 551,071\.98 (3,555\.98) 14\.0 -0\.2 Total 3,943,490\.25 2,071,673\.75 100 100 Despite the above, project interventions increased efficiency in the areas of service quality and utilization capacity of service providers\. As noted in section 3\.2, the project implemented a number of measures that 40 improved service quality and utilization\. For instance, the routine semiannual quality assessment of all service providers with issuance of certificates of recognition to service providers improved the quality of their services\. Also, PAF carried out a number of capacity building interventions for HCHC and service providers\. These trainings include quality management for hospitals, management of common conditions such as hypertension diabetes, pediatric and obstetric cases for doctors and nurses, family planning counseling, laboratory training, and customer service for front office staff of health facilities\. In addition, utilization capacity of private service providers significantly increased\. The project sought to increase utilization and efficiency of provider capacity and that ensured optimum capacity utilization, and also limited overcrowding in the participating facilities\. The HCHC maintained sufficient balance between provider capacity and demand for services from enrollees thereby curtailing underutilization or overutilization of provider capacity and minimizing inefficiencies\. The project also leveraged other resources such as previously established service provider network and monitoring and evaluation processes\. Additionally, ILO provided $250,000 to improve the claims processing and managements system\. Cost-benefit Analysis\. To estimate the economic and financial returns to the project, a cost-benefit analysis for a range of interventions was performed at appraisal\. For that reason, the ICR team also performed similar analysis in order to determine the project’s financial viability and to compare with the appraisal estimate\. The appraisal analysis was based on the project investments consisting of upgrading the providers’ facilities, marketing the insurance program, and maintaining equipment and building, and excluded interventions that were deemed to be difficult to quantify\. Methodology and key assumptions\. (i) Costs: Project costs data, including procurement reports, financial management reports, monitoring and evaluation reports and physical progress reports produced by the project team were reviewed\. The reviewed noted that\.insurance co-payments per enrollee, administrative expenses, capitation fees, entitlement fees, and medical payouts were the main costs incurred by HCHC\. These items form the basis for ascertaining projects costs, and were included in the analysis\. For the purposes of this analysis, monitoring evaluation, audit and unallocated expenses were included in the HIF management costs category\. Initial costs for running the scheme were assumed to be about 9 percent of total project costs (ii) Benefits: The analysis assumed that the benefit streams were cash inflows (revenues) accrued to HCHC, and considered insurance premium (co-premiums, and premium subsidy)as the revenues inflows to HCHC\. Using an excel spreadsheet, a cash flow to the HCHC was derived, and was discounted at 12 percent rate\. The discount rate was considered as a proxy for average opportunity cost of capital, based on the average bank lending rate in Nigeria\. The discounted cash flow was sum up to ascertain the net present value (NPV) and financial internal rate of return (FIRR) for the project\. The analysis covered the five-year period for the program services\. Results\. Upon the basis of the above assumptions, the project generated a negative NPV of NGN100 million (minus $781,250) and FIRR of minus 10 percent\. The negative NPV came as a result of the excess medical payouts by HCHC, which resulted in significant net loss to HCHC over the entire project period\. As noted above, similar analysis was conducted at appraisal, which generated an 11 percent FIRR\. However an NPV was not calculated at appraisal but the reasons for the exclusion of NPV from the analysis was not indicated in the project commitment document\. This ex post analysis shows both NPV and IRR, which provide a clear picture of the financial strength of HCHC\. Table 14 summarizes the results of the analysis and compare it to the appraisal estimate\. 41 Table 14\. Summary of results of the CBA analysis Year 0 1 2 3 4 5 -840,000 Benefit 69,257 192,874 287,171 344,081 502,022 Costs -1,014,640 61,560 118,255 216,082 290,908 604,181 Cash flow -1,854,640 130,818 311,129 503,254 634,990 1,106,203 Discount factor 1\.00 0\.86 0\.74 0\.64 0\.55 0\.48 Discounted cash flow (1,854,640) 112,779 231,219 322,413 350,699 526,677 Cum discounted (1,741,866 (1,510,646 cash (1,854,640) ) ) (1,188,232) (837,534) (310,856) NPV (NGN100,365) IRR -10% Appraisal IRR 11% 42 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members The project had three task team leaders: Carmen Nonay for the design, and Fatou Assah and Chris Atim during implementation\. Names Title Unit Responsibility/ Specialty Lending Carmen Nonay Task Team Leader GUROA Program Manager Olaf Smulders Consultant GUROA Consultant Lopa Shah Investment Officer IFC (CNGS5) Investment Officer Ioan Cleaton-Jones Contractor IFC (FFSFP) Health Specialist Kristine Schwebach Social Development Specialist GURDR Social Development Specialist Serigne Omar Fye Environmental Safeguard GURDR Environmental Safeguard Specialist Specialist Mary Asanato-Adiwu Senior Procurement Specialist GGODR Procurement Specialist Akinrinmola Oyenuga Akinyele Senior Financial Management GGODR Financial Management Specialist Specialist Hisham A\. Abdo Kahin Lead Counsel LEGES Counsel Supervision Senior Financial Management Akinrinmola Oyenuga Akinyele GGODR Financial Management Specialist Specialist Abiodun Elufioye Program Assistant AFCW2 Program Assistant Adewunmi Cosmas Ameer Sr\. Financial Management GGODR Financial Management Specialist Adekoya Specialist Benjamin P\. Loevinsohn Lead Public Health Specialist GHNDR Cluster Leader Senior Human Development Boubou Cisse Economist Economist Chris Atim Senior Health Specialist GHNDR TTL (later during implementation) Daniel Rikichi Kajang Senior Procurement Specialist GGODR Procurement Specialist Fatou C\. Assah Program Coordinator GFMDR TTL (first part of implementation) Iain Menzies Water & Sanitation Specialist GWASE Task Team Leader Indira Konjhodzic Country Program Coordinator AFCNG Senior Operations Officer Leslie Villegas Infrastructure Specialist GUROA Infrastructure Specialist Mary Asanato-Adiwu Senior Procurement Specialist GGODR Procurement Specialist 43  IFC Scott Douglas Featherston Task Team Leader Principal Investment Officer (CMGCS) Ubaldo Daniel Coila Quispe Operations Analyst GUROA Operations Analyst Ugonne Margaret Eze Team Assistant AFCW2 Team Assistant Yogita Mumssen Task Team Leader GWADR Program Manager (b) Staff Time and Cost Stage of Project Cycle Staff Cost US$ Thousands Lending 130,812\.59 Supervision/ICR 489,835\.12 44 Annex 5\. Beneficiary Survey Results Findings from beneficiaries assessment, April 2014 Introduction and Methodology A survey was carried out to assess the perception of the beneficiaries of a health pre-paid scheme implemented between 2009 and 2013 in April, 2014\. The beneficiaries of the scheme were members of the CAPDAN and their families\. The survey was carried out as part of the ICR of the project\. The study area comprised the computer village, Ikeja and health facilities located in Akowonjo, Ojodu, Ogba and Ikeja area of Lagos State\. The beneficiary survey was done on a predetermined, small sample size of 10 enrollees stratified into two sets\. The first consist of those enrollees that were only registered under the original HYGEIA CAPDAN Scheme while the second set is made up of enrollees that were registered on the HYGEIA CAPDAN scheme but have transited into enrollees under the HBL Scheme\. A total of ten enrollees registered under five of the health facilities under the scheme were interviewed\. Theses health facilities include; Blue Cross Hospital, Crystal Specialist Hospital, St\. Mary Specialist Hospital, Krown Hospital and Longing Medical Center\. The beneficiary questionnaire was administered on the 10 enrollees to elicit information on beneficiaries’ socio-demographic characteristics, respondents’ experience of HYGEIA scheme and perception of co- payment and premium for the scheme\. Other information elicited includes beneficiaries’ perception on the quality services from their respective health facilities and beneficiaries’ satisfaction with the transition from subsidized product to a non-subsidized product\. Analysis of responses Socio-demographic characteristics of beneficiaries interviewed and their household A total of 10 questionnaires were analyzed\. The respondents were four men and six women\. All the respondents were Christian and were monogamously married with 9 being educated to the tertiary level\. Nine of the 10 respondents originally sold computers and allied products in computer village; two have subsequently changed their line of business\. One of the respondents was related to the person selling computers and allied products\. Five respondents disclosed their monthly income and expenditure\. On the average, the monthly income stood between N60,000 and N70,000\. However, a respondent reported a monthly income of about N500,000\. Experience with HYGEIA Scheme It was found that most of the 10 respondents registered for the HYGEIA CAPDAN scheme in 2011 (3 respondents) and 2012 (4 respondents)\. One respondent claimed to have been registered in 2009 while 2 respondents originally registered in 2010\. Nine beneficiaries renewed their enrollment but a respondent did not renew in a particular year for what he termed inconsistency of services\. Eight respondents have other household members enrolled (mostly spouses and children)\. Knowledge of co-payment Eight respondents that registered between 2011 and 2012 remembered the actual co-payment made correctly\. The other respondents could not correctly disclose the amount of co-payment made for their first enrollment but the amount paid for more recent renewal and the amount paid for the HBL scheme\. 45 All respondents that were registered before 2011 were aware that the co-payment amount was increased except for a particular enrollee that claimed she paid N2,500 from 2011 until 2013\. All 10 respondents were happy with the amount of co-payments for the HYGEIA-CAPDAN scheme\. Though no respondent was aware of the actual cost of premium of the product, 8 respondents knew the product was subsidized\. Knowledge of the subsidy source varied among respondents with 9 respondents claiming it was the World Bank or some foreign aid, while one particular respondent believed it was Lagos State government\. Awareness of HBL Scheme Out of 6 respondents that were aware of the HBL scheme, only 3 agreed to encourage their friends and or households to enroll under the HBL scheme\. The key reason given was the price increment for the HBL product without corresponding increase in the scope of services\. Services from Health Facilities When asked about the frequency of respondents’ attendance at their various health facilities in 2013, 6 respondents were able to remember and offered approximates\. The highest attendance stood at 6 visits while the lowest was 1 visit in that year\. Most of the visits to the health facilities were for basic healthcare and maternity care (family planning, ANC and post natal care)\. Only 2 out of the 10 respondents reported having cases that were not covered by the HYGEIA scheme, such as dental services and hormonal profile tests\. Quality of services Seven out of 10 respondents were happy with the waiting time at the health facilities\. The dissatisfied clients linked the long waiting time to the high patronage recorded their health facilities\. Three respondents (each attending a different hospital) claimed they were given negative treatment because they were under the HYGEIA-CAPDAN scheme at their health facilities\. One respondent disagreed with being satisfied citing poor attitude of staff in a particular hospital\. The complaint was about the poor attitude of staff (with the exception of the doctors and nurses) that did not show adequate care about HYGEIA scheme patients\. Another respondent complained about the low quality of drugs given to HYGEIA scheme patients in some of the health facilities\. Beneficiaries’ satisfaction with the transition from subsidized product to a non-subsidized product HYGEIA-CAPDAN only enrollees None of the 5 HYGEIA CAPDAN-only patients was completely willing to pay more to enjoy the current services being enjoyed in their health facilities\. All of the enrollees considered the cost of the new family package arrangement for HBL as being high\. HBL enrollees Only 1 enrollee out of 5 claimed that he was properly briefed or got adequate information on the HBL\. All the other 4 HBL enrollees said they were not properly briefed but were only told the new fees to pay for the new product\. Aside the difference in price that was obvious to most respondents, they were oblivious to other information on the new product\. Despite the fact that HCHC had an information sharing mechanism through which the market leaders would inform their constituents, the survey showed that not all beneficiaries received the required information\. Enrollee’s suggestions on the improvement of the Scheme 1\. More information should be shared with enrollees on all products 46 2\. The quality of services rendered under the scheme, especially the quality of drugs should be improved 3\. The current price of HBL should be reviewed downwards to N5,000 4\. Enrollees should be allowed to see more experienced doctors during consultation 5\. The scope of the services of the HBL scheme should be increased 6\. Private admission services should be included in scheme for enrollees able and willing to pay 7\. The hospital admission allowed under the scheme should be increased to twice a year\. 47 Findings from provider assessment, April 2014 Introduction and Methodology A survey was carried out to assess the perception of the service providers (health facilities) of a health pre-paid scheme implemented between 2009 and 2013 in April, 2014\. The respondents were top staff of the 15-member provider network approved to provide health services for the members of the CAPDAN\. The survey was carried out as part of the ICR of the project\. Five HYGEIA pre-paid health insurance scheme providers were located in Dopemu, Ikeja, Ojodu and Ogba areas of Lagos State respectively\. The providers’ survey was done on a predetermined sample size of five HYGEIA pre-paid health insurance scheme with the highest number of enrollees\. The provider questionnaire was administered on the 5 services providers to elicit providers’ general information and their perception and views on the pre-paid health insurance scheme\. Information was also collected on payment, the impact of the HYGEIA scheme on the providers, the administration and management and providers’ perception of the transition from subsidized product to a non-subsidized product\. Analysis of Responses General The respondents were either the provider’s Medical Director or Hospital Administrator\. All were men\. Three of the 5 health facilities were listed as service providers for the HYGEIA-Lagos Women Market Association/CAPDAN pre-paid health insurance scheme in 2012\. The other 2 were listed in 2009 and 2011 respectively\. Providers’ perception and views on pre-paid health insurance scheme All the facility managers saw the HYGEIA CAPDAN scheme as a good concept\. One provider did not report an increase in out-patients attendance in the health facility since the HYGEIA scheme enrollment\. This is because it built a separate facility to take care of community pre-paid clients\. The increase in enrollees for the 4 other facilities ranged from 15 percent to 400 percent during the reporting period\. The providers agreed that patients under the scheme accessed health services at every visit to the facilities\. Two of the respondents gave instances when patients paid for procedures not covered by the scheme, such as fibroid surgery\. Four respondents reported abuse of the health insurance scheme by CAPDAN clients\. The two main areas of abuse by enrollees were frequent facility visits for minor ailments and collection of drugs for relatives not enrolled in the scheme\. One of the providers saw a rapid increase in HCHC clients, albeit most of them came from the LMW program\. Other providers enumerated the following as benefits of the scheme: (a) increased service utilization; (b) improved capacity; (c) infrastructure upgrade; (d) improved quality of care; and (e) increased financial benefits\. There were systems in place to guide procedures such as Standard Operating Procedures (SOPs) & Policies after the advent of CAPDAN\. Quarterly inspection from HYGEIA with the support of the Lagos State Hospital Management Board (HMB) has improved operational performance\. All respondents averred that HYGEIA CAPDAN clients were not treated differently from others\. Reimbursement The respondents affirmed that all facilities were reimbursed monthly for capitation and Fee-For-Service (FFS) by HCHC\. The reimbursements for capitation were in line with the agreements reached with the 48 service providers\. One of the providers insisted that there were delays in the reimbursement for FFS occasionally\. However, the provider confirmed that it was eventually paid\. Premium Payment and Capitation All the providers were of the view that CAPDAN enrollees were able to make the co-payment premium of N2,500\. Two providers responded that its enrollees may be persuaded to pay the new premium\. Three providers were of the opinion that enrollees may not be able to afford services when subsidy is removed\. The capitation to providers by HYGEIA CAPDAN was generally considered unsatisfactory while opinion was split on the tariff for FFS\. Three of the 5 providers considered the FFS fee for services paid unsatisfactory, while the remaining 2 considered it satisfactory\. Impact of HYGEIA CAPDAN Scheme on Providers None of the providers interviewed had designated clinic days for CAPDAN enrollees; clients could visit the provider at any time\. They affirmed that the SafeCare intervention and HYGEIA Care Coordinators have contributed tremendously to improved quality of services in their facilities\. The HYGEIA Care Coordinators have contributed by: (a) explaining policy and providing leadership directions; (b) conducting on-the-job training; (c) monitoring the services and auditing of case notes; and (d) reducing waiting time and ensuring quality improvement\. Four of the 5 providers agreed that the scheme’s partnership with local health authorities such as the Lagos Health Facility Monitoring and Accreditation Agency (LHFMAA) have also contributed to improved regulation, monitoring & accreditation\. Administration and Management Courtesy of the scheme, all the providers had approved 2012 and 2013 work plans\. They also had registers for cases handled & services provided\. The providers conducted clinical staff internal performance assessments; however, the periodicity varied from one to four times in the last 12 months\. Providers reported that Health Workers (HWs) performance was assessed externally by SafeCare\. Additionally, there was a review of HWs credentials in 2012 and 2013\. The scheme provided training for HWs in the facilities under its jurisdiction\. The HWs in these facilities were trained in ANC, HIV/AIDS, diabetes care and customer care and relations\. Other training on post-natal care, institutional delivery, immunization, family planning, infections prevention & control, hypertension care, medication management and record keeping were conducted for HWs\. All the service providers reported having clinical guidelines and pathways used by the health workers in these facilities\. They had complaint boxes or registers and designated staff handling complaints from enrollees\. Complaints were actually lodged by CAPDAN clients in 3 of the 5 service providers\. The main complaints were poor staff attitude and waiting time for clients\. The periodicity and number of providers at staff meetings varied from one facility to the other in the last 12 months, from twice every month through once a month to once in 3 months\. All the providers reported that they reviewed patients’ opinions and complaints in the staff meetings\. Similarly, the providers held quality of care management meetings but the periodicity varied from one to the other\. Transition from Subsidized Product to a Non-Subsidized Product All the service providers indicated that they received adequate information on the Hygeia Better Life (HBL) scheme and that they knew the difference between Hygeia CAPDAN and HBL\. The differences between Hygeia CAPDAN and HBL mentioned were that: (i) the enrolment fee for CAPDAN was per 49 head but HBL was a family package; (ii) capitation for CAPDAN was higher when compared to that of HBL; (iii) CAPDAN premium was highly subsidized but HBL premium was not subsidized; and (iv) CAPDAN was restricted to computer village but HBL was for urban poor people\. Providers’ suggestions on the improvement of the Scheme • Improvement on the quality of services provided under the scheme, especially with the drugs • Proper information dissemination among enrollees especially on all products • Aggressive marketing to increase coverage • HBL registration should be individualized • The scope of services of the HBL scheme be increased 50  Annex 6\. Stakeholder Workshop Report and Results MINUTES OF MEETING State/Location: Title of Meeting: HYGEIA Office, Apongbon, Lagos CAPDAN ICR Stakeholders’ Workshop Prepared by: ICR Consultants Date: 28th April, 2014 Attendees: Adetoro Tayo-Adetoro (HCHC) Dr\. Peju Adenusi (HCHC) Adetoye Adebunmi (HCHC) Ajiboye Ayodeji (PharmAccess – PAF) Omoboriowo Emmanuel (Service Provider - Crystal Pieter\. Walhof (PAF) Specialist Hospital) Dr\. Adesola Taiwo (Service Provider - Adefemi B P Lekhart (World Bank) Hospital) Daniel Coila (World Bank) Dr\. Chris Atim (World Bank) Olaseinde Gbenga (CAPDAN) Olalekan Oladunjoye (HCHC) Ogunfolaji Sunday (CAPDAN) Dr\. Funke Ijimakin (PAF) Dr\. Okunola Olumide (IFC) Olabosipo Daniel (PAF) Marissa Popma (HCHC) Fleur Henderson (HIF) Ogundipe Oludare (HCHC) Demola Luwaji (Service Provider - Blue Cross Dr\. Chukwuemeka Chiedu (HCHC) Hospital) Dr\. Henry Gbelee (St\. Mary Specialist Hospital) Segun Oguntoyinbo (ICR Consultant) Gbenga Adedayo (ICR Consultant) Objective of Meeting: Presentation and Discussion of the HYGEIA CAPDAN Pre-paid Health Insurance Scheme draft ICR\. Business: The meeting was chaired and declared open by Dr\. Peju Adenusi (HCHC) at 11am 1\. Introduction: Self introduction was done by all participants\. 2\. Introduction of the World Bank Group: Dr\. Chris Atim of the World Bank gave a brief of the World Bank group involvement on the CAPDAN project\. He gave a brief on the design, expectations and implementation as well as the implementing partners\. He specifically noted that original target enrolees (low income earners) which was revised during the implementation from 24,000 to 22,500\. The outputs were related to the key performance indicators of the project\. The borrower’s ICR shall feed into the Bank’s ICR which shall be completed within 6 months\. He informed that the Bank’s ICR shall have additional or more pronounced sections on efficacy, efficiency, lessons learnt and sustainability\. Daniel Coila (GPOBA) briefed the meeting on the importance of the output-based grant for the CAPDAN project and the interest of GPOBA on its implementation\. GPOBA is particularly interested in the replicability, the accountability of the implementing partners, the achievement of targets, M&E and the sustainability of the project\. He identified the distinction between the Bank’s rating of a project and that of GPOBA; GPOBA’s emphasis is on the replicability of the project in the other parts of the nation and Africa at large through focus on the lessons learnt during the implementation of the project\. 51  3\. A short recap on CAPDAN project was presented by Marissa Popma (PAF), Dare Ogundipe (HCHC) and Dr\. Dupe Oludipe (SafeCare)\. The presentation highlighted CAPDAN overview & objectives, implementing partners, product, funding mechanisms, achievements, introduction of the new Hygeia Better Life product, quality of care, risks and mitigation\. Though the project is shutting down by the end of April, 2014, the already registered enrolees will continue to enjoy services till their contract ends\. Achievements – the achievements highlighted include number of low income families enrolled with a peak in the number of enrolment towards the end of 2011; renewal rates was shown to be above 60 percent throughout the project years; utilization increased as shown by the number of visits per enrolee\. Another key achievement highlighted during the presentation is improved healthcare quality\. The improved healthcare quality was linked to the multidisciplinary approach of the SafeCare methodology used to achieve the healthcare facility standards in all the facilities in the network\. The improved healthcare quality led to zero maternal death in all the CAPDAN health facilities from inception of the project till June 2013 despite the over 1,698 deliveries were recorded\. Other achievements highlighted in the presentation are improved patient experience (as revealed by MyCare assessment); capacity building of providers and equipment upgrade of two providers (it was emphasized that some of the other service providers on the scheme enjoyed upgrade from other funding sources outside of the current CAPDAN pre-paid health insurance project funding)\. Risks and mitigation: a major highlight was on the excess medical payout experienced during the implementation of the project\. Mitigation includes the introduction of biometric solutions which was pilot tested in three health facilities\. Other mitigating factors include the introduction of waiting period for maternity cases, family pricing for the new product and setting of limits for the services\. On the delay in bill settling noticed at the early stage of the project, the capacity building for the HMOs was seen to have led to improvement in bill settlement by HCHC\. Discussions on the short recap of CAPDAN project: • From November 2013 to March 2014, over 1,000 enrolees were registered on the unsubsidized product Hygeia Better Life (HBL) • Quality improvement assessment would have benefited from a ‘before’ and ‘after’ comparison • The trend in enrolment juxtaposed against increase in co-payment over time could be one of the lessons learnt during the implementation of the scheme\. Discussions suggested that (a) slight increase in co-payment made no difference to increased enrolment\. However, a marked increase affected enrolment negatively\. A small surge post price increase was explained by increased enrolment arising from the systematic transition from CAPDAN to HBL • Adverse selection: mitigation factors employed by the project reduced adverse selection\. • Rural-urban equity was discussed in the context of the data from the scheme • A key lesson may be the effectiveness of technology on the operations of the project to increase efficiency and reduce costs\. Examples were given of biometrics solutions piloted with 3 providers and an automated process for processing of claims 4\. Findings of ICR assessment: Segun Oguntoyinbo (Consultant) ICR draft presentation: The focus of the presentation of the draft ICR was on the lessons learnt during the project implementation and the exit strategy – transition from a subsidized to an unsubsidized product\. The lessons learnt were discussed in 3 parts: (a) those that informed project design, (b) those that influenced project 52 implementation, and (c) those that can impact on the design of future project\. These include: state support at onset, design of unsubsidized product yyyand evaluation\. The presentation also emphasized the role of the World Bank in project oversight, proposed arrangements for future operations of project; migration strategy for migration to new product; migration marketing and sales approach, etc\. Discussions on the ICR draft presentation (responses in italics): • Although the CAPDAN project shall formally end in April 2014, all enrolee contracts shall be fulfilled till expiration • Though a dip in income for providers is foreseen as a result of a lag phase in new product uptake, there is no contractual agreement on compensation of providers\. The dip is expected to be made up when adequate number of enrolees come on board • Capitated product will be introduced soon\. • Dr Olumide Okunola (IFC) informed that the WB shall spend about $1billion buying results\. Attention shall focus on the CAPDAN ICR and those of other output-based projects • Dr\. Chris Atim of the World Bank requested that the ICR detail more of the lessons learnt\. • The non-inclusion of Impact Evaluation in project design was a missed opportunity\. • The buy-in of the State government from the inception was considered pertinent for a new project\. • Benefit package calibration if considered will introduce ‘value for money’ to the beneficiaries\. • The World Bank wants clarification on the reasons behind the set targets for enrolees and the actual\. 5\. Findings of Beneficiaries and Providers Perception of project (Gbenga Adedayo): Perception of beneficiaries/providers presentation: The presentation was made in two parts; perception of beneficiaries on the scheme and perception of providers on the scheme\. The presentation focused on the findings from the analysis from the key variables for both beneficiaries and providers\. Discussion on beneficiaries/providers presentation: • Data from the beneficiaries and providers assessment should be anonymized in the ICR\. • A small number of enrolees were interviewed as this was a dip-stick survey\. Besides, a similar in-depth by care with 600 respondents has been carried out • Collaboration of the State government on the technical level should be emphasized in the ICR\. • The unsatisfactory nature of the responses of providers on capitation and fee for service was clarified by the contributions from HCHC • Dare Ogundipe (HCHC) suggested that for the community based projects like this, there is need to find providers with similar cost profile that will match the target population\. 101\. CAPDAN executives thanked all stakeholders for the CAPDAN project and expressed interest in the HBL product\. Dr Adenusi wrapped up this session by explaining the complexity of the business and stated that it is a delicate balancing act keeping all scheme stakeholders happy\. 6\. Next Steps: • The World Bank is proposing a ‘lessons learnt’ workshop for the first week of November in Abuja, in partnership with the NHIS\. 53  • Similarly, a quality workshop is proposed for June in Lagos to coincide with the Bank’s ICR\. 7\. Closing: The meeting came to a close with lunch at 2\.30pm\. 54 Annex 7\. Summary of Borrower’s ICR and/or Comments on Draft ICR Comments from Implementing agencies on draft World Bank ICR report October 17th, 2014 1\. Impact evaluation The report states that the program would have greatly benefited from rigorous impact evaluation\. We agree with this conclusion\. This evidence based approach was and is in line with our practice in other health insurance programs in Nigeria and elsewhere in Africa and included in our initial discussions\. Unfortunately, the final design that was agreed between the World Bank and the implementing partners could not include such an Impact Evaluation\. The GPOBA Commitment Paper of June 2007 only refers to impact and feasibility analysis without being specific about the objectives and methodology for the study or the party or parties responsible for commissioning and carrying out such a study\. 2\. Project redesign The CAPDAN program was an innovative and experimental one (as mentioned several times in the GPOBA Commitment Paper of June 2007)\. During the course of the program’s implementation, design flaws and imperfections were identified and addressed\. During a meeting of parties in Lagos on 4-7 July 2011 (see attached minutes of the meeting), a major redesign was discussed, including reallocation of funding, program extension and revised enrollment targets\. At the time, the World Bank made it clear that no such redesign would be possible and that the project should retain its original design and targets (even though this is explicitly stated in the Commitment Paper as a risk mitigation measure)\. An extension of the program for one year only was deemed acceptable at the time (rather than the requested two years)\. It is a fair question whether a learning mission such as the CAPDAN program should have been held so rigidly to its original design and targets, rather than to allow further experimentation that could have provided additional learnings\. 3\. Enrollment One of the main indicators for the project, as discussed in the report, is the enrollment into the CAPDAN program\. The World Bank focuses on the actual achieved enrollment upon completion of the project, which it concludes was adversely affected by the uncertainties surrounding the World Bank’s postponed decision about extension\. Discussions between the parties about extension were commenced in July of 2011 and the final decision was only communicated by the World Bank in June of 2013\. At that time, a year before the end of the extension that was granted, enrollment and re-enrollment into the CAPDAN program had already been stopped in order to limit the financial exposure of the implementing parties\. As stated in the ICR report, the uncertainties surrounding the extension had led the implementing parties to curtail marketing and sales efforts\. The ICR report takes the enrollment at the end of January 2014 as its measure of achievement, while it would be fair to use the enrollment figure at the moment that enrollment and re-enrollment were 55 stopped at the end of April 2013 (enrollment: 9,001) as this is the actual close-out date of the CAPDAN program\. Enrollees only remained eligible for services for one year after enrollment ended\. At its peak, enrollment into the CAPDAN program was close to 70% of the entire target group\. This is an exceptionally high level of enrolment in a voluntary health insurance scheme, especially in the Nigerian context\. The report also points to the fact that, at the program’s peak, re-enrollment rates were high (77% adjusted for migration)\. This points to a high demand for health insurance, demand that was severely affected by growing uncertainties surrounding the program’s future from year three of implementation onwards\. 4\. Co-premium An issue that is connected to enrollment is the increase in co-premium paid by the enrollees\. In the original design it was envisaged that enrollees would bear more than half of the cost of premium by the end of the first phase in 2013\. As the program progressed it became increasingly clear that such a goal was not realistic given the ability and willingness to pay for health insurance by the majority of the target group, despite the gradual increase in co-premium over a period of 10 years\. The report cites studies commissioned by the implementing partners in 2011 into pricing and package composition to get a better understanding of the balance between coverage and contributions\. Despite pressure to adhere to the original design, the World Bank and the implementing partners agreed to limit the co-premium increases to maintain affordability\. An analysis conducted by PharmAccess in 2011 (see attached powerpoint presentation) indicated that, due to attrition and migration, the enrollment within the CAPDAN group would decline anyway because of the group’s limited size\. It can be argued that enrollment had reached near saturation levels by 2011\. 5\. Government engagement The ICR report criticizes the implementing partners for not engaging the government in the design and monitoring of the program\. The GPOBA Commitment Paper of June 2007 aims at sustainability being achieved through an increased contribution to the premium by the enrollees in the program\. The idea being that this particular target group, being somewhat better off than other poor groups, would be able to afford the full cost of the premium after a period of ten years\. The document contains an endorsement letter from the Federal Ministry of Health for the CAPDAN project dated 19th of February 2007\. In addition, the document states that the CAPDAN target group was not likely to benefit from NHIS initiatives any time soon\. The only mention of proposed government engagement is one proposed by the World Bank to explore with Government of Nigeria the possibilities of establishing an equalization fund for cross-subsidizing health insurance premiums for the poor\. No mention is made of engagements with NHIS or the Lagos State Government\. It would appear that such a requirement has been added post-hoc to the ICR\. Over the years, the implementing partners have actually engaged with Lagos State Government and the NHIS on multiple occasions to discuss our health insurance programs\. The approach taken has not been significantly different from the successful engagements with Kwara and Ogun State governments\. Engagement with Lagos government and NHIS has taken considerable time to achieve, but unfortunately did not during the program lead to a co-financing partnership \. Currently, the relationship with Lagos State Government is good and joint initiatives in areas of healthcare quality (SafeCare) are being discussed\. PharmAccess regularly attends the Lagos State Health Insurance Implementation Committee\. PharmAccess and HCHC have also participated in constructive engagements with NHIS and State Governments organized by the World Bank Group\. 56 6\. Sustainability The original design of the CAPDAN program was for sustainability to be achieved over a 10-year period as enrollees would take on an ever greater proportion of the premium payments until they were able to finance the entire premium\. This was an innovative and experimental approach to sustainability for Community Based Health Insurance\. During the implementation, it became clear that this approach would not work for the majority of the target group (see section on co-premium)\. The report mentions that the first year’s premium of $68\.06 was slightly more than twice the per capita public expenditure ($32\.53) in 2008 (please mention the source) indicating the government could not afford the scheme\. To compare the Total Premium with Government Health Expenditure is incorrect\. When comparing, it should be Premium Subsidy compared with Government Health Expenditure\. To evaluate the design, it should be taken into account that over the course of the program the premium subsidy would become close to the available State Government Expenditure\. Mainly due to continuation of excess medical expenses on fee for services this was not achieved\. This also was true for the other Lagos Health Insurance Schemes which showed even higher excess medical expenses, which demonstrate that sustainable financing of health expenditure in urban settings like Lagos poses a great financial risk\. In rural settings however we have seen that sustainable financing of health expenditure is likely\. Actually, CAPDAN was the financially best performing urban scheme showing the lowest rates of excess medical expenses\. This was shared with the Lagos State Government Health Commissioner\. 7\. Medical expenditure The ICR report points to fact that the cost of medical services outstripped the allocation for these costs within the premium\. To calculate such an allocation, data is required for the costs and usage of care by a specific target group, which were unavailable at the start of the project\. At the time of proposal writing, such calculations had to be done within clear limitations\. The surplus payments within the CAPDAN program were quite limited to start with and only increased substantially as enrollment dropped and adverse selection increased, limiting and skewing the risk pool\. The report points to measure taken by HCHC to curtail medical costs, especially for chronic ailments\. The report states that ‘excess’ (a judgmental term where we assume it is should be ’excess’) capitation and fee-for-service payments were done by HCHC\. By their very nature, capitation fees cannot lead to excess medical payouts, as they are fixed reimbursements per member for a given period (e\.g\. monthly)\. Actuarial analysis conducted by Miliman (an international firm of actuaries) actually led to (slight) increases of the capitation fees so as to fairly reimburse healthcare providers in the program for their primary care services\. 57 8\. Discontinuing enrollment and phase-out strategy The ICR report states that the discontinuation of enrollment may have led to mistrust of the scheme among the target group\. There is, however, no evidence to suggest that this has actually happened\. The exit plan that was developed was aimed at avoiding reputational damage to all partners\. This was achieved through stakeholder meetings (e\.g\. CAPDAN executives, Medical Directors, enrollee forums)\. The ICR report talks of a poorly executed phase-out strategy\. It remains unclear on what evidence this classification is based\. HCHC, PAF and the World Bank agreed upon an exit plan, which included engaging the stakeholders (CAPDAN executives, Medical Directors, enrollee representatives) and developing a migration phase program (to HBL)\. These plans were executed as agreed and stakeholders were engaged and carried along\. Whereas potential negative publicity could have taken place after the announcement of the end of the program the opposite was the case\. In our view the phase out was managed very well by all partners including the World Bank\. The ICR criticizes HIF for delaying for about 8 months (after PAF had indicated the need for change) before submitting such a request to the World Bank\. This observation is not correct\. Based on lessons learned from implementation, the HIF (in collaboration with PharmAccess and HCHC) started a discussion with the World Bank (Fatou Assah, TTL CAPDAN) about a review of the CAPDAN project\. On 4-7 July 2011 (not August 2011), at the Supervisory Mission in Lagos, the HIF presented these changes that it thought were crucial to ensure effective implementation\. On Monday, September 12, revised changes (based on the outcome of the Supervision Mission in July 2011) were sent to the TTL CAPDAN\. The approval process by the World Bank took one year and nine months, which disrupted an effective implementation and phase-out strategy of the program\. 9\. Phase II extension The report criticizes HIF for not recruiting additional donors to fund the second phase of the CAPDAN program\. Clearly, this would lead to enhanced sustainability of the program\. However, due to the uncertainties surrounding phase one due in large part to the long delay by the World Bank in approving the revised program and the refusal to accept revised enrollment targets as well as the effects on enrollment (as discussed in the section on enrollment), it is not reasonable to assign this solely to HIF as there were too many uncertain project outcomes and no foreseeable partnership with the Lagos State Government\. 10\. Finances The ICR report is based on figures for disbursed funding (cash advances) only, while relevant figures are those for realized expenditure\. Please see attached overview of expenditures\. On page 42 it is mentioned that various financial management supervision reports and audit reports showed that project management did not provide detailed breakdown of expenditures incurred We assume that the above refers to World Bank project management, financial management supervision reports and internal audit reports not available to us\. and at project closing there was inadequate documentation to support such expenditures\. In case this reflects to us please provide us more detail when and how this occurred\. We would like to state that HIF, PAF and HCHC have always provided the requested information and reporting during the entire program\. No notice of any breach was provided by the World Bank to us\. As agreed in the action plan of late September 2014 we are preparing the supporting documents of Categories 3-7 for the final due diligence audit by the FM at project closing\. 58 Comments on draft World Bank ICR report by Consultants who prepared the borrower ICR October 17th, 2014 It is a complicated task to comment on the Bank’s ICR which scores Bank and Implementing Agency’s performance as ‘Moderately Unsatisfactory’ respectively\. The justification for Bank’s assessment is detailed clearly\. I think what is important are the lessons learned going forward\. Again these are clearly detailed in the report\. For us, three of these stand out: (a) the project design ought to have aligned reduced subsidies (increased premiums) to increased services; (b) M&E design should have included impact evaluation (clear and documented development & intermediate objectives and the indicators to measure them in the approved project documents), establishing baseline levels and setting performance milestones; and (c) slow restructuring of project against an announced freeze of new enrollment (project closure)\. This is all water under the bridge now\. Opportunity lies in using the lessons learned from this project implementation to bear on the design and implementation of the new product\. Nevertheless, unless there has been further reconciliation of figures between the Bank and the Project, some slight inconsistencies in the Project ICR and Bank’s ICR data\. These are detailed below: Page 9/72: IO Indicator 4: This ICR report gives an average of 2\.4 visits per enrollee but project ICR has a different utilization figures recorded for this: 3\.1 visits per enrollee in 2011 increased to about 4 visits per enrollee in the first half of 2013 Page 9/72: PDO Indicator 3 figure should be 14 and not 15\. There were 15 service providers in the project as at the end of 2013 but only 14 were in compliance with the service quality standards specified by PAI (OnTrack Assessment) (please see ‘ Table 9 – Summary of Finding from Project Monitoring Indicators’ in CAPDAN ICR Report submitted)\. This was based on the reported data/information in the semiannual progress reports\. Page 28/72: ‘Figure 2: Actual and planned enrollment’ figures in the graph is different from what we found during the preparation of the CAPDAN ICR report\. The borrower ICR is attached\. \. Comments from Implementing agencies on draft World Bank ICR report January 13, 2015 ICR reviewer Samuel Mills Senior Health Specialist Amsterdam, 13 January 2015 Subject: Response to CAPDAN ICR draft report dated December 18 2014, Pre-Paid Health Scheme Project TF 092182 Dear Samuel, Thank your for sharing the 2nd ICR draft report and giving PAI and HIF the opportunity to respond\. You have done a massive job in providing this extensive report on such a comprehensive program with so 59 many levels of input, output, outcomes and impact\. We are very appreciative of your support, time and collaboration during this process\. After reviewing carefully the second ICR draft report we acknowledge that all data corrections have been adopted but also feel there are still some fundamental outstanding concerns and we would kindly request to take these comments into consideration for the final draft\. We will first discuss the six most important factual observations and conclude this letter with a description of the broader outcomes of the Pre-Paid Health Scheme plus our main conclusions\. 1\. Finances On page 22/23 it is mentioned for both PAF (5\.2(b)) as well as HIF (5\.2(c)) that “further, outstanding disbursement issues were only resolved in November 2014 (6 months after project closing) due to inadequate financial documentation”\. This does not reflect the sequence of events\. HIF and PAF did report on expenses in a timely manner during the full project period\. Reports and withdrawal applications were approved, no comments were given\. Not until Q3 2013 was a first question raised: could HIF (and PAF) report on cash transfers instead of realized expenses\. PAF, supported by Deloitte Accountants, argued that the way PAF prepared the financial documentation for this program was the proper way to do this for such an insurance orientated program (with prepayments)\. The FM of the World Bank argued that it did not match the World Bank policies\. On September 29 2014, we agreed on an action plan to resolve these differences\. According to this action plan HIF (and PAF) delivered on their part of the action plan in 7 separate ‘responses’ which were only reviewed and approved by the FM Saidou Diop during his visit to Amsterdam from 13-17th November 2014\. On a yearly basis HIF (and PAF) submitted subsidy statements\. Annual external auditor’s (Deloitte) opinions on these statements were unqualified\. After the closing date of the program (April 30, 2014) Deloitte performed the last audit on the program\. Policies within the World Bank did not allow reimbursement of all costs concerning this audit\. Therefore the final audit fees and personnel charges of HIF, PharmAccess and HCHC after April 30, 2014 related to the closure of the program were not reimbursed (due to the several layers of reporting HIF/PAF could not report earlier) The PAF scoring has been downgraded from satisfactory to moderately satisfactory because of above mentioned delay of the financial review\. Something for which PAF nor HIF nor HCHC can be held accountable for\. 2\. Project redesign and enrollment targets The report states that the restructuring request did not include a reduction in the number of target enrollees despite the evidence that it was unattainable (page 23)\. The CAPDAN program was an innovative and experimental one (as mentioned several times in the GPOBA Commitment Paper of June 2007)\. During the course of the program’s implementation, design flaws and imperfections were identified and addressed\. During a meeting of parties in Lagos on 4-7 July 2011 (see minutes of the meeting), a major redesign was discussed, including reallocation of funding, program extension and revised enrollment targets\. At the time, the World Bank made it clear that no such redesign would be possible and that the project should retain its original design and targets (even though this is explicitly stated in the Commitment Paper as a risk mitigation measure)\. An extension of the program for one year only was deemed acceptable at the time (rather than the requested two years) but revised enrollment targets was a taboo\. Hence we didn’t include revised enrollment targets in the amended agreement (restructuring proposal) in April 2012\. It is a fair question whether an innovative pilot program as the CAPDAN program should have been held rigid to its original design and targets, rather than to allow adjustment of the design and testing models that could have provided additional learnings\. The enrollment indicator is the main indicator of this program and carries more weight and the rigid attitude regarding enrollment target has influenced the end scoring of both HIF and PAF\. 60 3\. Impact evaluation The 2nd draft ICR report still states that the program would have greatly benefited from rigorous impact evaluation\. We agree with this conclusion and this evidence based approach was and is in line with our practice in other health insurance programs in Nigeria and elsewhere in Africa and included in our initial discussions\. Unfortunately, the final design that was agreed between the World Bank and the implementing partners could not include such a long term impact evaluation parallel to the implementation of the program\. The GPOBA Commitment Paper of June 2007 only refers to impact and feasibility analysis without being specific about the objectives and methodology for the study or the party or parties responsible for commissioning and carrying out such a study and to include a budget header for this research\. We would appreciate if the report is adjusted to reflect that at the start the GPOBA Commitment Paper could not include a rigorous impact evaluation as is the case in other HIF/PAF programs\. 4\. Enrollment One of the main indicators for the project, as discussed in the report, is the enrollment into the CAPDAN program\. The World Bank focuses on the actual achieved enrollment upon completion of the project, which it concludes was adversely affected by the uncertainties surrounding the World Bank’s postponed decision about extension and the fact that we were not allowed to change the enrollment target\. Discussions between the parties about extension were commenced in July of 2011 and the final decision was only communicated by the World Bank in June of 2013\. At that time, a year before the end of the extension that was granted, enrollment and re-enrollment into the CAPDAN program had already been stopped in order to limit the financial exposure of the implementing parties, which is necessary because of the financial commitment to policyholders and clinics that any insurance program needs to take into account\. And also to manage expectations at target group level\. As stated in the ICR report, the uncertainties surrounding the extension had led the implementing parties to curtail marketing and sales efforts\. The ICR report takes the enrollment at the end of January 2014 as its measure of achievement, while it would be fair to use the enrollment figure at the moment that enrollment and re-enrollment were stopped at the end of April 2013 (enrollment: 9,001) as this is the actual close-out date of the CAPDAN program when the marketing program was stopped\. Enrollees remained eligible for services for one year after enrollment ended\. At its peak, enrollment into the CAPDAN program was close to 70% of the entire target group\. This is an exceptionally high level of enrolment in a voluntary health insurance scheme, especially in the Nigerian context\. The report also points to the fact that, at the program’s peak, re-enrollment rates were high (77% adjusted for migration)\. This points to a high demand for health insurance, demand that was severely affected by growing uncertainties surrounding the program’s future from year three of implementation onwards\. Notot mention the client satisfaction rate of 72%\. Finally it is important to mention that we started the phase out strategy (April 2013) to avoid reputational damage for World Bank\. HCHC and PharmAccess\. In a face to face meeting with Mrs\. Marie Francoise Marie-Nelly (Country Director World Bank Nigeria, September 2013), she made very explicit that she was happy the program extension now facilitated the adequate and professionally executed risk mitigation measures at the final stage of the program in order to protect the interests of beneficiaries, continuity of clinics and local partners and reduce potential reputational risk\. Phasing out a project is a delicate process, especially in the business of health insurance\. Insurance is a business of trust and this trust could be broken if the scheme, that the low income groups in the Computer Village of Lagos have learned to appreciate, would close abruptly\. Moreover, this group of people will then no longer be protected against health risks which pose a great threat to their lives and livelihoods\. Therefore, the project implementers have been developing a phase-out strategy to mitigate the above mentioned risks\. This phase-out strategy was mainly focused on replacing the scheme’s dependence on subsidies with a new feasible, sustainable and low-cost 61 insurance product of which the cost will be fully borne by its enrollees\. By offering the target population the possibility to transition from the World Bank supported program into a new affordable insurance program the risk of loss of trust amongst the target population will be reduced and the risk of reputational damage mitigated\. It is logical that, as the result of a transition phase, the enrollment numbers have declined\. Hence, we strongly advise not to rely only on the end reference date (January 2014)\. 5\. Government engagement The ICR report criticizes the implementing partners for not engaging the government in the design and monitoring of the program\. The GPOBA Commitment Paper of June 2007 aims at sustainability being achieved through an increased contribution to the premium by the enrollees in the program\. The idea being that this particular target group, being somewhat better off than other poor groups, would be able to afford the full cost of the premium after a period of ten years\. The document contains an endorsement letter from the Federal Ministry of Health for the CAPDAN project dated 19th of February 2007\. In addition, the document states that the CAPDAN target group was not likely to benefit from NHIS initiatives any time soon\. The only mention of proposed government engagement is one proposed by the World Bank to explore with Government of Nigeria the possibilities of establishing an equalization fund for cross-subsidizing health insurance premiums for the poor\. No mention is made of engagements with NHIS or the Lagos State Government\. It would appear that such a requirement has been added post-hoc to the ICR\. However with hindsight, we agree that it would have been good to have engaged more with the Lagos State Government at an earlier stage\. However the situation in Lagos State at the time was not comparable with the situation in Kwara as mentioned in the report\. In Kwara State the governor was one of the initators from the onset together with of the HCHC which led after 8 years to a full agreement to finance the premium subsidies and was selected as a top 10 winner of the 2014 OECD “Taking development innovations to scale” award\. Over the years, the implementing partners have actually engaged with Lagos State Government and the NHIS on multiple occasions to discuss our health insurance programs\. The approach taken has not been significantly different from the successful engagements with Kwara and Ogun State governments\. Engagement with Lagos government and NHIS has taken considerable time to achieve, but unfortunately did not during the program lead to a co-financing partnership\. Currently, the relationship with Lagos State Government is good and joint initiatives in areas of healthcare quality are developed\. Lagos State has requested and has already funded PharmAccess to perform SafeCare assessments, train quality teams and develop Quality Improvement Plans for three healthcare facilities, namely General Hospital Epe, General Hospital Alimosho and General Hospital Apapa, as well as assist in the development of a Quality Policy for Public Sector Healthcare Facilities under Lagos State Ministry of Health (LSMOH)\. A MoU between PharmAccess-SafeCare and Lagos State will be signed in the coming weeks\. PharmAccess regularly attends the Lagos State Health Insurance Implementation Committee\. PharmAccess and HCHC have also participated in constructive engagements with NHIS and State Governments organized by the World Bank Group\. 6\. Phase II extension The report criticizes HIF for not recruiting additional donors to fund the second phase of the CAPDAN program\. Clearly, this would lead to enhanced sustainability of the program\. However, due to the short duration of the Phase I, the local policy uncertainties since the start of phase one, in combination with the difficulty for the World Bank in approving any program redesigns, we feel it is not reasonable to assign this solely to HIF as there were too many uncertain project outcomes and no foreseeable partnership with the Lagos State Government\. And in general this type of program requires a longer term commitment, in order to develop appropriate policies, allow for development of adequate structures, adopt new strategies, and build trust in these new institutions\. 62 7\. Broader outcomes of the Pre-Paid Health Scheme and conclusions The Pre-Paid Health Scheme Project CAPDAN has a couple of important broader outcomes which unfortunately didn't fall within the scope of the ICR: 1\. The established financial leverage through investments in the participating private clinics in Lagos 2\. The continuous and measurable quality improvement in the clinics which is an important return on the investment 3\. The contribution to policy development and capacity building for access to quality healthcare in combination with health insurance to NHIS, Lagos State and state wide insurance schemes by using the lessons learned and data we have collected over the years\. This has led to deepening of understanding and contributed to the acceleration of developments in Nigeria to the introduction of the UHC Declaration in March 2014\. In addition the CAPDAN Pre-Paid Health Scheme was highly appreciated by beneficiaries, HCHC, and providers and most importantly also NHIS and Lagos State, which has recently announced its policy change into the direction of State -wide supported Health Insurance\. A survey was carried out to assess the perception of the beneficiaries of the pre-paid health scheme implemented between 2009 and 2013 in April, 2014 and the beneficiary rating was satisfactory and beneficiaries had good experiences in using the product\. In the overall ICR rating this appreciation is not reflected\. Moreover the overall quality of the health care system in the neighborhood has improved dramatically\. Experiences with the new non-subsidized scheme of Hygeia are still rather recent\. However we are quite confident that this non subsidized product could be very appropriate\. When time comes such a commercially viable product for low income working class may be complemented with subsidized products supported by the Nigerian federal and state governments\. Last but not least, we believe GPOBA and World Bank Group have been – together with the Dutch Government - instrumental in a very early stage of development, where health insurance for the informal sector was completely unknown and untested in Nigeria, in laying the foundation for the current developments towards UHC in Nigeria\. Substantial credit is given by Nigerian public and private stakeholders to this initiative\. We believe this 2nd draft ICR report is too modest in this respect and could give a higher appreciation to the teams from World Bank Group, GPOBA and its partners for achieving this contribution and recognition\. Taking all our comments into account, please be assured that we are impressed of the diligence and quality of the work provided in the ICR\. We would like to thank you for this\. Yours sincerely, On behalf of PharmAccess Jan Willem Marees, director finance Fleur Henderson, manager AHME On behalf of Health Insurance Fund Pieter Walhof, director Kwasi Boahene, director advocacy 63 Cc: Chris Atim (World Bank Senegal), Olumide Okunale (World Bank Nigeria), Leslie Villegas (World Bank Washington), Dr\. Peju Adenusi (HCHC) 64 Annex 8\. List of Supporting Documents 1\. Amendment to GPOBA grant agreement, June 2013 2\. Approval of extension of closing date, June 2013 3\. Declaration of project effectiveness, May 2009 4\. Financial management supervision report, May 2010 5\. Framework agreement between PharmAccess foundation and Hygeia Community health Plan Ltd, May 2009 6\. GBOPA panel of experts meeting minutes, June 2007 7\. GBOPA panel of experts meeting minutes, Nov 2006 8\. GPOBA commitment document (concept note/proposal), June 2007 9\. Grant agreement between IDA (World Bank) and Stichting Health Insurance Fund, October 2008 10\. Health Insurance Fund request for extension of closing date, April 2012 11\. Health Insurance Fund, interim financial report, July – Dec 2012 12\. Health Insurance Fund, operations manual, April 2009 13\. Health Insurance Fund, semi-annual progress report, July – Dec 2010 14\. Health Insurance Fund, semi-annual progress report, July – Dec 2012 15\. Implementation support (supervision) mission report, May 2010 16\. Implementation support (supervision) mission report, Nov 2010 17\. Midterm review report, Dec 2012 18\. Procurement plan, Nov 2008 19\. Restructuring paper June 2013 20\. Safeguards data sheet may 2007 21\. Service level agreement between PharmAccess foundation and Hygeia Community health Plan Ltd, May 2009 22\. Target population report CAPDAN, October 2008 23\. FMOH (2010): National Strategic Healthcare Development Plan (2010-2015) 24\. Nigeria health care policy 25\. Health Insurance Fund, semi-annual progress report, Jan– June 2010 26\. Health Insurance Fund, semi-annual progress report, Jan– June 2011 27\. Health Insurance Fund, semi-annual progress report, July – Dec 2011 28\. Health Insurance Fund, semi-annual progress report, Jan– June 2012 29\. Health Insurance Fund, semi-annual progress report, Jan– June 2013 30\. Health Insurance Fund, semi-annual progress report, July – Dec 2013 31\. Health Insurance Fund, semi-annual progress report, Jan– April 2014 32\. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2010-2014 33\. SafeCare annual assessment scores (2011 -2013) 34\. Guidelines for SafeCare Clinic Standards, 2012 35\. Nigeria Pre-Paid Health Scheme Project (CAPDAN): Recommendations of Health Insurance Fund for Nigeria Pre-Paid Health Scheme Project, April 2012 36\. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2013 37\. Program agreement Computer and Allied Product Association in Nigeria(CAPDAN), March 2014 38\. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2010, July 2010 39\. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2013-4, July 2010 65 40\. HCHC PAI General Framework Agreement, April 2011 41\. OBA Principles for CAPDAN Project: final version, April 2012 42\. Risk and responsibility allocation: final version, April 2012 43\. Annual External Auditor’s reports 44\. Aide memoires for missions 45\. Financial review report 46\. Implementation Status and Results Reports, sequences 1-7 47\. Concept Paper On Community-Based Health Insurance Scheme (CBHIS) In Ogun State 48\. Concept Paper on Hygeia Better Life 49\. 2010-2013 World Bank’s Country Partnership Strategy 50\. 2014-2017 World Bank’s Country Partnership Strategy 51\. Borrower implementation completion report, April 2014 52\. Renaissance Capital\. Nigeria unveiled: thirty-six shades of Nigeria\. Economics & Politics\. Nigeria\. May 7, 2013\. 66 Annex 9\. Map 67

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Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 16172 IMPLEMENTATION COMPLETION REPORT NIGERIA FIRST MULTISTATE AGRICULTURAL DEVELOPMENT PROJECT (LOAN No\. 2733-UNI) December 9, 1996 Agriculture 2 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENT Currency Unit = Naira US$1\.00 0\.89 Naira (at appraisal) " = 10\.00 Naira (at mid-term review) " = 82\.00 Naira (at completion) WEIGHTS AND MEASURES Metric System FISCAL YEAR OF BORROWER January I - December31 ABBREVIATIONS AND ACRONYMS ADP - Agricultural Development Project ADPEC - ADP Executive Committee ADPMU - ADP Management Unit APMEU - Agricultural Projects Monitoring and Evaluation Unit ARMTI - Agricultural and Rural Management Training Institute EA - Extension Agent ERR - Economic Rate of Return FACU - Federal Agricultural Coordinating Unit FDA - Federal Department of Agriculture FGN - Federal Government of Nigeria FMANR - Federal Ministry of Agriculture and Natural Resources FMF - Federal Ministry of Finance ICR - Implementation Completion Report IFAD - International Fund for Agricultural Development LGA - Local Government Authority LGC - Local Government Council MANR - Ministry of Agriculture and Natural Resources MSADP - Multi-State Agricultural Development Project NRCRI - National Root Crops Research Institute NSS - National Seed Service OFAR - On-Farm Adaptive Research PCC - Project Coordinating Committee PME - Planning, Monitoring and Evaluation SAP - Structural Adjustment Program SG - State Government SPAT - Small Plot Adoption Technique UA - User Association T & V - Training and Visit System of Agricultural Extension UAES - Unified Agricultural Extension Services VEA - Village Extension Agent WIA - Women in Agriculture Vice President Jean-Louis Sarbib Director : Surjit Singh (Acting) Technical Manager Joseph Baah-Dwomoh Task Team Leader Samuel Onwona  FOR OFFICIAL USE ONLY Table of Contents Page No\. Preface Evaluation Summary \. i Part I: Project Implementation Assessment Introduction \.1 Project Objectives, Covenants, Costs and Financing 1\. Achievement of Objectives \. 3 Overall Project Implementation Performance \. 4 Factors Affecting Implementation \. 7 Bank Performance \. 9 Borrower Performance \. 9 Assessment of Project Outcome \. 9 Project Sustainability \. 10 Future Operations \. 10 Key Lessons Learned \. 11 Part iI: Statistical Annexes Table 1: Summary of Assessments \.12 Table 2: Related Bank Loans and Credits \.13 Table 3: Project Timetable \.14 Table 4: Loan/Credit Disbursements \.14 Table 5: Key Indicators for Project Implementation \.15 Table 6: Key Indicators for Project Operation \.16 Table 7: Studies Included in Project \.17 Table 8A: Project Costs \. 18 Table 8B: Project Financing \. 19 Table 9: Economic Costs and Benefits \. 20 Table 10: Status of Legal Covenants \. 21 Table 11: Compliance with Operational Manual Statements \. 24 Table 12: Bank Resources: Staff Inputs \. 24 Table 13: Bank Resources: Missions \. 25 Appendices Appendix A: Mission's Aide-memoire Appendix B: Executive Summary of Borrower's ICR Appendix C: Operational Plans of the ADPs Ths docunent has a restricted distribution and may be used by recipients only in the performance of their oficial duties\. Its contents may not otherwise be disclosed wiLhout World Bank authorization\.   IMPLEMENTATION COMPLETION REPORT NIGERIA FIRST MULTI-STATE AGRICULTURAL DEVELOPMENT PROJECT (LOAN NO\. 2733-UNI) Preface I\. This is the Implementation Completion Report (ICR) of the First Multi-State Agricultural Development Project (MSADP 1) which was supported by Bank Loan No\. 2733-UNI in the amount of US$ 162\.0 million approved on June 26, 1986\. It became effective on June 15, 1987\. 2\. The loan was closed on June 30, 1995, after three extensions from the original closing date of June 30, 1992\. The Project was reviewed and restructured in 1991, incorporating, amongst others, adjustments necessitated by the bifurcation of four of the original seven implementing states that increased the number of state-level implementing agencies from seven to eleven (State Agricultural Development Projects or ADPs)\. The loan was completely disbursed with the final disbursement being made on March 29, 1995\. 3\. The ICR was prepared by a team led by Lewis Campbell (Consultant), supervised by Samuel Onwona (AFTA2)\. An early draft of the ICR was made available to the Borrower for comment\. The Borrower's own evaluation has been received and its Executive Summary is included as Appendix B to this ICR\. 4\. Preparation of the ICR was started during the Bank's final supervision mission from September 10 to October 6, 1995, conducted in collaboration with the Agricultural Projects Monitoring and Evaluation Unit (APMEU) and the Federal Agricultural Coordinating Unit (FACU) of the Federal Ministry of Agriculture and Natural Resources (FMANR)\. A copy of the Aide Memoire of the mission is provided as Appendix A\. It is also based on information in files, visits and discussions with Federal, State and Project officials and farmers\. The Borrower's contribution to the ICR was coordinated by APMEU and preparation of the Borrowers' operational plans was coordinated by FACU\.  I  IMPLEMENTATION COMPLETION REPORT NIGERIA FIRST MULTI-STATE AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2733-UNI) Evaluation Summary Introduction 1\. This MSADP was appraised in May 1984, following ten years experience with enclave and statewide ADPs in Nigeria and other parts of Africa\. The design reflected the lessons of previous projects, and focused on fewer but more effective programs to help farmers grow more food, improve productivity, incomes and quality of life and better manage their resources\. It concentrated on small farmer technology generation and transfer\. The support services were tailored for sustainability; with greater involvement of the Local Government Authorities (LGA) and the users in the identification and implementation of programs and allowing the stable evolution of commercial services in the private sector, preferably by the users\. The original implementation period was five years but was extended over eight years, having been affected by a new structural adjustment program (SAP), local cost increases and scarcity of counterpart funds, bifurcating of four of the implementing states and management and operational difficulties\. Project Objectives 2\. The objectives were to (a) increase food production and incomes of small farmers; (b) apply flexible, phased approaches to development with initial emphasis on implementing well-proven components geared to agricultural potential and within the financing and managerial capacity of the states, while embarking on an intensified program of adaptive on-farm agricultural research; (c) assist the states in rationalizing current activities through a move to reorganize and commercialize input distribution and develop a smaller but more effective extension service; and (d) prepare for the transfer of a greater share of the responsibility for future project appraisal and supervision to Nigerian institutions\. 3\. The objectives were highly relevant, taking into account the economic circumstances, government policy priorities and the experiences with earlier ADPs\. They focused on fewer and simpler programs but each flexibly tailored within the financial and human resources of the States while effectively addressing the essential farmer services to increase and sustain production\. They were also in keeping with Bank policy of full participation of local institutions in the design and implementation process, and within their financial resources, management and technical capacities to take ownership of the development programs\. The flexibility in design allowed variations in the programs during implementation and accommodated changes in economic circumstances brought on by the SAP and the ensuing management and other institutional weaknesses [paras\. 2,3]\.  ii Covenants 4\. Apart from the general covenants relating to subsidiary loans, work plans, budgets, project and special accounts, application of loan proceeds, audits, periodic reporting, procurement and disbursement, the key covenants to achieve the objectives focused on strengthening and sustaining (a) institutional arrangements at the Federal as well as the State level; (b) the quality of staffing; (c) timely payments of required counterpart funds; and (d) establishment of a cassava multiplication program under the National Seed Service and whose entire operations were also to be evaluated\. All covenants were generally satisfied except (a) counterpart funding which was frequently delayed and did not keep up with inflation; (b) institutional and management arrangements not being operated satisfactorily in several states; and (c) the not infrequent diversion of project resources into non-project uses [para\. 5, Table 10]\. Project Costs\. Financing and Timetable 5\. Total cost was estimated at US$256\.4 million of which US$162\.0 million (63\.2%) would be from the Bank loan, US$12\.0 million (4\.7%) from the IFAD loan, US$49\.5 million (19\.3%) from the FGN and US$32\.9 million (12\.8%) from the seven implementing states\. At project restructuring in 1991, the total estimated cost was reduced to US$221\.0 million of which $162\.0 million (73\.3%) would be from the Bank loan, US$12\.0 million (5\.4%) from the IFAD loan, US$23\.7 million (10\.7%) from the FGN, US$22\.3 million (10\.1%) from the states and US$1\.0 million (0\.5%) from farmers\. At completion, actual project costs amounted to US$228\.7 million, of which US$162 million (70\.8%) came from the Bank, US$9\.59 million (4\.2%) from IFAD (March 1995), US$37\.08 million (16\.2%) from State Governments, and US$20\.03 million (8\.8%) from the Federal Government\. The closing date was extended three times to a total of 8 years and the Bank loan was completely drawn down\. The IFAD loan which financed the cassava multiplication and processing components is still active with the closing date having been extended to June 30, 1997\. Project Implementation Experience and Results 6\. The project was slow to start, taking a full year for the Bank loan to become effective\. Being the first of the multi-state ADPs, most of the implementing ADPs had little or no prior experience with Bank procedures which they found complicated and tedious\. Where joint actions by more than one state were required, because of the multi- state nature of the project, progress was further delayed\. The difficulties became worse with the progressive decline in value of the local currency and the inability of the state and federal governments to provide the required level of counterpart funds for the planned annual work programs\. Although project implementation achievements werein the end substantial, it required three loan extensions for such results to be attained\. 7\. Farmers, however, took advantage of the improved markets and pricing brought on by the SAP and responded very well to the project's agricultural services, particularly technology generation and transfer\. The increases in farming activities led to greater  iii demand for improvements in feeder roads, village water supplies and post harvesting and marketing facilities\. With continued involvement of the states in input supplies distribution, the private sector was slow to enter such services and the reliability and efficiency continued to be poor\. Fertilizer distribution remained under direct control of the state and federal governments, with no improvement in efficiency or reliability of the service\. Overall Project Implementation Performance 8\. Overall, performance is rated as satisfactory\. The main obstacles to better performance were (a) reduced management efficiency caused mainly by frequent political interference and irregular meetings of the Project Executive Committees (ADPECs) and frequent changes in the staffing of Project Management Units (PMUs); and (b) failure of the governments to make prompt payments of required counterpart funding and also to implement policies to improve the availability and distribution of fertilizers, the most important input to achieve yield potential of the better crop varieties\. Farmers took advantage of the beneficial support activities of the project and responded to the good prices and markets resulting from the SAP\. Overall Assessment of Project Outcome 9\. Using a comparative common base of sorghum grain equivalent (at 10% moisture), total food production increased 230%, from an estimated 4\.43 million tonnes in 1986 to 10\.3 million tonnes in 1994\. The three main crops contributing to the successful project outcome were cassava, yams and maize\. The most important contribution of the ADPs was the dissemination of improved technologies which helped farmers to raise substantially their production, productivity and incomes\. The institutionalization of the ADPs as farmer support institutions is also a significant achievement\. The quality of staff recruited and their training is an important contributor to the capacity building of the ADPs, which are now well placed to help sustain the investments in farmer support services\. The re-estimated Economic Rate of Return (ERR) is 33% versus the appraisal estimate of 24% and mid-term estimate of 25%\. Project Sustainability 10\. With a favorable economic environment for agriculture, the capacity of the ADPs to generate and deliver improved technologies, and the readiness and capability of farmers and rural communities to assume responsibility and ownership, through user associations (UAs), for most of their important services, the main objectives of the project could be sustained\. The state governments have all placed key farmer support operations under the umbrella of the ADPs with policy matters being in the hands of the Ministries of Agriculture\. This has proved to be workable arrangement\. The major constraint to ADP sustainability will be state level funding which, under the current economic scenario, seems not predictable\. Future Operations 11\. The federal and respective state governments have given assurances that current levels of ADP recurrent funding would be maintained in their annual budgets, with due  iv allowances for inflation\. The ADPs arL q'rdering their priorities in the use of these annual provisions and propose to cuncentrate on the generation and transfer of technology\. The delivery of other important services would be left to organizations best placed to do so, in either the private or public sectors\. The ADPs will devote increased attention to develop the capacity of farmers and others in the rural communities, working in groups (UAs), to organize commercial services in input supplies, credit, post harvest operations including processing, storage and marketing, and to work with LGAs on the maintenance of roads and operation and maintenance of potable water supplies\. Key Lessons for Future Projects 12\. The key lessons are concerned with (a) the need to have political commitment and organizational and management stability; (b) adequate and timely local funding from state governments can be obtained through mandatory deductions from the Federal allocations; (c) the willingness of farmers to take responsibility for their essential services, working in formal groups where necessary, and receiving appropriate training for the purpose; (d) the gradual and time consuming processes for sustainable institutional development; (e) inadequate input supply services reduce the effectiveness of extension efforts in technology transfer; and (f) the need for close monitoring and tight control of commitments on pooled funds of multi-state projects\.  IMPLEMENTATION COMPLETION REPORT NIGERIA FIRST MULTI-STATE AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2733-UNI) Part I: PROJECT IMPLEMENTATION ASSESSMENT Introduction 1\. The Project was appraised in May 1984 at a time when the Borrower and the Bank had gained much experience during the preceding ten years on the design and implementation of integrated agricultural development projects in Nigeria and other areas in Africa\. While it was concluded that the support facilities, particularly infrastructure and input supplies provided by these projects to improve farmer operations, contributed substantially to increased production, it was generally agreed that they were too complex to implement, requiring such levels of management and technical skills that much of it had to be provided externally, making it difficult to sustain all the achievements\. It was felt that greater focus was required on generating appropriate technologies for extending to small farmers to increase their production, productivity and incomes\. The design of this project, therefore, concentrated on these aspects\. It restricted expenditures on rural infrastructure to rehabilitation and maintenance of existing facilities, preferably through private contracting, and gradually transferring the maintenance responsibility to local authorities and users, where they properly belonged\. It placed greater reliance on locally recruited management and technical personnel to implement the program of activities\. Similarly, the private sector was to be relied upon for input supply and other services which are commercially sustainable\. It was also the first in a series of multi-state agricultural development projects in Nigeria\. The Project was to be implemented over five years at an estimated total cost of US$256\.4 million, shared by the Bank loan of US$162\.0 million, an IFAD loan of US$12\.0 million and FGN and States contributions of US$49\.5 million and US$32\.9 respectively\. Soon after the loan was approved, the FGN embarked on a structural adjustment program (SAP) which included the abolition of several important commodity boards and the liberalization of the foreign exchange market\. Also during implementation four of the original seven participating States were bifurcated, thereby increasing the number of implementing ADPs to eleven\. Both of these events had significant effect on project costs and farmer response\. Project Objectives, Components, Covenants, Costs and Financing\. 2\. Project Objectives\. The main objectives were to: (a) increase food production and incomes of small farmers; (b) apply flexible, phased approaches to development with initial emphasis on implementing well-proven components geared to agricultural potential and within the financing and managerial capacity of the states, while embarking on an intensified program of adaptive on-farm agricultural research; (c) assist the states in rationalizing current activities through a move to reorganize and commercialize input distribution and develop a smaller but more effective extension service; and (d) prepare  2 for the transfer of a greater share of the responsibility for future project appraisal and supervision to Nigerian institutions\. 3\. Evaluation of Project Objectives\. The objectives were highly relevant, taking into account the economic circumstances, government policy priorities and the experiences with earlier ADPs\. They focused on fewer and simpler programs but each flexibly tailored within the financial and human resources of the States while effectively addressing the essential farmer services to increase and sustain production\. They were also in keeping with Bank policy of full participation of local institutions in the design and implementation process, and within their financial resources, management and technical capacities to take ownership of the development programs\. The flexibility in design allowed variations in the programs during implementation and to accommodate changes in economic circumstances brought on by the SAP and coping with management and other institutional weaknesses\. 4\. Project Components\. The original project design included State and Federal-level activities described below: (i) Main State-wide activities to be undertaken by the ADPs: (a) Crop and Farm Development: within the framework of increasing food crop production (cassava, yam, maize, rice, plantains and vegetables) undertake promotion of appropriate fertilizer use; multiplication and distribution, at state level, of improved planting material of cassava, rice and potatoes; and reorganization of rainfed extension services along performance oriented lines; (b) Agricultural Research: a program of on- farm adaptive research; (c) Commercial Services: improved fertilizer and other inputs distribution; and assistance in crop processing; (d) Roads and Workshops: rehabilitation and maintenance of feeder roads and associated essential equipment; (e) Village Water Supplies: a program of construction for boreholes and digging wells with hand pumps installation; (f) Project Management\. Monitoring & Evaluation\. Planning and Manpower Development: establishment and operation of project management, monitoring & evaluation, planning and manpower development units\. (ii) Activities to be Undertaken by Federal Government Agencies (a) Cassava Multiplication and Development: varietal development and initial multiplication of improved cassava material, including assistance to the National Root Crops Research Institute (NRCRI) and National Seed Service (NSS); assistance to NRCRI to monitor biological control of cassava pests and acquisition of a fund for purchase of green spider mite predators; and assistance to non project states for multiplication of cassava planting material; (b) Processing: support for a revolving fund for cassava motor-driven graters and cassava processing research; (c) Others: (i) support for an Agricultural Pricing Policy Unit; (ii) pilot projects for testing developments in forestry, livestock and crops; and (iii) studies concerned with development of improved agricultural data as a basis for better sector planning, including food crop marketing  3 study; feasibility study of ADP village water supply programs; and preparation for a second phase of ADPs\. 5\. At project restructuring in 1991, new management facilities, including new headquarters and other service buildings, had to be provided in the four new ADPs\. In addition, the following sub-programs were also included in all the ADP activities: (a) Women in Agriculture (WIA); (b) Agro-Forestry and Land Use management; (c) Animal Traction, Fadama and Fisheries Development; and (d) Capacity Building of the State Ministries of Agriculture (SMOAs)\. 6\. Covenants\. Apart from the general covenants relating to subsidiary loans, work plans, budgets, project and special accounts, application of loan proceeds, audits, periodic reporting, procurement and disbursement, the key covenants to achieve the objectives focused on strengthening and sustaining (a) institutional arrangements at the Federal as well as the State level; (b) the quality of staffing; (c) timely payments of required counterpart funds; and (d) evaluation of the entire operations of the NSS in the context of its major role in a cassava multiplication program\. All covenants were generally satisfied except (a) counterpart funding which was frequently delayed and did not keep up with inflation; (b) institutional and management arrangements where many of the ADPECs failed to meet regularly to provide policy and opcrational guidance to PMUs, some of which performed poorly; and (c) occasional diversion of project resources (usually vehicles) into non-project state government officials\. 7\. Project Costs\. Financing and Timetable\. Total project cost at appraisal was estimated at US$256\.4 million\. It was to be financed by the Bank loan of US$162\.0 million (63%), an IFAD loan of US$12\.0 million (5%), FGN counterpart funds of US$49\.5 million (19%) and States counterpart funds of US$32\.9 million (13%)\. The project restructuring, which took into account the effects of the SAP, creation of new states, implementation delays and changes in prices, reduced project costs by US$35\.0 million\. Under the new estimate of US$221\.0 million, financing shares would be: Bank loan of US$162\.0 million (73%), IFAD loan of US$12\.0 million (5%), and the balance of US$47\.0 million (21%) coming from FGN (US$23\.7 million), States (US$22\.3 million) and from farmers (US$1\.0 million)\. At completion, actual project costs amounted to US$228\.7 million, of which US$162 million (70\.8%) came from the Bank, US$9\.59 million (4\.2%) from IFAD (March 1995), US$37\.08 million (16\.2%) from State Governments, and US$20\.03 million (8\.8%) from the Federal Government\. The implementation period was extended from five to eight years with three extensions of the loan closing date, by which time the loan funds were fully disbursed\. Achievement of Objectives 8\. The project achieved most of its objectives\. It increased food production and consequently raised incomes of small farmers\. Production of the three major food crops increased over the project period as follows: (a) cassava - at an average annual rate of  4 15% from a base of 5\.8 million tonnes to a total of 13\.3 million tonnes, with area planted rising from about 785,900 ha to about 1\.18 million ha, and average yield increasing from 7\.4 t/ha to 11\.25 t/ha; (b) yam - at an average annual rate of 13% from 4\.1 to 10\.6 million tonnes, with area planted rising from about 585,000 ha to 1\.17 million ha, and average yield increasing about 7\.0 t/ha to 9\.1 t/ha and (c) Maize - at an average annual rate of 25% from about 631,900 t to about 1\.9 million tonnes, and average area planted increasing from about 631,200 ha to 1\.03 million ha, and average yield increasing from about 1\.0 t/ha to 1\.85 t/ha\. The same pattern of increases occurred with the minor crops of sorghum, groundnut, rice, millet, cocoyam and potatoes\. Improved technologies and better market conditions in the 8-year period enabled farmers to increase food production by 230%, from a base of 4\.43 million tonnes sorghum grain equivalent (10% moisture) to 10\.3 million tonnes\. A flexible phased approach to the development was used\. Initial emphasis was on well-proven components to exploit the agricultural potential consistent with the financing and managerial capacity of the states\. The extension services dealing with crops were strengthened using the fundamentals of the training and visit (T&V) system to disseminate available technologies to farmers\. Programs of "on-farm" adaptive research were implemented in conjunction, and intensified progressively\. The ADPs having strengthened their crops-based extension system with front-line extension agents supported by subject matter specialists (SMS) moved on to implement a unified extension system covering crops, livestock, forestry and fisheries\. This was part of a process to rationalize roles and costs for state agricultural institutions\. 9\. Efforts to reorganize and commercialize input supplies were, however, unsuccessful\. The FGN continued to monopolize the supply (procurement and distribution) of fertilizers\. Untimely procurement and delivery caused shortages leading to many states abandoning the commercialization/privatization programs\. On the positive side, there was evidence of the private sector responding to the liberalization of the economy under the SAP and initiating imports of agricultural chemicals, equipment and materials\. In terms of capacity building, considerable progress was made in strengthening FACU and APMEU to assume a greater share of the responsibilities for project appraisal, implementation assistance and supervision\. It is worthwhile to note that with the widespread project area and the multiple number of implementing units, the Bank became increasingly dependent on FACU and APMEU for supervision support, especially in the supply of technical personnel\. Also, the support to the State Ministries of Agriculture helped to improve their information retrieval (through improved MIS) and analytical capacity of the staff of the Planning Research and Statistics Department targeted for the Capacity Building Program (para 5)\. Overall Project Implementation Performance 10\. In addition to the performance of farmers in meeting the primary project goal to increase food production, there was fair performance by the implementing agencies in providing effective farmer support towards this primary goal\. The results of their activities are summarized below\.  5 11\. Adaptive Research\. The level of agronomic trials of improved production technologies was intensive and conducted at a high standard, generally in collaboration with national and international research institutions\. Initially, the focus was on variety testing and introductions, crop spacing and planting methods, soil fertility management and post harvest handling\. Later, in response to the need for greater attention to mixed farming systems, the focus was broadened to investigations and adaptations on better practices in cropping mixtures, agro-forestry, small livestock husbandry and freshwater fish culture\. The results were mostly satisfactory for crops and formed the basis for technology information transfer by the extension services\. 12\. Extension Services\. The programs of technology transfer were generally very successful\. The States unified the several previous specialized services of the MANRs under the one umbrella of the ADPs\. The unification concept was, at first, difficult to accept by some extension staff and the adoption process was slower than expected\. It is now working well\. The T and V system is being followed, but there is some concern on its cost which they feel could be reduced without weakening its effectiveness\. The organizational aspects are to be reviewed, with due regard to improving the cost effectiveness\. 13\. Seed Multiplication This program was largely unsuccessful\. The ADPs concentrated on operating their own commercial seed farms and gave little or no attention to organizing and assisting outgrowers to develop the skills for such production, starting with improved seed multiplied from foundation material from the plant breeders at the research organizations\. While these improved varieties were being promoted by the extension services, farmers were having difficulty in securing adequate quantities of the planting material\. Pricing of seed was generally below market levels, despite a clear policy of the FGN under the Seed Act to allow market forces to determine seed prices in order to build a viable seed industry\. The IFAD supported cassava multiplication program started slowly, but with the effect of the SAP on increasing prices of imported food, the demand for local food and raw materials rose sharply, and consequently for planting material of the higher yielding new varieties\. This was fully satisfied by the successful outgrower cassava cuttings programs which were well coordinated by the National Seed Service (NSS)\. 14\. Commercial Services\. (a) Input Supply\. All ADPs undertook distribution of farm inputs with fertilizer as the main item of sale/distribution\. Each of the ADPs inherited a massive public distribution system with far too many staff and distribution points\. Attempts to trim down the distribution network and commercialize the operations, however, did not materialize\. Some ADPs were initially successful in involving the private sector in input distribution but untimely supplies of fertilizer from the FGN created shortages which provided state administrations the opportunity to intervene and reverse the success\. Chemical fertilizers are the major required inputs to achieve the yield potential of the new crop varieties but the policies of the FGN to monopolize the supply and distribution of the required mixtures have not served farmers as intended\. The benefits from improved crop varieties and other agronomic practices were thus realized at  6 below potential, especially on the less fertile soils\. In response to the FGN request, the Bank on April 20, 1989 agreed to amend the loan agreement and reallocate US$50 million for bulk purchase of fertilizers through ICB for supply to all states in Nigeria\. This purchase would supplement national fertilizer procurement undertaken by the Federal Fertilizer Procurement and Distribution Department\. Most of this amount was disbursed in FY90\. Distribution of other chemical inputs, tools and equipment by the ADPs was equally unsatisfactory\. These inputs were generally more efficiently provided by limited but very slowly growing private commercial sources\. The provision of inputs at below market rates discouraged private enterprise from expanding their limited involvement in such activities and farmers have not been well served as a result\. Little or no effort was made to assist farmers to organize, through Users' Associations (UAs) or such other working groups, to operate their own services, or to encourage other private enterprise to offer them\. (b) Crop Processing and Storage\. This component was essentially for Cassava and financed by IFAD\. It did not attain the desired results of improving processing quality and capacities and has been reformulated via pilot processing programs in order to achieve the desired results\. 15\. Rural Infrastructure\. Compared to earlier similar projects, the design placed low priority on new supporting infrastructure\. The program was to rehabilitate priority feeder roads, to develop village water supplies, particularly in areas with high guinea worm risks, and to establish sound maintenance programs, with the intent of progressively transferring the responsibility to the LGAs, where it constitutionally belongs\. The user communities were also to be involved in the routine maintenance work, including their training for the purpose, and ultimately, to take it over fully, with limited assistance from the ADPs and the LGAs\. Staff offices and other accommodation were to be provided from existing MANR buildings, which would be rehabilitated or modified where necessary\. While preference was to be given to private contracting for much of the works, provision was made for limited in-house capacity in heavy earth- moving and other equipment for force account work\. At project restructuring, small scale irrigation via Fadama-type schemes was added to this program\. The performance in these activities varied widely between states, depending on local funding, degree of official/political interference and implementation capacity, including contracting and contractor management\. Most of the ADPs, with the assistance of FACU, prioritized road rehabilitation based on need and acceptable (benchmark) estimated ERRs\. Only 60% of the larger revised targets (at mid-term) of the road rehabilitation works were undertaken\. Road maintenance was 41% of the target with community participation not sufficiently widespread\. There was limited use of private contractor capacity for roadworks\. 16\. The village water supply programs were based on need and minimum user contributions to the capital costs and to operation and maintenance\. LGAs were rarely consulted on this\. However, by the time construction was organized, the costs frequently rose well above justifiable limits and, in many instances, the works were either seriously delayed or were never completed\. Based on the larger revised targets at mid-term, 72% of boreholes and 65% of hand-dug wells were completed\. Attention to routine maintenance fell short of requirements, but where the communities were involved, the  7 programs were being sustained through active supervision of operations by Water Users' Associations (WUAs) which charged adequate fees to cover O&M expenses\. No progress was made on transfer of project feeder roads and water programs to the LGAs, primarily because the LGAs did not have the resources for the maintenance or they were either disorganized or not functioning\. LGAs applied their limited funds to activities which fell within their priorities\. 17\. The rehabilitated MANR buildings were adequate for offices and services in the original ADP states\. However, the new states did not have enough office accommodation and it became necessary to construct offices for the new ADPs\. Construction suffered from inadequate local funding and poor contractor management, leaving two (Delta and Akwa-Ibom) still incomplete at loan closing date\. Most of the vehicles and equipment were in fair working condition\. However, signs of poor operation or abuse and inadequate maintenance were obvious in some instances\. The workshop facilities are adequate for the servicing, maintaining and light repairing of plant and equipment\. 8\. Fadama irrigation development was included in the last three years\. The progress was slow, with attention being given mainly to planning, studies and other preparatory work, including groundwater surveys\. Only limited implementation occurred\. Several of the ADPs completed their water surveys in preparation for farmer investments in anticipation of assistance under a proposed irrigation development project\. Factors Affecting Implementation 9\. Overview\. Implementation was adversely affected by: (a) weaknesses in management organization and performance; (b) delays in counterpart funding and failure to adjust adequately to sharp inflation; (c) shortage of middle level technical staff, particularly for extension work; (d) difficulties in managing Bank procurement procedures and in preventing external interference in staff recruitment and use of project equipment and vehicles; (e) frequent political changes; and (f) abnormnal floods and droughts\. On the other hand, the changes in the economic environment which started in 1986 improved the market for local food and other raw materials and provided major incentives for farmers to take the risks in expanding their production\. Farmers took advantage of the improved services made available to them by the ADPs, particularly the transfer of technologies, better roads and potable village water supplies\. They were also receptive to the concept of organizing themselves into manageable groups to take ownership for planning, operating and/or maintaining their essential infrastructure and commercial services\. 20\. Project Organization and Management\. The organizational structure of the ADPs for implementation responsibilities was generally sound\. The main problem arose from the indifferent performance of the ADP Executive Committees (ADPECs)\. Most tried, and often succeeded, to expand their functions beyond the terms of reference defined in  8 the gazetted edicts officially establishing the ADPs\. Their major failing was in usurping the functions of the Program Managers and the ADP Management Units (ADPMUs) in day-to-day management matters, taking decisions for which they had no authority or competence, particularly in staff recruitment and deployment, in procurement of goods and services and in use of project vehicles and equipment for purposes outside of the Project\. Such interventions invariably caused serious disruption of work programs, delayed implementation and increased costs\. 21\. Management performance was extremely variable between and within the eleven state ADPMUs over the period\. While the professional qualifications and experience of management and senior technical staff were generally good, they were frequently not allowed to discharge their management and operational responsibilities effectively by some State Governments\. The main failing was their frequent inability to take full responsibility for and to expedite the day-to-day management decisions\. They were not always able to advise or educate ADPEC members, early enough, and perhaps with the support of the FGN (FACU) where needed, on the respective responsibilities of ADPEC and ADPMU for the implementation of programs, before interferences started\. Persistent efforts by ADPMUs, especially with new ADPEC members, may have moderated the tendency of ADPEC to become involved with management operations\. Timely briefings were more so necessary because of the frequent changes of ADPEC members, particularly the State Governors or Administrators and Commissioners\. Resistance to interferences by political or other outside interests carried the high risk of removal of managers or other staff\. Lack of management continuity was an important factor in implementation performance in some ADPs\. 22\. Local Funding and Support\. During implementation, the funding resources of the FGN and States declined while costs rose sharply\. They were therefore not always able to provide on time their required quarterly contributions computed at appraisal\. Moreover, they could not adjust the level of their contributions to allow for the increased costs in domestic currency which followed the introduction of the SAP and the devaluation of the local currency\. Project restructuring in 1991 correspondingly adjusted the overall project cost and increased the percentage borne by the loan funds\. The original cost of US$256\.4 million was restructured to US$221 million and Bank funding at US$162 million\. This was raised from 66% to 73% of project costs (actual project costs are now put at US$228\.7 million)\. In addition, State governments were required to issue letters to the Ministry of Finance (MOF) authorizing the Central Bank of Nigeria (CBN) to transfer counterpart funds from their federal allocation amounts as and when due to the ADP\. This measure was, although initially, not honored by all state governments, was subsequently effective in reducing the problem of counterpart funds\. 23\. Procurement Manage:nent\. Project staff found the procurement guidelines cumbersome to manage and too time consuming\. They generally resented their lack of freedom for independent decisions on choice of suppliers or contractors\. Some of the delays, particularly during the first four years, were due to this resistance to the guidelines\. States also refused to allow FACU to bulk-up ICB items and manage the  9 bidding process\. The problem was further exacerbated by interferences from higher state officials who had no desire to observe the basic provisions for efficiency and equity in the procurement process\. The tenacity of task managers to the integrity of the process, even if it involved prolonging it, helped in preventing misprocurement\. Bank Performance 24\. The identification, preparation and appraisal of the Project were in line with Bank policies\. The flexible approach to farmer support activities allowed adjustments within the project activities as economic circumstances changed\. The Bank supported such flexibility to facilitate implementation\. The supervision and implementation assistance was generally adequate\. Nonetheless better coordination with ADP management on use of pooled loan fund could have reduced the risk of under-funded or non-funded contracts as the funds ran out\. The project management units, however, regarded Bank procurement procedures too cumbersome and frequently caused significant implementation delays\. They also felt that progress was affected by conflicting advice, in the initial years, from supervision missions\. The development of indicators of project performance jointly with FACU proved quite useful in providing routine and timely feedback to the FGN and state governments about implementation bottlenecks as well as disseminating examples of "best practices" to poorly performing states\. Borrower Performance 25\. Borrower performance was variable\. The FGN was consistent in its support for the ADP system -and generally released counterpart funds promptly to the respective ADPs; but in many instances the contributions were below what was required for the approved work programs\. FACU and APMEU provided strong start up and implementation support, joined in supervision and monitoring work and participated in the mid-term review and completion missions\. However project monitoring requirements were not adequately developed at the preparation stages or subsequently during implementation\. Further, the FGN did not play a strong enough role to ensure that all sub-borrowers met fully and promptly their obligations for effective implementation\. Some sub-borrowers were not always as diligent in support of smooth implementation of their components\. The major defaults were in delayed and inadequate funding and poor performance of the ADPECs, with frequent interference in the day to day management decisions, particularly in staff matters, procurement and misuse of project vehicles and equipment\. Assessment of Project Outcome 26\. Overall, the project outcome is satisfactory\. The estimated overall ERR at loan closing is 32\.9%, compared with 24% at appraisal and 25% at mid term\. In spite of  10 difficult operating circumstances caused by political and budgetary difficulties, the states have organized agricultural development institutions with capacity to support farmers in improving production, productivity and incomes and to manage their land and water resources in a sustainable manner\. Farmers, encouraged by beneficial policies, responded well to the support and achieved substantial increases in production, incomes and quality of life\. Project Sustainability 27\. The FGN recognized that the ADPs have played a key role in reversing the decline in agricultural production and setting the country on a firmer footing for greater self reliance and food security\. Having seen the benefits farmers and other users would be willing to provide for and operate directly their own essential infrastructure and institutions to access public facilities and commercial opportunities\. The cost of maintaining the ADPs and the extension services is something which state governments have not internalized fully\. This is largely because the benefits from the activities of the ADP are less obvious when these come in the form of agricultural production than, say, on roads and water supplies\. Budgetary support from the FGN and the State governments would hold the key to the sustainability\. Given experience to date, some of the states are less likely to maintain the support at a required level\. Future Operations 28\. All eleven ADPs have received assurances from their respective state governments that required operational funds will be provided at minimum affordable levels in the states' recurrent annual budgets, and based on past provisions and inflation, to maintain the investments in institutional and infrastructural facilities during the last eight years and to assist farmers with essential services\. Federal funds are also promised at not less than past levels to supplement state funds\. The operational plans in Appendix 'C' were prepared by the respective ADPs in close consultation with their State MANRS and with guidance from FACU\. Their projections of required local funds are based on the provisions in the recurrent budgets in the last three years\. The policy for use of these funds will be to focus mainly on (a) maintaining the technical services for adaptive research and technology transfer; (b) organizing farmers into workable groups and training them to take ownership of their essential infrastructure and commercial services and maintain them in a cost effective manner; and (c) maintaining the minimum administrative, accounting and monitoring services\. The staff structure of each ADP will be rationalized and, where necessary, redeployed to ensure adequate capacity to develop farmers' ability to become self reliant for their range of essential services\. These services would include commercial input supply, credit, post harvest handling, processing, storage and marketing, transport and access roads, potable village water supplies and irrigation infrastructure\. The successful implementation of the operational plans hinges on two  11 main factors: (a) an enabling macro-economic framework and (b) adequate budgetary support\. Key Lessons Learned 29\. The key lessons learned are as follows: (a) management stability and the proper support of the ADPECs are critical for smooth project implementation; (b) counterpart funding must be adequate, consistent and timely to avoid implementation delays, cost escalation and allow effective use of loan funds; in this respect letters from state governments authorizing mandatory deductions from Federal allocations can be an effective instrument; (c) farmers and rural communities are willing to take ownership and be trained for the proper operation and maintenance of essential support facilities and services; (d) effective and sustainable institutional development is a gradual process and cannot be hastened; (e) inadequate and inefficient supply of inputs reduce the impact of extension efforts in technology transfer and increased production; and (f) managing pooled loan funds in multi-state development projects creates a competitive environment for ensuring an efficient use of loan funds, but it requires careful monitoring to reduce the risk of over commitments by competing implementing agencies\.  12 PART II: STATISTICAL ANNEXES Table 1: Summary of Assessments A\. Achievement of Objectives Substantial Partial Negligible Not applicable Macro Policies C1 C1 0 t0 Sector Policies l O 0 O Financial Objectives O 0 0 0 Institutional Development El E E E Physical Objectives El E E El Poverty Reduction El 0 0 0 Gender Issues 0 E3 0l Other Social Objectives E 0 E 0 Environmental Objectives ElEl E El Public Sector Management 0E 0 0 0 Other (specify) E E E E B\. Project Sustainability Likely Unlikely Uncertain El El El Highly C\. Bank Performance satisfactory Satisfactory Deficient Identification E 0 E1 Preparation Assistance E 0 El Appraisal El 0 El Supervision El 0: E Highly D\. Borrower Performance satisfactory Satisfactory Deficient Preparation E 0 E Implementation E 0 El Covenant Compliance E 0 El Operation (if applicable) El El El Highly Highly E\. Assessment of Outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactory Of the I I states under the project, 10 were judged to be satisfactory, and I (Akwa-lbom) was judged to be unsatisfactory\. The main cause for the relative failure was too much political interference in day-to-day operations of the ADP\.  13 Table 2: Related Bank Loans/Credits Year of Loan/Credit Title Purpose Approval Status Preceding Operations 1\. 1092-UNI Funtua ADP Integrated Rural Dev\. 1975 Completed 2\. 1099-UNI Gusau ADP 1975 Completed 3\. 1164-UNI Gombe ADP 1975 Completed 4\. 1454-UNI Lafia ADP 1977 Completed 5\. 1455-UNI Ayangba ADP 1977 Completed 6\. 1667-UNI Bida ADP 1977 Completed 7\. 1668-UNI Ilorin ADP 1979 Completed 8\. 1719-UNI ARMTI Agriculture/Mgt 1979 Completed Training 9\. 1838-UNI Oyo North Integrated Rural 1980 Completed ADP Development 10\. 1854-UNI Ekiti/Akoko 1980 Completed ADP 11\. 1981 -UNI Bauchi ADP 1981 Completed 12\. 1982-UNI Kano ADP 1981 Completed 13\. 2029-UNI ATAP Agricultural Tech\. Assistance 1981 Completed 14\. 2185-UNI Sokoto ADP Integrated Technical Assistance 1981 Completed 15\. 2345-UNI Fertilizer Fertilizer Input Sup\. 1982 Completed 16\. 2436-UNI Kaduna/ Agricultural Dev\. 1986 Completed Katsina 17\. 2741-UNI South Borno 1986 Completed Following Operations 1\. 2988-UNI MSADP II 1989 Completed 2\. 2035-UNI MSADP III 1989 Completed 3\. 3183 -UNI Nat'l Seed Improved seed supply 1990 Ongoing Plant Qua- rantine 3\. 2261-UNI Agric\. Improved basic 1991 Ongoing Resrch\. Research 4\. 3451-UNI Fadama Small Scale irrigation 1992 Ongoing 5\. 3483-UNI NATSP Extension/ Adaptive Research 1992 Ongoing  14 Table 3: Project Timetable Steps in Project Cycle Date Planned Date Actual/ Latest Estimate Identification - May 1982 Preparation 1982-1984 1982-1984 Appraisal May 1984 May 1984 Negotiations March 1985 July 22-Aug\.2, 1985 Board Presentation May 1985 June 26, 1986 Signing July 1986 Nov\. 6, 1986 Effectiveness Feb\. 4, 1987 June 15, 1987 Midterm review Sept\. 1990 Sept\. 1991 Project Completion December 1992 December 1995 Loan Closing June 30, 1992 June 30, 1995 Table 4: Loan Disbursements: cumulative Estimated and Actual (US$ million) ______ FY87 FY88 | FY89 FY90 FY91 FY92 FY93 | FY94 FY95 Appraisal Estimate 29\.6 76\.0 110\.6 133\.2 154\.0 162\.0 162\.0 162\.0 162\.0 Actual - 6\.88 15\.56 74\.89 88\.50 105\.34 126\.07 155\.36 161\.89 Actual as % of 0 9 14 56 57 65 78 96 99\.9 Estimate l I - I_I_I _ Date of final Disbursement: March 29, 1995  15 Table 5: Key Indicators for Project Implementation Key Implementation Indicators in Revised Estimates SAR/ President's Report (at mid-term) Actual 1 Extension (No\.) - Farm families 3,979,591 3,777,611 - Contact farmers 1,160,082 535,780 -VEA 2,764 2,316 - EA farmer ratio - 1:1631 - SPATS 1,088,923 795,728 - Extension Block 399 361 - Extension Cells 2,770 2,548 - MTRM 760 738 - FNTS 6,076 5,602 - WIA Formed 7,416 4,582 2\. Adaptive Research (No\.) - OFAR 6,513 5,133 - Diagnostic Surveys 37 33 3\. Roads/Tracks (Km\.) - Rehabilitation 10,776 6,221 - Maintenance 39,346 16,184 4\. Rural Water Supply (No\.) - Boreholes 175 126 - Wells 2,399 1,558 5\. FADAMA Infrastructure - Washbores 818 271 - Tubewells 620 305 6\. Farm Service Centres (No\.) - Farm Service Centre 192 192 - Primary distribution point 67 67 - Fertilizer 3,272 1,352\.4 - Seeds 235\.2 234\.0 7\. Agrochemicals - Kg\. 236,424\.6 143,459\.6 - Ltrs\. 497,812\.8 290,531\.3 - Sat\. 497,858 462,217 - Tubes 1,877 1,877  16 Table 5: Key Indicators for Project Implementation (cont'd\.) Key Implementation Indicators in Revised Estimates SAR/ President's Report (at mid-term) Actual 8\. Equipment (No\.) - Sprayers 5,783 4,536 - Ox-drawn equipment 6,625 2,784 - Engine pump 3,163 2,503 9\. Training - Overseas (No\.) 412 281 - Local and In-house 26,895 32,679 Table 6: Key Indicators for Project Operation No indicators for project operation were established for the project implementation period\.  17 Table 7: Studies Included in Project Purpose as Defined Study at Appraisal/Redefined Status Impact of Study 1\. Agricultural To fill some major gaps Undertaken with Useful in dealing with Planning Data in data on natural delay but most of the land planning activities Studies\. resources, farming acquired data was of ADP\. systems and settlement gathered by FACU patterns\. 2\. Food Crop To derive consumption/ Completed\. Information used by Marketing Study\. production balance ADPs to assist farmers sheets, identify in planning production surplus/deficit areas and and marketing determine ways of activities\. improving marketing and distribution systems\. 3\. Water Supply To identify levels of Completed by local Limited\. Report was of Feasibility investment in new and consulting firm but a general nature and Study\. rehabilitation of existing results not in line with information provided wells and boreholes expectations\. Super- was not sufficiently covering seven states\. vision of study by specific for identifying FACU and ADPs' and planning village Infrastructure water programs\. Division was inadequate\. 4\. Preparation To provide information Completed mainly by Very useful in study for for preparation of the local consultants preparing and apprais- MSADP II second phase of the under supervision of ing the Second and multi-state agricultural FACU\. Third Multi-state Agri- development project\. cultural Development projects (see Table 2)\.  18 Table 8A: Project Costs Appraisal Estimate Actual/Latest Estimate (US$M) (US$M) Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs State Components 1\. Crop & Farm Dev\. 24\.5 66\.5 91\.0 23\.3 56\.5 79\.8 2\. Agricultural Research 1\.2 1\.0 2\.2 1\.1 0\.9 2\.0 3\. Commercial Services 6\.6 2\.6 9\.2 6\.3 2\.2 8\.5 4\. Roads & Workshops 18\.4 22\.6 41\.0 15\.6 19\.2 34\.8 5\. Rural Water 7\.5 8\.9 15\.6 6\.4 7\.6 14\.0 6\. Mgmt\. Support Serv\. 14\.5 9\.3 23\.8 12\.3 7\.9 20\.2 Total Base Costs-ADPs 72\.7 110\.1 182\.8 65\.0 94\.3 159\.3 Physical Contingencies 3\.4 7\.9 11\.3 2\.9 6\.7 9\.6 Price Contingencies 29\.3 16\.2 54\.5 24\.9 13\.8 38\.7 Total Project Cost-ADP 105\.4 134\.2 239\.6 92\.8 114\.8 207\.6 Federal Components 1\. Cassava Multi\. & Proc\. 2\.5 2\.3 4\.8 2\.1 2\.0 4\.1 2\. Support to APPU 0\.2 0\.3 0\.5 0\.2 0\.3 0\.5 3\. Pilot Projects 0\.6 0\.6 1\.2 0\.5 0\.5 1\.0 4\. Studies 1\.2 4\.5 5\.7 1\.0 3\.8 4\.8 Total Base Cost-Federal 4\.5 7\.7 12\.2 3\.8 6\.6 10\.4 Physical Contingencies 0\.3 0\.3 0\.6 0\.3 0\.3 0\.6 Price Contingencies 2\.6 1\.4 4\.0 3\.2 7\.0 10\.2 Total Project Cost-Fed\. 7\.4 9\.4 16\.8 7\.3 13\.9 21\.2 Total Project Costs 112\.8 143\.6 256\.4 100\.1 128\.6 228\.7  19 Table 8B: Project Financing Appraisal Estimate (US$M) Revised Actual Estimate (US$M) (at mid- term) Local Foreign Total Total Local Foreign Total Source Costs Costs Costs Costs IBRD 26\.9 135\.1 162\.0 162\.0 82\.3 79\.7 162\.0 IFAD 3\.5 8\.5 12\.0 12\.0 2\.59 7\.0 9\.59 Federal Government 49\.5 - 49\.5 23\.7 20\.03 - 20\.03 State Governments 32\.9 - 32\.9 22\.3 37\.08 - 37\.08 Farmers - - - 1\.0 - - - TOTAL 112\.8 143\.6 256\.4 221\.0j 142\.0 86\.7 228\.7  20 Table 9: Economic Costs and Benefits This table identifies the major costs and/or benefits that enter into the calculation of a re-estimated net present value (or economic rate of return)\. Detailed data and assumptions of costs and benefits are available in the Borrower's Completion Report dated July 1995 prepared by A\.P\.M\.E\.U\. Economic Costs and Benefits (Naira Million) S/NO Year Proj\. Costs Total Ben\. Net Ben\. 1 1987 42\.1 \.0 -42\.1 2 1988 163\.0 \.0 -163\.0 3 1989 169\.3 3\.2 -166\.1 4 1990 201\.5 4\.9 -196\.1 5 1991 297\.0 534\.0 -291\.6 6 1992 232\.0 11\.3 -220\.7 7 1993 269\.6 19\.3 -250\.3 8 1994 427\.0 66\.6 -360\.4 9 1995 679\.0 112\.0 -567\.0 10 1996 387\.0 245\.0 -142\.0 11 1997 194\.8 567\.0 372\.2 12 1998 112\.7 1,236\.0 1,123\.3 13 1999 112\.7 2,457\.0 2,344\.3 14 2000 112\.7 4,334\.3 4,221\.6 15 2001 112\.7 5,511\.1 5,398\.4 16 2002 112\.7 6,496\.2 6,385\.5 17 2003 112\.7 7,160\.7 7,048\.0 18 2004 112\.7 7,507\.8 7,395\.1 19 2005 112\.7 7,689\.0 7,576\.3 20 2006 112\.7 7,765\.6 7,652\.9 ERR (%) 32\.9 Discount rate = 12% NPV (Million Naira) = N6289 ERR (%) = 32\.9  21 Table 10: Status of Legal Covenants Agree- Section Covenant Present Original Revised Description of Covenant Comments ment Type Status Fulfillment Fulfillment Loan 3\.01 5 CP Continuous \. the Borrower to ensure that Initial payments were 2733- (b) project States perform all their made but later payments UN] obligations including provision were delayed or of funds, facilities, services inadequate\. The States and other resources needed for frequently took action the project and shall not take against the best interests or permit to be taken any of the Project\. action which would prevent or interfere with such obligations\. 3\.02 5 C The Borrower to place (a) a (a) qualified & experienced officer in charge of the NSS cassava seed program and (b) appoint and assign to it a qualified and experienced accountant\. 3\.02 2 C 12/31/86 The Borrower to (i) establish a (b) cassava multiplication revolving fund; (ii) pay into that fund all for sales of foundation material produced by the NSS; and (iii) cause all amounts paid into the fund to finance the recurrent cost of the cassava multiplication program\. 3\.03 5 C 06/30/86 The Borrower to establish a (a) Projects Advisory Committee in form and function l_______ satisfactory to the Bank\. 3\.03 5 C Continuous The Borrower to maintain and (b) make available to the Bank, specified records and accounts adequate to reflect sound acco- unting practices and I _______ ________ ____________ ___________ operations\. I_________________oe ato s 4\.01 1 C The Borrower to have all (b) accounts for each fiscal year audited in accordance with sound auditing principles by independent auditors accep- table to the Bank\. 4\.01 1 C For all SOE withdrawals, the (c) Borrower to (i) maintain separate records, (ii) retain such records for at least one year after closing date; (iii) enable Bank to examine such records; and (iv) such separate records to be included in the annual audits with separate auditors' opinion\. Project 2\.01 4 CP The States to make provisions Most States experienced Agree- (b) for capital and recurrent difficulty in meeting the ment expenses for the project, cost increases due to the including Staff salaries and SAP\. The situation was other emoluments, from the partially eased in the re- annual MANR budgets\. design of the project, by reducing total project cost & the States contributions\.  22 Table 10: Status of Legal Covenants (Cont'd\.) -_ -_ - __ _ __\. Agree- Section Covenant Present Original Revised Description of Covenant Comments ment Type Status Fulfillment Fulfillment 2\.01 3 CP 06/30/86 The State to (i) open and Payments were frequently (c) maintain a commercial bank delayed by some States account for payments for and only a few authorized required goods and services; the CBN to deduct at (ii) pay into that a/c the source for their a/c\. estimated first six months budget requirement from the state and (iii) authorize the Central Bank to make subsequent monthly payments due to this a/c\. 2\.01 5 C The States to submit to (d) FMANR for approval and to the Bank for information, at least 4 months before the beginning of any fiscal year, project work plans and procurement programs for that fiscal year for each Project Executing Agency\. 2\.01 3 C The States to open and (e) maintain special dollar a/c in commercial banks to facilitate loan disbursements\. 2\.02 3 C The States to follow agreed procurement guidelines for l______ _______ goods and services\. 2\.04 5 C Should the States establish All States established (a) authorities to carry out Agric\. Agricultural Development and Rural Dev\. functions of Projects (ADPs) with the the MANRs, they would required constitutions and provide for the constitution of powers to implement their the ADPMUs as separate components of the management unit functions Project\. and power satisfactory to the Bank, including powers to maintain separate records and accounts\. 2\.05 5 CP Each State shall (i) prepare and The States failed to (a) send to the Bank for approval, satisfy fully the fertilizer annual plans for fertilizer distribution covenant, distribution and arrangements with the FGN and States to involve private retailers and controlling this activity, (ii) prepare and send to Bank without involvement of and FACU for approval not private retailers\. later than Sept\. I each year, their feeder roads programs\. 2\.06 5 CP Before undertaking any (i) Some States started this (a) rehabilitation or (ii) new well but did not succeed infrastructure investments, the in wide coverage\. The States were to submit to the village water schemes FGN and the Bank details of showed greater success arrangements to ensure rate than routine road adequate O&M of the works, maintenance\. including contributions by the users to the recurrent costs\.  23 Table 10: Status of Legal Covenants (Cont'd\.) Agree- Section Covenant Present Original Revised Description of Covenant Comments ment Type Status Fulfillment Fulfillment 2\.06 5 NC The States to ensure that sales These requirements were (b) of (a) all fertilizers are at rarely met\. uniform and countrywide retail prices, (b) herbicides and pumps financed by the loan are at prevailing market prices and (c) all seedlings and seeds produced under the loan are at full production and distribution costs\. 2\.07 5 C States to make arrangements This was not possible for LGAs to development, with because of instability and assistance of ADPs and FACU, poor performance of capacity to assume O&M of LGAs\. project feeder roads by end of loan funding\. 3\.01 1 C States shall maintain separate (a) records and accounts to reflect in accordance with sound accounting practices, the operations, resources and expenditures on the project\. 3\.01 1 C States shall (i) have accounts (b) for each fiscal year audited in (i),(ii) accordance with sound § (iii) principles by independent auditors; (ii) furnish not later than six months after the end of each year, certified copies of each audit report in scope and detail as may be required by the Bank; and (iii) furnish to the Bank other info\. concerning such audits as may be reasonably requested from time to time\. 3\.01 1 C Maintain for SOEs (i) separate (c) records and accounts; (ii) retain for one year after the closing date all records relating to SOEs; (iii) enable the examination of such records by the Bank; and (iv) ensure that accounting for these SOEs are shown separately in the audit reports and opinions\. Covenant types\. 1\. = Accounts/audits 8\. = Indigenous people 2\. = Financial performance/revenue generation from beneficiaries 9\. Monitoring, review, and reporting 3\. = Flow and utilization of project funds 10\. = Project implementation not covered by categories 1-9 4\. = Counterpart funding II\. Sectoral or cross-sectoral budgetary or other resource allocation 5\. = Management aspects of the project or executing agency 12\. Sectoral or cross-sectoral policy/ regulatory/institutional action 6\. = Environmental covenants 13 = Other 7\. = Involuntary resettlement  24 Table 11: Compliance with Operational Manual Statements On the basis of documents reviewed and opinions and comments received, the project has been implemented in compliance with all applicable Bank Operational Manual Statements\. Table 12: Bank Resources: Staff Inputs Stage of Actual Project Cycle I Weeks US$(000) Through Appraisal 63\.0 134\.4 Appraisal-Board 194\.1 399\.9 Board-Effectiveness 12\.1 26\.2 Supervision 869\.4 1513\.2 Completion 29\.0 57\.2 TOTAL 1167\.6 2130\.9  25 Table 13: Bank Resources: Missions Performance Rating Days Specialized Implemen Develop- Stage of Month/ No\. of eld StaffSkills -tation ment Types of Project Cycle Year Persons Represented Status Objective Problems Through Appraisal 9/82-12/84 14 67 EC,AG,WE - FA,PR,RD Appraisal through 7/85-11/85 5 33 EC,FA - _ Board Approval Board Approval thru 9/86-6/87 7 51 FA,PR - - Late release of counterpart funds Effectiveness 1/ and fertilizer storage problem\. Supervision 1 9/13-10/5/87 I 22 FA 2 2 Ogun State loan not yet effective\. Supervision 2 2/21-3/16/88 1 23 FA 2 2 Ogun loan not effective; procure- ment in Benue & Imo ADPs\. Supervision 3 _/ 11/29- /88 2 RU,RE - - N\.A\. Supervision 4 2/5-27/89 1 23 FA 2 2 Lack of human resources, and procurement Supervision 5 11/7-22/89 1 15 AE Management problems at Benue and IMO ADPs\. Supervision 6 1/20-3/9/90 3 20 AG,OP Conditions of Credit Effectiveness Supervision 7 2/19-3/11/90 3 21 AE,FA,CN 3 3 Cassava Prod\., Equipment Prides, mid-term Review and Redesign discussions\. Supervision 8 4/3-6/90 1 4 FA - - Plateau State - Agric\. Issues\. Supervision 9 5/21-6/8/90 2 19 AE,FA 2 2 Weak administration, counterpart funding, reporting,, and weak FACU & MANR support\. Supervision 10 1/28-2/2/91 2 6 AE,OP 2 2 Staffing, Counterpart funding, reporting and weak MANR\. Supervision 1] 4/15-5/1/91 3 16 AE,RE,EX Redesign non-perfbrming components & reallocation of funds\. Supervision 12 6/1-30/91 3 30 RE,AG,EX - - Thematic Supv\. - OFAR trials\. Supervision 13 3/2-20/92 1 18 OP,RE 3 2 Management at Akwa Ibom and bifurcation of Imo State\. Supervision 14 4/6-10/92 2 5 OP,AG 2 3 Vehicles, Counterpan funding, reporting, and staff salaries\. Supervision 15 9/22-25/92 2 4 AE,CN 2 2 Delta ADP - Staffing,, Counter- part funding and management\. Supervision 16 10/16-22/92 2 7 OP,TC 3 3 Funds for Akwa Ibom state\. Supervision 17 10/20-27/92 1 8 AE - - Plateau ADP  26 Table 13: Bank Resources: Missions (cont'd\.) Performance Rating Dnays Specialized Implemen Develop- Stage of Mont/ No of Field Staff Skills -tation ment Types of Project Cycle Year Persons Represented Status Objective Problems Supervision 18 11/2-6/92 3 5 OP,RES,AC 2 2 Counterpart funds and salaries\. Supervision 19 12/7-8/92 1 2 AE - - Anambra & Enugu ADPs\. Supervision 20 1/11-13193 1 3 AE 4 2 Anambra ADP, cars, proj\. mgmt\., HQ Bldg\., and counterpart funds\. Supervision 21 1/31-2/25/93 2 26 OP 3 3 Abia & Imo States - Extension I overstaffing\. Supervision 22 2/15-17/93 2 3 AE,CON 2 2 Ogun ADP, staffing, PMU, rural water supply, and feeder roads\. Supervision 23 2/18-20/93 2 3 OP,OP 3 3 Akwa-lbom, Imo and Abia ADPs\. Supervision 24 4/ -30/93 ? I ? AE 2 2 Staffing, and procurement Supervision 25 5/6-8/93 1 3 AE 2 2 Delta ADP - staffing, PME, HQ bldg\. and roads\. Supervision 26 11/2-5/93 2 4 OP,AG 2 2 Benue State - Procurement Supervision 27 11/29-12/3/93 2 5 AG,EX - - Cross River State - Management and OFAR trials\. Supervision 28 3/8-12/94 3 5 TC,OP,AG Progress on AKADEP 1993 Work Program\. Supervision 29 3/21-22/94 3 2 TC,OP,AG Imo ADP Implementation\. Supervision 30 4/7-30/94 3 24 AE,TC,CN 2 2 Political in Edo ADP and seed quality and pricing\. Supervision 31 9/26-10/11/94 1 16 AE - - Implementation progress and I capacity building\. Supervision 32 2/12-311/95 1 18 AE over-commitment of funds and progress on ICR preparation\. Completion 9/11-10/11/95 7 31 AG,EX,TC, _ Preparation mission for ICR\. RES,OP AG=Agriculturist; FA=Financial Analyst; EC=Economist; AE=Agric\. Economist; WE=Water Engineer; RD=Road Spslt\.; PR=Procurement Spslt\.; RU=Rural Engineer; RE=Research; EX=Extension; OP=Operations Officer; TC=Tree Crops Spslt\.; AC=Accountant; CN=Consultant\. 1/ Since the project became effective on 6/15/87, the supervision missions between the dates 9/22/86 to 6/2/87 have been accounted for in the 'Board Approval thru Effectiveness'\. 2/ This was a Thematic Supervision for which no details are available\. Note: This project involves I I states which were supervised normally by different individuals/groups, some at the same time\. Most of the times there were only Back-to-Office Reports or Aide-Memoires prepared and no forms 590, hence no performance ratings were available for those supervisions\. 590s were prepared for the whole project to meet the Annual Review of Project Performance (ARPP) requirements\.  Appendix A NIGERIA FIRST MULTI-STATE AGRICULTURAL DEVELOPMENT PROJECT (MSADP I\. Ln No\. 2733-UNI) Final Supervision and Implementation Completion Report Mission\. September 10 to October 5\. 1995\. AIDE-MEMOIRE An initial briefing meeting was held with most mission members at the World Bank offices, Lagos, on Monday, September 11, 1995, and at which the field programme and operational logistics for the following four weeks were finalized\. In order to complete the field work within the limited time, the mission was divided into five teams to cover the eleven States as follows: Team A: Lewis Campbell (Consultant) - Mission Leader, Ray Unama (World Bank, Lagos), Edwin Okorie, R\. Okoro, John Eboigbe and Abel Oduyale (FACU - Abuja), Christopher Okonjo (APMEU, Benin) and Frank Kayoma (APMEU, Enugu) covering the States of Ogun, Edo, Delta, Abia, Anambra and Enugu from September 12 to 30; Team B: Sam Eremie (World Bank, Abuja) - Team Leader, Frank Kayoma (APMEU) and Peter Ta'avaan (FACU), covering Cross River State from September 12 to 15; Team C: Ogbo Nduaka (World Bank, Lagos) - Team Leader, Sam Eremie (World Bank), S\. Okoli (FACU), V\. Onochie (Consultant - FACU) and F\. Idefoh (APMEU), covering Plateau State from September 18 to 21; Team D: Dele Ilebani (World Bank, Lagos) - Team Leader, Esther Gadzama (World Bank, Lagos), Osuagwu (FACU) and C\. Molokwu (APMEU), covering Benue and Imo States from September 18 to 29; and Team E: Claude Carlier (World Bank, HQ), Dele Ilebani, Esther Gadzama, Frank Kayoma (APMEU), and the representative of FACU, covering Akwa Ibom State from October 2 to 4\. The mission teams reviewed records, reports and other documents, including draft internal ICRs and held discussions with staff of the separate implementing ADPs, with farmers and with officials of the State MANRs\. An outline of its main findings was presented on October 5, 1995, at a wrap-up meeting at Abuja chaired by Engnr\. Usman Jama'are, deputy Director of Agriculture (Engineering), FDA and attended by his senior staff, including officials of APMEU and FACU, and by the ADP Program Managers\. This Aide-Memoire forms the basis for the presentation and the resulting discussions\. It highlights the salient issues which will be addressed in the preparation of the ICR\. We wish to thank the Director of the FDA and the Heads of APMEU and FACU for participation and able support of their staff in the mission\. We wish also to thank the State Commissioners of Agriculture and Natural Resources for receiving briefings from  2 the mission and to acknowledge the valuable assistance and cooperation from the respective ADP Program Managers and their management and technical staff\. Background\. A loan of $162\.0 million from the World Bank to the Federal Government of Nigeria (FGN) was approved in June, 1986, as part financing for the MSADP I to be implemented over a 5-year period, at an estimated total cost of $256\.4 million by statewide Agricultural Development Projects (ADPs) in the seven States of Anambra, Bendel, Benue, Cross River, Imo, Ogun and Plateau to which the loan would be on lent by the FGN\. The project design took into account experiences in several enclave and statewide ADPs during the previous ten years in Nigeria, as well as local circumstances in the target States\. It was less complex, focusing on fewer activities in support of small farmers to increase their production and productivity\. The main concern was to develop cost effective and sustainable institutions to focus on generating and proving appropriate improved technologies and transferring them to small farmers\. Other activities or services included in previous ADPs, such as provision of rural infrastructure and input supply services, were to be progressively reduced in scope or omitted, with the expectation that, in time, they would be provided by other organizations, in either the public or the private sector, where there is greater capacity and competence to do so efficiently\. The loan became effective in June 1987, a year after Board approval and by April 1990, four years later, only $66\.3 million or 43% had been disbursed\. In the meantime, new States were being created from the original project States and by 1991 the number had increased from 7 to 11, each with its own ADP to implement their portion of the Project\. Up to that time progress was slow, due to a number of factors, including (a) weak management in some ADPs, (b) substantial changes in prices as a result of a ten- fold reduction in value of the local currency, following the adoption of a Structural Adjustment Program (SAP) soon after the loan approval in 1986, and (c) defaults in counterpart funding\. At the same time, the environment for competitive agricultural production and marketing had improved significantly and farmers were beginning to adopt widely the hitherto ignored new technologies for raising yields and increasing production efficiency\. They were also calling for the ADPs to provide some of the badly needed essential support services and infrastructure\. It was therefore decided in 1991 to redesign the Project to address the new circumstances brought on by the SAP and which were affecting implementation\. The redesign proposals which took into account national agriculture policies, included additional farmer support activities in infrastructure and operational facilities, reallocation between loan categories and pooling the remaining funds to allow faster drawdown, especially by the States which were better prepared with counterpart funds and more effective management to take advantage of the benefits\. An important measure to correct the poor local funding was the procedure of timely deductions, "at source", of amounts due which was adopted earlier on by a few states, later formalized by all states and but in the end implemented by only some\. Program Implementation\. The initial years of the project were affected by inadequate local commitment and readiness to expedite implementation\. The one-year  3 delay in loan and disbursement effectiveness and initial slowness in organizing their programs was due partly to inexperience of the States to deal with the loan conditions\. This was further complicated by the need for joint actions by more than one government\. The procurement and disbursement procedures were particularly tedious for them to follow\. The measures introduced in the redesign, including the pooling of the loan funds, spurred the states to take the necessary actions to expedite implementation and derive as much as possible of the project benefits\. The results were as expected, with several of the ADPs accelerating their operations\. However in some instances over-commitments occurred on the balance of the funds\. The loan was fully drawn down in 8 years, after three extensions of the closing date, with most of the targets substantially achieved, despite the increased costs over the extended period\. The project was able to follow a flexible phased approach to the developments, with emphasis on well proven components geared to the agriculture potential and within the financing and managerial capacity of the states\. It was able to get the states to reorganize some of the farmer support activities such as adopting an effective unified extension service and an intensified program of adaptive on-farm research\. Other activities, however, did not all do as well\. No progress was made on putting farmer input supplies services on a commercial footing although the private sector, encouraged under the policies of the SAP, were gradually entering the commercial supply services for equipment, chemicals and other materials\. The FGN continued to maintain a stranglehold on the supply and distribution of chemical fertilizers, with poor results on their timely availability to apply to crops\. Efforts of ADPs to improve timely availability were feeble and largely ineffective\. No progress was made to bring the maintenance of feeder roads and village water supplies under the umbrella of the LGAs, where these activities statutorily belong\. The default was due to lack of capacity in the LGAs\. Very limited progress was made in passing routine maintenance operations of these facilities to their users, with water users doing much better\. While there is still much to be done in strengthening the federal support institutions, good progress was made in preparing FACU and APMEU for assuming a greater share of the responsibility for project preparation, appraisal and supervision\. Project organization\. The organization of the ADPs for the implementation responsibilities was generally good\. The main problem was in the indifferent performance of the ADP Executive Committees (ADPECs)\. Most often tried, and in some instances succeeded, to expand their functions beyond their terms of reference as defined in the gazetted edicts officially establishing the ADPs\. Their major failing was in usurping the functions of the Program Managers and the ADP Management Units (PMUs) in day-to-day management matters, and taking decisions on which they had no authority or competence, particularly in staff recruitment and deployment and in procurement matters\. Such interventions were often the major causes of much of the implementation delays\. The ADPs most affected by this situation were the ones which derived the least benefits from the loan funds\.  4 Program Management\. Management performance was extremely variable over the project period\. The professional qualifications of management and senior technical staff were generally good\. However, they were frequently not allowed to discharge their management and operational responsibilities effectively by some State Governments\. The major failing of most of the ADPs was too frequently their inability to take full responsibility for the day to day management decisions\. They were not always able to advise or educate ADPEC members, early enough and perhaps with the support of the FGN (FACU) where needed, on the respective responsibilities of ADPEC and PMU in the implementation of the Project programs, before interferences started\. Persistent efforts by PMUs to bring to the attention of ADPEC members, on their assumption of duties, the respective roles of ADPEC and PMU in the implementation of the programs and the likely consequences in breaching them, may have moderated their desire to become directly involved with management operations\. Timely briefing was more so necessary because of the frequency of changes of ADPEC members, particularly the State Governors or Administrators and Commissioners\. The day to day management responsibilities of some PMUs were thus vulnerable to the risks of frequent and undue interference by political or other external interests\. Continuity of management was also at risk, with the possibility of removal of managers who stood firm against such interferences\. Two critical areas of frequent interference by state authorities were in the appointment of staff against the best interests of the project, and the removal of project vehicles and equipment for use elsewhere\. These seriously disrupted project operations, frustrated the discharge of staff duties, encouraged indiscipline, delayed progress and increased costs\. There was also the tendency of some Program Managers to reduce the scope of implementation monitoring by not funding the key PME activities adequately\. This reduced the ability of PMUs to address critical implementation issues at an early stage\. Consequently, much of the project benefits at the farmer level were not fully assessed\. Staff Recruitment and Training and Institutional Development\. The ADPs were able to recruit most of their core staff from existing members of the various State MANRs and these were supplemented by local contract staff from other government agencies and the private sector\. The performance of staff training at all levels was good\. The quality of institutional development in only some of the ADPs is high, and their staffing has been fairly stable at the senior level\. The weaker ones suffered from frequent interferences outside the control of their PMUs\. The creation of new states and consequent splitting of ADPs diluted capacities of the management and technical staff and added further to the weakening of some the ADPs\. It is noteworthy that, given the opportunity, ADPs were able to recruit and retain competent local professionals for the established posts and they were, in the main, responsible for the strength in developing the institutional capacity\. This has placed those ADPs in a strong position to continue the essential technical support to farmers in pursuit of the basic objectives of raising production, productivity and quality of life in rural areas\.  5 Operational Facilities\. The basic physical facilities for the effective conduct of the implementation operations were generally adequate in the original ADP States\. Existing structures were acquired and repaired, modified or extended as needed to accommodate the planned programs\. However, the subsequent new States were not as well placed with basic accommodation\. Shortage of funds and of time did not allow them to acquire or provide the minimum required basic facilities\. Most started new facilities but they were still incomplete at the loan closure\. Their mechanical equipment and vehicles moderately well maintained but are not functioning, but could be repaired and put into proper use\. This lack of basic operational facilities has seriously affected performance and is an urgent matter which requires appropriate attention\. Project Funding\. The funding status of ADPs in the implementation period is summarized in Table 1\. Table 1 Project Funding by State (Smillion) for 1986 - 1995\. States Sources of Funds IBRD FGN States Total Cummulative Anambra 10\.01 1\.73 4\.19 16\.62 16\.62 Enugu 9\.71 1\.81 4\.61 16\.57 33\.18 Delta 7\.53 1\.58 3\.72 13\.32 46\.50 Abia 7\.92 3\.02 4\.98 22\.28 68\.78 Edo 6\.23 1\.83 2\.94 11\.46 80\.24 Ogun 8\.80 2\.85 5\.31 17\.74 97\.98 Cross River 9\.10 3\.16 3\.79 17\.54 115\.51 Imo 8\.00 1\.21 2\.44 12\.52 128\.04 Benue 15\.50 2\.01 3\.30 21\.24 149\.28 Plateau 20\.60 3\.29 8\.58 32\.47 181\.75 Akwa lbom 7\.34 ? ? ? ? FGN 51\.27 - - 51\.27 240\.37 Total 162\.00 22\.50 43\.86 240\.37 Over c/mnt 4\.08 - - 4\.08 244\.45 Total Cost 166\.08 22\.50 43\.87 244\.45 Note\. The totals for FGN and States do not yet include data for Akwa Ibom\. The local funding during implementation was variable, but in general neither the state or the FGN paid their quarterly contributions on time and in the required budget amounts\. This was often an important cause of delays in the operations and slowing down the disbursement rates of the loan\. Table 2 shows the actual levels of contributions  6 by state and FGN compared with budget/appraisal estimates\. The reliability of these figures is suspect and require verification\. The FACU accountant on the mission is to revisit the data at the respective ADPs and do another check on the accuracy of the figures provided by the financial controllers\. Table 2\. Counterpart Funding Performance (Smillion) 1986 - 1995\. State FGN State Appraisal Actual % Act\./Appr\. Appraisal Actual % Act\.! Appr\. Anambra 1\.98 1\.73 87\.6 6\.14 4\.19 68\.2 Enugu 2\.09 1\.81 86\.9 6\.35 4\.61 72\.6 Delta 2\.01 1\.58 78\.8 3\.14 3\.72 118\.7 Abia 3\.45 3\.02 87\.7 4\.30 4\.98 115\.8 Edo 1\.98 1\.83 93\.4 2\.37 2\.94 124\.4 Ogun 3\.04 2\.85 93\.6 6\.32 5\.31 83\.0 Cross River 8\.62 3\.16 36\.6 3\.88 3\.79 97\.7 Imo 1\.16 1\.21 103\.9 1\.96 2\.44 124\.4 Benue 4\.76 2\.01 42\.3 3\.33 3\.30 99\.1 Plateau 10\.67 3\.29 30\.9 7\.86 8\.58 109\.1 Akwa lbom na na - na na - Project Achievements\. Implementation performance by the several components or activities of the Project are summarized in Annex 1\. These activities include response of farmers to the main objective in raising food production and productivity, adaptive research, seed multiplication, extension services, input services, rural infrastructure, and planning, monitoring and evaluation\. The overall performance of individual State ADPs is evaluated in a comparative summary in annex 1\. Table 3 shows the response by farmers to project assistance, as reflected in crop production increases over the period\. The main objectives of increasing food production, farner efficiency and incomes were highly successful\. The three major food crops showed increases over the 8-year period as follows: (a) cassava - at an average annual rate of 15% from a base total of 5\.8 million tonnes to 13\.3 million tonnes, with total area planted rising from about 785,900 ha to 1\.18 million ha, and average yield increasing from about 7\.0 t/ha to 9\.1 t/ha, (b) yams - at an average rate of 13% from a base total of 4\.1 to 10\.6 million tonnes, with total area planted rising from585,000 ha to 1\.17 million ha, and average yield increasing from about 7\.0 t/ha to 9\.1 t/ha and (c) maize - at an average rate of 25% from a base total of 631,900 to 1\.9 million tonnes, with area planted rising from about 631,200 ha to 1\.03 million ha, and average yield increasing from about 1\.0 t/ha to 1\.85 y/ha\. Similar increases occurred with the minor crops of sorghum, groundnut, rice, millet, cocoyam and potato\. Total incre- mental food production over the 8-year period increased 230% from 4\.43 million tonnes sorghum grain equivalent (10% moisture) to 10\.3 million\.  7 Table 3\. Crop Area ('000 ha), Production ('000 mt) and Yield (mt/ba) 1986 and 1994\. 1986 1994 Area Production Yield Area Production Yield Cassava 785\.9 5,853\.1 7\.5 1,177\.5 13,247\.8 11\.1 Yam 585\.0 4102\.0 7\.0 1,170\.0 10,642\.1 9\.1 Maize 631\.2 631\.9 1\.0 1,031\.0 1,910\.5 1\.9 Sorghum 602\.3 362\.0 0\.6 659\.8 834\.6 1\.3 Groundnut 218\.8 98\.9 0\.5 307\.8 236\.1 0\.8 Rice 362\.1 285\.7 0\.8 364\.1 608\.4 1\.7 Millet 221\.1 100\.4 0\.5 93\.7 132\.0 1\.4 Cocoyam 213\.2 902\.6 4\.2 161\.3 1,038\.6 6\.4 Potato 82\.5 366\.6 4\.4 71\.6 589\.1 8\.2 Adaptive Research\. The level of agronomic trials of improved production technologies was intensive and generally conducted at a high standard\. Initially, priority attention was to improved variety testing and introductions, crop spacing and planting methods, pest control, soil fertility management and post harvest handling\. Subsequently, in response to the need for greater attention to mixed farming systems, as opposed to sole or pure stand cropping, some attention was given to investigations and adaptations on better practices in cropping mixtures, agro-forestry, small livestock husbandry, and freshwater fish culture\. The results were mostly satisfactory for crops and formed the basis for the technology information transfer by the extension services\. Seed Multiplication\. The seed multiplication programmes were largely unsuccessful\. The staff put too much effort at producing commercial seed on their own seed farms and insufficient attention was given to assisting outgrowers to develop the skills for commercial production, starting with seed multiplied by the ADPs from foundation material produced by the research organizations\. While the extension services were promoting these improved varieties, farmers were having difficulty in acquiring the planting material\. The IFAD supported cassava multiplication programme started slowly, but with the SAP soon having its effects on the cost of imported foods versus local foods, the demand rose sharply for planting material of the higher yielding new varieties\. Provision of required cassava plant cuttings by outgrowers was thus highly successful\. Extension Services\. The extension programs were generally very successful\. The State agreed to unify under the umbrella of the ADPs the previous several separate services\. The unification concept was difficult to accept by some extension staff and the adoption process was thus slower than expected\. The unified system is now working well under the respective ADPs\. They are using the recommended T and V system, but some conflict is arising on the most cost effective method of implementing it and this requires attention\. The organizational aspects of this are to be reviewed with the view to reducing the present costs without diluting the intensity and quality of training\.  8 Production Input Supplies\. The commercial input supply services of the ADPs were not successful\. These services were neither commercial nor reliable\. Their provision of supplies at less than market prices also served to discourage the private sector from entering such services more widely\. Chemical fertilizers are the major required inputs to achieve the yield potential of the new varieties but the policy of the FGN to monopolize the supply and distribution of the required mixtures has not served farmers as intended\. Supplies were generally not available at the required times, armounts or mixtures\. The benefits of new crop varieties and improved agronomic practices were thus realized at lower levels than the potential, especially on the less fertile soils\. Provision of other chemical inputs, tools and equipment were equally ineffective\. These commodities were generally more efficiently provided through limited but slowly growing private commercial sources\. Little or no effort was made to assist farmers to organize, through user associations or comparable manageable working groups, to operate their own services, or to encourage other private enterprise to enter the business\. Rural Infrastructure\. The initial design of the project placed lower priority on new supporting essential infrastructure for agricultural production\. The reduced program was to rehabilitate deteriorated roads and improve their maintenance with focus on progressively transferring this responsibility to the LGAs as soon as possible\. The user communities were also to be involved with the routine maintenance work and ultimately to take full responsibility for it after appropriate training\. Provision was made for potable village water supplies, particularly in areas with high risk of guinea worm infection\. Staff offices and other project facilities and operations were to be housed in existing buildings of the MANRs, with provision for rehabilitation or expansion where necessary\. While preference was to be given to private contracting for much of the work, provision was made for limited heavy equipment capacity for the infrastructure development\. The servicing and maintenance of other plant and equipment, including motor vehicles, was also to be the responsibility of the infrastructure departments\. The project redesign added small scale irrigation (fadama) development into the rural water program and farm mechanization\. The performance of these activities varied widely between states, depending on their implementation capacity, including local funding\. Overall, achievements were less than expected\. The main factors affecting performance of these components were delays in or inadequate local funding, poor maintenance of plant and equipment or their diversion to work outside the project, delays in receiving clearances for contracts, delays in paying contractors for work completed as well as performance defaults of contractors\. The achievements of the infrastructure components are summarized as follows: (a) Feeder Roads\. Although they exceeded budgets by over 50% this component fell short of expectations\. The data considered here applies only to the states of Ogun, Edo, Delta, Imo, Abia, Anambra and Enugu\. The rehabilitation of 5,845 km of feeder roads was only 79% of project targets while the recurrent maintenance of 4,742 km was only 46% of target\. More disappointing, however, is the excessively high costs of these roads\. Whereas FACU and the Bank went to considerable lengths to avoid  9 feeder road costs rising above economically justifiable limits, and to have the respective ADPs set priority rankings on their feeder roads programs, the actual expenditures exceeded the estimated upper limits\. This applied to both contract as well as force account work\. The management of contracts was particularly poor, leading to either excessive costs or unfinished road works or both\. Recurrent maintenance (1 - 2 times per year) was better, achieving 13,377 km or 80% of target\. The low cost techniques of routine maintenance, however, never reached the level required for sustaining the investments in these roads and the involvement of user communities in the program was minimal\. There is a high risk of many of these feeder roads going into ruin if the ADPs do not take the necessary measures to intensify their maintenance\. Insufficient attention was paid to organizing user communities, and giving them appropriate training to participate in low cost maintenance of their roads\. The ADPs also were unable to transfer responsibility for maintenance of roads in their areas to the LGAs which lacked capacity and stability\. (b) Village Water Supply\. This component completed 799 new village water schemes, 39% of target, and rehabilitated 625 disused water points, 26% of target\. The expenditure on village water supply was also below the provisions\. The operation and maintenance of these water supply facilities by users reached a high point of 83% achievement of expectation\. Communities readily took responsibility for their system, and received the necessary training to operate and maintain them, including recovering the costs from users\. (c) Office and other Service Buildings\. The original provision for this component was for rehabilitation or extension of buildings acquired from the MANRs\. Expenditure on this was modest and did not exceed 70% of budgets\. The position changed with the creation of new states which were poorly served with accommodation facilities\. At the redesign, provision was therefore made to build new office and service facilities for the new ADPs\. By the closing date only 65% of new construction was completed\. Some of these have been put to use while others are awaiting completion\. In general, the quality of their maintenance is better than the average for public buildings\. (d) Mechanical Services and Equipment\. More than 65% of plant, vehicles and equipment on the books are in working condition\. About half of the remaining have reached the end of their useful life, while the remainder require mostly minor repairs to restore to service\. Several ADPs are also holding large surpluses of vehicle spare parts\. The workshop facilities are adequate for servicing, maintaining and light repairs of existing plant and equipment\. Fadama Development\. Agro-processing\. Storage and Mechanization\. These activities were added at the redesign and in the last three project years, they were able to complete mainly the planning, studies and other preparatory work and only a limited amount of field work\.  10 Bank Performance\. The identification, preparation and appraisal of the project were in line with Bank policies\. The flexible approach to the main farmer support activities allowed adjustments to the project design as the economic circumstances changed and the Bank responded well to this during the implementation\. The supervision and implementation assistance was generally adequate although the over commitments towards the end on the pooled loan funds could have been avoided by better controls on loan and expenditure management\. The project units however regarded the procurement procedures too cumbersome and delayed disbursements\. They also felt that they received conflicting advice on implementation, in the initial years, from the different Bank staff during supervision missions\. Borrower Performance\. The Borrower performance was satisfactory\. The FGN was consistent in its support for the ADP system and released counterpart funds contribution promptly in most years, although in some instances the contributions were below the requirements for the approved work plans\. FACU and APMEU provided start- up and implementation support and participated in the mid-term review and completion missions\. However, project monitoring requirements were not adequately developed at the project preparation stage and subsequently during implementation\. Some of the sub- borrowers were not always as diligent in ensuring smooth implementation of their components of the project\. The major defaults were in delayed and inadequate state funding (see Table2) and poor performance of their ADPECs, with frequent interference in the day to day management decisions, particularly in staff matters, procurement and use of project vehicles and equipment\. Assessment of Outcome\. Overall, the project outcome is satisfactory\. The states have organized agricultural development institutions with fair capacity to support farmers in improving their production, productivity and incomes and to manage their land and water resources in a sustainable manner\. Farmers are responding well to the support and are achieving substantial increases in food production and incomes\. The estimated ERR overall at loan closing is 32% compared with 24% at appraisal and 25% at the mid- term\. The institutions and their programs could be sustained with continued budgetary support by the state and federal governments, at least, at past levels, making appropriate allowances for inflation\. Future Operations\. All eleven ADPs have received assurances from their respective state governments that recurrent funds will be provided at minimum essential affordable levels, and based on previous provisions from the annual state budgets, for the maintenance of institutional and infrastructural facilities which were developed during the eight year loan period\. Federal funds are also expected at not less than past levels to supplement state funds\. However, only some of the ADPs have drawn up credible operational plans to sustain the operations within the affordable local resources\. Their projections of required local funds are based on levels of recurrent funding during the last three years\. The policy for use of the funds is to concentrate on maintaining the technical services for adaptive research and technology transfer and the associated administrative and monitoring requirements\. Other essential support activities will be  I1 passed, where feasible, to the users to take ownership and maintain them at the most cost e£ ective levels\. This will be implemented through group action by the users who have direct interest in ensuring that the services they require are provided in the most efficient manner\. The staff structure in each ADP will be rationalized to ensure adequate technical capacity and to allow deployment for their most effective use in developing farmers' ability to become self reliant for their individual needs\. The ADPs will be focusing mainly on the generation and transfer of technical and management information and training of farmers\. They will also assist legitimately and voluntarily organized groups to take advantage of such training and other available services to assume responsibility for their group support activities\. These services would include commercial input supply, credit, post-harvest handling, processing, storage and marketing, transport and access road, potable village water supply and irrigation infrastructure\. In order to complete the operational plans and have them cleared by their respective state governments for submission to the Bank urgently, and not later than November 1, 1995, it may be necessary for FACU to convene an early meeting of the Program Managers to expedite the matter, with guidelines provided by FACU\. Lessons Learned\. The key lessons learned are as follows: (a) management stability and the proper support of the ADPECs are critical for smooth project implementation; (b) counterpart funding need to be consistent and timely to avoid cost escalation and allow full use of loan funds; (c) farmers and communities are willing to take ownership and be trained for the proper operation and maintenance of essential support facilities and services as was done, in some instances, in infrastructure investments, especially village water supplies; (d) effective and sustainable institutional development is a gradual process and cannot be hastened; and (e) managing pooled loan funds in multi-state projects require strict control over commitments by competing implementing agencies\. October 5, 1995\.  Appenuix B EXECUTIVE SUMMARY i) The main objective of the Multi-state Agricultural Development Projects I (MSADP I) is to increase food crop production and incomes of small holder farmers through a programme of integrated unified extension service, Adaptive research, seed multiplication, rural roads rehabilitation and maintenance, water supply and farm input supply and distribution\. li) The project which was originally planned to last for five (5) years was implemented over eight (8) years with three (3) extensions, from June 1987 to June 1995\. iii) The major factors that affected project implementation included the devaluation of the Naira, untimely release of counterpart funds; state creation resulting in bi-furcation of projects, irregular ADPEC meetings, and delays in procurement processes\. These factors affected the pace of loan draw-down and hence the need for the extensions\. iv) The Bank, Borrower and Implementing agencies performances were satisfactory\. Overall funding showed that the FGN and all SG's contributed N266\.7m (84\.5%-) and N498\.3m (89%-), respectively against their budgets\. The loan was fully draw-down and over-committed by about US$4\.08m as at June 1995\. v) All the state projects implemented the Unified Extension System\. There was an improvement in the EA:farm family ratio with a reach out of about 95% of farm families in the project area\. About 795,728 SPAT plots and 5133 OFAR trials were conducted during the period with the Women-In-Agriculture components forming 4582 groups\. vi) The Rural Infrastructure constructed 1558 open wells, rehabilitated 5015Km of roads and maintained 17,365Km of roads\. vii) The Human Resources Development component conducted about 32,679 local courses for various categories of staff\. viii) Input distribution during the period was about 1\.4m MT of fertilizer\. ix) The project had a positive impact on crop production and farm income\. Overall ERR stood at 32\.9% against an appraisal estimate of 24\.0% and a redesign estimate of 25\.0%\. (ii)  :) The project is sustainable provided adequate funding and reasonable level of autonomy for the ADPs are garrantteed\. xi) All the states implemented the IFAD cassava program successfully after the redesign in 1990\. About 5602Ha of seed multiplication farms were established over project life against a target of 5285Ha in all states\. The ERR for the programme is 10\.6% against SAR of 12\.7%\. xii) The key lessons learnt include:- a) The deduction of state contributions at source contributed to speedy drawdown and project implementation\. This policy should be sustained in future projects\. b) Giving our present mixed experience at the ADPs in road rehabilitation through contract or force account there is the need for a comparison to be made\. FACU who had the original mandate on the issue should go ahead and complete the study under a broadened Terms of Reference (TOR)\. \. c) The expected involvement of LGC's in post construction and maintenance of rural roads was not successful because both the ADPS and LGC did not sufficiently mobilise the benefiting communities\. d) The frequent changes in state government political leadership and ADP management staff affected decision making down the scale resulting in delays during project implementation\. This required a continous re- education of political appointees at all levels by FACU and ADP management on loan agreements convenants and conditionalities to improve implementation\. e) There is need for the Implementing Agency, Federal Government and the World Bank to properly monitor loan disburesement and withdrawal applications\. Status report on loan disbursement should be rendered in time to the project to provide early signals of distress or overdrawing\. f) The ICR exercise revealed weak data base records of project implementation at some PME units resulting from serious constraints of adequate skilled staff and lack of in-house capability\. (iii)  There is the need to ensure that adequate machiner-y, capable personnel and continous management support are always in place at the on-set bf any future project\. g) The pooling of unallocated funds created a healthy competition which contributed 'to speedier drawdown\. h) Some of the Bank missions pronouncements and approvals led to contradictions which sometimes confused ADP management in their implementation efforts\. These contradictions resulted in the weak coordination between Task Manager~s, disbursement and procurement departments leading to, for example over-committment at end of loan\. i) The low level of renumeration vis-a-vis high work demands within the ADP system produced job instability relative to other sectors and created difficulties in retaining all cadre of staff in posts at the ADP's\. (iv)  NIGERIA FIRST MULTI-STATE AGRICULTURAL DEVELOPMENT PROJECT OPERATIONAL PLANS FOR THE ADPs AKWA IBOM STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996 - DECEMBER 1998) Physical Target Financial Resources (N'000) SINo\. Activities Unit 1996 1997 1998 Total 1996 1997 1998 Total A\. Application of Funds 1\. Management & Administration Administration Lump I I 1 3 2788 2846 2906 8540 Finance & Accounts Lump I I 1 3 2788 2846 2906 8540 Human Resources Development Lump I I 1 3 8364 8537 8718 25619 Sub-Total 13940 14229 14530 42699 2\. Extension Services Fortnightdy Training (FNT) No\. 26 26 26 78 652 882 624 2158 Field visits/seminars No\. 68068 68068 68068 204204 2500 3000 3000 8500 SPAT & Field Days No\. 21920 21920 21920 65760 1000 1000 1500 3500 Pilot Schemes No\. 3 3 3 9 3500 3500 3500 10500 Media Lump I I 1 3 2000 2000 2000 6000 WIA Lump I I 1 3 1500 1000 1000 3500 Sub-total 11152 11382 11624 34158 3\. Technical Services MTRM No\. 12 12 12 36 652 882 824 2358 Adaptive Research No\. 4 4 4 12 1000 1500 1300 3800 Seed Multiplication/Outgrowers Ha\. 60 100 100 260 3000 2500 2500 8000 Field Visits/seminars Lump I I 1 3 1500 1500 1500 4500 Livestock Lump I I 1 3 800 800 900 2500 -Fisheries-- Lump I I 1 3 1200 1000 1200 3400 Agro Forestry Lump I I 1 3 500 700 900 2100 Diagnostic Survey No\. I I 1 3 1500 1500 1500 4500 PesVDisease Control Lump I I 1 3 1000 1000 1000 3000 Sub-total 11152 11382 11624 34158 4\. Rural Institution Development Input Procurement/Distribution No\. 1 1 1 3 4500 4600 4500 13600 Credit/Marketing/Coop\. Production No\. I I 1 3 1076 1091 1312 3479 Sub-total 5576 5691 5812 17079 5\. Engineering Services Rural Road Maintenuace Km\. 100 100 100 300 8000 4000 2000 14000 Plant/Velicle/Equipment Lump I I 1 3 4788 2846 4906 12540 Pataanrigation Schemes Lump I 1 1 3 10000 6000 6000 22000 Sub-total 22788 12846 12906 48540 6\. PMED & PRSD Planning Activities Lump I I 1 3 1364 536 1600 3500 Monitoring Activities Lump I I 1 3 1000 1000 1118 3118 Evaluation/Surveys Lump I I 1 3 3000 3000 2000 8000 Consuhancies Lump I I 1 3 1500 1000 1500 4000 Computer Maintenance Lump I I 1 3 1500 2000 2500 6000 PRSD Lump I I 1 3 2788 2846 2906 8540 Sub-total 11152 10382 11624 33158 TOTAL 75760 65912 68120 209792 B\. Sources of Funds Intemally Generated Revenue 7000 6000 5000 18000 Countetpart fimds - Federal 7500 7500 7500 22500 Counterprt finds - State 22051 23203 26411 71665 IBRD - NATSF 9209 9209 9209 27627 IBRD - NFDF 30000 20000 20000 70000 TOTAL 75760 65912 68120 209792  ABIA STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996 - DECEMBER 199S) Physical Target Financial Resources (NeOOO) S/No\. Activities Unit 199 1997 1998 Total 1996 1997 1998 Total A\. Apprlation of Funds \. Managessent & Administration Administtion Lump 3 2 1 6 3900 2600 1300 7800 Fance & Accounts Lump 3 2 1 6 2600 1740 870 5210 Hmna ResoumcDevelopment Lump 3 2 1 6 1310 870 430 2610 Sub-Total 7810 5210 2600 15620 2\. Extsslo\. Services General Extensimn Lump 3 2 1 6 2290 1850 1250 5390 F-nigbtlyTraining(FNT) Lnnp 3 2 1 6 2290 1850 1250 5390 Field visits/seminrs Lump 3 2 1 6 2290 1850 1250 5390 SPAT & Fid Days Lump 3 2 1 6 2290 1850 1250 5390 Womnen in Aguiculua Lump 3 2 1 6 6120 4930 3330 14380 Media Supped Lump 3 2 1 6 3090 2470 1670 7230 Sob-total 18370 14800 10000 43170 3\. TechIcl Services Crop Lmp 3 2 1 6 3610 2410 1200 7220 Fisheies Lump 3 2 1 6 3610 2400 1210 7220 Livestock Lup 3 2 1 6 3610 2410 1200 7220 AgroForestry Lump 3 2 1 6 3610 2410 1210 7230 Sob-taa 14440 9630 4820 28890 4\. Rural Insdtutd Development Aguic-boie Mangement Lump 3 2 1 6 1100 880 600 2580 1us Dev\. & Linka Lump 3 2 1 6 1100 880 600 2580 Subtolal 2200 1760 1200 5160 5\. gmdwg Services MlehaicalandElecEkical LUmp 3 2 1 6 1550 1550 1410 4510 FarnMechanizetion Lump 3 2 1 6 3110 3090 2820 9020 Roadsad Bulding Lump 3 2 1 6 4650 4640 4220 13510 Fathom Lump 3 2 1 6 6200 6180 5630 18010 Sob-total 15510 15460 14030 45050 6\. PMED & PRSD panning Lump 3 3 830 670 450 1950 Moutoring Lump 3 3 660 1340 900 2900 Evanstin LUMp 3 3 2490 2000 1370 5860 Sub-tot 3980 4010 2720 10710 TOTAL 62310 50870 35420 148600 B\. Soures of Fuods NATSP 13300 3900 4500 26700 EFAD 12000 S000 20000 FGN 15000 15000 15000 45000 STATE 10000 10010 10000 30010 ntenly Geneatd 730 760 800 2290 Fadma 12300 8200 4100 24600 TOTAL 63330 50870 34400 14600  ANAMBRA STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996 - DECEMBER 1998) Physical Target Financial Resources (N 000) S/No\. Activities Unit 1996 1997 1998 Total 1996 1997 1998 Total A\. Application of Funds Rural Institutional Development Input linkage farmers No\. I I 1 3 84 100\.8 109\.2 294 Record keeping guide to farmers No\. I I 1 3 84 100\.8 109\.2 294 Farm accounting guide to farmers No\. I I 1 3 84 100\.8 109\.2 294 Contact with financing Institutions No\. I I 1 3 84 100\.8 109\.2 294 Credit linkage to farmers No\. I I 1 3 80 96 104 280 Organization of FUAs No\. 20 20 20 60 160 192 208 560 Prepation of FUA agreement letters No\. 20 20 20 60 200 240 260 700 Supervisory visits to FUAs No\. 20 20 20 60 40 48 52 140 TrainingofFUAfumers No\. 3 3 3 9 90 108 117 315 Traimngofartisans No\. 3 3 3 9 90 108 117 315 TubeweDl constmsetion No\. 20 20 20 60 1000 1200 1300 3500 Fadamamarketiggo-down No\. 10 10 10 30 700 840 910 2450 RegularlinkagewithFUA No\. I I 1 3 262 314\.4 340\.6 917 Pump procurement No\. 200 200 200 600 15000 18000 19500 52500 Fadama marketing infiwstructure No\. 5 5 5 15 1000 1200 1300 3500 In-house drilling of washbores & tubewells No\. 5 5 5 15 250 300 325 875 Fadama roads Km 20 20 20 60 2800 3360 3640 9800 Fadama access roads Km 20 20 20 60 2000 2400 2600 7000 Fadama strmae sheds No\. 20 20 20 60 1600 1920 2080 5600 Fadama shelters No\. 20 20 20 60 1600 1920 2080 5600 Fadama dying sheds No\. 20 20 20 60 1600 1920 2080 5600 Fadam go4down No\. 20 20 20 60 1600 1920 2080 5600 Roadsrecurrentmaintenance No\. 5 5 5 15 500 600 650 1750 Roadsroutinemamtenance No\. 6 6 6 18 180 216 234 630 Incalbtion of pumnp/gen sets No\. 9 9 9 27 360 432 468 1260 Culvert construction No\. 20 20 20 60 1000 1200 1300 3500 Supervisionofwaterpoints No\. I I 1 3 9 10\.8 11\.7 31\.5 Impoved Blcksmitbing equipment No\. 2 2 2 6 64 76\.8 83\.2 224 Production of processing equipment No\. 4 4 4 12 80 96 104 280 Productionofassava chippers 5 5 5 15 10 120 130 260 Sub-Total 32611 39241\.2 42511\.3 114363\.5 2\. Adaptive Reearch OFAR trials (livestock) No\. 2 2 2 6 350 420 4550 5320 Breed multiplication (rabbits) No\. I I 1 3 500 600 650 1750 Animal health activities No\. I I 1 3 400 480 520 1400 Piggery outgrowaa No\. 16 16 16 48 208 249\.6 270 727\.6 Rabbitry outgrowers No\. 16 16 16 48 160 192 208 560 Thematic survey (livestock) No\. I 0 0 1 200 0 0 200 Fisherywaterpump/accessories No\. I I 1 3 871\.16 1049\.35 1136\.8 3057\.31 Concrete tanksinets No\. I I 1 3 400 480 520 1400 Fingesling multiplication/distibution No\. 40000 40000 40000 120000 400 480 520 1400 OFAR trials (fishery) No\. 2 2 2 6 350 420 455 1225 Thematic survey (fishery) No\. 1 0 0 1 150 0 0 150 Nursery development No\. 4 4 4 12 200 240 260 700 OFAR trials (agro-forestry) No\. 2 2 2 6 380 456 494 1330 Erosion control demonstration No\. 16 16 16 48 S00 960 1040 2800 MTRM No\. 12 12 12 36 360 432 468 1260 OFAR trials (arable crops) No\. 2 2 2 6 234\.18 381\.02 364\.43 979\.63 Improved Cassava multiplication Ha\. 80 S0 S0 240 900 1080 1170 3150 Improved Sweet Potato multiplication Ha\. 10 10 10 30 100 120 130 350 Improved Cocoyam multiplication Ha\. 10 10 10 30 100 120 130 350 ImprovedYamMinisetmultiplication Ha\. 10 10 10 30 500 360 390 1250 Improved Rice multiplcation Ha\. 20 20 20 60 300 360 390 1050 Sub-total 7863\.34 8879\.97 13666\.2 30409\.54 3\. Extension ServiCes Programmetechnicaltraining No\. 32 32 32 96 960 1152 1248 3360 Programmensanagemcst training No\. 10 10 10 30 400 480 520 1400 Conferences/Workshops/Semimars No\. 30 30 30 90 900 1080 1170 3150 In-house courses No\. 4 4 4 12 80 96 104 280  Visit reseach institute No\. 2 2 2 6 150 ISO 195 525 Scientfic visits No\. I I 1 3 50 60 65 175 SPATs No\. 6000 6000 6000 18000 600 720 7S0 2100 FieldvisitsbyEAs No\. 19184 19194 191S4 57552 767\.56 920\.81 997\.57 2685\.94 FNTs No\. 104 104 104 312 208 249\.6 270\.4 728 Fidd days No\. 174 174 174 522 174 200 224\.2 598\.2 Skld plots No\. 56 56 56 168 99\.99 119\.9 130 349\.89 Block meeti4s No\. 572 572 572 1716 57\.2 68\.64 74\.56 200\.4 Selecion of contac gWps No\. 696 696 696 2088 4\.8 5\.76 6\.24 16\.8 Productionofvideofeatues No\. 2 2 2 6 110 132 143 385 Productionofpostrsblls No\. 6 6 6 IS 120 144 156 420 Purchase of video featues No\. I I 0 2 500 600 0 1100 Production ofgi publications No\. 500 500 500 1500 10 12 13 35 Poductionofradiopprogammes No\. 4 4 4 12 100 120 130 350 ProductionofTVprogrammes No\. 2 2 2 6 60 72 78 210 Production of sides No\. 3 3 3 9 3 3\.6 3\.9 10\.5 Upkeep of video/pbow smudio No\. I I 1 3 426\.6 511\.92 554\.5E 1493\.1 Esablish skill devdopment centres No\. 4 4 4 12 200 240 260 700 Denonmtrals processing6 utilizaion &pmventionoffoodproduct No\. 5 5 5 15 165 198 214\.5 577\.5 Souac pnoc _ssmg ctr No\. 4 4 4 12 40 48 52 140 Conumereduationcentes No\. 24 24 24 72 120 144 156 420 WIA-bued OFAR tials No\. I I 1 3 125 150 162\.5 437\.5 SubWta 6431\.15 7706\.23 7708\.45 21847\.83 4\. Plhumm Moukoriug & Evaluation Resoue entre upkeep No\. I I 1 3 200 240 260 700 Mo\.hly progre-CPO' No\. 12 12 12 36 240 208 312 760 Quautely repoats No\. 4 4 4 12 SO 96 104 280 Anndual epots No\. I I 1 3 20 24 26 70 Moniteoingofprogrammeactivities No\. I I 1 3 362\.56 435\.07 471\.32 1268\.95 Gencral MIS rpots No\. I I 1 3 SO 96 104 280 Upkeepofcmpulcenbtreetal No\. I I 1 3 700 840 910 2450 Proj stsatus repot/projct digest No\. I I 1 3 10 12 12 34 PME repout ploductiosublishing euipmn No\. I I 1 3 350 420 455 1225 Pogmme nnul wvkpbn/Budget No\. I I 1 3 30 36 39 105 FarmCrop,buget No\. I I 1 3 100 120 130 350 Nation roling plan/Cpil estinates No\. I I 1 3 20 24 26 70 Cost-effeciveness survey No\. I I 1 3 140 168 182 490 Deiled quastey woNkplan No\. 4 4 4 12 40 48 52 140 Databse build-p No\. I I 1 3 500 600 650 1750 Mid-yearrview No\. I I 1 3 100 120 130 350 Plani ngdt ageneation No\. I I 1 3 500 600 650 1750 Cays (agrnoic survey) No\. I I 1 3 175 210 227\.5 612\.5 Msrket piceSUrvs \. (MPS) No\. 12 12 12 36 120 144 156 420 IFAD CAssva suwey No\. I I 1 3 180 0 0 ISO Metemological dat collection/analysis No\. 12 12 12 36 120 144 156 420 Impact studies No\. 3 4 4 11 600 960 1040 2600 RTEP baselme survey No\. I 0 0 1 200 0 0 200 LSR survey No\. I 0 1 2 250 0 325 575 VIS suvqy No\. I 0 0 1 300 0 0 300 Sub-total 5417\.56 5545\.07 6417\.82 17380\.45 5\. Finance and Administration Annual accounts and stock evaluation No\. I I 1 3 150 ISO 195 525 Sourcing of fumds No\. I I 1 3 442\.84 531\.41 575\.09 1549\.34 Payrollandauditexercises No\. 12 12 12 36 240 288 312 840 Stores upkeep/stok control No\. I I 1 3 210 252 273 735 Security & allied services No\. I I 1 3 500 600 650 1750 Utility & general admm\. service No\. I I 1 3 400 480 520 1400 Stutioneries No\. I I 1 3 700 840 910 2450 Vehicle operation/maintenance No\. I I 1 3 1500 1800 1950 5250 Sub-total 4142\.S4 4971\.41 5385\.09 14499\.34 MNRS/PRSD No\. I I 1 3 1300 1300 1300 3900 TOTAL 57765\.89 67645\.88 76988\.9 202400\.7  B\. Sources of Funds IERD - NATSP 15868 10132 0 26000 EBRD - NFF 16000 16000 16000 4S000 IFAD - RTEP 5000 21000 16000 42000 COUNTERPART FUND - FGN 5530\.2 5000 12837\.7 23367\.9 COUNTERPART FUtND - STATE 10100\.89 14000 17151\.2 41252\.08 INTERNALLY GENERATED REVENUE 5266\.8 1513\.S8 15000 21780\.68 TOTAL 57765\.89 67645\.88 76988\.9 202400\.7  BENUE STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 199 - DECEMBER 1998) Physical Target Financial Resources (N'000) S/No\. Activities Unit 199f 1997 1998 Total 1996 1997 1998 Total A\. Application of Funds 1\. Management & Administration Administration Lump I I 1 3 10857\.58 10857\.58 5280 26995\.16 FinLnce&Accounts Lump I I 1 3 5056 5056 1000 11112 Human Resoures Development Lump I I 1 3 1961\.44 1275\.92 1000 4237\.36 Sub-Total 17875\.02 17189\.5 7280 42344\.52 2\. Extension FNT/Supervision Lump Lump Lump Lump 1061 1061 1000 3122 Field Visits/Seminurs No\. 8\.99 8\.99 8\.99 26\.97 1061 1061 1000 3122 SPAT&FieldDays No\. 32 32 32 96 1061 1061 1000 3122 Media Support Lump Lump Lump Lump 1061 1061 1000 3122 Sub-total 4244 4244 4000 12488 3\. Technical MTRM No\. 11 11 11 33 1431\.23 1431\.23 1000 3862\.46 StaffTraining Lump I I 1 3 1431\.23 1431\.23 1000 3862\.46 OFAR & Field Visits 1431\.23 1431\.23 1000 3862\.46 Seed Production and Processing Lump I I 1 3 1431\.23 1431\.23 1000 3862\.46 Animal Traction Lump 7156\.14 7156\.14 1000 1531228 Sub-total 12881\.06 12881\.06 50C0 30762\.12 4\. Rural Institution Development Input Production/Distribution Lump I I 1 3 5056 5056 1000 11112 CFAPromotion Lump I I 1 3 5056 5056 1000 11112 Sub-total 10112 10112 2000 22224 5\. Fadama & Rural Infrastructure Drilling & Civil Work Lump I I 1 3 7175 7421 1000 15596 Plant & Vehicle Eqppment Lump I I 1 3 10092\.56 11628\.42 1000 22720\.98 Technical Assistance & Studies Lump I I 1 3 2345\.2 2353\.9 1000 5699\.1 Allowances& General Opp\. Cost Lmnp I I 1 3 2999\.56 2630\.56 1000 6630\.12 Sub-total 22612\.32 24033\.88 4000 50646\.2 6\. PMED & PRSD Planning Lump I I 1 3 1755\.49 1692\.63 2000 5448\.12 Monitoring Lump I I 1 3 755\.49 692\.63 1000 2448\.12 Evaluation Lump I I 1 3 755\.49 692\.63 1000 2448\.12 PRSD Lump I I 1 3 0 0 0 Sub-total 3266\.47 3077\.89 4000 10344\.36 TOTAL 70990\.17 71538\.33 26280 168809\.2 B\. Sources of Funds Internally Generated Revenue 5000 5000 5000 15000 Cotmeerpart Funds - Federal 10000 10000 10000 30000 Counterpart Funds - State 11280 11210 11280 33840 IBRD - NATSF 11650 11650 0 23300 IBRD - NFDF 33060\.87 33608\.33 0 66669\.2 TOTAL 70990\.87 71538\.33 26280 168809\.2  DELTA STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996 - DECEMBER 199S) Physical Target Financial Resources (N'000) S/Ne\. Activiftis Unit 1996 1997 199S Total 1996 1997 1998 Total A\. Appliation of Fonds 1\. Maaageit h Administration Admiistation Lump I I 1 3 2040 1500 850 4390 Fnnct h Acounts Lump I I 1 3 750 760 780 2290 mesourc Deelpment Lump 1 1 1 3 2037 1500 519 4056 Sub-Toal 4827 3760 2149 10736 2\. Extenion Servic SPAT & Field Days No\. 144S0 15000 i5" 44480 S50 8S0 880 2610 Field Viits No\. 39654 40000 40000 119654 847 854 854 2555 FNTS No\. 78 78 78 234 919 919 919 2757 Media Lump 1 1 1 3 729 430 430 15S9 Sab-total 3345 3083 3083 9511 3\. Tetnial Service MTRM No\. 12 12 12 36 150 IS0 IS0 510 OFARFidd Visiuts Lunp I I 1 3 1521 1700 1500 4721 SeedProdion Lmnp I I 1 3 604 855 655 2114 Sub-f4"l 2275 2735 2335 7345 4\. Rural I 1sdtuds l tDirbtion Lump I I 1 3 2938 3850 3192 9980 R-l Svin Mobdile Study No\. I 1 375 0 0 375 Tranig lofufoul Faieus Oroop No\. 700 700 700 2100 Sub-toa 4013 4550 3892 12455 5\. E\.- FadinaDevelopment Lump I I 1 3 30393 17481 6521 54395 Pla Vdeice MaintMance Lump I I 1 3 3257 4500 4500 12257 Mechninhtim A Ape-Processing Lump I I 1 3 850 0 850 2550 Civil Wks (M_aineance) Lump I I 1 3 650 700 700 2050 RoodRehabllition&Ma_tensc Km 56 34 22 112 5715 3500 2200 11415 Sob-tl 40865 27031 14771 82667 6\. PhbED & PRSD Plowing Moniring & Evauaon Lump I I 1 3 2510 1695 1695 5900 PRSD 230 280 295 805 Sub-total 2740 1975 1990 6705 TOTAL 58065 43134 28220 129419 B\. Sources of Fonds Intemally GenCated Revenue 2500 2500 2500 7500 Countrpart Funds - Fedeal 5800 5800 5800 17400 Comterpat Funds - Statt 15600 15600 19920 51120 EBRD - NATSF 10860 9S84 0 20744 IBRD - NFDF 23305 9350 0 32655 TOTAL 58065 43134 28220 129419  CROSS RIVER AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996- DECEMBFR 199S) Physical Target Financiul Resources (N1000) S9No\. Adivitis Unit 1996 199 1998 Total 1996 1997 199 Total A\. Appliestno of Fuads 1\. MaagWe\.t & Aduailtratiom Management & Admstatiom Lump I I 1 3 6 6 5 17 Sub-Tweal 6 6 5 17 2\. F _rna sa Acemt F _ eind A _cmt Lump I I 1 3 13 13 13 39 Sub-f\.4ai 13 13 13 39 3\. H _ms\. Resources Devdopmmt Hiuna Res sDevdopment Lump I I 1 3 3 3 3 9 S5b-twlal 3 3 3 9 4\. Uulf litemslou F-W Wy Traunag (NT) No\. 73 73 78 234 0\.5 0\.5 0\.5 1\.5 SPATS No\. 19200 19200 19200 57600 1\.3 1\.S 1\.8 5\.4 Fil Visits No\. 19200 19200 19200 57600 2 2 2 6 Field Days No\. 15 15 15 45 1\.5 1\.5 1\.5 4\.5 Media SppeSt Lmnp I I 1 3 1 1\.5 1\.5 4 Subtal 6\.8 7\.3 7\.3 21\.4 5\. Ad2pte _Rurc MTRM No\. 12 12 12 36 0\.4 0,4 0\.4 1\.2 Diagods Suvey No\. I 1 0\.3 0\.3 OFARDField Viit No\. 20 20 20 60 2\.5 2\.5 2\.5 7\.5 Suboestal 3\.2 2\.9 2\.9 9 6\. Rural last Dvelopment Inp4 DiSnb,tio Lump I I 1 3 5 7 6 1U Procesing Equiumet Lmnp I I 1 3 4 4 4 12 Sub-tol 9 1 1 10 30 7\. \. -rg RoadM i M suim Km 104 104 104 312 4\.5 4\.5 4\.5 13\.5 Aquifer Studies No\. I I I I T _ewe Develvmnp No\. 100 100 100 300 3 3 3 9 Civil WokstEquient Maintenance Lump I I 1 3 10 10 10 30 Sub-ta 13\.5 17\.5 17\.5 53\.5 8\. Pranlu M_itorlg & Evalation PiunnglMonioring&Evalabion Lup I I 1 3 2\.5 2\.5 2\.5 7\.5 PRSD Lump I I 1 3 1\.5 1\.5 1\.5 4\.5 Sub-to 4 4 4 12 TOTAL 63\.5 64\.7 62\.7 190\.9 B\. Sources Funds 1\. Countetpart Funds - State 17 17 17 51 2\. Coutrpat Funds - Federal 16\.8 16\.8 16\.3 50\.4 3\. 1BRD - NATSP S 9\.4 9\.25 26\.65 IBRD - IFAD Caseava 10 10 6 26 IERD - NFDP 10 10 12\.35 32\.35 4\. hItenally Geneated Revenue 1\.7 1\.5 1\.3 4\.5 TOTAL 63\.5 64\.7 62\.7 190\.9  - -- \. \. - \. Zf -'' J:ttCiITflEf 1177 Physical Target Financial Resources (NO000) SlNe\. Activite Unit 1996 1997 1998 Total 1996 1997 199 Total A\. Application of Funds 1\. Extension (a) FNT No\. 52 52 52 156 1075\.5 1994\.65 2127\.54 5197\.69 (b) SPAT No\. 10000 14000 14500 38500 1875 1994\.45 2127\.54 5996\.99 (c) Field Days No\. 2000 2000 2000 6000 937\.65 997\.45 1127\.77 3062\.87 (d) Travel Allownce & Claims Lump I I 1 3 937\.65 997\.45 1069\.77 3004\.87 (e) Extension Kits Lump I I 1 3 937\.65 997\.45 1069\.77 3004\.87 (f) Communication Lump I I 1 3 1075\.56 1994\.65 2127\.54 5197\.75 (g) WIA Lump I I 1 3 937\.65 997\.43 1065\.77 3000\.85 Sub-Tota 7776\.66 9973\.53 10715\.7 28465\.89 2\. Technical Sevkes AdafiveResearchCro2 No\. 144 144 144 432 625\.1 664\.95 709\.15 1999\.2 (a) OFARiOFR No\. 12 12 12 36 625\.1 664\.95 709\.1 1999\.15 (b) MTRM Lump 1250\.2 1329\.5 1929\.96 4509\.66 (c) TraeaSim No\. 2 2 2 6 625\.1 664\.95 709\.1 1999\.15 (d) Conractid Rtarc 3125\.5 3324\.35 4057\.31 10507\.16 Seed pehimo (e) Direct NA 90 90 90 270 625\.1 665\.95 709\.1 2000\.15 (f) Ouowes NA 60 60 60 180 1250\.2 1228\.5 1410\.% 3U89\.66 () processng Lump I I 1 3 1250\.2 1229\.5 1418\.36 3892\.06 Sub-tol 9376\.5 9772\.65 11653 30802\.19 3\. Rural I_Hnutio (Commercial) impact Distibutio Lump I I 1 3 50C0 5919\.6 5672\.44 16592\.04 Credi Maketing Lump I I 1 3 1250\.2 1329\.5 1418\.56 3992\.26 Sub-to 6250\.2 7249\.1 7091 20590\.3 4\. F lerls (a) ConcreteTanks No\. 6 6 6 18 1000\.16 1063\.32 1194\.69 3258\.17 (b) Nets No\. 100 100 100 300 1500\.24 1595\.66 1702\.09 4797\.99 (c) Warnps No\. 50 50 50 150 2000\.32 2127\.96 2269\.57 6397\.S5 (d) Accesories Lump I I 1 3 500\.66 567\.55 567\.95 1636\.16 Subbotal 5001\.38 5354\.49 5734\.3 16090\.17 5\. Hman Rweorw Deuenmt (a) Trfaa Lmnp I I 1 3 3923\.19 4819\.65 4467\.65 13210\.49 (b) Training Maels Lup I I 1 3 11401 1196\.91 1276\.52 13S74\.43 (c) LiwuyDvelopwne Lump I I 1 3 598\.45 598\.45 642\.25 1839\.15 Sub-total 15922\.64 6615\.01 63S6\.42 28924\.07 6\. PMEIPRS (a) RetProd-do Lump I I 1 3 500 527 466 1493 (b) StudiesiCosulacy Lump I I 1 3 1500 1600 1646 4746 Sub-tol 2000 2127 2112 6239 u\. MIS (a) RePGOtPcepmion Lunp I I 1 3 1514 1466 1469 4449 (b) MouioinViits Lump 12 12 12 36 562 595 658 1815 Sub-total 2076 2061 2127 6264 ui\. Evaluaion (a) Surveys Lup I I 1 3 1500 1750 1650 4900 (b) SurweyMarials Lump I I 1 3 575 245\.5 277 1097\.5 Sub-tal 2075 195\.5 1927 5997\.5 iv\. PRS Lump I I 1 3 500 5312 709 6521 SUB-TOTAL 6651 11495\.5 6875 25021\.5 7\. Engineering (a) Road RlkcabiiCtioom cc Km\. 50 50 50 150 5000 5320 5674 15994 (b) FadamatIrigation Schemes Lump I I 1 3 5000 5320 5674 15994 (c) Civi WorkslEquipment AssL Lump I I 1 3 2502 2000 2000 6502 Sub-total 12502 12640 13348 38490 S\. Administration Office Equipment Maintenance Lump I I 1 3 5000 5000 5675 15675 Stationery/Others Lump I I 1 3 1251 1545\.5 1418 4214\.5 Sub-total 6251 6545\.5 7093 19889\.5 9\. Programme ManagementFinance  Vehicle Maintenance No\. 65 65 65 195 4000 4250\.1 4558 12808\.1 Finmnce Lump I I 1 3 1000 1069\.8 1195\.44 3265\.24 Sub-total 5000 5319\.9 5753\.44 16073\.34 TOTAL 74731\.38 74965\.68 74649\.9 224347 B\. Sources of Fands 1\. ntenlW Generaed Revenue 7006 7700 8470 23176 2\. Countepart Fnmd (a) FGN 10000 14155 15548 39703 (b) SGN 31065\.38 26050\.68 23971\.9 81087\.96 3\. LGA 2000 2400 2000 6400 4\. IBRD NATSF 14000 14000 14000 42000 NFF 10660 10660 10660 31980 TOTAL 74731\.38 74965\.68 74649\.9 224347  ENUGU STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996 - DECEMBER 1998) Physical Target Financial Resources (N'000) S/No\. Activities Unit 1996 1997 1998 Total 1996 1997 1998 Total A\. Application of Funds 1\. Management and Administration Administration Lump I I 1 3 8686 10775 12026 31487 Finance & Account Lump 862 1901 1180 3943 Planning, Monitoring& Evaluation Lump I I 1 3 239 263 309 811 Sub-Total 9787 12939 13515 36241 2\. Extension Fortnightly Training (FNT) No\. 78 72 72 222 120 133 250 503 Field Visits No\. 28800 35000 35000 98800 491 540 614 1645 SPATs & Field Days No\. 7200 10300 19000 36500 285 314 456 1055 Media Lump I I 1 3 107 117 232 456 Human Resources Development Lump I I 1 3 3916 4312 4908 13136 Sub-total 4919 5416 6460 16795 3\. Technical (Adaptive Research) MTRlM No\. I 1 1 3 167 14 309 660 OFAR No\. I I 1 3 575 633 749 1957 Seed Multiplication Ha\. I I 1 3 933 1228 2169 4330 Sub-total 1675 2045 3227 6947 4\. Rural lutitution Development Road Maintenance Lump I I 1 3 509 560 737 1806 EquipmentM aintenance Lump I I 1 3 1187 1697 2087 4971 Input Distribution Lump I I 1 3 4533 5091 5983 15607 Sub-total 6229 7348 8807 22384 5\. Staff Salaries and Allowances 14000 14000 14000 42000 TOTAL 36610 41748 46009 124367 B\. Sources of Funds 1\. Enugu State Government 23110 26898 29129 79137 2\. Federal Govenment ofNigena 6500 7150 8130 21780 3\. Intenal Generated Revenue 1600 1600 1600 4800 Cash 4\. Value of Farmers Contribution in Kind 5400 6100 7150 18650 TOTAL 36610 41748 46009 124367  IMO STATE AGRICULTURAL DEV\. PROJECT OPERATnONAL PLAN (JULY 1996 - DECEMBER 199) Physical Target Financial Resources (N'000) SIN\. Aethis Unit 1996 1997 1999 Total 1996 1997 I19l Total A\. Appliatio of Funb 1\. MNangom_t and Ad bintratoa A _mb is Lump I I 1 3 19\.2 12\.68 22\.49 60\.37 FhAceeAAccoudt LumP I I 1 3 4\.15 4\.1 6\.72 15\.67 H Resaces Develpment LAmp I I 1 3 2\.15 2\.19 3\.2 7\.54 SuTOal 26\.2 24\.97 32\.41 13\.58 2\. ate_n Fo_big Training (FNT) No\. 260 260 260 780 2\.45 1\.45 3\.67 7\.57 Fied Vits No\. SPAT & Fidd DaystAdnpeive Research No\. 200 200 200 600 0\.24 0\.24 2\.28 2\.76 Sub-4\.45l 2\.69 1\.69 5\.95 10\.33 3\. Toeale MTRM No\. 12 12 12 36 3 2 6 11 Senol StaffTraining No\. OFAR md FiHd Vl/IFAD No\. 34 32 50\.2 116\.2 Saed I ToO 147 147 147 441 1\.2 4\.2 4\.93 10\.23 A_sId Tfadon Trho No\. Sub-Istal 38\.2 31\.2 61\.03 137\.43 4\. Rual Iuldtnt_ ItpDbdio_n L_p I I 1 3 3\.48 3\.48 7\.25 14\.21 CFA Pmmotn LA-p I I 1 3 0\.43 0\.43 1\.5 2\.36 Sub_al 3\.91 3\.91 8\.75 16\.57 Rond R _obetMia& hMame KmL 46 48 50 144 2\.91 2\.3 3\.65 S\.S6 Ifgtion ccaesiFADAMA No\. 3\.4 3 5\.9 12\.3 Civil W ulEquip\. MNinJF n/M\. Lnp I I 1 3 4\.4 2\.4 5\.4 12\.2 S-blna 10\.71 7\.7 14\.95 33\.36 6\. PK & MDSS rl_,p& Mmdu & Evn1tion Lap I I 1 3 2\.06 3\.74 5\.24 11\.04 MlSD L_p I 1 2 3\.17 4\.17 8\.74 Sub-latal 2\.06 7\.61 10\.11 19\.78 TOTAL *3\.77 *4\.03 133\.2 301\.05 3\. S"res f Fun 1\. bumlly Ge otald Rce e 2\.46 3 3\.4 8\.16 2\. Couuhepmt Fund - Federal 11\.5 11\.5 11\.5 34\.5 ComntpUt Fiund - Stte 27\.5 19\.19 25 71\.69 3\. IBRD - NATSP 15\.6 10\.4 IBRD - NFDP/lFAD 26\.71 40 93\.3 160\.01 TOTAL 13\.77 84\.09 133\.2 301\.06  OGUN STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 1996 - DECEMBER 1998) Physical Target Financial Resources (N'000) S/No\. ActMties Unit 1996 1997 199s Total 1996 t991 199h Total A\. Application of Funds 1\. Management & Administration Administration Sub-Programme Lump I I 1 3 2904 3041 3750 9695 Finance Sub-Prornme Lump I I 1 3 2000 2100 2500 6600 HRD Sub-Progamme Lump I I 1 3 2382 2500 3000 7882 Sub-Total 7286 7641 9250 24177 2\. Extension Fortnightly Training (FNT) No\. 24 24 24 72 240 560 560 1360 Ficld Visits No\. 23040 23040 23040 69120 4580 5000 5100 14680 SPAT & Field Days No\. 16350 21528 21528 59406 6478 7000 7750 2122S Wome in Aicture Lump 1 1 1 3 2750 2S50 3950 9550 Communication Suppoit Lump I I 1 3 2080 2100 4750 8930 Sub-total 16128 17510 22110 55748 3\. Teebical Servier Sub-ProgUamme MTRM No\. 9 12 12 33 109 145 200 454 OFAR nd Field V-ists No\. 500 550 600 1650 8616 S650 8000 25266 SeedePrPdctionlPfocessing Ton 65 70 75 210 1911 2000 2625 6536 Casva Lump I I 1 3 18491 0 0 18491 Sub-otl 29127 10795 10S25 50747 4\. RID Sub-Programme Input Distnion Lump I I 1 3 3294 3323 6355 12972 Sub-total 3294 3323 6355 12972 5\. Egaeering Servica Sub-Progrmme Rul Feeder Road Mainteace Knn 50 100 150 7500 11942 19442 FadamalnistiionScheme No\. 100 150 250 3000 3347 4115 10462 Fadsmanfatsnuce nDevelopment Lump I I 1 3 11996 15130 27126 Sub-total 10500 27285 19245 57030 6\. PHI Sub-Progamme Planning Monitoring & Evaualion Lump I I 1 3 4030 4100 7400 15530 Sub-tol 4030 4100 7400 15530 TOTAL 70365 70654 75185 216204 S\. Sources of Fumb 1\. lynal Generated Revenue 1000 1200 1440 3640 2\. Coentepw Fund - Fedtel 11700 13760 IS500 43960 Countmpant Fund -SStte 23900 2S000 36000 87900 3\. IBRD-NATSP 15274 12351 27625 IBRD - NFDF 15343 19245 34588 4\. IFAD - ICP 18491 18491 TOTAL 70365 70654 75185 216204 Notes: I) EschlangeRateUSDI=NS5\.00 2) The closing date of IFAD CaSsva loan under MSADP-I has been etended to December 1996\. 3) NATSP find projections based on USD325,000 approved allocation nd NFDF - USD406,920 proposed\. 4) It is asumed that the NATSP will run for 2 years effective in 1996 while the NFDF mateilized in 1997\.  PLATEAU STATE AGRICULTURAL DEV\. PROJECT OPERATIONAL PLAN (JULY 196 - DECEMBER 1998) Physical Target Financial Resources (N'000) S/No\. Activities Unit 1996 1997 1998 Total 1996 1997 1998 Total A\. Apphcation of Funds 1\. Management & Administration ManagementandAdnmistibon Lump I I 1 3 9313 11977 15068 36358 Finance andAccounts Lump I I 1 3 7565 7318 8808 23691 Human Resources Development Lump I I 1 3 5466 4710 5714 15890 Sub-Total 22344 24005 29590 75939 75939 2\. Extension Fortnightly Trinmg (FNT) No\. 26 26 26 78 3020 3473 3994 10487 Field Visits by VEAs No\. 107520 107520 107520 322560 18360 18360 18360 55080 SPAT & Field Days No\. 15004 15004 15004 45012 5844 5843 5843 17530 Media Lump I I 1 3 12992 12992 12992 38976 Sub-total 40216 40668 41189 122073 122073 3\. Technical Services MTRM No\. 11 11 11 33 2354 2537 2147 7038 Seasl StaffTraining No\. 3 3 3 9 1000 1100 1000 3100 OFAR/Field Visit No\. 300 300 300 900 3000 3254 3000 9254 Seed Mubliplication Ha\. 250 276 200 726 1500 1500 1500 4500 Animal Traction Development No\. 2 2 2 6 2500 2500 2500 7500 Sub-total 10354 10891 10147 31392 31392 4\. RID Sub-Programme Input Distribution Lump I I 1 3 9245 10697 10659 30601 Promotion of Rural Inst Asso\. Lump I I 1 3 3000 3000 3000 9000 Sub-total 12245 13697 13659 39601 39601 5\. Engineering Road Reabilitation Maintenance Km\. 70 85 85 240 3500 4250 4250 12000 lIrigation Scheme No\. 1100 1100 26250 26250 Civil Woks Equpment Maintemance Lump I I 1 3 1500 750 750 3000 Sub-total 31250 5000 5000 41250 41250 6\. Planning, Monitoring and Evaluation Planning,MonitoringandEvaluation Lump I I 1 3 5459 5665 5615 16739 Sub-total 5459 5665 5615 16739 16739 TOTAL 121868 99926 105200 326994 326994 B\. Sources of Funds I\. Intemally Generated Revenue 15000 15000 15000 45000 2\. Counterpart Fnd - Fedald 22562 23375 28600 74537 3\. Counterpart Fund- State 34813 38980 48630 122423 4\. IBRD - NATSF 14270 13345 27615 5\. IBRD - NFDP 55419 55419 TOTAL 142064 90700 92230 324994 324994 Notes: 1) Eschange Rate USDI = N85\.00 2) The closing date of IFAD Cassava loan under MSADP-I has been extended to December 1996\. 3) NATSP fund projections based on USD325,000 approved allocation and NFDF - USD406,920 proposed\. 4) 1 is assumed that the NATSP will run for 2 years effective in 1996 while the NFDF materilized in 1997\.   I   cl\.J I--4 1-\., a => \. r\._, f-- I _! 1'! \. I , ,4 E- r kq cc ' O _ ! ;! Li fj

REVIEW

P099296

Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004144 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H3380, IDA-45150, IDA-53440, and IDA-H9020) ON A GRANT IN THE AMOUNT OF SDR 32\.2 MILLION (US$50 MILLION EQUIVALENT) AND AN ADDITIONAL CREDIT IN THE AMOUNT OF SDR 9\.1 MILLION (US $14\.3 MILLION EQUIVALENT) AND AN ADDITIONAL GRANT IN THE AMOUNT OF SDR 13\.1 MILLION (US$20 MILLION EQUIVALENT) AND AN ADDITIONAL CREDIT IN THE AMOUNT OF SDR 19\.6 MILLION (US$30 MILLION EQUIVALENT) TO NEPAL FOR THE NEPAL IRRIGATION AND WATER RESOURCES MANAGEMENT PROJECT December 12, 2018 Agriculture Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS (Exchange Rate Effective December 12, 2018) Currency Unit = Nepalese Rupee (NPR) NPR 115\.18 = US$1 US$1\.38 = SDR 1 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS AF Additional Financing AMIS Agency-managed Irrigation Systems ASC Agriculture Service Center BCR Benefit-to-Cost Ratio CAS Country Assistance Strategy CBA Cost-Benefit Analysis CDMA Code Division Multiple Access CPS Country Partnership Strategy DHM Department of Hydrology and Meteorology DoA Department of Agriculture DoI Department of Irrigation DTW Deep Tubewell ENPV Economic Net Present Value ERR Economic Rate of Return ESI Essential Structural Improvement ESMF Environmental and Social Management Framework FCRP Food Crisis Response Program FFS Farmer Field School FMIS Farmer-managed Irrigation Systems FMR Financial Monitoring Report FNPV Financial Net Present Value FRR Financial Rate of Return GAP Gender Action Plan GFCRP Global Food Crisis Response Program GIS Geographic Information System GMC Grievance Management Committee GMIS GIS-based Management Information System GoN Government of Nepal GRM Grievance Redress Mechanism HYV High Yielding Variety ICR Implementation Completion and Results Report IDF Institutional Development Framework IMD Irrigation Management Division IMT Irrigation Management Transfer IP Implementation Progress ISF Irrigation Service Fee ISP Irrigation Sector Project ISR Implementation Status and Results Report IUFR Interim Unaudited Financial Report IWRMP Irrigation and Water Resources Management Project IWRP Integrated Water Resources Policy M&E Monitoring and Evaluation MTR Midterm Review NFCRP Nepal Food Crisis Response Program NISP Nepal Irrigation Sector Project NWP National Water Plan NWRS Nepal Water Resources Strategy O&M Operation and Maintenance OCC Opportunity Cost of Capital OPD Office of the Project Director PCR Project Completion Report PDO Project Development Objective PRSP Poverty Reduction Strategy Paper PSC Project Steering Committee QCBS Quality- and Cost-Based Selection RBO River Basin Office SAWI MDTF South Asia Water Initiative Multi-Donor Trust Fund SEMP Social and Environmental Management Plan STW Shallow Tubewell WECS Water and Energy Commission Secretariat WRIC Water Resources Information Center WRIS Water Resources Information System WUA Water Users Association Regional Vice President: Hartwig Schafer Country Director: Qimiao Fan Senior Global Practice Director: Juergen Voegele Country Manager: Faris H\. Hadad-Zervos Practice Manager: Loraine Ronchi Task Team Leader(s): Purna Bahadur Chhetri, Ahmed Shawky M\. Abdel Ghany ICR Main Contributor: Jeren Kabayeva  TABLE OF CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 6 A\. CONTEXT AT APPRAISAL \. 6 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \. 10 II\. OUTCOME \. 12 A\. RELEVANCE OF PDOs \. 12 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 12 C\. EFFICIENCY\. 18 D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 19 E\. OTHER OUTCOMES AND IMPACTS \. 20 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 22 A\. KEY FACTORS DURING PREPARATION \. 22 B\. KEY FACTORS DURING IMPLEMENTATION \. 23 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 24 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 24 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 25 C\. BANK PERFORMANCE \. 27 D\. RISK TO DEVELOPMENT OUTCOME \. 28 V\. LESSONS AND RECOMMENDATIONS \. 29 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 31 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 43 ANNEX 3\. PROJECT COST BY COMPONENT \. 46 ANNEX 4\. EFFICIENCY ANALYSIS \. 47 ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 58 ANNEX 6\. SUPPORTING DOCUMENTS \. 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P099296 NP Irrigation & Water Resources Management Project Country Financing Instrument Nepal Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Related Projects Relationship Project Approval Product Line Additional Financing P114912-NP Irrigation 30-Sep-2008 IBRD/IDA & Water Resources Management Supplemental Additional Financing P144474-NP AF for 23-Dec-2013 IBRD/IDA IWRMP Organizations Borrower Implementing Agency Ministry of Agriculture and Livestock Development, Department of Agriculture, Ministry of Energy, Water Ministry of Finance Resources and Irrigation, Department of Water Resources and Irrigation, Water and Energy Commission Secretariat Page 1 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) Project Development Objective (PDO) Original PDO The objective of the proposed project is to improve irrigated agriculture productivity and management of selected irrigationschemesand enhance institutional capacity for integrated water resources management\. The primary target group of beneficiaries ofthe project is the water users of the selected irrigation schemes that will now cover about 214 farmers-managed irrigation systems(FMIS) withabout 26,808 ha mainly in the hill regions\. It will also target the irrigation management transfer in fouragency-managed irrigation systems (AMIS) and essential structural improvements at about 29,000 ha\. PDO as stated in the legal agreement The objective of the proposed project is to improve irrigated agriculture productivity and management of selected irrigation schemes and enhance institutional capacity for integrated water resources management\. FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 50,000,000 49,764,913 48,965,789 IDA-H3380 14,300,000 13,815,998 13,520,881 IDA-45150 20,000,000 20,000,000 15,179,982 IDA-H9020 30,000,000 30,000,000 25,648,551 IDA-53440 Total 114,300,000 113,580,911 103,315,203 Non-World Bank Financing Borrower 10,000,000 0 0 Total 10,000,000 0 0 Total Project Cost 124,300,000 113,580,912 103,315,204 KEY DATES FIN_TABLE_DAT Approval Effectiveness MTR Review Original Closing Actual Closing 06-Dec-2007 24-Apr-2008 26-Sep-2010 30-Jun-2013 30-Jun-2018 Page 2 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 06-Dec-2007 0 Other Change(s) 21-Jun-2011 22\.06 Other Change(s) 25-Jun-2013 43\.29 Change in Loan Closing Date(s) 23-Dec-2013 47\.26 Additional Financing 26-Jun-2014 54\.62 Change in Loan Closing Date(s) 15-Apr-2015 54\.92 Reallocation between Disbursement Categories 19-Jun-2015 54\.92 Change in Loan Closing Date(s) 30-Sep-2018 103\.49 Additional Financing KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 28-Jun-2008 Satisfactory Moderately Satisfactory 3\.37 02 26-Dec-2008 Satisfactory Moderately Unsatisfactory 3\.37 03 29-May-2009 Satisfactory Moderately Unsatisfactory 5\.80 04 28-Nov-2009 Satisfactory Moderately Satisfactory 5\.80 05 21-May-2010 Moderately Satisfactory Moderately Satisfactory 9\.53 06 29-Jun-2010 Moderately Satisfactory Moderately Unsatisfactory 9\.53 07 11-Dec-2010 Moderately Satisfactory Moderately Unsatisfactory 12\.69 08 03-Jun-2011 Moderately Satisfactory Moderately Satisfactory 15\.23 09 13-Dec-2011 Satisfactory Satisfactory 29\.84 10 09-Jun-2012 Satisfactory Satisfactory 38\.29 11 14-Dec-2012 Satisfactory Satisfactory 41\.28 12 12-Jun-2013 Satisfactory Satisfactory 43\.29 Page 3 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) 13 15-Dec-2013 Satisfactory Satisfactory 47\.26 14 21-Jun-2014 Satisfactory Moderately Satisfactory 54\.62 15 12-Jan-2015 Satisfactory Moderately Satisfactory 54\.92 16 05-Aug-2015 Satisfactory Moderately Satisfactory 69\.97 17 09-Feb-2016 Satisfactory Satisfactory 75\.21 18 02-Sep-2016 Moderately Satisfactory Satisfactory 82\.08 19 08-Mar-2017 Moderately Satisfactory Satisfactory 87\.95 20 19-Sep-2017 Moderately Satisfactory Satisfactory 98\.80 21 30-Jan-2018 Satisfactory Moderately Satisfactory 99\.19 22 07-Aug-2018 Satisfactory Moderately Satisfactory 103\.49 SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 90 Agricultural Extension, Research, and Other Support 12 Activities Irrigation and Drainage 76 Other Agriculture, Fishing and Forestry 2 Public Administration 10 Central Government (Central Agencies) 8 Sub-National Government 2 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Finance 10 Finance for Development 10 Agriculture Finance 10 Page 4 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) Urban and Rural Development 50 Rural Development 50 Rural Markets 10 Rural Infrastructure and service delivery 40 Environment and Natural Resource Management 40 Water Resource Management 40 Water Institutions, Policies and Reform 40 ADM STAFF Role At Approval At ICR Regional Vice President: Praful C\. Patel Hartwig Schafer Country Director: Susan G\. Goldmark Qimiao Fan Senior Global Practice Director: Constance A\. Bernard Juergen Voegele Practice Manager: Adolfo Brizzi Loraine Ronchi Purna Bahadur Chhetri, Ahmed Task Team Leader(s): Shyam Sunder Ranjitkar Shawky M\. Abdel Ghany ICR Contributing Author: Jeren Kabayeva Page 5 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. At appraisal in 2006–07, Nepal was the poorest country in South Asia1 and the 12th poorest country in the world and experienced a politically difficult and conflict-ridden development environment\. Disenchantment and political uncertainties that lasted for two decades—involving 15 changes of government, each averaging 11 months’ rule, since the establishment of multiparty democracy in the 1990s—were associated with the rise of the Maoist resistance in 1996\. This was a low-grade insurgency until 2002 when it escalated sharply, disrupting the fabric of political and economic life, especially in the country side\. In April 2006, a large-scale protest movement led to the end of direct rule by the king\. 2\. In November 2006, a peace agreement was signed between the main political parties and the Maoists; however, sustaining the peace process remained a challenge as the root causes of insurgency were yet to be addressed\. They included dissatisfaction of the people with public service delivery, elite capture of the government and bureaucracy, inequitable allocation of resources, geographic and ethnic disparities, and lack of employment\. Although average income growth rates were high (per capita expenditure increased by 42 percent in real terms between 1995–96 and 2003–04), inequality also increased (the Gini coefficient rose from 34\.2 to 41\.4 during this period) and geographic disparities became more pronounced\. 2 3\. Nepal was at a critical crossroads facing the dual challenges of accelerating domestic growth and sharing this growth more broadly across the population\. One of the pressing priorities in this regard was to improve agricultural productivity and foster diversification toward high-value products\. Agriculture made only a modest contribution to improved living standards\. This was in large part due to the poor performance of the crop sector as yields of the major cereal crops were still well below potential in many areas of the country\. Farmers were generally unable to benefit from existing technology and modern inputs\. Water use efficiency and agricultural productivity remained low in both the traditional farmer-managed schemes and the large public irrigation systems\. 4\. The key sectoral and strategic documents of the Government and studies conducted by the international institutions called for improved irrigation systems to increase agricultural growth and reduce poverty\. The Nepal Water Resources Strategy (NWRS, 2002) and National Water Plan (NWP, 2005) prepared by the Government of Nepal (GoN) emphasized the proper management of the surface water and groundwater resources of the country\. Nepal’s Poverty Reduction Strategy Paper (PRSP) envisaged that improved irrigation facilities, uninterrupted supply of chemical fertilizer, and expansion of rural credit, along with rural roads and higher resource allocations, could help achieve annual agricultural growth of about 4\.1 percent\. 5\. Irrigation systems in Nepal were diverse and fell under five major categories\. They included (a) traditional farmer irrigation systems developed, owned, and managed by the communities; (b) systems developed with full or partial support of the Government; (c) large-outlay surface irrigation schemes; (d) 1 With average per capita GDP of US$270 in 2005\. 2 Nepal Living Standards Survey, 2003/04\. Page 6 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Government-developed tube well irrigation schemes; and (e) individually owned and operated tube wells and pumps (mostly utilizing shallow aquifers, streams, ponds, and dug wells)\. The first and second categories accounted for nearly three-quarters of the total irrigated area and the farmers were accountable for operation and maintenance (O&M) of the schemes\. The third category included medium and large systems jointly managed by the Government and the farmers\. The fourth category represented Government-developed deep and shallow tube wells with high subsidies\. The fifth category was fully privately controlled\. Capital cost for shallow tube wells (STWs) was previously subsidized by the Government but this stopped in July 2000\. 6\. The characteristics and problems of the surface irrigation schemes varied significantly between the hills and the terai\. The hill schemes were traditional Farmer-Managed Irrigation Systems (FMIS) and suffered typically from infrastructural weaknesses owing to informal design and use of indigenous material as well as ravages of nature\. On the other hand, the terai had relatively large public irrigation systems (Agency-Managed Irrigation Systems [AMIS]), which suffered from below-capacity performance, poor O&M, negligible cost recovery, and inadequate maintenance funds\. Both the hills and terai irrigation systems suffered from low water-use efficiency, contributing to low agricultural productivity\. With a few notable exceptions—which illustrated the potential for synergistic growth—existing irrigation schemes had only moderately improved productivity and crop diversification toward higher-value crops\. 7\. The improvement of irrigation services in command areas was a problem to be addressed through a combination of both ‘hardware’ and ‘software’ solutions\. The first involved improving/rehabilitating existing water structures to improve reliability of supply, expanding the system of secondary and tertiary canals, and developing groundwater to augment lean season water supply\. The second required the development of more efficient mechanism for management of irrigation systems up to the field level through a clear delineation of responsibilities between the Government, in charge of major infrastructure, and the Water Users Associations (WUAs), in charge of delivering irrigation services to farmers\. There was also the need to pool funding through the Government and users’ contributions for O&M and asset replacement over time\. 8\. Water issues were addressed through a sector-based approach with the dominant focus on water utilization and development rather than water management\. Water management policies and legislation were fragmented\. This was partly due to the lack of sufficient capacity for effective planning and management in relevant apex bodies\. There was also the lack of a comprehensive, legislative, and regulatory framework to enable integrated water resource management\. 9\. The irrigation sector in Nepal has received significant investments, both from Government and donor agencies\. During the Ninth Plan, the GoN spent over 4\.7 percent of the budget on irrigation\. By the appraisal time, the World Bank extended 13 credits totaling US$387 million and the Asian Development Bank (ADB) extended 9 credits totaling US$160 million to this sector\. Many other international and bilateral agencies such as the Saudi Fund, Organization of Petroleum Exporting Countries Fund, Kuwait Fund, and the European Union were also active in providing assistance\. Theory of Change (Results Chain) 10\. The theory of change is illustrated in figure 1\. Following the prolonged conflict in the country, Government efforts were focused on accelerating domestic growth and sharing this growth more broadly across the population\. The agricultural growth was required for poverty reduction, given the concentration of Page 7 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) the poor in rural areas\. However, the sector suffered from poor performance as water use efficiency and agricultural productivity remained low in both the traditional farmer-managed schemes and the public irrigation systems\. The Nepal Irrigation and Water Resources Management Project (IWRMP) was designed to address these challenges\. The outcomes as stated in the Project Development Objective (PDO) included (a) improved agriculture productivity, (b) improved management of selected irrigation schemes, and (c) enhanced institutional capacity for integrated water resources management\. Outcome (a) was to be achieved through the improved performance of the irrigation systems—resulting from the activities under Irrigation Infrastructure Development and Improvement (Component A) and increased yield of the main irrigated crops and crop diversification resulting from the activities under Integrated Crop and Water Management (Component D)\. Further, outcome (b) was expected to be achieved through WUAs assuming full responsibility for O&M of the scheme—resulting from the activities under Components A and B\. Finally, outcome (c) was envisaged to be achieved through the capacity-building activities under Institutional and Policy Support for Improved Water Resources Management (Component C)\. Critical assumptions made by the team at appraisal to ensure the causality between the activities, outputs, and outcomes represented in the Results Chain in figure 1 include (a) effective collaboration between the Department of Irrigation (DoI) and Department of Agriculture (DoA); (b) effective collaboration and participation of WUAs; (c) adequate staff and budget for proper functioning of the Water Resources Information Center (WRIC) and Water Resources Information System (WRIS) provided by the Water and Energy Commission Secretariat (WECS); (d) timely availability of construction materials; and (e) retention of key staff at the Office of the Project Director (OPD) and project implementing agencies\. Figure 1\. Overview of the Project’s Theory of Change Activities Outputs Outcomes (PDO) Long-Term Outcomes Improved Better resilience against Scheme modernization performance of water-induced hazards, irrigation systems such as droughts, floods, Improved irrigated and changes in water agriculture productivity availability during the Gains in crop agricultural seasons Agricultural Production production increases Support and crop diversification Effective planning and Improved intersectoral allocation of WUAs in the management of water resources Strengthening WUAs command areas fully selected irrigation responsible for O&M systems Sustainable and inclusive economic growth Strengthening An integrated water Enhanced institutional institutional capacity for resources policy and capacity for integrated improved water appropriate water resources Increased rural incomes resources management regulatory framework management prepared Page 8 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Project Development Objectives (PDOs) 11\. The objective of the project was to improve irrigated agriculture productivity and management of selected irrigation systems and enhance institutional capacity for integrated water resources management\. Key Expected Outcomes and Outcome Indicators 12\. Key expected outcomes and outcome indicators to measure the achievement of the PDO were (a) Improved agriculture productivity: ï‚ Increase in productivity of selected (main) crops ï‚ Increased cropping intensity ï‚ Area provided with new/improved irrigation or drainage services (core) (b) Improved management of selected irrigation systems: ï‚ Percent of WUAs in transferred schemes whose O&M expenditures are as per agreed Asset Management Plans ï‚ Percent of water users in the rehabilitated schemes satisfied with WUAs ï‚ Operational water user associations created and/or strengthened (core) ï‚ Water users provided with new/improved irrigation and drainage services (core) (c) Enhanced capacity for integrated resource management: ï‚ Establishment of a national water resources database Components 13\. Component A: Irrigation Infrastructure Development and Improvement (Appraisal total cost US$42\.39 million; actual cost US$73\.50 million3)\. The component was aimed at improving irrigation water service delivery in selected schemes in the mountain, hill, and terai areas and expanding groundwater irrigation in the terai\. The component was designed to address the following issues: (a) structural and operational weaknesses in the traditional FMIS, with consequent low water-use efficiency and low agricultural productivity and (b) low exploitation of the excellent groundwater potential of the terai and lack of an appropriate plan for systematic development of groundwater irrigation\. 14\. Component B: Irrigation Management Transfer (IMT) (Appraisal total cost US$11\.16 million; actual cost US$26\.81 million)\. The objective of this component was to improve service performance and service delivery of selected public irrigation schemes in the terai through the completion and consolidation of management transfers to the WUAs\. The component was designed to address the problem of below-capacity performance, poor O&M, negligible cost recovery (below 5 percent on average), and inadequate maintenance funds in large public irrigation schemes\. 3 Appraisal total costs are inclusive of contingencies and Government financing and WUA contributions\. Page 9 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 15\. Component C: Institutional and Policy Support for Improved Water Management (Appraisal total cost US$3\.57 million; actual cost US$3\.75 million)\. This component helped provide more effective and streamlined water resources management services at the national level and within selected basins through institutional strengthening of relevant institutions, namely the WECS and the DoI\. It envisaged addressing sector issues related to the lack of the appropriate regulatory framework and sufficient institutional capacity for undertaking effective planning and intersectoral allocation of water resources\. 16\. Component D: Integrated Crop and Water Management (Appraisal total cost US$7\.89 million; actual cost US$33\.26 million)\. The objective of this component was to increase production, productivity, and profitability of agriculture and related production activities in project-selected schemes\. The component integrated the irrigation system rehabilitation and improved irrigation service provided through Components A and B with agricultural production activities\. It addressed the issues of insufficient integration between agriculture and water management interventions to derive full benefits from investments in irrigation\. B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets 17\. The PDO was not revised during project implementation\. Revised PDO Indicators 18\. During the preparation of the second AF in December 2013, the project management team informed about the difficulties in collecting data related to subjective variables such as ‘satisfaction level’ and ‘strengthening of WUA’ for the PDO indicator ‘Percent of water users in the rehabilitated schemes satisfied with WUAs’\. Through consulting services, a tool was proposed to measure this indicator\. In addition, the PDO indicator related to the establishment of integrated national water resources database was dropped as this activity was to be completed by the Government through the South Asia Water Initiative Multi-Donor Trust Fund (SAWI MDTF)\. This AF was also seen as an opportunity to bring the project’s Results Framework in line with the World Bank’s newly introduced corporate requirements by incorporating several core indicators\. The core indicators included (a) Area provided with new/improved irrigation and drainage services (ha); (b) Operational water user associations created and/or strengthened (number); (c) Water users provided with new/improved irrigation and drainage services (number); and (d) Water users provided with irrigation and drainage services - female (numbers)\. Revised Components 19\. The components were not revised\. While the substance of the components did not change dramatically, the scope did change; see the details in paragraph 21\. Other Changes 20\. The first Additional Financing (AF1) in the amount of SDR 9\.1 million (US$14\.3 million equivalent) from the Global Food Crisis Response Program (GFCRP) was approved on September 29, 2008\. AF was specifically allocated for Component D to support the short- and medium-term implications of the global food crisis for the country by improving access to food and strengthening agricultural production, particularly for food insecure districts and smallholders\. Page 10 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 21\. The project was restructured in June 2011\. The main change was a reduction in the number of irrigation schemes and WUAs to be supported under the project, with the available project funds and within the remaining project duration until June 30, 2013\. The main reason for the reduction in number of schemes was the increase in costs for materials and construction that occurred since project appraisal in October 2007 and the low level of price contingencies (only 4 percent) considered for overall project costs\. The change in number of schemes and command area covered under the project included a substantial reduction in FMIS, from 193 to about 103, with a reduction in command area from 29,000 ha to 17,545 ha and a reduction in area covered by essential structural improvements (ESIs) in four Agency-managed Irrigation Schemes (AMIS) from 61,000 ha to less than 29,000 ha\. 22\. On December 23, 2013, the project received a second Additional Financing (AF2) in the amount of US$50 million to ensure (a) completion of the original commitment of rehabilitating 193 schemes and (b) internalize and replicate the gains made in both irrigation water management and agricultural policies\. The original PDO and components remained unchanged\. The closing date of AF2 was fixed as June 30, 2018\. 23\. The Original Financing (OF) and AF1 received three extensions\. On June 25, 2013, their closing date was extended for one year, from June 30, 2013 to June 30, 2014\. This extension was requested by the GoN to provide additional time to complete the remaining activities under the project\. On June 26, 2014, the closing date of the OF and AF1 was extended for one year, from June 30, 2014 to June 30, 2015\. This extension was requested by the GoN to finalize the remaining activities under the project\. On June 19, 2015, the closing date for the OF and AF1 was extended from June 30, 2015 to June 30, 2016, to complete the ongoing rehabilitation of irrigation schemes that was put on hold following the earthquakes on April 25 (7\.8 on Richter) and May 12, 2015 (7\.3 on Richter)\. 24\. On April 15, 2015, the project processed reallocation of funds between disbursement categories, including distribution of unallocated funds\. This enabled the use of funds from underspent categories for the categories that required more funds than originally estimated\. Specifically, categories 2 and 6—Goods, Services, and Training—required additional funds, and these funds were reallocated from categories 1 and 8—Civil Works and Unallocated\. Rationale for Changes and Their Implication on the Original Theory of Change 25\. Overall, the changes did not have significant implications on the original theory of change\. The rationale for cumulative extension of project life for five years was to allow for (a) the completion of some of the envisaged activities that were put on hold due to lack of funds (unexpected cost overrun) and due to the two major earthquakes that hit the country in April and May 2015, immediately followed by a shortage of construction materials and transportation fuel due to disturbance at the Nepal-India border and (b) the completion of new activities that were added to the project within its original design following approval of the two AFs\. The GFCRP funding (AF1) added the group of food-insecure districts and smallholders to the original list of primary beneficiaries\. The restructuring of June 2011 was prompted by serious start-up implementation delays, and AF2 was the result of scaling up the project scope to move toward the original project targets\. The rationale for the reallocation of funds in 2015 was to use unallocated funds for the disbursement categories that required more funds than were originally budgeted\. Page 11 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 26\. The PDO, ‘to improve irrigated agriculture productivity and management of selected irrigation systems and enhance institutional capacity for integrated water resources management’, remained highly relevant to Nepal’s priorities in irrigation development and management and in agricultural development\. The PDO contributed to the World Bank’s Country Assistance Strategy (CAS) for FY 03-08, which was strategically aligned with the PRSP and identified ‘increased agricultural growth and broad-based rural development’ as a key ‘development result’ that the CAS would focus on\. The expected outcome associated with this result was increased agricultural productivity and farm income\. The PDO remains consistent with the current World Bank Country Partnership Strategy (CPS) for FY14–18\. Specifically, the project addressed Pillar 2 of the CPS ‘Increasing Inclusive Growth and Opportunities for Shared Prosperity’ and its key outcome ‘Increased Agricultural Productivity and Commercialization’\. With the alignment of the PDO to the CAS at appraisal and the current CPS, the relevance of the PDO is rated High\. B\. ACHIEVEMENT OF PDOs (EFFICACY) 27\. The PDO consisted of three parts: (a) to improve irrigated agriculture productivity, (b) to improve management of selected irrigation schemes, and (c) to enhance institutional capacity for integrated water resources management\. Assessment of Achievement of Each Objective/Outcome 28\. PDO 1: Improved irrigated agriculture productivity\. This first part of the PDO was successfully achieved, and all respective PDO and intermediate indicators were either substantially met or exceeded their target values\. Components A and D jointly supported this objective\. Specifically, Component A contributed to this part of the PDO by improving irrigation water delivery in the command area\. Further, Component D supported the objective by increasing productivity of the target crops, namely rice, wheat, maize, and potato, through the adoption of diversified and improved farming practices; good water management; and linking farmer access to technology, inputs, and advisory services\. With the provision of improved package of practices (irrigation, improved seeds, integrated fertility and pest management practices, and advisory services), substantial rise in productivity of target crops (PDO indicator) were achieved, as shown in table 1\. Table 1\. Improved Irrigated Agriculture Productivity Targeted Crops Baseline Value (MT) Target Value (MT) Actual Value (MT) Increase Rice 2\.9 3\.8 4\.38 +51% Wheat 2\.0 3\.2 3\.09 +54% Maize 2\.1 3\.6 4\.66 +121% Potato 10 16 17\.83 +78% Source: Beneficiary’s Project Completion Report (PCR)\. Note: MT = Metric ton\. Page 12 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 29\. According to the beneficiary’s data, the project increased cropping intensity (PDO indicator) from 168 percent to 243 percent (against the target value of 220 percent)\. However, this figure is based on the survey data for the selected AMIS and 41 FMIS that was conducted to prepare the financial analysis for the Government PCR\. It covered FMIS which were completed in the initial years of the AF2 financing and included more FMIS located in or close to terai areas\. However, the Implementation Completion and Results Report (ICR) used the end line survey data and calculated weighted averages for all FMIS and AMIS financed both for the OF and AF\. Based on these calculations, the actual crop intensity is 219 percent, which comes very close to the target value\. 30\. Component A supported this part of the PDO by improving irrigation water service delivery in selected schemes in the mountain, hill, and terai areas and expanding groundwater irrigation in the terai\. The component had a target of rehabilitating 239 FMIS (134 under the original scope and 105 under the AF) covering an area of 38,827 ha\. The project completed 230 FMIS, that is, 96 percent of the target (128 from the original scope and 102 from the AF), covering a total command area of 34,095 ha (18,733 ha from the original scope and 15,362 ha from the AF)\. Out of the original target of 38,827 ha, this achievement was 88 percent considering the combined noncompletion of nine subprojects\. Among nine outstanding schemes, six were dropped due to (a) delays on part of the contractors in the case of Sukatia, Ghukhaya, Khatikulo, Jhimjhime; (b) interference with forest reserve in the case of Gudrung khola; (c) conflict between users and contractor in Ghatgaon khola; and (d) change in river morphology in Jugeni khola\. The remaining three schemes, which are currently at 80 percent progress, will be completed with funding from the GoN\. A total population of 384,361 people with 59,228 households directly benefitted from the implementation of the irrigation subprojects\. 31\. Component D supported this part of the PDO by providing investment support and a package of appropriate agronomic and water management practices\. Specifically, the component focused on on-farm crop water management, cropping pattern improvement, crop diversification and intensification, seed production at the community level, farm mechanization, and organized markets\. The project applied a demand-driven and community participatory approach of extension while delivering targeted services\. A total of 752 Farmers’ Field Schools (FFSs) were created, in which a total of 17,300 farmers learned about better crop production techniques, safe use of pesticides, and integrated crop and water management techniques\. The project supported construction of small- and large-scale seed storage facilities\. The project also supported establishment of large-scale seed processing and storage centers in four locations: (a) Dibyapuri, Nawalparasi; (b) Maharanihoda, Jhapa; (c) Motipur, Rupandehi; and (d) Rajapur, Bardiya\. The centers have drying-cum- transitional shade, a seed processing house, a seed storage with capacity of 100 metric tons, and a separate office\. Under the seed production program, the project produced and distributed 3,226 tons of paddy, 2,822 tons of wheat, 2,952 tons of maize, and 10,494 tons of potato\. Further, the project improved 3,316 livestock sheds and supported construction of 1,554 plastic tunnels for high-value vegetable crop production\. 32\. The project provided a total of 2,428 machineries including mini tractors, power tillers, winnowing machines, threshers, rotovators, reapers, and harrows\. The use of this equipment also helped address the labor shortage and make farming easier for women as, with the migration of males, the burden of agriculture increasingly fell on women who were already overwhelmed with household work\. Further, to attract youth into agriculture, the project supported different types of agro-enterprises, which were based on business plans with support of up to NPR 40,000 per entrepreneur in addition to supporting 725 youth farmers for off- season vegetable farming\. In addition, for the landless, marginal, and poor households, the project provided small grants (a maximum of NPR 50,000 per grant) to carry out need-based income-generation activities such Page 13 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) as mushroom cultivation, beekeeping, spice cultivation, and off-season vegetable production\. A total of 408 disadvantaged people benefitted from this scheme\. 33\. Nepal Food Crisis Response Program (NFCRP)\. The notable outputs achieved under this program (Report No\. 45503-NP), through the IWRMP, were construction and rehabilitation of 3,491 small irrigation schemes4 on 5,678 ha of command area (including 5,305 ha of existing area and 373 ha that received new irrigation)\. Priority was given to areas inhabited by marginalized communities with no potential for future development of surface irrigation\. A total of 28,394 farm households (against target 12,400 farm households) benefitted from this activity\. Improved access to irrigation through completion of small irrigation subprojects led to increased cropping intensity by 20 percent\. Further, under the Social Safety Nets Project, the NFCRP provided a transport subsidy for the private sector to transport fertilizer and seeds (maize, wheat, paddy, and potato)\. In total, the project transported and distributed 11,214 metric tons of fertilizer and 838 metric tons of seeds\. The subsidy scheme covered 58,790 farm families in 800 (out of total 826) Village Development Committees/Municipalities in 23 severely food-insecure project districts\. As part of the food security initiative, a total of 38 seed storage centers were constructed in 21 districts\. Following this production and distribution initiative, 691 metric tons of potato seed, 444 metric tons of wheat seed, and 328\.8 metric tons of paddy seeds were produced by the communities\. Overall, this emergency activity helped in mitigating the impacts of climate change through provision of year-round water, use of quality and appropriate cultivars, and soil management (even if not fully achieved as it is a long-term outcome) while maintaining focus on the food insecure population\. 34\. PDO 2: Improved management of selected irrigation schemes\. This second part of the PDO, which mainly aimed to strengthen the capacity of WUAs to assume full responsibility for O&M of the works constructed under the project, was largely achieved\. All respective PDO and intermediate indicators were either mostly achieved or exceeded their end targets\. Both Components A and B contributed to the achievement of this objective\. While Component A strengthened capacity of WUAs in FMIS, Component B supported the IMT activities and capacity building for seven WUAs within four AMIS\. It must be noted that the PDO and intermediate indicators measured performance of the AMIS and FMIS WUAs separately; the clarification specifying the type of WUAs for each indicator is provided in the comments section of the Results Framework\. 35\. As a result of these capacity-building activities under Component A, the project supported establishment and capacity-building activities of 233 FMIS WUAs\. In total under Component A, the project organized 1,006 training events and trained 28,241 people, 48 percent of whom were women\. However, the project faced several issues when implementing the training program\. Long distances between the district- level division offices and project WUAs as well as lack of social mobilization staff affected the ability of the DoI staff to effectively implement the training\. There were many WUAs that initially did not understand the value of administrative requirements such as systematically maintaining minutes of meetings, regularly updating the lists of water users or audit documents and holding meetings on a regular basis rather than on an ad hoc basis\. Some of the WUAs did not establish their separate offices, which made these WUAs more difficult to sustain and only a limited number of farmers participated in the identification and feasibility studies of their subprojects\. The training was challenging, with some WUAs not maintaining complete financial records, lacking importance for formation of the respective subcommittees, and being reluctant to maintain written records of decisions made by the WUAs\. Capacity development is a time-consuming process, especially when 4 Farm sizes in target areas are on average 0\.2 ha while household sizes are on average 6–7\. Page 14 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) it involves adult learning process\. Further, the project was not able to fully complete the final stage of the training program on O&M in some of the WUAs as some of the construction activities were completed only toward the end of the project, making it difficult to adequately deliver training on O&M for the WUAs in these schemes\. Capacity-building activities for the FMIS WUAs should continue, to improve quality of their performance\. By the project end it was reported that 73 percent of the FMIS WUAs collect water charges required for adequate O&M (intermediate indicator to measure performance of the FMIS WUAs)\. 36\. Under Component B, the project transferred management functions of project-supported sections of the command area under the four AMISs—Narayani, Sunsari Morang, Kankai, and Mahakali irrigation schemes—to the respective WUAs\. The project supported the DoI to enter into agreements with seven WUAs to transfer 39,300 ha\. Progress on civil works (AF) was satisfactory with 97 percent completion rate in Ramgunj and 100 percent in Mahakali Irrigation Scheme (MIS)-II and Narayani Irrigation Scheme (NIS)\. Work on water management activity was satisfactory with the preparation of Canal Operation Plans, training of the WUAs on institutional and water management capability development and canal operation training, and so on\. Under this component, the project provided 520 trainings to 19,013 participants, out of which 4,664 (or 25 percent) were women\. The Asset Management Plans were prepared and handed over to all seven systems\. These plans will help the WUAs effectively and efficiently manage irrigation water and the system\. Although the actual Irrigation Service Fee (ISF) collection was lower than the targets set for each WUA to cover their O&M, the evolution of ISF collection between the beginning and the end of the project was encouraging (see table 2)\. Table 3 shows significant increase in the revenue from collecting the annual O&M resources from different sources by each subsystem in 2017 (it must be emphasized that increased in-kind contributions are particularly more important than cash contributions)\. Table 2\. Trend of Total ISF Collection in the IMT Subprojects (NPR) Subsystem 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 KIS 176,440 943,466 385,562 695,629 820,749 1,196,700 1,489,177 2,411,891 SIS 562,017 682,880 110,511 114,000 1,203,000 RIS 286,500 345,000 545,000 NIS-8 35,000 202,185 196,106 127,200 124,761 NIS-2 448,071 225,796 493,259 MIS-I 971,000 534,424 569,962 612,413 1,170,421 1,040,329 MIS-II 961,583 994,698 1,149,133 2,592,467 Note: KIS = Kankai Irrigation Scheme; NIS = Narayani Irrigation Scheme; RIS: Ramgunj Irrigation Scheme; SIS = Sitagunj Irrigation Scheme\. Table 3\. Annual Resources Collection by the IMT Subprojects in 2017 (NPR, thousands) KIS SIS NIS-8 MIS-I RIS NIS-2 MIS-II O&M target 4,336 5,600 1,800 3,141 5,600 1,800 3,666 ISF, fees, rent 2,412 1,203 125 1,041 545 493 2,593 income ISF collection 1,652 1,003 117 1,041 545 420 1,996 Equipment services 1,230 285 256 567 740 182 0 Total cash income 3,642 1,488 381 1,608 1,285 675 2,593 % of O&M target 84% 27% 22% 52% 23% 38% 71% In-kind O&M 3,350 3,328 910 2,835 4,937 1,303 2,884 % of O&M target 78% 60% 51% 91% 89% 73% 79% Page 15 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) KIS SIS NIS-8 MIS-I RIS NIS-2 MIS-II Total cash + labor 6,992 4,816 1,291 4,443 6,272 1,978 5,477 % of O&M target 162% 86% 72% 142% 112% 110% 150% Note: KIS = Kankai Irrigation Scheme; NIS = Narayani Irrigation Scheme; RIS: Ramgunj Irrigation Scheme; SIS = Sitagunj Irrigation Scheme\. 37\. Overall, the activities under Components A and B strengthened the capability of the WUAs to assume more responsibility for the O&M of the modernized system\. Their operation has improved with provision of comprehensive training, new office buildings, machinery, and equipment\. At project completion, the respective PDO indicators surpassed their target values\. Thus, a total of 240 (233 WUAs under Component A and 7 WUAs under Component B) were created and/or strengthened against the targeted 221 WUAs\. Based on the survey of water users, 87 percent (against targeted 70 percent) of water users in the rehabilitated schemes were satisfied with the work of the WUAs\. Further, 94 percent (compared to the targeted value of 85 percent; PDO indicator for the AMIS WUAs) of the AMIS WUAs in the transferred schemes currently maintain O&M expenditures in line with their Asset Management Plans\. All AMIS WUAs are formally constituted and holding regular meetings, maintain appropriate accounts and cash registers, and collect water charges required for adequate O&M (three PDO indicators that measured performance of the AMIS WUAs)\. 38\. PDO 3: Enhanced institutional capacity for integrated water resources management\. The third part of the PDO was partially achieved through project activities completed under Component C\. These activities included (a) setting up a WRIC at the WECS; (b) preparing an integrated water resources policy (IWRP); (c) streamlining and upgrading the hydro-meteorological information collection system; (d) setting up two river basin offices to prepare the country for a basin-level approach to water resources management; and (e) preparing seven river basin management plans for Nepal rivers and installing 32 telemetry systems\. All these activities were completed with the exception of the River Basin Management Plans that could not be completed within the project period\. Further, the IWRP prepared by the project needs to be revised now in the context of the country becoming a Federal State with seven provincial governments along with empowered local governments\. The key achievements and challenges under this part of the PDO are described below\. 39\. WRIC and WRIS\. Partly funded by the SAWI MDTF, the WRIC was established and is expected to become the national center that develops and maintains a national water resources database (availability, allocation, and use) and disseminates water-related data to interested users, for example for basin planning and management\. Along with the establishment of the WRIC, the project developed a computerized WRIS to facilitate the functioning of the WRIC\. While the WRIC is an organizational physical entity with the defined structure, systems, and processes, the WRIS is a combination of hardware and GIS-based software to assist the WRIC to meet its objectives\. However, it is uncertain whether the WRIC can function properly and the WRIS can provide reliable datasets on water resources and availability, use, and allocation for all stakeholders in future\. The WECS, which is responsible for both the WRIC and the WRIS, seems to lack proper staffing and adequate budget for regular functioning of the WRIC, as well as maintaining and upgrading of the installed WRIS\. 40\. Telemetry systems\. The establishment of real-time data acquisition system with code division multiple access (CDMA)-based telemetry in Narayani basin was successful and the same technology was also followed in Babai and West Rapti basins\. Because the measurement variables are only few, it can handle data with acceptable response time\. CDMA, being a wireless network, is a particularly suitable option for remote Page 16 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) sites in areas covered by the network\. Telemetry systems were installed in 32 stations (9 hydrological and 23 meteorological stations) in Babai, West Rapti, and Karnali River basins\. A total of 11 hydro-met stations were upgraded and information from telemetry systems was uploaded into the WRIS\. 41\. River basin offices (RBOs)\. The RBOs were established at Nepalgunj for Karnali basin and at Narayanghat for Gandaki (Narayani) basin jointly by the WECS and the Department of Hydrology and Meteorology (DHM)\. Hydrology units of the DHM were shifted to Nepalgunj from Surkhet and to Narayanghat from Pokhara\. The requirement of logistics was jointly assessed by the WECS, DHM, and OPD\. The RBOs are responsible for developing procedural guidelines and decision-making tools (for formal water access) for the sub-basins and providing training to the stakeholders\. 42\. Regional cooperation cell for trans-boundary water management\. The concept and the mandate for establishing the regional cooperation cell to look after trans-boundary water management were approved by the 54th meeting of Water and Energy Commission held on November 23, 2009\. The cell was established with the operational responsibility entrusted to a Joint Secretary of the WECS\. 43\. IWRP\. Due to challenges in recruiting consultants for the preparation of the policy, the WECS decided to implement the policy formulation activity in-house by forming a task force in July 2009, coordinated by the Joint Secretary, Legal Division, WECS and comprising the Joint Secretaries of Water Resources, Energy, and Environment Divisions\. A draft IWRP was prepared and submitted to the Government for approval\. However, because the country has gone through political restructuring and has become a Federal State with seven provincial governments and several empowered local governments, the draft policy will need to be substantially revised\. 44\. River Basin Management Plans\. This activity was to be implemented by the WECS\. Due to substantial delay in hiring of consultants, the preparation of basin plans was delayed as a result of which US$3\.5 million budgeted for this activity was cancelled\. However, the WECS was able to sign the contract with Lahmeyer International GmBH on June 26, 2018, and the work started in August 2018, that is, at the time of preparation of the ICR\. WECS has managed to secure funding till December 2019 from South Asia Water Initiative through the World Bank to continue to work\. While the GoN expects further support from the World Bank, it is committed to complete the work\. 45\. Although activities under Component C substantially helped achieve the third outcome of the PDO (see also paragraph 38), delays in preparation of the River Basin Management Plans and the unplanned need to revise the IWRP currently constrain the Government’s capacity to provide more efficient and streamlined water resources management services at the national level and within selected basins\. In addition, as explained in paragraph 39, sustainability of the outcomes of the WRIC and WRIS activities is at risk due to the WECS’s capacity to continue the works and update and upgrade of the WRIS in future\. Justification of Overall Efficacy Rating 46\. Given that the project largely achieved its intended outcomes, the overall efficacy is rated Substantial\. Page 17 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) C\. EFFICIENCY Assessment of Efficiency and Rating 47\. Economic efficiency\. The appraisal analysis estimated economic feasibility of the project through the cost-benefit analysis (CBA)\. It estimated potential returns for representative schemes and did not present aggregated project-level returns\. Key benefits were assumed to derive from year-round irrigation, adoption of high yielding variety (HYV) of paddy, increase in crop productivity, and increase in cropping intensity and diversification\. Baseline and future levels of crop yields, intensity and diversification, and benefit accumulation phases were not described in detail\. Benefits were estimated for a period of 20 years, in 2006 prices and at opportunity cost of capital (OCC) of 12 percent\. As presented in Table 4, the analysis projected lowest returns to groundwater-based (electrical5) FMIS in the terai with an economic rate of return (ERR) at 13\.9, economic net present value (ENPV) at NPR 12,681 per ha, and benefit-to-cost ratio (BCR) at 1\.11\. Highest returns were projected to groundwater-based (conversion6) FMIS in the terai with the ERR at 52\.6 percent, the ENPV at NPR 27,000 per ha, and the BCR at 2\.6\. Sensitivity analysis was conducted for multiple variables, of which the variable that reflected the actual situation was on simultaneous 25 percent increases in investment costs and one-year delays in benefit accumulation\. In this scenario, the base ERRs were projected to drop by up to 54 percent\. The surface water mountain FMIS and groundwater-based (electrical) FMIS in the terai were projected to become unfeasible with the ERRs dropping below 12 percent\. As discussed in paragraph 48, the appraisal returns were based on substantially underestimated costs and overestimated irrigated areas, which explained the project’s sensitivity to the related variables\. 48\. During the Midterm Review (MTR), the project was restructured by reducing the appraisal project scope by 51 percent due to substantially higher-than-projected civil works costs (see paragraph 21)\. The project costs were underestimated substantially due to the technically erroneous assumptions on price contingencies\. The MTR analysis reestimated the economic and financial feasibility of the overall project at 2010 prices, OCC at 12 percent, and assuming the technical life of project at 20 years\. The scheme-level returns were not presented\. The MTR analysis projected a financial rate of return (FRR) of 19\.0 percent and financial net present value (FNPV) of 3\.0 billion with the BCR at 1\.28\. The ERR was estimated at 19\.7 percent, the ENPV at NPR 2\.9 billion, and the BCR at 1\.83\. 49\. The project received additional financing in 2013 to complete the restructured appraisal scope of 45,400 ha and an additional 29,900 ha of FMIS commands\. The AF2 analysis estimated the ERR and ENPV only for the FMIS schemes\. The schemes were projected to generate ERRs from 13 percent (mountain) to 30 percent (hills)\. The analysis did not describe key costs and benefits assumptions\. 50\. The ICR analysis reestimated the returns for representative schemes as well as the overall project\. The returns were estimated assuming the technical life of schemes at 20 years, in 2018 prices, and at OCC of 5 percent\.7 The analysis used actual changes to crop productivity, intensity, diversification, and technology adoption rates\. The overall project FRR was estimated at 21\.8 percent, the FNPV at NPR 23\.1 billion, and the BCR at 3\.8\. The scheme FRRs were projected from 12\.7 percent (mountain FMIS) to 22\.9 percent (terai IMT)\. Overall project ERR was estimated at 23\.6 percent, the ENPV at NPR 18\.7 billion, and the BCR at 4\.2\. The scheme-wise ERRs were estimated from 14\.5 percent (mountain FMIS) to 24\.1 percent (terai IMT)\. Relatively 5 Refers to ground-water based deep tubewell (DTW) pumps operated through electricity 6 Refers to groundwater DTW pumps converted from the diesel-based operation to electricity-based operation\. 7 Since the appraisal and restructuring analyses were incomparable (please see paragraph 51 and annex 4), the ICR did not use the appraisal discount rate\. Page 18 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) higher civil work costs and agro-climatic conditions that do not support higher intensification contributed to the lower returns to mountain FMIS\. In contrary, lower civil works costs and favorable agro-climatic conditions in the terai contributed to higher returns to the terai schemes\. Refer to annex 4 for a detailed analysis\. Table 4\. Summary Economic Results: Appraisal, MTR, AF, and ICRR Appraisal MTR AF-2 (2013) ICRR ERR at 25% cost increase Areas ERR ENPV Areas ERR ENPV Areas ERR ENPV ENPV Areas ENPV ENPV BCR and 1 year BCR BCR EIRR BCR (ha) (%) (NRs/ha) (ha) (%) (NRs/ha) (ha) (%) (NRs M) (NRs/ha) (ha) (NRs M) (NRs/ha) benefit delay FMIS Mountain 1,024 16\.38 31,828 1\.21 9\.62 692 13\.00 54 1,917 17\.83 2\.34 255 133,147 Hills 10,680 47\.83 185,092 2\.64 25\.68 2,446 30\.00 879 7,744 18\.36 3\.14 2,619 338,188 Scheme level Terai -surface 14,688 28\.31 41,355 1\.75 18\.91 Scheme level results are not 3,761 26\.00 4,176 16,283 18\.14 2\.93 5,374 330,058 results are not Terai - DTW (electrical) 2,100 13\.93 12,681 1\.11 9\.22 available 1,160 22\.00 2,730 3\.34 available 8,151 18\.57 712 87,319 Terai - DTW (conversion) 3,000 52\.63 27,012 1\.88 29\.65 5,300 29\.00 4,096 IMT 61,000 49\.65 26,903 2\.57 22\.79 16,500 n\.a n\.a 39,300 24\.18 4\.89 7,292 185,547 Overall Project 92,492 Not estimated 46,545 19\.70 40,804 1\.83 29,859 Not presented 73,395 23\.64 4\.21 18,722 255,083 51\. The economic efficiency cannot be evaluated by comparing the appraisal, restructuring, and ICRR results due to (a) drastic underestimation of cost and overestimation of costs at appraisal, (b) unavailability of detailed benefits and costs assumptions used in previous analyses, (c) use of prices in different years, and (d) inconsistency in estimation of project and scheme-level returns\. The project efficiency therefore is rated based on the ICRR analysis-produced results only\. Despite substantial cost overruns, reductions in the scope, delays in benefit accumulation, and failure to prepare the river basin plans (see paragraph 21), the project investments generated higher returns due to higher-than-expected increases in crop productivity, intensity, and diversification, substantially higher adoption of improved agricultural technologies, and achieving targets for the O&M budgets\. Moreover, the project also achieved savings at around NPR 620,000 million (US$6\.2 million) because of favorable exchange rate gains, competitive bidding, and savings in physical contingencies\. Additional 23 irrigation schemes with 2,972 ha of command were supported for these savings\. The economic efficiency is therefore rated Substantial\. 52\. Administrative and overall efficiency\. The project faced substantial cost overruns due to underestimation of costs at appraisal (see paragraph 21 and annex 4) as well as implementation delays\. Frequent staff changes at the project management team had a negative impact on efficiency\. Around US$242,218 of the IDA grants were cancelled due to non-utilization\. Preparation of river basin plans was not carried out (see paragraph 44)\. The administrative efficiency was therefore rated Substantial\. The overall project efficiency is rated Substantial considering the administrative efficiency and the economic efficiency ratings\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING 53\. Overall, the project achieved impressive outcomes\. Thus, improved cropping intensity, improved adoption rates of the disseminated technologies, higher seed replacement rates, and productive subprojects contributed to the increased agricultural productivity\. A substantially larger proportion of the tail-enders received water and improved irrigated agriculture, and transfers of the schemes resulted in larger or expected water deliveries at the designated points\. Based on the abovementioned assessment and ratings, Relevance of the PDO is rated High, Efficacy of the PDO is rated Substantial, and Efficiency of the project is rated Substantial\. However, the overall outcome rating of the project is rated Moderately Satisfactory due to partial achievement of the third outcome of the PDO\. Specifically, the issues related to an IWRP and four River Basin Page 19 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Management Plans (see paragraphs 43 and 44) currently constrain the Government’s institutional capacity for effective integrated water resources management\. E\. OTHER OUTCOMES AND IMPACTS Gender 54\. It was evident that women and vulnerable groups benefitted from the project with (a) one-third of total positions in the executive committees of WUAs reserved for women; (b) specific training on gender awareness, women’s empowerment, and gender and development; (c) training on income-generation activities where approximately 60–70 percent of the participants were women; and (d) observation tours for female members of the WUAs\. Women also benefitted from the use of machineries (which made farming easier) provided by the project that helped them handle the burden of agriculture due to labor shortage following massive migration of males out of rural areas\. 55\. A Gender and Vulnerable Community Development Action Plan (GVCDAP) was implemented on a pilot basis in three subprojects in the Western, Mid-Western and Far-Western regions\. The plan was implemented forming a group comprising women, Janajatis, and Dalit households from the command area in coordination with the respective WUA\. Women’s participation in the WUA executive committee was 35 percent across the project-supported schemes\. The project also implemented the Youth Promotion Program, in which NPR 40,000 was provided per entrepreneur, benefitting 747 young farmers, 47 percent of whom were women\. The project recruited a native social mobilizer in subprojects for group mobilization and extension support and to bridge the gap between WUA and district offices\. Out of the total 70 social mobilizers, 54 percent were female, of which 51 percent belonged to the Dalit and Janajati communities\. The 384,361 people with total 59,228 households directly benefitted from the implementation of the subprojects under Component A\. The share of women, Janajatis, and Dalits were 51, 18, and 10 percent, respectively\. In addition, under the FMIS, the project organized 1,006 training and capacity development events, benefitting 28,241 members, of which 48 percent were women\. Such events were also organized under the AMIS, benefitting 19,013 members, which included 4,753 women\. In addition, a total of 1,129 field-based agricultural training and 752 FFSs were created and attended by 15,983 women\. Institutional Strengthening 56\. Irrigation and agriculture technical staff\. The project organized training and study tours abroad for the Government employees\. Training was focused on topics such as participatory irrigation management, irrigation water management, preparation and management of the World Bank-funded projects, groundwater development, and integrated water resources management\. In addition, the OPD carried out several local workshops in three regions\. Participants were technical and accounting officials from the irrigation field offices as well as staff from the OPD, Regional Irrigation Directorate, Regional Agriculture Directorate, the DoI, and Ministry of Irrigation\. Training courses were conducted on topics such as gender and vulnerable community participation and development, agriculture extension, data collection and GIS, social and environmental management plans (SEMPs) implementation, groundwater pump testing and well development, and World Bank procurement processes\. 57\. WRIC\. The project established the WRIC and equipped it with the WRIS that is currently operational and available to the public\. Further, the project established two RBOs and provided equipment and training Page 20 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) to make it a fully functional office\. A total of 32 hydrological and meteorological stations were equipped with telemetric systems to provide real-time data\. This information is also available on the Internet and is linked to the WRIS\. 58\. WUAs\. Due to various types of WUAs in the project area, the project developed a WUA-specific port and training program customized for FMIS and AMIS\. Training for the WUAs included topics such as O&M, office management, financial management, water management, and empowerment of women as well as farmer-to-farmer training programs\. Although the capacity level varies from WUA to WUA, all project WUAs conduct regular meetings of the executive committees, prepare annual budgets, and collect ISF to cover O&M and administrative costs\. Some of the WUAs still need to undertake an important exercise to assess the annual O&M requirement and set the adequate ISF that will cover O&M of the irrigation systems\. The survey conducted by the monitoring team recorded high marks by respondents for WUA performance and effectiveness, which was not the case at the beginning of the project\. 59\. FFSs established under Component D proved to be effective in disseminating new production techniques\. FFSs promoted best practices and new innovations through field days, seasonal planning workshops, cross learning visits, and field-based interactions\. In collaboration with the National Agriculture Research Council, seeds of rice, maize, and wheat were distributed to District Agriculture Offices for further seed production\. Results of the completed schemes showed increase in yields of rice, wheat, maize, and potato along with increased cropping intensities\. With considerable experience gained and lessons learned, regional-level workshops were organized to share findings, particularly in the areas of FFS, soil fertility management, community-based seed production, and integrated plant protection\. Further, the project supported establishment of crop collection and seed storage centers through Investment Support Grants\. These facilities helped farmers to better organize themselves to secure better market prices in addition to facilitating interactions between the buyers and sellers\. 60\. Agriculture Service Centers (ASCs)\. A total of 12 ASCs were equipped with IT facilities to support e- extension\. Over 60 social mobilizers (including 28 women) were trained in basic technical skills such as designing cropping pattern, soil fertility management, and integrated pest management\. Mobilizing Private Sector Financing 61\. The total amount of private sector financing was US$7\.42 million\. This was the contribution of water users in financing of the subprojects in their project area\. Poverty Reduction and Shared Prosperity 62\. The NFCRP activities contributed to poverty reduction under the project\. The detailed description of achieved results is provided in paragraph 32\. Other Unintended Outcomes and Impacts 63\. In some groundwater subproject areas, particularly in the terai, due to its promising returns, fisheries have become one of the attractive activities among the farmers after rehabilitation works conducted by the project\. It was noted that after project activities in the Bhairahawa Lumbini Ground water irrigation subproject, dedicated areas for fish farming have increased by 10 percent\. These fish ponds range in size from 0\.068 ha to 6 ha and together account for 10 percent of the command area\. It has been reported that the Page 21 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) farmers harvest approximately 3,600 tons of fish per year from 400 ha and generate a combined net income of around NPR 456 million\. 64\. General improvement in living conditions was strongly demonstrated by the increase in price of land and houses in the project districts\. The real estate price increase was mentioned by a number of respondents among farmers and households\. Many people who seemed to have left the area earlier started to return, and household gardens showed better yields because of improved irrigation conditions, contributing to the increase in land price\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 65\. The project design was guided by the Government strategic documents for the sector, namely 2005 Nepal Irrigation Development Vision and 2002 NWRS\. The vision document emphasized the need for increasing irrigated agriculture productivity and extending the cropping season through year-round irrigation services\. In alignment with the vision, the project design recognized the importance of a service-oriented management approach to provide more efficient, reliable, and flexible water services to farmers, which indeed formed a major policy shift from the earlier supply-oriented approach\. The vision also called for progressive shifting of O&M costs to beneficiaries to enhance efficiency, equity, and sustainability\. In addition, the strategy emphasized integration of agriculture and irrigation development to realize the full benefits from investment in irrigation\. 66\. The design of the previous project, the Nepal Irrigation Sector Project (NISP), featuring a similar project structure, informed the design for the IWRMP\. Accordingly, Component A aimed at improving the ‘scheme screening, selection, and approval mechanism’; Component B was designed following adequate consultations between the DoI and the WUAs and within hierarchical levels of the WUAs; Component C formulated the water resources policy and automation in information collection, retrieval, and management systems; and Component D targeted implementation of the technology- and result-oriented agricultural program in the command areas of the schemes with joint participation of agriculture and irrigation staff\. 67\. Price contingencies for civil works costs were erroneously estimated at appraisal, which led to the considerable reduction of the original project scope during project implementation\. At the time of the appraisal, the inflation rates for the country were between 5 percent and 8 percent (2005–2006)\. An annual average inflation rate for the project period (2006–2013) was forecasted at around 9\.5 percent\.8 In addition to this, the country was an importer of construction materials and fuel, and migration of labor to the Gulf countries was on rise\.9 Despite all these factors, only 4 percent price contingency was assumed for the entire project period\. Consequently, there was a significant cost overrun after the price of construction materials and labor substantially increased in the first few years of project implementation, and the project had to be restructured in 2011 to reduce the original scope of works\. 8 IMF, World Economic Outlook (October 2009)\. 9 World Bank, The Qatar-Nepal Remittance Corridor 2008; World Bank, Work-Related Migration and Poverty Reduction in Nepal (2007); World Bank, The Demographic, Economic and Financial Determinants of International Remittances in Developing Countries (2008)\. Page 22 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 68\. At appraisal, the key project risks were adequately identified—including risks related to project stakeholders, the implementing agencies, and the project—and mitigation measures were proposed\. There were broadly three sources of risks: (a) worsening of the political environment, (b) weaknesses in project design, and (c) weaknesses in implementation arrangements\. To mitigate the first risk, the project adopted a flexible design that allowed project interventions to become more selective in terms of locations and activities\. The project also promoted participation, inclusion, and transparency as well as implementation through local-level structures with strong beneficiary participation\. With regard to the second and third risks, lessons learned from previous World Bank operations were used to reduce the likelihood of these risks materializing during project implementation\. B\. KEY FACTORS DURING IMPLEMENTATION 69\. Adequate arrangements were made by the Government at the national and local level for project implementation\. A Project Steering Committee (PSC) with representatives from the relevant ministries was set up as the apex body for the project\. There was also a Project Implementation and Coordination Committee chaired by the Director General of the DoI, which functioned under the PSC\. The DoI had the main responsibility for overall project implementation (including implementation of Components A and B), with the DoA of the Ministry of Agricultural Development as the implementing agency for the agricultural production support under Component D\. The WECS and DoI were in charge of Component C\. The DoI provided support staff for the OPD to consolidate all project activities at the center and coordinate with various implementing agencies\. A Regional Project Support Unit in each regional irrigation directorate assisted by the Regional Directorate of Agriculture undertook project implementation at the regional level, and a subproject management unit implemented subprojects at the district level\. The commitment and leadership of the GoN was evident through the attention and support the project received at all levels of the Government\. 70\. However, frequent changes at the OPD had an impact on project implementation\. Disruptions occurred at times when transfers (following local, provincial, and central government elections) took place, making the tasks difficult for the incoming staff, contractors, and water users\. The most significant one was when all staff were transferred from Component A, including the Project Director in September 2013\. Such wholesale transfer had an adverse impact on project implementation as disbursement and progress on project activities considerably slowed down\. The position of the environmental specialist to support the OPD was kept vacant for this period too, which affected the environmental oversight and monitoring of subprojects as well as timely preparation of SEMPs\. 71\. Project implementation was at times delayed by external factors that were beyond the project’s control\. The Koshi embankment breach in August 2008 and major earthquakes on April 25 and May 12, 2015, followed by several earthquake-triggered landslides, caused significant disruption to construction activities under Component A\. Further, due to agitation in the terai in 2015 that resulted in severe shortage of fuel and construction materials, the project suffered delays in construction works in all AMIS in the terai\. There was a concern that seven schemes would remain incomplete by the closing date of June 2016 of the original project\. Furthermore, there were two schemes, Itiya Khola scheme in Palpa and Gajedi scheme in Rupandehi, which suffered damages from the monsoon in 2015 and needed additional financial support over original allocation for completion of civil works\. Finally, construction activities on some of the larger terai schemes were delayed due to weather-related delays and nationwide strikes (bandhs) in 2014 and 2016\. Page 23 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 72\. Ratings for implementation progress (IP) fluctuated between ‘Moderately Unsatisfactory’ and ‘Moderately Satisfactory’ from the start of the project until mid-2011\. These ratings were assigned mainly due to the Unsatisfactory/Moderately Unsatisfactory status of financial management and initial delays in implementation of Component D that were resolved at a later stage of project implementation\. Progress in meeting the PDOs remained mostly Satisfactory but was downgraded to Moderately Satisfactory as some aspects of water institution/management and water policy could not be completed during the project period\. However, the PDO rating was reverted to Satisfactory given the GoN’s commitment to accomplish all these works using their own resources\. 73\. Preparation of river basin plans under Component C to be implemented by the WECS was not carried out as the selection of a consulting service for this important activity took an exceptionally long time\. Initially, the selection process commenced for providing consulting services for the preparation of four major river basin plans\. Proposals from short-listed consultants were received, technical proposals were evaluated, and the World Bank’s no-objection provided\. However, before financial evaluation was completed, the borrower and the World Bank agreed that the river basin plan covering all the major rivers (seven major river basins) of the country with broadened scope of services including development of hydropower master plans would be required to develop a complete national master plan on river basins\. Accordingly, the terms of references were revised, and the selection process was reinitiated\. The consultant was selected, and a contract was signed toward the end of the project, with the assurance that the GoN would manage funds required after the end of the IWRMP\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 74\. The project followed a clearly structured theory of change, as described in section I\.A\. It outlined how project activities of each component would contribute to achieving the PDO\. The PDO was disaggregated into four main PDO indicators that covered the activities’ contribution to the PDO\. The M&E activities envisioned a project monitoring, learning, and evaluation framework to facilitate (a) results-based management through timely monitoring, analysis, and feedback of relevant indicators; (b) learning and process enhancement, through process monitoring by participatory methods, involving reviews and satisfaction surveys; and (c) impact evaluation, involving the use of appropriate baseline and controls\. A dedicated M&E specialist in the OPD would be responsible for planning and coordinating the M&E activities, involving the implementing agencies, external M&E consultants for intermittent surveys and studies, and the beneficiaries, primarily WUAs\. M&E Implementation 75\. The project conducted the baseline study at the onset of project implementation to establish baseline data for periodic project monitoring and impact evaluation\. The OPD focused on the systematic monitoring of the indicators of the Results Framework and close monitoring of contracts\. A number of useful surveys were carried out, including (a) a survey based on a representative sample of households in the command area to establish a pre-intervention baseline, (b) training needs assessment of the WUAs, (c) impact study on groundwater irrigation, (d) final impact assessments for Component A (separate reports for Far-Western, Mid- Page 24 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Western, and Western regions) and Component B (separate reports for Kankai, Mahakali, Narayani, and Sitagunj); (e) PCR for Component D; and (f) most importantly, the integrated PCR for the entire project\. The project maintained the website (www\.dwri\.gov\.np/iwrmp) with all the information available about the project activities, including the above-listed documents, photos, and videos, which ensured transparent and easy access for all relevant constituency and stakeholders\. 76\. However, the project could not implement the M&E design exactly as it was prescribed in the Project Appraisal Document\. Specifically, the DoI and the DoA conducted their M&E activities independently and not in an integrated manner during project lifetime\. Both agencies had monitoring systems with standardized forms and processes that are used to monitor implementation progress but not necessarily evaluate project results\. Efforts by the DoI to monitor results were not effective and most outcome results were collected through the use of consultants and a midterm survey\. The World Bank recommended several times that coordination between the DoI and DoA be strengthened to ensure a unified and comprehensive approach to M&E activities during project implementation\. However, only at the end of the project, the World Bank received a very well-prepared PCR with a thorough integrated analysis of project activities carried out under all components\. M&E Utilization 77\. Overall, M&E reports prepared individually for each component were effectively utilized during the course of the project, as the AF and project restructurings were timely requested and processed based on M&E recommendations\. However, the main weaknesses in M&E utilization, as mentioned earlier, were lack of coordination between the OPD and implementing agencies in carrying out M&E activities and, therefore, lack of integrated M&E analysis for the entire project during project implementation\. This consequently limited the ability of all involved parties including the GoN, implementing agencies, and the World Bank to see the bigger picture of how key contributions achieved under each project component complement each other and feed into meeting the overall PDO\. As mentioned earlier, this situation was resolved at the end of the project, when the OPD submitted a well-prepared PCR for the entire project\. Justification of Overall Rating of Quality of M&E 78\. Although a rigorous M&E system was established by the project, the overall rating of M&E quality is Substantial due to lack of integrated progress reports during project implementation\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 79\. Environmental safeguards\. The project supported improvement and rehabilitation of already existing groundwater and surface water small to medium-size community-managed irrigation schemes\. These schemes were geographically located all over the country\. The project also supported management transfer of some secondary/tertiary canals of larger irrigation schemes from the DoI to the user groups\. No significant adverse environmental issues or impacts were encountered during the implementation as the project support was for the improvement/rehabilitation of the six existing schemes which were relatively small in scale and with low environmental risks\. Typical environmental issues identified in one or the other scheme included small-scale landslide risks along the canal, the risk of accidents in open canals near settlements, disturbance to trails and village roads, canal seepage affecting houses, water-logging risks, silt intrusion chances, and so on\. Page 25 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 80\. The project was a category ‘B’ and triggered safeguard policies Environmental Assessment (OP 4\.01) and Pest Management (OP 4\.09)\. Considering that the improved irrigations system would intensify agriculture which would attract the use of pesticides, the Pest Management (OP 4\.09) policy was triggered during the additional financing of the project\. The project prepared an Environmental and Social Management Framework (ESMF) which provided guidance/framework for managing the potential social and environmental risks during the project implementation\. As outlined in the ESMF, each scheme was screened against the set of environmental and social criteria derived from the GoN regulation and the World Bank’s safeguard policies\. Accordingly, different management procedures were adopted; for example, simple schemes were mitigated through a scheme-specific SEMP while some subprojects required an Initial Environmental Examination/Environmental Impact Assessment with specific SEMPs\. The project also prepared guidelines for safe use of chemicals in FFS curriculum for farmers to raise awareness on the judicious use of pesticides\. 81\. Social safeguards\. The project activities were mainly focused on upgrading and rehabilitation of existing small to medium-size community-managed groundwater and surface water irrigation schemes\. The project triggered OP 4\.12 (Involuntary Resettlement) and OP 4\.10 (Indigenous Peoples)\. An ESMF was prepared based on an Integrated Social and Environmental Assessment\. Based on the guidelines of the ESMF, 239 subproject-specific SEMPs were prepared and implemented satisfactorily\. There were no issues of land acquisition in the surface water and groundwater subprojects rehabilitated under the project\. For new groundwater subprojects, however, the required lands were acquired following a voluntary donation approach from concerned water users\. The project prepared a land contribution report documenting the process and procedures followed to accept voluntary land donation and maintained records of voluntary donated lands\. The project has been successful to extend project benefits to vulnerable groups like women, Dalits, and indigenous people, and involving them in orientation and WUA training activities\. The project provided support to the poor, women, indigenous people, and Dalits by expanding employment opportunities during constructions as well as providing share cropping and agriculture labor opportunities\. The project strictly implemented a zero-tolerance policy on use of child labor and gave high priority to health and safety of workers by encouraging the use of personal protective equipment\. 82\. Procurement\. The project procurement was carried out by the DoI, DoA, and WECS\. With respect to procurement management, the project was recognized as one of the good performing projects in the Nepal portfolio\. Overall, procurement management rating for the project is Satisfactory in both the implementing agencies (DoA - Component D and DoI - Components A and B) and it remained so over the last three years or more\. Two large-value consulting contracts for providing technical assistance for implementation of two components—Component A (Irrigation Infrastructure Development and Improvement) and Component B (Irrigation Management Transfer)—were procured on time, which helped in the timely implementation of the irrigation schemes\. Works contracts for irrigation schemes were procured through the national procedures using the open competitive approach as well as through the WUAs\. For very small value (less than US$10,000) and routine nature of consulting services, an innovative approach using simplified Quality- and Cost-Based Selection (QCBS) methods was used, which proved to be efficient and effective\. 83\. Financial management\. Initially, there were challenges in coordination between the implementing agencies in areas of financial management such as planning, budgeting, accounting, and reporting due to multiple implementing agencies and diverse sources of financing\. However, this was improved subsequently with increased communication and collaborative efforts\. There was an attempt to have a financial management information system in this project\. However, this could not be implemented due to technical and other reasons\. There were several transfers of finance staff during the implementation period\. However, Page 26 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) the transition was adequately managed and mitigated through the use of financial management consultants\. The project complied with the fiduciary covenants except for some delays in the submission of trimester financial monitoring reports (FMRs)/interim unaudited financial reports (IUFRs) and audit reports\. Though internal control arrangements were found adequate, there were some minor internal control weaknesses as reported in internal audit reports and auditor’s management letters\. These were also noted during the World Bank’s fiduciary reviews and were resolved subsequently\. Despite some initial challenges, the financial management arrangement was found adequate and satisfactory\. There were no outstanding FMRs/IUFRs and audit reports\. The auditors provided unqualified opinions in the audit reports\. The separate budgetary allocation, a dedicated financial management team supported by the financial management consultant, and good coordination were key to smooth implementation\. C\. BANK PERFORMANCE Quality at Entry 84\. The design of the project was strategically relevant and in line with the Government’s overarching objective of sustainable economic growth and poverty reduction through improving irrigated agriculture productivity and irrigation water management\. The project preparation started in December 2005\. The project team comprised a mix of technical, social, and environmental experts specializing in irrigation infrastructure, irrigation management/institutions, social and environmental aspects of irrigation, and agriculture and agricultural economics and was fully supported by the fiduciary colleagues\. A brief strategy document, ‘Nepal Irrigation Development Vision, 2005,’ prepared by the DoI, which emphasized the need for increasing the productivity of irrigated agriculture and extending the cropping season through year-round irrigation services provided a road map for the formulation of the project\. As per the vision document, the project design recognized the importance of a service-oriented management approach to provide more efficient, reliable, and flexible water services to the farmers, which indeed formed a major policy shift from the earlier supply-oriented approach\. However, as explained earlier, the quality at entry was affected by the inadequate estimate of appraisal-level project costs, which led to significant reduction of the original project scope\. The World Bank team was proactive though during project implementation to immediately process project restructuring to address this matter10\. Quality of Supervision 85\. The World Bank task team provided quality implementation support to the GoN with sufficient expert staff and knowledge resources\. The task team regularly conducted implementation support missions (at least twice a year) and timely prepared Aide Memoires, except during the period of the devastating earthquake event and during the period of political unrest, when the World Bank missions were suspended\. The MTR of the original project took place in September–October 2010 when the scope of work under Component A was revised and the number of irrigation schemes were reduced to reflect the increase in cost of labor and construction materials\. The MTR team conducted the review in a comprehensive manner and rated the findings with candor\. The MTR for the IWRMP AF was conducted in August 2016\. The Implementation Status and Results Reports (ISRs) also candidly rated performance of the project both in terms of achievement of development objectives and project implementation\. The task team regularly drew the attention of the Government and the project team to the issues in project implementation and provided appropriate advice 10 Project Restructuring Paper of June 2011 Page 27 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) and suggestions\. The country-based team was constantly available for consultations and support\. The Sector/Practice and Country Management provided proper guidance to the task team in the resolution of the issues raised during project implementation\. 86\. The task team also reviewed progress regarding establishment of the M&E system and alerted the project team on urgent attention to establish the M&E system and undertake the monitoring in a periodic manner\. The comprehensive MTR of September 2010 set the benchmark for project progress and actions to be taken to achieve them emphasizing on institutionalization of M&E in the implementing agencies\. The MTR for the AF of August 2016 fully assessed the project progress in terms of technical, financial, social, and environmental safeguards and fiduciary aspects, determined implementation issues, and formulated actions to be taken to ensure a successful completion of the project\. There was no abrupt turnover of the Task Team Leader or key team members for a major part of the implementation period\. A change in team leadership took place, one by attrition in October 2010 and the other in 2012 when the IWRMP was placed under the Agriculture Global Practice\. Justification of Overall Rating of Bank Performance 87\. Although the overall quality of World Bank performance was Satisfactory, due to limitations in the appraisal-level project costs that led to the significant reduction of the original project scope, the overall rating of World Bank performance is Moderately Satisfactory\. D\. RISK TO DEVELOPMENT OUTCOME 88\. Federalization and staffing\. While the political restructuring provides ample opportunities to serve the rural poor through decentralized services, the change also raises the question on how quickly the new government, especially at the municipality level, can build its capacity to provide services at the grassroots level\. With the district and regional irrigation and agricultural offices (buildings and assets) now being handed over to the local government and lack of clarity on staffing and fund flow, it is likely that both irrigation and agricultural services will be disrupted in the short term\. Furthermore, there is a risk that due to uncertainty about effective functioning of each level of government apparatus, the WUAs and FMIS may not receive support from these government institutions in case of damages to the irrigation systems because of natural disasters such as big landslides, floods, and earthquakes\. This issue has been discussed by the World Bank task team at all levels but there has been no clear-cut answer or direction to address this issue\. 89\. Sustainability of AMIS WUAs\. The agreed management obligations and responsibilities under Component B (large irrigation systems in the terai) stipulate that the GoN will manage the main canal systems along with the headworks with adequate budget outlay while the AMIS WUAs will assume O&M responsibilities for lower order canal systems with the resources they generate in cash from ISFs and so on and from traditional labor contribution\. There is a risk that both parties may not fully meet the requirement for the GoN to secure sufficient budget and for the AMIS WUAs to collect adequate ISF\. 90\. Sustainability of FMIS WUAs\. In general, the data indicate that the project had a positive impact on FMIS WUAs’ performance and effectiveness\. This is confirmed by a steady rise in fees collected by FMIS WUAs over the project life\. However, a risk to development outcome is the capacity of these WUAs to assume full responsibility for the O&M of the new/rehabilitated infrastructure\. Most of the O&M training activities for the FMIS WUAs have taken place only toward the end of the project implementation period\. Among the issues Page 28 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) that still need to be addressed are the mobilization of all farmers for canal maintenance, an increased capacity of the FMIS WUAs to carry out all their responsibilities, and more awareness among farmers on the WUA functioning\. 91\. Irrigation Management Division (IMD)\. There seem to be slow involvement of the IMD in management transfer of AMIS and strengthening of the WUAs, and the World Bank task team recommended several times to institutionalize the support to the WUAs and facilitate management transfer after the closure of the project\. There is, therefore, a risk that institutional strengthening activities for the WUAs will not be continued by the IMD after project closure\. 92\. IWRP\. With the new federal system in place now, it has become imperative for the GoN to design policies and strategies regarding the water resources of the country on ownership, conservation, use, and accountability taking into consideration the mandate of the federal states and the local governments on these resources\. Although formulation of such a policy was included in Component C of the project, the WECS could not accomplish it during the project period\. A revision of the policy would be necessary as the governance structure changed significantly under the new constitution\. Component C also included activities such as establishing at the WECS a WRIC equipped with a WRIS\. In due course, the WRIC would be capable of collecting, processing, and dispensing data to the consumers\. Partly funded through the SAWI MDTF, the task was accomplished to some extent\. However, there is a risk that the WRIC/WRIS may not function properly as the WECS seem to lack a proper ‘cell’, budget, and human resources to continue the works as well as update and upgrade the system which is already overdue\. V\. LESSONS AND RECOMMENDATIONS 93\. Proper coordination between agriculture and irrigation institutions and activities produces good results\. Learning from the preceding project, the NISP, the IWRMP was designed to require good collaboration between these institutions and among the staff\. It was apparent that building such good working coordination still took time; however, better agricultural production and productivity results with better use of irrigation water in most project areas attest to these efforts\. The DoI and DoA have taken this as a good example for the future projects\. Thus, for better outcomes, infrastructure works should be combined with institutional strengthening and agricultural support, maintaining strong working relations among the agencies, including the WUAs\. Such integrated projects will require adequate financing and engagement with both aspects of infrastructure and agricultural production from the start\. 94\. The WECS working as a repository of water-related information is appropriate as it is mandated with the water resources planning for the country\. Component C was envisaged with activities that would strengthen the WECS to carry out its mandate\. Lack of proper staffing and lack of adequate budget for regular functioning, maintenance, and upgrading of the installed WRIS would certainly have put a dent in the expected outcomes\. The lesson learned in this case is that a budgetary commitment/action from the Government should be a pre-condition for such endeavors, or those activities should not be included in the project design\. 95\. Although quality of construction works was generally satisfactory and the farmers were satisfied with the benefits seen from the new or rehabilitated irrigation facilities, they further demanded additional works, for example, more concrete lining or the extension of the canal to irrigate more land at the tail end\. It is, therefore, important to fully involve and inform the beneficiaries during project preparation in any future engagement\. Communication was identified as a key area that needed to be strengthened in the subprojects Page 29 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) to clearly convey the messages and to reduce the communication gap between the users and project staff\. The lesson learned from this experience is to also make extensive use of social mobilizers for clearly communicating the scope and design of the project\. 96\. Thorough attention should be given to preparation of appraisal-level project costs for construction activities\. The lesson learned under the IWRMP showed that any error/underestimated values lead to significant cost overrun and subsequent reduction of the original project scope during project implementation\. 97\. Delays in preparation of the River Basin Management Plans during the course of the project also provided a learning that the proper planning and development of scope of services need to be discussed and finalized at the project preparation phase or early phase of project implementation, before proceeding with procurement process, for smooth procurement and implementation\. 98\. There were challenges for the DoI and DoA to produce the integrated M&E reports during project implementation, although both agencies should be commended that they have overcome them at the project end\. It will be useful for the projects that have cross-ministries/departments as counterparts to be able to position M&E inputs and outputs as key tools in an integrated manner for unlocking various stages of (sub)project processes and stages\. 99\. Historically, the World Bank investment in irrigation and irrigated agriculture encouraged the Government and the implementing agencies to introduce policies and procedures that have progressively brought reforms in the water resources and irrigation sectors\. The IWRMP continued to build institutional capacity by focusing on (a) implementation of the Nepal Water Resources Strategy and National Water Plan by supporting setting up of the data center and taking a basin-level approach to integrated water resources management with the preparation of River Basin Management Plans and (b) strengthening of WUA institutions in smaller farmer-managed irrigation schemes in the hills/mountain areas as well as in the larger DoI/WUA jointly managed irrigation schemes in Nepal terai\. Activities included in this project have helped the WUAs in planning and budgeting the operation and management of their schemes by collecting service fees from their members\. 100\. Most World Bank projects are short term with an average life of five years\. The IWRMP went on for 10 years and therefore was able to show tangible results in the use of new farming practices; strengthening of WUAs; by enhancing synergy through integration of irrigation and agriculture, human resource development; and support of seed cooperatives to produce and process seeds locally, therefore addressing shortage of quality seeds\. \. Page 30 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: The objective of the proposed project is to improve irrigated agriculture productivity and management of selected irrigationschemesand enhance institutional capacity for integrated water resources man Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Water users provided with Number 0\.00 415200\.00 764611\.00 new/improved irrigation and drainage services (number) 23-Dec-2013 23-Dec-2013 29-Jun-2018 Water users provided with Number 0\.00 215904\.00 388604\.00 irrigation and drainage services - female (number) 23-Dec-2013 23-Dec-2013 29-Jun-2018 Comments (achievements against targets): This is a corporate indicator added in December 2013 following the second Additional Financing\. Out of total 764,611 water users provided with new/improved irrigation and drainage services: 384,361 water users were covered under Component A and 380,251 water users were covered under Component B\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Operational water user Number 0\.00 221\.00 240\.00 associations created and/or 23-Dec-2013 23-Dec-2013 29-Jun-2018 Page 31 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) strengthened (number) Comments (achievements against targets): This is a corporate indicator added in December 2013 following the second Additional Financing\. Specifically 223 FMIS and 7 AMIS WUAs were strengthened by the project\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Area provided with Hectare(Ha) 33106\.00 72867\.00 73867\.00 new/improved irrigation or drainage services 23-Dec-2013 23-Dec-2013 29-Jun-2018 Area provided with new Hectare(Ha) 33106\.00 72867\.00 73867\.00 irrigation or drainage services 23-Dec-2013 23-Dec-2013 29-Jun-2018 Comments (achievements against targets): This is a corporate indicator added in December 2013 following the second Additional Financing\. The breakdown of the area with new/improved irrigation and drainage services is as follows: (i) Component A - 34,095 ha; (ii) Component B - 39,300; and (iii) Component D - 481 ha\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of WUAs in Text 0 85% 94% transferred schemes whose O&M expenditures are as per 01-May-2008 01-May-2008 29-Jun-2018 Asset Management Plans\. Comments (achievements against targets): This indicator provides an average percentage of O&M expenditures as per Asset Management Plans Page 32 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) for 7 AMIS WUAs\. The individual percentage for each AMIS WUA is as follows: KIS - 141%; SIS - 75%; NIS8 - 57%; MIS-I - 137%; KIS - 71%; NIS-2 - 103%; MIS-II - 80%\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of water users in the Text 0 70% 87% rehabilitated schemes satisfied with WUAs\. 01-May-2008 01-May-2008 29-Jun-2018 Comments (achievements against targets): The figure 87% is the combined of both rehabilitated FMIS and AMIS under IWRMP\. Due to very isolated nature of FMIS sub-projects, small in size and unavailability of skilled man-power in WUA and division offices, this indicator was monitored using very simple structured “yes/no” question\. The sample of this “yes/no” question can also be found in http://dwri\.gov\.np/iwrmp/index\.php/2018-03-12-10-35-47\. In case of FMIS, 96% of all farmers rate the performance of their respective WUAs as good as or acceptable\. This result derived from the sample survey of 32 FMIS\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase in productivity of Text Paddy 2\.9MT/ha; Rice: 3\.8 MT/ha Rice: 3\.8 MT/ha Rice: 4\.38 t/ha; selected (main) crops\. Wheat 2\.0MT/ha; Wheat: 3\.2 MT/ha Wheat: 3\.2 MT/ha Wheat: 3\.09 t/ha; Maize 2\.1MT/ha; Potato 10\.0MT/ha Maize: 3\.6 MT/ha Maize: 3\.6 MT/ha Maize: 4\.66t/ha; Potato:16\.0 MT/ha Potato:16\.0 MT/ha Potato: 17\.83 t/ha 20-Aug-2007 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): Data for this indicator is based on the Beneficiary's Project Completion Report\. Page 33 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) A\.2 Intermediate Results Indicators Component: Irrigation Infrastructure Development and Improvement Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of WUAs collecting Percentage 0\.00 100\.00 73\.00 water charges (in cash, kind and labor) required for 01-May-2008 01-May-2008 29-Jun-2018 adequate O&M Comments (achievements against targets): This indicator measures percent of WUAs collecting water charges only in FMIS\. The O&M of all FMIS that were rehabilitated under IWRMP will be the responsibility of concerned WUAs and there will be no any further support from government side for its O&M until there will be a need of major rehabilitation or any emergency rehabilitation\. Hence, a general understanding was that the WUA would collect adequate water charges in terms of cash and kind for its annual maintenance work\. Therefore the actual target was set at 100%\. However, according to the OPD data on 48 sub-projects regarding collection of water charges in comparison to their actual need, the average ISF targets for them for FY17/18 was NPR357,000 per sub-project whereas the average collection was NPR260,753, which gives the actual target of 73%\. Since preparation of ISF collection plan was initiated by OPD around the end of the project period, it was not completed for all 233 FMIS\. The ISF collection plan was prepared for only 71 FMIS and of which 48 FMIS had already rectified the plan by their general assembly\. Remaining 23 FMIS are under the process of its rectification by concerned WUAs\. All the IDD were given the proper instruction to continue the preparation of ISF collection plan for remaining FMIS also\. Further, the preparation and updating of these plans is a continuous process for a livable FMIS\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of WUAs formally Percentage 0\.00 100\.00 100\.00 constituted and holding regular meetings 01-May-2008 01-May-2008 29-Jun-2018 Page 34 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) Comments (achievements against targets): The unit of measure was changed from percent (in PAD) to number during the second Additional Financing as only a total of 7 AMIS WUAs planned to be intervened\. However, the indicator with a percentage value was retained in the portal RF\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Area irrigated by Hectare(Ha) 464\.00 8725\.00 8151\.00 groundwater from Deep Tube Wells (DTW) 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): Based on the Beneficiary's Project Completion Report\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of WUAs maintaining Percentage 0\.00 100\.00 100\.00 appropriate accounts and cash registers 01-May-2008 30-Jun-2013 10-Jan-2018 Comments (achievements against targets): This indicator measures percent of WUAs maintaining appropriate accounts and cash register only in AMIS\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of tail-enders Text 0 60% 60% Page 35 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) reporting improved water 01-May-2008 30-Jun-2013 29-Jun-2018 availability\. Comments (achievements against targets): The source of data for this indicator is the household survey and the information collected by the project hired consultants through focused group discussions with the users\. Reference: Monitoring Report, March 2018, Irrigation and Water Resources Management Project, Department of Water Resources and Irrigation\. Component: Irrigation Management Transfer (IMT) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of WUAs holding Number 0\.00 7\.00 7\.00 regular meetings\. 30-Sep-2013 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): The unit of measure was changed from percent (in PAD) to number during the second Additional Financing as only a total of 7 AMIS WUAs planned to be intervened\. All 7 AMIS WUAs hold regular meetings\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of delivery points Percentage 0\.00 100\.00 100\.00 receiving proportionate share of water 01-May-2008 01-May-2008 29-Jun-2018 Comments (achievements against targets): Based on the OPD data, all targeted delivery points were receiving proportionate share of water\. Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at Page 36 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) Target Completion Number of WUAs Number 0\.00 7\.00 7\.00 maintaining appropriate accounts and cash registers 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): The unit of measure was changed from percent (in PAD) to number during the Additional Financing as only a total of 7 AMIS WUAs planned to be intervened\. All 7 AMIS WUAs maintain appropriate accounts and cash registers\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of WUAs collecting Number 0\.00 7\.00 7\.00 water charges required for adequate O&M\. 30-Sep-2013 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): The unit of measure was changed from percent (in PAD) to number during the Additional Financing as only a total of 7 AMIS WUAs planned to be intervened\. All 7 AMIS WUAs collect water charges required for adequate O&M\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Adequate O&M expenditures Text 0 100% 80% by DoI and WUA according to agreed Asset Management 01-May-2008 30-Jun-2013 29-Jun-2018 Plans in 5 out of 7 schemes\. Comments (achievements against targets): This is an average value for adequate O&M expenditures by DoI and AMIS WUAs to agreed Asset Management Plans in 5 out of 7 schemes\. Based on the PCR and data obtained from DoI\. Page 37 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of tail-enders Text 0 60% 60% reporting improved water availability\. 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): The source of data for this indicator is the household survey and the information collected by the project hired consultants through focused group discussions with the users\. Reference: Monitoring Report, March 2018, Irrigation and Water Resources Management Project, Department of Water Resources and Irrigation\. Component: Institutional and Policy Support for Improved Water Management Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Integrated river basin plans Yes/No N Y N developed for four basins 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): In PAD, target was to develop plans for only two river basins\. This was changed to four during the Additional Financing (December 23, 2013) as the AF supported a total of four river basins\. This activity was not completed, but the Government is committed to complete the work\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Telemetric systems Text No systems in place\. At least 15 functional At least 15 functional 36 systems in place Page 38 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) established in targeted systems in place\. systems in place\. basins\. 01-May-2008 30-Jun-2013 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): During PAD stage, target was still not defined\. Component: Integrated Crop and Water Management Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase in seed replacement Text Rice: 10\.2% Rice: 13\.01% Rice: 13\.01% Rice: 13% rate Wheat: 10\.3% Wheat: 10\.90% Wheat: 10\.9% Wheat: 12% Maize: 11\.3% Maize: 16\.01% Maize: 16\.01% Maize: 16% 18-Sep-2008 30-Jun-2013 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): This indicator was added after the first additional financing in 2008\. The data is based on the Beneficiary's Project Completion Report\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent of farmers in the Text 0 60% 59% selected schemes adopting demonstrated techniques\. 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): Social mobilizers and district agriculture development officers were engaged in collecting the information for this indicator through focused group discussions (primary source) and the DADO (district agriculture development office) Page 39 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) report (secondary)\. Case studies were carried out to validate the data received from the DADO\. Reference: Project Completion Report, 2018\. Unlinked Indicators Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percent Increase in cropping Percentage 168\.00 220\.00 219\.00 intensity 01-May-2008 30-Jun-2013 29-Jun-2018 Comments (achievements against targets): This is a PDO indicator according to the PAD\. According to the Beneficiary’s data, the project increased cropping intensity (intermediate indicator) from 168 percent to 243 percent (against the target value of 220 percent)\. However, this figure is based on the survey data for the selected AMIS and 41 FMIS that was conducted to prepare the financial analysis for the Government Project Completion Report\. It covered FMIS which were completed in initial years of AF-2 financing and included more FMIS located in or close to terai areas\. However, the ICR used the end line survey data and calculated weighted averages for all FMIS and AMIS financed both for original and AF financing\. Based on these calculations, the actual crop intensity is 219 percent, which comes very close to the target value\. Page 40 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) B\. KEY OUTPUTS BY COMPONENT Output 1 Increase in productivity of selected (main) crops Outcome indicators 1\. Area provided with new/improved irrigation and drainage services\. 2\. Water users (number of beneficiaries) provided with new/improved irrigation and drainage services\. 3\. Water users (number of females) provided with irrigation and drainage services\. Intermediate result indicators 1\. Percent of farmers in the selected schemes adopting demonstrated techniques\. 2\. Increase in seed replacement rate\. Key outputs by component 1\. A total of 230 FMIS rehabilitated covering an area of 34,095 ha (59,228 households)\. 2\. ESI were done in seven AMIS supporting 39,300 ha (65,718 households)\. 3\. A total of 3,491 small irrigation schemes were supported for minor rehabilitation works under Component D covering an area of 373 ha (28,394 households) 4\. Micro-level nonconventional irrigation schemes were implemented through local nongovernmental organizations covering an area of 108 ha (2,318 households) 5\. Productivity of key crops, namely rice, wheat, maize, and potato, increased by 51%, 55%, 12%, and 79%, respectively\. 6\. Seed replacement rate for rice, wheat, and maize was 13%, 12%, and 16%, respectively\. Output 2 Percent increase in cropping intensity Outcome indicators 1\. Percent increase in cropping intensity Intermediate result indicators 2\. Percent of farmers in the selected schemes adopting demonstrated techniques 3\. Area irrigated by groundwater from Deep Tube Wells (DTW) Key outputs by component 1\. 59% of farmers reported adoption of demonstrated techniques against planned 60%\. 2\. Increase in cropping intensity from 168% to 243%\. 3\. A total of 8,151 ha of command area provided with irrigation facilities using groundwater (baseline 464 ha)\. Output 3 Percent of WUAs in transferred irrigation scheme whose O&M expenditures are as per agreed Asset Management Plans Outcome indicators 1\. Operational water users associations created/strengthened (number) Intermediate result indicators 2\. Adequate O&M expenditures by DoI and WUA according to agreed Asset Management Plan for 5 out of 7 schemes\. 3\. Percent of tail-enders reporting improved water availability\. 4\. Number of WUAs holding regular meetings\. Page 41 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 5\. Number of WUAs collecting water charges required for adequate O&M Key outputs by component 1\. O&M of all the seven schemes supported by the project guided by Asset Management Plan\. 2\. A total of 81% of the tail-enders reported improved water availability in Component A and the figure is 60% for Component B schemes (exceeded the overall target of 60%)\. 3\. All the 7 WUAs in AMIS and 230 WUAs of FMIS were formerly constituted and holding regular meetings\. 4\. 73% of WUAs collecting adequate water service fee including all seven AMIS Outcome 4 Percent of water users in the rehabilitated schemes satisfied with WUAs\. Outcome indicators 1\. Water users (number of beneficiaries) provided with new/improved irrigation and drainage services\. 2\. Water users (number of females) provided with irrigation and drainage services\. Intermediate result indicators 1\. Operational water users associations created/strengthened (number) 2\. Percent of tail-enders reporting improved water availability\. 3\. Percent of delivery points receiving proportionate share of water\. Key outputs by components 1\. A total of 764,611 beneficiaries provided with new/improved irrigation and drainage services (59,228 households from FMIS; 65,718 households from AMIS)\. 2\. A total of 388,604 female water users provided with irrigation and drainage services\. 3\. 81% of tail-enders reported improved water availability against planned 60%in FMIS and 60% in AMIS\. 4\. A 100% progress reported in delivery points receiving proportionate share of water\. Page 42 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Shyam Ranjitkar Task Team Leader Bigyan Pradhan Senior Financial Management Specialist Animesh Shrivastava Program Leader Mohammed Hasan Consultant Kiran Ranjan Baral Procurement Consultant Bilal H\. Rahill Lead Environment Specialist Javier Zuleta Senior Water Resources Mangaement Specialist Drona Raj Ghimire Senior Environment Specialist Ohn Myint Consultant/Water Resources Gayatri Acharya Senior Economist Manivannan Pathy Senior Agriculture and Agribusiness Specialist Fernando Gonzalez Consultant, Irrigation Management Expert Hector Garduno Consultant, Water Resources Institutions Expert Charles Abernethy Consultant, Water Users Association Expert Prachanda Pradhan Consultant, Irrigation Management and WUA Expert Achyut Man Singh Consultant, Irrigation Specialist Shiva Upadhyaya Consultant, Economist Iswar Raj Onta Consultant, Water Resources Management Yusuf Chowdhry Consultant, Economist and Financial Analyst, FAO Ishwor Neupane Consultant, Social Development Nadia Islam Program Assistant Tara Shrestha Team Assistant Supervision/ICR Purna Bahadur Chhetri, Ahmed Shawky M\. Task Team Leader(s) Abdel Ghany Page 43 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Bigyan Pradhan Senior Financial Management Specialist Shambhu Prasad Uprety, Chandra Kishor Sr\. Procurement Specialist(s) Mishra Yogesh Bom Malla Sr\. Financial Management Specialist Kiran Gautam Sr\. Program Assistant Neena Shrestha Procurement Assistant Joop Stoutjesdijk Lead Irrigation and Drainage Specialist Drona Raj Ghimire Sr\. Environmental Safeguards Specialist Jeren Kabayeva Agriculture Specialist, ICR Main Author Kunduz Masylkanova Agriculture Economist, FAO Hari Prasad Bhattarai Social Safeguards Specialist Shyam Ranjitkar Irrigation Engineer, FAO Rohan Selvaratnam Agriculture Analyst Rupa Shrestha Team Member Ramesh Raj Bista Team Member Page 44 of 61  The World Bank NP Irrigation & Water Resources Management Project (P099296) B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY06 32\.374 135,942\.84 FY07 32\.769 100,364\.45 FY08 20\.826 76,407\.01 Total 85\.97 312,714\.30 Supervision/ICR FY08 15\.698 23,274\.24 FY09 39\.673 81,198\.23 FY10 47\.327 110,317\.33 FY11 26\.100 91,141\.52 FY12 21\.809 47,774\.29 FY13 15\.751 51,484\.76 FY14 27\.374 58,777\.75 FY15 18\.780 39,330\.51 FY16 14\.226 23,185\.94 FY17 17\.406 35,887\.52 FY18 25\.659 122,068\.65 FY19 19\.447 78,273\.91 Total 289\.25 762,714\.65 Page 45 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) ANNEX 3\. PROJECT COST BY COMPONENT Table 3\.1\. Summary of Component-wise Planned and Estimated Actual Costs (US$, millions) Planned Actual as of August 2018 IDA Water IDA Water GoN Total GoN Total Credit Grant Users Credit Grant Users Component A — 31\.91 6\.94 3\.53 42\.39 11\.80 39\.45 11\.85 5\.79 68\.89 Component B — 8\.56 1\.83 0\.67 11\.06 6\.35 12\.85 4\.09 1\.06 24\.36 Component C — 3\.25 0\.32 — 3\.57 0\.16 2\.91 0\.16 — 3\.23 Component D — 6\.27 1\.05 0\.57 7\.89 21\.27 6\.17 1\.85 0\.56 29\.85 Total 50\.00 10\.14 4\.77 64\.91 39\.58 61\.39 17\.94 7\.42 126\.33 Page 46 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) ANNEX 4\. EFFICIENCY ANALYSIS A\. Economic Efficiency Appraisal Economic and Financial Analysis 1\. At appraisal, the economic and financial feasibility of the project was assessed through the CBA\. The analysis was poorly presented with limited details on the methodology and key benefit and cost assumptions used\. Baseline and future crop productivity, cropping patterns, and cropping intensity were not described in detail\. Similarly, scopes of projected expansion of command areas were not discussed\. The Excel spreadsheet of the analysis was also not available making it difficult to rebuild the appraisal analysis\. 2\. Benefits\. The appraisal analysis assumed that improved availability and reliability of irrigation water supply coupled with improved farm management, extension services, and market links would lead to higher productivity, cropping intensity, and diversification into higher-value crops\. The benefits were assessed through six models that represented surface water-based and groundwater-based FMIS in mountain, hill, and terai agro-climatic zones and AMIS (referred to as the IMT) in terai zone, management of which will be transferred to WUAs\. The main benefit and costs assumptions for these six models are summarized in table 4\.1\. Table 4\.1\. Summary of Models and Key Benefit Assumptions Schemes Command Areas Projected Benefits (number) (ha) FMIS Model 1 Mountain 16 1,024 (a) Increased paddy production in summer and wheat/oilseeds in winter, (b) adoption of HYV of paddy within five years, (c) diversification into vegetables and other high- value crops in ‘all other seasons’, (d) 30 percent yield increase within the first five years in the existing command areas and 100 percent yield increase in newly cultivated areas within the first year, (e) 30 percent expansion of cropping areas within the first five years, (f) benefits accumulation starting from project year 1, and (g) little change in the without-project scenario\. Model 2 Hills 120 10,680 Same as in Model 1 except (d) is at 20 percent Model 3 Terai 32 14,688 Same as for Model 2 Model 4 DTW 3 900 Same as for Model 2 electrical Model 5 DTW 30 12,000 Same as for Model 2 conversion Page 47 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Schemes Command Areas Projected Benefits (number) (ha) AMIS under the IMT to the WUAs Model 6 IMT 24 61,000 Same as for Model 1 except (e) is 0 3\. Costs\. Unit rates for civil works were obtained from the feasibility assessment report prepared for the NISP and were adjusted to 2006 prices\. Future O&M costs were assumed at NPR 950 per ha for surface irrigation schemes and NPR 1,739–2,451 per ha for groundwater schemes\. Agricultural output and input prices were prevailing market prices for 2006\. 4\. Methodology\. Financial prices were converted into economic values at the standard conversion factor of 0\.90\. Conversion of financial labor wages into economic values is not mentioned\. Benefits were estimated for a period of 20 years at the OCC of 12 percent\. Economic and financial feasibility indicators were estimated for only representative schemes\. 5\. Results\. The appraisal-projected financial and economic results are presented in tables 4\.2 and 4\.3\. Incremental financial returns per ha were estimated in the range of NPR 15,725 (DTW conversion) and NPR 195,481 (surface hill)\. Estimated FRR ranged from 13\.9 percent (mountain) to 64\.5 percent (IMT) with an average FRR of 33\.02 percent\. The overall project FRR was not calculated\. Table 4\.2\. Summary of Financial Results (Appraisal) Benefits Incremental Benefits Irrigation Schemes Cost (NPR/ha) BCR FRR (%) (NPR/ha) (NPR/ha) Mountain 159,723 175,839 16,116 1\.10 13\.9 Hill 121,273 316,754 195,481 2\.61 46\.9 Terai 58,375 89,590 31,215 1\.53 22\.9 DTW (electrical) 107,256 129,490 22,234 1\.21 15\.5 DTW (conversion) 29,775 45,500 15,725 1\.53 34\.3 IMT 18,160 47,709 29,549 2\.63 64\.5 Average 55,833\.12 / 84,427 134,174 51,718 1\.77 33\.0 6\. The appraisal analysis estimated that incremental economic returns will be in the range of NPR 12,681 (DTW conversion) and NPR 185,092 (surface FMIS in hills)\. Economic rates of return (FRR) were projected in the range of 13\.9 percent (DWT electrical) and 52\.6 percent (DTW conversion)\. The overall project ERR was not estimated\. Table 4\.3\. Summary of Economic Results (Appraisal) Costs Benefits Incremental benefits Irrigation Schemes BCR ERR (%) (NPR/ha) (NPR/ha) (NPR/ha) Mountain 155,155 186,983 31,828 1\.2 16\.4 Hill 112,558 297,650 185,092 2\.6 47\.8 Terai 55,092 96,447 41,355 1\.7 28\.3 DTW (electrical) 113,281 125,962 12,681 1\.1 13\.9 DTW (conversion) 30,770 57,782 27,012 1\.8 52\.6 IMT 17,129 44,032 26,903 2\.6 49\.6 Average 80,664 134,809 54,145 1\.9 34\.8 Page 48 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Costs Benefits Incremental benefits Irrigation Schemes BCR ERR (%) (NPR/ha) (NPR/ha) (NPR/ha) Overall project Not estimated 7\. The appraisal analysis tested the project’s feasibility for eight sensitivity variables on potential changes to scopes of benefits and costs and delays in benefits accumulation (table 4\.4)\. The project returns were found to be highly sensitive to potential declines in output prices, increases in investment costs, and benefit accumulation delays\. Assuming potential increases in costs by 25 percent and one-year delay in benefit accumulation, the ERRs of the mountain and terai groundwater (electrical) FMIS were projected to drop below 12 percent\. Table 4\.4\. Sensitivity Analysis (Appraisal) DTW DTW Sensitivity Analysis Mountain Hill Terai IMT Average (electrical) (conversion) Base case 16\.4 47\.4 28\.3 13\.9 52\.6 49\.6 35\.0 Incremental yields for main 15\.2 35\.9 16\.1 11\.0 47\.8 41\.0 28\.0 crops will be 15 percent less Incremental yields for all 14\.3 31\.7 15\.0 10\.5 45\.4 37\.1 26\.0 crops will be 15 percent less Zero HYV paddy adoption 15\.6 36\.6 23\.0 13\.2 4\.2 n\.a\. 19\.0 Prices for main crops 8\.1 14\.6 9\.0 n\.a\. n\.a\. n\.a\. n\.a\. decline by 15 percent Prices for all crops decline 3\.7 7\.5 5\.1 n\.a\. n\.a\. n\.a\. 5\.0 by 15 percent Investment cost increases 11\.9 27\.7 20\.8 10\.3 31\.7 40\.1 24\.0 by 25 percent Benefits lag behind by 1 13\.5 32\.4 21\.4 12\.5 28\.6 49\.6 26\.0 year Benefits lag behind by 1 9\.6 25\.7 18\.9 9\.2 29\.6 22\.8 19\.0 year and investment costs increase by 25 percent Restructuring and AF-2 Economic and Financial Analyses 8\. In September 2008, the project received the first AF at US$14\.30 million toward Component D (please refer to paragraphs 22, 23, and 32)\. It was funded under the GFCRP and the NFCRP that aimed at mitigating the short- and long-term impacts of rising food prices in Nepal\. The AF was to support the food- insecure households affected by the food price crises with improvements in small-scale and nonconventional irrigation and increased local production of improved seeds\. The geographical coverage of the first AF was similar to the original project coverage with exception of several districts\. Due to the emergency response nature of the first AF investments, reassessing appraisal economic and financial analysis was not required\. Page 49 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 9\. The appraisal project scope was restructured in 2011 due to considerably higher-than-projected costs of civil works\.11 Technically erroneous assumption on price contingencies was the main reason for inadequate estimation of civil works costs at appraisal\. At the time of the appraisal, the inflation rates for the country was between 5 percent and 8 percent (2005–2006), while an annual average inflation rate for the project period (2006–2013) was forecasted at around 9\.5 percent\.12 As the country was an importer of construction materials and fuel and migration of labor to the Gulf countries was on the rise, prices for construction materials and labor were expected to increase\. Despite all these factors, price contingency budget at 4 percent of the base cost was allocated for the entire project period\. Already in the third year of the project implementation, increases in unit rates for civil works costs were in the range of 38 percent (IMT) and 189 percent (DTW electrical)\.13 Therefore, the appraisal project scope was reduced by 45 percent (table 4\.5)\. Table 4\.5\. Restructured Project Scope (2011) Original Scope Restructured Scope Reduction Components Schemes Command Schemes Command (%) (number) (ha) (number) (ha) A\. Irrigation Infrastructure Development 193 31,500 105 17,545 46% and Improvement B\. Irrigation Management Transfer (IMT) 24 61,000 14 29,000 42% D\. Integrated Crop and Water 197 92,500 109 46,545 45% Management 10\. The economic and financial feasibility of the restructured project was reassessed, though it was not reflected in the relevant documents\. The project returns were estimated for a period of 25 years, including project life, in 2010 prices and at OCC of 12 percent\. Unlike the appraisal analysis, the restructuring analysis estimated the returns to the overall project, but it did not present the scheme-wise returns\. The FRR was estimated at 19\.0 percent and the FNPV at NPR 3\.014 million, while the ERR was estimated at 19\.7 percent and the ENPV at NPR 2\.9 billion (table 4\.6)\. Table 4\.6\. Summary of Financial and Economic Results (Restructuring 2011) NPV (NPR, IRR (%) NPV (NPR/ha) BCR millions) Financial 19\.0 3,013\.7 42,494\.4 1\.8 Economic 19\.7 2,893\.7 40,803\.6 1\.2 11\. In November 2013, the project received the second AF to complete the restructured scope of works, replicate best practices achieved in irrigation water management and agricultural practices, and support an additional 80 FMIS with 13,360 ha\. The restructuring assessed only the economic returns and only for the second AF-supported FMIS\.14 The analysis estimated positive returns to all FMIS with ERRs from 13 percent (mountain) to 30 percent (hills) (table 4\.7)\. 11 Restructuring Paper (June 2011)\. 12 IMF, World Economic Outlook (October 2009)\. 13 Aide Memoire (2010)\. 14 Project Paper (2013)\. Page 50 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Table 4\.7\. Summary of Economic Results (AF2, 2013) ENPV (NPR, ERR (%) millions) Surface - mountain 13\.0 0\.8 Surface - hills 30\.0 12\.4 Surface - Terai 26\.0 58\.8 Groundwater - DTW 22\.0 38\.4 Groundwater - STW 29\.0 576\.9 ICRR Economic and Financial Analysis Methodology and Key Assumptions 12\. The ICRR analysis largely followed the CBA approach\. It assessed economic and financial returns both for the representative schemes and the overall project\. The benefits were estimated for 20 years which correspond to technical life of rehabilitated and modernized irrigation schemes, if adequate management, operation, and maintenance is provided\. Therefore, potential benefits to the schemes that were completed in 2018 would be fully realized in 2038\. Since the appraisal and restructuring analyses were incomparable, the economic efficiency was reassessed using 2018 prices and the OCC rate of 5 percent (please see paragraph 32 of this annex)\. 13\. The baseline and current levels of yields, cropping intensity, diversification, and technology adoption rates were obtained from results assessment surveys conducted by multiple external consultancies and project M&E data\. According to the surveys, the second AF schemes had higher baseline levels of yields, intensity, and diversification than those supported under the original scope\. These changes could be attributable to the project investments in production of improved and foundation seeds (first AF) and agricultural mechanization\. However, these benefits were not accounted to the project as the surveys did not determine attribution\. 14\. Financial prices of locally traded outputs and inputs were converted into economic values by removing transfer payments, taxes, and duties\. Financial wages were converted into economic values at a shadow wage conversion factor of 0\.70\. 15\. In 2008, Nepal received emergency support to address short- and long-term impacts of food price crises\. To facilitate the emergency response, the financing was channelled through several ongoing projects\. The project too received an AF of US$14\.30 million toward Component D\. Around 70 percent of the financing was invested in increased production of improved and foundation seeds, while the remaining investments targeted addressing short-term impacts on food-insecure households\. Increased seed production benefitted, in addition to the target food-insecure households, farmers located within and beyond the IWRMP target areas\. The ICR analysis, however, accounted benefits to the IWRMP beneficiaries only\. Non-seed investments and benefits to the food-insecure households are excluded from the analysis\. Page 51 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) 16\. Estimated actual financial cost of the project—inclusive of contingencies, taxes, and duties—was NPR 12\.37 billion\.15 The cost includes the first AF investments in increased production of improved and foundation seeds and excludes other AF investments in addressing short- and long-term impacts of food price increases\. The financial project cost was converted into economic values by removing taxes and duties\. Project Benefits 17\. The project investments in rehabilitation and modernization of irrigation schemes, strengthening of agriculture water management, adoption of improved agricultural practices, increased availability of improved seeds, and improved access to extension services, agricultural mechanization, and markets resulted in substantial positive changes in crop productivity, cropping intensity, and diversification\. 18\. Project areas\. Planned and actual command areas of project-supported FMIS and IMT schemes are presented in table 4\.8\. Out of the total 92,500 ha of irrigated command areas that were planned for support at appraisal, around 73,395 ha received the project support (21 percent decrease)\. These include 34,095 ha of FMIS and 39,300 ha of IMT command areas\. Significant differences between the planned and actually supported command areas were for the mountain (87 percent increase) and terai groundwater FMIS (60 percent increase), and IMT schemes (36 percent decrease)\. However, command areas where irrigation water delivery actually improved make 73 percent of the total command\. 16 This was accounted for in the benefit scope estimation\. Table 4\.8\. Planned and Actual Irrigated Command Areas Command Areas (ha) Planned Difference (%) Actual (Appraisal) FMIS Mountain - surface 1,024 1,917 87 water Hills - surface water 10,680 7,744 −27 Terai - surface water 14,688 16,283 11 Terai - groundwater 5,100 8,151 60 Subtotal 31,492 34,095 8 IMT 61,000 39,300 −36 Subtotal 61,000 39,300 −36 Total 92,492 73,395 −21 19\. Crop productivity\. The baseline, current, and target levels of yields are presented in table 4\.9\. In the schemes that were supported under the original scope, yields increased substantially with an average increase at 80 percent\. The lowest increase at 33 percent was reported for potato in terai surface FMIS and the highest increase at 180 percent for maize in IMT schemes\. The second AF schemes had higher baseline yields than those supported under the original scope\. Around 34 percent of the second AF schemes were completed in the last two years\. Despite this, yields in the second AF schemes increased 15 Project cost need to be modified after the final disbursement application is processed\. 16 International consultant’s report on Component B\. Page 52 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) considerably with an average increase at 48 percent\. In these schemes, the lowest productivity increase at 22 percent was observed for paddy in terai surface water and groundwater schemes and the highest increase at 134 percent for maize in IMT schemes\. Table 4\.9\. Crop Productivity: Baseline, Current, and Target (t/ha) Mountain Hill Terai Terai - GW IMT Targets WOP WIP WOP WIP WOP WIP WOP WIP WOP WIP Paddy 2\.10 3\.50 2\.40 3\.24 2\.61 3\.88 2\.90 4\.10 3\.05 5\.64 3\.80 Wheat 1\.56 2\.80 2\.06 2\.87 1\.87 3\.00 1\.80 2\.80 2\.00 3\.28 3\.20 Maize 1\.58 2\.50 2\.05 3\.00 2\.30 3\.50 1\.60 2\.70 2\.10 5\.89 3\.60 Potato 7\.80 17\.00 8\.37 12\.85 9\.00 12\.00 6\.30 11\.00 10\.00 21\.74 16\.00 Veg 7\.00 15\.21 8\.07 15\.18 6\.50 12\.00 5\.00 12\.00 10\.00 19\.46 n\.a Oilseed 0\.50 1\.20 0\.50 1\.20 0\.53 1\.60 1\.20 1\.60 0\.90 1\.21 n\.a Pulses 0\.67 1\.30 0\.54 1\.20 0\.90 1\.30 0\.90 1\.40 1\.00 1\.41 n\.a AF Paddy 2\.10 3\.30 2\.63 3\.52 2\.80 3\.43 3\.00 3\.70 3\.30 4\.25 3\.80 Wheat 1\.56 2\.06 2\.10 2\.89 1\.99 2\.50 1\.64 2\.80 2\.00 2\.98 3\.20 Maize 1\.58 2\.17 2\.05 2\.56 2\.30 3\.00 1\.92 2\.70 2\.10 4\.92 3\.60 Potato 7\.83 17\.85 9\.41 14\.62 10\.16 13\.93 7\.34 11\.00 10\.00 18\.08 16\.00 Veg 7\.00 12\.59 8\.62 13\.46 9\.81 12\.62 6\.79 12\.00 10\.00 17\.54 n\.a Oilseed 0\.90 0\.97 0\.69 1\.00 0\.91 1\.40 1\.00 1\.30 0\.80 1\.05 n\.a Pulses 0\.97 1\.22 0\.62 1\.10 1\.00 1\.30 0\.90 1\.20 0\.90 1\.23 n\.a Note: GW = Groundwater; WIP = With project; WOP = Without project\. 20\. Cropping intensity\. The baseline and current cropping intensity levels are presented in table 4\.10\. The project target for the cropping intensity was 220 percent\. The schemes supported under the original scope had cropping intensity increases at 60 percent on average\. The lowest increase at 44 percent was reported for the terai surface FMIS and the highest increase at 82 percent for the hill surface FMIS\. Whereas in the second AF schemes, cropping intensity increased by 43 percent on average with the lowest increase at 35 percent reported for mountain and terai surface FMIS and the highest increase at 56 percent for the IMT schemes\. Table 4\.10\. Cropping Patterns and Intensity (%) Mountain Hill Terai Terai Groundwater IMT WOP WIP WOP WIP WOP WIP WOP WIP WOP WIP Original Scope Paddy 73 78 42 74 77 90 75 65 73 115 Wheat 27 43 12 23 49 57 30 45 20 32 Maize 38 58 39 66 41 51 30 35 13 20 Potato 1 8 6 7 7 10 5 15 5 8 Veg 2 8 11 16 16 22 7 10 9 13 Oilseed 1 1 9 19 7 9 3 25 5 8 Pulses 5 4 7 2 18 21 0 5 5 9 Fruits — — — — — — — — 1 2 Sugarcane — — — — — — — — 2 3 Cropping intensity 146 200 126 208 215 259 150 200 134 211 Page 53 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Mountain Hill Terai Terai Groundwater IMT WOP WIP WOP WIP WOP WIP WOP WIP WOP WIP AF Paddy 49 55 86 99 79 85 75 65 67 95 Wheat 11 21 33 39 31 44 35 45 25 36 Maize 24 33 36 46 29 34 35 35 11 15 Potato 5 9 9 18 4 9 5 15 4 6 Veg 4 9 4 9 4 5 7 10 6 9 Oilseed 3 4 5 11 6 7 3 25 6 9 Pulses 4 4 2 4 4 9 0 5 7 10 Fruits — — — — — — — — 1 2 Sugarcane — — — — — — — — 6 9 Cropping intensity 100 135 174 225 157 193 160 200 134 190 Note: WIP = With project; WOP = Without project\. 21\. Diversification\. Notable increases in areas under potato and vegetables were observed both in the original scope and second AF schemes (table 4\.10)\. In the original scope schemes, potato and vegetable areas increased on average by 10 percent in FMIS and 9 percent in IMT schemes\. The highest increase at 13 percent was observed for mountain and terai FMIS, whereas in the second AF, there was around 10 percent increase for FMIS and 8 percent in IMT schemes\. 22\. Expansion of command area\. The project investments did not lead to expansion of existing command areas\. However, around 500 ha of IMT command area was reportedly waterlogged and unproductive before the project start\. This was, however, not reflected in the baseline value of irrigated areas\. Therefore, these lands were assumed to be productive in the without-project scenario\. 23\. Benefits to agricultural machinery\. The farming sector faces substantial labor shortages due to migration of labor to the Gulf countries\. This issue was addressed by the project through provision of small-scale agricultural machinery to farm groups and organization\. Farmers report that agricultural mechanization reduced labor costs by 10 percent and contributed to increases in cropping intensity by shortening the time spent on land preparation and crop harvesting\. These benefits were captured in the analysis\. 24\. Other unquantified benefits\. The first AF investments largely focused on mitigating short- and long-term impacts of food price crises (please see paragraph 32 of the main text)\. The short-term impact on the food-insecure households was addressed through supporting transportation costs of agriculture input deliveries and improving irrigation water delivery in minor irrigation schemes with 464 ha of command area\. The long-term impact was addressed through investments in increased production of improved and foundation seeds\. Benefits to food-insecure households were excluded from the analysis, whereas the impact of seeds on the IWMRP target beneficiaries was accounted for\. Project Cost 25\. The estimated total actual cost of the project is NPR 12\.4 billion inclusive of the Government financing and beneficiary contributions and foreign exchange savings at around NPR 125 million\. The cost Page 54 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) of AF investments on non-seed production activities at around NPR 820 million was excluded from the analysis as the benefits to them were not accounted for\. Financial Analysis 26\. The project as a whole is estimated to generate the FRR of 21\.8 percent and the FNPV of NPR 23\.1 billion or NPR 314,900 per ha with the BCR at 3\.8\. 27\. Scheme-wise, lowest returns are estimated for the mountain FMIS at the FRR of 12\.7 percent, the FNPV of NPR 200 million or NPR 104,450 per ha\. This is explained by higher civil works costs in the mountain areas and difficulty in receiving a third crop due to agro-climatic conditions\. Highest returns are projected for the IMT schemes at the FRR of 22\.9 percent and the FNPV of NPR 9\.9 billion\. However, the FNPV per ha for the IMT schemes are on the lower side at NPR 252,300 per ha\. A combination of relatively lower civil works costs, favorable agro-climatic conditions for higher cropping intensity, and higher diversification toward high-value crops drove the higher returns for the terai IMT schemes\. The hills and terai FMIS on the other hand are projected to generate highest FNPV per hectare\. Table 4\.11\. Summary Financial Results (ICRR) FNPV FRR FNPV Schemes BCR (NPR, (%) (NPR/ha) millions) Mountain 12\.7 2\.5 200 104,450 Hill 17\.0 4\.8 443 443,373 Terai 16\.8 4\.5 7,012 430,622 Terai - groundwater 16\.9 4\.7 110 109,550 IMT 22\.9 7\.7 9,913 252,300 Overall project 21\.8 3\.8 23,112 314,900 Financial Sustainability of Irrigation Schemes 28\. The O&M budget increased substantially for the IMT schemes\. As presented in table 4\.12, in five schemes out of seven, in 2017/18, actual O&M budget per ha exceeded the targets\. In the remaining two schemes, the current O&M budget per hectare is 72–86 percent of the targets\. In terms of composition, the budget consisted of ISF in-kind at 59 percent, ISF in cash at 24 percent, and income from other sources at 16 percent\. 29\. A different trend is observed in the target FMIS\. The project prepared the ISF collection plans for 71 FMIS\. Of these, the plans were rectified in 48 FMIS with 5,454 ha of command area\. The annual average ISF target for 2017/18 for these schemes was set at NPR 3,142 per ha, whereas the ISF at NPR 2,287 per ha was actually collected (or 73 percent of target level)\. Page 55 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Table 4\.12\. O&M Budget Actual (NPR/ha) Command Target of which, Achievement Areas (ha) (NPR/ha) Total Other (%) ISF cash ISF in-kind Income a FMIS 5,454 3,142 2,287 114 2,173 — 73 b AMIS 37,958 3,645 4,356 947 2,748 660 119 KIS 5,760 4,336 6,992 1,652 3,350 1,990 161 SIS 7,985 5,600 4,816 1,003 3,328 485 86 NIS-8 2,768 1,800 1,291 117 910 264 72 MIS-4 5,100 3,141 4,443 1,041 2,835 567 141 RIS 6,845 5,600 6,222 545 4,937 740 111 NIS-2 3,000 1,800 1,978 420 1,303 255 110 MIS-II 6,500 3,666 5,477 1,996 2,884 597 149 Total/weight 43,412 4,040 4,643 962 3,021 660 115 average Note: a\. Presents the 2017/18 target and actual ISF rates for 48 FMIS\. b\. Actual ISF level is for 2017/18\. Economic Analysis 30\. The ICRR analysis estimated the overall project economic returns at the ERR of 23\.6 percent and the ENPV of NPR 18\.7 billion or NPR 255,083 per ha with the BCR at 4\.2 (table 4\.13)\. The project investments in the mountain FMIS are estimated to generate lowest returns due to higher civil work costs and limited agro-climatic conditions for intensification\. These schemes are expected to yield the ERR of 14\.5 percent and the ENPV of NPR 167 million or NPR 87,240 per ha with the BCR of 1\.6\. The IMT schemes are projected to generate highest returns largely due to lower investment costs and higher intensification and diversification\. The economic returns to these schemes are projected at the ERR of 24\.2 percent and the ENPV of NPR 7\.3 billion with the BCR at 4\.9\. The ENPV per ha for the IMT schemes are, however, lower than those for the hill and terai FMIS at NPR 185,550 per ha\. Table 4\.13\. Summary of Economic Results (ICR) ENPV ERR ENPV Schemes BCR (NPR, (%) (NPR/ha) millions) Mountain 14\.5 1\.6 167 87,240 Hill 18\.2 3\.0 2,577 332,732 Terai 18\.0 2\.8 5,286 324,650 Terai -groundwater 18\.1 2\.9 671 82,366 IMT 24\.2 4\.9 7,292 185,550 Overall project 23\.6 4\.2 18,722 255,083 31\. Sensitivity analysis\. The project returns were tested for four sensitivity variables on costs, benefits, and delays\. The project is moderately sensitivity to all variables and results remain above 5 percent OCC when tested for these variables (table 4\.14)\. Page 56 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Table 4\.14\. Sensitivity Analysis (ICR) ERR ENPV (NPR, Variables BCR (%) millions) Base scenario 23\.6 18,722 4\.2 Cost increases by 20 percent 20\.6 17,554 3\.5 Benefits decline by 20 percent 21\.8 14,132 3\.5 Benefit accumulation delays by 2 years 17\.4 14,658 3\.5 Simultaneous cost increases and benefits declines by 20 18\.8 13,671 2\.9 percent 32\. Economic efficiency rating\. The economic efficiency cannot be evaluated by comparing the appraisal, restructuring and ICRR results due to (a) drastic underestimation of cost and overestimation of costs at appraisal, (b) unavailability of detailed benefits and costs assumptions used in previous analyses, (c) use of prices in different years, and (d) inconsistency in estimation of project and scheme-level returns\. The project efficiency therefore is rated based on the ICRR analysis-produced results only\. Despite substantial cost overruns, reductions in the scopes, and delays in benefit accumulation, and failure to prepare the river basin plans (see paragraph 44 in the main text), the project investments generated higher returns due to higher-than-expected increases in crop productivity, intensity, and diversification, substantially higher adoption of improved agricultural technologies, and achieving targets for the O&M budgets\. Moreover, the project also achieved savings at around NPR 620,000 million (US$6\.2 million) because of favorable exchange rate gains, competitive bidding, and savings in physical contingencies\. Additional 23 irrigation schemes with 2,972 ha of command were supported for these savings\. The economic efficiency is therefore rated Substantial\. B\. Administrative Efficiency 33\. The project faced substantial cost overruns due to underestimation of costs at appraisal (see paragraph 21 in the main text) as well as implementation delays\. Frequent staff changes at the project management team had a negative impact on efficiency\. Around US$242,218 of the IDA grants were cancelled due to non-utilization\. Preparation of river basin plans was not carried out (see paragraph 44 in the main text)\. The administrative efficiency was therefore rated Substantial\. 34\. Overall efficiency rating\. The overall project efficiency is rated Substantial taking into consideration the administrative efficiency and the economic efficiency ratings\. Page 57 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Page 58 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Page 59 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) Page 60 of 61 The World Bank NP Irrigation & Water Resources Management Project (P099296) ANNEX 6\. SUPPORTING DOCUMENTS 1\. World Bank Country Assistance Strategy for Nepal, 2003 2\. World Bank Country Partnership Strategy for Nepal for FY14–18 3\. Project Appraisal Document, November 6, 2007 4\. World Bank Emergency Paper under the Global Food Crisis Response Program, September 2008 5\. World Bank Aide Memoires of Preparation and Implementation Review and Support Missions, 2005– 2018 6\. World Bank Implementation Status and Results Reports (ISRs), 2008–2018 7\. World Bank Project Additional Financing and Restructuring Papers 8\. Government’s Project Completion Report, August 2018 9\. Government’s Project Progress Reports and Subprojects’ Feasibility Studies on the DoI’s website: www\.dwri\.gov\.np/iwrmp 10\. DoA’s project progress reports Page 61 of 61

REVIEW

P089733

Document of  The World Bank  FOR OFFICIAL USE ONLY      Report No: ICR00003743        IMPLEMENTATION COMPLETION AND RESULTS REPORT  (Loan Number 48490‐RU)   ON A  LOAN    IN THE AMOUNT OF US$50 MILLION   TO THE     RUSSIAN FEDERATION    FOR A  JUDICIAL REFORM SUPPORT PROJECT      August 30, 2018        Governance Global Practice  Europe And Central Asia Region           CURRENCY EQUIVALENTS     (Exchange Rate Effective December 31, 2017)    Currency Unit  =    RUR   RUR62\.32  =  US$1          FISCAL YEAR  July 1 ‐ June 30                                  Regional Vice President: Cyril E\. Muller  Country Director: Andras Horvai  Senior Global Practice Director: Deborah L\. Wetzel  Practice Manager: Roberto Adrian Senderowitsch  Task Team Leader: Amitabha Mukherjee  Amitabha Mukherjee, Olga Albertovna Schwartz, Rajni  ICR Main Contributors: Khanna      ABBREVIATIONS AND ACRONYMS AI Artificial Intelligence BEA Bureau of Economic Analysis BEEPS Business Environment and Enterprise Performance Survey CAS Country Assistance Strategy CC Constitutional Court of the Russian Federation CDP Customs Development Project CEE Comprehensive Economic Effect CGJ Court of General Jurisdiction CIDA Canadian International Development Agency CPS Country Partnership Strategy CQ Selection based on Consultants’ Qualifications DEE Direct Economic Effect DO Development Objective EC European Commission EU European Union FER Foundation for Enterprise Restructuring FMR Financial Management Report FPS Federal Penitentiary Service FTAP Fiscal Technical Assistance Project FTP Federal Targeted Program GTZ German Agency for Technical Cooperation IACC Inter-Agency Coordinating Council IAMC Inter-Agency Management Council IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICR Implementation Completion and Results Report ICT Information and Communications Technology IFC International Finance Corporation IFR Interim Unaudited Financial Report IPF Investment Project Financing IRI Intermediate Result Indicator JET Judicial Education and Training JP Justice(s) of the Peace JRSP Judicial Reform Support Project LCS Least Cost Selection LRP Legal Reform Project MCC Moscow City Courts MOED Ministry of Economic Development of the Russian Federation MOEDT Ministry of Economic Development and Trade of the Russian Federation MOF Ministry of Finance of the Russian Federation MOJ Ministry of Justice of the Russian Federation NCB National Competitive Bidding NDB New Development Bank OE Overall Effect  PIU Project Implementation Unit PPP Public Private Partnership QCBS Quality and Cost Based Selection RF Russian Federation RFP Request for Proposals RSFSR Russian Soviet Federated Socialist Republic SAC Supreme Arbitration Court SBD Standard Bidding Document SC Supreme Court of the Russian Federation SIL Specific Investment Loan SSS Single Source Selection TAMP2 Second Tax Administration Modernization Project TMP Treasury Modernization Project USAID United States Agency for International Development VCIOM Vserossiiski Centr Izucheniya Obschestvennogo Mnenia (Russia Public Opinion Research Center) WB World Bank WBG World Bank Group           TABLE OF CONTENTS    DATA SHEET \. 1  I\.  PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 9  A\. CONTEXT AT APPRAISAL \. 9  B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \. 14  II\.  OUTCOME \. 18  A\. RELEVANCE OF PDOs \. 19  B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 20  C\. EFFICIENCY \. 26  D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 30  E\. OTHER OUTCOMES AND IMPACTS \. 31  III\.  KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 32  A\. KEY FACTORS DURING PREPARATION\. 32  B\. KEY FACTORS DURING IMPLEMENTATION \. 35  IV\.  BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 38  A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 38  B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 39  C\. BANK PERFORMANCE \. 40  D\. RISK TO DEVELOPMENT OUTCOME \. 41  V\.  LESSONS AND RECOMMENDATIONS \. 41  ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 43  ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 59  ANNEX 3\. PROJECT COST BY COMPONENT\. 62  ANNEX 4\. EFFICIENCY ANALYSIS \. 63  ANNEX 5\. BORROWER COMMENTS \. 79  ANNEX 6\. OVERVIEW OF KEY JUDICIAL AND LEGAL REFORMS \. 84  ANNEX 7\. JRSP SURVEYS – SUMMARY OF KEY RESULTS \. 91  ANNEX 8\. 2017 MOSCOW CITY COURTS SURVEYS – SUMMARY \. 105  ANNEX 9\. MOSCOW CITY COURTS AUTOMATED SYSTEMS ‐ KEY FEATURES AND RESULTS \. 115  ANNEX 10\. SUPREME ARBITRAZH COURT & COMMERCIAL COURTS ICT SYSTEM \. 123  ANNEX 11\. SUPPORTING DOCUMENTS \. 133  ANNEX 12\. SUMMARY OF RUSSIAN FEDERATION’S ICR \. 134         The World Bank Judicial Reform Support Project (P089733)       DATA SHEET     BASIC INFORMATION   Product Information  Project ID  Project Name  P089733  Judicial Reform Support Project  Country  Financing Instrument  Russian Federation  Investment Project Financing  Original EA Category  Revised EA Category  Not Required (C)  Not Required (C)  Organizations  Borrower  Implementing Agency  Ministry of Economic Development, Foundation for  Ministry of Finance, Moscow City Courts, Supreme  Enterprise Restructuring and Financial Institutions  Court of the Russian Federation  Development  Project Development Objective (PDO)    Original PDO  The project development objective is to strengthen judicial transparency and efficiency in courts financed by the  JRSP\.      Page 1 of 148  The World Bank Judicial Reform Support Project (P089733) FINANCING      Original Amount (US$)   Revised Amount (US$)  Actual Disbursed (US$)  World Bank Financing          50,000,000  50,000,000  49,902,853  IBRD‐48490    1,896,800  1,895,592  1,895,592  TF‐90655  Total    51,896,800  51,895,592  51,798,445  Non‐World Bank Financing        Borrower  122,414,000  138,867,800  138,857,600  Total  122,414,000  138,867,800  138,857,600  Total Project Cost  174,310,800  190,763,392  190,656,045        KEY DATES      Approval  Effectiveness  MTR Review  Original Closing  Actual Closing  15‐Feb‐2007  15‐Nov‐2007  20‐Sep‐2010  30‐Mar‐2012  31‐Dec‐2017      Page 2 of 148  The World Bank Judicial Reform Support Project (P089733)   RESTRUCTURING AND/OR ADDITIONAL FINANCING      Date(s)  Amount Disbursed (US$M)  Key Revisions  18‐Sep‐2010  5\.71  Other Change(s)  26‐Mar‐2012  10\.54  Change in Loan Closing Date(s)  30‐May‐2012  14\.24  Change in Results Framework  Change in Loan Closing Date(s)  Reallocation between Disbursement Categories  Change in Legal Covenants  Change in Institutional Arrangements  Change in Implementation Schedule  27‐Mar‐2014  22\.19  Change in Loan Closing Date(s)  12‐Sep‐2014  24\.17  Change in Results Framework  Change in Components and Cost  Change in Loan Closing Date(s)  Reallocation between Disbursement Categories  Change in Legal Covenants  Change in Implementation Schedule  Other Change(s)  03‐Oct‐2016  41\.57  Change in Loan Closing Date(s)  31‐May‐2017  46\.68  Change in Loan Closing Date(s)  Reallocation between Disbursement Categories      KEY RATINGS      Outcome  Bank Performance  M&E Quality  Satisfactory  Moderately Satisfactory  Substantial    RATINGS OF PROJECT PERFORMANCE IN ISRs      Actual  No\.  Date ISR Archived  DO Rating  IP Rating  Disbursements  (US$M)  01  19‐Jun‐2007  Satisfactory  Satisfactory  0  02  30‐Jun‐2008  Satisfactory  Satisfactory  2\.74  03  29‐Jun‐2009  Unsatisfactory  Unsatisfactory  4\.22  04  24‐Feb‐2010  Unsatisfactory  Unsatisfactory  4\.87  05  23‐Oct‐2011  Unsatisfactory  Unsatisfactory  9\.42  Page 3 of 148  The World Bank Judicial Reform Support Project (P089733) 06  25‐Oct‐2011  Unsatisfactory  Unsatisfactory  9\.42  07  19‐May‐2012  Moderately Satisfactory  Moderately Satisfactory  10\.99  08  07‐May‐2013  Moderately Satisfactory  Moderately Satisfactory  20\.58  09  28‐Dec‐2013  Moderately Satisfactory  Moderately Satisfactory  20\.69  10  18‐Jun‐2014  Moderately Satisfactory  Moderately Satisfactory  23\.21  11  23‐Jan‐2015  Satisfactory  Satisfactory  25\.60  12  23‐Sep‐2015  Satisfactory  Satisfactory  27\.85  13  04‐Apr‐2016  Satisfactory  Satisfactory  34\.90  14  16‐Nov‐2016  Satisfactory  Satisfactory  41\.97  15  15‐May‐2017  Satisfactory  Satisfactory  46\.68  16  22‐Dec‐2017  Satisfactory  Satisfactory  50\.00    SECTORS AND THEMES      Sectors  Major Sector/Sector  (%)    Public Administration   100  Law and Justice  100      Themes    Major Theme/ Theme (Level 2)/ Theme (Level 3)  (%)    Public Sector Management  99    Rule of Law  99    Judicial and other Dispute Resolution  53    Mechanisms  Legal Institutions for a Market Economy  33    Personal and Property Rights  13            ADM STAFF  Role  At Approval  At ICR  Regional Vice President:  Shigeo Katsu  Cyril E Muller  Page 4 of 148  The World Bank Judicial Reform Support Project (P089733) Country Director:  Kristalina I\. Georgieva  Andras Horvai  Senior Global Practice Director:  Cheryl W\. Gray  Deborah L\. Wetzel  Practice Manager:  Ronald E\. Myers  Roberto Adrian Senderowitsch  Task Team Leader(s):  Amitabha Mukherjee  Amitabha Mukherjee  ICR Contributing Author:    Olga Albertovna Schwartz                   Page 5 of 148  The World Bank Judicial Reform Support Project (P089733) EXECUTIVE SUMMARY    The World Bank Group’s 2007-2009 Country Partnership Strategy (CPS) for the Russian Federation (RF) addressed key aspects of Russia’s modernization strategy\. The CPS supported enhanced transparency and increased public dissemination of information through strategic improvements in public sector management and governance, including judicial reform\. The Judicial Reform Support Project (JRSP) was fully aligned with this strategy and vision\. The authorities cited the Bank’s international experience in judicial reform and its added value in the development of coherent judicial modernization programs\. The project was regarded as a first step in a longer-term judicial modernization process\. The project development objectives (which remained unchanged) were to strengthen judicial transparency and efficiency in courts financed by the JRSP\. The project had four components: (a) Institutionalizing Judicial Transparency and Accountability; (b) Harnessing ICT for Judicial Transparency and Effectiveness; (c) Strengthening Human Capital; and (d) Project Management and monitoring and evaluation (M&E)\. The PDOs were not revised because their continued relevance was reconfirmed to Bank management by the judicial leadership, MOE and MOF all through implementation, at the mid-term review (MTR) and at each restructuring\. The original total project cost was US$172\.4 million, comprising US$50 million from IBRD (29 percent) and US$122\.4 million (or 71 percent) from the Russian Federation (RF)\. In 2017, the RF added almost US$19 million to the project, boosting the total project cost to US$188\.86 million (of which IBRD comprised 26\.5 percent)\. By project closing, US$188\.76 million had disbursed, including US$49\.90 million from the Loan proceeds\. The overall outcome is rated Satisfactory\. The relevance of PDOs and Efficacy are rated Substantial, while Efficiency is rated High\. The quality of Monitoring and Evaluation (M&E) is rated Substantial while Bank Performance is rated Moderately Satisfactory\. The detailed Efficiency Analysis is at Annex 4, while Annexes 7-12 provide information and context about activities, results and achievements\. The ICR ratings are summarized below: Relevance Efficacy Efficiency Overall Quality of Bank of PDOs Outcome M&E Performance Substantial Substantial High Satisfactory Substantial Moderately Satisfactory While component names were not revised, some activities were added or deleted at the 2012 and 2014 restructurings to respond to evolving RF judicial reorganization and modernization priorities and address JRSP implementation challenges\. These restructurings (i) updated the scope of Component B: the Moscow City Courts (MCC) and Court of Intellectual Rights (CIR) were added as project beneficiaries, and unimplemented Judicial Department (JD) activities were cancelled and (ii) other activities were added to enable the Supreme Court (SC) to review the results of the modernization and plan an information and communications technology (ICT) strategy for the future which could in future accommodate the judiciary’s vision to move towards a single integrated judicial ICT system\. A new Project Implementation Unit (PIU) – the Foundation for Enterprise Restructuring (FER) - was engaged with effect from December 2011, in place of the original PIU\. FER was instrumental in turning the project around by working closely with all courts covered by the project, and with the Ministry of Economic Development (MOED – the Page 6 of 148  The World Bank Judicial Reform Support Project (P089733) implementing agency), the Ministry of Finance (MOF) and the World Bank\. The inclusion of the MCC at the 2014 restructuring increased the strategic relevance of the project and the PDOs\. The MCC is Russia’s largest regional court system, with 35 district courts in Moscow City, with the Moscow City Court (with more than 500 judges – the largest in Russia and in Europe) at the top\. The MCC court system annually handled more than twice the caseload of the 900 courts of general jurisdiction (CGJ) originally included in the project, significantly increasing the JRSP footprint and impact\. Several factors affected preparation and implementation\. Positive factors included realistic objectives; strong supervision and implementation support; high counterpart capacity; strong commitment of the judicial and executive leadership to the project and a highly professional PIU from December 2012 which helped turn the project around; and readiness on the part of the Bank and the RF to restructure the project to address evolving circumstances and take deft advantage of opportunities to achieve project objectives and results\. Risk factors included complex project design (due to the RF judiciary having three highest- level courts at the time); several beneficiary entities within the judiciary; shortcomings of the first PIU in stakeholder engagement, procurement and results reporting (which delayed implementation of some – but not all – activities); and some results framework weaknesses\. The overall quality of M&E is rated Substantial\. There were significant strengths in M&E design, implementation and utilization, but shortcomings in the articulation of some results indicators and the first PIU’s inability to obtain results information in a timely manner somewhat diluted overall M&E performance\. These issues were addressed at the 2012 restructuring and M&E finished strongly\. In addition, significant elements of the JRSP M&E framework are being used by the MCC even after project closing to track its own performance\. Bank performance is rated Moderately Satisfactory (MS)\. The MS rating reflects some shortcomings at entry on Results Indicators and implementation arrangements, which were overcome during implementation\. The Bank team understood and noted the project’s high risks and the potential high rewards\. The quality of supervision is rated Satisfactory because the stable and technically strong Bank team worked closely with courts and executive agencies (Ministries of Economy and Finance) to support implementation, help counterparts restructure the project to restore its achievements and results, and provide technical support all through to the courts covered by the project\. The Borrower’s ICR, received in July 2018, was quite detailed and comprehensive and, most importantly, reinforced the Bank team’s analysis on project performance\. The project design and implementation experience generated four sets of lessons: a) Commitment works when coupled with the creation of conditions for success\. JRSP achievements stemmed from a combination of top-level commitment from the executive and judicial leadership, technical-level commitment from the judges and staff of the courts financed and high technical competence in Borrower and Bank teams\. These together created an environment in which sequenced change, underpinned by the transformative power of ICT, could be induced, nurtured and sustained\. A key element of such commitment included shedding lagging counterparts and the original PIU, the sequencing and phasing of ICT implementation to build up commitment, and addressing institutional Page 7 of 148  The World Bank Judicial Reform Support Project (P089733) issues beyond ICT hardware and software (e\.g\. handling the cessation of SAC functioning and the changes to the structure of the RF judiciary, the induction of the MCC and the exit of the JD)\. The Bank trusted the commitment of the judicial and executive leadership\. Rushing significant institutional change in courts in a country as complex as Russia would have created obstacles to change and led to the convergence of interests opposed to modernization\. Discussions on how to use restructuring to effect change continued during implementation, and more importantly through peer-based knowledge- sharing events (e\.g\. JUSTPAL conferences) and study visits (e\.g\. to European and US courts)\. Where the authorities’ commitment is clear, such an approach can yield positive and sustainable results\. b) Complementary reforms and change management increase the impact of institutional reforms\. For example, as the survey findings demonstrate, in addition to improving court-wide ICT infrastructure and systems for the SC, SAC, CC and MCC, it was critical to include actions to support collaborative activities for different groups – judges, judicial staff, academia, experts of methodological centers, and other users of the court system – whose common interests in enhancing judicial transparency and efficiency could converge around specific reforms (e\.g\. publication of judicial decisions, or automated complaints handling mechanisms)\. Such convergence through, for example, peer-based knowledge-sharing (e\.g\. peer-to-peer learning from other judiciaries and JUSTPAL) facilitated mindset changes and boosted collaboration\. In addition, in ICT-intensive projects, managing change over the medium term is as important as technical competence\. This project proved - again - that ICT in institutional modernization is more than installing computers and software: they are one element of modernization and can have a systemic impact only if the content of business processes and the organization of courts into cooperating networks of service delivery institutions can generate efficiency, transparency and trust\. This is the largest Bank-financed project in ICT-intensive judicial modernization: it has played a significant role in pioneering such an approach\. c) Successful teams on both sides, which generate trust and promote smooth implementation in complex high-risk operations, should be maintained regardless of organizational shifts or requirements in the Bank or the government\. This is because stable and successful teams on the Borrower and Bank sides can together address implementation risks and challenges, as the Borrower’s ICR points out\. The Bank team remained constant throughout the project life – an unusual feature that contributed to meaningful support to project beneficiaries and a trusted relationship between the Bank and Russia’s courts, the PIU, MOE and MOF\. The Borrower’s ICR also makes this point\. In addition, the Bank team’s candid reporting, with ratings downgrades, helped counterparts turn the JRSP around\. d) This project is a good example of the value-added the Bank brings to middle-income countries\. The loan amount constituted a very small element of successive RF Federal Targeted Programs (FTPs) for judicial modernization\. The project strategy was aligned with the RF judicial modernization strategy\. The Bank’s main role was to provide implementation support, policy advice, technical feedback and a menu of alternative approaches for beneficiaries\. The JRSP experience reconfirmed that counterparts were more interested in the intellectual support, exchange of knowledge and the implementation discipline associated with a Bank-financed project, rather than in the financing itself\. The courts used the JRSP to access Bank support (through the know-how that comes bundled with Bank financing) to conceive, design and implement complex, high-risk, ICT-intensive systems\. This is also evident more broadly in the Bank’s relationship with other middle-income countries, where fee-based services and knowledge exchange are becoming increasingly important\. Page 8 of 148  The World Bank Judicial Reform Support Project (P089733)   I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES    A\. CONTEXT AT APPRAISAL    Context  1\. The World Bank Group’s 2007-2009 Country Partnership Strategy (CPS) for the RF addressed key aspects of Russia’s modernization strategy\. It focused on selected areas where it felt it could provide solutions complementing those of the country\. The CPS was grouped around four pillars: (a) economic diversification for sustainable development and growth (Pillar 1); (b) improved public sector management and governance including stepping up engagement in judicial reform1 (Pillar 2); (c) improving the delivery of social and communal services (Pillar 3); and (d) enhancing Russia’s global role, as a donor and as a producer of global public goods (Pillar 4)\. The CPS supported enhanced transparency and increased public dissemination of information through strategic improvements in public sector management and governance, including judicial reform: the JRSP was fully aligned with this strategy and vision2\. 2\. By 2006, the RF had undertaken significant legal and judicial modernization steps\.3 Substantive and procedural laws had been enacted4\. Trial by jury was re-introduced\. A trio of judicial structures, employing more than 120,000 personnel, comprised the RF court system in 2006: the Supreme Court (SC) overseeing Courts of General Jurisdiction (CGJs) and military courts; the Supreme Arbitration Court (SAC) overseeing arbitrazh (commercial) courts; and the Constitutional Court (CC)\. A RUR45 billion Federal Targeted Program (FTP) for the judiciary for 2002-2006 had financed substantial increases in judges’ salaries, new positions (including 2,500 court administrators and 14,000 judicial assistants), courthouse renovations and equipment\. The justice system at appraisal is depicted at Box 1\. 3\. Court caseloads were rising\. The 2005 CGJ annual case load comprised about 6 million civil cases, 1 million criminal cases and 4 million “administrative” cases (petty offences)\. The commercial court system heard 1\.5 million cases annually; case inflows were rising rapidly as economic activity expanded - cases filed with arbitration courts nearly doubled between 1995 and 2000\. New laws and amendments were adding to the commercial court case inflow\. The use of court information and communications technology (ICT) to improve efficiency and transparency was evolving, but many courthouses were in unsatisfactory condition and some courts had no premises of their own5\. 1 The Judicial Reform Support Project (JRSP) became the fifth public sector modernization project in the RF supported by the World Bank\. Four projects – the Second Tax Administration Modernization Project (TAMP2), the Customs Development Project (CDP), the Treasury Modernization Project (TMP) and the Fiscal Technical Assistance Project (FTAP) – were under implementation\. The JRSP followed the Bank-financed Legal Reform Project (LRP), which closed on December 31, 2005\. 2  The February 15, 2005 CAS Progress Report included the JRSP as an investment loan to address the CAS priorities of strengthening public sector governance and service delivery and improving the business environment\. 3 The Constitution specifies an independent judiciary (Article 10) and guarantees judges’ independence and subordinates them only to the Constitution and federal laws (Article 120)\. 4 The LRP, which closed December 31, 2005 supported, among other things, the drafting of several key federal laws\. 5 For example, the Ministry of Economic Development and Trade estimated in 2004 that for CGJ buildings, 719 (or 34 percent) were unfit for use while 162 (or 7\.8 percent) needed repairs\. Page 9 of 148 The World Bank Judicial Reform Support Project (P089733) B ox 1\. Justice System of the R ussian F ederation C ou rts of G en era l Ju risdiction E xec + L eg B ran ch es C on stitu tiona l C ou rt C ou rts of A rb itration In stitu tion s G eneral Prosecution Service P resident SC JD M inistry of Justice SA C P arliam ent C onstitu tional C ourt O blast C ourts* C ircu it cou rt M inistry of the Interior Governm ent D istrict cou rts* C ou rt of ap p eals F ederal Security Services H uman Rights Ju stices of th e P eace A rb itration court Commissio n of the President O mbud sm an law yers, attorneys, barristers, solicitors, students, post-graduate stu dents, notaries  LAW S  C onstitutional C ourt: Federal Law “O n the C onstitutional C ourt in the R F” – 199 4  General C ourts: C ivil P rocedure C ode of the R F - 2003 C rim inal P rocedure C ode of th e R F - 19 96 Federal law “O n Justice system in the RF” – 1998 Federal Law “O n Justices of the P eace in the R F” – 1998  C ourts of Arbitration : Arbitration P rocedure C ode of the R F - 2002  Institutions: Federal Law “O n O ffice of the P ublic P rosecutor in the R F” – 19 92 N otes: R egulations of the M inistry of Justice in the R F – 1999 M ilitary courts are in cluded in the courts of general jurisdiction\. R egulations of the M inistry of the Interior in the R F – 1 996 T he Judicial D epartm ent (JD ) oversees functioning of the courts R egulations of the Federal Security Services in the R F – 2003 of gen eral jurisdiction & provides m aterial and technical support\. 4\. The Judicial Department (JD - see Box 1) is responsible for oversight of, and provision of ICT and physical infrastructure, for all CGJs\. It was created by spinning off these functions from the Ministry of Justice (MOJ) in 1998, so that courts no longer had to depend on the executive branch for operational and capital needs\. A key actor in the RF judicial system, the JD’s 2005 budget was about US$1 billion, growing to about US$6 billion by 2017\. It is responsible for all CGJ recurrent and capital expenditures, and for oversight of CGJs’ performance\. Its annual work program is approved by the Council of Judges, the highest RF judicial self-governance body\. The JD vision was for the JRSP to finance the roll-out and implementation of court automation systems to 900 out of 2,500 CGJs\. 5\. Several RF programs at the time addressed judicial constraints, the most significant being the 2002-2006 FTP and its successor 2007-2011 FTP\. The 2007-2011 FTP had a budget of RUR48\.4 billion\. Among other things, it aimed to expand courts’ use of ICT, including the creation of websites for CGJ and arbitration courts for publishing judicial decisions and other public information\. The FTP envisaged preparation of new legislation to increase transparency and judicial accountability\. The FTP also financed security of court premises and housing for judges\. At the time, some development partners financed programs to support different elements of judicial reforms, mainly training of judges and some pilot ICT systems in a few first-instance courts\. In 2005, the JD awarded a contract to a state-owned enterprise (NII Voskhod) to develop and pilot an ambitious ICT system envisaged to be deployed to all CGJs across the RF\. The system, called GAS Pravosudiye (state automated system for justice), would comprise, when Page 10 of 148  The World Bank Judicial Reform Support Project (P089733) completed, an integrated suite of 27 applications for case management, court administration and all other judicial and ‘housekeeping’ (e\.g\. human resources and budgeting) functions of courts\. The 2007-2011 FTP continued financing for GAS Pravosudiye implementation, except for the 900 CGJs where JRSP resources would finance implementation\. 6\. Rationale for Bank involvement\. The authorities cited the Bank’s international experience in judicial reform and its added value in the development of coherent judicial modernization programs\. The project was regarded as a first step in a longer-term judicial modernization process\. The JRSP was envisaged to contribute to increased transparency and efficiency in court functioning and help improve the business environment by increasing the efficiency of the arbitration court and CGJ systems\. Theory of Change (Results Chain)    7\. The PAD did not have a results chain as this was not required at the time\. Nevertheless, the PAD is clear enough for the results chain to be constructed (Figure 1)\. The PDO has been unpacked into its 2 elements and the links to PDO indicators, IRIs and component/activities depicted\. Some critical assumptions were made, such as: (a) the courts had the capacity to design and implement technically difficult ICT-based reforms - this held true for all courts, especially the SC, MCC and SAC which implemented technically and institutionally challenging ICT-based reforms; (b) the MOEDT (later MOE) was able and willing to coordinate JRSP implementation as the implementing agency responsible for use of JRSP loan proceeds – this assumption held true; (c) the courts would collaborate closely with the Bank on the design and implementation of JRSP activities – this held true for all courts\. The abolition of the SAC in 2014 did not affect the reasoning underlying the results chain since SAC functions were transferred to the SC\. 8\. The project results chain focused on two project-level outcomes – transparency and accountability – in courts financed by the JRSP; the longer-term outcome sought was increased public trust and confidence in courts\. Transparency was improved through several activities supported by the project, such as: (i) drafting a law to mandate publication of all judicial decisions, (ii) information kiosks and screens in public-access locations in courts financed, to enable citizens, litigants and lawyers to access their cases, obtain information about court functioning in general and about the specific court in particular, (iii) inclusion of transparency-enhancing elements in the MCC ICT system (such as reporting on complaints received and resolved)\. The enactment of Law 262 (mandating publication of judicial decisions) greatly improved transparency, with court ICT systems becoming the constraining factor (because the existing ICT systems did not have the capacity and bandwidth to handle such massive amounts of data, until JRSP-financed systems addressed this constraint)\. With this enactment, the original transparency outcome was met early in the project: the original PDO indicator was therefore deleted at restructuring and replaced with a new one (see Table 1)\. In addition, private sector and other actors could now access information on cases, while survey questions on transparency provided more information on transparency\. Efficiency was mainly improved through streamlining business processes and automating them through ICT systems in the SC, SAC, CC, MCC and the commercial courts\. Almost US$169 million of the US$189 million disbursed was invested in such activities, greatly enhancing efficiency, as the economic analysis demonstrates\. Page 11 of 148 The World Bank Judicial Reform Support Project (P089733) Figure 1\. JRSP Results Chain  Components/  Longer Term  IRIs PDO level indicators PDO Components Activities Outcomes courts financed by 1\. To strengthen transparency in PDO Indicator 1\. the JRSP Availability of data from judicial A\. Surveys p eriodic surveys of users of judicial services PDO Indicator 2\. Decisions of B\. Information services for users (kiosks, video- MCC in civil conferencing, etc) cases enforced, as a percentage Percent of of all decisions courts financed by MCC in civil by the JRSP in which new cases information Increased public trust and confidence in courts services are available for B\. ICT sy stems for users SC, CC, SAC, AC, M CC, CIR PDO indicator 4\.  New video‐ 2\. To strengthen efficiency in courts financed by the JRSP conferencing  facilities (to  enable remote  Reduction in complaints by participation in  litigants in M CC court  proceedings)  are functional in  Reduction in courts financed  cases with by the project contested court records, as a p ercentage of all cases in M CC B\. ICT system for  A modern Data MCC Processing Center for M oscow courts is functional at the M CC PDO Indicator 3\. Reduction in time taken by Time taken by M oscow lower Moscow courts courts to forward criminal and civil to respond to cases to courts of citizen ap peal applications Number of Component C - M anpower training activities Trained under the Project   Page 12 of 148  The World Bank Judicial Reform Support Project (P089733) Project Development Objectives (PDOs)  9\. The original project development objectives were to strengthen judicial transparency and efficiency in courts financed by the JRSP\.  Key Expected Outcomes and Outcome Indicators  10\. The two key expected JRSP outcomes were to: a) Strengthen judicial transparency in courts financed by the JRSP, measured by 2 outcome indicators: i\. Periodic surveys show improved private sector and public ratings for judicial transparency and efficiency; ii\. Judicial decisions in all arbitrazh courts, all courts of general jurisdiction financed by the JRSP, the Constitutional Court and the Supreme Court are routinely published and publicly accessible\. b) Strengthen judicial efficiency in courts financed by the JRSP, measured by the outcome indicator: i\. Periodic surveys of judges and staff in courts covered by the JRSP show increasing satisfaction with use of new information systems compared to the 2006 baseline\. 11\. The first PDO indicator was meant to track a longer-term outcome – increased user satisfaction with transparency in judicial functioning, while the other PDO indicators and intermediate indicators were meant to measure project-specific results from the ICT modernization of JRSP-financed courts\. Together, the indicators covered activities valued at more than 90 percent of the actual total project cost of US$188\.76 million (project costs by component are at Annex 3)\. Components  12\. The JRSP financed four components whose estimated and actual costs (indicated below) add up to the estimated and actual total project costs: A\. Institutionalizing Judicial Transparency and Accountability (total estimated cost US$7\.15 million, actual cost US$4\.78 million)\. This component financed: (i) periodic surveys of users of judicial services such as individuals, businesses and professional users (e\.g\. lawyers, bailiffs, and notaries) and dissemination of survey results; (ii) research and analysis on development of transparency, openness and accessibility of judicial decisions, processes and practices; (iii) the creation and implementation of common case management standards, guidelines and processes; (iv) the development and piloting of judiciary performance criteria and indicators; and (v) development and implementation of communications and change management strategies for judicial reform\. B\. Harnessing ICT for Judicial Transparency and Effectiveness (total estimated cost US$146\.10 million, actual cost US$168\.76 million)\. This financed activities to: (i) modernize, develop, and deploy integrated information systems for courts to facilitate document flow, record management, information collection, and internal knowledge sharing; (ii) improve public access to and availability of judicial information through online publication of judicial decisions and other relevant information; and (iii) more effectively link the SC, the SAC, lower courts, JD offices, and other relevant justice entities (such as prisons) through integrated information systems and video-conferencing\. C\. Strengthening Human Capital (total estimated cost US$10\.10 million, actual cost US$7\.09 million)\. This component financed: (i) information technology-related education and training for judges and court Page 13 of 148  The World Bank Judicial Reform Support Project (P089733) personnel for the Constitutional Court, the CGJ, the SAC and the Judicial Department; and (ii) knowledge exchange, including seminars and workshops for the judiciary\. D\. Project Management and M&E (total estimated cost US$9\.06 million, actual cost US$8\.13 million)\. This component financed: (i) logistical and secretarial support for the Inter-Agency Coordination Council (IACC – later renamed the Inter-Agency Management Council or IAMC) and the operating costs of the project implementation unit (PIU) – the Bureau of Economic Analysis (BEA); (ii) expert technical ICT support for the judiciary; and (iii) implementation of the project results framework\. Figure 2 depicts the authorities’ overall strategy to modernize Russia’s courts, using a mix of instruments and stakeholder coalitions, and the stakeholder coalitions developed during JRSP implementation\. Figure 2\. Modernizing Russia’s Courts – Strategy and Stakeholder Coalitions B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)    Revised PDOs and Outcome Targets   13\. The PDOs were not revised because the continued relevance of the original PDO was reconfirmed to Bank management by the judicial leadership, MOE and MOF all through implementation, at the mid-term review and at each restructuring\. The table below shows the changes made to outcome targets and PDO indicators at the 2012 restructuring (when US$14\.24 million of the IBRD loan had disbursed) and the 2014 restructuring (when US$24\.17 million had disbursed)\. Revised PDO Indicators  Table 1\. Revisions to PDO Indicators and Outcome Targets Original PDO Revised PDO Date of Reason for Change Indicator and Indicator and revision/ outcome target Outcome Target drop Component A Page 14 of 148  The World Bank Judicial Reform Support Project (P089733) 1\. Periodic surveys Availability of data The baseline for the original outcome target show improved private from periodic surveys was derived from the 2010 user survey\. Revised sector and public of users of judicial May 30, 2012 (Please see paragraphs 25-29 of the ICR and ratings for judicial services Annexes 7 and 8 for key survey findings) transparency and efficiency\. Outcome target: Yes Outcome target: Increased satisfaction with judiciary, measured by 75% increase over baseline figure\. Component B The original indicator was adopted when Russia’s courts were not required to publish 2\. Judicial decisions in Dropped Dropped their decisions\. A few courts did so; the vast all arbitrazh courts, all May 30, 2012 majority did not\. This changed with the courts of general passage of law no\. 262 of 2010: from July 1, jurisdiction financed by 2012 all courts were legally required to the JRSP, the publish all decisions\. Hence at the 2012 Constitutional Court restructuring the indicator as originally and the Supreme Court worded became moot: the Bank’s support to are routinely published the drafting of law 262 contributed to the and publicly accessible\. mandatory publication and public Outcome target: 100% accessibility of judicial decisions, the SC and of above courts publish CC were publishing all their decisions, and their decisions the indicator was considered to have been substantially achieved by removing the legal impediment that most impeded publication: the only constraint to publication became courts’ lack of ICT systems, infrastructure and bandwidth to handle high data volumes and storage\. Hence this original indicator was dropped\. At the time of the drop, most CGJs (which comprised about 80 percent of the total number of RF courts) were unable to publish their decisions only because of ICT constraints (e\.g\. lack of software to address privacy issues, lack of ICT systems and equipment, and insufficient ICT bandwidth)\. Decisions of Moscow Added This indicator measures a key element of City Courts in civil September judicial efficiency, namely the extent to which cases enforced, as a 12, 2014 percentage of all Page 15 of 148  The World Bank Judicial Reform Support Project (P089733) decisions by Moscow the MCC’s judicial decisions in civil cases are City Courts in civil actually enforced\. cases Outcome target: 40 percent Reduction in time Added This indicator was added to measure the taken by Moscow September efficiency of response to citizen applications courts to respond to 12, 2014 addressed to the MCC\. In 2014, Moscow citizen applications, courts took 30 days on average to respond to as a percentage of citizen applications, including complaints\. 2016 baseline This was targeted to be reduced to 24 days (i\.e\. 20 percent reduction) by the end of the Outcome target: 20 project\. Reports on this indicator are part of percent the automated reports generated by the JRSP- financed MCC ICT system\. New video- Added This indicator was originally subsumed under conferencing facilities September the ICT applications for each court system and (to enable remote 12, 2014 hence covered the SC, CC, SAC, CGJs and the participation in court commercial court system\. At the 2014 proceedings) are restructuring, with the exit of the JD and the functional in courts CGJs from the JRSP, the SAC having been financed by the abolished, and the MCC added to the project, project this indicator covered the SC, the commercial courts and the MCC system\. Outcome target: 100 percent Component C 3\. Training of judges, Dropped Dropped By the 2014 restructuring, much of the court personnel and September component C budget had been spent and about Judicial Department 12, 2014 3,000 judges and staff trained\. The JD and demonstrates increased CGJs were exiting the project\. It was agreed to technological drop this indicator and include new ones that proficiency\. would capture the results of the ICT modernization of the MCC\. Outcome target: 5,000 judges and 5,000 judicial staff trained Page 16 of 148  The World Bank Judicial Reform Support Project (P089733) Revised Components  14\. The original component names were not revised; some activities within components were added or deleted at the May 2012 restructuring to respond to evolving RF judicial reorganization and modernization priorities and address JRSP implementation challenges: a) Activities were added to reflect major changes in the organization and functioning of Russia’s courts:  The passage of landmark Law no\. 262 of 2010 mandated all courts to publish their decisions online – an activity was added to Component A on research and analysis on publication of judicial decisions\.  In 2014 the SAC ceased to function as a result of a Constitutional amendment and associated laws; its functions were transferred to a newly-created Commercial Division in the SC\. The commercial court system below the SAC remained in place, with the SC becoming the apex court in place of the SAC\. This was a major structural change in the RF judiciary\. It was recognized in the Loan Agreement and an activity added to analyze the impact of the abolition of the SAC on commercial courts’ processes and ICT systems\. b) A new covenant (a “circuit-breaker”) was added to mitigate implementation risks: it provided that (A) the RF, through the PIU, should: (i) by not later than October 31, 2015 or such other agreed date, sign the contracts for remaining procurement of goods with contract duration of 12 months or more, and (ii) by not later than June 30, 2016 or such other agreed date, sign all other contracts for activities included in the procurement plan agreed upon between the Borrower and the Bank; and (B) If the project failed to sign any of the contracts referred to above by the respective due dates, the Bank might, at its discretion, determine that the amount of the Loan pertaining to the unsigned contracts would not be required and, without further notice, cancel such amount from the Loan Account\. 15\. At the 2014 restructuring:  The scope of Component B was updated: the MCC and Court of Intellectual Rights (CIR) were added as project beneficiaries along with relevant activities and the remaining unimplemented JD and CGJ activities were deleted; and  Other activities were added to enable the SC to review the results of the modernization and plan an ICT strategy for the future which could – in the right circumstances – accommodate the vision of the MCC and other courts to move towards a next-generation suite of ICT applications that, together, could integrate into a single judicial ICT system\. 16\. The 2014 restructuring increased the strategic relevance of the PDOs\. The JD sub-component to modernize the ICT systems of 900 CGJs (estimated cost US$42 million) was cancelled at the 2014 restructuring\. The MCC was added – the JRSP was to finance the design and implementation of a next- generation suite of ICT applications for the MCC\. The substitution of the JD and the 900 CGJs by the MCC was significant\. The 900 CGJs designated by the JD for investment under the JRSP comprised about a third of the total number of RF general jurisdiction courts\. Although large in number, they were scattered across Russia’s territory and mostly comprised small courts with one, two or three judges\. Their total caseload was less than 10 percent of the total RF caseload volume\. The Bank team had expressed concerns on different occasions about (a) the Bank’s ability to verify implementation across so many locations with a limited supervision budget and (b) implementation issues with the JD-developed GAS Pravosudiye System intended for implementation in the 900 CGJs\. The MCC was Russia’s largest regional court system, with 35 district courts in Moscow City, with the Moscow City Courts (with more than 500 judges – the largest in Russia and in Europe) at the top\. The MCC court system annually handled more than twice the 900 CGJs’ caseload, Page 17 of 148  The World Bank Judicial Reform Support Project (P089733) increasing the JRSP footprint and impact\. The MCC wanted to partner with the Bank to design and implement a next generation suite of applications integrated into a single ICT system, which could serve as a pilot to improve the GAS Pravosudiye system\. The high MCC caseload volume (about 15 percent of the total RF caseload volume at the time) made this change a potentially high-impact one\. In addition, the strong MCC leadership team, the high-capacity MCC ICT team and the compact MCC territory made it likely that this ambitious approach could work\. Hence, while the decision to cancel the investment in the 900 CGJs could have seemed like a lost opportunity, adding the MCC and the CIR made the PDO more relevant and JRSP efficiency and impact higher (see also discussion on this issue under Efficiency)\. Other Changes  17\. At the May 2012 restructuring other changes included: (a) recognition of the Foundation for Enterprise Restructuring (FER) as the new JRSP PIU, (b) preparation and adoption of a revised Operational Manual by November 30, 2014 as a result; and (c) reallocation of loan proceeds so that the FER began its role as the PIU with a clean slate: the costs incurred by the BEA till the date of termination of its contract were frozen (at US$726,248\.06) and depicted separately\. 18\. Other restructurings summarized in the Data Sheet extended the closing date, revised implementation timelines and reallocated loan proceeds to take account of changed circumstances on the ground\. Rationale for Changes and Their Implication on the Original Theory of Change  19\. The rationale for dropping the JD and the 900 CGJs has been explained earlier, and more detail is in the Annex\. The addition of the MCC and CIR more than compensated for this, and increased project ambition and potential achievement due to the very heavy MCC caseload\. And it allowed the MCC to design, test and deploy an improved ICT system that began to strengthen transparency, efficiency and trust – and possibly lead to an improved court ICT system across Russia\. These changes therefore did not affect the original theory of change\. Upon the cessation of functioning of the SAC in 2014, its functions were transferred to the SC which became the apex court for the commercial courts – hence this change did not affect the original theory of change\. It actually strengthened the theory of change because with one less apex court out of the original three, the SC was now in sole charge of the CGJs and commercial courts, and began to look for ways to increase its efficiency and transparency\. As a result, the JSRP financed a study commissioned by the SC to examine the potential to integrate commercial and CGJ ICT systems in the future, building on JRSP achievements\. Overall, therefore, the changes that occurred during JRSP implementation strengthened the reasoning behind the original theory of change\. II\. OUTCOME    Relevance of PDOs Achievement of PDOs (Efficacy) Efficiency Overall Outcome Substantial Substantial High Substantial   Page 18 of 148  The World Bank Judicial Reform Support Project (P089733) A\. RELEVANCE OF PDOs  Assessment of Relevance of PDOs and Rating  Rating: Substantial 20\. The PDO was relevant to RF priorities throughout the project life\. Improved transparency and efficiency of the RF court system was and remains critical to the RF\. This was reiterated by RF authorities and the judicial leadership at mid-term review and through successive restructurings\. 21\. The Bank’s implementation support evolved in relation to changing needs on the ground: the Bank reviewed in detail the pilot of the GAS Pravosudiye and provided feedback through discussions and mission Aides Memoire on the design, integration and implementation risks\. This led to the exit of the JD and the inclusion of the MCC and the CIR in the project\. The Bank team provided examples of, and experts in, international good practice during the drafting in 2008-2009 of Law 262 (which mandated publication of all judicial decisions)\. Intensive consultations between European and US judges and experts on the one hand, and Russian judges and drafters on the other, were arranged by the Bank team under its supervision budget, with strong support from Bank management\. And when the SAC ceased to function in 2014, the Bank helped counterparts to minimize the impact on the commercial court ICT system, and supported the SC in developing a strategy for a future integrated ICT system for CGJs and commercial courts\. 22\. The PDO was consistent with the Bank’s CPSs for the RF till 20166\. The 2017 Systematic Country Diagnostic (SCD) reviewed justice achievements and constraints as part of the scan of the governance horizon: the JRSP provided generally sufficient information to show alignment of the objectives to the preceding CPSs\. In addition, when circumstances changed, the outcome indicators were revised in 2012 and 2014 to keep the objectives relevant\. In 2017, the New Development Bank financed a $460 million follow- on judicial modernization project\. The PDO and project design were also consistent with the approach to judicial reform in the World Bank’s Europe and Central Asia (ECA) Region, which was to support transparency- and efficiency-enhancing reforms\. The JRSP, which focused on the potential of ICT to facilitate such change, was aligned with this approach\. Lastly, the May 2018 Presidential Decree on national programs and priorities mentions digitalization of the economy and of state functions and services to be facilitated by a new Ministry of Digital Economy\. 23\. For the reasons above, the relevance of PDOs is rated Substantial\. In the CPS for 2012-2016 (report no\. 65115-RU), the JRSP is aligned with and contributes to the CPS results under 6  the cross-cutting theme of “Improving Governance and Transparency”\. Page 19 of 148  The World Bank Judicial Reform Support Project (P089733) B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome  Rating: Substantial   24\. Three of four PDO-level indicators, and five of seven intermediate results indicators, were achieved by project closing\. The achievements are assessed below\. Outcome 1\. Increased judicial transparency in courts financed by the JRSP 25\. PDO Indicator 1\. Availability of data from periodic surveys of users of judicial services – achieved7\. Surveys from 2010-2017 show that (i) trust in courts slowly increased and (ii) more entrepreneurs felt that courts protected their property rights\. The 2010 survey was published by the BEA and Levada Center while the MCC published the 2017 survey results on its public website\. The indicator has been useful in tracking transparency and trust in courts\. Five rounds of surveys (2010, 2011, 2012, 2013 and 2017) tracked user satisfaction with, attitudes to, and actual experiences with, courts (including enforcement of judicial decisions)\. The surveys succeeded in tracking some longer-term trends and outcomes, as the extracts below show\. The successful conduct of five rounds of user surveys (in addition to two more 2017 surveys specially commissioned and conducted for the MCC) and the availability of survey data for research and publication was key to achievement of PDO indicator 1\. All survey results were shared with the judicial and executive leadership and used by courts to improve their functioning\. Even if the wording of the original PDO indicator is considered, the surveys show increasing trust and confidence in courts (Figure 3)\. Figure 3\. Trust and Confidence - 2010-2017 Survey Feedback from General Public and Entrepreneurs Can An Ordinary Russian Citizen Have  His/Her Case Considered Fairly & Without  Prejudice By The Court? (General Public:  % Responding "Yes") 80 70 60 50 40 30 2009 2010 2012 2013 2017 Table 2\. Responses to the question on trust and confidence in the courts: Can an ordinary Russian citizen have his/her case considered fairly and without prejudice by the court? (General public, percent answering yes) 2006 2007 2008 2009 2010 2012 2013 2017 Percent 46 55 56 46 64 73 51 76 Table 3\. Responses to the question: What issues in judges’ work are the most acute from your point of view? Page 20 of 148  The World Bank Judicial Reform Support Project (P089733) (General public, percent choosing various options) 2010 2011 2012 2013 2017 Bribery, corruption of judges and court personnel 56 59 55 48 45 Judges’ dependence on the authorities and influential groups 46 45 50 40 39 Absence of equality of parties in court proceedings, e\.g\. public officials have priority over ordinary citizens 25 27 30 25 27 Red tape, delays, unproductivity 29 26 26 25 20 Low public standing of judges 17 24 17 25 14 Table 4\. Responses to the question: Are your private property rights protected? (Entrepreneurs, percent responding) 2011 2012 2013 2017 (n = 812) (n = 823) (n = 802) (n = 800) Yes/rather yes 43 48 52 51 No/rather no 54 50 45 44 Hesitate to answer 3 2 4 6 Table 5\. Responses to the question: How high is the public standing of the following institutions in the community? (General public) 2011 2013 2017 2011 2013 2017 2011 2013 2017 Very high + Rather high Very low + Rather low Hesitate to answer Church 72 63 61 19 30 29 9 7 10 Government 65 49 62 29 46 32 7 5 6 Special services 63 65 69 21 26 19 16 9 13 (FSB etc\.) Army 46 55 73 47 41 20 7 5 6 State Duma 45 38 50 48 57 42 7 5 8 Businesses 43 44 52 47 46 36 11 9 13 Courts 41 44 54 49 50 37 9 6 9 Human Rights 41 40 43 43 48 38 16 12 19 Organizations Public Chamber 37 35 40 36 49 37 27 16 22 Law enforcement 34 38 53 58 56 37 8 6 10 26\. JRSP activities increased courts’ transparency at all levels\. They increased the availability of information about citizens’ and businesses’ legal rights, about court functioning, about how to lodge complaints about judges and courts – each of these also increased the protection of parties’ rights in court proceedings\. Details can be seen in Annex 4 (Efficiency Analysis)\. SC, SAC and MCC information kiosks and public information systems created positive transparency effects\. The RF SC building was equipped with self-service information terminals (output B\.2\.2\.5 ‘Purchase of information referral system equipment for RF SC visitors and delivery of related services for system implementation’)\. Through such activities, citizens gained comfort and confidence (difficult to measure in monetary terms) in obtaining information on their 7 The original PDO indicator 1 read as follows: “Periodic surveys show improved private sector and public ratings for judicial transparency and efficiency”\. As explained earlier, it was modified to its present form at the 2012 restructuring\. Page 21 of 148  The World Bank Judicial Reform Support Project (P089733) own\. A similar positive effect arose from providing the MCC with self-service terminals and panels through JRSP activity B\.3\.1\.2\. All of this improved courts’ transparency and openness and citizens’ confidence in approaching courts with their disputes and complaints\. 27\. Survey findings on transparency – Levada surveys\. In the Levada surveys two questions for the general public were directly related to openness and transparency of the court system: “From your point of view is information on court activities accessible to citizens, public at large and to what extent?” and “From your point of view how transparent court proceedings are for 1) interested persons, their relatives; 2) mass media; 3) general public”\. On the first question, respondents stating that information is fully accessible increased by one percentage point between 2010 and 2017 (from 3 in 2010 to 4 in 2017), respondents stating that information was mostly accessible stayed stable (20 percent) and respondents stating that judicial information was limited fell from 51 percent in 2010 to 44 percent in 2017\. On the second question, respondents stating that court proceedings are not transparent enough for interested persons and relatives fell from 31 percent in 2010 to 28 percent in 2017, and respondents stating that court proceedings are not transparent enough for mass media fell from 41 percent in 2010 to 38 percent in 2017\. Respondents stating that court proceedings are not transparent enough for the public fell from 48 percent in 2010 to 45 percent in 2017\. In the 2017 survey, 63 percent of entrepreneurs responded that they use the database of arbitrazh court decisions, and 24 percent used templates of court documents\. On the question “Is it difficult to get information on arbitrazh court jurisprudence?”, 47 percent of entrepreneurs answered that it was not difficult and 27 percent that it was rather easy\. Commenting on arbitrazh court websites, 71 percent were satisfied with the amount of information, 66 percent were satisfied with the search features and 64 percent were satisfied with the regularity and timeliness of information updates\. 28\. Survey findings on transparency – MCC surveys\. Satisfaction with functioning of all information systems rose by 10-20 percentage points between 2014-2017 and by 13 percentage points on average\. Satisfaction with access to video recordings of court hearings and live-streaming of court sessions rose by 13 percentage points\. Professional users were highly satisfied with the MCC ICT system’s information and analytical applications (57 percent), the external internet portal of the Moscow courts (57 percent), the data exchange system between courts (56 percent) and video-conferencing with detention centers (55 percent)\. Satisfaction of the general public with all systems rose by 11 percentage points on average\. The most appreciated were the external web portal (65 percent, an increase of 17 percentage points), information kiosks (63 percent, an increase of 8 percentage points), and public access to the e-Justice system (58 percent, an increase of 9 percentage points)\. 29\. Additional sources of information for users about the courts\. According to the Levada surveys, newspapers and TV programs remain the most important sources of information about the judicial system for the general public\. The importance of internet sources is rising (from 4 percent in 2010 to 15 percent in 2017)\. Among firms, 49 percent of respondents named arbitrazh courts’ websites among their main sources of information about the judicial system (against 32 percent in 2010)\. 30\. Numerous project outputs contributed to the achievement of the transparency outcome, including: ï‚ Study and assessment of effectiveness of interaction between courts and mass media; ï‚ Publishing of the reporter "Decisions of the Constitutional Court of the Russian Federation" in English Page 22 of 148  The World Bank Judicial Reform Support Project (P089733) ï‚ Consulting Services for Analysis of the Legal and Regulatory Framework of the RF and development of proposals for improvement to ensure legal provision for the use of ICT in case management and interaction between courts and other government agencies of the RF and their territorial bodies (in part related to live-streaming of court hearings and public access to records of court hearings); ï‚ Supply and Installation of the integrated document flow management system and information posting in the internet portal of the Constitutional Court of the RF; ï‚ JRSP/1/B\.2\.2\.5\. Procurement of equipment of information system for SC visitors and installation; ï‚ JRSP/1/B\.3\.1\.2\. Turnkey creation of the Integrated Information System of Moscow city general jurisdiction courts (in part related to installation of information kiosks, live-streaming of court hearings and public access to records of court hearings); ï‚ JRSP/1/B\.4\.2\.1\. Supply and Installation of information mini-booths for the arbitrazh courts; ï‚ JRSP/1/B\.4\.2\.2\. Development, implementation and support of uniform portal of the arbitrazh (commercial) courts of Russia; ï‚ JRSP/1/B\.4\.2\.3\. Supply and Installation of systems of storage of electronic copies of judicial documents for the arbitrazh courts; and ï‚ JRSP/2/C\.1\.11\. Professional development of public relations specialists of the Constitutional Court of the RF, commercial courts, courts of general jurisdiction and divisions of the Judicial Department\. Outcome 2\. Increased efficiency in courts financed by the JRSP 31\. PDO Indicator 2\. Decisions of Moscow City Courts in civil cases enforced, as a percentage of all decisions by Moscow City Courts in civil cases: not fully achieved (81 percent achieved)\. This indicator was important because MCC decisions in civil cases needed to be enforced by public bailiffs for the successful party to actually obtain the benefit of the court decision\. Bailiffs’ non-enforcement of such decisions was difficult for the courts to track\. The new system, which was linked to the bailiff ICT system, made it more for bailiffs to delay or avoid enforcement, and provided information to the courts on the progress of enforcement of each court decision\. Against the end-project target of 40 percent of MCC civil decisions enforced, the MCC achieved 37 percent\. The 2014 baseline was 24 percent\. The under-achievement was due to challenges in initially implementing the technically complex MCC integrated ICT system (which required interfacing with the bailiff ICT system)\. The achievement was significant but fell short of the ambitious target\. 32\. PDO Indicator 3\. Reduction in time taken by Moscow courts to respond to citizen applications, as a percentage of 2016 baseline - Fully achieved (265 percent of target)\. This indicator was added to measure the efficiency of response to citizen applications addressed to the Moscow City Courts\. This indicator, as a published report automatically generated by the MCC ICT system, increases transparency by providing users/litigants information on the MCC’s response to citizen applications\. In 2014, the MCC took 30 days on average to respond to citizen applications, including complaints\. This was targeted to be reduced to 24 days (i\.e\. 20 percent reduction) by the end of the project\. The actual achieved by end-project was 16 days, i\.e\. a 53 percent reduction in time from the baseline of 30 days (in other words, 265 percent of the targeted 20 percent reduction)\. Reports on this indicator constitute part of the numerous automated reports being generated by the integrated ICT system installed in the MCC under the largest JRSP ICT contract\. Page 23 of 148  The World Bank Judicial Reform Support Project (P089733) 33\. PDO Indicator 4\. New video-conferencing facilities (to enable remote participation in court proceedings) are functional in courts financed by the project - fully achieved (100 percent)\. This indicator originally covered the SC, SAC, 900 CGJs and the commercial court system\. It was already achieved for the SC, CC, SAC and all commercial courts by the time of the 2012 restructuring\. At the 2014 restructuring, with the exit of the JD and the 900 CGJs from the JRSP, and with the SAC having been abolished, the revised indicator covered the SC, CC, commercial courts, MCC, and half of all penitentiaries\. It was fully achieved by project closing\. 34\. Achievement of key IRIs underpinned success as measured by the PDO results indicators: a) For achievement of PDO 2 as measured by PDO indicators 2 and 3, the achievement of IRI “percent of courts financed by the JRSP in which new information services are available for users” was key to success\. Underlying this IRI were several outputs under component B, summarized in the Key Outputs section of Annex 1; b) PDO indicators 2, 3 and 4 were dependent on the achievement of a key IRI (a modern data processing center for the Moscow Courts is operational at the MCC); c) For PDO 4, the establishment of the VC systems was preceded by development of technical specifications and functional requirements that would be compatible with interoperability of ICT systems (i\.e\. which could work with court and prison ICT systems at the very least); and d) Underlying each IRI were the outputs indicated by component in Annex 1 (Key Outputs section)\. 35\. Some IRIs were not preconditions for PDO indicators: they were included for specific reasons: a\. They were key elements of the MCC automated system and needed to work satisfactorily for the overall achievement of PDO 2 – the IRIs “time taken by Moscow lower courts to forward criminal and civil cases to courts of appeal” and “reduction in cases with contested court records” are examples\. Together they ensured that cases sent to other/higher courts were complete in terms of documentation and time was not wasted in getting missing documents or evidence; or b\. They contributed to citizen engagement and complaint handling, e\.g\. “reduction in complaints by litigants in MCC”\. 36\. Numerous project outputs contributed to the achievement of the efficiency outcome, including: ï‚ Development of new criteria and indicators of efficiency of functioning of the judicial system; ï‚ The scientific analysis and systematization of decisions of the Constitutional Court of the RF; ï‚ Analysis and generalization of the practices of the European Court on Human Rights in the context of the RF Constitution and Russian legislation; ï‚ Analysis of efficiency and recommendations to improve video-conferenced hearings in CGJs; ï‚ JRSP/1/B\.1\.1\.2\. Modernization of ICT infrastructure of the Constitutional Court of the RF; ï‚ JRSP/1/B\.2\.1\.1\. Retrospective conversion of RF SC decisions and data files into electronic format; ï‚ JRSP/1/B\.2\.2\.2\. Procurement of equipment for workplaces of judges and employees of the SC; ï‚ JRSP/1/B\.2\.2\.3\. Modernization of the SC Information System; ï‚ JRSP/1/B\.2\.2\.4a\. Procurement of hardware and software for virtualization of computing resources of the SC and related services for implementation of the virtualization system; ï‚ JRSP/2/B\.2\.2\.8 (i)\. Information Systems Audit of the SC and the SAC of the RF; ï‚ JRSP/2/B\.2\.2\.8 (ii)\. Development of IT Concept of the SC of the RF; Page 24 of 148  The World Bank Judicial Reform Support Project (P089733) ï‚ JRSP/2/B\.2\.2\.9\. Development and implementation of the information system "Case Processing and Judicial Documents Flow" of the SC of the RF, based on modern ICT; ï‚ JRSP/1/B\.2\.3\.1\. Procurement of equipment and system of communication channels for the system of remote court proceedings of the SC of the RF; ï‚ JRSP/1/B\.2\.3\.2\. Supply of additional video-conferencing equipment to the SC of the RF and Federal Penitentiary Service (FPS) offices; ï‚ JRSP/1/B\.3\.1\.2\. Turnkey creation of an Integrated Information System of Moscow city CGJs; ï‚ JRSP/1/B\.4\.1\.1\. Supply and installation of modern internal phone communication for the arbitrazh court system; ï‚ JRSP/1/B\.4\.1\.3\. Development of a uniform system of corporate e-mail in commercial courts; ï‚ JRSP/1/B\.4\.1\.5\.1\. Analysis of the needs of the CIR in terms of the specialized functionality of its IT systems, and development of the concept and technical requirements for the new specialized automated case processing system; ï‚ JRSP/1/B\.4\.1\.5\.2\. Development of new functional modules of the Arbitrazh Case Management System, reflecting process-specialization of the CIR and based on current legislation; ï‚ JRSP/1/B\.4\.1\.9\.1\.1\. Upgrade of the CIR data storage system to enable processing and storage of live court hearings broadcast; and ï‚ JRSP/B\.4\.1\.9\.3\. Procurement of an automated system for document flow management in the CIR\. 37\. Significant poverty and social effects also arose from the JRSP-financed videoconference (VC) system installed in the Supreme Court, which linked it with courts and penitentiaries8\. Witnesses and detainees could now remotely provide testimony and be heard from different locations without needing to travel vast distances, stay overnight, take leave from work, or to leave their minor children or sick relatives alone\. The state saved money on transportation and security of detainees\. With the implementation of the VC system, the ability of citizens to access justice services improved greatly\. Court practice showed that people serving sentences or those in pre-trial detention are sometimes witnesses in other court proceedings in other regions\. The convicts or accused used to be transported to the place of hearing by special transport – such round trips could take several months, leading to high expenditures in addition to security risks and logistical complications\. This project design accommodated this important access intervention\. Providing prisons with VC facilities also produced other positive effects: for example, prisoners’ relatives, no matter how far they live from the place of imprisonment and regardless of whether they possessed money for transportation to the prison, now have the right to video-conferencing\. 38\. The MCC integrated information system allows citizens – including low-income citizens, women and other vulnerable groups – and businesses to lodge complaints with the court by electronic means and remotely track the status of the complaint\. The social effect of such an opportunity is significant\. To lodge a complaint in person requires a citizen’s presence in court during working hours\. Consequently, by engaging with the court remotely, she or he not only significantly saves travel time (considerable for a city of Moscow’s size and spread) but the person does not have to miss work for a personal visit to the court or to spend working hours on telephone calls to obtain information on the status of the case\. Online services – accessible through public internet access sites or from home or other internet connections - make applicants more confident and comfortable as they can access the information at any time or from any location\. 8  VC systems were installed in all regional courts, district courts of general jurisdiction and in more than half the penitentiaries\.  Page 25 of 148  The World Bank Judicial Reform Support Project (P089733) 39\. Non-JD project activities proceeded rapidly during 2007-2012, including modernization of SC, SAC and CC ICT systems, and identification and promotion of good practices in Russia’s judicial reforms, supported in part through the ECA Justice Sector Peer-Assisted Learning (JUSTPAL) Network\. JRSP- financed analytic work (e\.g\. a survey of user experiences with courts, performance indicators) was taken into account by the judicial leadership in designing further reforms, and in promoting a culture of increasing transparency, efficiency and user feedback9\. The SAC Chief Justice visited the World Bank in April 2009\. The RF courts sent 2 delegations to the April 2011 Athens launch conference for the ECA JUSTPAL Network, and participated actively in subsequent JUSTPAL events, sharing Russian courts’ innovations and good practices\. Importantly\. The Bank team organized a 2008 visit of a high-level delegation from Russia comprising bankruptcy judges from the SAC, Moscow City Arbitrazh Court, Appeal Arbitrazh Court for the First Circuit, SAC staff members and MOE to the United States (Sacramento and Boston) to study consumer bankruptcy in the US: best practices identified by them contributed to the preparation of the draft law on consumer bankruptcy in Russia, which in turn played an important role in enhancing Russian commercial courts’ ability to deal efficiently with the influx of such cases in the post-2008 crisis period\. Justification of Overall Efficacy Rating   40\. The project’s overall efficacy is rated Substantial\. The operation substantially achieved its objectives and intended outcomes, as explained above\. Outcome 1 was substantially achieved with the robust 5 rounds of surveys and the additional 2 surveys specially designed for the MCC\. The MCC published its survey results on its website\. Significant findings from the surveys are at Annexes 7 and 8: these support the conclusion that the significant project investment on modern automated systems and electronic access was beneficial for accessing courts as well as information about courts\. Revised PDO indicator 1 was achieved, as were two of three other PDO indicators\. Outcome 2 was also achieved, as indicated by the outcome indicator, IRIs and other evidence summarized above\. C\. EFFICIENCY    Assessment of Efficiency and Rating  Rating: High 41\. Economic analysis at completion, based on conservative assumptions, shows a Net Present Value (NPV) of RUR7\.3 billion (or US$121\.8 million equivalent based on the prevailing exchange rate) and an economic internal rate of return (EIRR) of 63 percent, in line with satisfactorily-performing public sector institutional modernization projects in the RF and elsewhere\. Details of the economic analysis, including methodology, underlying assumptions and calculations, is at Annex 4\. The analysis demonstrates that project efficiency objectives were achieved\. 42\. Summary of analysis\. Project economic analysis at appraisal followed Bank and ECA Region practice at the time for public sector institutional modernization projects\. The project was designed to provide 9 In addition, a Japan Social Development Fund (JSDF) Grant, implemented by a policy research institute, the Institute of Law and Public Policy, had achieved unanticipated policy impact and results on the ground\.  The Grant Management Council included a representative from the Presidential Administration and was chaired by a retired Justice of the Constitutional Court Ms\. Morschakova\. The RF law on free legal aid was revised to include non-state providers such as lawyers and NGOs, based in part on results from JSDF- financed activities in the 2 participating regions\. Page 26 of 148  The World Bank Judicial Reform Support Project (P089733) economic benefits from improvements in judicial performance and was expected to improve judicial transparency and efficiency\. Positive economic effects arose from savings on staff time of judges and other court officials; lower transactions costs between courts, other governmental institutions and users of courts such as citizens and businesses; and reduced cost of processing information and providing it to citizens, businesses and governmental agencies\. The estimated direct economic effects (DEE) of JRSP activities considerably exceeded the expenditures incurred on the JRSP\. In addition to the DEE, project implementation positively affected the quality and timeliness of the administration of justice and improved access to judicial services for citizens, businesses and professional users\. It also contributed to improving actual experiences with, and perceptions about, the judicial system as a whole\. This in turn contributed to increasing satisfaction of citizens and businesses with the judiciary\. JRSP activities also had social effects such as increasing the transparency of courts at all levels; increasing the availability of and access to court decisions, judicial information and judicial processes; and increasing protection of the rights of litigants and businesses, as the survey data cited in the ICR demonstrate\. 43\. Taking account of the overall economic effect, the comprehensive economic effect (CEE) demonstrated efficiency in JRSP implementation\. The CEE value obtained for the period up to and including 2022 is RUR40 billion (equivalent to US$665\.9 million at the end-2017 exchange rate or US$614\.7 million based on the average weighted exchange rate provided by the RF Central Bank for the corresponding years)\. In addition, a stress test applied to assess the JRSP results showed high stability\. Under the stress test, all key assumptions underlying CEE estimations were simultaneously varied from +10% to -10%\. This facilitated examination of system behavior under stringent conditions\. Methodology 44\. The JRSP was implemented within a larger context of major judicial reforms initiated by the government and mostly financed by Federal Targeted Programs (FTPs)\. Efficiency was calculated as a combination of direct economic effects of project activities, and as part of the overall effect of reform of Russia’s judicial system, of which the JRSP was an element\. JRSP effects are divided into 2 categories: direct and indirect\. Direct effects were calculated separately for each activity\. Indirect effects were calculated for the entire JRSP as part of the effect of the entire judicial reform\. The combined effect is the sum of all direct effects for JRSP activities and of the overall effect of the entire JRSP\. The methodology used was to (a) identify JRSP activities with direct effects from project components and calculate the sum of all direct effects (i\.e\. the cumulative direct effect or CDE), (b) calculate the overall effect (OE) of the JRSP as part of the effect of the entire judicial reform using appropriate methodology summarized in the Annex (based on the detailed project economic analysis) and (c) deduct the amount of JRSP financing from the sum of CDE and OE to arrive at the total comprehensive economic effect (CEE)\. 45\. JRSP activities with direct economic effects\. Table 6 below shows the most important JRSP activities with direct economic effects with a summary of the effects identified\. Table 6\. Activities with direct economic effects Activity number and description Description of direct economic effects B\.2\.1\.1\. and B\.2\.1\.2\. Conversion of RF SC Reduction in staff time and cost associated with searching Page 27 of 148  The World Bank Judicial Reform Support Project (P089733) decisions and data files into electronic archival documents format (Stages 1 and 2) Reduction in staff time and cost associated with scanning B\.2\.2\.3 Modernization of SC Information cases and other files/documents System Reduction in staff time and cost of IT specialists in repairing/replacing computers B\.2\.2\.4\.a Procurement of hardware and software for virtualization of SC computer Savings from procurement, deployment and maintenance of resources and provision of related physical servers (PS) from creation of required operational virtualization system implementation infrastructure services B\.2\.2\.9 Development and Implementation Savings by citizens and organizations as they (and/or their of the SC Information System “Case representatives) do not need to be physically present to file Processing and Judicial Documents Flow procedural requests B\.2\.3\.1 Procurement of equipment and Cost savings on prisoner transfers, procedural fees, relatives development of communication channels of prisoners, training and investigation activities for organization of remote proceedings B\.2\.3\.2 Supply of Additional VC Saving on procurement of additional MGTS telephone Equipment to SC and FPS Offices numbers through digital telephone station (DTS) Saving of labor cost of judicial staff associated with filing of cases in courts of higher instance and passing of judgement by courts of higher instance Saving of labor cost of judicial staff associated with handling of complaints B\.3\.1\.2\. Turnkey creation of Integrated Saving of labor cost of citizens and organizations’ Information System of Moscow city representatives associated with submission of claims and general jurisdiction courts applications for examination of case materials through the Internet Saving of staff cost and time associated with maintenance of databases of new employees Saving of material and postage costs using electronic exchange with FBS B\.4\.1\.1\. Development of corporate Savings on long-distance calls telephone network of commercial courts Page 28 of 148  The World Bank Judicial Reform Support Project (P089733) B\.4\.1\.5\.2\. Development of new functional Labor saving associated with preparing the state statistical modules of arbitration case management data system specific to the CIR B\.4\.1\.9\.1 Procurement of servers and Savings on international calls and on buying telephone active network equipment numbers from telephone company Reduced material expenses and labor costs of administrative B\.4\.1\.9\.3 Procurement of Automated personnel associated with maintenance of non-judicial System for Document Flow Management paperwork В\.4\.1\.9\.4 Procurement of Savings for citizens and organizations as they (and/or their videoconferencing equipment for the representatives) do not need to be physically present at court Presidium of the CIR sessions B\.4\.2\.2\. Development, implementation Reduced time spent by citizens and organizations to obtain and maintenance of a single portal for information Russian commercial courts Saving of labor cost associated with registration of and providing access to arbitration cases B\.4\.2\.3/i-iv Supply and Installation of Saving of labor cost of IT specialists associated with systems of storage of electronic copies of equipment maintenance judicial documents Saving of funds for procurement, deployment and maintenance of physical servers (PS) and for creation of the required operational infrastructure B\.4\.2\.4\.1 Audio Recording System of Saving on reduced number of appeals against judges’ orders Court Sessions and decisions 46\. Some activities can have longer-term impact even if their direct effect is difficult to identify or measure at this point\. Typical examples include training and skills upgrading of judges and judicial staff, knowledge exchange and access to international good practice for judges\. It is difficult to assess the direct economic effects of such activities, yet they do impact Russia’s court system\. 47\. Overall effect of JRSP\. The JRSP contributed to the overall effect of the system-wide judicial reform over the years\. The total overall effect of the JRSP is the sum of annual effects\. The comprehensive economic effect (CEE) of the JRSP is the sum of the direct economic effects and the overall economic effect of the Project, less cumulative actual JRSP expenditures\. Inflation estimates used data from the Federal State Statistics Service, while inflation forecasts up to 2022 used data from the MOE10\. Details are in Annex 4 (Efficiency Analysis)\. 10  http://economy\.gov\.ru/minec/about/structure/depmacro/2017271001 Page 29 of 148  The World Bank Judicial Reform Support Project (P089733) 48\. Aspects of design and implementation contributed to efficiency\. First, the exit of the JD and CGJ activities enabled more efficient utilization of freed-up project resources for the MCC, the CIR and the SC, further enhancing the efficiency of use of JRSP funds\. Second, the engagement of the FER as the PIU from December 2011 resulted in more efficient utilization of PIU resources due to faster procurement and project implementation\. Third, as Annex 3 shows, project resources were utilized substantially in line with estimates at approval, with the 2017 additional allocation of US$15 million from the MOF helping to further modernize SC ICT systems and reduce ICT operations costs over the medium term\. Box 2\. Switching Financing from 900 CGJs to the MCC Increased JRSP Efficiency and Impact Many of the 900 CGJs whose ICT systems were originally envisaged to be modernized under the JRSP were merged or reorganized during 2013-2017\. Typical small CGJs in Russia (with 1-5 judges) resolve about 500 cases annually, while CGJs with 3-5 judges sometimes resolve up to 1,000 cases annually\. Using an average of 800 cases annually resolved per small CGJ (which is on the high side), the total number of cases annually resolved by the 900 small CGJs originally included in the project would be 720,000\. In contrast, the number of cases annually resolved by the Moscow regional court system is 1\.5 million\. The exit of the 900 CGJs from the JRSP and the inclusion of the MCC more than doubled the effect of JRSP investment in Russia’s court system\. Following the exit of the JD and the 900 CGJs from the JRSP in 2014, budgetary resources were allocated to the JD for ICT automation of small CGJs, and in 2014-2015 budget-financed contracts were signed to install ICT equipment for the 900 CGJs\. This equipment ran on the GAS Pravosudiye system\. No budget funds were allocated to the MCC for ICT modernization\. The MCC obtained access to resources for ICT modernization only at the 2014 restructuring through inclusion in the JRSP\. The MCC and the Bank took this opportunity to design and implement a more efficient ICT system for the MCC, which is now helping Russia’s judicial authorities to further improve GAS Pravosudiye functionality and performance\. 49\. The project’s Efficiency is rated High for the reasons above\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING  50\. The overall outcome is rated Satisfactory\. Relevance of objectives is rated substantial\. Achievement of objectives is rated substantial, and efficiency is rated high based on the economic and financial analysis\. In addition, (a) the PDO remained substantially relevant and its strategic importance grew with the entry of the MCC and the CIR into the project, and with the issuance of the May 2018 Presidential Decree on national priorities and programs, (b) 3 of 4 PDO indicators were achieved, (c) 5 of 7 IRIs were achieved, (d) the project economic analysis demonstrates efficiency, (e) project performance since the 2012 restructuring has been remarkable (reflected in project ISRs) and the MCC’s implementation of its integrated ICT system is an example of global good practice in design and implementation of complex ICT systems through a rapid (seven-month) 2-stage bidding process, and (f) intensive and constructive Bank implementation support was possible due to a technically and operationally strong and stable team with no turnover of team members\. This is substantiated by Annexes 7 and 8 which depict key survey findings, Annex 9 which depicts the key features and results of the MCC ICT system, Annex 10 which does likewise for the SAC and commercial courts’ JRSP- financed ICT system and Annex 12 (the executive summary of the Borrower’s ICR)\. The Borrower’s detailed ICR (which was received in July 2018 and filed) provides detailed additional evidence for a Satisfactory outcome rating\. Page 30 of 148  The World Bank Judicial Reform Support Project (P089733) E\. OTHER OUTCOMES AND IMPACTS    Gender  51\. The project over-achieved the target for women beneficiaries, who constituted the women judges and staff of JRSP-financed courts\. This indicator was added at the 2012 restructuring as a mandatory indicator, following Bank policy\. The target for female beneficiaries was 40 percent (or 12,800) of the target for total direct project beneficiaries (32,000)\. By end-project, the actual achievement was 39,579 total direct beneficiaries (124\.25 percent of target) of whom 26,541 (or 66\.75 percent) were women\. Hence the actual achievement for women beneficiaries was 112\.56 percent of the target\. In addition, the user-friendly features of the JRSP-financed ICT systems facilitated access to courts for women and other vulnerable groups\. Institutional Strengthening  52\. The SC, SAC and MCC improved their capacity to design, tender, contract and implement sophisticated ICT systems\. This was demonstrated by (a) the SC, the SAC and the commercial courts in installing, operating and maintaining their JRSP-financed ICT systems (preceded by business process streamlining), and (b) the SC and MCC in rapidly designing, during 2016-2017, the US$460 million follow-on judicial modernization project presented by the RF to the New Development Bank for financing, approved by the NDB on August 31, 2017\. In addition, the MCC designed, procured and successfully implemented a suite of next-generation integrated court ICT systems at an estimated cost of US$42 million within 3 years – a significant achievement in terms of complex ICT procurement, system integration, testing and going live\. The MCC now has the capability to augment this system in the future and help other courts to do so\. Mobilizing Private Sector Financing  53\. Not applicable\. Poverty Reduction and Shared Prosperity  54\. The MCC integrated information system allowed citizens – including low-income citizens, women and other vulnerable groups - to lodge complaints with courts electronically and remotely track the status of the complaint; so did the VC connectivity and remote hearings between the SC, lower courts and penitentiaries\. To be heard, give testimony or lodge a complaint required a citizen’s presence in court during standard working hours\. By remotely engaging with the court, citizens not only significantly save travel time but do not have to miss work or to spend working hours on telephone calls to obtain information on the status of the case\. Online services can make applicants more confident and comfortable as they can access the information at any time or from any location\. Many state institutions working with citizens and businesses (such as the Federal Tax Service, the Pension Fund and entities of the Ministries of Health and Education) provide users with online interaction\. This is already considered to be the norm by citizens\. This capability of the judiciary has improved the poverty and shared prosperity impacts\. It has also improved the service-friendliness of the SC, commercial courts, the MCC and the CIR in the eyes of citizens and businesses\. Social development  55\. As stated earlier in the PDO achievement section, the operation had significant social effects such as enabling citizens to access courts and penitentiaries electronically\. Page 31 of 148  The World Bank Judicial Reform Support Project (P089733) Other Unintended Outcomes and Impacts  56\. None\.   III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME    A\. KEY FACTORS DURING PREPARATION    57\. JRSP preparation and design took account of lessons learned from the World Bank-financed LRP and from the then-ongoing ICT-intensive TAMP2, TMP and CDP operations\. ï‚ Focus on reforms that had significant high-level commitment and support from policy-makers and ownership from technical levels\. Implementation of TAMP2, TMP and CDP, which had been designed with these lessons in mind, were progressing despite changes in top management in 2005 in the tax and customs entities, because civil servants and technical working groups in these entities ‘owned’ the key interventions\. This model was followed in JRSP design\. ï‚ Intensive attention to the design, procurement and integration aspects of ICT interventions\. Learning from TAMP2, CDP and TMP at preparation, major JRSP ICT interventions were sequenced so that analytics came first (which informed the development of user and technical specifications – see key outputs at Annex 1), followed by procurement of equipment and integration of systems\. Such sequencing at the design stage was important given the technological and procurement risks associated with ICT systems11\. ï‚ Focus only on the courts in view of the judiciary’s special status – a lesson learned from several justice reform projects around the world\. The RF courts wanted to be responsible for selecting and implementing project activities, to avoid sensitivities between the executive and judicial branches\. This lesson was also learned from the LRP, which financed activities for the courts, executive entities and non-state actors (such as universities) but was overseen and implemented by the Presidential Administration through a PIU, leading to implementation problems when disagreements arose between the courts and the executive on project issues\. 58\. Project risks were identified and the JRSP categorized as a high-risk, high-reward project\. While judicial reform is always challenging, it was more so in the RF at that time, with its complex and changing relationships between its apex courts, evolving organization of the judicial and executive branches and the shifts in responsibilities between entities\. Nevertheless, it was felt that the potential gains were so large that these were risks worth taking\. The key risks summarized in the PAD, and what actually happened, are shown below\. Table 7\. Key Risks and What Actually Happened At the time, the World Bank’s ECA Region was at the forefront of ICT procurement risk mitigation in the World 11  Bank: all ICT procurement documents were reviewed by ICT procurement experts in addition to the task team’s own review, even though the task teams for TAMP2, CDP and JRSP included experts in ICT systems design, procurement and implementation\. Page 32 of 148 The World Bank Judicial Reform Support Project (P089733) Risk Stated in the PAD Risk Mitigation Measure Rating What Happened Political risks are unavoidable\. Consultative design, clear This rating was appropriate These arise from the complex communications, explicit in hindsight\. This risk came interplay and sometimes inter-agency agreements and to pass\. It resulted in the conflicting agendas of major transparent implementation\. H exit of the Judicial actors: different elements of Department and CGJs and the judiciary, the executive and the addition of the MCC the legislature\. Such conflicts and the CIR to the project\. may be manifested in inter- agency turf battles, coordination gridlocks, backtracking on reforms, and delays in project design and implementation\. Reputational risk\. The ability Appropriate stakeholder This rating was appropriate of RF reformers and the World representation on IACC\. in hindsight\. Bank to influence the Posting IACC meeting H Implementation challenges modernization agenda is minutes on the official during 2007-2012 arose limited\. This creates a high websites (accessible to the mainly due to a reputational risk for both12\. public) of the participating combination of these three project entities\. factors: the limited ability Transparent procurement\. of the Bank, the executive Adaptation of global lessons branch and some judicial and good practice to project reformers to influence the design and implementation\. JD (responsible for the Multiple agencies, differing Clarity on activities to be JRSP’s CGJ investments priorities\. Implementation and financed, implementation totaling almost $80 million sustainability risks increase arrangements and assurance H of the $172 million project with the number of agencies of quality control\. cost) and the conflict of involved, more so when interest and procurement agencies have different issues that arose in the priorities: this lesson was original PIU (the BEA)\. reinforced in the LRP\. This These led, in 2014, to risk is high, given the number cancellation of further JD- of agencies involved in the related project activities JRSP13\. and a restructuring that Lack of effective cooperation Extensive discussions and resuscitated the project and and communication between explanation of roles under paved the way for the main implementing the JRSP with all H substantial achievement of agencies and beneficiaries beneficiaries leading to a the PDOs by project under the Project\. clear definition of closing\. responsibilities between all 12 The implementation challenges that led to the 2012 and 2014 restructurings were foreseen in the November 2006 Minutes of Negotiation, which recorded agreement on the approach to ICT modernization of the 900 CGJs under JRSP\.  13 The SC, the JD, the SAC, the CC, the MOE and the MOF\. Page 33 of 148 The World Bank Judicial Reform Support Project (P089733) Risk Stated in the PAD Risk Mitigation Measure Rating What Happened stakeholders with regard to particular project components, to be reflected in a Project Operations Manual\. An IACC will be established with representatives of the relevant agencies\. Ineffective ICT investment\. Rigorously determined This risk did not materialize The project will finance technical specifications because the JD and CGJs substantial ICT-related derived from business needs exited from the project\. All expenditures\. This investment and accompanied by relevant other beneficiary entities M could prove ineffective\. investments in ICT-related strongly owned their ICT training and practical use of investments\. ICT-based business processes\. Weak implementation capacity Applying the lessons learned This risk did not in beneficiary entities may from the implementation materialize\. All project adversely affect the speed and experience of the LRP and beneficiary entities – except quality of implementation\. other projects in the RF\. H for the JD - established BEA project implementation strong technical working experience will mitigate this groups\. In the case of the risk somewhat\. JD, the issue turned out to Capacity augmentation in be governance concerns the IT units of the JD, SAC rather than insufficient and CC\. This is to be implementation capacity\. achieved through expert technical support and through IT-related training and peer-to-peer learning to be financed through the proposed JRSP, FTP, and other government budgetary resources\. Lack of sufficient budgetary Adequate funding The rating was appropriate\. Government funding for the requirements will be Budgetary support was very operation, maintenance and discussed with RF L strong throughout\. An support of new or upgraded authorities as part of the additional government ICT systems\. ongoing dialogue\. contribution was provided Government commitment to in calendar 2017\. provide adequate budgetary resources for operation and maintenance of the ICT systems installed under the project\. Ignoring lessons learned from Applying key lessons from The rating was appropriate: Page 34 of 148  The World Bank Judicial Reform Support Project (P089733) Risk Stated in the PAD Risk Mitigation Measure Rating What Happened the implementation experience judicial reform projects and M close attention to of complex multi-beneficiary the Russia-specific LRP procurement issues by projects straddling different implementation and ICT MOE, MOF and the Bank branches of the state\. procurement experiences to prevented untoward JRSP design and procurement outcomes implementation throughout the life of the arrangements (outlined in project\. section B\.5 above)\. Overlap and/or lack of A series of coordination The rating was appropriate\. coordination between JRSP meetings have been held RF authorities – especially activities, FTP activities and with development partners M MOE, MOF and the courts those of development partners\. during project development – took care to avoid overlap and design\. of JRSP and FTP activities\. Continued close coordination and collaboration between the RF authorities, the Bank and development partners to closely align JRSP support with ongoing and planned efforts\. An MOEDT-chaired IACC will monitor coordination efforts\. Overall Risk Rating H   B\. KEY FACTORS DURING IMPLEMENTATION    59\. In 2010, all projects in the Bank’s RF portfolio – including the JRSP - underwent a restructuring to align the wording of the PDO in the Loan Agreement with that in the PAD\. 60\. The government enacted a landmark law in 2010 (Law number 262) – supported by the 14 Bank – mandating publication of judicial decisions by all courts regardless of level or jurisdiction\. This immediately made the PDO more strategically relevant and the JRSP – which supported implementation of court ICT systems to provide the capability and ‘bandwidth’ for courts to store and publish their decisions online – indispensable for Russia’s judiciary to achieve the law’s objective\. 61\. An early JRSP analytical work – on judicial performance measurement – resulted in the JD and courts refining their system of and indicators for performance measurement\. This assignment was requested by the JD and resulted in a review of policies and practices relating to measuring judicial Versions of the draft law prepared by the SC and SAC – which have the right of legislative initiative in the RF and can submit 14  draft laws to the legislature on issues affecting the justice system – were reviewed by the Bank at the request of the RF judiciary\. In addition, at the request of the judiciary, the Bank requested eminent judges and experts from other jurisdictions to comment on the drafts\. Passage of this law was a landmark event in enhancing judicial transparency in the RF while addressing privacy concerns as many OECD countries have done on this issue\. Page 35 of 148  The World Bank Judicial Reform Support Project (P089733) performance in Russia and internationally\. Based on the analysis (which was reviewed by the World Bank team) and following extensive consultation with the community of judges and with Russia’s judicial leadership, the JD refined the performance measurement indicators for CGJ judges in 2010\. Along with the passage of Law 262 referred to earlier, this was an early win for JRSP\. In addition, the refined performance measurement criteria included measuring satisfaction of court users and personnel\. The Russian NGO Leonid Nikitinsky's Center for Legal Initiatives received grants (first from the US-Russia Foundation and thereafter from the Presidential Administration) to pilot this element (i\.e\. criteria related to satisfaction of court users and personnel) and conducted three rounds of surveys in Volgograd, Yaroslavl and Nizhny Novgorod oblast courts in 2010-2012\. 62\. A 2-stage restructuring was approved in March 2012, to change the PIU and address the reluctance of the JD to consider Bank advice to improve the design of the ICT system proposed to be deployed to the 900 CGJs\. At the May 30, 2012 restructuring, US$14\.24 million (28\.5 percent of the loan amount) had disbursed\. Implementation delays were also caused by a slow-down in decision-making prior to parliamentary and presidential elections and also somewhat due to the abolition of the SAC\. 63\. The inclusion of the MCC in the project made the PDO more strategically relevant, since the MCC system is the largest regional court system in the RF in terms of caseload volume\. The high MCC caseload volume meant that the JRSP – by the end of the project - had more impact than would have been the case had it financed ICT systems modernization of 900 small CGJ courts across the country\. The introduction of the innovative next generation ICT systems in the MCC appears to have provided a paradigm for improving ICT modernization across RF CGJs\. 64\. The approach of the FER, MOE, MOF and the Bank team to look for opportunities for intervention consistent with the PDO resulted in JRSP support for ICT modernization of the MCC and the Court for Intellectual Property Rights (CIR) in Moscow\. This court has all-Russia jurisdiction as a first instance court for all IP-related issues\. These interventions had a significant impact on PDO achievement and results\. Figure 4 below shows the scale and scope of some of the user-oriented achievements from the MCC ICT system implementation\. Figure 4\. Some MCC ICT implementation results Page 36 of 148  The World Bank Judicial Reform Support Project (P089733) Source: MCC 65\. Knowledge-sharing between the RF and other judiciaries, supported by the Bank team within and outside the JRSP project framework, was a constant feature since 2011\. Knowledge sharing under JRSP was quite extensive\. High-level teams of judges from Croatia’s commercial courts visited Russia in 2011 to learn from the SAC experience of ICT modernization\. Delegations from the SC, SAC and JD participated in the launch conference of the JUSTPAL network in April 2011 in Athens and in subsequent JUSTPAL peer-to-peer knowledge sharing conferences in The Hague and Brijuni (Croatia)\. In October-November 2017, the MCC President and a delegation visited Azerbaijan to study the implementation experience of the US$200 million World Bank-financed Azerbaijan Judicial Services and Smart Infrastructure Project\. Apart from participation of the SC, SAC and JD representatives in JUSTPAL events, several knowledge sharing visits for representatives of the RF courts were organized under the project\. In 2008 a delegation comprising arbitrazh bankruptcy judges and staff of different level arbitrazh courts, as well as MOE representatives, visited Federal Bankruptcy Courts in Sacramento and Boston to learn how personal bankruptcy functioned in other jurisdictions\. The experience shared contributed to the preparation of the draft consumer bankruptcy law\. In 2009 a Russian Constitutional Court delegation visited Federal Constitutional Court of Germany, Constitutional Court of the Republic of Austria and European Court of Human Rights to study new ICT applications in those courts\. A SAC delegation in 2009 visited Magistrate and District Courts of Singapore and the Supreme Court of the Republic of Korea to familiarize themselves with new information technologies and their use in the named courts\. In 2010 a CC delegation visited the Federal Court of Australia and the Supreme Court of Australia and, in 2011, the European Court of Human Rights and the Union Court of the Swiss Confederation to study both their approaches to adjudication of certain constitutional issues and new ICT systems\. In 2011 an SC delegation familiarized itself with the ICT modernization experience of the French and Austrian judicial systems\. 66\. International experience was also analyzed through several analytics under the project\. In 2009, while developing performance criteria for the RF judicial system, the consultant LLC "GC Consultum" (Russia) studied criteria and performance indicators developed in the Netherlands, Finland and the USA, as well as at the international level (e\.g\. the criteria and indicators developed by the International Consortium for Court Excellence, CEPEJ)\. In 2010-2011 a consortium of Agritim Canada Consulting Ltd (Canada) and Legal Culture Development Foundation (Russia) analyzed examples of international good practices in organizing interactions between the judiciary and the media, including the work of court spokespersons (press secretaries) or specialists with a similar function, and conducted a sociological survey on the organization of interaction with the media in Russian courts\. Based on the results of the studies, recommendations were made to improve judiciary-media interaction, and to improve the skills of court spokespersons\. In 2017, when preparing draft laws on introduction of ICT tools in court proceedings, international good practices on ICT in case management and related issues were studied\. 67\. Sustainability of JRSP gains through a follow-on project\. The JRSP – in the view of the RF authorities – achieved significant success and results\. The RF authorities also appreciated the stable Bank team and its value added\. The RF authorities designed a US$460 million follow-on justice modernization project financed by the New Development Bank (NDB) – the loan was approved by the NDB on August 31, 2017\. The follow-on project is designed to build on and enhance the sustainability of JRSP gains and results\.   Page 37 of 148  The World Bank Judicial Reform Support Project (P089733) IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME    A\. QUALITY OF MONITORING AND EVALUATION (M&E)    M&E Design  68\. The PAD envisaged a comprehensive annual evaluation of progress against project indicators, as set out in the Results Framework\. The results of the evaluation were to be used to analyze intermediate project results and adjusting activities or priorities, if needed\. To the extent possible, the results of monitoring were intended to be widely publicized within the judicial community and for the general public\.15 69\. The nature of this multi-beneficiary project for the judiciary and prevailing RF project implementation practices influenced the M&E design\. The JRSP beneficiary entities at approval comprised the CC, SC, SAC, JD, the commercial courts and 900 CGJs\. The MOEDT was the implementing agency and the BEA (which operated as a Foundation under the MOEDT’s administrative control) was the PIU\. Overall project supervision and guidance was provided by the IAMC, whose membership included representatives from each high judicial entity (i\.e\. from SC, CC, SAC and the JD) as well as from MOEDT and MOF\. It was the practice in the RF at the time for each PIU to have a strong M&E team\. Accordingly, the BEA established such an M&E team\. Each beneficiary entity identified a technical team (usually from the statistical unit and the units responsible for project activities) responsible for project-related data collection and reporting\. These entity M&E teams would provide M&E data to the BEA M&E team, which would compile and share the periodic project M&E reports with the MOEDT, MOF, IAMC and the Bank\. The BEA M&E team became the focal point for internal and external project relations and was responsible for benchmarking and tracking agreed project indicators, tracking day-to-day progress in project implementation, and reporting to the IAMC, MOEDT, MOF and the Bank\.   M&E Implementation  70\. During 2007-2012, M&E implementation was moderately satisfactory\. The BEA’s reporting on JRSP results focused exclusively on process and not on substantive or qualitative information\. The results information provided by the BEA did not mention qualitative issues – the 2010 Mid Term review agreed that these would be addressed by Bank implementation support going forward\. 71\. At the 2012 restructuring - when the FER became the PIU – the M&E arrangements were strengthened, results reporting and utilization of M&E information began to improve, and the project closed with a strong M&E performance in its last 3 years\. Actual project implementation entailed the execution of a large number of project activities in many functional areas of the work of three supreme courts, numerous lower courts and the JD\. Accordingly, the PIU bore a heavy burden in helping the IAMC to coordinate implementation and obtain results information\. Results reporting was done by beneficiary entities and their cross- cutting technical working groups with members drawn from relevant business units with each entity (to internalize and institutionalize modernization processes) but these groups needed handholding support from the PIU and the Bank\. Once the FER became the PIU, these arrangements worked satisfactorily throughout the rest This was mostly achieved: apart from the internal reporting within the judicial management system, project results were also 15  routinely communicated to the executive agencies overseeing the project (MOED and MOF)\. In addition, project results were also shared with visiting delegations from other countries and at international conferences such as the JUSTPAL Community of Practice meetings (to which the RF regularly sent delegations representing the SC, SAC and the JD)\.  Page 38 of 148  The World Bank Judicial Reform Support Project (P089733) of project implementation\. The courts strengthened their capacity to sustain operational inputs and outcomes from the project through networks built during project implementation - despite disruptions caused by organizational restructuring such as the abolition of the SAC\.    M&E Utilization  72\. The IAMC and judicial leadership used the M&E framework to track project progress\. Each court used the indicators relevant to its part of the project\. The slow implementation of project activities from 2007 to 2010 and the associated BEA inability to work with the courts to obtain results information meant that, till 2010 (when the mid-term review was held), results information was sporadic (as recorded in mission Aide Memoires and ISRs)\. The MOE began to exercise its oversight authority over the BEA from 2010, when M&E utilization began to improve\. The success of the 2012 and 2014 restructurings was based in part on close attention to M&E utilization for project decisions and restructuring discussions\. M&E utilization continued to improve from 2012 till project closing, as depicted in the project results framework at Annex 1\. Justification of Overall Rating of Quality of M&E  73\. The quality of M&E is rated Substantial overall: project M&E design was largely satisfactory though with some weaknesses\. The M&E framework was adjusted to address weaknesses and evolving priorities during the 2012 and 2014 restructurings\. From 2012, M&E significantly improved and finished strongly by project closing\. In addition, the client (e\.g\. MCC) continued to use elements of the project M&E system to track results of their activities (e\.g\. using various elements of the new ICT system)\.   B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE  Safeguard Compliance 74\. The project was classified as Category C for safeguard purposes as it did not finance any civil works\. As a result, no environmental or social safeguard policies were triggered\. No safeguard issues arose during implementation\. Fiduciary Compliance 75\. Project financial management (FM) was satisfactory throughout the project\. There were no financial management issues\. Audit reports were received on time\. FM was rated satisfactory at closing\. 76\. Project procurement was mostly rated satisfactory except for the period 2008-2011 when there were delays in ICT procurements when the BEA was the PIU\. Procurement improved significantly when the FER became the PIU in December 2011\. A key FER and MCC achievement was the rapid 2-stage ICT procurement for the US$42 million contract for the MCC ICT system\. The professionalism of the MCC and FER teams and equally rapid responses from the Bank enabled the process to be completed in eight months from concept to contract signing\. Procurement was rated satisfactory at closing\. 77\. Implementation challenges were resolved through the 2012 and 2014 restructurings\. First, performance and governance issues pertaining to the first PIU – the Bureau of Economic Analysis (BEA) - during 2008-2010 slowed down JRSP implementation, especially the procurement process for the US$42 million ICT systems contract for the JD and 900 CGJs and ultimately led to its cancellation\. As a result, Page 39 of 148  The World Bank Judicial Reform Support Project (P089733) by June 2009 the JRSP was rated “Unsatisfactory”\. Second, JD-related ICT activities for the 900 CGJs posed technical and procurement risks, due to which implementation of JD activities was slow from 2008 to 2011 (one effect of which was that as of June 30, 2011, 4\.5 years after effectiveness, only $7\.23 million of loan proceeds - 14\.5 percent - had disbursed)\. All these issues were resolved through the 2012 and 2014 restructurings\.   C\. BANK PERFORMANCE    Quality at Entry  Rating: Moderately Satisfactory 79\. Bank performance for Quality at Entry is rated Moderately Satisfactory for two reasons: (a) in hindsight, the risk to implementation arising from the design and implementation challenges relating to GAS Pravosudiye could have been more starkly highlighted, so that stronger risk mitigation measures could have been included; and (b) the Bank over-estimated the BEA’s ability to communicate effectively with JD management on procurement of large ICT packages – this was left to the Bank even though the BEA team included procurement specialists\. For these reasons, a rating of Moderately Satisfactory is appropriate\.   Quality of Supervision  Rating: Satisfactory 81\. The quality of Bank supervision is rated Satisfactory\. ï‚ The strong technical, operational and fiduciary strengths in the stable Bank task team enabled the Bank to help technically sophisticated court managements and technical counterparts across the RF judicial system for a considerable period of time\. The team’s technical and operational strengths, which included an RF legal expert who was part of the core Bank team throughout, enabled it to provide effective implementation support\. Due to the inability of the BEA (the first PIU) to engage on issues of substance with courts’ technical working groups, to obtain results information from courts, and to help courts to prepare satisfactory terms of reference and technical specifications, this function fell on the Bank team which was in constant contact with the judicial leadership on issues of project scope and results gathering, and with technical counterparts to help them prepare terms of reference and technical specifications\. ï‚ The Bank team helped the RF judiciary to identify good practices from JRSP implementation, and share this knowledge with other countries through participation in international knowledge exchange events, conferences and workshops\. ï‚ The team’s candor in reporting, along with ratings downgrades, facilitated a shared approach to restructurings\. The team’s proactive approach to restructuring and close coordination with executive agencies, courts and the FER resulted in the restructurings being able to address the JRSP implementation challenges pointed out earlier\. Early handling of PIU performance and governance issues enabled the project to effectively address risks and keep the focus on implementation and results\. Page 40 of 148  The World Bank Judicial Reform Support Project (P089733) ï‚ There were some missed opportunities, e\.g\. cancellation of JD activities at an earlier stage of implementation could have improved project performance and results\.   Justification of Overall Rating of Bank Performance  82\. Bank performance is rated Moderately Satisfactory overall, for the reasons above\. Though (a) the team was technically strong and stable and possessed all needed technical skills, (b) most of the results indicators were achieved, and (c) the project achieved an impressive turnaround due to the 2012 restructuring, the missed opportunities justify the Moderately Satisfactory rating\. D\. RISK TO DEVELOPMENT OUTCOME    83\. The risk to development outcomes is rated Moderate\. On the positive side, the ICT systems in the CC and SC are being further modernized with their own budgets\. Both Courts publish their decisions and other information on web portals\. In addition, a US$460 million loan for a follow-on judicial modernization project, approved by the New Development Bank on August 31, 2017, is taking forward key JRSP gains and achievements: it will expand ICT modernization of the MCC, other courts and the RF Federal Bailiff Service’s ICT system\. It includes investment in ICT and physical infrastructure\. The commercial courts’ ICT system, following the abolition of the SAC, is now supported by the JD\. The Presidential Decree of May 2018 lays out the national priorities and programs for the RF - which includes progressive digitalization of the economy and of all state functions and services – including the courts\.    V\. LESSONS AND RECOMMENDATIONS    84\. The project design and implementation experience generated four sets of lessons: a) Commitment works best when coupled with the creation of conditions for success\. JRSP achievements stemmed from a combination of top-level commitment from the executive and judicial leadership, technical-level commitment from the judges and staff of the courts financed and high technical competence in Borrower and Bank teams\. These together created an environment in which sequenced change, underpinned by the transformative power of ICT, could be induced, nurtured and sustained\. A key element of such commitment included shedding lagging counterparts and the original PIU, the sequencing and phasing of ICT implementation to build up commitment, and addressing institutional issues beyond ICT hardware and software (e\.g\. handling the cessation of SAC functioning and the changes to the structure of the RF judiciary, the induction of the MCC and the exit of the JD)\. The Bank trusted the commitment of the judicial and executive leadership\. Rushing significant institutional change in courts in a country as complex as Russia would have created obstacles to change and led to the convergence of interests opposed to modernization\. Discussions on how to use restructuring to effect change continued during implementation, and more importantly through peer-based knowledge-sharing events (e\.g\. JUSTPAL conferences) and study visits (e\.g\. to European and US courts)\. Where the authorities’ commitment is clear, such an approach can yield positive and sustainable results\. b) Complementary reforms and change management increase the impact of institutional reforms\. For example, as the survey findings demonstrate, in addition to improving court-wide ICT Page 41 of 148  The World Bank Judicial Reform Support Project (P089733) infrastructure and systems for the SC, SAC, CC and MCC, it was critical to include actions to support collaborative activities for different groups – judges, judicial staff, academia, experts of methodological centers, and other users of the court system – whose common interests in enhancing judicial transparency and efficiency could converge around specific reforms (e\.g\. publication of judicial decisions, or automated complaints handling mechanisms)\. Such convergence through, for example, peer-based knowledge-sharing (e\.g\. peer-to-peer learning from other judiciaries and JUSTPAL) facilitated mindset changes and boosted collaboration\. In addition, in ICT-intensive projects, managing change over the medium term is as important as technical competence\. This project proved - again - that ICT in institutional modernization is more than installing computers and software: they are one element of modernization and can have a systemic impact only if the content of business processes and the organization of courts into cooperating networks of service delivery institutions can generate efficiency, transparency and trust\. This is the largest Bank-financed project in ICT-intensive judicial modernization: it has played a significant role in pioneering such an approach\. c) Successful teams on both sides, which generate trust and promote smooth implementation in complex high-risk operations, should be maintained regardless of organizational shifts or requirements in the Bank or the government\. This is because stable and successful teams on the Borrower and Bank sides can together address implementation risks and challenges, as the Borrower’s ICR points out\. The Bank team remained constant throughout the project life – an unusual feature that contributed to meaningful support to project beneficiaries and a trusted relationship between the Bank and Russia’s courts, the PIU, MOE and MOF\. The Borrower’s ICR also makes this point\. In addition, the Bank team’s candid reporting, with ratings downgrades, helped counterparts turn the JRSP around\. d) This project is a good example of the value-added the Bank brings to middle-income countries\. The loan amount constituted a very small element of successive RF Federal Targeted Programs (FTPs) for judicial modernization\. The project strategy was aligned with the RF judicial modernization strategy\. The Bank’s main role was to provide implementation support, policy advice, technical feedback and a menu of alternative approaches for beneficiaries\. The JRSP experience reconfirmed that counterparts were more interested in the intellectual support, exchange of knowledge and the implementation discipline associated with a Bank-financed project, rather than in the financing itself\. The courts used the JRSP to access Bank support (through the know-how that comes bundled with Bank financing) to conceive, design and implement complex, high-risk, ICT- intensive systems\. This is also evident more broadly in the Bank’s relationship with other middle- income countries, where fee-based services and knowledge exchange are becoming increasingly important\.   \.    Page 42 of 148  The World Bank Judicial Reform Support Project (P089733) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS        A\. RESULTS INDICATORS    A\.1 PDO Indicators            Objective/Outcome: To increase judicial transparency of courts financed by the JRSP  Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Availability of data from  Yes/No  N  Y  Y  Y  periodic surveys of users of  judicial services    31‐Dec‐2007  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017    Comments (achievements against targets): Achievement was 100% of the revised target and 65% of the original target\.    The indicator text was revised at 2012 and 2014 restructurings\. The original text of this PDO indicator was "Periodic surveys show improved private sector  and public ratings for judicial transparency and efficiency"\. The 2006 baseline was "46% of respondents expressed confidence in the courts in 2006"  according to data from Levada‐Centre, an independent polling entity in Russia\. The original end‐project target was "Increased satisfaction (actual  experience and perceptions) with judicial transparency and efficiency, measured by 75% increase over baseline\." Successive surveys showed the following  evolution of responses to this question: 46% (2006), 64% (2010), 73% (2012) and 76% (2017)\. The change from 46% to 76% represented an increase of  65% over the 2006 baseline against the original target of 75% increase over the baseline\.    This PDO indicator was revised in 2012 to its present form\. The first (2010) survey was published by the Levada Center and by the BEA (the project  implementation unit) and the last 2 rounds of surveys conducted in 2017 were published by the Moscow City Court on its website\. The results of each  survey were made available to the judicial leadership, participating courts, and to the Ministries of Economy and Finance\. The courts used the results to  determine priorities for improving their work\. Equally importantly, the surveys were intended to capture and track, over time, longer‐term outcomes of  judicial reforms such as public and businesses' trust and confidence in the judiciary\. The survey results over time showed an interesting picture (see ICR  Annex 7)\. For example, (a) 54% of businesses in 2010 felt that their property rights were not protected, but this fell to 43% by 2017, showing greater trust  Page 43 of 148  The World Bank Judicial Reform Support Project (P089733)   and confidence in the judiciary and (b) in 2006, 46% of individuals felt that an ordinary Russian citizen could have his/her case considered fairly and  without prejudice by the court; this rose to 76% in 2017\.    Hence, whether seen from the original indicator wording or the revised wording, this PDO indicator was achieved (see ICR text)\.      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Decisions of Moscow City  Percentage  24\.00  40\.00  40\.00  38\.00  Courts in civil cases enforced,  as a percentage of all    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  decisions by Moscow City  Courts in civil cases    Comments (achievements against targets): Achievement was 95% of target\.   This indicator measures a key element of judicial efficiency, namely the extent to which the MCC’s judicial decisions in civil cases are actually enforced\.  This information is automatically generated by the new JRSP‐financed ICT system of the MCC\. Due to implementation challenges of this technically  complex integrated ICT system beyond the control of the MCC (e\.g\. this indicator required the MCC system to interface with the federal bailiff service  information system), the achievement, while significant, fell somewhat short of the ambitious target\. However, the upward trend continues after project  closing: in February 2018, the percentage rose to 39\.         Objective/Outcome: To increase the efficiency of courts financed by the JRSP  Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Decisions of Moscow City  Percentage  24\.00  40\.00  40\.00  38\.00  Courts in civil cases enforced,  as a percentage of all    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  decisions by Moscow City  Courts in civil cases  Page 44 of 148  The World Bank Judicial Reform Support Project (P089733)     Comments (achievements against targets): Achievement was 95% of target\.   This indicator measures a key element of judicial efficiency, namely the extent to which the MCC’s judicial decisions in civil cases are actually enforced\.  This information is automatically generated by the new JRSP‐financed ICT system of the MCC\. Due to implementation challenges of this technically  complex integrated ICT system beyond the control of the MCC (e\.g\. this indicator required the MCC system to interface with the federal bailiff service  information system), the achievement, while significant, fell somewhat short of the ambitious target\. However, the upward trend continues after project  closing: in February 2018, the percentage rose to 39\.      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Reduction in time taken by  Percentage  0\.00  20\.00  20\.00  53\.00  Moscow courts to respond to  citizen applications    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017    Comments (achievements against targets): Achievement was 150% of target\.   This indicator was added in 2014 to measure the efficiency of response to citizen applications addressed to the Moscow City Courts\. In 2014, Moscow  courts took 30 days on average to respond to citizen applications\. This was targeted to be reduced to 24 days (i\.e\. 20 percent reduction) by the end of the  project\. This indicator is an important element of the package of automated reports generated by the integrated ICT system installed in the MCC under the  JRSP\.      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  New video‐conferencing  Percentage  0\.00  100\.00  100\.00  100\.00  facilities (to enable remote  participation in court    31‐Dec‐2007  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  proceedings) are functional in  courts financed by the  project  Page 45 of 148  The World Bank Judicial Reform Support Project (P089733)     Comments (achievements against targets): Achievement was 100% of target\.   This indicator originally covered the SC, the SAC and the commercial court system and was already 100% achieved at the time of the 2012 restructuring\.   At the 2014 restructuring, with the SAC having ceased functioning from 2014, this indicator covered the SC, the commercial courts and the Moscow City  Courts ‐ it was 100% achieved by completion\.        A\.2 Intermediate Results Indicators        Component: A\. Institutionalizing Judicial Transparency And Accountability  Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Reduction in complaints by  Percentage  0\.00  40\.00  40\.00  30\.60  litigants (about violations of  rights of parties in judicial    30‐Jun‐2014  31‐Dec‐2014  31‐Dec‐2017  31‐Dec‐2017  proceedings) in Moscow  courts as a percentage of  2014 baseline    Comments (achievements against targets): Achievement was 76\.5% of target\.   This indicator measures a key transparency and efficiency‐enhancing result from the JRSP‐financed ICT modernization of the MCC\. Due to challenges in  implementation of the technically complex MCC integrated ICT system, the achievement, while significant, fell somewhat short of the target at project  closing because of the time taken to complete the normative laws applicable, and to complete the interagency linkages with the MCC system\. The actual  level of achievement is commendable, given the complexity of the system and the number of interagency linkages involved\. The upward trend in this  result continued after project closing: by February 28, 2018, the figure rose to 31\.1, up from 30\.6 on December 31, 2017\.        Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Page 46 of 148  The World Bank Judicial Reform Support Project (P089733)   Reduction in cases with  Percentage  0\.00  40\.00  40\.00  35\.20  contested court records (i\.e\.  comments and complaints    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  about transcription), as a  percent of all cases in  Moscow courts    Comments (achievements against targets): Achievement was 88% of target\.   This indicator measures another key transparency and efficiency‐enhancing result from the JRSP‐financed ICT modernization of the MCC\.        Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Time taken by Moscow lower  Months  2\.00  1\.50  1\.50  1\.50  courts to forward criminal  and civil cases to courts of    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  appeal    Comments (achievements against targets): Achievement was 100% of target\.  This indicator was added at the 2014 restructuring as an intermediate indicator of the process efficiency of the MCC\.  In 2014, Moscow lower courts took,  on average, two months to forward criminal and civil cases to courts of appeal, which advised the MCC to shorten the time taken to forward case records\.  The JRSP‐financed ICT modernization of the MCC enabled the target to be met\.        Component: B\. Harnessing ICT for Judicial Transparency and Effectiveness  Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Page 47 of 148  The World Bank Judicial Reform Support Project (P089733)   Percent of courts financed by  Percentage  0\.00  100\.00  100\.00  100\.00  the JRSP in which new  information services are    31‐Dec‐2007  31‐Dec‐2012  31‐Dec‐2017  31‐Dec‐2017  available for users    Comments (achievements against targets): (Note ‐ this is erroneously included\. Please see correct version of this indicator below)      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Percent of courts financed by  Percentage  0\.00  100\.00  100\.00  100\.00  the JRSP in which new  information services    31‐Dec‐2007  31‐Dec‐2012  31‐Dec‐2017  31‐Dec‐2017  (information kiosks and  electronic access to judicial  decisions) are available for  users    Comments (achievements against targets): Achievement was 100% of target\.   This indicator was revised in 2014 to reflect (a) the retention of the SC, the CC and commercial courts in the JRSP at restructuring, (b) the inclusion of the  Moscow City Courts and the Court of Intellectual Rights at that restructuring, and (c) the deletion of the JD and the 900 CGJs\.      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Reduction in complaints by  Percentage  0\.00  40\.00  40\.00  30\.60  litigants (about violations of  rights of parties in judicial    30‐Jun‐2014  31‐Dec‐2014  31‐Dec‐2017  31‐Dec‐2017  proceedings) in Moscow  Page 48 of 148  The World Bank Judicial Reform Support Project (P089733)   courts as a percentage of  2014 baseline    Comments (achievements against targets): Achievement was 76\.5% of target\.   This indicator measures a key transparency and efficiency‐enhancing result from the JRSP‐financed ICT modernization of the MCC\. Due to challenges in  implementation of the technically complex MCC integrated ICT system, the achievement, while significant, fell somewhat short of the target at project  closing because of the time taken to complete the normative laws applicable, and to complete the interagency linkages with the MCC system\. The actual  level of achievement is commendable, given the complexity of the system and the number of interagency linkages involved\. The upward trend in this  result continued after project closing: by February 28, 2018, the figure rose to 31\.1, up from 30\.6 on December 31, 2017\.        Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Reduction in cases with  Percentage  0\.00  40\.00  40\.00  35\.20  contested court records (i\.e\.  comments and complaints    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  about transcription), as a  percent of all cases in  Moscow courts    Comments (achievements against targets): Achievement was 88% of target\.   This indicator measures another key transparency and efficiency‐enhancing result from the JRSP‐financed ICT modernization of the MCC\.        Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  A modern Data Processing  Yes/No  N  Y  Y  Y  Page 49 of 148  The World Bank Judicial Reform Support Project (P089733)   Center for Moscow courts is    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  functional at the Moscow  City Court    Comments (achievements against targets): Achievement was 100% of target\.   A functional and data‐secure Data Processing Center is key to the MCC's e‐processing, e‐services and other transparency‐ and efficiency‐enhancing  capabilities financed under the JRSP\. The Center was completed in 2016 and demonstrated to the World Bank Country Director and the Governance  Global Practice Director\.      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Time taken by Moscow lower  Months  2\.00  1\.50  1\.50  1\.50  courts to forward criminal  and civil cases to courts of    30‐Jun‐2014  31‐Dec‐2016  31‐Dec‐2017  31‐Dec‐2017  appeal    Comments (achievements against targets): Achievement was 100% of target\.  This indicator was added at the 2014 restructuring as an intermediate indicator of the process efficiency of the MCC\.  In 2014, Moscow lower courts took,  on average, two months to forward criminal and civil cases to courts of appeal, which advised the MCC to shorten the time taken to forward case records\.  The JRSP‐financed ICT modernization of the MCC enabled the target to be met\.        Component: C\. Strengthening Human Capital  Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Number of Manpower  Number  0\.00  4000\.00  4300\.00  7703\.00  Trained under the Project  (number of people)    31‐Dec‐2007  31‐Dec‐2014  31‐Dec‐2017  31‐Dec‐2017  Page 50 of 148  The World Bank Judicial Reform Support Project (P089733)     Comments (achievements against targets): Achievement was 192\.57% of the original target and 179\.14% of the revised target\.   This was added as a Core Indicator at project restructuring in 2012\. It pertains to Component C and relates to the training of judges and judicial staff of  commercial courts, the MCC and the Supreme Court to increase their ICT proficiency (to complement the ICT systems financed by the JRSP)\.      Formally Revised   Actual Achieved at  Indicator Name  Unit of Measure  Baseline  Original Target  Target  Completion  Direct project beneficiaries  Number  0\.00  32000\.00  32000\.00  39759\.00    31‐Dec‐2007  31‐Dec‐2012  31‐Dec‐2017  31‐Dec‐2017    Female beneficiaries  Percentage  0\.00  40\.00  40\.00  66\.75    31‐Dec‐2007  31‐Dec‐2012  31‐Dec‐2017  31‐Dec‐2017      Comments (achievements against targets): Achievement was 124\.25% of target for direct project beneficiaries and 112\.56% of target for female  beneficiaries\.   This is a mandatory indicator\. Direct project beneficiaries comprise the judges and judicial staff of the Supreme Court, the Constitutional Court, the  Supreme Arbitrazh Court, the commercial courts, Moscow City Courts and the Court of Intellectual Rights Protection\. The original target for total project  beneficiaries was 32,000, while the original target for female beneficiaries was 40% of the total number of direct project beneficiaries, i\.e\. 23,580 female  beneficiaries\. Actual end‐project achievement was 39,759 total direct beneficiaries (124\.25% of target) and 26,541 direct female beneficiaries (112\.56% of  target)\.       Component: D\. Project Management and M&E                   Page 51 of 148  The World Bank Judicial Reform Support Project (P089733) B\. KEY OUTPUTS BY COMPONENT      Objective 1: To strengthen judicial transparency in courts financed by the JRSP  1\. Availability of data from periodic surveys of users of judicial services  Outcome Indicators 2\. Decisions of Moscow City Courts in civil cases enforced, as a percentage of all decisions by Moscow City Courts in civil cases 1\. Percent of courts financed by the JRSP in which new information services (information kiosks and electronic access to judicial decisions) are available for users Intermediate Results Indicators  2\. Reduction in complaints by litigators (about violation of rights of parties in judicial proceedings) in Moscow courts, as a percentage of 2014 baseline 3\. Reduction in cases with contested court records (i\.e\. comments and complaints about transcription), as a percentage of all cases in Moscow courts Component A 1\. “Surveys of users of the judicial system”\. Five rounds of surveys were conducted (2010, 2011, 2013, 2014 and 2017)\. The surveys were technically robust and representative at the national level\. The reports and findings were disseminated to the courts, judicial leadership, MOE, MOF and the IAMC\. 2\. “Development of new criteria and indicators of efficiency of functioning of Key Outputs by Component judicial system”\. This October 2009 report proposed new performance criteria (linked to the achievement of Objective 1)  and indicators for the judicial system\. The criteria and indicators were discussed by stakeholders at two roundtables on May 20, 2009 and August 12, 2009\. The final recommendations were reviewed by the judicial leadership: while some were adopted for the courts of general jurisdiction, other (user feedback-based) indicators were applied to the surveys of court users\. 3\. “Study and Assessment of Interaction between the Courts (CGJs and commercial courts) and Mass Media”\. The contract was awarded in August Page 52 of 148 The World Bank Judicial Reform Support Project (P089733) 2010 and led to recommendations for improving interactions between the SAC/commercial courts and the media\. 4\. “Training in effective interaction between courts and mass media for PR specialists of arbitrazh courts and courts of general jurisdiction”\. This output was a direct result of the previous output and opened the door for such joint training of court spokespersons and members of the media for the first time under the JRSP\. It later led to a strategy for improved communication between the media and SAC/commercial courts\. 5\. “Analysis and systematization of decisions of the Constitutional Court of the Russian Federation”\. This 2010 contract led to an important outcome: the CC implemented a modern system for taxonomy and classification of CC decisions so that they were more easily searchable and accessible by judges, researchers, lawyers and the public\. 6\. “Translating and editing services for publishing the reporter "Decrees of the Constitutional Court of the Russian Federation"\. This 2010 contract led to the translation and publication of important CC decisions, which had been pending for some years\. 7\. “Analysis and Generalization of Practices of the European Court of Human Rights in the Context of the Constitution of the Russian Federation and the Russian Legislation”\. This arose out of a joint request from the CC and the SC to address a key issue – the high and increasing numbers of Russian judicial decisions being appealed to the ECHR (of which the RF was a member) and the non-implementation of many ECHR decisions (mainly by the federal government) which created a growing political, judicial and financial issue\. The report examined why so many ECHR decisions were going against the Russian state and whether any Russian constitutional or legal provisions were part of the problem\. The result of this assignment was that such issues were analyzed for the first time in an integrated manner\. As a result, the courts and executive pinpointed issues that could be addressed by the Russian authorities\. Page 53 of 148 The World Bank Judicial Reform Support Project (P089733) Component B 8\. “Modernization of the SC integrated system for document flow management, development of electronic bank of court decisions, information system, E-library and Internet-portal; development of information system for SC visitors”\. This important contract resulted in the modernization of the stated information systems critical to greater transparency of SC functioning\. It improved the ability of the SC to upload information and documents on the internet portal and to provide needed information to visitors to the SC and to judges, lawyers and researchers online\. 9\. “Procurement of hardware and software for virtualization of Supreme Court server resources\.” This output was linked to the previous output\. It facilitated more efficient and more secure use by the SC of its electronic resources\. 10\. “Supply and installation of systems of storage of electronic copies of judicial documents for the SAC”\. This output enabled the SAC to electronically store, search for and retrieve judicial documents including case files and judicial decisions – increasing its transparency and efficiency\. 11\. “Development of court proceedings’ audio and video recording system (for the arbitration courts)”\. This output enabled commercial courts’ proceedings to be electronically recorded and stored, facilitating transparency: parties could obtain copies and judges could review them when preparing their decisions\. It also had reduced complaints about behavior of judges, staff and lawyers since video and audio tapes could be examined when such complaints were lodged\. 12\. “Supply and Installation of Hardware Facilities and General Software to Build a Physical and Technical Platform for Implementing Main Subsystems of GAS “Pravosudie” in Small Courts of General Jurisdiction” – this activity, proposed by the JD, was not agreed to by the Bank: it proposed to procure significant amounts of ICT equipment for CGJs before the software and integration issues had been resolved to the Bank’s satisfaction\. This activity is one of the follow- on results of the output from package D\.4 below\. Page 54 of 148  The World Bank Judicial Reform Support Project (P089733) Component D 13\. (Package JRSP/2/D\.4 – the ‘gateway contract’ referred to in the ICR text\.) “Technical review for technical design and preparation of technical specifications for JD”\. In September 2009 this contract was signed with NII “Voskhod” (Russia)\. The report on Phase 1 of Stage 1 was submitted in October 2009; on Phase 3 of Stage 1 in November 2009; Phase 2 of Stage 1 in December 2009\. Stage 1 was fully completed in May 2010\. On August 4, 2010 the IAMC approved the results of Stage 1 together with the technical requirements for hardware and software procurement for 900 CGJ under proposed JRSP package B\.3\.1 Objective/Outcome 2: To strengthen efficiency in courts financed by the JRSP 1\. Reduction in time taken by Moscow courts to respond to citizen applications, as a percentage of 2014 baseline Outcome Indicators 2\. New video-conferencing facilities (to enable remote participation in court proceedings) are functional in courts financed by the project 1\. Percent of courts financed by the JRSP in which new information services (information kiosks and electronic access to judicial decisions) are available for users 2\. Reduction in complaints by litigators (about violation of rights of parties in judicial proceedings) in Moscow courts, as a percentage of 2014 baseline 3\. Reduction in cases with contested court records (i\.e\. comments and complaints Intermediate Results Indicators about transcription), as a percentage of all cases in Moscow courts 4\. A modern Data Processing Center for Moscow courts is functional at the Moscow City Court 5\. Time taken by Moscow lower courts to forward criminal and civil cases to courts of appeal 6\. Number of Manpower Trained under the Project Key Outputs by Component Component B (linked to the achievement of Objective 2) 1\. “Supply and installation of an integrated document management system and an Page 55 of 148 The World Bank Judicial Reform Support Project (P089733) automated system of information posting on the internet portal of the Constitutional Court of the Russian Federation” This output improved the Constitutional Court’s electronic document management and uploading of documents to the internal and external portals\. 2\. “Retrospective conversion of the decisions and data files of the RF Supreme Court into electronic format”\. The contract was signed in July 2008 and completed in March 2010\. A high-speed planetary scanner, a magnetic tape library, a server and other equipment were installed in the SC\. More than 1\.5 million pages of documents and more than 1\.1 million cards were scanned, indexed, converted to electronic format and archived for environmentally- friendly and secure storage and easier search and retrieval\. 3\. “Procurement of equipment for workplaces of judges and employees of the RF Supreme Court”\. The contract was signed in February 2008 and completed in August 2008\. Modern equipment for 720 work-places, 12 servers, 1 data storage system, 25 notebooks, and more than 800 multi-functional devices (printer/scanner/copier) and printers was supplied and installed\. (Some of these would be replaced in 2017 with the 2017 JRSP government contribution from the MOF\.) 4\. “Development of Uniform System of Corporate E-Mail of Arbitration Courts”\. This July 2010 contract provided the SAC and commercial courts with a modern and more secure corporate email system\. 5\. “Supply and installation of information kiosks for the arbitrazh court system”\. This September 2009 contract information kiosks to the SAC and all commercial courts, accessible to the public\. The kiosks provided information on court functioning, rules and procedures, how to search for cases, a databank that could pull up court decisions, and whom to contact for problems and complaints\. 6\. “Development, implementation and support of uniform portal of arbitration courts of Russia”\. This August 2010 contract helped design, implement and support the launch and continuation of a modern publicly accessible web portal for the arbitrazh court system of Russia (in Russian and English)\. Page 56 of 148 The World Bank Judicial Reform Support Project (P089733) Component C 7\. “Exchange of experience with Federal Constitutional Court of Germany” – led to a September 2008 ICT knowledge-exchange visit to Germany between the ICT teams of the RF Constitutional Court and the Constitutional Court of Germany, where actual issues of further ICT development of constitutional courts was discussed\. 8\. “Knowledge Exchange Visits to Constitutional Court of Austria and European Court of Human Rights in Strasbourg October 2009”\. RF Constitutional Court judges and staff visited the Constitutional Court of Austria and the European Court of Human Rights in Strasbourg for knowledge-sharing on ICT implementation\. 9\. “Knowledge Exchange Visits to Federal and High Courts of Australia February 2010”\. RF Constitutional Court judges and staff visited Federal and High Courts of Australia for knowledge exchange on ICT implementation\. 10\. “Study tour of SAC delegation to the Supreme Court and other courts of Singapore April 2009”\. This knowledge sharing visit to the Singapore Supreme Court, magistrates’ courts and district courts gathered information on current practice in settlement of commercial disputes and on use of ICT in justice\. The RF delegation also discussed achievements and issues in the developing an ICT network for Russian arbitration courts\. 11\. “Knowledge Visit of SAC delegation to Supreme Court and other courts of South Korea May 2009”\. 12\. “Training for employees of arbitrazh courts in use of modern information technologies”\. The contract was completed in April 2009: 178 persons were trained under an initial program, 94 under a basic training program, and 6 senior IT officials were trained under a special program for IT leaders\. 13\. “Training of employees of information divisions of arbitration courts of Russia in use of modern information technology”\. The contract was signed in April 2010\. 97 IT staff members of arbitration courts were trained\. Page 57 of 148  The World Bank Judicial Reform Support Project (P089733) 14\. “Training of employees of courts and managers of CGJ and JD to information technologies (standard training courses, logistics)”\. About 3000 ICT staff of courts of general jurisdiction and Judicial Department were trained under this contract, which was linked to the ‘gateway contract’ (activity D\.4) and to the envisaged implementation of the ICT system for 900 CGJs\. Component D 15\. “Technical design documentation and preparation of technical specifications for SAC and assessment of the needs of arbitration courts for improved automated judicial record management using advanced ICT”\. This output provided a medium- to longer-term vision and draft technical specifications for further modernization of SAC and commercial courts’ ICT capabilities for improved efficiency\. The recommendations were never acted upon because the SAC was abolished in 2012 and it took about two years for the new commercial division in the Supreme Court to be staffed and begin functioning\. By this time the recommendations had become obsolete due to the judicial reorganization and technological change\.     Page 58 of 148  The World Bank Judicial Reform Support Project (P089733)   ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION      A\. TASK TEAM MEMBERS    Name  Role  Preparation  Olga Schwartz  Team Member – Judicial and Legal Reform  Nikolai Soubbotin  Country Lawyer  Alexander Balakov  Procurement Specialist  Galina S\. Kuznetsova  Financial Management Specialist  Olga A\. Gubareva  Team Member ‐ Safeguards  Ljudmilla V\. Poznanskaya  Team Member ‐ Operations  Ramesh Sivapathasundram  Team Member – E‐Governance and ICT  Svetlana G\. Golubeva  Social Safeguards Specialist  Craig Neal  Team Member – E‐Governance and ICT  Friedrich Peloschek  Team Member – Judicial Reform  Amitabha Mukherjee  Task Team Leader – Institutional and Justice Reform      Supervision/ICR    Amitabha Mukherjee  Task Team Leader – Institutional and Justice Reform  Olga Schwartz  Team Member – Judicial and Legal Reform  Nikolai Soubbotin  Country Lawyer  Alexander Balakov  Procurement Specialist  Galina S\. Kuznetsova  Financial Management Specialist  Susana M\. Padilla  Team Member – Administrative and Client Support  Ronald N\. Hoffer  Social Safeguards Specialist  Rajni Bajpai  Team Member ‐ ICR  Olga A\. Gubareva  Team Member ‐ Safeguards  Ljudmilla V\. Poznanskaya  Team Member ‐ Operations  Page 59 of 148  The World Bank Judicial Reform Support Project (P089733) Ramesh Sivapathasundram  Team Member – E‐Governance and ICT  Pratheep Ponraj  Team Member – E‐Governance and ICT  Arcadii Capcelea  Environmental Safeguards Specialist  Svetlana G\. Golubeva  Social Safeguards Specialist  Eva Maria Melis  Team Member – Judicial Reform  Runyararo Gladys Senderayi  Team Member – Judicial Reform  Zohreh Bahreh Bar  Team Member – Voice Secondee  Kateryna Elishyieva  Team Member – Voice Secondee         B\. STAFF TIME AND COST  Staff Time and Cost  Stage of Project Cycle  No\. of staff weeks  US$ (including travel and consultant costs)  Preparation  FY05  15\.313  92,179\.84  FY06  53\.734  368,879\.68  FY07  38\.339  286,353\.17  FY08  0  ‐1,092\.46  FY09  0     0\.00  Total  107\.39  746,320\.23    Supervision/ICR  FY07  7\.540  89,971\.22  FY08  16\.765  98,093\.65  FY09  36\.773  227,917\.55  FY10  39\.870  252,772\.52  FY11  41\.476  252,214\.76  FY12  22\.740  137,320\.16  FY13  20\.685  172,952\.14  FY14  24\.900  148,643\.01  FY15  19\.567  118,584\.00  Page 60 of 148  The World Bank Judicial Reform Support Project (P089733) FY16  11\.450  89,989\.71  FY17  13\.626  99,219\.06  FY18  12\.050  111,527\.34  FY19  \.200  1,680\.64  Total  267\.64  1,800,885\.76                 Page 61 of 148  The World Bank Judicial Reform Support Project (P089733) ANNEX 3\. PROJECT COST BY COMPONENT      Amount at Approval   Actual at Project  Percentage of Approval  Components  (US$M)  Closing (US$M)  (US$M)  A\. Institutionalizing Judicial  Transparency and  7\.15  4\.78  66\.85  Accountability  B\. Harnessing ICT for  Judicial Transparency and  146\.10  168\.76  115\.51  Effectiveness  C\. Strengthening Human  10\.10  7\.09  70\.20  Capital  D\. Project Management and  9\.06  8\.13  89\.74  M&E  Total    172\.41    188\.76    109\.48          Page 62 of 148  The World Bank Judicial Reform Support Project (P089733) ANNEX 4\. EFFICIENCY ANALYSIS      Positive economic effects arose from savings on staff time of judges and other court officials, reduced transactions costs between courts and other governmental institutions, reduced cost of processing information and its provision to citizens and businesses\. The estimated direct economic effects (DEE) of JRSP activities considerably exceeded the expenditures incurred on the JRSP\. In addition to the DEE, project implementation positively affected the quality and timeliness of the administration of justice and improved access to judicial services for citizens, businesses and professional users\. It also contributed to improving actual experiences with, and perceptions about, the judicial system as a whole\. This in turn contributed – and will continue to do so over time - to increasing satisfaction of citizens and businesses with the judiciary\. JRSP activities also had social effects such as increasing the transparency of courts at all levels; increasing the availability of and access to court decisions, judicial information and judicial processes; and increased protection of rights of litigants and businesses, as the survey data cited in the ICR demonstrate\. Taking account of the overall economic effect, the comprehensive economic effect (CEE) demonstrated efficiency in JRSP implementation\. The CEE value obtained for the period up to and including 2022 is RUR40 billion (equivalent to US$665\.9 million at the end-2017 exchange rate or US$614\.7 million based on the average weighted exchange rate provided by the Russian Federation Central Bank for the corresponding years)\. The NPV and EIRR values for the Project are: NPV: RUR7\.3 billion (equivalent to US$121\.8 million at the end-2017 exchange rate) EIRR: 63 percent The dropping of the 900 small CGJs from the project and the 2014 addition of the MCC to the project also significantly enhanced the efficiency and impact of JRSP resources\. Many of the 900 CGJs originally included under the project were merged and reorganized during the last 5 years\. These small courts (with 1 to 5 judges) handle about 500 cases annually (for courts with 1- 3 judges) and sometimes up to 1,000 cases annually (for courts with 3-5 judges)\. Taking an annual average of 800 cases per small court (on the high side), the total number of cases considered annually by 900 CGJs originally included in the project would be 720,000\. In contrast, the number of cases annually considered by the Moscow region courts is about 1\.5 million\. Therefore the exclusion of the 900 CGJs and the inclusion of the MCC practically doubled the effect of the project investments into Russia’s CGJs\. In addition, no funds for ICT modernization were allocated to the MCC under the FTP – the JRSP resources helped the MCC to significantly improve the efficiency of their operations\. Therefore, not only were there no negative impacts of dropping 900 CGJs, adding the MCC with its higher case volume conferred significant additional efficiency to Russia’s overall judicial system and provided an opportunity to make significant improvements to the ICT system currently deployed across other CGJs with Russian budgetary financing\. Page 63 of 148 The World Bank Judicial Reform Support Project (P089733) A stress test was employed to assess the sustainability of JRSP results: all key assumptions underlying the CEE estimations were simultaneously varied from +10% to -10%\. This facilitated examination of system behavior under stringent conditions, while the probability of the mistakes in all indicators at the same time is highly unlikely)\. The stress-test showed high sustainability of JRSP results\. Methodological summary\. The JRSP was implemented within a larger context of major judicial reforms initiated by the government and mostly financed under Federal Targeted Programs (FTPs)\. Efficiency was calculated as a combination of direct economic effects of project activities, and as part of the overall effect of reform of Russia’s judicial system, of which the JRSP was an element\. JRSP effects are divided into 2 categories: direct and indirect\. Direct effects were calculated separately for each activity\. Indirect effects were calculated for the entire JRSP as part of the effect of the entire judicial reform\. The combined effect is the sum of all direct effects for JRSP activities and of the overall effect of the entire JRSP\. The methodology used was to (a) identify JRSP activities with direct effects from project components and calculate the sum of all direct effects (i\.e\. the cumulative direct effect or CDE), (b) calculate the overall effect (OE) of the JRSP as part of the effect of the entire judicial reform using appropriate methodology summarized in the Annex (based on the detailed project economic analysis) and (c) deduct the amount of JRSP financing from the sum of CDE and OE to arrive at the total comprehensive economic effect (CEE)\. JRSP activities with direct economic effects\. The table below shows the most important JRSP activities with direct economic effects with a summary of the effects identified (Table 64\.1)\. Table 4\.1\. Activities with direct economic effects Activity number and description Description of direct EE B\.2\.1\.1\. and B\.2\.1\.2\. Conversion of RF SC Reduction in staff time and cost associated decisions and data files into electronic with searching archival documents format (Stages 1 and 2) Reduction in staff time and cost associated with scanning cases and other files/documents B\.2\.2\.3 Modernization of SC Information System Reduction in staff time and cost of IT specialists in repairing/replacing computers B\.2\.2\.4\.a Procurement of hardware and Savings from procurement, deployment and software for virtualization of computer maintenance of physical servers (PS) from resources of the SC and provision of creation of required operational infrastructure related virtualization system Page 64 of 148 The World Bank Judicial Reform Support Project (P089733) Activity number and description Description of direct EE implementation services B\.2\.2\.9 Development and Implementation Savings by citizens and organizations as they of the SC Information System “Case (and/or their representatives) do not need to be Processing and Judicial Documents Flow" physically present to file procedural requests B\.2\.3\.1 Procurement of equipment and Cost saving on prisoner transfers development of communication channels Cost saving on procedural fees for organization of remote proceedings Cost saving for relatives of prisoners Cost saving on training Cost saving on investigation activities Saving on procurement of additional MGTS B\.2\.3\.2 Supply of Additional VC telephone numbers through the use of digital Equipment to SC and FPS Offices telephone station (DTS) Page 65 of 148 The World Bank Judicial Reform Support Project (P089733) Activity number and description Description of direct EE Saving of labor cost of judicial staff associated with filing of cases in courts of higher instance and passing of judgement by courts of higher instance Saving of labor cost of judicial staff associated with handling of complaints Saving of labor cost of citizens and organizations’ representatives associated with submission of claims through the Internet B\.3\.1\.2\. A turnkey creation of Integrated Information System of Moscow city general jurisdiction courts Saving of labor cost of citizens and organizations’ representatives on submission of applications for examination of case materials through the Internet Saving of staff cost and time associated with maintenance of databases of new employees Saving of material and postage costs using electronic exchange with FBS B\.4\.1\.1\. Development of corporate Savings on long-distance calls telephone network of commercial courts B\.4\.1\.5\.2\. Development of new functional modules of arbitration case management Labor saving associated with preparing the system specific to the CIR based on state statistical data current legislation B\.4\.1\.9\.1 Procurement of servers and Savings on international calls active network equipment Page 66 of 148 The World Bank Judicial Reform Support Project (P089733) Activity number and description Description of direct EE Savings on buying telephone numbers from telephone company Reduced material expenses and labor costs of B\.4\.1\.9\.3 Procurement of Automated administrative personnel associated with System for Document Flow Management maintenance of non-judicial paperwork В\.4\.1\.9\.4 Procurement of Saving of funds of citizens and organizations videoconferencing equipment for the as they (and/or their representatives) do not Presidium of the CIR need to be physically present at court sessions B\.4\.2\.2\. Development, implementation Reduced time spent by citizens and and maintenance of a single portal of organizations to obtain information Russian commercial courts Saving of labor cost associated with registration of and providing access to the arbitration case B\.4\.2\.3/i-iv Supply and Installation of Saving of labor cost of IT specialists systems of storage of electronic copies of associated with the maintenance of equipment judicial documents Saving of funds for procurement, deployment and maintenance of physical servers (PS) and for creation of the required operational infrastructure\. B\.4\.2\.4\.1 Audio Recording System of Saving on reduced number of appeals against Court Sessions the actions of judges The lack of direct economic effects or ability to identify them does not imply their absence, as such activities can be efficiently undertaken and be effective\. However, such effects occur at a somewhat different level from the impact on the state of the entire judicial system\. Typical examples include training and skills upgrading of judges and judicial staff, knowledge exchange and access to international good practice for judges\. It is difficult to assess the direct economic Page 67 of 148 The World Bank Judicial Reform Support Project (P089733) effects of such activities, yet they do impact Russia’s court system\. Overall effect of JRSP\. The JRSP contributed to the overall effect of the system-wide judicial reform over the years\. The significance of this contribution can be estimated based on certain conservative assumptions, as a percentage of the overall effect of the reform\. To measure the effect of the entire judicial reform, the analysis used the global rankings of countries based on a methodology that measures the quality of the judicial system and the extent of protection of the rights of businesses and citizens\. Russia’s improved rankings on such ratings during judicial reform implementation could indicate that the reform had a positive impact on Russia’s country's economic and social climate\. The World Bank’s annual Doing Business (DB) ratings was found to be appropriate for this analysis\. Within the DB ratings, those associated with enforcing contracts are almost entirely based on an analysis of judicial system efficiency and protection of legal rights of parties to contracts being enforced\. Hence the changes in the scores and rankings for this indicator may directly reflect changes in the judicial system, including as a result of reforms\. Three indicators – obtaining credit, resolving insolvency and protecting minority investors - reflect the level of protection of rights of businesses, specifically creditors and shareholders, and the efficiency of credit and bankruptcy institutions\. Each of these three topics includes issues not directly connected with the protection of rights or the judicial system\. However, other issues allow us to associate the Distance To Frontier (DTF) dynamics with changes in a country’s judicial system\. The other six topics are more distantly connected to the judicial system and cannot be used\. Thus, 4 out of 10 DB indicators can be considered to be connected to judicial reforms, in whole or in substantial part\. Since all indicators for calculating the total DTF have equal weight, the share of the judicial reform contribution to the overall effect from improved business climate in the DB index can be assumed to be 0\.4* [i\.e\. it is a reduction factor because of partially indirect connection]\. For measuring the economic effect of the judicial reform, the approach described in “Does Doing Business Matter For Foreign Direct Investment?” (available on the World Bank website) was used to identify correlation with indicators that could be used to assess the net effect for the economy\. Specifically, the coefficient of correlation between cumulative DTF of various countries and internal lending interest rates (LIR) in the non-financial sector was used\. The analysis reasonably suggests a correlation between cumulative DTF and LIR\. A linear regression coefficient has been estimated based on the analysis results\. The conclusion is that correlation between these indices is negative: the higher the country's rating (i\.e\. the country's DTF), the lower is the interest rates on loans to non-financial corporations\. As to the effect of the reforms, this correlation implies that the higher the DB ranking since the reform began, the lower the interest rates on loans to natural and legal persons should be\. In this case, the direct effect will be received by borrowers which, in turn, generates follow-on effects in the economy\. Therefore, the total annual effect from reducing lending interest rates as a result of DTF growth can be assessed as the difference (reduction) of lending interest rates (LIR) calculated using the linear regression coefficient multiplied by the cumulative volume of non-financial sector lending\. The equation to calculate the annual effect of the JRSP is summarized as follows: Page 68 of 148  The World Bank Judicial Reform Support Project (P089733) Э ∆ ∗ ∗ ∗ 0\.4 ∗ ∗ where: ∆ – DTF variation from the basic primary level (prior to the start of reforms in question) for i year; k - a negative linear regression coefficient for DTF and LIR – volume of non-financial sector lending in i year 0\.4 - the share of indices connected with the judicial reform in the total DTF – reduction factor (determined by the professional assessment method) which takes into account that some DTF indices selected for analysis have somewhat indirect connections with project activities and FTPs on the development of Russia’s judicial system; – amount of financing of the JRSP; – amount of financing under FTPs on development of Russia’s judicial system for 2007-2016\. There is no reason to believe that the DTF direction for Russia will turn negative in the near future and/or the scores/ratings will decrease\. At the same time, using a conservative approach, 2017 DTF values were used to estimate the overall effect of JRSP for five years after project closing\. The total overall effect of the JRSP is the sum of annual effects\. Calculation of JRSP total comprehensive economic effect (CEE)\. The JRSP’s CEE is the sum of direct economic effects and overall economic effect of the Project, less cumulative actual JRSP expenditures\. The CEE is calculated as follows: ∑ ∑ Р , where DEEi - direct economic effects of the JRSP OEE - overall economic effect of the JRSP ∑ Р – amount of expenditures on the JRSP Inflation estimates used data from the Federal State Statistics Service, while inflation forecasts up to 2022 of the Ministry of Economic Development of the Russian Federation were used16\.     16  http://economy\.gov\.ru/minec/about/structure/depmacro/2017271001 Page 69 of 148  The World Bank Judicial Reform Support Project (P089733)   Table 1\. Economic effect of videoconferencing implementation Effect in Effect, thousand rubles  prices for Quantity of sets 2014, (2017) thousand 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 rubles/year for 1 set Type of sets RF SC 13 1 707 57 602 57 546 48 162 38 778 29 394 30 570 31 793 33 065 34 387 35 763 Court of level I 777 1 020 350 290 331 516 537 557 743 598 949 640 987 625 1 027 130 1 068 215 1 110 944 1 155 382 Court of the level II 2479 -155 -39 102 -203 830 -305 698 -407 566 -509 435 -529 812 -551 004 -573 045 -595 966 -619 805 TOTAL: 368 790 185 232 280 021 374 810 469 599 488 383 507 919 528 235 549 365 571 339 Table 2\. Economic effect of digital telephone connection implementation DEE, thousand rubles MGTS line rental fee, Numbering capacity Numbering capacity Rubles/ 1 telephone number monthly (general) (MGTS) 2017 2018 2019 2020 2021 2022 340 1200 900 1 224,00 1 272,96 1 323,88 1 376,83 1 431,91 1 489,18       Page 70 of 148 The World Bank Judicial Reform Support Project (P089733) Table 3\. The effects of activity B\.3\.1\.2 and formulae for the calculation Effect Main driver Calculation formula Description of terms Saving of labor cost of The quantity of falsified ∗ ∗С / - The quantity of falsified judgments of the first-instance courts\. judicial staff associated with judgments of the first-instance TS - Time saving on the data input for 1 case (man/hours) filing of cases in the court of courts\. С / –The court personnel man hour cost the higher instance and passing of judgement of the court of the higher instance in the court of the first instance 17 Saving of labor cost of Quantity of complaints ∗ ∗ / – Number of complaints during the basic period judicial staff associated with – Number of complaints during the present period handling of complaints –Average labour cost on consideration of 1 complaint (man/hour) С / –Court personnel man hour cost Saving of labor cost of Quantity of the claims ∗ ∗ / –number of the claims submitted though the Internet citizens and organizations’ submitted though the Internet –Average time expenditures on a claim submission, hour representatives associated С / – Applicant’s (or his representative’s) man hour cost18 with submission of claims through the Internet Saving of labor cost of Number of applications –Number of applications for examination of materials of cases submitted citizens and organizations’ submitted though the Internet ∗ ∗ / though the Internet representatives associated –average time expenditures on a claim submission, hour with submission of С / – Applicant’s (or his representative’s) man hour cost18 applications for examination of case materials through the Internet Saving of labor cost of Number of the new personnel ∗ ∗С / –Average number of new employees a year administrative personnel in a year –Time saving on the input of the data on 1 new employee (man/hour) associated with the С / – Administrative personnel man/hour cost maintenance of databases of new employees 17 Time saving due to elimination of manual data input from paper documents by automating document flow  18 Due to difficulty to direct assessments, data on average salary in the Russian Federation has been used: http://www\.gks\.ru/bgd/free/B09_03/IssWWW\.exe/Stg/d02/193\.htm  Page 71 of 148 The World Bank Judicial Reform Support Project (P089733) Effect Main driver Calculation formula Description of terms Saving of material and Number of writs obligatory ∗ С С ∗ С ∗ –Number of writs obligatory passed to FBS postage costs using passed to FBS С –Cost of a writ obligatory form electronic exchange with С –Cost of a certified mail FBS –Number of a certified mail for 1 writ obligatory –Number of uninsured mail for 1 writ obligatory С –Cost of an uninsured mail Page 72 of 148 The World Bank Judicial Reform Support Project (P089733) Table 4\. Effects and the main assumptions/parameters for their estimation Effects Parameters Unit of measure 2017 2018 2019 2020 2021 2022 Saving of labor cost of judicial staff associated Saving of time on filing of cases hours 0,5 0,5 0,5 0,5 0,5 0,5 with filing of cases in the court of the higher instance and passing of judgement of the court of the higher instance in the court of the first Administrative personnel man hour RUR instance cost 220 229 238 247 257 267 Judges man hour cost RUR 1 539 1 601 1 665 1 731 1 800 1 872 Saving of labor cost of judicial staff associated Average time on handling of Person-hours with handling of complaints complaints 60 60 60 60 60 60 Administrative personnel man hour RUR cost 220 229 238 247 257 267 Number of claims submitted by citizens and organizations’ pc\. Saving of labor cost of citizens and organizations’ representatives in person at courts’ representatives associated with submission of reception 1 488 1 488 1 488 1 488 1 488 1 488 applications for examination of case materials Average time required on claims hour through the Internet submission in person 4 4 4 4 4 4 Applicant´s average man hour cost RUR 248 258 268 279 290 301 Number of claims submitted by citizens and organizations’ pc\. representatives in person at courts’ Saving of labor cost of citizens and organizations’ reception n/a n/a n/a n/a n/a n/a representatives associated with submission of Average time required on claims court claims through the Internet hour submission in person 4 4 4 4 4 4 Applicant´s average man hour cost RUR 248 258 268 279 290 301 Cost of the writ obligatory form RUR Saving of material and postage costs using 0,80 0,83 0,87 0,90 0,94 0,97 electronic exchange with FBS Number of a certified mail for 1 writ pc\. obligatory 5 Page 73 of 148  The World Bank Judicial Reform Support Project (P089733) Effects Parameters Unit of measure 2017 2018 2019 2020 2021 2022 Number of uninsured mail for 1 writ pc\. 0 Average cost of certified mail RUR 48\.38 50\.32 52\.33 54\.42 56\.60 58\.86 Average cost of uninsured mail RUR 25\.96 27\.00 28\.08 29\.20 30\.37 31\.58   Page 74 of 148 The World Bank Judicial Reform Support Project (P089733) Table 5\. Estimation of the economic effect of activity B\.3\.1\.2\., thousand rubles Effect 2018 2019 2020 2021 2022 Total Saving of labor cost of judicial staff associated with filing of cases in the court of the higher instance and passing of judgement of the court of the higher 22 947 23 069 23 164 23 231 23 489 115 899 instance in the court of the first instance Saving of labor cost of judicial staff associated with 39 038 50 864 63 575 77 220 91 856 322 554 handling of complaints Saving of labor cost of citizens and organizations’ representatives associated with submission of 1 534 1 595 1 659 1 725 1 794 8 306 applications for examination of case materials through the Internet Saving of labor cost of citizens and organizations’ representatives associated with submission of court 16 819 17 492 18 192 18 920 19 676 91 099 claims through the Internet Saving of material and postage costs using electronic 109 171 131 703 153 408 172 308 188 160 754 751 exchange with FBS Total 189 508 224 724 259 998 293 404 324 976 1 292 609 Page 75 of 148 The World Bank Judicial Reform Support Project (P089733) Table 6\. JRSP overall effect (by years) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017** 2018** 2019** 2020** 2021** 2022** DTF of the Russian 53\.06 53\.79 56\.83 54\.93 54\.32 56\.66 58\.93 66\.00 71\.25 73\.20 73\.20 73\.20 73\.20 73\.20 73\.20 73\.20 Federation Funding of the FTP “The development of the Russian 6 380 8 937 10 153 10 930 13 532 10 793 10 000 9 454 9 354 11 725 Federation Judiciary system”, million RUR Average annual rate of exchange 25\.577 24\.8553 31\.7231 30\.3692 29\.3874 31\.093 31\.848 38\.4217 60\.9579 67\.0349 58\.3344 RUR/US$ Funding of the FTP “The development of the Russian 249\.44 359\.56 320\.05 359\.90 460\.47 347\.12 313\.99 246\.06 153\.45 174\.91 Federation Judiciary system”, million US$ Bank Lending to non-financial 12 16 16 18 23 27 32 40 43 40 42 42 42 42 42 42 sector at the end 287\.10 526\.90 115\.50 147\.70 266\.20 708\.50 456\.30 865\.00 985\.00 938\.60 000\.00 000\.00 000\.00 000\.00 000\.00 000\.00 of reporting year, billion RUR Bank Lending to non-financial sector at the end 1 019 1 063 480 396 664 924 508 005 597 569 791 706 891 149 721 563 610 705 720 000 720 000 720 000 720 000 720 000 720 000 of reporting 100 591 year, million US$ Page 76 of 148  The World Bank Judicial Reform Support Project (P089733) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017** 2018** 2019** 2020** 2021** 2022** Expected effect, mil US$ (average data 0\.00 0\.00 25\.01 11\.04 6\.82 41\.37 84\.69 209\.89 203\.60 191\.56 225\.85 225\.85 225\.85 225\.85 225\.85 225\.85 for 2005 and 2014) Minimal effect, mil\.US$ (average data 0\.00 0\.00 6\.58 2\.91 1\.80 10\.89 22\.30 55\.26 53\.61 50\.44 59\.46 59\.46 59\.46 59\.46 59\.46 59\.46 for 2005 and 2014) Expected effect, mil RUR 12 12 13 14 14 15 16 16 (average data 0\.00 0\.00 793\.32 335\.25 200\.50 1 286\.41 2 697\.27 8 064\.28 411\.14 841\.42 160\.69 228\.31 797\.44 389\.34 004\.91 645\.11 for 2005 and 2014) Minimal effect, mil RUR (average data 0\.00 0\.00 208\.87 88\.27 52\.79 338\.70 710\.17 2 123\.25 3 267\.74 3 381\.03 3 465\.09 3 746\.19 3 896\.03 4 051\.88 4 213\.95 4 382\.51 for 2005 and 2014)   Table 7\. CEE Calculation parameters of the JRSP Parameter 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Costs under the 217 364 1 269 3 427 1 665 JRSP 175 202 170 259 303 208 029 201 304 913 165 659 496 288 871 234 169 0 0 0 0 0 613 1 088 1 450 1 843 2 263 2 706 3 180 Direct effects 0 0 0 0 0 156 850 380 484 742 622 218 679 916 179 599 585 147 968 690 Overall (indirect) 208 710 2 123 3 267 3 381 3 465 3 746 3 896 4 051 4 213 4 382 effect 0 0 874 88 270 52 789 338 700 166 254 744 033 092 187 035 876 951 509 -175 -170 -119 -148 -417 958 2 111 2 620 2 888 5 196 5 739 6 315 6 920 7 563 ECF 202 259 -8 429 759 515 616 887 708 091 633 716 102 786 620 024 919 200 Page 77 of 148  The World Bank Judicial Reform Support Project (P089733) The total direct economic effect is 15\.2 billion rubles (around $253\.0 million dollars at current exchange rate)\. The total overall effect is 33\.9 billion rubles (around $565\.4 million dollars at the current exchange rate)\.               Page 78 of 148  The World Bank Judicial Reform Support Project (P089733) ANNEX 5\. BORROWER COMMENTS    Ministry of Finance of the Russian Federation Comments to Implementation Completion and Results Report (Report) on the Judicial Reform Support Project (Project) prepared by IBRD IBRD Loan No\. 4849-RU Ministry of Finance of the Russian Federation (MOF) makes special mention of a large volume of work has been achieved by the IBRD team to analyze and summarize project results (the Bank team has analyzed, among other things, the results of project research and analytical activities) and progress\. Considering project-specific conditions (MOED acting as implementing agency and chief budget funds administrator for the project solely implemented for the judiciary, three highest-level courts acting as the key project beneficiaries, project focus on providing support for modernization rather than development of the existing national judicial system, project role to augment federal targeted programs on judicial system modernization), findings and conclusions expressed by the Bank team in the Report represent an interest for the IBRD potential borrowers and contribute to the cumulative implementation experience of projects financed by the IBRD and other international financial institutions\. The IBRD rating of project efficacy and efficiency as substantial (page 6 of the original version, references are made to the English version of the Report provided by the IBRD) seems to be reasonable, reflecting project contribution to strengthening transparency and efficiency of all judicial authorities involved in the Project\. However, we have the following comments on a number of aspects outlined in the report\. We have to note that the rating of the relevance and importance (significance) of the Project Development Objective (PDO) to assist the Borrower to strengthen judicial transparency and efficiency of selected courts through the implementation of information systems and judicial training (page 6 of the Report) as modest does not seem to be sufficiently justified\. The PDOs were not focused on the issues of judicial independence, as was rightly noted by the IBRD team\. This seems to be reasonable as the tasks to ensure independence of judges and entire judiciary throughout the period of implementation of the Project were among the key tasks of the federal targeted programs for judicial system development, e\.g\. the federal targeted program Page 79 of 148 The World Bank Judicial Reform Support Project (P089733) on development of Russia’s judicial system for 2007-2012 and the federal targeted program on development of Russia’s judicial system for 2013-2020/\. The Project was originally designed to supplement the federal targeted programs and other government programs on judicial system development\. Hence, it seems to us that the fact that PDOs have addressed some, but not all, national judicial development priorities should not be seen as a weakness of the above PDO\. The relevance of informatization issues is emphasized in RF Presidential Decree No\. 204 dated 07\.05\.2018 “On the national agenda and strategic development objectives of the Russian Federation for the period up to 2024”\. This decree orders the RF government to ensure that a series of national development objectives of the Russian Federation for the period up to 2024, including enhanced deployment of digital technology in the economy and social sector, are achieved\. This is expected to be achieved, among other things, by introducing digital technology and platform solutions in the area of public administration and delivery of public services, including for citizens and small and medium-sized enterprises\. The JRSP-financed activities undertaken to ensure automation of workflow and document flow based on modern ICT in Moscow courts of general jurisdiction with the aim to increase degree of electronic interaction in judiciary, interagency interaction and interaction with litigants, directly address the national tasks related to the development of information society in Russia and future national development objectives described in the above-mentioned RF Presidential Decree\. The Bank team noted on page 18 (paragraph 20) of the Report that the ICR guidelines require the relevance of PDOs to be assessed with respect to the CPS goals and priorities at the time of project closing\. However, PDOs can be assessed only with respect to the CPS for the period up to 2016\. It seems that a lack of CPS for the Russian Federation at the time of project closing as of December 2017 does not constitute sufficient grounds for reducing the ranking of PDO relevance by project closing\. On the basis of the above, we suggest that the relevance of PDO should be rated as High\. The Bank performance under the Project (page 6 of the Report) is rated by the Bank team as Moderately Satisfactory\. This ranking seems to be undervalued, not reflecting the actual role of the IBRD leadership and the Bank team in the implementation of the Project\. The Borrower's JRSP implementation completion report submitted by MOF to IBRD provides detailed justification for high ranking of IBRD performance under the Project\. In particular, positive factors include stable Bank team throughout the project life contributing to high professional level of support provided by IBRD with respect to all substantive project-related aspects\. The distinctive Page 80 of 148 The World Bank Judicial Reform Support Project (P089733) feature of the Bank team throughout the project life was ongoing monitoring conducted by the Bank team members with respect to the RF judicial system modernization, including modernization of the legal and regulatory base relevant to the judiciary\. With the meaningful involvement of the Bank team in dealing with problematic areas relating to improvement of government organization and management, the Bank timely identified implementation challenges and supported all reasonable proposals on project restructurings and extensions, which were key to achievement of project objectives and almost full disbursement of loan funds provided to the Russian Federation for implementing priority measures aimed to improve judicial transparency and effectiveness as identified by judicial stakeholders\. On the basis of the above, we suggest that Bank performance should be rated as Highly Satisfactory\. We assume that overall rating of project performance should be improved to Satisfactory, taking into account comments above\. The wording of the original project development objective as specified on page 12 of the Report (paragraph 8) is to strengthen judicial transparency and efficiency in courts financed by the JRSP, while the PDO wording used in the Loan Agreement is to assist the Borrower to strengthen judicial transparency and efficiency of selected courts through the implementation of information systems and judicial training\. We suggest that PDO wording as specified in the Loan Agreement should be used since it includes the proposed methods for achieving development objective which seem to be substantial in terms of assessing the project results\. It is stated on page 2 of the Report that the amount of US$ 49 902 853 was disbursed out of the proceeds of Loan 4849-RU to finance the Project\. It is stated in the Borrower's Implementation Completion Report that after all eligible expenditures had been paid by project closing, the Foundation for Enterprise Restructuring repaid to the IBRD on April 25, 2018 the undisbursed amount of loan proceeds equal to US$ 101 106\.11 from the Designated Account\. According to the Borrower's Report, the disbursed amount is equal to US$ 49 898 893\.89\. There might be a technical error as a cause of data discrepancies because the IBRD team has used for preparation of the report the data from the IBRD financial system which has not been updated with the final disbursement data\. On the basis of the above, we suggest that disbursement data should be reconfirmed\. The data on estimated and actual costs by components is cited on pp\. 12-13 of the Report Page 81 of 148 The World Bank Judicial Reform Support Project (P089733) in the description of project components and in Annex 3 to the Report\. The data provided is inconsistent with the actual data obtained from the completed project procurement plan at the time of preparing the Borrower's Implementation Completion Report\. A comparative table below shows data from the Borrower's Report and the IBRD Report\. Scope of financing, US$ mln\. Actual disbursed Actual based on data disbursed Planned from based on data Component/Subcomponent Name (Appraisal procurement from IBRD Document) plan included Report in the Borrower's Report A\. Institutionalizing judicial 7\.15 4\.78 6\.15 transparency and accountability B\. Use of Information and Communications Technology for 146\.10 168\.76 161\.10 Judicial Transparency and Effectiveness B\.1\. Constitutional Court 5\.85 5\.62 - B\.2\. Supreme Court 26\.10 69\.25 - B\.3\. Judicial Department and Courts 65\.65 57\.59 - of General Jurisdiction В\.4\. Supreme Commercial Court and 48\.50 36\.30 - commercial courts C\. Strengthening Human Capital 10\.10 7\.09 10\.10 D\. Project Management, 9\.06 8\.13 9\.75 Monitoring and Evaluation TOTAL 172\.41 188\.76 187\.10 There might be a technical error as a cause of data discrepancies because the IBRD team has used for preparation of the report the project procurement plan which has not been updated in the IBRD data system with contract payments made during grace period provided by the IBRD Page 82 of 148  The World Bank Judicial Reform Support Project (P089733) (January-April 2018)\. On the basis of the above, we suggest that data on project financing by components should be reconfirmed\. It is stated in paragraph 13(a) on page 16 and in paragraph 18 on page 17 of the Report that the Supreme Arbitrazh Court (SAC) was abolished in 2012\. There seems to be a misprint since SAC had terminated its operations on August 5, 2014 as per the federal constitutional laws No\. 2- FKZ and No\. 3-FKZ dated 05\.02\.2014\. We suggest that the date for termination of SAC operations should be 2014\.         Page 83 of 148 The World Bank Judicial Reform Support Project (P089733) ANNEX 6\. OVERVIEW OF KEY JUDICIAL AND LEGAL REFORMS    This Annex summarizes key judicial and legal reform and modernization measures in the Russian Federation which formed the backdrop to JRSP design and implementation\. The 1991 Concept of Judicial Reform\. The Supreme Soviet Resolution of 24 October 1991 of the Russian Soviet Federated Socialist Republic (RSFSR) enacted the Concept of Judicial Reform\. This is generally understood to have signaled the beginning of the modernization of Russia’s judicial system\. This Concept articulated the priorities of judicial reform in the nineties in the Russian Federation\. Public trust in the judicial system at that time was low\. Analytical research of the time, such as VCIOM19 studies of 1989-1991 of the omnibus court system, did not separate courts from other law enforcement and justice entities\. VCIOM data indicated that society was divided on trust in courts and prosecution: about 20 percent fully trusted these bodies, 20-33 percent did not trust them at all, and 33-40 percent did not fully trust these bodies\. Experts at the time were of the view that factors affecting trust included the level of judicial independence, especially from the executive, powerful private actors and public opinion; fairness; corruption; red tape; and the speed of enforcement of judicial decisions\. 1991 establishment of Constitutional Court\. The 1991 Concept – approved when the USSR was still in existence - proposed to make the judicial branch of power strong and efficient, independent from executive and legislative branches, to reform the bar (advokatura) and the prosecution service, and to amend criminal procedure to raise the standard of proof and introduce judicial control over preliminary investigations\. Judicial reform was declared one of the main State priorities\. The Law “On RSFSR Constitutional Court” was adopted in 1991, establishing the CC\. The creation of the CC was a significant breakthrough: its main responsibilities were to review federal laws, other normative acts and international agreements of the RF for compliance with the RF Constitution\. The CC was authorized to review the constitutionality of established practice in applying the law, and to issue legal opinions at the request of high RF state bodies (e\.g\. RSFSR People’s Deputies’ Congress and the RSFSR Supreme Soviet) and under its own initiative\. The Law on the CC was developed in accordance with high European standards and for the first time introduced such principles as security of judges’ tenure and their accountability only to the law\. The 1991 Law prohibited CC justices from involvement in politics or to perform any other paid activities except for teaching and creative work\. 1991 establishment of commercial court system\. The 1991 Law “On Arbitrazh Courts” established a Supreme Arbitrazh Court and a system of State commercial or economic (arbitrazh) courts on the lines of the system of State arbitration existing in Soviet times for state-owned enterprises\. The SAC performed, for the commercial court system, a role analogous to that of the SC for the CGJ\. 1992 independence and status of judges protected by law\. The 1992 Law “On the Status of Judges” of 23 May 1992 expanded the standards applied to CC justices to all judges across Russia: 19Russia Public Opinion Research Center (Vserossiiski Centr Izucheniya Obschestvennogo Mnenia)\. At the time referred to – All-Union Public Opinion Research Center\. Page 84 of 148 The World Bank Judicial Reform Support Project (P089733) it enshrined the autonomy of judicial power and its independence from legislative and executive branches, introduced security of tenure for all judges (a judge could be removed from office only on his/her personal request), personal inviolability of judges (interrogation, search or arrest of a judge was possible only with the consent of the High Qualification Collegium of Judges or lower bodies of judicial self-government), subordination only to the law and increased salaries of judges and other material benefits\. It institutionalized the judicial community, including creating bodies of judicial self-governance and judicial qualification collegiums within them having full control over judges’ discipline and their removal for cause\. Judges’ procedural powers were widened\. The Criminal Procedure Code was amended to introduce judicial control over arrest and detention: the main powers to authorize arrests and detentions still belonged to the prosecution but the defendant acquired the right to appeal against such decisions to the courts, which were to review not only the legality of the arrest (i\.e\. formal compliance with legal provisions) but also its justification (i\.e\. whether there were appropriate grounds for the arrest)\. 1993 reintroduction of jury trials\. In 1993 jury trials were reintroduced, a milestone in Russia’s judicial reforms\. Jury trials existed in Tsarist Russia, since the 1864 judicial reform, but were later repealed by the Soviet state\. Jury trials – by empowering juries alone, not judges, to pronounce guilt - were intended to make judicial proceedings more objective and independent and reduce corruption, bribery and undue/inappropriate influence on judges\. Due to budget constraints, jury trials were first introduced as an experiment in some regions but it became the first stage of the full-fledged reintroduction of jury trials in Russia\. When citizens’ right to trial by jury was enshrined in the 1993 RF Constitution, the introduction of jury trials in all regions became inevitable, although due to different obstacles (e\.g\. budget constraints and turbulence in some regions) jury trials could not be fully introduced across Russia until 2003 (indeed it was introduced in the Chechen Republic only in 2010)\. 1991-1993 – other reforms\. During 1990-93, numerous other reforms were introduced by highly respected and reform-minded legal scholars and practitioners who began to shape the emerging judiciary in Russia\. For example, key principles and guarantees of judicial independence and of due process (especially with regard to criminal procedure) were reflected in relevant laws and then in the new 1993 Constitution\. 1996 - administrative and operational independence of the judiciary from the executive\. The next step for Russia’s courts was to gain administrative and operational independence from the executive\. In 1996 the Federal Constitutional Law “On Judicial System of the Russian Federation” repealed the existing system of administrative control over the judiciary by the Ministry of Justice (MOJ) and established a Judicial Department (JD) under the RF SC\. The JD had already been created in 1998, but the 1996 law gave it true authority and control over CGJs: as a result, the judiciary – through the JD - gained actual control over financing of federal CGJs20\. The structure and functions of the JD are in the Federal Law “On Judicial Department under the Supreme Court of the Russian Federation”\. The Law tasked the JD with personnel, organizational and material 20  Because the arbitrazh court system was established from scratch in 1991, the SAC already had control over financing of the commercial court system – this was already reflected in relevant legislation\. This was also the case with the CC\. Both the CC and the SAC established administrative and financial departments within their respective structures\.)  Page 85 of 148 The World Bank Judicial Reform Support Project (P089733) support to the courts of general jurisdiction21\. In addition, the JD also provides material and technical support to the bodies of judicial self-government\. 1998 – reintroduction of Justices of the Peace (JPs)\. A 1998 landmark Federal Law “On Justices of the Peace in the Russian Federation” restored the institution of JPs which first appeared in Russia as part of the reforms of Alexander II in the late nineteenth century\. According to the Law JPs became regional judges of general jurisdiction, appointed by regional legislatures\. Significantly, all JP-related expenditures (salaries, allowances, other operating and capital costs) were to be borne by regional governments\. JPs’ jurisdiction on criminal and civil cases was set in federal procedural law, although the jurisdiction with regard to administrative offences was to be set by regional legislation\. The main tasks of the JPs were to “guard and protect rights, freedoms and legitimate interests of individuals and legal entities” by adjudicating petty criminal cases (i\.e\. offences with a maximum sentence of up to three years imprisonment), the bulk of administrative offenses and small civil claims up to RUR50,000\. The restoration of the institution of JPs was driven by growing case backlogs in courts and public pressure for “fast, right and fair” courts22 - district-level CGJs had become overloaded with cases and could not cope with the rising workload and increasing delays in processing cases, especially civil disputes\. In addition, most district courts were located in district centers and were not easily accessible for rural dwellers\. The JPs fulfilled the need for arrangements to swiftly adjudicate uncomplicated and frequent disputes, and located closer to the population they served\. Budgetary constraints since 1991 and how they were addressed\. The above reforms could not be fully implemented due to insufficient budgetary funding and frequent budget sequestrations\. According to the 1991 RSFSR Law “On Fundamental Principles of the Budget Organization and Budgetary Process” the state budget was developed by the Council of Ministers and had to be balanced\. If the budget was exceeded or if revenues fell, expenditures had to be sequestrated\. Such sequestration resulted in proportional lowering of monthly state allocations and expenditures on all budget items, except protected ones, during the fiscal year\. For example, in the draft budget for 1996 the MOJ requested a minimum of RUR5\.5 billion\. This request was reduced and the 1996 budget provided only RUR1\.9 billion instead of the amount requested by the MOJ23: the approved budget of the CGJs was less than half the budget request\. Such situations left their mark: judges took the reforms into their own hands and mainly tried to secure their minimally required budgets\. This also had an impact on legislation: on 10 January 1996, in an effort to maintain decent living conditions for judges, the Federal Law “On Additional Guarantees of Social Protection of Judges and Court Personnel” was passed\. Under this law, in addition to monetary salaries, judges received substantial additional benefits\. This marked the first phase of the struggle for adequate financing for courts\. Later, the 1999 Federal Law “On Court Financing in the Russian Federation” provided for the implementation of the constitutional provision on direct federal financing of courts\. Several additional guarantees stipulated in this law included (a) financing of courts according to the 21 Inthis respect, the JD’s role and functions somewhat resemble those of the Administrative Office of federal courts in the United States, in terms of providing financing and technical/ material support for the courts it supports\. 22 Alexeev S\.S\. Obschaya teoriya prava [General Theory of Law]\. vol\. 1\. - М: Prospekt, 2008, p\. 294\. 23 Report of the Head of the Council of Judges Yuri Sidorenko on the work of the Council of Judges, accessible at: http://www\.ssrf\.ru/page/844/detail/ Page 86 of 148 The World Bank Judicial Reform Support Project (P089733) standards authorized by the federal law and with the indication of each of the branches of judicial authority in the budget by a separate line, (b) interaction of the Russian Federation Government, in the course of development of the draft budget for the courts, with the presidents of the CC, SC, SAC and the Council of Judges, (c) the opportunity for court representatives to participate in the discussion on the federal budget in the Federal Assembly, and (4) a requirement to secure the consent of the All-Russia Congress of Judges or the Council of Judges to any reduction in the size of the approved annual budget for courts\. The creation of the JD could be also attributed partly to judicial efforts to strive for adequate financing for courts\. Overview of first decade of judicial reforms\. Reviewing the first decade of judicial reforms, it was said that “the courts had gained key elements of independence (tenure and self-rule) and power (new jurisdiction) but lacked others (financial security; authority to secure implementation)\. At the same time, severe underfunding and the delays in procedural reform held back progress in making the courts fair, efficient, and accessible”24\. 2000 – additional steps to strengthen the judiciary\. In 2000 several policy declarations referred to the role of a strong judiciary for the development of the country\. For example, a Presidential declaration in 2001 stated that an “Independent and impartial tribunal means that citizens are legally protected” and an independent judiciary was seen as “a fundamental prerequisite for the development of healthy and competitive economy\. Finally, this is respect to the State itself, giving credit to the authority of law and justice”25\. The 2002-2006 FTP “Development of Judicial System” further increased the judiciary budget, including higher salaries and bonuses for judges\. 2001-2004 judicial reform measures\. During 2001-2004 several significant steps were taken to improve the functioning of the judicial system and promote further judicial reforms\. These included: (a) setting the hierarchy of normative legal acts and elimination of contradictions between normative acts of different levels (including those of federal and regional levels) by adopting the Decree “On Legal Acts’ Classifier”; (b) enactment of new procedural codes (Criminal Procedure, Civil Procedure and Arbitrazh Procedure), which recognized modern procedural rules ensuring equality among parties and corresponding to the principles of international law enshrined in the UN International Covenant on Civil and Political Rights and the European Convention for the Protection of Human Rights and Fundamental Freedoms; (c) elimination of the role of regional legislatures in judges’ appointment and promotion; and (d) a substantial increase in court financing including raising judges’ salaries (while decreasing the number of existing benefits), (e) increasing the number of JPs, thereby reducing the workload of district court judges, (f) expanding jury trials across Russia, (g) increasing the number of judicial staff, (h) renovating courthouses and courtrooms, and (i) first steps towards modern automation of the judicial system26\. In 2001 a 24 Peter H\. Solomon Jr\., “Assessing the Courts in Russia: Parameters of Progress under Putin” in Demokratizatsiya, 2008 Heldref Publications\. P\. 66, accessible at: https://www2\.gwu\.edu/~ieresgwu/assets/docs/demokratizatsiya%20archive/GWASHU_DEMO_16_1/38876Q5X895 46626/38876Q5X89546626\.pdf 25 Borba s korruptsiiei i politicheskim vliyaniiem v sudebnoi sisteme [Fighting Corruption and Political Influence in Judicial System]\. URL: http://ru-bespredel\.com/index\.php?newsid=1354 26  Someinitiatives (e\.g\. drafting procedural codes) were developed during the end of the nineties; they could not be implemented mainly due to budget constraints\. Page 87 of 148 The World Bank Judicial Reform Support Project (P089733) package of measures signed into law introduced disciplinary responsibility for judges, limited the broad immunity from prosecution earlier enjoyed by judges and limited the tenure for presidents of all courts (except the CC) to two consecutive six-year terms\. The 2002 Federal Law “On the Bodies of Judicial Community” established new formations of qualification collegiums, adding public representatives and one representative of the President into their structures\. 2008-2011 reforms\. During 2008-2011 several major steps were taken to modernize the judicial system and procedures\. For example: (a) the rules on public and mass media access to judicial information finally received their recognition in legislation; (b) to fight corruption in the judicial system the Law “On the Status of Judges” was amended to compel judges to recuse themselves in case of a conflict of interest, established a prohibition for judges to accept any remuneration with regard to exercising their authority which is not provided by Russian legislation (loans, monetary and other kinds of payments, services, financial coverage of entertainment, resort, transportation expenses) from individuals and legal entities, and mandated declaration of judges’ income and assets together with the income and assets of their spouses and underage children; (c) abolished the “probation period” for newly appointed federal judges; (d) to further improve disciplinary responsibility of judges, a Disciplinary Tribunal was established to hear appeals against decisions of the High Qualification Collegium and regional qualification collegia of judges on early termination of judicial powers for commission of disciplinary offences; (e) in accordance with the European Court of Human Rights jurisprudence the right to receive compensation for not completing a trial or proceeding within a reasonable time was enshrined in the law; (f) the system of continuous professional training of judges was improved by the introduction of special six- month training for newly appointed judges; (g) the selection system for judicial candidates was enhanced by separation of examination commissions from qualification collegia of judges and making them independent bodies; (h) full-fledged appeal procedures were introduced in CGJs which substantially decreased the timeframe for consideration of appeals; (i) a specialized Court for Intellectual Property Rights was established within the arbitrazh court system, (j) the Criminal Procedure and Civil Procedure Codes were amended to permit random case assignment to judges and the possibility of automated random allocation of cases to judges\. In addition, two packages of amendments were made to the Criminal Procedure Code: in 2008 jury trials were eliminated for cases involving terrorism charges and anti-government activities and in 2009 the institution of pre- trial cooperation agreement was introduced into Russian criminal procedure, further simplifying it\. Lastly, the election of the CC President (by his/her peer judges) was abolished and replaced by Presidential nomination and Federation Council approval\. 2013-2014 - fundamental changes to the structure of the higher judiciary\. The next stage of judicial reform was announced in 2013\. It was decided to merge the SC and the SAC to “provide for the uniform approach in considering disputes with the participation of both individuals and legal entities as well as bodies of state power and local self-government”27\. In December 2013 the State Duma (Lower House of the Russian Parliament) approved amendments to nine articles of the Constitution: the SAC was to be abolished and its powers transferred to a ‘renewed’ SC whose 27President Putin’s presentation at the Plenary Session of St\. Petersburg International Economic Forum\. URL: http://kremlin\.ru/events/president/news/18383 (Last accessed 08\.01\.2018) Page 88 of 148 The World Bank Judicial Reform Support Project (P089733) members were to be freshly appointed and a Judicial Collegium for Economic Disputes also established\. This Law on Constitutional Amendments became effective on February 6, 2014 after approval by more than two-thirds of Russian regions\. The Law provided for a six-month transition period during which the new qualification collegium of judges (established specially for this purpose) selected judicial candidates for the new court and set new, more rigid standards of judicial selection\. The new consolidated SC became fully operational on August 6, 2014\. In addition, the Constitutional amendment also abolished the Disciplinary Tribunal and established a new Disciplinary Collegium within the ‘renewed’ SC\. 2013 and after – other measures\. Several initiatives to further modernize the judicial system were implemented\. For example: (1) the 2013-2020 FTP “Development of the Judicial System” provided for further increase in financing of the judiciary; (2) the system of judges’ remuneration was modernized; (3) to improve resolution of commercial disputes and increase the authority of civil and commercial arbitration, a new Law on Arbitration (Arbitration Procedure) was adopted in 2014; (4) a highly anticipated Individual Bankruptcy Law finally became effective introducing not only new procedures for such disputes but dramatically changing arbitrazh courts’ jurisdiction – allowing them to consider disputes involving natural persons (i\.e\. individuals) in addition to individual entrepreneurs and enterprises; (5) in order to distribute caseloads more evenly among JPs, new powers to redistribute cases between judicial sub-district were given to presidents of district courts, and appointment of retired judges as acting JPs was introduced; (6) as a new guarantee of judicial independence, judges were obliged to publish any communications from legislative or executive officials with regard to cases in their dockets; (7) a new Administrative Procedure Code was adopted to regulate judicial control over the legality and reasonableness of exercising state and other public authority; (8) reform of civil legislation including changes to the law of obligations (performance, security and termination of obligations, and liability for breach of obligations) and general contractual provisions; (9) jury trials also became available in district and garrison military courts so many more litigants could now exercise their right to be tried by their peers; (10) new procedures were introduced, such as summary (writ) proceedings and mandatory use of extrajudicial means of settlement before applying to an arbitrazh court – these aimed to exempt arbitrazh courts from lengthy consideration of undisputed debts where the claim was not more than RUR500,000\. The SC took initiatives to improve the humanization of criminal law and procedure\. For example, in July 2016 several offences previously included in the Criminal Code were decriminalized, for example simple battery and non-payment of alimony\. The SC proposes to introduce a new concept of a “misdemeanor” for those crimes now characterized by the Criminal Code as “crimes of minor gravity”\. Such crimes are intended to be punished by suspended sentences and a person who committed a misdemeanor for the first time would not have it entered into his/her criminal record28\. The SC also announced an initiative to create interregional appellate and cassation courts in the CGJ system, analogous to the arbitrazh court system, proposing to establish five interregional 28Yuri Belov\. Vyacheslav Lebedev gotovit “ugolovny prostupok”\. Predsedatel’ Verkhovnogo Suda rasskazal o gumanizatsii ugolovnogo zakonodatel’stva [VyacheslavLebedev is preparing a “misdemeanor”\. President of the Supreme Court Tells About the Humanization of Criminal Legislation]\. Kommersant, 21\.09\.2016\. URL: https://www\.kommersant\.ru/doc/3094716 Page 89 of 148 The World Bank Judicial Reform Support Project (P089733) appellate courts to review cases considered by regional level courts as trial courts and nine cassation courts to perform cassation review of those cases instead of the SC\. According to the SC this reform, requiring 170 additional judges’ positions for appellate courts and 790 for cassation courts, would cost RUR831 million\.29 Automation of court procedures and functions\. Major actions were taken to increase court automation\. From January 1, 2017 the justice function became more accessible to the public due to the coming into effect of the 2016 Federal Law "On Introduction of Amendments into Certain Legislative Acts of the Russian Federation in Terms of Using Electronic Documents in the Activities of the Judiciary": civil claims, applications, complaints and petitions within civil, arbitrazh, administrative and criminal procedure could be submitted electronically through personal accounts at court websites or through the Public Services Portal\. It is also possible to receive judicial decisions electronically\. All documents shall be signed by the electronic digital signature but it is not mandatory to receive it as it would be possible to sign electronic documents through the Unified Identification and Verification System which gives access to the Public Services Portal\. The CC also provides an advanced search option on its website, allowing users to search court resolutions and other acts by case number, case participant surname, or text of the resolution\. Related documents including relevant ECHR decisions are attached to the search results\. The video-conference system implemented in CGJs and arbitrazh courts allows the conduct of trials involving participants from remote locations or defendants in detention\. In 2017 the new Law unified standards for live broadcasting of court hearings on TV and radio, live streaming on the Internet and Internet publication of judicial decisions\. According to this Law, allowing live streaming of court hearings can be decided by the court itself\. Upon such a decision, the live stream becomes accessible to all Internet users\. The rapid development of artificial intelligence has led to discussions about making judicial proceedings more efficient, for example further automation of legal drafting and enforcement of law, generation of routine decisions using artificial intelligence (AI) and creation of an automated monitoring system for courts’ jurisprudence\. Creation of an automated system for legal decision support is envisaged to include services for automatic generation of routine legal documents, and an electronic risk management system to analyze judicial decisions for errors and corruption\.30 29 Anastassiya Kornya\. Verkhovny Sud odobril sozdaniye sistemy apellyatsionnykh i kassatsionnykh sudov [Supreme Court Approves the Establishment of Appeal and Cassation Courts’ System], Vedomosti, 14\.07\.2017\. URL: https://www\.vedomosti\.ru/politics/articles/2017/07/14/723566-apellyatsionnih-kassatsionnih-sudov 30 Nadezhda Krasnushkina, Andrey Raisky, Yevgeniya Kruchkova, Denis Skorobogat’ko\. Sudebny protsessor\. Pravitel’stvo obsuzhdaet ispol’zovaniye iskusstvennogo intellekta v pravovoi sfere [Judicial Processor\. The Government is Discussing the Possibility of Using Artificial Intelligence in the Legal Sphere]\. Kommersant, 13\.11\.2017\. URL: https://www\.kommersant\.ru/doc/3466185?ref=tjournal\.ru Page 90 of 148 The World Bank Judicial Reform Support Project (P089733) ANNEX 7\. JRSP SURVEYS – SUMMARY OF KEY RESULTS  Five rounds of user surveys were conducted under Component A of the JRSP (2010, 2011, 2012, 2013 and 2017)\. The surveys covered the general public (i\.e\. individuals), businesses, professional users (e\.g\. lawyers, bailiffs and notaries) and court personnel\. Key extracts from these surveys are presented in this Annex\. The results of the first round of surveys were published by the BEA (the PIU at the time) and by the Levada Center (which was awarded the contract for the first four rounds of the surveys)\. In addition, two surveys were conducted for the MCC in 2017: they are summarized in a separate Annex\. Part A\. Key Extracts From Survey Responses (2010-2017) The key messages from the surveys are: ï‚ Public trust in courts is gradually rising (Figure 7\.1); ï‚ Public trust in courts is lower than other institutions such as the church and armed forces; ï‚ Enterprises feel that private property rights protection is improving (Figure 7\.2); ï‚ TV news and TV court programs, newspapers and magazines remain key information sources for citizens about the judiciary - online sources are still insignificant; ï‚ Information channels such as online sources and publications remain less significant for citizens as a source of information; and ï‚ For enterprises, the main sources of information about the judiciary are websites of courts and online legal databases\. Below are year-wise responses to key survey questions\. Question: Can an ordinary Russian citizen have his/her case considered fairly and without prejudice by the court? (General public) 2006 2007 2008 2009 2010 2012 2013 2017 Trust 0\.46 0\.55 0\.56 0\.46 0\.64 0\.73 0\.51 0\.76 coefficient Figure 7\.1 Can An Ordinary Russian Citizen Have His/Her Case  Considered Fairly & Without Prejudice By The Court? (General  Public: % Responding "Yes")  80 70 60 50 40 30 2009 2010 2012 2013 2017 Page 91 of 148 The World Bank Judicial Reform Support Project (P089733) Question: What is your main source of information about the judicial system and courts’ activities? (General public) 2010 2011 2012 2013 2017 TV news, information channels 63 62 61 60 57 TV mock trials like “The Court is in Session”, 57 56 50 44 31 “The Court’s Hour”, “Judicial Passion” Newspapers and magazines 32 32 29 31 22 Films and TV series 22 24 24 25 22 Relatives or acquaintances having experience in 25 23 27 20 23 litigation Radio channels 7 10 7 9 7 Internet sources 4 5 10 8 15 Specialized web sites 7 5 10 7 8 Belles-lettres, fiction 5 3 4 4 3 Personal experience in litigation 10 7 8 5 9 Specialized scientific literature, magazines 5 3 4 4 3 Courts’ web sites - 3 - 4 4 Educational TV channels, text books 5 4 5 3 4 Popular lectures, lawyers’ interviews 2 2 3 3 2 Specialized legal databases 2 1 3 2 3 Professional activity 2 3 2 2 3 Not interested in such information 7 9 11 11 13 Question: Do you trust the following institutions? (General public) Do trust Do not trust Trust resource Second Fourth Fifth Second Fourth Fifth (difference wave wave wave wave wave wave between “do 2011 2013 2017 2011 2013 2017 trust” and “do not trust”) as of 2017 President 74 63 81 23 33 16 65 Church 69 63 59 24 29 31 28 Army (armed forces) 55 62 75 38 34 19 56 Security Service 58 61 66 29 32 23 43 (FSB) Government 63 51 57 33 44 39 17 Prosecution Service 47 51 55 44 44 38 17 Presidential 54 47 59 36 44 31 28 Administration Human Rights 48 46 50 39 44 35 16 Page 92 of 148 The World Bank Judicial Reform Support Project (P089733) Organizations Judicial system 41 44 49 50 50 43 6 Federation Council 45 41 49 40 47 38 11 State Duma 42 39 44 52 56 50 -6 Police 31 38 48 63 57 45 2 Trade unions 36 46 40 48 52 42 -2 Political parties 28 26 31 63 68 60 -29 Question: How high is the public standing of the following institutions in the community? (General public) 2011 2013 2017 2011 2013 2017 2011 2013 2017 Very high + Rather Very low + Rather low Hesitate to answer high Church 72 63 61 19 30 29 9 7 10 Government 65 49 62 29 46 32 7 5 6 Special 63 65 69 21 26 19 16 9 13 services (FSB etc\.) Army 46 55 73 47 41 20 7 5 6 State Duma 45 38 50 48 57 42 7 5 8 Businesses 43 44 52 47 46 36 11 9 13 Courts 41 44 54 49 50 37 9 6 9 Human Rights 41 40 43 43 48 38 16 12 19 Organizations Public 37 35 40 36 49 37 27 16 22 Chamber Law 34 38 53 58 56 37 8 6 10 enforcement Question: Public Standing Index Second wave (2011) Fourth wave (2013) Fifth wave (2017) Church 53 33 32 Government 36 3 30 Special forces 42 39 50 (FSB etc\.) Army -1 14 53 State Duma -3 -19 8 Businesses -4 -2 16 Courts -8 -6 17 Human Rights -2 -8 5 Organizations Page 93 of 148 The World Bank Judicial Reform Support Project (P089733) Public Chamber 1 -14 3 Law enforcement -24 -18 16 Question: Do you trust the following courts? (General public) Fully trust + Fully distrust + Do not know, Trust index Rather trust Rather distrust hesitate to answer Waves Wave Waves Wave 5 Waves 1- Wave Waves 1- Wave 1-4, 5 1– 4, (2017) 4, 5 4, 5 average (2017) average average (2017 average (2017 ) ) Supreme 59 64 22 21 2\.7 3\.0 19 15 Court Constitutional 55 61 23 22 2\.4 2\.8 Court Justices of the 52 55 30 30 1\.7 1\.9 18 15 Peace Supreme Arbitrazh 49 57 23 22 2\.1 2\.6 28 21 Court Jury trials 48 52 33 30 1\.4 1\.7 19 18 Federal courts of 44 48 39 35 1\.1 1\.4 17 17 general jurisdiction Constitutional (charter) 43 52 26 25 1\.6 2\.1 31 24 courts Arbitrazh 42 47 28 30 1\.7 1\.6 30 24 courts Question: Do you think today’s judiciary is really independent? (General public) 2010 2011 2012 2013 2017 Yes, to a great extent 7 7 7 6 6 Yes, to a certain extent 27 23 27 26 29 No, to a small extent 39 31 42 49 31 No, completely dependent 17 27 15 24 20 Hesitate to answer 10 11 8 10 15 Question: Which of the following do you trust most? (General public) Average 2010 2011 2012 2013 2017 Page 94 of 148 The World Bank Judicial Reform Support Project (P089733) Judges Fully trust 6 7 6 6 6 8 Rather trust 45 47 44 46 44 48 Rather distrust 34 31 34 35 35 39 Fully distrust 8 8 8 7 9 8 Hesitate to answer 7 7 8 7 7 7 Advocates Fully trust 8 9 10 6 9 9 Rather trust 52 53 52 55 49 53 Rather distrust 25 24 24 25 29 23 Fully distrust 7 7 6 7 7 7 Hesitate to answer 7 7 8 7 6 8 Prosecutors Fully trust 6 5 7 6 7 8 Rather trust 42 43 41 42 43 45 Rather distrust 34 31 34 35 34 30 Fully distrust 9 9 8 8 9 8 Hesitate to answer 9 11 10 10 6 9 Investigators Fully trust 5 4 4 5 5 6 Rather trust 36 39 35 36 35 42 Rather distrust 39 37 40 40 40 34 Fully distrust 11 11 11 11 12 9 Hesitate to answer 9 10 9 9 8 9 Notaries public Fully trust 13 15 12 12 12 15 Rather trust 55 56 54 58 53 55 Rather distrust 20 18 21 19 23 17 Fully distrust 5 5 5 4 7 5 Hesitate to answer 7 6 7 7 5 8 In-house lawyers Fully trust 6 6 6 7 7 8 Rather trust 45 44 43 47 45 47 Rather distrust 28 27 29 25 30 24 Fully distrust 9 10 9 7 9 7 Hesitate to answer 13 13 14 14 10 14 Human rights defenders Fully trust 8 7 7 9 9 9 Rather trust 47 49 45 50 44 47 Rather distrust 25 23 26 22 28 24 Fully distrust 8 8 8 7 8 7 Hesitate to answer 13 14 14 13 11 14 Policemen Page 95 of 148 The World Bank Judicial Reform Support Project (P089733) Fully trust 3 2 3 3 5 7 Rather trust 27 27 27 29 29 39 Rather distrust 42 41 43 40 44 33 Fully distrust 21 24 23 20 16 12 Hesitate to answer 7 6 7 8 6 9 Trust index (justice sector) 2010 2011 2012 2013 2017 Notaries public 3\.1 2\.5 3\.0 2\.2 3\.2 Advocates 2\.0 2\.1 1\.9 1\.6 2\.1 Human rights defenders 1\.8 1\.9 2\.0 1\.5 1\.8 In-house lawyers 1\.3 1\.3 1\.7 1\.3 1\.8 Judges 1\.4 1\.2 1\.2 1\.1 1\.5 Prosecutors 1\.2 1\.1 1\.1 1\.1 1\.4 Investigators 0\.9 0\.8 0\.8 0\.8 1\.1 Policemen 0\.5 0\.4 0\.5 0\.6 1\.0 Question: How would you assess the following? (General public) Average 2010 2011 2012 2013 2017 Public standing of Russian judges Very high 6 6 6 6 5 9 Rather high 38 42 34 36 39 42 Rather low 39 37 40 40 41 29 Very low 7 7 8 8 6 6 Hesitate to answer 10 8 13 10 9 13 Ratio of opposite opinions 0\.9 1\.0 0\.9 0\.9 0\.9 1\.4 Qualification and expertise of Russian judges Very high 5 6 4 6 5 8 Rather high 44 48 43 43 43 46 Rather low 30 26 29 31 32 24 Very low 5 4 6 4 5 5 Hesitate to answer 16 17 18 16 15 18 Ratio of opposite opinions 1\.4 1\.9 1\.3 1\.4 1\.3 1\.9 Moral qualities of Russian judges Very high 4 5 3 4 4 5 Rather high 29 31 28 27 30 33 Rather low 38 35 37 40 41 31 Very low 9 9 9 9 8 9 Hesitate to answer 20 21 22 21 18 21 Ratio of opposite opinions 0\.7 0\.8 0\.7 0\.6 0\.7 0\.9 Independence of Russian judges Page 96 of 148 The World Bank Judicial Reform Support Project (P089733) Very high 4 4 4 4 4 5 Rather high 23 24 22 22 26 28 Rather low 45 44 45 45 45 37 Very low 13 13 13 16 12 12 Hesitate to answer 14 14 16 13 13 18 Ratio of opposite opinions 0\.5 0\.5 0\.4 0\.4 0\.5 0\.7 Human qualities of Russian judges Very high 3 3 3 4 3 5 Rather high 27 31 25 26 27 30 Rather low 40 37 39 39 43 33 Very low 10 9 11 10 10 12 Hesitate to answer 20 19 21 21 17 21 Ratio of opposite opinions 0\.6 0\.7 0\.6 0\.6 0\.6 0\.8 Attentiveness of Russian judges Very high 4 4 3 4 3 5 Rather high 25 29 23 23 24 27 Rather low 43 39 43 43 46 37 Very low 12 12 13 13 12 13 Hesitate to answer 17 16 18 17 15 18 Ratio of opposite opinions 0\.5 0\.6 0\.5 0\.5 0\.5 0\.6 Fairness of Russian judges Very high 4 4 3 4 3 5 Rather high 25 28 23 23 27 30 Rather low 42 39 42 45 42 33 Very low 12 13 13 12 12 12 Hesitate to answer 17 17 19 16 16 19 Ratio of opposite opinions 0\.5 0\.6 0\.5 0\.5 0\.6 0\.8 Russian judges’ devotion to duty Very high 5 - 4 6 5 7 Rather high 30 - 28 29 33 34 Rather low 36 - 35 36 37 29 Very low 10 - 10 9 10 10 Hesitate to answer 19 - 22 20 15 19 Ratio of opposite opinions 0\.8 - 0\.7 0\.8 0\.8 1\.0 Courage of Russian judges Very high 5 - 4 - 5 7 Rather high 28 - 26 - 30 32 Rather low 34 - 33 - 36 27 Very low 12 - 13 - 12 10 Hesitate to answer 21 - 24 - 18 24 Ratio of opposite opinions 0\.7 - 0\.7 - 0\.7 1\.1 Judges’ qualities index Page 97 of 148 The World Bank Judicial Reform Support Project (P089733) Average 2010 2011 2012 2013 2017 Qualification and expertise 1\.4 1\.9 1\.3 1\.4 1\.3 1\.9 Public standing 0\.9 1\.0 0\.9 0\.9 0\.9 1\.4 Devotion to duty 0\.8 - 0\.7 0\.8 0\.8 1\.0 Moral qualities 0\.7 0\.8 0\.7 0\.6 0\.7 0\.9 Courage 0\.7 - 0\.7 - 0\.7 1\.1 Human qualities 0\.6 0\.7 0\.6 0\.6 0\.6 0\.8 Fairness 0\.5 0\.6 0\.5 0\.5 0\.6 0\.8 Attentiveness 0\.5 0\.6 0\.5 0\.5 0\.5 0\.6 Independence 0\.5 0\.5 0\.4 0\.4 0\.5 0\.7 Question: What issues in judges’ work are the most acute from your point of view? (General public) 2010 2011 2012 2013 2017 Bribery, corruption of judges and court personnel 56 59 55 48 45 Judges’ dependence on the authorities and 46 45 50 40 39 influential groups Absence of equality of parties in court proceedings: for example public officials have 25 27 30 25 27 priorities over ordinary citizens Red tape, delays, unproductivity 29 26 26 25 20 Low public standing of judges 17 24 17 25 14 Question: Are you ready to sue a …? (Index) 2010 2011 2012 2013 2017 Judge 0\.42 0\.55 0\.42 0\.46 0\.8 Investigator 0\.54 0\.76 0\.54 0\.59 1\.0 Public official 0\.59 0\.78 0\.58 0\.65 1\.0 Policeman 0\.72 0\.94 0\.62 0\.9 1\.1 Public employer 1\.2 1\.6 1\.2 1\.4 1\.8 Private employer 1\.3 1\.7 1\.4 1\.4 2\.2 Question: When your rights were violated did you apply to…? (General public) Second wave (2011) Fourth wave (2013) Fifth wave (2017) State institutions 14 16 8 Court 15 10 21 Prosecution service, law 8 6 13 enforcement agencies Acquaintances that can 5 5 5 Page 98 of 148 The World Bank Judicial Reform Support Project (P089733) settle the case Executive bodies of any 10 4 7 level Police 7 3 15 Influential public officials 2 2 2 Your member of the 4 1 1 parliament Mass media 2 1 2 Public and human rights 5 0 6 organizations Arbitration tribunals 0 0 1 Criminal groups 0 0 0 Other 1 2 5 Did not apply anywhere 42 57 37 Question: Are your private property rights protected? (Entrepreneurs) Second wave Third wave Fourth wave Fifth wave (2011) 812 (2012) 823 (2013) 802 (2017) 800 respondents respondents respondents respondents Yes/rather yes 43 48 52 51 No/rather no 54 50 45 44 Hesitate to 3 2 4 6 answer Figure 7\.2 Enterprises’ Response – Improved Protection of Property Rights Page 99 of 148 The World Bank Judicial Reform Support Project (P089733) Question: What are your sources of information on the arbitrazh courts’ activity? (Entrepreneurs) 2010 2011 2012 2013 2017 Legal databases (“Garant”, Consultant+”) 67 70 74 58 54 Supreme Court, Constitutional Court web sites 38 47 50 58 21 First instance arbitrazh courts’ web sites 32 34 36 43 49 Information exchange with the colleagues 29 29 25 22 25 Professional magazines 28 24 22 17 4 Newspaper articles (“Vedomosti”, Kommersant”) 20 17 13 14 25 Specialized literature 16 11 11 10 15 Other web sites, blogs 10 9 12 9 1 TV programs 13 10 7 6 14 Question\. How important are the following systems for you? General Court Professional Population Personnel Users External Internet portal of MCC and Moscow 62 64 59 district courts Data exchange system between the courts of 57 64 50 different levels Accessibility of all subsystems of the Integrated 57 64 48 Information System of Moscow CGJ Possibility of conducting videoconferences with 55 56 55 detention centers and prisons\. Unified archive of judicial documents and case 54 59 48 files with bar codes application\. Unified storage of audio and video records of court sessions; installation of audio and video 54 60 47 recording equipment in courtrooms\. Information and analytical system – unified 52 57 45 database of MCC and Moscow district court cases Internal Internet-portal of MCC and Moscow 50 57 42 district courts Automation of case files’ archiving function before their destruction after the expiration of their 48 51 45 storage time or transfer to the Central Archive for life storage Access to video records of court sessions to external users including live broadcasting and 46 43 49 streaming\. Page 100 of 148 The World Bank Judicial Reform Support Project (P089733) Part B\. 2017 Survey of General Public Constitutional state\. The main criteria of the rule of law for the population are equality before the law (57 percent), law compliance (55 percent), respect for human rights and fundamental freedoms (47 percent)\. However, 39 percent of Russians believe that they are not under the protection of the law\. They often think that laws are freely interpreted by authorities and there are too many people feel that they are above the law\. Subjective assessments of knowledge of own constitutional rights are at a low level: only 3 percent of Russians claim that they are very well aware of their constitutional rights, another 20 percent say they know their rights well\. 41 percent of respondents believe that judicial proceedings will be considered by the court fairly and impartially\. 60 percent of Russians know about the European Court of Human Rights in Strasbourg\. However, only a third of them is ready to apply to the court to protect their interests\. Overall, 64 percent of Russians have a positive attitude towards a jury trial, but only 36 percent of respondents are ready to be on the jury\. Awareness about the Russian judicial system\. Russians assess the level of accessibility of information on the activities of courts at a low level\. Only 4 percent of respondents note that information is fully available, another 20 percent say it is more likely to be available\. Only 2 percent of Russians know very well how the judicial system in Russia operates\. Another 13 percent say they know it well\. However, 50 percent of the population have only a general idea of the judicial system and every third (33 percent) knows nothing about it\. A low level of awareness about Russian judicial system is associated with a low level of interest and willingness of the population to understand how it is arranged\. Only 22 percent of respondents claim that they are interested in information about the judicial system operation in Russia\. The main source of information about the judicial system in Russia is news on TV (57 percent)\. On the second place is themed programs and talk shows (31 percent)\. Independence of the judiciary\. Half of Russians believe that the judiciary is currently dependent on other branches of government (51 percent)\. 35 percent of respondents say that the judicial system in Russia is independent\. It should be noted that a third of Russians consider that courts must be dependent on other branches of government\. According to citizens, the strongest pressure on judges is provided by federal and higher judicial authorities\. The most urgent problems in the judicial system operation are: 45 percent of Russians pay attention to bribery, corruption of judges and court personnel, 39 percent on dependence of judges on authorities and influential groups and 27 percent on the violation of the principle of equality of parties in judicial proceedings\. Key measures that could raise the authority of courts in Russian society are: increasing the competence of judges and the quality of their education, raising the public awareness about the work of judges, a possibility for people to choose or recall judges\. Situations related to violation of rights\. Over the last 12 months, 10 percent of Russians were faced with a conflict situation related to the violation of rights or the need to protect them\. Most often, these conflict situations arose in the housing, labor and family relations\. 61 percent of those who faced a conflict situation sought a legal advice\. 44 percent of them applied to the law office, 24 percent - to familiar lawyers, 21 percent - to law firms, 12 percent - to people who has already faced similar problems, 9 percent - in human rights organizations\. 15 percent of Russians have faced conflict situations that violate or prejudice their rights (except for criminal offenses) and Page 101 of 148 The World Bank Judicial Reform Support Project (P089733) these conflicts could be resolved in a court\. Most often, these conflict situations arose in the housing law, violations of property rights, family and consumer law\. 58 percent of Russians who faced such conflict situations applied to a court at least once\. 42 percent did not apply to a court in such situation, most often due to lack of time and energy, the bureaucracy and high financial costs for judicial procedure (18 percent)\. Actual experience with judicial proceedings\. 24 percent of Russians have attended court proceedings\. Most often, respondents were present at court in civil proceedings (63 percent), in criminal proceedings (36 percent) and in cases of administrative offenses (21 percent)\. 47 percent of Russians independently represented their interests at a trial\. 25 percent engaged a lawyer\. In 17 percent of cases there was a free lawyer appointed by a court\. Key reasons for refusal of Russians to engage lawyers: lack of money to hire a private lawyer and a low level of confidence in free legal aid or assistance from the state\. 55 percent of Russians believe that they have been explained their rights in court\. However, every third participant of the survey indicated that the rights were explained formally and fast (31 percent)\. Half the participants in the judicial proceedings said that they were well or generally familiar with the code of practice\. 68 percent of respondents were satisfied with the work of court officers and noted that court officers did everything that depended on them and all they were obliged to do\. 70 percent of Russians found the judge's decision fair and 26 percent found the decision unfair\. 43 percent of respondents incurred significant financial costs for family budget due to judicial procedure\. 33 percent of Russians said they would appeal to a court to protect their rights in the future\. However, 52 percent of respondents said they would not appeal to a court at all or would attend only in extreme cases\. Corruption in the Russia judicial system\. Only 7 percent of respondents believe that court officers are highly corrupt\. 50 percent consider that in federal courts of general jurisdiction bribes are often taken\. The main cause of the prevalence of corruption in the federal courts of general jurisdiction is self- interest of court officers (41 percent)\. Russians tend to clarify the representation of corruption in courts by the prevailing view in the society that all authorities in Russia take bribes (38 percent) and by the information from the media about cases of corruption in the courts (35 percent)\. Even though almost half of Russians support an opinion on corruption, 56 percent of respondents will not try to solve their problems in court giving a bribe\. 7 percent of respondents are aware of cases about corruption in courts personally or through relatives and friends\. Moreover, many representatives of this group (84 percent) answered that the case was related to a bribe\. A bribe was accepted in a half of the cases described, in a quarter - a bribe was not accepted\. Two- thirds of respondents who had relevant experience tried to bribe to achieve a desired decision and a quarter to speed up a trial process\. A third of those who bribed reported about the full achievement of a goal, 53 percent - about a partial achievement\. On measures that could reduce corruption in Russian courts, most respondents were inclined to tougher penalties for court officers (46 percent)\. One third of respondents considers that strengthening of control by the executive, legislative authorities will be effective (32 percent), and from higher courts (27 percent)\. Part C\. 2017 Survey of Businesses Constitutional state\. 47 percent of entrepreneurs consider that their property rights are protected\. However, 46 percent of respondents believe their rights are unprotected\. 52 percent of Page 102 of 148 The World Bank Judicial Reform Support Project (P089733) entrepreneurs are afraid of the deprivation of property (raiding)\. There is an atmosphere of partial trust and partnership\. 78 percent of respondents trust business colleagues, although only 17 percent are absolutely sure of their reliability\. Every fourth businessman is ready to work legally even with restrictions on business, other 45 percent entrepreneurs are inclined not to break the law\. 23 percent of respondent has an opposite opinion, even tenth evades a direct answer\. Participants explain that citizens and organizations apply to foreign courts due to their independence (41 percent), the absence of corruption (25 percent) and the use of better legal frameworks abroad (25 percent)\. Awareness about the Russian judicial system\. 37 percent of business representatives are interested in the practice of arbitration courts\. The main sources of information for business are such systems as «Garant» and « Consultant Plus» - 54 percent, official websites of the arbitration court - 49 percent\. Entrepreneurs are looking for a database of court decisions and appeals (63 percent), also comments and explanations of law enforcement practice (57 percent)\. 23 percent of entrepreneurs encounter difficulties in obtaining information about a court practice of arbitration courts\. It is caused by the lack of systematic information (48 percent), closed information (35 percent), poor quality and fragmentariness of information (29 percent)\. 65 percent of entrepreneurs support open access to texts of various documents of arbitration courts\. 45 percent of respondents say about possible negative consequences of the publication of documents of arbitration courts\. About the same number of participants in the survey do not expect negative consequences for enterprises in the case of the publication of such materials (41 percent)\. 16 percent of respondents know cases when the openness of information about the decision on their enterprise case led to undesirable consequences\. As a compromise, many entrepreneurs (60 percent) believe that it is necessary to give an open access to the texts of various documents of arbitration courts without specifying participants\. 26 percent indicate the need to specify the all information\. 49 percent of entrepreneurs consider that the media provide materials about a litigation in arbitration courts objectively, but 34 percent - not objectively\. 16 percent find it difficult to assess the work of the media\. Entrepreneurs pay attention to the fact that the media partiality is caused by the desire to submit the «hot» material (45 percent), «invited» articles (36 percent) and the desire to emphasize the correctness of state authorities that participated in the trial (32 percent)\. Independence of the judiciary\. 75 percent of entrepreneurs believe that courts in Russia must be independent of the country's leadership\. 12 percent of participants have the opposite opinion\. 15 percent of entrepreneurs believe that in Russia there are no independent judges\. 23 percent consider that many judges under any conditions are independent\. 16 percent say that a half of the judges are independent\. 17 percent believe that such judges are a minority\. The most frequent subject of pressure on judges of an arbitrazh court are stated to be influential persons (38 percent), a chairman or deputy chairman of an arbitrazh court (35 percent) and federal authorities (31 percent)\. Actual experience with judicial proceedings\. 46 percent of enterprises do not have their own legal service or department, or even one staff unit for the relevant specialist\. 29 percent of participants had to act in 2000-2016 as a plaintiff or defendant in litigation in an arbitration court\. Large businesses participated in court proceedings more often (70 percent), 40 percent in medium enterprises, 27 percent in small businesses, and 20 percent in microenterprises\. Many enterprises had legal proceedings with another enterprise, organization, bank (63 percent)\. Among those who took part in court proceedings their interests were most often represented by an internal lawyer (63 percent), every fifth respondents noted that the interests were represented by an invited lawyer (21 Page 103 of 148  The World Bank Judicial Reform Support Project (P089733) percent)\. 64 percent of respondents named contractual delinquency as the main reason for the arbitrazh court case\. 26 percent of entrepreneurs know about the possibility of attracting arbitration assessors who have the same powers as a federal judge\. The participation of an arbitration assessor had a positive effect on the case in court for 46 percent of entrepreneurs\. Almost a quarter of respondents noted the absence of any influence (23 percent)\. 66 percent of respondents are satisfied with the way the court proceedings were conducted\. 80 percent were satisfied with how the court dealt with the enterprise case\. Entrepreneurs complain that the trial was often postponed for various reasons (18 percent), and that the trial did not start for a long time (13 percent)\. 18 percent say that the judicial act that entered into legal force was not executed at all\. 11 percent of enterprises incurred significant financial costs for budget, 53 percent - insignificant, 34 percent - did not affect at all\. 20 percent of respondents will appeal to a court in all situations in the future\. 66 percent of the entrepreneurs go to a court if there is no other choice\. Only 12 percent of the respondents will try to resolve a conflict situation in a different way\. Corruption in the Russia judicial system\. 60 percent of respondents are not satisfied with ways which are used now to fight corruption\. Many entrepreneurs note that bribery hinders fair and impartial consideration of cases in a court, and therefore it is necessary to fight corruption (70 percent)\. 21 percent of respondents believe that corruption is present in arbitration courts to a small extent, 13 percent - to a large extent, 7 percent - note a very high level of bribery\. The main reason for the spread of corruption in arbitration courts is the fact that courts are the part of a government system whose agencies are characterized by a high prevalence of bribery (40 percent)\. Approximately the same number of respondents pay attention to the impunity of court officers (39 percent)\. 35 percent respondents consider the hidden nature of bribe taking and the hard-to-prove nature of this fact as the main reason for bribery in arbitration courts\. 15 percent of entrepreneurs are aware of the facts of bribery in the arbitration court of their region\. Among those who said that there are many such facts, a large proportion is in Moscow and Saint Petersburg (16 percent)\. 30 percent of respondents consider that organizations rarely have to bribe in order to speed up the trial or take the necessary decision in an arbitration court\. 16 percent - often give such payments\. 23 percent of respondents did not encounter such situations at all\.             Page 104 of 148 The World Bank Judicial Reform Support Project (P089733) ANNEX 8\. 2017 MOSCOW CITY COURTS SURVEYS – SUMMARY    1\. Two rounds of surveys were conducted in 2017 for the MCC: a baseline survey in February 2017 and a final survey in December 2017, before project closing\. The surveys covered litigants (i\.e\. court users), professional court users (e\.g\. lawyers, prosecutors, bailiffs and notaries) and court personnel (i\.e\. judges and court staff)\. The MCC published the survey report on its website (http://mos-gorsud\.ru/mgs/info/orders)\. This Annex summarizes key findings from these surveys\. The MCC plans to conduct the survey annually to track progress\. 2\. The final survey had higher positive responses to questions on changes to the court system (question 1) and there were higher positive responses about the changes in the MCC (question 2)\. The increased positive responses about the MCC may be attributed to the JRSP-financed next- generation MCC ICT system which went live from January 1, 2017: its functioning rapidly improved during 2017 as interagency coordination issues and technical issues were addressed\. Question 1\. From your perspective, how has Russia’s court system changed in the last 1-2 years? All respondents Final survey 29 34 8 15 13 Baseline survey 25 37 9 12 17 Court personnel Final survey 44 37 5 6 9 Baseline survey 32 46 4 8 11 Professional users Final survey 32 38 8 18 4 Baseline survey 26 42 10 13 9 General public Final survey 13 28 13 21 25 Baseline survey 18 23 13 15 32 Changed positively Some changes are positive, some are negative Changed negatively Did not change at all Hesitate to answer Question 2\. From your point of view, how has the MCC system changed in the past year? Page 105 of 148 The World Bank Judicial Reform Support Project (P089733) All respondents Final survey 28 33 6 17 17 Baseline survey 26 36 5 13 20 Court personnel Final survey 46 32 1 8 14 Baseline survey 38 37 1 8 15 Professional users Final survey 28 36 9 19 8 Baseline survey 25 46 5 13 11 General public Final survey 12 32 6 22 29 Baseline survey 15 25 9 16 34 Changed positively Some changes are positive, some are negative Changed negatively Did not change at all Hesitate to answer 3\. On questions about the effectiveness of the Russian and Moscow court systems (questions 3 and 4), responses were more positive about the MCC, largely attributable to the implementation of the JRSP-financed MCC ICT system\. Within the MCC responses, court personnel – who worked most closely with the new MCC ICT system – had significantly higher responses at the final survey compared to the baseline survey\. Question 3\. How do you assess the effectiveness of Russia’s court system? Page 106 of 148 The World Bank Judicial Reform Support Project (P089733) All respondents Final survey 9 31 41 10 5 4 Baseline survey 7 29 41 8 6 9 Court personnel Final survey 15 45 34 15 Baseline survey 11 37 45 313 Professional users Final survey 10 32 43 10 3 2 Baseline survey 8 31 45 7 4 5 General public Final survey 2 19 44 19 11 4 Baseline survey 4 19 34 14 11 19 Very effective Rather effective Sometimes effective, sometimes not Rather ineffective Absolutely ineffective Hesitate to answer Page 107 of 148 The World Bank Judicial Reform Support Project (P089733) Question 4\. How do you assess the effectiveness of the MCC system? All respondents Final survey 12 32 37 9 3 7 Baseline survey 9 30 38 7 4 12 Court personnel Final survey 23 49 22 15 Baseline survey 14 41 33 30 9 Professional users Final survey 10 29 47 8 14 Baseline survey 10 31 47 42 6 General public Final survey 3 20 42 17 8 11 Baeline survey 3 19 34 14 9 20 Very effective Rather effective Sometimes effective, sometimes not Rather ineffective Absolutely ineffective Hesitate to answer 4\. When asked to identify the top three problematic areas in court functioning, different respondent groups had different responses (question 5): a) Court personnel cited salary levels in the judiciary, material and technical support (i\.e\. operations and maintenance) and interagency interaction; b) Professional users cited organization of workflow and document flow, salary levels in the judiciary and judicial independence; c) The general public’s top three concerns were organization of workflow and document flow, judicial independence, and organization of courts’ activities in general and at different stages of proceedings; and d) For all respondents, the top three problematic areas were salary levels in the judiciary, organization of workflow and document flow and material and technical support\. Question 5\. Name the three most problematic areas in the functioning of Russia’s court system Page 108 of 148 The World Bank Judicial Reform Support Project (P089733) Professional All Respondents Court Personnel General Public Users Baseline Final Baseline Final Baseline Final Baseline Final survey survey survey survey survey survey survey survey Salary level in the judiciary 30 33 64 72 20 22 7 7 Organization of workflow and 36 31 26 24 32 32 48 38 document flow Material and technical 15 22 32 46 5 13 7 8 support (e\.g\. printers, paper) Interagency interaction (i\.e\. with other government 23 20 32 29 24 18 13 14 agencies) Independence of the 11 20 4 7 14 22 16 28 judiciary Informing participants of 20 18 11 15 16 21 33 16 court cases Organization of courts’ activities in general and at 21 15 10 5 18 15 33 24 different stages of proceedings Building maintenance, office space availability (e\.g\. courtrooms, judges’ 9 14 14 21 8 15 6 8 chambers), electricity supply, modern equipment, furniture etc\. Infringement of parties’ rights 7 14 0 4 10 14 10 22 during court proceedings Direct access to justice for the public (e\.g\. difficulties with filing an 19 11 14 6 17 9 25 17 application/claim and its further consideration) Interaction between courts of 16 10 19 5 22 11 7 14 different levels\. Legislative framework 7 10 4 4 6 16 11 11 Acquainting parties to the 10 8 5 1 12 11 12 12 case with the case files Transparency and openness 7 6 1 4 9 7 11 9 of the court system Security issues 2 4 1 6 5 4 2 2 Hesitate to answer 9 9 9 6 18 12 1 10 5\. Respondents believe the most urgent problems of the organization of the work of Page 109 of 148 The World Bank Judicial Reform Support Project (P089733) courts are the length of time taken for case examination (58 points), workflow in legal proceedings (56 points), familiarization with electronic case documents (56 points), numerous requests from litigants (51 points), and interdepartmental interactions and coordination (51 points)\. User Feedback on ICT System Components 6\. The following automated systems received the highest performance scores: the external internet portal of MCC and district courts in Moscow (63 points), the internal internet portal of MCC and district courts in Moscow (61 points), the information and analytical system (61 points), the videoconferencing system with correctional institutions (60 points)\. In addition, satisfaction with the work of all automated systems rose by 10-20 points and by 13 points on average for all systems among respondents, compared to the baseline survey\. Scores for ICT system components increased as follows: ï‚ The e-Case system - on average by 25 points among court personnel; ï‚ The data exchange system between courts at different levels in Moscow – on average by 24 points among court personnel; ï‚ The audio-video recording system - on average by 18 points among court personnel; ï‚ The external internet portal of courts of general jurisdiction - on average by 26 points among court personnel and by 12 points among professional users; ï‚ The automated information and analytical subsystem - on average by 26 points among court personnel; ï‚ The electronic archive - on average by 18 points among court personnel and by 10 points among professional users; ï‚ The internal information portal of courts of general jurisdiction in Moscow - on average by 29 points among court personnel\. 7\. The elements of the ICT system most in demand among court personnel are: the automated archive functions (65 points, a rise by 14 points), the information and analytical system (65 points, an increase by 8 points), the internal portal of MCC and district courts in Moscow (64 points, a rise by 7 points), e-filing of applications and complaints from the public and other users and e-enforcement system (63 points, a growth by 7 points)\. 8\. Court personnel and professional users’ assessment of key components of the MCC electronic case subsystem (a critical user-facing element of the ICT system) significantly improved in the final survey, reflecting increasing levels of user satisfaction with the JRSP-financed MCC E-case system (question 6)\. Question 6\. Please assess the functioning of the following components of the MCC E-case subsystem Page 110 of 148 The World Bank Judicial Reform Support Project (P089733) Document search subsystem 66 40 Administration subsystem 66 37 Storage and tracking of documents 63 38 Scanning and recognition of documents 58 38 Final survey Baseline survey 9\. Assessments of key elements of another JRSP-financed MCC ICT system – the audio and video recording system for court proceedings – improved significantly at the final survey, reflecting increasing satisfaction among court personnel and professional users with this system\. This improvement can be attributable to the JRSP intervention, including training provided to these user categories as the system was piloted and rolled out\. Question 7\. Please assess the functioning of the following elements of the audio-video recording system Page 111 of 148 The World Bank Judicial Reform Support Project (P089733) Quality of video recording 72 50 Accessibility of records 69 54 Level of synchronization between video and 69 audio 49 Friendliness of Chief Judge's workstation 69 53 Friendliness of Secretary's workstation 68 52 Acсessibility of case information for litigants 67 50 Quality of audio recording 64 47 Final survey Baseline survey 10\. Court personnel and professional users’ assessment of the functioning of key elements of the automated information and analytical subsystem – which has automated many key tasks including case tracking, decision publication and depersonalization of personal and other information as required by law – significantly improved by the final survey (question 8)\. Question 8\. Please assess the functioning of the automated information and analytical subsystem according to the following criteria… Page 112 of 148 The World Bank Judicial Reform Support Project (P089733) Ability to track the stage of case processing 73 46 Loading information from workflow management 70 databases to unified database 40 Monitoring the results of loading information from 69 different sources 38 Payment of court fees through the portal 68 43 Automated publication of case decisions and 67 information under Law 262-FZ 42 Accessibility of step-by-step guide with document 66 samples 42 Ability to process information and generate 66 automated reports 41 Ability for automated electronic filing of documents 65 34 Ability to adapt the system to changing 63 requirements 39 Ability to apply automatic depersonalization of 58 information in decisions and documents 35 Final survey Baseline survey 11\. Court personnel and professional users expressed satisfaction with introducing the automated system: 69 percent noted the ease of use of the system for daily tasks (an increase by 16 percentage points in comparison with the baseline survey)\. Such users also gave high scores to the use of the system for daily tasks, with 67 percent of court personnel (a rise of 5 percentage points) and 70 percent of professional users (a rise of 27 percentage points) expressing satisfaction\. 12\. 73 percent of general public respondents stated that the internet portal of MCC was convenient, while 62 percent said the same for information kiosks/terminals in court buildings and 67 percent for the E-case system\. 51 percent of such users believe that the quality of the work of district courts will improve after introducing the automated system\. 13\. The following subsystems of the new automated system saw the highest demand from users: the external internet portal of MCC and district courts in Moscow (70 points), the information and analytical system (66 points), the unified e-repository of judicial documents, cases with barcoding technology (63 points), automated archive for Moscow courts (63 points), the internal portal of MCC and district courts in Moscow (62 points), the videoconferencing system with correctional institutions (61 points)\. Page 113 of 148  The World Bank Judicial Reform Support Project (P089733) 14\. The highest rise in scores in comparison to the baseline survey were for: (a) the automation of the archive functions for courts in Moscow (63 points, a rise by 15 points), (b) the information and analytical system (66 points, an increase by 14 points), (c) the internal portal of the MCC and district courts in Moscow (62 points, a rise by 12 points) and (d) the unified e-repository of judicial documents (63 points, a rise by 9 points)\.                                           Page 114 of 148  The World Bank Judicial Reform Support Project (P089733)   ANNEX 9\. MOSCOW CITY COURTS AUTOMATED SYSTEMS ‐ KEY FEATURES AND RESULTS    The information below has been adapted from materials from the Moscow City Courts provided courtesy MCC President Ms\. O\. Egorova and MCC Deputy President Mr\. D\. Fomin on May 29-30, 2018\. Results relate to achievements as of December 31, 2017 Page 115 of 148 The World Bank Judicial Reform Support Project (P089733) Page 116 of 148 The World Bank Judicial Reform Support Project (P089733) Page 117 of 148 The World Bank Judicial Reform Support Project (P089733) Page 118 of 148 The World Bank Judicial Reform Support Project (P089733) Page 119 of 148 The World Bank Judicial Reform Support Project (P089733) Page 120 of 148 The World Bank Judicial Reform Support Project (P089733) Page 121 of 148  The World Bank Judicial Reform Support Project (P089733)     Page 122 of 148  The World Bank Judicial Reform Support Project (P089733) ANNEX 10\. SUPREME ARBITRAZH COURT & COMMERCIAL COURTS ICT SYSTEM    The information below has been adapted from materials from the Supreme Arbitrazh Cpurt provided courtesy Ms\. Helena Avakyan, former Head, Department of Control and Analytics, SAC in 2012\. Results relate to 2012 when the JRSP-financed ICT systems for the commercial courts and SAC were installed\. Page 123 of 148 The World Bank Judicial Reform Support Project (P089733) Page 124 of 148 The World Bank Judicial Reform Support Project (P089733) Page 125 of 148 The World Bank Judicial Reform Support Project (P089733) Page 126 of 148 The World Bank Judicial Reform Support Project (P089733) Page 127 of 148 The World Bank Judicial Reform Support Project (P089733) Page 128 of 148 The World Bank Judicial Reform Support Project (P089733) Page 129 of 148 The World Bank Judicial Reform Support Project (P089733) Page 130 of 148 The World Bank Judicial Reform Support Project (P089733) Page 131 of 148  The World Bank Judicial Reform Support Project (P089733)                     Page 132 of 148  The World Bank Judicial Reform Support Project (P089733) ANNEX 11\. SUPPORTING DOCUMENTS    1\. World Bank\. Project Appraisal Document, JRSP, 2007 2\. World Bank\. Country Partnership Strategies (Russian Federation), 2007, 2012, 2017 3\. World Bank\. Systematic Country Diagnostic, 2017 4\. World Bank\. Implementation Status Reports, 2007-2017 5\. JRSP Implementation Status Reports 6\. MCC Survey Reports Page 133 of 148 The World Bank Judicial Reform Support Project (P089733) ANNEX 12\. SUMMARY OF RUSSIAN FEDERATION’S ICR  The Russian Federation prepared and shared a detailed ICR which has been filed\. The Executive Summary of that ICR, prepared by the Borrower, is attached below\. Loan Agreement No\. 4849-RU between the Russian Federation and the International Bank for Reconstruction and Development BORROWER'S IMPLEMENTATION COMPLETION REPORT Judicial Reform Support Project (Executive Summary) General Project Information Loan Agreement No\. 4849-RU between the Russian Federation and the International Bank for Reconstruction and Development (IBRD, the World Bank) for financing the Judicial Reform Support Project (Agreement, Loan Agreement) in the total amount of US$ 50 million was signed on July 17, 2007 and became effective on November 15, 2007\. During the course of the project implementation the Loan Agreement was amended in the context of changes in the objective project implementation conditions to reflect (also in the tables with PDO level and intermediate results indicators) closing date extension, project restructuring issues agreed between the Russian Federation and the IBRD as a result of selection of a new Project Implementation Unit, and structural judicial reforms\. The substantial change was made to the project financing percentage of expenditures to be financed from the Loan under category (1) from 29% to 11\.57% as of May 01, 2017\. The implementation of project activities was completed on December 31, 2017\. The final payments under the project contracts for goods and services supplied before December 31, 2017 were made during the grace period provided by the IBRD through April 30, 2018\. Overall, the amount of US$ 49 898 893\.89 was disbursed out of the proceeds of the Loan during project implementation, or 99\.8% of the Loan amount\. Given the change in the portion of the loan proceeds allocated to finance project costs under category “(1) Goods, technical services and consultant's services for the Project”, the amount of counterpart funds provided by the Government of the Russian Federation was equivalent to more than US$ 138\.86 million\. The total project cost was US$ 188\.76 million\. The Ministry of Economic Development of the Russian Federation31 was acting as the federal executive authority, the project entity and the chief budget funds administrator in accordance with the legal and regulatory acts applicable to the Project32\. The Constitutional Court of the Russian 31\. Until May 12, 2008 ‐ the Ministry of Economic Development and Trade of the Russian Federation  32  In particular, RF Government Resolution 43 “Operational procedures for projects being implemented by the Russian  Page 134 of 148 The World Bank Judicial Reform Support Project (P089733) Federation, the Supreme Court of the Russian Federation, the Supreme Commercial Court of the Russian Federation and commercial courts (including the Court of Intellectual Rights), courts of general jurisdiction (including the Moscow City Court and Moscow district courts of general jurisdiction), and administrations of the Judicial Department of the Supreme Court of the Russian Federation were acting as the recipients of goods and services under the Project - Project Beneficiaries\. The following project management bodies were responsible for interagency coordination under the Project: Inter Agency Management Council created by order of the MOED and comprised of representatives from MOF and judicial authorities - Project Beneficiaries and Project Implementation Unit; working groups responsible for project oversight and management created by the key Project Beneficiaries (Constitutional Court, Supreme Court, Supreme Commercial Court, Court of Intellectual Rights, Moscow City Court, Judicial Department of the Supreme Court) responsible for implementing project activities\. The working groups included the representatives from MOED, MOF and PIU\. The Project Implementation Unit assisted the MOED and the Project Beneficiaries with project implementation\. The PIU functions were performed by the Bureau of Economic Analysis 33(BEA) during the period from 2007 to 2011\. In December 2011, PIU functions were delegated to the Noncommercial Foundation for Enterprise Restructuring and Financial Institutions Development (FER)34\. The PIU was acting on the basis of the Agency Agreement between PIU, MOED and MOF\. Project Goals and Objectives The project development objective (PDO) as specified in Schedule A “Project Description” to the Loan Agreement is to assist the Borrower to strengthen judicial transparency and efficiency of selected courts through the implementation of information systems and judicial training\. The project objective was not revised during project restructuring\. The project structure included the following components\. The composition of project components was not revised during project implementation and is reflected in Schedule 1 to the Loan Agreement: (1) Component A\. Institutionalizing judicial transparency and accountability (2) Component B\. Use of Information and Communications Technology for Judicial Transparency and Effectiveness (3) Component C\. Strengthening Human Capital (4) Component D\. Project Management, Monitoring and Evaluation Key Project Results Federation with the assistance of international financial organizations” dated January 28, 2005; RF Government Resolution 361  “On signing the Agreement between the Russian Federation and the International Bank for Reconstruction and Development  for financing the Judicial Reform Support Project” dated June 9, 2017  33 Legal entity registered under the Russian laws in the form of noncommercial organization\.  34 Legal entity registered under the Russian laws in the form of noncommercial organization\.   Page 135 of 148 The World Bank Judicial Reform Support Project (P089733) All project activities were performed in compliance with the project development objective described in the Loan Agreement\. Most project activities were aimed to improve transparency and effectiveness of judicial authorities involved in the Project through upgrading existing and developing new ICT and providing judicial training\. At the same time, some activities envisaged under project components in accordance with the Loan Agreement were supplementary and had indirect impact on achievement of the key project objective\. These activities include completed social surveys, analysis of needs for training of specific categories of judicial staff, assistance to Project Beneficiaries with analysis of current information and communication infrastructure and preparation of concepts and technical requirements/terms of reference for extensive use of modern ICT in case management processes, services of interpreters and auditors, operations of the Project Implementation Unit\. Overall, completed project activities fully cover all thematic areas mentioned in the Loan Agreement in the description of project components despite significant changes made in the list of project activities as compared with the original project implementation plans developed at the project preparation and appraisal stage\. The most substantial project results broken down by components are briefly described below\. Component A\. Institutionalizing Judicial Transparency and Accountability The activities implemented under Component A contributed to the achievement of the project development objective “Availability of data from periodic surveys of users of judicial services” which is measured with the use of logical yes/no scale\. The target value of this indicator was achieved: during project implementation 5 waves of national social surveys of the attitude of citizens and organizations toward the judicial system and 2 waves of micro surveys of judicial process participants in Moscow courts of general jurisdiction (Moscow City Court and district courts) were carried out\. The results of the final survey of citizens carried out under the Project showed that the percentage of population that trusts the judicial system (49%) in 2017 was higher than the percentage of population that does not trust the judicial system (43%)\. First time during the implementation of social surveys under the Project the level of trust towards judiciary system showed positive value at 6 points\. However, despite the positive trends, the judicial system continues to lag behind the most credible institutions in terms of the level of public trust\. The survey results reported that judicial system was perceived in 2017 as a more credible institution\. First time during project implementation the judicial system credibility index measured as the difference between positive and negative measures of judicial performance showed positive value and gained 17 percentage points\. Furthermore, judicial system was less criticized by respondents for unnecessary bureaucracy and poor management (22% in 2012 versus 17% in 2017)\. The attempt to carry out social surveys that more accurately reflect public assessment of extensive use of ICT by judiciary was initiated by the Moscow City Court\. Unlike national surveys, this survey covered not only potential users of judicial services acting as respondents, but also the staff of Moscow courts, professional trial participants (prosecutors, legal counsels, lawyers - representatives in civil cases, representatives of the government authorities), non-professional trial participants (plaintiffs, respondents, applicants in special proceedings, offenders in administrative cases)\. Questionnaires included additional blocks with Page 136 of 148 The World Bank Judicial Reform Support Project (P089733) the aim to seek respondents perception of the last steps made towards informatization of Moscow courts of general jurisdiction and respondents assessment of these steps and financial aspects of providing and receiving judicial services\. The survey showed that the implementation of the Integrated Information System of Moscow city general jurisdiction courts (GJC IIS) did not go unnoticed\. The level of satisfaction with almost all automated court systems has increased by 10-20 points and by 13 points in average with all systems compared to baseline survey\. Overall, the highest (on a 100-point scale) performance assessments obtained under these surveys were given to the following GJC IIS subsystems: external Internet portal of the Moscow City Court and Moscow district courts (63 points), internal portal of MCC and Moscow district courts (61 points), information and analytical system (61 points), videoconferencing sessions with correctional facilities of Federal Penitentiary Service (60 points)\. The research and analytical activities, including those related to development of approaches to measuring the performance of justice systems, were undertaken under this component through implementing the following activities: (1) Conducting survey and assessment of efficiency of interaction between courts and mass media, including social survey on organization of communication between Russian judicial authorities and mass media\. Upon completion of survey and based on the analysis of related best practices, recommendations were developed on a number of aspects to improve communication between judicial authorities and mass media and to change the status and improve qualifications of court press relation officers\. The recommendations to improve qualifications of press relation officers were used during preparation of advance training program for judicial staff involved in communication with mass media under Component C of the Project\. (2) Scientific analysis and systematization of documents of the Constitutional Court, including development of principles for classification of decisions of the Constitutional Court, approbation of approaches to the identification of constitutional and legal provisions in the decisions and development of approaches to processing and systematization hereof, development of classifiers of decisions of the Constitutional Court and identified constitutional and legal provisions that are consolidated into unified classifier of decisions and constitutional and legal provisions; development of subsystem “CC Analytics” in the information system of the Constitutional Court for making available results of the decision systematization; systematization of 15 000 acts of the Constitutional Court\. The search function of the developed subsystem improves judicial performance by reducing time needed to find relevant and complete information, which, in turn, facilitates the adoption of consistent and coherent decisions\. (3) Analysis of the Russian legal and regulatory framework and development of proposals to improve it with the aim to create a legal framework for ICT use in case management processes and in communication with other government authorities of the Russian Federation and their territorial bodies\. Under this activity, the legal gaps and inconsistencies were identified in the federal legislation, subordinate legislation, departmental legal and regulatory acts\. To confirm conclusions of analytical survey, field visits were undertaken to Moscow courts of general jurisdiction, commercial courts and some regional government authorities with the aim to identify the needs of judicial system and civil society in legal regulation, including issues related to Page 137 of 148 The World Bank Judicial Reform Support Project (P089733) protection of state, commercial and official secret, confidential information, compliance with personal data use, processing and protection rules\. Further, the status of IT use in these organizations was checked\. Survey results contributed to the development of proposals to improve Russian legal and regulatory framework regulating ICT use in the case management processes and in communication with other entities\. The proposals were reflected in 72 legal and regulatory acts at the federal, regional, interagency and intra-agency levels\. (4) Under the activity “Development of criteria and indicators of efficiency of functioning of judicial system under the Judicial Reform Support Project”, the analysis covered the court performance criteria and indicators (at the level of judicial statistics, Rosstat indicators and indicators of federal target program) used in the Russian practice, the system of court performance criteria and indicators developed in the Netherlands, Finland and the USA and at the international level (system of IFCE criteria and indicators developed by the International Consortium for Court Excellence with the assistance of IBRD)\. On the basis of analytical results, the approach was suggested to developing the system of judicial performance assessment indicators and criteria\. It was determined based on proposed criteria and indicators to use the survey method as the main source of information on dynamics of indicators\. The pilot test was performed by the Consultant to assess the proposed system of criteria and indicators\. However, it appeared that this system could not be used directly by judicial authorities on a regular basis since such activities were not included in the job descriptions of judicial staff (for conducting surveys) and/or it was necessary to increase workload on already overloaded judicial staff\. Further, in order to introduce additional reporting forms it was necessary to prepare regulatory documents of the judicial system, justification and cost analysis for additional functions to be performed by judicial staff\. At the same time, the survey results were used under the Project during the preparation of social survey instruments\. (5) Additional input in assessment of judicial performance was attributed to such activities as analysis of efficiency and development of recommendations for improving the videoconferencing system in the courts of general jurisdiction, a comprehensive assessment of the economic, financial and social impact of project activities and project sustainability\. Both surveys showed that though public services projects are social projects that do not bring direct profits, investment in judicial informatization can be considered economically effective taking into account economic benefits from automated court case management systems and economic benefits which can be received by various counterparties of judicial system, as well as economic assessments of social effects\. Component B\. Use of Information and Communications Technology for Judicial Transparency and Effectiveness The component included four subcomponents focused on the key Project Beneficiaries\. Subcomponent B\.1 included such activities performed for the Constitutional Court in full compliance with project development objectives and tasks of Component B as supply and installation of integrated case management system and automated system for publication of information on the Internet portal of the Constitutional Court, upgrade of information and telecommunication infrastructure of the Constitutional Court\. Page 138 of 148 The World Bank Judicial Reform Support Project (P089733) Subcomponent B\.2 supported the implementation of extensive range of activities initiated by the Supreme Court\. The most substantial project results under this subcomponent include: - Development of federal videoconferencing (VC) system supervised by the Supreme Court of the Russian Federation\. Overall, the VC system was installed in all regional and same-level courts of general jurisdiction\. 278 FPS offices were used as automation sites under two consistently implemented related activities\. High economic efficiency (first of all, through savings of budget funds used for transportation of trial participants from detention facilities to the place where trial proceedings take place) and substantial social effects from using the VC system for remote participation in court proceedings of persons kept in detention facilities have been confirmed by analytical surveys conducted under the Project\. Further, judicial authorities use VC systems, apart from court sessions, for conducting meetings, training and knowledge sharing events\. The use of VC systems also improves judicial efficiency through saving of funds and time needed for participation in field visits, provides the opportunity to hold meetings with all judicial agencies equipped with VC systems\. - Upgrade of information and communication infrastructure of the Supreme Court, including strengthening of capacities for storage and processing of information electronically through upgrading court’s server system (among other things, introduction of advanced technologies for virtualization of IT resources), conversion of equipment of judges and judicial staff workplaces to a new hardware and software level, development of information protection system, etc\. Through implementing these activities it became possible not only to improve judicial performance but also to create in a timely manner the technical conditions to ensure compliance with the requirements of the Russian legislation for publication of information on the activity of the Supreme Court in the Internet\. - Development of the Mid-Term Concept on Informatization of the Supreme Court, including delegation of powers of the supreme court on economic disputes and planned reallocation of the Supreme Court to St\. Petersburg)\. This Concept was developed to ensure substantiated balanced complex plan of actions on extensive use of the latest information technologies in courts coordinated with other programs on development of information society\. The first steps toward the implementation of the Concept had already been made under the Project, specifically the implementation of specific activities on development of the court information protection system and upgrade of information systems, creation of the information system “Judicial Document Flow and Case Management in the Supreme Court of the Russian Federation” supporting modern information technologies\. The main advantages of the developed system include substantial extension of the inter-agency and inter-level interaction functions and communication with trial participants electronically\. The developed system allowed the Supreme Court to use electronic documents in case management processes in accordance with federal law No\. 220-FZ of June 23, 2016 starting from January 1, 2017\. - The task to strength judicial transparency was addressed by the Supreme Court through installing the shared information display equipment (information panels and kiosks) in the courthouses and through creating a new version of the court's website linked to the developed information system of judicial document flow and case management\. The development and implementation of the Integrated Information System of Moscow city Page 139 of 148 The World Bank Judicial Reform Support Project (P089733) general jurisdiction courts (GJC IIS) initiated by the Moscow City Court under Subcomponent B\.3 is considered to be one of the most significant results of the Project\. The GJC IIS created under the Project includes such functional blocks as electronic archive, electronic case, internal portal of the Moscow City Court and district courts, video conferencing system, inter-level interaction system, information and analytical system, audio and video recording system, interagency interaction system\. The interagency interaction system supports communication between the administration of the Federal Bailiffs Service, administration of the Federal Penitentiary Service and subordinate pre-trial detention facilities, Russian Post, Moscow Department of Housing and Utilities, Moscow Administration of Federal Treasury, Judicial Department and Moscow Administration of the Judicial Department, 438 JPs, Moscow Prosecutor's Office, Moscow Main Investigation Department of the RF Investigation Committee, lawyers, interpreters, and citizens\. Overall, the system represents a pilot project designed to organize a unified information space for judicial authorities of the Russian regions to exchange electronic information with the relevant regional segment of the system for interagency electronic interaction of executive authorities and other bodies\. The performance of Moscow court of general jurisdiction has been improved significantly even during relatively small period of the GJC IIS system operation\. According to data for the 1st quarter of 2018 provided by the Moscow City Court, the enforcement rate of judicial decisions of Moscow courts of general jurisdiction is 39% out of the total number of decisions in civil cases, which is by 15% more than baseline of this indicator as of June 2014 (24%)\. The average time for preparation of the response to citizens’ appeals has been reduced from 30 to 14 calendar days\. After the implementation of audio and video recording system, the number of cases challenging the minutes of court sessions has been reduced by 35\.2%, the number of complaints from litigation participants on rights’ abuse during court proceedings has been reduced by 31\.4%\. Despite very impressive results of the implementation of the GJC IIS system, target values have not been completely achieved under all results indicators of this subcomponent during 3 months of system operation\. This situation is partially attributable to rigorous commitments undertaken by the Moscow City Court to improve its performance indicators, not all of which are free from external impacts (e\.g, low level of legal knowledge of trial participants) which are beyond efforts of Moscow courts\. At the same time, we may assume that with overall high level of achievement of target indicators (not less than 78\.5%), exceeded values under some indicators and positive dynamics of results, target values will be fully achieved under all indicators considering that GJC IIS system’s operational life is expected to be increased over time by 1-1\.5 years\. Subcomponent B\.4 supported the activities aimed to strengthen the openness and efficiency of commercial courts of the Russian Federation\. The most substantial activities undertaken in 2007-2014 in all commercial courts of the Russian Federation under this component include: - Installation in all commercial courts of modern systems for storage of electronic documents with sufficient capacity to meet the needs of commercial courts for storage and access to electronic judicial documents, thus addressing the task of the Supreme Court to be able to publish all decisions of commercial courts in the Internet within 24 hours after the adoption of decisions\. - Development of departmental telephone network and unified corporate e-mail network for Page 140 of 148 The World Bank Judicial Reform Support Project (P089733) commercial courts contributing to enhanced efficiency in communication between judges and judicial staff by providing additional functionality and increasing system fault tolerance and to reduced recurrent costs of these courts by reducing the cost of telephone communication and maintenance of technical resources, including centralized management of networks; - Installation of information mini kiosks in the premises of commercial courts in order to increase judicial openness and implementation of audio recording systems providing access to audio records of trial participants\. The implementation of subcomponent in 2014-2017 by Court of Intellectual Rights (CIR) contributed to achieving project development objectives\. Considering that CIR had started its activity as part of the system of RF commercial courts in the first half of 2013, the initial court operations were supported by the automated case management system used earlier in the system of commercial courts, and CIR's information and communication needs were satisfied mainly based on the information and communication infrastructure of the Supreme Commercial Court\. Given a relatively small period of CIR's operation and some information and communication problems caused by cessation of activities of the Supreme Commercial Court, one of the prioritized tasks of the Project for the period up to 2016 was to adjust the automated case management system to CIR's specific needs and changes in the Russian legislation within a short period of time and to assist CIR with the development of its own information and communication infrastructure\. To address the above tasks, CIR's server system was created under the Project supporting CIR's needs for data processing and storage (including data of stream broadcasts of court sessions), active network equipment was upgraded, modern system of electronic document management was procured, new modules with arbitration case management functionality specific for CIR were developed, VC system was installed in the Presidium Hall\. The Project also included the development of the court informatization concept\. The CIR informatization concept includes analysis of CIR informatization needs; key informatization areas; conceptual CIR informatization architecture; concept implementation plan; feasibility study on selected architecture and technology stack\. All activities performed for CIR contributed to improving its performance\. Component C\. Strengthening Human Capital This component contributed to improving qualifications through off-the-job training in the use of modern ICT of 272 ICT specialists in all commercial courts covering the topic on “Support of enterprise network infrastructure and mail system”, training of 196 employees from 111 commercial courts covering the topic on “Development of network infrastructure of commercial courts with the use of modern Microsoft network technologies”, training of 2750 employees of the courts of general jurisdiction and administrations of the Judicial Department of the Supreme Court of the Russian Federation in the use of modern software supporting GAS Pravosudie\. 80 judges and judicial staff of the Court of Intellectual Rights were trained in the program on “Effective use of office software”, 3 IT specialists were trained in the standard training courses (certified by software manufacturers) on the use of modern software\. At the same time, training provided under the contracts on implementation of information systems was rated by the Project Beneficiaries as the most effective form of training on the use of such systems\. Overall, 4109 people were trained in the use of new systems under the contracts on development of information systems in the judicial authorities involved in the Project\. Page 141 of 148 The World Bank Judicial Reform Support Project (P089733) The component also supported upgrading of qualifications of 287 civil servants involved in communication with mass media in the courts of general jurisdiction, commercial courts, administrations of Judicial Department of the Supreme Court of the Russian Federation\. The component included experience sharing between the representatives of the judicial authorities of the Russian Federation and foreign countries during visits of the representatives from the Constitutional Court, Supreme Court and Supreme Commercial Court to the supreme courts of foreign countries\. The RF representatives shared the results of their work and studied the experience of the European Court of Human Rights, supreme courts of Germany, France, Austria, Switzerland, Australia, Singapore, and Republic of Korea in the area of application of information technologies in case management systems\. On the basis of the above, target value of the indicator “Number of manpower trained under the Project (number of people)” during project implementation was exceeded by more than 1\.5 times\. The tasks under Component D “Project Management, Monitoring and Evaluation” described in the Loan Agreement were fully completed\. The PIU costs were covered throughout the life of the project\. The PIU was responsible for providing management and technical support for Inter Agency Management Council and other project management bodies (working groups, evaluation committees created by Project Beneficiaries), collecting information and preparing regular reports on achievement of PDO level and intermediate results indicators\. As to provision of technical assistance to courts involved in the Project, the component financed the contracts for provision of consulting services to the Supreme Court on development of design and estimate documentation for optimization of scheme for installation of local area network and upgrading the engineering infrastructure supporting LAN with the aim to increase system reliability (the developed documents were used by the Supreme Court to upgrade engineering infrastructure using budget funds) and contracts for provision of consulting services to the Judicial Department of the Supreme Court in the area of implementation of activities under the Judicial Reform Support Project for automation of courts of general jurisdiction and the system of judicial department of the Supreme Court in order to provide material and technical conditions for improving openness and access to justice (including the development of specifications for equipment, detailed design and terms of reference for provision of technical services)\. The foreign consultant was engaged under the component to provide assistance in conducting two-stage bidding process for award of contract on GJC IIS system development\. Key Factors Affecting Implementation and Outcomes 1\. Constructive interaction supported by IBRD, MOF and MOED on issues of project oversight and supervision and in dealing with project implementation issues\. 2\. The RF Government’s attention to project implementation issues and to ensuring project effectiveness, including sustainability of project outcomes\. With the RF Government's assistance, it became possible to ensure uninterruptable project financing in the required amounts, to prepare the second project in support of judicial system development and enforcement of judicial decisions, which is aimed to ensure, among other things, sustainability of the JRSP results and will Page 142 of 148 The World Bank Judicial Reform Support Project (P089733) be financed out of the loan provided by the New Development Bank\. 3\. The composition of the IBRD project team has not been changed\. The IBRD project team members supported the Project at the project preparation stage and at all times during implementation of the Project\. The project team included highly skilled specialists with extensive experience in judicial system development projects implemented in foreign countries (including informatization of case management systems) and contributed significantly to successful implementation of the Project and achievement of Project objectives\. In particular, extensive practical experience of the IBRD experts contributed to timely identification of project implementation problems and to the development of effective mechanisms for addressing such problems, including through effective project restructuring within a short period of time\. 4\. Bank's flexibility in project management and consideration of specific aspects of country and national legislation, directly or indirectly affecting the Project\. At all times during implementation of the Project, the Bank was flexible in its response to ongoing changes, taking into account the Borrower’s suggestions, where possible\. The flexible approach in review of IT- related procurement and contract amendments contributed to timely procurement of necessary equipment to address the Beneficiaries’ tasks, on the one hand, and to effective project disbursement, on the other\. The Bank's project team and management showed understanding of project implementation delays at the initial project stage and structural changes in the judicial system at the subsequent project stages and created the most favorable conditions for successful completion of the Project given the social importance of the judicial system improvement\. 5\. Project design aimed to supplement federal targeted programs on development of the judiciary system in Russia and other programs\. Overall, commitments declared in all programs to achieving key objectives of judicial system modernization - strengthening judicial transparency and efficiency - allowed all Project Beneficiaries to carry out regular analysis of the list of prioritized informatization activities and reallocate (if necessary) activities which are of primary importance between the sources of funding to achieve better results\. Notwithstanding that changes in the list and/or scope of project activities proposed by Project Beneficiaries slowed down the pace of project implementation, extension of the project implementation period was compensated by increased efficiency in the use of financial resources by Project Beneficiaries (e\.g\., implementation of identified prioritized needs not covered by budget funding)\. Thus, despite a substantial extension of the actual project implementation period as compared with originally planned dates, project performance was measured at 100%, provided that values of some project performance indicators were exceeded, in accordance with performance assessment methodology developed by MOF and MOED that reduces the project rate in case of project extension\. 6\. High level of project management The clear project management system that included Inter Agency Management Council and working groups created by the key Project Beneficiaries was used throughout the life of the project\. The Operational Manual was developed and agreed with the IBRD to ensure proper level of project management\. The Operational Manual included the key documents regulating daily project activities: project management rules and procedures, procurement procedures, financial management system, staffing policy, etc\. Page 143 of 148 The World Bank Judicial Reform Support Project (P089733) 7\. The special organization (project implementation unit, PIU) was engaged to perform procedural and technical functions during project preparation and implementation, including procurement, opening and maintaining the Designated Account, preparing financial reports in accordance with the IBRD procedures, providing assistance to Project Beneficiaries with preparation of documents required for conducting bidding procedures and contract signing, and ensuring day-to-day contacts with the IBRD\. 8\. Sustainability of project results supported by project planning in accordance with the long- term strategic plans for building information society; incorporation of achieved results and needs for further improvement of information and communication infrastructure of the judiciary\. Performance of the World Bank and the Borrower Performance of the World Bank Performance of the World Bank during project preparation and supervision can be rated as highly satisfactory\. The close monitoring over the project implementation by IBRD helped ensure compliance with the Loan Agreement and applicable procurement guidelines\. The cooperation with the World Bank’s Moscow office was very productive and helpful in dealing with emerging issues, thus contributing to successful project implementation\. The IBRD reviewed and approved implementation strategies, project implementation plans and procurement plans, bidding documents/RFPs at various stages of procurement procedures, advised MOF, MOED, judiciary - Project Beneficiaries and Project Implementation Unit on various project implementation issues in accordance with the Loan Agreement, the General Conditions Applicable to Loans of the International Bank for Reconstruction and Development (dated July 1, 2005, revised and amended on October 17, 2007), the Guidelines for Procurement under IBRD Loans and IDA Credits (May 2004), the Guidelines for Selection and Employment of Consultants under IBRD Loans (May 2004) and other documents\. The IBRD comments were generally constructive and justified and contributed to enhancing effectiveness of procurement procedures and the quality of bidding documents/RFPs\. The IBRD reviewed the submitted reports (both financial and substantive) on the progress with the implementation of project components as part of the supervision of the project progress\. The IBRD also regularly organized field supervision missions for evaluating the project’s implementation and outcomes and provided its recommendations to MOF, MOED, judiciary - Project Beneficiaries, and Project Implementation Unit upon completion of such missions\. Of particular note is constructive interaction between IBRD, MOF and MOED in view of unsatisfactory project rating in 2009-2011\. Owing to advisory and management support provided by the World Bank team, it was possible to agree and make a decision to replace the Project Implementation Unit, extend project implementation period in order to achieve objectives of beneficiaries, prepare proposals and make amendments to the Loan Agreement\. The Project was rated as satisfactory by the IBRD in 2012 based on the results of the implemented measures\. Performance of the Borrower and Project Implementation Unit Page 144 of 148 The World Bank Judicial Reform Support Project (P089733) MOF, MOED, judiciary - Project Beneficiaries, the Noncommercial Foundation for Enterprise Restructuring and Financial Institutions Development performed their functions in accordance with the rules and procedures applicable to the Project\. The performance of MOF, MOED, judiciary - Project Beneficiaries, the Noncommercial Foundation for Enterprise Restructuring and Financial Institutions Development performing PIU functions can be rated as satisfactory\. Advantages of implementation of the IBRD-assisted projects A wide range of judicial system modernization activities was expected to be implemented under the federal target programs on development of the judiciary system in Russia for 2007-2011 and 2013-2020 in the context of limited funds allocated in the federal budget\. However, the planned activities were not exhaustive taking into account challenges for the judiciary\. The IBRD participation in project financing helped significantly speed up the informatization processes in the supreme courts of Russia (Constitutional Court, Supreme Court, Supreme Commercial Court), address a number of urgent information system upgrade issues and implement a number of IT development activities in all commercial courts to support the development of a single information space for this branch of the judiciary\. The most significant factors of the IBRD involvement in the project include favorable project financial conditions; provision of significant amount of loan funds by IBRD; grace period for repayment of principal amount, low interest for debt service at all times throughout the duration of the Project\. Additional advantage of attracting funds from the international financial organizations for implementation of development projects is that Russian legislation guarantees protection of federal budget articles on debt service from reductions in case of adverse financial situation in the country\. Unlike other sources of funding of public projects, this fact guarantees sustainable implementation of agreed modernization plans\. Despite factors related to favorable financial conditions, the following factors played a positive role in enhancing efficiency in the use of funds under the Project and other IBRD- assisted projects: - Regular and close monitoring and evaluation of Project by the IBRD at all stages; - Strict and unified procedures for procurement of goods, works and services in accordance with the IBRD standards; - IBRD participation in the analysis and approval of objectives, tasks and scope of works under each important area of activity; - A wide coverage of markets of suppliers of goods, consulting services, training services, including international markets, due to the use of international bidding procedures\. - Enhanced quality and objectivity of assessment of project achievements through regular independent assessment of progress and achievements conducted by IBRD highly skilled experts and invited experts with extensive international experience; - Advice of IBRD highly skilled experts during project implementation; - Enhanced project reputation and importance due to participation of major international financial organizations\. Page 145 of 148 The World Bank Judicial Reform Support Project (P089733) Conclusion Upon completion of the Project we may confidently say that almost all project activities contributed to achieving Project development objectives which cannot be always measured quantitatively for objective reasons\. Based on the wording used to describe the project development objective we may assume that this objective has been certainly achieved by the Project and by almost all judicial authorities - Project Beneficiary\. Sustainability of the achieved judicial system upgrade results, including the results of the Judicial Reform Support Project is confirmed by actual data on the use of the created capacity\. The international conference on disseminating project results and sharing knowledge in the area of judicial informatization “21st Century Court: Technology in Service of Justice” which was held in Moscow in May 28-29, 2018 demonstrated a very impressive data on the functioning of information systems which were created mainly as a result of project activities\. The report presented at the conference by Ms\. Avakyan, who was acting as the Head of Control and Analytical Department of the Supreme Commercial (Arbitrazh) Court of the Russian Federation (SCC) before the SCC was abolished, showed that unified database on arbitration disputes of commercial courts is currently used as a day-to-day instrument by legal practitioners\. As of the end of 2017, 22 556 242 cases had been registered in the database, and up to 35 000 new judicial documents are added daily into the database\. Nearly 400 000 unique users use database every day, the number of queries amounted to 93 million in 2017\. The intensity of database updates and usage shows that it has been growing steadily during the entire period of system operation\. Thus, in 2013, the number of new documents in the system amounted to 22 million, the number of new registered judicial cases amounted to 1 million\. In 2014, 2 million new cases were registered in the system, and 27 million of documents were added\. In 2016, 2 million of new cases were registered, the number of added documents amounted to 32 million\. The number of unique system users was 3 million in 2010, 10 million in 2014, 12 million in 2016\. The distinctive feature of the information resource is that it is possible to add court orders as image of original document and to obtain complete information on the case, including results of case review in all instances\. The information resource provides electronic real time access to information on 117 commercial courts, as well as the possibility to track new claims and changes in the case using case number and the name of the company acting as a party to proceedings\. Further, the system provides the possibility to receive notifications by e-mail\. The speaker specifically noted that information resource on judicial practice in resolution of economic disputes created in the system of commercial courts is currently used by legal practitioners as a good alternative to legal search systems because of better search function\. In 2017, 17% of claims were submitted to commercial courts electronically in the first instance, and around 35% of requests were submitted electronically to the appellate instance\. Since the entry into force of Federal Law #220-FZ dated June 23, 2016, 126 081 documents have been signed with a digital signature in the system of commercial courts and 172 375 court orders have been issued electronically\. The modern system of departmental e-mail of commercial courts created under the Project has been also intensively used\. Nearly 7,000,000 e-mail messages are processed in the system Page 146 of 148 The World Bank Judicial Reform Support Project (P089733) monthly\. Ms\. Egorova O\.A\., Chief Justice of the Moscow City Court, stated at the conference that before implementation of GJC IIS system created under the Project the level of public awareness about judicial system was low, courts, trial participants and related agencies communicated in paper, the level of judicial transparency was low\. This significantly reduced the effectiveness of Moscow courts, particularly given the increase in the number of requests for judicial protection of violated rights (nearly 0\.5 million cases and materials were submitted to Moscow courts in 2010, while in 2017 1\.5 million cases and materials were submitted)\. 100% of information is received electronically in Moscow City Court from district courts of general jurisdiction through GJC IIS\. Even though the system became operational in December 2017, 22 000 citizens have already created personal accounts on mos-gorsud\.ru portal\. More than 450 thousand documents had been scanned in 2017, generation of statutory reports has been accelerated by 30 times, more than 1500 writs of execution have been submitted to FBS electronically\. Enforcement rate for collection of state fees has been increased in half in Moscow and Moscow region due to electronic interagency interaction\. This indicator was at 90% in 2017\. The Data Center (DC) created under the Project in 2016 based on MCC consolidates all computing resources and data storage media (legal cases in electronic format, audio and video records of court sessions and other data) that support stable and smooth operation of IIS GJC\. As of June 15, 2018, DC contained information on 3 145 758 cases (including cases for previous years transferred to DC) and on 1 376 629 court orders\. The archive of audio and video records of court sessions contains more than 659 Tb of data\. The data provided shows that material and technical capacity of project beneficiaries created under the Project is of high demand and is actively used , and this strengthens judicial transparency and efficiency\. Sustainability of project results obtained by Supreme Court (SC) and Court of Intellectual Rights (CIR) will depend, first of all, on implementation of the mid-term informatization concepts developed under the Project\. The key areas and tasks of further implementation of modern technologies in SC and CIR as specified in the said concepts correspond to the tasks of further development of judicial system and information society in Russia identified at the highest level of government authorities and administration\. The use of project results by beneficiaries will contribute to achieving goals and objectives of high-level programs such as the Concept of the Long-term Social and Economic Development of the RF (SED Concept)35 and the Information Society Development Strategy36 and to achieving sustainability of project outcomes\. 35 The Concept of the Long-term Social and Economic Development of the RF through 2020 (SED Concept) was approved by the RF Government Resolution #1662-p dated 17\.11\.2008 “On the Concept of the Long- Term Social and Economic Development of the RF through 2020”\. 36 The Concept of the Long-term Social and Economic Development of the RF through 2020 (SED Concept) was approved by the President of the Russian Federation No\. Pr-212 of 07\.02\.2008\. Page 147 of 148 The World Bank Judicial Reform Support Project (P089733) Given the advantages of implementation of plans on modernization of specific sectors of the government authorities with the assistance of the international financial organizations as demonstrated under the Project, the project results are expected to be further developed under the Judicial System Development Project (JSDP) to be financed from the loan of the New Development Bank provided to the Russian Federation\. The objective of the new project is to enhance judicial efficiency and improve judicial protection of rights and legitimate interests of individuals and legal entities by infrastructure development and implementation of modern information technologies\. This underlines continuity of strategic judicial system development completed under the Judicial Reform Support Project\.   Page 148 of 148

REVIEW

P149831

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) Report Number : ICRR0021633 1\. Project Data Operation ID Operation Name P149831 PE CAT DDO II Country Practice Area(Lead) Peru Social, Urban, Rural and Resilience Global Practice L/C/TF Number(s) Closing Date (Original) Total Financing (USD) IBRD-84780 12-Mar-2018 70,000,000\.00 Bank Approval Date Closing Date (Actual) 12-Mar-2015 12-Mar-2018 IBRD/IDA (USD) Co-financing (USD) Original Commitment 400,000,000\.00 0\.00 Revised Commitment 70,000,000\.00 0\.00 Actual 70,000,000\.00 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Cynthia Nunez-Ollero Fernando Manibog Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Policy Areas a\. Objectives This operation was a stand alone, single tranche Development Policy Loan (DPL) with a Catastrophe Deferred Drawdown Option (CAT DDO)\. According to the February 8, 2015 Program Document (PD, paragraph 5 and Annex 2, Letter of Development Policy), the objective of this DPL was to "strengthen the institutional and legal framework to contribute toward the reduction of Peru's fiscal and physical vulnerability to disasters\." This review will assess the following objectives: Page 1 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) • to strengthen the institutional and legal framework to contribute toward the reduction of Peru's fiscal vulnerability to disasters\. • to strengthen the institutional and legal framework to contribute toward the reduction of Peru's physical vulnerability to disasters\. b\. Pillars/Policy Areas The PDO would be achieved through reforms under three pillars (Loan Agreement or LA, p\.5-6, and PD, paragraph 35): • Improving efficiency in public resource allocations for disaster risk management, which focused on strengthening the financing mechanisms for the implementation of the National Disaster Risk Management Plan (Plan Nacional de Gestión del Riesgo de Desastres or PLANAGERD) and mainstreaming disaster risk management (DRM) policies into subnational planning\. • Strengthening vulnerability reduction policies in infrastructure for education and housing sectors and flood protection measures, which focused on integrating vulnerability reduction policies in the education and housing sectors and establishing flood protection planning to reduce the impact of extreme weather events\. • Increasing the Government's capacity for post-disaster recovery and reconstruction, which focused on strengthening the Government's institutional capacity to effectively plan and implement post-disaster rehabilitation and reconstruction processes and guarantee the Government's operational continuity\. c\. Comments on Program Cost, Financing, and Dates Program Cost: The original program commitment was US$400 million\. The total actual disbursement was US$70 million\. After partial disbursement, the Government requested to close this operation after assessing its current debt profile, costs, and repayment needs and continued availability of other contingent lines of credit to provide immediate liquidity in case of another natural disaster (ICR, paragraph 18)\. Page 2 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) Financing: The International Bank for Reconstruction and Development financed this Development Policy Loan (DPL) with Catastrophe Deferred Drawdown Option (CAT DDO)\. This CAT DDO had a revolving feature where amounts repaid prior to the closing date would have been available for drawdown (PD, paragraph 37)\. Funds may be withdrawn after the declaration, through a supreme decree, of a State Emergency (Estado de Emergencia)\. The drawdown period for the operation was three years, renewable up to four times as long as the original program remained in place and the Bank reconfirmed the adequacy of the macroeconomic framework at the time of renewal\. Dates: The Loan was appraised on January 20, 2015 and approved on March 12, 2015\. Its effectiveness date was on June 22, 2015\. Loan withdrawals were made on February 15, 2018\. The remainder of the loan (US$330 million) was cancelled on March 12, 2018 at the request of the Government\. The Bank accepted the Government's Supreme Decree No\. 14-2018 PCM signed by the President and published in the official gazette "El Peruano" on February 7, 2018 to fulfill the conditions precedent to withdrawing the funds (ICR, paragraph 17)\. Funds were released on February 15, 2018\. The DPL was closed on March 12, 2018 as originally planned\. A two-day stakeholder workshop was held on September 26-27, 2018\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives According to the World Bank's Study of Natural Disaster Hotspots, Peru ranked 20th among the world's economies most vulnerable to multiple natural hazards\. Peru lies in a highly seismic region called the Pacific Ring of Fire, where about 80% of the world's earthquakes occur\. In addition, the tropical west coast of South America exposes the country to El Niño oscillations, characterized by prolonged torrential rains that affect Peru's northern coasts (PD, paragraph 2)\. About 76% of Peru's population lives in urban areas and about 87% lives in the coastal and mountain regions\. All are exposed to seismic, volcanic, flood, landslides and El Niño /La Niña phenomena, among others\. The Government estimated a 33 million population by 2021 with as much as 63% who would be vulnerable to heavy rainfalls, frosts, droughts, and seismic activity\. Beginning in 2007, the Government collaborated and conducted dialogue with the World Bank to undertake a broad DRM strategy\. Over the past five years, the Government has strengthened its legal and institutional framework to reduce disaster climate risk (ICR, paragraph 6)\. For example, Peru's National Agreement included a Disaster Risk Management Policy that promoted a culture of prevention to contribute toward sustainable development at the national and subnational levels\. (Sistema Nacional de Gestión del Riesgo de Desastres or SINAGERD), established in 2011, adopted a comprehensive approach to DRM by asking all public agencies to include DRM considerations in their respective sectoral and planning processes to avoid new risks and reduce existing ones\. The Government's 2011 institutional framework defined roles and coordination functions for various actors involved in managing disaster and climate risks\. Among these were the Presidency Council of Ministers (Presidencia del Consejo de Ministros or PCM), the new National Center for the Estimation, Prevention and Reduction of Disaster Risks (Centro Nacional de Estimación, Prevención y Page 3 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) Reducción del Riesgo de Desastres or CENEPRED), and the National Civil Defense Institute (Instituto Nacional de Defensa Civil or INDECI)\. The strong commitment of the government to reduce disaster risk was also evident in its comprehensive financial protection strategy against natural disasters by assigning the MEF to define and implement a national financial protection strategy against disasters, which included the resources from the first CAT DDO, among others\. Since 2011, the Government has signed contingent lines of credit with the Bank, other international financial institutions and bilateral cooperation\. These included US$300 million with Banco de Desarollo de America Latina (Development Bank of Latin America or CAF), US$300 million with the Inter- American Development Bank (IADB), US$100 million with the Japan International Cooperation Agency (JICA) and US$100 million from the first CAT-DDO\. The operation's objectives were relevant to the country's national development plan for 2016-2021, which focused on (i) jobs and formalization of workers and economic growth; (ii) public safety and fight against corruption; (iii) improving access to water and sanitation and social investments; and (iv) bringing the state closer to its citizens\. Included in this plan was Pillar 3 for greater security supported by a program that would pay close attention to disasters and other natural hazards (https://www\.presidencia\.gob\.pe/plan-de-gobierno)\. The objective was also consistent also with Peru's Bicentennial Plan 2021 that included policy guidelines to promote risk reduction and disaster risk management within the framework of sustainable development under Strategic Area (vi) Environment and Natural Resources\. The objectives of the operation were also in line with the approved DRM law and the national DRM plan, PLANAGERD 2021\. The impacts of El Niño de Costeras in 2017 only heightened the Government's resolve to continue to mainstream DRM in planning and investment processes at the national, sectors, and subnational levels\. The government's financial and policy frameworks were adequate and in place to rapidly respond to the risk from natural hazards\. This second CAT DDO built upon the policy engagement started in the first CAT DDO (2010, US$100 million)\. This operation helped further strengthen the country's budgetary program for DRM and emergency response\. The number of sectors with enhanced DRM consideration increased from health, and water and sanitation to include education, housing, and flood control\. Further, this operation provided additional resources to boost the country's financial protection strategy against disasters (ICR, paragraph 8)\. The operation was substantially relevant to the World Bank's Country Partnership Framework (CPF) for 2017- 2021\. The Systematic Country Diagnostic, which informed the CPF pointed out the high exposure to climatic risks and natural hazards as a key bottleneck to development (CPS, Table 2)\. This operation directly supported Pillar 3 - Natural Resource and Climate Risk Management (CPF, paragraph 39) and directly contributed to meeting objective 8 - Strengthen the Management of Natural Resources\. The Bank's existing portfolio in Peru included access to four contingent lines of credit for US$3 billion, including two DPF-DDOs and two Catastrophe Deferred Drawdown Option (CAT-DDO)\. The DDOs also represented an important fiscal buffer in the event of an adverse shock (CPF, paragraph 42)\. Rating Page 4 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) Substantial b\. Relevance of Design The operation's theory of change was coherent - that disaster risk reduction needed to be built on strong institutions and preparation, and not just to respond to an emergency\. A framework for coordination and processes to rapidly access liquidity following a disaster needed to be in place\. At appraisal, the Bank team determined that the country's macroeconomic policy framework was adequate for the operation to proceed (PD, paragraph 16)\. The country's conservative fiscal stance and active liability management policy led Moody's to upgrade its sovereign rating to A3 with a stable outlook because of (a) continued strong fiscal position and good management of its public debt, (b) structural reforms that fostered productivity increases and positive economic growth, and (c) expected faster rate of GDP growth (PD, paragraph 14)\. The country was also considered to have adequate fiscal space to respond to external shocks if necessary (PD, paragraphs 15 - 16)\. The PDO was straightforward\. Indicators and expected results in the policy matrix were well designed\. The causal chain between the prior actions and the expected outcomes was clear\. The policy matrix provided policies that were specific and measurable (PD, Table 3)\. These prior actions were relevant and aligned with the operation's PDO and facilitated the outcomes of the operations\. The approval of the DPL was contingent on the following prior actions linked to the PDO whereby the Government: • has strengthened the financial mechanisms for the implementation of the National DRM plan by (i) integrating the existing DRM budgetary program in the new DRM policy framework, and (ii) including disaster risk information in regional development planning\. • has integrated seismic risk-reduction considerations for existing and new infrastructure into the National School Infrastructure Program (Programa Nacional de Infraestructura Escolar or PRONIED)\. • has established the financing mechanisms for a pilot program to reduce seismic vulnerability of low- income housing\. • has taken measures to improve the design of flood protection programs at national and subnational levels by (i) expanding the mandate of National Water Authority (Autoridad Nacional del Agua or ANA) to conduct hydraulic studies that support the design of regional and local flood protection programs, and (ii) defining minimum specific standards for the preparation of pre-investment projects under the National Public Investment System (Sistema Nacional de Inversión Publica or SNIP) framework\. • has taken measures to improve post disaster recovery and reconstruction processes by (a) establishing the regulatory and institutional framework for reconstruction, and (b) defining MEF's internal coordination mechanism to finance rehabilitation and reconstruction processes\. The performance indicators were mutually reinforcing and causally linked to the objective\. The legal and regulatory procedures were directly linked to operationalizing the functions of various institutional DRM stakeholders at the national and subnational levels\. The focus on strengthening the legal and institutional DRM capacities complemented the fiscal aspects and resource mobilization directed at DRM\. Design also Page 5 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) emphasized inter agency consultation following the successful implementation of the first CAT DDO, which will end in December 2019\. The choice of a DPL CAT DDO was appropriate because of its multi-sector scope, the participation of institutions at the national and subnational levels in carrying out DRM responsibilities, and rapid access to liquidity in case of a disaster\. This was a single tranche operation built on the achievements and lessons learned from the implementation of the first CAT DDO\. The CAT DDO operations in Peru complemented the policy reforms and supported policy designed to consolidate DRM in the country\. The key areas included sector risk reduction efforts, processes related to post disaster recovery and institutional development and financial mechanisms to improve public resource allocation for DRM\. This supported the Government's move toward comprehensive DRM and away from emergency response\. CAT DDO was complemented by Reimbursable Advisory Services and Technical Assistance designed to Peru School Infrastructure Baseline and the Peru School Infrastructure Programmatic approach, the latter coming up with a proposal for a national school infrastructure plan which integrated the mainstreaming of DRM in the sector and water, sanitation, and hygienic aspects\. Both products strengthened the dialogue within the Ministry of Education and supported the inclusion the disaster risk reduction in school infrastructure investments and interventions\. Rating Substantial 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective • to strengthen the institutional and legal framework to contribute toward the reduction of Peru's fiscal vulnerability to disasters\. Rationale The prior actions that were required and fulfilled by the time this DPL was approved were in line with the main objective of PLANAGERD to reduce the vulnerability of the population and their livelihoods to disaster and climate risks\. Reforms in this policy area strengthened the financing mechanisms to implement PLANAGERD at all levels of Government including mainstreaming DRM policies in regional planning\. The achievements of Objective 1 would be assessed in terms of the corresponding policy pillars, namely Pillars 1 and 3\. The prior actions that were relevant to the above objective were: Page 6 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) • the Government strengthened the financial mechanism for the implementation of PLANAGERD by integrating the existing DRM budgetary program in the new DRM policy framework and including disaster risk information in regional development plans; • the Government has taken measures to improve post disaster recovery and reconstruction processes by (i) establishing the regulatory and institutional framework for reconstruction; and (ii) defining the Ministry of Economy and Finance's (MEF) internal coordination mechanism to finance rehabilitation and reconstruction processes\. Pillar 1 - Improving efficiency in public resource allocations for DRM: OUTPUTS: • On May 12, 2014 the Supreme Decree No\. 034-2014-PCM approved the 2014-2021 PLANAGERD\. • On December 4, 2014 the 2015 National Budget Law No\. 30281, Annex 8 provided Allocations for the Budgetary Program (BP068)\. • On May 23, 2014, the National Center for the Estimation, Prevention, and Reduction of Disaster Risk (Centro Nacional de Estimación, Prevención, y Reducción del Riesgo de Desastres or CENEPRED) passed the Administrative Resolution (Resolución Jefatural) No\. 044-2014-CENEPRED/J, which approved the guidelines for incorporating disaster risk management in Regional Development Plans\. • On March 12, 2018 the 2016 and 2017 annual budgetary performance reports on PLANAGERD implementation under the results-based budgeting programs were published, meeting the target\. • 15 out of 25 regional governments approved regional plans for the prevention and reduction of disaster risk meeting target\. Four additional regional plans were also prepared and in the process of approval after project closing\. OUTCOMES: The Government improved its efficiency in public resource allocation for DRM as evidenced by: • integrating the existing results-based DRM budgetary program (BP068) in the new DRM policy framework as reported in annual budgetary performance reports reported in 2016 and 2017\. The Vulnerability Reduction and Emergency Response Budgetary Program 068 (PP068) was created in 2010 and was the financial mechanism through which public resources were channeled to promote investments in disaster risk reduction activities at the subnational and national levels\. Budget allocations for DRM have been increasing in response to forecasts of a strong El Niño event in 2015 and 2016\. Such increases highlighted the need to have a program line dedicated to rapid emergency response activities\. In 2018 and 2019, the budget created a separate line for emergency activities to provide flexibility in the use of resources for executing agencies during an emergency response\. The 2016 and 2017 budgetary Page 7 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) performance reports published in the Presidency of the Council of Ministers (Presidencia del Consejo de Ministros or PCM) website\. The budget program showed the financial resources required to implement the national DRM plan and contribute to achieving the objectives established under PLANAGERD 2014-2021\. • including disaster risk information in 15 approved regional development plans (target 15, achieved) to prevent and reduce disaster risk\. The 25 regional governments defined, prioritized, and designed mitigation measures and risk reduction interventions\. CENEPRED gathered hazard and risk information and assisted the regional governments to develop regional plans using the guidelines approved in 2014 and ensured that resources were prioritized for key interventions\. Four other regions have completed their regional plans and were expected to be approved in mid-2019\. The approval is taking time because of internal processes between the technical and legal offices in the regions\. Provincial and municipal level plans were developed and approved, demonstrating the commitment from various levels of government to the DRM agenda\. Pillar 3 - Increasing the Government's capacity for post disaster recovery and reconstruction\. This pillar was designed to increase the Government's capacity to rapidly deploy for post disaster recovery and reconstruction by establishing processes that guarantee operational continuity following a disaster\. OUTPUTS: • Supreme Decree (Decreto Supremo or DS) No\. 034-2014-PCM approved PLANAGERD 2014- 2021\. PLANAGERD included Objective 4: Strengthen the Capacity for Social, Economic, and Fiscal Recovery; and Objective 5: Build Institutional Capacity in Disaster Risk Management\. It also allowed government entities to develop sector guidelines for the post disaster reconstruction process and operational continuity plans\. The main objective is to build capacity in the various sectors to restore basic services and provide support to those in affected areas\. Due to the impacts of El Niño Costero (landslides, floods, and huaycos) the sectors prioritized emergency response activities and provided inputs to the ARCC for its reconstruction plans, which allowed the sectors to improve their respective post disaster guidelines following the experience\. CENEPRED supported the sectors in developing sector guidelines for the post disaster reconstruction process\. Through SIMSE, CENEPRED tracked and monitored progress made by government entities in formulating and approving these guidelines\. • MEF's Ministerial Resolution No\. 034-2015 -EF/10 dated January 25, 2015 defined the internal coordination mechanism to finance rehabilitation and reconstruction process\. • In May 2017, DS 132-2017-EF established the multi sector commission for the fund for intervention in the event of natural disasters (FONDES), achieving the target\. The policies and procedures incorporated the financing of post disaster rehabilitation and reconstruction processes and an Annex with procedures to manage resources for recovery and reconstruction\. This was an important step to have a mechanism in place with clearly defined roles, responsibilities, procedures and criteria to channel resources to respond in post disaster contexts\. The decree also included the scope and types of interventions and investment Page 8 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) projects that can be financed by FONDES, useful to the sectors and subnational governments which submit requests for financing by FONDES\. • The National Civil Defense Institute (Instituto Nacional de Defensa Civil or INDECI) with RM 028-2015- PCM approved the guidelines for management operational continuity for the three levels of government under the National Disaster Risk Management System\. These operational continuity plans identified critical activities and services which must be executed and provided without any service disruption similar to the protocols to respond in an emergency or disaster\. INDECI provided technical assistance on the guidelines approved in 2015 and supported the government entities at the three levels of government in developing these plans\. OUTCOMES: The institutional capacity of the Government to plan and implement post disaster rehabilitation and reconstruction was strengthened and guaranteed continuity of government operations following a disaster as evidenced by • 6 national government sectors (agriculture and irrigation, justice, transport and communications, housing, education, and CENEPRED) have approved sector guidelines for the post disaster reconstruction process\. Five other sectors were awaiting approval at project closing\. • 20 (original target 37, almost achieved) national government agencies have approved operational continuity plans in the event of a disaster\. INDECI continued to work with the remaining government agencies to prepare their plans and approved in the coming year\. INDECI carried out over 98 technical assistance activities\. But there is still need to for the various entities to better understand and identify critical activities for which disruption must be minimized and key components for the operational continuity plans identified\. The process for obtaining formal approvals for these plans from the authorities within each government entity needs to be expedited\. • An Operational Manual was approved with policies and procedures for the financing of post disaster rehabilitation and reconstruction processes\. On balance, the significant outcomes achieved under Pillar 1 lead to an overall rating of Substantial for the efficacy of PDO 1, while taking note that achieving Pillar 3 had some shortcomings\. There appears to be a likelihood that a number of regional entities that have yet to integrate DRM in its development plans will be achieved in the future because the Vulnerability Reduction and Emergency Response Budgetary Program 068 (PP068) was in place\. However, only 6 national government sectors had guidelines for post disaster reconstruction while five other sectors were awaiting approval by project closing (ICR, paragraph 44)\. In addition, while INDECI continued to provide all levels of government technical assistance to produce their respective continuity plans, their approvals needed to be expedited (ICR, paragraph 45)\. Page 9 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) Rating Substantial PHREVDELTBL PHEFFICACYTBL Objective 2 Objective • to strengthen the institutional and legal framework to contribute toward the reduction of Peru's physical vulnerability to disasters\. Rationale The prior actions that were required and fulfilled by the time this DPL was approved were also in line with the main objective of National Disaster Risk Management Plan (PLANAGERD) to reduce the vulnerability of population and their livelihoods to disaster and climate risks\. The prior actions that were relevant to the above objective were: • the Government integrated seismic risk reduction considerations for existing and new infrastructure under the National School Infrastructure Program (Programa Nacional de Infrastructura Escolar or PRONIED); • the Government has established the financing mechanism for a pilot program to reduce the seismic vulnerability of low-income housing; • The Government has taken measures to improve the design of the flood protection program at the national and subnational levels by • (I) expanding the mandate of the National Water Authority (Autoridad Nacional del Agua or ANA) to conduct hydraulic studies that support the design of regional and flood protection programs; and • (ii) define specific minimum standards for the preparation of flood protection pre-investment studies under the National System for Multi annual Programming and Investment Management (Sistema Nacional de Programación Multianual y Gestion de Inversiones or SNIP) framework\. Pillar 2 - Strengthening vulnerability reduction policies in infrastructure for the education and housing sectors and flood protection measures\. This pillar was designed to increase (i) the education sector's capacity to implement disaster risk reducing policies in school infrastructure; (ii) the housing sector's capacity to support and facilitate the reduction of seismic vulnerability of low income households; and (iii) the institutional capacity to define and implement flood protection policies\. OUTPUTS: •The Supreme Decree No, 004-2014-Ministerio de Educación or MINEDU established the National School Infrastructure Program (Programa Nacional de Infrastructura Escolar or PRONIED)\. In 2015, Page 10 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) PRONIED implemented Plan Lima\. This short-term plan was designed to reduce critical risk conditions in over 350 school facilities in the Metropolitan Lima area by (I) demolishing school buildings at risk of collapse; (ii) installing temporary classrooms; and (iii) providing for maintenance and refurbishment\. PRONIED installed 825 prefabricated school modules and works in 25 school facilities\. After El Niño Costero in 2017, MINEDU carried out risk reduction interventions in the affected regions in the north by installing temporary classrooms\. MINEDU then reviewed the methodology used to measure how much risk was reduced by the interventions\. By March 2017, MINEDU approved the first National School Infrastructure Plan 2025 (Ministerial Resolution No\. 153-2017), which guided policy and investments and included a seismic vulnerability reduction program\. In 2018, PRONIED implemented a pilot seismic retrofitting program with plans to scaling up in the coming years\. • About 75% of the housing stock of 7\.8 million houses were in urban areas and at least 50% were in cities with high seismic hazard (e\.g\., Lima, Arequipa, Moquegua, and Chincha)\. The Grant Program for the Protection of Housing Vulnerable to Seismic Risk, started in 2014, provided low income households with financial and technical support for seismic retrofitting interventions of their homes through the Ministry of Housing, Construction, and Sanitation (Ministerio de Vivienda, Construcción y Saneamiento or MVCS)\. The MVCS engineers assessed and executed the reinforcement civil works to create 14 m2 safe zone in the event of a high intensity earthquake\. Using technical information from seismic microzonation studies that were available for 12 districts helped MVCS to begin retrofitting after the August 2016 earthquake, first in Lima, followed by Arequipa the second largest city with close to 1 million residents\. MVCS disbursed 4,246 grants or 65% of the total 6,512 eligible households under the program as of September (original target was 80% of 8,303 households, almost achieved)\. • At the beginning of the PEN100 million grant program, each grant was established at PEN12,000, later increased to PEN15,000\. After the 2016 earthquake in Caylloma, Arequipa, each grant was increased to PEN23,500\. With the grant program envelope remaining at PEN100 million, the number of eligible households was adjusted over time\. By 2018, disbursements have reached PEN65 million\. By October 2018, MVCS approved the regulatory guidelines to include interventions in the regions most affected by the El Niño (Ministerial Resolution No\. 336-2018-VIVIENDA) and would include 1,177 households in 11 regions\. Lessons learned in implementing this grant program allowed the MVCS to look to longer term housing vulnerability reduction policy, taking into consideration the high seismic risk of the housing stock and exposure to other natural hazards\. • The ANA provided technical assistance to subnational governments to design flood protection programs\. In 2017 two studies were approved - identification of vulnerable populations by the activation of quebradas (rivers) and Flood Atlas for the prioritized rivers of Agua Jequetepeque Zarumilla\. This study outlined the flood prone areas caused by 12 rivers\. ANA worked with Japan International Cooperation Agency (JICA) on a study for flood management at the national level, analyzing 159 watersheds to inform the cost estimates for investment projects\. In 2017, ANA identified 627 critical points nationwide at risk of flooding and erosion and was provided to the 24 regional governments and sectors within the framework of SINAGERD\. The evidence-based knowledge developed by ANA was key to identifying, prioritizing, and designing interventions for critical flood prone areas\. They also provide technical guidance and recommendations to implement regional and local flood protection areas\. Page 11 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) • 5 studies in flood risk prevention and mitigation in watersheds were approved by project closing (target 4, exceeded)\. An additional 7 additional studies were in the process of being approved by project closing\. OUTCOMES: • The government implemented PRONIED to reduce seismic risk in Metropolitan Lima's school infrastructure\. This seismic risk was measured by a Risk Indicator (RI) or the total ratio of expected annual loss to the total value of exposure times 1,000\. The Lima Metropolitan area, with a portfolio of 1,969 school facilities, had a baseline RI of 20\.3%\. By September 2018, the government has reduced the earthquake risk of Lima schools by 13%, exceeding the target of 10% (See Annex 3, Borrower's Comments on the ICR or Borrower's Final Implementation Report, Section 3, Table 1)\. • A Grant Program to Protect Housing Vulnerable to Seismic Risk was established with an envelope of US$100 million\. By project closing, 4,235 grants benefited 65% of 6,512 eligible households (original target was 80% of 8,303 households or 6,642 households, almost achieved)\. The initial grant established was PEN12,000 per household\. This was increased first to PEN15,000 and then to PEN23,500 to include households in Arequipa following the earthquake there\. With the envelope remaining constant at US$100 million, eligible households were reduced from 8,303 to 6,512\. • Five studies for flood risk prevention and mitigation in watersheds have been approved (target 4)\. Seven more studies were expected to be approved in 2019\. These studies included a vulnerability analysis and proposed both structural and non-structural interventions focused on risk reduction and reducing the probability of losses from an extreme flood event\. The studies were submitted to executing entities, regional and local governments for implementation through investment projects\. ANA provided technical advice at the subnational level and supported the formulation of eight pre-investment technical studies for mitigation works in 8 rivers\. These were submitted to the regional and municipal governments for their approval and implementation\. The efficacy of this objective based on the outcomes under Pillar 2 was rated substantial because processes were instituted for future DRM strategies in the sectors\. Rating Substantial PHREVDELTBL PHREVISEDTBL 5\. Outcome Page 12 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) The relevance of objectives was rated substantial\. The relevance of design was also rated substantial\. On balance, the significant outcomes that were achieved under Pillars 1 and 2 lead to an overall outcome rating of substantial, while noting that there were shortcomings in achieving outcomes under Pillar 3\. On the basis of these ratings, the overall outcome rating is satisfactory\. a\. Outcome Rating Satisfactory 6\. Rationale for Risk to Development Outcome Rating There was a modest risk to sustaining the development outcomes of this operation\. • Institutional and legal frameworks were in place to support disaster risk management in the country at the national level\. The strong Government commitment of the government to reducing disaster risk was evident in its comprehensive financial protection strategy against natural disasters\. The implementing agency, the Ministry of Economy and Finance (MEF) assessed the country's current debt profile and assessed the costs associated with this CAT DDO including repayment obligations and concluded that after the partial disbursement of US$70 million this second CAT DOO would be closed (ICR, paragraph 18)\. Peru still had access to US$100 million from the first CAT DDO, which will close in December 2019\. In February 2018 Peru signed the first catastrophe bond issued by the World Bank to provide US$200 million of insurance protection against earthquake losses using parametric formula\. In addition, laws are in place to continue to manage disaster risk\. These laws and policy reforms, however, require time to implement and become operational on the ground\. • The legal and institutional framework that would strengthen the government's commitment to reducing risk from disasters need to include also the subnational levels, both at the local government and the regional levels\. The national level entities including the MEF, as well as sector level entities need to offer their technical support and human resources to help focus the investments and policy agenda that are implemented at the subnational level\. Page 13 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) • The continuing threat from natural hazards remain\. But the financial structure that the government has in place and the policy framework it has adopted would mitigate this risk because of its preparedness to rapidly respond with post disaster recovery and reconstruction\. a\. Risk to Development Outcome Rating Modest 7\. Assessment of Bank Performance a\. Quality-at-Entry The Bank was well prepared for this operation\. Lessons from the first CAT DDO, which is scheduled to close in December 2019 informed the design of this single tranche operation\. The project was well aligned with the Government's priorities and served as an avenue to deepen the engagement with the Bank on disaster risk management\. The policy matrix and prior actions were based on detailed and robust analytics, were in line with the Government's priorities, and helped strengthen their commitment to reducing the risk from natural hazards\. Following the success of the first CAT DDO also implemented by the MEF, the Government provided evidence of its commitment to implementing comprehensive DRM program\. Evidence was derived from the progress of three policy areas that were rated as Highly Satisfactory (PD, paragraphs 80-81)\. All seven policy results were achieved in 2014\. MEF as coordinating body was supported by the General Directorate for Debt and Public Treasury, the Directorate of Selected Program Coordination Unit and the respective line ministries and agencies working on policy reforms\. Quality-at-Entry Rating Satisfactory b\. Quality of supervision The Bank conducted semiannual missions to assess progress towards expected results and achieving the PDOs\. The Bank also maintained close policy dialogue with the Government\. The Bank provided key technical support especially during the aftermath of the March 2107 El Niño Costero event\. In addition, the Bank provided technical assistance to the Ministry of Education in its effort to integrate risk reduction in school infrastructure investments\. As a result, MINEDU came up with a proposal for a National School Infrastructure Plan\. This Plan was based on a series of technical and analytical reports and included a national level seismic risk assessment of 45,000 school facilities (or 180,000 school buildings)\. MINEDU also convened a research group from the top local universities to develop a retrofitting solution for a group of highly vulnerable school buildings\. Quality of Supervision Rating Satisfactory Page 14 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) Overall Bank Performance Rating Satisfactory 8\. Assessment of Borrower Performance a\. Government Performance Evidence of the Government’s strong commitment to the DRM agenda was reflected in implementing the institutional, legal, and budgetary processes as provided in the policy matrix that supported this operation\. There was strong support to the five prior actions that led to meeting the expected outcomes of the 3 policy areas or pillars\. Achievements under each pillar were mostly substantial and strengthened the legal and regulatory framework to reduce the country’s fiscal and physical vulnerability to disasters\. The Government’s commitment to a comprehensive DRM strategy was also evident in its support to expanding its financial protection strategy against disasters\. In addition to these first and second CAT DDOs, the Government joined Chile, Colombia, and Mexico in forming the Pacific Alliance to access the US$1\.36 billion sovereign sponsored catastrophe bond issued by the World Bank\. Peru’s US$200 million risk insurance covered earthquake risks for 3 years\. Triggers were parametric with data to be supplied by the US Geologic Survey (ICR, paragraph 19)\. Two events affected implementation\. The first, in 2016 and 2017, CENEPRED and INDECI were transferred to the Ministry of Defense\. This move caused some implementation delays under Pillar 3 regarding agencies with approved continuity policies, achieving only 20 of the 37 agencies with approved continuity plans\. The second, in March 2018 when the president resigned, a new administration was sworn in, causing some delays but key technical staff remained to implement the remainder of the program\. There was continued interest in the Government to move forward with the DRM agenda, expressing interest in another CAT DDO after the first one ends in December 2019 that would allow the Government to further consolidate DRM in the planning processes at the subnational levels\. There was also interest expressed in support of an Investment Project for the education sector to build on the outcome of the technical assistance, i\.e\., a proposal for a National School Infrastructure Plan based on a national level seismic risk assessment of 45,000 school facilities representing 180,000 school buildings and a retrofitting solution for highly vulnerable school buildings (ICR, paragraph 59)\. Government Performance Rating Satisfactory b\. Implementing Agency Performance The Ministry of Economy and Finance (MEF) implemented this operation\. It had a strong inter-institutional coordination and was supported by the General Directorate for Debt and Public Treasury (Direccion de General de Endeudamineto y Tesoro Publico or DGETP), the Directorate-Sectoral Program Coordination Unit (Direccion Unidad de Coordination de Prestamos Sectorales or DUCPS) and the respective line Page 15 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) ministries and agencies tasked with carrying out DRM policy reforms such as INDECI, CENEPRED, the Secretariat for DRM of PCM, MVCS, MINEDU, and ANA (PD, paragraph 81 and ICR, paragraph 61)\. As noted above, even with a new administration taking over in March 2018, there was adequate transition arrangement to complete project closing\. This was evident from the implementing agency preparing its own completion report outlining the results and outcomes of the operation and sustainability challenges ahead\. One of these challenges was strengthening the link between SINAGERD and MEF’s Disaster Reduction Financial Management Strategy to improve evidence-based interventions financed by the budget program PP 0068\. Another was how to accomplish a more efficient transfer of risks to reduce the impact of disasters on public resources\. Implementing Agency Performance Rating Satisfactory Overall Borrower Performance Rating Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The objectives of the operation were clearly stated\. The theory of change was sound\. Indicators and expected results in the policy matrix were well designed in terms of being specific and causally linked to measuring the achievement of the PDO\. These were also relevant to the overall program and were time bound\. Indicators were tied to prior actions supporting the pillars of the operations\. Targets were in line with the PLANAGERD 2014-2021, which established a set of specific objectives and priority areas in disaster risk management\. Indicators were part of ongoing government programs with established reporting mechanisms\. M&E design was well embedded in the MEF\. The MEF as implementing agency was assigned to monitor the operation\. b\. M&E Implementation Input, outputs, and outcomes were collected and analyzed in sound manner\. Some challenges that affected monitoring progress during implementation were: • the initial difficulty in applying the methodology to measure the risk reduction indicator to capture the share in how the seismic risk in school infrastructure was reduced; and • the change in the number of low-income households eligible for grants under the program to protect housing vulnerable to seismic risk\. Originally, there were 8,303 eligible households\. Eligible households were expanded to include those in Arequipa after the August 2016 earthquake\. By October 2018, 1,177 Page 16 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) households in 11 regions most affected by El Niño were included\. The program adjusted grant amounts from an initial PEN12,000 per household to PEN15,000 per household and finally to PEN23,500 per household by project closing\. The overall funding envelope was unchanged at PEN100 million and targeted 6,512 eligible households\. These indicators were new to the implementing agency to monitor but were rectified during implementation with the Bank working with the concerned entities to refine the data collection approach for these indicators\. c\. M&E Utilization Decision makers were informed of progress and resources required in different sectors under the program - housing, education, and flood protection\. For example, CENEPRED directed its technical assistance to the remaining 7 of the 26 regional governments that needed help in preparing and approving their respective continuity plans\. M&E had reported that 15 regional governments had approved their disaster prevention and risk reduction plans while another 4 were in the process of being approved\. M&E Quality Rating Substantial 10\. Other Issues a\. Environmental and Social Effects No safeguard policies were triggered by the operation\. The PD expected that the prior actions for the operation were not likely to cause significant effects on Peru's environment, forests, and other natural resources (PD, paragraph 71)\. Each pillar of the operation was noted to enhance proper natural resource and environmental management\. b\. Fiduciary Compliance No fiduciary issues arose from this operation and no compliance problems were noted in the ICR\. The PD noted that the results of the 2009 Public Expenditure and Financial Accountability (PEFA) concluded that, overall, public financial management was functional well and in line with international best practices\. Proceeds from the DPL CAT DDO were provided as budgetary support to the Government and not earmarked for any government agency\. This operation did not have any procurement requirement\. The ICR did not mention that any financial audit was conducted\. Page 17 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) c\. Unintended impacts (Positive or Negative) --- d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Satisfactory Satisfactory --- Risk to Development Modest Modest --- Outcome Bank Performance Satisfactory Satisfactory --- Borrower Performance Satisfactory Satisfactory --- Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 12\. Lessons The ICR identified four lessons and three are presented below that may be useful to other similar operations (with some paraphrasing): • The impacts from El Niño Costero highlighted the need to integrate risk reduction in the development and planning processes, particularly for entities at the sector and subnational levels that are tasked with managing vulnerable infrastructure\. In the case of Peru, strengthening the subnational governments’ technical and financial capacity was critical to ensure that risk reduction criteria were integrated into investments and that there was local capacity to implement continuity plans following a natural disaster\. Page 18 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) • The design of a rapid disbursing CAT DDO operation and pursuing policy reforms to promote a strong DRM program require a sound understanding of the institutions, challenges, and development priorities of the country\. Good dialogue is paramount in shaping the dialogue with the country and helping define the metrics that would monitor progress within the three-year timeframe of the operation\. These metrics should tap into the government's ongoing efforts and programs\. In the case of Peru, the dialogue and inclusion of the education, housing, and water sectors, ensured that reforms could be translated into concrete actions in risk reduction investments and interventions\. Introducing new indicators require careful assessment of local capacity to evaluate its progress and may require additional support during implementation\. • The use of CAT DDOs may be an effective entry point to engage with key sectors to further advance the DRM agenda in a country and promote investments in risk reduction\. In the case of Peru, technical assistance activities in the education sector that covered seismic risk assessment of school facilities resulted in the approval and adoption of the first National School Infrastructure Plan in 2017, currently under implementation\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR was well prepared and provided a detailed overview of the operation\. It was concise and followed guidelines\. The report was results focused, generally aligned with the PDO, and provided a detailed and accurate overview of the operation\. The theory of change and the policy matrix were effective in supporting the rationale for the ratings\. The report also effectively provided data to assess project relevance and efficacy\. The evidence provided and the lines of reasoning supported the ratings\. There was ample evidence to support the Government's efforts in strengthening the fiscal aspects of implementing of a comprehensive DRM strategy\. For example, the various decrees outlined how these supported the policy actions and pillars that contributed to achieving the expected outcomes of the operation\. It was candid as reflected in the implementing agency's own assessment of the challenges faced during implementation\. The lessons were clear, useful, and based on the evidence outlined in the ICR\. There was a minor shortcoming in terms of providing a complete account of the implementation of M&E although the information regarding how the indicators were refined were found in the Annex (Annex 3, Summary of Borrower's ICR)\. Page 19 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review PE CAT DDO II(P149831) a\. Quality of ICR Rating Substantial Page 20 of 20

REVIEW

P056393

 ICRR 11949 Report Number : ICRR11949 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 11/24/2004 PROJ ID : P056393 Appraisal Actual Project Name : Second Social Action Fund Project Costs 47\.0 42\.84 Project (fas Ii) US$M ) (US$M) Country : Angola Loan/ Loan US$M ) 33\.0 /Credit (US$M) 32\.4 Sector (s): Board: SP - General Cofinancing 9\.0 7\.78 education sector (35%), US$M ) (US$M) Sanitation (30%), Other social services (25%), Health (10%) L/C Number : C3399 Board Approval 00 FY ) (FY) Partners involved : Norway, Sweden, Italy, Closing Date 02/29/2004 02/29/2004 USAID, Shell, British Petroleum Prepared by : Reviewed by : Group Manager : Group : Soniya Carvalho Roy Gilbert Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives To increase the sustainable utilization of basic social and economic services by target populations through the provision or rehabilitation of social and economic infrastructure at the community level; capacity building at the level of communities, partners, local government and Social Action Fund (Fundo de Apoio Social, FAS); and strengthening the M&E system (PAD, page 2)\. b\. Components The project had four components : 1\. Social and Economic Infrastructure (Appraisal US$ 28\.9m; Actual US$ 31\.55m): To support a wide range of small and medium scale social and economic infrastructure subprojects \. 2\. Capacity Building (Appraisal US$ 3\.30m; Actual US$ 2\.02m): To transfer skills and improve methods for stakeholders at the community, implementing partners, local government officials, and FAS levels \. 3\. Monitoring and Evaluation (M&E) (Appraisal US$ 1\.80m; Actual US$ 0\.12m): To improve the existing MIS system and design and implement a more comprehensive M&E system which would include the more regular use of Beneficiary Assessments and qualitative evaluations \. 4\. Institutional Support (Appraisal US$ 3\.60m; Actual US$ 6\.47m): To support administration and operating costs of FAS and strengthen its procurement and financial management capacities \. No formal restructuring of the project was undertaken, but the focus of the capacity building component was shifted shortly after effectiveness from community capacity building to building capacity of local administrations and implementing partners\. c\. Comments on Project Cost, Financing and Dates The actual total project cost was US$ 42\.84m against an appraisal estimate of US$ 47\.0m\. Physical and price contingencies amounted to US$ 4\.50m each\. The Bank disbursed US$ 32\.4m of the US$ 33\.0m planned at appraisal (ICR page 19)\. Government contribution was slightly over half that projected at appraisal (US$ 2\.66m against US$ 5m)\. The cofinancing figures indicated above include both donor and community contributions (the ICR lumps them together)\. Community contributions were lower than the US$ 4m expected at appraisal while donor contributions slightly exceeded the appraisal estimate of US$ 5m\. Over half of the disbursements were in 2002 after signing of the peace accord\. The project closed on schedule \. 3\. Achievement of Relevant Objectives: Based on the limited evidence in the ICR, the project objective of achieving an increase in the sustainable utilization of basic economic and social services appears to have been met \. This will be verified through an OED project performance assessment (See Section 8 and 9 below)\. 4\. Significant Outcomes/Impacts: 1\. Improved access to education, enhanced quality of education, reduced distance to health care, reduced labor in fetching water and washing, and better household hygiene (2002 and 2003 Beneficiary Assessments)\. 2\. 89 and 90 percent of the beneficiaries "approved of" the FAS (2002 and 2003 Beneficiary Assessments)\. 3\. FAS was able to deliver a significant amount of infrastructure in a conflict -affected country\. It also expanded links with local government through provincial and municipal training \. The ICR notes "In a country that was characterized by bad governance, FAS functioned for both the public and the private sector as a transparent example of good governance\. FAS also expanded the link with local government and implementing partners and helped develop the institutional capacity of local authorities and partner organizations \. There was clear impact of training in procurement, financial management, and disbursement procedures at this intermediary level \. FAS II strengthened the partnerships with local government through provincial and municipal training for partners and administrations, and through the Consultative Committees in each province " (ICR page 10)\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): 1\. There are questions about sustainability \. According to the borrower's input to the ICR : "The issue of sustainability of this infrastructure is still a source of concern, especially in the health sector, due to the irregular supply of medicines and establishment of specialized infrastructure \. There is a lot of involvement of the community in water and sanitation sector projects \.but the lack of resources is still an obstacle to the creation of their own alternatives \. FAS and its partners, especially government structures, shall have to study mechanisms to ensure that project sustainability is not endangered, as the situation is currently " (ICR page 34)\. In addition, the 2002 and 2003 Beneficiary Assessments point to weaknesses in communities' sense of responsibility for maintenance of provided infrastructure\. Qualitative data from the Beneficiary Assessment and project site visits suggest that the absence of capacity building specifically targeted to communities affected community ownership and participation (ICR page 7)\. The ICR notes that the realignment of the training to focus on municipal and regional administrations rather than community capacity building had an impact of the ability of communities to manage and sustain their projects (page 11)\. 2\. Community training, a weakness in the first project, remained a weakness in this follow -on project as well\. Although there possibly was some community capacity enhancement through learning by doing, this effect does not appear to have been significant based on the ICR (especially, page 9): "The Beneficiary Assessments in FAS II showed that the learning by doing effects mostly do not spill over into any further community development activity, the main focus remains the subproject "\. 3\. The logframe was not finalized until the first half of 2001, FAS management did not consistently track all impact and output indicators in the logframe, and it was of limited use in project management \. Some key M&E data were lacking including on achievement of the project objective \. The ability to monitor impacts needs strengthening \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory To be verified through an OED project performance assessment given limited and conflicting evidence in the ICR \. Institutional Dev \.: Substantial Substantial Sustainability : Likely Non-evaluable The ICR contains conflicting information on sustainability with the sustainability analysis and a-posteriori evaluation giving a positive picture and other evidence in the ICR (see point 1 in Section 5 above) showing a negative picture\. It is not possible to rate sustainability either "likely" or "unlikely" at this stage\. Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Unsatisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Building capacity requires careful planning and adequate allocation of time and budget \. Particular attention is also needed to systematically monitor and evaluate capacity building initiatives \. In a post-conflict situation, a quick and flexible response is needed to country situations \. 8\. Assessment Recommended? Yes No Why? To verify ratings and contribute to OED's evaluation of World Bank support to LICUS \. 9\. Comments on Quality of ICR: The ICR has major shortcomings: 1\. The ICR provides limited and conflicting evidence of the achievement of the project objective of increasing the "sustainable utilization" of basic social and economic services \. The ICR provides inadequate utilization data (also a reflection of the weaknesses in the M&E system )\. 2\. The ICR fails to provide a coherent analysis of the sustainability issue and reconcile conflicting information \. While the a-posteriori evaluation and sustainability analysis give a positive picture, other parts of the ICR including the borrower's input raise concern about sustainability (see point 1 in Section 5 above)\. Furthermore, FAS II failed to adequately mitigate two risk factors for sustainability identified in the PAD : community training (which was postponed to FAS III), and a focus on rehabilitation rather than new infrastructure (which did not materialize--76 percent of the infrastructure supported by FAS II was new infrastructure )\. In addition, since over half of project disbursements were made after the signing of the peace accord in April 2002, most of the infrastructure is likely to have been relatively recent at the time of the sustainability evaluations \. There is also some lack of clarity about the timing of the a-posteriori evaluation--page 28 of the ICR says it was after one year of "implementation" of the subproject while page 31 says it was one year after the subproject's "delivery" to the community\. 3\. The ICR does not indicate the soundness of the methodology underpinning the sustainability analysis and a-posteriori evaluation which it cites \. 4\. There are discrepancies in a number of figures reported in the ICR \. The actual total cost figures are reported on page 18 of the ICR as US$ 40\.16m versus US$ 42\.84m on page 19 of the ICR\. Community contributions are wrongly reported as part of the cofinancing figures \. Regional comments note that there was an issue with accounting for community contributions ($ 2\.68m in labor, kind, and opportunity cost ), and that the difference seems largely due to wrongly reported community contributions \.

REVIEW

P000717

Document of The World Bank FOR OFFICIAL USE ONLY Report No\.: 16827 IMPLEMENTATION COMPLETION REPORT GOVERNMENT OF ETHIOPIA ENERGY I PROJECT (Credit 1704-ETH) June 30, 1997 Water, Urban and Energy I Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS Currency Unit = Ethiopian Birr (ETB) US$1\.00 = Birr 2\.07 as of March 1985 FISCAL YEAR July 1 - June 30 WEIGHTS AND MEASURES 1 kilometer = 0\.621 miles f square kilometer (kIn2) = 0\.386 square miles 1 kilovolt (kV) 1,000 volts 1 megawatt (MW) = 1,000 kilowatts 1 megavolt ampere (MVA) = 1,000 kilovolt amperes 1 gigawatt hour (GWh) = 1 million kilowatt hours 1 ton of oil equivalent (toe) = 10,500,000 kilocalories ABBREVIATIONS AND ACRONYMS AfDB = African Development Bank DANIDA Danish International Development Agency DCA = Development Credit Agreement EELPA Ethiopian Electric Power and Light Authority EIA = Environmental Impact Assessment EPC Ethiopian Petroleum Corporation ERRP Emergency Rehabilitation and Reconstruction Program ESMAP = Energy Sector Management Assistance Program GOE = Government of Ethiopia ICR = Implementation Completion Report iCS = Interconnected system IDA = International Development Agency LPG = Liquid Petroleum Gas MME = Ministry of Mines and Energy NCCP = National Committee for Central Planning NEC = National Energy Committee PMU = Project Management Unit SAR = Staff Appraisal Report UNDP = United Nations Development Program Vice President: Callisto Madavo Country Director: Oey Astra Meesook Technical Manager: Jeffrey Racki ICR prepared By: Alfred Gulstone  ETHIOPIA ENERGY I PROJECT (CREDIT 1704-ETH) FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT CONTENTS PREFACE EVALUATION SUMMARY Introduction \.i Project Objectives \.i Project Results and Implementation Experience \. \.i Project Outcome, Sustainability and Future Operation \. ii PART I: PROJECT IMPLEMENTATION ASSESSMENT A\. Introduction \.1 B\. Achievement of Project Objectives \.2 C\. Project Implementation Experience \.6 D\. Performance of IDA \.7 E\. Perfornance of the Borrower \.8 F\. Project Outcome, Sustainability and Future Operations \.8 G\. Key Lessons Learned \.8 PART II: STATISTICAL TABLES AND ANNEXES Tables: Table 1: Summary of Assessments Table 2: Related Bank Credits/Loans Table 3: Project Timetable Table 4: Credit Disbursements: Cumulative Estimated, and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation - Not applicable Table 7: Studies Included in the Project Table 8A: Project Costs Table 8B: Project Financing Table 9A: Economic Costs and Benefits Table 9B: Major Assumptions Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements - Not applicable Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions Annexes: Appendix A: Borrower's Review of the Project Appendix B: Project Operational Plan Map: IBRD No\. 25037 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  I  IMPLEMENTATION COMPLETION REPORT ETHIOPIA ENERGY I PROJECT (Credit No\. 1704-ETH) PREFACE This is the Implementation Completion Report (ICR) for the Energy I Project for which Credit 1704-ET was approved on May 20, 1986 in the amount of SDR 53\.7 million (US$62 million equivalent) and made effective on March 16, 1987\. The Credit was closed on March 31, 1995 and was 87 percent disbursed\. Co- financing was provided by DANIDA in the amount of US$9\.9 million\. The Danida Grant closed on March 31, 1997 and the approximate disbursement is 95 percent\. The ICR was prepared by Alfred Gulstone, Principal Power Engineer, reviewed by Fauzia Najm under the supervision of Jeffrey Racki, Technical Manager, AFTUl\. The Borrower provided comments which have been incorporated in this report\. The contents of this report are based on material in the project files\. The Borrower contributed very useful information for the preparation of Parts I and II of the report and provided its own review of the project, attached as Appendix A or this report\.   IMPLEMENTATION COMPLETION REPORT ETHIOPIA ENERGY I PROJECT (Credit No\. 1704-ETH) EVALUATION SUMMARY Introduction 1\. The Ethiopia Energy I Project addressed the need for priority actions to ensure the supply of biomass household energy, electric power, and petroleum at least cost and provide the necessary manpower and management systems for their development\. The project also formed part of a country assistance strategy to mobilize financial resources for investment and economic growth\. The flow of external financial assistance in the energy sector was mainly for electric power sector development\. It was inadequate for meeting the power sector's developmen' needs; its allocation was not efficient, and it did not provide the necessary support for policy formulation and institutional development\. When IDA appraised the Energy I project in 1984, IDA had very limited involvement in the energy sector\. There had been no electric power project since the 1960s and there had been no project in the household energy sub-sector\. The most recent project was a credit for petroleum exploration promotion, which IDA had approved in 1983\. Project Objectives 2\. The Staff Appraisal Report (SAR) for the Energy Project defined four broad objectives: (a) improving investment planning and programming; (b) strengthening institutions; (c) developing strategies to resolve problems in the household energy sector; and (d) arresting the declining biological productivity of key agricultural ecosystems\. The SAR further specified these objectives by sub-sector\. Project Results and Implementation Experience 3\. The project substantially achieved its physical objectives for power system development, though with a delay but did not achieve its financial objectives for EELPA\. In household energy development, the emphasis was on developing least-cost plans to supply household energy products through free marketing practices with substantial private sector participation\. The project was successful in developing an information base and strategy for managing biomass resources and in establishing the viability of improved cooking stoves\. However, the project did not did not establish the technical and economic viability of efficient charcoal production on a commercial scale or fully establish the economic viability of fuel briquetting operations\. Regarding petroleum supply, the project did not determine the most economic petroleum supply option or  - ii - upgrade LPG production as originally planned\. Also, the project only partially achieved its objective of demonstrating and implementing improvements in energy efficiency of selected energy-intensive industries\. 4\. There was considerable delay in project implementation due to country conditions of civil unrest, and IDA extended the closing date three times\. Most of the components were completed during the period 1987-95, except for the woody biomass component which extended into 1996\. The project closed March 31 1996\. Total project costs amounted to US$ million compared to US$ US$ 73\.8 million (Part II, Table 8A) as estimated at appraisal\. IDA disbursed a total of US$ 64\.7 million (Part II, Table 4), which in US dollar terms was higher than the appraisal estimated due to the devaluation of the US $ relative to the SDR, the currency of the original credit\. A restructuring of the project took place during 1992 to support GOE's emergency rehabilitation and construction program to finance additional generators, consumer connection materials, transmission and distribution equipment, vehicles and computers in facilities affected by the civil unrest\. The main factors that affected project implementation were civil unrest, devaluation of the birr, management limitations of the project management unit (PMU), The overall performance of IDA and the Borrower was satisfactory\. Project Outcome, Sustainability and Future Operation 5\. The project's outcome overall was satisfactory because of its substantial contribution to improving EELPA's planning and management capability; success in implementing priority investments in the electric power sector; and made significant progress in developing an effective household energy strategy\. Also the actions in the project's operational plan (Appendix B), and the proposed Energy II project should make the sustainability of the project's achievements likely\. They also could help achieve objectives which the first energy project was unable to achieve concerning EELPA's financial performance; establishing the financial viability of improved charcoal commercial production; and evaluating the most viable option for petroleum supply and upgrading the production of LPG\. The proposed Energy II project incorporates some of the key actions of the operational plan\. Its objectives are to further increase the efficiency and sustainability of Ethiopia's power sector; expand the use of electricity for greater economic growth and quality of life; and improve the efficiency of renewable energy production and consumption\. Key Lessons Learned 6\. There were several lessons learned from the project: (a) The, Energy Assessment under the Joint UNDP/Bank Energy Sector Management Assistance Program (ESMAP) played a crucial role in the design of both the Energy I project and the Energy II projects and such assistance can be particularly important in other countries where the World Bank Group does not have a recent history of operations\.  - iii - (b) It is important to keep the design of energy projects simple and avoid complex implementation arrangements, even within a single sub-sector and especially in countries were there is a shortage of qualified staff to manage the implementation\. (c) The project's experience in producing briquettes from crop residues had mixed results and future projects with such components should also evaluate private sector interest in owning and operating briquetting plants\. (d) A successful improved stove dissemination program requires paying detailed attention to producer capabilities, quality control, and consumer preferences\. (e) To ensure the implementation of viable industrial energy efficiency improvements, special training programs and financing mechanisms may be necessary\. (f) Addis Ababa is experiencing a transition from traditional biomass fuels to modem fuels which could have a major impact on the demand for electricity and petroleum products and future projects should assess the potential substitution effects of changes in energy pricing and the availability of improved stoves\. (g) The management of a project such as Energy I requires full-time project managers who should not have any other duties in the government, especially during the start-up phase\.   ETHIOPIA ENERGY I PROJECT (Credit No\. 1704-ETH) PART I: PROJECT IMPLEMENTATION ASSESSMENT A\. INTRODUCTION 1\. The Energy Project addressed key energy sector issues which a Joint UNDP/World Bank Energy Assessment report identified in 1984\. The Assessment pointed to the need for priority actions to meet the need for biomass household energy, electric power and petroleum at least cost and provide the necessary manpower and management systems for implementing energy development programs\. The project also formed part of a Country Assistance Strategy focused on improving the efficiency of public and private sectors to mobilize financial resources for investment and economic growth\. The flow of external financial assistance in the energy sector was mainly for electric power sector development\. It was inadequate for meeting the power sector's development needs; its allocation was not efficient, and it did not provide the necessary support for policy formnulation and institutional development\. When IDA appraised the project, in 1984, its involvement in the sector had been very limited, beginning with two hydroelectric projects in the 1960s but no projects for more than a decade later until the Petroleum Exploration Promotion project in 1983\. 2\. The institutions responsible for energy sector development had structural weaknesses and insufficient skilled staff\. The Ministry of Mines and Energy (MME) was responsible for designing and implementing energy policies and shared the responsibility of ensuring the consistency in planning and investment with the National Committee for Central Planning (NCCP)\. The MME exercised its functions with the assistance of the Ethiopian National Energy Committee (NEC), an advisory group consisting of the heads of the Ethiopian Electric Power and Light Authority (EELPA), the Ethiopian Petroleum Corporation (EPC) and other government bodies\. The Natural Resources branch of the Ministry of Agriculture was responsible for forestry\. The Ministries of Agriculture State Farms and Coffee and Tea Development were responsible respectively for coffee and tea crops that produced large volumes of residues for energy use\. 3\. There were two main problems in energy planning\. First the parastatal energy sector organizations planned their budgets and long term investment programs without consulting NEC\. Instead they consulted with NCCP, which was not equipped to take the lead advisory function in the energy sector\. As a result the establishment of investment priorities often lacked sound integrated technical economic and financial planning\. Second, the energy sector lacked qualified staff to handle planning work required, especially in the power sector\. EELPA's organizational structure was out of date with  modem practice\. The utility's training programs were not specifically linked to efficient deployment of staff and human resource management systems were virtually non- existent\. B\. ACHIEVEMENT OF PROJECT OBJECTIVES Overview 4\. The Staff Appraisal Report (SAR) for the Energy Project defined four broad objectives: (a) improve investment planning and programming; (b) strengthen institutions; (c) develop strategies to resolve problems in the household energy sector; and (d) arrest the declining biological productivity of key agricultural ecosystems\. The SAR further specified these objectives by sub-sector: household energy development; electric power sector development; petroleum supply options and industrial energy efficiency\. The following section reviews the achievement of objectives in each of these areas\. Electric Power Development 5\. The focus of the project in the electric power sub-sector was on developing a capability for least-cost programming, implementing the highest priority projects in the program, and making the necessary improvements in management, operations, and financial performance to execute the investment program\. In support of these objectives the project components included: an organizational and manpower development program; power sector studies and technical assistance to make use of surplus hydropower capacity; improved electricity distribution planning and design; and investments to make existing facilities more reliable and efficient\. Since the project was particularly concerned with organizational and manpower improvement and the financial condition of EELPA, it included legal covenants requiring the completion of an organization and manpower improvement study; implementation of the Study's recommendations; and attainment of specific financial objectives\. 6\. Power development objectives were reasonable and responded to the most pressing needs of the system\. Inadequate investment planning and low tariffs had led to inefficient resource use, diminished power system reliability, and financial problems for EELPA\. A chronic lack of foreign exchange for spare parts and maintenance had reduced the service life and reliability of many facilities\. Also EELPA did not have sufficient qualified personnel and information systems to prepare planning studies required for system expansion\. As a result the utility's investment programs did not necessarily represent the least-cost solution for the country and over-investment in capacity expansion had placed a heavy burden on the national budget\.  - 3 - 7\. The project partially achieved its institutional objectives for EELPA\. While it made some improvement in planning, management and operations, it did not meet all of its financial objectives set forth in project covenants\. The project prepared a least-cost investment program, with the assistance of consultants, which EELPA is using as a basis for future power system investments\. The organization and manpower development study helped to improve system operations by decentralizing management and setting up information systems necessary for the operation of a modem utility\. The data base of the information system includes performance indicators, financial projections and capital programs\. 8\. The project completed important studies to improve utilization of hydro-based interconnected system (ICS)\. The feasibility study for a potential electricity interconnection between Ethiopia and Sudan resulted in an agreement between the two countries to jointly review the study and subsequent activities\. However, further negotiations did not materialize\. The completion of a distribution planning and design study led to several improvements: the standardized optimal conductor size for the EELPA system; a topographic map of the network; improved system protection, and safety regulations\. Comprehensive studies on voltage levels and loss reduction indicate that distribution system investments are needed to improve the quality of electricity service\. 9\. EELPA was unable to fully achieve all of its financial objectives\. Two key indicators were the level of the accounts receivable and its annual contribution to investment\. During most of the project's implementation period, the level of receivables exceeded the agreed target of 3 months' of sales and was as high as one year\. The utility took measures to reduce receivables but these measures unfortunately did not have a lasting effect on improving collection performance\. Project covenants also linked fmnancial performance to cash generation levels instead of a rate of return on revalued assets; IDA was concerned that the latter would lead to higher tariff increases than necessary, producing excessive cash accumulation when large assets were included in the asset base\. 10\. Prior to Board approval of the project, there was a major tariff increase of 75 percent\. Given country conditions, IDA considered this increase sufficient to allow EELPA to meet its operating expenses, debt service, and requirements for contributing to the utility's capital expenditures\. IDA estimated that this situation was likely to continue through the project's original completion date (1992)\. The project's covenants stipulated a tariff increase in the event that EELPA could not meet its cash generation target\. For several years EELPA met that target and at times exceeded it\. However, with the extension of the project through March 1996 and the devaluation of local currency (the Birr) that took place during the project's implementation period a tariff increase became long overdue\. Although there were discussions about performing a tariff study, it never took place\.  -4- 11\. The project substantially achieved its original physical objectives for power system development, though with a delay\. It completed the following components in the original project design: rehabilitation of generating plants; construction and/or rehabilitation of transmission lines, sub-stations and distribution lines; and general plant investments such as the supply of additional vehicles and housing needed to implement the investment prograrn\. In addition, the project rehabilitated or replaced diesel generating equipment and other parts of the system damaged during civil unrest, based on a 1992 modification of the project\. (Part II, Table 5)\. Household /Biomass Energy Development 12\. In the household energy sub-sector, the project's objective was to develop and implement least-cost plans to supply household energy products through free marketing practices with substantial private sector participation\. In so doing, the project sought to ensure the sustainability of affordable cooking fuels, create private enterprises and preserve the environment\. The project provided components to: strengthen planning for woody biomass development; implement pilot projects for producing crop residue briquettes; design and modify oil-fired industrial plants to use the briquettes; demonstrate and evaluate charcoal production on a commercial scale; and test new cooking appliances and other techniques for efficiency improvement\. 13\. The project's objectives were justified given the important role household biomass fuels played in the energy sector and the fact that the household energy component was the first of its kind for IDA in Ethiopia\. Biomass fuels for household energy, mainly fuelwood crop residues and dung used for cooking, accounted for about 92 percent of total energy consumption\. Although the demand for modem energy was growing rapidly and substitution of electricity and petroleum fuels was taking place, biomass fuels were still expected to account for over 90 percent of fuel use in the medium term (1986-92)\. 14\. Demand pressures combined with inadequate and inefficient wood fuel production, marketing, and infrastructure were responsible for the high cost of household cooking fuels and the acceleration of forest depletion\. Fuelwood prices were increasing in real terms at around 9 percent per year\. Environmental damage was alarming: Ethiopia's forests had declined from 40 percent of the land area in the early 1900s to only 3 percent by 1982\. Forecasts had indicated that without investments in managed biomass development, increases in biomass consumption would greatly increase soil erosion and loss of food production\. 15\. The project was successful in developing an information base and strategy for managing biomass resources and household energy development\. It completed a woody biomass survey and set up a management information system to provide a technical basis for planning\. The biomass survey covered 375,000 km , exceeding the original objective  of 250,000 km2\. The project also developed a computerized system for modeling environmental stress of various biomass development activities\. 16\. The Biomass Fuel Systems Marketing Review provided important information for developing strategies to disseminate efficient stoves and improved charcoal production technology\. The review found that most urban households in Addis Ababa were using a combination of fuels depending on the type of food preparation\. The main distinction in food preparation is between fuel used for making inj era, the popular Ethiopian bread, and other foods\. The project found that: (a) charcoal met about 50 percent of non-injera cooking needs and the improved Lakech stove was economic and effective in reducing charcoal consumption by 25 percent; (b) cooking with electricity was cheaper than cooking with biomass but the high cost of the stove made it affordable only for higher income households; and (c) for injera cooking, the enclosed biomass mtad reduced biomass consumption by 23 percent and was economic for urban households but only marginally economic for rural households\. 17\. The project's marketing survey indicated the need for a charcoal demonstration project, finding that over 80 percent of charcoal produced in Ethiopia came from informal charcoal production using inefficient kilns\. However, the project did not establish the technical and economic viability of efficient charcoal production on a commercial scale\. A dispute between the consultant and the implementing agency for the charcoal component delayed implementation\. Ultimately the Government of Ethiopia (GOE) decided to divert funds originally allocated to the charcoal component to the emergency reconstruction and rehabilitation of the power sector and seek donor financing for the charcoal demonstration project\. This financing never materialized\. The pilot testing of the crop fuel briquetting operations produced mixed technical results depending on the type of crop used and did not fully establish the economic viability of the processes and interest of the private sector in them\. Petroleum Supply Options 18\. The project did not complete studies to determine the most economic petroleum supply option or upgrade liquefied petroleum gas (LPG) production as originally planned\. Ethiopia's refinery was producing too much fuel oil and not enough of the petroleum products more in demand -- diesel oil, kerosene, and LPG\. Studies were necessary to determine whether to invest in modifying the refinery or close it down and import petroleum products instead\. It was also important to evaluate the most efficient mode of transporting petroleum products\. The main transport mode for these products was overland, by truck, for a distance of 950 km\. The process was expensive, time consuming and risky in terms of safety\. Preliminary investigations had indicated that a product pipeline not only would be competitive economically with truck transport but would have additional security and environmental benefits\. However, GOE did not show interest in completing this evaluation or the study or the short-term upgrading of LPG production from the refinery\.  -6- Industrial Energy Efficiency 19\. The project partially achieved its objective of demonstrating and implementing improvements in energy efficiency of selected energy-intensive industries\. It produced energy audits of 15 such enterprises\. These audits indicated that most industries would benefit from improved housekeeping measures and that investments in firther technological improvements could be economically and financially viable for some industries\. However, it appears that the implementation of housekeeping measures did not take place apparently because it was not a high priority for plant managers and there was insufficient financing\. C\. PROJECT IMPLEMENTATION EXPERIENCE The Implementation Record 20\. The SAR for the project estimated that the execution of the project's physical components would take place during 1987-91, with the anticipated closing date of the Credit as March 31, 1992 (Part II, Table 5)\. However there was considerable delay in project implementation due to prevailing country conditions, and IDA extended the closing date three times\. Most of the components were completed during the period 1987-95, except for the woody biomass component which extended into 1996\. The project closed March 31, 1996\. IDA disbursed a total of US$ 64\.7 million (Part II, Table 4), which in US dollar terms was higher than the appraisal estimated due to the devaluation of the US $ relative to the SDR, the currency of the original credit\. A restructuring of the project took place during 1992 to support GOE's emergency rehabilitation and construction program to finance additional generators, consumer connection materials, transmission and distribution equipment vehicles and computers in facilities affected by the civil unrest\. Factors Affecting Project Implementation 21\. Factors not Subject to Control by the Borrower and Implementing Agencies\. The major external factors that affected the implementation of the Energy I Project were the civil unrest, the change in government, and currency devaluation\. Periods of civil unrest and war disrupted project implementation, through communications delays and restricted access to certain parts of the country where some of the project's activities originally were supposed to take place\. The change of govermnent in 1991 resulted in an emergency rehabilitation and reconstruction program and IDA modified the project to finance important reconstruction work in the electric power sector\. The devaluation of the Birr made foreign expenditures more costly and increased EELPA's debt service,  - 7 - further eroding the adequacy of tariff levels\. Also the devaluation of the US dollar relative to the Danish krona led to the need for additional funds from Danish International Aid Agency (DANIDA) which was providing financing for the project's household energy components\. 22\. Factors Subject to the Control of the Borrower and Implementing Agencies\. These factors were: the staffing of the Project Management Units (PMUs) for the electricity and household energy components; the complexity of the PMU for the household energy components; delays in procurement and the construction of training facilities at the University of Addis Ababa; and the reluctance of GOE to address the petroleum transport issue\. The project provided for two PMUs: one to supervise electricity components and another in charge of the various components related to household energy\. Initially manpower deficiencies in the PMUs and other duties of the PMU managers obstructed the development of comprehensive work programs\. At the request of IDA, GOE released the PMU managers from other duties, allowing them to give full attention to the project and strengthen the PMUs with additional staff\. 23\. The PMUs' lack of familiarity with IDA's procurement procedures also caused delays and led IDA to intensify the frequency of supervision missions in order to provide this assistance\. Also the complexity of the PMU for household fuels complicated project coordination and led to delays\. Since there was no single entity in charge of household energy and biomass fuels, the PMU had to supervise several project implementation units spread among different ministries\. Major delays in completing of training facilities at Addis Ababa University were due to: inadequate supervision by the PMU; insufficient coordination among the University, the PMU and the contractor; and the lack of essential construction materials\. 24\. GOE was slow clearing its arrears with EELPA and reviewing tariffs to ensure their adequacy, making it difficult for EELPA to meet some of the project's financial objectives\. Also GOE did not take an active stance to ensure the completion of the study on petroleum supply options\. Project supervision reports indicated that GOE hesitated to proceed with the petroleum pipeline feasibility study because it would detract from the Asseb Addis railway, noting that the Ministers of Energy and Transport were reluctant to address the issue and authorize work\. D\. PERFORMANCE OF IDA 25\. IDA's performance overall was satisfactory\. The cooperation between ESMAP and IDA's project divisions proved to be very effective in project design\. Although IDA did an adequate evaluation of the technical risks of the project but it could have given more attention to the institutional risks due to the Borrower's lack of project experience\. With hindsight, the project probably had too many components, considering that it was the first energy project in the country and the PMUs were inexperienced\. In project implementation, IDA was very responsive to the Borrower's needs by: fielding extra  - 8 - supervision missions to minimize procurement problems; agreeing to restructure the project to address the Borrower's reconstruction needs through the ERRP; and extending the credit closing date to take into account implementation delays caused by factions not subject to the Borrower's control\. E\. PERFORMANCE OF THE BORROWER 26\. Given the difficult country conditions and the pilot nature of the project for Ethiopia, the performance of the Borrower and its implementing agencies overall was satisfactory\. GOE showed a commitment to the project and although there were some difficulties and delays in implementation, GOE responded to most of IDA's suggestions to improve project implementation performance\. The Borrower and implementing agencies complied with most of the project's covenants, except for some covenants governing EELPA's financial performance\. The main deficiencies were the lack of sufficient attention to helping EELPA meet it's financial objectives; delays in providing IDA with audit reports and financial statements; delays in implementing a tariff study; and the lack of action to determine the least-cost petroleum supply option\. F\. PROJECT OUTCOME, SUSTAINABILITY AND FUTURE OPERATIONS 27\. The project's outcome overall was satisfactory\. It made a substantial contribution to improving EELPA's planning and management capability; implemented priority investments in the electric power sector; and made significant progress in developing an effective household energy strategy\. Also the actions in the project's operational plan (Appendix B), and the proposed Energy II project should make the sustainability of the project's achievements likely\. They also could help achieve objectives which the first energy project was unable to achieve: improving the financial performance of EELPA; demonstrating the financial viability of improved charcoal commercial production; evaluating the most viable option for petroleum supply and upgrading the production of LPG\. The ongoing Calub Gas Project will provide for the development of LPG as a household fuel\. The proposed Energy II project incorporates some of the key actions of the operational plan\. Its objectives are to further increase the efficiency and sustainability of Ethiopia's power sector; expand the use of electricity for greater economic growth and quality of life; and improve the efficiency of renewable energy production and consumption\. G\. KEY LESSONS LEARNED 28\. The key lessons learned from the project are the following: (a) The energy assessments prepared under the Joint UNDP/Bank Energy Sector Management Assistance Program (ESMAP) played a crucial role in the design of both the Energy I project and the Energy II projects\. Such  -9 - pre-investment assistance is particularly important where the World Bank Group does not have a recent history of operations\. (b) It is important to keep the design of energy projects simple and avoid complex implementation arrangements, even within a single sub-sector\. This is especially important in countries which have not had recent experience with IDA-financed projects and have deficiencies in qualified manpower\. IDA has incorporated this lesson in the design of the Energy II project by: focusing on generation in the electric power sector, leaving distribution for a subsequent project; and confining household energy components to further woody biomass assessment and the strengthening of the GOE's capability to deal with rural energy development, two aspects of the Energy I project that were very successful\. (c) The project's experience in producing briquettes from crop residues had mixed results and did not lead to ongoing productive enterprises\. However, some private organizations reportedly have been producing crop residue briquettes successfully for many years\. The next strategic step, as the 1994 Energy Assessment recommends, should be to conduct an evaluation of private sector interest in owning and operating briquetting plants\. (d) A key element in a successful improved stove dissemination program is to pay detailed attention to producer capabilities, quality control, and consumer preferences\. (e) The implementation of viable industrial energy efficiency improvements requires follow-up efforts to train staff and may require the provision of special financing mechanisms to implement them\. (f) Addis Ababa is experiencing a transition from traditional biomass fuels to modem fuels\. This process began in the mid 1980s and is likely to continue throughout the 1 990s\. In many developing countries there is a tendency to separate energy into traditional biomass fuels and modem fuels such as kerosene, LPG, and electricity\. However, household energy use is beginning to have a major impact on the electricity load in Addis Ababa and is likely to affect the demand for other fuels\. The same pattern may occur in other urban areas as well\. It is therefore important to maintain an integrated approach evaluating the potential substitution effects of changes in energy pricing and the availability of improved stoves\. (g) The project's experience suggests that the private sector is appropriate agent for the production of briquettes from crop wastes\. It is important, however, to further assess market potential of these energy sources;  - 10- request the private sector to submit proposals; and assist entrepreneurs in securing financing\. (h) In the management of a project such as Energy I, project managers need to devote full time to their project management duties and should not have any other duties in the government, especially during the start-up phase\.  PART II: STATISTICAL TABLES AND APPENDICES  PART II: STATISTICAL TABLES AND APPENDICES Tables: Table 1: Summary of Assessments Table 2: Related Bank Credits/Loans Table 3: Project Timetable Table 4: Credit Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation - Not applicable Table 7: Studies Included in the Project Table 8A: Project Costs Table 8B: Project Financing Table 9A: Economic Costs and Benefits Table 9B: Major Assumptions Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements - Not applicable Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions Appendices: Appendix A: Borrower's Review of the Project Appendix B: Project Operational Plan  Table 1: Summary of Assessments A\. Achievement of Project Objectives Assessment Substantial Partial Negligible Not Applicable Categories Macroeconomic Policies X Sector Policies X Financial Objectives X Institutional X development Physical objectives X Gender concerns X Other social objectives X Environmental X Public sector X management Private sector X development Other B\. Project Sustainability Likely Uncertain Unlikely x~~~~~~~~~~~~~~ C\. Bank Performance Stage of Project Highly Satisfactory | Satisfactory Deficient Cycle _____________ ____________ ____\._\._I Identification X Preparation X Appraisal X Supervision X  Table 1: Summary of Assessments (continued) D\. Borrower Performance Stage of Project Highly satisfactory Satisfactory Deficient Cycle Preparation X Implementation X Covenant X Compliance E\. Assessment of Outcome Highly Satisfactory Marginally Unsatisfactory Highly Satisfactory Satisfactory Unsatisfactory x  Table 2: Related Bank Credits and Loans Preceding Operations Title Awash II and III Hydro Loan no\. : 375-ET Year of approval :1964 Amount Purpose Status : Closed\. Title : Finchaa Hydroelectric Project Loan no\. : 596-ET Year of approval :1969 Amount Purpose Status : Closed\. Title : Petroleum Exploration Credit no\. : 1386-ET Year of approval : 1983 Amount : US$ 7\.0 million Purpose : Promote the exploration of petroleum potential, acquire and improve seismic data, study potential uses of natural gas and geothermal energy\. Status : Closed\. Following Operations Title : Energy II Credit no\. : NA Year of approval : Not yet approved\. Amount : US$200\.0 million Purpose : Under preparation\. Status : To help finance the Gilgel Gibe hydroelectric project and support the Government's restructuring of the power sector\.  Table 3: Project Timetable Steps in project cycle Date planned Date actual/estimate Identification March 1984 March 1984 Preparation March - November 1984 March - November 1984 Appraisal November 1984 November 1984 Negotiations March 1986 Letter of development policy NA NA Board presentation May 20, 1986 Signing October 15, 1986 Effectiveness February 15, 1987 March 16, 1987 Project completion October 30, 1993 October 30, 1995 Credit closing March31, 1993 March 31, 1995 Source: Project Files and Bank staff estimates\. Table 4: Credit Disbursements: Cumulative Estimated and Actual FY 87 FY 881 FY 89 FY 90 FY91 FY 92 | FY 93 | FY 94 FY 95 | FY 96 Appraisal estimate 5\.6 21\.7 40\.9 55\.2 60\.8 62\.0 62\.0 62\.0 62\.0 62\.0 Actual -- 3\.5 14\.9 20\.6 31\.1 38\.4 45\.8 51\.0 64\.4 64\.7 Actual as % of estimate -- I16 36 37 51 62 74 82 103* 104* Date of Final disbursement Source: Bank MIS and staff estimates\. * Actual disbursements in US$ terms are slightly higher than estimated disbursements because during the project implementation period the US$ depreciated in value relative to the SDR, the currency in which IDA made the Credit\.  Table 5: Key Indicators for Project Implementation Key implementation indicators in the SAR/President's Estimated Actual Report Completion Dates Completion Dates Power Sector Components Rehabilitation of generation June 1990 February 1994 to facilities March 1995 Rehabilitation of transmission lines June 1990 1991-93 Expansion of substations September 1990 December 1992 to January 1995 Rehabilitation of the distribution system June 1991 Purchase of vehicles for EELPA April 1989 1988-89 Provision of housing for technical assistance July 1988 March 1992 Completion of the organizational and manpower December 1990 March 1988 to development program October 1989 Completion of the feasibility study for interconnection December 1987 December 1987 with Sudan Completion of distribution planning and design studies December 1990 December 1990 Energy Components September 1991 March 1995 Completion of facilities for producing crop residue briquettes and industrial modifications necessary for utilization \. Completion of facilities and training for demonstrating the September 1991 Not done viability of charcoal production on a commercial scale Provision of equipment and training for testing new fuels September 1991 March 1993 for household use and improving end-use efficiency\. Development of a strategic energy planning unit and an August 1990 March 1995 inventory of woody biomass resources Completion of energy sector studies including :a review August 1988 Not done of petroleum supply options, upgrading of LPG supply; and a study on improving industrial energy efficiency\. Other indicators: Additional diesel generator sets and transformer capacity September 1991 to under the Emergency Rehabilitation and Reconstruction November 1994 Program (ERRP) Source: Project Files and Bank staff estimates\.  Table 6: Key Indicators for Project Operation Not applicable \. The preparation of the project's SAR took place before the development of these indicators had become part of the appraisal process\. Table 7: Studies Included in the Project Study J Purpose J Status and Impact Power Sub-sector Prepare a diagnostic Completed\. During Phase I, EELPA implemented the Organizational evaluation of EELPA's recommendations by appointing Four Deputy General Improvement organizational Managers and 13 department directors\. Also some improvement needs divisional managers were assigned\. Phase II consisted and implement the of job training for the Salary Works Organization recommendations of Division and coaching of higher management on the the study improvement objectives and tasks for specific functions\. Did not result in any adjustment of the salary scale which was 24 years old\. Financial policies and procedures were developed and four staff members were sent to Canada for training\. Electricity Execution of a Completed\. Ethiopia and Sudan reached an agreement Interconnection with feasibility study for a in 1991 for review of the feasibility work and Neighboring Countries high-voltage electricity subsequent activities which the African Development interconnection Bank was to Finance\. between Ethiopia and Sudan Distribution Planning Provision of a \.Completed\. The result was an upgrading of 700 km and Design distribution planning of 15-kV distribution\. A study of various network and design method, altematives led to standard conductor size\. including the necessary Transformer stations on wood poles were developed computer equipment and system protection improved\. About 30 percent of and software packages\. the system's 3600 km network was plotted on a Updating of existing topographic map\. Earthing systems and safety drawings for the regulations developed\. Comprehensive studies on distribution systems of voltage drop improvements and loss reduction found Addis Ababa and other that substantial investment in distribution systems is major cities needed to improve service quality\. Other Energy Sector Detailed review of Study not completed\. Studies petroleum supply options and short-term upgrading of LPG Petroleum Supply supply from the Options refinery Industrial Energy Evaluation of energy Evaluation of 15 industries completed and indicated Efficiency efficiency upgrading in possible energy savings through improved local industries, housekeeping and investments in energy saving including preliminary technology\. However, implementation has been design improvements constrained by the lack of sufficient management for 20 large industries interest\. Source: Project Files and Bank staff estimates\.  Table 8A: Project Costs Item Appraisal Estimate (USSmm) | Estimated Actual Costs (US$mm) 2L Local Foreign costs Total Local Foreign Total costs costs costs costs Costs Civil Works, equipment, materials and installation -Total 8\.7 30\.1 38\.8 23\.0 40\.3 63\.3 Institution-building 1\.1 4\.6 5\.7 2\.9 6\.1 9\.0 Studies 0\.3 1\.6 1\.9 0\.8 2\.1 2\.9 Engineering/admin\. 2\.1 0\.8 2\.9 5\.6 1\.1 6\.7 Total base cost 12\.2 37\.1 49\.3 Contingencies 3\.4 7\.4 10\.8 _ Duties and taxes 6\.4 6\.4 Total cost 22\.0 45\.5 67\.5 Int\. during construction 7\.0 7\.0 - Financing required 29\.0 45\.5 74\.5 32\.3 49\.6 81\.9 Civil works, equipment,\. materials and installation for crop residue briquetting and charcoal production\. -Total 3\.1 7\.9 11\.0 5\.4 10\.6 15\.1 Inst\.-building and studies 2\.6 7\.9 10\.5 4\.5 10\.6 15\.1 Engineering administration 0\.5 2\.5 3\.0 0\.9 3\.4 4\.3 Total base cost 6\.2 18\.3 24\.5 10\.8 24\.6 35\.4 Contingencies 1\.8 4\.0 5\.8 Duties and taxes 1\.7 1\.7 Int\. during construction 0\.3 0\.3 - - Financing required 9\.7 22\.6 32\.3 10\.8 24\.6 35\.4 _________________ _\. _ \.' Base cost 18\.4 55\.4 73\.8 - Project preparation 1\.0 1\.0 Contingencies 5\.2 11\.4 16\.6 Duties and taxes 8\.1 0\.0 8\.1 Total costs 31\.7 67\.8 99\.5 Int\. during construction 7\.0 0\.3 7\.3 Total financing required 38\.7 68\.1 106\.8 43\.1 74\.2 117\.3 Source: Bank MIS and staff estimates\. 9/ Actual project costs were not available for ICR preparation\. Estimate actual costs based on actual financing by IDA and Danida and percentages allocated to various components and local financing in SAR\.  Table 8B: Project Financing Source J Appraisal estimate Actual/latest estimate Local Foreign Total Local Foreign Total costs costs Costs costs costs costs IDA 62\.0 62\.0 64\.7 64\.7 DANIDA 5\.8 5\.8 9\.2 9\.2 Government 9\.7 0\.3 10\.0 10\.5 0\.3 10\.8 EELPA 29\.0 29\.0 32\.6 32\.6 Total 38\.7 68\.1 106\.8 43\.1 74\.2 117\.3 Table 9A Economic Costs and Benefits The Staff Appraisal Report did not calculate an internal economic rate of return (ERR) on the project as a whole\. However, it indicated a 7 percent ERR on the investment program which the project financed indicating that it would increase to 12 percent if all power could be sold\. It also indicated ERRs of 31-33 percent on the project's individual transmission components and an 11-30 percent rate of return for charcoal products\. For the electricity components, IDA made repeated attempts (between August 1996 and June 1997) to obtain the necessary information to re-estimate the ERRs calculated at appraisal\. The information received allowed only a very rough approximation of the ERR for the portion of the power system investment program that IDA financed and did not permit a re-estimation of the ERRs on the various transmission components\. Table 9, Part B lists the main assumptions for the ERR analysis on the investment program\. Since total investment cost data was not available, this analysis estimated two ERRs: one based on the disbursement information that EELPA provided and another using the disbursement data and assuming that EELPA contributed the same percentage of costs estimated at appraisal\. On the basis of the disbursement data alone, the re-estimated ERR was 4 % and with the assumption of the EELPA contribution it declines to 1 %\. The ERRs are below the appraisal estimate mainly due to lower incremental sales than originally assumed which resulted form internal conflict conditions, during project implementation, that constrained demand and resulted in some damaged capacity\. No ERR was calculated on charcoal production because this component was dropped from the project\.  Table 9B: Major Assumptions Item SAR ICR Investment Costs Based the FY 85-92 expansion Based on disbursement infromation program\. Uses 1984 prices provided by EELPA for 1988-95, n excluding duties taxes and price given in current Birr, deflated to 1984 escalation but including physical prices using GDP deflator at factor cost\. contingencies\. Operating and Calculated as a % of cumulative Same factors as in SAR applied to the maintenance capital costs as follows: cumulative capital cost for each type of costs 2% investment\. Covers the period 1989- generation: 2% 2029\. transmission: 1\.5% distribution: 5% general plant: 2 % Covers the period 1984-2029 2029 Marginal 50% of average customer costs at No actual customer cost available\. customer the time of appraisal\. Used the same costs specified in the administrative SAR\. costs Fuel' costs Calculation not specified in the SAR Based on the share of diesel generation (9% of incremental sales) valued at the cost of diesel oil supplied by EELPA Benefits: Based on incremental sales resulting Based on incremental sales and tariff Incremental sales from the rehabilitation/expansion data provided by EELPA, for the years revenues program valued at projected tariffs\. 1989-2029, deflated to 1984 prices using a GDP deflator at factor cost\.  Table 10: Status of Legal Covenants Agreementt Covenant Status Covenant Description and Comments Section Type DCA/3\.01 Management C Borrower commits to project objectives, to carry out the project with aspects due diligence and efficiency, and cause EELPA to perform its obligations in line with the PA\. DCA/ 4\.01 (a) Financial C Borrower to maintain adequate records, in accordance with sound performance accounting practices\. DCA/4\.02 Financial CP Borrower to enable EELPA to adjust its electricity tariffs for electricity performance and meet its obligations under Sections 4\.02 and 4\.03 of the PA\. PA/2\.01 Management C EELPA to pursue project objectives as set forth in Schedule 2 of the ____ __ aspects DCA\. PA12\.02 (a) Management C Procurement to be governed by Schedule 3 of the DCA\. aspects PA/2\.02(b) Management C EELPA to employ a Project Manager with qualifications acceptable to aspects IDA\. PA/2\.03 Management C EELPA to perform obligations set forth in the General Conditions\. aspects PA/2\.04 Management C EELPA to perform all of its obligations under the Subsidiary Loan aspects Agreement\. PA12\.05 Management C EELPA to exchange views on project progress at the request of IDA and aspects promptly inforn IDA of any condition interfering with progress\. PA/2\.06 Management C EELPA to provide IDA, by December 31, 1986, with a draft agreement aspects for University of Addis Ababa to carry out Part F (2) (i), (ii) and (iii) of the Project\. After review of the agreement, EELPA shall proceed with the implementation of the above sections of the Project\. PA13\.01 (a) Management C EELPA to perform its operations in accordance with sound aspects administrative, financial, engineering and public utility practices under supervision of qualified and experienced management assisted by adequate competent staff\. PA/3\.0l(b),(c) Management DC EELPA to complete manpower and organization study, (Part F I of the aspects Project) by October 31, 1986\. EELPA to consult with IDA on a plan to implement the study's recommendations\. PA/3\.02 Management C In accordance with sound engineering and financial practices, EELPA to aspects operate and maintain plant, machinery, equipment and other property and make necessary repairs\. PA 3\.03 Management C EELPA to take out and maintain insurance appropriate to the risks in its aspects operations\.  Table 10: Status of Legal Covenants (continued) Agreement/ Covenant Status Covenant Description and Comments Section Type PA 3\.04 Financial PC EELPA to take the necessary measures to reduce accounts receivable to performance no more than 90 days of sales by June 7, 1987\. PA 4\.01(a) Accounts/ C EELPA to maintain records and accounts in accordance with sound audits accounting practices\. PA/4\.01(bXi) Accounts/ C EELPA to have accounts and financial statements audited, each fiscal audits year, by independent auditors acceptable to IDA\. PA/4\.01(bXii) Accounts/ C EELPA to furnish provisional financial statements to IDA as soon as audits available, according to the following fulfillment schedule by fiscal year: 9 months after FY86; 7 months after FY 87; 4 moths after FY 88 and other FY s during the project's implementation period\. PA/4\.01 (b) Accounts/ DC EELPA to furnish IDA with certified copies of financial statements and (iii) audits audit report as soon as available but no later than the time periods specified for each FY in the PA, as follows: 13 months after FY 86; 9 months after FY 87; and 6 months after FY 88\. PA/4\.01 (b) Accounts/ C Furnish to IDA other reasonable inforrnation concerning financial (iv) audits statements and audits\. PA/4\.01 (c) Accounts/ C EELPA to maintain separate records for the Credit account, retain all audits records I year after the closing date, enable IDA to examine records and ensure such separate accounts are included in the annual audit, along with a separate opinion of the auditors on the use of expenditures for the intended purpose\. PA/4\.02 (a) Revenue PC EELPA to produce funds from internal sources for capital expenditures generation according to following minimum specified percentages by FY: 15 % for FY 88; 20% for FY 89; and 25% for each FY thereafter\. PA/4\.02 (b) Revenue C EELPA to review, with IDA, before March 31 of each fiscal year, (c) generation whether it will meet cash generation targets and take all necessary l - | measures to meet requirements\. Source: Project Files and Bank staff estimates\. Abbreviations: (a) for time periods, FY = fiscal year; mo\. = month(b) for agreements, DCA = Development Credit Agreement and PA = Project Agreement; and (b) for covenant status, C = complied with; CD = complied with after delay; CP = complied with partially; and NC = not complied with\.  Table 11: Compliance with Operational Manual Statements Not applicable to this project\. Table 12: Bank Resources: Staff Inputs Stage of Planned a/ Actual project cycle Weeks 000US$ Weeks 000US$ Through appraisal 66\.2 125\.1 Appraisal 108\.8 250\.7 Negotiations through Board approval 28\.5 52\.8 Supervision -- -- 127\.8 342\.1 Completion 6-- -- 60 4\.6 Source: Project Files and Bank staff estimates\. a/ Planned information not available on a consistent enough basis during the project Cycle, to allow for a meaningful comparison with actual figures\.  Table 13: Bank Resources: Missions Stage of project Month Number Days Specialized Performance Types of cycle /Year of in field staff skills rating problems/ __________ _ _ [persons represented Notes Through appraisal 6/94 5 17 EC,ES, 2PE, NA NA Pre-appraisal FA, CON Appraisal through Board approval Appraisal 11/84 5 22 PE,ES,FA, NA NA TS,EC Post-appraisal 03/85 3 11 PE,ES,FA NA COF Supervision Preparation for 05/86 1 NS ES NA SP implementation Supervision 1 10/86 3 11 ES, EN, OM I Supervision 2 01/87 3 19 ES, EN, OM 1 EFF Supervision 3 04/87 1 10 ES I Supervision 4 09/87 3 10 PE, OM, FA I M Supervision 5 11/87 3 13 ES, FA, PR I M Supervision 6 05/88 2 13 ES, FA 1 M Supervision 7 10-11/88 2 13 FA,PE I M Supervision 8 05- 1 NS PE NR I 06/89 Supervision 9 3 11 FA, OA, PE 2 FS, M, LC, 09- DO Supervision 10 10/90 1 NS PE\. NR Supervision 11 11/91 1 NS PE NR AF Supervision 12 05/92 3 4 PE, FA, 2 FS, LC FAS Supervision 13 11/92 3 8 2 FS, FP PE, FA, 04/93 FAS Completion I Source: Project files and Bank staff estimates\. There was no completion mission for this project\.  Appendix A ETHIOPIAN ELECTRIC LIGHT AND POWER AUTHORITY WORLD BANK ENERGY I PROJECT POWER SUBSECTOR IDA CREDIT No 1704 ET AND ERRP PROJECT COMPLETION REPORT Prepared Bv:- GEBRENIESKEL HA[LE DGNI - SERVICES PROJECT CO-ORDINATOR MIAY 1995  ETHIOPIAN ELECTRIC LIGHT AND POWER AUTHORITY ENERGY I PROJECT POWER SUBSECTOR IDA CREDIT NO\. 1704-ET AND E RR P PROJECT COMPLETION REPORT 1\. PROJECT DESCRIPTION The power Subsector comprises the implementation of high priority projects included in EELPA investment program for the period 1989 - 1995 including the closing date extension brought about by the then prevailing conditions in the country unfavourable for the timely implementation of the Project\. The Project comprises, the rehabilitation of Generation Plants, rehabilitation and extension of Distribution systems, a comprehensive manpower development and organizational improvement program, power studies needed to support sound Distribution expansion and operation including the pre- feasibility study of a possible inter connection with the Sudan\. The implementation of the project was two years behind schedule\. The schedule was reviewed for adjustment of disbursement to be completed before the contract closing date of March 31, 1994\. This did not materialize and it gave rise to the need of\. extending the closing date to March 31, 1995\. 2\. CONTRACT AGREEMENTS i\. Contract Agreement between the Ethiopian Government and the International Development Association was signed on October 15, 1986\. ii\. Subsidiary contract Agreement between the Ministry of Finance and the Ethiopian Electric light and Power Authority was signed on January 31\. 1987\. iii\. Effective date: March 16,1987 *i iv\. a) Original closing date March 31, 1934 (b) Revised closing date March 31,1995 3\. ~'IDA Credit 1704 - ET Original credit to EELPA SDR 39\.09 Mill\. USD 45\.50 Mill\. ERRP transfer from Energy Project SDR 6\.87 USD 8\.00 Mill Total 45\.96 53\.50 (at an exchange rate of 1 SDR= 1\.1639 USD) ERRP - Credit No\. 2351 - ET --------------- USD 3 Million  1 PART A\. GENERATION REHABILITATION I\. Rehabilitation of Koka, Awash II and III, Finchaa and Tis Abbay, Hydro Electric Power Plants to bring them to their full operational condition and Provision of spare parts in the inter-connected system(ICS)\. II\. Rehabilitation of about 20 small diesel generating plants to bring them to their full operational condition and provision of spare parts, in the self contained system(SCS)\. ACCOMPLISHMENTS I\. Generation Rehabilitation(ICS) a) Koka HPP As part of the Rehabilitation Program for Koka Hydroelectric Power Plant the dam intake new trash rack cleaning equipment has successfully been completed at the end of February 1994\. Spare parts for 10\.5/132 kv switch gear, generator voltage regulation, and Turbine control systems have been delivered, as a result the units have been reconditioned and reliable power supply is achieved\. b) Finchaa HPP The Finchaa Penstock movement has been studied and problem identified by consultants from PITEAU ENGINEERING LTD\. The proposed remedial solution is under implementation\. Spare parts for rehabilitation of the Power Plant are delivered to site\. The air conditioning units are effective in regulating the room temperature which could cause abnormal temperature rise on generators and Turbines\. Essential spare parts for Turbine, governor, inlet valve, and penstock valve have been incorporated into the system and reconditioning of the units has been maintained\. Some items are kept in stock for emergency purposes\. Substantial reliability and availability of power supply has been achieved\. The proposal made by NORD through the Association, about the possibility of providing some financing in conjunction with the rehabilitation of Finchaa HPP, during the IDA Credit 1704 - ET extension period did not materialize\. However, as hinted out, EELPA has carried out a detailed analysis of the subject matter and prepared Rehabilitation document which was sent to the Association in Oct\. 18 - 1994 for review\.  2 c) Melka Wakena HPP The frequent breakdown of the 230 kv switch gear compressor equipment has been rectified after the replacement of the piston rings and associated fast moving parts\. the supply of compressed air necessary for the switching of the 230 kv air blast circuit breakers and disconnectors is enhanced\. The installation of the canal flow regulation has improved the regulation system of the water discharge and power supply has become more reliable at the Power Plant\. Submersible pumps have been installed to increase effective water leakage removal from the Turbines\. d) Tis Abbay HPP - The Power Plant is in its poorest condition\. It is an aged plant, the Turbine part of the units are aged, cavitated with highly deteriorated sealings and excessive water leakage\. Spare parts required for the rehabilitation of obsolete 45 kv switch gear have been delivered to site\. The erection of the electromechanical equipment has not started as yet\. The Power Plant was constructed by INGRA - ENGINEERING AND CONSTRUCTION CO\. Upon the approval of the Association, EELPA approached INGRA for the supply of spare parts for the turbines, regulating equipment, Inlet Butterfly Valves, submersible pump units\. After having completed the purchase processes INGRA notified EELPA that the spare parts have to be manufactured and the process would take longer time than anticipated\. That would lie between six to nine months beyond the closing date of March 31 - 1995\. The price of the spare parts was USD 785, 007\.60 including freight and insurance (CIF)\. EELPA went to the extent of agreeing to pay 100% against Bank guarantee for partial shipment to be delivered before the closing date and that was not possible on the part of the supplier\. e) AWASH II HPP The two turbines that were malfunctioning due to aging were repaired and an idle running test performed at the end of March 1995\. The IDA credit has greatly helped to have sufficient spare parts available for rehabilitation of the -plant including cooling system filter equipment the installation of which helped to improve the cooling system of the plant\. The two generator unit each of 16MW output are expected to operate at full capacity\.  3 f) AWASH III HPP On December 1991 heavy short circuit damaged the stator windings of generator unit II including two (2 x 20/6/20 MVA Capacity 2 x 10\.5/15/132 KV) generator block transformers\. Subsequently, at the request of the Authority the Association approved the purchase of the windings and transformers\. The transformers were delivered to site in June 26, 1994 and they are already installed and made ready for commissioning\. The stator windings were delivered to site in March 25,1995 and replacement works is under way\. Commissioning is scheduled to start soon\. Lately, 230KV switch gear Equipment for MELKA WAKENA HPP and Heat exchangers for KOKA HPP arrived in February 23,1995 and March 25,1995 respectively\.  4 PART A\. GENERATION II\. GENERATION REHABILITATION IN SELF CONTAINED SYSTEM EMERGENCY RECOVERY AND CONSTRUCTION PROGRAM (ERRP) IDA CREDIT 1704 - ET ACCOMPLISHMENT\. Under the Emergency Recovery and Construction Program, _ELPA has implemented a procurement plan Erection of D-esel Generating sets with the associated o\.4/15 XV step up indoor substations at 16 towns in different Regions of the Auth^rity in the self contained system\. The completion period of the physical implementation, the generating sets capacities with the associated Transformers and the locations (sites) at which the erection work took placed are indicated in Table I\.  Table I Deisel Generator Sets Erection Under ERRP - CR\._1704 - ET Serial | | Diesel Generator Set Step up Transformer Year of R e m a r k s No\. Site Capacity and Capacity Completion and I \. \. i,, \. \. Q~~~~~~uantity andl 4unt Commissioning__ \. _,\.I I Ahi Adi 11x 181\.SKVA I x\.ISKVA 'Feb\. 1994 PNcwPovxr Stalion 2 Adigrat ,I x S\.UI+ I x89)KVA I xPX1)KVA tMalrch 1992 Old Powcr Swiaion August I9 1 I xX()9 KVA iSLt delivered to sitc Alcm Kcitemia 1 x 187\.5 KVA I x 315 KVA August 1992 \. New Power Station ! 4 :Asahilal I l x \.K() lVA x 31S KVA In August 1X94 the Set delivcred to site 4Erection will start carly April 1J)S9 S A%sosa I x 187\.5 KVA I x 315 KVA April 19(4 Old Pomer Station 6 IAxuI I x 55) + I x X)) KVA I x 81X) KVA Ociolber 1P92 Old Power Station 7 Dupli Ix \.0U) KVA Ix 315 KVA New Power Station In August 19'4 the set delivered to site Erection will start earlyApril 1995 8 1Korem i2 x 55i) + I x 187\.S KVA 2 x 8( + I x 2( KVA Augusl 19(2 !New Powcr Station 9 ULalihcha 1I x 187\.S KVA I x 315 KVA 1AugusL 193 New Power Station 1(1 Mdthel Mcda 'I x 187\.s KVA I x 315 KVA AuLutS1 1992 New Power Slation II |Mckete x s 55 + I '8tY) KVA I xK(M) KVA Sept\. 1(91 -Nov\.l' l)3 Old Power Station tn AUILgust 1994 Ix80( I(VA Additional set delivered to sate 12 lNef is Mc%what I x 187\.5 KVA I x 315 KVA Fcl\. 199'Y Ncw Povwer Station 13 Negelle Borcna I x8' KVA I x 31s KVA 01(O Power Slation In August 1994 set delivered to site _ ___ _ _ __ _\. _\. __ _ \. \. _ _ _ ___ \. _ \.____ Ercclion a_vErection will start April 1995  Cont'd Table I Diesel Generator Sets Erection Under ERRP _ CR\. 1704 - ET ISerial ' ~ | Diesel Generator Set Step Up Trans- Year of R e m a r k s INo\. Site Capacity and former Capacity Completion is !a, Quantity and Quantity and Commissiong 14 Shire EndaclassNe I x 150 + I x39 KVA 1I x 2(X IKVA June 1992 In August1994 I 0Wx3O set , deliwred to sitc Old Power Station 15 jSokoi;a I x 187\.5 KVA I x 315 KVA 1May e993 New Power Station 16 jTepi 1I x 3M KVA I x 315 lVA New Power Station Erection will start in April 1995  7 PART B\. TRANSMISSION LINES ACCOMPLISHMENT\. The construction of 100 Km of 66 kv transmission line between Sebeta and Woliso was completed and interconnected with the grid system early April 1991\. The construction of another 100 km 66kv transmission line between Dessie and Woldia is also completed and the line is in operation since February 1193\. Construction of 20 km of 123 kv transmission line between Kaliti and Cottobie Substations in Addis Abeba is completed in late 1993 and interconnected with the grid system\. The construction of 6 km of 132 kv transmission between Dire Dawa I and Dire Dawa II Substation is also finalized\. The implementation of this project component is accomplished in compliance with the plan\. Connection of Kaliti, Sabbata and Gafarsa Substation by 230 kv transmission line and connection of Sabbata and Makanisa by 132 kv transmission have been foreseen\. The material supply is financed by IDA Credit 1704 - ET and the goods are delivered to site and kept in store until funds are available for the construction works of the transmission lines and substations in the 1995/1996 fiscal year\.  8 Part C\. Substations I\. Construction of new substation at Kaliti II, Bole\. Akaki and Dire Dawa II and expansion of existing substations of Cottobe and Kaliti I\. II\. Construction of new substations at Woliso, Woldia and expansion and rehabilitation of existing substation of Addis South, Bahr Dar Tis Abbay and Sabbata\. ACCOMPLISHMENTS The Construction of a new 132/15 KV 2x20 KVA Transformer substation at Bole (Weregenu) was completed and put into operation in early Dec\. 1992\. Earlier, in 1991 Kaliti II 132/45/15 KV 1x20 MVA Transformer bay was completed\. At Dire Dawa town, the construction of Dire Dawa II 132/15 KV - 2x20 MVA transformer substation was completed at the beginning of Dec\. 1994\. Similarly, Akaki (kaliti North) 132/15 KV - 2x20 MVA transformer substation was completed in late June 1994\. After the completion of the 132 KV transmission line between Kaliti and Cottobie substations, expansion works on out going and in coming bays followed and the construction was completed in early June 1994\. In the North Eastern Region, construction of a ne\.v 66/5 Ky 2x3 MVA transformer substation at Woldia was completed and put into operation in early February 1993\. Following the completion of the 66 KV transmission between Sabbata and Waliso, at Sabbata 45/66 KV one auto transformer bay and at Woliso 66/15 KV, 2x3 MVA transformer substation were completed in Dec\. 1992\. At Debre-Zeit, about 50 KM South-East of Addis Abeba a new 132/15 KV 2x20 MVA substation was completed in May 1994\. The 132 KV in coming line to the substation was tapped from the 132 KV Koka-Addis Abeba line No II\. At Dire Dawa I (old substation), one 132/66 KV - lx12 MVA transformer bay and a 66 KV line bay and at Harar 66/15 KV 2x6\.3 MVA transformer substation construction works are completed in late Jan\. 1995\. SABATTA - MAKANISSA PROJECT COMPONENT M/S CEI of Italy could not supply the materials and equipment for the Power Sub-Sector Project Component as per the contract agreement\. The information of their not being able to deliver was received late in early Feb\. 1995\. They categorically stated it was beyond their control\. On the other hand 132/15 KV 1x20 MVA transformer supplied by M/S Pauwels International of Sweden is delivered to site\. Sabatta- Mekanissa 7 Km 132 KV transmission line materials supplied by M/S ABB - SAE SADELIMI are delivered to site\. Also, Kaliti - Sabatta - Geferssa 25 Km of 230 KV line materials supplied by M/S IVO had already been delivered to site\.  9 PART D\. DISTRIBUTION i) Distribution expansion in interconnect system ii) Distribution Rehabilitation in both inter connected and self contained systems\. ACCOMPLISHMENT out of the 1200 km of medium voltage (15kv) and low voltage (400/200V) distribution expansions in Addis Ababa and other major urban centres foreseen in the contract a total of 1180 km of distribution lines has been constructed and 858 Distribution transformers with a total capacity of 174,000 KVA have been erected in the related networks\. In the rehabilitation program the Authority has effected computer assisted distribution design training during 1988 and 1990\. A total of 495 km of existing distribution net works rehabilitation works have been carried out in Addis Abeba Bahir Dar, Jimma, Dire Dawa and Nazreth load centres\. Rehabilitation works included upgrading of conductor sizes, replacement of insulators, poles, transformer capacities and related accessories 171 pieces of transformers with a total capacity of 46,000 KVA have been erected\. Emerrency Recovery anid Reconstruction Program (ERRP) Distribution Systems ERRP - Proiect Credit No\. 2351 -ET The power subsector component of ERRP Credit No\. 2351 is completed\. The total amount is USD 3 million\. The proceeds of the credit is utilized for the procurement Distribution materials and line-men tools\. ERRP - Credit No, 1704 - ET The power subsector component of this program in Distribution covers 20 regional small towns\. In-these areas, 679 km of medium 15 kv and low voltage 400/220 V\. Lines of distribution networks have been constructed\. -About 640 street light points were installed and 89 pieces of transformers with total capacity of 17, 200 KVA erected\.  10 PART E\. GENERAL PLANT I\. Acquisition of about 80 vehicles an Vehicle spare parts\. II\. Construction of 12 Dwelling Houses for Expatriate Personnel of EELPA and Class Room Extension at the Faculty of Technology in Addis Abeba University\. ACCOMPLISHMENTS I\. The Authority had acquired 64 vehicles in 1988 and 10 vehicles in 1989\. The vehicles are allocated to various functional areas of the Authority\. II\. The construction of 12 Dwelling Houses and the Class Room Extension of the Faculty of Technology in the Addis Abeba University was completed on mid March 1992\.  11 Part F :- Organization and Manpower Development Program IOMDP) I\. Organization Improvement Program (OIP) II\. Man Power Development (MPD) III\. Technical Assistance (TAP) ACCOMPLISEMENT ORGANIZATION IMPROVEMENT PROGRAM Phase I : In Phase I the study was conducted by Ontario Hydro of Canada, during the last quarter of 1987 through the third quarter of 1988\. the final Report was submitted and approved at the end of 1988\. Accordingly, the Authority started implementation of the recommendations as of March 1989 with the appointment of Four Deputy General Managers followed by the appointment of Thirteen Department directors during June 1989\. Considerable number of Division Managers were assigned during July 1989\. - Phase II : The program included on job training of the Salary Works organization Division and coaching higher management levels to study, understand and implement the recommendation in line with the goals, objectives and implement the recommendations in line with the goals, objectives and tasks of the respective functions\.Phase II of the OIP had been implemented from February to October 1989\. The orientation was successfully conducted by a management consultant with the help of EELPA staff\. The orientation went down to the section level in the hierarchy of the organizational structure\. However, it is to be noted that the OIP did not bring forth any salary scale adjustment or revision of the salary scale which was adopted about 24 years ago\. Parallel with the above activities EELPA's Financial Policies and Procedures were developed by Ontario Hydro\. Four EELPA staff members were sent to canada on the OIP program\. II\. Man Power Development The Faculty of Technology in the Addis Abeba University was required to train under graduate students student under the terms of an agreement entered between the University of Addis ababa and EELPA\. The Faculty was required to train a total of 300 students in Civil an Electrical Engineering over the period 1986/87 - 1995\. Accordingly the first three batches of 50 students each were-admitted to the Faculty during the 1986/87, 1987/, 1987/88 and 1988/89 academic years\. Since 1988/89 on- -wards EELPA did not recruit student for admission to the Faculty\. In connection with the implementation of the agreement three staff members of the faculty were selected for fellowships studies and sent abroad to pursue doctoral studies in various specialities of Electrical Engineering\. Two of these who went to the USA during the 1988/89 academic year completed their studies one in Dec\. 1992 and the other August 1993\. The third started his studies in 1990 and completed in June 1994\. Cont'd\.  12 III\. Technical Assistance (Tav) A Technical Assistance Program agreement was entered between EELPA and Ontario Hydro of Canada\. The Program covered various work areas over the contract agreement, Period\. a) The first batch of four consultants have covered the following areas over the period of two years\. - The two in the Finance Department as Financial systen specialist and Policy/Procedure developer the o\.her two in the Data Processing Division as Management Information Service Consultant\. b) The second of six consultant from Ontario Hydro covered the areas of Man Power Planning, Customer Services (developing policy and procedure), Financial operational jobs, system operation in the Operation Department, and Finchaa Penstock remedial programme\. The third final batch of three consultants covered a consultancy service of 12 months starting October 1993 in the areas of Electrical Inspection, Vehicle Maintenance and Technical Vocational Training\.  13 PART G\. POWER SUBSECTOR STUDIES I\. Preparation of a feasibility study for a high voltage inter connection between Ethiopia and Sudan\. II\. Updating existing distribution system drawing of Addis Abeba and other major cities in Ethiopia and preparation of a distribution planning and design method and provision of computer equipment and software packages needed\. ACCOMPLISHMENT I\. Under IDA Credit 1704 - ET Program, IVO International completed the feasibility study for high voltage inter connection between Ethiopia and Sudan in 1987\. In another development, an agreement between the two countries was reached in 1991 for the review of the feasibility study and subsequent stages of activities to be financed by ADB\. II\. An upgrading study of 700 km 15 kv distribution network in Addis Abeba was carried out\. Single line diagram of the network was plotted on the Addis Abeba Topographic Map\. Various network alternatives were studied and consequently conductor sizes standard were set up including the option of application of aerial bundled conductors\. Design on associated 15/0\.4 kv transformer netstations on wood poles was developed and protection system improved\. Similarly about 30% of the total 3600 km network of the main distribution system was plotted on the Topographic Map\. Comprehensive studies on voltage drop improvements and loss reduction were carried out\. Earthing systems and safety regulations were further developed\.  14 MAJOR PROBLEMS A) PHYSICAL IMPLEMENTATION The commencement of the implementation of the Project was two years behind schedule\. The delay was brought about by the then prevailing country wide unfavourable conditions for the project implementation\. The schedule was reviewed for disbursement to be completed before the closing date of March 31, 1994\. This did not materialize\. Consequently an extension requested was submitted by EELPA through the Ministry of Mines and Energy and Ministry of External Economic Co-operation to the Association\. The Association approved the request and established March 31, 1995 as the later date for the extension\. In the mean time about 3 months temporary suspension occurred in our purchase operations for fear the L/C validity periods might extend beyond the li' closing date if the extension could not be approved\. High time elapsed on the one year credit extension which made foreign purchase process time tight\. In effect EELPA was obliged to limit the procurement of equipment and material to only those that require short delivery time\. B) PROCUREMENT AND DISBURSEMENT In the implementation of the project a lot of tendering, awarding and contracting for procurement of equipment, materials and services was necessary, The process took much longer time than expected during appraisal\. Although, IDA Tendering process was substantially adhered to, purchase approvals, clarification and explanation for disbursement by telephone, telex and fax messages took longer time than necessary\. Delivery of equipment and materials to site go through several stages\. -Obtaining import permits from the National Bank of Ethiopia takes a long time\. Cont'd\.  15 -Receiving of shipping documents necessary for clearance, from the Foreign Negotiating Bank through the Commercial Bank of Ethiopia and custom clearance through Maritime in Addis Abeba as well as at Assab Port take a lot of precious project implementation time\. C) PRICE INCREASES Some suppliers demanded 10 to 15% in prices increase due to L/C expiring dates during the extension negotiating periods and as a result some purchase orders were cancelled\. Delay in obtaining " No objection " reply from the Association usually results in price increases, tight manufacturing period and delayed delivery\. L/C extension operations entail significant bank charges and delayed delivery\.  16 D) Contract No\. 33\.3/48 Date 09 JUlY 1993 Trainina, Installation and Commissioninc Consulting Services In the above cited contract for purchase of 5x890 KVA and 5x309 KVA Diesel Generator Sets, M/S FLOHR & Co\.'s demand on prices increase in the contract has never been accepted by EELPA and there was no ground to have been approved by IDA as commented on a fax message of 15 May 1995 from Disbursement Division - LOAN DEPARTMENT\. In response to their demand EELPA rejected their proposal long before the Diesel Generator Sets were manufactured\. In addition EELPA strongly advised them that the purchase could be cancelled if they insisted on prices increase-\. To this effect, M/S FLOHR & Co\. accepted EELPA advice and confirmed by their fax message 28 April 1994 and the sets were shipped accordingly\. Regarding, Training of EELPA Personnel and commissioning Consulting Services M/S FLOHR & Co\. have defaulted to meet their contractual obligation and it had been terminated\. E) Purchase Order No\. 3209 L/C No\. 05/16884 Date 2/12/1994 M/S AKAI - IMPEX were not able to deliver the ANGTE IRONS on time and they could not meet the contractual obligations\. They defaulted and the purchase was cancelled\.  ANNEX 1 17 ETIOPIAN ELECTRIC LIGHT AND POWER AUTHORITY --------------------------------------------- IDA CREDIT 1704-EET ENERGY 1-POWER SUB-SECTROR -------------------------------------------__- DISBURSEMENT EFFECTED FROM 1988-199A1f' ------------------------------------ SIMIMARY YEAR SDR- BIRR USD 1988 821384\.38 2337787\.85 1125448\.01 1989 7297110\.56 19700663\.84 955570,0\.44 1990 4157761\.64 11174160\.62 h364999\.20 199i 7302166\.15 21014542\.38 10181721\.38 1992 3061776\.38 8730391\.66 4202050\.88 1993 4065683\.71 24928881\.77 5749108\.83 1994 6592257\.78 59929869\.54 9627540\.84 1995 4710325\.37 45098033\.76 7058138\.42 TOTAL 38008465\.97 192914331\.42 52864708\.00 Less Bal\. in S/A 40107\.32 601608\.98 95493\.49 Total-Disb-re--379683-8\.5-19231--22\.4 -52-6--1-\.5 Total Disbhursed 37968358\.65 192312722\.44 52769214\.51  18 ETHIOPIAN ELECTRIC LIGHT AND POWER AUTHORITY IDA CREDIT 1704-ET - ENERGY I - POWER SUB-SECTOR J DISBURSEMENT EFFECTED IN 1988 APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SUB-PRoTECT CATEGORY NO\. S D R B I R R U\.S DOLLAR WA 08 USD 194201\.16 140121\.48 402687\.13 194534\.85 OMDP (F) 4A WA 12 USD 25469\.00 18461\.57 52781\.28 25498\.20 OMDP (F) 4A WA 13 DM 62750\.00 26998\.35 77187\.77 37212\.91 OMDP (F) 4A S/C 4A JPY 73704935\.00 428287\.24 1221973\.73 586770\.66 GENERAL PLANT(EI 3A S/C 4B JPY 13102753\.00 76604\.60 216451\.74 104404\.41 GENERAL PLANT(E) 3A WA 17 USD 30636\.00 22428\.79 63341\.17 30555\.19 OMPD (F) 4A S/C 9A USD 145949\.50 108482\.35 303365\.03 146471\.79 S ISTATIO'A (Ci 2A TOTAL DISBURSED - JULY 7/88 821384\.38 2337787\.85 1125448\.01  1989 1 9 APPLICATION CUTRRENCY APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SUIB-PROJECT CATEGORY NO\. S D R B I R R U\.S DOLLAR S/C 14A DM 224553\.00 93434\.91 252365\.54 121968\.06 DISTRIBUTION (D) 2A S/C 6 JPY 15068632\.00 87326\.39 237294\.62 113945\.22 GENERAL PLANTI(F) 3A S/C 5 USD 814479\.00 624348\.44 1687075\.02 815380\.33 DISTRIBUTION (D) 2A S/C 14B DM 309985\.00 128340\.37 345146\.14 165144\.53 DISTRIBUTION (D) 2A WA 24 CAD 35742\.00 22629\.30 60862\.66 29570\.6J O\.MODP (F) 4A S/C 19A SKR 783211\.00 93496\.63 249232\.47 120677\.04 GENERATION (A) 2A S/C 27A USD 37153\.80 28903\.01 76995\.42 37171\.29 DISTRIBUTTON (D)) 2A S/C 15 USD 508579\.00 390379\.80 1049873\.77 508579\.00 DISTRIBUTION (D) 2A WA 25 USD 88021\.61 67227\.77 181242\.50 88021\.6J OMD)P (F) 4A S/C 27B USD 53121\.30 41034\.88 109934\.74 53002\.29 DISTRIBUTION (D) 2A WA 29 USD 29843\.90 23120\.11 6J816\.12 29843\.90 ONDP (F) 4A WA 23 UISD 214808\.21 165840\.47 444652\.99 214808\.21 REPLINSHMENT SIC IOA USD 41117\.06 31824\.85 86089\.94 41117\.06 TRANSMISSION (B) 2A S/C 11A USD 130555\.40 99603\.27 271877\.68 130555\.40 SUBSTATION (C) 2A S/C IOAA 31423\.80 86053\.64 41672\.05 TRANSMISSION (B) 2A S/C 27C USD 197223\.90 148796\.04 408224\.32 197549\.06 D ISTRBUTtON 10D 2A S/C 14C DM 160331\.00 67228\.85 185619\.33 89625\.47 DTSTRBITION (D) 2A S/C IIAA 98870\.96 271254\.06 13L266\.03 SIUBSTATION (C) 2A S/C 18A SWF 26169\.00 12928\.62 35994\.14 17466\.96 GENERATION iA) 2A S/C 20A SWF 154168\.00 76165\.70 2l2050\.41 102902\.15 SUBSTATION C) 2A S/C 14D DM 132690\.00 56334\.42 159459\.08 77033\.38 DISTRBUTION (bi 2A S/C 7 ASH 3014160\.00 180771\.37 511291\.21 247555\.54 GENERATION (A) 2A S/C 26 DM 128557\.16 54338\.37 153888\.98 74639\.19 DISTRBUTION (D) 2A S/C 32A F 402294\.00 49648\.71 140741\.23 67926\.37 TRANSMISSION (B) 2A S/C 18 SWF 192260\.00 97679\.54 275234\.08 132904\.74 GENERATION (A) 2A S/C 9B U\.SD 1167596\.00 871717\.96 2429880\.69 1173785\.66 SUBSTATION (-) 2A WA 39 USD 37231\.48 28044\.14 77017\.90 37300\.95 OMDP (F) 2A S/C lOB USD 94113\.58 71988\.15 195184\.83 94113\.58 TRANSMISSION- (B) 2A S/C IOAB ECU 83167\.86 71150\.11 192912\.71 93671\.96 TRANSMISSION 1B) 2A SUB-TOTAL 3814596\.94 10449266\.22 5049217\.64 ----------------------- ------ ------- _ ___  1989\. Cont'd 2u APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUTINT 'I-N SUB-PRO,JECT CATEGORY NO\. S D R B I R R U\.S DOLLAR S/C 28 ASH 352150\.00 20498\.42 56140\.58 27093\.37 GE\.ERATION (A) 34 S/C LOC USD 144832\.86 109647\.73 300588\.84 144832\.86 TRANSMISSIO:N (B) 2x S/C IOAC ECU 127988\.32 110547\.88 303056\.5l 146837\.43 TR A:'\.SMI SSION IB) 2A S/C 22 USD 26402\.00 20050\.44 54609\.84 26402\.00 GENERATTON (Al 34 S/C 32B F 370953\.60 44803\.31 121320\.64 58707\.57 TRANSMISSION tB) 24 S/C IOD USD 89990\.07 68766\.86 185944\.15 89990\.00 TRANSMISSION iB) 2A S/C IOAD ECU 79523\.92 67891\.66 183577\.62 88606\.08 TRANSMISSIO rB) 24 SIC 31A USD 472447\.78 361025\.94 976206\.56 472447\.78 DISTRIBUTIOb ID) 2A S/C 34A STG' 121083\.19 159466\.45 427460\.50 206773\.77 GENERATION (A) 3A S/C 38A STG 20525\.39 26942\.19 72834\.38 34889\.06 GENERATION (A) 31 S/C 19 SKR 1958029\.00 235355\.00 636248\.82 304775\.31 GENERATION (A) 2A WA 45 USD 457777\.00 352195\.76 947831\.69 457777\.00 OMDP lF) 2A WA 44 USD 19800\.00 15233\.35 40996\.10 19800\.00 OMDP (F) 4A S/C IIAB ECU 317288\.05 271663\.32 732468\.69 352230\.51 SUBSTATION fC) 2A S/C 32C' F 80032\.00 9745\.65 26276\.58 12635\.92 TRANSMISSION iB) 5A S/C JIB USD 361787\.97 278129\.27 746471\.15 361787\.97 SUBSTATION iC) 24 S/C IIAC ECU 191884\.81 164648\.14 443882\.66 214556\.29 SUBSTATION iC) 9A S/C IIC USD 218796\.82 167940\.38 454604\.36 218796\.82 SUBSTATION !C) 2A S/C 14 DM 52738\.00 21713\.62 57988\.18 28002\.97 DISTRIBUTION fD) 2A S/C 33 SWF 128630\.00 59205\.68 157078\.57 76383\.61 GENERATION !E) 9A S/C 32D F 2764648\.16 336270\.36 898471\.70 433738\.33 TRANSMISSION 1B) 2A S/C 37 STG 12572\.30 16364\.59 43407\.04 21049\.61 GENERATION iE) 3\.k SiC 36 F 354660\.00 43198\.30 113324\.35 54746\.07 GENERATION fEi 3A SiC 2uB SWF 519375\.05 238481\.38 625620\.61 302232\.22 SUBSTATION ;C) 2A S/C 42A USD 23730\.00 18899\.66 49122\.35 23730\.60 SUBSTATION C) 34 S/C 16A NKR 2257250\.00 252925\.28 653868\.25 314026\.97 GENE-RATION I )( 2A S/C IID USD) 13632\.68 10903\.00 28137\.48 13632\.68 SVBST1TION i 0 9A SUB - TOTAL 3482513\.62 9251397\.62 4506482\.80 TOTAL DISBURSED - JUlLY 7/89 7297110\.56 19700663\.84 9555700\.44  1990 21 APPLIC'ATION CURRENCY APPLIED AMOUNT IN AMOtlNT IN MOUNT IN SUB-PROJEcT CATEGORY NO\. S D R B I R R U\.s DOLLAR S/C IIAD ECU 11955\.87 10102\.61 26218\.72 12666\.05 SUBSTATION (C) 2A S/C 21A SWF 215346\.00 102545\.00 266129\.09 128564\.77 GENERATION (4) 3A S/C 41 USD 243470\.00 189247\.57 500525\.30 242636\.20 DISTRBUTION tr) 24 S/C I1h USD 80955\.37 63344\.16 167453\.83 80799\.91 SUBSTUTION (C) 2A S/C: IIAE ECU 70997\.86 61385\.06 162274\.84 78300\.95 SUBSTUTION (C) 24 S/C llF USD 4036\.39 11055\.38 28925\.04 14082\.67 SUBSTUTION IC) 2A SIC IIAF ECU 12309\.92 10661\.25 27893\.85 13580\.62 SUBSTUTION (C) 24 SIC 32E F 401614\.60 49186\.98 128357\.70 62169\.88 TRANSMISSION (B) 2A S/C 31B USD 465868\.13 351645\.69 937372\.34 465868\.13 DISTRBUTION (D) 2A S/C 21B SWF 8305\.00 3992\.20 10417\.9L 5101\.35 GENERATION (A) 3A WA 49 SKR 469482\.00 56788\.14 146968\.67 70918\.73 GENERATION (A) 2A S/C 21 SWF 3020\.00 1429\.15- 3657\.93 1767\.12 GENERATION (A) 3A S/C 31C USD 3863\.94 3L13\.62 7975\.93 3863\.94 DISTRBUTION (D) 2A S/C 9 USD 145949\.50 115448\.11 304868\.44 145949\.50 SUlBSTATION (C) 2A S/C IIACT ECU 39837\.49 34997\.04 92026\.89 44318\.86 SUBSTATION (C) 2A S/C I1G USD 45424\.73 35537\.85 93448\.98 45003\.36 SIJBSTATION (C) 2A WA 48A USO 264450\.00 210613\.76 557418\.80 264964\.75 OMDP (F) 2A S/C 46 JPY 15247000\.00 84254\.50 222991\.33 105997\.22 GENERAL PLANT (E) 3A S/C 34B GBP 13691\.93 16940\.39 44547\.92 21659\.47 GENERATION (A) 3A S/C 47A USD 84116\.99 65709\.73 173708\.67 84235\.93 DISTRBIITIOfN (D) 2A S/C 20C SWF 803215\.08 388231\.07 1028335\.59 497692\.82 SUBSTATION (C) 2A S/C 20 SWF 64921\.88 31413\.03 82883\.44 39974\.03 SlUBSTATION (Cl 2A S/C 38 GBP 127494\.86 156881\.82 412806\.58 199734\.09 GENERATION (A) 3A S/C llH USD 214580\.20 162020\.39 443794\.59 214096\.98 SUBSTATION (C) 2A S/C 11AH ECU 188186\.83 169852\.81 465248\.59 224446\.90 SUBSTATION (C) 2A S/C 51 SWF 140000\.00 68049\.64 184580\.91 88951\.77 GENERATION (A) 2A WA 53 usr) 82722\.87 62359\.25 170688\.62 82722\.87 OMDP (F) 2A SUB-TOTAL 2516806\.20 6691320\.50 3240068\.87  1990\. Cont'd 29 APPLICATION CURRENCY APPLIED AMOUiNT IN AMOUNT IN AMOIINT I?i SUB-lFROJECT CATE,\.-DRY NO\. S D R B I R R U\.S DOLLAR WA 56 & 57 CAD 344341\.01 225145\.54 616063\.94 297615\.39 OMDP IF) 4A WA 55 SEK 204671\.00 25176\.14 68899\.02 33279\.82 GENERATTON (A) WA 55 SEE 24t682\.00 29728\.78 81357\.78 39297\.90 GENEiRATION tA) 4; WA 54 USD 141034\.00 106259\.09 290269\.76 141034\.00 OMDP (F) 4\. S/C 11-I liSD 34386\.80 25988\.79 71594\.39 34399\.02 SUBSTATION (C) ZA S/C II-AI ECU 30157\.22 27489\.27 75727\.94 36385\.07 SUBSTATION (C) 2\. S/C 42 ATS 4419840\.00 283154\.83 779307\.22 336505\.69 GENERATION (A) 2 S/C 11-J USD 34018\.13 25545\.45 70011\.90 33945\.30 SUBSTATIOJN (C) 2\. S/C IIAJ ECIJ 29833\.90 27525\.44 75438\.42 36576\.36 SUiBSTATIOlN (C) 2A WA 60 USD 74067\.00 55619\.60 152435\.53 73908\.43 OMDP (F) 4A SIC 35A ITL 75174000\.00 45771\.34 124763\.38 60272\.16 GENERATION (A) 3A S/C 30 DM 264234\.00 118676\.37 321293\.96 155057\.80 GENERATION (A) 24 S/C 50 ATS 3121200\.00 200169\.89 537832\.67 259822\.52 GENERATION tA) 2A SIC 59A GBP 128321\.62 162800\.39 447841\.73 215884\.71 GENERATION fA) 3; WA 65 USD 77612\.00 58546\.21 160117\.09 77612\.00 OMDP iF) 41 WA 64 CAD 42860\.18 27501\.14 75091\.18 36334\.50 OMDP lF) 44 42B USD 27448\.80 20775\.66 56727\.42 27448\.80 GENERATION ( \.I A WA 75 CAT) 67165\.42 43624\.34 118348\.52 57235\.13 OMDP tF) 4 WA 74 CAD 108583\.38 70577\.90 l91032\.57 92497\.98 OMOP tF) 4A 42C USD) 53796\.00 41072\.23 111672\.27 53796\.00 GENERATION (A) 3: S/C IIK USD 26021\.75 19807\.04 54013\.34 26021\.75 SUBSTATION ;C) 2- SUB - TOTAL 1640955\.44 4479840\.03 2124930\.33 TOA-DSU-E--JL-7--4576-4-1716\.2-34992 TOTAL DISBURSED) - JULY- 7/90 4157761\.64 11174160\.62 536i4999\.20  1991 23 APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SUB-PROJECT CATEGORY NO\. S D R B I R R U\.S DOLLAR S/C lIE USD 8344\.1] 6154\.19 17113\.30 8269\.81 SUBSTATION (C) 2A SIC IlL ECU 7317\.78 6829\.75 18991\.86 9177\.61 SUBSTATION (C) 2A WA 66 USD 301352\.64 224433\.16 623799\.96 301352\.64 REPLINSHMENT S/C 72 SEK 999600\.00 124669\.36 347126\.63 167694\.01 GENERATION (A) 2A S/C 71 SEK 178075\.00 22405\.68 62669\.08 30127\.58 GENERATION (A) 2A S/C 73 SEK 31950\.00 4020\.00 11205\.51 5405\.45 GENERATION (A) 2A S/C 68 GBP 9554\.38 12977\.15 36640\.48 17613\.50 GENERATION (A) 2A WA 75 CAD 67165\.42 42698\.59 121034\.31 58310\.91 ObDP (F) 4A WA 77 USD 21771\.95 J6009\.17 45113\.45 21771\.95 OMDP (F) 4A WA 78 liSD 75563\.00 54879\.20 156644\.12 75563\.00 OMDP (F) 4A S/C 52 SWF 206301\.00 115632\.21 333237\.58 161424\.88 GENERATION (A) 2A S/C 62 DM 16208\.73 7456\.2-3 21414\.91 10281\.47 GENERATION (A) 2A WA 82 & 83 CAD 287227\.89 176858\.42 512846\.97 246494\.65 OMDP (F) 4A S/C 35 ITL 81040000\.00 49889\.33 144334\.52 69726\.82 GENERATION (A) 3A S/C 63 DM 295492\.82 135494\.36 401043\.25 194134\.96 GENERATION (A) 2A S/C 89 USD 12574\.00 8698\.23 25825\.59 12574\.00 GENERATION (A) 2A WA 94 USD 84600\.00 58595\.63 175742\.54 84600\.00 OMDP (F) 4A WA 92 & 93 CAD 111701\.60 66483\.41 199399\.90 96021\.32 OCDP (F) 4A S/C 84 FRF 381830\.00 52767\.46 158262\.44 76455\.30 DISTRBUTION ()i 2A S/C 86A GBP 307178\.13 413780\.21 1233815\.63 596170\.38 GENERATION (A) 2A SIC 90 GBP 45376\.47 61L23\.77 182259\.72 88066\.51 GENERATION (A) 2A S/C 91 GBP 14500\.00 19532\.03 58240\.88 28141\.56 GENERATION (A) 2A S/C 81A USD 704171\.01 489011\.04 1454080\.69 704171\.01 DISTRBUTION cr) 2A S/C 80A FIM 2875804\.20 551097\.99 1601587\.75 774970\.52 DISTRBUTION (D) 2A S/C 67 GBP 50389\.36 68050\.58 198234\.68 95800\.25 GENERAIION (A) 2A S/C 69 GBP 8625\.54 11648\.75 33933\.3R 16398\.88 GESERATION (A) 2A S/C 70 GBP L7868\.23 24130\.96 70295\.67 33971\.08 GENERATION (A) 2A WA 107 CAD 107654\.70 64202\.45 193256\.50 93323\.40 OMD)P (F) 4A WA 106 USD 413807\.30 281942\.39 856581\.11 413807\.30 REPLINSHMENT S/C 61A DM 361182\.46 170327\.37 492276\.25 246743\.04 GENERATION (A) 2A SIC 63B DM 74478\.66 35122\.84 105023\.51 50880\.35 GENERATION (A) 2A S/C 85A USD 1260035\.00 869627\.21 2600339\.28 1260035\.00 DISTRBUTION (D) 2A siC 61 DM 93900\.74 44281\.96 132410\.40 64148\.61 GENERATION (A) 2A S/C 63C DM 43150\.00 20348\.79 60846\.49 29478\.07 GENERATION (A) 2A S/C 83A FRF 74058\.23 10159\.32 30199\.63 14594\.57 DISIRBUTION (D) 2A S/C 86 GBP 57753\.33 77968\.59 228065\.61 109776\.65 GENERATION (A) 2A S/C 84B FRF 1491840\.00 199753\.53 577508\.82 278144\.80 DISTRBUTJON (D) 24 -------OTA-45906131-352402\.0 -64566\.8 -EiB -TOTAL 4599061\.31 13521402\.40 6545616\.86 , _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-  1991, Cont'd 24 APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SUE-:FROJECT CATEGORY NO\. S D R B I R R U\.S DOLLAR S/C 99A DM 120492\.0 54882\.04 157880\.26 76489\.64 DISTRBUTION -D1 2A S/C 102A FIM 598080\.0 112415\.70 320081\.90 154612\.16 DISTRRUTION cD) 2A S/C 79A USD 24011\.0 17860\.12 50234\.72 24267\.98 DISTRBUTION fD) -2A S/C 85 USD 1310800\.0 964064\.55 2691523\.62 1310800\.00 DISTF\.iUTION iD) 2'A S/C 96A JPY 19174790\.0 103403\.56 285829\.78 l39250\.47 GENERAL PLANT CE) 3A S/C 88A DM 13301\.8 5694\.82 1580J\.00 7613\.24 GFNERATION (A) 2A S/C 104A DM 273480\.0 118482\.57 329748\.13 158744\.54 DIST \.RBUTION iD) 2A S/C 96B JPY 22074385\.0 118360\.33 329407\.92 158580\.35 GENERAL PLANT (E) 3A S/C 83B FRF 592465\.8 75672\.69 209871\.17 101861\.50 DISTRBUTION (D) 2A SIC 84C FRF 1562800\.0 199608\.61 553595\.92 268689\.16 DISTR:UTTON iD) 2A S/C 95A JPY 32627243\.0 176562\.15 486692\.69 237541\.42 GENERAL PLANT (E) 3A S/C 76 SWF 345868\.0 173242\.65 473877\.38 230658\.73 GENERATION (A) 2A S/C 88 DM 32384\.7 13976\.71 38231\.04 18608\.87 GENERATION (A) 2A S/C 95B JPY 8457070\.0 45317\.49 123696\.04 59859\.43 GENERAL PLANT (E) 3A SIC 104 DII 41900\.0 17577\.57 47877\.95 23106\.07 DITrSTBUTION I0) 2A S/C 105 USD 127000\.0 96388\.10 263131\.42 127000\.00 DISTREUTION MD) 2A S/C 98 JPY 74282565\.0 409595\.18 L115659\.04 538421\.06 GENERAL PLANT tE) 3A SUB - TOTAL 2703104\.84 7493139\.98 3636104\.52 TOTAL DISBURSED - JULY 7/91 7302166\.15 21014542\.38 10181721\.38  1992 25 APPLICATION CURRENCY APPLIED AMfOUNT IN AMOUNT IN AMOUNT TN SUB-PROJECT CATEGORY NO\. 8 D R B I R 8 IJ\.8 DOLLAR S/C 99A DMI 125209\.80 52354\.83 141625\.94 68435\.61 DISTRBUTION (D) 2A S/C 95B JPY 27224757\.00 150422\.68 410876\.55 197280\.85 GENERAL PLAN\.T (E) 3A S/C 99A DM 13388\.00 5736\.30 15813\.51 7639\.38 DISTRBUTION (D) 2A S/C 99 DM 12157\.20 5211\.65 14395\.02 6950\.94 DISTRBUTION (D) 2A S/C 99A DM 529518\.60 226998\.76 626989\.64 302755\.06 DISTRBUTION ID) 2A S/C 97 JPY 11441845\.00 62682\.11 172847\.80 83565\.91 GENERAL PLANT CE) 3A S/C 99 DM 58835\.40 25604\.00 71566\.28 34573\.08 DISTRBUTION 113) 2A S/C 99 DM 1755\.00 76\.5\.70 2143\.96 1037\.93 DISTRBUTION (C) 2A S/C 96B JPY 8655120\.00 47462\.32 132849\.49 64390\.71 GENERAL PLANT (E) 3A S/C Ll USD 294815\.15 214220\.08 607945\.66 293693\.56 SUBSTATION (C) 2A 42D USD 80489\.40 58485\.62 165979\.21 79987\.85 GENERATION (A) 3A S/C 83B FRF 74058\.23 9462\.42 26675\.43 12949\.89 DISTRBiUTION (DI 2A S/C 96C JPY 111959\.00 627\.88 1765\.76 853\.02 GENERAL PLANT CE) 3A WA 112 USD 62883\.39 45677\.52 130661\.09 62883\.39 SUIBSTATION (C) 24 S/C 109 FIM 804855\.65 133319\.41 384005\.63 185572\.61 DISTRBUTTON (Dr 2A WA 108 USD 232877\.85 170210\.24 482057\.14 232877\.85 REPLINSHMENT WA 115 CAD 106181\.77 64314\.31 185923\.54 90109\.50 OMDP (F) 4A S/C 101 USD) 14596\.29 10593\.93 30484\.34 14726\.73 DISTRBUTION (DI 2A S/C 103 USD 114720\.00 82988\.42 237050\.95 114517\.37 DISTRBUTION fD) 2A S/C 10 USD 41117\.02 29709\.39 84923\.82 41026\.00 TRANSMISSION (B) 2A ------------------------------------ SUB - TOTAL 1396847\.57 3926580\.76 1895827\.24 ------------------------------------ S/C 79B USD 197424\.0 144313\.66 407251\.71 197424\.00 DISTRBUTION (D) 24 SIC 116 USD 161573\.9 117923\.21 334422\.45 161573\.96 SUBSTUTION (C) 2A S/C 101 USD 75736\.7 54731\.12 155705\.93 75736\.73 DISTRBUTTON /D) 2A S/C 101 USD 23385\.5 17005\.46 48268\.02 23385\.54 DISTRBUTION CD) 2A S/C 111 JPY 4468024\.0 24444\.05 69095\.21 33293\.77 GENERAL PLAMT (E) 34 SIC 116 USD 373646\.0 274737\.08 776596\.16 373646\.04 DISTRBUTION (D) 2A S/C lOAD XEU 33581\.5 30431\.70 86029\.13 41555\.70 TRANSMISSION (D) 2A S/C 117 bM 301060\.8 133020\.28 378262\.06 182205\.86 DISTRBUTION (D) 2A S/C 79C USD 8766\.0 6374\.95 447106\.60 8766\.00 DISTRBUTION (D) 2A S/C 120 SGD 522932\.0 231214\.86 665556\.84 321962\.06 DISTRBUTION (D) 2A SIC 116 USD 103760\.0 74759\.13 214668\.08 103760\.00 DISTRBIU'TION CD) 2A S/C 121 BEF 4850850\.0 104141\.28 301008\.09 144462\.71 DISTRBUTION (D) 24 S/C 123 USD 132957\.2 94780\.32 275503\.27 32-957\.20 DISTRRIUTION (D) 2A S/C 122 USD 451144\.7 319144\.61 934433\.72 451144\.76 DISIRBUTION (Di 2A S/C 119 ITL 62300000\.0 37908\.10 112303\.59 54449\.31 DISTRBUTION (DI 2A SUB : TOTAL 1664928\.81 4803810\.90 2306223\.64 TOTAL DISBURSED - JlULY 7/92 3061776\.38 8730391\.66 4202050\.88  L99\.3 26 APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUiNT IN SUB-PROJECT :\.ATEGGRY NO\. S O R B I RR U\.8 soLLAR S/C114A USD 952455\.00 644847\.97 1972900\.11 952455\.00 DISTRIBUJTION 2A S/C118 FRF 1712713\.00 239006\.87 731281\.43 347864\.93 DISTRIBUTION 2A SC/11i USO 352265\.00 243769\.51 1752312\.75 352265\.00 DISTRIBUTION 2A S/C 79 USD 9909\.00 7075\.52 49771\.68 9909\.00 DISTRIBUTIO-N 2A S/C131 ITL 132000000\.00 70656\.69 498002\.48 99404\.78 DISTRIBUTION 2A S/t122 USD 183252\.32 132542\.85 918899\.70 183252\.32 DISTRIBUTION 2A S/C130 ITL 114184000\.00 59045\.97 413699\.69 82036\.10 DISTRIBUTION 2A S/C114 UJsD) 754960\.00 542127\.68 3764073\.81 754960\.00 DISTRTBUTION 2A S/C103 USD 14340\.00 10360\.87 71757\.83 14340\.00 DISTRIBUTION 2A S/C126 GBP 170838\. Li 186791\.55 1285891\.71 256812\.23 GENERATION 3A S/C 97 JPY 2027961\.00 11820;82 81259\.86 16374\.08 GENRAL PLANT 3A S/C129 USD 202100\.00 147275\.21 1011228\.41 202100\.00 DISTRIBUJTION 2A S/C126 GBP 62635\.63 70398\.66 483698\.63 96584\.14 GENERATION 3A S/C125 USD 24921\.56 18090\.96 125431\.86 24921\.56 DISTRIBUTION 3A WA 134 U)50 301365\.24 218765\.79 1506825\.95 301365\.24 REPLINSHMENT S/C127 DM 225148\.80 101758\.56 705975\.45 141630\.62 SUBSTATION 2A S/C 84 FRF 381830\.00 49987\.01 346844\.87 69299\.00 DISTRIBUTION 2A W/A136 CAD 285818\.91 L66190\.36 1143082\.22 228400\.39 OMDP 44 S/C127 DEM 126621\.10 55743\.93 383203\.29 76683\.02 SUBSTATION ZA S/C102 FIM 74760\.00 9139\.6f3 62829\.02 12572\.75 DISTRIBUTION 2A S/C]13 ATS 7598000\.00 48J593\.85 33834L3\.51 677848\.16 GENERATION 2A S/X133 CHF 184550\.00 88337\.89 627322\.69 124538\.76 SUBSTATION 2A S/C124 JPY 56651820\.00 352423\.11 2489710\.68 497942\.13 GENERATION 3A S/C132 USD 145910\.80 102176\.85 724474\.74 145910\.00 SUBSTATION 2A S/135 ITL 115000000\.00 55755\.60 394989\.40 79639\.62 DISTRIBUTION 2A TOTAL DISBURSED JULY 7,1993 4065683\.71 24928881\.77 5749108\.83  1994 27 APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SUB-PROJECT CATEGORY NO\. S D R B I R R U\.S DOLLAR W/A138 CAD 292198\.97 158248\.44 1237876\.90 222204\.54 OMDP (F) 4A W/A139 DEM 520105\.80 221023\.96 1595309\.30 307285\.19 GESER\.(A) 2A W/A141 ITL 323815792\.00 144374\.66 1039735\.75 201022\.94 SUBST\.(C) 2X W/A140 IJSD 202914\.00 146378\.57 1054682\.90 202914\.00 TRANS\.(B) 2A SfC137 GBP 319486\.85 342021\.62 2487657\.60 481617\.75 GENER\.(A) 24 S/C143 ITL 99884876\.00 43011\.78 346746\.00 59745\.09 TRANS\.(B) 2A S/C145 BEF 6849392\.00 138320\.61 1109163\.92 191257\.29 DISTR\.(D) 2A S/C146 CHF 59332\.00 29661\.69 256428\.63 41900\.10 TRANS\.(B) 2A S/C147 CAD 117733\.02 65130\.77 515043\.90 89262\.37 OMDP (F) 4A S/C144 USD 75030\.30 54753\.79 433439\.20 75119\.46 DISTR\.(D) 2A S/C128 ATS 9528150\.00 563893\.30 4522959\.70 777140\.72 GENER\.(A) A W/A156-157 CAD 132193\.25 68172\.30 581279\.10 25920\.74 O'rUP (F) 4A W/A158 CAD 34987\.43 18170\.00 155462\.70 25402\.41 OMDP (F) 2A S/C158 FIM 55944\.00 7306\.59 64947\.50 10323\.52 DISTR\.(D) 2A S/C160 CAD 30097\.29 15456\.69 44008\.34 276812\.40 OMDP (F) 44 W/A161 CAD 30655\.00 l5fi61\.57 138151\.40 22282\.50 0MDP (F) 4A S/C150 USD 403445\.70 285529\.24 2535913\.30 403445\.70 DISTR\.(D) 2A W/A163 CAD 29093\.40 14565\.70 130899\.60 21044\.95 OMuP (F) 4A S/C149 ITL 56025344\.00 24662\.68 222550\.80 35779\.87 TRANS\.(B) 2A SfC115 BEF 7388106\.00 152302\.59 1338756\.80 215928\.52 DISTR\.(D) 2A SUB-OTAL250646\.5 _181103\.3 3686410\.0 SUB-TOTAL 2508646\.55 19811013\.34 3686410\.06  28 APPLICATION CURRENT APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SUB-PRO\.JECT CAT AGORY NO\. S D R BIRR U\.S DOLLAR W/A159 US 200598\.00 143284\.29 1259756\.J0 200598\.10 Renlinshement W/A162 US 58040\.67 41457\.62 361012\.97 58040\.67 " B S/C149 ITL\.343514160\.00 150675\.15 J363934\.51 219282\.07 TRANSMISS\.(Bi 2A S/C153 C:HF 5500\.00 26856\.60 244971\.34 39384\.46 * (B) ZA S/C164 CAD 30169\.87 15055\.15 134737\.62 21908\.55 OMDP (F) 4A W/A16fi CAD 27820\.90 13855\.86 124060\.14 20139\.63 OMDP (F) 4A S/C151 DEM 4575680\.41 2012637\.07 17968485\.64 2921704\.90 GENER\. (E) 2A S/C168 liSD 112500\.00 76567\.17 696833\.30 112211\.48 GENER\. (E) 2A SfC157 USD 391969\.00 269995\.41 2442625\.25 393337\.36 TRANS\. (B) 2A S/C157 USD 17119\.00 11726\.11 106336\.34 17119\.00 TRANS\. (B) 2A S/C156 USD 203549\.79 140225\.76 1255800\.49 203549\.79 DISTR\. (D) 2A 5/C15 BEF 195962\.24 418049\.-11 3827108\.75 612337\.39 DISTR\. (D) 2A S/0157 USD 171215\.00 116905\.94 1070019\.14 171215\.00 DISTR\. (D) 2A S/C160 FRF 314650\.00 40752\.48 3811026\.20 60480\.35 DISTR\. IDi 2A S/C172 CAD 56888\.00 28236\.57 264612\.90 42002\.04 OM-DP (F) 41 SfC155 BEF 195962\.40 418049\.11 3827108\.75 612337\.39 DISTR\. tD) 2A SfC159 FRF 325000\.00 42448\.45 397629\.24 63115\.75 DISTR\. (D) 2A S/C157 USD 32615\.00 2l924\.92 205923\.87 32615\.00 DISTR\. (Di 2A S/C157 USD 37597\.00 25300\.28 236861\.10 37597\.00 DISTR\. (D) 2A VC157 USb 46290\.00 31150\.50 520012\.55 46290\.00 DISTR\. (Di 2A S/C171 SEK 419182\.00 38457\.68 351948\.61 55864\.85 GENERAL\. (El 3A SUB-TOTAL 4083611\.23 40470804\.81 5941130\.78 GRAND TOTAL/94 6592257\.78 59929869\.54 9627540\.84  199g 29 APPLICATION CURRENCY APPLIED AMOUNT IN AMOUNT IN AMOUNT IN SLB-PROJECT CATEGORY No\. S D R B I R R li\.S DOLLAR S/C184 NLG 268532\.00 105688\.66 961561\.98 153849\.92 GENERAL\. (El 2A S/C176 USD 515800\.00 351344\.50 3219835\.90 515800\.00 DISTRB\. (0) 2A S/C183 JPY 5362339\.00 36460\.05 336216\.35 53794\.62 GESERAL\. (E) \.A S/C178 JPY 15446000\.00 105689\.66 975279\.76 155299\.32 (;ENERAL\. (E) 2A S/C152 ITL 658075206\.00 277033\.76 2548209\.10 405765\.76 DISTRB\. (D) 2A S/C165 DEM 362562\.50 162302\.62 1498027\.50 237782\.14 DISTRB\. lD) 2A S/C182 USD 220\.92 148\.39 1382\.54 220\.92 GENERAL\. (E) 3A S/C179 GBP 123108\.00 131207\.50 1224321\.70 195891\.47 DISTRB\. (Di 2A S/C174 ITL 39291608\.00 16466\.12 153940\.71 24630\.51 GFNERAL\. (E) 3A S/C187 GBP 245272\.20 260457\.72 2499010\.30 260457\.72 GENERATION(A) 3A 3iC157 USD 101454\.00 n 64806\.J8 628672\.56 101454\.00 TRANSM\. (T) 2A S/Ci182 USD 94580\.00 64273\.02 5915l6\.62 94580\.00 GENERAL\. (El 3A S/C176 USD 256800\.00 176487\.75 1624354\.40 256800\.00 DISTRB\. (1D) 2A S/C180 DEM 890000\.00 415805\.20 4025464\.61 6420L9\.87 GENERAL\. (El 2A S/C176 USD 1228800\.00 818287\.67 7652569\.00 1228800\.00 DISTRB\. (D) 2A S/C185 USD 199571\.00 133322\.87 1246826\. 10 199571\.00 DISTRB\. (D) 2A S/C165 DKK 323757\.00 37221\.79 995638\.89 159302\.22 GENERATIOICAi 2A S/C176 Us 977600\.00 633504\.98 6140233\.70 977600\.00 DISTRB\. (D) 2A S/Ci77 Us 379000\.00 245599\.82 2380471\.10 379000\.00 GENERATION(A) 2A S/C170 US 110400\.00 71541\.48 693414\.29 110400\.00 GENERATTON(A) 2A S/C187 GBP 24232\.80 25102\.32 243018\.84 38758\.98 GENERATION(A) 34 S/C188 US 106350\.00 70900\.00 670005\.00 106350\.00 GENERAL\. (El 3A S/0i89 Us 76000\.97 506673\.31 4788062\.81 760009\.97 GENERAL\. (El 34 SUB - TOTAL APRIL - 95 4132752\.06 39639965\.95 6191778\.45 TOTAL 4710325\.37 45098033\.76 7058138\.42  Appendix B PROJECT OPERATIONAL PLAN Key Objectives of Energy Proposed actions and related follow-up projects to sustain Project (Credit 1704-ET) them \. \. \. \. \.' \. \. \. \. \. \. : \. ,\. \. \. \.- \.' , '\. \. \. Build and maintain a * Creation by EELPA of a Manager for Planning capability for least-cost * Employment of consultants from time to time for analyses programming\. that require specialists\. * Restructuring of EELPA for greater commercialization, making planning important to profitability\. Implement priority * Construction of the Gigel Gibe hydro plant under the investment projects\. proposed Energy II project financed by IDA and co-financiers * Improvement the distribution system under a proposed follow-up project to Energy II\. Improve management, * Restructuring of the electricity sector to promote efficiency operations and financial and improved management\. performance\. * Issuance, by the Council of Ministers regulations establishing EELPA as a corporation: Ethiopian Electric Power Corporation\. (EEPCO) * Elimination of electricity pricing subsidies and increase tariffs to meet the financial needs of the utility\. * Restructuring of EELPA, in its present form, giving greater autonomy and accountability to eight regional managers and separation of accounting systems for non-core activities, and introduction of programs for human resources development and improved operations planning\. a~~d,*eg ?f, = urnfle rnw#a Develop and implement least- * Evaluation of the technical financial and economic aspects of cost plans to supply agricultural residue briquetting plants and private sector household energy products, interest in owning and operating them\. through free marketing * Removal of the monopsony status of the Construction and practices with substantial Fuelwood Production and Marketing Enterprise (CFPME)\. private sector participation * Design and implementation of a program to improve charcoal efficiency in traditional kilns used by small informal private charcoalers and lift the ban on charcoaling\. Evaluate the least cost * Evaluation of the least-cost transport option for petroleum transport option for petroleum products, which Energy I did not implement\. products\. Upgrade the production of * Expansion of LPG production under the ongoing Calub Gas LPG Project\. fi$tEmowcre--y Assess the potential benefits * Review of the industrial energy efficiency study under Energy of\.improving the efficiency I, to determine why the implementation of recommended of large industries and measures was limited and arrangement of financing and ensuring the implementation training for implementing technically and economically of economically viable viable measures\. investments\.   MAP SECTION   < S U W A N BR2 A ETI-IIOpIA ET / R _OADLS UNDER M\.INTENANCE\. ZAIRE TLK4 I /) A;S - X BICALT, All WEA EI j s U G,AVEL AVL AL\.-WETHE -lp ~~~~~~~~~~~~~~RURAL AND/OR R W , , / 4 INTERNATIONAL AIRPORTS DOMESTIC AIRPORTS * NATIONAL CAPITAL PAoIoPTh\.14'NAALR\.~ ~ ~~~Ao 6\. - 1A oAAoIo ~~~ AIoo ARAR~~~~ MU s\. Nooer LAIAR\. loop > Mo10 DINIooAoIA- S N\.-~~~~~~~~~~~~~~~~~~~~~~~~~~M,AO \. El K- ~ ~ ~ ~ ~~~~~~Do OA N~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~j~~~~~~~SPEAE p  I   IMAGING Report No\.: 16827 Type: ICR

REVIEW

P039643

 ICRR 10749 Report Number : ICRR10749 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 08/21/2000 PROJ ID : P039643 Appraisal Actual Project Name : HIV/AIDS and STDs Project Costs 35\.2 5\.77 Prevention and US$M ) (US$M) Management Project Country : Indonesia Loan/ US$M ) 24\.8 Loan /Credit (US$M) approx\. 4\.5 Sector (s): HIV/AIDS Cofinancing None US$M ) (US$M) L/C Number : L3981 Board Approval 96 FY ) (FY) Partners involved : Closing Date 09/30/1999 09/30/1999 Prepared by : Reviewed by : Group Manager : Group : 2\. Project Objectives and Components a\. Objectives The ID STD/AIDS project was a three-year pilot project conducted in two provinces\. It was designed to develop, test, monitor, and evaluate institutional mechanisms and interventions to reduce transmission and spread of STDs and HI V/AIDS\. b\. Components Project components at the central level and two provincial levels included: support of behavior change, STD service delivery, STD/HIV/AIDS surveillance, laboratory strengthening, NGO capacity building, monitoring and evaluation, and other management activities\. Lessons learned and best practices were to be documented with a view to their subsequent nationwide replication\. c\. Comments on Project Cost, Financing and Dates Original project costs were estimated at $35\.2 M (IDA: $24\.8M, GoI $10\.4M)\. Final project costs were estimated at $5\.77M (IDA: $4\.51M, Gol $1\.26M)\. 3\. Achievement of Relevant Objectives: Since there was no routine and standardized baseline data collected, nor was there any systematic monitoring of project performance in terms of indicators related to STD/HIV/AIDS, the effectiveness of most interventions was not measurable\. Thus the value of this project as a potentially replicable pilot project was neligible\. 4\. Significant Outcomes/Impacts: Some activities can be cited, as the Borrower comments do in the ICR, such as establishment of standard operating procedures for HIV/AIDS/STD surveillance, treatment and management, development of IEC materials, training of (an unspecified number of) health workers, and an increased number of NGOs being involved in HIV/AIDS activities, however the absence of baseline, interim and final data collection makes quantification of achievements difficult\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): The ICR contains a plethora of comments about poor performance, lack of measurable project outcome, policy impediments, management difficulties, lack of GoI support, failures of Bank supervision, and Bank-Borrower tension\. In addition to the failure at the technical level, as noted above in section #3, the project received minimal GoI commitment as reflected in: 1) significant policy impediments to NGO involvement (despite that being an agreed-upon project feature), 2) only 11% of planned counterpart budget being allocated to the project, and, 3) failure to establish a strong, harmonious, senior project management team\. The Asian economic crisis sharply reduced available counterpart funds, and government commitment was further undermined by a perception that AIDS was not yet a serious problem\. Bank supervision was also generally unsatisfactory\. Both the ICR and borrower comments suggest that tensions between the Bank team and MOH undermined project implementation and policy dialogue\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory Most project components failed to achieved their objectives, but the project contributed to the emergence of a framework for subsequent HIV/AIDS programs -- mitigating an otherwise highly unsatisfactory rating\. Institutional Dev \.: Negligible Negligible Sustainability : Unlikely Unlikely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: All projects--and certainly pilot projects potentially destined for national replication need agreed-upon -— baseline data against which to measure the results and efficacy of project interventions\. NGO involvement in STD/HI V/AIDS activities is a critical part of a comprehensive national AIDS Prevention Program\. Thus government procedural impediments to NGO involvement must be addressed at the appraisal stage, and removed, if possible, before project approval\. Optimal consideration of PMU structure, composition, capabilities, and responsibilities must be given continuing Bank attention\. Experience in Indonesia suggests that PMUs should focus on project administration, while responsibility for policy and technical issues should rest with line departments\. The PMU needs to exercise leadership and facilitate communication to peripheral levels without becoming a bottleneck or a source of conflict and/or technical miscommunication\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR was admirably frank in laying out the dimensions of difficulty and poor performance encountered with this pilot project\. The final project cost was not indicated in the text and is somewhat inconsistently presented in the tables of Annex 2\. Some parts of the lessons-learned section recapitulated earlier descriptive sections rather than crisply laying out the lessons\. The ICR might have usefully discussed whether and how the apparent tensions between the GOI and Bank team have been addressed\.

REVIEW

P000509

 ICRR 11287 Report Number : ICRR11287 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 08/14/2002 PROJ ID : P000509 Appraisal Actual Project Name : Health & Safe Motherhood Project Costs 25\.7 36\.6 US$M ) (US$M) Country : Chad Loan /Credit (US$M) Loan/ US$M ) 18\.5 29\.7 Sector (s): Board: HE - Central Cofinancing government administration US$M ) (US$M) (61%), Health (39%) L/C Number : C2626 Board Approval 94 FY ) (FY) Partners involved : UNDP, UNICEF Closing Date 06/30/2000 06/30/2001 Prepared by : Reviewed by : Group Manager : Group : Timothy A\. Johnston Martha Ainsworth Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The project supported the government's efforts to : Enhance capability at the central level to support regional health services; Improve access to basic health services in the Prefectures of Gu éra and Tandjilé; and Ensure accessibility of the population to low -cost essential drugs\. b\. Components The project had three components (final cost): 1\. Reinforcement of the capacities of the central level to support peripheral health services ($4\.2 m), including improving the central and regional budget process, developing training modules for regional and district health personnel, developing a national information, education and communications (IEC) program, and reinforcing government capacity to plan, coordinate and implement donor -financed projects\. 2\. Support to health, nutrition and family planning services in the prefectures of Gu éra and Tandjilé ($16\.2 m)\. This component financed civil works (to establish or upgrade district health facilities ), skills upgrading for district health personnel, and promoted community participation in local health services planning, implementation, and monitoring\. Following approval of the supplemental credit, the project also financed decentralized basic training for paramedical personnel, construction of two regional training centers, and water supply for health facilities\. 3\. Development and implementation of a national pharmaceutical policy ($5\.3 m), including strengthening planning and management capacity of the Division of Pharmacy, and creating a central purchasing agency for essential and generic drugs\. The pharmaceutical component was part of an essential drug program that involved cost recovery through revolving drug funds managed by local communities\. c\. Comments on Project Cost, Financing and Dates The loan was denominated in SDR, which appreciated against the dollar \. Due to underestimates during appraisal (particularly for civil works), cofinancers not meeting commitments, and shortages of counterpart funds, a supplemental credit of SDR8\.2 million (US$10\.9 million, IDA Credit No\. 26261) was signed in October 1998 (for a total IDA credit US$28\.5 million), and the loan was extended by one year \. US$16,000 from the original credit was cancelled at closing\. The final project cost tables in Annex 2 of the ICR (reflected in the cost per component above ) do not appear to include the supplementary credit, however \. 3\. Achievement of Relevant Objectives: The project achieved most of its relevant objectives, despite a difficult country context \. According to the ICR, the project contributed to strengthening financial management capacity in the ministry public health; contributed to the development of a new budgetary nomenclature and trained 165 personnel in budgetary management; developed 46 health worker training modules, constructed and equipped two regional training centers; developed a national communications strategy for health (with technical support from a national NGO), trained 23 trainers, 95 health workers, and 40 social mobilizers in IEC, and widely disseminated IEC material; assisted the government to develop a national health strategy which served as a framework for coordinating donor partners; and supported several qualitative studies (teenage pregnancy, breast feeding, maternal mortality)\. Half of project resources were devoted to the two target Prefectures of Gu éra and Tandjilé\. The project  supported construction of new health facilities (which ensured one health center per zone, and one hospital per district); trained over 1000 health providers; established local health management committees (primarily to manage cost recovery from essential drugs )\. These investments improved access to health services \. Indicators for child vaccination coverage and antenatal care improved between 1995 and 2000\. The National Pharmaceutical Policy and law on pharmaceuticals were adopted, which established a national list of essential drugs\. The project also supported the creation of a Central Purchasing Agency or essential drugs, which has been fully operational, autonomous, and self -financed since June 2000 (WHO and the EU provided support for this component)\. 4\. Significant Outcomes/Impacts: In Guéra, geographic access to health services improved from 47% (1995) to 77% (2001), and from 58% to 76% in Tandjilé\. Over the same time period, BCG vaccination coverage increased from 17% to 94% in Guéra, and from 37% to 76% in Tandjilé\. Antenatal coverage and assisted deliveries also improved, albeit from low levels (for ANC, from 15% to 26% in Guéra, and from 23% to 27% in Tandjilé)\. ANC and assisted delivery indicators also improved at the national level, however, similar to the changes in Tandjil é\. Evidence are inadequate to assess the extent to which the project contributed to these changes in the two target prefectures \. The Central Pharmaceutical Purchasing Agency has contributed to increasing the availability of essential and generic drugs throughout the country at a reasonable cost \. The community management committees appear to have helped improve availability of drugs at the community level (although no data are given regarding drug access and equity at the facility level )\. The ICR reports that the IEC materials produced by the project (including for micronutrients, immunization, HIV/AIDS, malaria, and family planning) were widely distributed and appreciated by beneficiaries and partners (no data are available on the impact on behavior, however )\. Good capacity and continuity in the Project Coordination Unit contributed to good performance, while line departments retained responsibilities for activities under their purview \. In addition, the project together with the national health strategy contributed to improved coordination of donor activities in the sector \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Even though much of the project financed infrastructure activities, no in -country appraisal was conducted regarding the cost and scope of these activities (relying instead on regional averages )\. The fact that most facilities lacked water supply was not recognized initially, and had to be addressed through the supplementary credit\. Construction activities suffered from delays, cost overruns, and design flaws due to lack of in -country appraisal estimates, the poor performance of the initial private -sector contractor, and lack of consultation with local health staff\. The Pharmacy Department did not perform its planning and management role effectively and the Prefecture Supply Pharmacies remain unregulated \. Operational research and monitoring and evaluation were not given sufficient priority from the outset \. The logframe indicators are for project outputs, not impacts, and implementation of M&E appears to have been limited\. So it is difficult to assess the impact of many project activities \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory QAE was only moderately satisfactory, due to poor appraisal of civil works and weak M&E framework\. Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: The ICR lists the following findings/lessons: A key to project success was that it financed elements of the overall National Health Policy, for which there was strong government commitment and ownership\. As a result, the project developed and implemented within a broader framework of multi-donor efforts to strengthen the health sector, with each donor fitting into a national strategy which was coordinated by the government\. The difficulties encountered in the construction components suggest several lessons, including (i) plans for construction and equipping of hospitals should be discussed with all stakeholders, rather than relying on national standards; (ii) field visits contribute to better cost estimates; and (iii) management agent selection is critical \. 8\. Assessment Recommended? Yes No Why? This project appears to have contributed to progress in a difficult context, but further evaluation of the progress with regard to increased service access, community -managed cost recovery, etc \. would be useful\. The synergies between this project and the Population and AIDS Control Project could also be further explored \. 9\. Comments on Quality of ICR: The ICR is rated satisfactory, but moderately so \. The ICR provides a useful overview of the project, and summarizes project outputs and some outcome indicators nationally and in the target prefectures \. But there are a number of gaps in the description of both project outputs and outcomes (e\.g\., the ICR does not state the total number of facilities built; there are no data on improvements in drug availability or the extent of cost recovery; no definition of what is meant by "geographic access;" and no data on the actual utilization of the facilities constructed by the project )\. The ICR also should have given greater attention to analyzing the extent to which the project might have contributed to improvements in available indicators (vaccination rates, ANC, assisted deliveries ) given that the changes in the target prefectures were similar to those at the national level \. Finally, there were several errors and omissions in the annex tables on project costs \.

REVIEW

P099618

 ICRR 13302 Report Number : ICRR13302 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 04/19/2010 PROJ ID : P099618 Appraisal Actual Project Name : Ma-Energy Sector Dpl Project Costs (US$M): US$M ): 100\.0 100\.0 Country : Morocco Loan /Credit (US$M): Loan/ US$M ): 100\.0 100\.0 Sector Board : EMT US$M): Cofinancing (US$M ): Sector (s): Power (24%) Oil and gas (22%) Renewable energy (22%) General energy sector (16%) District heating and energy efficiency services (16%) Theme (s): Legal institutions for a market economy (33% - P) Regulation and competition policy (33% - P) Climate change (17% - S) Pollution management and environmental health (17% - S) L/C Number : L7448 Board Approval Date : 05/29/2007 Partners involved : Closing Date : 12/31/2007 12/31/2007 Evaluator : Panel Reviewer : Group Manager : Group : Robert Mark Lacey Fernando Manibog IEGSE ICR Reviews IEGSE 2\. Project Objectives and Components: a\. Objectives: This Development Policy Loan ( DPL) supported the first phase of Morocco's 2007-2009 energy sector reform program\. The development objectives (PDO) of this program, according to the Program Document, are ""to strengthen Morocco's energy security, facilitate energy market integration in support of competitiveness of the economy, and develop sustainable energy reform \." Within this program, the specific objectives of this DPL -- in addition to maintaining a satisfactory macroeconomic framework -- were to "(i) help the Moroccan Government improve energy security through the development of domestic energy resources, efficient use of energy, and the formulation of a long term energy import strategy; (ii) foster competition in the energy market through regional system integration, liberalization of the high voltage domestic electricity market, and open access for competitors in the petroleum downstream market; and (iii) to reduce government subsidies for petroleum products \." The wording of the program objectives in the Loan Agreement, while similar in substance with regard to the three specific loan objectives stated above, adds a fourth goal : "developing a monitoring and evaluation system for policy implementation in the [energy] sector during the period 2007-2009\." This Review bases its evaluation on the program objectives stated in the Project Document and on the four specific objectives as set out in that document and in the Loan Agreement \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The DPL was a single tranche operation \. The prior actions triggering release of the loan were : 1\. Continuing to maintain a satisfactory macroeconomic framework, consistent with the objectives of the program, as determined on the basis of macroeconomic indicators agreed between the Borrower and the Bank \. 2\. Provide the Bank with a schedule of changes in petroleum product characteristics based on a decision of the Minister of Mining and Energy to allow to be marketed only lead -free and low-sulphur gasoline and diesel\. 3\. The adoption by the Council of Government (Cabinet) of a draft law on energy efficiency (EE) and renewable energy (RE) in form and substance satisfactory to the Bank \. 4\. The adoption by the Council of Government of a draft law, in form and substance satisfactory to the Bank, to, inter alia: (a) increase the ceiling for self-generation of electricity to 50 MW; and (b) provide access to self-generators to the Borrower's national electricity network \. 5\. Establish an inter-ministerial committee to prepare and oversee the restructuring of the Borrower's electricity sector, with composition and terms of reference satisfactory to the Bank \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: This DPL was planned to be the first in a programmatic series of single tranche operations sequentially presented to the Board within a medium term framework, specified at the outset \. However, because implementation of the reform program took longer than expected, the triggers for presentation of a second DPL were not attained within the maximum 24 month time frame between two operations which must be adhered to according to operational guidelines for a programmatic series \. A second DPL is, nonetheless, under preparation, but would be presented to the Board as a separate operation outside the framework of a programmatic series \. This DPL was complemented by a loan designed to strengthen the capacity of the national electricity company (Office National d'Electricite -- ONE) in adapting to a more competitive environment and the achievement of financial soundness \. 3\. Relevance of Objectives & Design: Relevance of program and project objectives was, and remains, high \. The urgency of reforming the energy sector was brought to the forefront of the Government's agenda by both volatile international prices and ongoing national reform efforts in other areas\. The high priority of the objectives is indicated in the Government's Letter of Sector Development Policy (April, 2007)\. Objectives are also fully consistent with the priorities of the Bank's 2005 Country Assistance Strategy (CAS) for Morocco, especially with regard to enhancing competitiveness and the investment climate, and increased growth and poverty reduction \. The CAS also recommended an emphasis on the use of policy lending instruments under a results -based approach that allows flexibility in response to changing circumstances \. Design relevance was modest \. Priority objectives both for the reform program and for this DPL were correctly identified\. The project was prepared through close collaboration between the Bank team and several inter -ministerial and inter-disciplinary working groups that prepared much of the detailed work including a policy and action matrix for monitoring and evaluating progress \. This collaborative approach to design was appropriate, given not only the sensitive nature of many of the reform proposals but also the fact that the Bank had been absent from the energy sector in Morocco for 15 years\. Nonetheless, the timing of the operation, with a change of administration shortly after implementation started, undoubtedly slowed progress subsequent to the prior actions \. The broad scope of the DPL was over-ambitious, especially given this political context \. The programmatic sequencing of a series of DPLs proved unattainable\. Moreover, some of the structures and administrative arrangements put in place to facilitate further program implementation did not continue after disbursement of the single tranche -- the working groups referred to above were dissolved, and the inter -ministerial committee for the reform of electricity sector only met once \. 4\. Achievement of Objectives (Efficacy): Maintenance of a satisfactory macroeconomic framework : Substantially achieved \. The Project Document contains a communication from the IMF expressing their view that Morocco's macroeconomic framework at the time of DPL Board presentation was satisfactory \. While there is no discussion in the ICR of this objective since disbursement of the single tranche, it is evident from the reports of IMF Article IV Consultations that the country's macroeconomic management remains solid and satisfactory \. Improving energy security through the development of domestic energy resources, efficient use of energy, and the formulation of a long term energy import strategy : Modestly achieved \. The marketing of leaded gasoline has been phased out\. However, regarding the second of these actions, the proposed legislation has been rewritten by the new Government into three new draft laws that have yet to be approved by parliament \. Two of the new draft laws concern RE and have both been passed by the Council of Ministers and are awaiting presentation to Parliament \. The third, on EE, has not yet been adopted by the Government \. Some progress has been made in restructuring and strengthening the institutions responsible for the development and promotion of EE and RE and on the enactment of legislation offering fiscal encouragement for energy efficient investments \. An Energy Development Fund was created and made operational through the 2009 Finance Law specifying the use of the Fund for EE and RE \. With regard to energy security, terms of reference have been prepared for an energy supply strategy, and a Technical Committee has recommended the adoption of a new policy on strategic oil stocks \. This latter, however, has not yet been implemented due to a financing gap of about 5 billion dinars (US$600 million)\. Fostering competition in the energy market through regional system integration, liberalization of the high voltage domestic electricity market, and open access for competitors in the petroleum downstream market : Modestly achieved \. There were two prior actions supporting this objective \. The first was the establishment of an inter-ministerial committee for the reform of the electricity sector \. The committee was indeed formed, but has only met once\. This is especially unfortunate since the electricity sector contains several institutions, some of which compete against each other\. The second was the raising of the capacity threshold for self -generation of electricity from 10 MW to 50 MW\. This was enacted and ONE's charter amended accordingly \. However, the reform was only to take effect from the end of 2009\. Progress has been made with the physical integration of power markets -- power exchange capacity with Algeria and Spain has been strengthened and connections with the latter country doubled \. A strategic study of electricity sector development has been prepared but not released as originally intended \. Other than the removal of entry obstacles to new suppliers of butane, no progress is reported in the ICR on furthering open access in the downstream petroleum market or on allowing self -generators to sell their power to the national grid \. Reduction of government subsidies for petroleum products : Modestly achieved \. Although periodic price reviews are now undertaken, and there were some price adjustments (7% increases in VAT levied on fuels marketed at service stations in February 2006, September 2007, and July 2008, followed by a reduction in April, 2009), attainment of this objective to the extent anticipated was rendered impractical by the sharp increases in international fuel prices, notably in 2008 (the oil price was US$60 per barrel when the DPL was designed and rose to over US$ 140 per barrel in 2008))\. Although the ICR does not provide quantitative data, it states that, while subsidies have been reduced, they "remain substantial\." Developing a monitoring and evaluation system for policy implementation in the energy sector during the period 2007-2009: Substantially achieved \. An energy information system has been established using geographic-information-system-based energy resource statistics and statistical data on the electricity sector \. A model for the energy sector has been developed as well as a study to finalize indicators for monitoring the results of energy policy actions\. In addition, a communications plan has been adopted and public meetings on energy policy organized in October 2006 and in March 2009\. However, the ICR reports that , while this effort has been successful in producing background work and in communicating to the public the broad goals of energy sector reform, the concrete evaluation of the outputs of policy action has not yet begun since the monitoring unit in the Ministry of Energy is not yet operational\. Progress made under this DPL towards the attainment of broader program goals -- to strengthen Morocco's energy security, facilitate energy market integration in support of competitiveness of the economy, and develop sustainable energy reform -- has thus been mixed\. While important first steps have been taken to diversify energy resources and reduce supply risks, there have also been disappointments, notably concerning the timing of the legislation for promoting EE and RE and the reform of the power sector \. Quantitative targets for the use of RE were only set for 2012\. Although the reorganization of the power sector -- including the introduction of greater competition for high voltage and very high voltage markets -- is scheduled to take place in 2010, this timetable is unlikely to be met since the passage of the necessary legislation has been delayed \. Petroleum price subsidies remain high \. Overall, IEG rates the efficacy in reaching program and project goals as modest \. 5\. Efficiency (not applicable to DPLs): ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal % %  ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: With design relevance and efficacy modest and the fact that the program had to be interrupted, the outcome of the project is rated as moderately unsatisfactor y\. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: There are three significant and inter -related risks to development outcome, defined as sustaining the reforms already carried out and continuing with the reform program \. First, Morocco is highly (85%) dependent on imported petroleum products and therefore vulnerable to price fluctuations \. This is mitigated by the new practice of periodic price reviews, by the stated policy intention of aligning domestic with international prices, and by the promotion of EE and RE\. However, the experience of the last two years has demonstrated the difficulties posed by this risk when it materializes\. Second, increases in domestic petroleum prices and electricity tariffs are likely to encounter social and political resistance\. This can be mitigated by more careful targeting of subsidies and more frequent and effective communication of the benefits of the reform program, though the first of these actions also carries a significant political price\. Third, Morocco's new energy policy hopes to rely to a major extent on private investment -- for example, in the generation of electricity for high -voltage consumers\. This may be inhibited by perceived risks that tariffs will not be adjusted to keep pace with costs and that subsidies may be insufficient to cover the gap \. Other risks -- for instance, those arising from changes in government or from the capacity of state institutions to implement the reform process -- are considered to be moderate and are adequately mitigated by the single tranche approach and institutional strengthening efforts \. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: Quality at entry \. Design was based on a careful and thorough analysis of the constraints and problems facing the energy sector and successfully identified the priorities for reform \. As noted earlier, it involved close collaboration between the Bank team and a number of governmental working groups each focusing on particular policy areas\. Attention was paid to the realism of the actions proposed and the technical capacity of the relevant institutions in carrying them out \. Risks were correctly identified and analyzed and mitigating measures incorporated\. The link between the policy objectives and concrete actions supported by the loan was clearly delineated\. The option of a single tranche DPL with others to follow provides necessary flexibility in the face of changing circumstances, but the Bank did not foresee that the originally intended programmatic sequence proved infeasible\. In this and in other respects, the timing of the operation was unfortunate in view of the scheduled elections, which resulted in a change in government three months after Board approval \. Implementation arrangements were adequately designed even if, after disbursement, some of the structures put in place were dissolved or proved ineffective \. The presentation of the monitoring matrix in the Program Document is described in the ICR as "somewhat confusing," and it was only partially used for monitoring purposes in its original form (see Section 10 below)\. On balance, quality at entry was moderately satisfactory \. Supervision \. The supervision effort involved numerous missions, covering not only the follow up to the prior actions for this DPL but also the institutional support operation for ONE and preparation of a possible DPL 2\. The missions conducted intense policy dialogue with Government and other stakeholders and were required on several occasions to react and adjust to changing circumstances -- a new government, new interlocutors, new priorities, and unforeseen events such as sharp increases in international oil prices \. Both preparation and supervision teams were technically strong, and supervision benefitted from continuity of task team leadership and input from sector experts\. The ICR reports one notable weakness -- supervision missions aide-memoires did not always provide a clear picture on where implementation of some of the policy actions stood and did not use the Operation Policy Matrix in the Project Document \. In the context of preparation of a possible DPL 2, the Bank team was criticized for lack of flexibility in insisting on the enactment of a new energy efficiency law as a trigger for appraisal of the new operation\. Such insistence would, nonetheless, seem appropriate given, first, the importance of the legislation for Morocco's energy sector reform effort, and second, the fact that the adoption of a draft law by the Council of Government was a prior action for DPL 1\. IEG rates the quality of supervision as satisfactory \. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory  c\. Overall Bank Performance :Moderately Satisfactory 9\. Assessment of Borrower Performance: Although the new Government needed considerable time to adopt the energy reform program as its own, it is showing commitment to it, as demonstra ted by the recent launch of a new national energy strategy to reduce the country’s vulnerability to international energy markets \. The Region points out in its comments that the country has announced “an ambitious and far reaching energy strategy to reduce the country ’s vulnerability to international energy markets and has launched initiatives to implement the strategy, â€? and the country has also submitted two investment plans for accessing CTF resources where it argued that those resources would effectively support the country ’s new strategy\. There have also been some important individual achievements both before and after the change in administration \. However, there are also some important gaps and a failure to systematically follow up on some prior actions -- for example, the slow and partial progress in enacting legislation promoting EE and RE, and the fact that the inter -ministerial steering committee for power sector reform has only met once\. Implementing agencies \. Arrangements for implementing the reform program are inadequate \. A considerable number of Ministries and other institutions are involved, and among them, the Ministry of Energy, Mines, Water and Environment plays a leading role \. However, effective coordination is lacking \. In the absence of an inter-ministerial committee at the technical level reporting to a clearly identifiable "champion" of reform, managing a complex and politically sensitive change program such as this was difficult for a single sector Ministry \. The lack of continuity of the structures and working groups set up during preparation made both monitoring the impacts of past reforms and progress in furthering the program more difficult \. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Moderately Unsatisfactory c\. Overall Borrower Performance :Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: Design \. The Program Document translates each program and DPL objective into a series of concrete actions which could be tracked during implementation \. These are presented in summary form in an Operation Policy Matrix \. With a few exceptions (for example, "strategic infrastructure investment decision for energy imports ") the expected actions are clear, though many of them lack quantitative precision (example: "Improvement of air quality in cities, " "Reduction of subsidization of petroleum products ")\. Design is rated as substantial \. Implementation \. According to the ICR, supervision missions found the Operation Policy Matrix "confusing" and in its aide-memoires did not monitor progress by referring to the matrix \. This may have been in part because the matrix was soon superseded by events -- for instance, a draft law liberalizing the electricity sector was supposed to be presented to Parliament during 2008, but the inter-ministerial committee that was to design the reform only met once \. Similarly, the application decrees for the laws promoting EE and RE were scheduled for adoption in 2009, but this was impossible because the laws are yet to be passed \. Nonetheless, the appropriate reaction to this would have been to update the matrix rather than simply ignoring it which inevitably undermined program M&E \. Implementation is rated as modest \. Utilization \. Despite being involved in its design there is no evidence that the Borrower uses the Operation Policy Matrix for its own M&E purposes outside discussions with preparation and supervision missions \. As reported in Section 4 above, the project has supported the development of an energy information system and of a series of indicators for monitoring energy policy implementation \. While the design of the systems is in place, they cannot yet be implemented since the monitoring unit in the Ministry of Energy is not yet operational \. Utilization is rated as modest \. a\. M&E Quality Rating : Modest 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): The ICR contains no discussion of safeguards or fiduciary issues as such \. However, increasing concerns over the negative environmental and health impacts of the energy sector drove a number of the policy actions in the reform program\. The presence of high quantities of lead and sulphur in gasoline and diesel, together with deteriorating air quality, notably in urban areas inhabited by lower income groups and the poor, were primary targets for policy action \. The phasing out of leaded gasoline and reductions in the sulphur content of diesel from the beginning of 2009, together with the adoption of policies to encourage the use of EE and RE are expected to improve air quality significantly\. Since implementation is recent or (in the case of EE and RE) still to be completed, no figures are as yet available\. An idea of the potential benefits may, however, be gleaned from the estimate in a 2003 World Bank study that air pollution generates annual health costs of about 1% of Morocco's GDP\. 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Key objectives related to improvements Satisfactory Unsatisfactory in energy security, fostering competition, and reducing government subsidies were only modestly achieved\. The program had to be interrupted due to the time needed for the new Government to acquaint itself with the program Risk to Development Moderate Significant The risks stemming from Morocco's Outcome : vulnerability to international oil price fluctuations and the social sensitivity of petroleum price subsidies have already shown themselves to be significant risks to the goals of the reform program\. Bank Performance : Satisfactory Moderately The operation was approved by the Satisfactory Board in May, 2007\. In September 2007, a new Government took office following scheduled elections \. The Bank did not take sufficient account of the risks, which in fact materialized, that this would render the originally intended programmatic sequence infeasible and that the new Government would need time to adopt the program as its own\. In addition, the matrix for monitoring policy actions was confusing and could only be partially used\. Borrower Performance : Moderately Moderately Implementing arrangements were Satisfactory Unsatisfactory moderately unsatisfactory -- in the absence of an inter-ministerial committee at the technical level reporting to a clearly identifiable "champion" of reform, managing a complex and politically sensitive change program such as this was difficult for a single sector Ministry \. The lack of continuity of the structures and working groups set up during preparation made both monitoring the impacts of past reforms and progress in furthering the program more difficult\. Since outcome was moderately unsatisfactory, the harmonized criteria lead to a moderately unsatisfactory rating for overall Borrower Performance Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: A number of lessons can be drawn from the preparation and implementation of this operation : Implementation arrangements for a complex reform program such as this should ensure a robust institutional structure remains in place, with clearly assigned responsibilities and accountability at both the political and technical levels\. It is preferable to avoid a coincidence between the inception of such programs and a change in administration in the Borrower's country\. If this is absolutely unavoidable then the design of the program, and especially its timetable, should take account of the likely delays resulting from the new government's need to study the program and adopt it as its own\. A solid M&E system which can be used by both the Borrower and the Bank, and which enables, inter alia, an evaluation of the impact of reforms, is an essential precondition for timely success of such a reform program as this\. A sound, thorough, and collaborative analytical preparation is a necessary but not a sufficient condition for success-- due attention must also be paid to the time needed for the implementation of legal reforms and sector strategies, including the preparation and application of the decrees and ministerial decisions required to give new laws practical effect \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR is satisfactory, but barely so \. Its analysis of the economy and sector background does contain most of the elements required to evaluate the operation, but it is, at times, necessary for the reader to make a real effort to derive clear conclusions\. A case in point is the evaluation of Borrower performance where the text does not really make an unambiguous evaluation\. Discussion of Bank performance at entry is confined to a reproduction of a QAG analysis \. Some important points are left without clear conclusions -- for example, the status of reforms enabling access to the downstream petroleum market (subsequent discussion with the ICR TTL clarified that the reform enacted concerns only butane) and access to the grid by self -generators\. The reduction in oil prices subsidies is not quantified \. The discussion of M&E emphasizes the disconnect between the Operation Policy Matrix in the Project Document and the aide-memoires of supervision mission, but does not describe or evaluate the source and nature of the problem \. There is no discussion of macroeconomic performance subsequent to the release of the single tranche \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P112615

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) Report Number: ICRR0021745 1\. Project Data Project ID Project Name P112615 Kiribati Adaptation Program - Phase III Country Practice Area(Lead) Kiribati Urban, Resilience and Land L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) TF-10875,TF-11351,TF-11448,TF- 31-Dec-2018 11,561,597\.92 11818,TF-A5560 Bank Approval Date Closing Date (Actual) 15-Sep-2011 31-Dec-2018 IBRD/IDA (USD) Grants (USD) Original Commitment 11,567,162\.00 11,567,162\.00 Revised Commitment 11,561,597\.92 11,561,597\.92 Actual 11,561,597\.92 11,561,597\.92 Prepared by Reviewed by ICR Review Coordinator Group Katharina Ferl Fernando Manibog Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Components DEVOBJ_TBL a\. Objectives According to the Project Appraisal Document (p\. iv) and the Global Environment Trust Fund Grant Agreement of October 14, 2011 (p\. 6) the objective of the project was “to improve the resilience of Kiribati to the impacts of climate change on freshwater supply and coastal infrastructure\.” Page 1 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) The project was the third phase of a multi-year program supported by the World Bank\. The first phase of the Kiribati Adaptation Program (KAP) was implemented from 2002 to 2005 and the second phase was implemented from 2006 to 2011\. b\. Were the project objectives/key associated outcome targets revised during implementation? No c\. Will a split evaluation be undertaken? No d\. Components The project included four components: Component C1: Improve water resource use and management (appraisal estimate US$4\.4 million, actual US$5\.4 million): This component was to finance the following activities: i) expand the installation of groundwater abstraction systems in North Tarawa based on investigations and community consultation work completed under KAP II; ii) detect leakage and repair real losses; iii) expand the program of installing rainwater harvesting systems on public buildings for community use that was started under KAP II; and iv) improve the legislative and regulatory framework and governance model for water resources management with a focus on improved management and protection of the water reserves in Bonriki and Buota\. Component C2: Increase coastal resilience (appraisal estimate US$2\.7 million, actual US$2\.6 million): This component was to finance the following activities: i) implement further works at priority sites identified and started under KAP II; ii) continue to further build the capability of the Ministry of Public Works and Utilities (MPWU) capability in coastal assessment, options analysis, design and construction through the appointment of a Senior Civil Engineer seconded to MPWU; iii) develop skills in coastal infrastructure asset management; and iv) continue/expand the mangrove planting program commenced under KAP III\. Component C3: Strengthen the Capacity to Manage the Effects of Climate Change and Natural Hazards (appraisal estimate US$2\.1 million, actual US$2\.1 million): This component was to finance the following activities: i) providing additional support to the Strategic Risk Management Unit (SRMU) to better undertake its role with respect to Climate Change Adaptation (CCA) and Disaster Risk Reduction (DRR) coordination, integration and policy harmonization functions; ii) preparing coastal management policy and locally managed adaptation planning; iii) implementing communications and media activities relating to CCA and DRR over the duration of the project; iv) maintaining and continuation of populating the GoK’s website with KAP III outputs, stories and general information; and v) operating a small grants scheme for CCA and DRR activities at community level with an agreed proportion of activities increasingly identified through the locally managed adaptation plans\. Component C4: Project Management, Monitoring and Evaluation (appraisal estimate US$1\.5 million, actual US$1\.4 million): This component was to finance the establishment and operation of an appropriately staffed Project Management Unit (PMU), audit of the project’s financial systems and results, independent review of the project progress and achievements at the time the project has achieved roughly 50% disbursement of funds, and monitoring of project implementation progress and other key performance Page 2 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) indicators, end of project review of the project achievements and final verification of the indicators from the Results Framework\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The project was estimated to cost US$10\.8 million\. Actual cost was US$11\.62 million\. Financing: The project was to be financed by a Global Environment Facility Least Developed Country Fund (GEF LDCF) in the amount of US$3 million (actual disbursement was US$2\.9 million), Japan Policy and Human Resources Development Fund in the amount of US$1\.8 million (which was fully disbursed), Global Facility for Disaster Reduction and Recovery (GFDRR) in the amount of US$900,000 (which was fully disbursed), and the Australian government in the amount of US$4\.85 million (which was increased by US$0\.85 million during the 2017 restructuring and actually disbursed US$5\.4 million)\. Borrower Contribution: The Borrower was to contribute US$250,000\. Actual contribution was US$53,000\. According to the Bank team (June 25, 2019) significant savings were realized in project administrative costs, and the full planned amount of Borrower’s in-kind contribution was not needed\. Dates: The project was restructured twice: ï‚ On January 11, 2016 the project was restructured to: i) adapt the Results Framework through revising or introducing new indicators to better measure desired outcomes, deletion of some indicators, and modification of yearly targets to better reflect realistic implementation conditions and progress; ii) addition of an extension to the President’s office building as part of Component 3; iii) extension of the project’s closing date by 18 months from August 31, 2016 to February 28, 2018 to utilize project savings resulting from favorable exchange rate movements\. ï‚ On August 3, 2017 the project was restructured to: i) scale up existing activities on water network improvement, resilience fund grants, and capacity building for the lead implementing agency; (ii) revise the Results Framework to effectively capture the outcomes associated with the scale-up; (iii) allow inclusion of a new activity, the development of a Long-Term Coastal Security Strategy; and (iv) extend the closing date from February 28, 2018 to December 31,2018 to align the closing date of all funding sources\. 3\. Relevance of Objectives Rationale Kiribati is one of the most vulnerable countries in the world to the effects of climate change\. The country’s capacity to respond to climate change related risks is impacted by low atolls, isolated location, small land area separated by vast oceans, high population concentration, and the costs of providing basic services\. The rise of the sea-level and natural disasters such as drought and weather fluctuations pose significant and direct additional threats to sectors and resources central to human and national development\. Kiribati’s remote location and many small islands impose a significant economic challenge\. At the time of project appraisal in 2010, Kiribati had the lowest gross national per capita income in the region of US$2,090 and Page 3 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) one of the highest rates of poverty with 22 percent of the population in extreme poverty and 66 percent at risk of falling into extreme poverty\. Exports of marine products and income from fishing license account for approximately 10 to 20 percent and 20 to 25 percent, respectively, of the Gross National Product (GNP)\. The Kiribati Sustainable Development Plan (2008-2011) estimated that without adaptation to climate change, Kiribati could face approximately US$8 to US$16 million a year (approximately six percent of annual Gross Domestic Product (GDP) at appraisal) in climate change related damages by 2050\. The objective of the project is in line with the National Adaptation Program of Action which was adopted by the government in 2007 and identified water resources, coastal zone management, and community resilience as key priorities\. The project’s objective also supported the Kiribati Development Plan (2016- 2019), which identified climate change as the long-term issue threatening the sustainability of the country’s economic development\. The project contributed to the Plan’s key performance areas on environment (coastal resilience) and infrastructure (protection of water resources and improvement of fresh water supply)\. The project’s objective also supported Kiribati’s Climate Change Policy (2018), which identified coastal protection and infrastructure, water security, environmental sustainability and resilience, and disaster risk management as priorities\. Furthermore, the project’s objective is also in line with the Bank’s Pacific Islands Regional Partnership Framework (FY2017-FY2021), which emphasized the importance of protecting incomes and livelihoods, through strengthened resilience to natural disasters and climate change\. The project’s objective was overly ambitious in terms of scope and geographic coverage\. According to the ICR (p\. 23) the project benefited from the Bank’s decade long involvement with the government to address climate change impacts\. Rating Relevance TBL Rating High 4\. Achievement of Objectives (Efficacy) EFFICACY_TBL OBJECTIVE 1 Objective To improve the resilience of Kiribati to the impacts of climate change on freshwater supply: Rationale The project’s theory of change established a valid causal chain between the project’s provision of additional groundwater abstraction and water harvesting systems and the project outcome of improving fresh water supply because those project activities would increase the number of people who would gain access to more sources of water supply\. The project outcome on improved water supply resilience can be partly attributed to this Phase III project, since earlier interventions under KAP I and KAP II already provided inputs and outputs related to groundwater abstraction and water harvesting systems, which were expanded under Phase III\. Page 4 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) The project output of water transmission rehabilitation was causally and directly linked to the project outcome of improved resilience in fresh water supply because the rehabilitation activity would decrease leakage and thus increase the number of people with permanent access to pressurized water\. The project’s outputs on construction of seawalls completed on South Tarawa and coastline protected by mangroves was causally and directly linked to the project outcome of increased amount of people and assets protected from coastal erosion, flooding, and storm damage\. This Theory of Change applies to the two PDOs\. The PAD did not include a Theory of Change\. Outputs (the ICRR only mentions targets when they were included in the ICR): ï‚ Three groundwater abstraction galleries at the Immaculate Heart College, the Notoue village, and the Tabonibara village, were completed as planned\. ï‚ Health and hygiene training programs for beneficiaries were implemented by the Ministry of Health and Medical Services (MoHMS) and Operation & Maintenance trainings of village-based committees were implemented by the Ministry of Infrastructure and Sustainable Energy (MISE)\. ï‚ Six rainwater harvesting systems were built at faith-based and public buildings and community halls in North Tarawa\. ï‚ A large-scale rainwater harvesting system, with a storage capacity of 300,000 liters, was constructed in Buota, North Tarawa\. ï‚ Collection roofs over the tanks, in-line ultraviolet treatment and on-demand, solar-powered pumping system and associated reticulation and tap-stands to serve the adjacent five villages were constructed\. ï‚ The Resilience Fund for community-led small adaptation grants financed the construction of (a) 328 rainwater harvesting tanks (ranging from 5,000 to 10,500 liter volume), and (b) 36 solar and Tamana pump systems (simple hand-powered system made using plastic tubes that can greatly reduce water contamination by allowing pumping from closed wells), thus providing 14\.2 m³ / day to approximately 13,400 people in 70 community groups\. ï‚ The secondary distribution networks were replaced: laying of 4,602 meters of new pipes, surpassing the target of 3,000 meters; installing 438 tap-stands and water meters, surpassing the target of 180 meters, and replacing a 20 m³ storage tank, fittings, and valves\. Outcomes: ï‚ The number of people with access to improved water sources rose from 5,000 people in 2017 to 12,780 people in 2018, surpassing the target of 11,000 people\. ï‚ The number of women provided with access to improved water resources increased from 2,500 women in 2017 to 6,495 women in 2018, surpassing the target of 6,000 women\. ï‚ The number of people provided with access to improved water resources in rural areas increased from 3,600 people in 2017 to 8,435 people in 2018\. ï‚ The number of people provided with access to improved water sources in urban areas increased from 1,400 people in 2017 to 4,345 people in 2018, surpassing the target of 2,600 people\. Page 5 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) ï‚ The volume of potable water provided from new groundwater sources increased from six kiloliters per day in 2016 to 22 kiloliters per day in 2018, surpassing the target of 21 kiloliters per day\. ï‚ The volume of potable water saved through reduced leakage increased from >5 kiloliters per day in 2011 to 645 kiloliters per day in 2016, surpassing the target of 190 kiloliters per day\. ï‚ The volume of potable water provided from new rainwater harvesting system increased from one kiloliter per day in 2016 to 6\.5 kiloliters per day in 2018, surpassing the target of 6\.1 kiloliters per day\. ï‚ 645 m³ of water were saved from rehabilitation of the transmission main and storage reservoirs\. ï‚ 438 households had 24/7 pressurized water supply in the pilot zones providing an additional of 140 m³ of water, surpassing the target of 180 of households and the service level of providing four hours per day\. Rating Substantial OBJECTIVE 2 Objective To improve the resilience of Kiribati to the impacts of climate change on coastal infrastructure: Rationale Outputs: ï‚ Detailed coastal risk assessments and engineering studies for nine vulnerable coastal erosion sites on South Tarawa were conducted\. ï‚ A coastline asset condition assessment was completed and documented for all major non-government assets along the South Tarawa coastline, achieving the target\. ï‚ Three seawalls measuring 370 linear meters were completed in South Tarawa\. ï‚ Community-based mangrove managements plans were prepared and adopted under the village development committees\. ï‚ Over 35,000 seedlings for mangrove plantings along 46 segments of coastline measuring 1\.005 linear kilometers were completed by communities in nine outer islands, under the training and monitoring of the Ministry of Environment, Lands, and Agricultural Development (MELAD)\. ï‚ The number of groundwater abstraction systems installed and operating in North Tarawa increased from one system in 2011 to three systems in 2018, achieving the target of three systems\. ï‚ A Long-Term Coastal Security Strategy (LTCSS) was developed\. The strategy established a coherent framework for managing the use of the coast by responsible agencies and communities\. An updated coastal risk assessment for highly vulnerable areas in South Tarawa and outer islands was conducted\. Also, a consistent set of practical tools aiming at breaking the reactionary cycle of the government communities funding low-cost, poorly constructed, under-designed seawalls requiring frequent maintenance\. ï‚ The government adopted a structured approach of identifying hazards, development risks, and potential interventions called the Whole of Island Approach (WoIA)\. In line with the WoIA the project supported the development of nine island vulnerability assessments and four island strategic plans covering a population of 33,761 and 13,745 people, respectively\. The strategic plans identified the Page 6 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) risks, issues, and development priorities for each island for expenditure planning and directing donor investment\. ï‚ The number of community-led resilience sub-projects completed increased from 35 sub-projects in 2017 to 100 sub-projects in 2018, surpassing the target of 80 sub-projects\. Outcomes: ï‚ The amount of coastline protected increased from 0\.50 kilometers in 2011 to 1\.87 kilometers in 2017, surpassing the original target of 1\.60 kilometers and the revised target of 1\.20 kilometers\. Rating Substantial OVERALL EFF TBL OBJ_TBL OVERALL EFFICACY Rationale The achievement of both objectives is rated Substantial\. Overall Efficacy Rating Substantial 5\. Efficiency Economic Efficiency: The PAD did not conduct an Economic analysis stating (p\. 12) that it is challenging to quantify the damage associated with future climate events and the project benefits associated with climate risk reduction\. Also, all project activities had not been fully defined during appraisal, therefore, costs and benefits could not be estimated\. The ICR (p\. 20) conducted a cost-benefit analysis for key investments under Components 1 and 2, which comprised 84 percent of the of the two components and 51 percent of the entire project cost\. The analysis did not include any costs related to capacity building and policy advisory support since the benefits of these activities were difficult to quantify and fully attribute to the project\. The analysis applied a discount rate of six percent\. Page 7 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) The Net Present Value (NPV) for water resilience investments ranged from US$1\.32 million to US$3\.53 million\. The Economic Internal Rate of Return (EIRR) for these activities ranged from 10 percent to 38 percent\. The NPV for the coastal resilience investment was US$1\.06 million and the EIRR was 10 percent\. The ICR (p\. 21) stated that several benefits were not quantified, such as: reduction in the incidence of water-borne diseases, opportunity costs of school absenteeism among school age population, loss-of-life avoided, savings resulting from switching from alternative water supply to piped water supply, avoided damage costs on power and water mains, avoided business disruptions due to power and water outages and traffic delays, and avoided disruptions in lifeline and other public services\. Operational Efficiency: During appraisal, the project’s administrative costs were estimated to be 13\.6 percent of the revised budget, which ended up being lower at 12 percent\. The 28-month extension of the project’s closing date did not have a negative impact on the administrative costs, indicating that the project’s operation was efficient\. Also, the ICR (p\. 21) stated that the share of management costs in the total budget decreased from 21 percent under KAPII to 12 percent under KAPIII, indicating that the project benefited from efficiency gains from systems, structures and capacity building activities implemented during the previous phases\. However, the project design included a large amount of Implementing Agencies (IAs)\. The ICR (p\. 24) stated that this resulted in a lack of clarity in terms of responsibility among IAs and competing demands on the technical advisors who supported the IAs\. Third, the Bank team did not take into account the amount of infrastructure projects the IAs were responsible for\. The ICR (p\. 24) stated that in October 2014, three IAs were responsible for 24 different infrastructure projects, resulting in KAP III being given less priority due to their smaller size\. And finally, the ICR (p\. 28) stated that the project design assumed that the water supply network and coastal infrastructure could be constructed by local contractors, which turned out to be inaccurate and resulted in implementation delays\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0  Not Applicable 0 ICR Estimate 0  Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome During the 2016 project restructuring and the Additional Financing in 2017, the Results Framework was revised to modify or introduce new indicators to better measure desired outcomes, delete some indicators, and modify Page 8 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) yearly targets to better reflect realistic implementation conditions and progress\. Since the end targets were not revised, a split rating was not conducted in this Review\. The relevance of the objective was High given its alignment with Kiribati’s Climate Change Policy and the Bank’s Pacific Islands Regional Partnership Framework (FY2017-FY2021)\. Efficacy and Efficiency were Substantial\. On the basis of these sub-ratings, the project’s overall outcome rating is Satisfactory\. a\. Outcome Rating Satisfactory 7\. Risk to Development Outcome The ICR (p\. 17) stated that in order to ensure the sustainability of O&M of the groundwater abstraction galleries, the Ministry of Women, Youth, and Social Affairs registered village committees that were empowered with constitutions and authority to collect small fees from residents\. The registration was authorized under the Incorporated Societies Act\. In addition, to support sustainability and appreciate the voluntary land agreements by future generations, a traditional community agreement "Te Berita", which binds all members to abide by the pledge, entailing a cultural sanction for enforcement, was implemented\. According to the ICR (p\. 17) MISE is currently taking steps to draft legislation for similar voluntary water protection zones for future use\. The ICR (p\. 29) stated that greater social fragmentation in Buota poses a moderate risk on the sustainability of village water supply systems which is being mitigated by the management of the Public Utilities Board (PUB)\. PUB has adequate capacity for long-term O&M but requires government funding since it only generates limited income\. In order to ensure the sustainability of PUB's operations it will be critical to establish a more efficient and accessible customer billing and collection system\. The sustainability of coastal protection works is threatened by the limited public financing and capacity of the MISE\. Also, the Office of the President, which has a clear work program and well identified priorities on climate change policies, is heavily dependent on donor funds\. 8\. Assessment of Bank Performance a\. Quality-at-Entry According to the ICR (p\. 24) the design of the project was built on lessons learned from KAP I and II\. Lessons learned included the importance of day-to-day community engagement across all components and the need to address complex and sensitive policy issues such as land and asset ownership, to ensure the sustainability of the infrastructure investments\. In order to apply these lessons, long-term resources were budgeted\. The ICR (p\. 28) stated that the Bank team included the relevant expertise including a mix of coastal and water resource engineering and urban and community infrastructure development specialists\. The PAD (p\. 11) stated that the Bank identified relevant risks such as weak implementation capacity, competing demands from other infrastructure projects, and project rejections by communities\. Mitigation measures included on-the-job training and capacity building, partnering with donors and programs to Page 9 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) increase complementarity and effectiveness of interventions, and consultations with and engagement of communities\. According to the ICR (p\. 24) mitigation measures were adequately identified\. However, there were also some shortcomings\. First, the project scope and geographic coverage was ambitious\. Second, the project design included a large amount of Implementing Agencies (IAs)\. The ICR (p\. 24) stated that this resulted in a lack of clarity in terms of responsibility among IAs and competing demands on the technical advisors who supported the IAs\. Third, the Bank team did not take into account the large number of infrastructure projects the IAs were responsible for\. The ICR (p\. 24) stated that in October 2014, three IAs were responsible for 24 different infrastructure projects, resulting in KAP III being given less priority due to their smaller size\. And finally, the ICR (p\. 28) stated that the project design assumed that the water supply network and coastal infrastructure could be constructed by local contractors, which turned out to be inaccurate and resulted in implementation delays\. Quality-at-Entry Rating Moderately Satisfactory b\. Quality of supervision According to the ICR (p\. 28) the Bank team conducted regular supervision missions on a semi-annual basis\. In addition, the Bank team conducted technical missions, procurement support missions, and financial management implementation review missions\. The ICR stated that the Bank team’s reporting was of high quality and appropriately candid\. Furthermore, the ICR (p\. 29) stated that the Bank team provided support to strengthen the fiduciary and technical capacity within the IAs and the PMU, reviewed tender documents, and ensured the project’s compliance with the Bank’s safeguards\. Even though there were changes in Task Team Leaders, who were all based in DC, specialists based in the Sydney office were closely involved throughout implementation which allowed for continuity and long-term relationships with the counterpart\. When it became clear that international contractors were not interested in providing services due to insufficient profit gains due to the remote location of Kiribati and domestic contractors did not have sufficient capacity, the Bank team used Force Account and specialist technical consulting services\. The ICR (p\. 29) stated that this resulted capacity building within the IAs and job creation for local communities\. The Bank team restructured the project twice to modify the Results Framework to allow for better measurement of outcomes and to obtain Additional Financing for strengthening the resilience at the community level and build on well-functioning implementation mechanisms\. However, according to the ICR (p\. 29) an earlier restructuring might have had a positive impact on the project’s performance\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Page 10 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) Moderately Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The project’s theory of change and how key activities and outputs would lead to the intended outcomes was sound and reflected in the Results Framework\. The objectives were clearly specified\. The indicators included a mix of qualitative and quantitative targets and were specific, measurable, relevant and the majority had a baseline\. Data sampling methods included beneficiary surveys and impact assessment for selected components\. However, a shortcoming of the original M&E design was that it mainly focused on outputs\. The ICR (p\. 26) stated that the M&E design would have benefitted from additional indicators focusing on outcomes such as the behavior change of water users, governance outcomes for sustainability, and adoption of relevant policies\. It seems that some indicator’s targets could have been more ambitious given that for example the indicator for measuring the volume of potable water saved through reduced leakage already surpassed the target in 2016, almost two years before project closure\. b\. M&E Implementation During the 2016 project restructuring and the Additional Financing in 2017, the Results Framework was revised to modify or introduce new indicators to better measure desired outcomes, delete some indicators, and modify yearly targets to better reflect realistic implementation conditions and progress\. However, end targets were not revised\. According to the ICR (p\. 26) baseline data for the project were collected and analyzed during the completion of KAP II\. The project conducted random-sample household surveys, expenditure diaries and an impact assessment for the sub-projects of the Resilience Fund\. The ICR (p\. 26) stated that the Implementation Status Reports consistently reported on all indicators\. According to the Bank team (June 25, 2019) the data were found to be reliable and of good quality and the M&E functions and processes are likely to be sustained after project closure\. For example, ongoing mangrove awareness-raising, initiated by MELAD under the project, is being conducted during Island Council meetings, at village meetings in maneabas, and during school visits\. Students and teachers tend to the plantings and revegetation as part of their environmental studies\. MELAD officers continuously monitor the seedlings, as two years (on average) are needed to reach full viability\. According to the Bank team (June 25, 2019) the Office of the President (OB), with the support of the PMU, worked with Island Councils and the Ministry of Internal Affairs to monitor the completion of the Resilience Fund sub-projects, and MELAD actively monitored and regularly reported on implementation progress of the outer island mangrove planting activities\. c\. M&E Utilization According to the ICR (p\. 26) M&E results were used to inform decision making and supported resource allocation and modification of project implementation\. Also, donors, especially the Australian High Page 11 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) Commission was briefed on a regular basis on progress towards the achievement of the outcomes resulting in Additional Financing\. M&E Quality Rating Substantial 10\. Other Issues a\. Safeguards The project triggered the Bank’s safeguard policies on Environmental Assessment (OP/BP 4\.01) and Involuntary Resettlement (OP/BP 4\.12) and was classified as category B\. The ICR (p\. 27) stated that an Environmental Management Plan (EMP) was developed and disclosed and all civil work contractors and implementing agencies carrying out Force Account works followed the EMP\. Also, all major works included an environmental impact assessment\. The PMU collaborated with MELAD to monitor safeguard compliance on a regular basis and addressed environmental issues that were identified\. According to the ICR (p\. 27) the project complied with the environmental safeguard policy\. According to the ICR (p\. 27) the project used an existing Land Acquisition and Resettlement Policy Framework since the impacts of the project were not known before implementation\. The framework was modified during implementation before being disclosed\. The project did not require any physical displacement or relocation\. The ICR stated that for the construction of rainwater harvesting systems in North Tarawa included full consultation and community agreements\. Also, for the groundwater abstraction systems implemented in North Tarawa, landowners provided land voluntarily for use as a water reserve and were fully compensated for any livelihood loss\. According to the ICR, the safeguard policy was adequately complied with\. b\. Fiduciary Compliance Financial Management: According to the ICR (p\. 28) the project complied with legal covenants throughout implementation\. Interim financial reports were submitted in a timely manner, transactions were accounted for and documented adequately, accounting information was up-to-date and reliable and the external auditor’s opinions were unqualified\. Also, financial management for Force Account works was maintained and effective\. However, the Commitments Register was not updated on a regular basis and budget management was weak and required substantial support by the Bank\. Procurement: According to the ICR (p\. 27) the project complied with the procurement procedures as outlined in the Grant Agreements and Procurement Plan\. The project experienced implementation delays due to poor bidder and consultant response given the country’s remote location, limited understanding of the supply market, and lack of capacity among local suppliers and contractors\. These challenges resulted in unsuccessful Page 12 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) bidding processes and the need to use the Force Account mechanism for the replacement of the secondary water distribution network and the Buota rainwater harvesting system\. The ICR (p\. 28) stated that after the 2016 project restructuring, procurement improved due to extensive implementation support and capacity building by the Bank team, the synchronization of procurement plans with design/consultant engineers’ targets for civil works procurement, and the establishment of a longer-term contractual agreement for centralized procurement of Resilience Fund materials through an Indefinite Delivery Contract\. Also, the PMU hired a Procurement Specialist for the large number of goods, works and services contracts (in contrast to large infrastructure projects with a limited number of sites and contracts)\. c\. Unintended impacts (Positive or Negative) NA d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Satisfactory Satisfactory Moderately Bank Performance Moderately Satisfactory Satisfactory Quality of M&E Substantial Substantial Quality of ICR --- Substantial 12\. Lessons The ICR (p\. 30 -31) provided lessons learned that were adapted by IEG: 1\. Engaging local communities in project activities throughout the project cycle is essential for ensuring the sustainability of project outcomes\. In this project, community engagement was critical for a successful implementation and subsequent use and maintenance of public infrastructure such as coastal protection measures and water supplies\. Community engagement evolved from information seeking, to semi-commercial behavior change campaigns, to empowering residents and allowing for public voice in decision-making and proactively recognizing the needs and priorities of different groups\. Page 13 of 14  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Kiribati Adaptation Program - Phase III (P112615) 2\. Understanding local administrative systems, local contracting and suppliers’ markets and taking advantage of local expertise are critical for successful implementation\. In this project, an appropriate contract size and pre-bid training for local contractors allowed for the eventual completion of 13 of the 16 works contracts by local contractors using Force Account in two cases\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR provided a good overview of project preparation and implementation\. The ICR was internally consistent and mainly outcome driven\. The ICR included an adequate Economic analysis and useful lessons learned\. However, the ICR did not mention the risks and mitigation measures that were identified during appraisal\. Overall, the Quality of the ICR is rated Substantial\. a\. Quality of ICR Rating Substantial Page 14 of 14

REVIEW

P077834

Document of The World Bank Report No: 25157 IMPLEMENTATION COMPLETION REPORT (IDA-36870) ON A CREDIT IN THE AMOUNT OF SDR 71\.2 MILLION (US$90 Million Equivalent) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A STRUCTURAL ADJUSTMENT CREDIT FOR THE GOVERNMENT OF NORTH WEST FRONTIER PROVINCE June 19, 2003 Poverty Reduction and Economic Management South Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Pak Rupees (PKRs) 1 = US$ Pa\. US$ 1 = 57\.70 FISCAL YEAR July 1- June 30 ABBREVIATIONS AND ACRONYMS AsDB Asian Development Bank LHW Lady Health Worker AG Accountant General (Provincial) MDG Millennium Development Goals AIT Agriculture Income Tax M&E Monitoring and Evaluation AWB Area Water Boards MICS Multi-Indicator Cluster Survey BHU Basic Health Units MOP Memorandum of President CAS Country Assistance Strategy MTBF Medium-Term Budget Framework CFAA Country Financial Accountability Assessment NEAS National Education Assessment System CGA Comptroller General of Accounts (Federal) NGOs Non-Government Organizations CIP Community Infrastructure and Services Project NRB National Reconstruction Bureau DAO District Accounts Office NWFP North West Frontier Province DFID United Kingdom Department for International Development O&M Operation & Maintenance EMIS Education Management Information System PAC Public Accounts Committee EPI Expanded Program of Immunization PAD Pakistan Audit Department ESR Education Sector Reform PFAA Provincial Financial Accountability Assessment FMC Fiscal Monitoring Committee PFC Provincial Finance Commission GAVI Global Alliance for Vaccines and Immunization PIFRA Improvement to Financial Reporting & Auditing Project GoNWFP Government of the North West Frontier Province PD Program Document GoP Government of Pakistan PIHS Pakistan Integrated Household Survey GST General Sales Tax PRGF Poverty Reduction Growth Facility HMIS Health Management Information System PRP Provincial Reform Program HR Human Resource PRSP Poverty Reduction Strategy Paper IDA International Development Association PSC Public Service Commission IMF International Monetary Fund PTAs Parents-Teachers Associations I-PRSP Interim Poverty Reduction Strategy Paper SAP Social Action Program KPP Khushal Pakistan Program SBP State Bank of Pakistan LGO Local Government Ordinances WAPDA Water and Power Development Authority Vice President: Mieko Nishimizu, SARVP Country Director: John W\. Wall, SACPK Sector Director: Sadiq Ahmed, SASPR Sector Manager: Ijaz Nabi, SASPR Task Managers: Paul Wade & Zareen Naqvi, SASPR  PAKISTAN NWFP Structural Adjustment Credit CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 5 5\. Major Factors Affecting Implementation and Outcome 14 6\. Sustainability 15 7\. Bank and Borrower Performance 16 8\. Lessons Learned 18 9\. Partner Comments 18 10\. Additional Information 21 Annex 1\. Key Performance Indicators/Log Frame Matrix 22 Annex 2\. Project Costs and Financing 26 Annex 3\. Economic Costs and Benefits 27 Annex 4\. Bank Inputs 28 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 29 Annex 6\. Ratings of Bank and Borrower Performance 30 Annex 7\. List of Supporting Documents 31  Project ID: P077834 Project Name: NWFP Structural Adjustment Credit Team Leader: Paul Wade TL Unit: SASPR ICR Type: Core ICR Report Date: June 20, 2003 1\. Project Data Name: NWFP Structural Adjustment Credit L/C/TF Number: IDA-36870 Country/Department: PAKISTAN Region: South Asia Regional Office Sector/subsector: Sub-national government administration (60%); General education sector (20%); Health (10%); Law and justice (5%); Roads and highways (5%) Theme: Other economic management (P); Public expenditure, financial management and procurement (P); Administrative and civil service reform (P); Health system performance (P); Education for all (S) KEY DATES Original Revised/Actual PCD: 04/09/2002 Effective: 07/12/2002 Appraisal: 04/23/2002 MTR: Approval: 07/09/2002 Closing: 12/31/2002 12/31/2002 Borrower/Implementing Agency: GOVERNMENT OF PAKISTAN/MINISTRY OF FINANCE; GOVERNMENT OF PAKISTAN/GOVERNMENT OF NWFP Other Partners: STAFF Current At Appraisal Vice President: Mieko Nishimizu Mieko Nishimizu Country Director: John W\. Wall John W\. Wall Sector Manager: Ijaz Nabi Team Leader at ICR: Paul Wade and Zareen Naqvi Abid Hasan and Mark Sundberg ICR Primary Author(s): Richard J\. Carroll 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:L Institutional Development Impact:M Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: Background National context\. Per capita economic growth fell to an average of 1\.2 percent in Pakistan in the 1990s after averaging 3\.0 percent in the 1980s\. There has also been little reduction of poverty in the past decade\. Social indicators' improvement did not match that of overall economic growth\. Compared to other countries at a similar stage of development, Pakistan lagged far behind in child mortality, female literacy, primary enrollment and other social indicators\. In the 1990s, there was a large accumulation of public debt as annual fiscal deficits averaged 6 percent of GDP\. At the end of the 1990s, Pakistan faced a financial crisis, domestic tensions, and an unsustainable level of debt with interest payments consuming half of total tax revenue\. A military government came into power in October 1999, and designed a reform program to modernize Pakistan and its institutions\. This government learned lessons from the unsuccessful Social Action Program launched in the 1990s\. The main lesson that emerged was that if the social gap were to be closed, Pakistan would have to improve economic management and governance at the sub-national government level in order to deliver basic social services effectively\. Provincial context\. The North West Frontier Province is one of four provinces in Pakistan and one of the poorer ones\. Per capita income is 30 percent below the national average of $429, or about $300\. Nearly half of the rural and 31 percent of the urban population live below the poverty line\. Social indicators improved only modestly in the 1990s\. The exception was infant mortality, which was halved\. The social and economic position of women remains weak\. Female enrollment in school is only 54 percent (84 percent for males) and female literacy is 15 percent\. The resource base with which to fund government has been low\. There was low value added in agriculture (which accounts for one-third of provincial income), remittances, until recently, had stagnated, and there is general underdevelopment\. The province's fiscal position deteriorated in the 1990s, mainly due to a weak revenue base\. Provincial financial management deteriorated with a general breakdown of internal controls\. Bank support\. The Bank support for the NWFP reform program follows a programmatic approach\. The NWFP SAC was the first phase of a planned three-phase adjustment lending program, and provided US$90 million (equivalent) in budget support to the NWFP\. This ICR assesses the accomplishments of the SAC-supported first phase through the completion of Board conditions, and reviews continued reform implementation up through the May 2003 review/ICR mission\. Objective The NWFP SAC supported the Province's economic and social reform program (PRP 2001-2004), which has four pillars: (i) strengthening provincial governance through the reform of the civil service to strengthen the accountability, integrity and professionalism of provincial government institutions; (ii) strengthening public health and education service delivery systems and the devolution of responsibilities to expand access to these services, with a focus on primary service delivery; (iii) fiscal and financial management reforms to increase provincial revenues, and reprioritize expenditures, strengthen procurement and improve budget preparation, execution, and oversight; and (iv) deregulation and business facilitation to enhance prospects for growth and poverty alleviation\. The credit aimed at allowing the province to incur larger budgetary expenditures for the province's reform program, especially the costs of fiscal restructuring and service delivery improvements\. - 2 -  This support was consistent with the program expressed in the Interim Poverty Reduction Strategy (IPRSP) that was discussed by the World Bank and IMF Boards in December 2001, particularly with respect to its focus on restoring good governance and the respect for the rule of law, enhancing the effectiveness of public expenditures and reestablishing the integrity of government institutions\. In this regard, the objectives of the NWFP SAC were responsive to the province's priority development problems\. The NWFP qualified for a provincial SAC based on its commitment to carry out necessary reforms demonstrated by its launch of the PRP\. This focus on client pull and the NWFP SAC's fit with other features of the Country Assistance Strategy (CAS) for Pakistan is discussed below\. 3\.2 Revised Objective: No revisions\. 3\.3 Original Components: The components of the NWFP SAC were consistent with the main goal of the Bank Group's Assistance Strategy for FY2003-2005 which is to support the Government reform program for a transition to a modern Islamic state through a program of analytical services, institutional capacity building, and demand-pull lending\. The components address the priority development constraints in the province\. These components and their sub-components were: 1\. Strengthening Accountability and Professionalism of Government Institutions 1\.1 Devolution 1\.2 Restructuring and down-sizing 1\.3 Promoting merit and professionalism and improving human resource management 1\.4 Judicial reforms 2\. Accelerating Human Development 2\.1\. Education 2\.2\. Health 3\. Improving Fiscal Sustainability and Restoring Financial Accountability 3\.1\. Fiscal sustainability 3\.2\. Tax and user charges reform 3\.3\. Expenditure reforms 3\.4\. Process reforms 3\.5\. Fiscal devolution 3\.6\. Public financial management and accountability 3\.7\. Procurement, transparency and public access to budget documents 3\.8\. Autonomous bodies/public enterprises 4\. Promoting Sustainable Growth-Private Sector Development 5\. Monitoring Poverty, Social Service Delivery and Reform Implementation 5\.1 Monitoring 5\.2 Reform implementation The design was broad, but the core conditions were relatively few and each component addressed a priority - 3 -  reform area with the overall aim of restoring integrity to state institutions and improving the effectiveness of public expenditures\. Financial management and fiscal sustainability were essential to easing the public debt burden, addressing poverty and in ensuring that the budget reflected the reform program's priorities\. The program appropriately included a component to enhance economic growth, without which human and income poverty cannot be reduced\. In this regard, core conditions included improvements to the regulatory environment, although the private sector development component (PSD-no\. 4\.) was generally weak, as discussed below\. The approach of the NWFP SAC embodies the CAS's three strategic engagement principles: 1\. Strong client pull to reform and selectivity; 2\. A programmatic approach focused on transfer of knowledge and capacity building first, and resources second, in a flexible pursuit of key development outcomes; and 3\. Partnerships and outreach\. The NWFP SAC programmatic approach, involves a sequence of similar credits (three are anticipated) and is consistent with the process of long-term reform laid out in the IPRSP\. The programmatic approach offers the flexibility to adapt the program to changing circumstances, as well as the multi-year commitment of a reasonable level of budgetary support in order for fiscal and governance reforms to yield results\. The triggers for the Bank's future assistance strategy are based on measurable outcomes derived from the Millennium Development Goals (MDGs) in the social sectors\. 3\.4 Revised Components: No revisions\. 3\.5 Quality at Entry: ICR ­ Satisfactory\. The NWFP SAC objectives were fully consistent with the CAS\. The program document (PD) specified entry and exit triggers that were relevant and reasonable\. Entry triggers required that the provincial government be in the process of reform with committed reform champions in key positions, and that the province had already initiated fiscal management, civil service and health and education reforms\. Exit triggers included reversal of reforms, resumption of substantial Ways and Means borrowing, and expansion of public sector contingent liabilities\. The selection of the NWFP as a recipient for a SAC was appropriate given the Provincial Government's demonstrated commitment to critical reforms\. As a single tranche operation, NWFP SAC conditions were completed prior to disbursement\. Section 4 reviews these achievements\. Though the NWFP SAC design was broad, there were a limited number of conditions which helped ensure timely implementation despite NWFP's limited implementation capacity\. The growth promotion/PSD component was however too narrow\. There was insufficient economic and sector work (ESW) to support a more meaningful component, that would have included, e\.g\., measures to promote rural growth\. The single tranche was complemented with a follow-on reform program including triggers for a possible NWFP SAC2\. The Program Document cited three types of risk: continuity of the reform program, implementation capacity, and exogenous shocks owing to Pakistan's location in a turbulent area of the world\. Continuity, or political risk, was cited as the most immediate risk because the elections (in October 2002) would mean that most ministers would be replaced\. The risk associated with these political changes was identified, but, to some extent, was underestimated, as the elections brought about a greater political shift than expected\. For example, the Bank underestimated the difficulties in trying to achieve civil service reform following a change in government, wherein the new government would have a tendency to consolidate its power in the bureaucracy\. The choice to proceed with the NWFP SAC before elections appears appropriate in the final analysis because of the reform progress to date, even though uncertainties persist about the future of the reform program\. - 4 -  The risk of inadequate implementation capacity was most serious as it related to devolution\. This risk was addressed by a bilateral and multilateral donor supported comprehensive capacity building program, which has been under implementation\. Still, this implementation capacity risk was somewhat underestimated because capacity has proven to be as much a matter of coordination and clear guidance as it is of the level of skills at the district level\. Training, however extensive, is a necessary, but not sufficient input to successful devolution\. The speed of devolution has outstripped the Provincial Government's ability to guide and coordinate\. These issues are being sorted out, but it will take several years and will mute the poverty reduction benefits from the increased spending in the social sectors\. Another area where the Bank underestimated risk was in assuming the smooth transfer of power from the province to the districts\. After the elections, conflicts arose between the provincial and district governments over areas of authority, which still persist\. The NWFP-supported reform program's "homegrown" nature and the widespread consensus from stakeholders was expected to mitigate this political risk\. On the "homegrown" nature of the program, it is true that reform intentions and much of the selection of reform areas originated in NWFP, as there was a core group of reform champions\. However, it was also reported that much of the detail of the program required substantial donor input, with modest underlying sector work prepared by NWFP stakeholders\. On the social side, the PD asserted that civil society would support the continuation of improved service delivery, resolving fiscal issues, expanding girls' education and improving governance and would hold any new government to these goals (section 4\. reviews the progress in these areas)\. In addition, the devolution process would be difficult to reverse regardless of election outcome and over time becomes increasingly irreversible\. Clear triggers were established for follow-on operations\. Though the triggers identified at appraisal were fairly mild from a reform point of view, they have evolved into a stronger follow-on program which is necessary for continued Bank support\. The risk of exogenous shocks was rated particularly high in NWFP\. The mitigation was expected to come from strengthening local institutions, improved social indicators, improved business environment and tangible benefits ("quick wins")\. This mitigation plan might be effective in the long run, but the program document was perhaps optimistic that shocks from a spill over from Afghanistan or Iraq could be limited by any design feature of the reform program\. There are limits to how much program design can mitigate against swings in political moods or exogenous shocks\. QAG ­ Not Applicable 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: This assessment concentrates on the specific reforms supported by the NWFP SAC, but, because the approach is programmatic, the ICR also reviews the progress of the follow-on program leading up to a planned NWFP SAC2\. The achievement of objectives is rated satisfactory for the core program leading up to tranche release\. However, the follow-on program, while successful in some areas, has not met the expectations built into the program (indicative triggers) approved by the Bank Board\. The NWFP SAC effectively supported the government reform program and made significant progress through its five major components, with particular emphasis on social sector and governance reforms\. However, in the follow-on program only limited progress was made in civil service reform, own revenue collection, monitoring and evaluation, and developing a broadbased poverty reduction strategy with the private sector as the engine of - 5 -  growth\. There has been no backtracking of the reforms (though there are potential issues on several revenue items and the Bank of Khyber)\. The outcomes are presented under their corresponding project development objectives (PDOs)\. Table 1 presents the recent fiscal performance of the GoNWFP and Table 2 summarizes the broad outcomes from the NWFP supported program\. Annex Table 1 provides details of outcomes\. A review of the outputs from the follow-on program is presented in section 4\.2\. Table 1: Summary of NWFP Fiscal Accounts (Rs\. In Million) 1998/99 1999/00 2000/01 2001/02 2002/03 Actual Actual Actual June Proj\. 1/ Final Total Revenues and Grants 27,245 30,370 32,302 36,454 37,582 Federal Tax Assignment 14,422 16,392 18,440 19,014 22,568 Provincial Own Revenues 2/ 9,023 9,102 9,290 9,517 9,820 Provincially Collected Revenues 3,023 3,146 3,027 3,197 3,247 Tax Revenues 969 1,286 1,250 1,554 1,575 Non-Tax Revenues 2,054 1,860 1,777 1,643 1,672 Hydel Profits from WAPDA 6,000 5,956 6,044 6,000 6,000 GST on Services 0 0 218 256 413 Royalty on Oil and Natural Gas 0 0 0 64 160 Federal & Foreign grants 3,801 4,877 4,572 7,924 5,194 of which KPP grants - - 657 2541 0 Subventions 3,801 3,882 3,828 3,915 3,898 Others - 989 739 1,451 1,296 Total Expenditures 29,384 34,496 33,452 39,068 43,939 Current Expenditures 25,792 30,551 29,998 31,496 35,219 Wages 10,575 12,220 12,985 14,573 16,791 Pension 1,871 2,054 2,485 2,805 3,200 Non-Wage Operation and 4,265 5,278 5,412 4,621 6,434 Maintenance 3/ Interest Payments 6,282 7,621 6,878 8,225 7,794 Subsidies (Food) 2,750 3,250 1,950 1,228 1,000 Grants to LG and Investments 48 129 287 43 0 Development Expenditures 3,592 3,945 3,454 7,572 8,720 Annual Development Program - 2,178 3,454 1,684 2,960 Foreign Project Assistance 1,178 - 2,121 2,952 Federal Projects Incl\. ESR 0 589 - - 983 Civil Works from KPP Grants - - 1,147 3,767 1826 Fiscal Balance -2,139 -4,126 -1,151 -2,613 -6,589 Source: Finance Department, GoNWFP and NWFP AG Office\. Note: The sign "-" indicates that the data is not available\. FY03 Proj\. are Bank staff projections\. 1/ Projections from May 2003 review mission\. 2/ Provincial own revenues include provincially collected tax and non-tax revenues as well as Net Hydel Profits, General Sales Tax (GST) on Services and Royalties on oil and gas\. 3/ The Non-wage O&M is calculated residually from current expenditures\. - 6 -  1\. Strengthening provincial governance through the reform of the civil service to strengthen the accountability, integrity and professionalism of state institutions (Satisfactory) It is early to gauge a long term process such as improved professionalism and governance in state institutions\. Certainly, some of the ground work toward that end has been laid\. It can be said that NWFP moved toward the objective of a decentralized administration with greater administrative autonomy at the district level\. Rationalization of staffing has also taken place in a number of agencies and departments\. With the increased independence of Provincial Public Service Commission (PSC) -- and assuming that the new Government will maintain the PSC's autonomy for recruitment for grades 11 and above -- it is expected that recruitment and promotion will become more merit-based, and that the opportunity for corruption and misconduct will diminish\. However, the ongoing practice of frequent transfers not only of Secretaries but also of lower level staff -- some of which appear to be subject to interventions at the political level -- continues to undermine progress towards a more merit-based civil service\. Donors have supported an extensive training program including support under the Essential Institutional Reform Operationalization Project (EIROP)\. The impact of this training will increase as the new division of responsibility between the Districts and other levels of government is better understood by the implementing agencies\. The eventual establishment of a civil service data base would help eliminate potential "ghost" workers from payrolls and yield a more accurate estimate of the pension liability of government workers\. Lengthened tenures of civil service will promote better management of institutions and greater accountability of upper level staff\. Making the judiciary independent of the executive branch is expected to improve judicial performance and impartiality in the long run\. However, there have been some significant adjustment pains\. With the abolition of the role of the Magistrate, the key access point of the "common man" to adjudicated settlements was lost\. Previously, Magistrates would dispense executive justice on minor civil cases, family issues, etc\. Currently, courts are not equipped to handle the volume of these types of cases\. Until family courts and minor civil courts can be established, average citizens and the poor may find it nearly impossible to resolve disputes\. Magistrates also acted, historically, as a check on the power of the local police\. It was reported that there is public dissatisfaction with growing police corruption\. The follow-on program has recognized this and calls for the establishment of specialized (e\.g\., family, small claims) courts to settle disputes\. Admittedly, there are no clear monitoring indicators for the outcomes in this component, which makes outcome assessment, beyond noting that the supporting measures have been carried out, impossible\. As part of the continued dialog, a set of outcome indicators should be agreed and tracked as the part of the ongoing reform program\. - 7 -  TABLE 2: Monitoring Indicators INDICATOR BEFORE NWFP SAC CURRENT PLANNED (2005) Provincial GDP growth rate 4% 4% 4-5% Poverty Head Count (caloric) 44 n\.a\. 38% Provincial Tax Revenue Growth 15% 1\.4% (projected FY03 over 10% target June final FY02) 1/ Pro-poor I-PRSP expenditures 29% n\.a\. 35% (% of exp\.) Development expenditures 26% 27% (FY03 Budget) 31% Maintain timely comprehensive and 0% n\.a\. 100% reconciled fiscal data using the New Accounting Model (NAM) Gross Primary enrollment rate 70% (PIHS 1998/99) 72% (Sept\.2002) 85% Gross primary enrollment rate 54% (PIHS 1998/99) 56% (Sept\.2002) 84% female Reduction in primary school 45% (EMIS 2002) 43% (Sept\.2002) 35% dropout rates Girls school provided essential 50% (EMIS 2002) n\.a\. 100% by end FY03 physical facilities Full immunization % of children less 54% (PIHS 1998/99) 57% (PIHS 2001/02) 80% than 2 years % of population with access to TB 20% (Dept\. of Health, 48 % (Estimates from the 100% Control using DOTS GoNWFP) Provincial TB Control Program) Antenatal coverage of pregnant 34% 2/ n\.a\. 45% women by health professionals Contraceptive Prevalence Rate 21% 2/ n\.a\. 35% Population with access to safe 58% (PIHS 1998/99) 58% (PIHS 2001/02) 65% drinking water Proportion of roads classified in poor 80% n\.a\. 50% condition Source: GoNWFP, World Bank mission estimates\. 1/ Based on projections from May 2003 review mission\. 2/ Pakistan Reproductive Health and Family Planning Survey 2001 2\. Strengthening public health and education delivery systems and the devolution of responsibilities to expand access to these services, with a focus on primary service delivery (Satisfactory) In education (satisfactory), the gains have been small in enrollment rates, but there is also a rapidly increasing number of children eligible for school\. In K-5 grades, the number of students enrolled increased by 115,000 (about 6 percent) in 2002/03 compared with 2001/02\. The gross enrollment rate increased modestly from 70 to 72 percent against the 2005 target of 85 percent\. Female primary enrollment has also increased from 54 to 56 percent, far below the 2005 target female enrollment of 84 percent\. The dropout rate has fallen from 45 to 43 percent compared to the target of 35 percent for 2005\. These measured improvements (measured up to September 2002) pre-date the effects of the teacher redeployment and recruitments and the upgrading of girls' schools\. So continued enrollment increases are expected as a result of these measures and others supported by the large increase in public financing in the sector\. Nevertheless, at present rates of increase the targets will not likely be reached unless the GoNWFP launches special enrollment campaigns\. The slow progress toward targets may also partially be the case of - 8 -  the outcome response lagging behind the outputs by an additional year or two, which the next data survey would reflect\. In health (satisfactory), the 2001/02 Pakistan Integrated Household Survey (the most recent source of data for the health sector) indicates health improvements with decreasing infant mortality, increasing immunization coverage and contraceptive use, although the improvements are very gradual\. Data for 2002/03 are not yet available\. Infant mortality has declined by about 3 percentage points and immunization coverage of children aged 12-23 months has increased by about 3 percentage points (54 to 57 percent) against a 2005 target of 80 percent\. The slow improvement in indicators reflects the equally slow improvements in health care delivery system, and there is concern that they are not on track to meet the health improvement targets for 2005\. The SAC-supported measures to improve district health care so that district health facilities can treat more non-serious or non-urgent cases have resulted in seven district hospitals being upgraded to A level where there is a capability in 24 medical specialties\. A plan to finance the upgrading of district hospitals through a Hospital Fund (HF) in which doctors contribute 30 percent of the proceeds from their private practice activities was rolled back\. It did not appear that this requirement was effectively enforced\. In any case, doctors wanted the requirement rescinded and the new government obliged\. This has created additional uncertainty in funding the upgrade of district hospitals\. The percent of the population with access to TB control using daily observation therapy (DOTS) has increased from 20 to 48 percent compared with the goal of 100 percent by 2005\. Population with access to safe drinking water was unchanged at 58 percent at the latest estimate, compared with a target of 65 percent by 2005\. Progress must be made in this area in the immediate term\. There are no updated data for improvements in pre-natal coverage, or contraceptive use\. 3\. Fiscal and financial management reforms to increase provincial revenues, and reprioritize expenditures, strengthen procurement and improve budget preparation, execution, and oversight (Marginally satisfactory) As mentioned earlier, the assessment below reflects verified information received through the May 2003 review/ICR mission\. Additional information was received subsequent to the May mission but could not be verified in time for the ICR deadline\. While it is early to assess the response to/outcome of fiscal reforms, the response thus far has been mild (Table 1)\. Little progress has been made in provincial revenue collection\. Provincial Own Revenues increased about 3 percent in 2001/02 and 2\.5 percent in 2002/03 (first three quarters), which is well below the budget target of over 20 percent\. Fiscal deficits initially fell, but then sharply increased\. The fiscal deficit increased from Rs\.-1\.2 billion in 2000/01 to Rs\.-2\.6 billion in 2001/02, then jumped to Rs\.-6\.6 billion (projected) in 2002/03, reflecting shortfalls in own provincial revenue collection and increased spending in high priority areas such as health and education, though the expected outcomes in the social sectors have not yet been observed\. Some additional fiscal space was created through early retirement of the most expensive debt\. However, the current substantially higher spending, in particular social and development spending, without the necessary increase in own revenue generation, will be sustained after the last SAC credit only if the provincial government receives a generous (multibillion rupee) annual increase in the next NFC award; something which is still uncertain\. In procurement, though no efficiency improvements have been measured, it is a reasonable expectation that the substantial measures taken will lead to significant cost savings in the future\. - 9 -  4\. Deregulation and business facilitation to enhance prospects for growth and poverty alleviation (Marginally unsatisfactory) Given the weak impact of this component on private sector development and poverty alleviation it is rated marginally unsatisfactory\. Though there were a number of achievements under this objective, the measures were too narrow and had too little development impact\. Following the establishment of the Deregulation Committee (a core condition), the Committee's recommendations led to a streamlining of industrial inspections by the various government departments\. There were 23 inspections, which the government reduced to 13\. Furthermore, under the Boiler Ordinance 2002, only private insurance companies will be involved in inspections, further reducing the role of government\. A new integrated Directorate for Mineral Development has been created\. In principle, the public sector will not be involved in exploration projects but will limit itself to undertaking survey work, preparation of technical reports, licensing and inspection\. To make the new Directorate effective, issues of institutional capacity building need to be addressed especially in terms of adequate staffing, training of staff and acquiring equipment\. There is considerable additional work to carry out\. CBR officials continue to harass businesses with frequent visits in sales tax and income tax audits\. Officials indicated that since the remaining inspections, as well as CBR issues were a Federal subject, the province has little jurisdiction in dealing with these issues and they should be addressed at the Federal level\. These measures did not have much of an effect on the NWFP population\. It would have strengthened the program, for example to have included rural development measures with the ultimate objective of a sustained reduction in rural poverty\. In general, a clear, shared vision and government strategy that would enable NWFP to achieve faster and sustainable economic growth and poverty reduction where the private sector is the engine of growth is lacking\. The program would benefit from a province-specific business investment climate survey\. 4\.2 Outputs by components: The assessment of outputs concentrates on the core conditions of the SAC-supported program, which was satisfactory overall, but also rates the progress of the follow-on program, which was marginally unsatisfactory\. The lower rating for the follow-on program reflects shortfalls in implementation and resulting delay in approving a planned SAC2\. Strengthening Accountability and Professionalism of State Institutions Achievement of the Board conditions of the NWFP SAC satisfactory\. To support devolution and improve government efficiency, the Government restructured 15 departments and abolished 11 attached departments and eliminated more than 6,000 positions\. The ban on new recruitment is continuing with little new hiring below grade 11, and only under special circumstances approved by the Finance and Establishment Departments\. Exceptions are permitted to hire teachers and doctors, consistent with the NWFP SAC\. GoNWFP also established Surplus Pool and Facility Specific contract policies\. Around 6,500 staff were placed in the Surplus Pool for transfer to other departments, and the number has dropped to 1,400, indicating progress in resolving the issue of surplus staff\. None of these staff have been made involuntarily redundant in keeping with the purpose of the pool\. The SAC-supported program also supported the authority and independence of the NWFP Public Service Commission (PSC) to recruit officers\. As part of the effort to restore professionalism, the PSC was to carry out recruitments within a four-month period\. No action has been taken to reduce the recruitment time - 10 -  through the PSC, and there are no monitorable data\. It is essential that the PSC perform professionally so as not to invite bypassing by government agencies on efficiency grounds\. A capacity building program was approved that is building the necessary skills to make devolution successful and improve government efficiency\. This capacity building has progressed under EIROP and other initiatives, and a needs assessment for further training, etc\., has also been carried out\. Implemented judicial reforms include its separation from the executive branch of government and allocation of the resources needed to provide judicial services, namely, adequate budget and autonomy of recruitment (see Outcomes section 4\.1 above for explanation of complications of this reform)\. The NWFP SAC-supported program included improved monitoring which included a Multiple Indicator Cluster Survey (MICS) in FY2001/02\. While the MICS has been completed, overall the monitoring function has not progressed as far as hoped\. In particular, monitoring systems for health and education, as well as consolidated (province and district) fiscal spending, are not as developed as called for in the follow-on program\. An important measure for the follow-on program is to increase the average tenure in post of senior civil servants\. Secretaries' average tenure in post is less than 7 months\. Implementing reforms, as well as refining the reform strategy, require Secretaries with knowledge and vision, and the time to carry it out\. The flexibility provided by the greater use of contract staff will place a greater responsibility on managers to plan and use their human resources effectively\. These challenges will prove extremely difficult for Secretaries whose average tenure in post is this short\. No action has been taken on this issue, except that a monitoring exercise is underway to measure whether this tenure is lengthening\. Results are expected by September 2003\. It is difficult to have meaningful results before then because of the turnover in Secretaries resulting from the change in Government in November 2002\. A comprehensive HR database is another priority for the continuing program because the present paper-based system is inaccurate, does not capture the actual numbers of provincial and district employees, and does not allow for an accurate estimate of pension liability\. Little progress has been made in this area and implementation is more than one year behind schedule\. This data base could be built by: (i) completing the computerization of all district and departmental payrolls; (ii) linking databases to provide central HR database to Finance; (iii) verifying against a civil service census; and (iv) using the database to assess government pension liabilities\. After the database has been constructed, it will be possible to undertake some detailed actuarial work to calculate the pension liability\. Inter-agency disputes between Department of Finance and the Establishment Division have delayed action\. Notwithstanding this, TORs have been issued for the database software development, a short list of contractors has been selected and requests for detailed proposals have been issued\. The implementation of this exercise has been drawn out by contracting separately the software development and the manuals and training, rather than as one contract\. Accelerating Human Development Education (Achievement of Board conditions satisfactory)\. The SAC-supported core measures that were implemented included approval of the staff rationalization program, and provision of water and sanitation facilities to all girls' schools\. Education allocations were increased substantially under the Medium Term Budget Framework\. For FY2003, the education budget increased nearly 25 percent\. An education reform unit was established and a program to recruit 2,000 primary teachers was approved\. Thus far, nearly 2,400 teachers have been recruited, which is the number required under the teacher redeployment plan to meet the student teacher ratios\. Before the program, the average teacher-student ratio was 33:1 and the target was actually to increase the ratio to 40:1\. This target was revised downward to 30:1, which necessitated the additional recruitments\. To realize the 30:1 target an additional 12,200 teachers will have to be recruited\. The fact that there is no adequate monitoring capability in place to - 11 -  track teacher absenteeism is a serious issue for the follow-on program\. The provision of sanitary and other facilities for girls' schools has only recently gotten underway\. The SAC coordinator estimates that this activity will nevertheless be completed by the end of the fiscal year\. The Government is generally on-track, however, in its follow-on, medium-term plan for the education sector\. The plan includes: (i) increase budget allocations by over 75 percent from PR8\.5 billion in FY02 to PR14\.7 billion by FY05, including increasing instructional materials and minor repair allocations by tenfold; (ii) complete management reforms to implement the process of district-based management, separation of teaching and management staff, and training of staff; (iii) complete the teacher redeployment, and facility rationalization based on the approved staff and facility rationalization plan; (iv) expand school capacity in partnership with the private sector and communities and continue the strengthening of PTAs; (v) provide essential physical facilities in all primary schools, especially for girls, and continue the policy of larger allocation of development funds for girls' schools; (vi) deployment of teachers in home districts and location-based new recruitment, and in-service teacher training; (vii) consolidate performance-based teacher evaluation and compensation, and the province-wide student assessment system; (viii) continue textbook de-regulation; (ix) expand secondary school capacity, PTAs for secondary schools, and school facilities for computer literacy; (x) establish primary schools in seriously deficient districts; (xi) further increase in higher education user charges; and (xii) continue to strengthen the monitoring and supervision system, including the commissioning of a regular third party user and facility survey in October 2002 (approaching 1 year delay), and annually thereafter, for independent monitoring of service delivery indicators\. Health (Achievement of Board conditions satisfactory)\. The implementation of reforms in the health sector as agreed in the SAC has made slow but steady progress\. The new political government appears to be committed to most of the agreed reforms\. FY03 allocations are adequate both in development and recurrent budgets in line with MTBF, with the exception of the Health Management Information System (HMIS)\. The allocations include adequate financing for preventive programs and program priorities\. The releases have been timely at the provincial level; however, releases of non-salary budget at the district level have been delayed\. The implementation of the FY03 budget is slow because of the weak institutional capacity of district governments and the slow release of funds caused by procedural bottlenecks especially to the district governments\. Additional completed core measures included establishment of a management cadre for the sector (but no progress in assigning staff to the management cadre), increased managerial and financial authority to tertiary hospitals, rationalization of district health services, increased female nursing staff and Lady Health Workers (LHW) and expansion of the immunization program\. The provincial reform program is making good progress in the areas of TB control using DOTS strategy and expansion of the LHWs program with adequate allocation in FY03 development budget\. The TB program has been expanded as planned from 5 to 10 districts and overall coverage increased from 20 percent to 45 percent with a regular monitoring and reporting system in place\. Similarly, plans to expand the LHWs program to increase coverage of mothers and children health programs especially in rural areas is making good progress with the number of LHWs increased from 7,800 to 8,655 and another 75 are under training\. The work on development of a comprehensive plan for medium to longer-term sectoral reforms is in final draft\. The capacity of the Health Sector Reform Unit (HSRU) has been strengthened\. However, the Department continues to lose trained staff and existing capacity remains limited for developing detail plans for the reforms\. The rationalization program is being expanded to 12 districts\. It includes training to build skills of district managers in planning, budget formulation and personnel management which has been started\. To ease the critical shortage of nurses to improve quality of care at the district and sub-district - 12 -  hospitals, 255 posts are being created as part of the rationalization program\. The reform program is in an early stage of implementation and its effects are likely to be seen in next 6 to 12 months\. The capacity of the HSRU, and the Health Department, to design and implement the reforms remains limited\. In addition, coordination and monitoring processes to assess progress of implementation at the district level remains weak and needs attention in the continuing policy dialog\. Improving Fiscal Sustainability and Restoring Financial Accountability Achievement of Board conditions satisfactory\. In part from the proceeds of the credit, the Provincial Government paid seven high interest loans of PR5\.7 billion\. This debt restructuring has created significant fiscal space of about PR843 million annually\. Additionally, the Government has planned over five years to retire PR29 billion of high priced (14 percent) debt to the federal government by borrowing at far lower rates (about 6 percent) on the commercial market\. This is however entirely dependent on approval from the Federal Government both to borrow in the market and to retire the debt to the Federal Government\. The latter would reduce the Federal Government's fiscal space as it would lose revenue from the interest earnings received from the Provincial Government\. Another important output was the approval of a Medium Term Budget Framework (MTBF) which helped achieve a predictable fiscal outlook\. As part of the MTBF, pro-poor expenditures in the form of primary service delivery have remained on track\. The wheat subsidy was also reduced and the district development funds were released to the Districts on a formula basis\. A start has been made on establishing a unit for preparing a MTBF but much remains to strengthen this unit\. There are two major outputs under taxes\. Tax simplification was achieved by reducing the number of provincial taxes from 22 to 9\. The tax base was also broadened by introducing the Agriculture Income Tax (AIT), increasing the number of rating areas for the Urban Immovable Property Tax from 18 to 27, and better enforcement of the GST\. A Financial Management Reform Program was initiated, a Provincial Financial Controller position was established and filled, and reconciliation of expenditures and revenues is now public\. This reconciliation is increasing significantly and has risen to 96 percent\. The Provincial Public Accounts Committee has been established and will operate with public access\. The newly formed PAC plans to hold its first meeting in June 2003\. One concern is that the PAC will become overwhelmed with minor cases and so it is important that the PAC be shielded from the less significant objections so that it will have time to deal with more important policy matters\. The DAO positions have been upgraded in the major districts as envisaged in the reform program, but capacity building is slow\. A new Procurement Ordinance was approved, and a draft of their procurement rules and standard bidding documents have been prepared\. Procurement reforms are considered to be highly satisfactory\. The Provincial Financial Accountability Assessment for NWFP carried out jointly by the Bank and the Government is at an advanced stage\. As part of the follow-on program a Financial Management Improvement action plan is expected to be agreed as part of this which will form the basis for future financial management reforms in the province\. The follow-on fiscal program has not produced the desired results\. The main reason, in addition to some of the exogeneous factors discussed in section 5, is that the provincial government did not follow-up its revenue policy measures with the necessary revenue administration measures\. There was a general implementation lapse in that the GoNWFP did not take the necessary remedial actions to ensure that the - 13 -  revenue targets were reached\. Promoting Sustainable Growth Achievement of Board conditions satisfactory\. GoNWFP carried out the core conditions by establishing the Deregulation Committee, closing at least three agricultural and commercial autonomous entities and approving the privatisation of the Khyber Bank\. A new Hydel policy has been formulated for private sector investment in small (up to 5000 kw) Hydel projects; a total of 85 MW under construction in different sites on Upper Swat canal\. Major mining sector regulatory reforms have taken place\. These include: (i) ratification of the National Mineral Policy (NMP) 1995; (ii) re-constitution of the Mines Committee, with strong private sector representation, who would provide technical input into policy formulation, and help increase transparency in decision-making, among other things; (iii) a new Directorate for Mineral Development has been created by merging three existing agencies that were established for mineral development\. Mining Concession Rules, 1976 have been amended for the gem sector to allow entry of small scale gemstone excavators; the new rules allow an SME to apply for land lease for gemstone excavation without the pre-requisite of getting registered with any official entity\. This is in sharp contrast from the past when only registered firms could apply\. However, in the follow-on program, the new government has expressed reservations to the SAC target of reducing its equity holding in Bank of Khyber to less than 50 percent\. At present, the GoNWFP does not have a well-defined strategy for private sector development and its linkages to poverty reduction\. There has been little progress in developing, announcing and implementing a sound strategy for faster and sustainable broad-based economic growth and poverty reduction -- both rural and urban -- where the private sector is the engine of growth\. 4\.3 Net Present Value/Economic rate of return: Not applicable\. 4\.4 Financial rate of return: Not applicable\. 4\.5 Institutional development impact: Though the measures supported by the NWFP SAC could lead to a substantial institutional development impact in the future, for now the impact must be characterized as modest\. There are a number of uncertainties that only time will resolve, such as the success of the governmental devolution and the new government's commitment to civil service reform\. Whether the Districts will be able to improve on social service delivery will depend on sustained commitment at both the provincial and district levels and the successful building of implementation capacity at the District level\. Once beneficiaries receive reliable, basic social services and come to expect a certain minimum level of service quality, the argument for substantial impact is supported, but not until that time\. Continued civil service reforms will not be easy and will test the new Government\. Progress so far is modest from an institutional point of view and it will take some time to observe the effectiveness of the Provincial PSC\. In that regard it is important that the Government continue the policy of an autonomous Provincial PSC for recruitment of grades 11 and above\. It is also premature to suggest that the impact of judicial reforms is substantial\. The follow-on program that includes the establishment of specialized courts for family law, minor civil cases, etc\., and the number of cases processed will be critical for the impact of judicial reforms\. - 14 -  5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The main factor outside the control of the Government/Implementing agencies were the political forces at play leading up to and following the elections in October 2002\. The change in government led to political and bureaucratic inertia all over Pakistan\. Key reform champions, such as the former Finance Minister and the former Education Minister, were unelected and so are no longer in the provincial government\. NWFP lost reform momentum as a result\. It may be too early to tell to what extent the new officials in government will champion reforms\. Another important factor that hampered implementation was the installation of the new Local Government (LG) system which began in August 2001\. Most of FY02 (July 2001 to June 2002) and FY 2003 were occupied with getting the system in place\. The limited capacity of the LG functionaries in project preparation, in particular, and coordination problems within the LG system and with the Provincial government led to delayed implementation of projects, especially in the social sectors\. These problems were not limited to NWFP but were encountered all over Pakistan\. The drought has also slowed the economic recovery and depressed agricultural income and therefore tax revenue from the AIT\. The other main factor was the geopolitical turmoil in the region\. September 11 set back the real economy from which it is still recovering\. The continuing military operation in neighboring Afghanistan and the war in Iraq have created additional uncertainty\. Despite continued regional tensions Pakistan has increased both exports and imports and improved tax collection\. Thus, while Pakistan has shown resilience to regional instability, its progress is vulnerable to further shocks\. 5\.2 Factors generally subject to government control: Weak preparation of the districts for the new LG system meant that social service delivery could not improve as much as would have been possible given the large increase in social expenditures\. Implementing the large increase in social expenditures was slowed partly because of the fact that devolution was thrust upon the districts before they were fully ready\. There were also some important changes in the civil bureaucracy such as the transfer of the Finance Secretary, the main counterpart for the Bank, out of the province and also Secretaries of Education and Health that initially inhibited the reform implementation\. 5\.3 Factors generally subject to implementing agency control: Monitoring performance appears weak as there does not seem to be much set up in the way of quick updates of monitoring indicators of such things as teacher absenteeism, improved professionalism of public institutions, impact of judicial reforms, etc\. Monitoring efforts need to be increased at the District and Provincial levels to ensure continuously improving socio-economic outcomes\. 5\.4 Costs and financing: The total original credit amount was SDR 71\.2 million (US$90 million equivalent)\. The entire credit amount was disbursed in a single tranche upon effectiveness\. The credit was made on standard IDA terms with a term of 35 years, a 10-year grace period, and an IDA service charge of 75 basis points\. The proceeds helped the GoNWFP increase social expenditures and achieve additional fiscal space by helping to restructure provincial debt under more favorable terms\. The borrower was the Islamic Republic of Pakistan which on lent the funds in PAK rupees (also on IDA terms) to the Province of NWFP\. - 15 -  6\. Sustainability 6\.1 Rationale for sustainability rating: Though the sustainability of the NWFP SAC is rated likely, because of the uncertainties created by the election results and implementation of the follow-on program, "uncertain" might be a more accurate rating (but it is not an official rating)\. The NWFP SAC was effective (tranche conditions fulfilled) only three months before the election, and reform progress continued as the elections neared\. The elections brought widespread changes in top level positions\. In addition, it took several months to form the provincial and national governments\. During this period, the reform program slowed considerably\. The Government has since expressed full committment to continued implementation of the SAC-supported Provincial Reform Program in a letter (27 February 2003) from the new Finance Minister\. Nevertheless, there are three areas of high concern to sustainability: the poor record in increasing provincial own-revenues, civil service reforms and establishing clear linkages between the provincial growth strategy and poverty reduction\. These areas will require close supervision from the Bank\. The Government has reaffirmed continuity of reforms in the recent FY04 budget speech\. In the near term the increased social spending (health and education) appears reasonably sustainable\. However, while the FY04 budget allocations for social spending remain higher than before the SAC, their share of total spending is declining and falling further behind the MTBF target path in the SAC\. This is even more accentuated in the case of development spending\. Correspondingly the share of current spending has increased contrary to the MTBF target path\. In the medium to longer term achieving fiscal sustainability would require substantial progress in own revenue collection and containment of non-social current spending\. The issue of sustainability of the program was raised at several points during the project cycle and also by the Board\. It was agreed that the Credit-supported reforms had (and continues to have) wide public support and ownership\. There is a strong public demand to fix the public health and education systems, provide better social services and improve the performance and accountability of public servants\. There is also a need for generating more resources for the NWFP, which is highly indebted and dependent on Federal government resources\. The GoNWFP, which is considered among the best functioning provincial governments in Pakistan, also felt strongly the need to improve financial accountability and management of the government\. Overall the reform program appears to have a reasonable basis for sustainability\. 6\.2 Transition arrangement to regular operations: There have been problems with the capacity of the bureaucracy to implement the program at the LG level, but the GoNWFP is addressing this issue with an extensive capacity building program\. Regarding fiscal/financial sustainability, the province has limited revenue to tap in the medium run\. It is also dependent on transfers from the Federal government\. Expenditures have little fiscal space with establishment and debt servicing costs taking up approximately 70 percent of the budget in recent years (though the situation is improving)\. Hence, efforts at increasing provincial resources, getting agreement on contentious sources of revenues (such as Hydel profits from WAPDA), and containing expenditures and increasing expenditure efficiency will be important for financial sustainability\. In general, the types of reforms supported by the NWFP SAC, such as those promoting local government and governance require years to achieve, but are also expected to be sustained as a new way of doing - 16 -  business\. Transparency and accountability are being ingrained in processes of social service delivery\. These processes will require continued support for at least the two-year remainder of the plan period\. While there is still the potential for some policy divergence from the program down the road, an intensified dialog leading to the next operation would help mitigate this risk\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Satisfactory\. The project was prepared in record time and with limited number of staff\. The PRP was basically homegrown, though there were limited ESW inputs on provincial macroeconomic issues and other sectoral inputs\. It would have been preferable to have more ESW input in the future and some of this work has already started\. Input for future PSD work will be available in the Investment Climate Assessment for Pakistan\. There was little time for consultations with the LG functionaries and civil society on the reform program in the last operation\. The next operation should have more buy-in on reforms from the political representatives at different levels (e\.g\. Provincial, District, sub-District) and also from members of civil society\. 7\.2 Supervision: Satisfactory\. A system of quarterly reporting of selected fiscal expenditures was set up between the NWFP SAC Reform Monitoring Unit and the Islamabad Field Office\. However, the reporting of consolidated spending (provincial and district governments) on health and education (recurrent and development) was deficient\. Dialogue on reform continues regularly with the main GoNWFP counterparts and has been effective in assisting the follow-on program\. Review missions took place in September 2002, January 2003, and May 2003\. The May review mission indicated shortfalls in a number of areas that would require more time for the authorities to implement the remaining program measures\. Supervision was generally thorough, but the Bank could improve its efforts in working with the Government to implement monitoring and evaluation of the reform program's components\. 7\.3 Overall Bank performance: Satisfactory\. The Bank conducted a sustained policy dialog with the Government, which resulted in a meaningful reform program that was consistent with national priorities, and the completion of all conditions\. Borrower 7\.4 Preparation: Satisfactory\. Borrower performance was good and a key feature of the reform program was the significant borrower ownership\. It was initiated by reform champions in the previous government\. The PRP provided the blueprint for the provincial reform effort, which the SAC supported\. There was a significant reliance on consultants for much of the ground work for the policy program, but the directions were homegrown and the Government is relying less on external inputs in the prelude to a potential NWFP SAC2\. 7\.5 Government implementation performance: - 17 -  Satisfactory\. The Government carried out all Board Conditions for a timely tranche release\. During the main supervision mission in September 2002, the ministries and agencies demonstrated continued ownership of their provincial reform program\. The Government went beyond core conditions to implement a broader reform program\. While the implementation performance was slower than expected, indications are that the GoNWFP is taking serious actions in some areas to limit the shortfalls against the program targets, in particular with regard to health, education and development spending for this fiscal year\. It is also clear that the GoNWFP needs to do a better job of monitoring the reform program\. Thus, while there are some shortcomings in the broader program, a satisfactory rating is still warranted\. The World Bank recognizes this satisfactory performance and has endorsed the preparation of the second (out of three planned) SACs for the NWFP\. An auditor reviewed the conversion of the US$ credit into Pak Rupees at the Province level to ensure full value to the province\. 7\.6 Implementing Agency: Satisfactory\. Implementing agencies had to cope both with the newness of the NWFP SAC (in the past, operations had been conducted through the central government) as well as the ongoing process of devolution\. NWFP authorities generally managed to take on the challenge and seize most of the opportunities offered by the NWFP SAC\. Implementation was reasonably good despite the adjustment problems at the local level\. The province has also taken the lead in establishing district government cadres in Education and Health sectors with the hope of improving accountability and performance of the majority of employees\. 7\.7 Overall Borrower performance: Satisfactory\. The Borrower showed initiative and ownership of the broad reform program, implemented all core conditions under the SAC, and though reform momentum has not fully recovered since the elections, the follow-on program has been substantial, which qualifies for a satisfactory performance overall\. 8\. Lessons Learned It is better to proceed with a reform program credit even if there are the risks of first-time lending to a sub-national borrower, new elections and other risks, if there is borrower ownership\. At preparation there was considerable uncertainty, particularly on the political front because of the upcoming October elections, whether to proceed with the NWFP SAC\. In retrospect, it was the correct call to proceed because it has led to the buy-in on reforms by the new government in NWFP (as well as in Sindh)\. There were fears that the devolution program would be diluted by the new government (or Provincial or National Assemblies), but the Bank's support to provinces under the SAC to strengthen decentralization and devolution has helped reformers in the provinces\. Proceeding with the SAC meant that there was an established reform program that could guide a new government and limit errant policy decisions\. In addition, if a reform program has had time to put tangible improvements for the people in the pipeline, as in NWFP's case, then the new government has a strong incentive to continue the reform program\. An accompanying TA project would enhance the effectiveness of subsequent SACs\. The NWFP reform program is comprehensive and complex and there are a number of areas where sustained expertise and capacity building would be of great benefit\. The slow implementation in some areas shows the need to strengthen implementation capacity, among other things through technical assistance\. For example, NWFP - 18 -  authorities will need assistance in developing implementation capacity at the District level in order to ensure improved social service delivery\. M&E is another area that would benefit from TA\. It would be preferable if the TA were supported by grant funding\. The limited progress by the authorities in undertaking analytical studies (on the province's economic growth potential and its tax potential, among other things) shows that the Bank could usefully complement its assistance with ESW in related areas\. The ramifications of judicial reforms and devolution must be reasonably well understood before their implementation\. The Bank and other donors noted the constitutional requirement for a judiciary separate from the executive branch, but did not fully take into account the vacuum created by abolishing the Magistrate (as part of the program of Devolution, not specifically the SAC) as an arbiter of average citizen's disputes or as a mediator between the public and the police\. Violence has erupted between the police and the public in NWFP with considerable loss of life\. Family courts and minor civil courts should be established expeditiously to compensate for the loss of the Magistrate's judicial role\. 9\. Partner Comments (a) Borrower/implementing agency: - 19 -  - 20 -  - 21 -  (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10\. Additional Information NA - 22 -  Annex 1\. Key Performance Indicators/Log Frame Matrix A\. Outcome Indicators Outcome Indicator/Matrix Core Conditions and Triggers Actual/Latest Estimate for follow-up on program (Core Conditions in Bold) 1\. Strengthening Accountability and Professionalism of State Institutions Government restructuring to devolve Uphold the effective ban on new recruitment; All completed and contract policies continue to be staff to districts and rationalize staffing, restructuring of 26 Departments/attached implemented except for judiciary, police and prison consistent with decentralization agenda, departments and abolition of more than 6000 workers, which are exempted\. Recruitment ban not to improve efficiency and effectiveness of positions; notification of the Surplus Pool and applicable to teachers, doctors and paramedics\. provincial government\. Facility Specific contract Policies\. Promoting merit and professionalism of Establish full authority of the NWFP Public NWFP PSC has been established and granted the civil service, and improve Human Service Commission (PSC) for recruitment of administrative autonomy\. However, the Resource Management\. officers; increase the PSC's administrative preponderance of transfers and postings including autonomy; introduce a transparent and those influenced by the political leadership may merit-based promotion system; approve detract from steady progress towards a transparent comprehensive capacity building program\. and merit-based system of promotion and postings\. Reduce recruitment time to four months for Recruitment time; no system for tracking this data contractual and tenured staff; pilot contract-based has been set up and hence no data is available\. employment; implement capacity building program\. Capacity building under implementation in particular for district officers in planning and budgeting and health managers\. Contract based employment continues\. Completed with family and small claims courts to Judiciary separated from executive and be established in follow-on program\. Judiciary made independent provided financial and recruitment autonomy\. Monitoring strengthened to improve public Implement and publish Multiple Indicator Cluster MICS: Done\. service performance and responsiveness to Survey (MICS); full funding of educational and public needs\. health management information systems; approve HMIS was not provided any resources in the program for third party monitoring and user surveys\. recurrent budget as agreed and at present it is only being supported by the Women Health Project\. HMIS reporting rate from health facilities has decreased from 85% in 2001 to 77% in 2002, reportedly due to inadequate funding for reporting instruments\. Very little progress on third part monitoring and user surveys; one year delayed\. 2\. Education and Health Sector Reforms Education reforms to expand access to Approve program for provision of water and Program approved in December 2002 and quality education services, improve sanitation facilities to all girl's schools\. construction underway and scheduled for enrollments by 15% in 3 years, reduce completion before July 2003\. gender disparities, increase adult literacy, and reduce/eliminate absenteeism A comprehensive exercise was carried out by the education department with a plan to implement the recommendations of the staff facility rationalization exercise\. Recommendations were implemented but there was resistance from the teachers' associations and therefore, results of the exercise have not been fully implemented\. - 23 -  Outcome Indicator/Matrix Core Conditions and Triggers for Actual/Latest Estimate follow-on program (Core Conditions in Bold) Complete provision of sanitation/water facilities to The total development expenditures allocated to girl's schools; achieve enrollment and dropout school education are lagging at 24 percent of reduction targets; complete expanded recruitment and allocation because of delay in upgrading of basic redeployment of teachers; FY03 expenditures (total facilities\. Non-salary expenditures are 47 percent of and IM&R) as per MTBF program\. allocation (through April 2003) and salary expenditures are 67 percent\. Introduce teacher absenteeism monitoring No well-functioning monitoring system in place\. system\. Apparently monitoring committees have been established, but no reports have been issued\. Not done\. A notification to establish separate Complete teacher/management caderization\. cadres would be issued by December 2003\. Done, but actual expenditures lagging (see above)\. Increase education allocations within MTBF\. Health reforms to strengthen provincial Establish a management cadre; grant There has been no progress in assignment of staff and district management capacity, increased managerial and financial authority to the management cadre\. The Health Department improve the quality and coverage of to tertiary hospitals; initiate rationalization is still working on the modalities\. The final plan is communicable disease control and of district health services; approve program likely to be implemented by end-August 2003\. maternal and child health intervention to increase female nursing staff and LHWs; programs\. approve enhanced immunization program; All other actions have been completed\. increase health allocations within MTBF\. 3\. Improving Fiscal Sustainability and Restoring Financial Accountability Improved development effectiveness of Introduce agriculture income tax; approval Follow on program-on track except AIT study, expenditures and fiscal discipline; of AIT administration modernization study; which is delayed\. strengthen provincial revenue base; rationalize total number of taxes; restructure protect key social and priority and enlarge urban immovable property tax development expenditures in the budget; from 18 to 27 rating areas, and revise reduce untargeted subsidy; improve the valuation formula\. maintenance of public assets and infrastructure\. Adopt FY03-05 MTBF; reduce wheat subsidy; Done release funds to districts on formula basis in FY02; establish Road Maintenance Fund and the General Provident and Pension Funds\. Strengthen financial management Initiate Financial Management Reform Follow-on program-on track except capacity and accountability; increase the Program: publicly-available monthly reconciliation and reporting of expenditure data transparency and efficiency of public reconciliation of revenue and expenditure by districts\. procurement\. accounts; establishment of Provincial Public Accounts Committee (PAC); upgrade DAO positions for major districts; appoint provincial financial controller; new Procurement Ordinance approved; adoption by Cabinet of Financial Management Reform Action Plan\. 4\. Promoting Growth An improved business environment to PSD enabling reforms initiated: establish Done increase investment, private sector Deregulation Committee; close three business activity; accelerate rural growth\. agricultural and commercial autonomous bodies; Privatization decision of Bank of Khyber approved\. - 24 -  B\. Output Indicators Output Indicator/Matrix Core Conditions and Triggers Actual/Latest Estimate (Core Conditions in Bold) 1\. Strengthening Accountability and Professionalism of State Institutions Government restructuring to devolve staff Annual review of the restructuring and staff No review has been undertaken since there has to districts and rationalize staffing, rationalization's; notify and implement revised Rules been no further restructuring and rationalization\. consistent with decentralization agenda, to of Business\. improve efficiency and effectiveness of Rules of Business were notified on October 31, provincial government\. 2001 (i\.e\., before the credit approval in July 2002)\. Promoting merit and professionalism of Computerize HR database for all provincial/district Major delays; TORs have now been issued\. the civil service, and improve Human employees\. Resource Management\. Monitoring strengthened to improve public M&E arrangements fully functional\. M&E not fully functional\. service performance and responsiveness to public needs\. Publicly disseminate third party survey report and Third party validation surveys for health and agency annual reports; EMIS and HMIS made fully education delayed by close to one year\. functional\. 2\. Education and Health Sector Reforms Education reforms to expand access to Approve staff rationalization program, establish Done and teacher redeployment implemented\. quality education services, improve education sector reform unit; approve program to enrollments by 15% in 3 years, reduce recruit 2000 primary teachers\. gender disparities, increase adult literacy, Being done on priority basis\. and reduce/eliminate absenteeism\. Complete provision of sanitation/water facilities to girl's schools\. Progress, but somewhat slower than the Achieve enrollment and dropout reduction targets\. medium-term target path\. Complete expanded recruitment and redeployment of Ongoing\. teachers\. Implement absenteeism monitoring system\. No well-functioning monitoring system has been established Complete teach/management caderization\. Not done\. A notification to establish separate cadres to be issued by December 2003\. FY03 expenditures (total and IM&R) as per MTBF Done\. program\. Health reforms to strengthen provincial Deploy 1,800 new Lady Health Workers and 200 All done, with plan to recruit an additional and district management capacity, female nurses; pilot facility-specific contract 3,000 LHWs by end FY03/beginning FY04\. improve the quality and coverage of employment\. communicable disease control and Draft health sector reform plan envisaged ready maternal and child health intervention Approve long-term health sector reform plan\. by end-June 2003\. programs\. - 25 -  Output Indicator/Matrix Core Conditions and Triggers Actual/Latest Estimate (Core Conditions in Bold) 3\. Improving Fiscal Sustainability and Restoring Financial Accountability Improved development effectiveness of Program to modernize AIT administration initiated; Reports considerably delayed and not yet expenditures and fiscal discipline; tax rates/policy revised in light of tax potential study completed\. Hence the 2003/04 fiscal budget did strengthen provincial revenue base; protect to be undertaken in FY03\. not incorporate the expected policy input\. AIT key social and priority development study to be completed by July 2003\. Tax Potential expenditures in the budget; reduce Implementation of the FY03 budget consistent with and Growth Potential studies commissioned with untargeted subsidy; improve the targets to enhance social expenditure, boost own final reports expected in July 2003\. maintenance of public assets and revenues; limit wheat procurement for strategic stocks infrastructure\. only; full functioning of the Road Fund, Pension and On track in some areas, but shortfalls on own Provident Funds; Provincial Finance Awards revenue collection and ADP spending on health announced\. and education\. Wheat procurement limited to buffer stock only\. Road, Pension and Provident Funds have been opened and deposits made\. PFC Award on interim basis in FY03 and FY04\. Strengthen financial management capacity FY03 benchmarks of the Financial management Procurement Ordinance promulgated in 2002\. and accountability; increase the reform action plan met; new Procurement Regulations Formal notification of new procurement rules transparency and efficiency of public notified; and standardized procurement and bidding expected by July 2003\. Provincial Public Accounts procurement\. system as per the Procurement Ordinance\. Committee has been established and will operate with public access\. The newly formed PAC plans to hold its first meeting in June 2003\. DAOs have been upgraded to grade 18 in the major districts\. 4\. Promoting Growth An improved business environment to PSD reforms continued, including: PSD Strategy Satisfactory reduction in the number of inspection increase investment, private sector announced; satisfactory implementation of of industries (deregulation program)\. The new business activity; accelerate rural growth\. Deregulation program; GoNWFP shareholding in GoNWFP has reservations to reducing its BOK below 50%; and rural/agriculture growth shareholding in BOK below 50%\. Comprehensive strategy developed\. PSD strategy and rural/agriculture growth strategy have not yet been developed and announced\. - 26 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Budget Support 90\.00 90\.00 100 Total Baseline Cost 90\.00 90\.00 Total Project Costs 90\.00 90\.00 Total Financing Required 90\.00 90\.00 or SDR71\.2 million Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate IDA Govt\. CoF\. Bank Govt\. CoF\. IDA Govt\. CoF\. Budget Support 90\.00 90\.00 100\.0 or SDR71\.2 million - 27 -  Annex 3\. Economic Costs and Benefits Not applicable\. - 28 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation January 2002 3 Economists 1 Legal 1 Finance 1 Public Sector Development 1 Health 1 Education Appraisal/Negotiation May 2002 - 4 Economists S S June 2002 1 Legal 2 Finance 1 Public Sector Development 1 Education 1 Health Supervision September 2002 4 Economists S S January 2003 2 Finance May 2003 1 Public Sector Development 1 Education 1 Health ICR December 2002 - 1 Economist S S June 2003 (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 25\.51 129\.1 Appraisal/Negotiation (included above) (included above) Supervision ICR 15\.24 42\.7 Total 40\.75 171\.8 * Includes labor, travel and other costs\. - 29 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 30 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 31 -  Annex 7\. List of Supporting Documents Program Document For a Proposed Credit in the Amount of SDR 71\.2 million (US$90 million equivalent) to the Islamic Republic of Pakistan for a Structural Adjustment Credit for the government of NWFP, May 31, 2002\. Development Credit Agreement July 10, 2002\. Memorandum of the President on a Country Assistance Strategy for the Islamic Republic of Pakistan, June 24, 2002\. Project Agreement between the International Development Association and the North West Frontier Province, July 2002\. Project Status Reports from supervision missions (Project File) - 32 -  - 33 -

REVIEW

P001322

 ICRR 10267 Report Number : ICRR10267 ICR Review Operations Evaluation Department 1\. Project Data : OEDID : OEDID: C2198 Project ID : P001322 Project Name : Forestry Development Project Country : Kenya Sector : Forestry L/C Number : C2198 Partners involved : Prepared by : Nalini Kumar, OEDST Reviewed by : John Johnson, OEDCR Group Manager : Gregory Ingram, OEDST Date Posted : 05/03/1999 2\. Project Objectives, Financing, Costs and Components : Cr\. 2198, the fourth Bank supported forestry project in Kenya was originally designed to be a nationwide, sub-sector wide effort that would foster donor coordination and promote balanced development of the forestry sector\. Project components for forestry extension, industrial plantation development, indigenous forest conservation, institutional strengthening, research and education --were to be (parallel) financed by different donors (SDC, DFID, EEC, FDA, IDA)\. Total project cost was estimated to be US $ 83\.83 million of which IDA was to finance only US $ 19\.9 million (24 percent of total project cost)\. However, delay in meeting the conditions of project effectiveness resulted in other donors either withdrawing or proceeding independently with their components\. The Bank went ahead with only the two original IDA financed components ie\. industrial plantation development and strengthening the Forest Department's (FD) central functions\. Actual project cost was US $ 21\.19 million of which IDA's share was US $ 17\.25 million and Government of Kenya financed US $ 3\.94 million\. The balance of the IDA credit i\.e\. US $ 2\.6 million was canceled\. 3\. Achievement of Relevant Objectives : The project as implemented, after the withdrawal of the other donors, focused narrowly on the two IDA financed activities (industrial plantation development and strengthening the FD's central functions) rather than on sub sector wide concerns as was the original intention\. Even here, project components were not geared towards fulfilling the project objectives\. They focused too narrowly on specific activities geared towards the FD\. The primary stakeholder in industrial plantation development, the timber industry, was left out\. 4\. Significant Achievements : Despite these shortcomings, some physical targets (those related to replanting of clear felled plantations, civil works ) were met and the project led to significant improvement in FD’s inventory and management capacity\. The project also resulted in improvement of the policy framework for forestry\. A new Forest Policy was introduced in 1993 and reviewed by the Cabinet in 1995\. 5\. Significant Shortcomings : The much needed institutional reform did not come about\. As a result even the improved FD management capacity could not be put to use\. Physical targets with respect to road rehabilitation, reducing backlog of areas treated for silvi-cultural treatment, establishing newly planted areas, were also not met\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory Institutional Dev \.: Partial Modest same  Sustainability : Unlikely Unlikely Bank Performance : Satisfactory Unsatisfactory The project, unlike the earlier three forestry projects in the country was meant to be sub sector wide to promote the sector’s balanced development and help coordinate the activities of other donors in the sector\. The dropping out of the other donors and their project components reduced the basic rationale for Bank financing of the project (SAR 2\.28)\. The Bank at that very stage should have reconsidered the logic of going ahead with the project in its reduced form\. In addition, lessons from past projects had underlined the crucial importance of involving the private sector to improve efficiency and financial viability of plantations\. The Bank agreement to go ahead with the project despite the fact that the Ministry reversed its stance on private sector involvement resulted in flawed project design and was a major failing\. The Ministry's action signaled lack of government commitment to crucial institutional reform and the Bank should have been more firm\. The ICR itself acknowledges that "the project’s most significant failings were a result of a failure by Government and the Bank to address these systemic concerns during appraisal and negotiations"\.â€? Borrower Perf \.: Deficient Unsatisfactory same Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : It is important that in the urgency to lend, issues identified as crucial for the sector and the country do not get diluted\. The Bank should be ready to terminate a project even before its implementation if it is evident that crucial borrower commitment is missing\. 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : The ICR is satisfactory and gives a complete and clear account of the project \.

REVIEW

P001146

Document of The World Bank FOR OFFICIAL USE ONLY Report No\.15032 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE HEALTH AND DEMOGRAPHIC PROJECT (LOAN 2619-IVC) JUNE 28, 1995 Population and Human Resources Operations Division West Central Africa Department Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  Currency Equivalents Currency Unit = CFA franc (CFAF) US$1\.00 = CFAF 490 (1988) = CFAF 290 (1993) = CFAF 515 (February 1995) Weights and Measures Fiscal Year Metric System January 1 - December 31 Abbreviations and Acronyms BAD Banqque africaine de developpement (African Development Bank) BOG Bureau d'organisation et gestion (Management and Organization Bureau) CAA Caisse Autonome d'Amortissement DAF Direction des affaires financi&res (Directorate for Financial Affairs) DCGTx Direction du contr6le des grands travatur (Directorate for Control of Major Works) DEMM Direction des equipements, des materiauLv et de ,naintenatice (Directorate for Equipment, Material and Maintenance) DIP Direction des investissements publiques (Directorate for Public Investments) DRH Direction des ressources hutnaines (Directorate for Health Manpower) ECA Economic Commission for Africa (Commission economique pour l'Afrique) FAC Fonds d'aide et de cooperation (French Bilateral Aid Agency) FED Fonds europeen de developpement (European Development Fund (European Union)) FP Family Planning (Planning familial) INFAS Institut national deformation des agents de sante (National Institute of Training for Health Personnel) INS Instituit national des statistiques (National Institute of Statistics) KfW Kreditanstalt fur Wiederauflau (Germany) MCH Maternal and Child Health MCU Ministere de la construction et de l 'urbanisme (Ministry of Construction and Urban Development) MEF Ministere de l'&ononie et desfinances (Ministry of Economy and Finance) MEFP Ministere de '&economie, des finances et du plani (Ministry of Economy\. Finance and Plan) MIS Management Information System MSPAS Ministere de la sante publique et des affaires sociales (Ministry of Public Health and Social Affairs) MDP Municipal Development Project PCU Project Coordination Unit UNFPA United Nations Fund for Population Activities population) USAID United States Agency for International Development  FOR OFFICIAL USE ONLY TABLE OF CONTENTS PREFACE EVALUATION SUMMARY \. i PART I\. PROJECT IMPLEMENTATION ASSESSMENT \. 1 I\. INTRODUCTION \. 1 A\. Macroeconomic Setting \. 1 B\. Bank's Role in the Sector \. 1 II\. PROJECT OBJECTIVES AND DESCRIPTION \. 2 A\. Project Objectives \. 2 B\. Project Components \. 2 C\. Evaluation of Project Objectives \. 3 III\. IMPLEMENTATION EXPERIENCE AND RESULTS \. 5 A\. Assessment of Project's Success and Sustainability \. \. 5 B\. Summary of Financing Arrangements and Costs \. \. 5 C\. Analysis of Key Factors Affecting Implementation \. \. 6 D\. Assessment of the Bank's and Borrower's Performance \. \. 8 E\. Assessment of Project's Outcome \. 10 IV\. FUTURE OPERATIONS AND KEY LESSONS LEARNED \. \. 11 A\. Important Findings of Project Implementation Experience \. 11 B\. Future Operation and Sustainability \. 12 C\. Lessons for Future Projects in the Sector in C6te d'Ivoire \. \. 12 PART II\. STATISTICAL ANNEXES \. 14 APPENDIXES A\. MISSION'S AIDE-MEMOIRE B\. GOVERNMENT CONTRIBUTION TO THE ICR C\. MAP IBRD 18942R1 This document has a restricted distribution and may be used by recipients only in the performance of their Lofficial duties\. Its contents may not otherwise be disclosed wiLhout World Bank authorization\.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE HEALTH AND DEMOGRAPHIC PROJECT (Loan 2619-IVC) PREFACE This is the Implementation Completion Report (ICR) for the Health and Demographic Project in the Republic of C6te d'Ivoire, for which Loan 2619-IVC in the amount of US$22\.2 million equivalent was approved on September 19, 1985, and made effective on May 27, 1986\. The loan was closed on June 30, 1994, following two extensions beyond the original closing date of June 30, 1992\. It was fully disbursed and the last disbursement took place on November 29, 1994\. Cofinancing for the project was provided by the United States Agency for International Development (USAID)/Bureau of the Census\. The ICR was prepared by Ethna Johnson (PHN) and reviewed by Ian Porter, Division Chief (AF4PH) and S\. Singh, on behalf of the Project Advisor (AF4DR)\. Preparation of this ICR was begun during the Bank's final supervision/completion mission from October 24 to November 5, 1994\. It is based on material in the project file\. The Government contributed to preparation of the ICR by providing views reflected in the mission's Aide-Memoire, by preparing its own evaluation of project preparation and execution and by commenting on the draft ICR\. The Government submitted its input to the ICR in a final report dated December 27, 1994, which can be found in the appendixes to the ICR\.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE HEALTH AND DEMOGRAPHIC PROJECT (Loan 2619-IVC) EVALUATION SUMMARY 1\. Bank's Role in the Country and Sector\. The Health and Demographic Project was the first IBRD-financed health project in C6te d'Ivoire (para\. 1\.5)\. It was prepared and implemented during a period of severe recession in the country\. Economic and financial difficulties commencing in the early 1980s and extending into 1993 coupled with high population growth (4\.1%), resulted in a fall in GNP per capita levels from more than US$1000 in the early 1980s to US$630 in 1993, below the IDA eligibility cut-off of US$740 (para 1\.1)\. The IMF and the World Bank responded with a series of Standby Arrangements and a number of SALs/SECALs respectively, designed, inter alia, to reduce the fiscal deficit, pay off domestic and external arrears and address structural reforms in the sectors (para\. 1\.2)\. The expansion that occurred in the 1970s and early 1980s in the health sector could not be sustained and health indicators lagged behind comparable lower middle-income Sub- Saharan African countries\. Structural imbalances due to concentration on urban infrastructure and curative care left the rural population with limited access to health services (para\. 1\.3)\. The Health and Demographic Project, conceived in the framework of the 1981- 86 Development Plan and a national Health Conference held in 1984, supported sector objectives, and was targeted at expanding output and improving the quality of paramedical personnel, strengthening management capacity, and improving cost containment and efficiency measures\. The project was also unusual in that it financed a very large separately- managed demographic component (para\. 1\.4)\. Project Objectives, Components, and Achievements 2\. Project objectives and corresponding components included: (a) Expansion and improvement of nurse training and manpower planning by: (i) upgrading, constructing and equipping of nursing schools; (ii) fellowships for teaching staff; (iii) review of the nursing curriculum; (iv) field training for students; and (v) capacity improvement in the Directorate of Health Manpower of the Ministry of Public Health and Social Affairs (MSPAS) (para\. 2\.2(a)); (b) Improved management capacity and efficiency of health services through: (i) development of a Management and Organization Bureau (BOG); (ii) capacity building of the central directorates including development of a management information system (MIS); (iii) training and cost containment measures at hospitals; and (iv) training in management and administration and upgrading health centers (para\. 2\.2(b)); and (c) Provision of reliable demographic data for macroeconomic and sector planning through: (i) a Population Census; (ii) a migration study; and (iii) capacity building of the National Institute of Statistics (INS) (para\. 2\.2(c))\.  ii 3\. Project objectives were clearly defined and consistent with sector needs\. However, in the absence of a detailed sector operational plan, and strong, consistent Government commitment, the objectives, particularly with respect to efficiency measures and service delivery performance, were ambitious\. In addition, these components were dispersed and resources allocated to them were relatively modest (para 2\.3)\. 4\. Loan Covenants and Special Agreements\. Agreements with the Borrower (Republic of Cote D'Ivoire) were reached on the following issues, namely, that the Borrower shall (a) adequately staff the Nursing Schools and ensure that the said Schools are utilized to their full capacity; (b) undertake a study of the functions and long-term role of its auxiliary health workers; (c) undertake an evaluation of the effectiveness of nurse training and management programs of mother and child health care in the Project Areas, and shall furnish to the Bank for its review and comments the results of said evaluations no later than December 31, 1987 for Treichville and December 31, 1989 for Bouake; (d) take all necessary action to establish a Management and Organization Bureau within MOPHP and shall cause it to be assisted by competent staff in sufficient number under the supervision of experienced and qualified management; (e) plan for the establishment of the basic management information system (f) furnish to the Bank for its review and comments the results of the study of (i) the Central Pharmacy's procurement practices and stock management procedures of the Project and the proposals for remedying any deficiencies in said practices and procedures; (ii) the alternative health cost recovery mechanisms; and (iii) the action plan of the Borrower for the establishment of a health cost recovery system; (g) take all measures necessary to include the position of nurse specialists in health service management in an appropriate category of the administrative list of the Borrower's health personnel; (h) furnish to the Bank (i) no later than January 31, 1986, for approval, a master plan of census and survey activities to be undertaken under the Project; (ii) no later than October 31, 1987, the preliminary official results of the census, and the final results of the census and its attendant studies as soon as available; and (iii) quarterly progress reports on the execution of the Project; and shall cause the said master plan to be updated no later than December 31 of each year during the execution of the Project; (i) take all necessary measures to establish within the Directorate of Statistics of its Ministry of Economy and Finance a Census Bureau and shall cause it to be assisted by competent staff in sufficient number, and after the completion of the said census, continue to provide, promptly as needed, staff and budgeting resources sufficient for the utilization of census and survey records and updating annually the files of localities; (j) provide in its national budgets for the fiscal year beginning in January 1991 and for any fiscal year following thereafter amounts sufficient to cover the full costs of continuing, after the completion of the Project, all the activities and programs provided for in the Project\. Further, the Borrower shall maintain or cause to be maintained separate records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof\. (b) The Borrower shall: (i) have the accounts referred to in (a) including the Special Accounts and the Project Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by the said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other  iii information concerning said accounts and the audit thereof and said records as the Bank shall from time to time reasonably request\. (c) For all expenditures with respect to which withdrawals are requested from the Loan Account on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with (a) separate records and accounts reflecting such expenditures; retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank's representatives to examine such records; and (iv) ensure that such separate accounts are included in the annual audit referred to in (b) and that the report thereof contains, in respect of such separate accounts, a separate opinion by the said auditors as to whether the proceeds of the Loan withdrawn in respect of such expenditures have been used of the purpose for which they were provided\. 5\. In addition to the above agreements, the following events are specified as additional conditions to the effectiveness of the Loan Agreement: (a) the opening of the Project Account and the payment of the initial amount; (b) evidence, satisfactory to the Bank, that the Management and Organization Bureau has been established in accordance with the Agreement; and (c) evidence, satisfactory to the Bank, that the Census Bureau has been established in accordance with the Agreement\. 6\. The project was reasonably successful in achieving most of its objectives\. Implementation achievements were substantial in a number of areas and serious delays were experienced in others\. Although external factors influenced implementation, sector and executing agency issues had the most significant influence\. Physical objectives for nursing schools were met\. Nurse training and pedagogical capacity were substantially improved but field training was inadequate\. There were substantial delays in MIS development, while other management components were quite successful\. The demographic component was the most successful in reaching objectives\. Data is now integrated into planning work, capacity is substantially strengthened, and the Government has adopted a population policy and family planning program (para\. 2\.4)\. Implementation Experience and Results 7\. Project Timetable\. Project effectiveness was only two months behind schedule\. Loan closing, however, was extended by two years to June 30, 1994, and substantial slippages occurred in a number of project components (para\. 3\.1)\. 8\. Financing Arrangements and Summary of Costs\. Financing included an IBRD Loan of US$22\.2 million, a Government contribution of US$7\.3 million, and US$250,000 by the USAID/Bureau of the Census\. UNFPA provided parallel financing of US$828,000 for the demographic component\. Project costs were consistent with appraisal estimates when expressed in CFAF (-2%)\. Dramatic exchange rate fluctuations resulted in the need for supplementary support (US$7\.4 million) by the Municipal Development Project, an increase of 33\.6 percent\. 9\. Factors Affecting Implementation\. Due to certain design features and1 non- familiarity with Bank procedures, implementation was slower than expected\. In addition, certain external factors delayed implementation including: (a) the need to obtain  iv supplementary financing due to the fall in the value of the US dollar (from CFA franc 490 at appraisal to CFA franc 290 in 1993); (b) devaluation of the CFA franc in January 1994 which necessitated amending a number of ongoing contracts; and (c) counterpart financing difficulties\. Sector and executing agency factors had the most significant impact and included: (a) absence of an agreed strategy and sector operational plan; (b) coordination and personnel weaknesses and limited integration of the BOG with other departments of MSPAS; (c) prolonged procurement and lengthy contract approval and payment procedures; and (d) delays in replenishment of the special account (para\. 3\.3)\. 10\. Sustainability\. It is assessed that current Governments actions, if continued, would make the project sustainable\. The Government's current expenditures for health are expected to increase for priority needs based on reforms introduced in support of the economic recovery program\. It is anticipated that resources will be adequate for operation and maintenance of project components\. Several components are well integrated into the Government's program (demographic work, nursing training), but other priorities such as the MIS, and practical student training, need to be reinforced\. A proposed follow-up Bank- financed health project will address a number of sectoral problems including institutional development and budget priorities, that sustain project outcomes (para\. 3\.4)\. 11\. Assessment of the Borrower's and Bank's Performance\. Government and Bank collaboration was good on project design and implementation\. Project design was ambitious, components quite diverse and not well integrated and the project timetable warranted greater attention to up-front measures\. Alternative design features (project management and review and use of training facilities) could have improved performance considerably\. Supervision was inadequate on both sides, with limited Government staffing and supervision and limited field supervision and inadequate skill-mix of Bank missions for such a diverse project\. Although delays occurred, compliance with loan covenants was reasonably satisfactory with the exception of Audits (paras\. 3\.5-3\.12)\. 12\. Assessment of the Project's Outcome\. The project was successful in reaching most of its major objectives despite some design and implementation weaknesses, complex management arrangements and intervening external factors\. Although some shortcomings are evident, there is substantial integration of project components into the Government's program\. While the capacity to provide recurrent costs for project operation remains fragile, IDA's expected involvement under the proposed follow-up project will help to build on earlier achievements\. In addition, it will support efforts to build a stronger analytical and management base as well as improve the physical capacity of the sector\. Overall project outcome is considered satisfactory (para\. 4\.1)\. Future Operation and Sustainability 13\. With respect to future operation of the project, issues to be resolved include: (a) setting criteria for entry to nursing schools and determining private and public sector training needs; (b) continued work to revise the curriculum and practical training for students; (c) adequate resource allocation to ensure proper operation and maintenance of facilities; (d) expansion of the work on cost containment and internal efficiency of health services; (e) further development and implementation of the nationwide MIS system, ensuring that it is  v fully decentralized; and (f) continued support through the MEFP for demographic work and its full utilization in the planning process\. Data already collected needs to be fully exploited and results disseminated\. Findings and Lessons Learned 14\. Design work should closely assess physical needs, project management arrangements and include up-front conditionalities and preparation work on project staffing, procurement, coordination, accounting systems, and operating procedures\. Systematic and regular project review and appropriate resource allocation and skill-mix of Bank missions should be assessed to ensure adequate supervision\. Agreement should be reached on sector priorities and performance indicators and resource levels at project appraisal\. The Bank may want to consider a shorter project time-frame with phased implementation, and dovetailing of subsequent projects to avoid loss of staff and financing gaps\. Finally, efforts to consolidate achievements of the first project and ensure that recurrent cost requirements are met is a priority (paras\. 4\.2-4\.3)\.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE HEALTH AND DEMOGRAPHIC PROJECT (Loan 2619-IVC) PART I\. PROJECT IMPLEMENTATION ASSESSMENT I\. INTRODUCTION A\.Macroeconomic Setting 1\.1 The Republic of C6te d'Ivoire had an extended period of rapid economic development and balance of payments equilibrium in the 1960s and 1970s based on favorable prices for the country's two main export crops, coffee and cocoa\. Due to poor economic and financial management and an end to the cocoa boom in 1980, the country experienced a prolonged and severe economic and financial crisis\. In addition, natural population growth (3\.1 percent) and substantial inflows of migrant workers (1 percent), put increased pressures on the economy\. Per capita GNP fell from over US$1,000 in the early 1980s to US$630 in 1993\. 1\.2 Faced with a worsening economic and financial situation, the Government sought support from the IMF and the World Bank\. IMF support was obtained through an Extended Agreement in February 1981, which was followed by five Stand-By Arrangements in the 1980s and another in 1991\. World Bank assistance included three SALs during 1981-1986 and six Sector Adjustment Loans between 1989 and 1991\. The IMF and World Bank support was designed, inter alia, to reduce the fiscal deficit, pay off domestic and external arrears, and address structural reforms in the sectors\. B\. Bank's Role in the Sector 1\.3 In line with the expansion of the economy, C6te d'Ivoire invested considerable resources in the health sector in the 1970s and early 1980s but performance was both unsatisfactory and uneven\. The heavy concentration on developing urban hospitals and curative care left the rural population with limited or no access to health services\. Health indicators lagged behind comparable lower middle-income Sub-Saharan African countries\. The economic downturn meant that investment levels could not be maintained and recurrent budgets were severely affected\. 1\.4 The Government's Fourth Development Plan (1981-1985), and the national Health Conference held in 1984, set forth a number of sector objectives including: (i) improved access to and quality of health services in rural areas; (ii) improved quality and quantity of health manpower; and (iii) improved management and cost containment/efficiency measures\.  2 1\.5 The Health and Demographic Project, the first IBRD-financed loan in the sector in C6te d'Ivoire, was limited in scope but supported these objectives\. In addition, the demographic component of the project was consistent with the Govermnent's and the Bank's objective to improve the knowledge base about population growth and migration patterns and their implications for socio-economic development\. This analysis would also provide the framework for development of a coherent population policy, which the country has now adopted\. The project was unusual in that it combined a health component with a large separately-managed demographic component\. II\. PROJECT OBJECTIVES AND DESCRIPTION A\. Project Objectives 2\.1 The three main objectives of the project were to: (a) Expand and improve nursing training to meet current shortages, make training more responsive to the Government's priority objectives, and to develop long- term manpower planning; (b) Improve the management capacity and efficiency of health services; and (c) Provide reliable demographic information for use in macroeconomic and sector planning\. B\. Project Components 2\.2 The project consisted of three major components: Part A\. Health Manpower Development\. (a) Upgrade and equip Treichville Nursing School in Abidjan and establish and equip two new nursing schools in Bouake and Korhogo; (b) Finance 42 fellowships to ensure availability of key teaching staff for the new schools; (c) Implement, monitor and evaluate a new curriculum for the nursing schools in order to improve the quality of training; (d) Provide practical experience for nursing students through implementation of a field training program in three geographic areas linked to the schools; and (e) Strengthen management and planning capacity of the Directorate of Health Manpower (DRH) in the MSPAS\.  3 Part B\. Strengthen Management Capacity of MSPAS (a) Establish a Management and Organization Bureau (BOG) within the central health ministry, develop a management information system (MIS) including epidemiological monitoring, and improve planning and operations of selected directorates (Maintenance and Pharmaceuticals); (b) Provide management training and related technical assistance to upgrade management skills of hospital staff; develop cost containment and internal efficiency mechanisms; study and develop cost recovery mechanisms for two national hospitals and 5 regional hospitals; and strengthen selected hospital services; and (c) Provide in-service training, including in management and administration, for all levels of health staff in 70 peripheral health centers; reinforce this training through implementation of a program of regular supervision; evaluate primary care activities including maternal and child health (MCH) and family planning (FP) and immunization; and upgrade and equip about 70 health centers and dispensaries\. Part C\. Population Data Development (a) Implement a program of demographic data collection and analysis by strengthening the National Institute of Statistics (INS), including a census of localities, a general population census in 1987, a post-enumeration survey and a survey of migration as well as publication of results; and (b) Integrate the results into planning activities of all relevant ministries through seminars and follow-up studies, and dissemination of results to all levels of Government, community leaders and NGOs\. The first two components (Part A and B) were implemented by the MSPAS and the third component (Part C) was implemented initially by the Ministry for Economy and Finance (MEF) and later transferred into the Ministry of Economy, Finance and Plan (MEFP)\. C\. Evaluation of Project Objectives 2\.3 Project objectives were clearly defined and consistent with the country strategy and sector needs\. However, in the absence of a detailed sector strategy, operational plan and strong and consistent government commitment, the objectives particularly with respect to cost containment and efficiency measures were ambitious and resources allocated to these components were relatively modest\.  4 2\.4 Overall, the project was partially successful in achieving its objectives\. Substantial developments occurred in a number of areas and serious delays in others\. Although external factors (para\. 3\.3) did influence project implementation, sector and executing agency issues had the most significant influence on project execution and objectives\. (a) Expansion and Improvemnent itn Nurse Training and Improved Manpower Planning: The nurse training and pedagogical capacity at the three nursing schools was substantially improved and met objectives\. Due to construction delays, student intake initially fell short of objectives\. However, once operational, intake in all three schools met targets and exceeded in the early years of the project\. Physical objectives for field training fell short of expectations\. Out of a total ot 70 proposed training sites, 49 student housing units were constructed and health centers rehabilitated\. However, due to low utilization of accommodation and alternative options for student housing in the community and at the health centers, revisions to this program for student accommodation were justified\. However, practical training objectives were not met in qualitative terms due to limited equipment and supplies and training of trainers\. The inventory of sector personnel was completed but the system is not fully operational and longer-term human resource planning work is still in its early stages\. A draft report prepared under the project related to the role and status of auxiliary health personnel provided the input for the recent decision to integrate this categorv of health worker into the civil service function\. (b) Management Capacity and Healthl Service Efficiency: Although limited in scope at one level, this component combined a diverse set of activities, some of which were extremely ambitious but not well integrated\. Furthermore, resources allocated for this work were limited\. Development of the MIS, maintenance, and cost containment and cost recovery efforts had mixed results\. The maintenance component undertaken by the Directorate for Equipment, Material and Maintenance (DEMM) included training and a study of equipment maintenance\. Following successful implementation of this component, several donors are now financing sector maintenance work\. Study work on cost recovery although prolonged has recently resulted in the launching of a nationwide cost recovery program\. Staff training was provided in hospital management, prescription practices, and for hospital ward supervisors to improve performnance and efficiency but the impact of this is not yet clear\. The MIS experienced the most serious delays and did not meet objectives\. This was due mainly to lack of adequate consensus on key elements of this component during project preparation\. It is still in the early stages of design and development and equipment for this component was not purchased prior to project closing\. Project scope was expanded to include three AIDS studies (1993) and the definition of nursing care norms (1991) and are on-going activities in the project\.  5 (c) Demographic Work: Despite implementation delays and design changes (integration of the migration study with the West African Migration Study), this component was successful in reaching objectives\. However, it should be noted that very substantial technical assistance resources were allocated to the component\. The Census was completed and published and the Migration Study is in the final stages of tabulation work\. There is considerable use of the data by EFP, the Ministry of National Education (preparation of the carte scolaire, regional planning exercises, estimations of educational levels, etc\.), the Directorate for Control of Major Works (DCGTx) and donors such as UNICEF\. In particular, DCGTx uses the results extensively to make projections, prepare area maps and plan extension work in different sectors and the data and cartographic information have been computerized by DCGTx\. In terms of institution building, the project has succeeded in improving INS capacity to do census and other study work\. III\. IMPLEMENTATION EXPERIENCE AND RESULTS A\. Assessment of Project's Success and Sustainability 3\.1 Project Timetable: The project was approved by the Board of Executive Directors on September 19, 1985, signed on September 27, 1985, and became effective on May 27, 1986, two months behind scheduled effectiveness\. Project closing date, initially scheduled for June 30, 1992, was extended by 18 months and subsequently by a further six months to June 30, 1994\. A third and final request made by the Government to extend the closing date by a further six months due to devaluation of the CFA franc in January 1994 (para\. 3\.3), was not approved by the Bank\. The project was executed over an eight and a half year period against the projected six and a half years and was fully disbursed\. Final disbursement of funds took place on November 29, 1994\. B\. Summary of Financing Arrangements and Costs 3\.2 Financing Arrangements and Costs: Project financing arrangements included an IBRD Loan (US$22\.2 million), a Government contribution (US$7\.3 million) for local costs and financing by the USAID/Bureau of the Census (US$0\.25 million)\. In addition, the United Nations Fund for Population Activities (UNFPA) contributed US$828,000 in parallel financing for census work, particularly for technical assistance\. Program costs were consistent with appraisal estimates when expressed in CFAF (-2 percent)\. Dramatic exchange rate fluctuations resulted in the need for supplementary support (US$7\.4 million) obtained in 1989 through the Municipal Development Project (Loan 3218-IVC), an increase of 33\.6 percent when expressed in US dollars, for construction of Korhogo Nursing School and the Migration Study\. This increase corresponds to 22 percent for Part A and B and 76 percent for Part C of the project\. Implementation delays and some changes in project scope resulted in cost overruns for the demographic component for census activities, training, equipment, vehicles and materials\. This was due to the large and unexpected increase in  6 encampments requiring increased resources and time for the census of localities and difficult access necessitated more sturdy motorcycles for field work\. Part A and B cost overruns were incurred mainly for architectural and engineering services, training, and furniture, equipment, vehicles and materials (Footnotes in Annex 8C)\. Studies were initiated on AIDS and norms for nursing care due to needs identified during project implementation, which increased the scope of the studies financed under the project\. C\. Analysis of Key Factors Affecting Implementation 3\.3 Due to certain design features (diverse components, separate management arrangements) limited up-front implementation arrangements, and non-familiarity with Bank procedures, implementation was slower than expected\. The largest component, civil works for nursing schools, was assigned to the DCGTx which had extensive experience in civil works\. However, complex management arrangements and diversity of components as well as the implementation schedule agreed (six and a half years) warranted greater attention to up-front measures such as: (a) adequate staffing and resources to the BOG and PCU; (b) established procedures to ensure good interaction between the BOG and the technical departmnents of the MSPAS; and (c) a mechanism for annual planning and review of project implementation through, for example, a project launch workshop, annual programming, and a mid-term review of the project, to assess the continued relevance of the project components to sector needs (para\. 4\.2)\. In addition, factors outside the executing agencies' control had an impact on project implementation\. These included: (a) lack of timely and adequate counterpart financing; (b) the fall in the value of the US dollar (falling from CFA franc 490 to CFA franc 290 to 1 US$ between March 1985 and 1993 respectively) resulting in the need to secure supplementary financing (para\. 3\.2); and (c) the decision in January 1994 to realign the parity of the CFA franc from 50 CFA franc to 100 CFA franc per French franc resulted in procurement delays due to the need to amend a number of contracts\. Absence of a clear and agreed sector strategy and operational plan were probably most significant for Part B of the project\. (a) Training and Manpower Planning: Slippages of up to two years occurred in the physical aspects of the project\. Major causes for delay were (i) the lengthy approval procedures for signature of contracts (more than 1 year) by the concerned Ministries - Health, Finance and Plan and Construction, and internal delays (3-4 months) within a single ministry - Department of Public Investments (DIP), Caisse Autonome d'Amortissement (CAA); (ii) lengthy payment procedures (delays up to 4 months) involving Project Coordination Unit, Directorate for Financial Affairs, Directorate for Public Investments, Caisse Autonome d'Amortissement, for suppliers and construction companies, and sometimes exacerbated by lack of counterpart funds and late requests for replenishment of the special account; (iii) incorrect equipment cost estimates leading to a prolonged bidding process (Korhogo Nursing School equipment); (iv) occasional non-conformity with Bank procurement guidelines (enclosure for Bouake Nursing School); and (v) contractor weaknesses (resulting in  7 reissue of contract for technical studies for Korhogo Nursing School)\. However, physical implementation was expedited by PPF financing for the preparation of bidding documents for Treichville and Bouak6 Nursing Schools and the decision to assign civil works components to the implementing agencies most experienced in this area (DCGTx and Directorate for Equipment, Material and Maintenance)\. (b) Management Capacity and Health Service Efficiency: The slow implementation of studies and other components related to cost recovery, pharmaceuticals, personnel management and establishment of the management information system (MIS) is reflected in delays in meeting dated covenants and completing studies\. This was caused by (i) absence of a clear and consistent sector strategy and operational plan based on broad sector consultations and consensus which could have accelerated several of the management components of the project (MIS, pharmaceutical component); (ii) frequent Ministerial changes; (iii) limited capacity of the BOG (only two of three expatriates were recruited) and limited integration of the BOG as a strategic planning and programming entity within the MSPAS; and (iv) limited capacity of the PCU (only one staff member during the first two years, and a part-time accountant) resulting in: (a) a poorly performing financial management and accounting system; (b) limited resources and enthusiasm for field supervision; and (c) limited familiarity with Bank procurement and monitoring procedures\. The non-availability of counterpart funds and delays in replenishment of the Special Account (SA) affected all components of the project\. (c) Demographic Work: Although implementation delays occurred, the demographic component's objectives were substantially met\. The census work was delayed by one year and the migration study, scheduled to be completed in 1989, was merged with the West African Migration Study leading to a substantial reprogramming of activities\. One significant factor which positively influenced implementation was the regular review and programming exercises undertaken as part of the tripartite meetings between the Government, UNFPA/ECA, USAID/Bureau of the Census and the World Bank and the extensive work program supervision by all the donors (para\. 3\.7)\. Implementation delays were caused by: (i) the transfer of census work from the Ministry of Economy and Finance to the Ministry of Plan in 1986 leaving a period of uncertainty; (ii) administrative, logistical and some technical weaknesses during the census of localities; and (iii) technical weaknesses in the census bureau resulted in non-publication of the post-census survey or use of this data to evaluate census coverage despite substantial resources assigned to the activity\. In addition, the National Census Committee was not particularly effective in cross-department coordination and the non-replacement of the Director of Statistics for a long period may have  8 contributed to work program delays and problems in maintaining timely financial records\. The Government has not complied with the Audit covenant for this component of the project\. However, this component was successful due to the substantial institution building efforts, successful completion of the Census and Migration Study and integration and use of data by various institutions\. R Assessment of the Bank's and Borrower's Performance 3\.4 Bank's Performance\. Project design was consistent with needs in the sector but addressed only a limited number of concerns\. The nursing and demographic components had a number of well integrated activities\. However, the management component had several sub-components which were quite diverse in nature and not well integrated\. The physical components should have been linked more closely with student training schedules to ensure optimum use of facilities\. Given that this was the first IBRD-financed project in the sector, and it was prepared at a time when the development of a sector strategy and plan were not included as part of Bank preparation work, there were a number of inherent and important risks related to its implementation, coordination and supervision\. These risks were only partially recognized at the project appraisal stage, and further, it was not clear how the strategic and planning role of the BOG and the project management role of the PCU would fit into the Ministry of Health's overall management system\. 3\.5 Bank supervision performance was mixed\. Although there was good continuity in terms of supervision staff and relationships with the Government were good, resources were inadequate both in terms of the overall levels of field supervision and the skill mix of missions\. While resources used for project preparation and appraisal were substantial (150 staff weeks), resources applied to supervision were inadequate (93 staff weeks) despite the diversity of components and complex management arrangements\. In the start-up phase, inadequate attention was given to the development of a computerized accounting and financial management system, and to difficulties with completing staffing arrangements\. During the period 1988 to 1992, supervision missions were conducted solely by the Task Manager due to resource constraints and did not exceed 3 weeks each year, despite the diverse nature of the components and the need for a better skill-mix on missions\. Although organized somewhat late to have a sustained impact, the Bank disbursement seminar of 1993 was considered by project managers to be particularly useful\. 3\.6 The transfer of one component due to the availability of grant financing from the EU for the pharmaceutical component, and the inclusion of others based on identified needs (development of a midwifery program at Korhogo, a study of the impact of AIDS, and the development of norms and procedures for nursing care) shows that the Bank was responsive to identified needs and this work contributed to expanding sector knowledge in these areas\. 3\.7 Borrower's Performance\. The Government worked closely with the Bank during project preparation\. Preparatory work on the physical components, financed under the PPF,  9 advanced quickly\. Design limitations related to the size of schools (underutilization of space) and accommodation for students (used two months a year) as well as the management arrangements for the project\. 3\.8 Despite early delays related to the Census and management components of the project, physical components advanced relatively quickly\. DCGTx's involvement in the large construction/rehabilitation work was particularly helpful in the case of Korhogo Nursing School (para\. 3\.3(a))\. However, difficult working relationships between the MSPAS and DCGTx, Ministerial changes, and other project-related weaknesses resulted in a series of delays in several components, the most notable being the MIS (para\. 3\.3(b))\. The Government also had difficulties in meeting financial commitments for counterpart financing\. In addition, replenishment of the two special accounts managed by the CAA was not requested in a timely manner resulting in the non-availability of funds for up to three months each year\. The Government was responsive and successfully obtained financing (through the Municipal Development Project) for the migration study and construction of Korhogo Nursing School following exchange rate changes (para\. 3\.2)\. 3\.9 Limited project staffing and lack of integration of BOG's work with the technical departments in MSPAS, coupled with difficult working relationships with DCGTx affected the feeling of ownership and regular review and collaboration on components\. Conversely, the review and planning process adopted through the tripartite meetings for the demographic component (para\. 3\.3(c)), led to clear agreements on work program timetables, input requirements and technical needs\. Technical support was provided through numerous missions by the donors, (51 in all including Bank missions), all of which contributed to the well-managed work program adopted by the Governrment for this component\. However, a large level of technical assistance was used under this component\. 3\.10 A perpetual problem experienced by the project was the lack of a computerized accounting and financial management system and consolidated accounts\. At the PCU managing the health component, a project accountant only arrived in the Unit in 1990\. The INS did not have a computerized system for accounting and financial management\. In this context, it was extremely difficult to assign expenditures to specific project components and follow-up was further complicated by a particularly lengthy approval process from initiation to payment of bills\. 3\.11 Although delays occurred with respect to Loan covenants, the Government's record was reasonably good with the exception of audits for the demographic component which are still outstanding\. The long delay in replacing the Director of Statistics may have resulted in the lack of good financial record-keeping and audit delays as well as implementation delays in census work\. During the completion mission, the Government gave assurances that the two outstanding audits would be completed by December 1994, and the reports have been received\. Besides the serious delays in receiving audits for 1992 and 1993 from the INS, full corrective measures were not implemented to respond to earlier audit recommendations for the project\.  10 E\. Assessment of Project's Outcome 3\.12 Project Sustainability\. The Government's capacity to meet recurrent budget requirements is essential for: (a) operation and maintenance of the nursing schools and training sites; (b) improvement in management practices at all levels and in particular the development of the MIS; and (c) development and dissemination of demographic data and further demographic work by the Census Bureau\. The Government's current expenditures for health are expected to increase for priority programs based on reforms introduced under the Bank-financed economic recovery program and the groundwork laid by the Human Resources Development Program\. In addition, the proposed health sector project currently under preparation (FY96), should help to improve and sustain project operation and outcomes, by supporting reforms and activities to improve management performance at the central and decentralized levels\. It should also expand and improve the quality of primary care (which has direct relevance for both the nursing program and management component of this project)\. Most importantly, the new project will address resource allocation and management in the context of a sector policy that is operationally relevant and supports the priorities set for the sector\. (a) Training and Manpower Planning: Utilization of the nursing schools to their full capacity may be jeopardized by the Government's recent decision to not provide guaranteed entry into the civil service following nursing studies\. In addition, a reduction in output from the three schools could seriously affect the Ministry's capacity to adequately staff public health facilities\. The Government is currently reviewing possibilities for training both public and private sector students in order to ensure full utilization of training facilities\. In addition, responsibility for setting criteria for entrance to the nursing program has been transferred to the National Institute of Training for Health Personnel (INFAS) resulting in delays in receiving the new cohort of students\. Although overall quality of facilities is good, maintenance of schools and facilities at the training sites is inadequate, and maintenance responsibilities need to be clearly defined\. In addition, the limited use of housing by students (2 months per year) during field training needs to be reviewed in the context of curriculum scheduling\. With respect to curriculum development work, the evaluation of norms for health care needs to be finalized and reflected in the proposed revisions to the nursing curriculum\. Additional financing will be required for this activity and the Government is actively seeking financing to test and revise the new guidelines\. Autonomy in the management of the nursing schools' budgets in 1995 and placement of an accountant at the schools, starting with Bouake, should lead to improved use of funds\. However, the current allocations for the three schools in 1994 (CFAF 84 million) was inadequate to cover all operational and preventive maintenance\. The proposed follow-up project should review with the Government the staffing norms for public facilities and output requirement of the schools as well as the budgetary allocation for pre-service training\.  11 (b) Management Capacity: Following limited project support for improving the Ministry's capacity in maintenance, several donors (BAD, FAC, FED, KfW, Japan) are now providing substantial resources to decentralize the maintenance system and prepare a nationwide inventory of facilities and equipment\. The Pharmaceutical sector work continues to be supported by the European Development Fund\. Recognizing the importance of the MIS, the Ministry has already initiated discussions with the Bank and other donors (Canada) to obtain additional financing for its development\. The project's study and training work on cost recovery and cost containment efforts is now beginning to yield results at the hospital level, although supervision and performance at the health center level is particularly weak\. (c) Demographic Mbrk: The capacity of the INS has been greatly strengthened\. In addition, the decision to undertake a census every ten years is considered to be an important step in institutionalizing and using demographic data as part of the planning process\. Recurrent budget requirements remain an issue however as is the need to sustain a core group of experienced staff\. IV\. FUTURE OPERATIONS AND KEY LESSONS LEARNED A\. Important Findings of Project Implementation Experience 4\.1 The project was successful in reaching most of its major objectives despite implementation weaknesses, complex management arrangements, and intervening external factors\. In spite of the shortcomings identified, there is substantial integration of project components into the Government's program\. The capacity to provide recurrent cost requirements for operation is a key issue for project sustainability and outcome\. IDAs continued involvement in the sector should build on achievements under this project and build a stronger analytical and management base as well as improve physical capacity and ensure that recurrent cost needs are met\. Overall, the project's outcome is considered to be satisfactory\. B\. Future Operation and Sustainability 4\.2 With respect to future operation of the project, issues to be resolved include: (a) setting criteria for entry to nursing schools and determining private and public sector training needs; (b) continued work to revise the curriculum and practical training for students; (c) adequate resource allocation to ensure proper operation and maintenance of facilities; (d) expansion of the work on cost containment and internal efficiency of health services; (e) further development and implementation of the nationwide MIS system, ensuring that it is fully decentralized; and (f) continued support through the MEFP for demographic work and its full utilization in the planning process\. Data already collected needs to be fully exploited and results disseminated\.  12 C Lessons for Future Projects in the Sector in CMte d'Ivoire 4\.3 The principal lessons to be drawn from this experience and implications for the project's future operations and ongoing future projects in the sector include the following: (a) Project scope and content should be coherent and support an agreed sector strategy and program that is based on a consensus and agreed upon by the different Government departmnents\. Design of physical components should carefully assess facility utilization and recurrent cost implications for operation and maintenance; (b) Agreement should be reached up-front on performance indicators, and be reviewed through project launch workshops, annual programming exercises, and a mid-term assessment (para\. 3\.10); (c) Project management arrangements should be agreed upon including staffing commitments and roles of key technical units\. Most important, a computerized accounting and financial management system, as well as advance preparatory work on procurement, terms of reference for studies and other tasks through PPF financing should be initiated (para\. 3\.3)\. Up-front conditionalities and up-stream work should improve implementation and resolve a number of issues prior to negotiations and Board approval; (d) Bank missions should be more frequent with skill-mix tailored to the technical and management requirements of the project\. The Bank may want to consider delegation of certain tasks to the Resident Mission; and (e) The Bank may want to consider a shorter time-frame for future projects with phased implementation based on an agreed work program with the Government\. In addition, some dovetailing of projects will reduce staff losses and reduce the risks of financing gaps\.  13 PART II\. STATISTICAL ANNEXES  14 Table 1: Summary of Assessments A\. Achievement of objectives Substantial Partial Negligible N appicable Macro policies El E l0 Sector policies D i[] El Financial Objectives EEl E l Institutional development E E El Physical objectives E E El Poverty reduction El E El Gender issues n E El Other social objectives El E El Environmental objectives a E El Public sector management ° E El Private sector development n E El Other (specify) n E E E B\. Proiet susainability Likely Unlikely Uncertain C\. Bank performance satisfactory Safa ry Deficient Identifidation 0 E l Preparation assistance El Appraisal E El Supervision O El (Continued)  15 Table 1: Summary of Assessments (Continued) Highly D\. Borrwowerperformance satisfactory Satisfactory Deficient Preparation [ 0] Implementation [] Covenant compliance E El Operation (if applicable) 0 El Hi - ghE E\. Assessment of outcome satisfactov Satisfactoy Unsafisfactory unsatisact El 0 El E  16 Table 2: Related Bank Loans/Credits Loan/Credit Title Purpose Year of Status Following Operations Approval l I\.L31280-IVC Municipal Development Project 1990 Project closed December 31, 1994\. 2\.L32510-IVC Pilot Women in Development 1991 Extended by I year to June 30, 1995 Project 3\.L34280-IVC Human Resources Adjustment 1992 Project closed September 30, 1994 Operation 4\.C2505-IVC Human Resources Management 1993 Closing scheduled for December 31, 1996 Project Table 3: Project Timetable Steps in Project Cycle Date Planned' Revised Date' Actual date Identification November 1981 Preparation October '82-October '84 Appraisal November 1984 Post - Appraisal March 1985 Negotiations July/August 1985 Board presentation September 19, 1985 Signing September 27, 1985 Effectiveness March 26, 1986 May 27, 1986 May 27, 1986 Project completion December 31, 1991 _ December 31, 1994' Loan closing June 30, 1992 December 31, 1993 ____________________ ________________ June 30, 1994 June 30, 1994 Due to transfer from the management information system to a cost accounting system, the planned and revised dates of key events in the preparation timetable are not available\. The timetable in the Memorandum of the President reflects only actual dates of key events in the project cycle\. 2 Ibid 3Planned date for remaining equipment deliveries to Korhogo Nursing School\.  17 Table 4: Loan Disbursements: Cumulative Estimated and Actual (US$ thousands) Calendar Year 1986 1987 1988 1989 1990 1991 1992 1993 1994 Appraisal estimates 2,400 6,200 10,900 15,500 19,300 21,500 22,200 Actual 1,297 4,910 11,711 15,012 16,195 17,582 18,685 19,477 22,200 r ctual as % of estimate 54% 79% 107% 97% 84% 82% 84% 88% 100% [Date of final disbursement: Nov\. 29 1994 R A _te 5w7,,~~~ Series I= Appraisal estimates Series 2= Actual disbursement Note: As of November 29, 1994  18 Table 5: Key Indicators for Project Implementation Key implementation indicators in SAR Estimated Actual 1\. Health Manpower Development Number of new nursing schools 2 2 Number of renovated nursing schools I I Student output -Treichville 1235 1204 -Bouake 400 473 -Korhogo 240 04 Number of trained nurse tutors 42 38' Study of the function and long- term role of auxiliary health workers 30/05/88 30/05/88 Number of Nursing Supervisors trained 50 108 Number of student houses built 70 49 2\. Strengthening of Management and Efficiency Number of Regional Directors trained 8 8 Number of hospital directors trained I 11" Number trained in management and administration 22 22 Establishment of MOB Aug\.-'85 Apr-'86 Establishment of MIS Oct\.-'85 in progress Strengthening of hospital management and services -cost-control 10/85-12/90 1989-1994 -cost-containment 03/85-10/90 in progress -renovation of kitchens 1986/87 1987/88 Number of physicians trained in prescription practices 200 200 Development of maintenance system 1985-1988 1989-1990 Training of technicians/biomedical engineers 12 13' Number of health centers rehabilitated 70 49 3\. Population Data Development Census of localities Dec\.-85 Feb\.-86 General population census March 87 March 88 Post-census survey April 87 April 88 Migration survey Jan 87 Sept\. 93' Other Indicators The impact of AIDS in Cote d'lvoire 3 studies l 1995w in progress Patient care practices norms development 6/5/92'j in progress 4First cohort of 78 students entered school in March 1994\. 5An additional 21 were trained through WHO financing\. 6A total of 71 trained including financing from FAC (local plus foreign training)\. 7A total of 49 were trained including financing from WHO, FAC, AfDB, and KfW\. Migration study, combined with West African Migration Study which changed scope of work\. 9Studies not included at evaluation of project\. '°Studies not included at evaluation of project\.  19 Table 6: Key Indicators for Project Operation Key Operating Indicators in SAR [ Estimated Actual 1\. Health Manpower Development Number of nursing schools 3 3 Student intake - academic year 93/94 -Treichville 160 142 -Bouake 80 73 -Korhogo 80 78 Nursing Supervisors trained/year 20 20 Field training for students I month/yr\. I month/yr\. Personnel management/Inventory 1987 1992" 2\. Strengthening of Management Capacity of MSPAS Cost recovery system in place 1988 1994'' MOB in place 8/85 since 4/86 MIS established 10/85 under development Development of maintenance system 1985-1988 1989-1990 3\. Population Data Development 10-year general population census | 4/87 4/88 Migration Survey | 1/87 9/93" 11Staff information system not functioning well which limits human resource planning efforts\. 12 National cost recovery system being tested\. 13Results expected February 1995\.  Table 7: Studies Included in Project Study Purpose as defined at appraisal Status mpact Stud y I \. Redesign of basic nursing cirriculum to enhance the quality of basis training underway -norms for patient care defined\. -study results to be integrated with curriculum work (see\. 9 below) 2\. Development of cost-control] internal to improve financial management in the seven most work ongoing -study of sample of hospitals at each level efficiency measures important hospitals -financial management systems in place 3\. Management information system to improve planning and management of resources 1990/1991 -preliminary study work completed\. including epidemiological data -serious delays with follow-up\. -testing underway\. 4\. Study of the functions and long-term to improve human resource planning 1988 -auxiliary health worker statute passed role of auxiliary health worker -needs identified -training needs identified -organization of entry exams underway 5\. Study of pharmaceutical procurement to improve procurement and stock management 1991 -financed by the EU practices and stock management -results of the study under assessment o procedures 6\. Evaluation of service delivery costs in assess costs underway -part of a series of studies to develop cost- country recovery system\. -system now in place- 1994 7\. Guide for accounting and budgeting to improve budgeting and accounting 1992 -improved information for setting budget allocations to health facilities 8\. Development of maintenance system Improve infrastructure and equipment maintenance 1991 -donor support to develop decentralized maintenance system - nationwide inventory of facilities and equipment underway 9\. Development of patient care norms to irmprove quality of care/imput for training' underway -guidelines being tested 10\. The impact of AIDS in Cote d'Ivoire socioeconomic impact of AIDS" underway designed to improve knowledge base about AIDS I Not included at appraisal\. Initiated in 1991 in response to concerns about quality of care and training 2Not included at appraisal\. Initiated in 1993 to evaluate impact on transport sector, long-term economic growth prospects and labor force\.  Table 8A: Project Costs A breakdown of project costs by component is not available\. Table 8B: Project Financing Source Appraisal Estimates Health and Demographic Project Additional support from Municipal Development Project ( in millions)' Actual Financing (in CFA Franc millions) (IVC 3128) Dollars US Francs CFA In % PartA+B Part C Total HNP In % Part A+B PantC Subtotal MDP In % TOTAL (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (I1) (12) IBRD 22\.200 10\.892\.202 74\.7 4,338\.923\.3 939,500\.0 5,278,423\.3 51\.4 1,542,696\.4 1,898,900\.0 3,441\.596\.4 8\.4 8,720,019\.7 US Bureau 200 98\.128 0\.7 0\.0 59,441\.7 59,441\.7 0\.6 0\.0 0\.0 0\.0 0\.0 59,441\.7 of the Census Govemment 7\.300 3,581\.670 24\.6 4,078,150\.8 851,000\.0 4,929,150\.8 48\.0 436,000\.0 200,000\.0 636,000\.0 15\.6 5,565,150\.8 Contribution Total 29\.700 14,572\.000 100 8,417\.074,1 1,849,941\.7 10,267,015\.8 100 1,978,696\.4 2,098,900\.0 4,077,596\.4 100 14,344\.612\.2 ' Exchange rate of USS I =CFA Franc 490 at time of appraisal\.  22 Table 8C: Withdrawals of the Proceeds of the Loan (US$) Category Planned % Revised % Final (11/29/940) % Allocation Allocation Disbursement 8/15190 Parts A and B of the Project 1\. Civil works 7,000\.000 75 8,000,000 75 8,146,328\.57 75 2\. Architectural and engineering services 200,000 80 200,000 80 352,990\.592 80 3\. Furniture, equipment, vehicles and materials 2,600,000 75 2,600,000 75 3,262,587\.893 75 4\. Consultant and Specialist Services 2,500,000 100 2,500,000 100 3,050,927\.654 100 5-A MSPAS Project Operation Costs 700,000 85 700,000 85' 746,640\.26 85 5-B MSPAS Project Operation Costs 500,000 60 500,000 60 500,243\.86 60 5-C MSPAS Project Operation Costs 800,000 30 800,000 30 468,469\.78 30 6\. Refunding of Project Preparation Advance 490\.000 490,000 296,962\.16 7\. Unallocated 2,710,000 1,710,000 0\.00 special account (Part A & B) 0 0 -24,989\.515 Part C of the Project 8\. Civil works 200\.000 75 200,000 75 137,233\.07 75 9\. Furniture, equipment, vehicles and materials 500\.000 80 500,000 80 1,086,404\.996 80 10\. Census activities 3,100,000 80 3,100,000 80 4,014,610\.197 80 11\. Migration survey 500\.000 85 500,000 85 87,400\.55 85 12\. Unallocated 400,000 400,000 0\.00 Special Account (Part C) 0 0 -74,190\.35 TOTAL 22,200,000 22,200,000 22,200,000\.00 I\. Operating expenditures for MSPAS: 85% for withdrawals up to an aggregate amount equivalent to US$700,000; 60% for withdrawals up to an aggregate amount equivalent to US$ 1,200\.000; and 30% for withdrawals up to an aggregate amount equivalent to US$2,000,000\. 2\. Architectural and engineering services exceeded costs substantially due to: (i)billing of services by DCGTX for Korhogo Nursing School (ii) complementary work at Korhogo and (iii) the need to revise contract for works following devaluation of the CFA Franc\. 3\. Furniture, equipment, vehicles and materials costs were exceeded due to: (i) extension of the project beyond expected closing date and devaluation of the CFA Franc and (ii) difficulties associated with equipment lists for Korhogo Nursing School\. 4\. Increased costs for training mainly\. 5 and 8\. Negative amounts are due to fluctuations of exchange rate from the date the Special Accounts were made available to the date finally recovered\. 6\. Purchase of sturdy motorcycles for field work due to difficult terrain\. 7\. Census of localities required additional resources due to increased number of encampments\.  23 Table 9: Economic Costs and Benefits No attempt was made at appraisal to estimate net present value (NPV) or economic rate of return (ERR) and therefore there is no baseline against which to judge a re-estimate for evaluation purposes\. Furthermore, no parameters were given at appraisal with regard to cost effectiveness\. However, the overall costs of the project appears within reasonable norms for the activities undertaken\.  Table 10: Status of Legal Covenants Section Covenant Present Original 1 Revised Description of covenant | Comments type statut fulifilment fulfilment l date date 3\.01 -b 5 P 04/87 to 12/88 The borrower shall assign to each of the Project Area Only fulfilled for areas of Bouake a qualified and experienced regional health management and Treichville, considering the delays and training coordinator satisfactory to the Bank\. for the area of Korhogo 3\.0 1-b 4 C 04/87 to 12/88 The Borro er shall provide such coordinator with Lihiited funds available sufficient resources for the carrying out of his or her duties 3\.02-a 4 CD 10/11/85 The Borrower shall, for the purposes of the Project, open Account opened on December 12, 1985 and maintain with adequate funds a project account in the CAA on temis and conditionis satisfactory to the Bank\. 3\.02-b 4 CP 09/27/85 The Borrower shall deposit into the Project Account for Project effectiveness condition fulfilled 5\.01-a Parts A and B ofthe Project an initial amount ofCFAF on 05/15/86\. 75 million, and shall thereafTer pay into such Project Replenishment sometimes late\. Account at least three months in advance quaterly contibution for the Project\. 3\.03 5 CP Procurement of the goods, works and consultants'services Done with a few exceptions\. required for the Project and to be financed out of the proceeds of the Loan shall be govemed by provisions of Scheduled 4 to this Agreement  3\.04 5 CP The Borrower shall adequately staff the Nursing Schools Done for the Treichville and Bouake schools\. and ensure that the said Schools arc utilized to their full Hiring of staff started early 1993 for Korhogo\. capacity: Retirement of staff could jeopardize teaching 1988 - Treichville capacity\. 1989 - Bouake 1991 - Korhogo 3 0O 12 CD 30/06/8X The Borrower shall undertake a study of the functions and long-tern role of its auxiliary health %%orkers Study done with some delay in implementation 3\.05 12 C 30/6/88 The Borrower shall fumish to the Bank for comments no Discussion now underway on integration and later than June 30, 1988\. a plan for the long-term training of auxiliary workers\. utilization of auxiliary health workers\. 3\.06 9 CP The Borrower shall undertake an evaluation of the Evaluation of training programs is being effectiveness of nurse training and management programs done by the Comite de Reflexion of mother and child health care in the Project Areas on norms and nursing care\. 1/12/87 - for the health centers in the areas of Treichville 31/12/89 - for the health centers in the areas of Bouake 3\.07-a 12 C The Borrower shall take all necessary action to establish a Creation of BOG on April 2, 1986\. Operational Management and Organization Bureau withing MOPHP in June 1986\. 3\.07-b 12 CD 30/04/86 The Borrower shall fumish to the Bank for approval no later Study done in July 1986\. Serious delays in follow-up April 30, 1986, a plan for the establishment of the basic work on system details management informaton system\. 10 CD 30/11/86 =The Borrower shall fumish to the Bank for approval no later Delays due to a faulty initial design\. Novenmber 30, 1986 a definition of the technical Finally done in May 1994\. specifications of computer requirement of the said system\.  3\.07-c 12 CD 31/12/86 The Borrower shall fumish to the Bank for its review and Study was completed late, after redesign and comments, no later than December 31\. 1986\. the results of finanicinig by a new financing source (EU)\. the stidy of the Central Pharmacy's procurement practices Results presented in 1991\. and stock management procedures\. 1 2 CD 30/06/87 The Borrower shall fumish to the Bank for its review and After initial slow start, several studies donce commenLs, no later than June 30\. 1987\. the results of the between 1988-1994 altemative health cost recovery mechanisms\. 12 CD 31/12/87 [he Borrower shall fumish to the Bank for its review and Effective since October 10\. 1994 comments, no later than Deceniber 31, 1987\. the action plan for the establishment of a health cost recovery system\. 3\.08 12 CD 3 1/12/86 Trhe Borrower shall, no later than December 31\. 1986, take Creation of the category of Health all measures necessarv to include the position of nurse "Surveillants"A3 since 1988 specialist in health service management in an appropriate category of the administration list of the health personnel\. 3\.09-a 10 C 31/1/86 The Borrower shall fumish to the Bank no later than January Completed on schedule 31\. 1 986\. for approval, a master plan of census and survey activities\. 3\.09-b 12 C Juillet 85 AoOt 1985 The Borrower shall take all necessary measures to establish Main statT for census bureau hired on within the Directorate of Statistics of its Ministry Economy 08/05/ 1985\. Minimum number of staff and Finance a Census Bureau and shall cause it to be have been maintained\. assisted by competent staff in sufficienit number\. 3\.09-c 10 CD 31/01/86 The Borrower shall fumish to the Bank a plan\. satisfactory Plan submitted with delay\. to the Bank\. to carry out the migration study\. 'Iabulation work for migration stidy underway  3\.1 4 CP from 01/01/91 The Borrower shall provide in its national budgets for fiscal Delays in disbursement of funds and year beginning in January 1991 and for any fiscal year insufficent amounts\. following thereafter amounts sufticient to cover the full cost of continuing, after the completion of the Project, all the activities and programs provided for in the Project\. 4\.0-b ii I NC six mionths The Borrower shall fumish to the Bank as soon as available\. Audits generally completed with delays\. after but in any case no later than six months after the end of each Last audits relative to Part C not done account such year\. a certified copy of the report of such audit by the (Years 1992 and 1993) closing said auditors, such scope and in such detail as the Bank shall have reasonably requested\. nex 5 I amendement to loan agreements to increase deposit of initial Amendment to Credit Agreement on 02/24/88 amount from SS 400\.0001t $1,600,000 for Part C of project -4 I = Accounts/audits 7 = Involuntary Resettlement C = covenant complied with 2 = Financial Performance/revenue 8 = Indigenous people CD complied with after delay generation from beneficiaries 9 = Monitoring, review, and reporting CP = complied with partially 3 = Flow and utilization of project funds 10 = Project implementation not covered by categories 1-9 NC not complied with 4 = Counterpart funding 11 = Sectoral or cross-sectoral budgetary or other resource allocation C = covenant complied with 5 = Management aspects of the 12 = Sectoral or cross-sectoral policy/regulatory/institutional action project or executing agency 13 = Other 6 = Environmental covenants  28 Table 11: Compliance with Operational Manual Statements Statement number and title Describe and comment on lack of compliance I\. OD 10\.60 accounting, financial reporting and Serious delays in submission of audit for 1992 and auditing 1993 for Part C of project l Table 12: Bank Resources: Staff Inputs Stage of project cycle Actual Weeks US$" Preparation to appraisal 83 Appraisal 61\.1 Negotiations through Board approval 6\.2 _ _ _ _ _ Supervision 92\.8 Completion 17\.2 TOTAL 26o\.3-| I Includes 40 weeks reported under Lending Development category\. 2 The US dollar amounts are not available for projects prior to 1993\. 3 No trust fund consultant time charged to this project\.  29 Table 13 A: Bank Resources: Missions Performance Rating Number Specialized Stage of project cycle month/year of Days in Staff Skills Imp\. Status Develop\. Types of Persons Field Represented Objectives problems Through appraisal 11/84 31 343 Footnote I Appraisal through Board 10/85 5 35 Footnote 2 Board through 2/86 4 28 Footnote 3 Effectiveness Supervision 86!93 23 161 Footnote 4 See Table 13B Final 11/94 4 48 Footnote 5 Supervision/Completion \.A\._\.__\. _ Footnotes 1\. PHS, E A D, LO HTS\. MS, D 2\. PHS, HTS, D 3\. E, A, LO, PHS\. 4\. D, E, LO, A, OA, PHS 5\. PHS, A D, PMS\. Key to specialized staff skills A Architect D Demographer E Economist HTS Health Training Specialist LO Loan Officer MS Manpower Specialist OA Operations Assistant PHS Public Health Specialist PMS Project Management Specialist  Table 13B: Bank Resources: Missions Perfor7ance Rating by Type of Problem Supervision Month2Year Number Days Specialized 2 D L M F P T TA S E FP of in the Staff Skills Persons Field Represented supervision 1 04\.1986 2 13 D,E 2 1 - 2 1 follos vup 07\.1986 2 28 E,LO D / follonvup 08\.1986 1 3 D follos vup 11\.1986 1 3 E supervision 2 01-03\.1987 3 14 A,D,E 2/ 2 1 - 2 1 supervision 3 10\.1987 2 18 D,OA 2 1 - 2 1 supervision 4 04\.1988 2 16 D,A 2 2 - 2 4 supervision 5 05\.1989 1 na D 3/ 2 2 2 2 4 2 2 2 2 1 3 supervision 6 10\.1989 1 8 A 4/ supervision 7 02\.1990 1 3 D 2 2 2 2 1 2 1 2 2 1 2 supervision 8 05\.1991 1 8 D 2 3 2 2 1 2 1 2 2 1 2 supervision 9 09\.1991 1 2 D 2 2 2 2 2 2 1 2 2 1 2 superision 10 02\.1992 1 7 D 2 2 2 2 2 2 1 2 2 1 2 o) supervision I 1 03\.1992 1 4 D 2 2 2 2 2 2 1 2 2 1 2 supervision 12 01\.1993 2 18 D,A 2 2 2 1 2 2 1 2 2 1 2 supervision 13 11\.1993 2 16 D,PHS 2 2 2 2 1 2 2 1 2 2 1 2 completion 10-11\.1994 4 48 PHS,A,D,PMS Specialization: A=Architect; E=Economist, D=Demographer; LO=Loan Officer, PHS=Public Health Specialist; OA=Operation Assistant; PMS=Project Management Specialist Type of problem for Performance O=Overal1 Status; D=Development Impact/objectives; L'=Compliance with Legal Covenants; M=Management; F=Availablity of Funds; P-=Procurement Progress; T=Training Progress; TA=Technical Assistance Progress; S=Studies Progress; E=Environmental Aspects; FA=Financial Performance\. Performance Rating l=Problem free or minor problems; 2=moderate problems; 3=major problems with solution underway; 4=major problems without solution underway\. I/Economic mission, partly devoted to follow up of the project 2/Based on different short visits 3/Duration of the mission is not available 4/No Form 590 available  APPENDIXES  COTE D'IYOrRE PROJET SANTE ET DEMOGRAPHIE (PRET NO\. 2619-IVC) AIDE-MENOIRE MISSION FINALE ET PREPARATION DU RAPPORT DACHEVEMENT DU PROJET DU 24 OCTOBRE AU 4 NOVEMBRE 1994 1\. Une mission de la Banque Mondiale composee de Mme Ethna Johnson, specialiste en sante publique, chef de mission, et M\. Waechter, consultant architecte, M\. Magassouba, consultant, specialiste en gestion des projets et M\. Sow, Conseil Regional en Statistiques Demographiques, FNUAP, a sejourne en C6te d'Ivoire du 24 octobre au 4 novembre 1994\. La mission a re,u l'appui du Bureau Regional de la Banque mondiale a Abidjan, notamment celui de M\. Robert Calderisi, Chef du Bureau Regional et M\. Rachidi Radji, Charge des operations\. La mission a tenu des s6ances de travail avec les responsables du Ministere de la Sante Publiques et des Affaires Sociales (MSPAS), le Ministere de l'Economie, des Finances et du Plan (MEFP), notamment de l'Institut National de la Statistique (INS), la Direction et controle des Grands Travaux (DCGTx) et la Caisse Autonome d'Amortissement\. La mission a pu visiter un certain nombre de formations sanitaires ainsi que lee trois ecoles d'infirmiers/infirmieres appuy6es par le Pret\. 2\. L'objectif de la mission etait: - de passer en revue avec les services concernes l'etat d'avancement et les mesures prises pour l'achevement du Projet Sante et Demographie (Pr6t No\. 2619-IVC), et - d'evaluer avec les autorites ivoiriennes les r6sultats acquis dans le cadre des differentes composantes du projet en vue de la pr6paration du rapport dlach4vement du Projet\. Mise en Vigueur et Cl6ture du Prit 3\. Signe le 27 septembre 1985 le Projet Sante et Demographie a ete mis en vigueur le 27 mai 1986\. La date de Cloture du projet, initialement fix6e au 30 juin 1992 a ete reportee & deux reprises, une premier fois au 31 decembre 1993, et une deuxieme fois au 30 juin 1994\. Une derniere requete du 13 juin 1994 a ete envoyee par la CAA en vue d'un dernier report au 31 decembre 1994 compte tenu de nouveaux retards engendres suite a la devaluation du F\.CFA\. La date de Cl6ture du 30 juin 1994 a ete maintenu compte tenu de la disponibilit6 eventuelle d'autres financement en provenance de la Banque autorisant l'achevement des activites en cours\. Les demandes de remboursement devaient etre soumises a la Banque avant le 31 octobre 1994\. Objectifs et Composantes du Projet 4\. Le projet comporte les objectifs suivants: (i) expansion et amelioration de la formation des infirmiers; (ii) amelioration de la gestion a tous les niveaux des services de sant6; et (iii) la fourniture d'informations demographiques fiables pour la planification macro-economique et sectorielle\.  -2- S\. Le projet comporte lea activit6s suivantes - Partie A : Valorisation du Personnel de Sante (i) r6novation et 6quipement de l'Ecole d'Infirmiers de Treichville et construction et equipement de deux nouvelles 6coles d'infirmiers A Bouak6 et Korhogo; (ii) attribution de 42 bourses d'etudes permettant la formation des cadres et des moniteurs en soins infirmiers; (iii) mise en oeuvre, suivi et evaluation retrospective du nouveau programme d'6tude des ecoles dlinfirmiers; (iv) fourniture d'equipement d'6ducation et de formation pour lea trois 6coles, y compris de materiel didactique et de manuels; (v) programme de formation pratique d'dl6ves-infirmiers des Ecoles d'Infirmiers aux Lieux de Formation sur le Terrain, y compris l'amenagement d'installations simples d'h6bergement des eleves- infirmiers et la formation de 70 instructeurs; (vi) programme destine A renforcer laptitude de la Direction du personnel du MSPAS A evaluer les programmes de formation et A estimer les besoins en personnel de Sante\. - Partie B : Renforcement du MSPAS (i) creation d'un bureau de gestion (Bureau d'Organisation et de Gestion-BOG) au sein du MSPAS; (ii) elaboration d'un systeme d'information de base en gestion pour le MSPAS, y compris la fourniture d'equipement informatique et d'une assistance pour la collecte et l'analyse des donnees; (iii) elaboration de programmes destines A ameliorer la gestion, la planification et le fonctionnement de la Direction des Equipements du Materiel et de la Maintenance du MSPAS et de la Pharmacie Centrale, y compris une 6tude diagnostique sur les procedures d'approvisionnement pharmaceutique et de la gestion des stocks de la Pharmacie Centrale; (iv) amelioration de la gestion et des services des CHU et des CHR par: (a) la formation sur place d'environ 50 infirmiers specialistes en gestion de services de sante; (b) la formation a l'etranger en gestion hospitaliere d'environ 14 administrateurs d'h6pitaux; (c) l'amelioration des services d'alimentation, des services comptables, et des pharmacies des CHR et des CHU; et (d) l'amelioration du contr6le des coats et de la gestion financi&re des CHU et des CHR et le developpement de mecanismes possibles pour le recouvrement des couts\. (v) un programme de renforcement des services de sante de base par: (a) la formation en cours d'emploi et la supervision du personnel de sante employ6 dans les Zones du projet; (b) de petits travaux de renovation et d'equipement des centres de sant6 aux Lieux de Formation sur le Terrain; et (c) 1'evaluation de l'efficacite des  3- programmes de gestion et de formation d'infirmiers afin d'ameliorer les services de soine de sante primaires\. - Partie C: D4veloppement de Donnees sur la Population (i) Ex6cution par la Direction de la Statistique du Ministere de l'Economie, des Finances et du Plan d'un programme de collecte et d'analyse de donnees demographiques, comportant un recensement des sites habit6s en 1985-1986, un recensement general de la population en mars 1987, une enquete post-censitaire, et un enquete sur lea migrations; et (ii) accroissement de la capacite de traitement informatique et de diffusion des r6sultats de la collecte par des publications adaptees et l'organisation de seminaires en vue de l'int6gration des donn6es demographiques dans la planification macro-economiques et sectorielle du pays\. R6alisation des Objectifs et des Activit6s du Projet Partie A: Valorisation du Personnel de Sante Ecole de Korhogo (PDN, Pr6t 3128-IVC): 6\. L'ecole a commence a fonctionner avec une premi&re cohorte de 78 eieves venant des ecoles de Treichville et de Bouake en Mars 1994 (ann6e scolaire 93-94)\. Pour l'annde scolaire 93-94, seuls ces memes 6leves, maintenant en 2eme annee sont actuellement accueillis a l'ecole\. Le concours d'entree pour les 6leves integrant l'ecole en 94- 95 devrait se tenir en Janvier-Fevrier 95\. Les conditions de fonctionnement sont rudimentaires les locaux disponibles etant limites aux internats et a 2 petits foyers utilises comme salles de cours\. Les locaux p6dagogiques, administratifs et la cantine ne sont pas livr6s\. Les materiels pedagogiques ne sont pas disponibles a l'exception d'une partie des livres installes dans une bibliotheque provisoire\. 7\. Les travaux ont et6 ralentis puis quasiment interrompus pour differentes raisons (difficult6a de paiement des fonds de contrepartie, d6lais dans la signature des avenants pour travaux complementaires puis pour l'actualisation des couts suite a la devaluation de janvier 94, d6lais de livraison de certains elements de second oeuvre (menuiseries mdtalliques pr6fabriqu6es) et de certains equipements lies au genie civil (climatisation, 6quipement de cuisine et audiovisuels en particulier)\. L'achevement complet des travaux (correspondant a un solde de 360\.000\.OOOFCFA sur un total de 1\.890\.000\.000FCFA) est dul pour \.e 31 d6cembre 1994\. La disponibilit6 des locaux p6dagogiques, a l'exception des amphithe&tre est escomptee pour le 15 novembre\. Pour le reste des locaux, il convient cependant de ne pas exclure la possibilit6 de legers retards (concernant les services cantine et r6fectoire), compte tenu des delais de livraison des equipements relatifs a ces locaux\. Ce calendrier devrait autoriser l'accueil de la deuxieme cohorte d'6l1ves sans probleme majeur vers janvier-fevrier 95\. Probl4mes additionnels rencontres: Le drainage du site slest av6re tres insuffisant en cas de forte pluie\. Des travaux ont ete engagde en limite exterieure du site en vue de collecter et d'6vacuer les eaux de ruissellement en provenance du quartier\.  Des travaux sont actuellement engages (pour un montant estime a 30\.000\.000 de FCFA) par une entreprise contact6e directement par le MSPAS et sans que le bailleur de fonds ait ete interroge sur le financement de ces travaux\. * I1 est convenu que le MSPAS devra confirmer par ecrit a la Banque la disponibilit6 sur le budget de l'Etat des fonds necessaires a l'achevement de ces travaux\. Dana ce cadre, la mission recommande que le Gouvernement recherche le financement aupres d'autres sources y compris le futur projet Programme d'Appui a la Conduite d'Op4rations Municipales (PACOM)\. * Les services cuisine/r6fectoire sont localises en un point mal prot6ge des eaux de ruissellement du site de l'ecole\. Ii a 6te convenu d'entreprendre la realisation de talus de terre (compactes et plantes) destin6s a d6tourner les eaux de ruissellement\. La mission n'a pas d'objection pour que ces travaux (estimes a 5\.000\.000 FCFA) fassent l'objet d'un avenant au marche de lentreprise charg6e des travaux de VRD sur le site de 1'ecole\. La proposition d'avenant devra parvenir a la Banque d'ici au 15 novembre 1994 pour avis de non objection\. * Deboursement/date de cl6ture: compte tenu de la mise en place du PACOM, (dont la n6gociation\.devrait avoir lieu en decembre et dont les fonds pourraient etre disponibles vers fevrier 95), aucune extension de la date de cloture n'est envisagee pour le PDM (achevement du projet pr6vu au 30 juin 94 et cloture du Pret prevue au 31 Decembre 1994 -cf\. SAR para 3\.07-)\. La mission rappelle que I'ensemble des demandes de paiement concernant le Genie civil relatif a 1'ecole de Korhogo devra parvenir a la Banque avant le 30 avril 1995 et devra concerner des travaux realises avant le 31 decembre 1994\. Ecole de Bouake (PSD, Prit 2619-IVC) 8\. L'ecole est en fonctionnement depuis janvier 1988\. L'ecole eat tres bien geree et presente un aspect agreable (espaces interieurs et exterieurs bien entretenus)\. Cette situation masque cependant une realite beaucoup plus problematique\. L'insuffisance des credits de fonctionnement, apres i'arret du financement des frais de fonctionnement par le projet pendant les quatres premieres annees de fonctionnement, a entraine la fermeture de la cantine, ainsi que l'immobilisation du car prevu pour le deplacement des 61eves\. Les couts des deplacements et des repas sont donc pris en charge entierement par les eleves ce qui ne parait pas etre une situation viable A terme\. Par ailleurs, d'importants travaux d'entretien des batiments (peinture, etancheite du hall d'acces aux amphithe&tres) ne peuvent pas non plus atre pris en charge par i'icole\. I1 est convenu que MSPAS (DEMM/INFAS) et DCGTx entreprendront une visite detaillee conjointe des locaux de 1'ecole en vue d'itablir le detail et le cou3t des interventions necessaires et de preciser la part pouvant etre consideree comme couverte par la garantie decennale des entreprises et celle qui devra faire l'objet d'un financement du MSPAS\. Ecole de Treichville (PSD, Prit 2619-IVC): 9\. Les travaux de rehabilitation/extension ont demarre en janvier 1987, la reception definitive des operations s'est achevee en aout 92\. L'ecole a continue de fonctionner pendant des travaux\. 10\. Les problemes majeurs dont souffre l'ecole sont 1ies A l'absence d'un drainage correct du site (terrain plat, nappe phreatique proche, realisations de b&timents additionnels au fil du temps le temps qui n'ont fait que de rendre de plus en plus compliquee 1'evacuation des eaux de  -5- ruissellement)\. Des travaux de remblaiement sont actuellement entrepris par INFAS en vue de rehausser le niveau du terrain naturel a l'approche des constructions\. L'6cole souffre par ailleurs d'une maintenance insuffisante, en particulier pour tout ce qui concerne les canalisations d'6vacuation des eaux usees dans lee dortoirs\. La maintenance est rendue difficile par (a) une conception mal adapt6e des systames d'4vacuation (entierement masques par des coffrages, il est impossible de les surveiller) et (b) des fonds insuffisants de fonctionnement et d'entretien\. 11\. Utilisation des locaux: pour des raisons d'environnement, lee activites pedagogique et administratives se deroulent en g6neral toutes baies masqu6es, dans une atmosphere confinee, entigrement en eclairage artificiel, bien que les locaux offrent des conditions naturelles d'6clairage et de ventilation convenables\. La mission a invite les utilisateurs a une pratique diff6rente en vue d'am4liorer la salubrite des locaux et de diminuer les coats en electricit6\. 12\. Remarczues aenerales sur les ecoles d'infirmiers: les locaux des ecoles, definis suivant une programmation architecturale qui a tenu compte de l'emploi du temps tres particulier de ces ecoles (tous les eleves sont en stage en meme temps, les travaux pratiques a l'hopital se deroulent toujours le matin) font que les locaux pedagogiques sont vides une grande partie du temps et peuvent apparaitre comme surabondants\. Une r6flexion fine concernant le deroulement des activites et lea emplois du temps semble devoir Atre conduite pour l'avenir en vue d'une meilleure utilisation des investissements (une augmentation sensible des capacites de formation semble possible, si necessaire, dans les infrastructures existantes)\. 13\. De l'avis des utilisateurs, l'equipement apparait comme relativement bien adapte aux activites des ecoles\. Les visites ont montre cependant que certains appareils semblent peu ou pas utilises (poupinel par exemple)\. Par ailleurs, il a et6 constate qu'une partie de l'equipement se trouvait toujours dans les cartons d'origine et que les utilisateurs n'avaient qu'une connaissance partielle de lquipement mis a leur disposition\. I1 n'existe pas d'inventaire, pas de fiches signaletiques des equipements (caract6ristique, etat, historique, localisation)\. Il serait judicieux, apres plus de 5 annees de fonctionnement concernant 2 des 3 ecoles, qu'un examen attentif de cette situation soit engage par INFAS/DEMM/BOG en vue de la disponibilite d'un inventaire precis et d'une 6ventuelle relocalisation des 6quipements pouvant apparaitre comme inutiles ou surabondants aupres d'autres services du MSPAS\. Cette analyse devrait pouvoir aussi concerner les equipements prevus pour l1'cole de Korhogo apres la deuxieme annee de fonctionnement\. 14\. La mise en oeuvre des op6rations concernant le suivi des etudes architecturales, la passation des march6s de genie civil et d'equipement et le controle des travaux a 6te confiee a DCGTx, conformement a l'Accord de Pret\. Les services offerts par DCGTx ont ete tres efficaces concernant la conduite des operations confiees et tout particulierement en fin de projet, lorsqu-il s'est agit d'accelerer les deboursements\. Ce d6coupage a cependant engendre des difficultes permanentes concernant la tenue & jour des comptes du projet et slest solde parfois par des relations difficiles entre MSPAS et DCGTx, principalement en debut de projet, periode a laquelle les circuits de communication n'6taient pas bien maitrises\. 15\. Les objectifs d'effectifs concernant les etudiants dans les deux ecoles qui sont enti6rement operationnelles ont ete plus au moins respect6s\. Le nombre de sortants des ecoles de Treichville et de Bouake pour l'ann6e  1994/1995 s'elevent a 165 et 82 our un nombre prevu de 160 et 80 respectivement\. Quant a l'ecole de Korhogo la premiere promotion (actuellement en deuxieme annee) est de 78 eleves infirmiere/sages-femmes et correspond aussi aux objectifs retenus dans le cadre du projet\. 16\. A partir de l'ann6e scolaire 1994/95, la fonction publique ne garantit plus le recrutement des agents formes dans les ecoles d'infirmiere/sages-femmes\. Le MSPAS devrait desormais definir les modalites de realisation et de deroulement du concours\. Pour cette raison, la mission a constate que linscription des elves-infirmiers, et des sages-femmes commence & flechir\. Cela va avoir des repercussions sur le rythme de formation et la disponibiliti des agents de sante sur le terrain\. 17\. Le programme de stages pratiques en zone rurale a l'intention des 6leves-infirmiers a partir de la deuxieme annee ainsi que la formation de 70 encadreurs des centres de Sante ont ete acheves pour les deux ecoles en fonctionnement\. Au cours des visites des centres de Sante faisant partie des zones du stages, la mission a constate que l1iquipement et le materiel des centres etaient insuffisants et dans certain cas derisoire pour assurer une formation efficace des 6l1ves\. Des propositions emises au cours des r6unions avec la direction des differentes ecoles et le MSPAS seraient soit l'approvisionnement en materiel directement aux elIves pour les stages pratiques soit la selection des centres de santi les plus rapproches des Bases de Sante Rurales\. Le principe de l'apport des stages pratiques en zone rurale a bien ete retenu comme element central du cursus, neanmoins, les formations sanitaires pour ces stages ne possedent pas le materiel et l'equipement requis pour assurer la formation de base necessaire\. 18\. Concernant la formation des enseignants moniteurs par lee CESSI de Dakar et de Yaounde, 38 sur 42 ont ete formes dans le cadre du Projet\. Dans le meme ordre d'idie, les objectifs retenus quant a la formation de cadres superieurs (les surveillants d'unites de soins) ont ete respectes\. Le ratio moniteurs-6leves est favorable et reste autour de 1:20\. 19\. Le fonctionnement de ces trois ecoles a ete pris en charge au titre du budget de l'INFAS a partir de Juillet 1992\. Cependant le montant alloue (84 million F\.CFA pour l1annde 1994) pour les frais recurrent des icoles reste inferieur aux besains reels, ce qui entrave le bon fonctionnement des ecoles\. En consequence, le manque de ressources remet en cause la perennite du systeme de formation de base\. La mission suggere que le MSPAS et INFAS poursuivent l'objectif de donner aux trois ecoles leur propre budget a partir de 1995\. 20\. Le travail entame pour 1'6laboration des normes relative a la qualite des soins infirmiers et obstetricaux ne figurait pas parmis lee objectifs originaux du projet\. Cependant, ils devraient servir de base pour les diffirents modules de formation permanente et la rivision des programmes de formation de base, ainsi que pour le systeme de prestation des services\. Bien qu'il a ete constate un retard important, la mission suggere que le travail du Comite national de reflexion sur l'enseignement, la pratique et la gestion des soins infirmiers et obstetricaux se poursuive rapidement apres avoir teste et valide les guides et protacoles de soins dans les centres pilotes\. 21\. Faisant suite a la criation de l'Institut National de Formation des Agents de Sante (INFAS) en 1991, la responsabilit6 pour l1ivaluation et le suivi des programmes de formation de base a ete confiie a cet organisme\. Les trois ecoles utilisent le meme cursus qui fait l'objet de rivision legere  -7- p6riodique\. La mission suggere qu'une analyse des stages pratiques soit entreprise le plut6t que possible et que le travail cit6 plus haut serve comme de point de depart pour les r6visions du cursus dans le futur\. 22\. D'une fagon generale, les objectifs retenus par le projet relatifs a la valorisation des ressources humaines ont 6te atteints, et parfois d6passees\. Cependant, la mission attire l'attention du Gouvernement sur la n6cessit4 de preparer un plan operationnel (paragraphe 68), pour assurer la perennite du systeme de formation de base\. Partie B: Renforcement du MSPAS (i) Systes d'Information et de Gestion (SIG) 23\. La pr6paration d'un plan pour le Developpement du SIG 6tait confiee au BOG et sa realisation a 6te confide a la Direction de l'Information et de la Programmation Socio-sanitaires (DIPS)\. Lobjectif etait la mise en place d'un systeme de collecte et de traitement des donnees afin d'assurer la disponibilite des informations n6cessaires i la planification des activites de sante pour tout le pays\. Ceci comportait des donnees sur les activites des formations sanitaires, la gestion des ressources financiires, humaines et mat6rielles ainsi que des donnees 6pidemiologiques\. Ces dernieres devraient atre collectdes en 6troite collaboration avec l'Institut National de Sante Publique\. 24\. Cette composante du projet a accuse un retard consid6rable et les dates retenues pour l1elaboration du plan pour le developpement du systeme ainsi que les specifications techniques en informatique dans l'accord de credit n'ont pas et6 respectees\. La premiere phase du SIG a demarre en 1991\. Ce n'est qu'en 1993 que le Comit6 Technique de mise en oeuvre du SIG a 6te cree\. 25\. La mise en oeuvre du systeme repose sur un ensemble de modules a realiser de fagon progressive qui sont - Module 1 : Activites de base Surveillance epidemiologique Activites specifiques BSR, CS, SSSU - Module 2 : Activites des plateaux techniques Hospital isat ion Gestion des ressources (humaines, mat6rielles et financi6res) - Module 3 : Activites specifiques CHU/CHR 26\. Concernant le Module 1, la d6finition des indicateurs, le choix des donnees a collecter, la conception et la confection des supports, la formation des formateurs et des agents des dtablissements retenus sont acheves\. Les tests sont en cours et les sedminaires d'dvaluation sont pr5vus pour les 2 et 3 decembre 1994\. 27\. Les travaux de conception et dldlaboration de support de collecte pour le module 2 sont entames, les tests etant pr6vus pour le mois de decembre 1994\. Compte tenu de la cloture du projet, le MSPAS recherche le financement  pour l'achevement de ce travail y compris la fourniture des 4quipements compl6mentaires pour le bon fonctionnement du systime grAce a un financement canadion\. La Banque serait disposee a aider le MSPAS a faire une evaluation approfondie des activites et de la m6thodologie en vue d'assurer la mise en place d'un SIG efficace a terme\. Cet appui pourrait etre pris en charge dans le cadre du Projet d'Appui a la Gestion des RessourceS Humaines (PAGRH) finance par la Banque Mondiale\. Quant a la supervision, la Coop6ration Frangaise a affect6 un assistance technique epidemiologiste pour 3 ans et envisage un appui logistique\. Appui & la Gestion du Systeme 28\. L'absence de coh6rence entre certaines operations a compromis la realisation des objectifs globaux definis dans le projet\. Certaines activit6s ont et6 menees a bien telle que la formation des Directeurs des H6pitaux, des infirmiers specialistes en gestion et des techniciens de maintenance biom4dicale\. La creation d'un Corps d'infirmiers sp6cialistes a ete effective conformement a la clause 3\.08 de l'Accord de Pret\. Niveau Central 29\. Appui a la maintenance: Lee bourses destinees a la formation compl6mentaire des personnels de maintenance ont 6te mise en oeuvre\. L'assistance technique pr6vue pour la DEMM a permis de r6aliser une 6tude sur lea problemes de maintenance des equipements\. Bien que l'appui apporte par le projet A la DEMM puisse etre considere comme relativement faible, les moyons dont dispose cette Direction sont maintenant importants du fait du concours de divers bailleurs (BAD, KFW, FED, FAC, Japon)\. Des unit6s d6centralis6es de maintenance sont en voie d'installation au niveau des regions, une opdration d'envergure relative a l'inventaire des infrastructures sanitaires et des 6quipements eat en preparation\. 30\. Pharmacie de Sant6 Publique: L'appui destine A la Pharmacie de la Sant6 Publique a ete limite compte tenu, d'une part, des difficult6s rencontrees par la Pharmacie, et, d'autre part, de la prise en charge par la CEE des activites de fonctionnement de la Pharmacie pour un montant de 10 milliards F\.CFA\. 31\. L'6tude et la conception d'un systeme de recouvrement des couts pour lequel le BOG a jou6 un r6le central, a abouti d'une fa,on progressive A la mise en place tout rdcente d'un systeme de recouvrement des couts dans les formations sanitaires\. Niveau Hospitalier 32\. Concernant i'appui aux hopitaux, l'amelioration des services d'alimentation des deux CHU par la r6novation et l'equipement de deux cuisines a ete fait aussi bien que la mise en place d'une imprimerie pour l'impression des outils de gestion\. Cependant, l'appui destine aux services comptables n'a pas ete maintenu\. Par contre, le Projet Sante et Demographie a finance des seminaires a destination des prescripteurs\. Niveau de Base 33\. La plupart des activit6s relatives au niveau de base ont concernd la formation de personnel dans les 70 centres de Sante des Lieux de Formation sur le Terrain, aussi bien que les m6decins des districts, par l'organisation  -9- do *eminaires et de stages de courtes durees\. Ceci en vue du renforcement du *ystAme de supervision et de prestation des services\. 34\. Centres de sante/h6bergement des stagiaires\. Les r6alisations visit6es sont en g6neral de qualit6 acceptable\. Les problemes suivants se posent cependant: Surcouts initiaux engendres par des rdalisations pas toujours en relations avec l'environnement (equipement des bAtiments d'hebergement avec des installations 6lectriques et sanitaires mais absence le plus souvent de r6seaux d'eau ou d'6lectricit6)\. Les installations sont le plus souvent d6grad6es avant m6me d'avoir pu etre utilis6es\. entretien des b&timents et des espaces extdrieurs quasi inexistant: branches d'arbre touchant ou surplombant les toitures, debut de degradation des toitures (arrachage des bardages par le vent)\. 35\. La mission recommande que le MSPAS (INFAS, DEMH, Bureau du Projet) entreprenne une tournee syst6matique de toutes lea installations d'hebergement des CS en vue de pr6ciser & nouveau les responsabilites des beneficiaires concernant l'entretien et de preciser les recommandations dans chaque cas\. 36\. Le taux d'utilisation tres faible des infrastructures (environ 2 mois par an pour les localisations od les stages ont commence) et les charges fixes incontournables de maintenance des bAtiments incitent a penser qu'une solution d'h6bergement s'appuyant directement sur les communautes eut et6 pr6f6rable\. 37\. Concernant le petit equipement destine aux stages sur le terrain, seul semblent subsister le mobilier d'h6bergement\. II apparait qu'il eut et6 sans doute plus judicieux d'affecter le petit equipement necessaire aux ecoles plut6t qu'au CS d'accueil des stagiaires\. Partia C\. D&veloppement des Donnees sur la Population 38\. Ce qui suit concerne essentiellement la composante demographique relative au recensement general de la population et de l'habitat, a l'enquete post-censitaire et & l'enquete migrations et urbanisation\. 1\.- Recensement de la Population et de l'Habitat\. 39\. Cette composante inclut le Recensement des Sites Habites, le Recensement General de la Population et de l'Habitat et l'Enqu&te Post- censitaire\. La mission apres examen des documents mis a sa disposition et discussions avec les cadres du Secr6tariat General du Recensement et de certains utilisateurs souligne que les objectifs assignes A l'op6ration ont 6t6 globalement atteints\. Les indicateurs demographiques et socio- economiques sont rendus disponibles A travers plusieurs series de publications \. Plusieurs rapports d'analyse sont publies selon plusieurs themes structure et mouvement naturel de la population, repartition spatiale et migration, caracteristiques socio- culturelles et 6conomiques, caract6ristiques des m6nages et de l'habitat\. Une importante source de donnees est disponible pour l'analyse & travers de plus de 600 tableaux\. Les r6sultats du Recensement des Sites Habites combines avec les resultats du denombrement constituent une base de sondage complete et assez recente pour les enquetes post-censitaires et ont conduit a lAlaboration d'un fichier national de villages\. Les effectifs de la population par circonscription administrative villages, villes, sous- prefectures, prefectures communeB et regions sont egalement disponibles\. Les migrations internes et internationales sommairement saisies lora du  - 10 - recensement seront mieux apprehendees lors de l'EnquAte Migration Urbanisation\. 40\. Bien que le projet ait atteint ses objectifs, il faut souligner que le d6veloppement des activites a enregistre beaucoup de difficult6s qui ont et6 surmontees grace A la collaboration des diff6rents participants au projet : cadres nationaux, bailleurs de fonds (Banque Mondiale et FNUAP), assistance technique ext6rieure (c E A, BUCENS\.)\. Ces difficultea ont conduit a plusieurs reports de la date du denombrement a savoir de Mars 1987 a Novembre 1987 puis Mars 1988\. Ces reports sont dus au retard dans la lib6ration des fonds, les proc6dures administratives et les performances des 6quipes de terrain lors des travaux des cartographies\. 41\. Les difficultes rencontrees par les travaux de cartographie sont de divers ordres : acquisition tardive des 6quipements cartographiques et des moyens de transport, mauvais fonctionnement des mobylettes mises a la disposition des agents, decouverte de nombreux campements, reticence des chefs de campements due a une sensibilisation insuffisante\. Les travaux de terrain ont ete acheves avec 4 mois de retard\. Ils ont permis la confection de plusieurs documents et informations cartographiques : fichier de localit6s, repertoire des localites, code g6ographique nationale des localites, 10\.332 districts de recensement, 5 862 croquis de villages, 184 cartes de sous- prefectures, 50 cartes de departement, 168 plans de ville etc\. II reste cependant a informatiser l'ensemble de toutes ces informations cartographiques, mais la Division de cartographique ne dispose pas d 'quipements informatiques appropries\. 42\. La sensibilisation a 6te un maillon faible des activit6s pr6paratoires du recensement\. Elle a d&marre tardivement, et n'a pas suivi int6gralement la strategie qui avait ete envisagee\. Cette insuffisance de la sensibilisation s'est fait ressentir lors des travaux de cartographie et du d6nombrement occasionnant des retards dans 1'execution des activites\. Une campagne de sensibilisation ne doit pas slarreter au niveau des autorites locales ; elle doit etre programmne et executee jusqu'au niveau des populations\. 43\. Le denombrement de la population a ete caracterise par une formation en cascades des agents\. Initialement prevu pour 15 jours, il a ete prolonge A 1 mois pour tenir compte de l'adjonction de la fiche de 14 ans et plus pour servir a l'tablissement des listes 6lectorales\. La collecte a d6marre (ler au 31 Mars 1988) avec quelque retard dans certains districts de recensement suite A des difficultes d'acheminement du materiel\. Malgre la structure mise en place, le denombrement a connu quelques problemes : deplacement des agents vers certaines zones d6ficitaires, d6coupage cartographique, decouverte de campements omis lors de la cartographie, sensibilisation insuffisante, problemes de guides et d'interpretes\. Le recensement a ete cependant une reussite grAce a l'engagement total du gouvernement, au courage et la t6nacite des cadres nationaux malgr6 leurs problemes d'int6gration A la fonction publique, et A l'assistance ext6rieure par des missions ponctuelles\. 44\. L'Enquete de couverture dont lobjectif est de verifier l'exhaustivite et la qualite du RGPH, de mesurer lea omissions et les doubles comptes a ete rdalisee du 24 Avril du 8 Mai 1988 dans 60 DR tir6s au hasard dans 5 strates\. Menee par 60 enqueteurs et 13 contr6leurs, elle a connu quelques difficultds : absences de certains menages, dem6nagement de menages, sensibilisation insuffisante\. L'exploitation a ete faite ; malheureusement les  - 11 - responsables n'ont pas juge opportun de faire la publication des r4sultats obtenues\. 45\. La mission pense que quels que soient les resultats, il faudrait donner lee raisons de la non publication, exploiter a fond les donn6es et analyser toutes lee difficult6s rencontrees pour une am6lioration des operations futures\. 46\. L'exploitation des donnees a connu un retard considerable par manque de fonds da a la depreciation du dollar\. Apres l'archivage qui a connu lui-meme quelques difficultes (am6nagement tardif des locaux, transfert des dossiers d'un site a un autre), lea travaux de codification n'ont commence qu'en janvier 1989 au lieu de Juin 1988 soit 8 mois de retard\. Ils ont dur6 7 mois au lieu de 12 comme prevu avec un renforcement de l'6quipe de codification\. Ce renforcement n16tant pas necessaire dans la mesure ou la saisie n'a d6marre qu'en Juin 1988 soit 6 mois apres la fin de la codification\. Elle a duree 10 mois au lieu de 12 grAce surtout A un taux de ressaisie de 50 % au lieu du 100 % initial\. Le traitement a connu des difficultes liees aux pannes de l'ordinateur central de la Direction de la Statistique et A la saturation du centre de 1OCM par les travaux relatifs aux elections de 1990\. 47\. La mission pense que le choix des gros systemes au profit des micro-ordinateurs pour l'exploitation des donnees n16tait pas assez heureux\. Des micros performants existent actuellement; ils rendraient le bureau du recensement plus performant, plus autonome et le renforcement en 6quipements informatiques pour les op6rations futures serait mieux assure\. 48\. Les plans d'analyse et de tabulation ont retenu 5 themes d'analyse, 602 tableaux regroup6s en 52 types\. Le plan de tabulation donne le niveau geographique retenu pour chaque tableau\. 49\. Les resultats ont ete publies selon 4 volumes : volume 0 r4pertoire des localites, volume I resultats bruts, volume 2 : Tableaux et graphiques, volume 3 : Analyse en 5 tomes\. 50\. I1 reste A faire des analyses approfondies tant au niveau national que r6gional; a rediger le rapport methodologique et administratif, des monographies\. L'elaboration des perspectives est encore a achever\. Il faudrait informatiser les donnees cartographiques, etablir un atlas, et envisager une mise a jour reguliere des travaux de cartographie\. Un sdminaire national de pr6sentation des resultats du RGPH a 6te organise du 18 au 21 Novembre 1991\. Mais la dissemination des resultats du recensement A p6ch6 par la non publication officielle des resultats provisoires du recensement malgre lee nombreux besoins exprimes\. 51\. Pendant les differentes phases du projet, plusieurs types de formations ont ete organis6es: formation des agents d'execution, ateliers et seminaires pour les cadres du recensement, et stage de courte dur6e a l'exterieur\. Ces formations, appuyees par des missions d'assistance ponctuelle ont renforce la capacite d'ex&cution du Bureau de Recensement\. Il serait souhaitable que les cadres de la Division de cartographie beneficient d'une formation sur l'exploitation informatique des donn6es et informations cartographiques et qu'une attention particuliere soit accordee a la formation des cadres dans le domaine de l'organisation, de l1ex6cution et de l'exploitation en matiere d'Enquete Post-censitaire de couverture\.  - 12 - 52\. Les rdsultats du recensement ont ete largement utilis6s par plusieurs departements notamment l'Interieur pour ce qui est du r6pertoire et du fichier des localit6s et des resultats statistiques par circonscriptions administratives, par le Ministere de l'Economie, des Finances et du Plan\. 53\. La Direction des Controles et des Grands Travaux (DCGTx) s'est basee sur des rdsultats de la cartographie et du d6nombrement pour des etudes de projection, de connaissance du milieu, pour etablir des cartes a partir des fonds de cartes de la cartographie, etablir le sch&ma directeur d'Abidjan, pour le montage d'un systeme d'Information geographique urbain et national etc\. L'INS doit etablir des contrats avec la DCGTx pour une harmonisation des concepts et pour un echange de donnees et d'experiences\. 2\.- Enquete Migration et Urbanisation\. 54\. Programm6e dans le cadre du RGPH 1988, l'enquete devait etre ex6cutee en 1989\. Mais sa combinaison (jonction) avec le reseau sur les Migrations en Afrique de l'Ouest a considerablement retarde ce projet jusqu'en 1993\. Apres une enquete pilote qui a donne lieu a un rapport de collecte et d'analyse, la collecte des donndes de llenquite a d6marre fin Juin 1993 pour une periode de 3 mois\. 55\. Les travaux de codification ont 6te effectu6s par 14 agents d'AoQt 1993 a Janvier 1994\. Mais par manque de materiel la saisie n'a pu d,marr6 qu'en Janvier 1994 soit a la fin de la codification alors que ces deux op6rations devaient etre menees parallelement pour permettre d'eviter des erreurs depuis la codification\. 56\. Les cadres de 1'enquete ont suivi des ateliers de formation sur le logiciel ISSA pour la codification et les logiciel SATA pour l'analyse des donnees\. 57\. Le projet est actuellement a sa phase d'apurement et de tabulation\. Les activites restantes comprennent l'analyse des donnees prevue par un seminaire en Fevrier 1995 qui sera suivi d'un saminaire de diffusion\. 58\. Le projet connait quelques problemes: problemes de gestion et de capacite de la memoire vive des micro-ordinateurs\. De plus, le projet PDM doit prendre fin en Decembre 1994 et le financement des activites restantes constitue une des preoccupations des responsables du projet\. 59\. La mission considere que le recensement a ete une reussite malgr6 les retards accuses et les difficultes rencontrees\. L'INS a et6 renforce dans sa capacite d'organiser et d'executer les op6rations de collecte et d'analyse de donnees d6mographiques\. Cependant pour les operations futures les organisateurs devront jouir d'une large autonomie dans l'ex6cution des activites et dans la gestion des fonds\. Les fonds necessaires aux operations doivent etre assures avant llengagement des activit6s afin d'eviter les ruptures comme celles constatees apres le denombrement\. I1 faudrait egalement 6viter la dispersion des sites abritant lea differentes activit6s du recensement\. La perennit6 de l'expdrience acquise doit etre assur6e par le maintien au Bureau du Recensement d'un noyau de cadres capable d'assurer le suivi des travaux intercensitaires et de mener les analyses approfondies envisagdes\.  - 13 - Gestion du Projet 60\. La gestion du projet a 6te realisee par les organismes suivants: le Bureau du Projet du Ministere de la Sante Publique et Affaires Sociales, la Direction et Contr6le des Grands Travaux, la Direction des Investissements Publics et de la Caisse Autonome d'AAmortissement et l'Institut National de Statistique du Ministere de l'Economie, des Finances et du Plan\. Cette multiplicit6 d'organismes intervenant dans la realisation du projet a pose d'6normes problemes de coordination, d'execution, d'6valuation et de suivi dans la gestion Personnel 61\. Les organismes d'ex6cution du projet n'ont jamais dispose de l'ensemble du personnel requis pour la realisation des tAches qui leur incombent\. Ainsi l'Administrateur du bureau du projet a travaille seul pendant quatre ans\. Le BOG n'a pas obtenu toute l'assistance technique escompt6e\. Gestion comptable et financiere 62\. Le projet a manqu6 d'un appui initial concernant la mise en place d'un systeme adequat et complet de comptabilite si bien qu'a l'arrivee de la mission, soit 4 mois apres la cloture du projet, aucune situation actualis6e et fiable n'4tait disponible concernant chacun des 2 grands volets du projet\. Du fait de la gestion separee des volets Sante et Population, aucune consolidation des depenses n'etait non plus disponible\. Seule la comptabilite relative au volet Sant6 a et6 informatis6e, a partir de 1990\. Cette informatisation n'a pas prevu cependant une presentation des comptes par composante pour laquelle il demeure necessaire d'operer un important traitement manuel\. Comptes du projet 63\. Le compte sp6cial et des fonds de contrepartie du projet ont connu des periodes de rupture de fonds\. Cette situation est due non seulement & la lourdeur des procedures de reapprovisionnement, mais aussi au fait que les institutions responsables de cette t&che s'y prenaient avec beaucoup de retard\. On constate en moyenne environ deux mois par an de manque de liquidite dans l'un ou l'autre des comptes, parfois dans les deux a la fois\. Audit 64\. Tous les rapports d'audit du volet sante du projet ont 6t6 fournis avec quelquefois des retards tres importants\. Par contre, les deux derniers audits du volet demographie n'ont pas ete realises et ceux des annees anterieures n'etaient pas accompagnes des commentaires du Gouvernement\. Durant la mission, l'INS a donnd l'assurance que les pre-rapports d'audit des exercices 1992 et 1993 du volet demographie seraient disponibles avant le 15 Decembre 1994\. Recommandations 65\. Pour am6liorer la gestion et l'efficacite de futur projet, il serait souhaitable que les autorites ivoriennes prennent des mesures adequates pour assurer une meilleure communication entre les differents organismes intervenants, la disponibilite du personnel adequat, la programmation et l'evaluation frequente des activites a travers un atelier de lancement du  - 14 - projet, des atellers annuels de progra Gation ainsi qu'uns 6valuation & ml- parcours, la miss en place des proc6dures de passatLon de march6s beaucoup plus simples et la disponibillt6 & temps des rapports d'audit\. PFin--cement du Projet 66\. Lo projet a connu certaines difflcult6s do financement principalement li6es a une 6volution d6favorable des taux de change entre le F\.CFA et le dollar\. L'achavement des Partles A et C du projet (6col- d'linfirmiers de Korhogo et Enquete sur lea migrations) a n6cessite la mise en place d'un financement complementaire de la Banque Mondiale dans le cadre du Projet de Developpement Municipal (Pret 3128-IVC)\. 67\. Le projet a beneficie des co-financements initialement pr6vus de la part du FNUAP et de lUSAID (partie C du Projet) et du soutien du FAC (Partie B du projet) sous la forme d'assistance technique et de bourses de formation\. Rapport d'6valuation du projet du Gouvernement 68\. Comme indiqu6 dans la lettre du 28 septembre 1994, adress6e au MSPAS et MEFP, la mission demande quo le rapport d'6valuation du projet du Gouvernement soit envoye a la Banque dans un d6lais de deux semaines\. La mission a donne aux autorit6s un sch6ma du rapport A titre indicatif et la mission a souligne la n6cessite de joindre A ce rapport un plan op6rationnMl pour la poursuite des activites du projet\. Ca plan devrait comporter les d6ci- siona prises et lea mesures envisagees pour assurer la p6rennit6 des differentes activit6s financ6es dans le projet, entre autres, la disponibilit6 des fonds de fonctionnement des diff6rentes activitea du projet, les d6cisions prises pour lVentretien des batiments, le suivi du SIG, la diffusion des resultats du volet demographique etc\. 69\. Lee conclusions, recommandation et suggestions de cet Aide-MHmoire feront l'objet d'une confirmation officielle dea le retour de cotte mission a Washington\. Abidjan, le 4 novembre 1994 St,_~~~~~ ~~~~~~~ rr 1 o Ethna Johnson Ouattara Mahiri Edouard Chef de Mission Directeur de Cabinet, MSPAS Coordonnateur du Projet  ; -^____ AT%A23 / C MINISTLRE DE LA SANTE I REU LE REPUBLIQUE DE COTE D'IVOIRE ET DE LA PROTECTION SOCIALE Union - Discipline - Travail 20 fE C\. 10,9 k PROJET DE DEVELOPPEMENT SANITAIRE PROJET SANTE - B\.I\.R\.D\. SERVICE COURRIER t -mj^ le G__<1y 146 NO /MSPAS/CAB/DAF/BOG A Monsieur le Chef de la Mission Regionale de la Objet Rapport d'achevement du Banque Mondiale en Afrique Projet Sante et Demographie de l'Ouest pret 26 19 IVC du 27 Septembre 1985\. A B I D J A N A l'Attention de Madame ETHNA JOHNSON Specialiste en Sante Publique Banque Mondiale WASHINGTON D\.C J a i 1h on n e ur d e v ou s f a ire pa r ve n ir Ile r a p port d'ach6vement du Projet sus-indiqud, 6tabli par 1tEmprunteur et ceci en compl6ment de 1'6valuation effectu6e par la Mission de la Banque Mondiale conduite par Madame ETHNA JOHNSON du 24 Octobre au 5 N\.ovembre 1994\. Je vous prie de craire en 1'assurance de mes sentiment respectueux\. L'Administrateur du Projet \.~~~~~~~~~~1 \. _\. :~~~~~~~~~~~~~~~~~~~~~ VmAdrinistrateu, JOHNSON du 4 Octobre du PToebr 94 ~ CISSE LASSINE Je~~~~~~ma vos re e riree ' suaned mssntmn  MINISTERE DE LA SANTE PUBLIQUE REPUBLIQUE DE COTE D'IVOIRE ET DES AFFAIRES SOCIALES Union-Discipline-Travail LE CABINET RAPPORT D'ACHEVEMENT DU PROJET SANTE ET DEMOGRAPHIE PRET 2619 IVC DU 27 DECEMBRE 1985 REFERENCE : Lettre Banque Mondiale n02325/04 du 28 septembre 1994, signee par M\. OK PANNENBORG\. Le present rapport effectue en novembre 1994 constitue l'annexe/A du rapport d'achevement, soit la deuxieme partie etablie par l'emprunteur en complement de lVevaluation effectuee par la mission de la Banque Mondiale conduite par Mme ETHNA JOHNSON qui a sejourne en COTE d'IVOIRE du 24 octobre au 5 novembre 1994\. PLAN DU RAPPORT I - INTRODUCTION\. II - OBJECTIFS DU PROJET\. III - EVALUATION CRITIQUE DES MODALITES D'EXECUTION\. IV - APPRECIATION DES RESULTATS\. V - PROPOSITIONS POUR L'AVENIR\. I/ INTRODUCTION : Le Projet Sante-demographie (Pret 2619 IVC) dont l'accord de pret a ete signe le 27 septembre 1985 est le premier projet de financement de la Banque Mondiale dans le secteur sanitaire en COTE D'IVOIRE\. Et comme son nom l'indique, le projet comporte egalement une composante demographie\. Initialement prevue pour le 30 juin 1992, la date de cl6ture a ete reportee a deux reprises, d'abord au 31 decembre 1993 puis au 30 juin 1994, en raison essentiellement des difficultes creees par la fluctuation du cours du dollar US\. Cette situation a perturbe le financement de l'Ecole des Infirmiers de KORHOGO dont la partie Genie Civil a dui etre assurde par le Projet de Developpement Municipal (Pret 3128 IVC)\.  2- Le montant total de la composante sante (parties A et B du Projet) soit 17,5 millions de dollars US au titre de Pret et 23 millions de dollars US en tenant compte de la contre-partie ivoirienne a ete consomme a hauteur de 8,5 milliards de FCFA\. Quant a la composante demographie (partie C) son couit global se chiffre a 3,268 milliards de FCFA reparti comme suit - un pret de la Banque Mondiale d'un montant de 4,2 millions de dollars US, soit l1'quivalent de 2,082 milliards de F CFA, au moment de la signature de l'accord du pret\. Mais, a la suite de la baisse du cours du dollar US, ce chiffre s'est traduit par un montant effectif de 1,176 milliard de F CFA en mars 1988 Cette perte de financement a ete compensee par un nouveau pret de 3 millions de dollars US, sur le Projet Developpement Municipal (PDM qui est entre en vigueur a partir de mars 1990)\. - une inscription de 262 millions de F CFA au Budget General de Fonctionnement (BGF) et de 589 millions de F CFA au Budget Special d'Investissement et d'Equipement (BSIE), soit un montant global de 851 millions de F CFA, au titre de la contre-partie ivoirienne ; - une subvention du Fonds des Nations-Unies pour la population (FNUAP) d'un montant initial de 500\.000 dollars US porte a 828\.000 de dollars par des apports successifs, soit l'equivalent de 335 millions de F CFA, en fin 1990\. Le Projet a egalement beneficie d'une contribution en nature de l'US-AID d'une valeur de 250\.000 dollars US repartie sur plusieurs annees et consacree & la formation et a l'assistance destinees au personnel d'encadrement d'une part, et a la fourniture d'equipements cartographiques et informatiques d'autre part\. II/ OBJECTIFS DU PROJET : 2:1 - Volet Sante (parties A & B) Dans son volet sante, le Projet avait deux (2) objectifs principaux : - la valorisation du personnel de sante, plus particulierement le personnel infirmier ; - l'amelioration des capacites de gestion du Ministere de la Sante\.  -3- A - VALORISATION DU PERSONNEL DE SANTE Partant du constat effectue en 1984-1985 qui fait apparaitre : - l'insuffisance quantitative du personnel infirmier (2\.500 en 1985) ; - l'inadaptation de la formation aux besoins plus particulierement des centres de sante de base - la penurie en cadres infirmiers et en personnel d'execution du type aide-soignant ; Le Projet a eu pour objectifs - l'augmentation de la capacite de formation par la creation de deux (2) nouvelles ecoles d'infirmiers a BOUAKE et KORHOGO et la rehabilitation et l'extention de l'ecole de TREICHVILLE de facon a garantir une production annuelle de l'ordre de 320 infirmiers pour les trois (3) ecoles ; l'amelioration du contenu des programmes et des methodes pedagogiques avec l'introduction de stage en zone rurale ; = la formation de quarante-deux (42) moniteurs supplementaires pour les trois (3) ecoles d'infirmiers et la mise en place d'une formation nationale de surveillants d'unites de soins - la reconnaissance de la fonction d'aide-soignant et la mise en place d'une formation specifique de ce personnel auxiliaire - la mise en place d'une planification des effectifs et d'un programme de formation a long terme ; - en cours de Projet, un objectif supplementaire a ete retenu, & \.savoir la definition des normes de soins par niveau de structure sanitaire et par specialite en integrant systematiquement la pratique des soins de sante primaire (SSP)\. B - AMELIORATION DE LA CAPACITE DE GESTION DU MINISTERE DE LA SANTE : La situation en 1985 etait caracterisee par l'absence totale de cadres administratifs et techniques, ce qui a conduit a privilegier dans le Projet la formation de vingt-six (26) administrateurs des services de sante, de quatorze (14) ingenieurs biomedicaux et techniciens de maintenance et le perfectionnement de huit (8) directeurs regionaux de la sante\.  -4- Le Projet prevoyait egalement la mise en place d'un Bureau d'Organisation de Gestion (BOG) pour ameliorer le fonctionnement de l'administration centrale, la gestion des formations sanitaires (y compris les CHU et les CHR) et preparer la mise en place d'un systeme de recouvrement des couts, etc\. Des actions specifiques etaient enfin prevues en vue de la mise en place d'un Systeme d'Information pour la Gestion (S\.I\.G\.), de l'amelioration de la maintenance des equipements et de l'approvisionnement en produits pharmaceutiques, etc\. 2\.2 - Volet Demographie (partie C) : Deux (2) principaux objectifs ont ete assignes a ce volet : - la realisation d'un recensement general de la population et de l'habitat (R\.G\.P\.H\. 88) ; - l'enquete migration et urbanisation\. Ces operations de collecte devaient, entre autres, permettre d'elaborer des indicateurs demographiques et socio- economiques d'une part, et de constituer une source importante de donnees pour l'analyse et la recherche sur l'evolution et les structures de la population ainsi que pour les sondages pour les enquetes post-censitaires d'autres part\. En plus de ces deux principaux objectifs, le volet demographie du Projet comportait d'autres composantes - le recensement des sites habites, - le denombrement, - les activites post-denombrement\. III / EVALUATION CRITIQUE DES MODALITES D'EXECUTION Cette evaluation critique portera d'une part sur le contenu du Projet et d'autre part sur ses modalites d'execution\. A - CONTENU DU PROJET : L'historique de l'elaboration du Projet fait comprendre les difficultes rencontrees surtout pour la mise en oeuvre de la partie B du volet sante\. En effet, cette partie non prevue a l'origine a ete rajoutee en fin de discussion, au Projet initial qui portait sur la formation des infirmiers essentiellement\. C'est pourquoi, la formation des objectifs est quelquefois confuse avec un catalogue d'operations pas toujours coordonnees entre elles et des moyens financiers pas toujours adaptes aux besoins reels ; le S\.I\.G\. aurait pu par exemple justifier a lui tout seul une composante specifique\.  -5- B - PROCEDURES D'EXECUTION Les difficultes liees a l'execution du Projet tiennent aux causes suivantes : - lourdeur des procedures de decaissement surtout au niveau de la Caisse Autonome d'Amortissement (CAA) ; - difficultes de paiement des contre-parties ivoiriennes dues au manque frequent de liquidite ; - approvisionnement irregulier du compte special - lourdeur et lenteur des procedures administratives de signature des marches publics ; - delais souvent importants pour obtenir les avis de non- objection de la Banque Mondiale ; - la conclusion du pret en dollar US pose enormement de problemes au moment de l'execution, en raison des fluctuations de cette monnaie\. IV/ APPRECIATION DES RESULTATS A - FORMATION DU PERSONNEL DE SANTE L'ecole d'infirmier de BOUAKE a ete ouverte en janvier 1988 comme prevu, tandis que celle de KORHOGO, avec beaucoup de retard, fonctionne depuis mars 1994 dans un chantier pas encore acheve\. De 1986 A 1994, 1\.817 infirmiers ont ete formes portant le nombre d'infirmiers en service a 4\.000 L'objectif poursuivi, a savoir une capacite de formation de 320 infirmiers par an est donc atteint\. En ce qui concerne le programme de formation, le contenu a ete adapte aux priorites de la politique de sante de la COTE d'IVOIRE\. Mais les methodes pedagogiques et la formation sur le terrain seront davantage ameliores avec l1'tablissement des NORMES DE SOINS INFIRMIERS qui est en voie d'achevement\. De 1986 A 1994, 59 moniteurs ont ete formes dont 21 avec des bourses OMS et 38 avec des bourses du Projet\. Ces formations ont ete realisees dans les CESSI de DAKAR et de YAOUNDE\. La formation des surveillants d'unites des soins a ete engagee en COTE d'IVOIRE depuis 1986 avec le debut du Projet\. A ce jour, 108 ont ete formes et le cycle se poursuit sur la base de 20 par an\.  -6- La reconnaissance de la fonction d'aide-soignant a fait l'objet d'un dossier definissant leur profil, les modalites de recrutement et de formation\. Aujourd'hui, cette qualification est reconnue par le nouveau statut de la Fonction Publique et la formation pourra etre assuree par les ecoles d'infirmiers\. Par ailleurs, depuis 1991, les ecoles d'infirmiers sont integrees dans un etablissement public national denomme Institut National de Formation des Agents de Sante (INFAS) qui doit prendre en charge leur fonctionnement, assurer la maintenance de leurs infrastructures et de leurs equipements et redefinir les nouveaux programmes de formation, en tenant compte de 1tlaboration en voie d'achevement des NORMES DE SOINS INFIRMIERS\. Si globalement on peut considerer que l'objectif poursuivi pour ameliorer la formation des infirmiers a ete atteint, par contre, la planification a long terme des effectifs nta pu etre realisee comme prevue\. En effet, le fichier du personnel etabli sur la base d'un recensement realise en 1992 n'est pas operationnel et le probleme de la maitrise des effectifs aussi bien sur le probleme de la maitrise qu'en ce qui concerne leur utilisation reste a resoudre\. B - RENFORCEMENT DES CAPACITES DE GESTION AU MINISTERE DE LA SANTE : Le Bureau d'Organisation et de Gestion (B\.O\.G\.) a ete mis en place mais, il n'a pu beneficier que d'un assistant technique de 1986 a 1994 et d'un second seulement de 1988 A 1990, sur les 3 prevus dans le cadre de la Cooperation Francaise\. 14 cadres nationaux au total ont servi de 1986 A 1994 au B\.O\.G\. qui a plut6t servi de terrain de formation de ces derniers\. Le B\.O\.G\. a assure comme prevu le secretariat du College des Directeurs Centraux, elargi une fois par trimestre aux Directeurs Regionaux et le suivi de l'execution de ses decisions\. Il a participe a la formation, A la gestion, a l'inventaire de la reglementation existante et a l'elaboration de nouveaux textes, au suivi et a 1'exploitation de l'activite des h6pitaux, a la mise en place d'une comptabilite analytique, A 1'exercice de la tutelle des Ministeres sur les EPN du secteur sante, A l'elaboration et la mise en place du recouvrement des couits\. Le BOG constitue aujourd'hui une cellule de reflexion au service du Ministere pour tous les problemes en rapport avec l'organisation et la gestion des services de sante\. Par ailleurs, le programme de formation a ete realise bien au-dela des previsions avec le concours financier d'autres bailleurs de fonds tels que : OMS, FAC, BAD et KFW\.  -7- Ainsi - 50 administrateurs des services de sante ont ete formes et 21 autres sont en formation a 1'ENA oui a ete ouverte une section permanente de formation en administration sanitaire (moyenne de 10/an) ; - 57 cadres de niveau A ont ete egalement formes a la gestion hospitaliere ; - les Directeurs Regionaux ont beneficie de stages de perfectionnement au CHR de BORDEAUX en FRANCE ; - 14 ingenieurs biomedicaux et 35 techniciens de maintenance ont ete formes ; - 22 stages de perfectionnement dans les techniques de gestion, en organisation des services sanitaires, en sterilisation et en hygiene hospitaliere ont ete finances par le Projet comme prevu\. En outre, les objectifs specifiques notamment la reorganisation de la fonction alimentaire des CHU visant a reduire sensiblement le coOt des journees alimentaires ainsi que la realisation de l'imprimerie de la sante ont ete atteints\. Enfin, la mise en place d'un systeme de recouvrement des couts a pu etre menee a son terme et son application est effective depuis octobre 1994\. Par contre, la realisation d'un systeme d'information et de gestion (SIG) n'a pu etre menee a son terme en raison de l'ambition trop globale du Projet, tant au niveau des donnees prises en compte que des supports de saisie de ces donnees\. En ce qui concerne l'approvisionnement en medicament et la gestion de la Pharmacie de la Sante Publique (PSP), l'ampleur de ce probleme a necessite le concours financier du FED pour sa realisation\. Neanmoins, la formation des prescripteurs en medicaments essentiels a pu etre financee par le Projet comme prevu et environ 200 medecins ont requ cette formation\. Il reste beaucoup a faire pour rendre effective et veritablement operationnelle la capacite de gestion du Ministere de la Sante Publique malgre la realisation quasi-totale des objectifs assignes & cette composante\. En premier lieu, il convient d'achever la mise en place du SIG, prealable indispensable a la generalisation de la programmation budgetaire qui suppose une bonne connaissance de l'activite\.  -8- C - DEMOGRAPHIE Les resultats du volet "Demographie" portent sur les aspects quantitatifs et institutionnels d'une part, et sur la formation des hommes d'autres part\. 1) Aspects quantitatifs : Le recensement general de la population et de irhabitat (RGPH 88) a permis de disposer : - d'un fichier des localites (8\.549 au total) - d'un repertoire de districts et d'ilots de recensement ; - d'une cartographie totale et approfondie du territoire national (5\.862 croquis de village-moyen ; 7\.000 esquisses de plans de rattachement de campements ; la mise a jour de 100 plans d'ensemble de ville ; 184 cartes de sous-prefectures ; 50 cartes de departements ; etc\.) - de plus de 600 tableaux portant sur la population de droit, groupes en 52 types et classes en 8 series\. Ces resultats ont ete publies dans 4 volumes dont le volume 3 est une analyse au niveau national en 5 tomes\. 2) Aspects institutionnels : A la faveur du RGPH 88, le Gouvernement a institue un recensement general de la population tous les dix (10) ans\. De meme, il a ete cree au sein de l'Institut National de la statistique (INS) un service charge specifiquement des recensements gqneraux de population et des enquetes demographiques\. 3) Formation des hommes Les cadres nationaux de l'Institut National de la Statistique ont beneficie de l'appui technique des experts du FNUAP, de la CEA, du Departement de Cooperation Technique pour le Developpement (DTCD), de la Banque Mondiale et du Bureau de Recensement des Etats-Unis (BUCN) dans les domaines de la gestion, de la cartographie censitaire, de la collecte, du traitement informatique et de l'analyse des donnees de recensement\. Les cadres nationaux ont egalement beneficie de formations soit sous forme de seminaire ou atelier, soit sous forme de cours academiques de courte duree dans divers domaines dans des institutions specialisees en AFRIQUE, en EUROPE, aux ETATS-UNIES et au CANADA\.  -9- V/ PROPOSITIONS POUR L'AVENIR La realisation des objectifs du Projet Sante- Demographie (Pret 2619 IVC) que l'on peut considerer comme globalement satisfaisante a ete entravee par les difficultes soulevees plus haut et qui pourraient etre limitees a l'avenir : - par une identification plus claire du contenu des operations et eventuellement, pour eviter le contexte du Projet 2619 IVC, avec un accord de pret s'appuyant sur une analyse purement descriptive des operations a mener ; - par des procedures d'execution plus souples permettant des decaissements plus rapides sans exclure le contr6le indispensable pour le bailleur et l'emprunteur ; - l'accord de prdt devra prevoir une clause d'ajustement automatique tenant compte des cas de fluctuations a la baisse de dollar US\. Cela permettrait d'eviter un arret des activites ; - I'accord de pret devra egalement prevoir la mise en place par decret d'une structure de coordination pour veiller au ban fonctionnement du Projet\. Par ailleurs, il est necessaire, en vue de perenniser les acquis du Projet 2619 ICV, de poursuivre certaines actions entamees et qui malheureusement ont connu ou qui connaissent des difficultes dans leur execution\. Ces actions concernent aussi bien le volet sante que le volet demographie\. A - VOLET SANTE Il s'agit de - de la prise en charge effective du fonctionnement et de la maintenance des ecoles d'infirmiers par l'INFAS\. - de la mise en oeuvre effectives de la formation des aide- soignants\. - de la refonte des programmes de formation sur la base des normes de soins en cours d'elaboration\. - de la poursuite de la realisation du SIG par la prise en charge par la Banque Mondiale du financement necessaire pour achever l'acquisition de l1'quipement informatique et la formation du personnel\.  - 10 - de la mise en place d'une veritable maitrise des effectifs et d'une planification des ressources humaines\. - de la poursuite de la mission du BOG comme bureau d'etudes au service du Ministere de la Sante Publique et des Affaires Sociales\. B - VOLET DEMOGRAPHIE - Le traitement des donnees devra se faire dans un centre de l'Institut National de la Statistique avec des micro- ordinateurs autonomes prevus a cet effet\. - La realisation des differentes activites du recensement devra etre centralisee et non dispensee sur plusieurs sites\. Abidjan, le 23 DEC\. 1994 Le Directeur de Cabinet Coordonnateur du Projet LeDrdu * CaIR DUR  !2/06 '95 17:16 FAX 225 44 16 87 IBRD ABIDJAN CI i002 MINISTERE OE LA SANTE-P BLl> -PUBLIQU~ REPUBUQUE DE COTE D'IVOIRE ET DES AFFAIRES SOCIALES ' | nion-DsciplineTravail C A B I N IE T 1= | Abidjan, I OJ°IN 79^ ________________ I\.E DIRECTEUR DE CABINET No 2°9 4 /MSPAS/CAB/BOG' * ^& |Mornieur le Chef de la Mission 1-_ --_ Residents de la Banque Mondiaio A B I D J A N OBJET: Rapport de fin d'execution du Projet A L'ATTENION DE Sant6 at D0mographie (Pr6t 2619 IVC) MONSIEUR IAN PORTER Chef de la Division Population REF\. V/Lettre n- WA/SR/154 du 15 mal 1995 at Ressourcas Humainee, -Dpartement de I'Afrique Centrale et Occidental a ila Banque Mondlale WASHINGTON D\.C\. Suite A votre iettr vle en r6f6renve,- 'al l'honnmu de you\. sinifier quo le n'al pa d'obmevatlons particullim A fair concemant le rapport de fin d'_ xcution du Praie $enth at D1mographie 6tabil par la Division Population St Rsourcee Humainas\. Veuillhz agroer\. Monsieur le Chef do Mision, I'exprension do ma haute consid6ration\. Le Directeur de Cabinet Coordinateur du Projet   t ' < < ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~B U R K I N A < 9, -\.i \. ~~~~~~~ ~~~~~~~~~~~~~~~~~~F A S O 0 ,0~~~~~~~~~~~~~~~~~~~~~~~ -\.---------- k~~~~~~~~~~~~~~~~~~~~~~~~~~o f 0 G I, DANANE 7 Ir-~ 11 n°*- COTE D'VOIRE D t ,,o T'tHEALTH AND DEMOGRAPHIC PROJECT 4 NURSING SCHOOLS_ PROJECT ZONES - ECaiES DINFIRMIERS ZONES DU PROJEr UNIVERSITY HOSPITALS BOUNDARIES OF MEDICAL DISTRICTS HOPIrAUX UNWlERSITAIBES LIM/ITES DE SECTEURS DE SANTE o -o do co o a c C R E G I O N A I H O S P IT A L S S U IP R E E E C T U IE B O U N D A R IE S ZIIOSEItIR3 HOPITAUX REGIONAUX LIMTrEs DE SOUS\.PREFECTU/ES * SUB -REGIONAL HOSPITALS INTERNATIONAL BOUNDARIES HOPITAUX SOUS REGIONAUX LIMJTEs INTERNArIONALE ,,\. ,\. o\.0~~~\. o~ooo\. ooA \.o\.~~~ o\.0, -~ m MEDICAL DISTRCICS \.o,,, _n 0\.,\.on * \.o0 I ho,, 0\.1tl ,0o0 50 7l\. 7AtM oA - BASES GE SECTEUOS D E S GCTE DE SANTE CD \.000000\.I \.n or o\.o\.pI\.o of wn0io\.0 b\.oodoo\. '0 a~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~ \. 7    LMA(G LN(G Report Nc: 15u3'-i Type: 1 (CR

REVIEW

P105143

 ICRR 13967 Report Number : ICRR13967 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 10/19/2012 Country : Albania Project ID : P105143 Appraisal Actual Project Name : Albania Md Capacity US$M ): Project Costs (US$M): 7\.19 5\.52 Building & Support To Implement The Integrated Planning System L/C Number : Loan /Credit (US$M): Loan/ US$M ): 7\.19 5\.52 Sector Board : Public Sector US$M): Cofinancing (US$M ): Governance Cofinanciers : Austria, Italy, Sweden, Board Approval Date : 01/17/2008 Switzerland, United Closing Date : 10/31/2009 09/30/2011 Kingdom, EU, Netherlands Sector (s): General finance sector (40%); Central government administration (30%); General public administration sector (30%) Theme (s): Other public sector governance (20% - P); Public expenditure; financial management and procurement (20% - P); Administrative and civil service reform (20% - P); Macroeconomic management (20% - P); Analysis of economic growth (20% - P) Prepared by : Reviewed by : ICR Review Group : Coordinator : Stefano Migliorisi Clay Wescott Navin Girishankar IEGPS2 2\. Project Objectives and Components: a\. Objectives: The project development objective was to “ensure that the Government of Albania ’s core policy and financial processes function in a coherent, efficient and integrated manner \.â€? (Project Document, p\. 6)\. The Grant Agreement adds that the PDO would be achieved “through the participation of the Recipient ’s line ministries in the Integrated Planning System (IPS)\.â€? For this review, IEG uses this elaborated objectives statement \. Also, for the purposes of evaluating efficacy (Section 4), IEG assesses two elements of the PDO \. PDO1 relates to more integrated and coherent functioning of core policy and financial processes of the Government, and PDO 2 relates to more efficient functioning of those processes\. The project was restructured in August 2010, but the PDO was not revised\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components:  The original project had eight components : 1\. Stabilization and Association Agreement (SAA)SAA ) Implementation and EU Assistance Programming and Reporting Capacities Strengthened – to support effective and timely implementation of the European Integration obligations in line with the commitments foreseen in the National Plan for the Implementation of the SAA (original cost US$ 0\.82 million) 2\. MTBP ) – support to improving the MTBP process Implementation of the Medium Term Budget Process (MTBP) (original cost (US$1\.41 million); 3\. Implementation of Public Investment Management – enhancing public investment management capacity (original cost US$ 0\.97 million); 4\. Macroeconomic Forecasting – supporting the establishment of sound macroeconomic and fiscal forecasts as a basis for the multi-year budgeting process (original cost US$ 0\.80 million); 5\. IPS Coordination, Oversight, Awareness, Communication – supporting the implementation of the Government IPS framework (original cost US$ 0\.41 million); 6\. NSDI ) and Supporting Sector and Cross Cutting National Strategy for Development and Integration (NSDI) Strategies – improving linkages between national and sectoral strategic planning (original cost US$ 0\.65 million); 7\. Aid Coordination – improving coordination of donor aid (original cost US$ 0\.49 million); 8\. Monitoring and Reporting – establishment of IT systems (including Albanian Financial Management Information System or AFMIS) to support monitoring and reporting progress in strategy and MTBP implementation (original cost US$ 1\.1 million)\. In addition the components noted above, US$ 200,000 was set aside for contingencies and US$ 340,000 for the Trust Fund administration fee\. Actual costs for these components were not provided in the ICR \. The components were revised during restructuring, although their number was kept constant \. The second and third components were merged reflecting the Government ’s decision to merge recurrent and capital budgeting processes and offices\. The eighth component was focused more clearly on AFMIS \. A new project management component was added to support capacity building of the Central Financing and Contracting Unit (CFCU), which functioned as the project implementation unit \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Cost: Cost : Financial project costs at appraisal were US$ 7\.19 million\. Actual costs were not included in the ICR \. Financing : The project was entirely financed through a Multi -Donor Trust Fund (amounts received by the Bank are indicated in brackets)\. Austria (Euro 500,000), Italy (Euro 368,787), the European Union (Euro 900,000), the Netherlands (EUR 1,000,000), Sweden (SEK 8,000,000), Switzerland (CHF 750,000), and the United Kingdom (GBP 1,500,000) contributed to the trust fund \. These contributions included also the Bank ’s administration fee which is not passed on to the Recipient \. The initial grant was equivalent to Euro 4\.525 million, increased to Euro 5\.525 in August 2010\. An estimated Euro 1\.45 million was undisbursed by project closing, mainly due to the lack of progress on AFMIS as discussed later in this review\. Borrower Contribution : The Government planned to contribute US$ 89,000\. Information on the actual contribution is not provided\. Dates : The project was approved on January 17, 2008\. A mid-term review was carried out in November 2009, and the project was restructured in August 2010 to adjust the results framework, slightly modify the components, and accept additional financing\. The project’s closing date was extended twice from October 31, 2009 to September 30, 2010, and then to September 30, 2011 during the 2010 restructuring\. The project closed as per revised schedule\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: IEG assesses the relevance of objectives is rated as substantial \.  The PDO was -- and continues -- to be consistent with the Government ’s reform agenda and the NSDI\. The project was based on the IPS Implementation Plan produced by the Department of Strategy and Donor Coordination (DSDC) in April 2006\. Furthermore, the objective is aligned with the Bank's current Country Partnership Strategy FY11-14, and specifically, contributes to the two pillars of the strategy -- (i) Accelerating Recovery of Economic Growth through Improved Competitiveness and (ii) Broadening and Sustaining Social Gains)\. These priorities are to be achieved by addressing fiscal stability issues and improving public service delivery, both of which are directly related to the PDO \. b\. Relevance of Design: IEG assesses relevance of design as modest based on its strengths and weaknesses : The project’s design was overly complex and ambitious, given its short duration of three years and Albania's limited capacities (ICR, p\. 6)\. It included eight components, 36 different activities, and numerous beneficiaries across all line ministries\. In addition to the line ministries, project implementation relied on the Department of Public Administration (DOPA), the Training Institute for Public Administration (TIPA), the Ministry of Finance, the Department of Strategy and Donor Coordination (DSDC), and the Central Financing and Contracting Unit (CFCU)\. The project introduced dual accountabilities -- ministries were responsible for agency -specific components and the DSDC for government-wide components -- that placed a premium on coordination \. Administrative support provided by a Project Implementation Unit (PIU) at the Council of Ministers (staffed by only two civil servants) was not adequate to meet this challenge \. These above-mentioned factors -- complexity of design, limited capacity, and dual accountabilities -- contributed to inefficiencies in project management \. As a result, the project implementation was substantially delayed\. The pace improved only after the 2010 restructuring, which added the dedicated PIU \. There were some innovative aspects that sought to introduce flexibility during design and implementation \. For instance, Component 2 (MTBP/Budget Capacity)\. It included subprojects to provide intensive, direct MTBP support to 4- 5 key ministries through TA over a 2-3 year period\. The Ministries and activities were to be identified during implementation to enable the Government to adapt the project to changing circumstances \. Flexibility is helpful for agency level change efforts, but not always appropriate for building highly technical systems across ministries and agencies \. For instance, Component 3 (PIM) included support for software development for the AFMIS without clearly defined specifications upfront \. However, there was not enough time to prepare these specifications and write the software code during the life of the project \. Overall, the intervention logic was simple : technical assistance and IT investments funded under the project (inputs) would allow the participation of Albania ’s line ministries in the IPS (outputs), and this would ensure that the Government of Albania’s core policy and financial processes functioned in a coherent, efficient and integrated manner (outcome)\. However, the causal link between inputs, outputs and outcomes in the original design was not clearly established, and the results framework lacked a baseline on which to measure progress\. 4\. Achievement of Objectives (Efficacy): Efficacy is assessed against the goal of ensuring that the Government of Albania ’s core policy and financial processes function in a coherent, efficient and integrated manner through the participation of the Recipient ’s line ministries in the Integrated Planning System (IPS)\. Outputs: All outputs, with the exception of the development of AFMIS and HRMIS, were achieved before project closing\. These include the completion of training (i\.e\., on budget planning, analysis and monitoring; on external assistance); training needs assessments and strategy; redesign of documents, manuals or strategies (on MTBP, policy impact assessments, and debt management ); and regulations (i\.e\., role of DSDC in coordinating external aid)\. Nevertheless, the AFMIS was not completed as direct (sole source) contract negotiations with the developer of the Treasury IT system failed in April 2011, due to the refusal by the contractor to accept standard World Bank terms\. These outputs generally led to some improvements in policy and financial processes at the government -wide  and line ministries, although further strengthening of coordination across ministries is needed : The 2010 SIGMA assessment of public sector performance in Albania recognized progress in the government's strategic planning, while at the same time, pointing out the weakness in central coordination of different line ministries' legislative initiatives \. This finding is corroborated by a PEFA Assessment which also acknowledges improved policy -based budgeting and coordination of the budget planning process \. Also, medium term budgeting process improved as a result of better integration of strategic planning, MTBP, and budget allocations\. The PEFA Indicator PI-12 “Multi-year perspective in fiscal planning, expenditure policy and budgetingâ€? has show marginal improvements from C in 2006 to C+ in 2011\. Yet, most sector strategies remain poorly linked to the MTBP and lack costing and clear performance frameworks \. Management of external assistance also improved, but not as much as claimed in the ICR \. A 2011 Paris Declaration Survey found that slow progress has been made since 2007 regarding alignment and harmonization, with a decline (rather than an increase, as claimed in the ICR ) in the use of country systems \. Outcomes (against PDO1 and PDO2): Policy and financial processes are more coherent and integrated (PDO1): The restructured results matrix defined the outcome in a coherent and integrated manner as a clear link between each Ministry ’s plan defining policy goals and objectives and the NSDI \. The ICR found that, while all Ministries produce sector strategies, these often lack clear links to the NSDI and are not costed \. The efficacy of this PDO was modest \. Policy and financial processes are more efficient (PDO2): The improved efficiency of the GoA policy and financial processes was instead defined as a strengthened respect of the MTBP ceiling by each Ministry with a deviation under 6 percent\. In reality the average deviation was reduced substantially, from 21\.6% in 2008 to 5\.4% in 2011\. The efficacy of this PDO was therefore substantial \. 5\. Efficiency: The ICR's discussion of efficiency was found to be wanting \. The project appraisal did not include a formal cost benefit analysis, even though it should have been possible to provide information on unit rate norms for technical assistance\. IEG is not able to calculate and assess these rates in the absence of detailed data on days of technical assistance and their cost \. It is also possible to analyze other aspects of design and implementation that affected the project ’s efficiency: As noted earlier, the design was ambitious -- covering a number of components and activities in a weak capacity environment\. This design contributed to the limited efficiency of project management and monitoring and evaluation, and to a rather slow start \. The number of Ministries and Agencies involved in the project placed a premium on coordination \. The PCU was unable to deliver until the restructuring \. On the positive side, the project combined the support from several donors in a single MDTF, thus achieving efficiency gains compared to the alternative of separate grants \. On balance, IEG assesses the project ’s efficiency as modest \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re-estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Through this operation, Albania's public sector has strengthened strategic planning and medium -term budgeting processes\. As a result, the country has made substantial progress towards achieving the goal of making core  policy and financial processes of the Government more efficient, yet more modest improvements in making these processes more integrated and coherent (for instance, development of sector strategies )\. The objectives of the project were assessed to be substantially relevant, even though relevance of design and project efficiency were modest\. Following IEG-OPCS's Harmonized Evaluation Criteria (and IEG's criteria for evaluating split ratings), the ICRR assesses project outcome to be moderately satisfactory \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: IEG concurs with the ICR’s assessment of risk to development outcome as moderate \. The IPS reform program has been under implementation for a long period of time and the GoA has confirmed its commitment to it through a continuous effort\. The importance of IPS for the SAA with the EU is an additional guarantee that efforts will continue\. As stated in the ICR, a second IPS project has been requested by Government and is currently under preparation, thus guaranteeing continuation in donor funding of the program \. The combination of these factors minimizes the risk the overall risk of a possible policy reversal \. However, the resistance to computerization and insistence on sole source contracts both show cause for concern \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: a\. Quality at entry: The project's clearly defined objectives sought to address key PFM issues in the country, and it was able to provide support from multiple donors from a single fund with a common set of procedures \. Yet, the original results framework did not provide credible causal links among inputs, outputs, and objectives, and was not operationally useful\. The original components and results framework were not “focused on achieving project objectives\.â€? (ICR, p\. 26)\. The overly complex design, in a weak capacity environment, could have been simplified and better fitted to the Albanian context \. By the same token, high risk components such as the AFMIS were added late in the preparation process and were found to be under -designed\. With a more rigorous appraisal of the operation, the Bank team could have helped avert some of the implementation challenges evident over the project's life \. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: The Bank supervised the project on a regular basis (3-4 times a year) and provided continuous support from the Albania office\. It was able to identify the design problems that caused the initial implementation delays, albeit quite late in the project cycle (only a little over one month before the original closing date )\. Nevertheless, the Bank's proactive support contributed to the project achieving a good part of its original objectives, during the one year extension granted as part of the restructuring \. By the same token, the Bank should have taken a tougher stand on the sole sourcing of the AFMIS contract \. The lack of ISRs till 2010 and the constant shifting of PDOs being monitored are two additional weaknesses of Bank supervision \. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Government of Albania demonstrated substantial ownership and commitment to the project, as shown by its continued effort over the years, achieving substantial results in the efficiency of its financial processes \. The implementation issues that caused the initial delays were addressed through restructuring and the GoA has requested support from the Bank for a follow on operation \. The long time lags in project preparation and restructuring were mainly due to the need to reach agreements with a large number of donors (seven in this case)\. There were no fiduciary issues mentioned in the ICR or the other documents examined by IEG \. Stakeholders were consulted during implementation through an M&E workshop in March 2011\. Government Performance Rating Satisfactory b\. Implementing Agency Performance: The performance of the Ministry of Finance was rather modest, which was at least partly due to design issues\. The outputs missed by the project (i\.e\., Human Resource Management Information System - HRMIS and Albanian Financial Management Information System - AFMIS) were due to lack of focus by the implementing agencies concerned and to the low capacity of the Ministry of Finance in handling large IT projects\. In addition, the problems with AFMIS were partly caused by the implementing agency ’s decision to proceed with a sole source contract with a supplier that eventually refused to accept standard conditions for contracts in Bank funded operations \. Performance improved after restructuring when the CFCU became the project's implementing agency\. Implementing Agency Performance Rating : Moderately Unsatisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The quality of M&E design was rather poor \. As noted in the ICR (p\. 6), the original results framework included 3 goal indicators, 9 purpose indicators, and 38 output indicators, and linkages between output and higher level indicators were weak\. The output indicators had no baseline values \. This flaw was addressed during the 2010 restructuring that introduced a new results matrix with 2 outcome and 19 output indicators\. The revised M&E matrix was an improvement, but still included a relatively large set of indicators \. b\. M&E Implementation: The three ISRs show a thorough monitoring of the results matrix, as the original one had no operational value and was not used \. The goal indicators used in the ISRs vary without any explanation \. c\. M&E Utilization: There is no information in the ICR about the utilization of the M&E system \. Donors contributing to the MDTF made use of the reports produced after restructuring, after they insisted for the replacement of the original framework that was not allowing them to properly understand project performance \. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: There were no safeguard issues highlighted in the available project documents \. b\. Fiduciary Compliance: There were no fiduciary compliance issues identified in the project documents \. The project did not use Albania ’s country systems because donors asked that Bank processes be used \. c\. Unintended Impacts (positive or negative): The project indirectly supported the launch of the new computerized Treasury System that had been previously installed but not used, through a joint letter to the Minister of Finance from all donors supporting it \. d\. Other: 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Unsatisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The main lessons that the ICR and IEG identified are as follows : Complex design in a low capacity environment should be avoided at all costs \. While it is tempting to combine many components into a single operation for possible economies of scale in preparation and supervision, the reality is that the pace of implementation can suffer, and the savings in preparation are often translated into more intensive supervision and a subsequent re -design of the project\. Projects covering a short time span should avoid complex but under -designed components\. Major IT investments such as the AFMIS are more likely to succeed if planned in sufficient detail before the implementation\. Lack of competition in contract award can have a negative impact on efficiency or efficacy, and should be  avoided for large contracts or important project components \. An excessive number of donors in a multi -donor trust fund established to support a specific project can add unnecessary complexity to the project itself \. When PIUs are staffed by civil servants, there should be sufficient numbers of staff with the required skills, and sufficient time freed up from other responsibilities to be able to effectively carry out project management functions\. The Bank’s design, supervision, monitoring and reporting on trust funded projects needs to improve \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR offers a candid review of project performance, and provides some useful information \. However, it did not provide any information on the project ’s efficiency, and included a few erroneous indicators (e\.g\., on Aid Effectiveness)\. It also did not include details on the project ’s restructuring in the datasheet, which also contains some discrepancies (the date indicated in the datasheet is November 2010 but August 2010 in the main text)\. Finally, the ICR does not provide any feedback from the donors funding the MDTF, or any information on planned and actual costs by component (Table in p\. 18 is not filled out)\. Considering these limitations, IEG assesses the quality of the ICR to be unsatisfactory , a\.Quality of ICR Rating : Unsatisfactory

REVIEW

P003523

 ICRR 10099 Report Number : ICRR10099 ICR Review Operations Evaluation Department 1\. Project Data : OEDID : OEDID: C2025 Project ID : P003523 Project Name : Shandong Provincial Highway Country : China Sector : Highways L/C Number : C2025-CHA/L3073-CHA Partners involved : Prepared by : Binyam Reja, OEDST Reviewed by : Hernan Levy Group Manager : Roger Slade Date Posted : 07/10/1998 2\. Project Objectives, Financing, Costs and Components : Objectives : To assist the Shandong Provincial Government in (i) meeting the transport demand in the most important and congested corridor, and (ii) improving the management of the road network by introducing modern planning and management techniques \. Components : (a) construction of 319 km, four-lane divided, access controlled highway between Jinan, the provincial capital, and Qingdao, one of China's major seaports, (b) consulting services for construction supervision and training, (c) provision of specialized equipment and technical assistance for evaluating road pavements and strengthening paved roads, (d) equipment to set up computerized Road Data Bank, (e) provision of road maintenance, traffic monitoring and communication equipment, (f) staff training, and (g) assistance in improving road safety\. Cost: Cost : Total project cost was: US$ 702 million, of which the Bank provided US$ 60 million in loan and US$ 50 million in credit\. The loan and credit were fully disbursed \. 3\. Achievement of Relevant Objectives : The main project objective of meeting road transport demand in the heavily trafficked Jinan-Qingdao corridor was achieved \. The construction of 319 km Jinan-Qingdao Expressway (JQE) was completed and opened to traffic by the end of 1993, as scheduled\. Specialized equipment, including equipment for traffic monitoring and toll collection, have been acquired and are used in the operation and management of the road network \. Training and technical assistance under the project were also successfully carried out and have increased the capacity of the Shandong Provincial Transport Department (SPTD)\. 4\. Significant Achievements : The significant achievement of the project was (i) the construction of the Jinan -Qingdao Expressway, and (i) the technology transfer gained in the areas of tolled -expressway operations and management through training and study abroad, as well as the acquisition of modern equipment for traffic monitoring and tolling \. 5\. Significant Shortcomings : Contractors' performance was less than satisfactory \. Some civil works were not carried out according to the technical specifications\. The road safety program was not adequately achieved in part due Central Government's decision to transfer road safety responsibilities from SPTD to Public Securities departments nationwide \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Partial Substantial The project substantially enhanced the institutional capacity of the Shandong  Provincial Transport Department through an effective training program, acquisition of modern technology, and the development of the Road Data Bank and Pavement Management System\. Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : Improving road safety is a complex and challenging undertaking that is rarely achieved in the context of a single project; it requires a long-term commitment and a broader intervention including institutional and policy reform \. 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : The ICR is satisfactory and its economic analysis is sound \. The ICR could have been improved by (i) a concise and focused discussion of the project implementation experience and its achievements, and (ii) a more detailed discussion on the institutional set up of the Management Bureau of JQE and future government plans to sell a portion of the expressway and its implications for future highway financing \.

REVIEW

P113102

 Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004273 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A GRANT IN THE AMOUNT OF SDR 15\.8 MILLION (US$ 25\.0 MILLION EQUIVALENT) TO THE Republic of Yemen FOR THE Yemen Schistosomiasis Control Project August 27, 2018 Health, Nutrition & Population Global Practice Middle East and North Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective – July 31, 2018) Currency Unit = Yemen Rials (YER) YER 250\.10 = US$1\.0 YER 1 = US$0\.004 US$1\.4 = SDR 1\.0 FISCAL YEAR January 1 - December 31 Regional Vice President: Ferid Belhaj Acting Country Director: Samia Msadek Senior Global Practice Director: Timothy Grant Evans Practice Manager: Ernest E\. Massiah Task Team Leader(s): Moustafa Mohamed ElSayed Mohamed Abdalla ICR Main Contributor: Naoko Ohno  ABBREVIATIONS AND ACRONYMS ABZ Albendazole BP Business Procedures CEN Country Engagement Note ERR Economic Rate of Return FCV Fragility, Conflict and Violence FM Financial management HRSP Health Reform Support Project HPP Health and Population Project ICR Implementation Completion and Results Report IDA International Development Association IE Impact evaluation IEC Information, education and communication IEG Independent Evaluation Group IO Intermediate Outcome ISR Implementation status report ITIFA Independent technical and internal audit functions MBZ Mebendazole MDA Mass drug administration MTR Mid-term review M&E Monitoring and Evaluation MoPHP The Ministry of Public Health and Population NSCP National Schistosomiasis Control Program NTDs Neglected Tropical Diseases OP Operations Policy PAD Project appraisal document PAU Project Administration Unit PDO Project Development Objectives PZQ Praziquantel QER Quality Enhancement Review RF Results Framework SAC School age children SCH Schistosomiasis SCI Schistosomiasis Control Initiative SCP Schistosomiasis Control Project STHs Soil-transmitted helminths TA Technical assistance UN United Nations UNICEF United Nations International Children’s Fund WHO World Health Organization  CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 5 A\. CONTEXT AT APPRAISAL \.5 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \.8 II\. OUTCOME \. 10 A\. RELEVANCE OF PDOs \. 10 B\. ACHIEVEMENT OF PDOs (EFFICACY)\. 10 Justification of Overall Efficacy Rating \. 14 C\. EFFICIENCY \. 14 Assessment of Efficiency and Rating \. 14 D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 15 E\. OTHER OUTCOMES AND IMPACTS (IF ANY) \. 16 Gender \. 16 Institutional Strengthening \. 16 Mobilizing Private Sector Financing\. 16 Poverty Reduction and Shared Prosperity \. 16 Other Unintended Outcomes and Impacts \. 17 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 17 A\. KEY FACTORS DURING PREPARATION \. 17 B\. KEY FACTORS DURING IMPLEMENTATION \. 20 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 21 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 21 M&E Design \. 21 M&E Implementation \. 22 M&E Utilization \. 22 Justification of Overall Rating of Quality of M&E \. 22 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 22 C\.BANK PERFORMANCE \. 24 Quality at Entry \. 24 Quality of Supervision \. 25 D\. RISK TO DEVELOPMENT OUTCOME \. 26 V\. LESSONS AND RECOMMENDATIONS \. 26 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 28 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 35 ANNEX 3\. PROJECT COST BY COMPONENT \. 37 ANNEX 4\. EFFICIENCY ANALYSIS \. 38 ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 41 ANNEX 6\. SUPPORTING DOCUMENTS \. 42  The World Bank Yemen Schistosomiasis (P113102) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P113102 Yemen Schistosomiasis Country Financing Instrument Yemen, Republic of Investment Project Financing Original EA Category Revised EA Category Not Required (C) Not Required (C) Organizations Borrower Implementing Agency Ministry of Planning and International Cooperation Ministry of Public Health & Population Project Development Objective (PDO) Original PDO The project objective is to decrease the prevalence and intensity of infection of both urinary and intestinal Schistosomiasis among school-aged children by 2015 in endemic regions in Yemen\. Page 1 of 44  The World Bank Yemen Schistosomiasis (P113102) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 25,000,000 25,000,000 22,420,509 IDA-H5420 Total 25,000,000 25,000,000 22,420,509 Non-World Bank Financing Borrower 2,140,000 0 0 World Health Organization 1,460,000 0 875,612 Foreign Universities 200,000 0 200,000 Total 3,800,000 0 1,075,612 Total Project Cost 28,800,000 25,000,000 23,496,121 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 17-Dec-2009 03-Aug-2010 19-Sep-2012 30-Jun-2016 31-Jan-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 14-Mar-2013 12\.63 Change in Results Framework Change in Components and Cost Reallocation between Disbursement Categories 21-Jun-2016 18\.32 Change in Loan Closing Date(s) 26-May-2017 22\.40 Change in Loan Closing Date(s) 02-Sep-2017 22\.40 Change in Loan Closing Date(s) KEY RATINGS Outcome Bank Performance M&E Quality Highly Satisfactory Satisfactory Substantial Page 2 of 44  The World Bank Yemen Schistosomiasis (P113102) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 20-May-2010 Satisfactory Satisfactory \.10 02 01-Jan-2011 Satisfactory Satisfactory 5\.66 03 27-Jul-2011 Satisfactory Satisfactory 5\.66 04 12-Nov-2011 Moderately Satisfactory Moderately Satisfactory 5\.66 05 21-May-2012 Moderately Satisfactory Moderately Satisfactory 6\.02 06 25-Nov-2012 Satisfactory Moderately Satisfactory 7\.14 07 05-Jun-2013 Satisfactory Satisfactory 12\.63 08 14-Aug-2013 Satisfactory Satisfactory 12\.91 09 24-Feb-2014 Satisfactory Satisfactory 13\.94 10 30-Aug-2014 Satisfactory Satisfactory 15\.20 11 02-Mar-2015 Satisfactory Satisfactory 16\.75 12 30-Jun-2015 Moderately Satisfactory Moderately Unsatisfactory 16\.88 13 11-Dec-2015 Moderately Satisfactory Moderately Unsatisfactory 16\.88 14 02-Jun-2016 Moderately Satisfactory Moderately Satisfactory 18\.32 15 11-Jan-2017 Satisfactory Satisfactory 20\.39 16 19-Sep-2017 Satisfactory Satisfactory 22\.40 SECTORS AND THEMES Sectors Major Sector/Sector (%) Health 100 Health 100 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Page 3 of 44  The World Bank Yemen Schistosomiasis (P113102) Human Development and Gender 100 Disease Control 67 Health Systems and Policies 33 Child Health 33 ADM STAFF Role At Approval At ICR Regional Vice President: Shamshad Akhtar Ferid Belhaj Country Director: A\. David Craig Samia Msadek Senior Global Practice Director: Cristian C\. Baeza Timothy Grant Evans Practice Manager: Akiko Maeda Ernest E\. Massiah Alaa Mahmoud Hamed Abdel- Moustafa Mohamed ElSayed Task Team Leader(s): Hamid Mohamed Abdalla ICR Contributing Author: Naoko Ohno Page 4 of 44  The World Bank Yemen Schistosomiasis (P113102) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. After the 1990 unification, Yemen overcame a civil war in 1994 but continued to experience internal insecurity situation\. At project appraisal, Yemen was already considered a fragility, conflict and violence (FCV) state\. According to 2007 population data, the population in Yemen was 23\.6 million, with almost 75% living in rural areas, widely spread all over the country\. Poverty had been a nation-wide phenomenon with an estimated 42% of the total population living in poverty in 2007 with a higher prevalence in rural areas\. 2\. Yemen’s human development outcomes had improved substantially over the three decades preceding the time of project preparation\. There had been an increase in average life expectancy (up from 41\.6 years in 1970 to 62 in 2006) with women’s life expectancy mirroring the overall trends\. Similarly, there had been a significant increase in enrollment rates in basic education (up from 3 million in 1996 to 4\.1 million in 2004)\. Yet, female literacy rates stood low at 28\.5 percent in 2002, with Yemen ranking 138th out of 179 on the Human Development Index in 2008\. In particular, there was a number of areas of concern, including: (i) high and stagnated maternal, infant, and child mortality; (ii) high prevalence of malnutrition, particularly for children under-5; (iii) rapid population growth (population growing at over 0\.5 million people per annum); and (iv) high prevalence of communicable diseases such as malaria and schistosomiasis (SCH)\. 3\. At the time of the project preparation, SCH was considered as one of the most significant public health problems in Yemen, with an estimated prevalence rate of 15 percent, corresponding to 3 million infected people with either Urinary SCH (Schistosoma haematobium, or S\. haematobium) or Intestinal SCH (Schistosoma mansoni, or S\. mansoni), or with both\. At least 600,000 school-age children (SAC) and adults were estimated to suffer from severe morbidity resulting from SCH\. 15 million individuals were living in SCH endemic areas, and were therefore at higher risks of infection\. SCH is a disease caused by parasitic worms which affect the blood vessels in the intestines or in the urinary tract of infected people and signs and symptoms typically include haematuria, dysuria, bladder wall pathology, blood in stool, anemia, and diarrhea\. The severity of the clinical symptoms increases with the increased worm burden\. The most chronic cases might suffer from hydroureteronephrosis, renal failure and bladder cancer (in Urinary SCH), and liver and spleen enlargement, liver fibrosis and portal hypertension (in Intestinal SCH)\. There are generally two large at-risk population groups – (i) people who are engaged in agricultural activities and exposed to regular contact with contaminated water, and (ii) school-age children (SAC), who participate in recreational activities in the contaminated water\. 4\. Since the early 2000s the National Schistosomiasis Control Program (NSCP) in Yemen had been implementing preventive chemotherapy interventions using schools as delivery channels for Praziquantel (PZQ), with support of the World Health Organization (WHO)\. In March 2008, the Program included the first national campaign for PZQ distribution and Albendazole (ABZ) for soil-transmitted helminths (STHs), funded by the IDA-financed Health Reform Support Project (HRSP)\. Rationale for Bank Involvement 5\. Lack of adequate resources constrained the magnitude of SCH control interventions, resulting in a sporadic and uneven approach to address the problem, focusing on a limited number of people requiring treatment\. The IDA- financed HRSP demonstrated that nationwide control of schistosomiasis according to the WHO recommendations could be implemented in Yemen if adequate resources were made available\. However, the closing of the HRSP on August 31, 2009 left a financial gap, reducing support to the activities by the NSCP\. This prompted the request from the Government of Yemen for Bank assistance to continue these activities to maintain the momentum\. Page 5 of 44  The World Bank Yemen Schistosomiasis (P113102) 6\. The Schistosomiasis project was subsequently prepared and expected to make a significant decrease in prevalence and intensity of infection and consequently contribute to the achievement of controlling morbidity due to Urinary SCH and intestinal SCH and also to the Government of Yemen’s announced goal of eliminating SCH as a public health problem in 2008\. 7\. The project was clearly linked to the third strategic objective of the FY10-13 Country Assistance Strategy (Report No\. 47652-YE, approved on April 29, 2009), which was to help foster human development, including health outcome\. The CAS specifically highlighted the need for reducing the prevalence of SCH and included an indicator on SCH prevalence in the Results Framework\. Project Development Objectives (PDOs) 8\. The project development objective was to decrease the prevalence and intensity of infection of both urinary and intestinal schistosomiasis among school-age children by 2015 in endemic regions of Yemen\. The PDO stated in the project’s Grant Agreement was consistent with the one in PAD\. Key Expected Outcomes and Outcome Indicators 9\. The PAD stated that the project beneficiaries are those who would receive anthelminthic drugs through the project, which translated into 6 million people\. 10\. There were three PDO indicators to measure the achievement of the PDO: • PDO indicator #1 - Prevalence of infection with any form of SCH is on average lower than 10 percent in all selected sentinel sites; • PDO indicator #2 - Urinary SCH: intensity of infection on average is about 50 eggs per 10 ml of urine among those who remain positive in selected sentinel sites; and • PDO indicator #3 - Intestinal SCH: intensity of infection on average is about 400 eggs per gram (epg) of feces among those who remain positive in selected sentinel sites\. Components 11\. The project included originally the following two components: Component 1: Preventive Chemotherapy for Schistosomiasis Control (original amount: US$22\.65 million)\. This component was to support two anthelminthic drug delivery strategies (campaign-based preventive chemotherapy using fixed and temporary sites, and routine preventive chemotherapy), as well as technical assistance to support implementation, monitoring and evaluation of these strategies; training; and information, education and communication (IEC) activities and social mobilization activities to support the effective application of the strategies\. Component 2: Independent Monitoring, Audit and Project Administration (original amount: US$2\.35 million)\. This component was to support activities related to the independent monitoring of project targets and audit of project campaigns\. The component included support for mid-term and end-of-project evaluations (which included following up longitudinal cohorts) as well as support for baseline, mid-term, and end-of-project parasitological surveys for prevalence mapping used for classification and reclassification of endemic districts\. The component was also to provide support to the Project Administration Unit (PAU) within the Ministry of Public Health and Population (MoPHP)\. Page 6 of 44  The World Bank Yemen Schistosomiasis (P113102) Theory of Change: Yemen Schistosomiasis Control Project Activities Outputs PDO/Outcomes Long-term Outcomes 1\. Decreased prevalence of infection Assumption: Availability of of both urinary and operating cost and PZQ for intestinal SCH among each MDA campaign through SAC in endemic regions on-time procurement by WHO • Reduced prevalence Assumption: through functioning drug of infection with any Successful supply inventory system and form of SCH in all MDA delivery to the target districts selected sentinel sites campaigns and prior to each campaign transitioning to routine prevention Implementation of campaign-based preventive chemotherapy, using fixed and temporary Increased program sites coverage of large-scale Control of MDA (a) in targeted schistosomiasis endemic districts, and morbidity in all (b) among targeted ToT workshops, BCC enrolled and non- endemic areas & Communication enrolled SAC campaign, and TA 2\. Decreased Elimination of intensity of infection of schistosomiasis Assumption: Successful both urinary and intestinal mobilization of SAC SCH among SAC in endemic regions • Reduced intensity of Assumption: Assumption: infection with urinary Overall Domestic Assumption: No disruption of SCH as well as intestinal improvement in security activities due to domestic SCH among the positive living conditions situation conflict in selected sentinel sites and improved implementation and political of non-MDA stability in interventions the country including snail regained control, WASH, behavior changes Page 7 of 44  The World Bank Yemen Schistosomiasis (P113102) B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs 12\. There was no change in the PDO during project implementation maintaining the sole focus on SCH control, even after a new component was added aiming to address other neglected tropical diseases (NTDs), including Soil Transmitted Helminths (STHs), onchocerciasis, and trachoma at project restructuring in 2013\. Revised PDO Indicators and Outcome Targets 13\. The project’s Results framework (RF) was changed twice\. The first revision to the RF was made when the restructuring in March 2013 was undertaken to add a new Component 3\. The following three intermediate outcome (IO) indicators associated with Component 3 were added: (i) Targeted enrolled SAC in non-endemic SCH districts for STHs, (ii) Persons treated for Trachoma by tetracycline or Azithromycin, and (iii) Persons benefitted from surgery for Trachoma\. 14\. The second revision to the RF was made in 2014\. Two out of three PDO indicators (#2 and #3, measuring intensity of infection) were revised albeit without formal restructuring\. The revision did not entail changing the fundamental goal behind these two indicators, i\.e\., measuring intensity of two types of SCH\. Also, the methodology for calculating indicator achievement and the unit of measure, as well as their targets were changed at the same time, from measuring numbers to measuring percentages\. This did not entail a revision of the targets but just the way the targets were being measured\. The revised language was reflected starting at ISR #9 in February 2014 (see Table 1 below)\. Table 1: Comparison of PDO indicators #2 and #3 Wording of indicator Unit of measure End-target PAD After ISR 9 PAD After PAD After ISR 9 ISR 9 PDO indicator #2 Intensity of infection on Prevalence of No\. of eggs Percentage < 50 eggs 1\.0% (intensity of average is about 50 eggs heavy infection per 10ml of per 10ml Urinary SCH) per 10 ml of urine of urinary SCH urine of urine among those who remain positive, in selected sentinel sites PDO indicator #3 Intensity of infection on Prevalence of No\. of eggs Percentage < 100 epg 2\.5% (intensity of average is about 400 heavy and per 1g of Intestinal SCH) eggs per gram (epg) of medium feces (epg) feces among those who infection of remain positive, in intestinal SCH selected sentinel sites\. Revised Components 15\. Substantial project restructuring including the addition of a new component\. As mentioned above, the March 2013 project restructuring added a new Component 3 to the project, namely, “Output-based Deworming and Control of Other Neglected Tropical Diseases (NTDs)â€? with US$5\.0 million\. Component 3 was expected to support the establishment of a school-based deworming program for the treatment of soil transmitted helminths (STHs) in non- schistosomiasis endemic areas, as well as extending support to other neglected tropical diseases such as onchocerciasis, trachoma, or other NTDs of public health importance\. The environmental assessment category of “Câ€? Page 8 of 44  The World Bank Yemen Schistosomiasis (P113102) remained unchanged\. The project funds were reallocated as shown in the table below\. A new disbursement category for output-based financing for treatment of NTDs was created\. Lastly, the percentage of expenditures to be financed by IDA was changed from the original 85 percent to 100 percent for drugs due to the government’s budget constraints\. Name of component Original New Component 1: Preventive chemotherapy for SCH 22\.65 18\.65 Component 2: Independent monitoring, audit, and project administration 2\.35 1\.35 Component 3: Output-based deworming and control of other NTDs 0\.00 5\.00 Other Changes 16\. Suspension of disbursement in 2011\. Following the popular uprising in Egypt and Tunisia, the ensuing political crisis in Yemen in January 2011 led to a temporary suspension of disbursements for all Bank Group-funded operations from July 29, 2011 to January 20, 2012\. This suspension was lifted after a transition government was put in place in late 2011, and all Bank-funded operations resumed\. Due to the suspension, however, the planned 3rd MDA campaign was delayed for a year\. 17\. Suspension of disbursement since 2015 and the UN service contracts\. Following the start of the civil unrest in 2015, which continues to date, the Bank management suspended disbursement for all Bank-financed projects in the Yemen portfolio in line with OP/BP 7\.30 (dealing with de facto governments), effective March 11, 2015\. In December 2015, the Bank’s health team obtained exceptions under OP/BP 7\.30, lifting the suspension for the two IDA-financed health projects in view of the dire needs for basic health services all over the country, one of which was the Schistosomiasis Control Project (SCP)\. To ensure the project funds to be used properly against the PDO, the policy exception was granted to the two health projects, subject to entering the Operational and Technical Assistance Agreements between the two UN agencies (UNICEF and WHO) and the Government of Yemen with US$16\.94 million total (US$3\.50 million for the SCP and US$13\.44 million for the HPP)\. Under the Agreements for the two health projects, the two UN agencies were able to procure and distribute drugs through their existing delivery network using the UN’s FM and procurement procedures\. The funds for procurement of drugs, their distribution and campaign- related operating costs were directly transferred to the two UN agencies\. The provision of services was outsourced by the PAU to the two UN agencies as part of the project’s procurement\. Lastly, the PAU was sustained with the access to the project’s designated account to ensure their responsibility for the contract management of the UN Agreements, independent verification firms and external auditors\. 18\. Restructuring to extend the Closing Date\. Considering the two periods of suspension of disbursements and associated revisions in implementation arrangements, the Closing Date of the project was extended three times for a total of one year and seven months from the original date of June 30, 2016 to January 31, 2018: (1) June 21, 2016 (for one year), (2) May 26, 2017 (for three months), and (3) September 2, 2017 (for four months)\. The third extension of the Closing Date was to allow for the completion of the additional PZQ procurement\. As the project has achieved its targets in the RF by then, it was decided to utilize the remaining funds under the WHO contract for additional procurement of PZQ, which would be distributed under the ongoing Yemen Emergency Health and Nutrition Project to sustain the project results\. Rationale for Changes and Their Implication on the Original Theory of Change 19\. The country’s worsening political and security environment was extremely dire, and in this situation, the aforementioned changes made to the project implementation arrangements were critical to continue delivering basic health services to the people who needed them most\. The original theory of change and the originally expected outcomes were not affected as implementation continued with the revised implementation and disbursement arrangements involving the UN agencies\. As seen in later sections of this ICR, the 13 MDA campaigns were conducted Page 9 of 44  The World Bank Yemen Schistosomiasis (P113102) and the final outcomes in some cases exceeded the original targets\. 20\. The inclusion of the new Component 3 through the 2013 restructuring did not change the original theory of change because Component 3, which aimed to address other NTDs, would have no impact on the PDO narrowly crafted for controlling SCH\. In retrospect, due to nearly no progress on this Component due to technical reasons and also due to the disbursement suspension and transition of implementation arrangements, the project’s original outcomes were not affected\. II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 21\. The project’s PDO was and remains highly relevant to the health needs of the country\. Given the country’s volatile situation and high unpredictability, a regular Country Partnership Strategy/Framework is not currently available for Yemen\. Instead, a flexible Country Engagement Note (CEN), covering FY17-18 (Report No: 106118-YE) was prepared to suit the country’s needs during the ongoing conflict\. The CEN defines the WBG engagement and support to the country during the conflict, as well as in the post-conflict period, with two objectives: (1) provide emergency support to preserve local service delivery capacity to support conflict-affected families and communities\. This will be done in full partnership with UN institutions; and (2) prepare for post-conflict recovery and reconstruction, with due attention to state and institution building and laying the foundation for a more inclusive and resilient development framework in the future\. 22\. The CEN estimated, based on the Disaster Needs Assessment, that conflict-related destruction prevented around 14 million Yemenis, including 8\.3 million children, from accessing health care services\. Two health projects were thus highlighted in the CEN contributing to the first CEN objective, to preserve local service delivery to support conflict-affected families/communities\. B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome Rating: High 23\. The PDO was to decrease the prevalence and intensity of infection of both urinary and intestinal Schistosomiasis among school-aged children by 2015 in endemic regions in Yemen\. Three PDO and eight IO indicators (including two IDA results indicators) were selected to measure the achievements of the project\. All three PDO indicators monitored the outcomes of the MDA campaigns, while all eight IO indicators measured the aspects needed for the implementation of the MDA campaigns\. The overall achievement of the PDO assessed by the indicators in the RF is rated as High, considering all three PDO indicators and eight IO indicators achieved/surpassed their target values\. Of those, 2 PDO indicators and 5 IO indicators surpassed the end targets\. 24\. Before discussing the specific achievements of the PDO, it is important to note two issues with the PDO statement\. First, the PDO statement included “by 2015â€?, although the Closing Date of the project was set to the end of June 2016 in the original legal agreement\. This may have been intentional to reflect the WHO 2015 target for NTDs\. This ICR therefore reports on achievement by 2015 (based on the midline survey) and by project end in 2017\. Page 10 of 44  The World Bank Yemen Schistosomiasis (P113102) The second issue with the PDO was that the PAD did not specify the disaggregation of results and targets for SAC\. ISRs always reported only the overall figures, not disaggregated for SAC\. The IE report prepared by the SCI included only the overall figures, though the SCI did collect data for 6,500 SAC and 1,500 adults from 36 sentinel sites as part of the IE work\. Therefore, this ICR is able to report on the disaggregated numbers, per the PDO\. Lastly, the definition of “endemic regionsâ€? was defined in the PAD as areas targeted by the project which would include all the endemic and suspect endemic districts of Yemen\. Districts were classified as highly-endemic, meso-endemic, low-endemic and suspect endemic,1 and the assessment of the classification was going to be conducted periodically through future surveys\. 25\. PDO 1: Prevalence of infection: Rating – High\. This PDO aims to decrease the prevalence of infection of both urinary and intestinal SCH among SAC\. The indicator measuring its achievement is “prevalence of infection with any form of schistosomiasis on average is lower than 10 percent in all selected sentinel sites (PDO indicator #1)â€?\. A series of MDA campaigns supported by the project achieved a significant reduction in the SCH prevalence, especially before 2014\. As shown in Table 2 below, the final results achieved 136 percent and 146 percent reduction for SAC and overall, respectively, against the original endline target of 10\.0 percent\. Similarly, the substantial reduction has been seen in each of S\. Haematobium as well as S\. Mansoni in both SAC and overall rate (graph below)\. Given that the target was substantially surpassed, the rating for the first part of PDO is considered as High\. Table 2: Achievement of PDO indicator #1 Baseline*1 Midline*2 Endline*3 Endline target % achievement against the target SAC only 17\.3 9\.5 7\.4 10\.0 (7\.4-17\.3)/(10-17\.3)= 136% Overall 16\.7 7\.5 6\.9 10\.0 (6\.9-16\.7)/(10-16\.7)= 146% Source: The IE results data from SCI Note: *1 – collected between Dec 2010 and Dec 2012, including a break of approximately one year between April 2011 and April 2012 during the Arab Spring unrest\. *2 – Nov 2014\. *3 – April 2017\. There were two end-line surveys done in April/June 2016b and April 2017, but did not show significant difference in the data between two surveys\. Figure 1: SCH prevalence rate among SAC and overall IE results - Overall SCH prelalence 20\.0% 16\.7% 15\.0% 8\.9% 9\.2% 10\.0% 7\.5%6\.9% 3\.5% 3\.6% 4\.4% 3\.6% 5\.0% 0\.0% Overall Schisto Schisto Haem\. Schisto Mans\. Baseline Midline Endline Source: The IE results data from SCI, the IE report (June 2017) by SCI 1The PAD defined the endemic districts as follows: (1) Highly-endemic: districts where ≥40 percent prevalence of infection with any form of SCH detected among surveyed populations; (2) Meso-endemic: between ≥10 percent and <40 percent; (3) Low-endemic districts: <10 percent; (4) Suspect endemic districts: districts that have not been surveyed but from which cases of SCH have been reported by the national surveillance system\. Page 11 of 44  The World Bank Yemen Schistosomiasis (P113102) 26\. PDO 2: Prevalence of high intensity infection: Rating – High\. The high intensity of infection provides a strong proxy for the percentage of individuals likely to suffer from severe, chronic morbidity in the future\. The second part of the PDO, i\.e\., to decrease the intensity of infection of both urinary and intestinal SCH, was measured by the following two PDO indicators: (i) Urinary SCH - intensity of infection on average to be reduced to <50 eggs per 10ml of urine among those who remain positive in selected sentinel sites (PDO indicator #2), and (ii) Intestinal SCH - intensity of infection on average to be reduced <100 eggs per 1g of feces among those who remain positive in selected sentinel sites (PDO indicator #3)\. 27\. During the implementation, reporting of the progress for the two indicators used the following revised wording: (i) prevalence of heavy infection of Urinary SCH; and (ii) prevalence of heavy and medium infection of Intestinal SCH\. Their baseline data was entered for the first time in ISR #6 in November 2012, keeping the same unit of measure and targets noting in PAD\. The methodology for calculation and unit of measure as well as their targets were then changed at ISR#9 in February 2014, as discussed earlier\. 28\. As seen in Table 3 below, the prevalence of heavy infection of S\. Haematobium, as defined as >49 eggs/10ml urine, has been substantially reduced during the project period in the overall population as well as among SAC\. The achievements against the target value of 1\.0 percent is above 85 percent for both population groups, hence, the PDO indicator #2 is considered achieved\. In fact, the prevalence of heavy infection of S\. Haematobium has dropped below the endline target at the project midline (in November 2014)\. 29\. For the prevalence of heavy and medium infection of S\. Mansoni, available data from the IE shows 194 percent of the overall achievement against the target value of 2\.5 percent\. While the SAC-specific data on heavy and medium infection was not available in the IE, available data shows heavy infection for both SAC and overall population was reduced to less than half of the baseline, surpassing the target\. Considering this significant achievement, the second part of PDO is considered as a combination of High for 2015 and Substantial for 2017\. Table 3: Achievement of PDO indicators #2 and 3 Baseline Midline Endline* Endline % achievement against *1 *2 3 target the target S\. Haematobium (heavy) - Urinary SCH SAC only 3\.1 0\.8 1\.3 1\.0 (1\.3-3\.1)/(1\.0-3\.1)= 86% Overall 2\.7 0\.7 1\.2 1\.0 (1\.2-2\.7)/(1-2\.7)= 88% S\. Mansoni - Intestinal SCH SAC only (heavy) 0\.7 0\.4 0\.3 0\.3 (0\.3-0\.7)/0\.3-0\.7)=100% Overall (heavy) 0\.7 0\.3 0\.2 0\.3 (0\.2-0\.7)/(0\.3-0\.7)=125% Overall (heavy and 4\.1 1\.0 1\.0 2\.5 (1\.0-4\.1)/(2\.5-4\.1)= 194% medium) Source: The IE results data from SCI Note: *1 – collected between Dec 2010 and Dec 2012, including a break of approximately one year between April 2011 and April 2012 during the Arab Spring unrest\. *2 – Nov 2014\. *3 – April 2017 30\. It is important to note that SCI also presented data in June 2017, using the original unit of measure (number of eggs in urine/feces); this showed substantial reduction in the intensity of both S\. Haematobium and S\. Mansoni\. Page 12 of 44  The World Bank Yemen Schistosomiasis (P113102) Figure 2: Change in intensity of infection for two SCH 16 Intensity (epg or eggs/10ml) 14 Baseline 12 10 Mid-Line 8 6 End-line 4 2 0 S\.haematobium S\. mansoni Source: SCI presentation in Cairo, June 2017\. “Impact Evaluation of the National Schistosomiasis Control Programme 31\. Achievements of eight IO indicators: Rating – High\. The project’s results framework includes six intermediate outcome (IO) indicators (drug availability and program coverage) and two IDA core sector indicators to measure the progress of Component 1\. As shown in Annex 1, all six IO indicators have achieved and surpassed their targets\. First, drug availability was ensured at every stage starting from the detailed campaign planning for each round, sending the drug needs from the NCSP to WHO for onward procurement of PZQ, and delivering PZQ to the targeted districts on time\. This entire circle of drug procurement is a prerequisite for successful implementation of MDA campaigns\. Except for the first and second MDA campaigns, which experienced shortage of or delay in delivering PZQ to the target districts, all MDA campaigns were conducted in a timely manner with adequate volumes of PZQ according to the planning\. Second, 100 percent geographical coverage of MDA campaigns in all 275 endemic districts was achieved in the first two years (see table below)\. Despite the temporary suspension of disbursements on Bank-funded operations for a year between 2011 and 2012, rounds of well-planned, intensive MDA campaigns conducted especially before the national mapping survey in 2014 (midline survey) led to a substantial reduction in the SCH endemicity\. Table 4: MDA campaigns schedule for endemic districts Page 13 of 44  The World Bank Yemen Schistosomiasis (P113102) Table 5: Change in SCH endemic districts between 2010-2014 Source: NSCP 32\. It is also commendable that three IO indicators were assigned to closely monitor the program coverage of enrolled and non-enrolled SAC separately in endemic districts\. The pilot conducted before the project launch revealed a great challenge in reaching out-of-school SAC through the school-based campaigns\. Hence, the project design adopted campaign-based MDA using both fixed sites other than schools, such as health facilities, mosques, etc\., as well as temporary sites to enhance the chance to reach non-enrolled SAC and underserved adults\. At the end, above 70 percent of total targeted non-enrolled SAC was covered\. Also, each round of 13 MDA campaigns covered above 85 percent of targeted enrolled SAC\. 33\. As a result, 85 percent (6 million) of total targeted enrolled and non-enrolled SAC (7 million) in all 275 endemic districts were actually covered, which surpassed the original target of 6 million for one of the IDA core sector indicators, direct beneficiaries of the project\. Besides, a total of 72\.2 million tablets of PZQ were distributed and consumed by 11 million people, including 6 million SAC\. 34\. Lastly, as for the other IDA core sector indicator, i\.e\., the number of health personnel trained, under the project, 36,732 persons have been trained; of those, 11,711 were "health workers" according to the definition of the IDA results indicator, while others were teachers and volunteers, according to the NSCP\. Considering the nature of MDA campaigns involving schools and communities, it was necessary to train teachers and volunteers, rather than limiting to health workers\. Therefore, a total of 36,732 persons were trained against the original target of 20,000 personnel\. Justification of Overall Efficacy Rating 35\. Considering a significant reduction in the prevalence of infection and the intensity of infection of two species of SCH in Yemen, and considering the overall achievement of IO indicators, the rating for Efficacy is High, especially in view that these accomplishments were made under extremely challenging conditions in Yemen, particularly after the start of the conflict in 2015\. These remarkable achievements were directly attributable to the project’s interventions\. C\. EFFICIENCY Assessment of Efficiency and Rating Rating: Substantial 36\. A cost-benefit analysis was carried out during the preparation of the ICR to calculate the benefits of the implementation of the project (see Annex 4), including the benefits arising from the reduction of prevalence of S\. Hematobium and S\. Mansoni, in addition to the benefits accrued from increased productivity of health personnel as a Page 14 of 44  The World Bank Yemen Schistosomiasis (P113102) result of training activities\.2 The estimated savings because of the project total US$125\.5 million, reflecting savings from (1) reduced mortality due to SCH infections, (2) reduced cost of care due to reduced morbidity, and (3) productivity gains due to reduced loss of productivity as a result of the infection, as well as training personnel benefits and government/household savings\. The overall Internal Rate of Return is calculated at 43\.13% with a Net Present Value of $49\.7 million\. This calculation is based on relatively conservative assumptions and yet the project benefits outweigh the costs with a benefit ratio of 12\.44, highlighting the overall High value for money of project interventions\. 37\. Implementation efficiency\. The implementation of the project was carried out under an extremely difficult fragile and conflict environment, with gradually increasing political instability, civil unrest, absence of the counterparts for certain periods of time, two suspensions of disbursements for an accumulated time of 15 months, and severe restrictions to operate the PAU due to the lack of operating costs and salaries for many months\. Despite these restrictions, the new arrangements established with the WHO under the service agreement to procure equipment, drugs and supplies was key to fully accomplish the planned MDA campaigns\. Despite the closure of the World Bank Office in Yemen in February 2015, the interaction with the PAU staff was kept through virtual meetings\. Furthermore, the relationships among WHO, SCI, the END Fund, and the Bank enabled continuous, remote technical support, which immensely helped the MoPHP staff to sustain their motivation and continued interventions\. With the project funds mostly disbursed and targets in the results framework (RF) either fully achieved or surpassed, the implementation efficiency is considered as Substantial\. 38\. Co-administering ABZ/MBZ to address STH with PZQ was mentioned in the PAD, as it was the WHO recommendation for better coordination and efficiency\. It was supposed to be provided free of cost by WHO, according to PAD; despite the original promise, the project eventually needed to procure ABZ through WHO of US$459,199 in 2011 for 8,685,878 tablets\. Though the amount was not significant and the objective was technically justified3, the project funds should have not been used outside the intended purpose clarified in the legal agreements\. The project funds diverted to the procurement of ABZ could have been used to further enhance the outcome of the project\. This resulted in the savings of operational costs for the STH program supported by WHO, but the efficiency gains by co-administering PZQ and ABZ were not relevant to the project\. 39\. Given the very high allocative and technical efficiency and a substantial implementation efficiency, despite this project being implemented in the FCV environment, the overall Efficiency rating is High\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING 40\. Overall outcome rating is Highly Satisfactory, with “Highâ€? relevance and efficacy of PDO, and “Substantialâ€? efficiency\. Outcome dimensions Ratings Relevance High Efficacy High Efficiency High Outcome Rating Highly Satisfactory 2 It is worth mentioning that at the beginning of this cost-benefit analysis the plan was to calculate the benefits accrued from the project on education\. However, a Campbell systematic review by Taylor-Robinson et al (2017) concluded that mass deworming of children for STHs/SCH has little to no effect on growth, hemoglobin, cognitive development, and school attendance (https://www\.thelancet\.com/journals/langlo/article/PIIS2214-109X(16)30289-3/fulltext)\. 3 The project’s QER also supported the idea of co -administering of two anthelminthic drugs\. Page 15 of 44  The World Bank Yemen Schistosomiasis (P113102) E\. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 41\. The project benefitted both males and females alike\. According to the administrative data collected by the NSCP, 52 percent of the total 11 million beneficiaries were male (gender disaggregation among SAC was not done)\. This slight higher proportion of male beneficiaries is justified considering Yemen’s estimated gender ratio in 2010 was 1\.03 men to 1 woman\. Besides, boys/males have a higher risk of SCH infection, due to their water contact behaviors\. The study in 2013 found that boys had significantly higher intensity of both SCH species than girls, while no significant difference in the prevalence of schistosomiasis between male and female participants (Sady H, et al, 2013)\.4 Nonetheless, the project and NSCP paid significant attentions to the cultural barriers; females are generally hesitant to contact males outside the family\. Thus, both male and female volunteers and teachers were purposefully hired and trained under the project\. Nearly 50 percent of the total beneficiaries being female was thus a notable result of conscious efforts for gender equality made under the project\. Institutional Strengthening 42\. The project employed a campaign-based, and single-purpose vertical disease control approach to address the pressing need to deliver services, given that a routine health service delivery system was yet to be in place\. The project outcomes show, similar to the global experience, that intense MDA campaign approach works for a so-called “attack phaseâ€? of SCH\. In regard to institutional/system strengthening, the project supported the training of health personnel, who will be able to work immediately once any SCH campaigns takes place again in the area\. The project supported the capacity building of different levels and types of health personnel, such as the national and cascade training sessions that targeted trainers (training of trainers) at the national level, and the providers (drug distributors) such as health workers, school staff and other community-based workers/volunteers, in addition to the training of governorate-level supervisors\. In addition, micro-planning capacity building was built at the governorate level for implementing campaigns to adequately cover right target groups\. Mobilizing Private Sector Financing 43\. The partnership arrangement the project established helped bring additional funds outside the IDA funds\. First, the SCI/Imperial College provided TA in designing and implementing impact evaluation for the project with their own funds\. WHO has brought their technical staff and capacities, in addition to anthelminthic drugs (ABZ/MBZ for STHs) which were donated the pharmaceutical companies\. from Furthermore, the PAU managed to bring in assistance from the END Fund, which financed one MDA campaign and helped cover some of the distribution costs of the drugs financed by the project\. Poverty Reduction and Shared Prosperity 44\. SCH is rampant in poor rural communities, especially where fishing and agriculture are the dominant economic activities\. These rural communities often face limited access to health services, where failure to receive the necessary health services, resulting poor health, and lost productivity can push people into poverty\. Although the project did not measure direct benefits on poverty reduction the reduction in the prevalence of S\. Hematobium and S\. Mansoni clearly reduced morbidity and thus preserved productivity of treated adults living in SCH endemic areas (see the economic analysis for monetized details on the decreased loss of productivity due to the project’s interventions)\. 4Sady H, Al-Mekhlafi HM, Mahdy MAK, Lim YAL, Mahmud R, et al\. (2013)\. Prevalence and Associated Factors of Schistosomiasis among Children in Yemen: Implications for an Effective Control Programme\. PLoS Negl Trop Dis 7(8): e2377\. Page 16 of 44  The World Bank Yemen Schistosomiasis (P113102) Other Unintended Outcomes and Impacts Not applicable III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 45\. Lessons considered\. It took one year to prepare this project, from the Project Concept Note approval to the WB Board approval\. Technical design of the project was mainly informed by the Bank-financed “Yemen Health Reform Support Project (HRSP; P043254; closed in 2009)â€? and “Egypt SCH Control Project (P005152; closed in 2002)â€?\. The task team leader (TTL) at project appraisal and for most of the implementation period of the Yemen SCP had led the Egypt SCH project\. The project design was built on the previous work done by the NSCP under the HRSP aiming for (i) introducing a new service delivery model that expanded its program coverage to reach non-enrolled school children through expanding the fixed sites to include health facilities and to reach “hard to reachâ€? population using campaigns, and (ii) putting in place an adequate and regular flow of funds to scale up to a nationwide intervention benefiting all those requiring treatment\. 46\. Design\. The intention was to prepare a single-disease focused, vertical program supported by WHO\. Based on the well-established strategy for the “attack phaseâ€?, the PDO, project design and the components were all aligned to concentrate efforts on controlling high SCH prevalence and intensity, which would contribute to the government’s goal of the SCH elimination\. The project’s target areas and treatment schedule were also clearly described in the PAD\. The project’s Quality Enhancement Review (QER) and Decision Meeting consistently supported its single- disease focused design, while the reviewer recommended making the interventions and outcomes on STH from co- administering more explicit\. The team could have broadened the PDO as well as the project design to include STH and other NTDs, considering what has happened later\. During the ICR preparation, the following design aspects were examined: (1) Choice of investing in SCH control over other public health areas\. The Global Burden of Disease (GBD) study in 2010 estimated Yemen’s top three causes in disability-adjusted life years (DALYs) - lower respiratory infections, diarrheal diseases, and congenital anomalies\. Burden of SCH in Yemen, on the other hand, was accounted only for 3\.16 percent of total DALY for Yemen (33 out of total 10,417 (in million) (Global Burden of Disease Study 2010), which indicates that SCH was not an imminent public health problem to be addressed\.5 However, at the time of project appraisal, 3 million individuals were estimated to be infected with SCH in 2010 (about 12\.7 percent of total population) – albeit insignificant DALYs, its high prevalence was a major health problem that warranted urgent attention\. Moreover, global underestimation of burden of NTDs, especially SCH, is well documented (Hotez P\., et al 2014)\.6 SCH often results in specific illnesses, although the link is not always properly identified, making it difficult to attribute SCH to a particular infection or risk factor\. SCH is an infectious disease caused by parasitic worms; however, if untreated, it is known to cause serious chronic conditions, including bladder cancer and renal failure (in urinary SCH) and liver and spleen enlargement, liver fibrosis (in intestinal SCH)\. (2) Health systems considerations\. The SCH control strategy is widely established; a short-term intensive 5 GBD Compare (https://vizhub\.healthdata\.org/gbd-compare/), Institute for Health Metrics and Evaluations (IHME), retrieved on April 1, 2018\. 6 Hotez PJ, Alvarado M, Basa´n˜ ez M-G, Bolliger I, Bourne R, et al\. (2014)\. The Global Burden of Disease Study 2010: Interpretation and Implications for the Neglected Tropical Diseases\. PLoS Negl Trop Dis 8(7): e2865\. Page 17 of 44  The World Bank Yemen Schistosomiasis (P113102) “attack phaseâ€? with preventive chemotherapy to rapidly reduce prevalence and intensity of infection, followed by a less costly “consolidation or maintenance phaseâ€? to prevent a rapid resurgence of transmission\. While the benefits brought by this focused and simple disease control intervention were unarguably substantial, it would have been desirable to pay more attention to the integration of a vertical program into the health system to ensure lasting impact, such as use of existing platforms for drug distribution, integrated supply chain and monitoring system\. The PAD described that Yemen’s weak health system was the reason for choosing a vertical disease program approach, leaving health system strengthening elements out of the project scope\. The IEG assessment of the performance of Bank-financed communicable diseases control projects in 20107 stressed that investments in health systems is an essential means to controlling disease outcomes, especially for the poor, and that it should not be viewed as an alternative to investment in communicable disease control\. However, it should be noted that the simple, vertical project design largely contributed to the success of the project when conflicts erupted and the operating environment increasingly became challenging\. (3) Consideration of non-medical interventions\. The project design heavily focused on MDA campaigns\. The option of environmental management aimed at controlling the snail population was not explored because it was expensive and not cost effective, based on the available evidence at project appraisal\. The PAD noted that snail control would be considered at MTR; however, as the NSCP regretted during the ICR preparation, there were no substantial steps interventions taken during implementation to control snails\. Furthermore, other non-medical interventions such as health education and behavior change interventions for safe drinking water and proper sanitation, which are now known to be critical in order to curtail transmission and morbidity caused by SCH, were not given much consideration during project preparation\. Today, experts agree that such complementary strategies along with MDA campaigns have played a crucial role in settings where interruption of disease transmission was achieved\.8,9,10,11 47\. Establishing a partnership arrangement\. One of the key strengths of the project was the establishment of a strong partnership with WHO, the Schistosomiasis Control Initiative (SCI) of Imperial College in London, the MoPHP, and the Bank\. WHO was already working with the MoPHP prior to the project, but under the project, WHO agreed to contribute US$1\.46 million for the following activities: (1) timely procurement of PZQ for SCH; (2) donation of ALB/MBZ for treating STH among SAC; (3) development of training schemes; (4) quality assurance of drugs; and (5) design of the sentinel survey\. The SCI entered into a Memorandum of Understanding with the MoPHP in 2009, agreeing to provide TA in designing the following: (1) MDA campaigns; (2) parasitological surveys to be conducted at baseline, mid-term, and end-project; (3) training, workshops and protocols; (4) communication strategy and KAP surveys; and (5) impact evaluation using longitudinal cohort\. The PAD mentions that their contribution would be US$200,000; however, the total contribution from the SCI is estimated between US$1\.5 to 2\.0 million\. At a later stage, the END Fund, which focuses on NTDs, stepped in in collaboration with the SCI, to support the MoPHP by funding one MDA campaign and 7 Martin, G\. (2010)\. Portfolio Review of World Bank Lending for Communicable Disease Control\. IEG Working Paper 2010/3\. Independent Evaluation Group, the World Bank\. 8 Andrews, JR\., et al\. (2017) The benefits of mass deworming on health outcomes: new evidence synthesis, the debate persists\. The Lancet Global Health, Volume 5, Issue 1 , e4 - e5\. 9 Lo, NC\., Gurarie D\., et al\. (2018) Impact and cost-effectiveness of snail control to achieve disease control targets for schistosomiasis\. Proceedings of the National Academy of Sciences, January 2018, 115 (4)\. 10 Sady, H\., et al\. (2015) Knowledge, attitude, and practices towards schistosomiasis among rural population in Yemen \. Parasites & Vectors (2015) 8:436\. 11 Tambo, E\., et al\. (2017) Impact evaluation of schistosomiasis control into elimination interventions models in P\. R\. China and Africa\. Journal of Microbiology and Infectious Diseases, 2017; 7(2): 104-118\. Page 18 of 44  The World Bank Yemen Schistosomiasis (P113102) a pilot campaign of onchocerciasis and providing advice in designing the MDA strategies for SCH and onchocerciasis\. This financial and technical support mechanism established under the project significantly helped maintain the relationship with the government and enhance the ability and perseverance of the MoPHP to carry on the MDA campaigns under the SCP, even under the deteriorating operating environment\. The strong partnership with WHO established from project preparation served as the basis for the WHO service agreement to lift the disbursement suspension, which then led to the Bank’s new business model pursued under the Yemen Emergency Health and Nutrition Project\. 48\. Adequacy of risk identification and mitigation measures\. The PAD described the overall project risk as High, which was a candid and accurate assessment of the difficult operating environment coupled with low capacity\. The following five categories were rated as “Highâ€?: procurement of drugs; reaching non-enrolled SAC; newly established PAU; decentralized funds flow; and low capacity for international procurement for consulting services\. The team adequately incorporated mitigation measures for each high risk in the technical design and implementation arrangements during preparation\. For instance, the team’s choice of the direct contracting for procurement of PZQ from the WHO was commendable\. This arrangement, accompanied with the direct funds transfer from the Bank to WHO, was the risk mitigation measure to ensure timely procurement of drugs with good quality through international competitive bidding\. Throughout the project implementation, quality and timing of delivery of drugs by WHO for the project was therefore assured, resulting in successful implementation of multiple, large-scale MDA campaigns\. 49\. To address the weak FM capacity and system within the MoPHP, establishing a new Project Administration Unit (PAU) was agreed upon specifically for the NSCP, complemented by a qualified firm that provided independent technical and internal audit functions (“ITIFA firmâ€?)\. The MoPHP had wished to establish one Project Management Unit to be utilized by all IDA-financed health projects, including the Health and Population Project (HPP)\. One could also question if establishing one PMU under the MoPHP would have been more efficient and provided opportunity for building FM capacity in the MoPHP for post-project sustainability, rather than having separate PAUs for different projects within the same ministry\. Considering the level of importance in having an adequate FM system in place, including internal control, accounting, reporting and asset management, and securing on-time funds flow to implement large-scale campaigns, the team’s choice was justified\. In addition, the team ensured appropriate installment of the FM accounting system in the PAU by making it as the effectiveness condition\. Because of this, it took about eight months for project effectiveness, but the effectiveness condition is deemed a right decision considering the high fiduciary risks\. 50\. Readiness for implementation\. The WB team provided adequate guidance and support to the NSCP in collaboration with WHO and the SCI to kick start the project implementation\. With high ownership by the MoPHP, the implementation readiness was high\. For instance, having considered time needed to open a Designated Account (DA), the team allowed the MoPHP to fund the cost of the pilot campaign from its own resources and requested that the Bank reimburse the expenditures of this campaign at a later stage\. Other key actions taken while waiting for project effectiveness were as follows: (1) key operational staff of the PAU were put in place; (2) accounting system was operational and generating the required Interim Financial Reports; (3) the annual work plan covering for 2010-2011 was developed; and (4) preparations were underway for the first phase of the 2010 national MDA campaign, targeting 57 districts\. Furthermore, the WB team also facilitated the signing of the agreement for the procurement of 95,385,958 tablets of PZQ between the MoPHP and WHO for the amount of US$9,043,125, ensuring the timely delivery of an adequate volume of drugs necessary for the implementation of the first nation-wide MDA campaign in 2010/2011\. Page 19 of 44  The World Bank Yemen Schistosomiasis (P113102) B\. KEY FACTORS DURING IMPLEMENTATION 51\. Overall\. The project implementation was challenged by the onset and progressive worsening of the crisis in the country\. In spite of such growing difficulties, the project managed to be implemented and achieved or surpassed most of its targets, carrying out 13 large-scale MDA campaigns\. This was made possible owing to the sustained government ownership and commitment fully backed up by support provided to the MoPHP, under the partnership arrangement among WHO, SCI, and the Bank\. Also, the Bank’s strong determination to find a way to continue supporting the project and people in Yemen made this success possible\. 52\. Factors outside the control of government and or implementing entities\. As explained earlier, the project implementation faced a number of extremely difficult challenges due to: (1) the 2011 political crisis leading to the suspension of disbursement of the entire Yemen’s portfolio; and (2) continuing violence and conflict since 2015, which resulted in another disbursement suspension and eventually the cancellation of all Yemen’s portfolio except for the SCP and HPP conditioned by the use of the TA agreements with the UN agencies\. Due to two disbursement suspensions and a change in the implementation arrangements, the overall delay in implementation was unavoidable\. The MoPHP and the PAU staff could not access their offices for a considerable amount of time due to insecurity\. Even under such difficult circumstances, the Bank team and the PAU managed to mobilize external resources from the END Fund to cover some of the distribution costs of the drugs financed by the project\. This ensured continued service delivery through the MDA campaigns\. 53\. Factors subject to government and/or implementing entities control\. • The Government of Yemen was highly committed to controlling SCH from the onset of the project\. With an unusually large financing size of US$25 million for a single NTD control project even on a global standard, the project was given a high priority by the senior management of the government\. For instance, technical meetings with the partner organizations were regularly attended by the senior management such as the deputy minister along with the technical staff\. The leadership at the NSCP and the PAU was sustained throughout project implementation allowing capacity building and continuity in the program\. Furthermore, the government agreed to provide counterpart financing of US$2\.14 million at project appraisal, although this did not happen during implementation due to the growing crisis\. The staff at the MoPHP/NSCP/PAU, along with the governorate level staff, were highly motivated and did their best despite major challenges such as a long delay of salary payment to implement the MDA campaigns\. Also, the regular monitoring and tracking of campaign results were thorough, technically supported by the SCI\. It is noteworthy that they managed to adopt a series of changes in implementation arrangements due to the introduction of the WHO TA agreement\. • The initially envisaged role of WHO was to provide technical advice to the Government and also quality drugs on-time to enable the Government to implement MDA campaigns\. In December 2015, WHO became the implementing entity as per the TA agreement between the MoPHP and WHO for the amount of US$3\.5 million\. The majority of the funding was used to implement three MDA campaigns\. Overall, the TA agreement worked well to sustain the provision of SCH prevention and treatment services even under the heightened insecurity situation\. Towards the end of implementation, the WHO and the Bank team agreed to utilize the remaining balance of US$2 million in the original US$9 million contract for the procurement of PZQ under the project to procure additional 20 million PZQ tablets to be used under the Yemen Emergency Health and Nutrition Project (P1618109)\. However, the planned procurement of PZQ worth US$0\.5 million was not completed/delivered before the project closing date, and the funds needed to be returned to the Bank\. This was largely due to lack of timely communication between the drug supplier and WHO, as well as shifted priority in the drug shipment to the cholera response\. Page 20 of 44  The World Bank Yemen Schistosomiasis (P113102) 54\. Factors subject to World Bank control\. During the suspension of disbursements in 2015 with the worsened security situation, the Bank team, CMU and the management collectively made a critical decision requesting exceptions under OP 7\.30 Dealing with De Facto Governments to lift disbursement suspension for two health projects on the basis of urgent humanitarian needs\. The way the Bank adapted to a rapidly changing situation and found the unprecedented solution is undeniably commendable\. Likewise, the utilization of the remaining balance under the WHO agreement for the PZQ procurement to be linked to the Yemen Emergency Project was another example of the team’s proactivity to find out solutions for the population in dire need amidst deteriorating conditions\. 55\. Adding the new Component 3 to the project was extremely ambitious, especially with insufficient capacity in managing output-based financing in the MoPHP\. The progress was lagging from the beginning with only a negligible expenditure under Component 3 used for printing materials\. In addition, the WHO TA agreement focused solely on the implementation of MDA campaigns for SCH control\. Thus, any other activities including those under Component 3 under the project were no longer financed\. After the lifting of suspension, the Bank team did consider the cancellation of Component 3; however, without a recognized government which would normally request restructuring, the Bank’s legal department advised not to proceed with cancellation\. As a result, until project closing, Component 3 was kept legally in the project but it was not actually being implemented\. The PDO achievement was not affected by this at all\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design Rating: Substantial 56\. The project’s RF at the design stage included 3 PDO indicators for which data could be collected only through a large-scale epidemiology survey and 7 intermediate outcome (IO) indicators for which data would be collected by the SCP’s existing M&E system\. The selection of indicators in the RF was appropriate for the purpose of SCH control and the project’s interventions and aligns with the project’s theory of change\. It should be noted, however, that the RF did not include any STH related indicator, even though co-administration of PZQ and ABZ was planned during appraisal, according to the PAD\. 57\. There was no baseline data entered for any indicators in the RF in the PAD\. This was pointed out at the project’s both QER and Decision Meeting and the team confirmed that data would be collected before project effectiveness, but it did not actually take place until 2013\. 58\. It was not clearly written throughout the PAD whether the three PDO indicators measured progress in the primary target group, i\.e\., “SAC in endemic regionsâ€? as stated in the PDO, or the entire population in endemic regions\. Disaggregation by adult and by SAC was not indicated in PAD\. As the PDO specifically focused on SAC in endemic regions, the PDO indicators should have included the information in the wording of the indicators or in the description in PAD to avoid confusion during implementation\. 59\. Sentinel site surveys for impact evaluation (IE) were planned in the PAD to collect data for the three PDO indicators, in collaboration with WHO and SCI/Imperial College\. Inclusion of the IE as part of the project was one of the key strengths of the project, unlike the HPP, which struggled in measuring the project’s achievements\. In spite of the advice from the Decision Meeting, the PAD did not specify who would conduct IE and how much it would cost; only US$150,000 was allocated for IE under Component 2, which is clearly insufficient for conducting full-scale IE\. As the IE was considered integral part of M&E for the project, the information should have been clearly presented in Page 21 of 44  The World Bank Yemen Schistosomiasis (P113102) the PAD\. The role of WHO and SCI was to provide TA for IE design and supervision of the quality of the work done under the project\. The SCI also funded the time of their staff and travel\. M&E Implementation Rating: Substantial 60\. During implementation, the indicators in the RF were closely monitored as shown in the post-mission Aide Memoires\. All supervision missions were jointly done with the partners and the MoPHP\. The data collection and analysis for IE including baseline, mid-term and end-line surveys were conducted and presented by SCI at the joint supervision missions\. The source of data for the IO indicators was solely from the NSCP’s administrative data\. After each of 13 MDA campaigns, the data was meticulously collected and compiled for monitoring purposes, even under the difficult circumstances\. While the appointment was delayed, Grand Thornton, which was hired as an IFITA firm for the PAU, assumed the responsibility of independent verification of each MDA campaign\. 61\. Such rich data availability was not properly reflected for reporting the progress in the ISRs\. It was not possible to track changes in results consistently during implementation\. One of the reasons was that the methods of calculation and units for the PDO indicators were changed in the ISRs without project restructuring\. Furthermore, the data for some IO indicators, namely, geographical and program coverages, was erratic in the ISRs\. These IO indicators were originally formulated to monitor the “progressive increaseâ€?,â€? but during implementation the results from each campaign conducted were captured instead\. M&E Utilization Rating: Substantial 62\. The availability of rich data is one of the strengths of the project, which enabled the MoPHP to make course correction during project implementation\. The prevalence mapping was done in 2013, which helped recategorize the districts that have received preventive chemotherapy into different prevalence categories, supported by WHO and SCI\. Furthermore, the baseline and mid-line surveys under the IE also helped the MoPHP plan for subsequent MDA campaigns to effectively target the most vulnerable districts\. The inclusion of the IE done by a reputable entity and supported by WHO/SCI was an invaluable asset to the project and the MoPHP\. Justification of Overall Rating of Quality of M&E Rating: Substantial 63\. The overall M&E for the project is Substantial, owing to simple project design and RF, technical and financial support from WHO and SCI/Imperial College, and full-fledged IE conducted by SCI, a reputable entity\. Despite a series of challenges in the country, and the shortcoming related to not tracking the SAC separately, the MoPHP focused on implementation of the MDA campaigns and collected data from all 13 campaigns\. Their dedication is commendable\. Overall, there was sufficient data and quality of information from the assessments to enable the full measurement of the PDO achievement\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 64\. Environmental safeguards\. The project had an Environmental Assessment (EA) category of C at project appraisal\. The project restructuring in 2013 introduced Component 3 extending support to other NTDs such as onchocerciasis and trachoma\. For trachoma, surgical treatment was included under the project\. However, the change of the EA category was not discussed among the team, though surgical treatment for trachoma could have produced medical waste\. The new IO indicator “Persons benefitted from surgery for Trachomaâ€? was included in the RF as a result of restructuring\. 65\. Social safeguards\. It was clear that the project had a substantial positive social impact by the expansion of the Page 22 of 44  The World Bank Yemen Schistosomiasis (P113102) NSCP’s program coverage to underserved segments of the population groups, especially non-enrolled SAC\. The project’s RF included the indicators measuring the geographical and program coverage, showing the project has successfully produced positive social influence\. The NSCP noted that at the beginning of the implementation of the MDA campaigns there were some instances where women rejected male campaigners due to cultural constraints\. These were not recorded in the Bank documents, but the NSCP later focused on training more female campaigners and raising awareness\. Positive social impacts, i\.e\., school enrollment and increased attendance, as described in the PAD, which were perceived/expected benefits from mass deworming campaigns for children, are increasingly challenged in various articles as evidence suggests there is little or no impact\. In the case of Yemen, the ICR team tried to collect the administrative data in the project target districts from the Ministry of Education; however, due to security challenges and crisis, the data was not obtainable\. 66\. Financial Management (FM)\. Financial Management was rated as Moderately Satisfactory over the life of the project\. The FM system including accounting, auditing, and reporting, was adequate and consistent with the Bank’s FM guidelines and requirements\. The overall FM arrangements were in place including staffing, controls, accounting, reporting, and auditing\. However, Quarterly Interim Financial Reports (IFRs) for the project were presented to the Bank with revisions throughout implementation\. In addition, the individual independent financial auditors reported a number of observations from their reviews on the project’s expenditures, such as missing documentation, delay in settling advances, discrepancy between information, etc\. These findings illustrated the fact that some procedures followed were not in compliance with the project’s FM Manual\. 67\. During implementation, as planned, the PAU contracted an ITIFA firm, which was Grand Thornton (GT), to approve each MDA campaign plan and verify for the Bank that the planning and implementation of the MDA campaigns were conducted at an acceptable level and constitute a reliable base for the disbursement of IDA funds\. The GT was instrumental to enhancing fiduciary capacity building to the PAU and confidence to the Bank and partner organizations even during the inaccessible period\. 68\. The project funds were disbursed from the Bank to the Designated Account at Central Bank of Yemen (CBY)\. The PAU maintained a sub-account in the Central Bank of Yemen in Yemeni Rial and another in the CAC Bank\. The PAU preferred to use the CAC bank account as it facilitates the payments of the campaign costs\. This account was used to receive transfers from the DA and disburse payments for eligible expenditures related to operation cost of drug distribution to the concerned districts’ sub accounts prior to the campaign\. Except for the first campaign, there was no delay in sending the project funds from the PAU to the districts\. Even after the suspension, the same funds flow remained in place\. 69\. The PAU maintained the FM arrangements through: retaining adequate staffing arrangement in the FM department which is led by a Financial Manager, and supported by an accountant; maintaining adequate internal controls procedures based on an acceptable FM Manual which describes the project’s FM and disbursement procedures including internal controls on campaign costs; maintaining an automated accounting system capable of recording and reporting on all project’s transactions; and submitting acceptable quarterly IFRs and annual audited financial statements\. The PAU demonstrated resilience as they remained operational during both periods of suspension and conflict in the country (2011-2012 and 2015-2017) and continued to maintain the required FM arrangements including the submission of financial statements and audit reports on time\. There was a period that government salary was not paid by the government in 2016 – even such time, the NSCP and PAU staff were diligent and tried every possible venue to keep the MDA campaigns going\. The Bank team eventually made the arrangement with WHO to keep government employees by paying per diem to supplement lack of salary\. 70\. The project disbursed US$22\.4 million equivalent out of US$25\.0 million at the end of the project\. 71\. Procurement\. Procurement performance of the project was rated as Moderately Satisfactory throughout the Page 23 of 44  The World Bank Yemen Schistosomiasis (P113102) implementation\. Procurement arrangements were maintained by the PAU with support from the ITIFA firm\. At the beginning of the implementation, there were many challenges related to preparation of technical specifications and delay in decision making because all the decisions had to be taken by the Ministry of Health\. In addition, lack of knowledge about the Bank’s regulations within the PAU which led sometimes to incorrect preparation of a procurement documents and filing\. Findings of the post procurement review carried out annually by the Bank were discussed as a means of capacity building and future guidance, such as ensuring timely payments to suppliers, and improving quality of procurement documentation (specifications) and its filing\. 72\. Despite the security situation in Yemen, most of the procurement activities were implemented with some delay\. The Bank team maintained close guidance and support to the PAU\. Procurement of equipment and materials along with drugs was properly synchronized with the planning which enabled successful implementation of 13 large-scaled MDA campaigns\. 73\. As for procurement of drugs, the Bank approved finances procurement of PZQ from WHO on a direct contract basis prior to project implementation\. Drugs were delivered mostly on time to the campaign districts from the warehouse in Sana’a\. Towards the end of the project implementation, the procurement of praziquantel worth US$0\.5 million to be used under the Yemen Emergency Health and Nutrition Project (P1618109)\. However, it was not completed/delivered before the project closing and the fund will be returned to the Bank\. This was largely due to lack of timely communication between the drug supplier and WHO, as well as shifted priority in the drug shipment to the cholera response\. C\. BANK PERFORMANCE Quality at Entry Rating: Satisfactory 74\. Overall, the ICR rates Bank performance during project preparation as Satisfactory\. The project’s PDO and components, as well as its RF, were all aligned to focus on the “attack phaseâ€? of SCH with preventive chemotherapy to rapidly reduce prevalence and intensity of infection through the government’s single-disease, vertical program\. Given the high SCH prevalence in the country, this simple and established approach with an emphasis on MDA campaigns through schools and communities led to substantial reductions in the SCH prevalence and intensity of infection in a short period\. Also, the project integrated the lessons learned from the previous health project in Yemen and the Egypt SCH project\. From the operational viewpoint, the Bank team took well into account the weak fiduciary and technical capacity in the MoPHP; for mitigating fiduciary risks, a few conditions for the FM were set before project effectiveness\. In addition, the ITIFA firm was contracted by the PAU to provide fiduciary support to the PAU and for independent verification of each MDA campaign\. Procurement of drugs, which was a major part of the project interventions, was secured by direct contract with WHO\. In addition to the Bank team support, a partnership arrangement was formed among WHO, SCI/Imperial College, the MoPHP, and the Bank during project preparation\. This turned out to be one of the key factors which enabled the project to continue during the crisis and even achieve or surpass the set targets\. 75\. There were a few shortcomings mainly in the design\. First, co-administration of ABZ/MBZ for treating STH infections with PZQ could have been formally integrated as part of the project activities, as it was eventually added as a new Component 3\. The project design did not invest in health system strengthening with little emphasis on sustainability, even though the project was prepared during the stabilized country situation\. In addition, non-medical approach, such as snail and environmental control, behavior change campaigns, and hygiene education did not receive much consideration, which could have further enhanced the results gained from the MDA campaigns and helped the country transit to the “consolidated phaseâ€?\. Globally, it is generally agreed that such complementary strategies along with MDA campaigns have played a crucial role in settings where interruption of disease transmission was achieved\. Page 24 of 44  The World Bank Yemen Schistosomiasis (P113102) Quality of Supervision Rating: Satisfactory 76\. Overall, the project supervision by the Bank team was undertaken adequately\. First, the Bank team’s engagement remained solid throughout project implementation with only two TTLs for the six years of implementation; the original TTL at project approval continued until 2015\. Second, the counterpart highly valued the Bank’s supervision including the hands-on support in fiduciary aspects as part of capacity building for the MoPHP/NSCP/PAU\. Frequent meetings with Government officials and the partners, often conducted remotely, to discuss the progress, results, challenges and bottlenecks were important measures taken during project implementation to ensure continued strong support by the partners and promptly address technical and operational challenges in the planned activities to achieve targets and objectives\. Lastly, as mentioned earlier, despite the challenge of the fragile environment, the Bank team focused on achieving the results on the ground\. With full support from the Bank’s senior management, the task team and the Country Management Unit explored a new ground within the Bank which led to the decision on lifting disbursement suspension in 2015 with the WHO TA agreement\. It represents the Bank’s proactivity and commitment to delivering basic health services to the beneficiaries\. Another example of flexibility and proactive implementation support by the Bank team was the decision on utilizing the remaining balance of US$2 million in the US$9 million WHO contract for procuring additional 20 million PZQ tablets to be distributed under the Yemen Emergency Health and Nutrition Project (P161809)\. 77\. Strong coordination and partnership arrangement among WHO, SCI/Imperial College, MoPHP/NSCP, and the Bank was also another key for success focusing on results and ensuring implementation support and supervision, especially during crisis in the country\. Later on, the END Fund also joined this partnership, whose financial contributions enabled the NSCP to conduct one more MDA campaign\. This arrangement was considered essential and supported the partial lifting of suspension, helped preserve gains made, and even continued to meet project objectives\. The results and experience of the project later inspired the design and implementation arrangement of subsequent operations in Yemen in the health and other sectors\. 78\. There were a few minor shortcomings, mainly found before disbursement suspension, in the course of implementation\. First, adding a new third component for output based financing for deworming and control of other NTDs at the 2013 restructuring might have been too ambitious due to limited capacity in implementing the output- based financing\. Testing output based financing was already proposed by the team at the QER, but was not recommended as it would bring complexity to implementation\. After the addition of Component 3 in 2013, there was no subsequent Aide Memoire noting this aspect, thus a system to implement output-based activities, including verification of results and provision of funds, was likely never set up\. Second, reporting implementation status on ISRs, especially monitoring results, was not systematic\. Changes in the wording of indicators and target were made in the ISRs without restructuring\. Third, there was no disaggregation of data recorded for SAC for the PDO indicators in the ISRs; despite the disaggregated data was collected and available, the Bank team did not appear to have specifically asked for the disaggregated data\. Lastly, it should be noted that it took nearly one year from the suspension of disbursement in February 2015 to have the memo requesting exceptions under OP/BP 7\.30 approved by the Bank’s Managing Director in January 2016\. In the process, a series of discussions and decision making needed to take place within the institution to lift the disbursement suspension; this experience illustrates how the Bank was able to move to more ‘agile’ decision making for a difficult emergency situation requiring enhanced flexibility and adaptability\. Justification of Overall Rating of Bank Performance Rating: Satisfactory 79\. On balance, the ICR rates Bank performance over the course of project implementation as Satisfactory\. The satisfactory rating is largely due to the Bank’s proactivity and focus on results to find alternative implementation arrangements in a context of fragility and major restrictions to the government capacity to deliver basic health Page 25 of 44  The World Bank Yemen Schistosomiasis (P113102) services\. Bank’s flexibility and creativity shown during implementation were essential for the achievements of the project in a FCV context\. There were a few shortcomings during implementation, related to adding new activities and complexity to the project\. This might have been technically justified at the time of 2013 restructuring; however, the new activities were never implemented due to the MoPHP’s limited capacity in output-based financing and the deterioration of the operating environment\. D\. RISK TO DEVELOPMENT OUTCOME 80\. The risk to development outcome is High due to the continued conflict situation in the country and the inherent institutional risks in this situation\. However, with continued support from partners like WHO and the END Fund, the government continues to be committed to keep the implementation of drug administration for SCH\. As previously mentioned, 20 million PZQ tablets, which were procured by utilizing the remaining balance in the WHO contract, will be distributed to beneficiaries as part of the provision of basic health and nutrition services through the Emergency Health and Nutrition Project (P161809, US$483 million)\. 81\. As was observed in the IE report, however, it is unfortunately clear that such momentum gained under the “attack phaseâ€? with preventive chemotherapy would be not be sustained, considering the worsened country environment and closure of the project\. Efforts to include non-medical interventions under the project could have positively contributed to sustaining the project outcomes\. Transitioning from an “attack phaseâ€? to “consolidation/maintenance phaseâ€? to prevent a rapid resurgence of SCH transmission would require functioning health systems and uptake of routine prevention activities at schools, as well as overall improvements in living conditions\. V\. LESSONS AND RECOMMENDATIONS 82\. The following lessons learned and recommendations from the project are intended to inform future World Bank financed operations, especially for those being implemented in the FCV context\. 83\. Maximizing partnership and capitalizing on a clear TOR for a UN agreement matching the organization’s mandate\. The partnership with WHO, SCI/Imperial College, END fund, and the Bank provided a strong supporting mechanism for the MoPHP to continue their SCH program even under the adverse environment\. It ensured common directions and reduced duplication of efforts and transaction costs\. This supporting mechanism was further strengthened by frequent virtual missions or reverse missions in alternative locations with all partners including the government team, ensuring a deeper follow-up and supervision, especially when physical visits were not possible\. After the project implementation moved under the UN agreement, WHO was able to continue the MDA campaigns in collaboration with the NSCP without any technical ambiguity, because it evidently leveraged the WHO’s core strengths\. 84\. Flexibility, agility and proactivity\. The projects under a FCV context face a number of implementation challenges to respond to changing needs and environment\. It is important for the Bank team, CMU and the senior management to collectively focus on delivering results and allow the team to try unprecedented measures through timely decision making if needed\. Learning from the experience, the Bank is striving to be more ‘agile’ in decision making in FCV contexts without missing adequate considerations for any implications\. In addition to the prime example of the transition to the WHO TA agreement to lift disbursement suspension in 2016, the project Closing Date was also unilaterally extended twice to allow completion of procurement of PQZ using the remaining funds, which Page 26 of 44  The World Bank Yemen Schistosomiasis (P113102) was used for 2\.3 million children under the Yemen Emergency Project\. 85\. Simple project design for a single disease with a vertical intervention could be highly cost effective\. The project was originally designed to solely focus on controlling SCH as a vertical project\. Later in the implementation, the project tried to include output-based financing for other NTDs as Component 3, but under the worsened security situation and limited capacity, it was proven to be too ambitious\. In a FCV scenario, it is essential for the project to have a simple design and keep the ambition moderate\. This includes: setting modest targets and objectives; and prioritizing the most cost-effective interventions to ensure the feasibility of the project and robust achievements at the end of implementation\. 86\. Integrating sustainability through health system strengthening and multisectoral collaboration and maintaining relationship with the government is beneficial in short and long terms\. Implementation can be responsive to urgent needs but it cannot ignore sustainability beyond the project\. Integration of drug distribution from campaign to routine health services, preventive school health programs, and BCC campaigns could have been done under the project to build resilience and sustainability for health\. Multisectoral collaboration, such as snail control and WASH, was not pursued from the design stage, which could have supplemented the impressive outcomes in the reduction of SCH prevalence and intensity rates\. These aspects, however, have been fully integrated in the ongoing Yemen emergency project\. 87\. Use of data and impact evaluation\. The project benefitted from the rigorous IE including baseline, midline, and two endline surveys, as well as the campaign administrative data collected by the NSCP\. In addition, independent verification of implementation of each MDA campaign was also part of the project M&E design\. In the FCV context, collection of data is challenging but using technology and third-party monitoring are proven to be effective for ensuring accountability when the team has no physical access to the project location\. Also, data can provide evidence to respond to rapidly changing contexts\. \. \. Page 27 of 44  The World Bank Yemen Schistosomiasis (P113102) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: To decrease the prevalence of infection of both urinary and intestinal Schistosomiasis among school-aged children by 2015 in endemic regions in Yemen Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Prevalence of infection Percentage 16\.70 10\.00 6\.90 14-Mar-2013 20-Nov-2009 01-Jun-2017 Comments (achievements against targets): Target surpassed\. In PAD, the indicator was written as follows: Prevalence of infection with any form of schistosomiasis is on average lower than 10 percent in all selected sentinel sites\. The results of the final IE report issued by the SCI on June 2017 shows that the overall prevalence of infection at 6\.9% was obtained based on all 36 sentinel sites (one site was dropped due to security reasons)\. Hence, 146% of the target value of 10% was achieved\. According to the IE results, the SAC only SCH prevalence rate at the end was 7\.4%, also significantly decreased from 17\.3% at baseline\. Hence, 136% of the target value of 10% was achieved even for SAC\. Objective/Outcome: To decrease the intensity of infection of Urinary Schistosomiasis among school-aged children by 2015 in endemic regions in Yemen Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Prevalence of heavy infection Percentage 2\.70 50\.00 1\.00 1\.20 of Urinary schistosomiasis 24-Feb-2014 20-Nov-2009 24-Feb-2014 31-May-2017 Page 28 of 44  The World Bank Yemen Schistosomiasis (P113102) Comments (achievements against targets): Target achieved\. In PAD, the indicator was written as follows: Intensity of infection on average is less than 50 eggs per 10 ml of urine among those who remain positive in selected sentinel sites\. The exact wording of the two indicators shown in PAD was never used in ISRs; eventually, the methodology for calculation and unit of measure, as well as their targets were changed at ISR #9 in February 2014, without restructuring - the target figure of 1\.0% and baseline data of 3\.0% was entered in ISR #9\. The results of the final IE report issued by the SCI on June 2017 shows that the overall intensity of infection of urinary schistosomiasis at 1\.2% was obtained based on all 36 sentinel sites (one site was dropped due to security reasons) against the baseline of 2\.7%\. Hence, 88% of the target was achieved\. According to the IE results, the SAC specific prevalence rate for heavy intensity in S\. Haematobium at the end is 1\.3%, decreased from 3\.1% at baseline\. Hence, 86% of the target was achieved even for the SAC\. Objective/Outcome: To decrease the intensity of infection of Intestinal Schistosomiasis among school-aged children by 2015 in endemic regions in Yemen Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Prevalence of either heavy or Percentage 4\.10 100\.00 2\.50 1\.00 medium infection Intestinal schistosomiasis 24-Feb-2014 20-Nov-2009 24-Feb-2014 01-Jun-2017 Comments (achievements against targets): Target surpassed\. In PAD, the indicator was written as follows: Intensity of infection on average is less than 100 eggs per 1 gram of feces among those who remain positive in selected sentinel sites\. The exact wording of the two indicators shown in PAD was never used in ISRs; eventually, the methodology for calculation and unit of measure, as well as their targets were changed at ISR #9 in February 2014, without restructuring - accordingly, the target figure of 2\.5% and baseline data of 4\.1% was entered in ISR #9\. The results of the final IE report issued by the SCI on June 2017 shows that the overall prevalence of infection of intestinal schistosomiasis at 1\.0% was obtained based on all 36 sentinel sites (one site was dropped due to security reasons)\. Hence, 194% of the target of 2\.5% was achieved\. The IE report did not report the SAC disaggregated rate for medium & heavy intensity in S\. Mansoni, however, heavy intensity infection among the SAC at the end was 0\.3%, decreased from 0\.7% at baseline\. The target figure of 2\.5% cannot be applied to the SAC data as the baseline of 0\.7% was already below the target\. A\.2 Intermediate Results Indicators Component: Component 1: Preventive chemotherapy for schistosomiasis control Page 29 of 44  The World Bank Yemen Schistosomiasis (P113102) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Geographical coverage Percentage 0\.00 90\.00 100\.00 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target surpassed\. Originally the indicator was written in PAD as follows: Geographical coverage of large-scale distribution of praziquantel should show a progressive increase in proportion of endemic districts are targeted throughout the 6 years of the project\. The number of endemic districts was not available in PAD\. During implementation, the actual values reported in ISRs were not showing "progressive increase", rather the values fluctuated\. Because the number of endemic districts to be targeted and actually covered under each campaign was used\. The project covered all 275 endemic districts during the first and second year of the project through a multiple MDA campaigns\. In this way, the end-target of 90% coverage of all endemic districts was surpassed in the first two years\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Program coverage - Targeted Percentage 0\.00 75\.00 85\.00 enrolled and non-enrolled school-age children 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target surpassed\. Originally the indicator was written in PAD as follows: Program coverage of large-scale distribution of praziquantel should show a progressive increase in proportion of targeted enrolled and non-enrolled school-age children throughout the 6 years of the project to reach at least 75% by the end of the project\. The total targeted number of enrolled and non-enrolled SAC was not available in PAD\. During implementation, the actual values reported in ISRs were not showing "progressive increase", rather the values fluctuated\. Because the team used the number of enrolled and non-enrolled SAC to be targeted and actually covered under each campaign\. The total targeted number of enrolled and non- enrolled SAC in all 275 endemic districts was 7 million; of those, 85% of SAC (6 million) was actually covered\. Thus, the target of 75% was 113% achieved\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 30 of 44  The World Bank Yemen Schistosomiasis (P113102) Program coverage - Targeted Percentage 0\.00 80\.00 100\.00 enrolled school-age children 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target surpassed\. Originally the indicator was written in PAD as follows: Program coverage of large-scale distribution of praziquantel should reach at least 80 percent of targeted enrolled school-age children at each round of treatment throughout the 6 years of the project\. The total targeted number of enrolled and non-enrolled SAC was not available in PAD\. The NSCP/project implemented 13 MDA campaigns; during each round of 13 campaigns, between 88-100% of enrolled SAC were covered\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Program coverage - Targeted Percentage 0\.00 70\.00 70\.70 non-enrolled school-age children 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target achieved\. Originally the indicator was written in PAD as follows: Program coverage of large-scale distribution of praziquantel should show a progressive increase in proportion of targeted non-enrolled school-age children throughout the 6 years of the project\. The total targeted number of non-enrolled SAC was not available in PAD\. The NSCP/project implemented 13 MDA campaigns; 9 out of 13 campaigns, > 70% coverage among non-enrolled SAC was achieved\. At the end, 1\.82 million non-enrolled SAC out of 2\.57 million targeted were covered by the MDA campaigns\. Hence, 101% of the original target of 70% was achieved\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0\.00 6000000\.00 11390000\.00 20-Nov-2009 30-Jun-2016 01-Jan-2018 Female beneficiaries Percentage 0\.00 50\.00 49\.00 Page 31 of 44  The World Bank Yemen Schistosomiasis (P113102) 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target surpassed\. Total of 13 MDA campaigns were held, which covered 11 million persons including 5\.9 million SAC in all endemic districts\. It is unclear whether the target value of 6 million in PAD was set for the overall population or SAC specific\. In either way, the target of 6 million was surpassed\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Drug Availability - Timely Yes/No Y Y Y Information to WHO 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target achieved\. Originally the indicator was written in PAD as follows: Drug needs should be calculated and communicated to the procurement agency at least 6 months before the planned implementation of large-scale distribution interventions\. Based on the campaign planning, the drug needs were sent to WHO, which enabled procurement and delivery of praziquantel to the targeted districts on-time\. No major delay in drug procurement was reported\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Drugs Availability - At Yes/No Y Y Y Governorate Level 20-Nov-2009 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target achieved\. Originally the indicator was written in PAD as follows: Drugs should be made available to the most decentralized level of the health system at least 1 week before the planned implementation of large-scale distribution interventions\. There were some instances that faced delay in delivering drugs to the implementing sites one week before the MDA campaigns\. However, majority of the MDA campaigns was conducted timely according to its plans with adequate volume of PZQ\. Therefore, this indicator is considered achieved\. Page 32 of 44  The World Bank Yemen Schistosomiasis (P113102) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Health personnel receiving Number 0\.00 20000\.00 36732\.00 training (number) 14-Mar-2013 30-Jun-2016 01-Jan-2018 Comments (achievements against targets): Target surpassed\. This IDA core indicator has been added to the results framework at project restructuring in March 2013\. According to the definition of the indicator, health personnel should include only health workers, namely, doctors, nurses, midwives, pharmacy staff, and laboratory staff, as well as health administrators/managers\. Under the project, 36,732 persons have been trained; of those, 11,711 were "health workers", while others were teachers and volunteers, according to the NSCP\. Considering the nature of MDA campaigns involving schools and communities, it was right that the training focused on teachers and volunteers, rather than limiting to health workers\. Therefore, considering the above point, total of 36,732 persons were trained against the original target of 20,000 personnel\. Therefore, the target was surpassed\. Page 33 of 44  The World Bank Yemen Schistosomiasis (P113102) B\. KEY OUTPUTS BY COMPONENT Objective/Outcome 1 Decreased prevalence of infection with urinary and intestinal schistosomiasis in selected sentinel sites\. Outcome Indicators 1\. Prevalence of infection with any form of schistosomiasis on average is lower than 10 percent in selected sentinel sites\. 2\. Total number of people who receive anthelminthic drugs as a result of the project interventions\. Intermediate Results 1\. Sentinel sites identified Indicators 2\. Numbers of targeted enrolled and non-enrolled school-age children identified 3\. Drugs needs identified 4\. Training sessions carried out Objective/Outcome 2 Decreased intensity of infection with urinary and intestinal schistosomiasis in selected sentinel sites\. Outcome Indicators 1\. Urinary schistosomiasis: intensity of infection on average to be reduced to less than 50 eggs per 10 milliliters of urine among those who remain positive, in selected sentinel sites\. 2\. Intestinal schistosomiasis: intensity of infection on average to be reduced to less than 100 eggs per gram (epg) of faeces among those who remain positive, in selected sentinel sites\. Intermediate Results 1\. Sentinel sites identified Indicators 2\. Intensity of both urinary and intestinal schistosomiasis in sentinel sites was identified 3\. Numbers of targeted enrolled and non-enrolled school-age children identified 4\. Drugs needs identified 5\. Training sessions carried out Key Outputs by 1\. Total number of direct project beneficiaries reached under the project is Component: 11,390,000 Component 1 2\. Drugs availability was ensured at every stage starting from the detailed campaign planning for each round, sending the drug needs from the NCSP to WHO for onward procurement of PZQ, and delivering PZQ to the targeted districts on time 3\. 100% of geographical coverage of MDA campaigns in all 275 endemic districts was achieved in the first two years 4\. More than 70% of total targeted non-enrolled SAC was covered\. 5\. More than 85% of targeted enrolled SAC was covered\. Key Outputs by 1\. Number of health personnel received training reached 36732 by the end of the Component: project Component 2 2\. Grand Thornton hired to carry out independent verification and monitoring 3\. SCI was hired to carry out the both the baseline survey and impact evaluation study Page 34 of 44  The World Bank Yemen Schistosomiasis (P113102) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Alaa Mahmoud Hamed Abdel-Hamid Task Team Leader E\. Gail Richardson Health Dina Mohamed Samir El Naggar Communication Yoonyoung Cho Economist Dhekra Amin Annuzaili Operation Mira Hong Operation David Freese Disbursement Ghada Youness Legal Moad Alrubaidi Financial Management Mikael Mengesha Procurement Supervision/ICR Moustafa Mohamed ElSayed Mohamed Abdalla Task Team Leader Samira Al-Harithi Procurement Specialist Saleh Qasem Al-Manary Financial Management Specialist Miyuki T\. Parris Team Member Jamal Abdulla Abdulaziz Procurement Specialist Moad M\. Alrubaidi Financial Management Specialist Safa'a Abdullah Al-Sharif Team Member Amer Abdulwahab Ali Al-Ghorbany Environmental Safeguards Specialist Naoko Ohno ICR Author Mennatallah Mohamed Hisham Rabie Elbeheiry ICR Team Member Development Partners Sami Al-Haidari National SCH, STH & ONCHO Control Director, Ministry of Public Health and Population (MoPHP) Page 35 of 44  The World Bank Yemen Schistosomiasis (P113102) Adel Ahmed Mwaydh Technical Officer, MoPHP Mahfoudh AlShehabi Financial Manager, Project Administration Unit (PAU) Ismail Baharoon Procurement Manager, PAU Albis Gabrielli Regional NTDs Advisor, World Health Organization (WHO) Alan Fenwick Professor, Faculty of Medicine, School of Public Health and the founder of Schistosomiasis Control Initiative (SCI), Imperial College Dhekra Annuzaili Programme Manager, SCI, Imperial College B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY09 24\.269 117,317\.22 FY10 20\.654 127,452\.81 Total 44\.92 244,770\.03 Supervision/ICR FY10 11\.423 32,935\.48 FY11 14\.483 70,743\.49 FY12 10\.813 99,867\.42 FY13 2\.000 120,583\.94 FY14 15\.575 48,374\.94 FY15 7\.100 41,486\.89 FY16 17\.080 54,829\.31 FY17 3\.304 26,472\.63 FY18 10\.407 63,436\.94 FY19 \.625 3,793\.59 Total 92\.81 562,524\.63 Page 36 of 44  The World Bank Yemen Schistosomiasis (P113102) ANNEX 3\. PROJECT COST BY COMPONENT Amount at Revised Actual at Percentage of Percentage of Components Approval Amount Project Closing Approval Revised (US$M) (US$M) (US$M) Amount Amount Component 1: Preventive 22\.65 18\.65 21\.15 93\.3% 113% Chemotherapy Component 2: Independent Monitoring, Audit, and 2\.35 1\.35 1\.20 51\.0% 88\.9% Project Administration Component 3: Output- Based Deworming and 0\.0 5\.00 0\.11 N/A 2\.2% Control of Other Neglected Tropical Diseases (NTDs) Total 25\.00 25\.00 22\.46 100\.0 100\.0 Page 37 of 44  The World Bank Yemen Schistosomiasis (P113102) ANNEX 4\. EFFICIENCY ANALYSIS 1\. Scope of the analysis 1\. This cost-benefit analysis proceeds from an intervention logic that the distribution of praziquantel through campaigns targeting School-Aged Children (SAC) and other campaigns targeting the whole population would lead to a decrease in the prevalence and intensity of infection of both urinary and intestinal schistosomiasis among SAC and other population in endemic regions of Yemen\. It is worth mentioning that at the beginning of this cost-benefit analysis the plan was to include a calculation of the project’s benefits accrued on education\. However, a Campbell systematic review by Taylor-Robinson et al concluded that mass deworming of children for STHs has little to no effect on school attendance\. The project duration was eight years (2010-2017) and since the 1st disbursement was in the project Year 1 and ended in year 8, it is considered that the costing of the economic analysis will start in 2010 and ends in 2017, while the benefits flows will start approximately in year 3\. An effectiveness rate is assumed for each intervention based on the results of the ISR of July 2017\. Figure 1: Cost - Benefit Analysis of the Project 14 12 10 USD (Millions) 8 6 4 2 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Costs Benefits 2\. In the analysis, a social prospective is employed and there are two main factors affecting the results: (1) a time-frame based on a time horizon of ten years; and (2) the discount rate used in this economic analysis aims to reflect the preference of the Project beneficiaries and the government to receive the benefits of the reduced morbidity earlier than later (time preference) and to explain the increased ambiguity about receiving predicted benefits further into the future (Risk Premium)\. To ensure uniformity and comparability with other economic evaluations for similar interventions, the discount rate was set at 3%\. 3\. Benefits and costs are expressed in USD monetary terms in the analysis, and are adjusted for the time value of money, so that all flows of benefits and flows of project costs over time (which tend to occur at different points in time) are expressed on a common basis in terms of their net present value\. For a consistency concern, the costs included in the analysis are extracted from the client connection\. Page 38 of 44  The World Bank Yemen Schistosomiasis (P113102) 2\. Benefits accrued from reduced prevalence of S\. Hematobium and S\. Mansoni Reduced mortality 4\. According to WHO (2002) the fatality rate of Schistosomiasis is 0\.0014\. Assuming a 10% effectiveness rate, and following Stenberg et al (2016) in a conservative approach, it was assumed that the value of one statistical life-year (VSLY) equals 1\.5 times the per capita gross domestic product (GDP), and following Midzi et al (2008) for the 89% cure rate of schistosomiasis after treatment by PZQ\. Given the total number of cases treated of 11,390,000 we could say that, 14,192 lives were saved\. Using the VLY, it is possible to monetize, where the VLY for each life-year saved is US$1,964\. Saving 14,192 lives will yield a total economic benefit of USD 86\.4 million\. This calculation is explained by: (11,390,000* 0\.0014* 89% Cure Rate)\. Reduced cost of care due to reduced morbidity 5\. Schistosomiasis infection results in two different types of morbidity; mild morbidity (60%) and severe morbidity (10%), according to WHO (2002)\. Treatment by PZQ reduces morbidity due to mild and severe schistosomiasis\. As for severe morbidity, the project is thought to yield USD 28\.8 million, by treating 11,390,000 schistosomiasis cases, where 10% (1,139,000) is estimated to be severe cases and 80% (6,834,000) are mild cases of schistosomiasis\. Moreover, due to the lack of data, in this analysis we assume that the cost of outpatient consultation is USD 3, the cost of hospital admission is USD 50, and that the cost of surgical intervention is USD 160, based on the WHO CHOICE-Unit Cost Estimates (2007/2008)\. This is explained by the following calculations: Cost of Care for Severe Cases = [1,139,000* USD 3]+[1,139,000* USD 50* 25%]+[1,139,000* USD 160* 5%] = USD 26,766,500 (following a conservative approach where we assume that all severe cases will seek medical outpatient consultation, 25% of them will need hospital admission and only 5% of them will require a surgical intervention), while Cost of Care for Mild Cases = 6,834,000* USD 3* 10% = USD 2,050,200 (following a conservative approach where it is assumed that only 10% of mild cases will seek medical outpatient consultation)\. 6\. These benefits can be expressed as forgone government expenditure or increased savings for the households\. The immediate monetary costs of treating and preventing Schistosomiasis and NTDs are obvious and large for government and families\. Moreover, it is expected that the project reduced inequities in access to care for NTDs\. Productivity gain (reduced loss of productivity) 7\. According to the ZA Bhutta et al (2014)12 on schistosomiasis infection in the Philippines results in 45\.4 days of work lost per infected person per year\. As a conservative approach, it is assumed that only the productivity of those who are severely ill (10%) will be affected\. Treating adult cases of Schistosomiasis infection will yield USD 3\.9 million\. This calculation is explained by: 5,490,000 adult cases treated13* 10% those with severe morbidity* 89% cure rate of PZQ * 8 years as the project horizon\. 3\. Benefits accrued from Increased Health Personnel Productivity 8\. Based on the assumption that the project intervention in training health personnel will increase their productivity by 10%, 36,732 health personnel (who are assumed to be 30 years old when they received the 12 Bhutta ZA, Sommerfeld J, Lassi ZS, Salam RA, Das JK\. Global burden, distribution, and interventions for infectious diseases of poverty\. Infectious Diseases of Poverty\. 2014;3:21\. doi:10\.1186/2049-9957-3-21\. 13 According to the NSCP presentation in the closure mission of the project Page 39 of 44  The World Bank Yemen Schistosomiasis (P113102) training) were trained under the project, yielding USD 6\.4 million as increase in health personnel productivity\. This is arrived to by using their monthly average salary equivalent to USD 48\.5 (12,000 YR according to WHO) as a proxy measure for productivity; (36,732 workers * 4\.85 USD * 12 months* 10% effectiveness*30 working years till retirement\.14 Summary: 9\. Combining all the above benefits, the project is thought to have benefits that far exceed the costs as described in the below tables\. Table 1\. Summary of the benefits accrued by the project interventions Benefits USD, Millions Benefits accrued from Reduced Prevalence of S\. Hematobium & S\. Mansoni 119\.12 Benefits accrued from Training Health Personnel 6\.41 Total 125\.54 10\. Based on the set of assumptions outlined above and on bringing in the financial costs of the project investments, the returns to the project are summarized below: Table 2\. Project returns (at 3% discount rate) Benefits / costs Present Value of Flows (US$) Benefits: Benefits due to Reduced Prevalence of S\. Cash flow: US$ 125\.54 Million to 2021 (discount rate Hematobium and S\. Mansoni and training personnel 3%) (See above for details)\. Costs: Investment cost plus recurrent costs\. The project disbursed a total of USD Million 22\.7 over 8 years\. Net present Value 49\.7 million Benefit-Cost Ratio 12\.44 IRR (%) 43\.13% 14 Assuming that the age of retirement in Yemen is 60 years\. Page 40 of 44 The World Bank Yemen Schistosomiasis (P113102) ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS 1\. Comments from the National Schistosomiasis Control Program, Ministry of Public Health and Population The NSCP/PAU was very pleased to see that the ICR was well written and captured the efforts under the project and its implementation history\. They also expressed the hope that the World Bank will continue support during the next period of SCH control\. There was a request from the NSCP to include the names of partners who worked under the project\. Page 41 of 44 The World Bank Yemen Schistosomiasis (P113102) ANNEX 6\. SUPPORTING DOCUMENTS Andrews, JR\., et al\. 2017\. The benefits of mass deworming on health outcomes: new evidence synthesis, the debate persists\. The Lancet Global Health, Volume 5, Issue 1, e4 - e5\. Bhutta ZA, Sommerfeld J, Lassi ZS, Salam RA, Das JK\. 2014\. Global burden, distribution, and interventions for infectious diseases of poverty\. Infectious Diseases of Poverty\. 2014;3:21\. doi:10\.1186/2049-9957-3- 21\. Hotez PJ, Alvarado M, Basa´n˜ ez M-G, Bolliger I, Bourne R, et al\. 2014\. The Global Burden of Disease Study 2010: Interpretation and Implications for the Neglected Tropical Diseases\. PLoS Negl Trop Dis 8(7): e2865\. Grant Thornton\. 2018\. Republic of Yemen - Schistosomiasis Control Project: Implementation Completion and Results Report\. Submitted to the Project Administration Unit, Ministry of Public Health and Population, Republic of Yemen\. January 10, 2018\. Lo, NC\., Gurarie D\., et al\. 2018\. Impact and cost-effectiveness of snail control to achieve disease control targets for schistosomiasis\. Proceedings of the National Academy of Sciences, January 2018, 115 (4)\. Institute for Health Metrics and Evaluations (IHME)\. 2018\. GBD Compare (https://vizhub\.healthdata\.org/gbd-compare/), retrieved on April 1, 2018\. Martin, G\. 2010\. Portfolio Review of World Bank Lending for Communicable Disease Control\. IEG Working Paper 2010/3\. Independent Evaluation Group, the World Bank\. Sady H, Al-Mekhlafi HM, Mahdy MAK, Lim YAL, Mahmud R, et al\. 2013\. Prevalence and Associated Factors of Schistosomiasis among Children in Yemen: Implications for an Effective Control Programme\. PLoS Negl Trop Dis 7(8): e2377\. Sady, H\., et al\. 2015\. Knowledge, Attitude, and Practices Towards Schistosomiasis Among Rural Population in Yemen\. Parasites & Vectors (2015) 8:436\. Schistosomiasis Control Initiative (SCI)/Imperial College\. 2017\. Yemen, Impact Evaluation Surveys Report: Baseline, Mid-line, and End-line 1 & 2\. June 30, 2017\. Schistosomiasis Control Initiative (SCI)/Imperial College\. 2017\. Impact Evaluation of the National Schistosomiasis Control Programme (Presentation)\. June 2017\. Tambo, E\., et al\. 2017\. Impact evaluation of schistosomiasis control into elimination interventions models in P\. R\. China and Africa\. Journal of Microbiology and Infectious Diseases, 2017; 7(2): 104-118\. World Bank (2009)\. Republic of Yemen - Country assistance strategy for the period FY 2010-2013\. Report No\. 47562\. Washington, D\.C\.: World Bank, April 29, 2009\. Page 42 of 44 The World Bank Yemen Schistosomiasis (P113102) World Bank (2012)\. Republic of Yemen - Interim strategy note for the period FY13-14\. Report No\. 70943\. Washington, D\.C\.: World Bank\. October 1, 2012\. World Bank (2009)\. Republic of Yemen – Schistosomiasis Control Project\. Project Appraisal Project\. Report No\. 50282-YE\. Washington, D\.C\.: World Bank\. November 20, 2009\. World Bank (2010-2017)\. Republic of Yemen - Schistosomiasis Control Project\. Implementation Status Reports (ISR) No\.1 – No\.16 World Bank (2013)\. Republic of Yemen – Schistosomiasis Control Project\. Project Restructuring Paper\. No\. 75310-YE\. March 14, 2013\. World Bank (2016)\. Republic of Yemen – Schistosomiasis Control Project\. Project Restructuring Paper\. No\. RES16834\. June 21, 2016\. World Bank (2017)\. Republic of Yemen – Schistosomiasis Control Project\. Project Restructuring Paper\. No\. RES28059\. May 26, 2017\. World Bank (2017)\. Republic of Yemen – Schistosomiasis Control Project\. Project Restructuring Paper\. No\. RES29461\. September 2, 2017\. World Bank (2003)\. Arab Republic of Egypt – National Schistosomiasis Control Project\. Implementation Completion Report\. Report No\. 2552\. Washington, D\.C\.: World Bank\. March 2, 2003\. World Bank (2008)\. Arab Republic of Egypt – National Schistosomiasis Control Project\. Project Performance Assessment Report\. Report No\. 44446\. Washington, D\.C\.: Independent Evaluation Group, World Bank\. June 25, 2008\. World Bank (2002)\. Republic of Yemen - Health Reform Support Project\. Project Appraisal Project\. Report No\. 23717-YEM\. Washington, D\.C\.: World Bank\. February 27, 2002 World Bank (2010)\. Republic of Yemen – Health Reform Support Project\. Implementation Completion Report\. Report No\. ICR1298\. Washington, D\.C\.: World Bank\. February 23, 2010\. World Bank (2011)\. Republic of Yemen – Health Reform Support Project\. ICR Review\. Report No\. ICRR13567\. Washington, D\.C\.: Independent Evaluation Group, World Bank\. January 12, 2011\. World Bank (2010)\. Republic of Yemen - Health and Population Project\. Project Appraisal Project\. Report No\. 53766-YE\. Washington, D\.C\.: World Bank\. December 21, 2010\. World Bank (2016)\. Yemen Emergency Health and Nutrition Project\. Project Appraisal Project\. Report No\. PAD2160\. Washington, D\.C\.: World Bank\. December 29, 2016\. Page 43 of 44

REVIEW

P113222

 ICRR 13473 Report Number : ICRR13473 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 01/24/2011 PROJ ID : P113222 Appraisal Actual Project Name : Niger : Emergency US$M ): Project Costs (US$M): 7\.00 6\.74 Food Security Support Project Country : Niger Loan/ US$M): Loan /Credit (US$M): 7\.00 6\.74 Sector Board : ARD US$M): Cofinancing (US$M ): Sector (s): Crops (93%) Public administration- Agriculture fishing and forestry (7%) Theme (s): Global food crisis response (100% - P) L/C Number : Board Approval Date : 08/26/2008 Partners involved : Closing Date : 06/30/2009 12/31/2009 Evaluator : Panel Reviewer : Group Manager : Group : John R\. Heath Robert Mark Lacey IEG ICR Review 1 IEGPS1 2\. Project Objectives and Components: a\. Objectives: The Emergency Project Paper (p\. v) and the Grant Agreement (Schedule 1, p\. 5) both include the following statement: "The objective of the Project is to support the Recipient's efforts to mitigate the impact of the food price crisis by : (a) increasing the production of rice in irrigated farmlands; and (b) enhancing its capacity to respond adequately to future food security threats "\. Paragraph 18 of the Project Paper formulates the project development objective : "The objective of the grant is to support the government efforts to mitigate the impact of food price crisis through : (a) increase of rice production with procurement and distribution of fertilizers to rice producers at affordable prices ; and (b) providing technical assistance to enhance the capacity of the Food Crisis Prevention and Management Framework’s (FCPMF) coordination unit and executing agencies, for the management of the project and for improved monitoring of the country ’s food security"\. This latter statement of objectives is more explicit and more evaluable and is used in this Review : b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): (1) Procurement of Fertilizers \. (Estimated cost, US$6\.50 million; Actual cost, US$6\.45 million)\. This was intended to cover operating costs associated with the procurement and distribution of 4,000 metric tons of fertilizers to be used on 10,000 ha of irrigated rice, delivered in time for the July -December 2008 cropping season\. The price of fertilizer supplied to rice producers would embody a 30-40 percent subsidy\. (2) Support to National Food Crisis Management Framework \. (Estimated cost, US$0\.50 million; Actual cost, US$0\.28 million)\. This component included: (a) Strengthening of the Food Crisis Coordination Unit (CCA) management and monitoring capacity; (b) Technical assistance to CCA and as well as the Central Agricultural Inputs Procurement Unit (CA) and Office of National Food Security Stocks (OPVN); (c) Monitoring of food security, both across the country and along the borders with Nigeria; (d) Strengthening of the management of grain storage and the early -warning system; (e) Design of safety net programs to permanently tackle food security affecting 20 percent of Niger's population; and (f) Provision of advisory services to rice farmers and cooperatives during the two successive irrigation campaigns covered by the project \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost : Project costs were less than the expected US$ 7 million because only 56% of the allocation for institutional support was disbursed\. 94% of the grant was used for direct payment for the fertilizers procured under the Project\. The delivery of fertilizers was fully completed on November 12, 2008, three months after project approval\. Financing : US$6\.74 million was disbursed and US$02\.26 million was cancelled at project closure \. Nil \. Borrower Contribution : Nil\. Dates : The project closed six months behind schedule \. The ICR gives no explanation\. 3\. Relevance of Objectives & Design: Objectives (Substantial )\. The project was a timely response to food price spiral of 2007-2008\. In June 2008 the price of rice in Niamey was 21 percent above the average for 2003-2007 (ICR, p\. 2)\. Nearly 80 percent of the population (mainly in the rural areas) is at risk of food insecurity (CAS, p\. 3)\. The land-locked nature of Niger, and specifically the remoteness of Nigerian ports and poor, insecure roads, increased the case for boosting domestic rice production rather than relying exclusively on facilitating consumer purchase of imported rice \. The low Domestic Resource Cost (DRC) ratio (0\.64<1) suggests that it is efficient to use labor and land for production of rice in Niger (ICR, paragraph 49)\. The Government’s 2003 Rural Development Strategy and 2006 Action Plan provide the framework for national efforts to increase production in the agriculture sector (CAS, p 11)\. The project objectives are consistent with the 2008-2012 Poverty Reduction Strategy Paper and the current (2008-2011) Country Assistance Strategy, both of which emphasized the need to improve food security and the importance of long -term programs of social protection\. The CAS results matrix (p\. 38) includes the following expected outcome : "an effective food security and social protection strategy is in place ", involving "implementation of policies that help to reduce vulnerability to shocks, increase income of the poor, and improve efficiency of grain markets "\. Niger's development goals include "increase agriculture growth to 7 percent; increase production of cereal staples " (CAS, p\. 33), both of which were congruent with the project development objective of increasing the output of irrigated rice \. The choice of grant financing was appropriate given the availability of a special facility, the World Bank's Global Food Crisis Response Program (GFRP), which was endorsed by the Board on May 29, 2008\. Project objectives were broadly consistent with those of the GFRP, which sought to : (a) Reduce the negative impact of high and volatile food prices on the lives of the poor in a timely way; (b) Support government in the design of sustainable policies that mitigate the adverse impacts of high and more volatile food prices on poverty while minimizing the creation of long-term market distortions; and (c) Support broad-based growth in productivity and market participation in agriculture to ensue an adequate and sustainable food supply response (Project Paper, paragraph 15)\. Design (Substantial ) The project used a production focus as a lever for engaging government in a dialogue on social protection \. The components of the project were consistent with its development objectives \. They were also in line with GFRP guidelines\. Component I of the project was aligned with Component III of the GFRP (Enhancing Domestic Food Production and Marketing Response ); Component II of the project matched GFRP Component II (Ensuring Food Access and Reducing Nutritional Vulnerability \.  The results framework was simple and streamlined, appropriate for an emergency operation of this nature \. The selection of indicators and targets was a lso appropriate\. The mechanism to utilize the grant for procurement of fertiliz er was clear given the substantial fiduciary risks recognized at appraisal: thus fertilizer was procured by the Ministry of Agriculture Development ’s Inputs Procurement Division (Centre d’Approvisionnement, CA) using agreed upon procedures under the FCPMF and overseen by FCPMF's Joint Government -Donor Committee\. A design strength was that funds from the sale of subsidized fertilizer (US$2 million) were used to finance a safety net pilot that is now being consolidated in follow -up operations that address longer -term food security\. Trade interventions did not need to be part of the design because before project approval (but not as an effectiveness condition) the government had already taken steps to exempt food staples from taxation \. In June 2008 the parliament adopted a supplemental Budget Law which included tax exemptions on rice, wheat flour, edible oil, sugar and milk (ICR, p\. 2)\. There were no other food security -relevant programs that the Bank could have expanded in lieu of subsidizing fertilizer \. By working through producer cooperatives, government was able to target the fertilizer subsidy to 21,000 farmers with 0\.25 irrigated hectares or less\. 4\. Achievement of Objectives (Efficacy): (a) Increase of rice production with procurement and distribution of fertilizers to rice producers at affordable High \. prices : High\. The baseline rice yield was 2\.5 tons per hectare, the target was 3\.5 t/ha and by completion the yield achieved was 5\.4 t/ha\. This outcome was achieved through procuring and distributing to paddy farmers the targeted amount of fertilizer (4,000 tons) with 93 percent of the targeted area (10,000 ha) treated with an adequate dose (ICR, p\. vii)\. Stakeholders interviewed during the ICR mission confirmed that, more than anything else, the yield increase was attributable to "the availability of quality fertilizers at the very beginning of the cropping cycle " (ICR, p\. 11)\. The Project reached 20,788 farmers through their cooperatives and contributed to the food security of 124,728 people (ICR, p\. 4)\. Nowhere in the PAD or the ICR is the term 'affordable prices' defined \. Instead the ICR (p\. 5) states that the Government established the price of fertilizers after a consultative process with farmer ’s cooperatives (this Review assumes that farmer's cooperatives would not agree to unaffordable prices \.) The price (13,500 CFA Franc per bag of 50kg, both for urea and NPK) was kept slightly above the price before the crisis peak in early 2008 (13,000 CFA Franc/bag) and well below the 17,000 CFA Franc that CA announced in May 2008 to reflect the sharp increase in international markets \. This resulted in a 54% subsidy compared to what it would have been without government intervention \. The CA fully recovered the payments from farmers and the net revenues of the sales (i\.e\. cost of fertilizers net of subsidies ) and a 10% fee for transportation and management \. The proceeds were transferred to the FCPMF ’s account to support the safety nets programs \. (b) Provide technical assistance to enhance the capacity of the Food Crisis Prevention and Management FCPMF ) coordination unit and executing agencies, for the management of the project and for Framework ’s (FCPMF) improved monitoring of the country ’s food security :Substantial \. The project built on key recommendations from the February 2009 Bank-supported study on Food Security and Safety Nets in Niger (ICR, p\. 6)\. These recommendations included support to the government in developing terms of reference for studies and defining actions needed to enhance food security \. By the end of project implementation the government had fully carried out the work plan that had been developed, including completion of four analytical reports on safety nets and the launch of a cash transfer pilot using revenue from sale of fertilizers distributed by the project \. The project was not successful is assisting an increase in the transparency with which food security stocks were monitored\. The relevant agency, OPVN, would not collaborate and the envisaged study was not completed \. The project successfully assisted CA to develop a Procurement and Financial Management Procedures Manual (which did not exist prior to project ); (ii) contributed to enhancing the financial system of CCA by upgrading its software and providing related training to its accounting staff; and (iii) supported the National Irrigation Development Office and the General Directorate of Agriculture with communications and M&E, including farm surveys and to document performance of beneficiary cooperatives \. 5\. Efficiency (not applicable to DPLs): Efficiency is rated substantial \. Because it was an emergency operation no economic analysis was carried out at appraisal (OP8\.0)\. However, a full cost-benefit analysis was undertaken ex post \. The project produced significant private and social benefits, including the expected scale of transfers to paddy farmers (ICR, p\. 12)\. The social benefit-cost ratio was 1\.11; the private benefit-cost ratio was 1\.20 (ICR, p\. 22)\. The difference in profits with and without the project was 209,258 FCFA/ha while the incremental costs resulting from the project (calculated as the net subsidy on fertilizer per hectare ) was 28, 620 FCFA/ha\. In addition, the domestic resource cost ratio (0\.64) indicates that, at prices prevailing during project implementation , Niger is a competitive producer of rice \. In the absence of the requisite sensitivity analysis it is not clear that Niger would still be competitive when world prices declined significantly from the 2008 peak\. (ICR, p\. 14 notes that "the operation is beneficial to the whole economy, provided that the international prices for rice remain high" [IEG italics])\. But given the emergency, OP8\.00-consistent, nature of this intervention the long -term prospects for rice production are less germane than they would be in the case of a conventional agriculture project \. The cost of the fertilizers net of subsidies and transport and management costs was fully recovered from farmers and all of the resulting sales revenue was channeled to the safety net initiative (ICR, p\. 5)\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of objectives and design is rated high \. The project fully achieved its first objective to increase rice production using imported fertilizer at affordable prices \. While it successfully enhanced the capacity of agencies responsible for food crisis management and prevention, it was not successful in getting the cooperation of the agency responsible for monitoring food stocks \. Efficiency was substantial\. Considering all these factors outcome is rated satisfactory\. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The fiscal drain represented by the fertilizer subsidy (54 percent of CIF price at the time of project implementation ) benefited the economy as a whole when the world rice price was at 2008 levels but is probably not sustainable over the long term\. But maintaining the project's positive development outcome hinges less on survival of the fertilizer subsidy, more on the seriousness of the government's commitment to social protection \. The ICR notes that "the new government has shown an interest in tackling chronic food insecurity and to set up a safety net system and develop an institutional framework separate from the emergency response system " (p\. 14)\. But the temporary steering committee needs to be converted into a permanent inter -ministerial coordinating body and this may take time, creating some risk that the push to strengthen social protection may lose momentum \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: Quality at Entry \. There was close coordination between preparation of this intervention and other interventions under the Global Food Crisis Response program, with oversight from the Agriculture and Rural Development anchor to ensure that the terms of GFCR were respected \. Particularly noteworthy was the collaboration in the Bank between the sector unit working on agriculture and the unit working on social protection (ICR, p\. 14)\. Lessons were incorporated from similar operations in the Africa region, including the Emergency Locust Project\. Steps were taken during preparation to ensure that fertilizer procurement would proceed swiftly once the project was approved (ICR, p\. 10)\. There were no formal fertilizer procurement procedures before the project; part of the project's legacy was setting norms that would continue to be observed after the grant was disbursed\. Producer cooperatives were consulted and this helped to ensure that fertilizer distribution was timely and properly targeted\. Supervision \. There were three supervision missions : October 2008, June 2009 and November 2009\. Despite the long 2008-2009 gap between missions dedicated to this operation, the Bank team told IEG that there was substantial follow-up under the cover of missions for parallel operations \. According to the ICR, meetings, and audio- or video-conferences with relevant specialists from Washington, as necessary, mostly with the environmental and safety net specialists, were organized from time to time as the need arose \. The ICR does not indicate how outcome-focused the supervision was \. at -Entry :Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Satisfactory 9\. Assessment of Borrower Performance: Government \. The government responded swiftly and made the operation a top priority, ensuring the appropriate high -level liaison between the concerned authorities, helping to supervise the studies and activities bearing on safety nets and ensuring procurement and good governance in the procurement of fertilizers \. The one arm of government that performed unsatisfactorily was the OPVN, the office responsible for managing food security stocks\. OPVN, which is close to the President's office, resisted any attempt to share information about the volume of stocks and the use to which they were put, refusing to collaborate in the food security background studies\. Implementing Agencies \. The two agencies were the Food Crises Coordination Unit (CCA) and the Inputs Procurement Unit (CA)\. Both units were responsive to Bank requests about monitoring of project performance and the Bank's requests were implemented fully\. Fertilizer procurement and distribution was smoothly handled and preparation of the background studies was well coordinated \. There were some implementation delays at the start owing to the units' lack of previous experience of Bank procedures, including a misunderstanding about the hiring of auditors\. But this did not detract from the otherwise smooth management of the grant proceeds \. a\. Government Performance :Satisfactory b\. Implementing Agency Performance :Satisfactory c\. Overall Borrower Performance :Satisfactory 10\. M&E Design, Implementation, & Utilization: Design : The performance indicators were well chosen and appropriate for an emergency operation \. The baseline value for rice yields was established and targets for this and other indicators were fully specified \. The project financed the additional equipment needed to measure rice productivity more accurately (e\.g\. electronic scales)\. Implementation : Weekly monitoring reports were prepared \. The Inputs Procurement Unit (CA) collected data from its own accounting system and from local fertilizer distribution committees, feeding into the Bank's GFRP biweekly update\. The data included volumes of fertilizers sold and payments recovered for each cooperative and irrigated perimeter\. Use : Use: Owing to the thoroughness of monitoring during implementation, by closing, the government's contribution to the completion report provided a full set of data on the indicators specified in the results framework \. "Overall, the M&E system was strong and provided good quality information on project's outcomes, implementation, and fiduciary management" (ICR, p\. 7)\. This is an important legacy that future projects in Niger may build on \. a\. M&E Quality Rating : High 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Safeguards \. This was a Category B project and the requisite safeguards were properly observed \. The Environmental Assessment Policy (OP 4\.01) and the Pest Management Policy (OP 4\.09) were triggered\. There was some delay in submission of the environmental impact assessment report (ICR, p\. 7) but in other respects procedures were sound\. According to the ICR, no significant negative environmental impacts were reported during project implementation (p\. 7) -- the ICR does not specify what it meant by "significant"\. Fiduciary \. During project preparation, fiduciary risk was assessed as substantial for the Inputs Procurement Unit (CA) and moderate for the Food Crises Coordination Unit (CCA)\. Appropriate provisions were made to train staff, upgrade accounting software and improve financial reporting \. The ICR reports (p\. 13) that the strengthening of CCA financial management system under the project has increased its capacity to better reporting on the use of  Donors’ contributions to the Fonds Commun des Donateurs (FCD - Donors' Basket Fund), and the Fond de Sécurité Alimentaire (FSA- Food Security Fund)\. The project assisted the Ministry of Agricultural Development's CA to move to a modern management system with a new manual of procurement, accounting and financial management procedures\. The ICR (p\. 9) rates financial management as "moderately satisfactory", balancing "the good management of the project-designated account on the one hand " and the "delays and shortcomings in the implementation of the action plan for improving CA's financial management system and the contracting of the external auditor "\. The audit submitted in June 2010 was unqualified\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: In order to succeed, emergency operations need to be simple in design, and must address the short -term priorities of government and beneficiaries \. Simplicity of design does not preclude development of a solid results framework with practical indicators and supporting baseline and target values \. Emergency operations must do due diligence to avoid undermining governance : in this case, the scope offered by fertilizer procurement for corrupt dealings was headed off by including a joint government -donor committee (CRC) and representatives of farmer cooperatives at critical steps in the process \. Bank-sponsored analytical work, prepared before the operation or in parallel to, has an invaluable role to play in facilitating decisions about which project and program design options are most likely to be viable \. The Global Food Crisis Response Program has demonstrated that the Bank can respond swiftly and effectively to emergencies of this nature, and in a manner that is congruent with the long -term development needs of the country concerned \. 14\. Assessment Recommended? Yes No Why? To verify the ratings and document lessons learned \. An assessment would contribute to the study on the Bank's Response to the Global Food Price Crisis that IEG envisages \. 15\. Comments on Quality of ICR: The ICR is both complete and concise presenting a clear picture of the various aspects of this operation \. The lessons are useful\. There is, however, a discrepancy in the rating for Quality at Entry in the summary tables versus the text\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P010313

 ICRR 10953 Report Number : ICRR10953 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 07/09/2001 PROJ ID : P010313 Appraisal Actual Project Name : Private Sector Energy Project Costs 1887 1556 Development US$M ) (US$M) Country : Pakistan Loan/ Loan US$M ) 150 /Credit (US$M) 117 Sector (s): Board: EMT - Power (35%), Cofinancing 265 198 Mining and other extractive US$M ) (US$M) (35%), Oil and gas (30%) L/C Number : L2982 Board Approval 88 FY ) (FY) Partners involved : The Export Import Bank of Closing Date 12/31/1994 11/30/1998 Japan, Government of Italy, Government of France and US Eximbank Prepared by : Reviewed by : Group Manager : Group : Ramachandra Jammi Ronald S\. Parker Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives Note: Note The Private Sector Energy Development Project (PSEDP) was extended to be co-terminous with PSEDP II, and the loan agreements and implementation programs were amended to be consistent with each other \. Therefore the evaluation summaries for the two projects are identical, except for project header details (section 1), and project cost, finance and dates (section 2c)\. This was done to achieve consistency with the ICRs for the two projects where the main text is identical but the Annexes are specific to the individual project \. Objectives : The Projects' objectives were to : 1\. Assist Pakistan in mobilizing, from the private sector, the resources required to meet the anticipated deficit in power supply; 2\. Establish incentives to encourage private sector participation; 3\. Establish an institutional framework required to facilitate private sector transactions in energy on a sustainable basis\. b\. Components PSEDP and PSEDP II each consisted of two components -- (i) investment sub-projects and (ii) institution building\. They provided for the financing of subordinated debt to private energy companies, together with technical assistance to government entities implementing the private power policy \. PSEDP focused mainly on one very large sub -project -- the 1292 MW Hub Power Project\. Five sub-projects were collectively financed under the PSEDP and PSEDP II \. Institution-building included: (a) provision for the government and its agencies to formulate and adapt policies to enable private sector transactions in power; (b) creation of three new entities -- (the Private Power and Infrastructure Board {PPIB} in charge of negotiating the contractual framework; Water and Power Development Authority (WAPDA)'s Private Power Organization (WPPO) in charge of negotiating the power purchase agreements (PPA); and the Private Energy Division (PED) of the National Development Finance Corporation (NDFC) in charge of administering the funds under the Bank Loan ) and (c) provision for the power utility, WAPDA, to abandon its virtual monopoly on power generation, and adjust its activities to include purchasing power from plants it did not own \. c\. Comments on Project Cost, Financing and Dates Project Costs and Financing : For PSEDP, total project cost was estimated at US$ 1,893 million, comprised of US$415 million from a Bank loan of US$150 million and loans from bilaterals, and US$ 1328 million from the private sector (US$470 million equity and US$858 million local and foreign commercial loans and credits )\. Estimated PSEDP II project cost was US$ 2,388 million including US$11 million for TA and US$2,377 million for subprojects\. Of this, the Hub project accounted for US$ 1,832 million, Asia Pipleline (APL) project US$100 million and the remaining US$445 million for power subprojects\. Comparisons of appraisal estimates of project cost and financing with actual costs are not very meaningful \. This is because the Long Term Credit Fund (LTCF) created under the project was intended to catalyze financing for private sector sub-projects which, for most part, were not identified in detail at the time of appraisal \. The projects ultimately financed five private energy investments for a total cost of US$ 3 billion\. The Hub and Asia Pipeline (APL) projects were completed within budget while the other three subprojects exceeded projections by 20-30 percent\. The capital costs per kW for the four power projects were very high at US$ 1200 - US$1245 (as broadly compared to US$510 per kW for a combined cycle power plant in Bangladesh ) mainly due to a high (17-30%) of "soft" costs -- sponsor/project development costs, interest during construction and other financing fees \. At appraisal, the ERR for Hub and Uch projects was calculated at 18\.3 and 20 percent respectively\. Although revised estimates could not be made for lack of data, the ERR and FRR have almost certainly decreased since appraisal given the extended delays in commissioning the plants, increase in project costs and the reduction in negotiated tariffs during 1998-2000\. Dates: Dates The original closing date of PSEDP I, which was 12/31/94, was extended to match that of PSEDP II (12/31/99) when the latter was approved\. PSEDP I was eventually closed on 11/30/98, and the remaining funds cancelled once it was clear that no additional subprojects would be approved \. PSEDP II was extended by six months to allow for the financial restructuring of two subprojects \. The first subproject -- the Hub project -- under PSEDP I was delayed by several years due to the following factors : External Factors:The Gulf War suspended development activities for almost fourteen months in 1991-92; Internal Factors: There was a loss of continuity due to changes in government which sometimes led to renegotiation \. Rulings on loan interest by the Shariah court took time to resolve \. Commercial factors: Withdrawal of two key contractors led to reconstitution of the construction consortium \. 3\. Achievement of Relevant Objectives: 1\. The projects achieved their physical targets , and load shedding due to insufficient generation was largely eliminated\. 2\. The objective of establishing incentives to encourage private sector participation was achieved \. However, the private power policy -- which was successful in attracting private investment, but ended up supporting many projects that were too small and not suitably located to system requirements -- led to substantial overcapacity that greatly strained WAPDA's financial situation \. 3\. The objective of establishing an institutional framework to facilitate private sector transactions in energy was achieved partially and unsustainably The Bank helped create three agencies : Private Power and Infrastructure Board (PPIB); Private Energy Division (PED), a unit of the National Development Finance Corporation (NDFC) in charge of administering the LTCF; and the WAPDA Private Power Organization (WPPO)\. Lack of managerial autonomy, heavy political interference, lack of transparency, and the turnover of key staff meant that the institutional objectives of the project were only partially attained \. 4\. Significant Outcomes/Impacts: The financial and institutional framework that evolved under the projects enabled the construction of an additional 4,400 MW generating capacity (which was consistent with the targets set for Pakistan's seventh five-year plan) with a total investment of US$5 billion\. The Hub subproject paved the way for private power projects internationally, and the complex documentation that it generated has become a reference for similar projects \. New Bank instruments like the Partial Risk Guarantee were tried out successfully for the first time \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Macroceonomic: The IPP program put pressure on the already narrow fiscal base of Pakistan, adversely impacting the balance of payment position and ability to deal with large contingent liabilities \. Financial: 1) Generous incentives were provided to project promoters through the price of electricity and Government's guarantees; 2) There was a lack of incentives for project promoters to reduce costs; 3) The terms of Power Purchase Agreements (PPAs) allowed IPPs to pass through fuel costs while WAPDA was unable to pass on the escalated costs to retail consumers \. 4) As the project progressed, the financial condition of NDFC deteriorated and lack of agreement over the future management and ownership of the LTCF affected it adversely \. 5) WAPDA deteriorated financially due to front -loaded IPP tariffs indexed to the US dollar, decline in demand for electricity, poor collection rates and widening tariff cross -subsidies\. Institutional and Governance : 1) Allegations of corruption within Pakistan and the investors' perception of heavy-handedness of the government, destroyed investor confidence in Pakistan; 2) The pace of the private power program was faster than creation of a suitable regulatory system and restructuring of WAPDA \. Implementation: Too many subprojects were given letters of intent despite the Bank's caution to cap the amount at 2000 MW\. Policy: 1) The Government's private power policy was not adequately reviewed, monitored and amended by the government as originally intended \. This should have revealed the need to limit new capacity; 2) The impact of IPPs on WAPDA's finances was not adequately analyzed; 3) Implementation of many sub-projects was not consistent with the least-cost expansion program in terms of capacity, fuel selection, and technology \. Social: There was not enough emphasis on social consequences and affordability of private power generation \. Planning: There was no technical specialist on the team to focus on the location of IPPs and choice of technology; 2) The QAG panel failed to notice the substantial asset /liability mismatches of the LTCF and therefore failed to recommend remedial action\. Given the significant shortcomings of the projects in many areas, the sustainability of the physical achievements as well as the institutional and policy structure created by the projects is unlikely, unless the government takes drastic measures on the financial, institutional and policy fronts \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory 1\. Even though the physical targets were achieved the outcome of both projects is considered unsatisfactory as the related economic, financial, institutional and technical aspects fell short of expectations\. Institutional Dev \.: Negligible Negligible Sustainability : Unlikely Unlikely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: Sector Reforms and IPPs: Private investment does not substitute for reform, and should not be attempted without at least the basic reform elements in place \. Benchmark Pricing vs\. Competitive Bidding: Competitive bidding for IPPs combined with incentives for providing least cost power could have resulted in lower trariffs, prevented too many and suboptimal projects being developed, and promoted transparency\. Important Issues in Managing Large IPPs : These include: tailoring public financial support and guarantees to facilitate an efficient investment program; having an efficient fuel supply policy; allowing IPPs to procure fuels in competitive markets, both foreign and domestic; creating capacity to manage IPP contracts; and ensuring efficient plant dispatch\. An option for gaining valuable experience without much risk is to begin with a small IPP \. Due Diligence by Other Lenders: Risk mitigation measures provided in the security package may not be sufficient when the underlying economics are compromised by an unsound macroeconomic situation in the country \. Procurement: International competitive bidding -- for IPP concession on basis of price -- leads to greater transparency, reduces the risk of corruption, and allows more flexibility for Bank financing \. Contingent Liabilities: Where contingent liabilities are likely to be an important issue, a monitoring system -- perhaps at the Central Bank -- ought to be put in place\. Covenants: Material covenants that may be difficult to enforce through measures such as suspension of disbursements could be designed as conditions of loan effectiveness, or other remedies designed according to the needs of the situation\. At the same time, threat of suspension is not practical when it is applied to a private sector transaction i\.e\. the Bank cannot penalize the private sector for inaction by the government on an unrelated matter \. On another count, the Bank should not encourage essentially commercial provisions such return on equity as part of the covenants\. Corruption Allegations: It is difficult for the Bank to maintain an "honest broker" role in a complex project when different parts of the Bank Group often play conflicting roles -- IFC as a lender to IPPs seeking to mitigate its reputational risk; the Bank's Project Finance Group trying to mitigate calls to the Partial Risk Guarantee; and the Bank's macroeconomic team advising on the macroeconomic agenda \. In dealing with corruption, the Bank should encourage the government and its agencies to pursue matters strictly according to law and internationally recognized due process, while honoring contractual conditions \. Renegotiations: Renegotiations (or indeed any negotiations) will more likely result in prompt and mutually acceptable solutions when they occur in a commercial atmosphere, free of coercion \. Mitigating Foreign Exchange Exposure : Financial stresses generated due to currency mismatch between liabilities and ultimate source of revenue (in this case domestic consumers ) can be mitigated if the ultimate revenue source is linked wherever possible to foreign currency such as for electricity sales to export -oriented industries\. 8\. Assessment Recommended? Yes No Why? PSEDP and PSEDP II were pioneering projects for PSD in the power sector in a developing country situation\. The projects encountered complex financial, economic, political and institutional issues at every stage from design to closure\. There is scope for finer lessons to be drawn from this experience \. 9\. Comments on Quality of ICR: This Intensive Learning ICR is rated as Satisfactory (bordering on Exemplary), given its depth of analysis and objectivity, which compensates for the paucity of detailed data due to heightened sensitivites from all quarters \.

REVIEW

P106654

 ICRR 14379 Report Number : ICRR14379 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 07/29/2014 Country : Afghanistan Project ID : P106654 Appraisal Actual Project Name : Artf - US$M ): Project Costs (US$M): 57\.00 56\.95 Kabul-aybak/mazar-e- sharif Power Project L/C Number : Loan/ US$M): Loan /Credit (US$M): 57\.00 56\.95 Sector Board : Energy and Mining Cofinancing (US$M): US$M ): 1\.50 Cofinanciers : Board Approval Date : 10/04/2007 Closing Date : 03/31/2013 Sector (s): Power (92%); Central government administration (8%) Theme (s): Infrastructure services for private sector development (67% - P); Conflict prevention and post-conflict reconstruction (33% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Dileep M\. Wagle George T\. K\. Pitman Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: The Project Development Objective, as stated in the Grant Agreement (p\.5), was: "to help provide reliable and quality power to consumers in the target areas of Kabul, Aybak and Mazar -e-Sharif" The Project Proposal (p\.1) that was approved in lieu of a Project Document provides an identical statement of project objectives\. This review uses the objectives stated in the Grant Agreement \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: 1: Distribution System Rehabilitation for Kabul (at appraisal: US$17\.0 million; at completion: US$20\.66 million)\. This component aimed to rehabilitate and extend the distribution system to connect medium voltage lines to customers in Kabul, and to reorganize the existing distribution system to optimize loading and improving power supply voltage to customers there \. 2: Establishment of a 220 kV Substation at Aybak and Interconnection with Distribution System (at appraisal: US$6\.00 million; at completion: US$9\.86 million)\. This component aimed to set up a new 220/20kV, 16 MVA substation at Aybak, which would then be interconnected with the existing Aybak distribution system \. 3: Power System Rehabilitation for Mazar -e-Sharif (at appraisal: US$25\.00 million; at completion: US$23\.6 million)\. This component aimed to rehabilitate the distribution system in Mazar -e-Sharif through the upgrading of the existing MV distribution network from 6 kV to 20 kV, connecting the distribution network to the 220/20kV substation, rehabilitating and replacing the low voltage distribution network, plus upgrading the Mazar -e-Sharif substation capacity to meet the requirements of the distribution network \. 4: Institutional Capacity Building (at appraisal: US$4\.00 million; at completion US$2\.83 million)\. This component aimed to provide capacity building and implementation support to the Ministry of Energy & Water (MEW) and its entity responsible for power supply, Da Afghanistan Breshna Moassesa (DABM), for (i) operation & maintenance of the distribution systems, (ii) implementation of infrastructure metering for energy supplied in Kabul, Aybak and Mazar -e-Sharif, (iii) establishment, operation and hand -over to DABM of customer care centers, and (iv) other capacity building needs, as identified during implementation \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost : The final project cost was US$56\.95 million, marginally lower than the estimated cost at appraisal (US$58\.50 million)\. There was some variability between individual components – two of which (Components 1 and 2) ended up costing somewhat more than originally anticipated and the other two costing slightly (though not proportionately) less; the difference being made up by a draw -down of the allocation for contingencies \. Financing : The sources of funding for this project consisted of the Afghanistan Reconstruction Trust Fund (ARTF), which financed a grant of US$57\.00 million under TF-91120, supplemented by US$1\.50 million of IDA resources from existing Credit 3933\. US$55\.42 million were actually disbursed and the balance of US$ 1\.58 million was cancelled\. Borrower : No counterpart funding was provided \. Dates: Dates The project’s closing date was extended three times, for a total of 39 months, as follows: a) by 21 months, from November 2009 to September 30, 2011; b) by 9 months, to June 30, 2012; and c) by a further 9 months, to March 31, 2013\. As regards the first extension, it should be mentioned that since the parent ARTF Grant Agreement (TF-50576) had a closing date of June 30, 2010, the original closing date of TF -91120 was set as December 31, 2009, with the understanding that once the parent TF Agreement was extended, the closing date of the project TF would be extended to enable project completion \. Subsequent extensions took place to provide additional time for project completion necessitated by delays on account of a variety of factors, some reflecting poor implementation by MEW and others on account of factors beyond its control (including the tenuous security situation in the country)\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: High The project was relevant to the country ’s developmental objectives, which were being severely constrained by the poor condition of the power sector \. At the end of 2005, only 6% of Afghans had access to public power, one of the lowest rates in the world\. One third of energy consumers, connected to the public grid, were in Kabul \. There was no significant provincial or rural electrification \. At the time of approval the prevailing service consisted of only a few hours of supply a day to small percentage of the population which had access to the power grid, leaving a huge demand -supply gap, especially in Kabul \. Hence, improving the reliability and quality of the electricity services could be considered critical to the country ’s developmental goals of poverty alleviation and economic growth\. The Afghanistan National Developmental Strategy (ANDS) had energy supply among the country ’s top economic priorities\. Sustainable energy and water supplies formed the eighth pillar of the ANDS \. This was echoed in the World Bank’s FY12-14 Interim Strategy Note, which recognized the need to continue to address the energy needs of the businesses and people \. In light of the rapidly evolving demand for electricity in Kabul and the importance of Mazar-e-Sharif as a commercial and industrial center (and Aybak as a provincial city ), the objective clearly was and remained relevant \. b\. Relevance of Design: Modest Project design was relatively straightforward, and built on the design standardized by studies conducted under the preceding Emergency Power Rehabilitation Project \. The original design envisaged capacity building of the distribution utility (DABM) for planning, operation & maintenance of the low voltage distribution network, by  hands-on/on-site training and physical rehabilitation as both being essential \. In practice, however, the design of the project focused heavily on the physical rehabilitation of infrastructure, with a relatively small share of resources being allocated to capacity building \. It appears that the capacity of the implementing agency, MEW – particularly for project management – remained weak, and contributed to the significant delays experienced by the project, especially in the misspecification of the concrete poles used for medium and low voltage overhead lines, interrupting power for several months and causing delays in subprojects\. Low capacity in other parts of the government, especially the Ministry of Finance (MoF) also led to delays\. The failure to anticipate and to mitigate capacity shortfalls at various levels through the project design greatly undermined the performance of the project \. For this reason relevance of design is rated modest \. 4\. Achievement of Objectives (Efficacy): Objective: "To help provide reliable and quality power to consumers in the target areas of Kabul, Aybak and Mazar -e-Sharif \." 1\. To help provide reliable power : Modest Outcomes : The goal of increasing power supplies to project areas in Kabul is seen to have resulted in a 253% increase over the baseline target of 482 GWh (actual achievement of 1,219 GWh); The goal of increasing power supplies to customers in Mazar -e-Sharif from 92\.2 GWh to 113 GWh was similarly overachieved by 174% (to an actual level of 197 GWh)\. The target of providing grid power to at least 25% of the people of Aybak was fully realized \. The borrower’s evaluation report, however, raises some questions on the attribution of results to the project ’s interventions\. The report argues that power consumption in Kabul was already significant at 649 GWh in 2007, before the project started, rising to 978 GWh by end-2009, before the project work in Kabul was even completed \. Hence, the improvements in power availability there would have been largely on account of work carried out under the earlier Emergency Power Rehabilitation Project (EPRP), which undertook extensive rehabilitation of the distribution networks in Kabul (and/or supported by other donors, as suggested by the Closing Implementation Status and Results Report )\. The report also casts doubt on the results achieved in Aybak, arguing that the end-project target of connecting 25% of households to the grid was based on baseline data that significantly underestimated the percentage of population already connected \. (The indicator for Mazar-e-Sharif was however considered to be valid and to have been legitimately achieved by the project )\. Outputs : The intermediate goal of strengthening the low voltage distribution network in Kabul and Mazar -e-Sharif, as measured by the number of transformers installed and commissioned, was reportedly fully achieved, albeit with a delay of 11 months in each case\. The goal of constructing a 220/20kV substation and associated 20kV lines at Aybak to provide grid power to residents there was also fully achieved, though with a delay of 18 months\. The achievement of physical targets may mask to some extent concerns about the sustainability of the distribution system in Kabul\. The closing Bank supervision drew attention to the failure of a number of transformers that had been installed, on account of overloading and poor maintenance \. The failure of the project to ensure the build-up of adequate capacity within MEW (later Da Afghanistan Breshna Sherkat [DABS]), mentioned earlier, may also have contributed to this problem \. 2\. To help provide quality power : Modest As regards improvements in the quality of power delivered, while reliable data are not easily available, for Mazar-e-Sharif at least, there is limited evidence to suggest that average delivered voltage, which was no higher than 125V from the previous 6KV network, had reached the proper 220V line voltage threshold under the new 20kV network set up under the project \. 5\. Efficiency: Economic and Financial Efficiency :  No economic and financial analysis was conducted as part of the original Project Proposal, at appraisal; hence no economic rates of return (ERRs) or estimates of net present value (NPV) are available for comparison with estimates at closure\. Estimation of economic efficiency for the project is complicated by the fact that the Kabul component, which financed the low voltage systems and meters, was closely intertwined with the earlier -initiated Emergency Power Rehabilitation Project (EPRP), which had financed much of the cost of transmission and distribution rehabilitation\. Economic returns from that component in the EPRP had been very high (of the order of 81%), and the ICR for the current project excluded the Kabul component entirely from the ERR analysis, as it was difficult to separate out the respective costs and benefits \. On the basis of only the Aybak and Mazar subprojects, which accounted for only 56% of total project financing, the net present value of economic benefits were estimated at US$6\.71 million for Aybak and US$13,12 million for Mazar, with estimated ERRs (based on the avoided costs of the next-best alternative) of 25% and 0\.15% respectively\. Though ERRs estimated at appraisal were unavailable, the ICR argues that the efficiency of the Mazar -el-Sharif sub-component clearly fell well below an acceptable threshold, whereas for Aybak it may possibly have been acceptable \. It should be noted that the arguments in the ICR for excluding the (relatively large) Kabul sub-component from the economic efficiency analysis are not entirely self -evident\. While much of the benefits arising may have been on account of the rehabilitation of transmission lines to Kabul under the EPRP project, from an economic perspective this does not invalidate the role of the distribution rehabilitation in Kabul \. In so far as it completed “the last mileâ€? at relatively low cost, it would have generated relatively high returns, which in turn might have indicated positive economic efficiency \. In the absence of an estimate in the ICR for the specific work undertaken for the current project however it becomes difficult to make a meaningful judgment, other than to suggest that depending on how benefits were allocated between the two projects, efficiency may well have been positive for this sub-component, and hence for this project as a whole \. Administrative and institutional efficiency : From the ICR, it would appear that project management was handled in a less -than-optimal manner\. which led to major delays in implementation, poor maintenance and equipment failure \. As a result, implementation took twice as long as originally anticipated, eventually undermining project sustainability \. This was on account of failure to provide adequately for capacity -building, especially for project management, and this led to both technical and institutional shortcomings : Technical : Quality control was poor, resulting in some defective equipment being installed \. Particular issues were observed to have arisen with the concrete poles and distribution transformers installed in Kabul and Mazar-e-Sharif, due to incorrect specification of orders placed by MEW \. Installation work by the contractors was of variable quality and not consistently acceptable, and corrective action was not always taken even when they were issued with corrective action reports \. Institutional : O&M training during the project life was often inadequate \. Though contractors were required to provide such training as part of their scope of work, no standard of quality or competence was specified, which resulted in training being often delivered to the wrong local staff or in an ineffective manner \. Installation contracts included provision for equipment and spare parts, but the lists were often inadequate and quantities inadequate, thereby increasing the likelihood that assets installed will fall into disrepair faster than necessary\. Taking account of these factors, efficiency is rated as Modest \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The project’s objectives are highly relevant \. However, relevance of design is modest \. Efficacy is rated modest, for both reliability and quality objectives \. Efficiency is also rated modest \. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: Serious questions remain regarding the sustainability of the project \. As mentioned in Section 5, serious shortcoming were observed at both technical and institutional levels \. Systems installed, especially for distribution systems, were not implemented with any focus on quality, longevity or sustainability \. Secondly, the security situation in the country continues to be volatile, and political risks continue to be high \. Overall, considering this state of affairs, the risk to achieving a sustainable outcome in the medium term is rated High\. High \. a\. Risk to Development Outcome Rating : High 8\. Assessment of Bank Performance: a\. Quality at entry: The project components were in line with country priorities and appear to have been designed as complementary to the existing EPRP project, with a view to filling in specific gaps that remained unfinanced after that project’s restructuring\. While no Project Appraisal Document (PAD) was prepared, a detailed Project Proposal that was approved could be considered to be the de facto PAD, on the basis of which to assess the quality of the project at entry \. The Bank's Quality Assurance Group included this project in its Quality Assessment Lending Portfolio (QALP) in 2010 and found the design and implementing arrangements to be satisfactory\. The Minutes of the project concept review meeting included a recommendation that the project be fast-tracked for implementation\. The issue of sustainability, and risks thereof, were raised during that meeting, and the team was strongly advised to ensure that capacity building for the utility be included in the project\. However, these risks were eventually not adequately mitigated in design and such capacity building as took place happened at MEW, which is not the institution that would be responsible for future investments or O&M\. at-Entry Rating : Quality -at- Unsatisfactory b\. Quality of supervision: The Bank team conducted regular supervision missions, often jointly reviewing the EPRP project, and project issues are fairly clearly documented in the Supervision reports \. The project was extended several times on account of various delays in implementation \. As the ICR recognizes, there is a disconnect between the various implementation problems highlighted in the supervision reports and the Satisfactory /Moderately Satisfactory ratings that were accorded by the Bank team to the project ’s performance throughout its life, right up to the final supervision which made a sharp reversal and downgraded the rating to Unsatisfactory \. The same was true of the various restructurings /requests for extension, which recognized the problems resulting from delays and weak capacity, but continued to express confidence that the development objectives remained attainable\. To some extent, supervision teams may have been making allowance for the deteriorating security situation in the country, which clearly impacted implementation performance, but it would also suggest a lack of rigorous monitoring, especially in light of the weaknesses later identified in baseline data for the indicators and the problems in attributing results \. The ICR suggests this may have been on account of an over -reliance on the Project Management Firm, whose quality of work had begun to deteriorate after 2010\. Quality of Supervision Rating : Unsatisfactory Overall Bank Performance Rating : Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Coordination issues presented the most significant challenge to the implementation of the project \. Lack of coordination and a long-standing dispute between ministries and DABS (a department under MEW, created in 2009 to play the role of the national electric utility ) was reflected in such actions as the suspension of pole delivery by the Ministry of Energy and Water (MEW) due to non-compliance of design standard, non-issuance of customs exemption certificates by the Ministry of Finance, which also delayed the processing of letters of credit for contractors, all of which were avoidable and which led to major delays in the implementation of the project\. This no doubt reflects the fragile (post-conflict) nature of Afghanistan’s public administrative structure; in light of which the decision to rely on country systems for disbursement and financial management may also have contributed to problems encountered \. Government Performance Rating Unsatisfactory b\. Implementing Agency Performance: Lack of capacity at MEW, reflected in weak contract management and inability to address technical issues, significantly impacted the project ’s performance\. All project components experienced delays in implementation, including delays in executing contracts (which took an average period of 125 days between MEW receiving bids to signing the contracts ) and performing the work\. Of all of the contracts implemented, the Borrower’s Evaluation Report records that the most on -time project – the meter supply contract – still took 320 days longer than expected, while the worst -delayed project, the Mazar distribution rehabilitation, took 850 days longer than originally planned \. Adequate attention was given to safeguard issues, and there were some financial management issues, including lack of internal control mechanisms and late submission of the external audit Implementing Agency Performance Rating : Unsatisfactory Overall Borrower Performance Rating : Unsatisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The outcome indicators (one for each component, covering rehabilitation of infrastructure, but not for institutional capacity building) were broadly relevant to the objectives of the project \. Their principal weakness lay in the fact that they did not adequately take account of and differentiate between the project and the earlier EPRP project, which had already financed a significant portion of the infrastructure rehabilitation for the Kabul component, leaving the current project to finance gaps and add -ons\. As a result, attribution of results was going to be a challenge from the outset\. Nor did Key Performance Indicators take account of the danger that poor quality of product (e\.g\. of transformers, that later failed) could undermine actual achievement \. The difficulties that later emerged in underestimating start-of-project baselines in the results matrix, thereby rendering the end -of-project targets largely useless for both the Kabul and Aybak components, further exacerbated these problems \. b\. M&E Implementation: The results matrix was regularly updated in successive supervision reports, suggesting that a regular flow of information was being maintained\. The fact that the Final Supervision Report raised (for the first time) concerns regarding attribution of results is an indication of the fact that these data had not been rigorously analyzed at the time they were collected, during the implementation of the project \. c\. M&E Utilization:  Feedback from monitoring and evaluation did not appear to have played much of a role in helping corrective action be taken on a timely basis \. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: The project was classified Category B under OP /BP 4\.01 Environmental Assessment and not expected to raise significant environmental concerns \. No Integrated Safeguards Sheet was prepared and the Environmental & Social safeguards Framework (ESSF) used for the EPRP project was used without change for this project as well\. Efforts to strengthen capacity were pursued during implementation through the Project Management Firm, which supported regular monitoring \. Training was provided to improve the capacity of both government and contractors to implement safeguards \. During implementation, safeguards issues arising included mine clearance (handled by the Mine Action Center for Afghanistan, as per the ESSF ), Rights of Way (handled in compliance with the provisions of the ESSF and the ESS, including local community consultation along the proposed routes ), and polychlorinated biphenyl testing (which took place but did not reveal their presence (ICR, p\.8)\. The ICR notes (p\.8) that while safeguards supervision was regularly documented through 2009, less information was divulged in later years\. According to the ICR, this may have been because few safeguard issues were at stake by then\. b\. Fiduciary Compliance: Some financial management (FM) issues were reported, including lack of internal control mechanisms and late submission of the external audit for 2011-12\. The Bank's Supervision Reports consistently rated FM issues in the Satisfactory/Moderately satisfactory range \. Very few contracts were to be procured under the project, which did not experience procurement problems, apart from delays, as such (ICR, p\. 8)\. However, contract management was affected by institutional capacity constraints\. c\. Unintended Impacts (positive or negative): d\. Other: 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Unsatisfactory Moderately There were significant shortcomings in Unsatisfactory the projects design, efficacy and efficiency\. Although the project appeared to have met or exceeded its results targets, serious concerns had arisen about their attribution and validity of data, as well as about the overall sustainability of the project \. Risk to Development High High Outcome :  Bank Performance : Unsatisfactory Unsatisfactory Borrower Performance : Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The ICR provides the following key lessons : Even when a project is conceived as a follow up to an existing operation, it needs to be appraised thoroughly on a stand -alone basis, so that proper attention can be paid to design issues \. Building implementation capacity is as important as investments in physical infrastructure \. Infrastructure was rehabilitated under the project, but remained at risk of falling into a build -neglect-rebuild cycle on account of lack of capacity created for operations and maintenance \. Results indicators need to be built on a clearly defined results chain, linking inputs to attributable outcomes \. In countries with a history of conflict and poor capacity, consideration should be given to use of relative or incremental indicators (e\.g\. number of households connected and metered )\. Ensuring adequacy of supervision \. Given the importance of on site supervision, which - for this operation - was essential for quick identification (and resolution) of implementation problems, the question is how to ensure this in the midst of deteriorating security conditions in the country, which may make frequent field visits difficult in practice\. The use of management agents is one option, but did not work out too well in this project \. The answer may lie in simpler design that requires minimal supervision \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR is adequately evidence -based in its analysis and discussion of results \. It is concise and generally internally consistent in its presentation \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P096205

 ICRR 13634 Report Number : ICRR13634 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 06/23/2011 PROJ ID : P096205 Appraisal Actual Project Name : Development Policy US$M ): Project Costs (US$M): 10 10 Loan (dpl) Country : Albania Loan/ Loan /Credit (US$M ): US$M): 10 10 Sector Board : EP US$M ): Cofinancing (US$M): Sector (s): General public administration sector (43%) General industry and trade sector (29%) General finance sector (14%) Health (8%) Compulsory health finance (6%) Theme (s): Regulation and competition policy (29% - P) Public expenditure financial management and procurement (29% - P) Health system performance (14% - S) Legal institutions for a market economy (14% - S) Administrative and civil service reform (14% - S) L/C Number : C4282 Board Approval Date : 03/29/2007 Partners involved : Closing Date : 12/31/2007 12/31/2007 Evaluator : Panel Reviewer : Group Manager : Group : Jorge Garcia-Garcia Kris Hallberg IEG ICR Review 2 IEGPS2 2\. Project Objectives and Components: a\. Objectives: The program document (par\. 31) states the objective as follows : The key objectives of the government program supported through a series of proposed development policy operations (DPOs) follow directly from the government program and the CAS objectives, and are : Improving the investment climate for private sector -led growth\. Improving fiscal sustainability of public service delivery, in the health, social insurance and water sectors \.  Improving government effectiveness, following the governance principles enumerated in the CAS \. The financing agreement did not state the DPO ’s objectives\. The review takes the objectives listed in the three bullets as the loan objectives \. The ICR covers the first DPO (DPO1) as well as the implementation of prior actions under the second DPO (DPO2)\. This review covers the entire program as implemented \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The DPO was the first in a programmatic series of three loans that sought to support key aspects of the government’s program\. The Government carried out most of the prior actions for DPO 2 but the Bank stopped this operation because the Government failed to establish a sustainable medium -term macroeconomic framework\. The DPO covered three pillars (policy areas): investment climate, fiscal policy, and government effectiveness \. On the investment climate the DPO included business regulations, land markets, and oversight of the non -bank financial sector\. On fiscal policy the DPO contained the health sector ’s regulatory framework, pension policy, and the water sector’s policy and incentives\. On government effectiveness the DPO covered public financial management, public administration, and local finances \. The Government completed the seven prior actions agreed to for DPO 1\. It also completed 10 prior actions for the DPO2, which did not materialize\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The loan, for US$10 million, was disbursed in one tranche in August 8, 2007, some four and half months after being approved\. It closed on December 31, 2007, as planned \. 3\. Relevance of Objectives & Design: Relevance of objectives\. The objectives of the loan had substantial relevance \. First, the private sector accounted for most of the seven percent annual growth of Albania during 1999-2005, a growth which induced a rapid decline in the poverty rate from 25 percent to 18\.2 percent between 2002 and 2005\. Second, a sound fiscal management led to a reduction in the overall fiscal deficit from 13\.5 percent of GDP in 1993 to 3\.7 percent in 2005; the improved fiscal management, coupled with the rapid economic growth, contributed to reduce the public debt from 80 percent of GDP at the end of 2007 to 57 percent at the end of 2005\. To improve fiscal performance and deliver better service the government sought to deal with problems in water, electricity, health and social insurance\. Although the DPO excluded electricity, seeking fiscal sustainability in the three sectors was still relevant\. Third, government effectivene ss improved steadily since 2000, but the evidence indicated that there was room for improvement; for example, the World Governance Indicators showed that in 2007 Albania th th was ranked on the 25 - 50 percentile of the countries surveyed \. Fourth, the DPO was consistent with the CAS \. It was the main vehicle for implementing the CAS, which in turn reflected the government's program \. Therefore, the objectives selected had substantial relevance \. Relevance of Design\. Unlike the three PRSCs that preceded the DPO, this loan avoided the “catch allâ€? character of the PRSCs and had more focused objectives \. It also had fewer conditions and sought more realistic, achievable results, such as improving the implementation of existing laws and guidelines \. The results indicators reflected the loan’s aim of ensuring continued compliance with existing rules \. The review considers that relevance of design was substantial \. 4\. Achievement of Objectives (Efficacy): Pillar 1: Improving the Investment Climate for Private Sector -led Growth This pillar covered three areas : business regulations, land markets and oversight of the non -financial sector\. Strengthen the regulatory environment for businesses \. The prior actions related to this objective dealt with superfluous licensing requirements in about 14 sectors and enacting a new concession law to promote competitive bidding systems\. These recommendations were based on a FIAS report that the Prime Minister requested and that led, among other measures, to : (a) establish a “regulatory guillotineâ€? to review and eliminate unnecessary licensing; (b) enact a new Concessions Law to improve competition in bidding systems; and (c) establish a credit bureau and create a national registration center for businesses \. In part as a result of these measures, the number of procedures to start a business and the time to open it fell (from 11 to 6 procedures and from 41 to 8 days), the public registry increased its coverage (from nothing to 8\.3 percent), concession contracts were published, and the percentage of unsolicited bids awarded to non-original bidders reached 22 percent in 2008\. The credit bureau reduced the cost of assessing credit risks, and made it easier for people with good credit record to get loans\. Improve the functioning of land markets \. The prior action related to this objective was the one dealing with superfluous licensing requirements \. Although the time required to register a property fell from 47 to 30 days, the cost of registering it remained essentially unchanged, 3\.4-3\.5 percent of the property value \. The ICR does not inform what happened with the collection of property taxes in 2008, another indicator of the program’s development outcome\. Improve oversight of the non-bank financial sector \. The prior action dealt with the establishment of one integrated non-bank financial regulator\. With that action it was expected that the insurance sector and the supervisory role of the Financial Supervisory Authority (FSA) would strengthen\. The indicators show that performance of the insurance sector improved \. Between 2006 and 2008 the value of claims received increased 37 percent, the expense ratio fell from 60 to 59 percent, the solvency coverage increased from 190 percent to 494 percent, and the number of companies out of compliance with the 20 percent limit on risk retention fell from 5 to zero\. These indicators suggest that the system improved, but the expense ratio did not meet its target value of 55 percent for 2008, and the ICR does not inform on the claims ratio, which was expected to reach 45 percent in 2008\. Efficacy in achieving this objective was substantial\. Pillar 2: Improving Fiscal Sustainability and Effectiveness of Public Service Delivery This pillar covered three areas : social insurance, health financing and water services \. The initial program expected to achieve this objective through prior actions carried out under DPO 1 and DPO2\. Under DPO1 the prior action covered the Health Insurance Institute, and under the DPO 2 the prior actions would have covered the pension system and a new health care law \. For water no prior action was taken \. Strengthen financial sustainability and effectiveness of social insurance \. Before the DPO1 the pension administration could not track pensioners and their contribution \. Actions supported by DPO1 and during the preparation of DPO2 helped to reverse this situation \. At the end of 2008 the following results could be noted : Some 467,000 pensioners had a social security number, compared with none before DPO 1; The review of pension cases for fraud reached 47,000 compared with none before DPO1; The authorities linked the death and pension registries, so deaths were reported automatically to the pension institute; The review of pension cases and the pruning of the pension rolls created a fiscal gain that permitted to reduce the social security tax from 29\.5 percent to 24\.5 percent\. Improve fiscal sustainability and effectiveness of health financing \. The two main indicators for this objective were achieved but the Health Financing Law which was expected to improve the regulatory framework of the health system was not even drafted \. The revenues of the Health Insurance Institute reached 10\.9 billion lek in 2008, exceeding by a substantial margin the baseline value of 2005, 5\.9 billion lek, and its revenue in 2006, 6\.4 billion lek\. Also, the Health Insurance Institute did not have an operating deficit in 2007 and 2008 (as well as in 2006) but increased its transfers to the reserve fund from 125 million lek in 2006 to 868 million lek and 600 million lek in 2007 and 2008\. Improve fiscal sustainability of water services \. This objective was not achieved, as the operating deficit of the utilities increased 31 percent, exceeding the 10 percent target set in the program \. Efficacy in achieving this objective is rated modest\. Pillar 3: Improving Government Effectiveness \.  The pillar covered three areas : public spending, public administration and local finances \. Prior actions under DPO1 and prior actions carried out during the preparation of DPO 2 covered these areas\. Increase efficiency and accountability of public spending \. The DPO supported the establishment of public investment management procedures to improve the quality of budget decision -making and of public investment planning and execution\. Prior to establishing these procedures government agencies would submit long list of projects without any priority for financing \. After the procedures were put in place, the average project size increased from 13 million lek in 2006 to 37 million lek at the end of 2008 and the number of projects submitted fell from 1,832 in 2006 to 1,010 in the 2009 budget\. As a result of the changes, weaker and smaller projects were weeded out and others were grouped together or consolidated \. The DPO also supported actions to improve transparency and efficiency in resource utilization \. The actions referred to enacting a new Public Procurement Law and preparing drafts and doing consultations for a new Organic Budget Law\. On procurement, the most significant achievement of the DPO 1 and the incomplete DPO2, was the enactment of the new Public Procurement Law \. The Law made open tenders the default procedure, required publishing tender documents and outcomes on a timely basis, and granted civil service status to the head of the Public Procurement Agency \. After the law started operating, during 2008 the public procurement negotiated without announcement declined by 3 percent of the total value and by 8\.8 percent of the total number of procurement processes\. Also, the use of electronic procurement procedures increased 4\.5 percent, and these procedures accounted for 34 percent of value in 2008\. The organic budget law of 2008 stipulated the steps to follow when preparing the budget; as a result of the new rules, budget preparation started earlier, giving more time for discussion in the parliamentary budget committee \. A better budget preparation helped to reduce the number of virements (the incidence of moving funds from one project to another ) from almost 12,000 in 2007 to about 7,000 at the end of 2008\. Improve efficiency and continue de -politicization of public administration \. Actions supporting this objective covered civil service\. The actions aimed at encouraging a better implementation of the reforms and preventing backsliding on the reforms in place \. This objective was achieved in part \. The turnover rates in civil service fell from 2\.7 percent from the baseline value (for 2000-03) to 1\.1 percent for the first nine months of 2008, and the number of people hired on a temporary basis fell from 161 in 2006 to 93 and 42 by December 2007 and 2008\. Maintaining and improving compliance with the civil service law was difficult, and particularly so for dismissals, where the Bank intervened actively to achieve a satisfactory resolution \. The Bank sought to ensure that the government would comply with court decisions upholding the appeal of 5 civil servants that appealed their removal in court\. Strengthen local finance \. The actions for this objective supported the completion of analytical work to inform the formulation of the Local Government Finance law and the preparation of draft legislation on local borrowing and insolvency\. The ICR reports that unconditional transfers remain at 3\.5 percent of central government expenditure but does not inform on whether there are consolidated and detailed data on local government finance for the fiscal year 2007, the PDO indicator associated with this intervention \. Efficacy in achieving this objective was modest\. Although the program helped to achieve these objectives, it should be noted that the government's commitment to membership of the European Union (EU) also helped to trigger some of the changes reviewe d\. 5\. Efficiency (not applicable to DPLs): ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The DPO1 succeeded in strengthening the regulatory environment for businesses, improving the oversight of the non-banking financial sector, strengthening the social insurance system, and increasing the accountability of public spending\. It had modest success in improving the functioning of land markets, improving the fiscal sustainability of health financing, and in strengthening local finance \. It failed to improve the fiscal sustainability of water services\. Among the main outcomes to mention are the enactment and functioning of the procurement law, the pruning of pensions and the reduction of the social security tax, the improvement in the financial situation of the Health Insurance Institute, and the pruning of investment projects presented by government agencies for budget financing \. In sum, the program had substantial relevance, and substantial efficacy in Pillar 1 and modest efficacy in Pillars 2 and 3\. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The review agrees with the ICR assessment that the government ’s commitment to achieve EU membership makes the risk to development outcome moderate \. Although the macroeconomic framework at program closure seemed unstable, the attraction of EU membership will cause the authorities to come to terms with a framework consistent with Albania's aspirations \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: Ensuring Quality-at-Entry\. The preparation of the operation benefited substantially from the Bank ’s experience with the previous PRSC operations \. As a result, the Bank prepared an operation that sought achievable objectives and selected reasonable results indicators for its duration and the duration of the program\. The Bank selected areas for intervention where reforms were necessary and picked actions that could be implemented, avoiding the temptation of preparing an ambitious program with many objectives and conditions but low chance of success \. The Bank also prepared a good results framework that specified what it expected to achieve from the operation and from the program of the three DPOs \. Selecting few reforms helped the government focus on key reforms and complete them \. Quality of Supervision\. Although the DPO1 did not have to be supervised, the Bank maintained a continuous dialogue with the government for the preparation of the DPO 2\. The dialogue contributed to prepare what would have been the DPO2 and to strengthen the reforms that DPO 1 supported\. The dialogue stopped when the Bank decided to not continue with DPO 2 because the government’s macroeconomic framework did not guarantee fiscal sustainability \. at -Entry :Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Satisfactory 9\. Assessment of Borrower Performance: Government performance\. The government carried out important actions agreed to in the program, with the Procurement Law perhaps the most significant of them and an essential step to improve governance and public sector performance\. Other important actions were establishing the credit bureau, enacting the Concessions and Health Care Laws, issuing social security numbers and auditing pensions, and improving the licensing regime for business \. Two shortcomings should be noted \. First, the government resisted to accept the decisions of the Civil Service Commission and of the High Court regarding the dismissal of five civil servants, thereby jeopardizing the credibility of the Commission and the High Court \. Second, it decided to expand government spending without reason, when Albania was performing reasonably well after the global crisis erupted\.  Implementing Agencies Performance\. All of the agencies but the Ministry of Water /Water Utilities carried out the actions they were committed to under the program \. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: Design\. The program document set clear objectives and selected indicators that reflected the objectives, and could be measure and timed\. The document specified clear baseline values and defined the expected values for the outcome indicators at Board presentation time for each loan \. Implementation \. The authorities collected the monitoring indicators enumerated in the program and the agencies in charge of collecting them did their work well \. Utilization\. The Bank and the authorities used the data to follow on the DPO 1 and to prepare the DPO2\. That effort allowed the Bank to see that the government ’s decision to increase expenditure prevented having a sustainable macroeconomic framework, which led to the Bank ’s decision of not continuing with the DPO 2\. a\. M&E Quality Rating : Substantial 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: The experience of the DPO1 indicates that for governments committed to improving economic policy the size of the loan may be of secondary importance, as their main objective is to signal the direction of policy to the private sector, government agencies, and development partners \. The DPO teaches that programs with a small number of conditions and focused and achievable objectives are more likely to succeed than “catch-allâ€? operations with broad objectives and large number of conditions (like  the previous PRSCs)\. It also shows that such design lends itself to having a results framework that makes it easier to manage and assess the program \. The experience with this program design also shows the wisdom of leaving sectors with difficult problems (e\.g\., electricity) out of the program and dealing with them in sector specific operations that permit testing the authorities ’ commitment to deal with them\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR assesses the loan in a clear, succinct and straightforward manner \. Its information is credible and its judgments are fair\. The ICR could have been rated exemplary if it had : (a) followed more closely the monitoring indicators in the program document (Annex 4); (b) compared expected outcomes or baseline values with actual outcomes in section 3; (c) been more consistent in presenting ratings and evidence in section 3; (d) been consistent in rating overall outcome and government performance in section 3\.3 and in the ratings summary data sheet; and (e) prepared a short section on the macroeconomic fra mework\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P003563

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24336 IMPLEMENTATION COMPLETION REPORT (SCL-400 10; TF-2069 1) ON A LOAN IN THE AMOUNT OF US$150 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR AN ANIMAL FEED PROJECT June 27, 2002 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.   CURRENCY EQUIVALENTS (Exchange Rate Effective May 31, 2002) Currency Unit = Yuan Yl\.0 = US$ 0\.12 US$ 1\.0 = Y8\.3 FISCAL YEAR January 1 December 31 Weights and Measures Metric System ABBREVIATIONS AND ACRONYMS ABC Agncultural Bank of China ADB Asian Development Bank CADTIC China Agribusiness Development Trust and Investment Company CAU China Agriculture University CIDA Canadian International Development Agency CU Capacity Utilization DCP Dicalcium Phosphate EAI Environmental Assessment Impact EPA Environmental Protection Agency FAO Food and Agriculture Organization of the United Nations FI Financial Intermediary ISO International Organization for Standardization MAFIC Ministry of Agriculture Feed Industry Center MoA Ministry of Agriculture MoF Ministry of Finance MTR Mid-term Review NFIO National Feed Industry Office PBC People's Bank of China (China's Central Bank) PMO Project Management Office PRC People's Republic of China QAG Quality Assurance Group SAR Staff Appraisal Report SC State Council SOE State-Owned Enterprise TCP Tricalcium Phosphate TIC Trust and Investment Corporation TPA Tons Per Annum TPH Tons Per Hour TVE Town and Village Enterprises Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Yukon Huang, EACCF Sector Manager/Director: Mark D\. Wilson, EASRD Task Team Leader/Task Manager: Qun Li, EASRD  CHINA ANIMAL FEED PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 6 6\. Sustainability 8 7\. Bank and Borrower Performance 8 8\. Lessons Learned 10 9\. Partner Comments 10 10\. Additional Information 1I Annex 1\. Key Performance Indicators/Log Frame Matrix 14 Annex 2\. Project Costs and Financing 16 Annex 3\. Economic Costs and Benefits 18 Annex 4\. Bank Inputs 20 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 22 Annex 6\. Ratings of Bank and Borrower Performance 23 Annex 7\. List of Supporting Documents 24 Annex 8\. ABC's Contribution to the ICR 25 Annex 9\. Detailed Subproject Pipeline 29 Annex 10\. The Ministry of Agriculture Fee Industry Center (MAFIC) 33   Project ID: P003563 Project Name: ANIMAL FEED Team Leader: Qun Li TL Unit\. EASRD ICR Type: Core ICR Report Date: June 27, 2002 1\. Project Data Name: ANIMAL FEED L/C/TFNumber\. SCL-40010; TF-20691 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: AM - Agro-Industry & Marketing KEY DATES Original Revised/Actual PCD: 07/14/1993 Effective: 09/05/1996 09/05/1996 Appraisal: 02/15/1995 MTR: 09/15/1998 10/19/1999 Approval: 04/16/1996 Closing: 12/31/2002 12/31/2001 Borrower/Implementing Agency: PRC/MINISTRY OF AGRICULTURE Other Partners: STAFF Current At Appraisal Vice President- Jermal -ud-din Kassum Russell Cheetham Country Manager: Yukon Huang Nicholas Hope Sector Manager: Mark D\. Wilson Joseph R\. Goldberg Team Leader at ICR: Qun Li Brian (Abraham) Brandenburg ICR Primary Author: Xueming Liu (FAO/CP); Brian Brandenburg (Consultant) 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N-Neglhgible) Outcome: S Sustainability: L Institutional Development Impact: H Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: U Project at Risk at Any Time: No  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The Project's original objectives, as set out in the SAR, were to develop China's feed sector by (a) the alleviation of supply constraints of critical feed ingredients, (b) improving and expanding the utilization of agro-industrial byproducts for use as high-quality livestock feeds, (c) improving the organizational efficiency of the feed sector through specialization and integration, and (d) the restructuring of project enterprises to effect greater corporate efficiency and commercialization\. These objectives were based on the findings of a major study on the animal feed sector that preceded project identification\. The study was conducted and sponsored by the World Bank and the National Feed Industry Office (NFIO), the agency responsible for providing policy and investment guidance to the feed sector, under the Ministry of Agriculture (MoA)\. 3 2 Revised Objective: The original project objectives remained unchanged during project implementation despite the change of the implementing agency\. However, during the MTR, the project activities were broadened in response to changing feed sector developments\. In particular, the project scope was expanded to finance not only feed production but also procurement of livestock by vertically integrating project enterprises\. As a result, vertically integrating project enterprises could now be financed under the project to link livestock production, processing and marketing\. At project completion, five out of the fourteen enterprises were adopting vertical integration (see Annex 9)\. Assessment of Objectives: The original objectives were clear and continues to be responsive to the China's feed and livestock sectors' circumstances and the country's development priorities\. In China, the average per capita consumption of meats and other livestock products continues to increase at a rapid clip, and so does the demand for animal feed\. However, the project had overestimated the demand for high-quality livestock feeds by the livestock sector\. At the time of the study of the animal feed sector and even at the onset of project preparation, modernization was expected to be based on Ministry of Agriculture initiatives\. At appraisal, however, the path of feed sector modernization depended more on private sector judgments on demand for their output, and needed to be reflected in the loan size\. The Asian financial crisis and its negative effect on Chinese livestock exports and price of feed imports exacerbated the demand situation\. The revision in project scope at MTR addressed some of the needs of the growing private modem feed enterprises in China, for example, their need to be more vertically integrated because of input standardization issues\. 3\.3 Original Components: The seven components in the SAR included: (a) Integrated Feed and Livestock Production, (b) Feed Additives Manufacture, (c) Feed Processing Equipment, (d) Enhanced-Protein Feed Product Synthesis, (e)\. Integrated Protein Feed Crop Production, (f) Feed Commodity Wholesale Marketing, and (g) Feed-sector Strengthening\. The first six components comprised a number of subprojects (financial intermediation of non-SOE enterprises in the six areas), while the last component supported the establishment of the Ministry of Agriculture Feed Industry Center (MAFIC) which was termed China Feed Industry Center in the SAR (see Annex 10)\. The China Agricultural Development Trust and Investment Company (CADTIC) was the financial intermediary\. China Animal Feed Sector Study (Grey Cover Report No 19022-CHA), World Bank, June 24, 1993\. The term non-SOE enterprises means companies which have a mmonty-state ownership\. At the time of approval, there were few fully pnvate companies m the feed sector\. -2 -  3\.4 Revised Components: In January 1998, the State Council disbanded CADTIC for its "weak financial positions" (see MOF letter on file)\. However, at the time no project funds had been disbursed\. A replacement financial intermediary, Agricultural Bank of China (ABC), was identified by the Bank and GOC, and the project was renegotiated in 1998\. ABC developed a list of project enterprises, which was agreed with the Bank\. The total project cost was re-estimated at US$60\.7 million (see Annex 2, Table 2a\.)\. The fourteen project enterprises were grouped into 3 components, namely (i) Vertically Integrated Feed and Livestock Production; (ii) Protein Concentrate Milling; and (iii) Feed Additives and Feed Mineral Production\. Assessment of Design: Most importantly, the project design ushered private sector participation in the animal feed sector in China\. This was a desirable path to bring innovation and sector modernization without burdening the government with capital investments and risks\. A feed sector study that provided a set of priority investment guidelines for feed sector development indicated the priority areas under the project, and was technically appropriate\. The enterprises financed under the project were to provide a leadership role in these priority areas\. However, the project institutional aspects were developed in a hurry\. Only at the project appraisal review, Bank management had instructed the Task Team to redesign the project from a directed-loan operation to a demand-driven financing operation, aimed at supporting non-SOE enterprises\. This appropriately made it easier to focus project resources on viable units and help the industry become more commercially oriented\. Rapid changes in institutional aspects were undertaken changing the implementing agency, the components, and the subproject pipeline, but many other features of the project, such as the loan size and review process of sub-borrower selection, were left unchanged\. These weakened the project\. What was appropriate for a directed-loan operation was possibly inadequate for a private sector development type of operation\. The financial intermediary plays a central role in such an operation and the choice of CADTIC was unfortunate, because it was relatively new and possibly did not have the depth of resources required for such an innovative role in the sector\. In 1998, many of these issues were redressed with ABC taking over as the financial intermediary\. Its deeper understanding of the sector led to the support of those areas where commercial enterprises could flourish, and sub-borrowers who could benefit from dollar-denominated loan fmancing\. 3\.5 Quality at Entry: Quality at entry is rated unsatisfactory\. The project did not receive a QAG review\. As mentioned above, the technical aspects of the project were well prepared, and based on a feed sector study that provided a set of priority investment guidelines for feed sector development\. However, the structure of the livestock sector, its pace of development, and, consequently, its demand for high-quality feed (particularly from the many individual/small scale entities) were not fully taken into account into the design at appraisal\. In addition, because of the last minute changes, due diligence was inadequate in the choice of the financial intermediary jointly selected by the Bank and the GOC to implement the project\. The switch from a directed loan operation by MOA to a financial intermediation operation by a relatively new institution CADTIC brought a different level of risky-ness to the operation\. The loan size did not reflect the lack of demand for high-quality feed nor the risky-ness from switching to a financial intermediation operation\. The market for the modem feed producers developed slowly and they found little reason to borrow dollar-denominated loans\. The preparation effort failed to anticipate either of the developments\. In 1998, the project institutional aspects were entirely recast\. The new financial intermediary, ABC, appreciated the risk and chose sub-borrowers wisely reflecting both the demand and cost-of-financing (dollar versus local currency loans)\. Lastly, the institutional strengthening component, which supported the establishment of a self-financed feed sector development center, MAFIC, although not directly financed by the Bank, was well designed\. -3 -  4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The project outcome is rated satisfactory, despite the disbursement of only 15 percent of the original IBRD loan at SAR, and a much smaller project output than originally anticipated\. The rating of the achievement of objective is based on the project achieving the SAR qualitative objective of sector modernization and the quantitative targets made at MTR, which led to among other things partial loan cancellation\. The project addressed priority objectives for the feed sector, as outlined in the SAR and followed throughout implementation, namely, (a) vertically integrated feed and livestock production, (b) protein concentrate and compound feed production, and (c) feed additives and feed mineral production, (d) enhanced-protein feed synthesis, and, (e) specialty (aquatic) feed production\. The enterprises financed under the project are providing a leadership role in these project objectives\. As envisaged in the SAR, the project ushered private sector participation in the animal feed sector in China\. All project enterprises are privately-owned; operate under market-oriented corporate management; own state-of-the-art production equipment and facilities; practice stringent quality control; and have been developing strong marketing programs and demonstrated financial and economic viability except enterprises still under start-up production (see Sections 4\.3 and 4\.4)\. Several enterprises are preparing for ISO-9000 accreditation\. In parallel with the qualitative structural change in the sector, the project has mainly achieved its output targets revised at MTR, based on the reduced project scope and investment plan\. Apart from the financial intermediation targets, other targets achieved include: the incorporation of innovative technologies (135 percent of target), feed industry information exchange through MOA (145 percent of target), degree of vertical integration by project enterprise (54 percent of target), and feed production capacity building (91 percent of target)\. See detailed information in Annex 1\. The project facilitated the development of regulatory and policy framework for the feed sector at the central level, and provided technical support to the sector through the national feed industry center\. The project preparation contributed greatly to the priority of the sector investment needs\. The project objectives were in line with the Fourth and Fifth 5-Year Plans (1990-1995 and 1996-2000) for livestock and feed sector development\. Though no Bank loan was provided for the establishment of the Ministry of Agriculture Feed Industry Center (MAFIC), support was provided in the planning of MAFIC's as a financially sustainable agency, and arranging for bilateral assistance\. MAFIC has developed intro an important animal feed sector support institution, providing technical services and training to the feed industry in China (See Annex 10)\. The project achieved significant benefits for both borrowing feed mills and farmers\. The project directly benefited project enterprises by increasing and upgrading their output capacity, but also indirectly benefited livestock owners' access to improved feeds for livestock and aquaculture production\. Furthermore, the project also contributed to poverty reduction\. Although not a specific project objective, most of project enterprises are in poverty-designated county areas and contributing to rural poverty alleviation by means of rural employment generation through contract farming and feed mill employment of local workers\. The project had provided 2,410 new job opportunities to the local farmers\. 4\.2 Outputs by components: The project has been generally successful in achieving its design capacities and expected output targets assigned during the MTR\. The total incremental design capacity from project supported enterprises is at - 4 -  some 908,000 tpa (equivalent to 1% of the current national feed production), that comprised 529,000 tpa of protein concentrates, 275,000 tpa of compound and pelleted feeds, and 104,000 tpa of feed additives, and has been fully achieved at the project completion\. Of the 14 project enterprises, 11 were at various stages of production by the project closing date of December 31, 2001, with three enterprises still under start-up production\. The total incremental feed production from 14 enterprises was about 633,580 tpa at project completion, that had reached 70 percent of the designed capacity\. Vertically Integrated Feed and Livestock Production (3 enterprises, total investment cost US$11\.23 million, 21% of the total project costs)\. This component comprises vertically integrated enterprises engaged in compound and pelleted feed milling using fully automated feed formulation equipment\. The enterprises are at various stages of vertical integration\. Some units use their own products to feed enterprise-owned livestock (pigs, poultry, dairy cattle) for extra value-added\. Others contract farmers living in the vicinity to raise their livestock, supported by company production inputs and services\. This component reached 79 percent of capacity utilization at project closing date, that is well above the national average feed mill capacity utilization rate of 47 percent\. In addition to above enterprises, two enterprises (Bayu Oil Plant and Shijiahu Feed Mill) under Protein Concentrates Component are also vertically integrated production\. Protein Concentrate Production (9 subproject enterprises, total investment cost US$25\.43 million, 49% of total project costs)\. This component is the largest component, and has played an important role in alleviating supply constraints in protein-rich animal feeds\. The component outputs (compound and pelleted feed) have reached 100 percent design capacity completion and 59 percent capacity utilization\. The end-products are used for poultry, pigs, ruminants and pond fish in the field\. Protein concentrate production had responded to a serious national shortage of animal feed protein resources, and have been widely used by smaller livestock enterprises and farmers in the field\. Feed Additives Production (2 enterprises, total investment cost US$16\.07 million, 30% of the total project costs)\. Support was provided for enterprises engaged in micro-mix or premixes production for use in compound feed milling\. Premix production requires micro-blending technology, which is still in its early stages in China\. This component is particularly significant for its large DCP manufacturer, which provides a superior feed mineral product to the low-quality and often toxic 4 Tri-calcium phosphate (TCP), commonly used in livestock feeding in China\. With a total design capacity of 104,000 tap, this component had reached 97 percent capacity utilization by project closing date\. Project enterprises have eased certain critical supply shortages\. At the farm-level, the 529,000 tons of protein concentrates produced by project enterprises are expanded five-fold with corn to make a total of 2\.65 million tons of finished feed\. This expansion increases the annual project output to a substantial 3 percent of the annual national feed mill output\. In the case of DCP feed additive, project support to Mianzhu enterprise has increased its DCP share of the China market to 45 percent\. The project has acted as a model for other domestic producers in terns of its quality products and corporate management, and two enterprises have been accredited with ISO-9001 status\. Three subproject enterprises, Sanli Farm, Hengda and Youyou, were operating at low capacity rates at closing date, through no fault of their own\. Hengda began production only one month prior to closing date, and Sanli Farm is developing 267 ha of ephedrine crops, a slow process that requires nursery development and seedling transfer\. The third subproject, Youyou Biological, had been operating at full capacity since April 1999, producing enhanced-protein feed by converting regional abattoir wastes\. The enterprise had to stop operations in 2000 due to a precautionary government ban of abattoir waste processing related to Mad Cow Disease outbreaks in Europe\. Youyou is currently restructuring into a different feed product line\. The output indicators are summarized in the table below, with enterprise profiles listed in Annex 9\. - 5 -  4\.3 Net Present Value/Economic rate of return: The prevailing financial prices of the inputs and outputs of feed mills adequately reflect economic prices, and in line with the practice of recent Bank projects in China, the Standard Conversion Factor is assumed to be one(l)\. The returns for the individual units, before tax and financing, adequately reflect the economic impact of the project\. Separate economic analysis was conducted for all subprojects except Youyou in Henan Province (closed down due to Mad Cow Disease, see Section 4\.2) and the project as a whole\. The NPVs (OCC at 12%) for the 13 subprojects are all positive, with ERR ranging from 14% to 41%\. The ERR for the project as a whole (the cost of Youyou included) is estimated at 28% (NPV at a 12% discount rate, estimated at Y 369\.8 million), indicating the project as economically robust\. No economic analysis was done at ABC's appraisal\. Detailed analyses are presented in Annex 3\. 4 4 Financial rate of return: Following the approach adopted at appraisal, the return on capital employed after taxes, which measures the benefits accrued to the enterprises, is used as the FRR\. As with the economic analysis, the financial analyses were carried out for 13 sub-projects and the project as a whole\. The financial rate of return of the project as a whole is estimated 16% (NPV at a 12% discount rate, estimated at Y 88\.4 million), with FRRs for 13 individual sub-projects ranging from 13% to 21%, indicating that the project is financially viable\. These returns are in general moderately lower than those at ABC appraisal\. The main reason for the generally lower individual FRRs compared with those of ABC's appraisal is the higher capacity utilization rates assumed at appraisal\. Detailed analyses are attached in Annex 3\. 4\.5 Institutional development impact: The project's institutional development impact on China's feed sector has been threefold: (a) facilitating the incorporation by MoA and NFIO of the main policy and sector investment priorities as outlined in the feed sector study, (b) contributing to the establishment of the national feed sector development center, MAFIC, to provide leadership in technical sector development'; and (c) further strengthening of ABC's long-term loan management, sub-project environmental assessment, and sub-project appraisal skills and risk mitigation in lending to the private sector\. The significance of project impact was borne out by the steadfast commitment and support by Government and ABC to the objectives of the project\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Two interrelated external factors adversely affected the project during the early years of implementation and seriously depressed the feed industry's demand for investment and credit\. Firstly, the Asian financial crisis in 1997 reduced the demand and capital investment in China's economy as a whole\. National Feed Industry Office Annual Report, 2000\. 4 TCP, in contrast to DCP, is poorly digestible and can contain up to 1\.5% fluoride\. The Center, with autonomous management and operating on a full cost recovery basis, plays an important role in feed sector strengthening\. Although completed without Bank support, the Center was an integral part of project activities (See Section 10 C)\. -6 -  The livestock sector and high quality feed production in particular were hard hit\. Secondly, in response to the crisis, the Government instituted a series of interest reductions to stimulate investment demand\. In line with the credit agreement, the variable LIBOR-based US dollar single currency loans of the project were onlent by ABC with a margin of no less than 2\.0%, resulting in a loan interest rate well above prevailing local rates\. Moreover, the interest rates of LIBOR-based loans, according to the legal agreement, could be only adjusted twice a year\. In an environment of falling interest rates, this created a situation where the project funds were more expensive than the local commercial loans of comparative terms and maturity (See Section 10, Table 10a)\. In addition, the outbreak of BSE (Mad Cow Disease) in Europe led the government to close down one sub-project (Youyou) as a precaution against the disease\. 5\.2 Factors generally subject to government control: The factors under government control were generally positive for the project\. The government has given priority to livestock sector and quality feed production as a means to increase farmers' income\. Also, the market-oriented reform has facilitated the selection of non-SOEs under the project and imposed higher standards on corporate governance\. However, the government, could have, together with the Bank, selected the right implementing agency earlier in the project design\. The changes in the project's implementing agency, which required two revisions in the selection of units under the project (one during preparation and one during implementation), caused serious delays in project implementation and loan disbursements\. 5\.3 Factors generally subject to implementing agency control: The following three major factors, all under the control of ABC, have contributed positively to the project: (a) The size of the project loans (averaging US$1\.6 million) on-lent by ABC to project enterprises proved to be a major competitive advantage, as such loans were far more responsive to the sub-borrowers' investment needs, and could be approved and disbursed by ABC more rapidly than domestic loans\. Many project enterprises have confirmed that, in spite of their higher interest rates, Bank loans better met their financial needs, whereas domestic banks had to set severe limits on the loan amounts lent to borrowers, due to the prevailing credit crunch\. Moreover, domestic loans are often lent only at short or medium maturity, whereas the project loans issued a long-term maturity\. (b) ABC's prior experience in implementing four Bank-supported rural credit projects over a period of 10 years has been proven beneficial in terms of long-term loan management, procurement and disbursement, all of which were effectively carried out well by ABC's Head Office PMO and the provincial ABC branches; and (c) ABC has improved its loan appraisal and management\. The sub-borrowers of the rural credit projects, which were implemented before the onset of enterprise reforms in China, were mainly financially weak SOEs\. Due to their command-driven business operations, many such SOE sub-borrowers faced difficulties in servicing their loans\. In onlending the Animal Feed project loan, ABC selected only non-SOEs with proven, viable track records\. 5\.4 Costs andfinancing: In the SAR, total project costs of the original pipeline prepared by CADTIC were estimated at US$310\.3 million, including an IBRD loan of US$150 million\. When the final implementing agency, ABC, was selected in 1998, the project was renegotiated\. The final pipeline, developed by ABC, was much reduced in size and scope, due to two loan cancellations totaling US$127\.5 million (see Section 10)\. As per ABC's appraisal, and further defined at MTR, the total project cost was US$60\.7 million including an IBRD loan of US$25\.2 million (see Annex 2)\. The actual total project cost is estimated at US$52\.7 million with - 7 -  IBRD financing US$22\.4 million (43% of the total project cost), ABC and beneficiaries financing US$7\.46 million (14% of total cost) and US$22\.83 million (43 % of total cost) respectively (see Annex 2)\. 6\. Sustainability 6\.1 Rationale for sustainability rating: Project sustainability is likely\. The main reason for this rating is that the sub-project enterprises generally have solid financial and economic viability (see Sections 4\.3 and 4\.4), supported by sound corporate management, state-of-art production equipment and facilities, stringent quality control and strong efforts on brand building and product marketing\. Government commitment to the development of the animal feed sector remains high, and many of the Feed Sector Study's recommendations have been drafted into the national feed sector development strategy\. Government and ABC's commitmnent to promoting free market-based agribusiness development is very high, as evidenced by the loan portfolio of exclusively private sector project enterprises\. Marketing has been clearly identified as a priority by all the enterprises, and efforts have focused on increasing market share through brand development, product promotion, and improving production efficiencies\. In addition to its continued supervision inputs, ABC has provided start-up working capital to enterprises scaling up existing production\. These combined efforts would increase the production capacity utilization and contribute to the project sustainability\. The institutional strengthening component financed outside the project, but an inherent part of it, will also be sustainable\. The feed sector institute, MAFIC, is financially self-supporting through\.advisory, technical and production activities, and has already proven its sustainability by providing substantial institutional leadership supported financially by the feed industry (see Annex 10)\. ABC's central project management office has also been strengthened by implementation of the project\. Skill development of the individual provincial branches responsible for subproject appraisal and loan management has been especially valuable to ABC\. These skills are being transferred to other, non-project branches\. 6\.2 Transition arrangement to regular operations: The transition of project enterprises to post-project operational status is already assured, as these enterprises, from the beginning, have operated as fully commercial entities\. MAFIC, with its integral cost recovery and shareholding structure and its active support from, and exposure to the feed industry, was designed from the beginning to operate as an autonomous, commercially sustainable entity\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Lending performance by the Bank is rated unsatisfactory\. The Bank could have recognized from the onset that the project, given its commercial nature, should have been prepared as a demand-driven loan operation, which would have prevented unnecessary implementation delays (see Section 3\.5)\. However, the preparation of the Feed Sector Study prior to project identification was instrumental in securing the Govemment's commitment to the project and its objectives\. The appraisal of a subproject pipeline of great technical variety and complexity, although costly in termns of technical consultant inputs and supervision, has been well executed, resulting in a good quality lending portfolio\. 7\.2 Supervision: Supervision quality is rated satisfactory\. Project supervision by the Bank was generally regular and constructive to project implementation\. Most importantly, when extemal factors delayed loan disbursement, - 8-  the Bank was timely in identifying these constraints, and used the supervision missions to restructure parts of the project and partially cancel the loan to reflect new realities\. Supervision of technically sophisticated subprojects, such as DCP feed mineral production and protein synthesis, depended heavily on the participation of highly-specialized consultants, who were not always available when needed\. Collaboration between ABC and NFIO, even though the latter was no longer directly involved in the project, continued throughout implementation\. Given ABC's prior experience with Bank projects, procurement and disbursement did not pose any problems\. The Bank's prior review of the first three NCB pipeline contracts, as required, was satisfactory, as were ABC's overall project management, its administration of the Special Account, and overall loan management\. 7\.3 Overall Bank performance: Overall Bank performance has generally been satisfactory\. The overall project objectives remained clear and unchanged, and the Government remained supportive of the project throughout its implementation, as evident from its assistance in resolving the problems associated with the feed sector downturn and the changes in project implementing agency\. The Bank's communications with ABC remained close throughout implementation so that problems could be identified and resolved at an early stage\. Borrower 7\.4 Preparation: Initial project preparation suffered from borrower's incomplete appreciation for a private sector oriented operation\. But when in 1998, the project institutional aspects were recast, the performance of the borrower was quite satisfactory\. ABC adopted a sustained and positive approach throughout project preparation, and displayed substantial project ownership, even though ABC was not the project's original sponsoring agency, and was requested to take over project management from CADTIC\. ABC understood that its stake in developing a well-performing subproject pipeline was high, given the commercial nature of the project, and took many risk mitigation measures in selecting viable project enterprises\. 7\.5 Government implementation performance: Government implementation performance is rated satisfactory\. The Government's commitment to the project has remained strong and sustained, in spite of several changes in project implementing agency and the economic downturn of the feed sector during and following the Asian financial crisis\. Government's continued support for the establishment of MAFIC has been especially strong, and the grounds for MoA's decline to utilize the project loan earmarked for this purpose were purely financial\. The government's commitment to feed sector development was better focused from the onset by the recommendations made in the Feed Sector Study that preceded project identification, which clarified the issues involved in modernizing the sector, and presented clear options for institutional and capacity building\. This commitment ran parallel to the Government's equally strong commitment to the commercialization of the livestock sector, which depends on quality feed for its improvement\. 7\.6 Implementing Agency: The selection of a suitable project implementation agency was problematic, and required a shift from directed onlending to demand-driven lending\. The mismatch of NFIO as a suitable implementing agency should have been recognized early in project identification\. The performance of ABC, considering the extrinsic constraints it faced during implementation, has been satisfactory\. ABC's performance in pipeline development, subproject appraisal, loan management, procurement, disbursement and administrative procedures has been satisfactory\. 7\.7 Overall Borrower performance: The overall performance of the Borrower has been satisfactory\. The Borrower has been consistently supportive in assisting the Bank in resolving the issues faced during implementation, recognizing that the -9-  basic objectives of the project were sound and relevant\. 8\. Lessons Learned Lessons learned based on the review by the ICR mission are as follows: (a) Use Sector Studies with care: With the usual lag between a sector study and the Appraisal, some structural or institutional change in the sector is common\. It is important to identify clearly sector constraints, and evaluate the suitability of implementing agency and the selection criteria for participating enterprises\. On the business practice side, the participating enterprises must be willing to innovate, build a sound management team, and prepare a realistic business plan\. (b) Evaluate competitiveness of foreign currency denominated loans for sub-borrowers: This is especially true when the major investment items (equipment and works) are locally available and major project outputs are destined for domestic market\. Under such circumstances, foreign exchange risk and more competitive local currency loans tend to discourage the use of dollar denominated loans\. Moreover, given the volatility of the financial market, project implementation delays may reduce project viability drastically\. (c) Chose the financial intermediary based on their local knowledge and, if developing a new relationship, do your due-diligence: Due diligence should cover the intermediary's prior sector and regional experience\. If possible, evaluate the quality of the staff in the intermediary who would be involved in selecting the sub-borrowers\. Staff assigned for sub-borrower development may have excellent understanding in one sector but deficient in a specialized sector such as the animal feed sector\. ABC's prior experience in implementing four Bank-supported rural credit projects and its improved loan appraisal criteria and risk management skills made the project viable after a disastrous start\. 9\. Partner Comments (a) Borrower/implementing agency: Comments from ABC We are satisfied with the ICR assessment of the project, which generally reflects the actual situation of the project design, implementation and reasonably forecasts the projects' future operation, and we appreciate very much the efforts made by the ICR team\. We share the view in the ICR that the quality at entry could have been better in terms of project design, especially the selection of appropriate implementing agency at the early stage of project preparation\. The ICR assessment on the achievement of project objectives and outputs are objective\. We particularly agree with the conclusion that the project has demonstration effects in terms of quality product, state of art technology and corporate governance\. The project has further benefited not only farmers buying feed for livestock and aquaculture production but also those producing crops as raw materials for feed industry\. We are also satisfied with the assessment on economic and financial rates of return in ICR\. The financial rates of returns of the subprojects are generally lower than those at appraisal and the main reason was, as clearly identified in the ICR, the different assumptions made on capacity utilization between ICR and appraisal\. - 10 -  The lessons learned in the ICR are highly relevant and useful for ABC's future feed industry and agribusiness loan appraisal, as well as for its future cooperation with the World Bank\. (b) Cofinanciers: There were no co-financiers for this project\. (c) Other partners (NGOs/private sector): No direct partners were involved, although CIDA participated in the institutional strengthening activity by assisting in the establishment of the feed industry center, MAFIC\. However, no project funds were used for MAFIC\. 10\. Additional Information Changes in Project Implementing Agency Three changes in project implementing agency, from NFIO to CADTIC to ABC, have hampered the timely implementation of project activities, and caused the project to miss an important window of opportunity during which the animal feed sector's investment rate in capacity building was high\. The National Feed Industry Office, NFIO, is the national agency under MoA responsible for regulatory and sector development aspects of China's animal feed sector\. NFIO has a network of provincial and county branch offices, and its connections with the feed industry were primarily directed to SOEs operating in the feed industry\. Privately owned agro-enterprises were somewhat outside NFIO's scope, however\. MoA, the project's original line ministry, assigned NFIO to assist the Bank in preparing the Feed Sector Study, from which the basic project objectives and investment priorities were identified\. The original subproject pipeline developed by NFIO contained 31 SOE-managed subprojects in six components related to feed sector capacity building, to be financed with a US$150 million IBRD loan\. Given the commercial nature of the proposed project and its concern with the viability of SOE-led subprojects, Bank management requested the Task Team at pre-appraisal to prepare an issues paper on how the ongoing enterprise reform in China would impact on the project\. Subject to this paper, Bank management directed the Task Team at the appraisal review meeting to change the project design from a directed loan operation involving SOEs to a market-oriented, demand-driven operation with non-SOE enterprises\. This change over was effected during the March 1995 appraisal mission\. The identification and appraisal of the project financial intermediary CADTIC delayed project negotiations for a 10-month period, until February 1996\. The China Agribusiness Development Trust and Investment Co\., CADTIC, was established in 1988 and was originally under the administrative supervision of the State Planning Commission (SPC), which was transferred in 1994 to MoA\. CADTIC was set up with Bank assistance to serve as a financial intermediary for channeling rural credit funds to China's rapidly developing TVE subsector\. Although CADTIC reported to the Minister for Agriculture, it operated under autonomous management and was incorporated as a shareholding Trust and Investment Corporation (TIC)\. In 1988, CADTIC became the implementing agency of a long term US$300 million Bank loan allocated for China's Rural Sector Adjustment Credit\. CADTIC also gained operational on-lending experience with ADB loans, and loans from Credit Suisse\. The Task Team appraised CADTIC in June 1995 as the implementing agency for the Animal Feed Project, with its Intemational Finance Department as the PMO (see CADTIC Appraisal Report in the Project Files)\. The appraisal found CADTIC's in-house loan portfolio and operating procedures satisfactory and recommended an institutional strengthening program to further bolster its loan management expertise\. This program included, (a) reorganization of on-lending operations from three separate divisions into a single Credit Department, (b) strengthening risk management by establishing a Credit Review Department, (c) - 1 1 -  improving the management information system, and (d) providing additional PLO staff training in lending operations and risk management\. These measures were accepted by CADTIC and technical assistance was identified to oversee and carry out these measures\. CADTIC proceeded to identify its own subproject pipeline, consisting entirely of privately owned agro-enterprises engaged directly or indirectly in the feed industry\. At the early stages of pipeline development, CADTIC did not adhere sufficiently closely to the project objectives when selecting enterprises, which resulted in an Highly Unsatisfactory project objectives rating at the November 1996 supervision mission\. The rating was upgraded to Satisfactory at the following supervision\. In January 1997, before CADTIC had committed or disbursed any of the project loan, the State Council closed CADTIC\. Bank management decided not to terminate the project in accordance with Article V (b) of the Loan Agreement (June 1996); a decision based on strong representation by NFIO and MoA concerning the importance of financing feed sector development\. A hiatus of nine months followed, during which the replacement financial intermediary, ABC, was identified\. The Agricultural Bank of China (ABC)\. The project was renegotiated with ABC in Beijing in October 1997 and presented to the Board on a No Objection basis in February 1998\. An amount of US$200,000 of the loan was earmarked for ABC project management office strengthening\. In March 1998 ABC resumed project implementation\. ABC is China's large state-owned financial institution, with over 2,000 branches and near 400,000 employees nationwide\. Its original agricultural loan portfolio has shifted from agriculture to other sectors in recent years\. When ABC was requested by PBC (the cental bank) to take over the Animal Feed Project, it had already accumulated substantial experience with Bank projects\. Between 1984 and 1990, ABC implemented four rural credit projects for a total amount of US$585 million-equivalent in blended IBRD/IDA loans/credits\. These loans/credits increased in amount from US$50 million IBRD/IDA (the first project in 1985) to US$275 million IBRD/IDA (the fourth project in 1990)\. These loans were principally onlent to SOEs and TVEs, with varying success, given that many such sub-borrowers were technically, structurally and financially weak\. ABC assumed project implementation in the early stages of the Asian financial crisis, which had begun in mid-1997\. In 1997 and 1998, the Government instituted a series of interest rate reductions to stimulate the economy, which had slowed as a result of the Asian financial crisis\. As a consequence, the Bank loan, onlent by MoF to ABC in variable LIBOR-based US dollar currency, became increasingly noncompetitive compared to domestic commercial loans of similar maturity\. Two extrinsic factors; depressed capital investment, and the Bank loan's widening interest rate gap, contributed to a rapidly declining demand for the Bank loan\. ABC had also become extremely cautious in approving sub-loans as the result of tightened banking regulations in response to deteriorating economic conditions\. As a result, ABC faced increasing difficulties in finding suitable enterprises prepared to take on the project loan, and, in order to reduce its commitment fee exposure, requested the Bank for two successive loan cancellations; the first in April 2000 of US$95 million, followed by a second cancellation of US$32\.5 million in December 2000\. This left US$22\.5 million of the loan active, or 15 percent of the original US$150 million loan\. During the midterm review mission in October 1999, three measures were taken to make the project more responsive to prevailing conditions in the feed industry, which had slumped as the result of the Asian financial crisis\. First, a US$10 million working capital facility was earmarked from the project loan to assist project enterprises with difficulties borrowing sufficient working capital\. These loans had a maturity of 6 months with a 1% interest per month penalty for late repayment\. Second, a decision was made to cancel part of the loan to ease ABC's exposure to the commitment fee\. Third, the project objective was broadened to provide project loans for livestock purchases for enterprises wishing to undertake vertical feed and livestock integration\. Therefore, loans had only been designate for feed-related investments\. However, the extrinsic effect of the widening interest rate gap could not be controlled\. With the Loan cancellations, the project was closed on December 31, 2001, one year before it's scheduled closing date\. - 12 -  Interest Rates of IBRD Loans Spread Against Domestic Currency Loans (Annual Percentage) Table lOa Dates I Dec-991 Jun\.001 Dec-00 I Jun-01 I Dec-01 I Jun-02 I Dec-02 IBRD Loan Interest Rate 1 7\.071 5\.191 5\.471 6\.241 7\.161 6\.631 4\.06 ABC On-lending Rate | 9\.071 7\.471 7\.471 8\.241 9\.161 8\.631 6\.06 Local Currency Loan Rate | 7\.561 621 6\.211 6\.211 6\.211 6\.211 5\.8 10 9 8 78 IBRD Loan Interest 6 Rate 5 \ ABC On-lending 5 ~~~~~~~~~~~Rate 4 Local Curency Loan 3 Rate(5 years) 2 I 0- Dec- Jun- Dec- Jun- Dec- Jun- Dec- 98 99 99 00 00 01 01 - 13-  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome/Impact Indicators:/' Revised at MTR Actual/Latest Estimate Project agro-enterprises apply 65% of enterprises 36% of enterprises vertically integrated management Feed Industry Information 50% of subprojects reached by 95% of subprojects reached by exchange by Ministry of MAFIC MAFIC Agriculture Feed Industry Center Feed Industry Center (MAFIC) Full effective Fully effective provides sector leadership Compliance with eligibility 85% compliance 100% compliance criteria for subproject participation ABC central PMO and Rating: Highly Satisfactory Rating: Highly Satisfactory provincial branch appraisal quality 1a These indicators were retrofitted during the MTR and do not reflect those presented in the SAR Output Indicators Revised at MTR Actual/Latest Estimate Indicator/Matrix:__ Feed industry personnel training 100 trainees 450 trainees (No\.) Enterprises with 15 enterprises I 1 enterprises enhanced-protein and feed additives production Enterprises introducing 65% of enterprises 100% of enterprises innovative conversion technologies Total capacity building output 1\.0 rnillion tpa 905,000 tpa (91% of target) ,by project These indicators were retrofitted during the MTR and do not reflect those presented in the SAR - 14 -  Output Indicators Design Capacity Capacity Capacity Onset of Utilization Utilization (tpa) at Production Project Enterprise Closing Date Target Actual tpa % Date Component A\. Vertically Integrated Feed and Livestock Production Total Component 257,000 257,000 203,500 79% -- l\.Baoto Qishi Feed Industry 7,000 7,000 3,500 50 12/01 2\.Beixu Feedmill 100,000 100,000 65,000 65 07/01 3\.Shiyang Feedmill Co\. 150,000 150,000 135,000 90 06/01 Component B\. Protein Concentrate Production Total Component 547,000 547,000 323,900 59 -- 4\.Bayu Oil Plant 70,000 70,000 63,000 90 08/01 5\.Danong Sci &Tech\. 70,000 70,000 0 0 02/02 6\.Linying Agriculture 50\.000 50\.000 25,000 50 08/00 7\.Ningxia Feed Company 50,000 50,000 27,500 55 09/01 8\.Shuijiahu Feedmill 60,000 60,000 42,000 70 10/99 9\.Zhengxing Feedmill 33,000 33,000 26,400 80 02/01 10\.Zhengtai Feed Technology 120,000 120,000 120,000 100 05/99 I I\.Youyou Biological 14,000 14,000 0 0 04/99 12\. Hengda Feedmill 80,000 80,000 20,000 25 11/01 Component C\. Feed Additives and Feed Mineral Production Total Component 104,000 104,000 100,880 97 -- 13\.Longmang DCP Plant 100,000 100,000 100,000 100 12/97 14\.Sanli Farm 4,000 4,000 880 22 07/01 Total Project Capacity 908,000 908,000 633,580 70 Project Capacity completion -- 100% - 70% and Utilization -15 -  Annex 2\. Project Costs and Financing Proect Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million A\. Integrated Feed & Livestock Production 11\.25 11\.23 99\.8 B\. Protein Concentrate Production 29\.10 25\.43 80 C\. Feed Additives and Mineral Production 14\.91 16\.07 108 Total Baseline Cost 55\.26 52\.73 Physical Contingencies 3\.27 Price Contingencies 2\.19 Total Project Costs 60\.72 52\.73 Total Financing Required 60\.72 52\.73 Note These figures were presented at ABCs appraisal (revised at MTR) and do not reflect those presented In the SAR Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB N\.B\.F\. Total Cost NCB ~~Other' 1\. Works 0\.00 5\.93 3\.05 6\.29 15\.27 (0\.00) (5\.93) (3\.05) (0\.00) (8\.98) 2\. Goods 0\.00 11\.72 2\.98 0\.27 14\.97 (0\.00) (11\.72) (2\.98) (0\.00) (14\.70) 3\. Services 0\.00 0\.00 0\.00 0\.02 0\.02 Training (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 4\. Land Requisition 0\.00 0\.00 0\.00 0\.17 0\.17 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) S\. Working Capitial 0\.00 0\.00 0\.71 27\.78 28\.49 (0\.00) (0\.00) (0\.71) (0\.00) (0\.71) 6\. Other 0\.00 0\.82 0\.02 0\.96 1\.80 (0\.00) (0\.82) (0\.02) (0\.00) (0\.84) Total 0\.00 18\.47 6\.76 35\.49 60\.72 (0\.00) (18\.47) (6\.76) (0\.00) (25\.23) Note These figures were presented at ABCs appraisal (revised at MTR) and do not reflect those presented In the SAR\. - 16 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other' N\.B\.F\. Total Cost 1\. Works 0\.00 5\.32 3\.02 8\.36 16\.70 (0\.00) (5\.32) (3\.02) (0\.00) (8\.34) 2\. Goods 0\.00 10\.81 2\.71 1\.48 15\.00 (0\.00) (10\.81) (2\.71) (0\.00) (13\.52) 3\. Services 0\.00 0\.00 0\.00 0\.24 0\.24 Training (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 4\. Land Requisition 0\.00 0\.00 0\.00 0\.30 0\.30 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Working Capitial 0\.00 0\.00 0\.04 19\.68 19\.72 (0\.00) (0\.00) (0\.04) (0\.00) (0\.04) 6\. Other 0\.00 0\.00 0\.52 0\.25 0\.77 (0\.00) (0\.00) (0\.52) (0\.00) (0\.52) Total 0\.00 16\.13 6\.29 30\.31 52\.73 ________________________ (0\.00) (16\.13) (6\.29) (0\.00) (22\.42) Note\. These figures were presented at ABCs appraisal (revised at MTR) and do not reflect those presented m the SAR\. "Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 21Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) I | Percentage of Aopraisal Component :A'ppraisal Estimate Actual/Latest Estimate [ *; A, I Bank-' Govt\. CoF\. Bank Go'L CoF\. Bank GoiL CoF\. A\. Integrated Feed and 5\.29 2\.06 5\.04 6\.15 0\.98 4\.10 116\.3 47\.6 81\.3 Livestock Product B\. Protein Concentrate 14\.04 1\.55 16\.35 10\.49 4\.32 10\.62 74\.7 278\.7 65\.0 Production C\. Feed Additives and 5\.90 3\.00 7\.48 5\.78 2\.17 8\.12 98\.0 72\.3 108\.6 Mineral Total 25\.23 6\.61 28\.88 22\.42 7\.47 22\.84 88\.9 113\.0 79\.1 Note: These figures were presented at ABCs appraisal (revised at MTR) and do not reflect those presented in the SAR\. - 17 -  Annex 3\. Economic Costs and Benefits This Annex covers the reassessment of the financial and economic rates of return of the sub-projects implemented by ABC\. The analysis was conducted for all subprojects except Youyou in Henan Province (only 6% of the total project, which was closed down by Government due to Mad Cow Disease, so that data are not available for its future operation (Section 4\.2 )\. Detailed sub-project descriptions are provided in Main text of ICR (Annex 9)\. Major assumptions for financial analysis are: (1) Project life: In line with the prevailing practice in the animal feed sector, the project life is assumed to be 15 years; (2) Investment costs and residual value of fixed assets: The investment costs employed in the analysis are based on actual costs incurred, including procurement and installation of equipment, land acquisition (user rights fees), and training\. The residual value of the fixed assets is estimated at 5 percent of their book value, and is treated as cash in-flow at the end of the project life; (3) The revenues and operating costs\. The revenues are derived from sales generated from operating capacity achieved from past years and projected values for the future\. Detailed data concerning the amounts and prices of products sold, amounts and costs of raw materials, labor, utilities, marketing and administrative expenses were provided by each of the 13 factories; (4) Incremental working capital, depending on the capacity utilization, and management of current assets and liabilities, is projected by factory management and is included in the analysis separately; (5) Taxes: The feed sector has a preferential VAT of 13% as against 17% in general, with the amount payable to the supplier's recoverable\. It also enjoys corporate income tax holidays for the first three years of operation, after which the corporate income tax is 33% of taxable income\. The straight-line method was used to calculate the depreciation as income tax shield; and (6)\. Capacity utilization: actual capacity utilization for the number of years in operation, future projections were provided\. Direct operating costs vary approximately in proportion to the plant capacity utilization\. Based on the approach adopted at appraisal, the after tax IRR, which reflects the returns of factory gains, is treated as the financial IRR of the factories\. The cash flow analysis is conducted in 2001 prices (no inflation adjustment made to the investment costs, given the fact that CPI remained virtually unchanged during the project implementation)\. The financial rate of return of the project as a whole is estimated 16% with IRRs for 13 individual sub-projects ranging from 13% to 21%, indicating that the project is financially viable\. The IRRs by factory at ICR and at appraisal (estimated by ABC) are listed in the attached table\. Detailed cash flow analyses are available from the project files\. The Economic analysis was carried out individually for each project enterprise\. The methodology of the analysis follows that of financial analysis with adjustment of prices and elimination of the impact of the transfer payment (tax liabilities)\. In line with the Bank's recent analysis of agricultural projects of similar nature, a SCF of I has been used in the analysis, which implies that no adjustment is needed in converting financial prices for non-tradable to economic prices\. As for tradable, parity prices were used as economic prices\. However, due to (1) the large number of diverse end products and raw materials; (2) the uniqueness in certain areas of a certain or raw materials; and (3) the absence of internationally comparable commodity prices for most of the products and raw materials; financial prices were used as proxies for economic prices\. As such, the IRR before tax and financing, which measures the return on the total resources engaged, was taken as ERR for the project enterprise\. The NPVs (OCC at 12%) for the 13 subprojects were positive, with ERRs ranging from 14% to 41%\. The ERR for the project as whole (derived from the weighted ERR average of all project enterprises, including the cost of Youyou) is estimated at 28%, indicating the project is economically robust\. The noticeable difference between the ERR and FIRR for each plant is caused mainly by the fairly high tax liabilities (VAT at 13% and corporate tax at 33%)\. - 18 -  Sub-project IRRs and ERRs at ICR and Appraisal** FRR at ICR FRR at ABC's ERR at ICR ERR at ABC's Appraisal Appraisal 1\. Baotou Qishi Feed Industry Co\. 17% 17% 32% N\.A\. 2\. Beixu Group Co\.Linying Dahe Feedmill 21% 23% 35% N\.A\. 3\. Shiyang Co\. 19% 27% 36% N\.A\. 4\. Bayu Oil Plant 13% 23% _7% N\.A\. 5\. Xijing Danong Science & Tech Vegetable 19% 25% 33% N\.A\. Oil Plant 6\. Linying Dahe Feedmill 15% 21% 26% N\.A\. 7\. Ningxia Xinghuo Feed Company 15% 16% 27% N\.A\. 8\. Shuijiahu Zhengtai Feed Mill 16% 29% 32% N\.A\. 9\. Zhengxing Zhimi Feed Mill 23% 30% 41% N\.A\. 10\.Zhengtai Feed Technology Co\. Ltd\. 18% 28% 29% N\.A\. I I\.Heng Da Aquatic Feed Factory 16% 18% 28% N\.A\. 12\.Longmang DCP Plant 20% 29% 31% N\.A\. 13\.Sanli Farm 13% 18% 14% N\.A\. Project as a whole 16%N\.A\. 28% [N\.A\. (**Spreadsheet calculations of IRR/ERR and NPV at ICR are available in Project files) -19 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective I denti ficati on/P rep aratio n 04/93 5 TTL, EC, NR, AB, FF 10/93 9 TTK, BD, AE, ID, FT, FA, NB, IO, AN 03/94 9 TTL, BD, AE, OD, FT, FA, MB, OP, AN 09/94 11 TTL, AB, MB, AO, OA, OP, RS, AN (2), EC, AQ 10/94 12 TTL, AB, PM, AO, AN, AE, EA, HR, AT, FF, FA, DB Appraisal/Negotiation 04/95 14 TTL, AB, EA, FP, FA (3), Fl, AM, PP, IF, AO, EC, AN 02/96 7 TTL, CL, DO, PS, FP, FA, AB, CB 11/96 12 TTL, AB, PM, AO, AN, AE, EA, HR, AT, FF, FA, DB Supervision 10/97 3 TTL, AB, PA HU S 03/98 2 TTL, PA S S 12/98 2 TTL, PA S S 06/99 1 TTL S S 10/99(MTR) 3 TTL, EC, PS U U 04/00 1 TTL U S 12/00 2 TTL, FA U S 03/01 2 TTL S S 12/01 2 TTL S S ICR 6/00 1 FA S S 4/02 3 TTL, FA, EC S S AB = Agribusiness Specialist, AE = Agricultural Economist; AN = Animal Nutntionist; AO = Agriculture Operations; AQ = Aquaculture Specialist; AT = Agncultural Training Specialist, BD = Business Development Specialist, CB - Credit and Banking Specialist; CL = Country Counsel, WB Legal Dept; DB = Data Base Management Specialist, DO = Disbursement Officer, EA = Environmental Assessment Specialist; EC = Economist; FA = Financial Analyst; Fl = Financial Institution Analyst; FF = Feed Formulation Specialist, FP = Fmancial Policy Analyst, FT = Feed Millmg Technology Specialist; HR = Human Resource Development Specialist; EI = Ingation Engineer, MB = Microbiologist; OA - Oilseed Agronomist; OD = Organizational Development Specialist, OP = Oilseed Processing Specialist; PA = Project Analyst; PC = Principal Counsel Operations, WB Legal Dept, PM = Project Management Specialist; PP = Poultry Production Specialist; PS = Procurement Specialist; NR = Natural Resource Economist, SA = Soybean Agronomist; TTL = Task Team Leader\. - 20 -  (7) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 880\.4 801\.6 AppraisaVNegotiation 411\.9 344\.8 Supervision 197\.4 197\.8 ICR 4\.5 28\.0 Total 633\.7 1372\.20 - 21 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating L Macro policies OH O SU OM O N * NA Q Sector Policies O H *SUOM O N O NA a Physical O H O SU @ M O N O NA l Financial O H *SUOM O N O NA a Institutional Development 0 H 0 SU 0 M 0 N 0 NA El Environmental O H *SUOM O N O NA Social OIPoverty Reduction O H OSUOM O N * NA O Gender O H OSUOM O N * NA OiOther (Please specify) O H OSUOM O N * NA El Private sector development * H O SU O M 0 N 0 NA Li Public sector management 0 H 0 SU 0 M 0 N 0 NA El Other (Please specify) O H OSUOM O N * NA - 22 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating Ol Lending OHS OS *U OHU OI Supervision OHS OS OU O HU O Overall OHS OS OU OHU 6\.2 Borrower performance Rating LI Preparation OHS OS O U O HU OI Government implementation performance 0 HS * S 0 U 0 HU LI Implementation agency performance 0 HS 0 S 0 U 0 HU OL Overall OHS OS O U O HU - 23 -  Annex 7\. List of Supporting Documents Number Title and Author Date 1\. China Feed Sector Study, Grey Cover No\. 10922-CHA, World Bank June 1993 2\. Feed Industry Project Component Identification, Brown (consultant) June 1993 3 Subproject Proposal Assessment Report I, Agriteam Canada April 1994 4\. Subproject Proposal Assessment Report II, Agriteam Canada October 1994 5\. Feed Additives Technical Evaluation Report, Agritear Canada December 1994 6\. Preappraisal Report, Agriteam Canada (2 Vol\.) October 1994 7\. Auditor's Report for CADTIC 1994 8\. Appraisal Mission Report, Agriteam Canada July 1995 9\. Project Proposal for the Establishment of the China Feed Industry Centre April 1995 (later renamed Ministry of Agriculture Feed Industry Center), CIDA, Hull, Canada 10\. Enterprise Reform Report, Agriteam Canada May 1995 11\. Environmental Assessment Summary, Agriteam Canada June 1995 12\. Environmental Impact Assessment, Agriteam Canada June 1995 13\. Project Appraisal Report, Agriteam Canada July 1995 14\. Appraisal of CADTIC, Resource Industries Ltd\. July 1995 15\. Basic Report for CADTIC, by CADTIC International Finance 1995 Department 16\. Study on Changeover from Traditional Rapeseed to Canola, Agriteam August 1995 Canada 17\. Project Implementation Plan August 1995 18\. Vertically Integrated Agribusiness Management Study, (2 Vol\.), Hassall March 1997 & Associates Pty Ltd 19\. Technical Assistance to CADTIC, Report by R\. Neiss, Banking/Credit July 1996 Consultant) 20\. China Beef Cattle Development, Agriteam Canada September 1996 21\. Agribusiness Management Study, Hassall & Associates December 1998 22\. China National Feed Research and Training Centre, Bameveld College, August 1988 Netherlands (reference material) 23\. Aquaculture Production Mitigation and Monitoring Study, Hassall & March 1997 Associates 24\. Integrated Soybean and Canola Production and Processing Study, Hassall March 1997 & Associates 25\. Individual Subproject Pipeline Technical and Financial Proposal Reports Various Dates (14) (Summary in English) 26\. Corporate Brochure, MAFIC 2001 27\. ICR Spreadsheet Caluclation of ERR/IRR May 2002 - 24 -  Additional Annex 8\. ABC's Contribution To The ICR A\. Background The Animal feed Project (the Project) was originally proposed by the Ministry of Agriculture, and latter onlent by China Agribusiness Development Trust and Investment Corporation (CADTIC)\. In January 1997, CADTIC was closed down according to related laws and regulations\. Agricultural Bank of China (ABC) was designated by the Government to take over the implementation of the Project\. In March 1998, after negotiations among the Bank, Ministry and Finance (MoF) and ABC and through necessary legal procedure, three agreements, namely, Agreement Amending Loan Agreement, Project agreement, and Project Onlending Agreement, were signed respectively between the Bank and MOF, the Bank and ABC, MOF and ABC\. ABC started to implement the Project as financial intermediary\. B\. Project Implementation Adjustment to the Project The original IBRD loan amount is US$150 million\. Though ABC had made a lot of efforts to facilitate the Project, selection of subprojects still tumed out to be very difficult under the current market situation, particularly due to the loss of competition of the Bank's lending rate in contrast to the prevailing domestic banking rate\. Besides, in order to reduce its commitment fee exposure, based on the subprojects pipeline, ABC requested to cancel US$95 million of the loan in February 2000, and again applied for cancellation of US$32\.5 million in December 2000\. With the Bank's approval, the loan amount was reduced to US$22\.5 million\. Based on the above, ABC determined that the project closing date was advanced to December 31, 2001, one year earlier than the original closing date\. By the end of 2001, the project loan has all been approved by the Bank to be disbursed to the subprojects\. C\. Achievement of Objectives and Outputs Outcome/ Achievement of objective: The implementation of the subprojects greatly increased the added value of the agricultural products by utilizing the local resources, and improved the quality of the feed products and promoted the development of livestock breeding\. On the other hand, the Project provided about 2410 new working opportunities to the local people, which brought about good social effect\. As of December 2001, 11 out of the 14 subprojects were completed and opened to commercial operation, and the rest 3 has finished civil works construction and equipment installation and will start test-run in 2002\. Most of the subprojects performed quite well and has achieved satisfactory financial earning\. The accumulated sales of the 11 subprojects amounted to RMB 1,204 million which profits RMB 98 million\. It is expected that the rest 3 subproject will see good profit when they become operational\. The Loan effectively supplemented ABC's shortage for long-term foreign exchange existed in Midwest branches\. Financed by the loan, ABC had effectively supported a number of good customers\. ABC's fix asset lending capacity was strengthened by adopting international practices through technical assistance and the Bank-funded project implementation\. Leamed from the practices in international banks, - 25 -  ABC applied the lending processing in its operations, including project identification, appraisal, review, approval, underwriting, monitoring, collection and post evaluation, which were critical for ABC to improve its credit policy and project management\. Outputs by Component Fourteen subprojects were financed by the bank until the loan account was closed on 31 December, 2001, with total loan disbursement of US$22\.42 million\. The total actual investment of the 14 subprojects is RMB 438 million, of which 42% is Bank loan\. The 14 subprojects are located in 8 provinces, most of which in Midwest area\. They are Sichuan, Henan, Hunan, Fujian, Anhui, Shaanxi provinces and Ningxia, Inner Mongolia Municipalities\. Among the 14 subprojects, 4 subprojects are integrated feed and livestock components, 2 are feed additives and feed mineral production component, 6 are compound, pelleted, concentrated feedmilling components, and 2 enhanced-protein synthesis components\. After the subprojects are all completed, the production capacity of various feed products will be: compound, concentrated and pelleted feed products 802,000 tons, DCP I000,000 tons, ephedrine feed 4000 tons\. The actual production capacity of each subprojects is almost same as the appraised\. D\. Main Factors Influencing the Projects The Project was in line with the state sector development plan in increasing the added value of the agricultural products and improving the deficiency in feed enterprise of small scale, low quality and backward technology\. The subproject got support from local government in many aspects, such as tax reduction and exemption\. All levels of ABC have done a lot of work in implementation of the Project, including market research, production design for the enterprise and loan disbursement\. E\. Problems and Issues Encountered in Implementation During the implementation, the central bank adjusted the foreign currency loan interest rates from 7\.81% at January of 1998 to 5\.56% at September of 2001\. While for the Renminbi long-term (five years above) loan, the interest rate declined from 10\.35% at March, 1998 to 6\.21% at June, 1999, then 5\.76% at February 2002\. The advantages of using the Bank Loan, which were considered as longer, term and lower interests, were no longer existed\. The Bank loan at this regard was less attractive to the borrower, which brought the inefficient utilization of the funds\. Negatively affected by the Asian Financial Crisis, the exportation of the livestock products sharply decreased\. And the domestic demand for the meat products are also declining, besides, the competition in local feed market has been very fierce since many new feed mill founded in recent years\. All the above factors led to the demand and the price of feed products decreased\. F\. Sustainability of the Project The project seems likely sustain in the future\. As most subprojects put into operation in 2000 and 2001 and still operated at early stage, they have not yet reached their original production capacity\. And some subprojects have faced fierce competition since they started operation\. Both ABC Head Office and branches cooperated actively with the subprojects to develop the market strategy and make financing plan\. The - 26 -  subproject Youyou, which was allowed to manufacture protein feed grade meat meal, using animal wastes, is presently restructuring into different feed production lines, and will restart operation in 2002\. Followed the project completion, ABC would continue to concentrate on project monitoring and follow up management\. Special attention would be given to the sub-projects, which did not reach full capacity utilization, to help and encourage them to take measures to improve the operations, management and efficiencies to ensure the pay back of the loans and interests\. As agriculture is the most important fundamental sector in China, the government has always put great attention to its development\. With China's entry into WTO, stockbreeding has been framed as the priority industry, which will bring along the development of the feed industry\. The project will see good potential market in the near future\. G\. ABC Performance Based on the Project Agreement, Amending Loan Agreement, the Bank's Guidelines for Disbursement, and Procurement and related policies issued, and in order to effectively implement the project, ABC Head Office developed "The Project Management Regulations for Animal Feed Project" and requested all the project branches executed the projects in line with the regulation\. The regulations included the Project objectives, loan lending scope, subborrower's qualification, the projects appraisal and approval procedure, and supervision requirement\. All the subprojects should get clearance of the local Environment Protection Bureau before their submission to ABC for approval\. With the strict supervision by ABC, procurements of equipment under the Project were fully complied with the Project Agreement and the Bank's Guidelines for Procurement\. NCB and direct shopping at least with three suppliers was used for all subproject procurements\. Apart from the quality, price, technical functions of equipment, more attention were paid to the delivery, parts supply, maintenance, and after services in evaluation and selection of suppliers to ensure that equipment procured was technically advanced, reasonable for price and convenient to maintain after services\. To ensure that the Bank loan was disbursed in line with the eligible criteria stipulated in the Project Agreement, all disbursements had been made after careful review of related materials and invoices\. ABC has conducted on-site visits and off-site supervisions for all sub-projects\. The monitoring scheduled covered: project funds resources and its implementation, the implementation of environmental measures, civil work processing progress, equipment procurement, equipment installation and operations, business operations after production, borrowers' financial situation, loan repayment schedule, as well as problems and suggestions\. H\. Bank performance During the Project implementation, to push the Project forward smoothly, the World Bank rendered great assistance in such aspects as establishing a revolving working capital fund, expanding the lending scope, etc\. The supervision missions provided good advice on project management and technical aspects, which greatly improved the subborrowers' management\. - 27 -  I\. Main Experience and Lessons The useful experience worthy to be summed up for this project are mainly in the following aspects: (a) The local governments attached great importance to all the subprojects\. (b) ABC's prudent credit principal ensured the qualified project was selected, which brought satisfactory financial and economic benefit to the subprojects and the local government\. The lessons drawn from the project implementation are mainly in the following aspects: (a) Major project investment costs are spent in local currency and major outputs are sold in domestic market\. In this case, the subborrowers was discouraged both by the foreign exchange risk and interest rate risk\. (b) During the implementation period, the interest rate of the Bank loan to the subborrower ( after plus interest rate spread) was much higher than that of the local currency loan, which made the Bank loan less competitive\. (c) ABC should reinforce the ability to make market research and forecasting in long-term project appraisal\. - 28 -  Additional Annex 9\. Detailed Subproject Pipeline Component A\. Vertically Integrated Feed and Livestock Production 1\. Baotou Oishi Feed Industry Co\. is a privately-owned shareholding agro-enterprise, owned by a parent company engaged in vertically integrated dairy production and milk processing in the Inner Mongolia Autonomous Region\. To provide high quality feed for its diary farm, the project financed Qishi to construct a new feedmill with a production capacity of 7,000 tpa of concentrated dairy cattle feed, and to plant 5,000 mu (333 ha) of corn for use as corn silage\. The feedmill construction was completed in early 2002\. Qishi will operate as an integrated feed and diary production enterprise, with the feed mill company serving as the nucleus farm, providing feed and services to surrounding dairy smallholders\. This subproject is the result of the broadened project objective, introduced at MTR, to include project support for livestock production in addition to feedmill capacity building for vertically integrating enterprises\. Qishi is located in a poverty-designated county, thereby providing income generation for local farmers in return for tax concessions\. 2\. Beixu Feedmill is a vertically integrated, privately-owned agro-enterprise in Henan province, producing compound feeds for pigs and poultry\. Its parent company, Beixu Group Co\., is located in a major pig production area in Henan, to which the new project mill will supply compound feed\. Beixu received a project loan to establish a feedmill with a design capacity of 100,000 tpa, producing compound feeds, formulated from the abundant com and soybean in the area\. Construction was completed in July 2001 and will reach full production by end-2002 with a current CU of 65 percent\. Management, marketing and markets are good and the project is highly likely to achieve long-term sustainability\. Beixu aims to be a major pig feed producer and pig producer integrator in Henan province\. 3\. Shivang Feedmill Co\. is a privately owned, shareholding subsidiary located in Shaanxi province, belonging to the Shiyang Group\. Shiyang Group is a leading oilseed agro-enterprise conglomerate operating in Northwest China, and owns 14 subsidiary oilseed extraction and feed milling enterprises in different provinces\. The Shiyang Group has eight years of experience in feedmilling, and has diversified from oilseed extraction into value-added animal feed product milling, utilizing the soybean and oilseed cake byproducts generated by its oilseed extraction plants\. Shiyang Feedmill plans to market 90 percent of its feeds in Shaanxi province, where only 50% of animal feed is presently mechanically compounded\. The feedmill received a project loan to expand its operation with two fully computerized feed production lines with a design capacity of 150,000 tpa\. The entire equipment package was procured by NCB contract\. The mill began operating the two new feed lines in June 2001\. After 10 months of operation, feed output has reached 90% of planned CU, and comprises over 100 types of compound and pelleted pig, poultry and cattle feeds\. The feedmill operates a large sales force and promotes a life-cycle feeding program, marketing protein concentrates and fully compounded feeds to smaller and more commercialized clients respectively\. (In addition to above three enterpriese, two enterprises under (Bayu oil plant and Sherjiahu Feed Mill) protein concentrates component are also integrating) Component B\. Protein Concentrate, Compound and Pelleted Feed Milling 1\. Bavu Oil Plant is a privately owned as well as subsidiary owned by the Shaanxi Bayu Group, engaged in oil and feed production in Shaanxi province\. The Bayu Group has five years of feed industry experience, and is located in a cotton producing area, which provides sufficient cotton seed cake from its oilseed extraction operations to convert into value-added protein concentrate\. Bayu Oil Plant received a project loan to construct a protein concentrate feed line with a design capacity of 70,000 tpa\. Construction - 29 -  began in August 2000 and the mill was commissioned in June 2001\. By end-2001, the mill was operating at 90% capacity\. Full production is projected by end-2002\. The new production line's formulation and cottonseed cake detoxification technologies are advanced\. Currently, the mill has a market share of 20 per cent in Shaanxi Province, and the subproject has good long-term sustainability, as most feed products used in Shaanxi province are purchased from other provinces at prices higher then local commodities\. By utilizing locally produced commodities, the enterprise is therefore very competitive in terms of price and product quality\. 2\. Danong Science & Technoloev Feedmill Co\. Ltd is a privately-owned shareholding company located in Shaanxi province, owned by its parent company Xijing Co\. Ltd\. with five years of feed industry experience, Danong is a leading agro-enterprise in Northwest China\. The subproject comprises a fully automated, computerized state-of-the-art feedmill with a design capacity of 70,000 tpa, constructed under a turnkey contract awarded by NCB\. The enterprise is market oriented, has a good management team and is in a stable financial position\. The new mill has four feed compounding lines with a combined production output of over 100 types of granulated, pelleted and compound feeds for pigs, poultry, and carp\. Commercial production began in February 2002 and is projected to reach 35,000 tpa (50% capacity utilization (CU)) by end-2002; and full production in 2-3 years The enterprise has already obtained ISO-9002 accreditation for operating procedures, and is engaged in a long term scientific exchange program with Northwestern University in Xian, under which the latter provides feed formulation services and new product development, in return for use of the feedmill for student training and scientific research in its crop and animal husbandry programs\. Danong's future expansion plans include restructuring into integrated feed and livestock production\. 3\. Linvin-' Agariculture Material Supply and Sales Coop is a collectively-owned limited corporation with five years of experience in the feed industry in Henan province\. The feedmill utilizes local corn and soybean resources to produce compound feed and protein concentrate for the large pig population in the area\. The enterprise received a project loan to expand its feed production by adding a fully automated feed production line with a design capacity of 50,000 tpa\. The entire equipment package was procured by NCB\. The expanded mill began operations in August 2000 and its current CU is at around 50%\. It has embarked on a strong product promotion program to increase sales and it is expected to reach full capacity in 2005\. 4\. Ningxia Xinghuo Feed Companv is a private enterprise with nine years experience in feed industry\. The enterprise has been engaged in the production of feed additives and protein concentrate, and is the biggest protein concentrate mill in west-northem China\. The project established compound feed/concentrates producti9n line of 50,000 tpa, utilizing feed ingredients from local sources\. The production line is currently running at 55% percent design capacity and, as the result of strong market competition, is converting into integrated feed and fish production\. The feedmill's product quality is high and a major advantage in increasing its market share\. The enterprise has a strong product and sales promotion staff, which are gradually improving market shares for its products\. It is expected to reach 100% CU in 2 - 3 years\. 5\. ShuUiiahu Zhengatai Feed Mill is a limited corporation, owned by an integrated feed and livestock enterprise mainly engaged in farming, feed processing and chicken and pigs breeding\. To utilize the corn and soybeans produced by its own farms, Zhengtai ensures value-added by cycling part of its high quality feeds through the enterprise's own pig and chicken farms, and marketing the remainder in the provinces of Shandong, Henan , Jiangsu and Jiangxi\. Zhengtai's products include more than 50 types of compound feeds for fish, pigs and chickens\. The enterprise received a project loan to expand it feed output with a fully automated production line for protein concentrates, with a design capacity of 60,000 tpa, procured by NCB\. In 1999, construction was completed and commissioned\. Because of the fierce competition in the feed market, utilization capacity has reached 50% of design capacity, and the enterprise is strengthening its - 30 -  marketing networks and concentrate on new product development\. The enterprise reaches 70% production in 200, with full production in 2-3 years\. 6\. Zhengxing Zhimi Feed Mill is a private enterprise with seven years of feed industry experience\. The mill used a project loan to meet increased demand by constructing two production lines to increase its original production capacity from 17,000 tons of compound feed and protein concentrate by an incremental 33,000 tpa, for a projected output of 50,000 tpa\. The mill has a long-term scientific exchange relationship with the feed industry center, MAFIC, which provides feed formulation services, new product development, and training for mill workers\. The mill presently operates at 80% capacity and is performing quite well, as its products are well received\. The negative impact of the Asian financial crisis and the resulting depressed domestic market, has stimulated the mill's management to develop new feed products and to increase its product promotion with assistance from MAFIC\. 7\. Zhengtai Feed TechnoloLv Co\. is a shareholding company located in Hunan province, engaging mainly in feed and feed additives production\. The company has nine years of feed industry experience\. The enterprise received project loan to expand its existed production capacity by 120,000 tpa, from 80,000 tpa to 200,000 tpa\. Construction was completed in 1999\. In 2001, the project reached full production\. Its products include compound and protein concentrates for pigs, fish and poultry\. The enterprise has achieved ISO-9002 operating accreditation, and is engaged in a long-term scientific exchange program for new product development with a local university\. In spite of strong competition, Zhengtai has increased its domestic market and integrated by purchasing a Grain Company in IMAR, to lower its commodity costs for soybean cake and rapeseed cake\. The mill has set up an integrated production chain comprising commodities, feed processing, and marketing, which has enlarged its business scope through lower product prices, high-quality products, and improved marketing\. 8\. Youvou Biological Engaineering Co\. Ltd\. located in Henan province, is a privately owned shareholding company, established for the purpose of manufacturing high-protein feed grade meat meal, using animal wastes from regional slaughterhouses, thereby resolving an important waste disposal problem by converting low value slaughter wastes into high value feed protein\. The plant with a design capacity of 14,000 tpa began operations in April 1999 but was closed down in 2000 due to circumstances beyond its control, when the Government placed a nation-wide ban on the manufacture of livestock feeds using animal wastes as the result of the outbreaks of bovine spongiform encephalopathy (Mad Cow Disease) in the United Kingdom and other European countries\. The company is presently restructuring into different production lines, but has experienced substantial losses\. 9\. Hengda Aquatic Feed Mill is a shareholding company located in Anhui province, one of eight subsidiary feed processing, breeding and beverage plants owned by the Hengda Group Company, an agro-enterprise with seven years of feed industry experience\. The Hengda Group is a leading feed processing company in Anhui Province\. Its feed products include compound and protein concentrate feeds for pigs, fish, chickens and ducks\. Hengda received a project loan to expand its production into aquatic feeds, with construction of a feed processing line with a design capacity of 80,000 tpa\. Equipment and civil works were procured by NCB\. Construction was completed in the last quarter of 2001, and the mill is presently operating at 25 percent CU (test runs)\. Hengda's entry into the aquatic feed market has faced strong competition, which it aims to overcome with high-quality feed products and marketing\. Business from other subsidiaries will assist final financing and commissioning of the project\. The production of aquatic feeds is highly technical and requires innovative feed formulation and processing\. Component C\. Feed Additives and Feed Mineral Production Component 1\. Mianzhu Longman DCP Plant, located in Sichuan province, is a newly constructed, privately - 31 -  owned shareholding subsidiary of a parent company, Sichuan Longman Group, with 13 years of feed additives experience, operating eight mineral processing and chemical plants\. The project enterprise is engaged in the extraction and purification of rock phosphate into dicalcium phosphate (DCP), an essential mineral for livestock feeding\. DCP is nutritionally far superior to tricalcium phosphate (TCP), which is commonly used in China\. The enterprise replaces a defunct plant on land owned by the company in Mianzhu County, with resources of 15 billion tons reserve of rock phosphate\. The plant was commissioned in December 1997 and is at full production at 100,000 tpa of feed grade DCP\. A byproduct, 50,000 tpa of mono-ammonium phosphate fertilizer, is also produced\. Plant equipment was procured by NCB\. The plant has received IS09002 operating certification\. This subproject, which is engaged in surface mining, received an environmental A rating, and a comprehensive environmental assessment was carried out\. Environmental certification was issued by the local Environmental Protection Agency (EPA), subject to the implementation of a comprehensive environmental mitigation plan by the company\. The plant is extremely profitable\. A thematic Bank supervision in 2001 found the plant's environmnental mitigation program satisfactory\. 2\. Sanli Farm is a private farm owned by a parent company in the Inner Mongolia Autonomous Region (IMAR), engaged in agricultural commodity trading\. The farm received a project loan to develop a 4000 mu (267 ha) of ephedra plantation, with a planned output of 4000 tpa of Ephedra feed additive\. The product is marketed as an organic metabolic stimulant, for use in feed rations to promote growth rates\. This subproject has an ecological objective is addition to its commercial objective\. In its effort to combat desertification, the IMAR government has recommended Ephedra as the vegetation of choice in large areas of Inner Mongolia\. Ephedra is typically transplanted to the field from nursery seedlings, with onset of production three years after transplanting\. To date, land preparation and civil works have been completed, and 18 ha nursery is in operation and 60 ha of Ephedra (22% of target) have been planted\. Sanli Farm has engaged a technical specialist to head up the project\. Full production is projected for 2004\. - 32 -  Additional Annex 10\. The Ministry of Agriculture Feed Industry Center (MAFIC) As evidenced by the sustained and increasing demand for its products, services, quality assurance programs, and applied research training programs, MAFIC is well on its way to fully achieve its objective to provide national leadership to China's young, growing feed industry\. The Center represented the Project's Feed Sector Strengthening Component, and was designated for Bank support under Schedule 1, part B of the Loan Agreement for a loan of US$2\.3 million, together with a US$2\.4 million bilateral grant from CIDA, with the balance to be financed by MoA\. Because of its institutional nature and longer start-up phase, the loan's maturity was set at 15 years, including a 5-year grace period\. However, the Asian financial crisis caused the loan's interest rate to become increasingly uncompetitive as compared to domestic loans of similar maturity\. As a consequence, MoA, MAFIC's implementing agency, declined the Bank loan and arranged for alternative' less costly financing\. Nevertheless, MAFIC has more than fulfilled its role in of animal feed sector strengthening, in substantial part due to the efforts by the Bank and MoA teams involved in the planning and preparation of MAFIC's physical and human resources, combined with implementation support from CIDA\. CIDA supported seven years of technical assistance to MAFIC in the form of long term consultancies in feed processing technology, industrial training, extension, research and agribusiness management, and MAFIC became fully operational in 2000\. MAFIC's objectives are to provide institutional and technical leadership at the national level to China's growing feed industry, which, in terms of output capacity at 85 million tpa of manufactured feed, has become the world's second largest after the United States (125 million tpa)\. The industry began to commercialize only 20 years ago, and at present between 50-70 percent of China's animal feed is scientifically formulated in modern mills\. The industry's institutional infrastructure is multi-agency and complex, with much duplication of effort, which has hampered the clarity and timeliness of the sector's earliest development plans\. MAFIC, as the sole national technical institute devoted entirely to the feed industry, is therefore fulfilling a much needed role in coordinating and implementing feed sector development objectives, especially where MAFIC is fully industry-supported and has thereby gained substantial credibility with the animal feed industry\. All of MAFIC's laboratory equipment, office furniture, computers and other internal furnishings were donated by members of the feed industry; civil works were financed by MoA, and CIDA supported the technical assistance\. The Center operates research and feed analysis laboratories, a large reference library and information technology unit, an experimental feedmill for research, training and new product development, and several animal facilities for bioassay of feeds and feed additives; the first such facilities operational in China\. MAFIC also owns a commercial feedmill with a 5,000 tpa output of commercial premixes, for sale to the feed industry\. In 2000, the Center acquired IS09001 operational status; the first such institute in China to reach this standard\. In 2001, MAFIC received accreditation from the State Commission for Science and Technology as a National Center of Excellence, another first\. MAFIC is financially and managerially fully autonomous and generates its own operating and staffing funds from the sale of its commercial product sales, contract research and advisory services\. MAFIC is located on the campus of China Agricultural University in Beijing and has six Departments: Education and Research, Information Technology, Laboratory Services, Commercial Feedmill, Training and Extension, and International Cooperation\. MAFIC has a core scientific staff of 20 persons, and has scientific exchanges with several countries\. It receives sustained financial support from China's feed industry enterprises in return for contract service work and product development\. MAFIC operates two websites from its Information Technology Department, which, since their beginning in April 2001, have received 700,000 hits\. The Center produces and sells software packages for use in feed fornulation, feedmill training and management, livestock disease diagnosis, sales and marketing management, and feed - 33 -  commodity market pricing\. Its laboratories harbor a full array of diagnostic and research instrumentation utilized for applied research, quality control, and product development of feed ingredients and feedstuffs\. Each year, MAFIC conducts hands-on vocational training courses for several hundred feed industry workers and managers\. MAFIC issues an annual report and an annual science report, containing information on its applied research programs and progress\. Animal science and nutrition undergraduate and graduate students from China Agricultural University take feed formulation technology courses and carry out graduate research work at the Center\. - 34 -      IMAGING I Report No\.: 24336 C Type: ICR

REVIEW

P074755

 Document of The World Bank Report No: ICR2280 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-72500) ON A LOAN IN THE AMOUNT OF US$ 13\.50 MILLION TO THE NATIONAL BANK OF PUBLIC WORKS AND SERVICES (BANOBRAS) WITH THE GUARANTEE OF THE UNITED MEXICAN STATES FOR THE STATE JUDICIAL MODERNIZATION SUPPORTING ACCESS TO JUSTICE PROJECT June 30, 2012 Poverty Reduction and Economic Management Sector Management Unit Mexico and Colombia Country Management Unit Latin America and the Caribbean Region  CURRENCY EQUIVALENTS (Exchange Rate Effective May 15, 2012) Currency Unit = Mexican Peso 1\.00 Peso = US$ 0\.073 US$ 1\.00 = 13\.7 Pesos FISCAL YEAR January 1- December 31 ABBREVIATIONS AND ACRONYMS AMIJ Mexican Association of Judicial Operators (Asociación Mexicana de Impartidores de Justicia) AOP Annual Operations Plan APP Actual Problem Project BANOBRAS National Bank of Public Works and Services (Banco Nacional de Obras y Servicios Públicos) CPS Country Partnership Strategy CONATRIB National Commission of State Courts (Comisión Nacional de Tribunales Estatales) CONEVAL National Council of Evaluation of Social Development Policy (Consejo Nacional de Evaluación de la Politica de Desarrollo Social) DF Federal District (Distrito Federal) EPADEC Survey Company FLACSO Latin American School of Social Sciences (Facultad Latinoamericana de Ciencias Sociales) GOM Government of Mexico GDF Federal District Government (Gobierno del Distrito Federal) HR Human Resources ICB International Competitive Bidding ICT Information and Telecommunications Technologies INEGI National Statistics and Geography Institute (Instituto Nacional de Estadistica y Geografia) ISR Implementation Supervision Report M&E Monitoring and Evaluation PAD Project Appraisal Document PARIS 21 Partnership in Statistics for Development in the 21st Century PCU Project Coordination Unit PDO Project development objective ii RAAP Rapid Assessment and Action Plan RDP Rapid Data Processing (Programa de Aceleración de Datos SHCP Secretariat of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) SICOR Integrated Judicial Resolution Consultation System (Sistema Integral de Consulta de Resoluciones Judiciales) TOR Terms of Reference TSJDF Superior Justice Tribunal of the Federal District (Tribunal Superior de Justicia del Distrito Federal) Vice President: Hasan A\. Tuluy Country Director: Gloria M\. Grandolini Sector Manager: Arturo Herrera Gutierrez Project Team Leader: David F\. Varela ICR Team Leader David F\. Varela Francisco Lazzaro, Jenni ICR Primary Authors: Pajunen, Tirza Rivera-Cira iii  MEXICO STATE JUDICIAL MODERNIZATION SUPPORTING ACCESS TO JUSTICE PROJECT CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \.1 2\. Key Factors Affecting Implementation and Outcomes \.8 3\. Assessment of Outcomes \.14 4\. Assessment of Risk to Development Outcome \.20 5\. Assessment of Bank and Borrower Performance \.20 6\. Lessons Learned \.25 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \.29 Annex 1\. Project Costs and Financing\.30 Annex 2\. Outputs by Component \.31 Annex 3\. Economic and Financial Analysis \.47 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \.48 Annex 5\. Beneficiary Survey Results \.52 Annex 6\. Stakeholder Workshop Report and Results \.53 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \.54 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \.55 Annex 9\. List of Supporting Documents \.56 Annex 10\. Chart of Federal and Sub-National Authorities in Mexico potentially involved in processing restructurings ……………………………………58 MAP…………………………………………………………………………………\.59 iv A\. Basic Information State Judicial Country: Mexico Project Name: Modernization Project Project ID: P074755 L/C/TF Number(s): IBRD-72500 ICR Date: 06/30/2012 ICR Type: Core ICR Specific Investment Lending Instrument: Borrower: BANOBRAS Loan (SIL) Original Total USD 30\.00M Disbursed Amount: USD 13\.50M Commitment: Revised Amount: USD 13\.50M Environmental Category: C Implementing Agencies: BANOBRAS - TSJDF Co-financiers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept 10/25/2002 Effectiveness: 01/25/2006 01/25/2006 Review: Appraisal: 04/29/2004 Restructuring(s): 08/08/2008 Mid-term Approval: 07/01/2004 09/24/2009 09/24/2009 Review: Closing: 09/30/2010 12/31/2011 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Low Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Satisfactory v C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Unsatisfactory BANOBRAS: Unsatisfactory Quality of Moderately Implementing Moderately Supervision: Satisfactory Agency/Agencies: Satisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Satisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Quality at Entry Project at any time No None (QEA): (Yes/No): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): PDO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Law and justice 100 100 Theme Code (as % of total Bank financing) Access to law and justice 17 17 Judicial and other dispute resolution mechanisms 33 33 Law reform 17 17 Other public sector governance 33 33 E\. Bank Staff Positions At ICR At Approval Vice President: Hasan A\. Tuluy David de Ferranti Country Director: Gloria M\. Grandolini Isabel M\. Guerrero Sector Manager: Arturo Herrera Gutierrez Ronald E\. Myers Project Team Leader: David F\. Varela Waleed Haider Malik ICR Team Leader: David F\. Varela vi  ICR Primary Author: Jenni Amanda Pajunen Tirza Rivera-Cira Francisco Lazzaro F\. Results Framework Analysis Project Development Objectives (from Loan Agreement) The objective of the Project is to assist the Borrower with the implementation of its judicial modernization credit program by supporting the efforts of the Participating States to: (a) strengthen justice sector institutions and promote cultural change and knowledge sharing among such institutions and with civil society; (b) develop efficient and effective judicial services; (c) increase judicial transparency; (d) enhance access to justice for the poor and disadvantaged populations of the Participating States; and (e) disseminate good practices and learning-by-doing strategies within and among Participating States; and promote efficient monitoring and evaluation procedures, including consultation with Project stakeholders\. Revised Project Development Objectives (as approved by original approving authority) Not applicable\. However, a first order restructuring was initiated but not completed to narrow the PDO and reflect that only one sub- national (i\.e\., the DF) participated in the Project\. (a) PDO Indicator(s)1 Indicator Baseline Value Original Formally Actual Value Achieved Target Values Revised at Completion or (from Target Target Years approval Values documents) Indicator 1 : Stakeholder satisfaction on the efficacy of modernization activities Value Original per PAD: Original per Original per PAD: quantitative or None\. PAD: None On the basis of the only Qualitative) subproject financed under the Project (the TSJDF Subproject: TSJDF TSJDF’s) and the 0 user service Subproject: surveys conducted, 1 As this Project was structured as a credit line, the PAD included neither specific baseline nor target values for the indicators but expected those values to be determined for the particular subprojects of individual subnational applicants to the credit line\. However, the PAD was prepared using the Logical Framework methodology\. As the Project ended up having only one subproject (the TSJDF’s), the baseline, targets and achieved values presented here refer to those agreed for the TSJDF Subproject\. vii applications Ten (10) user stakeholder satisfaction uploaded to the service with the only institutional ICT applications participating sub- network\. Low user uploaded to the national following confidence and institutional modernization activities stakeholder network that financed by the Project satisfaction in serves as have increased\. See TSJDF services\. backbone of the below for details\. management model increase TSJDF Subproject: user confidence PARTIALLY and stakeholder ACHIEVED satisfaction in (Percentage of TSJDF services achievement: 80%) 5 according to applications uploaded to latest the ICT institutional information platform that provides available\. rapid and reliable decision-making information and 22 public kiosks have access to the status of judicial decisions and location of cases in target courts have increased confidence and stakeholder satisfaction with the TSJDF according to a survey by EPADEC on fair trial indicators, where more than half of respondents (55\.25 %) were satisfied with TSJDF services\. The satisfaction level did not vary significantly if the respondent was a plaintiff (52\.4%) or a defendant (54%)\. The level of satisfaction with the image, attention and functioning of the target courts was 63%\. viii  (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla Norte, Este and Sur, and Santa Marta Acatitla)\. Date achieved 08/08/2008 07/02/2004 5/11/2012 Users’ satisfaction reported by the EPADEC survey is higher than the trust in the justice system reported for the whole country by Americas Barometer, Latin Comments America Public Opinion Project (LAPOP), in 2010\. Mexico scored 35\.5%, (incl\. % (Hermann, Stefanie and others, “Confidence in the Criminal Justice System in achievement) the Americasâ€?, Americas Barometer Insights:2011 http://www\.vanderbilt\.edu/lapop/insights/I0862en\.pdf\. Indicator Baseline Value Original Formally Actual Value Achieved Target Values Revised at Completion or (from Target Target Years approval Values documents) Indicator 2 : Improved capacity building and communication practices Original per PAD: Original per Original per PAD: None PAD: None On the basis of the only sub-project financed under the Project (the TSJDF TSJDF’s), the TSJDF Subproject: Subproject: New communication practices No ICT network ICT network of the only sub-national provides information provides timely participating in the on demand and supply information on Project have improved as of justice services in demand and demonstrated by the Value the courts targeted by supply of justice intensive dissemination of quantitative or the Project services in the information through the Qualitative) (Reclusorios Norte, courts targeted by TSJDF portal about the Oriente, Sur and Santa the Project operations and Marta Acatitla)\. (Reclusorios performance of the target No training and Norte, Oriente, courts\. The capacity- knowledge-sharing\. Sur and Santa building practices of the Marta Acatitla), only sub-national Inter-institutional to ensure participating in the arrangements with efficiency gains Project have also other sector agencies in the use of improved through the GDF, public security resources\. training provided to the secretariat Attorney Training and operators (including ix General and General knowledge- partner agencies) of the Counsel not entered sharing provided integrated management into\. to support the model financed by the implementation Project\. See below for of the new details\. management model\. TSJDF Subproject: EXCEEDED\. (Percentage Inter-institutional of achievement: 100%) arrangements New ICT platform with other sector provides timely agencies GDF, information on demand (public security and supply of justice secretariat services in the courts Attorney General targeted by the Project and General (Reclusorios Norte, Counsel) to be in Oriente, Sur and Santa place\. Marta Acatitla) to ensure efficiency gains in the use of resources\. The ICT platform in all target trial courts allows access to e- mail, intranet and extranet and internet that have improved communication practices\. TSJDF internal communications are paperless\. Inter-institutional arrangements have been signed to improve communications with the prosecutor’s office (Procuraduria General) and cases are presented to the TSJDF on-line during the second semester of 2012\. Also, all the socio- economic information on defendants required by the INEGI is now collected and transmitted on line\. In the near future, the TSJDF ICT platform will be x  connected to Mexico’s recently established Intelligence Platform to fight crime and violence\. Date achieved 08/08/2008 07/02/2004 5/11/2012 No cultural change or knowledge sharing activities were included in the TSJDF Comments subproject other than the program sponsored by the Bank and PARIS 212 for the (incl\. % Rapid Data Processing (RDP) and the plan for the implementation of the new achievement) criminal procedure code\. (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Achieved Values (from Revised Indicator Baseline Value at Completion or approval Target Target Years documents) Values Indicator 1 : Strengthening institutional 1\.1 Improved information development for institutional planning and capabilities, external services\. culture and knowledge Original per PAD: Original per Original per PAD: None PAD: None- On the basis of the only sub-project financed Value under the Project (the (quantitative TSJDF Subproject: TSJDF TSJDF’s), the or Qualitative) 0 target trial courts Subproject: 69 information for were able to process target trial courts institutional planning and statistics on line\. able to process external services of the 0 target trial, appeal statistics on line, only sub-national 2 The Partnership in Statistics for Development in the 21st Century (PARIS21) was founded in November 1999 by the United Nations, the European Commission, the Organization for Economic Co-operation and Development, the International Monetary Fund, and the World Bank, in response to the UN Economic and Social Council resolution on the goals of the UN Conference on Development\. The PARIS21 Consortium was set up -- at a meeting hosted by the OECD Development Assistance Committee -- as a global partnership of national, regional and international statisticians, analysts, policy-makers, development professionals and other users of statistics\. It is a forum and network to promote, influence and facilitate statistical capacity development and the better use of statistics\. PARIS21’s goal is to develop a culture of Management for Development Results (MfDR)\. PARIS21 pursues this goal primarily by encouraging and assisting low-income and lower middle income countries to design, implement, and monitor a National Strategy for the Development of Statistics (NSDS)\. xi and judgment 81 trial, appeal participating in the execution courts and judgment Project has improved as shared case-tracking execution courts demonstrated by the information, and only share case effective establishment 5\.1% of courts had tracking and operation of the access to email, information, and TJSDF statistical unit and intranet and extranet\. 80% percent of the dissemination of Institutional ICT trial courts have statistical information network covered only access to e-mail, through the TSJDF portal 10% of TSJDF staff in intranet and about the operations and the targeted courts extranet\. performance of the target (approximately 200 Institutional ICT courts\. See below for out 2,000 staff)\. network covers details\. 80% of target TSJDF staff (approximately TSJDF Subproject: 1,600 out of EXCEEDED (Percentage 2,000 staff)\. of achievement: more than 100%) A new information system for Institutional Planning and External Services is in place\. The new system provides information for decision-making regarding financial, material and human resources optimization\. It provides data to be used to prepare and implement a results- based budget linked with previously defined indicators\. The system has also provided tools to the judicial authorities to present and support the budget before the Secretariat of Finance and the Legislative Assembly of the DF\. 69 target criminal trial courts, 40 criminal peace courts, 2 sentence execution courts, 15 juvenile courts and 26 xii  appellate courts are able to process statistics on line, and ICT network covers 100% of target TSJDF staff who also have access to e-mail, intranet and extranet\. Date achieved 08/08/2008 07/02/2004 5/11/2012 With TSJDF’s own resources, the statistical information system largely exceeded expectations\. It went beyond the target courts to cover all the 278 courts, 17 justice support offices and 13 administrative offices of the TSJDF\. It also generates the socio-economic information requested by INEGI, and has superseded manual completion of information forms per defendant\. A paperless statistical system and the automatic transmission of data to INEGI are in operation\. A system that will allow citizens to make case related financial Comments deposits (bails, guarantees etc\.) in a commercial Bank is currently in a testing (incl\. % phase, Such deposits will immediately electronically notified to courts using the achievement) ICT platform\. Two areas for improvement remain to utilize electronic signature and single identification number\. The Information Technology Office of TSJDF is working on both\. No cultural change or knowledge sharing activities were included in the TSJDF subproject other than the program sponsored by the Bank and Paris 21 for the RDP and the plan for the implementation of the new criminal law\. Indicator Baseline Value Original Formally Actual Value Achieved Target Values Revised at Completion or (from Target Target Years approval Values documents) Indicator 2 Improving efficiency and 2\.1 Reduction in case processing times effectiveness of judicial services : Original per PAD: Original per Original per PAD: None PAD: None\. On the basis of the only Value subproject financed under (quantitative the Project (the TSJDF’s) or Qualitative) TSJDF Subproject: the modernization Average processing TSJDF activities financed under xiii  times in target courts Subproject: the Project have reduced 2\.5 months\. TSJDF Average the case processing times target courts clearance processing times of the Judiciary of the rate of 77\.8 % in 2008\. in target trial only participating sub- Total workload 18,180 courts 2\.0 national\. See below for cases a year in the months\. Target details\. target courts\. courts clearance 0 target courts are able rate 100%\. Total TSJDF Subproject: to carry out virtual workload of up PARTIALLY trials and videotaped to 20,000 cases a ACHIEVED (Percentage oral-based trials\. year\. of achievement: 80%)\. 35 target courts Average processing times able to carry out in target trial courts have virtual trials and been reduced to 2\.3 videotaped oral- months\. The TSJDF based trials\. target courts’ clearance rate is 108\.6%\. Total criminal courts workload of 20,589 cases (end 2011)\. No target courts are yet able to carry out virtual trials\. Virtual trials require legislative changes, although 8 courtrooms carry out video recordings of oral-based trials\. Date achieved 08/08/2008 07/02/2004 5/11/2012 The integrated ICT network supports a new organizational and management model for target trial courts\. The Project supported ICT applications allow the preparation of monthly statistical reports to monitor case processing times and clearance rates\. The ICT applications have incorporated a human rights red flag alert system to better track the status of pre-trial detainees, victims of domestic violence and sexual abuse, femicides, victims of torture, trafficking of persons Comments and cases where indigenous peoples are involved\. The system systematically (incl\. % reports red flags to the Human Rights Office at the TSJDF President's Office\. achievement) Two (2) additional judgment execution courts have been established as part of the new management model aimed towards more efficient processing of criminal cases with the TSJDF’s own resources\. The TSJDF subproject did not include the organizational and management model for the administrative structure of the TSJDF, a coordination and communication model, human resources development activities, integrated administration, finance and human resources systems, or developing support units for training, xiv  research and information, but these activities have been carried out with the TSJDF’s own resources for the benefit of the Project target courts\. Indicator Baseline Value Original Formally Actual Value Achieved Target Values Revised at Completion or (from Target Target Years approval Values documents) Indicator 3 : Increasing 3\.1 Increased availability of public information judicial transparency Original per Original per PAD: PAD: None-- On the basis of the only subproject financed under TSJDF the Project (the TSJDF’s) Subproject: the modernization 6 court databases activities financed under Original per PAD: to operate the Project have None through the increased availability of integrated ICT public information about network the Judiciary of the only developed under participating sub- TSJDF Subproject: the subproject national\. See below for 0 court databases and accessible to details\. operating through the court staff and integrated network and general public, TSJDF Subproject: Value accessible to court staff and 4 judicial ACHIEVED\. (Percentage (quantitative and general public\. statistics reports of achievement: 100%)\. or Qualitative) 0 judicial statistics compiled Five (5) court databases reports compiled quarterly for are operating through the quarterly for decision- decision-making integrated ICT network making purposes, and purposes, and developed under the published annually for published Project and are accessible public dissemination\. annually for to court staff; one of Zero (0) judicial public them, SICOR, allows decisions disseminated dissemination\. TSJDF staff to access through integrated ICT Up to 19,000 620,896 judicial network judicial decisions decisions and will be (including up to available to the public for 15,000 final a fee as early as June judgments) a 2012\. Monthly judicial year statistics reports are made disseminated available for decision- through the making purposes\. Since xv  integrated ICT 2010, annual statistics network\. reports have been published and disseminated\. The statistics portal in the TSJDF web page has 53 data banks available to the public on line on different subject matters\. There is an on-line judicial bulletin that provides the status of (judicial decisions) and location of cases in courts\. In eight (8) TSJDF buildings there are 22 kiosks available to the public for case status consultations\. Date achieved 08/08/2008 07/02/2004 12/31/2011 The TSJDF subproject did not include specialized and applied studies on improving transparency, or disciplinary and accountability mechanisms\. However, these activities were carried out with the TSJDF’s own resources for the benefit of the whole TSJDF system\. The TSJDF website has a Transparency Comments Portal that permits public access and consultation of the financial asset (incl\. % declarations of TSJDF judges and staff and also of the TSJDF transparency achievement) indicators\. The website also allows review of the situation of fair trial indicators\. The ICT platform has also allowed the TSJDF to comply with the new Transparency Law and is able to respond to information requests that do not involve privacy rights in less than 7 days\. Indicator Baseline Value Original Formally Actual Value Achieved Target Values Revised at Completion or (from Target Target Years approval Values documents) Indicator 3 : Increasing 3\.2 Increased opportunities for community engagement judicial transparency Value Original per PAD: Original per Original per PAD: (quantitative None PAD: None-- On the basis of the only or Qualitative) subproject financed under xvi  the Project (the TSJDF’s) TSJDF Subproject: the modernization No specific community TSJDF activities financed under engagement activities Subproject: the Project have envisaged, but Six (6) court increased opportunities emphasis on databases to for community transparency and operate through engagement of the accountability through the integrated Judiciary of the only access to information ICT network participating sub- should provide developed under national\. See below for opportunities for such the subproject details\. engagement\. and accessible to 0 court databases court staff and operating through the general public, integrated ICT network and 4 judicial TSJDF Subproject: to be developed under statistics reports ACHIEVED (Percentage the Project and compiled of achievement: 100%)\. accessible to court staff quarterly for Public Information and general public\. decision-making available increased\. 0 judicial statistics purposes, and reports compiled published No specific community quarterly for decision- annually for engagement activities making purposes, and public were envisaged in the published annually for dissemination\. TSJDF subproject, but public dissemination\. Up to 19,000 transparency and judicial decisions accountability through (including up to greater access to 15,000 final information provided judgments) a opportunities for such year engagement\. disseminated Five (5) court databases through the are operating through the integrated ICT integrated network network\. developed under the Project and up to 620,896 judicial decisions will be accessible to the general public for a fee by early June\. Monthly judicial statistics reports are compiled for decision- making purposes\. Annual statistics report published annually and accessible on line\. xvii Date achieved 08/08/2008 12/31/2011 5/11/2012 The increased demand for statistical information has prompted the TSJDF to finance several community engagement activities with its own resources to expand links between the Judiciary and civil society\. With technical support from the United Nations High Commissioner for Human Rights they have developed fair trial/due process indicators\. Also with FLACSO, the TSJDF carried out a case study to evaluate the application of human rights international standards on TSJDF final decisions, EPADEC, carried out a first user satisfaction survey the TSJDF plans to repeat periodically\. Finally with the Juridical Research Institute at the National Autonomous University of Mexico (UNAM), the TSJDF has Comments started an assessment of judicial decisions quality\. These activities have started a (incl\. % new trend of involving civil society organizations in assisting the TSJDF to achievement) measure its own performance\. The TSJDF web site has also Transparency Portal that permits public consultation of the asset declarations of TSJDF judges and staff and the TSJDF transparency indicators\. The web site also allows reviewing the status of due process indicators\. The ICT platform has also allowed the TSJDF to comply with the new Transparency Law and is able to provide answers to information requests that do not affect privacy rights in less than 7 days\. Indicator Baseline Value Original Formally Actual Value Achieved Target Values Revised at Completion or (from Target Target Years approval Values documents) Indicator 4 : Strengthening 4\.1 Increases in number of users from vulnerable groups accessing judicial access to services justice for all users Original in PAD: Original in PAD: Original in PAD: None None On the basis of the only subproject financed under the Project (the TSJDF’s) TSJDF Subproject: TSJDF the modernization No specific vulnerable Subproject: No activities financed under Value groups access specific the Project have (quantitative activities included vulnerable increased the number of or Qualitative) other than adapting groups access users from vulnerable infrastructure to users’ activities groups of the Judiciary of needs, including envisaged, other the participating sub- information and than adapting national\. See below for orientation centers at infrastructure to details\. targeted courts users’ needs, xviii  (Reclusorios Norte, including TSJDF Subproject: Oriente, Sur and Santa information and PARTIALLY Marta Acatitla) courts orientation ACHIEVED (Percentage located in the vicinity centers at the of achievement: 80% ) of vulnerable areas\. four targeted No specific activities on courts vulnerable groups’ access (Reclusorios to justice carried out, Norte, Oriente, other than adapting Sur and Santa infrastructure to users’ Marta Acatitla) needs, including located in the information and vicinity of orientation centers at the vulnerable areas\. targeted courts (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla) located in the vicinity of vulnerable group areas\. Out of the 302,220 annual users of the targeted buildings, 58\.8% are persons whose family income is less than US$450 per month, and 30\.8% are users whose family income is between US$450 and US$1000 per month\. 39\.8 % of all users are women\. 5/11/2012 Date achieved 08/08/2008 07/02/2004 This indicator was not consistent with to the TSJDF Subproject’s focus on ICT Comments for efficiency and transparency\. Nevertheless there were improvements in access (incl\. % for vulnerable groups that use the target trial courts, that the statistical system achievement) developed under the project helped to track\. xix  Indicator Baseline Value Original Target Formally Actual Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 5: Project coordination, 5\.1 Improved application of project know-how and skills through learning monitoring, processes evaluation and learning Component dropped in Component NOT RATED\. Value restructuring dropped in Component dropped in (quantitative restructuring restructuring or Qualitative) Date achieved 08/08/2008 07/02/2004 5/11/2012 Comments (incl\. % achievement) G\. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No\. DO IP Archived (USD millions) 1 12/21/2004 Satisfactory Satisfactory 0\.00 2 05/16/2005 Satisfactory Satisfactory 0\.00 3 01/05/2006 Satisfactory Satisfactory 0\.00 4 06/20/2006 Satisfactory Satisfactory 0\.00 Moderately Moderately 5 02/02/2007 0\.00 Unsatisfactory Unsatisfactory Moderately Moderately 6 12/05/2007 0\.00 Unsatisfactory Unsatisfactory Moderately Moderately 7 06/30/2008 0\.00 Unsatisfactory Unsatisfactory Moderately Moderately 8 12/16/2008 0\.00 Unsatisfactory Unsatisfactory Moderately Moderately 9 06/04/2009 0\.00 Unsatisfactory Unsatisfactory Moderately 10 12/21/2009 Moderately Satisfactory 0\.00 Unsatisfactory Moderately 11 06/30/2010 Moderately Satisfactory 3\.42 Satisfactory 12 02/15/2011 Satisfactory Satisfactory 9\.94 Moderately 13 08/10/2011 Satisfactory 11\.51 Satisfactory xx  Moderately 14 12/05/2011 Moderately Satisfactory 13\.50 Unsatisfactory H\. Restructuring (if any) Restructuring Board ISR Ratings at Amount Reason for Date(s) Approve Restructuring Disbursed at Restructuring & Key d PDO DO IP Restructuring Changes Made Change in USD millions 01/19/2007 MU MU 0\.00 To replace the currency conversion letter 09/04/2008 MU MU 0\.00 (i) To increase the percentage of financing under the Loan through the adoption of Mexico’s Country Financing Parameters; (ii) cancel Component 5; (iii) reallocate the proceeds of the Loan; (iv) extend the Closing Date to December 31, 2011; and (v) increase the amount of the Authorized Allocation of the Special Account 07/02/2009 MU MU 0\.00 To accept BANOBRAS’ request for cancellation of the amount of US$16\.5 million (effective May 4, 2009) from the unwithdrawn Loan balance, thereby reducing the total Loan amount to US$13\.5 million 01/19/2010 MU MS 3\.42 To include the provision of works’ supervision as eligible works under subprojects xxi I\. Disbursement Profile xxii  1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Institutional Context of State Courts 1\. Mexico’s justice system is structured in two tiers: State and Federal\. The state system is comprised of 31 state courts and the courts of the Federal District, each with its respective ancillary institutions (Attorney General’s Office, Ombudsperson’s Office)\. The courts generally handle matters including amparos3 from state court systems, and labor, agrarian, fiscal, bankruptcy etc\. The legal framework for the court system is detailed in the Federal Constitution of Mexico, state constitutions, the Organic Laws of the state court systems, as well as procedural laws regarding civil, family and criminal matters\. 2\. State courts and other state justice sector agencies are independent of the federal system\. At the time of the appraisal, there were a total of about 6,000 judges in Mexico including both Federal and state systems (justices, judges, judges of the peace etc\.) This is about one judge for every 16,800 persons\. About 3,600 belonged to the state judicial branches (about 28,000 persons per judge), and the rest to the federal judicial branch and administrative courts at the federal and state levels\. 3\. The state court systems lacked adequate financial, human and other resources to meet the accumulated and growing demand, and the social and economic needs of the population\. State courts’ were weaker than the federal courts\. The overall judicial system received about 1 million new cases per year, including civil, family and criminal matters\. At the time of appraisal, reviews indicated that about 80% of all judicial cases in Mexico, or some 800,000, were handled by state court systems\. The typical proportion of cases heard in state courts was 60% civil, 20% family, and 20% criminal, respectively\. 4\. The weaknesses of the state court systems were divided into external and internal problems\. The external weaknesses identified included: low public confidence in the courts, subordination of state courts to the federal courts through the use of amparo, confusion regarding the jurisdiction of judicial authorities in commercial cases, among others\. The internal weaknesses included poorly designed policies, weak judicial independence (due to occasional problems with political and media pressures), weak monitoring of professional performance, lack of institutional capacity and resources, and overly formal and deficient procedures that stemmed from a lack of adequate and up-to- 3 Amparo is a citizen judicial action to protect the individual’s constitutional rights\. 1 date legal frameworks\. Functional weaknesses included inadequate case management, significant caseload delays, insufficient statistical registries, inefficient bailiff and clerk operations and supervision, and uneven workload distribution, among others\. 5\. In response to these issues, some states had already advanced judicial modernization efforts, although with limited impact\. Various States were in different stages of implementation\. However, across the board there were institutional problems such as weak strategic planning and capacity\. There was also a need for better measurement of results, appropriate incentives for change, citizen participation and sharing of good practices and knowledge so that the pace and impact of modernization efforts could be improved nation-wide\. Weak coordination and learning also affected most judiciaries\. 6\. The State Judicial Modernization Project was designed after a detailed diagnosis of the weaknesses of state courts\. This was based on the inputs from consultative workshops with state court judges and administrators in sixteen (16) different state courts as well as consultations with users, and the review of prior studies\. Consequently, the Project was built around the following six strategic choices\. They were to: ï‚ Focus on a few states and support institutional development of the judiciaries through the provision of a flexible set of judicial modernization building blocks to develop strategies; ï‚ Promote the development and implementation of integrated state judicial branch modernization plans with a participatory “learning while doingâ€? approach\. The aim was to ensure demand-driven commitment, provide real impact assistance for results, and adopt a flexible approach for project development and implementation\. This was also key to overcoming resistance to change, and building judicial leadership\. Although time consuming, this approach was considered best suited to such complex changes as reforming and modernizing judiciaries\. This approach could help promote synergies among states and judicial institutions, and contribute to saving costs; ï‚ Adopt a flexible approach for Project development and implementation because of the need for open-endedness in addressing 32 states with diverse interests and requirements, as well as to overcome the resistance to change and ensure the commitment of the judicial leadership; ï‚ Leverage partnerships where possible, especially for access to justice and transparency related activities\. A broad and innovative set of measures would be promoted by Participating States under the modernization plans, with special emphasis on the assessment of disparities (supply and demand gaps) and building partnerships between judicial branches, Banco Nacional de Obras y Servicios Publicos (BANOBRAS), Comisión Nacional de Tribunales Estatales (CONATRIB) and national universities with public, private and social institutions at all levels to begin to address this major challenge\. BANOBRAS, a decentralized federal financial institution and development bank, focused on financing major public sector investments in Mexico at the subnational level, was selected as the main counterpart for the implementation of the overall credit line\. 2  ï‚ To concentrate on knowledge-sharing and transparency of information to help raise awareness, build consensus, generate support, improve the knowledge base for reform, and deepen understanding of the state courts’ roles in social and economic development; ï‚ To develop capacity of BANOBRAS in a new sector, through semiannual implementation reviews to be conducted in collaboration with CONATRIB and others\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 7\. The PDO was closely aligned with the improvement of the institutional performance of state judiciaries\. According to the PAD, the PDO was “to support the improvement of institutional performance of judiciaries in a few states through BANOBRAS's credit program for state judicial modernization by learning while doing\. In these states, the Project would: (a) strengthen institutional capabilities, organizational culture and knowledge; (b) strengthen efficiency and effectiveness of judicial services; (c) improve judicial transparency; (d) increase access to justice; and (e) support Project coordination, monitoring and evaluation, and learning, including consultation with Project stakeholders\.â€? The key performance indicators identified in the PAD include stakeholder satisfaction on the efficacy of modernization activities and improved capacity building and communication practices\. 8\. On the other hand, the Loan Agreement provides a slightly different formulation of the PDO\. “The objective of the Project is to assist the Borrower with the implementation of its judicial modernization credit program by supporting the efforts of the Participating States to: (a) strengthen justice sector institutions and promote cultural change and knowledge sharing among such institutions and with civil society; (b) develop efficient and effective judicial services; (c) increase judicial transparency; (d) enhance access to justice for the poor and disadvantaged populations of the Participating States; and (e) disseminate good practices and learning-by-doing strategies within and among Participating States; and promote efficient monitoring and evaluation procedures, including consultation with Project stakeholders\.â€? 9\. For purposes of this ICR, the project performance will be assessed on the basis of the Loan Agreement PDO formulation\. While there is no substantial difference between the formulation of the PDO in both documents, in consultation with the Bank’s Legal Vice Presidency it was determined that the Loan Agreement is the only legally-binding document, and the PDO stated therein had to be tracked during Project life\. Moreover, as opposed to the PAD prepared by Bank staff, the Loan Agreement was negotiated with BANOBRAS (the Borrower) leading to a slightly more specific formulation of the PDO that provided adequate parameters about the operation of the credit program (support effort of participating subnationals) and its potential beneficiaries (the poor and disadvantaged for access to justice activities) that could serve as better basis for measuring results\. 3 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 10\. The PDO was not revised but a Tier I restructuring process was advanced to that end\. Even though the Bank project team, BANOBRAS, the Government of the Federal District (GDF) and the TSJDF worked for more than a year on a level 1 restructuring, this proposal was not approved\. By May 2009, it was determined that the only participating state would be the Federal District (DF) that had selected only few of the activities included in the broad ‘menu’ provided by the project appraisal document (PAD)\. At that time the Bank project team started a level 1 restructuring process\. The proposed restructuring would have updated the original PDO to reflect the objectives of the only State Judicial Modernization Plan financed by the project\. As a consequence, the project team and the country partners intended to narrow down the PDO to “assist the Borrower with the implementation of its judicial modernization credit program by supporting the efforts to: (a) strengthen justice sector institutions; (b) develop efficient and effective judicial services; (c) increase judicial transparency; and (d) facilitate efficient monitoring and evaluation processes\.â€? After protracted discussions with BANOBRAS, the GDF and the TSJDF, until May 2011, the project team prepared a restructuring package that was circulated for clearance in June 2011, including the draft Amendment to the Loan Agreement prepared by LEG\. 11\. Nevertheless, the Bank decided to suspend the restructuring process in July 2011 and then cancelled it in September 2011\. As it was by then less than six months before the Closing Date (December 31, 2011) and with most of the disbursements already made, the value-added of pursuing a restructuring would be minimal\.4 The processing of the restructuring was delayed by protracted discussions on the draft legal amendments between BANOBRAS and the Bank in order to correct flaws in the Project design at entry\. 1\.4 Main Beneficiaries 12\. The main beneficiaries of the Project were the staff and users of the targeted courts, although some benefits were also designed to reach the wider population of the target areas\. For the efficiency and effectiveness activities financed by the project, the beneficiaries were users of justice services coordinated by the court offices of the participating judiciaries\. Similarly, the beneficiaries of the transparency and accountability activities were all state citizens, as that component was designed to strengthen the capacity of the state level\. In the end, as the only participating judiciary was the TSJDF, a total of 69 courts, their users and population served were targeted by the project\. This Subproject in one of the largest metropolitan areas of the World with the TSJDF court system serving a total population of more than 10 million\. With regards to 4 See Appendix B of the ICR Guidelines of August 2006 updated on October 5, 2011 on rating the outcome of projects with formally revised objectives\. 4 the promotion of the program at a sub-national level, the Bank, SHCP and BANOBRAS organized 16 workshops on Judicial Modernization, in which state-level authorities (Governors and Secretaries of Finance) and high-level authorities from the state’s judiciaries (Magistrados) participated\. These workshops were aimed to invite local authorities to join the Program through a credit line offered by BANOBRAS\. Although the promotion of the program was intense and remained as a continued effort along three years, covering from 2005 to 2008, only one participating state the Federal District was incorporated to the program\. 1\.5 Original Components (as approved) A\. Strengthening institutional improvement, organizational culture and knowledge diffusion (Appraisal US$ 7\.5 million, Actual US$ 3\.38million)5 13\. Component 1 emphasized strengthening institutional capabilities, development of a culture of service and increasing knowledge about justice institutions and their operations\. It also included strengthening jurisdictional processes and raising awareness of the judicial function\. It could potentially encompass: (a) improvement of the capabilities of judges and staff in such areas as strategic planning and budget programming, judicial organization, technology use, dissemination of institutional innovations, sharing modernization plans with stakeholders, encouragement of civil society to participate in the evaluation and feedback on institutional transformations and impacts; (b) awareness raising of judicial operators to act consistently with a culture of service and continuous improvement by focusing on human resources, knowledge development, leadership development for change management and promotion of public outreach and educational campaigns; and (c) sharing knowledge with local, national and international judiciaries and other institutions involved in judicial modernization\. The specific activities were to be identified in the state Judicial Modernization Plan of each participating state\. B\. Improving efficiency and effectiveness of judicial services (Appraisal US$ 13 million, Actual US$ 5\.91million) 14\. Component 2 addressed improving the efficiency of judicial branches and the effectiveness of judicial decisions to raise productivity and quality while reducing costs and delays\. It could potentially encompass: (a) the better design, follow-up, control and evaluation of judicial policies with respect to jurisdictional and administrative management; (b) improvement of the judicial branch management model, procedures and organization through reorganizing functions, optimizing and rationalizing the use of resources, developing new working methods, systematizing jurisdictional and administrative procedures, defining case backlog reduction programs, and rationalization of case distribution among courts; (c) design and implementation of a judicial career 5 Only Bank financing is reflected in the actual estimates\. 5 system with emphasis on professional development and independence, with suitable incentive systems; (d) systematization and automation of procedures focused on case management and documentation for the Superior Tribunal of Justice, first instance courts and other courts, and finance and human resources systems for the Judicial Branch’s administrative structure and/or Judicial Councils; (e) development of training, research, information and document centers for judges and operators at all levels; (f) development of information for decision making and interpretation; (g) provision of equipment and infrastructure for designing and implementing of ICT plans with comprehensive information and technical specifications; (h) design and implementation of plans for construction, rehabilitation and remodeling of courthouses and judicial offices; and assistance for pre-investment studies on further enhancement of the efficiency and efficacy of the Judicial Branch\. Specific activities would be identified in each state Judicial Modernization Plan\. C\. Increasing judicial transparency (Appraisal US$ 4\.5 million, Actual US$ 2\.03 million) 15\. Component 3 was designed to promote judicial transparency\. This block could potentially encompass: (a) creation of new or the strengthening of existing organizational units responsible for the dissemination of information about jurisdictional and administrative procedures, and for the management of judicial documentation to support judges and judicial operators, including the establishment of judicial information and documentation centers and information and citizen orientation offices; the carrying out of outreach campaigns to provide information about the functioning and structure of the judicial system; and the development of annual performance reports by the Judiciaries including relevant auxiliary institutions; (b) development of discipline and accountability mechanisms for judges and judicial operators by developing a Judicial Code of Ethics and appropriate sanction mechanisms, a system for the receipt of complaints against judicial operators and documenting the outcome of investigations, accountability mechanisms for personnel of the Judicial Branch; (c) organizing events disseminating the benefits of an enhanced transparency of judicial processes, such as, the strengthening of oral trials; and (d) carrying out studies and research on improving transparency about discipline systems, access to information, accountability systems and judicial ethics\. Specific activities had to be identified in the particular state Judicial Modernization Plans\. D\. Strengthening access to justice for all users(Appraisal US$ 5\.0 million, Actual US$ 2\.25 million) 16\. Component 4 would increase accessibility to justice administration by reducing barriers to services\. This block could potentially encompass: (a) development of special programs for women, minors, indigenous peoples and other poor and socially disadvantaged users of the judicial services and small entrepreneurs, such as outreach events to provide citizens with a greater understanding of the judicial branch, of their rights and responsibilities, and help judges to gain a greater understanding of the realities of their social context; school orientation and education programs for children and adolescents to gain a greater understanding of justice administration; and community 6 outreach seminars on gender-based violence; promoting a gender dimension of judicial systems; and access to justice for indigenous populations; (b) creation of new, or the strengthening of existing alternative dispute resolution institutional mechanisms, including awareness-raising and educational campaigns; (c) development of innovative programs aimed at diversifying the range of judicial services, such as strengthening of existing small claims justice at the municipal level, creation of mobile small claims courts in judicial districts, and establishment of citizen information and orientation centers; (d) development of training programs for public defenders, legal aid providers and staff of public prosecutor’s offices, including the development of a pilot legal aid and orientation program, and the organization of workshops and seminars to develop public consensus on problems facing the Judiciary; (e) development of programs to improve the interactions between the Judiciary and legal professionals, including private attorneys and bar associations; and (f) carrying out of studies for the strengthening of access to justice for the public at large, with special emphasis on the poor and disadvantaged populations\. Specific activities eligible for financing would be determine in the State Judicial Modernization Plans\. E\. Project Coordination, Monitoring and Evaluation (M&E), and Learning (Appraisal US$ 5\.0 million, Actual: component dropped) 17\. Component 5 would support standard coordination, and monitoring and evaluation activities\. The component was divided in two areas: (i) support for the design and operation of the state PCUs, promotion of good practices and knowledge sharing and (ii) support for strengthening BANOBRAS’s capability to supervise the Project, conduct semi-annual M&E reviews, promote learning and prepare future projects\. 1\.6\. Revised Components 18\. Component 5 was dropped as part of the 2008 restructuring and was never implemented\. The rationale for this restructuring was that the BANOBRAS organizational structure (designed to support large infrastructure investments at the state and local levels) and internal financial policies (not to assume financial liabilities to support routine credit management activities) were not consistent with the scope and concept of this component\. Instead, it was agreed the Bank’s and BANOBRAS’ usual monitoring and evaluation policies and procedures would be applied to the State Judicial Modernization Plans, and that specific M&E activities would be included as part of such Plans for the sub-nationals to carry such activities with their own resources\. The proceeds of the loan being allocated to this component were transferred to Component 2 (Improving Efficiency and Effectiveness of Judicial Services)\. 19\. In conjunction with SHCP, BANOBRAS, GDF and TSJDF, the Bank project team intended to revise the description of the project to align it with the TSJDF subproject\. The restructuring intended to reflect the fact that only one Judicial Modernization Plan (the TSJDF’s) would be financed and the PDO and project description of 2004 were significantly broader than the limited scope of the TSJDF subproject\. However, this restructuring was not finalized for reasons discussed in 7 paragraph 10 above\. The proposed restructuring would have substantially narrowed down the scope of BANOBRAS credit line financed by the Project\. Only activities that had been effectively selected by the single participating judiciary (the TSJDF) would have been left in the project description and would have been condensed into three components on (i) Strengthening Institutional Capabilities, Culture and Knowledge; (ii) Efficiency and Effectiveness of Judicial Services; and (iii) Increasing Judicial Transparency\. 1\.7\. Other significant changes 20\. The Loan Agreement was amended four times: (a) on January 19, 2007 to amend the currency conversion letter; (b) on September 4, 2008 to: (i) increase the percentage of financing under the Loan through the adoption of Mexico’s Country Financing Parameters; (ii) cancel Component 5; (iii) reallocate the proceeds of the Loan; (iv) extend the Closing Date to December 31, 2011; and (v) increase the amount of the Authorized Allocation of the Special Account; (c) on July 2, 2009, to accept BANOBRAS’ request for cancellation of the amount of US$16\.5 million from the unwithdrawn Loan balance effective as of May 4, 2009, thereby reducing the total Loan amount to US$13\.5 million reallocating the proceeds of the Loan; and (d) on January 19, 2010 to include the provision of works’ supervision as eligible works under subprojects\. The Project was only extended once from the original closing date of September 30, 2010 to December 31, 2011\. 21\. In the original design, the eligible Subprojects would have had two sources of funding: the BANOBRAS credit line and the cash/in-kind contributions of the participating Sub-nationals\. In the particular case of the GDF/TSJDF Subproject, the Federal Government rules on the use of public debt limited the Bank/BANOBRAS financing to goods and works\. As a consequence, as part of the Subproject arrangements entered into between BANOBRAS and the GDF/TSJDF it was agreed that the GDF/TSJDF would finance with its own resources the technical assistance needed to carry out the non-work and non-good portion of the TSJDF Judicial Modernization Plan, in particular the advisory services required to make the integrated ICT solution operational\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 22\. This ICR considers the preparation, design and quality at entry unsatisfactory although the preparation and design of the project were highly participatory in nature\. They included consultative workshops with judges, administrators in five (5) state courts as well as consultations with users, and the review of prior studies, thereby providing broad diagnosis of the weaknesses of these state courts\. Bank coordination for consultations, with states was made through the CONATRIB in liaison with the SHCP and BANOBRAS\. This collaboration continued 8 during Project implementation, including additional consultation workshops in nine (9) state courts\. 23\. The Project suffered from serious delays in signature and effectiveness\. The Project was approved by the Board of Executive Directors on July 1, 2004 and the Loan Agreement was signed in November 21, 2005 and became effective in January 25, 2006\. The project did not have effectiveness conditions but signature was delayed for almost a year and half after Board approval because: (a) this was one of the first loans processed under an innovative financial design (a foreign currency loan convertible to local currency) that required initial fine-tuning by the Bank’s Treasury; and (b) while the interest of the potential participating states was not confirmed, BANOBRAS preferred not to incur in commitment fees for a loan that it was not sure it could pass through to the states under the credit line, until the subloans were entered into\. 24\. More seriously, the project was not ready for implementation\. Project design had various weaknesses that delayed implementation\. Main design issues were related to coordination between State Governments and Judiciaries, creditworthiness and financial terms and conditions, and BANOBRAS business focus\. The Project was originally designed to provide support to Participating States for the implementation of their respective Judicial Modernization Plans\. Sixteen (16) Modernization Plans were prepared (with Bank support) between 2003 and 2006\. However, until the DF signaled its interest to access the BANOBRAS credit program in November 2006 (one year after signing), the Borrower had been unable to confirm the interest of any state in taking a sub-loan\. The main reasons for reluctance by the states to participate were: (a) coordination between State Governments and Judiciaries, While the State Judiciaries were fully engaged by the Bank during the preparation of the Judicial Modernization Plans, failure to coordinate with the executive branches of the State governments, which are legally responsible for the financial decisions was reflected in limited or no interest in taking sub-loans even by the five (5) initial candidates; (b) creditworthiness, financial terms and conditions of the Loan: some initial candidates were not creditworthy, while others had alternative sources of financing at a cost lower than the cost of borrowing from the BANOBRAS credit program\. At that time, the financial markets reference rate resulting from the currency conversion determined a relatively higher financial cost for the program; (c) BANOBRAS business focus: BANOBRAS lacked expertise and capacity to promote judicial reform Projects as it traditionally dealt with large infrastructure projects and was not in a position to establish a specialized unit to handle this type of projects\. 25\. The DF was the only sub-national jurisdiction that confirmed its interest in the BANOBRAS credit line\. The Project was originally designed for an implementation period of five (5) years from 2005 to 2010\. However, because of scarce interest among the States in benefitting from BANOBRAS’ credit line for judicial modernization, by November 2006, only one, the DF had confirmed its interest\. Nevertheless, it took two years to formalize an agreement between BANOBRAS, and the GDF and the TSJDF because of: a) changes in GDF’s authorities as a result of the electoral cycle, b) negotiations of financial costs issues between the Bank, BANOBRAS and GDF; and (c) the stringent rules established by SHCP on projects financed by GDF debt and 9 guaranteed by the Federal Government, that included a requirement for a cost-benefit analysis – a critical aspect that had not been considered at the time of appraisal6\. After the financing cost issue was resolved by the Bank providing complementary technical assistance to off-set the high cost of borrowing (see discussion on paragraph 27), SHCP requirements were complied with, the sub-loan was signed in December 2008, ICB procurement process for the turn-key contract for infrastructure and information and communication technology (ICT) was initiated in early 2009 with contract signature on January 2010 that allowed project implementation to start\. 26\. Furthermore, Component 5 had to be dropped because of BANOBRAS internal financial policies\. These policies do not allow debt to finance activities related with credit processing that BANOBRAS typically carries out with its own resources (technical assistance or consultants’ services - typical inputs of monitoring and evaluation activities) – a constraint that should have been identified at Project preparation\. The Project’s monitoring and evaluation design was also weak\. The performance indicators identified in the PAD lacked sufficient specificity which compounded with the lack of baseline and target values did not provide for proper guidance on how to monitor and evaluate progress towards achieving the PDO\. 2\.2 Implementation 27\. The Federal Government’s commitment with state justice systems modernization was critical at a point when cancellation was being seriously considered\. After the August 2007 mission, the Project’s performance was rated unsatisfactory by the Bank and the possibility of cancellation was considered\. However, during the October 2007 meeting of the National Association of Judicial Operators (AMIJ), President Calderon reiterated the Federal Government’s commitment to State judicial modernization, and publicly requested BANOBRAS to establish the appropriate mechanisms to activate the Bank-financed Project to strengthen the States’ Judicial Branches\. SHCP took the lead on the Federal Government side to accomplish this policy objective in conjunction with BANOBRAS\. However, the only potential client with a strong interest in a sub-loan (the GDF/TSJDF) still faced the issue of the high financial costs\. As a result of a joint effort (BANOBRAS, SHCP, GDF, TSJDF, and the Bank) a mutually satisfactory resolution of this issue was reached (by the Bank setting off part of the financial costs through a complementary technical assistance package), while internal legal requirements for the sub-loan were met through the preparation of the cost-benefit analysis\. 28\. To rescue a Project that had no disbursements for three years, the Bank had to develop a multi-faceted strategy that addressed design and implementation issues in FY2008\. Main elements of that strategy were the following: (a) processed a 6 See Article 3 of the Federal Revenue Law (Ley de Ingresos de la Federacion) Available in http://www\.shcp\.gob\.mx/INGRESOS/Ingresos_ley/2012/lif_2012\.pdf 10 restructuring to modify some key aspects of Project design that had became dated after a long period of inactivity, basically some financial covenants, the cancellation of a component that was supposed to be implemented directly by BANOBRAS (mainly monitoring and evaluation, and learning activities among Participating States) and the extension of the Closing Date to December 31, 2011; (b) to offset the high financial cost of borrowing from BANOBRAS, the Bank developed an additional technical assistance program for the TSJDF on criminal justice to strengthen institutional capacities to implement an ambitious criminal reform package (comprising study tours, workshops and visits of top-notch international experts) that delivered the blueprint of a reform implementation plan; (c) facilitated the TSJDF engagement in a complementary program sponsored by the Bank and OECD (Paris 21) to strengthen its capacity to generate and analyze quality statistical information relevant for managerial decision-making processes; and (d) processed the cancellation of US16\.5 million from the Loan balance\. 29\. As the only sub-national jurisdiction that agreed to participate in the BANOBRAS’ credit line, the GDF/TSJDF exercised their right to select just a few of the activities eligible for financing under the Project\. The TSJDF Subproject therefore focused on the financing of the infrastructure remodeling (no construction envisaged) and information and communication technology (ICT) equipment required as a platform for the operation of an integrated network for the effective operation of key court services to users that complemented the TSJDF modernization efforts\. Due to constraints imposed by the internal regulations of SHCP for the GDF public debt, the TSJDF Subproject could not finance technical assistance or training out of Project funding but the TSJDF agreed to conduct the support activities required for the operation of the integrated network with its own budget resources\. 30\. The GDF was the most important sub-national the Project could have ever engaged in terms of the size and complexity of the DF Judicial Branch, the number of cases and users\. Within the framework of the overall Project, significant impacts and outcomes were expected from the successful implementation of this Subproject in one of the largest metropolitan areas of the world with the TSJDF courts serving a total population of more than 10 million\. The project was highly focused on ICT solutions for the benefit of TSJDF court users located in urban low-income areas\. 31\. Given the significant delays in subproject processing, the TSJDF adopted an innovative approach to procurement of works, goods and services through a single turn-key package\. The GDF sub-loan was finally signed on December 19, 2008 and the implementation of the DF Judicial Modernization Plan started in January 2009, under an innovative “turn-keyâ€? approach that consolidated infrastructure and ICT investments into a single International Competitive Bidding (ICB) package, thus avoiding fragmentation in the procurement processes\. This single contract was awarded in October 2009 and started implementation in January 2010\. Contract implementation proceeded smoothly and was completed in December 2011 allowing 100% disbursement of the subloan\. 32\. The Bank Project team the Federal Government and BANOBRAS were conscious that a very old PAD had to be thoroughly updated to reflect the reality of 11 the Project on the ground\. As the TSJDF subproject did not cover all the objectives or components initially envisaged in the PAD, and following the applicable Bank rules on restructuring, the Bank Project Team prepared a Level 1 restructuring proposal7\. That proposal would have changed the PDO to narrow it down to the particular objectives of the TSJDF Subproject\. The restructuring would have also included: (i) revisions to the components, subcomponents and activities included in the Project description to leave only the ones included in the TSJDF Subproject; (ii) changes in component-specific costs; (iii) changes in the description of disbursement categories; and (iv) changes to the broad indicators of the results framework to reflect the expected contribution of the TSJDF Subproject to the achievement of the revised PDO\. 33\. The restructuring package was prepared well in advance but it took longer than expected to finalize negotiations on the Loan Agreement between the Bank and BANOBRAS\. It should be noted that restructurings are not unilateral decisions taken by the Bank but require the advice and consent of the various signatories of the legal agreements\. Nevertheless, on September 2011, the Bank decided not to pursue the restructuring because it was by then less than six months before the Closing Date, among other reasons because the formalization of the amendment would involve a sub-national level government within a federal system, requiring additional consultation not only with the signatories of the Loan and Guarantee Agreements (Federal Government, BANOBRAS and the Bank) but also with the signatories of the sub-loan agreement (Federal Government, BANOBRAS, the Federal District and the TSJDF) (See Annex 10)\. 34\. Even though this restructuring was not processed, the Project still achieved the results expected under the TSJDF Subproject\. A significant portion of the components and activities included in the broad “menuâ€? of the Project description were carried out such as: (a) strengthening selected courts of the TSJDF and promote cultural change around a new court management model, while increasing knowledge sharing among the TSJDF and civil society around a revamped statistical system; (b) develop more efficient and effective judicial services in the target courts by implementing the new management model; (c) increasing judicial transparency through the TSJDF portal and the information generated through the integrated ICT system; and (d) enhancing access to justice for the poor and disadvantaged populations in the areas served by the targeted courts\. 2\.3 Monitoring and Evaluation Design, Implementation and Utilization 7 Level One restructuring applies to modifications in a project’s Development Objectives (DOs) or changes in the safeguard category—from a lesser category set in the Project Appraisal Document (PAD) to a Category A, or trigger of a new safeguard policy\. Level one restructurings are submitted to the Board of Executive Directors for approval under absence of objection (AOB) procedures\. 12 M&E Design 35\. The ICR considers the M&E design unsatisfactory\. The Project Design Summary (Annex 1 of the PAD) was supposed to guide the monitoring and evaluation of the Project\. However, it did not contain either baseline or clear target values for the performance indicators\. Also, the indicators were difficult to measure and were not particularly connected with potential Project outputs or activities\. The targets were not defined in a way that the intended strategic impact of the Project could be appropriately tracked\. More than indicators, the results framework contained principles that the States should follow in the design of their own Judicial Modernization Plans as the TSJDF did in its results framework\. M&E Implementation and Utilization\. 36\. Based on the general principles provided by the results framework of the PAD, the TSJDF Subproject developed its own robust set of input, output and impact indicators\. While guidance provided by the original Project’s results framework was limited, the TSJDF Subproject developed its own set of input/output and outcome indicators that were effectively tracked during implementation\. The TSJDF Subproject also made a significant contribution to the improvement of the monitoring and evaluation capacities in the TSJDF through the establishment of a specific coordination and implementation unit, provided with full-time staff in charge of monitoring and evaluation responsibilities, and coordination with the various units of the TSJDF engaged in the implementation of the subproject\. The single ICT network that allowed the integration of statistical data generated by all the TSJDF courts, and the Paris 21 program that helped improve the statistical analysis and reporting capacity of the Central Statistics Unit of the TSJDF\. This Coordination and Implementation Unit also complied with BANOBRAS’ Operational Manual to ensure monitoring and evaluation activities met the standards required by the Subproject Agreement\. 2\.4 Safeguard and Fiduciary Compliance 37\. The Project was rated as Category C and did not trigger any Bank safeguard policies\. The TSJDF Subproject did not include any activities on improved access of indigenous peoples to judicial services that had been originally envisaged in the PAD as there are no indigenous communities in the territory served by the courts targeted by the TSJDF Subproject\. This is a large metropolitan area, highly urbanized since the colonial times, where the indigenous communities have largely disappeared\. For this reason, in the implementation phase, the project had to focus only on the poor and disadvantaged communities served by the targeted courts\. 38\. BANOBRAS and the TSJDF were endowed with adequate management systems, and proficient staff\. There were no reported safeguard or fiduciary compliance issues, and no systemic issues with regard to quality and reliability of Project administration\. Agreed procurement schedules were closely complied with by the TSJDF 13 with the effective assistance of BANOBRAS and Bank procurement specialists (particularly between 2009 and 2010)\. The ex-post reviews found that the TSJDF had taken appropriate measures to strengthen procurement capacity and the rating was satisfactory\. Regarding financial management (FM), the annual audited financial reports arrived on time to the Bank, presented an unqualified opinion and were reviewed and found acceptable\. Also, as part of the supervision it was considered that appropriate Financial Management arrangements had been in place during the life of the Project\. 2\.5 Post-completion Operation/Next Phase 39\. Judicial Modernization continues to be a high priority for the TSJDF\. A Bank Judicial Sector Rapid Assessment and Action Plan (RAAP), currently under preparation, will look into the potential efficiency and effectiveness gains and performance improvements for the TSJDF courts involved in the provision of civil and commercial justice services with an aim to help improve the country ranking under the “Doing Businessâ€? contract enforcement indicator\. This RAAP will focus on the synergies that may arise from effective institutional arrangements for service delivery, proactive public-private partnerships, and the efficient allocation of resources\. The TSJDF has also started an innovative initiative to track progress under international standards, the first effort of its kind in the country and the region that have been already published and is accessible on-line\. The Bank may support a TSJDF proposal to the World Bank Nordic Trust Fund to support validation and dissemination of fair trial/due process indicators\. 40\. Some indirect benefits in terms of continuity of service delivery have also materialized\. Before the Project, the target courts of the TSJDF had permanent blackouts that often forced them to suspend services to the public for 15 to 20 hours per month (more than two working days) due to power outages\. The instability of the electrical power system affecting the operation of the courts and their services to the user was a major barrier to access\. The integrated ICT network has resulted in reduced operating costs and increased service life of computerized equipment, but the primary benefit has been uninterrupted service to the public\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 41\. The 2004 Country Assistance Strategy of the World Bank Group in partnership with the United Mexican States highlighted the importance of assistance to the judicial system, which provided inefficient and inadequate services\. In the CAS discussion by the Executive Directors in April 2004, it was agreed that the institutional reform agenda, as outlined by Mexico’s 2001-2006 National Development Plan, was fundamental to improve basic services, especially for the poor\. Furthermore, the National Development Plan assigned a high priority for improving the justice sector\. The CPS of 14 2008 8 as well as the CPS Progress Report for the period of FY08-109 acknowledges the project’s contribution to the Bank’s broad based institutional strengthening approach\. Thus, the objective of the Bank’s partnership with the state judiciaries to undertake a progressive judicial modernization process to strengthen the state courts and make their operations more transparent was entirely aligned with the national plan\. The 2008 CPS noted that strengthening institutions remains one of the key country development goals that the Bank will continue to support through this Project in order to improve transparency perceptions (Mexico ranked 70" out of 163 in Transparency International index) and level of corruption (3\.3 out of 10 also under Transparency International)\. State judiciaries were considered critical to achieve this goal by improving the overall functioning of, and perceptions about, public sector\. 3\.2 Achievement of Project Development Objectives Rating: Moderately Unsatisfactory 42\. The achievement of the PDO was moderately unsatisfactory because it was broader than the objective of the TSJDF Subproject that was actually implemented\. The Project improved the capacity and performance of the TSJDF in four areas of the original PDO: (a) strengthening institutional capability for continuous service delivery in four (4) critical court locations through the integrated ICT network; (b) improving efficiency and effectiveness of judicial services through the new court management model supported by that ICT network; (c) enhanced judicial transparency by disseminating reliable information about the operations and performance of the four target courts; and (d) increasing access to justice for the disadvantaged groups living in the areas served by the same four (4) court locations\. However, once it was determined that there would be no other takers of BANOBRAS credit line for State Judicial Modernization, the disconnect between the PDO and the TSJDF objective should have been corrected by a Level 1 restructuring\. 43\. By contrast, the achievement of the TSJDF Subproject’s development objective was highly satisfactory\. The objective of the TSJDF subproject was: (a) to strengthen the capability of the TSJDF to provide continuous service delivery in four (4) critical court locations; (b) improve its efficiency and effectiveness through a new court management model supported by an ICT network\. The key performance indicators were: (a) User service applications uploaded to the institutional ICT network that serves as backbone of the management model increase user confidence and stakeholder satisfaction; and (b) new ICT network provides timely information on demand and supply of justice services in the courts targeted by the Project\. Training and knowledge-sharing were provided to support the implementation of the new management model\. Under the 8 Report No 42846-MX 9 Report No 52776-MX 15 subproject, a new management model was pursued\. Specifically, the key modernization activity financed was an integrated ICT solution to support the TSJDF's new information model for decision-making which is now operational in 69 courts in the four locations selected for the subproject (Reclusorio Norte, Reclusorio Sur, Reclusorio Oriente, and Santa Marta Acatitla) in low income areas\. In parallel, the TSJDF, with its own resources developed and updated the court services that would be operating through this ICT network, thereby effecting a major qualitative leap in TSJDF’s new management model based on reliable information\. This new management model that provides information for decision-making regarding financial, material and human resources optimization\. It provides information that is currently used to prepare and implement a results-based budget with previously defined indicators\. The system has also provided tools to the judicial authorities to prevent and support the budget before the GDF Secretariat of Finance and the State Legislative Assembly of the Federal District\. The system has also optimized communications among the various criminal trial courts and between them and the administrative offices\. 44\. The ICT platform financed by the project in all target trial courts provides essential tools to improve service delivery\. TSJDF internal communications are increasingly paperless due to the ICT platform\. These courts also have improved communications with the Prosecutors office (Procuraduria General) and files are accessible to court on-line\. Once the TSJDF gets the case identification, the information existing on the case can be imported to criminal courts\. The new applications have allowed the preparation of monthly statistic reports that permit better monitoring of case processing times by judicial authorities\. Average processing times in target trial courts have been reduced to 2\.3 months (71 days at trial courts)\. TSJDF target courts clearance rate is 108\.6% of a total criminal workload of 20,589 cases (end 2011)\. Criminal trial courts have the best clearance rate at the TSJDF\. The infrastructure and equipment funded by the Plan in the target courts is ready to operate the new management model for the oral trial system with specialized technological tools (judicial management, courtrooms)\. 45\. Public information available has increased substantially\. 620,896 judicial decisions (including final judgments) have been filed in SICOR and are available for a fee to the TSJDF staff\. Access to these decisions by the public will be available by June 2012\. Since 2010, annual statistics reports have been published and disseminated\. Annual reports are also available on line\. The statistics portal in the TSJDF web page has 53 data banks available to the public on line on various subject matters\. There is an on- line judicial bulletin that provides the status and location of cases in courts\. In the four target criminal judicial centers, and in the buildings of Niños Heroes, Plaza Juarez, Rio de la Plata and Sullivan, there are 22 kiosks available to the public for such case status consultations\. 46\. The first survey on TSJDF user’s satisfaction was carried out by an independent survey firm\. More than half of respondents (55\.25 %) were satisfied with TSJDF services\. The level of satisfaction with the image, attention and functioning of the target criminal courts (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla) was 16 63%\. Regarding the level of courts compliance with international standards of due process under human rights treaties , 61% of those interviewed ranked the criminal courts (6\.2) in a range where 0 is the worst and 10 the best\. The level of satisfaction with the institutional actors involved in the process increases depend on the family’s monthly income of the users\. Users’ satisfaction reported by this survey is higher than the trust in the justice system reported for the whole country by Americas Barometer, LAPOP, in 2010\. Mexico scored 35\.5%\. 10 3\.3 Efficiency 47\. Net Present Value/Economic Rate of Return, Financial Rate of Return, and Cost Effective Analysis criteria were not applied to this Project\. The PAD estimated the fiscal impact of project to be about US$37 million over five years (about US$5 million total per state or about 1\.0 million per state/year), which ended up not materializing because there was only one taker of BANOBRAS credit line\. A cost-benefit analysis was conducted in 2008 to meet the Federal Government requirements for the GDF to enter into a sub-loan agreement with BANOBRAS under a credit program financed by external debt\. The cost-benefit analysis was approved by SCHP in May 2008 and served as the basis for the design of the TSJDF subproject documentation, including the specific monitoring indicators tracked during supervision and verified during the preparation of this ICR\. Consequently, sub-project design allowed a close monitoring of the connection between inputs-outputs–outcomes via the use of the performance indicators selected in the TSJDF Judicial Modernization Plan\. In particular, BANOBRAS and the TSJDF periodically reported, to the Bank’s satisfaction, on the progress towards the achievement of these indicators\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 48\. For the reasons explained above, this ICR considers the overall Project outcome rating to be moderately unsatisfactory, in spite of the TSJDF Subproject’s outcome being highly satisfactory\. The details on the achievement of the Project’s objectives and results indicators as demonstrated by the TSJDF Subproject are discussed in the data sheet and Annex 2\. 10 Hermann, Stefanie and others, “Confidence in the Criminal Justice System in the Americasâ€?, Americas Barometer Insights:2011 http://www\.vanderbilt\.edu/lapop/insights/I0862en\.pdf\. 17 3\.5 Overarching Themes, Other Outcomes and Impacts (a) The judicial statistical information System for decision- making purposes largely exceeded expectations\. 49\. The ICT platform established by the Project allowed the collection of statistical information beyond the target 69 courts\. Currently, statistical information is collected from all of the 278 TSJDF courts of all subject matters, 17 justice support offices and 13 administrative offices\. Moreover, socio-economic information is also collected by TSJDF for the National Institute of Statistics and Geography (INEGI)\. The ICT platform has also allowed the implementation of a pre-trial detention system capable to generating red flags or alarms for enhanced monitoring of the defendants rights and to better controlling compliance with due process standards\. 50\. The increased demand for statistical information has prompted the TSJDF to finance several studies with its own resources to expand links between the Judiciary and civil society\. With limited technical support from the United Nations High Commissioner for Human Rights, TSJDF has developed the indicators and conducted an initial pilot\. Also with FLACSO, the TSJDF carried out a case study to evaluate the application of human rights international standards on TSJDF final decisions\. With a local survey firm, EPADEC, the TSJDF performed a user satisfaction survey, an activity that the TSJDF expects to carry out every five years\. Finally with the Juridical Research Institute at the National Autonomous University of Mexico, the TSJDF has started an assessment to study a group of cases to measure judicial error\. These serious studies have started a new trend of involving civil society organizations in assisting the TSJDF to measure its own performance\. (b) Benefits to vulnerable groups 51\. While the TSJDF did not have specific activities for vulnerable groups’ access to justice, it adapted infrastructure to users’ needs\. The TSJDF subproject included information and orientation centers at the four targeted judicial buildings (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla) located in the vicinity of vulnerable group areas\. 302, 220 annual users of the four targeted courts represent 15% of the estimated 2,168,062 total TSJDF users\. But of actual users, 58\.8% are persons whose family income is less than US$450 per month, 30\.8% are also users whose families make between US$450 and US$1000 per month\. 39\.8 % of all users are women\. (c) Transparency Improvements: 52\. Project achievements in the areas of transparency/accountability were also substantial\. The TSJDF web site has a Transparency Portal that permits public consultation of the asset declarations of TSJDF staff and also of the TSJDF transparency indicators\. The web site also allows reviewing of the status of human rights due process indicators\. The Annual Statistics Report has a section on the number of complaints received by year on violations of the human right to a fair trial\. The Annual Report also 18 includes the number of judges that have been sanctioned (9 judges in 2010)\.The ICT platform has also allowed the TSJDF to comply with the new Transparency Law and it is able to provide answers to information requests that do not affect privacy rights in less than 7 days\. 53\. The installation of a security system that monitors the operations of the 69 target courts improved safety and transparency\. The security system, with 190 video cameras that monitor the activities inside and outside of the 69 target criminal courts plus improvements in power and lighting systems, has improved safety for staff, users, data and property\. This system is able to archive the images collected for a period of 30 days and has served to prevent cases of fraud or corruption, the loss of records and property, while it has ensured the safety of employees and users of the courts and ensured compliance with due process standards\. 11 A mainstream centralized server has increased information security and minimized the opportunities for the tampering of information\. (b) Institutional Change/Strengthening 54\. The TSJDF Subproject substantially strengthened critical elements of the TSJDF’s internal planning, monitoring and evaluation functions that had been previously weak or non-existent\. It radically changed justice services delivery in one of the largest urban centers in the world through an information system for target trial courts that proved to be very effective in terms of increases in the clearance rates, shortened case time resolution, and coordinated policy-making by the highest authorities\. 55\. Moreover, the TSJDF Subproject made a significant contribution towards improving the overall performance and institutional capacity of the TSJDF\. The Subproject piloted an information system in the criminal courts of four (4) locations, which was extended to other subject matters (civil, labor, family) with the TSJDF’s own financial resources\. The single ICT platform contributes to enhanced accountability and transparency, especially when helping to disseminate planning/monitoring information for evaluating court performance generated by the Statistical Unit established and operational with support of Bank complementary non-lending technical assistance\. (c) Other Unintended Outcomes and Impacts (positive or negative) See section 3\.5\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not Applicable 11 After the public debate provoked by the film ‘Presunto Culpable’, the TSJDF has adopted special measures to prevent any case of violation of basic human rights\. 19  4\. Assessment of Risk to Development Outcome Rating: Low 56\. It is unlikely that any changes occur in the near future which could be detrimental to the ultimate achievement of the TSJDF’s Subproject development outcome\. The TSJDF Subproject received the full-fledged support of the Chief Justice (recently re-elected for an additional 4-year period) even though it had been designed under a previous administration\. The Chief Justice has retained the specialist on multilateral-financed project design and implementation as part of his regular staff and has indicated his interest in continuing receiving Bank assistance through a proposed RAAP\. The commitment of the TSJDF Management and Staff during the last two years of implementation of the Subproject provides reasonable assurances of sustainability in the years to come\. Main subproject outcomes (court management model, integrated ICT network, statistical unit) have been sustained after Project closing\. Operation and maintenance of the ICT platform has been financed by the TSJDF resources since the inception (the BANOBRAS credit program only financed the initial investments, not operating recurrent costs)\. The TSJDF authorities have confirmed their interest in continuing with the complementary non-lending technical assistance for the statistical unit and have requested additional support to enhance fair trial standards in accordance with international best practice\. 57\. Even though no Bank-financed follow up operation will take place, the stability of the TSJDF leadership and management provides good grounds for the sustainability and mainstreaming of the reforms the Subproject supported\. As judicial modernization has been incorporated into the Chief Justice’s reform agenda, it is expected that the TSJDF will provide appropriate resources to continue the reform path initiated by the Subproject\. The continuation of the Paris 21 statistical program and the carrying out of a RAAP in partnership with the Bank’s Financial and Private Sector Development Practice and particularly the “Doing Businessâ€? team signals the commitment of the TSJDF for a continued relationship with the Bank around an ambitious reform agenda\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Unsatisfactory 58\. The proactivity of the Bank team during the identification, preparation, and appraisal stages was insufficient to ensure participation of State Governments or to create demand for the BANOBRAS judicial modernization credit program\. The identification process focused on critical gaps and the need for new approaches to Mexico’s state justice sector\. The Project’s design process ensured that it was consistent 20 with the needs and priorities of the State Judiciaries identified by the main local stakeholders, as condensed in the 16 State Judicial Modernization Plans developed during Project preparation\. During appraisal, the Bank failed to take into account all major relevant technical and institutional aspects\. The Bank consistently maintained a superb working relationship with the State Judiciaries during the identification-to–appraisal period although that was not enough to ensure the commitment of the State Governments or prompt Loan effectiveness\. The five (5) letters of intent signed by State authorities during preparation neither materialized in applications for the BANOBRAS credit line by the State Secretaries of Finance nor was the Bank able to roll out an innovative financial product within in the time required to retain the interest of potential applicants to the credit line\. 59\. While the design was flexible enough to adapt to the varied needs and priorities of the States, there were some issues with the readiness for implementation as well as the monitoring and evaluation arrangements\. Consequently, the ICR finds that the Bank did not properly identify and assess the Project’s risks related to the rolling-out of its new financial product, did not achieve the actual engagement of State Executive Branches, did not anticipate the subnationals reaction to the high costs of borrowing from the Bank-BANOBRAS credit program and the Federal Government policy restrictions applicable to the use of external debt by the GDF, and therefore failed to put in place appropriate mitigation measures for these risks\. The fact that the only actual applicant (the GDF-TSJDF) had not signed any letter of intent suggests that while the team had been somewhat successful in attracting the initial general interest of a number of sub-nationals, it was unable to convert such interest into firm commitments to join the BANOBRAS program\. 60\. Neither of the benefits expected to be derived from successful Project implementation were clearly spelled out in a clearly articulated results framework\. The Judicial modernization Plans developed their own frameworks through intensive participation and consultation with local stakeholders but received little guidance in the task from the broad indicators in the PAD\. The logical framework developed for the TSJDF Subproject followed closely the outline of such principles two for the PDO and one per each component but had to identify baselines and numeric targets that were not even suggested by the PAD\. (b) Quality of Supervision (including fiduciary and safeguards policies) Rating: Moderately Satisfactory 61\. Supervision activities exceeded typical Bank standards\. In addition to at least two field trips a year, periodic video and audio conferences were held to closely monitor the progress of the TSJDF Subproject activities and to discuss implementation issues\. A Public Sector Specialist operating from the Mexico DF country office served as permanent liaison with counterparts in BANOBRAS and the TSJDF\. The Project had 21 only two Task Team Leaders during supervision, and was supported by a qualified team of local and international consultants, some of them based in Mexico\. 62\. The task team was complimented on several occasions for being extremely proactive in turning around a problem project\. Particularly after the 2008 restructuring, the team was complimented for helping BANOBRAS and the TSJDF to prioritize activities and speed up implementation while helping to explore alternative approaches such as a single “turn-keyâ€? contract\. The revision of the annual operations plan (AOP) after the restructuring helped to make the sequencing of Project activities more relevant to the achievement of the PDO\. Supervision improved under and new Bank team leader and the Management comments to the June 2009 ISR specifically congratulated the team for bringing this Project out of actual problem project (APP) status\. Particularly creative was the design of a complementary technical assistance package to address the client concerns about the extra financial cost of the Bank- supported credit line that had been a major obstacle in the entering of a sub-loan agreement by all interested sub-nationals\. 63\. However, failure to finalize the proposed restructuring at an earlier stage represents a major shortcoming of overall supervision\. After it was determined that only the TSJDF Subproject would be financed by the Loan, the Bank had the duty to report back to the Board that the very ambitious PDO was not achievable as originally envisioned because the only taker of BANOBRAS credit line had selected a narrower set of objectives and activities, as it was entitled to do under Project design\. Such restructuring would have ensured that the PDO and Project description would be fully consistent with what was happening on the ground during 2010-2011 as opposed to what was expected in 2004\. Failure to finalize that restructuring earlier impaired the quality of supervision\. By June 2011, six months before the Closing Date the restructuring would not have added significant value as the changes to the PDO and the indicators to reflect the reduced Project scope would have only applied to the remaining balance of the subloan (approximately US$ 4 million)\. A restructuring at that late stage would have not made a substantial difference in the assessment of Project PDO and implementation progress (IP) in the last ISR and on ICR ratings, as there was little time to show results under the reduced Project scope\. It was also believed that the ICR would be the right place to report on the achievements of the TSJDF subproject\.12 12 In 2009 the Bank and BANOBRAS had agreed to proceed with the cancellation of US$ 16\.6 million before the restructuring because that action would avoid BANOBRAS incurring commitment fees on the cancelled balance and followed a streamlined process that only required unilateral action by the Borrower while the restructuring required revising the language of most of the Loan Agreement\. The expectation that the restructuring would happen shortly thereafter did not take into account the complexity of such revisions\. In retrospect, as by that time it was already clear that the Project scope had to be narrowed down it would have been more effective to process a single restructuring (including the cancellation) instead of splitting it from the restructuring, so as to benefit from the high priority assigned by the Borrower to the cancellation\. 22 (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 64\. Overall the Bank performance is rated as moderately unsatisfactory\. Based on the above discussion, the ICR finds that while the Bank had major shortcomings at entry it effectively facilitated Project implementation by overcoming serious start up delays, removing critical unexpected bottlenecks, and engaging a critical sub-national client that was able to achieve in full the objectives of its own State Judicial Modernization Plan\. However, failure to process a restructuring to reflect the fact that the single taker of BANOBRAS credit line had selected only a few of the “menuâ€? of objectives/activities initially envisioned under the Project justifies a downgrading in overall Bank performance\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 65\. While the GoM and BANOBRAS reiterated their commitment to the Project at various points during Project implementation, failure to detect original design issues and to finalize the restructuring affected overall performance\. The Project was included as a key Bank assistance instruments in the 2007 CAS and the 2010 CAS Progress Report\. Furthermore, the GoM’s commitment to achieving the Project’s objectives remained consistent throughout Project implementation, in particular between 2007-2009 when President Calderon publicly ratified his Government support to this initiative and SHCP took over a very active role in finding a solution to the bottleneck that had delayed the signing of the sub-loan agreement between BANOBRAS and the GDF\. However, significant design issues that could have been detected earlier posed serious challenges to project start-up, and failure to finalize the proposed level 1 restructuring at an earlier stage, which affected the Bank’s performance, also impacted BANOBRAS as both partners were responsible for supporting effective project supervision\. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 66\. The overall performance of BANOBRAS as implementing agency was satisfactory\. A senior management team in the Technical Assistance and Multilateral Projects Unit took responsibility for Project implementation, in close coordination with other functional and territorial units of BANOBRAS that cooperated closely with the Bank team\. On regular basis, the BANOBRAS team verified compliance with the Project Operational Manual and Procurement Plan, and tracked the agreed indicators\. Thanks to the close working relationship between BANOBRAS and the TSJDF performance 23 picked-up dramatically in the last two years of Project implementation\. Generally, the BANOBRAS team: (i) quickly responded to the demands for assistance from the TSJDF in carrying out various project components; (ii) provided an effective liaison with the Bank and the TSJDF\. 67\. Fiduciary aspects were effectively handled by BANOBRAS\. The financial management system (including accounting, controls, auditing and reporting) was adequate and satisfied the Bank’s financial management requirements\. The TSJDF followed the procurement and financial management rules and procedures established for BANOBRAS credit lines, kept accurate records and accounts, and generated timely financial information\. Procurement of all works, goods and technical services under the Project followed the Bank Procurement Guidelines\. The delays of the first years of Project implementation were partially offset by the rapid implementation of the “turn-keyâ€? contract that packaged all goods, works and services between January and December 2010 with the assistance of the Bank’s procurement specialist\. 68\. BANOBRAS effectively coordinated implementation of technical and administrative aspects between the TSJDF and the Bank\. The financial management system provided by BANOBRAS (including disbursements, accounting, controls, auditing and reporting) was adequate and satisfied the Bank’s requirements\. BANOBRAS submitted quarterly and annual reports in a timely manner, based on the Project’s monitoring and evaluation system\. These reports provided valuable information on how the Project was progressing with disaggregated data\. BANOBRAS also supported the TSJDF in the preparation of the complex procurement documents required for an innovative “turn-keyâ€? contract that included the technical specifications for the civil works and the ICT equipment, as well as separate TORs for the supervision of the civil works\. 69\. BANOBRAS ensured that the participatory process followed during Project preparation reached an unusual number of stakeholders\. In order to generate momentum for change, efforts were made by BANOBRAS to involve as many stakeholders as possible in discussing policy options available and in the overall decision- making process that led to 16 State Judicial Modernization Plans\. This represents a record in the number of participatory exercises attended by hundreds of local stakeholders, not only for the Judiciaries but from bar associations, academic institutions and civil society organizations\. 70\. BANOBRAS, GDF and the TSJDF worked closely with the Bank’s team on a regular basis, and cooperated fully in addressing any issues detected during preparation or implementation of the relevant Subproject\. Appropriate levels of review and approval were in place; financial accountability was observed; expenditures were duly authorized; and documentation was properly maintained for periodic review\. The Project did not suffer from any counterpart funding problems as the GDF made appropriate budget provisions for the TSJDF\. Thanks to close cooperation between BANOBRAS and the TSJDF Loan Covenants were fully complied with (including the financial covenants related to audits), with no delays\. Audit reports were satisfactory, and 24 financial and procurement ex-post reviews were also acceptable\. At the appropriate time, BANOBRAS requested and processed the cancellation of the unused balance for approximately USD 16\.5 million equivalent\. 71\. The overall performance of the TSJDF was satisfactory\. TSJDF provided overall policy guidance through the Chief Justice working in conjunction with members of the Judicial Council\. The Chief Justice entrusted his Oficial Mayor (General Manager) the overall responsibility for Project implementation\. TSJDF’s administrative structure is designed along functional lines; for Project purposes the functional responsibilities were assigned to the Directors of three technical units (Informatics, Infrastructure and Statistics) that cooperated regularly with BANOBRAS and the Bank\. This group was responsible for the overall implementation of the Project, on the basis of the AOPs approved by BANOBRAS and the Bank\. 72\. The performance of the technical units of TSJDF was also satisfactory\. The Informatics and Infrastructure Directorates were responsible for the detailed technical design of the activities envisaged under the TSJDF Subproject\. Their Directors reported directly to the Chief Justice and the Oficial Mayor\. Minor staff turnover took place during Project implementation\. Generally, the three Directorates: (i) responded to the demands for assistance from the field units of the TSJDF in carrying out various Subproject components in four different locations; (ii) ensured an effective liaison with the decision-making levels of the TSJDF and promoted the adequate utilization of TSJDF’s installed institutional capacity; and (iii) ensured compliance with the Bank’s requirements in the areas of procurement, disbursement and financial management\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 73\. Overall Borrower performance was considered moderately satisfactory despite a moderately unsatisfactory rating\. BANOBRAS and the Bank could have been more proactive in finalizing the proposed restructuring at the appropriate time\. However, the satisfactory performance of both BANOBRAS and the TSJDF in the implementation of the only sub-project financed by the credit line largely offsets this shortcoming of project supervision\. 6\. Lessons Learned Lessons of Generic Application 74\. Institutional reform Projects in upper-middle income countries may be implemented directly by line agencies, sometimes with the support of other agencies experienced in Bank procedures\. In the justice sector where there is limited experience in the management of international cooperation, specialized Project Coordination Units (PCUs) staffed by experts with strong technical and professional qualifications have been the standard implementing arrangement\. PCUs are supposed to provide continuity and 25 credibility during implementation\. However, for the TSJDF Subproject, one of the most critical decisions taken early at the design stage was not to establish a PCU, but rather to delegate implementation responsibilities to three line Directorates, under the direct supervision of the Official Mayor who hired an external consultant with experience on international cooperation projects to work with him to handle day-to-day implementation\. The TSJDF Subproject success was closely related to the stability, continuity and capabilities of these line units that reported to the Chief Justice through the Oficial Mayor\. 75\. Access components in public sector projects may provide an appropriate interface between State institutions and vulnerable groups\. While focusing on internal strengthening, institutional reforms should also pay attention to demands of users or potential users, in particular from vulnerable groups\. The TSJDF subproject did not include particular activities to bring services to poor urban users of justice services; nevertheless, four court locations were strategically selected in the proximity to low- income neighborhoods and this selection produced positive results in terms of enhanced access\. Attention to this aspect is vital to achieve the Bank’s mandate to reduce poverty and strengthen democratic governance; strategic choices at the design stage may result in projects dealing both with public sector management and social development issues that require a multi-disciplinary approach and possibly a cross-sector approach\. Project Specific Lessons 76\. To measure Project success or failure, indicators are critical and should be chosen carefully and in the early stages of the project cycle\. Several criteria were used in the selection of the seven indicators for the TSJDF Subproject: linkage with the objective being tracked; likely availability of data; likelihood of measurable change within the Subproject lifetime; and ease of interpretation\. It was anticipated that indicators that met these criteria could be effectively followed up and they were effectively tracked\. By contrast, the very general and undefined indicators of the PAD logical framework were not very useful for the design of the particular indicators of the TSJDF subproject, beyond providing broad principles as guidance\. The attribution of outcomes to outputs was difficult or impossible, or results could only be identifiable at the input level\. Definition of baseline data must occur at the beginning of the Project or shortly thereafter\. Most baseline data and means of tracking performance and the TSJDF Subproject achievements did exist when the Subproject went into effect\. This was critical for establishing performance targets, focusing the executing agency on achieving them, establishing the monitoring and evaluation system, and allowing the Project to show progress\. To face the constraints of the Federal Government guidelines on eligibility of expenditures for public credit contracted by the GDF, the Bank correctly attached a technical assistance package to the subproject that provided the consultants services required not only to develop the Project’s M&E system but also a statistical system for the whole TSJDF\. 77\. Working at a subnational level poses additional challenges in a complex sector\. The TSJDF and other Mexican sub-nationals were affected by a broad and complex set of internal and external variables, which could not be fully anticipated at the 26 subproject design stage\. While the subproject was highly explicit in its goals and strategies, it also had flexibility to accommodate unforeseen situations, for example to adapt Project activities to new opportunities to advance deeper reforms such as the entry into effect of the new Code of Criminal Procedures, which was a priority for the new TSJDF and which also received Bank support through the complementary technical assistance package\. However, the complexity of working with subnationals was illustrated by the protracted and aborted restructuring process\. 78\. Major cancellations and/or reallocations impacting the PDO and results framework must be accompanied by comprehensive restructurings\. The completion of the processing of a restructuring close to 2 years after a major cancellation/reallocation took place reveals a critical shortcoming during supervision\. It distorted the “rules of the gameâ€? for the Bank and Borrower implementation teams as after the cancellation/reallocation they started to operate on the ground under the assumption of a reduced Project scope, in the expectation that the restructuring would be completed shortly thereafter, and made good progress under that assumption\. Unfortunately, the restructuring was never completed thereby generating a disconnect vis-à-vis the original PDO and results framework\. More proactive Management decisions should have been taken early in the process to either complete the restructuring shortly after the cancellation or not proceed with the cancellation until the restructuring affecting the PDO and results framework took place and was duly reflected in the legal agreements\. Justice sector reform specific 79\. A realistic assessment of justice sector issues at the early stages of the preparation process is essential as a basis for quality project design\. Project design should be based on a solid institutional assessment process that engages a range of justice sector stakeholders, not only justice operators\. Moreover, justice projects need to recognize a number of critical, exogenous variables in their risk-management model\. In this Project, although 16 State Judicial Modernization Plans had been prepared in close consultation with justice operators and users, the effort did not lead to an ability to manage risks and overcome implementation obstacles arising from lack of commitment of the State Executives, the complexity of the interfaces between the Federal and State Governments, or the lack of credit capacity of some of the original 16 states\. Justice Projects should avoid raising stakeholder expectations, and acknowledge policy constraints upfront\. Reform leaders should be aware of the risk of setting standards too high and of creating unrealistic expectations about what can be delivered\. Projects with relatively modest scope such as the TSJDF Subproject are able to achieve a few deeper changes, on a smaller scale\. The fact that the only taker of the credit line selected only a small portion of the “menuâ€? of objectives and activities included in the description of the Project suggests that the original design was overly optimistic about the ability to engage a large number of State judiciaries with multi-faceted needs\. 80\. Justice projects should be structured around a problem-solving strategy and should engage all actors required to implement a proposed solution\. Demands for assistance to this complex sector should be analyzed under a problem-solving framework 27 that looks at the functions to be improved and the services to be delivered\. Components and activities should be articulated around service delivery improvements\. i\.e\. practical solutions to particular problems\. While the PAD for this Project did not clearly follow this approach, its embedded flexibility allowed the TSJDF subproject to be developed with the appropriate geographic and thematic targeting (only four locations, only 69 criminal courts)\. Even in a geographically limited sub-national jurisdiction, it was not possible to cover the full territory of GDF with a single USD13\.5 million sub-loan or to address various thematic areas (civil, commercial, labor, family, administrative) at the same time; decisions on geographical or thematic areas had to be driven by a factual analysis of service demand\. As a consequence, the TSJDF Subproject only sought to ensure that citizens in a particular geographical area received a certain type of service, as in the case of the low-income Colonias and Delegaciones in the marginal areas served by the selected courts\. Judicial Branch Specific 81\. Civil society’s participation is critical at all stages of design and implementation of justice projects\. Through the advocacy role of civil society organizations, citizens are given a voice in the process of formulating public policies in relevant areas of institutional reform\. To strengthen these constituencies, justice projects need to work with bar associations, academic institutions and other organizations that are at the forefront of reform efforts, or that can take advantage of reform opportunities\. As recorded in the PAD, broad inclusion of civil society in this Project was the right choice\. Coalition-building included allies from both inside and outside the State Judicial Branches, and allies such as CONATRIB, judges, advocacy groups, business associations, and the media\. During implementation, the involvement of these organizations was maintained through periodic feedback mechanisms\. 82\. Support to infrastructure refurbishment should be considered when it is linked to changes in core management processes and functions\. While justice institutions may need modern buildings, equipment and ICT technology, the essence of justice sector reform is institutional change\. It demands changes in the court’s administrative and managerial culture, replacement of obsolete procedures, and reengineering of internal processes\. The TSJDF Subproject linked substantive elements of institutional reform to limited infrastructure construction/remodeling with a clear and limited geographical focus\. Subproject design also ensured that the investments in infrastructure and equipment did not divert attention from re-engineering the internal process\. The absence of suitable facilities for court operation was identified at the design stage as a major obstacle to the TSJDF’s chances of providing adequate services, in particular for vulnerable communities\. Dilapidated facilities made it unlikely that organizational changes, internal communication improvements, and the ICT system’s upgrading would generate the expected service improvements\. Financing rehabilitation/refurbishment of courts buildings was justified to the extent that infrastructure changes were closely aligned with new work processes designed to increase operational effectiveness, for example, the adoption of new court management models for the delivery of justice services that allowed these courts to upgrade the range 28 of services they could provide\. The fact that the ICT network supported successfully not only the M&E system of the Subproject, but it contributed also the set up of a brand new statistical system for the whole TSJDF confirms that the close connection between the ICT investments supported and a major institutional reform\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Borrower’s comments on an earlier draft, received on June 26, 2012, have been reflected in this final version\. However, BANOBRAS disagreed with its own rating as Government agency which considers it to be Moderately Satisfactory (the same obtained as Implementing Agency)\. See Annex 7\. (b) Co-financiers Not applicable (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society) Not applicable\. 29 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate (USD Estimate (USD Appraisal15 millions)13 millions)14 A\. Strengthening Institutional Capabilities, Culture and 7\.50 3\.38 25% Knowledge B\. Improving Effectiveness and Efficiency of Judicial 13\.00 5\.91 43% Services C\. Increasing Judicial 4\.50 2\.03 15% Transparency D\. Strengthening Access to 5\.00 2\.25 17% Justice to All Users Total Baseline Cost 30\.00 13\.5 100% Physical Contingencies 0\.00 0\.00 0\.00 Price Contingencies 0\.00 0\.00 0\.00 Total Project Costs 30\.00 0\.00 Front-end fee PPF 0\.00 0\.00 \.00 Front-end fee IBRD 0\.3 0\.3 100\.00 Total Financing Required 37\.50 13\.5 (b) Financing Source of Funds Type of Appraisal Actual/Latest Percentage Co- Estimate Estimate of financing (USD (USD Appraisal millions) millions) Borrower and Sub-borrower 7\.50 3\.00 40% International Bank for 30\.00 13\.5 45\.2% Reconstruction and Development 13 Revised figures after the project restructuring approved on 08 August 2008, including both Bank and Borrower contribution 14 Only Bank financing reflected 15 Percentage of Total Bank financing 30 Annex 2\. Outputs by Component Background The TSJDF Subproject was part of a larger credit line in which several other Mexican states were expected to participate\. For the reasons discussed in the main body of the ICR, the only subnational that participated in this credit line was the TSJDF\. The TSJDF Subproject financed a series of priority activities included in the TSJDF’s Judicial Modernization Plan\. The Subproject could only finance the infrastructure and equipment necessary to implement such activities because under Mexico’s applicable DF public debt regulations, Bank resources could only be used for those purposes, while the related technical assistance had to be financed by the TSJDF’s own resources\. However, as a part of an agreement to offset part of the Sub-loan financial costs, the Bank was also able to provide non-reimbursable technical assistance in two areas: (a) The joint World Bank-OECD Rapid Data Processing (RDP) program\. This program began in early 2009 with a visit by RDP team and included subsequent visits of technical experts to improve the TSJDF statistical capacity; and (b) Development of a strategy for the adoption of oral-based trials\. This activity began with a study tour of five (5) TSJDF representatives to Santiago, Chile in July 2009 to analyze that country’s experience with the implementation of an oral-based justice system and continued with a series of visits to the TSJDF, between September 2009 and June 2010, by international experts to prepare a TSJDF strategy for the implementation of similar procedures\. The original PAD results indicators were not appropriate to measure the impact of the TSJDF Subproject\. The PAD indicators were not direct, adequate or attributable only to any particular Bank-financed intervention\. Instead, they provided only general principles about how those indicators could be developed in the context of a specific Judicial Modernization Plan\. For this reason, at the signing of the TSJDF Sub-loan in 2008, as part of the operational plan a set of specific input indicators was agreed with the TSJDF\. The TSJDF reported on these input indicators throughout Project implementation\. The Bank Project Team also submitted a proposal to modify the original PAD indicators through a level I restructuring, but this process was not completed\. Therefore, this ICR had to establish the connection between the TSJDF Subproject achievements, and the original PAD indicators using a series of outcome/result indicators agreed with the TSJDF as part of its Judicial Modernization Plan\. Project Development Objective Indicators Indicator No\.1\. Stakeholder satisfaction on the efficacy of modernization activities Baseline data PAD: None 31  ISRs: Low user confidence in justice services and stakeholder satisfaction\. Baseline data to be inserted upon each state judiciary’s formal inclusion to the Project\. TSJDF Subproject: 0 user service applications uploaded to the institutional ICT network\. Low user confidence and stakeholder satisfaction in TSJDF services\. End target PAD: None ISRs: Improved user confidence as per surveys, studies, focus groups, community and vulnerable group reviews\. TSJDF Subproject: Ten (10) user service applications uploaded to the institutional network that serves as backbone of the management model increased user confidence and stakeholder satisfaction in TSJDF services according to latest information available\. Status as of May 2012: Partially Achieved On the basis of the only subproject financed under the Project (the TSJDF’s) and the surveys conducted, stakeholder satisfaction with the only participating subnational following modernization activities financed by the Project have increased\. 5 user service applications uploaded to the ICT institutional platform have increased confidence and stakeholder satisfaction with the TSJDF according to surveys\. According to a survey carried out by EPADEC for the TSJDF, more than half of respondents (55\.25 %) were satisfied with TSJDF services\. Women were slightly less positive (52\.6%) than men (57\.9) (see Figure No\. 1)\. The satisfaction level did not vary significantly if the respondent was a plaintiff (52\.4%) or a defendant (54%)\. The level of satisfaction with the image, attention and functioning of the target courts (criminal and juvenile) was between 63% and 64% (higher than the average for the whole TSJDF (see Figure No\. 2)\. Figure No\. 1\. TSJDF user satisfaction (2010) Figure No\. 2\. TSJDF user satisfaction by 59\.00% subject matter (2010) 57\.90% 58\.00% 66\.00% 65% 57\.00% 65\.00% 56\.00% 55\.25% 63\.60% 64\.00% 55\.00% 63% 63\.00% 54\.00% 52\.60% 62\.00% 53\.00% 52\.00% 61\.00% 60\.50% 51\.00% 60\.00% 50\.00% 59\.00% 49\.00% 58\.00% Male Female Average Civil Criminal Family Adolescents Source: TSJDF (2010),“Indicadores sobre el derecho a un Source: TSJDF (2010), “Indicadores sobre el derecho a un juicio justo del Poder Judicial del Distrito Federal juicio justo del Poder Judicial del Distrito Federal (2010â€?), (2010)â€?, p\. 124\. Statistics Office at the Court Presidency p\. 144\. Statistics Office at the Court Presidency 32 Comments An automated case tracking application for the new criminal procedures has been developed and is ready for implementation in the juvenile and sentence execution courts\. Overall, the level of users’ satisfaction reported by the EPADEC survey is substantially higher in the TSJDF than the satisfaction with the criminal justice system reported for the whole country by Americas Barometer, LAPOP, in 2010\. Mexico scored 35\.5%, only above Ecuador and Peru (See Figure No\. 3)\. Figure No\. 3\. Confidence in the Criminal Justice System in the Americas United States 56\.2 Surinan 54\.9 Jamaica 54\.8 Guyana 53\.2 Honduras 52\.3 Colombia 50\.8 Canada 48\.8 Uruguay 46\.7 Nicaraga 45\.6 Dominican Republic 44\.7 El Salvador 43\.5 Venezuela 40\.3 Bolivia 39\.8 Chile 38\.8 Brazil 38\.4 Argentina 36\.8 Trinidad & Tobago 36\.7 Costa Rica 35\.8 Paraguay 35\.6 Guatemala 35\.5 Mexico 35\.5 Peru 34\.7 Ecuador 30\.5 0 10 20 30 40 50 60 Source: Hermann, Stefanie and others, “Confidence in the Criminal Justice System in the Americasâ€?, Americas Barometer Insights:2011 http://www\.vanderbilt\.edu/lapop/insights/I0862en\.pdf Source: HERMANN, Stefanie and others, “Confidence in the Criminal Justice System in the Americasâ€?, Americas 33 Barometer Insights: 2011 http://www\.vanderbilt\.edu/lapop/insights/I0862en\.pdf Indicator No\. 2: Improved Capacity Building and Communication Practices\. Baseline data PAD: None ISRs: Limited capacities in coordination, HR planning, budgets and evaluation mechanisms\. Baseline data to be inserted upon each state judiciary's formal inclusion to the Project\. TSJDF Subproject: No ICT network provides information on demand and supply of justice services in the target courts (Reclusorios Norte, Este and Sur, and Santa Martha Acatitla)\. No training and knowledge-sharing\. Inter-institutional arrangements with other sector agencies GDF, public security secretariat Attorney General and General Counsel for the implementation of the Criminal Procedures Code not established\. End target PAD: None ISRs: Provision of timely information on demand and supply of judicial services, efficiency gains in the use of resources, availability and successful completion of training and successful knowledge sharing\. TSJDF Subproject: New ICT platform provides timely information on demand and supply of justice services in the target courts (Reclusorios Norte, Este and Sur, and Santa Marta Acatitla), to ensure efficiency gains in the use of resources\. Training and knowledge-sharing provided to support the implementation of the new management model\. Inter-institutional arrangements with other sector agencies GDF, public security secretariat Attorney General and DF General Counsel in place for the implementation of the juvenile courts and the sentence execution courts\. Status as of May 2012: Exceeded On the basis of the only sub-project financed under the Project (the TSJDF’s), the communication practices of the only subnational participating in the Project have improved as demonstrated by the intensive dissemination of information through the TSJDF portal about the operations and performance of the target courts\. The capacity- building practices of the only subnational participating in the Project have also improved through the training provided to the operators (including partner agencies) of the integrated management model financed by the Project\. Monthly statistical reports on a set of indicators defined by judicial authorities to monitor performance are distributed among TSJDF’s decision-making authorities (President, Oficial Mayor, Judicial Council Members, Human Rights Directorate, Criminal Detention Directorate, etc)\. 34 The ICT platform provides timely information on demand and supply of justice services in the target courts (Reclusorios Norte, Este and Sur, and Santa Marta Acatitla) to ensure efficient use of resources\. The ICT platform in the target courts allows access to e-mail, intranet and extranet and internet that have improved internal and external communication practices\. TSJDF internal communications in these courts are paperless\. The courts also have also improved communications with the Prosecutors office (Procuraduria General) and cases can be presented to court on-line\. Once the TSJDF gets the case identification number, the relevant file can be automatically transferred to the criminal courts\. Moreover, all the socio-economic information about defendants required by INEGI is now collected and forwarded to INEGI on line\. In the second semester of 2012, the TSJDF ICT platform will be connected to the Federal Intelligence Platform, established to fight crime and violence\. Intermediate Outcome Indicators Component I: Strengthening Institutional Capabilities, Culture and Knowledge Indicator 1: Improved information development for institutional planning and external services Baseline PAD: None ISRs: State Courts did not make use of information systems for institutional planning and services\. Baseline data was expected to be inserted upon each state judiciary’s formal inclusion to the Project\. TSJDF Subproject: 0 target courts were able to process statistics online\. 0 target courts shared case-tracking information, and only 5\.1% of courts had access to email, intranet and extranet\. Institutional ICT network covered only 10% of TSJDF staff in the target courts (approximately 200 out of 2,000 staff)\. End target PAD: None ISRs: New information system for Institutional Planning and External Services in place\. TSJDF Subproject: The 69 target courts able to process statistics on line\. In addition, 81 trial, appeal and judgment execution courts share case tracking information, and 80% percent of TSJDF trial courts have access to e-mail, intranet and extranet\. Institutional ICT network covers 80% of target TSJDF staff (approximately 1,600 out of 2,000 staff)\. 35 Status as of May 2012: Partially Achieved On the basis of the only sub-project financed under the Project (the TSJDF’s), the information for institutional planning and external services of the only subnational participating in the Project has improved as demonstrated by the effective establishment and operation of the TJSDF statistical unit, and the dissemination of statistical information through the TSJDF portal about the operations and performance of the target courts\. The new integrated information system for Institutional Planning and External Services is in place\. This system provides information for decision-making regarding financial, material and human resources optimization, that is currently used to prepare and implement results-based budgets linked with previously defined indicators\. The system has also provided tools to the judicial authorities to present and support the budget before the Secretariat of Finance and the Legislative Assembly of the DF\. The system has also optimized communications among the various target courts and between them and the administrative offices\. The integrated ICT platform financed by the Project is currently running four (4) key systems or applications: 1) the Statistical Information System for Criminal Justice (SIEMP) that compiles statistics and also records pre-trial detentions from criminal courts; 2) the On-line system to compile statistical information (CLIE) from civil and family courts; 3) the Integrated System for judicial resolutions consultation (SICOR) that provides information on civil and family resolutions; and 4) the Criminal Detention System (Sistema de Consignaciones Penales)\. A fifth application, the new TSJDF criminal management system (SGPJ - Sistema de Gestión Penal Judicial) has been developed and is being implemented in juvenile and sentence execution courts (See Figure No\. 4)\. 16 These systems support oral-based trials, and include a case tracking feature that allows close criminal justice performance monitoring\. 16 Another system, currently in a testing phase, will allow citizens to make case related deposits (bails, guarantees and the like) in a commercial bank\. Such deposits will be electronically notified to TSJDF courts using linkages to the ICT platform\. 36 278 courts (including the target courts) process statistics online for the TSJDF and INEGI\. SIEMP produces criminal statistics data from 69 criminal trial courts, 40 criminal justice of the peace courts, 2 sentencing execution courts, 15 juvenile courts and 26 appellate courts\. The CLIE compiles information from 83 civil courts, 27 civil justices of the peace courts, 42 family courts, 17 justice support offices and 13 administrative offices (see Figure No\.5)\. 100% of project target courts now have access to e-mail, intranet and extranet and internet, antivirus, and SIEMP\. The Institutional ICT network covers 100% of target courts (69 courts, each of which has an average of 19 computers) for a total of 1324 desktops available to the whole staff of the target courts (1,656 persons)\. Comment: The statistical system exceeds by far original expectations\. It went beyond criminal courts to cover all TSJDF courts, the administrative offices and the support offices\. The SIEMP has been also able to compile all the socio-economic information requested by INEGI and has superseded manual completion of reporting forms for each defendant (see Figure No\.5)\. 37  Figure No\. 5\. TSJDF Statistical information System SIEMP 69 criminal trial courts 40 criminal justice of the peace courts 2 sentencing execution courts 15 adolescents in conflict with the law courts TSJDF statistical 26 criminal appelate courts information systems 278 courts 13 administration offices 17 Justice support offices CLIE 42 family courts 83 civil ourts 27 civil justice of the peace courts 13 admnistration offices 17 justce support offices Source: TSJDG Statistics Office at the Court Presidency Two areas for further improvement remain: (a) electronic signature; and (b) a single identification number\. The Information Technology Office is currently working on both\. Expansion of the statistical reporting system to other areas beyond the target courts were carried out with the TSJDF’s own resources (see Figure No\. 5)\. No cultural change or knowledge sharing activities were included in the TSJDF subproject (other than the program sponsored by the Bank and Paris 21 for the RDP program and the plan for the implementation of the new oral-based trials)\. 38 Component 2: Improving Efficiency and Effectiveness of Judicial Services Indicator 2\.1: Reduction in case processing times Baseline data PAD: None ISRs: Case processing time in courts is high\. Baseline data to be inserted upon each state judiciary's formal inclusion to the Project\. TSJDF Subproject: Average processing times in target trial courts 2\.5 months\. TSJDF target courts clearance rate of 77\.8 % in 2008\.Total workload 18,180 cases a year in the target courts\. 0 target courts are able to carry out virtual trials and videotaped oral-based trials\. 0 target courts are able to carry out virtual trials and videotaped oral-based trials\. End Target PAD: None ISRs: Case processing times reduced\. TSJDF Subproject: Average processing times in target trial courts 2\.0 months\. Target courts clearance rate 100%\. Total workload of up to 20,000 cases a year\. 35 target courts able to carry out virtual trials and videotaped oral-based trials\. Status as of May 2012: Partially Achieved On the basis of the only subproject financed under the Project (the TSJDF’s) the modernization activities financed under the Project have reduced the case processing times of the Judiciary of the only participating subnational\. The SIEMP and the Criminal Detention System have allowed the preparation of monthly statistic reports for monitoring of case processing times by judicial authorities\. In 2010, the TSJDF ordered a case file review17 by a civil society organization to define the processing times in all subjects\. This review covered a 2009 representative sample of all criminal, civil and family cases\. According to this sample, average processing times in target trial courts have been reduced to 2\.3 months (71 days in the target courts) (see Figure No\.6)\. 17 EPADEQ (2010), “Estudio de expedientes para calcular los tiempos de duración de los juicios del Tribunal Superior de Justicia del Distrito Federalâ€?, Final Report 39  Figure No\. 6\. Average resolution times in days by subject and court Trial Courts Appellate Courts 300 256 250 200 185 167 139 150 100 71 50 0 Criminal Civil Famiy Family Source: EPADEQ (2010), “Estudio de expedientes para calcular los tiempos de duración de los juicios del Tribunal Superior de Justicia del Distrito Federalâ€?, Final Report The TSJDF Subproject target courts clearance rate 108\.6% is the best in the TSJDF\. In 2010, civil courts had a clearance rate of 97\.3%, Family Courts 93\.8%, and juvenile courts, 96\.4%\. As average, in 2010 the TSJDF had a clearance rate of 100\.2% (see Figure No\. 7)\. Figure No\. 7\. TSJDF Clearance rates by subject matter (2008-2010) 100\.2 Total 100 99\.2 96\.4 Adolsescents 2010 93\.8 Family 95 2009 97\.3 Civil 2008 97\.7 108\.6 Criminal 104\.6 80 85 90 95 100 105 110 Source: TSJDF 2011 Annual Statistic Report, p\.61 None of the target courts was able to carry out virtual trials because some legislative amendments by the DF Assembly are pending\. 8 courtrooms at the target courts allow Source: TSJDF Statistics Office 40 videotaping of oral-based trials\. Six (6) of them are used for juvenile courts and two (2) for the sentencing execution courts\. These courtrooms also operate under the oral-based system\. Comments Two more sentencing execution courts will be establishing in the second semester of 2012 with the TSJDF’s own resources\. The Criminal Pre-Trial Detention System and the SIEMP have incorporated an innovative human rights red flag alert system to better control the status of pre-trial detainees, victims of domestic violence and sexual abuse, femicides, torture, trafficking of persons and cases where indigenous people are involved\. The system sends an immediate alert to the Human Rights Office at the TSJDF President's Office and ensures close monitoring of these cases\. Component 3\. Increasing Judicial Transparency Indicator 3\.1: Increased availability of public information Baseline: PAD: None ISRs: Information available to the public in state courts is limited\. Baseline data to be inserted upon each state judiciary's formal inclusion to the Project\. TSJDF Subproject: 0 court databases operating through the integrated network and accessible to court staff and general public\. 0 judicial statistics reports compiled quarterly for decision-making purposes, and published annually for public dissemination\. 0 judicial decisions disseminated through integrated ICT network\. End Target: PAD: None ISRs: Public Information available has increased\. TSJDF Subproject: 6 court databases to operate through the integrated ICT network developed under the Subproject and accessible to court staff and general public, and 4 judicial statistics reports compiled quarterly for decision-making purposes, and published annually for public dissemination\. Up to 19,000 judicial decisions (including up to 15,000 final judgments) a year disseminated through the integrated ICT network\. 41 Status as of May 2012: Achieved On the basis of the only subproject financed under the Project (the TSJDF’s) the modernization activities financed under the Project have increased availability of public information about the Judiciary of the only participating subnational\. Five (5) court databases are operating through the integrated ICT network developed under the Project and are accessible to court staff; one of them -SICOR- will be available to the public for a fee in June 2012\. Service charges will be between US$30 and US$60 a month depending on the number of judicial resolutions that the subscriber would like to access\. Public access to judicial resolutions on-line would imply a dramatic savings in time for subscribers to the service in a city with serious traffic congestion\. As part of the TSJDF Subproject cost-benefit analysis required by the GoM, it was estimated that allowing subscribers to access judicial resolutions online would imply savings of around 36\.6 million pesos (approximately US$3,000,000) per year\.18 As of May 2012, 620,896 judicial decisions (including final judgments) have been filed in SICOR\. Beginning in 2012, monthly judicial statistics reports have been made available for decision-making purposes\. Since 2010, annual statistics reports have been published and disseminated\. Annual reports are also available on line\. An on-line judicial bulletin that provides the status of judicial resolutions issued, and the location of cases in the courts\. In the four criminal judicial centers, and in the buildings of Niños Heroes, Plaza Juarez, Rio de la Plata and Sullivan there are 22 kiosks available to the public for such case status consultations\. The TSJDF web site (http://www\.poderjudicialdf\.gob\.mx/swb/ ) has a Transparency Portal http://www\.poderjudicialdf\.gob\.mx/swb/PJDF/Transparencia that permits public consultation of the asset declarations of TSJDF judges under a voluntary disclosure program\. The portal also provides information on the TSJDF transparency indicators (http://www\.poderjudicialdf\.gob\.mx/es/PJDF/III_Funciones\.), and the status of human rights due process indicators (http://www\.poderjudicialdf\.gob\.mx/en/PJDF/Indicadores )\. This report records the number of complaints received about violations of the right to a fair trial\. Between 2009 and 2010, the number of complaints has increased by 26\.5%, from 640 to 871\. Most complaints (45%) arise in criminal cases\. 40% of the complaints deal with procedural irregularities, 16\.6% with obtaining certified copies of judicial resolutions, 16\.2% with abuse of authority by TSDFJ staff, and 11\.6 % with detainees’ rights\. The Annual Report also includes the number of judges that have been sanctioned under disciplinary procedures (9 in 2010)\. 18 GALA PALACIOS, Javier and Marco Antonio Pérez Cruz (April 2008), “ Estudio Costo-Beneficio Socioeconómico del Proyecto de Modernización Integral de la Infraestructura para la Impartición de Justicia del Tribunal Superior de Justicia del Distrito Federalâ€?, p\.23\. 42 The ICT platform has also allowed the TSJDF to comply with the new Transparency Law\. The TSJDF is able to provide answers to information requests that do not involve privacy rights in less than 7 days\. The statistics portal in the TSJDF web page ( http://estadistica\.tsjdf\.gob\.mx/portal/) has 53 data banks available to the public on line on different subject matters\. http://estadistica\.tsjdf\.gob\.mx/anda/anda/index\.php/catalog Comment: The TSJDF Subproject did not include specialized and applied studies on improving public access or transparency\. However, these activities were carried out with the TSJDF’s own resources for the benefit of the whole judiciary and the public at large\. Indicator 3\.2\. Increased opportunities for community engagement Baseline data PAD: None ISRs: Opportunities for community engagement in state courts increased\. Baseline data to be inserted upon each state judiciary’s formal inclusion to the Project\. TSJDF Subproject: No specific community engagement activities envisaged, but emphasis on transparency and accountability through access to information will provide opportunities for such engagement\. Zero (0) court databases operating through the integrated ICT network developed under the Project and accessible to court staff and general public\. Zero (0) judicial statistics reports compiled quarterly for decision-making purposes, and published annually for public dissemination\. End Target: Opportunities for community engagement increased\. PAD: None ISRs: Opportunities for community engagement in state courts increased\. TSJDF Subproject: No specific community engagement activities envisaged, but emphasis on transparency and accountability through access to information provide opportunities for such engagement\. 6 court databases operating through the integrated network developed under the Project and accessible to court staff and general public and 4 judicial statistics reports compiled quarterly for decision-making purposes, and published annually for public dissemination\. 43 Status as of May 2012: Achieved On the basis of the only subproject financed under the Project (the TSJDF’s) the modernization activities financed under the Project have increased opportunities for community engagement of the Judiciary of the only participating subnational\. No specific community engagement activities were envisaged in the TSJDF Subproject, but transparency and accountability through greater access to information provided opportunities for such engagement\. Five (5) court databases are operating through the integrated network developed under the Project and accessible to court staff, and one (SICOR) will be accessible to the general public\. Monthly judicial statistics reports are compiled for decision-making purposes\. Annual statistics reports are published annually and accessible online\. The increased demand for statistical information has prompted the TSJDF to finance several community engagement activities with its own resources to expand links between the Judiciary and civil society\. With technical support from the United Nations High Commissioner for Human Rights, the TSJDF has developed fair trial indicators and completed the first measurement of these\. With FLACSO, the TSJDF carried out a case study to evaluate the application of human rights international treaties on TSJDF final decisions\. With a local civil society organization, EPADEC, the TSJDF conducted assessments on the duration of cases and a user satisfaction survey, activity that the TSJDF plans to repeat periodically\. Finally with the Juridical Research Institute at the National Autonomous University of Mexico, the TSJDF has started an assessment of the quality of judicial decisions\. These studies have started a new trend of involving civil society organizations in assisting the TSJDF to measure its own performance\. Component 4\. Strengthening Access To Justice For All Users Indicator No\. 4\.1 Increases in number of users from vulnerable groups accessing judicial services Baseline PAD\. None ISRs: Number of users from vulnerable groups low\. Baseline data to be inserted upon each state judiciary’s formal inclusion to the Project\. TSJDF Subproject: No specific vulnerable groups access activities included other than adapting infrastructure to users’ needs, including information and orientation centers at targeted courts (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla) located in the vicinity of vulnerable group areas\. 44 End Target PAD: None ISRs: Number of users from vulnerable groups increased\. TSJDF Subproject: No specific vulnerable groups access activities envisaged, other than adapting infrastructure to users’ needs, including information and orientation centers at the targeted courts (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla) located in the vicinity of vulnerable group areas\. Status as of May 2012: Partially Achieved On the basis of the only subproject financed under the Project (the TSJDF’s) the modernization activities financed under the Project have increased the number of users from vulnerable groups of the Judiciary of the participating subnational\. The implementation of the new TSJDF management model supported by an integrated ICT platform financed by the Project facilitates access of users from vulnerable groups\. No specific activities on vulnerable groups’ access to justice were carried out, but the Project adapted infrastructure to users’ needs, including information and orientation centers at the targeted courts (Reclusorios Norte, Oriente, Sur and Santa Marta Acatitla) located in the vicinity of vulnerable group areas\. According to National Council for the Evaluation of Social Development Policy (CONEVAL) in the areas where the target courts are located between 25% to 50% of residents that live below the poverty line (see Figure No\. 8)\. Figure No\. 8\. Percentage of DF population living below poverty line (2010) Source: CONEVAL, estimates based on the 2010 Population Census 45 The 302,220 users that the 69 target courts serve each year represent 15% of the total 2,168,062 TSJDF annual users\. 58\.8% are individuals whose family income is less than US$450 per month, 30\.8% are users whose family income is between US$450 and US$1000 per month\. 39\.8 % of all users are women (see Table 1)\. Table No\. 1\. Annual number of vulnerable users of the 69 targeted trial courts Users Total Percentage of the total Total number of users 302,220 Users with family income below US$450 monthly 177,705 58\.80 Users with family income between US$450 and US$1000 93,084 30\.8 Indigenous illiterate users 6,044 2\.00 Women users 120,284 39\.80 Source: TSJDF Statistics Office at the Court Presidency\. Comment: The TSJDF Subproject did not provide financing for carrying out specialized and applied studies for strengthening access to justice, special attention to women, minors, small businesses, indigenous, the poor and socially disadvantaged, alternative mechanisms for the resolution of disputes, diversifying the range of judicial services, strengthening public defender and legal aid services, and strategies for improving collaboration with attorneys\. However, the selection of the target courts located in the vicinity of vulnerable group areas had significant impact in terms of access to justice by these groups\. 46 Annex 3\. Economic and Financial Analysis A cost-benefit analysis was conducted in 2008 to meet the Federal Government requirements for the GDF to enter into a sub-loan agreement with BANOBRAS under a credit program financed by external debt\. The cost-benefit analysis was approved by SCHP in May 2008 and served as the basis for the design of the TSJDF subproject documentation, including the specific monitoring indicators tracked during subversion and verified during the preparation of this ICR\. 47 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending World Bank Isabel Guerrero Country Director Ernesto May Sector Director Ronald Myers Sector Manager Joaquin Cottani Lead Economist Steven Webb Lead Economist David Gold Sr\. Economist Krishna Challa Sector Leader Olivier Lafourcade Former Country Director Lead Economist and Sector Marcelo Giugale Leader Ferenc Molnar Chief Counsel Vicente Fretis-Cibils Lead Economist Lea Braslavsky Lead Procurement Specialist Lead Public Sector Management Fernando Rojas Specialist Miguel Lopez-Bakovic, Sr\. Operations Officer Teresa Genta-Fons Sr\. Counsel Sr\. Public Sector Management Roberto Panzardi Specialist Robert Buergenthal Sr\. Counsel Connie Luff Sr\. Country Officer Keta Ruiz Country Officer Sr\. Financial Management Daniel Boyce Specialist Regis Thomas Cunningham Sr\. Finance Officer Jozef Draaisma Sr\. Economist Issam Abousleiman Sr\. Financial Officer Sr\. Public Sector Management Richard Messick Specialist Sr\. Public Sector Mgmt\. Linn Hammergren Specialist Sr\. Public Sector Management Lisa Bhansali Specialist Rosa Estrada Procurement Analyst 48 Shelton Davis Sector Manager Social Development and Civil Jorge Franco Society Specialist Christopher Neal Sr\. Communications Officer Mario Bravo Sr\. Communications Officer David Gray Lead Knowledge Mgmt\. Officer Mark Hagerstrom Country Sector Leader Juan Quintero Lead Env\. Specialist Alonso Zarzar Sr\. Social Scientist Glaura Lage Language Program Assistant Ricardo Hernandez Murillo Env\. Specialist John Kellenberg Sector Leader Gladys Lopez-Acevedo Economist Victor Manuel Ordoiiez Financial Mgmt\. Specialist Conde, Mauricio Cuellar Transport Specialist Omar Hayat Financial Analyst Shirleyn Matzen Co-financing Officer Sr\. Public Sector Mgmt\. Maria Gonzalez de Asis Specialist Katherine Bain Team Leader Gisu Mohadjer Operations Adviser Ipek Alkan Operations Officer Cesar Yammal Information Officer Silvia Porche Procurement Assistant Gabriela Aguilar Communication Officer Angelica Calderon Information Officer Hugo Concha Maria Novoa Jose Antonio Caballero Sr\. Specialists, Consultants Faustino Barrón Gustavo Luis Borgognon Nina Ohman Ximena Gutierrez Alexandra Habershon Operation and information Guadalupe Toscano officers, Analysts, Consultants Sang Hyuck-Cho Matilde Bordon Johnny Guzman Herman Nissenbaum Consultants Anthony Waniss 49 Richard Lau Agustin Mercado Mary Cornish Benjamin Santamaria Rosa Elba Perez Laura Fuesers Layla Castellanos Nina von Hardenberg Ruxandra Burdescu Eriko Yamashita Lilit Petrosyan Aracely Barahona Alejandra Gonzalez Karina Kashiwamoto Guillermo Ptrez Ricardo Hernandez-Rosas Adrian Gastelum Gerardo Garcia Antonio Gonzalez LCSPS, LEGLA and Resident Fabiola Longgi Office Team Staff Sharon Spriggs Ayela Rojas Carmen Villamil Georgina Wiese Elizabeth Greene Odracir Barquera Clara Rodriguez Ada Garcia Lead Public Sector Management Waleed Malik Specialist and Task Team Leader\. Supervision/ICR Dmitri Gourfinkel Financial Management Analyst LCSFM Senior Resource Management Tanya Gupta CFRPA Off Rosa Maria Hernandez- Program Assistant LCC1C Fernandez M\. Dolores Lopez-Larroy Lead Financial Officer/Debt Ca CMD Javier Julio Madalengoitia Consultant LCSPS Alencastre Jose M\. Martinez Senior Procurement Specialist ECSO2 Patricia E\. Mendez Senior Executive Assistant LCSPR Agustin Mercado Consultant LCSPT Maria Del Carmen Minoso Senior Operations Officer ECSO1 Nina-Christina Ohman Consultant LCSPS 50  Roberto O\. Panzardi Sr Public Sector Mgmt\. Spec\. AFTPR Juan Carlos Serrano- Financial Management Specialist LCSFM Machorro Sharon D\. Spriggs Program Assistant LCSIS Maria Guadalupe Toscano Public Sector Mgmt\. Spec\. LCSPS Nicolas Arturo Herrera Gutierrez Sector Manager LCSPS May Olalia Sr\. Operations Officer LCSPS Francisco Lazzaro ET Consultant LCSPS Jenni Pajunen ET Consultant LCSPS Tirza Rivera-Cira Consultant LCSPS (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) USD Thousands Stage of Project Cycle No\. of staff weeks (including travel and consultant costs) Lending FY02 94\.19 FY03 351\.49 FY04 359\.93 Total: 805\.61 Supervision/ICR FY04 0\.00 FY05 126\.29 FY06 130\.94 FY07 105\.06 FY08 90\.18 FY09 137\.94 FY10 179\.63 FY11 92\.73 FY12 45\.97 Total: 908\.74 51 Annex 5\. Beneficiary Survey Results (if any) Not applicable 52 Annex 6\. Stakeholder Workshop Report and Results (if any) Not applicable 53 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR The Borrower’s comments on an earlier draft, received on June 26, 2012, have been reflected in this final version\. However, BANOBRAS disagreed with its own rating as Government agency which considers it to be Moderately Satisfactory (the same it obtained as Implementing Agency)\. The Bank explained to BANOBRAS the rationale for the different ratings in accordance with the Bank’s ICR Guidelines\. Comentarios de BANOBRAS: Las experiencias y la problemática enfrentada durante la ejecución del programa, descritas en el informe de evaluación final, generaron importantes lecciones que deben ser consideradas en los futuros proyectos conjuntos a ser desarrollados entre BANOBRAS y el Banco Mundial\. Particularmente, como área de oportunidad, creemos que el Banco Mundial puede perfeccionar el diseño de sus programas, específicamente los elementos necesarios para asegurar la viabilidad de alcanzar los objetivos, metas e indicadores que se plantean\. Asimismo, un elemento fundamental en todo Programa de financiamiento, es el análisis y la identificación de la viabilidad crediticia de los posibles sujetos de crédito\. En el caso del PMJ, consideramos que, además del análisis técnico en materia del funcionamiento, perfil y necesidades del sector judicial, dimensionar e identificar correctamente la normativa crediticia y el marco jurídico aplicable a los gobiernos subnacionales en México habría permitido un mejor desempeño\. Es necesario citar que la realización de los primeros talleres de modernización judicial se determinaron y se realizaron sólo a iniciativa del Banco Mundial\. Consecuentemente, algunos elementos del diseño del Programa, basados en información de dichos talleres y contenidos en el Project Appraissal Document (PAD), se determinaron en etapas en las que BANOBRAS aún no había sido incorporado al Programa, por lo que la evaluación de BANOBRAS no debería considerar estos elementos que no son imputables a nuestra institución\. Por otra parte, una vez que BANOBRAS accedió a impulsar el PMJ del Banco Mundial, se detectó que era necesario formalizar la última enmienda que permitiría superar los defectos de diseño al ajustar las expectativas del programa al único perfil que fue posible instrumentar no obstante los esfuerzos conjuntos del BIRF, de BANOBRAS, de la SHCP y de otros participantes por rescatar el Programa\. La posibilidad de formalizar dicha enmienda, que consumió recursos de BANOBRAS, fue finalmente desestimada por el Banco Mundial (como se describe en el texto del Informe Final de Evaluación), no obstante que se había determinado que era viable su formalización\. Creemos que este tipo 54 de programas pioneros deben ser tratados como programas pilotos para que los participantes puedan aprender del proceso durante la ejecución del programa, y así poder realizar los ajustes necesarios cuando se detectan a tiempo áreas de oportunidad\. Lo anteriormente expuesto habría permitido una evaluación más objetiva de BANOBRAS, tanto como cliente y socio local del Banco Mundial\. Consecuentemente, la evaluación de BANOBRAS como prestatario y como agencia implementadora debieran estar determinadas más por su desempeño en la administración y ejecución del préstamo (programa), más que por su intervención en su diseño\. 55 Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders Not applicable 56 Annex 9\. List of Supporting Documents EPADEQ (2010), “Estudio de expedientes para calcular los tiempos de duración de los juicios del Tribunal Superior de Justicia del Distrito Federalâ€?, Final Report GALA PALACIOS, Javier and Marco Antonio Pérez Cruz (April 2008), “Estudio Costo-Beneficio Socioeconómico del Proyecto de Modernización Integral de la Infraestructura para la Impartición de Justicia del Tribunal Superior de Justicia del Distrito Federalâ€? HERMANN, Stefanie and others, “Confidence in the Criminal Justice System in the Americasâ€?, Americas Barometer Insights: 2011 http://www\.vanderbilt\.edu/lapop/insights/I0862en\.pdf MOHLZAN, Cory, Viridiana Rios, and David Shirk, “Drug Violence in Mexico, Data and Analysis Through 2011â€?, Trans-Border Institute, University of San Diego, March 2012 http://justiceinmexico\.files\.wordpress\.com/2012/03/2012-tbi-drugviolence\.pdf TSJDF (2011) Annual Statistic Report, http://estadistica\.tsjdf\.gob\.mx/portal/anuario/anuario2011\.action TSJDF (2010) “Indicadores sobre el derecho a un juicio justo del Poder Judicial del Distrito Federal (2010), Statistics Office at the Court Presidency, http://www\.poderjudicialdf\.gob\.mx/en/PJDF/Indicadores \. TSJDF (December 31, 2011), “Acciones en Materia de Modernización Integral para la Impartición de Justiciaâ€?\., Préstamo 7250-ME Programa de Modernización de los Poderes Judiciales Estatales y del Distrito Federal\. TSJDF (February 2012), “Informe de Evaluación y Monitoreoâ€?, Préstamo 7250-ME Programa de Modernización de los Poderes Judiciales Estatales y del Distrito Federal\. TSJDF (April 2012) “Reporte estadístico mensualâ€?, Statics Office at the Court Presidency Weiss Eli, Rosenblatt David (2010): Regional Economic Growth in Mexico\. Recent Evolution and the Role of Governance\. Policy Research Working Paper 5369\. World Bank\. World Bank (2001) Country Assistance Strategy Progress Report for United Mexican States\. Report No\. 22147-ME World Bank (2002): Country Assistance Strategy for United Mexican States\. Report No\. 23849-ME\. World Bank (2004): Country Partnership Strategy with the United Mexican States\. Report No\. 28141-ME 57 World Bank (2004): Project Appraisal Document for a State Judicial Modernization Supporting Access to Justice Project\. Report No 27946-MX\. World Bank (2006): World Bank Lending for Lines of Credit\. An IEG Evaluation\. Independent Evaluation Group\. World Bank (2007): Country Partnership Strategy Progress Report for the United Mexican States for the Period of FY05-08\. Report No\. 37934-MX World Bank (2007): Institutions and Governance in Mexico\. Beyond State Capture and Social Polarization\. Report No\. 37293â€?MX\. World Bank (2008): Country Partnership Strategy with the United Mexican States for the Period of FY08-13\. Report No 42846-MX World Bank (2008): Independent Evaluation Group’s CPSCR Review for FY05-08\. Report No 43157\. World Bank (2009): Program Document for Proposed Economic Policies in Response to the Global Crisis Development Policy Loan\. Report No: 51219-MX World Bank (2010): Country Partnership Strategy Progress Report for the United Mexican States for the Period of FY0810\. Report No\. 52776-MX World Bank (2004-2012): Implementation Status Reports and other supervision documents\. 58 Annex 10\. Chart of Federal and Sub-National Authorities in Mexico potentially involved in processing restructurings (Projects with sub-national clients) 1\. Approvals and Consultations Required World Bank BANOBRAS S\.H\.C\.P Legal Dept\. Legal Dept\. Tesorería Crédito Procuradoría (Ingresos) Público Fiscal GOM (Organismos GDF Multilaterales) TSJDF (Finanzas) Legal Dept\. Legal Dept\. Legal Dept\. Legal Dept\. Legal Dept\. 2\. Other Stakeholders to be informed SHCP (Inversión CONATRIB Pública) 59  To Los Angeles 115°W 110°W 105°W 100°W 95°W 90°W 85°W To Albuquerque To To Alamogordo Gila Bend Tijuana Mexicali UNIT ED STAT ES O F A MER I CA Ensanada Sonoita San Ciudad Juárez To Felipe Midland Nogales Ri o Rio rav Agua BAJA Prieta ra n MEXICO G 30°N B o d To 30°N CALIFORNIA San Antonio e Gu SONORA CHIHUAHUA Yaqui To lf Ojinaga San Antonio Hermosillo To of Si Houston er Chihuahua Sal C a ra Sie Guaymas al do Santa if Rosalia rra M Con chos or ad Laredo BAJA Navojoa COAHUILA ni re Fue CALIFORNIA r te Frontera a Ma SUR NUEVO O Loreto dre cc Los Mochis LEON Gu l f of M e xi co 25°N id Monterrey Matamoros 25°N Torreón en Saltíllo ta SI Or Culiacán l NA DURANGO PAC IF IC La Paz TAMAULIPAS ie Durango nt LO OC E AN ZACATECAS Ciudad al Victória A Mazatlán Cabo San Lucas Zacatecas SAN LUIS AGUASCALIENTES POTOSI Tampico QUERÉTARO San Luis This map was produced by the Map Design Unit of The World Bank\. NAYARIT Aguascalientes Potosí The boundaries, colors, denominations and any other information YUCATAN Cancun Ler shown on this map do not imply, on the part of The World Bank Tepic a VERACRUZ Merida m Group, any judgment on the legal status of any territory, or any GUANAJUATO Guanajuato HIDALGO endorsement or acceptance of such boundaries\. 110°W Cozumel Puerto Vallarta Guadalajara Querétaro DISTRITO FEDERAL Pachuca TLAXCALA Campeche 20°N JALISCO QUINTANA MEXICO MEXI C O MEXICO Morelia Jalapa Bay of Campeche CITY ROO Toluca Tlaxcala Veracruz Chetumal Colima Citlaltépetl (5,747 m) Cuernavaca COLIMA MICHOACAN Puebla CAMPECHE SELECTED CITIES AND TOWNS PUEBLA TABASCO Balsas Villahermosa Gulf of STATE CAPITALS GUERRERO Chilpancingo Us BELIZE Honduras NATIONAL CAPITAL um Sie Oaxaca CHIAPAS ac in RIVERS Acapulco rra OAXACA Tuxtla ta Mad re de Gutierrez MAIN ROADS l S u r Tehuantepec MORELOS Puerto 15°N RAILROADS 0 100 200 300 Kilometers Escondido Gulf of GUATEMALA HONDURAS NOVEMBER 2008 Tehuantepec IBRD 33447R 15°N Tapachula STATE BOUNDARIES To San Salvador 0 50 100 150 200 Miles INTERNATIONAL BOUNDARIES EL 105°W 100°W 95°W SALVADOR

REVIEW

P037834

 ICRR 11764 Report Number : ICRR11764 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 05/19/2004 PROJ ID : P037834 Appraisal Actual Project Name : Northern Education Project Costs 36\.00 31\.89 US$M ) (US$M) Country : Pakistan Loan /Credit (US$M) Loan/ US$M ) 22\.80 17\.13 Sector (s): Board: ED - Primary Cofinancing 5\.60 7\.50 education (56%), Tertiary US$M ) (US$M) education (15%), Other social services (15%), Sub-national government administration (14%) L/C Number : C2992 Board Approval 98 FY ) (FY) Partners involved : DFID Closing Date 06/30/2002 09/30/2003 Prepared by : Reviewed by : Group Manager : Group : Howard Nial White John R\. Heath Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The Northern Education Project (NEP) was to support the program for the development of the elementary school sector in Azad Jammu and Kashmir (AJK) and Northern Areas (NA)\. The objectives were: "a) to improve the quality of education, increase learning achievement and improve completion rates in elementary education; (b) to increase access, equity, and retention of students, particularly girls; (c) to strengthen institutional capacity to plan and manage education programs; and (d) to encourage greater community and NGO participation " (SAR, p\.15)\. NEP was designed to cover education from Katchi (kindergarten) to grade 8, with particular emphasis on the primary years and girls’ education\. b\. Components 1\. Improving the quality of education (US$8\.2 million) by : (a) changes in teacher recruitment and training; (b) curriculum and educational materials development; and (c) development of assessment capacity \. 2\. Increasing equitable access (US$16\.3 million) by: (a) reconstruction of dangerous schools and construction of new school buildings for shelterless schools; and (b) in NA, participatory construction of buildings for community schools \. 3\. Strengthening institutional capacity (US$4\.4 million) by: (a) strengthening the management capacity of the Directorates of Education through organizational changes, the provision of limited additional staff, training, and technical assistance; (b) improving the information base for planning and management decisions through the conduct of baseline studies, rationalizing information flows and developing information management systems at the local level; and (c) conducting regular monitoring and evaluation of the five -year program\. Monitoring and evaluation impact studies were incorporated into the project's design \. 4\. Community participation (US$3\.8 million) through: (a) in AJK, the establishment of school committees in existing Government schools through an NGO -led pilot scheme in a single district; and (b) in NA, continued support to and improvement of the existing community schools program started by the Directorate of Education under the Social Assistance Program\. c\. Comments on Project Cost, Financing and Dates Cost: cost shortfall because of (1) exchange rate fluctuations, and (2) cancellation of one major civil works project which was delayed because of a land dispute \. Project extension was required due to slow start up, with slow progress in first two years of project \. 3\. Achievement of Relevant Objectives: Objective 1: improving the quality of education \. Achieved Quality of education is measured directly by test scores (criterion reference test, CRT) and indirectly by inputs for higher quality (teacher training and curriculum development )\. The CRT in 2003 found a modest improvement compared to the base line in 1999/2000 - this is a rather short period to expect a substantial change \. At the input level, in-service teacher training was provided to 11,000 teachers in AJK, with a study showing that over half (58%) were subsequently using teaching materials prepared under the project \. In NA the target of 1,000 teachers receiving a 5 month training program was exceeded, with a study showing that these teachers went on to make "widespread use of teaching materials "\. In NA the project covered approximately 80 percent of government primary school teachers\. Improved quality was also supported by the development of learning materials \. Since inputs for improved quality were delivered attribution of better learning outcomes to the project interventions may be inferred\. Objective 2: increasing equitable access to education \. Partially achieved Targets were specified in terms of absolute enrolments, and the percentage of female enrollments \. In NA the achievements were substantial, with enrollment increases well in excess of the targets \. By contrast, achievements in AJK were very modest\. In NA primary enrollments increased by nearly 60 percent (74,087 in baseline to 118,032, exceeding the target of 102,150)\. The female share rose from 30 to 43\.6 percent, a substantial increase albeit less than the target of 50 percent\. At middle school level enrollments increased by 48 percent, overshooting the target of a 23 percent increase\. In AJK primary enrollments actually fell by 8 percent, though there are doubts about data quality; the share of girls in total enrollments rose from 36 to 47 percent\. Middle school enrollments rose by 7 percent, rather less than the target of 27 percent\. The project supported higher enrollments through increasing the quantity and quality of schooling \. In AJK 455 school buildings were completed (compared to target of 350) and furniture provided to 337 schools constructed in earlier phases\. In NA 381 schools were constructed or rehabilitated, another 55 schools were not constructed as planned as a result of land disputes or because in a border area which has been affected by the border dispute with India \. As a result of these project-supported improvements, NA is close to achieving UPE \. AJK is some way off, though may do so by 2015\. Objective 3: strengthening institutional capacity \. Achieved The project has strengthened the Education Management Information System (EMIS) and brought it to a situation in which EMIS data are requested by other government departments \. There was also support to monitoring and evaluation which has enabled satisfactory M&E of project activities \. Finally, managers in the education Directorates have received training\. Activities in support of this objective suffered somewhat from DFID's suspension of all aid activities in response to Pakistan's nuclear testing\. Objective 4: promoting community participation \. Achieved In both AJK and NA the project supported the formation and strengthening of School Management Committees/Parent Teacher Associations (SMCs/PTAs) In AJK 160 SMCs were formed, with training for 642 members and 160 chairpersons\. In NA 1,465 SMCs were formed, well in excess of the target of 800\. An evaluation in AJK showed that SMCs following the project guidelines function more effectively than other SMCs \. In NA the SMC system has provided the community infrastructure for community school construction and delivery of support to schools, including scholarships, resulting in improved performance \. 4\. Significant Outcomes/Impacts: The main outcomes of the project have been : 1\. Substantial increase in primary and middle school enrolments in NA \. 2\. Greater gender equality in enrollments in both NA and AJK \. 3\. Improvement in test scores (albeit modest)\. 4\. Institution of Education Management Information System 5\. Creation of a large number of active community -level school management organizations (SMCs) 5\. Significant Shortcomings (including non-compliance with safeguard policies): Neglect of poverty perspective Poor performance in improving enrolments in AJK Overall, the performance in the two project areas was very uneven \. NA over-fulfilled ambitious targets, whereas AJK failed to meet targets\. Judged separately the NA activities are satisfactory or even highly satisfactory \. But those in AJK were rather less satisfactory \. This case illustrates the possible difficulty of awarding a single rating to a project carrying out somewhat different activities in different areas \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: 1\. A realistic assessment of implementation capacity, especially for project start -up, should be made to avoid delays in project implementation\. 2\. Although the activities in NA and AJK had the same objectives, the activities themselves were different \. The benefits of combining them in a single project are not evident \. Project management may have benefitted from separate projects\. 3\. It is advisable to have back up plans for co -financed activities essential to project design, lest the co -financier should not deliver\. 8\. Assessment Recommended? Yes No Why? Relevance to on-going OED studies on both CDD and Primary Education 9\. Comments on Quality of ICR: Satisfactory overall\. However, the SAR classified this project under the Program of Targeted Interventions and the ICR makes no mention of this nor does it report on direct or indirect poverty impacts of the project \. The only use made of Pakistan Income Household Survey data is for the rate of return analysis \.

REVIEW

P005878

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 20685 IMPLEMENTATION COMPLETION REPORT (21640) ON A POWER PROJECT IN THE AMOUNT OF US$15\.5MILLION TO THE REPUBLIC OF YEMEN FOR THE THIRD POWER PROJECT June 30, 2000 Infrastructure Development Group Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their I official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS (Exchange Rate Effective 1999) Currency Unit = Yemeni Riyal (YR) YR = US$ I US$ 1\.00 = YR 155\.8 FISCAL YEAR January I to December 31 ABBREVIATIONS AND ACRONYMS COCA Central Organization for Control Auditing CPI Consumer Price Index DCA Development Credit Agreement DSC Debt Service Coverage IDA International Development Association MOF Ministry of Finance PCEP Public Corporation for Electric Power (former south Yemen power utility) PDRY People's Democratic Republic of Yemen (refers to South Yemen prior to unification) PEC Public Electricity Corporation PIU Project Implementation Unit SAR Staff Appraisal Report SDR Special Drawing Rights SEP Sana'a Emergency Power Project YAR Yemen Arab Republic (refers to North Yemen prior to unification) YGEC Yemen General Electric Corporation (former north Yemen power utility) Vice President: Jean-Louis Sarbib Country Manager/Director: Inder Sud Sector Manager/Director: Jean-Claude Villiard Task Team Leader/Task Manager: Zoubeida Ladhibi-Belk/Somin Mukherji  FOR OFFICIAL USE ONLY CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 3 5\. Major Factors Affecting Implementation and Outcome 6 6\. Sustainability 8 7\. Bank and Borrower Performance 8 8\. Lessons Learned 10 9\. Partner Comments 11 i0\. Additional Information 11 Annex 1\. Key Performance Indicators/Log Frame Matrix 12 Annex 2\. Project Costs and Financing 14 Annex 3\. Economic Costs and Benefits 17 Annex 4\. Bank Inputs 18 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 20 Annex 6\. Ratings of Bank and Borrower Performance 21 Annex 7\. List of Supporting Documents 22 MAP IBRD 30887 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\.   Cover Page PREFACE This is the Implementation Completion Report (ICR) for the Third Power Project for which an IDA Credit (2164-YEM) of SDR 11\.9 million (equivalent to US$15\.5 million) to the Republic of Yemen was approved by the Board on June 21, 1990, just a month after the official announcement of the reunification of North and South Yemen\. The Project closed on December 31, 1999, three years after its original Closing Date, due to major delays arising from the merger of the two power utilities, civil war and a two-year suspension of disbursements because of non-compliance with Credit covenants\. The project was restructured and the Development Credit Agreement amended in November 1994 and again in May 1997 to reflect the altered circumstances since the project was appraised\. The Credit Closing Date was extended twice to complete the project, which was originally designed for completion within a seven-year timeframe\. Actual Project works started only in 1996 caused by the need to rebid one of the major components of the Project\. An undisbursed balance of about SDR 0\.40 million (equivalent to about US$0\.53 million) was canceled\. The ICR was prepared by Messrs\./Mme\. Somin Mukherji (Team Leader), Sunil Mathrani (Consultant-Energy Economist), Josephine Masanque (Financial Analyst) and Mr\. Ali Khamis (Operations Officer)\. The ICR was reviewed by Mr\. Jean-Claude Villiard (Sector Director), Ms\. Zoubeida Ladhibi-Belk (Sector Manager), Mr\. Gianni Brizzi, (Yemen Country Representative) and Ms\. Tufan Kolan (Portfolio Manager)\. Preparation for the ICR began during the final supervision mission in December 1999 and was completed in May 2000\. The report is based on documents in the project files, information collected in the field and discussions with the Borrower\. An ICR was also prepared by the Borrower and a summary is attached as Appendix B\.   Project ID: P005878 Project Name: RY-POWER III Team Leader: Somin Mukherji 1Z Unit: MNSID ICR Type: Core ICR Report Date: June 30, 2000 1\. Project Data Name: RY-POWER III LIC/TF Number: 21640 Country/Department: YEMEN, REPUBLIC OF Region: Middle East and North Africa Region Sector/subsector: PD - Distribution & Transmission; XX - Unidentified KEY DATES Original Revised/Actual PCD: 12/31/86 Effective: 06/06/91 08/06/91 Appraisal: 05/31/89 MTR: 04/15/97 04/15/97 Approval: 06/21/90 Closing: 12/31/96 12/31/99 Borrower/lImplementing Agency: GOVERNMENT/PUBLIC ELECTRICITY CORPORATION Other Partners: STAFF Current At Appraisal Vice President: Jean-Louis Sarbib W\.A\. Wapenhans Country Manager: Inder K\. Sud Spiros Voyadjzis Sector Manager\. Jean-Claude Villiard Vinay Bhargava Team Leader at ICR: Somin Mukherji Kashinath Sheorey ICR Primary Author: Sunil Mathrani 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: U Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: U QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: Yes  3\. Assessment of Development Objective and Design, and of Quality at Entry 3,1 Original Objective: 3\.1\.1 Original Proiect Obiectives\. According to the Staff Appraisal Report (SAR), the initial development objectives of the Project were to assist the power utility in the Peoples' Democratic Republic of Yemen (PDRY), the Public Corporation for Electric Power (PCEP)1 in: (i) meeting the incremental demand for electricity in the Aden region by rehabilitation of the Aden system; (ii) reducing line losses in the Aden system and the Wadi Hadramawt branch; (iii) improving PCEP's finamcial position; and (iv) improving the technical and managerial skills of PCEP staff\. 3\.1\.2 These objectives were appropriate and relevant to the issues confronting the PDRY power sector in the late 1980s when electricity demand had been increasing rapidly by 8% annually\. While generation capacity was in surplus, the Aden power transmission and distribution system was old and overloaded, with the result that power supply was unreliable and energy losses were high (18%)\. Because of a shortage of skilled manpower, PCEP's financial management was weak\. Even though tariffs, exceeded the long run marginal cost of producing power (LRMC), PCEP was in deficit\. In addition, it was burdened by high-cost of water and power produced by the combined Hiswa power and water desalination plant, an uneconomic project that it was obliged to undertake on behalf of the government\. 3\.2 Revised Objective: 3\.2\.1 As a result of the unification of the two Yemens in 1990, PCEP of the south and Yemen General Electric Corporation (YGEC) of the north were merged and in 1991, Public Electricity Corporation (PEC) was legally established\. The Credit was suspended in mid-1993 due to PEC's default in complying with the agreed financial covenants\. Following the civil war (mid-1994), the GOY requested IDA to lift the suspension and restructure the Project to reconstruct the war damaged power systemn in the southern region\. The restructuring (of late- 1994) resulted in minor modification of the original Project objectives and except for elimination of the reduction of line losses at the Wadi Hadramawt branch, all other objectives were retained\. This was aimed at making more resources available for reconstruction and reinforcement of the badly damaged Aden power system (para\. 3\.4\.1)\. 3\.3 Original Components: 3\.3\.1 As initially designed, the Project had three components that were meant to ensure that the original project objectives were met\. These were: * rehabilitation of the Aden system to increase its operating efficiency and meet incremental demand through provision of additional substation, transmission and distribution capacity, capacitor banks and a network control center; * provision of loss reduction and distribution expansion equipment for the Wadi Hadramawt branch; and * technical assistance and training to improve PCEP's technical and managerial skills\. 3\.4 Revised Components: 3\.4\.1 In line with the revised Project objectives, during restructuring (November 1994) the lower priority activities including, construction of the network control center, line loss-reduction equipment in Aden, the entire Wadi Hadramawt component and the second phase of the training activities were dropped\. The funds thus released were reallocated to cover reconstruction and reinforcement of lines damaged during the hostilities, and to replace equipment and spares which were damaged or looted\. The construction of bulk supply substations to increase capacity and reduce losses as originally envisaged was retained\. - 2 -  Assessment of Design 3\.4\.2 The project was designed as a traditional power system rehabilitation and expansion project and was not unduly complex or risky\. No major sector policy reform measures were included\. Adequate arrangements were made for engineering and management support to PCEP during implementation\. However, while a significant portion of the Credit (US$1\.2 million) was allocated initially for training activities, implementation of this component was not defined adequately at appraisal\. Nor did the project incorporate specific measures/action plans to improve the financial and accounting capabilities of the utility, even though these were components of the project objectives and central to PCEP's ability to meet the financial covenants of the DCA\. 3\.4\.3 Satisfactory financial performance by PCEP was also predicated upon government commitments to reduce the price of fuel oil' to PCEP and to insulate PCEP from the cost burden of operating the over-sized investment in the water desalination plant\. These proved to be undertakings that the government found difficult to adhere to\. Satisfactory resolution of the perennial problem of payment of arrears for electricity consumed by the government and public sector bodies also depended upon government action, which proved not to be forthcoming\. With hindsight, these issues should have been addressed more thoroughly in the project design and the risks of failure to achieve financial goals highlighted in the SAR\. Instead, it indicated that risk of not achieving the financial objectives was small, which is hard to reconcile with the prevailing fiscal problems of the government\. 3\.5 Quality at Entry: 3\.5\.1 Based on the criteria prevailing at the time of appraisal, this ICR assesses the quality at entry as satisfactory\. Although, in today's context, a review of the quality at entry indicates several shortcomings\. Using today's criteria, the Project could have agreed on: (i) clear measures that would result in the institutional strengthening of PCEP including its accounting, commercial and financial functions; (ii) detailed training component aimed at improving the technical and managerial skills of PCEP; and (iii) overall up-front financial improvements supported by necessary action plans\. In addition the risks to the Project should have been adequately addressed\. Later merged with the northern utility, Yemen General Electric Corporation to form the Public Electricity Corporation (PEC)\. PCEP had to pay 1\.5 to 2 times the international price for fuel oil and diesel, which were heavily taxed\. At that time priced substantially above the international price\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: 4\.1\.1 The Project financed procurement of materials required for rehabilitation of the Aden transmission and distribution system\. Implementation is being carried out by PEC through its own resources and all works are expected to be completed by the end of 2001\. Upon completion, the Project will have fully achieved its revised physical objectives\. The Project financed various premises, vehicles, communications and office equipment which replaced the war losses and brought the Aden branch of PEC to operate as a normal power utility\. The ex-post economic intemal rate of return (EIRR) for the Project has been estimated at 14% which compares well with the 11% at appraisal\. 4\.1\.2 However, the impact of the project on improving PEC's overall financial position (and particularly the technical and management functions of the Aden Branch) was rather limited\. On the whole, PEC -3 -  (including its Aden Branch) remains a weak institution, with serious difficulties in\. key areas such as project management/implementation, financial management, accounts and management accounting system (paras\. 4\.4\.2-4\.4\.5)\. 4\.1\.3 During the entire implementation period, there was no sustained improvement in PEC's financial performance, which failed to break-even in all but one year (1996 ) during the past decade\. The 1999 unaudited reports indicate a further erosion of PEC's equity base (net loss of about YR 4\.6 billion), energy losses at an unsatisfactory level of 27% and accounts receivables at an unacceptable level of seven months of average monthly electricity billing\. In spite of suspension of disbursement (mid-1993) due to non-compliance with the covenant on timely submission of audit reports, PEC continued to be in default (except for 1997) throughout the entire Project period (para\. 4\.4\.5)\. 4\.1\.4 In view of the above, the ICR assesses the overall project outcome as unsatisfactory\. Even though the physical objectives were somewhat met, the project failed to meet the agreed financial targets on break-even requirement, accounts receivables and debt service coverage minima\. Subsequently, at the time of 'retrofitting' in mid-1997, several covenants were deleted from the DCA5 (para\. 7\.2\.3) and the project development objectives as included in the Project Status Report were modified to reflect the project's revised goal of rehabilitating Aden's war-damaged power facilities\. 4\.2 Outputs by components: 4\.2\.1 The new bulk supply substations and switchgears (which account for 52% of the project costs), have substantially increased the capacity (by 200%) and reliability of the sub-transmission (33/ llkV) network; this component has been fully completed\. 4\.2\.2 The Project also helped provide necessary support for reinforcing and extending the distribution system at 33kV and below by financing materials and equipment that are currently being utilized directly by PEC staff for this purpose\. Various sections of 33/11 kV lines in the Aden area are being upgraded using project-funded materials and equipment with PEC's own workforce carrying out the construction\. Currently, these works are proceeding and are expected to be completed by end-2001 as scheduled\. The 67km, 132kV transmission interconnection between Abyan and Aden is also being rehabilitated and upgraded by the addition of a second circuit; completion is expected by end-2000\. 4\.3 Net Present Value/Economic rate of return: 4\.3\.1 The economic analysis of the project presented in the SAR estimated the EIRR on a 1990-96 time slice of the investment program of PCEP, the southem power utility to be 11%\. Measurable benefits were taken to be the incremental sales valued at the existing tariffs, since these were above LRMC at that time\. 4\.3\.2 For the purposes of the ICR the same time-slice methodology was used to estimate the ex-post EIRR of the project\. However, since the PCEP no longer exists, the investment program, costs and sales of the Aden Branch of PEC were used in order to approximate the analysis in the SAR\.' The time-slice used was for the period 1995-2001, corresponding to the actual implementation period of the Project\. Incremental sales of the Aden Branch have been used as a proxy for the project benefits\. These sales have been valued at the prevailing tariffs\. On this basis the recomputed IERR is 14%\. Details of the calculations and the assumptions used are included in Annex 3\. - 4 -  4\.4 Financial rate of return: 4\.4\.1 The GOY, through the MEW and the MOF, regulates PEC's operations, tariff policy, investments and budgetary allocations\. PEC has little control over the amount (or use) of the revenue it generates\. This situation has proven unsustainable, however, and the GOY has begun to take effective steps to improve PEC's financial performance to meet its commitment to the IMF under the Enhanced Structural Adjustment Facility (ESAF)\. 4\.4\.2 PEC's overall financial situation continues to be weak, and the tumultuous setting (after the unification and the gulf war) against which the two utilities (PCEP and YGEC) were shaped had no impact at all on the company's financial performance, as PEC has always been entangled in financial quandary since it was legally established in 1993\. In that year, IDA suspended credit disbursements to PEC due to non compliance with its financial agreement on the annual submission of audit report\. But because of the civil war in 1994 and upon request of the Government to rebuild its war-damaged power systems in the southem region and its commitment to adjust the electricity tariffs, IDA lifted the suspension in August 1995\. As a result, tariffs' were increased in 1996 by more than 100 percent and PEC was able to comply with the breakeven covenant in that year\. 4\.4\.3\. Its overall financial management and internal control mechanism has been weak and inordinate delays in finalization of year-end trial balances resulted in delayed (except for 1997) finalization of audit reports; thus PEC has not been in compliance with timely submission of audit reports to IDA\. In addition the audit reports were qualified over the years, partly due to PEC's inability to strengthen its overall financial management, improve its accounting practice and develop a reliable management information system\. PEC was unable to overcome these difficulties and its overall financial management continued to decline\. However, of late, there seems to be a serious effort on PEC's part in reversing the trend by strengthening of its financial management\. Audit observations are being attended to, efforts are being made to strengthen internal controls and necessary initiatives have been taken to improve revenue collections\. 4\.4\.4\. PEC made net losses in every year (except for 1996); as such it continues to depend heavily on GOY budgetary support\. PEC's tariff structure needs to be rationalized as it does not offer any incentive or penalty to encourage any conservation or demand side management (DSM) initiatives\. With no tariff increases since 1998 and with the expected removal of fuel oil and debt service subsidies, PEC is not expected to generate adequate funds to meet its operating costs during 2000\. 4\.4\.5 PEC failed to meet the agreed financial targets\. In 1998, PEC was unable to generate revenues from operations to meet its operating costs (break-even), largely because tariff adjustments did not keep pace with inflation, high system losses (about 29%) and lack of good commercial practices\. PEC has not recovered as it continued to accumulate losses in 1999 (based on unaudited financial statements), caused by the gradual increase in fuel prices in 1998\. The accounts receivable outstanding has never reached the agreed target of three months, with the highest in 1994, at 14 months outstanding (during the civil war), which showed an impressive improvement in 1997 and 1998, at its lowest of five months\. But by the end of 1999, this has started to climb to about seven months equivalent of average monthly electricity sales, with the Government accounting for about 14 months\. The agreed debt-service coverage ratio of 1\.5 times was never achieved by PEC, as it continuous to incur losses\. It fell to its lowest in 1995, (minus 0\.19) and has hardly improved since and is estimated to be at minus 0\.77 as of 1999 (Appendix D)\. 4\.5 Institutional development impact: 4\.5\.1\. Since the major focus of the Project had shifted to emergency reconstruction, as part of the project restructuring, the bulk of the US$1\.2 million initially earmarked for training was reallocated to the - 5 -  emergency reconstruction component\. The project financed materials and equipment for the PEC training center in Aden prior to the restructuring, as well as some technical training courses for staff\. In total, the project funded about US$0\.4 million of training equipment and courses of short duration in which over 300 PEC staff participated\. The Project's overall impact on PEC Aden Branch's institutional development was less than as anticipated at appraisal and, at best, was modest\. Tariff adjustment was implemented as a condition of Project restructuring\. The Region wide retrofitting of 1997 aimed at sharpening the focus on to more relevant and achievable development objectives\. In the process, several covenants deemed less relevant and not attainable were dropped\. PEC Aden Branch covers a smaller area than PCEP, so the comparison is only approximate\. Since late 1997, the Government and PEC have acted to address the major problem areas, which inacludes increasing tariffs by 54 percent, in November 1997, and by an additional 12 percent (YR/kWh) in July 1998, bringing the tariff to YR 8\.52/kWh in 1999\. This consistent with IMF commitment to increase the fuel price to the level of the international price (see footnote 3)\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency\. 5\.1\.1 Several significant external factors outside the control of the government or the implementing agency affected project implementation\. Unification of North and South Yemen 5\.1\.2 Project implementation during 1991-92 was seriously delayed due to priority being given to the integration of the two countries, which also involved the merger of the two power utilities\. The Yemeni Dinar that was used in the former PDRY was phased out and the official fixed exchange rate of the Riyal to the Dollar was abolished in 1995 and replaced by a free-market rate\. Also, the Yemeni Riyal depreciated more than ten-fold between 1994 and 19969\. These significant fiscal changes had a major negative impact on PEC's finances and on the level of tariff increase requirements\. Civil War 5\.1\.3 The mid-1994 civil war resulted in heavy damage to the Aden power supply system\. However, there was no damage caused to any physical component of the Project, as implementation was stalled due to Credit suspension prevailing at that time\. Subsequently, after hostilities ceased, a review of the components was carried out and restructuring initiated\. Credit suspension 5\.1\.4 The two-year suspension of the Credit for non-compliance with financial covenants from mid-1993 to mid-1995 was a major contributory factor in the delay in completing the project on time\. 5\.2 Factors generally subject to government control: The project was also adversely affected by the following: * High inflation during the 1990-96 period (in excess of 25% annually), combined with GOY's general reluctance to raise tariffs meant that they fell significantly in real terms\. In the decade 1990 - 2000 the level of prices in Yemen increased 20-fold while power tariffs only increased eight-fold; - 6 -  * GOY failed to compensate PEC for losses incurred in operating the Hiswa desalination plant, to make adequate budgetary provision for the electricity consumnption of government agencies and to organize a cross settlement of arrears among various state bodies, thus contributing to further weakening of PEC's overall financial situation; * GOY could not always make adequate or timely arrangements for releasing counterpart funds to PEC in order to pay local contractors, which contributed to implementation delays\. 5\.3 Factors generally subject to implementing agency control: * PEC did not wish to award the contract for the 33/1 1kV substations to the lowest evaluated bidder due to its non-compliance with 'prior experience' criteria, a factor not included in the initial bidding documents\. After lengthy verbal and written exchanges over a six-month period between IDA and PEC it was decided to rebid for the substations, which resulted in an additional two-year delay in implementing this component\. * PEC was consistently unable to finalize its accounts within the agreed period, and thus was always in violation of the requirement to submit its audited accounts to IDA on time\. This was a contributory factor in the decision to suspend disbursements\. * PEC's project monitoring and administration was weak\. At the time of Credit Closing there was a significant undisbursed balance (about US$1\.0 million), while several contractors did not receive full payment for goods and services provided under the project; this was mainly due to PEC's inefficiency in submitting withdrawal applications in a timely manner\. 5\.4 Costs andfinancing: 5\.4\.1\. Total project cost including contingencies, at appraisal was at US$20\.93 million equivalent; this included a foreign exchange component of US$15\.50 million (about 74%)\. During restructuring, the project cost was estimated to reach US$20\.67 million equivalent\. By the Closing Date, actual cost is estimated at US$18\.94 million, which is expected to increase to about US$20\.7 million upon completion of the remaining works during 2000 - 2001\. 5\.4\.2\. At the time of Credit Closing, total project financing by IDA was US$15\.48 million; this was close to the SAR estimates of US$15\.50 million \. Counterpart funding was to be provided by the Government for the balance\. Funding by GOY at the time of ICR preparation was US$3\.46 million which was about 64% of the appraisal estimates for US$5\.40 million\. However, based on the Borrower's estimates, this is expected to rise to US$5\.22 million which is close to the appraisal estimate and would be about 25% of final project costs upon full completion of the project\. The fixed rate prior to the liberalization of the foreign exchange market in early 1995 was $1 = YR 12\. By end 1996 the rate had dropped to $1 = YR 127\. This was based on an exchange rate of ISDR = US$1\.30 at appraisal, as against an average rate of ISDR= US$1\.39 for disbursements during the life of the project\. As a result of appreciation of the SDR against the dollar, PEC had 6% more US Dollar resources at its disposal than anticipated, which is one of the reasons for the significant undisbursed balance at the time of project closing\. -7 -  6\. Sustainability 6\.1 Rationalefor sustainability rating: 6\.1\.1 The sustainability of the physical investments financed under the project is assessed as likely since they form an integrated part of the PEC Aden Branch transmission and distribution system\. As such, they will be operated and maintained according to standard power utility practices\. 6\.1\.2 However, PEC as an entity has yet to achieve financial viability\. It has not made profit since it was created in 1991 and its predecessor utilities were also chronically loss-making entities\. Prospects for its future financial sustainability are uncertain, given continuing non-compliance with the financial covenants of the follow-on Sana'a Emergency Power Project (SEPP - Cr\.3 1 32-YEM)\. 6\.2 Transition arrangement to regular operations: 6\.2\.1 Close monitoring of the project by IDA during the next 18 months is reconunended in order to ensure the satisfactory completion of the rehabilitation of the Aden-Abiyan transmission line as well as the Aden LV distribution system\. This is necessary to ensure the sustainability of the project as a whole and should be given due consideration in IDA's ongoing/future involvement in the sector\. 6\.2\.2 PEC's overall financial and operational performance is being monitored under the ongoing SEPP which commits PEC to reducing its accounts receivables to 90 days, achieve financial breakeven without subsidies on fuel inputs in the near term, make a rising contribution to its investment program from internally-generated funds and reduce its energy losses to 18% by 2001\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Identification\. preparation and aWpraisal 7\.1\.1 The project's objectives were appropriate\. Preparation and appraisal were satisfactory from a technical standpoint and took about 18 months to complete\. However, there were a number of shortcomings in project design (paras\. 3\.4\.2-3\.4\.3) and in the financial aspects of appraisal (para\. 3\.5\.1)\. No environmental impact assessment was carried out, given that the project only entailed rehabilitation/construction of substations, transmission and distribution lines, which have minor environmental impacts\. 7\.1\.2 A six-month delay occurred after the Bank had issued the green cover SAR because of difficulties in getting the government to meet the conditions for negotiations\. The latter was in part due to the Bank's requirement that GOY compensate PCEP for the high costs of producing water from the Hiswa desalination plant\. In addition, during the first half of 1990, PDRY government efforts were focussed on reunification talks with the YAR\. Credit negotiations finally occurred just days before the formal announcement of reunification of the two Yemens in May 1990\. These delayed the Board presentation, which took place a year after appraisal\. Subsequently, because of the merger of the two utilities (PCEP and YGEC) and delays in legalizing the merged utility (PEC), Credit effectiveness was also delayed and took a further 14 months to accomplish\. -8 -  7\.1\.3 With hindsight, it appears that there may have been a case for a reappraisal of the project, given the strong probability of a merger between the two utilities' and the concomitant difficulties in harmnonizing the differences in tariffs prevailing in the two utilities of the north and south Yemen\. This would also have assisted in implicating the new government in the project, and in building ownership for it, given that the project was entirely located in the former PDRY and unfamiliar to many decision-makers of the former YAR\. However, given the fact that the Credit had already been negotiated and the end of the fiscal year was imminent, it was perhaps a pragmatic decision to proceed with Board presentation without a reappraisal\. 7\.2 Supervision: 7\.2\.1 Overall project supervision by IDA was satisfactory, with fifteen missions in the eight years between effectiveness and closure\. Given the various interruptions experienced during the implementation phase including the unification of 1990, gulf war of 1991, Credit suspension in 1993 and the civil war of 1994, the bulk of IDA's supervision activity was concentrated during the last four years\. In reality this was the actual project implementation period, given that very little had been accomplished prior to lifting of Credit suspension (mid-1995)\. The suspension itself was handled well, with firmness on the IDA's part combined with ample early warnings given to the Borrower, including a 60-day informal suspension notice prior to the formal declaration\. 7\.2\.2 In 1994, following the civil war, IDA responded promptly to GOY's request to restructure the project and this correctly reallocated part of the Credit amount on the immediate reconstruction and rehabilitation needs of the war-damaged Aden system\. However, the restructuring was somewhat hybrid in nature\. Although, the restructured Project was described as 'basically an emergency operation'," IDA did not explicitly convert the project to an emergency relief assistance activity without specific performance covenants, as could have been expected for a purely emergency project\. This was due to the fact that the largest project component (i\.e\. substations) could not be considered as emergency reconstruction\. Hence, IDA was unwilling to compromise on the need for ensuring PEC's financial viability, and insisted that tariffs be raised at least enough to ensure that financial break-even was achieved with in 18-24 months\. This requirement contributed to a further year's delay in lifting the suspension of disbursements\." 7\.2\.3 It is worth mentioning that during the retrofitting of 1997, IDA agreed to drop the three covenants relating to the Hiswa desalination plant which GOY had failed to comply with since the start of the Project\. This was a pragmatic recognition of the impossibility of achieving compliance, given GOY's financial constraints, but the issue of the financial drain on PEC of continuing to operate the desalination plant remains and is being addressed under the ongoing SEPP\. Currently, PEC is investigating the prospect of converting the surplus desalinated water into potable water for sale in the local market\. The preference is for seeking a joint venture operation with the private sector and several offers received are under consideration\. 7\.2\.4 The project also benefited from a fairly high degree of continuity in Bank staff who worked on the project and from the decision in the later years, to transfer responsibility for task management to the Country Office\. 7\.3 Overall Bank performance: 7\.3\.1 Taking into account all of the above, the Bank's overall performance is assessed to have been satisfactory\. -9-  Borrower 7\.4 Preparation: 7\.4\.1 The Borrower's performance was satisfactory as regards to project identification, preparation and appraisal\. It participated fully in discussions concerning project component identification\. 7\.5 Government implementation performance: 7\.5\.1 GOY's performance was unsatisfactory because: (i) tariff increases were consistently delayed and insufficient to prevent the level of tariffs from halving in real terms, (ii) it did not observe its undertakings to compensate PEC for losses incurred in running the Hiswa desalination plant, (iii) it did not provide PEC with the necessary counterpart funds in a timely manner, (iv) it failed to make adequate budgetary allocations for the electricity consumption of state bodies, and (v) the excessively long time taken to issue the Presidential Decree formalizing the merger of the two utilities delayed the project by almost a year at a time when urgent repairs were needed\. 7\.6 Implementing Agency\. 7\.6\.1 Despite the establishment of an autonomous Project Implementation Unit (PIU), PEC's overall performance in physical implementation of the project was not filly satisfactory\. Procurement issues were often contentious and the PIU did not manage the process with sufficient diligence\. Payments were not handled expeditiously and monitoring was patchy\. The large undisbursed balance (of about US$1\.0 mnillion) that was subsequently canceled resulted from a lack of close monitoring of implementation progress by the PIU and a failure to submit withdrawal applications promptly as the deadline for final disbursements approached\. Furthermore, PEC failed to produce its accounts in a timely manner, its overall financial management was weak and it failed to improve its revenue collection during the project period\. Finally, on the institutional side, it suffered from the failure to appoint a Finance Director between 1997-98 and from rapid staff turnover\. 7\.7 Overall Borrower performance: 7\.7\.1 The performance of the Borrower is assessed as unsatisfactory\. "Furthermore, environmental impact assessments were not mandatory at the time of project appraisal\. 1This was announced in late 1991, just a few months after the Credit was declared effective\. From a letter to the Managing Director of PEC signed by the Chief of the Industry & Energy Division, CD II, MENA, 30 November, 1994\. "This was to give GOY a transition period to phase in the large increases and was a dilution of the original break-even covenant, which had not been met since the start of the project\. Issuing the Presidential decree legalizing the merger of the two utilities to form PEC was equally problematic\. 8\. Lessons Learned 8\.1\.1 The key lessons that can be drawn from this project are: * In order to avoid disagreements over contract awards (and possible further delays arising from rebidding), it is vital to ensure precise drafting of evaluation criteria in bidding documents; also, for large contracts the process of prequalification should be mandatory; - 10 -  * Major changes in the political, fiscal and institutional environment, are a strong justification for restructuring a project; the opportunity presented by a formal project restructuring should be utilized to take a fresh look at the appropriateness of the initial project objectives; * Implementation of all works that are related to fulfilling the development objectives of the Project should be completed prior to Credit Closing\. Procuring materials for such works and leaving it for the implementing agency to implement after Credit Closure should be avoided as monitoring of physical progress is difficult\. The usual delays in completion result in delays in achieving the overall development objectives; * Improving the financial performance of a power utility largely depends upon improving revenue earnings which requires an upfront action (during project preparation) on areas including tariff adjustments, loss reduction, improved billing and enhanced revenue collection measures\. Agreed loan covenants need to be supported by appropriate action plans to attain the desired level of financial performance\. Institutional strengthening, via improvements in financial, accounting and management systems, increases the sustainability of projects; and * Close supervision by field staff and a flexible response to changing conditions can improve the implementation of a project that faces serious implementation problems\. 9\. Partner Comments (a) Borrower/implementing agency: Not Applicable (b) Cofinanciers: Not Applicable (c) Other partners (NGOs/private sector): Not Applicable 10\. Additional Information ^-11 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Annex 1A Key Performance Indicators Staff Appraisal Report Indicators* Monitoring Indicators for Public Corporation for Electric Power (PCEP) (at appraisal, prior to merger) Indicators 1990 1991 1992 1993 1994 1995 1996 I\. System Operation _ Installed Capacity (MW) 240 265 267 267 267 267 275 Gross Maximum Demand MW) 121 125 130 137 145 153 162 Units Generated (GWh) 655 681 696 730 769 816 860 Units Sent Out (GWh) 595 610 625 657 691 732 771 Transmission and Distribution Losses % 18\.0 16\.1 14\.2 13\.7 13\.0 12\.6 12\.1 II\.Management and Finance Operating Ratio % 1\.04 0\.96 0\.96 0\.96 0\.97 0\.97 0\.97 Rate of Return % (on hist\. Assets) (1\.1) 1\.3 1\.2 1\.2 1\.2 1\.4 1\.8 Current Ratio 2\.3 2\.3 2\.4 2\.7 2\.7 2\.5 2\.3 Debt Service Coverage Ratio 3\.3 4\.4 4\.9 5\.3 5\.6 6\.0 4\.9 No\. of Months Receivable Outstanding 3 3 3 1 _3 3 3 3 Avg\. Revenue Rate (Fils/kWh) 42\.64 47\.24 49\.37 51\.12 51\.12 51\.12 54\.47 *These indicators are not comparable to Annex I B, given the institutional changes that took place during project implementation\. Annex 1B Third Power Project Monitoring Indicators for Public Electricity Corporation (at completion, Actual, after the merger) Indicators 1993 1994 1995 1996 1997 1998 1999 I\. System Operation Installed Capacity (MW) 708 708 699 698 737 779 802 Gross Maximum Demand MW) 418 420 488 497 502 549 574 Units Generated (GWh) 2122 1957 2216 2242 2425 2719 2848 Units Sent Out (GWh) 1586 1480 1573 1565 1734 1854 1923 Transmission and Distribution Losses % 25 24 29 30 29 29 27 II\. Management and Finance Operating Ratio % 1\.24 1\.46 1\.28 0\.96 0\.82 1\.18 1\.19 RateofReturn % (on hist\. Assets) 0\.12 0\.10 0\.09 0\.02 (0\.61) (0\.16) (0\.11) Current Ratio 1\.24 0\.76 0\.88 1\.60 0\.89 0\.98 0\.50 Debt Service Coverage Ratio (0\.17) (0\.22) (0\.19) 0\.72 (1\.04) 1\.96 (0\.77) No\. of Months Receivable Outstanding 12 14 9 7 5 5 7 Avg\. Revenue Rate (YR/kWh) 1\.16 1\.30 2\.09 5\.10 5\.44 7\.80 8\.52 - 12 -  Annex 1C Key Indicators Established at modification of DCA covenants (retrofitting) in 1997 Project Component Indicator Actual Outcome Comments Meet the incremental demand for Completed The electricity bulk supply capability in electricity in the Aden Region\. the Aden system has increased by 200% as a result of the construction of five new substations\. Partially reduce line losses in the Not yet completed At the time of Credit closure, reductions in Aden region\. line losses could not be assessed since network rehabilitation is ongoing\. Improve PEC's Financial position\. Not achieved PEC's financial performance remains unsatisfactory and it is in violation of DCA covenants\. Improve the technical and Partly Completed About 300 PEC staff received technical managerial skills of PEC's staff\. training in the 1 st phase\. Most funds reallocated to rehabilitation component\. -13 -  Annex 2\. Project Costs and Financing Pr ect Costs by Components (in US$ million equivalent) Component SAR Restructured Restructured Actual/Latest Percentage of Estimates Component Estimated Estimates Restructured Total Total Total A\. Aden System Rehabilitation A\. Aden System Rehabilitation Substation Rehabilitation 5\.76 132 KV Transmission Line 1\.92 1\.91 0\.99 Network Rehabilitation 1\.55 33 KV Transmission Lines 0\.92 0\.98 1\.06 Capacitors 2\.83 11 KV and LV Lines 1\.32 1\.28 0\.97 Network Control Center 1\.20 Distribution Transformers 0\.31 0\.33 1\.06 BASE COST 11\.34 Rehabilitation of 33/1 11KV Physical Contingencies 1\.20 Substations 8\.32 9\.93 1\.19 SUBTOTAL 12\.54 HV and LV Cables 0\.97 0\.60 0\.62 Price Contingencies 2\.38 Instruments, Commercial TOTAL A 14\.92 Equipment and Vehicles 0\.32 0\.46 1\.44 Erection Equipment 0\.09 0\.27 3\.00 Miscellaneous items and Spares 0\.74 0\.64 0\.86 BASE COST 14\.91 16\.40 1\.10 Physical Contingencies 1\.49 0\.00 0\.00 SUBTOTAL 16\.40 16\.40 1\.00 Price Contingencies 0\.94 0\.00 0\.00 TOTAL A 17\.34 16\.40 0\.94 B\. WADI HADRAMAWT WADI HADRAMAWT BRANCH BRANCH Cancelled and Deleted Line/Substation 0\.18 From the Project 0\.00 0\.00 0\.00 Capacitors 0\.21 BASE COST 0\.39 Physical Contingencies 0\.04 SUBTOTAL 0\.43 Price Contingencies 0\.08 TOTAL B 0\.51 _ C\. TECHNICAL ASSISTANCE B\. TECHNICAL ASSISTANCE BASE COST 1\.95 Consultancy Services 1\.58 2\.47 1\.56 Physical Contingencies 0\.06 Computers 0\.03 0\.07 2\.33 SUBTOTAL 2\.01 BASE COST 1\.61 2\.54 1\.58 Price Contingencies 0\.39 Physical Contingencies 0\.00 0\.00 0\.00 TOTAL C 2\.40 SUBTOTAL 1\.61 2\.54 1\.58 Price Contingencies 0\.00 0\.00 0\.00 TOTAL C 1\.61 2\.54 1\.58 D\. PROJECT COST (A+B+C) C\. PROJECT COST (A+B+C) BASE COST 13\.68 BASE COST 16\.52 18\.94 1\.14 Physical Contingencies 1\.30 Physical Contingencies 1\.49 0\.00 0\.00 SUBTOTAL 14\.98 SUBTOTAL 18\.01 18\.94 1\.05 Price Contingencies 2\.84 Price Contingencies 0\.94 0\.00 0\.00 TOTAL PROJECT COST 17\.82 TOTAL PROJECT COST 18\.95 18\.94 0\.99 E\. INTEREST DURING D\. INTEREST DURING CONSTRUCTION CONSTRUCTION IDA Credit On-Lent to PCEP 3\.11 IDA Credit On-Lent to PCEP 1\.72 0\.00* 0\.00 F\. TOTAL FINANCING E\. TOTAL FINANCING REQUIRED (D+E) 20\.93 REUIRED (D±E) 20\.67 18\.94 0\.91 The Government of Yemen did not enforce the subsidiary agreement with PEC (former PCEP) on interest payment and PEC did not indicate accrual of any interest during construction in their account\. - 14 -  PROJECT COSTS AND FINANCING PROJECT COSTS BY PROCUREMENT ARRANGEMENTS (IN US$ MILLION EQUIVALENT) Expenditure Procurement Method Procurement Method Categories Appraisal Estimate Actual/Latest Estimate Total Total ICB Other N\.A\. Cost iCB Other N\.A\. Cost 1\. Substations 6\.8 0\.5 0\.2 7\.5 9\.93 9\.93 (6\.2) (0\.5) (6\.7) (9\.49) - (9\.49) 2\. Distribution 0\.4 0\.1 0\.5 0\.33 0\.33 Transformers (0\.4) (0\.4) (0\.23) - (0\.23) 3\. Line Materials! 1\.4 0\.4 1\.8 6\.21 6\.21 Cables (1\.3) (1\.3) (3\.15) (0\.64) (3\.79) 4\. Capacitors 3\.6 0\.4 4\.0 (3\.5) (3\.5) -- - 5\. Load Dispatch 1\.6 1\.6 Equipment (1\.5) (1\.5) 6\. Training 0\.6 0\.1 0\.1 0\.8 Equipment (0\.5) (0\.1) (0\.6) (0\.44) (0\.44) 7\. Consultancy 1\.6 1\.6 2\.47 2\.47 Services and Training (1\.5) (1\.5) (1\.53) - (1\.53) Total 14\.4 2\.2 1\.2 17\.8 16\.47 2\.47 18\.94 (13\.4) (2\.1) (15\.5) (12\.87) (2\.61) (15\.48) - 15-  PROJECT FINANCING BY SOURCE (IN US$ EQUIVALENT) Appraisal Perceutageof Source Lateststte A IDA 15\.50 15\.48 0\.99 Governnent/PEC 5\.40 3\.46 0\.64 Total Sources 20\.90 18\.94 0\.91 - 16 -  Annex 3: Economic Costs and Benefits Year Genern Trans & 0 & Fuel Total Total Incremen Incremental Net Benefits Invt Distbn M Mn YR Costs Sales tal Sales Revenues Mn YR Invt Mn Mn YR GWh GWh Mn YR Mn YR YR 1995 149\.2 88\.6 0\.0 0\.0 237\.8 0\.0 0\.0 0\.0 -237\.8 1996 116\.2 323\.0 0\.0 0\.0 439\.2 0\.0 0\.0 0\.0 -439\.2 1997 53\.1 246\.4 0\.0 0\.0 299\.5 424 0\.0 0\.0 -299\.5 1998 0\.0 893\.1 37\.4 123\.8 1054\.3 457 33 274\.9 -779\.5 1999 38\.1 606\.7 50\.3 123\.8 818\.8 421 33 274\.9 -544\.0 2000 300\.0 54\.0 57\.4 202\.7 614\.1 442 54 450\.2 -163\.8 2001 70\.0 100\.0 60\.8 285\.6 516\.3 464 76 634\.4 118\.0 2002 0\.0 0\.0 60\.8 372\.6 433\.4 487 99 827\.7 394\.3 2003 0\.0 0\.0 60\.8 464\.0 524\.8 512 123 1030\.7 505\.9 2004 to 0\.0 0\.0 60\.8 559\.9 620\.7 537 149 1243\.8 623\.1 2020 _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Economic Rate of Return 14% Net Present Value at 10% I YR 25\.5 million Notes: - All data applies to PEC's Aden branch only\. - The period of analysis is 25 years, 1995-2020\. * All Aden branch investments have been included, even though some of these contribute to supplying areas outside the Aden branch via the nterconnected grid\. * Operations and maintenance costs have been taken to be 2% of the cumulative capital investment\. * 1998 average Aden Branch fuel costs of 3\.75 YRlkWh have been assumed constant throughout\. Itncremental sales have been assumed to be attributable to the project only from year 4 of the project, given the 7-year implementation period\. Sales are projected to grow by 5% annually from 2000 to 2004 and are held constant thereafter\. This is a conservative estimate, given the ongoing boom in construction and property development that Aden is now experiencing\. It is only slightly above the 1995-2000 rate (4\.5% annually), when the Aden power system was suffering the aftermath of the civil war\. * No estimate of benefits from reduced technical losses has been included, even though the project investments will assist in cutting such losses\. * Sales have been valued at existing 1998 tariffs (average revenue: 8\.3 YR/kWh), which are assumed to remain constant\. This understates project benefits\. If the tariff necessary to meet the financial covenant in the SEP project (10\.8 YR/kWh) is used to value benefits from 2001 onwards, the IRR rises to 18%\. -17 -  Annex 4\. Bank Inputs (a) Missions\. Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 2/88 4 Sr\. Power Engineer, Economist, 1J S Financial Analyst, Power System Specialist 12/88 2 Sr\. Power Engineer, Financial U S Analyst Appraisal/Negotiation 6/89 4 Sr\. Power Engineer, S S Financial Analyst, Power System Specialist, Consultant Supervision 10/91 2 Financial Analyst, S S Consultant 6/92 2 Sr\. Power Engineer, Financial S S Analyst 8/94 2 Sr\. Power Engineer, Financial IS S Analyst 11/94 2 Sr\. Power Engineer, Financial S S Analyst 3/95 2 Sr\. Power Engineer, Financial S S Analyst 3/96 4 Sr\. Power Engineer, Financial S S Analyst (Power), Restructuring Specialist, Sr\. Implementation Specialist 7/96 2 Principal Municipal Officer, Sr\. U U Financial Analyst 11/96 1 Sr\. Financial Analyst U U 2/97 1 Financial Analyst U U 10/97 2 Sr\. Power Engineer, Financial S S Analyst 3/98 2 Sr\. Power Engineer, Financial S S Analyst 12/98 4 Power Engineer, Financial Analyst, Operations Officer, Sr\. Implementation Specialist 5/99 5 Power Engineer, Economist, Sr\. SI S Financial Analyst, Operations Officer, Implementation Specialist - 18 -  ICR 12/99 3 Operations Officer, S U Implementation Specialist, Financial Analyst (b) Staff: Stage of Project Cycle ActualLatest Estimate No\. Staff weeks US$ (,000) Identification/Preparation 51\.4 124\.3 Appraisal/Negotiation 47\.7 129\.4 Supervision 169\.1 549\.6 ICR __ _ _ __ _ _ __ _ _9\.0 35\.0 Total 277\.2 839\.3 19 \.  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O lMacro policies O H OSUOM O N * NA Z Sector Policies O H OSUOM O N * NA Z Physical O H *SUOM O N O NA Z Financial O H OSUOM * N O NA O Institutional Development 0 H O SU *M 0 N 0 NA Z Environmental O H OSUOM O N * NA Social O Poverty Reduction O H OSUOM O N * NA ZGender O H OSUOM ON * NA C Other (Please specify) O H OSUOM ON O NA O Private sector development 0 H O SU O M 0 N 0 NA Z Public sector management 0 H O SU O M 0 N 0 NA O Other (Please specify) O H OSUOM O N O NA - 20 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating O Lending OHS*S OU OHU • Supervision OHS OS OU OHU El Overall OHS OS O U O HU 6\.2 Borrowerperformance Rating El Preparation O HS * S O U O HU El Government implementation performance 0 HS 0 S 0 U 0 HU El Implementation agency performance 0 HS 0 S * U 0 HU El Overall OHS Os * U O HU - 21 -  Annex 7\. List of Supporting Documents A\. Completion Mission Aide- Memoire B\. Project Review from Borrower's Perspective C\. Comments from Government D\. Financial Statements: 1993-2000 - 22 -  APPENDIX A Republic of Yemen THIRD POWER PROJECT (Cr\. 2164-YEM) COMPLETION SUPERVISION MISSION November 20-December 5, 1999 Introduction 1\. An IDA mission comprising Messrs\./Mme\. Somin Mukherji, Josephine Masanque and Ali Khamis carried out the final supervision of the above project during the period November 20 through December 5, 1999\. The mission wishes to thank the officials and staff of the Ministry of Planning and Development (MOPD), Ministry of Electricity and Water (MEW), the Public Electricity Corporation (PEC) and the Aden Branch of PEC for all the courtesies, assistance and hospitality extended to the mission members\. 2\. This aide memoire summarizes the mission's findings and recommendations, which are subject to review and confirmation by IDA management\. A list of people met during the mission is included in Annex 1\. Background 3\. An IDA Credit for SDR 11\.9 million (US$15\.5 million equivalent) was made effective on February 6, 1991\. The main objectives of the project are to assist PEC meet the incremental demand for electricity in the Aden region by rehabilitation of the Aden power system, reduce line losses, strengthen PEC's technical and financial position and help PEC improve the technical and managerial skills of its staff\. Implementation of the project suffered major setbacks as consequences arising from the Gulf war, the 1990 unification of North and South Yemen, Credit suspension (because of delays in the submission of audit reports) between 1993-1995, and the civil war of 1994\. The project was formally restructured in 1994 and retrofitted in 1997\. Over the years, the project scope and the various components have gone through significant changes\. The changes in project scope are detailed out in Annex-2\. Currently, the project scope consists of: (i) rehabilitation of five sub-stations, (ii) rehabilitation of 67km of 132-kV transmission line (Aden-Abian), (iii) provision of conductors and accessories, cables, and distribution transformers of various capacities\. The project also provides for technical assistance to strengthen PEC's technical and managerial skills\. 4\. Closing Date: The Credit Closing Date was extended twice, and GOY's request for a final extension until December 31, 1999, was approved on November 16, 1998\. Extension of the Credit Closing Date was allowed primarily to enable PEC rehabilitate the sub-stations (Contract No\. 1) which accounts for about 60% of the total project cost Implementation of Physical Works 5\. During field visits to all the project sites, the implementation progress of the various project components were reviewed\. The procurement status as of November 30, 1999, is included in Annex 3\. Current status of implementation of physical works is as follows 6\. Rehabilitation of five sub-stations: Since the last supervision mission of June 1999, the progress of works under this component (Contract No\. 1) has improved considerably and almost complete\. The overall completion of physical works is at about 99% in comparison to 50% as of December 1998 and 90% as of June 1999\. Of the five sub-stations, the ones at Shenaz and Block 80 were formally inaugurated (on - 23 -  September 12, 1999) by the President of the Republic\. Most of the commissioning tests at all the sub-stations have been completed except for those which have to be done at the time of energization\. The specific status of implementation of works at the various sites is as follows: (a) B3lock 80 - both the transformers are energized and are supplying electricity to the system, (b) Shenaz and Al-Manara: Due to contractual problem with PEC's cable trenching contractor, the laying of the 33-kV cable circuits between Shenaz and Al Manara was delayed slightly; this is now expected to be completed by December 15, 1999 and energization to be effected by December 31, 1999, (c) Medinat Ashaab: Transferring of cables to Medinat Asha'ab is in progress and expected to be completed by December 20, 1999, energization of this sub-station is expected by December 31, 1999, and (d) Lahei: The implementation status of the civil and electrical works is at 95% and 98% respectively\. These are expected to be comp\.leted by the end of December 1999 and energization to be effected by mid-January 2000\. 7\. Rehabilitation of 67km of 132-kV transmission lines (Aden-Abian): Materials for this rehabilitation work is to be financed out of the Credit and the labor contract is to be financed out of PEC's own budgetary resources\. Materials for this rehab-work are covered under Contract numbers 15-21 (refer Annex-3) and all materials have arrived\. However, because of pilferage/theft some materials delivered under Contract no -18 (costing about USD15,000) are needed urgently in order to complete the rehabilitation works of the above transmission line\. These however can not be delivered before the Credit Closing Date\. During mission, PEC explained the urgency of these materials and requested IDA's special consideration to facilitate procurement of them\. Since, disbursement from Credit can only be made for materials supplied on or before the Credit Closing date, the issue will be conveyed to IDA management and subiect to the availability of funds (para\. 10)\. the matter will be given due consideration at the time of Credit closure\. 8\. Rehabilitation of LV Network system: Materials for these rehabilitation worls are to be financed out of the Credit and cost of implementation to be financed out of PEC's own budgetary resources\. Procurement of all materials related to the rehabilitation of the network systems for 33 -kV, 11 -kV and below, are completed through Contracts 1-13 All materials have arrived and the network rehabilitation work is progressing satisfactorily\. As per current progress of implementation all rehabilitation works (33-kV, I l-kV and below) is expected to be completed by 2001\. A bar chart on implementation of the network system is included in Annex-4\. 9\. Storage facility at Beir Fhadhal: A 20m x 40m PEC storage facility was included within the scope of Contract No -1 with RMT (the sub-stations contractor) at a total cost of US$288,297 and YER 1,722,481\. Subsequently, the size of the stores was modified to 20m x 60m and the total cost of the enlarged facility including additional site work and a 7\.5T O/H crane with associated structural strengthening is US$485,430 and YER 1,310,872 (this includes some price reductions as well because of deletions in the price of boundary fencing)\. The current status of implementation is at 80% of completion, and the facility is expected to be completed by the end of December 1999\. During mission, the variation order related to the stores was discussed/reviewed and subject to a satisfactory outcome of the review process and the availability of funds (para 10) the mission will provide necessary approval for PEC to proceed\. The mission however reminded PEC that in case the works are not completed by the end of December 1999, the Credit will finance works completed as of December 31, 1999, and any works carried out beyond the Credit Closing date will have to be financed out of PEC's own resources\. 10\. Availability of additional funds: PEC's latest cost estimates indicate a possible saving from actual contract expenditures to be about US$770,000 (Annex -5)\. Much of these will be utilized for fornalizing the financing of several items that PEC has already procured against variation orders through their sub-stations contractor RMT\. These are being reviewed now and necessary clearances will be accorded on - 24 -  a case by case basis\. In addition, there is an issue of procuring two items (viz\. a 5MVA transformer and various fittings for the 132-kV transmission line rehabilitation works) that are expected to arrive three months after Credit closure\. Subject to availability of funds, the mission will recommend to IDA management that neceSsarY approval be given to PEC so that procurement of these items be allowed on an exceptional basis after Credit closure\. Technical Assistance and Training 11\. During the implementation of the Project, various training activities have taken place both in-country and abroad\. These included factory training for PEC engineers in specialized areas on operation and maintenance of transmission and distribution systems, management and procurement\. Overseas training was organized in areas of operations and maintenance of protection relays, energy meters, medium voltage switchgear, power transformers, and high voltage insulators \. In total 310 PEC staff have been trained under this Project, details of these are included in Annex-6\. Accounts and Finance 12\. Organizational Set-up: The current organizational set-up and practices have undermined any efforts on the part of PEC's management to initiate any change and, as explained later, the overall financial condition of PEC continues to deteriorate\. Necessary support from the GOY/MEW is therefore needed urgently to ensure that the management of PEC is able to play its role independently and effectively; this is essential to improve the overall financial condition of the corporation\. The ongoing institutional and organizational study (I/O study) under the Sana'a Emergency Power Project (SEPP), is expected to bring about effective improvement in accounting and financial systems in PEC; completion of the study is now scheduled for end-December 2000\. Audit Reports: 13\. PEC's financial statements: Based on recommendations agreed during the June1999 supervision mission, PEC focused on improving three main issues highlighted in the FY97 audit report\. PEC has taken the initial steps to establish an accurate record of all PEC outstanding loans and to maintain proper asset register, both of these are expected to be completed by March 2000\. The collection of accounts receivables has also improved\. 14\. The audit work for the period FYs97-99 has been contracted out to a private audit firm\. As in the past, PEC continues to default on timely submission of audit reports\. The FY97 audit reports were submitted in May 1999, i\.e\., after a delay of 11 months\. The FY98 audit report (due by June 1999) is now over due by about six months and is currently under review by PEC; finalization of the report is expected by January 30, 2000\. Soon thereafter, the audit work for FY99 will start and it is expected that it will be finalized and submitted by June 30, 2000 as scheduled\. During mission PEC agreed to this schedule\. 15\. Audit of SOEs and SA: Audit report on expenses made through SOEs and SAs are required to be submitted six months after the end of each fiscal year\. Audit reports for FY97 were submitted in May 1999\. Audit reports of FY98 are ready and pending finalization of contract with the auditor, these are now expected by December 30, 1999\. Audit reports for FY99 will be made available by June 30, 2000 as scheduled\. During mission\. PEC agreed to this schedule\. 16\. Financial Covenants: For FYs 98 and 99, the agreements with IDA requires PEC to break even (revenues sufficient to meet operating costs)\. PEC is not expected to meet its break even covenant for - 25 -  FY98\. During FY99, PEC's income statement for the first nine months indicates that its revenues will not be sufficient to meet its operating costs\. During this year, while tariffs remained thle same, salaries were increased by 20% and fuel costs by about 18% (from YR1 lAiter to YR13/liter)\. It is therefore unlikely that during FY99, PEC will be in compliance with the financial covenant (break-even)\. 17\. Debt-Service Coverage (DSCQ: The agreements with IDA also call for PEC to achieve a DSC ratio of 1\.5 times\. In FY98, GOY's settlement of PEC's foreign debt obligation were recorded as equity contribution\. This practice has been discouraged by IMF, as it drains the Govermment's budget\. In addition, the terms and conditions of repayment of these debts are not in agreement with subsidiary loan agreements (SLAs) between GOY and PEC, which is a generic problem for all Government's loans on-lend to Government-owned entities, e\.g\. NWSA and PEC\. As anticipated in the June 1999 aide-memoire, the trend is continuing, and based on unaudited financial statements, the DSC for FY98 and FY99 are estimated at 4\.25 time and 0\.19 times respectively\. PEC incurred losses due to increased operating costs, particularly salaries and fuel bills combined with no tariff increase in FY99\. 18\. PEC has succeeded in reconciling its loan accounts with Ministry of Finance and Central Bank, except for the Italian loan\. PEC's record indicates that the loan (currently at US$14 million) from the Italian Governrment and Ansaldo (SACE) is about US$11 million more than that of the books of MOF\. PEC has requested the MOF to provide them with proper instruction or documentation to enable them to reconcile their Italian loan accounts with that of MOF\. At the Paris Club Meeting, Ansaldo (SACE) reduced the loan by about US$11 million\. The mission recommended PEC to involve the MEW in resolving the issue with MOF\. 19\. Accounts Receivable Under the Credit Agreement, PEC is required to maintain its level of accounts receivable at four months for FYs 98, 99 and three months thereafter\. Although the level of accounts receivable from electricity sales has improved from ten months as of the end of FY97 to about six months as of the end of FY98, PEC continues to be in default of this covenant\. This modest improvement is the result of the off-settings of accounts among various government agencies as agreed based on IMF recommendation (Structural Adjustment Credit), and PEC's disconnection policies\. PEC also added incentives to its workforce to improve collection\. It continues to publish the namnes of prominent Government servants who default in settling their electricity bills in a timely manner\. In addition, the MOF has implemented direct payment from its budget allocation to various government agencies' account into PEC account for the electricity consumption\. Based on these initiatives, PEC is expected to meet the three months level of outstanding accounts receivable by the end of FY2000\. PEC will continue it's A/R monitoring program and include this in their monthly progress report to IDA starting February 1\. 2000\. 20\. Electricity Tariffs: The increase in tariff in FY97 and FY98 caused PEC to lose the industrial consumers, who are charged prices above the cost of supply\. Most of these consumers shifted to using diesel-generators, which is cheaper than electricity\. In the recently completed IDA-financed Tarim Water Supply Project, power connections to the wellfield were completed by PEC at a total cost of US$168,000 (financed by the Credit)\. Because of the high cost of power supply from PEC, the Tarim Branch has now decided to use their own diesel generation instead of buying power from the PEC grid\. Such shifting of consumer behaviour has contributed to the decrease in FY98 and FY99 revenues of PEC\. The proposed tariff study under the I/O study would provide recommendations on the tariff structure and levels, as well as a program for establishing a basis of pricing for financial viability, economic efficiency, and social objectives\. 21\. Disbursement: As of December 9,1999, a total of US$13\.92 million equivalent has been disbursed\. The balance amount is expected to be disbursed before the Credit Closing Date\. A table - 26 -  showing a comparison of actual/forecast disbursement with the appraisal projections is included in Annex- 8 22\. Special Account: The Project Management Unit has a balance of US$76,382\.72 in its Special Account as of December 9, 1999\. 23\. Covenant Compliance: Compliance with covenants is included in Annex-9\. Operational Plan 24\. The mission discussed and agreed with PEC on an Operational Plan (Annex-10) for the operation phase of the Project\. Since the transmission and distribution works constructed under the project will be integrated within PEC's overall system, their operation will be subject to normal operation and maintenance work of PEC\. Further, since the Project completion goes beyond the Credit Closing date, the Operation Plan incorporates the completion dates of the various components and provides indicators for monitoring the Project's operation and its development impacts\. Subsequent IDA missions will monitor these indicators\. Implementation Completion Report 25\. In accord with IDA guidelines, after completion of each project, an Implementation Completion Report (ICR) is required within six months of Project Closure\. The mission discussed with PEC the necessary information required to prepare IDA's part of the ICR and provided to PEC with necessary advice and support for preparation of the Borrower's contribution to the ICR which will be made available by the end of February 2000\. List of Annexes: Annex I List of People Met Annex 2 Changes in Project Scope Annex 3 Procurement Status Annex 4 Implementation of the LV Network Annex 5 Project Cost estimates Annex 6 Details on Technical Assistance and Training Annex 7 Financial Summary Annex 8 Disbursement Forecast Annex 9 Covenant Compliance Annex 10 Operation Plan Yahia A\. Al-Abiad Anwar Al-Harazi, Deputy Minister Somin Mukherji Managing Director Ministry of Planning and Development Operations Officer Public Electricity Corporation (The original copy was signed by all parties\.) - 27 -  I 1 TIEE REflnUIC OF YEMEN ' I 04e\.0U i\.Mtil 4"AJ Eti PUBLI4C KL CTRICITY CORPORATION ADEN rFID POWER PgW\.ECT are\. 61i3i20W Ref PEC' TCfrT U7 12000 'O T\.il WORLD J3ANKl RESIDMNT TMS\.STON 50 M\. SANA'A\. ATTN Mr\. Soin MLukhergoc -Task Manager rAX 0 1 4! 3709 C'C Mr\. Ali Kiamis - Task Officcr Subiect: Impleaenuton cgm&letlo reort Dear sir; Piease fnd enclosed a copy of implementation completion report \. Apologite ior the delay\. Be Eng\. M\. ~C\. TEL\. 957-2-38g27( 967-2-388270:\. F'AX: 97-2-3SS27J 967-2-388271 iSb E-MAIL: pgwer3(a)v\.net\.ye\. vower3(6iW\.eLve *gt4v\.1Jt A ADDRESS OnPOSrIT TOMATELNI'Y \. A4Sof t J'PU : A5\.4& HOSPITAL \. AL-mausomra - ADEN -,91 - 28 -  Appendix B PROJECT BACKGROUND 1\. The project concept was developed in 1987, when the Aden electrical system was old and needed to be rehabilitated in order to enhance the system's reliability and adequacy of supply\. Accordingly, a study was prepared by the World Bank Mission in May 1990\. According to the staff appraisal report, originally the components of the Third Power Project consisted of: Aden System Rehabilitation: comprising rehabilitation of the substations, transmission and distribution system establishment of network control center and installation of line loss reduction equipment\. Wadi Hadramout Branch: comprising installation of 33kV / 11 kV, 5 MVA substation and line loss reduction equipment\. Technical Assistance: comprising of provision of training and engineering consultancy services and procurement of training equipments\. 2\. IDA, then discussed with Ministry of Electricity and Water (MEW) and Public Electricity Corporation (PEC) the urgently needed replacement and/or rehabilitation of the materials and equipment damaged as a result of civil disturbances (May-Julyl994), based on these discussions, it was agreed to delete from the project, the following components / sub components: (1) Aden system rehabilitation: network control center, line loss reduction equipments and Tawahi substation (including change - over from 6\.6kV to l1kV\. Of the distribution system fed from Tawahi substation\. (2) Wadi Hadramout branch and (3) Technical assistance - training component\. 3\. The funds so released were reallocated to cover the urgent needs, at that time, of the rehabilitation of the equipments in the substation, replacement of transmission and distribution lines material equipments, and essential spares damaged or lost during the civil disturbance\. The credit suspension was lifted only at May1995\. Due to all factors mentioned above, the credits extended two times: at first extended up to end of 1997 and secondly extended up to the end of 1999\. PROJECT OBJECTIVES 4\. The objectives of the World Bank financed Third Power Project are to improve the quality, reliability and availability of electric power in Aden\. In particular, the following work were identified: * Meeting the incremental demand for electricity in the Aden region\. * Augmentation of the capacity of 33/1 1kV substations; * Reinforcement of the distribution circuits which consist of 33kV and lkV cables and overhead lines; * Replacement of old switchgear with higher capacity switchgear at a number of substations in order to improve reliability; * Improvement of the power factor of the system in order to reduce the line losses which have become a serious problem; in Aden and Wadi Hadramout Branches - 29 -  * The first phase of the network Control Center including SCADA/ EMS hardware and software\. * Improving PEC financial Position\. * Improving PEC technical and Managerial skills 5\. However, as a result of the civil war in Yemen from May to July of 1994, the project was restructured in September 1994, The loss reduction component and the network Control Center component were omitted\. Other components aimed at replacing and repairing lost or damaged equipments during the war were added\. These new components were mainly associated with the design, supply, erection and commissioning of five (5) 33/1 1kV substations, supply of equipments for the (33kV, I 1kV and low voltage networks and for the rehabilitation of the 132kV transmission line between Aden and Abyan (67km\.)\. 3\. PROJECT COMPONENTS 3\.1 The revised project consisted of the following main components in the form of contracts: a) Contract 56702/1 - substations rehabilitation involving the provision of 190MVA power transformers, 22 panels of 33kV and 83panels of I kV switchboards, and auxiliary equipments for 5x33/1 lkV substations, namely, Shenaz, Al Manara, Block 80, Medinat Ashaab and Lahej\. b) Contracts 56702/2 - 56702/21 - the contracts for the supply of following materials and equipments for the rehabilitation of the distribution network and 132kV Aden - Abyan transmission line: * 10 km of 33kV power cables and 10km of pilot cables\. * Distribution transformers and package substations of total capacity of 14 MVA\. * Poles (1200), conductors (500krn) and insulators (10,000), and\. accessories for line rehabilitation and maintenance\. * Test equipments, energy meters, substation batteries and radio communication equipments\. * HV and LV fuses\. * Materials and equipments for the rehabilitation of 70km 132kV line between Aden and Abyan including substations entry cables\. c) Direct Purchase Contracts\. d) International Shopping Contracts 4\. ACHIEVEMENT OF PROJECT OBJECTIVES 4\.1 Enhancements to the Aden Power System\. As result of rehabilitation work carried out under the World Bank funded Third Power Project, the performance and adequacy of the transmission and distribution system of Aden have improved considerably\.With the energisation of five (5) new substations, the Aden power system's capacity has increased by almost 200% and with the new 33kV and 11kV switchgear provide with modern protection relays have enhanced the reliability of the Aden power supply system significantly\. 4\.2 Additional Benefits\. As a result of associated works provided under the project will bring the following additional benefits to PEC and Aden: * 60 x 20 m storage, repair and maintenance building with 7\.5 T crane will provide PEC with adequate and safe storage facility for equipments and materials supplied under the project and to - 30 -  establish a maintenance facility for repair and maintenance of transformers and other equipments\. * The new air conditioned, fully furnished, two office buildings and office/ mess facilities at five substations will provide PEC with much needed office space and PEC staff will be able to perform their duties efficiently and effectively with these facilities\. * The new fully furnished and air conditioned gatehouses built under the project will help PEC staff to provide better protection for PEC properties under some comfort in hot Aden weather\. * The vehicles supplied under the project will help PEC with to improve the capability of the transport fleet and to get rid of some of the uneconomical vehicles\. * The doctor's room built under the project will help to improve the health facilities for Aden public\. * New radio and communication equipments provided under the project will help PEC to improve its communication facilities to provide an efficient services to the community\. * The Scott & Scott Distribution Management software and computer hardware will provide PEC engineers with modem facilities for planning and management of the transmission and distribution system\. * The training received by PEC staff throughout the Project duration will help them to improve their performance and for better management of PEC network assets\. 5\. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT 5\.1 Project Approval\. Following approval of the project by the World Bank, credit negotiations were held between the Bank, the Government of Republic of Yemen and relevant Ministries and agencies,The Development Credit Agreement, to finance the Third Power Project, was concluded between the International Development Association and the Republic of Yemen on June 21,1990\. Project Implementation and Managaement 5\.2 Proiect Organization\. The project was implemented in accordance with the World Bank Project Implementation Plan PEC's Project Manager; with the close co-ordination of the Consultant SMEC International Ltd\. Was responsible for implementing the project\. SMEC International Pty\. Ltd\. Was retained to provide consultancy services for Project\. The consultancy team assisted PEC in specification preparation, bid evaluation, on-site construction supervision, monitoring progress of construction works, reporting and the provision of training as required\. 5\.3 Procurement\. All contracts financed by the IDA Credit for works and goods were awarded, following International Competitive Bidding (ICB), according to World Bank IDA procurement guidelines\. 5\.4 Construction/Erection Contract No\.56702/1\. The design, supply, erection and commissioning of five (5) substations and associated works were carried out on turnkey contract basis\. The successful contractor for this work was RMT Industrie - Und Elektrotechnik GmbH of Germnany at Contract price of DM 11,454,959\.00 plus US$ 1,972,170\.00 plus YR 15,681,126\.95\. 5\.5 SUpply Contracts - Contracts 56702/2 - 56702/21\. The Contractor details for the supply contracts are shown Appendices 1 and 2 for costs estimates and Contract status of these Contracts\. 5\.6 Project Schedule and Progress Reporting\. Procedures for monitoring the physical works and - 31 -  financial reports were agreed with PEC, including monthly progress reports to PEC and quarterly progress reports to the World Bank\. These procedures were part of the project Implementation plan\. The project schedule for Contract 56702/1 is shown in the Microsoft Project Chart in Appendix 4\. 6\. PROJECT SUSTAINABILITY 6\.1 Operations and Maintenance of the Works\. The works and services that are to be completed and commissioned under this project form an integrated part of the PEC transmission and distribution system\. The existing PEC organization will be responsible for operations and maintenance of these works\.The project components will be operated and maintained in with the established practices of the PEC\. The maintenance work is planned using schedules of tasks, frequencies, standard gang compositions and work standards\. Maintenance procedures are long established and function satisfactorily\. PEC has a similar professional to equipments operation, and uses clearly defined procedures to ensure that equipments are operated in a safe and reliable manner\.The details of all plants and equipments are taken over under the project will be entered in to the plants and equipments register\. Progress of maintenance works and operations are to be carefully recorded and maintained; there is an established reporting system to furnish management information reports and which important has to be made\. 6\.2 Education and Trainin \. PEC's Third power project staff participated actively in all stages of the project to develop PEC's institutional capability for the engineering supervision and management of T&D project\. Four overseas training programs were organized for PEC Engineers; Two (2) Engineers were sent to Alstom, UK to join a course in power system protection analysis & applications; Six (6) Engineers participated in a training program organized by RMT with equipments manufacturer's works such France Transfo and Merlin Gerin\. Three (3) engineers participated in a training program organized by L&G, switzerland with energy meters applications and Two (2) engineers participated in a training program organized by dielve, Italy with 132kV\. Glass insulators applications\. RMT also provided training on site for the PEC's technical staff on equipments erection, wiring and cabling, testing, commissioning and equipments operations\. Various PEC's personnel were assigned to the contractor's staff to obtain hands-on 11kV\. Circuit breakers maintenance, protection relays commissioning and settings, switchgear erection, alignment and testing, maintenance of electronic equipments (eg\. Battery chargers \. etc\.)\. 6\.3 Along the course of the project, PEC staff worked closely with the Engineer (SMEC) on a daily basis\. This provided the opportunity for training in: * Substations earthworks, piling, foundations, drainage, cable trenches, control buildings\. * Substation layout, electrical details and electrical plants installation, control cabling, power cables terminations, phasing\. * Contract supervision and project management\. * Construction of new substation buildings, substations refurbishment\. * Substations testing and commissioning procedures\. * Usage of Scott and Scott Distribution System Management software and computer hardware\. * Installation and maintenance of radio communication equipments\. 6\.4 The various training programs provided to PEC staff under the Project have significantly enhanced PEC's capacity to undertake equipments upgrade project\. They have also instilled an awareness of the benefit of improving the quality and reliability of supply to Aden, and should improve the overall management of the utility\. - 32 -  6\.5 Maintenance and Spares\. The maintenance and care of the project facilities and installations will be the on-going responsibility of PEC Adequate quantities of spares for maintenance had been supplied under the project, as have suitable facilities for their storage\. 7\. EVALUATION OF BANK'S PERFORMANCE 7\.1 PEC is thankful for the credit facilities provided by the Bank and it's strict control over disbursements (See Appendix 3)\. The Borrower experienced very strict supervision and adhered to the rules of the Bank in procurement\. Any way, The establishment of the Bank's mission in Yemen in 1995\. Has greatly improved IDA's contribution towards the success of the project through shortening time needed seeking IDA's "no objection" \. etc\. for various project activities during implementation\. 8\. EVALUATION OF BORROWER'S PERFORMANCE 8\.1\. The project was nearly at a halt for several years (1991-1995)\. The transitional period after unification of Yemen and transfer of staff from PCEP-Aden to PEC-Sana'a or MEW resulted in suspension of the project activities\. Actually, World Bank suspended the credit up to May 1995\. In addition to this, for contract 56702/1, World Bank had been advised PEC to invite those 17 bidders already participated in round one for the second round\. 8\.2 Due to non-compliance of the bidders\. Contract 56702/1 for the second round opened in 15\.01\.1997 and signed on 3\.05\.1997\. 8\.3\. In general, since May 1995, the project execution was very satisfactory in all means of implementation\. 9\. ASSESSMENT OF OUTCOMES 9\.1 The project has provided PEC with an improved infrastructure and enhanced capacity to manage it\. It is suggested that performance indicators, such as 200% additional increase in substations capacity, laying-out and energizing a lot of numbers of 33kV, 11 kV\. And low voltage lines in Aden network causes reduction in technical power losses in the network, reduction in variation of voltage between peak and off-times and reduction of system outages per month are established\. By monitoring over a period of three years, the performance of the project can be assessed, and ongoing effectiveness of the training provided can be estimated\. 10\. KEY LESSONS LEARNED 10\.1 The lessons to be learned form the project is that for future projects, it will be beneficial that all related construction work to be given to a single contractor, who will then be responsible for completion of the project on time as scheduled and to avoid interfacing problems\. 10\.2 Also, on materials and equipment, supply of some Contracts, which were divided in to more than 20 packages, there were a shortage/missing items which always and in all cases deducted from the original contract price\. Successful in meeting its primary objective of increasing the quantity and improving the - 33 -  quality of the Power supply services in Tarim and near by villages\. 10\.3 The NWSA Wadi Hadramout branch has taken over the responsibility of operating the new Power supply system in Tarim, and a sub branch has been established\. The Branch has computerized its accounts, replaced all non working meters, installed new meters on all the non metered connections, and has trained its staff on financial and management aspects\. Plans for Future Operations and Sustainability: 10\.4 NWSA Wadi Hadramout Branch has already been operational for more than 10 years now; and has gained experience in operating Power supply systems in Seiyun, Shibam, and Al-Qatn districts\. The branch has taken over the responsibility of operating and maintaining the Third Power system and adopted an organization and administrative structure similar to that applied for Shibam and Al-Qatn\. NWSA has already made available the required staff and the technical and financial resources needed for its operations in Tarim\. Most of the staff needed are taken from the Tarim National Power Company, which ceased its operations in Tarim\. 10\.5 It is likely that the Project will sustain the achievements generated in relation to its primary objective and continue to supply adequate good quality Power to Tarim town and near by villages\. PEC Project Implementation Unit, Aden\. February, 2000\. LIST OF APPENDICES TO MAIN REPORT (Appendices included in the Project Files) Appendix 1\. Contract status\. Appendix 2\. Procurement Schedule\. Appendix 3\. Project Cost "Estimates & Availability of funds" Disbursement status as of 31\.12\.1999\. Appendix 4\. Implementation Schedule for substation contract as of 31\.12\.99\. Appendix 5\. Implementation Schedule for Network, works\. Appendix 6\. Credit Disbursement Schedule " Disbursement forecast and Actual"\. Appendix 7\. Operation Plan\. Appendix 8\. List of Spares under Contract 56702/1\. Appendix 9\. List of Tools & Materials under Contract 56702/1\. Appendix 10\. Photographs -34 -  APPENDIX C 0\. Ministt of Elctricity aad Water 3 ut t PlIXLIC LEC7'R1NCf CRPORA 7ON Z X |si>Ji SANAA - REPUBIUC OF YEMEN 1_ HEAD OFFICE if wt1 OUR RF\.P iC\. A\. 305\.2000 DAT3 -21\.6\.2000 20 June 2000 Mr\. ianri Brizzi Country Mmager IThe World sank Office in Sana'a Sana'a\. Republic of Yemen 13e2r Mr\. Brizzi, Sttjcct Third Pewer Project (Cr 2164-YEM) [miplcmctation Completion Report iCR) We rexeived the Implementation Complction Report (ICR) for th Third Power Project, a project which was restruured after the civil war of 1994) We thank th World Bank for continuing the project which began prior to the merger of thw fntier PCEP in Aden and YGHC in Sana'a\. We know tv the project faed severaI pblems, due to many ftators beyond the cwstrol of the World:3Bark and the Government of Yemen\. Becau* of this, we wish to particularty thank you and the projeci team\. Otr review of tie ICR indicates that it is a well articulated document v4crc in all fcets have been correttly represented\. We agree to its findings and conciltsions and wish to compliment the priject team for doing such atn xemplary job\. Let me thank yotu again and we look forward to working together in th Setor\. BSest rcgars\. t:ontactAddress: tRXt:P\.O\.aol#tQ\. 178 $af T\.f t8) (Ot7 513-25I2S'254126 P- t9671(1) 21WM701CM9080P2C09 E \.YENKWA - 35 -  APPENDIX D page l of 4 PUBLIC ELECTRICITY COPORATION Income Statements (all values in Yr mnillions unless otherwise noted) Actual Estimated Projected 1992 1993 1994 1995 1996 1997 1998 1999 2000 REVENUE Electrcity Sales 1,607 1,839 1,919 3,292 7,985 9,463 14,455 16,478 17,304 Service/Capacity Charges 0 0 0 0 0 0 0 0 1,785 OtherIncome 113 238 379 287 2,401 9,979 1,686 1,602 0 Water Sales 0 0 0 0 0 0 0 0 0 TOTAL OPERATING REVENUE 1,720 2,077 2,298 3,579 10,386 19,442 16,141 18,080 19,089 OPERATING EXPENSES Salaries and Wages 656 851 924 1,113 1,584 2,005 '2,485 2,764 3,317 Fuel 851 861 1,243 2,274 5,936 8,766 11,828 12,500 13,957 Exchange differences 0 0 0 0 0 3,039 :2,433 0 235 Maintenance and Repairs 97 134 193 366 0 0 0 1,093 1,142 Provision 40 115 41 52 151 754 398 400 239 General and Administrative Expenses 79 78 300 65 1,578 398 577 2,981 3,339 Depreciation 542 544 660 719 758 923 1,391 1,717 2,451 TOTAL OPERATING EXPENSES 2,265 2,583 3,360 4,589 10,007 15,885 19,112 21,455 24,680 PriorYears Adjustment 161 98 100 16 57 (18,908) (1,304) 400 0 Operating Profit (Loss) (706) (604) (1,162) (1,025) 436 (15,351) (4,275) (3,775) (5,591) Gross Interest Charges 126 114 96 248 782 547 380 805 727 Less Interest Charged during Construction 0 0 0 0 0 0 0 0 146 Interest Charged to Operations 126 114 96 248 782 547 380 805 581 PROFITI(LOSS) BEFORE TAX (832) (718) (1,257) (1,273) (346) (15,898) (4,655) (4,580) (6,172) Tax 0 0 0 0 0 0 0 0 0 NET INCOME (LOS S)AFTER TAX (832) (718) (1,257) (1,273) (346) (15,898) (4,655) (4,580) (6,172) Add: ProfWll(Loss) Balance January 1 (1,402) (2,741) (3,460) (4,717) (5,990) (6,336) (22,234) (26,889) (31,469) Cumulative Proflt/(Loss) December 31 (2,741) (3,460) (4,717) (5,990) (6,336) (22,234) (26,889) (31,469) (37,641) NOTES: ASSUMPTIONS: Fuel - HFO increased from YR 11 to YR 13 from 7/1/99\. 1\. Salaries & Wages - 20 percent annual increase\. 2\. Connection Charges - increased in April 2000\. 3\. Service Fees - increased in April 2000\. - 36 -  APPENDIX D page 2 of 4 PUBLIC ELECTRICITY COPORATION Balance Sheets (all values in Yr millions unless otherwise noted) Actual Estimated Projected 1992 1993 1994 1995 1996 1997 1998 1999 2000 FIXED ASSETS Fixed Assets 11,664 11,821 14,063 14,868 15,559 18,021 33,647 36,303 49,024 Accumulated Depreciation 3,249 3,718 4,361 5,048 5,616 6,484 7,777 9,555 12,007 Net FixedAssets 8,415 8,103 9,701 9,820 9,943 11,537 25,870 26,747 37,017 Work in Progress 957 1,088 1,568 3,972 13,478 21,982 12,961 37,256 40,173 TOTALFIXEDASSETS 9,371 9,192 11,269 13,792 23,421 33,519 38,831 64,004 77,191 CURRENT ASSETS Cash 463 404 363 972 4,789 2,740 1,395 (7,317) (5,571) Accounts Receivables 1,618 1,897 2,316 2,592 4,438 3,579 6,505 9,112 3,851 Other Receivables 303 579 535 410 1,063 4,040 3,210 366 409 Inventory 693 875 1,157 1,620 3,462 7,646 8,484 3,150 4,704 Accrued Income - - - 515 481 399 330 346 TOTALCURRENTASSETS 3,078 3,755 4,371 5,593 14,267 18,486 19,993 5,640 3,738 TOTAL ASSETS 12,449 12,947 15,640 19,385 37,688 52,005 58,824 69,644 80,929 CURRENT LIABILITIES Bank Overdrafts 100 83 63 7 0 22 2 0 0 Accounts Payables Govemment, Ministries and corporations 447 196 324 1,791 0 0 0 3,399 3,818 Contractors and suppliers 789 1,219 1,969 1,878 4,196 1,789 4,999 3,092 3,334 Accrued expenses 395 473 748 786 4,057 5,634 5,857 1,638 1,805 Ministry of Finance current account 699 0 0 0 1 0 0 0 0 Provision for fuel price increase 148 349 349 329 62 82 85 0 0 Current Maturites on long term loan 516 704 2,269 1,558 620 13,331 9,452 1,786 2,097 Total Accounts Payables 2,994 2,941 5,659 6,342 8,936 20,836 20,393 11,345 12,627 TOTAL CURRENT LIABILITIES 3,094 3,024 5,722 6,349 8,936 20,858 20,395 11,345 12,627 EQUITY Government Equity 10,362 11,677 12,005 15,847 23,604 20,185 28,871 34,177 40,386 Capital Contributions-Grant 0 0 0 0 3,947 3,947 3,947 3,947 4,096 Revaluation Surplus 13 27 32 39 46 0 0 12,642 11,940 Non-Refundable Deposits 620 697 756 845 0 0 0 1,612 3,466 Retained Earnings (2,741) (3,460) (4,718) (5,991) (6,337) (22,234) (26,889) (31,469) (37,641) TOTAL EQUITY 8,254 8,940 8,075 10,740 21,260 1,898 5,929 20,909 22,248 NON-CURRENT LIABILITIES Long-Term Debt 831 680 1,512 1,890 7,492 29,249 32,500 36,268 44,659 Staff Retirement Reserve 32 38 42 48 0 0 0 491 639 Consumers Refundable Deposits 238 265 288 357 0 0 0 630 757 TOTAL NON-CURRENT LIABIUTIES 1,101 983 1,842 2,296 7,492 29,249 32,500 37,390 46,054 I UIAL CUUI II a RUIr-tUKIel I LIABILITIES 12,449 12,947 15,640 19,385 37,688 52,005 58,824 69,644 80,929 - 37 -  APPENDIX D page 3 of 4 PUBLIC ELECTRICITY COPORATION Statement of Sources and Uses of Fund (all values in Yr millions unless otherwise noted) Actual Estimated Projected 1992 1993 1994 1995 1996 1997 1998 1999 2000 SOURCES Net Income Before Interest 320 (604) (1,162) (1,025) 436 (15,351) (4,275) (3,775) (5,591) Add: Depreciation 542 468 *643 687 568 868 1,293 1,778 2,451 Gross Intemal Cash Generation 862 (135) (518) (338) 1,004 (14,483) (2,982) (1,997) (3,140) OTHER SOURCES Government Equity 6,094 1,315 328 3,842 7,757 (3,419) 8,686 5,306 6,209 Capital Contribution (495) 0 0 0 3,947 0 0 0 149 Non-refundable customer deposits 620 76 59 89 (845) 0 0 1,612 1,854 Long-termdebtincrease 270 (151) 832 378 5,602 21,757 3,251 3,768 8,390 Current Maturities on Long-Term Loans 516 704 2,269 1,558 620 13,331 9,452 1,786 2,097 Consumers refundable deposits 106 27 23 70 (357) 0 0 630 126 MOF (700) 0 0 0 0 0 0 0 0 Staff retirement reserve 15 6 4 6 (48) 0 0 491 147 6,426 1,977 3,515 5,943 16,675 31,669 21,389 13,594 18,973 TOTALSOURCES 7,288 1,841 2,997 5,605 17,679 17,186 18,407 11,598 15,833 APPLICATIONS Capital Expenditures 6,569 289 2,722 3,209 10,197 10,966 6,605 26,951 15,638 Debt Service: Repayments 516 704 2,269 1,558 620 13,331 9,453 1,786 2,097 Interest Charged to Operations 126 114 96 248 782 547 380 805 581 Increase (Decrease) in Working Capital exc\. cash (293) 773 (2,080) (126) 2,255 (5,610) 3,275 3,410 (4,931) Increase (Decrease) in Cash 370 (39) (9) 716 3,825 (2,047) (1,305) (21,354) 2,448 TOTALAPPLICATIONS 7,288 1,840 2,997 5,605 17,679 17,187 18,408 11,598 15,833 - 38 -  APPENDIX D page 4 of 4 PUBLIC ELECTRICITY COPORATION Statement of Sources and Uses of Fund (all values in Yr millions unless otherwise noted) Estimated Projected 1993 1994 1995 1996 1997 1998 1999 2000 Income Statement Items Unit Volume (GWh) (000's) 1,586 1,480 1,573 1,565 1,734 1,854 1,934 2,031 Tariff (YR/kWh)11 1\.16 1\.30 2\.09 5\.10 5\.44 7\.80 8\.52 8\.52 Revenues 2,077 2,298 3,579 10,386 19,442 16,141 18,080 19,089 Electricity Sales 1,839 1,919 3,292 7,985 9,428 15,821 19,304 22,894 Other Income 238 379 287 2,458 2,419 648 1,281 1,346 Operating Income (604) (1,162) (1,025) 436 (15,351) (4,275) (3,775) (5,591) Net income BeforeTax (718) (1,257) (1,273) (346) (15,898) (4,655) (4,580) (6,172) Funds Statement Items Debt Service: Repayments 704 2,269 1,558 620 13,331 9,453 1,786 2,097 Interests 114 96 248 782 547 380 805 581 TotalDebts 818 2,365 1,806 1,402 13,878 9,833 2,591 2,678 Net Intemal Sources (1,760) (841) (2,130) (2,669) (22,707) (16,129) (7,998) (1,033) Gross Internal Sources (135) (518) (338) 1,004 (14,483) (2,982) (1,997) (3,140) Borrowings 553 3,101 1,936 6,222 35,088 12,703 5,554 10,487 Equity Investments 1,315 328 3,842 11,704 (3,419) 8,686 5,306 6,358 Other Sources 109 86 165 (1,251) 0 0 2,734 2,127 Total Sources 1,841 2,997 5,605 17,679 17,186 18,407 11,598 15,833 Capital Expenditures 289 2,722 3,209 10,197 10,966 6,605 26,951 15,638 Working Capital Increase (Decrease) 773 (2,080) (126) 2,255 (5,610) 3,275 3,410 (4,931) Increase (Decrease) in Cash (39) (9) 716 3,825 (2,047) (1,305) (21,354) 2,448 Debt Service: Repayments 704 2,269 1,558 620 13,331 9,453 1,786 2,097 Interests 114 96 248 782 547 380 805 581 TotalApplications 1,840 2,997 5,605 17,679 17,187 18,408 11,598 15,833 Balance Sheet Items Current Assets 3,755 4,371 5,593 14,267 18,486 19,993 5,640 3,738 LessCurrentLiabilibes 3,024 5,722 6,349 8,936 20,858 20,395 11,345 12,627 NetCurrentAssets 731 (1,351) (756) 5,331 (2,372) (402) (5,704) (8,889) NetFixed Assets 9,192 11,269 13,792 23,421 33,519 38,831 64,004 77,191 Total Assets 9,923 9,918 13,035 28,752 31,147 38,430 58,299 68,301 Debt 983 1,842 2,296 7,492 29,249 32,500 37,390 46,054 Equity 12,401 12,793 16,731 27,597 24,132 32,818 52,378 59,888 Retained Earnings (3,460) (4,718) (5,991) (6,337) (22,234) (26,889) (31,469) (37,641) Total Liabilities and Equity 9,923 9,917 13,036 28,752 31,147 38,429 58,300 68,301 Financial Ratios Operating Income as a % of Revenue (0\.29) (0\.51) (0\.29) 0\.04 (0\.79) (0\.26) (0\.21) (0\.29) Net Income as a % of Revenue (0\.35) (0\.55) (0\.36) (0\.03) (0\.82) (0\.29) (0\.25) (0\.32) Retum on Average Invested Capital (Equity) (0\.12) (0\.10) (0\.09) (0\.02) (0\.61) (0\.16) (0\.11) (0\.11) DebtServiceCoverage (0\.17) (0\.22) (0\.19) 0\.72 (1\.04) 1\.96 (0\.77) (1\.11) Current Ratio 1\.24 0\.76 0\.88 1\.60 0\.89 0\.98 0\.50 0\.30 No\. of Months Receivable Outstanding 12 14 9 7 5 5 7 3 Self-Financing Ratio l/ 7%) I/ Self-financing ratio covenant does not apply to 1993-1999\. - 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MAY 2o0I 0 0 TIhe W-wIt BOtIs RI'nP, \.y itd9mo,o - \. on Is _soseTso ff55)' y 5 000T - - 0070040~~T m555505so-oTo of 44-50 5 MAY 2000

REVIEW

P005803

Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 14639 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN SANA'A-HODEIDAH ROAD REHABILITATION PROJECT (CREDIT 1848-YAR) JUNE 21, 1995 Private Sector Development & Infrastructure Operations Division Country Department II Middle East and North Africa Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS Currency Units = Yemeni Dinars (YD) and Yemeni Riyals (YR) YD 1 = Yemeni Riyals 26 = US$ 2\.90 (May 1985) YD I = Yemeni Riyals 26 = US$ 2\.17 (exchange rate for this project) US$ 1 = Yemeni Riyals 12 = YD 0\.462 (exchange rate for this project) US$ 1 = Yemeni Riyals 120 = YD 4\.616 (market rate of exch\. March 1995) WEIGHT AND MEASURES Metric System British/US System 1 meter (m) = 3\.28 feet (ft) I kilometer (km) = 0\.62 miles (mi) 1 sq\. kilometer (m2) = 0\.386 sq miles (mi2) 1 metric ton (m ton) 0\.984 long ton (Ig ton) FISCAL YEAR OF BORROWER January 1 to December 31 ABBREVIATIONS AND ACRONYMS Arab Fund - Arab Fund for Economic and Social Development GCRB - General Corporation for Roads and Bridges HA - Highway Authority ICB - International Competitive Bidding ICR - Implementation Completion Report IDA - International Development Association MOP - Ministry of Planning OPEC - Organization of Petroleum Exporting Countries PCR - Project Completion Report PDRY - People's Democratic Republic of Yemen ROY - Republic of Yemen SAR - Staff Appraisal Report SDR - Special Drawing Right TA - Technical Assistance WB - World Bank YAR - Yemen Arab Republic YD - Yemeni Dinar YR - Yemeni Riyal  FOR OFFICIAL USE ONLY REPUBLIC OF YEMEN SANA'A-HODEIDAH ROAD REHABILITATION PROJECT (Credit 1848-YAR) IMPLEMENTATION COMPLETION REPORT TABLE OF CONTENTS Page No\. Preface \. i Evaluation Summary \. \. ii PART I: PROJECT IMPLEMENTATION ASSESSMENT Introduction \. \.1\. Project Objectives \. 2 Achievement of Project Objectives and Implementation Record \. \. 3 Project Sustainability \. 7 Association Performance \. 7 Borrower Performance \. 8 Assessment of Outcome \. 8 Future Operation \. 9 Key Lessons Learned \. 9 PART HI: STATISTICAL TABLES Table 1\. Summary of Assessment \. 10 Table 2\. Related IDA Credits \. 12 Table 3\. Project Timetable \. 14 Table 4\. Credit Disbursements: Cumulative Estimated and Actual \. \. 15 Table 5\. Key Indicators for Project Implementation \. 15 Table 6\. Key Indicators for Project Operation \. 15 Table 7\. Studies Included in Project \. 16 Table 8A\. Project Costs \. 17 Table 8B\. Project Financing \. 18 Table 9\. Economic Costs and Benefits (A-H) \. 19 Table 10\. Status of Legal Covenants \. 26 Table 11\. Compliance with Operational Manual Statements \. 27 Table 12\. IDA Resources: Staff Inputs \. 27 Table 13\. IDA Resources: Missions \. 28 Appendix I: IDA Amendments to Credit Agreement \. 29 References \. \. \. 30 Map: IBRD 19909R This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World 13ank authorization\.|   REPUBLIC OF YEMEN SANA'A-HODEIDAH ROAD REHABILITATION PROJECT (Credit 1848-YAR) Implementation Completion Report Preface 1\. This is the Implementation Completion Report (ICR) for the Sana'a-Hodeidah Road Rehabilitation Project in the Republic of Yemen, for which Credit 1848-YAR in the amount of SDR 14 million (US$ 18\.0 million equivalent) was approved on October 20, 1987 and made effective October 6, 1988\. The original credit was made to the Yemen Arab Republic, which merged with the People's Democratic Republic of Yemen to become the Republic of Yemen in May 1990\. 2\. The credit was closed on May 31, 1994, two and a half years after the original closing date of December 31, 1991\. Before the Credit became effective SDR 5\.7 million (approximately US$ 7\.9 million equivalent) was canceled, and the final disbursement from the remaining commitment took place on February 27, 1995\. The remaining undisbursed balance of SDR 1\.665 million (US$ 2\.487 million equivalent) was also canceled\. Co-financing was provided by the Arab Fund for Economic and Social Development (Arab Fund) and the Organization of Petroleum Exporting Countries (OPEC) Fund\. 3\. This ICR was prepared by Terje Wolden (Task Manager) and Tribhuwan Narain (Operations Officer) of the Private Sector Development & Infrastructure Division, Country Department II, Middle East and North Africa Region, and reviewed by Alastair J\. McKechnie (Division Chief) and Gianni Brizzi (Project Adviser)\. The preparation of the ICR began during the final supervision mission in February 1994\. A completion mission was not undertaken due to the civil war in Yemen later in 1994\. The ICR is based on information contained in the Staff Appraisal Report, the Development Credit Agreement, supervision reports, material in the correspondence files, internal IDA documents, and on interviews with relevant Bank staff\. Although the Borrower/Implementing Agency did not provide written comments on the report, IDA was verbally informed that they concur with the report's findings and conclusions\.   ii REPUBLIC OF YEMEN SANA'A-HODEIDAH ROAD REHABILITATION PROJECT (Credit 1848-YAR) Implementation Completion Report Evaluation Summary Introduction 1\. This Credit was the seventh in a series of IDA highway credits to the former Yemen Arab Republic (YAR) aimed at assisting the Government in rehabilitating and improving its road system\. The Yemen Arab Republic and the People's Democratic Republic of Yemen (PDRY) merged on May 22, 1990, to form the Republic of Yemen (ROY), which then took over responsibility for the project\. Project Objectives 2\. The primary objective of the project was to assist the Government in rehabilitating, maintaining, and improving its road system\. It aimed to conserve and develop economic resources, prevent potentially high road reconstruction and vehicle operating costs, and repair flood damage to important road links\. 3\. These objectives were incorporated in the project design, which included road works: rehabilitating and strengthening the Sana'a-Hodeidah road, flood-damaged sections of Sana'a- Marib road and the Harad bridge; financing equipment for road maintenance, and technical assistance for studies and assistance to the domestic construction industry\. The project also provided for (a) undertaking studies for priority projects and identifying needed institutional reforms; (b) adjusting fuel pricing and vehicle taxation to ensure more appropriate cost recovery from heavy vehicle users for wear and tear to the network caused by their vehicles; (c) protecting infrastructure by instituting adequate fund allocation and management procedures; (d) increasing the capacity of the domestic construction industry and expanding domestic employment opportunities, and (e) assisting in mobilizing external co-financing\. Implementation Experience and Results 4\. The project's major physical component - rehabilitating and strengthening a 68- kilometer section of the Sana'a-Hodeidah road - had to be dropped from the IDA financing package after a procurement decision by the Government deviated from IDA procurement guidelines\. While these works were completed using other funding, the Association did not supervise them and cannot evaluate their sustainability\. IDA financing enabled flood-damaged sections of the Marib road to be repaired and the Harad bridge rehabilitation to be completed, although the sustainability of the bridge work remains questionable\. Implementation of technical assistance, though intermittent, was effective\. Equipment worth US$ 4\.5 million was delivered  iii as planned\. The very adverse effects the Persian Gulf Crisis had on Yemen's economy also caused significant delays in project execution and reduced traffic flows so that rates of return were lower than expected\. The steps to improve cost recovery from road users by adjusting fuel pricing and vehicle taxation were never carried out partly due to the negative effect of the unification process and external events, such as the Gulf war, on the Government's continuity and commitment to reform\. 5\. The project, as conceived, was consistent with the Government's sector development plan and the Association's assistance strategy, which included five earlier highway projects and a port project\. The project was well formulated and easily accommodated into IDA lending plans during the course of its preparation\. It addressed the main transport sector priority of the Government's 1987-91 Third Plan: the Sana'a-Taiz-Hodeidah-Sana'a road network\. Its appraisal was, however, postponed after oil was discovered in the Safir area, and the Government asked that development of the Marib-Safir highway be brought forward\. The Association agreed, and the Marib-Safir Highway Project (Credit 1726-YAR) was appraised in November 1985, while appraisal for the Sana'a-Hodeidah Road Project was deferred to 1986\. 6\. Project preparation and appraisal took into account and responded well to changing needs of the Borrower and the sector\. In fact damages to road sections inflicted by floods after appraisal were assessed by a post-appraisal mission and included in the project during negotiations\. Appraisal and financing arrangements addressed co-financier interests and procurement requirements\. As funding for the Sana'a-Taiz section was secured from other sources the project scope was narrowed and redefined\. As co-financier interests in participating grew, the road works were divided into four independent contracts that could be bid under each financier's procurement requirements\. Negotiations and Board presentation were also rescheduled to accommodate the timing of co-financier appraisals\. 7\. In spite of thorough and flexible preparation, implementation suffered due to procurement-related delays before effectiveness\. Credit effectiveness was delayed by about nine months, from January to October 1988, after losing bidders complained about the procurement process for employing contractors for the section of the road IDA had agreed to finance\. After careful review, the Association upheld those complaints\. Rather than reopen the bidding, the Government acquired additional resources from the co-financiers for the Sana'a-Mafraq section of the road, and IDA funds associated with the road works contract (SDR 5\.7 million) were canceled, and revised implementation and disbursement plans agreed with the Borrower\. In August 1990, the Credit Agreement (Schedule I) was revised as proposed by the Government\. 8\. Project implementation subsequently focused on: (a) rehabilitating (i) flood damaged road sections (Ibb-Jibla, Marib-Sana'a), and (ii) the Harad bridge; (b) technical assistance for (i) developing the domestic construction industry; (ii) carrying out road engineering and feasibility studies for four roads (Kit-Assada 30 Km, Marina-Aldalid 150 Km, Salif road 60 Km and Hajja-Kushum 63 Km), and (iii) studies of erosion, siltation, and road safety, and (c) procurement of maintenance equipment\.  iv 9\. The Highway Authority (HA) awarded rehabilitation contracts for the flood-damaged roads in late 1989 - some 18 months behind the original implementation schedule\. Contracts for construction materials and equipment were awarded in April 1990\. However, by early 1991, with deliveries nearly complete, the delay had been reduced to about six months\. Subsequent work progressed satisfactorily on these roads, even though the contractor on the Marib-Sana'a road abandoned the job and the HA/General Corporation for Roads and Bridges (GCRB) finished critical sections under force account\. 10\. The Harad Bridge's superstructure (bridge deck) had collapsed shortly after its completion in 1981 because of structural deficiencies caused by poor workmanship in combination with inadequate design-load standards and high axle loads\. The bridge was an important trade link to Saudi Arabia that had been included in Yemen's 1986 Highway Master Plan, and the Government asked that it be included in the revised project\. The contract to design the bridge superstructure and the supervision contract was awarded in late 1989, and IDA agreed to finance the works based on a final design submitted in early 1991\. Due to lack of responses from bidders - due, at least in part, to the Persian Gulf Crisis - the Government invited pre- selected bidders to bid for the works\. It awarded the contract only in April 1992, which warranted an extension of the project closing date to December 31, 1993\. However exceptional flooding in 1992 and 1993 delayed the contractor in mobilizing works\. More importantly, the flooding exposed a problem of siltation of the river that reduced the opening under the bridge and put the adequacy of the bridge's original hydrological design into question - and raised questions as to the need to consider siltation-prevention measures and the possible redesign of bridge\. Based on the Government's request IDA allowed a final extension of the closing date for the contractor to finish the work - with an agreement that the Ministry of Construction would prepare an action plan within five months to address the problem of flash flooding\. The bridge works were completed, but the action plan was not received - Yemen was then on the brink of civil war - and the project closed on May 31, 1994\. Shortly thereafter, the bridge opened for traffic\. 11\. The four road feasibility studies were completed as scheduled, but the road safety and coastal siltation and soil erosion studies were somewhat delayed\. Technical assistance for the domestic construction industry was mobilized after considerable delay\. As appraised, three experts, hired by HA, were to train private domestic contractors in modem management techniques and practices\. The team leader was hired in August 1989\. After two years of working closely with Yemeni counterparts and domestic construction contractors, the team developed manuals and provided training to contractors\. The impact of this technical assistance was not immediately apparent, as construction entered a long slack period reflecting the deep recession in Yemen\. As the construction industry came out of the slump again in 1993, however, the effectiveness of the training became apparent, and it is estimated that domestic contractors are now carrying out more than half of all road construction related works\. 12\. At appraisal the overall economic rate of return (computed over ten years) for the Sana'a-Hodeidah road was estimated at 29%\. An ex-post evaluation shows an average ERR of about 21 %\. While lower than the appraisal estimate, this rate of return is still quite creditable,  v particularly given delays the project encountered\. The original contractor abandoned the project during the Gulf Crisis and GCRB executed the works under force account\. Rehabilitation of the bridge and the flood-damaged roads were unavoidable expenses, and no ERRs were calculated\. Overall Assessment of Outcome 13\. Project outcome can be described as mixed\. While the Sana'a-Hodeidah road rehabilitation was completed, after delays, and its economic rate of return - averaging 21% for the four road sections - was quite acceptable (though below the appraisal estimate of about 29%), IDA dropped out of this component before project effectiveness and could not contribute to the implementation of the main construction works\. 14\. The important project objectives of improving fuel pricing and vehicle taxation to ensure more appropriate cost recovery from truck users for the wear and tear their vehicles cause to the network, and protecting infrastructure by improving fund allocation and management procedures were not achieved\. 15\. The rehabilitation of flood damaged road sections and bridges, and the technical assistance for the domestic construction industry were carried out as planned, though there were significant delays, and the sustainability of the Harad bridge rehabilitation remains questionable\. The equipment to be procured under the project was also delivered as planned, strengthening the capacity of the HA to undertake maintenance work\. Key Lessons Learned 16\. One key lesson taken from this project - and put into practice as it evolved - is the need to assess early on potential Borrower problems with procurement and other Bank/IDA procedures and provide close supervision when difficulties are anticipated\. Thus, the Association monitored the procurement process for the rehabilitation of the Ibb-Jibla and Marib-Sana'a roads and the Harad bridge much more closely, and is continuing this on-site supervision in the ongoing Multi- Mode Transport and upcoming Transport Rehabilitation Projects\. 17\. Another lesson of the Project is that complex institutional changes are often not carried out successfully unless the Borrower is strongly committed to them and there is an appropriate constituency supporting their implementation\. This can often be accomplished by making institutional change the fulcrum on which a project rests and testing government commitment through the requesting of appropriate up-front actions\. 18\. On the technical side, the experience with the Harad bridge points out the importance of frequent on-site supervision and taking early action if the assumptions underlying design standards need to be changed to take account of changed circumstances\.  REPUBLIC OF YEMEN SANA'A-HODEIDAH ROAD REHABILITATION PROJECT (Credit 1848-YAR) Implementation Completion Report Part I: Project Implementation Assessment Introduction 1\. This Credit is the seventh in a series of IDA credits designed to assist the former Yemen Arab Republic (YAR) in rehabilitating and improving its road system\. The Yemen Arab Republic and the People's Democratic Republic of Yemen (PDRY) merged on May 22, 1990, to form the Republic of Yemen (ROY), which took over responsibility for the project\. Related IDA credits are as shown in Table 2\. 2\. Before the project's inception in late 1986 the Ministry of Planning (MOP) undertook a broad Transport Sector Review that led to a proposed set of sector investments under the Third Five Year Plan (1987-91)\. IDA reviewed these sector investments in the Transport Sector Memorandum (Report No\. 4990-YAR)\. and found them satisfactory\. MOP/IDA carried out a joint identification of priority areas for future work that suggested increased emphasis on: (i) improving administration of the transport system; (ii) maintenance and rehabilitation of existing roads; and (iii) port expansion to respond to the increase in traffic due to oil activities\. 3\. The Government's policy also aimed at recovering all costs of providing transport services\. Road user charges were levied through vehicle import duties, registration fees, road taxes, driving license fees, and taxes on fuel and tires\. These charges were adequate to cover only routine maintenance of roads, and the cost-recovery situation deteriorated due to inflation as the riyal devalued against other currencies, road maintenance costs increased\. and road user charges and fuel prices were not adjusted correspondingly\. Since unification, Government revenues have steadily decreased in real terms as a result of high inflation and the decline in worker remittances after the Gulf War\. 4\. IDA assistance strategy for Yemen's transport sector concentrated on developing infrastructure to support productive areas of the economy by addressing institutional and policy issues, and manpower development needs\. Project preparation and appraisal took into account key considerations of this strategy, such as rationalizing transport-sector expenditures, reducing transport costs and reconstruction needs, improving cost recovery from road users, addressing wasteful fuel subsidies, and developing the domestic construction industry\. 5\. The project originally intended to develop the Sana'a-Taiz-Hodeidah-Sana'a main roads\. When funding for the Sana'a-Taiz section was secured from other sources, project scope was narrowed and redefined in 1985\. Appraisal was deferred to November 1986 after a Government request to advance the processing of the Marib-Safir Highway Project (Credit 1726-YAR), which was important for oil exploration-related traffic induced by the refinery at Safir\. This provided additional preparation time that was used to improve cost estimates and firm up co-financing\. By  2 September 1986 the Highway Authority (HA) and its consultants, had prepared draft tender documents and bills of quantities for the Sana'a-Hodeidah road sections\. The Arab and OPEC Funds expressed interest in co-financing the project\. The Final Executive Project Summary (November 6, 1986) and the subsequent appraisal confirmed project objectives as rehabilitating the road, and providing technical assistance to support the domestic construction industry\. 6\. During negotiations in June 1987, it was agreed that Government would (i) allocate adequate budgetary resources for road maintenance; (ii) review and decide with the Association, on an annual basis, important policy issues such as the criteria for fuel pricing, and road user charges, and (iii) initiate important institutional improvements through systematic technical assistance to the private domestic construction industry\. The delegation also confirmed that flooding had caused significant damage to several bridges and road sections\. It provided IDA with damage assessments from the flood-stricken sections of the Sana'a-Marib road (175 Km)\. The Association agreed to send a mission to confirm cost estimates and possibly raise the IDA financing of the project\. 7\. Based on the findings of the post-appraisal mission, the IDA credit was increased from US$10 million to US$14 million to finance one of the Sana'a-Hodeidah road sections, road maintenance equipment, flood-damaged roads and bridges, and support for the technical assistance program at the Highway Authority\. Project Objectives 8\. The primary objective of the project was to assist the Government in its rehabilita- tion/improvement program for the main road network\. This would help preserve valuable capital investments necessary to exploit economic resources, avoid the high costs of complete road re- construction, and reduce vehicle operating expenses\. Other objectives were to: (i) develop the capability of the private domestic contracting industry; (ii) encourage reforms in transport institutions; (iii) support necessary changes in fuel pricing policy and vehicle taxation to assure adequate cost recovery from heavy vehicle users for the wear and tear they caused the road network; (iv) protect road infrastructure through adequate allocation of funds to support a systematic maintenance program, and (v) assist in attracting and coordinating external financing\. 9\. To achieve the above objectives the following project components were included: (a) Road works: (i) rehabilitation/strengthening of the Sana'a-Hodeidah road (including Markha junction road); and (ii) rehabilitation of flood damaged roads and bridges on the Sana'a-Marib, Taiz-Mafraq and Hodeidah-Saudi Border road\.  3 (b) Technical Assistance: (i) for construction supervision of the Sana'a-Hodeidah road works; (ii) to the domestic construction industry to strengthen its civil works imple- mentation capability and improve its efficiency; (iii) for the preparation of future projects, and (iv) for assisting Government in addressing transport sector policy issues\. (c) Procurement of road maintenance equipment\. 10\. A 3 1/4 year project implementation period was envisaged\. The total cost of the project was estimated at US$57\.0 million equivalent, with a foreign exchange component of 77%, of which US$18\.0 million or 32% was to be financed under the IDA credit\. The Arab and OPEC Funds had agreed to co-finance the Sana'a-Hodeidah road\. Achievement of Project Objectives and Implementation Record 11\. The Sana'a-Hodeidah road works were divided into four sections, of which IDA had agreed to finance one (the 68 km road section between Sana'a and Mafraq) at an estimated cost of US$9\.2 million\. Three sections totalling 163 Km were to be financed jointly by Arab Fund (US$23\.2 million), OPEC Fund (US$4\.4 million), and the Government (US$5\.8 million) under one contract in parallel with the IDA-financed section\. 12\. The section IDA had agreed to finance was tendered under ICB rules, and an international consultant served as an advisor during the tendering and evaluation processes\. A committee comprising members of the Government's Central Purchase and Tenders Committee and engineers from the HA recommended awarding the contract to a Yugoslav contractor as the lowest evaluated bidder\. IDA, on the basis of the information provided in the evaluation report, gave its "no objection" to the award of the contract as recommended\. 13\. The other bidders complained to the Association, however, that IDA guidelines had not been followed, as the Yugoslav bidder had not provided an acceptable bid bond by the time of bid opening\. After reviewing the complaints, IDA concluded that the Yugoslav contractor's bid was non-responsive, and requested the Government to award the contract to the lowest evaluated responsive bidder\. The Borrower advised the Association of its inability to reconsider the award of the contract, referring to the quality of the other bids and a cabinet decision on the matter\. IDA ultimately withdrew its financing for Section IV (Sana'a-Mafraq) of the Sana'a-Hodeidah road works in view of its responsibility to assure fair treatment of fully responsive bidders\. 14\. After being informed that the Government could secure financing for this section from the Arab and OPEC Funds, the Association cancelled the related SDR5\.7 million and waived the associated condition of effectiveness that consultants for the supervision and construction of the  4 Sana'a-Hodeidah road works be employed, as the works and their supervision were no longer to be financed by IDA\. Other conditions remained in force and were met by October 6, 1988, when the Credit was declared effective before the end of the second three-month postponement\. 15\. The Sana'a-Hodeidah road works contracts - financed by the Arab and OPEC Funds - were signed in May 1988\. and execution of works began in September 1988\. The road works were seriously affected by the Persian Gulf crisis and later civil disturbances\. The contractor abandoned the works in January 1991 after completing only a small fraction of the project\. In December 1991 the Highway Authority - renamed the General Corporation for Roads and Bridges (GCRB) - acting under Clause 63 of the Contract took possession of the contractor's equipment and facilities, and completed the works using force account\. During their implementation the scope of the works and the number of kilometers rehabilitated were somewhat reduced to accommodate changed circumstances and contain costs\. By January 1995 some 80 to 90 percent of the works were completed, but substantial amounts of road furniture, markings and drainage works still remained to be finished\. Redluction of Project Scope 16\. Dropping the Sana'a-Hodeidah road works substantially reduced the scope of the project\. Project implementation, therefore, focused primarily on: (a) rehabilitating flood damaged road sections (Ibb-Jibla and Marib-Sana'a roads) and rebuilding the Harad bridge; (b) technical assistance for: (i) the domestic construction industry; (ii) engineering studies for four roads: Kita-Assada (30 Km), Madina-Aldalid (150 Kin), Hodeidah- Salif (56 Kin) and Hajja-Kushum (63 Km); and (iii) studies of coastal siltation/soil erosion and road safety, and (c) procurement of equipment for maintenance\. 17\. The rehabilitation works were started in late 1989, and contracts for construction materials and equipment for maintenance were awarded in April 1990\. By early 1991, with deliveries nearly complete, an 18-month delay had been reduced to about six months\. Work on the roads and bridge progressed satisfactorily after the Gulf crisis, but a second contractor abandoned this job and GCRB finished sections of the Marib-Sana'a road using force account\. Overall, rehabilitation of the flood-damaged road sections and equipment procurement were satisfactory\. The Harad Bridge 18\. The Harad Bridge is on the Hodeidah-Jizan road close to the Saudi border\. The original bridge and the main road and other bridges on it were financed by the Saudi Government on a grant basis and completed in 1981\. Shortly after opening to traffic the bridge showed signs of distress caused by a combination of several factors\. Severe cracking developed on the underside of the bridge deck, possibly due to damage to the concrete caused by inadequate curing before  5 removing its framework and scaffolding\. This in combination with high axle loads and the low design loading standards used in the design caused the bridge deck to collapse shortly after the road was opened to traffic\. Its loss meant that cross-border traffic had to make a lengthy detour\. 19\. Although the bridge was not damaged by floods, IDA agreed to finance the reconstruction of the bridge and related works because of its importance to cross-border trade\. GCRB awarded the design and supervision contract in late 1989\. The design was approved by IDA early in 1991\. and bids for works were announced shortly thereafter (ICB)\. No contractor showed interest in taking on the works after two consecutive calls for proposals, possibly because of the Gulf crisis, the remote location of the project, and because the bridge had been redesigned in a way that required pre-stressing and pre-casting beams - techniques locally established internationial contractors lacked experience with\. GCRB then invited three pre-selected bidders to prepare proposals and Uttar Pradesh State Bridge Corporation Ltd\., of India, was awarded the contract in April 1992\. The delay in the bidding process warranted an extension of the closing date of the credit to December 31, 1993\. 20\. Exceptional flooding, with water levels that would have overtopped the bridge if it had not been for the fact that the old bridge's superstructure had been removed\. This delayed the contractor in July/August 1992 and again in March 1993\. More importantly, the supervision engineer observed considerable siltation of the river bed in the area of the bridge\. The siltation had been ongoing for many years, apparently, and effectively reduced the opening under the bridge and its capacity to accommodate high floods\. The bridge superstructure as designed would, therefore, require maintenance work on a permanent basis to remove large quantities of upstream and downstream silt from the wadi beneath it\. In October 1992 the bridge supervision consultant proposed to GCRB that hydrological studies be undertaken to estimate new flood design levels and determine the extent and cause of the siltation and remedial measures, such as upstream silt traps, that could be taken\. This would have enabled GCRB to revise the design\. In a progress report in late 1992, the Ministry of Construction indicated that such studies would be undertaken\. Bridge experts assisting the IDA supervision mission in October 1993 recommended reviewing the project design, but the Ministry and the supervision consultant decided not to delay the contractor's work for that purpose\. 21\. On receiving Government's request to extend the closing date to December 31, 1994, IDA granted a 5-month extension to allow the contractor to finish work and be paid on the condition that the Ministry of Construction prepare an action plan to address the design and siltation problems (including hydrology and morphology studies of the river) to make the bridge resistant to flash floods and ensure its long-term viability\. This action plan was not received, and the project closed end of May 1994, during the Civil War\. The bridge opened for traffic in June 1994\. The Government has been informed that receipt of a satisfactory action plan to rectify the problems on the Harad Bridge will be necessary for further IDA assistance in the road sub-sector\. Technical Assistance 22\. The contracts for the road feasibility studies were awarded by end-1989 to consultants from both Part I and Part II countries (with one joint-venture with a local firm)\. The assistance was  6 delivered in a relatively straightforward fashion and no major problems were encountered\. The studies were completed by end-1990\. 23\. The coastal siltation/soil erosion study and the road safety study were somewhat delayed, and the road safety study was only completed in draft form due to the civil war\. The coastal siltation/soil erosion study surveyed major road sections to identify erosion containment works\. It identified main issues regarding coastal soil erosion impact on roads\. An example of this was the protection work done for Al-Katib Road in Hodeidah\. The work started in December 1990 and was completed by September 1991 - rubble stone armor was provided to a total of 3,060 m of the double lane asphalt road serving as a second line of protection to the Hodeidah Port\. The study had good impact - works taking these experience into account were then included in the second phase of the study\. New components, such as for fishing ports were also developed\. 24\. The road safety study identified safety measures, requisite road furniture (equipment and civil works), highway marking materials and regular maintenance equipment and implementation assistance\. These were provided under the project as recommended by the study for key sections of the road network\. 25\. Technical assistance for the domestic construction industry also was mobilized after considerable delay\. As appraised, three experts were to be hired for three years by the Highway Authority to guide domestic contractors in modern management techniques and practices\. The team leader was hired only in August 1989 and began concentrating on the building construction and road sub-sectors\. After two years, working closely with Yemeni counterparts and domestic construction contractors, the team developed manuals and provided training to contractors\. The impact of this technical assistance was not immediately apparent, as construction entered a long slack period reflecting the deep recession in Yemen\. As the construction industry picked up again in 1993, however, the effectiveness of the training became apparent, and it is estimated that domestic contractors are now carrying out more than half of all road construction-related works\. However, as seen under prior projects (Credits 1617-YDR and 1413-YAR) development of private-sector capabilities is being threatened by severe inflation and a lack of price escalation clauses in local construction contracts\. The Government, therefore, needs to allow for price adjustment when budgeting civil works contracts\. It also needs to develop the indices and bases to implement price adjustment clauses\. Also, the Government needs to consider contracting out more road works to local contractors as a sector policy\. Procurement of Maintenance Equipment 26\. When increased levels of financing from the Arab and OPEC Funds were identified, it was agreed that approximately US$2\.9 million worth of equipment would be procured from IDA funds\. The equipment list was agreed at negotiations, and the HA soon after effectiveness prepared bidding documents\. No major delay affected the procurement and the Borrower awarded the contracts during April-May 1990\. The proceeds of the Credit were reallocated on August 30, 1990 (see Appendix I) to increase the amount allocated for goods and equipment as proposed by the Borrower\. By 1992 most of the tendered equipment was procured and delivered utilizing the total estimated allocation of approximately SDR 3\.3 million (equivalent of US$4\.5 million)  7 Project Sustainability 27\. The main issues regarding project sustainability apart from normal deterioration in Sana'a- Hodeidah road conditions if regular maintenance is not forthcoming, concern the Harad Bridge\. Government has to closely monitor siltation levels affecting the bridge opening\. In addition there is concern about the capacity of the bridge superstructure to withstand horizontal water forces if overtopped by a flash flood\. The reasons for the changed hydrological regime in the area are unclear, but are probably related to upstream diversionary structures built to irrigate farmland along the river\. The Government needs to take concerted actions - combining road maintenance, studies, and silt excavation - to alleviate these risks\. 28\. As regards efforts to keep the local contracting industry capable of meeting the increasing standards demanded by an expanding network, macroeconomic reforms now under way should alleviate the inflationary situation\. The envisaged introduction of price adjustment clauses (see para 25) would help reduce financial risk for contractors and establish sounder relations between them and contracting agencies\. Association Performance 29\. IDA accommodated the Borrower's requirements very flexibly from project conception through its completion\. It reduced project scope to exclude the Taiz road links once other financing was identified, then deferred preparation to enable the fast-track delivery of the Marib- Safir Road Project (Credit 1726-YAR)\. Bidding problems that might have seriously delayed the project were overcome by arranging further co-financing\. And very late in the project preparation cycle IDA changed project design to include equipment, last-minute flood damage and key network constraints such as the Harad Bridge\. In terms of the project, during implementation, the closing dates were extended three times to enable works, interrupted by regional and civil strife, to be completed, particularly on the Harad Bridge\. 30\. The project objective of improving fuel pricing and vehicle taxation to ensure more appropriate cost recovery from truck users for the wear and tear their vehicles cause the network, and protecting infrastructure by improving fund allocation and management procedures were not achieved\. Lack of progress in these areas were partly due to the negative effects of the unification process and external events, such as the Gulf War, on the Government's continuity and commitment to reform\. 31\. The Association generally supervised the project well but more frequent supervision of the Harad Bridge re-construction would have been beneficial\. After the exceptional flood in August 1992 that was higher than the old bridge's superstructure, and in which the contractor suffered a considerable delay due to damage to the bridge abutments, the supervision consultant proposed a hydrological study and a review of the bridge design\. Files do not indicate this proposal having being forwarded to the Association, but was brought to the Association's attention by the bridge supervision consultant on site during the next supervision mission\. This delayed IDA's reaction\. In the next supervision mission in September, 1993, a bridge expert and a hydrologist were included to review the situation and make recommendations\. Since the construction work had  8 advanced considerably, and it might have been more costly to put the works on hold to await the outcome of a design review than to complete the works, the Borrower decided to continue works and proposed meeting redesign requirements subsequently\. The action plan for doing this was not received - at least partly because Yemen was then on the verge of civil war - as of project closing\. This issue is being followed up as part of the supervision and preparation of other projects in the sector\. Borrower Performance 32\. The Government's strong commitment to finish the road works overcame the contractor's abandonment of the Sana'a-Hodeidah road works and the Gulf crisis and civil disturbance-related problems faced by the Highway Authority\. The Borrower and project co-financiers, the Arab and OPEC Funds, succeeded in completing the works and opening the road to traffic\. 33\. As regards the Harad Bridge, bridges are normally designed to accommodate historical floods\. Since the August 1992 flood would have overtopped the bridge if it had still been in place, it was clear that the basis for the present design had changed and appropriate measures will be required to correct it and prevent the bridge from being damaged by floods\. The Borrower indicated in a progress report to IDA the same year that it would take action based on the recommendations of the consultant\. While some silt removal works have been undertaken, the Borrower has not, to date, presented an action plan to address the fundamental hydrological problems affecting the bridge site\. Assessment of Outcome 34\. Project outcome can be described as mixed\. The Sana'a-Hodeidah road rehabilitation was completed, albeit delayed, and its economic rate of return (averaging 21 % for the four road sections) was quite acceptable, though below the appraisal estimate of 29%\. IDA, however, did not contribute directly to the implementation of this component since it dropped out of it before project effectiveness\. The rehabilitation of flood-damaged road sections and bridges was completed, although preventive maintenance is now essential to the Harad Bridge's sustainability\. Technical assistance to strengthen the private contracting industry was delivered, although delayed, and studies in preparation for future projects went smoothly\. TA for institutional and policy support was not broadly utilized, but the erosion and road safety studies were completed successfully\. The equipment to be procured under the project was delivered as planned, strengthening the hardware capacity of the HA\. No assessment was made of improvements in the capacity to maintain the equipment\. Economic Evaluation 35\. At appraisal the overall economic rate of return (computed over ten years) for the Sana'a- Hodeidah road was estimated at about 29%\. The ERRs for sections I, II, III and IV were estimated at 34%, 27%, 31 % and 27%\. Although, not as high, a similar estimation gives ex-post ERRs averaging about 21 %\. These lower ERRs are due to prolonged implementation of the road works and higher construction costs\. Because GCRB executed the contract after the original  9 contractor abandoned the project, and because the original contract rates were used in calculating costs, GCRB managed to contain total project costs, in part by reducing the length of road rehabilitated\. Traffic volumes were also considerably lower than expected because of the recession and, later, the civil war, reducing net road-user benefits\. Future Operation 36\. The major issue facing the future operation of the works constructed under this project is proper maintenance\. Although this project was designed to establish the permanent financing mechanisms needed to underpin an adequate national road maintenance program, these were not implemented (see para 38)\. The Government has, however, agreed to establish a Road Maintenance Fund financed by a surcharge on fuel and annual vehicle fees for heavy vehicles to address sector financing needs\. It is expected that IDA will support this endeavor in a forthcoming lending operation\. 37\. At IDA's urging, the GCRB has undertaken excavation of the wadi beneath the Harad bridge, though no formal action plan has yet been presented to the Association\. IDA has also prepared, for government review and comment, draft terms of reference for studies of the siltation problem\. Key Lessons Learned 38\. One key lesson taken from this project - and put into practice as it evolved - is the need to assess early on potential Borrower problems with procurement and other Bank/IDA procedures and provide close supervision when difficulties are anticipated\. Thus, the Association monitored the procurement process for the rehabilitation of the Ibb-Jibla and Marib-Sana'a roads and the Harad bridge much more closely, and is continuing this on-site supervision in the ongoing Multi- Mode Transport and upcoming Transport Rehabilitation Projects\. 39\. Another lesson of the Project is that complex institutional changes are often not carried out successfully unless the Borrower is strongly committed to them and there is an appropriate constituency supporting their implementation\. This can often be accomplished by making institutional change the fulcrum on which a project rests and testing government commitment through the requesting of appropriate up-front actions\. 40\. On the technical side, the experience with the Harad bridge points out the importance of frequent on-site supervision and taking early action if the assumptions underlying design standards need to be changed to take account of changed circumstances\.  10 Republic of Yemen Sana'a Hodeidah Road Rehabilitation Project, Credit 1848-YAR Implementation Completion Report Part 1I: STATISTICAL ANNEXES Table 1: Sununary of Assessments A\. Achievements of obiectives Substantial Partial Negligible Not applicable Macro policies m r-i r '- Sector policies Financial objectives r- { m LIZ Institutional development m l ra Physical objectives r,1 J L r--- Poverty reduction , , Gender issues m m m Other social Objectives r-\. Environmental objectives Public sector management r---, r - 7 r LJ LU I~~~~I II Private sector development m m Other (specify) m m , r LJ LJ L Jl  11 Table 1 (continued): Summary of Assessments B\. Project sustainability Likely Unlikely Uncertain Highlv C\. IDA Performance Satisfactory Satisfactory Deficient Identification Preparation assistance Appraisal - m r, Supervision LWI F I Highly D\. Borrower Performance Satisfactory Satisfactory Deficient Preparation m , Implementation Covenant compliance m , v LW Operation (if applicable) , r Highlv Highly E\. Assessment of outcome satisfactory Satisfactory Unsatisfactory unsatisfactory I I m I I I - LW ~ WJ LW LW  12 Table 2: Related IDA Credits Year of Credit Title Purpose Approval Status First Highway Development of road system 1970 Closed Credit 240-YDR around Aden and strengthen road institutions\. Engineering Provide technical Assistance, 1970 Closed Credit 512-YDR maintenance and workshop equipment, spare parts and engineering and feasibility studies\. Second Highway Creation of a construction unit for 1984 Closed Project road works, construct a road to an Credit 560-YDR agricultural area (Wadi Hadramout) and continued technical assistance to road adrninistration\. Third Highway Technical assistance to prepare 1984 Closed Project proposed Fourth Highway Credit 1144-YDR Project, utilize foreign consultants, use ICU to construct Naqabah-Nisab road\. Road Flood Implement road construction 1984 Closed Reconstruction program of major damages caused Project, by heavy floods of 1982 and Credit 1295-YDR 1983\. Rehabilitation of road maintenance centers and provide Transport Sector Study\. Aden Port Rehabilitation of Aden Port and 1984 Closed Rehabilitation ship servicing\. Credit 584-YDR Fourth Highway Construct Wasit-Beihan road, 1985 Closed Project maintenance and training Credit 1617-YDR program, and studies\.  13 Table 2 (continied): Related IDA Credits Year of Credit Title Purpose Approval Status First Highway Establishment of Highway 1972 Closed Credit 0315-YAR Authority (HA); feasibility and engineering studies; construction of Taiz-Tuba road; supply of road equipment\. Second Highway Technical assistance to HA; 1975 Closed Project construction of Taiz-Al Mafraq Credit 0558-YAR road\. Third Highway Implementation of a 3-year 1978 Closed Project national highway maintenance Credit 0794-YAR program; preparation of a national Highway Master Plan; recruitment of expatriate engineers and managers; staff training\. Fourth Highway Asphalt overlay and flood 1982 Closed Project protection for the Taiz-Al Mafraq Credit 1267-YAR road; organizational and policy studies, and other technical assistance, to define the future of the Department of Transport\. Fifth Highway Construction of Ibb-Udayn road 1983 Closed Project to paved standard; continuation of Credit 1413-YAR TA under Highway III Marib Safir Road Completion to paved standard of a 1986 Closed Project new road from Marib to Safir Credit 1726-YAR (62\.5 km) and supervision of construction by consultants\. Multi-Mode Civil works and construction 1990 Under Transport Project supervision for the Harad-Huth implementation Credit 2177-YEM road; TA to the GCRB; strategic development studies for the CAMA, the GCYP and GCMA; training and equipment\.  14 Table 3: Project Timetable l Date Actual/ Steps in Project Cycle Date Planned Latest Estimate Identification 3/84 3/84 Preparation 7/84 7/84 Pre-appraisal 11/84 11/84 -9/86 Appraisal / Post-appraisal 11/84 / n\.a\. 11//86 / 7/87 Negotiations 4/87 6/87 Letter of Development Policy (if applicable) n\.a\. n\.a\. Board Presentation 9/87 10/87 Signing 11/87 11/87 Effectiveness 1/88 10/88 First Tranche Release (if applicable) n\.a\. Midterm Review (if applicable) n\.a\. Second (and third) Tranche Release (if applicable) n\.a\. Project Completion 12/31/90 6/30/94 Credit Closing 12/31/91 5/31/94 LThe preparation of the Marib Safir Sixth Highway Project (Credit 1726-YAR) was advanced during this period\.  15 Table 4: Credit Disbursements: Cumulative Estimated and Actual (SDR millions ) As at end year FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Appraisal estimate 1\.9 4\.9 11\.5 13\.6 14\.0 Revised estimate 0\.0 0\.7 5\.8 7\.8 8\.3 Actual (US $) 2 0\.0 0\.4 1\.7 5\.4 6\.8 7\.3 7\.6 9\.2 (SDRs) 0\.0 0\.3 1\.3 3\.9 5\.0 5\.3 5\.5 6\.6 Actual as % of first revised estimate 0 4 22 50 60 64 66 80 Date of final disbursement 2/27/95 Table 5: Key Indicators for Project Implementation Key project monitoring indicators were outlined in Annex 16 of the Staff Appraisal Report\. However, piogress reporting for the Sana'a-Hodeidah road rehabilitation and supervision contracts was not expected to adhere to these indicators because IDA financing was cancelled for road works\. Progress monitoring for TA and studies was less intensive and supervision was carried out without a regular update of indicators\. Table 6: Key Indicators for Project Operation See Above\. Revised disbursement schedule for SDR 8\.3 million following cancellation of SDR 5\.7 million (US$7\.3 million equivalent) and credit effectiveness in October 1988\. 2Cumulative amounts represent historical US$ equivalents\.  16 Table 7: Studies Included in Project Impact Purpose as defined of Study at appraisal / redefined Status Study Road Engineering and Feasibility Studies Kita-Assada (30 Km) As needed for the All engineering Highway sector pro- Madina-Aldalid (150 Km) preparation of future feasibility studies gram preparation fur- Ras Katnib-Salif (60 Km) projects\. completed by thered\. Hajja-Kushum (63 Kni) 12/90\. Special Studies Coastal Erosion/Siltation Studies continued from Completed Road works for erosion Road Safety prior Credit 1413-YAR identified earlier and siltation at Mokka port and Hodeidah-AI Katib Road completed\.  17 Table 8A: Project Costs Appraisal Estimate Latest Estimate (US$M) (US$M) Item Local Foreign Local Foreign Costs Costs Total Costs Costs Total I\. Road Works (a) Sana'a-Hodeidah Road: 9\.2 31\.0 40\.2 23\.3 34\.9 58\.2 Hodeidah-Ma'abar 1\.6 5\.4 07\.0 10\.2 Ma'abar-Mawsanah 2\.7 8\.8 11\.5 16\.6 Mawsanah-Mafhaq 2\.5 8\.7 11\.2 16\.2 Mafhaq-Sana'a 2\.4 8\.1 10\.5 15\.2 (b) Flood damaged road sections and bridges 1\.1 3\.4 4\.5 0\.9 3\.8 4\.7 Sana'a-Marib 0\.4 1\.4 1\.8 Taiz-AI Mafraq 0\.1 0\.2 0\.3 Harad Bridge 0\.6 1\.8 2\.4 II\. Technical Assistance 0\.6 2\.7 3\.3 0\.9 0\.9 (a) Construction supervision 0\.4 1\.5 1\.9 (b) Dom\. Constr\. Industry 0\.2 0\.8 1\.0 (c) Studies - 0\.4 0\.4 11I\. Maintenance Equipment - 2\.9 2\.9 - 4\.5 4\.5 TOTAL1I 13\. 1 43\.9 57\.0 24\.2 44\.1 68\.3 Ilncluding contingencies\.  18 Table 8B: Project Financing (US$ Million equivalent) Total Total Item Cost Appraisal Estimate Cost Actual/Latest estimate IDA AF OPEC GOVT IDA AF OPEC GOVT I\. Road Works (a) Sana'a-Hodeidah Road 45\.2 9\.2 23\.2 4\.4 8\.4 58\.2 - 39\.0 7\.6 11\.6 Hodeidah-Ma'abar 7\.9 2\.0 4\.4 1\.5 Ma'abar-Mawsanah 12\.9 10\.0 2\.9 Mawsanah-Mafhaq 12\.6 11\.2 1\.4 Mafhaq-Sana'a 11\.8 9\.2 2\.6 (b) Flood Damaged Road Sections and Bridges: 5\.2 4\.0 1\.2 4\.7 3\.8 0\.9 Sana'a-Marib 2\.1 1\.6 0\.5 n\.a\. Taiz-Al Mafraq 0\.3 0\.2 0\.1 n\.a\. Harad Bridge 2\.8 2\.2 0\.6 n\.a\. II\. Technical Assistance 3\.7 1\.9 0\.8 1\.0 0\.9 0\.9 n\.a\. (a) Constr\. Supervision 2\.1 0\.7 0\.8 0\.6 (b) Dom\. Constr\.Industry 1\.2 0\.8 0\.4 (c) Studies 4\.4 0\.4 III\. Maint\. Equipment 2\.9 2\.9 4\.5 4\.5 n\.a\. TOTAL 57\.0 18\.0 24\.0 4\.4 10\.6 68\.3 9\.2 39\.0 7\.6 12\.5 Estimates based on Arab Fund financing 60 percent foreign and 7 percent local costs, OPEC Fund financing 13 percent local costs of Sana'a- Hodeidah road, and on Schedule I of the Credit Agreement as applied to overall actual disbursement figures\.  19 Table 9A: Economic Costs and Benefits Actual Financial and Economic Unit Costs Flnancial Coasts Taxes & Eccnomic CDob Subsidies US S Adjustnent us s Factor Rcad User Unit Costs New Vehicle: Car 17,500 0\.70 12250 New Vehicle: Pickup 25\.700 0\.70 18,000 New Vehicle:-Bus 90,000 0\.80 72,000 New Vehicle: 2 Axle 70\.000 0\.80 58\.000 New Vehicle: 3 Axde 100\.000 0\.80 a0\.0oo New Tire: Car 50 0\.85 43 New Tlre: PIckup 80 0\.87 70 Now Tire: Bus 150 0\.87 131 Now Tire: 2 Axle 290 0\.87 252 Now Tire: 3 Axle 450 0\.87 392 Maint Labor Car (hr) 3\.00 0\.87 2\.40 Maint Labor Pickup (hr 4\.00 0\.85 3\.40 Maint Labor: Bus (hr) 5\.00 0\.87 4\.S Maint Labor 2 Axle (hr) 5\.00 0\.87 4\.35 MainL Labor\. 3 Axle (hr) 5\.00 0\.87 435 Crew rime: Car (hr) 2\.50 0\.87 2\.18 Crew Time: Pickup (hr) 4\.50 0\.83 3\.75 Crew Time: Bus (hr) 10\.00 0\.84 8\.40 Crew Tune: 2 Axle (hr) 7\.50 0\.87 8\.50 Crew Tirme:3 Axle (hr) 7\.50 0\.87 850 Gas () 0\.13 3\.75 0\.50 Dlesel (1) 0\.07 4\.55 0\.30 Lubricants (I) 1\.11 0\.90 1\.00 Road Agency Unit Costs Patching (m2) 3\.75 0\.92 '3\.43 Reisdallng (m2) 0\.90 0\.91 0\.82 Ovelay (m2) 5\.25 0\.91 4\.80 outieno (m2) 1\.500 0\.93 13S5\.00 Scdon l: Hcdeldah-Mabr- 80\.7km (rnIIon) 10\.15 0\.93 9\.44 Section II: Maabar-Mawananah - 54\.3km (mASon) 10\.63 0\.93 15\.48 Secdon III: Mawsnnaih-Malhaq -47\.0km (millIan) 18\.23 0\.93 15\.09 Section V: Mafhaq-ana\.a - 57\.4km (mMlon) 16\.23 0\.93 14\.18  20 Table 9B: Economic Costs and Benefits Forecast and Actual Traffic Volumes TrafMc Data from thc SAR Traffic Counts Forccast Cou=u Dist 1 989 2003 1994 km ADT ADT ADT Hod\.idahMaaia 60\.7 7723 14303 4264 Hodeldah-kml6 1t\.0 11513 21322 km 1a- Maibmr 44\.7 5637 11791 Masbar-MawaanuiLh 44\.3 2815 5205 2502 Mawsamah-Mafhaq 47\.0 2815 5205 2502 Maflhtq-Sas 57\.4 2815 5205 2502 Table 9C: Economic Costs and Benefits Traffic Data by Vehicle Tvye Avemrag Daily Traffic (A0T) Year Ca Pickup Bus 2/AxI 3 Ad 4 Axle S Axb Total HodeldAaabar 1994 2310 1012 0 758 99 52 53 4284 Maabar\.Mawaanaah 1994 1114 595 0 284 205 113 191 2502 Mawsadah\.Malhaq 1994 1114 595 0 284 205 113 191 2502 MafhaqSanaa 1994 1114 595 0 284 205 113 191 2502  21 Table 9D: Economic Costs and Benefits HDM Estimated Unit Vehicle O(eratin Costs Road VOC per vah-km ($) Roughnst - (IRI) Car Pickup Bus Truck Truck 2/6 3/10 3\.9 1 \.1as 0\.263 0\.387 0\.474 0\.790 4\.0 0\.156 0\.265 0\.388 0\.481 0\.800 4\.1 0\.187 0\.267 0\.389 0\.485 0\.804 4\.2 1 0\.188 0\.268 0\.390 0\.488 0\.809 4\.3 1 0\.189 0\.270 0\.391 0\.492 0\.813 4\.4 0\.189 0,271 0\.391 0\.495 0\.817 4\.6 0\.190 0\.272 0\.292 0\.499 0\.822 4\.7 0\.191 0\.273 0\.393 0\.502 0\.826 4\.8 0\.192 0\.274 0\.394 0\.505 0\.830 4\.9 f 0\.193 0\.276 0\.395 0\.509 0\.835 5\.0 0\.194 0\.277 0\.395 0\.512 0\.840 5\.1 0\.195 0\.279 0\.398 0\.516 0\.844 5\.2 ! 0\.196 0\.280 0\.397 0520 0\.849 5\.4 1 0\.197 0\.282 0\.398 0\.524 0\.854 55 1 0\.198 0\.283 0\.399 0\.527 0\.859 5\.6 0\.199 0\.285 0\.400 0\.532 0\.864 5\.7 0\.200 0\.287 0\.401 0\.536 0\.869 17\.8 1 0\.411 0\.591 0\.620 1\.019 1\.462  22 Table 9E: Econoniic Costs and Benefits Section I: Hodeidah Ma'abar 14Dm Manager - Project Suma-ry RuLn Iame: YEMEN: SAMAM-HCOE?OAH RCAO PC2 Run Date: 22/02/95 Road mane: Section I : Hode!cah-Naabar toad Length: 60\.7 km Currency: MILtfon US DOLLARS WITHCUT PROJECT CASE YITH PROJECT CASE ECONCMIC COPARtISON Rehabilftatlon In 1998 RehabiLitation In 1993 ECOCU41C ECONWCIIC ECOCNOIC ECONCOIC ECNCHCIC ECORCMrC DECREASE DECREASE ECOUCIIC YEAR -ADT OPER IRI AGENCY USER TOTAL AOT OPER IRI AGENCY USER TOTAL AGENCY USER NET COSTS COSTS COSTS COSTS COSTS COSTS COST5 C$TS BENEFITS 1983 4284 5\.3 0\.09 27\.37 27\.46 4284 5\.3 1\.97 27\.37 29\.34 -1\.89 0\.00 -1\.89 1989 4284 5\.6 0\.09 27\.80 27\.89 4284 5\.6 1\.97 27\.80 29\.77 -1\.89 0\.00 -1\.89 1990 42z4 5\.9 0\.09 28\.24 28\.33 4284 3\.9 1\.98 28\.24 30\.22 -1\.89 0\.00 -1\.89 1991 4284 6\.2 0\.09 28\.72 28\.81 4284 6\.2 1\.98 28\.72 30\.69 -1\.89 0\.00 -1\.89 1992 428 6\.6 0\.09 29\.21 29\.30 4284 6\.6 1\.98 29\.21 31\.19 -1\.89 0\.00 -1\.39 1993 4284 6\.9 0\.09 29\.72 29\.81 4234 CONS 3\.2 0\.09 25\.16 25\.24 0\.01 4\.56 4\.57 1994 4284 7\.2 0\.10 30\.23 30\.33 4284 3\.3 0\.09 25\.31 25\.40 0\.01 4\.92 4\.93 1995 4412 7\.5 0\.10 31\.69 31\.79 4412 3\.4 0\.09 26\.18 2f r 0\.01 5\.31 \.5-2 1996 4544 7\.8 0\.10 33\.24 33\.33 4544 3\.5 0\.09 27\.08 27\.17 0\.01 6\.13 6\.16 1997 4681 8\.2 9\.52 34\.89 44\.41 4681 3\.7 0\.09 28\.02 28\.11 9\.44 6\.86 16\.30 1i98 4a21 CONS 3\.2 0\.09 28\.32 28\.40 4121 3\.8 0\.09 29\.01 29\.10 0\.00 -0\.70 -0\.70 1999 4966 3\.3 0\.09 29\.35 29\.43 4966 3\.9 0\.09 30\.05 30\.14 0\.00 -0\.71 -0\.71 2000 5115 3\.4 0\.09 30\.36 30\.45 3115 4\.1 0\.09 31\.17 31\.25 0\.00 -0\.80 -O\.80 2001 5268 3\.6 0\.09 31\.42 31\.50 5268 4\.3 0\.09 32\.35 32\."4 0\.00 -0\.94 -0\.94 2002 5426 3\.7 0\.09 32\.52 32\.60 5426 4\.5 0\.09 33\.63 33\.71 0\.00 -1\.11 -1\.1t 2003 5589 3\.8 0\.09 33\.67 33\.76 5589 4\.5 0\.09 35\.08 35\.17 0\.00 -1\.41 -1\.41 2004 5757 4\.0 0\.09 34\.90 34\.98 5757 OVER 3\.3 1\.98 36\.60 38\.38 -1\.5f9 -1\.71 -3\.60 2005 5930 4\.2 0\.09 36\.20 36\.29 5930 3\.4 0\.09 35\.14 35\.22 0\.00 1\.07 1\.07 2006 6107 4\.4 0\.09 37\.60 37\.69 6107 3\.5 0\.09 36\.34 36\.42 0\.00 1\.27 1\.27 2007 6291 4\.6 0\.09 39\.18 39\.27 6291 3\.6 *0\.86 37\.59 36\.73 0\.95 1\.59 2\.53 Average 5\.3 4\.3 TotaL (urdiscounted) 11\.21 634\.61 645\.81 12\.10 610\.04 622\.15 -0\.90 24\.56 23\.67 Total (at 12\.0 Z) 4\.15 251\.98 256\.13 8\.54 240\.55 249\.09 -4\.39 11\.43 7\.04 Project NPV at 12\.0 X Discount Rate: 7\.04 Project internal Rate of Return (M): 26\.7  23 Table 9F: Economic Costs and Benefits Section H: Ma'abar Mawsanah HOH Manager - Project Sumary Run Nlame: TEMEM: SAXILA-HCOEIDAH ROAD PCR Run Date: 22/0295 Road Name: Sectton It S Naabar-Rawsarah Read Length: 54\.3 hr Currency: Millton US DOLLARS WITNOUT PROJECT CASE WITH PROJECT CASE ECONOI1C CCKPARISON RehabILItation In 1996 RehabILitatIon In 1993 ECONM4IC ECONOMIC ECONOMIC ECONOMIC ECNONOIC ECOUO4tC DECREASE OECREASE ECONOMIC YEAR AMT OPER IRI AaENCY USER TOTAL AMT UPE2 IRI ACEICY USER TOTAL AGENCY USEa MET COSTS COSTS COSTS COSTS COSTS COSTS COSTS COSTS DREEFITS 1988 2502 6\.9 0\.08 23\.24 23\.31 2502 6\.9 3\.17 23\.24 26\.40 -3\.09 0\.00 -3\.09 1989 2502 7\.4 0\.08 23\.72 23\.80 2502 7\.4 3\.17 23\.72 26\.89 -3\.09 0\.00 -3\.09 1990 2502 7\.8 0\.08 24\.24 24\.32 2502 7\.8 3\.17 24\.24 27\.4: -3\.09 0\.00 -3\.09 1991 2502 8\.3 0\.08 24\.81 24\.89 2502 8\.3 3\.17 24\.81 27\." -3\.09 0\.00 -3\.09 1992 2502 8\.8 0\.08 25\.42 25\.50 2502 8\.8 3\.17 25\.42 28\.59 -3\.09 0\.00 -3\.09 1993 2502 9\.3 0\.08 26\.05 26\.13 2502 COgS 3\.2 0\.08 20\.13 20\.21 0\.01 5\.92 5\.92 1994 2502 9\.8 0\.08 26\.70 26\.78 2502 3\.3 0\.08 20\.25 20\.33 0\.01 6\.45 6\.46 1995 2577 10\.3 15\.54 28\.18 43\.72 2577 3\.4 0\.08 20\.95 21\.02 15\.46 7\.24 22\.70 1996 2634 CONS 3\.2 0\.08 21\.36 21\.43 2654 3\.6 0\.08 21\.67 21\.75 0\.00 -0\.31 -0\.31 1997 2734 3\.3 0\.08 22\.13 22\.21 2734 3\.7 0\.08 22\.43 22\.51 0\.00 -0\.30 -0\.30 1998 2816 3\.4 0\.08 22\.89 22\.97 2816 3\.9 0\.08 23\.23 23\.31 0\.00 -0\.34 -0\.34 1999 2900 3\.6 0\.08 23\.69 23\.77 2900 4\.0 0\.08 24\.09 24\.16 0\.00 -0\.40 -0\.40 2000 2987 3\.7 0\.08 24\.53 24\.60 2987 4\.3 0\.08 25\.00 25\.07 0\.00 -0\.47 -0\.47 2001 3077 3\.9 0\.08 25\.41 25\.49 3077 4\.5 0\.08 25\.97 26\.05 0\.00 -0\.36 -0\.S6 2002 3169 4\.1 0\.08 26\.35 26\.43 3169 4\.B 0\.08 27\.05 27\.13 0\.00 -0\.70 -0\.70 2003 3264 4\.3 0\.08 27\.36 27\.44 3264 OVER 3\.2 1\.77 28\.zo 29\.97 -1\.69 -0\.83 -2\.53 2004 3362 4\.6 0\.08 28\.47 28\.55 3362 3\.3 0\.08 27\.23 27\.30 0\.00 1\.24 1\.24 2005 3463 4\.9 0\.08 29\.65 29\.73 3463 3\.4 0\.08 28\.16 28\.23 0\.00 1\.50 1\.50 2006 3567 OVER 3\.3 1\.77 30\.92 32\.69 3567 3\.6 0\.08 29\.13 29\.20 1\.69 1\.80 3\.49 2007 3674 3\.4 0\.08 29\.83 29\.91 3674 3\.7 -1\.47 30\.14 23\.67 1\.55 -0\.31 1\.24 Average 5\.7 4\.8 TotaL (undiscounted) 18\.70 514\.96 533\.65 17\.14 495\.04 512\.17 1\.56 19\.92 21\.48 Total Cat 12\.0 X) 7\.87 208\.36 216\.22 13\.26 198\.84 212\.09 *5\.39 9\.52 4\.13 Project IWPV at 12\.0 X Dfscount Rate: 4\.13 Project Internal Rate of Return CX): 18\.9  24 Table 9G: Economic Costs and Benefits Section HI: Mawsanah Mafraq Rog Manager - Project Sum1ary Run gane: YEMEN: SANA-KOcEIOAH ROAD PCR Run Date: 22102/95 Road Mia0e SectIon III : Pawsantah-mafhaq Road Length: 47\.0 L-m Currercy: Mitlfon US DOLLAhS WITHCUT PROJECT CASE WITH PROJECT CASE ECONCHIC CCHPARISM teh,abiltation in 1995 RehabILitatfon in 1993 ECOhC0IC ECOXQ4ZC ECONCMIC ECONCHIC ECONC4IC ECONCHIC DCC2EASE DECREASE ECONC24IC YEMA ADT OPER ?RI ACENCY USER TOTAL ADT OPER IRI AGENCY USER TOTAL AGNCY USER MET COSTS COSTS COSTS COSTS COSTS COSTS COS COSTS 0EXEFITS 198U 2502 8\.4 0\.07 22\." 22\.51 2502 8\.4 3\.08 22\.44 25\.53 -3\.02 0\.00 -3\.02 1989 2502 8\.9 0\.07 22\.96 23\.02 2502 8\.9 3\.08 22\.96 26\.04 -3\.02 0\.00 -3\.02 1990 2502 9\.4 0\.07 23\.52 23\.59 2502 9\.4 3\.08 23\.52 26\.60 -3\.02 0\.00 -3\.02 1991 2502 10\.0 0\.07 24\.12 24\.19 2502 10\.0 3\.09 24\.12 27\.21 -3\.02 0\.00 -3\.02 1992 2502 10\.5 0\.07 24\.74 24\.81 2502 10\.5 3\.09 24\.74 27\.82 -3\.02 0\.00 -3\.02 1993 2502 11\.0 0\.07 25\.36 25\.43 2502 CONS 3\.2 0\.07 18\.37 18\.43 0\.01 6\.99 6\.99 1994 2502 11\.4 15\.15 25\.88 41\.03 2502 3\.3 0\.07 18\.47 18\.54 15\.09 7\.41 22\.49 1995 2577 CONS 3\.2 0\.07 18\.92 18\.99 2577 3\.4 0\.07 19\.10 19\.17 0\.00 -0\.18 -0\.18 1996 2654 3\.3 0\.07 19\.60 19\.66 2654 3\.6 0\.07 19\.76 19\.82 0\.00 -0\.16 -0\.16 1997 2734 3\.4 0\.07 20\.27 20\.33 2734 3\.7 0\.07 20\.45 20\.51 0\.00 -0\.18 -0\.18 1998 2816 3\.6 0\.07 20\.97 21\.03 2816 3\.9 0\.07 21\.17 21\.24 0\.00 -0\.20 -0\.20 1999 2900 3\.7 0\.07 21\.70 21\.77 2900 4\.0 0\.07 21\.94 22\.01 0\.00 -0\.24 -0\.24 2000 2987 3\.9 0\.07 22\.47 22\.54 2987 4\.3 0\.07' 22\.76 22\.30 0\.00 -0\.29 -0\.29 2001 3077 4\.1 0\.07 23\.30 23\.36 3077 4\.5 0\.07 23\.64 23\.70 0\.00 -0\.34 -0\.34 2002 3169 4\.3 0\.07 24\.17 24\.24 3169 4\.8 0\.07 24\.60 24\.67 0\.00 -0\.43 -0\.43 2003 3264 4\.5 0\.07 25\.11 25\.18 3264 OVER 3\.2 1\.53 25\.62 27\.16 -1\.47 -0\.51 -1\.98 2004 3362 4\.8 0\.07 26\.15 26\.22 3362 3\.3 0\.07 24\.84 24\.90 0\.00 1\.32 1\.32 2005 3463 OVER 3\.3 1\.53 27\.24 28\.77 3463 3\.4 0\.07 25\.68 25\.74 1\.47 1\.57 3\.03 2006 3567 3\.4 0\.07 26\.39 26\.46 3567 3\.6 0\.07 26\.56 26\.62 0\.00 -0\.17 -0\.17 2007 3674 3\.5 0\.07 27\.29 27\.35 3674 3\.7 -1\.44 27\.47 26\.03 1\.51 -0\.18 1\.33 Average 5\.9 5\.2 TotaL (undiscouited) 17\.89 472\.58 490\.46 16\.37 458\.19 474\.55 1\.52 14\.39 15\.91 Total (at 12\.0 X) 8\.42 194\.32 Z20\.74 12\.83 156\.88 199\.71 -4\.41 7\.44 3\.03 Project NPV at 12\.0 X Discount Rate: 3\.03 Project InterrAl Rate of Return (%): 18\.2  25 Table 9H: Economic Costs and Benefits Section IV: Mafraq Sana'a NOD Manager - Project Surmary Run Name: YEMEN: SANAA-HOOE1DA ROAD PCR Run Date: 22/02/95 Road Mame: SectiOn IV I Hafhaq-Sanae Road Length: 57\.4 kim Currency: MfIlIon US DOLLARS WITHOUWT PROJECT CASE WITH PROJECT CASE ECONOMIC COMPARISOC Rehabititation in 1995 RehabiLitation In 1993 ECONCMIC ECONOMIC ECONCMIC ECONOMIC ECONOMIC ECONCMIC DECREASE DECREASE ECCUONIC YEAR AOT OPER IRI AGENCY USER TOTAL ADT OPER IRI AGENCY USER TOTAL AGENCY USER NET COSTS COSTS COSTS COSTS COSTS COSTS COSTS COSTS BENEFITS 1988 2502 7\.4 0\.08 21\.02 21\.10 2502 7\.4 2\.91 21\.02 23\.93 -2\.83 0\.00 -2\.83 1989 2502 7\.9 0\.08 21\.56 21\.64 2502 7\.9 2\.91 21\.56 24\.47 -2\.83 0\.00 -2\.83 1990 2502 8\.3 0\.08 22\.15 22\.23 2502 8\.3 2\.91 22\.15 25\.06 -2\.83 0\.00 -2\.83 1991 2502 8\.8 0\.08 22\.79 22\.88 2502 8\.8 2\.91 22\.79 25\.71 -2\.83 0\.00 -2\.83 1992 2502 9\.3 0\.09 23\.47 23\.56 2502 9\.3 2\.91 23\.47 26\.39 -2\.83 0\.00 -2\.83 1993 2502 9\.8 0\.09 24\.18 24\.27 2502 CONS 3\.2 0\.08 17\.25 17\.33 0\.01 6\.93 6\.94 1994 2502 10\.3 14\.23 24\.89 39\.12 2502 3\.3 0\.08 17\.37 17\.45 14\.15 7\.52 21\.67 1995 2577 CONS 3\.2 0\.08 17\.77 17\.85 2577 3\.4 0\.08 17\.98 18\.06 0\.00 0\.22 -0\.22 1996 2654 3\.3 0\.08 18\.43 18\.51 2654 3\.6 0\.08 18\.62 18\.70 0\.00 -0\.19 -0\.19 1997 2734 3\.4 0\.08 19\.08 19\.16 2734 3\.7 0\.08 19\.30 19\.38 0\.00 -0\.21 -0\.21 1998 2816 3\.6 0\.08 19\.76 19\.84 2816 3\.9 0\.08 20\.01 20\.09 0\.00 -0\.24 -0\.24 1999 2900 3\.7 0\.08 20\.48 20\.56 2900 4\.0 0\.08 20\.77 20\.85 0\.00 -0\.29 -0\.29 2000 2987 3\.9 0\.08 21\.24 21\.32 2987 4\.3 0\.08 21\.59 21\.67 0\.00 -0\.34 -0\.34 2001 3077 4\.1 0\.08 22\.06 22\.14 3077 4\.5 0\.08 22\.46 22\.54 0\.00 -0\.41 -0\.41 2002 3169 4\.3 0\.08 22\.93 23\.01 3169 4\.8 0\.08 23\.45 23\.53 0\.00 -0\.51 -0\.51 2003 3264 4\.5 0\.08 23\.87 23\.96 3264 OVER 3\.2 1\.87 24\.49 26\.36 -1\.79 -0\.61 -2\.40 2004 3362 4\.8 0\.08 24\.93 25\.01 3362 3\.3 0\.08 23\.35 23\.43 0\.00 1\.58 1\.59 2005 3463 OVER 3\.3 1\.87 26\.05 27\.92 3463 3\.4 0\.08 24\.16 24\.24 1\.79 1\.88 3\.67 2006 3567 3\.4 0\.08 24\.82 24\.90 3567 3\.5 0\.08 25\.02 25\.10 0\.00 -0\.20 -0\.20 2007 3674 3\.5 0\.08 25\.69 25\.77 3674 3\.7 -1\.34 25\.91 24\.57 1\.42 -0\.22 1\.20 Average 5\.5 4\.9 Total (undiscounted) 17\.57 447\.18 464\.75 16\.14 432\.71 448\.85 1\.43 14\.48 15\.90 TotaL (at 12\.0 %) 8\.11 183\.65 191\.76 12\.27 176\.23 188\.50 -4\.15 7\.41 3\.26 Project NPV at 12\.0 X Discount Race: 3\.26 Project InternaL Rate of Return (X): 19\.1  26 Table 10: Status of Legal Covenants Agreement Covenant Pr esent Original Revised 1 Description of Section Type Status Fulfillment Fulfillment Covenant Comments Date Date 2\.02(b) Financial C Not Speci- Not Speci- Borrower to open Government opened fied fied & maintain Special Special Account in Account in Central November 1989 Bank on (credit effectiveness terms/conditions 10/06/88) becom- satisfactory to the ing operational in Association\. February 1990\. - Audit of Special Presently the Spe- Account and State- cial Account oper- ment of Expendi- ated satisfactorily, tures except that with- drawal applications were not sent on a regular basis\. Sec\. 3\.02 Financial C Annual Annual Road works con- Complied with\. Budget Budget tracts for not less than Rials 25 million to be awar- ded annually to domestic con- tractors Sec\. 3\.03 Financial NC Annual Annual Borrower to take Not complied with\. Budget Budget action required to The lack of timely enable the GCRB and efficient main- to increase over tenance of paved 1987-91 its budget roads remains an for routine and institutional prob- recurrent mainte- lem\. nance by 5 % annually in real terms\. Sec 4\.01 Accounts C 06/90 03/90 Records/accounts, Complied with\. (b) (i) (ii) /audits including special account to be audited annually\. and certified copy of audit report to be sent Association no later than 6 months after end of FY\.  27 Table 11: Compliance with Olerational Manual Statements Statement Number and Title Describe and Comment on Lack of Compliance | There were no significant lack of compliance with any Operational Manual Statement\. Table 12: IDA Resources: Staff Inputs Planned' Revised Actual Stage of Project Cycle Weeks US$ Weeks US$ Weeks US$ Through appraisal N/A _ ___ 57\.8 Appraisal - Board N/A 18\.8 _ Board - Effectiveness N/A 10\.5 l Supervision N/A 46\.2 Completion N/A 08\.0 TOTAL N/A N/A l N/A 141\.3 N/A No estimate of staff resources for preparation and appraisal was planned or revised\. The figures under "actual' are indicative, especially for supervision activities, wherein one mission supervised numerous ongoing transport projects, of which Credit\. 1848 was one\.  28 Table 13: Bank Resources: Missions Performance Performance No: Days in Specialized rating - rating - Stage of Month/ of per- field staff skills Implemen- development Project Cycle Year sons represented tation status objectives 1 _ _ _ _ _ _ _ _ _ _ _ __ (1) (2) Appraisal 11/86 2 14 HE, EC Re-appraisal 4/87 2 17 HE, FA l Post-appraisal (flood damage) 7/87 1 7 HE Supervision 1 11/87 2 14 HE, EC - Supervision 2 3/88 2 10 HE, EC 2 2 Supervision 3 9/88 2 18 HE, EC 2 2 Supervision 4 3/89 2 11 HE, EC 2 2 Supervision 5 10/89 1 14 HE 2 1 Supervision 6 12/90 1 8 HE 2 1 Supervision 7 6/92 1 15 HE 2 2 Supervision 8 6/93 1 16 HE 2 2 Supervision 9 9/93 1 21 HE + 4C 2 2 2 Supervision 10 2/94 1 21 HE, C 2 2 'Typically, field supervision was carried out in conjunction with other projects (November, 1991 and late 1992)\. Thus, neither dates on terns of reference, nor on back-to-office memos reflect actual time spent on supervising Credit 1848\. 2Two contract specialists and two bridge consultants\.  29 Appendix I: Amendmnents to Credit Agreement The following amendments were made to the credit agreement: 1\. Section 2\.04 to reflect the system of variable commitment charges affecting all Association credits, as of May 31, 1988\. "(a) The Borrower shall pay to the Association a commitment charge of the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum\. (b) The commitment charge shall accrue : (i) from a date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above\. The rate set as of June 30 in each year shall be applied as of the next payment date in that year specified in Section 2\.05 of this Agreement, except that the rate set as of June 30, 1988 shall be applied as of July 1, 1988\. (c) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; and (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4\.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section\." 2\. Schedule I was amended, vide telex dated August 30, 1990, to reallocate credit proceeds as follows: Category Amount of Proposed Cr\. Allocated Allocation (SDR Equiv\.) in SDR Civil Works 4,100,000 3,900,000 Goods 2,100,000 3,300,000 Consultants' Services 1,100,000 1,100,000 Unallocated 1,000,000 Total 8,300,000 8,300,000  30 References 1\. World Bank Office Memorandum, Summary of Negotiations (April 30, 1987)\. 2\. Telex from Mr\. J\.P\.Hyde Director, Rendel, Palmer and Tritton (consultants to Highway Authority) to the Minister of Public Works, November 6, 1987\. 3\. Office Memorandum from Mr\. Edgardo Staffini, Acting Division Chief (EM3IN) to Mr\. S\. Bhatia, Acting Projects Adviser, January 19, 1988\. 4\. Telex from Dr\. M\.S\. Al-Attar (Deputy Prime Minister, Minister of Development and Chairman of Central Planning Organization) to Mr\. W\.P\. Thalwitz Vice-President, EMENA (dated January 6, 1988) and Mr\. Thalwitz's response (dated February 8, 1988) copied to Arab and OPEC Funds\. 6\. Highway Authority, Strengthening and Upgrading of Sana'a Hodeidah Road Project and Its Financing Difficulties with IDA, February 1988 (A Note by Eng\. A\. Al Kurshumi, Minister of Public Works and Chairman, Highway Authority\.) 7\. GCRB, "Protection Works Against Sea Erosion to Al-Katib Road -- Assessment of Completed Works and Proposal for Phase II" (Document No:H-50\.347, MNA Files), July 9, 1992\. 8\. GCRB, Letter from ACER-Freeman Fox (supervision consultant), October 25, 1992 9\. Project Completion Report for Fifth Highway Project (Credit 1413-YAR), July 30, 1993, Report No: 12034\. 10\. Project Completion Report for Fourth Highway Project (Credit 1617-YDR), October 11, 1994, Report No: 13593\. 11\. GCRB, Sana'a-Hodeida Road -- Upgrading and Strengthening Project: Monthly Progress Report No: 54, September 1994\. 12\. GCRB, Traffic Counts at three locations on Sana'a-Hodeida Road and Harad Bridge, December 12, 1994\. 13\. Heggie, Ian G\., Management and Financing of Roads -- An Agenda for Reform, World Bank Technical Paper Number 275 (Africa Technical Series), March 1995\.    IBRD 19909R i 44- YEMEN ARAB REPUBLIC SAUDI ARABI A SANA'A - HODEIDAH XDhob,vr ROAD REHABILITATION PROJECT TRANSPORT NETWORK Prolect Components \II i; Roc6 with K lometer D,stances tromv Hodeidah \. Flood Damaged Road Sections to be Rehablitated Flood Damaged Bridges to be Rehobilitoted \. - v--- T- F,rst Through Fo-rth Highwoy Pro ect iiton<D\\.' / \ f -- Roads Constr,cted ~~~~~~~Son A v ti\ \. \. Fifth Highway Prolect ond Mar,b-SSoir Road f\., - - -S ~ ~ ~ Paved Roads Under Constr-ction \.\ Other Roods - - Other Roods Under Rehoblhatfion viva - \. - Principol Grovel Roods tAo,d, - ~~~~~~~~~~~~~~~~~Wdam WMorde ~~~~~~~~~~~~~~ ~Dom ® National Capitols | Cites, Towns and Vdilages \. 1 t r?Ktiai', , 4 Moin Potts 16 Abs i Infernational Airports { / \. ff - - ~~~~~~~~~~~~~~~~~~Province Boundair,es g n ,, } t ArboC i _-~~~~~~~~~~~~~~~~l-,Ifematiioncal Bou,,dar,es I\.A\.q\.~~~~~~~~~~~~~~~~~~~~~~~Aio (Ask 'NK ) - - -~ - - F-Sati, (Oil Fields) Z\.A\. ~ ~ ~ ~ ~ ~ A\.J h\. MRSDAM d\. lilt I 0 i&du | st d Mathag \.7> Al Kn1b1,1, 63 kn 5 o ) Ba Maw\.4_RsanTko < , j tj0 ' 4\.s Af ,- Ravar Sivv S ons,vi Ai AS, \. e lA Fl\. on \.' AAn B--- Al H-0 ~ ~ r inj$ Sono\.kt5 Ai Joiroi --v$ 6_$is t04H0Zb Si s%I,\. 1ibad, 9Rodon|t~'~A t 14 HlKKOO oe hvahi b_~--\.,InUD \.-AIO )Bnda R b ' ou \. i\. A" \. tlK;2 Al J\."ofs0 O O - A Monian , -t MaKdo ts H OBr 5bbv J, Al ~ ~ ~ ~ ~ ~ ~ 0n K\.k\.hO J\ Dabab | KILOMETERS E T H I O P I A \./ - EN 20 4_0 60 dO IOJ f,BfADEN ~ '0 40 60 1'~ MILES /DJIBOUTI __ SEPTEMBER 1987    IfiA;I N ( Report NO: 14839 TYpe: ICR

REVIEW

P050429

 ICRR 12602 Report Number : ICRR12602 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 04/18/2007 PROJ ID : P050429 Appraisal Actual Project Name : 3rd Ozone Depleting US$M ): Project Costs (US$M): 13\.0 6\.4 Substances Phase-out (Montreal Protocol) Country : Mexico Loan/ US$M ): Loan /Credit (US$M): 13\.0 5\.7 Sector Board : ENV Cofinancing (US$M ): US$M): 0 0\.7 Sector (s): General industry and trade sector (97%) Banking (3%) Theme (s): Pollution management and environmental health (50% - P) Climate change (50% - P) L/C Number : Board Approval Date : 11/08/1997 Partners involved : Closing Date : 06/30/2002 06/30/2006 Evaluator : Panel Reviewer : Group Manager : Group : Robert Mark Lacey Roy Gilbert Alain A\. Barbu IEGSG 2\. Project Objectives and Components: a\. Objectives: The project’s objective was to assist in phasing in phasing out ozone depleting substance (ODS) use in Mexico within the framework of the Montreal Protocol (MP)\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The project had two components: (a) an investment component consisting of grants to enterprises to assist them in switching from ODS to non-ODS technologies\. This financed new equipment, traning and intial operationg costs (US$12\.6 million at appraisal, US$5\.5 million at closure) (b) technical assistance to the implementing agency Nacional Financiera (NAFIN), mainly related to sub-project technical review and supervision (US$0\.4 at apparaisal, US$0\.2 at closure)\. Revisions\. There were no revisions to the project components\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost\. Total project costs at completion were US$6\.4 million, about half of the indicative ceiling of US$13\.0 million estimated at appraisal\. There two main reasons for the under-usage of the Grant: (a) the refrigeration sector, strongly represented in the portfolio of sub-projects initially identified, was not eligible for funding under the MP; and (b) among the four implementing agencies competing for MPMF resources in Mexico, the Bank was assigned to work in sectors, which were small users of ODS\. Financing\. A number of the implemented sub-projects required counterpart financing from the firms involved amounting to US$0\.7 million\. Dates\. At the Borrower’s request, the original closing date of June 30 2002 was extended twice, each time by two years, and the project closed on June 30, 2006\. This was to enable completion of ongoing activities within a number of sub-projects, and is not unusual in MP operations\. 3\. Relevance of Objectives & Design: The project was highly relevant to Mexico’s efforts to meet its commitments under the Montreal Protocol and fully consistent with CAS goals\. It was also timely, since under the Protocol, developing countries were expected to reduce their consumption of CFC by 50 percent by 2005 and 85 percent by 2007\. Project design was also relevant and appropriately targeted towards key ODS consuming sectors, including mobile air conditioners, chillers, sterilization, and aerosols\. 4\. Achievement of Objectives (Efficacy): The outcome of the project is Satisfactory\. Despite its much smaller than anticipated size, it achieved its development objectives\. The grant was established to help to ensure that Mexico’s ODS consumption decreased from a baseline of annual average consumption between 1995 and 1998 of just under 6,000 tonnes (mostly chlorofluorocarbons [CFC] and methyl bromide) of ozone depleting potential (ODP) to 3,318 tonnes by 2005, in accordance with the country’s MP obligations\. Consumption in that year was in fact 2,548 tonnes, some 23 percent below this quota\. Mexico is, therefore, very well positioned to meet its 75 percent reduction target for 2007, and its commitment to a complete phase-out by 2010\. The individual sub-projects financed by the grant were satisfactorily carried out, and resulted directly in a reduction of 252 tonnes of ODS consumption between 1995-98 and 2005\. This is slightly in excess of the 249 tonnes estimated for these sub-projects at appraisal\. 99\.,6 percent of the disbursements approved by EXCOM were actually made\. These results were, moreover, achieved in non-traditional sectors where innovative solutions had to be developed\. These techniques are now being adopted worldwide in other MP operations\. The project also contributed to Mexico’s wider ODS phase-out program by helping to build capacity\. The Environment Ministry (SEMARNAT) gained considerable experience in negotiation techniques at the international level, as well as a better understanding of the administrative procedures of UN agencies\. NAFIN acquired considerable capacity in sub-project management and in the Bank’s procurement and financial management procedures\. 5\. Efficiency (not applicable to DPLs): Project efficiency is Satisfactory\. Rather than an ERR, eligible funding under the Montreal Protocol is determined by cost effectiveness\. Costs for each sector must fall within pre-established cost effectiveness thresholds, measured in terms of US dollars per kg unit of ozone depleting potential (ODP)\. The ICR does not provide the threshold figures, and the only threshold figure available from other sources is that for sterilization\. For that sector, the cost effectiveness was within the threshold\. The figures are as follows: Sector Threshold (US$/kg ODP) Achieved cost (US$/kg ODP) Sterilization 19\.73 18\.35 Mobile air conditioning n\.a\. 23\.25 Aerosols n\.a\. 4\.40 Chillers n\.a\. n\.a\. n\.a\. == not available\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The project’s development objectives remain relevant and were achieved\. The under-usage of the grant was due to factors external to the project\. Assisted by appropriate government intervention and by market forces which diminished ODS consumption, the reduced project still made an important contribution to reduced ODS consumption in Mexico and to the country’s success in carrying out its overall ODS phase-out program\. The total grant amount is, in any case, an indicative ceiling rather than a disbursement target\. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: Mexico continues to show strong commitment to achieving its Montreal Protocol commitments\. Investment and TA projects financed by the Bank and other agencies have been successfully implemented over the past 12 years\. Mexico has exceeded its MP commitments both in terms of CFC consumption in 2005 (1,600 tonnes as against a target of 2,312 tonnes) and overall consumption of ODS where the country was already well ahead of its goals by 1999\. Companies which received assistance from the MPMF were provided with new equipment, training and incremental operating costs, and old equipment was destroyed\. It is, therefore, highly unlikely that enterprises will revert to ODS-intensive processes\. Terminal projects supported by other agencies (UNDP and UNIDO) have been equally successful\. Norms have been established prohibiting ODS consumption in the mobile air conditioning and aerosols sectors\. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: Quality-at-entry was satisfactory\. Project design was sound, and the sectors and sub-projects carefully and appropriately targeted\. Bank staff worked closely with implementing agencies and implicated their staff in sub-project preparation and implementation\. Specialized consultants were financed by the Grant to support the Government in key areas such as the design of technically challenging sub-projects and market studies to determine optimal phase-out strategies\. Supervision was adequate: good working relations with counterparts were established and maintained; during the missions, the companies with projects under implementation were visited; the stringent reporting requirements of the MPMF Secretariat were complied with, and Project Supervision Reports were introduced in FY00 to mainstream Montreal Protocol operations; aide-memoires were prepared at the conclusion of each mission\. at -Entry :Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Satisfactory 9\. Assessment of Borrower Performance: The Government’s commitment to ODS phase-out, and hence to the project’s objectives, is strong\. Mexico is well on the way to meeting its 2010 MP commitments\. The implementing agencies performed satisfactorily – the Environment Ministry fulfilled its responsibilities of establishing a clear strategy to create awareness of the need to address ozone depletion, and effectively participated in the preparation of sub-projects\. The implementing agency, NAFIN, produced high quality sub-project documents on time, as well as supervision reports\. The preparation for Bank supervision missions was of a high standard and considerably eased their task\. a\. Government Performance :Satisfactory b\. Implementing Agency Performance :Satisfactory c\. Overall Borrower Performance :Satisfactory 10\. M&E Design, Implementation, & Utilization: The performance indicators designed for the project are clear, quantified and easy to follow\. The logframe table in the ICR uses the same indicators as does the PD\. The indicators show Mexico’s progress in complying with its overall MP obligations, the number of sub-projects financed under the grant, and the direct contribution of the sub-projects to overall ODS reduction\. The hierarchy and causality are clear\. Detailed indicators were also developed for each sub-project both at appraisal and at completion\. These enable comparisons between anticipated and actual financing requirements and timing, as well as between anticipated and actual impact in terms of ODP\. Information on these indicators, as well as cost effectiveness and time needed to complete activities, was included in the sub-project completion reports prepared by the Bank and submitted to the MPMF Secretariat upon the completion of each operation\. a\. M&E Quality Rating : Substantial 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Environment\. The project was rated category B since no major negative environmental impact was anticipated\. Participating enterprises were responsible for meeting emission standards, preparing environmental data sheets (no environmental impact assessments were required), and obtaining environmental clearances as required by both Mexican law and Bank guidelines\. Under EXCOM sector guidelines, replacement substances were evaluated and approved\. All environmental consequences were therefore positive\. The limited number of safety issues connected with some individual replacement substances were addressed on a case-by-case basis\. Resettlement No resettlement was associated with the project\. Fiduciary compliance was assured by NAFIN which managed all sub-project disbursements\. The agency also made sure of compliance with auditing requirements\. NAFIN staff was trained on both Bank regulations and eligibility and fiduciary issues associated with MP projects\. All work was carried out to a high standard\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Risk to Development Negligible to Low Negligible to Low  Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: The main lessons are: 1\. The umbrella approach adopted in the subprojects is appropriate since it achieves economies of scale and accelerates the pace of conversion in a given sector\. 2\. The phase-out achievements in individual sub-projects must be underpinned by an appropriate regulatory framework prohibiting consumption of ODS in the relevant sectors\. This was accomplished in Mexico’s case\. 3\. The experience of the chillers sub-project indicates the feasibility of a revolving fund that is sustainable over time and that can help to speed the replacement of ODS-consuming equipment\. 4\. Funding approvals for new equipment and processes under the MP should not be solely on the basis of cost, but should also be based on technology\. In the mobile air conditioning sector some equipment is performing less than fully effectively because decision were based exclusively on least cost\. 5\. The indicative ceiling approach to MP grants is appropriate since it enables a flexible response to changing circumstances\. 6\. Close supervision and oversight by the relevant government agency are critically important since relatively small problems can delay implementation for months\. 7\. Documentation and reporting requirements for the MPMF are extremely rigorous and time consuming\. As the Government points out in its comments, it would be beneficial to consider easing some of these requirements especially in the case of small and medium-sized beneficiary enterprises\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR contains a substantial amount of information and analysis and is adequate for project evaluation purposes\. While it, therefore, merits a satisfactory rating, there are nonetheless a few shortcomings\. On the cover page, “Loan/Creditâ€? should have read “Grant\.â€? External agencies do not implement projects, as stated in the ICR – this is the responsibility of the grant beneficiary\. It would have been useful, when considering fiduciary issues, to have had more information on auditing requirements and compliance with them\. No information was given on cost effectiveness thresholds with which project achievements could have been compared\. And finally, more discussion of the overall regulatory and legal frameworks would have been helpful – for example, whether and how Mexico controls imports of ODS\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P001549

Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 19811 IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243-MAG) December 3, 1999 Rural Development 2 Country Department 8 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their| official duties\. Its contents may not be disclosed without World Bank authorization\.  Currency Equivalents (Estimated average for the period January 1 to December 31) Currency Unit: FMG Year 1991 1992 | 1993 l 1994 1995 i 1996 l 1997 1998 | 1999 FMG 1835 1864 1914 3067 4266 4061 5091 5000 Weights and Measures Metric System Fiscal Year of Borrower January 1 - December 31 ABBREVIATIONS AND ACRONYMS AFD Agence Francaise pour le Developpement CCCE Caisse Centrale de Cooperation Economique CEPROVET Veterinary Promotion Center CIREL District Livestock Office COMODEL Livestock Sector Divestiture Committee CPR Center for the Production of Breeding Stock DEL Livestock Department FIFAMANOR Dairy and Agricultural Extension Project FY Fiscal Year GDP Gross Domestic Product GOM Government of Madagascar ICB International Competitive bidding LCB Local Competitive Bidding MinAgri Ministry of Agriculture MinEl Ministry of Livestock MPAEF Ministry of Animal Production, Water and Forestry NORAD Norwegian Agency for Development Cooperation O&M Operation & Maintenance ROMA Malagasy Dairy ROMANOR Norwegian Malagasy Dairy Project SAR Staff Appraisal Report SPEL Provincial Livestock Service Vice President : Callisto Madavo Director : Michael Sarris Sector Manager : Joseph Baah-Dwomoh Staff Member Ousmane Seck  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243-MAG) TABLE OF CONTENTS Page No\. PREFACE \.I EVALUATION SUMMARY \.I PART I: PROJECT IMPLEMENTATION ASSESSMENT \.1 PART Il: STATISTICAL TABLES \. 10 TABLE 1: SUMMARY OF ASSESSMENTS \.10 TABLE 2: RELATED BANK CREDITS \.11 TABLE 3: PROJECT TiMETABLE \.12 TABLE 4: CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL \.12 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION \.13 TABLE 6: IMPACT INDICATORS \.16 TABLE 8: PROJECT COST \.20 TABLE 9: PROJECT FINANCING \.20 TABLE 8: ECONOMIC COSTS AND BENEFITS \.21 TABLE 9: STATUS OF LEGAL COVENANTS \.22 TABLE 10: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS \.23 TABLE 11: BANK RESOURCES: STAFF INPUTS \.23 TABLE 12: BANK RESOURCES: MISSIONS \.24 ANNEXES Annex 1: Summary of Borrower's Evaluation Report Annex 2: Borrower's Comments on the ICR MAP: IBRD 16922 R This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.   IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243-MAG) PREFACE 1\. This is the Implementation Completion Report (ICR) for the Madagascar Livestock Sector Project (Cr\. 2243-MAG), for which a credit in the amount of SDR14\.0 million was approved on May 16, 1991 and made effective on August 12, 1992\. 2\. The credit was closed as expected on June 30, 1999\. The final disbursement is expected to take place before October 31, 1999, at which time any unused balance would be canceled\. NORAD and the Government co-financed the project, and IDA administered the NORAD grant\. NORAD's comments have been incorporated in the report, and the Government's comments are attached\. 3\. The ICR was prepared by Yves Wong, Consultant, and was reviewed by Joseph Baah-Dwomoh, Sector Manager, Rural Development II and Michael Sarris, Director, Country Department 8\. 4\. Preparation of the ICR is based on the report of the Borrower's Project Completion Evaluation Report of July 19, 1999, and on existing material in the project file\. An unofficial English translation of the summary of the Borrower's report is attached\.   IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243-MAG) EVALUATION SUMMARY Introduction 1\. IDA has supported livestock development in Madagascar since the early seventies\. The Livestock Sector Development Project (Cr\. 585-MAG) aimed at developing parastatal ranches\. Two subsequent projects, the Village Livestock and Rural Development Project (Cr\. 506-MAG); and the Second Village Livestock and Rural Development Project (Cr\. 121 1-MAG) focused on support services in the Mahajanga area with a first attempt to support the sector as a whole through the provision of foreign exchange for imports of veterinary drugs and Livestock Directorate reinforcement\. The project was identified in 1988 following the decline of livestock sector over the past decades\. Until the mid 1970s, the livestock sector was successful in supplying the local demand for beef while allowing for substantial exports\. However, since 1975, beef production has decreased, while milk production has increased only marginally\. Yet, considerable scope for livestock development remained due to the absence of livestock diseases common in Africa, and to the presence of abundant land resources for grazing and feed production in many regions of the country\. Beef export prospects were also good at the time, as sanitary restrictions on exports to the European Union (EU) had been lifted and Madagascar could again benefit from its quota to EU\. 2\. The decline of the sector was due to many factors, the most important being the poor institutional and economic framework\. Weak and inefficient government agencies dominated the sector, providing unfair competition to the emerging private sector by being directly involved in production, processing, marketing, input supply, and provision of veterinary services and products\. Inappropriate policies, including provision of free veterinary services and reliance on subsidized and imported food under aid programs, created an unfavorable economic environment\. Project Objectives 3\. The main objective of the project was to promote livestock production for domestic consumption and exports through a mixed adjustment and investment operation\. The policy reforms aimed at economic liberalization and private sector development for input supply and provision of services to producers, while investments aimed at improving the quality of services provided by the public sector and developing the private sector through producer association activities\. 4\. The main policy reforms were: (a) redefinition of the respective roles of government and the private sector; (b) promotion of farmer associations to take over responsibility for feed mixing and distribution, fodder seed multiplication, cattle breed improvement, and milk collection; (c) establishment of a private veterinary profession; (d) streamlining of public sector entities dealing with production or marketing; and (e) establishment of an incentive framework to allow market-based competition\. The  ii institution strengthening component aimed at: (a) improving the capacity of the Livestock Department (DEL) of the Ministry of Animal Production, Water and Forestry (MPAEF); (b) strengthening training in livestock and veterinary science; and (c) streamlining Government's role in the sector\. The production development component included: (a) support to extensive cattle production systems, mainly through improved disease control in the western and northern regions; and (b) dairy development in the central highlands, by strengthening dairy producer associations and improving milk collection (access tracks, chilling centers), feed supply and breeding services\. 5\. The objectives were clear and consistent with the new policies of economic liberalization and public divestiture from private sector activities\. The main project risk was correctly attributed to the lack of response of the private sector\. However, more realistic targets should have been set for the riskier extensive beef production component as it depended upon the completion of innovative reforms and it covered remote regions where the private sector was virtually non-existent and supporting infrastructure very weak\. On the other hand, the policy reform objectives were feasible, and the institution strengthening component appropriately endorsed a longer term approach for staff development\. 6\. The appraisal report also incorrectly assumed that the EU market would remain open; however, its subsequent closure eliminated Madagascar's sole export market\. Project reliance on disease control as the main activity to promote extensive cattle production in the western and northern regions proved to be overly optimistic\. However, it correctly identified over-capitalization and significant under-utilization of the modern dairy sector as being serious risks and appropriately recommended a low technology approach\. Achievement of Objectives 7\. Except for the extensive beef production component, the project has substantially achieved its objectives\. Initial delays occurred during effectiveness, which took 14 months, due to the long legal process for passing reform legislation and for cross-effectiveness of cofinancing arrangements\. Project start-up was marked by slow progress due to the political transition, affecting decision-making on important legal, budgetary and project management matters\. 8\. The Project Mid-Term Review marked a turning point in project implementation\. On the basis of a fully participatory process, the review (followed by a project priority-setting exercise two months later) resulted in important corrective actions being taken\. These included the appointment of a new project coordinator, introduction of service contracts with governmental project entities, and amendment of the credit agreement to include financing of the establishment of savings and loan associations and rehabilitation of livestock roads\. After the mid-term review, project implementation significantly improved in such areas as financial and accounting control, work programming, and monitoring and evaluation\. 9\. At project completion, the project is still several years away from full development\. On policy reforms, the Ministry of Livestock (MinEl) has redefined its role of policy formulation, provision of extension services, epidemiological surveillance, regulation, and statistical data collection\. It is no longer involved in feedmill operation and fodder production, input supply, breed improvement, and veterinary practice\. Milk powder volumes from donor aid are now insignificant and taxation is at recommended levels\. Stock breeding centers are no longer operational\. 10\. The institution strengthening component has made much progress but is still incomplete\. The introduction of service contracts, emphasizing participation, performance targets, impact indicators, and  iii accountability, between the project and the livestock services significantly improved performance\. Subsequent to the review of training in DEL, a policy favoring local training was adopted\. The project target of setting up 90 private veterinarians has been fully achieved (100%) and 95% of these veterinarians have received their sanitary mandates\. MinEl is now proceeding to rationalize its staffing with EU support for compensation payment to redundant staff\. The provincial and district livestock services have been strengthened by the rehabilitation of office buildings, provision of vehicles and office equipment, and computerization of offices A livestock database has been prepared\. 11\. The extensive beef production component is not expected to yield the objective of incremental beef production at full development (year 10) as this target was unrealistic\. However, preliminary data indicate significant benefits from decreased calf mortality and increased milk production of zebu cows resulting from water supply development activities implemented after the mid-term review\. In spite of the poor supply response, significant steps have been taken under the project to improve the support environment for beef production\. National epidemiological surveys have been completed for the major cattle and pig diseases\. Completion of the national reference laboratory, which was not scheduled at appraisal, would provide important operational support to the regional laboratories for epidemiological surveillance\. Vaccination coverage for the main diseases is steadily rising with the installation of private veterinarians, reaching a rate of nearly 100% in a number of communes while the national coverage is estimated at about 60%\. 12\. The highlands dairy development component, financed by IDA and NORAD, has fully achieved its objectives\. A key incentive was the unmet demand for milk and milk products as well as attractive prices\. On extension and support to farmer associations, effective programs have been implemented by ROMA and FIFAMANOR\. At project completion, some 11,585 producers, or 83% of the appraisal estimate, were organized into approved associations, which were also organized into unions and regional and national federations\. The project also emphasized the development offemale producer associations; at project completion, some 157 (19% of the total number of associations) were established, which were among the most successful in milk production and collection\. ROMA is evolving into an autonomous and self-financing agency run by producer associations, and local and regional dairy "inter- professions", which include representatives of the main dairy industry, have been established\. 13\. On feed and fodder development, the adaptive research component was successfully carried out by FIFAMANOR, resulting in the adoption of improved new varieties of fodder maize, oats, and different rootcrops by farmers\. Farmer associations are also involved in seed production, significantly reducing the problem of supply of improved seeds\. FIFAMANOR also established an analytical and feed formulation laboratory, which has provided cost-effective feed formulations to livestock producers\. 14\. The Livestock Promotion Fund (LPF), a revolving fund set up under the project to support producer association investments in feed mixing and distribution, and milk collection and processing, has been fully disbursed\. Due to changing needs, the appraisal investment targets were revised\. Instead of using the matching grant system proposed in the appraisal report, the LPF has opted for loans at commercial rates in order to preserve the integrity of the fund\. The rehabilitation of the modern ROMINCO dairy plants was not carried out due to the suspension of CCCE aid\. 15\. The rehabilitation of about 1,000 km of livestock roads and tracks was not completed due to suspension of CCCE aid\. IDA agreed during the mid-term review to reallocate US$1\.0 million of IDA funds for district road and track rehabilitation, which has yielded significant benefits for milk collection and marketing of other agricultural products\. Substantial genetic improvements have been carried out under the project under NORAD cofinancing, so that genetic potential is no longer a limiting factor to  iv milk production\. As scheduled at appraisal, a Herd Book has been created by FIFAMANOR, which maintains a tracking system for high-yielding cows\. 16\. Credit\. As a result of the mid-term review, the IDA credit was amended to finance the establishment of savings and loans associations for livestock producers based on the model of the IDA- funded Pilot Rural Finance Project\. Loans made to producers from savings or from external sources for the purchase of pregnant cows have been highly successful as they have been fully repaid within two years in spite of interest rates of 36% per year\. 17\. Environmental Impact\. Bush fires continue to be set in the dry season to provide palatable pastures for grazing cattle\. Studies carried out under the project have shown that bush fires are complex phenomena that can be addressed only through a broader approach outside the project scope\. The highlands development component, however, is expected to have a positive environmental impact as producers are switching from grazing to more intensive systems, with cows kept in stalls\. 18\. Project Costs\. Project costs incurred were only 73% of appraisal estimate\. The road rehabilitation component was significantly reduced due to suspension of CCCE cofinancing\. Government contributions were also lower than appraisal estimates, due to significantly lower budgetary allocations in 1995-97\. Major Factors Affecting the Project 19\. The political transition period between 1991 and 1992 slowed down the decision-making process\. Policy reforms were not easily accepted, which delayed credit effectiveness\. Political considerations also slowed down replacement of weak project management\. At project start-up, government practices were inconsistent with declared reforms\. The budget continued to fund parastatals slated for divestiture, and food aid continued to arrive into the country without tariff increases\. The establishment of LPF by the Ministry of Finance was also delayed\. New procedures for budget allocation between 1995 and 1997 significantly reduced counterpart funding for the project and resulted in a severe drop in disbursements\. Project Sustainability 20\. The reforms carried out and the entities created under the project have a good chance of being sustainable\. Public sector activities are now restricted to policy formulation and sectoral adjustment, regulation, epidemiological surveillance, and support to livestock producer associations, which the State will continue to support\. Private sector activities, which include fodder and feed production, seed multiplication, supply of breeding stock, milk collection and processing, and veterinary practice are becoming more firmly entrenched and thus increasingly sustainable\. The LPF will ensure continued funding for investments in these activities, while producer associations are becoming more professional\. Bank Performance 21\. Bank performance has been satisfactory overall\. The Bank took the lead role among donors in promoting essential sectoral adjustment\. Bank missions usually included good skill mixes, but more frequent missions would have been useful when progress was slow\. The Bank was flexible on project restructuring when needed\. The transfer of project supervision responsibility after the mid-term review to the Bank's resident mission was very positive: links with the client were strengthened, administrative delays reduced, and donor coordination improved\. The Bank's' performance as Administrator of NORAD's Trust Fund could have been enhanced with better communication with NORAD\.  v Borrower Performance 22\. The Borrower's perfornance could be considered to be satisfactory\. Although it was slow to implement the necessary sectoral reforms and administrative changes at various times during the project, all the corrective actions were eventually taken\. Problems of counterpart funding were also finally resolved\. Assessment of Outcome 23\. The overall project outcome could be rated as "satisfactory", although project achievements are still fragile\. Sectoral adjustment is virtually complete, but rationalization of the Government livestock services has only just started\. All legislation on animal health and sanitary control has been updated, and the basis for effective epidemiological surveillance has been laid down\. Private sector development has been highly satisfactory\. A private veterinary profession is now in place, and vaccination rates continue to rise\. Milk production and producer incomes have significantly increased\. The Livestock Promotion Fund has been successfully set up as a revolving fund\. However, the introduction of two new diseases of importance for export markets is an indication of the weaknesses of the veterinary services Future Operation 24\. Government's livestock sector program is designed as a long-term program for livestock development\. Thus, the government is interested in pursuing some of the project's activities in line with the redefined roles of the public and private sectors\. In its dialogue with the government on country assistance strategy, IDA is proposing a new integrated operation called "Agricultural Intensification and Food Security Project"\. The latter is expected to include the national program approach of previous IDA operations\. Key Lessons Learned 25\. Major lessons learned from the project are: (a) The success of the project was highly dependent upon the commitment of the Government and officials towards divestiture\. (b) The hybrid nature of the project, combining policy reforms and investments, was appropriate for the achievement of project objectives\. (c) The policy reforms implemented were necessary to provide a suitable incentive framework for private sector development\. (d) Organizing all livestock development projects under a single program improved these interventions, although suspension of CCCE aid affected the whole sector\. (e) Effective project management and accountability are essential elements for successful project implementation\. Their absence affected the extensive beef production component\. (f) Adequate counterpart funding is critical for successful project implementation\. Insufficient local budgets affected the project\. (g) Beneficiary participation is essential for achieving project objectives\. The bottom-up approach for the elaboration of annual work plans and for the mid-term review improved project implementation\. (h) The mid-term review was used effectively to take stock of project implementation progress and enable corrective actions to be taken to achieve project objectives\.  vi (i) Poor roads and lack of access to credit were severe constraints to rural and private sector development\. These issues need to be addressed up-front in development projects\. () The issue of bush fires was very complex and required a multi-sectoral approach which was outside the scope of the project\.  IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243-MAG) PART I: PROJECT IMPLEMENTATION ASSESSMENT Introduction 1\. The project was identified in 1988 following the decline of the livestock sector, which contributed about 15% of agricultural GDP and provided some or full income to over 60% ofnational households, had been declining for the past decades in terms of both production and growth\. Until the mid 1970s, the livestock sector was successful in supplying the local demand for beef while allowing for substantial exports\. However, since 1975, beef production has decreased by about 7%, while milk production has increased only by 0\.5% per year since 1960, much less than the annual population growth estimated at over 3%\. Yet, considerable scope for livestock development remained, particularly in the more intensive dairy, pig and poultry production which was an important source of income for the rural population\. Madagascar also had a comparative advantage for livestock and milk production, due to the absence of livestock diseases common in Africa and to the presence of abundant land resources for grazing and feed production in many regions of the country\. Beef export prospects were also good at the time, as sanitary restrictions on exports to the European Union (EU) had been lifted and Madagascar could again benefit from its quota to EU\. 2\. The decline of the sector was due to many factors, the most important being the poor institutional and economic framework\. Weak and inefficient government agencies dominated the sector, causing duplication of effort and providing unfair competition to the emerging private sector by being directly involved in production, processing, marketing, input supply, and provision of veterinary services and products\. Inappropriate policies, including provision of free veterinary services and reliance on subsidized and imported food under aid programs, created an unfavorable economic environment\. Project Objectives 3\. The main objective of the project was to promote livestock production for domestic consumption and exports through a mixed adjustment and investment operation\. The policy reforms aimed at economic liberalization and private sector development for input supply and provision of services to producers, while investments aimed at improving the quality of services provided by the public sector and developing the private sector development through producer association activities\. Thus, the project was designed as a package of policy reforms, supported by an institution building component and a production development component, and was to be coordinated with several free-standing projects to be financed in parallel by other donors\. 4\. The main policy reforms were: (a) redefinition of the respective responsibilities of government and the private sector; (b) promotion of farmer associations to take over responsibility for such areas as feed mixing and distribution, fodder seed multiplication, cattle breed improvement, and milk collection;  2 (c) promotion of private veterinary practice; (d) streamlining of public sector entities dealing with production or marketing; and (e) establishment of an incentive framework to allow market-based competition, based on suitable pricing mechanisms to be set up for dairy products imported under food aid or subsidized surpluses\. 5\. The institution strengthening component aimed at: (a) improving the capacity of the Livestock Department (DEL) of the Ministry of Animal Production, Water and Forestry (MPAEF); (b) strengthening training in livestock and veterinary science; and (c) streamlining the government's role in the sector\. 6\. The production development component included: (a) support to extensive cattle production systems, mainly through improved disease control in the western and northern regions; and (b) dairy development in the central highlands, by strengthening dairy producer associations and improving milk collection (access tracks, chilling centers), feed supply and breeding services\. 7\. The objectives were clear and consistent with the economic adjustment programs that were being discussed under the Bank's dialogue with Government at that time\. There was also an emerging consensus in the country, and among donors, on the need to liberalize the economy and to divest the public sector from production, marketing and other activities that were more the role and responsibility of the private sector\. It was largely recognized that socialist policies of the previous decades had failed and that fundamental reforms were necessary to restart the stagnating economy, including the livestock sector\. 8\. However, while the long term project objectives were appropriate, there were several substantial risks associated with a number of the project development objectives\. More realistic targets for the five-year period of the project should have been set for the extensive beef production, which required a longer timeframe for the completion of innovative reforms\. On the other hand, policy reform objectives were feasible, in spite of expected opposition from entrenched livestock services in MPAEF (now called Ministry of Livestock or MinEI)\. The institution strengthening component correctly endorsed a longer term approach for staff development by initially supporting a manpower requirements review, as major weaknesses of the livestock services had been identified, including over-staffing, unclear mandates, poor work programming and supervision, low staff morale and pay, and inadequate operating and investment funds\. 9\. The main project risk was correctly identified as being lack of response of the private sector; private entities to take the place to be vacated by Government in input supply, marketing and veterinary practice were scarce or non-existent\. Thus, project objectives for the extensive beef production component, which was implemented in the remote areas of the country where the private sector was virtually non-existent and the support infrastructure very weak, were over-optimistic\. 10\. At appraisal, it was incorrectly assumed that beef exports to EU would continue, but the subsequent ban closed down the sole export market for processed beef\. The project design also assumed that disease control alone would be sufficient to induce increased extensive cattle production in the western and northern regions\. That approach was overly optimistic\.  3 11\. The appraisal mission correctly identified over-capitalization and significant under-utilization of the modern dairy sector as being serious risks and correctly recommended a low technology approach which focused on increasing local demand for milk and dairy products\. 12\. During negotiations, it was agreed that French Cooperation (FAC), and not IDA, would be providing support to the semi-intensive production of pork and poultry and to the operation of a new production unit for veterinary vaccines in partnership with international companies\. CCCE financing of milk road and track improvement was also confirmed, although the target of 1,000 km was considered to be ambitious\. NORAD cofinancing was agreed in principle for the genetic and feed and fodder improvement programs\. Achievement of Project Objectives 13\. In spite of initial implementation delays, the project, except for the extension beef production component, has substantially achieved its objectives\. Delays occurred during effectiveness, which took 14 months for the conditions to be satisfied, due to the long legal process for passing reform legislation and for cross-effectiveness of cofinancing arrangements\. 14\. The first year of project implementation (1992-93) was marked by slow progress due to the political transition, which affected decision-making on important legal matters, such as the finalization of the Boards of ROMA and ROMINCO\. No action was taken to increase tariffs on milk imports in the 1993 budget, and the by- law for setting up COMODEL was not signed\. The transfer of project coordination responsibility to the Director of Livestock in October 1993, in fact, further slowed down project implementation\. The main problems were excessive centralization, lack of delegation ofauthority, and poor work programming\. However, project activities implemented by other project entities, as in the highlands dairy development component, proceeded normally\. 15\. The Project Mid-Term Review conducted in April 1995 marked a turning point in project implementation\. On the basis of prior consultant reviews of project implementation and of a fully participatory process involving stakeholders, the review (followed by a priority-setting exercise two months later) led to important corrective actions being taken\. These included the appointment of a new project coordinator, introduction of service contracts with Government project entities, and amendment of the credit agreement to include financing of the establishment of savings and loan associations and rehabilitation of livestock roads\. After the mid-term review, project implementation significantly improved\. In 1996, notable progress had been achieved in financial and accounting control, work programming, and monitoring and evaluation\. 16\. At project completion in June 1999, the project is still several years away from full development due to the implementation delays in the first half of the project\. However, except for the extensive beef production component, the project has substantially achieved the objectives set for the project period\. 17\. On policy reforms, the Ministry of Livestock (MinEI) has redefined its role in policy formulation, provision of extension services to the non-milk subsector (for the milk subsector, the livestock producer associations are committed to taking over these activities in the medium term), epidemiological surveillance, regulation, and statistical data collection\. It is no longer involved in feedmill operation and fodder production, input supply, breed improvement, and veterinary practice\. These activities are now handled by farmers, farmer associations, private traders, and private veterinarians\. Milk powder is now received under donor aid in insignificant amounts, and taxation is set at levels recommended by the Bank\. Privatization of the breeding centers has been put on hold, as a result of the Privatization Law which has removed all responsibility for that activity from COMODEL (which has been set up under the project for that purpose)\. As these centers are no longer operational, their privatization does not appear to be a top Government priority\.  4 18\. The institution strengthening component has made much progress but is still incomplete\. DEL capacity improvement was seriously delayed until the replacement of the Director in 1996\. The introduction of service contracts between the project and DEL divisions and provincial livestock services after the mid-term review significantly improved performance\. These contracts emphasized participation, accountability, setting of clear quantitative targets, timely provision of budgets, and monitoring and evaluation\. A training policy favoring local training has been adopted\. The project target of creating a private veterinary profession has been achieved (all 90 private veterinarians are operating, and 95% of them have received their sanitary mandates)\. A consultant review confirms that 80% of them are doing an effective job\. To fill in gaps in geographical coverage, MinEl is taking steps to increase the numbers of private veterinarians \. As a result of the new private veterinarians, MinEl can redeploy its staff\. A first phase is scheduled to be implemented in the second half of 1999 with EU support for providing compensation to redundant staff\. 19\. Although not scheduled at appraisal, the project has supported the establishment of a database for the livestock sector\. The responsibility for preparation and maintenance of this database is in the hands of the public sector\. Livestock statistics for 1998 have been prepared\. 20\. The extensive beef production component is not expected to yield the objective of incremental beef production at full development (year 10)\. Implementation of the component was delayed by several years' inactivity due to weak DEL management and slow progress in health coverage by private veterinarians in the more remote rangeland areas\. Improved health coverage was assumed in the appraisal report as being the main factor leading to increased offtake, and in some communes, vaccination coverage against anthrax is nearly 100%\. Although appraisal objectives for beef exports were not set, there was an implicit assumption that increased offtake would be driven and absorbed by exports to EU\. The closing of that market eliminated a major production incentive\. Government now recognizes that redeveloping the export market for Malagasy beef will require a multi- pronged and long-term approach involving both the public and private sectors\. The main diseases must be brought under control, and the privately-run slaughterhouses must comply with EU sanitary norms\. 21\. A factor not foreseen at appraisal relates to decreased calf mortality and increased milk production of zebu cows as a result of water supply development activities implemented after the mid-term review\. As only 1-2 years of data are available, it needs to be treated with caution but preliminary estimates indicate that thiswater supply activity is having a significant impact on improving extensive beef production, particularly during the dry season\. In spite of the poor supply response, significant steps have been taken under the project to improve the support environment for beef production\. National epidemiological surveys have been completed for themajor cattle and pig diseases (tuberculosis, Rift Valley fever, anthrax, Teschen, etc\.)\. Completion of the national reference laboratory, which was not scheduled at appraisal, will provide important operational support to the regional laboratories\. The network will strengthen the database on regional animal health profiles and play a key role in epidemiological surveillance and in improving the effectiveness of disease control programs\. The provincial and district livestock services have been strengthened by the rehabilitation of office buildings and provision of vehicles and office equipment\. These offices are now fully computerized andthe staff is trained on computer use\. However, during the implementation of this project, two new diseases of importance for export markets were accidentally introduced: Rift valley fever of small ruminants, and African Swine fever which devasted the smallholder pig industry\. These introductions are an indication for the weaknesses of the veterinary services (quarantine and epidemiosurveillance)\. 22\. The pilot research and development program was carried out by the national research agency (FOFIFA), as scheduled\. It included studies and trials on breed and fodder improvement, feeding systems, and disease control\. However, little progress was made in developing systems for reducing the incidence of bush fires as a comprehensive approach was required, which was outside the scope of the project\.  5 23\. The highlands dairy development component, financed by IDA and NORAD, has fully achieved its objectives\. A key incentive to producers has been an unsatisfied demand for milk and milk products and attractive prices\. The lowlands dairy development program, which was expected to be financed by ADB as a stand-alone project, was not implemented due to suspension of ADB aid to Madagascar\. The highlands development component included five sub-programs\. However, the introduction of two new diseases of importance for export markets is an indication of the weaknesses of the veterinary services\. 24\. \. (a) Extension and Support to Farmer Associations\. Effective programs for extension and support to development of farmer associations were implemented by ROMA and FIFAMANOR\. While responsibility for extension for the beef production component was handed over to the National Agricultural Extension Project (NAEP) in 1995, that for dairy development remained with ROMA and FIFAMANOR at the request of the milk producer associations\. That was in line with appraisal plans for conversion of ROMA into an autonomous agency run by producer associations at the end of the project\. At project completion, ROMA has taken the first steps of this conversion with the establishment in early 1999 of local and regional dairy "inter-professions", which include representatives of eight different groups of actors in the dairy industry\. For extensive beef production, the Livestock Department provided livestock specialists to NAEP to train their subject matter specialists\. 25\. At appraisal, it was expected that some 12,000 farmers would be organized into 200 new associations\. At project completion, some 11,585 producers, or 83% of the appraisal estimate, were organized into approved associations, which were also organized into unions and regional and national federations\. While womenwere not specifically targeted, nonetheless the project emphasized the development of female producer associations\. At project completion, some 157 of those associations (19% of the total number) were established\. Being amongst the most dynamic associations, they were highly successful in milk production and collection and in providing attractive incomes to their members\. 26\. (b) Feed and Fodder Development\. The adaptive research component was successfully carried out by FIFAMANOR, resulting in the adoption by producers, specially in the dry season, of improved new varieties of fodder maize, oats, and different rootcrops\. Farmer associations are also involved in seed production, reducing the problem of supply of improved seeds\. FIFAMANOR also established with NORAD funding an analytical and feed formulation laboratory, which has provided cost-effective feed formulations to livestock producers mixing their own feeds\. 27\. The Livestock Promotion Fund (LPF), a revolving fund set up under the project to support producer association investments in feed mixing and distribution and milk collection and processing, has been fully disbursed\. Instead of using the matching grant system proposed in the appraisal report, LPF opted for full loans at commercial rates in order to preserve the integrity of the fund\. The interest collected would be used to finance the operating cost of the fund\. The Fund was only established in 1995 after significant delays in the finalization of institutional arrangements by the Ministry of Finance\. 28\. ( c) Milk Collection and Processing Infrastructure in the Highlands\. The rehabilitation of about 1,000 km of livestock roads and tracks, scheduled for funding by CCCE under parallel financing arrangements, was not completed due to suspension of that aid between 1994 and 1998\. At Government request, IDA agreed during the mid-term review to reallocate US$1\.0 million of IDA funds for that activity\. A total of 216 km of road was rehabilitated, and significant benefits on milk collection and marketing of other agricultural products have been reported\. 29\. The LPF also funded the construction of 87 milk collection points and centers and three collection/processing centers (appraisal targets were revised to accommodate current needs)\. Early results indicate  6 that these activities are profitable\. Scheduled to be financed by CCCE, the rehabilitation of ROMINCO's modern dairy plants was not carried out due to suspension of its aid to Madagascar\. NORAD expressed interest in the rehabilitation and funded consultant reviews but did not follow up with investments in view of the low economic viability of the modern sector\. The plants are virtually non-operational, being also affected by weak plant management\. 30\. (d) Genetic Improvement\. Substantial genetic improvements have been carried out under the project under NORAD cofinancing, to such extent that the genetic potential of cows in the project area is no longer the limiting factor to milk production\. As scheduled at appraisal, a Herd Book has been created by FIFAMANOR, which maintains a tracking system for high-yielding cows\. 31\. (e) Research and Development\. Livestock producers have benefited from increased knowledge and developments in livestock and milk production\. These include identification and measurement of disease incidence (national mapping of the main diseases has been completed), development and testing of vaccines (effective vaccines are now in use against anthrax in cattle and Teschen disease in pigs, which had decimated pig populations in a number of regions), dry season supplementary feeding of urea-treated rice stalks, and improved manure and silage production\. 32\. Credit\. As a result of the mid-term review, the IDA credit was amended to finance the establishment of savings and loans associations for livestock producers based on the model of the IDA-funded Pilot Rural Finance Project\. For the first time for many of them, association members could deposit their savings and have access to credit\. Loans received by members to purchase pregnant cows are bringing significant benefits to the families\. In spite of interest rates of 36% per year, these loans have been usually repaid in full within two years\. 33\. Environmental Impact\. In the dry season, herders continue to set fires to pasture to produce greener vegetation, although this is not linked to any dramatic cattle population growth, as anticipated under the extensive beef production component\. Numerous studies have shown that bush fires are complex phenomena that need a broader approach which is outside the scope of the project\. The highlands development component, on the other hand, should have a positive environmental impact as producers are switching from grazing to more intensive systems, based on forage production and keeping cows in stalls 34\. Project Costs\. Project costs incurred were only 73% of appraisal estimate\. Reductions in project scope were due to suspension of cofinancing arrangements with CCCE (US$5\.40 million for road rehabilitation)\. Government contributions were also lower than appraisal estimates, mainly due to significantly lower budgetary allocations in 1995-97\. Major Factors Affecting the Project 35\. In the transition period between 1991 and 1992 when the political system in the country significantly changed, slow decision-making affected the project\. Policy reforms underlying the project were not easily accepted\. Political considerations also had a major influence in keeping in place a weak project manager and head of livestock services during the first half of the project\. Consultant assistance provided under bilateral aid gave effective support to central project coordination and to technical aspects of livestock production\. 36\. At project start-up, governmental policies were inconsistent with declared reforms\. Thus, budget proposals included provisions for the rehabilitation of the parastatal ranch in the mid-west and of stock breeding farms, in contradiction with divestiture policy\. Government policy to provide easy access to cheap and subsidized food aid from donor countries weakened local dairy production and constrained its markets\. Raising of import tariffs to a  7 level of 30%, as proposed by the Bank, was completed only in Government budget year 1994, with two years of delay\. Switching the responsibility of project coordination between the Director of Livestock and the ex-Secretary General of MPAEF between 1992 and 1994 severely affected project implementation, particularly of the extensive beef production component which was then under the responsibility of the Livestock Department The Ministry of Finance finalized institutional arrangements for the operation of the Livestock Promotion Fund only in 1996, causing significant delays to its start-up and to its operation\. Between 1995 and 1997, new procedures introduced by the Ministry of Economy and Plan for budget allocation significantly reduced counterpart funding for the project and resulted in disbursements falling to 20% of previous levels\. Project Sustainability 37\. The reforms carried out and the entities created under the project have a good chance of being sustainable\. The division of responsibilities between the public and the private sectors for operation of the livestock sector is now clear and fully accepted by all stakeholders\. For the public sector, MinEL has divested itself from animal breeding and drug distribution activities and now concentrates on its permanent mandates of policy formulation and completing sectoral reforms, regulating the sector, carrying out epidemiological surveillance, and providing support to livestock producer associations\. 38\. Private sector activities developed under the project also have good prospects of sustainability, although they are still quite fragile and need continued government support for another 4-5 years\. The livestock producer associations have effectively taken over activities related to fodder and feed production, seed multiplication, supply of breeding stock, and milk collection and processing\. Loan repayments to LPF will ensure continued funding of new investments in these activities, which have excellent prospects of profitability due to the unsatisfied demand and attractive prices for milk\. The further development of associations into inter-professions will enhance their sustainability\. The establishment of a private veterinary practice has been entirely successful\. Many of these veterinarians are running profitable practices, and the majority of them are effectively fulfilling their sanitary mandates\. Bank Performance 39\. Bank performance has been satisfactory overall\. In particular, the Bank has played the lead role in promoting adjustment of the livestock sector\. It supported Government's successful efforts to integrate all sector development activities into the Livestock Sector Program\. The Bank identified most of the main issues and problems during project identification, preparation and appraisal\. However, the major project assumption that Madagascar would continue to benefit from its beef export quota to EU was over-optimistic and the risk of losing that market was not identified\. 40\. While Bank missions usually included good skill mixes, the frequency of missions could probably have been increased with positive effects during the period 1990-91 when progress was relatively slow\. The Bank was flexible and responsive to the frequent need for credit amendment as the project was being restructured, but could have been more forceful in requiring management changes in livestock services\. The participatory nature of the mid-term review resulted in significant project restructuring to address such constraints as poor roads and lack of credit\. No deviation from Bank policies and procedures was reported\. Finally, the transfer of project supervision responsibility after the mid-term review to the Bank's resident mission was very positive\. It not only strengthened links with the client, but also reduced administrative delays, promoted donor coordination, and improved the technical quality of Bank assistance\. 41\. The Banks' performance as Administrator of NORAD's Trust Fund could have been enhanced by better communication with NORAD on the planning of missions, regular briefings, and transmission of documents and  8 reports\. On the other hand, delays in the replenishment of the Trust Fund account delayed disbursements to some extent\. Borrower Performance 42\. At project completion, the Borrower's overall performance could be considered to be satisfactory, in spite of earlier political, policy and institutional problems\. The targeted sectoral reforms have substantively been completed, albeit with some difficulty at the beginning of the project\. The role of government services is now clearer, and the divestiture program has been completed in practice\. Although the breeding centers have not been officially privatized as scheduled, they are no longer operational and are not a burden on the public budget\. The Borrower is committed to the development of producer associations as an effective interlocutor\. On the other hand, inadequate provision of counterpart funding significantly slowed down project implementation after the mid-term review and lack of government action to strengthen weak project leadership and management at the Livestock Department caused several years of implementation delays\. While ROMA and FIFAMANOR are providing effective support to producer associations, MinEI, which only became a separate ministry in 1997, has still to fully evolve into its newly-defined role\. Thus, although the basis of a national epidemiological surveillance system has been laid down, this is not yet fully effective\. Assessment of Project Outcome 43\. Overall project outcome could be rated as "satisfactory", although project achievements are still fragile and need further support for sustained development\. Policy reforms have been largely completed, as well as divestiture from private sector activities\. Private sector development has been highly satisfactory\. Effective livestock producer associations have been established\. Privatization of veterinary practice is now an operational reality, and vaccination rates continue to rise\. Milk production and producer incomes have significantly increased, and LPF will continue to finance milk collection and processing and other milk production development activities\. However, the introduction of two new diseases of importance for export markets is an indication of the weaknesses of the veterinary services\. Future Operation 44\. Government's livestock sector program, in which this project has played a lead role, is designed as a long- term program as livestock development and disease eradication activities need a long-term perspective\. Thus, Government is interested in pursuing some of this project's activities in line with the redefined roles of the public and private sectors\. In its dialogue with Government on country assistance strategy, IDA is proposing a new integrated operation called "Agricultural Intensification and Food Security Project"\. Government and IDA have started a dialogue on the prospects of supporting the continuation of some project objectives under the new operation\. The latter is expected to integrate the national program approach of previous IDA operations with empowerment of decentralized authorities and bodies, consistent with the country's move towards provincial autonomy\. It would operationalize, together with other donor actions, key recommendations of the Rural Development Action Plan, which is being finalized by the Government with the cooperation of all donors\. Key Lessons Learned 45\. Major lessons learned from the project are: (a) The success of the project was highly dependent upon the commitment of the Government and officials towards divestiture\. (b) The hybrid nature of the project, combining policy reforms and investments, was appropriate for the  9 achievement of project objectives\. (c) The policy reforms implemented were necessary to provide a suitable incentive framework for private sector development\. (d) Organizing all livestock development projects under a single program improved these interventions, although suspension of CCCE aid affected the whole sector\. (e) Effective project management and accountability are essential elements for successful project implementation\. Their absence affected the extensive beef production component\. (f) Adequate counterpart funding is critical for successful project implementation\. Insufficient local budgets affected the project\. (g) Beneficiary participation is essential for achieving project objectives\. The bottom-up approachfor the elaboration of annual work plans and for the mid-term review improved project implementation\. (h) The mid-term review was used effectively to take stock of project implementation progress and enable corrective actions to be taken to achieve project objectives\. (i) Poor roads and lack of access to credit were severe constraints to rural and private sector development\. These issues need to be addressed up-front in development projects\. (j) The issue of bush fires was very complex and required a multi-sectoral approach which was outside the scope of the project (k) Contracting livestock services is an important way of improving quality of the project's implementation\.  10 IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243-MAG) PART II: STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS A\. Achievement of objectives Substantial Partial Negligible Not Applicable Macro policies x Sector policies X \. Financial objectives X Institutional development X Physical objectives _ Poverty reduction Gender issues X Other social objectives X Environmental objectives __X______ _- Public sector management Private sector development X Other (specify) B\. Project sustainability Likely Unlikely Uncertain x C\. Bank performance Highly Satisfactory Deficient Satisfactory Identification X Preparation Assistance X Appraisal X Supervision x D\. Borrower performance Highly Satisfactory Deficient Satisfactory Preparation X Implementation X Covenant compliance X E\. Assessment of outcome X  I1 TABLE 2: RELATED BANK CREDITS Credit title Purpose Year of Status approval | Concurrent operations i Second Agricultural Credit Provide foreign exchange to finance 1987 Completed Project (Cr\. 1804-MAG) subprojects in agricultural production and primary processing and marketing and strengthening of BTM\. National Agricultural Support the establishment of a 1989 Completed Research Project (Cr\. decentralized national agricultural 2042-MAG) system, based on participatory and multi-disciplinary research planning and evaluation\. Agricultural Extension Test the feasibility of an improved 1990 Completed Pilot Project (Cr\. 2150- extension management system\. MAG) Following operations I Second Irrigation Support irrigation rehabilitation and 1994 Active Rehabilitation Project (Cr\. sustainable management through a 2644-MAG) participatory approach empowering water user associations\. National Agricultural Support the establishment of a 1995 Active Extension Project (Cr\. national extension system under a 2729-MAG) single framework and based on clear ( management criteria\. Social Fund II (Cr\. 2778- Alleviate poverty and support 1995 Active MAG) community development through partnerships with NGOs and beneficiary communities\.  12 TABLE 3: PROJECT TIMETABLE Steps on Project Cycle Date Planned Date Actual Identification May 1988 May 1988 Preparation November 1988 Dec\. 88-Mar\.1990 Appraisal March 1990 January 3, 1991 Negotiations April 1991 April 2, 1991 Board presentation May 1991 May 16, 1991 Signing June 1991 June 12, 1991 Effectiveness September 1991 August 12, 1992 Mid-term review August 1995 May 1, 1995 Project completion December 31, 1998 June 30, 1999 Credit closing June 30, 1999 June 30, 1999 TABLE 4: CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL Estimated Cumulative Actual Cumulative Actual as a % of Fiscal Year Disbursements Disbursements estimate (US$ million) (US$ million) 1992 0\.4 0\.00 0 1993 2\.0 2\.35 118 1994 4\.4 3\.93 89 1995 8\.3 6\.32 76 1996 13\.1 7\.99 61 1997 17\.8 11\.51 65 1998 19\.8 14\.76 75 1999 19\.8 18\.29 _92 Final Disbursement Date: October 1999  13 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION A\. SECTOR REFORMS AND INSTITUTIONAL DEVELOPMENT Unit Target Completed (i) Animal health monitoring and Appraisal Revised Unit % App\. % Rev\. epidemiological surveillance National Reference Lab\. operational (1) No\. n\.a\. (2) 1 N\.A\. 45 Regional laboratories rehabilitated No\. 5 9 9 180 100 Ivato quarantine station rehabilitated No\. 1 1 I 100 100 Mobile surveillance teams operational No\. 5 8 8 160 100 (ii) Studies and control of major diseases Veterinary stations involved in bovine No\. n\.a\. 243 243 N\.A\. 100 tuberculosis investigations _ National map of bovine TB prepared No\. n\.a\. 1 1 N\.A\. 100 Vaccine for bovine TB tested / n\.a\. 100 N\.A\. 25 Veterinary stations involved in anthrax No\. n\.a\. 243 243 N\.A\. 100 investigations Anthrax incidence maps prepared No\./yr n\.a\. 2 2 N\.A\. 100 Veterinary stations involved in Rift Valley No\. n\.a\. 100 61 N\.A\. 61 Fever investigations Vaccine for Teschen disease tested % n\.a\. 100 100 N\.A\. 100 Eradication program completed n\.a\. 100 15 N\.A\. 15 (iii) Privatization of veterinary services Private veterinarians established No\. 90 90 90 100 100 Private vets mandated by Government No\. 90 90 85 94 94 Veterinary promotion center established No\. n\.a\. 1 1 N\.A\. 100 Overall vaccination rate for veterinarians % n\.a\. 100 56 N\.A\. 56 (iv) Privatization of breeding centers Privatization studies completed No\. 22 16 16 73 100 Centers privatized (3) No\. 22 20 2 9 10 (v) Livestock database National documentation center established No\. n\.a\. 1 1 N\.A\. 100 Regional documentation units established No\. n\.a\. 6 6 N\.A\. 100 Livestock database established No\. n\.a\. I I N\.A\. 40 1\. Construction has already been completed but the premises are considered by European Union experts to be inadequate\. The EU is financing the construction of another building at a more suitable location\. 2\. n\.a\. = not estimated 3\. As a result of Privatization Law, responsibilities transferred to Privatization Committee, which has yet to address the matter\. However, Government divestiture of breeding centers is already effective as all operations have ceased at the centers\.  14 B\. Support to Extensive Beef Production Unit Target Completed (i) Rehabilitation of livestock services Appraisal Revised Unit % App\. % Rev\. Regional livestock offices rehabilitated No\. n\.a\. 4 3 N\.A\. 75 District livestock offices rehabilitated No\. n\.a\. 31 31 N\.A\. 100 (II) Establishment of beef farmer associations Members of associations No\. 252 500 2048 819 410 Associations operational No\. 36 36 131 364 364 (iii) Production infrastructure created Drinking points developed No\. n\.a\. 72 47 N\.A\. 65 (iv) Genetic improvement Artificial insemination posts established No\. n\.a\. 3 3 N\.A\. 100 Females inseminated No\. n\.a\. 400 283 N\.A\. 71 (v) Feed improvement Fodder trials laid down No\./yr n\.a\. 12 0 N\.A\. 0 Urea-treated fodder trials No\./yr n\.a\. 60 33 N\.A\. 55 (f) Studies Livestock development studies completed No\. n\.a\. 12 8 N\.A\. 67  15 C\. DAIRY DEVELOPMENT Unit Target Completed (a) Extension support and development of Appraisal Revised Unit % App\. % Rev\. livestock farmer associations Total number of association members No\. 14,000 12,000 10,765 77 90 - in FIFAMANOR area No\. 4,500 2,500 2,460 55 98 - in ROMA area No\. 9,500 9,500 8,305 87 87 Approved grass-roots associations No\. 850 850 814 96 96 Approved unions of associations No\. 150 190 136 91 72 Approved federations of unions No 15 17 14 93 82 Approved women associations No\. n\.a\. 181 130 N\.A\. 72 (b) Feed improvement Fodder trials (FIFAMANOR) No\./yr n\.a\. 514 635 N\.A\. 124 Improved seed production Ha/yr n\.a\. 125 174 139 139 Seed production by ROMA associations Kg n\.a\. 5,400 6,626 N\.A\. 123 Establishment of nutrition laboratory No\. n\.a\. 1 1 N\.A\. 100 Feed rations formulated No\./yr n\.a\. 118 136 N\.A\. 115 (c) Genetic improvement __X_____=_ __X Bulls tested for breeding No\. n\.a\. 265 238 N\.A\. 90 Doses frozen semen produced No\. n\.a\. 9,000 130 N\.A\. 1 Cows serviced No\. n\.a\. 50,000 46,416 N\.A\. 93 Cows inseminated No\. n\.a\. 10,000 6,066 N\.A\. 61 (d) Animal health improvement _ _ Village pharmacies established No\. n\.a\. 138 135 N\.A\. 98 (e) Milk collection and processing _ _____ __ _X\. X Collection centers established (ROMA) No\. 50 75 100 200 133 Support to ROMINCO processing plants No\. 3 3 0 0 0 (f) Livestock Promotion Fund Milk collection points established No\. 46 46 57 124 124 Milk collection centers established No\. 18 14 5 28 36 Mini dairy plants established No\. 3 3 2 67 67 Mini feedmills established No\. 15 4 7 44 175 Salt lick plants established No\. 2 2 2 100 100 Milk road rehabilitated Km n\.a\. 250 216 N\.A\. 86 (g) Support to rural finance Savings and loan associations established No n\.a\. 47 48 N\.A\. 100 Members of associations No\. n\.a\. 8,500 7,765 91 Volume of savings FMG n\.a\. 280 382 N\.A\. 136 million I I  16 TABLE 6: IMPACT INDICATORS Project Objective Actual At Full Development 1\. Extensive Beef Production (a) Calf mortality From 23% to 15% 10% decrease over 10 years (b) Yearling mortality From 6\.5% to 4\.5% Not available over 10 years C Birth rate From 62\.5% to 64% Not available over 10 years (d) Milk production From 500 I to 600 1 Not available per lactation (e) Increase offtake 80,000 per year Not available (f) Incremental farmer revenue $150 per year after Not available from 50 head herd 10 years 2\. Highlands Dairy Production (a) Incremental milk production 1,500 1 per year 1,948 1 per year 2,000 1 per year per cow (base: 1993) (b) Total incremental milk 80,000 1 per day in 60,270 1 per day 80,000 1 per day production 10 years 3 Incremental income per cow (d) Increased return to labor From $0\.50 to $1\.50 _____________________________ per person-day  17 Table 7: Studies Included in Project Study Purpose as defined in Status Impact of Study l _____________________________ SARlredefined Incidence of Rift Valley Fever in Improvement of Completed Incidence evaluated and mapped, and cattle animal health disease monitored Country declared disease-free\. Incidence of tuberculosis in cattle It Long term eradication program planned\. Incidence of anthrax and related " Vaccination programs underway\. diseases\. Testing of vaccine against Effective vaccine available against Teschen disease\. disease\. Establishment of epidemiological " Surveillance network operational\. surveillance network\. Feasibility of installation of Privatization of All 90 private veterinarians earmarked private veterinarians\. veterinary practice\. installed\. Installation of milk collection and Private sector Most appropriate locations agreed by processing centers\. development\. producer associations\. Feasibility study of dairy Economic feasibility confirmed\. investments Establishment of feedmills and mineral licks\. Sustained development of the Designed as sustainable revolving fund\. Livestock Promotion Fund Future of ROMA\. Government Agreed plan designed for Government divestiture and private divestiture from ROMA and ownership sector development\. by producer associations\. Establishment of animal nutrition Not identified at Laboratory operational and providing laboratory\. appraisal excellent service to producers\. Financial audit of ROMINCO\. Viability of Confirmed the non-viability of l___________________ ROMINCO\. ROMINCO\. Survival of ROMINCO I c Survival plan prepared\. Preparation of livestock database\. Reinforcement of A current database now available\. Livestock Department\.  18 (continued) Study Purpose as defined in Status Impact of Study SAR/redefined Socio-economic study of System improvement " Little impact of results on the systems\. extensive beef production systems\. I Marketing of cattle in the mid- I IC Little practical application for results\. west\. Use of molasses urea mixes for I Beneficial use confirmed but not very cows accessible to cow keepers\. Evaluation of oats and urea- Feeding systems Completed Now being used to some extent by producers\. treated rice straw for cow-feeding improvement in dry season\. Milk quality in Vakinankaratra\. " Exposed poor bacteriological quality of milk and underlined need to give high priority to quality issues\. Evaluation of improved Manja Production systems " Confirmed potential for further development\. Boina cattle in suburban areas of improvement\. Mahajanga\. Breeding and cow management\. " Improvement of dairy production\. Technical and economic aspects " Demonstrated economic benefits of control\. of tick control\. Degree of immunization of dairy " Improved understanding of resistance to animals to diseases transmitted by diseases\. ticks\. Bibliography of bovine Provided database for planning of long term tuberculosis\. eradication program\. Reform of technical education at 99?????? EASTA Mahajanga\. Privatization of breeding centers\. " No privatization actions completed due to new Privatization Law\. Administrative, financial and Institution Implemented by CP\. accounting organization of CP, strengthening and preparation of manual of procedures\.  19 (continued) Study Purpose as defined Status Impact of Study in SAR/redefined ___ Mid-term evaluation of milk Monitoring Inputs into Bank mid-term review mission\. production, extensive beef and evaluation production, and institution strengthening components\. l Evaluation of project's Input into the continuous adjustment of project sociological impact\. directions\. Evaluation of project's economic impact\. Evaluation of private Redefinition of roles " Provides base for strengthening role of private veterinarians and of program to of public and private veterinarians and for redeploying redundant public divest MinEl's field services\. sectors services\. Mid-term evaluation of Not identified at Identified weaknesses and recommended corrective activities of savings and loan appraisal\. action\. associations\. Preparation of a national policy Production system Laid the base for directions to follow\. for genetic improvement\. improvement\.  20 TABLE 8: PROJECT COST Appraisal estimate Actual/latest estimate (US$ million) (US$ million) Local costs Foreign costs Total Total A\. Production Development\. 12\.18 11\.29 23\.47 _ _ Extensive Cattle Systems 4\.49 3\.93 8\.43 3\.81 Highlands Dairy Development 7\.69 7\.36 15\.04 9\.31 B\. Institution Building 3\.40 5\.21 8\.61 12\.38 \.Strengthening DEL 1\.65 3\.02 4\.67 \.Monitoring & Evaluation 0\.41 0\.52 0\.93 -\.Privatization of Veterinarians 0\.79 0\.87 1\.66 \.Divestiture Program 0\.28 0\.23 0\.51 \.Formal Training Review 0\.27 0\.57 0\.64 iPhysical Contingencies 0\.89 0\.89 ! 1\.78 Price Contingencies [ 1\.64 3\.13 [ 4\.77 l TOTAL Project Costs _18\.11 20\.52 38\.63 28\.28 TABLE 9: PROJECT FINANCING Appraisal estimate Actual/latest estimate US$ million US$ million 1j % Appraisal IDA 19\.80 19\.44 98 CCCE 5\.40 0\.04 1 MCD 1\.00 1\.63 163 NORAD 2\.10 2\.05 98 Farrners 2\.60 n\.a\. - Government 7\.70 5\.11 66 Total 38\.60 28\.28 73  21 TABLE 8: ECONOMIC COSTS AND BENEFITS The main quantified benefit resulting from the project comes from increased milk production in the highlands, foi which an economic rate of return (ERR) of 19 percent has been calculated for a speed of development of 10 years, as compared to the appraisal estimate of 13 to 19 percent, depending on the assumption on the speed of development of 10 or 8 years\. At full development, the incremental milk production is estimated to reach thl appraisal figure of 30 million liters per year\. For extensive cattle production, the ERR was not estimated as more lead-time is needed to quantify emerging benefits resulting from improved health care under health programs bein conducted by private veterinarians\. These benefits have been delayed due to project implementation problems\. At appraisal, an ERR of 17 to 22 percent, depending on the share of the cattle population that would be affected (30 to 50 percent), was estimated\. With hindsight, this figure was probably over-estimated, given the severely constraining socio-economic environment, including external market conditions, for extensive beef production\. Given the very poor state of roads and the time needed for the installation of private veterinarians and for them t become operational in the dispersed western and northern regions, it was unrealistic to expect that they would havy the capacity to treat 30 to 50 percent of the cattle population in these regions during the relatively short span of the project\. The main impact of the component was to come from improved health care\. The appraisal assumption that beef exports to EU would continue, if not expand, also did not materialize as that market was closed durinn project implementation\. However, the low project benefits estimated at project completion could become importan at true full development when significant health coverage is expected\. A new benefit, not foreseen at appraisal, relates to significant calf survival and milk production increases in the extensive zones resulting from water suppll improvements carried out under the project\. The benefits, when combined, could yield high ERRs but need to be verified further\.  22 TABLE 9: STATUS OF LEGAL COVENANTS Agreement Section Covenant Present Original Revised Description of covenant Comments type status fulfillment fulfillment date date DCA 4\.02 Financial CP Implementation of COMODEL has completed divestiture program privatization feasibility studies for the units earmarked, but has been superseded by the Privatization Committee, set up under the Privatization Law, which has not given priority to their privatization\. 4\.03 Financial C Hiring freeze A general freeze is in effect\. 4\.04 (i) Financial CD Not grant exemptions for The 94 budget law raised the duties on dairy products level to 30%, as for other dairy\. products\. 4\.04 (ii) Financial CD Regulate imports under An interministerial committee food aid so as not to has been created to coordinate perturb the local market import and decide on pricing mechanisms\. The local market is actually very competitive\. 4\.04 (iii) Management CD Annual donors meeting No longer necessary for coordination of food aid l 4\.05 (i) Management CP Effectively enforce Ongoing sanitary protection regulations at airports l 4\.05 (ii) Management C Restrict animal imports, Ongoing requiring quarantine, to air transport arriving at the airport at Ivato- Antananarivo\. 4\.06 Management C Restructuring of DEL\. Effective since February 1992\. Schedule Management CD 11/94 Carry out mid-term Completed in April 1995\. 4 para\. 2 review Schedule Management CD 02/95 Review report of mid- Completed\. 4 para\. 3 term review with Government and donors and take appropriate corrective actions\. Schedule Financial CD Cost recovery for Funding for vaccination is no 4 para\. 4 veterinary services\. longer included in Government budget\. Producers now pay full cost of services and drugs, which are provided by private veterinarians\. C: complied with CD: complied after delay CP: complied with partially  23 TABLE 10: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS Statement number and title Describe and comment on lack of compliance No major lack of compliance was observed TABLE 11: BANK RESOURCES: STAFF INPUTS Stage of project cycle Actual Weeks US$ '000 Preparation to appraisal 73\.9 164\.3 Appraisal 18\.5 38\.9 Negotiations through Board approval 5\.6 13\.6 Supervision 141\.9 418\.6 Completion 2\.0 5\.2 TOTAL 241\.9 640\.6  24 TABLE 12: BANK RESOURCES: MISSIONS Stage of Project Month/ No\. of Days in Specialized Staff Performance Rating Types of Problems Cycle Year People Field Skills Represented Implem Devel- entation opment Identification 05/88 2 16 LS, C n/a n/a n/a Preparation 12/88 1 12 LS, LS n/a n/a n/a 11/89 3 20 LS, V, AE 03/90 2 13 AE, LS Pre-Appraisal 09/90 6 21 AE, AE, AE, LS, V, n/a n/a n/a A Appraisal 01/91 3 18 AE, LS, V n/a n/a n/a Board approval 05/91 - 2 40 AE, C n/a n/a Delays in fulfillment of through 08/92 conditionalities concerning effectiveness legislation, legal reformn of entities, and cross- effectiveness of cofinancing _______ ________ ~~~~~~~~arrangements\. Supervision 1 10/92 1 20 AE 2 2 Unstable political situation, inadequate legal framework, and weak project management\. Supervision 2 06/93 1 21 AE n/a n/a Inadequate legal framework, no cost recovery for vaccination, and inappropriate food aid pricing\. Supervision 3 10/93 2 22 AE, LS 2 1 Weak project management, inappropriate food aid pricing, and lack of monitoring and evaluation\. Supervision 4 05/94 1 30 AE U S Weak project management Supervision 5 09/94 1 17 AE n/a n/a Staff reorganization\. (informal) __I Supervision 6 03/95 6 24 AE, A, FOS, LA, S S Weak project management (mid-term LS, AHS (procurement), absence of review) regulatory framework, and lack of capacity of other project entities\. Supervision 7 06/95 4 25 AE, LA, PSS, AHS S S Staff redeployment, animal health standards and sanitary inspections and control\.  25 (continued) Performance Rating Stage of Month/ No\. of Days Specialized Staff Implem- Devel- Types of Problems Project Cycle Year People in Skills Represented Entation opment l_______ Field Supervision 8 09/95 2 10 AE, A n/a n/a Insufficient counterpart (informal) funding\. Supervision 9 01/96 2 22 A, E S S Slow integration of crop and livestock extension services, poor roads, and lack of access to credit\. Supervision 10 06/96 1 10 A n/a n/a Insufficient counterpart (informal) funding, poor roads, and no access to credit\. Supervision 11 09/96 1 12 A S S Insufficient counterpart funding, poor roads, and no access to credit Supervision 12 05/97 1 12 A S S Staff reorganization, and slow integration of crop and livestock extension\. Supervision 13 12/97 2 12 A, V S S Staff reorganization, and incidence of bovine tuberculosis\. Supervision 14 06/98 2 12 A, V S S Staff reorganization, and incidence of bovine tuberculosis\. Supervision 15 11/98 2 12 A, V S S Stagnating beef production\. Completion 06/99 1 12 A S S Staff Skills: Ratings: A: Agriculturist I - Insignificant problems AE: Agricultural Economist 2 - Moderate problems AHS: Animal Health Specialist 3 - Major problems, appropriate actions being taken C : Consultant 4 - Major problems, not being addressed adequately E :Extension Specialist S - Satisfactory FOS: Farmer Organization Specialist U -Unsatisfactory LA: Livestock Advisor LS : Livestock Specialist PSS: Priority Setting Specialist V: Veterinarian  26 Annex 1 Summary of Borrower's Evaluation Report Project Context I \. IDA credit No\. 2243-MAG and NORAD grant TF22065, funding the Livestock Sector Project, were closed on June 30, 1999\. A grace period of four months was granted for completing disbursements\. The project had started in 1993 (reference year)\. The other partners, aside from the Malagasy Government, included the Fund for Aid and Cooperation (France) for technical assistance and the French Agency for Development (ex CFD) for a program of rural track rehabilitation that will continue until 2001\. Presentation of Results 2\. The results are detailed, in grouping all data (implementation, commitment, impact, sustainability and future prospects) per entity as per the project organization, but grouping by component is also made in a number of chapters (FIFAMANOR for milk production on the highlands and DEL/PBE for extensive beef production\. To note that disbursements for 1999 refer only to the first three months, the official cutting off date for commitments by entity decided for the project (earlier commitments were made by CP/PSE regardless of entity)\. Project Costs 3\. Including ongoing payments for invoices, the IDA credit and the NORAD grant will be disbursed at, respectively, 99\.18% and 100% by October 31, 1999, subject to exchange rate fluctuations\. Categories 1 and 5 of the IDA credit were overdrawn; due to implementation of activities not foreseen at project start-up, such as IDA financing of rural track rehabilitation, construction of the National Reference Laboratory, rehabilitation of the project headquarters at Anosimasina, and decentralization of technical and financial activities of the project to the regions\. This caused an increase in operating costs\. The NORAD grant was also overdrawn in categories 1 and 3, due to the distribution of improved bulls and to the execution of an audit and strategy study for ROMINCO\. It should be noted that these extra disbursements did not affect the overall allocations of the IDA credit and NORAD grant\. In summary, the financial results of the project, up to October 31, 1999, will be as follows: IDA credit: US$19\.44 million; CCCE grant: US$ 0\.04 million; FAC grant: US$ 1\.63 million; NORAD grant: US$ 2\.05 million; Government: US$ 5\.11 million Overall Economic Viability of Project and Results Obtained 4\. The project has yielded significant economic benefits, as shown by an internal economic rate of return (ERR) of 19%, which is quite acceptable given the important funding of institutional strengthening that has not directly yielded positive financial flows\. The cost of French technical assistance was also included in the calculation of the ERR, but depreciation charges were excluded\. The project had created at the end of 1998 about 18,500 new permanent jobs in the intensive dairy sector\. In addition, it generated an additional GDP of more than FMG 84 billion between 1994 and 1998, or equivalent to 10\.5% of the GDP growth, for the livestock/fisheries sectors for the same period\.  27 Milk Production in the Highlands 5\. The bulk of the economic benefits is due to intensive milk production in the milk triangle with an incremental production calculated in 1999 to be around 14 million liters for a value of FMG 21 billion\. The objective stated in the 1991 appraisal report was thus achieved within the timeframe, while using a less favorable, but more realistic, starting point for the FIFAMANOR region (1,100 liters of milk per cow per year, instead of the 500 liters assumed in the appraisal report)\. This sector has a promising future, with an important growth and a market that is far from being satisfied\. World prices of milk powder have been favorable for the project (EU policy to reduce stocks since 1994), even if a slight fall occurred in 1998 (reduction in demand by the large Asian importing countries)\. A detailed note on this matter was submitted to the World Bank in 1997 and 1999 (a project risk identified in the appraisal report)\. On the other hand, an important problem that has been well-quantified by the project, is that of milk quality, which should become the main issue for operators in the sector\. Thus, an interprofession approach for the future would be the only way to resolve the problem, namely through premium payments for quality\. IDA support is requested for that phase\. Besides, NORAD funding under bilateral aid has already been secured for continuation of technical work at producer level (through support to FIFAMANOR)\. Extensive Beef Production 6\. Results are below appraisal estimates\. The project achieved significant results only on water supply development which had a clear impact during the dry season\. The main results are an increase in milk production and reduction in the death of calves (incremental production of more than 11 million of liters worth FMG 29 billion and 21,000 calves saved for a value of FMG 3\.3 billion\.)\. The technical themes promoted were not always appropriate and were programmed only as pilot operations\. However, they enabled orientations to be set, namely for producers who wanted to move to a more intensive production system\. The international market was also not favorable to beef production, as a result of falling prices following the mad cow crisis in Europe, and the ban of Malagasy beef exports to the EU (still in effect)\. Finally, activities in specialized subsectors (honey, silk and pig production) have confirmed their importance for revenue generation in rural areas (poverty reduction), particularly for women\. The project requests IDA involvement in providing technical support to these village activities that can be readily intensified\. CP/PSE has prepared a project on this\. This could be carried out in synergy (in the framework of PADR) with French cooperation that is already supporting (and will continue to do so) the poultry and pig subsectors in the area of professional organization\. The continuation of the water supply development program will depend on the identification of needs by regional stakeholders in the framework of the regional preparation teams for PADR\. Institutional Strengthening 7\. Other than the changes in behavior it has brought about, the new sector policy framework put in place by the project has enabled to strengthen public services in: * organization of epidemiological surveillance; * collection of statistical data, with publication of the 1998 annual statistics report; * programming and evaluation of the sector and of livestock projects, with an effective system of implementation and impact indicators, and a consolidated annual report of the program which includes all donors and projects; * training, documentation, and communication; * coordination of activities in the sector, namely the evolution of the project into a program as from 1994 through integration of all funding sources and donors\. The publication since 1997 of consolidated annual  28 reports, including all activities and donors, is the clearest example\. empowerment of decentralized services, the project having reached a true contracting mode of its activities and financing with regional livestock services\. 8\. The follow-on to IDA financing for certain aspects of institutional strengthening (animal health and food hygiene) has already been confirmed by EU, which will include the first phase of the bovine tuberculosis control program under its PASA project\. Main Trends in the Sector 9\. The project has been effective in introducing changes in the sector, namely in: * cost recovery in animal health\. Until 1993, vaccination and veterinary services were provided, free of charge, by Government services\. The principle of full payment for veterinary services, after a period of resistance and a sharp drop in vaccination rates, is now accepted by all as confirmed by the sociological survey and increasing rates of vaccination coverage since 1996 after the brutal drop in 1994; * privatization of veterinary practice\. Here also, the project has confirmed the feasibility of empowering the private sector for a number of tasks\. This orientation is now well understood in spite of some understandable reluctance by Government staff concerned over their future\. Support to the process (without funding for installation) must continue, and IDA support is being requested for this\. * privatization of Government production units\. Unfortunately, project achievements have been below target\. Only the studies have been completed\. The final decision rests with the Privatization Committee, which was created during the project\. * empowerment of livestock producers\. On physical problems (rural tracks, water supply, marketing of products, ), there has been a significant shift in attitude towards a progressive taking over by beneficiaries, which can increase with the creation of GTDR (participation in regional projects)\. The initial participation of beneficiaries was generally easy to achieve\. However, there is much to do to ensure sustainability\. Regrouping of all these professional entities on the same site at Anosimasina is a very good initiative for future collaboration between the public sector and its private partners\. In this process of transfer of responsibility, a number of technical actions need to be supported\. * re-focussing of public sector on its permanent functions\. Government livestock staff have now well understood their main functions, even if some progress is still needed in the daily routine\. * restructuring of the public services that must accompany this "revolution" in operating practice\. The debate on this matter has started and, with access to material from relevant studies carried out under the project, can be completed within a reasonable timeframe\. Funding from EU has been secured to accompany this phase\. * decentralization of activities and funding\. Through its program contracts (for private and parastatal entities) and service contracts (for government services), the project has established the practice of decentralized management (activities and funding) within MinEl and preferential recourse to operators specialized in project implementation\. The Livestock Project and PADR 10\. The follow-on of livestock development activities of the World Bank will be set within the new approach for PADR\. The project has contributed significantly to the debate on this matter (the Project Coordinator is a permanent member of the Equipe Permanente de Pilotage and participated in GTC and GTDR)\. A number of principles of PADR were already largely applied to the project (decentralization, participatory approach, clear definition of respective roles of the public and the private sectors)\. However, as the country moves towards  29 regional autonomy system, a central responsibility or at least a national coordination is mandatory for certain activities to avoid moving backwards (functions connected with "Competent Authority", national policy of genetic improvement, control of tuberculosis, and African swine fever, etc\.) The National Coordinator Livestock Sector Program Ralambofiringa Arsene (signed)   Annex 2 Page 1 of 8 IMPLEMENTATION COMPLETION REPORT MADAGASCAR LIVESTOCK SECTOR PROJECT (Cr\. 2243 -MAG) Borrower's Comments Borrower's Comments on ICR  Annex 2 Page 2 of 8 RUODLIK'I DMAAGASDURA Tanura - ?aafh - d Yadro MUSTDEL DE LFELEAGZ Amanzuivo, it 4 SEP\. 1955 SECRETAZ G L PAWGRAMME SECgORlL EI2VAGE Lo Crmmatoa du Pogmm Seoidel'evWe CELLUL DE =OTAGE B\.P\. 121 TEA =32573-22\."735 1 Ea t221\.1L94 1nsicutIg Ip RW 6s= Raddnt de Is Baque WAd N -_4_5 0_ /" N 3 & M G/P S Z /C P 31S 1'gntlou de Moeslax Ziva RAZAPIWTSALAMA) 12AM: kapport d'ach&voment du Pojet Sectrt Eleag\. - 2$3 1AG ___ \. ICK de A Banquo Mondialb */L N*155199/NM4EL du 23107/99 Morsieur, En accusant riception du document cltA on rdf&ace, nous avons I'hozneur do vo comUnquor quelquos commentaires et lea rensignns suppldaestairs requl\. Nou vous oonmons qu il rapport de cZture transrls par Monsur la bfinimo de 1'Etevagc wu rdfene supra, constitmt b6 rapport de lmpnmteur\. , eon aChoet t BDanque mondiale en et destinatrm Cc rapport contian: un risurn6 ot lea perspectves du projet, - los rdsbations techniques et financires par raport aux objectifs ainsi que I\.s impacts, lc bilan et les parapectivos par agence d'ex6cution du prcet, - la rentabilitd les effets Induits et la coot du pro3jet - en annex\., los tudes, les tuavvx de consultations et Ws formaions affectuEs dan\. le cadre du projga Suit\. i votre demande, nou vous oommuniquons l'Evalualon des erormances des bailleurs et cellos de 1'Empruntcur\. La ficbe joint\. donne la suitsion des indicsteurs d'impacu, d6fnie dans l'ICR (Table 6), domen compldrde et epliqude\. Ndanmoins, quelqucs observaons sur le contenu de cet ICR mdritent d'&re soulign6es: De 1'exploitatioa oe Is syntbdse des ndicateuns de suivi d'exocution du projet au 30 juin 1999 (base do donndes, locaux des r6gions rd&abiiit, points d'abreuvemenr, membres des usociadons, associations or lgroupements, finances rurales, \.), nous vous t-annmttons ci-joli un tbleau r6capltulatK Identifian Is contnbution de chaque pVnafre finanler\. sur la base de I'adhision & 1'exncution de la Dclaration de Politique Sectorielle\. Lca donn6o ainsi foumnics sont on cohErence parfte aux informadio d6crites danA le rappor de clate su-rfIrenci6\. Quelques transcriptions sont A ajuster\. Ainsi, au point 28: 206 km de pistes ont &6 rihabilit6cs au lieu de 216 kn, at qu'il y a Ueu de lire 87 cenrs et points de colecto au lieu de 86, au paragraphe 29,  Annex 2 Page 3 of 8 Concruant la rm rccumu des lntudona, point 10 do aEvatio# mazumy V \.C point Is dA ii Pat IX\. l'opaonal du cmntreo da a a mntm 4onaaes d do u pea 66 p's 'a ooalddiato\. Ausui l eat ndesaai de soulipr 1'odez u fta va a fomiatos an cascadet ls p satio he fonatios local\. toucha -un plus gand nomb de bdcairo at sur dei thAme IdontifTa par MIM w&m& - Sur lea 1ipns appzisat du prot pO 45 deoatBe t Ils \.routil a OWD pmwo ou conw de ervice i, utihsi p~ar los agance\. d ' xdwIou~4~p \. P to oblie i aindre [ous objeWt: la tasmparene du proeddures pour une z d'pplic h slon un oronogruamoe concert\. * Sur Iss saatages ecaCb o eonomique du pr\.jot (table *), Ib tux d rentabilit intome (rRI) du projet sa de 9Igo ca,uld xar IL boea dt 10 m mas non Sur 9 ML Dan s on lm o Wi e s*Ial et au ddvsloppem t niul en pedariliar, ous ntmn quo la pr aet * cr it\.905 ols permo t loanan t vao jt& addWounle eat o nd 2 go mllier MG\. So pan, dano s cIsanc du P du saoctw dlevApAMe I, p*iode 1994 -I99s ,e s o\. u 12i,I clle\.du PI dtu Wcrw pdakr pow [a m5m pdriode co de 3\.6°4 et deo o de 0,9/%, rPport u PID nmaL pour le temps asddndi\. La paraples qu suivenm wprlment ans jug baustvu l'vahlustion des pnormces: 1 -Ev pluzion de pggmnna de lis Eaqu modslaeA;a Ems w\. e,ui-ers En collaborgtion gsre IEt* phulurs pa;nara techzqus et fincias (baillrs de fonds) oam appot leur contibution daa le d6veloppeane du soateur diame\. en iotavnet dans os proets bien ddflnia at spdcifiques rassemblds en up sal progmme sur la bae d'une seal\. Ddcearadon do PoltIque Sectmiolle savant de r6firczile\. Cae panonare so= ls Banque MondiAsle, Is NORAD, le Fonds dAide et de Coopdralion Pranss\., I'Agoce Frangailo pour le Diveloppement at ['Union Europdes\. Saul, le projet do dvloppem de la production 1aiare ousour des ptindpaux enres de consommation dam too bass trer, pr&vu k hro financh par la Banque Africane pour It Divelopp\.tmo n'a pu dftaTd\. En se rif&am: au projet sectoriel 6leove, les reuhltat son sot liacatift\. Cola eut dO principalesnen aux- perfomacus eso bailleun: Bnque Mfndiale, NORAD a Fonds dAido ea do Coopdradon FrsaI sur; I sa flcxibilitc de getion suivant les besoims de I'ampmnreur: amwndoment de i'\.ccord de crkdit IDA, I'-valuation i mi-parcours et les missions de supeoion successives dont I'\.t6tion des principale\. recommandations r6pondait aux besoins r6els dos bdndficinlres du projet, tels que leas points d'abreuvonent, los Snaaces rzurales, 1l rdhabilitation des pistes latiks, I'amdlioration d lea coordinadon du projet, la ddcantraliuation des activtAs teiques et fIsoci&\.ss du projet mu niveau des "Mrices rdgionaux; l a misc en place d'un chargd du projet au niveau de la mission rusident\. & Madagasa faei¢it le contact et la prise de ddtcsion, sins! quo Is difriuion dos informations lrs des reuons pdriodiques ou des reWus de pore(cuUle; - clacificazion des astributions ct l'appui des usistances teniques; - la reprise des r6habilitations d'uae partie des plstes Itiieros par la Banque Moda, travaux pr*hw sa financement de I'Agence Fran:aiso pour le Ddvloppeoment qui a dtd d6iermnisaate pour la maltrtse de ls fliere laIt et la concrdtisation des productions additionnelles\. 2- Fvalustion de IA nerfomae de V'Enmunte Dans l'oesomble, l performance de l'Emprunteur est satisfaisante\. Au ddmaxrage du projot, des probl6mes doonomiques at institutionnls s'Ialent manifestds\. L'Emprateur a r6solu Is problime des fonds de comm parze, faceur limitant du d6caisseraent, co qui permetrait d'aligner la prdvision de d6caissament des bailleurs et Ie dicais3emern r6el\. La gestion du projer en programme a dclairci les r6sultats aizendus et a donn confiance h l'Empruneur\. ta consolidation des acquis et leur intigraWon dans le proceaus actual d'elaboration du plan d'action pour It dd%vloppament nura (PAD3), traduit ia votonti de 1'Emprunteur\. Afin de maltenlr Is dynamique de l'*vohltion, une requ&t de PPF a\. etr introduite par is latmetNr 056AvM JSGIGT/DDTitMH du 22 juin 1999\.  Annex 2 Page 4 of 8 Ern so appoa damiquoet fin 1998et au d uanJe bas td\. areww du poTW le do projes finAcs par laBanque Moiale du 26 Ma 1999, dfctu6s pars le minim deo Fmiae at de rEconomin\. - Le rozr- an pwwnw anib fin 1995 Wm s iVaMi des ac#WMs at dasTXem aw6 la ifLs an place du wU"afp?0O'ma \.tdes co de jervic muwas andi hikn a, eodiaboe4iUon ac kI r tcb qW kI ONG\.I kas rgmw de kis &tsyks qwtlzw duaazfravs ttqw lawMz \.wvwm o et~ rdivvaNlm Le P'ogwved do iiVAis nd swbrwu dmin\., no trveton :s: u-_arkcsal du n v di counwtcevaciswk d'aewMllI*fRquedsits awdIIkwa gsdM ut d f I'aliantan anua, AdzL enplA dim nwnb,e hi Avde &*Awb s L La *Wse as ww de lapoatqu seetic& a Id ha ac ipnflcu4frIo co Is iatll\. Ea usaouahaizm mm boon tion d\. kpiLe noe qul fam paile intdgrme du downm de rappot de cltm du projet, vullea api , mw, nos melw= onh L - Tablea d'inzdicaieurs d'impacw - Tbleu des indiceurs do suin d'aecutio (C3 pages) Monsieur le Socr*aitw Qddal du MNEL 4 A tite de Compte Rendu R BOFIRINrBA Ar  PROGRMMM SECTORIEL ELEVAGE iYDICATEURS W'IMPACTS Indlcauro Sihuatin initials ObIectif du projet Situation fin prolet Observations 1 - ProductIn bovin it tlo __ _ _ _ __ _ _ __ _ _ _ _ _ _ _ _ __ _ _ _ _ - TauxCde Mor_l__d_o_veaux 23-24% 15% NO - Tao do morttldl6 des anknaux k6s dun an 67% 4_6 _ _ _ ND - Tom de ntati0 62,50% 64% ND - Production d lai 500 itres1t?tt & 600 lit os 680 litres (2) Au&neny tIon de Ia producgion 80\.000 tAles 21\.500 letes - Augmye=g-ion du rvenu dos productoure ME Un troLeau do 50 Was 100 A 200 USDlan 573,68 USDlan (4) 2- Prodctio Ialro (S 'w k O _ \. - ProduCtion de lal j _ 500 litresAiachl/an 2\.000 litresJvachelan 1\.948 lilreslvadielan ( 5) - Production addtionnrlle onait \.- 32\.000 (ornneslan 20\.640 tonnes/an (6, - Augmentation du revenu adctioi'me de producteurs ND 211 USDJvache/an (7) (1)\. (2), (3) at (4): Cf\. Rapport d clOture du projel, page: 21 (1): Aucoie d'rne6e Iabbe rfaxsle potr vkditer fivolilon des mortalits 0t des natatitAs; mals reffet de l'abreuvement a un impact positif sur la diminution du taux de rnortat el ram6lorallon de Ia natallt6 des ankiau (2): La productlon addilonnlie par vache en -lactaton par an est de iOa litres, en consid6rent 1,5 litre par Jour pat vacho en lactation pendant 4 mois de saison seche\. (3): Ce revenu addklloml englobe lto oducton de lbit et do viande\. (4): La revenu addWiUonr dos producdein par repoductrice et par an est do 232\.000 FMG\. Pour un troupeaux de 50 tWeas, dont 30% dos effectifs constituent des reproductdloes, soil 1S reprductrlces, et avec un taux de change 1 USD - 6066,05 FMG, le revenu addilionnel esl 573,68 USD [(23ZO00/6066,05)'151\. (5), (6) et (7): Cf\. Rapport de\.o lture du prol,t pages: 16 et 17 (5): La producUon moyenne mnruse par vache entre 1993 et 1999 vare de 1100 i 3000 litres, en fonction des productions par type g6n6tique at importance relative de chaque Iype\. (6): lUpectli sera atteint en 8 ens avec rhypothiso de base ou en 10 ens avec rhypothAse lent\. (7): Le revenu addilionnel arwiul par vache dos producteurs est de 1\.280\.000 FMG, soil 211 USD avec le laux de change I USD = 6066,05 FMG\. ,1/  Annex 2 Page 6 of 8 2\.Composante Producton bovine extnsive at a_ ui '6lava dessa &cAs b i\. court uumx lndicateurs d6 at ac_v|- Projate\. l u IJ " s - n Ihi rL wnI RS - Infraa&Utrfuru d'wpulI n satltonnel MA\.+pW iocaux r6gloriaux r6habllitdw nb 1 51 Rl 4 FM ~-CIRELs r6habolt6es et conistruite OE 100 IOA IP b rib 21 31 35 112,90 FED _ dELSO rb 2 50,00 _ 9nd _ -\._ IDA 46eour mernbres des assodatns _DEUPE 'nb 2522 500 2645 62900 IDA associaton iveurs bo_vs s DE"PS rnb 36 38 187 19,44 FED groupements d'61\.veurs IdOntissb 33 8 44 53b01 FED (leveurs membres des gupemerAs Lars OEM nb 2000 3000 2226 4 FED pha;macies r*munautaires Viiiaois 0EL30 nb 40 60 70 116,67 MCAC groupe=ents membres dejo MPE PARCC nb/an 250 250 101 4040 MCAC n PA8CC nb as WE 70 79_56 AJndnagement du mileu FED Purts ot barrag= de rtenues ohEso rnb 1 40 27 20 74,07 FED abreuvoirs et amOnOgement des mares OELSONSP nbb\. 1 241 tl 181 100\.00 FED abattoirs municiaux construits DVLSO fnb s s s ,100\.00 IDA Points nrbrsuvement Install6s DEUpSE rb [ 36 72 50 69\.44 Amflioratfon de aprductivt6:g4n4ftue FED Ins6mination artificife cbvres An _ = OISO nbian 225 137 51 37\.23 IDA sous centres dinsamination artici\.lle DELUPBE Inb 2 3 6S 200,00 IDA femelles Ins4min6es DE[E nb 100 400 574 143,50 MC AgmntetdfUsionderer PAECC nb 500 500 479 96580 FED Approvisionnementananimaux am6lorsI DELSO I nb 30 000 220000 22075 100,34 IDA {parcelles de dmonstration fburr esI DELtPBE ha 36 12 92 766,67 IDA demonstde traitement deopaille i rure DELAPSE nb 12 60 222 37000 FED lioumal agro-pastoral DELSO nib 18 22 - 22 10O\.0 CFD lasyee airspeiirsdsaiet PSA nib 500 100 23 230 MCAC r6union technique per sous filhlbr PAECC nib 50 50, 41 SZOO MOAC foration \. ant& w rimal\.at n&*dt' Mm9ag PAECC nib 27i 27 47i 174,07 MCAC lelevagessuivis totaux PAECC rnb 224 579 7471 129,02 MCAC formnuies crallments diffuss4es - PAECC ri 01 170 317t -186,47 IDA Ith&mes recherche d6veloppernent rAiisp's FOFMDRzv nbWan \.22 1s 10 62\.50 FED cr6dit deeromotiondu secteur p&I DELSO |nb 114 67 50 74,63 FED cr6dit de promotlon du secteur Prlv6 DO IO M'mg1 1334 494 544 11012 FED crAdit rural: convention avoCONGCIDR mm-sO Mft | 300 156 156 $0000 MCAC recherche-d6veloppement: 6tudes filiires PACC I -b FED abattairs municipaux construits -EI\.So nb 15, 51 5 TbordOB99  Annex 2 Page 7 of 8 nROGRAME SECTORIEL ELEVAGE lndlcateurs de suivi d'e,dcution 1\. Composanto R4forme seCtoriell, at renfomement des ins _tutionsT FINEX Indicateurs eMts at aCtivit4s Projets U lco~~~~~~ Endt6s I -w I" few [W luln-99 Ira Cuvo,tu,e sanitaire of srvllne d 'ue iDA Laboratoire National t % I 10C 45 45,00 IoA+FED LaboratoIres r6gionaux totaux _ +o nb 12 9 9 100 AnDsiranana ELSO nb 3 I 100\.00 MahaaNea DEIA nb 1 I 1 100-zoo Toamsina i nb 2 2 2 T1O00g Fianarantswa DEISA- nb i 1 = 1 100,0C Antananarivo DEUSAb_ n 1 1 1000 Toliary_ DELSO nb 3 3 _ 3 1000 IDA Station de quarantaine DEUSA % 10100 100 O IDA\.FED Equipes mobiles cr66es DELJSA+DELSO nb 8 10O,OC FED Couloir de vaccination DELSO rib 38 20 52,63 Etudes\. luttes contre maladies A incidence grave Tuberculose bovine IOA+FED Postes vitfrinaires enquit&s DELuSA+LSO nb I 243 _ 43L 1000 IDA+FED Carte p_d6miooglQue EuSA+DLSO Jnb 1 1 |1O,OC DA+FEDi roiet de lutte: essal vaccinal OEUSA+OELso % 100 _5 , Maladies charbonnevses IDA+FED Postes v6t6rinaires enqu&s O1JSA+OE1\.So nb 2431 1000 IOA+FED Carte epid6miologique DELjsA+osLSO jnblan 2 __ b,o I__ _I FI*vee de /a VaIlee du Rift __- IOA+FED Postes veterinaires enqu&t&s ODEUSA+DELSO nbb 1001 I 0C IDA+FED rCarte 6piddmtologUue OFiJSA+OLsoj nb I 1 100,0C I l Ma/adie de TESCHEN exploltation donn6es pilotes DELISA I% 100i 0 100 programme d'4radication DEL/SA % I1001 5 50 ___Pathologies des petits rumninants FED Pr6l6vernents et analyses r4alis6es DES b160 131 2,17 Prnvatisation virdt6inalre IDA mandats sanitaires attribu4s IDEL/SA rib I901 IDA v46t6rinaires priv6s install6s ICEPRO '/T rb I90 I--o 100 FED auxllliaires formds IDELSO nib 1201 5 250 ___Distribution dvintrants FED Centres de gros DEL\.SO _ _Inb 31 31 3 10000o Pnivatlsation des centres de production' IDA entit6s 6tudi6es ICOMODE-L rI b 28 6 171 60\.71 IDA lentitds privatis6es ICOMODEL f nb t281 201 21 7\.14 D>ocumentation et ban quo de doannes snir /Wt~e vage111 IDA centre de documentation JDELJRENF nib I i 100, IDA antennes r6glonales crddes JDEUJRENF j rb 27 J 100,0 IDA bangue-de dann6es jDEL/RENF % I12~L 1001 100,00 Aba ttoirv et commercialisation _01__30_00 FED Abattoirs construits et 6quip6s PEQUAVS % I0 FED Soiftd 'x otJo PEOUAVS nib Sj100 10 X Llhnnie i~~~~~~~~~~~~~~~~~~010 FED inspecteurs sanitaires form6s PEQUAVS tnb 7 79 100,00 1/3 Thordf699  Annex 2 3\. osarnt U6v01 emoertt d\. L prduetioniti&e Page 8 of 8 FINEX -hedkaauwo Mi aS actuvfto PrrlFMwoR U Ob25 R25 958 _ ~~~~~~~ ~ ~~~~~~~~~t Entillils Iinhisa I rdvigs |li Rdal IDA dome des rod\.Ios tteFiMANR nb 014001 912000 230 2iJ IDA zonA FIAMNR\.irb 1 450C 2SOC 25431 101\.72 NORAD femefle salbes s= FIFA_OMA nb 5000 0 5908 \. 116 rDA zo FFM\RAl nb _ 250 250 _ -245 I LOA zone ROmI nb Go eo 591 semi DO - uloa^ROW o us 153 ig9 I 7J=7 IDAD zo 191AMANOR PA r nb 4 0S 40 25 72\.85 RDAD zenela RO6MAno PiFoAMA rb 130 1000 70t6 70661 (OA _ gtS ons awmde I sr^+O nb is _17 i 001 zone NORI _ _FA \. nb: 3 2 a 1O PDA zoneRM O nb 12 is800 IDA larorc omwm u res FIFAROMA nb 1135 181 16i 978 IDA zone FIeA NRiR FICA nb 31 31 0 0,7 DA zone ROA ROW nb U7 75 _ tO 156 AORAD _ anbias de fou,c5o FIFAMddOn 513AF0dn NORAD Droduciotisemd\. ti de matEr5 nFAUMANR Ri 12 4-I3924 IDA _ _ s IWe i I R_ _ _4- SWe1114aRr14 1 782 AOMAO LeM doe uOtnuo rnsormiat o OAMANOR nb t 1 _ 1 10606\. AORAD mtlons aftne s concF n I Ids uls s R0FAP R nbhn 111 1 tJ\.8 1 13220 NR tuexetaptsAIs erd0t FAMNOR nb 21 265 254 95\.; NORD doses smences cona s "s produe e FROIuAIANR nb am 93O 230 2J# NORAD atolfle de bIFo0techerMe AJ nb S 0000 S000053031 110J A 08qIOR zone ROMA ROAs nb _ = S00 s5 2 _59 NORtAD zone =MAO FIFAMANOR nb 45000 45C000 325 \.3 NORAD femelleS In"min6as FIFIAMNOR nb 3000 10000 706t 70,eE PioCes dt co mme Iai fon -- NO apu aux lati&esrhbiles I ROMINCO 1--nb 3i 73T a 0\.00 CA 22!rftiSde lst rihadilitL e aoeson nostAf L- Km j 75 5 llI49 I Vdftaderokcgf n dws 1 CMII cdre Fon mties de I fEevago IDA lOointw de callece aq de mtils Ps ROMAP nb I 7 1 can ___ __ ___ __ ____t___ ___ r R4OM 4A10 IDA e81 cltsS 14i e1s78\.7 [IOA centes colliectv aformation nb 73 32 27 10007 0-A iIm ilaRerles FPE ktalds bROPE 1 2 12 1 100\.00 IDA r_nvembreew edht a desesImgnb 30i 60 94 1123s IIOA [atefer de fabrtmffon de pftmadcher IR O U4n Ib 20 3 3 10C0C IAPO -ost§ laiSres r6habjIk6 IROMvtPe IKm r I 10001 4501 10219 ____C8sWCUwCtJ8070126137 IDA re \.ift6s AOAMl\.I m 1801 2197 1230 24 I IFERT _ FERT __nb | 271 27 27 1 tW,o woccu woccu nb a a a '~~~~~~1QT 100 oc r Cafts" FERT "A0 = RT I _nb 6 00- 3600 39741 110,3 Cisses I WOCCU _b __ 100 16 13\.07 fDA montbnt enumuliens FmilIn ri ftarna oWe ES __ _ MfM 1717 2358 1315 271327 Caisses PERT FERT Mfma I 280 280 4558 e24\.1 Caro -l DID DID 37 78 11554 382\.5 Ce4sees WOCCU woccu MIM 17 27 -S IDA nombre cumuIl de orv ts octlrvns I7 rI b 1 7650 9- 6125 68 CalSses FERT PERT Inb 41000 64001 57201 10S\. Caisses DID DID Inb 42501 2258 3892 172 r ICases FERT P: 0|ERT I rMfn 1C010 1080 26581 246,11 Cls | a#DID _f- Mfa; _ 3_78 4a 2D r Tcaissesw-c WO--U Iwoccu 60'nw --a ---_5 rCdlsses fERT = IErrs brioT -L461 4\.640 _____ Caisses WOCCU WOCCU nb r300- 0 000 3,3 Tbordo699  IBRD 16926R ,12- MADAGASCAR , ,- 12'* RELIEF, WATERCOURSES AND RAINFALL ° firnona R& MC/ COURS D'CA U IFT PIU VIOSIE T<V1° Roinf\.11 : Ele-oti\., in met-r: G ' Pl-viosltgf: Altitud\. en , re:\ ( 205 , Centimefers Per y\.a l,l_ >1800 NOSY-8E Q(Amobe CenDmetres por on | EF 1200-1800 Hell,vi I/ S il \._; t;\X Vohmr Che,,'n de fer _- 6 °00ol2°S°>, /t --\.Riwes ,,° , 5 Z flevves et riire ' e, '6 Aeropor, <>t ; >r2,<5 N\.tFoiron\.l cproitc)opiri nllvgx ,f r E > chae-lier de foienvIr)nt sh r+/94 1t\ t r F-rirony bound\.ries / fJ / > wr? Anfoloha _ -Ite osol bdnqres Eaajna >tfarnn F1 f _4rSgOnTmoi;XrAHK ~~~~~~~~sS;S 1}SW< t /e't~P\., ci ;/z4~~~~ /lM t Xiloinrt [ wB019 ( t o^jS L) \. C enoorimp tsinonan MointirvnoOF AStT ,kSA tE@ ~M ! I~~~~~~~i \.Q ,' izoi u<oms Morondovo0> ~ ~ ~ ~ ~ ~~I I*o Toamasina - n Maniqa FIoXqn~~~~~~~0 A 4 tra V04aanar T 0 AA°b ?\. 1 XA A R YN T 7 A!-SlS ' S ° S W: 5ig?ahi~~~~~~~~~~~~~~P-o KILOMETERS O 50 100 150 200 s1 o,\. ,\.f\.Iqno>' ,\ l TolirJry3 g\.¢t42 loaind,\.n\. < 0 °Betioky r: iv {, \. N\. At ie i rt \.ZAIR4 TANZANIA 1\ C9 /A Al ro a v-bfln prd by i f9_/ 5 JAWl 7CMO and Ifr htm0bh1 Fhrreb A t ni r C-mrev TM dr-rmbos- AmpsoiyS WJf>sZMAWs:O Cncnnrw rn\.fmad\. ntmy,t d th\. I-Id-sryiu ch /1s n -°6_ \.* ny~ ~ ~~~~~~~~~~~~~~~~~~~~~~~AC 1991 9\. W

REVIEW

P055853

 ICRR 12597 Report Number : ICRR12597 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 03/28/2007 PROJ ID : P055853 Appraisal Actual Project Name : Nicaragua - US$M ): Project Costs (US$M): 18\.10 15\.78 Telecommunication Reform Country : Nicaragua Loan/ US$M): Loan /Credit (US$M): 15\.90 14\.53 Sector Board : GIC Cofinancing (US$M): US$M ): Sector (s): Telecommunications (54%) Central government administration (46%) Theme (s): Regulation and competition policy (40% - P) State enterprise/bank restructuring and privatization (40% - P) Law reform (20% - S) L/C Number : C3291 Board Approval Date : 11/18/1999 Partners involved : Closing Date : 06/30/2004 06/30/2006 Evaluator : Panel Reviewer : Group Manager : Group : Peter Nigel Freeman Fernando Manibog Alain A\. Barbu IEGSG 2\. Project Objectives and Components: a\. Objectives: To help strengthen the policy and regulatory environment in the telecommunications sector and improve rural access to services by encouraging private investment in those areas \. In particular, the project will support the development of a modern regulatory framework including the drafting and implementation of legal, economic, and technical regulations related to tariff rebalancing, interconnection agreements, and technical plans \. In addition, support will be provided to strengthen and improve the autonomy of the regulatory agency with responsibility for sector regulation, planning, and policy \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): Strengthen the institutional capacity and policy functions of the Nicaraguan Institute of Telecommunications and Posts (TELCOR) through strengthening the regulatory framework, recommending institutional changes, and assistance to establish a national telecommunications sector policy \. (Appraisal cost US$2\.00 million; actual US$0\.77 million)\. 1\. Establish radio spectrum management and monitoring system \. (Appraisal cost US$3\.67 million; actual US$4\.29 million)\. 2\. Create a rural telecommunications development fund \. (Appraisal cost US$1\.19 million; actual US$0\.32 million)\. 3\. Support for on-going privatization of ENITEL\. (Appraisal cost US$3\.20 million; actual US$3\.34 million)\. 4\. Project management and financial support to implementing agency \. (Appraisal cost US$1\.24 million; actual US$2\.18 million)\. 5\. Y2K software upgrade and data packet system \. (Appraisal cost US$3\.69 million; actual US$3\.63 million)\. At an early stage in the development of a rural strategy it was realized that in order to solve the rural access deficit some US$8 million would be required and it was agreed between the Bank and the Government of Nicaragua (GoN) that a new project would be needed for this \. It was therefore decided with Bank agreement that the available funds from the rural component would be used to carry out pilot projects on telephony, telecenters and e -government\. Internet service was not available for most of the country, and private investors were unwilling to risk investment in these areas because of uncertainty of demand and lack of infrastructure \. Component three was thus amended accordingly and the Board approved these changes on July 18, 2003\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The project was completed within budget and the price contingencies were not used; the loan was, however, reallocated among existing categories \. The borrower received a preparation facility of US$ 2\.2 million because it was unable to provide counterpart financing to assist with the privatization initiative - of this amount US$ 1\.25 million was disbursed\. Delays in the TELCOR reorganization and in the privatization process caused the project closing date to be extended by two years \. 3\. Relevance of Objectives & Design: Prior to the project the telecommunications sector in Nicaragua was neglected and consisted of a fixed -line monopoly and one mobile operator with a license limited to the wealthier region of the country around Managua \. Penetration of fixed and mobile was among the lowest in Latin America (3 lines per 100 inhabitants compared with 15 in neighboring Costa Rica)\. Teledensity in rural areas was less than one percent \. The design of the project was appropriate except for the cost analysis of increasing rural accessibility which was grossly underestimated \. The project was in line with the Bank's strategy of shifting the government's role from ownership and operations to policy making and regulation\. It also supported a greater role for increased privatization and the modernization of the regulatory framework\. This was in line with the country assistance strategy which also advocated improved accessibility to telecommunications for the rural poor \. 4\. Achievement of Objectives (Efficacy): The objective as formulated at appraisal was substantially achieved\. New regulations were issued for the liberalization of the sector\. The Regulator's capacity was strengthened and the legal framework enacted \. The number of phones (fixed and mobile) per 100 inhabitants increased from 3\.3 to 23\.6 per 100 inhabitants\. The number of faults were reduced and a wider variety of services were offered \. Rural penetration increased with 365 communities provided with access to public telephony (over and above the 171 communities already served)\. ENITEL was previously owned by the state \. The project planned for at least 40 percent of shares to be sold to a strategic investor \. In the event, 100 percent of shares were sold to private investors \. Y2K issues were successfully handled \. The only area where there was less than full achievement was in solving the rural access deficit, which was assessed at US$ 8 million\. With the agreement of the Board funds allocated in this component were successfully redeployed to pilot projects on telephony, telecenters and e -government; this did not materially affect the overall development objective \. A follow up project (Rural Telecommunications Project P089989) was approved by the Board on April 27, 2006 and included provision to resolve the rural access deficit issue \. 5\. Efficiency (not applicable to DPLs): The GoN would at a minimum benefit from the proceeds of the privatization amounting to net benefits of US$ 16\.28 million\. In the event that the privatization leads to efficient management of the company then the net benefits could reach a maximum of US$194\.13 million\. The reality is the outcome will be somewhere between these two scenarios \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\.  6\. Outcome: Given the fact that the project was relevant, that the objective was substantially achieved and that the financial return was positive and possibly could be excellent, outcome is rated satisfactory \. The one area where it proved not possible to make sufficient progress due to insufficient funds (rural access) is now part of an approved follow on project and the finance originally intended for this aspect in the current project were redeployed and spent satisfactorily on a newly defined component \. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: Most planned outcomes have been achieved already \. Private investment and the benefits that the competitive environment has brought to the market are likely to result in greater efficiency, thus making unlikely a risk of failure \. The regulatory agency is well-respected and is likely to be a positive factor in maintaining stability in the sector \. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: This was generally satisfactory except that a broader analysis of the sector may have revealed that the cost estimate for tackling the rural access deficit was unrealistically low \. Otherwise throughout implementation supervision was good albeit missions were not as frequent as the borrower would have liked \. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Satisfactory 9\. Assessment of Borrower Performance: After a disappointing start, the GoN showed strong commitment for the project and took all the necessary actions required for a successful privatization of ENITEL including a drastic tariff rebalancing and the restructuring of the company\. Leadership by the President of Nicaragua was needed to ensure progress with the initiative when at one time it looked to have stalled \. Frequent changes in leadership at TELCOR also impeded efficiency on occasion, but overall the performance was good \. a\. Government Performance :Satisfactory b\. Implementing Agency Performance :Satisfactory c\. Overall Borrower Performance :Satisfactory 10\. M&E Design, Implementation, & Utilization: Adequate key performance indicators were defined for each output except for the reduction in the number of faults and the improvement in the range of services offered; these indicators were regularly monitored by the Project Implementation Unit\. This led to useful information such as the extent of penetration, which also gave an indication of a positive outcome\. a\. M&E Quality Rating : Substantial 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Fiduciary compliance was good and there were no significant safeguard issues \. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Risk to Development Negligible to Low Negligible to Low  Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: Government commitment is essential for the successful privatization of telecommunication services \. 1\. A prior analysis of the cost of rural access requirements is appropriate in a telecommunications project designed for rural inhabitants \. 2\. Frequent changes in managerial leadership and weak implementing agency capacity inhibit timely progress \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR was well-prepared and coherently presented \. A few minor minor issues were that the report did not clearly state how the borrower's contribution was factored -in through a preparation facility, did not measure the reduction in the number of faults and did not specify the increased range of services offered; also, the scenario range for the expected benefits was too wide \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P034035

 ICRR 11723 Report Number : ICRR11723 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 04/01/2004 PROJ ID : P034035 Appraisal Actual Project Name : Lb-admin\. Rehab\. Project Costs 20\.0 19\.79 US$M ) (US$M) Country : Lebanon Loan/ US$M ) Loan /Credit (US$M) Sector (s): Board: PS - Central Cofinancing government administration US$M ) (US$M) (100%) L/C Number : L3930 Board Approval 96 FY ) (FY) Partners involved : Closing Date 12/01/1999 12/01/2003 Prepared by : Reviewed by : Group Manager : Group : Jeffrey Balkind John H\. Johnson Kyle Peters OEDCR 2\. Project Objectives and Components a\. Objectives The project's main objective was to assist the Government in the implementation of the National Administrative Rehabilitation Program (NARP)\. It focused on the core tasks of administrative rehabilitation and fostering reform \. b\. Components There were three main components : Part A, Information Technology and Office equipment; Part B : Civil Service Census; and Part C (revised component): Institutional assistance to the MoF \. Para\. 20 of the President's Report specifies that five specific reform actions were expected to be completed during the first year-and-a-half of implementation, and that their achievement, plus the progress of administrative reform in general, would form a major subject for the Mid-term Review of the Project in early 1997\. Of the five reform measures, none were achieved by 1997, necessitating the first major restructuring, and these were not substantially achieved, even by project closing (see Sections 3, 5, and 6 below)\. The five reform actions were: (i) performing a civil service census; (ii) removing from the payroll "identified irregularities"; (iii) completing a job classification and grading review; (iv) completing a review of control and audit procedures; and (v) completing a review of civil service regulations\. c\. Comments on Project Cost, Financing and Dates The project was approved on August 3, 1995 and was meant to close on December 1, 1999, but it closed four years later )December 2003) after four extensions\. Project costs were estimated at $ 20 million and actual costs (Bank disbursements) were $19\.8 million\. In 1999, $5\.4 million was reallocated from non-performing components to help build policy-making capacity in three core ministries (see Section 3 below)\. 3\. Achievement of Relevant Objectives: The political environment and post-conflict setting made this a very difficult project -- during the Civil War, most paper records were destroyed, limiting the ability of Lebanese public administration to account for any transaction either before or after the war\. The project focused on reconstructing these archives, digitizing the information where possible, and making it quickly available to the public\. Archival systems were provided for the whole of the public administration, and especially the National Archives\. A system of document protocol was set up and put in place\. More than 300,000 land titles were reconstructed and recorded, along with over 600,000 land parcels by the land cadastre system\. Procedures were made uniform and extended to the whole of government\. The Government now has an archival system that is among the most reliable in the region\. The project was overseen by the office of the Minister of State for Administrative Reform (OMSAR)\. The project underwent several amendments, and two major restructurings, as a result of which project design was materially altered\. In the 1997 restructuring, the Public Service Improvement Fund (PSIF) was created to reallocate amounts away from poorly performing subcomponents of the project\. Unlike the original design, which aimed at rehabilitating most ministries and agencies, the PSIF was demand -driven\. Agencies were encouraged, but not required, to submit proposals to support reform and rehabilitation initiatives under strict selection guidelines\. The PSIF enabled agencies to submit proposals to support reform and rehabilitation initiatives under agreed selection guidelines\. Procurement functions for goods and services financed from the ARP Loan were transferred from the Council for Development and Reconstruction (CDR) to OMSAR to expedite procurement and facilitate lagging disbursements\. The end result of this modification was to narrow the scope of the project's benefits to a few interested agencies\. Under ICR guidelines and OED's own guidelines, the project is rated against the original objectives\. In the re-allocation of the $5\.4 million (mentioned above) the reforms were partial\. rather than comprehensive rehabilitation\. As a result of these modifications, the Ministry of Finance (MoF) received funds to: (i) improve tax administration; (ii) introduce the Value Added Tax; (iii) deploy a computerized communication framework; and (iv) extend customs modernization; (b) the Ministry of Economy and Trade (MoET) received funds to (i) assist the program for WTO accession, (ii) support the policy unit within the Ministry and design an institutional framework for consumer protection; (c) the Ministry of Transport (MoT) received funds to establish an institutional framework for private participation in the ports of Beirut and Tripoli and to develop and implement a Civil Aviation Strategy\. Part A Information Technology and Office Equipment Satisfactory This component was basic and uncomplicated\. It trained 1600 government employees in information technology, including 300 management staff\. The project procured 5,000 computers, in addition to equipping most public administrations with IT equipment\. Priority information systems were made available to selected administrations, and network infrastructure was installed in 35 public agencies\. OMSAR worked together with MOF to deploy a government wide area network (GovNet)\. Under the purview of the Ministry of Economy and Trade (MOET), a national IT committee was set up in 1998 to pursue the national IT agenda in promoting information technology in support of the Lebanese economy and public service delivery\. A comprehensive "E-governance Strategy for Lebanon"has been established (the first of its kind in the Middle East), which establishes criteria for utilizing information technology to foster a more customer friendly focus within government\. In addition to basic office equipment (telephones, faxes, etc), most government ministries and departments now have a website\. There is a centralized portal for government systems where information is now available to the citizenry\. The site averages 6,000 hits a day (ww\.informs\.gov\.lb) Part B Civil Service Census Unsatisfactory Problems in cooperation between the Civil Service Board (CSB) and OMSAR on matter of civil service concerns led to the dropping of this component, and the reallocation of the funds to PSIF\. A civil service survey was conducted, but it was quite different in methodology to what the Bank envisaged\. While some important progress in collecting and systematizing databases was achieved, the government information base on personnel remained cumbersome and unreliable\. Although hundreds of "ghost employees" were removed from the files, thousands more remained on the files, perpetuating the problem of "inflated personnel costs\." This is a serious issue and goes to the heart of the operation\. A committee was formed in 2000 to consolidate the human resources databases\. The education census was not completed\. The work on the creation of schools/teacher/student management information systems experienced delays and was not implemented\. Part C Institutional Assistance to the MoF, MoET, and MoT Unsatisfactory with respect to original objectives Under the revised components (not the original design), the project helped to build capacity in the MoF and MoET by modernizing the design and management of trade policy and its links to the formulation of economic policy by these two ministries\. In the MoF, the project helped to complete the design and installation of an area network (WAN) connecting various departments and allowing them to exchange data\. Regional offices within the Ministry of Finance are now able to connect to central office and to exchange information among the different services with regard to budget preparation, revenue administration and related matters\. The MoF purchased and installed various computers and improved its software\. Personnel of different agencies within the MOF was trained in the preparation of the budget, using the improved it equipment, thus shortening the process of budget preparation and increasing its accuracy\. The ICR focuses too much detail on hardware aspects (machines, software licensing agreements)\. As regards tax administration, the project assisted in designing the strategy and the implementation plan for the introduction of the VAT in 2002\. Set at 10 percent, it is expected to yield LL 800 billion in revenues per annum, or the equivalent of 4 percent of GDP\. The revenue impact is expected to be drawn equally from imports and domestic production, and between goods and services\.These are estimates, not actual results yet, as it is too soon to establish a trend line\. The MOT used its allocation to create a Transport Regulatory Unit (TRU), responsible for legal and policy advice\. TRU presented two studies for parliamentary approval: institutional framework for private participation in the ports of Beirut and Tripoli; and Civil Aviation Overall Strategy for the implementation of an "open skies policy"\. The study was considered satisfactory, but it has not been followed-up\. Facilitating interaction between the private sector, foreign investor and the government of Lebanon through institutional development assistance to the MoET enabled the creation of one/stop shops/Trade Information Center(TIC) where all technical controls are available online and handled electronically through the Trade Information System\. Today, the TIC is the most used e-government service provided in Lebanon, with over 12,000 hits and several hundred transactions being handled daily\. These achievements are noteworthy, but they do not compensate for the lack of progress on the five critical reform actions listed in the President's Report and which are cited in Section 2 above\. 4\. Significant Outcomes/Impacts: Despite the difficulties it faced, and the numerous changes of governments, OMSAR achieved a significant amount : most notable was the long-term administrative reform strategy that was adopted by the Council of Ministers, and the job descriptions program that was completed and submitted to the Civil Service Council for implementation \. In addition\. OMSAR helped to implement a number of Information and Communication Technology (ICT) projects for most ministries ranging from network infrastructure to office productivity tools \. The project agencies conducted good quality background work to prepare and assist the process of administrative reform, but only a few of the recommended initiatives led to tangible reforms initiatives on the ground \. Line ministries were not invested with the responsibility of implementing the reform plans \. The end result is that the studies, as the ICR notes, have remained unused, "merely collecting dust", and occasionally being repeated when funding was offered from different donors \. This raises concerns about the prospects for the effectiveness of continued administrative reforms \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): 1\.The Bank under-estimated the intransigence of the government institutions, a factor which weakened the coordination capacity of the Government and its ability to oversee and carry out the various components \. Project preparation should have involved the prospective implementing agencies more closely, which would have shored up their commitment to a more timely completion of the administrative rehabilitation program \. 2\. Project implementation took 8 years and not 3 years, as estimated by the Bank in the lending stage \. Project preparation would have benefited from first helping to build more capacity in the institutions of the Lebanese Government and then designing a comprehensive administrative reform program (instead of going through project restructurings), which may have led to faster implementation in the end \. 2\. Lack of Government direction -- the Administrative Reform Strategy was endorsed by the Cabinet, yet no indication was given by the Cabinet about how the strategy should be implemented, what its timeframe might be, or who should be responsible for the actions contained in it\. 3\. Some 54 percent of the project funds was spent on procuring information systems and equipment \. Yet the economic costs and benefits section in the ICR is blank \. Estimates could have been prepared on the rate of return of the Government's investment in I/T infrastructure (increases in speed of work, productivity improvements, etc \.)\. 4\. There was a lack of reliable indicators at the outset of the project and for most of its implementation period \. OMSAR in its letter of Borrower comments states that "performance indicators or benchmarks are recommended before the implementation of a project "\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately The achievements under Part A are Unsatisfactory limited essentially to information technology and do not achieve the five critical actions cited in Section 2 above\. Part B (the civil service census ) was not done satisfactorily, and while Part C (revised components) did achieve the specific outputs cited, the overall outcome of the project is moderately unsatisfactory, given the original design \. Institutional Dev \.: Substantial Modest The components for MoF, MoET and MOT helped to bring improvements in these ministries\. OMSAR has been built-up and now exercises a central role in coordinating the administrative reforms and in measuring progress\. However, there was a lack of progress indicators in OMSAR (and in the project), which is mentioned in OMSAR's comments attached to the ICR\. Sustainability : Likely Unlikely As a result of the project, OMSAR has come to occupy a coordinating role on public administration aspects, but it will need to have stronger support from the Cabinet and the Parliament for sustainability to be likely\. The constitutional set-up requires that both heads of the Executive branch and the Legislative branch be consulted and provided with information on which to make key decisions\. Bank Performance : Satisfactory Unsatisfactory The project was appraised too quickly and was not ready for implementation\. There was not an institutional infrastructure in place\. The original project design set much too short a timeframe for implementation\. In the early years excessive changes in task team leadership and slowness in addressing  project implementation difficulties contributed to delays\. Four extensions with six months apiece in two of the instances were too short to accomplish the necessary improvements \. The monitoring indicators in Annex 1 of the ICR are very general, reflecting insufficient specification of outcome indicators during implementation\. Supervision improved in the last two years, but it does not outweigh the unsatisfactory quality at entry and the inadequate supervision in the first four years\. The fact that this was a post-conflict situation meant that extra-close attention needed to be paid to promptly resolving the lingering problems throughout implementation\. Borrower Perf \.: Satisfactory Unsatisfactory Lack of effective government coordination\. Frequent changes of policymakers hampered Governmental oversight and direction\. Satisfactory performance by the Project Implementation Unit (PIU) in OMSAR did not compensate for overall lack of Government direction\. Quality of ICR : Unsatisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: 1\. In post-conflict countries, close supervision is especially important \. Changes in Government (there were five different governments during this period ) made matters worse as regards taking decisions and tracking progress \. Lack of continuity on the Bank side compounded matters \. 2\. Well qualified and well paid PIU staff need to be mainstreamed into the regular civil service \. OMSAR tended to operate in an enclave manner\. 3\. The Annex 1 indicators are very general\. In order to have a handle on tracking actual progress, specific indicators including on outcomes in addition to outputs, should have been included \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR should have had a full analysis of the project's original design and early implementation difficulties \. The author did not consult with the original task team leader in the lending stage \. In order for ICRs to be complete, they need to include such consultation \. This issue is clearly flagged in the ICR guidelines \.

REVIEW

P000831

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 21832 IMPLEMENTATION COMPLETION REPORT (IDA-26020) ON A CREDIT IN THE AMOUNT OF SDR 1\.9 MILLION (US$2\.6 MILLION EQUIVALENT) TO THE REPUBLIC OF THE GAMBIA FOR A CAPACITY BUILDING FOR ENVIRONMENTAL MANAGEMENT TECHNICAL ASSISTANCE PROJECT February 14, 2001 Environment Unit, AFTES Country Department 14 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective February 2001) Currency Unit = Gambian Dalasi (GMD) GMD 1\.00 = US$ 0\.065 US$ 1\.00 = GMD 15\.4 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ANR Agriculture and Natural Resources CBEM Capacity Building for Environmental Management DCA Development Credit Agreement EAS Environmental Awards Scheme EE Environmental Education EEC Environmental Education and Communication EIA Environmental Impact Assessment EIS Environmental Information System GEAP Gambia Environmental Action Plan GGEMP Gambia German Environmental Management Project GIS Geographic Information System GOTG Government of The Gambia GTZ Gesellschaft fur Technische Zusammenarbeit IDA International Development Association IFAD Intemational Fund for Agricultural Development M&A Monitoring and Assessment MEQ&E Monitoring Environmental Quality and Enforcement MIS Management Information System NEA National Environment Agency NEAP National Environmental Action Plan NEMA National Environmental Management Act NEMC National Environmental Management Council NEP National Environmental Policy NRM Natural Resource Management PPF Project Preparation Facility SAL II Structural Adjustment Loan, Phase II SAR Staff Appraisal Report UNDP United Nations Development Program UNSO United Nations Sahelian Office USAID United States Agency for International Development Vice President: Callisto Madavo Country Manager/Director: John McIntire Sector Manager/Director: Roger Sullivan Task Team Leader/Task Manager: Yves Prdvost FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF THE GAMBIA CAPACITY BUILDING FOR ENVIRONMENTAL MANAGEMENT TECHNICAL ASSISTANCE PROJECT (CR\. 26020) CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 10 6\. Sustainability 12 7\. Bank and Borrower Performance 12 8\. Lessons Learned 14 9\. Partner Comments 16 10\. Additional Information 23 Annex 1\. Key Performance Indicators/Log Frame Matrix 24 Annex 2\. Project Costs and Financing 27 Annex 3\. Economic Costs and Benefits 29 Annex 4\. Bank Inputs 30 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 32 Annex 6\. Ratings of Bank and Borrower Performance 33 Annex 7\. List of Supporting Documents 34 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\.  Project ID: P000831 Project Name: ENVIRNMT MGMT CAP BL Team Leader: Yves Andre Prevost TL Unit: AFTES ICR Type: Core ICR Report Date: February 13, 2001 1\. Project Data Name: ENVIRNMT MGMT CAP BL L/C/TFNumber: IDA-26020 CountrwDepartment: GAMBIA, THE Region: Africa Regional Office Sector/subsector: VI - Environmental Institutions KEY DATES Original RevisedActual PCD: 03/22/93 Effective: 09/15/94 08/02/95 Appraisal: 10/14/93 MTR: 09/15/96 03/14/97 Approval: 04/12/94 Closing: 12/31/97 08/31/99 BorrowerlImplementing Agency: Republic of The Gambia/National Environment Agency (NEA) Other Partners: STAFF Current At Appraisal Vice President: Callisto Madavo Edward K\. Jaycox Country A1anager: John McIntire Katherine Marshall Sector Manager: Roger Sullivan Peter Watson Team Leader at ICR: Yves Pr6vost Grace Yabrudy ICR Primary Author: Michael Furst; Robert Etheredge; Jo Anne Yeager Sallah; Tanya Lisa Yudelman 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The primary objective of the Capacity Building for Environmental Management and Technical Assistance Credit was to establish the capacity within the National Environment Agency (NEA) and other relevant agencies to develop and guide an effective system for environmental planning and management in The Gambia, and to ensure that environmental concerns are fully integrated and reflected in the social and economic development process in The Gambia\. The Government of The Gambia (GOTG) has been making concerted efforts to improve environmental management for over 25 years\. Following the Banjul Declaration in favor of the protection of the country's biodiversity in 1977, GOTG attempted to develop an institutional framework for addressing environmental issues by creation of an Environment Unit in 1983\. This was followed in 1987, by the enactment of the National Environment Management Act (NEMA), which provided legislative measures for environmental protection, and later by the creation of the Ministry of Natural Resources (MNR)\. Despite these institutional initiatives, environmental problems became more severe due to lack of adequate action on the ground\. Within the context of The Gambia's structural adjustment program and against this background of intensifying environmental degradation the GOTG agreed to develop a National Environmental Action Plan\. After completing a highly participatory preparation process, under the auspices of the National Environmental Management Council (NEMC) and with high-level Government support, the Gambia Environmental Action Plan (GEAP) was finalized and approved by Cabinet in July 1992\. The GEAP, which was held up as a model for other countries, was presented to the donor community at a Roundtable in Banjul in January 1993\. The Government rapidly began implementing recommendations of the GEAP, beginning with the creation (effective July 1993) of a new National Environment Agency (NEA) directly under the Office of the President, into which the old Environment Unit was folded\. Under the National Environmental Management Act (1987, 1994) NEA was established as the body responsible for coordination, facilitation, and promotion of environmental management efforts in the country\. With the key elements in place, IDA agreed to support GEAP implementation in coordination with other donors (namely GTZ, USAID, UNDP, and UNSO)\. Since GEAP activities were conceived as an integrated program, irrespzctive of source of funding, the coordinated approach initially adopted by the key donors was appropriate\. IDA and GTZ specifically focused on providing national level institutional support to the NEA and its GEAP collaborators to enable fulfillment of the coordination and regulatory roles as defined in the GEAP\. USAID and UNDP funding complemented this with capacity building and resource management activities that reached down to the local level\. Although GTZ and IDA decided to jointly finance the GEAP institutional capacity development sub-program, the two projects were nevertheless packaged separately using parallel financing mechanisms and relying on specific cross-referenced performance related conditions, particularly in the area of EIA, to link them\. Thus, this ICR focuses primarily on the implementation of the IDA Credit, although where appropriate linkages with the broader GEAP implementation program of which it forms a part, and the GTZ Gambia-German Environmental Management Project (GGEMP) in particular, will be discussed\. The IDA Project objective was clear\. Its focus on institutional strengthening and capacity building for environmental management was, and continues to be, appropriate, and responds to the Government's environmental policy and institutional framework objectives\. The objective was also consistent with the Bank's CAS which focused more broadly on institutional capacity building\. 3\.2 Revised Objective: Not applicable -2- 3\.3 Original Components: The overall GEAP institutional capacity development sub-program highlighted ten (10) components, for which the World Bank financed CBEM Project took the lead on 6 components and GTZ, via a parallel project, addressed the remaining four\. World Bank funded components included: 1\. Institutional support for the coordination of the GEAP (US$1\. 22M), through both support for NEA to develop its operational (administrative and technical) capacity by financing equipment, training and targeted technical assistance; as well as the provision of associated training in environmental management for staff of sector agencies and private sector operators, through short-term practical attachments or workshops; 2\. GEAP monitoring and policy development (US$0\.295M), to support both the development of capacity to monitor, evaluate and report on GEAP implementation, as well as efforts to reorient existing sectoral policies and/or develop new policies, in accordance with the overall environmental policies elaborated in the GEAP; 3\. Environmental education and public awareness (US$0\.405M), to support the development of a strategy to increase public awareness of environmental issues and support for electronic and print media campaigns, using existing government and NGO skills and capacities; 4\. Monitoring of environmental quality (US$0\.515M), to support the development of a system to collection information and monitor environmental quality against agreed threshold levels; 5\. Environmental information management (US$0\.34M), to finance the development and implementation of an environmental information strategy according to a distributed model including common information architecture, basic information infrastructure, maintenance of key data sets and analytical capabilities; and 6\. Contingency planning and disaster preparedness (US$0\.125M), to develop a disaster awareness and contingency planning system\. GTZ funding (US$1\.3M) was provided through the Gambia-German Environmental Management Project (GGEMP) and initially addressed: (a) environmental legislative reform, (b) Environmental Impact Assessment (EIA), (c) establishment of a documentation center, and (d) publication of an environmental newsletter\. GTZ also became involved with the production of land use maps after the premature termination of the USAID program in The Gambia\. The collaborative and programmatic approach initially adopted by the key donors was consistent with the Bank's strategy for environmental support programs, although it was not sustained throughout project implementation\. Viewed in the broad context of GEAP implementation, the IDA/GTZ institutional capacity development sub-program was sound and complemented USAID and UNDP local level efforts well\. The IDA project itself was well conceived\. Project components and cross-conditionalities with the GTZ project were reasonably related to achieving the Project and GEAP sub-program objectives\. Key steps towards establishment of an institutional framework for environmental management were covered and the proposed multi-agency, collaborative approach was appropriate\. Design was consistent with the Bank's strategy for institution and capacity building for environmental management\. Lessons learned from other capacity-building projects, as well as Gambian specific experience, were incorporated into Project design\. To minimize institutional and financial risks the Project focused strongly on the establishment of management capacity and processes in the newly created NEA\. Emphasis was also placed on increasing local capacity through the provision of targeted short-term technical assistance as opposed to substituting it with long-term technical assistance\. -3- 3\.4 Revised Components: Not applicable\. 3\.5 Quality at Entry: An assessment of the Bank's Quality Assurance Group is not available\. The ICR rates the quality at entry as satisfactory\. The ICR found the organizational model being reinforced through the Project to be appropriate to the Gambian context\. The Project objective was and remains compatible with Government priorities and the Bank's CAS\. The design supported the stated objectives, and complied with the Bank's safeguard policies\. Risks to the Project were mostly identified and addressed in design, in particular those posed by weak implementation capacity in the newly established lead institution, NEA\. Strong emphasis was placed on stakeholder participation and ownership\. However, this broader ownership could have been further enhanced by defining more clearly the roles, responsibilities and resources allocated for NEA's collaborating agencies\. In the absence of these, NEA, established primarily to promote, facilitate and coordinate activities, had limited means to ensure that the designated collaborating implementation agencies adhered to agreed timetables\. An associated weakness, identifiable only with hindsight, is that the length of time required to establish a highly participatory system for environmental coordination was underestimated by both NEA and its collaborators\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The immediate development objectives of this project have been achieved, and the overall assessment of the Project is satisfactory\. Despite implementation delays due to administrative and financial deficiencies, the newly created national environmental coordination agency (NEA) is now operational, and is more competent to discharge its responsibilities\. There is considerably more awareness of The Gambia's environmental problems, particularly in urban areas\. In retrospect, the Government feels that the preparation and the first phase of GEAP implementation have amply demonstrated the benefits of participatory planning\. The GIS/EIS will provide, for the first time, accurate information for development planning\. NEA has produced the first "State of the Environment" Report, providing a foundation for such reports in the future\. A monitoring, environmental quality and evaluation strategy was developed and adopted\. Primary, secondary and tertiary schools are integrating environmental studies into their curricula\. NEA enjoys credibility and respect among government agencies and the general public\. Radio, television and newspapers are doing their share to raise public awareness and concern about environmental problems such as waste management or water and air quality\. 4\.2 Outputs by components: Component 1\. Institutional Support for the Coordination of GEAP Implementation Successful implementation of the GEAP depends upon both a fully functioning NEA as well as competent line implementing agencies\. Thus this component focused on institutional and human resource capacity building in NEA and the technical line ministries\. The component aimed to (a) put in place a management information system (MIS) in NEA to monitor its performance and efficiency in terms of use of staff, funds and equipment, (b) provide NEA staff with equipment and skills to fulfill agency functions, and (c) strengthen institutional and/or human resource capacity in NEA collaborating institutions, including not only key implementing agencies but also the private sector and NGOs\. Most of the component's objectives were achieved\. The institutional framework for the environmental management and coordination has been considerably strengthened through the Project\. Technical training of NEA staff has improved skill levels, -4- and most NEA professional staff see themselves as more competent and effective in their jobs than when they first joined the Agency\. For these reasons the outcome of the component is rated as satisfactory\. This should not, however, be allowed to conceal the implementation weaknesses of this component, particularly the failure to provide NEA with efficient and fully functional administrative and financial management systems, as well as the ad hoc and overly NEA centric implementation of the training program\. Institutional Strengthening For Environmental Management\. Environmental focal points were to be established in the collaborating line agencies to institutionalize links with NEA\. This approach has not worked well, due primarily to a frequent and unpredictable turnover of line department staff, and a lack of effective follow-up by both NEA and line agencies\. However, organization of operational activities within a framework of "networks" and "Working Groups" (WG) has been more successful\. Working Groups in particular have provided a practical forum for information sharing, communication, and coordination\. They have become the principal coordination instruments among participating institutions\. Organized along programmatic lines, their membership is broad-based and includes staff from institutions with different, but complementary mandates\. The ten WGs correspond to GEAP programmatic areas\. Their design allows the sector institutions to take the lead in analyzing, formulating and implementing their respective programs and policies, with NEA providing the forum for coordination and performing secretariat functions\. The concept of WGs as the focal point for coordination has been satisfactory to both NEA and collaborating agencies\. Nevertheless, the effectiveness of the WG concept is being compromised by the inconsistency of institutional representation on the WGs, Due to conflicting schedules and commitments, different representatives are often sent to WG meetings\. The individuals assigned to attend the meetings are not always technically competent in the WG subject matter and/or prepared to discuss agenda items\. Environmental management training for more line agency staff is needed to "level the playing field"\. It is also necessary to develop a system that fosters consistency and continuity of WG membership and partnership\. Human Resource Capacity Building\. NEA training corresponded loosely to a Training Needs Assessment prepared by an international consultant in mid-1995\. It did not, however, adequately take into account the needs of the project, and much of the training was subsequently identified in an ad hoc manner\. A Human Resources Development Plan developed for NEA by national consultants was deemed not satisfactory and thus not implemented\. In some cases, key staff left the country for long-term degree programs funded by other projects\. Their absence was partially responsible for implementation delays\. With respect to human resource capacity building in the technical implementing agencies, opportunities for skill building were provided, however, the forums chosen, e\.g\., workshops, were not always the most appropriate mechanism for ensuring skill transfer\. GEAP collaborators felt that NEA gave priority to intensive training of NEA staff at the expense of the technical staff of implementing departments or NGOs, whereby making effective collaboration more difficult\. NEA strengthening\. Most NEA staff received computer literacy and management training under the Project\. NEA also recruited an Information Technician (IT) who provides further on-the-job computer training\. All equipment and supplies financed under the Project have been procured\. Nevertheless, despite substantial emphasis in Project design, NEA's project management system at Project closure does not monitor Agency performance and efficiency in terms of the use of staff, funds, and equipment, nor in terms of programming and monitoring of activities\. An international consultant prepared a Management Information System (MIS) for NEA's consideration; however, NEA rejected it as too complex and time consuming\. Key NEA staff received training in administration and in project management, however, no alternative MIS was developed for NEA other than a computerized accounting system, which albeit late, has been installed and is now being efficiently utilized\. Similarly, while use of individual and program annual work plans has improved, more management skills are required at almost all levels\. In the absence -5- of a functioning MIS and specifically a staff evaluation system, it has not been possible to assess the impact of training on job performance\. Component 2\. GEAP Monitoring and Policy Development This component focused on increasing capacity within NEA to monitor, evaluate and report on GEAP implementation and on assisting sectoral agencies to align their policies with GEAP principles\. Overall progress made under this component was satisfactory\. Monitoring\. NEA established a system to monitor and assess GEAP implementation\. Data collected for the monitoring system provides information in all areas of GEAP implementation and can be used for both improving on-going activities, and for providing information for periodic evaluations of the GEAP\. The sectors included in the monitoring program are: forestry, soil conservation, fish stock management, wildlife management, livestock management, coastal zone management, water resources, energy, mineral resources management, agricultural production, and public health/population\. The GEAP Monitoring WG is chaired by one of the technical agencies\. NEA is the group's secretariat and provides coordination and technical supervision\. The initial data collected served as a baseline for the first "State of the Environment" Report published in 1997\. The next report and those produced thereafter will be based on the data generated by the new Monitoring and Assessment system\. It was agreed that it was more appropriate to prepare these reports at 5 yearly intervals, instead of annually as originally envisioned\. Policy Development\. Performance of the policy development sub-component was not satisfactory\. Under the Project, NEA was to assist line ministries in their efforts to analyze and reorient sector policies, in light of their impact on the environment and natural resources\. The Project did not accomplish this objective\. Although 10 policy studies were commissioned by NEA, with support from the relevant WG, their quality was extremely poor and there was limited buy-in from the relevant sectoral agencies\. With the exception of the Forestry Department, the sector line departments did not undertake a systematic review of existing policies\. Nonetheless, Gambia's Wildlife Policy is under review\. A National Environmental Policy (NEP) is not yet in place\. NRM p3licy reform was one of the main objectives of the USAID ANR project\. USAID's departure following the military takeover left a major gap which has yet to be filled, and momentum for policy work was lost\. The situation was exacerbated by an absence of policy analysis capacity in NEA, the technical agencies, as well as in the local private sector following the military coup in 1994\. This, combined with an apparent reluctance to draw on international expertise limited effective policy analysis\. Component 3\. Environmental Education and Communication (EEC) This component provided support to NEA to fulfill its mandate to educate the public on environmental issues, including raising awareness of the GEAP and NEA itself\. Progress in this area has been satisfactory, and most targets outlined in the SAR have been achieved\. Although startup was delayed because of the absence of the component coordinator who went away on training during the first year, a sound foundation for EEC activities is now in place\. An EEC strategy, facilitated and coordinated by NEA, with broad participation from concerned departments (EEC WG) and assistance from an international specialist, was prepared in 1995 and updated in 1998\. Progress has been made towards the integration of EE into primary and secondary schools; EE syllabi have been prepared for grades 1-9\. With the involvement of the four schools of Gambia College, significant progress was achieved in the production of an EE Teachers Resource Book\. Gambia College has developed an EE curriculum and will offer an introductory environmental course to all students at Gambia College next year\. NEA's EE program is playing a major role in promoting and supporting the integration of EE in the formal education system at various levels at different institutions\. Several local and international NGOs have also worked -6- with the Ministry of State for Education in the development of environmental curriculum and preparation of teaching materials for the secondary and tertiary school systems\. NEA completed in 1998 the publication and distribution of a popular version of the GEAP in English, Arabic and three local languages\. Other activities included awareness campaigns at the national, regional, and divisional levels\. Divisional and district EEC workshops were organized\. NEA uses the media to create public awareness of environmental problems\. Environmental issues have been discussed in the newspapers and on the radio\. An environmental awareness survey conducted in 1999 indicates that media campaigns have had some impact on attitudes\. While it is too early to measure impact on behavior with confidence, this survey will serve as a baseline for future assessments\. The full range of resources available for environmental awareness (i\.e\. posters, videos, and television) is currently underutilized\. Component 4\. Monitoring of Environmental Quality and Enforcement (MEQ&E) This component was designed to increase NEA's capacity to fulfill its mandate to both monitor environmental quality and enforce environmental standards\. It supported the design and implementation of a monitoring and reporting system and the creation of an inspectorate to follow up on environmental violations\. Progress to date in these regards is considered satisfactory\. The component strengthened NEA's capacity to develop and enforce environmental standards and regulations\. NEA, in collaboration with responsible technical agencies, has designed an effective environmental quality reporting and monitoring system, particularly for water quality, air pollution, and solid waste\. An Inspectorate has been created to increase the Agency's capacity to take action against specific environmental violations\. A MEQ&E strategy was developed and adopted\. The capacity of monitoring institutions was strengthened through training in monitoring and lab techniques and the provision of laboratory equipment\. NEA's Inspectorate has four trained inspectors\. Air quality monitoring is operational; however, water quality monitoring is delayed due to frequent lack of fuel\. Enforcement mechanisms have been established, and "Environmental quality standards regulations" and "Environmental discharges permitting regulations" have been adopted\. The capacity of Inspectors to act and respond to violations has been strengthened\. An Inspector's Manual spelling out enforcement procedures and code of conduct is in final draft\. However, NEA's current shortage of financial resources is threatening the sustainability of the monitoring network\. Component expenditures did not follow appraisal projections\. Contracts for monitoring services were originally intended to include equipment purchase costs\. During implementation it was determined to be more efficient for NEA to purchase the equipment directly\. The equipment was then provided to the relevant monitoring agency under a Memorandum of Understanding that included their meeting NEA's monitoring requirements\. Although this contributed to a significant expenditure category reallocation for the Project, in fact, it did not reflect a fundamental change in concept nor activity\. Component 5\. Environment Information Management Implementation of the GEAP requires reference data, both geographic and thematic, to serve as support to NEA technical functions\. Various aspects of environment information management have been supported by the participating donor agencies\. The IDA Credit, designed to complement other donor activities, aimed to initially reinforce and subsequently continue UNSO support to establish a multi-sector EIS Working Group\. The WG coordinated the development and implementation of an EIS strategy, guidelines and priority activities, as well as efforts to improve national capability to conduct spatial analysis through EIS awareness building and training\. Implementation of this component is rated satisfactory\. Five data centers have been created in key institutions, including the Departments of Lands and Surveys, the Department of Water Resources, the Department of Central Statistics, the Department of Agricultural -7- Planning, and the Department of Agricultural Services (Soil and Water Management Unit), and are now operational\. Several of these have been successful at attracting further financing for their activities\. Selected data center personnel and key NEA staff were trained in GIS/EIS\. More data centers are planned in the future if funding becomes available\. Not all officials in the line agencies were initially convinced of the usefulness of EIS/GIS and did not consider this a priority\. They were reluctant to commit additional staff time or resources for this activity\. However, NEA's EIS team's well-planned and effective demonstrations convinced the decision-makers of the potential use of EIS/GIS\. All the data centers reported a high degree of satisfaction with the assistance provided by NEA\. Component 6\. Contingency Planning and Emergency Preparedness In line with NEA's mandate to prepare contingency plans and strategies, this component provided for the preparation of a set of contingency plans and network mechanisms to mitigate the effects of the major potential environmental disasters that could affect The Gambia\. Design and implementation of this component is rated as satisfactory\. Contingency Planning and Disaster Preparedness has been strengthened and Response Plans prepared for various types of potential disasters, such as: offshore oil spills, drought, collapsing buildings, floods, air crashes, roadside tanker spillage, bush fires and ferry sinking\. A generic emergency response plan has also been prepared\. A simulation exercise was conducted for a ferry sinking, which provided useful insights into critical organizational and communication networks required for emergency preparedness\. Complementary Donor Achievements The integrated programmatic approach adopted by the donors for GEAP implementation allowed certain synergies to be maximized\. Thus, while not directly financed through the IDA project, the following outcomes and achievements are considered particularly noteworthy\. They have been enabled or augmented by exploiting the synergies and complementarities between this and other GEAP projects\. Environmental Impact Assessment (EL4)\. The establishment of an EIA process, supported by GTZ, was a cross-conditionality for the IDA Credit\. It is now operational, although two years behind schedule\. EIA guidelines and procedures were developed, approved, and distributed\. All new development projects planned for The Gambia must be submitted for review and environmental classification\. Class "A" projects must undergo a full EIA\. Guidelines for industry, tourism, waste management, agriculture and natural resources, and fisheries have been prepared, published, and widely distributed\. Others are under preparation\. The EIA WG prepared terms of reference for EIAs carried out thus far\. The WG also analyzes the assessments and reviews mitigation plans\. NEA then advises the NEMC, which has final decision-making authority\. Several training programs and workshops for the public and private sectors have been conducted to increase awareness about EIA requirements and procedures\. While these have had an impact, further educational efforts are needed\. Additional staff will be needed to manage the increasing workload as EIA becomes more widely applied\. Environmental Education and Communication\. The IDA supported EEC strategy, educational and awareness raising activities were complemented by UNDP supported local-level activities\. About 15 local and international NGOs are conducting village non-formal EEC assisted by NEA supervised authorities, focusing on the Northern Division\. In addition, UNDP's Capacity 21 Program UNDP supported the introduction in 1995 of a national "Environmental Awards Scheme" (EAS), an innovative activity for the enhancement of public environmental awareness\. The EAS highlights sound environmental practices in various categories that have been carried out by groups or individuals\. Competitions are held at the divisional level, and winners -8- go on to compete at the national level\. The Scheme is given wide publicity in the media and draws countrywide interest\. Environmental awareness has been enhanced throughout the country\. UNDP has conducted an evaluation of the EAS and is satisfied with the results\. However it is expensive, and its sustainability is questionable\. GTZ supported the publication of five issues of the environmental newsletter, which were distributed to a wide audience\. Monitoring of Environmental Quality and Enforcement\. Directly complementing efforts under the IDA Credit to enable NEA to monitor environmental quality and enforce environmental standards, a waste management legislation study was completed under the GTZ project and a first draft of the legislation has been completed\. In addition, GTZ supported the adoption of a "Hazardous Chemicals and Pesticides Control Act" (1994), and the responsibility for controlling pesticides and hazardous chemicals now rests with NEA\. A control unit was established in NEA and a Registrar of Hazardous Chemicals and Pesticides appointed\. The Unit issues licenses to anyone selling hazardous chemicals\. A number of dangerous chemicals have been banned by the Act and permits are required for the import of pesticides\. Pesticides Inspectors, often agricultural extension agents working on a part-time basis, have been appointed througho ut the country, and are paid a small cash incentive\. Unfortunately, NEA's current shortage of financial resources is threatening the sustainability of the monitoring network\. Environment Information Management\. In addition, to the 5 data centers established under the IDA financed activities, equipment acquired by the Government from the USAID's ANR project was transferred to NEA, and a small EIS/GIS unit was established and staffed\. GTZ provided follow-up funding to complete land use maps initiated under USAID's ANR Project when the project was prematurely terminated as a result of the 1994 Coup\. With the completed maps the EIS/GIS Unit is more effective in communicating the impact of various environmental and natural resource practices\. 4\.3 Net Present Value/Economic rate of return: A detailed cost benefit or rate of return calculations was not performed\. 4\.4 Financial rate ofreturn: A detailed cost benefit or rate of return calculations was not performed\. 4\.5 Institutional development impact: The institutional development impact is considered modest\. Prior to the project NEA existed only on paper, now there is a functional institution in place\. Investment in technical, administrative and financial training has improved the capacity of a significant number of professionals that will benefit The Gambia, whether they remain in government or migrate to private sector, NGOs or other projects\. The establishment of collaborative working groups has strengthening NEA's capacity to fulfill its mandate and enhanced the environment management potential within the country\. However, it does remains to be seen if these working groups can be effectively converted from forums for information sharing, discussion and coordination, into concrete management instruments\. Perhaps the key institutional development impact is the introduction of EIA regulations and guidelines, and related capacity building investments financed under GTZ project and the key cross-conditionality of the IDA Credit\. Application of this tool will make a significant contribution to the investment decision and development planning decisions of the country\. -9- 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Military Takeover of July 1994\. The military overthrow of the former regime in July 1994 resulted in a temporary suspension of World Bank operations and the permanent withdrawal of USAID from The Gambia\. The suspension of World Bank operations resulted in a 6 month delay in project effectiveness\. The withdrawal of USAID had a more significant impact on GEAP implementation overall and the IDA project in particular due to the premature termination of its Agriculture and Natural Resources (ANR) Project\. Environmental policy reform and the development of a GIS system were the two IDA Credit program objectives that were particularly affected by USAID's withdrawal\. Environmental awareness raising activities to be conducted via agricultural extension agents under the ANR project were also curtailed, to the detriment of the EEC objectives\. Indirectly, the coup increased political uncertainty and, hence, political sensitivity\. This negatively affected implementation\. Some of NEA's staff ware required to participate in commissions investigating corruption\. NEA was also less forceful in bringing polemic issues into the public arena opting for a more gradual long-term approach to environmental problem solving\. Moreover, several technically qualified individuals are believed to have left the country and not retumed, aggravating the shortage of qualified professionals able to provide consultancy support to Project activities\. 5\.2 Factors generallv subject to government control: Inactive National Environment Management Council (NEMC)\. This high-level Council was created under the NEMA to approve all environmental policies, adopt environmental standards, guidelines and regulations proposed by NEA, and supervise the Agency\. However, the NEMC was inactive from 1994 to 1999\. While NEA continuel to operate throughout this period, high level political support was significantly diminished\. As a result, it was difficult for NEA to communicate with top decision-makers about the seriousness of environmental problems and their potential economic impact\. Insufficient Incentives\. While NEA is a semi-autonomous agency, the Government takes full responsibility for staff salar es\. To attract qualified personnel, NEA was accorded a 50% salary premium over civil service scales\. This became less meaningful overtime as civil servants received periodic pay raises for which NEA personnel were ineligible\. Qualified personnel, particularly for the financial/administrative section, were difficult to recruit given the competitive wages available in the private sector\. Furthermore NEA senior staff were attracted by considerably higher salaries offered by other donor--financed programs or projects (i\.e\. Bank and IFAD)\. Under the present structure, the staff's upward mobility is severely limited\. It should be noted, however, that despite this declining financial incentives, most of the staff has remained in place\. 5\.3 Factors generalv subject to implementing agency control: Project Management\. Forward planning and integrated activity scheduling were a problem both for the Project and for the GEAP program as a whole\. NEA hired an international consultant to design a Management Information System (MIS), to facilitate integrated management of all GEAP activities\. However, the proposal did not fulfill requirements and consequently was not adopted by NEA\. Annual human resource management plans, work plans and schedules of consultant's recruitment with draft terms of reference were not prepared as was envisaged in the DCA, Article III, Section 3\.04 (b)\. Failure to follow an integrated annual work plan, both for the Project and GEAP implementation activities, gave rise to over programming of staff time, resulting in implementation delays\. Consultants were employed by NEA to prepare an integrated work plan following the mid-term review, but the results were not fully implemented\. - 10- Initially, inexperience with procurement procedures, combined with the absence of "prior review" thresholds, contributed to delays that frustrated both the Bank and the Borrower\. Additionally, the lack of standard procurement operating procedures resulted in requests being frequently sent to the Bank for " non-objection" by coordinators/program officers instead of being routed through an effective administration system\. Replacement and training of the project administrator, a year and a half into implementation in December 1996, significantly improved procurement efficiency, but did not fully resolve the problem\. Training\. The training sub-component was not satisfactorily implemented\. A training needs assessment and subsequent Human Resources Development Plan were prepared with the help of an international consultant, but NEA considered the proposals inadequate\. Instead arrangements for training were handled mostly on an ad hoc basis by NEA Management\. Neither the content nor the results of the training were scrutinized, and the choice of training programs was often left to the individual staff\. This did not in all cases ensure that the training content would fit the needs of the Agency or that the training would have a positive impact on work performance\. Furthermore, the Project was expected to provide access to training in environmental management to staff from collaborating institutions, NGOs and the private sector\. Instead, training focused primarily on NEA personnel to the expressed disappointment of line agency staff\. Certain key staff underwent out-of-country training for extended periods (financed by other projects) and effective coverage for their programs was in some cases inadequate\. This was further exacerbated by a chronic shortage of NEA staff, delayed hiring decisions, and an insufficient number of qualified local consultants from upon which to draw additional human resources\. Donor Coordination\. NEA should have insisted on better donor coordination\. The initial assumption was that NEA would manage support from all donors as an integrated program, with each donor's activities having common and/or complementary objectives\. Despite these initial intentions, NEA's facilitation of information exchange and coordination of donor teams and activities was weak\. Joint supervision missions were uncommon and, critically, efforts to develop an integrated work plan were unsuccessful in becoming an operational management tool\. 5\.4 Costs andfinancing: The cost estimate of the IDA/GTZ institutional capacity building sub-program at appraisal was US$ 4\.5 million over 3 years, of which IDA was to commit US$ 2\.6 million (including US$ 0\.3 million to refinance the PPF), GTZ US$ 1\.3 million and GOTG US$ 0\.6 million\. IDA's commitment covered approximately 60% of total sub-program costs and included 100% financing of consultant services, training, and goods procured to support implementation of the 6 IDA components\. The GOTG financed 100% of the incremental operating costs associated with the IDA components\. Information on GTZ project costs and financing was managed separately\. Overall, financing was more than sufficient\. The Credit closed with slightly more than US$ 0\.46 million (17\.4%) remaining undisbursed, despite the project time frame being extended from three to four a half years\. The Government's actual contributions for incremental operational costs are estimated to have met the initial objective of $0\.6 M\. An increase in the funds allocated for goods occurred primarily in three components: institutional support (Component 1), monitoring of environmental quality and enforcement (Component 4), and environmental information management (Component 5)\. This increase was supported through the transfer of funds allocated for consultancy services to the equipment expenditure category\. In the case of Component 1, the increase resulted from the need to upgrade computers purchased during the PPF phase, following project extension to July 1999\. In the case of Components 4 and 5, the reallocation did not reflect a fundamental change in concept nor activity as equipment costs had previously been - 11 - subsumed in the relevant consultancy services\. 6\. Sustainability 6\.1 Rationale for sustainability rating: Sustainability of the Project is rated as likely\. Technical and institutional advances made as a result of the capacity building efforts is expected to have lasting impacts\. At the close of the IDA Credit, a National Environmental Agency was established and operational\. Furthermore, key baseline data and mechanisms for environmental management have been put in place\. The technical capabilities of staff in NEA and several GEAP collaborators has been enhanced and, even taking into account any mobility between civil service, private sector and NGOs, is likely to continue to benefit The Gambia\. This is greatly enhanced by the popular and successful establishment of thematic working groups, which draw upon qualified individuals irrespective of their place of employment\. 6\.2 Transition arrangement to regular operations: While in the short term NEA is financially sustainable because GOTG funds all staff salaries and limited operating costs, there is some doubt about NEA, as originally envisioned, remaining operationally sustainable without additional Government and/or donor support\. Through experience gained during Project implementation, GOTG recognizes that while NEA's coordinating role is indispensable, certain GEAP activities promoted as NEA responsibilities during the Project are in fact not core responsibilities for such a coordinating body\. Thus, NEA plans to revisit the organizational structure of the Agency, refocusing its activities and responsibilities\. This will be done within the parameters spelled out in NEMA to carry out certain regulatory functions (i\.e\. EIA, Environmental Quality, EIS/GIS) and is expected to further enhance the sustainability of the institutional framework established by the Project and reduce dependence on external financial support\. With respect to non-core Project activities, UNDP's Capacity 21 (as the main remaining active donor) will provide some bridge financing to help mainstream them in line agencies (e\.g\. Environmental Education)\. In addition to UNDP Capacity 21 support, the Bank is preparing a Coastal and Marine Biodiversity Management Medium Sized Project for GEF financing\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance during project identification and preparation was satisfactory\. The UNSO and Bank supported GEAP process was recognized as an example of "best practice"\. Based on the GEAP and in active collaboration with key donor partners, namely, GTZ, USAID, AfDB, UNSO and UNDP), the Project was rapidly identified\. It's support of key institutional and human resource capacity building aspects of the GEAP was fully consistent with the Government's overall development strategy and environmental priorities\. The Project's emphasis on institutional capacity building was fully consistent with the strategy outlined in the Bank's CAS\. The Bank's performance at appraisal was satisfactory although inclusion of an administrative/procurement specialist on the team would have been advantageous\. Appraisal of many key factors including Government commitment, Project design, risks, lending instrument, consistency with safeguard policies, implementation plan, key indicator identification and inclusion of lessons learned was adequate\. However, the appraisal team underestimated the time necessary to: (a) develop effective implementation managerial and administrative capacity in a new agency, staffed with inexperienced professionals, and (b) to successfully implement the Project's highly participatory and collaborative approach\. The Project, originally planned to be implemented within a 3 year time frame took four and a half years to reach - 12- completion\. While these delays were the result of several factors, some beyond the NEA's control, the appraisal underestimated the impact of NEA's weak implementation capacity, exacerbated further by their inexperience with World Bank procedures\. The evaluation of incentives for Project implementation was adequate in the prevailing institutional context, if a little naive\. The rapid adoption and implementation of the GEAP were taken as strong indications of government commitment\. It was reasonable to expect the highly participatory GEAP process to lead naturally into a highly collaborative implementation process\. Retrospectively, incorporation of more concrete and well-defined incentives to secure participation of collaborating institutions would have been beneficial\. Similarly, donor coordination was strong at the time of appraisal and the expectation that the Project would be implemented as part of an integrated program of activities managed by NEA was reasonable\. The Gambia was one of the first countries to design and implement an environment support program and thus had no road map to follow\. Subsequent experience has demonstrated that inherent donor competition for scarce human resources frequently undermines project implementation in the environmental sector\. The Gambian GEMP was no exception\. NEA's capacity and/or incentive for ensuring an integrated programmatic approach proved to be inadequate\. The Bank overestimated the capacity and quantity of the Gambian technicians available to staff and/or serve as consults to NEA\. Staff vacancies went unfilled for notable periods, while efforts to utilize local private sector consultants revealed a lack of capacity across technical and skills areas\. Equally, qualified technical staff of GEAP collaborating agencies were in short supply and high demand\. Finally, it is probably unrealistic to expect a project whose principal objective is capacity- and institution-building for a new agency, staffed with inexperienced individuals, to implement complex project components in three years\. It would have been more realistic to allow an implementation period of five years\. 7\.2 Supervision: The Bank's performance has been satisfactory\. A review of PSRs indicates that supervision missions were carried out on a timely basis, and that problems were correctly identified\. Suggestions to correct these problems were not always heeded by the Borrower\. The skills mix was generally appropriate\. However, since the primary focus of the Project was capacity building and institutional development, the periodic inclusion during the entire project cycle of a human resources development specialist and an institutional specialist would have been useful\. The lack of procurement threshold made it necessary for IDA to give a "non-objection" for all expenditures from the credit\. It would have been more efficient and less tedious if a minimum amount had been set below which the Borrower could have proceeded without contacting the Bank\. A review of the Statement of Expenditures could then have been done during the next supervision mission\. Although the Bank suggested during the mid-term review that GOTG request an amendment to the DCA introducing a procurement threshold, the Project was already nearing closure by the time this was done\. Critical supervision missions should have been conducted in collaboration with GTZ and UNDP, especially since each of the donors many of the activities had overlapping elements\. While attempts were made to coordinate supervisory missions, such overlap only occasionally occurred as each of the donors was working according to a different timetable\. 7\.3 Overall Bank perfornance: The Bank's performance is rated satisfactory - 13- Borrower 7\.4 Preparation: The Government's performance during preparation was highly satisfactory\. The GEAP preparation process is regarded as an example of "best practice"\. The subsequent leadership and drive demonstrated through Government's rapid organization of a donor roundtable to secure implementation financing, as well as the immediate carrying out of the recommendation to establish the NEA were good indicators of national commitment\. Identification and preparation of the IDA project was both timely and well presented\. 7\.5 Government implementation performance: Government met its obligations vis-A-vis NEA's staff costs and incremental operating costs\. However, NEMC was inactive for the duration of the Project, reducing visibility of Project activities and undermining impact\. 7\.6 Implementing Agency: NEA's performance, with some notable exceptions, was satisfactory\. The operational aspects of project implementation, while slower than anticipated, were generally successful\. Regarding project management, NEA performed poorly in financial and administrative management, as key management tools and plans were either not developed or proposed tools were not accepted by NEA\. Other deficiencies compounded the problems: the accounting system was not in place quickly enough; significant delays occurred in filling key positions; and a lack of planning slowed procurement\. Nonetheless, regular financial audits were prepared and were mainly satisfactory\. From the environmental management standpoint, the Agency is functioning well and is considered an asset by the Government\. The coordination methodology was well planned and is satisfactory to all participating agencies and the private sector\. There is a much-improved level of competence for environmental management at the national level\. NEA is now in a better position to assist improving local capacity for environment management at the divisional level and below\. 7\. 7 Overall Borrower performance: Overall Borrower performance is rated satisfactory\. 8\. Lessons Learned Time Frame, budget and lending instrument\. Environmental capacity building is complex\. Furthermore, establishing a new environmental management institution and the necessary collaborative structures, in a context where there was little or no previous experience, or trained staff, is difficult and time-consuming\. In the past the Bank approach has favored stand alone operations with limited financing such as this one\. Given the typically weak in-country base, it was suggested that it would be more appropriate to start with a larger operation and extend it over a longer timeframe\. Thus, an APL may be a more appropriate lending instrument than a stand alone project\. Donor Coordination\. The importance of sustaining donor coordination cannot be over emphasized\. While cognizant of the importance of Govemment ownership of program activities, the donor community should recognize that national institutions may not always have sufficient capacity or interest to ensure effective donor coordination when faced with the realities of implementation\. This can lead to an inefficient allocation of human resources and funds as different donor initiatives compete for attention\. Human Resource Capacity Building\. Staff training should be considered a priority in any capacity building project\. A training needs assessment should be conducted as early as possible\. Based on this -14- assessment, a manpower development plan should be prepared by training specialists\. Considering NEA's diverse training needs, responsibility for implementing and managing staff training should rest with a full-time qualified training officer\. Workshops are an excellent means for disseminating information, and results of workshops should be published and publicly made available\. This is especially true in environmental activities\. Workshops have marginal value, however, as a means of training and strengthening capacity of staff\. The project held an excessive number of workshops\. Funds invested in many of the workshops would have had better results if they had been focused on short-term, well directed, local training aimed at strengthening staff capability\. Implementation Capacity\. First, for timely implementation, a strong administrative system must be established within the implementing agency and remain fully staffed throughout\. The administrative office should include adequate back-up staff not only in administration but also in finance\. This would allow the units to function and at the same time permit staff to receive rotational short-term local training without disrupting the administrative/financial daily operations\. Second, the complexity of a project and the number of components should be tailored to a careful appraisal of existing management capacity, not only of the lead agency, but of the collaborating institutions as well\. It is preferable to phase in new activities over time, as the agency gains experience\. Third, projects need active and effective implementation leadership\. Considerable emphasis is often placed during project start up on initiating activities that will lead to the achievement of tangible results\. As a result, a comprehensive understanding of basic management and administrative functions administration and systems requirements is typically overlooked\. As an alternative approach, prior to any financing being made available, the implementing agency should develop an overall plan of action\. Thereafter, the implementing agency should prepare detailed work plans, procurement plans, a schedule of consultants with the appropriate terms of reference, and a list of proposed studies at appraisal and annually thereafter\. During this time, if the implementing agency does not have the capacity to complete this planning exercise, the proposed work plan must reflect the need for training in these areas, and a realistic allocation of time and resources must be spelled out\. Experience shows that it is not sufficient to assume that capacity will be built as time goes on, as workloads become overwhelming and administrative/management functions are often pushed to the side\. Furthermore, it is necessary to take into account local cultural organizational and management patterns as well as the prevailing bureaucratic environment when designing management systems\. Fourth, Bank's intervention should be reduced to an absolute minimum\. Preparing and mutually agreeing to a Manual of Operating Procedures (MOP) at negotiations should clearly identify the duties and responsibilities of each section of the Borrower's implementing organization\. Procurement procedures and prior review limits would be included in the MOP\. - 15- 9\. Partner Comments (a) Borrowerlimplementing agency: REPUBLIC OF THE GAMBIA CAPACITY BUILDING FOR ENVIRONMENTAL MANAGEMENT TECHNICAL ASSISTANCE PROJECT IMPLEMENTATION COMPLETION REPORT BORROWER'S CONTRIBUTION Prepared by Momodou Chain and Momodou Sarr 1\.0 INTRODUCTION The program was prepared to support economic and social development while trying to ensure the long-term sustainability of the limited natural resource base within the country\. Through support from the program, this was to be achieved by providing direct support to the implementation of the Gambia Environmental Action Plan (GEAP) from 1993, after Cabinet adopted it in 1992\. Bilateral agreements between the Bank and Gambia Government on the priorities to be attached to the various functions of the NEA were also reflected in the design of the program\. Within the framework of the GEAP implementation, other sector-specific interventions being financed by IDA and other donors, were also supposed to benefit directly from project support through the establishment of standards and guidelines, the collection and dissemination of information and institutional support guidance\. 2\.0 PROJECT DESCRIPTION The project consisted of six major components: (a) Institutional Support for Coordination of GEAP Implementation to support the NEA develop its operational capacity by financing equipment, training and targeted technical assistance\. The development of management and technical skills in NEA and the provision of associated training in environmental management for staff of sector agencies and private sector operators, through short-term practical attachments or workshops were a part of this component\. (b) GEAP Monitoring and Policy Development to re-orient the existing sectoral policies and develop new policies where necessary, in accordance with the overall environmental policies elaborated in the GEAP\. (c) Environmental Education and Public Awareness to support the development of a strategy to increase public awareness of environmental issues and support for electronic and print media campaigns, using existing government and NGO skills and capabilities\. (d) Monitoring of Environment Quality to support the development of a system to collect information and monitor environmental quality against agreed threshold levels\. (e) Environmental Information Management to finance the development and implementation of an environmental information strategy according to a model including: (i) the design of a common information architecture to establish coherence and compatibility; (ii) the establishment of basic information infrastructures; (iii) the maintenance of key data sets; - 16 - (iv) analytical capabilities; () Contingency Planning and Disaster Preparedness to develop a disaster awareness and contingency planning system\. 3\.0 PROGRAM OBJECTIVES The primary objective program was to establish the capacity within the National Environment Agency (NEA) enabling it to develop and ensure the co-ordination of an effective system for environmental planning and management in the Gambia so that environmental concerns are fully integrated and reflected in the social and economic development process in The Gambia\. Since it was generally accepted that the long-term success of environmental planning initiatives in the Gambia would be contingent on the development of adequate human resources in NEA and its collaborating agencies, the program aimed at bolstering local talents and skills in order to gradually reduce the country's dependence on extensive technical assistance\. To this end, the program supported a new approach that relied on stronger local management supplemented by short and medium-term targeted consultancies\. Consequently, the main thrust of program was focused on the development of the institutional infrastructure, on strengthening the capacity of the human resources required to meet this objective, and also to help realize the policy and program objectives of the GEAP\. 4\.0 ACHIEVEMENTS OF BANK-FUNDED PROGRAMS 4\.1 Environmental Education and Communication (EE&C) The following achievements were noted: (i) establishment of the Annual National Environment Awards Scheme; (ii) establishment of Divisional Environmental Education Task Forces; (iii) development of the National Environmental Education Strategy; (iv) production of a simpler version of the GEAP in English and Arabic, and in three local languages, including Wollof, Mandinka and Pularr; (v) fourteen pamphlets dealing with various aspects of the environment and the work of NEA were also produced and distributed to the general public; and (vi) the finalization of Integration of Environmental Education into Formal Education System\. An EE&C Strategy was developed and adopted\. The task force action plans in the strategy were being implemented\. In non-formal Education, several environmental education activities were completed including training for extension agents in participatory rural appraisal techniques, sensitization of the media, and a pilot project for erosion control, to name a few\. The Environmental Education Resource Centre with audio-visual aids on the environment has been established, and is now headed by a Communications Officer\. Four issues of the Gambia environmental newsletter (EARTH NEWS) have since been published on a biannual basis\. One of the most significant and innovative GEAP activities geared toward raising public awareness is the Environmental Awards Scheme (EAS), which has been funded by Capacity 21\. It is in its fifth year, and has an average of 250 entries for competition annually\. 4\.2 Environmental Information Systems (EIS) In The Gambia a multitude of agencies, both public and non-governmental are involved in the collection and management of information related to the environment\. Data collection procedures, presentation formats, exchange methodologies, storage, update and maintenance routines are as varied as the number of -17- sectoral institutions involved in data handling\. The consequences have been that various environment-related data are held at various organizations and in different formats (digital and analogue) which are not inter-changeable\. This situation has hindered efficient information exchange, management and decision-making\. An EIS strategy to coordinate and harmonize the development of a demand-driven EIS was developed in 1994\. In addition, an EIS Working Group was created to implement the strategy and coordinate all EIS activities within the country\. A network of five Data Centres has been set-up and provided the necessary computer equipment to enhance environmental information management in The Gambia\. The current data centres are the Departments of Lands and Surveys, Water Resources, Central Statistics, Agricultural Planning, and Agricultural Services (Soil and Water Management Unit)\. The Environmental Documentation Centre (Library), which is part of the EIS program, now has a good collection of publications on the environment\. Training was provided for staff of the key officials of the EIS Working Group in GIS techniques\. 4\.3 Environmental Quality Monitoring and Enforcement The national strategies for Environmental Quality Monitoring and Enforcement (EQME) and Solid Waste Management (SWM) were developed under the guidance of the Environmental Quality Working Group\. In collaboration with the Department of Water Resources, the Gambia Police Force and the Department of Health Services, NEA commenced implementation of the EQME strategy\. The team focused on ambient air quality, vehicle emissions, water quality and solid waste management\. The institutions were provided with training and equipment for implementation of the strategy\. Systems for air and water quality monitoring and solid waste monitoring were designed\. The Air Quality Monitoring Network for Greater Banjul was established, and a nationwide water quality monitoring is being implemented\. NEA was not able to start implementation of the SWM strategy because it lacked the required funds\. However, important activities in this area, including identification of potentially suitable waste disposal sites in Greater Banjul, were undertaken in collaboration with the EIS program\. In the area of enforcement, the Inspectorate Unit has been established and provided with operational guidelines, equipment and training at the School of Public Health, Gambia College, to enhance its enforcement capacity\. 4\.4 Institutional Support for Coordination of GEAP Implementation Several significant achievements have been registered\. The management of the NEA has been trained in project management, and budgeting\. A Management Information System (MIS) has been created to include the integrated Work Plan, Assets Inventory, Human Resources database, Vehicles Monitoring and the Sun Accounting System\. Due to complex structure of the Integrated Work Plan, it has not utilized in the manner it was designed for\. Other components of the MIS, notably the SUN Accounting System, is being regularly utilized\. Another important milestone was the setting up of the Local Area Network (LAN), which has tremendously eased information sharing within the Agency\. All NEA staff have undergone computer literacy training in word-processing, spreadsheets and database\. 4\.5 GEAP Monitoring and Policy Development A GEAP monitoring strategy is being implemented, and routine progress reviews based on agreed - 18- environmental indicators are being conducted\. The State of the Environment Report has been published after a much publicized launching by His Excellency the President of the Republic and Chairman of the National Environment Management Council (NEMC)\. The State of the Environment Report was the first executive report on the environment in the Gambia following the implementation of the GEAR The report has acted as a benchmark for future actions\. Since it has not been feasible to provide a holistic picture of the environment frequently, it has been agreed to produce the report at least once every five years\. Several key policy studies were also completed\. 4\.6 Establishment of a Constituency for Environmental and Natural Resource Management All the reports on the GEAP implementation, including the GEAP Phase I evaluation report, the World Bank Mid-term review, the GTZ and UNDP Capacity 21 Reviews, have concluded that all the programs had progressed satisfactorily although some delays were experienced in certain areas\. The key implementation successes include: the establishment of a functional institutional framework for environmental management and planning; raising public awareness of environmental issues; and the accordance of a high profile to the environment on the national agenda\. The building of a constituency has been one of the best ways of attaining sustainability in The Gambia for environmental management\. There has now been created a participatory functional institutional framework for co-ordination and implementation of the GEAP, comprising principally the National Environment Management Council (NEMC) and the National Environment Agency (NEA)\. The NEMC being the main policy-making body for environmental management, has been chaired by the President of the Republic, with the Secretaries of State responsible for the following Departments of State as members: Natural Resources; Agriculture; Health and Social Welfare; Finance and Economic Affairs; Trade Industry and Employment; Local Government and Lands\. The Executive Director of NEA has served as Secretary to the Council\. The NEA has carried out the task of coordinating multi- and cross-sectoral environmental and natural resources management issues through the framework of Networks and Technical Working Groups\. Where the network system did not fully succeed in promoting coordination between different programs, the working group approach has helped to satisfy both inter- and intra-institutional working relationships\. These Technical Working Groups have been organized along programmatic lines with broad membership base drawn from institutions with complementary mandates for environmental and natural resources management\. Each Working Group has acted as a clearinghouse for the respective program, ensuring co-ordination among the member organizations, which include departments of state, NGOs, and the private sector in the area of environmental management\. The main objective for establishing Working Groups has thus been achieved by creating a system for continuous consultation and dialogue among the key stakeholders\. The Working Group concept has been adopted by planning authorities at the divisional level, where the authorities have established sub-committees on the environment and natural resources\. This has been a major achievement in environmental management, as the framework is expected to facilitate continued coordination\. 4\.7 Disaster Preparedness and Contingency Planning An inventory of all existing contingency plans was completed within the country\. The existing plans were then incorporated in the ten newly prepared contingency plans\. After a national sensitization workshop, a contingency plan was selected for a simulation exercise, which was quite successful indeed\. - 19- Recommendations for an institutional structure together with the backing legislation have been proposed\. 4\.8 Raising Environmental Awareness Through programs such as the Environment Award Scheme, the general public has begun to better understand environmental issues\. Communities have been making representations to NEA on environmental issues that adversely affect them\. Programs on radio and television, and in focus group meetings have served to raise the level of awareness of environmental issues in civil society\. Gambians at large have become aware of environmental issues that affect their lives, largely as a result of GEAP I implementation\. GEAP has reinforced the Banjul Declaration of 1977 and intensified the national call to address environmental and natural resources degradation\. Implementation of GEAP I has also provided a framework for addressing environmental and natural resources concerns of both the public and private sectors\. The need to incorporate Environmental Impact Assessments (EIA) in project designs and feasibility studies has become more acceptable in both the public and private sectors\. 4\.9 Strengthening Institutional Capacities for Effective Environmental Management The GEAP implementation process has afforded various stakeholders the opportunity to better understand the linkages between the relevant issues and the need to apply specific techniques in the decision-making process\. Such tools have included the following: Environmental Impact Assessment Guidelines and Procedures; Land Use Land Cover Maps for general and sector-specific applications; Forestry Inventory; Greater Banjul Master Plan Development; Tsetse Study (in collaboration with the International Trypanotolerance Centre); and Digitized Agro-ecological and Vegetation Map for the Medium Term Agricultural Master Plan\. 4\.10 International Cooperation The Gambia has been active in the international fora\. The Gambia has ratified global and regional agreements, including the Convention to Combat Desertification, the Climate Change Convention, and the Convention on Biodiversity\. As a clear indication of the success of program implementation in The Gambia, the UNDP Capacity 21 Program selected The Gambia, out of a total of 45 countries, to study how the country implemented its national environmental action plan\. Also, The Gambia has been one of three African countries selected by the World Bank to evaluate its success in implementing National Environmental Action Plans with a view to formulating "Best Practices Guides" for other African countries\. The choice of The Gambia was largely due to the success it registered in the area of environmental management\. Within the context of sub-regional co-operation, NEA has established an effective working relationship with the Centre de Suivi Ecologique (CSE) in Senegal\. The Remote Sensing Applications Unit of the University of Ghana, another sub-regional institution, has also collaborated with the NEA\. Also, The Gambia, through NEA, has been an active member of the Sahelian Pesticides Committee\. The NEA, under the Hazardous Chemicals and Pesticide Program, has entered into a bilateral co-operation program with Senegal in the area of chemicals, especially pesticides management\. Under this program, NEA's Pesticide Analyses Laboratory has agreed to undertake the analysis of pesticide formulation for both countries, while the Locustox Laboratory in Senegal is expected to conduct analyses in pesticides residues\. - 20 - 5\.0 IMPLEMENTATION CONSTRAINTS 5\.1 Inflexibility of Donor Rules and Procedures Donor rules and procedures would need to be made more responsive to the specific needs of the project, because donor inflexibility has been considered to be one of the major constraints that has been experienced in GEAP implementation\. Consequently, this had affected the overall performance of the Agency and its collaborators\. For instance, the project lacked a threshold under which non-objection from Washington would not be required\. Consequently, every single request for payment, irrespective of the amount in theory for even a dollar, had to be sent to the Bank for approval\. The response time for our requests for non-objections was too lengthy, and there was generally a lack of understanding of Bank procedures and requirements, especially during the initiation of the project\. 5\.2 Time-consuming Consultation Process With Collaborating Partners As this project has been a capacity building project, it has been expected that it would have to sustain itself well beyond the life of any other external funding\. Due to the fact that the project objectives agreed at the onset of the project were broad and generally vague, a great deal of innovative thinking by NEA project coordinators was required to develop activities to support the different project objectives\. The cross-sectoral nature of all project activities being implemented meant that all major stakeholders closely scrutinized proposed actions before they could give their approval or acceptance\. This added to making the extensive consultation process among collaborating institutions, cumbersome and time-consuming\. Notwithstanding, it was felt that such an extensive consultative process with all affected parties was deemed necessary to build that feeling of ownership among partners, which was necessary to ensure the success of the interventions, and their long-term sustainability\. 5\.3 Unrealistic Assumptions Furthermore, it has to be accepted that environmental management within the context of sustainable development, has been a relatively new area in The Gambia, and no road maps did previously exist to guide one's actions\. The experience in project implementation gained this far has indicated that several assumptions at the planning stage of this project have either changed, or have been found to be unrealistic\. Qualified personnel such as accountants and experienced project administrators were expected to be readily available within the country\. It was also expected that close linkages and the specific interventions from an IDA-supported Health and Population Project supporting a comprehensive population policy prepared with a view to reducing the current population growth rate and bringing about a sustainable equilibrium between human and natural resources demands and consumption, would be maintained\. The $10 million dollar USAID ANR Project was also expected to provide technical assistance for institutional support and natural resources planning, and to train Gambians in natural resources management and land tenure issues\. While the Health and Population was seriously delayed, the USAID ANR Project was abruptly closed as a result of the military take-over in 1994\. The IDA-funded Urban Environment Project to address urban poverty and environmental degradation was later prematurely closed\. Despite the and changes in assumptions and the special nature of this kind of project, the Bank could not be made to revisit its existing rules and procedures with a view to making them more responsive to the specific needs of the project 5\.4 Lack of A Framework for Co-Ordination of Development Partners' Efforts At the Round Table Conference at which the Gambia Government submitted its proposal for assistance in - 21 - environmental management, the various donors agreed on a programmatic approach rather than the project approach\. Consequently, some programs did cut across the existing Network lines within the Agency notably in areas such as EIA, Environmental Quality Monitoring (EQM), Environmental Information Systems (EIS), Environmental Education and Communication (EE&C) etc\. Generally, each donor came at a different time to evaluate its projects without looking at the inputs of the other donor, and the reports that emanated from these supervision missions were not made available to the other donors\. Even where the donors operated within the same program, they were not informed about the outcome of the others' field visit, and consequently their lack of coordination constrained the program implementation\. 5\.5 Weak Implementation Capacity Implementation capacity in environmental management in the country has been generally weak within the different sectors, including the line departments, the NGO community, private sector and in local communities\. Which type of capacity was lacked, varied at the various levels, but they generally ranged from lack of technical knowledge to project planning, implementation, and monitoring\. The lack of implementation capacity was due to several factors, such as lack of the required staff in terms of numbers for NEA during the project design\. The lack of the prerequisite skills in general management at the collaborating and implementing line departments also affected the smooth implementation of the project\. Within the private sector, experience has shown that in the area of environmental policy analysis, there was a clear need for training and skills' development\. This was confirmed by the generally low quality of consultancy reports and studies commissioned by the ANR Working Group, as well as the others such as the Environmental Education and Communication program\. Other areas that have been found to require skills' development were environmental impact assessment (EIA) and environmental legislation\. The professional capacity within both the NEA and line departments needed to be further enhanced if the expected outputs of GEAP implementation were to be met\. The availability of EIA skills particularly within the private sector, and in sufficient numbers was found to be necessary in enhancing the incorporation of EIA as an important tool in environmental management\. The lack of enough lawyers with sufficient training in Environmental Legislation resulted in the slow rate of implementation of several activities within the Environmental Legislation program\. At the divisional levels, the capacity development should have centered around environmental education at the community level, in training and skills' development in project planning, implementation, and monitoring\. Technical and resource constraints have also been recognized as major ones, and they included lack of office space, photocopiers, and means of communication\. 5\.6 Inadequate Support Systems for Environmental Management - Decentralization One other means of GEAP implementation apart from the "Working Group" concept was through decentralization to the local community levels\. Decentralization of the GEAP and other processes have been hampered by the fact that there has not yet been in place a coherent national decentralization policy that would have taken into account the different roles and responsibilities of the various actors\. The experience of the Agency in the development of the Local Environment Action Plans (LEAPs) helped reveal several shortcomings\. The current divisional level structures that were expected to support the decentralization of the GEAP were by and large the Divisional Coordinating Committee (DCC), too weak\. Their members often either lacked capacity as noted above, were overloaded with work, did not have adequate resources, or showed varying levels of commitment\. Although the framework for sustainable environmental - 22 - development exists in the country in the form of the GEAP, the constraints that have been encountered should act as valuable lessons along the way towards sustainable environmental management\. (b) Cofinanciers: No information provided\. (c) Other partners (MNGOs/private sector): No information provided\. 10\. Additional Information No information provided\. - 23 - Annex 1\. Key Performance Indicators/Log Frame Matrix Project Outcome Output Projected in SAR Actual Output at Project Notes and Component Indicators Completion Comments Projected in SAR 1\. Institutional 1\.1 Skills of NEA 1\.1\.1 At least six NEA staff Six NEA staff positions trained Support for the staff improved trained in project management\. in project management\. Coordination of GEAP Implementation 1\.1\.2 At least three workshops Two workshops conducted for conducted for NEA staff NEA staff to enhance members to enhance management skills\. management skills\. 1\.1\.3 All NEA staff to have All NEA staff received training received training in computer in computer literacy\. literacy\. 1\.1\.4 Eght to ten staff trained Eight to ten NEA staff trained in administration including in administration including Executive Director, Deputy Executive Director, Deputy Director, and Administrator\. Director, and Administrator\. 1\.2 Staff of other 1\.2\.1 Environmental Environmental curriculum institutions/correspo curriculum prepared and delivered to Gambia College, ndents trained in delivered to MDI GTTI, and RDI\. environmental management 1\.2\.2 At least four workshops More than ten workshops were (1 a) conducted for environmental conducted for environmental desk officeers/correspondents desk officers/correspondents in in line agencies and one line agencies and at least one training workshop for decision training workshop was makers on environmental conducted for decision makers management and planning\. on environmental management and planning\. 1\.3 NEA's 1\.3\.1 Management Information Accounting portion of (1 b) Management System designed, reviewed Management Information Information System and in use\. System being used by NEA\. installed\. 1\.4 Equipment is 1\.4\.1 Equipment acquired and Adequate equipment and acquired\. put into use\. vehicles procured, received and presently in use\. 2\. GEAP 2\.1 Capacity to 2\.1\.1 Publication of three One "State of the Monitoring and monitor, evaluate "State of the Environment" Environment" report published Policy Development and report on GEAP reports\. in March 1997 and distributed\. implementation exists\. GEAP revision completed in December 1999 - 24 - 2\.2 NEA assists 2\.2\.1 Workshops organized to Workshops conducted to relevant sectoral assist sectoral agencies\. assist Minerals, Forestry, agencies to align Biodiversity and Agricultural policies with GEAP agencies to align policies with GEAP\. 3\. Environmental 3\.1 Increased public 3\.1\.1 Environmental Education EES review completed in (3a) Education awareness of Strategy reviewed September 1997 with 30% of environmental the population being aware of issues key environmental issues\. 3\.1\.2 Video on priority Video completed in 1997 and environmental concerns shown in 10 villages/towns in produced\. each of six administrative regions; also shown on National TV\. 3\.1\.3 At least eight workshops Eight workshops conducted for organized for key target groups key target groups\. 3\.1\.4 Weekly national radio One radio broadcast made broadcasts for environment in each week for 12 months in all local languages\. three local languages plus English 3\.2 Public 3\.2\.1 Two national campaigns Two national campaigns held knowledge of GEAP on GEAP and NEA completed with workshops organized in six and NEA assured with workshops organized in at Divisions for opinion leaders\. least six Divisions for opinion leaders\. 3\.2\.2 Popular version of GEAP Popular version of GEAP (3b) completed within six months of completed and published in project implementation\. 1997\. 4\. Monitoring of 4\.1 Capacity to 4\.1\.1 A coordinated A coordinated environmental Environmental monitor environmental monitoring monitoring system began Quality and environmental system is designed and this implementation early in 1995 Enforcement quality is monitoring system principally with pesticides\. strengthened implemented 4\.2 NEA's capacity 4\.2\.1 Inspectorate established More than five environmental (4a) to act on specific and functioning with violations were followed up by environmental enforcement mechanisms in July 31, 1999\. violations is place\. At least five violations developed in different areas are followed up\. 5\. Environmental 5\.1 Development 5\.1\.1 EIS workshop organized EIS workshop held June 1999 Information and implementation Management of EIS strategy with coordination of EIS guidelines and priorities\. 5\.1\.2 First version of data Data architecture and architecture and nomaclature nomaclature available in available in Documentation Documentation Center since Center May 1997\. 5\.1\.3 Key data sets identified, Key data sets readily available (5a) produced or converted, and in digital format\. made available in digital format\. - 25 - 5\.1\.4 NEA program officers for One NEA program officer (5b) environmental Information and trained\. Fourteen staff from key Environmental impact departments trained\. Assessments trained in EIS\. Staff from key departments trained in data conversion and management\. 5\.2 National 5\.2\.1 Selected staff from NEA, Six selected staff from NEA, capabilities for key departments, private key departments, private sector special analysts sector and NGOs trained in and NGOs trained in analysis of developed analysis of georeferenced georeferenced environmental environmental information\. information trained in Ghana\. 6\. Contingency 6\.1 Contingency 6\.1\.1 Multidisciplinary Three multidisciplinary Planning and plans developed workshop organized workshops held\. Disaster Preparedness 6\.1\.2 At least one contingency Ten contingency plans made plan available available\. 6\.2 Networking 6\.2\.1 Capacity developed One Ferry Disaster simulation mechanisms for within line agency and local case tested\. implementation of communities to act in emergency plans emergency cases put in place\. Notes and Comments: (1a) Some of these workshops were held outside Gambia\. (1b) MIS during 1997-99 continued to be developed with computerized accounting put into use by NEA\. Integrated Work Plan, continues to require further development, is excessively complex and is too time-consuming to be successfully managed by the present staff of NEA at this point in time\. MIS not in use but is being considered by NEA for future use\. (3a) Baseline Survey of Awareness level on environmental issues conducted in 1997 (3b) Popular version of GEAP was translated in three main local languages (Vollof, Mandinka & Pulaar) and Arabic\. (4a) Inspectorate established and three inspectors trained\. Regulations approved in October 1999\. (5a) This is an ongoing process with data in digital format about 10 percent completed\. (5b) Program officers for Environmental Impact Assessment not trained in EIS\. Source of information: Components 1 & 2: Executive Director and Deputy Director\. Components 3 through 6: Individual Program Officers\. - 26 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Project Cost By Component USS million USS million 1\. Institutional Support for the Coordination of GEAP 0\.62 0\.54 87 Implementation * 2\. GEAP Monitoring and Policy Development 0\.29 0\.21 71 3\. Environmental Education & Public Awareness 0\.40 0\.31 77 4\. Monitoring of Environmental Quality and Enforcement 0\.52 0\.50 97 5\. Environmental Information Management 0\.34 0\.31 92 6\. Contingency Planning and Disaster Preparedness 0\.13 0\.10 88 Total Baseline Cost 2\.30 1\.97 Total Project Costs 2\.30 1\.97 Total Financing Required 2\.30 1\.97 * Excluding US$0\.6 million Government contribution for incremental operational costs Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB cB M h' N\.B\.F\. Total Cost NCB Other- 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 0\.00 0\.00 0\.15 0\.00 0\.15 (0\.00) (0\.00) (0\.15) (0\.00) (0\.15) 3\. Services 0\.00 0\.00 1\.70 0\.00 1\.70 (0\.00) (0\.00) (1\.70) (0\.00) (1\.70) 4\. Miscellaneous 0\.00 0\.00 0\.45 0\.00 0\.45 Training & Worshops (0\.00) (0\.00) (0\.45) (0\.00) (0\.45) 5\. Miscellaneous 0\.00 0\.00 0\.30 0\.00 0\.30 Refunding of PPF (0\.00) (0\.00) (0\.30) (0\.00) (0\.30) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 Currency Revaluation (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 0\.00 0\.00 2\.60 0\.00 2\.60 (0\.00) (0\.00) (2\.60) (0\.00) (2\.60) - 27 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCe Other N\.B\.F\. Total Cost 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 0\.00 0\.00 0\.53 0\.00 0\.53 (0\.00) (0\.00) (0\.53) (0\.00) (0\.53) 3\. Services 0\.00 0\.00 0\.91 0\.00 0\.91 (0\.00) (0\.00) (0\.91) (0\.00) (0\.91) 4\. Miscellaneous 0\.00 0\.00 0\.54 0\.00 0\.54 Training & Worshops (0\.00) (0\.00) (0\.54) (0\.00) (0\.54) 5\. Miscellaneous 0\.00 0\.00 0\.17 0\.00 0\.17 Refunding of PPF (0\.00) (0\.00) (0\.17) (0\.00) (0\.17) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 Currency Revaluation (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 0\.00 0\.00 2\.15 0\.00 2\.15 (0\.00) (0\.00) (2\.15) (0\.00) (2\.15) Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\. 2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal_Estimate ActuallLatest Estimate BanL Go%t\. CoF\. Bank Govt\. CoF\. Bank Gl\.t\. CoF\. L Institutional support for 0\.62 0\.60 0\.54 0\.60 87\.1 100\.0 the Coordination of GEAP Implementation 2\. GEAP Monitoring and 0\.29 0\.21 72\.4 Policy Development 3\. Environmental 0\.40 0\.31 77\.5 Education 4\. Monitoring of 0\.51 0\.50 98\.0 Environmental Quality and Enforcement 5\. Environmental 0\.34 0\.31 91\.2 Information Management 6\. Contingency Planning 0\.13 0\.11 84\.6 and Disaster Preparedness Actual GOTG financing for incremental operational costs was not available - 28 - Annex 3: Economic Costs and Benefits A detailed cost benefit or rate of return calculations was not performed\. - 29 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No of Persons and Specialty Performance Rating (e g\. 2 Economists\. I FMS\. etc\.) Implementation De%elopment Month/Year Count Specialty Progress Objective Identification/Preparation April 1993 4 Grace Yabrudy, TTL Yves Prdvost, consultant Dominique Reeve, GTZ, Observer Karl Kirsch-Jung, GTZ, ZOPP specialist Appraisal/Negotiation October 1993 4 Grace Yabrudy, TTL Yves Prdvost, Consultant Albert Greve, Multi-Donor Secretariat Coordinator Bernd Wiese, GTZ, ZOPP specialist Supervision February 1995 1 Marie Yvonne Powers, TTL HS HS July 1995 2 Marie Yvonne Powers, TTL HS HS Yves Prdvost, Consultant November 1995 1 Marie Yvonne Powers, TTL, HS HS Albert Greve April 1996 2 Marie Yvonne Powers, TTL S S Yves Prdvost, Consultant July 1996 1 Marie Yvonne Powers, TTL S S November 1996 2 Marie Yvonne Powers, TTL S S Yves Prdvost, Consultant March 1997 5 Yves Privost, TTL S S Marie Yvonne Powers Albert Greve Hans Hansen, GTZ Michael Warich, GTZ Oct/Nov\. 1997 1 Yves Pr6vost, TTL S S May/June 1998 1 Yves Prdvost, TIL S S February 1999 1 Yves Prdvost, TTL S S October 1999 1 Yves Prdvost, TTL S S - 30 - ICR March 2000 3 Yves Pr6vost, TTL - Env\. S S Specialist Michael Furst, Consultant, Env\. planning & management Robert Etheredge, Consultant, Financial management (b) Staff Stage of Project Cycle Actual/Latest Estimate No Staff weeks USS (\.000) Identification/Preparation 17\.3 49\.3 Appraisal/Negotiation 11\.1 36 Supervision 58\.7 180\.8 ICR 10\.6 32 Total 97\.7 298\.1 - 31 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating 0 Macro policies OH SU OM ON * NA L Sector Policies OH OSU OM * N ONA E Physical OH SU OM ON * NA O Financial OH OSUOM ON * NA E Institutional Development 0 H 0 SU OM 0 N 0 NA L] Environmental O H SU M ON ONA Social l Poverty Reduction OH SU OM ON * NA 0 Gender H SU OM ON * NA [ Other (Please specfy) OH OSUOM ON * NA L Private sector development 0 H 0 SU 0 M 0 N 0 NA El Public sector management 0 H 0 SU 0 M 0 N 0 A l Other (Please speci) OH SU OM ON * NA - 32 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating * Lending OHS OS OU OHU * Supervision O HS Os OU OHU Z Overall OHS OS OU 0HU 6\.2 Borrower performance Rating " Preparation OHS OS OU OHU " Government implementation performance O HS OS OU O HU " Implementation agency performance O HS OS OU O HU Z Overall OHS OS OU OHU - 33 - Annex 7\. List of Supporting Documents Staff Appraisal Report no\. 12478-GM - dated March 17, 1994 Development Credit Agreement - Credit no\. 2602-GM - dated May 11, 1994 Statements of Mission Objectives, Back-to-Office reports, Aide memoires and Project Status Reports - from April 1993 to March 2000 Mid-term review meeting report from the National Environment Agency - dated March 14, 1997 National Environment Agency Auditors Reports and Financial Statements from XXXXX to XXXXX Gambian-German Environmental Management Project (GGEMP) Internal Project Progress Monitoring\. February 1997\. Project Monitoring Mission on the Gambian-German Environmental Management Project within the NEA\. Findings and Recommendations\. Commissioned by GTZ\. Author: Dr\. Michael Priester\. October 1997\. National Environment Agency - Agreed Minutes for the NEA/GTZ Environmental Management Project supervisory mission\. Summary of Key Findings and Recommendations\. Atlantic Hotel, Banjul 2-6 March, 1998\. - 34 -

REVIEW

P049301

 ICRR 11742 Report Number : ICRR11742 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 03/19/2004 PROJ ID : P049301 Appraisal Actual Project Name : A\.p\. Emerg\. Cyclone Project Costs 219\.96 174\.89 US$M ) (US$M) Country : India Loan/ US$M ) 150\.0 Loan /Credit (US$M) 121\.36 Sector (s): Board: PSD - General Cofinancing public administration sector US$M ) (US$M) (28%), Roads and highways (25%), Irrigation and drainage (17%), Power (17%), Other social services (13%) L/C Number : C2950; L4156 Board Approval 97 FY ) (FY) Partners involved : Closing Date 07/31/2000 07/31/2003 Prepared by : Reviewed by : Group Manager : Group : Silke Heuser Ronald S\. Parker Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The Andhra Pradesh (AP) Hazard Mitigation and Emergency Cyclone Recovery Project was a response to heavy rains, floods and cyclones occurring between June and December 1996, with a devastating cyclone hitting the coastal area on November 6\. During that period, a total of 1,689 people died and economic loss was estimated at US$2 billion\. The project’s objectives were to: (i) assist GOAP in preparing and implementing a long-term hazard management program in high-risk areas with enhanced community participation; (ii) restore public infrastructure according to hazard-resistant criteria for infrastructure siting, construction and quality control so that such infrastructure can withstand future disasters; and (iii) enhance the capacity of GOI / India Meteorological Department (IMD) in early cyclone warning\. b\. Components 1) Hazard Management Program (US$48\.7 million): GOAP was to conduct cyclone and flood management studies that were expected to lead to a disaster management plan\. It was also to conduct hazard mapping and purchase communications and information technology to better inform and evacuate people before a cyclone; and it was to set up a Vulnerability Reduction Fund (VRF) to finance community-driven hazard reduction activities\. GOI was also to enhance IMD’s early cyclone warning capacity on the east coast of India through the provision of Doppler Weather Radars\. 2) Infrastructure Restoration (US$156\.7 million): Electric power facilities, irrigation drains, flood banks, roads, bridges and public buildings were to be constructed or repaired to withstand wind speeds of more than 200 km/h\. Mitigation measures were to include watershed management, tree shelter-belt plantations and cyclone shelters\. 3) Technical Assistance (US$14\.6 million): Besides financing consultants, training and equipment, TA was to fund the costs of project management\. c\. Comments on Project Cost, Financing and Dates Parallel financing of about US$30 million from NABARD and US$30 million from the Power Finance Corporation covered additional irrigation, work on rural roads, and the restoration of electrical facilities\. The depreciation of the Indian rupee led to US$9 million of the credit and US$20 million of the loan being unused\. Other factors reduced the project’s cost as well, so that the actual expenditures under the Hazard Management component came to about 9 percent of the loan amount, compared to an estimated 22 percent\. This was due to the fact that coastal mapping was done by a government agency instead of international consultants, and that the Doppler Weather Radar System was not procured\. Expenditures for TA, however, increased to 189 % of appraisal estimates due to a project extension of three years\. 3\. Achievement of Relevant Objectives: 1) Hazard Management Program: After delays, cyclone and flood management studies were completed, yet no time was left to integrate them into a disaster management plan\. The community disaster awareness program did not advance past an initial assessment; and, thus far, only one community-driven disaster activity has received funding from the VRF\. GOI did install 10 high wind speed recorders and 100 digital cyclone warning systems along the east coast to improve early cyclone warnings\. The purchase of three Doppler Weather Radars, however, had to be stopped due to improper procurement\. 2) Infrastructure Restoration: Electricity lines and substations were improved to withstand wind speeds of up to 200 km/h\. Plus, the communication system was enhanced by establishing VHF communications and satellite-based VSAT systems to coordinate disaster relief and transmit early warnings to communities\. Drains were enlarged and dredged to prevent flooding; and 19 flood embankments were repaired\. A total of 1,189 km of roads and 59 bridges were reconstructed, connecting vulnerable areas to nodal centers for post-disaster relief\. Eight hundred public buildings were repaired, especially schools and health centers\. Through self-help watershed management, 822 check dams and 711 percolation tanks were constructed along with soil moisture conservation works on 7,810 ha and horticultural plantations on 7,546 ha\. Last but not least, 82 cyclone shelters were constructed and more than 5,000 ha of casuarinas, palmyras and mangroves were planted along the shore to buffer cyclones and tidal waves\. 3) Technical Assistance: A disaster management team to implement hazard mitigation activities was financed\. Consulting was provided to check design and construction criteria and to assure work quality\. Field offices received real-time weather data through state-of-the-art equipment; and high level modeling computers were installed through which cyclone forecasting models could be interlinked and run in real time\. River and rain gauges with attached satellites were established throughout the state; and necessary budget provisions have been made for their maintenance\. 4\. Significant Outcomes/Impacts: Once integrated into one model, the two mitigation studies will increase the lead time of cyclone forecasting from 6-12 hours to about 48 hours\. Electricity supply was made more reliable\. The State Electricity Board also promoted higher standards across other ongoing works and institutionalized the O&M of power facilities\. The drainage system was improved and productivity on 645,000 ha of land increased\. The improved drainage system now protects three towns and 42 villages with a total population of about 300,000 from floods\. In addition, the project provided improved roads and bridges to provide more reliable all-weather access to the hinterlands for 155 coastal villages\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): While the objectives of infrastructure restoration and technical assistance were substantially met, the first and most important objective, namely to prepare and implement a long-term disaster mitigation program with increased community involvement in high-risk areas of AP, was not fully achieved\. This was mainly due to a lack of Borrower commitment, Bank staff inputs not being persuasive, and because GOI did not want to disclose geographical data for security reasons\. Continuous delays were experienced in most components\. Adequate maintenance is still an issue with roads and bridges, as well as with the drainage system\. No provisions were made to maintain cyclone shelters, with their quality also being impaired by inadequate location and lack of water supply and sanitation facilities\. Social safeguard: The original project agreement excluded any work on roads, bridges and flood banks involving resettlement because of perceived lack of time to address the issues\. However, as resettlement was unavoidable, an amendment to the agreement was made to enable GOAP to undertake those works\. GOAP generally delivered compensation and entitlements to the Project-Affected Persons, including squatters\. It failed, however, to carry out a resettlement impact assessment study\. Environmental safeguard: Although the project was classified as an Environmental Category B project, which did not require a full environmental assessment, procedures for environmental screening and assessment were agreed upon by the Borrower and the Bank\. Yet, during implementation, neither the initial agreed-upon environmental brief nor an environmental screening took place\. Had they been done, major problems could have been foreseen and avoided\. A newly constructed bridge in a wildlife sanctuary violated environmental protection criteria and had to be stopped for five months; and planting eucalyptus trees had to be suspended because it adversely affected the ground water table\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: 1) Combining long-term disaster mitigation activities into a three-year emergency reconstruction project proved to be unrealistic\. As a result, some of the disaster mitigation activities were not completed within the expected time frame\. Long-term disaster mitigation requires a longer period of time, extensive capacity building and, most importantly, strong ownership on the Borrower's part for successful mainstreaming into state-wide developmental efforts\. 2)Greater involvement of local Bank staff towards the end of the project produced more continuous, hands-on supervision, as well as more timely follow-up in resolving project implementation issues\. 8\. Assessment Recommended? Yes No Why? The project experience generated interesting lessons that should inform the ongoing OED review of Bank experience in the post-disaster context\. 9\. Comments on Quality of ICR: The ICR provides a detailed description of the project’s achievements and shortcomings\.

REVIEW

P100438

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) Report Number : ICRR0020737 1\. Project Data Project ID Project Name P100438 MX GEF Adaptation to Climate Change Country Practice Area(Lead) Mexico Environment & Natural Resources L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) TF-96681 31-Oct-2015 23,500,000\.00 Bank Approval Date Closing Date (Actual) 23-Nov-2010 31-Oct-2016 IBRD/IDA (USD) Grants (USD) Original Commitment 4,500,000\.00 4,500,000\.00 Revised Commitment 4,500,000\.00 4,201,973\.93 Actual 4,201,973\.93 4,201,973\.93 Prepared by Reviewed by ICR Review Coordinator Group Katharina Ferl Peter Nigel Freeman Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Components a\. Objectives The Project Appraisal Document (PAD) (p\.vii) and the Grant Agreement of May 11, 2011 (p\. 8) states that the Global Environmental Objectives of the project were to i) promote adaptation to the consequences of climate impacts in the coastal wetlands of the Gulf of Mexico, through the implementation of pilot measures that will provide information about the costs and benefits of alternative approaches to reduce the vulnerability of said coasts to climate change; and ii) to assess the overall impacts of climate change on Recipient’s national water resource planning, including the identification of potential response options, with a focus on coastal wetlands and associated watersheds\.” Page 1 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) b\. Were the project objectives/key associated outcome targets revised during implementation? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? No d\. Components The project included four components: Component 1: Design of selected adaptation measures and technical coordination of the project (appraisal estimate US$2\.8 million, actual US$1\.6 million): This component was to finance the designing of adaptation measures to be implemented under the project and technical assistance to facilitate modeling, generation of data, analysis, and access to information and long-term remote sensing of pilot areas\. This component was also to finance the facilitation of the technical coordination of the project\. Component 2: Implementation of pilot adaptation measures in highly vulnerable wetlands (appraisal estimate US$3\.9 million, actual US$3\.3 million): This component was to finance the development and implementation of comprehensive wetland management plans and land zoning for pilot areas, the implementation of a technical monitoring system and various adaptation measures for Tamaulipas, Veracruz, Tabasco and Quintana Roo\. Component 3: Assessment of the impacts of climate change on water resources planning at the national level and in coastal wetlands (appraisal estimate US$1\.0 million, actual US$1\.0 million): This component was to finance the development of climate change impact scenarios on Mexico’s national water resources, hydrologic characterization of pilot emblematic basins with a focus on coastal wetlands and associated watersheds and identification of response options that could be adopted at a national level to incorporate the anticipated impacts of climate change on water resource planning\. Component 4: Project Management (appraisal estimate US$1\.0 million, actual US$1\.2 million): This component was to finance the coordination of administrative, financial management, procurement and safeguards aspects of the project\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The project was estimated to cost US$23\.5 million, actual cost was US$7\.1 million\. The estimated costs in the PAD included contributions by the National Water Commission (CONAGUA) and Mexican Petroleum (PEMEX), which were separate from the project and were already disbursed before the project became effective\. Financing: The project was financed through a grant by the Global Environment Facility (GEF) in the amount of US$4\.5 million (actual US$4\.20 million), a grant by the Japanese Ministry of Finance in the amount of US$0\.54 million (actual US$0\.51 million), and a grant by the Japanese government in the amount of US$0\.54 million (actual US$0\.54 million)\. Borrower Contribution: The borrower provided in kind contributions in the amount of US$1\.79 million\. Page 2 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) Dates: The project was restructured on October 14, 2015 to: i) withdraw all activities and implementation arrangements associated with the pilot site in Tamaulipas due to security reasons; ii) reallocate grant proceeds in order to make use of released funds from the Tamailipas pilot and enable remaining project activities to be finalized; iii) adjust the project counterpart from INE to INECC and modify the implementation arrangements accordingly; iv) modify the definition of operational costs; v) modify the definition of the proposed activities related to the pilot sites in Veracruz and Tabasco; vi) modify indicator in Results framework to better reflect and measure progress towards the project’s objectives; vii) extend the closing date by 12 months to October 31, 2016 to allow for the completion of project activities\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives High: The project’s objectives were highly relevant given Mexico’s vulnerability to the impacts of climate change, especially in terms of water resources, drought and desertification, increase in sea surface temperature in the Gulf of Mexico and a continuous rise in sea level affecting its coastal areas and inland basins\. The objectives of the project were in line with the government’s National Development Plan (2007-2012) and the National Strategy in Climate Change which included adaptation measures and actions to mitigate Mexico’s greenhouse gas emissions\. Also, the objectives of the project continue to be in line with the government’s current National Development Plan (2013-2018) which focuses on strategies for disaster prevention, generation of community development schemes through social participation, integration of development policy which links environmental sustainability with social costs and benefits, sustainable management of water resources, conservation of natural patrimony, and strengthening of the national climate change and environment protection policy to transition to a competitive, sustainable, resilient, and low carbon economy\. At the time of project appraisal, the project’s objectives were also in line with the Bank’s Country Partnership Strategy (2008-2013) which identified air and water pollution, greenhouse gas emissions, deforestation and loss of biodiversity as key environmental sustainability issue in Mexico\. The Bank’s Country Partnership Strategy (2014-2018) at the time of project closing focused on promoting green and inclusive growth as one of its four main themes\. Rating High b\. Relevance of Design Modest: The project’s components were relevant for addressing Mexico’s vulnerability to the effects of climate change\. Activities to promote adaptation to the consequences of climate impacts in the coastal wetlands of the Gulf of Mexico included the development of wetland management plans and land zoning for pilot areas, the implementation of a technical monitoring system and various adaptation measures for the Page 3 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) selected pilot areas\. Activities to assess the overall impacts of climate change on Mexico’s national water resource planning included the development of climate change impact scenarios on Mexico’s national water resources, hydrologic characterization of pilot emblematic basins with a focus on coastal wetlands and associated watersheds and identification of response options\. However, the project’s scope was overly ambitious given Mexico’s early stage in developing and implementing climate change adaptation measures\. Also, some of the originally planned activities such as establishing sand barriers as coastal buffers were rejected due to their potentially irreversible changes in the coastal and estuary dynamics particularly related to increased erosion and biodiversity alterations\. Rating Modest 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective The GEF objective was: to promote adaptation to the consequences of climate impacts in the coastal wetlands of the Gulf of Mexico, through the implementation of pilot measures that will provide information about the costs and benefits of alternative approaches to reduce the vulnerability of said coasts to climate change: Rationale Outputs: • 100 hectares of water fluxes were rehabilitated in the Sian Ka’an reserve\. • Six areas in the Sian Ka’an biosphere reserve were repopulated with temperature-resistant coral genotypes\. The original target was significantly reduced since it was found that the targets were overly ambitious\. • The monitoring system was strengthened to include climate change parameters in Sian Ka’an\. • Mareographic and meteorological equipment was installed and is operating in Sian Ka’an, achieving the target\. • Two Sustainable Utilizatation Units (UMAs) were established in the Papaloapan mangrove ecosystem, surpassing the target of one UMA\. • Field visits and workshops were conducted to strengthen the capacity for climate change adaptation in Veracruz, achieving the target of doing so in at least one location\. • Field visits and workshops were conducted to strengthen the capacity for climate change adaptation in Tabasco, achieving the target of doing so in at least one location\. • The local land use plan was updated to incorporate climate change impacts and adaptation measures for flooding risk areas, evacuation routes, and areas where specific adaptation measures should be Page 4 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) implemented in the Tabasco, achieving the target\. • Infrastructure equipment for cleaning, desilting, and rehabilitation of at least three kilometers of water fluxes was installed and is operational in Tabasco, achieving the target in order to minimize the impacts of potential flooding, achieving the revised target\. • One management plan for wildlife conservation, management, and Sustainable Utilization Units (UMA) in mangrove ecosystems in Tabasco was completed but registry of the UMA is pending, not achieving the target of at least one UMA being established\. Outcomes: The ICR does not report on any outcomes for this objective given the time it will take for those activities to show their impact\. Rating Substantial PHREVDELTBL PHEFFICACYTBL Objective 2 Objective The GEF objective was: to assess the overall impacts of climate change on Recipient’s national water resource planning, including the identification of potential response options, with a focus on coastal wetlands and associated watersheds: Rationale Outputs: • Three design documents for pilot adaptation measures (which included sustainability strategies and guidance for prompt implementation and management provisions) were completed for all three pilot sites, achieving the revised target which was reduced from six design documents to three during the 2015 project restructuring\. • Two Land Use Planning Processes (LUPP) were completed and the LUPP for Tabasco was approved by local authorities, achieving the revised target\. • The protected area management plan for Sian Ka’an was revised to include climate change considerations\. • One national water response option that considers climate change impact scenarios was developed, achieving the original target\. The option included an assessment under three different climate change scenarios with respect to surface runoff nationwide, a model analyzing the implementation of an adaptation measure related to water availability in an area in Veracruz and the development of hydrological flow models for the three pilot sites\. • Infrastructure and equipment to reduce the vulnerability to climate change was installed and is being operated in three pilot sites, achieving the target\. Page 5 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) • 25 hectares of mangrove reforestation were concluded, and five hectares of riparian zones were restored in Tabasco to mitigate the negative impacts of extreme weather episodes, surpassing the target of 20 hectares of reforested mangrove and riparian forest\. Outcomes: Contracting time was reduced from nine months to six months or less, disbursement level and committed resources were increased and coordination among key stakeholders was improved, achieving the target\. Rating Substantial PHREVDELTBL PHREVISEDTBL 5\. Efficiency Modest: The PAD (p\. 21) states that it did not conduct a traditional Economic analysis given the long-term nature of the project’s objective and the difficulty to identify one meaningful quantitative outcome indicator that best reflects the outcomes\. During project implementation the direction of Natural Resource Economics within INECC conducted a cost- benefit analysis on the mangrove reforestation investments in two of the pilot sites (Tabasco and Veracruz)\. The benefits of the investments included improved quantity and quality, including purification, of water supply, improved habitat for fish species, and increased forest products\. Other benefits, which could not be monetized, included coastal protection against floods and erosion, carbon capture, species habitat, and aesthetic and recreational values\. The analysis also identified several costs such as conducting diagnostic studies, land preparation, production materials, planting, technical assistance, monitoring and the opportunity cost of land use\. The assumed time horizon for the flow and costs and benefits was 35 years\. The analysis estimated Net Present Values (NPV) at a discount rate of 4%, 10%, and 7% for each pilot site\. The highest NPV at 20\.9 million Mexican pesos (discount rate of 4%) was estimated for the site in Veracruz, which also has the highest mangrove survival rate\. For the site in Tabasco the NPV was 18\.3 million Mexican pesos with a 4% discount rate\. All sites’ NPVS were at 5\.6 million Mexican Pesos with a discount rate of 10% and a NPV of 13\.2 million pesos for the site in Veracruz and 11\.9 million pesos for the site in Tabasco with a discount rate of 7%\. These NPVs indicate that the investments were worthwhile\. However, significant implementation delays due to the project’s complex institutional implementation arrangements and weak capacity to perform the procurement function may indicate an inefficient use of project resources\. Taking everything together, Efficiency is rated Modest\. Efficiency Rating Modest Page 6 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0 Not Applicable 0 ICR Estimate 0 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The relevance of the objectives was High given Mexico’s vulnerability to the impacts of climate change\. The relevance of design was Modest due to the overly ambitious scope of the project and project activities that had to be cancelled due to their negative impact\. Achievement of both objectives was Substantial\. Efficiency was Modest due to significant implementation delays which may indicate an inefficient use of project resources\. Overall, the project’s outcome is rated Moderately Satisfactory\. a\. Outcome Rating Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating The investments made under the project such as the mareographic and meteorological instruments installed are fully operational and will be monitored by the National Autonomous University of Mexico (UNAM)\. Furthermore, it is expected that IMTA and CONAGUA will continue or expand the technical activities implemented under component 3\. Community participation was strong in several sub-projects and complementary activities, which is likely to have a positive impact on the sustainability of the activities implemented\. Infrastructure financed under the project will be maintained and operated by grassroots organizations that actively participated in the implementation\. No follow-on project by the Bank is in the pipeline, however, the government has expressed interest in a new national ecosystem0based adaptation operation supported by the Green Climate Fund\. Overall, the risk to development outcome rating is Modest\. a\. Risk to Development Outcome Rating Modest Page 7 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) 8\. Assessment of Bank Performance a\. Quality-at-Entry The Bank team took lessons learned from other climate change adaptation operations into account and developed an innovative project\. However, even though project preparation took three years, the project’s background analysis did not sufficiently take relevant risk factors that could influence project implementation such as the fragile security situation of one of the pilot areas and whether the government had plans to establish new protected areas along the gulf coast, into account\. Also, lack of commitment by the government and implementing agencies was not identified as one of the potential risks\. Furthermore, the implementation arrangements were overly complex leading to delays\. The project was overly ambitious and its scope had to be reduced during the project’s restructuring\. Also, some of the planned activities such as establishing sand barriers as coastal buffers have been rejected due to their potentially negative impact on the coastal and estuary dynamics particularly related to increased erosion and biodiversity alterations\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision The Bank team had a diverse skill mix and included experts from all relevant areas\. Implementation Status Reports were submitted on a regular basis and the team was able to support IMTA and INECC in building procurement and financial management capacity\. At the beginning of project implementation supervision missions were conducted on an irregular basis\. However, since 2013 the Task Team Leader was based in the country which had a positive impact on the relationship with the counterparts\. In October 2015 the Bank team restructured the project successfully by reducing the scope of several activities and improving the implementation arrangement\. This led to a stronger commitment by the implementing agencies and therefore a better implementation results\. Quality of Supervision Rating Moderately Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9\. Assessment of Borrower Performance a\. Government Performance The government’s commitment during project preparation and the initial phase of project implementation was weak\. The complex financial and institutional arrangements which included seven entities led to substantial implementation delays\. The effectiveness of the grant was delayed by almost one year since the National Institute of Ecology (INE) and the Mexican Institute of Water Technology (IMTA) could not reach Page 8 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) an agreement in regards to the division of responsibilities for project implementation\. The implementation was also negatively affected by the change in leadership and staff of National Institute of Ecology and Climate Change (INECC)\. After the Mid-Term Review the government demonstrated a higher level of commitment and project implementation improved\. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance The institutional implementation arrangements were very complex\. The project was implemented by INECC, IMTA and National Development Banking Institution (NAFIN)\. INE was responsible for the coordination and implementation of components 1 and 2 and the overall monitoring of activities through a joint INE-IMTA Project Implementation Team\. IMTA was responsible for the implementation of component 3 in collaboration with CONAGUA, and component 4 and for all fiduciary responsibilities, including financial management and procurement\. INE and IMTA were responsible for the compliance with environmental and social safeguards\. Together with NAFIN they were also responsible for the provision of the Anti-Corruption guidelines\. NAFIN was also the National Financing Agent\. A Steering Committee consisting of the Ministry of Environment and Natural Resources (SEMARNAT) through INECC and CONAGUA, and IMTA and representatives from each of the participating states was responsible for the oversight of the project\. The complexity of the institutional implementation arrangements and weak commitment led to delays in project implementation and low disbursement\. The agencies involved lacked a common methodology for processes such as issuing contracts\. Project implementation was also negatively impacted by weak technical and administrative teams in INECC and IMTA\. Also, INECC and IMTA were located in different cities, making coordination even more challenging\. During the Mid-Term Review a better functioning implementation system between INECC, IMTA, and NAFIN was established leading to more commitment and better performance by the implementing agencies improved\. Also, the change in INECC’s leadership in 2013 had a positive impact on the agencies’ performance\. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design Page 9 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) The original Results Framework included five PDO indicators and 15 intermediate outcome indicators\. The project’s objectives were clearly specified\. However, the selected indicators had several weaknesses\. Some indicators were overly complex and ambitious and iwhile others tried to measure several things at the same time such as the first PDO indicator “Design documents for pilot adaptation measures that facilitate prompt implementation and include sustainable strategy as well as monitoring provisions”\. Also, for some indicators it was not clear how their outcomes would contribute to the project’s objectives\. The proposed data collection methods were appropriate and included data collection, field visits and interviews with beneficiaries, and the usage of photographic records, satellite images and geographic information system\. b\. M&E Implementation IMTA and INECC were responsible for the M&E of the project\. Both entities had adequate capacity to conduct M&E activities\. During the project restructuring in October 2015 the Results Framework was modified to make some indicators easier to measure and some targets more realistic\. The Project Implementation Team conducted meetings with key stakeholders on a regular basis to assess progress towards the project’s objectives, and identify and address challenges\. The Project Implementation Team also conducted a cost-benefit analysis of the reforestation activities in two of the three pilot sites\. Furthermore, the Project Implementation Team visited project sites to assess implementation progress and submitted progress reports on the project’s financial and physical performance indicators to the Steering Committee and the Bank biannually\. c\. M&E Utilization The Project Implementation Unit assessed the monitored data and evaluated progress towards the project’s objectives\. The data was used to inform decision making\. M&E Quality Rating Modest 11\. Other Issues a\. Safeguards The project was classified as Category B and triggered the Bank’s safeguard policies OP/BP 4\.01 (Environmental Assessment), OP/BP 4\.04 (Natural Habitats) and OP/BP 4\.36 (Forests)\. The project team prepared an Environmental Management Framework and performed Environmental Assessments at each of the pilot sites to assess the sits’ vulnerability in regards to anticipated climate change impacts\. Specific environmental management plans with adaptation measures were developed for each site\. Furthermore, land zoning regulations and management plans were prepared to assess the potential direct and indirect effects of adaptation measures on local populations living in the affected areas\. The ICR (p\. 14) states that the project complied with all environmental safeguard policies throughout its implementation\. Page 10 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) b\. Fiduciary Compliance Financial Management A unit within the Mexican Institute for Water Technology (IMTA) was responsible for the financial management and procurement of the project\. At the beginning of the project, IMTA’s capacity was weak and faced difficulties to perform its role resulting in delays in the submission of disbursement applications for incurred expenses and inadequate coordination between IMTA and National Institute of Ecology and Climate Change (INECC), which was responsible for the technical aspects of project implementation\. This led to slow budget execution and procurement processes\. The Bank provided technical support to strengthen IMTA’s capacity\. All financial management provisions and requirements were complied with\. Unaudited Interim Financial Reports were submitted with minor delays\. The external auditor’s opinions were clean and no internal control weaknesses were identified\. Procurement IMTA and INECC were responsible for the procurement of the project\. Both entities had no experience in Bank procedures\. Also, the project’s complex implementation arrangements had a negative impact on the preparation of procurement plans during the initial phase of project implementation requiring an extension of the project’s closing date to allow for the completion of project activities\. The Bank provided capacity building activities and the procurement performance improved throughout the implementation\. Also, both entities improved their cooperation and were able to streamline procurement procedures to allow for a faster execution of funds\. c\. Unintended impacts (Positive or Negative) N/A d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Moderately Outcome --- Satisfactory Satisfactory Risk to Development Modest Modest --- Page 11 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) Outcome Moderately Moderately Bank Performance --- Satisfactory Satisfactory Moderately Moderately Borrower Performance --- Satisfactory Satisfactory Quality of ICR Modest --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons The ICR (p\. 27-28) included several lessons learned with some adaptation by IEG\. The two most important lessons are: • Complex institutional implementation arrangements can have a negative impact on project implementation\. In this project, the involvement of a large amount of agencies and a relatively small sized amount of funds led to little commitment by the agencies resulting in implementation delays\. • Community involvement is critical for the successful implementation of local adaptation measures\. In this project, community participation was important throughout the project implementation but will also be critical for the sustainability of the implemented activities\. 14\. Assessment Recommended? No 15\. Comments on Quality of ICR The ICR provides a good overview of project preparation and implementation and is appropriately candid\. The ICR does not provide an Economic analysis of the entire project but uses a cost-benefit analysis of an activity implemented under the project\. Furthermore, the ICR is inconsistent and demonstrates project achievement through indicators which measure outcomes that do not seem to contribute to the project’s objective\. a\. Quality of ICR Rating Modest Page 12 of 13 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MX GEF Adaptation to Climate Change (P100438) Page 13 of 13

REVIEW

P158836

 Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004921 IMPLEMENTATION COMPLETION AND RESULTS REPORT TF0A2937 ON A SMALL RECIPIENT EXECUTED TRUST FUND GRANT IN THE AMOUNT OF US$2 MILLION TO THE ORGANIZATION OF EASTERN CARIBBEAN STATES COMMISSION FOR THE SUPPORT TO IMPLEMENTATION OF THE REGIONAL EDUCATION STRATEGY PROJECT March 26, 2020 Education Global Practice Latin America and The Caribbean Region  J\. Humberto Lopez Regional Vice President (acting): Tahseen Sayed Khan Country Director: Regional Director: Luis Benveniste Practice Manager: Emanuela Di Gropello Task Team Leader(s): Shawn Michael Powers, Ingrid Bjerke ICR Main Contributor: Nicole Mammoser  ABBREVIATIONS AND ACRONYMS CLASS Classroom Assessment Scoring System EDMU Education Development Management Unit (of the OECS Commission) GPE Global Partnership for Education IDA International Development Association IRI Intermediate Results Indicator MOE Ministry of Education M&E Monitoring and Evaluation NPDT National Professional Development Team OECS Organization of Eastern Caribbean States OESS OECS Education Sector Strategy PD Professional Development PDO Project Development Objective RF Results Framework SIP School Improvement Plan  TABLE OF CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 4 II\. OUTCOME \. 10 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 15 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 17 V\. LESSONS LEARNED AND RECOMMENDATIONS \. 19 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 21 ANNEX 2\. PROJECT COST BY COMPONENT \. 30 ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 31  The World Bank Support to Implementation of the Regional Education Strategy (P158836) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name Support to Implementation of the Regional Education P158836 Strategy Country Financing Instrument OECS Countries Investment Project Financing Original EA Category Revised EA Category Not Required (C) Not Required (C) Organizations Borrower Implementing Agency OECS Commission, Ministry of Education, Dominica, Ministry of Education, Grenada, Ministry of Education, OECS Commission, Education Development St\. Lucia, Ministry of Education, St\. Vincent and the Management Unit Grenadines Project Development Objective (PDO) Original PDO The objectives of the Project are to: (i) use quality learning standards to support evidence based teaching and learning at the primary level; (ii) improve teacher practices at the primary level; (iii) strengthen primary school leadership and accountability and (iv) initiate the strengthening of sector monitoring and evaluation capacity in support of evidence-based strategic management and decision-making, all in the Member Countries\. Page 1 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) FINANCING FINANCE_T BL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) Donor Financing TF-A2937 2,000,000 1,775,557 1,775,557 Total 2,000,000 1,775,557 1,775,557 Total Project Cost 2,000,000 1,775,557 1,775,557 KEY DATES Approval Effectiveness Original Closing Actual Closing 05-Jul-2016 27-Jul-2016 30-Sep-2019 30-Sep-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 13-Jun-2018 0\.51 Change in Results Framework KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) Moderately 01 29-Jun-2017 Moderately Unsatisfactory 0\.41 Unsatisfactory Moderately 02 20-Dec-2017 Moderately Unsatisfactory 0\.41 Unsatisfactory 03 22-Jun-2018 Moderately Satisfactory Moderately Unsatisfactory 0\.51 04 21-Dec-2018 Moderately Satisfactory Moderately Satisfactory 1\.24 Page 2 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) 05 24-Jun-2019 Moderately Satisfactory Moderately Satisfactory 1\.66 ADM STAFF Role At Approval At ICR Regional Vice President: Jorge Familiar Calderon J\. Humberto Lopez Country Director: Sophie Sirtaine Tahseen Sayed Khan Director: Claudia Maria Costin Luis Benveniste Practice Manager: Reema Nayar Emanuela Di Gropello Harriet Nannyonjo, Leandro Shawn Michael Powers, Ingrid Task Team Leader(s): Oliveira Costa Bjerke ICR Contributing Author: R\. Nicole Mammoser Page 3 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES Context 1\. The Organization of Eastern Caribbean States (OECS) was formed in 1981 and is dedicated to economic harmonization and integration and encouragement of good governance among its eleven Member States\. In 2010, the organization updated its treaty to establish a unified financial and economic space in which goods, people and capital move freely, and Member States adopt a common approach to trade, health, education and the environment, as well as for the development of the agriculture, tourism and energy sectors\. The administrative body charged with implementing this regional approach is the OECS Commission\. The Commission’s Education Development Management Unit (EDMU) works to ensure integrative solutions in regional education development and reform while promoting the full participation of all Member States\. Among other tasks, the EDMU helps coordinate the implementation and results monitoring of the OECS Education Sector Strategy (OESS) 2012-21\. Of the OECS Member States, four are eligible for concessional long-term financing through the International Development Association (IDA): Dominica, Grenada, Saint Lucia, and St\. Vincent and the Grenadines\. 2\. At time of project preparation in 2016, these four countries had made significant progress in expanding access to basic education\. In 2015, net primary enrollment rates were 96 percent in Dominica, 95 percent in Grenada, and 93 percent in both Saint Lucia and St\. Vincent and the Grenadines, with gender parity achieved\. Government expenditure on education as a percentage of total public expenditure was 15 percent in both Saint Lucia and St\. Vincent and the Grenadines, 14 percent in Dominica and 11 percent in Grenada\. However, low learning achievement in the region remained a major challenge\. National exam data for 2015-16 showed 44 percent of fourth grade students in Grenada performing below minimum standards in reading, and 67 percent of fourth graders in Dominica performing below minimum standards in math\.1 3\. There were several underlying causes of low education quality in the OECS\. The first was a lack of clear learning standards to specify the learning outcomes expected at every grade level and to guide effective teaching and classroom assessment in order to promptly address learning deficiencies\. Second, teachers were insufficiently trained to provide effective instruction: in 2015, the proportion of untrained teachers2 at the primary level ranged from 11 percent to 37 percent across the four countries participating in the Project, and there were limited continuous professional development (PD) opportunities to improve instructional practices\. The third cause was the low capacity of school leaders to support teaching and to ensure that teachers were performing at desired levels\. 4\. To address low learning achievement across its Member States, the OECS developed a regional education strategy, referred to as the OESS, for the period 2012-2021\. OECS Member States were charged with aligning their national education plans to the strategy, which presents seven strategic imperatives in response to educational challenges and priorities in the region and defines a framework of related interventions and desired outcomes\. 1 Data for the four countries participating in the Project is from the OECS Education Statistical Digest\. The online Digest was developed to monitor implementation of the OECS Education Sector Strategy and was first published for the 2012-2013 academic year\. 2 Untrained teachers are defined as those lacking a formal teaching credential\. Page 4 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) 5\. In 2015, the World Bank began working with the EDMU and officials from the Ministries of Education in Dominica, Grenada, Saint Lucia, and St\. Vincent and the Grenadines to develop a project to support implementation of the OESS\. In alignment with this strategy, the Project was designed to address several of the primary causes of low learning achievement in the four countries through the development of regional public goods, including common learning standards for core primary school subjects, a related framework for formative assessment of students to ensure progress toward the learning standards, a teacher training program to promote integration of the learning standards and assessment framework in daily teaching, a framework for teacher professional development to improve instructional efficacy, and a professional certification program for school leaders to improve supervision and support of teachers\. These public goods were intended to serve not only the four IDA-eligible member states, but also the rest of the OECS through complementary regional and national activities\. 6\. In June 2016, the Global Partnership for Education (GPE) approved a US$2 million grant to implement the Support to Implementation of the Regional Education Strategy Project over a three-year period\.3 The Project would address four of the OESS strategic imperatives: (i) improve the quality and accountability of leadership and management; (ii) improve teachers’ professional development; (iii) improve the quality of teaching and learning; and (iv) improve curriculum and strategies for assessment\. The World Bank was designated as the grant agent and the OECS Commission’s EDMU as the implementing agency responsible for overall coordination, supervision and fiduciary oversight\. 7\. The Project’s focus on establishing clear learning standards and systematic student assessment, along with providing training to strengthen the skills of both teachers and school leaders, aligned with the GPE’s objectives of improving teacher effectiveness and early grade learning outcomes\. The Project was also relevant to the World Bank’s Regional Partnership Strategy for the OECS for the period 2015 -2019,4 which emphasized vocational training for young people to address lack of adequate skills for the workplace\. The Project’s interventions at the primary education level would benefit learners in the early stages of skill-building for future employment\. Project Development Objectives (PDOs) 8\. The objectives of the Project were to i) use quality learning standards to support evidence-based teaching and learning at the primary level; ii) improve teacher practices at the primary level; iii) strengthen primary school leadership and accountability; and iv) initiate the strengthening of sector M&E capacity in support of evidence-based strategic management and decision making, all in Dominica, Grenada, Saint Lucia and St\. Vincent and the Grenadines\. Key Expected Outcomes and Outcome Indicators 9\. The following five indicators were chosen to assess achievement of the PDOs: 3 After joining the GPE in March 2016, the OECS received two GPE-funded grants: an Education Plan Development Grant to provide technical assistance to finalize the OESS Education Quality Framework, and a Program Development Grant to develop an implementation and costing plan for all education sector activities to be implemented as part of the OESS\. In 2018, the GPE approved a second Education Plan Development Grant to carry out a Mid-Term Review of the OESS\. 4 The OECS Regional Partnership Strategy for 2015-2019 was endorsed by the Bank’s Board of Executive Directors in November 2014\. The strategy identified three other areas for support: enhancing productivity, competitiveness and employment, modernizing the public sector, and building climate resilience\. Page 5 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) i\. PDO Indicator 1: Percentage of primary teachers using formative assessment based on learning standards ii\. PDO Indicator 2: Percentage of teachers rated effective on classroom practices iii\. PDO Indicator 3: Percentage of primary schools with a School Improvement Plan (SIP) focused on learning outcomes iv\. PDO Indicator 4: Percentage of school leaders reporting on progress of teachers’ practices and students’ learning to oversight bodies v\. PDO Indicator 5: Production of an annual report on plan implementation and performance indicators at the country level Components Component 1: Curriculum and Assessment (US$396,500 at approval; US$292,868 actual) 5 10\. This Component would establish a set of learning standards that clearly specified learning outcomes to be achieved in language arts, mathematics, science and technology, and social studies in primary grades one through six\. Formative assessment methodology would also be instituted in order for teachers to routinely monitor and evaluate the degree to which students were progressing toward achievement of the learning standards\. 11\. Component 1 activities would include engaging in national consultations with education stakeholders in each of the four participating countries to finalize primary grade level learning standards6 and develop a learner-centered assessment framework to monitor achievement of the learning standards\. In addition, guidelines for the use of the learning standards and assessment framework would be developed, and primary teachers would be trained to integrate the standards and assessment in their daily teaching\. The expected outcome of these activities was that trained primary teachers would use formative assessment to gauge students’ performance in light of the core learning standards\. Component 2: Teacher Professional Development (US$1,115,000 at approval; US$976,694 actual) 12\. This Component would strengthen teachers’ content knowledge and instructional practices through opportunities for continuous professional learning that would support and further student achievement\. 13\. Component 2 activities would include reviewing existing teacher training programs and classroom teaching practices in each of the four participating countries to develop a teacher professional development training framework\. In addition, competence-based PD training activities and certification would be provided for teachers, and an online community of practice for teachers would be established to ensure access to instructional resources and foster knowledge-sharing related to lesson planning and teaching\. The expected outcome of these activities was that trained teachers would effectively carry out classroom instructional practices\. 5 Though curriculum development itself was not part of Component 1, the component title references curriculum because a significant activity was the alignment of the four countries’ existing curricula with a set of core learning standards\. 6 A set of regional learning standards for core subjects at the primary level had been drafted as an initial step in implementation of the OESS; these standards still needed to be aligned with the existing curricula in place in each of the participating countries\. Page 6 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Component 3: Improve School Leadership and Accountability (US$209,000 at approval; US$240,655 actual) 14\. This Component would train and certify principals and other school administrators in core management and leadership competencies required in order to better support teachers and increase student learning achievement\. 15\. Component 3 activities would include development of a program to train school leaders based on agreed professional standards, and provision of competence-based training and certification of school leaders in skills including instructional support for teachers and improved use of data for school planning, management and reporting\. In addition, a school leadership handbook and a standardized job description and appraisal instrument for school principals would be developed\.7 The expected outcomes of these activities were improved numbers of primary schools with School Improvement Plans focused on learning outcomes and of school leaders reporting on progress of teacher practices and student learning to the relevant oversight bodies\. Component 4: Project Implementation, Monitoring and Evaluation (US$279,500 at approval; US$265,322 actual) 16\. This Component would support Project implementation, including procurement and financial management, and strengthen monitoring and evaluation (M&E) capacity in the four participating countries in order to progress toward the shared goal of using education sector data for evidence-based management and decision-making\. 17\. Component 4 activities would include monitoring and reporting on Project activities (teacher training in the learning standards and related assessment, PD activities, the school leadership training program) and establishing methodologies and routines for ongoing monitoring of OESS implementation and of indicators specific to each country’s national education sector plan\. The expected outcome of these activities was that each of the four participating countries would produce a plan for Project implementation and would systematically monitor and report on Project indicators\. Project Restructuring 18\. A Restructuring was approved in June 2018\.8 The Project’s original Results Framework (RF) was streamlined by removing three indicators (two high-level impact indicators and one PDO Indicator) that measured results that were unlikely to be observed during the Project’s three-year timeline and thus were not appropriate measures of Project achievements\. The Restructuring also aligned the PDO Indicators with the four components of the Project\. 7 The leadership training program, principal job description, and principal appraisal instrument developed under Component 3 were aligned with a set of school leadership standards developed by the OECS\. 8 The GPE required that the Restructuring had to be endorsed by UNICEF, USAID, Caribbean Development Bank, UNESCO, EU and DFID, that is, all the donors that supported the Project when the grant was approved in 2016\. This took some time, and the Restructuring was therefore not approved until mid-2018, with 15 months left in the Project implementation period and 26% of the grant disbursed\. Page 7 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) 19\. At Project preparation, two impact indicators were included in the RF in an effort to ensure that focus was maintained on learning achievement\. These indicators would track the percentage of grade 2 students reading at or above their grade level and performing at or above the minimum standards in mathematics\. However, during implementation it was determined that any improvements in grade 2 learning outcomes that might be attributable to Project interventions could not be measured during the three-year implementation period, and as such the impact indicators were dropped from the Project’s RF\. They are represented in the long-term outcome section in the theory of change to more appropriately reflect the Project’s results chain\. 20\. The Restructuring also reduced the five original PDO Indicators to four, and ensured one PDO Indicator corresponded to each of the four objectives in the PDO statement: i\. PDO Indicator 2, which measured the percentage of teachers rated effective on classroom teaching practices, was dropped from the RF\. While the Project focused on generating professional development learning opportunities and plans, meaningful changes in teaching practices resulting from PD require more time to take hold in classrooms, and thus it was not feasible to expect to observe these changes during the Project implementation period\. ii\. Intermediate Results Indicator 3, which tracked the number of teachers trained and certified as competent in a range of PD activities, replaced original PDO Indicator 2 and was modified to measure a percentage of teachers\. This new PDO Indicator was considered an effective measure of the Project’s success in developing a framework for continuous teacher PD, and in training and certifying teachers in related PD activities during the life of the Project\. iii\. PDO Indicators 3 and 4 were originally included to both measure the impact of the third objective in the PDO statement (strengthen primary school leadership and accountability)\. In an effort to streamline the RF, PDO Indicator 4 (percentage of school leaders reporting on progress of teachers’ practices and students’ learning to oversight bodies) was maintained as a measure of principals’ compliance with a key aspect of their leadership duties and renumbered as PDO Indicator 3\. Original PDO Indicator 3 (percentage of primary schools with a SIP focused on learning outcomes) became an Intermediate Results Indicator\. 21\. Two Intermediate Results Indicators were also modified at Restructuring: i\. Intermediate Results Indicator 7 was reworded as the “number of teachers monitored with a standardized classroom observation tool,â€? removing the reference to use of the CLASS instrument, given uncertainty at the time about whether the region would continue to use this instrument for teacher classroom observations\.9 ii\. Intermediate Results Indicator 8, which tracked the number of schools analyzing and using student learning data, was dropped from the RF because the School Improvement Plans tracked under new Intermediate Results Indicator 3 (percentage of primary schools with a SIP focused on learning outcomes) would incorporate analysis of student learning data\. 9 The CLASS system was used to establish the baseline for original PDO Indicator 2\. The four participating countries were concerned about high licensing costs associated with continued use of CLASS, as well as the requirement that classroom observers be recertified annually\. One additional round of classroom observations using CLASS was undertaken after the Restructuring, and the region is now moving toward adopting a version of Teach, the open-source classroom observation tool developed by the World Bank\. Page 8 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) 22\. A split rating is not warranted as the Restructuring did not change the Project Development Objective, the targets for PDO Indicators, or the Project’s scope\. Rather, it served to better align the RF to impacts that could be realized during the Project’s relatively brief lifetime and to the four project development outcomes of the Project and thus to better reflect the Project’s results chain\. 23\. The Project’s Theory of Change is represented in the following results chain: Main activities: Outputs: PDOs/Outcomes: Long-term outcomes: -Establish learning standards -Finalized set of core Teachers use quality learning for primary grades learning standards aligned standards to support -Develop related assessment with curricula of the four evidence-based teaching and framework Project countries learning at the primary level -Train primary teachers to -Guidelines for use of (PDO Indicator 1: Percentage integrate learning standards assessment framework of primary teachers using and assessment in daily formative assessment based teaching on learning standards) ---------------------------------- --------------------------------- ---------------------------------- -Develop a framework for -Professional Development Teacher practices are teacher professional Framework Reference improved at the primary development (PD) training Guide level -Support four Project -Teachers participate in PD (PDO Indicator 2: Percentage countries in development of training activities per of teachers trained and Improved learning their own National PD Plans country-specific National PD certified (in PD activities)) outcomes: students Plans reading at or above ---------------------------------- --------------------------------- ---------------------------------- their grade level -Develop a competence- -Training program for Primary school leadership and based training program for school leaders and accountability performing at or school leaders that is aligned -School Leadership strengthened above the minimum with regional professional Handbook (PDO Indicator 3: Percentage standards in standards -Job description and of school leaders reporting mathematics -Train and certify school appraisal instrument for on progress of teachers’ leaders school leaders practices and students’ learning to oversight bodies) ---------------------------------- --------------------------------- ---------------------------------- -Support M&E teams in four -Training for national M&E Initiated the strengthening Project countries in teams of sector M&E capacity in monitoring/reporting on -Documented routines, support of evidence-based Project methodologies and strategic management and -Establish methodologies, processes for systematic decision making processes, templates for monitoring and reporting (PDO Indicator 4: Production M&E that teams use to track on the education sector of an annual report on initiatives being -M&E Manual (Project) plan implemented as part of the implementation and OESS (regional education performance indicators at strategy) the country level) 24\. Several critical assumptions underpin the achievement of the PDO\. Given the Project’s focus on producing regional public goods, all of the components were premised on member-state level commitment to the Project and successful implementation of national-level activities such as teacher professional development institutes\. Under Components 1 and 2, the key assumption is that teachers use the tools that have been developed, such as the formative assessment based on learning standards and Page 9 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) the skills acquired during PD training, in the classroom\. To support this link, school leaders would evaluate teachers to ensure this was taking place, and teachers would receive further training and in-classroom support for their training as needed\. Under Component 3, the key assumption is similar, that the School Leaders in turn utilize the tools and techniques learned, and Ministry of Education (MOE) officials would evaluate school leaders and provide support accordingly\. For Component 4, the key assumption is that the training is implemented and that the resulting annual report is an accurate and useful input for decision making in the education sector\. Finally, the critical assumption linking the PDO outcomes to the higher-level outcomes is that the tools and techniques are effective for increasing student learning\. This can be assessed in the longer term through appropriate student learning assessments\. II\. OUTCOME Assessment of Achievement of Each Objective/Outcome Objective 1: Use quality learning standards to support evidence-based teaching and learning at the primary level 25\. The Project’s first objective was to use quality learning standards to support evidence-based teaching and learning at the primary level\. Achievement of this objective was measured by PDO Indicator 1: Percentage of primary teachers using formative assessment based on learning standards, with a baseline of zero and a target of 50 percent\. This target was partially achieved\. In April 2019, principals used an evaluation checklist developed under the Project to observe teachers and found that 24 percent used the formative assessment10 in their classrooms to evaluate students’ progress toward meeting a core set of learning standards\. 26\. Under Component 1, consultants reviewed a set of grade-level learning standards for primary education in language arts, math, science and technology, and social studies11 in order to develop a formative assessment framework to monitor student achievement of the learning standards\. The consultants then worked with Education Officers, Curriculum Officers, principals and teachers from all four countries to align the learning standards with each country’s primary curricula\. 27\. The consultants also developed a training program to equip a cadre of trainers with the knowledge and tools to support teachers in the integration of the learning standards and assessment framework in daily classroom teaching\. In turn, these trainers (education professionals from the four Project countries) led in-country, district-based workshops to train 559 teachers from 50 primary schools across the four countries during July, August and September 2018\.12 10 Formative assessment is a process that takes place during the course of instruction to collect information that can be used to make decisions (on instruction modification, effective feedback for pupils, PD activities required to improve teaching practice, etc\.)\. There is a wide range of assessment techniques and methods across subjects that teachers can employ to support learning\. 11 Learning standards for core subjects taught in grades 1 through 6 were drafted in 2016\. These standards serve as a regional benchmark for the knowledge and skills that a student should attain by the end of each grade level in all of the OECS countries\. As part of implementation of the OESS at the national level, countries were charged with conducting curricula reviews to ensure alignment with the standards\. Under Component 1 of the Project, the consultants who had previously developed the regional learning standards were engaged to assist the Project countries with this work\. 12 Teachers were trained from 17 primary schools in Saint Lucia (12% of all primary teachers), 15 primary schools in Grenada (26% of all primary teachers), 10 primary schools in St\. Vincent and the Grenadines (16% of all primary teachers) and 8 primary schools in Dominica 18% of all primary teachers)\. Curriculum Officers from each country also received training\. Page 10 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) 28\. The Phase 1 rollout of the learning standards and assessment framework at the classroom level took place during the 2018-2019 school year\. Teachers utilized manuals developed under the Project for ongoing guidance, and the cadres of trainers provided onsite support during the school year to help teachers with lesson planning that aligned with the new learning standards, and to utilize formative assessment in order to adjust their teaching to better guide learning outcomes toward the standards\. 29\. During the 2018-2019 school year, most teachers focused on the new task of developing lesson plans that aligned with the learning standards\. The mandate to also incorporate formative assessment into the daily teaching routine was challenging for many teachers\. Furthermore, only a subset of 559 teachers in select pilot schools were directly trained and there was not sufficient time under the Project to expand training to all teachers\. Nonetheless, the 24 percent achievement shows that the training activities were effective, with some teachers having taken an important step towards formulating lessons in light of the new learning standards and conducting formative assessment to make informed decisions about instructional strategies\. 30\. Although the final target was not achieved during the life of the Project, the percentage of teachers using formative assessment based on the learning standards is expected to increase during the 2019-2020 academic year\. Teachers are growing increasingly accustomed to this new way of working, and continued training for teachers in integration of the standards and assessment framework, as well as training to bolster principals’ capacity to provide instructional support to teachers, has been integrated into their professional development going forward\. Objective 2: Improve teacher practices at the primary level 31\. The Project’s second objective was to improve teacher practices at the primary level\. Achievement of this objective was measured by PDO Indicator 2: Percentage of teachers trained and certified (in professional development activities), with a baseline of zero and a target of 50 percent\. This target was exceeded, with 67 percent of the teachers who participated in PD activities during the 2017- 2018 and 2018-2019 school years receiving an MOE certification based on a minimum of 18 hours of professional development activity per year, in accordance with the OECS’s Professional Development Program\. 32\. The PD activities measured by PDO Indicator 2 and implemented under the Project are well aligned with global evidence on the characteristics of PD that empirically lead to improved teaching and learning\.13 Through their focus on the learning standards, the PD was grounded in specific subjects rather than general pedagogy\. The training included an initial face-to-face training and strong follow-up visits through a structured program of coaching and mentoring by principals and education officers\. The training was designed for the local context in terms of the regional learning standards as well as customization in each member state, and engaged teachers for their opinions and ideas\. Sample lessons were provided for teachers to practice and work on through follow-up visits\. These design features – combined with results from PDO Indicator 1, which shows a measured improvement in teacher practices under the Project (i\.e\. formative assessment) – provide confidence that the teacher training and certification contributed 13 Popova, Anna; Evans, David; Breeding, Mary E\.; Arancibia, Violeta\. 2018\. Teacher Professional Development around the World: The Gap between Evidence and Practice (English)\. Policy Research working paper; no\. WPS 8572\. Washington, D\.C\.: World Bank Group\. Page 11 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) positively to the PDO of improved teacher practices\. 33\. Under Component 2 of the Project, consultants developed a regional framework for continuous teacher professional development\. The framework was informed by a review of existing PD initiatives in each of the four countries, findings from 2017 CLASS teacher observation data that identified gaps in classroom teaching practices, and the new learning standards finalized under Component 1 of the Project\. The framework lays out tenets and priorities to guide the development of national PD plans\. 14 34\. Each of the four Project countries established a National Professional Development Team (NPDT) comprised of Education Officers, Curriculum Officers, teacher educators, principals, and senior teachers\.15 During the first half of 2018, the consultants provided technical assistance to these teams as they developed National Professional Development Plans, customized based on each country’s education priorities and practices, desired approaches to PD (workshop-based, job embedded, peer coaching, etc\.), and data from national learning assessments\. The plans identified the resources necessary to deliver PD training and included cost estimates\. 16 35\. During the 2018-2019 school year, the NPDTs supported the initial implementation of the National Professional Development Plans by coordinating PD activities, leading workshop sessions for teachers in their areas of competence, recruiting resources to deliver training on topics outside their expertise, and providing the MOEs with feedback as the plans were implemented\. The NPDTs were supported in their efforts by a Professional Development Manual developed by the consultants under the Project, which elaborated on all aspects of planning and implementing PD at the national and local levels\. 36\. During the 2017-2018 and 2018-2019 academic years, 835 primary teachers participated in PD training activities, including those designated in the new National Professional Development Plans\. 17 By Project closing, the NPDTs were engaged in the challenging work of developing the next iteration of their PD plans, which aim to continue to move PD training from an effort that is driven by the MOEs to one that is responsive to what teachers are doing in the classroom every day\. 18 The activities under Component 2 have helped ensure that evidence-based PD planning becomes rooted in the institutional structure of schools in the four participating countries\. 37\. During implementation, the EDMU designed a new activity, the provision of school-level Student 14 Tenets include: determine the content of annual PD activity based on evidence of need, introduce Professional Learning Communities for educators to discuss pedagogical concerns and advances, require that School Improvement Plans include pedagogical goals aligned to the vision of respective MOEs, introduce peer coaching to support the introduction of new teaching approaches, and develop a strategy to ensure all teachers are trained in the next eight years (culminating in the provision of teachers’ licenses to currently untrained teachers)\. Priorities include: help teachers master differentiated practice throug h job- embedded coaching, enhance numeracy instruction, and strengthen formative assessment practices\. 15 NPDT members serve a three-year term\. Teams will initially be truncated or extended to facilitate a staggered change-over\. 16 The National PD Teams undertook asset mapping to identify and document institutions, individuals, and citizen associations existing within communities that are potential resources to be utilized for PD activities and training\. 17 Many of the 835 teachers certified in PD training activities under Component 2 were also part of the cohort of 559 teachers trained in the learning standards and related assessment framework in the summer of 2018, prior to the start of the 2018-2019 academic year\. The National Professional Development Plans that guided PD in 2018-2019 included the training that took place under Component 1 of the Project\. 18 The four National Professional Development Teams cited the burden of producing annual PD plans and intend to move to biennial plans\. Training schedules for PD activities will continue to be developed annually\. Page 12 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Achievement Grants, to further support Component 2’s objective of improving teacher practices through job-embedded PD\. Up to eight grants were available in each country for teachers of any primary grade\. The application process required teachers to identify student learning needs, conceptualize an intervention to address those needs, and implement the intervention\. Principals submitted grant applications to the NPDTs, and applications were approved by the MOEs\. 19 Thirty grants were awarded by the MOEs to support school-based projects that were aligned with the learning standards\.20 One grant, for example, supported the establishment of a “learning gardenâ€? at a rural school in Grenada, which developed students’ scientific process skills by creating an interactive and sustainable learning environment that included an aquaponics system, bird feeders, and a tortoise hut\. The project aligned to the Earth and Space Science strand in the grade 6 learning standards for science and technology\. All projects were implemented between January and June of 2019, and project status reports were provided to the MOEs midway through implementation and upon project completion\. Objective 3: Strengthen primary school leadership and accountability 38\. The Project’s third objective was to strengthen primary school leadership and accountability\. Achievement of this objective was measured by PDO Indicator 3: Percentage of school leaders reporting on progress of teachers’ practices and students’ learning to oversight bodies, with a target of 50 percent\. At the end of the 2018-2019 academic year, 87 percent of all primary school leaders had reported to MOE officials on leadership duties, teacher practices, and student learning via SIPs, exceeding the target for PDO Indicator 3\. 39\. At the start of the Project, SIPs were not being prepared by school leaders on a routine basis in the four participating countries, and those that were prepared did not focus on student learning\. A template was developed to assist school leaders in reporting on a set of leadership, teacher, and student performance metrics through annual SIPs\. These plans would then guide school administrators and MOE officials in school planning, management and supervision\. By Project closing, 195 primary schools had an MOE-approved SIP in place, surpassing the target for Intermediate Results Indicator 3, which tracked the number of primary schools with a SIP focused on teacher practice and student learning\. 40\. Component 3 Project activities also included development of a competency-based Professional Certification Program for Education Leaders, based on OECS School Leadership Standards, for select principals\. The six-unit course21 was delivered via a combination of synchronous sessions using the Blackboard Collaborate online platform and face-to-face sessions, with school leaders working on their own to complete one performance task per unit\. The consultants also developed an Education Leadership Handbook for course participants, a resource document to guide principals in their day-to-day supervision, management, and leadership duties\. The course culminated in National Leadership Forums in each country to facilitate dialogue among education stakeholders on standards for education leadership and their role in achieving school effectiveness, and for course participants to present their final projects, in 19 School Achievement Grants are included in each country’s National Professional Development Plan for 2018-2019\. 20 Approximately US$130,000 of Project funds were spent to support implementation of Student Achievement Grants across the four Project countries\. An additional US$80,000 was used to pay for Project-related training that was carried out at the 2017 and 2018 Summer Training Institutes, which are organized annually by the MOEs in each of the Project countries\. 21 The units covered leadership styles and skills, qualities of high-performing schools, conducting school self-evaluation, using data to support instruction, teacher leadership, and curriculum leadership, instruction and assessment\. Page 13 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) which they implemented strategies and demonstrated competencies developed during the training program\. 41\. The Professional Certification Program for Education Leaders was concluded in April 2019\. Intermediate Results Indicator 6 tracked the number of school leaders certified in competency-based leadership standards, with a target of 125\. This target was nearly achieved, with 110 principals and Education Officers successfully completing the program\.22 Fifteen school leaders who started the program were not certified; while a few had to drop out due to competing responsibilities, the majority of these finished the six course units but were not certified as they did not complete their final project\. 42\. A job description and an appraisal instrument for principals were also finalized under Component 3\. By Project closing, the job description was being evaluated by the four countries, and the appraisal instrument was being piloted in 60 schools\. Objective 4: Initiate the strengthening of sector M&E capacity in support of evidence-based strategic management and decision making 43\. The Project’s fourth objective was to initiate the strengthening of education sector monitoring and evaluation capacity in support of evidence-based strategic management and decision making\. Achievement of this objective was measured by PDO Indicator 4: Production of an annual report on (Project) plan implementation and performance indicators at the country level\. This target was achieved, as all four countries developed an implementation plan for Project activities and used a template developed under Component 4 to monitor and report on the set of indicators included in the Project’s RF\. 44\. Under Component 4, consultants conducted M&E capacity assessments for all four countries\. These assessments revealed that while the countries were collecting national data required for production of the annual OECS Educational Statistical Digest, existing M&E systems needed to be strengthened to better monitor and report on a range of indicators related to teacher, student and school performance, as well as on processes (PD activities, teacher classroom practices, etc\.) and outcomes from education interventions\. The consultants provided training in data collection and analysis methods, data management, process and outcome monitoring, and results reporting\. They then supported the M&E teams in a learning-by-doing approach, providing technical assistance as the teams built upon existing M&E systems by developing routines, procedures, and templates that could be used for systematic monitoring and reporting on the education sector beyond the life of the Project\. 45\. By August 2019, each of the M&E teams within the Ministries had developed a National Monitoring Report that included a comprehensive results framework to monitor indicators related to the regional education sector strategy, as well as descriptions of the methodology used to track and report on the indicators and data collection challenges that remained\. Through these reports, the four Project countries are now producing the data-based evidence required by the OECS Commission and the Council of Ministers for planning and decision making\. Overall Outcome Rating Rating: Moderately Satisfactory 22 Certification was awarded by the School of Education, University of the West Indies (Mona Campus)\. Page 14 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) 46\. The Project was effective in achieving its PDO, as measured by PDO Indicators 2, 3 and 4, two of which exceeded targets\. National Professional Development Plans are now in place to guide teacher PD training that will improve teaching practices at the primary level\. A training program for education leadership has been delivered and will continue to be used to strengthen primary school leadership and accountability\. Technical assistance provided to each country’s M&E team has improved capacity to monitor and evaluate the education sector across the four Project countries so that planning and decision- making at the regional and national levels can be evidence-based\. 47\. The target for PDO Indicator 1 was not met, although a significant portion of teachers are indeed conducting formative assessment to make informed decisions about instructional strategies that will best guide students to achievement of the learning standards\. The percentage of teachers using formative assessment in their classrooms is expected to increase quickly as the training program developed under Component 1 of the Project is expanded\. 48\. The Project remained relevant to several of the strategic imperatives laid out in the OESS for 2012- 2021\. It was also efficient in that a relatively small grant was used to support targeted interventions that positively impacted the capacity of primary education systems in the four participating countries\. As these interventions are expanded and built upon going forward, schools will provide better quality primary education, thus helping to address the challenge of low learning achievement in the OECS region\. Other Outcomes and Impacts 49\. The Project strengthened knowledge networks both between the four participating countries and within each country, down to the school level\. For example, teachers and principals developed informal networks to provide support in the rollout of the learning standards and related formative assessment\. Teams organized online meetings to share updates on the status of implementation and discussed its challenges and strategies to address them\. These teams remain active, and plan to visit each other to spend time in the field observing and monitoring classroom integration of the standards and assessment in order to jointly devise strategies to improve the adoption process\. Such knowledge networks will outlive the Project and continue to benefit MOE officials, school leaders and teachers going forward\. 50\. In addition, the Project was implemented by the OECS Commission’s EDMU, which is responsible for regional coordination and oversight of the OESS implementation process\. As the EDMU led Project coordination, implementation and procurement activities across multiple countries, it built capacity that enabled the EDMU to better support education sector initiatives within and across Member States beyond the Project’s lifetime\. As a result, the OECS Commission is now in the process of becoming a GPE Grant Agent, which means it can manage funding directly for the Member States, and, as such, potentially increase efficiency and efficacy of development funding\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME Key factors during Project preparation 51\. Project activities were designed to be mainstreamed into the work program of the MOEs, with the Ministry units tasked with overseeing curricula, teacher training, school administration and M&E for Page 15 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) implementation of activities under each of the respective Project components\. Accordingly, implementation arrangements were intended to work within the capacity constraints in the MOEs in the Project countries, where the small size of the ministries required multi-tasking by limited staff\. Project management was centered in the OECS Commission’s EDMU, which already worked with the Member States and had successfully implemented a range of operations, rather than creating an additional unit to support Project implementation\. This design streamlined implementation, ensured ownership, and contributed to capacity-building, but lack of a dedicated project implementation unit and capacity constraints of existing staff contributed to implementation delays and the need to create additional support structures during implementation\. 52\. Project components were designed with a high degree of interdependency\. Work under Component 1 to finalize learning standards and an assessment framework merged into teacher training activities in the PD plans developed under Component 2\. The training program to strengthen the leadership capacity of principals under Component 3 emphasized instructional support for teachers, so that principals could help them as they worked to integrate standards, formative assessment and PD training into their classroom teaching\. As part of capacity building under Component 4 of the Project, M&E teams monitored indicators that tracked progress toward outputs and outcomes for Components 1, 2 and 3\. As such, the components mutually reinforced one another for greater effect\. Key factors during Project implementation 53\. During the first year of Project implementation, the four large procurement activities led to 23 delays\. The procurement process was lengthy for each consultancy, technical proposals submitted by firms were more complex than required by the Terms of Reference, and financial proposals exceeded the Project’s allocated budget\. This necessitated negotiations to review activities and costs, and resubmission and reevaluation of proposals prior to contract negotiations\. The OECS Commission’s procurement approval process, and competing procurement demands, further contributed to the delays\. 54\. Procurement for the Component 3 consultancy took the longest time\. When initial proposals far exceeded the budget, the Bank guided the EDMU in annulling the procurement process and revising the Scope of Work in order to qualify lower-cost firms to bid on a reduced job that limited the number of school leaders to be trained to 125 (from 320 in the Project Appraisal Document)\. All four consultancies were underway by December 2017\. 55\. Hurricane Maria devastated Dominica in September 2017, and Project activities in Dominica were suspended until January 2018, as the MOE prioritized getting children back into schools and beginning the process of rebuilding damaged schools\. Previous to Hurricane Maria, Hurricane Irma almost completely destroyed Barbuda (not part of the Project, but part of another OECS member state)\. As such, whilst Project implementation in Dominica ultimately caught up with the other member states, the experience of these hurricanes justifiably elevated the relevance and urgency of disaster resilience and recovery in the EDMU’s workplan and in regional fora, leading to some additional diversion of attention from Project activities\. 23While the procurement process was underway, teams within the four MOEs were developing national Project implementation plans and related budgets\. This effort was tracked by PDO Indicator 4\. Page 16 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) 56\. The EDMU oversaw Project supervision on a regional level while simultaneously continuing to implement the EDMU’s ongoing workload\. The MOE teams at the national level accommodated Project implementation responsibilities alongside their existing duties and activities\. Nonetheless, the EDMU and MOEs worked together to support effective Project implementation: i\. To avoid duplication of efforts across the Project’s four consultancies, EDMU organized several opportunities for the consultants to meet to review their workplans together during the course of Project implementation in order to identify synergies and avoid conflicts in training schedules in the four countries\. ii\. To improve implementation speed, a dedicated resource person was assigned in each country to coordinate Project activities with other ongoing initiatives within the MOEs\. In September 2018, EDMU hired a one retired education professional in each country, collectively called the Local Support Team, to assist the MOEs\. The team was essential in improving logistics and communications, particularly around PD agendas\. iii\. Following the end of the Component 1 consultancy in December 2018, EDMU established Regional Implementation Teams, comprised of MOE officials, to support classroom implementation of the learning standards and related assessment\. The teams were trained in June 2019, and by the start of the 2019-2020 school year were serving as an additional source of onsite support for principals and teachers in their efforts to lesson plan for the new learning standards, conduct formative assessment, and use assessment results to improve teaching plans and methods\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME Bank Performance 57\. The Bank worked with the OECS Commission’s EDMU to ensure that Project implementation progressed on schedule and that all financial management and reporting duties were carried out satisfactorily\. As described previously, the Bank guided the EDMU through a prolonged procurement process and was proactive in processing a Restructuring to modify the RF to better reflect the Project’s objectives\. Bank support helped the EDMU strengthen its capacity in the areas of project management, implementation effectiveness, and procurement, as evidenced by the fact that the OECS Commission is now positioned to become a GPE grant agent\. 58\. The EDMU notes in its Borrower’s Report (Annex 3) that the turnover of Task Team Leaders (three TTLs in three years) caused some loss in the Project’s overall momentum\. The EDMU attests that the turnover occasionally resulted in delays in decision-making and in the Bank’s provision of timely technical and management support, both of which impacted Project implementation\. The resulting rating for Bank performance is Moderately Satisfactory\. 59\. M&E is rated as Substantial\. As previously described, the M&E teams in the MOEs were trained in data collection and analysis methods, data management, process and outcome monitoring, and results reporting under Component 4 of the Project\. The M&E teams then used a template to monitor and report on the indicators included in the Project’s RF\. The templates were passed on to the consultants, who aggregated data to calculate indicator results based on a weighted average of the four Project countries\. Page 17 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) All results were subject to EDMU review and approval\. 60\. The Project’s PDO and related indicators were focused more at the output level (teachers use learning standards and formative assessment in classrooms, teachers undergo PD training to improve instructional practices, primary school leadership is strengthened via development of SIPs, education sector M&E capacity is improved) than at the outcome level (improvements in teaching quality, gains in student learning)\. This reflected what could credibly be achieved given that the Project focused more on producing regional public goods (learning standards, frameworks for formative assessment and teacher PD training, a training program for school leaders) during its three-year timeline\. These public goods are critical outputs to the OECS’s long-term goals of improved teaching and learning outcomes\. Compliance Issues 61\. The Project did not trigger any of the Bank’s Safeguard Policies\. The Project maintained a financial management rating of Satisfactory throughout implementation\. All relevant financial management arrangements were in place and deemed acceptable to the Bank, and the EDMU consistently provided accurate and timely biannual Interim Financial Reports for the Project\. The final IFR for the period July 1, 2019 to January 31, 2020 is due on March 15, 2020\. Audited financial statements for the period July 2016 - June 2018 resulted in a clean report on the Project’s use of funds, internal controls and compliance with the terms of the legal agreement for the GPE grant and applicable laws\. A second audit covering the period July 2018-January 2020 is due to the Bank by March 31, 2020\. Risk to Development Outcome and Sustainability of Project Achievements 62\. Project results are expected to be sustainable for three main reasons: (i) Project interventions supported four of the strategic imperatives encapsulated in the OESS for 2012-2021, which is being implemented by all OECS Member States; (ii) the GPE grant funded activities that strengthened the capacity of education systems in the four Project countries, but do not create recurrent costs for the MOEs going forward; (iii) because the Project was implemented by various units within the Commission and MOEs, the capacity required to sustain activities initiated under the Project is in place\. 63\. The following additional factors provide evidence of the limited risk to sustainability of Project achievements: 64\. Component 1 Curriculum and Assessment: i\. The established Regional Implementation Teams are an additional source of onsite support for increased numbers of trained teachers and principals as they implement learning standards and formative assessment in classrooms across the four countries\. ii\. The Project countries plan to integrate the learning standards and assessment framework with their national curricula to streamline the documentation required for lesson planning and teaching\. Dominica has already undertaken this exercise as part of a recent curriculum review, and its new curriculum will serve as a reference\. Page 18 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) 65\. Component 2 Teacher Professional Development: i\. By Project closing, the NPDTs were finalizing PD Plans for 2019-2020\. The teams are institutionalized and will continue their work with the MOEs, school administrators, and teachers to ensure that capacity-building activities are based on evidence of need and grounded in day-to- day teaching practices\. The teams also plan to deepen engagement with the Teachers’ Colleges so that student teachers receive instruction aligned with overall PD objectives as part of their formal training\. ii\. The EDMU is developing the “OECS Hub,â€? an online interactive resource that will allow teachers to share lesson plans, teaching materials and assessment templates, and to live stream teaching demonstrations, thus enabling PD among peers\. Project funds were used to purchase equipment and networking components for classrooms and MOE offices that will facilitate optimal engagement with the “OECS Hub\.â€? iii\. At Project closing, the EDMU and MOEs were preparing to pilot Teach, the Bank’s open source classroom observation instrument\. Adoption of Teach will ensure that there is a cost-effective, regionally owned and adapted methodology for monitoring and evaluating teachers as they implement their PD training in classroom teaching\. 66\. Component 3 Improve School Leadership and Accountability: i\. Following completion of the Professional Certification Program for Education Leaders, the four top performers from each country were selected as trainers to support the next phase of leadership training\. They finished a five-week training course in July 2019 and delivered a second round of the leadership program to dozens of principals in August-September 2019\. 67\. Component 4 Project Implementation, Monitoring and Evaluation: i\. M&E teams have increased their capacity to collect, compile, and report on data on the education sector\. This vital work will continue to be supported and expanded, given its critical importance to the MOEs for national decision-making and to the EDMU for a comprehensive regional view of learning within the OECS\. V\. LESSONS LEARNED AND RECOMMENDATIONS 68\. Realistically assess implementation capacity at the project planning stage and include mitigating strategies to ensure effective implementation\. The EDMU struggled with the additional workload brought on by Project activities\. At the national level, the MOEs had small teams which, despite the alignment of the Project activities with sector plans, needed to multi-task across competing priorities\. These capacity constraints contributed to implementation delays; however, measures taken later in the Project, such as recruiting retired educators as a Local Support Team in the Member States, show that the constraints were surmountable\. Supporting a larger project implementation team and implementing strategies such as the Local Support Team could help accelerate implementation in a capacity-constrained environment\. 69\. When Project components and activities are interrelated, consider consolidating procurement of consulting services\. Procurement of multiple, separate contracts and delivery of goods and services to many different countries simultaneously to support each of the four components contributed to implementation delays and necessitated greater efforts by EDMU to ensure coordination and avoid Page 19 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) duplication\. In projects where the components are closely interrelated, procurement capacity is limited, and firms exist that can provide services across multiple components, combining assignments and pooling shared requirements for goods can help streamline implementation, reduce workload, improve efficiency and promote coherence and synergies across Project activities\. 70\. Consider and consult the end user when developing deliverables and timelines\. The Project introduced teachers to a number of reference documents for lesson planning, including curriculum guides, unit plan templates, learning standards for four subjects, and the Assessment Manual, which teachers reported were overwhelming\. At times, the pace of implementation was also too fast for direct beneficiaries to assimilate the Project interventions\. For example, the timeline from training of trainers on the learning standards and assessment framework (June 2018) to training of teachers and MOE Curriculum Officers (July through September 2018) was too brief to allow trainers to assimilate the new material and become confident in their new knowledge\. These experiences highlight the need to consider \. beneficiary experience as key to the goals of the Project\. Page 20 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: To use quality learning standards to support evidence-based teaching and learning at the primary level\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PDO 1: Percentage of primary Percentage 0\.00 0\.00 50\.00 24\.00 teachers using formative assessment based on learning 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 standards Comments (achievements against targets): Objective/Outcome: To improve teacher practices at the primary level\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PDO 2: Percentage of teachers Percentage 0\.00 0\.00 50\.00 67\.00 trained and certified 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): Page 21 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) This indicator measured the percentage of teachers trained and certified by MOEs for 18 hours of professional development activity according to the streams included in the OECS’s Professional Development Program (introduced in early 2019)\. National Professional Development Plans, developed under the Project and rolled out during the 2018-2019 academic year, include PD activities for teachers and school leaders\. Objective/Outcome: To strengthen primary school leadership and accountability\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PDO 3: Percentage of school Percentage 0\.00 0\.00 50\.00 87\.00 leaders reporting on progress of teachers practices and 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 students learning to oversight bodies Comments (achievements against targets): Objective/Outcome: To initiate the strengthening of education sector monitoring and evaluation capacity in support of evidence-based strategic management and decision making\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PDO 4: Production of an annual Yes/No N N Y Y report on plan implementation and performance indicators at 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Page 22 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) the country level Comments (achievements against targets): The words “plan implementationâ€? in PDO Indicator 4 refer to each country’s implementation plan for the Project\. These implementation plans included a Results Framework that M&E teams in each country used to monitor and report on Project indicators (the “performance indicatorsâ€?)\. A\.2 Intermediate Results Indicators Component: Component 1: Curriculum and Assessment\. (US$396,500) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 1: Learner-centered Yes/No N N Y Y assessment framework and guidelines for using learning 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 standards approved Comments (achievements against targets): Component: Component 2: Teacher Professional Development\. (US$1,115,000) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 2: Teacher professional Yes/No N N Y Y Page 23 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) development course 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 developed Comments (achievements against targets): Component: Component 3: Improve School Leadership and Accountability\. (US$209,000) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 3: Number of primary Number 0\.00 0\.00 170\.00 195\.00 schools with a School Improvement Plans (SIP) 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 focused on learning outcomes Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 4: Handbook for School Yes/No N N Y Y Leaders developed and printed 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): Page 24 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 5: School leadership training Yes/No N N Y Y program developed 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 6: Number of school leaders Number 0\.00 0\.00 125\.00 110\.00 certified in competence based standards 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): Component: Component 4: Project implementation, monitoring and evaluation\. (US$279,500) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 7: Number of teachers Number 0\.00 0\.00 400\.00 673\.00 monitored with a standardized classroom observation tool 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): Page 25 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) The CLASS tool was used twice during the Project\. In 2017, 300 teachers were observed in their classrooms across the four Project countries, and the resulting data informed the 2018-2019 National Professional Development Plans drafted under Component 2 of the Project\. In 2019, an additional 373 teachers were observed, thus surpassing the target for IRI 7\. At Project close, CLASS certified observers were planning to analyze the 2017 and 2019 data to see if there were any changes in observed teaching practices over the life of the Project\. Going forward, the OECS Member States plan to adopt the Bank’s Teach instrument for classroom observation of teachers\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 8: M&E Manual Developed Yes/No N N Y Y 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion IRI 9: Stakeholder feedback Yes/No N N Y Y surveys taken 30-Aug-2016 30-Aug-2016 30-Sep-2019 30-Sep-2019 Comments (achievements against targets): The M&E consultant hired under Component 4 conducted four online surveys over the course of the Project to collect and tabulate data from the four participating countries for the Project’s Results Framework\. Page 26 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Page 27 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) B\. ORGANIZATION OF THE ASSESSMENT OF THE PDO Objective/Outcome 1: Use quality learning standards to support evidence-based teaching and learning at the primary level 1\. Percentage of primary teachers using formative assessment based Outcome Indicators on learning standards 1\. IRI 1: Learner-centered assessment framework and guidelines for Intermediate Results Indicators using learning standards approved 1\. Set of core learning standards for primary grades (aligned with curricula of four Project countries) Key Outputs by Component 2\. Guidelines for use of learning assessment framework (linked to the achievement of the Objective/Outcome 1) 3\. Teachers trained to integrate learning standards and assessment in daily teaching Objective/Outcome 2: Improve teacher practices at the primary level 1\. PDO Indicator 2: Percentage of teachers trained and certified (in Outcome Indicators professional development activities) Intermediate Results Indicators 1\. IRI 2: teacher professional development course developed 1\. Framework for teacher professional development training 2\. Professional development framework reference guide Key Outputs by Component 3\. National Development Plans for four Project countries (linked to the achievement of the Objective/Outcome 2) 4\. Teachers participated in professional development training activities Objective/Outcome 3: Strengthen primary school leadership and accountability 1\. PDO Indicator 3: Percentage of school leaders reporting on progress Outcome Indicators of teachers' practices and students' learning to oversight bodies Page 28 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) 1\. IRI 3: Number of primary schools with a School Improvement Plan focused on learning outcomes 2\. IRI 4: Handbook for school leaders developed and printed Intermediate Results Indicators 3\. IRI 5: School leadership training program developed 4\. IRI 6: Number of school leaders certified in competence-based standards 1\. Training program for school leaders Key Outputs by Component 2\. School Leadership Handbook (linked to the achievement of the Objective/Outcome 3) 3\. School leaders trained and certified 4\. Job description and appraisal instrument for school leaders Objective/Outcome 4: Initiate the strengthening of sector M&E capacity in support of evidence-based strategic management and decision making 1\. PDO Indicator 4: Production of an annual report on (Project) plan Outcome Indicators implementation and performance indicators at the country level 1\. IRI 7: Number of teachers monitored with a standardized classroom observation tool Intermediate Results Indicators 2\. IRI 8: M&E Manual developed 3\. IRI 9: Stakeholder feedback surveys taken 1\. Training for national M&E teams Key Outputs by Component 2\. M&E Manual (linked to the achievement of the Objective/Outcome 4) 3\. Documented methodologies and processes for systematic education sector M&E Page 29 of 40  The World Bank Support to Implementation of the Regional Education Strategy (P158836) \. ANNEX 2\. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Component 1: Curriculum $396,500\.00 $292,868\.12 74% and Assessment Component 2: Teacher $1,115,000\.00 $976,693\.98 88% professional development Component 3: Improve school leadership and $209,000\.00 $240,655\.18 115% accountability Component 4: Project implementation, monitoring, $279,500\.00 $265,321\.92 95% and evaluation Total $2,000,000\.00 $1775,539\.2124 24 The discrepancy between the total cost by component and total amount disbursed in the data sheet is due to an unutilized balance of US$20 not refunded by the project and waived on an exceptional basis by the Bank\. Page 30 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Borrower’s Completion Report for the OECS Education Support Project This summary report on the implementation of the OECS Education Support Project (OESP) was prepared by Targeted Development Consulting Inc\. for the Education Development Management Unit (EDMU) at the OECS Commission, in accordance with the World Bank guidelines for Borrower Completion Reports\. Context and Background The OECS developed and launched a Regional Education Strategy (OESS) with the vision that, ‘Every Learner Succeeds’, to address the common challenge of low learning achievement across Member States\. The strategy was endorsed by the OECS Council of Ministers of Education at their annual meeting of May 2012, for implementation across the states\. The higher-level objective of the OESS is to improve learning outcomes at the basic education level\. In 2016, the OESP was approved by the Global Partnership for Education (GPE) and the World Bank (WB) was assigned as the grant agent to support the implementation of the OESS in Dominica, St Vincent and the Grenadines, St\. Lucia and Grenada\. Four priority areas of focus were included in the design of the OESP, namely: Curriculum and Assessment, Teacher Professional Development, Leadership and Accountability and Monitoring and Evaluation\. Context of Project Objectives According to the appraisal report for the OECS Education Support Project (OESP), the OESP's focus on improving the quality of basic education is aligned with the Education Global Practice goals of "access for all and learning for all"\. In addition, it is aligned with two goals under the Global Partnership for Education: Goal 2 of improved and more equitable student learning outcomes through quality teaching and learning, and Goal 3 of efficient and effective education systems\. Quite importantly, the OESP emerged from the OESS (2012) and as such, was designed to be responsive to the needs and priorities of Member States as captured in the strategy document\. The Member States were therefore expected to pursue national actions based on a regional agenda\. Thus, the need for the OESP component areas was compelling and already validated by regional stakeholders\. The OECS Economic Union requires that the experience of children in one Member State should be consistent with that in another\. The OESP, therefore, provided a platform for the harmonisation of standards and processes in the education systems of four OECS Member States, particularly related to three of the seven OESS strategic imperatives: School Leadership and Accountability, Teacher Professional Development and Curriculum and Assessment\. Page 31 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Achievement of Outcomes (Based on Evidence) Professional Development The focus of this component was to improve Teacher Training Programmes and strengthen Teaching Practice by developing a professional development programme for primary teachers that is responsive to teaching needs within the four Member States of the OECS\. Summary Achievements ï?¶ 2278 teachers participated in competency-based professional development activities\. ï?¶ 2182 teachers have been certified by the Ministries of Education across the four Member States\. ï?¶ 673 teachers across the Member States were monitored using the CLASS observation tool Member State *Total number of Teachers Trained and Percentage teachers certified Dominica 560 209 37 Grenada 690 498 74 St\. Lucia 1044 630 60 St\. Vincent and the 970 845 87 Grenadines Total 3264 2182 67% *Based on 2017 statistics of teachers from OECS Regional Statistical Digest Curriculum and Assessment This component was designed to improve the academic performance of pupils at the primary level across member territories through the implementation and eventual adoption of a common core of quality learning standards in four specific subject areas: Language Arts, Mathematics, Science and Social Studies as well as a formative assessment framework that is designed to improve and develop a system of continuous learning assessment\. Page 32 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Summary Achievements ï?¶ 835 education officials across the four Member States were trained to implement the revised standards and assessment framework\. ï?¶ All four (4) of the Member States reported primary school teachers using formative assessment based on learning standards though in varying degrees as follows: Dominica 100% Grenada 11% St\. Lucia 10% St\. Vincent and the Grenadines 4% ï?¶ Three of the four (4) Member States provided percentages of Educations Officers trained in the new learning standards as follows: Grenada 55% St\. Lucia 63% St\. Vincent and the Grenadines 92% Dominica Indicated that “Officers were not trained in the new learning standards, however, they were all sensitized about themâ€?\. Dominica explained that they already had curriculum developed for the four core subject areas\. Further, Dominica’s curricular were used by the consultants in the development of the learning standards\. Dominica’s task after the development of the Standards and Assessment framework was to identify the gaps and integrate into the existing curriculum\. Notwithstanding, the curricular (which included the learning standards) were already being implemented by all teachers (100%)\. Further, it was noted that their EMIS system records results of some formative assessments including class assignment/ homework/projects (Individual and group) and quizzes\. Leadership and Accountability This component focused on strengthening primary school leadership and accountability in the Member States building on previous work by the OECS in the development of leadership standards\. There were three broad goals that guided this component: 1\. Strengthen school leadership capacity to support teachers in improving instructional practices 2\. Design, develop and deliver an improved program for training leaders in school management 3\. Increase school planning activities that are focused on learning outcomes Page 33 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Summary Achievements ï?¶ 110 school leaders from the four Member States were certified in competency-based standards while 125 participated in competency-based training provided by the University of the West Indies, Mona\. Member State Number of School Leaders Certified Dominica 28 Grenada 27 St\. Lucia 28 St\. Vincent and the Grenadines 27 Total 110 ï?¶ All four Member States reported on the number of primary schools with School Improvement Plans focused on learning outcomes as detailed below: Member State Number of primary schools with School improvement plans focused on learning outcomes Dominica 58 Grenada 17 St\. Lucia 59 St\. Vincent and the Grenadines 61 Total 195 ï?¶ In terms of reporting on the progress of teachers' practices and student learning to oversight bodies the following was reported: Member State Number of School Number of School Percentage Leaders leaders reporting Dominica 58 58 100 Grenada 57 33 58 St\. Lucia 79 68 86 St\. Vincent and the 72 72 100 Grenadines Total 266 231 87 Page 34 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Key Factors that Affected Implementation and Outcomes Borrower Performance Consistent with the OECS mandate under the Treaty of Basseterre, the EDMU served as a facilitator for the implementation of the OESP\. This role also extended to being an enabler, catalyst and oftentimes a mediator\. The critical role played by the EDMU in bringing the four Member States together and providing the necessary support and hand-holding should not be understated\. While it is difficult to speculate what implementation would have been with a different execution arrangement, it is clear that the EDMU’s role was pivotal in “making things happenâ€?\. Further, the message from the EDMU to the Member States was that they are operating in one economic space and as such, the benefits should allow for the same education experiences to be shared across the economic union\. Factors positively Influencing Borrower’s performance: ï‚ They had strong relationships with the Member States and was able to provide the necessary guidance and direction as required ï‚ They were willing to try new ways of doing things and focused on innovative solutions Factors negatively influencing Borrower’s performance: ï‚ Receiving responses from the Member States was slow in some instances, which delayed decision making\. Further, reports were sometimes not adequately prepared which caused further delays\. ï‚ The slow uptake of the national ownership of the OESP\. There was often the sense that what Member States were doing, they were doing it for EDMU and not themselves\. ï‚ There was no dedicated project management team in the EDMU and consequently, the Head of the EDMU, Education Specialist and Administrative Assistant were expected to manage and coordinate the implementation of the OESP along with other projects and initiatives led by the unit\. There was also a change in the leadership of the Head of EDMU early in the OESP lifecycle\. ï‚ There were significant delays in the procurement process which pushed back the start of activities under a number of the component areas, in particular, consultancies\. ï‚ OECS’s accounting systems were cumbersome and many vendors were inconvenienced with the payment of invoices\. Furthermore, wire transfers came at a cost to some vendors\. ï‚ Took for granted that information would filter down through the Ministries of Education (MOEs) and this did not happen\. Teachers and principals, in particular, were left out of the communication loop\. ï‚ OECS Commission staff had to fill major gaps concerning procurement and accounting\. Given their other priorities, this made both these areas challenging to manage\. BANK PERFORMANCE The World Bank effectively performed its role as the Grant Agent for the Global Partnership for Education funding to the OECS Commission\. Page 35 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Factors positively influencing the Bank’s performance: ï‚ The WB team conducted regular supervision missions during which regional project updates were presented by the Member States as well as Consultants\. ï‚ The WB team was often receptive to the needs of the Member States and worked with EDMU to find solutions to bottlenecks and challenges faced at both the regional and national levels\. ï‚ Strong guidance was provided on procurement and other technical areas\. Factors negatively Influencing the Bank’s performance: ï‚ Three WB Task Team Leaders were assigned to OESP over the lifecycle of the OESP which caused some loss in momentum and delays with decision making\. ï‚ Significant delays with baseline CLASS analysis as the Bank engaged their consultant to undertake this\. EDMU then requested the OESP M&E consultants to undertake the analysis given the delays experienced with the WB-engaged consultant\. ï‚ Significant delays in providing the necessary approvals/no objections for the Leadership and Accountability consultancy\. ï‚ Technical and management support was often lacking particularly due to delays in decision making which in turn affected implementation\. EXTERNAL F ACTORS Natural disasters\. Hurricane Maria devastated Dominica in September 2017 and consequently brought all implementation activities to an abrupt halt\. While the Chief Education Officer (CEO) reiterated the Government's commitment to the OESP implementation, this desire was trumped by the urgent need of getting children back in school, as many of the schools were severely damaged or destroyed\. Government's priorities were therefore around providing the necessary psycho-social support to children and their families and reconstruction\. The impact meant that all MOE officials were focused on recovery and many of the planned activities could not be undertaken as and when scheduled\. In the meantime, the Member States like St\. Lucia tried to assist by accommodating displaced students from Dominica\. Changes in leadership\. In Grenada, there were many changes in leadership as well as focal points for the component areas\. The leadership changes included a change in Minister (following the general elections), two changes in permanent secretary and three changes in the Chief Education Officer\. The movement of key personnel resulted in a loss in momentum and uncertainty about the next steps\. The focal points for Curriculum and Assessment, Professional Development and Monitoring and Evaluation were also changed\. These personnel changes were further compounded by industrial strike action which resulted in schools closing and Ministry of Education officials focused on getting schools reopened\. In both SVG and SLU there were also changes with the Chief Education Officers\. In fact, in all Member States, many persons in key leadership roles are "acting" in the position and this oftentimes slowed decision making\. A summary of all the changes made in the leadership of the four Education Ministries (at the level of Permanent Secretary and Chief Education Officer) is detailed: Page 36 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Dominica 2 Permanent Secretaries Grenada 3 Permanent Secretaries and 3 CEOs St\. Lucia 2 Permanent Secretaries and 2 CEOs (with one still pending) St\. Vincent and the Grenadines 2 Permanent Secretaries and 3 CEOs Of note, all current CEOs are acting in their position and therefore are not in their substantive position\. Sustainability of Outcomes The EDMU has developed a draft sustainability plan for the region which is 80% complete\. This will serve as a broader framework for countries to adapt accordingly\. However, it should be pointed out that many key elements are already in place that could contribute to varying levels of sustainability being realized at the Member State level\. In particular, a significant amount of technical capacity has been developed at the national level and structures have been put in place that can be built on, such as those described below: ï‚ Several trained training cadres have been established that can continue and scale up PD activities nationally\. ï‚ PD teams have been established who will be responsible for coordinating national PD activities and updating national PD plans\. ï‚ Assets maps have been developed which identify key resources in the MOE that can be used to support teachers in the classroom and or support PD activities\. ï‚ Grenada and St\. Lucia started conducting webinars on their own and have set up the relevant structures to mainstream these\. OESP contributed to several changes being realised and these can be sustained through required and focused actions at the national level: ï‚ Increasing monitoring and supervision as well as the provision of technical support to principals and teachers\. Given that not all teachers participated in the training on the standards, they will need to be trained as well as be provided with hand-holding/coaching to ensure they can adapt accordingly\. ï‚ Undertaking ongoing and systematic monitoring by various stakeholders (principals, education officers, curriculum officers) of the skills and knowledge acquired during the Summer Institute to ensure implementation objectives are tracked and adjustments made to improve the effectiveness\. ï‚ Ensuring support is provided to schools that need it and that hard copies of the learning standards are produced so that teachers can use as a resource\. ï‚ Strategically deploying persons who have been trained under the OESP so they can be used across the education system\. ï‚ Making participation in Teacher Professional Development compulsory so that it is a requirement for the job as a teacher and a requirement for promotion or increments\. ï‚ Putting action plans and strategies in place to institutionalize initiatives\. ï‚ Monitoring, recognizing successes, addressing challenges promptly and holding educators accountable for the implementation of the initiatives\. Page 37 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) ï‚ Making some of the activities into policy and then ongoing monitoring and periodic evaluation of these activities\. ï‚ Ongoing promotion of the PLCs with teachers and school leaders to enable and shape the continuous learning culture at the school level\. ï‚ Continuing virtual as well as face to face coaching to ensure that the model becomes part of mainstream support for teachers in the classroom\. Lessons and Recommendations Several lessons were learnt by the EDMU as follows: ï‚ The implementation of a project of this nature required additional human resources particularly in the area of procurement and finance to enhance efficiency\. ï‚ Broad-based stakeholder sensitisation is key to gaining stakeholder buy-in and receptivity to the project\. Sensitisation only took place at mid-term and this should have happened from the outset\. ï‚ Further to the above, it was assumed that the Member States would have undertaken their sensitisation; however, this did not happen as anticipated\. Provision should, therefore, have been made to coordinate this rather than leave to the MOEs\. ï‚ Given the significant amount of procurement that needed to happen, there should have been a pre-implementation phase which would have given the EDMU time and space to treat with administrative matters before the start of implementation\. ï‚ Annual reporting at meetings of CEOs was not considered to be adequate\. However, due to GPE funding regulations, it was not possible to include the non-benefitting Member States in the regional discourse\. ï‚ The visibility of the project was lacking and needed to package key messages for dissemination\. ï‚ The submission of work plans by each Member State was critically important to planning and budgeting for implementation and the submission of these plans should have been a requirement before commencing implementation\. ï‚ Given the experiences in 2017 with hurricanes Maria and Irma, it is important to plan for risks and how best to manage if a Member State is affected by a natural hazard\. ï‚ A meeting of consultants emerged organically and was not part of the original project plan\. However, given the enormous value such a forum provided, this meeting should have been built into the project implementation plan\. ï‚ There is a need for careful consideration in the appointment of focal points\. TORs should have been developed to present a profile of who can serve in this position and serve well\. ï‚ St\. Lucia developed a team-based approach model to each of the components which allowed for teams to work collectively rather than one person having to carrying the component on their own\. This model could have been used from the outset given the efficiencies realised from this approach\. At the national level, Member States shared that they learnt the following: ï‚ There is enormous value in working in teams rather than as individuals\. Teamwork leads to greater effectiveness and efficiency\. Page 38 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) ï‚ Communication is critical and should not be taken for granted\. While it is often assumed that information is known or already shared, it is important to ensure that stakeholders are engaged, and information is shared continuously\. ï‚ A phased approach to implementation is important to work out any early kinks and correct any errors made\. This saves on the use of critical time and resources\. ï‚ It is important to delegate responsibilities to competent team members rather than micro- managing\. This approach leads to improved results being realized\. ï‚ Teachers embrace opportunities for further growth even when it is outside of their comfort zone\. ï‚ Stakeholder buy-in is necessary for effective implementation and sustainability of projects\. ï‚ High levels of sensitization and participatory consultation are needed to obtain stakeholder buy- in to the process and activities being undertaken\. ï‚ The effective implementation of any new initiative is heavily dependent on the quality and quantity of support and guidance provided to the implementers\. ï‚ Continuous professional development is also important for school leaders rather than only teachers\. ï‚ There is a dire need for additional monitoring and evaluation capacity in the Ministries of Education\. Recommendations ï‚ A number of the issues with sustainability will rely heavily on the support of MOE leadership at the highest level to sustain results\. Thus, MOE leaders need to ensure a coherent and coordinated approach is taken as this can’t be left to committees to make these connections\. If top-level MOE leadership does not step in to ensure there are regular meetings of key stakeholders and demonstrate how it connects to their sector plan, it will be difficult to keep the change momentum going\. ï‚ There is a need to encourage more teacher involvement in school development planning, implementation of standards and assessment framework and professional development\. Such activities are still regarded as led by MOE leadership and in many respects top-down rather than bottom-up\. Teachers need to understand each component, how they fit together in terms of an education ecosystem and how they all benefit them as teachers and, more importantly, the students\. This means having them actively participating in discussions and activities\. ï‚ There is a need for greater stakeholder engagement around the BIG PICTURE -- EVERY LEARNER SUCCEEDS and more particularly in the continued implementation of the changes\. It is important in any change process, that stakeholders understand how what they do will impact other parts of the system\. Knowing that they are contributing to something meaningful and something beyond their space can inspire greater buy-in\. ï‚ A change management team, led by “education change champions", should be established to agree to any changes related to the project and to ensure that a change management lens is used in determining the best course of action\. This would include EDMU and World Bank as well as other partners\. ï‚ There is a need for a fully dedicated project team at the EDMU that would include a Team Leader, Education Officer, Administrative Officer, Procurement Officer and Finance Officer\. ï‚ There is a need for dedicated and targeted focus at the national (micro) level, given to date, most of the focus has been on building regional structures\. This means placing a microscope on each Page 39 of 40 The World Bank Support to Implementation of the Regional Education Strategy (P158836) Member State to identify the main bottlenecks and barriers and how these can be untied or resolved\. ï‚ To date, EDMU has played many critical roles including coordinating, managing, brokering and driving the processes at both national and regional levels\. However, going forward, EDMU should be more of a facilitator with the Member States being the ones leading and driving the process\. ï‚ Regular dialogue should continue but the format for review meetings needs to be examined so the ownership is turned over to the Member States\. They should lead to determine if they need a meeting and then set the agenda\. Page 40 of 40

REVIEW

P163559

Document of The World Bank FOR OFFICIAL USE ONLY Report No: IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A PROPOSED GRANT IN THE AMOUNT OF SDR36\.9 MILLION (US$50 MILLION EQUIVALENT) FROM CRISIS RESPONSE WINDOW RESOURCES TO THE REPUBLIC OF SOUTH SUDAN FOR THE South Sudan Emergency Food and Nutrition Security Project June 22, 2020 Agriculture Global Practice Africa Region Official Use  CURRENCY EQUIVALENTS (Exchange Rate Effective May 14, 2020) South Sudanese Currency Unit = Pounds (SSP) SSP 130\.26 = US$1 US$ 1\.36 = SDR 1 FISCAL YEAR: July 1 - June 30 Regional Vice President: Hafez M\. H\. Ghanem Country Director: Carolyn Turk Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager: Holger Kray Task Team Leader(s): Melissa Williams, Mohammad Imtiaz Akhtar Alvi ICR Main Contributor: Abhinav Kumar Gupta Official Use  ABBREVIATIONS AND ACRONYMS APFS Agro-Pastoral Field School BSF Blanket Supplementary Feeding CBAHWs Community-Based Animal Health Workers CEN Country Engagement Note CMU Country Management Unit CRW Crisis Response Window CTSP Contracted Technical Service Providers EFNSP Emergency Food and Nutrition Security Project ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plans FAO Food and Agriculture Organization FAW Fall Armyworm FCV Fragility, Conflict, and Violence GBV Gender-Based Violence GDP Gross Domestic Product GFD General Food Distribution GRM Grievance Redressal Mechanism ICR Implementation Completion Report ICT Information Communication Technology IDA International Development Association IDP Internally Displaced Persons IPC Integrated Food Security Phase Classification IPMP Integrated Pest Management Plan IRRM Integrated Rapid Response Missions ISM Implementation Support Missions M&E Monitoring and Evaluation MAFS Ministry of Agriculture and Food Security MTR Mid-term Review NGOs Non-Governmental Organizations OTP Outpatient Therapeutic Programme PDO Project Development Objective PIU Project Implementation Unit PLW Pregnant and Lactating Women PMC Project Management Committee RUSF Ready-to-Use Supplementary Food SDG Sustainable Development Goal SMoAF State Ministry of Agriculture and Forestry SSDP South Sudan Development Plan SSP South Sudan Pound TSF Targeted Supplementary Feeding TTL Task Team Leaders UNICEF United Nations International Children's Emergency Fund WASH Water Sanitation and Hygiene WFP World Food Program WHO World Health Organization Official Use  TABLE OF CONTENTS DATA SHEET \. ERROR! BOOKMARK NOT DEFINED\. I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 5 A\. CONTEXT AT APPRAISAL \.5 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \.8 II\. OUTCOME \. 8 A\. RELEVANCE OF PDOs \.8 B\. ACHIEVEMENT OF PDOs (EFFICACY) \.9 C\. EFFICIENCY \. 12 D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 14 E\. OTHER OUTCOMES AND IMPACTS \. 14 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 15 A\. KEY FACTORS DURING PREPARATION \. 15 B\. KEY FACTORS DURING IMPLEMENTATION \. 16 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 17 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 17 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 18 C\. BANK PERFORMANCE \. 19 D\. RISK TO DEVELOPMENT OUTCOME \. 20 V\. LESSONS AND RECOMMENDATIONS \. 20 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 22 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 32 ANNEX 3\. PROJECT COST BY COMPONENT \. 34 ANNEX 4\. EFFICIENCY ANALYSIS \. 35 ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 41 ANNEX 6\. SUPPORTING DOCUMENTS \. 42 ANNEX 7\. COMPONENT 2 IMPLEMENTATION COUNTIES/PAYAMS BY IMPLEMENTING PARTNER 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name South Sudan Emergency Food and Nutrition Security P163559 Project Country Financing Instrument South Sudan Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Organizations Borrower Implementing Agency Ministry of Finance and Planning Ministry of Agriculture and Food Security Project Development Objective (PDO) Original PDO The project objectives are: (a) to provide food and nutrition support for the protection of lives and human capital of eligible beneficiaries; and (b) to help farmers re-engage in agricultural production in selected drought affected areas in South Sudan\. Page 1 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 50,000,000 50,000,000 50,243,624 IDA-D1860 Total 50,000,000 50,000,000 50,243,624 Non-World Bank Financing 0 0 0 Total 0 0 0 Total Project Cost 50,000,000 50,000,000 50,243,624 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 04-May-2017 06-Jun-2017 31-Jul-2019 31-Jul-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Modest RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 08-Sep-2017 Satisfactory Satisfactory 33\.23 02 20-Apr-2018 Satisfactory Satisfactory 45\.46 03 22-Nov-2018 Satisfactory Moderately Satisfactory 49\.79 04 03-Jun-2019 Satisfactory Moderately Satisfactory 50\.13 Page 2 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 58 Crops 10 Public Administration - Agriculture, Fishing & Forestry 1 Livestock 5 Other Agriculture, Fishing and Forestry 42 Social Protection 42 Social Protection 42 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Social Development and Protection 41 Social Protection 41 Social Safety Nets 41 Human Development and Gender 100 Gender 100 Nutrition and Food Security 100 Nutrition 100 Food Security 100 Urban and Rural Development 16 Rural Development 16 Rural Markets 16 Disaster Risk Management 16 Flood and Drought Risk Management 16 Page 3 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ADM STAFF Role At Approval At ICR Regional Vice President: Makhtar Diop Hafez M\. H\. Ghanem Country Director: Carolyn Turk Carolyn Turk Director: Juergen Voegele Ede Jorge Ijjasz-Vasquez Practice Manager: Mark E\. Cackler Holger A\. Kray Abel Lufafa, Elliot Wamboka Melissa Williams, Mohammad Task Team Leader(s): Mghenyi Imtiaz Akhtar Alvi ICR Contributing Author: Abhinav Kumar Gupta Page 4 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. In July 2011, South Sudan gained its independence from Sudan after over 50 years of on-and- off civil war\. The prolonged conflict coupled with a legacy of underinvestment in the Southern Sudan region and its people meant that South Sudan started with severely underdeveloped economic and social infrastructure, low human capital, and a large displaced population\. As a result, the country joined the international community as one of the most fragile countries in the world\. Less than three years after it gained independence (December 2013), armed conflict erupted in South Sudan between government and opposition forces\. The violence displaced over one million people and doubled the number of severely food insecure people in less than one year\. The August 2015 Agreement on the Resolution of the Conflict in the Republic of South Sudan (ARCSS) lasted only 11 months before fighting erupted again in Juba in July 2016 and rapidly spread throughout the country\. 2\. Economic turbulence and the decline into a war economy steadily increased food insecurity\. South Sudan has always been overly dependent on crude oil exports, and consecutive shocks to oil production due to trade disputes and conflict severely constrained revenue, public sector investment, and food prices\. The country entered a period of economic collapse in December 2013 when the conflict shut down five oil fields, severely constraining government revenue\. Ultimately, GDP per capita dropped from $1,111 in 2014 to less than $200 in 2017\. Growing insecurity, low government revenues, and a move to monetize the debt led to extraordinarily high inflation\. According to the National Bureau for Statistics, the Consumer Price Index increased by 480 percent from February 2016 to February 2017 driven by high food prices\. On average, the prices of most food crops in major markets ranged from 345 percent to 1100 percent above their long-term average (2007-2015) price\. Such extreme increases in prices have had a serious adverse impact on the purchasing power and the food security of poor households, the majority of whom depend on the market for their food\. By 2016, 83 percent of the country’s population was living below the poverty line\. Sector Overview 3\. Against the backdrop of conflict and macroeconomic collapse, agriculture struggled to meet basic food needs\. Years of conflict and displacement destroyed productive capacity, markets, road infrastructure, and the social and economic institutions that supported agriculture\. South Sudan’s cereal production gap had ranged from a low of 219,000 metric tons in 2014 to 500,222 metric tons in 2016\. The country had never run a production surplus\. About 85 percent of South Sudanese relied on agriculture for their livelihood, but the sector was plagued by limited acreage, high production costs, low productivity, and a recurrent drought and flood cycle\. Most farmers produced less food than what they required for subsistence, and nearly 75 percent of all farming households experienced food shortages for at least three months a year\. Page 5 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) 4\. As the country was falling back into conflict in 2016, the rains failed, and drought set in\. Findings from an FAO/WFP Crop & Food Security Assessment Mission in late 2016 showed that food production for 2016 was about 10 percent below the already low long-term average\. The drought in South Sudan was concurrent with a drought in the Horn of Africa that reduced overall output in the primary exporters of Uganda and Sudan and limited the food imports that South Sudan could viably access\. In summary, South Sudan was unable to meet its basic cereal needs and was experiencing extremely high inflation, limited availability of food, disrupting farming and trade, driven by high food prices, an active civil war and drought in neighboring countries\. The final blow was the climate outlook for the March to May 2017 growing season that predicted continued below normal rainfall\. The Government of South Sudan (GOSS) formally declared famine in January 2017\. At that time, 70 percent of the population was under food security stress or worse, of which 46 percent was in a food security crisis or worse\. Rationale for World Bank Support 5\. An initially sluggish donor response led the GOSS to request the World Bank to respond to the famine declaration\. Competing demands for humanitarian aid slowed the donor response to the famine declaration, so the Bank stepped in to fill the funding gap through the IDA Crisis Response Window given the role of drought in the crisis\. The project design encompassed not only humanitarian support (component 1) but also support for more development-oriented activities in component 2\. The project’s mix of food aid and food production contributed to the attainment of Sustainable Development Goals (SDGs) on ending hunger i\.e\. achieving food security and improved nutrition (SDG2) and ending poverty in all its forms (SDG1)\. It also aligned with the Bank’s Strategic Goal of ending extreme poverty\. 6\. The project also aligned to the GOSS’ South Sudan Development Plan (SSDP), which prioritized food security and increased agricultural production under its Economic Development Pillar\. The Comprehensive Agriculture Management Plan similarly assigned top priority to food security in its strategy to develop the agriculture sector\. Theory of Change (Results Chain) 7\. EFNSP’s two components served different goals but fit together along a cont inuum\. An underlying assumption of the project was that the more households that slipped into IPC-3 or worse, the more difficult and costly recovery and development would be\. The humanitarian support of component 1 helped reduce the negative coping strategies—e\.g\., selling productive assets and incurring debt—of affected households\. Component 2 allowed for more rapid re-engagement in production and rebuilding of livelihoods when conditions were favorable which should help mitigate further contraction of the economy\. Given that EFNSP was implemented as an emergency project in a conflict setting, the ability to track and quantify the elements of the underlying theory of change was limited\. The project, therefore, focused on tracking the delivery of food, services, and productive assets to meet the challenges of extreme food insecurity, malnutrition (especially among pregnant and lactating women and infants), and low food production (table 1)\. Given that EFNSP was an emergency project, focused primarily on humanitarian support to affected populations, and only had a 2-year duration, so long-term outcomes and impact are not factored into the theory of change\. Page 6 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Table 1: EFNSP Theory of Change Issues Activities Outputs Assumed Outcomes Extreme food General Food Distribution Households meet food needs insecurity Blanket Supplementary Feeding to children Urgent nutritional Growing malnutrition, Food and nutrition support Targeted Supplementary Feeding requirements met especially among provided to eligible to PLWs vulnerable populations beneficiaries Clean water and sanitation (e\.g\., children, PLWs, WASH services to communities provided elderly) Common communicable General health and vaccination diseases prevented Households grow crops, rear Provide productive assets and livestock, and/or catch fish for training to communities food and income Insufficient food Increased access to productive Farmers helped to re- Input trade fairs production for inputs through local markets engage in agricultural consumption and Provide post-harvest processing Producers can add value to production (crops and income equipment their crops livestock) Provide vaccination and veterinary Herd immunity against services common diseases more likely Training of CAHWs Project Development Objectives (PDOs) 8\. The PDO was ‘(a) to provide food and nutrition support for the protection of lives and human capital of eligible beneficiaries; and (b) to help farmers re-engage in agricultural production in selected drought areas in South Sudan\.’ 9\. The primary beneficiaries were households experiencing critical food and nutrition insecurity as represented by the Integrated Food Security Phase Classification (IPC) reports\. The IPC report at the outset of the project indicated that people in five States (Northern Bahr El Ghazal, Unity, Upper Nile, Jonglei, and Eastern Equatoria) were amongst the worst affected\. Nevertheless, the project had the flexibility to (i) change target areas as per the emerging needs, and (ii) shift from geographical targeting to vulnerability- based targeting\. At completion, EFNSP contributed to humanitarian services in 46 counties in 8 states and reached 642,176 beneficiaries, thus exceeding the target of 580,000 project beneficiaries by 10\.7 percent\. Key Expected Outcomes and Outcome Indicators 10\. Given the emergency and largely humanitarian nature of EFNSP, the PDO indicators were defined at the output level: (i) number of individuals benefiting from direct food support indicating eating two or more meals per day, (ii) number of children consuming blended supplementary food in the intended quantities, (iii) number of pregnant and lactating women consuming blended supplementary food in the intended quantities, (iv) number of individuals provided with wash services, (v) number of households supported to resume crop and livestock production, (vi) number of project beneficiaries, percent of which are female Components 11\. EFNSP comprised three components: (i) Support to Human Capital and Livelihoods Protection, (ii) Page 7 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Support to Re-engagement in Crop and Livestock Production, and (iii) Support to Project Implementation Arrangements\. 12\. Component 1: Support to Human Capital and Livelihoods Protection (Appraisal: SDR31\.0/$42\.0 million; Project Close: SDR29\.75/$40\.98 million)\. The component sought to increase access to food for vulnerable households, protect mothers and children, and prevent negative coping strategies by poor households\. The subcomponents were: (a) Support to Unconditional Food Transfers to eligible beneficiaries to prevent hunger-related deaths and livelihood erosion; (b) Support to Integrated Management of Malnutrition to meet urgent nutritional requirements of children under the age of five, pregnant women and lactating mothers\. 13\. Component 2: Support to Re-engagement in Crop and Livestock Production (Appraisal: SDR5\.5 /$7\.5 million; Project Close: SDR5\.32/$7\.45 million)\. The component aimed to help farmers affected by drought to re-engage in crop and livestock production through two subcomponents: a) Support To Crop Production to help farming households with seeds, tools, and training to grow more food; and b) Support to Livestock Production to improve livestock health among pastoralist and agro-pastoralist communities\. 14\. Component 3: Support to Project Implementation Arrangements (Appraisal: SDR0\.4 million/ $0\.5 million equivalent; Project Close: $0\.81/SDR0\.58 million)\. This component financed the administrative costs of the project implementation unit (PIU)—e\.g\., financial management, procurement, environment and social safeguards management, monitoring, reporting and evaluation of activities under the project\. B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) 15\. There were no significant changes during implementation\. II\. Outcome A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 16\. EFNSP’s relevance is High\. EFNSP was created to respond to a famine declaration in a country with severe and protracted food production deficits\. The design featured a direct response to the immediate food and care needs of the affected population through Component 1 and the need to boost food production through Component 2\. Given the emergency nature of the project, EFNSP did not address longer-term structural issues such as policy, funding, and research capabilities; however, the activities in Component 2 served as a bridge from humanitarian support to recovery and resilience building\. The PDO remained highly relevant at the end of the project as the donor community coalesced around the Partnership for Recovery and Resilience—a collaboration to move from humanitarian to recovery operations\. 17\. EFNSP’s PDO was well aligned with the Bank’s Country Engagement Note (CEN)\. Component 1 contributed to the CEN by increasing access to food for the most vulnerable, protect children, and prevent Page 8 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) negative coping strategies by poor households\. Component 2 contributed by supporting crop and livestock production to improve food security, incomes, and nutrition for affected communities\. B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 18\. The project sought to increase access to food for households in IPC-3 and above and to help farmers affected by the drought to re-engage in crop and livestock production under suitable conditions\. The project was implemented over two years, with Component 1 being completed within one year of project effectiveness\. For about the first 14 months of implementation, South Sudan was in active conflict, and security remained challenging due to insecurity for the duration of the project\. Given the short duration and ground conditions, an impact evaluation was not feasible; however, the project benefited from the existing M&E capacity of the UN Agencies that were contracted to implement the project\. 19\. The achievement of PDO is measured based on the two development outcomes: i) providing food and nutrition support for the protection of lives and human capital of eligible beneficiaries, ii) to help farmers re-engage in agricultural production in selected drought areas in South Sudan\. Project Beneficiaries 20\. Planning for and counting the number of beneficiaries targeted and reached was complicated by the lack of accurate data and the difficulties of tracking individuals during an active conflict\. EFNSP reached a total of 642,176 beneficiaries at completion, of which 57\.8 percent (371,1890) were females (table 2)\. Component 1 targeted people/households adversely affected by the deteriorating food security situation based on the regular IPC assessments (about 3 times per year) that were carried out by FAO, WFP, GRSS, and other agencies\. Most beneficiaries were concentrated in five states—Northern Bahr El Ghazal, Unity, Upper Nile, Jonglei, and Eastern Equatoria\. WFP and UNICEF targeted households experiencing IPC phase 3 (food security crisis) or above, and they reached 610,406 beneficiaries\.1 The two agencies worked together through Integrated Rapid Response Missions (IRRMs), which presented a risk of double counting\. Given that risk, the team was conservative in its calculations—e\.g\. 610,406 includes the services provided by UNICEF, even though there is a good chance that non-GFD recipients benefitted from some of the services, particularly WASH and health\. The FAO interventions reached families who were still able to produce food with the proper support\. Against a target of 30,000 households, FAO reached 31,770, and several of these households were also supported to engage in fishing\. Table 2 EFNSP Beneficiaries reached Component Total number of beneficiaries Of which women 351,174/b Component 1 (WFP & UNICEF) 610,406/a (57\.5%) 1Component 1 was implemented by both WFP and UNICEF; therefore, a conservative figure of 610,406 beneficiaries is used to avoid any double counting\. Page 9 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Component Total number of beneficiaries Of which women 20,015 Component 2 (FAO) 31,770/c (62\.9%)/c 371,189 Total Project 642,176 (57\.8%) a\. WFP and UNICEF combined results framework\. b\. Clarification from Giulia Polidori, External Partnerships Officer at World Food Programme, South Sudan based on M&E reports\. c\. FAO\. OSRO SSD 710 SSD Annex 2 - Results Framework Outcome 1: To provide food and nutrition support for the protection of lives and human capital of eligible beneficiaries 21\. This outcome-focused largely on the humanitarian response, and the agencies worked through integrated rapid response mechanism (IRRM), to deliver services to communities\. IRRMs were multi- sectoral initiatives by WFP, UNICEF, and (sometimes) FAO to fill critical gaps in life-saving humanitarian assistance in situations where hungry people faced emergency threshold of food insecurity\. At the height of the crisis (2017-18), WFP was running an average of 29 IRRMs per month to deliver general food distribution (GFD) and to treat moderate acute malnutrition in pregnant and lactating women (PLWs) and children\. A total of 268,000 individuals benefitted from direct food support (eating two or more meals per day) at project completion, which drastically improved their food security\. Nutrition was provided through mixed commodities – cereals, pulses, vegetable oil, salt, and pulses to ensure that the individuals were provided 2,100 kcal per person\. 22\. In a standard IRRM mission, the integrated team usually flies to the target location and stays for about one week\. Based on household data collected during IPC exercises and confirmed with local authorities, WFP screens potential beneficiaries, including measuring the mid-upper arm circumference of women and children to identify people in need of nutrition support services from UNICEF\. GFD provided an entry point to the conflict-affected populations and conduct registrations, screen and treat moderate acute malnutrition (MAM)\. UNICEF treated severe acute malnutrition (SAM) through screening and treatment; establishing stabilization centres (SCs); re-opening outpatient therapeutic programmes (OTPs) – including activities related to water, sanitation, and hygiene (WASH); disease prevention and treatment; and, protection of vulnerable children and women\. 23\. The project treated SAM in 102,730 children and PLWs, provided WASH services to 169,929 people, and provided preventive and curative services to 213,146 PLWs and children\. Although not measured in the results framework the UNICEF activities also included protection services for 159,572 individuals (see below)\. Under component 2 (implemented by FAO) the project reached 31,770 beneficiaries through its recovery and resilience-building interventions\. 24\. A total of 106,919 children consumed blended supplementary food in the intended quantities at project completion, securing their nutritional requirements, and saving lives to a large extent\. The project ensured that (i) children under Targeted Supplementary Food Programme (TSFP) were provided RUSF for 90 days, (ii) children under Blanket Supplementary Food Programme (BSFP) were provided corn-soy Page 10 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) blend++ (CSB++) for three months, six months, or one year\.2 Additionally, caregivers were given training on infant and young child nutrition practices, so that they could efficiently perform their duties\. A total of 74,359 pregnant and lactating women (PLW) consumed blended supplementary food in the intended quantities\. This helped the women in meeting their nutritional requirements\. The project ensured that the PLWs were provided with supplementary food (CSB++)for up to 90 days\. Outcome 2: To help farmers re-engage in agricultural production in selected drought areas in South Sudan 25\. The project provided select households with adapted rapid response kits comprising quickly maturing seeds, agricultural hand tools, and fishing kits\. This allowed a significant number of households to produce food for themselves within 30 days, thus reducing the number of food deliveries needed to avert hunger and malnutrition\. FAO also provided small ruminants (goat, sheep) and backyard poultry to vulnerable households to restore animal production in affected communities\. 26\. At completion, EFNSP supported a total of 31,770 households to resume crop and livestock production\. It allowed the families to capitalize on the benefits of their surroundings and they rapidly started to produce food\. The project provided assorted quality seeds to 16,500 and 15,270 households, respectively, through direct seed distribution and input trade fairs\. Various beneficiaries participated in the input trade fairs (ITF) and livestock fairs\. Overall 15,270 beneficiaries received assorted crop seed, and 3,000 beneficiaries received livestock\. Additionally, the project supported fishing households to restore and increase their productivity\. Rating for Overall Efficacy 27\. The rating for overall efficacy is Substantial\. EFNSP was able to satisfactorily achieve both its outcomes (table 3)\. The first development outcome ‘To provide food and nutrition support for the protection of lives and human capital of eligible beneficiaries’, was well achieved\. The second development outcome: ‘To help farmers re-engage in agricultural production in selected drought areas in South Sudan’ was fully achieved\. Table 3 Achievement of Indicators Indicator Target Achieved Percent No\. of individuals benefiting from direct food support indicating eating two or 250,000 268,000 107\.2 more meals per day No\. of children consuming BSF in the intended quantities 120,000 106,919 89\.1 No\. of pregnant and lactating women consuming BSF in the intended 80,000 74,359 92\.95 quantities Number of individuals provided with WASH services 200,000 169,929 84\.97 Number of households supported to resume crop and livestock production 30,000 31,770 105\.9 Number of Project beneficiaries 580,000 642,176 110\.72 Percent of which are female 55 57\.8 102\.8 28\. 2 Corn-Soy Blend ++ is a mix of maize, soya, dried skim milk powder, sugar, vegetable oil, and a vitamin and mineral pre-mix\. Page 11 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) C\. EFFICIENCY Assessment of Efficiency and Rating 29\. At appraisal, the project team did a cost-benefit analysis for investments to restart crop and livestock production under Component 2 with a budget of $7\.5 million; however, a lack of data, accelerated preparation schedule, and difficulty in estimating medium and long-term benefits from an emergency response project made it impossible to conduct a full cost-benefit analysis or calculate the rate of return and net present value of the entire project investment\. This section reviews the efficiencies achieved in both components and then presents an economic and financial ex-post analysis based on grant-financed investments of Component 2\. Aspects of implementation that contributed to the efficiency of EFNSP 30\. Almost by definition, a humanitarian operation is one of the least economically efficient interventions that an organization can do\. These are carried out during disasters and/or conflict, with rapid response requirements that outweigh cost considerations\. South Sudan is a land-locked country the size of France with only two percent of roads paved, a 6-month rainy season, an active conflict throughout the country, and fully half the country in need of humanitarian assistance\. Economic efficiency would not be the defining factor of any operation\. Despite this, EFNSP was able to achieve some efficiencies due to streamlined procedures, some administrative standardization, and excellent planning on the part of the technical service providers\. 31\. Fiduciary management tools supported simplified contracting and rapid disbursement\. As an emergency project in a conflict-affected country, EFNSP implemented through three UN agencies, which were fully deployed throughout the country\. The project used direct contracting procedures, where the Ministry of Agriculture and Food Security (MAFS) negotiated the contract with each agency using standard framework agreements developed by the Bank\. After that, MAFS supervised and cleared all financial reports, but payments flowed directly from the World Bank to the designated account of each agency\. The use of retroactive financing meant that $14\.75 million could be spent by the agencies to procure and preposition supplies and start delivering services as quickly as possible\. These fiduciary tools meant that the project disbursed 89 percent of the grant amount in the first year\. 32\. WFP’s rehabilitation of logistic infrastructure enhanced EFNSP’s cost efficiency\. In South Sudan, transport logistics take up a large proportion of humanitarian assistance, especially when agencies must rely on air transport to move goods to hard-to-reach populations\. The country’s road network is mostly gravel and earth tracks that become impassable during the rainy season (April-September)\. All three UN agencies, in cooperation with the entire donor community, use strategies like prepositioning supplies and running joint integrated rapid response missions to achieve efficiencies\. For example, UNICEF’s dry season plan involved prepositioning supplies throughout the country by road before the rainy season set in\. During the EFNSP implementation period (2017-18), 98 percent of UNICEF’s provisions were moved by road to forward positions, saving a $12 million and reducing CO2 emissions by 350 tons\. 33\. WFP made good efforts to improve road and river corridors and remove illegal check posts with Page 12 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) the support of government authorities, and drastically reduced its reliance on air transport from 35 percent in 2017 to 7 percent in 2019\. Furthermore, WFP expanded it storage capacity by 27,000 mt and deployed 124 mobile storage units in hard-to-reach locations to preposition supplies ahead of the rainy season\. The following tables show that a cost saving of 85 percent was achieved by comparing the cost incurred in transporting food commodities (through roads and river corridors) with the cost of transportation of the same commodities should they were transported by air\. Table 4 WFP Cost savings from reducing air transportation of food Cost Comparative Tonnage incurred Cost by air Rapid response mechanisms (RRM) location served by RIVER and dispatches 9572 3,771,368 18,196,372 ex-Malakal/Boar to RRM locations RRM locations served by ROAD and dispatches ex-Bentiu/Bor/Malakal to RRM 34,000 8,956,280 64,634,000 locations Cargo transported inland/overland on the Western corridor from June to 5687 1,498,070 10,810,987 September Total 49,259 12,225,718 93,641,359 Source: WFP 2019 assessment\. 34\. The targeted outreach for Component 2, at appraisal, was 30,000 households to resume agricultural production (75 percent for crop production and 25 percent for livestock production)\. The actual outreach at closing was 32,000 farming households, and 22,000 livestock keepers\. The project prepared six illustrative models to demonstrate the financial viability of investments made for agricultural production improvement\. The NPVs for the analyzed farms ranged between $82 and $526, while IRRs ranged from 15\.97 percent to 28\.34 percent (Annex 4)\. The economic analysis used the illustrative models to calculate the overall benefit stream by aggregating them based on economic prices and resulted in an ERR of 21\.7 percent and ENPV of $22\.8 million\. 35\. Sensitivity analysis\. Economic returns over the 15-years period were tested against changes in benefits and costs, disaster risks, and for various lags in the realization of benefits (Annex-4)\. In relative terms, ERR is equally sensitive to changes in costs and benefits\. In absolute terms, these changes do not have a significant impact on the ERR, and the economic viability is not threatened by both a 30 percent decline in benefits nor by a 20 percent increase in costs, since the ERR in both cases remains well above the discount rate, making the project results economically sustainable\. The details are provided in the table below\. 36\. Justification of Overall Efficiency Rating\. The overall project efficiency is rated Modest considering the ratings for economic efficiency and administrative efficiency\. Table 5 Sensitivity Analysis Sensitivity Analysis Base Cost Increase Increase of Benefits Decrease of Benefits Delay of Benefits (20-year period) Case +10% +20% +50% +10% +20% -10% -20% -30% 1 year 2 years ERR 21\.70% 20\.4 19\.3 16\.1 22\.9 23\.9 20\.3 18\.7 17\.7 19\.4 17\.3 ENPV (USD mln) 22\.80% 21\.4 20\.1 16\.2 26\.3 29\.9 19\.2 15\.6 12\.6 20\.7 18\.8 Page 13 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) D\. JUSTIFICATION OF OVERALL OUTCOME RATING 37\. The overall outcome rating has been rated Moderately Satisfactory\. The PDO was highly relevant and consistent with the Government’s SSDP and the World Bank’s CEN and remained so during implementation and after completion\. The project fully achieved its two outcomes and met or exceeded its targets for four PDO indicators and seven intermediate results indicators\. It also largely achieved the other three PDO and three intermediate indicators\. The Efficiency rating is rated Modest\. The project successfully supported life-saving humanitarian programs across the country when bilateral aid was overstretched and unable to respond\. The farming and livestock support services kept producer households active and contributed not only to producer food security but also led to some surplus being sold in local markets\. Moreover, the producer groups formed in reaching 46 counties in eight states, provided the much-needed food to save many lives and exceeded the project beneficiaries by 10\.72 percent\. E\. OTHER OUTCOMES AND IMPACTS Gender 38\. Increased women participation\. The project established project management committees (PMCs) in more than 20 locations for greater community-level engagement and coordination\. The PMCs composition consistently improved the gender parity by insisting that no less than 50 percent of all PMCs must have dual male and female representatives at all posts\. It strengthened women’s empowerment and facilitated women’s access to joint decision making at the household and community levels\. 39\. Gender-Based Violence (GBV)\. World Bank funding significantly contributed to GBV interventions including case management and psycho-social service; awareness-raising on GBV services; referrals for clinical management of rape; capacity building for service providers; and GBV risk mitigation across all sectors in, inter alia, Northern Greater Bahr-El Ghazal, Unity, Upper Nile, Jonglei, and Eastern Equatoria\. UNICEF-led GBV services benefited 42,307 individuals (20,233 women; 12,910 girls; 5,772 boys; 3,392 men)\. It included: (i) training 170 service providers (68 women) on GBV basics, risk mainstreaming, and CMR to prevent and respond to GBV issues; (ii) information sharing on available GBV services, individualized case management, psychosocial support (PSS), construction of six Women and Girl Friendly Spaces to socialize, seek safety & wellbeing care and learn skills for making healthy decisions\. WFP, in compliance with the Sphere Standards for Humanitarian Assistance, had a dedicated team for gender protection and ensured that the distance between the beneficiary and the collection point was manageable for the beneficiaries to reach, collect and return to their homes before dark the same day\. At the distribution sites, priority assistance was provided, and safe spaces were created for women and children to mitigate the GBV risks\. Institutional Strengthening 40\. The project strengthening various government bodies and non-governmental organizations (NGOs) including state ministries of agriculture, County Agriculture Department officials; 12 NGO staff; 268 Community Based Animal Health Workers (CBAHW); 190 Agro-Pastoral Field School facilitators; 305 Page 14 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) fisherfolk (of which 41 women); 100 livestock keepers and farmers including input trade fairs, seed, crop and vegetable production, nutrition; 102 (17 women) in fish handling and processing, and animal health and production\. Subsequently, 69 groups comprising 2,320 members (1,156 women) were trained\. A group of CBAHWs formed an NGO\. FAO later contracted it for livestock vaccinations\. WFP trained various organizations—i\.e\., government agencies, local NGOs, farmer co-operatives, traders’ union, and retailers on its policies, procurement, and invoicing\. Poverty Reduction and Shared Prosperity 41\. The project support prevented the beneficiaries from sliding further into poverty and improved livelihood opportunities\. The households in IPC 3 (crisis) or above were generally engaged in lifesaving coping strategies i\.e\. selling off their assets to meet their basic food needs\. EFNSP implemented GFD, mitigated the loss of assets and helped households to graduate out of extreme poverty\. It was evident as certain beneficiary farmers became financially capable and lent money to other farmers not supported EFNSP\. Furthermore, procuring and selling seeds locally by FAO resulted in improved livelihood opportunities and poverty reduction\. It resulted in money being plowed back into the local community\. The traders were able to reinvest the sales profits in their business\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 42\. EFNSP was designed rapidly in response to a famine declaration during a civil war\. The conflict in the country had intensified to the point that the World Bank office was evacuated to Nairobi from July 2016 to April 2017\. Thus, the project was designed remotely and in under four months\. The key design aspects were a humanitarian project, targeting of assistance using IPC, the modality of project implementation, the flexible approach in target areas selection, and incorporating GBV risks\. In response to the urgent humanitarian crises and famine, the Bank made an exception for this project\. 43\. World Bank's experience with emergency operations in South Sudan underscored the need for realism and simplicity and that it was essential to work with the organizations with a proven track record\. EFNSP considered the weak capacity of government and conferred key implementation functions to three UN agencies\. The Bank has overarching framework agreements with various humanitarian agencies\. There were standardized contracting practices followed by the Bank with WFP, UNICEF, and FAO\. 44\. The PDO was clear, appropriate, relevant, and consistent with the project activities\. The project adopted a pragmatic approach for the development of PDO indicators, baselines, and targets that were attainable, relevant, and timebound\. However, a more specific description of PDO indicators would have made the indicators clearly measurable\. 45\. Flexible approach in targeting of humanitarian assistance to the households experiencing IPC phase 3 (crises) or above\. The IPC classification has five phases from Phase 1 (minimal) where no Page 15 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) intervention is needed to Phase 5 (famine) where at least 20% of households face ‘extreme lack of food’, over 30% of children suffer from wasting, and there are at least two deaths for every 10,000 people daily\. The implementation agencies were given the flexibility to change geographical targeting to vulnerability- based targeting in response to the emerging food needs\. This flexibility helped them to reach out to most vulnerable groups in remote and isolated locations\. 46\. Incorporating GBV risks while designing interventions\. During project design, due consideration was given to the risks associated with GBV\. It was one of the actions being used as a weapon of war in some project areas\. The interventions were strategically designed to minimize the risks associated with GBV\. B\. KEY FACTORS DURING IMPLEMENTATION Factors subject to the control government and implementing entities 47\. Effective coordination and strong Figure 1: Project institutional arrangements implementation counterparts\. The Implementing MAFS implementation responsibility laid upon the Agency CTSPs (WFP, FAO, and UNICEF) and their Technical Service subcontracted third parties who had the Providers WFP UNICEF FAO experience, longstanding relationship, and trust with the local communities & Implementing 44 IPs 29 IPs 6 IPs Partners stakeholders in South Sudan\. The MAFS-PIU was responsible for overall performance monitoring and supervision\. The three implementation agencies coordinated efficiently and provided complementary services\. The planned activities were discussed & coordinated beforehand with the relevant authorities in all project areas\. 48\. Robust Procurement Mechanism supported by Effective Governance and Clear Accountability\. The CTSPs all have robust procurement systems with strong logistics and pre-positioning systems to ensure steady pipelines of humanitarian supplies\. WFP’s procurement system won a global award for efficiency in the procurement of commodities\. On receiving project funds, WFP immediately purchased the commodities from the facilities and transported it to the project locations\. Similarly, FAO followed an efficient procurement mechanism by procuring seeds locally and importing only non-available seeds\. A transparent, open, effective, and readily available grievance redressal mechanism (GRM) helped to resolve any arising conflicts\. 49\. Operational Interference\. Despite support and cooperation on the part of the government, to provide visas for staff, customs clearance for humanitarian goods, and cooperation in targeting and conflict resolution at the local level, interference did happen\. Project implementation faced interference due to conflict or political issues when trying to access some areas\. For instance, access to Kajo-Keji, which was controlled by the opposition groups, was quite problematic to those delivering humanitarian assistance to IDP camps\. At times, humanitarian supplies were prohibited from leaving Juba by Page 16 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) government authorities\. Similarly, several other parts of the country were inaccessible throughout the first half of 2018 due to the active conflict and access blockages by both the government and opposition groups\. 50\. Inadequate Infrastructure for Basic Logistics: Poor ICT infrastructure, broken roads, lacking transportation logistics, and multiple check posts controlled by warring factions was a major challenge in project implementation\. The phone and internet communication services were generally weak, and the CTSPs had to use wire or satellite phones and radios for communication purposes\. They had to invest heavily in reliable internet connectivity in their offices across South Sudan\. Factors outside the control of the government and/or implementing entities 51\. MACROECONOMIC ENVIRONMENT\. Macroeconomic collapse and inflation adversely affected the public institutions in South Sudan\. The civil servants were not paid for many months and, when paid, their salary was insufficient to sustain them beyond a few weeks\. This resulted in self-vested interest in some of the officials associated with the project which adversely affected the project implementation\. High inflation negatively affected the project\. While FAO performed contracting and procurements in US Dollar, its subcontracted third parties performed their transactions in South Sudan Pound (SSP) which was unstable, depreciated, and weakened\. The third parties had to pay more for the same commodities and services as compared to what they would have paid if they had performed their transactions using dollars\. 52\. CONFLICT AND INSTABILITY\. Protracted conflict posed a serious challenge to EFNSP implementation and restricted UNICEF’s work in several regions\. From January to March 2018, nine planned IRRMs were canceled due to insecurity in Jonglei\. Restricted access and insecurity including violent acts of killings, looting, harassment, threats, remained the biggest constraints to WFP operations\. The insecurity in Unity state deterred FAO from implementing crop and livestock interventions on several occasions\. 53\. NATURAL/ENVIRONMENTAL CHALLENGES\. Environmental factors i\.e\. harsh weather conditions, bad road conditions, and pest infestations hampered effective implementation\. Prolonged dry spells and seasonal floods adversely affected EFNSP implementation in several locations and resulted in the failure of some crops--i\.e\., maize in Panyikang\. Pest infestations, such as fall armyworm (FAW), aphids, and beetle attacks, hindered some farmers\. There were further cases of birds, rodents, and grasshoppers damaging crops\. In Bor South and Twic East, 80 percent of cereal crops, especially maize, were adversely affected by dry spells, and FAW\. The project, therefore, was unable to spend adequate time on community mobilization before carrying out its crop and livestock-related interventions\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design and Implementation 54\. The project established a functional M&E system\. WFP, FAO, and UNICEF all did internal monitoring and reporting to PIU\. The PIU in MAFS for overall oversight and quarterly progress reports, and the Bank for conducting implementation support missions\. Page 17 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) 55\. FAO, WFP, and UNICEF regularly tracked and reported on all project indicators and\. The PIU communicated proficiently with the CTSPs but had limited capacity to collect and analyze the project data\. WFP followed a Monitoring, Evaluation, Accountability, and Learning approach (MEAL) with the support of a 31-member team\. FAO M&E team focused on data quality assurance and conducted Post-Distribution Monitoring (PDM) with the beneficiary households\. UNICEF used an annual Integrated Monitoring, Research and Evaluation Plan (IMEP) and 13 field offices/technical teams conducted monthly M&E visits\. The Bank performed M&E by conducting Implementation Support Missions (ISM), follow up discussions, phone calls, and email exchanges\. Nevertheless, the Bank could not field a full mission due to the restriction of a maximum of three-member mission at a time\. 56\. The M&E information was used for decision making and to refine the project implementation strategy\. In certain cases, people who registered as beneficiaries at one location attempted to register as beneficiaries in another nearby location to gain undue benefits from the project\. The CTSPs quickly introduced a system of simultaneous registration of beneficiaries at all nearby locations, as well as biometric registration of beneficiaries to stop registering the same person multiple times\. Based on the M&E reports, of the six project sites, FAO dropped two and scaled up interventions on the remaining sites\. Furthermore, some project farmers suffered from crop failure due to waterlogging and FAO linked them to another project that was working on irrigation and drainage in that area\. 57\. While EFNSP M&E system was generally adequate, the overall rating is Modest\. There were several weaknesses in project design and implementation\. The weaknesses were mainly attributable to the FCV environment, low PIU capacity, and the short timeframe for project design and implementation\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental & Social Compliance 58\. The overall environmental and social safeguards compliance was adequate and is rated Moderately Satisfactory\. No outstanding environmental safeguards issues were reported\. The project was Environmental ‘Category B (Partial)’ with no significant irreversible environmental and social impacts from proposed project activities\. The small public works were carried out within the existing villages and were designed to be purely of a maintenance nature--e\.g\., minor repairs to roads, bridges, community granaries, water points\. The triggered environmental safeguard policies were: (i) Environmental Assessment (OP/BP 4\.01), (ii) Pest Management (OP/BP 4\.09), and (iii) Indigenous Peoples (OP/BP 4\.10)\. The Environmental and Social Management Framework (ESMF) and Integrated Pest Management Plan (IPMP) was prepared after effectiveness, as allowed for emergency projects, but there were delays in the final processing\. EFNSP ensured effective disposal of waste items to protect the environment across all project activities\. WASH activities improved solid waste collection and disposal\. The project promoted safety procedures for livestock campaigns including safe disposal of used containers, first aid kits, and protective gear\. 59\. EFNSP interventions enhanced social cohesion\. It complied with the OP4\.10 requirements by ensuring that the implementation arrangements were based on a free, prior, informed, and broad-based Page 18 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) community consultation\. The local knowledge and norms were harnessed by placing indigenous peoples at the forefront and they were selected as members of the project implementation committee and the input distribution committee\. The project’s “Do No Harm” approach strengthened capacities for peace and reduced the divisions and sources of tensions\. The trade fairs and community farm schools created a social bond that facilitated harmony and coexistence\. 60\. The following challenges and limitations were encountered by the project: The contract of the safeguard company, the PIU hired to manage the safeguard implementation was rectified twice due to the company’s poor management practices\. There were gaps observed in the proper safeguard documentation\. The supervision mission was unable to get all the necessary safeguards documents due to poor documentation practices or oversight\. Although GRM was effectively addressing the concerns and resolving issues among the beneficiaries, proper documentation was weak\. Financial Management 61\. Financial management performance is rated Moderately Satisfactory\. The project complied with the relevant financial covenants and ensured timely submission of interim financial reports and audit reports to the Bank\. The audit reports expressed an unqualified/clean opinion\. The advances of the UN agencies were finally settled within the extended project grace period of January 31, 2020\. However, FAO’s final certified financial report was submitted late\. Nevertheless, some FM weaknesses at the PIU remained unaddressed at project closure\. It included a failure to utilize the computerized accounting system, gaps in the FM manual, and weak internal audit oversight\. These risks were effectively mitigated by the robust FM system of WFP, UNICEF, and FAO who handled more than 90 percent of project funds\. Procurement Management 62\. Procurement performance is rated Satisfactory\. The project had mainly three major procurement activities i\.e\. contracting of UNICEF, FAO, and WFP, and the procurements were based on the Output Template provided by the OPCS\. All procurements were direct selection based on the emergency nature of the project\. All procurement activities were treated as prior reviewed under the enhanced fiduciary measure given the country context\. No procurement performance issue was noted\. C\. BANK PERFORMANCE Quality at Entry 63\. The Bank’s performance in the identification, preparation, and appraisal of the project was Satisfactory\. The Bank completed and approved the project design within four months\. All aspects related to financial management, procurement, and safeguards were adequately considered with the help of an adequate number of specialists and experts who ensured high quality of project preparation and appraisal\. The project design considered its complementarity with other relevant projects and incorporated the lessons learned from the Bank’s previous emergency operations in South Sudan including Emergency Food Crisis Response Project (EFCRP) and Support to Agriculture and Forestry Development Project (SAFDP)\. The Bank also had a good working relationship with the borrower and Page 19 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) consistently engaged with the borrower during project preparation and appraisal\. Quality of Supervision 64\. The Bank’s performance during project implementation was Moderately Satisfactory\. The Bank allocated adequate budget and staff resources for effective project implementation support\. Low turnover of TTLs – only two TTLS from start to end - assisted in smooth project implementation\. The task team carried out regular ISMs, consistently responded to project the needs, and arranged a workshop with the CTSPs implementing partners to identify the lessons learned from implementation\. However, security restrictions prevent thorough supervision, including the inability to field implementation support teams\. Justification of Overall Rating of Bank Performance 65\. The overall bank performance is rated Moderately Satisfactory considering (i) the short duration in which the project design was prepared and approved, (ii) restrictions on operational support, and (iii) insecurity that prohibited the task team from conducting field missions)\. D\. RISK TO DEVELOPMENT OUTCOME 66\. The risk to development outcome is rated High\. Continued inter-communal conflict and macroeconomic collapse in the country has resulted in one of the worst humanitarian crises in the world\. The scale of the conflict and economic collapse was beyond the ability of the project to overcome\. The following are the external factors, which pose risks to the development outcomes of the project\. 67\. Climate risk and pest infestations: The agriculture sector in South Sudan is highly vulnerable to weather variation, including increased intensity of rainfall in the drought-flood cycle, which worsened by the lack of basic support infrastructure\. Pest infestations, especially fall armyworm, present a considerable risk to the development outcome of the project\. 68\. Recurrent conflict-related to resources, ethnicity, historical enmity, vengeance, and Internally Displaced People (IDP)\. The weak writ of the government and politics at the subnational level lead to intercommunal conflicts that could cause internal displacement of people and pose a risk to the sustainability of project interventions\. V\. LESSONS AND RECOMMENDATIONS 69\. As the Bank increases its support to FCV countries, it will need to establish protocols for humanitarian emergency response projects\. Humanitarian operations are necessarily different from development projects, and as such, the priorities for reporting need to shift\. The standard questions of efficiency, long-term outcomes and impacts, and sustainability need to be reconsidered because they are not suited to the measurement an FCV operation\. 70\. FCV countries are usually not data-rich environments\. Baseline and impact data and other information about demographics and sector technical issues is either not available or not reliable\. This Page 20 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) can delay preparation, implementation, and closure processes or lead to an underestimation of the impact of a project\. In FCV countries, Bank teams should explain the difficulties of data access and the level of confidence in the data available\. Anecdotal information should be encouraged to back up a weak data story\. 71\. Flexibility in Project Design and Implementation\. Projects in FCV face fluid situations—in terms of natural disasters and conflict—requiring adaptive risk management at all levels—e\.g\., Bank team, CMU, and Senior Management\. Projects should be flexible enough to continue operating as circumstances on the ground change\. The implementing agencies appreciated that the Bank, unlike other donors, did not limit them to only certain geographical locations\. This allowed them to implement the program in areas based on the level of need, the security situation, and the relative position of other donor programs, which maximized the benefits of the operation\. 72\. Technical assistance vs\. capacity building\. There is a trade-off, particularly when working in FCV countries, between achieving project goals in a timely manner through technical assistance and building lasting skills on the ground through capacity building\. Any outside technical assistance should be balanced by a strong program of capacity building (technical and managerial) for the client\. Close supervision is also needed to more effectively track progress, communicate and establish teamwork among PIU and donors\. 73\. The results framework should be designed in accordance with the existing circumstances of the borrower nation\. Many EFNSP beneficiaries were IDPs trying to escape the civil war\. The outcome of project interventions serving vulnerable populations cannot be measured by the indicators like ‘beneficiary satisfaction with the program\.’ In addition, the Bank should design the results framework with the acceptance that overlapping of beneficiaries of certain project interventions will eventually occur in fragile, insecure, and conflict-prone regions\. 74\. Additional resources are required for supervision in FCV countries because of the lower capacity of clients— particularly in the areas of fiduciary, safeguards management, and monitoring and evaluation\. Projects in South Sudan, and other FCV countries, need additional resources (people and technology) for third party verification support during implementation, which will require additional supervision funds\. 75\. Humanitarian operations can lay the foundation for development\. While humanitarian operations should not try to do development given the fundamentally different operational goals and designs between the two\. Follow up interventions could be performed in successful project areas to reduce aid dependency\. 76\. Prepositioning of supplies related to health, nutrition, WASH, etc\. before the rainy season saves on logistics costs\. To minimize the logistics cost, it would be beneficial if the implementing agency could get funding before the start of rainy season to buy and preposition supplies in nearby project locations\. \. Page 21 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: Provide food and nutrition support for the protection of lives and human capital Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of Project Number 0\.00 580000\.00 642176\.00 beneficiaries 15-Mar-2017 15-Mar-2017 01-May-2019 Percent of which are female Number 0\.00 55\.00 57\.80 15-Mar-2017 15-Mar-2017 01-May-2019 Comments (achievements against targets): Overachieved\. This indicator included all persons who benefited from project interventions\. Cases where beneficiaries accessed more than one type of benefit (e\.g\. food support and WASH) care were taken out to avoid double counting\. For calculations, see Section B\. Achievement of PDO\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 22 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Number of individuals Number 0\.00 250000\.00 268000\.00 benefiting from direct food support indicating eating 2 or 15-Mar-2017 15-Mar-2017 01-May-2019 more meals per day Comments (achievements against targets): Overachieved\. This indicator included individuals (refugees, IDPs, residents) who received direct transfers from WFP or from a cooperating partner, to improve their food security and nutrition status\. Transfers included in-kind food, cash-based transfers and/or individual capacity strengthening\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of children Number 0\.00 120000\.00 106919\.00 consuming blended supplementary food in the 15-Mar-2017 15-Mar-2017 01-May-2019 intended quantities Comments (achievements against targets): Mostly achieved\. This indicator included: (i) children (under 5 years) who received supplementary food (CSB++ or RUSF) from WFP or a cooperating partner; (ii) children under targeted supplementary food program (TSFP) who received Ready-to-Use Supplementary Food (RUSF) for 90 days; and (iii) children under blanket supplementary food program (BSFP) who received CSB++ for a period of 3 months, 6 months or 1 year for Protection of Civilian sites)\. Package comprised of 200 grams/day/beneficiary\. Page 23 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of pregnant and Number 0\.00 80000\.00 74359\.00 lactating women consuming blended supplementary food 15-Mar-2017 15-Mar-2017 01-May-2019 in the intended quantities Comments (achievements against targets): Mostly achieved\. This indicator included pregnant and lactating women (PLW) who received supplementary food (CSB++) from WFP or a cooperating partner\. For acute malnourished PLW, duration of CSB++ treatment is 90 days but beneficiaries were discharged depending on the recovery status\. Blanket supplementary feeding program was for prevention of acute malnutrition, and the duration varied from area to area (3 months, 6 months or 1 year for Protection of Civilians sites)\. Package comprised of 200 grams/day/beneficiary\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of individuals Number 0\.00 200000\.00 169929\.00 provided with WASH services 15-Mar-2017 15-Mar-2017 01-May-2019 Comments (achievements against targets): Mostly achieved\. This indicator included individuals (refugees, residents, IDPs) who received UNICEF assistance but also received other complimentary programs/packages comprising of soap for handwashing, clean and safe drinking water, access to latrines, access to a healthy facility, access to health and nutrition education\. Page 24 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Objective/Outcome: Help farmers re-engage in agricultural production in selected drought affected areas Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of households Number 0\.00 30000\.00 31770\.00 supported to resume crop and livestock production 15-Mar-2017 15-Mar-2017 29-Mar-2019 Comments (achievements against targets): Overachieved\. This indicator included all individuals who benefited from project support related to crop and livestock production\. A\.2 Intermediate Results Indicators Component: Support to Human Capital and Livelihoods Protection Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Amount of general food Metric ton 0\.00 9172\.00 9381\.00 rations availed to beneficiaries 15-Mar-2017 15-Mar-2017 01-May-2019 Comments (achievements against targets): Page 25 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Mostly achieved\. This indicator refers to the quantity of in-kind food assistance provided to targeted beneficiaries on monthly basis\. General food rations were calculated based on grams/persons/day\. The food basket per beneficiary/day comprised of cereals (500 grams of maize, sorghum), 30 grams of vegetable oil, salt, pulses (50 grams of beans or lentils)\. Duration of feeding days varied depending on the type of beneficiary category and the feeding days\. For example, 21 days for refugees, 30 days for IDPs and 30 days for residents in Integrated Rapid Response Mechanism locations\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Amount of BSF availed to Metric ton 0\.00 1836\.00 1836\.00 beneficiaries 15-Mar-2017 15-Mar-2017 01-May-2019 Comments (achievements against targets): Achieved\. This indicator referred to the quantity of CSB++ (or RUSF) provided to people comprising of children under 5 years and PLW receiving WFP assistance under the Blanket Supplementary Feeding Program (BSFP)\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Amount of TSF availed to Metric ton 0\.00 180\.00 180\.00 beneficiaries 15-Mar-2017 15-Mar-2017 01-May-2019 Page 26 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Comments (achievements against targets): Achieved\. This indicator refers to the quantity of CSB++ (or RUSF) provided to people comprising of children under 5 years and PLW receiving WFP assistance under the Targeted Supplementary Feeding Program (BSFP)\. Component: Support to Re-engagement in Crop and Livestock Production Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Amount of seeds and Metric ton 0\.00 300\.00 452\.90 planting materials distributed to eligible 15-Mar-2017 15-Mar-2017 31-Dec-2018 beneficiaries Comments (achievements against targets): Overachieved\. The indicator has a self-explanatory definition\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of animals Number 0\.00 200000\.00 854764\.00 vaccinated against common diseases 15-Mar-2017 15-Mar-2017 29-Mar-2019 Page 27 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Comments (achievements against targets): Target surpassed\. The PAD and RF in the ISRs all reported 200,000 vaccinated animals as the target\. FAO had a tarted of 960,000, which appears to have come from their larger program goals\. Against the stated PAD target, this was surpassed\. Against the FAO target, it was largely achieved at 89%\. This indicator refers to vaccinations against common diseases including Contagious Bovine Pleuropneumonia (CBPP), Contagious Caprine Pleuropneumonia (CCPP) and East Coast Fever\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of households Number 0\.00 2000\.00 1778\.00 supported with postharvest handling assets 15-Mar-2017 15-Mar-2017 28-Sep-2018 Comments (achievements against targets): Mostly achieved\. This indicator has a self-explanatory definition\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Farmers reached with Number 0\.00 30000\.00 22432\.00 agricultural assets and services 15-Mar-2017 15-Mar-2017 29-Mar-2019 Page 28 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Comments (achievements against targets): Mostly achieved\. This indicator has a self-explanatory definition\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of farm tools Number 0\.00 10000\.00 60000\.00 distributed to eligible beneficiaries 15-Mar-2017 15-Mar-2017 29-Mar-2019 Comments (achievements against targets): Overachieved\. This indicator has a self-explanatory definition\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Citizens and/or communities Yes/No N N Y involved in making decisions on beneficiary selection 15-Mar-2017 15-Mar-2017 29-Mar-2019 Comments (achievements against targets): Page 29 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Achieved\. This indicator has a self-explanatory definition\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Beneficiary satisfaction with Percentage 0\.00 70\.00 81\.68 program 15-Mar-2017 15-Mar-2017 01-May-2019 Comments (achievements against targets): The indicator was partially achieved\. Official satisfaction surveys were not conducted during the project period\. Nevertheless, as part of FAO's standard monitoring regarding getting beneficiary feedback on its program (ELRP, ongoing), the last monitoring was conducted midway through the EFNSP project (2018) and it showed a Beneficiary satisfaction rate at 81\.68%\. Page 30 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) B\. KEY OUTPUTS BY COMPONENT Provide food and nutrition support for the protection of lives and human capital 1\. Number of Project beneficiaries: 642,176\.00; Of which are female: 57\.80% 2\. Number of individuals benefiting from direct food support indicating eating 2 or more meals per day: 268,000\.00 Outcome Indicators 3\. Number of children consuming blended supplementary food in the intended quantities: 106,919 4\. Number of pregnant and lactating women consuming blended supplementary food in the intended quantities: 74,359\.00 5\. Number of individuals provided with WASH services: 169,929 6\. Amount of general food rations availed to beneficiaries: 9381 Intermediate Results Indicators 7\. Amount of BSF availed to beneficiaries: 1836 8\. Amount of TSF availed to beneficiaries: 180 9\. Households with more stable food security Key Outputs by Component 10\. Pregnant and lactating women and children treated for malnutrition Help farmers re-engage in agricultural production in selected drought affected areas Outcome Indicators 1\. Number of households supported to resume crop and livestock production: 31,770\.00 2\. Amount of seeds and planting materials distributed to eligible beneficiaries: 452\.9 3\. Number of animals vaccinated against common diseases: 854,764 Intermediate Results Indicators 4\. Number of households supported with postharvest handling assets: 1778 5\. Farmers reached with agricultural assets and services: 22432 6\. Number of farm tools distributed to eligible beneficiaries: 60000 Key Outputs by Component 7\. Producer households with productive assets being productive 8\. Livestock herd health improved Page 31 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Melissa Williams, Mohammad Imtiaz Akhtar Alvi Task Team Leader(s) Ocheng Kenneth Kaunda Odek, Pascal Tegwa, Shimelis Procurement Specialist(s) Woldehawariat Badisso Stephen Diero Amayo Financial Management Specialist Samuel Aichiro Kirunda Balyejjusa Team Member Christine Heumesser Team Member Stella Chepkorir Team Member Sheila Lucrecia Francisco Pene Neves Team Member Ademola Braimoh Team Member Minna Maria Kononen Team Member Christiaan Johannes Nieuwoudt Team Member Elliot Wamboka Mghenyi Team Member Pauline Zwaans Team Member Abel Lufafa Team Member Srilatha Shankar Team Member Nidhi Sachdeva Team Member Jean Okolla Owino Team Member Varalakshmi Vemuru Social Specialist Assaye Legesse Team Member Endashaw Tadesse Gossa Team Member Norman Bentley Piccioni Peer Reviewer Nathalie S\. Munzberg Safeguards Advisor/ESSA Margaret Png Counsel Giuseppe Fantozzi Team Member Page 32 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Garry Charlier Peer Reviewer Hawanty Page Team Member Tracy Hart Environmental Specialist Pierre Olivier Colleye Peer Reviewer Jeren Kabayeva Team Member B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY17 13\.009 79,874\.14 FY18 0 -8,147\.49 Total 13\.01 71,726\.65 Supervision/ICR FY17 0 21,000\.00 FY18 20\.960 188,148\.96 FY19 20\.414 183,981\.53 FY20 15\.331 114,219\.03 Total 56\.71 507,349\.52 Page 33 of 43 Official Use  The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 3\. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Support to Human Capital 42\.00 40\.91 97 and Livelihoods Protection Support to Re-engagement in Crop and Livestock 7\.50 3\.7 49 Production Support to Project Implementation \.50 \.80 160 Arrangements Total 50\.00 45\.41 91 Page 34 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 4\. EFFICIENCY ANALYSIS 77\. The overall economic and financial analysis has not been conducted for the whole project during the appraisal stage, hence it is not possible to compare the overall economic indicators of appraisal and completion stages\. During the appraisal stage of the project, the lack of data, urgency of task and the difficulty in estimating medium and long-term benefits from emergency response projects made it impossible to conduct a full cost-benefit analysis of the project or calculate the rate of return and net present value of the entire project investment\. The project included two main components: Component 1, which aimed at supporting human capital protection by providing unconditional food transfers to eligible beneficiaries (Subcomponent 1\.1, $20\.0 million); and support to integrated management of malnutrition (Subcomponent 1\.2, $22\.0 million); Component 2, which targeted at providing support to the recovery of crop production (Subcomponent 2\.1, $5\.0 million) and livestock production (Subcomponent 2\.2, $2\.5 million)\. 78\. The appraisal stage EFA included an analysis which characterizes potential benefit streams from Component 1 and provided a cost-benefit analysis for investments to restart crop and livestock production under Component 2 (with a budget of $7\.5 million)\. The crop production indicative models were constructed and extrapolated to compare with the total costs of Component 2 (which included activities for both crop and livestock production)\. 79\. Approach for the analysis\. For the cost-benefit analysis at appraisal stage, the assumptions and results were reported in constant USD terms\. The shadow exchange rate used in the analysis is USD 1 equal to 110 South Sudan Pounds (SSP) (March 2017, source: personal communication)\. The conversion factors used for the economic analysis ranged from 0\.7 to 1\.1\. They were used to reflect the differences between local and imported crop prices including transport and non-tariff barriers, a 15% value added tax (agricultural inputs are exempt), and the shadow cost of labor\. Some assumptions were taken from the economic analysis of a related project - Southern Sudan EFCRP (P147900; 2014)\. 80\. Economic returns on investment in agricultural productivity\. The financing for Subcomponent 2\.1 was $5\.0 million - of which 75% was assumed to be operating cost - and which was matched by $3\.7 million operating cost borne by farmers, which included e\.g\. labor and additional inputs (in addition to project inputs)\. The analysis during the appraisal stage was based on sorghum and maize production models\. Financial gross margins and investment costs were converted into economic values\. Results in the table below (Annual net benefits - increased agricultural productivity) shows that the entire investment cost is recovered in benefits in year 1 because it turns a positive net benefit of $2\.1 million or $98/farmer or hectare that is cropped (see Base Case in the table- ‘Economic returns on investment - increased agricultural productivity’)\. If the net benefits are projected forward for 15 years with a 6% discount rate, the benefit cost ratio is 1\.5 and the economic net present value (NPV) is $32\.3 million\. The economic rate of return (ERR) was not calculated when there is no net investment in year one\. Sensitivity analysis showed that sorghum production has a higher sensitivity to declining crop yields; the economic rate of return remains quite high, even for declining crop yields of 30%\. Table A1 Annual net benefits - increased agricultural productivity Financial Analysis Economic Analysis US$ million Year 1 Year 6-onwards Year 1 Year 6-onwards Gross value from increased production 11\.1 11\.1 9\.8 9\.8 Page 35 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Financial Analysis Economic Analysis US$ million Year 1 Year 6-onwards Year 1 Year 6-onwards Operating costs covered by Project -3\.7 -3\.2 Operating costs covered by farmers -3\.7 -7\.5 -3\.2 -6\.4 Remaining Component 2 (crops) budget -1\.3 -1\.3 Annual net benefit 2\.4 3\.7 2\.1 3\.5 Table A2 Economic returns on investment - increased agricultural productivity -20% crop Unit Base Case yields -30% crop yields Economic gross margin - Sorghum US$/ha 6 -63 -97 Economic gross margin – Maize US$/ha 333 224 169 Net Investment Benefits Year 1 US$ million 2\.1 0\.2 -0\.8 US$/farmer 95 8 -36 US$/ha 95 8 -36 Payback period Years 1 1 3 Benefit Cost Ratio (6%, 15 years) Ratio 1\.5 1\.2 1\.1 Net Present Value (6%, 15 years) US$ million 32 13 4 Economic Rate of Return (15 years) % N/A N/A 63% 81\. For the appraisal stage EFA, it was estimated that the project would have an annual net carbon sink of carbon -13,793 tCO2-eq, due to the improvement of crop production practices\. Valued at a social cost of carbon of $30, which allows to quantify the avoided losses and damages from reducing one ton of CO2-eq emissions, it was calculated that this would result into an annual benefit stream of $413,790\. Economic and Financial Analysis at ICR Stage 82\. For the Implementation Completion and Results Report, similarly as during the appraisal stage, it was not possible to conduct a full cost-benefit analysis of the project or to calculate the rate of return and net present value of the entire project investment mainly because of the difficulty in quantifying medium and long-term benefits from emergency response projects\. Most of the project financing (84% to be exact) was aimed to respond to food crisis immediately, but not to achieve future economic benefits\. 83\. Thus, the overall economic and financial analysis has been conducted for Component 2: Support to Re-engagement in Crop and Livestock Production, taking into account both crop and livestock production activities\. The objective of the EFA is to conduct an ex-post analysis based on grant-financed investments to assess the overall effect of the Project associated with support to re-engagement of farmers in agricultural activities\. It was planned that support to enhancement of agricultural productivity would lead to expansion of markets for commodities produced by small-scale producers, contribute to local economy and strengthen smallholders’ resilience\. I\. Programme Cost and Outreach 84\. The total programme cost comprised of IDA grant in the amount of $50 million\. For the implementation of the Project, three UN agencies (WFP, UNICEF and FAO) were contracted for the total amount of $ 49\.5 million according to the scheme provided in the table below\. The rest $0\.5 million was spent on Component 3: Support to Project Implementation Arrangements, to finance administrative costs of the Project Implementation Unit (PIU)\. Page 36 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) Table A3 Project implementation scheme and modalities for WFP, UNICEF and FAO Subcomponent Total cost Agency/contract cost Description Subcomponent 1\.1: USD 20 million WFP/ USD 20 million To provide food assistance through Support to unconditional general food distributions (GFDs) to food transfers prevent hunger-related deaths and livelihood erosion Subcomponent 1\.2: USD 22 million WFP / USD 5\.75 million To address Moderate Acute Support to integrated Malnutrition (MAM) management of UNICEF / USD 16\.25 To address Severe Acute malnutrition million Malnutrition (SAM) Subcomponent 2\.1: USD 5\.0 million To (i) purchase and distribute Support to crop agricultural inputs and planting production materials; (ii) rebuild or distribute assets for post-harvest handling and food storage; and (iii) strengthen agricultural extension services\. FAO / USD 7\.5 million Subcomponent 2\.2: USD 2\.5 million To (i) restock households with small Support to livestock and stock; (ii) improve animal health fisheries production services through community-driven livestock treatment and vaccination campaigns; and (iii) provide advisory services and capacity building for agro-pastoralists\. Total USD 49\.5 USD 49\.5 million million 85\. The original targeted project outreach at the appraisal was: (i) 250,000 people benefiting from direct food assistance; (ii) 200,000 children and pregnant/lactating mothers benefiting from nutrition support; (iii) 200,000 individuals benefiting from providing water, sanitation and hygiene services; (WASH) and 30,000 households who will be supported to resume agricultural production (75% for crop production and 25% for livestock production)\. 86\. The actual outreach of the FAO contract targeted at improvement of agricultural productivity within Component 2 of the Project was: (i) 32,000 farming households, and (ii) 22,000 livestock keepers, instead of estimated 30,000 households in total\. II\. Financial Analysis 87\. Approach for the analysis\. The parameters for the analysis are based on the information provided in previously prepared project documents and information from Project implanting agencies\. In particular, information on labor and input requirements for various operations, capital costs, prevailing wages, yields, farm gate and market prices of commodities, input and farm-to-market transport costs were collected\. Conservative assumptions were made both for inputs and outputs, and the possible risks were taken into account\. 88\. Prices for commodities/inputs reflect annual average and those actually paid/received by the farmer/entrepreneur, and imply potential risks\. Page 37 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) 89\. Similarly as at appraisal, the internal rate of return (IRR) of 6\.03% is used in this analysis to assess the viability and robustness of investments\. The selection criterion for the IRR is to accept all projects for which the IRR is above the opportunity cost of capital, i\.e\. 6\.0%\. Using the IRR as the measure, the models’ sensitivity to the changes in parameters can be assessed by varying the cost of investments, production costs and revenues\. 90\. Project Benefits\. The original Project Development Objective (PDO) was to (a) to provide food and nutrition support for the protection of lives and human capital of eligible beneficiaries; and (b) to help farmers re-engage in agricultural production in selected drought affected areas in South Sudan\. If the former was more about the immediate response to food crisis, the latter was targeted at sustainable improvement of agricultural productivity, well-being of farmers through accumulation of wealth and economic growth\. 91\. It is expected that the quantifiable benefits of the project would be generated by increased productivity and production of the supported households due to the improved access to seeds and planting materials, farm tools distributed to eligible beneficiaries, animals vaccinated against common diseases, support related to postharvest activities and facilities\. 92\. There are also some unquantifiable benefits that can be attributed to the Project that were also considered in the analysis: (i) project interventions resulted in saved lives and avoiding of severe health issues of beneficiaries; (ii) benefits associated with increased social cohesion and education; (iii) availability, sale and purchase of assets; (iv) long-term benefits from improved nutrition and education; (v) benefits associated with indirect impacts on economic capital\. Had it been possible to more thoroughly quantify the Project benefits to the beneficiaries, the Benefit-to-Cost ratio would have certainly been significantly greater\. 93\. Six illustrative models were prepared to demonstrate the financial viability of investments made by the project in the area of agricultural productivity improvement: namely, groundnut, sesame, sorghum, maize, backyard poultry and sheep breeding farm models\. The chosen illustrative models fully represent the interventions made by the Project\. While the design stage analysis assumed that the investment would lead to cropping on 22,500 ha (55% sorghum; 45% maize), the actual picture reveals that the Project enabled beneficiary households to harvest 121 tonnes of assorted crops and seeds (15 tonnes of maize, 84\.7 tonnes of sorghum, 19\.6 tonnes of groundnut, and 2 tonnes of sesame), thus the cropping farm models were developed for the above-mentioned four crops taking into account the average yield of each crop\. 94\. Based on the knowledge available and the fact that in total 32,000 crop producing beneficiaries were affected by the Project, the following outreach scheme was assumed for the total Project lifetime: groundnut cropping households – 5,183 units, sesame cropping households – 529 units, sorghum cropping households – 22,400 units, maize cropping households – 3,967 units\. The ICR EFA findings validate the design stage assumption of using the average farm size for a household as 1 ha\. The total amount of beneficiaries engaged in livestock production – 22,000 households was distributed 60%/40% among those who specialize on poultry and small ruminants, respectively\. Page 38 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) 95\. The models show only incremental revenues and costs generated by the new investment\. In each case, the result of the investment translates into additional demand for produce from primary producers and new permanent jobs\. 96\. All models demonstrate the prospective benefits and rate of return derived from the access to required financing, training, demonstration and advisory services\. The results of the financial analysis can be seen from the table below\. Table A4 Financial analysis\. Summary table South Sudan: Emergency Food and Nutrition Security Project (ENFSP) F Inv\. costs Annual Net Benefits (US$) Return to Annual Inc\. net I Benefit- family N CATEGORY Without W\. Project - Increment benefits per IRR (%) NPV (US$) Total cost ratio labor, \. Project Full Dvt al 1US$ of Inv\. US$/day A Groundnut cropping farm model 95 0 16 16 0\.2 15\.97% 84 1\.14 0\.95 N A Sesame cropping farm model 85 0 17 17 0\.2 18\.92% 99 1\.21 0\.82 L Sorghum cropping farm model 115 0 32 32 0\.3 27\.61% 238 1\.75 0\.41 Y S Maize cropping farm model 150 0 43 43 0\.3 28\.34% 322 1\.57 0\.53 I Backyard poultry breeding model 78 106 122 16 0\.2 22\.05% 82 1\.41 0\.69 S Sheep breeding unit model 282 88 277 190 0\.7 19\.33% 526 2\.05 0\.17 III\. Overall Economic Analysis ERR = 21\.7%, ENPV = USD 22\.8 million 97\. The period of economic analysis is 15 years to account for the phasing and gestation period of the proposed interventions\. The conservative scenario is presented in the analysis and it is indicative and demonstrates the scope of profitability originated from Project investments\. 98\. The analysis identifies the quantifiable benefits that relate directly to the activities undertaken following implementation of the project components, or that can be attributed to the project’s implementation\. 99\. The illustrative models described above have been used for the calculation of the overall benefit stream by aggregating them on the basis of economic prices\. The overall benefit stream has been generated based on the grant support provided by the Project\. 100\. It was assumed that at least 80% of the investments would achieve the estimated returns, i\.e\. an 80% success rate was applied to the models\. Financing flows have not been undertaken in the calculations as they are already reflected in the project costs or represent transfer payments (duties and taxes)\. 101\. Given the benefit and cost streams, the actual ERR of the Project showed a result of 21\.7%\. This proves that the project was economically viable and justified\. The Graph 1 illustrates the results, where the y-axis shows the cash flow and the ENPV in ‘000 USD from left and rights sides, respectively, while the x-axis represents the time in years starting from the first year of project implementation\. 102\. Sensitivity analysis\. Economic returns over the 15-years period were tested against changes in benefits and costs, disaster risks, and for various lags in the realization of benefits\. In relative terms, the ERR is equally sensitive to changes in costs and in benefits\. In absolute terms, these changes do not have a significant impact on the ERR, and the economic viability is not threatened by both a 30% decline in Page 39 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) benefits nor by a 20% increase in costs, since the ERR in both cases remains well above the discount rate, making the Project results economically sustainable\. The details are provided in the table below\. Figure A1 Summary graph Table A5 Sensitivity analysis Increase of Delay of Sensitivity Analysis Costs Increase Decrease of Benefits Base case Benefits Benefits ( 20-year period) +10% +20% +50% +10% +20% -10% -20% - 30% 1 year 2 years ERR 21\.7% 20\.4% 19\.3% 16\.1% 22\.9% 23\.9% 20\.3% 18\.7% 17\.7% 19\.4% 17\.3% ENPV (USD mln) 22\.8 21\.4 20\.1 16\.2 26\.3 29\.9 19\.2 15\.6 12\.6 20\.7 18\.8 Page 40 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ICR was prepared in close coordination with FAO, WFP, and UNICEF and draft report was shared with them for their comments and feedback\. This report adequately reflects their comments and inputs\. Halfway through the EFNSP implementation, the Bank introduced 3rd party implementation of the entire South Sudan portfolio, with funds flow directly to the implementing agencies\. This had a cooling effect on the relations with the government and communications declined significantly\. The task team made concerted efforts over time in restoring a cordial working relationship with the Ministry of Agriculture and Food Security (MAFS)\. The government, especially MAFS was kept informed and updated about the ICR preparation, and findings and recommendations were shared with the key officials and project staff\. The Ministry was largely satisfied with the outcomes, impacts and performance of the project\. To-date the Ministry has never provided any written comments and feedback on any of the Bank funded projects that it was involved in for implementation\. Page 41 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 6\. SUPPORTING DOCUMENTS South Sudan Emergency Food and Nutrition Security Project Appraisal Document, 2017, World Bank, Washington D\.C South Sudan Emergency Food and Nutrition Security Project Agreement, 2017, Government of The Republic of South Sudan and FAO, Juba\. South Sudan Emergency Food and Nutrition Security Project Agreement, 2017, Government of The Republic of South Sudan and UNICEF, Juba\. South Sudan Emergency Food and Nutrition Security Project Agreement, 2017, Government of The Republic of South Sudan and WFP, Juba\. South Sudan Emergency Food and Nutrition Security Project Implementation Status & Results Report (2017, 2018 and 2019), World Bank, Washington D\.C\. Country Engagement Note for the Republic of South Sudan, 2017, World Bank, Washington D\.C\. South Sudan Emergency Food and Nutrition Security Project Final Progress Report, 2018, UNICEF South Sudan South Sudan Emergency Food and Nutrition Security Project Quarter 7 Report, 2019, FAO South Sudan South Sudan Emergency Food and Nutrition Security Project Quarterly Project Report, 2018, UNICEF South Sudan South Sudan Emergency Food and Nutrition Security Project Quarterly Report, 2018, WFP South Sudan Page 42 of 43 Official Use The World Bank South Sudan Emergency Food and Nutrition Security Project (P163559) ANNEX 7\. Component 2 Implementation Counties/Payams By Implementing Partner Page 43 of 43 Official Use

REVIEW

P049174

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 32311 IMPLEMENTATION COMPLETION REPORT (SCL-42850) ON A LOAN IN THE AMOUNT OF US$16\.4 MILLION TO THE UKRAINE FOR A TREASURY SYSTEMS PROJECT May 25, 2005 Poverty Reduction and Economic Management Sector Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS (Exchange Rate Effective May 25, 2005) Currency Unit = UAH Hrivnya 1 UAH Hrivnya = US$ 0\.20 US$ 1 = 5\.045 UAH FISCAL YEAR January 1 Decmber 31 ABBREVIATIONS AND ACRONYMS ADETEF French Government's Aid Agency PAL Programmatic Adjustment Loan AS Name of the Treasury System developed by PHRD Policy and Human Resources Development KAZNA the Treasury Grant CIS Commonweatlh of Independent States PIU Project Implementation Unit COA Chart of Accounts PSRML Public Sector Resource Management Loan DBMS Database Management System QAE Quality at Entry ECA Europe and Central Asia Region RDBMS Relational Database Management System FAD Fiscal Affairs Department STU State Tax Administration FSU Former Soviet Union SU Spending Unit GFS Government Finance Statistics S/W Software H/W Hardware TA Technical Assistance IBL Institution Building Loan TLS Treasury Ledger System ICB International Competitive Bidding TSA Treasury Single Account IMF International Monetary Fund TSP Treasury Systems Project IT Information Technology UNIX Name of computer operations system LAN Local Area Network USAID United States Agency for International Development MOF Ministry of Finance WAN Wide Area Network NBU National Bank of Ukraine WB World Bank Vice President: Shigeo Katsu Country Director Paul G\. Bermingham Sector Manager Deborah L\. Wetzel Task Team Leader/Task Manager: Cem Dener  UKRAINE TREASURY SYSTEMS PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 6 5\. Major Factors Affecting Implementation and Outcome 10 6\. Sustainability 11 7\. Bank and Borrower Performance 11 8\. Lessons Learned 13 9\. Partner Comments 14 10\. Additional Information 17 Annex 1\. Key Performance Indicators/Log Frame Matrix 18 Annex 2\. Project Costs and Financing 20 Annex 3\. Economic Costs and Benefits 22 Annex 4\. Bank Inputs 23 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 25 Annex 6\. Ratings of Bank and Borrower Performance 26 Annex 7\. List of Supporting Documents 27  Project ID: P049174 Project Name: Treasury Systems Project Team Leader: Cem Dener TL Unit: ECSPE ICR Type: Core ICR Report Date: May 25, 2005 1\. Project Data Name: Treasury Systems Project L/C/TF Number: SCL-42850 Country/Department: UKRAINE Region: Europe and Central Asia Region Sector/subsector: General public administration sector (94%); Law and justice (6%) Theme: Public expenditure, financial management and procurement (P); Administrative and civil service reform (P); Law reform (S); Standards and financial reporting (S) KEY DATES Original Revised/Actual PCD: 01\.23\.1997 Effective: 03\.01\.1998 07\.27\.1999 Appraisal: 07\.31\.1997 MTR: 02\.15\.2000 10\.17\.2002 Approval: 02\.24\.1998 Closing: 06\.30\.2002 12\.31\.2004 Borrower/Implementing Agency: UKRAINE/TREASURY DEPARTMENT Other Partners: STAFF Current At Appraisal Vice President: Shigeo Katsu Johannes F\. Linn Country Director: Paul G\. Bermingham Paul J\. Siegelbaum Sector Manager: Deborah L\. Wetzel Sanjay Pradhan Team Leader at ICR: Cem Dener ICR Primary Author: Ali Hashim 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: Yes  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The overall objective of the project is to assist the Government to design and implement a fully functional, automated Treasury system that would serve as an effective instrument for budget execution and cash management\. Context: The objectives of the Treasury Systems Project (TSP) need to be assessed in the context of the fiscal problems encountered by the Government and the reform agenda pursued by it at the time of project inception\. In the mid-nineties when this project was being prepared, one of the key issues facing the Government and leading to an unsustainable fiscal situation was that the Government had been running up arrears and postponing expenditures caused by an unrealistic budget and by poor expenditure management and control\. Previous analyses by the Government, the IMF and the Bank had highlighted significant weaknesses in the budget system and the financial management of government resources\. (Ukraine--A Program to Set Up a Treasury System, IMF/FAD, April 1993\. Garamfalvi, et al\.)\. The key weaknesses of the previous system, as documented by this work, were: l lack of a macro economic framework needed for formulation of the budget and making of revenue and expenditure projections; l diffusion of responsibilities for fiscal matters among a number of different entities within the Government in addition to the MOF; l inappropriate legal framework for budget preparation, approval, implementation and monitoring; l inappropriate budget classifications, which did not allow meaningful budget monitoring; l lack of administrative capacity to adjust the budget in response to changing circumstances; l lack of reliable, comprehensive and timely accounting information; l underdeveloped debt and cash management operations that are not linked to overall budget management; and l dispersion of budget money in many spending units accounts, instead of concentrating money in a Treasury Single Account (TSA), which made cash management difficult\. Government Fiscal Reform Program In response to this situation, the Government of Ukraine initiated a fiscal reform program in 1994 to address these issues\. As part of this program, and with IMF assistance, the Government developed a comprehensive strategy to introduce a fully functioning Treasury\. The various elements of this strategy are summarized below: l Preparation of comprehensive legislation to support the establishment of the Treasury and its functions and to define budget preparation and budget execution procedures (1995)\. l Establishing a Treasury organization, including establishment of regional (oblast level) and district (rayon level) Treasury units which would take over budget execution and primary accounting responsibilities from the National Bank of Ukraine (NBU), and introduce required reforms to centralize fiscal monitoring and control functions in the Treasury\. - 2 -  l Revision (1997) of the budget classification structure to conform with the IMF's Government Finance Statistics (GFS) in order to facilitate a strategic overview of the allocation of budget resources between sectors of the economy and for inter-country and time-series comparisons\. The new budget classification structure also allowed the Treasury to identify the resources allocated to each line ministry and to ensure proper accountability\. l Re-engineering Treasury processes and setting up new procedures for budget execution\. Replacement of the existing system of fiscal transfers to Spending Unit (SU) bank accounts with a system of Treasury warrants that would set the limit for expenditure for the line ministries by program and line items, using the new budget classification code\. The line ministries would in turn distribute the warrant allocation to SUs by the same classification code by issue of sub-warrants\. The regional offices were made responsible for ex-ante control of all payment orders raised by SUs against their cash allocations, for calculating the division of designated tax revenues between the central government and the local governments, and for advising the NBU regional branches of the allocation of revenues\. This reform intended to achieve optimum use of the cash resources and prevent accumulation of idle cash balances\. l Closing down bank accounts held by the spending units and bringing them under the control of the Treasury; progressive consolidation of these accounts at the regional branches of the Central Bank (NBU); setting up a Treasury Single Account (TSA) at the headquarters of the Central Bank in Kyiv with daily transfers of balances to this account from the regional branches of the NBU\. l Creation of a Treasury Ledger System (TLS) based on a new chart of accounts, which includes ledgers for financial accounting as well as for monitoring of budget implementation\. The TLS was based on the new chart of accounts (COA) adopted for use in 1997\. The new COA reflected the new budget classification of revenues and expenditures\. The TLS also has provisions for recording data on original budgets, revisions as approved by the Budget department, warrants issued by the Treasury and sub-warrants by line ministries at regional level and expenditures against these warrants\. l Design and implementation of a modern, automated, and integrated Treasury System for government financial management to support the re-engineered Treasury processes and procedures\. This reform strategy was implemented in a phased manner over the period 1994-2002\. Originally, assistance from the World Bank to the Treasury had started under the Treasury Component of an Institution Building Loan (IBL)\. In 1997 work was carried out under the Treasury component of the IBL to elaborate drafts of legislative and normative acts for the Treasury and to analyze the Treasury department's functional and organizational structure\. Assistance was also provided for setting up a basic computer-based system to support the Treasury in budget execution processes\. The present project built on this work and designed and implemented a fully functioning Treasury system\. Several other donors, such as USAID and the French ADETEF, were also actively involved at this time in designing and implementing reforms in the public sector in Ukraine\. In the case of the Treasury, USAID and ADETEF contributed to an analysis of application software options for the Treasury system and ADETEF assisted in arranging for the training of Treasury staff on the concepts and functioning of a modern Treasury system with agencies of the French Government\. - 3 -  Assessment of Project Objectives: In view of the above, the objectives of the Treasury Project reflected essential priorities for fiscal management in Ukraine as identified by the Government, the IMF and the Bank at that time\. They were consistent with Government strategy for setting up institutions, systems and procedures necessary to establish a fully functioning Treasury function within Government\. The objectives were however very ambitious since the implementation of the Treasury function, ab-initio, involved introducing change on a massive scale, government-wide\. However, these changes were essential for the desired transition to a market economy\. 3\.2 Revised Objective: The overall objective was not revised\. 3\.3 Original Components: This is essentially a single component project that was designed to provide technical assistance, computer equipment, software and training to enable the Government to design, develop, test, and implement processes, procedures and systems, related regulations and training programs for budget execution and treasury operations\. The project would first provide support, to enhance the basic system developed under the Institutional Building Loan (the interim system) and extend it across the country\. It would then design a more comprehensive Treasury system, implement it in a set of pilot rayons and rayons and then replicate it through out the country\. Details of project inputs are as follows: A\. Technical Assistance (base cost US$2\.62 million)\.The IMF was responsible for advising the MOF/Treasury on the substantive aspects of Budget Execution, Cash Management, and Treasury Operations\. This assistance was delivered through a Resident IMF Treasury advisor\. The project would provide TA for the design of an automated Treasury system to support Treasury operations\. This included: (i) extending the work done by the IMF advisor into a full set of functional specifications for the Treasury system, incorporating the key characteristics of the overall design, as specified by the IMF (e\.g\., new COA, re-engineered Treasury processes, etc\.); (ii) developing the technology architecture for implementing the treasury systems and specifying the H/W, S/W and communications design, systems software and application S/W environment (UNIX, DBMS, and application development tools); (iii) researching and identifying and/or developing application software for the Treasury system; (iv) specifying the hardware and software requirements and preparing bidding documents in accordance with World Bank procurement guidelines; (iv) supervising implementation of the Treasury system\. In addition, technical assistance was also be provided to assist the Treasury to administer and manage the project and assist with Bank procedures (project monitoring, accounting, and disbursement)\. B\. Computer Hardware and Software (base cost US$21\.4 million)\. This included: (i) equipment (UNIX servers, work stations, equipment and software for local and wide area networks, printers, UPS, site preparation), systems software and application development tools for central facilities at the Treasury Headquarters, oblast and rayon Treasury offices\. Each Treasury office would receive an appropriately sized UNIX server, a LAN network, a RDBMS, application development tools, laser and line printers, Windows-based work stations, and WAN equipment to connect to the overall Treasury network; and (ii) application software for Treasury systems at the center, regional units, and spending units, and customization, as may be necessary\. C\. Training (base cost US$0\.5 million)\. Training was recognized to be a crucial element for project implementation\. The project provided financing for: (i) technical assistance for a training - 4 -  needs analysis; identification of suitable training courses within the country and abroad; the development/acquisition of training materials, technical documentation, and end-user manuals; (ii) training courses arranged at site, or in local or foreign institutes to cover these areas\. Staff trained under the project included the MOF/Line Agency/Treasury staff and technical staff of the MOF/Treasury involved in the development and implementation of the systems; and (iii) study tours abroad for government officials in the budget execution and treasury operations areas to enable them to benefit from the experiences of other Governments in these areas\. The project provided financing for essential technical assistance required for the detailed design of the systems, for the computer hardware, software and training required for their implementation\. Project activities were consistent with the requirements of setting up a Treasury system in the country\. The phasing of project activities which included a pilot phase and, on successful completion of this phase, replication of the system across the country, was in line with the required phasing for similar projects, which involved the implementation of large scale information systems, countrywide\. 3\.4 Revised Components: The project components were not revised\. However, as a result of advice based on analyses by two sets of consultants, one financed by the USAID and the other by the French Government, both of whom were of the opinion that since during the early years of project implementation, Treasury processes and procedures were still being modified frequently, and had not been stabilized and incorporated in the legal framework, it would be better for the Treasury to invest in custom development of application software rather than the acquisition of an off-the-shelf application software package for the budget execution part\. The project therefore financed the acquisition of consulting services from a group of technical consultants who designed, developed, and implemented the Treasury system\. The Treasury did acquire an off-the-shelf package to interface the Treasury system with the banking system\. Project-financed consultants helped the Treasury to integrate this with the custom-developed Treasury system\. 3\.5 Quality at Entry: A formal Quality at Entry (QAE) assessment was not carried out before the start of the project\. However, project objectives were consistent with Government priorities and the Bank's strategy as envisaged in the Public Sector Resource Management Loan (PSRML) adjustment operation that was initiated at about the same time and were proven feasible during implementation\. The conceptual design of the Treasury system was based on the IMF's design which was being successfully introduced elsewhere in the Former Soviet Union (FSU)\. The implementation approach was also appropriate, with a pilot phase to test the functionality of the systems, before being adopted nationwide\. Counterparts were committed to the operation and were involved in all phases of project preparation\. However, the project was launched in a challenging environment as the political consensus on reforms within the country was evolving\. It was an ambitious project and involved extensive changes to the existing system of fiscal management and control\. The project design catered adequately to technical aspects but underestimated considerations of the political economy\. This led to delays during project effectiveness and implementation\. A better analysis of the political economy and institutional stakeholders might have mitigated the very slow start up of the project\. However, the technical design proposed for the Treasury system and its phasing envisaged in the project and the commitment level of the MOF and the Treasury management were appropriate\. Gaps in institutional capacity were supplemented by technical assistance provided through the project\. The project objectives were achieved\. Therefore, on balance QAE is assessed as satisfactory\. - 5 -  4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The project has successfully assisted the Government in setting up a Treasury function, has modernized Treasury operations, and has upgraded the Government's capacity for fiscal management\. Reform measures included the design and implementation of the underlying legal framework, the setting up of the organizational arrangements for Treasury-based payment and receipts processing and design of the associated systems and procedures\. These measures have provided the Treasury the capacity to monitor budget execution closely, collect and provide the MOF comprehensive reliable and timely information required for the management of government expenditure and has significantly improved the capacity of the Government for fiscal management\. The overall objectives of the project have been successfully accomplished and the achievement of objectives is rated satisfactory\. It is interesting to see the data on Government fiscal deficits in Ukraine for the period 1994-2004 as shown the table below: General Government Fiscal deficit ( % of GDP) - IMF Figures 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 -7\.8 -4\.9 -3\.2 -5\.4 -2\.8 -2\.4 -1\.3 -1\.6 +0\.5 -0\.9 -4\.4 It is observed that in response to the reform measures initiated by the Government during the period 1994- 2000, which included the establishment of the Treasury and were generally characterized by better budget management and improved fiscal control, the fiscal deficit reduced significantly\. The rise in the defict during 2004 is attributed to the loosening of fiscal control and granting very large increases in benefits (e\.g\., pensions) prior to the national elections in 2004\. Details of Treasury-specific reforms implemented over the period 1998-2004 are given below\. The necessary legal framework that authorizes the Treasury to control budget execution is in place\. The State Treasury has been set up as a separate organization under the MOF and has taken over budget execution functions formerly carried out by financing departments of the MOF and the National Bank of Ukraine\. A three-tier Treasury organization has been set up with offices at the center, the 27 oblast treasury offices and 640 rayon Treasury offices\. A GFS-conformant Budget classification structure has been implemented since 1998\. A Treasury Single Account has been established at the National Bank of Ukraine at the center in Kyiv and at the oblast branches of the Central Bank\. Most spending units' bank accounts have been closed and Government finances are lodged in the Central Bank\. Budget execution processes have been re-engineered and spending units now route all of their expenditure transactions, including those relating to staff salaries, through designated treasury offices\. Budget appropriations approved by Parliament are recorded in the Treasury system, as are planned expenditures for each spending unit, by month and type of expenditure\. During the course of the year the MOF issues periodic warrants to spending ministries which define the limits of expenditure for that month\. The Treasury offices check for availability of budget and cash and pass these transactions to their parent oblast Treasury office which then processes them through correspondent accounts set up at the oblast branch of the National Bank of Ukraine\. After approval the Treasury forwards the payment request to the designated branch of the Central Bank that holds the TSA and the bank pays the government creditor\. This payment could be in the form of a check or a direct deposit to the creditors' bank account in a private bank\. A commitment system has been instituted for contracts exceeding a specified threshold\. A full set of fiscal reports are produced by the system to assist the Government in the management of its financial resources\. - 6 -  Over the period 1997-2002, the scope of the Treasury system has been gradually extended to cover all central government budget operations, including former extra-budgetary funds and off-budget revenue activities of the central government institutions\. Starting from FY2000, off-budget activities of budget institutions and most extra-budgetary funds are covered by the formal budget appropriation process\. The Treasury system has become the repository of information for all initial budget allocations and any changes introduced during the course of the year\. A basic commitment registration and control system has been initiated from FY2001\. All information on cash flows related to tax administration are routed through the Treasury\. Typically, a taxpayer would instruct his Bank to make a payment on his behalf for a specific tax to a specified Treasury correspondent account at the respective oblast branch of the NBU\. The Treasury receives information about these deposits by type of tax including details about the taxpayer from the NBU\. This information is then passed on by the Treasury to the TSA office at the oblast and rayon levels\. Since August 2002, Customs receipts are also deposited in the Treasury correspondent accounts with the NBU as explained above for tax administration, and Treasury informs the Customs Department about the collections\. All customs-related expenditures are now also handled by the Treasury\. At present, only selected national security agencies remain outside the purview of the project\. Even for these agencies, payments related to their headquarters (e\.g\., salaries of staff and other expenses) are handled through the Treasury\. In accordance with a Government decree, the Treasury has extended the coverage of the system to the local budgets\. This is beyond the scope of the project as originally designed\. Extending Treasury coverage to local budget execution allows the uniform application of expenditure and procurement control regulations and better information on the fiscal position of all levels of government budgets in Ukraine\. Local government revenue and expenditure transactions are now also routed through the Treasury with effect from January 2004\. However, achievement of project objectives has not been achieved without difficulties\. Opposition from groups who perceived this change as a threat, delayed project effectiveness\. These factors are discussed in more detail in Section 5\.2 below and caused a delay of about 12 months in project effectiveness\. In addition, the slow pace of project implementation in the earlier years during which the underlying concepts of the Treasury reform and associated systems were still being debated, caused schedule slippages and the project closing date had to be extended by two and a half years\. However, as pointed out in a recent study carried out at the Bank and discussed in Section 8, the time taken to complete the project is not out of line with the time taken for similar projects in many countries\. 4\.2 Outputs by components: As mentioned earlier, this is a single component project\. However, the major outputs for each of the notional sub-components are described below\. (a) Technical Assistance\. As mentioned earlier, the overall functional design of the Treasury system was carried out under advice from the IMF\. Technical assistance on the substantive aspects of the Treasury was provided by the IMF through the resident IMF Treasury advisor\. The Project supplemented this assistance by financing the consultants for the technical design, development, and implementation of the automated Treasury system developed under the project\. The design phase was completed successfully and the outputs from this phase were satisfactory\. This phase resulted in: (i) a full statement of functional requirements for the Treasury system\. The functional design included a description of information flows, - 7 -  procedures, transaction types, associated documents and forms, the organizational arrangements required to operate the new systems and the reports to be generated\. It also developed detailed documentation for the overall systems and its operation, the detailed functional requirements and systems specifications for the application software required to support them, in addition to their interfaces with external systems; (ii) design of technology architecture\. This task involved definition of the size and configuration of the hardware and software to be installed at the nodes, as well as the mode of intercommunication, and specifications for the hardware and systems software required at the various sites for each phase of the project; (iii) preparation of tender documents for system procurement in accordance with the World Bank guidelines for procurement of computer systems; and (iv) design of a training program describing the training courses required for the operation of the system and highlighting the numbers and types of staff to be trained in each area\. (b) Computer Hardware and Software: The outputs from this component are rated satisfactory\. The project first financed hardware and software to upgrade the interim Treasury system that was first established by the Government using its own finances in the mid nineties\. These improvements related to upgrades in hardware, systems software and application software and were designed with a view to enable the system to act as an effective interim tool for budget execution and control\. The Treasury then upgraded this interim system to a new more full function system, termed the AS KAZNA, as agreed with a joint Bank /IMF (FAD) mission in 2000\. The AS KAZNA system was first piloted at a designated set of oblasts and rayons and then subsequently replicated across all oblasts and rayons over the period 2000- 2004\. The system has been established at all oblasts and rayons\. The system is being used to process all central government expenditure and revenue transactions at all oblasts and all associated rayons and the Headquarters\. In addition, as of December 2003, the AS KAZNA system is also being used to process local government expenditure and revenue transactions in all oblasts and rayons\. The Treasury system "KAZNA" designed and implemented under the project is operating in a stable mode\. Typically between 60-100 local users and 400 remote users are connected to the system running at a given oblast on a given day\. The total number of concurrent users, country wide is about 8000\. The system processes about 94 million transactions per year country wide\. Out of this number, 70 million transactions relate to revenue and 24 million transactions relate to expenditure\. The AS KAZNA system operates under an oblast-based centralized environment\. This means that the application software resides at the oblast and the rayon offices are required to connect to this in an on-line mode to process transactions\. This facilitates system maintenance and upgrades\. However, it also imposes additional communications requirements\. For satisfactory operations an online telecommunications link with a minimum speed of 19\.2 kbs is required between all rayon offices and their parent offices at the oblast level\. The Treasury has worked with UKR Telecom for the provision of adequate numbers of good quality communication lines between the rayon and the oblast treasury offices and between the oblasts and the central Treasury\. For the connections from the oblast to central Treasury the Treasury now has frame relay channels operating at a bandwidth of 64 kbs over fiber optic medium\. For the rayons to oblasts a mix of analog channels, frame relay connections, and x\.25 channels are currently used to connect all rayons to their respective oblasts\. Data transmission speeds over these channels vary between 19\.2 to 64 kbs\. It appears that the Treasury has been able to overcome the anticipated problems related to telecommunications\. (c) Training: The outputs from this component are rated as satisfactory\. As part of the AS KAZNA roll-out process, the Treasury has conducted an extensive training program for the training of - 8 -  management, technical, and operational staff\. Training of functional staff and managers included definition of the concepts of a Treasury-centric budget execution system and how the automated treasury system will be used to carry out the budget execution process Documentation has been developed that describes operational procedures for carrying out treasury functions using the new system\. The training program has proceeded successfully and between 10-15 staff have been trained for each oblast who then serve as trainers for staff at their oblasts and associated rayons\. A total of about 337 trainers have been trained in the use of KAZNA over the last three years\. These staff then provide hands-on assistance and training to Treasury office staff in their regions\. The Treasury system is now operating in all regional (oblast) and district (rayon) offices and all relevant staff have been trained in its use\. The Treasury has planned an ongoing training program for managers and operational staff at professional training institutes at Kyiv and Dnieperopetrovsk and it is envisaged that about 1,000 staff would be trained on an ongoing basis each year\. The Treasury has followed this up by organizing extensive seminars for training of its staff, as well as senior financial staff of the user ministries and local governments\. This training focused on the functional aspects of the new treasury system, using the Treasury training facility and the detailed functional requirement documents\. A detailed training program for the senior staff of the MOF and the user ministries in using the new application software has been introduced from November, 2001 by the project team and is being replicated country-wide, in step with the system replication process\. In addition the Project has also financed the costs associated with training of Treasury staff, arranged through ADETEF, with government agencies in France, to make them familiar with the functioning of a modern treasury\. A total of 135 Treasury staff were sent to France for this training over the last four years\. Senior Treasury managers from the functional and the informatics side also visited Hungary and Kazakhstan to see the working of the Treasury system in these countries\. 4\.3 Net Present Value/Economic rate of return: N\.A\. 4\.4 Financial rate of return: N\.A\. 4\.5 Institutional development impact: The institutional development impact of this project has been substantial\. The necessary legal and institutional framework required for the operation of a Treasury has been set up\. The Government of Ukraine has been able to put in place a fully functioning Treasury organization with offices at the center, in each of the 27 oblasts and in some 650 rayons\. All government financial flows relating to expenditures and receipts have been restructured and are routed through the Treasury\. Most spending unit bank accounts have been closed and a TSA has been set up with the NBU\. Associated systems and procedures implemented under the project enable better control on the use of Government financial resources and ensure that they are spent on items for which they had originally been approved\. The system enables better cash management and Government has a good idea of the total cash resources available to it at a given point in time thereby enabling it to better formulate its borrowing strategy\. Efficiencies in budget execution achieved by the system, enable Government to meets its financial obligations within the stipulated contractual time limits\. A large number of staff have been trained in the use of the system\. - 9 -  5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: A major factor that affected project implementation related to the fact that this project was initiated at a time when Ukraine was in the initial stages of the transition from a socialist system to a market economy\. The project was launched in a challenging environment when political consensus on the reforms in the country was still evolving\. Public finance management structures and institutions inherited from the socialist days were not adapted to a market economy and called for far reaching institutional and policy reforms\. Even though a decision had been taken to move to a market-based economy, the specific steps involved in the actual transition were not clear to all Government officials\. Exposure of top MOF officials to courses organized by the IMF institute in Vienna, and visits of these officials to other advanced countries, to see the functioning of a modern Treasury were helpful in improving their understanding of Treasury Reforms\. However, it took time for all related officials to become fully conversant with the new systems and procedures involved in the transition\. 5\.2 Factors generally subject to government control: The introduction of the new institutional structure for budget execution envisaged under the project would require reorganization and realignment of the roles and responsibilities of related Government agencies, such as the MOF, the Treasury, the Central Bank, as well as the relationships with line ministries\. Change on such a magnitude is bound to experience opposition from groups who perceive this change to be detrimental to them\. These quarters were able to mount a successful opposition to the project\. Thus, spending units within Government resisted the closure of Bank accounts\. The private banking sector in the country resisted a loss of government business consequent to the closure of the SU bank accounts and lobbied parliamentarians at the Verkhovna Rada (the Ukrainian Parliament), which refused to ratify the project Loan or a PHRD Grant agreement under pressure from this lobby\. This led to the eventual cancellation of the PHRD grant and a delay of about 15 months in project effectiveness\. It was only due to the continuing support of the senior government policy makers in the MOF that these obstacles were eventually overcome\. 5\.3 Factors generally subject to implementing agency control: In the early years of the project the Treasury Department was a growing but weak institution which suffered from frequent changes in management and had limited institutional capacity both on the functional and technical side\. Due to this, it took some time for the Treasury to understand fully the concepts and implement activities associated with setting up a fully functioning Treasury\. These institutional weaknesses contributed to some delay in implementation\. However, these weaknesses were largely overcome as the project got underway\. In the early stages of project implementation, a controversy over the type of application software to be used delayed project implementation\. However, once this issue was settled in accordance with the advice of the IMF and the Bank, the project implementation proceeded smoothly and the system was extended to all oblasts and rayons within a fairly short period of two to three years\. 5\.4 Costs and financing: The original investment cost of the project was estimated at US$26\.2 million, including duties and taxes of US$3\.41 million\. Out of this the Bank was supposed to finance US$16\.4 million\. The Loan has been almost fully disbursed\. A residual amount of US$1,197\.36 has been cancelled\. In addition, the Government has contributed US$10\.85 million, mainly towards procurement of computer hardware and software\. This includes an amount of US$4\.66 million for the payment of duties and taxes on equipment and software imports\. Thus, the total project investment cost is about US$27\.24 million, which is slightly higher than the original estimate\. This increase is due to the fact that some of the computer hardware purchased by the Government from its own resources in the earlier years of the project had to be upgraded - 10 -  as the project progressed and better and more effective technology became available\. 6\. Sustainability 6\.1 Rationale for sustainability rating: Sustainability of the Project\. Treasury reforms, including the legal framework, the organizational arrangements, the system and procedures set up under the project have become an integral part of government budget execution processes\. A sufficient number of staff have been trained in the use of the new systems and procedures\. The Government has contributed a significant amount towards ths implementation of the new Treasury system and appears committed to continue to allocate additional resources to maintain the new systems\. It is also planning a follow-on project to implement the second stage of treasury reforms in Ukraine, which would ensure better use of the information available from the Treasury system by the central MOF for budget execution purposes and the spending units for getting better status information on their financial resources\. 6\.2 Transition arrangement to regular operations: The institutions and systems set up as part of this project are now routinely used by the Government as part of its apparatus for public finance management\. The transition to regular operations has already successfully taken place\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance in the identification, preparation, and appraisal phases of the project was satisfactory\. The project financed the setting up of a Treasury system, which was a crucial element of the Government's own fiscal reform program\. During these phases the Bank worked closely with the IMF and provided advice on the design and implementation of the system based on its work on similar systems in other CIS countries\. Government officials internalized the concepts associated with setting up a Treasury function and fully supported the design\. However, both the Bank and the Borrower had underestimated political and institutional constraints and stiff resistance was encountered from quarters whose interests would be affected by the project\. This was overcome only by the continuing high level support from the Government for establishing a Treasury function\. The project received about 58 staff-weeks for project preparation up to supervision\. 7\.2 Supervision: The Bank's performance is assessed as satisfactory\. The project received about 167 staff-weeks for supervision\. The Bank and IMF worked very closely to supervise the project\. During the initial phases of the project, progress was slow in the selection of the application software for the project due to internal conflicts within the Treasury\. However, after intensive discussions between the Treasury, the IMF, and Bank experts, in which the Bank and the IMF assisted the Treasury in assessing options, the Treasury came to a decision on the choice of the application software for the Treasury system and started its implementation across all oblasts and rayons\. During the later years of the project, the Treasury put a very competent Treasury professional in charge of the project and assembled a team of competent consultants and staff to work on project implementation\. Another key characteristic was that the focus of project implementation moved from being one of an IT project to a Treasury reform project\. - 11 -  These changes, coupled with persistent Borrower commitment to project implementation, enabled the Treasury to complete the design and development of the application software and its pilot implementation and testing\. The software was then rolled out to all oblasts and rayons after the necessary hardware was procured through project financing\. Both the IMF advisor and the Bank were actively involved in assessing the quality and the suitability of the prototype and in advising the Treasury on any corrective actions required\. Implementation picked up considerably during the last years of the project and it was able to achieve most of its objectives\. On balance, the Bank's performance during supervision can therefore be rated as satisfactory\. 7\.3 Overall Bank performance: In view of project outcomes and the quality of intensive supervision carried out during the project, overall Bank performance can be assessed as satisfactory\. Borrower 7\.4 Preparation: The overall project design was based on IMF recommendations for Treasury systems for CIS countries\. However, as implementation commenced, the Borrower quickly assumed the leadership in formulating and executing project activities\. In particular, the Borrower internalized the basic concepts associated with the Treasury function and, in fact, showed a strong desire to extend the scope of the function to areas beyond those that were originally envisaged in the project, e\.g\., the extension of the system to include local governments\. The Bank remained involved in implementation by highlighting the underlying requirements for pursuing this more aggressive strategy and keeping a close watch on progress implementation\. 7\.5 Government implementation performance: The Ministry of Finance was responsible for overall project coordination, however, execution of the project was the responsibility of the Treasury Department\. 7\.6 Implementing Agency: The implementing agency, was very responsive to the implementation needs of the project and generally excellent cooperation was established with the task team and maintained throughout the project\. The Treasury hired a very competent team of technical consultants financed under the project who were able to successfully design, develop, and implement the new Treasury System across all oblasts and rayons in the country\. A project-financed Project Implementation Unit (PIU) within the Treasury was responsible for procurement, maintaining project accounts, and the financial management aspects of the project\. Hardware and software worth over US$14\.0 million was procured through two large International Competitive Bids (ICBs) which were carried out very smoothly\. 7\.7 Overall Borrower performance: The targets proposed for the project have been met\. Overall performance of the Borrower can be assessed as satisfactory\. - 12 -  8\. Lessons Learned The Treasury System project holds some valuable lessons for the design and implementation of technical assistance projects\. Strong commitment and support from the highest management levels\. Government commitment to reform over the entire project duration, which has extended to seven years, has been a critical success factor for this project\. Successive Finance Ministers and Treasury managers have recognized the importance of treasury reforms and have continued to press for progress on key policy reforms\. Initially there was resistance from some power ministries (e\.g\., the Ministry of Defense), who were reluctant to give up their separate bank accounts\. However, support from the Government made it possible for the Treasury to achieve the transition\. Design of information systems should be driven by functional rather than technical issues\. In the design of this project, attention was carefully focused on functional design issues prior to computerization issues, to ensure effective and efficient implementation\. Functional and procedural changes were the major drivers of the reform\. The technological changes, though the most capital intensive, were viewed as being in support of the functional reforms\. A decision early in the project to invest in an interim computer system, partly financed under the IBL, to handle core aspects of Treasury functionality was critical in enabling the introduction of change involved in a gradual and a more manageable manner\. It enabled staff within the Treasury to become familiar with a simpler computer-based system before the full function, more complex system was introduced\. Moreover, since this system enabled the introduction of the key functional processes for the Treasury, it made it possible to hold the end-user's attention over the extended period required for full systems implementation\. Bank-IMF partnership in Treasury-related operations\. In this project as in several others, e\.g\., Treasury projects Kazakhstan, Hungary, etc\., the partnership between the Bank and the Fiscal Affairs Department (FAD) of the IMF in terms of delivery of coordinated policy advice, close monitoring and follow-up has been critical for successful project implementation\. The consistency and continuity in the advice was made possible by the continued association of the same IMF Treasury advisor throughout the major part of the project duration\. This enabled the availability of good functional and technical advice to the Borrower during the critical implementation phases\. Technical members of the Bank team at appraisal of this project were also involved with project supervision up to completion\. This contributed to continuity of advice\. The requirements for the inclusion of appropriately qualified technical staff in the project team for projects involving the implementation of a major countrywide information systems network needs to be recognized in the Bank\. Implementation capacity\. The Government's ability to staff the project team with an extremely competent project manager and with a dedicated team of Treasury staff was critical during the testing and implementation phases of the new system\. The Government was also able to set up a team of extremely competent local consultants experienced in setting up complex information systems who were able to design, develop, and implement the new Treasury system\. However, low government pay scales will continue to be a crucial impediment to attracting and retaining qualified technical staff\. Increasing salaries and a parallel move at improving the service conditions of employees within the Treasury would be required to retain staff and ensure the longer term sustainability of the system\. In the interim, the Government may need to contract with the private sector for some technical support to ensure proper maintenance and operation of the system as it has done during project implementation\. Treasury management recognizes this requirement\. - 13 -  Time required for institutional building projects\. The project closing date had to be extended by two and a half years to complete the project activities\. Lack of capacity within the Treasury to handle the implementation of change associated with the new financial management system on such a wide scale has been the main impediment to the project being completed more speedily\. The time taken is not out of line with similar projects in other countries, such as Kazakhstan, etc\., where a treasury function was being set up ab-initio\. A recent study in ECA of Treasury systems in 13 countries has shown that the average time taken for setting a basic Treasury system in these countries is between seven to nine years\. The time actually taken to introduce changes in the legal framework and organization structures, re-engineer functional processes, and introduce new systems procedures on such a large scale across multiple government agencies needs to be recognized in planning similar projects\. Focused and well-defined program\. A focused and well-defined program and a single implementing agency are prerequisites to successful and smooth implementation\. These set of conditions were present in this Project\. Relating technical assistance operations to policy-based lending\. As mentioned above, the close linkages between the Treasury Systems Project and the IMF's economic support program, specially in the early years of the project, and the Bank's public sector adjustment lending (first, the PSRML and later, the PAL programs), have been particularly useful in focusing high-level Government management attention on the importance of achieving milestones in the Treasury project\. 9\. Partner Comments (a) Borrower/implementing agency: Borrower's Evaluation Report 1\. Assessment of the Project Objectives, Design, Implementation and Operation Experience The State Treasury of Ukraine (STU) has been developing along with the World bank during almost the whole time of its existence\. The beginning of the Project was contemporized with the period of establishment and initial development of treasury system in Ukraine\. At that time the Treasury was one of the departments at the Ministry of Finance\. From the first year, the Treasury has undergone dynamic development, but possessed a limited institutional capacity\. This was caused by the difficulties during formation period: low technical capabilities and weak methodological base, understaffed, overloaded by high-scaled government objectives\. Therefore, the Project objective that is the establishment of a fully functional automated treasury system as an effective tool for budget execution and cash management accompanied by financial and technical assistance was extremely important for STU and the budget system as a whole\. In general, the project content was built successfully\. It envisaged a substantial technical assistance to support treasury reforms and training\. A resident IMF adviser on treasury issues worked at the Treasury on the permanent basis\. Moreover, the numerous WB supervisory missions monitored the course of Project realization, amended the Project content with new assignments and addressed the current implementation problems\. - 14 -  The improvement of the Project at the preparation stage would have been better if there was systematic government policy from one hand and strategic development program for the Treasury system on the other hand\. Unfortunately, we had to amend and extend the Project content during its implementation, for example, automation of accounting on treasury servicing of local budgets\. However, due to reasonable policy of the Bank we achieved the greater outputs than expected, within the available value of the Project\. 2\. Project Implementation The Project Implementation had been carried out properly\. An effective link has been established between main implementation agencies (STU, World Bank, IMF, PIU) and promoted the efficiency for project implementation process\. Among the factors that could facilitate the Project implementation, we would like to point out the following: experience and knowledge in design of payment systems, and WB procedures and guidelines, qualified personnel experienced in automation of accounting procedures, certain management culture in conjunction with experience of large-scale IT projects realization\. If the Treasury had these capacities at the Project start, this could reduce the implementation time and favored with the efficiency of the Project realization\. 3\. Achievement of Project Objectives All Projects objectives were accomplished that was confirmed by expectations of the Bank experts during supervisory missions\. In general, STU was established as a modern public financial institution, reached full functionality and became an effective instrument of budget control\. As far as the components are concerned: Part A: Technical Assistance in Designing and Implementing a Treasury System The institutional and legal framework for Treasury activities are in place\. The Treasury functionality is stabilized, including introduction of budget classification compliant with IMF's GFS methodology and implementation of new chart of accounts\. All Government payments are routed through the Treasury, which checks for budget appropriations, cash available, commitment before releasing the payment to be paid from the Treasury single account\. A full set of fiscal reports are produced by the Treasury\. Part B: Computer Hardware and Software A computerized transaction Treasury Ledger Systems based on automated system for accounting of budgets execution AS "Kazna" has been established and rolled out within the Treasury system\. The Treasury Single Account is built and legal framework on its functioning is set up\. The updated hardware platform for the Treasury has been installed on Intranet mode including telecommunication network rayon-oblast plus oblast-center, implemented DBMS Oracle (for budget revenues, banking part), Microsoft SQL (for budget expenditures, treasury part) as well as intrusion and antiviral protection systems\. - 15 -  Part C: Training During the course of the project a wide training program has been carried out\. The Treasury management and staff had the opportunity to attend workshops, conferences in international training centers and in Ukraine in the area of budget management and treasury practices\. Thus, valuable experience and practical recommendations were gained especially in terms of treasury servicing of local budgets\. 4\. Appraisal of the Borrower's Own Work from the Standpoint of Project development and Introduction Fist of all, it is experience gained in area of project management\. In the course of the Project the Treasury approach to its realization was improved significantly\. In the conditions of limited institutional capacities and uncertainty in budget policy in the Project start, approach to cooperation with the Bank was built taking into account the actual situation in budget sphere and availability of own recourses in the Treasury\. By the second part of the Project we worked out the effective strategy that allowed predicting possible problems, setting priorities for project measures as well as planning the Treasury activities\. Specific management culture and significant performance potential received due to experience of cooperation with the Bank, set the positive preconditions for a follow-up joint IBRD's project\. The Treasury did its best to disburse fully and effectively the Loan proceeds\. Obviously, some lack of experience in project management in the Project beginning could have been compensated by arrangement of workshop for the Treasury management in area of project and financial management and procurement\. It could be reasonable to envisage to great extent attraction of national intellectual resources for fulfillment of Project objectives\. This could facilitate the development and increase of S&T capacities in Ukraine\. Our experience in ICB procurements proved that the most appropriate procedure for complex IT solutions is 2-stage bidding with an accent on pilot projects\. Also the costs for maintenance and technical support are essential part of the procurement\. This significant amount, 10 and 20% of product costs (as charged by IT industry) should be accounted during cost estimates of IT procurement\. That also requires a bigger life cycle costs of IT procurement and should be taken into account while Project preparation\. In our opinion, the issue of authorized support on the out-sourcing principles should be addressed to greater extent in Ukraine\. The experience gained during the WB Project implementation made the State Treasury of Ukraine well-known institution in the area of international project realization\. We're sure that new approach to project implementation will be valuable in cooperation with other international donors\. - 16 -  5\. Appraisal of the World Bank Work from the Standpoint of Project Development and Introduction First of all, we would like to appreciate the excellent work of the Task Team, that provided efficient coordination and support of the Project from the Bank side as well as constant assistance given by the Bank Resident mission in Ukraine\. The main advantage of the Bank in terms of project implementation, to our mind, is the high degree of trust to the Treasury as implementing agency\. The next is flexible and sustainable policy taking into account the national specifics\. This allowed them to withdraw the excessive tensions in resolving of main strategic implementation issues\. A striking example is the approval by the Bank of the Treasury decision regarding own design and implementation of application software AS "Kazna" for Treasury information system\. At that time the Bank accepted the Treasury arguments, namely inability and unreadiness of the Treasury, in terms of functionality and technical capacities for procurement of off-the-shelf application software\. This favorable decision turned out to be quite effective for medium-term tasks of Treasury development and allowed financing AS "Kazna" implementation from Loan proceeds\. Some negative feature that could be mentioned was frequent introduction of new samples for IT procurement bidding documents and usage of trial version of Standard bidding document for complex purchases\. Relations with the Bank were very constructive\. Always we felt understanding attitude of the Bank representative to the Treasury\. Besides regular supervisory missions the Bank was open to discuss critical issues during meetings, negotiations, video-conference, etc\. Project implementation unit played a key role for successful project implementation and became an effective intermediate link between the Bank and the Treasury\. In our opinion, more decentralization within the Bank would reduce time for concordance and approval procedures, and would facilitate the timely project implementation\. Such processes have been introduced recently in financial management and procurement activities\. (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10\. Additional Information None\. - 17 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Introduce new budget classification compliant The new budget classification system and Use of the new budget classification system with GFS to be introduced in FY 1998\. new Chart of Accounts were introduced in and chart of accounts has improved the Improvements to be made over the course of 1998\. quality of fiscal reporting the project\. Develop the legal, regulatory and operational The Treasury was set up under a A Treasury centric budget execution system framework to implement the Treasury Presidential Decree in 1997 giving it the is now in full operation enabling the system\. authority to monitor budget execution\. A Government to ensure that all spending is in three-tier organization has been set up with accordance with budget appropriations and Establish Treasury Single account by FY Treasury offices at the Center, at each of the warrant allocations\. 1998; centralize all government payments 27 oblasts and about 650 rayons\. A Treasury through Treasury by June 1999, 70% by single account has been established in the June 1998\. National Bank of Ukraine (NBU) at the center in Kiev and at the oblast branches of the Central bank\. Most spending unit bank accounts have been closed and Government finances are lodged in the Central Bank\. Budget execution processes have been re-engineered and spending units route all expenditure transactions, including those related to staff salaries, through designated Treasury offices\. This change has taken place gradually over the period 1997 to 2000\. Improved cash management to result in a With the implementation of the new Treasury Implementation of the TSA system and reduction of government cash balances with system, most spending unit bank accounts consolidation of Government bank accounts the banking system to half the present with the private banking system have been into a TSA has eliminated idle balances in amount after the implementation of the full closed and a TSA was set up at the Central spending unit bank accounts\. system\. Bank in Kiev\. Balances in branches of the Central Bank at oblast branches are transferred each night to the TSA at the Central Bank in Kiev\. Develop methods to improve forecasting of The new Treasury system implemented Information available from the Treasury expenditure requirements and cash under the project has the capability to assist system is used to forecast expenditures and management\. in the forecasting of expenditure and cash for cash management management\. Assess training requirements for institutional A comprehensive training program was A sufficient number of Treasury staff have development, and develop and implement a initiated in parallel with the implementation of been trained in the operation and use of the training, skills upgrading, and recruitment the new AS KAZNA Treasury system\. system and trained Treasury staff now use program as may be necessary- Ongoing Documentation has been developed that the Treasury system on a day to day basis for throughout the project describes the operational procedures for all budget execution related functions\. carrying out treasury functions using the new system\. A total of about 1650 staff have been trained in the use of the new system over the last three years\. In addition the Treasury has developed a capacity to train new entrants and replacement staff on an ongoing basis\. - 18 -  Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Redesign budget classification system and A new budget classification system based on same develop a revised Chart of Accounts IMF's GFS and a new Chart of Accounts conforming with the IMF's GFS classification conforming to the new budget classification methodology was designed in 1997-98\. Develop the fiscal reporting system- start A basic fiscal reporting capability was same preparing fiscal reports using the interim established using the interim Treasury treasury system - FY1999\. system in 1999\. Upgrade interim system and hardware by The Treasury first upgraded the interim same June 1999\. Establish pilot system by June system developed under the IBL from 2000\. Install full system hardware and Government's own resources\. This was done software by December 2001\. in 2000\. This system was then replaced by a more fully functioning Treasury system AS KAZNA in 2002\. The new system has now been installed at all oblasts and rayons and is being used to process all central and local government expenditure and revenue transactions\. 1End of project - 19 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Equipment and Software 22\.77 25\.73 Technical Assistance 2\.59 0\.97 Training 0\.54 0\.27 Incremental Operating Costs 0\.27 0\.27 Total Baseline Cost 26\.17 27\.24 Total Project Costs 26\.17 27\.24 Total Financing Required 26\.17 27\.24 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 11\.59 0\.00 1\.50 9\.67 22\.76 (11\.59) (0\.00) (1\.50) (0\.00) (13\.09) 3\. Services 0\.00 0\.00 2\.44 0\.14 2\.58 (0\.00) (0\.00) (2\.44) (0\.00) (2\.44) 4\. Training 0\.00 0\.00 0\.54 0\.00 0\.54 (0\.00) (0\.00) (0\.54) (0\.00) (0\.54) 5\. Incremental Operating 0\.00 0\.00 0\.28 0\.00 0\.28 Costs (0\.00) (0\.00) (0\.28) (0\.00) (0\.28) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 11\.59 0\.00 4\.76 9\.81 26\.16 (11\.59) (0\.00) (4\.76) (0\.00) (16\.35) - 20 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 14\.11 0\.00 0\.76 10\.85 25\.72 (14\.11) (0\.00) (0\.76) (0\.00) (14\.87) 3\. Services 0\.00 0\.00 0\.97 0\.00 0\.97 (0\.00) (0\.00) (0\.97) (0\.00) (0\.97) 4\. Training 0\.00 0\.00 0\.27 0\.00 0\.27 (0\.00) (0\.00) (0\.27) (0\.00) (0\.27) 5\. Incremental Operating 0\.00 0\.00 0\.28 0\.00 0\.28 Costs (0\.00) (0\.00) (0\.28) (0\.00) (0\.28) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 14\.11 0\.00 2\.28 10\.85 27\.24 (14\.11) (0\.00) (2\.28) (0\.00) (16\.39) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Equipment and Software 13\.09 9\.67 14\.88 10\.85 113\.7 112\.2 Technical Assistance 2\.45 0\.14 0\.97 0\.00 39\.6 0\.0 Training 0\.59 0\.00 0\.27 0\.00 45\.8 0\.0 Incremental Operating 0\.27 0\.00 0\.27 0\.00 100\.0 0\.0 Costs - 21 -  Annex 3\. Economic Costs and Benefits N\.A - 22 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation October 1996 3 TTL, Informatics Specialist, IMF FAD Economist March 1997 3 TTL, Informatics Specislist, IMF FAD Economist Appraisal/Negotiation August, 1997 5 TTL, Informatics Specilaist, IMF FAD Economist, Procurement specialist, Financial Management Specialist December 1997 7 TTL, Informatics Specialist, IMF FAD Economist, Lawyer, Procurement Specialist, Financial Management Specialist, Disbursement Specialist Supervision 09/19/1998 2 Sr Informatics Specialist (1); S S Sr Eonomist (1) 10/23/1999 2 Informatics Specialist (1); Project U S Officer (1) 05/15/2000 3 TTL and Informatics Spec\. (1); S S Procurement Specialist (1); Disbursement Analyst (1) 10/21/2000 3 TTL and Informatics Spec\. (1); S S Proc Staff (1); Disb Staff (1) 06/02/2001 4 TTL and Informatics Spec\. (1); S S Proc Spec (1); Disb Analyst (1); IMF Advisor Designate (1) 12/01/2001 2 TTL and Informatics (1); Lead S S Economist (1) 03/05/2002 2 TTL/Informatics (1); IMF-FAD S S Economist (1) 10/17/2002 3 TTL and Informatics Spec\. (1); S S Proc Staff (1); Disb Staff (1); 06/20/2003 3 TTL and Informatics Spec\. (1); S S Proc Staff (1); Disb Staff (1); ICR 10/15/2004 3 TTL/ Informatics Spec\. (1); S S Proc Staff (1); Disb Staff (1) - 23 -  (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 18 39800 Appraisal/Negotiation 40 66820 Supervision 167 469000 ICR 8 20000 Total 233 595620 - 24 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 25 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 26 -  Annex 7\. List of Supporting Documents Staff Appraisal report, Technical Annex No: T-7184-UA Bank Mission Back to Office Reports and aide Memoires from 1997- 2004 - 27 -  - 28 -

REVIEW

P036405

 ICRR 12918 Report Number : ICRR12918 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 07/23/2008 PROJ ID : P036405 Appraisal Actual Project Name : Cn-wanjiazhai Water US$M ): Project Costs (US$M): 1351\.6 1072\.1 Country : China Loan/ US$M ): Loan /Credit (US$M): 400 324\.6 Sector Board : ARD US$M): Cofinancing (US$M ): Sector (s): Water supply (60%) Sewerage (20%) Sanitation (14%) Central government administration (6%) Theme (s): Water resource management (25% - P) Pollution management and environmental health (25% - P) Land administration and management (24% - P) Other urban development (13% - S) Rural services and infrastructure (13% - S) L/C Number : L4179 Board Approval Date : 06/03/1997 Partners involved : Closing Date : 06/30/2003 06/30/2007 Evaluator : Panel Reviewer : Group Manager : Group : Emily O'Sullivan John Redwood Monika Huppi IEGSG 2\. Project Objectives and Components: a\. Objectives: (a) PDO 1: reducing the severe water supply infrastructure bottlenecks that impede economic growth; (b) PDO 2: increasing employment and thereby reducing poverty, by eliminating constraints to development; (c) PDO 3:reducing the distress of the urban population caused by insufficient and intermittent water supplies, which are barely enough to meet their basic needs; (d) PDO 4: improving the environment by ending the overextraction of groundwater and the subsequent drying of surface streams and land subsidence, and by treating all waste, so as to reduce water pollution downstream; (e) PDO 5: creating a system to rationalize water use, by sector, and reducing water shortages by managing demand; and (f) PDO 6: promoting integrated management and financial independence for water institutions\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate):  YRDPC) (a) Yellow River Diversion Project Corporation (YRDPC ) (Appraisal US$963\.6 million; Actual US$994\.23 million) (a) the physical river diversion works (construction of tunnels and water delivery structures and equipment ); (b) resettlement and compensation for households displaced by the construction of aqueducts; (c) environmental management; and (d) consultant services\. (b) Water Resources Institutional Reform (Appraisal US$7\.7 million; Actual US$1\.84 million) Reform of all major water resource institutions will be undertaken within the Yellow River water delivery area : YRDPC, Fen-1, Fen-2, Fenhe Irrigation Bureau, Taiyuan Water Company and Taiyuan Sewerage Bureau \. The YRDPC, Fen-1, Fen-2, Fenhe Irrigation Bureau and the Taiyuan Groundwater Institution and Rural Groundwater Institution will be integrated into a Upper Fen River Basin Corporation (UFRBC) and will be responsible to license all water sold (surface or groundwater) to all users in the Upper Fen Basin \. The component also include the corporatization of the major water institutions \. (c) Water Pollution Control and Industrial Waste Management (Appraisal US$10\.6 million; Actual US$24\.4 million) This component included: (a) an environmental master plan for Taiyuan, which would involve studies on a wastewater permit system, pollution enforcement, and a phased pollution prevention program; (b) an in-plant wastewater monitoring system and effective pollution permit system, with charges high enough to deter industries from discharging waste above the standards; (c) training and upgrading Environmental Protection Bureau (EPB) staff skills to prevent pollution, establish and operate pollution permit systems and a data base for monitoring water and wastewater quality; (d) a fund to introduce cleaner technology in the seven main polluting industries (steel, coal, coke, pharmaceuticals, paper, fertilizer and chemicals )\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: • The project was extended four times primarily as a result of delays in addressing institutional and policy reform \. • Share of beneficiary (Government)- Appraisal US$921\.6 million; Actual US$747\.5 million • There was a cancellation of US$ 75 million from the loan as a result of procurement issues \. The cancellation was based on the request from MOF due to the disagreement between Shanxi Province and the World Bank on the issue of awarding the Lot IV contract for the connecting works \. • Component A costs were greater than at appraisal due to higher than expected costs for construction of the general main tunnels and the south main tunnels \. • The ICR does not explicitly describe the reason for the reduction in cost for Component B; however, it was likely due to its slow progress\. • The cost by component table in the ICR does not make it clear why an additional US$ 13\.8 million was spent for Component C\. 3\. Relevance of Objectives & Design: Overall rating for relevance: Modest Relevance of project objectives : Substantial \. Project objectives remained relevant to country conditions throughout implementation as the project is part of a continuing national water sector development program in the Shanxi Province\. As well, the objectives were aligned with the 2003 CAS\. Specifically, the objectives were consistent with the third thematic pillar in the CAS to facilitate an environmentally sustainable development process through relevant actions including strengthening effectiveness of environmental institutions, managing water resources, and protecting global environmental commons \. Relevance of project design : modest \. While project design supported the goals of project objectives, significant problems existed with the design of indicators for the PDOs \. Though most objectives were relevant, PDO 1 was not well-defined and there was a gross overestimation of the future industrial demand for water on the part of the Bank as well as the Government\. Significant changes in industrial technologies and production were not adequately considered up-front\. This serious quality-at-entry problem seems to be the main reason why the project failed in economic terms\. PDO 2 was too general\. The degree of complexity involved in achieving the institutional reforms proposed in component B were not adequately accounted for, as expressed in the ICR \. In addition, project design did not appropriately account for the amount of time necessary to complete the components \. 4\. Achievement of Objectives (Efficacy): Overall achievement of objectives is rated Modest \. PDO 1: reducing the severe water supply infrastructure bottlenecks that impede economic growth \. Modest \. While industrial output did increase during the years the project was implemented, it was determined that this outcome was not attributable to the activities designed to increase water supply as the assumed positive relationship between the two was found to be false\. Instead, annual water consumption declined significantly as a result of improved technology, increased efficiency in water use, and strict enforcement of environmental laws that were not adequately taken into consideration at appraisal \. However, the planned infrastructure was successfully completed \. Due to the undertain connection between the project input and outcome, the overall rating is modest \. PDO 2: Increasing employment and incomes by eliminating the paramount constraint to development \. Non -evaluable \. The objective was very broad thus making it difficult to attribute any improvements to project Non- activities\. It is unclear how the project component activities directly contributed achieving the objective \. Rapid growth occurred in non-water intensive industries during the same period as well, thus making it hard to give all credit to the project\. PDO 3: Reducing the distress of the urban population caused by insufficient and intermittent water supplies, which are barely enough to meet their basic needs \. High \. The project achieved 159% of the SAR target\. The objective was more clearly defined and improvement was easier to measure\. PDO 4: Improving the environment by ending the over extraction of groundwater and the subsequent drying of surface streams and land subsidence, and by treating all waste, so as to reduce water pollution downstream \. Modest \. The project achieved 77% of the SAR target for total extraction of groundwater \. However, water quality improvements were more difficult to quantify as no systematic monitoring was undertaken \. Furthermore, in order to reduce the pressure on groundwater, the transferred water (for which too much capacity was built given the overestimate of industrial demand ) should have been priced lower than water from underground sources \. Instead, exactly the reverse occurred, creating the wrong incentive in relation to this objective \. Considering the overestimation of demand for water, it is possible that the decrease in extraction of groundwater had to do with improved efficiency, rather than project activities \. PDO 5: Creating a system to rationalize water use, by sector, and reducing water shortages by managing demand \. Negligible \. It was not clear in the SAR what project outputs were associated with the achievement of this objective \. While the ICR includes the establishment of the unified Fen River Basin Commission as an achievement, this would seem more appropriate for PDO 6 as it was an effort to promote integrated management \. Because this objective was vague, success was both difficult to achieve or measure \. PDO 6: Promoting integrated management and financial independence for water institutions \. Negligible \. Corporatization of major water institutions was not achieved \. The legislation to establish the Upper Fen River Basin Commission was approved, however, this was after the project closing date \. 5\. Efficiency (not applicable to DPLs): Overall efficiency rating: Negligible \. The EIRR was calculated for the SAR to be 22% using both a willingness to pay and consumer surplus approach to derive a price for domestic water, as well as input /output models and linear programming to determine the value of water for industrial purposes \. These methods were adopted based on project cost and benefit streams defined in the SAR and a 50-year project life\. The SAR did not account for environmental externalities which may have affected the results \. More important, the linear model used to calculate the marginal value of water by sector was not appropriate as it did not allow for the consideration of constraints such as labor or industrial capacity\. In other words the model assumed that as long as water was made available, industry would be able to grow\. Further, the analysis failed to recognize the important role of rapid adoption of new technology, which did in fact occur, and allowed industry to grow without having to utilize increasing amounts of water \. The ERR was recalculated using actual project costs, current prices and the volume of water delivered \. The conclusion was that the project was not economically viable, with an ERR on 0\.85% with over design in capacity - capacity utilization for the project was found to be just 23%\. Further, ex-post cost effectiveness analysis was limited due to an absence of baseline unit rate norms in the SAR, as noted in the ICR \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal Yes 22% 71% ICR estimate Yes 0\.85% 93% * Refers to percent of total project cost for which ERR/FRR was calculated\.  6\. Outcome: While the project exceeded its original target for water supply to households (159% of SAR) and substantially decreased overdraft of groundwater (77% of SAR target), it was less successful in achieving its other objectives \. Relevance of project design was modest, as well as project efficacy, both due largely to the failure to account for improvements in technology and efficiency in water usage \. The result was a very poor efficiency rating as project physical investments were greatly over dimensioned \. Corporatization of major water institutions failed to occur, and although the unified Fen River Basin Commission was established, this did not happen until just before project closing, thus is not yet fully operational \. As already discussed, although economic growth occurred during the project period it cannot be attributed to the project as water use actually decreased as a result of greater efficiency and improved technology\. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: Environmental risks may in fact pose substantial risk to development outcome as future impacts on groundwater extraction remain unknown\. The ICR does not adequately address social risks, therefore it is uncertain whether or not these are actually negligible, as rated by the ICR \. Combined with negligible technical risks and modest to substantial risk associated with financial, economic, and institutional aspects, the overall risk to development is moderate\. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: Assessment of Bank performance in the ICR was weak in that adequate detail was not provided to explain the ratings\. A central problem at entry was due to the overestimation in demand for water, despite evidence in the SAR that evidence was available to suggest that water efficiency was improving \. Bank intervention may have been more effective had it been a more programmatic approach in line with the project being part of a long -term government program\. Inadequate attention was paid to the degree of political willingness to adopt reform, the complexities of dealing with multiple water agencies, and preparation of a realistic time table for project completion\. In the first three years of project implementation, supervision missions did not sufficiently address institutional reforms\. Once physical works were completed, supervision improved \. The Bank's flexibility in granting extensions to the closing date and continued dialogue with stakeholders were instrumental in bringing about reform\. at -Entry :Moderately Unsatisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Satisfactory c\. Overall Bank Performance :Moderately Unsatisfactory 9\. Assessment of Borrower Performance: Project design was based in part on faulty analysis which led to an over -estimation of the industrial demand for water as well as an ineffective pricing system that allowed for the continued over -extraction of groundwater\. The opportunity to synchronize institutional aspects with construction was missed early on during project design, thus leading to problems during implementation \. While the government had a long standing commitment to water reform, in practice there was much difficulty met in producing change within the water department \. There was an acute lack of attention to the complexity involved in institutional and pricing reform \. The implementing agency was successful in completing components necessary to delivering water to households beyond the SAR target as well as substantially reducing groundwater extraction \. a\. Government Performance :Moderately Unsatisfactory b\. Implementing Agency Performance :Moderately Satisfactory c\. Overall Borrower Performance :Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization:  M&E design and implementation were weak for several reasons \. Assumptions regarding the demand for water in PDO 1 were over-estimated and the indicator was not appropriate in determining whether water supply was a contributing factor in industrial growth \. Rather it monitored growth by sector and water deliveries, assuming the two were positively related\. PDO 2 had the same problem in that the assumption was made that improvements in employment and income would be attributable to the project, as the indicator was simply to monitor growth in these two areas\. As previously noted, PDO 5 was poorly defined thus preventing design of useful indicators \. It was not clear in the SAR which project activities would contribute to this objective \. PDO 6 indicators were found difficult to define, thus difficult to record \. The ICR notes that milestones in the complicated process of institutional reform could have been noted in order to form a basis for discussion regarding the progress on the activities \. M&E utilization was inadequate primarily as a result of poor design and implementation of M&E \. Even for PDOs 3 and 4 where M&E design was acceptable, indicators were not effectively used due to early recognition of the unlikelihood of reaching delivery targets, as noted in the ICR \. a\. M&E Quality Rating : Negligible 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): This section of the ICR was weak as inadeqautely dealt with the following issues : • Procurement problems leading to cancellation of US$ 75 million\. • Environmental improvement was a project objective, however there is nothing regarding how safeguard issues were handled during implementation\. • Resettlement was included in Component A, however the safeguard issues were again not addressed \. As a result of the over-dimensioned design of the scheme, the government has recently decided to expand the delivery of transferred water to new areas not previously covered under the project (e\.g\., surrounding peri-urban areas around Taiyuan and other industrial and urban centers in central Shanxi along the line )\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Unsatisfactory Unsatisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Moderately Moderately Unsatisfactory Unsatisfactory Borrower Performance : Moderately Moderately While it may be the case that the Satisfactory Unsatisfactory government was committed to the long-term program to which this project contributed, there was a lack of commitment to dealing with the complexities of reform\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: • The project design should have considered how to achieve the project development objectives in the most effective way based on realistic water demand projection and should have given much greater priority to demand management and efficiency improvements among industrial water users rather than focusing primarily on large-scale engineering solutions \. • Broadly defined project development objectives coupled with indicators with weak causal linkages not only impede supervision and impact evaluation, but they can result in wasted resources, both financial and temporal\. • Projects that include infrastructure aspects as well as reform to institutions and financial policies can require increased attention to the institutional aspects, especially in the early stages, in order to ensure the two stay synchronized\. 14\. Assessment Recommended? Yes No Why? While the project encountered problems due to design and the complexities of institutional reform, it was able to successfully deliver water to underserved households \. In addition, there was substantial success in reducing groundwater extraction, which may be of interest to the IEG Water Study \. 15\. Comments on Quality of ICR: The ICR is concise and presents evidence to support the ratings offered \. The ICR is candid, discussing both strengths and weaknesses of project design, implementation and outcome \. The lessons flow from the body of the paper\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P006005

 ICRR 10529 Report Number : ICRR10529 ICR Review Operations Evaluation Department 1\. Project Data : OEDID : OEDID: L3280 Project ID : P006005 Project Name : Provincial Development Project Country : Argentina Sector : Other Non-sector Specific L/C Number : L3280 Partners involved : Inter-American Development Bank (IDB) Prepared by : Navin Girishankar, OEDCR Reviewed by : Hernan Levy Group Manager : Ruben Lamdany Date Posted : 10/14/1999 2\. Project Objectives, Financing, Costs and Components : Objectives : The Provincial Development Project (PDP-I) sought to provide financial support and incentives for provinces to implement their own adjustment programs, focused on own-source revenue enhancement and expenditure control\. Specifically, the operation aimed to (i) improve financial management so provinces can convert deficits to surpluses, (ii) build provincial capacity for expenditure programming, and (iii) finance institutional development and physical investments\. Components : PDP-I financed sub-projects in 23 provinces under two components\. The institutional development component financed technical assistance, training, and the purchase of equipment needed to enhance own-source revenues\. The physical investment component financed \. Costs and Financing : Total rehabilitation and completion of existing and unfinished works in public infrastructure and facilities project costs amounted to $629\.4 million equivalent\. IBRD commitments of $200 million were fully disbursed by project completion, while the IBD disbursed $203\.6 million\. The remainder was covered by counterpart financing provided by participating provinces, which amounted to $225\.8 million\. This multisectoral loan was approved December 18, 1990, became effective on July 5, 1991 and closed on December 21, 1998\. While the national government was the borrower for the PDP-I, funds for sub-projects were on-lent to provinces on the same terms and conditions as the Bank loan\. Provincial governments had to meet criteria related to creditworthiness, fiscal performance, and implementation progress in order to be eligible for the on-lent funds\. This demand-driven approach meant that actual allocations between institutional development and physical investment components of the PDP-I were not determined ex ante,but rather evolved based on the types of sub-projects proposed and approved\. It revealed significantly higher demand for institutional development activities (and less for physical investment) than anticipated at appraisal\. 3\. Achievement of Relevant Objectives : The PDP-I contributed to Argentina's overall macroeconomic objective of fiscal deficit reduction\. The fiscal and expenditure management measures of the PDP-I were partly responsible for the drop in the primary deficit of all provinces from 1\.6% of GDP in 1990 to 0\.1% in 1997\. In addition, the PDP-I laid the foundation for 'changing the rules of the game' governing provincial fiscal management by introducing notions such as credit-worthiness, etc\. Specifically, the operation supported 318 sub-projects directed towards short-term technical assistance as well as 'strategic' objectives (e\.g\., tax administration, cadastres, property registries)\. These helped provinces make important strides towards own-source resource mobilization, which increased 13% in real terms between 1994 and 1997\. The physical investment component financed 55 sub-projects with an average weighted ERR of 39%\. These included the rehabilitation of 1200 km of provincial roads, 84 hospitals (servicing 130,000 in-patients annually), and 214 school buildings (serving 80,000 students)\. Monitoring as part of the eligibility requirements of the PDP-I led to the development of one of Latin America's best information systems on provincial finance\. 4\. Significant Achievements : Aside from those listed above, three other achievements of the PDP-I are noteworthy\. Innovative design : The first multisectoral project that on-lent funds to provincial governments, the PDP-I introduced concepts of demand-orientation and flexibility in center-province relations in Argentina\. Changing the rules of the game : Embedded within the PDP-I were incentive mechanisms such as the creditworthiness and fiscal performance eligibility criteria that introduced new processes and rules based on principles of prudent financial management\. As the ICR indicates, follow up projects including PDP-II and the PRLs would further develop an incentive framework for provincial fiscal management based on these principles\. Building knowledge and trust : During preparation, the Bank solicited the input and participation of representatives from the provinces\. On the 14 supervision missions undertaken during PDP-I implementation, visits to the provinces helped establish personal and institutional contacts with provincial authorities, which were then formalized through interactions between the Central Executing Unit (CEU) in the Ministry of the Interior and the Provincial Executing Units (PEUs) in the provinces\. This emphasis on building trust and knowledge, if continued in follow-up projects, will likely promote the types of learning as well as cultural change necessary for public sector reform to become a reality at the provincial level\. 5\. Significant Shortcomings : First, the cadastre and property registry sub-projects--despite helping increase the tax base of provinces--did not lead automatically to increased revenue\. A more deliberate strategy for tax collection and compliance is required if that objective is to materialize\. Second, the Bank underestimated the demands in terms of coordination that this type of operation placed on the center as well as the provinces, thereby leading to delays in implementation\. Third, an important aspect of coordination and enforcement of minimum standards is rigorous monitoring and evaluation of sub-projects\. The Bank's assistance did not include a methodology or toolkit for monitoring the institutional development impact of sub-projects, which accounted for nearly $30 million\. Without such a framework, assessment of institutional development impact tends to be largely qualitative and based on inputs (e\.g\., numbers trained or number of consultants hired) rather than results\. Fourth, the project supported a variety of capacity building inputs, but did not explicitly diagnose and rectify disincentives in the pay and employment systems of provincial governments (e\.g\., real wage level, decompression levels, opportunities for decision-making, and the autonomy to innovate)\. Finally, the project did not contain any measures to limit regional inequalities that would have been reinforced by a demand-driven approach (since richer provinces were more likely to have met creditworthiness criteria than poorer ones, etc\.)\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Highly Satisfactory Highly Satisfactory Borrower Perf \.: Highly Satisfactory Highly Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : This innovative project offers five lessons that could be applicable in other countries and regions\. First, the success of national fiscal adjustment programs depends on the ability of states/provinces to carry out similar reforms to encourage prudent fiscal behavior and operational efficiency in service delivery\. Second, when possible, changes in the rules of game for intergovernmental relations such as strict eligibility criteria used in private markets (e\.g\., creditworthiness) or demand-driven sub-project identification should be embedded upstream, in the design of projects\. Third, operations that support on-lending for multisectoral sub-projects place significant demands on central and provincial authorities as well as the Bank and its partners in terms of coordination capacity and enforcement of minimum standards\. Finally, multisectoral loans involving cadastre, property registry and tax administration projects should be implemented in an integrated manner with a special focus on sequencing\. 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : The ICR is well-argued\. The annexes contain relevant information on the type and location of sub-projects, numbers of beneficiaries, IERR, etc\. Detailed evaluations of different types of sub-projects -- cadastre, tax administration, physical investment, and financial management -- are also provided\. The links between the PDP-I and its follow-up projects are also explained\. The lessons section, however, was not very clear\. The seventeen lessons listed in the executive summary could have been consolidated and articulated more cogently\. Finally, ICR should have commented on the influence (if any) that sub-projects had on how social and infrastructure services were delivered\.

REVIEW

P124514

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) Report Number : ICRR0021082 1\. Project Data Project ID Project Name P124514 BD: Local Governance Support Project II Country Practice Area(Lead) Bangladesh Social, Urban, Rural and Resilience Global Practice L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-50190 30-Nov-2016 532,000,000\.00 Bank Approval Date Closing Date (Actual) 29-Nov-2011 30-Jun-2017 IBRD/IDA (USD) Grants (USD) Original Commitment 290,000,000\.00 0\.00 Revised Commitment 290,000,000\.00 0\.00 Actual 265,917,116\.75 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Cynthia Nunez-Ollero John R\. Eriksson Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Components a\. Objectives Both the Financing Agreement (FA) and the Project Appraisal Document (PAD) stated the Project Development Objective (PDO) as: "to strengthen Union Parishads (UPs) to become accountable and responsive, supported by an efficient and transparent intergovernmental fiscal system (FA, p\. 5, PAD, paragraph 14)\." This PDO was amended in the March 2015 Restructuring to clarify that the fiscal transfer system targeted only the UP level of government\. The PDO was revised "to strengthen UPs to become accountable and responsive, through an efficient and transparent fiscal transfer system to UPs\." This Review focused on the amended PDO\. Union Parishads (UP) were the lowest tier of local government Page 1 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) in Bangladesh\. b\. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? No d\. Components 1\. Union Parishad (UP) Grants (US$460\.42 million at appraisal, US$460\.40 million actual)\. This component financed basic block grants and performance based grants used by UPs to execute assigned expenditure mandates\. Funds were also used to provide incentives (Performance Based Grants) for performance in governance and public financial management areas such as (i) Planning and Budgeting, (ii) Public Financial Management, (iii) Own Source Revenue, (iv) Monitoring, transparency and accountability, and (v) Effectiveness of Village Courts\. 2\. Information Flows and Accountability (US$8\.92 million at appraisal, US$8\.21 million actual) This component financed UP audits and audit reviews, quality assurance audits by the Comptroller and Auditor General, accreditation of auditors, expansion of the Management Information System (MIS) of the Local Government Division (LGD) to district level, project related information, education and communication activities, and mid-term and final project evaluations\. These activities were to strengthen accountability systems, improve transparency, and inform decision making among UPs\. 3\. Institutional Development (US$30\.21 million at appraisal, US$24\.02 million actual)\. This component financed direct UP training; accreditation of capacity building service providers; personnel, training and equipment to strengthen the office of the Deputy Director for Local Government (DDLG); dissemination of the UP Operations Manual (UP OM); capacity building of LGD and other agencies, including training and technical expertise; and policy studies to strengthen the intergovernmental system at all levels\. According to the Task Team Leader in an email dated February 19, 2018, the difference in disbursements and appraisal cost was the non-completion of training of newly elected UP officials (in late 2016-early 2017)\. In addition, there were savings from the procurement of vehicles; and the non-use of TA directed at LGD and other agencies\. 4\. Project Management (US$3\.83 million at appraisal, US$2\.81 million actual)\. This component financed technical and financial support to the National Project Director (NPD) and two Deputy Project Directors (DPDs) and other project implementing staff in: (i) financial management, (ii) procurement, (iii) safeguards, and (iv) project management\. It also covered logistical and incremental operating costs associated with project implementation\. Page 2 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The total project cost reached US$532\.00 million and disbursed US$265\.92 million\. The International Development Association (IDA) Credit reached US$290 million at appraisal and disbursed US$265\.92 million\. The difference was due to (I) exchange rate losses between the US$ and SDR, (ii) use of savings from procurement of vehicles, and (iii) non use of training to newly elected government officials and technical assistance to LGD and other agencies\. Financing: The International Development Association financed this Specific Investment Loan\. Borrower Contribution: The Borrower committed US$242 million at appraisal but no disbursements were reported by project close\. However, the ICR stated that the Government fully met counterpart funding requirements in a timely fashion (ICR, paragraph 44)\. The Task Team Leader confirmed in an email on February 19, 2018 that the Borrower did disburse the full US$242 million but that a portal glitch did not capture this information\. The team will correct the datasheet\. Dates: The project became effective on February 2012 and was scheduled to close by November 2016\. A Mid Term Review was conducted in September 2014, as planned\. There were two Restructurings: • Level 1 In April 2015 to clarify the focus of the PDO, amend the Project Results Framework, and change legal covenants\. • Level 2 in November 2016 to extend the project closing date to June 2017 and reallocate resources among disbursement categories\. 3\. Relevance of Objectives Rationale The PDO - "to strengthen UPs to become accountable and responsive, through an efficient and transparent fiscal transfer system to UPs\." - was relevant to the country's long-term development plan called Vision 2021\. Vision 2021 envisaged the devolution of power, function, and fiscal authority to local government according to the constitutional provisions for elected bodies at each level of administration\. To implement this vision, the Government prepared a Perspective Plan 2010-2021\. Under this Perspective Plan, the country's Seventh Five Year Plan (FY2016-2020) “Accelerating Growth, Empowering Citizens,” aimed to develop strategies, policies and institutions to accelerate inclusive growth, reduce poverty, empower citizens and promote sustainable development\. The plan identified development priorities such as ensuring sound governance institutions, addressing globalization and regional cooperation, energy security, sound infrastructure and managing the urban challenge, and mitigating the impacts of climate change\. The plan cited that one of the institutional foundations of stability to support this nascent lower middle income economy (status achieved in 2015) was facilitating change in the political system through local governance\. The plan recognized that the Page 3 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) devolution of fiscal authority required a strengthened capacity for accountable local resource mobilization and responsive expenditure management\. These factors formed part of the PDO\. The PDO was relevant to the Bank’s FY2016-20 Country Partnership Framework (CPF)\. The primary objective of the CPF was to increase engagement in the three foundational and five transformational priorities identified in the country diagnostic\. The three foundational priorities were (1) maintaining macroeconomic stability, (2) promoting human development, and (3) strengthening institutions\. The five transformational priorities were: (1) energy, (2) inland connectivity, (3) regional and global integration, (4) urbanization, and (5) adaptive river delta management\. The CPF indicated that Bank support to strengthening the government's governance systems was critical to increasing the country's competitiveness\. The PDO was relevant to this approach as well as to the Bank's support to operational designs that help enhance the functions and service delivery of local governments through fiscal decentralization and performance-based resource allocation (CPF, paragraph 43)\. The PDO contributed to meeting the CPF Focus Area 1 - Growth and Competitiveness and Objective 1\.3 Improved delivery of basic urban services\. The PDO complemented the Bank's efforts to work with local governments in enhancing their performance and service delivery during the CPF period\. The CPF noted that the LGSP series supported the establishment of Union Digital Centers to enable the rural population to access citizen services to complement the implementation of the 2009 Right to Information (RTI) Act that gave Bangladeshi citizens greater access to information\. These centers were piloted in 30 UPs in 2009 and rolled out to all 4,547 UPs by 2011\. (CPF, Annex 2, paragraph 25)\. The relevance of the PDO was also evident in the recently approved follow-on project, LGSP III, which built on the LGSP II objectives intending to replicate project outcomes at the municipal level\. Rating High 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective "to strengthen Union Parishads (UPs) to become accountable and responsive, through an efficient and transparent fiscal transfer system to UPs\." Rationale The design of LGSP II benefitted from lessons gained during the implementation of the predecessor LGSP\. LGSP II aimed to improve and accelerate local government delivery of public goods and services by (i) making discretionary fiscal resources available to UPs in a timely and transparent manner; (ii) putting in place institutionally sustainable mechanisms for accountability; (iii) supporting capacity and institutional development of the inter-governmental system; and (iv) improving the ways in which local government performance and activities were monitored, evaluated and supervised\. OUTPUTS: The following outputs were exceeded: Page 4 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) • UPs achieved 68\.7% increase in mobilizing own source revenues (baseline 0, original target 33%) • There was a 17\.38% annual increase in basic block grants transferred to UPs (baseline 12\.2%, target 12%)\.The ICR reported reaching 144\.8% increase in the final year\. • There were 83,767 functionaries from the UPs trained by Upazila-based Resource Teams (baseline 0, original target 62,382, revised target 78,132) • The Deputy Director for Local Governments submitted all required biannual reports according to schedule (baseline 0, original target 75%, revised target 90%)\. • 99\.5% of all UPs submitted biannual performance reports according to schedule (baseline 0, original target 50%, revised target 90%, exceeded) The following outputs were achieved or substantially met: • A Fiscal Transfer Wing for UPs was established at the Local Government Division (LGD) to institutionalize the fiscal transfer system for UPs (baseline 0, target achieved) • A Performance Based Grant system was established for all UPs and was operational nationwide at project close (baseline 0, target achieved)\. • UP performance audits were conducted annually (baseline 0, target annual)\. Chartered accountants overseen by the Comptroller & Auditor General (CAG) conducted more than 11,000 audits of UPs under the project\. • Safeguards review was carried out annually in 1 UP per Upazila (baseline 0, target annual)\. An Upazila (or sub-district) is an administrative unit of the Government of Bangladesh above the UP\. There are 450 Upazillas in the country\. • Annual Project Steering Committee meetings were held to take stock of project progress (baseline 0, original target, annual) • Annual work plans, including procurement plans were submitted to the Project Steering Committee and the World Bank by June 30th of previous FY (baseline 0, target annual) • Ward Sabahs (local councils) were functional in all UPs (baseline 0, original target 50%, revised target 100%) • 97% of all UPs had periodic plans (baseline 0, original target 50%, revised target 100%, substantially met)\. • 97\.5% of all UPs submitted annual budget plans to the Upazila Nirbahi Officer according to schedule (baseline 0, original target 50%, revised target 100%, substantially met) • There were 470 Upazila Women's Forums that were functional by project close (baseline 80, original target 242, revised target 486, substantially met) OUTCOMES: • 71% of beneficiaries surveyed expressed satisfaction that UPs were responsive to the service delivery preferences of their constituents and were meeting local priorities (baseline 40%, original target 50%, Page 5 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) revised to 60\.5%, exceeded)\. • Based on a 12-point scale, the average nationwide performance scores of UPs indicating improvements in governance and public financial management areas reached 7\.8 (baseline 0, target 7\.5, achieved) • Two basic block grant tranches a year were released that were formula-based (transparent), announced in advance and disbursed to eligible UPs on a predetermined schedule (predictable)\. representing fiscal transfers to UPs (baseline 0, target 2, achieved)\. The Expanded Block Grants (EBGs) based on population and disbursed directly to UP bank accounts more than quadrupled resource transfers to UPs\. Rating High PHREVDELTBL PHOVRLEFFRATTBL Rationale The Project achieved its development objective of strengthening the capacity of the local governments at the UP level to provide constituent-responsive services\. There were minor shortcomings in achieving some of the outputs but most were either exceeded or substantially achieved\. Project components such as the Expanded Block Grants (EBGs) based on population and disbursed directly to UP bank accounts more than quadrupled resource transfers to UPs\. Chartered accountants overseen by the Comptroller & Auditor General (CAG) conducted more than 11,000 audits of UPs under the project\. Nearly 84,000 local public officials were trained in planning, budgeting, public financial management, safeguards compliance, and good governance\. UPs reported on good governance on a six-monthly basis to LGD who then aggregated these reports for oversight and program adjustments\. Participation through mandatory disclosure obligations, inclusive systems of planning, budgeting and scheme implementation improved transparency and accountability\. Small local infrastructures and service delivery schemes responded to local needs\. Overall Efficacy Rating High 5\. Efficiency Economic Efficiency: No traditional economic analysis was carried out at the time of appraisal because infrastructure investments were identified during implementation\. There was also no ex-post cost-benefit analysis because the size of the investments averaged about US$2,000 per project\. The 4,500 participating UPs each identified about 10 projects a year\. Following similar local government projects financed by the Bank, efficiency was measured according to whether or not schemes met the needs of beneficiaries (allocative efficiency)\. The ICR presented evidence from a beneficiary survey that 71% of constituents surveyed confirmed that projects financed by the UPs reflected local priorities and were selected in a transparent manner (ICR, paragraph 31)\. Technical efficiency was measured in terms of design parameters utilized, approved vs\. actual costs, and time overruns\. Two hundred UPs were surveyed at project close who Page 6 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) reported that no significant deviations from design parameters, actual costs were in line with approved costs, cost overruns were insignificant, and 85% of the projects were implemented within the allocated time\. The 15% that missed the deadlines were considered insignificant because of the small size of the project contracts\. Operational and Administrative Efficiency: Ninety eight percent of the IDA Credit was utilized\. A mid-term review (MTR) was undertaken as planned and the changes and adjustments agreed during the MTR were implemented\. The closing date was extended by seven months to utilize remaining funds, due primarily to the exchange rate gains between the Taka and SDR\. The additional time was also used to finalize some remaining aspects in operationalizing the delayed implementation of the MIS system\. Delay was due to lack of initial talent, compounded by unstable electric supply and available bandwidth at the UP level\. The full operationalization of the MIS system was carried over to the recently approved follow-up LGSP III project\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0 Not Applicable 0 ICR Estimate 0 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The project's objective was achieved with substantial efficiency\. The relevance of the objective and the achievement of efficacy were rated high\. A minor shortcoming in efficiency related to the delayed operationalization of an MIS system designed to cover reporting of outputs and outcomes from the UP level to the LGD level\. A beneficiary survey conducted at project close and the periodic reporting by the UPs and the DDLG mitigated this shortcoming during implementation\. The MIS system was expected to be fully functional during the follow on LGSP III\. a\. Outcome Rating Highly Satisfactory Page 7 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) 7\. Risk to Development Outcome Building on lessons from the implementation of the predecessor LGSP, the LGSP II design faced reduced risks during implementation\. LGSP II closed after disbursing about 98% of the IDA credit and exceeding, achieving, or substantially meeting PDO level and intermediate outcome indicator targets\. The Government's share of the block grants stood at 60:40 at project close compared to 50:50 in FY 2011-12 and was expected to increase to 100% by the end of the recently approved follow on project - the Third Local Government Support Project (LGSP III)\. UPs reported a 68\.7% increase in own source revenues, up from a baseline of 0 in 2011\. Financial and performance audits were routinely carried out and expected to continue as part of accessing block grants for local projects\. Audit quality was good and steadily improving\. Citizen participation has increased for the Ward Committees, Scheme Supervision Committees, Upazila women’s development fora and open budget meetings\. Capacity building and training of UP and District officials was expected to continue under the recently approved LGSP III\. With the ongoing implementation of LGSP III, there was little risk to maintaining the development outcomes of LGSP II\. 8\. Assessment of Bank Performance a\. Quality-at-Entry LGSP II was prepared during the implementation of the first nationwide effort to strengthen local governments, LGSP\. Lessons from that operation were included in the LGSP II design such as (i) adopting a results-based approach to decentralization and supporting policy reform with technical assistance to strengthen local capacity; (ii) predictable and timely release of block grants to strengthen UP planning and budgeting expenditures; (iii) introducing performance based grants as incentives to recognize improved local service delivery\. The PDO was simple, fully consistent with the government’s policy on improved decentralization and empowerment while being fully aligned with the Bank’s FY2011-15 CAS (see section on Relevance of PDO) and long-term lending strategy for Bangladesh\. Decentralization to subnational tiers of Government is a complex matter requiring continuous research about the ever changing socioeconomic and political scenario in the country\. Involvement in LGSP afforded the opportunity to stay abreast of the changing environment and the design of LGSP II incorporated all the lessons learned\. LGSP II continued to focus on UPs as these were the oldest and lowest tier of local government that were also closest to people in the target population; at the time of LGSP II, UPs covered approximately 75 percent of the total population of the country\. International experience encouraged the introduction of performance based financing\. All the project components complemented each other to achieve the project objectives and outcomes\. The appraisal of the project was thorough and paid close attention to all relevant technical, economic, institutional, fiduciary, social and environmental aspects\. Risk assessment was appropriate, as were the proposed mitigation measures\. The Results Framework was clear although modified in the 2015 Restructuring to remove ambiguity in the UP level focus of the PDO and the measure of its indicators and targets\. The one shortcoming in the design of this follow on project was the over-optimistic assessment of the operationalization of a web based MIS system that would gather data from the UP level and flow up to the LGD level\. Page 8 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) Quality-at-Entry Rating Satisfactory b\. Quality of supervision The Bank adequately supported the project agencies throughout project implementation\. Capacity building aspects of the project were addressed early on\. For example, the Bank conducted training in the environmental, social, financial management, procurement and M&E aspects of the project to ensure compliance with Bank policies considering the first time implementation at the UP level\. In addition, LGSP III was prepared in a timely manner to ensure the sustainability of LGSP II outcomes\. Progress was delayed in the early period of project implementation and another 8 months toward project close mainly due to the delay in the introduction of an MIS system to improve and strengthen the project M&E and complete UP financial and performance audits for FY 2016\. Recruiting staff, hiring of an MIS software development firm, and training adequate numbers of UP staff to operate the MIS were delayed\. This was accompanied by a lack of reliable power and unavailable internet systems in the UP areas\. Although delayed, the MIS was functional by project closure and was anticipated to be fully operational during the follow-up project, LGSP III\. Bank supervision and other resources, including timely support from the field office, were adequate\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The project implementing entity, the Local Government Division (LGD) is located in the Ministry of Local Governments, Rural Development, and Cooperatives in Bangladesh and was, among other project implementation responsibilities, tasked with project Monitoring and Evaluation (M&E)\. Design of the project M&E ensured that reporting, monitoring, and impact evaluation were mainstreamed in the LGD’s system and integrated monitoring and impact evaluation with policy making by strengthening the M&E wing of the LGD\. A senior M&E specialist advised LGD regarding M&E systems and introduced activities to strengthen M&E such as rolling out MIS to the subnational levels, introduced annual performance audits\. submission of bi-annual reports to the Deputy Director for Local Governments\. A survey at the end of the predecessor LGSP project served as baseline for LGSP II\. A Mid Term evaluation and end of project evaluation were planned\. The theory of change was reflected in the project's results framework consisting of one PDO and three outcome indicators\. Baseline data were established under the predecessor LGSP\. Ambiguity in the PDO was addressed in the 2015 Restructuring to note that inter-governmental fiscal transfers only applied to UP level transfers\. Specific, measurable, time bound intermediate outcome indicators were provided under each of the four project components although refinements were introduced in the 2015 Restructuring\. M&E design also called for the installation and operationalized of a properly functioning management information system (MIS) and was to be Page 9 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) installed from the UP level to the LGD level\. This web-based MIS system included accountability mechanisms in its design\. b\. M&E Implementation The 2015 Restructuring addressed ambiguity in the PDO to reinforce the focus of the project at the UP level only\. For example, two of the three outcome indicators clarified the unit of measure applicable to scoring the performance of UPs and that the release of tranches was counted annually\. One intermediate outcome indicator was dropped because it referred to all local governments and was outside the scope of the project\. In addition, the fiscal cell at LGD managed only UP transfers, and performance audits were to be measured annually\. A couple of the intermediate outcome indicators were revised to show percentages with absolute numbers and targets inferred\. Data were collected routinely as a continuation of LGSP I processes\. District reports by the Deputy Director for Local Governments together with field visit reports prepared by LGD teams were used to generate data to track the use of project funds and monitor results\. Annual reports on training activities for UPs were prepared by the training providers such as the National Institute of Local Government, Bangladesh Academy for Rural Development, Rural Development Academy and the Local Government Engineering Department\. LGD consolidated an annual report from these various sources\. Difficulties in recruiting a suitable MIS Expert delayed MIS software development\. A lack of uninterrupted electricity at steady voltage and inadequate internet band-width contributed to the delays in operationalizing the MIS system\. The web-based MIS system started functioning at the UP level but not at the district level by project close and LGSP III was expected to complete the full installation and use of the system\. c\. M&E Utilization The UPs, with the help of the Deputy Director for Local Governments and District Facilitators submitted operational and financial monitoring reports and data\. Private chartered accountants carried out financial audits of all UPs annually and all UPs were in compliance\. Performance audits were also carried out based on data collected by the UPs and through inspection of completed sub-projects\. These performance audits determined eligibility rankings for accessing performance block grants, which were allocated to qualified UPs\. UPs and LGD prepared periodic progress reports for managing project activities and policy discussions\. Adjustments were made to the PDO, modified a couple of outcome indicators and some intermediate indicators were also modified accordingly\. A Mid Term Review was conducted as planned, which contributed to the modifications of targets and mid-term measures of some indicators and 200 randomly selected UPs participated in a beneficiary survey at project closure\.The M&E activities reported on project impact, cost effective use of project resources, and facilitated the approval of LGSP III\. An example in the use of MIS was the submission of annual performance audits to inform performance block grant decision making\. For another, MIS reporting also informed transparency and accountability policy, which facilitated participatory budgeting\. M&E Quality Rating Substantial Page 10 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) 10\. Other Issues a\. Safeguards The LGSP II was classified as Category B and triggered the following safeguards - an Environmental Assessment (OP/BP 4\.01) and Indigenous Peoples (OP/BP 4\.10)\. The PAD identified that minor environmental issues were anticipated when the UPs begin implementing the small scale community infrastructure schemes\. These included (i) arsenic and bacterial contamination in drinking water, (ii) unplanned road construction causing drainage blockages, (iii) improper sanitation and sewage systems, (iv) inadequate solid waste management, and (v) improper land filling leading to loss of water bodies and biodiversity (PAD, paragraph 67)\. The ICR reported that an environment and social management framework (ESMF) was adopted to identify environmental issues, and to prepare site specific Environmental Management Plans (EMP)\. Compliance with environmental standards was rated satisfactory\. (ICR, paragraph 54) even though a two-year lag in filling the position in the Project Management Unit hampered early compliance monitoring\. Mitigation measures were identified and reported undertaken in response to environmental issues arising from land based schemes\. District Facilitators, members of the Ward Committees and the Scheme Supervision Committees received training on safeguard management\. b\. Fiduciary Compliance Financial Compliance: Financial management risk was rated "substantial" at appraisal and remained during implementation because of the complex project activities and fund flow mechanism\. A time bound Financial Management Action plan was prepared and adopted\. Financial Management was rated satisfactory with no pending issues from the agreed action plan\. Interim unaudited financial reports were submitted in a timely manner and found acceptable\. Annual project financial statements were audited by the Foreign Aided Project Audit Directorate under the Comptroller and Auditor General's office and were issued unqualified opinions with a number of observations on prior audit reports\. Private chartered accountants carried out annual financial audits of all UPs and were found to be in compliance\. Performance audits were also carried out on the basis of data collected by the UPs and through field inspection of completed sub-projects\. Procurement: There were two sets of procurement arrangements: (a) procurement of goods and services by LGD and (b) procurement of works and goods by the UPs\. There were some minor delays in selection of consulting firms and also in procurement of goods by LGD\. However, the quality of procurement was satisfactory as LGD was supported by a procurement consultant throughout the project\. Major procurement in terms of cumulative value was done by UPs and these were mostly satisfactory as few issues were identified in yearly UP audits\. UP Procurement covered almost 90% of the project procurement\. To mitigate procurement risks, a comprehensive MIS system was developed under this project, which became partly operational in the last year of the project\. The MIS system covered all activities from planning to asset management including a “procurement module”\. The initial MIS data showed good results and full implementation of the MIS system in LGSP III was expected to further improve the transparency and efficiency in UP procurement\. Page 11 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) c\. Unintended impacts (Positive or Negative) --- d\. Other The CPF noted that the Local Governance Support Project supported the establishment of Union Digital Centers to enable the rural population access to citizen services to complement the implementation of the 2009 Right to Information (RTI) Act that gave Bangladeshi citizens greater access to information\. These centers began as a pilot operatotion in 30 Union Parishads (UP), the lowest tier of local government in Bangladesh in 2009 and were subsequently rolled out to all 4,547 UPs by 2011\. (CPF, Annex 2, paragraph 25)\. 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Highly Satisfactory Highly Satisfactory --- Bank Performance Satisfactory Satisfactory --- Quality of M&E Substantial Substantial --- Quality of ICR Substantial --- 12\. Lessons The ICR pointed to a number of lessons (ICR, paragraphs 62-71) culled from the overall Local Governance Support Project (LGSP), which consisted of a progression of intervention in support of local government decentralization in Bangladesh\. LGSP III is currently under implementation following the close of LGSP II\. The most important lessons are the following: • Decentralization requires a long-term commitment by both the government and its development partners to gradually transform long held governance arrangements\. Time and absorptive capacity of recipient institutions are important inputs to designing progressive interventions such as predictable and transparent intergovernmental transfer programs like block grants\. For example, in this project, intergovernmental transfers were carried out using transparent formulas, predictable with a commitment made every three years by the national government to the UPs who, in turn, used the resources to plan longer term investment priorities identified after direct consultations with constituents\. • Institutional development at all levels of government and communities of constituents requires a continuous effort\. Alternative arrangements for training and mentoring of critical staff are essential to build sustainable capacity at the local levels\. In this project, District Facilitators trained about 63,000 UP officials on public financial management, procurement, safeguards and monitoring\. • Right sizing and proper sequencing of intergovernmental transfers are important\. For example, UPs Page 12 of 13  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BD: Local Governance Support Project II (P124514) needed adequate block grant allocations that would allow them to deliver on their mandates without encouraging rent seeking and patronage activities\. • Introducing performance based grants provided a competitive incentive to subnational governments to perform well in key governance areas and undertake accountability measures within the purview of local governments\. For example, UPs improved tax revenue collections, increased participation by constituents, and improved planning, budgeting and reporting\. • When designing management information systems (MIS) to accompany the changes introduced to support decentralization efforts, a realistic assessment of the availability of key personnel and infrastructure such as a stable and uninterrupted power supply and proper internet band-width are helpful while its absence could inform alternative measures to ensure achievement of implementation targets\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR was concise with a detailed project overview, following the revised 2017 guidelines\. The theory of change was well presented with a particularly helpful summary table showing the evolution of the project, detailing how the project's progressive interventions accompanied government reform in local governance (ICR, Table 1 after paragraph 71)\. The narrative was candid, for example, in reflecting on the need to make unambiguous the UP level focus of the PDO and its indicators and the reasons that held back the timely operationalization of the focus of the M&E design, including the MIS system\. Evidence of project outcomes were internally consistent, credible, and extensive\. a\. Quality of ICR Rating Substantial Page 13 of 13

REVIEW

P004340

Document of The World Bank FOR OFICIAL USE ONLY Report No\. 13762-MOG IMPLEMENTATION COMPLETION REPORT MONGOLIA ECONOMIC REHABILITATION CREDIT (2320-MOG) DECEMBER 12, 1994 Country Operations Division China and Mongolia Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS Currency Unit: Tugriks $1\.00 = Tug 40 (September 1991) $1\.00 = Tug 150 (April 1993) Floating exchange rate: $1\.00 = Tug 400 (May 1993) WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank CIS Commonwealth of Independent States CMEA Council for Mutual Economic Assistance DAF Delivered-at-frontier ERC Economic Rehabilitation Credit FTC Foreign Trade Corporation GDP Gross Domestic Product ICB International Competitive Bidding ICR Implementation Completion Report METS Economic Transition Support Credit MOF Ministry of Finance MTI Ministry of Trade and Industry PIC Petroleum Import Concern TAC Technical Assistance Credit  FOR OFFICIAL USE ONLY CONTENTS Preface \. Evaluation Summary \. \. PART I: PROJECT EMPLEMENTATION ASSESSMENT A\. Project Objectives \. \. 1 B\. Achievement of Project Objectives \. 3 C\. Implementation Record and Major Factors Affecting the Project \. \. 5 D\. Project Sustainability \. 6 E\. IDA Performance \. 6 F\. Borrower Performance \. 7 G\. Assessment of Outcome \. 7 H\. Future Operation \. \. 8 I\. Key Lessons Learned \. 8 PART II STATISTICAL TABLES \. 9 Table 1: Summary of Assessment \. 9 Table 2: Related Bank Loans/Credits \. 11 Table 3: Project Timetable \. \. 12 Table 4: Credit Disbursements: Cumulative Estimated and Actual \. 13 Table 5: Key Indicators for Project Implementation \. \. 14 Table 6: Key Indicators for Project Operation \. \. \. 14 Table 7: Studies Included in Project \. \. \. 15 Table 8a: Project Costs \. \. 16 Table 8b: Project Financing \. \. 16 Table 9: Economic Costs and Benefits \. \. \. 17 Table 10: Status of Legal Covenants \. \. \. 18 Table 11: Compliance with Operational Manual Statements \. \. 19 Table 12: Bank Resources: Staff Inputs \. \. \. 20 Table 13: Bank Resources: Missions \. \. \. 21 This document has a restricted distribution and may be used by recipients only in the performance of their Xofficial duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  ANNEX 1: Aide Memoire (July 27, 1994) \. 22 ANNEX 2: Project Review from the Borrower's Perspective \. \. 26 1\. Background \. 26 2\. IDA Performance \. 26 3\. Borrower's Performance \. 27 4\. Relationship between IDA and the Borrower \. \. 27 5\. Description of Execution of Subprojects Financed from Credit Proceeds \. 28 6\. Conclusions and Lessons Learned \. 30 MAP: IBRD No\. 26450  IMPLEMENTATION COMPLETION REPORT MONGOLIA ECONOMIC REHABILITATION CREDIT (2320-MOG) PREFACE This is the Implementation Completion Report (ICR) for the Economic Rehabilitation Credit in Mongolia for which Credit 2320-MOG in the amount of $30 million/SDR 22\.2 million was approved on December 19, 1991 and made effective on February 20, 1992\. The credit was closed on June 30, 1994, twelve months beyond the date originally envisaged, June 30, 1993\. Final disbursement took place on November 22, 1994\. A balance of $139,637/SDR 99,740 was canceled\. The ICR was prepared by Natasha Beschorner and Hongjoo Hahm, China and Mongolia Country Operations Division, East Asia and Pacific Region, and reviewed by Mr\. Zafer Ecevit, Division Chief, and Mr\. Yo Kimura, Project Advisor\. The Borrower provided comments which are included as an annex to the ICR\. Preparation of this ICR began during the Bank's final supervision/ completion mission on July 19-August 5, 1994\. It is based on the Staff Appraisal Report, the Development Credit Agreement, Supervision Reports, correspondence between IDA and the Borrower, internal IDA memoranda and interviews with IDA and Borrower staff involved in project implementation\. The Borrower contributed to the preparation of the ICR by commenting on the draft ICR, preparing an evaluation of the project's execution and implementation, and by contributing views reflected in the mission's aide-memoire\.   - ii - IMPLEMENTATION COMPLETION REPORT MONGOLIA ECONOMIC REHABILITATION CREDIT (2320-MOG) EVALUATION SUMMARY Project Objectives 1\. In 1991, Mongolia experienced enormous supply shocks caused by a combination of internal and external factors\. These included worsening terms of trade, disruption in the flow of essential imports from and collapse of traditional export markets in the former Soviet Union and members of the Council for Mutual Economic Assistance (CMEA), and the virtual termination of Soviet aid which had reached 30 percent of GDP during the 1980s\. These external factors were responsible for a fall in real GDP of 9\.9 percent for 1991\. Against this background, the Economic Rehabilitation Credit (ERC), the first Bank Group operation in Mongolia, was designed primarily to finance critical imports for priority sectors of the economy, agriculture, energy (coal mining, petroleum products and power operation) and transport to maintain production in each sector during 1992 and the first six months of 1993\. Through economywide effects, the project also aimed to help Mongolia sustain its overall production and employment level\. A secondary objective was to familiarize Mongolian institutions with intemational procurement and financial procedures and thereby facilitate diversification of trade\. Based on the severe constraints facing the Borrower at the time, the project's scope and timing were appropriate\. The implementing agency was the Foreign Trade Department (now the Department of International Trade and Cooperation) in the Ministry of Trade and Industry (MTI) of Mongolia\. 2\. Special arrangements were made for procurement and disbursement\. First, given Mongolia's high proportion (80 percent) of external trade with the Commonwealth of Independent States (CIS), it was agreed, on an exceptional basis, to disburse 25 percent of the Credit proceeds, up to $7 million, against goods and spare parts and equipment obtainable only from the CIS and former CMEA countries, under negotiated direct purchase contracts\. The remaining project-financed goods and services would be procured through international competitive bidding (ICB) in accordance with IDA Procurement Guidelines\. Second, in order to facilitate disbursements for purchasing directly contracted goods and supplies from the CIS, a $6 million Special Account facility was set up in Midland Bank, UK (see para\. 14)\. Finally, the project required end-users of imported goods to purchase project-financed imports at the equivalent of delivered-at-frontier (DAF)  - 111 - cost in local currency (Tugriks) at the official rate of exchange\. These counterpart funds were transferred directly into the government budget (see para\. 3)\. 3\. The emergency balance of payments assistance provided by the ERC was complementary to the IMF's Standby Facility and other donor assistance\. The ERC was therefore part of a broad package of macroeconomic and institutional development support from the international donor community\. The ERC did not include policy conditionalities; policy dialogue was maintained through IDA's continuing economic and sector work\. Implementation Experience and Results 4\. The ERC was carried out against a background of economic crisis\. Nevertheless, it brought about positive results by supplying urgently needed inputs and contributed to the diversification of Mongolia's trade, therefore achieving its primary objectives\. Maintaining the supply of critical inputs served to slow the decline in productivity and output in Mongolia's priority sectors, particularly in the case of coal mining (see para\. 9)\. Moreover, the quality of inputs from nontraditional suppliers was considerably improved; this had an important demonstration effect in the sectors concerned\. In addition, project implementation resulted in the development of a greatly improved import and procurement management system within MTI (see para\. 10)\. 5\. The original credit amount was SDR 22\.2 million, equivalent to $30 million\. Actual foreign exchange costs, at the time of project completion,were $31\.4 million of which $30\.17 million were spent on imported goods and $781,600 on consultancy services\. Local costs totalled the equivalent of $8\.8 million, including $ 7\.8 million equivalent for customs duties and sales tax, and $1 million equivalent for internal transport and handling charges\. Thus the total project cost was $40\.2 million, compared with the original estimate of $37\.95 million\. The final disbursement was made on November 22, 1994, 17 months after the original closing date of June 30, 1993\. The project proceeded on schedule throughout the early stages of the cycle, but procurement delays required extension of the closing date first to December 31, 1993 and finally to June 30, 1994\. 6\. The principal factors responsible for the delays were (a) problems in securing timely delivery of critical spare parts for agricultural and mining equipment, and bitumen for the transport sector, from direct contract CIS suppliers in the light of political and economic turmoil in the CIS (see para\. 13); (b) misunderstandings between the Borrower and CIS suppliers and financial institutions over the concept and operation of the Special Account (see para\. 14); and (c) delays in the sale and distribution of certain imports to end-users, attributable to successive devaluations of the Tugrik and to price distortions which affected the ability of end-users to purchase the imported goods at market prices\. This in turn delayed the transfer of counterpart funds to the government budget (see para\. 15)\. 7\. A great deal of preparatory work was done, particularly on the development of a detailed procurement timetable, given IDA's limited experience in transactions with the CIS and the almost total lack of commercial links between Mongolia and non-CMEA  - iv - states\. IDA staff continuity was maintained during preparation, appraisal and supervision\. In view of the Borrower's limited experience with procurement procedures, a specialized procurement support and logistics advisor was appointed within MTI\. This appointment was highly effective in ensuring adherence to the procurement plan and thereby facilitating rapid disbursement\. When implementation delays occurred, IDA demonstrated flexibility both in agreeing to two extensions of the loan closing date and in doubling the original allocation to the Special Account, at the request of the Borrower, to ensure delivery of essential imports\. Moreover, IDA did not insist on prompt compliance with the counterpart fund requirement when delays occurred in end-user distribution and counterpart fund transfers\. This was considered the most pragmatic approach in the context of a difficult economic transition period, given the overriding objective of emergency assistance and the very real risks of further deterioration in the priority sectors (see para\. 19)\. Cooperation between the Borrower and IDA was good\. The quality of communication, particularly the provision of relevant documentation by the Borrower, was satisfactory\. Some of the confusion arising over the operation of the Special Account might have been resolved had the Borrower counterparts and CIS suppliers sought clarification at an earlier stage on commitment procedures (see para\. 14)\. Borrower compliance with credit covenants was satisfactory\. 8\. The project outcome is rated as satisfactory\. The ERC achieved its primary objectives and contributed to the development of the various sectors concerned within the overall context of Mongolia's economic stabilization program\. Summary of Findings, Future Operations and Key Lessons Learned 9\. Four main lessons emerge from IDA's experience with the ERC\. First, rapid disbursement is greatly facilitated by the development of a well-prepared procurement timetable and monitoring system and the appointment of procurement advisors prior to negotiations and Board preparation\. Regular monitoring allowed schedule modifications to be made where necessary\. Second, a project of this type can have valuable long-term benefits if attention is paid in design and implementation to developing the Borrower's institutional capacity\. Third, emergency assistance of this nature is most effective when combined with donor coordination to address broader macroeconomic and sectoral concerns\. Finally, the objectives of counterpart fund management and emergency assistance are difficult to reconcile in transitional economies where ability to pay is constrained by adjustment processes\. In future operations it will be advisable to develop mechanisms for working more closely with end-users and explore the role of financial intermediaries and the private sector in this regard\. These lessons have been incorporated into the follow-up Economic Transition Support Credit (METS) (2551-MOG)\. The METS focuses on the mining and transport sectors, but also places greater emphasis at the outset on policy issues, notably pricing/tariff reforms to improve cash flows for end-users and improved management of public expenditures using already allocated budgetary funds for financing counterpart funds\. In addition, the petroleum study financed under the ERC is being used in the preparation of the FY96 Petroleum Transshipment Project\.   IMPLEMENTATION COMPLETION REPORT MONGOLIA ECONOMIC REHABILITATION CREDIT (2320-MOG) PROJECT IMPLEMENTATION ASSESSMENT A\. PROJEcT OBJECMIVES 1\. In 1991, Mongolia experienced enormous supply shocks caused by a combination of internal and external factors\. These included: worsening terms of trade, disruption in the flow of essential imports from and collapse of traditional export markets in the countries of the former Soviet Union and members of the Council for Mutual Economic Assistance (CMEA), Mongolia's principal trading partners\. The most severe external shock was the virtual termination of Soviet aid which had reached 30 percent of GDP during the 1980s\. These factors resulted in a fall in real GDP of 9\.9 percent for 1991, 7\.6 percent in 1992 and 1\.3 percent in 1993\. Against this background, and following internal political reforms in the early 1990s, a newly elected coalition government had embarked on a three-year program of economic stabilization and transformation to a market economy in 1991\. The principal objectives were private sector development and trade diversification and, ultimately, resumption of modest economic growth to ensure increases in output and improved medium-term living standards\. To this end the government introduced significant price, financial sector and fiscal reforms beginning in 1991; at the same time a number of preliminary institutional, legal and regulatory changes were enacted in order to expand the scope of market transactions and private economic activities\. 2\. The Economic Rehabilitation Credit (ERC), the first Bank Group operation in Mongolia, was designed primarily to provide emergency financing for critical imports and thereby alleviate bottlenecks resulting from foreign exchange shortages in the agriculture, energy (coal mining, petroleum products and electric power generation) and transport sectors\. These sectors had been declining continually over the previous 21 months because of the lack of sufficient foreign exchange to purchase spares and replacements\. The project financed 100 percent of foreign exchange costs for the import of equipment, materials, spare parts, vehicles and other essential inputs\. The ERC was considered a first step in the government's economic reform program to help rehabilitate, maintain and operate priority economic sectors; to check further serious deterioration in the country's economic infrastructure; and help ensure the country's output performance\. The project aimed to increase and maintain capacity utilization and hence increase production in each sector during 1992 and the first six months of 1993 and, through economywide effects, help Mongolia sustain its overall production and employment levels\.  - 2 - The sectors and items financed were selected on the basis of an overall assessment of critical import requirements, taking into account several qualitative criteria: (a) the economy's structural and sectoral priorities; (b) Mongolia's need to reduce its dependence on the Commonwealth of Independent States (CIS) for goods available elsewhere and thereby diversify its external trade; (c) the need for quick action in vulnerable sectors of the economy; and (d) transportational and logistical constraints\. 3\. A secondary objective was to enable Mongolian institutions to become familiar with international trade and procurement procedures\. The project was designed to introduce procedures related to international competitive bidding and international financial transactions and thereby facilitate diversification of trade\. Furthermore, in order to complement the government's program of distribution system reforms, the project required end-users of imported goods to purchase project-financed imports at the equivalent of delivered-at-frontier (DAF) cost in local currency (Tugriks) at the official rate of exchange plus customs duties and local handling charges\. It was originally expected that these counterpart funds would be transferred via line ministries to the implementing agency, the Ministry of Trade and Industry and thence to the Ministry of Finance and directly into the budget\. The objectives of establishing counterpart funds were to develop financial and fiscal discipline among end-users by increasing their exposure to market mechanisms; and to generate counterpart fund revenues for the government budget\. 4\. The objectives of emergency balance of payments assistance was clearly stated\. The ERC was considered part of an immediate response by the international donor community to the country's short-term economic crisis\. The quick disbursing and balance of payments type assistance complemented the IMF's Standby Facility and the cash and commodity assistance committed by other donors: the Asian Development Bank (ADB), Germany, Japan, Korea and the United States\. The ERC therefore supported a broader package of macroeconomic and sectoral development, financial objectives and institutional capacity-building\. It did not include policy conditionalities; policy dialogue was maintained through IDA's continuing economic and sector work\. Based on the severe constraints facing the Borrower at the time, the project's scope and timing were appropriate\. 5\. The implementing agency in Mongolia was the Foreign Trade Department (now known as the Department of International Trade and Cooperation) in the Ministry of Trade and Industry (MTI)\. Its principal concerns were Mongolia's lack of experience with international procurement or banking practices and lack of familiarity with IDA procedures\. Moreover, MTI had very limited experience in convertible currency trade with non-CMEA countries\. Its other major concern was logistical and transport difficulties for the delivery of imports\. Given Mongolia's high proportion (80 percent) of external trade with and technological dependence on the CIS, it was agreed, on an exceptional basis, to disburse 25 percent of Credit proceeds, up to $7 million, against goods and spare parts and equipment obtainable only from the CIS and the former CMEA countries, under negotiated direct purchase contracts\. The remaining project-financed goods and services would be procured through international competitive bidding (ICB) in accordance with IDA Procurement Guidelines\.  - 3 - 6\. The project did not involve any unusual risks\. It consisted of two components: (a) imports of equipment, materials, spare parts and other essential items; and (b) provision of consultant services to facilitate procurement\. The main risks to the project were that procurement problems and transport bottlenecks would seriously delay or prevent delivery of the critical imports; these problems were compounded by difficulties experienced by suppliers in the CIS, owing to general political and economic turmoil in the region\. These risks were anticipated, however, and mitigated by the development of a detailed procurement timetable prior to negotiations\. In view of the Borrower's limited experience with procurement procedures, it was agreed to appoint a specialized procurement support and logistics advisor to be based in Mongolia and assist MTI in project implementation\. B\. ACIEVEMENT OF PROJECT OBJECTIVES 7\. The ERC was carried out against a background of economic crisis\. First, market reforms began to reveal the inefficiency of state enterprises and concomitant price distortions\. Second, the abandonment of central planning left the administration with relatively undeveloped instruments of public management\. Growth performance was hindered in the absence of rapid improvements in institutional or physical infrastructure\. Finally, the Mongolian Tugrik was devalued three times during the implementation period (for official transactions: from $1 =Tug 40 in September 1991 to $1 =Tug 150 in April 1993 and to a floating exchange rate of $1 =Tug 400 in May 1993)\. 8\. Macroeconomic and Sector Policy Improvements\. The ERC was not designed to address policy issues but as emergency assistance to support a broader program of reforms\. The ERC did facilitate diversification of Mongolia's trade\. A recent assessment of Mongolia's direction of trade reveals increased diversification\. In 1990, over 90 percent of Mongolia's imports and exports were intra-CMEA\. In 1993, Mongolia conducted less than 60 percent of its trade with these countries\. Trade links with China, Japan and Western Europe have increased substantially\. Furthermore, Mongolia has begun to contract with traditional CMEA trading partners on convertible currency terms\. Maintaining the supply of critical inputs served to slow the decline in productivity and output in Mongolia's priority sectors\. Moreover, the quality of inputs, particularly from nontraditional suppliers, was considerably improved; this had an important demonstration effect in the sectors concerned\. 9\. Physical Objectives\. In the agricultural sector, the ERC helped to provide the necessary funds and inputs for spare parts, fertilizers, veterinary medicines and other chemicals\. All the imported fertilizers were used for growing potatoes and vegetables in the 1992 growing season, while the agricultural equipment was used for wheat production\. In the electricity sector, the project provided spare and replacement parts, diesel generators and electric motors\. The spare parts and equipment procured under the credit were part of a broader program of assistance from the donor community, including the USA, Japan, Germany and ADB\. In the coal sector, pivotal for future economic growth, spare and replacement parts, dump trucks, bulldozers and explosives were supplied\. The Nalaich, Sharyngol and Baganuur coal mines welcomed the opportunity to diversify their sources  - 4 - of key equipment\. Although the level of coal production has yet to return to former levels, the critical decline in overburden removal was halted through the use of heavy earth- moving equipment procured under the project\. Difficulties were identified in financing spare parts for the coal mine equipment, after consumption of the spares included with the original delivery\. This issue has since been resolved under the Economic Transition Support Credit (2551-MOG) by the provision of consignment spare parts stocks\. In the petroleum sector, the project financed and successfully delivered specialized lubricants for industry, agriculture, transport and mining\. The end-users were pleased with the high quality of the lubricants (i\.e\., multi-viscosity characteristics, detergent properties, long life, high breakdown temperatures) compared with those which they had used previously\. In the transport sector, the project helped to provide urgently needed tires and batteries for ambulances and buses particularly in the provinces (aimag), bitumen and spare parts for road maintenance equipment\. The end-users for the tires and batteries were mainly small transport operators and farmers\. Bitumen supplies were used primarily for urgently needed road maintenance both in Ulaanbaatar and on national highways\. 10\. Institutional Development\. The ERC did not seek to address institutional development issues directly\. IDA focused on strengthening institutional capacity for policy implementation through the parallel Technical Assistance Credit (2321-MOG) which became effective in March 1992\. The project did, however, contribute substantially towards developing institutional capacity within MTI for international procurement procedures and practices\. The creation of a project implementation unit within MTI with clearly defined responsibilities was the first step in developing this capacity\. This resulted, ultimately in the creation of a greatly improved import management system and logistical capacity\. 11\. Counterpart Funds\. The transfer of a substantial portion of counterpart funds from end-users to the Ministry of Finance (MOF), as agreed at the time of negotiations, was carried out by the time of project completion, according to the records made available to IDA\. Yet these transfers were not adequately monitored or enforced\. Some misconceptions arose and delays occurred in developing coordination between the relevant line ministries and MOF\. It was originally envisaged that the line ministries would have sufficient budget allocations to ensure the transfer of local currency equivalents to cover the cost of imported items\. However, the counterpart fund procedures were adversely affected by internal institutional reforms and by external factors, notably the devaluation of the Tugrik\. 12\. Studies\. A series of policy-oriented studies were originally to be done under the ERC\. These were (a) an energy assessment; (b) a coal production costs and pricing study; (c) a petroleum demand, supply and procurement study; (d) an agricultural pricing and marketing study; and (e) an analysis of the factors affecting reorientation of trade\. It was agreed during implementation that these would be more relevant to the objectives of the Technical Assistance Credit (TAC) (2321-MOG)\. Only the petroleum study was carried out under the ERC\.  -5- C\. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFEcTING THE PRojECr 13\. Factors not subject to government control The final disbursement took place on November 22, 1994, 17 months after the original closing date of June 30, 1993\. The principal factor delaying disbursement was the problem in securing timely delivery of critical spare parts for agricultural and mining equipment, and bitumen for the transport sector, from certain direct contract suppliers in the CIS\. These delays required the Mongolian government to request two closing date extensions, the first to December 31, 1993 and the final extension to June 30, 1994\. Most of these delays were beyond the control of MTI which took all reasonable steps to speed up deliveries, including drawing up new contracts with more responsive suppliers\. In the case of bitumen, the contract with the original Russian supplier could not be completed because the supplier was unable to ship and receive materials in bulk or in liquid form during the winter months\. This required MTI to find a new Ukrainian supplier at very short notice; the contract had to be completed in several stages owing to unavailability of suitable shipping containers\. 14\. In order to facilitate disbursements for purchasing imports from the CIS a $3 million Special Account facility was set up in the State Bank of Mongolia International (SBI)\. It was subsequently transferred to Midland Bank (UK) at the request of the Borrower\. The Special Account was established to enable the purchase of goods directly contracted from the CIS (at that time, the Soviet Union was not a member of the Bank) and former CMEA countries\. The government was unable to prefinance these goods from its own resources\. The Special Account was designed to operate as a revolving fund from which the Borrower would submit replenishment applications when required\. However, the suppliers concerned insisted on full payment and/or commitments through letters of credit before goods could be shipped\. Moreover, neither IDA nor the Borrower had much expertise in financial transactions with the CIS\. The concept of a revolving fund was not entirely clear to Mongolian and Russian banks which were unfamiliar with IDA procedures and processing letters of credit\. After the Special Account was opened, $3 million were immediately committed through letters of credit, although it took up to six to nine months before the relevant shipments were made\. Normal replenishment of the account was therefore not possible until after deliveries had been made and drawdown implemented against letters of credit\. This led to delays in placing orders and anticipated deliveries\. In the circumstances, IDA agreed to a supplementary $3 million replenishment of the Special Account in May 1992\. This was also immediately committed\. In sum, $6 million were fully committed by late 1992 owing to precommitment requirements of direct contract suppliers; disbursement took over a year to complete\. The Special Account was thus never used as a revolving fund as originally envisaged\. 15\. Factors Subject to Govermnent Control\. The principal problem of project implementation in-country was the sale and distribution of certain key imports to end-users\. This can be attributable to (a) expectational lags- resulting from successive devaluations of the Tugrik and price differentials between the newly imported goods, which had to be purchased at market prices, and formerly subsidized imports from the former Soviet Union or CMEA countries; and (b) confusion over institutional responsibility\. Price ceilings prevailed during the transitional phase in the economy, thus hindering the ability of end-  - 6 - users to purchase imported goods at market prices\. Devaluation embattled negotiations with end-users further\. Previously, line ministries had been responsible for import purchasing and distribution to end-users\. Under the counterpart fund requirement, line ministries were to transfer counterpart funds to the Ministry of Finance\. However some end-users did not feel an obligation to pay for the imported goods, on the assumption that this was the responsibility of line ministries as had historically been the case\. In addition, the quasi-autonomous Foreign Trade Corporations (FTCs) within the relevant line ministries (Erchimpex, Nuursimpex, Autoimport, State Road Corporation, Agricultural Trade and Import Corporation and the Petroleum Import Corporation) responsible for receipt, sales and distribution of goods were in the process of being restructured\. In some cases there was some confusion between the mandates of the FTCs and the emerging private sector\. It was therefore very difficult for MTI to monitor and follow up on the distribution of goods; ultimately it was not practical for MTI to act as a financial intermediary between the line ministries and MOF\. 16\. Most distribution and sales difficulties occurred in the transport and agricultural sectors where the end-users were highly dispersed\. End-users in the energy and mining sectors were relatively monolithic\. In the transport sector, initial sales of tires, particularly for cars and dumpsters, were slow\. In the agricultural sector, the level of sales of spare parts, equipment, veterinary medicine and fertilizers was initially very low because of price distortions\. Moreover, formerly collective state farms were in the process of being privatized\. The new smaller agricultural units had more limited financial ability and the issue of producer prices has not yet been resolved\. It was reported during supervision that some agricultural and transport imports had been sold to the private sector, but this was believed to be minimal\. In the mining sector, some end-users delayed payment, trying to negotiate deliveries on the basis of earlier exchange rates which caused delays in distribution\. D\. PRoJiEcT SusTALNABuirY 17\. The issue of sustainability is marginally relevant to an emergency balance of payments credit of this type\. However, the development of institutional capacity within MTI contributed substantially to facilitating implementation of subsequent operations\. MTI acquired valuable experience in logistical planning, procurement procedures and commercial practices which greatly enhanced their ability to manage public sector imports\. 18\. It is anticipated that future import requirements will increasingly be met through the private sector, particularly in the case of petroleum, vehicle spare parts and agricultural inputs\. A significant volume of imports are still donor-financed at this stage of Mongolia's economic transition\. E\. IDA PERFORMANCE 19\. This was IDA's first project in Mongolia\. A Country Economic Memorandum, Mongolia: Towards a Market Economy, was prepared in 1992 and provided a detailed analysis of the country's proposed economic reform program and  - 7 - development prospects\. A great deal of preparatory work was done, particularly on the development of a detailed procurement timetable, given IDA's limited experience in transactions with the CIS and the almost total lack of commercial links between Mongolia and non-CMEA states\. The appointment of a locally based procurement advisor, in collaboration with MTI, was highly effective in ensuring adherence to the procurement plan and thereby facilitating rapid disbursement\. 20\. The implementation of the ERC was supervised by frequent IDA missions\. When procurement delays were experienced, IDA demonstrated flexibility both in agreeing to two extensions of the loan closing date and in doubling the original allocation to the Special Account at the request of the Borrower to ensure delivery of essential imports\. Moreover, IDA did not insist on prompt compliance with the counterpart fund requirement when delays occurred in end-user distribution and counterpart fund transfers\. IDA was compelled to make a strategic decision: either to insist on counterpart fund requirements, at the risk of spoilage of some of the critical imports such as fertilizers, or to place overriding emphasis on quick disbursement\. The latter option was chosen\. This was considered the most pragmatic approach in the context of a difficult economic transition period, given the fundamental objective of emergency assistance and the very real risks of further deterioration in the priority sectors\. F\. BoRRowER PERFORMANCE 21\. The Government established a dedicated project implementation unit within the Foreign Trade Department (now Department of International Trade and Cooperation) of MTI to work with IDA in the preparation and implementation of the ERC\. Cooperation between the Borrower and IDA was good, particularly during the development of the procurement plan\. The performance of MTI has been very effective\. MTI set up an import procurement management system to monitor shipments, contracts and arrivals of imports including those financed by other donors\. Master Status sheets on imports and disbursements were diligently kept up to date by MTI and submitted on a regular basis as agreed\. In addition MTI's project coordinator and key project staff remained in place until project completion\. The quality of communication, particularly the provision of relevant data and documentation by the Borrower was therefore satisfactory\. However, some of the confusion arising over the operation of the Special Account might have been resolved had the Borrower counterparts sought clarification at an earlier stage on how to address precommitment demands or operate a revolving fund\. In general, delays in implementation were primarily attributable to external sources, and the Borrower performed well in difficult circumstances\. 22\. Borrower compliance with credit covenants was satisfactory\. Nevertheless some delays occurred in compliance with section 2\.06 conceming repayment of commission and service charges, requiring IDA to issue waming telexes in November 1992, December 1993 and June 1994\.  - 8 - G\. ASSESSMENT OF OUTCOME 23\. The project outcome is rated as satisfactory\. The ERC mitigated the decline in the growth rate, facilitated trade diversification and provided important institutional support, especially to MTI\. As a result, it has made a significant contribution towards Mongolia's economic stabilization program and the transition to a market economy\. H\. FUTURE OPERATION 24\. The ERC was designed as short-term emergency balance of payments assistance\. There are no provisions for future operation\. However, two follow-up operations have been launched which consolidate the ERC's achievements\. The Mongolia Economic Transition Support Credit (2551-MOG) focuses on the mining and transport sectors, but also places greater emphasis at the outset on policy issues, notably pricing/ tariff reforms to improve cash flows for end-users and improved management of public expenditures using already allocated budgetary funds for financing counterpart funds\. The recommendations of the petroleum study have been incorporated into the Petroleum Transshipment Project (FY96) which is currently under preparation\. I\. KEY LESSONS LEARNED 25\. Four main lessons emerge from IDA's experience with the ERC\. First, rapid disbursement is greatly facilitated by the development of a well-prepared procurement timetable and monitoring system and the appointment of procurement advisors prior to negotiations and Board preparation\. Regular monitoring allowed schedule modifications to be made where necessary\. Second, a project of this type can have valuable long-term benefits if attention is paid in design and implementation to developing institutional capacity\. Third, emergency assistance of this nature is most effective when combined with donor coordination to address broader macroeconomic and sectoral concerns\. Finally, the objectives of counterpart fund management and emergency assistance are difficult to reconcile in transitional economies where ability to pay is constrained by adjustment processes\. In future operations, it will be advisable to develop mechanisms for working more closely with end-users and explore the role of financial intermediaries and the private sector in this regard\.  - 9 - STATISTICAL TABLES Table 1: SUMMARY OF ASSESSMENTS Achievement of Objectives Not Substantial Partial Negligible applicable Macroeconomic policies X Sector policies x Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender concerns X Other social objectives X Environmental objectives X Public sector management X Private sector development X Project Sustainability Likely Unlikely Uncertain x Bank Performance Highly satisfactory Satisfactory Deficient Identification X Preparation assistance X Appraisal X Supervision X  - 10 - Borrower Performance Highly satisfactory Satisfactory Deficient Preparation X Implementation X Covenant compliance X Assessment of Outcome Highly satisfactory Satisfactory Unsatisfactory Highly unsatisfactory x  - 11 - Table 2: RELATED BANK LoANs/CREDlTs Year of Loan/credit title Purpose approval Status Technical Assistance Credit (a) To help Mongolia develop institu- FY92 Lending 2321-MOG tional capacity for macroeconomic man- agement in a market economy; (b) to help define strategies for sectors/subsec- tors key to Mongolia's economic devel- opment\. Economic Transition Support Credit (a) To finance critical imports and tech- FY94 Lending 2551-MOG nical assistance to maintain and develop the mining and transport sectors in Mongolia; (b) to help the ongoing eco- nomic stabilization and adjustment pro- gram and contribute to resumption of growth\.  - 12 - Table 3: PROJEcr TIMETABLE Steps in project cycle Date planned Date actual/latest estimate Identification 07/29/91 07/29/91 Preparation 08/12/91 08/12/91 Appraisal 10/05/91 10/05/91 Negotiations 11/15/91 11/15/91 Board presentation 12/19/91 12/19/91 Signing 12/27/91 12/27/91 Effectiveness 01/20/92 02/20/92 Project Completion 12/30/93 09/15/94 Credit closing 06/30/93 06/30/94  - 13 - Table 4: CREDrr DISBuRSEmENTS: CUMULATIVE ESTIMATED AND Ac-ruAL FY92 FY93 FY94 FY95 Appraisal estimate 15\.0 30\.0 0 0 Actual 15\.2 26\.9 30\.1 31\.4 Actual as % of estimate 101\.3 89\.6 - - Date of final disbursement: 11/22/94  - 14 - Table 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION (Not Applicable) Table 6: KEY INDICATORS FOR PROJECT OPERATION (Not Applicable)  - 15 - Table 7: STUDIES INCLUDED IN PROJECT Purpose as defined at Status Impact of study Study appraisaUredefined Energy assess- To investigate the pricing, energy Carried out by ESMAP, Bank ment efficiency and environmental issues ESW which define the power system's long- term investment priorities\. Coal pricing Coal production costs and pricing Carried out under METS study Petroleum prod- Demand, supply and procurement Carried out under ERC Transshipment facility ucts study to support development of at Zamyn-Uud identi- strategy to meet increasing demand fied\. Project prepara- when economic growth resumes tion underway Agricultural Action program for privatization of Bank ESW pricing and mar- agricultural input supply and distribu- keting tion; agricultural product marketing\. Reorientation of To examine access to foreign Dropped trade exchange and trade finance, customs inspection, valuation and duty coUec- tion procedures for imports, market reconnaissance, quality control and marketing arrangements for export promotion; how to make foreign trade organizations responsive to market conditions\.  - 16 - Table 8a: PROJECT COSTS Item Appraisal estimate ($ M) Actual/latest ($ M) Local Foreign Total Local Foreign Total Electric power production 1\.00 3\.50 4\.50 1\.10 4\.10 5\.20 Coal mining 1\.90 7\.40 9\.30 2\.80 10\.70 13\.50 Transport 1\.30 5\.00 6\.30 1\.50 5\.80 7\.30 Agriculture 1\.70 6\.50 8\.20 1\.80 7\.00 8\.80 Petroleum products 0\.55 2\.00 2\.55 0\.60 2\.50 3\.20 Total critical imports 6\.45 24\.40 30\.85 7\.80 30\.17 37\.97 Consultant services - 0\.30 0\.30 0 0\.78 0\.78 Contingencies 1\.50 5\.30 6\.80 1\.00 0\.45 1\.45 Total 7\.95 30\.00 37\.95 8,80 31\.40 40\.20 Table 8b: PRoJEcT FINANCING Source Appraisal estimate ($ M) Actual ($ M) Local Foreign Total Local Foreign Total IDA 0 30\.0 30\.0 0 31\.40 31\.40 Domestic contribution 7\.95 0 7\.95 8\.8 0 8\.8 Total 7 953 37\.95 8\.8 31\.40 40\.20  - 17 - Table 9: ECONOMIC COSTS AND BENEFTs (Not Applicable)  Table 10: STATUS OF LEGAL COVENANTS Agreement Section Covenant Present Original Revised Description of covenant Comments type status fulfillment fulfillment date date Develop- 2\.03 5 NC 12/27/91 Closing date of June 30, 1993 Closing date extended to ment Credit stipulated December 31, 1993 then to June Agreement 30, 1994 because of procurement delays from CIS suppliers 2\.06 5 CD 12/27/91 Semi-annual repayment of com- Repayment delays occurred in mitment and service charges on November 1992, December 1993 May 1 and November 1 and June 1994\. Warning telexes issued by IDA\. 3\.03 5 C 12/27/91 Maintenance of key project staff Procurement Advisor still in place 00 including coordinator and procure- as of loan closing ment advisor 4\.01 9 C 12/27/91 Maintenance of adequate records and accounts Schedule 4 3\. 13/a CP 12/27/91 Special Account withdrawals Special and Credit Accounts used of DCA interchangeably owing to misun- derstandings over procedures with CIS suppliers and financial institu- tions /a Special Account Note: The selection of legal covenants was appropriate\. The only problems which occurred concerned operation of the Special Account\.  - 19 - Table 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS (Not Applicable)  - 20 - Table 12: BANK RESOuRcEs: STAFF INPUTS Stage of project cycle Planned Revised Actual Weeks $ Weeks $ Weeks $ Through appraisal 120\.4 45\.2 33\.8 - 18\.9 - Appraisal-board - - 9\.8 9\.5 15\.6 - Board-effectiveness - - - - - Supervision 12\.0 9\.9 12\.0 9\.9 23\.9 2\.6 Completion - - 10\.0 - 13\.9 16\.8 Total 132\.4 55\.1 65\.6 19\.4 72\.3 19\.4  Table 13: BANK RESOURCES: MISSIONS Stage of Number of Days Specialized staff Types project cycle Month/year persons in field skills represented Performance rating of problems Implementation Development status objectives Through appraisal 08/91 4 12 Economics, 1 10/91 5 10 Engineering/ Procurement Appraisal through Board approval I Board approval through effectiveness 1 Supervision 03/92 2 10 Economics, 1 NR 1/0 11/92 2 10 Engineering/ (Other= Special 04/93 2 6 Procurement Account Operation; Procurement) Completion 06/94 3 5 Economics, 1 NR Engineering/ Procurement  - 22 - ANNEX 1 IMPLEMENTATION COMPLETION REPORT MONGOLIA ECONOMIC REHABILITATION CREDIT (2320-MOG) AIDE MEMOIRE July 27, 1994 1\. An IDA mission, comprising Mr\. Hongjoo Hahm (mission leader), Ms\. Natasha Beschorner and Mr\. J\. Chanmugam, held meetings with representatives from the Ministries of Fuel, Energy, Geology and Mines; Agriculture; Infrastructure (Transport); and the Petroleum Import Concern to discuss the utilization of proceeds from the Economic Rehabilitation Credit (2320-MOG)\. The mission would like to thank the Ministry of Trade and Industry (MTI) for their assistance during this mission and in preparing the Implementation Completion Report (ICR)\. At all these meetings, staff from MTI (Ms\. Narangua, Ms\. Oyunchimeg, Mr\. McKie and others) attended and participated in the discussions\. The following is a summary of the principal findings and conclusions of the mission and has been discussed with the Ministry of Trade and Industry in its capacity as implementing agency\. 2\. The original credit amount was SDR 22\.2 million, equivalent to $30 million at the time of IDA Board approval\. The actual foreign exchange cost, at closing of the credit was $31\.4 million of which $30\.17 million were spent on imported goods and $781,600 on consultancy services\. Custom duties on imported goods and sales tax amounted to $7\.8 million equivalent, and the cost of intemal transport and handling amounted to $1\.0 million equivalent, for a total of $8\.8 million equivalent in local costs\. Thus the total project cost was $40\.2 million, compared with the original estimate of $37\.95 million (as described in para\. 3\.1 in the Staff Appraisal Report)\. 3\. The project progressed according to schedule at first, but delays in procurement of items contracted with suppliers in CIS countries necessitated extensions in the closing date by 12 months from the original closing date of June 30, 1993\. These delays were largely due to the inexperience of traditional CIS suppliers in carrying out intemationally accepted procedures for financial transactions\. Procurement using ICB procedures was undertaken expeditiously without any problem\. In general, project implementation was satisfactory, providing valuable learning experience for all concerned\. 4\. The counterpart Tugrikfunds generated from the sale of imported goods to end-users were transferred to the Ministry of Finance (MOF)\. At the time of credit  - 23 - ANNEX 1 closing, a substantial portion of the counterpart funds were transferred, leaving a balance of $2\.32 million still to be collected due to lack of sales\. These sales are mostly to small agricultural and transport end-users, who, following the privatization of state farms and truck operations, lack the financial means to pay promptly\. During the implementation period, the Tugrik was devalued from $1=Tug 40 to $1=Tug 150 to $1=Tug 400, making it more difficult for end-users to pay at market prices\. 5\. A total of $4\.08 million was spent on procuring spare parts and equipment for the power sector, all by direct contracts from the CIS\. The spare parts and equipment procured under the credit were part of a broader program of assistance from the donor community, including the USA, Japan, Germany and ADB\. Except for a small amount of goods still in transit, all imports were sold to end-users by the responsible foreign trade corporation, ERCHIM IMPEX, who also collected the Tugrik counterpart funds for MOF\. There were some problems and delays in collecting money from end-user power stations as electricity prices were highly subsidized and their customers were not paying in time\. 6\. A total of $10\.7 million was used to import equipment and spares for the Nalaich, Sharyngol and Baganuur coal mines\. All imported items were received and handed over to the mines by NUURS, the responsible foreign trade corporation\. However, only a portion of the equivalent Tugrik counterpart funds has been paid to NUURS for transfer to MOF\. The mines were not paid by their principal customers-the power generating units-and consequently the mines lacked the resources to pay the NUURS for the imported goods; $6\.2 million was used for ICB procurement of dump trucks and bulldozers, while the balance was used for procurement by direct contracts from traditional Russian suppliers\. The mines welcomed the opportunity to diversify their sources of procurement of key equipment\. There was some apprehension about the adequacy of technical sales support provided by the supplier of dump trucks (Terex)\. 7\. The lubricating oils imported under the ERC amounted to $2\.5 million and were procured under ICB\. All the contracted items were received, distributed and sold by the Petroleum Import Concern (PIC)\. The entire Tugrik equivalent counterpart funds were collected by PIC and handed over to MOF\. The end-users were pleased with the high quality of the lubricants (i\.e\., multi-viscosity characteristics, detergent properties, long life, high breakdown temperatures) compared with the Russian oils they had used before\. A petroleum logistics and supply study was commissioned by PIC under the ERC\. The study, costing $373,000, provided engineering plans for a petroleum products transshipment facility at the Mongolia-China border\. 8\. The total amount of contracts for the transportation sector was $5\.8 million, of which $800,000 was for tires and batteries and $5\.0 million for roads\. ICB procurement, amounting to $3\.8 million was used to purchase tires and batteries, and $1\.1 million for direct purchase of tires and batteries for specialized vehicles (e\.g\. trolley buses)\. AUTOIMPORT, the responsible foreign trade corporation, undertook the purchase, delivery and sales of the imported items\. The end-users for the tires and batteries were mainly small transport operators and farmers\. AUTOIMPORT was unable to sell about $1 million of tires as of closing, but expects to complete all sales by the end  - 24 - ANNEX 1 of the 1994 harvest season and transfer the Tugrik counterpart funds to MOF\. The ERC experience with commodities such as tires and batteries suggests that such imports may best be left to commercial/business entities rather than state organizations like AUTOIMPORT\. 9\. Imports of bitumen and spares for road equipment for the road sector amounted to $860,000, all procured through direct contracts from traditional Russian suppliers\. The procurement of bitumen posed significant problems due to the limited delivery season (April to September) and a lack of special heated rail wagons\. Furthermore, due to problems with the supplier, a part of the original contract was cancelled, and a new contract was made with a different supplier; 7,500 tons of bitumen have been received and the final 2,500 tons are in transit for delivery by August\. (One reason for the extension in the closing date referred to in para\. 3 was due to the bitumen procurement problem\.) All counterpart Tugrik funds for imported items have been received and transferred to MOF\. 10\. Imports to the agriculture sector amounted to $6\.95 million, of which $4\.68 million was procured through ICB\. Among the ICB items procured were 10,000 tons of N, P and K fertilizers, and various quantities of herbicides, pesticides and veterinary medicines\. The balance was used for direct contract purchases of spare parts for agricultural equipment from Russia and Poland\. All the imported fertilizers were used for growing potatoes and vegetables in the 1992 growing season, while the agricultural equipment were used for wheat production\. Almost all the directly contracted spare parts were sold promptly, but about $15,000 in agricultural equipment was not sold by closing date\. It is expected to be sold by the end of the 1994 growing season\. Of the $1\.19 million in imported veterinary medicines, about $748,000 was sold by closing date\. The high costs of the veterinary medicine for herdsmen have been prohibitive\. In this regard, there is concern about the shelf life and potency of the stored veterinary medicine which were purchased in 1992\. AGROIMPEX was the foreign trade corporation responsible for the delivery of goods and collection of sales proceeds\. However, only a portion of the Tugrik counterpart funds from the agriculture sector have been collected and transferred to MOF\. The end-users, predominantly small farmers and herdsmen, found it difficult to pay in full for the purchased items\. The Government has allowed purchases by end-users at an exchange rate of $1 =Tug 200 to ensure delivery of the imported goods in time for the harvest season\. 11\. The Ministry of Trade and Industry fulfilled all its responsibilities under the ERC\. The creation of a project implementation unit within MTI greatly contributed to the quick disbursement of the credit\. Further, the ERC experience provided MTI with experience in logistical planning, procurement procedures and commercial practices that facilitated their ability to manage public sector imports\. Ulaanbaatar July 27, 1994  - 25 - ANNEX 2 IMPLEMENTATION COMPLETION REPORT MONGOLIA ECONOMIC REHABILITATION CREDIT (2320-MOG) PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE 1\. BACKGROUND (a) Signature of Credit C 2320 MOG The Economic Rehabilitation Project - C 2320 MOG - was initiated at a time of extreme economic crisis following the collapse of the CMEA trading system and the break up of the USSR, and when Mongolia had effectively no foreign reserves\. The agreement was signed on Dec 27, 1991 and became effective on 20 Feb\., 1992\. (b) Amount and Currency The credit C 2320 MOG was approved in the amount of SDR 22,200,000 equivalent to US $30,000,000\. 2\. IDA PERFORMANCE a\. IDA performance during development & implementation of the project IDA recognized from the outset that there was a lack of knowledge and experience of dealing with international procurement and international banking procedures\. Direct assistance was given in the preparation of specifications and bidding documents prior to the appointment of a specialist procurement adviser\. In country training in the procedures and practices of IDA bidding procedures and disbursement regulations was given\. b\. Lessons learned (1) In any similar future project, the assembly and training of a procurement team should have first priority\. It is not enough to "learn as you go along" especially where there is a language barrier\.  - 26 - ANNEX 2 (2) That there are many instances where LIB procedures are more applicable than full ICB procedures, both with regard to speed and the ability to deal with principals rather than middlemen\. (3) Provision should always be made for task specific training and experience in a developed economy\. There is always difficulty in adjusting between changes of economic environment when only a mental imperative to change exists\. 3\. BORROWER's PERFORMANCE a\. Project Implementation and objectives As there was harmony from the beginning between IDA and the Borrower, and the special case of direct contract supply from sole sources in the former USSR had been allowed for, the project went ahead smoothly\. Virtually all contracts were let and funds committed during the first half of 1993\. The single problem area was the procurement of bitumen\. A major difficulty was the realization of counterpart funds during this period of economic trauma\. It is fair to say that if the beneficiaries had the tugrik funds they would not have used the IDA methods at all but would have made direct contracts for their needs\. Despite the difficulties created by this requirement the appropriate amounts (incorporating the various changes in exchange rates) were largely collected\. Some sectors have stocks as yet unutilized - albeit mostly as a result of exchange fluctuations pushing the tugrik equivalent prices beyond the capability of the beneficiary to pay - but authority has been given to use, an exchange rate of 1:200 (current rate is 1:400) in order to get the goods into-use\. The project has highlighted the role played in procurement and distribution by the Foreign Trade Corporation in the various sectors and consideration of their place is in hand vis a vis the role of the private sector\. For example, the Petroleum Import Concern is now in a position to deal directly internationally and to consider commercial developments such as franchising some of the services now provided from its own resources\. Further study of other FTC is in hand to enable policy to be developed\. Although there was an original intention for the MTI to act as a collecting agency for counterpart funds, this was not in fact practicable as MTI would have had to warehouse and account for goods prior and subsequent to their uptake by the beneficiaries\. Direct transaction between FTC beneficiary agencies and the MOF have in fact been the method of bringing the counterpart funds into the Treasury\. 4\. RELATIONSHIP between IDA and THE BORROWER Relationships were good\. Both IDA and the Borrower maintained the same team throughout the project, and mutual understanding was highly developed\. Negotiation  - 27 - ANNEX 2 was possible on any issue\. The peculiar to Mongolia problems were very well understood and appreciated by IDA\. Physical communications in the early stages were not good and this led sometimes to worries and confusion\. The international courier service was inefficient- sometimes taking 25-30 days to deliver documents either way-and the telephone/telex lines were routed through the ancient Moscow exchange\. Provision should always be made for what is now commonplace - satellite communication - which allows for instant resolution of problems\. It appears that IDA can not work from facsimile transmissions of documents etc, although telex transmissions can be accepted\. In view of the excessive cost and time of forwarding original documents provision should be made to work from facsimile documents, to be authenticated later during supervisory missions\. 5\. DESCRIPTION OF EXECUTION OF SUBPROJECTS FINANCED FROM CREDIT PROCEEDS a\. Energy Sector As described earlier, provision was made for direct contracting to sole suppliers in the former USSR\. This allowed speedy provision of parts and material\. $3,500,000 were originally allocated to this subproject ($1,100,000 ICB $2,400,000 direct contract) $4,028,500 were eventually utilized\. (It should be noted that the IDA financing was part of a sectoral financing and support plan from various donor agencies)\. b\. Coal Mining Sector Where direct contracting was undertaken the only problems encountered were the unfamiliarity of the ex USSR banking system with the provisions of international banking\. ICB procurement, unfortunately, resulted in dump trucks being provided which were different from the existing equipment (whose manufacturer tendered but was not competitive in price)\. Despite the apparent advantages of ICB, IDA procedures should allow more weight to be given to buyers preference\. $7,400,000 were originally allocated to this sub project ($5,000,000 ICB $2,400,000 direct contract)\. $10,401,800 were eventually utilized\. c\. Transport Sector The support to this sector, which includes Roads, was in the main in the form of tyres (truck, bus, car and utility, dump truck) batteries; and Bitumen and spare parts for road maintenance equipment\. The procurement of bitumen was the major  - 28 - ANNEX 2 headache, and it was largely because of delays in supply that extensions to the project life had to be requested\. $5,000,000 were originally allocated to this sub project\. ($3,500,000 ICB, $1,500,000 direct contract) $5,214,300 were ultimately utilized\. d\. Agriculture Sector The support to this section covered fertilizers, medicines for livestock agriculture equipment, spare parts, herbicides and pesticides\. To some extent this was the least satisfactory element in that, because of the leap in exchange rates, the end-users initially were unable to purchase fertilizers, herbicides and pesticides\. The issue was partially resolved by selling on credit, but even so this sector accounts for much of the unrealized counterpart funds\. There was a clear lack of commercial awareness on the part of the FTC which was handling distribution of these inputs, but in fairness they have also been hampered by lack of budget allocations\. Further study of the mechanics of distribution and sale (especially to small farmers) is required and will receive attention\. $6,500,000 were originally allocated to this sub project\. ($4,800,000 ICB $1,700,000 direct contract) $6,941,600 were ultimately utilized\. e\. Petroleum Sector Procurement and distribution for this sector was timely and efficient and ensured the continuing supply of lubricants for generating plants around the country\. The organization concerned leamed a great deal about intemational trade in petroleum products and has recently undergone partial privatization\. Storage and distribution are under current review with a view to allocating franchises or joint ventures $2,000,000 were originally allocated to this sub project ($2,000,000 ICB) $2,506,800 were ultimately utilized\. f\. Consultancy and Miscellaneous There were no problems in this area\. $300,000 were originally allocated\. $838,600 were ultimately utilized (amount includes provision of office equipment and communication equipment to provide for the needs of the procurement management unit of the MTI)\.  - 29 - ANNEX 2 6\. CONCLUSIONS AND LESSONS LEARNED - The project objectives were satisfactorily achieved\. - Considerable flexibility was shown by IDA with regard to problems of supply, disbursement and reallocation of funds under-utilized or accruing from exchange rate differentials\. - The role of MTI can gradually change from being the national procurement agency to that of policy maker and coordinator of procurement for the public sector and source of international contacts and price levels etcetera\. - The project has clarified the need to examine the future role of the FTCs\. - The sensitivity to Mongolian needs and sensibility on the part of the IDA team enabled this project - the first of its kind in this country - to be a success\.   x~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Au UKE ~fJ > - 4 ~~~~~~~~~~~RUSSIAN FEDERATION | U" I ULAANGOM :C \-\. 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REVIEW

P096962

 ICRR 14167 Report Number : ICRR14167 IEG ICR Review Independent Evaluation Group 1\. Project Data : Date Posted : 04/29/2013 Country : Pakistan Is this Review for a Programmatic Series? Yes No How many operations were planned for the 3 series? How many were approved? 2 Series ID : S102333 First Project ID : P096962 Appraisal Actual Project Name : Punjab-irrigation US$M ): Project Costs (US$M): 100\.00 102\.76 Sector Development Policy Loan L/C Number : L7379 Loan/ Loan US$M): /Credit (US$M ): 100\.00 102\.76 Sector Board : Agriculture and Rural US$M): Cofinancing (US$M ): Development Cofinanciers : Board Approval Date : 06/01/2006 Closing Date : 06/30/2007 06/30/2007 Sector (s): Irrigation and drainage (100%) Theme (s): Rural services and infrastructure (40% - P); Water resource management (20% - S); Rural policies and institutions (20% - S); Public expenditure; financial management and procurement (20% - S) Second Project ID :P102333 Appraisal Actual Project Name : Punjab-irrigation US$M ): Project Costs (US$M): 100\.00 100\.00 Sector Development Policy Loan Ii L/C Number : L7454 Loan/ Loan US$M): /Credit (US$M ): 100\.00 100\.00 Sector Board : Agriculture and Rural US$M ): Cofinancing (US$M): Development Board Approval Date : 06/07/2007 Cofinancers : Closing Date : 12/31/2007 12/31/2007 Sector (s): Irrigation and drainage (100%) Theme (s): Rural services and infrastructure (33% - P), Water resource management (17% - S), Rural policies and institutions (17% - S), Administrative and civil service reform (17% - S), Environmental policies and institutions (16% - S) Evaluator : Panel Reviewer : ICR Review Group : Coordinator : George T\. K\. Pitman Robert Mark Lacey Soniya Carvalho IEGPS1 2\. Project Objectives and Components: a\. Objectives: To initiate reform of Punjab's irrigation sector, the government launched a medium -term reform program 2006-2008 that was to be supported by a series of Development Policy Loans \. The Government of Punjab's Letter of Development Policy (15 April 2006, para 5) for the Punjab Irrigation Sector Reform Program stated that its long-term vision was: "to provide adequate, equitable and reliable irrigation supplies to the cultivable lands of Punjab aiming at enhanced agricultural productivity, and sustainable development with focus on holistic management and broad  based institutional reforms"\. The Program Document (PD page 28, para 71) states that the DPL series was expected to achieve : "improved management of irrigation and drainage infrastructure; improved irrigation service delivery through participatory irrigation management and cost recovery; and transparent and more equitable water allocation and distribution"\. The objectives for each of the two individual DPLs was the same as that for the series \. b\. If this is a single DPL operation (not part of a series), were the project objectives/ key associated outcome targets revised during implementation? No c\. Policy Areas: The DPL series had four Policy Areas (PD pages 34-41), that were detailed in the Development Policy Matrix (Project Document, Annex 2, pages 61-71): Policy Area I - Institutional and policy reforms to improve the management and maintenance of Punjab's irrigation system to ensure integrity and sustainability through: (a) preparing and implementing a policy framework for an Asset Management Plan; (b) establishing a cost-sharing policy that makes financing of Operations and Maintenance (O&M) explicit in terms of public sector and users' contributions; (c) ensuring adequate budgetary allocations for maintenance and repair; (d) divesting to the private sector a number of activities currently carried out by the public sector; and (e) establishing institutional arrangements for asset management, and reinforcing accountability of the sector \. Policy Area II - Water resource management reforms to make inter -province water allocation and distribution more transparent through: (a) emphasizing the nexus of water entitlements, measurements and transparency; (b) building on the existing platform of water entitlements; (c) publicizing water accounts for the distributary canals in Lower Chenab East Canal command area by Farmer Organizations; (d) forming a website committee to include Farmer Organizations' representatives, NGOs, scholars, other users and Irrigation and Power Department officials to ensure that information on the website is responsive to users' needs, accessible, user friendly, clear, accurate and timely; (e) publication of the waribandi (allocation and distribution schedules ) in the Lower Chenab East Canal command area in Villages, Water User Association's and Farmer Organization's offices; and (f) promoting sustainable groundwater management \. Policy Area III - Irrigation services delivery reforms to improve the quality, efficiency and accountability with which irrigation services are delivered through: (a) transparent and efficient system of irrigation service delivery in accordance with water entitlements; (b) facilitating the entry of new players into the system to help professionalize and make irrigation services more efficient; (c) devolving responsibility for O&M and abiana (water charges) collection to water users/Farmers Organizations; (d) promoting contractual arrangements that clearly specify the rights and obligations of bulk water suppliers and users; and (e) benchmarking for irrigation services\. On-farm agricultural water management reforms to improve water use efficiency and on -farm Policy Area IV - On- productivity through: (a) formulating a water conservation strategy; (b) building on the on-going initiatives such as watercourse improvement; (c) strengthening laser land leveling, (d) introduction of pressurized irrigation systems, bed-and-farrow, zero-tillage etc\.; and (d) creating a separate Agricultural Marketing Department to formulate and implement internal and export market strategies and facilitate linkages and partnerships between farmers and cooperatives, public and private sectors \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost : DPL I cost US$102\.76 million, and DPL II 100\.00 million\. Financing : DPL I was financed by an IBRD Loan denominated in Japanese Yen (Â¥11\.78 billion, equivalent to US$ 100 million)\. Due to depreciation of the US$ against the Yen, US$ 102\.76 million was disbursed\. DPL II was financed by an IBRD loan for US $100\.00 millions that was fully disbursed\. The planned DPL III was cancelled \. It was under preparation in 2008 when deterioration in the macro-economic situation resulted in its cancelation \. However, dialogue continued on the need for furthering the reforms program by exploring options for replacing the DPL with a Results-Based Lending operation\. A Bank mission visited Punjab in December 2008 to discuss the status the Irrigation Sector Program, and identify a framework for the Bank's support for a medium -term sector program building on the achievements already made \.  Borrower Contribution : Nil\. Dates : DPL I was approved 06/07/2006 and closed on schedule on 06/30/2007\. DPL III was approved on 06/07/2007, and closed on 12/31/2007 as scheduled\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Relevance of Objectives : High Irrigation was, and remains, a vital component of Punjab's infrastructure \. Over 90% percent of the province's agricultural output comes from 8\.4 million hectares of irrigated land served by one of the largest contiguous irrigation systems in the world \. Agriculture contributes 25% of Punjab’s GDP and provides employment to 45% of its work force\. At the time the DPL was prepared, it was estimated that accumulated deferred maintenance was of the order of US$ 2 billion and that the replacement value of Punjab ’s irrigation infrastructure was about US$20 billion equivalent\. The DPL series was highly relevant to the recommendations emanating from a series of national, sector and financial reviews\. At the federal level these were: the Pakistan Planning Commission's Ten-Year Perspective Plan (2001); the Ministry of Water and Power's Water Resources Strategy and the National Water Policy (2005)\. The key recommendation of these analyses was that Pakistan needs to adopt a holistic approach to water management; improve the governance of scarce water resources; improve the efficiency of irrigation; and help ensure long term sustainability of irrigated agriculture \. The DPL was highly relevant to the Government of Punjab's Irrigation Sector Reform Program (ISRP, 2005) that was prepared after extensive consultations with various stakeholders within and outside the government, including dialogue with the Bank and other donors in the water sector \. The ISRP supported Pakistan's Poverty Reduction Strategy Paper that focused on improving governance by enhancing the accountability of state institutions; improvement in social service delivery systems; accelerating growth and generating employment through enhanced focus on productive sectors; and enhancing the effectiveness of public expenditures through budgetary and institutional reforms \. The DPL series was highly relevant to the recommendations of the Bank's sector work \. The Bank's 2002 Public Expenditure Review highlighted a series of strategic issues to be addressed by the Government and improving management of the water sector was high on the list of priorities \. Key recommendations were that Pakistan must modernize both the water infrastructure and the institutional and governance arrangements for water management, improve strategic planning and the knowledge base that supports planning, policy analysis and investment (research & development, information systems ), reflect a more rigorous economic, social and environmental analysis to ensure that project priorities and plans make the best use of the limited resource and fiscal space, and facilitate a new consensus on water management and development that avoids the costly political conflicts of the past \. Subsequently, the Bank's 2004 Country Water Resources Assistance Strategy, that was reviewed and endorsed by Pakistan's Federal Government and its Provincial Governments, incorporated many of these recommendations emanating from the Review \. The DPL series was highly relevant to the Bank's Country Assistance Strategy for Pakistan \. The series was specifically identified in the 2006-09 Strategy as contributing to the following outcomes : improved management of irrigation and drainage infrastructure; improved irrigation service delivery through participatory irrigation management and cost recovery; and transparent and more equitable water allocation and distribution\. The DPL remains relevant to the current 2010-2014 Country Assistance Strategy which emphasizes that higher levels of efficiency in agricultural production are needed to address rural poverty alleviation and that this, in turn, requires improved efficiency of water resource management; rehabilitation of water assets (e\.g\. barrages); irrigation sector development; and better on -farm water management and small scale irrigation b\. Relevance of Design: Relevance of Design : Substantial The results chain was very through, and was logically linked to expected outcomes \. The DPL activities sought to address the complex issues associated with financing, operating and maintaining the irrigation system\. The high-level comprehensive approach was relevant \. It included establishing the status quo for both the system and its financing, arresting deterioration of hydraulic infrastructure, reducing water scarcity, increasing water use efficiency and productivity, finding means to overcome inequities in water distribution, and providing incentives for users to pay for water services and manage them locally \. However, there was one oversight in the design : the authorizing environment for Farmer Organizations to exercise executive management over their irrigation command areas -- which was to be one of the ways of achieving the intended outcome of transparent and more equitable water allocation and distribution -- was  inadequate\. In consequence, decisions by Farmer Organizations on water disputes and member's payments had no legal backing from the civil administration \. Use of the DPL instrument was appropriate (see Section 8a below)\. 4\. Achievement of Objectives (Efficacy): "Improved management of irrigation and drainage infrastructure; improved irrigation service delivery through participatory irrigation management and cost recovery; and transparent and more equitable water allocation and distribution "\. Achievement of the three objectives is as follows : I - Improved management of irrigation and drainage infrastructure : Substantial Outputs: The inventory of the Irrigation and Power Department assets was completed \. The new common base and standards for facility assessment enabled more realistic cost estimates for rehabilitation works \. The replacement value of the Department's assets was estimated to be US$ 19\.5 billion at 2006 price levels\. The policy framework for a 10-year Asset Management Plan was approved and implemented \. Further work on the Plan under the second DPL estimated its cost to be Rs 132 billion\.The cumulative expenditure by the end of FY 08 amounted to Rs 35\.7 billion (27%) of the total requirements of the Plan \. Budgetary allocations for maintenance and repair increased \. Budgets were updated based on the new yardsticks reflecting the market rate that replaced the old composite schedule of rates \. As a result, the original FY 06-07 budget of Rs 1\.23 billion was increased to Rs 2\.0 billion\. The same process was followed in FY 07-08\. The increased budgetary allocations for rehabilitation and maintenance continued after the DPL series was completed\. It was Rs 3\.04 billion In FY 09-10, and Rs 3\.09 billion in FY10-11\. A number of activities currently carried out by the public sector were divested to the private sector \. The most important of these activities (apart from the transfer of abiana collection in some areas to Farmer Organizations) was reducing the public cost of operating and maintenaning tubewells \. A plan for the transfer of irrigation tubewells providing fresh groundwater was completed under the first DPL \. 550 fresh water tubewells were closed in October 2007, and 416 fresh water tubewells were transferred to farmers' groups during the second DPL \. 1,617 tubewells in saline groundwater areas areas were closed in February 2007\. As a result of these divestitures and closures, the annual electricity cost was reduced by 51%, an annual saving of Rs 462 million\. A study by the Department of the Muzaffargarh area in FY 07-08 concluded that farmers were satisfied with the transfer of tubewells as it provided them with direct control and the choice on the use fresh groundwater at their own expense to supplement canal irrigation (ICR, page 37)\. Arrangements for asset management and reinforced accountability were institutionalized \. According to the ICR (pages 29, 38), a system of performance evaluation, prepared in 2005-06 was implemented to ensure that maintenance and repair funds are judiciously allocated, are properly utilized in a transparent manner with full regard to procurement and fiduciary safeguards, and have downward accountability to farmers \. A system for third-party monitoring of maintenance and repair works was established \. Notices of of contracts for Maintenance and Rehabilitation Works more than Rs 0\.5 million, and for Annual Develop Plan Works more than Rs10 million are placed on the Department's website \. High efficiency pressurized irrigation systems (drip/ sprinkler) were installed on 4,034 ha\. 257,000 ha of irrigation lands were levelled to improve the efficiency of irrigation water distribution using Land Laser levels provided by the Loan \. An Agriculture Marketing Department was created to formulate and implement strategies to promote private investment in this sector, and the Punjab government legislated to reform of agricultural markets through the Punjab Agricultural Produce Markets Act - however, its approval status is not known \. Outcomes: Integrity improved\. Meetings of the Departmental Accounts Committee every two -weeks were institutionalized to review and resolve the backlog of 6,666 advance audit observations \. In all, 45% of the cumulative backlog - about 3,000 audit observations - was reviewed and resolved\. Sustainability improved\. The total reduction in deferred maintenance over the four years since the start of the DPL Program was approximately 22% because of increased government budget allocation and improved irrigation fee collection\. In FY 09-10, a total of Rs 4\.53 billion was spent on rehabilitation of irrigation and drainage systems and Rs 2\.8 billion on maintenance and repair\. In total, this constituted approximately 6% of the accumulated deferred maintenance \. The backlog of deferred maintenance was reduced \. The backlog was Rs 120 billion in FY 05/FY06\. It was planned that this would be decreased  annually by 5% under the DPL series\. The government spent Rs 6\.45 billion on rehabilitation of irrigation and drainage in FY06-07, and Rs 7\.41 billion in FY07-08, the year following this first DPL\. Additionally, it spent on Rs 2\.14 billion on maintenance and repair in FY 06-07 and Rs 2\.06 billion in FY 07-08\. The total spending over these two years, at 15% of the deferred maintenance amount, exceeded the DPL targets \. Since the end of the DPL Program the backlog of deferred maintenance continues to be reduced \. The effectiveness of inter -departmental coordination under the reforms program resulted in an enhanced understanding between Irrigation and Power Department and the Finance Department over the issue of the perverse subsidy for electric tubewells \. The provincial governments were required to cover 50% of the operating costs of agricultural tubewells \. The subsidy had serious implications for the groundwater policy approved by under the DPL reforms as it was : (i) promoting excessive pumping by the farmers not only for their own use but also for sale to other farmers; (ii) benefitting primarily large land holders and thus enhancing inequities; (iii) placing an unnecessary financial burden (Rs 1\.7 - Rs 2\.0 billion per year) on the provincial budget; and (iv) representing a major retrograde step in the sector policy environment as well as increasing the power deficit in Punjab \. As a result of this improved dialogue, the Punjab government suspended the tubewells power subsidy \. Later the government decided to completely withdraw the subsidy on all agriculture tubewells with a retroactive effect from July 1, 2010 and the federal Ministry of Water and Power carried out consultations with the provincial governments \. While the governments of Khyber Pakhtunkhwa, Balochistan and the federal Ministry of Food and Agriculture opposed abolition of the subsidy, the finance bill of FY 2010-11 was finalized with an envisaged zero subsidy to take retroactive effect as of beginning of the financial year 2010-11\. The reduced length of irrigation ditches and dikes through land levelling increased the irrigated area by 3,750 ha\. The Department of Agriculture estimated that water saving from improvement of watercourses saved 1294 million m3 of water and land levelling saved a further 172 million m3\. Incremental crop production resulting from improvements in water supply and land leveling were estimated to be 1\.6 million tons (mt) for sugarcane; 0\.93 mt for wheat; 0\.18 mt for rice; 0\.13 mt for cotton, and 0\.10 mt for maize\. II - Improved irrigation service delivery : Modest This objective aimed to enhance the quality, efficiency and accountability with which irrigation services are delivered\. Outputs: Responsibility for O&M and water charges collection was devolved to water users /Farmers Organizations \. Decentralization of the Irrigation and Power Department was started through establishment of 3 Area Water Boards\. 83 Farmer Organizations were established and Irrigation Management Transfer Agreements were signed with the Farmer Organizations in Lower Chenab Canal East \. This was extended to a total of 186 Farmer Organizations under the DPL II (target 183)\. Members of the General body of the 83 Farmer Organizations and 2,379 of their staff were trained by 2007\. Distributary canals were rehabilitated before hand-over to ensure farmers could manage them efficiently \. A policy on sharing maintenance and rehabilitation costs was implemented \. Farmer's Organizations were authorized to collect abiana and retain part of it in the Lower Chenab Canal East \. A transparent and efficient system of irrigation service delivery in accordance with water entitlements was established\. Benchmarking for irrigation services by Farmer Organizations was introduced \. To ensure improved water equity from head to tail of irrigation canals, joint measurements of discharges by Farmer Organizations and the Provincial Irrigation Department was instituted \. Measurements taken were independently verified by independent third -party consultants\. Actions were taken to realign the staffing of the irrigation department to modern needs following the reforms \. Specifically, this involved reorganizing and downsizing the Department to recognize that some of the earlier work has been devolved Farmer Organizations \. An Irrigation and Power Department Modernization Plan was developed, including a strategy and an action plan, using technical assistance from the Asian Development Bank\. Outcomes: The Irrigation and Power Department was able to consistently improve the abiana collection rate\. From a FY04 baseline of 52%, department staff collected 58% of the winter (rabi) in 2005-06 and 70% of the summer (kharif) irrigation dues in 2006 from a baseline of 47%\. After completion of the DPL program, the collection of abiana increased to 77% in 2007-08; 87% in 2008-09 and 86% in 2009-10\. From a FY05 baseline of 70%, Farmers' Organizations collected 78% of the winter (rabi) in 2005-06 and 79% of the summer (kharif) irrigation dues in 2006\. This improved performance may have been also partly due to the fact that water supplies were 5% higher than the previous year (ICR, page 38)\. In 2007, the collection rate declined to 64% for the summer, and to 59% for the following winter 2007-08 irrigation\. Thus it did not meet the target of 85% for FY08\. The reasons for this are complex \. The main reasons put forward  in the ICR (page 25) were local shortages of water (when supplies are short or irregular, farmers are unwilling to pay), and the unwillingness of local civil administrations (police and magistrates) to accept the authority of Farmer Organizations on water disputes (mainly water theft and defaulters on billings )\. After the completion of the DPL program, the effectiveness of the Farmer Organizations dwindled \. This was for three main reasons\. First, not all farmers are members of the Organizations \. Second, the Farmer Organizations lack legal authority to impose their decisions within their management areas \. Third, in areas handed over to the Farmer Organizations for operation and maintenance, Departmental support for canal rehabilitation was significantly reduced \. This slowed attempts by Farmer Organizations to improve water distribution and reduced their ability to efficiently operate the system \. In turn, this contributed to difficulties in collecting abiana\. The Irrigation and Power Department Modernization Plan was approved by the provincial Government; however, it was not implemented (ICR, page 32)\.The ICR does not state the reasons \. According to the ICR (page 32), the new policy for O&M cost-sharing was not being followed by the Department after the end of the DPL Program \. The ICR does not state the reasons \. III - Transparent and more equitable water allocation and distribution : Substantial Outputs: Flow metering gauges were installed and calibrated for 12 canal of the 24 canal systems (target 12), and linked with the Irrigation MIS (while the ICR reports installation of flow metering for the Lower Chenab Canal East distributary canals, this was installed in 2005-06 and pre-dated the Loan (ICR page 56))\. A Groundwater Management Plan was completed \. Pilot groundwater management schemes included : stakeholder participation; economic incentives; strengthening of knowledge base and regulatory measures \. Groundwater information was made available on the web site of Government of Punjab \. Farmer Organizations in the Lower Chenab Canal East monitor groundwater water depth and quality \. Criteria were developed for allocating any additional water (or shortages) that occur under the Inter-Provincial Water Accord and are posted on the website \. All new water allocations were made public \. An information website and a telephone complaints system was instituted under the first DPL and became operational in 2007\. Outcomes: Transparency improved\. Water accounts for all 24 main canals and the Lower Chenab Canal East distributary canals (including entitlements, deliveries and status of the water balance ) are updated every 10 days and posted on the government's website \. In addition the rotational water distribution system for the Lower Chenab Canal East command area are publicized by Farmer Organizations \. The complaints website recorded about 75 hits per day in July 2007; 1,551 telephone complaints were received and 1,089 were addressed\. The system remains operational\. Farmer Organizations resolved more than 2,800 disputes including some 1,758 disputes related to unauthorized water use or water theft \. More equitable water distribution was achieved \. The ratio of head to tail water availability, the Delivery Performance Ratio, improved for 5 of the 6 canals reported in the ICR\. For example, for the Upper Gugera canal the ratio improved from 0\.64 in Kharif 2006 to 0\.90 in the Kharif of 2008\. The exception was the Khanki canal where fell from 0\.68 to 0\.59 over the same period\. Macroeconomic Framework In 2007, the period covered by the two operations in the series, the Government's policy stance remained generally appropriate\. However, increases in the rate of inflation and in the external trade deficit pointed to significant excess liquidity in the economy, and the need for resolute action to contain money supply and improve export competitiveness \. Between 2007 and 2010, Pakistan's macroeconomic situation deteriorated significantly, as the effects of internal and external imbalances were compounded by shocks stemming from the global crisis and natural disasters \. As a result, the preparation of the third DPL in the series was at first deferred and subsequently abandoned \. 5\. Efficiency (not applicable to DPLs): 6\. Outcome: Relevance of objectives is rated high and that for design is rated substantial \. The achievement of the first objective to improve the management of irrigation and drainage infrastructure was substantial \. In contrast,  achievement of improved irrigation service delivery through participatory irrigation management and cost recovery was modest\. This is because important reforms to the staffing and structure of the Irrigation and Power Department were put on hold after the end of the DPL series, and because Farmer Organizations have become less effective due to unresolved institutional problems \. The achievement of the third objective to introduce more transparent and equitable water allocation and distribution was substantial \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The Government's policy environment remained supportive at the end of DPL II \. However, the period between 2007 and 2010 witnessed mounting economic problems with fiscal deficits and an energy crisis followed by the massive floods in 2010\. Inflation and external trade deficit led to a deterioration of the macroeconomic climate, and this remains a problem\. The Floods Damage Needs Assessment estimated that an expenditure of approximately US$ 10 billion will be required for the recovery, rehabilitation and medium - to long-term reconstruction process \. The cumulative irrigation and flood management reconstruction costs are estimated at US$ 982 million with approximately US$51 million for reconstruction in Punjab\. Resource constraints, and low levels of revenue generation may put renewed pressure on the irrigation management system to raise abiana rates, as well as improving collection efficiency and intensity \. However, at the same time the effectiveness of the Farmer Organizations was dwindling because governance issues remain unresolved \. In addition, the process of Farmer Organization formation and transfer of management to them slowed down considerably, and little progress was made after completion of the DPL series\. The reforms regarding transparency and accountability appear to have been mainstreamed \. However, the intransigence the Irrigation and Power Department over their internal reforms may prove to be a stumbling block\. The Modernization Plan remains unimplemented \. The approved policy for O&M cost -sharing was not followed after completion of DPL series \. a\. Risk to Development Outcome Rating : High 8\. Assessment of Bank Performance: a\. Quality at entry: at -entry : Quality -at- Use of the DPL instrument was appropriate \. Given the diverse set of challenges facing the sector and the large need for resources, the Country Water Resources Strategy recommended that Bank support be selective, keeping in view the Bank ’s comparative advantage, other donors ’ traditional areas of support, and the sector priorities\. Thus Bank support would focus on instruments and incentives for reforms rather than simply on organizations, programs and projects as in the past \. Consequently, the Government of Punjab and the Bank agreed that new approaches and instruments are needed to meet the diverse set of challenges facing the water sector\. The DPL instrument was considered a more suitable instrument for supporting the newly formulated reform agenda than an investment loan as it would enable the Bank to have detailed engagement with the policy-makers rather than having dialogue confined to project implementating agencies as had happened to date\. In addition, because of its “budget supportâ€? nature, it was expected that the DPL series would provided leverage for government -led policy reforms\. Preparation also benefited from Analytical and Advisory Activities that culminated in several major sector reports, including: "Water and Power Resources of West Pakistan : A Study in Sector Planning;" a "Revised Action Program for Irrigated Agriculture " (1979); a "Water Sector Investment Planning Study " (1991); “Pakistan -- Irrigation and Drainage: Issues and Optionsâ€? (1994); and “Accelerated Development of Water Resources and Irrigated Agriculture, â€? prepared as part of the Public Expenditure Review, carried out in 2003\. In addition, several sector policy and planning studies, including a draft National Water Policy, and a framework for a Drainage Master Plan for the country, were prepared through the technical assistance components of Bank-assisted projects as well as various Trust Funds managed by the Bank \. The Bank team worked very effectively with the Government to design the DPL Program that was comprehensive and very thorough \. Notably, appraisal paid considerable attention to M&E arrangements that included an excellent focus on expected short - to medium-term outcomes\. The only shortcoming was too little attention to the governance environment that would enable Farmer Organizations to perform effectively \.  M&E design was adequate\. at -Entry Rating : Quality -at- Moderately Satisfactory b\. Quality of supervision: Supervision : The Bank team undertook regular supervision missions \. Strong dialogue was maintained with key policy makers, not only with the Provincial Irrigation and Power Department and Agriculture Department but also with the Department of Finance and the Planning and Development Board \. This was supplemented by field visits to Farmer Organizations and the members of the Area Water Board to assess progress and impact of the institutional reforms\. The Bank team consisted of senior staff from various sectors of the Bank and included, as needed, senior national and international technical experts \. These experts provided technical support to Irrigation and Power and the Agriculture Departments \. In both operations in the series,the Bank team continued regular policy dialogue with the Punjab Government's Planning and Development Board and the Department of Finance, to reinforce high -level support for the reform program \. The Bank team also coordinated closely with the Asian Development Bank that was parallel -financing the Modernization Plan for the Irrigation and Drainage Board and the introduction of Integrated Water Resources Management principles to the Province\. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Government : At the time of DPL 1, Pakistan’s economy was starting to grow after a period of stagnation and the irrigation reforms program enjoyed strong championship from the political leaders and top administrative officers of the province which made it possible to implement institutional and fiscal reforms \. This continued under DPL II\. Government implemented the required prior actions in a timely manner and was pro -active on ensuring agreed actions under the DPLs were implemented \. 23 of the 29 of the actions started during the Program are being sustained\. The arrangements for transparency and accountability remain active on the government website\. Third-Party monitoring was continued after the end of the DPL series \. Implementation of the Groundwater Strategy was implemented in critical areas \. The Maintenance and Repair Budget continues to be allocated as per revised yardsticks \. Provincial Budget allocations for rehabilitation are in line with those specified in the Asset Management Plan \. A shortcoming was the inadequate progress on implementing the organizational reforms of the Irrigation and Power Department \. Government Performance Rating : Moderately Satisfactory b\. Implementing Agency Performance: Implementing Agency Performance Rating : Not Applicable Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design:  Design : The choice of output and outcome indicators were closely aligned to expected outcomes \. Baselines for all indicators were established\. Importantly, the Government established a Strategic Planning and Reform Unit within the Irrigation and Power Department consisting of four teams, one each for the oversight of the four pillars\. These pillar teams were responsible for day -to-day monitoring and follow-up actions\. There were well-designed arrangements for beneficiary and third -party validation of outputs and outcomes regarding water management, its allocation and distribution, and third -party oversight of procurement \. b\. M&E Implementation: Implementation : There were quarterly progress reports for DPL reform activities supplemented by annual internal monitoring and evaluation report, and annual Operation & Maintenance evaluation reports for maintenance and repair works\. The Program Monitoring and Implementation Unit monitored equity and transparency in water allocations and distributions, and the results were published on government websites \. c\. M&E Utilization: Utilization : The ready availability and publication of the water management data reportedly won the trust of farmers and other water users and bolstered public support for the reform program \. Transparency also led to consultation between the Irrigation Department and Farmer Organizations that resulted in improved equity of water distribution\. It also enabled Farmer Organizations to arbitrate disputes over water \. M&E Quality Rating : Substantial 11\. Other Issues a\. Safeguards: NA b\. Fiduciary Compliance: The Bank required no additional assurance requirements in the form of a formal audit in the light of the fiduciary environment established with the management of foreign exchange reserves by the State Bank of Pakistan \. c\. Unintended Impacts (positive or negative): The irrigation management reform process in Punjab had a demonstration effect in other provinces \. The province of Sindh is following a similar program structure for the irrigation sector improvement which is based on the principles of decentralizing irrigation management, formation and capacity building of Farmer Organizations and introducing transparency in water distribution and sharing \. d\. Other: 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Achievement of improved irrigation Satisfactory service delivery (second objective) through participatory irrigation management and cost recovery was modest\. This is because important reforms to the staffing and structure of the Irrigation and Power Department were put on hold after the end of the DPL series, and because Farmer Organizations have become less effective due to unresolved institutional  problems\. Risk to Development High High Outcome : Bank Performance : Satisfactory Moderately Inadequate attention during appraisal Satisfactory to the governing environment affecting the effectiveness of Farmer Organizations\. Borrower Performance : Satisfactory Moderately Unsatisfactory progress on reform of Satisfactory the Irrigation and Power Department; inadequate attention to the governing environment affecting the effectiveness of Farmer Organizations\. Quality of ICR : Exemplary NOTES NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following lessons are adapted from the ICR : Keep DPLs simple : This lesson was specifically learnt from the implementation of the National Drainage Program and was applied to the DPL Program \. The Program was simple and had one main implementation agency (the Irrigation and Power Department) which made its implementation easy\. The the program was strategically designed to engage the highest decision -making officials through an Inter -Departmental Reforms Steering Committee which provided oversight and guided decision -making as well as their quick implementation\. Any program that generates demand can be considered a success : The institutional architecture that evolved under the Program provided a strong base for farmers ’ participation and decentralization of irrigation management responsibilities\. A well-designed communication plan ensured that all stakeholders – especially farmers – are aware of the steps being taken through the reforms \. This not only created the demand for transparency in information sharing, it also challenged the government agency to keep pace with increased demand for timely and accurate information \. Institutional change needs time to take roots : The short lifespan of the DPL series was designed for quick outcomes in setting forth the reforms processes \. However, the expected pace of implementation on some policy areas could not be sustained by the new Farmer Organizations and their governance arrangements that needed time to mature\. It was expected that this lacunae would be addressed through follow -up investment programming built on the lessons learned \. 14\. Assessment Recommended? Yes No Why? Are the reforms sustained? Have Farmer Organizations become more effective? Has the Irrigation and Power Department carried out its internal reforms? 15\. Comments on Quality of ICR: This was an unusually through ICR for a DPL series \. It is comprehensive, results -based and outcome-focussed\. The quality of the evidence and analysis is good and is internally consistent \. The lessons drawn are based upon the Program's experience\. Unlike most DPL ICRs, it gives considerable attention to what happened after the DPL series was completed\. a\.Quality of ICR Rating : Exemplary

REVIEW

P004003

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 25276 IMPLEMENTATION COMPLETION REPORT (CPL-39790; SCL-3979A; SCPD-3979S) ON A LOAN IN THE AMOUNT OF US$ 60\.4 MILLION TO THE GOVERNMENT OF INDONESIA FOR A SECONDARY SCHOOL TEACHER DEVELOPMENT June 24, 2003 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS (Exchange Rate Effective November 1995) Currency Unit = Rupiah (Rp) Rp 1 million = US$ 445 US$ 1\.00 = Rp 2,246 ACADEMIC YEAR July 1 - June 30 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS APKG - Student Teaching Observation Form ASD - Academic Staff Deployment CAS - Country Assistance Program DO - Development Objectives GOI - Government of Indonesia ELA - Entry Level Student Assessment ELAQA - Entry Level Student Assessment in Quality Assurance IKIPs - Teacher training institutions with education and other faculty departments LPTK - General term for Teacher Training Institution MGMP - Teacher study circles or clusters MOE - Ministry of Education PPL - Field Experience Program S1 - Undergraduate Degree Program S2 - Master's Level Degree Program S3 - Docatorate Level Degree Program SAR - Staff Appraisal Report TTL - Task Team Leader UPBK - Guidance and Counseling Implementation Units UT - Open University Vice President: Jemal-ud-din Kassum Country Manager/Director: Andrew D\. Steer Sector Manager/Director: Emmanuel Y\. Jimenez Task Team Leader/Task Manager: H\. Dean Nielsen  INDONESIA SECONDARY SCHOOL TEACHER DEVELOPMENT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 11 6\. Sustainability 12 7\. Bank and Borrower Performance 13 8\. Lessons Learned 15 9\. Partner Comments 19 10\. Additional Information 19 Annex 1\. Key Performance Indicators/Log Frame Matrix 20 Annex 2\. Project Costs and Financing 24 Annex 3\. Economic Costs and Benefits 26 Annex 4\. Bank Inputs 27 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 29 Annex 6\. Ratings of Bank and Borrower Performance 30 Annex 7\. List of Supporting Documents 31 Annex 8\. Borrower's Contribuion 32  Project ID: P004003 Project Name: SECONDARY SCHOOL TEACHER DEVELOPMENT Team Leader: H\. Dean Nielsen TL Unit: OEDST ICR Type: Core ICR Report Date: June 26, 2003 1\. Project Data Name: SECONDARY SCHOOL TEACHER L/C/TF Number: CPL-39790; SCL-3979A; DEVELOPMENT SCPD-3979S Country/Department: INDONESIA Region: East Asia and Pacific Region Sector/subsector: Tertiary education (50%); Secondary education (48%); Central government administration (2%) Theme: Education for all (P); Education for the knowledge economy (P); Gender (S); Social analysis and monitoring (S) KEY DATES Original Revised/Actual PCD: 10/28/1992 Effective: 05/30/1996 Appraisal: 06/08/1995 MTR: 04/01/1999 08/23/1999 Approval: 02/20/1996 Closing: 10/01/2001 12/31/2001 Borrower/Implementing Agency: REPUBLIC OF INDONESIA/DIRECTORATE GENERAL OF HIGHER EDUCATION (DIKTI) Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Russell J\. Cheetham Country Director: Andrew D\. Steer Dennis de Tray Sector Manager: Emmanuel Jimenez Marianne Haug EA3ER Team Leader at ICR: H\. Dean Nielsen Alfonso F\. de Guzman ICR Primary Author: H\. Dean Nielsen 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:L Institutional Development Impact:SU Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The original project objective was to enhance the teaching-learning processes in secondary schools through the improvement of teacher education in 31 public teacher training institutions\. This objective remained thoughout the project, except for the fact that the number of institutions was reduced to 30\. The objective highlights processes in secondary schools, but in reality the project was more focused on the teacher training institutions\. Therefore, there was little emphasis, both in project implementation and evaluation, on the secondary school classroom and its processes\. In any case, teacher education only covers a subset of the determinants of enhanced teaching-learning processes\. Much of the mix comes from the other factors such as presence and quality of teaching-learning materials, teacher incentives, management support for excellence, and community involvement\. What the project appears to have focused on -- in both implementation and monitoring -- were the kind of factors that higher educator can leverage -- change within the teacher training institutions and their processes, including those which take place at schools\. In retrospect, it may have been better for such activities and processes to have been the focal point of project objectives and for better teaching-learning processes at the schools to have been one of the expected outcomes\. 3\.2 Revised Objective: No Revision 3\.3 Original Components: Component 1: Improving preservice and inservice teacher education ($30\.6 million) This component included curriculum revision (highlighting vertical and horizontal flexibility); provision of science equipment; books and references; offices and conference rooms to select training institutions; student support services and career planning; inservice education; and learning material development\. During a year two supervision mission the Bank team took the position that three of seven original project subcomponents had the potential to directly effect project development objectives (DO) and thus began tracking them in its DO ratings, namely student support services, inservice education, and learning materials development\. When the project was scaled back by nearly 50 percent in year three due to the national economic crisis, three of the remaining four subcomponents, science equipment, books and references, and offices and conference rooms were reduced in scope or canceled (offices and conference rooms)\. The curriculum activity remained, but was so limited in scope that it was also poorly connected to the teaching-learning objective of the project\. Component 2\. Strengthening linkages to secondary schools ($5\.4 million) To strengthen linkages to secondary schools the project set out to improve the content of school-based student teaching, redeploy substantial numbers of teacher training institution (LPTK) lecturers (who at the beginning of the project were in oversupply) to secondary school teaching positions, and promote collaboration between teachers and lecturers in conducting school based action research\. All aspects of this component can be considered directly and strongly related to school teaching-learning processes and were appropriately used in assessing attainment of project objectives\. The international partnerships formed as a way of enhancing the project resource base were well conceived and useful at the beginning but eventually domestic expertise appeared sufficient to drive these activities and given the need - 2 -  to scale back on budget, the funding for international partnerships was appropriately cut\. Component 3\. Raising qualifications of teacher educators ($32\.4 million) This component, meant to strengthen the professional qualifications and expertise of LPTK lecturers, consisted of fellowships for national and international degree programs (Masters and Doctoral), refresher courses at international centers of excellence, and related national workshops\. Given the fact that at Project appraisal a high proportion of teacher educators (80 percent) had only received a bachelors degree (the same degree that they were offering new secondary school teachers) -- and most from the institution where they were teaching -- this component can be considered an essential means of raising professional competence related to secondary school instruction\. When project recosting was done, many of the subcomponents were reduced (especially the one covering the less efficient refresher courses), but even at their scaled-back levels all subcomponents were maintained as proxies of development objective attainment\. Component 4\. Building educational research capacity ($2\.9 million) This component consisted of developing and using a system of entry level student and graduating student assessment, and competetive research grants to encourage instructional improvement\. Given the fact that a large proportion of students admitted to the teacher training institutions have not mastered the subject matter that they will be expected to teach (e\.g\., secondary school math or science or language skills) a diagnotic tool and its use to guide remedial actions (tutoring) can be considered an important potential contributor to project objective attainment\. Use of the instrument for quality assurance (in this Project meaning to test both entry-level and exit level mastery) also has the potential to leverage program improvement\. Also, given the low priority given in the teacher training institutions to effective instruction by the lecturers themselves, the competitive grants were welcomed as highly visible means of changing that\. It is reasonable to note these subcomponents were included among the nine proxies of project objective attainment\. Component 5\. Preparing for a wider mandate ($1\.1 million) This component set out to examine, in four teacher training institutions (IKIPs) making the transition to university status, issues of strategic planning, accreditation, and student career planning\. This component was never well connected to the project objective of fostering better teaching and learning in secondary schools except in a negative sense -- converted training institutions were at risk of losing their motivation and capacity for excellence in teacher education\. Given that even before the Project results on this component were ready, all ten public IKIPs converted to universities, the importance of this component in policy formulation and program development was undermined\. It was appropriately not included as a proxy for project objective attainment\. 3\.4 Revised Components: All of the components were maintained throughout the project, but their levels of funding were changed due to the cost-cutting requirements, as follows (the letter after the cost figure reflects their ratings at the time of cost reduction): 1\. Improving preservice and inservice teacher education ($9\.5 million); S 2\. Strengthening linkages to secondary schools ($3\.8 million); S - 3 -  3\. Raising qualifications of teacher educators ($19 million); S 4\. Building educational research capacity ($3 million); S 5\. Preparing for a wider mandate ($0\.8 million); NR 3\.5 Quality at Entry: Although no formal Quality at Entry assessment was made of the project, it is possible to get a sense of the adequacy of project preparation and design through document review, namely by project adherence to the Country Assistance Strategy and by its response to external reviews\. The 1995 Country Assistance Strategy for Indonesia called for a lending program that would address critical issues in human resources development, especially those related to educational quality, and for the adoption of strategies supportive of the country's transition towards more regional autonomy, including that in higher education\. The project was well designed to deliver higher levels of educational quality at the teacher training institutions, and placed appropriate and adequate emphasis on institutional development and autonomy\. Less well designed were features that would allow the development objective of improving the teaching-learning processes in secondary schools\. Project external reviewers were supportive of the main features of institutional improvement for teacher training but questioned whether the project had built adequate mechanisms for coordination and communication among institutions, such that innovations and changes in lead institutions would be shared across the entire network\. Related to that were concerns about the lack of engagement of accreditation or national policy bodies in the exercise of quality assurance\. In fact, there were problems of communications and sharing and quality assurance was not a strong project feature\. A national Directorate for Teacher Education was established during the life of the project but too late for it to have a major impact on policy change\. Another point by reviewers was the project's lack of attention to changes in the labor market for secondary school graduates and issues of national competitiveness in productivity\. Although it could be asserted that curriculum design for secondary schools was beyond the scope of this teacher development project, it can be argued that the project should have paid more attention to both the content and processes of teaching and learning in secondary schools\. Finally, there was a reviewers' call for a more coherent and forward looking view of the teacher education system and its organization, given the pending transformation of training colleges into universities\. In retrospect, it seems that system was overwhelmed by the scope and pace of transformations that did take place, which might have been better absorbed had more strategic planning and holistic thinking been done\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The attainment of the project object, "to enhance the teaching-learning processes in secondary schools through the improvement of teacher education in 31 public teacher education institutions," can not be directly assessed, at least the first part, since the project did not systematically collect data on changes in teaching and learning at the secondary school classroom level\. What can be assessed is the improvement of teacher education, as follows: Improving pre-service and in-service teacher education Curriculum\. A key task in this component was the preparation of new curriculum materials in English, social sciences, and subject-specific pedagogy and the creation of vertical, horizontal, and external flexibility\. Though the curricula have been field-tested, and, in the case of intensive English course materials, adopted in many institutions, system-wide adoption was in doubt in late 2002 (near the end of the project) since national guidelines released at that time leave it up to each institution to create its own - 4 -  curricular materials\. Thus, the Project materials were distributed to the group of 31 institutions as exemplary curriculum materials which the institutions could use in creating their own\. Vertical flexibility (the ability to teach at both lower and upper secondary school levels) was improved through specific changes in social science and subject specific pedagogy courses and field experience programs\. External flexibility was found to some extent in the English language programs\. However, horizontal flexibility (endorsement to teach more than one subject matter) was not established during during the Project\. The main vehicles to be provided, the use of double majors or major-minor options, were not observable during the project, since such options were only seen as coming at the end of a program and the first cohort of those experiencing Project revised curricula had not yet finished their initial majors\. Science and language laboratory equipment\. Science equipment provided under the project, while utilized in some laboratories, was not used in other places due to a lack of complimentary material, e\.g\. software, nitrogen gas, etc\. Problems in the maintenance of science equipment were also noted, at least in part a problem of inadequate training\. Foreign language laboratories, used mostly for English language instruction, were well received and intensively used, but the lack of student keyboards prevents students from being able to use the labs to improve their writing skills\. Distance education modules\. The lack of enthusiasm for the Open University (UT) approach to inservice teacher training activities (upgrading), and its eventual discontinuation under the project, has meant that some 120 modules developed by the Open University for teacher upgrading (20 more than the target) are not being utilized widely in the campus-based teacher training programs\. However, they are being used as basic texts for the distance inservice training programs managed by the Open University (ten of thousand of students) no longer included as part of this Project\. If the best of these modules could be made available to the other teacher training institutions for their inservice programs, the returns on investment could be increased\. In-service education\. A major potential contribution has been made to the improvement of classroom instruction by the Project's placing 18,725 lower and upper secondary school teachers in inservice training programs for their upgrading to the S1 degree\. Both faculty and participants spoke positively about the program which was selective and rigorous\. Of those placed almost 15,000 graduated (an 80 percent completion rate); of the graduates 56 percent were women, and 58 percent lower secondary school teachers (compared to the originally planned 77 percent)\. It is not clear why lower than expected numbers of lower secondary school teachers received the scholarships\. With the cancellation of the Open University program, the project was less well equipped to reach rural and remote school teachers than planned -- although some LPTKs provided remote access to courses and outreach was still being made by the Open University through its own resources\. Studies showed that inservice course participants did just as well as inservice program graduates on cognitive outcomes and teaching skills (based on head teacher and student feedback)\. (Unfortunately, the study did not include the kind of direct observation of teaching skills used in the regular preservice courses\.) The program was undeniably popular among teachers, evidenced by its continuation with those willing to pay their own fees and the demand for it by private universities and distant provinces, presumably because of its help to them in reaching higher levels in the civil service (an important incentive for a serverly underpaid and under-appreciated teaching force)\. It also showed its capacity to increase teacher knowledge -- important in a teaching force where even mastery of the secondary school curriculum is weak\. Improvement in teaching skills was probably not (and probably cannot be) strongly affected by such programs, since generally this requires more "hands on" approaches, like those featured in the action research programs and faculty deployment systems described below under university-school linkages\. Student support services\. Student support services (3S) have been established in 30 LPTKs to improve student study skills and adjustment to university life, but their best benefits are only being realized in about - 5 -  a third of them, the ten which have developed entry level tests to identify weak subject mastery and are providing tutoring for the underprepared students\. Even in those the most needful students (those with low entry level scores) are not always reached since tutoring is not required\. The Centers are managed by staff trained in guidance and counseling, not academic remediation\. Some remediation activity seems to be done at subject departments, e\.g\. English at UNM and not at the center\. One notable feature, used in many locations, but whose effectiveness is not yet established, is peer tutoring\. While well-qualified students can help their peers, other limitations, e\.g\. time, teaching ability, may not be adequate\. Career counseling has also been established at some universities, but no data available to assess how effective it is\. Improved linkages to secondary schools There was a significant increase in the activities between the teacher education institutions (LPTKs) and the schools through highly valued classroom action research and deployment of 902 lecturers to schools\. The classroom action research which partners LPTK lecturers with classroom teachers in examining the teaching learning process in schools increased lecturer knowledge of current practices in the secondary schools and connected them to the real world of teachers\. The deployed lecturers worked as teachers, on action research, and community service\. A model field experience program was developed that included a handbook and manual that was tried out with partner schools at all LPTKs\. Supervising lecturers and cooperating teachers were trained in the use of the field experience handbook and manual\. There was no systematic pre-/posttest data collected to determine if the performance of student teachers changed as a result of the increased linkages to secondary schools; nor do we know if lecturers/teachers improved their teaching as a result of the school linkages program and their action research\. Observations during site visits and feedback from lecturers, teachers and administrators were supportive of the linkages and some LPTKs are using their own budgets to continue these activities beyond the project\. Partnerships with international universities were supported for the first two years of the project\. The economic crisis curtailed project support but five LPTKs continued the partnerships on their own\. Raising the qualifications of teacher educators Graduate degrees\. Using domestic universities and creative means of accessing international ones (particularly in Germany, France, and Holland, where university placement agents were used) the project delivered most of its planned graduate degrees\. Virtually all masters and most doctoral programs were in the subject fields or disciplines, which was the plan at the masters level but not the doctoral where a balance of disciplinary and pedagogical studies was expected\. Also, the process of candidate selection and placement appeared less reliant on institutional needs analysis than expected\. The drop-out rate from degree programs has been quite low (less than 10% for the international doctoral candidates) but several doctoral programs are still in progress (about 25%)\. For any students needing time beyond the project closing date to finish, the universities (or in a few cases the students themselves) have agreed to cover the remaining costs\. Masters and doctoral returnees have almost all returned to teaching in their former departments, and show increased levels of academic output (research, journal writing, involvement in academic conferences)\. There is some evidence (self-reports and comments from Deans) of improvement in their own teaching and reports of higher satisfaction among students about the returning lecturers' instruction and thesis supervision (based on tracer studies of 50-60% of returnees) -- but there was no systematic/objective assessment of improved teaching competence\. Few of them gained specific training and new expertise on improving quality of teacher education programs; most are more oriented to the non-education programs of the wider mandate institutions and often research that can only be done overseas (e\.g\., physics research in France)\. The overall goal of the project ­ to increase the proportion of faculty holding a post bachelor's degree to above 45 percent -- was exceded (as of 2001 it was 51\.5 percent; counting faculty in the pipeline 63\.2 percent), with as much as one third of the change attributable to the project\. - 6 -  Refresher courses and faculty workshops\. Of the 150 refresher courses that were planned only 22 ­ the first round -- of them were undertaken\. Since they were found to be relatively expensive (compared to potential impact), subsequent rounds were canceled during the cost reduction\. Of the 22 only eight yielded booklets which were published and distributed\. There is little sign of their having been used (except by producers and reviewers) or visible/available at the receiving institutions ­ and no faculty workshops on them were held, as planned\. - 7 -  Building Educational Research Capacity Entry level student assessment (ELA) and Quality Assurance\. ELA instruments were developed at ten LPTKs and have been used constructively by the institutions to identify students lacking pre-requisite knowledge (secondary school content) and prepare remedial programs, usually at the student support service centers\. Some institutions have made remediation mandatory and some not; also some use only faculty members as tutors and whereas others involved peer tutors\. Feedback directly to faculties and departments for use in course development does not seem to have been done systematically\. The use of the instrument for quality assurance (end-of-program testing) was done, but at most for two years\. In some programs there was significant change; in others not, a finding at least in part influenced by the fact that students and faculty did not take the post-test very seriously\. At least one institution showed that results were better when student tutoring was undertaken\. The intended use of the student teaching observation form (APKG) for summative evaluation of trainees' teaching skills was done only at two institutions with results which are not conclusive\. Research on the improvement of instruction\. Originally meant to cover up to five studies per year, this program grew to significant proportions (229 grants awarded in all) and was accompanied by publications and workshops which have had a positive impact on lecturer attention to their own teaching and student outcomes\. However, there are no data to actually document improved instruction\. Preparing for a Wider Mandate Originally the project proposed the preparation of two to three IKIPs for future conversion to universities\. Four IKIPs were selected to participate in conversion to university status with support from the project\. Institutions preparing for conversion were to provide graduates with three types of competencies: vertical - the ability to teach at lower and upper secondary levels; horizontal - the ability to teach 2 to 3 subjects; external - the ability to compete for employment other than teaching\. The time needed to grow and develop into a university was estimated at between 5 and 15 years\. As IKIPs came to recognize the status improvements connected to this conversion they all applied for and were granted the permission to convert during the project period\. This process was accelerated by a Presidential Decree in support of the conversion in 1999\. The impact of these conversions on teacher education has yet to be assessed\. One of the immediate results is that the academic qualifications of the intake students has increased, nearing and even surpassing that of the established universities\. A stimulating academic environment may positively impact teacher education if the better qualified students select teaching as a career\. However, there is no guarantee that these students will pursue teacher education\. As non-education programs increase, competition for resources could adversely affect teacher education\. Thus, during the project the goal of converting a few IKIPs to universities was "overfulfilled" but with questionable results with respect to the quality of teacher education offered and teachers produced\. It is crucial that former IKIPs monitor this during the first years of their new wider mandate status, tracing number and characteristics of their graduates who enter the teaching force, and making changes in their programs if it turns out that too few of their good students are going into teaching\. The accreditation system, including peer evaluation elements, proposed in the project evolved into a less rigorous self-evaluation system\. Under the direction of the Director General of Higher Education, self-evaluation reports are now required as part of the institution's annual budget request, a positive first step\. However, stronger accreditation measures will be needed if the government is serious about improving the quality of teacher education, especially given the increased number of private universities and faculties offering teacher education\. 4\.2 Outputs by components: Improving pre-service and in-service teacher education - 8 -  Curriculum improvement\. Three curricula developed and pretested: Intensive English in 8 LPTKs, Social Sciences in 3 LPTKs, and Subject-Specific Pedagogy in 3 LPTKs\. The horizontal flexibility features of the English and Social Sciences curricula (allowing double majors and major-minor) were not tried out during the Project implementation\. Science equipment\. Using the Basic Science Team Standards, biology, chemistry, mathematics and physics equipment was purchased and installed in 12 of 16 planned LPTKs\. Support for the last 4 was taken out of the Project under cost reduction and covered by GOI funds\. At one institution the science laboratory was renovated and is used for S1 students practicum\. Science laboratory storage facilities were installed at two LPTKs\. As an added feature to the Project, English language laboratory equipment to support the implementation of the English curriculum developed by the SSTD English Development Team was purchased and installed in 6 LPTKs; in two others supplementary language laboratory equipment was provided\. Secondary textbooks and education references\. Textbooks used in lower and upper secondary schools were purchased and distributed to all LPTKs\. Biology, chemistry, and physics textbooks (7 of the targeted 75, scaled back to 12 under cost reduction) were translated from English to Indonesian, published, and distributed to all LPTKs except UNPATTI due to civil disturbances in Maluku\. Eight of the 22 refresher course program textbooks (scaled back from 150) were published and distributed to all public LPTKs\. Student support services\. Student Support Centers were established at 30 LPTKs\. A model program was set up at the State University of Padang (formerly IKIP Padang) and National Seminars held to discuss the "3S" program and its effectiveness as documented in studies at 14 LPTKs\. Students having low Entry Level Scores were identified in 7 LPTKs and other instruments for detecting learning problems were developed and used in 30 LPTKs\. In-service education for secondary school teachers\. A total of 18725 scholarships for upgrading secondary teachers from D3 to S1 were awarded, exceeding the project target of 18,000 (14,000 for SLTP and 4,000 for SMU)\. Upgrading of 600 teachers through the Open University was cancelled due to cost containment\. Learning materials development\. Basic course outlines were developed and reviewed for twelve subject-specific pedagogy areas\. Modules (120 compared to the planned 100) were produced for use in the distance learning program of the Open University (UT)\. Since upgrading via UT was not undertaken under the project, the modules were not used in the project\. However, they are still being used by UT for with its non-project supported students\. Offices and conference rooms\. Staff offices were remodeled and renovated at 12 LPTKs and are being designated for meetings between students and lecturers as evidenced by office hours posted on office doors\. However, there are not data to show whether such office hours are being maintained by lecturers\. Strengthening linkages to secondary schools Supporting school linkages\. A total of 912 lecturers, from eleven LPTKs, were redeployed to secondary schools under the academic staff deployment (ASD) program (well below the 2400 mentioned in the SAR but reduced to an undetermined number during cost-reduction)\. They worked in a variety of activities: teaching, action research, student counseling, learning material improvement, and community service\. For Field Experience Program (PPL) a handbook and manual were developed\. Tryout of new PPL models were conducted by LPTKs and partner schools in all LPTK\. There was a total of 180 partner schools with an - 9 -  average of 6 partner schools per LPTK\. A total of 6140 cooperating teachers and supervising lecturers were trained to use PPL materials (far above original expectations)\. At total of 559 classroom action research studies (far more than planned expectations), conducted by teacher-lecturer partners, were selected for funding in five batches\. National seminars were held where findings from research were reported\. National evaluation of CAR was conducted and results shared at a national seminar in December 2001\. Partnerships with foreign institutions\. IKIPs were partnered with international universities with strong teacher education programs\. Ohio State University was partnered with Malang, Bandung, and Surabaya; the University of Iowa with Padang, Medan, and Manado; Curtin University of Technology with Semarang, Yogyakarta, and Gorontalo; and LaTrobe University with Makassar, Singaraja, and Jakarata\. International visits followed by in-country workshops for dissemination of new ideas were conducted during the first two years of the project before the international activities were discontinued as a result of financial crisis\. Some LPTKs (Makassar, Malang, Surabaya, IKIP Singaraja, Bandung) continued the international partnerships with their respective partners (OSU and La Trobe) even after project funding was terminated\. Raising the qualifications of teacher educators Master's programs\. Domestic S2 program fellowships and international masters programs were awarded to 1301 and 57 teacher educators, respectively\. The original targets were 1450 in national universities and 150 in international universities, adjusted to 1250 and 60, respectively\. The completion rate for the domestic masters program was 84 percent\. The international masters degrees were taken in Australia (28), United States (4), Canada (12), United Kingdom (12) and New Zealand (1)\. The completion rate for the international masters program was 93 percent\. Doctorate program\. Domestic doctoral program fellowships taken in academic departments in prominent universities were awarded to 16 teacher educators with appropriate S2 qualifications (compared to 20 planned -- adjusted from 50)\. International doctoral fellowships were awarded to 105 teacher educators (the original target was 100)\. About half (53) of the doctoral students are still completing their programs; thus this part of the project is being extended to December 31, 2002\. Countries for doctoral studies are: Australia (17), United States (4), United Kingdom (2), Holland (27), France (33), Germany (21), and Malaysia (1)\. Refresher courses and faculty workshops\. Short-term refresher courses were made available to 22 teacher educators (of the original 150 planned -- reduced due to cost-cutting)\. Course-related materials were developed by the returnees from the refresher program\. Of the materials developed 14 were deemed worthy of publication\. These were revised, eight were published and distributed to all the public LPTKs\. Building educational research capacity Entry-level student assessment\. Diagnostic tests to assess entry level knowledge (ELA) for 10 study programs (mathematics, physics, biology, chemistry, English, B\. Indonesia, history, geography, civics, and economics) were developed and administered at 10 LPTKs (no clear target number)\. Results of ELA were disseminated to 3S teams at LPTKs\. Program coordinators and lecturers from the other 20 LPTK attended ELA training conducted in Bogor and Surabaya in Feb\. 2000\. Quality assurance\. Training for use of ELA in quality assurance (ELAQA) in four subjects was conducted at 30 LPTKs\. Exit-level testing of content knowledge was conducted at 4 LPTKs (UM, UNM, UNESA, and UNP)\. Exit level assessment of teaching skills was conducted at two institutions, UNESA and UNP\. (No target numbers were specified)\. - 10 -  Research on the improvement of instruction\. Due to high demand and large number of proposals this program was expanded from an original target of 5 studies per year to over 50 per year (229 in all over four years)\. Each year (from 1999-2001) national seminars were held to discuss the studies' findings\. The results of twenty of research studies were published in Parameter, an accredited education journal of State University of Jakarta\. Preparing for a wider mandate Planning for a wider mandate\. All ten public IKIPs became universities (compared to the planned two to three) and the two public STKIPs to IKIPs (unplanned)\. Preparing for accreditation\. A guide book for self-evaluation was completed and distributed for required use by all LPTKs\. Career planning\. Career information services were set up at UPBK (Guidance and Counseling Implementation Units) in 12 LPTK\. Training for the other 18 institutions conducted in 1999\. Information was developed regarding types of competencies, occupations, vacancies, and training in education and non-education careers relevant to LPTK graduates\. 4\.3 Net Present Value/Economic rate of return: NA 4\.4 Financial rate of return: NA 4\.5 Institutional development impact: During project implementation the Government of Indonesia created the post of Director for Teacher Education within the Directorate General for Higher Education, an important institutional development which had been recommended by the Bank since the launching of the Primary School Teacher Development Project in 1992\. This appointment, although coming later than hoped, has provided teacher educators a voice in the Directorate General and created a locus for policy and program development\. It came at a time of Indonesia's move to more university autonomy and accountability, and after the conversion of ten public teacher training institutions to universities (IKIPs)\. That conversion was another important development impact of the project\. Expected to proceed slowly, using planning and institutional development instruments created under the project in two to three institutions, the conversion quickly gathered momentum and by the end of the project had occurred, for better or for worse, in all 10 public IKIPs\. Under the project's component "preparing for a wider mandate," the first step in an accreditation processes (institutional self-assessment) was launched which the Director General now requires to be used and submitted along with budget requests annually\. One of the observable implications of the conversion is an increase in the quality of applicants to the former IKIPs, in some places now at par with that of more established universities\. At the project level, a high level of managerial capacity and productivity was noted in Bank supervision documents\. All project components were managed by prominent teacher educators, many of whom are at the forefront of institutional reform in their own institutions\. The team, which grew in effectiveness over the years, was remarkably stable throughout project implementation (especially given the fact that the nation's President and Minister of Education changed four times)\. Some external technical assistance was sought in relation to graduate student placement and other technical features of the project, but for the organization and production of project outputs all management was done by Indonesia's own teacher - 11 -  educators\. At the university level, institutional development is often portrayed in terms of the professional qualifications of the teaching staff\. Here there were also dramatic developments during the project (although not only as a result of the project)\. Whereas at the beginning of the project over three quarters of lecturers held the S1 degree (generally from the institution itself), at the end more than half were possessors of the S2 or S3 degree; counting those lecturers currently in S2/S3 training the proportion stands at 63 percent\. Project managers and university officers comment on improved academic environment that has resulted from this shift\. In addition, many project innovations are being institutionalized\. For example, many institutions now routinely do entry-level assessments of new students and provide remediation for those whose prerequisite knowledge is deficient\. Remediation is being conducted under the Student Support Services which have a permanent place on campus together with Career Planning Services, including those for students who are non-education majors\. Also expected to be covered by routine budgets at the participating institutions are the improved methods of student teaching (codified in implementation manuals), lecturer redeployment to secondary schools (temporary attachments as teachers and partners in action research), and classroom action research, often funded the LPTK's research center\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Near the middle of the projects second year (late 1997) a financial crisis swept through Asia, and hit Indonesian particularly hard -- in 1998 there was a negative growth rate of around 15 percent\. Foreign investors and capital fled the country and severe devaluation (and attendant inflation) ensued\. This put severe pressure on the national budget and foreign exchange reserves leading to a policy decision to reduce indebtedness\. The direct consequence for the Project was almost a 50 percent reduction in the size of the World Bank loan\. The major indirect influence was the impact on schools (and thus the attainment of quality improvement goals): by 1998-99 schools began experiencing real declines in financial support (covering books, facilities, etc\.); teacher pay increases were undercut by inflation\. In Indonesia the financial crisis was accompanied by political crisis ­ the resignation of President Suharto after more than thirty years of absolute rule, followed by three new presidents in the course of two years\. With the four changes in presidency came four changes in the Minister of Education, which meant constant changes in MOE direction and emphasis and uncertainty for Project strategy\. 5\.2 Factors generally subject to government control: By the end of the Project's second year government budgets for education had diminished in real terms, including that for teacher salaries, instructional materials and school maintenance\. Thus, even if the project was doing a better job of preparing teachers and improving learning processes, other contextual factors mitigated against quality improvement\. In addition, by 1999 the Government promulgated an ambitious policy of decentralization (to the district level), which has not yet been well articulated in education service delivery and has led to much confusion as to who is in charge of what\. By the end of the project, when decentralization was in full swing, there was concern about district's ability to maintain even the current low outlays for education ­ factors further threatening school quality\. A policy related to teacher education, already in place in the project's first year, was that of zero growth in government staff positions\. The fact that a low proportion of LPTK graduates were being hired acted as a damper on interest in the teaching profession and drove many potential teachers into non-teaching fields\. Another major personnel issue is the fact that full time university lecturers are appointed as civil servants having tenure from the beginning\. This prevents the university from using some of the conventional performance indicators -- excellence in teaching, research productivity, and university/community service -- as incentives for promotion and tenure\. Instead university staff are drawn into project work, consultancies, and outside - 12 -  teaching as ways to increase their stature and incomes\. 5\.3 Factors generally subject to implementing agency control: The project got underway quickly with a management team more skilled in moving materials and infrastructural development than quality improvement, resulting in some delays/distortions in the latter\. Also, the Director General in place at the beginning of the project, using the prevailing ideology of providing the same assets to all institutions, overrode project design features of selective strengthening (using the project to strengthen lead institutions which would influence the others)\. Among other things, this meant that more science equipment was distributed than was called for in the plan, equipment which later was found to be underutilized and poorly maintained\. In addition, the Directorate General relaxed controls over the number of teacher training institutes that could be converted to universities and the processes for making the transition\. As a result all IKIPs made the transition with unknown consequences with respect to the status of teacher education\. In the project management there was a reluctance to recruit consultants, for reasons which are unclear at the beginning but eventually related to cost reduction efforts\. As a consequence none were used\. This seems to have had two opposing impacts: one was positive pressure on project managers and team leaders to develop the needed management capacity (see section 4\.5 on institutional development impact); the other was a missed opportunity for quality improvement inputs, especially on project features such as curricular design and quality assurance systems\. Certain MOE policies also had an impact on project implementation\. First the policy to create a new teacher education curriculum by 2002 (the first post-project year), using a competency-based model\. Since new curricular guidelines were only expected to specify required outcomes and leave the ways of reaching them up to the institutions (under principles of institutional autonomy), the kind of national curriculum that was being prepared by the project was out of date by the project's end\. Second, the Ministry made a decision to allow LPTKs to conduct inservice teacher training\. Previously, this had only been the realm of the Directorate General of Primary and Secondary Education assisted by the Open University\. The decision to allow other institutions of higher education to do this brought large numbers of new clients to LPTKs, allowing them to be selective\. That plus the wider mandate helped former IKIPs to increase their student teacher ratios, on average, from 9\.4:1 to 13\.4:1, resulting in large improvements in institutional efficiency\. 5\.4 Costs and financing: A significant cost reduction effort was undertaken during the project's third year at the request of the Ministry of Finance, which was under pressure to reduce indebtedness\. For PGSM this meant reducing Bank financing from a total of US$60\.4 million to US$30\.4 million\. It was extremely difficult to cut that much from the budget, and some components clearly suffered (see above)\. Nevertheless, the project adjusted and eventually accommodated to the lower funding levels\. In fact, in the end the Project had a balance of just under US$2 million, most of which was from the category of international fellowships (19 percent of the total allocated for that category)\. Some of these programs were less expensive than expected, some were covered by other sources of funds, and some were not completed before the end of the project (also requiring other sources of funds for completion)\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The Government has put particular emphasis on sustainability during the project's last two years\. Planning for it has included creating field-tested manuals covering such things as student teaching and career counseling, holding dissemination workshops, creating new incentives (e\.g\., for action research) or exploiting olds ones (e\.g\., for inservice training), and pressing for funding commitments from both the central government and the teacher training institution\. A promising development in the current, first - 13 -  post-project year has been the creation of a government funded project which will continue the work of transition planning and institutionalization during the next four years (see below)\. Institutionalization is already apparent in many LPTKs where project programs are being covered by the institutions' own budgets\. Given the reduction of funds for higher education during the prolonged economic crisis in Indonesia, financial support, even for the best programs, will be hard won\. 6\.2 Transition arrangement to regular operations: 6\.2\. Transition arrangements to regular operations: As mentioned in 6\.1 above, the Directorate General has mounted a government-funded project which is managing the transition to regular operations: the institutionalization of project innovations\. Many of the PGSM managers are members of this transition\. The team will evaluate project-developed programs and products and make recommendations about what to institutionalize and how\. Transition managers are distinguishing between further development costs, which the center might fund, and recurrent costs, which should be borne by the teacher training institutions\. There are indications that individual institutions are beginning to cover project costs with their own routine funds\. For example, some institutions will put funding in their research center budgets for the kind of classroom action research pioneered by the project\. Similarly, some institutions are already bearing the costs of entry-level assessment, tutoring for under-prepared students, and expanded/improved student teaching\. Academic staff deployment (temporary placements of lecturers in secondary schools) is popular at many institutions but funding my be hard to obtain\. In at least one institution (UN Malang) arrangements were made for the head of the local educational office to take a study tour to the US, funded by the university's international partner\. This educational office head now provides local government funding support for staff deployment and other LPTK-school linkages\. Transition team members are also trying to convince universities to use non-monetary incentives for implementing project innovations: for example, helping staff to get the maximum functional credit units (used for promotion) out of the activities undertaken cooperatively under school linkages (training, research, and teaching)\. Finally, some project activities will continue because of incentives that are already in place\. For example, secondary school teachers will continue to seek inservice training, and pay for it with their own money, because it contributes heavily to their own promotion\. In fact, it is likely that project funding never was needed to get this moving; only the permission granted by the Ministry of Education to LPTKs to conduct inservice training (originally only given to the Open University)\. Such training could be further extended beyond the regular catchment of the university by granting the LPTKs permission to do distance education\. Raising the qualifications of teaching staff will also continue since the motivation of staff is high and alternative sources of funding keep appearing, both foreign (bilateral agencies) and domestic\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The project was designed to support the Country Assistance Strategy (CAS) for Indonesia that was presented to the Board on March 21, 1995\. The Bank's strategy called for continued assistance to Indonesia in meeting its development objectives through a lending program that would address critical issues in human resource development, especially those related to education quality: increasing expenditures on education, better distribution of teachers, staff training, and learning materials\. The focus of assistance in education and training was to be decentralized to the regional and provincial levels with emphasis on the individual teacher training institution as the unit of development ­ in case of this project to the 31 LPTKs\. Project preparation included a small group of professionals with a good mix of experience in both teacher training institutions and Indonesian schools\. One of those professionals continued as a - 14 -  consultant to supervision missions during the entire lifetime of the project\. A major shift in Project strategy came in mid-1998 when, given a major financial and budget crisis, the government asked for a major cut in the Project budget\. The Task Team Leader was asked to reduce Bank financing by almost 50 percent\. The TTL, with the help of economist from the Bank, constructively engaged the Directorate General and project management in adjusting output targets and unit costs to reflect current prices and feasible implementation\. Costly activities, especially those involving expenditures in foreign currency, were scaled down or eliminated\. Project activities considered essential to achieving Project development objective were jointly identified by project management and the Bank mission and recalculated for loan financing, including student support services, in-service education, books and references, linkages with secondary schools, deployment of lecturers to secondary schools, international partnerships, entry-level assessment, and research on instruction\. Restructuring resulted in the cancellation of the third batch of science equipment, refresher courses, upgrading through UT, and remainder of office renovations\. Targets for national and international masters degrees were adjusted as were national targets for doctoral studies\. One unexplainable lapse was lack of any performance indicators for the main development objective of the project, the enhancement of the teaching-learning processes in secondary schools\. Proxies for this were developed and used in the creation of supervision ratings, but the question still remains: did these processes improve? At the very least there could have been a study of the improvement of classroom teaching skills among the 15,000 teachers who received inservice training\. 7\.2 Supervision: Bank supervision during the life of the project was remarkably stable with the same task team leader serving for four of the Project's five years and his replacement being a person with over 20 years of experience in Indonesia, including that in teacher education\. Also, the same teacher training consultant joined every supervision mission\. Nevertheless there was some momentum lost in the transition from one TTL to the other, especially in the tracking of project impact indicators and in planning for sustainability\. In 1997 a rating scale was introduced for use during supervision missions\. This rating scale was taken seriously by the project management team as it represented an average of those components contributing directly to the Project's development objective\. With the introduction of the rating scale, project productivity increased and the overall project rating was considered to be more transparent\. Mission reports show some gaps in the Bank's financial management and supervision\. Reports to the Government on disbursement were seen as irregular and supervision of procurement somewhat problematic\. The decentralization of higher education moved procurement to the various teacher training institutions with the CPIU acting as reviewer\. Insufficient Bank-led training at these institutions in procurement and financial management meant that Bank guidelines were often not followed nor standard formats used\. However, post-review of documents revealed no substantial procurement irregularities during the life of the Project\. 7\.3 Overall Bank performance: The overall rating of Bank performance is satisfactory\. Borrower 7\.4 Preparation: At the preparation stage, a six person team was designated to design the project\. The work of this team was fully supported by the Directorate General of Higher Education and WB Consultants\. International - 15 -  study visits were made by team members to teacher education institutions with particular emphasis on institutions having strong teacher education programs and those converted from normal schools to colleges or universities\. During preparation the Borrower took seriously the Bank's concern for institutional efficiency and agreed to a redeployment of some LPTK staff to secondary schools in order to raise the average student-faculty ratio to 12:1\. This was also consistent with the Government's personnel policy at the time of zero growth\. A good beginning, and a practice repeated during the project was the bringing together of LPTKs and stakeholders in Secondary Education for talks about strengths and weaknesses ­ and programs for improvement ­ in teacher education institutions and secondary schools\. 7\.5 Government implementation performance: The same group of key project preparation persons remained with the project as leaders throughout implementation\. Only two project managers were used, one person with proven project management skills (to get the project going) and the other a person with deep understanding of the processes of both LPTKs and secondary schools (to provide substantive leadership)\. GOI provided sufficient counterpart funds in spite of the financial crisis at mid-project\. One weakness, however, was the frequent late allocation of counterpart funds, caused by the fluctuating political and financial conditions during the crisis-ridden years of the project, meaning that some activities needed to be rushed (compressed into the last weeks of the fiscal year) and others (like dissemination workshops) curtailed\. 7\.6 Implementing Agency: Full support was given by the Central Project Implementation Unit consisting of education experts and professionals from education institutions, development teams, advisory committee, and sufficient number of dedicated administrative staff\. The project was closely supervised by Director General of Higher Education and Director for Academic Affairs and, since 1999, the holder of a new GOI position, the Director of Teacher Education and Higher Education Personnel\. The success of the project was due to adequate coordination by the project management and minimum intervention from the government as to project's technical management\. 7\.7 Overall Borrower performance: In most areas the project delivered targeted outputs\. An encouraging point is the efforts made toward sustainability\. Many LPTKs have instituted plans to raise funds to continue school linkages, implement enriched student teaching, and continue school partnerships and action research\. The main area of underperformance was the Borrower's weakness in gathering evidence to demonstrate improved instruction and learning at the LPTKs and secondary school levels\. The overall performance rating for the Borrow is satisfactory\. 8\. Lessons Learned 1\. Innovation process\. This project demonstrates how a relatively small investment (50 percent less than originally allocated) can generate useful breakthroughs and innovations in teacher education, a field generally considered to be conservative and resistant to change\. The project's model of using centers of innovation to create and try out, on a limited scale, new curricula, student screening and enrichment programs, stronger linkages to secondary schools, improved student teaching approaches, action research related to instructional improvement, and inservice teaching turned out to be a cost effective way to stimulate new ways of doing things\. Promoting widespread adoption of these innovations -- quite successful for some, not so for others -- was found to be a challenge in this era of growing institutional autonomy and clearly requires fresh thinking about the role of institutional accreditation and other inter-institutional development mechanisms\. 2\. Change model\. Although the main development objective of the project was to enhance the teaching - 16 -  learning processes in secondary schools through the improvement of teacher education, the project never clearly demonstrated where teacher education fits within a larger model of change (improvement) in teaching and learning\. Future future projects would do well to describe such a model of change and describe how the other crucial determinants are also supported\. 3\. Outcome orientation\. A major design weakness in the project -- one to be avoided in any further teacher training projects -- is its failure to effectively use outcome measures to document and assure project impact\. Ultimately, efforts to improve teacher education should be judged in terms of improved knowledge and skills of training program graduates\. Tracking these throughout a change program is means of quality assurance\. The current project, with its "entry level assessment" laid down an important baseline for student change, but failed to use it effectively to demonstrate the impact of remediation and the overall impact of the teacher training through exit level testing\. For practicing teachers, the inservice training that was offered, and the partnering with lecturers for action research and other professional growth opportunities, were never assessed in terms of observed changes in teacher performance; similarly those university lecturers who completed masters or doctors degrees were never called upon to demonstrate objectively improvements in their own instruction\. In the future, teacher training programs need to have built-in mechanisms for tracking and assuring changes in valued outcomes\. 4\. Curricular revision of the kind envisioned in the Project -- geared to vertical, horizontal and external flexibility allowing graduates to teach at both secondary levels (lower and upper), to teach comfortably in more than one subject area, and to compete for jobs outside the field of education -- is a heavy and difficult task, more like structural reform than curricular revision\. The project's efforts created some useful curricular materials but fell short of establishing such reforms, largely because they were focused too narrowly\. The creation of curricular flexibility requires a system-wide effort to reduce curricular densities and rigidities -- a focus on learning scope and sequence not learning content\. For instance, if the university were to stop teaching high school content to compensate for low student entry-level knowledge and instead were to institute mandatory remedial programs (tutoring) for underprepared students (see more below on ELA and 3S), it could create more space in the curriculum for flexibility\. Such reforms cannot be done in isolation -- they need widespread support, even ownership, by major stakeholders to flourish\. It would be useful to see them as part of the recently initiated efforts to create a competency-based (or perhaps better performance-based) curriculum\. 5\. The project's inservice teacher training was considered beneficial by both the tens of thousands of teachers who received it and the LPTK lecturers who provided it\. Motivation was high among teachers in large part because it has helped them gain credits towards promotion\. In fact, it is now clear that the most important feature of the project was not the funding of the training -- many participants seem willing to pay their own fees -- but the policy shift that allowed LPTKs to provide it\. In exchange for this career boost for teachers the State has the right to expect improved teaching quality (see points in item 2 above)\. In the past the school system often regarded IKIP/FKIP training to be overly theoretical and largely irrelevant to the teacher's daily tasks\. Given the Project's attempts to forge closer ties between the universities and the schools, has this changed? Have inservice graduates at the S1 level become more capable teachers? Some survey research at one institution showed that trainees had attained acceptable levels of knowledge and teaching skills, but there was no assessment of how much this was attributable to the course (no pre-post or control group comparisons)\. This is something that could be measured under DIKTI's transition project, perhaps using the observational instrument developed under the project (APKG)\. As implied in point 2 above, it would be important for any future inservice program to include among its performance indicators changes in teaching skills and classroom performance related to course participation\. Another lesson learned was that Project inservice training was much more accessible to those in major - 17 -  urban areas (those hosting the LPTKs) than to rural teachers\. New attempts must be found to reach those teachers largely (and unfairly) excluded from such training, especially if the country wants to keep teachers in rural areas\. It may be time to allow LPTKs to develop programs of distance education, or at least to encourage different kinds of outreach, using remote study centers or holding special sessions during holiday breaks\. Participation by rural teachers (especially where the teacher is the only income earner in the family) should be supported by scholarship funds\. Scholarship support does not always have to come from DIKTI\. There are growing numbers of examples of District Offices (Dinas) seeking and paying for teacher training\. One promising idea connecting Dinas and the LPTK would be for certain field-oriented lectures to become resource persons to the teacher study circles or clusters (MGMP) set up by Dinas\. 6\. The higher than expected interest in action research, both that done by teacher-lecturer teams at schools and that done by lecturers in relation to their own teaching, reveals an emerging research culture in the schools and universities\. Yet the agenda is still evolving\. Research projects are still largely atomized and invisible\. The few that have been published are published in academic journals of limited circulation\. In the future DIKTI may want to develop a more user friendly format for reporting research findings, such as a digest or newsletter -- reporting not just individual findings but identifying trends and generalizable findings that can be used by clusters of teachers (MGMP) or teacher educators\. Another unfinished part of the action research agenda is the action part\. The two programs were established as a means of leveraging more effective teaching and learning processes\. Since this has remained unmeasured (see point 2 above), it is not yet clear how successful this has been\. During the transition project, DIKTI could set up means to assess using instruction improvement (in the schools the APKG could be used)\. In the university, instructional improvement by lecturers could be assessed through use of course evaluations done by students (more about that in the following paragraph)\. As in point 4 above, future projects should be sure to include such improvement among it performance indicators\. 7\. The project made a substantial contribution to improved qualifications of teacher educators through the masters and doctoral programs (domestic and overseas) that it funded\. Its approach to enrolling lecturers in foreign universities (mostly European) using placement agents was both effective and economical (especially when the host country paid for the language training) and allowed the Project to exceed the target numbers (105 vs\. 100) even under conditions of cost-cutting\. However, the fields which were emphasized in the advanced studies were almost entirely in the disciplines, mostly science and math\. As important as these are for the institutions, especially those expanding to the "wider mandate," the intended build up of senior scholars in education/teaching fields was overshadowed\. (Whereas the SAR suggests an even balance between programs in the disciplines and those in pedagogy, the disciplines ended up with about 92 percent of the scholars\.) Universities and DIKTI will need to take a careful look at future leadership potential in the teacher training field and put into place new incentives to build up the core of senior scholars in this field if it appears underrepresented\. Concerning those who have returned from advanced studies, both domestic and international, there was no attempt to measure whether they had improved their skills as teacher educators -- an issue parallel to that for teachers graduating from S1 inservicing (see point 2 above)\. Universities have the right to expect improved instruction from their upgraded lecturers\. In many systems around the world this is accomplished through standard course evaluations done by students\. The question is: do those who have received advanced graduate degrees teach any better than: a) they did before upgrading, and b) than those who have not? Such questions could be assessed during the new phase of PGSM and covered in any future teacher education projects\. 8\. Large scale efforts to modernize and equip science labs often show disappointing results\. This Project purchased much equipment that was not used or was poorly maintained\. If the objective of providing - 18 -  well-equipped science labs is the more effective training of teachers, then it should not be necessary to obtain highly complex equipment, that difficult to operate and maintain\. Instead there should be an emphasis on the same kind of equipment that will be used in the secondary schools\. Also, project experience suggests that only those institutions which can demonstrate their capacity to use and maintain equipment should be provided such equipment in the future\. 9\. The Project's new approach to entry-level assessment (ELA), especially when connected to remediation through Student Support Services (3S), has proven to be a promising innovation but its potential has yet to be fully realized\. A common complaint about school teachers is that they do not know the subject matter they are expected to teach\. Project institutions developed the ELA in order to identify those prospective teachers whose subject matter mastery is weak\. They, like all other students, are then offered tutoring to help them overcome deficiencies, but not all weak students take advantage of this\. A more effective way to deal with the inadequate academic background of teacher trainees would be to make such tutoring mandatory -- a prerequisite to further study at the university\. Such tutoring should be followed by retesting to make sure mastery is attained\. This cycle of testing, remediation, and retesting is what quality assurance is all about\. However, the ELA could also be used for quality control: given as a kind of licensing exam at the end to assure that teachers being sent to schools know what they are to teach\. Those who fail at this point would not be licensed\. The ELA used at the end like this -- as a post-test -- can also be used as a kind of program evaluation: demonstrating to management the program's success in improving mastery levels\. This has been done to a limited extent in the Project and should be done more in the future to promote institutional accountability\. The serious use of the ELA in the above ways suggests that the ELA itself should be of high quality\. In the Project each institution was to develop its own version of the ELA, after receiving training\. Clearly some institutions were/will be capable of building better tests than others\. The serious use of the ELA suggests the need to make the best ones available to all institutions and the need to keep improving their quality\. It may even be advisable for DIKTI to require some level of standardization\. 10\. The civil service status of teachers and university lecturers inhibits the effectiveness of quality improvement initiatives\. The civil service incentive system does little to reward effective teaching, instead it encourages staff to join projects, do outside work (private school teaching and consulting), refrain from being controversial, and otherwise accumulate functional credits\. The culture that thus pervades the university and the school is a bureaucratic not an academic one\. Quality improvement in education requires higher levels of accountability than are now found in the civil service: accountability for performance in the classroom or lecture hall and for student outcomes, and real consequences if accountability standards are not met\. This requires the assessment of teaching behavior (e\.g\., by students, by peers, or by supervisors), an awareness of student performance (e\.g\., proportion passing certain exams), and tenure and promotion decisions based on the results\. Whether this kind of accountability can be accomplished by civil service reform or by taking teaching out of the civil service altogether is a question that needs to be confronted\. 11\. The conversion of all 10 public IKIPs to universities during the course of the Project has improved the status of teacher education in one sense, but potentially damaged it in others\. University enrollment records indicate that cohorts of students admitted since institutional conversion are better qualified academically than before, in some cases putting them at par with neighboring well-established universities\. Converted institutions report an improvement in the academic atmosphere on campus and higher levels of student expectations\. However, it is not clear whether this conversion will improve the quality of teachers produced, since the higher achieving students will probably not chose teaching careers\. Experience in other countries where this kind of conversion has taken place reveal the difficulty that the educational faculties have competing with higher status faculties for funds and resources\. Under PGSM itself, many fewer of - 19 -  the doctoral candidates than expected undertook studies in educational fields\. During the "transition PGSM project" it will be important to study the extent to which the education track receives its fair share of resources, including staff time, space and equipment, library books, journals and other educational materials, fellowship opportunities, and annual budget allocations\. It will also be important to track academic ability of those who select the teaching option, and to conduct tracer studies of graduates\. Converted universities would be especially advised to develop strategic plans for maintaining the strength and status of teacher education\. To assure continued quality improvement, it would also be desirable for all institutions to strengthen accountability at all levels (see point 6 on lecturers), including more rigorous accreditation procedures, involving peer and external reviews in addition to self-evaluation\. 12\. The new PGSM Project which can be considered a transition to full institutionalization of Project innovations can play a very positive role in further improving teacher education (see the many lessons learned above), but can also undermine sustainability\. It can undermine sustainability if it continues to perpetuate a reliance on national funding for those activities which should be funded by the institutions out of their own budgets\. This will require very careful consideration of what activities merit additional development funds and what should become routine\. Care should be taken to avoid creating a sense of entitlement to Project funding -- institutions will only implement them if they get external funds\. On the other hand, DIKTI should also avoid unfunded mandates, in which it requires the implementation of certain programs but fails to assess and arrange for financing\. 9\. Partner Comments (a) Borrower/implementing agency: The Borrower's contribution to the ICR is in Annex 8\. (b) Cofinanciers: None\. (c) Other partners (NGOs/private sector): None\. 10\. Additional Information - 20 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate - Student scores on project-developed tests Positive changes in observed student at teacher training institutions\. teaching skills in all (10) study programs at participating institutions (all but 2 statistically significant) - Field experience program is running in all Yes, for all 30 institutions\. public teacher education institutions\. - Percentage of faculty of teacher education 2001 figures: 51\.5%; if faculty in pipeline institutions with a post-bachelor's degree\. counted: 63\.2%\. - Number of graduates from public teacher Government freeze on hiring new teachers in education institutions employed\. place during most of the project Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Component 1\. Improved LPTK pre- service and in-service programs\. 1\.1\. English, social sciences and subject a\. All of the three curricula have been specific curriculum revised; pedagogy designed and pre-tested in 8 LPTKs courses developed; double major and (English), 3 LPTKs (Social Sciences), and 3 major-minor programs offered\. LPTKs (Subject Specific Pedagogy)\. b\. Flexibility programs, including double majors and major-minor, have been designed in English and Social Sciences curricula but they have not been implemented yet since these programs are meant to be offered in last semesters (after the students have completed all or most of their first major programs)\. 1\.2\. Science and math laboratories a\. Biology, Physics, Chemistry and renovated and equipped; storage facilities Mathematics Laboratory equipment in installed and used; science workshops for accordance with the Basic Science Team LPTK lecturers in operation\. Standard have been purchased and installed in 12 LPTKs (Jakarta, Bandung, Semarang, Yogyakarta, Surabaya, Malang, Singaraja, Makassar, Manado, Gorontalo, Padang and Medan)\. Science Laboratory in UNJ had been renovated and used for S1 students' practicum\. b\. Language lab equipment have been purchased and installed in UM, UNESA, UNNES, UNEJ, UNRAM, and IKIP Singaraja\. Language lab\. equipment as a supplement to the existing lab\. have been provided to UNRI and UNP\. All language lab\. Equipment has been used to support the implementation of the Newly English Curriculum developed by the SSTD English Development Team\. c\. Science Laboratory Storage for the equipment has been installed and used (UNESA, UNIMED)\. 1\.3\. Learning materials selected, revised and a\. Twelve (12) subject specific pedagogy piloted, and further revised\. areas have been identified, basic course outline have been reviewed and developed for - 21 -  each subject area, b\. 120 modules have been written, reviewed, and revised and used for distance learning program by the Open University\. 1\.4\. Number of staff offices, conference a\. Renovation/Remodeling of staff offices rooms, student-faculty and inter-faculty and conference rooms have been built in 12 interactions, and number of faculty attending LPTKs meetings and seminars increased\. b\. Student-faculty consultation meetings increased in some LPTKs\. Faculty-faculty interaction also increased accordingly\. c\. Number of seminars were conducted and attended by faculty members and experts from local and international Universities\. 1\.5\. Secondary text books purchased and a\. Lower and Upper Secondary School education references materials developed, Textbooks purchased and distributed to all and distributed to LPTKs\. public LPTKs\. The books have been used by students who are preparing for teaching practice in secondary schools and lecturers\. The books are also used by secondary school teachers to develop their own teachings\. b\. Biology, Chemistry and Physics Textbooks have been translated from English to Indonesian published and distributed to all LPTKs except UNPATTI due to civil disturbances in the province of Maluku\. c\. Eight of twenty-two textbooks produced by refresher program participants have been published, purchased and distributed to all public LPTKs\. d\. English Student Workbooks, Teacher Guide-Book and Audio Cassette were developed and distributed to 8 LPTKs\. 1\.6\. Student Support Service centers a\. Student Support Centers were established established and operating, based on students at 30 LPTKs\. entry level assessment scores\. b\. National Seminar was held in Yogyakarta in April 2001 for 3S program, reporting results of study in 14 LPTKs of effectiveness of 3S\. c\. Students having low Entry Level Scores (Mahasiswa ELA Rendah =MER) have been identified in 7 LPTKs\. d\. Instruments for detecting learning problems have been developed and administered in 30 LPTKs\. 1\.7\. Number of scholarships awarded\. a\. 18,725 scholarships for upgrading qualifications of secondary teachers from D3 to S1 were awarded, exceeding project target\. Upgrading of 600 teachers through the Open University was cancelled due to cost containment\. b\. Studies on second and last semester of final cohort were completed in September 2000\. Performance evaluation of 15 LPTKs was presented in national seminar in March and December 2000 c\. A study comparing teachers with regular S1s and those receiving S1 upgrading through the project was conducted and results results presented in a National Seminar\. - 22 -  Component 2\. LPTK partnerships with secondary schools established\. 2\.1\. Activities between LPTK and schools, a\. 912 lecturers from 11 LPTK have been numbers of teachers joining on-campus actively working in secondary schools programs, numbers of lecturers working in contributing to teaching, action research, schools, numbers of LPTK graduates being student counseling, learning material hired in schools, and numbers of joint improvement, and community services\. research between LPTK and schools\. b\. Field Experience Program (PPL): -180 partner schools were appointed, handbook, and manual for PPL were developed\. -Cooperating teachers and supervising lecturers were trained\. -Tryout of new PPL models were conducted by LPTKs and partner schools in all provinces\. c\. Classroom-Action Research: -5 Batches of CAR were implemented\. -559 proposals were selected and implemented\. -National Seminars were held and findings were reported\. -National evaluation of CAR was conducted and results were presented in national seminar in December 2001\. d\. Two FKIPs initiated pilot deployment using own funds (Tadulako in Sulawesi, Mulawarman in Kalimantan): -25 action-based research were conducted by participating deployment staff\. 2\.2\. International visits conducted, and a\. International visits were conducted during lessons applied to strengthening the first two years (before this program was LPTK-school linkages\. cut) followed by in-country workshops to disseminate and plan further activities in building LPTK-School linkages in Indonesia\. b\. Some LPTKs (UPI, UM, UNESA, IKIP Singaraja, UNM) continued conducting significant activities with their respective international partners (e\.g\., OSU & La Trobe) after program funding was cut\. Component 3\. Improved quality of LPTK teaching staff\. 3\.1\. Number of domestic and international 1301 and 57 teacher educators were fellowships for Masters program granted\. awarded domestic S2 program fellowships and international Masters program fellowships respectively\. 3\.2\. Number of domestic and international 16 teacher educators with S2 qualification fellowships for doctorate program granted\. were awarded Domestic Doctoral program fellowships and 105 awarded international Doctoral program fellowships\. 3\.3\. Number of international refresher 22 teacher educators from selected LPTKs courses accomplished\. attended the non-degree professional development through refresher program\. 3\.4\. Number of course-related materials 22 course-related materials were produced produced by returnees of refresher courses\. by the returnees of refresher program, but only 8 materials were revised, published and distributed to all public LPTKs\. 3\.5\. Number of regional workshops No information\. conducted and subject specific pedagogy courses taught in the workshops \. - 23 -  Component 4\. Building Education Research Capacity\. a\. Diagnostic entry level assessment 4\.1 Assessment instruments developed and instruments (ELA) were developed in 10 administered, results analyzed and LPTKs\. presented to the 3S, and teaching adjusted b\. ELA results were analyzed and scores accordingly\. has been presented to the Student Support Services (3S) Centers\. c\. Exit-level content knowledge of LPTK students was assessed using the ELA\. d\. Quality Assurance using ELA was conducted in 4 LPTKs (UM, UNM, UNESA and UNP); using the ELA and measures of teaching performance was conducted in 2 LPTKs (UNESA and UNP)\. e\. The results of such assessments were reported to the Directorate General of Higher Education, MONE and to program coordinators and lecturers from 18 and 2 STKIPs\. f\. Training in use of ELA and Quality Assurance (ELAQA) 4 academic fields was conducted for 30 LPTKs\. 4\.2\. Number of student teachers assessed Quality Assurance using and measures of after PPL and each LPTK student assessed teaching performance was conducted in 2 at graduation\. LPTKs (UNESA and UNP)\. 4\.3\. Number of grants awarded for 229 research proposals on RII were accepted proposals, RII designed and implemented, for funding, National seminars on findings results used and published\. were held in 1999, 2000 and 2001\. Component 5\. Preparing for a Wider Mandate\. a\. Guidelines, letter of intents, proposals, 5\.1\. Guidelines for wider mandate drafted, visitations, and program planning were set up letter of intent and proposals submitted, and completed, not only for wider mandate visitation and LPTK selection made, and but for converting LPTKs to universities\. program planning processed\. b\. At the moment, ten public IKIPs have now become universities and two public STKIPs have now become IKIPs\. 5\.2\. Meetings with BAN conducted, a\. Meetings with BAN were organized, guide standards for LPTKs adjusted, book for self evaluation was completed, and self-evaluation and peer validation its dissemination to all LPTKs was implemented, evaluation report writers and conducted\. peer validators trained, and seminars for b\. The DGHE stressed the importance of system improvement conducted\. conducting self evaluation and demanded the self evaluation reports be attached in LPTK annual budget proposals\. 5\.3\. Career information office available, data a\. Career information services were set up in base of career information developed and UPBK (Guidance and Counseling Imple\. shared, and number of students selecting menting Unit)\. double major and major-minor\. b\. List of information have been developed regarding types of competencies, occupations, vacancies, and training in non-education areas relevant to LPTK students\. c\. Data regarding number of students selecting double majors/major-minor programs have not been available yet 1End of project - 24 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million 1\. Improving Preservice & Inservice Teacher Education 30\.60 2\. Strengthening Linkages to Secondary Schools 5\.40 3\. Raising the Qualifications of Teacher Educators 32\.40 4\. Building Educational Research Capacity 2\.90 5\. Preparing for a Wider Mandate 1\.10 6\. Project Implementation 4\.20 Total Baseline Cost 76\.60 0\.00 Physical Contingencies 2\.40 Price Contingencies 8\.10 Total Project Costs 87\.10 0\.00 Total Financing Required 87\.10 0\.00 The Government was asked to supply information on actual project costs by component but did not respond\. Bank systems only track expenditure by disbursement category\. Hence, portions of this annex could not be completed\. Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 Total Cost Other N\.B\.F\. 1\. Works 0\.00 2\.80 1\.20 0\.00 4\.00 (0\.00) (1\.40) (0\.60) (0\.00) (2\.00) 2\. Goods 2\.80 7\.60 4\.60 0\.00 15\.00 (2\.10) (5\.30) (3\.20) (0\.00) (10\.60) 3\. Services 0\.00 0\.00 1\.60 0\.00 1\.60 (0\.00) (0\.00) (1\.10) (0\.00) (1\.10) 4\. Learning/Teaching 0\.00 1\.20 0\.80 0\.00 2\.00 Materials (0\.00) (0\.90) (0\.50) (0\.00) (1\.40) 5\. Fellowships 34\.7 34\.7 (27\.3) (27\.3) 6\. Grants 5\.9 5\.9 (4\.1) (4\.1) 7\. Scholarships 10\.0 10\.0 (7\.0) (7\.0) 8\. Local Training 0\.00 0\.00 9\.4 0\.00 9\.4 (0\.00) (0\.00) (4\.7) (0\.00) (4\.7) 9\. Project Operating Costs 0\.00 0\.00 4\.5 0\.00 4\.5 (0\.00) (0\.00) (2\.2) (0\.00) (2\.2) Total 2\.80 11\.60 72\.7 0\.00 87\.1 (2\.10) (7\.60) (50\.7) (0\.00) (60\.4) - 25 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 Total Cost Other N\.B\.F\. 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (1\.06) (0\.00) (0\.00) (1\.06) 2\. Goods 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (7\.56) (0\.00) (0\.00) (7\.56) 3\. Services 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.49) (0\.00) (0\.49) 5\. Fellowships 0\.00 0\.00 (11\.77) (11\.77 6\. Grants 0\.00 0\.00 (2\.69) (2\.69) 7\. Scholarships 0\.00 0\.00 (2\.41) (2\.41) 8\. Local Training 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (1\.11) (0\.00) (1\.11) 9\. Project Operating Costs 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (1\.35) (0\.00) (1\.35) Total 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (8\.62) (19\.82) (0\.00) (28\.44) The project implementation office was not able to provide the overall project costs by expenditure categories therefore, the above table only reflects loan expenditures\. The loan expenditures were calculated based on data available as of June 23, 2003 in the Integrated Controller's System\. After project restructuring and funds cancellation in 1998 the total loan amount was reduced to $30\.4 million\. As of June 23, 2003 an additional US$1,959,571\.81 will be cancelled leaving a total loan amount of US$28,440,372\. Project Financing by Expenditure Category (in US$ million equivalent) Percentage of Appraisal Expenditure Category Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Civil Works 2\.00 2\.00 1\.05 52\.5 0\.0 Equip/Furn/Materials 12\.00 5\.50 7\.56 63\.0 0\.0 Consultant Services 1\.10 0\.50 0\.49 44\.5 0\.0 Fellowships Domestic 7\.40 7\.40 2\.92 39\.5 0\.0 International 19\.90 0\.00 8\.82 44\.3 0\.0 Scholarships 7\.00 3\.00 2\.41 34\.4 0\.0 Grants 4\.10 1\.80 2\.69 65\.6 0\.0 Local Training 4\.70 4\.70 1\.11 23\.6 0\.0 Project Operating Costs 2\.20 2\.30 1\.35 61\.4 0\.0 The Staff Appraisal Report only provides project financing data by expenditure category\. The data used in calculating the Bank's portion of actual expenditures comes from the Integrated Controller's System - June 23, 2003\. The project implementation office was not able to provide the actual figures for the GOI contribution\. - 26 -  Annex 3\. Economic Costs and Benefits Not applicable - 27 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 08/1994 4 Education Specialist (Mission Leader); Teacher Education Specialist (Consultant); Science Education Specialist (Consultant); General Educator (Consultant)\. 11/1994 4 Education Specialist (Mission Leader); Teacher Education Specialist (Consultant); Operations Officer; Technical Support\. 02/1995 1 Economist (Task Manager) 09/1995 4 Economist (Mission Leader); Senior Education Specialist; Education Specialist\. Appraisal/Negotiation 06/1995 7 Economist (Mission Leader); Education Specialist; Research Assistant; 3 Educators Consultants; Operations Assistant\. 09/1995 4 Economist (Mission Leader); Senior Education Specialist; Operations Analyst; Education Specialist (Consultant)\. 07/1996 3 Education Specialist (Mission Leader); Teacher Education Specialist (Consultant); Education Specialist (World Bank Resident Mission)\. Supervision 03/1997 3 Senior Education Specialist S S (Mission Leader); Teacher Education Specialist (Consultant); Education Specialist\. 09/1997 3 Senior Education Specialist S S (Mission Leader); Teacher Education Specialist (Consultant); Education Specialist\. 09/1998 3 Senior Education Specialist S S (Mission Leader); Teacher Education Specialist - 28 -  (Consultant); Economist\. 03/1999 3 Economist (Mission Leader); S S Teacher Education Specialist (Consultant); Education Specialist\. 08/1999 3 Education Specialist (Mission Leader); Teacher Education Specialist (Consultant); Education Specialist\. 05/2000 2 Economist (Mission Leader); Senior Education Specialist\. 05/2001 2 Education Specialist (Mission S S Leader); Teacher Education Specialist (Consultant)\. ICR 03/2002 5 Senior Education Specialist S S (Mission Leader); Teacher Education Specialist (Consultant); Education Specialist; Procurement Consultant; Financial Management Advisor\. (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 343,353 Appraisal/Negotiation Supervision 336,568 ICR Total - 29 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA Increasing social status of teacher education - 30 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 31 -  Annex 7\. List of Supporting Documents Project Information Report (PIR) Staff Appraisal Report (SAR) Loan Agreement Memorandum of the President Minutes of Negotiations Mission Aide-memoires Back-to-Office Reports Project Status Reports (PSRs) Project Correspondences - 32 -  Additional Annex 8\. Borrower's Contribution Programs That Went Well Almost all programs of the SSTD have achieved satisfactorily most of the key targets and have affected institutional changes within the context of improving internal efficiency, productivity of staff, school teachers, LPTK's students, and providing linkages between LPTK and secondary schools\. Each program and activity, that went well, will be discussed separately in terms of its original component as follows\. Component 1: Quality Improvement subsumed several programs, namely: curricula development, educational facilities (office spaces, learning materials, references, science and language labs, student support services and career planning development and inservice training\. A new English Curriculum with its intensive course materials and strategy was established satisfactorily\. The teaching materials for students and teachers were produced, distributed, and tried out in 8 LPTKs\. This program went very well due to the fact that the program was relatively well managed by highly qualified and fully committed personnel, especially of the Intensive Course Team members\. The Social Studies and the Subject Matters Specific Pedagogy Curricula are also completed in due time\. Each of the curriculum retains its own characteristics\. Concerning horizontal flexibility, both English and Social Sciences curricula had designed portions of courses and their credit allocations for students from other departments who want to take English and Social Sciences as their minor programs\. These plans have not reached their implementation yet since: (a) the new curricula were meant for students entering the LPTKs at the time the new curricula were introduced; (b) the departments (jurusan) tend to allow their students to take minor programs during their last semesters, when students have or almost have completed their own major programs\. It is realized, however, that the work of curricular flexibility is concerned with the entire system of educational institution rather than with particular curriculum areas, such as English, Social Sciences, or Subject Specific Pedagogy\. In conjunction with the expectation specified in SAR, both English and Social Sciences curricula could only design courses for minor programs as providers\. The vertical flexibility has been developed and implemented through PGSM curriculum development, by means of: (a) Providing courses in English and Social Sciences which would also prepare LPTK students to teach in junior secondary schools\. The introduction of common courses in IPS, for example, was meant to provide both horizontal and vertical flexibility since in junior secondary schools students do not learn history, geography or economy but social studies\. (b) Expanding teaching methodology contents covered in Subject Specific Pedagogy courses to accommodate the instructional needs for both senior and junior secondary schools\. (c) Requiring all LPTK students to teach in both senior and junior secondary schools during their field experience programs (PPL)\. Aspects of 3S, which were believed to have been successfully implemented, are the development of AUM (student's learning problems probing instruments), training of tutors, implementation of peer tutoring, and the establishment of linkages to Guidance and Counseling Implementation Units\. Prior to the actual implementation, the implementers were trained in using the instruments and giving advisement of students who faced learning problems\. Career Planning Development was also successful in terms of its success in - 33 -  informing educational and non-educational job opportunities, and training for career information tutors \. In-service teacher education was conducted well, even it exceeding the project target\. Many of school teachers, especially in those remote areas have not had the chance to join the in-campus in-service education\. This is due to the design of the project which did not provide transportation and living allowances to teachers\. However, after the project completion they began entering the program on their own expenses\. Studies on second and last semesters of the final cohort were completed in due time\. A comparative study between regular S1 graduates and inservice S1 graduates was also conducted\. Learning materials in the form of modules (120) were developed, reviewed, revised, and re-written, for use by Open University students\. Purchased science equipment and language laboratories have been used by S1 students (both regular and in-service teacher programs) and by LPTK's staff who joined the Academic Staff Deployment program\. At least 4 LPTKs have developed lab practicum manuals through the financial assistance from JICA\. Renovated and remodeled staff offices, conference rooms and storage rooms for equipment have been used for preparing courses and student consultation\. Component 2: School Linkages subsumed several programs, namely: field experience program, academic staff deployment, and classroom action-based research\. Parts of the field experience programs that particularly went well were: criteria for teacher and faculty supervisors, guide books to field experience, the student teachers performance instruments, and training for teacher and staff supervisors\. Such successes were due to the implementation of the synergised bottom-up and top-down work strategy\. Action-based researches were successfully implemented in a collaborative way and results were used to improve teaching-learning processes in secondary schools\. The action-based research was well planned and managed\. The program was designed initially with training, development of terms of reference, nomination of research proposals, selection, implementation, and ending with evaluation\. For most of the LPTKs, international partnership have been quite successful, some continued their partneship after program termination\. The ideas of Academic Staff Deployment was initially resisted, but was finally well accepted and implemented by nine LPTKs\. Various activities were held in schools through a collaboration between school teachers and LPTK's educators\. The benefit gained by the deployed staff is deepened understanding about the schools\. The benefits gained by the teachers are: (1) improved teaching methods, and (2) improved learning materials\. The students also benefitted in that they were able to do lab experiments using equipment from LPTK\. Component 3: Staff Development subsumed several programs, namely: masters and doctoral programs and refresher program\. Masters and doctoral programs were both successful not only in terms of optimum achievement (number of graduates) but also in terms of qualitative achievement, such as improved accreditation for the institution, improved ability in conducting research, and improved recency of learning materials\. Based on data gathered through questionnaires, graduates returned to their original institution and were assigned to teach S1 or S2 students in accordance with their academic background\. The international refresher program was undertaken successfully, but due to budget cut only one batch was implemented\. Component 4: Education Research subsumed three programs, namely research for the improvement of instruction, entry-level assessment, and quality assurance\. Parts of ELA that went well are the construction, - 34 -  administration, analysis of tests or instruments, the use of ELA results by tutors and dissemination of ELA items to LPTKs\. Parts of quality assurance (QA) that are mostly successful are the construction, administration, and dissemination of test items\. Quite a number of research were conducted by skilled lecturers and the results of which were used for the betterment of teaching-learning processes at LPTKs\. Systematic mechanism was applied to assure the selection of good research\. Moreover, it was followed with intensive monitoring and evaluation of reports\. The best research results were presented in the national seminar and published in education research journals\. Component 5: Wider Mandate subsumed two major programs, namely: wider mandate and accreditation\. Ten LPTKs were finally converted to universities, while two STKIPs were converted into IKIPs\. The converted IKIPs were given permission to widen their primary mandates to run the non-education programs without neglecting their primary mandate (teacher education) The conversion yielded positive effect on the quality of applicants\. The accreditation program was conducted through self evaluation only\. DGHE requires LPTKs to conduct self evaluation and assists them financially by including funding for such in the LPTK's annual budget\. Programs That Didn't Go Well Component 1: Quality Improvement \. Parts of curricula development that is felt lacking are its dissemination and legalization from DGHE in order to secure implementation in all LPTKs due to the new ministerial policy on university autonomy in curriculum development\. An aspect of science equipment provision still considered problematic is maintenance\. This is due to budget cut and non-availability of qualified personnel\. Every room of the renovated staff offices has been shared by 2 to 4 staff members, and this has negatively affected the effectiveness of the consultation activities (though it may have a positive affect in terms of efficiency)\. Component 2: School Linkages\. In the first two years of Project's implementation, International Partnerships program was implemented successfully, however, there were certain LPTKs and their international partners which were not able to carry out the programs successfully due to lack of communication and mismatches in the programs\. This program was terminated due to drastic budget cut\. Component 3: Staff Development\. Refresher Program was only successful in sending 22 teacher educators out of 150 targeted by the Project to do the non-degree professional development in international universities\. Only 8 out of 22 manuscripts produced by the returnees have been printed and distributed to all LPTKs\. Some of the drafted manuscripts produced by the returnees were not approved by the expert reviewers\. There was no agreement by both parties on which parts needed revision\. Component 4: Education Research\. The Entry Level Assessment results were not used widely in quality assurance due to time limit\. ELA was conducted and the results were used for tutoring students in the third year of the Project's implementation\. Therefore QA can only be administered in semester VI rather than at the end of semester VIII\. Data on entry and exit levels has not been obtained as a form of quality assurance\. Component 5: Wider Mandate\. This program that went far beyond its expectation is the conversion of IKIPs into universities and STKIPs into IKIPs\. Although there is an increase in the quality of applicants but the conversion also recognized that the institutions' teacher education mission is under threat in certain ways\. - 35 -  Sustainability Almost all programs of the SSTD have achieved satisfactorily most of the key targets and have affected institutional changes, particularly the internal efficiency, productivity of staff, school teachers, and LPTK's students\. It also created amicable linkages between LPTK and secondary schools\. Therefore, most of the Project's actual outputs and outcomes are envisioned as most likely sustainable\. There are two main reasons why the ex STTD's programs would be sustained in the future\. Firstly, the Project has designed a gradual decrease in terms of funding of all programs and activities\. This scheme pushes the LPTKs to allocate budgets for sustaining previously conducted programs and activities\. Secondly, the establishment of a new directorate within DGHE, that is, the Directorate for Supervision of Educational Staff Development and Personnel of Higher Education (Direktorat Pembinaan Pendidikan Tenaga Kependidikan dan Ketenagaan Pendidikan Tinggi) assures the sustainability of the truly beneficial programs\. This new directorate is committed to sustaining some of the SSTD's programs and activities\. In light of DGHE policy, efforts have been made for ensuring sustainability of most programs through the combining of bottom-up and top-down implementation of those programs and activities\. In each institution, two junior and highly active staffs were appointed by DGHE to help plan future programs and activities\. Since the beginning of the SSTD, some programs are integrated in each institution's Strategic Planning ( Renstra)\. By such a policy, the programs and activities are to be sustained in the future\. Some programs were jointly planned between LPTK and the Regional and Provincial Office of National Education (Dinas Diknas), such as action-based research and field experience program (PPL)\. Fundamentally, almost all programs included in the five components are already being sustained\. The sustainability of all programs was made possible through their insertion into the existing and relevant offices or boards (LEMLIT, UPBK, BKSK, etc) within its own institution\. The new management strategy that will be implemented in the future is to combine the top-down and bottom-up approach in order to secure sense of belonging and responsibility by the respective LPTK and schools\. The funding which was originally derived from the SSTD has been replaced by the institution's routine, recurrent, and annual budgets (for examples: DIKs, DIP, BP3, DUE-Like, BPPS, etc\.)\. Funding has also been obtained from local governments\. There are some programs that will definitely be continued and sustained\. The programs expected to be sustained are: the action-based research, academic staff field assignment, in-service education for secondary school teachers, entry level and exit level assessment, student support services, quality assurance, self evaluation program, field experience for student teachers, curriculum dissemination, research for the improvement of instruction, books and references, and learning materials production\. Lessons Learned Positive Lessons Learned\. Evaluation reports of both partnerships and classroom action research (2001) indicated the importance of combining bottom-up & top-down approaches in enhancing program dissemination\. Reports of RII (2000) and classroom action research (2001) noted that competitive strategies had increased quality as well as institutional participation in respective programs\. Report of the English language curriculum tryout (2000) noted the effect of the intensive course approach (IC) in improving student learning within the first semester in LPTKs\. Annual Project Reports also suggested that early attention on program sustainability makes LPTKs more aware of this issue resulting in concrete efforts to integrate the programs into the existing organizational units\. Increased number of teaching facilities have improved the teaching-learning processes at LPTKs, which in turn will affect the quality of graduates\. Sufficient offices for staff have improved interactions between student- staff, and staff-staff\. In - 36 -  order to publish learning materials, it is certainly necessary to establish a link between LPTKs and local and national publishers\. Negative Lessons Learned\. Reports of the 3-S (2000) noted the lack of coordination among ELAQA, 3S and the implementing study programs in certain LPTKs, minimizing potential effect of the program\. Report of the CPD program also suggested the need of building better coordination between CPD and faculties and study programs in each LPTK\. Report of the science equipment monitoring in several LPTKs (2000) noted the lack of training in the use of new equipment for teaching purposes, minimizing the benefit of that investment\. Other reports -- PPL survey, 2001 and annual PGSM coordination meeting ­ point to the following lessons: (1) the problem of imposing one national model of PPL for all LPTKs with varied conditions, and (2) the potential risk of rapidly converting IKIPs to universities from the viewpoint of teacher education development\. There was not enough thought given to the staff development planning in accordance with the needs in the LPTKs\. Some of the above lessons have been considered relevant and applicable for similar projects i\.e\. (1) combining bottom-up and top-down approaches in introducing new ideas; (2) the role of competitive strategies in increasing both quality and program participation including research capacity; (3) the need for giving early attention on the sustainability of the programs; (4) the problem of imposing one national model for all institutions with varied background and conditions; and (5) the importance of training in use of new equipment for teaching purposes\. Bank's Performance The Bank had provided regular and effective supervision through the establishment a consistent mechanism and process in loan agreement\. The Bank had also satisfactorily provided the CPIU with adequate assistance prior, during and after the project's implementation\. The rating standards and procedures were well established and effective throughout the span of the Project\. However, there was minor administrative shortcoming as the Bank did not provide feedback of the matters requested or shared with the Bank\. The Bank's overall performance is rated satisfactory\. - 37 -  - 38 -

REVIEW

P167988

 Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005592 IMPLEMENTATION COMPLETION AND RESULTS REPORT TFA9400 ON THE SMALL GRANT IN THE AMOUNT OF USD 0\.5 MILLION TO THE REPUBLIC OF SUDAN FOR THE IMPROVING HOUSEHOLD SURVEYS AND ADMINISTRATIVE DATA IN SUDAN: STATISTICAL CAPACITY BUILDING PROJECT (P167988) June 22, 2021 Poverty and Equity Global Practice Eastern and Southern Africa Region  ABBREVIATIONS AND ACRONYMS AARR Administrative Registers CAPI Computer Assisted Personal Interview CBS Central Bureau of Statistics CsPro Census and Survey Processing System COVID-19 Corona Virus Disease 2019 EMIS Education Management Information System database GIS Geographic Information System HECRA Administrative Registers Quality Assessment Tool ICT Information and Communications Technology ISN Interim Strategy Note ISR Implementation Status and Results report IT Information Technology MDAs Government Ministries, Departments, and Agencies MICS Multiple Indicator Cluster Surveys NADA National Data Archive NHBPS National Household Budget and Poverty Survey NSS National Statistical System PDO Project Development Objective PRSP Poverty Reduction Strategy Paper SDGs Sustainable Development Goals SDG Sudanese Pound Regional Vice President: Hafez Ghanem Country Director: Ousmane Dione Regional Director: Asad Alam Practice Manager: Pierella Paci Task Team Leader(s): Alvin Etang Ndip ICR Main Contributor: Eiman Osman  TABLE OF CONTENTS DATA SHEET \. ERROR! BOOKMARK NOT DEFINED\. I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 4 II\. OUTCOME \. 7 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 11 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 11 V\. LESSONS LEARNED AND RECOMMENDATIONS \. 12 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 13 ANNEX 2\. PROJECT COST BY COMPONENT \. 20 ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 21 ANNEX 4\. SUPPORTING DOCUMENTS \. 22  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name IMPROVING HOUSEHOLD SURVEYS AND P167988 ADMINISTRATIVE DATA IN SUDAN: STATISTICAL CAPACITY BUILDING Country Financing Instrument Sudan Investment Project Financing Original EA Category Revised EA Category Not Required (C) Not Required (C) Organizations Borrower Implementing Agency Republic of Sudan Central Bureau of Statistics Project Development Objective (PDO) Original PDO The objective of the project is to strengthen the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data, and to improve the availability and quality of existing administrative data in the education and health sectors\. Page 1 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) FINANCING FINANCE_TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) Donor Financing TF-A9400 500,000 500,000 500,000 Total 500,000 500,000 500,000 Total Project Cost 500,000 500,000 500,000 KEY DATES Approval Effectiveness Original Closing Actual Closing 22-Dec-2018 31-Jan-2019 30-Jun-2020 31-Dec-2020 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 05-May-2020 0\.30 Change in Loan Closing Date(s) Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 01-Feb-2020 Moderately Satisfactory Moderately Satisfactory 0\.22 ADM STAFF Role At Approval At ICR Regional Vice President: Hafez M\. H\. Ghanem Hafez M\. H\. Ghanem Page 2 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) Country Director: Carolyn Turk Ousmane Dione Director: Carolina Sanchez Asad Alam Practice Manager: Pierella Paci Pierella Paci Task Team Leader(s): Alvin Etang Ndip Alvin Etang Ndip ICR Contributing Author: Eiman Adil Mohamed Osman Page 3 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES Context 1\. The Statistics Act of 2003 assigns to the Central Bureau of Statistics (CBS) the responsibility to provide national statistics\. The semiautonomous CBS has branch offices in all the states of Sudan\. Lower levels of government are also tasked with producing statistics and the CBS is expected to provide them with technical guidance, including the coordination of statistical work\. Large-scale household surveys and population and housing censuses are conducted by the CBS (see table 1), while compilation of administrative data (such as school and hospital statistics) is done by government ministries, departments, and agencies (MDAs)\. 2\. Sudan has weak coordination of statistical data within government agencies\. This may partly be because of inadequate capacity at both the federal and state levels\. Limited financial resources have resulted in heavy reliance on donors funding with limited resources for ensuring sustainable improvements in quality and capacity\. The system is also hampered by the absence of policies or plans for dissemination\. Besides, the Statistics Act of 2003 lacks explicit definitions of the National Statistical System (NSS) and of the specific roles of the component subsystems to ensure the good coordination and integration of the national system\. The act does not sufficiently articulate the role of the CBS in relation to the components of the subsystems and does not empower the CBS enough to perform its supervisory\. Table 1\. Main Statistical Surveys Carried out Since 2000 (Completed) Survey Name Date Multiple Indicator Cluster Surveys (MICS) 2000, 2010, 2014 Social Services Survey 2003 Comprehensive Industrial Survey 2003 Household Health Survey 2006 and 2010 Quick Household Consumption Survey 2007 The National Baseline Household Survey 2009 Household Health Utilization and Expenditure Survey 2009 Labor Force Survey 2011 National Household Budget and Poverty Survey (NHBPS) 2014/2015 3\. Addressing capacity constraints in statistics is an integral part of the Interim Strategy Note (ISN) that was discussed at the World Bank Board in September 2013, and the ongoing Poverty Reduction Strategy Paper (PRSP)\. The project activities are explicitly mentioned in the ISN\. They are also consistent with government policy priority areas in the National Strategy for the Development of Statistics from 2012-2016\. In addition, the development of national statistical capacity and data quality in Sudan is in line with the focus on measurable results in the World Bank objectives of ending extreme poverty by 2030 and promoting shared prosperity\. It contributes to improving the availability and reliability of important statistics for tracking the progress of the Sustainable Development Goals (SDGs), supporting the preparation of the full PRSP\. 4\. In line with the government priorities, the World Bank and the Government of Sudan (GoS), entered into an agreement to assist CBS in survey and statistical methodologies improvements, human resource capacity development, use of information and communications technology (ICT) for improving data collection and using socio- economic administrative data\. Page 4 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) Project Development Objectives (PDOs) 5\. The objective of the project is to strengthen the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data, and to improve the availability and quality of existing administrative data in the education and health sectors\. Key Expected Outcomes and Outcome Indicators 6\. The main result of this project is to build the capacity of the CBS to design and implement household surveys that are consistent with international best practices, as well as to be able to analyze the data and disseminate them in line with open data policies\. The project is also expected to help improve availability of administrative data in education and health sectors in Sudan\. 7\. The achievement of the PDO will be assessed based on two key outcome areas: • Outcome 1: Strengthening the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data\. • Outcome 2: Strengthening the capacity of the Central Bureau of Statistics to improve the availability and quality of existing administrative data in the education and health sectors\. 8\. The assessment will be based on the following PDO indicators: i\. Strengthened capacity of the CBS to improve the quality of household poverty survey data as measured by the CBS staff using skills, they received from training to develop instruments for the next household poverty survey, consistent with international best practices\. ii\. Improved capacity of the CBS to analyze data and prepare a basic report as measured by the CBS staff having analyzed household survey data and prepared a basic survey report\. iii\. Improved availability and quality of administrative data in education and health sectors by at least six administrative records from education and health sectors have been quality controlled and fully documented and are available in the National Data Archive (NADA) catalog or on the website of the relevant ministry\. 9\. The key results of the project will be assessed through intermediate result indicators: (Annex 1) i\. Implementation of Capacity building Training Plan\. ii\. Women participation in trainings\. iii\. Methodology for poverty survey and measurement developed\. iv\. Draft questionnaires developed for the next household survey\. v\. Implementation of the Pilot Household Budget Survey\. vi\. Number of staff (CBS and MDAs) trained on data analysis and writing\. vii\. Assessment of the quality of existing administrative data on selected key indicators in education and health sectors completed and report prepared Components 10\. The grant was structured around three core components and a project management component to facilitate project implementation\. The core components are designed to help strengthen the statistical capacity of Sudan CBS, thereby strengthening the NSS in general\. The project components are (1) improving the quality of household poverty survey data; (2) improving capacity for data analysis, report writing, and dissemination; (3) improving availability and quality of administrative data in the education and heath sectors; and (4) project management\. 11\. Component 1: Improving the quality of household poverty survey data\. This component aimed to strengthen the CBS’ capacity to prepare and implement household poverty survey in a more cost-effective manner through a Page 5 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) series of technical assistance engagements\. The component had eight activities\. The first activity involved technical discussion between CBS, World Bank and an international consultant to draft a poverty survey and measurement methodology and conduct a workshop to present the final draft\. The second activity aimed to train CBS staff on multi- topic household survey design and drafting three household survey questionnaires (Household Budget and Poverty Survey, Community Survey, And Market Price Survey)\. The third activity aimed to strengthening the technical and operational capacities of Geographic Information System (GIS) team to plan and implement household surveys in line with international standards\. The fourth activity aimed to train CBS staff on sampling for households’ surveys\. The fifth and sixth activities aimed to strengthen the existing knowledge on Census and Survey Processing System (CsPro) and Survey Solutions applications through the design and test of the Computer Assisted Personal Interview (CAPI) household survey instruments, real-time consistency checks, supervisor and enumerator supervision, and new ways to deal with measures and standards\. After the trainings, it was agreed to conduct a small pretest survey (in urban and rural Khartoum) using both CsPro and Survey Solutions to determine which of the two applications to use for the next household survey\. The seventh activity aimed to implement a pilot survey (in Khartoum State) to ensure CBS staff put into practice the skills acquired from trainings received on the various aspects of survey design and implementation using the selected CAPI application\. The eighth activity aimed at purchasing information technology (IT) equipment\. 12\. Component 2: Improving Capacity for Data Analysis, Report Writing, and Dissemination\. This component comprised a set of four hands-on training activities related to data analysis, writing and dissemination, and an advanced training course in English, in addition to the improving of CBS website\. The first activity involved training in Microsoft Word, Excel and PowerPoint for CBS new recruits (young graduates), existing CBS staff, and staff from the Ministry of Defense; to prepare for good foundation for report writing, preparing tables and creating graphs\. The second activity aimed to train CBS staff in basic data analysis using Stata and reporting, which includes a standard approach for data cleaning and quality assurance and the production of a fully documented and replicable procedure for data verification, error checking and correction\. The third activity aimed to train CBS in formulation and adoption of data dissemination and microdata anonymization\. The fourth activity aimed to train CBS staff in the poverty estimation methodology, including the estimation of the consumption aggregates, price indicators, and poverty line\. The fifth activity aimed at improving English language with a focus on communication and writing skills for CBS staff\. This component initially included two activities: training on small area estimation which was dropped because the World Bank team with CBS GIS staff produced a poverty mapping report using small area estimation (through a separate World Bank analytical task); and training on Structured Query Language which was dropped as it was no longer a priority at the moment\. 13\. Component 3: Improving Availability and Quality of Existing Administrative Data in the Education and Heath Sectors\. The aim of this component was to assess the quality and to improve the availability of existing administrative data on selected key indicators in the education and health sectors\. The activities under this component included: assessing the availability and quality of existing administrative data, documenting and disseminating administrative data, providing training sessions to the CBS and MDAs’ staff to assess the quality of administrative data and indicator and define improvements plans, conducting user satisfaction survey at the end of the administrative record activity to gauge the impact of the activity on data availability and quality, and developing a strategy to scale up improvement in administrative data in the middle to long term\. The component used to include a study tour abroad for the core team to visit an African country to learn from best practices in administrative records\. However due to Corona Virus Disease 2019 (COVID-19) travel restriction, the tour was canceled\. 14\. Component 4: Project Management\. The aim of this component was to finance operational costs related to project implementation including the use of local consultants as necessary, logistics (transport costs), stationery, workshops/meetings, and so on\. In addition, ensuring compliance with procurement, disbursement, financial management policies and procedures as well as agreed reporting requirements\. Page 6 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) II\. OUTCOME Assessment of Achievement of Each Objective/Outcome 15\. The project’s achievements are assessed against the outcome areas of the PDOs: 1) Strengthening the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data; and 2) Strengthening the capacity of the Central Bureau of Statistics to improve the availability and quality of existing administrative data in the education and health sectors\. 16\. The achievement of the PDO is measured by the three PDO indicators: (i) Improve the quality of household poverty survey data, (ii) improve capacity of the CBS to analyze data and prepare a basic report, and (iii) improve availability and quality of administrative data in education and health sectors\. Outcome 1: Strengthening the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data (i) Improve the quality of household poverty survey data 17\. Poverty measurement methodology concept note for Sudan has been prepared\. This activity provided international consultant to support CBS in writing up the poverty measurement methodology concept note for Sudan\. The international consultant recruited for this activity started in December 2019, and the inception draft report was submitted and shared with CBS through a technical workshop on December 18, 2019\. The consultant started a second mission for round of discussion on March 8, 2020 but had to end it in the middle because of COVID-19 situation\. The first draft was submitted on April 12, 2020\. Second version was then shared on August 24, 2020 after reflecting CBS and World Bank comments on the first draft\. A validation workshop took place on November 16, 2020 with 45 participants from different MDAs, development partners, donors, and researchers\. Final report was submitted on the December 10, 2020 after reflecting comments from the workshop, to be used for the next household survey\. 18\. Draft questionnaires for the next household survey (the Household, Community and Market questionnaires) were developed\. An international consultant has been hired and started work on December 21, 2019 with a kick-off meeting with CBS team to assess CBS capacity and develop a training plan\. The plan has been finalized based on CBS staff and the World Bank team comments\. Then, the training took place February 16, 2020 for 10 days for 32 participants (27 from CBS and 5 participants from the Ministry of Health, the Ministry of Welfare and Social Security, the Ministry of Education and the Ministry of Youth)\. Participants were selected with different levels of statistical experiences; 12 of them were senior managers in CBS, 2 have 5-10 years’ experience in data collection and data analysis and 18 are junior statisticians\. At the end of the training a household, community and market questionnaires were developed, participants were trained on data collection methods, processing, dissemination and documentation\. Pre and post assessment were conducted, showing a clear improvement in understanding the learning materials among participants\. A third mission was conducted on March 7, 2020 to finalize the questionnaires\. All questionnaires were translated from Arabic to English\. 19\. Training on GIS and mapping has been completed\. The training took place in Jordan-Amman from December 29, 2019 to January 2, 2020\. Eight CBS staff from the GIS department participated\. The training helped in strengthening the technical and operational capacities of GIS team to plan and implement the 2021 NHBPS in line with international standards\. as well as to learn different methods on updating the sampling frame and using the GIS for integration the spatial data with statistical data and producing and sharing the poverty mapping to inform national development planning and SDG implementation, monitoring and reporting\. Page 7 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) 20\. Training on sampling design has been carried out by an international consultant\. The virtual training took place on December 21, 2020 for three days by international consultant for 14 CBS staff from methodology, IT, GIS, Modeling and Network departments\. The training introduced sampling approach used in household surveys\. The participants learned how to compute sampling weights for a typical household survey\. Effects of weight on statistical inference and know-how to proceed for listing was also reflected in the training\. 21\. Advanced training in CSPro application was conducted in November 2020\. Nineteen CBS staff, 15 from programing and application unit, 2 from GIS unit, and 2 from network unit, participated in the training with an international consultant virtually from October 25, 2020 to November 11, 2020\. The training brought the tools to create CSPro CAPI applications using the best practices to assure high level of data quality and at the same time, to have a user-friendly application for the supervisors and enumerators that are working in the field\. The team uploaded the three draft questionnaires (Household, Community, and Market Price) during the training\. 22\. Training on Survey Solutions application was completed\. The virtual training took place from November 18, 2020 to December 3, 2020\. Nineteen CBS staff participated, the same staff who participated in CsPro training\. The staff learned how Survey Solution can be used to collect survey data and manage the information flow from enumerators to supervisors and then to managers, as well as how to convert a paper questionnaire into an electronic format\. The team uploaded the three draft questionnaires (Household, Community, and Market Price) during the training\. 23\. Pre-test for the three household questionnaires was conducted and preferred CAPI software was chosen and piloted\. The test took place from December 20-22, 2020\. Two areas were identified in Khartoum, Sahafa to represent the urban areas, and Soba to represent the rural area\. Two teams were formed, a team for each area, comprised of four members and a supervisor\. The teams tested both CsPro and Survey Solutions applications on questions from the household budget and poverty and the community questionnaires\. A meeting was then held on December 23, 2020 to discuss pre-test outcomes\. The meeting was attended by the enumerators, team leaders, IT staff and technical staff from CBS, and concluded the selection of CsPro for designing and collecting data for the upcoming Household Budget and Poverty Survey\. The pilot survey with CsPro took place from the December 24-25, 2020 testing all three questionnaires\. 24\. Planned IT equipment was purchased to support the enhancement of data processing, statistical information management, and dissemination\. Twenty printers for the Khartoum office and other states’ offices, 3 photocopiers, 260 antivirus, Firewall, CCTV and VC equipment for the training room at CBS in Khartoum were purchased to support CBS day-to-day work\. (ii) Improve capacity for data analysis, report writing, and dissemination 25\. Training on Microsoft Package was conducted\. The training included 80 staff from new recruits of the CBS, existing CBS staff and staff from Ministry of Defense who needed to be introduced to the basics of ICT skills as a vehicle towards creating a comprehensive employee in the digital era\. The staff were divided into three groups\. First group training took place from March 31, 2019 to May 1, 2019\. Second group training started on September 22, 2019 to October 21, 2019\. Third group training started January 1, 2020 to February 13, 2020\. The training program helped raise the level of core knowledge on ICT and computer skills competency for the candidates to the level that makes them perform their work easily and competently\. The course included using Windows and file management, skills of Microsoft word, Excel, PowerPoint and Access and the basics of Internet and the World Wide Web and email\. Post assessment for all candidates shows a significant improvement in the subject\. 26\. An advanced English course was carried out for the staff of CBS\. The training program carried out by Best Step Center for Training and Consulting Services for 19 staff of CBS, for a period of three months from February 2020 to May 2020\. The program equipped participants with advanced communication skills in English in accordance to the Page 8 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) best practices and modern techniques\. An English language assessment was performed before and after the completion of the program (pre-test and post-test)\. Overall, the learning experience was rated by CBS staff as either excellent or good\. Participants reported that their skills had profoundly leveraged and that they would transfer the knowledge to their coworkers\. 27\. Survey data analysis, poverty analysis and report writing training has been completed\. The virtual training was carried out by an international consultant for three weeks from September 21, 2020 to October 15, 2020 for 14 CBS staff from methodology, modelling, SDGs and IT departments\. The first part of the workshop was an introduction to Stata\. To maximize the usefulness of the workshop for the different level of participants, a learning-by-doing approach was used on a series of exercises and the team was divided into group of two\. The exercises were based on data from the 2015 NBPHS survey\. The focus of exercises was on poverty analysis; however, participants were exposed to other topics of the 2015 survey: demography, education, employment, assets and so on\. The training on Stata was mainly done with the help of self-contained notes with Stata instructions and practical exercises mixed together\. A handout on the most common and relevant commands in the analysis of household survey datasets was also provided\. A significant portion of the workshop was devoted to the presentation of a long series of lectures on poverty analysis, both at the conceptual level, and at the measurement of poverty\. In parallel to those lectures, the Stata exercises put into practices poverty analysis\. A handout on the construction of consumption-based welfare aggregate needed to analyze poverty was also introduced to the group\. For the report writing training, each of the seven groups picked a topic and had to start writing a small report on that topic\. Each team spelled out a research question, proposed a series of tabulations or/and regressions, wrote the Stata program (dofile), analyzed the results, and wrote a brief note\. 28\. Data dissemination workshop has been conducted\. The virtual training took place in December 2020 for one week for 18 CBS staff from Methodology, IT, media and modelling departments\. During the training, participants learned how to prepare household survey datasets to be distributed publicly\. Using the latest 2015 NBPHS survey datasets, the participants learned how to provide cleaned and anonymized datasets, as well as how a meta data document needs to be provided\. The training also covered Stata software commands needed to meet the objectives, namely commands for opening datasets, labelling (variables, option), selecting variables, sorting dataset, Record identifier, saving datasets, formatting variables, anonymizing datasets and saving datasets\. 29\. New CBS website has been developed\. With the aim to improve and maintain CBS website to include a microdata portal access in line with open data principles, CBS has hired Smart Node Company on November 2020 to develop the bureau website\. After a series of consultation of all CBS departments, Smart Node designed and programmed the website that is open for CBS to manage its content\. Configuration documentation and guidelines which clearly state how to manage the website, details on the hosting arrangement, environment and its configuration are provided\. In addition, a Comprehensive Training for CBS staff on how to use the control panel and involving in managing new website took place in December 2020\. Outcome 2: Strengthening the capacity of the Central Bureau of Statistics to improve the availability and quality of existing administrative data in the education and health sectors (i) Improve availability and quality of existing administrative data in the education and heath sectors 30\. A group of key participants from the CBS, Ministry of Education, and Ministry of Health received the Administrative Registers Quality Assessment Tool (HECRA) training\. Participants were selected based on the recommended profile, which included: Administrative Register Managers, Primary users, and Information Technology managers or database administrators\. The training was conducted in two phases: the one-day virtual workshop was held in April 2020 with the main objective to present the context of the project and the collaboration with the World Bank, introduce the HECRA Tool, and review main concepts and definitions to understand the scope of the tool and Page 9 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) explain the steps for its application\. However, due to technical issues and complications with the COVID-19 pandemic, the workshop had to be suspended and resumed in November 2020 to complete the theoretical and practical approach of the training\. In these sessions, the World Bank staff presented a tool to assess the quality of priority indicators\. Total of 12 participants from the CBS (2), Ministry of Health (5), and Ministry of Education (5) completed the full training (April and November sessions)\. A final session with each team was conducted in early 2021 to review the progress in completing the self-assessment activities, go over their proposed Administrative Register (AARR) improvement plan, and get to know their perspectives regarding the usefulness and relevance of the HECRA tool to improve the quality of AARR, and how confident they felt with the use of the tool\. 31\. Quality assessment of administrative registers in the education and health sectors in Sudan and improvement plan have been completed\. A total of eight indicators were assessed for both education and health sectors\. Seven indicators under the Education Management Information System (EMIS) database were assessed: Net enrolment rate, Dropout Rate, Teachers according to Qualifications and Specializations, Internal efficiency rate, External efficiency rate, Pupil-teacher ratio and Teachers quality\. One indicator “Inpatient Registerâ€? from the health sector was assessed\. Both self-assessments yielded overall positive results\. The EMIS database obtained an overall score of 4\.08, which corresponds to "very good" in the reference categories\. The EMIS database obtained scores above 4 in 3 out of 4 quality domains\. The lowest rating was obtained in the Metadata domain, with a score of 3\.3, which corresponds to the acceptable reference category, followed by the Design and production of the AR domain with a 4\.03 score\. With respect to the Inpatient Register Quality Assessment, the overall score for this AR was 3\.55, which corresponds to the acceptable rating category\. It obtained scores above 4 (corresponding to the "very good" rating category) in one quality domain and scores around 3 (in the acceptable rating category) in 3 quality domains\. The lower scores were obtained in the Metadata and Design and production of the AR domains\. In addition, participants from both ministries successfully completed the mini-HECRA questionnaire and the improvement plan for each of the red and yellow alerts that resulted from low scores in some indicators\. Overall Outcome Rating 32\. The overall outcome rating is Satisfactory\. The two outcome areas were achieved\. For the first outcome, “strengthening the capacity of the Central Bureau of Statistics to improve the quality of household poverty surveyâ€? , data poverty survey and measurement methodology has been prepared, a series of trainings on multi-topic household surveys design, sampling design, GIS and mapping, Survey Solutions and CsPro were completed\. In addition, three questionnaires on household, community and market price were prepared, translated, tested and piloted\. Moreover, training on Microsoft package, advanced English language, data analysis, poverty analysis, report writing, and dissemination were completed, and CBS website design was developed\. For the second outcome, “strengthening the capacity of the Central Bureau of Statistics to improve the availability and quality of existing administrative data in the education and health sectorsâ€?, relevant CBS and MDAs staff were trained on HECRA tools and self-assessed eight indicators from the education and health sectors in Sudan\. Other Outcomes and Impacts 33\. A two-day workshop on the lessons learned from the 2014/2015 National Household Budget and Poverty Survey was conducted\. The workshop took place in Khartoum from December 17-19, 2019 involving staff from CBS central office as well as CBS Directorates from all 18 states of Sudan\. Six papers (covering each of the six regions) were presented on lessons learned and recommendation were made for improving the next survey\. All papers were translated to English\. 34\. One-week training on econometrics and modelling took place in December 2019\. As requested by CBS, a training for the new established department (Modeling department) was needed\. Seven CBS staff from the Modeling department received training on Time Series Analysis in Cairo from December 1-7, 2019\. The training covered topics Page 10 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) on familiarity with the concepts of time series, types of time series and methods of their analysis, time series problems and how to discover and treat them, and econometric models\. 35\. Materials for the Sudan High-frequency Survey on COVID-19 were printed\. The project supported the dissemination event on the “Socioeconomic impact of COVID-19 on Sudanese Householdsâ€? and the “Effects of COVID- 19 on Sudanese Enterprisesâ€? studies that took place in December 2020\. The materials printed were 200 pens with World Bank and CBS logos, 200 Notebooks, and 200 copies of each study\. 36\. An intensive advanced ICT training took place in December 2020\. The CBS, with the fund from the Trust Fund for Statistical Capacity Building (TFSCB) grant, recruited “New Technology for Consultancies and Computerâ€? company to hold an advanced IT training on December 13, 2020 for CBS staff to gain more knowledge and experience to perform different tasks and jobs required to run the ICT systems perfectly and professionally\. The training provided participants with the most advanced techniques and strategies in ICT, worked with CBS heads of departments and units to restructure and redesign their systems, assisted top management personnel to manage their staff and communicate with them through a well-organized infrastructure, both technically and administratively\. In addition, the training helped the staff to gain theoretical and practical experience in designing, monitoring and managing ICT components and systems\. It also created a solid platform for components integration for different parts of the sectors and a communications channels between different workers in ICT for better collaboration and integration\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME 37\. The unpredictability of the country’s political situation affected the project implementation and disbursement plan\. The project was suspended from applying the World Bank Operational Policy 7\.30 following the political instability in the country during the December 2018 revolution\. The political situation was changed with the formation of the new government and the Sovereignty Council in September 2019\. Accordingly, the Bank lifted the disbursement suspension and the project submitted withdrawal applications, after over one month delay on the Bank side (after it had already taken some time to have new authorized signatories from the new government)\. 38\. COVID-19 pandemic has negatively impacted the implementation plan\. Travel restrictions have prevented international consultants to hold face-to-face trainings for capacity building\. Some planned IT equipment couldn’t be purchased because they needed to be imported from the international market\. Pilot household survey couldn’t take place in a context where social distancing needs to be adhered to\. Accordingly, the government has requested an extension of project initial closing date from June 30, 2020 to December 31, 2020 to allow completion of all activities\. The team has then revised implementation timetable with the government and the project was restructured and extended for six months\. 39\. The macro-economic context has led to several risks that affected the implementation\. The country macro context has led to: (i) increased exchange rate depreciation coupled with high inflation reducing the purchasing power of funds held in local currency, this risk was mitigated by ensuring that only small amounts of funds are held in local currency; (ii) the change in the exchange rate from 47\.6 Sudanese pound (SDG) per 1 dollar to 55 SDG per 1 dollar in March 2020, it was mitigated by PIU preparing and implementing an updated action plan for the extra funding\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME 40\. Overall, the World Bank’s performance has been satisfactory\. Since the signing of the agreement, the World Bank team carried out one implementation support mission on January 19, 2020\. The Implementation Status and Results Report (ISR) was rated satisfactory, with Financial Management assessment rated the PIU as Satisfactory and Moderately Satisfactory implementation of procurement activities\. In addition, the team was continuously Page 11 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) providing extensive implementation support via in-person meeting, phone, video conferences, and emails\. The satisfactory performance reflects the fact that the Bank team managed to complete project implementation successfully despite extensive disruptions caused by (i) the suspension of Bank’s portfolio (triggering of Bank Operational Policy 7\.30) when the former government was overthrown in 2019, followed by (ii) the COVID-19 pandemic\. The monitoring and evaluation quality was substantial as the team monitored project implementation and assessed performance on a regular basis, which allowed to address identified issues/challenges in almost real time\. V\. LESSONS LEARNED AND RECOMMENDATIONS 41\. The lessons learned are the following: i\. The appointed PIU staff have to free enough time to work on the project\. ii\. For future training, distribute candidates on pre-test results and to fine tune the course content according to each level\. iii\. Whenever possible, include staff from different states in addition to Khartoum state to build capacity of the whole institution\. iv\. To improve the quality of administrative data in Sudan: The use of AARR for statistical purposes should be consolidated as a national strategy, with CBS as the inter-agency coordination institution\. Promoting this strategy is crucial to ensure that CBS has the resources and support to continue the capacity-building efforts\. These efforts should consider designing and implementing a training plan on quality assessment tools\. Subsequently, develop a follow-up plan to monitor the fulfillment of the improvement plans\. Specific recommendations include: • Translate all training materials and tools to Arabic before scaling up the training efforts to other ministries\. • CBS should elaborate a training plan on these tools, prioritizing those sectors that rely more on Administrative Data for planning, monitoring, and evaluation of public interventions\. • For highly decentralized sectors in Sudan, it would be advisable to include the states in the training plan and implementation process since they have a critical role in the data generation and collection process\. • Training content could also include basic statistical training related to the construction of indicators and targets, baseline definitions, time series construction, etc\. • These training efforts could be supported with some World Bank technical assistance missions when face-to-face activities are possible due to the COVID-19 pandemic\. \. Page 12 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: Outcome 1: Strengthening the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Strenghtened capacity of CBS Yes/No N Y Y Y to improve the quality of household poverty survey data 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 as measured by CBS staff using skills they received from training to develop instruments for the next household pov Comments (achievements against targets): Achieved\. Capacity of CBS is strengthened through the following: data poverty survey and measurement methodology has been prepared, a series of trainings on Multi topics HHs design, sampling design, GIS and mapping, Survey Solutions and CsPro were completed\. In addition, three questionnaires on household, community and market price were prepared, translated, tested and piloted\. Moreover, training on MS package, advanced English language, data analysis, poverty analysis, report writing, and dissemination were completed, and CBS website design was developed\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Improved capacity of CBS to Yes/No N Y Y Y Page 13 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) analyze data and prepare a 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 basic report as measured by CBS staff having analyzed household survey data and prepared a basic survey report\. Comments (achievements against targets): Achieved\. Survey data analysis, poverty analysis and report writing training has been completed\. Objective/Outcome: Outcome 2: Strengthening the capacity of the Central Bureau of Statistics to improve the availability and quality of existing administrative data in the education and health sectors\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Improved availability and Number 0\.00 6\.00 6\.00 6\.00 quality of administrative data in education and health sectors by 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 at least six (6) administrative records from education and health sectors have been quality controlled and f Comments (achievements against targets): Achieved\. Relevant CBS and MDAs staff were trained on HECRA tools and self-assessed 8 indicators from the education and health sectors in Sudan A\.2 Intermediate Results Indicators Component: Component 1: Improving the Quality of Household Poverty Survey Data Indicator Name Unit of Baseline Original Target Formally Revised Actual Achieved at Page 14 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) Measure Target Completion Methodology for poverty Yes/No N Y Y Y survey and measurement developed 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 Comments (achievements against targets): Achieved\. Poverty measurement methodology concept note for Sudan has been prepared\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Draft questionnaires for the Yes/No N Y Y Y next household survey developed 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 Comments (achievements against targets): Achieved\. Draft questionnaires for the next household survey (the Household, Community and Market questionnaires) were developed\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Pilot household poverty survey Yes/No N Y Y Y implemented 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 Comments (achievements against targets): Achieved\. Component: Component 2: Improving Capacity for Data Analysis, Report Writing, and Dissemination Page 15 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Capacity building training plan Percentage 0\.00 100\.00 100\.00 100\.00 implementation 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 Comments (achievements against targets): Completed Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Women participation in Percentage 0\.00 40\.00 40\.00 79\.40 trainings 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 Comments (achievements against targets): Achieved, target exceeded\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of staff (CBS and Number 0\.00 10\.00 10\.00 14\.00 MDAs) trained on data analysis and writing 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 Comments (achievements against targets): Achieved\. An advanced English course was carried out for the staff of CBS\. Survey data analysis, poverty analysis and report writing training has been completed\. Page 16 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) Component: Component 3: Improving Availability and Quality of Existing Administrative Data in the Education and Heath Sectors Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Assessment of the quality of Yes/No N Y Y Y existing administrative data on selected key indicators in 06-Dec-2018 30-Jun-2020 31-Dec-2020 31-Dec-2020 education and health sectors completed and report prepared Comments (achievements against targets): Achieved\. Quality assessment of administrative registers in the Education and Health sectors in Sudan and improvement plan have been completed\. A total of 8 indicators were assessed for both Education and Health sectors\. Seven indicators under the Education Management Information System (EMIS) database were assessed: Net enrolment rate, Dropout Rate, Teachers according to Qualifications and Specializations, Internal efficiency rate, External efficiency rate, Pupil-teacher ratio and Teachers quality\. Page 17 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) B\. ORGANIZATION OF THE ASSESSMENT OF THE PDO Objective/Outcome 1: Strengthening the capacity of the Central Bureau of Statistics to improve the quality of household poverty survey data 1\. Strengthened capacity of the CBS to improve the quality of household poverty survey data as measured by the CBS staff using skills they received from training to develop instruments for the next household poverty survey, consistent with Outcome Indicators international best practices 2\. Improved capacity of CBS to analyze data and prepare a basic report as measured by CBS staff having analyzed household survey data and prepared a basic survey report\. 1\. Methodology for poverty survey and measurement developed, 2\. Draft questionnaires for the next household survey developed, Intermediate Results 3\. Pilot household poverty survey implemented Indicators 4\. Capacity building training plan implementation 5\. Women participation in trainings 6\. Number of staff (CBS and MDAs) trained on data analysis and writing Component 1: Improving the Quality of Household Poverty Survey Data • Poverty measurement methodology concept note for Sudan\. • Draft household survey questionnaires in Arabic and English (Household, Community, Market Price)\. • Pretest in Khartoum state for Survey Solutions and CsPro applications\. • Three household questionnaires were designed using CsPro and piloted in Khartoum state\. Key Outputs by Component 2: Improving Capacity for Data Analysis, Report Writing, and Dissemination Component • 88 CBS staff were trained on GIS and mapping\. (linked to the • 14 CBS staff were trained on sampling design\. achievement of the • 14 CBS staff were trained on Survey Solutions and Advanced CsPro\. Objective/Outcome 1) • Number of IT equipment were purchased\. • 80 CBS staff and staff from Ministry of Defense were trained on Microsoft package\. • 19 CBS staff were trained in advanced English course\. • 14 CBS staff were trained in survey data analysis, cleaning combining data, poverty analysis and report writing\. • 18 CBS staff were trained in data dissemination\. • New CBS website has been developed\. Page 18 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) Objective/Outcome 2: Strengthening the capacity of the Central Bureau of Statistics to improve the availability and quality of existing administrative data in the education and health sectors\. 1\. Improved availability and quality of administrative data in education and health sectors by at least six administrative records Outcome Indicators from education and health sectors have been quality controlled and fully documented and are available in the NADA catalog or on the website of the relevant ministry Intermediate Results 1\. Assessment of the quality of existing administrative data on selected key indicators in education and health sectors Indicators completed and report prepared\. Key Outputs by Component 3: Improving Availability and Quality of Existing Administrative Data in the Education and Heath Sectors Component (linked to the • 12 staff from CBS, Ministry of Education and Ministry of Health were trained in HECRA tools achievement of the • Quality assessment was completed for 8 indicators under the education and health sectors\. Objective/Outcome 2) Page 19 of 21  The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) \. ANNEX 2\. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Component 1: Improving the quality of 210,000 222,999 106% household poverty survey data Component 2: Improving capacity for data analysis, report writing and 130,000 69,842 54% dissemination Component 3: Improving availability and quality of existing administrative data in 100,000 11,440 11% the education and heath sectors Component 4: Project Management 60,000 195,719 326%+ Total 500,000\.00 500,000\.00 100% Note: + Actual project management (component 4) costs is substantially higher than initially planned budget because due to COVID-19, some face-to-face trainings and overseas study tour that were planned under components 2 and 3 were changed to virtual trainings or canceled (in the case of study tour)\. Savings from these were used for new activities that were included under component 4 (e\.g\. purchase of VC equipment)\. In addition, the duration of the project became longer as it was extended because of COVID-19 and earlier suspension (as noted above)\. This led to an increase in the overall payments to the project coordinator (hired from external)\. Page 20 of 21 The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Page 21 of 21 The World Bank Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building (P167988) ANNEX 4\. SUPPORTING DOCUMENTS • Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building Project Paper\. https://imagebank2\.worldbank\.org/Search/32011738 • Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building Project Disclosable Version of ISR\. https://imagebank2\.worldbank\.org/Search/31748092 • Improving Household Surveys and Administrative Data in Sudan: Statistical Capacity Building Project Implementation Support Mission Aide Memoire\. https://imagebank2\.worldbank\.org/Search/31748107 Page 22 of 21

REVIEW

P005818

Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 15620 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) May 17, 1996 Natural Resources, Water and Environment Division Middle East Department Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS US$1 (at appraisal, 1986) = 6\.5 Yemeni Rials (YRls, official rate) US$1 (between 1991/95) = 12 Yemeni Rials (YRls, official rate) US$1 (at completion, 1995) = 50 Yemeni Rials (YRls, official rate) WEIGHTS AND MEASURES Metric System vs British System 1 meter (m) = 3\.28 feet (ft) 1 kilometer (kIn) = 0\.62 miles (mi) 1 sq\. kilometer (m2) = 0\.386 sq\. miles (mi2) 1 cubic meter (m3) = 35\.315 cubic feet (ft3) ABBREVIATIONS AND ACRONYMS AREA Agricultural Research and Extension Authority CACB Cooperative and Agricultural Credit Bank CPPR Country Portfolio Performance Review EEC European Economic Commission FAO Food and Agriculture Organization of the United Nations FAO/CP FAO/World Bank Cooperative Programme FAO/UNDP FAO/United Nations Development Programme GDP Gross Domestic Product ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IFAD International Fund for Agricultural Development KFAED Kuwait Fund for Arab Economic Development MAWR Ministry of Agriculture and Water Resources M&E Monitoring and Evaluation O&M Operation and Maintenance ODA Overseas Development Administration of the United Kingdom PDRY Peoples Democratic Republic of Yemen ROY Republic of Yemen SAR Staff Appraisal Report SMS Subject Matter Specialists TDA Tihama Development Authority UNCDF United Nations Capital Development Fund WID Women in Development YAR Yemen Arab Republic GOVERNMENT OF THE REPUBLIC OF YEMEN FISCAL YEAR January 1 - December 31  FOR OFFICL41 USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) Table of Contents Page No\. PREFACE EVALUATION SUMMARY \. \. i-v PART I: PROJECT IMPLEMENTATION ASSESSMENT\. 1 A\. Introduction \. B\. Project Objectives \. 2 C\. Achievement of Objectives \. - \. \. \. 3 D\. Implementation Record and Major Factors Affecting the Project\. 8 E\. Project Sustainability \. \. 9 F\. Bank Performance \. \. \. \. 10 G\. Borrower Performance \. \. \. \.11 H\. Assessment of Outcome \. \. \. \.12 I\. Key Lessons Learned \.12 PART II: STATISTICAL TABLES Table 1: Summary of Assessments \. \. 14 Table 2: Related Bank Loans/Credits \.16 Table 3: Project Timetable \. 18 Table 4: IDA Credit Disbursements: Cumulative Estimated and Actual \.19 Table 5 (A): Key Indicators for Project Implementation - December 1995 \.20 Table 5 (B): Planned and Actual Recruitment of Technical Assistance \.21 Table 5 (C): Foreign and Local Training Program (1988-95) \. \. 23 Table 6: Project Costs and Financing - Part A: Project Cost \. \. \. \. 24 - Part B: Project Financing \. 25 Table 7: Project Results \. 26 Table 8: Status of Legal Covenants \. 27 Table 9: Use of Bank Resources: Staff Inputs \.28 Table 10: Use of Bank Resources: Missions \. 29 ANNEXES: A\. ICR Mission Aide-Memoire \. \. \. \.30 B\. Economic Analysis \.32 C\. Tihama Development Authority: Recurrent and Investment Budget (1992-1995) \. 46 D\. Project Review from Borrower's Perspective \. 47 E\. Comments from Government on ICR e\. \. \. 60 Map IBRD No\. 19224 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) Preface This is the Implementation Completion Report (ICR) for the Tihama V Agricultural Development Project in the Republic of Yemen, for which an IDA Credit (1667-YAR) in the amount of US$10 million or SDR 9\.0 million equivalent was approved on March 20, 1986 and declared effective on December 7, 1987\. The Credit was closed on December 31, 1995, after it was extended three times from its original closing date of December 31, 1993\. US$1\.5 million of the Credit was cancelled as a result of the May 1995 Country Portfolio Performance Review (CPPR) consultations between IDA and the Government, which took into account the status of commitments under the project and the outlook for project completion by the agreed closing date\. The remainder of the Credit was fully disbursed in 1996\. Cofinancing for the project was provided by the Government of the Netherlands (DFL23 million, US$11\.2 million equivalent in 1991) and the Kuwait Fund for Arab Economic Development (KFAED) (US$15 million)\. KFAED disbursed US$0\.5 million, but the remaining funding was discontinued in 1991 as a consequence of the Gulf War\. The ICR was prepared by Mr\. Tijan M\. Sallah, Economist (MN2NE), and reviewed by Mr\. Salah Darghouth, Chief (MN2NE), and Ms\. Tufan Kolan, Acting Project Advisor (MN2DR)\. The Government of the Republic of Yemen provided comments on the report which are included as Annex E to the ICR\. Preparation of this ICR began during IDA's joint supervision/completion mission in November 1995, which included Mr\. Nejdet Al-Salihi, Senior Irrigation Engineer (MN2NE) and Huub Stoetzer, Consultant Agronomist (Netherlands Government)\. The [CR is based on material in the project files, discussions with the task manager and Borrower representatives, field visits to project site, and project data provided by the Project Implementation Authority\. The Borrower contributed to the ICR by providing their own evaluation of the project's preparation and execution, which is included as Annex D\.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) Evaluation Summary Introduction 1\. The Tihaina V Regional Agricultural Development Project is the fifth among a series of area development projects in the Tihama Region of Yemen, a region representing 45 percent of the country's potential for irrigated development\. IDA assistance has supported the Republic of Yemen's (ROY) strategy to exploit all six major wadis (valleys, water catchments) in the region for agricultural development with provision of a range of rural development services\. Tihama I (rated satisfactory) concentrated on Wadi Zabid; Tihama II and IV (rated satisfactory) on Wadi Rima; Tihama III (rated unsatisfactory) on Wadi Mawr, and Tihama V on Wadi Siham\. Tihama III was rated unsatisfactory because the sophisticated permanent diversion structures built in Wadi Mawr have by themselves not been economically viable, and the volume of incremental water diversion and the size of the cropped area have not been significant\. Also, with only one diversion point upstream, farmers upstream benefitted at the expense of those downstream\. Project Objectives 2\. The objectives of the project were to improve agricultural productivity and farm incomes in the Tihama region by: (i) propagating suitable technical packages; (ii) improving irrigation water management; and (iii) strengthening institutions to ensure sustainable project benefits\. 3\. The above objectives were to be achieved by: (i) unifying and strengthening regional extension services with facilities and staffing; (ii) establishing regional veterinary services for livestock development; (iii) constructing irrigation infrastructure to serve 7,000 ha in Wadi Siham and constructing marketing infrastructure and 62\.4 km of feeder roads; (iv) establishing regular O&M service for the region; and (v) strengthening the Tihama Development Authority (TDA)\. 4\. A number of credit covenants were agreed in support of project objectives, directed at ensuring timely reporting, recruitment of staff, establishment of specific extension facilities, reorganization of Monitoring and Evaluation (M&E) unit, preparation of a training program, and overall smooth implementation of project activities\. All thirteen covenants have been complied with, of which 5 experienced delayed compliance (Table 8)\.  Tihama V Regional Agricultural Development Project ii Implementation Experience and Results 5\. The project succeeded in establishing 705 ha (against the 750 ha appraisal target) of shelterbelt plantation in Zabid, Rima and Siham to stabilize sand dunes and established a number of literacy, health, nutrition and home economics programs to assist rural women\. The pre-existing parallel extension services of the Ministry of Agriculture and Water Resources (MAWR) and the Tihama Development Authority (TDA) were unified under a single line of command; as a result, the approach to extension became more coordinated and duplication of efforts was reduced\. An extension division at TDA headquarters linked to three subregional (north, south, central) extension units was established\. The number of extension agents was increased, and was surpassed in the case of women extension agents\. Over 80 percent (38,110 farm families) of the target 44,000 farm families were reached by extension activities under the project\. Extension, however, suffered, at times, from inadequate operating funds, poor mobility, unsuitable and unresponsive technical packages, and weak linkage with research\. Generally, extension staff were better trained and more experienced than their counterparts in research (AREA)\. Despite these problems, extension under the project made substantial positive headway in transferring the experiences of successful farmers to others; thereby increasing yields among Tihama farmers\. 6\. The project unified the veterinary services provided by the Ministry of Agriculture and Water Resources (MAWR) with that by TDA and placed them under TDA's supervision\. However, this component has only been partially satisfactory because of lack of adequate equipment, veterinary drugs, and shortage of operating funds\. Shortage of foreign exchange impacted negatively on procurement of quality vaccines and thereby hindered campaigns against rinderpest (endemic to the region), and against sheep and goat pox\. 7\. The project achieved its objective of improving land and water management as well as farm incomes through irrigation development\. However, the achievement was partial in the sense that only one of the two irrigation schemes proposed at appraisal was completed\. Kuwait Fund financing was discontinued due to the Gulf War and, as a result, the Al- Barquqah scheme was postponed for future possible funding\. The EEC has picked up this scheme for financing to be completed in 1997\. IDA and part of the Netherlands Grant funds earmarked for the Al-Barquqah scheme were reallocated for use in the construction of the Waqir scheme\. The Waqir scheme comprised irrigation works for an area of 4,200 hectares (against 7,000 hectares for the two schemes at appraisal) and unlined main and secondary canals 21 km long\. The scheme has only been recently completed after considerable delays, and all works have been carried out at a high standard of construction\. The incremental water diverted as a result of the Waqir scheme is expected to result in substantial incremental benefits to Tihama irrigation farmers\. 8\. Under the project, the number of demonstration farms envisaged at appraisal (4 ten-hectares farms) have been surpassed (18 demonstration farms), and the demonstrations have been situated on farmers' plots with much greater impact than on government-owned  iii Tihama V Regional Agricultural Development Project plots, as proposed at appraisal\. On-farmer's plot demonstrations have also encouraged greater participation from farmers\. 9\. Also, under the project, 35\.7 km of asphalt roads and 12\.6 km of gravel roads, totalling 48\.3 km of access roads, were constructed (against the appraisal target of 62 km of gravel roads)\. The actual reduction in the combined total length of roads compared with the appraisal target was a result of optimization in designs during implementation\. Although construction suffered from implementation delays, the constructed roads have been made with better and more durable material, better earth embankments, and have greater width than proposed at appraisal\. The asphalt roads have facilitated farmer access to markets and to social services, and considerably reduced the adverse health effects of dust pollution from the previous unpaved dirt paths\. 10\. The project established three regional operation and maintenance centers, as envisaged at appraisal, and provided them with staffing and equipment\. The centers have been performing O&M functions for irrigation and feeder roads under the TDA at an acceptable standard\. Budgetary shortages, however, have sometimes made it difficult to attract adequate competent staff to fully utilize the equipment purchased for use in O&M\. 11\. Substantial training and technical assistance have been provided under the project\. Gains in these areas have resulted in the gradual phasing out of expatriate assistance and their replacement with national counterparts\. However, technical assistance and training for monitoring and evaluation capacity have been underestimated and have therefore been inadequate and require further strengthening\. Overall, the objectives of the project were substantially achieved, although after considerable delays of over three and a half years\. 12\. During implementation, the government's worsened budgetary situation also impacted negatively on the implementation of the project, resulting in inadequate and delayed availability of operating funds\. Government funds to the TDA were held at the 1992 level even while the Riyal had depreciated, and TDA's investments in infrastructure and agricultural services have expanded\. These raise the key question of project sustainability\. Sustainability of investments would depend on TDA's efforts to improve cost recovery, commercialize some of its services, and reduce dependence on government and external funding support\. 13\. The project has been overall satisfactory, with an ERR of 20\.6% (against the appraisal estimate of 21%)\. The actual total costs of the project was estimated at US$30 million (against an estimated S$47 million at appraisal) (Table 6)\. The difference is due to withdrawal of Kuwait Fund (KFAED) financing and shortage of government counterpart funds\. Actual financing was provided by the IDA Credit (US$11\.57 million against the SAR fmancing plan of US$10 million), the Netherlands grant (US$12\.68 million against appraisal plan of US$9\.4 million), the KFAED (US$0\.5 million against the appraisal plan of US$15 million), and Government (US$5\.25 million against the appraisal plan of US$12\.6 million)\.  Tihama V Regional Agricultural Development Project iv 14\. Overall, Bank performance in the project has been satisfactory in the sense that regular supervision missions were carried out, in addition to a mid-term review\. The Bank remained flexible and realistic in providing advice and helping resolve difficult issues, and extended the project closing date three times to allow for completion of major works, and realization of development objectives\. Bank shortcoming has been failure to use realistic yield data in the appraisal economic analysis and setting ambitious cost recovery objectives\. 15\. Borrower performance has been partially satisfactory\. TDA coped with tough circumstances beyond its control and complied generally with all the legal covenants\. Due to the difficult economic situation, shortage of Government counterpart funds at times adversely affected TDA's program of implementation\. Key Lessons Learned 16\. The key lessons learned under this project are listed below\. (i) Using realistic data at appraisal facilitates the evaluation of project achievement\. Therefore, emphasis is needed on quality at entry\. Under Tihama V, the substantial overestimates of agricultural yields at appraisal made them unrealistic for use as comparator for measure of project achievement (para\. 1\.30)\. (ii) Flexibility to reallocate resources is necessary to ensure substantial achievement of project goals when a major and dependable cofinancier (e\.g\., Kuwait Fund) discontinues funding due to unanticipated circumstances, such as the Gulf Crisis (para\. 1\.14)\. (iii) Extension cannot function fully effectively without research\. If research (AREA in Yemen) does not have adequate staffing, operating budget, and superior competence to produce suitable packages, then its input into extension is likely to be limited\. Moreover, extension cannot be effective without adequate operating funds (para\. 1\.8)\. (iv) The design of a cost recovery system should be based on a realistic appraisal of what is workable and achievable given local circumstances\. The full cost recovery objective under the project was ambitious\. The zakat (religious) cost recovery system is prone to misuse\. There is no objective means of assessing farmers' declarations; hence farmers understated their income and thereby the resulting zakat religious tax, without penalty (para\. 1\.28)\. (v) Inadequate counterpart funds have been a major limitation to project implementation\. This suggests that new projects should be undertaken only after a careful review of their incremental demands on the government budget (para\. 1\.31)\.  v Tihama V Regional Agricultural Development Project (vi) Although TDA is a competent authority, sustainability of project benefits is likely only if TDA pushes for greater cost recovery, commercializes some of its services, and reduces its dependence on government and external support (para\. 1\.25)\.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) PART I PROJECT IMPLEMENTATION ASSESSMENT A\. Introduction 1\.1 Agriculture accounted for about 19 percent of Yemen's 1994 GDP (estimated at US$4,122 million) and employed 58 percent of the workforce\. Critical to Yemen's agricultural development is the Tihama region (22,000 km2), which represents about 45 percent of the country's potential for irrigated agriculture development\. For centuries, the people of the Tihama have irrigated the otherwise semi-desert region with locally constructed temporary structures that divert a portion of the intermittent floods (or spates) onto the adjoining land\. 1\.2 Since 1973, the Government of the former Yemen Arab Republic (YAR), which united with the Peoples Democratic Republic of Yemen (PDRY) of the South in 1990 to form the Republic of Yemen (ROY), has pursued a strategy, supported by external assistance, of exploiting all the major wadis (valleys, water catchments) in the Tihama region for agricultural development\. This involved investments in surface irrigation in the form of permanent diversion structures in the wadis, investments in groundwater development, roads, and a range of support services\. IDA has assisted with five Tihama projects, the performances of which, except for Tihama III, have been satisfactory\. Tihama I Project (Wadi Zabid), and II and IV (Wadi Rima) were rated as satisfactory at completion, and Tihama III (Wadi Mawr) was rated unsatisfactory\. The latter was rated unsatisfactory because the sophisticated permanent diversion structures built in Wadi Mawr have by themselves not been economically viable (an ERR of 4\.5-9\.5 percent against the SAR estimate of 16 percent), and the volume of incremental water diversion and the size of the cropped area has not been significant\. Also, with only one diversion point upstream, the farmers upstream captured the benefits at the expense of those downstream\. 1\.3 IDA's strategy in Yemen's agriculture sector has been to support area development projects, providing a range of rural development services\. Successive Tihama projects (para\. 1\.2) have been in line with this, but so have the relatively successful Southern Uplands II, Northern Regional Agricultural Development Project, FY88 (board date), Southern Regional Agricultural Development Project, FY87, and the more difficult, problem-ridden projects of Central Highlands, FY84, and Wadi Al-Jawf, FY85\. In addition, IDA has begun to support  Tihama V Regional Agricultural Development Project 2 programs that strengthen national services to the agriculture sector (Agriculture Sector Management Project, FY92), that support area/irrigation development (Wadi Hadramawt III Project, FY89) and that tackle the pressing issues of land and water management (Land and Water Conservation Project, FY92)\. B\. Project Objectives 1\.4 The project objectives under Tihama V were to improve agricultural productivity and farm incomes in the region by propagating suitable technical packages and improving irrigation water management; and strengthening of development institutions to ensure sustainable project benefits\. To accomplish these objectives, the project was expected to: (i) support regional agricultural extension services through construction of extension buildings, provision of vehicles, equipment and machinery and appointment of staff to strengthen extension services, and provision of particular support for rural development for women; (ii) establish regional veterinary services for livestock development; (iii) improve land and water management as well as farm incomes through construction of the Al-Barquqah and Waqir irrigation schemes to serve 7,000 ha in Wadi Siham, as well as construction of 62\.4 km of feeder roads, flood protection works, demonstration farms and marketing infrastructure; (iv) establish regular operations and maintenance (O&M) service for the Tihama region; and (v) strengthen the Tihama Development Authority (TDA) and related regional development institutions through provision of technical assistance in extension, engineering, monitoring and evaluation and through provision of project-related training\. Evaluation of Objectives 1\.5 The foregoing objectives were realistic\. Recognition was made of limited water resources (and therefore the need to optimize usage and management) and poor access to suitable agricultural technologies as key limiting factors to agricultural development and economic growth\. However, the objective of sustaining project benefits, whereas desirable, is one of the most difficult to achieve since, despite TDA's institutional competence, it depends considerably on the timely availability of adequate financial resources\.  Tihama V Regional Agricultural Development Project C\. Achievement of Objectives Regional Agricultural Extension Service Component (a) Extension Structure and Methodology \. 6 Compared to the pre-project situation of limited coordination, unification of extension services under a single line of command has been fully achieved under the project [para\. I 4(i)]\. The two parallel extension services of the Ministry of Agriculture and Water Resources (MAWR) and the Tihama Development Authority (TDA) have been combined under a single line of command\. The two extension services comprised those under Tihama l, II, III, and IV covering specific wadis and supported by IDA credits, and those under the MAWR covering the remaining wadis in the Region, supported by three FAO/UNDP projects\. An extension division at TDA headquarters in Hodeidah has been established, with three subregional sections at the northern (Al-Zuhra), central (Bajil), and southern (Zabid) levels\. Regional extension programs covering all wadis have been strengthened\. The aippraisal targets in terms of number of extension agents and farm families have been mostly achieved (e\.g\., 124 agents against SAR target of 150 agents; and 38,110 farm families reached against SAR target of 44,100 farm families)\. The number of women extension agents also exceeded appraisal targets (58 agents against SAR target of 38 agents)\. i 7 However, unification alone is not sufficient for an effective extension\. In terms of the key requirements for an effective and efficient extension service, there is need for: (i) use of an appropriate extension method, (ii) well-trained and motivated staff, (iii) easy access to means of mobility, (iv) availability of suitable and responsive technical packages, (v) close and active relationship with research, and (vi) availability of operating funds\. Under the project, these were not always fully achieved or available\. TDA's professional staff and subject matter specialists were generally better trained and experienced than their counterparts in the Agricultural Research and Extension Authority (AREA)\. They generally hiad better technical and social skills, but their morale has been undermined by lack of an adequate operating budget\. This made mobility of extension agents a serious problem\. Until July 1992, when a consignment of new motorbikes arrived, about one-third of the extension agents were without transportation\. Problems with mobility were some times worsened by iack of spare parts (including availability of inner tubes) for the imported motorbikes\. In many instances, extension agents had to share one motorbike; as a result, this reduced their frequency of contacts with farmers\. 1\.8 Also, the Training and Visit (T&V) system has been the operative method of extension, but it suffered from lack of suitable technical packages, which have been difficult to generate because research through AREA has generally had less experienced and trained staff and inadequate funding compared to extension\. Research recommendations have, iherefore, been generally poor and outdated\. Research staffing suffered from high turnover ow ing to staffs' preference for living in Sana'a\. Despite these problems, some of which  Tihama V Regional Agricultural Development Project 4 were resolved under the project, considerable progress was made by the local extension service agents in reaching over 80 percent of the target 44,000 farm families and in transferring the experiences of more successful farmers to others; thereby increasing farmer yields\. (b) Rural Development for Women 1\.9 The objective of supporting TDA's agricultural and non-agricultural activities for women [para\. 4(i)] has been partially achieved\. As noted in the preceding text (para\. 8), appraisal targets to increase the number of female extension agents has been surpassed; but actual numbers fell short of the target in the case of female extension supervisors (3 against the SAR target of 7)\. The increased number of female extension agents have helped boost rural women programs to such an extent that now TDA operates such programs through three Women in Development (WID) sections in the northern, central and southern subregional levels respectively\. The WID activities had covered 51 villages, and over 612 female participants had benefitted from literacy courses\. From 1988-1993, the WID activities were supervised and coordinated by an expatriate WID expert (Egyptian home economist/ nutritionist) at TDA headquarters; thereafter, they have been headed by a Yemeni woman\. 1\.10 Under the WID subcomponent, programs were expanded to include subjects such as female literacy, handicrafts, home economics, primary health, agriculture and animal husbandry\. Beneficiary training and surveys were also carried out\. Three extension centers for females were built under the project to facilitate the dissemination of extension messages, but their use was limited due to the restricted mobility of village women\. Disseminating extension messages by individual home visits and demonstrations became more successful in the case of women than through the use of extension centers\. A drawback to fully realizing objectives has been the unbriddled expansion of WID activities in the context of limited operating funds, which caused resources to be thinly spread and diluted program effectiveness\. Programs were drawn with no funding provided; and training sometimes concentrated on what rural women already knew (e\.g\., milk processing) and so, in these cases, provided little incremental knowledge to rural women\. Moreover, some simple equipment, material, and operating budget which were necessary to make the program more practical were not adequately provided\. The 144 s/m of expatriate specialist technicians identified in the appraisal report were only partially provided (60 s/m) due to the success of training local staff; thus eliminating the need for expatriate technician level staff\. In retrospect, the achievement of the rural development for women programs were significant for Yemeni conditions, but they could have been more effective if they were built around a clearly defined objective and strategy\.  S Tihama V Regional Agricultural Development Project (c) Sand Dune Stabilization 1\.11 Shelterbelt plantations covering about 705 ha (against appraisal target 750 ha) have been established under the project in Zabid (506\.2 ha), Rima (126\.8 ha) and Siham (72\.0 ha)\. This significant achievement has helped reduce the severity of the problem of encroaching sands, and the indiscriminate removal of woodland for fuelwood, charcoal and crop production, particularly in wadi beds\. The sand dune stabilization program commenced in 1988 when funds became available, and included planting of Azadirachta Indica (Neem), Prosopis, Acacia, Balanites, Tamarix and Eucalyptus species\. The program was, however, adversely affected by the periodic unavailability of polythene bags, lack of adequate staff of experienced foresters, and insufficiency of wells for water\. Access to well-water was a problem because attracting contractors to dig wells in those remote areas where shelterbelts were being established was difficult, which delayed implementation\. Despite delays, the capacity for seedling production expanded under the project, and the present capacity for producing seedlings in the three nurseries in the Tihama region stands at about 400,000 tree seedlings (against an estimated 100,000 seedlings at appraisal)\. With the substantial gains in establishing shelterbelts and expanding seedling production, the appraisal target of stabilizing sand dunes in the designated area was effectively met\. (d) Investments 1\.12 The physical targets for the civil works of the regional extension services were all achieved\. They were financed from the Netherlands grant under the project\. One mass communication center with audio-visual material for training extension staff was built in Hodeidah at TDA headquarters (in line with the appraisal target); one subregional office was built in Bajil (meeting the appraisal target), and 23 extension centers were constructed in the northern, central and southern subregions (exceeding the appraisal target of 18 extension centers)\. Two irrigation wells for demonstration farms were constructed in the northern (Wadi Mawr) and central (Wadi Siham) subregions, and were all financed through local funds of TDA\. Regional Veterinary Service Component 1\.13 Unification and strengthening of regional veterinary services have been partially achieved under the project [para\. 1\.4(ii)]\. Veterinary services provided by MAWR with ODA assistance, since its inception in 1972, have functioned in parallel with those provided by TDA\. The TDA was to assume full responsibility for animal health and nutrition in the region in accordance with the veterinary regulations and livestock development policies of MAWR\. Under the project, both were brought under TDA's overall supervision\. Unification of services has helped reduce duplication of veterinary activities and combined resources to focus on priority problems\. This has resulted in average annual vaccinations of about 61,000 cows against rinderpest, 51,000 sheep against sheep pox, in addition to treatment against various diseases\. As per appraisal, one regional veterinary laboratory has  Tihama V Regional Agricultural Development Project 6 been built in Hodeidah, and 2 veterinary stations have been constructed in the central subregion, Bajil and Zadia areas\. Five veterinarians are in place (exceeding the appraisal target of three), and one of these is at headquarters, 2 in the northern subregion, and 2 in the southern subregion\. These veterinarians have been diagnosing livestock diseases, prescribing cures, and providing disease-prevention advice\. However, equipment and veterinary drugs have remained a major problem\. Both the regional laboratory as well as the veterinary stations suffer from shortages of drugs and supplies due to inadequate operating funds\. Vaccinations have been generally free of charge\. But vaccination campaigns against rinderpest, which is endemic to the region, and against sheep and goat pox have often suffered from shortage of quality vaccines due to scarcity of foreign exchange\. The limited availability of drugs has on occasion led livestock owners to purchase scarce drugs (eg\., antibiotics) meant for humans from local pharmacies to treat sick animals\. A government policy clearly needs to be formulated on cost recovery for veterinary services to empower TDA to collect and retain proceeds from charges on drugs or sale of services and to use the proceeds to provide better services to users; this is necessary for future financial and operational viability\. Irrigation and Infrastructure Development Component (a) Irrigation Development 1\.14 Improving land and water management as well as farm incomes through irrigation development has only been partially achieved in the sense that only one of the two irrigation schemes was completed\. Changes in design and delays in the implementation of irrigation works have been a problem; a significant cause of the problem has been the cessation of fiancing from the Kuwait Fund as a consequence of the Gulf War\. In the SAR, IDA was to finance the construction of the canals and structures for the Al-Barquqah and Waqir schemes, and Kuwait Fund was to finance the remaining works for both schemes (i\.e\., the diversion works, wadi control and demonstration farms) [para\. 1\.4(iii)]\. When Kuwait Fund financing ceased, the Al-Barquqah scheme was postponed for future possible funding, and IDA funds earmarked for the scheme, together with some funds from the Netherlands Grant, were reallocated for use in the construction of the Waqir scheme\. The Barquqah scheme is now being financed by the EEC, with related works expected to be completed by 1998\. 1\.15 The Waqir scheme financed under the project comprised irrigation works for an area of 4,200 hectares (against 7,000 hectares for the two schemes at appraisal), consisting of one diversion structure at Waqir site, with an off-take capacity of 22 m3/sec; 60-meter long reinforced concrete weir; unlined main, secondary, and tertiary canals (23 km long), a wadi crossing syphon, and the construction of two flood protection dykes\. An international contractor carried out the diversion structure and canal works with the support of local sub- contractors\. Despite delays in start-up and availability of funds, all works on the diversion headwork and the distribution network have been substantially achieved and at a very high standard of construction\. The downstream flood protection works were directly implemented  7 Tihama V Regional Agricultural Development Project by the TDA using own staff and IDA-financed equipment\. The new water control structures and canalization system will result in a higher level of water diversion and irrigation efficiency over the previous system\. (b) Demonstration Farms 1\.16 The objective of establishing demonstration farms [para\. 1\.4 (iii)] has not been achieved as previously envisaged but has been fully achieved in its redesigned form\. The SAR envisaged the establishment of four demonstration farms each 10 hectares for trials of improved irrigation and agricultural practices\. However, such areas were difficult to locate on Government land, and TDA did not establish these farms due to the difficulties of operating and maintaining them in the public sector\. Instead TDA established 18 demonstration units on farmers' plots, totalling 62 hectares, which encouraged greater farmer participation\. TDA also operated two demonstration farms at Al-Hussainia and Wadi Mawr\. In a sense, it could be argued that SAR targets have been more than achieved (18 units against the appraisal target of 4), and in a more effective way by doing it on-farm, involving user participation, rather than as originally proposed on government-owned and operated units, which would have been a centralized public sector undertaking\. (c) Feeder Roads 1\.17 The project has almost substantially achieved the physical targets for the construction of about 62 km of roads envisaged at appraisal [para\. 1\.4(iii)], with some modification resulting from optimization in length and design\. The Qutay-Khalifa access road, located in a sand dune area difficult to reach, has been completed, covering 9\.3 km asphalt (against the SAR target of 11\.6 km gravel)\. The Bajil-Mahal Shuma-Khalifa segment has been completed, covering 26\.4 km asphalt (against the target 27\.9 km gravel)\. The Marawa- Khalifa road has been the only one completed in gravel, covering 12\.6 km (short of the target 22\.9 km)\. All the constructed roads have a greater width of 5 m (against the SAR target of 4\.5 m) which provides a better margin of safety, and have better earth embankmnents than envisaged\. The roads link the main Hodeidah-Sana'a Highway to sites of major irrigation works and to the main agricultural villages and market center, and their construction from asphalt instead of gravel results in a more durable solution that is also more environmentally acceptable\. The contract for the roads, financed from the Netherlands Grant, was awarded to a local contractor in August 1991\. Work on the 12 month contract began in September 1991, but, despite the good quality of the works, there were substantial implementation delays partly due to the high rate of inflation on the Yemeni riyal and the fixed price nature of the contract; although now, all works have been completed\. (d) Marketing Centers 1\.18 The objective to construct four marketing centers [para\. 1 \.4(iii)] to provide outlets for increased commercial production under the project was never achieved because of lack of  Tihama V Regional Agricultural Development Project 8 funds under parallel financing from the Netherlands grant funds\. This was because the Netherlands grant funds were redeployed (following cessation of Kuwait Fund financing) to make up for some of the shortfall in the financing of the irrigation subcomponent\. Nevertheless, this subcomponent to establish a vegetable and fruit marketing center in Hussainia has been picked up for financing by the United Nations Capital Development Fund (UNCDF) which is administered by the UNDP with FAO as executing agency\. Regional Operation and Maintenance (O&M) Service Component 1\.19 Three Regional Operation and Maintenance Service centers have been established as envisaged in the SAR [para\. 4(iv)] and provided with staff and equipment\. These centers have been performing the O&M functions related to irrigation and feeder roads under the TDA\. Technical Assistance and Training Component 1\.20 Most of the technical assistance activities identified in the SAR were carried out, with some modifications\. Table 5 (b) provides detailed summary of appraisal targets and actual achievements in terms of staff-years and number of persons used\. During the project implementation, technical assistance staff were gradually phased out and replaced by national counterparts who were provided training under the project\. Table 5 (c) presents local and foreign training achieved under the project, which helped significantly in building local capacities\. The shortcoming in training and technical assistance has been in TDA's Monitoring and Evaluation Unit, which needs considerable strengthening\. Agricultural Credit Component 1\.21 Although agricultural credit was not financed under the project, CACB did carry out the assurance it gave at appraisal to support project activities through term-credit\. Credit data from CACB between 1988-1994 shows that a total of about 14,220 beneficiaries in the project area received short-term credit; 5,782 received medium term credit; and 951 received long-term credit\. Much of the credit was provided to farmers to complement their own financing in farm development\. Average recovery rates over this period for credit with different maturities have been satisfactory: short-term (72 percent), medium-term (64 percent), and long-term (76 percent)\. D\. Implementation Record and Mgjor Factors Affecting the Project 1\.22 The project has encountered considerable delays in implementation in general and in the irrigation development work in particular\. First, there was a delay of at least one year due to cross-effectiveness requirements between IDA credit and Netherlands grant; the first was signed in May 1986 but the second in May 1987\. Second, there were delays of over nine months due to modifications to original designs of the irrigation system requested by the  9 Tihama V Regional Agricultural Development Project co-financiers\. Third, there was a delay of one year due to suspension of disbursement by the Kuwait Fund because of the Gulf Crisis\. Fourth, there was delay of six months due to lack of response from international contractors to the first round of tendering in 1991/92 for an ICB contract to implement Waqir Irrigation works just immediately following the Gulf Crisis\. There were also delays of four months in 1994 due to the civil conflict between North and South Yemen\. All these added up to delays of more than three and a half years\. Because of these delays, the project's closing date envisaged at appraisal of December 31, 1993 was extended first to December 31, 1994, then to September 30, 1995 and finally to December 31, 1995\. 1\.23 For the irrigation development works, in particular, in addition to the Waqir system [para\. 4(iii)], it was envisaged at appraisal that a permanent diversion weir across Wadi Siham at the upstream site of Al-Barquqah would be constructed\. When Kuwait Fund financing ceased, implementation of the Barquqah scheme was halted, and available funding from IDA and the Netherlands government were redeployed for implementation of the downstream scheme alone at the Waqir site\. The diversion capacity was modified to fit the revised design agreed by TDA and the cofmanciers in early 1990 in which emphasis was shifted from constructing a diversion structure upstream (Al-Barquqa) to downstream at Waqir\. Implementation of the Waqir scheme was further delayed by unsuitable foundation materials (i\.e\., soils) encountered at the weir site which required changes in design and additional works (para\. 1\.15)\. 1\.24 In addition to these cofinancing and implementation delays in the irrigation component, project implementation was affected by delays in processing procurement, awarding contracts, and settling payments to contractors, which took time to resolve\. For instance, resolution of payment terms for the international contractor for the Waqir scheme required extension of project closing date to allow for completion of the remaining works\. E\. Project Sustainability 1\.25 Sustainability of investments and benefits made under the project is largely subject to timely availability of adequate financial resources\. At present, TDA does not receive or collect adequate funds to sustain its operations\. This makes sustainability therefore uncertain\. 1\.26 On the institutional front, TDA is relatively well-managed and, despite a few weak areas and some overstaffing, it is one of the most competent regional authorities in agriculture in Yemen\. For this reputation to last, TDA would need to retain competent staff and have access, as mentioned above, to adequate recurrent funding\. It also needs to strengthen its staffing in monitoring and evaluation to reduce its current dependence on expatriate staff\.  Tihama V Regional Agricultural Development Project 10 1\.27 On the resource front, project sustainability depends not on continued external assistance and budgetary support from the Government but on TDA's ability to institute sound cost recovery measures and develop alternative sources of financing\. In the short term, TDA could survive from three significant sources of foreign assistance: (i) IFAD is due to finance a Natural Resource Management Project; (ii) the EEC has signed an agreement to finance the Barquqa irrigation system, thus ensuring completion of the outstanding component of Tihama V, postponed due to withdrawal of Kuwaiti funding; and (iii) IDA's Land and Water Conservation Project has a large component for Tihama\. Government support is also critical in the short-term, even though government local budgetary subvention to TDA has often been short, held at the 1992 levels (YR 104 million in FY95), despite the fact that TDA's investments in infrastructure and agriculture have expanded considerably over the years\. 1\.28 In the long term, however, sustainability of investments would require instituting measures for recovery of cost for services provided and using collections to maintain or provide better services\. On this score, TDA has implemented measures to recover O&M for water services from its completed irrigation infrastructure in Wadi Zabid and is planning on widening coverage to other Wadis, but the revenues generated from this, although only about 5-9 percent of actual O&M costs, is not retained by TDA but forwarded to the Central Government budget\. According to a recently completed cost recovery study by the TDA, the average irrigation fees collected is about 5 percent of potential collections, suggesting that more can be collected given the profitability of farming in this area\. Future sustainability of these irrigation infrastructure, especially under the expectation of a more constrained government budget in the future, would depend on: (a) persuading Government to allow the TDA to retain revenues collected from services it provides (this should be put in the agenda of IDA's country dialogue with the Govermnent and should address the same problem for other RDAs); (b) raising awareness among beneficiaries by linking service benefits to charges; this would require improving methods of assessing charges either away from the current zakat (religious) system which relies on the farmer's declaration to a system based on charges by crop and area, or introducing improvements to the zakat system through a system of independent checks ( e\.g\., of crops grown); and (c) raising service charges and improving revenue collection methods by making them transparent so that farmers know what they pay for\. There is also clearly a need for TDA to take a hard look at commercializing some of its services (e\.g\., equipment rentals, veterinary services) to recover costs\. F\. Bank Performance 1\.29 IDA's performance in the project has been overall satisfactory\. IDA carried out regular supervision missions throughout the project, and a comprehensive mid-term review between January 7-23, 1993\. Despite delays mentioned above in project start-up and implementation, IDA remained flexible but realistic, providing the needed leverage to ensure that TDA and the contractors adhered tightly to the agreed project work schedule\. IDA's flexibility is demonstrated in the fact that the project was extended three times (December  11 Tihama V Regional Agricultural Development Project 31, 1993, December 31, 1994, and September 30, 1995) to allow for completion of major works on which depended the major development objectives of the project\. IDA management has agreed, on an exceptional basis, to continue implementation of the irrigation Component to April 30, 1996 to ensure completion of works\. When Kuwaiti financing ceased, IDA acted quickly to resolve the void in financing by agreeing to a re-deployment of resources; this was supported by the very positive cooperation of the Netherlands Government, which helped keep on course construction of one of the key irrigation schemes and the rural roads components\. 1\.30 IDA's shortcoming has been with "quality at entry\." Some of the agricultural data aspects of the appraisal report appear to be off the mark\. The yields presented in the appraisal report were unrealistic, and were based on research results and not actual field conditions\. IDA also had ambitious expectations under the project with respect to full cost recovery of capital and O&M costs in real terms through a surcharge of 2 percent on the gross value of production recoverable with the zakat\. Under present Yemeni conditions, even full recovery of only O&M costs would be a remarkable achievement\. IDA, at appraisal, should therefore have worked out a more practical program with Government, taking into account past experiences with agriculture projects in the country, in order to achieve realistic cost recovery objectives\. However, a cost recovery study was initiated inder the project, which came up with useful recommendations which should be discussed and implemented by government through TDA\. G\. Borrower Performance 1\.31 In general, borrower performance has been partially satisfactory\. However, the role of the central Government needs to be distinguished from that of the project authority\. TDA niad to implement the project in an environment of considerable delays due to circumstances beyond its control\. Owing to this, the Credit which was to originally close in December 31, 1993 was extended to the closing date of December 31, 1995\. Compliance with the legal covenants have been satisfactory but, in some cases, only after some delay\. The management of the project has benefitted from substantial expatriate assistance; however, the project did make progress on the objective of gradually phasing out expatriate experts and replacing them with nationals\. A competent cadre of Yemeni staff have been trained and progressively added to TDA's staff\. Local budgetary shortages have been a problem in terms of Government performance\. Due to the difficult economic situation facing the country, the local budget in subsequent years was set at the 1992 level regardless of TDA's program and the purchasing power of the Yemeni Riyal\. TDA faced serious cash flow problems as a result, which adversely affected its program implementation\. Distortions in the exchange rate also caused problems, particularly in the context of the international contractor's local currency component of payments, which hindered completion of the Waqir irrigation works in a timely manner\.  Tihama V Regional Agricultural Development Project 12 H\. Assessment of Outcome 1\.32 The outcome of the project has been satisfactory\. All thirteen covenants have been complied with, of which five experienced delayed compliance\. The project benefitted more than 38,110 farm families over 94,450 hectares\. Aside from data limitations and the over- optimistic character of appraisal yields (which were based on research and not field data, and therefore made them unsuitable as a comparator for measure of project achievement, the project economic reevaluation was carried out\. The recalculated ERR for the project based on actual field data since project start-up is 20\.6%\. This ERR compares favorably with the rate anticipated at appraisal (i\.e\., 21 %) and confirms the viability of the project\. It should be highlighted, though, that although appraisal yields for "with and without project cases" were on the high side, the incremental yields were of the same order of magnitude as that used in the ICR analysis\. Sensitivity tests of the ERR to variations in benefit, cost, and delay parameters show it to be quite robust\. Switching value analysis shows that it would take benefits to decrease by 29% or costs to increase by 42% for the ERR to fall below 12%, the opportunity cost of capital\. Details of calculations of the ERR, sensitivity and switching value analyses are in Annex B\. 1\. Key Lessons Learned 1\.33 The major lessons learned from the project's implementation are listed below\. (a) Using realistic data at appraisal facilitates the tracking and evaluation of project achievement\. Therefore, emphasis is needed on "quality at entry\." Under Tihama V, the overestimate of agricultural yields based on research data at appraisal made it unreasonable to use it as a comparator for measure of actual project achievement (para\. 1\.30)\. (b) Flexibility to reallocate resources is necessary to ensure the effective achievement of project goals when a major and dependable cofinancier (e\.g\., Kuwait Fund) discontinues funding due to unanticipated circumstances, such as the Gulf Crisis (para\. 1\.14)\. (c) Extension cannot function effectively without a responsive research authority\. If research lacks the staffing, operating budget, and the superior competence to produce suitable technical packages, then its input into extension is likely to be limited\. The experience of TDA's extension services with the research authority, AREA, under Tihama V corroborates this, and suggests that, despite the admirable efforts of its extension services, extension work has been hampered by lack of relevant technologies from research (para\. 1\.8)\. (d) The design of a cost recovery system should be based on a realistic appraisal of what works and can be achieved given local circumstances\. The full cost  13 Tihama V Regional Agricultural Development Project recovery of capital and O&M under the project was ambitious\. The operative cost recovery system, which is linked to the zakat religious tax, has been ineffective because of the tendency by farmers to understate the value of their output and the resulting zakat tax, without any independent verification of their declaration and without penalties\. In short, cost recovery objectives should therefore be more modest, kept initially to a recovery of O&M costs in real terms, and should use more objective and transparent criteria for assessing charges, such as size of cropped area and types of crops grown (para\. 1\.28, para 1\.30)\. (e) Inadequate counterpart funds have been a major limitation to project implementation\. This suggests that new projects should be undertaken only after a careful review of their incremental demands on the government budget (para\. 1\.31)\. (f) Despite TDA's institutional competence, sustainability of project benefits is likely only if TDA pushes for greater cost recovery, commercializes some of its services, and reduces its dependence on government and external support (para\. 1\.25)\.  Tihama V Regional Agricultural Development Project 14 REPUBLIC OF YEMEN TIHAMA V AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) IMPLEMENTATION COMPLETION REPORT PART II: STATISTICAL TABLES Table 1\. Sulmmary of Assessments A\. Achievements of Obiectives Substantial Partial Negligible Not Applicable Macroeconomic policies DD W 5 [ Sector policies DDW D Fvl F-I Financial Objectives D DWD Institutional Development WDD I Physical objectives WD D Poverty reduction WD D F2 Gender concerns DWD D F Other social objectives D WD1 D Environment objectives DD D3 Cl Public sector management [g g Private Sector development I L Z Z W Other (specify) DD D F E  15 Tihama V Regional Agricultural Development Project Table 1 (continued)\. Summary of Assessments B\. Project Sustainability Likely Unlikely Uncertain D:u n [z Highly C\. IDA Performance Satisfactory Satisfactory Deficient Identification DWD Preparation assistance DL Appraisal CC1 Supervision D C ] Highly C\. Borrower Performance Satisfactory Satisfactory Deficient Preparation DD W Implementation W Dl C Covenant compliance D PI F Operation (if applicable) DDD Highly Highly E\. Assessment of Outcome Satisfactory \. Satisfactory Unsatisfactory Unsatisfactory DwDF-lF F]  Tihama V Regional Agricultural Development Project 16 Table 2\. Related Bank Loans/Credits Loan/Credit Title Purpose Year of Status Approval Tihama Development Project I To provide irrigation and infrastructure 1973 Closed (Cr\. 376-YAR) improvements, agricultural services, extension and credit for agricultural development of 17,000 ha in Wadi Zabid\. Wadi Hadramawt Agricultural To build up infrastructure and 1976 Closed Development Project (WHADP) I institutions, carry out pilot (Cr\. 615-YDR) developments in area of the follow-up WHADP II\. Tihama Agricultural Development To provide irrigation, village water 1978 Closed Project II supplies, extension, sand dune (Cr\. 805-YAR) stabilization, infrastructure and development of state farms for agricultural development in Wadi Rima\. Tihama Agricultural Development To increase agricultural production in 1979 Closed Project HI Wadi Mawr by effectively using spate (Cr\. 880-YAR) flows and helping recharge the aquifer; strengthening agricultural support services (research, extension credit), building feeder roads, and providing potable water to rural poor\. Tihania Development Project IV To support the Second Agricultural 1980 Closed (Cr\. 978-YAR) Development in Wadi Rima through provision of surface irrigation in the form of permanent diversion structures Wadi Hadramawt Agricultural To increase agricultural production, 1983 Closed Development Project II raise farmer incomes, correct falling (Cr\. 1346-YDR) water table via use of deep-lying aquifers, provide farm machinery and technical assistance\. Central Highlands Agricultural To improve farm incomes through 1984 Closed Development Project production and productivity increases, (Cr\. 1453-YAR) provide potable water\. Agricultural Research and To strengthen agricultural research and 1985 Closed Extension Project extension capacity in Central Highlands, (Cr\. 1557-YDR) Tropical Lowlands, Southern Uplands regions\.  17 Tihama V Regional Agricultural Development Project Loan/Credit Title Purpose Year of Status Approval Southern Regional Agricultural To increase agricultural productivity 1987 Ongoing Development Project and farmer income in Southern Region (Cr\. 1772-YAR) through strengthening agricultural services in extension, credit and input supplies, assist O&M of project infrastructure and water, raise technical capability of staff, provide assistance to women farmers\. Northern Regional Agricultural To improve agricultural productivity 1988 Ongoing Development Project through: (i) improved agricultural (Cr\. 1886-YAR) services, (ii) better land management, (iii) improved irrigation and agricultural practices and improved health\ nutrition, establish regional extension and O&M to ensure sustainability\. Eastern Region Agricultural To provide extension and research 1989 Ongoing Development Project services, irrigation management, (Cr\. 1983-YAR) institution building to improve agricultural productivity and farmer incomes in Marib Governorate, particularly area around Marib Dam\. Wadi Hadramawt Agricultural To follow up on WHADP II with 1989 Ongoing Development Project III intention of expanding irrigated area\. (Cr\. 2045-YDR) Agricultural Sector Management To create within MAWR the 1992 Ongoing Support Project management basis for modern (Cr\. 2299-YEM) agricultural sector, and to strengthen agricultural research\. Also to improve general operations of MAWR\. Land and Water Conservation To begin a national program to gain 1992 Ongoing Project control over land and water resources (Cr\. 2373-YEM)  Tihama V Regional Agricultural Development Project 18 Table 3\. Project Timetable Item Date Planned Date Revised Actual Date - Identification December 1981 June 1984 - Preparation April 1985 - Appraisal April-May 1985 - Board Approval January 14, 1986 N\.A\. March 20, 1986 - Credit Signature N\.A\. May 9, 1986 - Credit Effectiveness September 9, 1986 December 9, 1986 December 7, 1987 - Completion _ - Closing December 31, 1993 September 30, 1995 December 31, 1995  19 Tihama V Regional Agricultural Development Project Table 4\. IDA Credit Disbursements: Cumulative Estimated and Actual (US$ million equivalent) 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Appraisal 0\.2 0\.7 1\.9 4\.9 8\.4 9\.5 10\.0 - - - Estimate Actual 0\.0 1\.24 1\.39 1\.47 1\.57 2\.28 2\.81 5\.29 11\.57* Actual as % of Estimate ** 0 177 73 30 19 24 28 53 116% Date of Final Disbursement Comments: * Disbursement as of December 31, 1995\. ** Percentages are rounded\.  Tihama V Regional Agricultural Development Project 20 Table 5 (A)\. Key Indicators for Project Implementation December 1995 Appraisal Targets Actual Achievement Item Unit At Completion, June 1993 December 1995 Agricultural Extension Farm Families No\. 44,100 38,110 Area ha 105,350 94,450 Agents No\. 150 124 Sand Dunes Stabilization ha 750 705 Women Extension Agents No\. 38 58 Expat\. Specialist (Subregional) No\. 13 8 Headquarters No\. 12 10 Technician SM 144 75 Agricultural Yields Sorghum Tons/ha 2\.6-3\.0 1\.0-1\.6' Vegetable Tons/ha 12\.0-14\.0 11-11\.1 Fruit Tons/ha 28\.0-30\.0 18 Staffing Consultants Staff Years 10\.5 7\.8 Expat\. Experts\. Staff Years 103 94 Local Staff No\. 478 1,0622 Irrigation Works 2! Diversion Structures No\. 2 1 (Waqir) Canals km 924' 23 (Waqir) Feeder Roads km 62\.4 48\.3 Overseas Training SM 108 477 I/ Data as obtained at project closing\. 2/ This doubling in the number of staff is not necessarily a positive achievement but an indicator of growth in TDA's recurrent budgetary requirements\. 3/ Works on Irrigation Schemes in Waqir commenced in February 1993, while that for Barquqa, Grant Agreement signed between EEC and Govemment in March 1995 and works based parallel component expected to be completed by end of 1998\. 4/ This included for both Barquqa and Waqir Irrigation Systems, total of 28\.5 km\. (Main), 19 kan\. (Secondaries), and 49 km\. (Tertiary)\. The Tertiaries will be implemented by beneficiaries while the Main and Secondaries from Waqir (IDA/Netherlands-financed) was 24 km\. reduced to 20 km\. due to a more efficient design\. The Barquqa works are being financed by EEC (parallel financing) which has replaced the Kuwait Fund financing\.  21 Tihama V Regional Agricultural Development Project Table 5 (B)\. Planned and Actual Recruitment of Technical Assistance SAR Actual No\. Staff-Years No\. Staff-Years (A) Engineering Consultants Chief Design Engineer 1 1\.5 Chief Construction Engineer 1 2\.5 2 5\.0 Design Engineer 1 4\.0 1 1\.7 Field Engineer 1 2\.5 (B) TDA H\.O\. Support Project Engineer 1 4\.0 1 6\.8 M&E Consultant 1 2\.0 1 3\.9 Design Engineer 2 7\.0 1 3\.8 Field Engineer 1 3\.0 1 2\.0 Hydrogeologist 1 4\.0 1 3\.3 Extension Planning 1 3\.0 1 3\.4 Irrigation Agronomist 1 3\.0 1 2\.0 Plant Protection Specialist 1 2\.0 0 0\.0 Field Crop Specialist 1 2\.0 0 0\.0 Horticulturist 1 3\.0 1 3\.4 Mechanization Specialist 1 3\.0 0 0\.0 Livestock Specialist 1 2\.0 1 2\.0 Communication Specialist 1 2\.0 1 0\.1 Veterinary Diagnostician 1 2\.0 0 0\.0 Home Econ/Nutritionist 1 3\.0 1 5\.9 Sand Dune Expert 1 2\.0 1 5\.8 Chief O&M Advisor 1 3\.5 2 4\.0 SUB-TOTAL 61\.0  Tihama V Regional Agricultural Development Project 22 SAR Actual No\. Staff-Years No\. Staff-Years (C) Sub-Regional Extension Services Extension Planning & Training Specialist 1 3\.0 0 0\.0 Irrigation Agronomist 3 6\.0 0 0\.0 Horticulturist 1 3\.0 1 1\.3 Plant Protection Specialist 2 4\.0 1 2\.4 Home Econ/Nutritionist 3 9\.0 1 3\.0 Field Crop Specialist 1 2\.0 1 2\.0 Mechanization Specialist 1 3\.0 0 0\.0 Veterinarian 1 3\.0 1 2\.0 SUB-TOTAL 33\.0 (D) Operation & Maintenance Senior O&M Advisor 2 6\.0 1 2\.0 Senior Mechanical Advisor 1 3\.0 1 6\.4 SUB-TOTAL 9\.0 Other Not Specified in SAR Financial Expert - - 3\.5 Range Management Specialist - - 4\.8 Pest Control Specialist - - 3\.0 Agric\. Ext\. Specialist (North) - - 3\.5 Agric\. Ext\. Specialist (Central) - - 3\.0 Hydrologist - - 1 3\.6 SUB-TOTAL GRAND TOTAL 103\.0 93\.6  23 Tihama V Regional Agricultural Development Project Table 5 (C)\. Foreign and Local Training Program (1988-95) SAR Target Foreign Training Expertise Number Staff Years Period Agriculture Irrigation Agronomy 1 2 10/86-9/88 Horticulture 1 2 10/86-9/88 Field Crops 1 2 10/87-9/89 Mechanization 1 2 10/87-9/89 Study Tours 6-8 1 10/87-9/90 Engineering Water Resources 3 4\.5 1/89-6/90 Construction Management 2 1\.2 1/88-12/89 O&M 2 1\.0 1/90-12/90 Actual Achievement 1' Foreign Traininz Local Training Department SM2' No\. of Trainees SM No\. of Trainees TDA Management 8\.25 6 5 Agricultural Affairs 313\.25 92 47 Engineering & Irrigation 69\.25 50 12 Demonstration & Finance 65\.5 41 20 Monitoring & Evaluation 20\.75 14 8 TOTAL 477\.0 203 224 92 Note: Training covered all disciplines\. " Actual training did not necessarily correspond with SAR targets because of modifications during implementation to suit actual project needs\. 2/ SM = Staff months\.  Tihama V Regional Agricultural Development Project 24 Table 6\. Project Costs and Financing A\. Project Cost (US$ million) Appraisal Estimate Estimated Actual Local Foreign Total Local Foreign Total TDA Headquarters Support 0\.2 1\.9 2\.1 0\.22 1\.98 2\.2 Establishment of Regional Services Extension 1\.3 5\.1 6\.4 0\.22 4\.22 4\.44 For Veterinary 0\.1 0\.3 0\.4 O&M 0\.2 1\.5 1\.7 0\.23 3\.4 3\.63 Irrigation Development 3\.5 7\.0 10\.5 2\.34 7\.03 9\.37 Feeder Roads 1\.2 1\.8 3\.0 1\.18 3\.55 4\.73 Incremental Operating Costs 6\.2 3\.1 9\.3 5\.25 5\.25 Total Base Line Costs 12\.7 20\.6 33\.3 9\.44 20\.18 29\.62 Physical Contingencies 1\.1 2\.2 3\.3 Price Contingencies 4\.4 6\.0 10\.4 = Total Project Cost 18\.2 28\.8 47\.0 9\.44 20\.18 29\.62* * The Barquqah irrigation scheme was postponed for future EEC funding and explains some of the departure of actual total costs from the appraisal estimates\.  25 Tihama V Regional Agricultural Development Project Table 6\. Project Costs and Financing B\. Project Financing (US$ million) _ Sources of Finance I Revised Estimatedl Original Credit/Loan Credit/Loan Actual Agreement Agreement Financing IDA Credit 10\.0 11\.57 11\.57 KFAED Credit* 15\.0 0\.5 0\.5 Netherlands Grant 9\.4 12\.68 12\.68 Government of Yemen 12\.6 5\.25 5\.25 TOTAL 47\.0 30\.00 30\.00 Comments: *Following Gulf War, KFAED financing was discontinued with only about US$0\.5 million disbursed and the Barquqah irrigation scheme was postponed for future funding\.  Tihama V Regional Agricultural Development Project 26 Table 7\. Projects Results A\. Direct Benefits Appraisal Estimate Estimate at Closing Date Beneficiaries (farm families) 44,100 38,110 B\. Economic Impacts [1 I Appraisal Estimate ICR Estimate 1 Economic Rate of Return 21% 20\.6% C\. Studies Study Purpose Status Impact of Study 1\. Pastoralists and Rangelands (i) assess present range Completed Indicator for planning on in Tihama - 4 parts: condition from pastoralists range management Southern, Central, viewpoint improvement Northern and the whole of (ii) assess responsiveness of Tihama pastoralists to participation in improved range management practices (iii) assess herd size, type of animals, and ownership 2\. Land Cover Change in Tihama (i) assess change which took Completed Enable possible planning of for the Period 1973-1990 place in land use during future management of natural 1973 (base year)-1990 resources and implementation (ii) depict change in percentage in of environmental protection different land categories measures\. (iii) draw updated maps for different land forms and use patterns 3\. Vegetation Classification Register all natural vegetation and Completed - Gain insight on botanical for Tihama - Establishment record it by family, genus and species diversity of Tihama to enable of a Herbarium in TDA future planning of plant H\.Q\. resources of area and to enable environmental protection - a herbarium was established as a result of study, including vegetation samples\. 4\. Evaluation of Cost Analyze and document cost recovery Completed Basis for improvement of cost Recovery Experiences in experience in Tihama projects recovery in Tihama projects Tihama  27 Tihama V Regional Agricultural Development Project Table 8\. Status of Legal Covenants Section Description of Covenant Original Revised Status Comments Date Date Article II Preparation of Local and Foreign 6/30/87 C Section 3\.04 Training Program (13) Section 3\.05 Reorganization of M&E Unit (3) 6/30/87 C Section 3\.06 Mid-Term Review Report to IDA (16) 6/30/90 06/30/92 CD Late Submission Section 3\.06 Mid-Term Review (16) 12/31/89 12/30/92 C Section 3\.07 (a-d) Coordination of Activities and 7/1/87 CP CACB constrained provision of additional resources to by limited source meet incremental credit needs (16) availability and rigid procedures\. Article IV Section Audit Report (1) 9 months CD Latest received for 4\.01 (b) after end FY93\. of each FY Section 4\.02 Cost Recovery Measures (11) Comple- CD Irrigation works not (a-b) tion of completed; study on Irrigation cost recovery Works completed; implementation under way Sech\. 4, Sect\. 1(b) Progress Report (16) Jan-June CD Mid-Term Review 30, 1991 Report issued Dec\. 1992\. Sect\. II, l(a) Estab\. of Central Extension Division 1/1/87 C (13) Sect\. II,1(b) Estab\. of Sub-Regional Office (13) 7/1/87 C Sect\. II, 3(a) Appt\. of Home Econ\. and Nutrition 7/1/87 C Specialist (23) Sect\.Il; 3(b) Female Extension Staff Increase (23) 6/30/89 C Sect\. III, 2 Enforcement of O&M Regulation (13) 12/31/90 C Status Covenant Tvyes C = Covenant complied with (1) = Accounts and Audit CP = Complied with partially (4) = Cost Recovery/Pricing CD = Complied with after delay (11) = Financial (13) = Institutional (16) = Project Implementation Arrangements (23) = Studies/Technical Assistance  Tihama V Regional Agricultural Development Project 28 Table 9\. Use of Bank Resources A\. Staff Inputs (Staff Weeks) Stage of Project Cycle Planned Revised Actual Comments Through Appraisal N\.A\. - 53\.2 Appraisal through Board Approval N\.A\. - 6\.7 Board Approval through Effectiveness N\.A\. - N\.A\. Supervision FY1987 13 - 4\.1 Supervision FY1988 15 - 8\.7 Supervision FY1989 19 - 16\.4 Supervision FY1990 15 - 28\.5 Supervision FY1991 14 - 10\.4 Supervision FY1992 17 - 12\.1 Supervision FY1993 16 - 19\.0 Supervision FY1994 11 - 6\.6 Supervision FY1995 11 - 12\.2 Supervision FY1996 0\.4 Project Completion FY1996 13 - 10\.6 Sub-total from 144 - 188\.9 GRAND TOTAL N\.A\. - N\.A\.  Table 10\. Use of Bank Resources B\. Missions Month/Year No\. of Days in Specialization Performance Types of Comments Persons Field Represented Rating Problems Through Appraisal Appraisal through Board Presentation Board Approval through Effectiveness Supervision 1 1987 Supervision 2 1988 Supervision 3 July 1989 4 3\.2 IE, AgE, Ag 2 Supervision 4 Feb\. 1990 2 5\.8 IE, Ag\. 2 Supervision 5 July 1990 5 15\.6 IE, Ag, WID, 2 IA l_______ SO, M&E Q\. Supervision 6 Oct\. 1990 1 0\.4 IE 2 IA e Supervision 7 April 1991 2 1\.9 IE 2 P, F Supervision 8 Dec\. 1991 1\.4 IE, Ag\. 2 P, F Supervision 9 June 1992 2 5\.0 IE, Ag\. 2 P, F, IA Supervision 10 July 1993 2 IE, Ag\. 2 F, IA Supervision 11 Jan\. 1994 2 2\.7 IE, Ag\. 2 IA Supervision 12 May 1995 1 4\.1 IE, Ag\. 2 IA Supervision 13 _ Supervision 14 Problem Types: P = Political, M = Managerial, F = Financial, IA = Implementation Arrangements Performance Ratin,g: 1 = Problem free, 2 = Minor problems, 3 =- Major problems Specialists Represented on Mission: IE = Irrigation Engineer, Ag\. = Agriculturist, Ag\.E = Agricultural Economist, Ec = Economist, So = Sociologist, WID = WID Specialist, M&E = Monitoring and Evaluation Expert  Tihama V Regional Agricultural Development Project 30 ANNEX A Page 1 of 2 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) AIDE MEMOIRE* Introduction 1\. A World Bank (IDA) mission comprising Tijan M\. Sallah (ICR team leader) and Nejdet Al-Salihi (Senior Irrigation Engineer) together with Mr\. Hubert Stoetzer (Agriculturalist), representing the Netherlands Government, visited Yemen between November 14 to 21, 1995 to review both implementation progress of the Tihama V project and to fialize data and review of implementation experience to complete the Implementation Completion Report (ICR)\. The mission held detailed discussions with project staff, carried out field visits to sites of major works, and interviewed farmers about their experiences under the project\. The mission would like to express its appreciation to Mr\. Ibrahim Al-Doumi, Chairman of the Tihama Development Authority (TDA) and his staff, including especially the assistance of his expatriate adviser, Dr\. Hassan Damous, of the Monitoring Unit in facilitating the mission's work\. mnpIementation ExDerience 2\. Apart from considerable delays in implementation of project activities, the project succeeded in achieving most of its physical objectives\. The Waqir Irrigation scheme has been completed (covering 4,200 ha) and the Barquqah scheme postponed (after Kuwait Fund pulled out due to Gulf war) for future funding\. It is now being funded by the EEC for completion in 1997\. It is now being implemented funded by the EU\. 48\.3 km of feeder roads have been constructed at a higher standard than projected at appraisal\. Flood protection dykes (Wasit and Bahluli) are being constructed to protect farmers in Wasit and Marawa (Wadi Siham)\. Extension activities have been strengthened and have reached 38,110 farmers on 94,450 ha, and women have benefitted from these activities\. 705 hectares have been planted with trees to stabilize sanddunes\. Virtually all of the project's covenants have been complied with, and Borrower and Bank performance, except for disruptions due to the Gulf war, civil conflict, and other similar shocks, have been satisfactory\. Although, TDA's Monitoring and Evaluation Unit has improved; it still needs further strengthening as its  31 Tihama V Regional Agricultural Development Project ANNEX A Page 2 of 2 statistical collection, record keeping, and data analysis capacities are still not up to standard\. TDA has suffered also from inadequate counterpart funds to carry out its activities\. In the future, it needs to push for greater cost recovery from the wide ranging services it provides and have the mandate to retain its revenues\. This is key to its future viability and sustainability\. *This brief Aide Memoire is extracted from the combined ICR and supervision mission Aide Memoire of November 1995, carried out by IDA with Netherlands Government participation and discussed with the TDA, and subsequently shared with the Government in a briefing to the Minister of Agriculture and the Ministry of Planning\. Because that Aide-Memoire was lengthy and contained issues already discussed in this ICR, reproducing it here again in full was considered needless duplication\.  Tihama V Regional Agricultural Development Project 32 ANNEX B Page 1 of 3 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1667-YAR) ECONOMIC ANALYSIS 1\. The main assumptions underlying the SAR estimate of the Economic Rate of Return (ERR) were: (a) Investment and recurrent costs of the Wadi Siham irrigation infrastructure were based on unit rates derived from similar irrigation works in Yemen Arab Republic\. (b) All values were expressed in units of the local currency at the official rate at appraisal-- YRIs 6\.5 = US$1\. (c) Crop yields were estimated on the basis of available data from field experience in similar ongoing irrigation schemes in the Tihama region\. (d) Incremental production was phased on the basis of anticipated rate of acceptance of the new technical package by project area farmers and buildup of development on each farm resulting from additional surface water\. (e) The economic life of the project was 30 years\. 2\. The ICR reevaluation of the ERR of the Tihama project is carried out with substantial limitation of data\. First, assumption (c) above is found not to be valid\. The baseline yield data in the appraisal report (SAR) were based on research and not field experience, and were therefore overly optimistic\. Second, the data collected by the Tihama Monitoring and Evaluation Unit (M&E) from actual field surveys since project start-up are not fully adequate\.  33 Tihama V Regional Agricultural Development Project ANNEX B Page 2 of 3 Against this background, considerable judgement had to be exercised in recalculating the ERR and coming up with an indicative measure of the project's incremental benefits\. 3\. The SAR identified project benefits to come from: (i) strengthening and expansion of extension services, and (ii) improvement in water availability for irrigation\. 4\. The following assumptions and parameters underlie the ERR recalculation for the ICR: (a) Out of a total of 38,110 farm families (94,450 hectares) or 86 % of SAR target actually reached by extension, 6,645 hectares are assumed to adopt improved technological packages\. (b) 4,200 hectares are assumed to benefit from the additional surface water resulting from the Waqir irrigation works\. (c) As per the SAR, four different farm models are assumed, representing the four main types of farming systems in the project area\. These include: pump irrigated farm (average farm size of 10\.5 ha); pump and spate irrigated farm (6\.0 ha); regular spate irrigated farm (3\.0 ha); and irregular spate irrigated farm (6\.0 ha)\. Benefits are based on per hectare buildup to full development per farm model\. (d) Crop yields are based on actual field data provided in crop budgets by the project authority\. The yields presented for the "with" project case are the full development yields, and yields are assumed to increase linearly over a ten-year period to the full development yields shown in Table 2 of 11\. Five years are assumed for the build-up to full development for the benefits from the Waqir scheme by capitalizing on the benefits of "learning\." (e) Crop yields without the project are assumed to be constant, which is a conservative assumption given that yields were expected to decline in the absence of flood protection works provided by the project\. (f) In the absence of data on cropping pattern changes, the existing cropping pattern provided by the project authority is taken as reflecting the "with" and "without" project situations\. (g) All values are converted to US$ at the 1995 market exchange rate of Yemeni Rials (YR) 120 = US$1\.  Tihama V Regional Agricultural Development Project 34 ANNEX B Page 3 of 3 (h) Investment and recurrent costs are derived from disbursement data kept by the project authority but adjusted to 1995 constant dollars\. (i) An economic life of 30 years is assumed for the project\. 5\. Costs\. Incremental on-farm costs (investment and recurrent) with the project are taken into account in calculating net-incremental benefit per farm model\. 0 & M costs are duly accounted for in the costs, and are expected to slightly increase in subsequent years after the completion of the irrigation works in 1995\. 6\. Prices\. For the internationally traded goods (cereals, cotton, tobacco, fertilizer), economic farmgate prices were derived from the World Bank commodity price projections (Commodity Markets and the Developing Countries-- A World Bank Quarterly) of February 1996, expressed in 1990 constant dollars but adjusted for our purposes to 1995 constant dollars\. For non-traded goods (millet, forages, labor, draft power, etc\.), economic prices were derived by applying the standard conversion factor (SCF) estimated at 0\.85 to the 1995 domestic prices\. 7\. Results\. On the basis of the foregoing assumptions and parameters, the benefits- buildup was done on a hectarage basis, and, after factoring out costs, the net incremental benefit stream for the 30 year lifecycle of the project was derived\. The economic rate of return is calculated at about 20\.6%\. This ERR compares favorably with the rate anticipated at appraisal (which was 21 %) and confirms the viability of the project\. Sensitivity tests of the ERR to variations in benefits, costs, and delays in implementations show it to be quite robust\. The results of the switching value analysis show that it would take benefits to decrease by 29% or costs to increase by 42% for the ERR to fall below the opportunity cost of capital, which is 12%\.  FARM MODELS\. NUMBER OF FARMS AND AREA DEVELOPED ', WADI SIHAM Farm Size Farms Total Area FARM MODEL (Ha\.) (No\.) (Ha\.) 1\. Pump Irrigated Farm 10\.5 240 2520 Adoption of Improved Packages: 6645 Ha\. 2\. Pump and Spate Irrigated 6 310 1860 Irrigation Infrastructure (Reg\. Spate): 4200 Ha\. 3\. Regular Spate Irrigated 3 225 675 4\. Irregular Spate Irrigated 6 265 1590 TOTAL 1040 6645 CROPPING PATTERN 1\. Pump Irrigated Farm 2\. Pump & Spate Irrigabon 3\. Regular Spate Irrig\. 4\. Irregular Spate Irrigaton Share of Area Ha\. Share of Area Ha\. Share of Area Ha\. Share of Area Ha\. Sorghum G 0\.18 1\.89 0\.14 0\.84 0\.65 1\.95 0\.3 1\.8 Maize 0 0 0\.05 0\.3 0\.15 0\.45 0\.07 0\.42 Millet 0\.11 1\.155 0\.03 0\.18 0\.02 0\.06 0\.19 1\.14 Forages 0\.2 2\.1 0\.26 1\.56 0\.11 0\.33 0\.35 2\.1 c Cotton 0\.03 0\.315 0\.11 0\.66 0\.01 0\.03 0\.07 0\.42 Tobacco 0\.08 0\.84 0 0 0 0 0 0 Sesame 0\.03 0\.315 0\.03 0\.18 0\.08 0\.24 0\.03 0\.18 Vegetables 0\.32 3\.36 0\.11 0\.66 0 0 0 0 Fruits 0\.04 0\.42 0\.1 0\.6 0\.01 0\.03 0 0 Other _ Model Farm Size 10\.395 4\.98 3\.09 6\.06 (D H 0 Ht  YIELDS Model 1 (tons) Model 2 (tons) Model 3 (tons) Model 4 (tons) WO W ICR W/O W ICR W/O W ICR W/O W ICR Sorghum G 0\.9 1 0\.1 0\.9 1\.6 0\.7 0\.9 1\.1 0\.2 0\.9 1\.1 0\.2 Maize 1 1\.4 0\.4 1 2 1 1 1\.5 0\.5 1 1\.5 0\.5 Millet 0\.6 0\.8 0\.2 0\.6 1\.3 0\.7 0\.6 0\.8 0\.2 0\.6 0\.8 0\.2 Forages 14 20 6 14 20 6 14 20 6 14 20 6 Cotton 1 1\.7 0\.7 1 2 1 1 2 1 1 2 1 Tobacco 1\.2 2\.3 1\.1 1\.2 2\.3 1\.1 0 0 0 0 0 0 Sesame 0\.6 0\.7 0\.1 0\.6 1 0\.4 0\.5 0\.6 0\.1 0\.5 0\.6 0\.1 Vegetables 6 11\.1 5\.1 6 11 5 0 0 0 0 0 0 Fruits 10 18 8 10 18 8 10 18 8 10 18 8 Other INCR\. COSTS Year (Yr) W/O W INCR\. Sorghum G 6055 8030 1975 Maize 7555 10084 2529 Millet 6383 7465 1082 Forages 0 Cotton 14189 14238 49 Tobacco 21097 22865 1768 Sesame 8906 9767 861 Vegetables 34584 34584 Fruits 0 NET INCR\. BENEFITS (at Full Development) Model 1 Model 2 Model 3 Model 4 US$ US$ USS USS Sorghum 1\.1225 106\.608 35\.1617 35\.1617 Maize 58\.5417 199\.042 99\.5208 99\.5208 Millet 46\.2333 193\.375 55\.25 55\.25 Forages 425 425 425 425 HD Cotton 1463\.4 2091\.15 2091\.15 2091\.15 Tobacco 2836\.28 2851\.02 0 0 Sesame 28\.2417 141\.667 35\.4167 35\.4167 ° Vegetables 1879\.3 2125 0 0 Fruits 2266\.67 2266\.67 2266\.67 2266\.67 Other  37 Tihama V Regional Agricultural Development Project Table 3 of 9 Exchange Rates, MUV Index and Derived Inflator Year Exchange Rate MUV b' Index Derived Inflator YR per US$ i 1988 11\.00 95\.327 1\.208 1989 13\.00 95\.018 1\.212 1990 16\.18 100\.00 1\.151 1991 25\.98 102\.230 1\.126 1992 38\.05 106\.640 1\.080 1993 53\.79 106\.330 1\.083 1994 101\.68 110\.210 1\.045 1995 129\.73 115\.130 1\.000 a/ Market exchange rates\. b/ World Bank Commodity Price Forecasts, February 1996\.  Tihama V Regional Agricultural Development Project 38 Table 4 of 9 Page 1 DERIVATION OF ECONOMIC PRICES OF INTERNATIONALLY TRADED COMMODITIES A\. AT EXPORT PARITY PRICES US$ per ton Cotton Tobacco Value fob exit port/i 2129\.35 2630\.04 YR per ton Value fob exit port 255522 315604 Port dues and handling 1104 1104 Handling/transport/storage 3000 3000 Value ex-store/market 251418 311500 Processing cost 0 0 Processing ratio 1 1 Transport/handling 480 480 Farmgate price 250938 311020 B\. AT IMPORT PARITY Sorghum Maize TSP - - -- ---US$/ton -- - - - - World price forecast 1/ 118\.553 123\.157 149\.63 Quality adjustment factor 0\.9 0\.9 1 Adjusted fob value 106\.698 110\.841 149\.63 Freight and insurance 50 50 50 cif value at port of entry 156\.698 160\.841 199\.63 --------- YR/ton --------- --------- cif value at port of entry 18803\.7 19301 23955\.6 Port dues and handling 1104 1104 1104 Handling/transport/storage 3000 3000 3000 Value ex-store/market 22907\.7 23405 28059\.6 Processing cost - - - Processing ratio 0\.9 1 1 Transport/handling 480 480 480 Farmgate price 21097 23885 28539\.6 Urea --------- US$/ton World price forecast 1/ 211\.784 Quality adjustment factor 1 Adjusted fob value 211\.784 Freight and insurance 50 cif value at port of entry 261\.784 --------- YR/ton cif value at port of entry 31414\.1 Port dues and handling 1104 Handling/transport/storage 3000  39 Tihama V Regional Agricultural Development Project Table 4 of 9 Page 2 Value ex-store/market 35518\.1 Processing cost - Processing ratio 1 Transport/handling 480 Farmgate price 35998\.1 1/World Bank Commodity Price Projections, February 1996\. Prices converted from 1990 constant to 1995 constant terms, using the MUV index\.  Tihama V Regional Agricultural Development Project 40 Table 5 of 9 Financial and Economic Prices Output Prices Financial Economic Econ\. (US$)* CF -------- YR/ton -------- -------- -------- Cotton 29000 250938 2091\.15 8\.65303 Tobacco 40000 311020 2591\.83 7\.7755 Sorghum 30000 21097 175\.808 0\.70323 Maize 17500 23885 199\.042 1\.36486 Sorghum Straw 10000 8500 70\.8333 0\.85 Wheat Straw 1500 1300 10\.8333 0\.86667 Maize Straw 1500 1300 10\.8333 0\.86667 Pulses 87500 40400 336\.667 0\.46171 Potatoes 40000 34000 283\.333 0\.85 Vegetables 60000 51000 425 0\.85 Citrus 40000 34000 283\.333 0\.85 Input Prices -------- YR/kg -------- Cotton seed 29 25 0\.20833 0\.86207 Tobacco seed 40 31 0\.25833 0\.775 Sorghum seed 30 21 0\.175 0\.7 Maize seed 18 24 0\.2 1\.33333 Pulses seed 88 40 0\.33333 0\.45455 Potato seed 70 70 0\.58333 1 Vegetable seed 800 800 6\.66667 1 Urea 35 36 0\.3 1\.02857 TSP 48 29 0\.24167 0\.60417 Muriate of Potash 30 22 0\.18333 0\.73333 Crop chemicals 1200 1200, 10 1 -------- YR/seedl -------- Citrus seedling 110 110 0\.91667 1 -------- YR/day -------- Labor 400 400 3\.33333 1 -------- YR/hour -------- Tractor hour 500 750 6\.25 1\.5 -------- YR/day -------- Animal draught pe 500 500 4\.16667 1 -------- YR/'OOOm -------- Irrigation water 1000 3000 25 3 *US$1 = 120 YR  Model 1 (Linear Build-Up) Total Hectares: 2520 - USS - YEARS 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998-2022 Phasing 0 0\.2 0\.3 0\.4 0\.5 0\.6 0\.7 0\.8 0\.9 1 CROPS Sorghum 0 101\.833 152\.75 203\.666 254\.583 305\.5 356\.416 407\.333 458\.249 509\.166 Maize 0 0 0 0 0 0 0 0 0 0 Millet 0 2563\.17 3844\.76 5126\.35 6407\.94 7689\.52 8971\.11 10252\.7 11534\.3 12815\.9 Forages 0 42840 64260 85680 107100 128520 149940 171360 192780 214200 Cotton 0 22126\.6 33189\.9 44253\.2 55316\.5 66379\.8 77443\.1 88506\.4 99569\.7 110633 Tobacco 0 114359 171538 228718 285897 343076 400256 457435 514615 571794 Sesame 0 427\.015 640\.522 854\.029 1067\.54 1281\.04 1494\.55 1708\.06 1921\.57 2135\.07 Vegetable 0 303094 454640 606187 757734 909281 1060827 1212374 1363921 1515468 Fruits 0 45696\.1 68544\.1 91392\.1 114240 137088 159936 182784 205632 228480 Total (M1) 0 531207 796811 1062414 1328018 1593621 1859225 2124828 2390432 2656035 Mdet 2 Total Hectares =1860- US$\. Sorghum 0 5552\.14 8328\.22 11104\.3 13880\.4 16656\.4 19432\.5 22208\.6 24984\.7 27760\.7 Maize 0 3702\.18 5553\.27 7404\.36 9255\.45 11106\.5 12957\.6 14808\.7 16659\.8 18510\.9 Mitlet 0 2158\.07 3237\.1 4316\.13 5395\.16 6474\.2 7553\.23 8632\.26 9711\.29 10790\.3 Forages 0 41106 61659 82212 102765 123318 143871 164424 184977 205530 Cotton 0 85569\.9 128355 171140 213925 256710 299495 342279 385064 427849 Tobacco 0 0 0 0 a 0 0 0 0 0 Sesame 0 1581 2371\.51 3162\.01 3952\.51 4743\.01 5533\.51 6324\.01 7114\.52 7905\.02 Vegetable 0 86955 130433 173910 217388 260865 304343 347820 391298 434775 Fruits 0 84320\.1 126480 168640 210800 252960 295120 337280 379441 421601 Total (M2) 0 310944 466417 6218t9 777361 932833 1088305 1243778 1399250 1554722 SJW 'tF3 (D w a 2  YEARS 1987 1988 1989 1990 1991 1992 1993 1994 1996 1996 1997 1998-2022 Model 3 Total Hectares s 675 - USS - Sorghum 0 3085\.439 4628\.16 6170\.88 7713\.6 9256\.32 10799 12341\.8 13884\.5 15427\.2 Maize 0 2015\.296 3022\.94 4030\.59 5038\.24 6045\.89 7053\.54 6061\.18 9068\.83 10076\.5 Ulbt 0 149\.175 223\.763 298\.35 3T2\.938 447\.525 522\.113 696\.7 671\.288 745\.875 Forages 0 6311\.25 9466\.88 12622\.5 15778\.1 18933\.8 22089\.4 25245 284006 31556\.3 ft Cotton 0 2823\.053 4234\.58 5646\.11 7057\.63 8469\.16 988\.68 11292\.2 12703\.7 14115\.3 Tobacco 0 0 0 0 0 0 0 0 0 0 Sesame 0 382\.5004 573\.751 765\.001 956\.251 1147\.5 1338\.75 1530 1721125 1912\.5 Vegetable 0 0 0 0 0 0 0 0 0 0 Fruits 0 3060\.005 4590\.01 6120\.01 7650\.01 9180\.01 10710 12240 137T0 1530 Total (M 3) 0 17826\.72 26740\.1 35853\.4 44568\.8 53480\.2 62393\.5 71306\.9 80220\.2 89133\.6 Model 4 Total Hectares s 1590 - US$ - Sorghum 0 3354\.426 5031\.64 6708\.85 8386\.07 10063\.3 117405 13417\.7 15094 16772\.1 Maize 0 2215\.333 3323 4430\.67 5538\.33 6646 7753\.67 8861\.33 9969 11076\.7 Millet 0 3338\.205 5007\.31 6676\.41 8345\.51 10014\.6 11683\.7 13352\.8 15021\.9 16691 f Forages 0 47302\.5 70953\.8 94605 118256 141908 165659 189210 212861 236513 f Cotton 0 48549 69823\.5 93098 118372 139647 162921 186196 209470 232745 Q Tobacco 0 0 0 0 0 0 0 0 0 0 Sesame 0 337\.5753 506\.813 675\.751 844\.688 1013\.63 1182\.56 1351\.5 1520\.44 1689\.38 Vegetable 0 0 0 0 0 0 0 0 0 0 Fruits 0 0 0 0 _ 0 _ 0 Total (PA 4) 0 103097\.3 154646 206195 257743 309292 36Mi 412389 3938 S15487 TOTAL (M 1+M 2+M 3+M 4) 0 963075\.4 1444613 1926151 2407689 2889226 3370764 3852302 4333839 4815377 4815377 4815377 4815377 4815377 4815377 4815377 4815377 Regular Spate (4200 Ha\.) 55460\.9 110922 221844 332765 443687 554609 554609 GRANDTOTAL INCR\. SEN\. 0 963075\.4 1444613 1926150 2407688 2889226 3370764 3852301 4333839 4815377 4870838 4926299 5037221 5148142 5259064 5369986 5369986 I ~3 Q 01 (D H (D 0 I-h N%  Republic of Yemen Economic Reevaluation of Tihama V Project 1995 US$ Million 1987 1988 1989 1990 1991 1992 1993 1994 1999 1996 1997-98 1999 2000 2001 2002-16 Incremental Benefits- 1\.00 1\.40 1\.90 2\.40 2\.90 3\.40 3\.90 4\.30 4\.80 4\.90 9\.00 5\.10 5\.30 5\.40 Investment Costs- 3\.70 2\.40 2\.20 2\.10 2\.90 4\.90 4\.30 4\.80 2\.90 - - - - - Operation & M4aint\. Costs - 0\.20 0\.20 0\.20 0\.20 0\.20 0\.20 0\.20 0\.20 0\.40 0\.40 0\.40 0\.40 0\.40 0\.40 Total Costs - 3\.90 2\.60 2\.40 2\.30 3\.10 5\.10 4\.50 5\.00 3\.30 0\.40 0\.40 0\.40 0\.40 0\.40 Incremsental Net Benefits - -2\.90 -1\.20 -0\.50 0\.10 -0\.20 -1\.70 -0\.70 -0\.70 1\.50 4\.50 4\.60 4\.70 4\.90 5\.00 3/14/1996 15t31 :33 '-4 N Ft CD f  Switching Values at 12\.0% \.s"\. \.s\. \.as Appraisal Switching Percentage Stream Value Value Change B\. TOr 24\.54 17\.31 -29\.46t C\.INV 15\.33 22\.57 47\.16% C\.OM 1\.98 9\.21 365\.64t% Total Costs 17\.31 24\.54 41\.77% Net Present Value at OCC 12\.0 - 7\.2 Internai Rate of Return - 20\.6t Coupon Bquivalent Rate of Return - 17\.4% -I & F-3 (D OC 0 i-  Present Values of Net Stream at a Discount Rate of 12\.0% _\.___\.____\. LA B\.TOT UP 10t UP 20% UP 50% DOWN 10% DOWN 20% DOWN 50% C\.TOT 7\.2 9\.7 12\.1 19\.5 4\.8 2\.3 -5\.0 UP lot 5\.5 8\.0 10\.4 17\.8 3\.0 0\.6 -6\.8 UP 20% 3\.8 6\.2 8\.7 16\.0 1\.3 -1\.1 -8\.5 UP 50% -1\.4 1\.0 3\.5 10\.8 -3\.9 -6\.3 -13\.7 DOWN 10% 9\.0 11\.4 13\.9 21\.2 6\.5 4\.1 -3\.3 DOWN 20% 10\.7 13\.1 15\.6 23\.0 8\.2 5\.8 -1\.6 DOWN 50% 15\.9 18\.3 20\.8 28\.2 13\.4 11\.0 3\.6 B\.TOT LAG 1 LAG 2 LSG 3 C\.TOT 7\.2 4\.6 2\.3 0\.2 UP 10% 5\.5 2\.9 0\.5 -1\.6 UP 20% 3\.8 1\.1 -1\.2 -3\.3 UP 50% -1\.4 -4\.1 -6\.4 -8\.5 DOWN 10% 9\.0 6\.3 4\.0 1\.9 DOWN 20% 10\.7 8\.1 5\.7 3\.6 DOWN 50% 15\.9 13\.3 10\.9 8\.8 LAG 1 - 6\.5 4\.1 2\.0 LAG 2 - - 5\.8 3\.7 LAG 3 - - - 5\.1 Internal Rates of Returns of Net Streams B\.TOT UP 10% UP 20% UP 50% DOWN 10t DOWN 20% DOWN 50% C\.TOT 20\.622 23\.900 27\.449 40\.330 17\.559 14\.655 6\.259 S UP 10% 17\.830 20\.622 23\.591 33\.999 15\.174 12\.610 4\.928 UP 20% 15\.609 18\.057 20\.622 29\.344 13\.245 10\.928 3\.778 ^ UP 50% 10\.928 12\.779 14\.655 20\.622 9\.081 7\.212 1\.049 O DOWN 10% 24\.280 28\.281 32\.707 49\.408 20\.622 17\.230 7\.839 DOWN 20t 29\.344 34\.493 40\.330 63\.303 24\.759 20\.622 9\.775 DOWN 50% 73\.275 92\.380 116\.447 248\.581 57\.937 45\.582 20\.622 B\.TOT LAG 1 LAG 2 LAG 3 C\.TOT 20\.622 16\.364 13\.849 12\.117 UP 10% 17\.830 14\.486 12\.396 10\.916 UP 20% 15\.609 12\.910 11\.147 9\.868 UP sot 10\.928 9\.350 8\.223 7\.364 H3 DOWN 10% 24\.280 18\.654 15\.568 13\.515 pb DOWN 20% 29\.344 21\.533 17\.651 15\.174 DOWN 50% 73\.275 37\.913 28\.130 23\.026 (D LAG 1 - 20\.622 16\.364 13\.849 LAG 2 - - 20\.622 16\.364 'O LAG 3 - - 20\.622 0 ft  ANNEX C Tihama Development Authority Recurrent and Investment Budget (1992-1995) (A) RECURRENT BUDGET Equivalent Expenditure at Year Approved Budget Amount of Expenditure Parallel Market Rate Approximate Parallel (YR Million) (YR Million) in USS Million Market Exchange Rate 1992 58\.43 65\.89 2\.20 1\.0$ = 30 YR 1993 91\.75 93\.92 1\.57 1\.0$ = 60 YR 1994 98\.79 106\.9 1\.34 1\.0$ = 80 YR 1995 112\.84 119\.55 1\.09 1\.0$ = 110 YR (B) INVESTMENT BUDGET Local Financing External Financing Total Financing Equivalent Expenditure in Total Actual Approved Actual US$ at Parallel Actual Total Actual Expenditures Budget Expenditure Rate Approved Budget Expenditure Equivalent USS Expenditure Equivalent Year (YR Million) (YR Million) (US$ Million) (YR Million) (YR Million) at Official Rate (YR Million) (US$ Million) 1992 73\.49 50\.22 1\.67 135\.77 45\.01 3\.75 (1:12) (2) 95\.23 5\.42 1993 83\.33 35\.44 0\.59 150\.75 36\.42 3\.04 (1:12) 71\.86 3\.63 1994 96\.30 10\.85 0\.14 85\.13 70\.21 5\.85 (1:12) 81\.06 5\.99 1995 (1) 108\.50 93\.24 0\.85 99\.80 140\.37 4\.53 (1:31) (3) 233\.60 5\.38 (I) Figures for November and December 1995 have been estimated\. z (2) Official exchange rate 12 YR to 1\.0 US$\. x (3) Official exchange rate for 1995 taken as average of 12 and 50 YR to the USS, giving 31 YR to the US$\. 0 M:\roy\invest\.tbl  47 Tihama V Regional Agricultural Development Project ANNEX D TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT IMPLEMENTATION COMPLETION REPORT PROJECT REVIEW FROM BORROWER'S PERSPECTIVE PLACE: HODEIDAH DATE: 16 NOV\. 1995  Tihama V Regional Agricultural Development Project 48 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN TIHAMA V REGIONAL AGRICULTURAL DEVELOPMENT PROJECT Table of Contents Summary of Project Review Project Review A\. Project Background B\. Project Design and Organization C\. Project Activities D\. Project Results E\. Project Impact F\. Future Role of the Project G\. IDA Borrower Relationship Statistical Tables Table 1: Major Achievements of Agricultural Extension Program Table 2: Major Achievements of Women Development Program Table 3: Major Achievements of Agricultural Irrigation Program Table 4: Major Achievements of Forestry and Sand Dunes Stabilization Program Table 5: Major Achievements of Veterinary Services and Animal Production Programs Table 6: Key Performance Indicators of Project Activities Table 7: Foreign and Local Training Program Executed during the Period 88-95 Table 8: Farm Budget for Contacted and Non Contacted Farmers Table 9: Amendments of Reallocation of Funds among Project Categories Table 10: Recruitment of Consultants and Experts  49 Tihama V Regional Agricultural Development Project PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A\. Background 1\. Tihama Region represents the central plain which extends 400 km in a strip of 30-40 km wide and bounded on the west by the Red Sea and joins the foothills to the east\. The plain is intersected by eight wadis which collect run-off from the high lands to the east making their ways to debouch on the coastal plain, where the water is used for spate irrigation and recharging of the aquifer\. The underground water is used for well irrigation as well as prime source for drinking water in the project area\. 2\. The broad valleys watered by these wadis are the most productive agricultural areas in Tihama Region, where suitable lands for sustained crop production are plentiful and the climate of the region is suitable for the year-round production of a wide range of crops\. Accordingly, Tihama Region is categorized as the most rich in agricultural potentials in the country\. 3\. In an attempt to utilize the huge agricultural potentials in the Tihama Region, the Government of Yemen had pursued a systematic "single-wadi" development approach\. To implement this strategy, Tihama Development Authority (TDA) was created in 1973 as a semi-autonomous institution, with a mandate of leading all the future development efforts in Tihama Region\. Since then, TDA had successfully acted as an implementing agency for Tihama I Development Project (Wadi Zabid) which was completed in 1979, Tihama II & IV (Wadi Rima) which were completed in 1984, Tihama III Development Project (Wadi Mawr) which was completed in 1988, and currently implementing Tihama V Regional Agricultural Development Project (Wadi Siham)\. 4\. The feasibility study of Tihama V Regional Development Project was carried out by Sogreah Consulting Engineers (France) in 1979\. The project was then prepared, depending on the said feasibility study, by FAO/FC in March/April 1985 and appraised by IDA in May 1985 and the Staff Appraisal Report (SAR) was released in Feb\. 1986 (World Bank Document No\. 5852-YAR dated Feb\. 1986)\. 5\. Tihama V Development Project was financed by IDA (Credit No\. 1667) for USD 10\.0 millions, the Kuwait Fund for Arab Economic Development (KFAED) (Credit No\. 312) for USD 15\.0 millions, a grant from the Netherlands Government for USD 9\.4 millions and the Government of Yemen for USD 12\.6 millions\. According to SAR, project mobilization was scheduled to start on July 1, 1986, however, even though KFAED loan agreement was signed in March 1986 and IDA credit agreement was signed on May 9, 1986, yet, it only became effective in Dec\. 1987 when the Netherlands grant agreement was signed on May 5, 1987\. Thus, it was quite evident that this project had suffered a pre-start-up delay of about eighteen months\. B\. Project Design and Organization 6\. Proiect Objectives: The primary objectives of Tihama V Regional Agricultural Development Project include: i) Increase agricultural production in the country ii) Improve the utilization of the available land, water and Human resources iii) Help substitute for agricultural imports  Tihama V Regional Agricultural Development Project 50 iv) Strengthen the regional agricultural services v) Establish a regional operation & maintenance (O&M) service vi) Strengthen TDA in carrying out regional development programs 7\. The major components of this project are: i) Agricultural extension service which comprises construction of agricultural extension centers, provisions for field demonstration and establishment of tree nurseries ii) Veterinary service which comprises construction and equipping of regional laboratory, in addition to the construction of two veterinary centers, together with housing for staff and provision for a mobile veterinary clinic iii) Irrigation development which comprises construction of two diversion structures on Wadi Siham, two wadis crossing structures for the canals and a network of 92 km of main, secondary and tertiary canals and appurtenant structures to irrigate about 5,760 hectares, in addition to the construction of downstream flood protection dikes and establishment of four demonstration farms iv) Infrastructural development which comprises the construction of 62\.4 km length of feeder roads and the construction of four marketing centers in the project area v) Regional operation and maintenance service which comprises provision for procurement of equipment and vehicles and appointment of three experts vi) Credit which comprises provision of medium-term credit for improvement of well irrigation farms, planting of tree crops and purchase of farm machinery as well as provision of short-term credit for farm inputs vii) Technical assistance and training which comprises appointment of experts and consultants to strengthen TDA capability in engineering, extension and monitoring and evaluation, in addition to provision for local as well as foreign training for national staff\. 8\. The objectives of this project are considered quite reasonable and reflect the real aspirations of the farming community in the project area; in addition these objectives were consistent with the agricultural sector development strategy as articulated in the third five-year national plan for economic development (1986-1991)\. Moreover, the project objectives were also quite compatible with the Bank strategy for future agricultural development in the country\. 9\. A thorough look and review of the project components and sub-components clearly shows that this project was designed to address and overcome the major constraints to agricultural development in the project area such as: i) Weak agricultural extension institution ii) Inefficient water resources management iii) Lack of effective O&M institution capable of ensuring sustainable O&M services\. Furthermore, the unique feature in the design of this project was that it incorporated an element of sustainability for the previous projects as well as this project\. 10\. The components and sub-components of this project are many, but they are quite interrelated and their timely and simultaneous implementation will eventually offer a greater opportunity to achieving an integrated agricultural development in the project area and Tihama  51 Tihama V Regional Agricultural Development Project Region\. Even though, some of the project components and/or sub-components were modified before and/or during the project implementation phase, yet the overall project design was intact and consequently it is highly likely that project objectives will be achieved\. 11\. The implementing agency (TDA) is the best organized institution under the umbrella of the Ministry of Agriculture and Water Resources (MAWR) and has a long experience and successful implementation record of similar development project in Tihama Region\. In addition, TDA has well structured departments of engineering, agriculture, finance and administration and monitoring and evaluation, and with adequate and qualified staff which proved to be capable of supervising the implementation phase, offering good quality programs as well as handling future operations in a satisfactory manner\. Implementation Record and Major Factors affecting the Project 12\. The implementation of the extension service, the veterinary service, the regional O&M service, the credit and the technical assistance components had started after the credit became effective in December 1987\. The implementation of these components went on smoothly with minimal modifications and/or delays\. However, the implementation of the irrigation development component (Wadi Siham scheme), which is the most important component of this project, and the infrastructural development component were subjected to major design modifications and suffered a series of delays prior to and during construction phase\. 13\. Pre-implementation delays: In September 1988 and before the consultant started the design work, the financiers argued that it is essential to review the technical and the economical feasibility of the irrigation schemes as a result of: i) The changes that took place since 1984/85 in Wadi Siham project area with respect to land use and cropping pattern ii) The controversial findings of the DHV study on water resources in the Tihama basin which necessitated detailed assessment of the situation to arrive at a technically and economically viable solutions\. The consultant started carrying out the technical and economic feasibility study in November 1988 and submitted the inception report in June 1989\. Hence, the study and the thorough discussions of its findings by financiers resulted in almost one year delay to start the design work\. In addition, the thorough discussions and the critical assessment had led participants to agree on major modifications in the original designs of the irrigation works presented in the project feasibility study (Sogreah, 1979)\. The agreed upon modifications were: i) Construction of Barquqa diversion structure and canal network to cater for base flows only with off-taking capacity of 5 cum/sec, instead of a diversion structure with off-taking capacity of 10 cum/sec ii) Construction of Wagir diversion structure and canal network system to cater for diversion of floods with off-taking capacity of 22 cum/sec, instead of a diversion structure with an off-taking capacity of 10 cum/sec\. 14\. Secondly, the Gulf war: As a result of the Gulf war and the withdrawal of KFAED from project finance, a revised plan of project finance was discussed and approved by other co-financiers in January 1991\. According to the revised plan, the consultant was requested to modify the original  Tihama V Regional Agricultural Development Project 52 tender documents of the irrigation works and prepare a new tender document for Wagir irrigation headworks and canal networks only and postpone Barquqa structure and canal network until adequate finance is secured\. The preparation of Wagir tender documents was completed in April 1991, resulting in another three months of pre-implementation delay\. 15\. Construction phase delays: First, after the excavation of the weir floor at Wagir headworks site was completed to the specified level in November 1993, it was found that the soil was unstable to warrant the structural stability\. In view of this situation, the consultant modified the design and submitted the revised drawings to the contractor in March 1994\. Thus, a delay of four months occurred due to inadequate soil investigation at the site\. TDA expressed its concern to the consultant about his performance\. Secondly, as the result of the emergency situation in the country which occurred during the period May 4, 1994 to July 7, 1994, the employees of Wagir contractor left Yemen and only returned by the end of July, when regular flights were resumed\. During this period, progress of work was almost negligible (i\.e\. three months delay)\. Wagir headworks and canal network contract (TDA/WS-1) was originally scheduled for completion by March 1995 (i\.e\. contract period is 24 months commencing March 1993)\. However, due to delays which occurred during the construction phase amounting to about seven months, the work in Wagir contract is expected to be completed in December 1995 at the time of credit closure\. 16\. Flood projection dikes: This sub-component consists of four flood protection dikes downstream of Wadi Siham as presented in Sogreah Consultants conceptual design\. Nespak Consultants retained and approved the four locations and prepared the detailed designs\. However, later on, IDA expressed lack of readiness to finance this sub-component\. TDA then started to review the design and the proposed locations of the dikes after securing Government finance\. TDA engineers found that the pre-determined locations for the dikes were quite inappropriate\. Hence, an intensive survey downstream of Wadi Siham was carried out, two suitable locations were identified (i\.e\. the number of dikes were reduced to two), new designs were prepared and currently construction is underway and expected to be completed by November 1995\. TDA expected Nespak Consultants to be more careful in reviewing the appropriateness of the locations before carrying the design work\. 17\. Infrastructural development component: The access roads sub-component was subjected to major design modifications and delays during the construction phase, while the construction of the four marketing centers was dropped when the finance plan was revised in 1991\. The modifications in the access roads designs had resulted in the reduction of the access roads length from 62\.4 km to 48,118 km length (35\.748 km metalled and 12\.37 km gravel) and the width of the metalled roads was increased from 3\.7 m to 5\.0 m\. The access roads contract (TDAfWS-4) was awarded to a local contractor and work was commenced in Sept\. 1990 and scheduled for completion in Sept\. 1992, but expected to be completed by Dec\. 1995\. The major factors for this delay, beside the modifications in the designs of the access roads, were related to losses incurred by the contractor as a result of the steadily deteriorating value of the local currency in the free market (i\.e\. in 1990, 1 USD = YR 16, and in 1995, 1 USD = YR 120-150 in the free market)\. In June 1994 the Government agreed to raise the foreign currency proportion of this contract from 23\.338% to 75%\. 18\. The construction of the four marketing centers was dropped as a project sub-component, however TDA and MAWR had secured adequate finance from the UNCDF for the construction of a wholesale vegetable market in the project area (at Al-Hussenia town)\. The land for this marketing center was acquired, land survey was completed\.  53 Tihama V Regional Agricultural Development Project C\. Project Activities 19\. Agricultural extension activities: The extension program in the project area follows the training and visit (T&V) extension approach which comprises intensive regular visits to contact farmers, sponsoring of demonstration plots in farmers fields, in addition to organizing field days to be attended by farmers as well as research workers\. TDA had provided all the logistical, institutional and technical support for this program\. However, the efficiency of the extension program activities was seriously constrained by the lack or inadequacy of flow of newly research recommendations\. The women in development program activities had focussed on providing crop and animal extension services, in addition to extension advise on basic child health care, nutrition and organizing of literacy classes for young and adult women in the project area\. The management of nurseries, production and distribution of tree seedlings to farmers to establish shelter belts around their farms, in addition to planting of tree seedlings to stabilize moving sand dunes, which are threatening the agricultural lands were the basic activities of the forestry and sand dunes stabilization program\. Furthermore, in its continuous endeavors to improve the efficiency of irrigation system and water use, the agricultural irrigation program activities had focussed on providing technical know-how and help to farmers to install modern irrigation systems in their fields\. 20\. Veterinary services and animal production activities comprise regular vaccination campaigns against render pest and small box as well as animal treatment during rural market days; on the other hand, the animal production extension activities had focussed on providing information on improved animal husbandry practices, animal nutrition and introduction of new improved forages in farmers fields\. 21\. The operation and maintenance activities comprise regular maintenance and operationalization of the irrigation structures, in addition to monitoring and performing the necessary maintenance of 186 km length of canals network as well as the necessary maintenance of 282 km gravel access roads in Wadi Zabid, Wadi Rima and Wadi Mawr\. More details on the construction activities were presented in paras\. 15, 16 and 17\. D\. Proiect Results Towards the end of the implementation phase, the following results were produced: 22\. Agricultural extension component: The construction of 18 extension centers, two centers for women in development program were completed, in addition to the establishment of one nursery\. On the other hand, the agricultural extension program activities has resulted in reaching over 80% of the targeted farm families in the project area and sponsoring over 1,786 demonstration plots in farmers fields during the period 1988-1994\. The women in development program activities had covered 51 villages and over 612 young and/or adult women had attended the literacy classes\. Furthermore, 175,000 tree seedlings were produced annually from the project nurseries\. The tree seedlings distributed to farmers resulted in the establishment of 350 km length of shelter belts around farmers fields\. The sand dunes stabilization activities resulted in a shelter belt plantation covering 705 ha which represents 93% of the targeted area according to SAR\. 23\. The veterinary service component: Two veterinary stations together with the staff housing were constructed in addition to the construction and equipping of the regional veterinary lab, and the procurement of one mobile veterinary clinic\. The veterinary services activities had resulted in an average annual vaccination of 6,400 cows against render pest, 5,000 sheep against small box, in  Tihama V Regional Agricultural Development Project 54 addition to the treatment of 500 animals against various diseases\. The animal production extension program activities had resulted in the establishment of 347 animal fattening units by farmers during the period 1988-1994\. 24\. The irrigation development component: One diversion structure is currently under construction at Wagir site, with an off-taking capacity of 22 cum/sec\. In addition, the construction of the main canals, secondary canals, and tertiary canals (23 lan) as well as the construction of two flood protection dikes, is ongoing and scheduled for completion in Dec\. 1995\. Results of the irrigation development component may be evident from the next season onwards\. 25\. The infrastructural development component: The construction of 48\.118 km of access roads connecting various villages in the project area with Sanna-Hodeidah national highway was almost completed (i\.e\. 35\.748 km metalled and 12\.370 km gravel)\. 26\. The regional O&M component: All equipment considered necessary to establish a well functioning regional O&M institution were procured in a timely manner and two workshops were established, one at TDA headquarters and another at Zabid\. Both are adequately equipped and currently functioning satisfactorily\. 27\. Credit data from CACB on medium- and short-term credit advanced to farmers in the project area shows a steady increase in amount as well as in the number of beneficiaries\. However, had it not been to CACB strict collateral requirements as a condition for credit eligibility, the results would have been far better\. 28\. Training: In an attempt to improve the technical skills and capability of its staff, TDA executed an ambitious training program which comprised 224 man/month of locally structured training and 477 man/month of foreign training, mainly short courses of 2-3 months\. 29\. Even though the development of a range management is not an integral sub-component of Tihama V, yet TDA had sponsored the following studies in an attempt to improve future planning and management of renewable natural resources in the project area\. The studies completed are: i) Land cover change in Tihama Region (1993)\. The study was carried by Hunting Technical Service (a British consultant) ii) Vegetation classification in Tihama Region (1993)\. The study was carried by an international consultant iii) Range management and pastrolists in Tihama Region (1994)\. The study was carried by the range management expert\. In addition, the M&E expert had also carried out an evaluation study of the existing cost recovery experience in Tihama projects\. E\. Project Impact 30\. In fact, many aspects of the project impact cannot be assessed at the time, the project implementation report (PIR) is being prepared, specially that the major irrigation works are not completed\. However, the evident impact of this project at this time is mostly attributed to the agricultural extension program activities as well as modest on-farm investment to modernize the irrigation systems on wells\.  55 Tihama V Regional Agricultural Development Project 31\. Technological Impact: The agricultural extension program had promoted the use of modern inputs, such as fertilizers, insecticides, pesticides improved seeds and machinery in the project area\. Farmers were quite responsive to use the recommended modern inputs, specially on high value crops\. The use of tractors for land preparation and levelling is widely practiced now and became the norm in the project area instead of animal draft\. However, the predominantly prevailing crop-sharing arrangements, together with the phenomenon of absentee landowners, had reduced the opportunities of direct influence of the extension program on landowners and eventually reduced opportunities of taking on-farm investment decisions\. 32\. The animal production extension program and veterinary service program had a positive impact on the level of awareness of many farmers in the project area with respect to improved methods of animal husbandry and animal feeding as well as the importance of animal vaccination and animal treatment against various diseases\. Even though TDA has already started a step-by-step approach to recover the full cost of veterinary services (now farmers pay the full cost of drugs in addition to 25 % for services), yet farmers demand for veterinary services continued to rise steadily and more farmers started to perceive animal production as a potential investment opportunity rather than a traditional household activity (many farmers had established fattening units)\. Thus, it is quite evident that these programs had positive impact, however meager it is, on farmers' incomes as well as on the development of animal wealth in the region\. 33\. Environment Impact: The sand dunes stabilized in the project area, the shelter belts established around farmers' fields and tree seedlings distributed and planted in and/or around villages and public institutions in the project area had a positive impact on agricultural and natural resources conservation in the region\. Furthermore, the completion of the irrigation works at Wagir and the flood protection dikes downstream of Wadi Siham will not only lead to improving of flood water utilization efficiency, but also recharging the aquifer in the project area; in addition, future on-farm investment in modern irrigation systems will lead to improving the underground water use efficiency\. Hence, it is evident that the project will have a positive impact on the conservation of irrigation water for future use, which is the key element in maintaining viable agricultural environment in the region\. 34\. Social impact: Farmers in the project area had acquired reasonable level of knowledge with respect to use of modern agricultural practices, improved methods of animal husbandry and treatment of animal diseases\. Moreover, the access roads constructed in the project area had facilitated farmers' contacts with commercial centers and provided easy access to social services in cities (clinics, hospitals, schools, etc\.)\. The construction of the feeder roads had also an evident impact on the economy of the farming community\. New business opportunities flourished along the roads sides, creating new jobs and incomes, market information on product and input prices become more accessible to the farmers, which improved their competitive capability and transportation cost of farm produce was significantly reduced\. 35\. Agroeconomic impact: Even though buying and selling of agricultural lands in the project area is a rare phenomenon, yet the average prices of the agricultural lands had started to skyrocketing since 1988 and continued\. The average price per hectare of an average quality land under spate and wells irrigation had increased from YR 120,000 and YR 50,000 in 1988 to YR 360,000 and YR 140,000 in 1993 respectively\. This is partially due to optimistic outlook of investors in view of the project implementation and partially due to changing attitudes in the region which become more commercially oriented and started to be perceived as an investment opportunity rather than a subsistence activity\.  Tihama V Regional Agricultural Development Project 56 36\. The project impact on cropped areas could be assessed after the completion of the irrigation works on Wadi Siham\. However, regarding crop yields, it is worth to mention that yields projected to be achieved with the implementation of the extension component were not fully realized, specially for cereals\. This was due to the fact that the projected yields were based on an optimistic outlook, yet unrealistic\. This is because at the time of appraisal preparation promising high yielding varieties were released by the Agricultural Research Station in the Tihama Region\. Unfortunately, these varieties were rejected by farmers due to unfamiliarity and disliking of taste\. Hence, farmers resorted back to their traditional low yielding sorghum varieties\. However, project impact on yields of most crops is specially acknowledged by farmers who were directly contacted by extensionists\. The analysis of 93/94 crop budgets for contacted and non-contacted farmers revealed that contacted farmers had realized relatively higher yields and better returns for most crops\. 37\. The cropping pattern in the project area had witnessed significant changes\. Areas under high value crops (fruits and vegetables) had increased steadily during the period 1988-1994 as predicted in SAR\. Fruits (banana, papaya) are mainly grown under wells and combine (spate + pumps) irrigation systems\. The fruits area under wells and combine irrigation systems had increased from 1,953 ha and 1,317 ha in 1988 to 6,701 ha and 2,768 ha in 1994 respectively\. Vegetables in the project area are mainly grown under pump irrigation system (wells) and the main types include tomato, onion, okra and water melon\. The areas cropped with vegetables had also increased from 21,500 ha in 1988 to 36,644 ha in 1994\. However, on spate irrigation, cereals continued to dominate the cropping pattern and represent over 80% of the cropped area\. Slight shift towards forage was quite evident specially during poor rainy seasons\. This change in the cropping pattern is an indicative of farmers' responsiveness (supply response) to relative changes in crop prices and also show farmers ability to adjust to market forces\. F\. Future Role of the Project 38\. TDA is a well organized and structured institution with adequate and qualified staff and satisfactory management capability\. However, for efficient and sustainable future operation of O&M tasks and other program activities, it would be absolutely necessary for TDA to secure the full support of the government to execute a practical and reasonable cost recovery policy (currently under review) to generate adequate financial resources for its future operations\. The future operationalization of the project along these lines will ensure its positive role in future and eventually the realization of its objectives\. G\. IDA Performnance 39\. IDA updated the project preparation report which was presented by FAO in 1985 and produced the staff appraisal report in 1986\. The SAR presented an overview of the huge agricultural potentials in the project area as well as justifiable and logical rationale for the project\. Furthermore, detailed features of the project components and sub-components were also presented in a logical manner and systematic sequence\. In addition, the project needs for each component in terms of equipment, vehicles, materials and technical assistance were clearly identified and adequate financial package was allocated; however, present and projected cereals yields were unrealistic\. IDA performance during project preparation and appraisal had been highly satisfactory\. 40\. IDA had exhibited reasonable levels of flexibility and agreed to major modifications in some of the project components and sub-components\. An example of such flexibility was envisioned when IDA agreed to drop the Barquqa headworks and canals networks - which is an essential  57 Tihama V Regional Agricultural Development Project component of the irrigation works in Wadi Siham - after KFAED ceased financing the project in 1991 following the Gulf crisis\. IDA also agreed to extend the closure of the credit three times in view of the delays in project implementation for reasons which were beyond i'DA control\. Moreover, IDA had also agreed to amend the allocation of IDA credit and the Netherlands grant among the project categories three times during the implementation period which clearly demo-1t, a4tes IDA responsiveness to the project needs\. Overall, it could be genuinely argued that the level of flexibility and responsiveness exercised by IDA during the course of the implementation is an instrumental element in accomplishing the current results\. 41\. IDA supervisory missions were usually composed of multi -disciplinary teams which had been very effective in monitoring all aspects of the project and in providing constructive suggestions to overcome problems confronting components implementation\. In addition, IDA missions had been quite helpful in providing guidance for future actions and in reviewing actions taken by TDA in response to previous missions recommendations\. In fact, IDA missions had been very constructive and instrumental during the whole period of project implementation\. H\. Borrower Performance 42\. The implementing agency (TDA) is a semi-autonomous institution created by a presidential decree in 1973 and entrusted to lead the development efforts in Tihama Region\. TDA had a successful track record as an implementing agency in the country\. TDA had acted as implementing agency for four similar development projects in Tihama Region during the period 1973- 1988 (i\.e\. Tihama I through Tihama IV)\. TDA management skills and staff competence were acquired through a long experience in implementation, supervision apd operationalization of previous development projects\. In addition, most of TDA staff had received foreign and local training opportunities which acted as an incentive for competent staff to stay with TDA\. Now TDA has well structured departments (engineering, agriculture, administration and Finance and M&E) which clear defined functions and with adequate and qualified staff in most disciplines related to project activities\. 43\. TDA management and staff had actively participated in the project preparation, vitally contributed to project preparation and appraisal and made constructive comments on the project design and project components\. TDA performance during project preparation and appraisal had been satisfactory\. 44\. TDA management had been quite successful in acquiring the approval and consent of the land owners for the constnrction of the extension centers, veterinary stations, central region headquarter camp, the canals network and the access roads, ahead of the construction phase\. In fact, no significant delay was encountered due to land owners objections\. 45\. TDA management had created a favorable and productive working relationship with the Agricultural Research and Extension Administration (AREA) and the Credit Agricultural and Cooperative Bank (CACB) through maintaining a high level of coordination and cooperation with these institutions\. This relationship was positively reflected on the quality of the joint programs such as the agricultural research linkages and advancement of short- and medium-term credit to farmers in the project area\. 46\. In general, suppliers of equipment, vehicles and materials had performed quite satisfactorily and were able to deliver all the contracted items without major delays and in accordance with the specifications\. However, contract No\. TDA/WS-1 (Wagir headworks and canal networks)  Tihama V Regional Agricultural Development Project 58 and contract No\. TDA/WS-4 (access roads) had suffered excessive delays\. TDA was not quite satisfied with the performance of both contractors\. 47\. As for the technical assistance, TDA had recruited foreign experts and consultants in different disciplines including engineering, agriculture, finance, monitoring and evaluation for a total period of 102 man/year\. Many experts had been quite effective and instrumental in improving the quality of programs and in providing the necessary in-service training to their national counterparts\. 48\. TDA had fully complied with most of the major loan agreement covenants\. TDA had completed the evaluation of the cost recovery experience in Tihama and concluded that the existing cost recovery system is inefficient and inappropriate\. TDA is currently in the process of formulating alternative proposals for reasonable and practical cost recovery policy which would ensure smooth and sustainable operations of the project activities\. TDA will pursue this matter with MAWR\. I\. IDA-Borrower Relationship 49\. In an attempt to improve and expedite the implementation of projects financed and/or co- financed by IDA, a joint workshop was convened in April 95 and addressed implementation problems related to project management, financial management, procurement, use of the special account and budget allocation and release of funds\. Constructive recommendations were reached and their immediate implementation was agreed upon\. The borrower had started to implement many of these recommendations, which clearly demonstrates productive working relationship\. On the other hand, IDA and TDA had developed and maintained an excellent working relationship during the implementation of the four previous development projects in the Tihama Region\. 50\. The co-financiers' joint efforts to secure the needed finance for Barquqa headworks and canal networks had been quite instrumental in convincing the EEC to finance this important sub- component\. In fact, this step is considered very important in keeping the overall project design intact and demonstrates the fruitful and productive working relationship among the co-financiers\. J\. Lessons Learned 51\. Credit effectiveness delays: IDA should agree with the Borrower on ways and means to overcome pre-start-up delays encountered due to credit effectiveness delays\. 52\. Government contracting procedures and regulations: The Bank should review the country contracting procedures in terms of contract award, time between advertisement and award as well as the exchange rates policies in relation to methods and currency of payment and if these procedures were incompatible with the Bank regulations, the agreement should explicitly show the procedures to be followed\. 53\. Expediting contract implementation and procurement of proiect needs: A significant portion of the delays encountered in the implementation of contracts under this project is due to the fact that contractors had incurred or anticipated to incur losses in view of the continuous deterioration of the value of the local currency, specially that certain percentage of their contract value is in local currency\. IDA and the Borrower should agree on measures to overcome this problem\. 54\. Simple projects are easy to implement: Even though the components of this project were carefully identified and that their simultaneous implementation will eventually lead to achieving an  59 Tihama V Regional Agricultural Development Project integrated rural development in the project area, yet keeping the project simple and with fewer components will make it more manageable and ensure high implementation performance\. 55\. Planning realistic implementation period: IDA should take into account important factors such as the macroeconomic environmnent, the absorptive capacity, prevailing rules and regulations with respect to contracting procedures, management capability and procedures for decision taking to arrive at a reasonable and realistic project implementation period\. 56\. Cost recovery: TDA management should launch an awareness campaign among the beneficiaries during the project implementation phase to secure their cooperation and willingness to participate in the cost recovery program\. The Bank missions should closely monitor the implementing agency efforts in this regard\.  Tihama V Regional Agricultural Development Project 60 ANNEX E REPUBLIC OF YEMEN MINISTRY OF AGRICULTtUJE 9 AND WATER RESOURCES 4g U II , LSIj;j lj- TIHAMA DEVELOPMENT AUTHORITY - ', , t i ' HODE1DAa* Or Ref// 7j?( I , D"14 May 1996\. \. m \ e- J" Mr\. Neidet Al-Salihi Natural Rcsources, Water Resources, and Environmnt Division Middle East and North Afca Region Dcar Nejdet, The Implemestation Completion Report (ICR) for the Tihama V Regional Agrcultural Development Project (Credit 1 667-YAR) has been received and reviewed\. The ICR report covers all the major issues related to the Tihama V Project\. It is therefore my pleasure ta infomi you that the ICR report has been found to be satisfacmory and aacceptablc to the TDA\. Wrth best regards\. u r s ~~~~~~swcerely,; Irhmel-Dowirm Chairman cc\. His Excellency Deputy Prime Minister, Minister of P"annig and Developmeat, Sana'a- cc\. HMs Excellency Minister of Agdicultre and Water Resources, Sanaa\. 4: 231212/3 P\.O\.Box a792 C=b* (ALHAIA) Had\.idah ; \.:1 r lex: ;673ALHAIA YE Fax No\. 03-211588 - - r X L; _ *v ,,1s )OCIDAH Ourlehenm' Road 1JJ , _    ARABIA- /, YEMEN ARAB REPUBLIC K,-'t ' 9 TIHAMA V REGIONAL AGRICULTURAL v,'\./X \.1 : DEVELOPMENT PROJECT u\ctd " { \PROJECT AREA Project Components N * ~~~~~~~~~~~~~~~~~~~~~~~~~~~Extension Centers Ab\. 0~~~~~~~~~~~~~~~~~~~~~~~~ Research Stations i A, Sub-Regional Office Sites Existing: AAgricultural Denelopmext Project (World Bank) Tihama Coastal Plain * Extension Cenlers AM- ^b-- Moie Roads -- -- Secondary Roads Al Aim\.,yxi Wadis SANA'A \ Notional Capital t7N,~ NK *,/ AJtsI0\ ~N~AUA N - tetereationot Boundaries AJ4nA N VWadi Siham / -~~~~~~~~~~~~~~~~~~~s BRD 1,= , 2g, \ 5~~~~~~~~~~~~~~~~- Deeomn Schem / iernf5hl b_ A\.ds' ' 9 A ] ° D] 40~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ t A 5 Red Sea _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'b\. a\.xf 55 -x -S, -uw xx \. M\.,\. in x A7\.Td2_tA~~~~~~~~~~~~~~~~RAI\.w/\.-\.,*\.sa\.n _ \.xuxI\. ,,Iixx\.,~\.d, \. 1 \.xn5e \. O I \.~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~e anrnI'i\.x\.,n\.'x,,,\.-CI , r \.aec \. \. / : - -)PEOPLE'S DEMOCRATIC atx ',x' 2 REPUBLIC OF YEMEN r\. Ad\., (5_ ,t-~~~~ X~~ f Red ~~~ SAUDI ARABIA / 9 'C'-> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Sea YEME1 A R\. ;S P\.D\.R\. YEMEN ETHIOPIA / / ETHIOPIA Gulf of Aden o n-n // -'i/DJIBOUTI\SL DJIBOUTI ~~~~~~~~~~~~~~~~~~~~~~~SOMALIA    IMAGING Report No: l5bZZU Type: ICR

REVIEW

P074114

 ICRR 13867 Report Number : ICRR13867 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/26/2012 Country : Bhutan Project ID : P074114 Appraisal Actual Project Name : Bhutan - Education US$M ): Project Costs (US$M): 39\.09 36\.18 Development Project L/C Number : C3820; CH374 Loan/ US$M ): Loan /Credit (US$M): 31\.00 35\.68 Sector Board : Education US$M): Cofinancing (US$M ): Cofinanciers : Board Approval Date : 08/21/2003 Closing Date : 12/31/2009 06/30/2011 Sector (s): Secondary education (60%); Primary education (20%); Central government administration (15%); Tertiary education (4%); Other industry (1%) Theme (s): Education for the knowledge economy (40% - P); Education for all (40% - P); Rural services and infrastructure (20% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Judyth L\. Twigg Robert Mark Lacey Soniya Carvalho IEGPS1 2\. Project Objectives and Components: a\. Objectives: According to the Development Credit Agreement (DCA, p\. 11), the project’s objectives were “(a) to assist in the implementation of the education development program in the Ninth Five -Year Plan; and (b) to that end, to expand access to primary and secondary education and to improve the quality and relevance of education at all levels \.â€? The Project Appraisal Document (PAD, p\. 2), stated the objectives slightly differently : “The project will support th Bhutan’s education development program under its 9 Five-Year Plan (2002-2007) to expand access to primary and secondary education, and improve educational quality at all levels \.â€? This Review will assess the achievement of objectives as stated in the DCA, as this statement is more clear and monitorable\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: The project contained three components : 1\. Expand Access To Basic and Secondary Education (appraisal, US$ 20\.60 million; actual, US$ 30\.1 million)\. This component was to create 3,000 additional places at the primary level and 7,000 places at the secondary level of education\. This was to be achieved through : (i) construction of 29 schools, four of which were to be new secondary schools, and 25 of which were to be upgraded/extended primary and secondary schools; (ii) construction of a warehouse for storage of light gauge steel framework (LGSF) construction materials; and (iii) provision of institution-based and on-site training in LGSF technology to school leavers, the School Planning and Building Division (SPBD), and local contractors\. Adoption of LGSF technology by the project was expected to alleviate prior problems with timber shortages, and also to promote the construction sector as a viable means of employment for the increasing number of Bhutanese youth entering the labor market \. 2\. Improve Quality and Relevance of Education at All Levels (appraisal, US$ 5\.80 million; actual, US$ 4\.60 million)\. This component was to: (i) enhance effectiveness of teaching and learning through revision of the mathematics curriculum, expansion of school library development and supplementary reading programs to about 300 primary and secondary schools, and establishment of about 15 additional resource centers to support clusters of schools in remote areas; (ii) finance innovation grants, through a competitive process at the district level, to assist selected primary and secondary schools in carrying out locally -designed, school-based quality enhancement schemes; (iii) expand the existing information technology (IT) education program for middle and higher secondary schools by implementing a newly-developed IT curriculum and developing a small cadre of IT specialists to spearhead wider application of IT education; and (iv) establish a secretariat for the Royal University of Bhutan (RUB), to create a nodal point for academic programming and quality control within a new federated system of colleges and other tertiary -level institutions\. 3\. Institutional Strengthening (appraisal, US$ 4\.60 million; actual, US$ 1\.48 million)\. This component was to focus on human resource development and the upgrading of physical capacities \. For the former, the project was to finance fellowships for Ministry of Education (MOE) staff for further study in their professional fields, training for district Education Officers, scholarships for graduate study in English and mathematics for selected teachers, and training and support for monitoring and evaluation (M&E)\. For the latter, the project was to construct a new complex to house all MOE staff at one location, and new education storage facilities to address inefficiencies in storage and distribution of learning materials\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost: On July 15, 2008 additional financing was approved through an International Development Association (IDA) grant of US$ 1\.6 million, primarily to cover a 40% increase in construction costs (Component 1)\. LGSF building technology had not previously been used in Bhutan, and more accurate cost information was determined as school building activities progressed\. In particular, costs rose due to increases in global steel prices (largely attributed to high demand for Asia-sourced steel for the Beijing Olympics ), additional site development that was required to install retaining walls and other land-slide preventive measures to accommodate Bhutan ’s mountainous and slide-prone terrain, below-specification steel delivery from the project ’s original steel supplier, and a particularly heavy and long-duration monsoon season in 2007\. Increased steel costs led to a downward revision of the project ’s original construction target from 29 schools to 26\. With the additional financing, that total was brought to 28 schools\. During implementation, it was decided to drop the construction of the MOE building, due to a new Government plan to include the MOE Secretariat within a larger development scheme to house ten ministries \. This explains why less than planned was spent on Component 3\. Financing: The project disbursed 100% of the original IDA credit of US$ 31\.0 million and 100% of the supplemental grant of US$ 1\.6 million\. With exchange rate gains from a weakened dollar versus the SDR, the historical amount disbursed by the project was US$ 35\.68 million\. Borrower Contribution: The ICR states that the Borrower made US$ 0\.50 million of a planned US$ 8\.0 million contribution\. According to the ICR (p\. 20), the PAD statement of a planned US$ 8\.0 million contribution may have been in error, as the DCA shows 97-100% financing for all categories\. During implementation, the Government followed the DCA\. It was assumed that the Government would base its expenditures on recurrent costs, but these were not quantified\. The project team confirmed that the Government covered not only recurring costs, but also approximately US$ 3\.0 million in cost overruns due to an expanded number of facilities at some school construction sites\. It is not clear how this US$ 3\.0 million coverage of cost overruns reconciles with the ICR's statement of a US$ 0\.50 million contribution\. Dates: The project’s closing date was extended in April 2010 for 18 months, from December 31, 2009 to June 30, 2011, to complete work at six sites where school construction was delayed \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Substantial \. The project’s objectives were substantially relevant to the country context at the time of appraisal \. Rapid enrollment increases were placing considerable pressure on the education system, particularly at the secondary level, as increasing numbers of students were completing the full primary school cycle to the end of grade 6\. Projected enrollment increases over the period 2002-2007 were more than 20000 students for grades pre-primary to grade 6, 15,000 for grades 7-10, and 5,000 for grades 11-12\. Unit construction costs were high because of the country’s mountainous terrain and remoteness of many settlements \. Unit costs for learning materials were also high, as the major portion was imported from India and had to be transported to interior regions of Bhutan \. Quality of education was a concern, with only 71% of those entering primary school completing the full seven -year cycle, 13% of students repeating grades each year, students ’ examination performance showing a decline in learning outcomes, and employers questioning the responsiveness of secondary and higher education to labor market demands \. The objectives were also substantially relevant to the priorities and goals of the Government ’s Ninth Five-Year Plan (2002-2007), which placed a high priority on the education sector \. Issues of both access and quality were featured prominently, with specific goals of increasing basic education from grade 8 to grade 10; bringing the quality of education in language, IT, and mathematics to international standards; increasing the percentage of students promoted from grade 10 to grade 12 from 38% to 56%; developing a higher education system under the umbrella of a national university; strengthening pre -service and in-service teacher education; strengthening institutions and human resource capacities at all levels for improved education management and planning; and enhancing the literacy rate from 54% to 80%\. The objectives are also Substantially relevant to the Bank ’s Country Partnership Strategy with Bhutan (2011-2014), current at project closure\. Two of that Strategy's four clusters are reforming the educational system to enable it to deliver the skills needed for diversification of the economy, and charting a new agenda for meeting emerging social challenges in health and education (p\. ii)\. b\. Relevance of Design: Substantial \. The PAD (pp\. 27-30) presented a coherent and complete results chain, plausibly linking the project ’s proposed activities with its expected outputs, outcomes, and development objectives \. The rejection of traditional approaches to school building using large quantities of stone and timber, along with labor -intensive construction techniques that necessitated large numbers of unskilled and semi -skilled workers from India, in favor of LGSF building technology, was an innovative method to enable the activities planned in Component 1 to meet the objectives of expanded access to education and improved relevance of education \. The PAD’s description of the Innovation Grants (pp\. 78-80) clearly outlined the relationship between anticipated grants and the achievement of development objectives\. However, Component 3 did not contain well-articulated implementation strategies for capacity building (ICR, p\. 11), raising questions about whether this component was well linked to the objectives of improving access, quality, and relevance of education \. 4\. Achievement of Objectives (Efficacy): Expand access to primary education is rated High \. Outputs : 28 schools were constructed or expanded /upgraded, almost reaching the target of 29\. Nine of those schools were middle and higher secondary schools \. Of those nine, six are located in remote areas \. In these schools, 408 classrooms were created, exceeding the target of 316\. 120 additional boarding spaces were created, exceeding the target of 100\. The number of schooling places for grades pre -primary to 12 increased from 129,160 in 2003 to 187,564 in 2011, exceeding the target of a 10,000-place increase\. Textbook and learning materials procurement and distribution were decentralized \. As a result, these materials were delivered on time, an improvement over three - to six-month delays prior to the project \. Outcomes : The net enrollment ratio (NER) of pre-primary to grade 6 increased from 62% in 2002 to 95\.1% in 2011\. The gross enrollment rate (GER) of pre-primary to grade 6 increased from 81% in 2002 to 120% in 2011; the 2011 GER exceeds 100% because a large number of over -age children joined primary education \. The completion rate for primary education at grade 6 increased from 71% in 2002 to 100% in 2011\. No targets were set for these indicators \. Expand access to secondary education is rated High \. Outputs : As in the first objective, the number of schooling places increased for grades pre -primary to 12, and delivery of textbooks and learning materials improved \. Outcomes : The GER at grades 7-10 increased from 49% in 2002 to 88% in 2011, against a target of 64%\. The GER for grades 11-12 increased from 18% in 2002 to 49% in 2011, against a target of 33%\. The transition rate from primary to secondary school increased from 87% in 2005/2006 to 94\.3% in 2009/2010\. The transition rate from lower secondary school to middle secondary school increased from 94% in 2005/2006 to 95\.4% in 2009/2010\. The transition rate from middle secondary school to higher secondary school increased from 65% in 2005/2006 to 69\.5% in 2009/2010\. Gender parity (ratio of girls to boys) increased from 47% at the primary level in 2002 to 50\.1% in 2011, against a target of 49%\. Gender parity increased from 45% for grades 7-10 in 2002 to 52% in grades 7-8 and 50\.6% in grades 9-10, against a target of 49%\. Improve educational quality at all levels is rated Modest \. Outputs : New management tools to guide policy and planning were adopted by the MOE, including an Education Review Committee, an Annual Education Conference, and since 2010, a Performance Management System (self-assessment tool) for schools\. Since 2007, all District Education Officers have met annually with the central MOE to discuss progress and achievement levels, and the MOE M&E Division annually performs site visits in the districts and receives reports and statistical data from schools and district offices \. 396 MOE staff received long-term training (degree work at the undergraduate and masters level ), and 94 received short-term training\. The ICR does not present evidence on the implementation of the results of this training \. A detailed proposal for a master plan for in -service education of teachers has been prepared and will be considered th for financing under the 11 Five-Year Plan\. This did not meet the target of a plan having been approved by the end of the project\. The mathematics curriculum was reformed and implemented for all grades, with teachers trained on the new curriculum\. An unspecified number of mathematics textbooks was procured \. Supplementary materials in English, Dzongkha, and mathematics, as well as library books, were distributed to 546 (exceeding a planned 296) primary and secondary schools \. As a result, the majority of these schools (exact number not specified) have functional libraries for the first time in their existence \. Fifteen Resource Centers to support clusters of schools were established by the project, as planned \. The ICR (p\. 17) states that, due to lack of technical back -up and limited financial resources for maintenance, these centers have had limited impact\. Innovation Grants were awarded to 36 schools\. Beneficiary schools received laptop computers, reading materials, and projectors\. The grants’ effectiveness has not been systematically evaluated \. IT education was introduced at all 60 secondary schools\. The project provided 761 computers, 64 projectors, and 94 printers to secondary schools \. An applied computer studies course was introduced for grades 11-12, with IT studies as an optional subject for grades 9-10 in 60 secondary schools\. The Royal University of Bhutan (RUB) Secretariat was established, as planned \. Construction of the Secretariat building was completed in December of 2008, and the RUB achieved complete autonomy in July of 2010\. Technical assistance from the project helped RUB to develop the “Wheel of Academic Law,â€? the academic regulations that now govern the university, as well as a 2004-2013 Strategic Plan\. Outcomes : Learning outcome data are presented for secondary education \. Subject scores for Grade 10 English were 51% in 2002 and 52\.6% in 2011, not meeting the target of 61%\. Subject scores for Grade 10 Math increased from 39% in 2002 to 51\.5% in 2011, exceeding the target of 50%\. Subject scores for Grade 10 Science increased from 43% in 2002 to 49% in 2011, not meeting the target of 53%\. No learning outcome data are presented for the primary or tertiary levels \. Improve relevance of education at all levels is rated Modest \. Interventions deliberately focused on mathematics, information technology, and English, subject areas that were determined best to position Bhutanese students for success in a modern economy \. Improvements in employment rates for graduates at both the secondary and tertiary levels (see Section 5) could be indicators of increased relevance of education on the demand site \. However, according to the ICR (p\. 9), a lack of centralized planning and implementation of analytical work on youth employment and underemployment meant that feedback into processes of curriculum development and school planning and management was not as vigorous as it might have been \. Also, the ICR (p\. 37) states that the project could also have focused more on vocational and soft skills education, which Bhutanese employers are increasingly demanding\. 5\. Efficiency: Efficiency is rated Substantial \. Based on estimates at appraisal, the project yielded an Economic Internal Rate of Return (EIRR) of 14% and a Net Present Value (NPV) of US$ 2\.24 million (PAD, pp\. 16-17, 41-52)\. The ICR calculates that school completion rates, especially at the secondary level, have increased by about 20% during the life of the project\. Employment rates for graduates at both the secondary and tertiary levels have improved by more than 10%, with unemployment falling from about 12% to 8% for secondary school graduates, and to 5% for tertiary school graduates \. Using these data, and finding that wages in 2010 for graduates are close to those predicted in the PAD, the EIRR is 16% and the NPV is US$ 3\.03 million, higher than projections at appraisal (ICR, pp\. 37-38)\. Even though rising construction costs resulted in 28 rather than the planned 29 schools being built/upgraded, the number of planned student places was exceeded because of efficient establishment of larger -than-planned schools at the middle and higher secondary levels \. According to the Summary of the Borrower ’s ICR (p\. 43), the project efficiently expanded and upgraded existing schools in addition to building new ones, prepared a master plan to maximize the use of available land, and adopted appropriate and efficient regional distribution of school construction \. The choice of LGSF technology cut down on the use of local construction materials that were increasingly scarce due to rapid growth in the private sector housing market and new hydroelectric power projects \. According to the ICR (p\. 14), the use of LGSF reduced typical school construction time by 50% compared with that for earlier Bank-financed projects in Bhutan, with labor time approximately 11\.4 person-days per square meter, compared with 22\.7 under prior projects\. The earthquakes of 2009 and 2001 that damaged many traditional houses and buildings did not damage schools built under the project using LGSF construction technology, avoiding repair and replacement costs \. The use of LGSF technology was also intended to have the additional benefit of providing skills development and new employment opportunities for youth who are normally not attracted to labor -intensive, low-wage jobs offered by the building industry (ICR, p\. 15)\. 290 workers were trained in LGSF technology, presumably making them more attractive to the private market and to prospective building industry employers; the ICR does not provide specific data on the workers who received this training \. The project team added that follow-up was carried out using qualitative methods by the School Planning and Building Division, Ministry of Education and by the Department of Employment, Ministry of Labour and Human Resources \. Most LGSF workers who were tracked reported increased levels of employability, attributable primarily to having gained valuable experience in the construction sector through the project\. However, as LGSF technology has not spread into the wider construction sector in Bhutan as anticipated (due mostly to the fact that the Ministry of Home and Cultural Affairs relaxed restrictions on the number of unskilled and semi-skilled foreign laborers who could enter the country ), Bhutanese contractors have had little incentive to hire more costly Bhutanese workers and employ more modern, higher technology building practices, such as LGSF \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re-estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal Yes 14% 100% ICR estimate Yes 16% 100% * Refers to percent of total project cost for which ERR/FRR was calculated\.  6\. Outcome: Relevance of objectives and design, as well as efficiency, were substantial \. Two of four objectives were highly achieved, and two were modestly achieved \. The project’s objectives were substantially relevant to country conditions at appraisal, to the Bhutanese strategy for education, and to the Bank ’s partnership strategy with Bhutan \. The project overachieved all targets for increasing access to education \. However, targets for improving quality of education were only modestly achieved, and there is little evidence provided on the quality and usage of curricula, training, textbooks, and other inputs intended to enhance quality \. Few data are presented on improvements in relevance of education, and a lack of centralized planning and implementation of analytical work on youth employment and underemployment meant that feedback into processes of curriculum development and school planning and management was not as vigorous as it might have been \. Also, there was little focus on vocational and soft skills education, which Bhutanese employers are increasingly demanding \. The project achieved a higher ERR and NPV than estimated at appraisal, and its choice of LGSF technology proved to be an efficient investment of Bank resources\. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: According to the ICR (p\. 38), with education expenditures rising to over 16% of GDP by 2010, the Government has been “easily able to absorb the recurrent cost implications â€? of the project\. The Government has maintained project-related investments since closure and is currently refining reforms begun during the project ’s lifetime\. The performance management system, for example, has “taken rootâ€? at all levels of administration, from central to school levels (ICR, p\. 10)\. Bank support for Bhutan’s education sector will continue in the form of analytic and advisory activities, including a public expenditure review and a policy note on higher education reform \. Capacity-building to address policy priorities of the national education framework has been institutionalized, from curriculum reform to service delivery in schools \. The RUB has been established as an autonomous institution \. The Bhutan Board of Examinations (BBE) has evolved to a high level of professional competence, “playing a leading role in Bhutan, in the region, and internationally â€? (ICR, p\. 19)\. A cadre of trained LGSF technicians and contractors exists \. District Education Officers stated in November 2011 that they would adhere to LGSF technology in the future, with appropriate design depending on the site and location \. The Government has articulated plans to revitalize the Resource Centers, as a tool toward providing a mandated 80 hours of professional development annually for teachers \. The ICR (p\. 20) cites continued risk, however, from the scaling down or ending of support from several development partners as Bhutan approaches middle income status, and from the possibility the human resource capacity could continue to act as a constraint on reform implementation \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: a\. Quality at entry: Project design supported a sector development program based on Bhutan ’s own vision and formulated through an inclusive and participatory approach \. The project built on two previous Bank -financed projects in the education sector (Primary Education Project, US$ 13\.6 million, 1988-1997; and Education Project (02), US$ 21\.2 million, 1998-2005)\. Lessons were appropriately learned from this previous experience, including the need for advance preparatory work to avoid construction delays, the importance of effective M&E, and the need for the MOE to establish accountability among its full -time staff to coordinate, manage, and deliver on project -financed activities\. However, school construction delays encountered in the previous projects suggest it might have been prudent to include more modest disbursement projections for the first two years of the project, particularly with the introduction of the new LGSF technology \. The project was prepared in consultation with stakeholders ’ assessment and benefited from needs assessments that helped to discern potential risks to implementation \. Risks were adequately identified and mitigated \. Two risks were rated substantial: that human resource capacity might not be ensured at an early stage, and that the increased size and complexity of the school building program might overwhelm Bhutan ’s implementation and construction capacity\. The apparent success of MOE ’s initial stages of piloting LGSF technology at one school was an important first step toward transition to the new technology \. The preparation process had the foresight to require in-country training of contractors as a prerequisite to bidding \. The PAD contains unusually detailed plans for the School Innovation Grant program (pp\. 78-80)\. The project team underestimated the costs for school construction using the LGSF technology (though the ICR, pp\. 20, makes the point that this was understandable, given that this technology had not been previously used in Bhutan)\. Also, according to the ICR (p\. 20), it is unclear how the preparation team computed the expected US$ 8\.0 million counterpart contribution (PAD, p\. 1), particularly since the DCA shows 97-100% financing by IDA for all categories\. at -Entry Rating : Quality -at- Moderately Satisfactory b\. Quality of supervision: The task team leader (TTL) was a member of the preparation team and stayed with the project until it closed \. This continuity, as well as the TTL ’s in-depth knowledge of the country, was a strong asset in maintaining a supportive presence with Government counterparts \. Bank managers consistently advised giving adequate attention to the quality and relevance objectives, so that these would not be overshadowed by school construction activities\. The Bank team, including its financial management and procurement units based in India, not only carried out portfolio and fiduciary reviews, but also provided advisory support appreciated by the MOE team, particularly to help fill occasional skills gaps due to MOE staff redeployments \. The Bank, MOE, and School Planning and Building Division (SPBD) staff regularly and jointly carried out inspections of construction activities \. The Bank team was appropriately responsive in providing additional IDA financing to meet increased costs of the school building program, justified on the evidence that the reasons for the cost escalation were outside the Government’s control\. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Government participated actively in project identification, and the Ninth Five -Year Plan provided a solid framework for preparation\. Throughout implementation, the Government showed a high level of dedication and commitment to achieving planned project outcomes as well as productive synergies with parallel actions supported by its own resources \. The Government made US$ 0\.50 million of what the PAD (p\. 1) cites as a planned US$ 8\.0 million contribution\. According to the ICR (p\. 20), however, this PAD statement may have been in error, as the DCA shows 97-100% financing for all categories\. The Government met all expectations for financing recurrent costs, and has agreed to cover any residual final payments to close out construction contracts (though there is lack of clarity in the ICR's account of the Government's contribution; see Section 2d)\. A Government/MOE input to the preparatory process was the pilot of the LGSF technology at one school, completed in the first year of project implementation \. When the number of candidates for the LGSF training program was too low to meet the requirements for construction, the Government intervened with incentives in the form of training stipends to persuade contractors to provide training in the new technology \. Government Performance Rating Satisfactory b\. Implementing Agency Performance: The project was implemented directly by the MOE, rather than by a separate implementing agency (project coordination unit)\. MOE had a strong vision for education sector development throughout project preparation and implementation, and “candid collaboration prevailed at all times â€? (ICR, p\. 22) between the MOE and the Bank task team\. The SPBD, which had responsibility for the school construction program,successfully pioneered the introduction of LGSF technology for the entire country \. Embedding the project in the MOE was occasionally a challenge, however, because staff regularly faced competing demands for their time\. In particular, the conduct of impact evaluations was crowded out, and in some areas of Component 2, staff showed reluctance to act because the requisite knowledge and capacity for implementation was not available (ICR, p\. 22)\. The staff member at the Policy and Planning Division of MOE who was responsible for overall project coordination changed three times over the project ’s lifetime, and there were similar changes in component managers and financial and procurement staff, resulting in uneven technical oversight during implementation\. New incoming staff would have benefited from more effective handover actions carried out with their predecessors \. Overall, however, issues with procurement and disbursement were eventually resolved (see Section 11), and civil works were supervised and built to a high standard \. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The PAD (pp\. 27-33) presents a coherent and complete design summary, specifying key performance indicators, data collection strategies, timetables /responsibilities for data collection, and complete baselines \.The number and scope of the performance indicators were ambitious \. The PAD’s plan for the Innovation Grant (pp\. 78-80) did not contain detailed provisions for evaluation of awarded grants \. b\. M&E Implementation: MOE established an Evaluation and Monitoring Support Services Division (EMSSD), with 17 staff recruited through open competition\. Education Monitoring and Assessment guidelines were established in 2003, and a decentralized M&E system focusing on District Education Officers and Assistant District Education Officers was put in place\. These district-level personnel are required to visit each school twice annually and report to the EMSSD \. Annual Education Statistical Report, which the MOE has produced regularly since the 1980s, were streamlined\. Overall, according to the ICR (p\. 8), “administrative data from Bhutan’s education sector is comparatively more reliable than many other countries at similar stages of development \.â€? A School Self-Assessment tool and School Improvement Plan was created \. EMSSD reviewed these plans through field visits\. Starting in 2010, a Performance Management System guide was used by department heads in each subject to observe teaching in classrooms and provide teachers with ongoing feedback \. The Bhutan Board of Examinations (BBE) conducted two National Education Assessments : a grade 6 test in Dzongkha (2005-2006), and a grade 10 test in English and Mathematics (2005-2008)\. The implementation of grade 8 examinations was decentralized to schools in 2009\. Over the project’s lifetime, the BBE “played a leading role and demonstrated a high level of competence in the region and internationally â€? (ICR, p\. 31)\. A tracer study of four cohorts (2005 through 2008) of school-leavers from grades 6, 8, 10, and 12 was completed in 2011\. This study intended to provide the basis for policies and programs responsive to high youth unemployment and underemployment\. However, this study, as well as other planned surveys, analytic work, and impact evaluation under the project, were the responsibility of MOE line divisions; according to the ICR (p\. 9), a lack of centralized planning and implementation of analytical work meant that feedback into processes of curriculum development and school planning and management was not as vigorous as it might have been \. The 36 awarded Innovation Grants have not been systematically evaluated \. Not all key performance indicators were included in regular Implementation Status Reports \. c\. M&E Utilization: According to the ICR (p\. 8), the Government and Bank teams fully used periodically collected data and analysis to monitor progress of the project and progress toward achievement of Ninth Five -Year Plan goals\. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: This Category B project triggered safeguard policies for Environmental Assessment (OP/BP/GP 4\.01) and Indigenous Peoples (OP 4\.20)\. The Bank team rated these two aspects as satisfactory throughout implementation \. The environmental issues were related to siting (land clearing), construction, operations, and maintenance (PAD, p\. 20)\. The Government prepared a set of guidelines for school construction to ensure that good environmental practices were adopted by districts and subdistricts, and this Environmental Management Plan was issued in March 2003\. Site visits to schools during implementation, however, found some areas for improvement, most typically relating to inadequate water and sanitation facilities (ICR, p\. 9)\. For example, the use of PVC piping for water systems and sewage, the common standard for Bhutan drawn from Indian construction practices, may be inappropriate to Bhutanese schools due to its low strength and cracking in cold temperatures \. According to the ICR (p\. 9), this is “a constant maintenance issue for schools \.â€? Compliance with safeguard policies was satisfactory (ICR, p\. 9)\. b\. Fiduciary Compliance: The project agreement called for a separate finance officer dedicated to the project, but in reality the MOE Finance Officer added work on the project to his regular administrative functions \. There were periodic delays in submission of financial reports, including audits \. During the first half of the project, it was a challenge to maintain two special accounts\. Procedural delays in reimbursement resulted until a decision was made at the mid -term review to merge the accounts and increase the overall allocation level \. The ICR does not state whether audits were unqualified; the project team confirmed that all audits were unqualified \. A procurement capacity assessment during preparation recommended increasing the number of procurement technicians due to the size of planned procurement activities \. The Government agreed to add an Assistant Procurement Officer before Credit effectiveness \. The capacity of staff was enhanced through training \. There was a systematic plan for handling the LGSF procurement that called for handling the procurement of major materials centrally and bifurcating the school building program into three main components for procurement purposes (site clearance, assembly works, and supplies )\. Frequent changes in staff made it difficult to maintain consistently satisfactory procurement capacity, and procurement issues were responsible for delays in the school construction program, but no cases of misprocurement were reported \. c\. Unintended Impacts (positive or negative): d\. Other: 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Targets for improving quality of Satisfactory education were only modestly achieved, and there is little evidence provided on the quality and usage of curricula, training, textbooks, and other inputs intended to enhance quality \. Few data are presented on improvements in relevance of education, and a lack of centralized planning and implementation of analytical work on youth employment and underemployment meant that feedback into processes of curriculum development and school planning and management was not as vigorous as it  might have been\. Also, there was little focus on vocational and soft skills education, which Bhutanese employers are increasingly demanding\. Risk to Development Moderate Moderate Outcome : Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Satisfactory Moderately MOE staff regularly faced competing Satisfactory demands on their time\. In particular, the conduct of impact evaluations was crowded out, and in some areas of Component 2, staff showed reluctance to act because the requisite knowledge and capacity for implementation was not available\. Staff turnover resulted in uneven technical oversight during implementation\. There were periodic delays in submission of financial reports, and procurement issues were responsible for delays in the school construction program\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following lessons are derived from the preparation and implementation experience described in the ICR : In a context with pre-existing human resource constraints, careful planning must govern human resource development programs\. In this case, while scholarships for training abroad contributed to capacity development, some staff who would have been best suited to manage specific project interventions at critical points were instead absent for extended periods while on training missions \. These short-term constraints can be managed through careful timing of training missions and attention to effective handover of responsibilities to temporary replacement staff\. When one component or set of activities dominates a project ’s resources, smaller components may be put at risk \. In this case, the school construction activities, in the context of a ministry with limited capacity, may have crowded out the curriculum development and institutional strengthening components \. Education should be understood to encompass not only formal pre -primary through higher secondary and university education, but also vocational and soft skills, particularly in an employment environment that values those skills\. A broader approach might have enhanced relevance through an additional focus on skills -based education and training (see ICR, p\. 24)\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR is clear, concise, and evidence-based\. It links the project’s outputs to outcomes in a straightforward and logical manner\. Its economic analysis is thorough and comprehensive\. The ICR does not state whether there was compliance with safeguards, nor whether audits were unqualified\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P078658

 Document of The World Bank Report No: ICR2168 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H0890 IDA-H3620 TF-54242) ON AN IDA GRANT IN THE AMOUNT OF SDR 68\.1MILLION (US$ 100 MILLION EQUIVALENT) AND AN IDA GRANT IN THE AMOUNT OF SDR 31\.3 MILLION (US$ 50 MILLION EQUIVALENT) AND A TRUST FUND IN THE AMOUNT OF SDR 68\.1 MILLION (US$ 100 MILLION EQUIVALENT) TO THE DEMOCRATIC REPUBLIC OF CONGO FOR AN EMERGENCY DEMOBILIZATION AND REINTEGRATION PROJECT March 30, 2012 Fragile States, Conflict and Social Development Unit Sustainable Development Department Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective February 2012) Currency Unit = Congolese Francs (CDF) CDF 1 = US$ 0\.001081 US$ 1\.00 = CDF 925\.00 FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS ADF Allies Democratic Forces AG Armed Group AGF Agence de Gestion Fiduciaire / Financial Management Agency AfDB African Development Bank ASR Applicatif de Suivi de la Réinsertion / Application for Reintegration Support BCECO Bureau Central de Coordination / Central Coordination Office BNK Basic Needs Kit CAFF Children Associated with Fighting Forces CBR Community Based Reintegration CDC Community Development Committee CGFDR Financial Management Committee for Demobilization and Reintegration CI-DDR Comite Interministériel de DDR / Inter-ministerial Committee on DDR CNDP Congrès national pour la défense du peuple / National Congres for the Defense of the People CO Centres d’ Orientations / Orientation Centres CONADER Commission Nationale de la Démobilisation et Réinsertion / National Commission for DDR CRDP Community Reintegration and Development Project DDRRR Disarmament, Demobilization, Repatriation, Resettlement and Reintegration CTO Centre of Transit and Orientation CSO Civil Society Organization DA Designated Accounts DC Discharge/Demobilization Center DDR Disarmament, Demobilization, and Reintegration DRC Democratic Republic of Congo DRO District Reintegration Officer EAFGA Enfants Associés aux Forces et Groupes Armés / Children Associated with Armed Groups EDPRS Economic Development and Poverty Reduction Strategy EU European Union FAC Forces Armée Congolais / Congolese Armed Forces FAFGA Femmes Associes aux Forces et Groupes Armés / Female Associated with Armed Groups FAG Congolese armed groups FARDC Forces Armées de la République Démocratique du Congo / Armed Forces of DRC Force Démocratique pour la Libération du Rwanda / Democratic Forces for the Liberation FDLR of Rwanda FNI Front des Nationalistes et Intégrationnistes / Front of Nationalists and Integrationists FNL Front National de Libération / National Liberation Front FPI Front Nationaliste et Intégriste / National and Integration Front GLR Great Lakes Region GTZ German Technical Cooperation HIV/AIDs Human Immune Virus/Acquired Immunity Deficiency Syndrome ID Identity Card IFR Interim Financial Reports IGA Income Generating Activity LEAP Learning for Equality, Access and Peace Program MINEDUC Ministry of Education MINEFIN Ministry of Finance MINISANTE Ministry of Health MIS Management Information System MDRP Multi-Country Demobilization and Reintegration Program MDTF Multi-Donor Trust Fund MLC Mouvement pour la Libération du Congo / Movement for the Freedon of DRC M&E Monitoring and Evaluation MOD Ministry of Defense MONUC United Nations Mission in the Democratic Republic of Congo MTR Midterm Review NGO Non Governmental Organization PNDDR Program National du DDR / National Program for DDR PDOP Pre-Demobilization Orientation Program PRSP Poverty Reduction Strategy Papers RCD Rassemblement Congolais pour la Démocratie / Congo Group for Democracy RG Reintegration Grant SMI Structure Militaire d'Intégration / Military Coordination Mechanism THK Take Home Kit TCC Technical Coordination Committee TS Technical Secretariat TSA Transitional Subsistence Allowance UEPN Unité d’Exécution du Programme National / Project Implementation Unit for the PNDDR UN United Nations UNICEF United Nations Children's Fund UNDP United Nations Development Programme USAID Unite States Agency for International Development VCT Voluntary Counseling and Testing VSW Vulnerability Support Window Vice President: Obiageli Katryn Ezekwesili Country Director: Eustache Ouayoro Sector Manager: Ian Bannon Project Team Leader: Bernard Harborne ICR Team Leader: Stavros George Stavrou  DEMOCRATIC REPUBLIC OF CONGO EMERGENCY DEMOBILIZATION AND REINTEGRATION PROJECT Table of Contents A\. Basic Information \. i B\. Key Dates \. i C\. Ratings Summary \. ii D\. Sector and Theme Codes \. ii E\. Bank Staff \. ii F\. Framework Analysis \. iii G\. Ratings of Project Performance in ISRs \. v H\. Restructuring \. v I\. Disbursement Profile \. v 1\. Project Context, Development Objectives and Design \. 1 1\.1 Context at Appraisal \. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators \. 3 1\.3 Revised PDO and Key Indicators and Justification \. 3 1\.4 Main Beneficiaries \. 4 1\.5 Original Components \. 4 1\.6 Revised Components \. 5 1\.7 Other Significant Changes \. 6 2\. Key Factors Affecting Implementation and Outcomes \. 7 2\.1 Project Preparation, Design and Quality at Entry \. 7 2\.2 Implementation \. 9 2\.4 Safeguard and Fiduciary Compliance \. 13 2\.5 Post-completion Operation \. 16 3\. Assessment of Outcomes \. 16 3\.1 Relevance of Objective, Design and Implementation \. 16 3\.2 Achievement of Project Development Objectives \. 17 3\.3 Efficiency \. 19 3\.4 Justification of Overall Outcome Rating \. 20 3\.5 Overarching Themes, Other Outcomes and Impacts \. 20 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops \. 21 4\. Assessment of Risk to Development Outcome \. 22 5\. Assessment of Bank and Borrower Performance \. 22 5\.1 Bank Performance \. 22 5\.2 Borrower Performance \. 23 6\. Lessons Learnt \. 24 7\. Comments on Issues Raised by Borrower, Implementing Agencies and Partners \. 25 Annex 1\. Project Costs and Financing \. 27 Annex 2\. Outputs by Component \. 30 Annex 3\. Economic and Financial Analysis \. 36 Annex 4\. Bank lending and implementation support/supervision processes \. 44 Annex 5\. Beneficiary Survey Results \. 46 Annex 6\. Stakeholder Workshop Report and Results \. 55 Annex 7\. Summary of Borrower's ICR \. 58 Annex 8\. Comments of Co-financiers and Other Partners / Stakeholders \. 69 Annex 9\. Additional lessons learned \. 70 Annex 10\. List of Supporting Documents\. 72 Annex 11\. List of Persons Met\. 74 Annex 12\. Map of the DRC \. 75 A\. Basic Information Emergency Demobilization Country: Congo, Democratic Republic of Project Name: and Reintegration Project IDA-H0890,IDA-H3620,TF- Project ID: P078658 L/C/TF Number(s): 54242 ICR Date: 03/30/2012 ICR Type: Core ICR GOVERNMENT OF THE Lending Instrument: ERL Borrower: DRC Original Total Commitment: USD 100\.00M Disbursed Amount: USD 144\.27M Revised Amount: USD 146\.74M Original Total Commitment USD 100\.00M Disbursed Amount: USD 90\.55M Revised Amount: USD 90\.55M Original Total Commitment: USD 50\.00M Disbursed Amount: USD 48\.11M Revised Amount: USD 48,06M Environmental Category: B Implementing Agencies: Unité d'Exécution du Programme National de Désarmement, Démobilisation et de Réinsertion Co financiers and Other External Partners: African Development Bank, Government of Netherlands, Danish Aid, Italian Directorate General for Development Cooperation , UK-Department For International Development, Swedish International Development Cooperation Agency, Government of Norway, Government of Finland, European Union, Belgian Cooperation, Germany Technical Cooperation, Canadian International Development Agency, Irish Aid, Government of France B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/10/2002 Effectiveness: 11/09/2004 11/09/2004 Appraisal: 01/30/2004 Restructuring(s): 05/26/2008 Approval: 05/25/2004 Mid-term Review: 10/31/2009 12/31/2009 Closing: 03/31/2008 09/30/2011 i C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Performance: Moderately Satisfactory Overall Borrower Performance: Moderately Satisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation Performance Indicators QAG Assessments (if any) Rating Potential Problem Project at any time : Yes Quality at Entry (QEA): None Problem Project at any time: Yes Quality of Supervision (QSA): None DO rating before Closing/Inactive status: Satisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Health 5 5 Other social services 95 95 Theme Code (as % of total Bank financing) Conflict prevention and post-conflict reconstruction 29 29 Gender 14 14 HIV/AIDS 14 14 Other social protection and risk management 14 14 Social safety nets 29 29 E\. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo Country Director: Eustache Ouayoro Emmanuel Mbi Sector Manager: Ian Bannon Laura Frigenti Project Team Leader: Bernard Harborne John Elder ICR Team Leader: Stavros George Stavrou ICR Primary Author: Stavros George Stavrou ii F\. Framework Analysis Project Development Objectives (from Project Appraisal Document) The objectives of the EDRP were to: ï‚ assist the Government in creating long-term sustainable social development and supporting macroeconomic stability in its territory through the demobilization of approximately 150,000 ex- combatants (including 30,000 children), while providing support for their reinsertion and social and economic reintegration; and ï‚ contribute to the reallocation of the recipient’s resulting budget savings from defence to social and economic sectors\. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Formally Target Values Revised Actual Value Achieved at Indicator Baseline Value (from Target Completion or Target Years1 approval Values documents) 125,000 150,000\.00 adults2 (120,000 In total 109,846 adults and Ex-combatants demobilized 0\.00 & adults and 31,738 children 39,000 30,00 children) children The ratio between social sector expenditures and defense expenditures increases each year of the project from 23\.00 25\.00 23\.50 23% (in 2002) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Achieved at Baseline Values Revised Indicator Completion or Target Value (from Target Years approval Values documents) Ex combatants demobilized by end of first year 0 30,000 40,574 Ex combatants demobilized by end of second year 0 110,000 102,014 Orientation centers established according to Joint yes 20 20 operations plan Reinsertion payments made upon discharge from 0 101,000 100,100 orientation centers Error in reinsertion payments 0 5% 0\.60% Withdrawal requests and disbursement of funds are made No reports of significant N/A N/A in a timely fashion\. delays 1 209,605 ex-combatants were verified through the process, with 66,814 opting for reintegration into the FARDC\. A total of 109,846 adults went through demobilization so they could be returned to civilian life\. A further 1,838 were demobilized by the UNDP in Ituri between Phases I and II of the project, but treated for services within the MDRP/TDRP\. Thus a figure of 111,053 is sometimes given as the overall number demobilized\. 2 This estimate was based on an estimated number of combatants in armed groups who would present themselves for either DDR or entry into the FARDC\. iii  Original Target Formally Actual Value Achieved at Baseline Values Revised Indicator Completion or Target Value (from Target Years approval Values documents) Sensitization and information tools for ex-combatants in place in a timely manner and in accordance with the N/A N/A Yes, within a three months PNDDR\. Demobilized ex combatants engaged in reintegration Phase one unknown 0 60% 19,0003 activities three months after demobilization\. 8,245 in phase two4 80% of eligible ex-combatants receive their transitional safety allowance (TSA) within nine months of their 0 80% 100% 80% demobilization Ex combatants receive 100% of their TSA within four 0 23,000 5,868 months of demobilization Ex Combatants engaged in productive economic activity 0 60% 80\.4% one year after demobilization 64\.7%5 (100% of 8,678 Percentage of demobilized ex-combatants engaged in CAAF opted for education) productive economic activity or schooling one year after 0 60% adults 125,000 Total received support demobilization 120,383 98% 80% Children provided with reintegration support 0 70% ongoing support to 8,678 9,000 during extension period\. Households of orphaned and vulnerable children aged 0- 17 receiving free basic external support in caring for the 0 28,000 33,035 child Active program for female ex-combatants within 6 Special Project active N/A N/A months of the start of the demobilization process\. within 18 months Disabled ex combatants are provided with additional 609 (& 347 psycho-social N/A N/A assistance assistance) Persons aged 15 and older who received counseling and 0 0 6,560 testing for HIV and received their test result Ex combatants demobilized within three months of 0 10,000 5,994 (in total) effectiveness of additional financing By the closing date, demobilized disabled ex-combatants All those in program were 0 N/A are provided with support appropriate to their condition supported Management Information System in place 3 months after N/A Yes, project effectiveness External evaluation of the implementation of the Project N/A N/A No is carried out annually 3 This was an estimate given at the time by the Armed Groups\. A total of 20,142 ex-combatants came forward and were verified, however of which 7,832 chose DDR and 8,245 chose to join the FRDC\. In addition there was of 57, 198 ex-combatants still to receive reintegration support from the Project\. 4 Not possible to accurately determine, due to no independent empirical data\. 5 Difficult to determine rolling figures per annum due to lack of empirical data - 75% of men & 69% of women achieved a productive economic livelihood after 4 yrs\. iv G\. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No\. DO IP Archived (USD millions) 1 11/17/2004 Satisfactory Satisfactory 0\.00 2 11/29/2004 Satisfactory Satisfactory 0\.00 3 03/02/2005 Unsatisfactory Unsatisfactory 5\.41 4 06/07/2005 Moderately Unsatisfactory Moderately Unsatisfactory 18\.25 5 12/02/2005 Moderately Unsatisfactory Moderately Unsatisfactory 36\.28 6 12/20/2005 Moderately Unsatisfactory Unsatisfactory 54\.91 7 03/27/2006 Moderately Satisfactory Moderately Unsatisfactory 70\.57 8 07/11/2006 Moderately Satisfactory Moderately Satisfactory 90\.26 9 11/15/2006 Moderately Satisfactory Moderately Satisfactory 93\.39 10 01/20/2007 Moderately Satisfactory Unsatisfactory 94\.36 11 06/06/2007 Moderately Satisfactory Unsatisfactory 98\.57 12 11/29/2007 Moderately Satisfactory Unsatisfactory 97\.50 13 06/02/2008 Satisfactory Moderately Satisfactory 96\.13 14 12/18/2008 Moderately Satisfactory Moderately Satisfactory 98\.41 15 05/09/2009 Moderately Unsatisfactory Moderately Unsatisfactory 101\.80 16 08/28/2009 Moderately Satisfactory Moderately Satisfactory 106\.16 17 03/11/2010 Satisfactory Satisfactory 115\.76 18 04/15/2011 Satisfactory Satisfactory 133\.89 19 11/12/2011 Satisfactory Satisfactory 141\.47 H\. Restructuring ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions Time extension and budget 05/26/2009 MS MS 125\.0 reallocation v 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. Since the mid-1990s, the Great Lakes Region (GLR) had been embroiled in a series of closely connected conflicts directly affecting the territory of the Democratic Republic of Congo (DRC)\. The war, linked to the spill-over of the Rwandan genocide in 1994 and the fall of the Mobutu regime, ended up involving ten other African countries and numerous Congolese armed groups\. An estimated 3\.5 million people died, and some 2 million were displaced, with over 200,000 seeking refuge in neighboring countries\. 2\. A gradual ending of the armed conflict started with the 1999 Lusaka Cease-fire Agreement and was completed in the signing of the All-Inclusive Global Accord of December 2002 and the Sun City Accords of April 2003 forming a Government of Transition for DRC\. Violence did not cease however, particularly in eastern Congo, and the Congolese parties that had just signed the accords and their international partners confronted an enormous challenge in ensuring peace and stability\. The various types of organized armed forces in the Congo included: ï‚ Regular foreign armed forces: up to ten neighboring states had regular soldiers on DRC territory; ï‚ Foreign armed groups: a number of foreign groups sought sanctuary in DRC including the FDLR, the Lord’s Resistance Army, the FNL and the ADF;6 ï‚ Congolese armed forces: including the national army, the Force Armées Congolaises (FAC), and the rebel signatories to the Global Accords including RCD-Goma, MLC, RCD-ML7 and a select few Mai Mai forces;8 ï‚ Congolese irregular armed groups: included local militia such as the Mai Mai forces as well as other armed groups that emerged during the continuing conflict in eastern Congo such as the FPI, FNI, and the CNDP\.9 3\. Under the Global Accords and subsequent peace treaties a multi-layered approach was established to push toward gradual demilitarization of an estimated 300,000 armed forces in DRC\. The legal framework and international support for the various armed forces is outlined below: ï‚ Regular foreign armed forces: from the Lusaka agreements in July 1999, to the Pretoria Agreement between Rwanda and DRC in July 2002, the Luanda Agreement between Uganda and DRC in September 2002, these forces were demarcated and withdrew from DRC territory by 2004, under the monitoring of the Third Party Verification Mechanism (South Africa) and the UN Peacekeeping Mission (MONUC); 6 The foreign forces are defined as the Forces Démocratiques pour la libération du Rwanda, FDLR, Forces Nationales de libération du Burundi, FNL and the Allied Democratic Forces, ADF from Uganda\. 7 Congolese armed forces included (RCD-Goma, Rassemblement Congolais pour la Démocratie, MLC, Mouvement pour la Libération du Congo, RCD-ML, Rassemblement Congolais pour la Démocratie-Mouvement pour la Libération)\. 8 The Mai-Mai forces are the Congolese local self-defence or territorial militias largely resident in eastern Congo\. 9 These were the two Ituri based militia, the FNI (Front des Nationalistes et Intégrationnistes) and the Front Nationaliste et Intégriste and the Rwandan- backed CNDP Congrès national pour la défense du people\. 1 ï‚ Foreign Armed Groups: no binding agreements were ever signed and these have remained the priority of MONUC under its DDRRR program (disarmament, demobilization, repatriation, resettlement and reintegration) for a decade supported by the rapprochement between DRC and Rwanda in 2008; ï‚ Congolese Armed Forces: as signatories to the Global Accords and numbering about 150,000 combatants these forces were the target population of the National Program for Demobilization and Reintegration Program (PNDDR) of the Government financed by the World Bank and donor partners, and after July 2003, supported by MONUC whose mandate was extended to include the demobilization of Congolese combatants (UN Resolution 1493); ï‚ Congolese irregular armed groups: these were addressed in a haphazard way according to local peace agreements over the decade\. The Dar as Salaam peace accords of 2003 provided the framework for cessation of the Ituri conflict supported by the Government with UNDP, USAID and the World Bank\. Later agreements, including Goma in 2008 and 2009, provided for the CNDP and local Mai Mai groups which were primarily integrated into the national army, the FARDC\. 4\. During 2002, the World Bank, in conjunction with 13 donors and in collaboration with governments in the GLR, established the Multi-country Demobilization and Reintegration Program (MDRP)\. This was designed as a financing and coordination framework to support the peace process in the region and specifically to support national demobilization and reintegration programs (DDR) to motivate former combatants return to civilian life\. 5\. Under the aegis of the MDRP, the Bank started a dialogue with the DRC authorities on the modalities to fund the PNDDR\. The design and appraisal of the Emergency Demobilization and Reintegration Program (EDRP) took some 18 months\. During this time, the World Bank team in collaboration with its partners achieved the following: ï‚ The design of a Joint Operations Plan with key stakeholders such as the newly formed FARDC (the national army) and MONUC outlining the particular system, known as brassage, for providing options for combatants (described below); ï‚ Use of the Special Projects window under the MDRP to finance a Rapid Response Mechanism for UNDP of $10 million to respond to immediate needs, such as disarmament in Ituri, as well as support capacity building of DRC authorities before the launch of the EDRP; and ï‚ Use of the Special Projects window to support the establishment of a program (which later became part of the PNDDR) comprising grants to UNICEF and four NGOs to help the return and reintegration of some 30,000 children associated with armed forces (CAFF)\. 6\. The EDRP, signed in April 2004, comprised two financing instruments, an IDA grant for $100 million and a multi-donor trust funded grant (as a technical annex, from the MDRP) for $100 million\. The EDRP, and the focus of this Implementation Completion Report, had two phases: ï‚ Phase I – April 2004-April 2008 – led by the National Commission for Disarmament, Demobilization and Reintegration (CONADER) financed by $100 million IDA and $100 million trust funds; 2  ï‚ Phase II – November 2008-September 2011– led by the implementing agency, UEPN-DDR (Unité d’Exécution du Programme National de Désarmement, Démobilisation et Réintégration) financed by an Additional Financing from IDA of $50 million\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators 7\. The original objectives of the EDRP were to: ï‚ assist the Government in creating long-term sustainable social development and supporting macroeconomic stability in its territory through the demobilization of approximately 150,000 ex- combatants (including 30,000 children), while providing support for their reinsertion and social and economic reintegration; and ï‚ contribute to the reallocation of the recipient’s resulting budget savings from defense to social and economic sectors\. 8\. The key performance indicators are summarized in the table below: Table 1: Key Performance Indicators at approval Program Phase Key Program Performance Indicators ï‚ 30,000 ex-combatants are demobilized end of the first year of the Project, and additional 80,000 ex- Macro combatants are demobilized end of the second year of the Project\. Indicators ï‚ The ratio between social sector expenditures and defense expenditures increases each year of the project from 23% (in 2002) ï‚ Withdrawal requests and disbursement of funds made in a timely fashion\. ï‚ Management Information System functional three months after Project effectiveness\. General ï‚ An external evaluation of the implementation of the Project is carried out annually and include an analysis of environmental and social monitoring indicators Sensitization & ï‚ Sensitization and information tools for ex-combatants in place in a timely manner and in accordance Information with the PAD\. Demobilization ï‚ Orientation Centers (OCs) established according to the timeline in the Joint Operations Plan\. ï‚ Eligible ex-combatants receive their first reinsertion payment upon discharge from demobilization sites Transition/ and 80% of their transitional safety allowance (TSA) within nine months of their demobilization Reinsertion ï‚ Less than 5% error (double or incorrect payments) in reinsertion payments\. ï‚ 60% of demobilized ex-combatants engaged in productive economic activities (or schooling) one year after receiving their final payment\. Reintegration ï‚ Active program for female ex-combatants within 6 months of start of demobilization\. ï‚ 70% of CAFF successfully reintegrated in their chosen reintegration site within 12 months of leaving the transit centers and OCs\. 1\.3 Revised PDO and Key Indicators and Justification 9\. The original PDO was not changed following the additional financing agreement of the EDRP from 2008 to 2011, but some key indicators were adjusted at the time of the extension to reflect new realities\. These are summarized below\. 3 Table 2: Revised Performance Indicators at Extension Program Phase Key Program Performance Indicators ï‚ Demobilize an additional 23,000 combatants and provide them with TSAs ï‚ Provide limited reintegration support to an estimated 19,000 militia armed group members in the East of the country Macro- ï‚ Complete socio-economic reintegration support for 40,000 demobilized ex-combatants (old case load) Indicators and 23,000 newly demobilized ex-combatants ï‚ Provide reintegration support to 9,000 children from armed forces ï‚ Provide specialized support to disabled ex-combatants ï‚ Number of demobilized ex-combatants engaged in productive economic activities (or schooling) to General reach 125,000 Demobilization ï‚ 10,000 ex-combatants are demobilized within three months of the Effectiveness Date Transition/ ï‚ Percentage of ex-combatants receive 100% of TSA within four months of demobilization Reinsertion ï‚ Number of children associated with armed forces (CAAF) reintegrated to increase to 39,000 ï‚ By the closing date, 80% of the children associated with armed forces and armed groups are Reintegration successfully reintegrated ï‚ At close disabled ex-combatants provided with support appropriate to their condition 1\.4 Main Beneficiaries 10\. The beneficiaries of the EDRP were: (i) all ex-combatants of the signatories of the ceasefire: FAC, MLC, RCD, RCG-Goma, RCD-ML, RCD-N, Mai-Mai forces, ex-FAZ in the Republic of Congo and ex-gendarmes from Katanga in Angola, as well as non-signatory armed groups specified in the Presidential Decree of the PNDDR; (ii) Congolese ex-combatants abroad seeking to return home; and (iii) children involved in the conflict as defined in the Cape Town Principles\. 10 Within the above categories, special target groups were defined as: females, disabled and chronically ill ex-combatants, and all children associated with or released from Armed Forces and Groups\. 1\.5 Original Components 11\. The original Program had the following six components:11 ï‚ Sensitization: Prior to the launching of the actual DDR process, CONADER commissioned specialized agencies to sensitize both the potential beneficiaries and the communities to which they returned as to the content and implications of the PNDDR in order to manage expectations and secure participation in the program\. It also instituted specific reconciliation activities in communities where the return of ex-combatants might have caused tension or hostility\. ï‚ Demobilization: This included the establishment of and transport to demobilization centers of ex- combatants (including provisions for special target groups: separation of women and children from men, special care for children and consideration of dependents)\. In addition medical screening (including HIV/AIDS counseling and voluntary testing and identification of special needs of women 10 Optional Protocol to the Convention on the Rights of the Child on the Involvement of Children in Armed Conflict (2000) that sets 18 as the minimum age for direct participation in hostilities, for recruitment into armed groups, and for compulsory recruitment by governments\. Included are guidelines on the treatment of children associated with armed groups when demobilized\. 11 Please see Annex 3 for more detail on each component\. 4  and children) was undertaken\. Also included was the verification of ex-combatants’ eligibility status, provision of identity cards, collection of basic socio-economic data and pre-discharge orientation about civilian life and program benefits\. Ex-combatants were then given a transport allowance, a Transitional Safety Net (TSN), and facilitation of transport to the ex-combatants’ preferred area of return\. ï‚ Transition and Reinsertion: Upon discharge from the Orientation Centers, demobilized combatants were provided support for a limited period following their return and transition to civilian life\. It consisted of a Basic Needs Kit to assist in the actual return and the first part of a Transitional Subsistence Allowance (TSA) to sustain the ex-combatant and family until they had a chance to register for the reintegration program in their area\. A second and third installment of the TSA was paid once the ex-combatant registered in the chosen area of reintegration and started participating in program activities\. ï‚ Reintegration: (i) Economic reintegration support was provided to all ex-combatants through the provision of agricultural and non-farm income-generating vocational and apprenticeship training, advisory services particularly for the promotion of income generating activities (IGA) and basic start-up goods, and education and scholarships for minors\. (ii) Social reintegration support through community level programs promoting reconciliation and strengthening social cohesion through the provision of technical advisory and outreach services was undertaken in most communities receiving ex-combatants\. Special programs for female, disabled and chronically ill ex-combatants were also implemented, albeit limited\. Special assistance was also provided to children associated with armed forces and armed groups with family tracing and reunification, counseling, psychosocial care, facilitation of access to education and skills training in communities of settlement through the provision of goods and technical advisory services\. A number of special projects were set up to deal with vulnerable groups, three of which were related to reintegration activities: a Gender-based Violence Trust Fund, a Social Action Fund and HIV/AIDS supported projects\. ï‚ Institutional Development and Program Implementation Support: This aimed at strengthening the capacity of the recipient’s institutions at the central and local levels to carry out and support activities under the EDRP through the provision of training and technical advisory services, the acquisition of vehicles and equipment, financing of operating costs, and audits\. 1\.6 Revised Components 12\. Given circumstantial changes the content of the original components were slightly modified to include support to the following activities: ï‚ Reinsertion support: In 2007, reinsertion kits valued at $110 per kit (plus a bag valued at $30) were replaced by a $140 cash payment\. The reintegration package increased from $300 to $400\. The extra $100 was given in kind, in the form of a bicycle\. ï‚ Reintegration: There was a shift from individual assistance to promoting economic and social associations of demobilized ex-combatants and adapting reintegration packages to reflect the local context, as well as increasing the per capita amount from $400 to $600\. ï‚ Special Target Groups: communication and sensitization messages adapted to promote greater girls’ and women’s participation in the PNDDR; adaption of kits (for girls with babies or married girls) in Phase II\. 5 1\.7 Other Significant Changes 13\. Eligible Combatants\. Due to the emergence of militia groups that were not signatories to any peace agreements, the Midterm Review (MTR) of September 2006 recommended that a new strategy and program be developed to deal with these groups outside the framework of the existing PNDDR\. The MTR also recommended that a date be set to complete demobilization of the remaining military, to coincide with the installation of the newly elected Government and the end of the transition in October 2006\. However, the final closure date of formal entry into DDR, associated with the Lusaka Agreement, was not until October 2010\. 14\. Financial management\. Although the Grant was approved in May 2004, the project did not become effective until November 2004, primarily because: (i) a key condition, the recruitment of an independent financial agency, was not met in a timely manner; and (ii) there was a lack of understanding on respective roles of the two bodies created to manage the PNDDR\. These were: (i) CONADER responsible for the overall coordination, management and implementation of the project; and (ii) CGFDR created to ensure a transparent bidding process, provide financial management and procurement support, and ensure proper reporting\. After consulting with the Bank, the Government abolished CGFDR in May 2005\. 15\. Army integration and demobilization\. The Joint Operations Plan envisaged a brassage process which combined army integration and demobilization; all armed forces as defined by the Accords were assembled in centers around the country and combatants given the option of staying in the army or demobilizing\. It took two years for the Government to provide a detailed plan for military integration\. Implementation of the brassage was then further delayed due to the enormous challenges around the lack of infrastructure, the geographical distances, and the lack of funding\. In 2005, to facilitate the process, the Bank agreed to finance the air-transport associated with the brassage effectively unblocking the process, resulting in a smoother operational roll-out\. 16\. Harmonization of Grant Agreements\. The two grant agreements from IDA and MDRP had different closing dates (MDRP in February 2007 and IDA in March 2008)\. The MTR recommended harmonizing the closure of both agreements\. Despite consistency between the objectives of the Technical Annex and Grant Agreement, the MTR assessed that the objectives were not clearly defined, were too general and needed to be revised\. The MTR also argued that the performance indicators in the Grant Agreement and the Technical Annex needed to be harmonized with particular reference to the cash payments and reduction in military spending\. It was agreed with the Government to incorporate the MTR recommendations in the implementation arrangements for the new Additional Financing Agreement (Phase II)\. 17\. In February 2007, as part of the Additional Financing Agreement, the Government agreed to replace CONADER with a new project management unit in the Ministry of Defense\. The Government also agreed that an independent international accounting firm would handle all financial and procurement matters and serve as a co-signatory on the Bank Designated Accounts for the Project\. In July 2007, in agreement with IDA, CONADER was replaced by the Unité d'Exécution du Programme National de Désarmernent, Démobilisation et Réinsertion (UEPNDDR)\. The Government established the new institution by Presidential decree and nominated a Program Coordinator, and KPMG was selected to provide the financial oversight\. 6 18\. Procurement arrangements during Phase I and Phase II were mostly similar, with some alterations in the second Grant on procurement of goods and services, works, consulting services, and prior review threshold\. One of the conditions of additional financing for example was that the Government had to repay almost $6\.4 million as a result of ineligible expenses and misprocurement\. According to an INT investigation in 2007, applicable procurement procedures were violated in connection with: (i) chartering certain flights to transport demobilized ex-combatants; (ii) recruitment of local staff by CONADER; (iii) a company billed the PNDDR for time worked by “ghost employees;â€? and (iv) payments to a project official by two companies in exchange for an award to supply computer equipment and services 12 \. During Phase I, the Government requested three budget reallocations, approved and processed in February 2007, July 2007, and March 2008 respectively\. These reflected the need to: (i) reallocate cost categories given savings in some categories and additional costs in others; (ii) account for the cancellation resulting from the $6\.4 million misprocurement outlined above; and (iii) ‘ensure’ an efficient program closure\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 19\. Since 2001, the transitional Government had launched a program of economic reforms to restore macro-economic stability, kick-start economic activity, and tackle governance issues, with support from the Bank and the International Monetary Fund (IMF)\. The Government had established an institutional DDR structure, progressed in incorporating the main armed groups under a unified command structure, and initiated the restructuring of the army with support from international partners\. 20\. Established in 2002, the MDRP represented the Bank’s and donors’ response to coordinate DDR efforts in the GLR\. This regional approach offered several key advantages including: (i) exchange of information between national programs; (ii) creation of synergies allowing MDRP to have a greater impact on national programs; (iii) capacity to take into account regional impacts; and (iv) increased transparency in national programs\. The MDRP benefited from lessons learned in previous DDR operations in Africa and elsewhere, which were integrated into the various components of the EDRP\. 21\. The PDO was designed as a main PDO and a sub-ordinate PDO, with a causal relationship between the two\. The main PDO stated a targeted amount of ex-combatants which would be processed by the Project\. All subsequent project indicators related to the various project components that were operationalized during the Project lifetime\. The performance of the sub-ordinate PDO was directly related to that of the main PDO, which explicitly stated that in order to assist the Government in creating long-term sustainable social development and supporting macroeconomic stability it was necessary to demobilize and assist with the reintegration of approximately 164,000 ex-combatants (including 39,000 children)\. As a result of a reduction in defense spending and a stable socio-economic environment, the Government should be in the position to both reduce the budget deficit and reallocate expenditures from defense to social and economic sectors\. Due to ongoing success in the achievement of the main PDO, as well as increased overall stability (bar the eastern part of the country) and encouraging improvements in the social and economic sectors in the country, both components of PDO were retained when the Additional Financing Agreement was drafted\. In turn, Bank senior management had asked the task team, 12 World Bank Department of Institutional Integrity (2007), Democratic Republic of Congo\. Emergency Demobilization and Reintegration Project\. Redacted Report\. 7 in line with an agreement with the Head of UNDPKO, to seek Government consent to undertake a public expenditure review of the security sector\. This proved not possible due to lack of Government interest; but the second PDO was retained as a peg upon which to base those discussions with the Minister of Defense\. Risks and mitigation\. 22\. There were two significant external risks identified in the PAD: ï‚ A failure to implement the political and security aspects of the Global Accord and the subsequent cease-fire agreements and protocols, especially the sensitive military integration process, could have undermined the PNDDR\. Even if large-scale violent conflict did not resume, delays in the implementation of these provisions might have delayed Program implementation\. ï‚ A failure to finance MONUC could jeopardize the implementation of the Program as MONUC support was critical to the disarmament phase\. 23\. These external risks were mitigated by several factors: ï‚ The integration of all parties into state institutions had increased their stake in the consolidation of the peace\. ï‚ The continued deployment of MONUC helped to provide confidence in the security aspects of the process and served as a deterrent for renewed efforts to destabilize the Government\. ï‚ The Government’s preparation of the PNDDR provided an indication of its commitment to the peace process and to security sector reform, and in itself served as an important confidence-building measure\. 24\. There was an acute awareness of the fragility of the environment within which the Project was being developed and therefore, in the event of a collapse of the overall peace process and resumption of hostilities, IDA would have considered exercising its remedies under the legal agreement\. 25\. The major program risks and mitigation measures were: ï‚ Program resources could have been diverted toward military spending\. Appropriate safeguards with respect to financial management, procurement and disbursement were put in place to mitigate this risk\. ï‚ Savings from the downsizing of the armed forces would not translate into increased spending in the health and education sectors; there was difficulty in monitoring Government expenditures\. ï‚ Implementation might have been unsatisfactory because of the limited human resource capacity in the DRC’s public and private sectors\. The program carefully monitored implementation progress and actual reintegration experiences of ex-combatants\. In addition, CONADER would be reinforced with additional qualified staff and technical assistance as required\. ï‚ HIV/AIDS spreads via the ex-combatants demobilized under the PNDDR\. The HIV/AIDS prevention and mitigation measures included in the Program’s design mitigated this risk significantly\. ï‚ Donors would not provide sufficient resources to fully cover the funding gap\. The Bank closely consulted donor and UN partners to ensure broad support and adequate financial assistance for the Program\. Pledges received covered the funding gap\. The Bank secured Additional Financing (Phase II) allowing the PNDDR to complete the DDR process\. 8 2\.2 Implementation 26\. The DRC is a large country, characterized by inadequate transportation and communications infrastructure\. Periodic insecurity and an uncertain political atmosphere continuously added to the challenges\. Yet the EDRP successfully completed most activities and fulfilled most key performance indicators\. This is a remarkable achievement, given the Project’s significant political, security and capacity obstacles\. The Projects legacy lies in making a major contribution to the regional security environment, facilitating longer term development and peace building efforts\. 27\. Demobilization and Reinsertion\. At demobilization, operations were established within the Project team to: (i) deploy and coordinate mobile demobilization teams; (ii) coordinate operations with MONUC and the principal coordination mechanism, the Structure Militaire d'Intégration (SMI); (iii) coordinate transportation of limited number of ex-combatants; and (iv) coordinate with BIO-ID Technology (process ID cards) and Cellpay (to set up payment structures for ex-combatants)\. Reinsertion kits were adapted to the local context: instead of the $110 kit ($60 for transport and $50 for reinsertion payments) plus a $30 bag, demobilized ex-combatants received $140 in cash\. The number of payments to ex-combatants was revised to take into account difficulties in transportation and the huge distances to reach beneficiaries: initially designed to provide $25 per month for 12 months, the EDRP cut down the frequency of payments to six or less\. In Phase I (2004-2007), delays occurred between demobilization and the launch of reintegration activities\. The delay in reintegration support could have caused unrest amongst the demobilized but CONADER staff intervened to manage potential and reassure beneficiaries that benefits would be delivered\. Most of these problems were largely ironed out and absent during Phase II (2008-2011)\. This was partly due to modifications to the project design in the Phase II based on lessons learned during implementation of Phase I\. Notwithstanding these early teething problems, overall the demobilization and reinsertion process was successfully completed\. 28\. Reintegration: During reintegration, the project established provincial offices, bringing the EDRP closer to ex-combatants\. Local offices were able to react quickly to issues, thus mitigating potential volatile situations\. Their presence was invaluable when working with host communities, which felt that the Government was directly involved with their issues\. In Phase II, reintegration support was provided through 12 implementing partners compared with 42 originally managed by CONADER, which allowed for more streamlined implementation and coordination\. Across both Phases, this working relationship not only met objectives but also had the effect of enhancing the capacity of local NGOs\. During both Phases there were criticisms about the size of the reintegration package, the duration of assistance, and outreach and monitoring of activities, but this would be no different to that expressed throughout the MDRP period, and the package in the DRC was relatively comparable to that elsewhere\. A notable change in the reintegration component took place during the Phase II when ex-combatants were encouraged to join economic associations\. Over 800 associations received support; and research indicated the positive role in terms of building social capital, as well as economic livelihoods, thus facilitating reintegration on both fronts\.13 29\. Reintegration of Special Groups\. The release of children associated with fighting forces (CAFF), family tracing, and reunification with families or placement in transitional families was very successful 13 N\. Lemasle (2011), Les associations de combattants démobilisés en République Démocratique du Congo : dynamiques locales et synergies internes : Avantages et limites d’une approche collective à la réintégration, TDRP publication (www\.tdrp\.net) 9 with 31,837 released from armed groups (target was 30,000), of which 23,060 children were registered as reunified with their families or placed in transitional families in the provinces\. Of those registered, 15,143 children benefited from IGA (66%) and 7,744 (34%) were enrolled in formal education\. After the MTR, the program improved with regards to support to children, women and disabled and chronically ill ex-combatants\. A single contract with UNICEF (replacing contracts with 35 partners under CONADER) improved the capacity of the project to deliver services\. 30\. The success in terms of economic reintegration was limited during Phase I, due to delays in the provision of reintegration activities after demobilization\. Children were waiting for several years to benefit from reintegration assistance, which meant that some had reached adulthood by the time reintegration assistance was provided\. While during their stay in the CTOs, children received psychosocial support, but there was little follow-up once they were reunited with their families or transitional families\. Children aged 15 to 17 at demobilization who already had a spouse and/or children, in particular girls, would have preferred to be treated as adults at reintegration\. In response, communication and sensitization messages were adapted, and the program modified the reinsertion kits for CAFFs\. Finally, while children received some psychosocial support, the program cannot claim success in this area as agents lacked qualifications and there was no follow-up after children left the demobilization centers\. 31\. Female ex-combatants\. A gender strategy was developed with CONADER incorporating gender into all aspects of demobilization and reintegration\. There were separate spaces and kits in the demobilization and orientation camps\. Owing to the low number of women, there were no specific female activities, but female ex-combatants benefited from all aspects of the project\. In December 2007, the MDRP launched the Learning for Equality, Access and Peace Program (LEAP), which provided technical assistance to the Project, resulting in: (i) a greater understanding of vulnerability among ex- combatants and how to provide for additional assistance to the most vulnerable (including enhanced social integration); and (ii) a gender action plan\. In Phase II, a strategy document was developed in a joint effort with stakeholders, named "Women Associated with the Forces and Armed Groups\.â€? A budgetary provision was also made for a maximum of 10,000 female beneficiaries\. LEAP funded six projects assisting women ex-combatants, implemented by Caritas\. Generally however, most women either preferred to stay in the army or simply self-reintegrated back into their communities and were not interested in what the Project offered, resulting in a reallocation of funds\. 32\. Disabled ex-combatants\. At the outset, CONADER created a synergy with the Social Action Fund, which was supposed to take care of the disabled ex-combatants, and so did not have a special program for this target group\. In 2007, CONADER organized a workshop to categorize physically and mentally disabled ex-combatants\. When the Social Action Fund project stopped CONADER had to design a special project for the disabled\. However, most disabled did not come forward for demobilization\. One underlying problem lay in the failure of the legislative authorities to clarify the legal basis for compensation and the lack of transfer in responsibility from Defense to Social Affairs\. In addition, being disabled in Congolese society carries a stigma, which is lessened if one is disabled but in uniform\. 33\. Psychosocial support consisted only of basic services at the OCs and limited services targeting children\. Following Phase I lessons, a medical commission was finally created at the end of the Phase II, and a contract was signed with an NGO, which eventually delivered psychosocial support to 347 ex- combatants\. 10 34\. Institutional issues\. Although risks were accurately identified in the EDRP, measures to mitigate them at the outset proved insufficient, in particular to deal with the limited implementation capacity of the Government\. During the early phase of the project, technical assistance did not have the desired impact on management\. At the beginning of EDRP, the concept was for a decentralized structure but it did not function in a decentralized way\. Following the MTR and the donors meeting in 2006, recommendations were made to improve the operational efficiency of the structure\. A resulting positive change was the move of the responsibility of the MIS department under the Reintegration Department and the deployment of MIS officer to the field\. But other recommendations were slow to be adopted, such as to increase the number of social reintegration assistants at community office level and closing or cutting back offices with no or little workload\. Later, due to budgetary constraints, CONADER had to close a number of offices and reduce field staff, even in areas of high need\. 35\. During Phase I under CONADER, the PNDDR worked with Strategic Partners14whose procedures contributed to implementation delays as decisions were made at HQ and not in the field\. Collaboration with local organizations and NGOs was more effective as they were close to the communities and could address their needs more easily\. CONADER was under considerable pressure from various sides\. Decisions were made at a high level and the administration was cumbersome and bureaucratic\. The mismanagement and procurement issues slowed the project and in some cases caused a breakdown in the delivery of services to ex-combatants\. This led to problems in the field\. Fortunately, very few cases of ex-combatants returning to armed groups were recorded and generally the discontent was contained\. Various support missions and the final evaluation reported that the professionalism of the PNDDR staff was evident both in the head and field offices\.15 PNDDR provincial offices developed close relations with the local political, military and civil authorities, creating a stable and harmonious environment for ex-combatants to demobilize and integrate in local communities\. Although PNDDR was under the supervision of the Ministry of Defense and Veterans, the composition of the Inter-ministerial Disarmament, Demobilization and Reintegration Committee (CI-DDR) 16 was widened in 2009 by involving 14 Ministers\. 36\. Regional security context and national elections\. Identified risks (including interference of vested interests, instability, multiple armed groups and lack of political will) were mitigated by the support given by the international community to the implementation of the Goma Peace Accords of 2008 and 2009 and the reform of the security forces\. This included the World Bank’s additional financing, specifically targeted to address the reintegration of approximately 19,000 armed militias in the eastern part of the DRC\. 37\. Sensitization and communication activities were seen as critical within the PNDDR, in the DRC and across the borders\. Sensitization helped different actors understand each other, facilitated acceptance of demobilized combatants in the communities of return, and thus contributed to the reduction of 14 These were the Implementing Agencies that were contracted to deliver services: UNICEF, FAO, BIT, ADEKOR, etc\. 15 Y\. Conoir (2011) Programme national de désarmement, démobilisation et réinsertion : évaluation finale indépendante, UEPNDDR 16 The Ministries of home affairs, the National defense and the War veterans, Foreign Affairs, Finances, the Budget, the Environment, the Agriculture the Communication and the Media are a member of the CI-DDR, of the Employment , and the social affairs, the rural Development, the Youth and Sports, the human rights, the gender the Family and As a child, of Social affairs, Humanitarian aid and national Solidarity in addition to the Cabinet directors of the President of the Republic, to the Prime Minister and to Vice Minister of the National Defense\. 11 tensions, especially during Phase I of reintegration\.17 Similar programs in neighboring countries also had a positive effect, except on members from Foreign Armed Groups who could not be reached\.18 2\.3 Monitoring and Evaluation Design, Implementation and Utilization 38\. The main PDO results indicators were aligned with the PDO statement\. Most had a baseline measurement and were simple to track and measure\. However, some indicators (withdrawal requests, disbursement of funds, sensitization and information tools, establishment of Orientation Centers) were simply to be made in a “timelyâ€? fashion, without indicating what was meant by timely\. If there had been consistent and regular monitoring and studies undertaken, then quantitative and qualitative proxy indicators could have been created after the baseline and tracked\. But until the last year of the Project, little research was undertaken\. During Phase II, new indicators added to the existing indicators, could be quantified, with the exception of the provision of specialized support to disabled ex-combatants which was simply stated as a condition that had to be met by Project closing\. 39\. During implementation, the M&E team was composed of four staff: an M&E Advisor, an M&E Specialist, a MIS Specialist, and a Database Specialist\. To follow up reintegration activities the M&E team had to ensure that the services provided by the various partners were of the same quality\. To evaluate progress, quarterly reports were prepared by implementing partners and transmitted to EDRP for approval\. Based on the analysis of these reports, the M&E team carried out evaluations directly on the ground\. In addition, each partner had to provide detailed information through regular reporting on the benefits provided\. While it was sometimes difficult for EDRP to obtain this information in Phase I, during Phase II the payment to partners was linked to the information in their reporting, which greatly improved the data available\. During Phase I, monthly statistical reports were provided to report to the Bank but not adequately used to inform operations\. However, these were re-formatted in Phase II into quarterly and annual reports to provide information to serve operational needs and also report on indicators/targets\. 40\. An efficient computerized MIS was put in place at the beginning of the Project to undertake the registration of ex-combatants in demobilization centers (and with the mobile team units during Phase II)\. The list of demobilized was thus available on a daily basis, with accurate demographic and biographic information of each individual\. A dedicated application was created to follow-up each beneficiary after demobilization\. It permitted to capture information on the reintegration benefits\. The combined systems gave the EDRP a good M&E system, able to provide a comprehensive profile of each beneficiary but also to keep track of the benefits provided to ex-combatants by the various partners\. 41\. Design\. The MIS evolved over time due to changing needs but also because of improvements in technology\. With the help of an international firm (BioID Technology) a registration system was established, using Iris Scan technology to ensure that each beneficiary could not be registered twice in the system (and avoid double-dipping)\. Initially, a network of VSat was set-up in each demobilization 17 Y\. Conoir (2011) Op cit; Bouvy (2011a), Programme National de Désarmement, Démobilisation et Réinsertion des Anciens Combattants, République Démocratique du Congo: Rapport d'Evaluation des Bénéficiaires du PNDDR - Perceptions communautaires sur le retour et la réinsertion des anciens combattants\. and Bouvy (2011b), Programme National de Désarmement, Démobilisation et Réinsertion des Anciens Combattants, République Démocratique du Congo: Rapport d'Evaluation des Bénéficiaires du PNDDR ; and interviews during ICR report drafting with Implementing Partners 18 Interviews by S\.Stavrou in 2007, with returning ex-combatants in Rwanda\. 12 center to ensure that data would be synchronized and avoid any possibility of additional fraud\. During Phase II, the VSat technology was changed to small portable satellite devices as demobilization centers closed and the program used instead mobile teams\. 42\. Almost in parallel with biometric registration, another system was designed to monitor reinsertion payments to the demobilized\. An external partner, CELPAY, created a specific application on mobile cell phones to process the payments and centralize information at the Project’s headquarters in Kinshasa\. In Phase II, CELPAY continued to provide the same support, but the payment process was simplified with the use of a payment unit including a laptop and Iris camera\. EDRP prepared and implemented an application (ASR: Applicatif de Suivi de la Réinsertion) to follow-up the reintegration activities of the demobilized\. The system was designed to work at the community level as information was entered directly by implementing partners\. A first synchronization of the data was done at the provincial office level to have a situation of the reintegration for each office\. Then data synchronization was done at the central level where data analysis and reporting was also carried out\. When comparing the design of the MIS in the DRC to those in other MDRP countries, the DRC was a best practice example\. 43\. While the MIS allowed EDRP to have comprehensive information on the program at the beneficiary level, few empirical studies were undertaken\. Between 2006 and 2010 the following studies were carried out: (i) evaluation on the management of the reinsertion payment to the demobilized (2006); (ii) study on gender (2006); (iii) technical audit of the PNDDR components (2009); (iv) audit of the payment system of the TSA to ex-combatants (2009); and (v) a study on use of the TSA by ex- combatants and socio-economic reinsertion (2010)\. 44\. Based on this, the Bank undertook two M&E support missions, in December 2009 and September 2010, and with the help of a strong supervision team from the Bank and TDRP19 all the studies required in the Grant Agreement were undertaken\. From late 2010 and into 2011 six research studies aimed at capturing the unique DDR experience in the DRC were undertaken: (i) study on the formation and success of economic associations; (ii) two studies of vulnerable groups (women and children); (iii) study on male adults ex-combatants; (iv) comparative analysis of adolescent ex-combatants demobilized three to five years ago as youth (17-18 years) against those demobilized as adults (18-19 years); and (v) a study of communities where ex-combatants settled\. A final independent evaluation of the EDRP was undertaken in the second half of 2011\.20 2\.4 Safeguard and Fiduciary Compliance 45\. Financial Management\. This component of the Program can be divided in four distinct phases: ï‚ Phase I comprised the period from the start of the project in November 2004 to May 2005\. The implementation structure comprised CIDDR, CONADER and Financial Management Committee for Demobilization and Reintegration (CGFDR), with the Bureau Central de Coordination (BCECO) providing fiduciary support to CGFDR\. Due to internal disagreements and blockages between CONADER and CGFDR, serious problems developed on accountability issues (document support of advances made to operational units) and transparency issues (procurement of goods and services disregarding Bank guidelines), resulting in substantial ineligible expenditures\. Owing to 19 TDRP a $30 million multi-donor trust fund program which followed the MDRP\. 20 Y\. Conoir (2011) Op cit 13  appropriate safeguard measures in place in terms of financial management and procurement, mis- procurement was detected, an INT investigation conducted leading to the Government reimbursing about $6\.4 million to the Bank\. Another consequence was the replacement of CONADER with the Technical Secretariat (TS) UEPNDDR\. ï‚ Phase II took place between May and December 2005\. CGFDR was dissolved by Government Decree 05/028 of May 12, 2005\. CONADER took over the fiduciary duties previously attributed to CGFDR and KPMG came on board to provide technical support\. This restructuring, while eliminating the infighting, was still unsatisfactory as KPMG only had an advisory role, the Designated Accounts (DAs) were solely controlled by CONADER and the transparency and accountability issues continued\. ï‚ Phase III lasted from January 2006 to June 2007\. During this phase, the Financial Management Agency, KPMG, assumed all fiduciary duties, including those of co-signatory of the DAs\. However, there was tension between CONADER and KPMG, as the latter made sure that only eligible expenditures were paid through the DAs (i\.e\. goods and services had to be correctly procured according to the provisions of the financial agreements and Bank’s Guidelines, and other payments were scrutinized to ensure accountability and transparency)\. Gradually, KPMG gained the upper hand in ensuring that CONADER abided by contractual obligations and guidelines\. Then KMPG became responsible for the fiduciary duties and took full control of financial operations, including the DA, and procurement functions were effectively transferred from CONADER to KPMG in September 2006\. When KPMG received signing powers on the DAs in June 2007, it became independent of interference from other bodies\. ï‚ Phase IV started in July 2007 with the replacement of CONADER by UEPNDDR, under which KPMG operated\. This phase continued until Project closure and functioned without major problems\. When KPMG took over in July 2007, fiduciary duties, including procurement, treasurer and accounting tasks for local transactions, were decentralized to the provinces and regions which relied on skilled staff overseen by KPMG-appointed accountants\. In general, compliance with Bank standards and adherence to fiduciary manuals ensured the transparency and accountability in all transactions taking place at regional and central levels\. After KPMG gained full control of the fiduciary functions, the financial management tasks were performed satisfactorily, despite a few payments being considered ineligible\. The reason for ineligibility was attributed to the failure to follow strict procurement processes\. Fiduciary safeguards identified ineligible expenditures totaling more than $6\.4 million, 21 which were refunded by the Government to the Bank before the effectiveness of the additional financing\. These ineligible expenses occurred mainly before the middle of 2006\. After that date, financial management functions ran satisfactorily\. 46\. Financial reporting\. Initially, the Project did not adhere to the Financial Agreement requirements for reporting as reports and audits were not submitted on time\. The situation was gradually remedied as the authority of KPMG increased\. Reports, generated from the accounting software acquired in May 2005, were subsequently presented within established deadlines\. Although similar in total, the 21 The amount generally quoted by the Bank is $6\.4 million\. However, the KPMG maintained that the amount refunded to the Bank was $6\.6 million, as stated in their financial statements\. As the payment was effected in, tranches and the real ineligible is expressed in SDR the difference is probably due to exchange differences between USD and SDR\. 14 expenditure allocated to categories in the financial accounts differed from those reported in the Category Summary in Client Connection\. 47\. Internal controls\. Internal controls improved after an Internal Auditor was appointed\. In June 2005 administrative, financial and procurement manuals were introduced\. The post of Internal Auditor was abolished in June 2007, replaced by AGF’s internal control measures\. 48\. External audit\. External auditors qualified all reports for the semesters up to December 31, 2005 but since then and until June 30, 2011 all reports were unqualified\. The next and final audit for the period from July 1, 2011 to the end of the grace period, January 31, 2011 is due by March 31, 2012\. 49\. Disbursements and fund flow\. There have been a few instances of cost overruns, and unallocated funds were reallocated\. The overall utilization of the funds allocated to EDRP was 94% (see Annex 1\.1)\. 50\. Anti-corruption\. Phase II of the Program stipulated, in part B of Schedule 2 of the Financial Agreement dated May 26, 2008, that the project should be carried out in accordance with the provisions of the Anti-Corruption Guidelines\.22 No evidence of contravention was found\. 51\. Safeguards\. At appraisal the project was classified as a category B following an environment assessment\. No other safeguard policy was triggered\. The project was not expected to have a significant environmental impact\. The phased and widely dispersed reintegration of ex-combatants into civilian life was environmentally neutral\. No major physical works were to be undertaken under the program\. Micro- project activities, estimated at $532 per ex-combatant (see Annex 1\.3) and financed under the reintegration component, were screened for environmental impact and monitored in accordance with Bank procedures\. 52\. The 2008 Environmental and Social Impact Assessment had the following key findings: inadequate solid waste management including disposal/removal (decommissioning) of equipment; lack of contingency plans for oil spill control and protection measures; abandoned or discarded equipment and materials; absence of coherent and consistent environmental management plan/system; weak contacts with the agencies responsible for environmental management, such as the Ministry of Environment; lack of knowledge on regulatory framework; no capacity building program for environmental management\. The recommendations were: (i) Legal Framework and Contingent Liabilities: it was recommended that former owners bear the liabilities of past actions before they hand over the site to the rightful landowner or new owner\. Therefore the project had to undertake a site decommissioning of equipments and material donated and left on the closed orientation centers, in close collaboration with the beneficiaries\. A solid waste management advisor had to be hired to carry out the decommissioning work\. (ii) The Environmental Management, Regulatory Framework and Capacity Building: called for the designation of a senior staff member to be a liaison person between the project and the Ministry of Environment\. The designated person was to have sought the support of an external Environmental Advisor during three months to assist the project in conducting awareness on the environmental laws, regulations and guidelines\. This call however came through after the camps were dismantled and it was not deemed necessary to proceed\. 22 This was a new clause introduced across the Bank\. 15 53\. Procurement\. As noted earlier, the first half of Phase I was characterized first by inadequate division of work and by poor skills, which impacted negatively upon the management of the procurement function\. Only from 2006 on were Procurement Plans submitted to the Bank for approval\. In Phase II, Project procurement staff became adequately skilled, and adequate record-keeping and filing systems were in place\. When procurement planning was in place and monitoring/control systems used, KMPG was able to meet the Bank’s reporting requirements\. The procurement plan became an effective tool for the Program activities\. 2\.5 Post-completion Operation 54\. The Project is not designed to be sustainable, as it ends with the transitional reintegration of targeted ex-combatants\. UEPNDDR remains operative while the African Development Bank continues with reintegration support to ex-combatants in five provinces: Katanga, Maniema, North Kivu, Orientale and South Kivu\. The objective of this program is to re-engage ex-combatants through vocational training and promotion of self-employment in the agricultural sector and it is envisaged to benefit 28,500 ex-combatants of which 1,000 are to be women\. On completion of this program, the Government will have to decide on whether it is maintained to deal with ongoing tensions in the eastern part of the country or to close it down\. 3\. Assessment of Outcomes 3\.1 Relevance of Objective, Design and Implementation 55\. The EDRP objective, design and implementation were highly relevant\. The main objective was highly relevant to the development priorities of the Government\. It conformed to: (i) its general objectives for peace and stability specifically outlined in the PRSP; and (ii) was in line with the Bank’s general support outlined in the Country Assistance Strategy\. DDR, in its various forms, became an early priority in the transition: as part of the extrication of foreign armed forces and groups from DRC territory and to stabilize the country in readiness for national elections\. If the DRC was to move toward peaceful free and fair elections, armed threats to the transition had to be managed if not removed\. 56\. Considering the context – including the weakness of the peace process, logistical and institutional challenges and lack of political will among leaders of the main belligerents to the conflict – EDRP saw significant accomplishments in the DRC\. Almost 110,000 ex-combatants were demobilized and almost all of these received cash payments\. Of those demobilized, some 88% received their full cash payments and 86% registered in their receiving communities\. While the status of ex-combatants after completing their reintegration could not be verified during implementation of the Financing Agreement, surveys carried out by the Bank team indicate that virtually all ex-combatants participated in some form of reintegration support\. Although the effectiveness of this reintegration support is more difficult to corroborate and fully document, surveys conducted point to some 50% of ex-combatants having improved their livelihoods since they had been demobilized, with much of the balance having assimilated within their communities at the same levels as their community peers\.23 57\. DDR was a major element of the peace process and the transition toward creating sufficient stability to hold the inaugural and subsequent national elections (the first two relatively free elections in 40 years)\. Hence it was a major priority for both national and international stakeholders in the DRC\. It 23 Bouvy (2011a), Op Cit 16 was also fundamental for promoting the conditions within which the economy could improve and poverty be addressed\. The main component of the objective, the design of the Program to achieve this objective and the implementation that followed were highly relevant because they resulted in a decline in the total number of combatants in the country, leading to both stability in the country and savings in the defense sector due to both less combatants and military activities and also to improvements in the social and economic environments\. The subordinate objective was also highly relevant because long term development and stability within the country would be contingent on an improved social and economic environment\. This required increased expenditures which could have primarily come from a decline in military activities and lower defense spending\. 3\.2 Achievement of Project Development Objectives Main PDO: To assist the Recipient in creating long-term sustainable social development and supporting macroeconomic stability in its territory through the demobilization of approximately 164,000 ex-combatants, while providing support for their reinsertion and social and economic reintegration\. 58\. This is rated as satisfactory for although 125,000 adult ex-combatants were targeted for DDR, a total of 209,605 ex-combatants went through a verification process with 66,814 choosing to join the FARDC\. 109,84624 combatants were demobilized and reinserted into their host communities\. Of these, 88,64525 sought reinsertion support\. A total of 39,000 children were targeted of which eventually 31,738 children were removed from armed forces and either reunited with parents or foster parents\. Specific Objectives linked to the main PDO 59\. Demobilization was highly satisfactory because the program demobilized 109,846 ex-combatants, almost reaching the original target of 125,000\. A total of 45,837 were demobilized by the end of the first 14 months and 102,014 by the end of the second year, thus more than originally planned for\. An additional 5,994 were demobilized during Phase II and 31,738 CAFF were released\. A total of 118,459 weapons were collected\. 60\. Reinsertion was highly satisfactory\. A total of 107,974 (98\.3%) ex-combatants that were demobilized by the Project, received reinsertion payments\. In Phase I, on average 86\.7% of ex- combatants received their TSA within nine months of demobilization (the project target was 80%)\. Once systems were fully operational, this increased to 100% carrying over into Phase II\. An independent audit of EDRP cash payments found a remarkably low error rate of 0\.6%, which was significantly less than the established indicator of less than 5%\.26 61\. Reintegration was satisfactory because: (i) 75% of male and 69% of female ex-combatants were reintegrated into their communities and engaged in productive economic activities (or schooling) four years after receiving their final payment; and (ii) at the end of the project 80\.7% (up from 60% at the end of Phase I) of the demobilized benefited from reintegration assistance\. During Phase II, UEPNDDR planned27 that the Project would help create 700 economic associations for ex-combatants to join; at closure it had created 821\. A study showed that these associations were important catalysts for 24 There is some confusion of the final figure owing to some early inconsistencies in numbers, with some totals claiming that 111,053 were demobilised\. 25 Included in this figure are 5,285 ex-combatants that were reintegrated through AfDB funding\. 26 Y\. Conoir (2011) Op Cit 27 This was not a stated indicator\. 17 economic/livelihoods creation while also playing an invaluable social capital formation role\.28 Overall, reintegration was successfully completed for the overwhelming majority of the ex-combatants\.29 62\. Special Target Groups ï‚ Reintegration of CAFF is satisfactory because 72\.7% (target 70%) were registered in the provinces for having benefited from family tracing, reunification or placement in alternative care, of which 48\.4% benefited from IGAs and 24\.2% were enrolled in school\. During Phase II, the Project managed to reintegrate 98% of the children (target 80%)\. They benefited from family tracing, reunification and placement in alternative care\.30 Furthermore 208 schools received assistance and 417 apprenticeship structures were supported\. ï‚ Support to female ex-combatants was satisfactory although no indicator was set for this component\. A large number of women chose to stay in the army rather than demobilize, while many others preferred to self-reintegrate and not attract attention to their former status\.31 In Phase I, 3,478 female ex-combatants were demobilized, representing about 3% of the total number of ex- combatants, of which 1,520 benefited from reintegration assistance; in Phase II, 1,046 out of an estimated 10,000 women were registered to participate in reintegration activities, and of which 876 women received reintegration assistance\. ï‚ Support to handicapped or chronically ill ex-combatants was satisfactory\. Although no indicator was set, an envisaged target was estimated at 9,000 of which the program identified 2,221 disabled\.32 A total of 1,239 were demobilized, 262 (3%) received reintegration assistance and 347 received medical rehabilitation\.33 A total of 4,377 war wounded were registered, out of which 347 (7\.9%) received psychosocial rehabilitation, accompaniment and vocational training (but no medical rehabilitation)\. There is a mitigating argument as to why numbers were so low\. Respondents, who chose to stay in the army, when interviewed said that there was resistance to demobilize due to the lack of pensions, coupled with the general feeling that at some stage in the future these would be made available to the FARDC\. In addition, support was provided to the disabled via the Social Action Fund, as well as cash payments, transport and reintegration\. ï‚ Psychosocial support, apart from basic services in OCs, was unsatisfactory\. No services were set up for adults and limited services were offered to children\. 63\. Institutional Development and Program Implementation Support\. CONADER and later UEPNDDR benefited from capacity building support from technical assistance including training on various topics\. Three financial audits were completed during the lifetime of the Project\. Internal quarterly reports were completed\. External evaluations of Project implementation did not take place\. 28 N\. Lemasle (2011), Op cit 29 Bouvy (2011a), Op Cit\. and Bouvy (2011b), Op Cit\. 30 P\. Lancaster (2011) Report on the Reintegration Experience of Children: An Analysis of Children’s Responses: Democratic Republic of Congo; IDL Group and P\. Lancaster (2011) Report on the Comparison of the Reintegration Experience of Youth and Children in the Democratic Republic of Congo; IDL Group 31 G\. Lacaille (2011) Programme National de Désarmement, Démobilisation et Réinsertion des Anciens Combattants, République Démocratique du Congo : Rapport d'Evaluation des Bénéficiaires du PNDDR - Réinsertion des Femmes ex Combattantes, IDL Group 32 UEPNDDR (2011), Rapport Final du Projet de Désarmement, Démobilisation et Réinsertion\. 33 Y\. Conoir (2011) Op Cit\. 18 Subordinate PDO: Contributing to the reallocation from defense budgets to social and economic sectors 64\. This subordinate PDO is rated as moderately satisfactory for although it was not possible to establish whether there was a direct reallocation from the defense sector to social and economic sectors, it was possible to measure positive changes in the social and economic sectors in DRC (Annex 3)\. Given the complex socio-political economy and security context of the DRC it would have been very difficult to achieve this outcome\. Furthermore, it was never clear as to who would have exercised leverage or oversight to re-allocate budget savings from defense\. The Bank had little direct leverage over the national Budget and no expenditures were allocated from this Project directly toward achieving this subordinate objective\. There are no performance indicators that can accurately measure any transfer from the defense budget to social and economic budgets\. There is published data but the composition of various components comprising each budget often changed making direct compressions impossible\. What is measurable is the fact that the military has moved toward professionalizing itself and outside of eastern DRC, security and stability prevail in the rest of the country\. Consolidating security was an essential step for private sector development, growth and the reduction of poverty\. The Government enhanced its presence, and slowly began to re-establish the rule of law and governance, and reinforce civilian administration, including the police\. 65\. There has been a marked improvement in economic development, foreign direct investment is on the rise as is domestic private sector investment, unemployment trends have shown a slight decline as livelihood options, particularly in the informal and agricultural sectors have increased, there has been increased public spending on health, education and social protection\. Ex-combatants and other community members have found alternative livelihood options to crime, violence and the potential return to rebellion\. EDRP aimed to contribute to all of the above and therefore these positive changes are directly related to the performance of the Project\. 66\. The overall rating of the PDO is moderately satisfactory\. 3\.3 Efficiency 67\. Efficiency is rated moderately satisfactory; the project was designed to minimize costs without compromising quality\. There were a number of shortcomings early in the project: (i) financial and procurement structures initially in place did not have the capacity to respond to the requirements of the Financing Agreements and of the fiduciary guidelines, but these were remedied in May 2005, with the closure of CGFDR and its replacement by a financial management agent, undertaken by an external consultancy; (ii) during the early stages of Phase I, Project staff struggled to meet the performance requirements of the Project but with Bank staff support managed to rapidly come to terms with the necessary requirements, however these and ongoing support missions added to overall project expenditures; and (iii) transportation costs were not envisaged to be as high as they were, adding to the overall cost of the original budget\. Given the overall budget, these cost over-runs were moderate and not significant\. 68\. The PNDDR cost per beneficiary was $1,817 (Annex 1\.3), excluding operations management costs\. This compares favorably with costs in Rwanda $2,06534 and Burundi $2,77535\. In Phase I, only 35% of 34 ICR00001169 Rwanda (IDA-36340, IDA-3634A, TF-52159, pp\.19-22, 31-43\. 35 ICR00001169 Burundi (IDA-H076, TF-53794, pp\.26-28 19 total expenditures represented direct payments to ex-combatants, in cash, kits and sub-project reintegration activities, while in Phase II these direct benefits to ex-combatants increased to 60% of total expenditure\. Overall, 44% of total expenditure was applied by the project in direct benefits to ex- combatants, of which 4% of total expenditure was applied in direct benefits to special groups\. Demobilized ex-combatants received services during this process, consisting mainly of shelter, food, transportation, medical services and counseling\. Demobilization costs represented 36% of total expenditures in Phase I, 4% in Phase II and 30% of overall project cost\. During Phase I, 28% of total expenditures were spent to manage the program, including much needed technical assistance\. In Phase II, however, this percentage was reduced to 22%\. The total project management averaged 27% at closing, which would compare with 28\.2% in Rwanda and 18\.3% in Burundi\. 69\. Unit costs per ex-combatant varied substantially between phases, except for the reinsertion component; demobilization costs decreased by 84%, mainly attributable to the establishment of the Orientation Centers, including works and equipment; reintegration costs increased almost 2\.5 times, but the average reflects a cost of $532 per ex-combatant, as possibly a large number of beneficiaries were not fully reintegrated in Phase I; the same is true of the special groups (see Annex 1\.3)\. All expenditures are related to the main PDO\. 3\.4 Justification of Overall Outcome Rating 70\. The overall outcome rating is moderately satisfactory based on high relevance, an average of moderately satisfactory PDOs, and moderately satisfactory efficiency\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Partnerships and donor harmonization 71\. The partnership of the MDRP, consisting of 13 donors and about 40 agencies, including key actors in the UN system, greatly facilitated donor alignment, harmonization and consistent policy support to the program\. Bilateral donors contributed directly to the MDRP while also directly supporting security sector reform (through structural initiatives as EUSEC or EUPOL); political reform; and provision of social services\. Collaboration with UN agencies included: Department of Peacekeeping Operations (DPKO) in coordination with the UN Mission in DRC (MONUC), the UN Stabilization Mission in Congo (MONUSCO), UNICEF (children released from armed forces and groups), the Food and Agriculture Organization (FAO), the International Labour Organisation (ILO) (economic reintegration of demobilized adults), the United Nations Development Programme (UNDP) (played a complementary role before and during the PNDDR, particularly in Ituri, in supporting demobilization in Eastern DRC and the World Food Program (WFP) which also played a supporting role providing food for FAT EAFGA and managing the transportation of demobilized\. The partnership with the African Development Bank (ADB) Project for Supporting Socio-Economic Reintegration of Demobilized (PARSEC) was important to PNDDR during the latter phase of the MDRP\. Overall there was a good level of harmonization between the Project and its partners and donors\. (b) Cross-border dialogue and regional approach to DDR 72\. The MDRP framework facilitated cross-border dialogue between countries and linked sensitization efforts in the eastern DRC for the return of members of Armed Groups to Rwanda and Burundi with the programmatic responses provided by the Project\. 20 (c) Other unintended or subsidiary outcomes and impacts 73\. EDRP was critical in assisting the transitional process established by the 2002 Global Accords and the move toward national elections and greater stability\. At the strategic level, EDRP contributed to the following: ï‚ Elections: the underlying intention of the program was to provide an environment for two elections and a return to stability\. Between 2004 and 2006 the majority of the ex-combatants were demobilized and the command and control of the rebel military factions had been broken\. Both elections were held without a major military threat\. ï‚ Stability and growth: during the EDRP period, the economy grew, and as highlighted in the Country Economic Memorandum, growth in certain sectors such as agriculture has been predicated on greater security\. Direct foreign and domestic private sector investment has increased and started to reflect itself both in infrastructure projects and business development\. Development aid has increased and outside the east of the country, peace has consolidated, security enhanced and social indicators have improved\. These achievements, even though indirect need to be recognized as they go well beyond the PDO\. (d) Institutional Change/Strengthening 74\. While CONADER was a more political entity managing Phase I of EDRP, UEPNDDR in Phase II focused more on technical aspects\. The Bank team, supported by the MDRP and TDRP trust funds, was able to provide sufficient capacity enhancement activities both in the DRC and outside to strengthen skills and enhance management effectiveness\. Today, the UEPNDDR has good capacity\. Some of its members have been asked to mentor counterparts in the South Sudan DDR Commission\. Another positive aspect was that NGOs also benefited from training and other capacity enhancement activities\. (e) Other Unintended Outcomes and Impacts (positive or negative) 75\. Although there is no hard data to support this, stakeholders listed the following unintended outcomes and impacts: (i) including vulnerable children and CAFFs in the program contributed to preventing re-recruitment of children because the whole community was sensitized about child protection issues and as a consequence protected children; (ii) local economies benefited from the use of local providers to supply activity inputs as well as businesses of demobilized ex-combatants; (iii) the local representation of NGOs meant employment opportunities for skilled people in the sector; and (iv) there was a demonstration effect on the use of associations combining demobilized and community members\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops36 Summary of Findings of beneficiary studies: 76\. Demobilized adults\. Ex-combatants are appreciative of the assistance provided by the Project\. This positive perception is present at all phases\. The employment situation of reintegrated ex-combatants is significantly more difficult than that of community members\. Self reported indicators of wellbeing among all ex-combatants were generally positive\. Women ex-combatants\. Women continue to suffer discrimination due to their exposure to sexual abuse during their military service\. They are single in larger proportion than men and are more likely to endure greater socio-economic uncertainty than other 36 Detailed results from the beneficiary survey and stakeholder workshop are in Annexes 5 and 6\. 21 categories of beneficiaries\. Child ex-combatants\. Most children selected vocational training, followed by returning to school\. Psychosocial indicators of children beneficiaries are poor (lack of trust of community members), yet children feel that their overall situation is slightly better than that of adult ex- combatants\. Community perceptions\. The degree of tolerance and consideration for the demobilized from community members is relatively positive\. The fear that existed several years ago has greatly diminished\. While specific assistance to the demobilized can cause resentment from other vulnerable community members, 80% of civilians surveyed said that they did not feel that way\. Summary of Findings of Stakeholder Workshop: 77\. The stakeholder workshop which comprised representatives from the Implementing Agencies reported that the Project was very relevant and contributed to peace, improved security and stability in DRC\. Although stakeholders initially had mixed opinions whether such an ambitious program would succeed, it managed to target a large number of ex-combatants\. Stakeholders highlighted that overall all the components were successful, but there were weaknesses with the economic reintegration, and especially with addressing women’s and disabled ex-combatants’ needs\. Demobilization was seen as a success, despite implementation difficulties\. Social reintegration improved during Phase II where a community approach was used\. Sensitization and communication activities in the communities of return contributed substantially to communities accepting the demobilized\. Economic reintegration would have been more successful if market feasibility studies had been carried out to advise on job opportunities, thus providing more adequate economic reintegration assistance\. Phase II corrected the absence of linkages with development programs\. Special groups (children, women, disabled) benefited from program adjustments in Phase II, but specialized support should have been provided earlier\. Phase II benefited from lessons from Phase I on institutional arrangements; the UEPNDDR focus on technical aspects and the establishment of community offices were seen as effective approaches\. 4\. Assessment of Risk to Development Outcome Rating: moderate 78\. The main risk to the development outcome comes from the regional context, specifically the current instability in eastern DRC, which has been influenced by the slow repatriation of remaining FDLR combatants to Rwanda\. The LRA, although a vastly reduced armed group and having largely moved north to the Central African Republic, is still at large and destabilizing certain north-eastern parts of the country\. There are regional initiatives against all armed groups, but the residual pockets of insecurity remain as a risk of a return to conflict in eastern DRC, making the continued reintegration of remaining ex-combatants in that area necessary\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry 79\. Bank performance at entry is rated moderately satisfactory\. The Bank project team responded in a timely and efficient manner to a critically urgent request from the international community and the transitional Government for support to its demobilization efforts, while setting up appropriate mitigation measures to address identified risks\. The project clearly aligned with the Bank strategy for assistance to the Government\. 80\. At the outset, the Bank structure and standard operating systems were not the most appropriate for managing a high risk, complex DDR operation in the fragile environment of the DRC: (i) the Bank’s set- 22 up is not always conducive to the rapid response required in a volatile emergency setting, and (ii) the Bank initially lacked the necessary human resource capacity\. However, over time flexibility was demonstrated (as in the use of trust funds to finance the air-lift operation) as well as deployment of additional staff (including four full time operations staff based in Kinshasa financed out of the MDRP)\. Initial design oversights included: (i) deficient analysis in designing some Project components; (ii) acceptance of faulty institutional arrangements (CGFDR-CONADER structure); and (iii) underestimating the supervision costs for the Bank\. Creativity had to be used at almost every turn to respond to the needs of the Project\. The Bank teams demonstrated flexibility to respond to needs as they arose\. (b) Quality of Supervision 81\. The quality of supervision is rated satisfactory\. The Bank over time devoted significant resources to Project supervision (financed out of the MDRP) and carried out regular supervision missions to DRC with technical specialists as well as placing staff in-country\. This allowed the Bank to provide enhanced support on specific thematic issues which the UEPNDDR viewed as adding value to its work\. 82\. Supervision missions were seen as responsive to the counterpart needs and proactive in problem solving\. An MDRP representative and co-TTL was posted in Kinshasa from 2003 to 2006, which was considered by UEPNDDR and implementing partners as invaluable to the success of the Project\. Feedback from stakeholders interviewed for this ICR stated that although four TTLs, each with different styles of management, headed the project during the seven years of preparation and implementation, transitions did not severely affect the project and the team was able to maintain continuity in supervision and support\. 83\. One area where the Bank performance was initially weak was in financial management, which did not benefit from sufficient early technical assistance and supervision\. This led to blockages in cash flow and a lack of transparency, resulting in delays for the selection of implementing partners\. This was corrected over time\. (c) Justification of Rating for Overall Bank Performance 84\. The overall Bank performance is rated moderately satisfactory\. At all stages the Bank set up appropriate mitigation measures to address identified risks, including the incremental increase of implementation support to the DRC authorities\. Initially that was slow, causing start-up delays but once in place greatly assisted project delivery\. 5\.2 Borrower Performance (a) Government Performance 85\. Government performance is rated moderately satisfactory on the basis that there was: (i) a failure to provide political support – and at different junctures obstruction and opposition – to the DDR process, in terms of ordering and allowing troops to go through the army integration/DDR process, as per the peace agreements; (ii) the CIDDR (Inter-ministerial Committee) set up as a safeguard that no single armed faction would influence the process met only twice, the second time to disband CONADER; (iii) the national executing agency CONADER had to be restructured and was eventually closed down; (iv) the Government’s lack of adherence to the EDRP legal agreement (carrying out yearly audits, and undertaking M&E functions); and (v) the CGFDR had to be dissolved because it was ineffectual and 23 obstructive\. However, these were issues that occurred during the early part of the process, and following discussion with the Bank corrective action was undertaken and all ineligible expenditures reimbursed\. Furthermore, the implementing agency was completely restructured and finance and procurement were outsourced in accordance to agreements reached between the Government and the Bank\. There were no few issues following this and the process was relatively straightforward\. (b) Implementing Agency or Agencies Performance 86\. The performance of CONADER and UEPNDDR is rated moderately satisfactory\. The performance of CONADER was rated as unsatisfactory and had to be dissolved due to mismanagement, obstruction, failure to adhere to Bank procedures, and a loss of legitimacy\. The performance of UEPNDDR was rated as satisfactory and was a structurally more sound organization that was able to capitalize on its technical strengths and build on the experience of Phase I\. It managed the Project effectively, providing significant leadership to achieve results and an adequate policy framework in a volatile and changing environment\. (c) Justification of Rating for Overall Borrower Performance 87\. The overall borrower performance is rated moderately satisfactory\. 6\. Lessons Learnt 88\. This program was started in the early 2000s when DDR was very much a post-Cold War instrument used to address the legacy of civil wars; it ended just as the World Development Report 2011 was published outlining the changing nature of violence, the decrease in civil wars, and the new challenges faced by international organizations such as the Bank\. Much learning has occurred during this period, enhancing the way in which DDR operations have deployed to support peace-building and recovery, and many of these lessons emerged from Projects such as EDRP\. 89\. Design DDR projects to respond to local level dynamics: The original DDR concept was one envisaged as a state-centric nationally-oriented program implemented by a central executive authority\. The experience of EDRP and repeated in the research findings such as those by the UNDPKO on its second generation DDR programs, is that many of the challenges around DDR are at the community level and not at the national level\. In turn, a nationally-focused program is contingent on and vulnerable to national politics; if the latter are blocked, so is a national DDR program\. The conflict dynamics in DRC, including smaller armed groups and ongoing conflict in eastern Congo, required a more flexible demand-led program that responded to those dynamics at the local level\. The trust funded Special Projects provided some response in terms of establishing projects in the absence of full state authority\. 90\. DDR projects should not have an objective that is expected to result in an immediate decrease in military expenditures in these environments: Setting a subordinate PDO that the DDR program would result in a shift in military spending toward social and economic expenditures was too ambitious and did not include instruments to achieve it\. This was particularly so in a country where there was continuing conflict and the Government had a policy of army integration to absorb other armed groups which therefore increased the size of the military\. 91\. DDR projects need to be designed within an overarching security framework: The links between the general security sector reform and the delivery of a DDR program have been well explored in the 24 conflict-literature\. Without a general process of army integration and security sector reform, maximizing the monopoly of violence by the state, comprehensive DDR is extremely difficult to accomplish\. 92\. Rapid response and efficient performance can be enhanced by the outsourcing of implementation and fiduciary control: there are two important lessons here: (i) in situations of political complexity and instability, and under the revised Emergency Operational Procedures the Bank team could have had the option of having a legal framework which included an international agency as recipient responsible for the first component, demobilization\. This would have then freed up the program to advance despite the early political inertia; and (ii) given the early poor performance of the Borrower, the establishment from the outset of an external Fiduciary Agent would have provided the Bank the necessary control and confidence that funds were being used for their intended purpose\. 93\. Reintegration design needs to be more flexible and pragmatic to account for children with families: Assistance to children associated with armed forces (particularly girls) that have children themselves need to be varied and adapted to take into account that their circumstances are similar to those of adults\. Therefore for some children’s reintegration package are not appropriate and the program needs to be flexible and pragmatic to maximize their social and economic reintegration\. 94\. Reintegration programs should incorporate collective support that includes communities: EDRP experience showed enhanced success rates for both social and economic reintegration that targeted support to economic associations which comprised of ex-combatants and members of the community\. 7\. Comments on Issues Raised by Borrower, Implementing Agencies and Partners (a) Borrower 95\. UEPNDDR found that although there were difficulties during the first part of Phase I, the working relationship with the Bank improved after the MTR and was on a sound footing after the creation of UEPNDDR in terms of the financing arrangements, technical guidance/assistance and implementation support\. At the core of this relationship was a mutual understanding of issues and the responsiveness of the Bank to support the Commission with technical assistance\. The placement of a resident TTL during the difficult part of Phase I was seen as a crucial intervention\. Support mechanisms helped to create an enabling environment where necessary changes to program objectives and timelines could be discussed\. The flexibility shown by the Bank in deliberating over requests and responding to them, including preparation, implementation, monitoring and evaluation, regardless of the outcome, was highly valued\. This support was crucial to respond to the emergency of the DDR project in DRC and was described as being very effective and having contributed to achieving great outcomes for all the Project components\. Overall, the contribution of the World Bank was described as very positive and decisive\. UEPNDDR commented on this ICR by noting that it reflects the reality of what happened during the Program life time, agreed with the ratings and felt that the lessons learnt were accurate\. (b) Co-financiers 96\. The African Development Bank (AfDB) decided to co-fund some demobilized activities within Phase II of EDRP\. It felt that the best way to support the reintegration was to focus on agricultural activities that could provide sustainable activities and worked on creating large scale pilot farms which would include a mix of ex-combatants and other community members\. Adoption of a community approach was preferred to a targeted individual reintegration package\. It was noted that the relationship between the Bank and AfDB was always open and frank, and while the two institutions did not share the same point of view at the beginning on the best type of reintegration to be provided, a dialog always 25 existed\. The two institutions have always been in contact and collaborated very well\. During each mission, the Bank would meet with AfDB and provide information on the current situation of the program and the AfDB would do the same during their own missions\. The two institutions managed to find complementarities and synergies in their two different approaches\. 97\. In regards to the performance of UEPNDDR, AfDB felt that the lessons learned from the previous phase were not fully operationalized in regards to procurement and financial management, repeating them with the AfDB funding\. In addition, it felt that there was a problem on the capacity to absorb the funds and the disbursements reflecting the reality on the ground was quite slow\. Furthermore, AfDB felt that the manner whereby the PNDDR structured its relationship with sub-contractors (executive agencies) was problematic as the latter were not being sufficiently monitored against the fulfillment of criteria needed to provide services to beneficiaries\. It felt that a change in the implementation strategy should be thought through for future programs\. Finally at the ministry level, AfDB faced a lack of coordination between Agriculture and Defense\. (c) Other Partners and Stakeholders, Implementing Agencies 98\. Among Implementing Agencies, although there were initial mixed opinions on whether the program was over-ambitious, the overwhelming opinion was that PNDDR was very relevant and contributed to peace and improved security and stability in DRC\. The relationship that implementing partners had with CONADER was mixed\. With UEPNDDR however, they felt that the focus on technical aspects enhanced their performance\. In addition, in Phase II, collaboration with local organizations and NGOs was more effective particularly due to establishment of community offices\. Notwithstanding many of the weaknesses noted in this report, particularly those dealing with delays and transportation problems around demobilization, lack of greater community inclusion, poor reintegration for women and disabled ex-combatants, there was a general sense that all the components of the DDR were successful\. Furthermore, it was felt that PNDDR was very relevant for security and peace, not just within the DRC but also regionally due to the reduced number of armed groups\. 26 Annex 1\. Project Costs and Financing (a) Project Cost by Component Table A1\.1: Funds allocated and expended by Category (All amounts at historic values) C AT FUNDS AVAILABLE AFTER EXPENDED VARIANCE EQ UI REALLOCATIONS V\. IDA I TF IDA II TO TAL IDA I TF IDA II TO TAL IDA I TF IDA II TO TAL 1 2\.2 0\.6 0\.0 2\.8 0\.6 0\.5 0\.0 1\.1 1\.6 0\.1 0\.0 1\.7 2 19\.9 3\.5 0\.1 23\.5 12\.3 3\.5 0\.1 15\.9 7\.6 0\.0 0\.0 7\.6 3 38\.5 56\.3 45\.5 140\.3 41\.4 48\.8 42\.7 132\.9 (2\.9) 7\.5 2\.8 7\.4 4 20\.4 19\.0 2\.7 42\.1 25\.8 17\.2 2\.6 45\.6 (5\.4) 1\.8 0\.1 (3\.5) 5 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 6 16\.7 20\.1 1\.7 38\.5 15\.2 20\.6 2\.7 38\.5 1\.5 (0\.5) (1\.0) 0\.0 7 0\.9 0\.0 0\.0 0\.9 0\.9 0\.0 0\.0 0\.9 0\.0 0\.0 0\.0 0\.0 8 1\.4 0\.5 0\.0 1\.9 0\.0 0\.0 0\.0 0\.0 1\.4 0\.5 0\.0 1\.9 100\.0 100\.0 50\.0 250\.0 96\.2 90\.6 48\.1 234\.9 3\.8 9\.4 1\.9 15\.1 % exp\. 96\.2% 90\.6% 96\.2% 94\.0% N\.B\. Category descriptions are: (1) Works; (2) Goods, etc\.; (3) Consultant and Auditing Services; (4) TSA; (5) Transportation Services; (6) Operating costs; (7) PPF; (8) Unallocated\. Table A1\.2: Program Expenditure Allocated by Component PHAS E I PHAS E II TOTAL COMPONENT Actual % Actual % Actual % Demobilization 67\.5 36\.1% 2\.1 4\.4% 69\.6 29\.6% Reinsertion 43\.8 23\.5% 2\.6 5\.4% 46\.4 19\.8% Reintegration 21\.1 11\.3% 26\.3 54\.7% 47\.4 20\.2% Special Groups 2\.3 1\.2% 6\.5 13\.5% 8\.8 3\.8% Program M anagement 52\.1 27\.9% 10\.6 22\.0% 62\.7 26\.7% TOTAL 186\.8 100\.0% 48\.1 100\.0% 234\.9 100\.0% N\.B\. No records were available on the allocation of funds to Components, except for the initial allocation in the Project Paper\. In 2006 (Phase I) and in 2010 (Phase 2) the unallocated funds were reallocated to the Categories, but no such reallocation to Components was found\. Negative variances in Categories 3, 4 and 6 in Phase I lead to a possible further reallocation of funds\. Therefore, for Components, it is not possible to compare forecast with actual costs\. Table A1\.3: Program Expenditure Allocated by Component by Phase PHASE I PHASE II TOTAL COMPONENT VARIANCE F/cast Actual F/cast Actual F/cast Actual Demobilization 34\.4 67\.5 2\.1 34\.4 69\.6 (35\.2) Reinsertion 66\.2 43\.8 2\.6 66\.2 46\.4 19\.8 Reintegration 45\.0 21\.1 26\.3 45\.0 47\.4 (2\.4) Special Groups 15\.8 2\.3 6\.5 15\.8 8\.8 7\.0 Program Management 35\.7 52\.1 10\.6 35\.7 62\.7 (27\.0) Sub-Total 197\.1 186\.8 0\.0 48\.1 197\.1 234\.9 (37\.8) Contingencies 2\.9 0\.0 TOTAL 200\.0 186\.8 0\.0 48\.1 197\.1 234\.9 (37\.8) 27 Table A1\.4: Project Cost by Component (in $ Million equivalent) Appraisal Actual/Latest Percentage Estimate ($ Estimate ($ of Appraisal Components millions) millions) (%) Civil Works 0\.2 4\.3 1881\.40% Goods 46\.6 19\.0 40\.70% Consultants’ Services, Trainings & Audits 85 129\.2 152\.00% Transitional Safety Net 68\.8 41\.1 59\.80% Transportation Services 2\.0 0 0\.00% Operating Costs 38\.7 47\.0 121\.50% Refunding of Project Preparation Advance 5\.3 0\.9 16\.70% Unallocated 3\.4 0 0\.00% Total Baseline Cost 250 241\.5 96\.60% Physical Contingencies 0 0 Price Contingencies 0 0 Total Project Costs 250 241\.5 96\.60% Table A1\.5: Unit Costs of Combatants by Component No\. ex- combatants Total expenditure Cost per ex-comb\. Component (in '000) Ph\. 1 Ph\. 2 Tot Ph\. 1 Ph\. 2 Tot Ph\. 1 Ph\. 2 Aver\. Demobilization 105 6 111 67\.5 2\.1 69\.6 643 350 627 Reinsertion 102 6 108 43\.8 2\.6 46\.4 429 433 430 Reintegration 59 30 89 21\.1 26\.3 47\.4 358 877 534 Special Groups 33 6 39 2\.3 6\.5 8\.8 70 1,083 226 Sub-Total 134\.7 37\.5 172\.2 1,500 2,743 1,817 Operating costs * 52\.1 10\.6 62\.7 418 604 485 Total expenditure 186\.8 48\.1 234\.9 1,918 3,347 2,302 * Apportioned on the basis of operating costs to total cost applied to cost per ex-combatant\. The EDRP design sought to minimize costs without compromising quality and, whenever possible, existing structures were used rather than parallel systems created\. However, in the first six months of the effectiveness of the project, it was found that the government structures did not have the skills needed to deal with the donors’ stringent fiduciary processes\. This required the appointment of external consultants to provide their services in financial and procurement management and in processing payments of transitional safety net allowances\. The direct unit cost of the EDRP of US$ 1,817 per capita was only about 7% above the projected unit cost of US$ 1,700\. 28 (b) Financing TableA1\.6: Financing by Source Amount-($ Donors/Source of funds millions) IDA 143\.5 MDTF 90\.6 Government of DRC 6\.6 Total 240\.7 Table A1\.7: Expenditure by Component Amount-($ Component millions) Demobilization 79\.4 Transition/reinsertion 41\.2 Reintegration 47\.2 Special groups 9\.1 Technical assistance 0 Program management 63\.7 Contingency 0 Grand total 240\.7 Table A1\.8: Disbursement by Category from 2004 to 2011 Category 2004 2005 2006 2007 2008 2009 2010 2011 Total -$mil Civil Works 0\.0 0\.5 2\.2 1\.6 0\.0 0\.0 0\.0 0\.0 4\.2 Goods 0\.0 13\.8 1\.7 0\.2 3\.2 0\.0 0\.0 0\.1 19\.0 Consultants’ Services, Trainings & Audits 0\.0 33\.8 40\.1 13\.9 -0\.5 11\.8 16\.3 13\.1 128\.5 Transitional Safety Net 0\.0 5\.1 21\.8 11\.7 0\.0 2\.4 0\.1 0\.0 41\.1 Operating Costs 0\.0 6\.3 30\.1 6\.0 2\.0 0\.8 0\.9 0\.8 46\.9 Refunding of Project Preparation Advance 0\.9 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.9 Unallocated 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 Total 0\.9 59\.5 95\.9 33\.4 4\.7 15\.0 17\.4 13\.9 240\.7 29 Annex 2\. Outputs by Component ï‚ Sensitization: Prior to the launching of the actual DDR process, CONADER commissioned specialized agencies\. Their role was to sensitize both the potential beneficiaries and the communities to which they returned as to the content and implications of the PNDDR, to manage expectations and secure participation in the program\. They also instituted specific reconciliation activities in communities where the return of ex-combatants caused tension or hostility\. This sensitization and reconciliation service continued throughout the duration of the program\. ï‚ Orientation/Demobilization: The Project timeline required that the orientation centers (Cos) were to be operational for three months and process approximately 1,000 combatants per week\. In July 2005, the first CO was opened; by September 2005, eight COs, six transit sites and six mobile teams were operational across the country\. By February 2006, the amount of COs increased to 12 and by September 2006, all 18 COs were fully operational and processing up to 1,000 combatants per week\. In addition, 16 mobile teams were deployed across the country\. Due to transportation issues and lack of political will, COs remained open for an average of eight months (rather than the programmed three months)\. All centers were eventually closed before the end of Phase I and replaced by mobile teams that were part of the original JOP\. These were intended only for remote areas, but ultimately proved to be more cost-effective than COs\. ï‚ All combatants went to COs in pre-determined groups, unarmed and (for those in the FARDC) military status was “suspended\.â€? On entering the CO, each ex-combatant was identified and had his status verified\. Children associated with armed forces were separated and taken to specialized centers\. In addition, women were also separated from the men, but all that arrived at the centers were medically tested\. Adult ex-combatants were briefed on the eligibility criteria, the conditions for entering the army, the demobilization program and the reinsertion benefits\. The ex-combatants that wished to join the new army and that met the eligibility criteria were relocated to a military location where they underwent a further evaluation (at the expense of the MOD)\. Those failing to meet the requirements of the security services had the chance to become eligible for re- consideration for programs focusing on demobilization and reinsertion\. The ex-combatants that wished to enter the demobilization and reinsertion process and met the criteria continued with the demobilization activities\. These activities included: formal demobilization from the armed services; a formal acceptance of the terms of the program, the collection of socio-economic data; further orientation on the program; and civic training\. Furthermore, medical screening, socio-economic profiling and pre-discharge orientation (demobilization ID card; program benefits and payment procedures; program opportunities; the role of the CONADER's provincial offices; HIV/AIDS prevention and control; and civic duties and human rights)\. ï‚ Transition: Upon discharge from the COs, demobilized combatants that wished to join the new army forfeited their sources of income and rights to army accommodation\. For a limited period, ex- combatants had a transitional safety net assistance following their return to civilian life (known as the 'transition ' phase)\. It consisted of a Basic Needs Kit (BNK) to assist in the actual return to home and the first part of a Transitional Subsistence Allowance (TSA) to sustain the ex-combatant, as well as his or her family until they had a chance to register for the reintegration program in their area\. The BNK provided the following assistance to facilitate the initial transition to civilian life of ex-combatants: (i) transport and food allowance, in the form of a cash grant; and (ii) a basic household items kit\. Children were transferred by child protection agencies to Transit Centers for 30  children; in addition, vulnerable cases, such as the handicapped and chronically ill qualified for special transport assistance\. The (TSA) helped assist adult ex-combatants who were ready to leave the orientation centers by them providing cash (this was the first installment of the program)\. ï‚ Reinsertion: The second and third installments of the TSA were allocated once the ex-combatant registered in his/her chosen area of reintegration\. Upon registration (usually at the provincial offices) the ex-combatant received a cash payment\. If the ex-combatants continued participating in the program activities and had started integrating in their communities, a third cash installment was allocated\. Assistance was also provided to help ex-combatants reintegrate themselves into their communities and establish sustainable livelihoods\. The following guiding principles were applied for reintegration assistance: (i) minimize market distortions and maximize beneficiary choice; (ii) provide assistance that leads to sustainable livelihoods; (iii) involve communities of settlement and foster reconciliation; and (iv) benefit the wider community\. Table A2\.1: Disarmament, Demobilization and Reinsertion Reintegration Children Number of Verified thro Integrated into Demobilised as into EAFGA Year guns IVO FARDC Civilians Communities Demobilised withdrawn Total Cuml Total Cuml Total Cuml Total Cuml Total Cuml 2004 5,763 5,763 151 151 2,435 2,435 0 0 3,177 3,177 2005 80,272 86,035 25,857 26,008 43,402 45,837 0 0 11,013 14,190 2006 104,324 103,428 189,463 32,561 58,569 57,384 103,221* 44,816 44,816 13,483 27,673 2007 2,061 191,524 8 58,577 1,838 105,059 8,356 53,172 215 27,888 2008 10 191,534 0 58,577 0 105,059 0 53,172 10 27,898 2009 14,224 17,233 208,767 8,236 66,813 5,862 110,921 560 53,732 3,135 31,033 2010 131 760 209,527 1 66,814 132 111,053 29,628 83,360 627 31,660 2011 0 78 209,605 0 66,814 0 111,053 0 83,360 78 31,738 118,679 209,605 209,605 66 814 66,814 111,053 111,053 83,360 83,360 31,738 31,738 *Re-adjusted to 102,014 at the end of Phase I ï‚ Economic reintegration: Ex-combatants were offered assistance in attaining sustainable livelihoods\. Irrespective of their rank, former military affiliation, or gender, they were equally eligible for the program\. Thus, they had the ability to choose their reintegration destination freely\. Where ever possible, the programs gave preference to reintegration assistance that also benefitted the ex-combatant’s community of return; it should be noted that reintegration support was to have been built on existing capacities rather than create new structures\. Assistance was offered in different forms such as: provision of information; counseling and referral services; vocational training; formal and informal apprenticeship schemes and educational opportunities; as well as employment\. It had been hoped that with the restoration of peace, labor intensive programs and other employment opportunities would be generated by public and private rehabilitation, including development and investment initiatives\. ï‚ Social reintegration: This was essential for a sustainable return to civilian life and livelihoods\. However, this was difficult in areas where ex-combatants lost their families or even where the social fabric had been destroyed\. Therefore, community participation in the PNDDR was considered critical for successful reintegration measures\. 31  ï‚ Special Groups: Gender: The PNDDR provided targeted support for the social and economic reintegration of female ex-combatants and women associated with the fighting forces\. Often sexually abused, they were not only traumatized, but also often stigmatized\. Therefore, these women required specialized re-integration support\. Specific measures include the following: (i) Ensuring that the special needs (e\.g\., security, sanitation) of female ex-combatants were taken into account in the orientation centers; (ii) ensuring that all benefits for ex-combatants were equal to and equally accessible to both men and women; (iii) encouraging female ex-combatants to participate in existing women’s associations; (iv) including partners of ex-combatants and women in communities of return in community-level counseling activities; (v) strengthening the gender awareness and capacity of CONADER staff and of others involved in the reintegration process; and (vi) monitoring the impact of the Program on partners of ex-combatants and women in communities of return, as well as bringing emerging problems to the attention of the relevant authorities\. Table A2\.2: Female Associated with Armed Groups (FAFGA) reintegrated SITE Number of Number of Number of women benefited women to be women from individual kids and supported supported collectives supports Kalemie 200 200 200 Kinshasa 150 185 185 Boma 150 4 4 Bukavu 100 90 90 Uvira 50 47 47 Bunia 200 200 200 Kisangani 150 150 150 TOTAL 1000 876 876 ï‚ Disabled ex-combatants: To date, only limited medical and economic assistance has been provided to disabled ex-combatants\. The PNDDR sought to systematically address the medical and economic rehabilitation needs of the estimated 2,000 disabled ex-combatants to be demobilized under the Program\. A medical commission defined the degree of disability of those that participated\. With respect to physical rehabilitation, the Program would provide assistance depending on the degree of disability\. ï‚ Chronically ill ex-combatants: The Program would also seek to systematically address the medical needs of chronically ill ex-combatants\. A medical commission would determine the degree of illness\. The Program would endeavor to ensure access to medical care and counseling for chronically ill ex-combatants for up to 12 months after demobilization\. After this period, the Program would transfer responsibility of these ex-combatants to relevant health authorities\. 32 Table A2\.3: Disabled Ex-Combatants reintegrated Activity 2010 SS total Number % Adults cumulated predicted Male Female Medical Consultations 199 5 204 600 34 Consultations to rehabilitation center (CRHP) 105 5 110 600 19 Physiotherapy 24 0 24 n/a Prosthetic Assistance 9 0 9 Orthopedic Assistance 6 0 6 Surgery 19 0 19 Psychological assistance 0 0 0 Transfer to other specialized centers 67 3 70 Other assistance 36 2 38 ï‚ Children associated with the armed forces: Child ex-combatants were estimated to represent at least 10% to 20% of the fighting forces and would need priority assistance\. CONADER worked in coordination with partners specialized in the area of child protection\. Programs were established according to guiding principles to secure the release of all children and to promote their earliest re- unification with their families, or placement in alternative care\. Upon their arrival to the COs, children were dealt with separately from the adults and the mainstream DDR program\. They were taken to dedicated transit and orientation centers (TOC) where experts assessed their needs and defined the best approach for re-integrating the children into their communities\. The children required special assistance especially in the areas of psychological support, drug abuse, sexual abuse, and dealing with child mothers\. Yet, the ultimate goal was to return the child to their family or to place them in an alternative family setting\. Tracing services worked to find the child's family, but for those that could not be found, extended family members or appropriate alternative care such as foster families, independent living, or group homes were sought\. Assistance included family tracing and reunification, trauma counseling and psychosocial care, and facilitation of access to education or skills training in communities of settlement\. While CONADER coordinated general assistance to children, this implementation was undertaken by experienced personnel from partner organizations\. Several pilot activities were funded through the MDRP Special Projects window\. 33 Table A2\.4 Children Associated with Armed Groups (EAFGA) reintegrated 2009 2010 2011 PROVINCE APE TOTAL Female Male Total Female Male Total Female Male Total total 600 391 991 342 714 1,056 52 366 418 2,465 AAS 0 0 0 195 359 554 0 0 0 554 Equateur AGL 0 0 0 147 355 502 38 90 128 630 APE 0 0 0 0 0 0 14 276 290 290 CRB 600 391 991 0 0 0 991 total 0 0 0 65 136 201 0 0 0 201 Kasaï Or BIC 0 0 0 65 136 201 201 total 13 59 72 20 89 109 0 0 0 181 Katanga REC 13 59 72 20 89 109 181 total 23 457 480 112 1,050 1,162 0 0 0 1,642 CAN 0 0 0 1 540 541 541 Nord Kivu SCG 23 453 476 13 195 208 684 SCI 0 4 4 98 315 413 417 total 685 1,884 2,569 120 331 451 0 0 0 3,020 Province Or COO 613 1,452 2,065 104 256 360 2,425 SCN 72 432 504 16 75 91 595 total 18 91 109 0 1 1 0 0 0 110 Sud Kivu SCU 18 91 109 0 1 1 110 TOTAL 1,339 2,882 4,221 659 2,321 2,980 52 366 418 7,619 ï‚ HIV/AIDS: It should be noted that combatants were a high-risk group for HIV infection\. The project offered an extensive HIV/AIDS service to the ex-combatants\. The PNDDR provided the necessary counseling to all combatants in the COs allowing them to make an informed decision to receive voluntary testing\. On-site testing was made available, as was any required post-testing counseling\. PNDDR was only able to provide treatment for acute opportunistic infections, but directed patients towards available HIV/AIDS programs\. 1\. Institutional Development and Program Implementation Support: This was aimed at strengthening the capacity of the Recipient’s central and local level institutions in order to carry out and support activities under the Project\. This was all made possible with the help of provisional training and technical advisory services, the acquisition of vehicles and equipment, financing of operating costs, and carrying out of audits\. 2\. During the height of its operations in 2006, CONADER had 11 provincial offices, 21 community offices and 18 Orientation Offices with over 1,000 employees\. With the closing of COs and the downsizing of operations, this number was gradually reduced to 169 technical staff, which by the end of the project had come down to 66 staff (24 in Kinshasa and 42 in the provinces)\. The project also supported the creation of a financial entity, which as noted above, was subsequently dissolved and replaced by KPMG\. 3\. CONADER and the Technical Secretariat of the UEPNDDR benefited from capacity building support\. Training and technical assistance focused on various topics: 34 ï‚ The World Bank’s financial management and procurement systems and procedures; ï‚ Develop a socio-economic reintegration strategy (DFID and MDRP); ï‚ MIS/data management, sensitization, development of joint operations plan and manuals, and development of project implementation and reintegration manual; ï‚ Logistics, program and strategic management, operations, gender and institutional development; ï‚ A study on reintegration and the impact of use of cash payments; and ï‚ A comprehensive beneficiary assessment of male, female, child ex-combatants and an overall final evaluation\. 35 Annex 3\. Economic and Financial Analysis Linkages between defense expenditure and socio-economic development in the Democratic Republic of Congo 1\. This section explores whether in the last ten years the Government has reallocated part of its defense budget to improving the country’s social and economic sectors\. The findings presented below are based on desk research, as well as interviews with stakeholders in Kinshasa\. In summary the research revealed that the reported DRC defense budget has been variable between 2003 and 2010\. The budget increased on average by 30 % annually between 2003 and 2006, then declined by 54 % from 2007 to 2009, and further increased by 34 % in 2010\. In specific budgetary terms, it appears as though no significant funds were reallocated from the defense sector to social and economic sectors\. However, the Government’s investment in professionalizing the national military and seeking to improve internal security have arguably promoted peace in the DRC\. Further analysis is provided below\. 2\. The Project had a direct impact on suppressing personnel costs in the defense sector through the demobilization of 141,584 adult and child ex-combatants\. The reintegration of these demobilized ex- combatants into civilian communities meant that these individuals were no longer included on the military payroll, which had provided these individuals with $60 per month\. This represented a potential opportunity saving by 2009 of $60 per month per average soldier, totaling approximately $100 million per year\. National budgetary allocations 3\. Global military expenditure in 2010 reached $1630 billion, representing 2\.6 % of global gross domestic product (GDP) or $236 for each person\. Spending was 1\.3 % higher in real terms than in 2009 and 50 % higher compared to 2001\.37 A similar pattern of military spending was replicated in the DRC, particularly between 2003 and 2007\. 4\. The last decade has seen the DRC’s defense budget grow from $113 million (2003) to $187 million (2004), $219 million (2005) up to $238 million (2006), $225 million (2007) down to $162 million (2008), $122 million (2009) up to $163 million in 2010\.38 The reform of the DRC’s military has been at the centre stage of the country’s post conflict reconstruction process, and therefore military reform has been a priority sector in terms of the country’s budgeting\. A perception amongst the country’s government authorities is that peace and security, necessary for development to thrive, can only be assured if the defense sector has the ability to safeguard the territorial integrity and internal security of the citizens\.39 In 2003, it was thought that an increase in military spending would bolster the security of the country and restore peace (especially in eastern Congo)\.40 The 2004 Regional Peace 37 Sam Perlo -Freeman et\.al, 2011\. “Military Expenditure\.â€? SIPRI Yearbook\. At: www\.sipri\.org/yearbook/2011/files/SIPRIYB1104-04A-04B\.pdf\. Accessed on 12 February 2012\. 38 Ibid, pg 49\. 39 Interviews with DRC government authorities in Kinshasa, 04-11 February 2012\. 40 African Economic Outlook\. 2005-2006\. “Democratic Republic of Congo\.â€? African Development Bank and OECD\. 2006\. http://www\.oecd\.org/dataoecd/13/8/36746740\.pdf\. Accessed 20 March 2012\. 36 Conference for the Great Lakes Region was interpreted to have a valuable impact in order to help “stabilize the situation and lead to better control of military expenditure in the region\.â€?41 5\. Despite the signing of the Global and Inclusive Accord in December 2002, the eastern part of the country has continued to be unstable, with a plethora of armed groups remaining active and the county’s national forces (FARDC) engaging in military operations against these armed groups\.42 These dynamics, coupled with the process of integrating various armed factions into the FARDC and the professionalization of the military, has continued to attract the biggest share of the DRC’s national budget over the last decade\. The first democratic elections (marking the end of the transitional Government) took place in 2006, which coincided with the start of a significant security sector transformation\. This further increased the Government’s attention to the defense sector, as it sought to exercise and consolidate control in all the provinces\. 6\. The total DRC budget for 2010 amounted to CF 5,607\.51 billion (equivalent to $US 5\.90 billion) in revenue and in expenditure\. Of this amount, the share of central government was 94\.5 % and the provinces 5\.5 %\. The budget, which was voted upon by the Parliament in late January 2010, was higher than the initial budget prepared by the Government in 2009, which amounted to CF 5,000\.78 billion\.43 Usually budget increases are funded from what is referred to as “additional revenue,â€? identified by Parliament during the budget review process\. Such a process can include reducing and increasing the amount allocated to specific budget lines\. Defense budgeting and spending 7\. The Government seems to have regularly under-estimated the costs associated with the defense sector resulting in substantial over-expenditure\. In 2009 and 2010 the defense expenditure was 44% and 72% respectively above the amount that had been initially budgeted\. For the same period, the health budget received 38 % and 74 % of its approved budget respectively\. These trends clearly show that the second PDO was not met, and indeed, quite the opposite occurred\. Interestingly, numbers show that in 2005 the military expenditure in percentage of health expenditure was 145%\. Furthermore, it should be noted that the health share of total Government expenditure rose from 2\.8% (2001 to 2002) to 7\.4% (2003-2005)\.44 8\. It is difficult to ascertain whether these budget over-runs were due to genuine under-budgeting or malpractice, or even a combination of both (which this report cannot comment on)\. There are however mitigating circumstances as to why the defense expenditure has kept increasing during this time period\. Government priorities include the reform of the FARDC, the stabilization of the country, safeguarding the DRC’s territorial integrity, and improving the internal security for its citizens, all of which are costly 41 International Monetary Fund\. 2004\. IMF Country Report No\. 04/243\. http://www\.imf\.org/external/pubs/ft/scr/2004/cr04243\.pdf\. Accessed 20 March 2012\. 42 United Nations\. 2011\. “Report of the Group of Experts Submitted Pursuant to Resolution 1533 (2004)\.â€? S/2011/738\. 2 December\. At: http://www\.un\.org/sc/committees/1533/egroup\.shtml\. Accessed on 10 January 2012\. 43 Emilie A\. Mushobekwa, 2010\. “DRC Economic Report\.â€? At: http://www\.siteresources\.worldbank\.org/\./DRC_economic_report_EN_Feb2010\. Accessed on 12 February 2012\. 44 Unicef\. 2009\. “Fiscal Space & Public Expenditure on the Social Sectorsâ€?\. http://www\.unicef\.org/wcaro/wcaro_08_UNICEF_OPM_briefing_paper__Fiscal_Space\.pdf\. Accessed 20 March 2012\. 37 exercises\. Consequently, the defense sector has attracted an increasing share of the Government’s national budget over the last decade\. ï‚ Despite these budgetary dynamics, the DRC military burden has remained relatively stable at just over 2% of GDP during 2004 and 2007 according to the Stockholm International Peace Research Institute (SIPRI)\.45 It then declined to 1\.4% in 2008, then 1\.1 in 2009 before increasing to 1\.4 in 2010\. Professionalizing the military 9\. After the 2006 elections, the DRC military was estimated to consist of 343,000 personnel with an average monthly package per soldier of $10\. By the end of 2009 there were in the region of 152,000 FARDC personnel, but the average monthly salary for the rank-and-file was around $60\. The salary increase had been instituted in an effort to reduce the predatory behavior of FARDC soldiers\. Force numbers will be further reduced to 105,000 by the end of 2012\. Furthermore, because of the adoption of a EUSEC sponsored biometric identification system, corruption and desertions have been drastically reduced\. However, the process of professionalizing is yet to be completed, particularly in the eastern provinces\. Further military downsizing will also include FARDC troops who are either of a pensionable age or physically or psycho-socially disabled\. Establishing a pension and compensation scheme for these individuals will have budgetary implications\. 10\. The biometric system has streamlined the armed forces by eliminating “ghost soldiers\.â€? A soldier is not eligible to receive a FARDC salary without an official biometric card\. The information is stored in an electronic database, and it allows military commanders to monitor the movement of soldiers who can only legitimately relocate from their area of operation to another are by following proper transfer procedures\. Creation of a homogeneous force 11\. The FARDC is currently composed of a combination of former government army formations and former rebel armed groups, and was a new military structure established after the termination of the Second Congo War in July 2003 as a peace-building measure\. The Government argued the country could have experienced an increase in insecurity if sufficient funding had not been dedicated to the integration of the various rebel groups into the FARDC\. 46 Several reintegration challenges however remain\. For instance some of the former rebel groups integrated into the FARDC have continued to operate in parallel command structures\.47 According to the Government, addressing such problems of command-and-control is a matter of priority, hence have motivated for the need to allocate more resources to address this problem\. Regularizing the salaries of the military 12\. According to a Congolese senior defense official “a poorly paid military force is a demoralized one and can easily stage a mutiny\.â€?48 FARDC soldiers now earn a regular monthly salary, which has 45 See the SIPRI website, http://www\.sipri\.se\. 46 Interview with government security agencies in Kinshasa, 8 February 2012\. 47 United Nations\. 2011\. “Report of the Group of Experts Submitted Pursuant to Resolution 1533 (2004)\.â€? Op\.cit\. 48 Interviews with senior defense officials in Kinshasa\. 7 February 2012\. 38 reportedly reduced the number of incidents of soldiers extorting money, food and other belonging from civilians, as well as incidents of violence perpetrated by soldiers against the citizenry\. A regular salary also serves as a disincentive to soldiers who may want to desert the force, while on the other hand it makes the force attractive to potential recruits\. 13\. Such developments have allegedly contributed to improvements in stability in the DRC, which apparently had a direct positive impact on foreign direct investment (FDI)\. Trends in social and economic development 14\. As indicated in graph A3\.1 the country’s GDP grew from just under -2% in 2001 to almost 8% in 2005\. The 2006 election violence and the uprising of the CNDP rebel group in the Kivus led to a drop in the GDP, which improved in late 2006/2007 after a period of relative stability\. The global economic crisis in 2008 negatively affected the DRC through a general collapse in the prices of key mineral exports, including cooper, cobalt and diamonds\. The copper price on the world market fell to approximately $2,700 per ton in October 2008 from around $7,000 per ton before the international crisis\.49 GDP growth declined sharply from 6\.2 % in 2008 to 2\.8 % in 2009\. 15\. With the resumption of activities in the mining sector in late 2009 and the continuing improving performance of the construction and public works sector, which had a direct impact on agriculture, commerce and transportation, economic growth was projected to reach 5\.4 % in 2010\.50 With increasing stability and more investors being attracted to the country, signs are that country’s GDP will rise\. 16\. The increased internal stability brought about through the defense transformation has been central to a more conducive investment environment\. Graph A3\.1: DRC Real GDP growth 2001-2010 Source: Emilie A\. Mushobekwa, 2010\. “DRC Economic Report\.â€? At: http://www\.siteresources\.worldbank\.org/\./DRC_economic_report_EN_Feb2010 17\. Stability and FDI\. A stable DRC has begun attracting foreign investors and foreign direct investment (FDI)\. The DRC’s increasingly secure environment, brought about by defense reforms, has induced FDI net flows into the country\. Between 1980 and 2006, FDI was low and often negative because state-owned companies, such as the mining company Gécamines, were not able to enter into 49 Emilie A\. Mushobekwa, 2010\. “DRC Economic Report\.â€? Op\.cit\. 50 Emilie A\. Mushobekwa, 2010\. “DRC Economic Report\.â€? Op\.cit\. 39 joint ventures with foreign investors\. By 2009, FDI stock had more than doubled to US$ 2\.5 billion since 2006, which was the point at which the mining sector was re-opened to private investors, following the initiation of military reforms and the holding of democratic elections\.51 18\. Private sector investment\. As reflected in table A3\.1 below, there has been a noticeable increase in private sector investment, particularly in the construction sector, but also in infrastructural development\. It is observable that most of the goods sector (agricultural, manufacturing and construction) recorded a gradual growth between 2000 and 2009, with the exception for electricity, water and gas which recorded staggering growth, ending with a -1,6 % growth in 2009\. According to the Government’s Central Bank report of 2009, agriculture contributed to 40\.6% of the country’s GDP, followed by the housing and public works sectors which contributed 32\.2% and 26\.2% respectively\. On the other hand, the service sector performed dismally, with the growth in transport and communication decreasing throughout the decade from 28\.5% in 2000 to 2\.9% in 2009\. Table A3\.1: Growth rate by volume of various sectors and their components Source: DRC Annual Report\. At: http://www\.bcc\.cd/\. Accessed on 15 February 2012\. 19\. Graph A3\.2 shows GDP growth by sector, and indicates how significant changes have occurred in all but ‘other services’ sectors, showing an overall GDP growth of 5\.3% between 2006 and 2010\. According to the Economist Intelligence Unit, GDP growth had increased to 6\.5 in 2011\.52 51 Alfie U, Felipe K and Nicole K\. 2009\. “Democratic Republic of the Congo\. A study of binding constraints\.â€? At: http://www\.hks\.harvard\.edu\. Accessed on 13 February 2012\. 52 Economist Intelligence Unit, Country Report: Democratic Republic of Congo, London, Economist Intelligence Unit, March 2012\. 40 Graph A3\.2: GDP growth rate by sector 1996-2010 Resilience of an African Giant, Boosting Growth and Development in the Democratic Republic of Congo by Johannes Herderschee, Kai-Alexander Kaiser, and Daniel Mukoko Samba 20\. Table A3\.2 below provides some context to table A3\.1 by illustrating sources of economic growth adjusted for human capital, for the period 1992 to 2010, particularly an increase in labour productivity\. Table A3\.2: Sources of economic growth adjusted for human capital 1992-2010 Resilience of an African Giant, Boosting Growth and Development in the Democratic Republic of Congo by Johannes Herderschee, Kai-Alexander Kaiser, and Daniel Mukoko Samba 21\. Informal sector\. A component of the private sector that continues to thrive in the DRC is the informal one\. The informal sector cuts across retail, service and manufacturing, as well as agriculture\. The size of the informal economy vis-a-vis the formal economy is significant\. In 2008, the unemployment rate in the country stood at 53\.2 %, while in 2009 it rose to 60\.8 %\. 53 Despite the increase in general unemployment rate in 2009, the numbers in the private sector (most of them in informal employment) that registered with the national social security fund showed an average growth rate of 7\.0% employment rate per year\. Agriculture remains the fundamental economic activity in the DRC, with 75 % of the population deriving a livelihood from it\. Due to an increase in security across the country, more people have the ability to sustain themselves through agriculture\. 53 DRC Annual Report\. At: http://www\.bcc\.cd/\. Accessed on 15 February 2012\. 41 22\. DRC has a young, rapidly growing population that is eager for employment opportunities\. According to a recent World Bank report, the formal private sector may generate as few as 300,000 jobs, (1\.2 percent of the workforce)\.54 The rest of the population is forced to engage in subsistence farming or in the informal sector\. According to the report, the situation has not improved substantially since 2006\. The report argues that although income levels in agriculture are rising they do not generate demand for skilled labor\. Developments in the informal sector have fluctuated over time\. The crisis of 2008–2009 hit the urban poor particularly hard because of exchange rate movements that were not compensated by income opportunities\. This scenario has been captured in graph A\.3\.3 below\. Unemployment increased from 2000 when the country emerged from two successive civil wars\. It partially stabilized in 2001 but deepened until 2004\. However, from 2007 the situation has been improving due to FDI, real GDP growth and improved internal security in many parts of the DRC\. Graph A3\.3: Unemployment trends between 2000 and 2009 Source: DRC Central Bank Annual Report, 2009 23\. Social services (health, education, welfare)\. The constitution defines primary and secondary education, health, and agriculture and rural development as decentralized sectors\. Local governments and provinces are responsible for the management of service delivery, but the standards are set at the national level\. As of end-2010, no competencies had been transferred, although interim regulations on public service management, which have been in place since mid-2009\. Fragmented authority and accountability on these sectors have provided loopholes for misuse of wage bill funds (which make up more than 40 % of expenditures)\. While the total extent of fraud in the DRC is difficult to establish, it clearly has a negative impact on the provision of public services\.55 24\. Gross primary school enrollment rates increased from some 64 % in 2006 to more than 80 % in 2008\. According to the latest evaluation report for the Poverty Reduction Strategy Paper and the Heavily Indebted Poor Countries (HIPC) Initiative, education represented more than 10 % of the government’s 54 Johannes H, Kai-Alexander K and Daniel M\. 2012\. “Resilience of an African Giant, Boosting Growth and Development in the Democratic Republic of Congo\.â€? Washington, DC: The World Bank\. Pg 75\. 55 Ibid, pg, 28\. 42 poverty-related expenditures during 2006–08\. Expenditures on education have grown faster than expenditures in the health sector\. Interestingly, spending on education is now comparable to that of investments in infrastructure\. 25\. Inadequate security and accountability in the public sector posed a fundamental constraint on economic growth\. This is associated with weak government capacity to monitor corruption and other related predatory behavior\. Patronage in the military has led to individual officers misappropriating funds through inflating budgets or imposing illegal taxes\. However, a significant share of the misappropriated money has been invested in the private (informal) sector, thereby boosting it\. 26\. In 2010, DRC was ranked 168th out of a total of 169 countries in terms of the Human Development Index (HDI)\. The Human Development Index (HDI) is a comprehensive numeric value used to rank countries level of human development\. On average, DRC’s HDI has declined since 1980, and has been well below the sub-Saharan HDI average\. However, there was a 19 % increase in the DRC HDI between 2000 and 2010\. Table A3\.3: Human Development Index, DRC 1980-2010 Resilience of an African Giant, Boosting Growth and Development in the Democratic Republic of Congo by Johannes Herderschee, Kai-Alexander Kaiser, and Daniel Mukoko Samba 43 Annex 4\. Bank lending and implementation support/supervision processes (a) Task Team members Names Title Unit Lending Supervision/ICR Gregory Alex Senior Social Development Spec AFTCS René Michel Bauman Consultant AFTCS Pamela Ording Beecroft Operations Analyst AFTCS Lucie Lufiauluisu Bobola Team Assistant AFCC2 Sean Bradley Senior Social Development Spec EASER Benjamin Burckhart Social Development Specialist AFTCS Maria C\. Correia Sector Manager SASDS Roisin Ellen Mary De Burca Senior Operations Officer OPCFC Bourama Diaite Senior Procurement Specialist AFTPC Madjior Solness Dingamadji Senior Social Development Spec AFTCS Andre Lohayo Djamba E T Consultant AFTFM Bruno N\. P\. Donat Communications Officer AFTCS John A\. Elder Lead Social Protection Special HDNSP Marcelo Jorge Fabre Senior Operations Officer OPCFC Eva Faye Consultant AFTCS Abderrahim Fraiji Senior Operations Officer AFTCS Bernard Harborne Lead Specialist AFTCS Harald Hugo Hinkel Senior Social Development Spec AFTCS Jean Charles Amon Kra Senior Financial Management Specialist AFTFM Nathalie J\. Lopez-Diouf Language Program Assistant AFTH3 - HIS Philippe Mahele Liwoke Senior Procurement Specialist AFTPC Elisabeth Maier Consultant AFTCS Philippe Daniel Maughan Consultant AFTCS Thomas Mbonye Procurement Spec\. AFTPC Valérie Molina Consultant CICIN Etienne NKoa Senior Financial Management Specialist AFTFM Catherine Sarrade Consultant AFTS3 - HIS Mamadou Sevede Consultant AFTWR Rashid Brown Shomari Consultant AFTCS Leya Malaika Gisele Tabu Consultant AFCC2 Laurent de Valensart Schoenmaecke Consultant AFTS3 - HIS Léa Salmon Operations Officer AFTCS Stavros Stavrou Senior Conflict & Development Specialist AFTCS 44 (b) Staff Time and Cost Sum of Total $ Thousands (including Sum of Staff travel and consultant Stage of Project Cycle Fund Fiscal Year Weeks costs) BB 2003 8\.96 54,393 2004 44\.84 283,531 2005 0 0 LENDING BB Total 53\.8 337,924 TFs 2003 0 68,350 2004 0 22,503 TFs Total 0 90,853 LEN Total 53\.8 428,776 BB 2005 34\.19 146,286 2006 31\.92 149,252 2007 33\.65 168,555 2008 27\.99 179,518 2009 23\.75 133,468 2010 13\.65 117,074 2011 15\.27 127,546 2012 7\.06 48,458 BB Total 187\.48 1,070,155 SUPERVISION/ICR TFs 2005 0 19,044 2006 0 23,700 2007 48\.47 203,170 2008 237\.11 1,183,849 2009 148\.65 538,464 2010 0\.16 47,712 2011 0 76,854 2012 4\.78 112,489 TFs Total 439\.17 2,205,281 SPN Total 626\.65 3,275,437 Grand Total 680\.45 3,704,213 45 Annex 5\. Beneficiary Survey Results Introduction 1\. From 2004 to 2010, a total of six years, the National Program of Disarmament, Demobilization and Reintegration of demobilized (PN-DDR) was intended to promote the return to civilian life of demobilized Congolese ex-combatants\. In its socio-economic reintegration component, it provides assistance enabling them to "fit into the social and economic practices of the communities of their choice, upon conditions and opportunities similar to those of other community members\.â€? 2\. By 30 September 2011, shortly before the close of the program, the PNDDR Execution Unit (DDR- UEPN) commissioned a study by the IDL Consultancy Group evaluating the current state of the beneficiaries’ reintegration and identifying needs for additional assistance, as well as to allow a formalization of the lessons learned\. Statistical data collected by the National Institute of the Statistics (INS) in April 2011, aimed to determine whether the PNDDR beneficiaries could support themselves\. In addition, they determined whether the beneficiaries found their ‘new’ life similar to that of the members of their community\. This summary report lays out critical information highlighted by the five key points upon the reintegration program of different groups of beneficiaries (men, women, children, young adults, injured ex-combatants, etc), as the perception of the communities in which they were reinstated\. Analyzing what civilian community members believed about former demobilized soldiers allowed comparisons between the PNDDR beneficiaries and the rest of the Congolese population\. 3\. Some important elements for the evaluation were not taken into account in the design of the questionnaire used by the INS\. For example, the questionnaire did not help to distinguish the age of respondents at the time of their demobilization\. There is a possibility that an age gap of several years may have existed for nearly tens of thousands beneficiaries\. Further, the questionnaire did not include questions allowing mapping of the PNDDR beneficiaries who later joined an armed group\. It is thus impossible to assess if the ex-combatants’ vulnerability to revolving multiple recruitment was mitigated by the DDR\. 4\. As of 28 August 2011, the IDL Group began their work with an initial review of data collected by the INS\. A systematic collection of elements of relevant literature was also conducted to contextualize the statistical results\. A field mission to Kinshasa was held in September 2011 allowing for consultations with the UE-PNDDR, the World Bank, the INS and other partners, and to elaborate on previous misunderstandings and clarification of interpretation of the data\. The IDL Group completed their reports on the closing date of the project, on 30 September 2011\. PNDDR Program Background 5\. During the Second Congo War in 1998-2002, the northern and eastern DRC were controlled by a myriad of armed groups that received direct support from foreign forces\. Until the Comprehensive and Peace Agreement signed in Pretoria on 17 December 2002, the Congolese armed groups faced the Congolese Armed Forces (FAC) of President Joseph Kabila\. From Kinshasa, President Kabila was able to maintain control of the western and southern Congo provinces with the support of other countries in the region\. 46 6\. During peace talks in Pretoria, the warring stakeholders agreed upon the creation of a new national army - the FARDC – which resulted in the integration of the different troops\. The remaining soldiers were demobilized and reintegrated into their communities of origin, as well as reintegrated into civilian life\. When the PNDDR commenced in November 2004, the main challenge for the Congolese leaders was security\. They had to quickly put together forces from former belligerents to form the FARDC brigades\. The challenge was to decrease the military in DRC over a period of three years\. The PNDDR was financed by international donors to help ex-combatants to be reinstated back to their communities as civilians; such a program was expected to be completed by end of 2007\. 7\. A first phase of demobilization was extended from March 2005 to June 2006\. This phase took place under the responsibility of CONADER\. By 31 December 2006, a group of diverse DDR partners agreed to completely stop operations until new arrangements from the Congolese government occurred after the general elections\. At the end of PNDDR’s Phase I, among the 138,700 ex-combatants that entered 18 COs located across the country, about 105,000 chose the demobilization option\. As of late 2007, the PNDDR agency partners did not receive sufficient funds for the implementation of the reintegration projects and thus they could cover only 54,700 demobilized ex-combatants\. 8\. The total demobilized number of ex-combatants did not change significantly by 2008\. No new projects were approved nor funded\. Nearly 50,000 ex-combatants of Phase I were still expecting to be reintegrated, and tens of thousands new candidates were awaiting demobilization\. A recovery plan was established for resumption by November 2008\. But it was not until April 2009 that further demobilization was carried out\. Although the program was to end by August 2010, reintegration projects were to continue until the following summer\. The PNDDR Phase II was therefore extended from November 2008 to September 2011 under the responsibility of the UE-PNDDR to account for these adjustments\. The total caseload of the two phases (from 2004 to December 2010) reached by the PNDDR amounted to 108,000 demobilized and nearly 90,000 adults have been reintegrated\. Socio-Economic Reintegration of Beneficiaries 9\. The reintegration process includes a financial component and a training component\. A sum of US$110 and a kit consisting of small equipment were given at the time of demobilization to meet the immediate needs of the ex-combatants\. During Phase II, the kit was converted into cash to immediately increase the disposable income to US$140\. An additional safety net of US$300 was also distributed in installments over the course of one year\. Ex-combatants were supported by the execution agency partners in their home provinces, having been resettled through either the UN or commercial flights funded by the PNDDR\. The economic and social reintegration took place through training or school re- enrollment which focused on helping the demobilized ex-combatants support themselves\. Theoretically, after 12 months of tutoring, a second aid package for a return to work was delivered to the beneficiary or to an ex-combatants association\. 10\. Children were supported by UNICEF and other partner agencies by aiding them to return to school\. Many children expected financial benefits similar to those ensured to older ex-combatants\. This was contrary to the policy of non- cash payment to minors adopted by partner agencies in compliance with international standards\. In the meantime, some minors came of age between the time of their demobilization and the beginning of their reintegration\. Becoming adults, they often requested to be reinstated as adults which did indeed occur in some cases\. 47 11\. The use of the safety net used during the demobilization phase\. The largest share was immediately spent on clothing, but 20% of men and women were able to invest this money quickly\. In the latter case, the purchase of land or business - which had the advantage of bonding the ex-combatants to their community - was favored by half of the investors\. Food was particularly a major share for expenses\. It represented nearly 30% of the second use of the safety net that all beneficiaries considered, while this percentage was already in use in the first phase for 21% of men and 15% of women demobilized\. The main use of US$300 during the reintegration phase was devoted to current expenses rather than investing in income generating activities\. This was divided mainly into livelihood and assistance to the family\. It appears that reintegration assistance of former adult combatants substantially benefited their dependents\. These are households or extended families that relied on financial assistance from the PNDDR to live\. 12\. Vocational training was at the core of the reintegration program; 68% of men and 66% of women stated having attended training\. Overall, the results seemed to be positive\. A total of 68% of men and 79% of women noted that they used the skills developed within this framework\. The fields selected by the training project designers seem to meet the needs expressed by the vast majority of beneficiaries\. A total of 55% of the demobilized population had a positive view of their rehabilitation experience, while 41% have a negative or reserved judgment\. 13\. The reintegration process was designed in the context of instability and weak economic recovery\. Due to necessary but occasionally imperfect choices, the PNDDR allowed the demobilized ex- combatants to leverage assistance at the end of the conflict and the start of an expected economic recovery\. A total of five analytical reports noted that the achievement of this objective was somewhat uneven\. As data outlined in general Bank studies has ascertained, the Congolese population has not yet benefited from sustained economic recovery\. There are still some areas particularly in eastern DRC where the security conditions remain very poor\. This is not the result of poor planning or execution of the PNDDR\. However, the analysis of the Congolese program suggests that more attention should have been undertaken in order to strengthen the opportunities and risks generated by a shifting political environment\. Presentation of Beneficiaries 14\. During the war, the country was divided\. Ex-combatants reflected this concept through interviews undertaken by the INS; a total of 57% came from armed groups while only 43% previously wore the uniform of the former national army (the FAC)\. 48 Table A5\.1: Distribution of the total of the demobilized and the children reintegrated by the PN- DDR Province Males Females Children % of total Kinshasa 7,136 353 131 6% Bandundu et Bas-Congo 2,274 47 504 2% East and West Kasaï 4,447 24 902 4% Katanga 11,952 456 732 11% Equateur 7,233 243 3,881 9% Maniema 4,550 424 11 4% North and South Kivu 25,410 747 12,316 32% Province Orientale 21,346 1,677 13,704 30% Total 84,348 3,971 32,181 120,500 % total 70% 3% 27% 100% Source EUPN-DDR (Terms of references) 15\. Between 2004 and 2007 nearly 80% of ex-combatants and child soldiers from the survey were demobilized\. The remaining 20% were demobilized between 2009 and 2010\. It should be noted that reintegration activities conducted by the implementing partners during this second phase also involved large numbers of people who had been demobilized earlier\. 16\. The proportion of children - and to lesser extent women - out of military organizations dramatically increased during the 2008-10 period\. Rebel militias in eastern DRC recruited young members and discharged them when they came of age in order for them to be demobilized\. Former FAC members were demobilized by the average age of 40\.3 years after being in the military for the last 19 years\. GAC’s ex-combatants were on average 24\.2 years at the demobilization stage and only spent 5\.3 years in their rebel group\. 17\. The reintegration process that began at the end of the demobilization stage depended on the former combatant’s level of education\. Among these, many were recruited when still at their school enrollment age like the rest of the Congolese population\. When registering in the PN-DDR, all male ex-militia over 18 years of age had more than twice the illiteracy rate (18%) of former members of the FAC (7%)\. 18\. Despite a large number of women who decided to participate on the INS survey, it was remarkable that men did not constitute a majority of the sample of demobilized armed groups in eastern DRC\. In North Kivu, males compose 42% of candidates for reintegration, while 11% are women and 47% are children\. This disproportion is even greater in South Kivu and Eastern Province, where nearly 65% of demobilized ex-combatants belong to vulnerable groups\. In Equateur, former MLC troops interviewed by the INS were composed of 2/3 men and 1/3 of children\. 19\. It should be noted that former militia and former FAC do not have identical reintegration capabilities\. The choice was made to offer the same support framework and the same financial safety net amount to beneficiaries, whatever their geographical and institutional origin\. Combined with differences in the security situation in the various Congolese provinces, the variety of trajectories, however, have obliged partner agencies and the EU-PNDDR to preserve flexibility in the reintegration process by taking into account the diversity and needs of their beneficiaries\. 49 Socio-Economic Situation of Post PNDDR Beneficiaries 20\. Rebel militias recruited their members at an average of 19 years of age, while the FAC recruited combatants at 21\.3 years of age\. The FAC veterans were discharged at an average age of 40\.3 years, after serving 19 years of service in the military\. On the other hand, ex-combatants of the militias were discharged at an average age of 24\.2 years, while having only spent 5\.3 years in the ranks\. 21\. The reasons for the enrollment of an individual in military organizations are partly related to lack of economic opportunities\. The task of the EU-PNDDR agencies and implementing partners was hindered by the socio-economic situation\. 22\. Ex-combatants are very appreciative of the assistance provided by the program\. The proportion of beneficiaries not satisfied at all with the process of reintegration is relatively low\. Positive reviews from ex-combatants were observed at all phases of the program\. The level of appreciation for the beneficiaries’ reintegration varies upon geographic basis\. After an average of four years post- demobilization 25% of men and 31% of women beneficiaries of the PN-DDR are still unemployed\. In fact, only 45% of women have a permanent source of income\. A total of 20% of reintegrated ex- combatants have found employment, proving that the ex-combatants had a difficult time finding jobs\. 23\. One of the priorities identified for a sustainable reintegration was to promote the ex-combatants association around income-generating activities\. Over a fifth of adults are now in associations but still get little additional income\. Evidence indicating the effectiveness of this approach cannot yet be generalized in the absence of further and specific studies\. 24\. The PNDDR has not been a substitute for socio-economic development programs to improve the general situation of the Congolese\. Reintegrated ex-combatants were worse off in the housing sector compared to members of their community and were on average less likely to be home owners\. 25\. A total of 47% of men and 40% of women ex-combatants stated that their access to food was either “badâ€? or “very bad\.â€? Nearly 30% believe that their condition had been deteriorating for two years\. Food insecurity is unevenly distributed in the Congolese territory\. Veterans were trying to support their families by increasing the size of their farm plots and the number of their livestock\. Some of the demobilized were reunited with family members and thus received their support, as well as their communities\. Social networks have continued to play a stabilizing role, but men experience a better social status than that of their female counterparts who encounter difficulty starting a family\. 26\. At the time of the INS study in April 2011, three quarters of the members of the communities surveyed were not so pleased with their living conditions\. Nevertheless, the various confidence, well- being indicators and capacity decision-making among the demobilized –men and women adults - were generally positive and show some optimism\. The majority of the demobilized believe they have relatively large mastery of changes in their lives\. This optimism, sometimes tinged with fatalism, is an asset upon which the development phase will flourish\. Women Beneficiaries 27\. A total of 30% of women ex-combatants are single, and a large proportion of men are in the same situation\. A total of 93% of demobilized men had a partner who had never participated in armed actions, and up to 56% of demobilized women had to find their partner in the military or among fellow veterans\. 50 Women may also suffer discrimination due to their exposure to sexual abuse during their military service\. 28\. Demobilized women endure greater socio-economic uncertainty than other categories of beneficiaries\. A total of 10% of women own their homes, which is two times less than civilian women and four times less than men veterans\. Nearly 53% of women beneficiaries of the PN-DDR are unemployed, housewives or students\. Over half of these women were dependent on a third party for their financial resources and food\. A total of 50% experienced permanent food insecurity\. Children Beneficiaries 29\. The average age of ex-combatants or individuals associated with a military organization has 15 years\. They spent two years in the ranks during the most important transitional phase between adolescence and entry into adulthood\. Nearly 90% of children served in the militias in their home province\. 30\. Agencies that have supported demobilized children focused on the urgency to get them out of the military and bring them quickly back to their families\. In four out of the five provinces where reintegration programs for children took place, a high level of poverty and high insecurity in the residual armed groups’ activities disrupted their reintegration\. 31\. The Ministry of Education is constitutionally obliged to provide free primary education\. Due to lack of funds to pay teachers and improve infrastructure, education systems in the five provinces - including those of the eastern DRC - were in very poor condition\. The Government did not recognize the schools for the families of the two million internally displaced in provinces most affected by insecurity\. These schools were fully managed with community resources\. Therefore, once PNDDR education funds run out, families with demobilized children may not have the means to pay for education or to bolster the education infrastructure\. 32\. A total of 32% of children chose to return to school, compared to 3% of adults, and 52% chose to receive vocational training\. Nearly 48% of them were not able to identify the qualifications received from training - in two thirds of the responses- due to a lack of tools or working capital\. A total of 46% of children mentioned that they did not also receive adequate explanations for their reintegration\. This general frustration could be partly explained by the choice of agencies to focus on giving information and resources to the parents\. 33\. After reintegration, children were more likely to be unemployed than before their recruitment\. There was an alarming decline in educational attainment and a significant increase in their representation in subsistence agriculture\. Reintegrated children currently live with families dependent on subsistence agriculture and they end up contributing to them through their work to\. This seems indicative of the deterioration of the living conditions observed in the provinces affected by conflict\. 34\. Psycho-social indicators for child beneficiaries of the PN-DDR were troublesome\. Nearly half of children mentioned that they did not trust members of their community\. A total of 13% reported feeling insecure, while this feeling was observed in less than 3% among adults\. This difference may be due to a higher propensity to fear due to their age or an objective assessment of their vulnerability as they were placed in the provinces still affected by insecurity\. It was likely that psycho-social disorders were not diagnosed or treated satisfactorily during the reintegration process\. 51 35\. A total of 73% of children reintegrated were satisfied with the DDR process while only 53% of adults expressed a similar appreciation\. Children felt that their overall situation was slightly better than that of adult ex-combatants\. Verified or not, this suggests that the Congolese families continue to make a sense of wellness to their children\. It also suggests that social resilience is more important for children than the general economic conditions\. 36\. It was not possible to find significant differences in the results of reintegration distinguishing young adults and children\. The rehabilitation process of young adults faced the same challenges faced by programs designed for children\. Community Perceptions 37\. Community members described the reintegration process as successful\. Three quarters of those interviewed by the INS regard the demobilized ex-combatants as part of their community regardless of their military past\. The degree of tolerance and consideration for the demobilized groups from the other community members is relatively positive\. 38\. The fear that existed several years ago between the ex-combatants and the communities has greatly diminished\. Nearly half of the civilians admitted to feeling fear at the time the veterans returned\. This fear was strongly felt among women rather than among men\. For instance 48 % of women felt afraid compared to 38% of men\. Upon investigation, they were only 12% feared the demobilized\. However, significant differences are observed at the provincial level on this topic\. Kinshasa has the highest percentage of respondents feeling fear of demobilized at the time of the survey, with 30% of respondents\. Kinshasa is followed by Equateur, with 20% of respondents still afraid, and then North Kivu, with 15%\. 39\. While specific assistance to the demobilized often sparked jealousy from other vulnerable members of communities, 80% of civilians surveyed said that there was no discontent\. Two-thirds believe that the presence of demobilized people in the community brought about a positive element, such as complementary skills and participation in community service\. 40\. These positive overall findings must nevertheless be qualified given the quite contrasting answers given by community members\. It seemed that the relationship between veterans and civilians was more likely about cohabitation marked by indifference\. First of all, the direct relationships (meetings, discussions etc) between community members and the demobilized did not seem to be particularly common nor of a great importance\. Thus, 80% of respondents said that they had never had important meetings with demobilized people\. Only 10% said they had a lot of important meetings with the demobilized\. The situation in the communities appeared to be a simple coexistence marked by relative ignorance and indifference rather than a real peaceful cohabitation\. 41\. Second, perceptions of discrimination against the demobilized groups remained important\. The stigmas that the demobilized, primarily the men, remained quite strong for their difference in attitudes and behaviors\. They were generally perceived as being more aggressive, violent people and troublemakers by other community members\. According to INS survey results, women were much less likely to have this stigma, but some were still subject to negative perceptions from the community members\. These negative perceptions remained in effect mainly to very masculine characteristics (fights, aggression, fights, disturbances, etc)\. Women and children demobilized seem to have been well integrated\. 52 42\. Negative perceptions were more strongly marked in some provinces, mainly in the Kivus, in the Bas-Congo and Equateur\. With the exception of the Bas-Congo, it is noteworthy that it’s the main strongholds of Congolese rebellion, namely the MLC in Equateur and the CNDP in the Kivus, which were most strongly affected by high rates of negative perceptions\. Other elements of explanation sheds light on this phenomenon with the example of the importance of abuse committed by armed men on civilians during the war, support for any military component by the community during the war or the presence of "residual" armed groups in some areas (the Kivus and Ituri in particular) or more general tensions that exist between communities in a given region\. 43\. Assistance to the demobilized groups was a source of some frustration within communities, even if they were limited because they involved about one fifth to one third of community members\. Such a rate was not negligible and revealed a need for information and awareness campaigns on DDR issues among civilian populations\. Compared to the relationships between children and the demobilized members of the community, the existence of certain mechanisms of solidarity and assistance established by community members against demobilized children exists\. These forms of assistance remain poorly framed and need further development, as well as generalization of other categories of ex-combatants, with support from some agencies or NGO's\. Conclusions 44\. Since 2003, the DRC is at peace with its neighbors\. In 2006, she acquired democratically and nationally elected leaders\. Kinshasa has strong international support materialized by an important United Nations peacekeeping mission and major national funding by foreign partners\. The socio-economic situation in the Congo remains extremely difficult\. And development efforts of the country have yet to fully benefit the Congolese people\. 45\. It is within this context, that the PNDDR reinserted and returned tens of thousands ex-combatants scarred by their experiences of combat and crippled by an interrupted education, as well as limited job skills\. The beneficiaries of the PNDDR have not yet caught up with the living conditions of members of their community and almost all are not satisfied with their living conditions\. 46\. It is likely that the overall strategy applied to the PNDDR has been too limited in the continued absence of adequate development programs benefiting vulnerable groups, the beneficiaries of the PNDDR and vulnerable members of communities\. Ex-combatants still need assistance to improve a certain precarious situation that they face\. Their employment rate is still lower than that of their community member’s rate\. They live in poorer houses and face serious problems accessing food for themselves and their families\. As previously noted, family and community support is important for them to manage and overcome the difficulties of everyday life\. 47\. The design of DDR programs in the future will need to include the rehabilitation in a broader economic development process that benefits all categories of vulnerable populations along a broader horizon\. Vocational training courses that were given by the implementing agencies of the PNDDR partners have not fully responded to the challenge of reintegrating veterans in a national economy dominated by subsistence agriculture\. A more ambitious approach would be to adapt training to key skills required by a development strategy designed and operated by the national government\. However, this would require an appropriation by the political authorities of the country larger than that operating in the Congolese case\. A less ambitious approach would be through a greater accountability of the implementing agencies by setting targets that would entice them to offer jobs to their graduates\. 53 48\. Overall, ex-combatants express a positive appreciation of the assistance provided by the PNDDR in a difficult and challenging environment\. This is partly explained by their relatively low initial expectations\. The reintegration program was relatively successful in meeting or exceeding their expectations\. It has not been a substitute for socio-economic development programs\. Many demobilized ex-combatants believe that their overall situation will improve in a few years or put their fate in ‘the hands of God\.’ This optimism tinged with fatalism is a ferment on which the development phase can evolve, as the political and security conditions may have the possibility of being met\. 54 Annex 6\. Stakeholder Workshop Report and Results 1\. The main findings of the stakeholder workshop were that the PNDDR was very relevant and contributed to peace, improved security and stability in the DRC\. Although stakeholders had initially mixed opinions whether the ambitious program would succeed, it managed to target a big number of ex- combatants, and stakeholders highlighted that the disarmament, demobilization and social reintegration were successful\. However, there were weaknesses with the economic reintegration and especially with addressing women’s and disabled ex-combatants’ needs\. 2\. Demobilization\. Despite delays and the challenges in terms of limited time for IVO (information, verification and orientation), high cost of establishing and running COs, planning issues with military and armed groups, lacking commitment of armed groups to demobilize and to respect international convention for the protection of children, transport delays of demobilized to their areas of return, demobilization was a success\. 3\. Social reintegration\. The community approach applied in the second phase was more successful as it promoted social reintegration whereas targeting only demobilized led in many cases to envy and stigmatization\. PNDDR’s sensitization and communication activities in the communities of return also contributed substantially to community members accepting the demobilized\. The first phase should have had a community approach to help build trust and confidence among communities in the DDR process\. Notwithstanding, social reintegration was perceived as a success\. 4\. Economic reintegration\. Stakeholders pointed out the delay between demobilization and the launch of reintegration activities, which could have been avoided if all strategies and inputs had been in place before the start of the PNDDR\. Economic reintegration would have been more successful if more market feasibility studies had been carried out to advise on job opportunities, and if a more adequate economic reintegration assistance had been provided by the implementing partners\. Though, it is noteworthy that some implementing partners did carry out studies; these cases seem to be the more successful ones\. The reintegration kits seemed insufficient, particularly during the first phase and were also adapted during the second phase\. Some stakeholders also mentioned that reintegration was more successful in those areas where the population had the culture of taking their life in their own hands and where the demobilized adapted to this culture\. Stakeholders also indicated that the impact of vocational training was higher than income generation\. 5\. Another aspect stressed was that reintegration was ineffective due to lack of ownership by local communities and absence of linkages with other development programs\. This changed in the second phase, when the approach was altered to community involvement and participating in the establishment of associations\. For example, in Phase I land was not given to the demobilized, however, during Phase II land was given to groups\. Notwithstanding of the points mentioned so far, it was pointed out that the PNDDR was an emergency intervention, and thus the objective was not to provide durable reintegration solutions, but rather to ensure that the demobilized were not worse off than the rest of the community\. And there were success stories, e\.g\. after having received vocational training one demobilized is today a supplier of a UN agency and another one became an implementing partner\. It was also highlighted that for an effective sustainable economic reintegration, it would be necessary to develop synergies with other development programs to ensure continuity of employment beyond the timeframe of the PNDDR\. 6\. Special Groups\. Overall, the family tracing, reunification (with ICRC’s help and financing) or placements of children in alternative care were successful\. Stakeholders also emphasized that placing children in transitional families helped facilitate social reintegration and thus were obviously better than 55 the CTOs\. However, the disarmament criteria of one man – one weapon left many children and women out of the program\. The kits for married girls or girls with children were only adjusted during the second phase\. There were also challenges in terms of older children aged 15-17 years of age, as they were unsatisfied with the benefits they received, especially those who already had a wife and/or children\. More adequate benefits for those children would have been needed\. Some children pretended to be adults because they would receive more benefits\. While children received some sort of psycho-social support in the CTOs, it seems that the program cannot claim any success in terms of providing psycho- social support as agents lacked qualifications and there was no follow-up after children left the CTOs\. Stakeholders also believed that more focus should have been put to enroll more children in schools and provide more reintegration assistance in terms of vocational training and support to income generating activities as only few benefited\. A stakeholder indicated that this was partly due to dire utilization of funds of implementing partners\. 7\. Moreover, specialized support to women and disabled groups should have been provided\. The program failed regarding the latter\. Very limited specialized support was provided to women\. In the second phase, there were few women associations with bakery and other small businesses, such as selling lemonade\. A project, implemented by CARITAS, was mentioned in Kalemie in the province of Katanga which targeted female ex-combatants by including literacy, IGAs, child care and community sensitization on the fight against sexual violence and the choice of activities by women\. In addition, the program catered specialized assistance for demobilized women in terms of specific accommodation, hygiene and health\. A good number of women did not come forward for reintegration because they were afraid of stigmatization\. This situation improved during the second phase with the LEAP project and a revised sensitization framework including specific messages for women\. While voluntary HIV testing and counseling was offered in the COs, no support was provided to sero-positive demobilized groups\. 8\. Regional relevance of the program\. While the PNDDR was deeply relevant for peace and security in the DRC, stakeholders were also of the opinion that it had an impact on a regional level due to the reduced number of armed groups\. Thus, the dismantling of national militia weakened the foreign armed groups\. 9\. Sensitization and communication was perceived as being a very important and critical activity within the PNDDR, which was overall successful\. Sensitization sessions helped that different actors understood each other, it facilitated acceptance of demobilized in the communities of return, and thus contributed to the reduction of tensions, especially during the first phase of the reintegration\. 10\. Institutional arrangements\. While CONADER was a more known political entity, the UEPNDDR focused more on technical aspects\. During the first phase under CONADER, the PNDDR worked with partners and their procedures which contributed to some implementation delays as decisions were made at HQ and not in the field\. Collaboration with local organizations and NGOs was more effective as they were close to the communities and could address their needs more easily than partners with their offices in Kinshasa\. CONADER faced a lot of pressure from various sides\. Decisions were made at a higher level and management of the PNDDR was a big challenge\. Furthermore, the administration was too big and worked in a bureaucratic manner\. 11\. The establishments of the provincial offices in Phase II was a substantial approach as it helped to address issues and find solutions more easily and quicker\. However, while there was a coordination mechanism for the children’s program at the national, there was a lack of coordination in the provinces because provincial offices did not have a focal point for children\. With financing from France, UNICEF 56 financed focal points for about 1,5 years but after the funding run out, the coordination problem at provincial level continued\. Furthermore, the Ministry of Social Affairs was not engaged and consequently had very little knowledge about the PNDDR\. To date, there is still no exit strategy of the PNDDR and no link to other development programs\. A crucial aspect is needed to ensure that the investment made will not be lost in the future because demobilized are tempted to remobilize as the political and security situation remains to be very volatile in the DRC\. 12\. Risks\. The main risks identified at the beginning of the program were related to the lack of commitment for DDR, security and stability risks, risks of remobilizing after disarming and capacity to manage the program\. The main risks today are mostly identified in the North-East, i\.e\., the resurgence of armed groups including the risk of continued re-recruitment and remobilization\. 13\. Unexpected results\. Including vulnerable children and CAFFs in the program, contributed to preventing re-recruitment of children because the whole community was sensitized about child protection issues and as a consequence protected children\. Another unexpected impact was that through the use of local providers to supply activity inputs as well as businesses of demobilized ex-combatants, the local economy benefited overall\. In addition, the local representation of NGOs meant employment opportunities for skilled people in the area\. They no longer had to look for jobs in Kinshasa\. Moreover, there was a positive effect of demobilized associations as other community members followed this example because they could see the successes\. 14\. Main identified lessons learned: ï‚ To avoid delays in reintegration, start DDR when all strategies and all other inputs are ready; delays create frustration among demobilized waiting for their benefits\. ï‚ Sensitization and communication crucial for success of DDR\. ï‚ Need to carry out market feasibility study prior reintegration interventions\. ï‚ Need to adapt economic activities to local context and apply community approach to promote social reintegration and prevent stigmatization\. ï‚ Women and disabled were not addressed and there is still a need to provide special programs for women and disabled\. ï‚ Psycho-social support was neglected but is a crucial aspect for reintegration\. ï‚ There are still issues in North and South Kivu, and a program is needed to continue activities for demobilized and communities to prevent re-recruitment and remobilization of both adults and children\. ï‚ The issue of foreign armed groups needs to be resolved as it is the core of the conflict\. ï‚ Important to budget activities well to avoid delays (transport of demobilized)\. ï‚ Political will crucial for a successful DDR\. ï‚ Important that UNDP and WB harmonize their DDR approach\. ï‚ Better results achieved by working with local organizations and NGOs\. ï‚ Good experiences with placing children in transitional families, which contributed to social reintegration\. ï‚ There is clearly a need for an exit strategy and link of PNDDR with other programs\. Time for reintegration not sufficient and follow-up activities needed\. Convened: 8 January 2012, World Bank Offices, Kinshasa, DRC 57 Annex 7\. Summary of Borrower's ICR Overview of the PNDDR 1\. The Congolese armed conflicts from 1996-2002 led to an increased militarization of the society, higher levels of arms trafficking, the creation of militias recruiting children and young adults, and the division of the territory into several administrative entities\. As a result, millions of people died, around 3 million of people were internally displaced and about 500,000 Congolese found refuge into camps in neighboring countries\. 2\. In the early 2000s, improvements in the peace process were evident with a gradual withdrawal of foreign forces and the beginning of a transitional political phase took place\. This resulted in the process of the Inter-Congolese Dialogue that led to the signature of a Global and Inclusive Agreement on 17 December 2002 and the nomination of a new Government in July 2003\. To further foster regional stability and peace, DRC has in addition signed several bilateral peace agreements with neighboring countries in order to counteract the activities of irregular forces still active after the previous civil wars\. 3\. In 2003, a presidential decree stated that DDR activities would be undertaken under the responsibility of the Ministry of National Defense, Demobilization and Veterans Affairs; the Ministry of Social Affairs; and the Ministry of Solidarity and Humanitarian Affairs\. Following this, the DDR’s technical committee for planning and coordination was created on October 18 2003\. PN-DDR Key Principles 4\. On 16 October 2004, the President created PNDDR as part of the security system reform and four main guiding principles were defined: ï‚ The Government has the leadership of the operations; ï‚ The coordination of operation in this area is to be implemented by a single structure; ï‚ An enlarged partnership - which includes the participation of several national and international partners in the program implementation; ï‚ An integrated approach combining common operations prior to demobilization and integration operations\. Objectives Main objective 5\. The main objective of the PNDDR was to contribute to the peace consolidation, national reconciliation, socio-economic reconstruction of the country, and contribute to the political stability of the region\. Specific objectives 6\. Specific objectives are: ï‚ Disarm the combatants of the armed groups who will not be integrated into the armed forces or the police as planned in the peace agreements; 58  ï‚ Demobilize troops and armed groups non-eligible for integration into the armed forces; ï‚ Reintegrate socially and economically the demobilized ex-combatants\. Funding 7\. Initially, program funds came from IDA (H 0890) and MDTF (54242) for a total of $200 million\. During a second phase, the World Bank provided additional financing of $50 million while the African Development Bank provided a further $22\.5 million\. In total, the PNDDR has received $272\.5 million while the Congolese Government pledged to contribute for $2\.5 million\. Implementation 8\. PNDDR was implemented in two phases: ï‚ Phase 1: from November 2004 to June 2008\. Phase one was characterized by a socio-economic reintegration of ex-combatants on an individual basis; ï‚ Phase 2: from July 2008 to June 2010\. The PNDDR supported the ex-combatants demobilized in the first phase who didn’t benefit from the socio-economic reintegration as well as the demobilized of the second phase\. This phase was further extended until September 2011 in order to continue past reinsertion programs and reinforce the work through associations\. PN-DDR objectives by component Targets Table A1\. Planned objectives of the PN-DDR Components Forecast Observations To be treated 300,000 Including 30,000 EAFGA To be disarmed 300,000 One man, one gun principle To be integrated 150,000 Reform and restructuration of the army To be demobilized 120,000 Adult ex-combatants Children extracted from armed groups 30,000 Family reunification and schooling (EAFGA) To Reinsert 120,000 Social and economic reinsertion Disarmament and demobilization components 9\. The disarmament and demobilization activities were operationally closed in December 2009 as all soldiers planned by the Military Integration Structure (SMI) were treated, as well as the 132 demobilized members of the armed groups eligible to PNDDR planned by the STAREC program\. Socio-economic reintegration component 10\. From July 2008 to June 2010, the aim was to assist 33,780 demobilized persons while (Chart 1 below)\. The Kivu area was to be dominant in terms of activity (12,000 individuals) while the CARITAS project (through TF and IDA funding) was to be the most important (13,180 individuals)\. 59  Chart A7\.1: Number of demobilized ex-combatants planned for reinsertion in Phase II by region and project 11\. From July 2010 to September 2011, the focus was on working with 709 associations to reinforce integration\. The Program also prioritized the support of associations to achieve sustainable economic reintegration\. The associations of demobilized ex-combatants were identified and received extensive support from the PNDDR through the associations of producers\. Main activities implemented from 2004 To 2011 Phase One (November 2004 to June 2008) Outcomes by project components 12\. The following results were obtained: (a) Disarmament: ï‚ Projected : 300,000 ï‚ Actual: 191,524 ï‚ Total number of weapons collected: 104,324 (b) Demobilization of ex-combatants: ï‚ Projected : 120,000 ï‚ Actual: 105,059 (c) Reinsertion: ï‚ Number of approved projects: 40 approved for 68,457 ex-combatants, but only 35 have been funded for 54,697 demobilized ex-combatants ï‚ Number of demobilized ex-combatants who received support from implementing agencies: 53,172 (d) Support to vulnerable groups: d\.1\. EAFGA ï‚ Projected: 30,000 children ï‚ Number of EAFGA out of the armed groups: 27,908 ï‚ Number of EAFGA reunified with their family: 22,929 ï‚ Number of EAFGA registered for formal education: 6,066 ï‚ Number of EAFGA benefitting from vocational training: 9,101 ï‚ Number of schools receiving supplies: 208 ï‚ Number of professional apprenticeship centers supported: 417 60  d\.2\. Wounded soldiers ï‚ A total of 262 wounded soldiers benefitted from the PNDDR support in phase one\. In addition, 218 were reintegrated, got a training funded by the social fund and received a professional kit from the by the Program\. Furthermore, 44 disabled ex-combatants were physically rehabilitated\. Cross-cutting activities 13\. The project was also active in several transversal activities aimed at improving the reintegration of former combatants and the implementation of targeted actions: Awareness and communication In terms of awareness campaign in Phase I, there are some outputs described below: ï‚ Number of trainees in interpersonal communication: 856 ï‚ Number of trainees in conflicts resolution: 85 ï‚ Number of flyers produced and distributed: 574,000 ï‚ Number of posters produced and distributed: 92,460 ï‚ Number of brochures produced and distributed: 47,100 ï‚ Number of stickers produced and distributed: 60,500 ï‚ Number of calendars 2005 and 2006 produced and distributed: 14,000 ï‚ Number of diaries 2006 produced and distributed: 2,000 ï‚ Number of pens produced and distributed: 10,000 ï‚ Number of key rings produced and distributed: 5,990 ï‚ Number of caps produced and distributed: 10,000 ï‚ Number of T-shirts produced and distributed: 13,750 ï‚ Number of loincloths produced and distributed: 16,100 Environment 14\. The project has not undertaken an environmental study\. However, on its own, the project ensured the reforestation of sites where the Counseling Centers were created\. Gender 15\. A group was set up to focus on gender issues (this supplemented the PNDDR which did not specifically address the issue)\. The group included the Ministry of Defense, Police, Gender Ministry, UNDP, MONUC, UNICEF, civil society and CONADER\. It worked on strategies to better integrate gender in the PN-DDR program\. This work helped define a new category of ex-combatant: “women associated with armed Groups “(FAFGA)\. HIV/AIDS 16\. Although HIV/AIDS was not a part per see of the project, i) the possibility to be tested in CTOs before being demobilized and ii) the knowledge of their status was offered to ex-combatants Phase Two and extension (July 2008 to September 2011) 17\. The second phase of the project aimed at completing the objectives not yet fully achieved after phase I and to meet new specific objectives especially in the unstable environment of the Eastern part of the country\. During that phase, the Government requested additional funding to continue 61  the disarmament, demobilization and reintegration operations\. The Government also restructured the management of the program by creating a new implementation unit called the UE-PNDDR\. Outcomes by project components 18\. The following results were obtained: Disarmament: ï‚ Number of weapons collected: 14,355 Demobilization of ex-combatants: ï‚ Actual: 5,994 Reinsertion: ï‚ Total Number of physically resettled demobilized soldiers: 30,188 ï‚ Number of approved projects: 8 Support to vulnerable groups: d\.1\. EAFGA ï‚ Number of EAFGA out of the armed groups: 3,900 ï‚ Organization of evaluation mission with UNICEF ï‚ Participation to various conferences\. d\.2 Demobilized female ex-combatants ï‚ Six projects of specific Chart A7\.2: Distribution (Pct\.) of demobilized assistance to female ex- female ex-combatants assisted\. combatants were executed by 25\.0 22\.8 22\.8 21\.1 CARITAS; 20\.0 ï‚ By December 15th, 2010, 876 17\.1 women had been helped (out of 15\.0 a target of 1000)\. 10\.3 10\.0 ï‚ Activity occurred mostly in 5\.4 Kalemie, Bunia and Kinshasa\. 5\.0 0\.5 They account for 66\.8 percent 0\.0 of women having received Uvira Bunia Kinshasa Boma Kisangani Bukavu Kalemie assistance\. d\.3\. Wounded soldiers ï‚ A total of 1,239 wounded soldiers have been demobilized\. ï‚ Out of the 600 wounded soldiers that benefited from medical assistance, only 204 have gone through a medical commission\. ï‚ 110 went through the related consultation and received medical assistance\. Cross-cutting activities Awareness and communication 19\. Several awareness and communication activities were carried out in favor of demobilized soldiers and local communities\. A total of 18 awareness agents were recruited and assigned to this task\. Activities included: ï‚ Monitoring and support of demobilized soldiers in their project of socioeconomic reintegration; ï‚ Awareness campaign in the host communities; 62 ï‚ Awareness workshops; ï‚ Media coverage of various 2010 events; ï‚ Several awareness sessions with politico-administrative authorities\. MIS 20\. The project focused upon improving the IT system which records the economic supervision of the demobilized soldiers, on top of the usual referencing activities, assistance to execution agencies and liaison officers in provinces as well as management of the PNDDR database\. Partnerships Phase I 22\. Partnership for the demobilization component\. Work on the seven counseling centers was entrusted to the UNDP and CONADER signed contracts with two partners for the payment of temporary subsistence allowances (CELPAY and the Congolese Bank)\. 23\. Partnership for the reintegration component\. A total of 35 reintegration agreements were signed with executing agencies to implement reintegration projects\. A total of 6 executing agencies are considered as strategic partners in reintegration activities due to the number of person they deal with: FAO, ILO, USAID, GTZ, Caritas Congo and INPP\. Phase II 24\. Partnership in the demobilization component\. The main partners are Caritas, ADEKOR, INPP, FAO, ILO and HDW\. 25\. Partnership in the reintegration component\. The main partners selected during the re-launch phase were: ï‚ The FAO for small livestock, agriculture, and fishing in Bas-Congo, Bandundu, Equateur, Katanga, Kinshasa, North-Kivu, South-Kivu and Maniema; ï‚ Caritas Congo for small livestock and agriculture in Kasai-Occidental, Kasai-Oriental and the Province Orientale, as well as vocational trainings and income generating activities in Kasai- Occidental and the Province Orientale; ï‚ The INPP for vocational trainings and income generating activities in Bas- Congo and Katanga; ï‚ The ILO for vocational trainings and income generating activities in Bandundu, Equateur, North- Kivu, South Kivu and Maniema; ï‚ ADEKOR for vocational trainings and income generating activities in Kasai-Oriental; ï‚ IFESH for vocational trainings and income generating activities in Katanga; ï‚ The GTZ for vocational trainings and income generating activities in Kinshasa; ï‚ UNHABITAT for vocational training provision in the Province Orientale; ï‚ BIO-ID to supply to all ex-combatants secure Demobilization IDs; ï‚ CELPAY to supply ITS to the ex-combatants; ï‚ UNICEF for advocacy activities, temporary care, follow-up and reinstatement of the EAFGA\. 63 3\.3\. Project outcomes: synthesis 26\. The table below provides a synthesis of the key project outcomes\. In numeric terms, activities related to the reinsertion of adults, children and the reinforcement of support associations have been rather successful activities\. Table A7\.2: Project outcomes compared to targets Project Target Outcome Pct\. Of Target I\. Disarmament 1\.1\. Treated 300,000 209,605 69\.9 1\.2\. Weapons recovered 300,000 118,679 39\.6 II\. Demobilization 2\.1\. Adults 120,000 111,053 92\.5 2\.2\. Children extracted from FGA 30,000 31,738 105\.8 2\.3\. Wounded 9,000 4,639 51\.5 III\. Reinsertion 3\.1\. Number physically installed 120,000 94,049 78\.4 3\.2\. Reintegrated 120,000 83,360 69\.5 3\.3\. Associations reinforced 709 821 115\.8 3\.4\. Wounded 600 204 34\.0 27\. The overall impact of the project includes: ï‚ Further completion of disarmament, demobilization and reinsertion of nearly 94,000 ex-combatants within the country’s social and economic life; ï‚ Promotion of a reallocation of Government expenditures from the military sector to the rest of the society and priority development areas; ï‚ Improved political and social stabilization through the demilitarization process, the resolution of local conflicts and national reconciliation; ï‚ Increased poverty reduction; ï‚ Professionalization and modernization of the Army and the Police\. Project Operations Procurement 28\. Phase 1\. A total of 468 contracts were signed for a total of $ 96\.62 million; 160 contract for the provision of goods; 127 contracts for consulting services; and 138 contracts for other services; ï‚ 29\. Phase 2\. A total of 274 contracts were signed; 4 contract for the provision of goods; 252 contracts for consulting services; and 18 contracts for other services; Financial management 30\. Project funding through the World Bank was $ 250 million (IDA: $ 150 million and MDTF: $ 100 million)\. 64 31\. Data on the project’s initial budget by category of expenditures and actual expenses show major deviations\. These include massive over-expenditures in expenses of category (1) and (3) (Civil works and Consulting services) and non-expenditures for item (5) (Transport services)\. Table A7\.3: Project budget, actual expenses and disbursement rate by category ($) Project budget Actual Disbursement Expenditure category Phase I Phase II Total expenditures rate (% ) (1) Civil works 202,790\.0 23,962\.0 226,752\.0 2,053,823\.0 905\.8 (2) Equipment 46,554,332\.0 23,962\.0 46,578,294\.0 15,844,619\.0 34\.0 (3) Consulting services 52,291,189\.0 32,747,604\.0 85,038,793\.0 140,108,277\.7 164\.8 (4) Subsistance temporary indemnity 59,019,090\.0 9,744,409\.0 68,763,499\.0 44,104,552\.0 64\.1 (5) Transport services 0\.0 1,996,805\.0 1,996,805\.0 0\.0 0\.0 (6) Operating costs 37,745,374\.0 990,415\.0 38,735,789\.0 37,565,762\.0 97\.0 (7) Reimbursements advances 1,292,217\.0 3,993,610\.0 5,285,827\.0 878,341\.0 16\.6 (8) Not affected elsewhere 2,895,008\.0 479,233\.0 3,374,241\.0 0\.0 0\.0 Total 200,000,000\.0 50,000,000\.0 250,000,000\.0 240,555,374\.7 96\.2 32\. The overall disbursement rate of the project on World Bank funding is 96\.2%, out of $250 million available, $240\.5 million have been used\. Table A7\.4: Project actual expenses by components ($) Project components Phase I C\.Pct Phase II C\.Pct Total C\.Pct (1) Demobilization 73,348,394\.1 38\.1% 2,146,419\.7 4\.5% 75,494,813\.8 31\.4% L\.Pct\. 97\.2% 2\.8% 100\.0% (2) Transition/Reinsertion 43,825,652\.9 22\.8% 2,564,760\.0 5\.3% 46,390,412\.9 19\.3% L\.Pct\. 94\.5% 5\.5% 100\.0% (3) Reintégration 21,037,940\.2 10\.9% 26,275,451\.3 54\.6% 47,313,391\.5 19\.7% L\.Pct\. 44\.5% 55\.5% 100\.0% (4) Target groups 2,325,433\.7 1\.2% 6,503,477\.9 13\.5% 8,828,911\.6 3\.7% L\.Pct\. 26\.3% 73\.7% 100\.0% (5) Support to project management 51,937,838\.9 27\.0% 10,590,006\.8 22\.0% 62,527,845\.6 26\.0% L\.Pct\. 83\.1% 16\.9% 100\.0% Total 192,475,262\.4 100\.0% 48,080,117\.1 100\.0% 240,555,379\.5 100\.0% L\.Pct\. 80\.0% 20\.0% 100\.0% 33\. Data by components show that the demobilization component was the most important over the entire project (31\.4% of all expenditures) but was massively reduced in phase two as it then only accounted for 2\.8% of this type of expenditure\. Transition and reinsertion expenditure followed the same pattern between Phase I and II, while overall they accounted for 19\.3% of total project expenditures, in Phase II they only accounted for 5\.5% of the total category expenditures\. Expenditures on target groups and reintegration followed an opposite pattern as they grew significantly in Phase II\. 65 Issues and recommendations Phase I: Issues 34\. Three main issues have to be mentioned in the Phase I of the program: institutional, operational and financial issues\. Institutional Issues: ï‚ Suspension of the program in December 2006 and conditionality of the donors; ï‚ $ 6\.8 million dollar of ineligible expenditures to be paid by the counterpart; ï‚ Abrogation of CONADER by Presidential decree without official plan for restructuring the project execution structure, with negative impact on the motivation of the staff; ï‚ Establishment of a lighter structure; ï‚ Scheduled payment of ineligible expenditures ($ 6\.8 million) has currently reached its second tranche\. Operational Issues: 35\. Logistical constraints and the field difficulties still retard the progress of the activities of the Technical Department of the Reintegration\. ï‚ Deadlock in the execution of the activities by some agencies due to the lack of funding; ï‚ Slowing down of the activities of reintegration by the agencies; ï‚ Poor appropriation of the experiences and the impacts of the project by the local authorities in particular in for the professional kits distribution process; ï‚ The extreme mobility of the demobilized soldiers sometimes making them unreachable by the Program; ï‚ The non-funding of six projects of reintegration, preventing the Technical and Reintegration Department from increasing the supervision capacity of several demobilized persons already registered in provinces; ï‚ Delay in the implementation of additional projects preventing the Technical and Reintegration Department from improving its supervision capacity of several demobilized combatants already registered in provinces; thus becoming a source of deep tensions and demands on the field and so causing frequent disturbances to public order; ï‚ The end of contracts with the awareness partners having entailed the end of awareness and communication activities; ï‚ The restructuring of the PNDDR execution agency leading to difficulties in the coordination of the activities of the partners with independent funding; ï‚ The delayed start-up of the PNDDR reintegration component in certain provinces, because of delays of payment, was a source of argument with demobilized ex-combatants\. Financial Issues: ï‚ The nonpayment of staff for a few months led to resignations and de-motivation for some Program executives; ï‚ The nonpayment of the suppliers led to lawsuits and trial in courts; ï‚ The failure of the mechanism of payment of the safety net, executed poorly by the partner, is a source of dissatisfactions for the demobilized ex-combatants\. 66 Phase II: Issues 36\. As in the Phase I of the program, three main issues have to be mentioned: the institutional, operational and financial issues\. Institutional Issues ï‚ The persistence of conflicts in eastern Congo which concentrates the vast majority of demobilized and the withdrawal of some donors; ï‚ Poor associative culture; ï‚ Slow implementation of the operations of the medical commission\. Operational Issues ï‚ The non- national coverage by the DDR service; ï‚ Ineffective transition from emergency activities to those of development, which would have established the demobilized socio-economic stability and sustainability; ï‚ Illiteracy of some demobilized; ï‚ Late involvement of war-wounded in the process of demobilization; ï‚ Capricious behavior of war-wounded when attending health care centers; ï‚ Distrust of the population\. Financial Issues ï‚ The lack of funding by the Government weakened the impact of the DDR program; ï‚ The determination of a realistic and high enough cost per capita would have increased the chances of an effective implementation of sustainable reintegration activities; ï‚ Dysfunctions in the establishment of funds hindered the normal operations of reintegration activities; ï‚ Poor culture of savings and credit; ï‚ Delay in financing activities; ï‚ Insufficient financial resources to meet the needs expressed by the real beneficiaries due to the extent of the demand\. Recommendations 37\. There are two main recommendations, one concerning the Government and the second related to the implementing agency\. For the Government ï‚ Proper national strategic and operational planning of the process of reintegration, coupled with clear work and realistic plans; ï‚ The establishment of a negotiated contractual framework for collaboration with local implementing partners facilitates cooperative relationships which respect mutual responsibilities and commitments; ï‚ The establishment of clear and understandable administrative, financial and accounting processes guarantees an efficient and transparent management of subprojects; ï‚ The competitive choice and judicious use of outsourcing partners with proven organizational and institutional capacity\. 67  To the UEPN-DDR ï‚ Ensure that IT hardware is in good shape and at the forefront of technology; ï‚ Allocate significant resources for the monitoring and evaluation of program activities; ï‚ Reinforce the awareness of demobilized and authorities (at all levels) on the reintegration process for their involvement in program activities; ï‚ The promotion of micro enterprises purveyors of self employment and income stability is a critical condition for sustainable reintegration; ï‚ Successful economic reintegration depends largely on a good professional orientation of demobilized and training in entrepreneurship and management of micro enterprises; ï‚ The establishment of active and synergistic partnerships with local providers of services for the consolidation and the relay of the support offered by the project is an absolute necessity for the sustainability of the reintegration process; ï‚ Follow-up on an application for a maximum grace period of six months to confirm the completion of EA commitments vis-à-vis the associations of demobilized: appropriations for equipment, training and capacity building, monitoring and evaluation\. 68 Annex 8\. Comments of Co-financiers and Other Partners / Stakeholders 1\. The African Development Bank (AfDB) decided to fund the second phase of the EDRP to follow the World Bank’s first phase as the partners undertook an evaluation on the ground to assess the remaining needs in term of reintegration\. The main results, as well as the lessons learned, were that the best way to support the demobilized in their reintegration was to support them in agricultural activities to provide sustainable activities\. That is why AfDB focused their reintegration activities on agriculture and decided to opt for the pilot farms solution versus the individual reintegration packages\. 2\. The relationship between the WB and AfDB proved strong by keeping regular contact and collaborating openly and frankly, even at times when the two institutions did not share the same point of view, particularly on some aspects relating to reintegration\. AfDB appreciated the fact that during missions each organization reciprocated visits to the other to inform them of progress and this resulted in complementarities even though they adopted different programmatic approaches\. 3\. AfDB was critical of aspects of the performance of the UEPNDDR, particularly with regards to procurement as well as finance management and felt that some of the lessons learned from the previous phase could have been better implemented\. The crux of the issue was that systems were slow and the capacity to absorb funds and make disbursements was limited\. There was a further criticism of the way the PNDDR structured its relationship with sub-contractors who could have performed better in the field\. 69 Annex 9\. Additional lessons learned Demobilization lessons: 1\. Better planning for length of time at demobilization centers to ensure that these are ready when demobilization is initiated, allow for separate facilities for men, women and children\. It is important that they have the necessary resources to ensure that they remain functional to receive and process all ex- combatants throughout the process, with either a mainstreaming strategy into mobile units or an exit strategy for closure\. 2\. Better budgeting for transportation both to and from demobilization centers for all ex- combatants that allows for flexibility to take into account the shifting nature of combatants’ geographic location and preferred area of civilian relocation\. Reintegration lessons: 3\. Parallel programs for women are paramount\. DDR is experienced through all the MDRP countries has shown that the criteria for categorizing women ex-combatants are limited and regardless, women ex-combatants, for a variety of reasons associated with stigma, do not present themselves for inclusion\. Parallel programs outside the DDR should be considered and delivered by implementing partners who are not associated with DDR but who are funded through the same mechanisms\. 4\. Specialized program for disabled ex-combatants are essential, otherwise they will either continue to resist demobilization from formal military structures or continue to live with their untreated disability, never properly reintegrating into their communities\. 5\. Greater consideration and inclusion of psycho-social programs because this trauma will always outlive any DDR process\. Without treatment for their symptoms, ex-combatants will continue to live with trauma, which can have devastating impacts in the future\. Psycho-social treatment capacity in most post-conflict countries is extremely low, and there are few (if any) therapy options for the general population\. Furthermore, there needs to be specific psycho-social treatment components for both child and women survivors, particularly those with traumas related to gender-based and sexual violence\. 6\. The training content should be better planned to ensure that it is adapted to the target groups and to potential livelihood and job opportunities that are available in the ex-combatants communities or in the communities where they may choose to migrate in order to enhance their economic reintegration\. Many ex-combatants have had little or no schooling; therefore, they are in need of basic life skills in order to enhance their potential of understanding the training and grasping future opportunities\. Additionally, there should also be the potential of structuring training and mentoring programs that are differentiated by age and gender to account for women, youth, rural/urban realties, etc\. 7\. Encouragement of ex-combatant participation in associations because they have consistently shown that they increase the potential for economic/livelihood security both in terms of increasing potential but also by buffering shocks, are an important means to social reintegration and exposure to democratic and governance models\. In addition, DDR programming offers possible means of reinforcing sustainability and mainstreaming reintegration support, since associations that are incorporated can also apply for support via other development programs and initiatives\. 70 Implementation arrangements 8\. A strong national ownership and leadership is instrumental for the DDR process to succeed and this should be reflected in a Board of Management that incorporates relevant Government Ministry representative\. This includes Defense and other stakeholders that have unfettered access to decision making within their departments or organizations\. 9\. More start-up support and mentoring are essential in order to ensure that there is skills transfer to DDR Commissions both via training and mentoring\. Such a process should incorporate the secondment of Bank staff or Technical Assistance to Commissions until there is sufficient skills transfer and confidence for the Commissions to continue on their own\. 10\. Sensitization must be an ongoing and constant process before, during and after demobilization and reinsertion\. It is crucial to a peaceful and successful DDR process to influence behavior change, not just amongst the ex-combatants, but also within communities of return and the general population\. This means that programs must ensure that they have adequate equipment, qualified staff and the financial resources to implement the necessary activities\. 11\. Monitoring and evaluation should be sufficiently prioritized to be determining factors when cash transfers are being processed\. The Bank needs to ensure that there are adequate monitoring and evaluation (M&E) processes and outputs that conform to minimum set-standards in the same manner as procurement and environmental standards, thus basic performance measures should based on empirical evidence structured in a timely and consistent manner\. 12\. Exit strategy should ensure the mainstreaming of residual post-DDR activities, as well as signing off and exiting of activities no longer necessary\. It should be incorporated within the technical annex and Project Implementation Manual; and when triggered, it should be monitored and reported on by Bank support missions\. 71 Annex 10\. List of Supporting Documents UE-PNDDR 1\. All Quarterly Progress Reports 2011 2\. Annual Reports, 2007, 2008, 2009, 2010, 2011 3\. INS Beneficiary Assessment, 4\. UE-PNDDR/ The IDL groups, November 2011\. Beneficiaries surveys, PNDDR, Kinshasa, DRC\. ï‚ Reinsertion of female ex-combatants ï‚ Reintegration of males soldiers and demobilized ex-combatants ï‚ Reintegration experience of children associated with armed groups ï‚ Community perception on the return of ex-combatants 5\. UE-PNDDR Final Report 2004-2011, September 2011\. 6\. UE-PNDDR Supervision Mission Aide Mémoire\. May 2006 7\. UE-PNDDR Supervision Mission Aide Mémoire\. September 2006 8\. UE-PNDDR Supervision Mission Aide Mémoire\. April 2007 9\. UE-PNDDR Supervision Mission Aide Mémoire\. October 2008 10\. UE-PNDDR Supervision Mission Aide Mémoire\. July 2009 11\. UE-PNDDR Supervision Mission Aide Mémoire\. December 2009 12\. UE-PNDDR Supervision Mission Aide Mémoire\. March 2010 13\. UE-PNDDR Supervision Mission Aide Mémoire\. September 2010 14\. UE-PNDDR Supervision Mission Aide Mémoire\. April 2011 15\. UE-PNDDR/ Yvan Conoir, 2011\. Independent evaluation report, PNDDR, Kinshasa, DRC\. 16\. UE-PNDDR Balance Sheet, Application of Funds by Project Component, Source and Application of Funds, for IDA H362, for the year ending December 31, 2012 (issued January 4, 2012) 17\. UE-PNDDR Balance Sheet, Source and Application of Funds, for IDA H089 & TF 54242, for the year ending December 31, 2008 (issued January 4, 2012) and (manual) Application of Funds by Project Component\. 18\. Balance Sheet for PPF Q6140, for the year ending December 31, 2004 (issued January 4, 2012) World Bank 1\. Banque Mondiale\. 2010\. “MDRP Rapport Final\. Vue d’ensemble des résultants du programme\.â€? Juillet\. 2\. EDRP Implementation, Status and Results Report, November 2004, March 2005, June 2005, December\. 2005, March 2006, July 2006, November 2006, January 2007, June 2007, November 2007, June 2008, December 2008, May 2009, August 2009, March 2010, April 2011, November 2011\. 3\. Environmental and Social impact Assessment, June 2008\. 4\. IDA Financing agreement, Additional Financing Grant H3620 Conformed, 26 may 2008\. 5\. IDA development grant agreement, emergency demobilization and reintegration project, June 10, 2004\. 6\. Johannes Herderschee, Kai-Alexander Kaiser, and Daniel Mukoko Samba\. 2011\. “Resilience of an African Giant\. Boosting Growth and Development in the Democratic Republic of Congo\.â€? Direction in Development, World Bank, Washington, DC\. 7\. Multi-Country TF Grant Agreement, TF054242 Conformed 26 October 2004\. 8\. Natacha Lemasle, “Associations of demobilized combatants in the Democratic Republic of Congo: local dynamics and internal synergies\. Advantages and limits of a collective approach to reintegrationâ€?\. TDRP publication, November 2011\. 72 9\. Technical annex IDA development grant agreement, emergency demobilization and reintegration project, May 3 2004\. 10\. Technical Annex for a proposed grant of SDR 68\.1M (US$ 100M equivalent) to the DRC for an Emergency Demobilization and Reintegration Project\. 11\. Project paper on a proposed additional financing grant in the amount of SDR 31\.3M (US$50M equivalent) to the DRC for the Emergency Demobilization and Reintegration Project 12\. Development Grant Agreement (EDRP) between the DRC and IDA, dated June 10, 2004\. 13\. Multi-Country Demobilization and Reintegration Program Trust Fund Grant Agreement (EDRP) between DRC and IDAS (acting as administrator of the MCDRPTF), dated October 26, 2004 14\. Financing Agreement (Additional Financing for EDRP) between DRC and IDA, dated May 26, 2008 15\. Implementation Completion and Results Report (IDA H3634, IDA H3634A, TF 52159) on an IDA credit in the amount of SDR 20 Million (US$ 25 Million equivalent) and a Trust Funded Grant in the amount of US$ 14\.4 Million to the Republic of Rwanda for an EDRRP, dated August 30, 2009 Other 16\. Alfie U, Felipe K and Nicole K\. 2009\. “Democratic Republic of the Congo\. A study of binding constraints\.â€? At: http://www\.hks\.harvard\.edu\. Accessed on 13 February 2012\. 17\. DRC Annual Report\. At: http://www\.bcc\.cd/\. Accessed on 15 February 2012\. 18\. Journal Officiel de la République Démocratique du Congo\. Cabinet du Président de la République\. Kinshasa, 15 juillet 2007\. 19\. Journal Officiel, de la République Démocratique du Congo\. Cabinet du Président de la République\. Loin No\. 10/013 du 31 décembre 2010 et ordinance No\. 10/080 du 31 décembre 2010\. 20\. Ministère Du Budget Secrétariat Général Au Budget Direction De La Préparation Et Suivi Du Budget 2011\. Dépenses Par Rubriques : Exécution Au 31/05/2011 (Situation Provisoire)\. 21\. “Note de conjoncture,â€? Banque Centrale du Congo-(BCC)-décembre 2010\. 21\. United Nations\. 2011\. “Report of the Group of Experts Submitted Pursuant to Resolution 1533(2004)\.â€? S/2011/738\.2December\. At: http://www\.un\.org/sc/committees/1533/egroup\.shtml\. 22\. “RDC: Etats de suivi budgétaire 2010, classification par Fonction de l’Etat,â€? Ministère du Budget\. Accessed on 10 January 2012\. 23\. Sam Perlo -Freeman et\.al, 2011\. “Military Expenditure\.â€? SIPRI Yearbook\. At: www\.sipri\.org/yearbook/2011/files/SIPRIYB1104-04A-04B\.pdf\. Accessed on 12 February 2012\. 73 Annex 11\. List of Persons Met INSTITUTION NAME POSITION ADEKOR Freddy Numbi Ngoie Director AGF Emmanuel Makengo Financial Manager AGF Seketula KiThima Senior Procurement Specialist CCOC Jean-Marc Tafani DD/RRR MONUSCO CONADER Ndangi Auditor World Bank CONADER Innocente Bakanseka Coordonator deputy CONADER Daniel Kawata Coordonator CONADER Willy Kikungu Kindu CONADER Françoise Mulawa Oriental Province EUSEC General Antonio Martins Head of Mission Government Jose Ikongo Permanent Secretary, Ministry of Interior EUSEC Jean-Michel Dumont Political Advisor FARDC Shibangu Vananciel Major FARDC Mr Zena Prosper Nzekani Retired Col\. GTZ Bob Bazola Administrator CO Molula/Kalemie GTZ former Jean-Luc Mathey Advisor in charge to external financing Helveta International Atangana Engelbert Researcher INPP Maurice Tshikuya Kayembe Administrator General delegate MONUSCO Laure Gnassou Economic Affairs Officer SMI col\. Prosper Nzekani Zena Supervisor OPS SMI UEPNDDR René Sileki Agent of BUNIA UEPNDDR Norbert Khasindy Mbale Agent of GOMA UEPNDDR Esther Shimba Mwena CONADER KINSHASA UEPNDDR Innocent Mirindi Agent of LUBUMBASHI UEPNDDR Lievain Chiruza Mongane Agent of UVIRA UEPNDDR Grevisse Ditend Administrator UEPNDDR Evelyne Mbata Information officer UNDP/MRR Fidèle Djoda DD/RRR MONUSCO UNI Complex SA Karim Noorani Managing Director World Bank Moise Tshimenga Economist WB Country Office Theophile Ndangi Ex-Auditor GCPDR/AGF 74 Annex 12\. Map of the DRC 75  10°E 15°E CENTRAL AFRICAN REPUBLIC FRI RE PU BLI 25°E 30°E 5°N To Oubang i To Kembe To Bangasso S O U T H SU DA N SOU S U D AN 5°N Bangui To Zongo Gbadolite BAS-UELE Juba Bondo Faradje Libenge NORD-UBANGI Uele DEM\. REP\. Gemena Businga HAUT-UELE Titule Kiba OF CONGO SUD- Buta Isiro Watsa li Aketi To Imese UBANGI Akula Lisala Bumba ORIENTALE Pakwach Wamba C Mongbwalu MONGALA Aruwimi Bunia ngui ITURI U GA N DA UGANDA on Banalia g o nga Basankusu Bongandanga Lake Ouba Lulo TSHOPO Bafwasende Albert Yangambi Beni ÉQUATEUR Kisangani É Q U AT E U R Butembo 0° Mbandaka Wanie Rakula 0° Boende NORD- Lake CON GO Tshu apa KIVU Edward GABON Lubutu Lake Lu Lo Bikoro T SH UA PA L a la mi m Ikela a NORD-KIVU ba u il om Victoria el a L ak Lowa Goma a Ul To Ruhengeri Inongo RWANDA in Betamba di Yumbi Congo To MAI-NDOMBE Kalima Bukavu Kibuye Kutu Kindu SUD-KIVU KINSHASA Bandundu Buna Lukenie Lodja Uvira BURUNDI To KINSHASA VILLE IN SH SA ILLE Kasa i SANKURU MANIEMA Kama Bujumbura San k uru SUD-KIVU BANDUNDU Mangai Ilebo MANIEMA KINSHASA Bulungu KASAÃ?- Malela Lusambo Kasongo Lulimba CABINDA BAS-CONGO Kenge ILU K W I LU K A SA Ã? 5°S (ANGOLA) To Pointe- KON G O - C E N T R A L O-C Kikwit Idiofa Luebo ORIENTAL Kongolo TA N Z A N I A 5°S Matadi KASAÃ?- Kananga ga Lake AT LANTIC Noire Boma Mbanza-Ngungu Mbuji- LOMAMI LOMA MI Kalemie Kw Luku KASAÃ?- KASAÃ?- Tanganyika ilu Feshi OCEAN To Damba OCCIDENTAL Mayi Kabinda Kabalo Tshikapa Ka ORIENTAL Kw 10°E 15°E KWANGO sa i LULUA TANGANYIKA ang Moba o i Mwene-Ditu am Manono Lom DEMOCRATIC REPUBLIC OF CONGO Luv ua EMERGENCY DEMOBILIZATION AND Kapanga HAUT-LOMAMI REINTEGRATION PROJECT Pweto Lueo Kamina Lulua Lake MAIN CITIES AND TOWNS K ATANGA ANGOLA L Kilwa Mweru ufi PROVINCE CAPITALS ra Sandoa 10°S Lubudi HAUT- 10°S NATIONAL CAPITAL KATANGA MAIN ROADS LUA L A B A Kolwezi To RAILROADS 0 100 200 300 400 Kilometers Dilolo Likasi Luwingu Z AM B I A A M BI Lake To Lu Lucano lab Malawi a a PROVINCE BOUNDARIES 0 100 200 Miles Lubumbashi M A L AW I INTERNATIONAL BOUNDARIES This map was produced by the Map Design Unit of The World Bank\. FEBRUARY 2012 The boundaries, colors, denominations and any other information BI ZA M B I A IBRD 39113 * The creation of 26 new Provinces was approved by the ratification of the 2005 Constitution, to take effect by Sakania February, 2009\. The existing 11 Province Capitals, shown with green circles, will retain their status, with the shown on this map do not imply, on the part of The World Bank To exception of Bandundu\. Future Province Capitals are shown with white circles\. Group, any judgment on the legal status of any territory, or any Kitwe ** The existing 11 Province boundaries and names are shown in dark green; future in light green\. endorsement or acceptance of such boundaries\. 25°E 30°E

REVIEW

P007690

 ICRR 10056 Report Number : ICRR10056 ICR Review Operations Evaluation Department 1\. Project Data : OEDID: OEDID : L3407 Project ID : P007690 Project Name : Primary Education Project Country : Mexico Sector : Primary Education L/C Number : L3407-ME Partners involved : Prepared by : Helen abadzi, OEDST Reviewed by : Group Manager : Roger Slade Date Posted : 06/04/1998 2\. Project Objectives, Financing, Costs and Components : The loan was for US$250 million equivalent, of which a total of US$ 58\.8 million were canceled at completion and as a result of devaluation\. Equity, quality, and efficiency of primary education, were to be improved at four states with the highest incidence of poverty through : (a) reducing the repetition and dropout rates, (b) raising the level of children's cognitive achievement, and (c) strengthening management of the primary education system \. The Bank financed educational services and instructional strengthening to provide work incentives to teachers, improve supervision, strengthen management, monitor and conduct studies \. 3\. Achievement of Relevant Objectives : Considerable progress was made in achieving the project's expansive objectives \. All physical targets of service coverage, distribution of materials, textbooks and libraries, were met \. As a result, there was a slight reduction in dropout rates in three of the four targeted states, and in all four states the number of students completing primary school increased\. 4\. Significant Achievements : The project trained 270,000 teachers\. Textbooks and teacher guides in eight indigenous languages were developed, and large numbers were distributed \. Promotional materials and special training helped teachers use the materials in class\. Innovative training programs were developed, such as video programs for distance learning in rural and indigenous schools\. Teachers received monetary incentives to work in remote schools \. 5\. Significant Shortcomings : Information systems were not modernized, as expected, and the monitoring studies envisaged were carried out \. Though expensive, they were not designed well enough to give definitive answers \. Consultant selection for technical assistance was slow \. Stricter control and quicker decisions could have resulted in greater economies in construction\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Partial Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : To improve the quality of primary education in poor communities, projects must focus on development of appropriate instructional methods and teacher training \. Parents must be incorporated in school activities, and school management must be decentralized to regional offices near these schools \. Though highly desirable, monitoring activities often cost more than is considered acceptable and, unless very carefully designed, may not yield clear and unassailable results\. 8\. Audit Recommended? Yes No Why? Several innovative methods were used, which deserve further assessment 9\. Comments on Quality of ICR : It covers important issues satisfactorily

REVIEW

P057951

 ICRR 12359 Report Number : ICRR12359 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 03/29/2006 PROJ ID :P057951 Appraisal Actual Project Name :Mostar Water Supply & Project Costs 13\.38 15\.02 Sanitation US$M ) (US$M) Country :Bosnia-Herzegovina Loan/ US$M ) Loan /Credit (US$M) 12\.00 13\.09 Sector (s):Board: ): WS - Water supply US$M ) Cofinancing (US$M) (70%), Sewerage (30%) L/C Number :C3400 FY ) Board Approval (FY) 00 Partners involved : Closing Date 06/30/2005 06/30/2005 Evaluator : Panel Reviewer : Division Manager : Division : Elaine Wee-Ling Ooi Kris Hallberg Alain A\. Barbu IEGSG 2\. Project Objectives and Components a\. Objectives The two project objectives as stated in the PAD were : 1) to create a unified water supply and sanitation utility for the city of Mostar; and 2) to improve service\. The credit agreement described the same objectives as : 1) to improve water and wasterwater services in the City of Mostar; and 2) promote reconciliation in the water sector \. This review will assess project achievement against these 2 objectives as articulated in the credit agreement \. The sector development (secondary) objectives are also listed here as the project's performance indicators deal with the progress in meeting the secondary objectives as well \. They are: i) develop the merged Utility into an efficiently managed and commercially operated entity that will enjoy greater autonomy to conduct operations; ii ) provide water for selected poor and non served refugee areas on the periphery of the city; iii ) assist the merged Utility to become financially viable by improving billings and collections through the introduction of better commercial practices and by harmonizing tariffs between the Eastern and Western parts of the city; iv ) improve quality and reliability of water service to population of Mostar on both sides of the city; and v ) improve the efficiency of the water supply system by reducing water wastage and addressing serious network leakage problems and hydraulic inefficiencies \. b\. Components (or Key Conditions in the case of Adjustment Loans ): There were 6 components: A)Priority investments for water supply rehabilitation and improvement ($ 3\.68m estimated; $ 3\.68m actual) Installation of production meters on sources not yet metered; protection of 4 of the 5 sources; replacement of pipe sections known to have high leakage rates; construction of a 600 mm main to replace poor quality pipeline from Radobolja Spring to the Glavica reservoir; purchase of leak detection /flow measurement equipment; and purchase of software and hardware for project implementation \. B)Water distribution network rehabilitation and improvement fund ($4\.72m estimated; $5\.25m actual) C)Sewerage network rehabilitation fund ($0\.50m estimated; $0\.24m actual) D)Institutional strengthening fund for purchase of software /hardware to strengthen Mostar Water Supply & Sewerage Utility (MWSSU) and build institutional capacity (training MWSSU personnel) ($1\.50m estimated; $1\.21m actual)\. E)Technical advisory/engineering services ( $1\.55m estimated; $2\.23m actual) to: Improve MWSSU's operational performance; identify works of network rehabilitation; assist in identifying the most urgent sewerage rehabilitation investments; and upgrade the software /hardware of MWSSU's commercial system in order to identify investments financed by the institutional strengthening fund \. F)Financing of critical operating expenditure following the merger of the Eastern Utility with the Western Utility ( $1\.43m estimated; $2\.41m actual)\. c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates At appraisal the project was estimated at $ 13\.38 million with the government providing $ 1\.38 million\. Actual project costs amounted to $15\.02 million with the government contributing $ 1\.93 million instead\. The ICR reported two reasons for the cost overrun ($1\.64million) - - fluctuation of the exchange rate between the SDR and the US dollar, and financing by the credit, of civil works affecting the water supply network of the project, which were to have been financed by Italian aid\. The project was started and completed as scheduled \. 3\. Relevance of Objectives & Design : The project design was straightforward and appropriate - and did not add risks to the difficulties of already having to work with a highly ethnically divided community, in a post conflict environment, and with a relatively inexperienced client country\. In the aftermath of conflict, the water and waste water networks in Mostar needed urgent rehabilitation and upgrading\. The two separate water utilities (divided along ethnic lines) needed to be unified for efficiency reasons; and a successful unification will also serve as a model for inter -ethnic cooperation and reconciliation \. A Quality Enhancement Review (QER) undertaken by QAG during the second year of the project, rated the project's concept, objectives and approach as highly satisfactory, and commended the preparation and country /sector management teams for being able to design a scheme befitting the difficult circumstances \. 4\. Achievement of Objectives (Efficacy) : Objective 1) To improve the water and wastewater services in the City of Mostar was substantially met and efficacy is rated "Substantial"\. With the exception of the reduction of water losses from the network, the targets of virtually all other key performance indicators (consolidation of accounts, harmonizing the tariff structure for both utilities, improve collections, conducting customer satisfaction surveys, reducing energy consumption per unit of water produced, reducing operating costs, meeting national water quality standards etc ) were met\. At project close water losses were still high at 60% against the 38% targetted at appraisal\. Project supported rehabilitation activities had committed much effort and resources to this goal and had brought the losses down from 84% before the project began\. Further reductions may be feasible with ongoing personnel training and improved leak detection capabilities \. The number of water connections were increased to 29,600 in 2004 from 27,200 in 2001 and by 2004, 75% of Mostar residents had continuous water supply (only 59% of residents did so in 2000)\. Despite extremely difficult economic conditions in the country, the utility was able to improve its financial situation and its operating ratio reached 100% from 2003 onwards\. Its collection ratio had increased to 75% in 2005 (eventhough it was unable to collect arrears from a few large industrial/official clients - litigations are pending)\. Total electric energy consumption was reduced to 5\.6 MWh by 2004 compared to 9\.4MWh in 2001, and the quality of water supplied met the national water quality standards\. All civil works were completed as planned and on schedule \. Objective 2) to promote reconciliation in the water sector was fully met, and efficacy is rated "High"\. The accounts from both utilities were consolidated as scheduled, and the development of a hydraulic model, that will enable the joint operation of the unified facility at an optimal level, has been initiated \. The biggest challenge in the unification/reconciliation process was the harmonization of the water and sewerage tariffs - - Western Mostar had been paying tariffs half that of Eastern Mostar \. After the project, all of Mostar pay the same tariffs ($0\.43 per cubic meter for domestic consumption, $ 0\.81 for industrial consumption, and $ 0\.49 for public consumption)\. 5\. Efficiency : No ERR was presented in the PAD but it estimated an IRR of 14%\. The ICR did not calcuate either but judged the project had brought high returns, since it aimed at improving the efficiency of the utility (reducing energy costs, improving operating ratio, detecting and reducing leakages )\. The ICR did not calculate the IRR because the valuation of fixed assets was uncertain \. The Utility was able to reverse its losses in 2001 and 2002, and generated a small annual profit in 2004 and 2004\. 6\. M&E Design, Implementation, & Utilization: The project identified and monitored key performance indicators that were relevant to the stated objectives \. Well defined physical targets were also set for each engineering, civil works and business goal \. These were all monitored and fed back into guiding project implementation \. A beneficiary survey was carried out in 2000 and 2004 which provided information on the client base including willingness /ability to pay, preferences, satisfaction with services, and suggestions for improvement \. The survey findings were publicly discussed with participation of the media and consumers\. The survey results guided project implementation and also provided data for the ICR \. 7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): A project supported study looking at the water quality of the Neretva River was instrumental in GEF approving a grant of $ 9 million which will be implemented by the MWSSU\. 8\. Ratings : ICR ICR Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: High High Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Highly Satisfactory The fact that the PIU was staffed entirely by MWSSU employees (without any salary increments) is testimony to the  commitment of the Implementing Agency\. This has led to the successful conclusion of the project in an ethnically charged environment\. In the interest of economy, MWSSU conducted the Beneficiary Survey directed by MWSSU's Financial Director without the use of external consultants\. The spillover effect of the IDI gained has enabled MWSSU to provide technical assistance to other utilities and infrastructure related ministries in Bosnia and Herzegovina (see lessons below)\. Quality of ICR : Exemplary NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \. 9\. Lessons: The likelihood of project success and sustainability of its benefits are enhanced if the Bank has a broad and sustained relationship with the counterpart in this case the city of Mostar \. The Bank's continued and widespread support for the rebuilding of Mostar had generated goodwill and trust towards it, facilitating acceptance of the Bank's advice on policy dialogue and on investment projects \. The project demonstrated that a public sector operator (MWSSU) can improve service quality and operational efficiency without the help of private sector operators \. The project demonstrated the virtues and feasibility of limiting the use of externally contracted consultancies \. The PIU was staffed entirely by MWSSU personnel with tremendous gains in institution building and cost savings\. The created capacity has enabled MWSSU to provide technical assistance to other utilities and infrastructure related Ministries in Bosnia and Herzegovina that are collaborating with international financial institutions\. 10\. Assessment Recommended? Yes No Why? Lessons may be extracted from the project where a public sector operator clearly improved service quality and operational efficiency, and without the use of expensive external consultants \. 11\. Comments on Quality of ICR: Quality is exemplary\. The ICR did a good job in providing a very succinct, clear and comprehensive account of the project experience\. It extracted good lessons for the sector \. It was very helpful to the reader to have the beneficiary survey results attached in full \.

REVIEW

P098496

Document of The World Bank Report No: ICR00003852 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-44540, IDA-55350 ADDITIONAL FINANCING) ON A CREDIT IN THE AMOUNT OF SDR 60\.8 MILLION(US$ 100 MILLION EQUIVALENT) AND ADDITIONAL FINANCING SDR 9\.8 (US$ 15MILLION EQUIVALNET) TO THE UNITED REPUBLIC OF TANZANIA FOR A SCIENCE AND TECHNOLOGY HIGHER EDUCATION PROJECT July 27, 2016 Education Global Practice Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective 31 March 2016) Currency Unit = Tanzanian Shillings (TZS) TZS1= US$ US$0\.70981389 US$ 1\.00 = SDR TZS 2,187 FISCAL YEAR JULY 1 – JUNE 30 ABBREVIATIONS AND ACRONYMS AAP Africa Action Plan ARU Ardhi University BRN Big Results Now DUCE Dar Es Salaam University College of Education CSEE Certificate of Secondary Education Examination COSTECH Tanzanian Commission for Science and Technology EIA Environmental Impact Assessment ESMF Environmental and Social Management Framework ESPJ Education and Skills for Productive Jobs HESLB Higher Education Students Loans Board HEIs Higher Education Institutions FFF Flexible Financing Facility KEI Knowledge Economic Index ISR Implementation Status Report ICR Implementation Completion Report IPCs Institutional Project Coordinators MUSE Mkwawa University College of Education MKUKUTA I&II National Strategy for Growth and Reduction of Poverty I&II MoEVT The Ministry of Education and Vocational Training MoESTVT Ministry of Education Science, Higher Education and Vocational Training MCST Ministry of Communication, Science and Technology ii MoWTC Ministry of Works, Transport and Communication NACTE National Council for Technical Education NSDS National Skills Development Strategy OUT Open University of Tanzania PEDP Primary Education Development Program (PEDP) PS Permanent Secretary UDSM University of Dar Es Salaam SEDP Secondary Education Development Plan STHEP Science and Technology Higher Education Project STEM Science, Technology, Engineering and Mathematics SUZA State University of Zanzibar SUA Sokoine University of Agriculture SSA Sub Saharan Africa ST Science and Technology TVET Technical Vocational Education and Training TCU Tanzania Commission for Universities TDV2025 Tanzania Development Vision 2025 Regional Vice President: Makhtar Diop Senior Global Practice Director: Claudia Maria Costin Practice Manager: Sajitha Bashir Project Team Leader: Cornelia Jesse Project Team Leader: Xiaonan Cao ICR Team Leader: Ruth Karimi Charo iii  UNITED REPUBLIC OF TANZANIA Science and Technology Higher Education Project (STHEP) CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 4 3\. Assessment of Outcomes\. 11 4\. Assessment of Risk to Development Outcome \. 23 5\. Assessment of Bank and Borrower Performance \. 24 6\. Lessons Learned \. 26 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 26 Annex 1\. Project Costs and Financing\. 28 Annex 2\. Outputs by Component\. 30 Annex 3\. Economic and Financial Analysis \. 31 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 33 Annex 5\. Beneficiary Survey Results\. 35 Annex 6\. Stakeholder Workshop Report and Results\. 36 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 37 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 40 Annex 9\. List of Supporting Documents \. 41 MAP iv A\. Basic Information Science and Technology United Republic of Country: Project Name: Higher Education Project Tanzania Parent Project ID: P098496 L/C/TF Number(s): IDA-44540,IDA-55350 ICR Date: 7/31/16 ICR Type: Core ICR United Republic Of Lending Instrument: APL Borrower: Tanzania Original Total SDR 60\.80 Disbursed Amount: SDR 70\.60 Commitment: Revised Amount: SDR 70\.60 Environmental Category: B Implementing Agencies: Ministry of Education and Vocational Training (MoEVT) Ministry of Communications Science and Technology (MCST) Competitively Selected Universities (See agreement) Cofinanciers and Other External Partners: Not Applicable\. B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/13/2006 Effectiveness: 10/02/2008 Appraisal: 09/26/2007 Restructuring(s): 10-Jul-2014 Approval: 05/27/2008 Mid-term Review: 09/15/2011 Closing: 06/30/2013 01/31/2016 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: v C\.3 Quality at Entry and Implementation Performance Indicators Implementation Performance Indicators QAG Assessments (if any) Rating Potential Problem Project at any No Quality at Entry (QEA): None time (Yes/No): Problem Project at any time Quality of Supervision Yes None (Yes/No): (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing)-STHEP Tertiary Education 88 Central Government administration 12 Sector Code (as % of total Bank financing)-STHEP-AF Tertiary Education 100 Theme Code (as % of total Bank financing) STHEP /AF Education for the Knowledge economy 100 E\. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Bella Bird John Murray McIntire Practice Manager/Manager: Sajitha Bashir Christopher D\. Walker Project Team Leader: Cornelia Jesse Arun Joshi ICR Team Leader: Ruth Charo Not applicable ICR Primary Author: Ruth Charo Not applicable vi F\. Results Framework Analysis Project Development Objectives(PDO) (from Project Appraisal Document) The objective of the project was to increase the quantity and quality of higher education graduates, with special emphasis on science, technology, and education, through an improved learning environment\. This will be achieved by: (a) increasing capacity to deliver specific degree programs of higher priority; and (b) building institutions and systems to support higher education overall\. This PDO was applicable until June 2014\. Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO was modified to read, “to increase quantity and quality of higher education graduates, with special emphasis on science, technology, and education; and to lay the foundation for improved responsiveness of tertiary education to the labor market”\. (a) PDO Indicator(s) Original Target Actual Value Values (from Formally Revised Achieved at Indicator Baseline Value approval Target Values Completion or documents) Target Years Number of new degree-holding teachers hired in secondary schools each school Indicator 1 : year, qualified to teach: (a) mathematics; (b) sciences; and (c) English\. Value 6215 quantitative 181 1039 4150 Date achieved 01-Dec-2007 2013 31-Jan-2016 31 December 2015 Target exceeded 150%\. Comments Indicator’s wording revised at restructuring\. Original read; ‘More degree-holding (incl\. % Secondary school teachers relevantly employed’\. achievement) Indicator 2 : Number of PhD and MSc holding lecturers in priority disciplines Value 2573 quantitative 564 n/a 1,650 Date achieved 30-Nov-2012 31-Jan-2016 11 November 2015 Target exceeded 156%\. Baseline established at restructuring (retrospectively obtained)\. vii  Number of scientific publications by these PhD and MSc holding lecturers in Indicator 3 : priority disciplines each year Value 980 1397 quantitative 784 n\.a Date achieved 30-Nov-2012 31-Jan-2016 11 November 2015 Comments Target exceeded 143%\. (incl\. % Baseline established at restructuring (retrospectively obtained)\. achievement) Indicator 4 : Direct Project Beneficiaries (number) of which female (%) Value 59889 quantitative 40150 45000 n\.a Date achieved 20-Dec-2012 31-Jan-2016 n\.a 3 December 2015 Female beneficiaries (%) Value 38\.83 quantitative 33\.70 37\.00 n\.a 3 December 2015 Date achieved 20-Dec-2012 31-Jan-2016 n\.a Comments Target exceeded for overall direct beneficiaries 133%\. (incl\. % Target exceeded for female beneficiaries 104%\. achievement) Indicator introduced in 2011/2012 through project restructuring Indicator 5 : Quantity: Number of graduates from science and technology degree programs\. Value 6698 1312 3035 3700 quantitative Date achieved 01-Dec-2007 2013 31-Jan-2016 31 December 2015 Comments Target exceeded 181%\. (incl\. % achievement) Indicator 6: Customized FFF Operations Manual endorsed by MoEVT for implementation FFF operations Value FFF operations manual endorsed by qualitative manual endorsed MoEVT Date achieved 31-Jan-2016 11 November 2015 Comments Target achieved 100%\. (incl\. % Indicator and target introduced at restructuring\. achievement) viii Indicator 7: Institutional mechanisms for using ICT in teacher training in place\. Institutional Value mechanisms for Yes qualitative using ICT in teacher training in place\. Date achieved 22-Jan-2016 Target achieved , 100% A teacher professional center, including a science laboratory is established at DUCE with Comments a capacity of 8000 learners per week for teaching learning and training\. The facility (incl\. % includes technology equipment and production facilities\. More teachers will therefore achievement) benefit from distance learning once the facility is fully operational\. The project also developed similar facilities at MUCE\. Target and indicator introduced at restructuring\. Appropriate ICT-enhanced method(s) for teacher training identified from pilot Indicator 8 : experiments Retooling program Retooling program Value pilot pilot conducted qualitative Date achieved 31-Jan-2016 22 January 2016 Target achieved 100%\. Comments Target and indicator introduced at restructuring\. (incl\. % The Retooling program was successfully piloted\. DUCE is utilizing the retooling achievement) materials for teacher preparedness, and MoEVT is considering the retooling materials for the e-learning\. A strategy and operational plan for skills development in priority growth sectors Indicator 9 : developed and endorsed by key stakeholders Strategy and Value Strategy and operational plan qualitative operational plan developed Date achieved 31-Jan-2016 22 January 2016 Comments Target achieved 100%\. (incl\. % Final draft of the strategy and operational plan in place and endorsed by MoEVT\. achievement) Percent of students who are satisfied with quality in science and technology degree Indicator 10 : programs Value 47\.10% quantitative 41\.80% 60\.00% n/a Date achieved 30-Nov-2012 31-Jan-2016 n/a 15 January 2016 Target partially achieved 79%\. Comments Indicator and target introduced at restructuring\. The survey assessed student’s (incl\. % satisfaction with the teaching and learning environment\. However, the survey achievement) questionnaire did not focus only on the project’s target disciplines and students enrolled in these disciplines\. This definitely interfered with the results\. ix (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Number of students enrolled in programs supported by Component 1A of the Indicator 1 : Program (Science and Technology students enrolled) Value 9738 quantitative 3353 7844 8742 Date achieved 01-Dec-2007 2012 31-Jan-2016 03 December 2015 Comments Target exceeded 111% (incl\. % Indicator wording revised at restructuring\. ‘Science and Technology students enrolled’ achievement) included\. Number of new courses (not previously offered) in science and technology Indicator 2 : disciplines\. Value 273 quantitative None None 224 Date achieved 01-Dec-2007 31-Jan-2016 03 December 2015 Comments Target exceeded 122%\. (incl\. % Indicator wording revised at restructuring\. ‘not previously offered’ included\. achievement) Number of student workstations in teaching workshops and laboratories for Indicator 3 : science and technology\. Value 3975 quantitative 1025 None 1,878 Date achieved 01-Dec-2007 31-Jan-2016 03 December 2015 Comments Target exceeded 212%\. (incl\. % Indicator wording revised at restructuring\. ‘Laboratories’ included in addition to achievement) ‘workshops’\. Number of new degree-holding secondary school teachers graduated each year Indicator 4 : qualified to teach (a) mathematics (b) sciences (c) English\. Value quantitative 172 1610 4150 5702 Date achieved 31-Jan-2007 2013 31-Jan-2016 11 November 2015 Comments Target exceeded 137% (incl\. % achievement) Enrollment in degree-level secondary school teacher preparation to teach Indicator 5 : mathematics, sciences and English\. Value quantitative 1130 3047 5150 5178 Date achieved 12/31/2007 2013 31-Jan-2016 11 November 2015 x Comments (incl\. % Target exceeded 101%\. achievement) Percentage of student borrowers with mature student loans who are repaying on Indicator 6 : schedule, as of Dec\. 31 of each year\. Value 50% quantitative 5\.6% 80\.7% 80\.7% Date achieved 01-Dec-2007 2013 31-Jan-2016 11 November 2015, Comments (incl\. % Target not achieved 62%\. achievement) Degrees of score increase between pre- and post-training assessments of science Indicator 7 : teachers participated in the pilot Value 22% n/a n/a qualitative Date achieved 11 November 2015 Target was achieved 100% Comments The overall degrees of score between pre- and post-training assessments of the teachers, (incl\. % increased by 21\.78% for the retooling pilot program\. achievement) Indicator introduced at restructuring\. Indicator 8 : Number of O-Level science teachers trained through the pilot Value None None quantitative 2000 1920 Date achieved January 2016 22 January 2016 Comments Target not achieved 96%\. (incl\. % achievement) Indicator introduced at restructuring\. Indicator 9 : Number of assessments & studies completed Value qualitative 5 16 completed Date achieved 31-Jan-2016 January 2015 Target exceeded 320%\. Indicator introduced at restructuring\. -Study on Rapid assessment of TVET system -Study on institutional arrangements and financing mechanisms -Study on human resource needs and skills gaps in agribusiness Comments -Study on human resource needs and skills gaps in Transport & Logistics (incl\. % -Study on human resource needs and skills gaps in Tourism& Hospitality achievement) -Three studies on Flexible Financing Facility (FFF) -STHEP M&E Assessment -STHEP Quality Assessment: Students Satisfaction baseline Survey -Study on Tertiary Education Labour Market Observatory (TELMO) -Independent Review of MUCE Science laboratory Civil Works -Study on Expansion of SUZA training programs\. -STHEP Independent review xi  -Environmental and Social Management Framework (ESMF)\. -Study on Development of Higher Education Hubs A “Lab” completed for developing a strategy and operational plan for Indicator 10 : skills development in priority growth areas\. Value Completed qualitative Date achieved 31-Jan-2016 15 September 2015 Target achieved 100%\. Indicator introduced at restructuring Comments “Lab” was an intensive three weeks closed door workshop to develop the National (incl\. % Skills Strategy, based on the five studies\. achievement) NB: The STHEP I and STHEP-AF RF was combined since the AF entailed completion of remaining activities under STHEP , revision of the additional indicators to facilitate monitoring and four new indicators within the original components\. G\. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No\. DO IP Archived (USD millions) 1 12/24/2008 Satisfactory Satisfactory 0\.36 2 06/30/2009 Satisfactory Satisfactory 11\.96 3 12/22/2009 Satisfactory Moderately Satisfactory 11\.96 4 06/27/2010 Satisfactory Moderately Satisfactory 16\.89 5 03/26/2011 Satisfactory Satisfactory 29\.21 6 12/26/2011 Satisfactory Satisfactory 74\.42 7 06/24/2012 Satisfactory Moderately Satisfactory 74\.42 8 12/25/2012 Satisfactory Satisfactory 74\.42 9 05/23/2013 Satisfactory Satisfactory 92\.02 10 12/04/2013 Satisfactory Moderately Satisfactory 93\.68 11 06/04/2014 Satisfactory Moderately Satisfactory 93\.68 12 12/01/2014 Moderately Satisfactory Moderately Satisfactory 108\.00 13 06/05/2015 Moderately Unsatisfactory Moderately Satisfactory 108\.00 14 01/11/2016 Moderately Satisfactory Moderately Satisfactory 108\.21 15 01/31/2016 Moderately Satisfactory Moderately Satisfactory 108\.21 xii H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions To reallocate savings across categories to finance ongoing and new agreed activities that are in need of additional resources; and to replace one of the PDO indicators designed to assess ‘education quality’ with three alternative ones: (a) Number of PhD and MSc holding lecturers in priority disciples and (b) Number of No S S 74\.42 April 24 2012 scientific publications by these PhD and MSc holding lecturers in priority disciplines each year\. (c) Percent of students who are satisfied with quality in science and technology degree programs\. Original indicator was “scores on standardized assessments of learning of S&T students in their final year of first-degree studies”\. Extend STHEP closing date by 8 months from June 30, 2013 until February 28, 2014\. The proposed extension was necessary April 22 2013 No S S 74\.42 to complete ongoing activities, the performance of which was affected by extensive delays during the first two years of the implementation\. Extend the STHEP closing date from February 28, 2014 to July 31, 2014 for a period of 5 months\. The proposed extension was to provide January 27 2014 No S MS 100 the needed time for the approval of an Additional Financing operation which would help the Borrower resolve the financial shortage and achieve the original PDO\. An additional Credit of SDR 9\.8 million for STHEP to: (i) implement remaining activities July 10 2014 Yes S MS 100 under STHEP which could not be fully completed due to a Credit loss of US$6\.6 million arising from exchange rate fluctuations over the xiii  ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions implementation period; (ii) pilot two programs to sustain the momentum of key reforms in science teacher training and performance-based financing in higher; and (iii) develop a strategy and operational plan for human capital and skills development at the tertiary level\. The PDO was modified to read, “to increase quantity and quality of higher education graduates, with special emphasis on science, technology, and education; and to lay the foundation for improved responsiveness of tertiary education to the labor market”\. The additional financing was for 18- months\. xiv I\. Disbursement Profile xv 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Country Context\. At project preparation, Tanzania’s real economic growth was more than 6% per year\. Its development agenda was guided by the National Strategy for Growth and Reduction of Poverty I&II (MKUKUTA I&II) 1 which aimed to transform the country to a market oriented economy through investments in infrastructure and improvements in human capital and the business environment\. Among other strategic focus areas, MKUKUTA prioritized increased investment in quality education, science and technology; use of information and communications technologies; a competitive knowledge-based economy; and an efficient Government\. Particularly, the strategy aimed to increase the amount and quality of human capital available, and make better use of knowledge\. To achieve this, there was need to increase transition rates from primary to secondary education from around 23% in 2004 to 50% in 2010, and the cohort’s participation rate in higher and technical education from the low level of about 2% in 2004 to around 6% in 2012\. Sector Context\. Between 2000 and 2007, Tanzania’s Gross Enrollment Rate (GER) for primary education increased from 78% to 114%, while Primary Completion Rate (PCR), had reached 71 % in 2006\. At the secondary level, the GER for Forms 1-6 had doubled from 7% in 2003 to 15% in 2006\. The quality of the teaching force at the secondary level was a serious concern given that about 80% held only diplomas\. Enrollments in the higher and technical education institutions were extremely low and barely increasing\. Only 23,000 were enrolled in tertiary education in 2001/02, which increased to 55,000 in 2005/06\. Furthermore, enrollments were not aligned to labor market needs leading to underemployment and concerns about the relevance of education provided\. Investment in ‘capital intensive’ disciplines particularly in sciences, technology, and engineering, were unable to attract the resources needed to provide education of adequate quality\. The appraisal document noted insufficiency of education inputs needed for quality education such as textbooks, qualified teaching staff, laboratory equipment, libraries and ICT facilities leading to a perceptible weakness of graduates in logical reasoning, fluency in communication, and problem-solving skills\. Project Rationale\. At the time of appraisal, HEIs had been slow in responding to the growing demand for graduates in key economic sectors such as Energy, Transportation, Food Agriculture, ICT, Management, Tourism, Marine Sciences, and Applied Sciences and Engineering including basic sciences, materials, mining and minerals, transportation, manufacturing systems, and land management\. Capital intensive disciplines, especially in science, technology, and engineering, had been unable to attract the resources needed to provide quality and relevant education\. These disciplines had remained small and under-funded, while arts and social sciences had expanded rapidly\. 1 The strategy was an operational plan for the Tanzania’s vision 2025\. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)\. The original Tanzania Science and Technology Higher Education Project (STHEP) development objective (PDO) was to increase the quantity and quality of higher education graduates, with special emphasis on science, technology, and education, through an improved learning environment\. Upon completion of the project, two PDO outcomes were envisaged: a) More and better quality science and technology graduates; and b) More degree-holding secondary school teachers\. Table 1: Key PDO indicators for STHEP\. Project Outcome Indicator Baseline Target Status at ICR Number of graduates from science and 1,312(2007) 3,035(2013) 6,698 (2015) technology degree programs\. Target was achieved Improvement in scores on formal n/a n/a This indicator was replaced in April assessments of learning of S&T students 2012 with three alternative ones: (a) in their final year of first degree studies Number of PhD and MSc holding lecturers in priority disciples and (b) Number of scientific publications by these PhD and MSc holding lecturers in priority disciplines each year\. Number of new degree-holding teachers 181 (2007) 1,039 (2013) 6,215 (2015) hired in secondary schools each school Target was achieved year, qualified to teach: (a) mathematics; (b) sciences; and (c) English\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification The PDO was modified to read, “to increase quantity and quality of higher education graduates, with special emphasis on science, technology, and education; and to lay the foundation for improved responsiveness of tertiary education to the labor market” in July 2014, at the time of the approval of Additional Financing for STHEP (STHEP AF)\. The main reasons for the revision of the PDO, and the AF were: a) to meet a credit loss of US$6\.6 million due to exchange rate fluctuations which affected the full completion of certain critical activities under STHEP such as the construction, PhD program and equipment/furniture for some buildings; b) strengthen education reforms initiated in STHEP\. Particularly, ‘push’ reforms further to address severe shortage of qualified secondary school science teachers; and reinforce weak linkages between higher education institutions and the private sector, to make higher education responsive to the needs of economic growth in the country; and c) develop a national skills strategy and operational plan to support human capital and skills needs for priority growth sectors\. Development of this strategy, encompassed the TVET subsector in addition to higher education, thus necessitating a change in the PDO to reflect tertiary education (higher and TVET sub sectors)\. 1\.4 Main Beneficiaries The main beneficiaries for both the STHEP and STHEP-AF were: • Students enrolled in target programs; 2 • Approximately, 2,573 faculty in target institutions benefitting from the staff training program at masters and doctorate levels; • An estimated, 5,178 secondary school science teachers; and • Key tertiary education agencies and institutions including Tanzania Commission for Universities (TCU), Higher Education Students Loans Board (HESLB), National Council for Technical Education (NACTE), Tanzania Education Authority (TEA), Tanzanian Commission for Science and Technology (COSTECH), Ministry of Education and Vocational Training (MoEVT)\. 1\.5 Original Components (as approved)\. The original project had four components summarized in Table 2 below\. 1\.6 Revised Components Although the project was restructured during the STHEP-AF, the components and their primary objectives remained the same\. The STHEP-AF included financing for the completion of activities under the original project activities; but also supported the following new activities: • an innovative pilot of ICT-based subject knowledge upgrading training (‘Retooling’) for secondary school science and mathematics teachers; • operationalization of the Flexible Financing Facility (FFF), a competitive fund developed under the original Credit; and • development of a strategy and operational plan for human capital and skills development in priority economic growth areas\. 1\.7 Other significant changes In April 2012, one of the outcome indicators, “scores on standardized assessments of learning of S&T students in their final year of first-degree studies” was changed due to absence of reliable standardized assessments\. The Government and the Bank, in consultation with key stakeholders including Universities, agreed to replace this indicator with the four indicators listed below: • Number of PhD and MSc holding lecturers in priority disciplines; • Number of scientific publications by these PhD and MSc holding lecturers in priority disciplines each year; and • Percent of students who are satisfied with quality in science and technology degree programs\. Four additional indicators were added at the time of additional financing of STHEP to account for the increased scope of activities and to measure performance of the new PDO: • Customized FFF Operations Manual endorsed by MoEVT for implementation • Institutional mechanisms for using ICT in teacher training in place • Appropriate ICT-enhanced method(s) for teacher training identified from pilot experiments • A strategy and operational plan for skills development in priority growth sectors developed and endorsed by key stakeholders\. The project was extended twice, in April 2013 by eight months from June 30, 2013 until February 28, 2014\. The proposed extension was necessary to complete ongoing activities\. Another extension was approved in January 2014 from February 28, 2014 to July 31, 2014 for a period of five months to allow time for processing of the Additional Financing for the Project\. 3  Table 2: Original Project Components Component Component amounts and main activities Revised component amounts and (US$M) activities Component • $47\.30m • $51\.01m 1A: • Staff development • Additional financing for the Investments in • Curriculum revision completion of STHEP I activities in the Priority • Upgrading physical infrastructure, and areas of staff training, remaining external Disciplines for academic and private sector linkages\. works and civil works, lab equipment, and Economic • Increase in enrolment in priority other goods\. Growth disciplines\. Component • $35\.00m • $40\.66m 1B: • Support preparation of degree-holding • Retooling activities for teachers Expanded teachers, particularly for mathematics, science • Build institutional mechanisms and Capacity for and language teaching\. capacity for applying information and Teacher • Staff development communications technology (ICT) in Preparation, • Revision and production of teacher training with the introduction of a and for instructional materials pilot training program that upgrades the Graduate • Improve laboratories content knowledge of science teachers in Studies in • Provision of equipment, including ICT difficult subject areas\. Education • Mainly targeted faculties of education and science at DUCE SUZA, OUT and MUCE Component • $8\.5m • $13\.13m 2A: • Strengthen TCU, HESLB, NACTE, • Establishing institutional Strengthening TEA, COSTECH and MoEVT through staff mechanisms and procedures for the Flexible Key Higher development, improved infrastructure and Financing Facility (FFF) which was Education service delivery developed under STHEP I\. Agencies and • Define, refine and implement key • Developing a strategy and Institutions strategic reforms\. operational plan for skills development from the technical/vocational level to higher education\. Component • $7m • $8m 2B: • Support higher education system to • Completion of the STHEP I Investment in better manage the increasing numbers of activity – Last Mile Connectivity – to System-wide students; improve quality of data enhance connect eight higher education institutions ICT knowledge sharing; and improve classroom that had remained with the National ICT Development study, and research capability\. Broadband Backbone\. and Libraries • Provision of high-quality connectivity to research and higher education institutions (HEIs), as well as the MoEVT and other sub- sector agencies\. Project • Project operational costs No change implementation ($2\.2m) 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry Tanzania aspires to be a middle income country by 2025, and has prioritized increased investment in quality education, science mathematics, and technology; and use of information and communications technologies\. Shortage in skills among the labor force in Tanzania is considered a major constraint to the competitiveness of Tanzanian industries, including attracting foreign 4 investors 2\. It is estimated, that only 3% of Tanzanian working population is classified as high- skilled while the majority 84% are low-skilled 3\. At the time of project preparation, enrollment in higher education was extremely low (GER of 2%) with the share of those enrolled in sciences and engineering subjects at a mere 34 percent in 2004 while demand for high skilled labor to meet its aspirations was high\. There had been minimal investment in the higher education subsector for more than 30 years resulting in very low enrolment at the tertiary level and the weak capacity of HEIs and the supporting system which suffered from neglect\. Development partner support was targeted to the basic education levels with no support for the higher education sub-sector\. There was thus strong rationale for investment in the sub-sector\. The project’s challenge was to strengthen higher education systems and lay a foundation for sustained reforms, and at the same time support production of the most needed graduates in priority sciences and engineering programs\. STHEP was designed to address the immediate high skills needs to support Tanzania’s growth\. As highlighted by Vision 2025 and the CAS, skills requirements were mainly in sciences, technology, engineering and mathematics\. At the time of preparation, Tanzania was relying fully on foreign expertise for the energy sector for example and needed to build local expertise in the sector\. Based on priorities identified in Tanzania’s Vision 2025 and MKUKUTA I & II, the Project identified key economic sectors, to inform priority training programs in: telecommunications and computer engineering; energy course; food science and technology; industrial biotechnolog y; agribusiness; tourism and aquatic sciences; mining related course; water engineering and land management courses\. Competitive proposals were sourced from existing Universities, to conduct trainings in these disciplines\. At the same time, the project supported successful universities, through staff training at masters and PhD levels, ICT and through relevant infrastructure development including buildings and equipment\. As a result, the project facilitated enrollment of about 9738 new students in priority programs, as well as training of an additional 5178 new secondary school teachers in sciences, mathematics and languages\. Impacting on enrollment in higher education for the priority programs was the poor learning outcome at the secondary school level, particularly in sciences and mathematics\. The project therefore focused on addressing this in order to ensure a quality ‘pipeline’ into higher education priority disciplines, and in the required numbers\. The immediate challenge identified was inadequate qualified teachers, specifically in sciences and mathematics\. The demand for new graduate secondary school teachers was projected to be 77,000 between 2007 and 2015\. In order to build and strengthen systems to initiate and support higher education reforms, the Project focused on building ICT enhanced infrastructure and staff development, strengthening of 2 Tanzania ranked 120 out of 144 countries in 2012 global competitiveness ranking\. World Bank, 2012 3 Attaining Middle Income Status – Tanzania: Growth and Structural Transformation Required to Reach Middle Income Status by 2025”, International Growth Center, London School of Economics, 2010 5 key higher education agencies and institutions, responsible for higher education legal frameworks, quality assurance and other legislations\. These institutions included TCU, HESLB, NACTE, TEA, and COSTECH\. Notably, the establishment of the computerized admissions system at the TCU; and the online loan application system established at HESLB improved efficiencies and service delivery\. Figure 1 on the next page, illustrates how the activities supported by the project led to achievement of its development objectives\. Project design was realistic\. An analysis of MoEVT capacity was undertaken to identify the required skills mix for the project staff proposed and budgeted for\. However, at preparation, the significant capacity gaps in the MoEVT to coordinate, monitor and drive the operation resulting from an absence of any investment in the sub-sector for several decades was underestimated\. A detailed implementation plan was prepared in September 2008, outlining specific roles for each of the agencies involved\. The project considered various options to improve the higher education sector to best meet Tanzania’s needs\. A science research funding project, was excluded based on the fact that quality and relevant research would require first a basic university infrastructure to be in place and a diverse set of graduate education in the sciences and engineering\. A general higher education improvement project was also not considered, since the Government was already focusing on expansion in tertiary education particularly with an emphasis on science and technology\. The main concern was quality and relevance of this education, and the need to improve capacity in specific areas related to the higher education system\. Originally, the project was to be delivered in two phases\. The CAS, envisaged a phased programmatic approach to higher education subsector\. A STHEP 1, USD 100M and a STHEP II, USD 120m were included in the CAS investment operations\. STHEP II was however not prepared although a project concept note was developed in 2014\. Instead, additional financing was delivered in 2014 to ensure continuity of the work that had begun under the project and was beginning to show results\. Project’s Quality at Entry The project process included extensive consultations with diverse stakeholder groups including academics, private sector, line Ministries and subject matter experts and other resource persons\. The project adopted a structured components approach to address development needs identified during preparation ie investment in priority disciplines, expanded capacity for teacher preparation; strengthening key tertiary education agencies and institutions; and investments in system-wide ICT and libraries\. This selective method, facilitated investments in priority activities under each component, to meaningfully respond to the country’s development needs and also create a platform to facilitate reform in tertiary education with a focus on quality, relevance and efficiency\. 6  Figure 1: Results chain Project activities/outputs Outcomes Construction and equipping of teaching and learning facilities (laboratories, classrooms, connectivity, text books, ICT fixtures & furniture)\. Increased quality and quantity of Staff capacities developed at Masters and PhD HE graduates in levels in priority disciplines, mainly sciences and science, engineering\. technology, and education Curricula revised and developed in priority disciplines, mainly sciences and engineering\. Improved quality Support preparation of degree-holding teachers, particularly for mathematics, science and language and quantity of pipeline of students teaching\. to HE Investments in system-wide ICT and Libraries (Provision of high-quality Optic Fiber Cable (OFC) connecting 28 Higher Education and Research Institutions -HERIs)\. Strengthen and support reforms in key tertiary education agencies and institutions (TCU, HESLB, NACTE, TEA, COSTECH and MoEVT) through staff development, improved infrastructure and systems development\. Foundation for improved responsiveness of tertiary Establish institutional mechanisms and procedures education to the labor market\. for a Flexible Financing Facility (FFF) to foster linkages between higher education institutions and the private sector\. Develop a National Skills Development Plan and its operational plan The need to strengthen key higher education agencies was also taken into account\. This was important to enable the agencies to carry out their mandate, to regulate quality and relevance in the expanding higher education sub sector, as well to improve efficiency in service delivery\. The systems at target HEIs agencies, (TCU, HESLB, NACTE, TEA and COSTECH) were weak, resulting in expensive and inadequate service delivery\. The project targeted to strengthen systems in these institutions, through provision of equipment and ICT software, training and staff development, and relevant technical assistance, in order to set the ground for the needed reforms\. This was crucial to drive higher education policy reform beyond the project period\. Notably, the project’s main interventions are anchored within existing University education management and agencies frameworks for ownership, sustainability and the need to generate momentum for reform 7 The project incorporated various experiences and lessons from other countries, and similar Bank financed operations to inform strategy of specific project interventions\. For example, lessons were incorporated from the ICR from the Chile Higher education improvement project to inform the Flexible Financing Facility (FFF) model and the HESLB reforms; Bank experience with the Uganda Millennium Science Initiative (MSI) informed the competitive aspects of the subprojects implemented by the Universities under the project; lessons from Argentina on a gradual approach to reforms and building up existing institutional capacity as reforms are designed and implemented-the project adopted this in strengthening key tertiary education agencies\. The STHEP-AF applied two innovative ideas to further ‘push’ reforms and create a foundation for scaling up of the STHEP initiated activities\. The innovation included an ICT approach for in- service secondary school sciences and mathematics teachers, to equip them with skills to master, and be able to teach identified ‘hard to teach’ topics\. The second innovation was the use of the ‘SMS’ platform for follow up of these teachers\. Three research papers are published on the retooling ICT approach and use of the ‘SMS’ platform\. Development of a comprehensive National skills strategy would further inform reforms towards relevance and quality of education and training to meet the market needs\. Assessment of Risks The critical risks identified and mitigation measures were relevant\. The overall risk rating at STHEP was modest/substantial\. At preparation, potential risks relating to delays in project delivery due to weak capacities and poor coordination were identified\. The mitigation measures applied were technical assistance (TA) support, close supervision and formation of inter university committee for network and libraries\. To some extent, the TA support facilitated project implementation; for example, the project replaced the national coordinator, with much more experienced staff to fast track implementation\. The implementing institutions appointed project teams to oversee project delivery at the institutional level, and to provide linkages with the institution’s senior management\. A critical risk highlighted at preparation was potential inadequate uptake of policy and institutiona l reforms\. The proposed phased approach to reforms was relevant although the planned STHEP phase II project did not materialize\. All the same, the systemic reforms carried out at the higher education agencies were well received and institutionalized\. The Faculty trained abroad, under both STHEP and STHEP AF did come back to Tanzania\. However, there has been some transfers within the Universities\. 2\.2 Implementation Despite significant start off delays, the project picked up and sustained implementation momentum to deliver main project activities\. STHEP’s closing date was extended twice, for a total of thirteen months\. Low capacity, poor coordination, inadequate communication and a lack of understanding of Bank procedures among the project implementers resulting from inattention to the sector and institutions for decades led to project startup delays in the initial stages\. The effectiveness of STHEP-AF was delayed and reduced the implementation period from eighteen months to about fourteen months due to a delay in submission of the legal opinion\. The government and implementing agencies however made strong efforts to turn around project performance 8 demonstrated by the large scope of activities under STHEP-AF which included procurement of goods, works, a number of consultancies, a major training pilot, a large-scale policy lab, and the preparation of a new Government policy, that were all implemented within eighteen months\. The project had multiple implementing partners at the national and University levels which complicated coordination, reporting and feedback\. Two ministries were involved in project implementation, the Ministry of Works, Transport and Communication (MoWTC) and MoESTVT in addition to seven implementing higher education institutions and five higher education regulatory and oversight agencies (TCU, HESLB, NACTE, TEA, and COSTECH)\. The two Ministries were a result of Government reorganization\. Although a detailed implementation plan dated September 2008 was in place, coordination was also weak between the Ministry and implementing institutions\. Once a strong, stable lead for MoEVT was put in place to drive the project and link with the relevant Government agencies, performance improved dramatically\. A crowded and poor quality (and quantity) infrastructure in target institutions also affected timely project delivery in the initial stages\. Project interventions, however, helped to rectify the initial capacity weaknesses which contributed to the turnaround in performance\. The Ministry and the Bank worked very closely to turn around the slow progress in implementation in the initial phases\. The change in project coordinator, and establishment of strong project teams in the institutions enabled the project to speed up implementation, particularly during the second and third phases\. A major implementation challenge faced by the Project was the variation in quality of the implementing HEIs\. Some institutions were very successful at taking the planned project activities and organizing themselves to deliver in the best way possible\. This however, was not always the case with some institutions showing very weak performance\. This could partly be explained by the number of project activities, and complexity of these activities at each of these institutions but leadership at the institution was a key determinant\. Intensive monitoring and support by the Bank team and MoEVT ensured that the main project activities at each institution were completed by project closure\. The Ministry acknowledged Bank’s support in addressing emerging project implementation matters\. For example, the Bank team recommended UDSM to prepare civil works designs ‘in- house’ as opposed to advertising, thus cutting at least six to eight months from the implementation timeline\. The project’s supervision aide memories and ISRs systematically documented the project’s implementation status, challenges and provided proposals to address these, including technical assistance from the Bank’s side, which was availed\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Design The original project’s result framework was defined with three PDO indicators and six intermediate indicators\. The project’s results framework was strong, however, one of the main PDO outcome indicator was revised, since attempts to measure the indicator related to scores on standardized assessments, proved challenging in Tanzania\. The Government and the Bank agreed on alternative indicators to measure quality, which included the number of staff trained in Masters 9 and PhD, number of publications, and percentage of students satisfied with the degree programs\. Taking into account the low base the project was starting at, these indicators were the most relevant, to lay a foundation for the priority programs, and thereafter assess learning outcomes\. The project satisfactory aligned the PDO indicators to the intended outcomes of the project\. An M&E consultant was recruited during STHEP-AF to collect and compile data on the project as per the revised indicators\. The data was collected by institution and complied\. Data from the specific implementing institutions is available at MoEVT and the Bank\. Implementation The MoEVT’s department of policy and planning was responsible for project monitoring with support from project staff, mainly the coordinator\. There was no comprehensive M&E system developed which was identified as a weakness throughout implementation\. Project data was collected by individual consultants as per the results framework\. Utilization Although data from the project does not seem to be integrated in the overall MoEVT education information, MoEVT has utilized it well\. For example, studies supported by the project provided input into the recently approved Tanzania Five Year Development Plan 2016-2021 (FYDP II)\. This includes the National Skills Strategy developed under the project\. Data collected under the project was also used to report on the project progress and inform formulation of the STHEP-AF\. In addition, the key higher education agencies such as TEA, TCU and HESLB utilized data from the project to inform further systems upgrade required as well as resource mobilization\. At the end of the project, the required project data, by each indicator was available and verified in some of the institutions visited during the ICR mission\. 2\.4 Safeguard and Fiduciary Compliance Safeguard The Project was a category B and the environmental safeguards category S2 due to the construction and rehabilitation expected under the Project\. Civil works were done within the existing higher education institutions premises, and therefore no ‘new’ land needed to be acquired\. The categorization remained during the STHEP-AF, since none of the new activities triggered any additional or change in the STHEP existing social and environmental safeguards policies\. An environmental audit was undertaken in July 2014 to assess extent to which beneficiary institutions were adhering to the ESMF requirements and procedures\. The assessment concluded that the beneficiary institutions generally adhered to the requirements of the EMSF\. The subprojects incorporated some of the inherent environmental and social requirements through environment sensitive designs and observance of existing building codes\. However, it was noted that there is still need to align fully with the Tanzania’s Environmental Management Act (2004) provisions for EIA\. Moving forward, the audit concludes that the in-Country specific EIA provisions could be integrated into the overall project’s EMSF\. Procurement Procurement capacity was weak in the early stages of the project, specifically from 2008 to 2010, but improved significantly following intense follow up by MoEVT and the Bank to build procurement capacity at the HEI level\. Some of the weaknesses included preparation of complete 10 procurement bidding documents and timely bid evaluation\. In addition, based on post procurement reviews, proper contract management and records keeping remained an issue throughout the project\. The Bank carried out fiduciary trainings on the required rules and procedures, once the project teams, both at MoEVT and at the implementing institutions, were in place\. At the end of the project, the project had completed all its main procurements\. Financial Management The financial management arrangements in place for the project were satisfactory\. A dedicated and qualified FM officer was in place at the MoEVT\. The project’s interim financial reports were prepared and submitted to the Bank on time\. Furthermore, the project’s audits are up to date and accepted by the Bank; a final project audit report is due in December 2016\. FM related trainings were conducted for MoEVT and implementing institutions\. Although project funds were fully disbursed from the Bank side, beneficiary institutions returned some funds to the Ministry after the closing date\. MoESTVT is carrying out final designated accounts reconciliations and preparing for the final project audit\. 2\.5 Post-completion Operation/Next Phase The proposed Tanzania Education and Skills for Productive Jobs (ESPJ) builds on the reforms initiated under STHEP\. The ESPJ, SDR 100m, was approved in June 2016\. The ESPJ aims to strengthen the institutional capacity of the skills development system and to promote the expansion and quality of skills development opportunities in select economic sectors\. The project aim is to strengthen the institutional capacity of Tanzania’s skills development system, and support expansion and quality of labor market driven skills in select economic sectors\. Notably, the ESPJ will operationalize and scale up the comprehensive National Skills Development Strategy (NSDS)\. The proposed ESPJ will also implement the FFF operational plan developed during STHEP I, as the planned skill fund\. The project’s investment in Sokoine, alongside support from USAID, EU and Japan, also contributed to Sokione’s approval as a beneficiary for the approved Eastern and Southern Africa Higher Education Centers of Excellence II (ACE II) Project\. This will enable Sokoine to further train local and regional students at Masters and PhD levels and conduct relevant research and publications\. 3\. Assessment of Outcomes A split rating methodology was adopted to assess achievement of outcome given that there were two project restructurings, resulting in three project phases\. Phase 1 covered the time period from project approval in 2008 to April 2012; Phase 2 started from the time the PDO indicators were revised in April 2012; and Phase 3, covered the period from July 2014 to January 2016, period coinciding with the implementation of the AF\. Overall, the Project performance with respect to achievement of its PDO was satisfactory\. The Following paragraphs provide details of the achievements of the Project and the challenges it faced during the three phases\. 11 3\.1 Relevance of Objectives, Design and Implementation Relevance of Objectives was high for all three phases\. The Project aimed to directly contribute to an increase in graduates with emphasis on science, technology and mathematics which was in line with Tanzania’s Vision 2025 and the CAS\. Vision 2025 requires continuous development of a relevant and quality workforce to support the growth of key economic sectors\. At the time of STHEP preparation, only 3 percent of Tanzania’s working population was considered high-skilled, while 33 percent was medium skilled\. The project objectives were also aligned with several pillars of the World Bank’s Country Assistance Strategy (CAS) 2010–2015\. Specifically, it contributed to the third CAS pillar of Strengthening Human Capital and Safety Nets and within this pillar, improved access to and quality of education , as there is wide recognition that both the quality and quantity of skills pose constraints to the growth of key industries\. The CAS highlights the need to generate the required number of workers with appropriate skills for the growth sectors such as manufacturing, tourism, mining, services and trade logistics through vocational education, higher education and non-formal education\. The Project contributed significantly to this CAS objective demonstrating its high relevance\. A new Country Partnership Framework (CPF) is currently under preparation and expected to be completed by July 2016\. Given the challenges and opportunities facing Tanzania, one area of focus in the CPF will be economic empowerment of the poor, which will include enhancing human capital opportunities as a key lever for economic empowerment 4 further demonstrating the continued relevance of the objectives of the Project\. The STHEP AF, included an additional objective, ‘to lay the foundation for improved responsiveness of tertiary education to the labor market’\. The MKUKUTA aimed at ensuring that education and training systems produce skills demanded by the labor market\. The AF therefore supported establishment of institutional mechanisms and procedures, such as the FFF to foster greater linkages between higher education institutions and the private sector\. Several tracer studies conducted in Tanzania, such as the Labor Market Demand Survey for Occupations, have pointed to the mismatch between labor market demand and graduates’ skills\. The project therefore aimed to lay a foundation for HEIs reforms, to contribute to this supply of high skilled labor relevant to Tanzania’s development context\. Relevance of design The Project adopted a highly relevant design approach, taking into account the low base in the higher education system at project preparation\. It focused on institution building and strengthening in order to lay a strong foundation for reforms and make more sustainable gains for its investment in higher education\. At the same time, it employed a bottom up approach, to invest directly in competitively selected HEIs, to ensure quick gains through expanding the capacity of universities to produce graduates in priority programs, and lay a foundation in the specific institutions, for continued training in relevant priority disciplines\. 4 World Bank, Tanzania Systematic Country Diagnostic (SCD), draft February 2016\. 12 The Project’s reform perspective entailed a rapid scale up in higher education, science, and technology to enable supply and employment of a skilled workforce for key economic sectors to contribute to the country’s growth\. To initiate this reform in a sustainable manner, the Project adopted a gradual reform approach, by targeting strengthening of education and training in specific priority disciplines through competitively selected Universities, and capacity-building of key agencies for higher education such as HESLB, TCU and TEA to provide oversight, and improve service delivery in the higher education subsector\. The new central admission system at TCU and the online loan application platform at the HESLB, remain highly relevant for efficient service delivery\. Both TCU and HESLB are continuing to improve the new systems using their own resources\. The need for graduate secondary school teachers in sciences and mathematics in Tanzania is enormous given that only 20% held degrees\. This in turn impacted the learning outcomes of students and thus the input to higher education institutes compromising Tanzania’s objectives of improving its human capital\. Table 3 shows the resultant high deficiencies in math and science performance of students\. One key design feature of the Project was to increase the number of degree-holding secondary school teachers qualified to teach mathematics and sciences to improve the learning of secondary students who then would have higher chances of success at the higher levels especially in the fields of science and technology\. The retooling in-service teachers program, under the STHEP AF was intended to improve mastery of subject matter content and strengthen pedagogical skills in teaching of sciences and mathematics\. Table 3: Percentages Pass for CSEE Results in Natural Science and Mathematics Subjects % Passed by year Subject 2006 2007 2008 2009 2010 2011 2012 Mathematics 23\.67 31\.32 24\.33 17\.78 16\.09 14\.6 09\.11 Biology 51\.40 57\.47 46\.3 43\.19 30\.49 43\.4 26\.42 Physics 60\.93 61\.47 53\.6 55\.46 44\.63 43\.2 34\.51 Chemistry 74\.33 69\.58 62\.1 57\.06 43\.88 43\.3 38\.15 Source: Final Consultant Report of the STHEP Evaluation, July 2014 Project investments in system-wide ICT and Libraries, as well as laboratories, lecture theaters and equipment, under both STHEP and STHEP AF, contributed to increased research and publications by the PhD and Masters lecturers\. Research publications increased to 1,397 by November 2015, up from 784 in November 2012\. Although the research uptake was not evaluated, it is expected that the findings have at least contributed to inform new courses under the Project and curriculum revisions\. Strengthening of key tertiary education agencies and institutions under both STHEP and STHEP AF, facilitated improved service delivery and efficiencies as detailed in the next section\. The agencies include HESLB, NACTE, TEA and TCU\. Project activities in these institutions, laid a foundation for higher education reforms, through ICT enhanced systems development, establishment of accreditation standards, and building staff capacity in relevant skills\. This resulted in significant improvements in service delivery, particularly for the online loan application system at HESLB; the Central admission online platform at TCU; and increased resources mobilizat ion and recovery of soft loans from education institutions at TEA\. TCU conducted a higher education 13 student’s unit cost study which has informed a differentiated unit cost approach for each degree cluster and also informed budgeting\. This contributed significantly to the quality aspect of the PDO\. The project supported development of a FFF’s operational plan, which will be used in delivery of the ESPJ skills fund, and in the framework of the national skills strategy, also developed by the project\. The FFF mechanism, and the first national skills development strategy, lay emphasis on a structured engagement with the private sector in development of quality and relevant skills for key economic sectors\. Tanzania’s dynamic economic growth path, and the bulk of employment opportunities will be in the private sector, with increasing numbers employed in non-agricultura l sectors and in higher skilled occupations (Tanzania National Bureau of Statistics 2015)\. Relevance of Implementation Implementation of the subprojects by the Universities, under component 1A and 1B, enabled the Project to build on existing program delivery to further strengthen the quality and relevance of these programs\. This approach was also relevant in enhancing fiduciary processes at these institutions, as well as sustainability\. For example, Sokoine University reported it has adopted the project’s fiduciary procedures as good practice in running of the University\. Project activities, under component 3, were also implemented by key higher education agencies such as HESLB, TCU and TEA, enabling them to address actual systemic needs to improve service delivery and overall, efficiently deliver on their core mandate\. 3\.2 Achievement of the Project Development Objective The Project was successful at achieving its PDO to increase the quantity and quality of higher education graduates, with special emphasis on science, technology, and education, through an improved learning environment\. The Project contributed to increased enrollments and graduates in sciences, education and mathematics at the tertiary level; improved quality of the teaching and learning environment; and strengthened higher education regulatory agencies\. Since the 1980’s, minimal investment has been targeted to higher education institutions\. The target implementing universities and agencies did not receive any other donor support\. The project achievements reported, are therefore highly likely to be a direct result of Project interventions\. The following paragraphs discuss in detail the specific objectives achieved by the Project under the three phases\. The assessment in this section is combined for the three phases and weighted in Table 11\. STHEP-AF did not finance ‘independent’ project activities as such\. It mainly supported completion of ongoing STHEP activities arising from the exchange rate losses, and to further ‘push’ reforms through activities initiated under STHEP I such as the FFF, the secondary school teachers training and preparation of the National Skills Strategy\. It is therefore not possible to ‘separate’ the achievements for the three phases in assessing the Project’s achievements\. 14 PDO 1: Increase in quantity of higher education graduates, with special emphasis on science, technology, and education\. This PDO aspect was highly achieved\. Under the Project, 273 new courses (not previously offered) in science and technology disciplines were introduced by December 2015, against a target of 224 by January 2016\. The Project supported development of new degree sciences programs, and also review of old ones, in key economic sectors\. Table 4 below, shows examples of new programs and courses and for which students are enrolled\. Development of these programs was mainly facilitated by the return from abroad of the new graduates from masters and PhD training, also supported by the Project\. The courses developed are highly relevant to Tanzania’s needs given that they are in line with the key economic sectors in need of highly skilled labor identified in Tanzania’s Vision 2025 and MKUKUTA I & II, such as energy, transportation, food agriculture, ICT, management, tourism, marine sciences, applied sciences and engineering (basic sciences, materials, mining and minerals, transportation, manufacturing systems, and land management)\. Table 4: Examples of new courses developed under the project in target Universities\. University Examples of new programs and courses ARU Environmental Studies and Environmental management; English and Communication skills; Public Finance & Taxation; and Financial Accounting &Marketing of Financial Services\. UDSM Science education and training; Technical and engineering education; Biotechnology; Mining and mineral processing; Sustainable energy; ICT and E pedagogy; Transportation and Geotechnical engineering; and Electrical and computer systems engineering DIT Telecom Engineering; Multimedia/film technology; Renewable energy technology; Biomedical engineering; Food science and technology; Highway engineering SUA Post-Harvest Technology ; and Food quality and control Source: M&E forms completed by the target HEIs\. These courses contributed to increased enrollment and graduates at the tertiary level substantially, increasing the supply of high-skilled labor in key growth sectors of the country\. Compared to 2\.5 percent in 2008, in 2014 3\.7 percent of the college-age population in Tanzania were enrolled in higher education\. Although this is still low and reliable data is not available, the country seems to be on an upward trend\. Specifically, enrollment in science and engineering programs, under the Project more than tripled to 9,738 from a baseline of 3,353 in December 2007, and against a target of 8,742 by January 2016\. According to MoEVT data, the overall number of science and technology graduates has increased from 1312 in 2007/08, to 3759\. Overall, TCU data shows that the total number of students enrolled in degree programs in universities almost doubled from 81,782 in 2008/09 to 162,510 in 2012/13\. Program wise, enrollment in engineering sciences improved from a total of 456 in 2008/2009, to 2549 in 2012/2013, while enrollments in sciences and ICT increased from 2369 in 2008/2009 to 3880 in 2012/2013\. Agriculture enrollments also increased from 482 in 2008/2009 to 921 in 2012/2013\. The results presented above, have no doubt contributed not only to this change, but also possible meaningful employment of the beneficiaries\. According to the Tanzania Skills for SMEs study, 2013University graduates have higher chances of employment; about 80 percent of university 15 degree holders are employed in a paid job\. In 2012-2013, an individual with a university degree and paid employment earned about 8,200 USD annually, about 2\.5 times the earnings of one with an upper secondary degree on average\. The project made a significant contribution to helping plug the gap in qualified secondary teachers\. As Figure 2 shows, there was an exponential increase in the number of degree holding teachers in the country as a result of project interventions specifically in the high demand topics of Science, English and Mathematics\. Figure 2: Number of new degree holding teachers in sciences, math and English 2015 2013 2007 0 1000 2000 3000 4000 5000 6000 No\. of new degree holding teachers in sciences, maths and english Source: MoEVT STHEP M&E report, February 2014 The proportion of staff with PhDs in most Universities in Tanzania was less than 20% in 2011 5\. Although current data on the stock of PhDs is not available, the project contributed significant ly to the increase of staff with PhD in the target Universities\. For example at SUZA, the science department up to 2012, had only one PhD holder , yet the department’s core mandate is to train quality science teachers\. Through the Project, SUZA obtained an additional thirty six PhD holders, and also one hundred and three masters’ holders\. This staff development, coupled with the science equipment provided through the Project, enabled SUZA to establish a ful-fledged School of Science\. The Project’s total number of PhD and MSc holding lecturers rose to 2,573 by November 2015 from 564 in November 2012 against a target of 1,650 by January 2016, as shown in Figure 3 below\. The Project has been the main financier of academic staff development in the target institutions\. The PhDs include: ARU seven (7) PhDs; MUCE, six (6) PhDs; and UDSM nineteen (19) PhDs\. The PhDs’ areas of specialization were relevant to the key economic sectors and priority science and engineering disciplines\. Most of the PhD trainings were undertaken in Europe\. SUZA, Sokoine and Ardhi reported that the new PhD and Msc trained lecturers have alleviated chronic staff shortage in the Universities and are also working on new programs and revision of the existing ones\. 5Review and Evaluation of the Performance of Tanzania’s Higher Education Institutions in Science, Technology and Innovation, June 2011 16  Figure 3: Trends in the Number of Academic Staff with Masters and PhD No\. of PhD and MSc holding lecturers in priority disciplines 3000 2573 2000 1501 564 648 754 756 1000 268 0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2014/15 No\. of PhD and MSc holding lecturers in priority disciplines PDO 2: Quality of higher education graduates, with special emphasis on science, technology, and education through an improved learning environment\. This PDO aspect is rated ‘substantial’\. The main quality aspect of the PDO, entailed improvement in the teaching and learning environment for priority science disciplines, as well as development of guidelines on quality education\. To appreciate this PDO aspect, it is critical to acknowledge the very low base that the Project was starting from\. Without the basics, such as qualified staff, adequate learning space and relevant equipment, quality related outcomes, would take a while to be meaningfully achieved\. All the same, this PDO aspect was achieved as follows: The Project aimed at improving the teaching and learning environments, to ultimately improve the overall quality of higher education graduates\. Availability of standard laboratories and laboratory equipment in the selected disciplines, enabled provision of an improved teaching and learning environment\. The negative perceptions, with respect to the quality of education institutions manifests in the hiring patterns of employers\. Therefore, there was need to improve and modernize infrastructure for an appropriate teaching learning and research environment\. The last mile connectivity to the twenty eight institutions, facilitated access to centralized/group services academic/educational applications; affordable and reliable internet services; improved collaborations; and enhanced sharing of information\. To further strengthen quality of education and training, the Project supported development of Tanzania’s first National Qualifications Framework, based on which technical institutions are registered and accredited\. There were no similar quality assurance mechanisms before the Project intervention\. Consequently, the number of accredited technical institutions and teachers by NACTE, has continued to increase as shown in table 5 (MoEVT, Design and Implementation of Monitoring and Evaluation Framework for Concluding STHEP I Report, February 2014)\. These quality assurance frameworks and mechanisms in place, will continue to enhance delivery of quality and relevant education and training\. The frameworks have established mechanisms for scrutiny and accreditation of tertiary institutions, including curriculum and the teachers\. This institutional strengthening in management and quality assurance is intended to regulate, for quality and relevance, the rapid expansion of tertiary institutions in the country\. The ability of NACTE to timely conduct registration and accreditation against a set criteria, has also contributed to 17 expansion, registration and accreditation of private universities, colleges, and technical education institutions thus contributing to an increase in enrollment\. Table 5: National Qualifications Framework Activity by NACTE National Qualifications Outputs Jan Dec July June Framework Activity by 2009 2010 2011 2013 NACTE 1\. Registration of Technical Number of registered TIs 188 216 231 316 Institutions (TI) 2\. Accreditation of TIs Number of accredited TIs 55 95 98 108 3\. Qualification Standard Number of programs 12 37 - setting 4\. Validation of curricula Validated curricula 82 212 240 303 5\. Registration of Technical Number of registered teachers 707 1740 2120 2,198 Teachers 6\. M&E of accredited TIs Number of monitored TIs 12 28 16 60 7\. Training of Technical Number of teachers trained in CBET 174 309 135 315 Teachers in CBET The other quality aspect related to an increase in scientific publications by the trained PhD and Masters staff under the Project\. Publications increased to 1,397 in November 2015 from a baseline of 784 in November 2012, and against a target of 980 by January 2016\. Knowledge and technology transfers are needed for the country’s economic development particularly when linked to solving emerging development challenges\. The Project enhanced HEI’s capabilities to conduct applied research\. An analysis of the nature of research and the process for publication was not conducted\. However, in the 2012 Knowledge Economic Index (KEI) Tanzania was the 129th country with a score of 1\.79, well behind Kenya which was 111th Country with a score of 2\.88 and also behind Uganda and Rwanda (118th and 128th Countries) with scores of 2\.37 and 1\.83\. It is likely that the Project will contribute to an improvement of subsequent Tanzania’s KEI scores\. The retooling program has also resulted in three research publications\. The increased publications were partly attributed to new workstations in teaching laboratories, which increased from 1,025 in 2007 to 3,975 in 2014/15, and against a target of 1,878 in January 2016\. SUA, ARU and DUCE for example reported increased utilization of the laboratory equipment by faculty for research\. Twenty eight universities and college campuses are connected to the National ICT fiber backbone\. This was reported to have enhanced research and students’ online learning\. For example SUZA University is working on an online educational platform\. Some learning materials are already uploaded online although not yet accessible to ‘external’ clients\. The percentage of students who were satisfied with quality in science and technology degree programs improved from 41\.80% in November 2012 to 47\.10% as at January 2015, and against a target of 60%\. Administration of the survey questionnaire seemed inadequate\. The questionnaire was not specific to the discipline targeted by the Project\. Also, students filling the questionnaire, were not necessarily drawn from the Project’s target faculties\. Since the initially proposed students leaning assessment was not conducted, a follow up employer survey or tracer studies would have to be conducted to further ascertain the quality of graduates from an employer’s perspective\. 18 The STHEP AF supported an ICT-based retooling pilot program, targeting ‘difficult to teach topics’ in four subjects namely biology, chemistry, physics and mathematics\. The program contributed to improved mastery of subject matter content among secondary school teachers for sciences and mathematics\. The June 2015 impact assessment report for the retooling program, showed a significant improvement in performance of participating teachers in the post test after the trainings\. The overall degrees of score between pre- and post-training assessments of the teachers, increased by 21\.78%\. Participating teachers were monitored through a ‘SMS’ mobile phone service\. The assessment would have benefited from a baseline in performance of students in the four subjects, and an assessment later to assess improvements in learning outcomes\. A total of 1920 secondary school teachers received the retooling training against a target of 2000 by January 2016\. This increased capacity of secondary school teachers is expected to lead to better learning outcomes and thus preparation for higher education for its secondary students which in turn will lead to higher quality higher education graduates\. This activity was critical to set a strong foundation for improved higher education outcomes given that skills taught at the secondary level are critical for learning at the higher levels\. The Project thus has strengthened the pipeline for higher education graduates that stretches well beyond the Project time period\. PDO 3: Lay foundation for improved responsiveness of tertiary education to the labor market\. The Project laid strong foundations for reforms in key higher education agencies to improve service delivery and efficiencies- aspects related to the quality of education delivered\. The Project has effectively addressed admission challenges through the development and operationalization of the Central Admission System (CAS) at the Tanzania Commission for Universities (TCU)\. The CAS has minimized admission obstacles, as well as the costs incurred by applicants\. By 2014, about 44,000 students applied to over 50 public and private HEIs, using the online system\. Of these students, approximately 5,000 used mobile telephone platforms, and thus did not have to travel to TCU premises\. This system has the added advantage of increasing access for poorer students to HEIs\. The automated HESLB online loan application system has reduced travel, application and processing costs\. The accuracy of data has also improved leading to a reduction in cases of cheating\. The initial manual process and manual data was prone to errors and possible manipulation\. Applicants can now use reliable payment methods, such as mobile money with real time verification and reporting\. In addition, it now takes HESLB a maximum of four weeks to process a downloaded online application, compared to up to three months in the past\. HESLB student’s loan recovery had also improved to 35% by November 2015 from 5\.6% in December 2007, against a target of 80% by January 2016\. However, this target may not have been practical owing to the fact that Tanzania does not issue national identity cards, making it very difficult for HESLB to trace the students once employed\. Rwanda, Kenya and Uganda mainly uses the identity card numbers to trace students with loans who are employment\. Figure 4 below shows dramatic improvement in loan recovery over five years, although the project’s 80% target was not met\. 19  Figure 4: HESLB loan repayments 2006/2007 to 2011/2012 Source: HESLB, 2012 Improvements in loan recovery, and an efficient loan system, has enabled the HESLB to mobilize additional resources and increase loans to a growing number of needy students\. The improved loan system has also facilitated better targeting and improved means-testing, thus helping HESLB to plan, conduct realistic projections and plan for resources\. The Tanzania Education Authority (TEA) benefitted from relevant staff trainings in areas such as planning, finance, M&E, resource mobilization and loan administration\. In addition, TEA conducted an impact assessment of its previously funded projects in June 2012\. The assessment informed TEA’s new approach to proposal evaluation, resource mobilization, and allocation of loans to education institutions, as well as recovery of these soft loans\. TEA has reduced the period for processing requests for funding from 21 days to 7 days, and the loan recovery rate has increased from 36% to the current 79%\. TEA will be the skill fund manager for the proposed ESPJ project\. TEA is still implementing the assessment’s recommendations\. A National Skills Development Strategy (NSDS), for 2016-2026, and an accompanying implementation plan for 2016-21 was developed and endorsed by MoEVT through support from the Project\. This is Tanzania’s first National Skills Strategy and is referenced in the recently adopted Tanzania Five Year Development Plan (FYDP II) 2016-2021\. The NSDS aims to put in place a set of strategic system level reforms, while using innovative, competitive financing mechanisms to increase impact and accountability of skills training provision\. The strategy is relevant and of high quality\. Five consultancy studies informed the skills needs\. Private sector, training providers and international experts participated in the strategy’s formulation, which is benchmarked against international standards including the Bank’s SABER-Workforce Development tool\. 20 3\.3 Efficiency The overall project’s Net Present Value is estimated at about 2\.3 million USD with a discount rate of 7\.6 percent, and an Internal Rate of Return of 36\.5 percent (see Annex 3 for details)\. These results represent even higher net returns to higher education investment than those indicated at project appraisal, due to most project outcomes exceeding targets\. The project is likely to have generated greater returns than those captured in this economic analysis\. Economic studies have shown that educational investments can provide economic benefits to society that are greater than the sum of its benefits to individuals\. By accelerating innovation, technology transfer, and scientific discovery, for example, education can help boost economic growth, leading to poverty reduction and shared prosperity\. In addition, the World Bank has brought global knowledge and expertise through project studies and activities\. For this project, Economic benefits are measured in terms of the wage premium of graduates from tertiary education institutions relative to wages of graduates from secondary institutions\. Data used in the analysis comes from project documents, and from the National Panel Survey (NPS) of 2012- 2013\. As indicated earlier, an individual with a university degree and paid employment earned about 2\.5 times the earnings of one with an upper secondary degree on average, and is likely to be employed (80%) in a paid job\. Given an internal rate of return of 36%, the overall economic efficiency is considered high\. 3\.4 Justification of Overall Outcome Rating The overall outcome at ICR is rated moderately satisfactory, based on the weighted evaluation presented in Table 6 below\. Generally, the Project played a major role in the Country’s tertiary education subsector, and laid the required foundations for further investments\. To appreciate the Project’s contribution, it is important to recognize the very low base that the investment was starting at; the Project was the largest public investment in higher education in Tanzania in more than three decades\. • The Project’s objectives are highly relevant to the context and developmental challenges of Tanzania and well-aligned to its development needs, particularly for the required skills in key economic growth sectors\. • Its design was initially substantially relevant, however with a greater focus on strengthening systems for larger impact and more sustained outcomes at the stage of Additional Financing, the design was strengthened and became highly relevant for Tanzania’s needs\. • There were initial delays in implementation which compromised the Project’s ability to achieve outcomes with respect to increasing the quality and quantity of HEI graduates in the first phase\. Progress picked up after that with performance in achieving the quantity related outcome becoming highly satisfactory and exceeding targets by Project closing\. There were minor deficiencies in achieving the quality outcomes reflected mainly in the beneficiary feedback on quality of HEIs\. • The third PDO to strengthen higher education systems was introduced in the third phase and was achieved fully\. • A single efficiency analysis was conducted for the project which found its performance highly satisfactory\. 21 In summary, the Project was able to achieve its development objectives as evidenced by the performance against its original and revised PDO indicators discussed in the sections above\. Project investments, laid a solid foundation for further improvements in quality of higher education, through strengthening of the key higher education agencies for improved service delivery and enhanced regulation of education and training\. Furthermore, the Project laid the needed foundation for the newly approved ESPJ operation through support for development of the endorsed National Skills Strategy and operational plan; formulation of the FFF operational manual; and enhanced institutional capacity at TEA\. Table 6: Weighting of Original and Revised PDOs Phase 1 (2008-2012) Phase 2 (April 2012-2014) Phase 3 (July 2014-2016) Relevance Substantial High High Objectives High High High Design Substantial Substantial High Efficacy Substantial Substantial High PDO1 Substantial High High PDO2 Modest Substantial Substantial PDO3 n/a n/a High Efficiency High Outcome Rating Moderately Satisfactory Moderately Satisfactory Satisfactory Rating value 4 4 5 US$ million disbursed 74\.42 25\.58 15 % disbursed 64\.71 22\.24 13\.05 Weighted value 2\.59 0\.89 0\.65 Cumulative 4\.13 (MS) 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Poverty Impacts The central online admission system (CAS) at TCU has contributed to gains in equitable access, as it offers lower-income applicants opportunities for otherwise expensive multiple applications\. The CAS has provided substantial savings for applicants through a single application to multiple institutions: previously per-student application costs were limited to a maximum payment of TSH 30,000 per student for consideration in 12 institutions\. As a result, direct application costs have been reduced, which included travel costs to the city, removing a barrier for the poorer segments of society from accessing higher education opportunities\. The HESLB has also increased students loans, thus facilitating access to higher education to needy students, through the introduction of the new version mean testing of mean testing\. In addition to the education background, the new version takes into account the following adjustments: orphanage; disability of the applicant and of the parents; and single parency\. 22 Gender Aspects, and Social Development About 38% of project beneficiaries were females enrolled in the priority disciplines, teacher education degree programs, and the retooling in-service program for secondary school teachers\. The project enabled access to quality science programs that are relevant to the market needs\. (b) Institutional Change/Strengthening The second project component supported strengthening of key higher education agencies and institutions responsible for higher education legal frameworks, quality assurance and other legislations\. These institutions included TCU, HESLB, NACTE, TEA, and COSTECH\. These have been discussed in earlier sections\. (c) Other Unintended Outcomes and Impacts (positive or negative) Not applicable\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops A student survey was conducted during 2012 and 2013 and in November and December 2015 as part of the project’s M&E exercise in seven STHEP recipient institutions\. The survey covered curriculum, human resources, and learning environment including infrastructure and ICTs\. The survey shows that overall student satisfaction improved from 41\.80% in November 2012 to 47\.10% by January 2015 meaning that on average half of tsh students of the supported institutions were satisfied with their quality\. Notably, the Open University of Tanzania had the highest student satisfaction level, at 53\.3%\. However, it is important to note that the initial baseline questionnaire was not very specific to STHEP interventions, and this could have impacted the survey results\. It is therefore not possible to rule out external factors affecting the results as these are not explained\. 4\. Assessment of Risk to Development Outcome The overall risk to development outcome is rated moderate for the following reasons: a) No significant risk to development outcomes is foreseen for project investments at the key higher education agencies such as TEA, TCU and HESLB\. The systems development are institutionalized and expected to be further enhanced by these institutions\. b) Financial risk to development outcome seems low\. For this financial year, the new Government has committed a significant increase to the tertiary education budget, including to the HESLB\. c) Governance is not expected to be a key issue, or affect the project’s development outcome after project closure\. The main project activities, were implemented at the University level, and at the higher education agencies, therefore a continued oversight on project investments is expected\. The HEIs, will continue to offer the degree programs supported within their regular mandates, and improve on the programs as required\. d) The HEIs, need to put in place an equipment and physical facilities preventive maintenance plan and or a specific maintenance budget\. e) The national skills strategy and the FFF operational manual will be implemented through the ESPJ project\. STHEP laid groundwork for the ESJP; the ESJP adopted the skills strategy as its program for support\. The FFF’s operational plan will be used in delivery of 23  the proposed ESJP skills fund\. Furthermore, some of the institutions strengthened by STHEP such as TEA, will support implementation of the ESJP\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry The Bank took adequate measures to ensure quality at entry\. Necessary analysis, in regard to human capital needs in Tanzania was carried out to ensure the priority disciplines respond to skills needs of key economic growth sector’s needs\. The project’s main focus areas, were informed by these needs\. The preparation of the project included consultations, through field visits and workshops, with beneficiary HEIs, private sector and policy institutions\. These institutions helped in identifying the priority areas of the economy that would be the focus of the project’s training areas\. Students and parents also participated through focused group discussions\. The project adopted a competitive procedure for qualifying the University’s subprojects in order to build on existing programs, and ensure ownership and sustainability\. A thorough analysis of the education sector was conducted to inform systemic gaps, particularly for the higher education subsector\. The project also supported preparation of graduate teachers, particularly in mathematics, sciences and languages in order to facilitate a qualified ‘pipeline’ for the priority disciplines at tertiary education level\. Investments in strengthening key higher education institutions and systems were also critical in laying a foundation for higher education reforms\. The project approach and design was based on good practices as well as lessons learned from various countries including Chile, Uganda and Argentina\. Implementation arrangements were spelt out as well as environmental and social requirements\. The required fiduciary procedures were also outlined\. For the STHEP-AF, the project paper had foreseen possibilities of some activities not being fully completed, for example operationalization of the FFF, weak M&E systems and inadequate capacities to timely deliver activities under the AF\. The risks for these aspects was rated substantial\. b) Quality of Supervision The project was supervised regularly as required\. The project’s implementation status reports (ISRs) and aide memoires, adequately reported on project outputs, implementation challenges, and recommended remedial measures\. The aide memoires and ISRs, reflected candid dialogues about project challenges and assessment of performance\. Concrete recommendations to address emerging implementation issues were discussed and documented\. For example, the Bank supported ‘in-house’ civil works designs to address procurement delays\. In addition, the supervisions reviewed indicators, and recommended adjustments through restructurings as necessary\. Due attention was given to the capacity of MoEVT and the project staff as concerns project delivery\. The STHEP-AF facilitated completion of outstanding activities, and to further ’push’ reforms for impact on the PDO\. These demonstrated a ‘close’ watch by the Bank on the 24 achievement of the PDO’s indicators\. Fiduciary clinics were conducted for the project staff and the implementing institutions\. (c) Justification of Rating for Overall Bank Performance Overall Bank performance is rated satisfactory\. The team critically looked into project issues, outlined relevant risks and constraints, and monitored these to ensure satisfactory project delivery\. The Bank team proposed relevant mitigation measures and recommendations to the Ministry, and the project teams in order to address emerging issues\. For example, the ‘in-house’ civil works designs approach cited above, and hiring of consultants for capacity building, and to ensure that the project was adequately monitored and data availed\. 5\.2 Borrower Performance (a) Government Performance Government performance was satisfactory, taking into account the context\. MoEVT was learning by doing; adopting a paradigm shift in project implementation, where project funds were directly disbursed to the implementing institutions, for project execution\. The main project components, component 1 and 2, were implemented by competitively selected Universities and key higher education agencies\. Government, in this case MoEVT, provided project oversight, through the project steering committee\. It was a daunting task for MoEVT, with a lean team, to closely monitor each of the implementing institutions, and ensure these report back as required\. Although there were challenges in the startup phase of the project given the lack of experience with project management (including fiduciary aspects) due mainly to the absence of any support to the sector in three decades, there was strong commitment to achieving results under the project and performance picked up significantly in the second half of the project with completion of all planned activities leading to satisfactory achievement of objectives\. The Government is fully committed to the initiated reforms; Government allocation to HEIs is expected to increase in the coming FY\. In addition, the national skills strategy is referenced in the Five Year Development Plan 2016-2021\. The proposed ESPJ project builds on the foundations laid by STHEP, thus demonstrating Government commitment to continued investment in education and training, and the importance of this project investments\. (b) Implementing Agency or Agencies Performance Performance of the Implementing Agencies was initially moderately satisfactory, but improved to satisfactory by project closure\. Again, due to the lack of experience with project management requirements, there were significant delays in the initial phases of implementation when significant capacity support was required to undertake project activities\. The institutions were also not adequately reporting to MoEVT on project progress and challenges on the ground as required\. The institutions however, improved implementation after the fiduciary training and close follow up by the MoEVT project staff\. The majority of the Universities have demonstrated ownership of the project investments, and are eager to scale up enrollment and research by utilizing the staff trained and facilities upgraded\. (c) Justification of Rating for Overall Borrower Performance Overall Borrower performance is rated overall satisfactory given the high level of commitment to sector reform and ownership of project activities which is reflective in the continued push for 25 building sector capacity and performance for improves results under ESPJ\. The borrower focused on institutions building and strengthening to lay a foundation for reforms and create a base for further investments in higher education\. The borrower was able to bring together various stakeholders from the industry and line ministries to develop the first National skills strategy\. The borrower was also implementing a new approach to project execution in the Higher Education sector for the first time\. Although initial delays were experienced, the Government eventually learned by doing, with support from the Bank, and delivered the project\. 6\. Lessons Learned The following four key lessons were learned from the project: a) A systems approach focused on integrating various investments in a sector for consolidated expansion can lead to bigger impact than the sum of its investments\. The Project began with tackling an immediate problem of addressing the need for highly skilled labor for Tanzania’s growth by contracting Universities to increase the supply\. However it soon realized that it was important to invest in related systems for quality assurance and efficiency of the overall sector to multiply gains that the individual universities were making\. b) The Project’s strategy of investing in improving quality at the secondary level although its primary focus was on higher education, paid off\. This was critical in ensuring a quality ‘pipeline’ for the needed number of HE graduates, particularly in STEM disciplines\. The project demonstrates how a higher education project can therefore bring a systematic improvement to the whole education system through improving teacher quality\. c) The Project adopted a competitive selection of the implementing universities through a request for proposals\. This enabled the Project to finance these HEIs, through sub grants, based on comparative advantages which included the institution’s overall mandate for ownership and sustainability, and build on existing infrastructure and faculty to strengthen this\. d) Performance varied across the implementing institutions, particularly at the beginning of the Project due to inherent variances in capacity of the institutions\. A thorough capacity assessment of the institutions with respect to the capacity needed to implement their proposals would have assisted in targeted capacity support to the HEIs to prevent the slow start up\. The Project did however provided intensive support during implementation which led to dramatic improvements in quality of the HEIs including selection of one as an Africa Center of Excellence through a regional competition\. This demonstrates the importance of regular and technically strong support from the Bank to help promote achievement of outcomes\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies No major issues were raised by the borrower\. The borrower’s ICR, indicated that overall, STHEP was a highly relevant project which addressed crucial needs of the Tanzanian higher education sector, particularly in science, technology and innovation to meet the needs of key economic sectors\. The ICR notes that the project was generally well-implemented and created substantial desirable outcomes and lessons\. Most of the PDO and intermediate indicators were overachieved\. 26 The borrower’s ICR rated the project highly satisfactory\. A summary of the borrower’s report is provided in Annex 7\. (b) Cofinanciers Not applicable (c) Other partners and stakeholders Not applicable 27  Annex 1\. Project Costs and Financing a) Table 1: STHEP I Project Costs by Component (in USD Million equivalent) Sub-Project Appraisal estimate Actual % appraisal (USD) Estimate(USD) Component 1A: Investments in Priority Disciplines for Economic 47\.3 Growth 47\.30 47\.30 Component 1B: Expanded Capacity for Teacher Preparation, and 35\.0 35\.0 35 for Graduate Studies in Education Component 2A: Strengthening Key 8\.50 8\.50 8\.5 Higher Education Agencies and Institutions Component 2B: Investment in System- 7\.0 7\.0 7 wide ICT Development and Libraries 2\.2 2\.2 2\.2 Total 100,000,000\.00 100,000,000\.00 100 (b) Financing Table 2: Sources of Funds Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Cofinancing Appraisal (US$ millions) (US$ millions) Borrower International Development 100 100 100% Association (IDA) 28 (b) Table 3: STHEP I Project Costs by Component (in USD Million equivalent) Sub-Project Appraisal estimate Actual % appraisal (USD) Estimate(USD) Component 1A: Investments in Priority Disciplines for Economic 3\.71 3\.71 24\.73 Growth Component 1B: Expanded Capacity for 5\.66 5\.66 37\.73 Teacher Preparation, and for Graduate Studies in Education Component 2A: Strengthening Key 4\.63 4\.63 30\.87 Higher Education Agencies and Institutions Component 2B: 1\.0 1\.0 6\.67 Investment in System- wide ICT Development and Libraries Total 15\.0 15\.0 100% (b) Financing Table 4: Sources of Funds Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Cofinancing Appraisal (US$ millions) (US$ millions) Borrower International Development 15 15 100% Association (IDA) 29  Annex 2\. Outputs by Component 1\. Component 1A: Investments in priority disciplines for economic growth • At December 2015, 9738 students were enrolled in programs mainly sciences and technology • About 273 new courses (not previously offered) in science and technology disciplines were introduced 2\. Component 1B: Expanded capacity for teacher preparation and for graduate Studies in education • In November 2015 , 5702 new degree-holding secondary school teachers graduated each year qualified to teach (a) mathematics (b) sciences (c) English • In December 2015, 6215 new degree-holding teachers hired in secondary schools each school year, qualified to teach: (a) mathematics; (b) sciences; and (c) English\. • Retooling program established and 1920 secondary school teachers trained 3\. Component 2A: Strengthening key tertiary education agencies and institutions • In November 2015 about 1397 new scientific publications submitted • A strategy and operational plan for skills development in priority growth areas developed • FFF operational plan developed and adopted • Computerized admissions at the Tanzania commission for universities in place\. • Capacity building at higher education students loan board helped achieve an increase in proposition of students repaying students loans on time from 5\.6% to 50% since 2007 • Networking and connectivity among 28 institutions realized • Tanzania’s first National Qualifications Framework developed\. This will informed through relevant study tours • An online centralized admission system established at TCU http://www\.tcu\.go\.tz 4\. Component 2B: Investments in System-wide ICT and Libraries\. • Mechanisms for using ICT established in January 2016 and 28 institutions connected and a few network\. 30  Annex 3\. Economic and Financial Analysis The economic analysis below updates the economic analysis conducted at project appraisal\. Costs and benefits are estimated for Component 1A (Investment in Priority disciplines), 1B (Strengthening Key Higher Education Agencies and Institutions) and 2B (Selective Investments in Systems-wide ICT development and Libraries)\. As mentioned in the economic analysis at project appraisal, Component 2A is for capacity development to strengthen higher education institutions, and, it is difficult to apply standard cost-benefit analysis to this component\. The cost-benefit analysis is based on calculations of the present values of economic costs and economic benefits\. Economic costs include the project costs of components 1A, 1B, and 2B, household expenses (school registration fees, uniforms and sport clothes, books and school supplies, costs to and from school, boarding fees and other expenses), and opportunity costs\. Economic benefits are measured in terms of the wage premium of graduates from tertiary education institutions relative to wages of graduates from secondary institutions\. Data used in the analysis comes from project documents and from the National Panel Survey (NPS) of 2012-2013\. There are likely to be social benefits from the project, although, as at project appraisal, this economic analysis abstracts from calculation of social benefits due to data limitations\. Enrolment and graduates\. Table below reports the number of enrolment and graduates under the project\. Table 5\. Number of enrolment and graduates under project FY FY FY FY FY 2010/11 2011/12 2012/2013 2013/2014 2014/2015 T otal number of students enrolled during FY under project 7,486 7,372 13,397 8,294 9,738 T otal number of graduates during FY under project 2,113 2,113 5,084 3,579 6,698 Costs\. Actual project disbursement and procurement of goods and works under components 1A, 1B and 2B are reported in Table below\. Household private costs for tertiary education in 2012- 2013 are estimated to be about 1,600 USD, based on the NPS of 2012-2013\. Opportunity costs are the loss of earnings due to enrolment in tertiary education\. In 2012-2013, an individual with an upper secondary degree and paid employment earned about 3,200 USD annually on average, and about 70 percent of upper secondary degree holders were employed in a paid job\. 31  Table 6\. Project disbursement and procurement FY FY FY FY FY Amount in USD 2010/11 2011/12 2012/13 2013/14 2014/15 T otal amount disbursed during FY Component 1 A 4,327,375 12,235,805 19,304,215 909,243 14,223,362 Component 1 B 2,666,154 6,201,700 10,426,078 2,982,497 18,383,572 Component 2 B 452,262 478,797 450,851 46,164 6,571,926 1A + 1B + 2B 7,445,790 18,916,302 30,181,144 3,937,904 39,178,860 T otal procurement amount spent on goods (equipment, furniture, vehicles, books etc) and works (construction and facilities) during FY 2,696,916 10,545,940 23,984,195 1,811,128 6,916,996 Benefits\. In 2012-2013, an individual with a university degree and paid employment earned about 8,200 USD annually, about 2\.5 times the earnings of one with an upper secondary degree on average, and about 80 percent of university degree holders were employed in a paid job\. Assumptions\. As in the economic analysis at project appraisal, salaries of graduates under the project are assumed to increase by 2 percent annually, the average retirement age is assumed to be 60 years, and no unemployment period between graduation and retirement is assumed\. Also as used in the economic analysis at project appraisal, the exchange rate is set at US$1 = TZS 1,600; the discount rate 7\.6 percent; and the inflation rate 5\.6 percent\.
 Limitations\. Currently available data does not permit analysis for specific disciplines such as science, technology and engineering, and does not permit analysis of social benefits\. Economic analysis results\. The project’s Net Present Value is estimated to be 2\.3 million USD and Internal Rate of Return 36\.5 percent\. These results represent higher net returns to investment than those estimated at appraisal, due to project outcomes exceeding targets\. 32  Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) STHEP Task Team members Nam e Title Xiaonan Cao Team Leader Pascal Tegw a Procurement Specialist Financial Management Michael Eriu Okuny Specialist Anne Muuna Kisumo Team Member Edeltraut Gilgan-Hunt Team Member Edith Ruguru Mw enda Team Member Eva K\. Ngegba Team Member Gisbert Joseph Kinyero Team Member Henry Forero Ramirez Team Member Krishna Pidatala Team Member Kristine Schw ebach Safeguards Specialist Kristine Schw ebach Team Member Luis M\. Schw arz Team Member Maria Concepcion J\. Team Member Cruz Modupe A\. Adebow ale Team Member Nobuyuki Tanaka Team Member Norbert O\. Mugw agwa Team Member Parminder P\. S\. Brar Team Member Rest Barnabas Lasway Team Member Richard R\. Hopper Team Member Serigne Omar Fye Safeguards Specialist Serigne Omar Fye Team Member Sophie Nelly Rabuku Team Member (b) STHEP Staff Time and Cost Source of Funding WPA Plan Com m itm ent Am ounts Labor Travel Other Total BB / Bank Admin fund 0\.00 7,440\.00 63,259\.60 10,905\.31 9,337\.87 83,502\.78 BB 0\.00 7,440\.00 63,259\.60 10,905\.31 9,337\.87 83,502\.78 TF / PHRD STAFF GRANT SUP 84,150\.00 0\.00 0\.00 0\.00 0\.00 0\.00 TF 84,150\.00 0\.00 0\.00 0\.00 0\.00 0\.00 Grand Total 84,150\.00 7,440\.00 63,259\.60 10,905\.31 9,337\.87 83,502\.78 33 (a) STHEP-AF Task Team members Nam e Title Cornelia Jesse Team Leader Simon B\. Chenjerani Procurement Specialist Chirw a Financial Management Michael Eriu Okuny Specialist Team Member Nobuyuki Tanaka (b) Staff Time and Cost Source of Funding WPA Plan Com m itm ent Am ounts Labor Travel Other Total BB / Bank Admin fund 0\.00 0\.00 63,259\.60 10,905\.31 16,777\.87 90,942\.78 BB 0\.00 0\.00 63,259\.60 10,905\.31 16,777\.87 90,942\.78 TF / PHRD STAFF GRANT SUP 84,150\.00 0\.00 0\.00 0\.00 0\.00 0\.00 TF 84,150\.00 0\.00 0\.00 0\.00 0\.00 0\.00 Grand Total 84,150\.00 0\.00 63,259\.60 10,905\.31 16,777\.87 90,942\.78 34  Annex 5\. Beneficiary Survey Results 6 The beneficiary surveys were the student satisfaction surveys; the data files for each institution is available\. The student satisfaction survey, was designed to compute the STHEP quality indicator - per cent of students who are satisfied with quality in science and technology degree programs\. The surveys were introduced in 2012 and 2013 and carried out in all the beneficiary Universities to establish a baseline for quantifiable quality improvement by STHEP\. Both undergraduate and postgraduate students in science, technology and education fields were selected from among the academic units that were targeted for, but yet to receive STHEP project intervention\. The baseline established the general mean percentage of students who were satisfied with the quality in science and technology degree program as 40\.8%\. The surveys assessed satisfaction with the 5 facets: adequacy, availability and quality of teaching staff and technical staff; relevance and organization of the program of study; adequacy, availability and quality of learning infrastructure; adequacy, accessibility and quality of ICT facilities; distance and online learning; and field related work\. The same survey approach, with slightly modified tools was conducted in November – December, 2015 to establish the effects of STHEP on students’ satisfaction with the teaching and learning environment\. The survey established the overall mean level of satisfaction with the teaching and learning environment in science and technology degree programs as 47\.1 % which was slightly higher that 40\.8% obtained by the baseline surveys of 2012/2013\. The tables below present details of the survey findings\. Table 7: Students’ awareness of STHEP per institution 6Summarized from borrower’s ICR April, 2016 and the consultancy report on quality assessment based on students satisfaction baseline survey in science, technology and education degree programmes in higher education institutions, October 2013 35  Table 8: Level of improvement in teaching and learning processes Table 9: Summary of mean satisfaction percentages Annex 6\. Stakeholder Workshop Report and Results N/A 36  Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR I\. Background STHEP was developed to address both the immediate and longer-term human resources needs of Tanzania through production of more and better qualified graduates for specified priority disciplines and through strengthening the higher education system as a whole\. The project was closely aligned with the overarching policies and strategic frameworks of the country that have been driving performance and investments in the various economic sectors such as agriculture, mining and industry and commerce\. These frameworks principally include the Tanzania Development Vision 2025, operationalized by the National Strategy for Growth and Reduction of Poverty I&II (popularly known as MKUKUTA I&II) and the First Five Year Development Plan (FYDP I) for 2011/12 to 2015/16\. And more recently the frameworks included the Big Results Now (BRN) initiative\. The emphasis of STHEP on science and technology is especially strategic and relevant to the goals and aspirations of Tanzania\. Science, Engineering, Technology and Innovation are paramount for technology‐led growth\. Countries with strong abilities to create, distribute, and utilize scientific and technological knowledge are better able to succeed in a competitive global market\. The higher and technical education sector is crucial in enhancing Tanzania’s capacity to apply knowledge in the various economic and social sectors\. In this, the country has made some notable progress in setting an appropriate institutional framework for tertiary education\. II\. Overall Project Objectives The original PDO of STHEP I was “to increase the quantity and quality of higher education graduates, with special emphasis on science, technology and education, through improved learning environment\.” The PDO was to be achieved through two broad areas: • Increasing capacity to deliver specific degree programs of higher priority; and • Building institutions and systems to support higher education sector\. The original STHEP-I PDO was slightly modified to cater for the additional project\. The revised PDO was (i) to increase the quantity and quality of higher education graduates, with special emphasis on science, technology and education; and (ii) to lay the foundations for improved responsiveness of tertiary education to the labor market\. STHEP-AF was conceived to (i) implement the remaining activities under STHEP which could not be fully completed due to the credit loss; (ii) pilot two programs to sustain the momentum of key reforms in science teacher training and performance-based financing in higher education; and (iii) develop a strategy and operational plan for human capital and skills development at the tertiary level in priority growth areas\. 37 III\. List of Project Components STHEP I comprised of 4 components - implemented in a total of 15 higher education institutions , agencies and ministries: • Component 1A: Investments in Priority Disciplines for Economic Growth • Component 1B: Expanded Capacity for Teacher Preparation, and for Graduate Studies in Education • Component 2A: Strengthening Key Higher Education Agencies and Institutions • Component 2B: Investment in System-wide ICT Development and Libraries IV\. Summary of Project Achievements • 398 academic (teaching) staff received MSc and PhD studies in priority science, technology and education\. • Teaching and learning facilities in form of lecture theatres, laboratories, libraries etc\. were created for over 47,000 students and office space created for over 1700 staff in 7 public universities • Online Loan Application System (OLAS) was established at the Higher Education Student Loan Board (HESLB) enabling a total of 115,322 high school leavers to apply for loans online as of May, 2013\. • There was increased enrolment of science and technology students from 3,353 in 2007 to 9,738 in 2014/15\. • The number of student workstations in teaching laboratories for science and technology increased from 1,025 in 2007 to 3,975 in 2014/15\. • A Central Admission System (CAS) was established at TCU which enabled applications for admission to university education to increase from 40,479 in 2010 to 52,537 applicants in 2014, while 90% of application costs have been reduced from applicants\. • New degree-holding teachers hired in secondary schools each school year, qualified to teach: (a) mathematics; (b) sciences; and (c) English increased from 181 in 2007 to 5,702 in 2014/15, exceeding the project target of 1,039 • Connection of 28 university and college campuses to the National ICT fiber backbone\. • Pilot retooling of 2000 secondary school science teachers in teaching of difficult topics in Biology, Chemistry, Mathematics and Physics carried out in April 2015, where 1920 out of 2000 did attend the training (96%), through a pilot project in 15 regions of Tanzania through 4 teacher training Universities namely MUCE, DUCE, OUT and SUZA\. • National Skills Development Strategy and Action Plan was completed\. V\. Evaluation of Project Objectives and Design Relevance of Objectives, Design and Implementation is rated Highly Satisfactory\. The project had strategic linkages with the critical national need for skills in a rapidly expanding Tanzanian economy and the demand from the rapidly growing number of students from primary and secondary education following the success of the Primary Education Development Program (PEDP) and Secondary Education Development Program (SEDP)\. There was strong alignment of STHEP 1 with and integration into other national development programs/strategies (PEDP, SEDP, 38 Higher Education Development Programme (HEDP), Tanzania’s Vision 2025, and Big Results Now (BRN) Initiative\. Generally, the design of STHEP I and STHEP-AF was highly relevant to the objective of project on the basis of the following observations: • The selection of beneficiary institutions was carefully done to ensure the ones that will create the most impact from the support\. The selection and approval of sub-projects at the level of beneficiary institutions in Component 1A focused on the core issues facing the sector, • For Component 1B sub-projects were required to “integrate greater quality and relevance in teacher education, while also promoting improved math and science education and developing graduate fields in education research and policy\.” • For Component 2A the emphasis was on capacity building initiatives which were “consistent with the policy making mandate of the specific institutions\.” • For Component 2B, the priority was on interventions which enhanced system wide integration, effectiveness and responsiveness in access to electronic media and information to support the core mission of higher education institutions\. VI\. Evaluation of Implementation Performance and Key implementation challenges The overall basic project implementation structure was supportive to the project’s success\. In particular, the project utilized the same MoEVT structure but appointed an overall project coordination unit (headed by the National Project Coordinator) to oversee the day-to-day activities of the project\. The designed structure also included an Implementation Committee, chaired by the Director of Higher Education with Institutional Project Coordinators (IPC) as members and the STHEP NPC as the Secretary\. This has been one of the active elements of the project structure and certainly quite useful\. At the level of the implementation institutions, the designed structure had the appointed IPCs to have overall responsibility for managing the projects in the respective institutions\. A small internal technical group, assisted the IPC with participants designated on an ad hoc basis, depending on the nature of the sub-component and on the stage of development of the implementation plan\. The implementation structure also envisaged the need for strengthening implementation capacities for example procurement\. The project also benefitted greatly from the WB staff who were particularly dedicated for providing support for the project implementation\. Implementation was constrained by the following challenges: • Lack of an upfront & clear specification of the required qualifications and attributes of coordinators and members of the various committees and supported with suitable capacity building plan for these roles\. • Lack of a structured ICT-mediated project decision support system for quick submission of requests and approvals\. 39 • Lack of a comprehensively defined M&E framework with supporting tools and M&E expert at the outset of the project\. VII\. Overall Government Performance (covering both quality at entry and quality of supervision) Rating: Highly Satisfactory The Government as the Borrower demonstrated very satisfactory performance during the preparation of the project\. It was strongly committed to the objectives of the project\. It did well in terms of preparation of the requisite technical reports and involvement of stakeholders\. This ICR is of the position that the Government implemented most of its responsibilities for the project reasonably well\. The MoEVT was seriously involved\. The government provided staff from the implementing institutions and met their salaries throughout the life of the Project\. The government provided also office space for the activities of the project\. All main Government approvals related to the project were obtained and without major delays\. Financial procedures were well-followed and pertinent financial reports prepared and made available in good time for periodic review\. VIII\. Overall World Bank Performance (covering both quality at entry and quality of supervision) Rating: Highly Satisfactory The Bank's performance during the implementation of STHEP was satisfactory\. It made sure that adequate financial and human resources were made available for supervision, mid-term review and stocktaking exercises\. During the tenure of the project, several supervision missions, with an average of about two missions per year, were made\. This clearly shows that the project was closely and reasonably supervised and monitored by the Bank\. Following these missions, Aide-Memoires were timely prepared and circulated to all key parties\. These aide-memoires were quite detailed and very useful in pointing out critical outstanding issues, solutions and actions strategies\. The government and the implementing agencies found them to be quite useful and facilitated their response to the project implementation problems in a timely manner, in conformity with Bank procedures\. The Bank is on record to have regularly worked with the Government and the Implementing Ministry in addressing observed delays in implementation\. Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders N/A 40  Annex 9\. List of Supporting Documents a) Attaining Middle Income Status – Tanzania: Growth and Structural Transformation Required to Reach Middle Income Status by 2025”, International Growth Center, London School of Economics, 2010\. b) Bank and MoEVT STHEP letters\. c) HESLB Presentation, December 2012\. d) Final Report of the STHEP Evaluation Submitted to the MOEVT and World Bank, 2014\. e) MoEVT Borrower’s ICR, April 2016\. f) MoEVT STHEP Retooling Project :Impact Assessment Report of Retooling Training content, June, 2015\.MoEVT, Quality Assessment Based on Students’ Satisfaction Baseline Survey in Science, Technology and Education Degree Programmes in Higher Education Institutions, 2013\. g) MoEVT, Statistical Data Report: Quality Assessment Based On Students’ Satisfaction Survey In Science, Technology And Education Degree Programmes In Higher Education Institutions, 2016\. h) MoEVT, Design and Implementation of Monitoring and Evaluation Framework for Concluding STHEP I Report, February 2014 i) MoEVT, STHEP-AF\. Impact assessment report of Retooling training, June 2015 j) MoEVT, STHEP Project Implementation Plan, September 2008\. k) MoEVET First report of the STHEP evaluation ,July 2014 l) MoEVT STHEP and STHEP-AF Data Files\. m) Project Appraisal Report STHEP, 2008 n) National Strategy for Growth and Reduction of Poverty 2005 to 2010 (MKUKUTA)\. o) World Bank\. Skill Use, Deficits and Firm Performance in Formal Sector Enterprises\. Evidence from the Tanzania Enterprise Skills Survey, 2015 p) World Bank Enterprise Survey for Tanzania 2013\. q) The World Bank, Constructing Knowledge Societies: New Challenges for Tertiary Education, 2002\. r) Review and Evaluation of the Performance of Tanzania’s Higher Education Institutions in Science, Technology and Innovation, June 2011 s) STHEP Supervision missions Aide memoires\. t) STHEP Progress reports\. u) STHEP and STHEP-AF ISRs\. v) STHEP Additional Financing Paper, 2014\. w) STHEP Environmental and Social Safeguards audit Report, July 2014\. x) STHEP Financing Agreement\. y) Impact Assessment of TEA funded Projects, June 2012\. 41 42

REVIEW

P055573

Document of The World Bank Report No: 29316-GE IMPLEMENTATION COMPLETION REPORT (IDA-30400) ON A CREDIT IN THE AMOUNT OF SDR 3\.4 MILLION (US$4\.49 MILLION EQUIVALENT) TO GEORGIA FOR A CULTURAL HERITAGE PROJECT June 15, 2004 Environmentally and Socially Sustainable Development Sector Unit South Caucasus Country Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective June 3, 2004) Currency Unit = Lari (GEL) Lari (GEL) 1 = US$ 0\.52 US$ 1\.00 = Lari (GEL) 1\.92 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy DCA Development Credit Agreement IDF Institutional Development Fund LIL Learning and Innovation Loan M&E Monitoring and Evaluation NGO Non-Governmental Organization PAD Project Appraisal Document PIU Project Implementation Unit Vice President: Shigeo Katsu Country Director Donna M\. Dowsett-Coirolo Sector Manager Alexandre Marc Task Team Leader/Task Manager: Janis D\. Bernstein  GEORGIA CULTURAL HERITAGE PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 7 5\. Major Factors Affecting Implementation and Outcome 12 6\. Sustainability 13 7\. Bank and Borrower Performance 14 8\. Lessons Learned 18 9\. Partner Comments 19 10\. Additional Information 20 Annex 1\. Key Performance Indicators/Log Frame Matrix 21 Annex 2\. Project Costs and Financing 23 Annex 3\. Economic Costs and Benefits 25 Annex 4\. Bank Inputs 26 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6\. Ratings of Bank and Borrower Performance 29 Annex 7\. List of Supporting Documents 30 Annex 8\. Evaluation Report: Fund for Preservation of Cultural Heritage of Georgia 31 Annex 9\. Partner Comments: Ministry of Finance of Georgia 50  Project ID: P055573 Project Name: CULTURAL HERITAGE Team Leader: Janis D\. Bernstein TL Unit: ECSSD ICR Type: Core ICR Report Date: June 15, 2004 1\. Project Data Name: CULTURAL HERITAGE L/C/TF Number: IDA-30400 Country/Department: GEORGIA Region: Europe and Central Asia Region Sector/subsector: Other social services (71%); Central government administration (29%) Theme: Participation and civic engagement (P); Other financial and private sector development (S) KEY DATES Original Revised/Actual PCD: 11/20/1997 Effective: 05/18/1998 05/18/1998 Appraisal: 11/20/1997 MTR: 11/15/1999 02/28/2000 Approval: 02/13/1998 Closing: 12/31/2001 12/31/2003 Borrower/Implementing Agency: Government of Georgia/Fund for Preservation of Cultural Heritage of Georgia Other Partners: STAFF Current At Appraisal Vice President: Shigeo Katsu Johannes F\. Linn Country Director: D-M Dowsett-Coirolo Judy M\. O'Connor Sector Manager: Alexandre Marc James Christopher Lovelace Team Leader at ICR: Janis D\. Bernstein Thomas Blinkhorn ICR Primary Author: Wendy Schreiber Ayres 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The project's objective was to improve the management and promotion of Georgia's rich cultural heritage by: (a) testing approaches that could revive the once dynamic tourism industry, and (b) engendering social cohesion and national identity during the difficult economic transition\. The project would achieve this objective by financing work to restore four sites of significant historic importance (including work to prevent further deterioration of private homes); activities proposed by community groups and others to restore or preserve historical and cultural assets (including music, dance, and handicrafts) in danger of being irrevocably lost; and technical assistance to strengthen capacity of the project implementation unit to manage the project, build awareness of the public of cultural heritage, and strengthen the capacity of people to develop and implement site management plans\. The overall project objective was, and remains, appropriate\. It reflected the importance of Georgia's cultural heritage to both citizens of the nation and to people of the world\. Georgia is home to some 12,000 culturally significant monuments, and religious buildings, forts and walled cities, some dating to the last centuries B\.C\. Tbilisi, its capital city, protected from the development pressures that have changed the character of most cities in the rest of Central and Eastern Europe, still contains large neighborhoods dominated by traditional houses and shops\. Georgia also has a rich and unique history of music and literature that is a strong focus of national pride and identity\. At the time the project was conceived and prepared, the country had been independent from the Soviet Union for just six years\. Interest in the history and culture of Georgia was rising rapidly as citizens sought to recapture a national identity based on its diverse ethnic and cultural traditions\. The project's objective was also in line with the government's strategy of reviving tourism, a potentially important source of growth for Georgia\. According to government statistics, tourism and travel accounted for about 10 percent of GDP in 2002\. Tourism, along with the other economic activities, had collapsed 1 with the breakup of the Soviet Union, and revitalizing the industry by restoring and protecting cultural sites and by reviving traditional music, dance, handicrafts, and other artistic activities was, and still is, viewed as important to stimulating the economy as a whole\. Finally, the project was designed to help promote social cohesion in a country divided by conflict among various ethnic and political groups that threatened to tear the nation apart\. The project's objectives also supported the objectives the Bank's country assistance strategy (CAS)\. These were to promote economic growth and diversification, to strengthen public finance, to protect the environment, and to reduce poverty\. The project promoted economic growth by rehabilitating historic sites and revitalizing cultural traditions of interest to both Georgians and foreign visitors\. It helped to strengthen public finance by insisting on transparency and accountability in procurement and financial management of project-related expenditures\. It helped to improve environmental conditions in Tbilisi by encouraging the municipality to address the severe underground water problem, and in the other pilot sites, by supporting the development of environmental management plans\. It also helped to reduce poverty by stimulating development in the areas where it operated\. Finally, the project fit well within a broader program of Bank support to Georgia, which included a municipal infrastructure project and a social investment fund project, both of which aimed at revitalizing Georgia's cities and towns\. _____________________________________ 1 Statistics on tourism are very weak in Georgia and appear to capture not only tourists spending time in Georgia, but also lorries passing through Georgia transporting goods among neighboring countries\. - 2 -  The project was the first stand-alone cultural heritage project to be supported by the Bank\. Because of its innovative nature, a Learning and Innovation Loan (LIL) was used to pilot a variety of approaches to revive and protect cultural heritage\. The project was the first in the Europe and Central Asia Region to benefit from this Bank instrument, which was introduced in fiscal 1998\. 3\.2 Revised Objective: The objectives of the project were not formally revised during implementation\. The Development Credit Agreement (DCA), however, was amended three times\. The DCA was amended on July 22, 1998 to add operating costs to categories eligible for financing\. The DCA was amended on May 5, 2000 to revise procurement procedures, as recommended in the midterm review\. The DCA was amended on November 29, 2001 to reallocate proceeds of the Credit\. 3\.3 Original Components: The project comprised two broad components: (1) Investment (US$3\.57 million)\. This included two subcomponents: l Emergency Rehabilitation Program (US$1\.03 million)\. This subcomponent focused on preventing the permanent loss of both immoveable and moveable cultural heritage by financing activities such as stabilizing buildings in danger of collapse, microfilming and archiving old manuscripts, and recording traditional songs and dances\. The program was to provide as grants a maximum of US$75,000 to 2 community groups, nongovernmental organizations (NGOs), institutes, and others whose proposals were selected by the 52-member Georgian Cultural Revival Board through a rigorously transparent selection process\. The staff of the Fund for the Preservation of Culture Heritage of Georgia (hereafter referred to as the Fund), which was established under the IDF and became the project implementation unit (PIU), would provide technical assistance to the committee and to beneficiaries, screen proposals for presentation to the committee to ensure that they complied with the criteria, and monitor and evaluate their implementation\. l Pilot Priority Cultural Heritage Sites (US$2\.54 million)\. This subcomponent focused on comprehensively restoring the historic buildings, and monuments, and the surrounding areas of four important cultural heritage sites\. The sites¯Old Town, Tbilisi; the famous northern mountain town of defensive towers, Shatili; the walled town of Signaghi; and the ancient rock city of Uplistsikhe¯were chosen after wide consultation with stakeholders on the basis of their cultural significance; evidence of community commitment to help protect, manage, and maintain the site; and evidence of community willingness to consider piloting new approaches for financing site management and maintenance, including through the forming public-private partnerships and implementing measures to recover costs\. Funds were to be provided as grants to local authorities or community groups in accordance with a signed memorandum of understanding that would reflect a simplified plan, budget, and schedule for operation and maintenance\. The Fund would assist communities prepare the plans\. This subcomponent also included funds to rehabilitate private properties in Tbilisi and Signaghi officially designated as historic, called the Neighborhood Fund\. ____________________________________ 2 The subcomponent was originally titled the Emergency Rehabilitation Fund\. The name was later changed to avoid confusion with the Fund for the Preservation of Cultural Heritage of Georgia, the PIU for the project\. - 3 -  (2) Technical Assistance (US$1\.4 million)\. This component included five subcomponents: l PIU Support and Institution Building\. This supported and strengthened the PIU by providing technical assistance in areas such as project management, finance and administration, procurement, monitoring and evaluation, and engineering\. It also helped build capacity of the Ministry of Culture and other cultural heritage-related institutions by financing the participation of their staff in study tours and training sessions\. l Training and Study Tours\. This involved training of staff of the PIU, the Ministry of Culture and other cultural heritage institutes, municipal authorities, and community groups in project management, community mobilization, methodologies of economic evaluation, and others according to demand\. This subcomponent also included study tours to destinations in Western Europe to learn about their experiences in successfully preserving and promoting cultural heritage\. l Public Awareness Program\. This involved preparation of articles for magazines and newspapers, programs for radio and television, and brochures and information booklets designed to increase public awareness of the importance of cultural heritage and the activities of the Fund\. It also included funds to present photo exhibits, cultural fairs, seminars, the design and operation of a website, and the like\. l Integrated Conservation Master Plan, Old Town\. This involved preparation of a plan intended to guide future development in Old Town, Tbilisi\. The master plan would incorporate principles of planning in areas with important historical urban architecture and would involve economic and market analyses\. l Monitoring and Evaluation\. This supported the development of a management information system to be used to monitor implementation of the project and its impact\. This subcomponent would also support technical and financial audits, beneficiary assessments, and reports of independent evaluators\. Finally, it would support participatory monitoring by cultural heritage committees at the pilot sites\. The project was expected to be executed over three years\. Overall responsibility for project implementation rested with the Fund, which was constituted as an autonomous agency for this purpose through decree\. The Fund had gained experience with Bank procedures and project management by implementing the US$430,000 Cultural Heritage Initiative approved in 1996, financed by an Institutional Development Fund (IDF) grant, that had established the institutional foundation for the project\. The Cultural Heritage Initiative Board of Trustees¯established by decree in 1996 with the support of the IDF grant and comprising representatives of government agencies and NGOs¯was to facilitate coordination, provide policy guidance, and oversee implementation\. The Georgian Culture Revival Board would have a major role in evaluating and selecting proposals for funding under the ERP\. Groups whose proposals were approved were responsible for implementing the proposed activities\. The Fund would provide technical assistance and oversight\. Community cultural heritage committees, with the technical assistance of the Fund were to implement small-scale activities at the pilot sites\. The Fund was responsible for all procurement\. 3\.4 Revised Components: Project components were not formally revised during project implementation\. However, funds were reallocated to allow six competitions to be held for funding under the popular Emergency Repair Program (ERP), rather than the three originally envisaged\. The total cost of this subcomponent rose to US$1\.46 million from the originally envisaged US$1\.03 million\. - 4 -  The project closing date was extended twice\. The first extension to December 31, 2002 was granted to allow work in Tbilisi and Uplistsikhe to be completed\. Works in Tbilisi could not start until repairs of the underground water systems conducted by the Municipality of Tbilisi and the Municipal Development Fund were complete\. Moreover, an earthquake in November 2000 damaged the caves at Uplistsikhe, which required emergency reinforcement and delayed the start of the works\. The second extension to December 31, 2003 was given to permit work in Tbilisi to be completed\. Work had been delayed by bad weather last winter, an earthquake in April 2002, and unexpected difficulties in making arrangements for the temporary relocation of residents of the Erekle St\. caravansary\. 3\.5 Quality at Entry: Quality at entry is rated marginally satisfactory\. The project's development objectives were reasonably clear and appropriate, although too broad to allow measurement of the project's achievements\. They were consistent with the government's development strategy and the Bank's CAS\. The project aimed to rescue cultural heritage in danger of permanent loss--critical both for stimulating economic development and for preserving and re-creating a national identity\. The Bank's Quality Assessment Group did not assess the project's quality at entry\. The project design benefited substantially from discussions with other organizations active in preservation of cultural heritage in Georgia, including the Council of Europe, Getty Trust, World Monuments Fund, UNESCO, and the Soros Foundation\. It also reflected lessons learned from the implementation of the IDF grant and from the experiences of other countries with preservation of cultural heritage\. These included incorporating a demand-driven fund for emergency rehabilitation of cultural heritage among the project's components, undertaking social assessments at the pilot sites, establishing community cultural heritage committees to help design and implement activities at the pilot sites, and supporting activities to raise public awareness of issues related to cultural heritage\. The design also accounted for Georgia's limited experience with and capacity for implementing Bank-supported projects by using a autonomous PIU (that is, the Fund) to implement the project, staffed with many of the same people that had executed the IDF grant\. While the use of independent PIUs is often criticized for creating structures parallel to those of the government, most Bank-supported projects in Georgia are implemented by such PIUs to compensate for exceptionally weak government capacity\. The project also included substantial resources to develop human resources and to strengthen institutional capacity over time\. The design was consistent with the Bank's safeguard policies\. The project, classified environmental impact assessment category B, included funds for environmental analyses to be conducted at the pilot sites\. Building on work that the Bank undertook in preparation of the project, the design also took account of the severe underground water problems in Old Town, Tbilisi by ensuring that rehabilitation of infrastructure and buildings took place only after the problem was resolved\. The project included funds for the development of a resettlement and rehabilitation plan should the need for resettlement arise\. The project appraisal document (PAD) realistically appraised the risks the project would face\. In particular, it recognized that the risk of failing to mobilize resources for the operations and maintenance was substantial\. The PAD did, however, mistakenly consider as negligible the risk that counterpart funds might not be forthcoming, and as modest the risk that no agreement with occupants of the Erekle Street caravansary on temporary resettlement could be reached\. Credit effectiveness conditions¯depositing counterpart funding for the first year of the project (US$100,000) in a bank account, and completing and - 5 -  adopting the project operation manual acceptable to IDA--were appropriate given the government's poor track record in providing agreed counterpart funds for donor-financed projects and the need to have clear implementation arrangements prior to project launch\. Credit disbursement conditions that applied to financing of the renovation of the Erekle Street caravansary¯confirming that underground water problems were not an impediment to restoration, and completing a resettlement and rehabilitation plan acceptable to IDA¯were essential to ensure that project resources were not wasted and that the project complied with the Bank's safeguard policies\. A dated covenant that the PIU recruit four technical specialists (project management advisor, procurement advisor, financial expert, and monitoring and evaluation specialist) was also appropriate\. The design of the project was, however, weak in several ways\. First, the plans for community participation were underdeveloped\. Thus although the PAD states that resources for renovating pilot sites would be provided as grants to local authorities or community groups to implement subprojects, this was not implemented\. Second, the project design failed to pay adequate attention to issues of raising funds for operating and maintaining the project investments\. While it was envisaged that the project would support experiments with cost recovery techniques, the project designers appear to have been unaware that such experiments at public sites require a special decree before they can be carried out, an obstacle that ultimately blocked such experimentation\. Even where entrance fees can be charged, such as at museums, the low number of visitors at most sites and the laws that require revenues raised through such fees to be submitted to the central treasury mean that other methods of raising funds for operations and maintenance must be found\. Third, the project design lacked an economic analysis that might have revealed where resources could best be targeted\. For example, Shatili was selected as one of the pilot sites, despite being snowbound nine months of the year--not an area where tourism is likely to rise significantly in the near future (although Shatili is located near the Chechen border, it was considered a safe ecotourist destination at the time the project was designed)\. Although Shatili holds a special place in the hearts of Georgians because of its unique defensive towers, economic analysis may have shown whether the existence values alone could justify the use of public funds for renovations in a inaccessible village that is home to just 25 families, or whether the resources could be better spent elsewhere\. Disagreements among the Bank team that arose during implementation with regard to Sighnaghi's prospects for increased tourism also may have been avoided\. Fourth, the PAD did not present hypotheses that stated what questions were being explored through the project\. This is a serious omission, given that the purpose of a LIL is to understand the effectiveness of the various approaches being tried\. Although the project was prepared before clear guidance on the purpose and content of LILs had been prepared and the new template for LILs (which emphasizes their learning aspects) became available, more attention could have been paid to clearly articulating what the project designers expected to learn from the project and how the learning would take place\. Fifth, despite including a subcomponent in the project on monitoring and evaluation (M&E) and the contracting of an international consultant to help design an M&E system, the plan for M&E was poorly articulated\. Key performance indicators specified to measure impact were either too vague to be useful (incorporation of lessons learned through the project by government and communities in future efforts to preserve and promote cultural heritage), or would be difficult if not impossible to attribute to the project without the use of sophisticated econometric techniques (increase in number of tourists visiting the sites benefiting from the project, and increase in number of cultural heritage-related activities, such as the national music competitions, during the project life)\. The PAD lacked benchmarks or details of the tools that would be used to measure project impacts\. The PAD also failed to acknowledge that statistical - 6 -  capacity in Georgia is extremely weak, and to propose measures that would allow necessary information to be collected in the face of the weaknesses\. Finally, establishing a three-year time frame for implementing the project was too ambitious, especially considering its experimental nature\. All experiments require time to carry out, evaluate, redesign, retest, and reevaluate\. Successfully concluding several experiments simultaneously, as in this project, in just three years is not likely\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Achievement of the objectives of the project is rated satisfactory\. While the project's objectives were broad, which makes measuring achievements difficult, the project has contributed to permanently improving the management and promotion of Georgia's cultural heritage by demonstrating the value of a variety of approaches to protecting and rehabilitating cultural heritage, forging ties with private benefactors and international groups, and taking the lead in formulating key legislation designed to protect historic properties and to encourage private investment in preservation\. Importantly, the project stimulated economic development in areas where it operated\. Especially noteworthy is the project's impact on the revitalization of Old Town, Tbilisi\. By restoring facades, resetting the cobblestone pavement, installing street lights, and landscaping public parks in Old Town, Tbilisi, the project has encouraged private investors to renovate on their own several of the city's most important old buildings\. Many of the workers executing these private developments received their training working on project-financed activities\. Rehabilitation of the area has also led to the opening of hotels, cafés, restaurants, shops, and galleries in the area and to an influx of residents and offices\. This has led to a significant increase in property values in the historic district\. The project generated widespread public awareness throughout the nation of the importance of cultural heritage and of actions that community and other groups can take to protect and rehabilitate it\. By employing many workers with special skills, it helped to revitalize knowledge of crafts and workmanship that will be used in future preservation efforts\. Finally, the project assisted in strengthening the capacity of the Ministry of Culture, institutes, NGOs, community groups, and others interested in protecting cultural heritage by providing technical assistance and training in preparing proposals and implementing projects\. Finally, it helped to build the capacity of cultural heritage committees to prepare and implement participatory community action plans\. 4\.2 Outputs by components: Component 1: Investment (US$3\.7 million) ERP (US$1\.03 million revised to US$1\.46) Outputs of the ERP are highly satisfactory\. The program helped to protect from further deterioration or permanent loss over 100 cultural and historic treasures through 58 projects, including churches, monuments, frescoes, mural paintings, archeological sites, forts, manuscripts, folk music, photos, films, and dances\. The ERP supported projects in all regions of the country through a competitive process that is regarded by the cultural heritage community of Georgia as transparent, fair, and effective\. Both the eligibility criteria and the process through which proposals are selected have contributed to the success of the program\. Among the eligibility criteria are that projects can cost a maximum of US$75,000 and that no single group can submit more than one proposal per competition\. This ensured that resources were - 7 -  available to fund a large number of projects sponsored by diverse groups\. The popularity of the program led to an expansion from three competitions to six competitions\. Perhaps surprisingly, all 58 proposed projects were completed, most on schedule and within budget\. This is due in large part to the technical assistance and supervision of implementation offered by the Fund to the project sponsors\. Noteworthy is that several projects in the regions under dispute were implemented jointly by members of different ethnic groups\. For example, subprojects in Javakheti and in South Ossetia (Ikorta, Azmana, Tighva) were implemented and are being maintained by people of various ethnic groups and religions\. Observers believe that this has helped to strengthen social cohesion and a sense of national identity in such areas\. Pilot Priority Cultural Heritage Sites (US$2\.54 million, revised to US$2\.08 million) Outputs of the pilot priority cultural heritage sites subcomponent are satisfactory\. The component rehabilitated urban spaces, parks, historic homes, and museums in Tbilisi and Sighnaghi; prepared for visitors the ancient cave city of Uplistsikhe; and rehabilitated 29 unique medieval towers, the water supply system, a meeting hall, and a historic brewery in Shatili\. Quality of construction, while largely satisfactory, has sometimes been disappointing due to early problems with the quality of technical drawings and specifications, and inadequate supervision of work\. These problems were partly, but not fully resolved\. While strong on archeological and historical conservation and research techniques, the Fund was unable to establish an effective supervision unit to cover conventional construction, resulting in poorly conceived and implemented finish work\. The project helped to resolve underground water problems in Old Town, Tbilisi first by mobilizing trust funds to assess and find solutions to the problem, and second by leveraging municipal funds and coordinating closely with the Bank-supported Municipal Development Fund to ensure that repairs to the underground water system were given priority in its schedule of activities\. The project responded rapidly to reinforce the caves of Uplistsikhe that were threatened with collapse following an earthquake in November 2001\. The project was not however able to renovate the Erekle Street caravansary, the oldest caravansary in Tbilisi\. Although the Fund and the municipal authorities spent several months attempting to negotiate an agreement with the residents of the building on a temporary resettlement plan, agreement was not reached by the time of an earthquake in April 2002\. By then, the building had suffered structural damage from the earthquake and project funds to fully repair the structure were insufficient, even if agreement had been reached\. Instead of undergoing a complete renovation, the caravansary has had its main section reinforced and the roof rehabilitated\. The municipality provided temporary external supports for the rear part of the building and continues to seek funds to complete its renovation\. The Neighborhood Fund repaired or replaced the gutters and drain pipes, and repaired balconies and facades of 36 historic homes in Tbilisi and 37 historic buildings in Signaghi\. While the Neighborhood Fund was successful, it was the most troublesome element of the pilot sites subcomponent\. The Neighborhood Fund financed up to US$1,500 of exterior improvements (US$4,500 to for a multiple-family dwelling) to private properties in Tbilisi and Signaghi that were included in a registry of historic homes\. The purpose of the program was to save historic homes from further deterioration by making inexpensive but critical repairs to the exterior of buildings (most have not been maintained since they were transferred to private ownership soon after Georgia became independent from the Soviet Union, and had already been seriously neglected under the Soviet regime), and to encourage private investment in restoration by demonstrating its ability to increase home values\. The Neighborhood Fund proved to be difficult to manage\. Many homeowners, whose properties had until independence been nominally maintained by the state, felt that the project should finance renovations to interiors in addition to exteriors, and demanded the - 8 -  full US$1,500 even when this was not needed to fund work on the exterior\. People whose houses were not on the official list of historic houses questioned the fairness of the program\. Tensions between the Bank and the Fund arose over the issue of cost recovery, with the Fund proposing that better-off homeowners be offered loans rather than grants to ensure the sustainability of the program and the Bank team explaining that providing loans would significantly increase the complexity of the program\. In sum, the Neighborhood Fund required substantial resources for administration and consultation that might have been better spent on renovating public streets, urban spaces, and historic buildings\. Nonetheless, the program arrested the deterioration of historic buildings, thus contributing to the preservation of a part of the architectural legacy of Tbilisi and Signaghi\. New legislation and regulations in support of the preservation of cultural heritage was drafted under the leadership of the Fund and subsequently enacted by parliament\. These include the Law on Preservation of Cultural Heritage (June 1999), the Law on Export and Import of Cultural Properties (June 2001), the Law on Museums (June 2001), and amendments to the Law on Preservation of Cultural Heritage (May 2002)\. With the encouragement and technical assistance of the Fund, Georgia also acceded to several international conventions, including the Granada Convention on Architectural Heritage Protection and La Valetta Convention on Archaeological Heritage Protection (both in February 2000)\. Laws on archaeology, on territorial-spatial planning and urbanization, and on sponsorship and charity in the sphere of culture¯which are still awaiting enactment by parliament¯have also been drafted with the help of the Fund\. Site management plans for the four pilot sites were developed under the project with the active participation of local cultural heritage committees and other community groups\. The management plans include measures to mobilize funds for operations and maintenance and plans for the sustainable development of the sites\. The plans have been approved by the State Monument Protection Department\. However, funding for implementing the site management plans other than that provided under the project has for the most part not materialized\. Some of the elements of the plan for Shatili are being implemented with funds raised by the community, including rehabilitating the local hydropower station and assisting local residents create attractive spaces in their homes for tourists\. Component 2: Technical Assistance (US$1\.4 million, revised to US$1\.37) Fund Support and Institution Building Outputs of this subcomponent are satisfactory\. After initial delays, the Fund contracted the services of three international experts to support project management (ten months), financial management (nine months), and monitoring and evaluation (six months)\. Detailed job description for each position in the Fund were prepared\. Organization of the Fund was brought in line with its responsibilities\. Training through seminars and hands-on experience was provided to staff in modern management practices, financial management, use of management information systems, accounting, procurement, disbursement, and monitoring and evaluation\. A management information system and a monitoring and evaluation system were developed\. Weekly staff meetings were introduced to ensure that all staff members knew what others were doing and to foster a sense of teamwork\. These measures quickly led to improving execution of the project\. The Fund benefited from additional support during the project\. Under a separate grant-financed exercise, Fund staff participated in training in community action planning\. They subsequently led a participatory community planning exercise in Sighnaghi\. The action plan is of high quality and aspects of it are already being implemented\. The action plan also has led to a Swiss investment in improving Sighnaghi's water supply system\. - 9 -  Some problems took time to resolve\. Despite considerable assistance from the Bank, financial reporting remained somewhat opaque until close to the end of the project, although in 2000 the Fund started using accounting software recommended by the Bank\. Although the Fund did not follow up the Bank's recommendation to contract technical assistance in this area, it consistently clarified any questions regarding financial statements and explained any discrepancies as they arose\. Moreover, the audits did not reveal problems in financial management\. Another issue related to the monitoring and evaluation system\. Although it was developed with the assistance of the international expert, the system was deemed inappropriate for use by the Fund\. Time was required before a workable system was put into place\. Once the system was established, the Fund significantly improved its monthly, quarterly, and annual reporting to the Bank\. Some aspects of technical assistance were not well used\. Social assessments conducted by the Fund were too weak to be useful and needed to be redone by outside consulting firms\. Whether even these were used to guide project investments is not clear\. Market studies were not carried out\. Training on the methodologies of economic evaluation was not provided\. Approaches for recovering costs were developed, but never implemented because the Fund lacked authority to introduce charges at public sites\. Training and Study Tours Outputs of this subcomponent are satisfactory\. Key staff of the Fund, the Ministry of Culture, and NGOs participated in a study tour to England taken in early 2002\. The visit involved meetings with the National Trust, the Architectural Heritage Fund, the English Heritage Fund, the Bath Preservation Trust, the Victoria and Albert and other museums, several visitors centers, and other sites\. Participants learned about the use of revolving funds, legal instruments, and financial incentives to encourage private owners to restore their historical properties\. They also met with experts on site management planning and value-led conservation, operation of trusts, use of cost recovery mechanisms and concessions to finance operations and maintenance, and use of promotional and educational materials to raise public awareness of the importance of cultural heritage\. Participants rate the tour as highly useful and staff of the Fund are actively exploring ways to replicate some of the approaches in Georgia\. Cultural heritage committees were established at all four pilot sites\. All remained actively involved in planning and implementing activities at their sites\. All continue to pursue new sources of funding to implement the site management plans, although with varying degrees of success\. Public Awareness Program Outputs of this subcomponent are satisfactory\. The subcomponent produced numerous articles for magazines and newspapers, programs for radio and television, and brochures and information booklets for distribution to the public\. It also financed photo exhibits, cultural fairs, and seminars\. It produced and maintains a website that receives thousands of hits a month\. It also frequently succeeded in obtaining coverage of its activities from both state and independent media outlets\. For example, the independent television broadcasting company, Mze, covered the restoration of a church in Ikorta (on the World Monument Watch list) that was financed under the ERP\. Although survey data do not exist, anecdotal evidence suggests that the activities of this subcomponent have substantially increased public awareness of and interest in preserving Georgia's substantial and varied cultural heritage\. - 10 -  Integrated Conservation Master Plan, Old Town Outputs of this subcomponent are satisfactory\. The conservation master plan was developed in close collaboration with experts of the Council of Europe\. It is considered a guiding document by the Tbilisi Architectural Service, the Cultural Heritage Subcommittee of the Parliament of Georgia, and many cultural heritage experts\. The Tbilisi Architectural Service is now preparing a paper drawing on its recommendations to guide the city in its future planning\. Monitoring and Evaluation Outputs of this subcomponent are satisfactory\. As noted above, the indicators initially chosen to monitor impact were either not quantifiable or not useful\. The Fund eventually agreed with the Bank to monitor a revised set of twelve indicators performance indicators for which data were reasonably easy to obtain\. After a slow start and with guidance from the Bank on the content and format of the reports, the Fund consistently produced timely and high-quality monthly, quarterly, and annual reports covering all aspects of project implementation\. These allowed problems to be quickly identified and solved and helped considerably in implementing the project\. Although participatory monitoring and evaluation at the pilot sites was not carried out, the Fund maintained close contacts with cultural heritage committees and solicited feedback which was communicated to the government and the Bank\. 4\.3 Net Present Value/Economic rate of return: The PAD did not include an estimate of the net present value or economic rate of return for the project\. Sound methodologies for estimating net present values of cultural heritage projects had not been developed at the time the project was being prepared\. While methodologies often used to evaluate environmental projects could have been adapted to produce such estimates for this project, considerable time and expense would have been required to produce credible results\. Given the short preparation time of the project (three months), undertaking such an exercise would have been difficult\. Estimating the net present values of the activities of the ERP was not possible, because these were not known in advance\. Estimating net present values of technical assistance is also difficult or impossible\. 4\.4 Financial rate of return: The project appraisal document did not include an estimate of the financial rate of return\. Few of the specific activities were expected to generate revenues directly, although it was hoped that would do so indirectly by stimulating tourism and economic growth in the areas benefiting from the project\. 4\.5 Institutional development impact: Institutional development impact is rated modest\. The project succeeded in strengthening government agencies, NGOs, institutes, and community groups involved in protecting and promoting cultural heritage\. These organizations benefited both from employing people who learned skills through employment at the Fund, and through their involvement in implementing project-funded activities\. A large number of former Fund staff members are now employed at the Department of Monument Protection at the Ministry of Culture, and according to its director, are helping to completely restructure and revitalize the department\. Others are now working at various institutes of history and art history in Georgia\. Still others have gone on to develop private businesses that produce and sell maps of important monuments and buildings of Georgian architecture, tapes of traditional Georgian music, and the like\. Others are providing consulting services\. Groups that benefited from the ERP acquired skills in writing proposals and managing projects - 11 -  that they are using to seek additional funding to rehabilitate or preserve cultural heritage\. Some have already received funding from other donors on the basis of these skills\. Government bodies, NGOs, and institutes that are members of the Georgian Cultural Revival Board have also been strengthened under the project\. The Georgian Cultural Revival Board maintains a permanent representative in the Department of Culture, Education and Sports of the State Chancellery (president's office) who liaises regularly with the Cultural Heritage Subcommittee of the parliament\. Community groups such as cultural heritage committees, have been significantly strengthened under the project through their involvement in planning and implementing project-supported activities\. At the end of the project, these groups remain active in driving forward a vision of development based on the preservation of cultural heritage\. For example, the cultural heritage committee of Tbilisi now plays a critical role in reporting illegal construction to the authorities\. The project helped in creating the regulatory framework for the preservation of cultural heritage through its leadership in drafting and promoting the enactment of laws aimed at protecting Georgia's cultural and historical treasures\. It has helped to create a partnership between the municipal government of Tbilisi, the central government, and other donor-funded projects to finance different elements of the renovation of Old Town, Tbilisi\. This partnership is likely to last beyond the life of the project\. Finally, it has played a major role in encouraging private firms and foundations to either donate funds or enter into public-private partnerships to protect cultural resources\. This is helping to create a sustainable source of funding for cultural heritage and to broaden support for its protection\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The influence of outside factors on project outcomes has been significant\. Most important is the failure of expected increases in tourism to Georgia to materialize during the nearly six years of the project\. Unresolved separatist movements in the country, tensions between Georgia and Russia over events in Chechnya, and the terrorist attacks in New York on September 11, 2001 have all blunted interest of foreigners in travel to Georgia\. Continuing economic stagnation in Georgia leaves citizens with little discretionary income with which to travel\. Low tourism has limited the impact of project investments on economic development of the areas where it operated\. The failure to generate income through tourism is evident in Signaghi, which is depending on tourism to reverse its decline\. While more people are visiting than before the project, and some are staying in the private homes adapted for visitors, many stay no longer than a few hours and spend little money\. Further assistance is needed to help residents of Signaghi attract tourists and encourage them to spend more than a few hours exploring the sites\. 5\.2 Factors generally subject to government control: The influence of factors within government's control on project outcomes has been substantial\. The unwillingness of government to provide its counterpart funds in a timely manner significantly delayed works in several cases, making project planning and management very difficult\. While the unplanned contribution of the municipal government of Tbilisi to reinforce buildings on Erekle Street and to rehabilitate infrastructure of Cotton Row and Iron Row is highly welcome, slow delivery of these funds has delayed works and left contractors unpaid, disrupting implementation of the project\. However, these delays did not affect the overall quality of the works\. - 12 -  5\.3 Factors generally subject to implementing agency control: The influence of factors subject to the control of the Fund on project outcomes has been highly significant in a positive way\. The competence, dedication, energy, and networking skills of the director? a respected art historian and former professor at Tbilisi State University? and key Fund staff have been critical to the success of the project\. In addition to successfully implementing the project, on their own initiative the staff of the Fund raised US$378,000 from donors other than the Bank\. These included, among others, the New Georgian Fund (funded with contributions from the TBC-Bank, Aldagi, Martin Bauer, United Georgian Bank, Georgian Wine Services, and Georgian Trans Expedition), the Council of Europe, the Soros Foundation, and the International Oil Corporation\. As an indication of their dedication, the Fund staff have been working without pay since the final project disbursement was made in September 2003\. Establishing a small, effective Fund was not easy\. With guidance from the Bank, the Fund initially comprised 20 full-time staff members, including a coordinator of the ERP, a public awareness officer, an officer of management information systems, an architect, an engineer, a procurement officer, a sociologist, and a social analysis assistant among others\. Many of the functions the staff performed could have been more effectively and efficiently carried out by firms or individual consultants contracted to undertake specific tasks (for example, supervision of construction, financial management)\. In summer 2001, the Bank informed the Fund that an extension of the closing date would not be possible without a reduction of 50 percent in its staff\. Staff of the Fund were later cut to six as the project entered its final year, and nearly all activities were complete\. 5\.4 Costs and financing: The PAD estimated total project costs (including contingencies) to be US$4\.97 million over three years\. The actual project costs over nearly six years totaled about US$4\.91 million (US$3\.54 million for the investment component, which included 2\.08 million for the pilot sites and 1\.46 million for the ERP, and US$1\.37 million for the technical assistance component)\. Disbursements from the IDA credit total about US$4\.48 million, 100 percent of the credit\. Government counterpart funds to December 2003 are estimated to total US$431,150, or 9 percent of the project costs\. This is slightly less than the 10 percent estimated in the PAD\. 6\. Sustainability 6\.1 Rationale for sustainability rating: While sustainability of most project investments is likely, this is not true for all\. With regard to the former, a large majority of the funds provided under the ERP was used to rehabilitate churches and church frescoes, murals, and other religious artifacts that had deteriorated during Georgia's years as part of the Soviet Union\. Most of these churches are now managed by church staff that protect and maintain the buildings and church artifacts\. The churches also have active congregations that provide funds and labor for operations and maintenance\. Another portion of the funds was used to improve the capacity of state-operated museums to better store and maintain their treasures through procurement of specialized equipment, installation of ventilation systems, and the like\. Museum stakeholders, who on their own initiative prepared and submitted the proposals to the Fund, are likely to make full use of the equipment and the renovations\. Many of the improvements at the pilot sites are also likely to be maintained\. The rehabilitations in Old Town, Tbilisi have stimulated significant private sector investment and the investors are likely to either organize maintenance themselves or to demand that the city meet its obligations to do so\. - 13 -  Owners of defensive towers and other buildings in Shatili improved under the project can be expected to maintain them, as they have since they were built in the tenth to twelfth centuries\. Less probable is proper maintenance of other improvements\. The city-owned Wedding Palace in Signaghi is rarely used, and already shows signs of deterioration\. Encouragingly, a new grant-funded initiative aimed at building on the achievements of the project will finance the operation of a visitor's center in the Wedding Palace for the next two to three years, and will develop plans intended to assure its longer-term sustainability\. A visitor's center in Uplistsikhe lacks funds to open to the public\. Road signs directing visitors to important cultural sites have been vandalized and not replaced\. The poor record so far with sustaining these investments stems from the failure of the Fund to identify the sources of funding for operations and maintenance in advance of undertaking the investments, and of the Bank to ensure that this was done before approving the investment\. Clearly road signs will need to be replaced over time\. The Fund should have made arrangements with the government entity responsible for maintaining road signs before installing them\. Likewise, the Fund should have reached agreement with the government on funding needed to operate the visitors center before constructing it, should visitors fees prove insufficient\. The Fund is not solely responsible for the lack of maintenance at some sites\. It did indeed obtain a commitment from the mayor and community of Signaghi to maintain the sites\. The commitment has been only partially fulfilled\. Benefits of investments in capacity building and institutional strengthening are likely to be sustained\. As previously mentioned, skills people have acquired as a result of working for the Fund or on activities financed under the ERP are already being used outside the project to strengthen the management and promotion of cultural heritage\. The sustainability of the Fund, however, is in doubt, assuming that the Bank does not finance a follow-on project\. Despite its success in mobilizing finance from donors other than the Bank and from private benefactors, the funds have not been sufficient to replace the Bank's financing\. Sustainability of the Fund, at least in the short term, thus appears to depend on government's commitment to continue funding activities aimed at preserving and promoting Georgia's cultural heritage\. Even if the Fund dissolves, the skills of its staff will remain and will no doubt be employed in preserving cultural heritage through work with other organizations\. 6\.2 Transition arrangement to regular operations: Transition arrangements to regular operations had not been made at the time of the project's closing\. Although the former president of Georgia, other government officials, NGOs, and institutes have asked the Bank to finance a follow-on cultural heritage and tourism project as a priority, decisions on whether to move forward with the new project depend on the strategy of the new government\. A follow-on project, should one be approved, would be desirable to support the development of a realistic plan for ensuring the sustainable flow of funds for the preservation and maintenance of cultural assets\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's overall performance in lending was satisfactory\. The Bank's performance in identification was satisfactory\. Preserving and promoting of Georgia's rich cultural heritage was (and still is) important to help revive Georgia's tourism industry, stimulate economic development in cities and towns, and create a sense among citizens of a shared national identity\. The project was designed in accordance with the lessons - 14 -  learned from an IDF grant for the Cultural Heritage Initiative, which was nearly complete at the time the project was identified\. The Bank's performance in preparation was marginally satisfactory\. Preparation was rushed at just three months and many elements of the design were not well developed\. For example, the PAD states that funds for investing in the pilot sites would be provided as grants to local authorities, yet little effort went into exploring what would be required to make this work in practice\. Ultimately the Bank and the government concluded that the risks associated with inadequate procurement or financial management capacity by local authorities and community groups were too high to implement this concept\. No economic analysis was prepared, a difficult challenge for a project supporting renovation of non-income generating assets\. Still, applying the techniques of economic analysis used for environmental projects may have guided investment to sites with greater potential for tourism and larger numbers of residents that could benefit from development than Shatili\. As mentioned earlier, the monitoring indicators, which the government was required to agree to as part of the Development Credit Agreement, were both too numerous and poorly specified\. More consultation on the monitoring indicators both within the Bank, and between the Bank and the government may have led to agreement on a smaller set of more appropriate indicators\. Clearer specification of the technical assistance component also would have helped to prevent later disagreement between the Bank and the Fund on what was needed and why\. The Bank's performance at appraisal was satisfactory\. The Bank mobilized trust funds to assess the groundwater problem in Old Tbilisi and appropriately linked investments in the area to its resolution\. As a condition of effectiveness, the Bank demanded that the government deposit in a bank account counterpart funds for the first year of the project\. This was appropriate, considering the government's poor track record in providing counterpart funds\. It also ensured through a condition of disbursement for the reinforcement of the caravansary that a resettlement plan acceptable to IDA was adopted by the government\. Appraisal of implementation arrangements was satisfactory\. Although autonomous PIUs are often criticized because they are not truly part of the government structure, in Georgia they have proven far more effective in implementing projects than government entities that are starved of funds and lack highly-qualified staff\. However, Bank guidance on the number and type of people that the Fund would need was too specific, leading to more staff than the Fund could effectively deploy, and making it difficult for the Fund to reduce staff when its needs shifted\. The Bank should have suggested during appraisal that the Fund keep its core staff small, and hire external consultants on a short-term basis to perform specific tasks as needed\. Estimates of project costs were reasonable\. The use of a Learning and Innovation Loan for the project was appropriate given the desire to experiment with a variety of approaches to preserve and promote cultural heritage\. More effort, however, should have been given to clearly articulating the hypotheses that the project was exploring and to designing an M&E system capable of testing them\. The Bank also should have carried out a realistic assessment of sustainability and ensured that the project included sufficient assistance to the Fund in preparing a sustainability plan 7\.2 Supervision: Bank performance in supervision was marginally satisfactory\. The Bank fielded ten supervision missions during the project's nearly six years of implementation\. Missions took place every six months during 1998­2000, once a year during 2001 and 2002, and again every six months in 2003\. Missions lasted about two weeks each and typically comprised three or more members, including foreign and local consultants investigating a wide range of technical and operational issues\. During the early years, supervision missions focused primarily on issues of project management, procurement, financial management, reporting, and Fund staffing\. The focus later shifted to design and quality of works\. Very little policy dialogue on how to make financing of cultural heritage preservation and maintenance more sustainable and how to promote - 15 -  tourism took place throughout the period the project was being implemented\. Only during the last two years of project implementation did attention shift to issues of sustainability and community development\. The Bank team responded to the needs of the client by coordinating closely with the Bank-supported Municipal Development Fund to ensure that work on the underground water system in Old Tbilisi was completed quickly\. It also mobilized a Norwegian Trust Fund for community-based participatory action planning in Signaghi to help the community find ways to make use of its restored cultural heritage to generate tourism\. Early project supervision however was hampered by several problems\. Members of different missions on one or two occasions provided the Fund with conflicting advice\. For example, a mission in 1999 recommended that the allocation for investment in the Sighnaghi pilot site be reduced from US$567,800 to about US$150,000 on the grounds that tourism potential in Sighnaghi may not be as large as other places\. While the argument had merit, challenging the design after the Development Credit Agreement was signed was inappropriate, and undermined the credibility of the Bank in Georgia\. In the face of objections by the government to the proposed change, renovations in Signaghi proceeded with a reduction in funding to about US$380,000\. Different missions also provided conflicting messages on the design of the Neighborhood Fund\. Although agreement had been reached with the Bank during negotiations that the funds would be provided as grants, one mission in 1999 argued that the Bank should not finance rehabilitation of private property without substantial cost sharing by owners\. The Fund subsequently developed a proposal to establish a revolving fund that would provide loans for renovations to households that could afford to repay them\. The Bank then again reversed its position, arguing that involving a financial intermediary at this stage would be too complex and was not part of the agreed project design\. This too undermined the credibility of the Bank\. The lack of continuity of task team leaders was, however, the primary cause of confusion\. The project had three task team leaders during its life, each with different interests and ideas\. The project was rated satisfactory at all times during implementation\. The project included a midterm review, which resulted in improved implementation and faster disbursement, but no fundamental changes in project design\. 7\.3 Overall Bank performance: The Bank's overall performance was satisfactory\. In lending, the Bank responded to the government's request for assistance in better managing cultural heritage first by obtaining an IDF grant, then by designing a project drawing on the lessons of the IDF grant and of experiences in other countries\. It chose the best available Bank instrument for the credit, the Learning and Innovation Loan, given the project's small size and experimental nature\. Preparation was not as thorough as it could have been, due to its short timetable, which caused some problems later\. Supervision created some confusion at times, due to conflicting messages of different missions on various aspects of project design\. Although the lack of continuity of task team leaders further contributed to strain, each of the task team leaders paid close attention to the details of project implementation such as, procurement and financial management, which contributed to the quality of the project\. During the later years of project implementation, more attention was paid to issues of community development and of sustainability\. Borrower 7\.4 Preparation: The borrower's performance in preparation was satisfactory\. The government worked closely with the Bank team to forge a common vision of development based on the preservation of cultural heritage and to devise a number of experiments that would help demonstrate effective approaches\. It proved its - 16 -  commitment to the project by successfully implementing the IDF grant, by establishing the Georgian Cultural Revival Board and the Fund for Cultural Heritage (the Fund), and by enacting key pieces of legislation to protect cultural heritage\. 7\.5 Government implementation performance: The borrower's performance in implementation was satisfactory\. The government continued to support the objectives of the project in many ways\. A department in the President's Office, whose head was a member of the Georgian Cultural Revival Board, was given the responsibility for coordinating the activities of the Fund\. The president himself chaired the Board\. The government also highlighted the project during President Wolfensohn's visit in 1999, taking him to several of the project sites\. Unfortunately, after a good start, the government failed to continue to provide counterpart funds in a timely manner, a problem affecting nearly all donor-funded projects in Georgia\. This disrupted implementation of works at several stages and delayed payments to contractors\. This likely raised costs of works, as contractors nearly always increase the costs of contracts to compensate for the risks of delayed payment\. The government also failed to enact the draft Law on Sponsorship and Charity in the Sphere of Culture\. Private sector involvement in preserving cultural assets is therefore lower than it could be if the draft were enacted into law\. 7\.6 Implementing Agency: The performance of the implementing agencies was satisfactory\. Implementation started slowly\. The Fund took time to recruit staff and become fully conversant with the Bank's procurement, financial management, reporting, and other procedures\. The Fund also spent some months focusing on fine tuning operational agreements and procedures and proposing a series of amendments to the Development Credit Agreement\. The pace of implementation picked up once training was complete and the Fund reached agreement with the Bank on any remaining issues\. In the early years of project implementation, one management issue concerned the hiring as staff several people whose services could have been provided on an as-needed basis through short-term consultant assignments\. In some cases, the Fund employed people whose skills were not well matched to the tasks they were hired to perform, particularly with regard to the supervisor of basic design and construction\. Some of these problems were resolved once the Fund substantially reduced its staff in response to the Bank's direction\. Fund staff remuneration and operating expenses comprised about 20 percent of the total project cost, which is high but acceptable considering the complexity of the project\. Despite its slow start, the Fund proved to be highly effective in implementing the project\. In large part, this was due to the competence, energy, and commitment of its director and key technical staff, who dealt effectively with changing Bank task teams and with considerable pressures from the government and others with an interest in the field of cultural heritage\. Staff anticipated early on that problems with counterpart funding could arise and requested that the Development Credit Agreement be amended to allow the project to finance 100 percent of the civil works of the ERP and the Neighborhood Fund\. They also persistently pursued the counterpart funds through letters and phone calls to the Ministry of Finance, the president of Georgia, and others with influence\. They coordinated effectively with the Bank-financed Municipal Development Fund to ensure that the underground water problem was resolved before rehabilitation in Old Tbilisi started\. They also coordinated closely with the municipal government as a partner in the project\. They raised over US$378,000 from donors and benefactors other than the Bank to preserve and restore cultural artifacts\. They created and sustained a network of individuals and groups interested in cultural - 17 -  heritage\. They also actively promoted the involvement of cultural heritage committees in planning development in their communities on the basis of its cultural assets\. While issues with sustainability remain, the Fund staff over time started to pay increasing attention to this issue\. They gave considerable weight in their initial review of the proposals to the ERP to plans for operation and maintenance of the investments\. They also insisted that the local authorities and cultural heritage committees of the pilot sites prepare plans for sustainability as a condition of support\. They performed less well in situations where operations and maintenance required the involvement of central government agencies rather than local authorities and communities\. They never discussed with the relevant transportation authorities a strategy for maintaining and replacing road signs indicating cultural and historical sites\. They did not secure funding from the government to operate the visitors center in Uplistsikhe\. Although they actively pursued solutions, they did not succeed in developing a sustainability plan to secure the future of the Fund in the absence of a follow-on Bank project\. While a sustainability plan was not a planned output of the project, the Bank during implementation emphasized this issue\. However, no funds were available to cover technical assistance to support staff of the Fund in developing such a plan\. 7\.7 Overall Borrower performance: The overall performance of the borrower was satisfactory\. The government demonstrated its commitment to the broad objectives of the project and its approach from identification to completion, although it did not always provide its counterpart funds in a timely manner\. The implementing agency also performed satisfactorily\. The Fund successfully implemented the project in close coordination with other entities with responsibilities and interests in cultural heritage, such as the Department of Monument Protection within the Ministry of Culture\. It carried out the agreed studies and implemented the training program\. It handled procurement in accordance with Bank guidelines\. Compliance with relevant Bank safeguard policies was satisfactory\. 8\. Lessons Learned While using autonomous PIUs to implement projects is controversial, doing so helps in achieving positive outcomes in environments with poor governance and weak institutions\. PIUs create structures parallel to those of the government and distort local pay scales\. They are however able to attract highly-qualified staff and provide training, equipment, and operating funds, which are necessary to effectively and efficiently implement projects\. Finding a way to make the Fund financially self-sustaining would increase the likelihood that project outcomes would be sustained and deepened\. In the absence of clear central government commitment to replace Bank funds with its own, or the ability of the Fund to mobilize funds from international or Georgian donors, the Fund is likely to dissolve, and the focus it brings to preserving cultural heritage lost\. Several other Funds in Georgia (the Social Investment Fund and the Municipal Development Fund) have established mechanisms that allow them to be financially self-sustaining\. These experiences may be able to provide models for the Fund\. Expectations for success should however be modest (see next paragraph)\. Preserving cultural heritage is largely a public good, which requires a long-term commitment of the government or its development partners for funding\. Although scope exists for raising funds through entrance fees and through contributions of private benefactors, in all countries much of the funding for the preservation of cultural heritage comes from the government\. The preservation of cultural heritage in Georgia will likely need long-term support of the government and its development partners, especially as - 18 -  the country lacks sites such as Angkor Wat in Cambodia that international tourists are willing to pay significant amounts to visit\. Demand-driven approaches that allow communities throughout the nation to benefit from the project help in building popular support for the preservation of cultural heritage, especially when the process of selecting projects is transparent\. The Emergency Rehabilitation Program proved to be a highly popular approach for preserving cultural heritage, and helped to focus the nation's attention on both the richness of Georgia's legacy and on the need to protect it\. This has helped to create the image among many government officials and citizens of Georgia that the Cultural Heritage Project was the most successful Bank-supported project in the country\. A program offering grants for home improvements to some private homeowners but not to others is likely to be divisive\. Many homes in Georgia are in poor condition\. People whose homes were in poor condition but were not eligible for a grant under the Neighborhood Fund Program had difficulty understanding why they did not also deserve support\. Offering loans or matching grants instead of grants would have helped improve the perception of the subproject as fair\. Comprehensively upgrading historic facades, streets, sidewalks, parks, water systems, and other elements of the urban environment induces private sector investment, especially in cities and towns that are already attracting investment\. As in cities around the world, the investments in Old Town, Tbilisi have attracted substantial private investment to upgrade historic buildings and to operate shops, cafes, restaurants, hotels, and other businesses\. Monitoring and evaluation systems must be carefully designed to ensure that monitoring efforts produce data that are useful in assessing project outcomes and impact\. Although the project included substantial resources for monitoring and evaluation, performance indicators were poorly specified, and plans for monitoring them could not be implemented\. Ultimately, the list of performance indicators was revised and shortened, which made monitoring feasible\. Choosing appropriate monitoring indicators and implementing systems that truly allow project outcomes to be assessed during its life is a challenge that requires special expertise\. Mobilizing communities in designing and implementing activities of the project proved effective in both protecting cultural assets and in building social capital\. At all pilot sites, cultural heritage committees and other community groups provided meals and assistance to contractors working at the pilot sites\. At some sites, they acted as watchdogs, reporting acts of illegal construction and vandalism\. In Sighnaghi, they helped bring people together to formulate action plans for the development of community-based cultural tourism\. In Shatili, they mobilized private funding to continue work restoring towers and adapting towers for guests\. Some community groups raised funds on their own initiative to finance additional stages of work\. Significantly, in some communities, cultural heritage committees brought together members of different ethnic groups to work together on a common project\. Observers believe this has helped in building social cohesion in such villages\. 9\. Partner Comments (a) Borrower/implementing agency: The Ministry of Finance of Georgia has reviewed and discussed this Implementation Completion Report in draft form and agreed with its main findings (see Annex 9)\. See also Annex 8 - Evaluation Report from the Fund for Preservation of Cultural Heritage of Georgia dated November 12, 2003\. - 19 -  (b) Cofinanciers: Not Applicable\. (c) Other partners (NGOs/private sector): Not Applicable\. 10\. Additional Information - 20 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Number of sites restored with project N/A 60 sites have been fully or partially restored assistance Number of tourists/visitors to Uplistcikhe pilot Increase to 14,000 visitors in 2004 from 22,000 in 2003 site 10,500 in 1998 Number of tourists/visitors to Shatili pilot site N/A Increase to 1,200 visitors in 2003 from 250 in 1999 Number of tourists/visitors to Signaghi pilot N/A Increase to 1,000 visitors in 2003 from 450 in site 1999 Number of cultural heritage related activities, Increase to 450 in 2004 from 160 in 1998 650 such as promotion, festivals, concerts Number of cultural heritage projects financed Increase to 30 in 2004 from 18 in 1998 70 by the private sector Number of NGOs working in the cultural Increase to 35 in 2004 from 17 in 1998 120 heritage field Number of community-based cultural 4 4 heritage committees operating effectively at the end of the project Number of media activities related to cultural Increase to 250 in 2004 from 0 in 1998 380 heritage Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate PILOT SITES Old Town, Tbilisi restoration completed N/A Phases 1 and 2 are complete\. The buildings and streets restored include: N\. Baratashvili Museum, Jvaris Mama Church, Tbilisi History Museum, Gobelin (Tapestry) Museum, Chardin Street (18 buildings), Erekle II Street (13 buildings), Sioni Street (8 buildings) Number of buildings in Old Town fitted with N/A 78, including 36 through the Neighborhood gutters and drain pipes Fund Signaghi: Rehabilitation of Wedding Palace, N/A The restoration is complete\. The buildings archeology museum, and other structures and streets restored include: complete St Nino's Church at Bodbe, Wedding Palace at 6, Kostava Street\. Sighnaghi Archaeological-Ethnographic Museum, Dodashvili square, St\. Stephen's Church, and Sarajishvili, Dadiani, Saradjishvili, and Lolashvili streets Number of buildings in Signaghi fitted with N/A 37 gutters and drain pipes (through the ERP) Uplistcikhe: site management plan and N/A The site management plan and interpretation interpretation center completed center were completed\. Many of the recommendations of the site management plan have been put into practice\. The interpretation center was not in operation at the end of the project due to lack of funds\. Fees collected at Uplistcikhe pilot site Increase to 6,500 GEL in 2004 from 4,500 7,500 GEL GEL in 1998 Shatili: renovation of historic towers and N/A Renovations of 29 towers, a historic brewery, retrofitting of folk hotels completed meeting hall and other buildings, were completed\. Eight folk hotels were created in the towers\. Community-based site management N/A Four community-based site management - 21 -  programs in two pilot sites operational plans, one for each of the pilot sites, were prepared with extensive community input\. EMERGENCY REHABILITATION PROGRAM (ERP) Three competitions completed N/A Six competitions completed, comprising 58 projects that saved over 100 cultural assets Archive collection and conservation improved N/A 19 museums, archives, and related facilities have improved their capacity to archive and conserve historic documents, tapestries, and other material\. Examples of renovations include: Reconstruction of the "Golden Fund" (Treasure) of the State Museum of Fine Arts of Georgia, rehabilitation of Poet's Museum, the Gobelin (Tapestry) Museum, and the State Archives of Film and Photo Documentation, and the creation of the Architectural Heritage Archives Database\. TECHNICAL ASSISTANCE Groundwater feasibility study for Old Town N/A The study was completed and used to guide completed investments in the water system for Old Town (under finance from the Municipal Development Fund) and in restoration of buildings and infrastructure in Old Town\. Cultural Heritage PIU and local municipalities N/A Training in project management (including strengthened financial management, procurement, community mobilization, and others) permitted the Fund to implement the project effectively and to assist other culture-related institutions develop similar skills\. Training in economic evaluation did not take place\. Public awareness campaign raises N/A Many events were reported in the media and awareness of the importance of cultural through events\. No survey data exist to heritage demonstrate the extent to which public awareness was raised, but it is certain the messages reached a large proportion of the population\. This is demonstrated through the large numbers of groups applying for funds through the ERP, which was advertised with the help of the public awareness team\. Integrated Conservation Master Plan N/A The Master Plan was developed and is being completed used as a guiding document by the City Architectural Service and Cultural Heritage Sub-Committee of the Parliament of Georgia\. 1End of project - 22 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Investment 2\.76 3\.54 1\.28 Technical Assistance 1\.19 1\.37 0\.86 Total Baseline Cost 3\.95 4\.91 Physical Contingencies 0\.59 Price Contingencies 0\.43 Total Project Costs 4\.97 4\.91 Total Financing Required 4\.97 4\.91 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.54 0\.61 2\.11 0\.00 3\.26 (0\.49) (0\.55) (1\.87) (0\.00) (2\.91) 2\. Goods 0\.00 0\.07 0\.05 0\.00 0\.12 (0\.00) (0\.06) (0\.04) (0\.00) (0\.10) 3\. Services 0\.00 0\.00 0\.00 1\.59 1\.59 Technical Assistance (0\.00) (0\.00) (0\.00) (1\.48) (1\.48) 4\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Project Preparation 0\.00 0\.00 0\.00 0\.00 0\.00 Facility (PPF) (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 0\.54 0\.68 2\.16 1\.59 4\.97 (0\.49) (0\.61) (1\.91) (1\.48) (4\.49) - 23 -  Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Procurement Method1 Opera- Expenditure ICB International National Consulting tional Total Cost Category NCB Shopping Shopping services expenses 1\. Works 0\.00 0\.36 0\.00 2\.67 0\.00 0\.00 3\.03 (0\.00) (0\.28) (0\.00) (2\.40) (0\.00) (0\.00) (2\.68) 2\. Goods 0\.00 0\.00 0\.12 0\.08 0\.00 0\.00 0\.20 (0\.00) (0\.00) (0\.10) (0\.07) (0\.00) (0\.00) (0\.17) 3\. Technical 0\.00 0\.00 0\.00 0\.00 1\.21 0\.00 1\.21 assistance (0\.00) (0\.00) (0\.00) (0\.00) (1\.21) (0\.00) (1\.21) 4\. 0\.00 0\.00 0\.00 0\.00 0\.00 0\.47 0\.47 Miscellaneous (operational expenses) (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) (0\.42) (0\.42) 5\. PPF 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 0\.35 0\.12 2\.76 1\.21 0\.47 4\.91 (0\.29) (0\.10) (2\.46) (1\.21) (0\.42) (4\.48) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Investment 0\.00 3\.19 0\.35 0\.00 0\.0 Technical Assistance 0\.00 1\.29 0\.08 0\.00 0\.0 TOTAL 0\.00 4\.48 0\.43 0\.00 0\.0 - 24 -  Annex 3\. Economic Costs and Benefits Not Applicable\. - 25 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation October 1997 1 PROGRAM TEAM LEADER (1) Appraisal/Negotiation December 1997 5 PROGRAM TEAM LEADER (1); SOCIAL SCIENTIST (1); FINANCIAL ANALYST (1); OPERATIONAL ANALYST (1); CULTURAL RESOURCE SPECIALIST (1) Supervision May 1998 4 TASK TEAM LEADER (1); ARCHITECT-PLANNER (1); SOCIAL SCIENTIST (1); PUBLIC SECTOR SPECIALIST (RM) (1) November 1998 3 TASK TEAM LEADER (1); S S ARCHITECT/PLANNER (1); ARCHITECT (1) May 1999 4 TASK TEAM LEADER (1); S S CONSULTANT/OPERATIONS ANALYST (1); PROJECT TEAM LEADER (1); ARCHITECT/URBAN PLANNER (1) September 1999 1 OPERATIONS ANALYST (1) S S December 1999 4 TASK TEAM LEADER (1); S S SECTOR MANAGER (1); FINANCIAL ANALYST (1); CONSULTANT/OPERATIONS ANALYST (1) March 2000 7 TASK TEAM LEADER (1); S S OPERATIONS ANALYST (1); URBAN MANAGEMENT SPECIALIST(1); SENIOR SANITARY ENGINEER (1); FINANCIAL ANALYST (1); FINANCIAL MANAGEMENT - 26 -  CONSULTANT (1); CULTURAL RESOURCE SPECIALIST (1) September 2000 5 TASK TEAM S S LEADER/SENIOR ARCHITECT (1); CONSULTANT/OPERATIONS ANALYST (1); PUB\. SECTOR MANAGEMENT (1); FINANCIAL ANALYST (1); FINANCL MGT CONSULTANT (1) February 2001 1 TASK TEAM S S LEADER/SENIOR ARCHITECT (1) March 2002 2 TEAM LEADER, SOC\. DEV\. S S (1); ARCHITECT (1) May 2003 1 CULTURAL HERITAGE, CDD S S (1) ICR November 2003 3 TASK TEAM LEADER (1); S S ARCHITECT-PLANNER (1); ECONOMIST (1) (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 16\.3 45\.4 Appraisal/Negotiation 9\.3 38\.0 Supervision 99\.9 440\.6 ICR 9\.4 71\.2 Total 134\.9 595\.2 - 27 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 28 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 29 -  Annex 7\. List of Supporting Documents 1\. Project Appraisal Document (No\. 17275-GE) 2\. Development Credit Agreement (Cr\. 3040-GE) 3\. Operational Manual (April 25, 1998, revised and amended January 31, 2001) 3\. Project Supervision Reports 4\. Mission Aide Memoires - 30 -  Additional Annex 8\. Evaluation Report: Fund for Preservation of Cultural Heritage of Georgia Background The 1990s was the most difficult period for the cultural heritage of Georgia\. Cataclysms, economic crisis, and civil wars caused by the collapse of the Soviet Union largely affected ancient cultural heritage of the country\. The models and mechanisms, regulating the sphere to a certain extent in the past, became obsolete\. Being in the process of transition, the country failed to mobilize internal resources for this sphere\. Georgia applied some new approaches to cultural heritage management\. It was even before the accession of Georgia to the Council of Europe (CoE) that the decision to adopt western models and schemes for safeguarding cultural heritage had been made\. Eduard Shevardnadze, the President of Georgia, while being on an official visit in Strasbourg, requested the World Bank (WB) and the Council of Europe to render assistance to the State Programme for Cultural Heritage Preservation\. He noted that this initiative would serve as a model of successful cooperation between the international institutions\. The World Bank and the Council of Europe supported this request following which a project "Cultural Heritage Initiative" was incepted\. The project was funded by the WB grant\. This was the first CH project funded by the WB\. The Project jointly undertaken by the Government of Georgia, the World Bank and the Council of Europe lasting for 18 months was successfully completed\. It was highly evaluated by the WB and the CoE experts\. The project prepared fruitful ground for the initiation of a larger project\. Acknowledging the value and potential of the country not only for stimulating national identity and social cohesion, but for developing tourism as well, the Government of Georgia requested a long-term funding for the State Program for Cultural Heritage Preservation in the form of the Learning and Innovation Loan (LIL)\. A new CHP was institutionally based on the former CHI functioning under the IDF grant from 1996\. On February 18, 1998, the Development Credit Agreement was signed between the Government of Georgia and the International Development Association (IDA) in Washington D\.C, through which the World Bank allotted the credit of USD 4\.5 million in the form of a Learning and Innovation Loan (LIL)\. The contribution of the Government of Georgia was USD 480,000\. On May 12, 1998, the DCA was ratified by the Parliament of Georgia\. This was the first LIL of the World Bank in the region and the first independent CH project of the WB\. The Project continued to collaborate with the Cultural Heritage Department of the Council of Europe\. The "Specific Action Plan" for Georgia was drawn up\. The basic objective of the Project was to rescue the endangered cultural heritage properties and test new approaches of management in preservation and conservation of cultural heritage\. Considering the nature of the LIL, one of the most important project components dealt with the promotion of changes relevant to the emerging market economy\. The changes refer to the institutional framework, fund-raising, mentality, public responsibility, stimulation of private investments, etc\. - 31 -  The period of the implementation of the Project supported by the LIL with the amount of USD 4\.5 million loan initially was 3 years (1998-2001)\. The Government of Georgia and the World Bank agreed to extend the Project until the end of the year 2003\. Under the Presidential Decree #377, the Fund for the Preservation of Cultural Heritage of Georgia is responsible for the Project implementation\. Project Design The Cultural Heritage Project consisted of the two main components: (a) investment component and (b) technical assistance component\. Investment Component Emergency Repair Program (ERP) The ERP aimed at safeguarding endangered cultural heritage properties and covering various areas of cultural heritage all over Georgia appeared to be one of the most effective and visible programs of the Project\. It had nation-wide effect, which is attested by a big number of the applications (113) submitted in 4 competitions\. In all, the ERP supported 58 projects\. This form of investment proved to be most effective and popular\. It was a demand-driven and competition-based program\. Project proposals submitted to the program were evaluated and selected against special criteria, by the Georgian Culture Revival Board comprised of 52 members and chaired by the President of Georgia\. Management of the selected projects (selection of contractors through tenders, supervision, evaluation) was undertaken by the Fund\. This program was financed as grant\. For the purposes of the ERP, four main (3 in PAD) and two additional project competitions were held\. I\. Competition was held in 1999 January - 6 project proposals were selected II\. Competition was held in 1999 July - 14 project proposals were selected III\. Competition was held in 2000 June - 12 project proposals were selected IV\. Competition was held in 2000 December - 12 project proposals were selected V\. Additional competition was held in 2000 November - 5 project proposals were selected VI\. Additional competition was held in 2001 September - 5 project proposals were selected The selected projects were approved under the Presidential Orders (#988 dated September 12,2000, #1326 dated December 12, 2000 and #932 dated September 11, 2001)\. Four of the short-listed projects were split up into two separate projects based on their proposed objectives (e\.g\. conservation of the architecture and the mural paintings of the same church, construction works and purchase of goods for the same beneficiary, etc\.) Out of the 58 projects implemented under ERP (14 in PAD), 33 projects addressed conservation of architecture; 5 - of mural paintings, 3 projects dealt with archaeology, 4 projects were related to folk music and 13 projects implied support to archives and collections and improvement of their storage conditions\. Twenty-four projects were completed on schedule and on budget; 7 projects were completed on schedule; with additional funding (contingencies envisaged in the ERP total budget); 16 projects were completed on budget, but with extension;11 projects were completed with additional funding and extension\. Each change of schedule or budget was based on the supervisor's rapport, discussed by the Technical Group and special confirmation of the FD\. - 32 -  ERP proved to be very popular national-wide, as the sub-projects were implemented almost in every region of Georgia; besides, the population around the sites participated in the physical works and thus the program had positive social-economical effect\. Four Pilot Projects Another component of the Project dealt with the four pilot projects: Old Tbilisi (the Zemo Kala District), Shatili, Sighnaghi and Uplistikhe\. These projects envisaged restoration/rehabilitation of pilot sites and setting grounds for their sustainable development\. The projects were divided into 2 phases: phase 1 included small emergency works while phase 2 was aimed at the development of project concepts and implementation of works on their basis\. The World Bank covered eighty percent of the costs associated with the pilot projects, while twenty percent was provided by the Government of Georgia\. The civil works carried out under the "Small Repair Works Program" (the so-called" Neighborhood Fund") were fully financed by the World Bank\. The Tbilisi Pilot Project supported 14 sub-projects, the Signaghi Pilot Project ­ 9 sub-projects, the Shatili Pilot Project ­ 3 sub-projects and the Uplistikhe - 3 sub-projects\. Apart from this, Tbilisi and Sighnaghi benefited from the program of the "Neighborhood Fund"\. The Sustainable Development Concepts, elaborated for each of the pilot projects by specially hired consultants, which also served as a Site Management Plans and provided basis for actual conservation works in second phases, were very important for the planning and implementation of the activities on this sites\. The Concepts addressed diverse aspects, such as site history, environmental analyses, assessment of present condition, identification of problems and priorities, selection of most endangered areas, recommendations for site interventions, tourism development, economic assessment, recommendations for maintenance, and cost estimates\. The programs of Pilot Sites were based on social surveys and involved community participation\. Within the framework of the Pilot Projects, mainly architectural sub-projects were implemented\. However, they also included infrastructure improvement activities, improving of preservation conditions in museums, and development of tourist infrastructure, etc\. As a result of these projects, the environment surrounding the sites was significantly improved and this, on its own, resulted in increase of the interest from the private investors and tourist agencies\. The local community also revealed increased interest in safeguarding their cultural resources\. Technical Assistance Institutional Building, Capacity Building, Training, Study Tours Legislation\. The Fund for Culture made a significant contribution to the institutional building in the cultural heritage sphere through the improvement of the cultural heritage legislation\. Fund for Culture experts took an active part in drafting the Law "On Cultural Heritage Protection" and facilitated its adoption by the Parliament of Georgia\. This law, which regulates institutional arrangements in the cultural heritage sphere, promoted needed reforms\. In addition, the Fund for Culture experts drafted several other important laws relating to cultural heritage, such as the laws "On Export and Import of Cultural Properties"(adopted on June 22, 2001), "On Museums" (adopted on June 22, 2001), "On Archaeology," - 33 -  "On Sponsorship and Charity in the Sphere of Culture," "On Territorial-Spatial Construction - Urban Planning," and "On the Amendments to the Law on Cultural Heritage Protection\." Of special note is the draft Law on "Sponsorship and Charity in the Sphere of Culture" providing for tax incentives to engender greater involvement of the private sector in cultural heritage activities\. If adopted, this Law will promote serious developments in this area\. During the elaboration of the above-mentioned laws, the Fund's experts studied the experience of the European legislation through the Technical Assistance extended by the CoE\. These laws facilitated significant reforms in institutional building relating to cultural heritage preservation\. Capacity Building The Fund was strengthened in every aspect of its activities\. The staff developed its professional skills through improving knowledge of World Bank guidelines, regulations, and procurement procedures; and gained profound experience in preparing tender documentation and Terms of References, as well as in conducting tenders\. If the initial stage of the implementation (submission of the project proposals, tendering etc) took more time than expected owing to the lack of knowledge of World Bank procurement guidelines, the process was facilitated beginning from Spring 1999\. The Fund specialists succeeded in attracting the best specialists in the field to carry out Project activities\. Special training program aimed at capacity building in tourism sector, and addressing economic assessment, planning, fund raising, etc was elaborated and submitted to the World Bank, but was not supported\. Instead, due to lack of time and urgent need for elaborating mechanisms for sustainability, it was decided to organize a study tour to the United Kingdom\. It is noteworthy that the Monument Protection Department also participated in and benefited from this tour\. Study tours to Lisbon and Strasbourg, undertaken by the Fund's experts working on the issues related to Old Town rehabilitation, were supported by the CoE\. The representatives of the Ministry of Culture also participated in these study tours\. Training courses were conducted aimed at the capacity building of the PIU, namely on General Management, Procurement, Monitoring, the English language, computer skills, GIS, SPSS,, PageMaker, and Community Participation\. The Fund for Culture provided technical assistance to specialists from different institutions in areas such as conducting tenders and procurement procedures, as well as in the application of GIS, creation of thematic maps, engineering assessment of the culturally important structures, and conducting inventories\. The Fund for Culture provided training to the specialists of the Institute of Manuscripts in managing the climatic equipment installed under the ERP sub-project aimed at the improvement of storage conditions for the rich manuscript collection\. Local authorities and communities also benefited from the project-financed training in cultural heritage preservation issues, planning of the conservation activities, and preparing project proposals\. The Fund for Culture also provided technical assistance to the representatives of the recently established World Bank-financed Cultural Heritage Project Implementation Units (PIUs) in Rumania, Armenia, and - 34 -  Azerbaijan\. Their representatives visited Tbilisi and received advice and recommendations from Fund for Culture experts, who shared their own experience with the foreign counterparts\. Public Awareness The Fund for Culture carried out numerous activities to raise public awareness of cultural heritage through the mass-media\. For example, articles were published and TV shots were produced and televised as social advertisements on leading Georgian TV channels\. The Fund for Culture regularly published information on its activities to ensure maximum transparency of its operation\. Articles regarding various cultural heritage preservation issues and monuments were also published\. Series of programs on the history of Georgian culture (educational program) was broadcasted by the State Radio Broadcasting Company\. The Fund for Culture also commissioned six video-films\. \. A bilingual booklet, English- and Georgian-language journals and a newsletter Sarkmeli (insertion to the daily newspaper Dilis Gazeti) were published\. The Fund for Culture website was developed (www\.culturalheritage\.ge)\. On November 16, 2002 the Fund for Culture arranged an exhibition in the State Museum of Fine Arts of Georgia to present the work carried out under its projects\. Mr\. Shevardnadze, the President of Georgia, as well as the members of the Government, the Parliament, relevant organizations, scholarly institutions and community groups attended the presentation and gave a high opinion to the work carried out by the Fund for Culture\. Several ERP sub-projects served similar purposes, e\.g\. the "National Folk Musical Instruments Data bank" CDs were produced and are on sale; CD-s made within the frames of "Golden Fund of Georgian Radio" were used by the Television and Radio broadcasting, the materials of the sub-project "Aralo- authentic Georgian folk songs"\. Video-clips, designed and commissioned by the Fund, have been broadcasted on Channel 1 of the State Television Broadcasting Company\. Arrangement of festivals, concerts, art competitions, educational program for schools etc envisaged in PAD was not possible due to small funds allocated for the PA component\. In collaboration with ICOMOS Georgia and the Monument Protection Department, the Fund for Culture launched a public awareness campaign (exhibitions, conferences, articles in media etc\.) aiming at prevention of illegal constructions in old Tbilisi and at mobilizing communities for this purpose\. The results of this campaign are already visible\. An exhibition demonstrating the outcomes of the survey carried out by the Fund for Culture in the Kala District was held in the building of the Embassy of Belgium in Strasbourg\. The Fund for Culture arranged several exhibitions on Georgian monuments (Mtskheta, Jerusalem, Tbilisi ­ old town problems)\. As a result of the Fund's activities, numerous articles on cultural heritage in the Georgian press and TV channels increased as well\. - 35 -  MIS and Monitoring MIS and Monitoring system was elaborated by a World Bank-financed consultant and carried out by Fund for Culture experts\. It must be noted that some of the monitoring indicators given in the PAD appeared to be inadequate to the Project activities, and therefore were late revised in collaboration with the Project Team\. In the course of Project implementation, it appeared that the proposed MIS system was not flexible enough and may be amended for more efficient use\. In the future, the M&E system as well as the key performance indicators and log-frame will need to be more carefully designed\. Community Participation One of the main objectives of the Cultural Heritage Project was to increase community involvement in cultural heritage activities\. The Fund for Culture set up local Cultural Heritage Committees in Old Tbilisi, Shatili, Sighnaghi, and Uplistsikhe\. During the meetings, the Fund for Culture experts trained the members of the committees in different issues related to cultural heritage preservation, and highlighted the importance of involving communities in planning, decision-making, and implementation processes\. It must be mentioned that the Georgian people have always cared for their cultural heritage which they view as an essential part of their life\. Their interest in their heritage has never faded, as confirmed by the social surveys carried out by the Fund for Culture\. Although the public's attitude toward and interest in cultural heritage has not faded in the last ten years, the economic situation in the country has changed\. Thus, the Government fails to provide for the management of cultural heritage preservation, and communities living in very poor economic conditions are unable to provide even smallest funds\. Even private owners of the historic properties cannot afford their maintenance, although the Law obliges them to do so\. In many cases, these property owners are forced to sell their properties\. In the last three years of the Fund for Culture's operation, local communities revealed a distinct interest in and eagerness towards the Project and participated both in planning and implementation processes\. Among the 126 applications submitted to the ERP, 46 were submitted by local communities (including religious groups) and NGOs\. They undertook the labor of finding the consultants to fill in the application form and then indicate the scope of work and budget\. There were many instances when local communities helped contractors by assisting in constructing scaffoldings, cleaning construction areas, and providing food to workers, etc\. In the village of Azmana where the ERP Project was implemented (ERP- 4-01), the local community consisting of different ethnic groups (Armenians, Georgians) helped the constructors in every possible way\. They volunteered to participate in construction works and archeological excavations, supplied construction workers with materials and food; and remained interested in the completed works\. Their activity was determined on the basis of two factors: (a) they care for the cultural heritage general, and (b) they hope that the restored sites will attract more visitors and hence, improve their economic condition\. The local community undertook the task of the maintaining the site in the future\. Local communities also carried out similar activities at several other sites, including: Urbnisi, Kintsvisi, Chajashi, Nikozi, Tigva, Zugdidi, Gelati, Mravaldzali, Sighnaghi, and Shatili\. In Racha, the mountain - 36 -  region of West Georgia, the local community set up a private society "Mravaldzali" aiming at raising funds for continuing the restoration works on Mravaldzali church after the Fund finishes the ERP Project\. The society works in close relation with the Fund\. In the region of South Ossetia the community of the village Ikorta, both Ossetians and Georgians, submitted the application to ERP and addressed the Fund with a joint letter requesting financing for the conservation works of the church, as it is the mutual worship place for all of them\. They promised to take care of this CH resource together\. During the implementation of this project, the entire community of Ossetians and Georgians actively participated side by side in the construction works\. At the four Pilot Sites, the local Committees have been set up to participate in elaboration of the programs, decision making, and supervision\. Local Committees in Tbilisi and Sighnaghi participated in preparation and performance of the "Neighborhood Funds\." The Shatili community was particularly active\. They participated in every stage of project development and elaboration of the Site Management Plan (Shatili sustainability Concept); took part in construction works both for salary and free of charge, and participated in carrying out the social investigation in Shatili (most of the owners of the towers live in Shatili only for short time, so the community group found these people, delivered the questionnaires, etc\.)\. The Committee participated in elaboration of the Museum program in Shatili, provided items of old furniture and fittings\. Due to the Fund's activities, the community arranged several guest-houses\. They are now setting up a "Coordination committee" for coordination of the tourist visits to Shatili\. They raised funds for constructing a bridge, for rehabilitation of school and hydro power station; elaborate program for folk crafts\. The Sighnaghi Local Committee participated in short-listing the historic houses for the "Neighborhood Fund" program; helped the fund Social assessment group in carrying out the explanatory work among the residents and delivering the questionnaires\. They also participated in elaboration of the II phase work program and supervision of these works\. Sighnaghi community participated actively in the Small Grant Program "Scaling up Community Driven Development" and in elaboration of the Action Plan; carried out small scaled activities envisaging tourism development: compiling of itineraries, preparation of tourist booklets, setting up guest house association etc\.; At present the group participates in setting up of Tourist Information Center\. Several NGO-s were founded that participate in above mentioned activities\. The Fund stimulated the local people to arrange the bad and breakfast hotels in their dwellings\. Special interest has been granted to Old Tbilisi Zemo Kala district\. Community of this area is multi-ethical, multicultural, heterogeneous; Besides, most of the population lives in bad economical conditions and this causes conflicts and tensions\. The Fund have made considerable efforts to mobilize community in the areas of implementation of sub-projects; several sociological investigations were carried out; numerous meetings conducted with representatives of community in order to explain the goals of the Projects, benefits of community, their responsibilities, their involvement in decision-making process, etc\. Tbilisi local CH Committee was rather active at the initial stages, especially during the elaboration of the II phase program\. But afterwards several most active members moved to other districts and the activity of the Committee reduced\. Although during elaboration of the Erekle Street 8/10 caravanserai program local dwellers were involved and special meetings held with them aiming at their participation and support of this project\. During the five years of the Fund's activities, its reputation and image among community of Old Tbilisi significantly improved\. More than 100 persons applied to the Fund with different proposals concerning particular CH resources and asked for the recommendations on who to contact for possible financing or consultations, etc\. This clearly indicates, that the Fund's activities have a response in community and - 37 -  causes increase of the private initiatives and responsibility\. In its activities the Fund always stressed the importance and the role of local community and tries to explain to people, that the safeguarding of their national CH is in their hands and on their responsibility\. For this sake, the Fund elaborated Recommendations for the Local CH Committees, that can help them to identify the objectives, elaborate the site management plans, find the means and ways for CH preservation in their regions, cities, villages\. The Social Assessment carried out by Fund specialists revealed that due to the Fund activities the attitude of the Community on the Pilot Sites underwent significant change, resulting in increase of the interest towards CH and realizing the value of their own property, as well as arising the trust in Government care and support and in foreign investments\. This change of mentality is very important\. Although the present economical situation does not allow the people to participate in the restoration activities by financial contribution (only in kind -labor, feeding the workers etc), they nevertheless gained the feeling of their own importance in demanding, making decision, monitoring the process and of their responsibility as well\. The experience gained by SA group in establishing the questionnaires and the assessment criteria for the CH preservation sphere will be valuable for future planning of such projects\. Partnerships In course of the Project implementation the Fund established partnerships with different institutions, Governmental bodies, community groups, NGO-s, local authorities, international and local donor organizations (See Fund raising)\. They include: the State Chancellery, the Parliamentary Sub-Committee on Cultural Heritage Protection, the Parliamentary Commission on Tbilisi Issues, the Ministry of Finance, the Ministry of Culture, the Municipality of Tbilisi, the Monument Protection Department, the Patriarchy of Georgia, UNESCO Georgian office, Georgian ICOMOS, Open Society - Georgia Foundation (Soros Foundation), scientific-research institutes, museums, and NGOs working in the sphere of culture\. The Fund has a very active collaboration with the Council of Europe\. CoE participated with Special Action Plan for Georgia form very start of the Project, already during the IDF grant\. The Fund became a junction point for the WB and CoE in the CH sphere (E\. Shevardnadze, President of Georgia, pointed out this in his speech in Strasbourg in 1999)\. Co provided Technical Assistance in legislation, CH resources Inventory, Old Town Rehabilitation Strategy, arrangement of study tours\. These spared significant finances for the Project and strengthened capacity of the Fund's experts\. Most active and close partnership was established with the Monument Protection Department of the Ministry of Culture\. The Parliament of Georgia ­ CH Sub-Committee was actively involved in the Fund's work, organized several Parliament meetings on different issues of the Project, participated in the work of the Board of Trusties and Board of Experts of the Project\. Ministry of Finances is one of our main partners\. The Project had many problems in receiving counterpart financing, although the Ministry declares its support for the CH Project and all activities in this field\. Less efficient was the collaboration with the State Tourist Department, although the Head of the Department was a member of the Board of Trusties and the Georgian Culture Revival Board\. - 38 -  Close partnership was established with the Tbilisi Municipality and its relevant departments (e\.g\. Chief Architect's Office, Municipal Services, etc)\. In response to the Fund's demand, the Municipality allocated funds for Tbilisi pilot project sub-projects\. Although the Municipality showed eager interest in Project activities, it often failed to allocate money on schedule\. Contacts were established with the Georgian Patriarchy as most of the sites under the ERP are in church ownership and the Fund coordinates its activities the Patriarchy\. The Fund has been actively participating in the events and meetings related to the cultural heritage protection (meetings organized by the Commission on Old Tbilisi Issues at the Parliament of Georgia, ICROM seminar in Rome, ICOMOS seminars in Tbilisi on various issues of CH Preservation; conference on cultural heritage legislation and conservation in Thessaloniki, seminar on cultural heritage protection issues in Netherlands; seminar on city planning issues held by the German Development Agency; scientific session of the Monument Protection Department, UNESCO work-shop on listing the CH resources; work=shops of Ministry of Culture and CoE dedicated to the development of Cultural Politics in Georgia etc\. Efficient collaboration developed between the Fund and Sighnaghi municipality and local Government ­ both phases of the Sighnaghi Pilot Project were elaborated with their active participation\. They provided support for the Fund's activities in Sighnaghi\. Partnership was established with MDF in the frames of the Tbilisi Pilot Project (rehabilitation of the underground infrastructure facilities) and SIF (rehabilitation of hydroelectric power station in Shatili)\. The Fund's experts participated in works of the scientific board of the Monument Protection Department, State CH Board, Scientific Board for architecture and art restoration of Georgian Patriarchy, of Institute of Georgian art History\. Several staff members, after completing their contracts with the Fund started to work in The Monument Protection department, thus sharing experience gained during the Project and strengthening capacity of this institutions\. Tourism Development Implementation of the CH Project stimulated certain activities related to tourism development\. Among other activities, the Shatili Pilot Project envisaged opening of a local ethnographic museum to provide visitors with comprehensive information about the site; setting up folk hotels in 4 towers Implementation of the Project resulted in Sighnaghi in increase of number of visitors and engendered arrangement of the folk hotels\. Opening of a visitors' center in Sighnaghi under TCTI will facilitate the inclusion of Sighnaghi into tourist itineraries and assist in establishing contacts with tour agencies\. As a follow-up of the CH Project was implementation of the Small grant program "Scaling up Community Driven Development in Sighnaghi\." In Uplistsikhe, the Fund financed infrastructure improvement works, namely, construction of the visitor's center and installation of an access iron bridge for visitors\. The Fund elaborated and implemented the program envisaging the production and placement of new types of road signs to facilitate visitors' access to the cultural heritage sites\. - 39 -  In results of Fund's activities the areas of Old Tbilisi became more attractive for tourists and tourism related activities\. Old Town Master Plan Old Tbilisi Revitalization Strategy\. The Fund elaborated documents considering the methods and strategies of revitalization of the old city, which have been approved and recognized as guiding documents by all relevant bodies and organizations\. These documents are based on the special researches and provide a model for elaboration of the rehabilitation strategy for old towns\. CoE provided technical assistance for the research works\. Usage of GIS for elaboration of the strategy is an advantage of these documents\. Several relevant institutions have applied to Fund for using these documents in their work (e\.g\. for development of the Master Plan of Tbilisi, Sighnaghi)\. In result of these work special model for planning the rehabilitation works in the Old Town have been established\. The material gathered for it can serve as a basis for different planning and practical activities in Old Tbilisi\. Underground Waters Funds were raised from the Dutch Trust Fund aiming at elaboration of the Project for rehabilitation of the underground water System in Zemo-Kala\. The research works were conducted by joint Dutch-Georgian group and results are given in the Document, that provides assessment of this most important problem, recommendations, scope of work, cost\. This documents was used by MDF while designing works in Old Tbilisi and still provides precious information for solving this problem, that causes damage to the houses in Old Tbilisi\. Fundraising The Fund made effort to raise funds from international and local investment companies and donors: (a) In 1998, funds were raised from a Dutch Trust Fund to finance emergency works in the cave complex of Vardzia\. (b) During 1998-1999, a grant was obtained from a Dutch trust-fund to finance monitoring of (c) underground water level in Zemo Kala (Old Tbilisi)\. (d) The Council of Europe provided financial and technical assistance through its Special Action Plan for Georgia in the period from the year 1998 to 2000 for drafting laws in the field of cultural heritage\. The project was implemented under the coordination of the Fund and with the participation of the Parliament, the Ministry of Culture, the Center of Archaeology Studies and other bodies concerned\. (e) Grants were obtained in 1999 and in 2000 from the Council of Europe for making inventory of buildings located in the district of Zemo Kala (Old Tbilisi)\. (f) The document "Rehabilitation Policy for Old Tbilisi" was elaborated under the Administrative Arrangement between the Council of Europe and the Fund concluded on July 5, 2001\. It was published with the financial support of the Council of Europe\. (g) The Open Society - Georgia Foundation (Soros Foundation) provided funds for a photo exhibition dedicated to the cultural heritage of Georgia, which was held in Washington DC; also, for a research expedition to Javakheti, conservation of wall paintings of Skhalta Church and structural reinforcement of Kintsvisi Church)\. (h) The Trust Fund of the Italian Government contributed funds for the emergency conservation of the - 40 -  13th century wall paintings of St\. Nicholas' Church at Kintsvisi: the grant covered the costs of conservation materials, consultancy services of two Italian restorers and elaboration of a design by an Italian climatologist for reducing humidity in the building)\. (i) The International Oil Corporation financed a survey of the Church of the Forty Martyrs in Tbilisi\. (j) "Kartu Bank" allotted funds for purchase and installation of the equipment in the Kekelidze Institute of Manuscripts\. (k) NGO "Mravaldzali" supported phase 2 restoration works on St\. George's Church at Mravaldzali\. (l) The New Georgian Fund (founded by: TBC-Bank, Aldagi, Martin Bauer, United Georgian Bank, GWS, Georgian Trans Expedition) co-financed restoration of St\. Nino's Church in Poka\. (m) "Magti-Group" financed an engineering-geological survey of Khirsa Church (Sighnaghi Region) and a survey of archaeological materials discovered in Poti by the Archaeological Center of the Academy of Sciences of Georgia\. (n) Private sponsor purchased two UPSs for the State Museum of Fine Arts of Georgia\. (o) The Tbilisi Municipality provides counterpart funding for the restoration of historic houses on Erekle II Street, Rkinis Rigi, Bambis Rigi, Sioni Streets\. (Tbilisi Pilot Project)\. (p) A private sponsor financed a survey of cultural heritage monuments found in the surroundings of the Tsalka Reservoir\. (q) A private sponsor financed archaeological excavations in the surroundings of Antiokia Church in Mtskheta\. (r) A private sponsor supported the visit of the Fund Director to Istanbul, Turkey, the objective of which was to study the state of assets of Georgia's cultural heritage located in the depository of a Georgian Catholic church\. (s) The Fund "Gamarjveba" financed the participation of the Deputy Fund Director in a research expedition to the Holly Land, Israel, aimed at the study of monuments of cultural heritage of Georgia located there\. In total, during the four years of Fund's activities, 378 000 USD was raised from additional sources\. Social Impact The Fund's activities had an important social impact\. More then 500 specialists were given an opportunity to work in their spheres of specialization after a long interval of unemployment\. More then 1800 people were employed in the implementation of the sub-projects\. Through its activities, the Fund instigated creation of 37 independent construction companies\. Several hundreds of people in almost all regions of Georgia, where the projects supported by the Fund were implemented, indirectly benefited from the Project by attracting a spend from business trips and selling of construction materials\. Implementation of the "Neighborhood Fund" program in Tbilisi and Sighnaghi also had a social impact as a support for the dwellers of the listed houses who have no economic possibility to maintain there dwellings properly\. Lessons Learned Experience gained innovations, impacts, improvements Considering the nature of the LIL introduction and stimulation of amendments responding to the market economy in the sphere of management of the CH of Georgia is a very important aspect of Fund's activities - 41 -  along with the practical implementation of the conservation-restoration projects\. The changes refer to institutional building, capacity building, fund-raising, change of mentality and self cognition and strengthening public responsibility and engendering private initiatives\. The achievement of these objectives is strongly dependant on the development of the market-based economy, the private sector, legislative bases, bank system, tourism industry, reducing of poverty etc\., that are independent from Fund's activities\. Improvement of the legislation is one of the most serious output of the CH Project\. The important result of the Fund activities is introducing and instilling new modus operendi in the sphere of CH preservation, namely the tender based selection, which was not current in USSR\. Most of the specialists and related organization adopted this mode of work\. The Fund inspired foundation of new, independent NGO-s and construction firms\. Important experience has been gained in working with community groups\. It showed that to overcome the Soviet mentality i\.e\. lack of initiative and sense of responsibility ,is not easy task\. The community groups demand systematic `stirring up" and tend to wait for instructions\. But proper methodology of community participation ensures positive results, as e\.g\. in Shatili and Sighnaghi\. It would give better results in case of more funding and time\. Significant work was carried out while elaborating the "Revolving Funds Program" that can serve as a tool for sustainable activities in conservation-rehabilitation of the old town districts\. The program is based on the so called "Lisbon experience" and if becoming operational, will solve many problems in the old town preservation field\. The program is based on the public-private partnership and private investments and credit lines (mortgage loans)\. The Fund can't start the program itself, as the character of the LIL doesn't permit activities related to credits, revenue etc\., besides, the program needs initial funding, approximately 1 800 000 USD, that is not available in our budget\. But anyway, the elaboration of this mechanism is an important achievement in this field\. In regard to Old Tbilisi problems, the work carried out by "Tbilisi Group" is very important\. Based on the research and inventory works (including the thematic maps created in GIS), the group prepared two important documents: " Kala - strategy for rehabilitation of the district" and "Main issues of urban rehabilitation of Tbilisi" (published in 2002), that are admitted as methodical guidelines for the rehabilitation and urban planning in the old districts of Tbilisi\. The method of application of the GIS for creating the thematic maps based on inventories and scientific researches, is an important innovation in the Georgian CH preservation\. The Fund's experts offered the Parliament to make amendment to the taxation regulation in regard with the CH; namely, to reduce amount of taxes for restoration works (they are very expensive all by themselves; and taxing takes nearly more thatn one third of the allocated funds); besides, we offered to make clear distinction in taxing restoration works in the Old Town (the taxes must be very low) and the new construction in same districts (that must be significantly high); this would stimulate private investors to prefer restoration of the old houses instead of destructing them and building new concrete structures\. Fund's Technical Group elaborated methods and mechanisms for prompt assessment of the structural-engineering condition of the CH resources and elaboration of the relevant cost-estimations\. Fund's expert strengthened their capacity in assessment of underground water problems, in monitoring and planning relevant activities\. - 42 -  Due to the Fund's activities, the interest of the media in CH increased\. In comparison with 1998, the number of articles and TV broadcasts related to the CH increased considerably\. Important result is introducing the new mechanism of tender selection - procurement procedures - in this field and accustom the relevant organizations and specialists to these rules and regulations\. On initial stages of Fund's activities there were many problems with explaining these rules to the applicants, beneficiaries, contractors\. The contractors, used to the Soviet methods of work, were trained by Fund in the new mechanism of procurement, submitting the withdrawal applications, realistic planning of implementation time, elaboration of the projects etc\. The beneficiaries learned how to prepare project-proposals, single out the essential issues, assess the risk-factors etc\. The Fund's activities caused disintegration of the soviet monopolistic system in CH protection field\. 35 new building companies were established that participate in the tenders announced by the Fund\. The Fund introduced in the CH preservation sphere the issue of community based planning, of performing the social investigations and social evaluation of the performed activities\. Sustainable Development Concepts\. For the four pilot sites, the sustainable development concepts (Site Management Plans) have been elaborated by the special consulting firms\. The objective was to prepare a base for the II phase works on these sites, but the concepts exceed these needs and can serve as a base for further activities on these sites, to lay down a conceptual framework for the preservation and protection of these sites\. These concepts provide bases for corrects and efficient management of Old Town CH\. This two-phase approach, which was not envisaged in the initial design of the Project, proved to be very efficient In the course of implementation of the ERP sub-projects certain new technologies have been elaborated and tested\. E\.g\., production of the special ceramic tiles for the roofing, including the glazed tiles, based on the study of the old technologies; the new hydrophobic material Boxan (German production) was tested for the stone conservation in Dzalisa, Vani and Gonio-Aphsaros and found appropriate for these needs; the biocide Metatin has been tested in Kintsvisi for the treatment of the results of micro-organism attacks, causing the damage of the painting layers\. All these new methods and materials may be used on other monuments and serve as an important tool in the conservation practice\. It must be noted that in cases of application of these new materials and methodologies, thorough testing has been carried out in independent bodies and laboratories to be sure of the results of their application\. The Fund engendered the creation of the computer data bases and information banks in different fields of CH\. Along with the works aiming at safeguarding - conservation-restoration - of the CH resources, implemented under ERP and 4 Pilot Projects, the significant improvement of the archives and depositories has been carried out through arranging the climatic equipment and creating the computer information banks\. - 43 -  The Neighborhood Fund program proved to be socially effective, but post factum it seems it would have been better if whole money was spent only on one large problem (e\.g\. roofs) instead of dispersing on many different trifles\. The unsolved problem of underground water and hence the basements, still make any works in this part of Tbilisi less effective\. In frames of the "Neighborhood Fund" program small repairs of different types were implemented on 36 listed buildings in Zemo Kala, Old Tbilisi (Total of 41 applications were accepted\. In all, 7690 m2 of tin roofing was replaced; 13470 m2 of facades and balconies were painted; 25002 of wood was placed under tin roofing; 115 m2 of doors and windows were replaced and 127m2 of flooring was laid\.) and 37 buildings in Sighnaghi\. (Total of 43 applications were accepted\. Works are finished\. In all 4430 m2 of tin roofing was replaced, 1010 m2 of tiling was reset, 1205 m2 of facades and balconies were painted; 2740m2 of wood was placed under tin roofing, 137m2 of doors and windows were replaced and 1140m2 of flooring was laid)\. Weak Points and Problems The appraisal period of the Project was very short (from mid December 1997 until mid-January 1998) and thereafter\. Already during the implementation period, many amendments had to be made (in programs, in budget, in staffing etc) that, taking to consideration the short duration of the Project (that is, three years) caused many difficulties for the Fund because many things had to be changed during the implementation\. Several changes of the Task manager and WB team also caused difficulties in the Fund activities\. although for last three years the previous Task Manager (E\. Peterson) and the most recent one (J\. Bernstein) worked in close collaboration, and this had a positive effect\. In the future, it would be better to allocate more time and funds for the preparation period to avoid having to make changes in the initial program\. Initially the social-economic development of the country was assessed too optimistic, and this occurred to be unrealistic and this caused the fact that involvement of the private sector was less than envisaged or desired\. The initial design of the project was too versatile - comprises too much diverse activities (with restricted budget and within short time)\. Probably it would be better to concentrate on one main activity (e\.g\. ERP) and subdue everything to it\. The results would be more visible and effective\. Start of the Project took more time that envisaged, as the PIU itself and the contractors and partners especially had to get aquatinted with the WB regulations (especially that of Procurement), tender procedures; initial program given in PAD had to be revised as well as budget etc\. During the implementation of the Civil works there arouse certain problems\. There was limited number of firms or organizations in CH restoration\. Especially multidisciplinary\. This concerns mostly the highly specialized fields (painting restorers, chemists, stone restorers etc)\. This problem can't be solved in short time, even in several years, as far as there must be social demand for these specializations\. The Project activities stimulated this process and engendered foundation of independent firms and companies\. In regard with the timing, the excessively time-consuming procurement procedures also affected the time (speed) of implementation\. Taking into consideration that the restoration works are mostly tightly linked with seasons (best time late spring - summer - early autumn), the procurement procedures sometimes hinder - 44 -  appropriate beginning of implementation\. Concerning the ERP architectural projects: most of them were already completed ( at least in main) and approved by the scientific board of the Monument Preservation Department\. So there existed the group of authors\. It was necessary to finalize the working design and to recruit the supervisors\. The sums for these designing-supervision contracts were small enough (ranging from $1000 to$10 000)\. Due to the small amount of money and on the emergency character of the works it would have been more appropriate to make a direct contract with the group of authors, particularly because their work was approved by the Main Board and being the authors of the project, they have more knowledge and experience of the monument, than anybody else\. But as in the Credit Agreement, direct contracts were not envisaged, it occurred to be impossible and caused the significant loss of time\. After long negotiations with the WB, we were allowed to hire the consultants for supervision (authors of design) through direct contacts\. During the initial stages of project implementation, there was one issue with regard to hiring the consultants\. According to the Credit agreement, hiring of consultants must be done by QCBS method\. The CQ and LC are also permissible, but only for the C part of the Project (TA)\. Up to now the sums of the contracts for the consulting firms, concluded by the Fund, are very small, the number of contracts is big\. Hence applying of the QCBS to this small contracts is very inconvenient\. the firms were hired by QCBS method (only several firms in ERP were hired by CQ based on the WB no objection )\. Based on all these\. applying CQ method for hiring firms for small tasks solves the problem\. This problem was solved with the help of the Bank Team\. There was still one problem: under ERP, the cost estimates in the project applications were given in dollars, but the contracts are concluded in Lari\. It would be better if we indicated the currency for the moment of concluding the contract\. It would spare the loss of money for contractors, as far as the Georgian currency is not stable\. The contractors were displeased with this (sometimes from signing contract till last disbursement passes enough time and the currency changes significantly)\. The delay in receiving of No Objections from the World Bank also hindered in a way timely implementation of sub-projects\. Decision made by the World Bank and GoG that evaluation and selection of the project proposals under ERP should be made by the Georgian Revisal Board and not the Fund itself, caused significant delay in implementation of the projects\. The Fund had enough capacity and skills to make selection on his own and to undertake responsibility for the decision\. On the other hand, this ensured wide community support and involvement in the ERP activities\. Due to the character of LIL it was impossible to make operational "credit lines" or a "revolving funds program" etc, that could ensure sustainability of the Fund\. There were many complications in the work due to lack of experience of PIU during the appraisal of the Project and due to the speeding the appraisal on the behalf of the WB\. and certainly due to the present economical and political situation in Georgia\. In the Neighborhood Fund program, if the grant amount for each family were larger, the social effect would be greater\. (Small sums dispersed on many small problems do not solve essential problems)\. Initially it was not envisaged the time and funds for designing the sub-projects; it was not taken to consideration that the Procurement guidelines do not match well in the rules of restoration work, are not flexible enough\. In case of Old Towns the WB rules that prevented implementing works for private possession caused - 45 -  problems, as most of the buildings in selected areas are private dwellings\. The idea was that the Projects finances the exterior works and the private owners- interior\. But due to the poor economic condition of the people, this was hardly achievable\. The works implemented by the Fund certainly had positive effect in regard with improvement of the condition and architectural image of the buildings, but it would have better effect if there was possibility to rehabilitate these buildings in whole\. Neither in Old Tbilisi, nor in Sighnaghi the population could provide counterpart funding\. Taking to consideration the short term of the Project and the present situation in Georgia in whole, it seems unrealistic to state as one of the main goals of the Project the development of tourism, development of new fee collecting and cost recovering systems and methods for monuments and their testing on four of the pilot sites and some others, which hardly can be achieved in such short time\. They must not serve as the indicators for evaluating the fund activities\. A number of items of the original program appeared unrealistic Economic assessment\. It was envisaged in PAD that training would be provided for Georgian specialist in economic assessment on Pilot sites\. This was not done, but the "Site Management Plans" for 4 Pilot Projects considered economic issues among others\. With regard to fee collection mechanisms, the issue is considered in the Sustainable Development Concepts for Pilot sites\. Beside, the Fund's experts elaborated a document dealing with main problems in this regard, e\.g\. different types of monuments, amount of entree fee etc\. several recommendations are given in regard of the different possibilities of cost recovery mechanisms on different sites\. These are mostly theoretical considerations, based on experience of our experts but without conducting special economic and cost-benefit surveys\. As far as to test new methods and mechanisms demand special decisions and permissions of different relevant institutions and changes in Tax policy, there was not possibility to carry out this work\. One big problem was the Georgian counterpart financing, that was often delayed and this in turn resulted in delay in sub-project's disbursement and implementation\. Obstacles Ø Therateofthegrowthoftourismdoesnotcorrespondtotheoriginallyplannedlevelowingtothe political and economic condition in the country, which impedes the generation of income from this sector, while this was assumed to be one of the outcomes of the Project; Ø Owingtothepooreconomiccondition,thelocalcommunitiesappearedunabletoprovidefinancial contribution to the preservation of cultural heritage despite their great desire to do so, while their financial involvement was originally envisaged under the Project; Ø Thelawon"SponsorshipandCharityintheSphereofCulture",whichmusthaveservedasamajor factor of the involvement of private sector in cultural heritage activities, remains un-adopted by the Parliament of Georgia\. Owing to this, cultural heritage remains dependent on the support of foreign donors and the Government; Ø Taxationsystemeffectiveinthecountryalsocreatesseriousproblemsbecause35%-40%offunding obtained for restoration/conservation activities is applied for paying taxes\. It is our opinion that adoption of taxation incentives for such activities will markedly improve the condition of cultural heritage monuments as well as stimulate private sector initiatives, increase employment, generate - 46 -  income and, to a certain extent, relieve burden from the state which fails to provide adequate budget for cultural heritage\. Ø Thedelayinreceivingcounterpartfundsfromthecentralbudget\. Ø Thebankingsysteminthecountryisnotdevelopedandreliableenough,thatprevents establishing "credit lines" and other activities for engendering small enterprises etc\. Ø Statisticalservicesareveryundevelopedinthecountryanditisdifficulttoobtainrelevant information\. We understand that the sustainability and viability of the outcomes largely depend on the economic-political situation in the country\. The concepts and mechanisms devised within the Project will not work unless adequate conditions are created in the country (e\.g\. improvement of the legal framework, establishing incentives for private sector investments, support to small and medium enterprises, empowerment of local communities, reduction of poverty, etc)\. Outputs The Project outputs were largely attained (please, see above)\. Though, it is to be mentioned that considering the nature of the LIL, the realization of the mechanisms that would ensure the long-term development of cultural heritage was not possible\. However, the LIL played a decisive role for this sector, as well as for the stimulation and mobilization of local communities\. It was within the LIL that the mechanisms, the realization of which could be possible under a different type of a credit, were devised\. It can be regarded that the LIL prepared conducive grounds for the further development\. It served to improve the management and promotion of cultural heritage (through educational TV shots, video films, bulletins, journals, brochures, reports published through mass media, web-site, exhibitions, which focused on the role of cultural heritage, significance of separate monuments, and contained appeals to public for the involvement in cultural heritage preservation)\. 90 sub-projects have been implemented in different fields of the CH, more than 270 CH resources have been saved due to the CH Project activities\. Outcomes Ø TheProjectplayedaroleofthecatalystinthe break-upofthemonopolisticsysteminthefieldof cultural heritage management typical of the Soviet period, which was followed by the creation of independent consulting and restoration companies (more than 30), and adoption of new market-oriented systems of cultural heritage management (introduction of tenders, etc); Ø Projectactivitiesservedtoincreasetheinterestoflocalcommunitiesintheirculturalheritageand strengthened the sense of responsibility; the local communities seem to be more actively involved in decision-making and in fund-raising; the number of local initiatives has increased markedly; the communities tend to recognize cultural heritage and cultural tourism related to it as a source of income; the community-based participatory approach applied by the Project has significantly increased the sense of ownership in local communities (e\.g\. in case of the Tbilisi Pilot Project)\. Ø TheimplementationoftheProjectconvincedusthattheculturalheritageisafactorwhichcan stimulate social and national cohesion even in multiethnic and conflict zones\. I can bring an example of - 47 -  projects that we implemented in Javakheti and in South Ossetia (Ikorta, Azmana, Tighva), where people of various nationalities and religions worked side by side and continue to maintain the monuments; Ø TheProjecthadanimportantimpactonsocialsphere-ithasstimulatedpovertyreductionby employing more than 2000 people, including 500 specialists\. Ø Despitetheabove-mentionedsituationintermsoftourismdevelopment,theactivitiescarriedoutunder the Project had an important impact on this sector as well\. In Shatili, several towers were converted into guest houses; a museum, which is expected to bring some income generating activities for the local community, will be opened\. In Uplistsikhe a visitor's centre was constructed and the site infrastructure was enhanced\. The activities carried out by the Project encouraged local residents to convert their houses into folk hotels (7)\. Apart from this, with the recommendation of the PIU, Sighnaghi was included in the World-Bank supported trans-Caucasian Tourism Development Initiative\. This will favor the development of tourism infrastructure and generation of income in the region\. The Project activities in Old Tbilisi encouraged local investors to take increased interest in this district and also, resulted in the growth of the number of visitors, which, in turn, will bring additional income to the cafes, art galleries and crafts studios located there\. Ø Theimplementationoftheprojecthaspromotedcapacitybuildinginthefieldsofculturalheritage management and restoration\. Within the framework of the sub-projects new methods and technologies were tested and adopted (e\.g\. reinforcement of rocks in Uplistsikhe, biocide treatment of Kintsvisi murals, etc)\. The PIU staff, having acquired significant experience during the implementation of the Project, at present provides consultations to various organizations and individuals\. Ø TheProjectencouragedlocaldonorsandprivatesectortotakeincreasedinterestinculturalheritagein terms of making investments in this area\. The allocation of funds by the WB served as an example to them\. This is attested by the fact that the PIU managed to raise USD 370 000 from external sources for the implementation of various projects; Ø Themechanismof"RevolvingFunds"andtheconceptsforthesustainabledevelopmentof thepilot sites, devised within the Project, will continue to favor sustainable management of cultural heritage and application of modern approaches to management and financing\. The materials developed within the Project are now used by various specialists employed in this sector; Ø WewouldparticularlypointouttheeffortsmadebytheProjectintermsofdevelopinglegal framework\. The law "On Georgia's Cultural Heritage Protection" made a significant contribution to the improved management of cultural heritage and institutional arrangement in the given sector\. Several other laws have been drafted in the framework of the Project by envisaging the European experience\. Ø TheProjectmadeasignificantcontributiontotheenhancementoftheenvironmentontheProjectsites (improvement of infrastructure, prevention of destruction processes, landscaping of areas, etc); Quality of World Bank's Contribution First of all, the main contribution is the Credit allocated for the needs of the CH preservation sphere for Georgia, that was rare instance in the World Bank's practice\. In a way, it was a kind of risk, and the Bank ran this risk\. - 48 -  The WB task team did its best to support the CH Project\. Contribution of Mr\. Robert Maurer, who elaborated "Cultural Heritage Initiative" Project (IDF Grant) must be marked out as well as contribution of Mr\. Tom Blinkhorn, who overtook the labor of preparing and launching CH Project (LIL Credit); especially, contribution of Mr\. Eric Peterson and Ms\. Janis Bernstein must be emphasized - as already mentioned above\. They worked in tight collaboration on our Project and this had very positive impact\. Taking to consideration, that this was first stand-alone cultural heritage project for the World Bank, there certainly arose some problems, but the Task Team always tried and succeeded to solve this problems as fast as they could\. On every stage of project development this support was very apparent and visible\. The WB provided international consultants in Management, Financial management, MIS monitoring, Old Town development Strategy\. This was essential for the successful start and development of the project\. The Task Team provided aid in Project Implementation Rapports, Key performance indicators, in social surveys\. The contacts with the Task Team was always very prompt, timely (in spite of the fact that the WB being rather bureaucratic organization takes too much time for decision making and responding to the on-going problems)\. They acted as mediators between the Fund and other Departments of the WB\. Provided valuable advises and recommendations\. The Task Manager and Task team always thoroughly considered the Fund's suggestions, proposals in regard with different issues (e\.g\. budget revisions, amendments to Pilot Site program, etc\.)\. The Task manager supported the Fund in relations with the Ministry of finances, demanding timely allocation of counterpart financing; even in dealing with problem with the American contractor who delayed supply of equipment for one of the ERP projects\. It was very good that in the Project program special attention was paid to the institutional building, capacity building, strengthening of local communities, human resources and other issues that must provide sustainable development of the CH preservation field in Georgia\. The Bank rightly considered, that only practical conservation activities are not enough to ensure future sustainable development of this field and it is more important to provide the country with "tools" for future independent activities\. - 49 -  Additional Annex 9\. Partner Comments: Ministry of Finance of Georgia - 50 -  - 51 -

REVIEW

P003654

Document of The World Bank Report No: 31460 IMPLEMENTATION COMPLETION REPORT (SCL-41240 TF-23133) ON A LOAN IN THE AMOUNT OF US$400 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE SECOND NATIONAL HIGHWAY PROJECT June 23, 2005 Transport Sector Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2004) Currency Unit = Yuan Yuan 1\.00 = US$ 0\.1207 US$ 1\.00 = Yuan 8\.2782 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AADT - Average Annual Daily Traffic BMS - Bridge Management System E&M - Electrical and Mechanical EAP - Environmental Action Plan EIA - Environmental Impact Assessment EIRR - Economic Internal Rate of Return ENPV - Economic Net Present Value FIRR - Financial Internal Rate of Return FYP - Five Year Plan GPCD - Guangdong Provincial Communications Department GPFC - Guangdong Provincial Freeway Company Limited HPCD - Hunan Provincial Communications Department HPECDC - Hunan Provincial Expressway Construction & Development Corporation ICB - International Competitive Bidding Jingzhu - Beijing-Zhuhai Expressway LLH - Loudi-Lianyuan Highway MOC - Ministry of Communications NCB - National Competitive Bidding NH2 - Second National Highways Project NEPB - National Environmental Protection Bureau NPV - Net Present Value NTHS - National Trunk Highway System PAPs - Project-Affected Persons PCD - Provincial Communication Department PMS - Pavement Management System RAP - Resettlement Action Plan RMB - Chinese Renminbi SEPA - State Environmental Protection Authority SEPB - State Environmental Protection Bureau SDPC - State Development and Planning Commission SPC - State Planning Commission TOR - Terms of Reference XLE - Xiangtan to Leiyang Expressway XGE - Xiaotang to Gantang Expressway XZH - Xiangtan to Zhuzhou Highway Vice President: Jemal-ud-din Kassum Country Director David R\. Dollar Sector Manager Jitendra N\. Bajpai Task Team Leader/Task Manager: Christopher R\. Bennett  CHINA SECOND NATIONAL HIGHWAY PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 3 5\. Major Factors Affecting Implementation and Outcome 11 6\. Sustainability 12 7\. Bank and Borrower Performance 13 8\. Lessons Learned 15 9\. Partner Comments 17 10\. Additional Information 28 Annex 1\. Key Performance Indicators/Log Frame Matrix 29 Annex 2\. Project Costs and Financing 30 Annex 3\. Economic Costs and Benefits 33 Annex 4\. Bank Inputs 46 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 49 Annex 6\. Ratings of Bank and Borrower Performance 50 Annex 7\. List of Supporting Documents 51 Map IBRD 27558  Project ID: P003654 Project Name: CN-Nat Hwy2/Hunan-Guangdong Team Leader: Christopher R\. Bennett TL Unit: EASTR ICR Type: Core ICR Report Date: June 23, 2005 1\. Project Data Name: CN-Nat Hwy2/Hunan-Guangdong L/C/TF Number: SCL-41240; TF-23133 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Roads and highways (100%) Theme: Municipal governance and institution building (P); State enterprise/bank restructuring and privatization (S); Rural services and infrastructure (S) KEY DATES Original Revised/Actual PCD: 10/07/1994 Effective: 11/27/1997 11/24/1997 Appraisal: 04/05/1996 MTR: Approval: 12/17/1996 Closing: 12/31/2003 12/31/2004 Borrower/Implementing Agency: People's Republic of China/Hunan and Guangdong Provincial Communications Departments Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Nicholas C\. Hope (Acting) Country Director: David R\. Dollar Nicholas C\. Hope Sector Manager: Jitendra N\. Bajpai Richard G\. Scurfield Team Leader at ICR: Christopher R\. Bennett Alfred Nickesen ICR Primary Author: Jacques Yenny 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The project had the following objectives: (a) relieve road transport congestion and improve the integration of interregional trade and commerce between Hunan and Guangdong by assisting in the development of two key sections of the National Trunk Highway System (NTHS) in the principal North-South transport corridor; (b) strengthen institutional capacity at the Hunan and Guangdong Provincial Communication Departments (PCDs) and related institutions; (c) develop a policy dialogue in the areas of the commercialization and corporatization of provincial expressway companies, highway maintenance management, and transport and economic integration; and (d) improve the safety of road transport\. The project objectives were clear and in line with the Bank's Country Assistance Strategy (CAS) presented to the Board in June 1995 and the Progress Report of March 26, 1996, supporting China's needs to rapidly modernize and expand its highway system\. The objectives were also consistent with the Government's request for continuous assistance of the Bank and other multi and bilateral agencies in developing its NTHS\. The project was the second in the series of national highway projects NH1-NH2-NH3-NH4 on the Beijing-Zhuhai (Jingzhu) expressway in the provinces of Guangdong, Hunan, Hubei, Hunan and Hebei\. All four projects supported an integrated approach to corridor development\. Besides investments in priority expressway links, the project also supported continued institutional development and sectoral reforms aimed at modernizing the management of the highway system\. 3\.2 Revised Objective: The objectives were not revised\. 3\.3 Original Components: The original project comprised the following components: (a) Construction of: (i) Xiangtan to Leiyang Expressway (XLE), a 169-km divided, four-lane, access-controlled toll highway in southern Hunan; and (ii) Xiaotang to Gantang Expressway (XGE), a 109-km divided, four-lane, access-controlled toll highway in northern Guangdong\. The works would include construction of administration, service and maintenance facilities as well as the supply and installation of electrical, electronic and mechanical (E&M) equipment for tolling, telecommunication, traffic monitoring, and lighting of interchanges, toll plazas and service areas; (b) Interconnecting roads programs: (i) in Hunan, consisting of new construction and upgrading of four roads, with a total length of 39 km, including a new 16 km divided, four-lane, Class I, Xiangtan-Zhuzhou Highway (XZH); and (ii) in Guangdong, consisting of new construction and upgrading of 10 short road sections, with a total length of two km; (c) Construction of Loudi-Lianyuan Highway (LLH), an auto-only, access-controlled, Class II, connecting road of 60 km length; (d) Construction supervision services for XLE, XGE, the interconnecting roads programs in Hunan and Guangdong including XZH, and LLH; - 2 -  (e) Studies/technical assistance in: (i) highway maintenance management in Hunan, (ii) expressway commercialization and corporatization in Hunan; (iii) transport and economic integration in Guangdong; and (iv) expressway safety in Guangdong and Hunan; (f) Staff training programs in Hunan and Guangdong, covering all aspects of highway planning, design, construction, operation, finance, and maintenance; and (g) Equipment for: (i) control of construction quality and monitoring of the environment; (ii) operation and maintenance of XLE and XGE after their completion; and (iii) maintenance of the provincial road network, the Road Data Bank (RDB) and the Pavement Management System (PMS) in Hunan\. 3\.4 Revised Components: The components were not revised\. 3\.5 Quality at Entry: The overall quality at entry is rated satisfactory\. The assessment is based on: (a) the consistency of the project objectives with China's priorities for the sector and of the Bank's strategy for future highway lending in China; (b) the importance given to improving the capabilities of highway personnel through training; and (c) the attention given to Bank policies, in particular regarding environmental protection and resettlement\. Project monitoring indicators were agreed\. Although detailed design had been completed by appraisal for both expressway sections, once work started unexpected geological difficulties appeared, which required numerous design and contract changes during execution\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Overview: The overall achievement of the project objectives in the Implementation Completion Report (ICR) is assessed as satisfactory\. Despite some delays in implementation due to technical difficulties in both provinces related to inadequate designs, and slow procurement of electrical and mechanical (E&M) works in Hunan, the project objectives were substantially met\. The expressway has attracted a significant portion of the corridor traffic, which has reduced congestion and improved travel times in the corridor\. The improved road infrastructure has stimulated socio-economic development in the corridor throughout the province and regionally\. Both Provincial Communications Departments (PCDs) took advantage of the training and institutional strengthening programs to improve their operational effectiveness\. Improvements were made in traffic safety but one section of road in Guangdong was problematic and required additional works to reduce traffic accidents\. - 3 -  A\. Relieve Road Transport Congestion and Improve the Integration of Inter-regional Trade and Commerce The Xiangtan to Leiyang Expressway (XLE) in Hunan was opened to traffic in December 2000 and the Xiaotang to Gantang Expressway (XGE) in Guangdong opened in April 2003\. All interconnecting and other roads included in the project were completed and opened to traffic\. The objective of reducing congestion on roads parallel to the new road and increasing the parallel road speeds was met\. Of the total 2003 corridor traffic, the expressway took 72% in Hunan and 93% in Guangdong\. The diversion rate to the expressway is similar to that predicted in Hunan, but 60% higher (93% vs\. 55% predicted) in Guangdong\. Travel time has been considerably reduced in both provinces\. The project has therefore made a significant contribution to inter-regional trade\. It was a key component of the Beijing-Zhuhai (Jingzhu) Expressway, linking the north and south of China\. Crossing the provinces of Guangdong, Hunan, Hubei, Henan and Hebei over a distance of approximately 2,500 km, the Jingzhu Expressway had the highest priority of the 12 national trunk routes in the NTHS\. As an example of the trade benefits, in 2003, even before the opening to traffic, the city of Shaoguan in Guangdong started the development of its "Expressway Economic Zone" and already reported 36 contracts signed with a total investment of Y1\.5 billion (about US$180 million)\. The economic benefits of the project are considered sustainable, without any predictable element of risk, as traffic has been growing steadily since opening\. B\. Strengthen the institutional capacity at the Hunan and Guangdong Provincial Communication Departments The impact of technology transfer through training is not easy to measure due to difficulties in defining baseline parameters\. However, the eagerness shown by the leaders of both provinces to engage their staff in training activities is evidence of the importance they attached to acquiring modern highway management techniques\. More staff received training than the number planned in the Bank's Staff Appraisal Report (SAR)\. Overseas training took place in North America, Australia and eight different countries in Europe\. The topics of training included: operational management, maintenance management, and information systems, traffic engineering and management, mountainous expressways and tunnel maintenance, and highway safety\. Numerous training courses were also organized locally\. Through overseas training and study tours, and participation in studies and supervision during project implementation, the highway staff of both provinces received satisfactory exposure to new concepts and practices in highway management and technology\. C\. Develop a policy dialogue in the areas of the commercialization and corporatization of provincial expressway companies, highway maintenance management, and transport and economic integration Hunan Province: The expressway commercialization study provided useful guidance to HPCD for moving the toll road sector of the province towards market based activities\. The toll rate study provided further useful guidance for adjusting toll rates on the expressway to the market and to be consistent with other provinces\. The toll rates retained for Hunan and Guangdong, of about 0\.45 Y/vehicle-km for small vehicles and ranging from 1\.30 to 1\.35 for heavy vehicles, are close to the average of toll rates charged in a number of other provinces\. The highway maintenance study made recommendations regarding the collection of information necessary for the organization of maintenance, modern technology for pavement maintenance, and maintenance planning and financing\. In parallel with the study, the HPCD further developed its - 4 -  pavement and bridge management systems\. By the end of the project, all the main paved roads and all bridges in the province had been registered in the systems\. Guangdong Province: The study on transport and economic integration provided useful information on transportation and its potential role in economic development\. It also gave valuable suggestions on planning and decision making for new transport networks, and identified transport nodes where goods and passenger terminals could be located for modal interchanges\. D\. Improve the safety of road transport\. Hunan Province: A number of road safety manuals were prepared and provincial road safety seminars were held annually since 1997\. All were very well received and professionally executed\. The seminars continued under the Fourth National Highway Project (NH4) and Hunan officials have indicated that they will continue with the seminars after completion of NH4\. A pilot study and remedial works at black spots was conducted on NR 107 to serve as a model for the province\. All road safety components under NH2 were completed satisfactorily and were followed by an implementation phase under the NH4 project\. The key performance indicators given in Annex 1 show a substantially reduced number of accidents involving fatalities per 10,000 registered vehicles from 18 in 1999 to 5 in 2003, and well below the 2005 objective of 10 accidents per 10,000 registered vehicles\. Guangdong Province: The component in Guangdong Province focused on expressway safety given by the rapidly expanding network of expressways in the province\. Several efforts were made towards establishing an Expressway Road Safety Organization comprising the various parties involved, such as the traffic police, the Highway Administration Bureau (HAB), the maintenance units, and the maintenance operating companies\. The HAB has also been issuing a monthly road safety report since April 2001, distributed to all the relevant parties\. In 1999, the Ministry of Communication (MOC) issued an order to regulate over-loaded vehicles\. Guangdong province introduced a series of measures to address the problem, including stopping the overloading vehicles and unloading the goods and levying fines for damage of the roads\. Fixed weighing stations were established in 2001 under a pilot project\. The province continued with its black spot eradication program and introduced a number of road safety initiatives\. The safety indicator for Guangdong at 12 fatalities per 10,000 registered vehicles for 2003 is in line with the benchmark set in the SAR for 2002, and substantially lower than the 1996 baseline accident record of 20 fatalities per 10,000 vehicles\. 4\.2 Outputs by components: Construction of Works included expressways, interconnecting roads and other roads as follows: (for components A, B and C - US$938\.4 million, SAR estimate includes contingencies; US$980\.0 million ICR; actual costs include all civil works) A\. Construction of Expressways Hunan Province: This was the first Bank financed highway project in Hunan\. Expressway construction included 10 interchanges and about 37 km of connecting roads\. The project's original slope design had to be modified and problems for bridge foundations were encountered with karstic holes\. These factors contributed to increase the contract costs to some 43% above appraisal estimates\. The quality of construction was rated excellent, with smooth pavement and an important effort made for the planting "which makes this expressway nice in the landscape" (April 2001 supervision mission)\. The expressway was opened to traffic on December 26, 2000\. - 5 -  Guangdong Province: The expressway traversed a mountainous area and 25% of the 110 km were tunnels (14 km) and bridges (13 km)\. Several alternative alignments were evaluated at appraisal and the completed detailed design was reviewed and found satisfactory by foreign consultants in 1996\. In spite of what appeared as a thorough preparation, the contractors soon encountered substantial difficulties\. The complex geological conditions, which had been underestimated in the design stage, affected the tunnels, bridge foundations and slopes of cuts and embankments\. In many locations, the original design was not appropriate for the given topography and geology\. In addition, the construction of a new standard highway in the same corridor as the expressway had changed the existing terrain conditions and created new obstacles for bridge pillars in particular\. The work contracts started in November 1998, and the larger contracts that included bridges and tunnels took three years until November 2001\. The opening of the expressway was delayed by about 18 months until April 2003 because of the need to redesign many parts of the project\. Despite the numerous problems and delays encountered during construction, the final result was deemed very good when a Bank mission visited in July 2003\. All the slopes appeared very stable, the tunnels looked dry with appropriate lighting and ventilation, and the pavement is smooth with good marking\. The expressway looks well integrated in the landscape as a result of the great efforts made for the greening and planting, and rest areas have been provided for drivers to stop and admire the frequent scenic views\. B\. Construction of Interconnecting and Other roads Hunan Province: The interconnecting roads program included: (i) the construction of the Xiangtan-Zhuzhou (XZH) Highway, which was a 16 km divided, four-lane Class I road; and (ii) the upgrading of 23 km Class II roads linking the expressway to various cities and towns, namely: 5 km linking Zhuting interchange with PR1815; 4\.7 km linking Xintang interchange with PR1820 to Hengshan and Hengdong; 3 km at Xinshi interchange linking with the Xiangjian bridge and NR107; and 8\.4 km linking Leiyang interchange with NR107\. Although the interconnecting roads were completed, the linking of the expressway with the road network was a weakness in the project\. For example: (i) interchanges were not always located in the most appropriate sites; (ii) the city of Hengyang was served only by a Class II road in anticipation of a future connection to the Kunming expressway, and in the interim, it is poorly served for connections to NH2; (iii) some local governments had insufficient funds to upgrade their connecting roads; (iv) the locally financed road section to Zhuzhou had inconsistent design standards relative to the NH2 financed sections\. Bank missions identified a number of safety related issues for the local roads which were addressed to varying degrees\. Lessons learned from NH2 were applied to other Bank funded expressway projects, for example, projects now include all interconnecting roads with a clear agreement with local governments as to the required works and delivery schedule\. Guangdong Province: Interconnecting roads consisted of new construction and upgrading of 10 short road sections, with a total length of 2 km to connect the interchanges with existing Class II roads\. These works were included under the contract for the expressway\. C\. Construction of Loudi-Lianyuan Highway The Loudi-Lianyuan Highway (LLH) links two important industrial cities and is part of a new route from Changsha to Lianyuan to be extended in the future to western Hunan\. Construction of this road also encountered technical difficulties due to terrain and geology\. The frequent rains usually allowed work for only 120 days per year\. The contracts signed for a period of 30 months were overly ambitious and had to be extended to 48 months\. The road was finally opened to traffic at the end of September 2002\. Many houses were built in the vicinity of this road during the extended length of the construction period, in spite of the fact that the highway and its accesses were designed as an auto only access controlled highway\. The original design specified a speed of 80 km/h, in accordance with MOC standards, but Bank missions - 6 -  expressed concern about the incompatibility of high speed vehicles trying to mix with pedestrians, bicycles, tractors and animal carts and suggested that the road be reclassified\. The MOC drew lessons from this experience and cancelled this type of road in the new standards\. D\. Construction of Electrical and Mechanical Works (US$86\.2 million SAR; US$29\.8 million ICR) In Hunan, substantial delays were experienced with the procurement of the E&M equipment\. These were not completed until February 2004 and formally handed over in June 2004\. Due to this delay the expressway, and in particular the toll collection, had to operate for three and a half years with a manual system\. The delays also required extending the loan closing-date by one year\. Guangdong province took advantage of its previous experience with E&M procurement and managed to complete the works before the opening of the project to traffic\. E\. Construction Supervision Services (US$23\.4 million SAR; US$26\.2 million ICR) Hunan Province: The construction supervision services were provided by foreign and domestic consultants\. For the latter, there were 18 contracts implemented by 17 supervision units\. The foreign consultants shared their international experiences and assisted the domestic consultants with the application of International Federation of Consulting Engineers (FIDIC) standards\. The performance of both domestic and foreign consultants was found satisfactory\. Guangdong Province: A single domestic consultant acted as Engineer for the project and there was a single foreign consultant\. Their performance was satisfactory\. F\. Technical Assistance and Studies (US$1\.6 million SAR; US$3\.3 million ICR ) 1 The five studies in the project (three in Hunan and two in Guangdong) were completed satisfactorily, albeit delivering them between two and four years behind schedule\. This illustrates the continuing difficulty of the Bank in convincing its Chinese clients of the value of technical assistance when compared to the more tangible outputs of civil works and equipment\. The results of the studies have already been discussed in 4\.1 above\. The more practical of the studies were those on toll rates, which laid the basis for setting tolls on the new expressways, and the safety study in Hunan, which produced a number of manuals, such as: the safety audit manual for design and the safety manual at road work sites\. A number of domestic experts took part in the safety study, thus gaining further experience in the matter\. G\. Training (US$4\.0 million SAR; US$1\.7 million ICR) Training activities were eagerly pursued in both provinces and the number of man-months (m-m) of training attended exceeded the targets of the SAR\. In Hunan training reached a total of 849 m-m domestically and 116 m-m abroad and in Guangdong, 672 m-m domestically and 114 m-m abroad\. Training covered road safety, expressway operation and environmental protection in Hunan\. In Guangdong, the topics ranged even more broadly, including in addition to the above topics: highway financing, human resource development, mountainous expressway construction, project planning and management, and quality control management\. In addition to the formal training program, the staff of both provinces acquired valuable experience in the construction and supervision of expressways and in the application of the safeguard policies\. ____________________________________________________________________________ Note: 1/The Guangdong Project Office had major difficulties in reconciling their final accounts due to staff changes\. While most problems were resolved with the assistance of a Bank mission in early 2005, the allocation for `Technical Assistance' was not\. This figure should therefore be viewed as unreliable\. - 7 -  H\. Equipment (US$24\.1 million SAR; US$9\.5 million ICR) In Hunan, the project included equipment for road maintenance, strengthening of laboratories, environmental monitoring, and further development of the road data base and pavement management system\. In Guangdong, the province decided not to procure any equipment to maintain the expressway because they intended to contract the maintenance out\. All other equipment described in the SAR was procured satisfactorily and is fully utilized\. I\. Safeguard Policy Environmental Protection The finished products on the two expressways and the Loudi-Lianyuan highway show a pleasant environment\. Trees have been planted to provide protection against erosion and excavated material has been properly shaped\. Some environmental problems were noted during construction\. In particular, contractor camps had poor sanitary conditions for the workers, some dumped unsightly material and others did not use sufficient spray trucks to minimize dust\. These deficiencies were pointed out repeatedly by the Bank's missions, but environmental supervision remained weak as the borrower was concerned primarily with resolving the technical difficulties of the works and the necessary design and contract modifications\. The implementing agencies followed only partially the agreed mitigation measures, allowing negative environmental impacts to occur, with the intention of mitigating the impacts later on\. Improvements were made as the pressure to solve other issues diminished\. Construction camps were gradually improved and areas of disposed material were landscaped\. Air, water and noise were monitored regularly and found within the contractual limits, except for some dust from trucks\. Land Acquisition and Resettlement (US$55\.1 million SAR; US$64\.8 million ICR) Hunan Province: The resettlement work associated with the project was completed in 1997\. After that, the main activity of the Provincial Resettlement Office (PRO) was to carry out the maintenance of infrastructure affected by the civil works\. The resettlement process was well managed from the set up of the PRO in November 1994, followed within one month by the setting up of offices in city, county and townships affected by the project\. The offices were fully staffed as required and, after several years of experience, most of the employees became resettlement experts\. The project affected persons (PAPs) were generally satisfied with the process and the compensation they received\. Their new housing is typically of much higher quality than their previous homes, and with better access to utilities\. Many of the new houses are two or three stories high while the old ones were only one story\. The total area of rebuilt houses was 495,531 m2 compared with 278,000 m2 of the demolition\. Living standards increased also as households were able to diversify their production from rice to fish, pig farms and orchard cultivation\. Guangdong Province: Land acquisition and resettlement was largely completed by the end of 1997\. Bank supervision missions found that impressive progress was achieved in improving the livelihood of the PAPs\. Average incomes were restored and all compensations delivered in a timely fashion\. All house construction was completed and all PAPs moved to new houses\. According to surveys conducted independently by the Guangzhou Social Science Institute, 80% of the original houses of the removed families were earth-type houses of poor quality, without water or electricity, and with poor lighting and ventilation\. The replacement houses were typically of brick and reinforced concrete with more floor space and access to water and electricity\. The expressway construction also provided villagers with work and up to one third of the local labor force was employed in one or other related activity\. Many services including hotels, restaurants and - 8 -  repair shops were started by the residents in smaller towns along the expressway, in addition to the already mentioned Expressway Economic Zone in the city of Shaoguan\. 4\.3 Net Present Value/Economic rate of return: The economic evaluation covers the two major components of the project: (a) the two expressways (XLE in Hunan province, and XGE in Guangdong province), including the interchanges and connecting roads, and (b) the other highways in Hunan province\. Both costs and benefits reflect December 2004 prices\. The results of the two expressways are summarized in the following table\. The detailed economic analysis is provided in Annex 3\. EIRR (in %) AND ENPV (12%, Y million) of Expressways SAR ICR EIRR ENPV EIRR ENPV Hunan (XLE) 26\.3 4,976\.0 19\.0 2,598\.7 Guangdong (XGE) 18\.1 2,111\.0 19\.7 2,636\.3 Total 22\.1 7,087\.0 19\.3 5,241\.5 Note: The ICR ENPV is different to the sum of the individual ENPVs due to different start and end dates of the discount periods\. The combined economic internal rate of return (EIRR) of the two expressways is estimated at 19 percent; the economic net present value (ENPV), at a discount rate of 12 percent, is estimated at Y 5,242 million\. Hunan Province: In Hunan, the EIRR and ENPV of the XLE are lower than the SAR estimate, mainly because of the lower demand for traffic in the corridor\. While the SAR estimated approximately 20,000 veh/day in 2003, the actual flow was approximately 14,000\. The SAR diversion rate was 74 percent against an observed rate of 72\.5 percent which shows that the relative demand for the expressway was correctly forecasted\. Guangdong Province: In Guangdong, the ICR EIRR and ENPV of the XGE are higher than anticipated at appraisal, mainly due to the much higher traffic levels\. The SAR anticipated 2003 traffic at about 8,000 veh/day; the actual traffic was over 14,000 veh/day\. The diversion rate was 93 percent compared to the SAR estimate of 55 percent\. The following table shows that the overall performance of the other roads exceeded the SAR estimates\. EIRR (in %) AND ENPV (12%, Y million) of Other Roads SAR ICR EIRR ENPV EIRR ENPV Loudi-Lianyuan 20\.7 200\.0 22\.9 239\.7 Zhuzhou-Xiangtan 47\.0 453\.0 93\.6 619\.7 Total 28\.4 653\.0 38\.5 859\.4 - 9 -  As shown in the following table, the EIRR for the entire project (the two expressways and the other roads) is estimated at 20\.2 percent, compared with 22\.4 percent estimated in the SAR\. The ENPV, at 12 percent discount rate, is estimated Y 6,094 million compared with Y 7,733 million estimated in the SAR\. The lower returns are mainly due to lower than anticipated traffic in Hunan province\. EIRR (in %) AND ENPV (12%, Y million) of Project SAR ICR EIRR ENPV EIRR ENPV Expressways (XGE & XLE) 22\.1 7,087\.0 19\.3 5,241\.5 Other Highways 28\.4 653\.0 38\.5 859\.4 Project Total 22\.4 7,733\.0 20\.2 6,094\.3 Note: The ICR ENPV is different to the sum of the individual ENPVs due to different start and end dates of the discount periods\. 4\.4 Financial rate of return: The XLE in Hunan was opened to traffic in December 2000, and the Guangdong XGE in April 2003\. Hunan and Guangdong each formed financially independent expressway companies in their provinces, which are responsible for the day-to-day management, operations and maintenance of the expressways\. As shown in Annex 3, the main income of these companies is from tolls charged to the road users\. The toll rates are set by the provincial government\. The toll revenues are used to cover amortization charges of the Bank and domestic loans\. Based on the current toll revenue and operating costs, the companies are able to generate enough total revenue over the loan period to finance the operation, maintenance, and debt service\. The profits, however, particularly for Hunan, will be low during the early years of operation due to the high debt-to-equity ratio and the lower than expected traffic demand\. The depreciation reserve represents a significant portion (about 55 - 60 percent) of the annual operating costs for each expressway, or about 20 - 30 percent of the annual revenue\. For example, in 2004 the depreciation reserves were estimated to be about Y 135 million and Y 100 million for the XLE and XGE respectively\. The higher operating costs, resulting from the higher depreciation, would reduce the tax liability and the higher depreciation also helps ensure strong internal cash flows during the life of the project\. This insulates the two expressway companies from issues arising from their high debt-to-equity ratios\. They are not likely to need to use their equity for external borrowings during the life of the project\. There was no financial analysis in the SAR\. The detailed financial analysis is presented in Annex 3 and summarized as follows\. FIRR (in %) AND FNPV (Y million) of Total Project SAR ICR FIRR FNPV Hunan (4\.77% FCI) -- -- -1\.4 -2,084\.9 Guangdong (4\.79% FCI) -- -- -0\.8 -2,305\.5 Total (4\.78% FCI) -- -- -1\.1 -4,389\.9 Note: FCI is the `Financial Cost of Capital' which was used to calculate the FIRR and FNPV\. - 10 -  Based on the current financial status, the expressways may not need any additional external financial assistance\. However, the low profit margin produces a negative impact on the financial internal rate of return (FIRR) for the capital investments\. The results of the financial evaluation for the project show that the FIRR of the project was -1\.1 percent with a NPV (4\.78 percent) of Y - 4,390 million\. Of which, Hunan has an estimated FIRR of -1\.4 percent and Guangdong -0\.8 percent\. 4\.5 Institutional development impact: Overall, the institutional impact of the project was positive\. The training program was well attended and successful, and many highway staff gained experience during the construction of the roads and the management of the contracts\. Frequent Bank visits and interactions with the implementing agencies contributed to enhancing their knowledge on improving the environment, carrying out the resettlement activities and improving road safety\. In Hunan province, the maintenance study combined with further development of the road data base (RDB), the pavement management system (PMS) and bridge management system (BMS) have all contributed to improve maintenance in the province\. The PMS has, unfortunately, not been maintained with up-to-date data and includes only bituminous roads\. The BMS has been maintained and populated with recent data\. Road safety manuals and the annual seminars have contributed to sensitizing the staff on key safety issues\. Vehicle weight control was prioritized following the unfortunate accidents which accompanied the opening of the expressway in Guangdong province\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The rainy seasons, although anticipated, still delayed the works in both Hunan and Guangdong\. In particular, rain precipitation was higher than normal due to El Niño in the fall of 1997\. The geological conditions, with more karstic holes than expected and poor characteristics of material excavated, forced redesigns in both provinces and resulted in longer construction periods\. 5\.2 Factors generally subject to government control: Project effectiveness was delayed about eight months from March to November 1997 due to the slow approval of the Guangdong expressway feasibility study by State Planning Commission (SPC) and design by MOC\. As Guangdong could not start construction before getting approval, the province delayed the signing of the loan agreement (LA) to avoid commitment fees\. Since Hunan had an advance contracting/retroactive financing facility under the LA, they were able to start work in 1997, one year earlier than Guangdong\. Although the project covered two provinces, there were few interactions or attempts to exchange knowledge and experience between the two provinces\. In particular, the delay in the procurement of E&M in Hunan could possibly have been reduced if the previous experience of Guangdong in the matter had been sought\. Due to the regulations in force, GPCD was precluded from addressing truck overloading, the fines were fixed by the law at a very low level, and could not be collected by the GPCD\. The recent changes to the legislation in China have improved the situation\. Now that the PCDs are able to enforce overloading limits there has been a substantial reduction in the degree and extent of overloading reported in several provinces\. - 11 -  5\.3 Factors generally subject to implementing agency control: There were insufficient geotechnical investigations and inadequate design of slopes\. A very large number of major design changes had to be made and variation orders issued to contractors in the mountainous areas which contributed to large cost increases, above the contract values\. During construction, less attention was given to making contractors respect their obligations regarding the environment because of the concerns with design changes and contract variation orders\. The contractors took advantage of this situation\. 5\.4 Costs and financing: At appraisal, the total project cost, including contingencies and land acquisition, was estimated at US$1,133 million, of which US$400 million (35%) was to be financed by the Bank loan (detailed cost tables are provided in Annex 2)\. The actual costs (including land acquisition and resettlement) in Hunan province were higher than estimated (SAR, US$505\.6 million; ICR, US$512\.4 million); while in Guangdong province costs were less than estimated (SAR, US$627\.2 million; ICR, US$615 million)\. However, the final provincial contributions to the overall project costs (including land acquisition & resettlement and design & investigation) was the same as planned in the SAR with Guangdong providing 55% of total costs and Hunan the remaining 45%\. The total actual cost of the project US$1,127 million (including US$12\.1 million for design and investigation in Guangdong province) was 99% of the estimate (US$1,133 million)\. Civil works incurred cost overruns due to the adverse geological and topographical conditions of mountainous alignments\. Original bid prices in Guangdong were very low at only 50% of the engineering estimates, mainly due to the high competition\. Bids were won by many contractors from outside the province\. This was not the case in Hunan, where the competition from outsiders was low\. In Hunan, the actual costs of civil works and E&M works (US$454\.2 million) were 104% of the costs estimates including contingencies (US$438\.2 million)\. In the end, in Guangdong the actual costs for civil works including the E&M works (US$555\.6 million) were 95% of the cost estimates including contingencies (US$586\.4 million)\. In both provinces, the costs of E&M works were substantially lower than the estimates, particularly in Guangdong, where the actual costs (US$20\.7 million) were only 29% of the cost estimates (US$71\.4 million) including contingencies\. Actual supervision costs (US$26\.2 million) were higher than the estimates (US$23\.4 million) and increased according to the extended duration of the civil works contracts\. Because of the original low contract costs, Guangdong province requested the Bank to increase the disbursement percentage from 34% to 50% in order to be able to use the loan in full\. On May 30, 2000, the Bank agreed to modify the loan agreement to increase the disbursement percentage to 48% and reallocated more funds for civil works, mostly from the unallocated category\. Funds were usually provided on time to contractors\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The sustainability of the project is rated satisfactory\. The continuous traffic growth in the corridors served by the expressways and other roads built under the project, combined with the large time-savings and reduced congestion, indicates that the economic benefits are sustainable\. Despite the problems encountered during construction, the final quality of construction is good\. - 12 -  The maintenance equipment acquired by Hunan province should provide adequate long term service\. The lessons learned through project implementation and from staff training programs have already been disseminated through seminars and workshops in both provinces and will have a long term influence on provincial road administration and management methods\. 6\.2 Transition arrangement to regular operations: There has been no particular problem in operating the expressways since opening, except for the initial high accident rate in Guangdong\. The expressway in Hunan was operated for three and a half years before installation of permanent E&M equipment and tolls were collected at temporary facilities\. Toll revenue leakage during this period was reportedly not a problem due to the tight supervision of the operations\. All E&M equipment is now in place in both provinces and operates on a permanent basis\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Project preparation was thorough and methodical\. All Bank missions included an expressway design engineer who worked with the local design institutes for over two years\. Simultaneous financing and completion of the entire corridor were required to fully realize the economic benefits of the two Bank financed sections and ensure the economic viability of the project\. Preparation missions closely coordinated with the two provinces the financial arrangements of other sections along the corridor\. The southern section was opened to traffic at the same time as the Bank financed section, thus ensuring full benefits of the Bank project from the beginning\. Similarly for Hunan, a Japanese Export-Import Bank (JEXIM) loan had been secured to finance the southern section linking the two Bank financed sections\. The remaining section to Changsha was financed by the Asian Development Bank (ADB)\. The Bank organized a review of the expressway design for both provinces using trust funds\. In both Guangdong and Hunan, the reviews found the design satisfactory, even though major problems were later encountered during construction\. 7\.2 Supervision: Supervision was intensive and comprehensive with almost all missions including a highway engineer and an institutional and traffic safety specialist\. Missions took place at least twice a year and even three times in Guangdong in the year 2000, when design and contract modifications were needed\. The environmental and resettlement aspects of the project were also supervised regularly\. The continuity of staff was good, with only one change of task manager in 2001\. Another change occurred in 2004, around the time of the closing date when the project was largely completed\. The Bank showed flexibility in approving the design and contract changes\. A Bank financed highway expert assisted in the redesign of certain sections and features of the expressway in Guangdong\. 7\.3 Overall Bank performance: Overall, the Bank's performance was satisfactory\. The supervision team paid adequate attention to compliance with the Bank policies on resettlement and environment\. The advice of the preparation and supervision teams was appreciated and generally followed\. - 13 -  Borrower 7\.4 Preparation: The Borrower's performance during project preparation was unsatisfactory\. The preparation went more smoothly in Guangdong than in Hunan since it was the second Bank highway project in Guangdong, while for Hunan, this was the first project\. There was still a tendency in both provinces to minimize the technical complexities of the project and set overly optimistic time frames for the contractors\. However, in comparison with the earlier Guangdong project, progress was made in terms of acquiring the land for the project without delaying the contractor's work\. 7\.5 Government implementation performance: The performance of the central and provincial governments during project implementation was generally satisfactory\. The Government was fully committed to the project which was contributing to the completion of the major north-south corridor in China\. However, internal clearance of the feasibility study and design was slower than expected, and loan effectiveness was delayed due to cumbersome internal processes involving both provincial and central government agencies\. 7\.6 Implementing Agency: The performance of the implementing agency was satisfactory\. In both provinces, the implementing agencies demonstrated commitment to achieve the project's objectives, including not only the construction of roads, but also the institutional development objectives through studies, workshops, and training of their staff\. Both agencies broadly complied with the Bank's safeguard policies on environment and resettlement\. Guangdong successfully procured the E&M equipment using its previous experience\. Hunan, however, took a long time for E&M procurement, leading to extending the project duration, completing installation three and a half years after opening the expressway to traffic\. Guangdong had difficulties in closing the loan, due to transferring of project staff\. This required a further extension of the loan closing date to provide sufficient time for new staff to be upskilled and process the necessary documentation\. 7\.7 Overall Borrower performance: Overall, the Borrower's performance is rated satisfactory\. The project objectives were achieved and all loan conditions were complied with\. The cooperation between the Borrower and the Bank was good throughout preparation and implementation of the project\. - 14 -  8\. Lessons Learned Projects in one or more provinces The experience of this project is that preparation of a bi-provincial highway project consumes about the same resources (in terms of staff weeks and budget) as two separate one-province highway projects\. Coordination between Guangdong and Hunan was complicated because Hunan was a first time Bank highway borrower, while for Guangdong it was the second experience\. During project preparation, the two provinces remained on different levels of understanding of Bank procedures, specifically as regards economic analysis, resettlement, environment, procurement and disbursement\. There was limited exchange of information between the two provinces during the preparation and execution of the project\. As an example, the procurement of E&M equipment in Hunan took a very long time and the installation was not completed until the expressway had been operating for three and a half years\. In Guangdong, E&M equipment was already in place at the time of opening because of their previous experience\. Better information exchanges between provinces could have accelerated the Hunan E&M procurement\. Project preparation and design With hindsight, the project was approved with insufficient attention paid to surveys and design\. At the time of preparation, the bidding documents were based on preliminary engineering design, and not the final one\. In recent years, the MOC has issued a regulation forcing the provinces to systematically include the final design in the bidding documents\. While there is a limit on how many soil investigations and borings can be done on such long alignments, sufficient testing needs to be performed to ensure that the designers have a good understanding of the situations likely to be encountered\. The testing should provide sufficient information on the geology and types of soils to properly estimate the stability of slopes of cuts and fills\. These issues were recognized in the case of Guangdong and the GPFC took immediate actions including: stopping the works, requiring new designs and nominating sub-contractors for assisting existing contractors in implementation of specialized technologies\. Hunan did not adopt as rigorous an approach to solving the field problems\. Expressway Safety In the four months following opening of XGE to traffic there were 121 accidents with 33 deaths and many injured\. Two-thirds of the accidents happened on the long (3-4 km) down slope sections, even though the maximum gradient of 4% was not unusually severe\. The major causes of these accidents were: the very poor condition of the commercial vehicles; the gross overloading of trucks (two to three times the registered weight is frequent in China); the over-long driving hours and fatigue of drivers; and, their inexperience with expressways (drivers not used to relying on engine brake, changing lanes without warning, parking vehicles on driving lanes, etc\.)\. The situation drew great attention from the provincial government and the GPCD has addressed the problem in a variety of ways\. Measures implemented included: extra warning signs and speed restrictions, strips painted on the longer slopes, instruction sheets given to drivers at toll stations, detecting and combating overloading, building more rest parking areas and adding escape lanes\. The accident rate came down for a while, but 117 accidents with 22 deaths and 33 seriously injured were recorded on XGE again - 15 -  during October ­ December 2003\. Most accidents are still due to truck overloading (98% of the trucks) and, until recently, the GPCD was not permitted to stop overloaded trucks as it was the domain of the police\. While improvements in overweight enforcement will limit the degree of overloading, there are additional measures that should in the future be implemented at the design stage to improve the safety of new roads\. These include factors such as ensuring a constant gradient over the length of the section, providing additional lanes, and emergency bays\. However, improvements such as these are not embodied in the MOC's design standards, which designers closely adhere to, even with regard to how they may have previously been applied\. Working with the MOC to update design standards, improving training of designers, and implementing proper design safety audits would significantly improve the safety situation on similar projects\. Pressure to complete work in the shortest time China was in a hurry to build its NTHS to meet the very high road traffic growth\. This led to the project specifying very tight schedules in its contracts, often necessitating extensions\. It also affected quality, as evidenced in some instances by problems with embankment settlement a short time after project completion\. It is important to adopt sensible schedules for construction, especially when the terrain is complex\. This has been recognized by the MOC and, recently, PCDs have been penalized for early completion of projects in an attempt to improve the quality\. Interconnecting Roads It is important to pay close attention to the interconnecting road program during project design\. The expressway alignment, number and location of interchanges need to be carefully considered to ensure that the full potential benefits of the expressway are realized\. It is necessary to carefully review the class and designs of the interconnecting roads to ensure that they are sufficient to meet the likely traffic demand from the expressway\. Design institutes can be weak in designing at grade junctions and this can present major traffic safety problems when the roads have a high speed alignment\. - 16 -  9\. Partner Comments (a) Borrower/implementing agency: A\. Contribution from the Hunan Provincial Communication Department General The NH2 Project Hunan components was appraised by the Bank in May 1996\. The project loan negotiations were held in Washington D\.C\. in November 1996\. The Loan Agreement and Project Agreement were signed on August 29, 1997, providing US$200 million for the Hunan components under the NH2 Project\. The loan was declared effective on November 24, 1997\. The original loan closing date was June 30, 2003 and was later extended to June 30, 2004\. It was retroactively extended to December 31, 2004 to allow for Guangdong to complete processing disbursements\. In general, all tasks described in the Staff Appraisal Report, Loan Agreement and Project Agreement have been successfully implemented\. Project Components 1\. Construction of Xiangtan-Leiyang Expressway (XLE)\. The alignment is located in the middle part of Hunan Province, with a total length of 168\.85 km\. It has four lanes, with a subgrade of 28 m (inclusive of all necessary 35\.56 km long interconnecting roads which connect with the expressway and the existing highway network in this corridor); service and management facilities along the expressway; supply and installation of expressway tolling, telecommunication, traffic surveillance, tunnel ventilation and lighting facilities; provision of construction supervision services for control of construction quality and environmental monitoring during the expressway construction; provision of equipment for the expressway operation and maintenance\. 2\. A 59\.98 km long Class II auto-only highway from Loudi to Lianyuan\. 3\. Institutional strengthening components: Road maintenance study to check and make suggestions for road maintenance policy and approaches consistent with the economic reform process; Expressway management study, which aimed to promote the process of corporatization and commercialization of Hunan provincial expressways; and, Road safety activities, which aimed to hold an annual traffic safety workshop, develop road safety audit procedures, and measures for traffic accident data collection and analysis\. Project Financing The final project cost totaled US$512\.4 million\. The Bank loan of US$192\.6 million covered 37\.6% of the total project cost\. The government provided US$168\.3 million (32\.9%), of the total cost, while co-financing covered the remaining cost of US$151\.5 million (29\.6%)\. - 17 -  Project Executing Organization Hunan Provincial Expressway Construction & Development Corporation (HPECDC) was the employer for the construction of XLE and its interconnecting roads\. It was also responsible for the equipment procurement\. Hunan Provincial Communications Department (HPCD) was the executing agency for the staff training program and the other three studies\. Project Objectives Achieved The objectives of the project were: To support sustained development of road infrastructure in Hunan; Road maintenance study to evaluate and make suggestions for road maintenance policy and approaches, which were consistent with the economic reform process; Expressway management study to promote the corporatization and commercialization process of Hunan provincial expressways; and, Road safety activities, which aimed to hold annual traffic safety workshops, develop road safety audit procedures and measures for traffic accident data collection and analysis\. These were achieved through successful implementation of each project component\. Project Formulation and Preparation The project pre-feasibility report and project proposal were approved by SDPC on November 8, 1994\. The project feasibility report was approved by SDPC on November 4, 1995\. The project preliminary design was approved by MOC on April 2, 1996\. The Bank carried out the project identification in July 1994\. The project preparation was undertaken in November 1995 and the Bank completed the project appraisal in May 1996\. The loan was negotiated in Washington, D\.C\. in November 1996\. Both the loan and project agreements were signed on August 29, 1997 and the agreements took effect on November 24,1997\. Project Implementation Construction of Xiangtan-Leiyang Expressway (XLE) Civil Works\. The four-lane, 168\.85 km XLE mainline included 11 civil works contracts and nine contracts of interconnecting roads\. The civil works commenced on October 1, 1997, all the contracts were completed by December 21, 2000, and opened to traffic for trial operation on December 26, 2000\. Annex Area Works\. The annex area works under the project cover eight tolling stations, three service areas, three parking areas, and three administrative centers\. These works included three packages, which commenced in March 2000 and were completed by December 2003\. - 18 -  E&M Works\. The ICB contract of the project E&M works commenced in April 2002 and was completed in March 2003\. The pre-commissioning test was completed in March 2004\. Environmental Protection and Monitoring An overall baseline environmental survey and monitoring were carried out along XLE in March 1996\. The Environmental Impact Assessment (EIA) and Environmental Action Plan (EAP) were prepared by the Employer and found satisfactory to the Bank\. The EAP specified major mitigation measures during the construction and operation phases, including optimum planning of earthworks, use of excavated soil for filling works, spraying water to minimize dust, construction of noise barriers at sensitive locations, etc\. The EAP was fully followed during the project implementation and operation stages\. The State Environmental Protection Bureau (SEPB) carried out an environmental inspection of the XLE and issued an acceptance certificate in December 2001\. Land Acquisition and Resettlement All of the project affected land acquisition, house relocation, power line and telecommunication facility removal as well as resettlement of the project affected persons (PAPs) was carried out in accordance with the Project Resettlement Action Plan (RAP)\. Under the project, 26,026 mu of land were acquired and 451,903 m2 of buildings\. Four enterprises and two primary schools were relocated\. A total of US$36\.0 million for land compensation was paid\. The resettlement work for the PAPs was completed in 2000\. All the affected buildings were relocated to new locations\. Those affected enterprises were also rebuilt and resumed their production activities\. Institutional Strengthening Road Maintenance Study\. The study was helpful for the improvement of road services standards in Hunan Province\. It was completed in accordance with TOR\. Study on Expressway Corporatization and Commercialization\. The study aimed to make suggestions for institutional strengthening of Hunan expressways, and helped to establish a market-oriented corporation entity to manage the expressway\. Expressway Safety Study\. There were three aspects to this component: (i) Annual workshops were held to discuss road safety issues, with the objective to learn more on road safety and to share the experiences of road safety from other countries\. (ii) A road safety audit manual, was developed which put forward safety audit requirements for each stage of road design in terms of technical contents of road design\. (iii) An analytical model of road black spots was established, covering the following 3 steps: find and identify the location, develop the implementation plan, implement it with before and after studies\. NH4 continued the study\. Training A total of 58 persons participated in the overseas training (116 person/months), including construction supervision training, 741 persons (849 person/months) participated in the domestic training\. All overseas training and study tours as well as domestic training were completed in accordance with the TORs\. Equipment Procurement All the equipment procurements were completed according to the approved procurement plan\. - 19 -  Project Operation and Maintenance Since the opening of the XLE on December 26, 2000, its traffic volume and toll revenue have been increasing steadily\. XLE Management Division under HPECDC is in charge of the operation and maintenance of the expressway\. One management center, eight toll station stations, three service areas, three parking lots, three maintenance centers and two administrative teams were established under the project\. The administrative teams carry out continuous daily patrols on the expressway to enhance traffic administration and assist the traffic police in dealing with accidents and safety issues\. The routine maintenance, including small maintenance and cleaning work, is carried out by the maintenance teams while the periodic maintenance works, especially for bridges and tunnels, are undertaken by eligible specialized highway maintenance companies selected by open and competitive bidding\. Tolling, telecommunication and traffic surveillance systems have functioned well\. Construction Assessment Performance by the Contractors and Consultants Work Done by the Contractor\. The project was divided into 27 contracts which were implemented by 24 qualified contractors\. During the construction, all the contractors established appropriate construction organizations, strengthened contract management systems, set clear progress targets, developed detailed construction plans and overcame many difficulties\. Under the organization and coordination of the Employer and the Engineer, the contractors completed the project successfully\. The project was evaluated domestically and received an excellent grade\. Work Done by the Domestic Consultants\. The construction supervision for this project consisted of 18 contracts, which were implemented by 17 qualified supervision units\. They were responsible for the supervision of the construction of the subgrade, bridges and the tunnel, as well as the paving of the pavement, the set up of the safety facilities, the installation of E&M works and the greening works\. They established specialized supervision teams, formulated specific supervision management programs and strictly followed relevant regulations of FIDIC Terms and Conditions\. They cooperated with the employer in contract management and implemented good control of the project quality, progress and the cost\. Work Done by the Foreign Consultants\. A foreign consulting firm was engaged to provide professional foreign consultants for the construction supervision service\. During project construction, they had close cooperation with the domestic consultants and shared their international working experiences\. Performance by the Implementation Agency Project Management Organization\. As the owner of the project, HPECDC set up the Xiangtan-Leiyang Expressway Construction Company to be in charge of the implementation of the project\. The XLE Company, as the representative of the owner, followed the state infrastructure construction guidelines, the Bank procurement procedures and FIDIC Terms and Conditions from the project preparation stage through implementation stage for the management of the project\. Through close operation with the Engineer, the employer implemented effective control of the project quality, progress, construction safety and cost\. - 20 -  Project Study Achievements\. A series of studies were carried out on the technical difficulties concerning the project, including: (i) Subgrade Construction Technique Study in Red Soil Region; (ii) Application Study of Small Particle Blast and Light Surface Blast Technique in Red Soil Region; and, (iii) Expressway Cut Slope Stability Experiment Study in Red Soil Region\. These led to the issuing of "Temporary Regulation for Subgrade Construction in Red Soil " and " Regulation for Red Soil Subgrade Construction and Monitoring"\. The application of these study results contributed to resolving the difficulties during construction, and improve the project quality and control the cost\. Environmental Protection and Monitoring\. An EAP for XLE was completed in March 1996 and was approved by the National Environmental Protection Bureau (NEPB)\. Specific measures required to mitigate the potential adverse impacts on the environment during construction and operation stage of the expressway were confirmed in the EAP\. Both the Employer and the resident engineer's offices were staffed with environmental supervisors\. In accordance with the regulations in EAP, the Hunan Provincial Environmental Monitoring Central Station was entrusted to undertake the environmental monitoring assignments during project construction stage and in the first year of the test operation\. Necessary measures were taken to guarantee that the environmental monitoring index met the requirements\. NEPB conducted an environmental check on XLE in December 2001 and issued an acceptance certificate\. Land Acquisition and Resettlement\. The land acquisition for XLE and resettlement of the PAPs were carried out according to the Resettlement Action Plan which specified the land and crop compensation and resettlement subsidy standards, specific resettlement organization as well as internal and independent monitoring arrangements\. By implementing the RAP, the living conditions of the PAPs were significantly improved\. Completion of the project has improved the transport conditions and investment environment along the expressway corridor and stimulated the local economic growth\. Performance by the Bank Project Identification\. The Bank carried out project identification in July 1994\. The Bank identification mission learned the following information: (i) the Bank was suggested to finance the NH2 project Hunan section; and, (ii) XLE was arranged to be implemented and completed concurrent with the sub-project Loudi-Lianyuan Class II auto-only highway\. Project Preparation\. The scope of the project was determined after the Bank financed project preparation mission\. In the follow-up mission, the Bank representative reviewed the RAP, EAP, design and bidding documents, procurement plan and the training program\. The report also formed an essential part of the project and a basis for loan negotiation, project implementation and post evaluation\. Project Implementation\. Since the loan for the NH2 project became effective on November 24,1997, the Bank sent at least two missions a year to supervise the project and monitor the progress of each project component\. The Bank carried out efficient management on the project through close collaboration with the employer\. - 21 -  Experiences and Lessons With the joint efforts of all the parties concerned, remarkable achievements were obtained in the aspects of construction and the institutional strengthening of the project\. The advanced experiences from modern foreign expressway highway construction management have been applied, which will contribute to the sustained development of Hunan highway network\. The Expressway Commercialization Study provided useful guidance for the HPCD to move the toll road sector of the province towards market-oriented activities\. The Toll Rate Study, which was more practical, has provided useful guidance for adjusting toll rates on the expressway to the market and to the situation in other provinces\. The Highway Maintenance Study has provided information and made recommendations for maintenance management reform, modern technology of pavement maintenance as well as maintenance planning and optimized allocation of maintenance funds\. In parallel with the study, HPCD further developed its Pavement Management System (PMS) and Bridge Management System (BMS)\. The Provincial road safety seminars, formulation of Design Safety Audit Manuals and Safety Manual for Road Works,a pilot study and remedial of black spots conducted on NR 107, serve as a model for the province\. All of these have laid the basis for improved safety for road transport in Hunan Province\. The application of the Bank's Procurement Guidelines and FIDIC Terms and Conditions need to be adapted to the concrete situations of the project\. Further improvements should be made for enhancing prequalification, implementing bid evaluation methods which better suits the present China market, rationalizing bid packages, and strengthening supervision\. The lowest bidder should be evaluated more reasonably to ensure that the bidder has enough capacity to implement if winning the contract\. Too much emphasis on the lowest bidding price does not suit the Chinese construction market which has state-owned entities as the major part\. Hunan and Guangdong Provinces shared the same World Bank-financed highway project\. In both the project preparation and implementation stages, the World Bank did not attempt to implement information exchange and technical support\. Accordingly, it is not especially beneficial to implement multi-province projects\. B\. Contribution from the Guangdong Provincial Communications Department General The NH2 Project-Guangdong component was appraised by the Bank in May 1996\. The project loan negotiation was held in Washington D\.C\. in November 1996\. The Loan Agreement and Project Agreement were signed on August 29, 1997, providing US$200 million for Guangdong component under the NH2 Project\. The loan was declared effective on November 24, 1997\. The original loan closing date was June 30, 2003 and was later extended to June 30, 2004, and subsequently to December, 31 2004\. In general, all tasks described in the SAR, Loan Agreement and Project Agreement were successfully implemented\. - 22 -  Project Objectives to support sustained development of road infrastructure in Guangdong; to improve economic integration between Guangdong and Hunan; to strengthen highway sector institutional capacity in Guangdong; and, to improve safety of road transport in Guangdong\. Project components construction of a four lane, 109\.9 km Xiaotang-Gantang Expressway (XGE), inclusive of construction and upgrading of interconnecting roads; supply and installation of expressway tolling, telecommunication, traffic surveillance, tunnel ventilation and lighting facilities; provision of construction supervision services for control of construction quality and environmental monitoring during the expressway construction; provision of equipment for the expressway operation and maintenance; carrying out a study on transport and economic integration; development and implementation of a program of expressway safety; and, provision of training in the areas of expressway construction, operation, maintenance and finance\. Project financing The final project cost totals US$615 million\. The Bank loan of US$185\.3 million covers 30\.1% of the total project cost\. The central government (MOC) and Guangdong covered the remaining cost of US$429\.7 million (69\.9%)\. Project executing organizations Guangdong Provincial Freeway Co\. Ltd\. (GPFC) was the Employer for the construction of XGE and its interconnecting roads\. It was also responsible for the equipment procurement and the expressway safety study under the project\. Guangdong Provincial Communications Department (GPCD) was the executing agency for the staff training program and the transport and economic integration study under the project\. Project objectives achieved The project objectives were realized through successful implementation of each project component\. - 23 -  Project formulation and preparation The project pre-feasibility report and project proposal were approved by SDPC on September 11, 1996\. The project feasibility report was approved by SDPC on August 26, 1997\. The project preliminary design was approved by MOC on March 10, 1998\. The Bank carried out the project identification in July 1994\. The project preparation was undertaken in November 1995 and the Bank completed the project appraisal in May 1996\. The loan was negotiated in Washington, D\.C\. in November 1996\. Both the loan and project agreements were signed on August 29, 1997 and the agreements took effect on November 24, 1997\. Project implementation Construction of Xiaotang-Gantang Expressway Civil works\. The XGE mainline included 13 ICB contracts, in which 10 contracts were for subgrade, bridge and tunnel works and three contracts for pavement works\. In addition, a contract package for traffic safety facilities, communication conduits and greening was separated from the original ICB pavement works\. The civil works commenced in November 1998 and all the contracts were completed in succession by the end of March 2003\. Annex area works\. The annex area works under the project covered seven toll stations, two service areas, one parking area, one administrative center, one tunnel administrative center, one tunnel administrative station, two maintenance centers and two administrative depots\. Packaging of these works included six NCB subcontracts commenced in January 2002 and was completed by March 2003\. E&M works\. The contract package for the E&M works under the project included two ICB contracts, one for the expressway tolling, telecommunications and traffic surveillance system facilities and one for tunnel ventilation and lighting\. The procurement was undertaken through single stage bidding\. These contracts commenced in April 2002 and were completed in March 2003\. The pre-commissioning test was completed in March 2004\. Environmental protection and monitoring An overall baseline environmental survey and monitoring were carried out along XGE in November 1998\. The Environmental Impact Assessment (EIA) and Environmental Action Plan (EAP) were prepared by the Employer and found satisfactory to the Bank\. The EAP specified major mitigation measures during the construction and operation phases, including optimum planning of earthworks, use of excavated soil for filling works, spraying water to minimize dust, construction of noise barriers at sensitive locations etc\. The EAP was fully followed during the project implementation and operation\. The State Environmental Protection Authority (SEPA) has carried out an environmental inspection of the XGE and issued an acceptance certificate in December 2003\. - 24 -  Land acquisition and resettlement All of the project affected land acquisition, house relocation, power line and telecommunication facility removal as well as resettlement of the project affected persons (PAPs) were carried out in accordance with the project Resettlement Action Plan (RAP)\. Under the project, 11,948 mu of land were acquired and 43,628 m2 of buildings, nine enterprises and one primary school were relocated\. A total of US$28\.8 million for land compensation and RMB 39\.28 million for resettlement subsidy were paid\. The resettlement work for the PAPs was completed in 1998\. All the affected buildings were relocated to new locations\. Those affected enterprises were also rebuilt and resumed their production activities\. Institutional strengthening Transport and economic integration study\. The objective of this study was to examine the long-term transport and economic integration effects of the transport corridor along Hunan and Guangdong provinces\. The study analyzed the advantages of the completion of XGE in terms of promoting faster regional economic growth in northern Guangdong\. The study was carried out according to the TOR\. Expressway safety study\. The objective of this study was to examine causes of expressway accidents by analyzing expressway safety impacts from design, traffic facilities and driver aspects\. The study was carried out according to the TOR\. Training\. A total of 108 persons (114 man-months) were sent for overseas training, including construction supervision training, and 752 persons (672 man-months) participated in domestic training\. All the overseas training and study tours as well as domestic training were completed in accordance with the TORs\. Toll rate study report\. As per the Project Agreement, GPCD sent a recommendation for the structure of the toll rates for XGE to the Bank in December 2000 and submitted its justification and analysis report in March 2002 for the Bank's review\. Upon taking into account of the Bank's comments, the study report was finalized\. Equipment procurement\. Due to institutional reform, major maintenance work for XGE is undertaken by selecting specialized highway maintenance companies through competitive bidding\. Therefore, the amount of equipment procured was reduced and the total procurement cost was cut from US$7\.7 million to US$2\.4 million with the approval of the Bank\. GPFC assigned CITC to handle the procurement which was completed through ICB\. Project operation and maintenance Since the XGE was opened to traffic on April 3, 2003, both the traffic flow and toll revenue have been increasing steadily at a higher rate than forecasted\. A newly established XGE subsidiary company under GPFC is in charge of the operation and maintenance of XGE\. It consists of one administrative center, seven toll stations, two service areas, two maintenance centers and two administrative teams\. The administrative teams carry out daily patrol on the expressway around the clock to enhance traffic administration and assist the traffic police in handling accidents and safety issues\. - 25 -  The routine maintenance, including normal repair and cleaning work, is carried out by the maintenance teams while periodic maintenance works, especially for bridges and tunnels, are undertaken by eligible specialized highway maintenance companies selected through open and competitive bidding\. The pre-commissioning acceptance for the E&M works indicated that all the completed tolling, telecommunication and traffic surveillance systems are functioning correctly\. Assessment of work Performance by the contractors and consultants Work by the contractors\. The project was divided into 34 contracts which were implemented by 30 qualified contractors\. During the construction, each contractor could set up as appropriate construction organization, strengthen its contract management system, establish clear progress targets, work out detailed construction plans and overcome numerous difficulties\. Under the organization and coordination of the Employer and Engineer, the contractors completed the project successfully\. The project works have been evaluated and reached excellent grade\. Work by the domestic consultants\. A domestic institute was Engineer for the project, responsible for supervising construction and placement of subgrade, bridges, tunnels, pavement, safety facilities, plantation, building and E&M works\. The Engineer set up a team of professional consultants, worked out specific supervision management methods and strictly followed FIDIC terms during the supervision\. It cooperated with the Employer in contract management and had good control of the project quality, progress and cost\. Work by the foreign consultants\. A foreign firm provided professional foreign consultants for the construction supervision\. They had close cooperation and shared their rich international working experience with the domestic consultants during the project implementation\. By analyzing features of expressway construction in China and abroad, they forwarded constructive advice to the Employer and contractors, which were accepted and applied to the project\. Performance by the implementation agency Project management organization\. As early as the project formulation, GPFC, as the Employer, established XGE Construction Management Division to be in charge of project implementation\. The division, as the Employer's representative, followed the state infrastructure construction guidelines, the Bank procurement procedures, and FIDIC terms during the project preparation and implementation\. In close cooperation with the Engineer, the Employer exercised effective control of the project quality, progress, construction safety and cost\. Project study results\. In connection with the project technical difficulties, a series of studies were carried out, including (i) high-cut side slope stability analysis and support measures; (ii) highway tunnel surrounding rock stability analysis and support parameters; (iii) rock-fill embankment construction; (iv) traffic surveillance and traffic management; and (v) highway tunnel surveillance system rationalization\. Application of these study results helped resolve the construction difficulties, ensure the project quality and control the cost\. - 26 -  Environmental protection and monitoring\. An EAP was prepared for XGE in early January 1996, which specified measures required to mitigate the potential adverse impacts on the environment during construction and operation of the expressway\. Both the Employer and resident engineer's offices were staffed with environmental supervisors\. The central laboratory conducted an overall baseline environmental monitoring along the project alignment in November 1998 and carried out routine environmental monitoring during the construction as specified in the EAP\. Appropriate mitigating solutions were taken when monitoring results fell beyond the standards\. The SEPA carried out an environmental inspection of the XGE and issued an acceptance certificate in December 2003\. Land acquisition and resettlement\. The land acquisition for XGE and resettlement of the PAPs were undertaken according to the Resettlement Action Plan which determined the land and crop compensation and resettlement subsidy standards, specified resettlement organization as well as internal and independent monitoring arrangements\. Implementation of the RAP indicated that living conditions of the PAPs were obviously improved\. Completion of the project has improved the transport condition and investment climate along the expressway corridor and boosted the local economic growth\. Performance by the Bank Project identification\. The Bank carried out the project identification in July 1994\. The main findings of the Bank identification mission were as follows: (i) proposal for the Bank to finance Guangdong section under NH2 project and (ii) arrangements for Xiaotang-Gantang Expressway (northern section) and Guangzhou-Gantang Expressway (southern section) to be implemented and completed concurrently\. Project preparation\. The project scope was formulated and refined after the Bank project preparation and follow-up missions investigated and examined vast amount of documents and information, including XGE engineering analysis, contract packaging, construction supervision, institutional strengthening and training, equipment procurement, environment, land acquisition and resettlement, project cost and financing plan as well as project implementation plan\. Project appraisal\. The Bank appraisal missions discussed with GPCD and GPFC in detail the implementation schedule for both the northern and southern sections with a view to completing both sections at the same time\. The Bank also reviewed the RAP, EAP, design and bidding documents, procurement plan and training program\. In accordance with findings of the project appraisal, the Staff Appraisal Report was prepared which formed an essential element of the project documentation and basis for the loan negotiation, project implementation and post evaluation\. Project implementation\. After the loan effectiveness of NH2 project took place on November 24, 1997, the Bank dispatched at least two missions a year to supervise the project and monitor the progress of each project component\. The Bank supervision missions carried out effective project management throughout its implementation in close collaboration with the Employer\. - 27 -  Experience and lessons With joint efforts by all participants involved, the project completion has achieved remarkable results which could be seen not only from physical completion of XGE but also from strengthening of the institutional capacity\. The emergence of numerous well trained management and technical staff and application of updated experience in international modern highway construction management will greatly contribute to the sustained development of highway network in Guangdong\. Application of the Bank's Procurement Guidelines and FIDIC terms need to be in line with the concrete situations of the project\. Further improvements may be made for enhancing prequalification, implementing suitable bid evaluation methods, rationalizing bid packages, strengthening performance supervision, etc\. In particular, the lowest bid should be evaluated more reasonably to ensure that the bidder, if winning the contract, has enough capacity to implement it\. A good design is essential to project success\. Due to geological complexity in the mountainous region along the XGE, the engineering design encountered many unexpected factors which made the design inconsistent with the actual situation to some extent\. During the construction, strict review was made to ensure the design drawings were in line with reality\. Design variations and optimization were proposed accordingly so that the smooth implementation the project could be guaranteed\. (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10\. Additional Information - 28 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Indicators/Matrix 2002 Benchmark Actual/latest Estimate Development of road infrastructure: As of 12/31/2003 1\. Reduced traffic congestion on roads parallel to the proposed road: a\. Hunan Component: Majiahe-Xintang section 3,800 vehicle /day 4,195 vehicle /day Xintang- Hongshi section 4,200 vehicle /day 2,126 vehicle /day Hongshi- Leiyang section 3,300 vehicle /day 5,277 vehicle /day b\. Guangdong Component: Xiaotang- Daqiao section 3,000 vehicle /day 1,063 vehicle /day Daqiao- Ruyuan section 2,000 vehicle /day 1,011 vehicle /day Ruyuan- Gantang section 1,000 vehicle /day 1,013 vehicle /day 2\. Increased average travel speed on roads parallel to the proposed road: a\. Hunan Component: Majiahe-Xintang section 60 60 Xintang- Hongshi section 55 60 Hongshi- Leiyang section 60 60 b\. Guangdong Component: Xiaotang- Daqiao section 60 60 Daqiao- Ruyuan section 50 40 Ruyuan- Gantang section 50 60 3\. Increase highway safety : Reduced number of traffic accidents involving fatalities (Number of annual fatalities accidents / number of registered vehicles): Hunan Component 12/ 10,000 5 / 10,000 Guangdong Component 10/ 10,000 12 / 10,000 Notes: a/ The data are from 2003\. A more current data was not available\. Indicators/Matrix Projected in last PSR Actual/latest Estimate % Percentage of civil works completed: a\. XLE 100 100 b\. XGE 100 100 Number of person- months of completed training a\. XLE Domestic 518 849 Overseas 110 116 b\. XGE Domestic 672 672 Overseas 122 114 Percentage of equipment purchased a\. XLE 100 100 b\. XGE 100 100 Expected Completion Date of Studies Hunan Component: Highway Maintenance Study 06/30/2000 05/30/2004 Expressway Commercialization and Corporatization Study 06/30/2000 06/30/2002 Road Safety Study 06/30/2000 06/30/2002 Guangdong Component: Transport and Economic Integration Study 06/30/2000 12/16/2002 - 29 -  Annex 2\. Project Costs and Financing Table 2a: Project Cost by Component (in US$ million equivalent) Hunan Guangdong Appraisal Actual/Latest Percentage Appraisal Actual/Latest Percentage Estimates Estimates of Estimates Estimates of US$ million US$ million Appraisal US$ million US$ million Appraisal Civil Works Expressway 276\.1 395\.8 143\.4 405\.1 534\.9 132\.0 E&M 11\.7 9\.1 77\.8 56\.1 20\.7 36\.9 Interchange Roads 22\.4 -- /_a -- -- -- -- Other Roads 35\.3 49\.3 139\.7 -- -- -- Subtotal Civil Works 345\.5 454\.2 131\.5 461\.2 555\.6 120\.5 Supervision 10\.1 13\.4 132\.7 8\.3 12\.8 154\.2 Subtotal Civil Works & SPN 355\.6 467\.6 131\.5 469\.5 568\.4 121\.1 Equipment 11\.3 7\.1 62\.8 7\.7 2\.4 31\.2 Training 1\.2 0\.9 69\.2 2\.0 0\.8 40\.0 TA/Studies 0\.8 0\.8 114\.3 0\.5 2\.5 /_b 500\.0 Subtotal Training/TA/Studies 2\.0 1\.7 85\.0 2\.5 3\.3 132\.0 Total Baseline Cost 368\.8 476\.4 129\.1 479\.7 574\.1 119\.7 Contingencies: Physical 36\.7 -- -- 45\.6 -- -- Price 62\.3 -- -- 84\.6 -- -- Subtotal Contingencies 99\.0 -- -- 130\.2 -- -- Total Project Costs 467\.8 476\.4 101\.8 609\.9 574\.1 94\.1 Design and Investigation -- /_c 12\.1 -- /_d Land Acquisition and Resettlement 37\.8 36\.0 95\.2 17\.3 28\.8 166\.5 Total Financing Required 505\.6 512\.4 101\.3 627\.2 615\.0 98\.1 /_a: The cost of interchange roads is included in the cost of the expressway\. /_b: The Guangdong Project Office had major difficulties in reconciling their final accounts due to staff changes\. While most problems were resolved with the assistance of a Bank mission in early 2005, the allocation for `Technical Assistance' was not\. This figure should therefore be viewed as unreliable\. /_c: The category "Design and Investigation" was not included in the original project appraisal document\. /_d: The original allocation was not registered; therefore, the percentage of appraisal was not calculated\. - 30 -  Table 2b: Appraisal Project Cost by Procurement Arrangements (Appraisal/Estimate) (US$ m equivalent) Expenditure Hunan: Procurement Method Guangdong: Procurement Method Category ICB NCB Other /a NBF /b Total ICB NCB Other /a NBF /b Total 1\. Works 381\.2 57\.0 0\.0 0\.0 438\.2 561\.7 24\.6 0\.0 0\.0 586\.3 (164\.7) (23\.0) 0\.0 0\.0 (187\.7) (180\.8) (6\.2) 0\.0 0\.0 (187\.0) 2\. Goods 10\.3 0\.0 4\.0 0\.0 14\.3 5\.8 0\.0 4\.0 0\.0 9\.8 (6\.3) 0\.0 (1\.7) 0\.0 (8\.0) (5\.3) 0\.0 (3\.8) 0\.0 (9\.1) 3\. Services Construction 0\.0 0\.0 12\.8 0\.0 12\.8 0\.0 0\.0 10\.7 0\.0 10\.7 Supervision 0\.0 0\.0 (2\.6) 0\.0 (2\.6) 0\.0 0\.0 (2\.5) 0\.0 (2\.5) Consultants and 0\.0 0\.0 2\.5 0\.0 2\.5 0\.0 0\.0 3\.1 0\.0 3\.1 Training 0\.0 0\.0 (1\.7) 0\.0 (1\.7) 0\.0 0\.0 (1\.4) 0\.0 (1\.4) Subtotal 0\.0 0\.0 15\.3 0\.0 15\.3 0\.0 0\.0 13\.8 0\.0 13\.8 0\.0 0\.0 (4\.3) 0\.0 (4\.3) 0\.0 0\.0 (3\.9) 0\.0 (3\.9) 4\. Land Acquisition and Resettlement 0\.0 0\.0 0\.0 37\.8 37\.8 0\.0 0\.0 0\.0 17\.3 17\.3 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 Total 391\.5 57\.0 19\.3 37\.8 505\.6 567\.5 24\.6 17\.8 17\.3 627\.2 (171\.0) (23\.0) (6\.0) 0\.0 (200\.0) (186\.1) (6\.2) (7\.7) 0\.0 (200\.0) Table 2c: Actual Project Cost by Procurement Arrangements (Actual/Latest Estimate ) (US$ m equivalent) Expenditure Hunan: Procurement Method Guangdong: Procurement Method Category ICB NCB Other /a NBF /b Total ICB NCB Other /a NBF /b Total 1\. Works 387\.8 66\.4 0\.0 0\.0 454\.2 425\.4 17\.3 0\.0 112\.9 555\.6 (182\.9) 0\.0 0\.0 0\.0 (182\.9) (175\.9) (8\.3) 0\.0 0\.0 (184\.2) 2\. Goods 6\.0 0\.0 1\.1 0\.0 7\.1 1\.3 0\.0 0\.0 1\.1 2\.4 (5\.7) 0\.0 (1\.1) 0\.0 (6\.8) 0\.0 0\.0 0\.0 0\.0 0\.0 3\. Services Construction 0\.0 11\.7 1\.7 0\.0 13\.4 0\.0 0\.0 1\.7 11\.1 12\.8 Supervision 0\.0 0\.0 (1\.7) 0\.0 (1\.7) 0\.0 0\.0 (1\.0) 0\.0 (1\.0) Consultants and 0\.0 0\.0 1\.7 0\.0 1\.7 0\.0 0\.0 0\.8 2\.5 3\.3 Training 0\.0 0\.0 (1\.2) 0\.0 (1\.2) 0\.0 0\.0 0\.0 0\.0 0\.0 Subtotal Services 0\.0 11\.7 3\.4 0\.0 15\.1 0\.0 0\.0 2\.5 13\.6 16\.1 0\.0 0\.0 (2\.9) 0\.0 (2\.9) 0\.0 0\.0 (1\.0) 0\.0 (1\.0) Design and -- -- -- 12\.1 12\.1 Investigation -- -- -- 0\.0 0\.0 4\. Land Acquisition and Resettlement 0\.0 0\.0 0\.0 36\.0 36\.0 0\.0 0\.0 0\.0 28\.8 28\.8 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 Total 393\.8 78\.1 4\.5 36\.0 512\.4 426\.7 17\.3 2\.5 168\.5 615\.0 (188\.6) 0\.0 (4\.0) 0\.0 (192\.6) (175\.9) (8\.3) (1\.0) 0\.0 (185\.2) /_a: Other include force account, international shopping, limited international bidding, consultants and training\. /_b: NBF means not Bank-financed\. Note: 1\. Figures in parentheses are the amounts to be financed by the Bank Loan\. All costs include contingencies\. - 31 -  Table 2d: Hunan Province - Project Financing by Component (in US$ million equivalent) Appraisal Estimate Actual/ Latest Estimate Component Bank Gov't CoF\. Total Bank Gov't CoF\. Total A\. Expressway Civil Works 146\.4 203\.8 350\.2 158\.1 117\.5 120\.2 395\.8 B\. Interconnecting Roads 11\.8 16\.6 28\.4 0 0 0 0 C\. Other Roads 18\.9 25\.9 44\.8 18\.5 14\.8 16\.0 49\.3 ABC Subtotal Civil Works 177\.1 246\.3 423\.4 176\.6 132\.3 136\.2 445\.1 D\. Expressway M&E 10\.6 4\.2 14\.8 6\.3 0 2\.8 9\.1 E\. Construction Supervision 2\.6 10\.2 12\.8 1\.7 0 11\.7 13\.4 F\. TA/Studies 0\.5 0\.5 1\.0 0\.4 0 0\.4 0\.8 G\. Training 1\.2 0\.3 1\.5 0\.8 0 0\.1 0\.9 H\. Equipment 8\.0 6\.3 14\.3 6\.8 0 0\.3 7\.1 TOTAL PROJECT /_a 200\.0 267\.8 467\.8 192\.6 132\.3 151\.5 476\.4 I\. Land Acquisition & Resettlement 0 37\.8 37\.8 0 36\.0 0 36\.0 TOTAL FINANCING 200\.0 305\.6 505\.6 192\.6 168\.3 151\.5 512\.4 Table 2e: Guangdong Province - Project Financing by Component (in US$ million equivalent) Appraisal Estimate Actual/ Latest Estimate Component Bank Gov't CoF\. Total Bank Gov't CoF\. Total ABC\. Expressway Civil Works 140\.8 374\.2 515 181\.3 353\.6 534\.9 D\. Expressway M&E 46\.2 25\.2 71\.4 3\.0 17\.7 20\.7 E\. Construction Supervision 2\.5 8\.1 10\.6 1\.0 11\.8 12\.8 F\. TA/Studies 0\.2 0\.4 0\.6 0 2\.5 2\.5 G\. Training 1\.2 1\.3 2\.5 0 0\.8 0\.8 H\. Equipment 9\.1 0\.7 9\.8 0 2\.4 2\.4 TOTAL PROJECT /_a 200\.0 409\.9 609\.9 185\.3 388\.8 574\.1 Design and Investigation /_b 0 0 0 0 12\.1 12\.1 I\. Land Acquisition & Resettlement 0 17\.3 17\.3 0 28\.8 28\.8 TOTAL FINANCING 200\.0 427\.2 627\.2 185\.3 429\.7 615\.0 Table 2f: Consolidated Hunan and Guangdong Provinces - Project Financing by Component (in US$ million equivalent) Appraisal Estimate Actual/ Latest Estimate Component Bank Gov't CoF\. Total Bank Gov't CoF\. Total ABC\. Civil Works 317\.9 620\.5 938\.4 357\.9 485\.9 136\.2 980\.0 D\. Expressway M&E 56\.8 29\.4 86\.2 9\.3 17\.7 2\.8 29\.8 E\. Construction Supervision 5\.1 18\.3 23\.4 2\.7 11\.8 11\.7 26\.2 F\. TA/Studies 0\.7 0\.9 1\.6 0\.4 2\.5 0\.4 3\.3 G\. Training 2\.4 1\.6 4\.0 0\.8 0\.8 0\.1 1\.7 H\. Equipment 17\.1 7\.0 24\.1 6\.8 2\.4 0\.3 9\.5 SUBTOTAL /_a 400\.0 677\.7 1,077\.7 377\.9 521\.1 151\.5 1,050\.5 Design and Investigation /_b 0 0 0 0 12\.1 0 12\.1 I\. Land Acquisition & Resettlement 0 55\.1 55\.1 0 64\.8 0 64\.8 TOTAL FINANCING 400\.0 732\.8 1,132\.8 377\.9 598\.0 151\.5 1,127\.4 /_a: Total project costs including price and physical contingencies\. /_b: The category "Design and Investigation" was not included in the SAR\. - 32 -  Annex 3\. Economic Costs and Benefits Table 3a: Economic and Financial Evaluation Summary SAR ICR EIRR ENPV FNPV EIRR ENPV (%) (12%, FIRR (4\.8%, (%) (12%, FIRR FNPV mY) (%) mY) mY) (%) 1\. Hunan: a\. XLE 26\.3 4,976 -- -- 19\.0 2,598\.7 -- -- b\. Other highways /_a /_b -- -- 38\.5 859\.4 -- -- Hunan total -- -- -- -- 20\.6 3,458\.0 (1\.4) (2,084\.9) 2\. Guangdong: XGE 18\.11 2,111 -- -- 19\.7 2,636\.3 0\.8 (2,305\.5) Total expressways (XLE & XGE) -- -- -- -- 19\.3 5,241\.5 -- -- Total project 22\.4 7,733 -- -- 20\.2 6,094\.3 (1\.1) (4,389\.9) /_a: In the SAR, the EIRR for the other highways range from 20\.7% to 47\.0%\. /_b: In the SAR, the ENPV for the other highways range from 200 mY to 453 mY\. Traffic The XLE (Hunan) opened in December 2000 and both the total corridor traffic and the traffic on the new highway for 2001 was only about 60 percent of the SAR's estimate\. After three years of operation, in 2003, the total corridor traffic and the traffic on the new highway improved to about 70 percent of the SAR's estimate\. The expressway diversion ratios (the portion of the road users using the expressway) during 2001-2003 is also improved slightly\. This reveals that the road users are gradually accepting the toll expressway concept\. Considering the lower traffic demand, the long-term traffic growth for the XLE are estimated to be 2\.5- 3\.5 percent from 2003- 2020\. In the SAR, the growth rate forecast is 6\.8 percent\. The XGE (Guangdong) opened to traffic in April 2003 and both the total corridor traffic and the traffic on the new highway for 2003, despite only eight full months of operation, were about 3 percent and 74 percent, respectively, higher than the SAR's estimates\. The expressway diversion ratio for 2003 was estimated to be 93 percent which is much higher than the SAR's forecast of 55 percent\. This reveals that the road users of the XGE have totally accepted the toll expressway\. Since the project road is located in either mountains or hilly terrain, the economic development in the project area may be lower than in the other parts of Guangdong province, the long-term traffic forecast is conservatively estimated to be about 4\.2- 5\.6 percent from 2003- 2020\. In the SAR, the growth rate forecast is 6\.8 percent\. The expressway corridor traffic and distribution between the old and the new highway are presented in the following table, including the SAR forecast and actual traffic census data\. - 33 -  Table 3b: Number of Motorized Vehicle Per Day (2001-2020) SAR ICR1/ Old New Diversion Old New Diversion Road Road Total ratio Road Road Total ratio (1) (2) (3=1+2) (4=2/3) (1) (2) (3=1+2) (4=2/3) 1\. Hunan (XLE): 2001 4,423 12,589 17,012 74\.0% 2,888 7,402 10,290 71\.9% 2002 4,777 13,597 18,374 74\.0% 3,288 8,285 11,573 71\.6% 2003 5,159 14,684 19,843 74\.0% 3,866 10,217 14,083 72\.5% 2004 5,572 15,859 21,431 74\.0% 4,017 10,737 14,754 72\.8% 2005 6,018 17,128 23,146 74\.0% 4,174 11,284 15,458 73\.0% 2010 8,842 25,165 34,007 74\.0% 4,867 13,762 18,628 73\.9% 2015 11,832 33,677 45,509 74\.0% 5,353 15,857 21,210 74\.8% 2020 15,835 45,067 60,902 74\.0% 5,888 18,272 24,160 75\.6% Average growth pa 2003-2020 6\.8% 6\.8% 6\.8% 2\.5% 3\.5% 3\.2% -- 2\. Guangdong (XGE): 2001 5,724 6,996 12,720 55\.0% 2,667 -- 2,667 -- 2002 6,182 7,556 13,738 55\.0% 3,445 -- 3,445 -- 2003 6,676 8,160 14,836 55\.0% 1,029 14,196 15,225 93\.2% 2004 7,210 8,813 16,023 55\.0% 1,091 15,266 16,357 93\.3% 2005 7,788 9,518 17,306 55\.0% 1,156 16,417 17,573 93\.4% 2010 11,443 13,986 25,429 55\.0% 1,460 21,957 23,417 93\.8% 2015 15,313 18,716 34,029 55\.0% 1,744 28,003 29,747 94\.1% 2020 20,492 25,046 45,538 55\.0% 2,084 35,714 37,798 94\.5% Average growth pa 2003-2020 6\.8% 6\.8% 6\.8% 4\.2% 5\.6% 5\.5% -- Sources: HPCD, GPCD and the Bank staff\. Note: 1/ 2004 onwards are estimates - 34 -  Table 3c: Hunan: Second National Highway Project EIRR: Xiangtan - Leiyang Expressway (million Yuan) Costs Benefits (Savings) Net cash Capital O & M Total VOC Congestion Accident Total flow 1997 516\.62 516\.62 (516\.6) 1998 922\.22 922\.22 (922\.2) 1999 802\.12 802\.12 (802\.1) 2000 710\.42 710\.42 (710\.4) 2001 602\.53 26\.60 629\.13 392\.26 5\.22 4\.02 401\.5 (227\.6) 2002 451\.86 26\.60 478\.46 524\.28 6\.84 4\.67 535\.8 57\.3 2003 26\.60 26\.60 686\.71 11\.49 5\.64 703\.8 677\.2 2004 26\.60 26\.60 760\.70 11\.84 5\.85 778\.4 751\.8 2005 26\.60 26\.60 842\.84 12\.21 6\.06 861\.1 834\.5 2006 26\.60 26\.60 934\.08 12\.59 6\.28 953\.0 926\.4 2007 26\.60 26\.60 1,035\.43 12\.99 6\.50 1,054\.9 1,028\.3 2008 26\.60 26\.60 1,148\.06 13\.41 6\.73 1,168\.2 1,141\.6 2009 26\.60 26\.60 1,273\.25 13\.85 6\.97 1,294\.1 1,267\.5 2010/_a 138\.36 138\.36 1,412\.42 14\.31 7\.27 1,434\.0 1,295\.6 2011/_a 138\.36 138\.36 1,516\.65 13\.92 7\.42 1,538\.0 1,399\.6 2012 26\.60 26\.60 1,628\.76 13\.53 7\.57 1,649\.9 1,623\.3 2013 26\.60 26\.60 1,749\.37 13\.15 7\.73 1,770\.3 1,743\.7 2014 26\.60 26\.60 1,879\.13 12\.78 7\.89 1,899\.8 1,873\.2 2015 26\.60 26\.60 2,018\.75 12\.43 8\.06 2,039\.2 2,012\.6 2016 26\.60 26\.60 2,168\.99 12\.09 8\.23 2,189\.3 2,162\.7 2017 26\.60 26\.60 2,330\.68 11\.76 8\.40 2,350\.8 2,324\.2 2018 26\.60 26\.60 2,504\.72 11\.43 8\.57 2,524\.7 2,498\.1 2019 26\.60 26\.60 2,692\.06 11\.12 8\.75 2,711\.9 2,685\.3 2020 26\.60 26\.60 2,893\.73 10\.82 8\.89 2,913\.4 2,886\.8 Total 4,005\.77 30,772\.2 26,010\.9 EIRR 19\.0% NPV (12%) 2,598\.7 /_a: Major maintenance - 35 -  Table 3d: Guangdong: Second National Highway Project EIRR: Xiaotang- Gantang Expressway (million Yuan) Costs Benefits (Savings) Net cash Capital O & M Total VOC Congestion Accident Total flow 1997 118\.65 118\.65 (118\.65) 1998 138\.27 138\.27 (138\.27) 1999 512\.86 512\.86 (512\.86) 2000 897\.74 897\.74 (897\.74) 2001 1036\.92 1036\.92 (1036\.92) 2002 1013\.58 1013\.58 (1013\.58) 2003 590\.40 21\.06 611\.46 647\.47 10\.34 1\.16 657\.81 46\.35 2004 222\.34 21\.06 243\.40 728\.97 10\.61 1\.22 739\.58 496\.18 2005 21\.06 21\.06 820\.76 10\.89 1\.29 831\.65 810\.59 2006 21\.06 21\.06 924\.15 11\.17 1\.35 935\.32 914\.26 2007 21\.06 21\.06 1,040\.62 11\.47 1\.42 1,052\.09 1,031\.03 2008 21\.06 21\.06 1,171\.82 11\.77 1\.50 1,183\.59 1,162\.53 2009 21\.06 21\.06 1,319\.61 12\.09 1\.57 1,331\.70 1,310\.64 2010 21\.06 21\.06 1,486\.08 12\.42 1\.65 1,498\.50 1,477\.44 2011 21\.06 21\.06 1,621\.15 12\.36 1\.73 1,633\.51 1,612\.45 2012/_a 107\.07 107\.07 1,768\.52 12\.30 1\.81 1,780\.82 1,673\.76 2013/_a 107\.07 107\.07 1,929\.31 12\.24 1\.90 1,941\.55 1,834\.49 2014 21\.06 21\.06 2,104\.75 12\.18 1\.99 2,116\.93 2,095\.87 2015 21\.06 21\.06 2,296\.15 12\.12 2\.10 2,308\.27 2,287\.21 2016 21\.06 21\.06 2,505\.00 12\.06 2\.21 2,517\.06 2,496\.00 2017 21\.06 21\.06 2,732\.87 12\.00 2\.33 2,744\.87 2,723\.81 2018 21\.06 21\.06 2,981\.50 11\.94 2\.47 2,993\.44 2,972\.38 2019 21\.06 21\.06 3,252\.78 11\.88 2\.62 3,264\.66 3,243\.60 2020 21\.06 21\.06 3,548\.78 11\.80 2\.80 3,560\.58 3,539\.52 Total 4,530\.76 33,091\.9 28,779\.9 EIRR 19\.7% NPV (12%) 2,636\.3 /_a: Major maintenance - 36 -  Table 3e: Second National Highway Project EIRR: Total Expressway (million Yuan) Costs Benefits (Savings) Net cash Capital O & M Total VOC Congestion Accident Total flow 1997 635\.3 0\.0 635\.3 (635\.3) 1998 1,060\.5 0\.0 1,060\.5 0\.0 0\.0 0\.0 (1,060\.5) 1999 1,315\.0 0\.0 1,315\.0 0\.0 0\.0 0\.0 (1,315\.0) 2000 1,608\.2 0\.0 1,608\.2 0\.0 0\.0 0\.0 (1,608\.2) 2001 1,639\.5 26\.6 1,666\.1 392\.3 5\.2 4\.0 401\.5 (1,264\.6) 2002 1,465\.4 26\.6 1,492\.0 524\.3 6\.8 4\.7 535\.8 (956\.3) 2003 590\.4 47\.7 638\.1 1,334\.2 21\.8 6\.8 1,362\.8 724\.8 2004 222\.3 47\.7 270\.0 1,489\.7 22\.5 7\.1 1,519\.2 1,249\.2 2005 0\.0 47\.7 47\.7 1,663\.6 23\.1 7\.3 1,694\.1 1,646\.4 2006 0\.0 47\.7 47\.7 1,858\.2 23\.8 7\.6 1,889\.6 1,842\.0 2007 0\.0 47\.7 47\.7 2,076\.1 24\.5 7\.9 2,108\.4 2,060\.8 2008 0\.0 47\.7 47\.7 2,319\.9 25\.2 8\.2 2,353\.3 2,305\.6 2009 47\.7 47\.7 2,592\.9 25\.9 8\.5 2,627\.3 2,579\.7 2010/_a 159\.4 159\.4 2,898\.5 26\.7 8\.9 2,934\.2 2,774\.7 2011/_a 159\.4 159\.4 3,137\.8 26\.3 9\.2 3,173\.2 3,013\.8 2012/_a 133\.7 133\.7 3,397\.3 25\.8 9\.4 3,432\.5 3,298\.8 2013/_a 133\.7 133\.7 3,678\.7 25\.4 9\.6 3,713\.7 3,580\.0 2014 47\.7 47\.7 3,983\.9 25\.0 9\.9 4,018\.7 3,971\.1 2015 47\.7 47\.7 4,314\.9 24\.6 10\.2 4,349\.6 4,302\.0 2016 47\.7 47\.7 4,674\.0 24\.2 10\.4 4,708\.6 4,660\.9 2017 47\.7 47\.7 5,063\.6 23\.8 10\.7 5,098\.0 5,050\.4 2018 47\.7 47\.7 5,486\.2 23\.4 11\.0 5,520\.6 5,473\.0 2019 47\.7 47\.7 5,944\.8 23\.0 11\.4 5,979\.2 5,931\.6 2020 47\.7 47\.7 6,442\.5 22\.6 11\.7 6,476\.8 6,429\.2 Total 8,536\.5 63,897\.2 54,054\.1 EIRR 19\.3% NPV (12%) 5,241\.5 /_a: Major maintenance - 37 -  Table 3f: Hunan: Income Statement - Consolidated (million Yuan, year ending 31, December) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Traffic (million veh-km) 311\.84 348\.36 431\.52 450\.46 470\.25 491\.01 512\.72 535\.40 559\.14 584\.10 601\.09 Revenue Tolls 293\.81 353\.18 415\.50 436\.95 456\.14 476\.28 497\.34 599\.65 626\.24 654\.19 673\.22 Others 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 Total 293\.81 353\.18 415\.50 436\.95 456\.14 476\.28 497\.34 599\.65 626\.24 654\.19 673\.22 Operating Taxes Business tax 14\.69 17\.66 20\.78 21\.85 22\.81 23\.81 24\.87 29\.98 31\.31 32\.71 33\.66 City tax 1\.03 1\.24 1\.45 1\.53 1\.60 1\.67 1\.74 2\.10 2\.19 2\.29 2\.36 Education levy 0\.44 0\.52 0\.62 1\.09 1\.14 1\.19 1\.24 1\.50 1\.57 1\.64 1\.68 Total 16\.16 19\.42 22\.85 24\.47 25\.55 26\.67 27\.85 33\.58 35\.07 36\.64 37\.70 Net Revenue 277\.65 333\.76 392\.65 412\.48 430\.59 449\.61 469\.49 566\.07 591\.17 617\.55 635\.52 Operating Costs Wages and benefits 14\.16 14\.90 15\.68 20\.54 21\.44 22\.39 23\.37 28\.18 29\.43 30\.75 31\.64 Maintenance 11\.05 11\.60 12\.18 12\.79 13\.43 14\.10 87\.34 15\.55 16\.33 17\.15 18\.01 Fuel & materials 1\.58 1\.66 1\.75 2\.18 2\.28 2\.38 2\.49 3\.00 3\.13 3\.27 3\.37 Administration 37\.84 18\.43 51\.71 50\.25 52\.46 54\.77 57\.19 68\.96 72\.02 75\.23 77\.42 Total working costs 64\.63 46\.59 81\.32 85\.76 89\.61 93\.64 170\.39 115\.69 120\.91 126\.40 130\.44 Depreciation 80\.37 110\.49 128\.04 134\.65 135\.99 136\.06 136\.13 136\.21 136\.28 136\.37 136\.45 Total operating costs 145\.00 157\.08 209\.36 220\.41 225\.60 229\.70 306\.52 251\.90 257\.19 262\.77 266\.89 Operating Profit 132\.65 176\.68 183\.29 192\.07 204\.99 219\.91 162\.97 314\.17 333\.98 354\.78 368\.63 Financial charges: IBRD 0\.00 0\.00 61\.43 58\.09 54\.59 50\.95 47\.15 43\.19 39\.07 34\.75 30\.26 Local Bank 41\.69 57\.31 66\.41 69\.84 69\.84 64\.66 59\.47 54\.29 49\.10 43\.92 38\.74 Others - - - - - - - - - - - Other income (expenses) (207\.49)(159\.45) (53\.40) (21\.85)(22\.81)(23\.81) (24\.87) (29\.98) (31\.31) (32\.71)(33\.66) Profit Before Taxes/1 (116\.53) (40\.08) 2\.05 42\.29 57\.75 80\.49 31\.48 186\.71 214\.50 243\.40 265\.97 Income tax - - - - - 26\.56 10\.39 61\.61 70\.79 80\.32 87\.77 Net Profit After Taxes (116\.53) (40\.08) 2\.05 42\.29 57\.75 53\.93 21\.09 125\.10 143\.72 163\.08 178\.20 Actual: 2003, forecast: 2004 thereafter\. /_1: Income rate = 33\.3% after the tax credit\. /_2: Opened to traffic on December 2000\. - 38 -  Table 3g: Hunan: Sources and Applications of Funds - Consolidated (million Yuan, year ending 31, December) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sources: Net profits - - - - (116\.53) (40\.08) 2\.05 42\.29 57\.75 53\.93 21\.09 125\.1 143\.72 163\.08 Depreciation - - - - 80\.37 110\.49 128\.04 134\.65 135\.99 136\.06 136\.13 136\.21 136\.28 136\.37 State contribution 21\.32 24\.84 92\.14 161\.29 186\.30 182\.10 106\.07 39\.95 - - - - - - Provincial contribution 12\.89 15\.02 55\.72 97\.54 112\.66 110\.13 64\.15 24\.16 - - - - - - Borrowing: IBRD 41\.86 48\.78 180\.94 316\.73 365\.84 357\.60 208\.30 78\.45 - - - - - - Local 35\.28 41\.11 152\.50 266\.95 308\.33 301\.39 175\.55 66\.10 - - - - - - Others - - - - - - - - - - - - - - Total 111\.35 129\.75 481\.30 842\.51 936\.97 1,021\.63 684\.16 385\.60 193\.74 189\.99 157\.22 261\.31 280\.00 299\.45 Applications: Capital expenditure 111\.35 129\.75 481\.30 842\.51 973\.13 951\.22 554\.07 208\.66 13\.43 14\.10 14\.81 15\.55 16\.33 17\.15 Other expenditure - - - - - - - - - - - - - - Loan repayment: IBRD - - - - - - 78\.16 81\.50 85\.00 88\.64 92\.44 96\.40 100\.52 104\.84 Local - - - - - - - - 100\.00 100\.00 100\.00 100\.00 100\.00 100\.00 Others - - - - - - - - - - - - - - Change w/ capital - - - - (36\.16) (32\.53) (34\.15) (11\.76) (10\.51) (11\.04) (11\.54) (56\.07) (14\.57) (15\.31) Total 111\.35 129\.75 481\.30 842\.51 936\.97 918\.69 598\.08 278\.40 187\.92 191\.70 195\.71 155\.88 202\.28 206\.68 Net Funds Flow - - - - - 102\.94 86\.1 107\.20 5\.82 (1\.71) (38\.49) 105\.43 77\.72 92\.77 Open balance - 102\.94 189\.02 296\.22 302\.04 300\.33 261\.84 367\.27 444\.98 Closing balance 102\.94 189\.02 296\.22 302\.04 300\.33 261\.84 367\.27 444\.98 537\.75 D/S Cover -- -- -- -- 1\.66 2\.17 1\.05 1\.01 0\.82 1\.33 1\.40 1\.46 - 39 -  Table 3h: Hunan: Balance Sheet - Consolidated (million Yuan, year ending 31, December) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Assets: Fixed Assets At cost 2,411\.14 3,314\.80 3,841\.16 4,039\.39 4,039\.39 4,039\.39 4,039\.39 4,039\.394,039\.39 4,039\.39 4,039\.39 Less: Depreciation 80\.37 110\.49 128\.04 262\.69 398\.68 534\.74 670\.87 807\.08 943\.36 1,079\.73 1,216\.18 Net fixed assets 2,330\.77 3,204\.31 3,713\.12 3,776\.70 3,640\.71 3,504\.65 3,368\.52 3,232\.313,096\.03 2,959\.66 2,823\.21 Current Assets Inventory - - - - - - - - - - - Receivable 15\.28 18\.37 21\.61 22\.72 23\.72 24\.77 25\.86 31\.18 32\.56 34\.02 35\.01 Cash - 102\.94 189\.02 296\.22 302\.04 300\.33 261\.84 367\.27 444\.98 537\.75 635\.49 Subtotal 15\.28 121\.31 210\.63 318\.94 325\.76 325\.10 287\.70 398\.45 477\.54 571\.77 670\.50 Other Assets 155\.72 187\.19 220\.22 231\.58 241\.75 252\.43 263\.59 317\.81 331\.91 346\.72 356\.81 Total Assets 2,501\.77 3,512\.81 4,143\.97 4,327\.22 4,208\.22 4,082\.18 3,919\.81 3,948\.573,905\.48 3,878\.15 3,850\.52 Liabilities & Equity State funds- Equity 479\.02 777\.64 1,047\.02 1,147\.91 1,196\.65 1,241\.12 1,252\.24 1,385\.311,518\.82 1,671\.17 1,835\.74 L/T loans: IBRD 954\.15 1,311\.75 1,441\.89 1,438\.84 1,353\.84 1,265\.20 1,172\.76 1,076\.36 975\.84 871\.00 761\.67 Local 804\.17 1,105\.56 1,281\.11 1,347\.21 1,247\.21 1,147\.21 1,047\.21 947\.21 847\.21 747\.21 647\.21 Subtotal 1,758\.32 2,417\.31 2,723\.00 2,786\.05 2,601\.05 2,412\.41 2,219\.97 2,023\.571,823\.05 1,618\.21 1,408\.88 Current Liabilities 176\.29 211\.91 249\.30 262\.17 273\.68 285\.77 298\.40 359\.79 375\.74 392\.51 403\.93 Other Liabilities 88\.14 105\.95 124\.65 131\.09 136\.84 142\.88 149\.20 179\.90 187\.87 196\.26 201\.97 Total Liabilities & Equity 2,501\.77 3,512\.81 4,143\.97 4,327\.22 4,208\.22 4,082\.18 3,919\.81 3,948\.573,905\.48 3,878\.15 3,850\.52 Debt- to- equity ratio 77/23 75/25 72/28 70/30 68/32 66/34 64/36 60/40 56/44 52/48 47/53 Current ratio 0\.1 0\.6 0\.8 1\.2 1\.2 1\.1 1\.0 1\.1 1\.3 1\.5 1\.7 - 40 -  Table 3i: Hunan: Assumptions for Financial Forecasts 1\. Toll and Traffic (AADT): Small Medium Large Small Medium Large Tractor car bus bus truck truck truck -Trailer Total Toll (Y/v-km) /_a 0\.400 0\.700 1\.000 0\.400 0\.700 1\.000 1\.300 1\. Majiahe- Xintang 2001 922 140 916 2,324 351 2,352 8 7,013 2002 1,035 157 1,029 2,609 394 2,640 9 7,873 2003 1,321 182 1,193 3,025 457 3,060 10 9,248 2010 1,859 224 1,467 3,720 562 3,763 12 11,607 2020 2,622 260 1,703 4,317 652 4,367 14 13,935 2\. Xintang- Hongshi 2001 1,076 163 1,069 2,712 410 2,754 10 8,194 2002 1,201 182 1,194 3,028 458 3,064 11 9,138 2003 1,607 221 1,453 3,684 557 3,728 13 11,263 2010 2,416 291 1,912 4,848 733 4,906 17 15,123 2020 3,752 373 2,448 6,206 938 6,280 22 20,019 3\. Hongshi- Leiyang 2001 920 139 914 2,319 351 2,347 8 6,998 2002 1,031 156 1,025 2,599 393 2,631 9 7,844 2003 1,446 199 1,308 3,317 502 3,358 11 10,141 2010 2,322 280 1,840 4,667 706 4,725 15 14,555 2020 3,606 395 2,596 6,583 996 6,665 21 20,862 /_a: 15 % increase every 5 years\. 2\. Operating Taxes: Business tax 5\.0% of the total revenue\. City tax 5\.0% of the business taxes\. Education levy 3\.0% of the business taxes\. 3\. Operating Cost: Increase 5 % pa\. a\. Wages and benefits 4\.7%of total revenue\. b\. Maintenance 3\.0%of total revenue\. c\. Fuel & materials 0\.5%of total revenue\. d\. Administration 11\.5%of total revenue\. e\. Depreciation 30years straight-line method\. f\. Other expenses 5\.0%of total revenue\. 4\. Capital maintenance (MY/km): Increase 5% p\.a\. Routine Medium Major maint\./ year maint\./ 5 years maint\./ 10 years 0\.0623 0\.350 0\.650 5\. Income tax rate 33\.3%, after 2005\. 6\. Borrowing: The IBRD 4\.24%, 20 year maturities, LIBOR US$ based single currency, 5 years grace period and the foreign exchange risks\. Local Bank 5\.18%, flexible principal payment\. - 41 -  Table 3j: Guangdong: Income Statement- Consolidated (million Yuan, year ending 31, December) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Traffic (million veh-km) 568\.92 605\.40 644\.23 685\.55 729\.61 776\.51 826\.59 880\.01 923\.58969\.43 1,017\.57 Revenue Tolls 279\.00 424\.00 451\.20 480\.13 510\.99 628\.97 669\.54 712\.81 748\.10785\.24 946\.34 Others - - - - - - - - - - - Total 279\.00 424\.00 451\.20 480\.13 510\.99 628\.97 669\.54 712\.81 748\.10785\.24 946\.34 Operating Taxes Business tax 14\.00 21\.00 22\.56 24\.01 25\.55 31\.45 33\.48 35\.64 37\.41 39\.26 47\.32 City tax 1\.00 1\.00 1\.13 1\.20 1\.28 1\.57 1\.67 1\.78 1\.87 1\.96 2\.37 Education levy 0\.50 0\.60 0\.68 0\.72 0\.77 0\.94 1\.00 1\.07 1\.12 1\.18 1\.42 Total 15\.50 22\.60 24\.37 25\.93 27\.60 33\.96 36\.15 38\.49 40\.40 42\.40 51\.11 Net Revenue 263\.50 401\.40 426\.83 454\.20 483\.39 595\.01 633\.39 674\.32 707\.70742\.84 895\.23 Operating Costs Wages and benefits 12\.00 22\.00 23\.46 24\.97 26\.57 32\.71 34\.82 37\.07 38\.90 40\.83 49\.21 Maintenance 11\.00 28\.00 29\.78 31\.69 112\.10 41\.51 44\.19 47\.05 49\.37256\.94 62\.46 Administration 9\.00 29\.00 31\.58 33\.61 35\.77 44\.03 46\.87 49\.90 52\.37 54\.97 66\.24 Others 34\.00 2\.00 2\.26 2\.40 2\.55 3\.14 3\.35 3\.56 3\.74 3\.93 4\.73 Total working costs 66\.00 81\.00 87\.08 92\.67 176\.99 121\.39 129\.23 137\.58 144\.38356\.67 182\.64 Depreciation 54\.00 100\.00 171\.08 171\.19 171\.29 171\.41 171\.53 171\.65 171\.78171\.92 172\.06 Total operating costs 120\.00 181\.00 258\.16 263\.86 348\.28 292\.80 300\.76 309\.23 316\.16528\.59 354\.70 Operating Profit 143\.50 220\.40 168\.67 190\.34 135\.11 302\.21 332\.63 365\.09 391\.54214\.25 540\.53 Financial charges: IBRD 17\.00 19\.00 57\.61 54\.12 50\.48 46\.68 42\.72 38\.59 34\.29 29\.80 25\.11 Local Bank 95\.00 105\.00 80\.77 106\.63 106\.63 106\.63 101\.45 93\.67 85\.90 75\.53 59\.98 Others - - 7\.16 5\.14 3\.13 - - - - - - Other income (expenses) 4\.00 2\.00 - - - - - - - - - Profit Before Taxes/1 35\.50 98\.40 30\.29 29\.59(22\.00) 148\.90 188\.46 232\.83 271\.35108\.92 455\.44 Income tax - - 10\.00 9\.76 - 49\.14 62\.19 76\.83 89\.55 35\.94 150\.30 Net Profit After Taxes 35\.50 98\.40 20\.29 19\.83(22\.00) 99\.76 126\.27 156\.00 181\.80 72\.98 305\.14 Actual: 2003, forecast: 2004 thereafter\. /_1: Starting 2005, income rate = 33\.3% /_2: Opened to traffic on April 2003\. - 42 -  Table 3k: Guangdong: Sources and Applications of Funds-Consolidated (million Yuan, year ending 31, December) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sources: Net profits - - - - - - 35\.5 98\.40 20\.29 19\.83 (22\.00) 99\.8 126\.27 156\.00 Depreciation - - - - - - 54\.00 100\.00 171\.08 171\.19 171\.29 171\.41 171\.53 171\.65 State contribution 16\.44 19\.16 71\.09 124\.43 143\.73 140\.49 81\.83 30\.83 - - - - - - Provincial contribution 29\.84 34\.77 128\.98 225\.77 260\.77 254\.90 148\.48 55\.91 - - - - - - Borrowing: IBRD 40\.12 46\.76 173\.43 303\.59 350\.66 342\.76 199\.65 75\.19 - - - - - - Local 40\.80 47\.54 176\.36 308\.71 356\.57 348\.54 203\.02 76\.46 - - - - - - Others 5\.96 6\.95 25\.76 45\.10 52\.09 50\.92 29\.66 11\.16 - - - - - - Total 133\.16 155\.18 575\.62 1,007\.60 1,163\.82 1,137\.61 752\.14 447\.95 191\.37 191\.02 149\.29 271\.17 297\.80 327\.65 Applications: Capital expenditure 133\.16 155\.18 575\.62 1,007\.60 1,163\.82 1,137\.61 662\.64 249\.55 6\.03 6\.33 6\.65 6\.98 7\.33 7\.70 Other expenditure - - - - - - - - - - - - - - Loan repayment: IBRD - - - - - - 73\.00 77\.00 81\.47 84\.96 88\.60 92\.40 96\.36 100\.49 Local - - - - - - - - - - - 100\.00 150\.00 150\.00 Others - - - - - - - - 50\.00 50\.00 50\.00 77\.60 - - Change w/ capital - - - - - - (41\.50) 74\.40 (6\.26) (15\.85) (16\.91) (64\.65) (22\.23) (23\.72) Total 133\.16 155\.18 575\.62 1,007\.60 1,163\.82 1,137\.61 694\.14 400\.95 131\.24 125\.44 128\.34 212\.33 231\.46 234\.47 Net Funds Flow - - - - - - 58\.0 47\.00 60\.13 65\.58 20\.95 58\.84 66\.34 93\.18 Open balance - - - - 58\.00 105\.00 165\.13 230\.71 251\.66 310\.50 376\.84 Closing balance - - - 58\.00 105\.00 165\.13 230\.71 251\.66 310\.50 376\.84 470\.02 D/S Cover -- -- -- -- 1\.23 2\.58 2\.35 2\.25 1\.68 1\.41 1\.21 1\.31 - 43 -  Table 3l: Guangdong: Balance Sheet- Consolidated (million Yuan, year ending 31, December) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Assets: Fixed Assets At cost 4,617\.00 5,095\.00 5,096\.21 5,097\.48 5,098\.81 5,100\.21 5,101\.68 5,103\.225,104\.84 5,106\.54 5,108\.32 Less: Depreciation 54\.00 154\.00 325\.08 496\.27 667\.56 838\.97 1,010\.50 1,182\.151,353\.93 1,525\.85 1,697\.91 Net fixed assets 4,563\.00 4,941\.00 4,771\.13 4,601\.21 4,431\.25 4,261\.24 4,091\.18 3,921\.073,750\.91 3,580\.69 3,410\.41 Current Assets Inventory - - - - - - - - - - - Receivable 69\.00 22\.00 23\.46 24\.97 26\.57 32\.71 34\.82 37\.07 38\.90 40\.83 49\.21 Cash 58\.00 105\.00 165\.13 230\.71 251\.66 310\.50 376\.84 470\.02 530\.06 377\.54 420\.14 Subtotal 127\.00 127\.00 188\.59 255\.68 278\.23 343\.21 411\.66 507\.09 568\.96 418\.37 469\.35 Other Assets 255\.00 225\.00 239\.14 254\.47 270\.82 333\.35 354\.86 377\.79 396\.49 416\.18 501\.56 Total Assets 4,945\.00 5,293\.00 5,198\.86 5,111\.36 4,980\.30 4,937\.80 4,857\.70 4,805\.954,716\.36 4,415\.24 4,381\.32 Liabilities & Equity State funds- Equity 1,510\.00 1,500\.00 1,435\.09 1,406\.51 1,336\.28 1,380\.00 1,509\.75 1,669\.541,852\.98 1,927\.72 2,262\.78 L/T loans: IBRD 1,067\.00 1,349\.00 1,300\.69 1,215\.73 1,127\.13 1,034\.73 938\.37 837\.88 733\.09 623\.81 509\.84 Local 2,075\.00 2,057\.00 2,057\.00 2,057\.00 2,057\.00 1,957\.00 1,807\.00 1,657\.001,457\.00 1,157\.00 757\.00 Subtotal 3,142\.00 3,406\.00 3,357\.69 3,272\.73 3,184\.13 2,991\.73 2,745\.37 2,494\.882,190\.09 1,780\.81 1,266\.84 Current Liabilities 197\.00 263\.00 270\.72 288\.08 306\.59 377\.38 401\.72 427\.69 448\.86 471\.14 567\.80 Other Liabilities 96\.00 124\.00 135\.36 144\.04 153\.30 188\.69 200\.86 213\.84 224\.43 235\.57 283\.90 Total Liabilities & Equity 4,945\.00 5,293\.00 5,198\.86 5,111\.36 4,980\.30 4,937\.80 4,857\.70 4,805\.954,716\.36 4,415\.24 4,381\.32 Debt- to- equity ratio 68/32 69/31 70/30 70/30 70/30 68/32 65/35 61/39 56/44 51/49 42/58 Current ratio 0\.6 0\.5 0\.7 0\.9 0\.9 0\.9 1\.0 1\.2 1\.3 0\.9 0\.8 - 44 -  Table 3m: Guangdong: Assumptions for Financial Forecasts 1\. Toll and Traffic (AADT): Small Medium Large Small Medium Large Tractor car bus bus truck truck truck -Trailer Total Toll (Y/v-km) /_a 0\.450 0\.675 0\.900 0\.450 0\.675 0\.900 1\.350 1\. Xiaotang - Daqiao 2003 2,909 2,203 520 532 5,139 1,212 1,681 14,196 2010 4,986 3,312 782 800 7,727 1,822 2,528 21,957 2020 9,359 5,143 1,214 1,242 12,000 2,830 3,926 35,714 2\. Daqiao - Ruyuan 2003 2,909 2,203 520 532 5,139 1,212 1,681 14,196 2010 4,986 3,312 782 800 7,727 1,822 2,528 21,957 2020 9,359 5,143 1,214 1,242 12,000 2,830 3,926 35,714 3\. Ruyuan - Gantang 2003 2,909 2,203 520 532 5,139 1,212 1,681 14,196 2010 4,986 3,312 782 800 7,727 1,822 2,528 21,957 2020 9,359 5,143 1,214 1,242 12,000 2,830 3,926 35,714 /_a: 15 % increase every 5 years\. 2\. Operating Taxes Business tax 5\.0% of the total revenue\. City tax 5\.0% of the business taxes\. Education levy 3\.0% of the business taxes\. 3\. Operating Cost: Increase 5 % pa\. a\. Wages and benefits 5\.2%of total revenue b\. Maintenance 6\.6%of total revenue c\. Administration 7\.0%of total revenue d\. Others 0\.5%of total revenue e\. Depreciation 30years straight-line method\. 4\. Capital maintenance (MY/km): Increase 5% p\.a\. Routine Medium Major maint\./ year maint\./ 5 years maint\./ 10 years 0\.043 0\.650 1\.200 5\. Income tax rate 33\.3%, after 2005\. 6\. Borrowing: The IBRD 4\.24%, 20 year maturities, LIBOR US$ based single currency, 5 years grace period and the foreign exchange risks\. Local Bank 5\.18%, flexible principal payment\. Bonds 4\.03%, flexible principal payment\. - 45 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 07/19/1994 4 Task Manager (1); Operations Unit Chief (1), Finance Specialist (1); Engineering Consultant (1); 11/09/1994 8 Task Manager (1); Operations Unit Chief (1); Highway Engineer (1); Engineering Consultant (1); Finance Specialist (1); RMC Project Officer (1); Resettlement Specialist (1); Environment Specialist (1) Consultant (1) 04/2/1995 8 Task Manager (1) ; Operations Unit Chief (1) Highway Consultant (1) ; RMC Project Officer (1); Institutional SPEC\. (1); Environment Specialist (1) Resettlement Specialist (1) Transport Consultant (1) 07/26/1995 6 Task Manager (1); Highway Consultant (1); RMC Project Officer (1); Institutional Specialist (1); Environment Specialist (1); Resettlement Specialist (1) Appraisal/Negotiation 05/26/1996 6 Task Manager (1) Highway Consultant (1); Institutional Consultant(1); Environment Specialist (1) ; Resettlement Specialist (1) ; Transport Specialist (1) Supervision 06/15/1997 2 Task Manager (1); S S Highway Consultant (1) 11/28/1997 6 Task Manager (1); S S Environment Specialist (1); Resettlement Specialist (1); - 46 -  Institutional Specialist (1); Procurement Specialist (1); Disbursement Specialist (1) 05/21/1998 3 Task Manager (1); S S Highway Engineer (1); Institutional Specialist (1) 12/02/1998 4 Task Manager (1); S S Highway Engineer (1); Institutional Specialist (1); Resettlement Specialist (1) 04/17/1999 3 Highway Engineer (1); S S Environment Specialist (1); Resettlement Specialist (1) 04/17/1999 4 Task Manager (1); S S Highway Engineer (1); Institutional Specialist (1); Resettlement Specialist (1) 11/27/1999 4 Task Manager (1); S S Highway Engineer (1); Environment Specialist (1); Institutional Specialist (1) 03/17/2000 2 Task Manager (1); S S Highway Engineer (1) 07/15/2000 3 Task Manager (1); S S Highway Engineer (1); Institutional Specialist (1) 04/07/2001 4 Pr\. Transport Finance Specialist S S (1); Institutional Development (1); Engineering (1); Environment (1) 11/23/2001 4 Team Leader (1); S S Engineering (1); Institutional (1); Resettlement (1) 05/31/2002 1 Team Leader (1) S S 12/07/2002 2 TTL/Pr\. Transp\. Fin\. Spec\. (1); S S Institutional Consultant (1) 03/15/2003 3 TTL/Pr\. Transp\. Fin\. Spec\. S S (1);Engineering Consultant (1); Senior Environment Spec\. (1) 07/25/2003 1 Engineering Consultant (1) S S 03/04/2004 3 TTL/Pr\. Transp\. Fin\. Spec\. (1); S S Finance Officer (1); Institutional Development & Road Safety (1) ICR 10/01/2004 2 TTL/Sr\. Transp\. Specialist S S (1); Highway Engineer (1) - 47 -  (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 134 463 Appraisal/Negotiation 21 63 Supervision 90 558 ICR 12 40 Total 257 1,124 - 48 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 49 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 50 -  Annex 7\. List of Supporting Documents 1\. The World Bank, Second National Highway Project: Staff Appraisal Report (No\. 15428-CHA), November 12, 1996 2\. The World Bank, Second National Highway Project: Loan Agreement (No\. 4124-CHA), between the People's Republic of China and International Bank for Reconstruction and Development, August 29, 1997 3\. The World Bank, Second National Highway Project: Project Agreement, between International Bank for Reconstruction and Development and Guangdong and Hunan Provinces, (No\. 4124-CHA), August 29, 1997 4\. The World Bank, Aide-memoires of the Second National Highway Project from 1994 to 2005 5\. The World Bank, Project Status Reports for the Second National Highway Project (No\. 1 to No\. 18); from 1997 to 2004 6\. The China Highway Engineering Consulting & Supervision Company (CHECSC), Report on "Evaluation of Traffic Forecast" and "Toll Rate Justification Analysis", August, 2002 7\. The World Bank Project Office of Hunan Provincial Communications Department, Study Report on Toll Standard of Tanlei Expressway; December 2001 8\. The World Bank Loan Office of Guangdong Provincial Communication Department, Research Report on Freeway Safety; August 2000 9\. Hunan/Guangdong Project Headquarters, Documents for ICR, 2004 - 51 -  112° 113° 114° 115° 116° This map was produced by CHINA the Map Design Unit of The World Bank\. The boundaries, colors, denominations and Xinyang NATIONAL HIGHWAY II any other information shown on this map do not imply, on Xiangfan (HUNAN-GUANGDONG) the part of The World Bank Group, any judgment on the legal status of any territory, HENAN PROJECT 32° or any endorsement or 32° a c c e p t a n c e o f s u c h boundaries\. HIGHWAY PROJECTS: 0 20 40 60 IBRD FINANCING ANHUI KILOMETERS INTERCONNECTING ROADS INTERCHANGES Jingmen Han INTERCONNECTING ROADS Shui COMPLETED PROJECT ROADS HUBEI 31° Yichang 31° Wuhan RIVERS MAIN ROADS Huangzhou RAILROADS Chang Jiangling SELECTED CITIES AND TOWNS Jiang PROVINCE CAPITALS Chang NATIONAL CAPITAL (INSET) Jiang PROVINCE BOUNDARIES 30° 30° INTERNATIONAL BOUNDARIES (INSET) Hong Hu Xianning Jiang Puqi Chang Linli Zhuzhou Yueyang Xiangtan Poyang 116° Hu DASHIQIAO Changde 29° 29° SHANPU Yuan Jiang gnaiJgnaiX Dongting Hu Nanchang JinJiang FuHe HUNAN Liuyang Changsha ZHUTING 28° 28° Hengshan Xiangtan Zhuzhou Fu Jia Ba Yichun Tan Jia Yasitang Lian Yun Xinyu DASHIQIAO Liling Loudi SHANPU Xinqi gnaiJgnaiX Pingxiang Gan Jiang XINGTANG Hengshan ZHUTING Shaoyang DAPU XINGTANG Ji'an 27° 27° DAPU Hengyang Hengyang JIANGXI HONGSHI Chaling HONGSHI GUANSHI Jiang Xiang XINGSHI GUANSHI LEIYANG Leiyang XiangJiang INSET A XINGSHI Yongzhou 26° Qin Jiang 26° LEIYANG Chenzhou Ganzhou Leiyang INSET A GUANGXI Dayuan PINGSHI MONGOLIA MEIHUA LIAONING 25° 25° DEM\. PEOPLE'S BEIJING REP\. OF KOREA Beijing DAQIAO NEI MONGOL SHI TAINJIN SHI 111° 112° DONGTIAN Shaoguan HEBEI REP\. OF KOREA RUYUAN Gantang SHANXI SHEZHU SHANDONG Yellow INSET B Sea Xiaotang QINGHAI NINGXIA Dayuan GANSU HENAN SHAANXI Area of JIANGSU PINGSHI G U A N G D O N G main map 24° 24° SHANGHAI SHI ANHUI MEIHUA HUBEI Lechang Tingjiang SICHUAN ZHEJIANG East China W XIZANG CHONGQING uJiang Tang Tang JIANGXI Sea HUNAN DAQIAO GUIZHOU FUJIAN Guitou Yinzhan TAIWAN DONGTIAN YUNNAN GUANGXI GUANGDONG DECEMBER Nanshui 23° Taihe 23° HONG KONG IBRD Reservoir SHEZHU Shaoguan Guangzhou MACAO RUYUAN Gantang Xijiang ANMAR VIETNAM 27558R MY LAO 2004 PEOPLE'S INSET B To DEM\. HAINAN Kaiping 113° 115° THAILAND REP\. PHILIPPINES

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P006403

Document of The World Bank FOR OFFICIAL USE ONLY Report No\.: 18046 IMPLEMENTATI[ON COMPLETION REPORT BRAZIL THE SECOND NORTHEAST BASIC HEALTH SERVICE PROJECT (LOAN 3135-BR) June 16, 1998 Country Managing Unit for Brazil Human Development Sector Management Unit Latin America and the Caribbean Regional Office This document has a restricted distibution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS Currency Unit = Brazilian Real (BRL) US$1\.00 = BRL 1\.12 FISCAL YEAR January 1 - December 31 ABBREVIATIONS & ACRONYMS AIS Integrated Health Action AMH Ambulatory and Basic Hospital Medical Care Program CDI Infectious Disease Control Program CIPLAN Inter-Ministerial Planning and Coordination Commissions CONASP Consultative Council on Health Insurance Administration FAS Fund for Social Development Assistance ICR Implementation Completion Report IEC Information, Education, and Communications IEPS Initial Executive Project Summary INAMPS Institute for Medical Assistance of Social Security System LA Loan Agreement MOH Ministry of Health PAHO Pan American Health Organization PAISMC Comprehensive Care for Women and Children PCU Project Coordination Unit PIASS Program for Implementation of Health and Sanitation Activities in Interior Areas PNE Northeast Basic Health Services Project POI Integrated Budgetary Plan SAR Staff Appraisal Report SES State Health Secretaries SUDS System of Unified and Decentralized Health Care SUS Unified Health System Vice President: Shahid Javed Burki CMU Director: Gobind T\. Nankani SMU Director (A): Xavier Coll Country Sector Leader: Patricio Millan Task Manager: Kye Woo Lee  FOR OFFCIAL USE ONLY IMPLEMENTATION COMPLETION REPORT BRAZIL THE SECOND NORTHEAST BASIC HEALTH SERVICES PROJECT (Ln\. 3135-BR) TABLE OF OF CONTENTS PREFACE \.i EXECUTIVE SUMMARY PART I: IMPLEMENTATION ASSESSMENT A\. Project Background \.1 B\. Project Objectives \.3 C\. Achievement of Project Objectives \.4 D\. Major Factors Affecting Project \.9 E\. Project Sustainability \. 11 F\. Bank and Borrower Performance \. 12 G\. Assessment of Outcomes \. 14 H\. Key Lessons Learned \. 14 PART II: GOVERNMENT CONTRIBUTION TO THE ICR \. 17 PART III: STATISTICAL INFORMATION Table 1: Summn ary of Assessments \. 24 Table 2: Related Bank Credits \. 25 Table 3: Project Timetable \. 26 Table 4: Cumulative Estirnated and Actual Disbursements \. 27 Table 5: Key Monitoring Indicators \. 28 Table 6: Studies included in Project \. 29 Table 7A: Project Costs \. 31 Table 7B: Project Financing \. 31 Table 7C: Loan Disbursemaents by State and Expenditure \. 32 Table 8: Status of Covenants \. 34 Table 9: Bank Resources: Staff Inputs \. 35 Table 10: Bank Resources: Missions \. 36 APPENDICES A\. Mission's Aide Memoire B\. Borrower's Comments on the ICR (Part I) C\. Map This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  i IMPLEMENTATION COMPLETION REPORT BRAZIL SECOND NORTHEAST BASIC HEALTH SERVICES PROJECT (Loan\. 3135-BR) PREFACE This is the Implementation Completion Report (ICR) for the Second Northeast Basic Health Services Project in Brazil, for which Loan 3135-BR in the amount of US$267\.0 million equivalent was approved on November 24, 1989 and became effective in December 1990\. The loan was closed on December 31, 1997, one and a half years beyond the original schedule\. As of June 16, there is a balance of US$2\.9 million in the loan account, but it is expected to be disbursed by June 30, 1998\. This ICR was prepared by Kye Woo Lee in collaboration with Claudia Rosenthal (consultant) Marian Kaminskis and Sarah Menezes of the Human Development Sector Management Unit and reviewed by Jean-Jacques de St\. Antoine of the same Unit and Patricio Millan of the Country Mzmaging Unit for Brazil of Latin America and the Caribbean Regional Office (Preface, Evaluation Summary, Parts I and III)\. The Borrower contributed to the preparation of the ICR through a review of project performance (Part -I) and commented on the ICR (Appendix A)\. Preparation of this ICR was done during the mission in March 1998 and is based, inter alias, on the Staff Appraisal Report, the Loan Agreement, Supervision Reports, Annual implementation review reports prepared by the Borrower and the Bank, correspondence between the Bank and the Borrower, and internal Bank memoranda\.  ii IMPLEMENTATION COMPLETION REPORT BRAZIL THE SECOND NORTHEAST BASIC HEALTH SERVICES PROJECT (Loan 3135-BR) Executive Summary Project Background\. At the time of the project preparation in the mid-1980s, health conditions in Brazil were lagging behind other sectors\. Major health indicators, such as a life expectancy of 65 years and infant mortality of 63 per 1,000 live births, were inferior to those of the countries with lower per capita income\. These poor national average indicators were caused mainly by the large geographical disparity in health status between the North/Northeast and the rest of the country\. The life expectancy in the Northeast was lower than the South/Southeast by 13 years, and the infant mortality rate of 79 was higher than in low-income developing countries\. The most important causes of illness and deaths among children wvere similar to the ones in lower-income developing countries\. In 1986, the Northeast accounted for 29% of Brazil's total population and 45% of the total rural population\. Major issues in the Brazilian health system in the 1980s were: (i) inequitable access to the health service systems, and (ii) lack of efficiency in the use of finances, manpower, and physical facilities\. These problems were most acutely felt in the Northeast because of their interplay with low income, poor social infrastructure, and inadequate education in the region\. The Institute for Medical Assistance of Social Security System (INAMPS), the major public health institution under the Ministry of Welfare and Social Security, provided individual medical care services only to the payroll levy contributors to the system, leaving the poor and those in the informal economy to the care of the Ministry of Health (MOH)\. The MC)H was responsible for setting national health policy and delivering basic health services through its specialized agencies, states, and municipalities\. The basic health services relied on the limited and variable general tax revenues\. By contrast, the INAMPS enjoyed significant financial and operational autonomy on the basis of the payroll levy, and reimbursed for the individual medical services offered by the public and private providers without cost and service control\. Consequently, basic health programs of the MOH grew little if any and were ineffective due to staff and input shortages, skill constraints, facility inadequacies, and over- centralization of planning and administration\. Between 1949 and 1982, the proportion of public spending on largely curative care rose from 13% to 85%; basic health care was squeezed out\. During the 1970s and 1980s, the Government launched a series of strategies and prograxns to redress the inequity and inefficiency of the health system\. They ranged from creating new funds for basic health services and according a higher priority to basic health services to coordinating various health programs in a state through an integrated budgetary plan (SUDS)\. In 1988, the new Constitution ratified the goals of past strategies, established the Unified Health System (SUS) at the national level, and  iii mandated the government to achieve the goals of the universal coverage of all citizens under the SUS through decentralization\. In support of the Government's strategy for strengthening, integrating, and decentralizing basic health services at the state level, the Bank participated in the financing of the Northeast Basic Health Services Project (PNE-I) (Loan 2699-BR) in 1986, and the Second Northeast Basic Health Services Project (PNE-II) (Loan 3155-BR) in November 1989\. Project Objectives and Content\. The project had two objectives: (i) to strengthen the delivery of the basic health service package in selected low-income areas of seven states in the Northeast; and (b) to reinforce the implementation of the sectoral reform including integration, unification, and decentralization\. The basic health service objective was to be achieved by supporting the provision of the basic health service package-- which comprised comprehensive care for women and children including family planning; the infectious diseases control program; and the ambulatory and basic hospital medical care program -- through the expansion and upgrading of 1,707 health facilities (including 1,107 health posts, 327 health centers, 171 unidades mistas (health centers with 16-50 beds), 81 obstetric units, 16 hospitals and 5 laboratories) and their equipment, training of 60,000 health personnel, special studies and technical assistance, provision of drugs and medical supplies, hiring or reassigning about 8,600 additional health personnel, and carrying out supervision throughout the project areas\. The sectoral reform objective was to be obtained by supporting the institutional development of the State Health Secretariat (SES) and the MOH in planning, management, logistics, financial controls, and community education through provision of technical assistance, training, and special studies\. Achievement of Project Objectives\. Although the project was completed with a substantial delay, its two main objectives were achieved as expected at appraisal\. The number of facilities and equipment provided and staff trained under the project is most likely to be greater than the appraisal estimates\. Technical assistance and studies provided under the project were 143% larger than envisaged at appraisal in terms of expenditures\. A cadre of professional health staff and managers trained under the project appear to be one of the most valuable results of the project\. Since the monitoring and evaluation indicators established at the beginning of the project were limited and the compilation of the data during the project implementation was inadequate, no proper data are available to assess the achievement of the institutional development objectives of the project at this time\. But the number of new or reassigned staff, drugs and medical supplies, maintenance, supervision and IEC activities provided under the project is assumed to be the same level as the appraisal estimates\. The project funds were applied to the institutional development component of the project in a more balanced way than in the PNE-I, where the infrastructure component claimed a disproportionate share of the total project expenditures\.  iv The project was completed in eight and a half years since the Bank Board approval, compared with six years estimated at appraisal\. The completion date was delayed by two and a half years, and the closing date was extended by one and a half years\. Total project costs increased by 27% from US$610\.6 million to $772\.8 million\. The project costs were higher due partly to the extended implementation period and partly to the additional number of states introduced into the project\. The original project included seven states in the Northeast (Alagoas, Ceara, Paraiba, Pernambuco, Sergipe, Marafnhao, and Bahia)\. In April 1996, the Government and the Bank agreed to the inclusion of three more states, which were also included in the PNE-1 (Rio Grande do Norte, Piaui, and northern Minas Gerais)\. The original Bank loan of $267\.0 million was canceled by $50 million in late 1994 as part of an overall portfolio restructuring exercise requested by the Cardoso government\. Therefore, the Bank loan of $217\.0 million accounts for 28% of the actual project costs, compared with the appraisal estimate of 43%\. The infrastructure compone it was implemented in 849 municipalities including 632 municipalities of the original seven states and 217 municipalities of the additional three states,i\.e\., nearly twice as many as the 478 municipalities targeted at appraisal\. In the original seven states, a greater number of municipalities were allowed to participate in the project\. Consequently, this ccmponent would benefit not only the 12 million inhabitants in the original seven states, but also 5\.2 million more people in three additional states, accounting for 60% of the total population in the Northeast\. The decision to cover the additional states was a cost-effective one, since their share of total beneficiaries was greater than that of their costs\. And the decision to expand the scope of the project to a greater number of municipalities was also conducive to the attainment of the project objectives towards the universal coverage of all citizens under the health system\. The two states visited by the ICR mission also implemented the infrastructure component more through renovation than construction and expansion of facilities\. Likewise, lower level facilities, suc]h as health centers, were preferred than higher level facilities, such as hospitals\. These options were more cost-effective\. The staff training componenit was also carried out in a successful way\. Although no project-wide data have been compiled yet, the state of Bahia alone trained 39% of the appraisal target for all seven states\. For the achievement of this component, some states constructed a public health school or a human resources training center\. The majority of the beneficiaries came from the municipal and regional offices, and from the more educated level of staff, such as doctors, technicians, managers, and administrative staff\. The cadre of trained medical, technical, and administrative personnel are one of the most concrete achievements of the project and are key elements for institutional and technical development of the health secretarials of the project municipalities and states\. The special studies component was carried out by both MOH and the states, covering a wide range of topics\. They range from educational materials development to institutional diagnosis, epidemiological profiles, architectural plans, and project implementation evaluation\. These studies, together with technical assistance, provided a  v sound basis for planning, implementing and evaluating sectoral reform and institutional strengthening programs\. However, one important topic missing in those studies was the development of a set of project monitoring and evaluation indicators, and performance criteria for MOH and States, which was agreed at appraisal\. Absence of this topic has had an adverse effect on the implementation and evaluation of the project and on the sectoral reform implementation\. All indications point to an adequate implementation of the drugs, medical supplies, and maintenance, and other institutional development component, such as staffing and supervision, and information, education, and communications (IEC) programs, but no adequate data have yet been compiled to demonstrate the achievement of these components in an analytical manner\. The IEC component was the most active element of the institutional development component\. Although it had a late start in 1994, multisciplinary consultants at federal and state levels made special studies, prepared public health information materials, and trained health information officers, and actively carried out IEC events through mass media, health fair, street theaters, publications and exhibitions\. However, this component suffered most from the partial cancellation of the loan amount and incurred only half the expenditures envisaged at appraisal\. Moreover, the mandated two-year rolling plan for this component was not updated annually, and no impact evaluation studies have yet been carried out\. Major Factors Affecting the Project\. The project implementation was sluggish at best during the period 1989-93\. During this period only 16\.5% of the loan funds were used, compared with 60% estimated at appraisal\. The project implementation was accelerated only after 1994 when the new Government came to power with a new MOH minister and a new project manager, declaring an unwavering commitment to the project, and the Bank appointed a new Task Manager\. About half the loan funds were utilized only during the last two and a half years, before the project was completed in June 1998\. The project was launched at a time when the country was undergoing a political, economic, and social transition, and it was difficult for the Government to maintain its commitment to the seven-year social investment project as originally designed\. Although the 1988 constitution declared the universal coverage of the total population under the unified health system through decentralization, it was not easy for the new Government to agree on the laws and regulations, as well as the sectoral strategy and administrative guidelines, to implement the mandate\. The end of military rule in 1985 marked the beginning of an increased political participation of the population through many political parties and influential regional leaders, and the democratic government tried to satisfy the needs of all segment of the society\. Health reform at a regional level had to wait for the progress in the sectoral reform at the national level first, but the project itself did not focus on the assistance for the sectoral reform at the national level\. It was only in 1993 when all relevant laws and regulations were in place, and the municipalities, instead of the states, were given greater role for project implementation\.  vi Also, the country was struggling with a high external debt and inflation with a popular plan, which could not sustain the fiscal balance\. The loan signing and effectiveness were delayed for 13 months just as in the PNE-I project\. The provision of adequate counterpart funds was a perennial problem until 1994, and the Bank's special account, procurement, and disbursement procedures had to be adjusted to accommodate the local situation\. The 1980s also witnessed a large migration of rural population to peri-urban and urban areas in the Northeast\. Therefore, the project implementation gathered momentum only after December 1995 when the list of targeted municipalities was expanded to include notably peri-urban areas, and the type of health facilities were adjusted to the changing circumstances\. The project design was rigid, but there was no serious efforts to adjust the project content, targets, and mode of implernentation until December 1995\. Any attempt by the Borrower to change the loan agreemLent was met with stiff objection by the Bank and time-consuming processes for reappraising the proposed changes\. It was only in 1995 that the Government and the Bank agreed to adjust the project content and the mode of implementation\. In particular, the competition and incentives introduced for project states in 1995 accelerated the project implementation and disbursement\. Together with other measures to introduce flexibility in the project design and implementation, the Government and the Bank agreed to allocate loan proceeds among state in accordance with the merits of the annual work programs and budgets, irrespective of the allocations already made at appraisal\. At the saame time, the Project Manager increased technical assistance to those states with weaker institutional capacities and more implementation difficulties\. To allow time for the newly introduced measures to produce results, the implementation period was extended by one and a half years\. The combination of these measures enabled the project to accelerate implementation\. Both poorer and richer states benefited from the competition and incentives owing to the strategic provision of technical assistance\. The design of this project merely followed that of the PNE-I, and did not draw lessons from,the implementation experience of the PNE-I\. By the time the PNE-II was approved, the PNE-I had already experienced implementation difficulties for three years\. The lessons learned from the PNE-I wvould have helped improve the design of the PNE-II, reduce its launching time, and would\. have minimized the risks\. The problems of the two projects were, in fact, addressed at the same time, and the two projects started a normal implementation only after 1993\. According to the loan agreement, the Project Manager was responsible for the coordination of all matters related to the project implementation\. But its de facto status and role were not conducive to an efficient coordination of project implementation\. It did not have direct access to the chief executive of the MOH who oversaw the sectoral reform and budget allocations\. In particular, the Project Manager was responsible only for the infrastructure component\. Therefore, the Manager did not actively push for and monitor  vii the progress of other project components, especially the institutional development component\. This had adverse effects on the pace and balance of project implementation and future operations of the project institutions upon completion of the project\. Project Sustainability\. Future operations of the project are financially and institutionally sustainable, but their sustainability could be strengthened through some on-going and follow up projects\. Financially speaking, the basic health service network is likely to be sustained because the SUS, the main source of financing health expenditures in the country, will reimburse most of the expenditures incurred in health centers and hospitals\. At the same time, the level of municipalities's and states' own financing of basic health expenditures has been steadily on the rise\. Institutionally speaking, the health secretariats of the states and municipalities, as well as the staff of individual health facilities, have been strengthened substantially\. The increased role of municipalities in the SUS helps make the system more responsive to the need of the population, and improves the financial flows between different levels of the Government\. These improvements have come mainly through state and municipal training programs and through technical assistance provided by the federal government\. 'lThe health secretariats of the states and municipalities and other public health institutions in the Northeast are still weak technically and institutionally, and would therefore require more professional personnel, continuous training, and technical assistance from the federal level\. The MOH, however, does not seem to be prepared to provide the necessary assistance on a continuing basis in the future\. Additional personnel hired under the project for institutional development and the basic health services were mostly consultants\. As the project implementation drew to a conclusion, their contracts were not extended\. Therefore, prospects are uncertain for continuous support for the institutional development components and monitoring their implementation at the state and municipal levels\. The MOH will have to strengthen its institutional arrangements for systematic monitoring and technical assistance to be provided to states and municipalities\. Outcome Assessment\. Because of the lack of adequate project monitoring and evaluation indicators and the absence of a systematic information system at the federal level, a full assessment of project outcomes cannot be done at this moment\. An extensive survey of the project outcome is being prepared by the PCU in collaboration with the project states and municipalities, but the result would be available only after mid-1998\. During the ICR mission some data on the project outcomes were collected from two selected states, CearA and Paraiba, and were compared between project and non- project municipalities\. The project municipalities showed a more rapid increase in medical consultation possibly due to the expanded and improved basic health service network\. The trend is not so clear in the vaccination coverage rate and in-hospital births possibly because they require more time to reflect the project impact\.  viii Key Lessons Learned\. * Projects with a long implementalion period are not advisable during a transitional period\. * It is essential to learn lessons from the implementation experience of the precedent project, especially for a repeat proj ect\. * In a multi-state project, if a sector loan approach cannot be adopted, the project design should be kept flexible, and should be adapted constantly to the changing needs\. * In a multi-state project, introduction of competition and incentives among states in the allocation of loan funds is effective as long as their varying institutional capacities are compensated by intensive technical assistance by the federal government\. * A sub-account should be established for each state separately so that each state's accountability and performance efficiency would improve\. * The Bank should streamline and actively monitor the process for the amendment to loan agreements so that project design can be adapted constantly and easily\. * Project specific monitoring and evaluation system is not likely to be operated effectively when an institution-wide monitoring and evaluation system is lacking\. * Government's commitment and P'CU's authorities and status are highly correlated to the success of project implementation and outcomes\. * A Borrower's ICR should be prepared before the closing date\.  1 PART I: PROJECT IMlPLEMENTATION ASSESSMENT A\. Project Background 1\. The Northeast\. At the lime of the project preparation in the mid-1980s, health conditions in Brazil were relatively lagging behind other sectors, compared with its overall level of development\. Major health indicators, such as life expectancy of 65 years and infant mortality of 63 per 1,000 live births, were inferior to those of the countries with lower per capita income\. These poor national average indicators were caused mainly by the large disparity in health statuLs between wealthy Brazilians concentrated in the South and Southeast, and poor Brazilians concentrated in the Northeast\. Despite the converging trend, residents of the south-southeast are still likely to live 13 years longer than their counterparts in the Northeast\. The infant mortality rate (79) for the Northeast in 1986 was higher than in low-income developing countries\. Infant deaths accounted for 35% to 40% of the total deaths in the region, and the most important causes of illness and deaths among children under five years were gastrointestinal and respiratory infections, perinatal diseases, low birth weight, and malnutrition, an epidemiological profile similar to the one in lower-income developing countries\. In 1986, the Northeast accounted for 29% of Brazil's total population and 45% of the total rural population\. 2\. Major issues in the Brazilian health system in the 1980s were: (i) inequitable access to the benefits of the health service systems, and (ii) lack of efficiency in the use of finances, manpower, and physical facilities\. These problems were most acutely felt in the Northeast because of their interplay with low income, poor sanitation, and inadequate education and housing in the region\. Prior to the unification of the health systems in 1990, the Institute for Medical Assistance of Social Security System (INAMPS), the major public health institution under the Ministry of Welfare and Social Security (MPAS), provided individual medical care services only to the payroll levy contributors to the system, leaving the poor and\. those in the informal economy to the care of the Ministry of Health (MOH)\. The MOH was responsible for setting national health policy and the collective health care, delivering basic health care through its specialized agencies, states, and municipalities\. The basic health services relied on the limited and variable general tax revenues\. By contrast, the INAMPS enjoyed significant financial and operational autonomy on the basis of the payroll levies\. Besides providing some individual medical care through its own small network of facilities, it reimbursed both public and private providers almost without cost and service controls\. Consequently, basic health programs of the MOH grew little if any and were ineffective due to staff and input shortages, skill constraints, facility inadequacies, and over-centralization of planning and administration\. By contrast, INAMPS services grew explosively, and it created additional distortions, most notably an over-utilization of high-cost medical services and discouragement of ful]l-time employment of health professionals in the public sector due to the low remuneration\. Between 1949 and 1982, the proportion of public spending on largely curative care rose from 13% to 85%; preventive care was squeezed out\.  2 3\. At the state level, the State Secretariats of Health (SESs) provided mainly infectious disease control and maternal child health care\. Remaining health services were provided largely by the private sector, generally reimbursed by INAMPS\. At the local level, there were some 5,000 municipalities in the country, with varying needs and levels of administrative capacity\. 4\. Government Strategy\. The Government's interest in redressing the inequity and inefficiency of the health care system led to the design and implementation of a number of national strategies\. In 1976, the Government introduced the PIASS (Program for the Implementation of Health and Sanitation Activities in Interior Areas), a program to bring basic health and sanitation activities to communities of less than 20, 000 people\. In 1979, the Fund for Social Development Assistance (FAS) changed its policy to finance basic health facilities\. In 1980, the Curitiba plan established the health center as the patient's point of entry to the health system, and established fixed payments from INAMPS for given treatment procedures rather than fee-for-service, an attempt to improve the reimbursement mechanism and to reduce costs\. In 1982, the Consultative Council on Health Insurance Administration (CONASP) made recommendations for better use of existing public sector facilities and strengthening of the managerial capacity of the public sector\. In 1983, the AIS (Integrated Health Action) was created to implement most of these recommendations through the Inter-ministerial Planning and Coordination Commissions (CIPLAN) with representatives of Ministries of Health, Education, and Labor, and the INAMPS\. As a first step towards better coordination of regional health programs, the state governments of the Northeast approved in March 1984 a common "Health Policy Document," which emphasized universalization of access to health services, decentralization of financial and administrative functions, and integration of public health service programs\. The Document gave priority to the control of transmissible diseases, basic sanitary measures, and improved access of high-risk groups (such as mothers and children) to ambulatory and hospital care, institutional development, and nutritional activities\. 5\. Realizing that the previous strategies were not particularly effective, the Government made stronger efforts to redress the inequity and inefficiency in July 1987 through a federal decree for the System of Unified and Decentralized Health Care (SUDS)\. It aimed to unify all those health care resources and programs at the state level by means of the Integrated Budgetary Plan (POI)\. The SUDS unified State Health Secretariats (SES) and INAMPS health care resources, with SESs to act as sole executors of health services in the individual states\. Under the SUDS reforms, the SESs witnessed sizable increases in the amount of sectoral resources at their disposal and were able to redirect more resources to basic health programs\. SUDS also represented a further step in the evolving decentralization of sectoral responsibilities\. While the federal level was to retain vital normative and monitoring functions, a much larger share of operational duties was to be gradually devolved to the state and local levels\. 6\. Brazil's New Constitution of 1988 ratified goals of the SUDS, such as the universal coverage of all citizens and declared further progress\. It established the Unified  3 Health System (SUS) at the national level and mandated the government to achieve the goals through decentralization\. At the time of the project design, INAMPS at the federal level was to be incorporated into the SUS, regional INAMPS offices eliminated, and INAMPS facilities and personnel transferred to states and municipalities\. The municipalities individually or in consortiums had the primary responsibility for the delivery of health services\. At the national level, the MOH was to operate the SUS\. However, it was two years later in 1990 that the constitutional precept for decentralization was incorporated into laws and regulations; and until 1993 there was no nationally agreed implementation strategy for the decentralization process\. It was a long evolving process\. 7\. The Bank Responses\. In support of the Government's strategy for the integration and decentralization of basic health services at the state level, the Bank participated in the financing of the Sdio Paulo Basic Health Care Project (Loan 2447-BR) in 1984 and the Nortfheast Basic Health Services Project (PNE-I) (Loan 2699-BR) in 1986\. The Bank strategy for health was to assist the government's efforts to redirect public spending to largely basic health programs that better serve the poor, and decentralize services as a way to improve accountability and efficiency\. By the time the Bank approved the Second Northeast Basic Health Services Project (PNE-II) (Loan 3135- BR) in November 1989, the Government had already passed the stage of the SUDS reform at the state level and was trying to implement the Constitutional mandate of the SUS on a national level\. B\. Project Objectives 8\. The project had two objectives: (a) to strengthen the delivery of basic health services in selected low-income areas of the Northeast; and (b) to reinforce the implementation of the sectoral reforms, i\.e\., integration, unification and decentralization\. 9\. The basic health service objective was to be achieved by supporting the basic health service package, i\.e\., Comprehensive Care for Women and Children (PAISMC) including family planning; the Infectious Diseases Control Program (CDI); and the Ambulatory and Basic Hospital Medical Care Program (AMH)\. 10\. The sectoral reform objective was to be obtained by supporting the institutional development of the SES and the MOH in planning, management, logistics, financial controls, and community education through provision of technical assistance, training, and special studies\. 11\. The basic health component of the project was to benefit some 12 million people in the 478 municipalities of the seven Northeast states (Alagoas, Ceara, Paraiba, Pemambuco, Sergipe, Maranhao, and Bahia) included in the original project design\. In April 1996, by an amendment to the Loan Agreement (LA) the Bank and the Government agreed that the three states of the Northeast Basic Health Services Project (PNE-I) (Rio Grande do Norte, Piaui, and northern Minas Gerais) were also to be included in this  4 Second Northeast Project (PNE-II)\. The institutional development component would benefit an additional 24 million people in the non-project municipalities\. C\. Achievement of Project Objectives 12\. Costs and Finances\. The project was completed in eight and a half years since the Bank Board approval, instead of six years estimated at appraisal\. The total project costs increased by 27% from US$610\.6 million to $772\.8 million\. The original Bank loan of $267\.0 million was canceled by $50 million in late 1994\. Therefore, the Bank loan of $217\.0 million, which would be fully disbursed by June 30, 1998, accounts for 28% of the actual project costs, compared with the appraisal estimate of 43%\. By category of expenditures, consultancies and special studies increased by 140%, and the recurrent expenditures (e\.g\. new staff salaries, supplies, maintenance and drugs) all increased by 95% due to the extension of the completion date by 30 months\. Other categories, such as infrastructure, training and supervision, were about the same as appraisal estimates, and IEC spent only half the appraisal estimate\. 13\. Monitoring of Project Objectives\. An assessment of the project outputs and the achievement of the project objectives was difficult due to the inadequate project monitoring system\. The federal Project Coordination Unit (PCU) monitored only the implementation of the health and administrative facilities and equipment, and the use of loan proceeds\. Even those infrastructure components were monitored mainly from the disbursement point of view and not from the operational and project objective point of view\. Therefore, the PCU did not compile data by project objective and did not follow up on the operation of the project facilities\. Moreover, monitoring of the other components, especially the institutional development components -- such as organization and management improvement, staffing, training, studies and consultancies, supervision, public health education and promotion through IEC-- were not, in fact, the responsibility of the federal PCU\. Each relevant department of the MOH supported the implementation of these components at the state and municipal levels and did not monitor systematically the execution and the result of the implementation\. There is no one unit in the MOH which coordinated and monitored the basic health services and/or the institutional development in the Northeast on a continuing basis\. As was often the case ten years ago, Staff Appraisal Report (SAR) included few implementation targets in quantitative and qualitative terms, against which the progress in the implementation and the achievement of the project objectives could be measured periodically\. The PCU did not use even the few indicators provided for in the SAR because of the change of the situation, and never updated them\. The Loan Agreement (LA) stipulates that such monitoring indicators should be prepared for Bank approval within three months of effectiveness, but this covenant was not complied with\. 14\. Components\. Achievement of the project objectives are assessed below for each of the two major project objectives: the Basic Health Services Component and the Institutional Development Component\.  5 15\. Basic Health Services Component\. The basic health services component was to be achieved through (a) expansion and upgrading of health facilities and equipment; (b) training of about 60,000 health personnel; (c) special studies at the state and federal levels concerning the management and delivery of health care services and establishment of project monitoring indicators and health service delivery performance criteria; (d) provision of necessary supplies for project area facilities including drugs, supplies, and materials, (e) hiring or reassigning of about 8,600 additional health personnel; and (d) carrying out of supervision throughout the project area\. 16\. (a) Expansion and Upgrading of Health Facilities and Equipment\. The infrastructure investments aimed at improving the delivery of health care services by providing adequate spaces and well\.-equipped facilities\. Improvement of infrastructure involved the construction, expansion or renovation of health facilities and regional headquarters including equipping and re-equipping of such facilities\. The Government spent about 10 percent more on civil works and 10 percent less on equipment than the SAR estimates\. The total expenditure spent on infrastructure is about the same as the appraisal estimate\. This is different fiom the experience with the PNE-I, under which the Government spent disproportionately more on the infrastructure component than on other components\. 17\. The health facilities component was to be implemented in 478 municipalities in seven Northeastern states\. In fact, the component was implemented in 849 municipalities including 632 municipalities in the original seven states and 217 municipalities of the additional three states introduced in ihe project as a result of the April 1996 amendment to the LA\. Because of the large scale migration from rural areas and the changing needs of each state, the need to take action on the newly emerging environmental problems and epidemiological profile, a greater number of municipalities was actually covered by the project in each of the seven original states (Table 5A), covering not only the rural municipalities as originally focused at appraisal, but also peri-urban municipalities\. Consequently, this component would benefit not only the 12 million inhabitants in the original seven states, but also at least 5\.2 million more people in three additional states\. The introduction of the three additional states into this project was a cost-effective decision because the investment made in the three states accounted for only 5% of the total expenditures for civil works and 3% of the total expenditures for infrastructure, but the additional beneficiaries account for about a third of total beneficiaries\. Unfortunately, however, it is not feasible to compare the project's contribution to the attainment of universal coverage of the population under the health system, because the SAR did not define the state of the coverage at appraisal, and the Government did not monitor the growth of the actual coverage\. 18\. At appraisal, the project was to construct, expand, rehabilitate 1,707 health facilities including 1,107 health posts, 327 health centers, 171 unidades mistas (health centers with 16-50 beds), 81 obstetric/delivery units, 16 hospitals, and 5 laboratories\. Also, it intended to equip or re-equip 1,791 health facilities\. The total number of facilities provided and the breakdown by state or type are not available yet, but it is  6 estimated that the total number of actually provided facilities would be much greater than the staff appraisal report (SAR) estimates, not only because the three states were added to the project, but also because a greater number of municipalities in the original seven states were allowed to participate in the project\. This expansion of the scope of the project was conducive to the attainment of the project objectives towards the universal coverage of all population under the health system\. The quality of the facilities provided was good\. 19\. The project completion mission visited two states in the Northeast and observed that in Ceara, the best performing state, the number of municipalities covered under the project increased from 61 to 85; and in the state of Paraiba, which had some implementation difficulties initially, the increase was from 57 to 74\. The number of project municipalities, however, still accounts for only part of the total number of municipalities in each state-- 46 and 33 percent, respectively\. The two states together provided a 20 percent increased number of health facilities than the SAR\. They also focused more on renovation than on expansion and construction of health facilities, compared to SAR targets (Table 5B)\. This option was more cost-effective in attaining project objectives\. The size and type of actually provided health facilities differed from the SAR estimates in accordance with the changing needs of individual states: while in Ceara more ambulatory (walk-in) health facilities were the choice for investments to cover extensive rural areas, in Paraiba more hospital units were provided to fill the critical gap\. Provision of equipment followed the same rationale (Table 5C)\. Thus, in the last three years, the project design became much more flexible than the original design, adapting itself to the varied and changing demand\. On the visit to the two states, the ICR mission observed that the health facilities, administrative units, and training facilities provided under the project were adequately equipped, fully operational, and intensively utilized\. However, it was also told by the facility managers that staff turnover was high and drugs and supplies were often inadequate due to shortage of inadequate reimbursement under the SUS and the shortage of state and municipal funds\. In order to assure sustainability, drugs and supplies, as well as incentives to staff need to be provided on a continuous basis\. 20\. Achievement of the infrastructure component accelerated and total disbursements increased by 55 percentage points during the last two and a half years\. In 1995, the Government and the Bank agreed to introduce series of measures to make the implementation and disbursement procedures more flexible\. These included adjustment in the procurement methods, ceilings and thresholds for discretionary decisions, and reduction of disbursement categories from 48 to 8\. Above all\. the allocation of loand funds to participating states made at appraisal was eliminated\. The PCU allocated the loan proceeds on the basis of the merits of the annual work programs and budgets submitted by individual states, and their performances in the previous year\. Thus, competition for funds was introduced, and increased technical assistance was provided by the PCU to institutionally weaker states, notably in the area of procurement\. To allow time for the newly introduced measures to produce results, the closing date of the loan was extended to December 1997\. The combination of these measures made the project  7 gain momentum, and all states used more loan funds for civil works than envisaged at appraisal\. Some states benefited more than others\. They were Sergipe, Alagoas, Ceara, and Pernambuco\. The former two states were relatively poorer states, and the latter two were better-off states\. Therefore, the competitive manner of allocating the project funds did not seem to have resulted in any inequitable allocations, as in Chile\. This was due partly to the similar institutional capacity among project states, and partly to the deliberate PCU strategy to provide more technical assistance to poorer states\. 21\. (b) Personnel Training\. The staff training component was carried out in a successful way\. Although no project-wide data have been compiled yet, the state of Bahia alone had 512 training events and trained 23,290 persons during 1990-97\. This is approximately 39% of the SAR targets for training of 60,000 persons in all seven original states\. 22\. In the state of Bahia, the majority of the beneficiaries came from the municipalities (17,802) and Regional offices (3,738) with the rest from the state central offices\. By level of education, doctors and other staff with high level education benefited the most (12,854) followed by the staff with middle-level educational background (9,131)\. The PCU confirmed that this pattern was replicated in other states, and a final picture would come out through a survey which is being carried out in May/June 1998\. In particular, the state of Ceara and E3ahia constructed a public health school at the higher education level and a human resources training center at the middle educational level, respectively\. These schools are fully operational\. A core group of trained medical, technical and administrative personnel is one of the most valuable and concrete achievements of the project\. They are key ingredients for institutional and technical development of the health secretariat of the project municipalities and states\. 23\. (c) The Special Studies anid Technical Assistance\. This component was implemented, covering a wide range of topics\. Examples of studies undertaken in the state of Bahia is listed in Table 6\. They range from educational materials development to institutional diagnosis, epidemiological profiles, architectural plans development, and project implementation evaluation\. As a result of the Bank's intensified supervision and new PCU's improved coordination, most studies were conducted during 1995-97 and made effective contributions to the basic health services and institutional development in the project states\. However, one topic missing in those studies was the development of a set of monitoring and evaluation indicators and performance criteria for the MOH and SES\. Consequently\. upon completion of the project, the PCU did not have a mechanism to properly track the outputs/outcomes of the project\. The Government is currently undertaking a survey to collect such information from all project states and municipalities, which would serve as a basis for taking action for improvement in the provision of health services by staLte and municipalities\. But this is a costly way of collecting data and would not prcvide any basis for formative evaluation of project performance and impact\. Corrective actions should be taken by the MOH in the future\.  8 24\. (d) Drugs, Medical Supplies, and Maintenance\. This category was financed by the loan up to about $2 million in the first half of the project period, and the remainder of this component ($140 million), mostly for drugs and medical supplies, was expected to be financed by the states throughout the project period\. However, no data have been compiled by the PCU\. 25\. (e) Staffing and Supervision\. This category suffered from the same problems as the supplies and maintenance expenditures\. The SESs were supposed to hire some 8,600 additional health personnel and carry out regular supervision routines with adequate financing for guidelines, manuals, reports, and travel allowances\. These additional staffing and supervision activities were also expected to be financed by the states\. However, there was no systematic monitoring of the implementation of these activities, and no data have been compiled to confirm their implementation\. 26\. The Institutional Development Component\. This component was -to be achieved through the (a) expansion and upgrading of administrative and training facilities and equipment; (b) technical assistance for special studies, staff training, and information, education, and communication (IEC) programs; and (c) in-house and inter- state workshops, seminars and information systems on reform program implementation, supervision, and evaluation\. Compared with other components, the share of the institutional development component in the total costs of the PNE-II was greater than in the PNE-1\. This component accounted for 37% of the total project cost\. 27\. (a) Infrastructure\. The expansion and upgrading of state's administrative and training facilities and maintenance workshops, and the provision of equipment for those facilities were implemented in conjunction with the basic health service component, but on a much smaller scale than the SAR plan\. And as in the basic health services componet, refurbishing rather than construction was the norm\. These deviations from the appraisal plan were positve adjustments to the changing priorities\. The state's Regional Health Directorates lost their role under the municipalization of the SUS reform, and the priority of the maintenance workshops was lowered as the maintenance services were planned to be contraced out to the private sector\. 28\. (b) Technical Assistance, Staff Training and Special Studies\. This category was also carried out in conjunction with the basic health services component\. The federal PCU was active during the post-1994 period in organizing inter-state seminars and training for the state PCU staff in project implementation\. In particular, it contracted consultants specializing in procurement norms and procedures, and provided technical assistance and training tailored to the needs of specific states, especially those with weak technical and institutional capacities\. This helped solve the implementation bottleneck\. However, as already pointed out, the federal government did not take advantage of this component to establish a set of effective monitoring and evaluation indicators and operate an information system covering a wide range of health services across the entire nation or at least in the northeastern states\.  9 29\. (c) Information, education, amd communications (IEC)\. This component was the most active element of the institutional development component\. Like other components, due to the institutional problems at federal and state levels, this component started late, and only at the end of 1993 was a multidisciplinary team organized to structure IEC at the federal and state levels\. In 1994, a meeting with project management team at the federal level and project coordinators of all states resulted in the definition of IEC's goals and operational programs\. Each state was responsible for executing activities and received technical support lrom the federal level\. At the federal level, multidisciplinary consultants made special studies, prepared public information materials, trained health information officers (health multiplicators), and supported state teams in carrying out the events\. At the state level, IEC consultant teams planned and carried out IEC training, dissemination of health information, and community participation in health promotion and education at the municipal level through mass media, health fairs, street theater, publications, and creation of IEC centers\. A survey of the opinion of state and municipal officials on the effectiveness of the federal IEC teamn was conducted in 1998, and it confirmed the federal team's effectiveness\. However, the two-year rolling plan for the IEC component was not updated annually, and no evaluative studies of the impact of the IEC program have yet been made\. D\. Major Factors Affecting Project 30\. The project implementation was sluggish during the period 1989-1993\. During this period only 16\.5% of the loan funds were used, compared with 60% estimated at appraisal\. The project implementation was accelerated only after 1994 when the new Government came to power with a new MOH minister and a new PCU management team, declaring an unwavering commitment to the project\. At the same time, the Bank appointed a new Task Manager and intensified supervision\. As a result, about half the loan funds were disbursed during the last two and a half years before the project was completed in June 1998\. 31\. Political, Economic, and Soicial Transition\. The project was launched at the time when the country was undergoing a turbulent political, economic, and social transition, and it was difficult for the Government to maintain its commitment to the implementation of the project as originally designed\. On the political front, the new Constitution of 1988 declared universal coverage of the total population under a unified health service system through decentralization\. But it was not easy for the Government to agree on the laws and regulations, as well as the sectoral strategy and administrative guidelines to implement the mandate\. It was only in 1993 when all these had been put in place\. The end of a long military rule in 1985 marked the beginning of an increased political participation of the population through many political parties and influential regional leaders\. Elected governments at all levels were trying hard to satisfy the needs of all segments of the society\. On the economic front, the country was struggling with a high external debt and was trying to arrest galloping inflation with the Cruzado Plan without much success\. The loan signing and effectiveness were delayed for 13 months, just as in the case of the PNE-1 project\. The provision of adequate counterpart funds was a  10 perennial problems until 1994\. The Bank procedures for special accounts and disbursement procedures were modified to make them more flexible\. On the social front, the 1980s witnessed a large migration of rural population to peri-urban and urban areas\. The municipalities and the type of health facilities selected for the project needed to be adapted to the changing circumstances\. But the project's original design merely reflected that of the PNE-I and did not provide for a mechanism for easy adjustment of the project design\. The project implementation started accelerating only after December 1995 when the Government and the Bank introduced major adjustments in the selection of beneficiary municipalities and the range of health facilities to be financed under the project\. 32\. Adjustment to the Changing Government Sectoral Strategies\. The project preparation started in 1986 following the footsteps of the PNE-I, and the underpinning sectoral strategy was to support the SUDS, i\.e\., accelerate decentralization to states and efficiently use the state resources increased as a result of the integration of all health service programs at the state level through the integrated budgetary plan (POI)\. By the time the PNE-II was approved by the Bank in late 1989, the new Constitution had been already declared, and the SUD, the governing sectoral strategy, was replaced by the SUS, under which all health programs were unified at the national level, and the decentralization focused on municipalities, instead of states\. In other words, the national sectoral policy framework was changed, and the implementation of both PNE-I and II, which supported regional health sector reform, had to wait until the national sectoral policy framework settles in\. In May 1996, the Bank finally agreed to support the SUS reform directly through the Health Sector Reform Project (REFORSUS)\. 33\. Lack of Lessons Learned\. This project followed the PNE-I, which had already experienced implementation difficulties for three years by the time PNE-II was approved\. The signing of the PNE-I was delayed by more than a year, the loan became effective only after 15 months, and the level of disbursement was poor\. Even so, the SAR did not include a section on the implementation experience of the PNE-I\. Lessons drawn from it by then could have been used as guiding principles for the design and implementation of the PNE-II\. The Initial Executive Project Summary (IEPS) review meeting of March 6, 1987 concluded that PNE-II should not be presented to the Board until PNE-I problems were well analyzed and resolved\. But PNE-II was processed and approved without taking this decision into account\. In fact, PNE-II had the same implementation problems as PNE-I, and the problems of both projects were resolved at the same time - only after 1993\. 34\. Responsibilities of the Federal PCU\. According to the LA, the PCU was responsible for the coordination of all matters related to the project implementation\. However, the de facto status and responsibilities of the PCU were not conducive to the achievement of the project objectives\. It did not have direct access to the chief executive of the MOH, and its reporting line changed several times\. The PCU was responsible only for the coordination of the implementation of the infrastructure component and finacial aspects of other components\. Therefore, it did not actively coordinate and monitor the  11 progress of other project components, in particular the institutional development component (e\.g\. staffing, supervisilon, training, decentralization, organization and management improvement, preparation of administrative and operational manuals, streamlining budgetary and financial accounting procedures, and resource allocation for preventive basic health services), which became the responsibilities of other departments in the MOH and the states\. 35\. Inflexibility in Project Desigin and Amendments\. The project design was rigid, and there was no efforts to adjust the project content, targeted areas, and mode of implementation until December 1995\. Any attempt to change the loan agreement was met with stiff objection by the Bank and time-consuming processes for reappraising the proposed changes\. Even changes of some project municipalities required visits by Bank reappraisal missions and renegotiations\. Decisive action was taken, however, to reduce the loan amount by $50 million in late 1994 as part of the high-level Bank-new Government joint effort to improve the portfolio status in Brazil\. 36\. It was only with the amendment of the LA in December 1995 that the Bank and the new Government agreed to restructure the project scope, implementation methods and procedures\. This amendment allowed (i) the project areas to be expanded to include peri- urban areas in addition to the rural areas; (ii) all project states to compete for claiming the loan funds irrespective of the amount of the loan funds allocated to each state at appraisal; (iii) a wider range of health facilities, as well as environmental health programs, be financed to accommodate the changing epidemiological profiles; (iv) municipalities to play a greater role in project implementation by permitting them to enter into agreement with states; and (v) procurement methods to be more flexible, and ceilings and thresholds to be more generous, accommodating the procurement norms of the LAC Region\. With this amendment, the project implementation accelerated so much that another loan amendment was made in April 1996, introducing more flexibility, in which (i) the authorized deposit to the special account was increased; (ii) two special accounts for local and foreign expenditures were integrated into one; (iii) an additional three states that participated in PNE-I were allowed to participate in this project; and (iv) the closing date was extended by one year to December 1997\. Besides these formal amendments, the Bank also took flexible and innovative initiatives for an accelerated implementation of the project\. For example, it allowed the Government to advance part of the special account to states, relieving states' cash flow burden, and arranged with the federal PCU to provide technical assistance to states in procurement, which was one of the major bottlenecks\. E\. Project Sustainability and Future Operations 37\. Future operations of the project is financially and institutionally sustainable, but its sustainability could be strengthened through some on-going and follow up projects\. Financially speaking, the basic health service network is likely to be sustained because the SUS, the main source of financing health expenditures in the country, will reimburse most of the expenditures incurred in health centers and hospitals, and the level of state's  12 and municipality's own financing of basic health expenditures has been steadily on the rise, as in Ceara\. The health sector's share of the state total expenditures in Ceara increased from 3\.3% during 1981-86 to 8\.5% during 1990-1994\. However, the level of prices and scope of SUS reimbursements needs to be improved further, because in some states like Paraiba, health sector's share of total state expenditures changed little from 3\.5% during 1981-86 to 3\.6% during 1994-97\. Also, rural health facilities financed by the project and visited by the ICR mission often showed problems of retaining medical doctors and shortages of medicines and supplies\. 38\. Institutionally speaking, the health secretariats of the states and municipalities, as well as the staff of individual health facilities, have been strengthened substantially, in particular in the areas of the, organization and management of the basic health services network, and operational procedures\. The increased role of municipalities in the SUS helps make the system more responsive to the need of the population, and improves the financial flows between different levels of the Government\. These improvements have come mainly through the training programs within and outside the individual states and municipalities, and through technical assistance provided by the federal government\. A large number of state and municipal managers, administrative and health professionals were trained and improved their skill levels\. 39\. The health secretariats of the states and municipalities and other public health institutions in the Northeast are still weak technically and institutionally, and would therefore require more professional personnel and continuous training and technical assistance from the federal level\. An important question is how the MOH would meet such a challenging demand\. Some 200 consultants hired with PNE-II funds have now departed and it is uncertain whether and how the MOH would provide the necessary assistance for the institutional strengthening at state and municpal levels with its regular operational budget in the future\. This question would affect notably such areas as maternal and child health, IEC, and training at state and municipal levels\. At present, the prospects for continuous support for these components and monitoring their implementation at the state and municipal levels are uncertain\. The MOH does not seem to have adequately developed organizational apparatus to carry out its policy-making, norm-setting, and technical assistance, monitoring, and supervision roles\. The institutional capacity at the federal level would be partly strengthened under REFORSUS, but should be further strengthened by other Bank-financed projects in the future\. F\. Bank and Borrower Performance 40\. Bank Performance\. Bank performance at project identification, appraisal and the earlier stage of the supervision was less than satisfactory, but since 1994 it has improved sharply\. There was a few flaws in the Bank performance at the earlier stage\. First, the project design was not based on a rigorous analysis of the sectoral problems and issues in the Region, did not fully take into account the changing policy framework, and did not define the content of the project flexibly, but used the unduly long implementation period\. Second, the project design did not take into account the lessons  13 learned from the previous project\. T hird, the project supervision was initially rigid and did not adjust the project content flexibly to the changing sectoral strategy and socio- economic circumstances, and did niot define the monitoring and evaluation indicators early enough\. 41\. Since 1994, the Bank took\. a flexible and dynamic attitude in advising the Borrower and provided a momentumn for the accelerated project implementation through two amendments of the LA with respect to the loan amount, implementation strategies and procedures\. 42\. Throughout the project implementation, one gets the impression that the Bank focused mainly on the progress in disbursements, the improvement of the health service network, and its adaptation to the geographically shifting demand\. The only additional monitoring indicator introduced in the project through the 1995 Loan amendment was the percentages of the disbursement for ithe infrastructure component in each of the remaining years\. With a short implementation period remaining, that focus is understandable\. But it could have paid more attention to the attainment of the results of the project inputs, in particular the institutional development inputs, such as hiring of additional staff, provision of drugs and medical supplies, health services delivery, IEC, and monitoring the changes in the health status of the population\. 43\. Despite the prompt and flexible supervision attitude since 1994, the Bank should have improved its Loan amendment processes\. A more rigorous monitoring and supervision by the Bank and the Borrower could have shortened the six-months needed for the exchange of a letter for the amendment made in December 1995\. 44\. Borrower Performance\. Borrower performance paralleled the Bank performance\. During the early years of the project cycle, Government performance was unsatisfactory\. This reflected the unstable political situation and turbulent economic circumstances\. The average term of a health minister was about one year\. Such frequent changes of ministers brought charLges at other levels of the Government and in the priorities of the sector and the project\. The PCU was not accorded proper authority for coordination of all project activities and did not have direct access to the top executive in the MOH\. 45\. With the advent of the new Government led by President Cardoso in 1994, the project implementation accelerated\. The Minister of Health declared Government's strong commitment to the project and mobilized the state governors and health secretaries in the Northeast to revitalize the project\. The PCU was also led by a new dynamic and competent manager during the last three years, having direct access and reporting responsibilities to the top executive of the MOH\. With the staunch support of the new Task Manager of the Bank, the PCIJ streamlined procedures for procurement, budgeting, disbursements, and special account withdrawals, and introduced competition and incentives into the project implemerntation by allocating the loan proceeds to each state on  14 the basis of the merit of the annual work programs and performance in the previous year, irrespective of the allocations made at appraisal\. The PCU also provided more technical assistance to those states which had weaker implementation capacities and more problems in procurement\. Unfortunately, however, it focused its leadership mainly on the implementation of the infrastructure component and did not properly follow up the institutional development component of the project and the operation of the completed health facilities\. G\. Assessment of Outcomes 46\. Because of the lack of adequate project monitoring and evaluation indicators, and the absence of a systematic information system at the federal level, a full assessment of project outcomes cannot be done at this moment\. An extensive survey of the project outcome is being prepared by the PCU in collaboration with the project states and municipalities, but the result will be available only after mid 1998\. 47\. During the ICR mission some data on the project outcomes were collected from two selected states, Ceara and Paraiba\. The idea was to attempt an analysis of the preliminary impact of the project\. Considering that the main objective of the project was to improve the supply and the quality of the basic health services, the ICR mission compiled the following data: (i) the medical consultation at all health facilities; (ii) the polio vaccination coverage rate (all three doses) for infants less than one year old; and (iii) births at hospitals\. The data were compared between project municipalities and non- project municipalities, in both states\. The results are shown in the Figures 1 through 6\. The project municipalities show a more rapid increase in medical consultation possibly due to the expanded and improved basic health service network\. The trend is more obvious in the state of Ceara, which performed better in project implementation, than Paraiba\. The trend is not so clear in the vaccination coverage rate and in-hospital births possibly because, among other factors, they require more time to reflect the project impact\. The decrease in hospital births may not be reflecting poor access or services, but more likely the effectiveness of the family planning program\. The impact of the project should be analyzed when more time has elapsed after the completion of the health facilities for the basic health services package\. Other indicators may be more effective in assessing the impact of the project, such as the infant mortality rate, but they were not available for the project and non-project municipalities separately\. Of course, care should be used in attributing the trend entirely to the project because these indicators depend on multifactors, and it is not easy to isolate the project impact over time\. H\. Key Lessons Learned\. 48\. Through the experience gained during the project implementation, the following are the key lessons learned: (a) It is not advisable to launch a project with a long implementation period, especially during a transitional period\. Successive projects with a short implementation period for each loan would be more cost-effective and less risky in achieving the development objectives\.  15 Figure 1: Ceara Figure 2: Paraiba Medical Consultations 199:2-1996 Medical Consultations 1991-1996 (1,000) (1,000) 12,000 10,000 8,000 6,00 0 ~~~~~~~~~~1991 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 1997 1991 reflects only the last 2 months of the yea r _ _ __ _Mflects only the first 3 months of the year Figure 3: Ceara Figure 4: Paraiba Average Percentage of Population Average Percentage of Poulation Vaccinated 3 Times Against Polio (Less Vaccinated 3 Times Against Polio than 1 year old) 1995-97 (Less than 1 year old) 1995-97 140 9 120 8 100 80 5p 60 4 40 20 10 0 0 11995 1996 1997 1995 1996 1997 -u-Municipalities w/out the Prcject ----Municipalities wI the Project Figure 5: Ceara Hospital Births % Change 1993 1994 1995 1996 1993-96 Municipalitieswith the Project 110,927 111,575 119,767 107,432 -3% Municipalities without the Project 62,463 59,895 60,918 62,404 0% Figure 6: Paraiba Hospital Births OhChange 199:3 1994 1995 1996 1993-96 Municpalities with the Project 13,526 13,261 13,042 12,151 -10% Municipalities without the Project 57,729 56,953 57,860 53,409 -7\.50%  16 (b) For a repeat project, it is essential to learn lessons from the implementation experience of the precedent project\. (c) In a multi-state projects like this one, a sector loan approach would be preferred; if a specific investment loan approach has to be taken, the project design should be kept flexible, and the Bank and the borrower should be prepared to adapt constantly the project content and implementation strategy to the changing needs and circumstances of the Borrower in general and the state in particular\. (d) In a multi-states project like this one, introduction of incentives and competition among states by rewarding more resources to those performing better actually accelerated project implementation, as long as different institutional capacities are taken into account and more technical assistance was provided to those states with weaker institutional capacities in order to ensure fairness in the competition\. (e) In a multi-state project, a sub-account should be established and replenished for each state separately so that each state may have accountability and efficiency for its financial planning and execution, and an efficient states would not be adversely affected by less efficient states in the flows of financial resources\. (f) The Bank should streamline the process for the amendment to loan agreements and should actively monitor the processes to encourage a constant review of the need for adjustments of the project design to the changing circumstances\. (g) Lack of monitoring indicators adversely affects the progress of the project in general and the institutional development component in particular\. Establishment of baseline indicators is essential for project progress monitoring and project outcomes evaluation\. (h) A project specific monitoring and evaluation system is unlikely to be established and operated effectively when an institution-wide monitoring and evaluation system is lacking\. (i) Both the Borrower and the Bank should pay more attention to the institutional development component of the project and the efficient operation of the physical facilities produced under the project in order to ensure the attainment of the project goals and impact\. (j) Success in project implementation is highly correlated with Government's commitment\. At the federal level, strong support from the Health Minister in 1995 resulted in accelerated project implementation; and states with more committed Governors were more successful than others\.  17 (k) Advice and assistance provided by a Bank supervision team do make significant differences in the pace and direction of project implementation, especially with respect to the needs and timing of project adjustments\. (1) The authorities and responsibilities of the project coordination unit and its location within a sectoral institution is important for a successful implementation and outcome of a project\. (m) Expansion and Improvement of the basic health service network do make a difference in the access to health services and health status of the poor people\. (n) Current Bank guidelines on the ICR should be revised, and a Borrower's ICR should be submitted to the Bank before the closing date, so that the Borrower can learn from the review of its own experience before the PCU loses its staff and institutional memories\. PART II: GOVERNMENT'S CONTRIBUTION TO THE ICR I\. General Observations Completion of the Second Northeast Project (PNE II) provides a good opportunity to put forward a number of considerations on the subject of its performance record\. This undertaking was characterized by an unusual contradiction\. Initially criticized as difficult to implement, it certainly proved extremely rigid where general planning was concerned, owing to the marked centralization of political and administrative decisions\. At the same time, however, there was considerable flexibility at the level of its individual components, where there was plenty of scope for action with potentially significant institutional impact, particularly as regards the use of loan proceeds in support of strategic areas amd activities, not only in the sphere of influence of the Northeast Region State Health Secretariats but also in that of the Ministry of Health itself\. This allowed a broad range of options for the utilization of project financial resources, and a degree of flexibility in this regard uncommon in similar investment projects, on the basis of renegotiations with the World Bank that resulted in modifications in the original project design\. Preliminary evaluation on completion of the project indicates that the way loan proceeds were used was clearly to the benefit of the national executing agencies, with full disbursement of the funds allocated to the State Health Secretariats, in accordance with the timetable agreed on with the World Bank\. However, the question whether the final objectives envisioned in the Project Loan Agreement have been accomplished, in terms of either product, process or impact, Translation of the original Portuguese report, dated May 29, 1998, which is placed in the Bank Files\.  18 As an atypical source of financing, the project succeeded in keeping its program objectives in line with the major national health policy objective, that of consolidating the decentralization process\. It was visualized as a further effort on the part of the Ministry of Health and the State Health Secretariats to guarantee properly coordinated allocation of project financial resources at each level of management, and thereby to ensure their maximum impact in improving access to health services for the general population\. PNE II incorporated some of the same elements as PNE I, including the programming parameters recommended by international agencies\. For instance, PNE II continued the line of credit initiated under PNE I, employing the same expenditure categories as the latter, although with pharmaceuticals and IEC as additional categories\. Since the profiles of the two projects were similar, they experienced virtually the same implementation problems, with some small variations\. Although the major part of PNE II proceeds was allocated for expenditure on civil works and equipment, the project - for what was essentially an investment project - funded a number of necessary innovations: (i) the need for management innovations, in the area of consulting arrangements; (ii) the need to improve the quality of human resources, in the area of training and supervision; (iii) the need to change the prevailing assistance model, by organizing the primary health care networks into a hierarchical structure; and (iv) the need to invest more in direct and indirect forms of technical assistance for the States, through consulting services provided from the central government level\. Its resulting hybrid nature meant that PNE II was marked, from the outset, by a series of contradictions - for instance: (i) The contradiction between regional political interests in civil works projects, frequently based on electoral considerations, and the imperatives of the National Health Policy, which at the time was concerned with new health service organizational models as a result of the changes introduced through the Integrated Health Actions (AIS, 1983) and subsequently through SUDS and SUS\. (ii) The contradiction between political will and bureaucratic red tape, which left the project managers no room for independent action and decision-making\. (iii) The contradiction between the comparative abundance of external resources and the scarcity of national counterpart resources, which were the responsibility of the State Governments - especially at a time when the national situation indicated the need for fiscal adjustments on the part of these governments\. In some instances, this delayed access to World Bank resources, whose availability was contingent on the execution of parallel financial operations\. (iv) The contradiction between the heavy demand for but short supply of State Health Secretariat personnel qualified to work on the technical implementation of the project\.  19 It appears that contradictions like these may have resulted in PNE II having had less than optimum final impact, judging from the initial data produced by the general evaluation now in progress\. Despite this, however, the project can clearly claim a number of successes - for instance: (i) Approximately 650 municipalities in 10 States have had the benefit of direct project investments in one or more eligible categories: civil works and/or equipment, human resources training, drugs and pharmaceutical supplies, etc\. (ii) Improved access to health services as a result of the increase in the number of health units constructed, rehabilitated, expancded and equipped in the municipalities targeted by the project\. (iii) Better quality of health care services for the target population groups as a result of improvements in equipment, buildings and facilities, which mean that system users can now be attended to with greater consideration\. In quantitative terms, there is now increased health care coverage in project target areas owing to the expanded supply of ambulatory, in-patient and diagnostic services\. (iv) Technical training of personnel at all levels of the civil service health apparatus, not only training for personnel directly responsible for patient care delivery but also management training, with a special focus on municipal administrators and services management\. (v) Increased management capacity in the State Health Secretariats, with significant improvement in the quality of procurement operations for PNE II, in other areas where procurement by competitive bidding is mandatory, in financial administration, planning and programming, and in architectural preparation of projects requiring expertise in the specifics of health architecture\. (vi) Although indicators for measuring final project impact have not been developed, it is very clear the project has helped improve certain health indicators in the Northeast through its expansion and improvement of the quality of health services in the municipal districts it targeted\. By upgrading the care available to groups more than usually exposed to health risks, and by giving them access to the technology best able to provide protection against such risks, PNE II has made a decisive contribution to improvement of the health status of the population\. II\. Brazilian Government Performance in the Implementation of PNE II The Government's performance in the execution of PNE II was characterized by two different approaches to the project\. Initially, it was distinguished from other Ministry of Health undertakings by its low assigned priority; subsequently, however, it was given much greater prominence, once it came to be seen as important in the relationship between the Ministry and  20 the State Governments\. Despite this change, certain difficulties were encountered during the implementation process, regardless of the question of operational level: (i) At Federal level, some of the basic difficulties were: Failure by Ministry of Health departments to commit effectively to accomplishing the ultimate objectives of PNE II\. Late release of project proceeds by the Treasury to the Ministry of Health, which then withheld them from the project in order to be able to cover other financial obligations\. Excessive red tape in the processing of agreements and amendments to them, with long delays in negotiations and forwarding of related documents for signature\. On some occasions, the political will to fulfill routine contractual obligations - for instance, independent audit of the project each fiscal year - was lacking\. (ii) At State level, the main difficulties were: In some instances, the State Health Secretariats failed to be active in their management of the project, regarding it as an activity imposed on them from above and as just another of their many ongoing responsibilities\. PNE II proceeds were a favorite target of individual State sectors intent on trying to finance their own activities, although this did not induce in them any sense of responsibility for upgrading their management and implementation practices\. Capacity for policy coordination among the various State Government departments and agencies involved in project execution was minimal\. Essential project administrative procedures were let slide, while a lack of management instruments systematically led to delays in the preparation of project financial statements and to a lack of the kind of information on which monitoring of the physical goals of the project depended\. Difficulties in moving ahead with competitive procurement procedures, especially in those States which required the necessary funding to be in hand before invitations to bid could be issued\. IHI\. World Bank Performance Like most of the government departments and agencies in Brazil with responsibilities for PNE II, the World Bank also failed to attach due importance to implementation of this project\. Excessive bureaucratic monitoring of execution of the majority of project actions led to difficult- to-resolve disputes over the roles of lender and borrower\. In principle, the borrower's responsibility was to fulfill all contractual obligations, and to provide the means of taking full advantage of the proceeds of the project loan - something not synonymous, however, with blind submission to the Bank's oversight requirements, which in many cases brought the implementation process to a standstill\. The lender's role was to keep abreast of progress toward project goals, through ongoing supervision and periodic monitoring of the execution process rather than through an exaggerated focus on the means of tracking expenditure; care should also have been taken to allow the project management team to reach its own decisions independently in most instances\.  21 As lender, the World Bank too was contradictory in its approach to PNE II, showing too much rigidity at some points and considerable laxity at others\. A judicious balance -between rigidity and flexibility was struck only in 1995, when adjustments were introduced that facilitated full use of loan proceeds\. This was something that had seemed impossible under the circumstances which until 1994 had governed the allocation of undisbursed loan proceeds - quite apart from the applicable technical criteria and Loan Agreement requirements\. In any event, during the implementation of PNE II, as during that of PNE I, the World Bank was in the contradictory position of acting simultaneously as both bank and development agency\. This contradiction originated in the conflict between the need to approve the project and disburse loan proceeds on the one hand, and on the other the need to ensure that these proceeds, in the form of investments, would work for the greater good of the community\. As soon as the second responsibility proved difficult to fulfill, the first would become paramount, even though Bank projects earn assured and risk-free returns and few governments fail to repay such investments on schedule and on the specified terms and conditions\. IV\. Lessons Learned and Recommendations With a view to the effectiveness, efficiency and rational design of projects similar to PNE -I, it is worth enumerating a number of lessons and recommendations: (i) Allow greater administrative flexiLbility at the levels responsible for the actual business of project execution, regardless of their management status\. (ii) Set up mechanisms to prevent eKecutive "verticalization" of projects in relation to the organizational structure within which they fit\. (iii) Negotiate greater decision-making autonomy with the international agencies in respect of the bureaucratic procedures for handling intermediate activities, and pass on the same autonomy to executing agents\. (iv) Devise instruments for technical monitoring and evaluation that make it possible to rectify the course of projects in progress: (a) re management performance: accomplishment of physical and financial goals, issue of financial statements and other management reports, etc\. (b) re operational performanrce: improvement of capacity to provide services, development of minimal reference indicators, etc\. (v) Develop outcome evaluation methods focused on the technical dimension (clinical or epidemiological effectiveness of the service provided), on the economic, or efficiency, dimension (to what extent could tie same outcome be achieved at a lower cost or through better deployment of the resources in play), on the qualitative, or client-satisfaction,  22 dimension, and on the ethical-political dimension (closeness to or distance from criteria of social justice, equity, etc\.)\. (vi) Seek greater diversity among ultimate executing agents\. (vii) Insist that national institutions give priority to projects in terns of their objectives and the interest rates and commitment fees the Government is paying\. Opportunity cost becomes high when solving easy problems is postponed\. (viii) Insist that the World Bank act first and foremost as an international development agency\.  23 IMPLEMENTATION COMPLETION REPORT BRAZIL SECOND NORTHEAST BASIC HEALTH SERVICES PROJECT (LOAN 3135-BR) PART III: ST'ATISTICAL ANNEXES Table 1: Summary of Assessments Table 2: Related Bank Credits Table 3: Project Timetable Table 4: Cumulative Estimated and Actual Disbursements Table 5: Key Monitoring Indicators Table 6: Studies included in Project Table 7A: Project Costs Table 7B: Project Financing Table 7C: Loan Disbursements by State and Expenditure Table 8: Status of Legal Covenants Table 9: Bank Resources: Staff Inputs Table 10: Bank Resources: Missions Table 11: Assessment of Project Objectives  24 Table 1: Summary of Assessments Macro policies X Sector policies X1 Financial objectives X Institutional development X Physical objectives X Poverty reduction X Gender issues X Other social objectives X Environmental objectives X Public sector management X Private sector development X Other (specify) atAj -R Nth41 1IF 6O Sustainability X ~~t V~~~ Identification X Preparation assistance X Appraisal x Supervision x \.' -i URN A 'w i4 '%7 Preparation X Implementation X Covenant compliance X Operation X x Assessment of Overall Outcome  25 Table 2: Related Bank Loans National Health To improve the Government's ability to 1984 Completed Policy Studies address a variety of health needs through (12/31/89) (LN 2488-BR) strengthening policy formation Sao Paulo Basic To improve the health status in five main 1984 Closed Health Care target areas and nine health districts in 6/30/92 Greater Sao Paulo and improve the cost- effectiveness of health services delivery within Greater Sao Paulo\. Northeast Basic To support the Borrower's effort to 1986 Completed Health Services I improve equity, efficiency and (3/11/97) (LN 2699-BR) effectiveness of basic health care in the project area\. 1988 Completed NE Endemic Disease To reduce the prevalence of three (6/30/96) Control (LNG 2931- endemic diseases (Chagas disease, BR) schistosomiasis, and leishmaniasis) in the Northeast, to levels where only epidemiological surveillance are needed to keep these diseases under control\. Amazon Basin To reduce malaria transmission in 1989 Completed Malaria Control Amazonia and prevent its reintroduction (6/30/96) (LN 3072-BR) in areas now under control\. Health Sector Reform To improve the delivery of care under the 1996 Ongoing (REFORSUS) SUS (the sole source of publicly (Closing Date (LN 4047-BR) subsidized care for the poor) and to assist 12/31/00) the government in introducing policy reforms which would improve the financial sustainability and efficiency of the SUS\.  26 Table 3: Project Timetable 1\. Preparation 12/86 12/86 2\. Appraisal 11/87 1/88 3\. Negotiations 05/88 09/89 4\. Board presentation 07/88 11/89 5\. Signing 9/90 9/90 6\. Effectiveness 12/90 12/90 7\. Project completion 12/95 6/98 8\. Loan closing 6/96 12/97  27 Table 4: Cumulative Estimated and Actual Disbursements (Millions of US$) Appraisal estimates 17\.5 41\.6 85\.2 132\.1 185\.0 234\.0 267\.0 267\.0 267\.0 Revised estimates - - - - - - - 217\.0 217\.0 Actual disbursements 0 23\.96 26\.54 35\.76 59\.91 98\.10 137\.24 194\.79 217\.0 Actual as % of Appraisal (or Revised) 0 56\.7% 31\.15% 27\.7% 32\.38% 41\.92% 51\.40% 89\.76 100% estimates Cumulative Disbursements 300\.00 250\.00 g - s 150\.00 -4-\.-Appraisal estimates -Revised estimates -U- Actual disbursements 0 00 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 Bank Fiscal Year  28 Table 5: Key Monitoring Indicators A\. The Number of Municipalities Participating in the Project Alagoas 49 62 Ceara 61 78 Sergipe 35 37 Bahia 114 169 Paraiba 57 74 Maranh,ao 50 66 Pernambuc 112 146 B\. The Number and Type of Works for Health Facilities in Ceara and Paraiba E , ,\.,,\.,\.- \. : 0 -\. !; ' - < ' , ,\.: \. \. j \. \. \.: \. \. \. \.,, No\. (%) No\. (%) Total Ceara SAR Plan 137 (74) 49 (36) 186 Actual 202 (74) 72 (36) 274 Paraiba SAR Plan 33 (39) 52 (61) 85 Actual 30 (59) 21 (41) 51 TO ~~~~~~~~~~~~~~~~~271 _ _ _ _ _ _ _ _ _ _ _ _ ~~23 2 \.1)9~3 ( I )_ _ _ C\. The Number and Level of Health Facilities Provided in Ceara and Paraiba Ceari SAR Plan 149 (80) 30 (16) 7 (4) - 186 Actual 253 (92) 17 (6) 4 (2) - - 274 Paraiba SAR Plan 46 (54) 33 (39) 3 (3) 3 (3) 85 Actual 23 (45) 27 (53) 1 (2) - - 51 -L_ _ _ _n #>!\._ A J B m _ __  29 Table 6: Studies Included in the Project (The State of Bahia)1 TITLE OF STUDY PURPOSE OF STUDY OUTCOME OF STUDY Evaluation of Health Unit To determine whether existing Health Secretariat provided with Equipment Sets dental, medical and hospital standardized equipment sets to equipment sets are in line with enable Units to cover actual health action and health service needs for health care services needs Study of Epidemiological Status To review status of dengue fever Prevention, control and of Bahia State epidemic in Bahia State eradication of vector Evaluation of Child Dental To diagnose dental health status Definition of alternative methods Health in Rural Areas of children in rural areas of preventive and remedial dental care for children aged 6 to 12 years in rural areas of Cansan,co Municipality (Bahia) Evaluation of First Northeast To evaluate success in achieving Support for Unified Health Basic Health Services Project PNE I goals and objectives System (SUS) operations in (PNE I) Bahia State, especially institutional development measures and health service organization programs Social and Morbidity Profile of To conduct census of psychiatric Support for programs to redesign Bahia State Psychiatric Patient in-patient population in public, Bahia State psychiatric care Population philanthropic and private services facilities under contract to SUS Case Study: Lymphoma in the To examine association between Formulation of epidemiological Workplace occurrence of non-Hodgkin's strategy for surveillance of lymphomas and exposure to incidence of workplace-related organic solvents cancers in Salvador Metropolitan Region (Bahia) Workplace Accidents and To ascertain morbidity and Establishment of database on Diseases mortality rates associated with workplace accidents, to work-related accidents in complement other CESAT health Salvador Metropolitan Region surveillance programs (Bahia) Mapping of Occupational Health To carry out a diagnostic study of Introduction of measures to Hazards present use of weedkillers in Qui eliminate harmful uses of District weedkillers, and production of educational audiovisual materials for that purpose Evaluation of Municipal Health To draw profile of Bahia State Identification of (i) major groups Councilor Training Municipal Health Councilors, and in composition of Municipal assess impact of training program Health Councils, and (ii) areas of on their performance training curriculum needing reformulation if Municipal Health Councilor Training program is to remain fully effective l This list is only an example\. All Project States and the MoH conducted studies similar to those listed in this State of Bahia  30 Evaluation of Worker Health To assist enterprises and Reorganization of Worker Health Centers (NUSATs) municipalities by developing Centers worker health monitoring programs, Study of Demand for Worker To study characteristics of Drafting of instructional and Health Facility Services demand profile for worker informational materials for ambulatory health care services workers, institutions and provided by Occupational Health communities, giving factual data Department on prevention, treatment and monitoring of common occupational diseases Evaluation of IEC Actions To analyze materials, group Critique of program performance mobilization activities, and media and recommendations to improve programs used by IEC/Bahia with it specific communities and the general public Evaluation of Results of To assess performance by Identification of weaknesses in Implementation of NOB 01/93 municipalities in incorporating Municipal Health System (in NOB 01193 requirements into management, finances, infra- Municipal Health System structure, organization and delivery of services), with view to supplementing State Health Secretariat technical cooperation to municipalities in process of decentralizing health actions Diagnostic Study of Bahia State To ascertain technical support Laying of foundations for Pharmaceutical Assistance needs of 'Pharmacy Commission drafting of Bahia State Program and Technical Standards Pharmaceuticals Inspection Plan Commission and for SUS/Bahia construction program Mid-Term Review of To evaluate proposed PNE II Support for Unified Health Implementation of PNE II goals and\. objectives System (SUS) operations, especially institutional development measures and health service organization programs  31 Table 7A: Project Costs (US$ Millions) Appraisal Estimates (US$M) Actual costs (US$M) A\. Civil Works 75\.1 18\.8 93\.9 20 20\.8 83\.8 04\.6 80% B\. Equipment 35\.9 19\.4 55\.3 35 8\.8 41\.7 50\.5 83% C\. Training 25\.0 6\.2 31\.2 2 4\.5 40\.9 45\.4 90% D\. Supervision 19\.0 4\.7 23\.7 20 B Consultancies 8\.2 2\.0 10\.2 20 0 37\.4 37\.4 100% F\. Special Studies 4\.2 1\.0 5\.2 20 03\. 74 10 \. \.pc a \.St& \. 4 2 \. \.0 5 2 \. \. \. ~6\. \.6\. f\. \. \. i\. \. G\.JIEC* 16\.3 4\.1 20\.4 20 0 11\.3 11\.3 100% H\. New Staff 98\.5 10\.9 109\.4 10 90\.6** 0 90\.6 0 Salaries I\. Supplies 47\.5 20\.4 67\.9 30 42\.0** 0 42\.0 0 J\. Maintenance 18\.1 9\.8 27\.9 35 7\.1** 0 77\.1 0 K\. Drugs 45\.0 19\.3 64\.3 30 12\.0** 1\.9 13\.9 2% L\. Physical 13\.3 4\.4 17\.7 25 - - - - Contingencies M\. Price 63\.4 20\.1 83\.5 24 Contingencies * IEC = Information, Education and Communications ** Estimated ** Figures include an estimated US$50\.2 million in local duties and taxes Table 7B: Project Financing (US$ Millions) Appraisal Estimates Actual Costs IBRD 129\.0 138\.0 267\.0 - 217\.0 217\.0 State 311\.9 -- 311\.9 - Governments <A555\.8 - 555\.8 Federal 28\.6 3\.1 31\.7 Government  32 Table 7C: Loan Disbursements by State and Expenditure State Works Goods T\.A\. Training Drugs IEC Unallocated Total Alagoas _ Original _ 10 7 1\.1 5\.1 0\.3 0\.5 24 Executed 13 3\.6 0\.2 4\.5 0\.3 0\.43 22\.03 Dierence =___ |_ 3 -3\.4 -0\.9 -0\.6 0 -0\.07 0 -1\.97 % Exec 130\.0 51\.4 18\.2 88\.2 100\.0 86\.0 |#DIV/0! 91\.8 Bahia _ Original 12\.9 9\.2 1\.1 7\.8 0\.4 0\.7 32\.1 Executed 12\.8 7\.1 0\.61 4 0\.35 0\.43 25\.29 difference -0\.1 -2\.1 -0\.49 -3\.8 -0\.05 -0\.27 0 -6\.81 % Exec 99\.2 77\.2 55\.5 51\.3 87\.5 61\.4 #DIV/01 78\.8 Ceara _ Original 8\.1 6\.9 1\.4 5\.7 0\.3 0\.7 23\.1 Executed 11\.6 6\.8 3 5\.2 0\.3 1\.2 28\.1 difference 3\.5 -0\.1 1\.6 -0\.5 0 0\.5 0 5 % Exec\. 143\.2 98\.6 214\.3 91\.2 100\.0 171\.4 #DIV/01 121\.6 Maranhao Original 8\.8 11 1 4\.9 0\.2 0\.5 26\.4 Executed 9 7\.2 0\.3 2\.9 0\.16 0\.52 20\.08 difference 0\.2 -3\.8 -0\.7 -2 -0\.04 0\.02 0 -6\.32 % Exec 102\.3 65\.5 30\.0 59\.2 80\.0 104\.0 #DIVIO! 76\.1 Paraiba _ _ _ = _ ___ Original 8\.3 10\.2 1 3\.1 0\.2 0\.5 23\.3 Executed 8\.8 5\.4 0\.07 1\.9 0\.15 0\.33 16\.65 difference 0\.5 -4\.8 -0\.93 -1\.2 -0\.05 -0\.17 0 -6\.65 % Exec 106\.0 52\.9 7\.0 61\.3 75\.0 66\.0 #DIV/0! 71\.5 Pemambuco _ Original 12\.6 16\.7 1\.4 8\.1 0\.4 0\.7 39\.9 Executed 15\.6 8 2\.1 8\.3 0\.4 0\.87 35\.27 difference 3 -8\.7 0\.7 0\.2 0 0\.17 0 -4\.63 % Exec 123\.8 47\.9 150\.0 102\.5 100\.0 124\.3 #DIV/0! 88\.4 Sergipe _ Original 5\.9 4\.7 1\.1 1\.9 0\.2 0\.4 14\.2 Executed 9\.3 2\.1 0\.03 1\.4 0\.19 0\.54 13\.56 difference 3\.4 -2\.6 -1\.07 -0\.5 -0\.01 0\.14 0 -0\.64 % Exec 157\.6 44\.7 2\.7 73\.7 95\.0 135\.0 #DIV/0! 95\.5 MOH _ Original 0\.9 0\.3 9\.9 9\.9 0 20 0 41 Executed 0 0\.29 30\.8 11\.9 0 6\.7 0 49\.69 difference -0\.9 -0\.01 20\.9 2 0 -13\.3 0 8\.69 % Exec 0\.0 96\.7 311\.1 120\.2 #DIVIO! 33\.5 #DIV/0! 121\.2 Subtotal _ Original 67\.5 66 18 46\.5 2 24 43 267 Executed 80\.1 40\.49 37\.11 40\.1 1\.85 11\.02 0 210\.67 difference 12\.6 -25\.51 19\.11 -6\.4 -0\.15 -12\.98 -43 -56\.33 % Exec 118\.7 61\.3 206\.2 86\.2 92\.5 45\.9 0\.0 78\.9  33 Table 7C: Loan Disbusements by Stabt and Expenditure Stte Woruks Goods TA\. Training Drugs IEC Unallocated Total Mhias Gerais \. Original ____ Execut 1\.7 0\.57 0\.11 0\.24 0 0\.06 2\.68 difference 1\.7 0\.57 0\.11 0\.24 0 0\.06 0 2\.68 % Exec #DIVI0I #DiV/01 #DIV/01 #DIV/01 #DIV/O! #DIV/01 #DIV/01 #DiV/01 Piaui _ = = _ _ _________ Original __- ____ __=_____ Executed 1\.2 0 0\.1 0\.27 0 0\.05 1\.62 difference 1\.2 0 0\.1 0\.27 0 0\.05 0 1\.62 % Exec\. #DIV/01 #DIV/01 #DiV/01 #DIV/01 #DIV/01 #DIV/01 #DIV/01 #DiV/O! Rio Grande _ Original Executed 0\.7 0\.53 0 0\.27 0 0\.15 1\.65 difference 0\.7 0\.53 0 0\.27 0 0\.15 0 1\.65 % Exec #DIV/01 #DIV/O0 #DIV/0! #DIV/01 #DIV/O! #DIV/0! #DIV/O! #DIV/0! Sub total Original Executed 3\.6 1\.1 0\.21 0\.78 0 0\.26 5\.95 difference 3\.6 1\.1 0\.21 0\.78 0 0\.26 0 5\.95 % Exec #DIV/01 #DIV/0! #DIVi0/ #DIV/0/ #DIV/O! #DIVIO! #DIV/01 #DIV/01 Grand total Original 67\.5 66 18 46\.5 2 24 43 267 Executed 83\.7 41\.59 37\.32 40\.88 1\.85 11\.28 0 216\.62 difference 16\.2 -24\.41 19\.32 -5\.62 -0\.15 -12\.72 -43 -50\.38 % Exec 124\.0 63\.0 207\.3 87\.9 92\.5 47\.0 0\.0 81\.1  34 Table 8: Stats of Legal Covenants Loan Agreement 3\.01E Inform World Bank of amounts in MoH's budget for project, C and ensure that funds deposited in each project account are at all times not less than I month's expenditures in cruzeiros under respective state component\. 3\.01G The Borrower shall, not later than May31 of each year, CP 5/31/91 furnish for its approval a two-year plan for purposes of Part A\.7 of the project\. 3\.02B The Borrower shall establish single registries of contractors C and suppliers for purposes of the project to meet local registration for procurement\. 3\.02C Not later than January 31 of each year, starting 1/31/90, the CP 1/31/93 Borrower shall publish ads in two newspapers\. 3\.03A Monitor overall implementation of project by Bo:rrower, C performance by each state in respect of implementation of corresponding states component, the delivery of health services under the project\. 3\.03B Prepare and submit for review and approval by the WB, no C 3/26/91 later than three months from the effective date, a set of indicators and performance criteria\. 3\.03C Submit progress reports to WB every year on C 1/31/93 implementation and delivery of services by each state covering, inter-alias, actual expenditures and budgetary authorizations under the corresponding part of the project\. 3\.03E Prepare annually with assistance of applicable states, starting CP 10/31/90 in 1990, a detailed analysis of sources and uses of funds\. 4\.01A The Borrower shall maintain separate records and accounts C in accordance with sound accounting practices\. 4\.01B Have records and accounts audited for each fiscal year and C 6/30/91 furnish to the World Bank no later than six mont:hs after the end of each fiscal year\. Obligations of States under Agreements with the Federal Government Article 4 Except as the Bank shall otherwise agree, procurement of C goods, works, etc\. shall be governed by schedule 4\. Article 5 Each state shall carry out the obligations subject to the C general conditions relating to insurance, use of goods and services, etc\. Article 6A Each state shall open, and thereafter maintain, lrNA Bank C satisfactory to the Borrower and the World Bank, an account\. Article 8 Each state shall take all actions necessary on its part to C enable the Borrower's compliance with provisions of section 3\.03 of the Loan Agreement\. Article 10 Each state shall keep separate records and accounts\. C Article 13 Each state shall annually prepare its plan for IEC activities C 1/31/92 and submit it for approval to the MoH and World Bank, update its state decentralization plan, prepare detailed financial information on sources and uses of funds\. Article 14 Each state shall, acting through its respective SES, appoint C and maintain a project coordinator with qualifications and experience satisfactory to the Borrower and the World Bank\. Covenant types: I = Accounts/audits; 2 = Financial performance/review; 3 = Flow and utilization of Project Funds; 4 = Counterpart funding; 5 = Management aspects of the project\. Present Status: C = Covenant complied with; CD = Complied with after delay; CP = Complied with partially  35 Table 9: Bank Resources: Staff Inputs Preparation to Appraisal 88\.1 158,920\.0 Appraisal 30\.6 50,942\.0 Negotiations through Board Approval 28\.0 66,729\.0 Supervision 180\.7 481,861\.0 Completion 2\.5 5,767\.0  36 Table 10: Bank Resources: Missions Through Appraisal Preparation 9/86 4 12\.5 J,A,A Preparation 12/86 4 7\.4 JN,B,A Preparation 5/87 4 8\.5 1,A,B,I Preparation 8/87 4 6\.3 J,I,A Preparation 9/87 1 1 A Preparation 11/87 8 22\.8 J,BN,AC,I,L Appraisal Through Board Approval Appraisal 1/88 4 7\.4 B,A,P,J Post Appraisal 3/89 2 5 J,B Post Appraisal 7/89 4 6\.8 J,A,M,B Post Appraisal 5/90 4 2\.3 P,J,A,G (Project Launch) Supervision Supervision 1 11/90 3 7\.7 A(2), I 1 1 Supervision 2 3/91 2 2\.3 J,I 2 1 Supervision 3 7/91 2 3\.1 J, I 2 2 Supervision 4 10/91 2 4\.5 J,I 2 2 Supervision 5 2/92 4 6\.2 N,I,A,L 2 1 Supervision 6 8/92 3 3\.1 A,J,I 2 1 Supervision 7 2/93 3 4\.7 J,I,A 2 1 Supervision 8 6/93 4 8 J,I,A,O 2 2 Supervision 9 9/93 3 1\.2 J,I,A 2 2 Supervision 10 11/93 4 6\.2 J,N,I,A 2 2 Supervision 11 3/94 4 5\.7 J,N,I,B 2 2 Supervision 12 6/94 5 12\.1 J(2),I,A(2) 3 2 Supervision 13 4/95 3 3\.4 N,B,G S S Supervision 14 1/96 1 1 H S S Supervision 15 6/96 2 2\.5 M,H S S Supervision 16 10/96 2 2 M,H S S Supervision 17 2/97 2 1\.2 M,H S S Supervision 18 5/97 2 1\.5 M,H S S Completion a/ A=Public Health; B=Economist; C=HR Specialist; D=Hosp\.Admin\.; E=Auditor; F=Health Educ\.; G=Procurement; H=Systems Analyst; I=Architect; J=Operations Analyst; K=Financial Analyst; L=Management; M=Laywer; N=Operations Ass\.; O=Communications; P-Implementation Spec\. _/ I=Problem Free; 2=Moderate Problems; 3=bAajor Problems; S=Satisfactory; U=Unsatisfactory c/ M=Management; F=Financial; P-Procurement; S-Studies; E=Monitoring & Eval\.; T=Technical Ass\.; Tr--Training  Appendix A BRAZIL A:IDE MEMOtRE IMPLEMENTATION COMPLETION MISSION ON THE SECOND NORTHEAST BASIC HEALTH PROJECT (PNE-11): LOAN 3135-BR L INTRODUCTION 1\. During the period March 16 - 27, 1998, Kye Woo Lee and Claudia Rosenthal (March 16-20) of Latin America and the Caribbean Regional Office of the World Bank (WB) visited Brazil for the implementation completion mission of the project\. 2\. The mission would like to express its appreciation to the authorities and officials of the government for the attention and collaboration that it received during its stay\. During its stay, the rnission had meetings with the Minister of Health, Dr\. Carlos Cesar Silva de Albuquerque, and officials of the Ministry of Health (MOHq, National Health Foundation, and the Project Coordination Unit (PCU)\. The mission also visited the project states of Bahia, Ceara and Paraiba, discussing with the state and municipal health officials and visiting some project institutions\. The Annex lists the persons with whom the mission had meetings\. 3\. The mission reviewed the principal activities of the project and presents some conclusions and recommendations, as well as agreements reached with the responsible persons\. IL Review of Principal Activities 4\. The mission and the government officials agrees that the project assisted the government in improving the newly decentralized health service network in the Northeast to deliver a package of basic health services, and strengthened the institutional capacity of the health authorities at federal and state levels\. The government successfully completed providing the necessary inputs to improve the operation of the basic health care services at state and municipal levels by completing the infrastructure investments, training of health personnel, hiring or reassigning of additional health staff, carrying out of supervision, and procurement of necessary drugs, and medical and office supplies\. The government also completed providing inputs to strengthen the institutional capacity of the MOH at both federal and state levels by hiring consultants for carrying out studies, improving management of processes, tools and manpower, designing and implementing information, education and communication (IEC) activities, and improving monitoring and evaluation systems; providing managerial and professional training for supervisors and staff; and preparing training curriculum and materials\.  5\. In completing the project, the government took three years longer than envisaged at the appraisal of the project\. The project implementation took off the ground with a one-year delay and the implementation pace was sluggish at best in the first half of the almost eight-year implementation period\. The WB's collaborative and supervisory efforts were not effective either\. However, since 1995, government's innovative initiative, with the help of the WB, has improved the project implementation in a dramatic way\. m\. SUSTAINABILITY, OPERATIONAL PLAN, AND IMPACT EVALUATION 6\. Sustainability: The basic health service network in the Northeast would be financially sustainable, but may not be sufficiently decentralized and become autonomous professionally and technically\. The Unified and Decentralized Health Service System (SUS) would continuously ensure that adequate financial resources are made available for the Northeast on an equitable basis\. Also, the PNE-I and II have provided technical and institutional assistance in the last ten years\. However, the he1th secretariats of the states and municipalities, and other public health institutions in the Northeast are still weak technically and institutionally, and would therefore require continuous training and technical assistance from the federal level\. 7\. Operational Plan: Under the SUS, the executing and operational functions of the health sector is to be carried out by the decentralized state and municipality, and the MOH at the federal level is to play financing, policy-making, normative, monitoring, evaluating, and technical assistance functions\. These functions have been designed or strengthened under the PNE-Il mainly through hiring consultants, especially for the provision of training, studies, technical assistance monitoring, and evaluation\. With the completion of the PNE-II project, however, a cause for concern is that these consultants hired under the institutional development component of the PNE-II project either have already left or are expected to leave the services in the near future, and the MOH does not seem to have an adequate institutional apparatus and financial and human resources to carry out such functions properly\. This concern is enhanced, particularly because the monitoring and evaluation systems of the MOH have not been adequately developed and institutionalized during the implementation of the PNE-II project\. Although they may be further strengthened under the Health Sector Reform (REFORSUS) and other Bank financed Projects in the future, no concrete action plans have yet been placed in the MOH\. The only positive action being taken is that the PCU is planning to launch a quick survey of the quantitative and qualitative outputs produced under the PNE-II project in May 1998\. However, the PCU is scheduled to be dismantled in June 1998, and the survey would not be a good substitute for continuous and institutionalized monitoring and evaluation, training and technical assistance systems \. Recommendation: The mission therefore recommends that the MOH make some organizational, procedural, human, and financial arrangements for systematically institutionalizing the monitoring and evaluation systems and continuously providing training and technical assistance to states and municipalities on a national basis, in particular to those in the Northeast\.  For this purpose, the MOH would be required to collaborate with the states and municipalities in the Northeast to develop a medium-term operational plan with targeted objectives for the basic health service network in the Northeast and establish some indicators to monitor the progress and achievement of the objectives and targets\. 8\. A Follow-Up Project\. The Secretaries of the three states visited by the mission strongly emphasized the need to follow up the PNE-ll with a new but shorter implementation project to address the same problems in other municipalities of their states\. They plan to make a request for a new loan from the Bank through the ]inistry of Health\. They emphasized the fact that the PNE-II loan was curtailed by $50 million, and the implementation capacity at the state and municipality levels has been sufficiently strengthened to implement a new project efficiently\. 9\. Field Visits\. The mission visited some basic health centers in rural areas in Ceara and Paraiba, and was positively impressed\. These centers, either constructed, expanded, or rehabilitated under the project, were adequately staffed, equilpped, and intensively used as envisaged at appraisal\. All staff members also received training under the project\. However, all rural centers have problems of retaining medical doctors and are short of medicines and supplies, which were to be addressed under the project\. The issues were brcught to the attention of the state authorities, which responded that as the SUS financing system is regularized and transfers to municipalities are increased, the problems would be gradually resolved\. 10\. The Public Health Schools\. Financial sustainability of one institution, the Public Health School in the state of Ceara, completed in 1994, has been a cause for concern during the implementation of the project, and it conLtinues to be so\. In 1997, the School depended on the loan funds by 58% and on the state budget the balance\. Its budget was reduced sharply to one- third of its 1996 level\. For the 1998 operational plan, the school has no clear sources of funding other than the Bank financed projects (REkFORSUS and PNE-II), which accounts for some 10%\. The state government intends to maintain its last year's level of budget transfer in the future\. The School has been actively negotiating with external aid or educational agencies for joint activities and financing\. The public health school in Bahia, completed in 1996, is in a better situation\. Although the level of training activities is reduced somewhat in 1998, its budget has been secured, and the Secretary of Health is negotiating for additional funds to resume the level of training activities as in 1997\. Recommendation: The School in Ceara should come up with a medium term strategic plan accompanied by a financing plan by the end of August 1998, so that it can be reflected in the state budgets for 1999 and be used as a basis; for negotiations with collaborating agencies\. The plan would be also sent to the Bank for information\. 11\. Disbursements and Cancellation of the Unused Loan Funds: The total loan amount was committed as of December 31, 1997\. The government intends to withdraw the total loan funds by the end of June 1998 as agreed with the WB, and expects that there would be no need to cancel any loan funds\.  12\. Audit Reports: The PCU has already made arrangements with the independent auditor of the government for the audit of CY 1997 project expenditures and promised to send the report to the WB before June 30, 1998\. The PCU also promised that it will make arrangements for audit of the expenditures incurred during CY1998 and report it to the WB by the end of December 1998\. 13\. Borrower's Implementation Completion Report (ICR: The PCU is preparing a Borrower's contribution to the ICR in collaboration with other departments of the MOH, states and municipalities, and promised to complete and send it to the WB by April 15, 1998\. The PCU already has the experience of preparing its contribution to the PNE- I in early 1997, and has all necessary knowledge and guides for the ICR of the PNE-II project\. Salvador, Brazil March 27, 1998 Kye Woo Lee Jose AnorArevald Silva The World Bank /General Coordinator of PNE-II  PERSONS CONSULTED AND PLACES VISITED DURING THE MISSION Annex Ministerio do Saude\. Brasilia Dr\. Carlos Cesar Silva de Albuquerque Ministro da Saude Ministerio da Saude Eliane Pinheiro de Araujo Coordinatora doof Projeto BRA/90/032 Project Desenvolvimento Institucional DI/Ms- PNUD Zuleide do Valle Oliviera Ramos Consultora Tecnica do PNUD/RH para o SUS Ana Gorete Kalume Maranhao Chefe do Servico de Assitencia Integrada a Saude de Criancs Celso Jose Roque Consultor Tecnico do EEC Comunicacao Social Jose Agenor Alvares da Siva Gerente-Geral do PNE-II Raimundo Tarcisio Macedo Gerente Finaceiro do PNE-II Emane Bento Bandarra Diretor do DATASUS Departamento de Informatica do SUS Fundacao Nacional do Saude Estado da Ceara\. Fortaleza Quastacio Queiroz Secretario da Saude Secretario da Saude do Estado Socorro Martins Chefe de Cabinete Secretaria da Saude do Estado Silvia Mamede Studart Soares Superintendente Secretaria da Saude Escola de Saude Publica Marcela Gerente do PNE-II Secretaria da Saude do Estado Centro de Diabetes e Hypertensiones, Forltaleza  Dr\. Jose Bezerra Centro da Saude do Municipio Sao Goncalo do Amarante Estado da Praiba\. Joao Pessoa Dr\. Jse Maria de Franca Secretario da Saude Secretaria da Saude do Estado Dr\. Ginaldo Lago Gerente-Geral do PNE-II Secretaria da Saude Dr\. Osman Setubal Secretario de Saude Municipio da Pirpirituba Unida Mista, Pirpirituba Health Center, Borborema  MINISTtRIO DA SAIDE Appendix B SECRETARIA EXECUTIVA GERgNCIA-GERAL DO PROJETO NORDESTE FAXIGGPNE/N 095/98 Esplanada dos Minist4rios Fone: (061) 226\.0437 1315\.2149 Bloco "G" Anexo *B" SALA 205 Fax (061) 315\.2747 CEP: 70058-900 Brasilia-DF-Brasil Data: 10/06/98 N° de PFginas: 02 (incluindo esta) PARA: Senhor Kyo Woo Lee BANCO MUNDIAL- WASHINGTON/DC FAX NO: 001- (202) 522-1201 De: Jos6 Agenor Alvares da Silva Gerente Geral do Projeto Nordeste ASSIU NTO Senhor Lee, Encaminho, conforme solicitado por Vossa Senhoria, os comentarios da Gerdncia-Geral do Projeto Nordeste sobre o Relat6rio de T6rmino de Implementahdo do FINE II - L- 3135-BR\. Nao foi possivel obter os comentarios do Minist6rio da Fazenda\. 76 c1osamente, Jos6 de Ivare3 d1 Sliva eere6-GeraI d'PNtI  BORROWER'S COMMENTS ON THE ICR (Part i)1 The ICR prepared by the World Bank on PNE II provides an overview of the -way in which the main elements of the projecl: performed in relation to Bank guidelines\. This report could well be more than a mere formality that marks the end of the Loan Agreement; it could become an important tool for project management and for regulating the political and institutional relationships between the providers and the recipients of financing\. This would make it possible to use the lessons of practical experience to adjust the direction of similar projects that are either ongoing or being negotiated\. This document should be used to generate a greater impact among the project executing agencies\. If Brazilian institutions and the Bank are to buy in to a significant extent to the ICR, the Borrower should be obliged to present its own comprehensive assessment, which would discuss the procedures used, the results obtained and the project's overall impact\. The lack of any such contractual obligation does not promote institutional commitment to the preparation of the ICR, as the rather improvised nature of the project components evaluated attests\. Consequently the final product of the report and the lessons drawn therein vanish into thin air, and each new project may repeat the same errors as previous ones\. The projects supported by the World Bank are not an end in themselves\. Rather, they are part of a program of government priorities that cannot be separated from other activities in the same field\. In other words, such projects, complement the permanent activities of the responsible agencies, which should encourage the effective commitment of these agencies to their implementation\. As a result, meeting the requirements of these projects should not be regarded merely as a kind of concession by the managers of these agencies\. The evaluation of the First Northeast Project was technically very rigorous, which made it possible, in light of the results that emerged, to change course in ways that were important for the consolidation of the health services provided by the State Secretariats of Health in the project area and for the strategic management and execution of PNE II\. The modifications made in PNE II enabled the loan proceeds to be fully disbursed without compromising technical standards or the effective attainment of project objectives\. However, this fruitful assessment was submitted only to the World Bank, no provision having been made for sharing it with oth,er national executing agencies\. There were merely some local discussions with state executing agencies in relation to specific problems identified in their particular projects, with the aim of finding remedies\. If there is no expectation concerning a discussion of the project's overall results or as regards the potential for making changes in the processes analyzed, the evaluation will arouse no interest\. Consequently, the report cannot simply be a formal statement delinked from the political and institutional context of the executing agencies\. 1 Translation of the original Portuguese Report, dated June 10, 1998, is placed in the Bank Files\.  As regards the report per se, the GGPNE has the following comments: 1\. Project Objectives These are correctly and for the most part clearly described, in line with the SAR\. One small point should be made regarding the report's definition of a unidade mista: this is a Health Establishment that brings together the activities of a health center; i\.e\. it is not itself a health center, but a surgical center for inpatients in the four basic branches (general medicine, surgery, pediatrics and obstetrics/gynecology)\. Implicit in the objective of implementing sectoral reforms was the institutional development of the Ministry of Health, as an absolute priority\. 2\. Achievement of Objectives It should be noted that the full execution of the project required an extension of only a year and a half\. Given the difficulties encountered in the early stages of implementation, this extension did not distort the project, compromise the achievement of its objectives or damage the relationship between the Bank and the Government\. The final data are still being collected by contracted professionals via field surveys, but the information available up to now indicates a reasonable performance in the eligible categories\. The project's total costs did not increase at all, as claimed in the report\. The extension of the project and the incorporation of more states did not entail the allocation of additional resources\. Rather, the extension enabled planned targets to be achieved without compromising the effectiveness of the planned expenditure, and eliminated the risk that some goals might not be attained\. Other states were added merely to reach targets not achieved under PNE I, and the states concerned provided the necessary counterpart\. Recurrent costs cannot be included in any calculation of project expenditure; the costs of the facilities built under the project will become an ongoing responsibility of governments at the Federal, state and municipal level\. The operation of these facilities is a principal concern of the Ministry of Health\. Two issues are receiving special attention from the evaluation team: a) the maintenance and operating conditions of the health units provided under the project, mainly the additional beds in the state and municipal health networks, in light of Brazil's health financing policy; and b) the quantity and quality of the training performed in the project states\. Consequently, an indepth qualitative assessment of the training component is being made in certain states, covering all aspects of training policy and its adaptation to the profile required by the health services\. In the context of the political and administrative decentralization taking place in Brazil, the role of the Ministry of Health as head of the system is to formulate and coordinate public policies in the area of health\. Formal coordination of basic health services is therefore unnecessary, since these services are the sum of various standard activities regulated by the institutions managing the SUS and given expression via the political direction of the Secretariats and Ministry of Health\. 2  In discussing the coverage provided by PNE II one should be careful to avoid confusion between the population actually covered by the new facilities and the population within an area potentially served by a given health unit\. Although the project did indeed significantly increase health service coverage, the numbers of municipalities and state populations benefitted are over- estimated if one takes into account the fact that states were added to the project in order to meet earlier objectives not attained\. As regards the direct application of resources in project implementation, the shares of the World Bank and the Government were 85\.6% and 14\.4% respectively\. This does not include recurrent costs of services in operation\. Reference should be made to the states that used PNE II funds to build health schools or training centers, namely Bahia and Ceara; Alagoas and Paraiba expanded and rehabilitated existing training centers\. As regards the other components discussed, the only point to add is that the reworking of IEC resources was the result of the immense difficulties created by the size and nature of the costs in this area\. The cormpensation fund set up by project management operated not merely among the Secretariats of Health but also among the agencies and activities directed by the Ministry of Health\. This made resource management more transparent and ensured that funds were allocated to the ultimate aims of the project\. In any event, at no time could any interruption in any activity in this component be attributed to lack of funds\. 3\. Major Factors Affecting the Project The GGPNE was responsible for relations with the states as regards all components financed and for the financial managennent of the project\. As a matter of policy the Ministry decided to diversify project implementation so as align some of its components with some of the Ministry's organizational areas, by linking the specific responsibilities and aims of each expenditure category with the needs oF the areas in question\. This approach fragmented the project, thereby hindering its implementation and hampering its effective management\. The main lesson to be drawn from this situation concerns the institutional weakness of the project management unit, which was in danger of losing credibility among other agencies - whether within the Government or the 'World Bank - as regards its management capacity\. This was mainly the result of a misunderstanding of the roles to be played by all the various participants in a negotiation mission\. Wlhen the financial component predominates in project implementation all other aspects are treated as if they were of little importance, and there is no concern about possible overlapping of roles\. Responsibility for the fragmentation of PNE II and the resulting problems must be shared equally by the Bank and the Ministry of Health\. 4\. Project Sustainablity Two issues deserve mention: 1) the sustainability of the services introduced under the Loan Agreement, for which responsibi'lity is shared among the Federal, state and municipal governments according to the financingr policy prevailing in Brazil\. The fiscal impact of the project must be borne by these different levels of government, which must identify additional resources to defray the increase in expeniditure; and 2) given the improvised nature of the project, the Ministry of Health must, through its permanent units, equip itself to act as a rearguard in 3  relation to the demand for specialized supervision in the states, as stipulated in the law governing the SUS\. The ad hoc consultants contracted for project implementation were (as regards the UGP) exclusively involved in activities connected with the project itself\. The same cannot be said of the use of consultants to meet the needs of other areas of the ministry\. Now that the Loan Agreement has closed, other alternatives must be sought to provide these areas with permanent rather than temporary solutions as regards the provision of specialists who can help the other component parts of the SUS to provide quality health services to the people of the Northeast\. 5\. Assessment of Outcomes Impact indicators should have been proposed when the project was prepared and negotiated so as to enable projections to be compared with implementation outcomes\. Some health indicators need time before they can yield valid measurements\. At the start of project implementation the information system was centralized; computerization and direct links with the states only came later, because of the lack of funds within the Ministry of Health and the State Secretariats\. Project funds could not be used for this purpose because Brazilian legislation on the computer sector prevented any importing of equipment and the World Bank did not include this as an eligible expenditure category\. Once the computer industry put aside its reservations, the project information and monitoring system was set up\. Except for data inputting backlogs deriving from the long period of manual operations and the consequent delays in updating the system, the latter met the project's management needs, principally as regards financial controls\. In the other eligible categories, there were some delays in recording achievements in the system, but the data are always available and accessible when needed\. With the updating and monitoring of targets, all kinds of management reports can be obtained with complete reliability\. One of the main problems in keeping the system updated was the lack of monitoring of targets that should have been performed by the states as soon as any given objective was set and/or completed\. Project management units in the states were concerned only about the quality and regularity of financial information, so as to ensure that the disbursement schedule was adhered to\. The need for accurate data for the evaluation now being undertaken by project management has led to the upgrading of the monitoring of targets in all the states\. Although impact indicators were not incorporated in the project (a fairly common failing) there is no doubt that it made a decisive contribution to the improvement in health conditions in the region\. It did this by expanding and enhancing the quality of health care for the most vulnerable groups in the municipalities benefitted, and providing access to the appropriate technologies for combating threats to their health\. Although good financial performance may be a necessary element for a successful project, it cannot by itself be a sufficient one\. An assessment of project performance should seek to reconcile the analysis of expenditure incurred with the degree of achievement of project 4  objectives, so as to guarantee efficient utilization of resources along with effective attainment of the targets set\. The World Bank is in the contradictory position of acting simultaneously as both bank and development agency\. This contradiction originates in the conflict between the need to approve the project and disburse loan proceeds on the one hand, and on the other hand the need to ensure that these proceeds, in the form of investments, work for the greater good of the community\. As soon as the second responsibility proves difficult to fulfill, the first becomes paramount, even though Bank projects earn assured and risk-free returns, and few governments fail to repay such investments on schedule and on the specified terms and conditions\. This was the situation of the Northeast Project and hence perhaps the explanation of some of its problems, which persisted throughout its execution because no politically appropriate solution to them was found\. 6\. Key Lessons Learned To achieve effectiveness, efficiency and rationality in projects financed by external resources, there must be maximum administrative and technical flexibility\. National institutions must be required to give priority to such projects, given their objectives and the commitment charges being paid by the Government\. In addition, the World Bank should act more like a development agency than a bank\. The World Bank's requirements regarding procurement, an area to which a consultant was allocated specifically for the Northleast project, provided a useful example of joint action with the national project\. This consultant was fully versed in Brazilian legislation regulating government procurement and aware of the difficulties some parts of the public administration experience in reconciling these laws and the Bank's guidelines\. His role consisted of providing guidance as necessary on how to overcome these problems and making procedures more flexible, so as to obtain maximum benefit from the time spent on procurement issues, without prejudice to suppliers or to the subprojects\. Since the health sector had no experience of handling this kind of problem, the consultant provided vital support for the training of personnel to advise the decentralized executing agencies, as well as guidance to state law officers\. As a result, the Northeast Project became a benchmark for other projects in this area financed by the Bank\. Bidding documents were approved more rapidly, enabling equipment to be obtained more quickly, especially when the contract required international competitive bidding\. The progress thus achieved allowed the project to make up the time lost when planned acquisitions could not be completed on schedule because of the difficulties mentioned atbove; only when these were overcome did the project really get moving\. Responsibility for imrplementation must be shared between all the signatories of a Loan Agreement\. 5  4B8' P A R A~~ORhESTREI ampo Mai ~ ~ ~ ~ ~ ~ ~ Cmin JA ~~~RESINA~~~ ~G JESQ -12' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~ f~~~, th~~~ -,-i- & th\.~~) ~- _d- -dTmES MARyIfS 1 h i't-) _ f Th\. VVEAdOBR -d th\. Ot-~~~~~~~~~~~~~~~~~-l F-,-~~~~NRTEAT C\.o 200 00 , zTh BRAZI \.-d \. LOMTERb - Bsj-i~ h- - A\. -p d~~~~~~~~~~~~~~~~~~~~ -' wty~~~~~~~~~~~~~~~~ \. U\.~~~~~~~~~ -1 f Th~~~~ REElV B\.HO-id NT

REVIEW

P086361

Document of The World Bank Report No: ICR0000483 IMPLEMENTATION COMPLETION AND RESULTS REPORT (DANI-50356 DFID-50047 DFID-50261 IDA-35110 NETH-50260 SIDA-50357) ON A SERIES OF FIVE CREDITS IN THE TOTAL AMOUNT OF SDR 473\.4 MILLION (US$ 650\.0 MILLION EQUIVALENT) TO THE SOCIALIST REPUBLIC OF VIETNAM FOR A SERIES OF FIVE POVERTY REDUCTION SUPPORT OPERATIONS June 29, 2007 Poverty Reduction and Economic Management Unit Vietnam Country Department East Asia and Pacific Region  CURRENCY EQUIVALENTS Currency unit = Vietnamese Dong (VND) (June 2007) US$ 1\.00 = VND 16,044 1 VND = US$ 0\.000062 GOVERNMENT FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS AAA - Analytical and Advisory Work AECI - Agencia Espanola de Cooperacion International ADB - Asian Development Bank AFD - Agence Francaise de Developpement AFTA - ASEAN Free Trade Area ASEAN - Association of South East Asian Nations AusAID - Australian Agency for International Development BIDV - Bank for Investment and Development of Vietnam BOT - Build-Operate-Transfer CAMEL - Capital Assets Management, Earnings and Liquidity CAS - Country Assistance Strategy CEA - Country Environmental Analysis CEPT - Common Effective Preferential Tariff Scheme CFAA - Country Financial Accountability Assessment CG - Consultative Group CIDA - Canadian International Development Agency CGE - Computable General Equilibrium CPAR - Country Procurement Assessment Review CPIA - Country Policy and Institutional Assessment CPRGS - Comprehensive Poverty Reduction and Growth Strategy CPS - Country Partnership Strategy DA - Deposit Account DAF - Development Assistance Fund DANIDA - Danish International Development Agency DATC - Debts and Assets Trading Company DFID - Department for International Development DONRE - Department of Natural Resources and Environment DSA - Debt Sustainability Assessment EC - European Commission EFA - Education for All EIA - Environmental Impact Assessment FA - Financing Agreement FDI - Foreign Direct Investment FSQL - Fundamental School Quality Level GC - General Corporation GDP - Gross Domestic Product GSO - General Statistics Office HCFP - Health Care Fund for the Poor HCCS - Harmonized Classification and Coding System HI - Health Insurance HIPC - Heavily Indebted Poor Country IAS - International Accounting Standards  ICA - Investment Climate Assessment IL - Inclusion List IOSCO - International Organization of Securities Commissions IPPC - International Plant Protection Convention IPR - Intellectual Property Rights I-PRSP - Interim Poverty Reduction Strategy Paper ISP - Internet Service Provision JBIC - Japan Bank for International Cooperation JSA - Joint-Staff Assessment JSAN - Joint Staff Advisory Note JSB - Joint Stock Bank LRO - Land Registration Office LUC - Land-Use Right Certificate LSDS - Legal System Development Strategy LWU - Loan Work-Out Unit MARD - Ministry of Agriculture and Rural Development MDG - Millennium Development Goals MFNT - Most-Favored Nation Treatment MHB - Mekong Housing Bank MOET - Ministry of Education and Training MOF - Ministry of Finance MOH - Ministry of Health MOHA - Ministry of Home Affairs MOJ - Ministry of Justice MOLISA - Ministry of Labor, Invalids, and Social Affairs MONRE - Ministry of Natural Resources and the Environment MOT - Ministry of Trade MPI - Ministry of Planning and Investment MTEF - Medium-Term Expenditure Framework NDM - Natural Disaster Mitigation NGO - Non-Governmental Organization NPL - Non-Performing Loan NPV - Net Present Value NSC - National Steering Committee NSEP - National Strategy for Environment Protection NSCERD - National Steering Committee for Enterprise Reform and Development NT - National Treatment NTP - National Target Program ODA - Official Development Assistance OOG - Office of Government OSS - One-Stop Shop PAR - Public Administration Reform PCU - Program Coordination Unit PEC - Party's Economic Commission PEFA - Public Expenditure and Financial Accountability PER - Public Expenditure Review PER-IFA - Public Expenditure Review-Integrated Fiduciary Assessment PIP - Public Investment Program PPA - Participatory Poverty Assessment PRGF - Poverty Reduction and Growth Facility PRSP - Poverty Reduction Strategy Paper PRSC - Poverty Reduction Support Credit PWD - People Living with Disabilities QR - Quantitative Restrictions RWS - Rural Water and Sanitary SAV - State Audit of Vietnam  SBD - Standard Bidding Document SBV - State Bank of Vietnam SCIC - State Capital Investment Corporation SDC - Swiss Development Cooperation SEA - Strategic Environment Assessment SEDP - Socio-Economic Development Plan SFE - State Forestry Enterprise SIDA - Swedish International Development Agency SME - Small and Medium Enterprise SOCB - State-Owned Commercial Bank SOE - State-Owned Enterprise SPB - Social Policy Bank SPS - Sanitary and Phyto-Sanitary SSC - State Securities Commission SSN - Social Safety Net TABMIS - Treasury and Budget Management Information System TRIPs - Trade Related Aspects of Intellectual Property TEL - Temporary Exclusion List UNDP - United Nations Development Program USBTA - United States Bilateral Trade Agreement VAS - Vietnamese Accounting Standards VASS - Vietnam Academy of Social Sciences VAT - Value-Added Tax VBARD - Vietnam Bank for Agriculture and Rural Development VBF - Vietnam Business Forum VBSP - Vietnam Bank for Social Policies VCB - Vietnam Commercial Bank VDB - Vietnam Development Bank VDG - Vietnam Development Goals VHLSS - Vietnam Household Living Standards Survey VSI - Vietnam Social Insurance VSS - Vietnam Social Security WBI - World Bank Institute WTO - World Trade Organization Vice President: James W\. Adams, EAPVP Country Director: Laurent Msellati, Acting, EACVF Sector Manager: Deepak Bhattasali, Acting, EASPR Task Team Leader: Martin Rama, EASPR ICR Team Leader: Thang-Long Ton, EASPR  COUNTRY Operation Name CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Program Performance in ISRs H\. Restructuring 1\. Program Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 5 3\. Assessment of Outcomes\. 7 4\. Assessment of Risk to Development Outcome\. 12 5\. Assessment of Bank and Borrower Performance \. 13 6\. Lessons Learned\. 16 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 18 Annex 1 Bank Lending and Implementation Support/Supervision Processes\. 19 Annex 2\. Program Performance\. 22 Annex 3\. Assessment of Development Outcomes\. 29 Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 44 Annex 5\. Donor Support to the PRSC Process\. 47 Annex 6\. List of Supporting Documents \. 51 MAP  A\. Basic Information Program 1 VIETNAM - POVERTY Country Vietnam Program Name REDUC\.SUPPORT CREDIT DANI-50356,DFID- 50047,DFID- Program ID P004850 L/C/TF Number(s) 50261,IDA- 35110,NETH- 50260,SIDA-50357 ICR Date 06/29/2007 ICR Type Core ICR SOC\.REP\. OF Lending Instrument PRC Borrower VIETNAM Original Total XDR 197\.2M Disbursed Amount XDR 197\.2M Commitment Implementing Agencies State Bank of Vietnam Cofinanciers and Other External Partners UK Department for International Development (DFID) Government of Netherlands DANIDA Program 2 Poverty Reduction Country Vietnam Program Name Support Credit II DANI-53001,DFID- Program ID P075398 L/C/TF Number(s) 52910,IDA- 38040,NETH-53000 ICR Date 06/29/2007 ICR Type Core ICR GOVERNMENT OF Lending Instrument PRC Borrower VIETNAM Original Total XDR 72\.6M Disbursed Amount XDR 72\.6M Commitment Implementing Agencies State Bank of Vietnam Cofinanciers and Other External Partners UK Department for International Development (DFID) Government of Netherlands DANIDA Program 3 Country Vietnam Program Name Poverty Reduction i  Support Credit III CIDA-54851,DANI- 54387,DFID- 53562,DFID- Program ID P082759 L/C/TF Number(s) 54204,EECT- 54386,IDA- 39340,NETH-54388 ICR Date 06/29/2007 ICR Type Core ICR GOVERNMENT OF Lending Instrument PRC Borrower VIETNAM Original Total XDR 69\.0M Disbursed Amount XDR 69\.0M Commitment Implementing Agencies State Bank of Vietnam Cofinanciers and Other External Partners Asian Development Bank (ADB) European Commission Japan Bank for International Cooperation (JBIC) UK Department for International Development (DFID) Government of Netherlands DANIDA Canadian International Development Agency (CIDA) Program 4 Poverty Reduction Country Vietnam Program Name Strategy Credit IV CIDA-56341,DANI- 56181,DFID- 56378,EECT- Program ID P086360 L/C/TF Number(s) 56182,GIRR- 56183,IDA- 40910,NETH-56184 ICR Date 06/29/2007 ICR Type Core ICR THE GOVERNMENT Lending Instrument DPL Borrower OF VIETNAM Original Total XDR 66\.2M Disbursed Amount XDR 66\.2M Commitment Implementing Agencies State Bank of Vietnam Cofinanciers and Other External Partners Asian Development Bank (ADB) European Commission Japan Bank for International Cooperation (JBIC) ii  UK Department for International Development (DFID) Government of Netherlands DANIDA Canadian International Development Agency (CIDA) Program 5 Vietnam - Poverty Country Vietnam Program Name Reduction Support Credit V CIDA-57679,DANI- 57680,DFID- Program ID P086361 L/C/TF Number(s) 57681,GIRR- 57682,IDA- 42020,NETH-57540 ICR Date 06/29/2007 ICR Type Core ICR THE GOVERNMENT Lending Instrument DPL Borrower OF VIETNAM Original Total XDR 68\.4M Disbursed Amount XDR 68\.4M Commitment Implementing Agencies The State Bank of Vietnam Cofinanciers and Other External Partners Asian Development Bank (ADB) Australian Agency for International Develoopment (AusAID) European Commission Japan Bank for International Cooperation (JBIC) UK Department for International Development (DFID) Government of Netherlands DANIDA Canadian International Development Agency (CIDA) Kreditanstalt fur Wiederaufbau B\. Key Dates VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 03/05/1997 Effectiveness: 10/03/2001 10/03/2001 Appraisal: 01/08/2001 Restructuring(s): Approval: 06/05/2001 Mid-term Review: Closing: 12/31/2002 12/31/2002 iii  Poverty Reduction Support Credit II - P075398 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 03/06/2003 Effectiveness: 12/05/2003 12/05/2003 Appraisal: 05/14/2003 Restructuring(s): Approval: 06/24/2003 Mid-term Review: Closing: 12/31/2003 12/31/2003 Poverty Reduction Support Credit III - P082759 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 04/28/2004 Effectiveness: 10/06/2004 10/06/2004 Appraisal: 05/19/2004 Restructuring(s): Approval: 06/22/2004 Mid-term Review: Closing: 12/31/2004 12/31/2004 Poverty Reduction Strategy Credit IV - P086360 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 03/10/2005 Effectiveness: 11/25/2005 11/25/2005 Appraisal: 05/16/2005 Restructuring(s): Approval: 06/30/2005 Mid-term Review: Closing: 12/31/2005 12/31/2005 Vietnam - Poverty Reduction Support Credit V - P086361 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 03/01/2006 Effectiveness: 11/14/2006 11/14/2006 Appraisal: 05/05/2006 Restructuring(s): Approval: 06/22/2006 Mid-term Review: Closing: 12/31/2006 12/31/2006 C\. Ratings Summary C\.1 Performance Rating by ICR VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Outcomes Satisfactory Risk to Development Outcome Moderate Bank Performance Satisfactory Borrower Performance Satisfactory iv  Poverty Reduction Support Credit II - P075398 Outcomes Satisfactory Risk to Development Outcome Low or Negligible Bank Performance Satisfactory Borrower Performance Satisfactory Poverty Reduction Support Credit III - P082759 Outcomes Satisfactory Risk to Development Outcome Low or Negligible Bank Performance Satisfactory Borrower Performance Satisfactory Poverty Reduction Strategy Credit IV - P086360 Outcomes Satisfactory Risk to Development Outcome Low or Negligible Bank Performance Satisfactory Borrower Performance Satisfactory Vietnam - Poverty Reduction Support Credit V - P086361 Outcomes Satisfactory Risk to Development Outcome Low or Negligible Bank Performance Satisfactory Borrower Performance Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Overall Borrower Performance Satisfactory Performance Satisfactory Poverty Reduction Support Credit II - P075398 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Satisfactory Overall Borrower Satisfactory v  Performance Performance Poverty Reduction Support Credit III - P082759 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Overall Borrower Performance Satisfactory Performance Satisfactory Poverty Reduction Strategy Credit IV - P086360 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Overall Borrower Performance Satisfactory Performance Satisfactory Vietnam - Poverty Reduction Support Credit V - P086361 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Overall Borrower Performance Satisfactory Performance Satisfactory C\.3 Quality at Entry and Implementation Performance Indicators VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Program at any time No Quality at Entry None (Yes/No): (QEA) Problem Program at any Quality of time (Yes/No): No Supervision (QSA) None DO rating before Closing/Inactive status vi  Poverty Reduction Support Credit II - P075398 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Program at any time No Quality at Entry Satisfactory (Yes/No): (QEA) Problem Program at any Quality of time (Yes/No): No Supervision (QSA) None DO rating before Closing/Inactive status Poverty Reduction Support Credit III - P082759 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Program at any time No Quality at Entry None (Yes/No): (QEA) Problem Program at any Quality of time (Yes/No): No Supervision (QSA) None DO rating before Closing/Inactive status Poverty Reduction Strategy Credit IV - P086360 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Program at any time No Quality at Entry None (Yes/No): (QEA) Problem Program at any Quality of time (Yes/No): No Supervision (QSA) None DO rating before Closing/Inactive status Vietnam - Poverty Reduction Support Credit V - P086361 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Program at any time No Quality at Entry None (Yes/No): (QEA) Problem Program at any Quality of time (Yes/No): No Supervision (QSA) None DO rating before Closing/Inactive status Satisfactory vii  D\. Sector and Theme Codes VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Original Actual Sector Code (as % of total Bank financing) Banking 32 40 Central government administration 32 General energy sector 5 General industry and trade sector 26 40 General information and communications sector 5 General public administration sector 20 Theme Code (Primary/Secondary) Regulation and competition policy Secondary Secondary Social safety nets Secondary Secondary Standards and financial reporting Secondary Secondary State enterprise/bank restructuring and privatization Primary Primary Trade facilitation and market access Secondary Secondary Poverty Reduction Support Credit II - P075398 Original Actual Sector Code (as % of total Bank financing) Banking 20 20 General education sector 15 15 General industry and trade sector 20 20 General public administration sector 30 30 Health 15 15 Theme Code (Primary/Secondary) Education for all Secondary Secondary Poverty strategy, analysis and monitoring Primary Primary Public expenditure, financial management and Primary Primary procurement State enterprise/bank restructuring and privatization Primary Primary Trade facilitation and market access Secondary Secondary viii  Poverty Reduction Support Credit III - P082759 Original Actual Sector Code (as % of total Bank financing) General agriculture, fishing and forestry sector 10 10 General education sector 10 10 General finance sector 20 20 General public administration sector 50 50 Health 10 10 Theme Code (Primary/Secondary) Education for all Secondary Secondary Export development and competitiveness Secondary Secondary Public expenditure, financial management and Primary Primary procurement Regulation and competition policy Primary Primary State enterprise/bank restructuring and privatization Primary Primary Poverty Reduction Strategy Credit IV - P086360 Original Actual Sector Code (as % of total Bank financing) General agriculture, fishing and forestry sector 10 10 General education sector 10 10 General finance sector 20 20 General public administration sector 50 50 Health 10 10 Theme Code (Primary/Secondary) Education for all Secondary Secondary Export development and competitiveness Secondary Secondary Public expenditure, financial management and Primary Primary procurement Regulation and competition policy Primary Primary State enterprise/bank restructuring and privatization Primary Primary Vietnam - Poverty Reduction Support Credit V - P086361 Original Actual Sector Code (as % of total Bank financing) General agriculture, fishing and forestry sector 10 10 ix  General education sector 10 10 General finance sector 20 20 General public administration sector 50 50 Health 10 10 Theme Code (Primary/Secondary) Education for all Secondary Secondary Export development and competitiveness Secondary Secondary Public expenditure, financial management and Primary Primary procurement Regulation and competition policy Primary Primary State enterprise/bank restructuring and privatization Primary Primary E\. Bank Staff VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Laurent Msellati Andrew D\. Steer Sector Manager: Indermit S\. Gill Homi Kharas Task Team Leader: Vivek Suri Kazi Mahbub-Al Matin ICR Team Leader: Thang-Long Ton ICR Primary Author: Thang-Long Ton Poverty Reduction Support Credit II - P075398 Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Laurent Msellati Klaus Rohland Sector Manager: Indermit S\. Gill Homi Kharas Task Team Leader: Vivek Suri Martin G\. Rama ICR Team Leader: Thang-Long Ton ICR Primary Author: Thang-Long Ton x  Poverty Reduction Support Credit III - P082759 Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Laurent Msellati Klaus Rohland Sector Manager: Indermit S\. Gill Homi Kharas Task Team Leader: Vivek Suri Martin G\. Rama ICR Team Leader: Thang-Long Ton ICR Primary Author: Thang-Long Ton Poverty Reduction Strategy Credit IV - P086360 Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Laurent Msellati Klaus Rohland Sector Manager: Indermit S\. Gill Homi Kharas Task Team Leader: Vivek Suri Martin G\. Rama ICR Team Leader: Thang-Long Ton ICR Primary Author: Thang-Long Ton Vietnam - Poverty Reduction Support Credit V - P086361 Positions At ICR At Approval Vice President: James W\. Adams Jeffrey S\. Gutman Country Director: Laurent Msellati Klaus Rohland Sector Manager: Indermit S\. Gill Homi Kharas Task Team Leader: Vivek Suri Vivek Suri ICR Team Leader: Thang-Long Ton ICR Primary Author: Thang-Long Ton F\. Results Framework Analysis Program Development Objectives (from Program Document) The objectives of PRSC 1 were: i) Improving the climate for the private sector, thereby generating jobs and higher wages ii) Reforming State enterprises to improve efficiency and free up fiscal resources for poverty reduction program iii) Restructuring the banking system to reduce the risk of financial crisis, which could otherwise undermine poverty reduction efforts iv) Integrating with the world economy to expand labor-intensive exports xi  v) Improving public expenditure management Revised Program Development Objectives (as approved by original approving authority) The scope of PRSCs 2-5 was wider than PRSC 1, being aligned to the government's Comprehensive Poverty Reduction and Growth Strategy which was approved in 2002 and expanded in 2003 to cover infrastructure\. The objectives of PRSC 2-5 were aligned closely to the three pillars of the CPRGS namely: (i) completing the transition to a market economy, including through actions to further international integration, strengthen the equitization process for SOEs, accelerating banking reform and improving the investment climate; (ii) ensuring social inclusion and sustainable development through actions to improve the financing of healthcare for the poor, quality of education for disadvantaged groups, as well as adoption of tools to promote environmental protection; and (iii) building modern governance, through focusing on development outcomes, strengthening the transparency and management of public finances, simplifying procedures for obtaining public services, and fighting corruption\. The original objectives of PRSC 1 were thus mainly subsumed under Pillar I, and also under Pillar III (a) PDO Indicator(s) VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Original Target Formally Actual Value Indicator Baseline Values (from Revised Achieved at Value approval Target Completion or documents) Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) xii  Poverty Reduction Support Credit II - P075398 Original Target Formally Actual Value Indicator Baseline Values (from Revised Achieved at Value approval Target Completion or documents) Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) Poverty Reduction Support Credit III - P082759 Original Target Formally Actual Value Indicator Baseline Values (from Revised Achieved at Value approval Target Completion or documents) Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) Poverty Reduction Strategy Credit IV - P086360 Original Target Formally Actual Value Indicator Baseline Values (from Revised Achieved at Value approval Target Completion or documents) Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) xiii  Vietnam - Poverty Reduction Support Credit V - P086361 Original Target Formally Actual Value Indicator Baseline Values (from Revised Achieved at Value approval Target Completion or documents) Values Target Years Indicator 1 : Please see Annex 3 in main document\. Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) (b) Intermediate Outcome Indicator(s) VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) Poverty Reduction Support Credit II - P075398 Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) xiv  Poverty Reduction Support Credit III - P082759 Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) Poverty Reduction Strategy Credit IV - P086360 Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Please see Annex 3 in main document Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) Vietnam - Poverty Reduction Support Credit V - P086361 Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Please see Annex 3 in main document\. Value (quantitative or Qualitative) Date achieved Comments (incl\. % achievement) G\. Ratings of Program Performance in ISRs VIETNAM - POVERTY REDUC\.SUPPORT CREDIT - P004850 Actual No\. Date ISR Archived DO IP Disbursements (USD millions) xv  1 12/20/2001 Satisfactory Satisfactory 100\.64 2 06/20/2002 Satisfactory Satisfactory 100\.64 3 06/27/2002 Satisfactory Satisfactory 100\.64 4 12/05/2002 Satisfactory Satisfactory 100\.64 Poverty Reduction Support Credit II - P075398 Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 06/30/2003 Satisfactory Satisfactory 0\.00 2 11/14/2003 Satisfactory Satisfactory 0\.00 Poverty Reduction Support Credit III - P082759 Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 06/30/2004 Satisfactory Satisfactory 0\.00 Poverty Reduction Strategy Credit IV - P086360 Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 03/22/2006 Satisfactory Satisfactory 94\.78 Vietnam - Poverty Reduction Support Credit V - P086361 Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 11/07/2006 Satisfactory Satisfactory 0\.00 H\. Restructuring (if any) xvi  1\. Program Context, Development Objectives and Design 1\.1 Context at Appraisal Vietnam has been on a sustained path of economic reform since the launching of Doi Moi (renovation) process in 1986\. The overall tenet has been an increased reliance on market mechanisms, while paying respects to the socialist principle\. The latter can be interpreted as care for social inclusion and equity while maintaining and protecting a leading role for the state and the party\. In practice, the process has involved a systematic piloting of reforms, followed by some forms of evaluation with an effort to forge consensus among relevant stakeholders, and finally the scaling up of reportedly successful initiatives\. With this approach, reform progress had its stops and starts, depending on where the country is in this process: it was moving rapidly in the early 1990s, slowed down in the late 1990s, then the pace picked up again in the early 2000s\. Taken together however, for the past two decades, initial comprehensive economic policy correction of past inappropriate policies unleashed rapid and pent-up growth in the economy and subsequent policy measures established and consolidate remarkable progress and achievement on development outcomes\. Vietnam has been among the fastest-growing economies in the world\. GDP per capita has increased at roughly 6\.9 percent per year in real terms\. Vietnam has made great strides in its external sector with exports gaining in value, volume, and diversity within a short period of time, bringing the country from a rice-deficit status to that of the third largest rice exporter\. Given the very low level of domestic prices at the inception of the reform process, and the subsequent appreciation as the economy develops, the average growth rate of per capita GDP measured in dollar terms has been well into two-digit figures\. With an initial agriculture-based reform and a resulting rapid economic transformation, there has been a relative stability of inequality indicators\. They probably reflect the dire needs of the country in the initial phases of economic transition to staunch the serious food shortages due to agricultural collectivization and inter-provincial bans in commerce\. The return of agricultural land to individual households, the dismantling of collectives and price controls, and the lifting of trade bans and subsequent liberalization of trade in agricultural products contributed to the rebound of the economy and improvement in the living standards of the population at large, especially in the country side\. Based on a consumption basket of food and non-food items sustaining an intake of 2,100 calories per person per day, the poverty headcount declined from 58 percent in 1993 to less than 20 percent in 2004\. Other social indicators, including child mortality, have shown equally remarkable improvements\. There was a considerable acceleration of reforms in 2001, justifying the first series of PRSCs from the Bank, and then again in 2006\. The former was marked with the approval of an enterprise law to facilitate business registration and operations, the signing of a bilateral trade agreement with the United States that strengthened global integration and resulted in important legal improvements, the adoption of the first serious steps 1  towards SOE divestiture and the strengthening of public financial management\. The latter culminated in the country's accession to the World Trade Organization (WTO), the adoption of an ambitious banking reform roadmap, a new resolve to equitize large SOEs and transfer the exercise of state ownership rights out of line ministries and provincial governments, the drive towards introducing universal programs for social protection, and the adoption of a determined anti-corruption drive\. There is little dissent regarding the direction for economic reforms, and internal debates are increasingly focusing on strengthening the mechanisms for citizen's feedback and government accountability\. The Bank marked its involvement with the country's reforms and changes in the early 1990s, as the doi moi policy was implemented with projects in infrastructure and social sectors (education)\. The first Structural Adjustment Credit was signed in October 1994\. This was followed by the series of PRSCs with the first one approved by the Board in 2001 and the fifth one completed in 2006, ending the first PRSC series of operations in support of Vietnam's structural development and sustained economic growth\. 1\.2 Original Program Development Objectives (PDO) and Key Indicators The PRSC 1 was originally planned as the second Structural Adjustment Credit (SAC 2), an integral part of a package of programmatic SACs designed to help the Vietnamese government to carry out its structural reform program as was reaffirmed in the CAS Progress Report of May 2000\. The planned second SAC eventually took the form of a PRSC during the transition to the new lending instrument\. PRSC 1 was envisioned as the first of a series of three PRSCs for Vietnam for up to US$450-550 million, over four years\. It focused on structural reform issues and on public expenditure management, primarily because incomplete structural reforms were seen as the most important impediment to poverty reduction in Vietnam at that time\. As a full PRSP was not available, PRSC 1 was based on an I-PRSP\. It was, however, expected that under a full PRSP and a new CAS, the focus of PRSCs would expand to social sectors and governance in subsequent operations\. PRSC 1 came at a crucial time for Vietnam as it sought to reinvigorate its development efforts after three years of slower growth (compared with the previous decade)\. The slower progress of these three years was due to an inadequate policy and institutional framework as well as to the regional financial crisis\. The objectives of PRSC 1 were: Improving the climate for the private sector, thereby generating jobs and higher wages Reforming State enterprises to improve efficiency and free up fiscal resources for poverty reduction program Restructuring the banking system to reduce the risk of financial crisis, which could otherwise undermine poverty reduction efforts Integrating with the world economy to expand labor-intensive exports Improving public expenditure management 2  1\.3 Revised PDO and Key Indicators, and Reasons/Justification The CPRGS provided a blueprint for Vietnam's development over the period 2002-2005 and served as the basis for the subsequent PRSCs 2-5\. The CPRGS, approved by the Prime Minister of Vietnam in May, 2002, translated the vision laid out in the Ten- Year Strategy for 2001-2010 into concrete public actions\. The Ten-Year Strategy envisions a path of transition towards a "market-economy with socialist orientation"\. The CPRGS built on this foundation\. The CPRGS represented a sharp improvement from earlier planning documents based on a "command and control" view of the economy\. Rather than spelling out detailed sector-by-sector production targets, the CPRGS focused on development outcomes such as poverty reduction and the Vietnam Development Goals (a localized version of the MDGs)\. Empirical evidence and a broad consultation process were used to identify the policies best suited to attaining those development outcomes\. Efforts were also made to "cost" these policies and to align resources towards their attainment\. A set of monitoring indicators was developed to monitor progress in implementation\. In 2003 the CPRGS was "expanded", with a new chapter providing a thorough discussion of the role of infrastructure in promoting economic and social development\. The inclusion of this chapter filled what the Government perceived as an important gap in the original CPRGS\. The objectives of PRSC 2-5 were aligned closely to the three pillars of the CPRGS namely: (i) completing the transition to a market economy, including through actions to further international integration, strengthen the equitization process for SOEs, accelerating banking reform and improving the investment climate; (ii) ensuring social inclusion and sustainable development through actions to improve the financing of healthcare for the poor, quality of education for disadvantaged groups, as well as adoption of tools to promote environmental protection; and (iii) building modern governance, through focusing on development outcomes, strengthening the transparency and management of public finances, simplifying procedures for obtaining public services, and fighting corruption\. The CPRGS pillars were not self-standing but rather connected through cross- cutting themes such as employment generation for poverty reduction and the link between public financial management and effective delivery of social services to the poor\. Other important policy developments have influenced this reform agenda recently\. By mid-2003 the government decided to aim for a rapid accession to the WTO, and in late 2003, a new anti-corruption strategy started to emerge, with the emphasis shifting from punitive measures to increased transparency and the strengthening of the systems through which the government operates\. 3  1\.4 Original Policy Areas Supported by the Program: PRSC 1 focused on the areas of global integration and trade policy, private sector development, financial sector reform, state enterprises reform, including their equitization, and public financial management 1\.5 Revised Policy Areas Subsequent PRSCs widened the coverage of policy areas in line with the three pillars of the CPRGS\. In Pillar I, policy actions were included in the infrastructure sector in addition to the sectors covered under PRSC 1\. Pillar II actions covered human development (education, health, social protection), and natural resources management (land, forest, water, and environment)\. Pillar III actions went beyond public financial management to include, modernization of planning, public administration reform, legal development, and anticorruption efforts\. 1\.6 Other significant changes In addition to providing resources to the budget, PRSC operations have served as an effective coordination device between the government and a large number of donors, which marked the most significant change in the PRSC series\. PRSC operations have been co-financed by several bilateral and multilateral agencies, either through grants or through parallel lending\. More importantly, the process saw a transition in the role of co- financiers, from providers of finance to partners substantially engaged in the preparation of the operations and the policy dialogue with government\. This dialogue is organized by policy areas, in which donors engage selectively, based on their interests and technical capacity on the ground\. The number of donors participating in this process has increased from four in PRSC 1 to seven in PRSC 3 to 11 in PRSC 5\. All donors who seriously consider the possibility to partner up in this process are invited to participate in the preparation of PRSC operations, even if they cannot commit to co-finance them in the short term\. Nineteen of them have actively contributed to the preparation of the five operations\. The implementation of Vietnam's ambitious reform agenda was initially supported by the International Monetary Fund (IMF) as well, through a Poverty Reduction and Growth Facility (PRGF) credit approved at the same time as PRSC 1\. However, PRGF disbursements were suspended at the end of 2002 due to a disagreement between the IMF and the government on the auditing of the SBV\. The PRGF credit expired in April, 2004\. The IMF has remained engaged in several policy areas, and especially in the monitoring of macroeconomic policies\. In the absence of an active PRGF, the IMF has provided an assessment of the macroeconomic framework as part of the preparation of each of the PRSC operations\. 4  2\. Key Factors Affecting Implementation and Outcomes 2\.1 Program Performance The policy actions supported under the PRSC series were predominantly "prior actions" in the sense that they were successfully accomplished prior to the Board date\. As such, they were included in the matrix of policy actions presented to the Board only after their satisfactory completion\. PRSC 1 was the only operation in the series where tranche release conditions were specified\. A waiver for tranche release was required for only one of 12 actions\. Effectiveness conditions were specified in the case of PRSC 2 and these were accomplished on time\. No effectiveness conditions were specified for any of the other operations\. The list of actions completed under the series is presented in Annex 2\. 2\.2 Major Factors Affecting Implementation: The reform program supported by the PRSC series sought to maintain the momentum built up by the government's own blueprint for reform, the CPRGS\. Most of the measures supported by the PRSC series were within the government control and directly monitored by the PRSC Steering Committee under the Prime Minister's direction\. As the program was strongly owned by the government and widely supported by the stakeholders with increasingly strong participation by all ministries and agencies concerned, fulfillment of the committed actions was effectively carried out\. The identification, design, and implementation of policy actions, was smoother in areas where a strong body of analytical work was available\. Areas where problems were encountered included those where there were institutional conflicts or overlaps among government ministries or agencies (e\.g\., water)\. On the donors' side, the existence of multiple "partnership groups" in certain areas was a factor that tended to fragment the policy dialogue\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: The SBV was the principal implementing agency for the PRSC series, chairing the Secretariat which oversaw the day-to-day implementation of the program\. Its experience was built up gradually with each successfully completed PRSC\. SBV's `learning by doing' led to improved coordination with the key ministries and agencies, especially the ministries of Finance, Planning and Investment, and Trade\. Progress under the PRSC process can be measured against the specific development objectives spelled out in the CPRGS and other plans and strategies of the government\. Unfortunately, a comprehensive system of indicators to monitor and evaluate the impact of economic reforms was not yet in place at the beginning of the PRSC process\. The focus varied across government plans and strategies, and the definition of goals and targets was not always precise, or totally pertinent\. This is not surprising as at that time the "command and control" view of the economy was more entrenched, and the statistical system was only starting to develop\. In spite of these limitations, based on the CPRGS and other planning documents of the government it was possible to assemble a set of 5  development objectives covering the three main areas of the reform program\. In practice, these indicators were compiled gradually, as the scope of PRSCs expanded to cover an ever-increasing number of policy areas\. Because of the five-year planning cycle of Vietnam, most of those objectives were spelled out for end-2006\. Progress against each outcome is given one of the following ratings: Highly Satisfactory (HS), Satisfactory (S), Partially Satisfactory (PS) or Unsatisfactory (U)\. The rating utilizes the latest available data to assess the progress to date\. And based on recent trends, it also includes a judgment as to the outcome expected by end-2006\. For those development outcomes where a quantitative target had been specified, a rating of HS reflects meeting or surpassing the target\. On the other hand no improvement or backsliding would have resulted in a U rating\. The intermediate ratings of PS and S do reflect a level of judgment about associated policies, exogenous constraints, and sustainability of the progress achieved\. 2\.4 Expected Next Phase/Follow-up Operation: The Bank has already initiated the next phase of the PRSC series, beginning with the Sixth PRSC which was presented to the Board on June 21, 2007\. It is anticipated that the new series will also span five operations (PRSC 6-10)\. These will, in line with the CPS, be designed to support Vietnam's new SEDP (2006-10)\. The new SEDP embodies the CPRGS principles: unlike earlier five year plans it is based on broad based consultations, and also includes a monitoring framework\. In the SEDP, the government sets out intended actions that fall broadly into four main areas: (a) the promotion of growth and transition to a market economy; (b) reducing poverty and ensuring social inclusion; (c) managing the environment and natural resources in a sustainable manner; and, (d) building institutions that can support the strategy\. The first three pillars are explicitly listed in the SEDP, whereas the fourth one is viewed as the foundation to make progress on the other three\. The fourth pillar is discussed in the SEDP in terms of the institutions needed to support a modern market economy with a socialist orientation, and it also forms part of the monitoring and evaluation framework\. Taken together, intended actions under these four pillars can pave the way for Vietnam to become a middle-income country by the end of the period\. It is anticipated that the next cycle of PRSCs will support actions to complete the transition to a market economy\. Vietnam has made a large number of commitments in the context of WTO membership which will have to be carried out in the next several years: These areas include the ambitious banking reform road map; the management of the SOE sector in a global context; the enormous infrastructure needs with demands for an effective regulation of access to networks and pricing of services; incentives for the private sector participation through transparent rules and regulations\. On the social front, the country will require support to address the needs for targeted poverty reduction, especially for the ethnic monitories in remote areas; to better manage migration (urban- rural); and build a modern social protection system\. 6  3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation The CAS for the period 2003-06 was built around the three pillars of the CPRGS\. The PRSC series was identified by the CAS as a key financing instrument for the period and was designed to be a series of one tranche operations to support the CPRGS\. With the expansion of the CPRGS to incorporate infrastructure development, the CAS update included support for this sector as well\. As noted, the PRSCs were also broadened to support policy actions in the infrastructure sector\. The objectives supported by the CAS and the PRSC series continued to be highly relevant to the country's priorities\. 3\.2 Achievement of Program Development Objectives Progress under the PRSC 1-5 series has been strong with firm commitments to reforms from the country's leadership, though with different implementation speeds and somewhat uneven achievements of the program development objectives across policy areas\. Annex presents the details on the achievements by policy area\. Given the comprehensive nature of Vietnam's reform agenda some areas are bound to register faster progress than others\. The assessment is also affected by differences in the quality and frequency of the available indicators\. However, substantive progress has occurred in the structural, the social and the governance pillars of the reform agenda, making it difficult to identify any of them as a systematic laggard\. The speed at which progress is made towards the attainment development outcomes within each of these pillars crucially depends on the political will to implement the reforms and the government's implementation capacity in terms of human resources through learning by doing\. The solid performance of Vietnam in terms of economic growth, poverty reduction and the attainment of other development objectives, suggests that the policy actions supported through the PRSC process so far have been effective\. Rapid economic development is taking place, and is accompanied by reforms which will contribute to sustain it over time\. The annual growth rate of GDP increased by almost two percentage points between the beginning and the end of the five-year period covered by this PRSC cycle\. Growth is leading to higher government revenues, which are in turn being used to provide social services and assist laggard areas\. Poverty reduction could have been expected to slow down after the easier gains had been made, but it actually accelerated in the second half of this period\. Moreover, these impressive gains appear to be sustainable\. A current account deficit emerged, but it was financed mainly through ODA and FDI\. Inequality in expenditures has increased only modestly\. While environmental degradation is a concern, sound policies are being put in place to manage natural resources and control pollution\. The fiduciary environment is improving and a program is in place to bring it up to international standards\. A strong governance agenda is leading to better planning processes, more transparent public financial management, a simplification of administrative procedures and, for the first time, a clear strategy in the fight against corruption\. In most of these areas, important challenges remain\. But it is difficult to claim that Vietnam's progress is "borrowed" on its future\. 7  While it is difficult to attribute success in the attainment of specific development outcomes to particular policy actions under the PRSC process, the latter is likely making an important contribution\. A truly rigorous impact evaluation analysis cannot be conducted in circumstances where no obvious counter-factual exists\. While it is possible to describe what happened in Vietnam during this period, assessments of what would have happened in the absence of the policy actions supported through the PRSC process are to some extent hypothetical\. However, an independent evaluation of budget support operations in seven countries, conducted by a team at the University of Birmingham, was very positive in Vietnam's case\. And a closer look at the mechanisms through which economic growth and poverty reduction took place during this period suggests that those actions did play an important role in practice\. The evidence is especially compelling in relation to poverty reduction\. Policy actions under the PRSC process contributed to the generalization of market mechanisms, a massive creation of wage employment and a strengthened delivery of public services\. These have been identified as the main drivers of poverty reduction in Vietnam\. Most of the poor live in rural areas\. The distribution of farm land to rural households, in the early 1990s, combined with stronger incentives for the commercialization of agricultural products, rapidly raised incomes among the poor\. While only 48 percent of the output by household farms was sold to the market in 1998, the fraction had increased to 70 percent in 2002\. Integration with the world economy, the development of banking credit, and the declining role of SOEs contributed to this trend\. The move from farming and self-employment to wage employment represented another major contribution to household incomes\. Wage employment increased from 21 percent of total employment in 1998 to 32 percent in 2004\. A more conducive environment for the creation and formalization of domestic private enterprises and the attraction of massive FDI inflows have made it possible to create jobs in a large scale and absorb large number of entrants into the labor market\. Service delivery has also contributed to better health and education outcomes, while local infrastructure has developed rapidly\. By 2004, 93 percent of the population had access to electricity, compared to 77 percent in 1998\. These outcomes have been made possible through sustained investment programs and increasingly effective inter-government transfer mechanisms favoring the poorest provinces\. The PRSC process has had a direct influence on the adoption of policy actions conducive to higher economic growth and poverty reduction, rather than simply rewarding policies that would have been adopted anyway\. While PRSCs have involved little conditionality, and only in the initial stages, it can be argued that the process followed to support their preparation has contributed to the quality of economic policies\. There has been agreement among donors that this dialogue should focus on government actions meeting four criteria: they have to be part of nationally-owned strategies and plans, including CPRGS; they have to be grounded on solid economic analysis; they have to be strategic in importance; and they have to be defined in an unambiguous way\. This focus has allowed to prioritize and to sequence the wide range of policy initiatives considered in Vietnamese development strategies and plans\. The tight deadlines resulting from the annual cycle for the delivery of PRSCs have also established an incentive to complete the key policy actions in time\. The discussion of those actions with the relevant 8  line ministries and government agencies has also nurtured a more systematic exchange of draft documents for consultation and comments, and fostered a increased openness in the policy making process\. 3\.3 Justification of Overall Outcome Rating Ratings: Satisfactory As Annex 3 shows, progress on the bulk of the individual development outcomes is rated satisfactory\. Of the fifty indicators assessed, 7 are highly satisfactory, 34 are satisfactory, and 9 are partially satisfactory\. There was no indicator against which progress was unsatisfactory\. 3\.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts Broad-based growth has been accompanied by a continuation of Vietnam's remarkable record in poverty reduction\. Data collected through the Vietnam Household Living Standard Survey (VHLSS) shows that general poverty rate has fallen from 58\.1 percent in 1993 to 19\.5 percent in 2004, implying an average decline of 3\.5 percentage points per year (Table 2)\. The proportion of poor people now is just above one-third of what it was 11 years ago\. Measures used to track inequality suggest that there has been only a modest increase in inequality over time\. The Gini index stands now at 0\.37, compared to 0\.34 in 1993, 0\.35 in 1998 and 0\.37 in 2002\. Admittedly, the Gini index is not very sensitive to substantive increases in income or expenditures at the very top of the distribution, and this is a relatively visible trend in Vietnam\. However, the ratio of per capita expenditures between the richest and the poorest quintile has not increased dramatically\. This ratio stands at 6\.27 in 2004, compared to 4\.97 in 1993, 5\.49 in 1998 and 6\.03 in 2002\. This inclusive growth pattern explains the unusual speed at which Vietnam has managed to reduce poverty\. Vietnam recorded significant achievements in poverty reduction, with no other country registering faster progress\. 1 Based on the one-PPP-dollar per-day measure, between 1990 and 2004 the percentage of the population living in poverty fell by roughly 3 percentage points per year, twice the rate of China\. Moreover, in Vietnam's case the trend is confirmed when using a comparable poverty line, related to the consumption bundle (including food and non-food items) necessary to secure a daily food intake of 2,100 calories per person per day\. 2 1 Admittedly, poverty comparisons across countries raise important methodological difficulties, stemming from the fact that both the structure of consumption bundles and the prices of goods and services differ considerably from one place to another\. One usual shortcut is to set the poverty line at some intuitively appealing level, such as one PPP dollar per day\. 2 While the rapid decrease in poverty is considered a hallmark in the Vietnam's development experience, it should be noted that this decline was initially a result of the correction of inappropriate policies in the 1970s and 1980s, including agricultural collectivization, industrial nationalization, and bans in commerce, leading to famine and drastic drops in the standard of living nation-wide\. 9  As the poverty rate declines, reducing it further becomes more difficult, so that a gradual deceleration of the process could be expected\. However, after a slowdown between 1998 and 2002, the pace at which Vietnam is reducing poverty picked up again\. TRENDS IN POVERTY Poverty headcount 1993 1998 2002 2004 North East 86\.1 62\.0 38\.4 29\.4 North West 81\.0 73\.4 68\.0 58\.6 Red River delta 62\.7 29\.3 22\.4 12\.1 North Central coast 74\.5 48\.1 43\.9 31\.9 South Central coast 47\.2 34\.5 25\.2 19\.0 Central Highlands 70\.0 52\.4 51\.8 33\.1 South East 37\.0 12\.2 10\.6 5\.4 Mekong delta 47\.1 36\.9 23\.4 15\.9 Kinh and Chinese population 53\.9 31\.1 23\.1 13\.5 Ethnic minorities 86\.4 75\.2 69\.3 60\.7 All of Vietnam 58\.1 37\.4 28\.9 19\.5 All of Vietnam (food poverty) 24\.9 15\.0 10\.9 7\.4 Note: GSO and World Bank staff estimates\. The poverty headcount indicates the percentage of the population with expenditures below the food and non-food consumption bundle needed to sustain an intake of 2100 calories per person per day\. The food poverty rate refers to expenditures below the value of the food component of that bundle\. This acceleration could to some extent have been amplified by a quirk of the data\. The 2002 household expenditure survey was much larger in scale than previous ones, and was conducted with less supervision and training of enumerators\. And in any event, the 3 apparent acceleration in poverty reduction is consistent with other developments during the period\. Output grew faster, the prices of commodities which are essential to sustain farmers' livelihoods (such as coffee and rice) increased, and the volume of resources transferred to poorer provinces in the context of decentralization expanded\. 3 While the 2004 survey was already of a better quality, there is a possibility that poverty was over-estimated in 2002\. However, it could have been under-estimated as well\. 10  Proportion of people living w ith less than 1 PPP$ per day 60 Vietnam China 50 East AsiaandPacific Indonesia Thailand 40 entcreP30 20 10 0 1990 1992 1994 1996 1998 2000 2002 2004 However, progress in poverty reduction has been slower for Vietnam's ethnic minorities\. Using a domestic poverty line that reflects basic calorie and non-food needs, poverty among ethnic minorities in Vietnam was still 61 percent in 2004, compared to 14 percent of the Kinh and Chinese majority\. In some parts of the country, such as the South Central Coast, poverty rates among ethnic minorities are above 90 percent\. In 2004, more than one third of all ethnic minorities in Vietnam lived in hunger and was unable to meet basic calorie needs\. (b) Institutional Change/Strengthening The PRSC process has contributed substantially to the capacity of the government to conduct cross-sectoral policy dialogue\. The annual preparation of a wide ranging PRSC program under tight deadlines has strengthened institutional capacity and discipline for delivering results in a timely fashion\. In addition, the discussion of PRSC- related policy actions with a wide range of stakeholders has demonstrated to the government the benefits of conducting an open dialogue on key policies\. As a result, the government has become more receptive to sharing policy drafts at an early stage and eliciting feedback from relevant stakeholders\. 3\.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Box 1 highlights some findings of an independent evaluation of the PRSC process\. The evaluation was based on consultations with donors and key government counterparts, as well as with Bank staff\. 11  Box 1: An Independent Evaluation of PRSCs in Vietnam There are clear benefits of PRSC support to the government's reform program\. The policy dialogue is highlighted as one of them by both government and co-financiers\. The government clearly values the ideas provided by donors on policy content and implementation mechanisms, while donors gain a broader understanding of the direction of the reform process and government thinking\. Other PRSC benefits stem not only from improving the quality of policies, but also from locking-in government's commitment to specific reforms, speeding up the implementation of policies, and providing additional resources to support policy actions\. PRSCs have been most effective in supporting the development of policy, legal and institutional frameworks, with implementation left to government\. Institutional strengthening specifically through supporting the development of systems has been an important element and can be seen for example through the strong effects of the PRSC in strengthening public financial management systems\. There have been similar systemic effects through linking policy, planning and budgeting\. Institutional and regulatory frameworks have been particularly important in providing the enabling environment for other donor and government activities\. The PRSC process itself has provided a mechanism for encouraging harmonization between donors and alignment with government systems PRSCs have been less good at influencing the two "extreme ends" of reform: strategic breakthroughs and grassroots level reform\. PRSCs have also had difficulty in addressing sectors that are by their nature complex and fragmented, such as public administration reform, legal reform and governance\. This applies particularly where there is no clear focus for the reform agenda or consensus on an underlying strategy or where this has taken time to emerge and needs a consensus on an implementing framework\. PRSC funds are obviously welcomed by government, but funds are often seen as less important than the policy and institutional changes supported by the process\. However, funding is still clearly important, particularly in sectors such as health, education and social protection where the government is a provider of services or where the innovations supported by the PRSC have considerable costs\. Strong national ownership of the reform agenda underpins the PRSC, with government participation in negotiations increasing over time, particularly from line ministries\. The inclusiveness of the process has been one of its strengths, as there has been participation in the policy dialogue by non- financiers of the PRSC\. The recent process to produce the Vietnam Development Report, which has included the majority of the donor community, international NGOs, technical departments of government and local research institutions, indicates the value of further opening up of consultations to more stakeholders\. Source: Adapted from Ann Bartholomew and Catherine Dom (2006)\. 4\. Assessment of Risk to Development Outcome Ratings: Low The progress achieved on development outcomes is expected to be sustained\. The reforms that underpin the achievement of the development outcomes are on track, and the government is fully committed to their continued deepening\. This commitment of the government is expressed in the SEDP 2006-10\. In addition, the SEDP also foresees second generation reforms that will be required as Vietnam enters the rank of middle income countries\. 12  The government is cognizant that one of the risks of rapid growth is the deterioration of the environment and natural resources\. It is for this reason that the sustainable use of natural resources has been introduced as a separate pillar of the SEDP\. Building the capacity to better evaluate and mitigate the trade-off between higher growth and environmental protection will be an important challenge\. The rapid pace of development, and the movement into second generation issues, is posing regulatory challenges in areas such finance and infrastructure\. For instance, Vietnam is becoming increasingly exposed to external shocks, including to the vagaries of capital flows\. At the same time, Vietnam has seen a very rapid growth in its stock market, which has likely outpaced regulatory capacity\. Thus the potential for macroeconomic turbulence is becoming very real\. However, the government has planned to modernize and strengthen the supervisory capacity of the central bank as well as the capital markets regulator\. Their timely implementation will thus be critical\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry The Sixth Quality at Entry Assessment (QEA6) Panel assessed PRSC 2\. The Panel rated the quality at entry of the PRSC 2 overall as "Satisfactory\." Two of the quality dimensions, Strategic Relevance and Approach and Poverty and Social Aspects are rated as "Highly Satisfactory\." (b) Quality of Supervision Ratings: Satisfactory The use of reliable information and analysis in policy making has improved steadily over the PRSC process\. Over the first three PRSCs, the government made efforts to improve the quality of data that can be used for monitoring PRSC outcomes\. The fourth and fifth PRSC continued to build on this experience\. Key sources of monitoring information for poverty and program outcomes include the biennial VHLSS, periodic participatory poverty assessments and local consultations, enterprise surveys, public expenditure tracking surveys, as well as the progress reports from the relevant sector ministries and committees implementing the reform program\. In addition, the strengthening of management information systems for SOEs and for all public spending, both led by MOF, was an integral part of the PRSC program\. (c) Justification of Rating for Overall Bank Performance Ratings: Satisfactory The Bank and its country office led by the Country Director, the Lead Economist and sector specialists in the field have maintained an effective dialogue with the 13  government's senior counterparts on the progress of reforms supported by the PRSC series\. As co-chairman (with the government) of the Consultative Group, the Bank helps coordinate development activities closely with other development partners and minimize overlap and competing demands from straining the authorities' administrative capacity\. This form of effective cooperation was supported and reflected in the cofinancing of PRSC series by an increasing number of cofinanciers\. The identification of the policy actions needed to attain the development outcomes spelled out in the CPRGS has been strongly influenced by the Bank's AAA program\. The annual Vietnam Development Reports (VDRs) have played a very important role in this respect\. These reports are prepared in partnership between the Bank and other donors, including many of those involved in the PRSC process\. They also involve substantial inputs from Vietnamese academics and policy makers\. VDRs serve to coordinate views on what the reform challenges are and how to address them, and have a considerable impact on the policy debate and the research agenda at the country level\. The VDR 2003 aimed to "translate" the CPRGS into a strategic direction for each of the policy areas covered by the PRSC process\. Subsequent VDRs, on Poverty, Governance, and Business address in more depth the challenges faced by Vietnam to keep development inclusive, build modern institutions, and complete its transition to a market economy\. There is also a strong synergy between PRSC operations and investment credits which are processed in parallel\. While PRSCs support the adoption of significant policy reforms, investment credits focus on their implementation, across a range of sectors\. Some of those credits, such as those for public financial management, payments system or customs modernization, aim at strengthening the systems through which government operates, thus making reforms effective in practice\. Other credits, like those for primary education for disadvantaged children or forest sector development, provide the resources needed to deliver on policy measures which could otherwise amount to declarations of intent\. More generally, project lending and policy lending are complementary in this process\. The Bank has played the role of coordinator for organizing the policy dialogue among donors, as well as between the donor group and the government\. As the number of donors participating in the PRSC process increased from four under the first operation to nine under PRSC 4, this task became more complex\. The PRSC process is aligned with the budget cycle, with operations taking place annually and Bank disbursements occurring towards the middle of the Vietnamese fiscal year\. Delivering the large PRSC program, both in terms of reform areas as well as the number of donors, within a fiscal year has required the task team to adhere to a very tight and demanding schedule\. 5\.2 Borrower Performance (a) Government Performance Ratings: Satisfactory 14  The government's strong ownership of its reform program has been backed up with an empowered implementing mechanism\. The National Steering Committee (NSC) for the implementation of the CPRGS and PRSCs was established in 2002\. It is chaired by the first Deputy Prime Minister, and brings together the heads of all the relevant line ministries and government agencies\. SBV is assigned as the agency responsible, in close collaboration with the World Bank, for preparation and implementation of PRSCs\. A Deputy Governor of SBV acts as Standing Vice Chairman of the NSC\. This quasi- advisory body has several representatives from key economic ministries and agencies\. Members of the NSC thus have authority over the entire range of policy areas covered by the PRSC process\. The participation of the Office of the Government (OOG) and the Party's Economic Commission (PEC) in the NSC also allow for a better coordination of policy decisions, and to elicit sufficient support for the most critical reforms\. Representatives from a total of 24 lines ministries and government agencies participated in the preparation of the credit\. On a different front, the government's strengthened resolve to accede to the WTO has acted as a catalyst for speeding up reforms across nearly all sectors covered under the PRSCs\. (b) Implementing Agency or Agencies Performance Ratings: Satisfactory The PRSC Steering Committee maintained a continuing and effective economic dialogue with Bank staff, coordinated and monitored the program under the direction of the First Deputy Prime Minister, and helped carry out the policy actions called for in the PRSCs series, meeting conditions for Board presentation and effectiveness\. The PRSC Secretariat, under the chairmanship of the SBV played a key and effective role in the day-to-day coordination, cooperation and trouble-shooting between an increasing number of ministries and agencies in the government and the Bank and an equally increasing number of donors as the PRSCs expanded in coverage to other sectors under the three pillars of development Given the intensive and complex coordination that is required to manage this very comprehensive reform program, SBV has created a Program Coordination Unit (PCU) with dedicated staff from SBV as well as external consultants\. The PCU has helped facilitate the policy dialogue of the Bank and donors with line ministries\. The PCU has been financially supported by PRSC co-financiers\. (c) Justification of Rating for Overall Borrower Performance The most significant factor responsible for the success of the PRSC operations has been the government's strong ownership of the reform program\. Building consensus among key stakeholders on the various components of the reform agenda has been a distinguishing characteristic of the policymaking process\. While consensus building has 15  at times been lengthy, it has considerably improved the chances of successful implementation of the reforms\. In addition to the NSC noted above, an inter-ministerial working group and a secretariat to implement and monitor the CPRGS was established at MPI\. Three Annual Progress Reports on the implementation of the CPRGS were prepared by the CPRGS secretariat under the guidance of the inter-ministerial working group\. Among the goals of the inter-ministerial working group was the implementation of CPRGS at sub-national levels\. The CPRGS Secretariat at MPI supported provincial governments in adapting the CPRGS to their own context, and reformulating plans and budgets accordingly\. Also, as noted earlier, the use of reliable information and analysis in policy making has improved steadily over the PRSC process\. 6\. Lessons Learned A stable macroeconomic and political environment contributed greatly to the successful implementation of difficult structural reforms in Vietnam\. The building of a broad consensus among key stakeholders coupled with strong government commitment to implement the reforms minimized the risk of policy reversals\. Overall, progress was slower in policy areas characterized by limited political will, conflicting institutional responsibilities or insufficient analytical work\. The speed at which progress was made across policy areas within each of these pillars depended on the political will to implement the reforms\. The contrast between rapid progress in the integration with the world economy and slow reform in the banking sector is revealing in this respect\. To some extent, this contrast may reflect a deliberate choice, whereby rapidly moving towards WTO accession would be a way to "lock-in" the need for subsequent reforms in the banking sector\. In other cases, as in water, limited progress reflects institutional overlap and unclear delimitation of competencies across several ministries or agencies\. In the case of corruption, the commitment to fight it is undeniable but it is more recent\. This is one area where progress on inputs (such as laws, or coordinating bodies) may take quite some time to translate intro progress on outputs and outcomes\. An effective coordination mechanism is essential to overcome the logistical challenges posed by a wide ranging and cross-cutting policy dialogue\. One of the potential strengths of direct budget support is to provide a predictable flow of aid resources to the government\. But the predictability would be lost if operations were to slip as a result of their administrative complexity\. The institutional arrangement established at the onset of the process, whereby PRSCs fall under the direct responsibility of the first Deputy Prime Minister, proved effective in this respect\. In practice, the PRSC secretariat operating in the SBV, has been instrumental in translating this empowerment into a workable schedule of meetings and exchanges of documents between line ministries and government agencies on the one hand, and donors on the other\. 16  The Vietnam experience demonstrates that PRSCs, with very low conditionality, are a well-suited aid instrument in countries with strong government ownership of the reform agenda and its capacity to deliver in practice\. The Vietnam experience also reflects a transition from a conditionality based policy dialogue to a fully cooperative policy dialogue\. Conditionality has not been a central feature of PRSCs in Vietnam, except at their inception\. PRSC 1 included a series of conditions for the release of the second tranche (one of them had to be waived) and PRSC 2 had a limited number of effectiveness conditions\. As the policy dialogue around PRSCs matured, incentive mechanisms were softened, with the assessment of a set of forward-looking triggers being used to launch the preparation of the next operation in the series\. It was agreed that progress towards meeting all triggers would lead to a higher volume of lending (high- case scenario), progress towards most and no backtracking in any to the stability of lending (base case) and serious backtracking to the halting of the process (low case)\. Since the introduction of triggers, all the operations in the series actually fell in the base- case scenario\. On the other hand, each of the operations was backward-looking, in the sense of reckoning the actual progress accomplished in the implementation of the reform agenda up to that point\. The programmatic nature of PRSCs also provided the flexibility to move a policy action to subsequent operations if sufficient progress had not been achieved\. This allowed greater dialogue with the government and stakeholders on the reasons why progress was slower than anticipated\. Such dialogue, sometimes accompanied by greater analytical work or TA, made the government more comfortable with the policy action and eventually led to its adoption\. PRSCs have also become an important donor coordination mechanism, in the spirit of the harmonization agenda\. Discussions with government in each of the policy areas are jointly conducted with all the co-financiers or potential co-financiers\. From the government's perspective, this arrangement reduces transaction costs\. From the donor's perspective, it increases the coherence of the support to economic reforms\. Effective donor coordination avoids duplication in donor programs that could greatly stretch the government's capacity\. At the same time, there is a scale effect, allowing each the participating donors to be involved in the policy dialogue to a larger extent than they could individually\. While transaction costs are significantly reduced for the government and donors, the Bank has had to devote considerable staff time and resources to this effort\. These costs need to be recognized as essential for increasing the effectiveness of total donor support\. The experience with the first series of PRSCs in Vietnam highlights the importance and advantages of consulting with NGOs and the private business sector to obtain inputs and feedback for the policy dialogue\. The task team sought the views of the private business sector on major legislative and regulatory changes affecting the investment climate, while NGOs provided valuable inputs on social, environmental, and governance actions\. While their perspectives "from the ground" often tended to focus on micro or case specific considerations, this detail provided a balance to the "higher level" policy discussions under the PRSCs\. These details have also proved helpful for the 17  government in drafting implementing guidelines for laws, thereby improving the probability of successful implementation\. Complementary investment credits or technical assistance are key tools for the strategic reforms supported by the PRSCs to bear fruit on the ground i\.e\., PRSCs carry through high-level policy reforms, whereas investment credits and technical assistance focus on their implementation\. There is also a clear complementarity between PRSCs and the analytical program\. The annual Vietnam Development Reports (VDRs) update government and donors on the assessment of the development challenges faced by Vietnam\. This in turn enables an articulation of policy actions to meet the development outcomes specified in strategic documents\. The availability of analytical work helped greatly in the design of policy actions and allowed a higher quality policy dialogue with the counterparts\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies The PRSC operations has helped promote the strong ownership of the government of Viet Nam in designs and implementation thereof and strengthened the partnership between the government and the donor community\. This process has delivered overall impacts and enabled a more developed and sustainable socio-economic environment, eventually aiming at poverty reduction as the final goal\. The government has also provided valuable recommendations in their assessment (Annex 4) that will be taken into account for the preparation of the next series of PRSCs in Vietnam\. (b) Cofinanciers The number of co-financiers increased from four at the time of PRSC 1 to 11 for PRSC 5\. The co-financing amount increased from around $40 million to over $150 million (see Annex 5)\. Bilateral and multilateral donors have played an important role through their involvement in the policy dialogue with the government through the PRSC vehicle\. Strong donor commitment and participation provided the common ground on sectoral priorities and broad timetables for the PRSC series and helped to ensure coherence across donors' programs of support, and to mobilize funding for high priority tasks in each policy area\. \. (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society) 18  Annex 1 Bank Lending and Implementation Support/Supervision Processes (a) Task Team members P082759 - Poverty Reduction Support Credit III Names Title Unit Responsibility/ Specialty Lending Theo Ib Larsen Consultant SASHD Hoi-Chan Nguyen Sr Counsel LEGEA Hang Thu Nguyen Program Assistant EACVF Duc Minh Pham Senior Economist EASPR Martin G\. Rama Lead Economist EASPR Vivek Suri Senior Economist EASPR Thang-Long Ton Economist EASPR Carolyn Turk Senior Poverty Specialist EASPR Supervision P086360 - Poverty Reduction Strategy Credit IV Names Title Unit Responsibility/ Specialty Lending Supervision Hoi-Chan Nguyen Sr Counsel LEGEA Hang Thu Nguyen Program Assistant EACVF Duc Minh Pham Senior Economist EASPR Vivek Suri Senior Economist EASPR Thang-Long Ton Economist EASPR P086361 - Vietnam - Poverty Reduction Support Credit V Names Title Unit Responsibility/ Specialty Lending Hang Thu Nguyen Program Assistant EACVF Martin G\. Rama Lead Economist EASPR Vivek Suri Senior Economist EASPR Supervision Hoi-Chan Nguyen Sr Counsel LEGEA Hang Thu Nguyen Program Assistant EACVF Martin G\. Rama Lead Economist EASPR (b) Staff Time and Cost P004850 - VIETNAM - POVERTY REDUC\.SUPPORT CREDIT Staff Time and Cost (Bank Budget Only) Stage No\. of staff weeks USD Thousands (including travel and consultant costs) 19  Lending FY95 28\.75 FY96 20\.30 FY97 226\.02 FY98 158\.32 FY99 402\.83 FY00 89\.07 FY01 105\.57 FY02 29\.87 FY03 12\.31 FY04 0\.64 FY05 0\.00 Total: 1073\.68 Supervision FY95 0\.00 FY96 0\.00 FY97 0\.00 FY98 0\.00 FY99 4\.43 FY00 1\.28 FY01 11\.85 FY02 160\.17 FY03 137\.01 FY04 0\.77 FY05 0\.45 Total: 315\.96 P082759 - Poverty Reduction Support Credit III Staff Time and Cost (Bank Budget Only) Stage No\. of staff weeks USD Thousands (including travel and consultant costs) Lending FY04 262\.91 FY05 3\.79 Total: 266\.70 Supervision FY04 0\.00 FY05 81\.63 Total: 81\.63 P086360 - Poverty Reduction Strategy Credit IV Staff Time and Cost (Bank Budget Only) Stage No\. of staff weeks USD Thousands (including travel and consultant costs) Lending 20  FY05 72 263\.21 FY06 1 15\.37 Total: 73 278\.58 Supervision FY05 0\.00 FY06 1 3\.58 Total: 1 3\.58 P086361 - Vietnam - Poverty Reduction Support Credit V Staff Time and Cost (Bank Budget Only) Stage No\. of staff weeks USD Thousands (including travel and consultant costs) Lending FY06 50 221\.38 FY07 1 5\.47 Total: 51 226\.85 Supervision FY06 0\.00 FY07 7 26\.50 Total: 7 26\.50 21  Annex 2\. Program Performance First Operation in a Programmatic Series: PRSC 1 List prior actions from Legal Agreement/ Program Document Status A\. Satisfactory progress achieved by the Borrower in carrying out the program Satisfactory B\. Macroeconomic policy framework of the Borrower is satisfactory to IDA, as Satisfactory measured on the basis of indicators agreed between the Borrower and IDA C\. Tranche release actions 1\. Removed or modified business licenses of at least 50 trades, industries and Completed services, so that entry in those sub-sectors is eased\. 2\. Streamlined the equitization process to expand capital and security markets, to Completed remove existing ceilings on shareholdings by individuals and legal entities in equitized SOEs, to improve transparency of the process, and to move responsibility for issuing, selling and registering shares out of individual SOE's management 3\. Completed major equitization (i\.e\., selling more than 65 percent of shares to non- Completed State shareholders and having no dominant or special State shares), sale under Decree No\. 103-1999-ND-CP of September 10, 1999 on Transfer, Sale, Management Contract and Lease of State Enterprises, or liquidation of at least 200 SOEs, with the equitized and sold SOEs operating and existing under the Enterprise Law\. 4\. Completed minor equitization (i\.e\., sales of shares with the State having dominant Completed or special shares) of at least 200 SOEs, with the equitized SOEs operating and existing under the Enterprise Law 5\. Adopted detailed restructuring plans for Seaprodex, Vinatex and Vinacafe General Waiver Corporations (GCs), including a timetable of specific actions to be taken to improve granted as this corporate governance and competitiveness of key SOEs in these GCs (de-regulation of action was not entry into SOE subsectors, new corporate governance mechanisms for the GCs, completed at equitization or sale of non-core assets, liquidation of non-viable operations, installation the closure of of appropriate accounting and management information systems) and specific PRSC 1 operational targets for cost-reduction and revenue growth 6\. Modified the design of the fund established to finance the social safety net for Completed state-owned enterprise workers, put the fund as modified into operation with dedicated staff in adequate numbers and completed a review and written report on the disbursement performance of the fund 7\. Removed Quantitative Restrictions vis-à-vis all countries, from all tariff lines for Completed clinker and paper, replacing them with tariffs where necessary and appropriate 8\. Adopted restructuring plans for four state-owned commercial banks (Vietnam Completed Commercial Bank (VCB), Vietnam Bank for Agriculture and Rural Development (VBARD), Bank for Investment and Development of Vietnam (BIDV) and Industrial and Commercial Bank of Vietnam (ICBV)) in accordance with the key principles of State Bank of Vietnam's State-owned Commercial Bank restructuring framework, and achieved the first year milestones of said restructuring plans 9\. Closed nine joint-stock banks (JSBs) under State Bank of Vietnam intervention Completed and ensured compliance of all remaining JSBs with existing regulations\. 10\. Amended Decision No\. 284/2000/QD-NHNN1 of August 25, 2000 Issuing Completed Regulation on Lending to Clients of Credit Institutions to bring criteria for loan- classification by banks in accordance with international practice, and initiated implementation of revised criteria for classification of non-performing loans as well as for their provisioning 11\. Completed audits of financial statements for the 2000 fiscal year of VCB, Completed VBARD, BIDV and ICBV in accordance with international auditing and accounting standards by international auditors acceptable to the Association and furnished said audits to the Association 12\. Improved transparency and reliability of national budgetary information by Completed 22  designating the Borrower's State Treasury as the agency responsible for a comprehensive management information system for government expenditures and by publishing sectoral breakdowns of at least 75 percent of total government spending PRSC 2 List prior actions from Legal Agreement/ Program Document Status I\. Transition to a Market Economy A\. International Trade 1\. Submission of a draft Common Effective Preferential Tariff Decree for approval Completed which, inter alia, (a) provides for the transfer of the last tranche on the Temporary Exclusion List (TEL) to the Inclusion List (IL); (b) establishes the 2003-2006 tariff reduction schedule on the basis of the ASEAN Harmonized Tariff Nomenclature; and (c) decreases the maximum tariff on all IL items to twenty percent (20%) 2\. Elimination of quantitative restrictions for all tariff lines for cement products, Completed steel, construction glass, floor tiles, vegetable oil, paper and clinker\. 3\. Issuance of regulations on most favored nation treatment (MFN) and national Completed treatment (NT), and of safeguard measures for imports B\. Reform of State-owned Enterprises 1\. Approval by the Prime Minister and public dissemination of 94 detailed plans Completed submitted by line ministries, provinces, cities and general corporations for the reform, during the period 2003-2005, of SOEs under their respective jurisdiction, said plans identifying the SOEs specifically and indicating a timetable for their ownership transformation; and submission for approval of 10 remaining plans\. 2\. (a) Issuance of Decision 167/2000/QD-BTC and Circular 89/2002/TTBTC Completed requiring all SOEs, on an annual basis, to report the financial results for their last completed accounting period, to the relevant authorities; and (b) issuance of a Ministry of Finance letter of instruction strengthening administrative penalties on SOEs for failure to comply with the provisions of said Decision and Circular 3\. Submission of a draft Decision on SOE Performance Monitoring and Evaluation Completed for approval which: (a) includes compliance with financial and accounting regulations, including reporting requirements, among the performance indicators; (b) establishes SOE rating based on performance; and (c) leads to sanctions for poorly performing SOEs C\. Financial Sector 1\. Completion by each of ICB, BIDV, VBARD and VCB of the 2002 loan loss Completed provisioning target indicated in the respective restructuring plan approved by SBV, such target established in accordance with the IAS audit completed for 2000 2\. Completion by each of ICB, BIDV, VBARD and VCB of the 2002 target for Completed resolution of non-performing loans, in accordance with the provisions of Instruction 355/CV-CLPT\. 3\. Approval by State Bank of Vietnam of the timetable for BIDV, ICB, VBARD and Completed VCB to prepare and adopt their respective credit manuals 4\. (a) Completion of the 2001 audit of BIDV and VBARD, carried out in accordance Completed with international accounting standards; (b) In regard to the qualifications to the reports of said audit, (i) both BIDV and Completed VBARD have moved from cash-based accounting to accrual-based accounting; (ii) VBARD has implemented the use of consolidated financial statements covering its affiliated entities; and established an action plan to enable it within 2003 to monitor and accurately reflect off-balance sheet items; and (iii) both BIDV and VBARD have established action plans to strengthen within 2003 their respective management information systems 5\. (a) Issuance of Instruction 04/CV-CLPT directing BIDV, ICB, VBARD and VCB Completed to undertake and complete the re-evaluation of unsecured non-performing loans to SOEs during 2003-2004; and (b) establishment of a list of 80 SOEs with large unsecured non- performing loans for debt re-evaluation in accordance with said Instruction 6\. Formulation of recommendations to: (a) revise Circular 74/2002/TTBTC to Completed 23  strengthen the creditor's rights of BIDV, ICB, VBARD and VCB in the reevaluation and resolution of SOE non-performing loans, and (b) coordinate the resolution of non- performing loans with the reform plans for SOEs D\. Private Sector Development: 1\. Issuance of the Government Decision 94/CP approving an action plan to promote Completed the development of the private sector 2\. Issuance of the Prime Minister's Directive 17/TTg to strengthen the Completed implementation of the Enterprise Law, including through the publication of a list of permits required II\. Inclusive Development A\. Health: Issuance of the Prime Minister's Decision 139/2002/QD-TTg to establish provincial- Completed level Health Care Funds for the Poor to finance out-of-pockets costs for eligible individuals using public health services B\. Land: Issuance of land-use right certificates: (i) to about thirty-five percent (35%) of users Completed of urban residential land; and (ii) in forest area, to about sixty percent (60%) of household and individual land users who have received or rented forest land directly from the State C\. Environment: Completion of stakeholders consultation on a National Strategy for Environmental Completed Protection III\. Modem Governance A\. Comprehensive Poverty Reduction and Growth Strategy (CPRGS): Establishment of a national steering committee to guide the implementation of the Completed CPRGS B\. Public Finance: Enactment of the revised Budget Law to support decentralization and transparency in Completed budget planning, formulation and execution C\. Legal Development: 1\. Enactment of Law 02/2002/QH 11 on Amendments of and Additions to a Number Completed of Articles of the Law on Promulgation of Legal Instruments, which, inter alia, requires the publication in the Official Gazette of legal documents issued by the Government, Prime Minister, line ministers, head of ministerial-level agencies, Supreme People's Court and Supreme People's Procuracy, as a condition of their effectiveness\. 2\. Enactment of Law 06/2002/L/CTN on the Organization of the People's Courts, Completed which, inter alia, transfers the management of the local courts from the Ministry of Justice to the Supreme People's Court\. D\. Information: Approval by the National Assembly of the Law on Statistics to ensure quality of data, Completed transparency and public access to information\. PRSC 3 List prior actions from Legal Agreement/ Program Document Status I\. Transition to a Market Economy A \. Trade Integration (a) Conduct of detailed preparatory work for WTO accession, including an Satisfactory assessment of the impact of various tariff scenarios on key sectors \. (b) Elimination of quantitative restrictions on the imports of petroleum products \. Completed (c) Adoption of the Early Harvest Program to implement the Framework Agreement Completed on Comprehensive Economic Cooperation between ASEAN and China , leading to the lowering of import tariffs on a number of agricultural and fisheries products \. (d) Issuance of regulations directing the use of transaction value as the basis for Completed customs valuation \. 24  (e) Application of the Harmonized Classification and Coding System to all trading Completed partners B\. Reform of State-owned Enterprises (a) Acceleration of SOE ownership transformation by following the 104 SOE Completed restructuring plans adopted in 2003\. (b) Broadening of the equitization process to include large SOEs and General Completed Corporations (c) Issuance of operational guidelines for the central Debt and Assets Trading Completed Company C\. Financial Sector Reform (a) In preparation for WTO's accession, formulation of a plan to strengthen the Completed supervisory capacity of the State Bank of Vietnam and to level the playing field for banks (b) Adoption of a new chart of accounts for banks to improve transparency of the Completed banking sector \. (c) Issuance of instructions to the SOCBs to put into effect new credit manuals to Completed improve risk management in their operations \. (d) Imposition of a sixty-day time limit for SOCBs to submit their IAS audits to State Completed Bank of Vietnam\. (e) Issuance of a prime-ministerial Directive to equitize two SOCBs, namely Mekong Completed Housing Bank and Bank for Foreign Trade of Vietnam, and initiation of steps to identify a strategic investor for Mekong Housing Bank \. (f) Issuance of regulations for the operation of the Development Assistance Fund Completed restricting its mechanisms for policy lending \. (g) Further development of the securities market by easing listing requirements and Completed creating the legal framework for securities investment funds as a new investment channel D\. Private Sector Development : (a) Leveling of the treatment of enterprises by unifying the corporate tax rate at 28% Completed irrespective of the nature of their ownership (b) Strengthening of the administration of intellectual property rights by designating Completed NOIP as the central point for treatment of trademarks and intellectual property rights (c) Issuance of a decree improving the legal framework for the organization, operation Completed and management of business association E\. Infrastructure (a) Expansion of the Comprehensive Poverty Reduction and Growth Strategy to Completed include a development policy for large-scale infrastructure (b) Opening of internet and mobile telephone services to competition by licensing Completed additional service providers (c) Reduction of prices for international telephone and leased line services to regional Completed levels II\. Inclusive Development and Environmental Sustainability A\. Education (a) Increase of expenditure share for education and training to 17 \.1% of the 2004 Completed national budget \. (b) Adoption of minimum quality standards for primary schools nationwide \. Completed B\. Health (a) Establishment of Health Care Funds for the Poor in all provinces and full payment Completed of the central government contribution to such Funds \. (b) Adoption of a multi-sector action program to implement the HIV-AIDS Strategy, Completed including de-stigmatization, information dissemination and provision of affordable care and treatment \. C \. Land Enactment of a new Land Law providing for a unified land administration system, Completed and supporting access to land for all sectors and community land use practices 25  D\. Water (a) Issuance of a decree providing for the transfer to water users groups of the Completed management of small-scale, stand-alone irrigation and drainage systems, and secondary and tertiary irrigation systems \. (b) Issuance of a decree for the conservation and sustainable development of wetlands Completed E\. Environment (a) Decentralization of the responsibility for environmental impact assessments to Completed local levels according to the value of investment projects \. (b) Establishment of "polluter pays" principle and mechanism for industrial and Completed municipal waste water discharges (c) Issuance of regulations requiring the worst pollution offenders to upgrade their Completed technology, move to authorized zones, or face closure III\. Modern Governance A\. Planning Processes (a) Issuance of guidelines to roll-out the CPRGS approach to provincial planning and Completed launching of the process in twenty provinces, to align policies, planning processes and allocation of resources with localized development targets (b) Piloting of a medium-term expenditure framework in the Education sector to Completed improve planning processes and service delivery capacity\. B\. Public Financial Management (a) Unification of the accounting systems of the State Budget and the State Treasury Completed to enable better monitoring of revenues and expenditures and allocation of resources (b) Completion of the overall design of an integrated Treasury and Budget Completed Management Information System to support the integrity of fiscal data, transparency and control of public finances C Financial Accountability (a) Enactment of a new Accounting Law and issuance of new accounting and auditing Completed standards in line with international standards (b) Issuance of a decree on Independent Audit Practice subjecting SOEs to Completed independent audits, unless specifically exempted and subject to audit by the State Auditor of Vietnam instead D\. Public Administration Reform (a) Promulgation of the national policy of the "One Stop-Shop" mechanism to Completed simplify administrative procedures (b) Piloting of the report card approach to public services delivery in four cities to Completed measure performance and service delivery outcome E \. Anti-corruption (a) Strengthening of the public procurement process by establishing DPP to perform Completed the functions of a public procurement agency, prepare standard bidding documents, issue implementation guidelines and oversee compliance ; reinforcing open competitive bidding as the main method of procurement; and mandating the establishment of a Procurement Bulletin (b) Strengthening of the requirement that government agencies adhere strictly to legal Completed procedures, schedule and scope of inspection of businesses PRSC 4 List prior actions from Legal Agreement/ Program Document Status I\. Transition to a Market Economy A\. Trade Integration : The Borrower has made strong progress in multilateral and bilateral negotiations Completed towards its WTO accession by reaching the stage for a full draft Working Party Report t and completing bilateral negotiations with six partners B\. State-owned Enterprise Reform : (a) The Borrower, through Prime Minister's Decision 155/2004/QD-Ttg of August 24, Completed 26  2004, has narrowed the list of sectors in which exclusive state ownership is to be maintained (b) The Borrower, through Decree 187/2004/ND-CP of November 16, 2004 , has Completed strengthened the mechanisms for equitization of SOEs, including by auctioning shares and requiring that valuations be carried out by outside agencies 3\. Financial Sector Reform (a) SBV has confirmed the principle of separation of its SOCB s management functions Completed from its supervisory functions (b) SBV has issued regulations applicable to all SOCBs requiring them to classify Completed loans on the basis of international accounting standards \. 4\. Infrastructure: The Electricity Law has been enacted which (a) allows the equitization of EVN Completed subsidiaries, and (b) establishes an electricity regulatory agency II\. Inclusive and Sustainable Development 5\. Education: The Borrower, through the Ministry of Education and Training, has complete d the Completed evaluation of seven percent (7%) of all teachers based on the new Primary Teacher Profile for career development 6\. Land and Forests : Completed The Law on Forest Protection and Development has been enacted 7\. Environment : The draft Amended Law on Environmental Protection has been submitted to the Completed National Assembly for approval, and the draft implementing decree has been submitted to Government III\. Modern Governance 8\. Planning Processes The Borrower is integrating the CPRGS approach into the preparation of the Socio- Completed Economic Development Plan 2006-2010, namely the principles of strategic planning, consultation, outcome orientation and monitoring 9\. Public Financial Management (a) The Borrower, through the Ministry of Finance, has issued regulations t o improve Completed financial disclosure of all state budget entities, including SOEs, requiring among other information, disclosure of their annual budget allocations, budget plans and final accounts\. (b) The Borrower has launched an assessment of the fiscal risks associated with Completed SOEs, SOCBs and DAF \. 10\. Financial Accountability The Law on State Audit has been enacted stipulating that the State Audit of Vietnam Completed is an independent specialized agency established by the National Assembly 11\. Anti-corruption : The Borrower has established a framework to increase the effectiveness of anti- Completed corruption actions by formulating a program of organizational and operational reforms , institutional capacity building and human resources development for the State Inspectorate, designed to increase its effectiveness and efficiency in preventing and combating corruption 12\. Information Availability The Borrower has strengthened the criteria for measuring poverty and targeting the Completed poor by bringing them more into line with international standards PRSC 5 List prior actions from Legal Agreement/ Program Document Status 1\. An Intellectual Property Law consistent with the requirements of the World Trade Completed Organization has been enacted \. 2\. State-owned enterprises have been classified on the basis of their performance, in Completed 27  accordance with Decision 271/2003/QD-TTg \. 3\. A comprehensive roadmap to reform the banking sector has been adopted \. Completed 4\. A unified Enterprise Law has been enacted providing for equal treatment of all Completed enterprises irrespective of ownership 5\. Regulations on inclusive education for children with disabilities have been issued to Completed ensure their access to education services 6\. Health insurance has been made compulsory for the poor, with expanded coverage to Completed include a larger number of persons, and supported by increased budget allocation 7\. The design, components and procedures of Program 135 to support the development Completed of communes facing extreme hardship in mountainous and ethnic minorities areas have been revised 8\. Provincial land registration offices have been established in compliance with the Completed requirements of the 2003 Land Law 9\. Institutional responsibilities for the implementation of the national targeted program Completed for rural water and sanitation have been assigned among line agencies and departments under the National Targeted Program, Phase II for 2006-2010 which has been submitted for approval by the Prime Minister 10\. Economic tools have been developed and strategic environmental assessments Completed piloted to promote environmental protection 11\. The Socio-Economic Development Plan 2006-2010 formulated under broad Completed consultation with stakeholders and with a focus on poverty has11\. The Socio-Economic Development Plan 2006-2010 formulated under broad consultation with stakeholders and with a focus on poverty has been submitted to the National Assembly, and monitoring tools are being developed 12\. All ministries and provinces have been required to prepare multi-year budget Completed estimates in support of the SEDP \. 13\. In respect of public services delivery entities, the monitoring of service quality and Completed user feedback mechanisms have been strengthened, and their salary bill capped \. 14\. Action plans for the simplification and increased transparency of administrative Completed procedures have been adopted \. 15\. An Anti-corruption Law has been enacted with provisions regarding denunciations of Completed corrupt actions and monitoring of assets\. 28  Annex 3\. Assessment of Development Outcomes Macroeconomic Framework and Performance The 2001-2006 period was marked with strong economic growth with GDP increasing on an annual average of 7\.6 percent in real terms\. In per capita terms, the GDP grew at an annual growth rate of 6\.1 percent during 2001-2006\. GDP per capita measured in dollar terms, increased from $415 in 2001 to $720 in 2006\. If this pace is sustained over time, the GDP per capita will pass the $1000 per capita milestone by 2010\. Economic growth rates have been built on firm economic fundamentals and Vietnam has achieved a sound macroeconomic performance and consolidated greatly the likelihood for sustainable growth in the long run\. Inflation increased during the period, but mainly on account of supply side shocks\. The economy has proven to be both resilient and robust, despite the shock from avian influenza, oil price increases, SARS, and the Asian financial crisis, in addition to frequent adverse weather\. 29  KEY ECONOMIC INDICATORS, 2001-2006 Indicator 2001 2002 2003 2004 2005 2006e Real GDP (percent change) 6\.9 7\.0 7\.3 7\.8 8\.4 8\.2 Industrial output value (percent change) 14\.6 14\.5 16\.1 16\.0 17\.2 17\.0 Inflation (percent, by year end) 0\.7 4\.0 2\.9 9\.5 8\.4 6\.6 Nominal depreciation (percent, by year end) 3\.9 2\.0 1\.6 1\.5 0\.7 1\.0 Credit to the economy (percent change) 21\.4 22\.2 28\.4 41\.6 31\.7 22\.0 General government budget (percent of GDP) Total revenues and grants 21\.6 22\.7 24\.9 26\.7 25\.9 26\.8 Total expenditure (including interest) 24\.4 24\.2 26\.1 25\.8 27\.1 27\.5 Current expenditure 16\.0 15\.7 16\.7 16\.9 18\.5 18\.7 Capital expenditure 8\.4 8\.4 9\.4 8\.9 8\.6 8\.8 Budget balance (excluding on-lending) -2\.8 -1\.4 -1\.2 0\.9 -1\.2 -0\.7 Extra-budgetary outlays (percent of GDP) On-lending of ODA 1\.0 0\.9 1\.5 0\.9 1\.0 1\.2 On-lending of domestic resources (DAF) 1\.2 1\.5 1\.7 1\.0 0\.5 0\.8 On-lending of sovereign bond 0\.0 0\.0 0\.0 0\.0 1\.4 0\.0 Off-budget investment spending 0\.0 0\.0 1\.6 1\.0 2\.0 2\.0 Current account balance (in US$ billion) 0\.7 -0\.4 -1\.9 -1\.6 -0\.5 -0\.4 Current account balance (in percent of GDP) 2\.0 -1\.1 -4\.9 -3\.4 -1\.0 -0\.4 Export growth (nominal, percent change) 4\.0 11\.2 20\.6 31\.4 22\.5 22\.1 Imports growth (nominal, percent change) 2\.3 22\.1 28\.0 26\.6 15\.7 20\.1 Total external debt (US$ billion) 12\.5 12\.3 13\.5 15\.4 17\.3 18\.6 Total external debt (percent of GDP) 38\.5 35\.2 34\.2 33\.9 32\.6 30\.4 Debt service ratio (percent of exports) 10\.6 8\.3 7\.5 5\.9 5\.5 5\.4 Reserves, including gold (US$ billion) 3\.4 3\.7 5\.6 6\.3 8\.6 11\.5 Reserves (in weeks of goods imports) 10\.0 8\.6 10\.3 9\.9 11\.0 13\.0 Source: World Bank\. Figures for 2006 are preliminary estimates\. Pillar I: Transition to a Market Economy Progress in integrating with the world economy has been faster than in other reform areas\. But to a certain extent, this reflects a strategy, whereby political effort was initially directed at gaining a consensus on WTO accession\. Integration with the world economy is being used as a mechanism to "lock-in" the reforms, and gradually create the incentive for changes in areas where the inertia is stronger\. Accordingly, as WTO accession neared the final stage, a much bolder approach to reform the banking sector was finally adopted, and a new approach to SOE emerged\. 30  Exports grew at 22 per annum percent during 2001-06 and the ratio of exports to GDP rose from 46 to 65 percent over the period\. The trade and current account deficits initially widened, reflecting the investment needs of a growing economy, but narrowed in subsequent years\. The current account deficit was financed mainly through FDI and ODA inflows\. Commitments of FDI soared from 3\.4 billion dollars in 2001 to a record level of 10\.2 billion dollars in 2006\. External reserves increased from 3\.4 billion dollars in 2001 to 11\.5 billion by end-2006\. External debt to GDP stood at 30 percent at the end of 2006 with debt service ratio at a very manageable 5\.4 percent\. A joint Bank-Fund DSA put Vietnam at a low risk of external debt distress\. The number of SOEs has declined steadily over the period, from 5,600 in 2001 to around 3,000 at the end of 2005, guided by master plans for each line ministry and province, approved by the Prime Minister\. From an initially slow start, transformations picked up in the second half of 2003 and through 2004\. The reduction in SOEs has been mainly through equitization, whereby the SOE after a sale of shares is converted to a joint stock company that operates under the Enterprise Law, rather than the SOE Law\. Other forms of SOE transformation have been mergers, conversions to limited liability companies, outright sales, and liquidation\. Initially, the focus of equitization had been on smaller SOEs, but in 2004 the list of sectors where 100 percent state ownership is to be retained was substantially shortened\. Since then, the average size of the SOEs transformed has been rising\. The equitization process has itself undergone major improvements with appraisals being conducted by outside evaluators, and the share sales taking place at market values through auctions at the securities trading centers\. The percentage of shares sold to non-employees or to outsiders (including foreigners) has also been increasing\. The percentage of SOEs that did not sell any shares to outsiders has come down from 52 percent in 2003 to 29 percent in 2005\. In 2004, the proportion of equity sold to outsiders amounted to no more than 9 percent of the total equity in these enterprises, but it rose to 14 percent in 2005\. The other aspect of SOE reform, and a key feature in the transition to a market economy, has been the rising role of the private sector\. Between 2000 and 2005, the share of the private sector in non-oil exports rose from about 50 percent to over 70 percent, while its share in manufacturing production rose from 57 to 65 percent\. Over the same period private investment increased from 14 percent of GDP to over 18 percent, with the domestic private sector being especially buoyant in recent years\. In the last five years about 144 thousand new domestic enterprises were registered, with the number being more than 38 thousand alone in 2005\. The average capital of these enterprises, at around 170 thousand dollars in 2005, remains small by international standards\. But it has doubled in comparison with 2001\. Private enterprises, excluding farmers and non-farm self-employment, now account for about 22 percent of the employed labor force, compared with 13 percent in 1998\. Progress along all areas of banking reform has been significant, especially in the last two years\. In 2001, the banking reform program aimed at restructuring joint-stock banks (JSBs) and making them comply with regulatory standards\. As for SOCBs, it involved phasing out their policy lending, resolving their existing non-performing loans (NPLs), conducting International Accounting Standard (IAS) audits of all of them, and 31  re-capitalizing them\. The pace of reform along all these areas has picked up after an initially slow start\. The NPLs identified as of end-2000 were resolved, but mainly through write-offs\. SOCBs received phased recapitalization payments totaling 10\.8 trillion dongs\. By 2006, at least six IAS audits have been conducted for each large SOCB\. Audit quality, though initially weak, has improved considerably over time\. Policy lending was separated from the commercial banking system but it initially continued to expand rapidly through the DAF\. However, the introduction of sounder regulation of DAF in 2004 has led to a slow down in such lending\. The share of credit to the private sector has risen to 68 percent in 2006, from 58 percent in 2001\. SOCBs compliance with banking regulations, though having improved since 2001, is still short of requirements\. But the regulations for prudential ratios and asset classification were strengthened, and are to be complied with in a phased manner over the next three years\. There has already been measurable progress towards their attainment\. An important benchmark was the production of a first estimate of NPLs based on criteria which are close to international standards, in early 2006\. This estimate, which after large write-offs is in the range of 8 to 10 percent of total credit, is lower than many observers expected\. But it is more than twice as high as previous estimates based on local accounting standards\. While questions still surround the accuracy of the new loan classification, the public announcement of more credible figures on a regular basis should mark a change from the past\. In addition, as part of their equitization plans the SOCBs are taking steps to help market participants obtain a better picture of their worth\. Vietcombank and Mekong Housing Bank (MHB) have hired external consultants to value the banks, while the Bank for Investment and Development of Vietnam (BIDV) has obtained a rating from Moodys\. Pillar II: Socially equitable and environmentally sustainable development Vietnam has outperformed many other countries in terms of progress towards achieving the MDGs\. Five of the ten main MDG targets set for 2015 have already been attained, and another four could be reached ahead of time\. However, Vietnam might only partially achieve the target on reversing the loss of environmental resources\. It should be noted that alongside a remarkable performance on nearly all of the MDGs, important disparities in achievement remain between the Kinh majority and ethnic minority groups\. For example, fewer ethnic minority children are enrolled in school, especially girls\. Also maternal mortality and child mortality rates are much higher in mountainous areas where many ethnic minorities live than in the rest of Vietnam\. Vietnam has made impressive improvements in access to education at all levels, while improving the quality of its primary schools\. Net enrolment rates reached 94 percent for primary, 80 percent for lower secondary and 45 percent for upper secondary in the school year ending in 2004\. More importantly, the gap between the rich and the poor continues to narrow\. Between the school years finishing in 1993 and in 2004, the net primary enrollment rate for the poorest income quintile increased from 70\.5 percent to 90\.7 percent\. For children from ethnic minorities, it increased from 61\.8 percent to 87\.7 percent\. Fundamental School Quality Level (FSQL) standards have been adopted as a key tool for monitor the performance of the education sector and link resources to needs\. 32  FSQL standards combine indicators related to the management of a school, the training of its teachers, the quality of its infrastructure and the availability of classroom material, among others\. An annual audit of primary schools nationwide was launched in 2004 to assess progress in the quality of education\. By 2005 the average FSQL index had increased substantially, especially in poorer districts\. Considerable gains have also been made towards achieving the MDGs on health, especially in relation to infant and child mortality\. The Vietnam Demographic and Health Survey for 2002 reports infant mortality to have declined to 18 per thousand live births, compared with 30 at the time of the 1997 survey\. The corresponding numbers for under-five child mortality are 40 per thousand and 24 per thousand\. While these estimates are subject to large measurement errors, the hypothesis of rapid declines cannot be rejected\. Gains have also occurred in relation to communicable diseases\. There has been progress with regard to malaria, and successes in diagnosing and curing a high proportion of new TB cases\. The setting up of Health Care Funds for the Poor (HCFPs) in all provinces significantly increased the level of funding provided by the central government to support the health care expenditures of the poor\. A survey conducted in two provinces found an increase in the utilization of health services after the implementation of the HCFPs, especially for inpatient care\. A significant increase in health services sought at the commune health stations was reported as well\. Although average out-of-pocket expenditures on outpatient and inpatient care were still substantial, they fell considerably among the poor\. Land tenure is being made secure through a rapid increase in the allocation of Land-Use Right Certificates (LUCs)\. For agricultural land, LUCs had been issued for nearly 76 percent of all plots as of 2004, compared with 42 percent in 1998\. For urban land, the corresponding figures were 68 percent and 34 percent respectively\. As of 2004, 18 of agricultural land titles were in the name of women, and an additional 12 percent had the names of both spouses on them\. In spite of these developments, the role of land rental markets in agriculture remains relatively minor\. In 2004, 10\.7 percent of rural households had rented-in land, compared with 7\.9 percent in 1998\. The development of land sales is limited too, with only 2\.7 percent of households reporting that they had sold land in 2004\. While interpreting the above numbers it is important to note that 2004 was the first year of the new land law, so it is unlikely that the above numbers reflect its impact\. Forest cover, including both natural forest and plantations, has risen from about 35 percent of the total land area of the country in 2001 to 37 percent in 2005, but is quality has been problematic\. About 18 percent of the total area is plantations\. Of the natural forests, over two-thirds are considered low quality or regenerating\. While the share of rich and closed-canopy forests was only about 4\.6 percent in 2004, it did record an increase from 3\.4 percent in 2000\. Efforts to stabilize the area under mangrove forests appear to be bearing results\. The last comprehensive national inventory of mangroves was conducted in 1999, but a range of site-specific data suggests that combined control 33  and replanting programs have slowed their decline\. The prevention of degradation of wetlands and coral reefs has not been equally successful\. Pillar III: Building modern governance The planning process itself has been substantially improved during the CPRGS period, moving away from a "command and control" approach towards a more strategic approach, involving strengthened policy analysis and broader consultation\. Both at the national and subnational levels, participatory workshops for the preparation of the SEDP for 2006-2010 drew stakeholders from inside and outside the government\. Over a period of several months, consultations were conducted with officials from local governments, the domestic private sector, local associations, international non-governmental organizations (NGOs) and development partners, researchers and representatives of the overseas Vietnamese\. There was a particular effort to solicit the views of women\. And teams of local researchers gathered feedback at the grassroots level\. The implementation of the revised Law on the State Budget, which became effective in 2004, is one of the cornerstones of the public financial management reform program\. The law clearly delineates the roles of the National Assembly and the Provincial People's Councils in budget approval and streamlines budget execution\. It also assigns the Treasury Department as the lead agency responsible for budget execution and for financial management information\. In 2005 the entire State Budget Plan was disclosed for the first time, including an aggregate amount for defense expenditures\. In November 2004, the trend towards disclosure was reinforced by the Prime Minister's Decision 192, which mandates that details of budgets at all levels of government be published within a stipulated time period\. Importantly, the Decision introduces financial transparency in capital projects that use state budget resources\. Allocation of funds to such projects must be based on approved investment plans, and details of the bidding process need to be made publicly available\. Decision 192 also covers the disclosure of information on the financial situation of SOEs\. The norms for allocating expenditures to provinces were made more transparent and pro-poor\. Another development was the transformation of the State Audit of Vietnam (SAV) into an independent institution reporting the National Assembly, rather than to the government\. The Auditor General will be appointed and dismissed by the National Assembly and audit reports will be made public\. The SBV will also be subject to annual auditing and the disclosure of the audit reports\. To help strengthen medium-term expenditure planning, the government has piloted the development of MTEFs in four sectors and four provinces\. The first MTEFs, covering the ministries of education, health, transport, and agriculture and rural development, have been submitted\. These contain scenarios for sectoral spending and its allocation over a period of three years\. Estimates for the capital and recurrent sides of the budget have been prepared in an integrated way, with reference to the development goals of the sectors\. These MTEFs have been developed within the context of a sustainable medium-term fiscal envelope\. 34  A diagnostic study of corruption and its modalities was completed in 2005 and its results were presented publicly\. The independently conducted Investment Climate Assessment (ICA) survey corroborates the results of the study\. Both sources identify the same set of agencies as being the most corrupt ones; land administration, customs, traffic police and tax offices come at the top of the list\. But it also appears that some of the key agencies businesses need to deal with (in particular, district level people's committees) tend to be relatively "clean"\. Average bribes to each of the most corrupt agencies are in the order on 100 dollars\. Given that this is close to an average salary in manufacturing, this finding is not comforting from a social and moral point of view\. It makes it clear why the Vietnamese society is so outraged at corruption\. At the same time, the cost of corruption for the conduct of business, estimated at 0\.4 percent of sales, is low by international standards\. The ICA also suggests that corruption is a less severe constraint for businesses in Vietnam than in most other countries in the region, bar Malaysia\. The implementing decrees for the anti-corruption law drew on the results of the diagnostic studies\. The main initiatives for fighting and controlling corruption include increased public disclosure and transparency in areas such as public procurement, civil works, management and equitization of SOEs, auditing of the state budget, management and use of land, and personnel management\. The adoption of the One Stop Shop (OSS) model nationwide has been an important step towards simplifying administrative procedures and enhancing their transparency\. In general, the OSSs have provided an accessible and recognizable entry point for people in need of administrative services\. Procedures have been published and fees have been made more transparent\. By now, 63 out of 64 provinces have established OSSs in the four compulsory departments, namely Labor and Social Affairs, Natural Resources and Environment, Planning and Investment, and Construction\. Overall, 98 percent of all districts and 65 percent of all communes have set up their OSS\. Legal transparency has improved with the issuance of a Decree stipulating that the sanction for non-publication of legal normative documents in the Official Gazette is non- effectiveness\. While the requirement to publish in the Official Gazette had been made in the Law on the Promulgation of Legal Documents, the implications of non-publication were not explicit until now\. Moreover, this new Decree, passed in 2005, sets clear guidelines for the collection of comments from stakeholders directly affected by legal normative documents\. A minimum period of 20 working days is stipulated for consultation\. The latter can take place through mass media or through the internet\. 35  Progress towards Development Outcomes Pillar 1: Transition to a Market Economy Reform Area Originally expected at end-2006 In 2001 Latest available Assessment Trade Ratio of exports to GDP is 55 47 percent 65 percent HS integration percent Share of private sector exports in 44 percent 77 percent S non-oil exports is 85 percent All quantitative restrictions (QRs) QRs on many products All QRs have been removed HS have been removed Modern customs procedures are in Customs procedures are Modernization project being implemented under a S place burdensome revised Customs Law\. E-customs piloted\. Vietnam becomes a member of the Slow progress in WTO Vietnam became a member of the WTO in January HS WTO negotiations 2007\. SOE reform There are about 2,100 SOEs 5,334 SOEs About 2,000 SOEs\. Large SOEs being transformed\. S SOE shares sold through auctions The share of bank credit going to 42 percent 31percent\. Marginal share of bank credit to SOEs in S SOEs is less than 25 percent last five years was 27 percent\. High proportion of profitable High proportion of Operational reviews, GSO surveys, and surveys of S SOEs unprofitable SOEs equitized SOEs reveal better than expected performance\. Most SOEs make profits, but profit levels are generally low\. Profits improve upon equitization\. Most non-performing inter- Presumption of large Problem related to inter-enterprise debts not as large PS enterprise debts resolved volume of non- as initially presumed\. Focus has been on settling performing inter- non-performing loans with commercial banks\. enterprise debts Data on performance of SOEs Data about SOE sector is Classification of SOEs by performance is being S available annually sketchy conducted annually starting with 2004\. Data for 2005 classification made public in 2007\. 36  Pillar 1: Transition to Market Reform Area Originally expected at end-2006 In 2001 Latest available Assessment Financial Banks in full compliance with No commercial bank in Improved compliance on provisioning, capital PS sector reform banking regulations full compliance adequacy, and disclosure\. Prudential standards themselves raised and are being complied with in a phased manner\. Profitability significantly improved\. Joint-stock banks (JSBs) consolidated, perform better than SOCBs Low estimated non-performing NPLs represent 15 Estimate of NPLs is 8-10 percent, but is subject to PS loan (NPL) ratio in banking system percent of credit revision SBV focused on supervision and Conflicting SBV Banking reform roadmap approved to remove PS regulation responsibilities as owner conflicts and focus SBV on supervision\. Basel Core and regulator Principles self assessment completed\. Sound regulation of policy lending Policy lending still done Policy lending largely shifted to the DAF and the S through SOCBs Vietnam Bank for Social Policies (VBSP) under stricter regulation Private sector Private investment is equal to 20 14 percent 18 percent S development percent of GDP Around 5 million people are 0\.6 million registered with 2\.8 million registered with social security; 3\.6 in S employed in the formal private social security; 1\.3 formal wage employment; 9\.1 million in wage sector million in formal wage employment employment; 7 million in wage employment A level playing field secured with Discrimination on access New Land Law improves access to land; corporate S same regulations for all firms to land, taxes and public tax unified; new enterprise and investment laws contracts create more level playing field Infrastructure Liberalized entry in State monopoly in Telecommunication sector opened to competition for S telecommunication and IT services telecommunication and mobile and ISP\. Further opening to foreign IT-services participants under WTO Improved infrastructure provision Provision of infrastructure Better access to infrastructure\. 88 percent of rural S and operations services often inefficient households electrified\. Rapid increase in road network, teledensity, and sanitation Rational pricing policies for Infrastructure services are Gradual convergence to regional prices\. Cost S infrastructure services expensive recovery in telecoms and electricity\. Operation and maintenance costs covered in water sector 37  Pillar 1I: Social Inclusion and Environmental Sustainability Reform Area Originally expected at end-2006 In 2001 Latest available Assessment Education Net primary school enrollment rate 88 percent (in 1998) 94 percent S attains 98 percent School quality has improved, School quality is uneven Fundamental School Quality Level (FSQL) S especially in poor areas and low in poor areas standards under implementation, with poorer areas recording faster progress Net lower secondary school 62 percent (in 1998) 80 percent S enrollment rate attains 80 percent Health Infant mortality rate is 30/1000 37/1000 (in 1998) 18/1000 (95 percent confidence interval ranges from HS 9 to 27 per thousand) Under five mortality rate is 48/1000 (in 1998) 24/1000 (95 percent confidence interval ranges from HS 36/1000 14 to 33 per thousand) Effective mechanisms to reduce Out-of-pocket payments Compulsory health insurance for the poor funded by S out-of-pocket payments by the deter use of health government budget, with top up for uncovered poor services amounts from Health Care Funds\. Free healthcare for children under-6\. 30 percent subsidy for near-poor to buy voluntary insurance\. Voluntarily insured to rise from 9\.1 million in 2005 to 10 million in 2006 A public health approach is in No appropriate HIV/AIDS law passed with action plans for S place to tackle the HIV/AIDS framework to prevent implementation\. New cases fell from 16,980 in 2003 epidemic HIV/AIDS spreading to 14,200 in 2004 and further to 13,731 in 2005 Social A financially viable social Unsustainable formula for New Law passed in 2006 to increase coverage and S protection insurance system pension benefits, address financial viability especially in public sector Expansion of mandatory system 4\.4 million (11 percent) Estimated 6\.9 million (16 percent) of workers S and voluntary scheme for informal workers covered under covered at end-2006, and voluntary scheme to be sector mandatory system launched 38  Pillar 1I: Social Inclusion and Environmental Sustainability Reform Originally expected at end-2006 In 2001 Latest available Assessme Area nt Land and All land allocated with all upland Not all land allocated especially in In 2004, 72 % of households have LUCs for S forests allocated to locals and ethnic urban and upland areas\. In 1998, 42 agricultural land; 68 % for urban residential communities percent of households had Land-Use land; 64 % for forestry land Right Certificates (LUCs) for agricultural land; 34 % for urban residential land; 42 % for forestry land A functioning land market is in place 7\.9 % of rural households rent-in 10\.7 % in 2004\. Land tenure secured by a PS and land tenure has been secured agricultural land (in 1998) rapid rise in LUC allocation Forest cover expands to 38 percent 35 % Cover expanded to 37 %, but its quality has S not improved Water Increased population access to water 76 and 25 % with improved water and 79 % and 32 % (in 2004) respectively S and sanitation services latrines (in 2002) Integrated river basin planning and Inefficient irrigation and limited Greater participation of water users PS participation of irrigation users participation of users expected following new decree\. Ministerial conflicts impede integrated river basin planning, but an official letter has now clarified responsibilities\. Environm A framework in place to assess EIAs are uncommon Departments of Natural Resources and S ent environmental impact of projects Environment (DONREs) established in all provinces for environmental review of projects\. EIAs mandated under new law\. No further degradation of highly bio- Cover of rich closed-canopy forest is Rich closed-canopy forest 4\.6 % (in 2004), PS diverse forests and wetlands 3\.4 % (in 2000)\. Protected area although more fragmented\. Protected area coverage 4\.1 % (1999)\. Widespread coverage 5\.5 % (in 2005)\. Stabilization of loss of mangrove forest\. Degradation of mangrove forest area\. Degradation of wetlands and coral reefs wetlands and coral reefs continues Mechanisms in place to handle waste Urban pollution is unchecked and Polluter pays principle introduced for waste S discharge and pollution offenders affects the poor water, with fees having been collected in 2005\. Implementation weaknesses remain Gender All newly issued or re-issued LUCs Low percentage of LUCs issued in the Progress on newly issued LUCs, but re- S are in the name of both spouses name of both spouses issuance of old LUCs with both names only on demand\. Convergence in other development indicators by gender\. 39  Pillar 1II: Building Modern Governance Reform Area Originally expected at end-2006 In 2001 Latest available Assessment Planning process Planning towards development Planning focused on production New SEDP based on broad consultation and HS goals targets but CPRGS under focused on development outcomes\. Poverty preparation focus beyond targeted programs alone\. Monitoring tools developed, identifying data sources and responsible agencies A number of provinces and sectors Planning is not well-geared Provincial CPRGS "roll-out" piloted in 20 HS have pro-poor socio-economic plans towards pro-poor goals provinces and is to be scaled up to all provinces Substantially improved integration PIP is a compilation of projects Improved criteria to prepare, appraise and S of the PIP with budget with little links to budget implement public investment projects leading to better selection and more transparent funding Public financial A publicly-disclosed MTEF is used Budget preparation is based on MTEF for 3-years prepared and disclosed in S management a short-term perspective 2006\. Budget for 2006 linked to five year plan Operation and maintenance costs Little integration of capital and Ban on public investment projects without S are fully taken into account recurrent expenditures proper funding\. MTEFs better integrate capital and recurrent expenditure in four sectors Annual publication of detailed and Partial budget data available, at Full disclosure of the central budget aggregate S accurate budget data at all levels central and commune levels categories only Sustainable public debt ratios, with Limited knowledge of Assessment of contingent liabilities launched\. S assessment of contingent liabilities contingent liabilities Debt ratios at sustainable levels Financial Accounting norms in accordance Accounting practices differ Convergence to international standards\. Thirty S accountability with international practice from inter national standards seven auditing and 26 accounting standards issued Legal development A legal system based on the rule of Limited legal transparency Effectiveness of legal documents is conditional PS law and promoting development upon publication in Official Gazette\. Legal and judiciary system strategies approved, but effective implementation measures needed\. Public Progress towards the simplification Cumbersome procedures and One-stop shop (OSS) model adopted in 63 S administration of administrative procedures murky payments provinces, but quality needs attention\. Inter- reform linked OSS piloted to streamline processing\. Action plans for simplification under implementation\. 40  Pillar 1II: Building Modern Governance Reform Area Originally expected at end-2006 In 2001 Latest available Assessment Anti-corruption Reduced corruption as rated by Perception of widespread Comprehensive diagnostic study on corruption PS independent monitors corruption and its modalities is available\. Its findings are corroborated by the Investment Climate Assessment (ICA) survey\. Bribes as a proportion of sales low by international standards; no evidence of state capture; petty corruption is widespread Information Reliable, publicly available Limited statistical development Poverty measurement in line with international S availability economic and social data and data difficult to access standards\. Household and enterprise surveys regularly conducted with publicly available data Note: The rating in the Assessment column is based on the development outcome as of end-2006\. 41   43  Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR INPUTS OF THE GOVERMENT TO ICR OF PRSCs 1-5 As a comprehensive process, PRSC operations embrace increasing numbers of areas while promoting the ownership of the government of Viet Nam in designs and implementation thereof and strengthening the partnership between the government and the donor community\. This process has delivered overall impacts and enabled a more developed and sustainable socio-economic environment, eventually aiming at poverty reduction as the final goal\. 1\. The PRSC operations have delivered significant effects on Vietnam\. PRSC operations 1-5 undertaken over the period of 2001-06 were prepared and implemented quite successfully, creating an effective platform of policy dialogue for the government and the donor community, contributing to the acceleration of the reforms in Vietnam, and mobilizing substantial financial support to the state budget for attainment of the set socio-economic development goals and poverty reduction targets over the past few years\. Actively supporting the implementation of the reform agenda and development program of the government\. Closely aligned to CPRGS, PRSC operations have contributed recommendations of policy priorities in a broad range of areas and creation of specific course of actions for each year\. Established through the PRSCs, the regular policy dialogue between the government and WB and co-financiers took place in a platform where valuable knowledge and expertise of both sides in various areas are brought into full play\. This support is of great importance, especially in the global integration of Viet Nam, including the efforts to accelerate the WTO accession\. In addition, while PRSC implementation was on an annual basis, the PRSC process still featured great strategic importance given that the contents for discussion were closely aligned to strategic orientation of the government and the donor side also actively linked their support strategies to its reform agenda\. Channeling financial support to the state budget The credit proceeds of PRSCs are substantial while the disbursements thereof are very rapid, often only after 3 months of signing\. The procedures to ensure the effectiveness of the Financing Agreement are reasonable and in line with the relevant rules and regulations of Vietnam on international treaties\. This budget support is highly predictable and synchronized with the state budget preparation and execution\. 44  Strengthening cooperation As an initiative of direct budget support by WB, PRSC process has drawn increasing attention of other bilateral and multilateral donors over the last operations\. A high spirit of cooperation and harmonization has been reflected in the use of the same policy matrix for their financing agreement and the participation of many donors in discussion with representatives of various ministries and government agencies\. The coordination across the ministries and government agencies, between WB and donors, and between the government and the donor community has been increasingly strengthened and developed\. Providing effective channel of information The PRSC process has created a platform for regular sharing of information in a wide- range of areas\. Information collected during the PRSC process underlies many of the assessments and analysis of WB and other donors, namely the PRSC Program Documents and the Vietnam Development Report (VDA), usefully providing reference for Vietnamese officials in terms of policy inputs and helps update the international community with the current status and development trend in Vietnam\. 2\. Recommendations on improving the effectiveness of the cooperation in PRSC preparation and implementation\. - Contents: It is recommended to further align to action plans of the government to implement the Resolution of the 10th Party Congress and the SEDP 2006-2010 and the roadmap to implement Vietnam's WTO membership commitments\. Three key pillars are proposed to focus on: (i) transition to a socialist-oriented market economy; (ii) improvement of the effectiveness of governance towards modernity, transparency, efficiency, and fighting corruption; (iii) sustainable development to achieve the MDGs of Vietnam, making efforts to halve the number of the poor households by 2010 while focusing on social issues and strengthening environmental protection\. - Financial support: The government of Viet Nam proposes WB and the other donors to further support the policy of the government to attract ODA and facilitate increased budget financing for the implementation of the ambitious reform agenda of the government and its commitments in various areas, especially in poverty reduction and attainment of the MDGs\. At the same time, for improvement of financing effectiveness, both sides need to seek further harmonization, especially in planning and budgeting processes\. Early and concrete co-financing commitments are of great assistance to the government because this enables more activeness of the government in budgeting and balancing resources across priorities, resulting in more effective use of resources and avoidance of delays in use of resources unaccounted into the state budget\. It is reasonable to schedule PRSC technical discussion and negotiation in April and May, and co- financing commitments should be announced to the relevant government agencies in about July or September, when state budgeting is underway\. 45  In financial perspective, donors should make medium-term and long-term specific commitments for PRSCs and further improve the appraisal procedures of financing to shorten time for preparation and approval of financing documents, facilitating the Government in prediction of annual finances and proactive budget preparation and allocation\. It is suggested that WB and other donors streamline the procedures of receiving co-finances and co-financing agreements be produced by simply referring to the Financing Agreement between the Government and WB\. Conditions under co- financing agreements should only be based on the policy actions agreed upon during PRSC negotiation\. Another suggestion is that upon determination of the channel of financing donors should promptly notify the Government whether it will be direct financing or through the trust fund of WB so that the Government can be proactive in working out formalities to receive resources\. WB and other donors are also proposed to further support the co-ordination by continuing to fund the operations of the PRSC Coordination Unit of SBV to ensure success for the coming PRSCs\. Providing technical assistance in parallel with PRSC operations: During the implementation of the comprehensive PRSC process, in addition to direct budget support, in case of complicated policy actions, WB and other donors would be highly appreciated for providing technical assistance for the relevant ministries and agencies to overcome obstacles and improve the substantive quality of policy actions\. This modality of support should be reflected as the direct results of the commitments under PRSCs\. 46  Annex 5\. Donor Support to the PRSC Process The number of co-financiers increased from four at the time of PRSC 1 to 11 for PRSC 5\. The co-financing amount increased from around $ 40 million to over $ 150 million (see Table below)\. Apart from co-financing PRSC operations, bilateral and multilateral donors have played an important role through their involvement in the policy dialogue with the government\. Donors participating in the process contributed human and financial resources to assess the policy challenges, coordinate their approaches, and discuss the options with government, across a range of policy areas\. These were chosen in accordance with their priorities and comparative strengths\. The preparation of the PRSC operations was conducted in a joint manner, with regular donor meetings taking place to reach consensus on how to proceed\. Bilateral meetings between the World Bank and specific donors have also proved useful to share information and put to good use the combined insights and knowledge of all the parties involved\. These meetings provided the common ground on sectoral priorities and broad timetables for the present operation\. Strong donor commitment to Vietnam is reflected in the intense meeting frequency of the different working groups that were established to coordinate the views of co-financiers and share information pertaining to the PRSC process\. Joint working groups of donors, government and international NGOs that meet on a regular basis have helped carry the discussions on government's plans for reforms to a wide group of stakeholders\. With the formation of working groups organized by policy area, donors have had the opportunity to engage in discussions on reform with government counterparts on an ongoing basis\. Such an arrangement also helped to ensure coherence across donors' programs of support, and to mobilize funding for high priority tasks in each policy area\. 47  DONOR SUPPORT TO THE PRSC PROCESS Donor Co-financing amounts Main areas of involvement in the policy dialogue for PRSC 1 PRSC2 PRSC 3 PRSC 4 PRSC 5 PRSC 4 Asian $6,400,000 $15,000,000 $15,000,000 Trade integration, SOE reform, Financial Development sector reform, Private sector development, Bank (ADB) Infrastructure, Education, Health, Land, Water, Environment, Planning processes, Public administration reform, Legal development, Anti-corruption Agencia española 2,000,000 3,000,000 Land, Water, Environment, Social Protection, de cooperación Planning processes internacional (AECI) Agence française SOE reform, Financial sector reform, de Infrastructure, Water développement (AFD)/ France Australian A$10,000,000 Trade integration, Private sector development, Agency for Public administration reform, Public financial International management, Anti-corruption, Water Development (AusAID) Belgium Water, Environment, Education, Public Administration Reform Canadian CDN7,000,000 CDN8,000,000 CDN4,000,000 Trade integration, Financial sector, Private International sector development, Education, Environment, Development Gender, Public financial management, Anti- Agency (CIDA) corruption, Legal reform 48  Donor Co-financing amounts Main areas of involvement in the policy dialogue for PRSC 4 PRSC 1 PRSC 2 PRSC 3 PRSC 4 PRSC 5 Danish DKr78,400,000 DKr19,500,000 DKr75,000,000 DKr61,000,000 DKr61,000,000 Trade integration, SOE reform, Private sector International development, Land, Water, Environment, Development Planning processes, Public financial Agency management, Financial accountability, Public (DANIDA) administration reform, Legal development, Anti- corruption, Social protection Department for £14,000,000 £10,000,000 £20,000,000 £20,000,000 £20,000,000 Trade integration, SOE reform, Private sector International development, Infrastructure, Education, Development Gender, Planning processes, Public financial (DFID, United management, Financial accountability, Anti- Kingdom) corruption, Social protection European 15,000,000 8,000,000 9,000,000 Trade integration, SOE reform, Financial Commission (EC) sector reform, Private sector development, Health, Education, Planning processes, Public financial management, Financial accountability Finland Public administration reform, Legal development Germany 6,000,000 Water, Environment Ireland 1,500,000 3,000,000 Social protection, gender, financial sector reform, private sector development, anti- corruption Japan Bank for ¥2,000,000,000 ¥2,500,000,000 ¥2,500,000,000 Trade integration, SOE reform, Financial International sector reform, Private sector development, Cooperation Infrastructure, Land, Environment, Planning (JBIC) processes, Public administration reform, Legal development, Anti-corruption, Social protection 49  Donor Co-financing amounts Main areas of involvement in the policy dialogue for PRSC 4 PRSC 1 PRSC 2 PRSC 3 PRSC 4 PRSC 5 Luxembourg Netherlands 15,201,637 8,000,000 12,000,000 14,000,000 24,000,000 Trade integration, Financial sector reform, Ministry of Health, Water, Environment, Gender, Public Development financial management, Financial Cooperation accountability, Public administration reform, (NMDC) Legal development, Anti- corruption Norway Education, Public financial management, Public administration reform, Legal development Swedish $1,868,285\.84 Health, Environment, Public administration International reform, Legal development, Anti-corruption, Development Legal reform Cooperation Agency (SIDA) Swiss Environment, Public administration reform, Development Legal development Cooperation (SDC) United Nations Trade integration, SOE reform, Financial Development sector reform, Private sector development, Program (UNDP) Infrastructure, Education, Health, Land, Environment, Planning processes, Public financial management, Public administration reform, Legal development, Anti-corruption, Social protection 50  Annex 6\. List of Supporting Documents 51

REVIEW

P111665

 ICRR 14503 Report Number : ICRR14503 IEG ICR Review Independent Evaluation Group 1\. Project Data : Date Posted : 12/01/2014 Country : Brazil Is this Review for a Programmatic Series? Yes No Series ID : First Project ID : P111665 Appraisal Actual Project Name : Rio De Janeiro US$M ): Project Costs (US$M): Municipality Fiscal Consolidation For Efficiency And Growth Dpl L/C Number : Loan /Credit (US$M): Loan/ US$M ): 1,045 1,045 Sector Board : Economic Policy US$M ): Cofinancing (US$M): Cofinanciers : Board Approval Date : 07/01/2010 Closing Date : 06/30/2013 06/30/2013 Sector (s): Central government administration (25%); General industry and trade sector (25%); General education sector (17%); Compulsory pension and unemployment insurance (17%); Health (16%) Theme (s): Municipal finance (32%); Health system performance (17%); Education for all (17%); Regulation and competition policy (17%); Public expenditure; financial management and procurement (17%) Evaluator : Panel Reviewer : ICR Review Group : Coordinator : Mariano Cortes Michael R\. Lav Lourdes N\. Pagaran IEGPS2 2\. Project Objectives and Components: a\. Objectives: The Program Document (PD) presents the Program Development Objectives (PDOs) as: to assist the Rio de RJCG in its "\.strategy aimed at: (a) generating additional internal resources for capital RJCG) Janeiro City Government (RJCG investment; (b) improving the quality of social services, particularly in low -income areas; and (c) improving internal administrative processes to reduce costs and enhance performance \." (pg 41)\. b\. If this is a single DPL operation (not part of a series), were the project objectives/ key associated outcome targets revised during implementation? No c\. Policy Areas: The fiscal space policy pillar will help generate additional resources for public investment through measures to improve revenue collection, reduce pension costs through parametric reforms, and debt restructuring operations \. The service delivery policy pillar will support the expansion of innovative approaches to primary and emergency health care as well as pre-school and primary school programs in low -income and violence prone areas \. It will also seek to improve businesses registration processes \. The public-sector management policy pillar will support the establishment of a system of results agreements for key municipal functions, the implementation of some elements of a medium -term expenditure framework, reforms in public procurement and management, and the establishment of a framework to enable PPPs to invest in infrastructure and service delivery \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The project was approved by the Board on July 1, 2010 and closed as scheduled on June 30, 2013\. The operation was a two tranche DPL totaling $ 1,045 million\. The first tranche of $545 million was released on 08/31/2010 upon completion of prior actions and the second tranche of $ 500 million was released on 11/23/2011 upon completion of the second tranche conditions \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Project objectives were relevant at the time of project appraisal \. The economy in the City of Rio de Janeiro had been in a lengthy decline, underperforming vis -a-vis other large cities in the country \. Furthermore, almost 20 percent of the city's population lived in slums with inadequate infrastructure, schools and health facilities with fiscal constraints (80 percent of the Municipality's revenue allocated to mandatory expenses ) impinging on public services delivery\. While the City was able to meet the requirements of the Fiscal Responsibility Law even in unfavorable conditions triggered by the global crisis, it did so in part through a significant decline in the share of investment expenditures\. Project objectives were still relevant under the Country Partnership Strategy (CPS) for FY2012-2015\. Specifically that document identified (i) increasing the efficiency of public and private investments, (ii) improving the quality and expanding the provision of public services for low income households, and (iii) promoting regional economic development through improved policies and strategic investments in infrastructure among its strategic objectives\. Furthermore, many sub-national governments viewed the World Bank Group's involvement as essential for increasing fiscal space inter -alia to fund investments (CPS, para 46)\. The CPS specifically identified the following results area with a direct bearing on this project objectives' : (i) fiscal and public sector management, (ii) education quality for low income groups, and (iii) access to health care for low income households\. The objectives were also highly relevant to the City of Rio de Janeiro Municipality \. In particular, the rising cost of pensions (para 32) and the high interest costs of public debt (PD, para 35) are identified as challenges that needed to be tackled to generate the fiscal space required to fund the provision of services and investments \. Furthermore, the policy areas of the DPL are those of the City Government program (PD, paras 55-93, and 98)\. The relevance of objectives is rated high\. high b\. Relevance of Design: Given the Brazilian Constitution's allocation of powers and responsibilities to the three levels of government (federal, state, municipality) whereby extensive autonomy and responsibility for the provision of services including health and education is bestowed to municipalities, this DPL is rightly centered on the RJCG \. This was the first DPL operation that the World Bank undertook at a municipal level \. At the same time, a parallel DPL was centered on the Rio de Janeiro State, also covering among other policy areas, education and health \. Thus the two operations helped support policy coordination between the State and Municipal Governments which was expected to be more conducive to effective policy implementation and services delivery \. The RJCG DPL was also supported by two Technical Assistance operations from the World Bank \. Overall, the project's results framework is cogent \. The objectives were clearly stated and soundly interlinked \. The activities to be undertaken in the three policy areas (see previous section) could reasonably be expected to contribute to the achievement of the projected outcomes \. For example, the generation of fiscal space through improvements in tax collection (e\.g\., electronic invoicing of taxes on services ), reductions in personnel staffing and in pension costs (e\.g\., parametric reforms) along with savings from RJCG’s liability management operation (pre-payment of debt to the Federal Government ) would generate resources that in turn would help fund the construction of health and educational outposts in low income and violence prone parts of the city \. Such investments along with other undertakings including innovations in the management of those and pre -existent facilities (e\.g\., contracts with qualified social organizations ) would help underpin improvements in education and health services delivery to the poor both in terms of coverage and quality \. Improvements in public sector  management (e\.g\., results management agreements and implementation of the first steps of a medium -term expenditure framework--MTEF) were also expected to support efficient delivery of services while generating cost savings\. Progress towards the achievement of the program objectives was to be tracked based on 13 outcome indicators\. Notwithstanding the overall coherence of the results framework, there are areas that could have been further developed\. For example, there is no explicit quantitative target (no specific number or target range ) for the fiscal space generation objective (or a time path), nor a target for the investments to be undertaken \. On the latter, it is noted that the PD shows (in Table 6, page 16) a rapidly rising investment path through 2014\. For the PDO “improving the quality of social servicesâ€?, specifically for the delivery of health services, the results framework did not specify an outcome indicator measuring changes in quality so the extent to which this dimension of the PDO was met is not possible to ascertain \. Similarly, for the delivery of educational services the outcome indicators for dropout rates and for the performance of Escolas da Amanha students in the IDEB/IDE exams did not specify quantitative targets, only the direction of change, namely annual reductions and improvements , respectively (PD Annex 2, pg 68)\. There is also a paucity of outcome indicators that would allow an assessment of whether improvements in administrative process do indeed result in enhanced performance \. The lack of legislative support for the enactment of parametric reforms of the pension system was not fully appreciated \. On balance, the relevance of design is rated substantial \. 4\. Achievement of Objectives (Efficacy): Regarding actions and policy measures, this section focus mainly on the extent of implementation of the main ones, which appeared bolded in PD Annex 2—Operation Policy Matrix\. (a) Generating additional internal resources for capital investment The generation of fiscal space was to be achieved by measures in (i) tax administration, (ii) better control of personnel expenses, (iii) reduction in the actuarial deficit of the pension plan through parametric reforms, and (iv) (implicitly) liability management operation (i\.e\., pre-payment of debt to the Federal Government )\. The electronic invoicing was implemented and contributed —according to the authorities ’ estimates—to a 6 percent real growth in the taxes on services revenue (exceeding the 4 percent outcome indicator target )\. Other revenue generating measures were also implemented—to tackle tax arrears and introduce user charges for public lighting \. The government decreed a 30% reduction in commissioned employment and cuts to benefits in early 2009 slowing down the real growth in such expenses (as targeted for in its outcome indicator )\. Regarding pension savings, the legislative assembly did not approve the draft law that would have enacted parametric changes for new public employees \. Rather, the bulk of the actuarial deficit reduction is to be covered by the Municipality ’s payment of a supplementary contribution on current employees for a 35 year period\. This policy action is at odds with the outcome indicator target which envisioned a roughly 50:50 reduction in the deficit between parametric reforms and assets transfer \. The supplementary contribution will increase pension related outlays rather than generate fiscal space that would have been created by the approval of parametric changes in pension benefits (e\.g\., indexation of pension benefits on inflation rather than nominal wage growth)\. It is noted that the actuarial reduction achieved, which is estimated at about R$ 21\.5 billion, is much larger than the targeted reduction of R$ 6\.3 billion (Aide Memoire, November 2012 Supervision Mission, page 9)\. The liability management operation almost halved debt service cost \. The ICR reports that from 2010 through the first half of 2013 the combined effect of these measures amounted to R$ 3\.9 billion, equivalent to 43\.6% of investment spending over the period\. It should be noted that about a quarter of that amount stems from the one -off tax arrears amnesty\. Municipal investments grew from R$400 million (3\.7% of total expenditure) in 2009 to R$3\.3 billion (15\.9% of total expenditure) in 2012, with 12% of the increase accounted for education and health infrastructure (ICR Table 4)\. An additional R$1\.2 billion in 2012 was undertaken via PPPs\. The amount invested by the Municipality in 2012 exceeded PD projections for that year (R$2\.9 billion; Table 6, page 16)\. This ICR Review considers that projection as an implicit target for the assessment of the extent of achievement of this part of the PDO \. Note—The Aide Memoire for the supervision mission of November 2012 reported a significant difference in the baseline estimate for the actuarial pension deficit (R$22 billion rather than the PD’s R$36 billion)\. There was no Board approval for the change of this outcome indicator target \. The Aide Memoire indicated that the authorities did not recognize the higher figure as the baseline (page 2)\. The first four Implementation Status Reports (ISR) were silent on this issue\. Achievement of this objective is rated substantial \. (b) Improving the quality of social services (health and education), particularly in low-income areas On health, the government undertook an overhaul and expansion of health care provision since 2009 based on integrated networks of family and urgent care clinics, establishing 71 Family Health Centers (FHC) serving mainly low income families\. Coverage of population grew from 6% in 2009 to 40% by 2013, almost entirely low income populations (ICR pgs 17-18), which substantially exceeds the 12 percent target\. The ICR (pg 18) reports that a range of service quality indicators has also shown improvements \. On education , wide ranging reforms were implemented including the opening and putting into operation of 10 EDIs--Integrated Pre-school Program-- in targeted low-income neighborhoods, the provision of remedial action in math and reading to older students performing below grade level, and the promotion of community engagement particularly around the 152 Escolas da Amanha \. All the outcome indicators on education were met or exceeded albeit with certain caveats\. The students drop out rate fell from 3\.6 percent in 2009 to 2\.1 percent in 2012, while the average score of students in Escolas da Amanha in the IDEB /IDE Rio tests rose every year between 2009 and 2012 (ICR Table, pg 20)\. Annual enrollments in Early Child Development Centers (ECDs) grew by about 6,000 places a year compared to a target of 3,000 a year since 2009 with most of the new spaces allocated to children of Bolsa Familia recipients\. A change in school enrollment age (from 7 to 6 years old) starting in 2010 prevents assessment of another related outcome indicator (ICR page 19)\. The ICR notes problems with the national proficiency standard used in the PD’s results matrix\. In the event, performance of grade 2 students was measured against the RJ's standards, with results showing a jump from 80% of students in 2010 to 90% of students in 2012\. Finally, the share of th 8-9 graders more than 2 years behind grade level fell faster than targeted (ICR Table 6)\. The introduction of on-line business license application for activities with low environmental risk cut the time it took to register a business to 3 days in September 2013 “comparedâ€? to a target of 12\.5 days in 2010—note that the target was for 2010 and the data reported in the ICR was for September 2013--(ICR pg\. 20)\. high \. Achievement of this objective is rated high\. (c) Improving internal administrative processes to reduce costs and enhance performance Activities to be undertaken in this policy area included initiating the implementation of a MTEF, the adoption and implementation of results based management (RBM) agreements with the public sector, and PPPs with the private sector\. The ICR states (page 21) that RBM agreements have been signed covering all but one city agency and 80% of the Municipalities’ workers\. It also notes that both targets and results of RBMs are published on the web and externally audited\. However, the ICR is not explicit about whether RBMs are subject to annual evaluations which constitute the outcome indicator \. The ICR reports that since 2011, draft MTEF's covering 80-90% of expenditures have been prepared in parallel to traditional budget process and published in the Municipality ’s web site\. Further, it notes that “[w]hile not fully operational, the steps that have been taken represent important progress …, hence are considered as meeting the target of implementing the first steps of 3-5 MTEF\.â€? This review agrees with that assessment\. On PPPs, the City created a PPP Council, defined project selection criteria, and established a guaranteed fund strengthening the institutional capacity to design /manage PPP projects\. As of June 2013, 5 projects were under implementation, of which 4 have been prepared by the PPP unit, compared to an outcome target indicator of 1 project\. Other management initiatives were put in place (e\.g\., a centralized electronic auction system for standardized purchases and a new stock management procedure in the health system )\. resulting, respectively, in 39% average savings as estimated by The Municipal Secretariat of Administration reported that the former resulted in 39% average savings compared to a 20% target, and the later in a a reduction in losses in the stock of goods in the health sector from 4\.9 % in 2006-09 to 0\.01% in 2012 (ICR page 22)\. For the later indicator the PD had targeted a halving of the losses but starting from a different baseline level \. While the first four ISRs for this project did not mention that the baseline estimate had been miss -specified, the Aide Memoire for the November 2012 supervision mission reported actual losses of 4\.9% in 2006-09 (the baseline period) and 0\.12% in 2012 (page 7)\. There was no Executive Board approval for this change in baseline \. The ICR reports that the authorities viewed the 20% baseline as implausibly high\. On balance, despite overachievement in PPP implementation and other areas, the paucity of performance indicators measuring enhancements in performance and weak evidence on the actual evaluation of RBM contracts leads to an assessment of achievement of this objective as substantial \. Macroeconomic framework -- The IMF's 2013 Article IV Consultation noted that Brazil was recovering gradually from the growth slowdown that had started in mid -2011 with near term growth prospects limited \. Inflation remained elevated (at around the upper band of the target range )\. In the near term, further monetary tightening but unchanged fiscal policies were expected \. Over the medium term a tightening of fiscal policies while maintaining sub -national fiscal discipline were required to bolster confidence, investments, and growth prospects while putting gross debt firmly on a downward path\. 5\. Efficiency (not applicable to DPLs): 6\. Outcome: While the relevance of objectives is rated high, design is rated substantial owing primarily to a lack of specificity regarding some outcome indicators, particularly for the fiscal space and public investment objectives \. Efficacy for one of three program objectives as identified in this ICR Review is rated "high" and the other two "substantial"\. The overall outcome rating of satisfactory \. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: There are some risks to the maintenance of the fiscal space generated under the DPL to fund investment expenditures associated with a slowdown in economic activity and thus tax revenue collection as well as continued increases in pension deficits (PD, page 49)\. It should be noted however, that tax revenues proved broadly resilient in the aftermath of the global crisis \. Resistance to reform could become more entrenched going forward, particularly with regard to those affecting pension benefits of public sector employees as the Municipality has not adopted the reforms ingrained in the Federal Constitution yet\. At the same time, as the benefits associated with the reforms in early and primary education and health services provision extend throughout the City, a supporting -the-reform constituency could be expected to emerge\. Finally, although unlikely revenue sharing arrangements between the three levels of government might change in the future that could require additional fiscal consolidation efforts on the part of the RJCG \. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: a\. Quality at entry: This was an innovative operation in so far as it was the first DPL at the Municipal level \. Risks that could be encountered in going down to sub -national levels were well identified (e\.g\., institutional capacity for policy implementation was strengthened through the provision of technical assistance, for example on PPPs )\. It builds on lessons from DPLs to various states in Brazil \. The objectives and policy areas were quite relevant to all levels of government, Municipal, State, and Federal, as well as to the World Bank \. The Municipal DPL was prepared in parallel with a Rio de Janeiro State DPL allowing to leverage synergies and ensure a more effective policy coordination in overlapping areas \. The analytical underpinnings of the operation appear sound and comprehensive, including PSIA (PD, pg 39)\. The macro-framework for the Municipal public finances, including a debt sustainability assessment, is adequately covered \. Many of the risks to the program were identified and adequately dealt with, including through a supporting TA operation to strengthen the authorities ’ capacity to manage PPPs\. However, the operation could have been further strengthened in certain areas, including a better tackling of the likely opposition to parametric reforms of the pension systems—outlays in this area are significant accounting for more than 40% of total personnel expense (PD page 12)\. While the project team brought an expert to buttress policy discussion with the authorities when the prospects for congressional approval of the parametric reform run into trouble, preemptive action could have been taken during project preparation \. The results framework could have been more thoroughly fleshed out (e\.g\., quantification of a rank for fiscal space and investment; service quality delivery indicators in the health sector )\. The baseline estimates for two outcome indicators (the actuarial deficit of the RJCG's pension fund, and the losses in the stock of goods in the health sector ) reported in the PD proved to be far from the actual numbers used in the implementation of the project as per the Aide Memoire for the November 2012 supervision mission and the ICR (see section 4 above)\. at -Entry Rating : Quality -at- Satisfactory  b\. Quality of supervision: The ICR reports that no issues were encountered that required Management's attention \. Further, the project team is said to have reacted proactively when the passage of the Municipal pension reform law ran into trouble arranging for a mission of a pension system specialist to deepen the policy dialogue with the authorities \. Two supporting TA projects (one on PPPs and the other on Strengthening the Public Sector Performance supported other policy areas covered under the DPL \. However, major discrepancies in the baseline estimates for two outcome indicators apparently went undetected for many months (the first four ISR were silent on this matter ) surfacing in the Aide Memoire for the November 2012 supervision mission (i\.e\., almost two and half year after Board approval)\. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The RJ Municipal Government showed strong political leadership and commitment to reform as embodied in the adoption of RBM almost all public agencies and by the phasing in of innovative health services management and delivery modalities\. The loan disbursed fully and on scheduled \. The only area were results fell short of objectives is on the parametric reform of the pension system \. Government Performance Rating : Satisfactory b\. Implementing Agency Performance: The Secretariat of Finance, supported by the Office of the Chief of Staff had overall program responsibility \. Arrangements were put in place to ensure effective surveillance and M&E, and officials and agencies demonstrated both commitments and capacity for effective implementation of a complex undertaking \. Implementing Agency Performance Rating : Highly Satisfactory Overall Borrower Performance Rating : Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The results framework utilized 13 outcome indicators to help monitor progress and assess performance \. As noted elsewhere, most indicators were adequate for the task at hand, however the framework should have include indicators on fiscal space generation, investment, and quality of health service provision and outcomes \. In the event, the ICR reported revisions to the baseline data for two indicators (the actuarial pension deficit estimate and to the rate of losses of the stock of medicines )\. In addition, the PD (pg\. 55) identified three specific evaluation projects to assess the effectiveness and impact of specific activities supported by the project in the area of education \. The RJ’s Secretary of Education would be partnering with World Bank researchers and other domestic and foreign entities in those endeavors \. At the time of Country Partnership Strategy (CPS) FY2012-2015, September 2011, the Bank was helping the RJCG evaluate innovative “pay-for-performanceâ€? programs for teachers and early childhood development (CPS, Box 2, pg13)\. b\. M&E Implementation:  Overall responsibility for M&E, including the gathering, analysis, and reporting of relevant data for prior actions and second tranche release conditions, was bestowed on the Secretary of Finance, supported by the Secretary of Planning and the relevant agencies involved in project implementation \. There was also a dedicated Project Implementation Committee\. The ICR reports that M&E was effectively implemented and that results were shared with the World Bank\. c\. M&E Utilization: M&E framework generated the evidence used to proceed with the release of the second tranche of the loan \. The ICR reports that “attention to measuring outcomes stimulated further awareness and appreciation of the importance of M&E for the Government’s reform strategy more generally …â€? (ICR pg\. 11)\. M&E Quality Rating : Substantial 11\. Other Issues a\. Safeguards: None identified in the ICR\. b\. Fiduciary Compliance: None identified in the ICR\. c\. Unintended Impacts (positive or negative): Institutional development both for PPPs and for the MTEF has been buttressed under the loan and the associated supporting TA operations \. For example, the City now has a functional and fully operational PPP Unit that should serve the City well for many years to come \. The ICR considers that the introduction of RBM could have far reaching consequences as anecdotal evidence suggests that it has started to impact the civil service culture (pg 24)\. d\. Other: This DPL was the first of its kind (i\.e\., Municipality level) requiring a waiver of OP/BP 8\.60\. Subsequently, the World Bank Board amended this OP/BP in February 2011 allowing DPL with any political subdivision that has budgetary and legislative authority to enter into a loan agreement with the World Bank (“2012 Development Policy Lending Retrospective: Results, Risks and Reformsâ€?, the World Bank)\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Highly Satisfactory Satisfactory Difference in efficacy ratings \. Risk to Development Negligible to Low Negligible to Low Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons:  This ICR Review concurs with the lessons identified in the ICR (pg\. 27)\. The simultaneous policy/financial engagement at different government levels in countries where the allocation of responsibilities for policy design and implementation is decentralized would seem to be an effective approach to garner stronger policy commitments, coordination, and implementation \.Clearly, more country cases are necessary to form a more definite view\. Sometimes the long-term impact of structural reforms (e\.g\., parametric changes to pension funds ) might not be fully/properly appreciated by those involved, particularly when faced with strong reluctance to move away from the status quo even thought it might be unsustainable \. The Bank could by putting forward strong analytical evidence early on during policy discussions advance the formation of a political consensus in support of such reforms \. 14\. Assessment Recommended? Yes No Why? This is a first of its kind DPL, engaging authorities at the Municipal level while at the same time engaging State level of authorities in a parallel operation \. Such a parallel approach would appear to be an effective tool for the World Bank to be able to work at various levels of government in countries with decentralized organization with significant powers over developmentally relevant matters devolved to lower levels of governments \. The World Bank would appear to be in a better position to leverage and deliver its know -how and policy expertise at the most impactful level engaging both at the policy (state) and implementation (municipal) levels while ensuring effective inter-governmental coordination\. 15\. Comments on Quality of ICR: The ICR is sufficiently thorough to let readers form a cogent view of the operation and the results thereunder \. It is, however, almost twice as long as the recommended length \. It clearly and meticulously presents the DPL's program objectives, which is the basis for a candid discussion of the operation and results \. It appropriately highlights strengths and weaknesses, thought it could have flagged more clearly the longer term fiscal consequences of not undertaking the parametric reform of pensions \. In most cases, it marshals sufficient evidence on quantitative outcomes in clear tabular presentations that complement substantive qualitative discussions for each objective \. There is consistency throughout the report \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P117822

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) Report Number : ICRR0020394 1\. Project Data Operation ID Operation Name P117822 SL-GRGG 4 BUDGET SUPPORT (DPL) Country Practice Area(Lead) Sierra Leone Macro Economics & Fiscal Management Programmatic DPL Planned Operations: 3 Approved Operations: 3 L/C/TF Number(s) Closing Date (Original) Total Financing (USD) IDA-48600 31-Jul-2011 10,000,000\.00 Bank Approval Date Closing Date (Actual) 20-Dec-2010 31-Jul-2011 IBRD/IDA (USD) Co-financing (USD) Original Commitment 10,000,000\.00 0\.00 Revised Commitment 10,000,000\.00 0\.00 Actual 9,807,680\.00 0\.00 Sector(s) Central Government (Central Agencies)(65%):Other Industry, Trade and Services(27%):Other Energy and Extractives(8%) Theme(s) Public expenditure, financial management and procurement(61%):Other Private Sector Development(12%):Debt management and fiscal sustainability(11%):Tax policy and administration(8%):Other accountability/anti-corruption(8%) Prepared by Reviewed by ICR Review Coordinator Group Felix Oppong Clay Wescott Lourdes N\. Pagaran IEGEC (Unit 1) PHPROJECTDATATBL Operation ID Operation Name P126355 SL-DPL 5 - Budget Support ( P126355 ) Country Practice Area(Lead) Sierra Leone Macro Economics & Fiscal Management  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) L/C/TF Number(s) Closing Date (Original) Total Financing (USD) IDA-48600,IDA-50560 31-Aug-2012 24,000,000\.00 Bank Approval Date Closing Date (Actual) 26-Jan-2012 31-Aug-2012 IBRD/IDA (USD) Co-financing (USD) Original Commitment 24,000,000\.00 0\.00 Revised Commitment 24,000,000\.00 0\.00 Actual 24,029,340\.00 0\.00 Sector(s) Central Government (Central Agencies)(70%):Mining(4%):Other Energy and Extractives(15%):Other Water Supply, Sanitation and Waste Management(3%):Other Industry, Trade and Services(8%) Theme(s) Public expenditure, financial management and procurement(32%):Tax policy and administration(27%):Regulation and competition policy(36%):Export development and competitiveness(5%) PHPROJECTDATATBL Operation ID Operation Name P133107 SL-GRGC-6 Gov Reform & Growth Grant FY13 ( P133107 ) Country Practice Area(Lead) Sierra Leone Macro Economics & Fiscal Management L/C/TF Number(s) Closing Date (Original) Total Financing (USD) IDA-48600,IDA-53480,IDA-H9600 30-Jun-2015 25,000,000\.00 Bank Approval Date Closing Date (Actual) 23-Dec-2013 30-Jun-2015 IBRD/IDA (USD) Co-financing (USD) Original Commitment 50,000,000\.00 0\.00 Revised Commitment 24,962,385\.00 0\.00 Actual 25,128,243\.00 0\.00  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) Sector(s) Central Government (Central Agencies)(56%):Other Education(11%):Mining(11%):Energy Transmission and Distribution(22%) Theme(s) Administrative and civil service reform(11%):Public expenditure, financial management and procurement(33%):Tax policy and administration(33%):Legal institutions for a market economy(23%) 2\. Project Objectives and Policy Areas a\. Objectives Project Portal Project Development Objective The Program Development Objective (PDO) was to: (i) improve the allocation and efficiency of public spending to support poverty reduction; (ii) strengthen domestic resource mobilization and management; and (iii) increase provision of electricity (PAD GRGC 4, Credit and Program Summary)\. Although, there were different formulations of the PDO in the program documents, there was a consistent formulation in the Credit and Program Summaries of the other two operations\. This Review will use the PDO statement in the Credit and Program Summary\. b\. Were the program objectives/key associated outcome targets revised during implementation of the series? If yes, were the changes part of the program document approved by the Board? No c\. Pillars/Policy Areas i\. Public Expenditure Management\. The expected outcome of this policy area was to improve implementation of the poverty reduction strategy through reduced incidence of extra-budgetary spending and virement between expenditure heads\. The government aimed at specifically improving the budget allocations made to social services (Education and Health) and eliminating laxity in fiscal management that resulted in rising fiscal deficits and risks, and growing contingent liabilities\. Some of the prior actions under this policy area included reallocation of budget heads in conformity to the budget law, submission of public debt management bill to Parliament, a review of the budgeting and accountability Act (2005) and Regulation (2007), biometric verification of teachers on the payroll, increasing the quality of 20 procurement plans, and reducing to less than 10 percent in 2009 the difference between the variance in expenditure composition of the 20 largest budget heads and the actual deviation in domestic primary expenditure\. ii\. Domestic Resource Mobilization\. The expected outcome of this policy area is to improve the tax revenue by increasing the taxpayers with tax identification numbers\. The increase in the tax revenue was expected to accommodate the rising non-debt expenditures after 2010\. The government intended to achieve its target through increased tax compliance of Small and Medium Enterprises and a reduction in discretionary exemptions granted annually\. The main prior actions for this policy area was the submission of a law to Parliament to reduce the opportunity for discretionary tax exemptions which was reducing tax revenue by 30 percent, and further increase the transparency of exemption decisions\.  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) iii\. Public Sector Reform The expected outcome of this policy area is to expand the potential for increasing investment in the public sector by increasing the efficiency and effectiveness of public administration and service delivery in the Civil Service\. The reform also aimed at rationalizing the size of the public service\. Some of the prior actions for this policy area included the submission of four bills to Parliament, that is: (i) Public–Private Partnerships Bill, (ii) Freedom of Information Bill, (iii) an Electricity and Water Regulation Commission Bill, and (iv) a National Electricity Bill\. Other prior actions include Cabinet approval of principles to guide tariff methodology in the energy sector and formalizing power sales to the National Power Authority\. d\. Comments on Program Cost, Financing, and Dates The programmatic series provided the government of Sierra Leone with a total of US$59 million\. The first and second operation were credits, while the third operation was a grant\. The first operation in the series was appraised on November 16, 2010 and approved by the Board on December 20, 2010\. It became effective on January 18, 2011 and SDR 6\.4 (US$10) million was disbursed by the close of the operation on July 31, 2011\. The second operation in the series was appraised on December 20, 2011 and approved by the Board on January 26, 2012\. It became effective on January 31, 2012 and disbursed in full SDR 15\.5 (US$24) million before closing on August 31, 2012\. The third operation was also appraised on November 18, 2013 and approved by the Board on December 23, 2013\. It became effective on May15, 2014 and disbursed in full SDR 16\.3 (US$25) million before closing on June 30, 2015\. The TTL attributed the delay in the effective date of the third operation to the request by the authorities to convert the third operation from a 'credit' to a ’grant’, after board approval and signing of the Financial Agreement as a credit\. The government requested the grant facility because of fiscal challenges it was facing from the decline in commodity prices, the closing of two iron mines and the Ebola outbreak\. There were no reported exchange rate losses resulting from conversion from SDR to US dollars for all three series\. The TTL indicated that the amount (US$50million) displayed in the Bank’s operations portal as the original commitment for the third operation is an error\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives The programmatic series addressed relevant challenges affecting the economy between 2010 and 2015\. Some of the key challenges during the period included the rising fiscal deficit, limited and unsustainable energy supply, falling expenditures for social sectors, and increased demand for capital spending for rehabilitation and new construction\. The rising fiscal deficit was partly a result of rising discretionary exemptions which weakened revenue performance, strong growth in domestic financed capital expenditures and rising wage bill\. The objectives of the program were in line with the government’s second and third Poverty Reduction Strategy\. They were consistent with the World Bank’s Country Assistance Strategy for the period FY10-13 and the African Regional Strategy emphasizing improving governance, and increasing growth\. The three operations were also fully aligned with the Joint Assistance Strategy which was prepared in collaboration with African Development Bank, the International Finance Corporation and other development partners in the Multi-donor budget support group\. Rating  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) High b\. Relevance of Design The design of the three operations focused on three policy areas (Public Expenditure Management, Domestic Resource Mobilization and Public Sector Reforms) that were relevant to the objectives of the government program\. Each prior action, trigger, and outcome target was linked to the three policy areas\. The choice of programmatic series was appropriate and enabled the team to incorporate changing priorities of government as indicated in the second and third poverty reduction strategy papers of Sierra Leone\. Most reform actions supported a causal chain linked to objectives and outcomes, in line with the changing country context within the period when the operation was designed and implemented\. Despite the appropriateness of the instrument and its linkages with the government’s policy agenda, the design fell short in many other areas\. Some of the policy actions were not adequately supporting the achievement of objectives\. These policy actions were one time actions that had to be taken by government and were easily reversible after the program\. Such policy actions attempted to micromanage the government instead of sustaining a plausible reform agenda\. One such policy action is: “The portion of budget head 501 being assigned to the office of the vice president and Miscellaneous Services General will be reassigned to other appropriate budget head”\. Another policy action which could be easily reversed is the variance in the expenditure composition of the largest budget heads which should not exceed overall deviation in domestic primary expenditure by more than 9 percentage points (GRGC5 Results Indicator)\. This policy action was dropped in the sixth program\. The annual budget has many budget heads and thus a sample of largest 20 budget heads would not remain the same over time\. This was a measurement and comparability issue with this indicator that affected the design of the first two programs (GRGC4 and GRGC5)\. However, corrective measures were taken during the third program (GRGC6)\. The ICR indicates that some of the triggers in GRGC5 were either replaced or refined during the third operation to make them measurable and realistic\. The design was made more relevant to the objectives during the third operation\.(ICR pp4,5) Sierra Leone's macroeconomic framework provided an adequate basis for the proposed series, based on prudent policies that seemed sustainable over the medium term\. It was conservative in that it didn't take into account two new iron ore operators, and factored in fiscal restraints below desired levels due to revenue uncertainty\. The country is reported by the ICR to have engaged in election year overspending in 2012 which resulted in a temporary suspension of an IMF program, but the government worked to get back on track\. While initial growth through 2013 far exceeded expectations, there was a sharp decline after that due to the collapse of commodity prices, and the Ebola epidemic, both beyond the ability of policy makers to control\. Other macroeconomic risks are discussed in Section 6\. Rating Modest 4\. Achievement of Objectives (Efficacy) PHREVISEDTBL Objective 1 Objective To improve the allocation and efficiency of public spending to support poverty reduction Rationale Efficacy is assessed against several outcome indicators as follows\. The quantitative target aimed at minimizing the variance between individual budget categories and their respective allocations in 2014 to 15 per cent of the original budget was met, with a result of 13\.6 per  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) cent\. Public domestic debt was stabilized at 11\.6 percent of non-iron ore GDP, meeting the target of being below 13 per cent\. Fiscal overhang was limited to 1\.7 per cent of the revenue statutory limit on the central bank overdraft facilities, and the combination of the change in domestic expenditure arrears and unpresented checks (float) did not exceed 1\.5 percent of total actual expenditure, meeting the targets of less than 5 per cent and 2 per cent respectively\. Cash Management Committee reports met the target of including relevant arrears data in the first half of 2014\. While the Committee did not meet starting in the second half of 2014 due to the Ebola epidemic, meetings resumed in 2016 and relevant reports started being produced\. There was no overspending outside of Government Budgeting and Accountability Act proscriptions, so no supplementary budgets were required, meeting the outcome target\. However, the target that 75 percent of procurements would be conducted through open competition was not met, with actual achievement of 42 per cent in 2014\. In addition, the target of at least 98 percent of teachers on payroll having HR records was not met, with a result of 76 per cent in 2014\. Despite most of the outcome targets being met, there are still concerns with the quality of budget allocation which was reflected in large deviations in the expenditures compared to the budget plan\. It also noted the laxity in fiscal discipline which reflected weakness in the underlying budget preparation\. Unappropriated expenditures were frequently displacing appropriated expenditures\. The ICR confirms the inadequacy of the policy actions and reports that: “despite the achievement of the quantitative targets, there were clear challenges with the budget allocation and efficiency issues in the public spending” (p\. 12)\. The ICR further states that off-budget spending was a common practice during the implementation of the programmatic series\. Among the targets that were met was the stabilizing of domestic public debt\. This target may have been met on the back of accumulating arrears, which is an indicator of hidden macroeconomic instability in the economy\. Also, the target which aimed at limiting fiscal overhang had no baseline when the indicator was formulated and thus, it was difficult to assess the results as reported in the ICR\. Another target that was met required government to submit a supplementary budget to Parliament if government actual expenditure exceeds the budget between 2013 and 2014\. The government did not present any supplementary budget to Parliament and hence the target was met\. The ICR does not confirm if indeed all actual spending were kept within budget\. The GRGG 6 took corrective measures to address challenges with accumulated arrears and unpaid financial obligations\. The cleaning up process defined the selected prior actions for GRGG 6 (p\. 23)\. While the policy actions were important steps forward, continuing work will be needed to improve allocation and efficiency of spending in support of poverty reduction\. On balance, though there were mixed results within the implementation period, the program’s major outcome indicators had been met at the closing of the program, with public debt stabilized and the variance between budget and actual reduced\. Rating Substantial PHREVISEDTBL Objective 2 Objective Strengthen domestic resource mobilization and management Rationale Efficacy is assessed against the achievement of a strengthened domestic resource mobilization and management\. The program target was to achieve a tax revenue to non-iron ore GDP of 12 percent by 2014, but it only increased from 9 percent in 2009 to 10\.8 percent in 2014\. The target was not met mainly as a result of the Ebola epidemic in 2014, along with the price decline which precipitated the closure of two largest iron ore mines\. Tax revenue to non-iron ore GDP fell by 1\.7 percent from 2013 and 2014 as a result of these shocks\. The ICR reports a recovery of this indicator after 2014\.  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) Although the tax revenue target was not met, the program managed to get 92 per cent of the large tax payers to file their tax returns on time, exceeding the target of 90 per cent from a baseline of 45 per cent in 2009\. Also, a national Minerals Agency was established by an Act of Parliament and staffed to regulate the mineral sector\. Increasing the number of large companies that file their taxes on time is usually expected to lead to increased revenue collections when the economy is stable and growing\. Tax revenue would have fallen further in Sierra Leone without the policy action aimed at increasing the base of large tax payers filing their tax returns\. The ICR describes the revenue performance of Sierra Leone after the program as being weak compared to its neighboring West African countries\. The third program document in the series duly acknowledges that income tax compliance has been historically low in Sierra Leone and envisages a structural deterioration in revenue collection from the non-mineral economy\. By implication, a shock in the international price of mineral ores is likely to have a devastating effect on the Sierra Leonean economy\. The program did not fully achieve its objectives, given that the prior actions were not sufficient to stimulate stronger revenue generation, in light of the unexpected Ebola shock\. Still, Government efforts at bringing tax payers into the tax net and passing the National Minerals Agency are not easily reversible and could have long term benefits\. On balance, the objectives were substantially met at the end of the series as tax administration benefited from enrolling 92 per cent of the large tax payers, reducing the potential cost of revenue collection\. Rating Substantial PHREVISEDTBL Objective 3 Objective Increase the provision of electricity Rationale Efficacy is assessed against the target aimed at getting a performance contract for the National Electricity company\. This target was not met because investors were not ready to take up any contract during the Ebola epidemic, although as of mid-2016 shortlisted firms were preparing financial-technical proposals\. The number of prepaid meters was increased from 29,000 to 80,000, exceeding the target of 50,000\. The increase in collection efficiency from 67 per cent to 83 per cent was partially met, with a result of 76 per cent in 2015\. A recent audit of the electricity utility suggests that the baseline figure was much lower than in the Program Document\. The program supported other reforms such as the passing the Freedom of Information Act and submission to Parliament of a bill to regulate the formation of public- private partnerships, which were expected to support the energy sector performance contracts\. In addition, the National Electricity Act and the Act for the establishment of the Electricity and Water Commission were both adopted\. Rating Modest 5\. Outcome  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) The relevance of the program’s objective is rated substantial while the relevance of design is modest, reflecting the shortcomings in the logical linkages between some prior actions, results indicators and program objectives\. There were issues with the depth of the prior actions in addressing the challenges highlighted in the Poverty Reduction Strategy Papers and Country Assistance Strategy\. The objective of protecting poverty reducing spending priorities was substantially achieved by the close of the series\. Similarly, tax administration was substantially strengthened with 92 per cent of large tax payers filling the taxes\. However, there were only modest achievement in increasing provision of electricity\. While the number of prepaid meters usage increased, collection efficiency was partially met and the performance contract for the NEC was not met\. On balance, the overall outcome is rated moderately satisfactory\. a\. Outcome Rating Moderately Satisfactory 6\. Rationale for Risk to Development Outcome Rating There are three major risks (macroeconomics, political and fiduciary) that could potentially undermine the program’s achievements\. The country is susceptible to macroeconomic shocks arising from external factors\. It is likely to continue to be negatively impacted by prolonged global downturn which has affected the terms of trade through low mineral prices\. But, there are also potential domestic risks to the macro economy which could arise from political interference to procurement procedures, and a rise in extra budgetary expenditures, as the cost of post Ebola recovery is uncertain\. A high cost of Ebola recovery and heightened demand for social expenditure could potentially reverse some of the macroeconomic gains\. The government’s inability to transparently collate and report mineral ore revenues as stipulated in its mineral laws (2009), and the low capacity to generate non- mineral tax revenue are in themselves risks to a continued increase in poverty reducing expenditures\. With high social expenditures looming against the restoration of fiscal discipline, the government's desire to implement its ambitious infrastructure program without ensuring adequate funding may result in budget re-allocation against social sector spending or an accumulation of either debt or arrears\. There is a possibility of re-occurrence of extra budgetary expenditures amidst continued subsidization of the retail price of fuel\. The potential of policy reversal could pose significant risk to the development outcomes of this program\. Election related expenditures risks are also likely to resurface in the next elections (2017) to distort budget allocations, if adequate measures are not taken to address the lack of political will and potential increase in demand for public services ( which also occurred during the last elections)\. Finally, the current weak institutional capacity to sustain public financial reforms is likely to pose some fiduciary risks that may affect future Bank operations\. a\. Risk to Development Outcome Rating Substantial 7\. Assessment of Bank Performance a\. Quality-at-Entry The preparation of the program benefited from considerable analytical and sector related work such as the Public Expenditure Reviews of 2004 and 2010, Procurement Audit of 2007, Public Expenditure and Financial Accountability Report of 2010 and the Poverty Diagnostic for 2008\. It also benefited from the government’s published strategy documents such as the second and third Poverty Reduction and Strategy Papers, which had been prepared through broad consultation with senior members of government\. The program document adequately reflected the Bank’s own Country Assistance Strategies and the priorities of government\. Through the Multi Donor Budget Support Group, civil society groups were engaged to provide input at various stages of the program preparation\. The macroeconomic challenges and risks were adequately diagnosed throughout the three series\.  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) Quality-at-Entry Rating Moderately Satisfactory b\. Quality of supervision Supervision was carried out by the program team and other sector colleagues with at least a mission each year\. The ICR reports that the implementation of the series was unhindered except for delays in the third operation because it was originally approved by the Board as a credit, but was later converted to a grant\. The Bank maintained dialogue with government through its active participation in the Multi Donor Budget Group that jointly discussed, assessed the government’s performance and progress towards achieving the outcome targets\. The ICR reports that donor coordination resulted in improved performance assessment\. However, implementation was affected by the Ebola epidemic and the collapse of international iron ore prices which heightened the fiscal risks affecting the country\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Moderately Satisfactory 8\. Assessment of Borrower Performance a\. Government Performance The ICR indicates that the government showed substantial commitment to the program\. Through policy dialogue and engagement with the development partners, the government harmonized the various indicators from the Bank and other Development partners into a single Progress Assessment Framework to ease monitoring\. Sierra Leone is a post conflict country with weak systems, and susceptible to global shocks\. A fiscal slippage occurred in 2012 (Section 3b), but the government worked with the Bank to restore confidence in the economy\. Government delayed the implementation of some of the reform actions especially in the electricity sector to accommodate the two shocks\. (ICR pp\. 7-8) Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance The implementing agencies were the Ministry of Finance and Development, Ministry of Energy, National Revenue Authority, Ministry of Education, Sports and Technology and the Accountant General’s Department\. The ICR reports that they worked together and prepared strategies to monitor the indicators\. While the staff of the Ministry of Finance were consistently accessible to the Bank for engagement on the progress of indicators, there was not enough consultations among the implementing agencies on the government side\. In the Ministry of Education, there was lack of strong support for the implementation of the policy action aimed at verification of teachers on the payroll\. The team attributed the results of the energy sector reforms to the change in the Minister of Energy during the implementation which resulted in a hostile environment for dialogue, and the lack of support from sector colleagues to follow up with the policy dialogue\. These pushbacks and resistance resulted in delays during implementation\. (ICR pp\. 8)\. In addition, the team informed IEG that the desired procurement results were not fully achieved because of the transfer of the procurement champion from the Authority during the implementation period\. However, the ICR attributes the government’s inability to meet the procurement indicator to the Ebola epidemic which necessitated sole sourcing under emergency, but it also mentioned that the effectiveness of the Procurement Authority was undermined by frequent interference from the authorities\.  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The program documents of the series had indicative baselines for all the quantitative indicators which improved the robustness of the design of the results framework\. The objectives were clearly specified and maintained in all the three series\. The ICR notes that the M&E for the program was designed with the government and other Multi-Donor Budget Support Partners using the existing systems under the joint annual assessment/ reviews\. The M&E design was adjusted during the second and third programs of the series to accommodate the changing needs of government\. It was also aligned with the budget cycle of the government to ensure that implementing agencies adequately budgeted for their activities and received resources in a timely manner\. However, the ICR reports design issues with the indicators that were expected to be assessed with publicly published data, some of which was either not available or in poor quality\. The programmatic series put more emphasis on legislation especially in the fourth operation of the series (GCRC4)\. b\. M&E Implementation The ICR reports that implementation was monitored through a continuous dialogue with government counterparts to assess progress and address potential bottlenecks\. Together with development partners, the government engaged the World Bank in defining and monitoring all indicators\. Some development partners also provided technical assistance to the government as a way to facilitate the implementation\. The Ministry of Finance and Development aided the data collection process\. The results indicators in the first two operations (GRGC 4&5) were not sharp and measured the completion of each stage of the operation rather than the entire program\. The team addressed this challenge through refining the results indicators during the course of the program as a way to strengthen the achievement of the objectives\. c\. M&E Utilization The World Bank and Development Partners used the results of their assessment of indicators to engage in policy dialogue with government\. This dialogue influenced pillars selected in the preparation of the Third Poverty Reduction Strategy paper by government\. In particular, the ICR reports on discussions with government on poverty related expenditures and transfers to local councils\. M&E Quality Rating Substantial 10\. Other Issues a\. Environmental and Social Effects  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) The ICR did not report of significant environmental issues\. However, it indicated that an improvement in revenue mobilization was likely to lead to more resources being channeled to poverty-related projects that would benefit people in the bottom 40 percentile income group\. b\. Fiduciary Compliance The ICR did not report any fiduciary compliance issues related to the series\. However, it indicated continued deficiencies in institutional capacity of the government that could affect fiduciary performance, M&E Design, Implementation, & Utilization\. c\. Unintended impacts (Positive or Negative) ICR did not report any unintended outcomes\. d\. Other There are no other issues \. 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Moderately Satisfactory Moderately Satisfactory --- Risk to Development Outcome Substantial Substantial --- Bank Performance Moderately Satisfactory Moderately Satisfactory --- Borrower Performance Moderately Satisfactory Moderately Satisfactory --- Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 12\. Lessons This review supports some of the lessons cited in the ICR, especially the importance of having a functional Multi-donor Budget Group that will assist in the design, formulation and selection of indicators discussed with government\. Other lessons cited in the ICR with adaptation in language include the following: (i) The Ministry of Finance plays a critical role in ensuring that agreed reforms are implemented by various government agencies\. In this case, the Ministry of Finance did not effectively use its budgeting and resource allocation powers to compel the Ministry of Education to focus on agreed reforms\. As a result, the education sector target was not met\. (ii) The use of a programmatic series provided an opportunity for mid-term corrective measures to be taken by the team towards the achievement of the targets\. The Bank team had an opportunity to re-evaluate their indicators after the first two operations and introduced new  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL-GRGG 4 BUDGET SUPPORT (DPL)(P117822) indicators during the third operation (SL-GRGG 6) to help them achieve the desired outcomes\. (iii) Selecting prior actions from the Progress Assessment Framework designed and discussed with government and other development partners works well and aids monitoring\. In this case, the policy reforms were derived from the government’s own reform agenda and harmonized with the reforms supported by development partners\. This created ownership from all stakeholders during the implementation and monitoring of the Progress Assessment Framework\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR provided detailed accounts and analysis on many important aspects of the programmatic series\. However, it did not provide sufficient information on progress made on the fiscal situation ahead of each operation\. Also, it did not report on the outcome of prior actions that required submission of bills to Parliament\. It is not clear whether all the bills were passed by Parliament\. SL-GRGG 4 is a credit in the PAD, but is listed both as a grant (pp\. iv, v, vi, 1, 23, 25) and credit (p 6) in different parts of the ICR, without explanation\. a\. Quality of ICR Rating Substantial

REVIEW

P094715

ICRR 14940 Report Number : ICRR14940 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 06/30/2016 Country : Brazil Project ID : P094715 Appraisal Actual Project Name : National Biodiversity US$M): Project Costs (US$ 97 118 Mainstreaming And Institutional Consol L/C Number : Loan/ US$M): Loan /Credit (US$ 22 22 Sector Board : Environment US$M): Cofinancing (US$ 75 96 Cofinanciers : Board Approval Date : 01/31/2008 Closing Date : 12/31/2013 12/31/2014 Sector (s): General agriculture; fishing and forestry sector (45%); Central government administration (30%); Forestry (25%) Theme (s): Environmental policies and institutions (50%); Biodiversity (50%) Prepared by : Reviewed by : ICR Review Group : Coordinator : Stephen Hutton Christopher David Christopher David IEGPS1 Nelson Nelson 2\. Project Objectives and Components: a\. Objectives: The project development objectives of the operation (from the GEF Trust Fund Grant Agreement , page 7) were: 1) to promote mainstreaming of biodiversity at the national level in key public and private sector planning strategies and practices; and 2) to consolidate and strengthen institutional capacity to produce and disseminate relevant biodiversity information and concepts\. The broader Global Environment Objective was to "To contribute to the reduction of the current rate of biodiversity loss, as a contribution of Brazil to 2010 goals and targets of the [Convention on Biological Diversity ", but this overarching objective does not appear in the loan agreement , so the project is evaluated solely against the project development objective\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: The project supported four components : 1\. Mainstreaming Biodiversity into Selected Public and Economic Sectors (expected cost $33\.4 million, actual cost not stated)\. This would support mainstreaming of biodiversity policy through specific sectors , including agriculture, fisheries, forestry, water resources, health, and technology\. It included 1) planning and refinement of public sectoral policies and policy instruments through studies and sector plans , and 2) pilot activities on the ground at a national level aimed at generating lessons , such as incorporation of biodiversity -friendly techniques into livestock management\. 2\. Mainstreaming Biodiversity into the Private Sector (expected cost $30 million, actual cost not stated)\. This would support incorporation of biodiversity principles into private sector planning strategies and practices , through the creation and management of a Fund which would support subprojects based on proposals from the private sector \. The approach would include creation of a knowledge database and monitoring and evaluation system for the subprojects\. 3\. Institutional Strengthening and Generation of Biodiversity Information for Policymaking (expected cost $31 million, actual cost not stated)\. This would aim to improve knowledge management on biodiversity across institutions that deal with biodiversity issues, by creating a number of virtual or actual knowledge tools and subunits and by promoting knowledge generation (including monitoring on biodiversity indicators ) and exchange\. 4\. Project Coordination and Management (expected cost $2\.5 million, actual cost not stated)\. This would support project administration, monitoring and evaluation, and information dissemination and communication \. The ICR did not provide actual costs of each component , it noted only actual use of the GEF Grant under each component (respectively $7 million, $7\.5 million, $6\.1 million, $1\.4 million)\. The components were not changed during implementation , but the GEF Grant Agreement was revised to allow for $1m in capital contributions to the Fund in component 2\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Cost: Cost : The ICR did not explain why total project costs of $118 million were substantially higher than expected , at $97 million\. Financing : The project received financing through a $US 22 million grant from the Global Environment Facility , but also received Borrower contributions either in cash or in kind from a range of government agencies , and cofinancing from a number of non-governmental sources\. These were: the Brazilian Agricultural Research Cooperation (expected $4m actual $11\.5m), Brazilian Biodiversity Fund (expected $22\.5 actual $13\.3), Oswaldo Cruz Foundation (expected $4m actual $7\.4m), Ministry of Agriculture, Livestock and Supply (expected $4m, actual $15\.6m), Chico Mendes Institute of Biodiversity Conservation (expected $14\.4m, actual $23\.5m), Rio de Janeiro Botanical Garden (expected $9\.6m, actual $9\.6m), Ministry of Science and Technology (expected $7\.1m actual $9\.4m), and the Ministry of the Environment (expected $8m, actual $5\.9m)\. The ICR does not distinguish between cash or in -kind contributions\. Dates : The project was restructured in November 2013, extending closure of the project by one year to allow for accounting of funds spent on subprojects and to allow for adjustments in the types of sub -projects that could be supported by the private sector fund \. Two other sets of project restructuring shifted resources between components \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Brazil has extremely high biodiversity , which was faced by threats from habitat conversion and loss , and invasive species and disease, driven particularly by agricultural expansion that triggered deforestation , along with road construction and mining\. Brazil had made international commitments to significantly reduce the rate of biodiversity loss, but progress on this was difficult to assess given gaps in knowledge on biodiversity \. A large number of environmentally oriented government agencies and departments , NGOs and foundations, and private sector groups were implementing biodiversity projects , but with little coordination or knowledge sharing \. But efforts to support conservation were weak outside of environment agencies , and limited funding meant that most projects were small and lacked sufficient scale needed to make a significant contribution to reducing biodiversity loss \. Specific issues had been identified as drivers of the lack of success of mainstreaming biodiversity concerns , including a lack of information and analysis, exclusion of low level decision makers from policy making , a lack of recognition of the role of the private sector in driving land use change , a lack of coordination of financial mechanisms and economic instruments to support conservation , and a lack of public sector responsibility for valuing biodiversity \. The objectives were broadly relevant at appraisal , as they addressed specific elements of these identified barriers as well as elements of the government 's strategies\. The government had made national and international commitments to protection of biodiversity and had established a national biodiversity program and funding mechanisms \. Environmental sustainability was a major pillar under the 2008 Brazil Country Assistance Strategy \. The strategy calls for the Bank to engage more in a number of areas in environmental sustainability , including in engaging the private sector in environmental challenges and supporting protected areas , while calling for fewer standalone or repeater projects\. The Bank's role in partnering with the federal government in reconciling conservation with development is specifically highlighted, especially in the Amazon\. Increasing conservation and biodiversity protection is explicitly noted as an indicative operation that might emerge \. The Bank and GEF had supported a significant number of biodiversity related operations in Brazil \. The objectives remained relevant at closure \. The challenge of enhancing biodiversity conservation is highlighted as a major challenge in the 2012 Brazil Country Partnership Strategy , and constitutes one of the subpillars under a strategy pillar on improving sustainable natural resource management and climate resilience \. While recognizing their overall relevance , the specific objectives targeted were relatively upstream - concerned with changing planning strategies and institutional capacity to manage information \. This was appropriate given what could be feasibly demonstrated within the project results framework , but it did mean that there was a gap between the project objectives and underlying outcomes to be targeted \. The process-oriented rather than outcome-oriented framing of the objectives also reduced their evaluability \. Relevance of objectives is rated Substantial\. b\. Relevance of Design: The broad approach of the project was relevant \. Sector-specific plans and studies that addressed biodiversity issues could help non-environmental agencies to promote biodiversity conservation within their own sectors \. Pilot activities in public and private sector could demonstrate how to support biodiversity conservation on the ground and could lead to replication outside the project through replication effects \. Institutional strengthening could improve knowledge management and sharing\. But the rationale for many of the specific activities supported was not clear from project documentation \. The project design supported a large number of studies , institutional activities, and sub-projects; many were relevant to the project objectives, but others were broadly related to biodiversity conservation without a clear theory of how these would support the project's specific narrow objectives , or were related to general sustainable land management or environment without a a clear articulation of how they would support biodiversity \. The attention to the agriculture sector was appropriate given the prime role this sector played in agricultural expansion and deforestation , but the justification for the specific focus on particular subsectors such as organic agriculture was not clear, or similarly for the activities on environmental health (clarified in additional information from the Global Practice to mean wildlife health)\. Additional information indicated that these were selected based on perceived opportunities for action rather than because they were seen as the highest priority subsectors for biodiversity \. Additional information provided by the Global Practice states that for example agriculture activities were intended to reduce pesticide use, water pollution, soil erosion, and land degradation - but did not clearly explain how these were intended to benefit biodiversity conservation \. The design had complex institutional arrangements , with three main implementing agencies, and project funds allocated to 8 agencies for implementing specific activities \. The ICR argues plausibly that a level of complexity was necessary in order to be effective in promoting the objective of mainstreaming given the wide range of already existing stakeholders\. But even given this, the project design was extremely broad \. A clearer operational definition of mainstreaming and what it meant may have helped to focus the project on a specific theory of change \. What would a sector in which biodiversity had been mainstreamed look like ? Some activities appeared to support mainstreaming - such as the creation of studies and strategies that addressed biodiversity issues in agencies that did not have primarily environmental goals; the rationale was to strengthen the ability of the weak environment ministry to engage on biodiversity in sectoral ministries \. But it is not clear how many of the supported activities addressed the specific barriers to biodiversity mainstreaming identified at appraisal \. It is also unclear how the one -time grants for subprojects were intended to lead to sustainable changes in behavior that would lead to changes in biodiversity \. The project design was focused on identifying entry points establishing relationships and enabling conditions for future mainstreaming efforts, rather than supporting a mainstreaming effort where these preconditions already existed \. Finally, only the broad outlines of the project design was determined at the point of project approval , leaving specific project activities to be selected during implementation following a broad criteria \. Relevance of design is rated Modest\. 4\. Achievement of Objectives (Efficacy): The output-oriented nature of the M&E system combined with the broad range of the sub -projects and activities supported makes it difficult to assess the overall impact of the project \. Objective 1: promote mainstreaming of biodiversity at the national level in key public and private sector planning strategies and practices Outputs: Plans and policies for incorporating biodiversity conservation were created for several sectors \. In the health sector, policies and activities for wildlife heath and surveillance , and for urban health and biodiversity were produced \. In agriculture, the project supported activities related to a national policy on agro -ecology and organic production and a national plan aimed at improving conservation of natural resources and ecosystems \. In energy, the project supported hydro-ecological studies related to hydropower projects , aiming to propose activities to reduce the negative impact of dams on biodiversity \. Hoped for activities on mining and transport did not occur \. A large number of other activities were supported across a range of environmental sub -sectors, including on forest products, on organic agriculture, and on threatened species \. Many of these appear to be aimed at reducing the negative impact of regular operations on biodiversity ; the purpose of others was not clear from the ICR \. The project supported private sector support for biodiversity by capitalizing a fund with $18\.8 million that then supported implementation of 7 private sector subprojects , where private sector agencies partnered with governmental and non-governmental organizations to support productive sectors (cocoa, forestry, sugar cane, biofuels, livestock, fisheries, etc\.) in priority biodiversity conservation areas \. The ICR does not clearly describe the extent to which these sub -projects were likely to lead to reduced negative impacts on biodiversity in these sectors , or how they would change private sector planning strategies and practices \. The aim of these activities was to establish and disseminate best practices , but the ICR does not report on the extent to which this occurred \. This is surprising given that the project supported a monitoring and evaluation system for learning from these pilots , which was a core part of their rationale\. Outcomes: There is little evidence on which to make a meaningful judgement of efficacy \. The relevant outcome indicator counted only the number of sectors in which outputs took place , it gives little ability to assess the aggregate effects of those outputs\. The ICR states that the project had a catalytic influence in establishing and formalizing a cross -sectoral multi-agency and multi-sector approach to biodiversity conservation , but provides little evidence on which to demonstrate this other than interview feedback from project implementers \. Additional information from the global practice states that subprojects were intended to support sustainable land management practices such as zero till , ecological pest control, and other agro-ecological principles in order to promote reductions in use of pesticides , water pollution, soil erosion, and land degradation, but did not present evidence that any such reductions had occurred or that these would lead to conservation of biodiversity \. The project established a knowledge base on best practices which presumably collected such information , but this was not reported in project documentation \. The number of hectares in which activities were taking place does not provide meaningful evidence of impact, and the existence of a selection criteria for projects does not by itself provide confidence that the projects were effective \. Additional information from the global practice states that the working group established on biodiversity impacts of hydropower has had a significant impact on decisions about the location and design of new dams in the Amazon , leading to a substantial reduction of potential impacts in high biodiversity areas \. Additional information from the global practice states that project activities (studies, workshops, and consultation processes) that played a contributing role in the establishment (after project closure) of a Biodiversity Law, which regulated access to genetic resources across all sectors and required benefit sharing with local communities \. The project's contributions to environmental policy and legislative frameworks may be significant , especially in the introduction of biodiversity concerns outside of traditional environmental actors , but more information should be provided to demonstrate the impact of on the ground activities \. Achievement of this objective is rated Substantial \. Objective 2: consolidate and strengthen institutional capacity to produce and disseminate relevant biodiversity information and concepts Outputs: A number of new institutions were created , including one that disseminates information on relationships between biodiversity and health, a network for wildlife health laboratories , and specialized centers for flora and fauna priority areas\. A planned center for biodiversity monitoring and forecasting was not established , as this requires a further national biodiversity monitoring strategy \. The project supported a range of improvements in information handling , such as the alignment of information systems across institutions , for wildlife health surveillance, and for collection of biological material for threatened species in conservation areas \. The project supported increased knowledge sharing by establishing a multi -stakeholder panel aimed at promoting synergies between biodiversity institutions and knowledge \. The project supported mapping of land cover in Brazilian biomes to establish a baseline on which future monitoring can be assessed against \. The project financed training of almost 8,000 staff in its implementing agencies, but did not track the impact of this training\. Outcomes: The ICR notes that the monitoring and tracking of formal biodiversity indicators at the national level was significantly improved by the project\. Progress was made in 21 of the 60 quantitative national targets for biodiversity preservation; it is not clear to what extent this is attributable to the project , but quantitative targets for strengthening biodiversity monitoring and evaluation of threatened species were plausibly a result of this target \. Achievement of this objective is rated Substantial \. 5\. Efficiency: It is difficult to assess the efficiency of a project such as this \. The outputs of the project are largely process-oriented and institutional and spread across many subactivities , with effects that are intangible , downstream, and hard to quantify\. Consequently, no economic analysis was provided at appraisal or closure \. The appraisal document includes an "incremental cost analysis"\. However, this statement only describes the proposed project as an alternative to a baseline activity level , and estimates additional expenditure required to support this project\. No analysis as to how the particular expenditure requirements were generated was provided , nor was any quantitative analysis of benefits provided \. The overall project cost was significantly higher than expected , at $118 million rather than $97 million\. The ICR frames this as the project having leveraged more funds than expected , but it is unclear what greater effectiveness was received from this additional expenditure \. The ICR notes that the the private sector fund was less successful in crowding in private resources than expected , generating $13\.3 million in counterpart funding as compared to an expected $25\.5 million\. However, implementation delays were only modest and there is no evidence of particularly inefficient delivery of outputs\. Given this, efficiency is rated Modest\. ERR )/Financial Rate of Return (FRR) a\. If available , enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Though the objectives of the project were substantially relevant , the project design did not have a coherent theory of change for how specific project activities would lead to achievement of the objectives \. There is some evidence that the project had an impact on mainstreaming of biodiversity policy in specific sectors , and evidence that the project improved institutional capacity to produce and share biodiversity information \. However, there is little evidence on the the aggregate effects of the subprojects and other activities \. a\. Outcome Rating : Moderately Satisfactory  7\. Rationale for Risk to Development Outcome Rating: The ICR states that project beneficiaries are likely to work towards biodiversity targets using the systems established under the project \. Several agencies had incorporated project activities into their core business and allocated funds to continue implementation \. Agencies receive regular budget , though the ICR notes that increased budget would be needed to make "decisive progress" on biodiversity conservation - though budget shortfalls for implementing agencies damaged the ability to implement the project in some cases \. The government has signalled its continuing support for securing resources and supporting capacity needed to meet biodiversity goals \. The ICR states that institutional reforms would be difficult to reverse and that this would be hard to imagine \. However, it does not comment on the likelihood of whether biodiversity policies established in non -environmental sectors are likely to be meaningfully implemented\. And it does not comment on whether any behavior change triggered by grant-supported subprojects were likely to be sustained beyond the cessation of those grants \. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: a\. Quality at entry: Project preparation was a participatory process across at least 10 governmental and non-governmental agencies with a stake in biodiversity conservation \. Buy-in from these stakeholders was demonstrated by their willingness to formally cofinance the project or provide informal contributions \. The ICR notes that this participatory approach served to mitigate the main critical risk identified during preparation : the potential for a lack of support and ownership by the large number of stakeholders \. Yet the complex institutional arrangements also made progress initially slow, as roles and procedures for implementation were not fully defined during appraisal and had to be established during the implementation period \. One weakness was the lack of up -front clarification on how to handle issues relating to differences between national procurement systems and Bank systems , and ensuring that implementers understood the necessary procedures to follow \. The monitoring and evaluation system could also have been stronger - less focused on outputs and more on demonstrating that the array of project activities collectively made a meaningful contribution \. More fundamentally, at the time of approval many details of project design had not been determined \. The appraisal document states that the project intended to support "sectoral mainstreaming initiatives", but defined only a process of workshops and outreach that were expected to then lead to selection of activities \. Solutions were left to be developed within the project rather than established at appraisal \. Greater efforts at appraisal could have meant that a more complete and coherent design could have existed upfront - for example, workshops aimed at establishing strategies for promoting biodiversity mainstreaming and selecting activities could have been held as part of the appraisal process rather than during implementation \. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: The Bank carried out regular supervision missions , combined with other Bank biodiversity operations in Brazil \. The ICR argues that the Bank added value by supporting discussion forums that helped with collaboration across institutions on both implementation and strategic issues \. The ICR states that the Bank worked to improve the implementation speed of lagging activities \. The ICR states (page 9) that the global economic and financial crisis , starting shortly after approval , delayed implementation of private sector aspects , and meant that private sector counterparts preferred sub -projects with longer term implementation periods, which then required restructuring of the project to allow the GEF grant to be used for these purposes \. Yet the ICR does not explain why this restructuring did not occur until four years after approval\. The original project design had intended to support subprojects that would be newly identified under a process of sector workshops supported by the project \. Yet implementation delays meant that a different approach was applied in practice: instead the sub-projects were to be those that were already underdevelopment and were had planned to go forward without the need for additional grant funding \. Channeling grant funding to these projects may have undermined the intended additionality , meaning that resources went to fund projects that would have occurred anyway rather than supporting new initiatives \.  Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The government remained committed to biodiversity goals that the project was trying to support , and processes established by the government helped the project to build awareness and institutional cooperation around biodiversity conservation \. The ICR did not note any shortfalls in government performance - though it did note that budget allocations for some implementing agencies were not sufficient for them to fully participate in the project\. One implementer stopped all participation in 2012 due to budget shortfalls\. Government Performance Rating Satisfactory b\. Implementing Agency Performance: The project had a complex implementation structure , with two executing agencies, a project coordination unit embedded in one of these, two agencies responsible for fiduciary aspects , and 9 implementing agencies\. The ICR states that in general these agencies carried out their responsibilities expeditiously \. There were some delays in procurement in one implementer (a federal bank) but performance improved over time\. The ICR notes that turnover in and lack of staff especially in the project coordination unit led to delays , but also noted that other implementing agencies generally praised the quality of remaining staff \. The environment ministry faced difficulties in hiring consultants and this also led to project delays \. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: A complex monitoring and evaluation structure was established to track outputs of the project : it tracked in detail the production of outputs under the project : adoption of policy initiatives and criteria , implementation of sub-projects, capitalization of a fund for sub -projects, creation of strategies, and others\. Indicators were not designed to be mutually exclusive; some sub-projects were double-counted across different indicators \. Of the project's outcome indicators, one tracked solely changes in policies and plans without assessing whether these changes were significant or were being implemented in a meaningful way \. Another tracked progress towards actual biodiversity targets, but the main contribution of the project to these outcomes was by improving the ability to track them rather than contributing to them directly \. A third formally tracked areas where the private sector would be involved in sustainable use of biodiversity , but it is not clear which grounds were used to establish whether use was sustainable\. This meant that there was little ability to assess the impact of the project on outcomes - were planning decisions actually being made differently to address biodiversity , was biodiversity information actually being disseminated and utilized? b\. M&E Implementation: The ICR states that the M&E system was implemented well, with regular submission of data from implementing agencies and compilation by the project coordination unit \. It also notes however that some indicators and targets were changed during implementation but without going through a formal project restructuring \. c\. M&E Utilization: M&E systems were used to track project performance , and informed mid-term review decisions that led to minor restructuring designed to improve implementation performance in lagging areas \. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: The project triggered safeguards on Environmental Assessment (Category B), Natural Habitats, Pest Management, Physical and Cultural Resources , and Forests\. Social safeguards were not triggered , but principles and procedures for managing any issues around land or indigenous peoples were included in the operational manual at midterm review\. The Environment Analysis concluded that environmental effects would be overwhelmingly positive \. The ICR states that an Environmental Management Plan and Pest Management Plan were produced , providing a framework for assessing impacts and implementing mitigation measures if needed \. The ICR did not report specifically on whether procedures were followed , but notes that the overall conclusion that environmental effects were positive were confirmed in implementation support and field visits \. b\. Fiduciary Compliance: Financial management was reviewed regularly during implementation and was rated satisfactory or moderately satisfactory by supervision missions \. The ICR states that FM arrangements all adhered to the Bank 's required standards\. Independent audits were carried out , and audit reports were on time and unqualified \. The ICR states that no major issues with procurement arose , but that project implementers were frustrated by following the Bank's procurement guidelines, especially in instances where these deviated from national systems , and that this led to delays\. c\. Unintended Impacts (positive or negative): d\. Other: Through sub-projects, the project supported establishment of roughly 1\.2 million hectares of private sector organic agricultural production units in Priority Biodiversity areas \. But it is unclear how this is related to the project 's objectives of mainstreaming in policy or consolidation of knowledge \. The Borrower's ICR also notes that the project improved dialog between private companies , NGOs, government agencies, and producers\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development Negligible to Low Negligible to Low Outcome : Bank Performance : Satisfactory Moderately The project design described a process Satisfactory for determining activities to be supported by implementing agencies rather than clearly defining activities \. Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Unsatisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column  could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The ICR reports a number of lessons : Environmental mainstreaming requires a degree of complexity and inclusion to generate broad ownership \. However, IEG would draw a distinction between including a wide range of stakeholders in a discussion , and using them all as direct implementers, which may or may not be required\. The ICR states that it is important for a results framework to acknowledge achievements by individual agencies\. However, IEG would note that this is not usual intended goal of a results framework , and that other mechanisms could be used for assigning institutional credit while a results framework could be used for assessing results\. Establishing a fixed pool of funding for each implementing agency helps to promote cooperation and avoid inter-agency rivalry for funding, but allowing for some flexibility could help to drive resources to agencies with more capacity to implement outcomes \. IEG would note that it is usual to assign resources based on which outputs are needed in order to achieve project objectives , rather than as a reward for successful implementation\. IEG also finds that: Projects may not be effective in achieving specific objectives if they have a design that is relatively unfocused \. If a project design describes a process to be followed rather than actual outputs , then there is a risk that the supported outputs may not have a coherent design \. Projects that seek to have impact through support of sub -projects should be clear about the expected goals of those subprojects and should establish monitoring and evaluation systems to assess whether those goals were achieved\. Progress on these goals should then be reported in the project 's ICR\. 14\. Assessment Recommended? Yes No Why ? The limits of the monitoring and evaluation system mean that the ICR presents little overall picture of what Why? has changed in terms of implementation of policies and strategies , a field-based assessment after a lag could help to build a picture of whether new systems are functioning effectively and whether knowledge is being utilized \. In addition, as a substantial effort on improving knowledge coordination for biodiversity , the program could offer more detailed lessons for other operations \. It could also be interesting to compare instrument options : in this case the Bank supported environmental mainstreaming in policy using a modest amount of investment lending , whereas in other cases this has been supported through policy lending with large disbursements - what circumstances made this investment lending option feasible in this case ? 15\. Comments on Quality of ICR: Given the very complex project design , the ICR could have explained the design rationale more clearly and how it related to the theory of change \. Specifically, it could have been clearer in explaining how the large number of disparate sub-projects contributed collectively to a larger whole or were related to the operation 's PDO, rather than simply listing the project outputs without identifying which were the most significant or what their effects were likely to be\. The ICR rated efficacy largely against indicator targets rather than against objectives \. It presumed that objectives were achieved self -evidently from the production of outputs , rather than providing a meaningful assessment of impact\. The ICR provided little meaningful evidence on efficiency \. The ICR is not easy to read\. It has over 5 pages of acronyms and abbreviations which are used regularly through the document, making the report less accessible to readers not familiar with the details of Brazil 's institutional structures\. The writing style could have been made more simple , and could have favored prioritization (what were the most important outputs and their likely effects ?) over inclusiveness\. A number of other features could have been improved : The ICR could have been more clear in distinguishing between activities financed by the project and other activities carried out by project implementing agencies or institutions established under the project \. Similarly it could have been more clear in clarifying the specific attribution to this project of national biodiversity indicators\. The ICR did not provide a breakdown of project cost across components , or explain differences between expected and actual costs \. The ICR did not draw links to the Bank 's country strategies for Brazil \.  The lessons did not seem well grounded in evidence \. a\.Quality of ICR Rating : Unsatisfactory

REVIEW

P003624

 ICRR 11445 Report Number : ICRR11445 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 03/13/2003 PROJ ID : P003624 Appraisal Actual Project Name : Cn-infectious Diseases Project Costs 271\.0 264\.9 (hlth5) US$M ) (US$M) Country : China Loan /Credit (US$M) Loan/ US$M ) 129\.6 126\.7 Sector (s): Board: HE - Health (100%) Cofinancing 0 0 US$M ) (US$M) L/C Number : C2317 Board Approval 92 FY ) (FY) Partners involved : Closing Date 06/30/1999 07/30/2002 Prepared by : Reviewed by : Group Manager : Group : Elaine Wee-Ling Ooi Patrick G\. Grasso Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives Project had two related objectives : a) Reduce the risk of tuberculosis (TB) infection and schistosomiasis prevalence and infection rates \. For TB, to expand and improve free, ambulatory treatment with short -course chemotherapy of patients with infectious pulmonary TB to achieve the reduction of infection rate more equitably and effectively in 12 provinces (about half China's population)\. For schistosomiasis, to revitalize and reorient the national schistosomiasis control program to reduce prevalence and rate of infection in eight remaining endemic provinces by implementing a morbidity reduction and control strategy with limited transmission control objectives; and b) Institute reforms and improve program management to achieve greater efficiency and effectiveness of disease control activities\. For both TB and schistosomiasis, and other important infectious diseases, to strengthen the institutions, management and financing systems, personnel and operational methods of disease control and to research, develop and disseminate cost effective methods and materials for improving future disease control and sustaining the progress made \. b\. Components Five components were described in the SAR as follows : i)TB Control Program : expansion/improvement of TB diagnosis at all TB dispensaries, upgrading bacteriological services at provinces/prefectures; provision of free short course chemotherapy (DOTS) to achieve high cure rates; improvement of case management with adoption of revised standard TB registry and reporting and supervisory protocol ($69\.8m) ii) ii)TB Institutional Strengthening : establishment of a national TB Project Office, reconstituting the TB Control Center with adequate resources to formulate /supervise/enforce national control policies for implementation by provincial TB program (PTP); reorganizing/upgrading PTP; implementation of TB Policy Package of administrative/technical/financial reforms to improve financing and management of provincial dispensaries; and undertaking of operational research into management /economic/social/epidemiological factors of TB control across China ($52\.7m); iii )Schistosomiasis Control Program in accordance with Schistosomiasis Policy Statement : case iii) identification/treatment of infected humans through chemotherapy, identification /treatment of infected animals, and snail control via mollusciciding and environmental control ($112m); iv) iv ) Schistosomiasis Institutional Strengthening : enhancement of resources and staff training at the national control program office, improvement of disease surveillance system and the program ’s M & E systems at all levels; undertaking of management/economic/social/epidemiological studies under the Joint Research Management Committee ($27\.7m) v) Central Operational Research : improving surveillance and control of key infectious diseases ie \. sexually transmitted diseases (STDs) and HIV/AIDS; epidemiological studies of all types of hepatitis and operational research on effective control of hepatitis B through immunization ($2\.7m)\. c\. Comments on Project Cost, Financing and Dates Total project cost was $264\.9m against $271m at SAR\. IDA provided $126\.7m, the provinces $137\.5m and central government $0\.7m\. Changes in exchange rates between SDR, USD and the RMB plus some savings from drug procurement generated some reserves which were reallocated to TB /schistosomiasis control, and some impact studies\. The project was extended first by 2 years to consolidate some gains and to impart greater attention to financial sustainability issues \. It was extended a third year, closing in 06/30/2002 to ensure greater program sustainability and to aid preparation of another TB project \. 3\. Achievement of Relevant Objectives: Overall objectives were achieved as follows : a) In all participating provinces, TB prevalence and risk of infection have declined \. Project helped avoid 100,000 new infectious TB cases per year and a similar number of premature deaths from the single largest cause of adult deaths in China\. Using the DOTS approach, free treatment was provided to all patients with highly infectious pulmonary TB, achieving a cure rate of 95\.6% (vs 52% before the project)\. Schistosomiasis control exceeded its projected targets with 49% reduction in prevalence in humans, 47% reduction in prevalence in lifestock and snail density reduced by over 70% in all 8 provinces\. The national schistosomiasis program was strengthened, and a good balance was achieved between interventions /investments in morbidity reduction and environmental snail control; b) Significant reforms and institutional building were achieved in both programs \. For TB, improved methods of diagnosis, treatment, supervision of therapy, enhanced laboratory procedures and reorganization of implementing agencies leading to better management, proper registration and follow up of cases, have substantially increased efficacy and efficiency of the program \. Likewise, for schistosomiasis, efficiency /efficacy gains were realized via a complementary mix of morbidity treatment and environmental snail control, the establishment of a health education network and good operational research under the auspices of the Joint Research Management Committee \. 4\. Significant Outcomes/Impacts: Despite an ambitious project design in a complicated implementing environment (increasing market orientation and fiscal decentralization), project achieved very substantial changes in policy with respect to : application of the DOTS approach to TB case management, free treatment of smear positive cases, free universal immunization against Hepatitis B, institutionalization and enhancement of operational research capabilities for important infectious disease control (STDs, HIV/AIDS, hepatitis)\. TB Policy Package of administrative, technical and financial reforms to TB control was successfully institutionalized and has significantly improved the TB control network and upgraded capacities of TB dispensaries at province level \. Positive changes in enabling environment which were institutionalized included incentive structure for health workers and reorganization/ strengthening of sectoral organizations \. High treatment/cure rates achieved\. Success of DOTS approach in the project which covered 560 million people has led to its replication by the Bank in other TB programs, worldwide; and facilitated WHO adoption eventually of DOTS \. The achievements of the TB component and innovations therein were recognized by TB specialists worldwide \. Project targets of schistosomiasis component were exceeded \. Operational research in hepatitis B and HIV /AIDS has led to a full fledged hepatitis B immunization program at government expense, a greater understanding of the AIDS epidemic and the launching of HIV /AIDS control efforts\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Despite the significant policy and instutional changes adopted by both programs, project sustainability may be compromised by the largely inadequate public financing of the health sector and country's system of fiscal decentralization \. The sector (MOH) has limited influence over the (public) health financing system in China \. During project implementation, TB case detection was at times compromised due to shortage of counterpart funds in the poorer provinces /prefectures/counties - creating considerable variance in achievements across provinces\. At project close, cuts of $10 m were anticipated in the government budget for schistosomiasis control \. Procurement during early stages of project was less than adequately handled and led to some delays and the purchase of low quality equipment \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial High Project made critical contribution to country's ability to effectively use human, financial, and natural resources, in TB/schistosomiasis control, via significant outcomes outlined in section 4\. Sustainability : Likely Likely Financial resilience at localized levels is uncertain\. Sustainability is rated at the borderline of "likely"\. Bank Performance : Highly Satisfactory Highly Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: High treatment and cure rates for TB were achieved because of good incentive structure to providers at local and dispensary levels\. Project design and implementation paid careful attention to strengthening and institutionalizing a complete package of administrative, managerial and financial changes, necessary to support the technical interventions adopted by project\. Similarly, the quality of technical work in project design and appropriate focus on the technical content of the operation during supervision, were critical to the success of the project \. Wide variation in capabilities exist among implementers and beneficiaries in all large projects and special attention and mechanisms to assist poorer performers need to be better incorporated in project design \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: Good quality ICR\. Covers the most salient issues \. Evidence presented consistent and convincing \. However discussion of project achievements should be framed against project objectives instead of components \.

REVIEW

P042399

 ICRR 12351 Report Number : ICRR12351 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 03/17/2006 PROJ ID :P042399 Appraisal Actual Project Name :Power Project Costs 51\.7 60\.6 US$M ) (US$M) Country :Macedonia Loan /Credit (US$M) Loan/ US$M ) 39\.9 38\.9 Sector (s):Board: ): US$M ) EMT - Power (100%) Cofinancing (US$M) 3\.9 3\.9 L/C Number :L4284 FY ) Board Approval (FY) 98 Partners involved : Swiss Government, Closing Date 06/30/2005 06/30/2005 Japanese Government Evaluator : Panel Reviewer : Division Manager : Division : Lei Liu Roy Gilbert Alain A\. Barbu IEGSG 2\. Project Objectives and Components a\. Objectives 1\. To increase the efficiency of hydropower generation (i\.e\., extracting more power than before while using the same amount of water flow----IEG note); 2\. To expand the generating capacity of the major hydropower plants; 3\. To increase the system operating efficiency of the power generation and transmission facilities (together) - (i\.e\., improved generation scheduling, reduced down time due to required repairs; reduced operation and maintenance costs; increased reliability of operations; and reduced unplanned outages ----IEG note) 4\. To reduce losses in the electricity distribution system; 5\. To facilitate the development of an independent power plant industry; 6\. To facilitate the re-integration of the Borrower into UCTE (Union for the Coordination of the Transmission of Electricity, an international electricity network in Western Europe )\. b\. Components (or Key Conditions in the case of Adjustment Loans ): 1\. Hydropower Plant Rehabilitation (US$31\.6 million at appraisal according to SAR, US$ 39\.6 million at appraisal according to ICR, US$47\.5 million actual cost): rehabilitating the six largest hydropower plants in the Macedonian System\. The Bank financed equipment purchase and technical assistance \. 2\. Energy Management System (US$8\.7 million at appraisal according to SAR, US$ 10\.1million at appraisal according to ICR, US$8\.5 million actual cost) including three subcomponents : 1) to modernize data acquisition and controls for the power system; 2) to complete the dispatch center; 3) to improve the telecommunications system of Electrostopanstvo Na Makedonija (ESM, the Borrower,a state-owned and the biggest power company in Macedonia \.) 3\. Distribution (US$4\.3 million at appraisal according to SAR, US$ 5\.0 million at appraisal according to ICR, US$ 3\.8 million actual cost): beginning the rehabilitation of the Macedonian distribution system by replacing the worn -out distribution transformers\. 4\. Dam safety (US$1\.0 million at appraisal according to ICR, US$ 0\.20 million actual cost )\. This was not listed as a separate component in the appraisal document (it was part of the component 1)\. However, in the ICR it appeared to be an independent component \. It mainly included works to strengthen dam safety \. This component was largely cancelled as the initially perceived dam safety concerns turned out to be unwarranted \. c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Cofinancing was received from the Swiss government (US$3\.5 million equivalent was expected and received ) and the Japanese government (grant US$0\.4 million was expected and received )\. The Borrower's share was expected to be US$12\.8 million at appraisal, and the actual spending was US$ 17\.8 million\. The ICR cited strong European currencies against the US dollar as the main reason for the cost overrun (the actual loan was in Deutsche Marks)\. The Borrower paid most of this additional cost \. 3\. Relevance of Objectives & Design : The project objectives were relevant to the 1995 CAS objectives of assisting productive sector development and strengthening the social safety net through investment lending \. Specifically, the 1995 CAS aimed at assuring adequate infrastructure for economic growth by financing transport, power supply, irrigation rehabilitation, water supply and sanitation projects as well as promoting private sector development \. The objectives remain relevant, albeit to a much more modest extent, to the current (2003) CAS objectives, which are to promote the efficient management of public resources and tackle corruption; promote the creation of jobs through sustainable private sector driven growth and promote social cohesion and protect the most vulnerable \. The objectives supported the Government's development strategies and sector reform initiatives in late 1990s, which assigned high priority to rehabilitation of the hydropower plants in order to prevent blackouts and brownouts \. The objectives remain relevant to date \. The project design is straightforward and supported the objectives it intended to achieve \. 4\. Achievement of Objectives (Efficacy) : High \. The potential output from the power plants Objective 1: to increase the efficiency of hydropower generation \. High\. under normal hydropower conditions increased by 40\.9 GWh a year, i\.e\., more energy is being extracted than before with the same amount of water flow\. This is 3 times more than the target level (13\.7 GWh a year)\. Objective 2: to expand the generating capacity of the major hydropower plants \. High\.High \. The original target was to increase the capacity of the 6 major hydropower plants by 31MW, the actual increase was 49\.2 MW, about 59% more than planned\. Objective 3: to increase system operating efficiency of the power generation and transmission facilities \. Substantial \. The operating costs of the hydropower plants were significantly reduced after the rehabilitation \. The down time due to required repairs has been reduced from an average of 75 hours per year for each generating unit where reliable information can be obtained to an average of 28 hours per unit, a 62% of reduction of repair costs \. The Energy Management System resulted in improved generation scheduling (which means better planning and arranging of energy production, the benefits was estimated to be 1% fuel cost reduction a year), reduced unplanned outages (with benefits being estimated at 7GWhs), reduced operation and maintenance costs (with benefits being quantified as a reduction of substation staff by 100), and increased reliability of operations (ESM used to be able to hold its actual generation within 20MW of its target generation only 34% of the time, now it can do it 82% of the time\.)\. Objective 4: to reduce losses in the electricity distribution system \. Modest \. System losses in the distribution were reduced by 8\.9 GWh, less than what was expected in the SAR (25Gwh) due to fact that fewer-than-expected distribution transformers were installed \. A procurement dispute caused this scale -down\. The rate of return on this component is nevertheless 11%\. Objective 5: to facilitate the development of an independent power plant industry \. Substantial \. Five new non-governmental mini-hydropower plants have been built, seven mini -hydropower plants are being rehabilitated and operated by the private sector under a Rehabilitation -Operate-Transfer (ROT) contract\. Objective 6: to facilitate the re-integration of the Borrower into UCTE\. Substantial \. With the Automatic Generation Controls being installed as part of the project, the ESM is able to improve its Energy Management System and increase the reliability of its power network, and thus to reconnect with UCTE network and became an active member of UCTE\. 5\. Efficiency : The efficiency is substantial \. The economic rate of return (ERR) was estimated at 22% at project closure, against an appraisal estimate of 21%\. No financial rate of return (FRR) was estimated at appraisal\. The ICR estimated the FRR to be at least 21%\. 6\. M&E Design, Implementation, & Utilization: The Key Performance Indicators /Log Frame Matrix used the following as outcome /impact indicators: efficiency of hydroelectric generation in terms of increased generation from normalized water flow after rehabilitation (GWh/year), reliability of electricity supply, ability to reconnect with UCTE which provides much improved system reliability \. Output indicators were also listed in the Log Frame, including increase in hydropower capacity (MW), increase of electricity price (from 3\.8 Euro Cents to 3\.9 Euro Cents), reduction of unserved energy (GWh), and reduction of distribution losses (as percentage of sales)\. The M &\.E design overall is satisfactory with most of the indicators were regularly monitored and reported and used as the gauge of the project performance \. 7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): The project was assigned an Environmental Assessment Category "B"\. The hydropower plants rehabilitation components had a positive environmental impact as it generated more power than before, while using the same amount of water\. The distribution transformers replacement component had a negative environmental impact due to the transformer oil contained in the replaced transformers \. This concern was properly addressed in the PAD \. An assessment of the safety of the dams was carried out by an independent dam specialist \. 8\. Ratings : ICR ICR Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Highly Likely Likely "The Government did require ESM to continue to supply electricity to certain large customers who did not pay their bills  on time, if at all\. Also ESM was required to supply some of these customers at low prices\." (The ICR based sustainability rating of the project on the longevity of the physical assets of the project \. ) Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \. 9\. Lessons: 1\. A carefully-staffed and well-functioning Project Implementation Unit (PIU) is very important to project success \. In order to do so, PIU members should be released from any other obligations at the company, so they can concentrate on the project tasks \. 2\. Splitting a whole project into several smaller subprojects based on the nature of the components and consequently hiring different contractors for each of the subprojects can reduce project costs \. However, in order for the benefits to be materialized, a competent and diligent PIU is essential \. In the case of Macedonia power system improvement project, the project was divided into five packages and was awarded to different contractors for each package \. By splitting project into several packages each contractor faced substantially less risks and therefore reduced the total project costs \. However, this placed considerably more responsibilities on the PIU and required the PIU to closely monitor more than 20 contracts\. A capable and trustworthy PIU is the precondition to the success of such an approach \. 10\. Assessment Recommended? Yes No 11\. Comments on Quality of ICR: The ICR is of satisfactory quality \. It is concise and furnished with necessary information for the project evaluation \. The analysis is sound and easy to follow \. It would be helpful if the ICR had assessed the relevance of the project objectives in relation to the country /Bank's development/assistance strategies at the project inception and at the project closure\. The ICR would have benefited from a stronger focus on the lessons learned from the project \.

REVIEW

P004805

Document of The World Bank Report No: 29152 IMPLEMENTATION COMPLETION REPORT (SCL-41600) ON A LOAN IN THE AMOUNT OF US$143\.4 MILLION TO THAILAND FOR A UNIVERSITIES SCIENCE & ENGINEERING EDUCATION PROJECT June 8, 2004  CURRENCY EQUIVALENTS (Exchange Rate Effective May 26, 2004) Currency Unit = Thai Baht Baht 40\.738 = US$ 1\.0 US$ 1\.0 = Baht 40\.738 FISCAL YEAR October 1 September 30 ABBREVIATIONS AND ACRONYMS AusAID - Australian Agency for International Development ICB - International Competitive Bidding ICR - Implementation Completion Report MOE - Ministry of Education MUA - Ministry of University Affairs NBF - Non-Bank Financed NCB - National Competitive Bidding NEC - National Education Commission O&M - Operations and Maintenance PCC - Project Coordinating Committee S&E - Science and Engineering SOE - Statements of Expenditure S&T - Science and Technology TASEAP - Thailand - Australia Science & Engineering Assistance Project USEEP - Universities Science & Enginneering Education Project Vice President: Jemal-ud-din Kassum Country Director Ian C\. Porter Sector Manager Christopher J\. Thomas Task Team Leader/Task Manager: Omporn Regel  THAILAND UNIVERSITIES SCIENCE & ENGINEERING EDUCATION CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 3 5\. Major Factors Affecting Implementation and Outcome 6 6\. Sustainability 7 7\. Bank and Borrower Performance 9 8\. Lessons Learned 10 9\. Partner Comments 12 10\. Additional Information 10 Annex 1\. Key Performance Indicators/Log Frame Matrix 20 Annex 2\. Project Costs and Financing 22 Annex 3\. Economic Costs and Benefits 25 Annex 4\. Bank Inputs 26 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6\. Ratings of Bank and Borrower Performance 29 Annex 7\. List of Supporting Documents 30  Project ID: P004805 Project Name: TH-UNIVERSITIES SCIENCE & ENG\. EDUC Team Leader: Omporn Regel TL Unit: HDNED ICR Type: Core ICR Report Date: June 8, 2004 1\. Project Data Name: TH-UNIVERSITIES SCIENCE & ENG\. EDUC L/C/TF Number: SCL-41600 Country/Department: THAILAND Region: East Asia and Pacific Region Sector/subsector: Tertiary education (100%) Theme: Education for the knowledge economy (P) KEY DATES Original Revised/Actual PCD: 09/27/1993 Effective: 10/27/1997 10/27/1997 Appraisal: 04/25/1995 MTR: 06/01/2000 03/21/2001 Approval: 05/13/1997 Closing: 12/31/2002 12/31/2003 Borrower/Implementing Agency: GOVT OF THAILAND/MIN\. OF UNIVERSITY AFFAIRS Other Partners: Co-financing provided for TA by Government of Australia STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Javad Khalilzadeh-Shirazi Country Director: Ian C\. Porter Javad Khalilzadeh-Shirazi Sector Manager: Christopher J\. Thomas Sven Burmester Team Leader at ICR: Omporn Regel William Rees ICR Primary Author: Robert L\. Mcgough 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: Project at Risk at Any Time: No  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The project fully met and, in some cases, exceeded its stated development objectives\. The overall objective was to improve the quality of undergraduate science and engineering programs\. Specifically, the project sought to: (a) strengthen the teaching capabilities of the faculty; (b) upgrade the content of existing programs in science and engineering and broaden the range of programs relevant to Thailand's technological advancement; (c) modernize laboratories and strengthen their management; and (d) improve the utilization of resources in faculties of engineering and science and establish a system in the large-scale procurement of equipment\. The Bank's project objectives were based on a detailed assessment of needs, and the project design was well conceived\. The project was prepared with a view toward the reduction of its complexity and risk\. A unique aspect of the project was its close articulation with a technical assistance/staff training project that was parallel co-financed by the Government of Australia\. This project was financed through the Australian Agency for International Development (AusAID) and was called the Thailand-Australia Science and Engineering Assistance project (TASEAP)\. TASEAP's objectives complemented those of Universities Science and Engineering Education Project (USEEP) and it effectively supported the agreed upon technical assistance and fellowship/ training programs that supported the objectives of the USEEP\. These complementary relationships were originally planned and presented in the USEEP's Staff Appraisal Report (SAR)\. TASEAP's final expenditures were about US$14\.0 million\. Additional information regarding TASEAP is provided in later sections as required to clarify the overall impact of the investments made in the USEEP\. The final Project Completion Report for TASEAP is listed in Annex 7\. 3\.2 Revised Objective: The project's development objectives were not revised\. This was significant considering the unforeseen Asian Financial Crisis (1997-1998) which resulted in the restructuring of many projects in Thailand\. 3\.3 Original Components: The project supported quality improvements in 20 public universities through the financing and implementation of the following components\. All components were judged to: (a) have strong relevance to the project's objectives; (b) be well within the capacity of the implementing agency; and (c) have been designed to reflect 'lessons learned' from previous Bank projects in Thailand and the Higher Education Sector in general\. Component 1\. Strengthen the teaching capabilities of faculty - This component was designed to improve the teaching skills and technical knowledge of staff from participating faculties of science and engineering\. The project provided international fellowships, in-country training programs and technical assistance by foreign specialists\. Small-scale research projects were also financed to extend the knowledge of academic staff relevant to improved teaching\. The component also provided English language training for academic and technical staff selected for overseas training and to enable a broadening of their access to academic resources\. - 2 -  Component 2\. Upgrade the content of existing programs in science and engineering and broaden the range of programs relevant to Thailand's technological advancement - This component supported faculties to evaluate existing programs and identify new ones that support the national development priorities\. It also supported the improvement of program resource management in the participating institutions\. The component provided technical assistance and overseas fellowships and coordinated the development of linkages with international universities and with industry\. Component 3\. Modernize laboratories and strengthen their management - The project financed equipment procurement to improve the quality of undergraduate science and engineering programs\. The component also sought to enhance the capacity of existing institutional staff responsible for management, operations and maintenance\. To support this second component initiative, overseas fellowships, training and technical assistance were provided\. Included in this component were investments to support the development of the Global Development Learning Network Center at Chulalongkorn University\. Component 4\. Improve the utilization of resources in the faculties of Engineering & Science and establish a system for the large scale procurement of equipment\. In Component 4, there were two elements\. The first element provided training and technical assistance to ensure that adequate provision of consumable materials, spare parts, supplies, maintenance, support services and systems for monitoring and analyzing the utilization, operation and maintenance of equipment\. The second element provided technical assistance and training to enhance the capacity of the Ministry of University Affairs (MUA) to manage all aspects of large scale procurement under World Bank ICB guidelines\. 3\.4 Revised Components: The USEEP components were not formally revised although there were some modifications made to their associated Key Performance Indicators (KPIs)\. The KPIs were revised through a series of meetings between MUA, World Bank and the participating institutions with the intent to more clearly define the deliverables to be achieved under the project\. 3\.5 Quality at Entry: This project was not subjected to a QAG review and rating at entry\. The ICR rating for quality of entry is as satisfactory\. This rating is based on a number of findings: (a) from the beginning, the project was strongly focused on its agreed upon developmental objectives\. This focus did not waiver or change through the duration of the project; (b) the focus of the project was closely aligned with Royal Thai Government (RTG) higher education development priorities as defined in the 7th and 8th five-year plans\. These attuned relationships remained consistent throughout the project's implementation period; (c) the project design was clearly consistent with the Bank's Country Assistance Strategy (CAS); (d) the RTG considers the project to have been timely, in that it occurred in accord with RTG higher education development initiatives and was in place to support the higher education sector during the time of economic crisis in Thailand\. As a result the project made a more significant contribution than originally envisaged; (e) the project was clearly designed to leverage the potential of the Bank's investments by closing linking with the technical assistance project funded by AusAid, and (f) the project design was formulated to respond to the a well researched and documented set of "lessons learned" from previous projects in the sector\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: - 3 -  The project has met its overall development objectives and its outcomes are seen as substantial\. The project supported the Government's efforts to build a comprehensive science and engineering model for achieving better learning at the higher education level\. These outcomes were produced by a well-conceived and strongly integrated approach that featured: (a) the training and upgrading of teaching and administrative staff; (b) the upgrading of existing, and the development of new curricula; (c) the establishment of long lasting links with foreign universities, to strengthen research and to facilitate staff exchanges; (d) the development and implementation of a system-wide quality assurance system; and (e) the development and institutionalization of a comprehensive asset management system\. The project also demonstrated that a large university system can be changed by targeted investments and well-conceived interventions\. The participating institutions are better able to meet the changing demands of the scientific and engineering labor market\. All of the participating institutions now report that they have substantially enhanced capacity to produce more science and engineering graduates\. Studies have also shown that graduates are now better trained to handle the rapidly changing technologies in the productive sectors\. Furthermore, the job placement rates from these institutions continue to be satisfactory\. These graduates are recognized as an important contribution to the strengthening of the science and technology infrastructure which is vital to sustaining Thailand's position in technology advancement and global competitiveness\. In addition to the above, it should be noted that the each of the project's development objectives was reached within the budget allocated, and within the time periods agreed upon between the Bank and the Government\. There was also a sustained Government commitment throughout the project implementation period\. Furthermore, the project received strong and committed institutional participation\. There was also strong indications of client satisfaction with the implementation and outcomes of the project\. Based on these outcomes, the overall outcome of the project is judged to be satisfactory\. 4\.2 Outputs by components: Component 1: Strengthen the teaching capabilities of faculty - The implementation of Component 1 was satisfactory\. Selected teaching staff were provided with short term specialized training to upgrade their teaching skills and technical knowledge - To improve the skills of the teachers in all 36 recipient faculties, the project implemented 139 staff development programs (47 in Engineering and 92 in Science)\. In each program, technical training, fellowships, research and in some cases the establishment of institutional linkages between Thai and Australian Universities were provided\. The project also initiated generic staff development activities in areas that were common within science and engineering\. These included: (a) curriculum development; (b) teaching methodologies; (c) research methodologies; (d) library science; and (e) technical support\. With the associated support of TASEAP, 2,836 teaching staff of the science faculty, and 805 staff of the engineering faculty were trained in-country\. 96 teaching staff of the science faculty and 84 staff of the engineering faculty were trained in Australia\. 2,295 participants received training in pedagogy and curriculum development in-country, and an additional 11 persons received such training in Australia\. 9,268 participants were also provided with English Language Training (ELT) to enhance the overall ELT capacity within each participating institution\. The RTG also provided training for 798 participants to strengthen their capacity to operate and maintain specific items of equipment purchased through the project\. Through both TASEAP and the RTG, 368 short-term, specialized overseas fellowships (250 and 118 respectively) were also awarded\. Ongoing monitoring and evaluation within the institutions found that the above staff interventions resulted in: (a) improved teaching methodologies such as a reorientation to student-based learning models and a - 4 -  greater use of computer-aided instruction including web-based learning; (b) improved capacity to formulate and develop curriculum; (c) greater knowledge of the use and maintenance of equipment; (d) increased research and improved research methodologies; (e) improved access to English language resources; and, (f) improved capacity to develop appropriate resources\. One of the most significant indirect benefits of the project was its influence on bringing academics, with like interests, together to share their experiences, knowledge and, in some cases, resources\. This interaction also facilitated the development of academic networks in the areas of (a) computing, (b) analytical chemistry, and (c) English Language Training\. Component 2: Upgrade the content of existing programs in science and engineering and broaden the range of programs relevant to Thailand's technological advancement - The implementation of Component 2 was satisfactory (for additional data regarding program enhancement/development, see Appendix 1)\. It is estimated that more than 3,000 engineering and science courses/modules were enhanced or developed\. This represents an average increase from base year (1997) of 13\.3% in undergraduate and 82\.7% in graduate engineering programs, and 24\.6% in undergraduate and 49\.07% in graduate science programs\. TASEAP also provided about 900 person months (or 75 person years) of technical assistance across a range of subjects\. This included both long-term (665 person months) and short-term (235 person months) advisors\. Component 3: Modernize laboratories and strengthen their management - The implementation of Component 3 was satisfactory\. The enormity and complexity of the task is demonstrated by the following statistics: (a) number of equipment specifications written was about 12,217; (b) number of sites to which equipment was delivered was about 295; (c) number of items ordered was about 38,671; and (d) number of tenders was 14\. Initially, participating institutions had some concern about the procurement process\. Although the procured equipment generally met functional specifications, many universities were not satisfied with the overall quality of the received items\. In response to this concern, the Loan Project Office (LPO) established a specifications review committee with representative membership from participating universities\. As a result, there was a minimum of further discontent regarding the procurement process\. The LPO managed the procurement process effectively and generally, through the duration of the project, employed sufficient dedicated staff to ensure quality operations\. There was some new construction and facilities modification as required to house the equipment provided under USEEP\. This construction was funded outside of the project by RTG\. In particular, newly established universities were allocated RTG budgets to support the construction of new buildings for the faculties of science and engineering\. Both the RTG and TASEAP provided substantial training support as mentioned above\. TASEAP also provided significant support in the area of laboratory management\. A team of TASEAP short-term advisors (STAs) delivered in-country workshops to about 328 academic and laboratory staff in the areas of planning, staffing and operational aspects of laboratory management\. The team also provided targeted fellowships for technical support staff to visit Australia and observe laboratory management techniques used in Australian universities\. The STAs further assisted in the production of a PC based asset-management system and a multimedia package containing information on relevant standards, calibrations and references\. All of these materials were made available to each participant, with a copy sent to the appropriate Dean of Faculty\. All of the participating universities now have an asset management program in place\. This program is functioning well and it is expected that these universities will fully - 5 -  institutionalize the use of the asset management program over the next few years\. The RTG sponsored a total of 584 personnel from science and engineering to participate in in-country training courses on operation and maintenance of advanced equipment, while 70 individuals were sponsored for advance training on equipment utilization aboard\. Those trainees from both in country and abroad came back and organized training within their faculties\. The LPO also confirmed that about 493 additional staff from science and engineering were trained, during the project period, within their own faculties\. Component 4: Improve the utilization of resources in the faculties of Engineering & Science and establish a system for the large scale procurement of equipment\. The implementation of Component 4 was satisfactory\. As mentioned above all procurement has been completed in a satisfactory manner\. Furthermore, all of the public universities are now undergoing a new system of budgeting which will incorporate depreciated costs as part of their budgets\. This will help each faculty to identify and plan for equipment replacement and future need for both teaching and research functions\. An independent review of universities commissioned by the LPO and, undertaken by Kasetsart University confirmed that all of the participating universities now have an established quality assurance system\. This system includes the monitoring and evaluation of procedures, equipment usage, and the appropriate use of supplies and instructional materials\. The Kasetsart University team also confirmed that each faculty has appointed one or more coordinators for asset management\. This indicates that a commitment has been made to ensure that there are no shortages in supplies and instructional materials required for the teaching of science and engineering\. Additional information in this regard will soon be available from the ongoing Impact Evaluation Study (funded outside of the project by the RTG)\. Preliminary findings are expected to be available in September 2004\. The project has also initiated a considerable amount of activities to support facility management, and has introduced asset management and maintenance systems\. Faculties are continuing the process of developing systems to inventory equipment, supplies and materials\. All participating institutions have implemented asset management systems\. Faculties have also demonstrated a commitment to budget for necessary instructional supplies and materials to support the undergraduate teaching of science and engineering\. Over the last three years (2001 to 2003) science faculties committed a total of Baht 91\.427 million to this effort, while engineering faculties have committed a total of Baht 80\.504 million\. Furthermore, in all cases, the budget significantly increased from 2002 to 2003\. 4\.3 Net Present Value/Economic rate of return: Not Applicable 4\.4 Financial rate of return: Not Applicable 4\.5 Institutional development impact: A review of the KPI reveals that significant institutional development impact has already taken place\. Within the 20 participating institutions, there has been a substantial increase in the capacity (in most cases exceeding initial project estimates) to: (a) design, plan and implement new courses in science and engineering; (b) upgrade existing courses; (c) plan and implement large scale scientific - 6 -  and technical procurement; (d) manage large scale development projects in higher education; (e) operate and maintain sophisticated, technical teaching equipment; (f) establish and maintain institutional linkages (both national and international) to support intellectual exchanges and collaborative research\. Additional data and analysis is expected from the RTG's ongoing Impact Evaluation Study (completion is expected in September 2004)\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The Asian Financial Crisis was a significant event during the implementation of the project\. It is interesting to note that the Crisis was judged to have had mostly positive effects on the outcomes of the project\. The onset of the Crisis pushed the project to higher levels of visibility and importance within the Government\. It became evident that the RTG could not support the continued development of the universities at this scale without USEEP\. As a result, the project had significantly more impact on higher education policy reform than originally envisioned\. In the initial stages there was some delay in the implementation of the procurement activities\. The Government proposed to use an electronic bidding approach to support its procurement requirements\. At that time, the Bank had no policy on electronic bidding, so it initially refused to support the proposal\. This resulted in some confusion and borrower discontent\. Later this decision was reversed\. The use of the electronic bidding procedure has proven to have a number of advantages to the borrower, among which the primary advantage was cost effectiveness, thus, it should be considered a 'lesson learned'\. In a small number of instances, suppliers did not maintained their contractual commitments relating to ongoing service and the availability of spare parts\. Because of this situation, in a few instances, some universities have a few pieces of equipment that are less than fully functional\. To address these issues, the LPO initiated meetings between suppliers and the participating universities to discuss their mutual concerns\. It was found that there were specific concerns that were common to more than one institution\. This recognition and a subsequent dialogue with the vendors led to a better understanding of needs and a stronger adherence to agreements regarding service and spare parts\. 5\.2 Factors generally subject to government control: There were some government delays in the approval of procurement recommendations\. This was partially due to the fact that the project was sizable with a complex procurement plan\. There was also an understandable lack of experience with many Bank procurement procedures\. Despite the project being one of the first implemented after Thailand's long absence from Bank lending, the counterpart contribution has been satisfactory, and the RTG has demonstrated a strong commitment to the full implementation of a quality project\. 5\.3 Factors generally subject to implementing agency control: There were some procurement processing delays at the implementation agency level\. The following are considered the primary factors that contributed to these delays: (a) there were some delays in the acceptance of goods by respective university appointed acceptance committees; (b) a significant number of LPO staff were under project duration contracts, so as they found more permanent work many resigned leaving a void which took time to fill; and, (c) MUA staff were assigned to the project but often felt that as a result, they lost their opportunity for advancement within the MUA\. The MUA became conscious of this issue towards the latter stages of implementation, and moved to establish promotion procedures that effectively addressed this issue\. - 7 -  5\.4 Costs and financing: Although the project substantially met all its objectives and in some areas exceeded initial expectations, there were significant cost savings\. The Government canceled US$11\.0 million from the loan on December 6, 2001 and US$3\.0 million on October 31, 2001, for a total of US$14\.0 million\. The project has disbursed about US$127\.4 million (about 98% when the loan amount is adjusted to reflect loan cancellations)\. The cost savings were generally due to a combination of the following factors: (a) lower than expected costs for purchased equipment; (b) the state of the economy during the Asian Financial Crisis; (c) rigorous, centralized specification procedures and associated training that were initially used by the project team; and (d) higher than necessary estimates of equipment costs made during project preparation\. Significant variances were found between the estimates at appraisal and actual costs for several categories of N\.B\.F expenditure\. The following briefly describes the variances, and the determined reasons for each: l In the SAR, it was estimated that the RTG would spend about US$24\.2 million for equipment procured through NCB and NBF\. The data indicates that about US$1\.7 million (NBF) was actually spent\. This amounts to about 7% of the original estimate for the two categories combined\. It was determined that: (a) NCB and NBF procurement estimates at appraisal were too high\. Most of the project's equipment requirements consisted of technical equipment that required procurement through ICB, thus, under Bank/RTG agreement, counterpart funding was not required; and (b) the national financial crisis provided for substantial cost savings for NCB and NBF purchased equipment\. It should be noted that all planned equipment was satisfactorily procured during the project\. l In the SAR, it was estimated that the RTG would spend about US$17\.0 million for equipment installation and procurement support costs\. The data indicates that about US$1\.2 million was actually spent\. This amounts to about 7% of the original estimate\. It was determined that: (a) due, in part, to the country's financial crisis, the project was able to contract for equipment installation, calibration and even training on equipment usage as a part of the purchase price, thus eliminating the need for additional expenditure in this category\. It should be noted that all planned equipment installation was satisfactorily completed during the project\. l In the SAR, it was estimated that the RTG would spend about US$57\.3 million for equipment O&M costs\. The data indicates that about US$5\.4 million was actually spent\. This amounts to about 9% of the original estimate\. It was found that significant efficiencies were gained during the project which reduced the funding requirement for this category of expenditure\. Some of the efficiencies were gained from the procurement and implementation of ICT technology and the introduction of strong linkages between the 20 participating institutions\. Instead of individual development of O&M programs as planned, the early implementation of ICT made it possible to develop O&M models that could be standardized and replicated in all of the participating institutions, thus providing for significant cost savings\. Furthermore, the introduction of extensive technical assistance in the area of management and O&M (provided by the co-financier), provided for efficiency improvements that were translated into further cost savings\. It should be noted that all of the planned O&M activities were satisfactorily completed during the project\. These activities included: (a) computerized data collection and inventory systems; (b) establishment of institutional O&M committees; (c) establishment of depreciation and replacement standards and procedures; (d) establishment of equipment usage and maintenance recording systems; and (e) establishment of training programs to improve usage, maintenance and collaborative use\. - 8 -  l In the SAR, in the institutional development category, it was estimated that the RTG would spend about US$0\.5 million for consultants, and US$0\.1 million for training\. It was found that the data indicates that about US$0\.1 million and US$0\.1 million was spent, respectively\. It was found that: (a) the co-financed TA component was more robust than originally planned and, for this reason, there was less need for RTG financed consultants and training; (b) the financial crisis provided for significant cost savings in the costs for both consultants and in-country training; and (c) some of the planned consultant services and training were provided by the vendors as a part of their contractual agreements for equipment purchase and installation\. It should be noted that all planned consulting and technical assistance was satisfactorily completed during the implementation of the project\. 6\. Sustainability 6\.1 Rationale for sustainability rating: Staff Development - Quality staff are the primary resource of the participating universities as they move toward institutional autonomy\. The participating institutions have worked with USEEP and TASEAP in developing human resources development plans and assessment strategies for their academic and support staff\. Each has recognized that there must be continued planning and staff development to ensure that university resources are used efficiently and effectively\. This recognition has resulted in significant policy reforms in human resources development at the institutional level\. Curriculum Development - As mentioned earlier, significant curriculum development has taken place during the project\. The objectives and initiatives for this activity were developed by institutional management and staff with some support from MUA\. Every effort was made to closely link the objectives to student/employer needs and national development goals\. USEEP/TASEAP assisted in facilitating these developments through technical assistance and some training\. As a result, the project has witnessed a strong growth in each institution's capacity to implement curriculum development\. With its strong philosophical and technical foundation and the current government policy to place a priority on university curriculum development, there is every expectation that this capacity will continue to develop in the future\. Research - USEEP/TASEAP has been successful in raising the awareness of the complementary nature of research and academic development\. It is now recognized at both the institutional and MUA levels that quality research is an essential element in all comprehensive university education schemes\. Associated with this understanding, MUA has initiated a number of programs to support the development of both undergraduate and postgraduate research at universities with a view toward enhancing the quality of academic programs\. Cooperative research programs with international universities have been established\. This effort was strengthened directly through the project's and MUA's linkage programs, and many of these have been sustainable to this point\. The government's strong commitment to research will likely grow and will almost certainly be sustained for the foreseeable future\. Facilities - Financial support for facility management and operation has been flowing as part of the RTG's recurrent funding to universities\. It is expected this level of funding will be sustained in the future\. In addition to these levels of funding, some faculties are also seeking alternative sources of funding through the provision of services to industry and through short-term commercial training\. It should also be noted that through joint research activities developed under the linkages program of TASEAP, Thai universities are now able to access Australian support for operational and maintenance challenges in their laboratories\. Australian academics also benefitted from the substantial resources now available at Thai universities\. - 9 -  University Linkages - It has been the experience of the project that sustainable and effective linkages rely on close relationships between individual academics at each linking university\. USEEP and TASEAP have been very successful in supporting such linkages both formally and informally\. Although Thai institutions and their international partner institutions have to contend with increasing financial pressures that challenge their efforts to maintain such linkages, this will be countered by both Thai and partner university management's recognition of the need to promote international activities and collaborative arrangements\. Procurement Capability - In the initial stages of USEEP, it was expected that the role of the Loan Project Office (LPO) would continue for many years as the Ministry sought additional loan funds for planned sector developments\. The RTG has since decided to reduce or eliminate all external borrowing\. Therefore, it is expected that the LPO will gradually reduce its capacity following the completion of the USEEP\. The LPO will, initially, continue to function as it provides ongoing support to other ongoing Bank project(s)\. Currently, the LPO staff is providing implementation assistance to the ongoing Secondary Education Quality Improvement Project\. Over the long term, it seems reasonable to assume that the LPO's extensive procurement capacity may not be required and that its staff will be eventually returned to their pre-project assignments/positions, most of which are not involved in procurement of goods or services\. The project has also provided considerable skills to many young Thai professionals that will enhance their careers in future years\. This has already been evidenced by the rate of movement by LPO contract staff into attractive and secure positions outside the MUA\. The individual institutions have also enhanced their procurement capacity significantly\. Most indicate that they should be able to maintain their current capacity level\. 6\.2 Transition arrangement to regular operations: Virtually all of the transitions to regular operations have already taken place\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Although the project's task team initial missions were the first to engage in an education lending activity, in Thailand, in over a decade, it was able to produce a thorough and comprehensive proposal that did not change much during the implementation of the project\. A number of working papers were produced that provided significant input to the preparation of the project\. The preparation mission paid special attention to the holistic integration of equipment, facilities, pedagogy, curricula and staff development in the project design\. Project development was consistent with the Government's long-term plan for university development as well as the Bank's view in this regard\. Preparation and appraisal teams were well staffed and managed\. Extensive data collection took place and the results were well organized and documented\. Lessons learned from other projects were discussed and agreed upon\. The appraisal of the project was comprehensive\. The performance indicators were well prepared and continuously updated, making the tracking of the project activities straight forward\. Delays in project negotiation and effectiveness were due to the Government's decision to slow down the process for internal reasons\. The task team's initial project estimates for equipment costs may have been somewhat excessive, however, this is difficult to confirm because the project was implemented during a financial crisis in Thailand and there were other contributing factors as well\. Overall, the Bank's performance in this section was satisfactory\. 7\.2 Supervision: The Banks files contain full documentation of all PSRs and there is evidence of extensive Bank involvement as issues were identified during the project's implementation\. Initially, similar to many other projects, the progress of the project was sluggish\. Throughout this initial period there was close monitoring and - 10 -  supervision by the Bank\. As a result, the early issues (primarily associated with procurement management) were quickly identified and addressed\. Through the Bank's intensive and pro-active supervision, implementation progress was adequate reported and project performance was realistically rated\. All covenants were reviewed during each mission and strictly enforced\. Staff gave significant advice and showed considerable flexibility in solving implementation issues\. Supervision missions at six month intervals were adequately staffed\. Relations with the Borrower were excellent throughout the project period\. It is noteworthy to mention that most of the supervision was conducted by senior staff from the Bank's Bangkok Field Office\. This arrangement seems to have resulted in a closer communication and oversight than would have been typically found if the project was supervised from headquarters\. Overall, the Bank's performance in this section was satisfactory\. 7\.3 Overall Bank performance: The overall Bank performance was satisfactory\. Borrower 7\.4 Preparation: The Borrower assigned a counterpart team to actively participate in the identification and preparation of the project\. Senior government officials made themselves available for discussion and policy dialogue during all phases of the project\. They made many significant contributions to the soundness of the concept and scope of the project\. Likewise, the participating institutions showed a strong commitment to excellence, and a full implementation of project\. The overall performance of the Borrower during project preparation was highly satisfactory\. 7\.5 Government implementation performance: The Government was, and remains, strongly committed to the higher education sector\. Over the past decade the participating universities have gained increasing prominence and capacity to contribute to the national development agenda\. For these reasons, it is expected that the Government will continue to support the funding required for the operations and development of higher education\. Throughout the duration of the project counterpart funds were available and adequate\. Covenants were in full compliance and there were no overdue audit reports through the project years\. The overall performance of the Borrower during implementation was satisfactory\. 7\.6 Implementing Agency: The implementing agency was strongly committed and involved with all aspects of the project throughout the duration of the project\. Initially, the implementing agency attempted to implement the project using a strong central control concept\. There was some concern within the participating institutions that this approach was less than satisfactory because, in their opinion, the implementing agency could not provide adequate oversight to the widely disbursed activities of the project\. As these issues were brought up, the implementing agency responded well with demonstrated flexibility\. Changes were made in the implementation plan to allow for a more decentralized approach wherein, the various institutions became responsible for many aspects of the project's implementation\. This approach proved to be highly satisfactory to all parties\. The Bank's supervision team was included in the related discussions and were fully consulted as the changes were planned and made\. The overall performance of the implementing agency was satisfactory\. 7\.7 Overall Borrower performance: Overall the Borrower's performance was satisfactory\. - 11 -  8\. Lessons Learned The use of local processing staff based in the Bank's field office is an advantage for projects which require frequent monitoring and evaluation\. In the case of this project, the LPO made frequent use of Bank advice that was locally available on procurement, governance issues, project financing and development strategies\. A clear orientation to the project objectives and a statement of project responsibilities should be provided to all participants in a project\. Initially the project team did not fully orient institutional staff to the project's objectives and their respective roles in implementation of the project\. Subsequently, there was some confusion and misdirection in the early days of the project\. Upon realizing the problem, the project implementation unit moved quickly to address the problem\. Project designs should include planned activities to quickly collect and organize good baseline data\. Some baseline data was initially available for enrollments, academic qualifications and courses, however, other qualitative data on student development was not collected until much later\. Furthermore, the important monitoring and evaluation plan for USEEP was not completed until midway through the project\. It should be noted that its completion met the conditions of the project, however, in retrospect, it would have more useful if completed earlier\. When co-financed projects are associated with a Bank project, it is important to have clear understandings and linkages/relationships well documented for both projects\. TASEAP was a linked-project with USEEP\. It focused on the first two components of staff and academic program development, and part of component 3, in that it supported the establishment and ongoing operation of a procurement capacity within the implementing agency\. Yet, because TASEAP was funded by a partner government (Australia), it was treated as a separate project which was complementary to USEEP, but not included as part of the overall USEEP project implementation plan\. Where faculties have similar or related academic interests, careful attention should be given to options for integration and sharing of equipment and other resources\. Initially, the project found it difficult to gain faculty recognition of this need\. Each faculty had a natural inclination to seek resources to fund their independent teaching and research capacity\. Later, a MUA review of this issue revealed that there were a number of overlaps and inconsistencies in processes, documentation and required resources for similar programs in both the Science faculty and the Engineering faculty\. From then on, there was an effort to seek significant integration of both Engineering and Science streams, for example in areas such as generic teaching and research, (i\.e\. common to both streams)\. This integration resulted in a more efficient use of resources\. Future projects should not assume that there is good communication within its stakeholder organizations and should evaluate and work with these organizations to ensure all interested parties can participate in information flows\. The project did have a comprehensive communication strategy that was approved and disseminated to all stakeholders\. However, the project overestimated the effectiveness of communication within the universities and faculties\. Some problems occurred when communication broke down between participating institutions and/or the LPO\. Where only one language is predominantly spoken in a project area, that language should be the primary language used in the project\. There was an assumption that many, if not most, of the academics participating in the project would have a good understanding of English, a second language\. In many instances this was not the case, and there was some miscommunication as a result\. The strong management within the respective institutions usually rectified these misunderstandings, but this situation did cause - 12 -  some delays and staff confusion\. Electronic bidding procedures have been proven in this project to have distinct advantages over traditional procurement/bidding procedures\. 9\. Partner Comments (a) Borrower/implementing agency: Background and Rationale In late 1993, the Royal Thai Government requested The World Bank to examine the possibility of project assistance to education\. In conjunction with the Government, the Bank identified a project which would assist in strengthening the quality of science and engineering education in public universities\. Most of the preparation work was completed by the Government according to guidelines formulated by the Bank\. Project preparation was completed in November 1994 and the project was appraised in May 1995\. Project processing was delayed following elections in July 1995 and installation of a new Government\. Further delay was caused by uncertainties and could be resolved, regarding the provision of technical assistance\. Finally, the project was signed on July 29, 1997\. The project was consistent with the Government's priority for developing technical and scientific skills and with its plans for expanding and improving the quality of science and engineering education\. The project also emphasized on human resource development and the need to develop the capacities of the universities to provide quality science and engineering education\. The overall objective of the project was to improve the quality of undergraduate science and engineering programs\. The specific aims were to; strengthen the teaching capacities of faculty, upgrade the content of existing programs in science and engineering and broaden the range of programs relevant to Thailand's technological advancement, modernize laboratories and strengthen their management, improve the utilization of resources in faculties of engineering and science, and establish a system for the large-scale procurement of equipment\. The project supported quality improvement in 20 public universities through financing an institutional program including; short-term overseas training for selected academic and technical support staff in the education use and maintenance of the project-finance equipment and technical assistance and academic support services which was financed by the Australian Agency for International Development through Thailand- Australia Science and Engineering Assistance Project (TASEAP)\. The TASEAP also provided consultant services to evaluate existing programs and reconfirmed new ones, improved the management of program resources, developed effective procedures for the large-scale procurement of equipment and strengthen project management\. The component included the financing of small-scale research projects which extended the knowledge of academic staff relevant to improve teaching and English language training for academic and technical staff selected for overseas training\. Project Implementation The Loan Project Office, Ministry of University Affairs was established to be responsible for centralized equipment procurement, planning and management of overseas training programs and in-country training, coordination of consultant services, monitoring and evaluation, financial management and information dissemination\. Co-ordination of the project with co-financier was made through the Department of Technical assistance Cooperation\. Coordination, monitoring and evaluation of Australian contribution to the project was undertaken by the Australia for International Development through its office in Canberra and Bangkok\. The Australian Managing Contractor responsible for - 13 -  project implementation was SAGRIC International Pty\. Ltd\. in association with Monash University, the University of New South Wales and the University of South Australia\. The project key performance indicators were developed and modified continuously during the project implementation period by every part of the project concerned\. After the fifth year of project implementation, the government requested the Bank for a one-year extension since there were many uncertainties occurred causing the project timely completion as identified in the contract\. At the same time, Kasetsart University research team was contracted by the Loan Project Office to conduct further monitoring and evaluation of the project\. Evaluation of Performance against Objectives Objective 1 Strengthening teaching capability Academic development activities in science were targeted at nine undergraduate priority areas\. These included analytical chemistry, biotechnology, computing, ecology/biology, environmental science, material science, organic chemistry, physics and statistics\. There were over 140 in-country training workshops were carried out in these priority areas\. These were attended by over 2400 Thai academics from across all the participating universities\. In addition, the project provided 96 fellowships to Australia which enabled Thai academics to further study specialist academic and research areas with their Australian colleagues\. The RTG had supported specialist in country training for about 543 Thai academics and technical support personnel, on specific items of science equipment purchased by faculties\. It had also sponsored international training to a further 47 science academics, covering specific operations and maintenance on some of the more complex equipment purchased\. As in science, engineering activities were targeted at priority areas for undergraduate academic development\. These consisted of construction engineering, energy engineering, environmental engineering, machine design, material processing, electronics, telecommunications and transport engineering\. Over 40 in-country workshops were carried out in support of these priority areas, which were attended by over 800 academic staff\. In addition, the project provided 84 fellowships to Australia for Thai engineering academics\. The project counterpart fund of RTG also supported 319 participants for in-country training courses of Thai academic and technical staff on the operation and maintenance of specific items of engineering equipment\. It also sponsored international training to a further 23 engineering academics on specific interests in operation and maintenance of some of the more complex engineering equipment purchased\. Objective 2 Upgrade existing undergraduate programs The provision of new equipment through the project enabled faculties to both establish new courses, in cases where existing facilities were inadequate, and improve existing curriculum, particularly in terms of associated laboratory work\. The universities have identified a total of 2,005 courses in science and 991 coursess in engineering have been adjusted as a direct impact of the project\. There were 1,084 courses in science and 244 courses in engineering developed\. Three hundred and five programs in science and three hundred and sixteen programs in engineering were developed in both undergraduate and graduate levels\. The project has provided faculties with a range of new equipment to enhance the way subjects are taught\. The greater use of technology now being applied to the teaching of science and engineering - 14 -  programs\. The project provided direct technical assistance to faculties in regard to developing improved teaching methodologies\. This was provided broadly through a series of in-country workshops, attended by a total of 947 academics\. The project also provided specific support direct to individual faculties in the application of newly acquired equipment in their teaching approaches\. Although the project was targeted at the development of undergraduate programs, a secondary benefit of the provision of equipment has been to enable the further development of research within participating faculties\. Faculty staff and postgraduate students have now greater access to modern scientific and engineering equipment which they can apply to their research programs\. The participating universities have identified a total of 1,991 new research projects which have resulted from this new access\. In addition, the project initiated a program, which was targeted at raising the awareness of Thai academics of the complementary nature of research and academic development\. In addition to the provision of technical assistance direct to faculties, the project provided 5 workshops on the improved research methodologies\. The report of the contracted team noted that the project also provided opportunity for faculties to strengthening their relationships with other international universities\. It sponsored, both directly and indirectly, the development of 68 such linkages\. These were in the areas of joint Doctoral, Master of Bachelor programs, research, teaching and student exchange programs\. Objective 3 Modernize laboratories and strengthen their management In addition to the training of academic and technical staff in the specific use and maintenance of equipment afforded through the project, training was also provided in the area of laboratory management\. The project offered six fellowships for technical support staff to visit Australia and observe laboratory management techniques used in Australian universities\. These staff were then involved in a series of in-country workshops in which they relayed their findings to the colleagues from other universities\. The project promoted and supported the development of asset management and asset utilization systems within faculties to manage and monitor the existing and new equipment\. This included the provision of asset management software and database\. Every faculty has made further advances to the development of such a system which has enhanced the sustainability of equipment provided through the project\. At the same time, 79 standard laboratories in science and 68 standard laboratories in engineering were developed for teaching, research and services\. The English language program was made successfully to enhance existing English language activities at universities in the areas of science and engineering\. The project provided six fellowships in Australia for English language academics who produced a computer assisted language learning software package and support materials specifically targeted at science and engineering\. These fellows then returned to Thailand and participated in project sponsored workshops where this new software package and associated support materials were presented to English language staff from all participating universities\. Objective 4 Improve utilization of resources in the faculties of science and engineering The procurement of equipment was completed with 38,671 pieces of fourteen tenders as identified - 15 -  in the contract and has been accepted and installed to the sites\. The study of equipment utilization conducted by the contracted team revealed that 80\.85 percent of science equipment and 70\.76 percent of engineering equipment was used for teaching per week\. In addition, 12\.89 percent of science equipment and 15\.29 of engineering equipment was used for research and 6\.26 and 13\.95 percent was used for services per week\. During the implementation period (2001-2004) 253 millions Baht of counterpart fund was allocated directly to the universities for operation and maintenance cost of the equipment provided\. Chulalongkorn University ­ Global Development Learning Network : CU-GDLN As part of the Universities Science and Engineering Education Project : USEEP, CU-GDLN aimed to promote student and faculty development in higher education institutions throughout Thailand and serve the government and private sectors by sharing and exchanging knowledge and resources on the issues related to national interest\. CU-GDLN offers different levels of videoconferencing service for distance education, training, seminar and tele-working to serve both low-end and high-end markets\. Linking to the World Bank's GDLN through the Network Operation Center at the Bank headquarter in Washington, D\.C\., the CU-GDLN uses three channels for the linkups; satellites, ISDN telephone line, and the Internet\. The network provides videoconferencing at transmission speeds of 128-384 kilobit per second (kbps) and network speeds of 256 kbps so conferences can be broadcast to all Distance Learning Centers live audio-visually worldwide\. More than six hundred thousand USD has already been disbursed since the year 2000 for the equipment procured including operation and maintenance costs\. The World Bank's representatives and the Loan Project Office`s staff visited CU-GDLN periodically for monitoring and evaluation of the USEEP during the project implementation\. The results of continuous visits were as follows; 1\.Management CU-GDLN has been managed as a part of Chulalongkorn University Center of Academic Resources : CAR\. Seven staff of the CAR were assigned to work on temporary basis on general administration, training coordination and technical works under the supervision of a senior advisor, (former director of to Thailand Document Center, Chulalongkorn University)\. With their expertise on their own jobs at CAR, all staff are able to work effectively and efficiently\. 2\.Performance Started in October 2002, CU-GDLN organized 24 events with 82 sessions for 871 participants in 2002 of Thai fiscal year and 26 events with 59 sessions for 839 participants in 2003\. The participants were university students, lecturers, government and non-government officials\. The diversity and applicability of contents offered with powerful technology used for real time training were highly satisfied by the participants\. 3\. Sustainability CU-GDLN was developed on academic and technological potential of Chulalongkorn University with two projects; WB-CU Documentation Center and the WB-CU Digital and Online Information System\. The above mentioned projects are connected to University Networks: UniNet and served as a super hi-way to higher education institutions throughout Thailand\. Knowledge exchanging and sharing can be done both within country and globally by the network provided\. - 16 -  In the near future, CU-GDLN decided to develop courses and contents for worldwide participants in order to act as an information and knowledge provider in the information-based society\. 4\. Strenthening the Sustainability Development Although CU-GDLN has been managing smoothly with concrete support from Chulalongkorn University and the World Bank in term of facilities and expertise, the Center still needs continuous supports on long-term finance and full time qualified personnel for sustainable development\. In addition the Center itself should strengthen its Strategic plan and Financial plan which has to be incorporated in the university plan and follow higher education development plan to be fully supported from the Budget Bureau\. Furthermore internal management should be focus more on the following activities 4\.1 Course Development and Delivering should be more closely link to global and local needs and has to be fully supported by the government as an alternative ways of HRD\. 4\.2 Increase greater public awareness of the role and activities of the Center 4\.3 Moving toward the adoption of Business oriented management in order to increase efficiency in term of financial management\. Major Factors Contributing to the Success of the Project The project was one of the key supporting mechanisms that helped sustain the development in science and engineering education in Thailand and was well accepted by most universities especially those newly established universities\. The project provided faculties of science and engineering a considerable kick-start with respect to laboratories management\. In particular, Asset Management System initiated by the Project and was established in the faculties of Science and Engineering will be a stepping stone for the new budgeting system of the university\. In addition, appropriate training courses, were offered by both TASEAP and USEEP in laboratory management, maintenance and operation of highly sophisticated equipment\. As the courses aimed at daily operation and maintenance management of the laboratories and equipment usage, the technical staff brought back their knowledge from the courses provided for the improvement of their own laboratories at the faculties\. The project also supported the successful implementation of Higher Education Development Plan in various aspects such as strengthening linkages between universities and industry, cooperated research between public and private sectors, upgraded research capacity of universities, helped develop postgraduate education and supported quality assurance of higher education\. It could not be deniable that the success of the project was due to full support from the Government of Australia through his generosity in providing assistance for the academic development for the faculties of Science and Engineering and for procurement management\. MUA has also recorded the full support from the World Bank officers, both at Washington D\.C\. and in Bangkok Office, and recognized its assistance as a major contribution toward the success of the project\. Advises from the World Bank always came in time and help alleviate many difficulties we encountered\. With effective advice the unused loan was returned immediately instead of delay until the final stage of the contract\. In addition our sincere appreciation was going to Department of Technical and Economic Cooperation for her assistance on TASEAP and to the Budget Bureau for a generous allocation of budget for the management of the project and for training and maintenance of the equipment procured\. - 17 -  The Public Debt Department and the Comptroller office, Ministry of Finance could not be neglected for their kind help and support\. Conclusion and Lesson Learned General Conclusion USSEP was the first largest project on development of undergraduate science and engineering programs in public universities\. Although the project faced many challenges due to its scope and complexity the targeted outcomes were achieved\. The project has also impacted on raising the quality of undergraduate programs in science and engineering and the development of future programs and internationalization of Thai higher education system as it created and initiative for networking among Thai public universities and collaboration with Australian universities\. Knowledge gained from the project on procurement system, international bidding, scientific equipment specifications, data based for procurement management system are valuable knowledge for the future implementation of the similar project\. Best practices in the forms of web-based asset management, electronic logbook, laboratory maintenance and operation including interactive teaching and learning with problem based learning were brought to the sustainable development successfully since all of the practices mentioned have been implementing in every university concerned\. In achieving such complex and challenging project as already mentioned there are many lessons learned from the project such as: Lesson Learned on Management There are 2 aspects regarding the lesson learned on management first the Organization Design and Communication and Involvement Organization Design Even though the Organization of the Implementing Agency was well designed, with help from AusAIDS who provided technical assistance in both academic development and the management of the procurement, it is still found that the full time Thai counterpart with more experience in the area of scientific equipment and Bank financed Procurement system is still very necessary at the beginning of the project\. Most of junior staff were temporary employed and hence the project faced frequent staff turnover\. In addition the discontinuity of management system at all levels ranging from MUA down to departmental level at the universities\. In particular, the change of top management such as the Minister, the Permanent Secretary, the University Presidents, the Deans and the Heads of Departments have effected significantly on the operation of the project\. Due to the large size and complexity of the project, Project Implementation Sub Unit (Sub-PIU) should be established at the university level\. The Sub-PIU will oversee the project as a whole and will be the suitable point of contact\. The benefit of Sub-PIU is that knowledge and experiences gained at LPO could be transferred directly to Sub-PIU\. In addition , any problems occurred at a particular university could be solved through the Sub-PIU in connection with LPO which could speed up the whole process\. Communication and involvement Due to size and complexity of this Project as mentioned earlier, it was difficult enough to make - 18 -  universities fully understand the USEEP and TASEAP projects and the connection of the two projects in early implementation\. The difficulty is that the position of the Dean and Department Heads is changed every four years or less in some universities while the Project is over 5 years\. Changing of the executive teams lead to changing of coordinators and not all the information had been passed through\. The workshop held by LPO each year in order to disseminate information to universities created mutual understanding of the 2 projects\. Furthermore LPO published a newsletter sent out to each department heads and coordinators to inform about the updated project events\. Regardless of all the effort LPO had done in the communication, the problem was inevitably\. There should be a more comprehensive communication strategy to disseminate to all stakeholders with regarding to different perception and process of information flows within the university\. With better communication, involvement of stakeholders in all aspects of the procurement cycle should also be taken into consideration\. Lesson Learned on Procurement Complexity of the procurement process Part of the problems in equipment acceptance is due to the complexity of the procurement process which was new and take quite a long time\. Since the project funding is around US$ 130 million, procurement has to be done in large packages to reduce handling cost\. However, such process in turn created additional cost and excess paper work for companies bidding for the contract and created delay in delivery process\. Moreover large packages procurement needs to simplify the specification of same type of equipment into one standard, omitting many detail specification which cater to each user's needs and sometimes clarification has to be made at acceptance process \. Large Lot At the beginning of the project, large number of equipment to be procured and a lot of equipment varieties in each tender had caused bidders to submit bid outside their scope of expertise and hence they do not have enough technical knowledge of all equipment both in installation and operations\. This in turn caused may problems in some of the early tenders such as; delay in equipment acceptance, incomplete installation, ineffective training\. Large size tender also has hidden cost in equipment delivery, handling and installation\. Vendors Thai Vendors Many Thai vendors did not understand the process of workflow inside LPO and view LPO as part of the government bureaucratic system\. Having little experience in international bidding (for many this was their first opportunity for international bidding), many venders had to rely on their sub-contractors for equipment installation and deliver, causing problem and delay in equipment acceptance\. Foreign Vendors Some foreign Vendors were not ready and well prepared when awarded multiple contracts or big contracts with many items and hence delayed both delivery and acceptance\. In addition, their Thai representatives were not well qualified to perform proper installation or training that created some dissatisfactions to the acceptance committees\. - 19 -  Mutual Understanding of the Bank Guidelines for Procurement For future project better preparation and better understanding of the Bank Guidelines for procurement of all participating agencies at the early stage of the loan implementation will certainly be one of the key success\. (b) Cofinanciers: The Government of Australia, a cofinancier of this project, did not submit comments for inclusion in this ICR\. The Government of Australia provided a separate Project Completion Report for its components\. That report is listed in Annex 7, and information from the AusAID Project Completion Report was used to support the findings of this ICR\. (c) Other partners (NGOs/private sector): 10\. Additional Information Not Applicable - 20 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate 1\.1 Selected teaching staff will be provided 2836 teaching staff of science faculty and In addition to projected in last PSR, 9268 with short-term, specialized training to 805 of engineering were trained; 96 staff of participants were trained in English upgrade their teaching skills and technical science faculty and 84 staff from engineering Language Training (ELT); and 11 knowledge\. faculty were trained in Australia; 2,295 participants were trained, in Australia in teaching staff were also trained in-country in pedagogy and curriculum development\. pedagogy and curriculum development in 9,268 participants were also provided with Australia; (ELT)\. The RTG also provided training for 798 participants to strengthen their capacity to operate and maintain equipment\. Through both TASEAP and the RTG, 368 short-term, specialized overseas fellowships (250 and 118 respectively) were also awarded\. 2 \.1 Based on the figures for the base-line 157 undergraduate programs of science were Same as projected in last PSR year, the number of science and engineering upgrades/developed (24\.6% increase from courses will be upgraded by an average of at base year (126)); 161 graduate programs of least 20% in the participating institutions\. science were enhanced/developed (49\.07% increase from base year (108)); and, 1,443 courses of science were upgraded/developed; 179 undergraduate programs of engineering enhanced/developed (13\.3% increase from the base year (158)); 137 graduate programs of engineering were enhanced/developed (82\.67% increase from base year (75)); and, 1,235 courses of engineering were enhanced/developed\. 2\.2 Throughout the life of the project, 81 Australian short-term consultants visited Same as projected in last PSR AusAID will provide US$7\.7 million to employ and organized 193 training workshops for consultants to assist participating universities academic staff of science and engineering in their development of new, and faculties; 21 Australian short-term improvement of existing, undergraduate consultants visited and organized 131 programs in science and engineering\. training workshops on teaching methods and curriculum development; 23 Australian short-term consultants visited and conducted 26 workshops on linkages for joint program collaboration, research, student exchanges and networks\. 3\.1 Equipment is provided according to an Revised procurement plan is 97\.83% Based upon a revised and agreed upon agreed upon schedule of implementation\. complete\. 37,860 items of equipment and schedule of implementation , 100 percent of supplies were accepted and integrated into equipment and supplies were accepted (The the participating institutional inventories\. final count of accepted items was 38,671) and integrated into the participating institutional inventories 3\.2 Construction and facilities modification 100% complete is completed according to an agreed upon schedule of implementation (already under construction and financed outside of the project) 3\.3 Specialized training will be provided to 835 academic staff and technicians of TASEAP supported in-country training for selected laboratory managers and technical science and engineering faculties were 328 staff in areas of planning staffing and staff\. trained in-country and 70 academic staff operational management of laboratories, and were sent for advanced training courses in about 70 staff for overseas training; RTG equipment utilization in Australia\. provided in-country training for about 584 staff in operation and maintenance of advanced equipment, and about 80 staff for overseas training in similar areas\. An additional 493 staff were provided with in-service training in equipment operations and maintenance 4\.1 By the end of the project, all equipment 100% complete - 21 -  and associated supplies and materials required by participating universities in undergraduate science and engineering programs will be identified, specified and procured, 4\.2 Within 12 months of completion of the Although it is not yet 12 months past project project, the instructional programs will not be completion, instructional programs are not experiencing significant shortages in reporting any significant shortages of equipment, supplies and instructional supplies and equipment\. materials procured under USEEP\. 4\.3 All equipment, supplies and materials 30 faculties modified original asset Same as projected in PSR procured will also be inventoried\. management program for local use and applications\. 36 faculties recorded equipment utilization in schedules and log books provided for that purpose 4\.4 By the end of the project, all relevant and At time of PSR, no response possible All relevant and operative laboratories are operative laboratories will be fully provided fully provided with necessary instructional with the necessary instructional supplies and supplies and materials to support materials to support the undergraduate undergraduate science and engineering science and engineering curriculum being curriculum being taught\. taught\. - 22 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/ Latest Percentage of Estimate Estimate Appraisal Project Cost by Component US$ million US$ million Strengthening the teaching capability of 4\.1 2\.6 63\.4 faculty Upgrading the content of existing 13\.2 12\.8 97\.0 programs in science and engineering and broadening the range of programs relevant to Thailand's technological advancement Modernizing laboratories and 184\.6 130\.3 70\.6 strengthening their management Improving the utilization of resources in 59\.6 7\.3 12\.2 faculties of engineering and science and establishing a system for the large-scale procurement of equipment Total Project Cost 261\.5 1/ 153\.0 Total Financing Required 261\.5 153\.0 1/ Although the project substantially met all its objectives and in some areas exceeded initial expectations, there was significant cost savings\. The Government canceled US$14\.0 million in 2001\. The cost savings were due to a combination of the following factors: a) lower than expected costs for purchased equipment; b) the state of the economy during the Asian Financial Crisis; c) rigorous, centralized specification procedures and associated training that were initially used by the project team; and d) higher than necessary estimates of equipment costs made during project preparation\. - 23 -  Project Cost by Procurement Arrangements (Actual/ Latest Estimate) (US$ million equivalent) Expenditure Category Procurement Method ICB NCB Other N\.B\.F\. Total Cost 1\. Equipment 142\.50 16\.80 0\.00 8\.70 167\.60 (127\.4) (0\.0) (0\.00) (1\.7) (129\.1) 2\. Equipment O & M 0\.00 0\.00 0\.00 57\.30 57\.30 (0\.00) (0\.00) (0\.00) (5\.40) (5\.40) 3\. Equipment Installation and 0\.00 0\.00 0\.00 17\.00 17\.00 Procurement Supporting Cost (0\.00) (0\.00) (0\.00) (1\.20) (1\.20) 4\. Consultants 0\.00 0\.00 0\.00 9\.50 9\.50 (0\.00) (0\.00) (0\.00) (9\.10) (9\.10) 5\. Training 0\.00 0\.00 0\.00 4\.10 4\.10 (0\.00) (0\.00) (0\.00) (2\.60) (2\.60) 6\. Universities Linkages 0\.00 0\.00 0\.00 3\.70 3\.70 (Research Program) (0\.00) (0\.00) (0\.00) (3\.70) (3\.70) 7\. Project Mangement 0\.00 0\.00 0\.00 2\.30 2\.30 (0\.00) (0\.00) (0\.00) (1\.90) (1\.90) Total 142\.50 16\.80 0\.00 102\.20 261\.50 (127\.40) (0\.00) (0\.00) (25\.60) (153\.0) Remark: Figures in parenthesis are the respective amounts financed by the Bank Loan\. All cost include contingencies\. N\.B\.F\. : Not Bank - financed - 24 -  Project Financing by Category of Expenditure (In US$ million equivalent) Appraisal Estimate Actual/Latest Estimate Percentage of Appraisal Category of Expenditure Bank Govt\. CoF\. Bank Govt\. CoF\. Bank \. Govt\. CoF\. 1\. Equipment 143\.40 24\.20 - 127\.40 1\.70 - 88\.84 7\.02 - 2\. Equipment Installation and - 17\.00 - - 1\.20 - - 7\.06 - Procurement Supporting Cost 3\. Equipment O & M - 57\.30 - - 5\.40 - - 9\.42 - 4\. Institutional Development 1) Consultants - 0\.50 9\.00 - 0\.10 9\.00 - 20\.00 100\.00 2) Training - 2\.60 1\.50 - 1\.10 1\.50 - 42\.31 100\.00 3) Universities Linkages - 0\.20 3\.50 - 0\.20 3\.50 - 100\.00 100\.00 5\. Project Management - 2\.30 - - 1\.90 - - 82\.61 - Total 143\.40 104\.10 14\.00 127\.40 11\.80 14\.00 88\.84 11\.14 100\.00 Remark * USEEP has cancelled loan amount USD 14\.00 million,then the existing loan is USD 129\.40 million - 25 -  Annex 3\. Economic Costs and Benefits No economic costs and benefit analysis was carried out at the time of project preparation, nor was it done at the time of the ICR\. - 26 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 11/01/1994 5 Principal Economist (1); S S Engineering Educator (1); Science Educator (1); Technical Educator (1); Operations Officer (1) Appraisal/Negotiation 05/01/1995 5 Principal Economist (1); S S Engineering Educator (1); Science Educator (1); Technical Educator (1); Operations Officer (1) Supervision 08/28/1997 4 MISSION LEADER (1); S S OPERATIONS OFFICER (2); PROCUREMENT SPECIALIST (1) 12/05/1997 4 ECONOMIST (1); S S OPERATIONS OFFICER (2); PROCUREMENT SPECIALIST (1) 06/19/1998 3 OPERATIONS OFFICER (1); S S PROCUREMENT SPECIALIST (1); TECHNOLOGY SPECIALIST (1) 12/10/1998 2 OPERATIONS OFFICER (1); S S PROCUREMENT OFFICER (1) 06/09/1999 7 OPERATIONS OFFICER (1); S S PROCUREMENT OFFICER (1); FINANCIAL SPECIALIST (1); EDUCATION ANALYST (1); DEPUTY PS OF MUA (1); PROGRAM MANAGER AUSAID (1); EDUCATION MANAGER (1) 06/12/2000 3 OPERATIONS OFFICER (1); S S PROCUREMENT OFFICER (1); RESEARCH ASSISTANT (1) 3/01/2001 5 Senior Operations Officer (1); S S Procurement Specialist (1); Financial Specialist (1); Science Education Specialist (1); - 27 -  Research Assistant (1) 02/01/2002 5 Senior Operations Officer (1); S S Procurement Specialist (1); Financial Specialist (1); Science Education Specialist (1); Research Assistant 05/01/2003 7 Senior Operations Officer (1); S S Education Specialist (1); Procurement Specialist (1); Financial Specialist (1); Portfolio Coordinator (1); Program Assistant (1); Research Assistant (1) ICR 10/01/2003 5 Senior Operations Officer S S (1); Procurement Specialist (1); Financial Specialist (1); Procurement Analyst (1); Research Analyst (1 (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation NA 147,906\.11 Appraisal/Negotiation NA 73,953\.06 Supervision NA 342,782\.36 ICR NA 12,124\.94 Total NA 576,766\.47 - 28 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 29 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 30 -  Annex 7\. List of Supporting Documents "USEEP - Project Completion Report for Loan 4160", Loan Project Office, Commission on Higher Education, Ministry of Education, Kingdom of Thailand, January 2004 (Government's Final Report)\. "USEEP - Progress Report for Loan 4160", Loan Project Office, Commission on Higher Education, Ministry of Education, Kingdom of Thailand, January 2004\. "USEEP - Monitoring and Evaluation Report for Loan 4160", Loan Project Office, Commission on Higher Education, Ministry of Education, Kingdom of Thailand, August 2003\. Project Communication Files (Aide Memoires and other forms of communication) for Loan 4160, The World Bank; Washington and Bangkok\. Project Status Report Files for Loan 4160, The World Bank, Washington and Bangkok\. "TASEAP - Project Completion Report", Australian Agency for International Development and Kingdom of Thailand, Ministry of University Affairs, Bangkok, June 2001 (draft)\. "Loan Agreement Loan Number 4160-TH - Universities Science and Engineering Education Project", between Kingdom of Thailand and The World Bank, July 29, 1997 'Staff Appraisal Report, (Report Number 16151-TH; Loan Number 4160-TH) - Universities Science and Engineering Education Project", The World Bank, Washington, February 7, 1997\. - 31 -  - 32 -

REVIEW

P001326

Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 16242 IMPLEMENTATION COMPLETION REPORT KENYA SECOND AGRICULTURAL SECTOR ADJUSTMENT OPERATION (ASAO) II (CR\. 2204-KE) January 16, 1997 Agriculture Operations Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS Currency unit = Kenya Shilling (KSh) US$1\.00 (at appraisal) = KSh23\.5 US$1\.00 (end December 1995) = KSh55\.85 SDR1\.00 (at appraisal) = US$1\.35 SDR1\.00 (end December 1995) = US$1\.49 WEIGHTS AND MEASURES Tons are metric tons of 1,000 kg (2,204 pounds) 1 acre (ac) = 0\.405 hectare (ha) FISCAL YEAR OF BORROWER 1 July - 30 June ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AFC Agricultural Finance Corporation ASAO Agricultural Sector Adjustment Operation ASMP Agricultural Sector Management Project CBS Central Bureau of Statistics CSRP Cereals Sector Reform Programme DCA Development Credit Agreement DGA Development Grant Agreement DFC District Fertilizer Committee DPD Development Planning Division EU European Union FAO Food and Agriculture Organization FAO/CP FAO/World Bank Cooperative Programme FPMRP Fertiliser Pricing and Marketing Reform Programme GTZ Gesellschaft fir Technische Zusammenarbeit HIID Harvard Institute for International Development ICR Implementation Completion Report IDA International Development Agency IMF International Monetary Fund KfW Kreditanstalt fir Weideraufbau KMDP Kenya Market Development Programme M&E Monitoring and Evaluation MOA Ministry of Agriculture MOLD Ministry of Livestock Development MOALDM Ministry of Agriculture, Livestock Development and Marketing NCPB National Cereals and Produce Board TA Technical Assistance USAID United States Agency for International Development Vice President Mr\. Callisto E\. Madavo Director Mr\. Harold E\. Wackman Division Chief/Manager Ms\. Sushma Ganguly Staff Member' Mr\. Gajanand Pathmanathan  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT KENYA SECOND AGRICULTURAL SECTOR ADJUSTMENT OPERATION (ASAO II) (CREDIT 2204-KE) CONTENTS PREFACE \.i EVALUATION SUMMARY \.ii PART I: PROJECT IMPLEMENTATION ASSESSMENT \.1 A\. STATEMENT/EVALUATION OF OBJECTIVES \.1 B\. ACHIEVEMENT OF OBJECTIVES \.2 C\. MAJOR FACTORS AFFECTING THE OPERATION \. \.3 D\. OPERATION SUSTAINABILITY \.6 E\. IDA PERFORMANCE \.7 F\. BORROWER PERFORMANCE \.8 G\. ASSESSMENT OF OUTCOME \.8 H\. FUTURE OPERATIONS \. 10 I\. KEY LESSONS LEARNED \. 10 PART II: STATISTICAL TABLES \. 12 APPENDICES \. 28 A\. Aide -Memoire B\. Map This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties\. Its contents may not otherwise be disclosed without World Bank authorization\.   IMPLEMENTATION COMPLETION REPORT KENYA SECOND AGRICULTURAL SECTOR ADJUSTMENT OPERATION (ASAO II) (Credit 2204-KE) PREFACE 1\. This is the Implementation Completion Report (ICR) for the Second Agricultural Sector Adjustment Operation (ASAO IT) for Credit 2204-KE, in the amount of SDR52\.2 million (US$75 million equivalent), which was approved on January 19, 1991 and became effective on May 21, 1991\. The second tranche of the credit amounting to SDR23\.3 rnillion, (US$33\.8 mnillion) was cancelled by IDA on December 21, 1992, following the Government of Kenya's (GOK) reversal of policy with respect to movement of maize within the country\. 2\. Following a request by the Government in December 1995, the closing date of the credit was extended to June 30, 1996, in order to allow implementation of the institutional strengthening components to be brought to an orderly closure\. The suspension of disbursements imposed in September 1995 as a result of non-compliance with the financial covenant requiring timely presentation of audited accounts was lifted on December 22, 1995, upon receipt by IDA of the outstanding audit reports\. Final disbursement was made on December 6, 1996, and SDR3\.0 rmillion undisbursed was cancelled\. 3\. Co-financing of US$7\.97 million (equivalent) for the operation was provided by the Netherlands Govemment\. The African Development Bank (AfDB), the United States Agency for Intemational Development (US AID), the European Union (EU), the Kreditanstalt f'ur Weideraufbau (KFW) and the Gesellschaft fur Technische Zusanmuenarbeit (GTZ) provided parallel financing (amounts contained in Annex 8B)\. 4\. Preparation of the ICR was undertaken by a FAO/CP mission' which visited Kenya in October 1995, coinciding with IDA's supervision mission\. Inputs were provided by Gajanand Pathmanathan and Donna Criddle (AFTAI)\. Comments were also received from Jacomina de Regt (AFTOS 1)\. Comments have been received from the borrower and have been incorporated in the report\. Comments were not received from the co-financier, and the Govemment of Kenya did not prepare a separate evaluation of the project\. 5\. The ICR is based on discussions with the project management, material in the project files, the President's Report, the Development Credit Agreement (DCA), the Development Grant Agreement (DGA)2, supervision reports, discussions with staff of concemed govemment agencies as well as information provided by private sector millers, merchants and importers\. The ICR was reviewed by Sushma Ganguly, Technical Manager, Agriculture Operations 1, Eastem and Southem Africa\. 'Messrs\. J\. H\. Weatherhogg, Mission Leader and F\. M\. Stubenitsky, Economist (Consultant)\. 2 Between the Govemment of Kenya and IDA as administrator on behalf of the Minister for Development Cooperation of the Netherlands\.   ii IMPLEMENTATION COMPLETION REPORT KENYA SECOND AGRICULTURAL SECTOR ADJUSTMENT OPERATION (ASAO I) (Credit 2204-KE)) EVALUATION SUIlMMARY Introduction 1\. ASAO n1 incorporated the experiences from the First Agricultural Sector Adjustment Operation3 completed in 1988 and subsequent studies by both GOK and IDA\. At GOK's request, project preparation started during FY89, the appraisal began in June 1990, the credit was negotiated in November 1990, signed in February 1991 and became effective in May 1991\. In addition to the IDA credit of SDR52\.2 million (US$75 million), parallel and co-financing for balance of payment support was expected to total approximately US$100 million\. An estimated 89 percent ofthe IDA credit was allocated for financing agricultural imports and 11 percent for sectoral management support\. Operation Objectives 2\. The main goals of the operation were to (a) accelerate agricultural growth through smailholders; (b) contribute to fiscal stabilization; (c) improve public sector resource use in agriculture; (d) begin to assist lower income groups who are vulnerable to climatic and economic shocks; and (e) improve agricultural sector institutional capacity\. 3\. Strategies to achieve accelerated agricultural growth included improved maize producer incentives and increased market competitiveness; rationalization of maize stocks, compatible with market needs; increased input supply, particularly of fertilizer, and promotion of its efficient use\. Fiscal stabilization and improved public sector resource use was pursued through improvement in the efficiency and composition of public expenditures\. Assistance to vulnerable groups was attempted through the development of targeted measures to protect vulnerable groups\. Finally, improvement of agricultural sector institutional capacity was pursued by supporting improved policy planning, project preparation and implementation in the Ministries of Agriculture (MOA) and Livestock Development (MOLD) and then continued after the merger of the two ministries in the Ministry of Agriculture, Livestock Development and Marketing (MOALDM)\. 4\. ASAO II aimed to make substantial advances in three policy areas (maize, fertilizer and public expenditure), representing a deepening of reforms begun under ASAO I, as well as initiatives in two other ' The first ASAO Credit 1717-KE of SDR52\.8 million and was fully disbursed in November 1988\.  iii areas, namely, steps towards assisting vulnerable groups and building capacity for policy analysis\. These five aspects constituted the immediate objectives of ASAO H\. 5\. To realize the operation's strategies with respect to maize and fertilizers, a number of policy measures, were conceived as conditions for release of balance of payments support to the Government\. These measures included liberalization of the maize and fertilizer markets, and reduction of the National Cereals and Produce Board's (NCPB) monopolistic role in agricultural produce marketing\. For institutional capacity building within the agricultural ministries, technical assistance and supply of equipment focused on the following areas: improved public sector management, by the introduction of financial management control systems, backed-up by provision of computers, technical assistance and training, improved performance reporting systems to allow monitoring and evaluation of project performance, supported by equipment, technical assistance and training, and improved management information system for fertilizers to encourage fertilizer use at smallholder level\. Finally, assistance to lower income groups was to be formulated on the basis of impact studies on vulnerable groups and drought assistance strategies\. Implementation Experience and Results 6\. Upon credit effectiveness GOK effectively freed the fertilizer market from public control\. Maize liberalization proceeded more slowly\. Initial relaxation in a phased manner of maize movement controls and waiving of NCPB's monopoly on maize procurement and its role as purchaser of wheat and minor crops, such as beans, proceeded slowly in 1991 and 1992\. However, GOK reimposed maize movement controls in November 1992\. As a result of this policy reversal, [DA canceled the second tranche of the credit allocated for the finance of agricultural inputs\. However, IDA's cancellation of the second tranche should be seen in the context of an overall dialogue with the Government as part of the economic reform agenda\. Subsequently, in December 1993 GOK announced full liberalization of maize movement and marketing\. Implementation of the institutional strengthening components proceeded slowly for a variety of reasons, including very restricted budget releases in 1992 and 1993, problems in recruiting consultants for the policy analysis activities and suspension of the IDA credit for the whole of the 1995 calendar year due to failure to submit audits of the project accounts\. Following GOK's request, IDA agreed to extend the credit closing date to June 30, 1996 to enable completion of the institutional strengthening components\. 7\. SDR23\.3 million were canceled in December 1992\. SDR 25\.86 million was disbursed, which is 49\.5 percent of the original credit amount and 89\.4 percent of the revised credit amount\. Parallel financing provided by the ather donors was also affected by GOK's decisions in late 1992 to reimpose market controls\. Despite this, total funding provided by other donors is estimated at around US$126 million\. 8\. The ASAO II overall project rating at closure is rated as marginally satisfactory\. If the essential objective of an adjustment operation is to fundamentally change the approach of Government involvement in the sector, with the focus being on gradual public sector disengagement, then the ASAO II operation can  iv probably be termed a success\. The Government's philosophy in the sector is now decidedly private sector oriented and the commitment to the liberalization process has deepened\. This is evidenced by reforms being undertaken in others subsectors such as dairy, tea, and coffee and in fundamental realignment of the role of agricultural cooperatives\. ASAO II provided a framework for a dialogue which extended beyond the stated objectives of the project, and thus did indirectly play a role in improving the general policy environment as far as the sector is concemed\. 9\. The immediate primary objectives of maize and fertilizer market liberalization have been achieved even if the former occurred after cancellation of the second tranche of the credit and following further discussions with IDA and the Intemational Monetary Fund (IMF)\. In fact the liberalization has progressed further than was envisaged under ASAO II\. The private sector is now emerging as the dominant player in maize trading, and NCPB's role has been consequently reduced\. GOK has reiterated on a nunber of occasions its policy of reducing government controls and encouraging an increase in the private sector's role\. The short-term impact on smallholder farmers has been mixed with farmgate prices reflecting the size of the harvest dictated by rainfall\. However, farmers selling to private traders have unambiguously been able to receive prompt payment which was not the case with respect to deliveries made to NCPB\. Over the long-term, as smallholders gain increasing confidence in the market to supply their domestic maize requirements they will likely substitute higher income eaning crops for maize\. This shift in production pattems (some evidence of this has been documented in the high population density Kakamega district4) will have important positive implications for smallholder farmer productivity and incomes\. 10\. The fertilizer liberalization goal of the operation appears to have been successfully achieved\. This conclusion is supported by a recent study35 The private sector is now responsible for fertilizer importation and distribution\. A competitive market has developed and fertilizer is available in most rural markets\. Fertilizer use by smallholders is still hampered by the lack of quality standards, and extensive soil testing in order to provide specific recommendations to individual smallholders has not been implemented\. While fertilizer use on small farms was affected by drought and uncertain policy framework in the early 1990s, it improved in 1995 and 1996\. 11\. The contribution of ASAO I to fiscal stabilization should also be evaluated in the context of the increased emphasis the Bank has placed in its dialogue with Government on the need to maintain fiscal discipline and allocate scarce budgetary resources to priority activities\. The impact of ASAO II on its own is uncertain, though the concept of "core" projects and the need to fully finance such projects was introduced under ASAO II\. Reduction of government budget expenditures through the price support operations of NCPB should ultimately prove beneficial\. The goal of assisting lower income groups vulnerable to climatic and economic shocks have so far been confined to carrying out surveys and 4Monitoring Farmer' Responses to Market Reform in Kakamega by Joseph 0\. Owour: Paper prepared for a conference on "Fine Tuning Market Reforms For Improved Agricultural Perfprmance" - September 25, 1996\. The Evolution of Fertilizer Marketing in Kenya by Gem Argwings-Kodhek: Paper prepared for a conference on "Fine Tuning Market Reforms For Improved Agricultural Perfpnrnance" - September 25, 1996  v preparation of contingency plans\. These initiatives are now being supported, particularly by the drought management component, of the IDA financed Arid Lands Resource Management Project (Credit 2797- KE)\. Considerable progress has been made towards improving agricultural sector institutional capacity through review of the government's agricultural project portfolio; studies on staffing norms; design and commencement of improved budgetary, and monitoring and evaluation systems; strengthening policy analysis; and training relevant to all of the above\. 12\. MOALDM's performance in implementing the institutional strengtheming components was hampered by staffing changes, particularly at the senior management level\. Regrettably, a high proportion of the staff already trained by the project have been transferred to other departments within MOALDM or to other ministries or have entered the private sector\. Thus, although the training component was implemented satisfactorily, the professional capacity of the Development Planning Division (DPD) has decreased, while some of DPD's staff are using their capabilities in other parts of the Ministry\. While MOALDM was generally successful in implementing the various components, difficulties were experienced with the Monitoring and Evaluation component with respect to tendering contracts\. The Policy Analysis component encountered substantial difficulties in recruiting the necessary technical assistance, which was remedied by modification of the scope of work\. Submission of audit reports was generally late and the disbursements were suspended from January 1995 until December 1995 due to overdue audits of the project accounts\. 13\. IDA performance was generally satisfactory throughout the process of identification, appraisal and m supporting GOK to carry out its policy of market liberalization of maize and fertilizers\. Staff from the resident mission provided continuing support during implementation\. Project design benefited from the lessons leamed from the ASAO I credit 1717-KE\. ASAO I concentrated on financing studies, policy papers and restructuring plans rather than on implementation\. ASAO II was designed to deepen the reforms m key areas (improved incentives for smallholder maize producers, fertilizer availability and efficiency of public expenditures) and capacity building for policy analysis and for improved project implementation\. Uneven implementation performance in ASAO I led to a better design of monitoring arrangements, fewer conditions and a common framework for donor support\. However, ASAO II contained a number of relatively minor components, such as capacity and institution building, budget management and studies related to the Ministry's organizational structure, vulnerable groups and land inventory system which required extensive management from MOALDM and supervision by IDA\. IDA's cancellation of the second tranche, though regrettable, ultimately may have helped GOK win over opponents to its liberalization policies\. 14\. GOK initially took the right decisions both for maize, fertilizers and the reduction of NCPB's role\. However, the reimposition of movement controls for maize in November 1992 effectively put a stop to the adjustment component of ASAO H\. The institution of a NCPB Performance Contract with the Ministry clarified NCPB responsibilities, but both NCPB and the Ministry failed to carry out their respective obligations\. Also, NCPB's eventual role in the maize market was not clearly defined in the project design\. Overall country non-compliance with audit covenants had been the focus of discussions between the Ministry of Finance and IDA on numerous occasions from 1994 through March 1995, and as indicated above, the credit was suspended for approximately one year as a result of long overdue audits\. For the remaining secondary objectives, support was satisfactory from MOALDM, the main beneficiary, but restricted govemment budgets provided inadequate resources for the institution building components\.  vi Summary of Findings, Future Operations and Key Lessons Learned 15\. As a result of ASAO II and the policy discussions which followed the cancellation of its second balance of payments component, the Government has progressively liberalized the maize market\. Also, an agricultural strategy based on public sector ownership and/or heavy involvement in the sector has been replaced with a private sector focused strategy with the Govemment increasingly playing only an enabling role\. This is a major positive effect of ASAO II\. 16\. For future operations, already being prepared and/or appraised, IDA will continue to support the Government's startegy to further liberalize the economy\. This is important, as the momentum could otherwise be lost and a degree of government control reimposed\. Continued financial support for the institutional strengthening is also vital for the continuation of the work already prepared by consultants, which was assisted by the decision to extend the project until June 30, 1996\. 17\. Key lessons leamed from project implementation are as follows: (i) The sustained impact of policy and institutional changes which are supported by adjustment operations and capacity building programs may only become apparent in the longer term and should be assessed in that time frame\. (ii) Normal investment components should not be packaged with adjustment operations\. They tend to detract from the main focus of the adjustment operation and in the event of a cancellation of a policy based tranche, are left vulnerable to the overall lack of commitment which resulted in the cancellation\. If such components are necessary then it would be better to finance such components through a parallel but separate investment operation\. (iii) A monopoly public sector agency's future role in a liberalized environment should be fully explored before the liberalization process embarks on assisting that agency to adjust to the liberalized environment\. (iv) Performance contracts between Govemments and public sector agencies may be useful tools to clarify mutual obligations, but unless the Govemment (a) is willing to carry out its obligations and (b) sanctions the public sector agency for not carrying out its obligations, the contract will not have a positive impact in modifying the operating behavior of the targeted agency\. (v) When the Government disengages from controlling the purchase and distribution of commodities such as fertilizer, it does not mean that it abrogates its regulatory oversight role\. In the fertilizer sector the Govemment should introduce strong quality control regulations in parallel to liberalizing the trade\. (vi) The design of technical assistance packages should not be complex and ambiguous\. The letter of invitation packages should clearly set out the scope of work expected by the bidding firm\. Also, Government institutional strengthening through technical assistance has to be a sustained undertaking, which therefore needs to be scheduled for the long term, generally exceeding the duration of a project or adjustment operation\. Fortunately, for this operation, the availability of  vii funding under the ASMP II, and the future Sector Investment Project, will continue to support local capacity building for institutional strengthening\. (vii) Inclusion of covenants must receive more up-front thought during project design and negotiations to ensure that coverants relate to critical policy and institutional change issues and implementation actions\. Supervision and project implementation of ASAO II would have been helped by better focusing of the large number of covenants included in the Development Credit Agreement (DCA)\.  IMPLEMENTATION COMPLETION REPORT KENYA SECOND AGRICULTURAL SECTOR ADJUSTMENT OPERATION (ASAO II) (Credit 2204-KE) PART I: PROJECT IMPLEMENTATION ASSESSMENT A\. STATEMENTIEVALUATION OF OBJECTIVES I \. ASAO II was both a sector adjustment and investment project\. In addition to the IDA credit of SDR52\.2 million (US$75 million), parallel and co-financing largely for balance of payment support from the Netherlands Government, AfDB, the EU, GTZ, KFW and USAID was not defined but was expected to total approximately US$100 million\. The IDA credit was to be allocated 89 percent (SDR46\.6 million, or US$67 million) for financing agricultural imports, including fertilizers, pesticides, chemicals and seeds, agricultural machinery equipment and spare parts, veterinary supplies and petroleum products\. This balance of payments support was to be disbursed in two equal tranches of SDR 23\.3 million\. The balance of 11 percent (SDR 5\.6 million, or US$ 8 million) was allocated to sectoral management support, including improvement in the efficiency of public expenditures, development of targeted programs to protect vulnerable lower income groups and to increase preparedness for droughts and strengthening the capacity of the then separate Ministries of Agriculture (MOA) and Livestock Development (MOLD)6 in policy analysis\. The operation aimed at substantial advances in three policy areas -- maize market liberalization, fertilizer market liberalization and public expenditure rationalization\. These represented a deepening of reforms begun under the first Agricultural Sector Adjustment Operation (Cr\. 1717-KE) completed in June 1988\. 2\. The main goals of the operation were to (a) accelerate agricultural growth through smallholders; (b) contribute to fiscal stabilization; (c) improve public sector resource use in agriculture; (d) begin to assist lower income groups who are vulnerable to climatic and economnc shocks; and (e) improve agnrcultural sector institutional capacity\. Strategies to achieve accelerated agricultural growth included improved maize producer incentives and increased market competitiveness; rationalization of maize stocks, compatible with market needs; increased input supply, particularly of fertilizer, and promotion of its efficient use\. Fiscal stabilization and improved public sector resource use was pursued through improvement in the efficiency and composition of public expenditures\. Assistance to vulnerable groups was attempted through the development of targeted measures to protect vulnerable groups\. Finally, improvement of agricultural sector institutional capacity was pursued by supporting improved policy planning, project preparation and implementation in MOA and MOLD and then continued after the merger of the two ministries in MOALDM\. 6Now combined in the Ministry of Agriculture, Livestock Development and Marketing (MOALDM)\.  2 3\. Effectively, ASAO Ifs immediate objectives were the liberalization of maize and fertilizer marketing, including removal of maize movement controls, removing the National Cereals and Produce Board's (NCPB) monopoly in maize procurement and cessation of trading in minor crops such as beans; complete freedom for the private sector to import and distribute fertilizer; and improvement in the capacity of the ministries associated with the sector (later merged into a single ministry), especially in allocation of finance and budgeting, monitoring and evaluation and policy analysis\. 4\. The choice of objectives was relevant to the Govenmuent's overall policies and strategy for development of the agricultural sector which has increasingly moved away from government control to greater involvement of the private sector in all aspects of agricultural production, processing and distribution\. In addition the objectives stressed the need for more fiscal discipline which was also increasingly in line with the macroeconomic reforms being undertaken by the Government\. The objectives were also the natural follow-up in terms of implementation to the much broader range of refonrs and analytical work supported under ASAO I\. Project design was clear regarding the major objectives for maize and fertilizers\. The project design stressed the need for a "phased approach\." Project progress was, perhaps inevitably erratic as a result of the difficulty of the political decisions involved B\. ACHIVEMENT OF OBJECTIVES 5\. A slight delay in meeting conditions of effectiveness was due to a less than timely start of studies on staffing norms, privatization opportunities and impacts on vulnerable groups, and full staffing and operationalization of the Fertilizer Inputs Unit in MOA\. The credit became effective in May 1991\. This project was implemented during a fairly turbulent economic management period in Kenya which saw a deteriorating economic policy framework in the early 1990s and a consequent overall decline in new IDA commitments to Kenya\. After the general elections held in late 1992, however, the economic policy fr,amework steadily improved which resulted in IDA's approval of a Structural Adjustment Credit (SAC 2884 -KE) for Kenya in June 1996 just before ASAO II closed\. Kenya also experienced a major drought in late 1992/early 1993 which had a marked adverse impact on agricultural production\. This relatively turbulent period was reflected in the sector's performance; the agricultural sector growth rate averaged a negative 1\.4 percent per annum from 1990-1993 before improving to 3 percent in 1994 and 5 percent in 1995\. 6\. The steady progress towards attaining the project's maize liberalization objectives was abruptly reversed when the Government reintroduced maize movement controls in November 1992\. IDA accordingly canceled the second tranche of the balance of payments component of the Credit in December 1992 and similar action was taken by the other agencies financing the project, in particular the European Union (EU), United States Agency for Intemational Development (USAID) and African Development Bank (Aff)B)\. Discussion on maize movement issues was, however, not limited to the context of ASAO II but was also included in the overall dialogue with the Govemment as part of the economic reform agenda\. IDA's cancellation of the second tranche of ASAO I1 should be seen in that context as well\. The maize marketing issues continued to be part of the "core" set of issues discussed by the Bank and the International Monetary Fund (IMF) with Govemment\. These discussions subsequently led to the Government of Kenya (GOK) fully liberalizing maize marketing, including imports and exports in December 1993\.  3 7\. Unlike in maize marketing, the Govemment moved quickly to fully liberalize the import of fertilizer and marketing in 1992\. Fertilizer use on small farms, however, in the early 1990s was affected by the drought and the uncertain policy framework before improving in 1995 and 1996\. Fertilizer use has also been influenced by availability of credit and slow payment by parastatal agencies (which has improved over time)\. Also, with market liberalisation taking root and faced with uncertain prices, famers have been cautious im making decisions about input use and cropping pattems\. Lack of quality standards have also had an impact\. A study was financed under ASAO I to establish quality control standards and regulatory criteria and the recommendations are being considered for adoption by Govemment\. The program of extensive soil testing with a view of formulating specific recommendations for individual smallholders has not been fully implemented, though the Kenya Agricultural Research Institute (KARI) has begun to disseminate the recommendations\. 8\. The contribution of ASAO II to fiscal stabilization should also be evaluated in the context of the increased emphasis the Bank has placed in its dialogue with Govenmment on the need to maintain fiscal discipline and allocate scarce budgetary resources to priority activities\. The impact of ASAO I on its own is uncertain, though the concept of "core" projects, and the need to fully finance such projects was introduced under ASAO II\. Reduction of govemment budget expenditures through the price support operations of NCPB should ultimately prove beneficial\. The goal of assisting lower income groups vulnerable to climatic and economic shocks have so far been confined to carrying out surveys and preparation of contingency plans\. These initiatives are now being supported, particularly by the drought management component, of the IDA financed Arid Lands Resource Management Project (Credit 2797- KE)\. Considerable progress has been made towards improving agricultural sector institutional capacity through review of the government's agricultural project portfolio; studies on staffing norms; design and commencement of improved budgetary, and monitoring and evaluation systems; strengthening policy analysis; and training relevant to all of the above\. C\. MAJOR FACTORS AFFECTING THIE OPERATION (a) Factors Not Generaily Subject To Government Control 9\. The problem of the highly sensitive nature of the objective of maize market liberalization was further compounded by variable climatic conditions and fluctuating harvests during the project period\. Poor rainfall years in 1990/91 and 1991/92 had resulted in maize production of respectively 2\.25 million tons and 2\.34 million tons, or around 20 percent below normal levels\. As a result, maize stocks were drawn down and 1992/93 was also a poor crop7 year\. Political pressure for Government to take action to manage the maize market so as to avoid any serious shortage in the country's staple food therefore increased\. Similarly in the 1993/94 crop year crop forecasts indicated a very low production of only 1\.6 million tonss which increased pressure on Governnent to allow extensive importing of maize\. In the event, production was significantly better than forecast at 2\.10 million tons\. One of the difficulties, both in regard 7 In the event 1992/93 was better than forecast at 2\.43 million tons\. ' Here also the forecasts proved to be pessimistic and the eventual harvest was estimated at 2\.1 million tons\.  4 to achievement of adequate maize prices for farmers in the west and south-west of Kenya and in preparation of reliable crop forecasts, is the apparently fluctuating, but unknown and unrecorded, imports of maize from Uganda and Tanzania, both of which have generally lower costs of production than Kenya\. 10\. In addition to IDA, other donors also actively supported the overall liberalization objectives, including long term assistance by USAID in development and liberalization of fertilizer and maize markets, the support of GTZ in fertilizer marketing and training; and the restructuring and reform of NCPB, which became the focal point of the EU's involvement in the Cereals Sector Reform Program\. However, both USAID and EU withdrew their support following the cancellation of the second tranche of the IDA credit\. In retrospect, the withdrawal of this donor support, and in particular of the EU, may well have further delayed the restructuring of NCPB, still not completed to this date\. (b) Factors Subject To Government's Control 11 The main policy objectives of ASAO 11 were the liberalization of the maize and fertilizer markets, as well as also removing beans and minor crops from NCPB's marketing monopoly\. The Government was committed to liberalization of commodity markets, and for crops other than maize and wheat it enacted the necessary liberalization measures with only minor delays\. After the initial freeing of maize movements between districts of 1991 and early 1992, full controls were re-introduced in November 1992, leading to cancellation of the second tranche of the IDA Credit allocated for the finance of agricultural input importation\. The Government took this decision to re-introduce maize movement controls notwithstanding IDA objections and warnings about possible consequences\. The cancellation of the second tranche of the Credit did not affect IDA\.financing of the non-policy based, largely technical assistance components of the project\. However, the cancellation of the second tranche, for some time at least adversely affected the implementation of the non-adjustment components\. 12\. As mentioned above the liberalization of the maize market formed part of the core set of issues which were subject to discussion by the Government and the Bank\. In late 1993, and in the context of these discussions with the IMF and the Bank, the Government removed all controls on maize marketing\. Wheat procurement by NCPB was terminated in February 1993\. In this manner the liberalization conditions imposed under the ASAO H credit were fully satisfied, even if no longer in the actual context of that operation\. 13\. GOK actions in response to anticipated maize shortages, both in reimposing maize movement controls in late 1992 and in encouraging large imports of maize over the period June-December 1994, damaged the confidence of the nascent private grain traders\. Regarding imports, GOK had introduced a vanable duty system in December 1992\. This duty was to be levied according to the difference between calculated import and domestic reference prices\. However, there was a provision for the duty to be waived  5 for a variety of reasons - e\.g\. food aid for refugees, or for use by govefmnent agencies\.9 As a result, application of the controls proved problematic\. At the same time as GOK liberalized maize marketing in December 1993, control of retail prices of maize flour was also removed\. With indications in March 1994 of likely shortages of maize later in the year, GOK was understandably anxious to avoid any further crisis in supply of the country's staple food\. ° GOK's encouragement to the private sector to import maize resulted in large quantities arriving as the successful 1994 season crop was being harvested which had an impact on lowering farmgate prices\. 14\. GOK suffered from a donor suspension of balance of payments support which was effective for two years from late 1991 to late 1993\. As a result, government budget resources were scarce and releases to MOALDM were inadequate and slowed down the implementation of the institutional strengthening components\. (c) Factors Under Implementing Agency Control 15\. MOALDMs performance in implementing the institutional strengthening components was hamrpered by staffing changes, particularly at senior management level\. The Director of Agriculture was transferred halfway through project implementation and the head of the DPD, which has a key role in the implementation of ASAO II, was replaced three times in four years\. In addition, DPD staff trained under the project were almost systematically moved to other departments or to other ministries, while some left to work in the private sector\. As a result, even though the training component of the project was implemented in a satisfactory manner, the professional capacity of DPD is now probably below the pre-project level; though from the Ministry's perspective, some of DPD's staff are working in other parts of the Ministry\. 16\. While MOALDM was generally successful in implementing the various components, although considerably more slowly than anticipated at appraisal, particular difficulties were experienced with the 9 Maize production trade, stocks and consumption estimates over the period 1991/92 to 1994/95 are as follows: i~~~~~~~199\._\.BJ\. E 934 -\.L9-J I-R gk ('000 tons) Opening stocks 318 40 200 100 Production 2,500 2,650 2,100 2,970 Imports 120 430 600 580 Exports 48 - - - Total Supply 2,890 3,120 2,900 3,650 Consumption 2,850 2,910 2,800 2,850 Closing stocks 40 210 100 800 The estimates indicate the critically low stocks at the beginning of the 1992/93 year and the over-supply situation due to continued importing of maize and adequate domestic production in 1994/95\. 10 Some estimates suggest as much as 70 percent of calones in the average diet in Nairobi is derived from maize\.  6 monitoring and evaluation, and policy analysis components\. For the first of these, two virtually identical contracts were assigned, one for MOA and the other for MOLD' I \. The ministries had merged by the time the work was completed\. As a result of this work a project performance monitoring system was installed in the Department of Agriculture (named PROMPT) and a separate one in the Department of Livestock (named PPM)\. Further work is being done to merge the two systems so that one system can be used for all MOALDM projects\. For the policy analysis component there were substantial difficulties in recruiting a suitable firm to provide the requisite technical assistance\. The whole technical assistance package was rather complex, and ambiguities in the Letter of Invitation package sent to a short list of firms led to difficult contract negotiations which ultimately could not be concluded between the Government and the selected firm\. The Government, then subsequently sought and obtained IDA concurrence to modify the scope of work and to recruit individual consultants to undertake specific work\. This hiatus delayed the start of implementation of the component until September 1994\. 17\. The Ministry's provision for the audit of the project accounts was generally late, and the failure to submit the audits finally resulted in suspension of the remaining credit in relation to institutional strengthening in January 1995\. The suspension remained in force until December 1995\. D\. OPERATION SUSTAINABILITY 18\. Given ASAO Ufs objectives im maize market liberalization, i\.e\., abolition of maize movement controls, greater involvement of the private sector in maize purchase and trading and a reduction of NCPB's role, the prospects of the changes being permanent and sustainable are good\. In fact the liberalization has progressed further than was envisaged under ASAO II\. The private sector is now emerging as the dominant player in maize trading, and NCPB's role has been consequently reduced\. GOK has reiterated on a number of occasions its policy of reducing government controls and encouraging an increase in the private sector's role\. The final issue is to clarify NCPB's future role in operating a strategic maize reserve and its relationship to the private sector, and steps are being taken to do this\. All these aspects are the subject of continuing discussions between GOK, IMF and IDA\. 19\. The sustainability of liberalization of the fertilizer market is highly likely, with importers/traders, stockists and retail outlets having taken on the responsibility of supplying farmers' requirements\. The increased dissemination of fertilizer use recommendations by KARI will also assist smallholder farmers to make informed economic choices about fertilizer use\. In addition, it is also likely that quality control will improve with the Government implementing the recommendations of the study financed under ASAO II\. The impact of these initiatives will be more long-term\. 20\. The technical assistance element of the operation was intended to assist MOALDM to strengthen its policy analysis, to improve budgetary procedures, to rationalize its staffing and to implement a monitoring and evaluation system of its development projects\. While the implementation of these objectives was largely successful, the loss of trained staff, the suspension of disbursements during 1995 and the limited time span of TA services, particularly in computerization, has so far restricted the benefits\. I IIn 1993 the Ministry of Agriculture (MOA) and Ministry of Livestock Development (MOLD) merged to become MOALDM\.  7 Concerted and well-financed follow-up action is necessary to ensure the sustainability of the relatively modest achievements of ASAO II\. The Government is undertaking a major restructuring of MOALDM under the IDA financed Second Agricultural Sector Management Project (ASMP II Credit 2445-KE)\. The work done under ASAO II is feeding into this restructuring initiative\. MOALDM's restructuring is also being addressed under the civil service reform focus of the SAC\. MOALDM has been selected as the front-runner for the restructuring program\. The Government and IDA have recognized that institutional development is a long term objective and have made provisions for ASAO H's initiatives to be supported under ongoing and future IDA and other donor funded programs\. The sustainability of the institutional development components financed under ASAO II is therefore likely\. E\. IDA PERFORMANCE 21\. IDA's performance has been satisfactory in supporting GOK in carrying out its policy of market liberalization of maize and fertilizers and in helping to obtain unified support for these policies among the other donors\. Design of the operation benefited from the lessons leamed from ASAO I and in particular the advantages of reducing and defining more clearly the operation's scope\. Even so ASAO II included, in addition to its main liberalization objectives, a large number of other components such as capacity and institution building, budget management and rationalization, and studies on the Ministr-ys organizational structure, on vulnerable groups and on the organization of a land inventory system\. These components demanded, in retrospect, an inordinate amount of management input by MOALDM and of supervision by IDA, which may have detracted from the principal objectives\. In retrospect it could be argued that normal investment components should not be included in an adjustment operation; such initiatives may be better financed through a parallel but separate investment operation\. 22\. Project design was clear regarding the major objectives for maize and fertilizers\. The project design stressed the need for a "phased approach\." Project progress was, perhaps inevitably, erratic as a result of the difficulty of the political decisions involved and the fluctuations in production\. 23\. For fertilizers, the project design assumed that timely and efficient soil testing -- a crucial component in the drive to higher fertilizer consumption -- would be available from KARI or from the private sector\. Unfortunately, KARI was unable to provide the necessary services as planned and, while private sector soil testing has been initiated by a major fertilizer company, its capacity is inadequate for the country's needs\. Consequently, the positive impact of the fertilizer reforms has only emerged in the last two years\. 24\. IDA's supervision was adequate, and staff from the resident mission provided continuing support during implementation\. Supervision and project implementation would have been helped by better focusing of the large number of covenants included in the Development Credit Agreement (DCA)\. 25\. IDA's cancellation of the second tranche of the credit, though regrettable, appears to have been correct in the circumstances and may ultimately have helped GOK in winning over opponents to its liberalization policies\. IDA's agreement to extend the loan closing date by six months was correct and should significantly increase the chances of sustamability of the institution strengthening components\.  8 F\. BORROWER PERFORMANCE 26\. The performance of the Government has to be judged bearing in mind the highly sensitive political nature of the maize market, the difficulties of moving from a public sector monopoly to a free market situation, the pressure exerted by individuals and sections of the population and the destabilizing effect of sharp fluctuations in production as a result of changing weather conditions\. Utimately the Government did have the strength of will to introduce limited liberalization in 1991 and early 1992\. However, the reintroduction of full controls in late 1992, just before the general elections, undoubtedly had a negative effect in undermining the confidence of private sector maize dealers and millers that the Government was serious in its liberalization policy\. 27\. Full removal of controls on the maize market, including imports, was effectively accomplished toward the end of 1993\. However, the timing of maize imports entering the Kenya market in 1994 depressed domestic prices and damaged farmers' confidence in maize as a profitable crop\. The subsequent entry of NCPB into the market, buying at well above the market price, but with inadequate finance to redeem its pledges for the 1994 season crop, created further difficulties\. 28\. The institution of a NCPB Performance Contract with the Ministry was supported by the project and appears to have been useful in clarifying NCPB responsibilities and the Ministry's expectations\. However, the performance contract failed in that both parties to the contract failed to live up to their mutual obligations\. NCPB did not adhere to the agreements on disengaging from the maize market and the Government did not adequately, and in a transparent manner finance NCPB to carry out activities on its behalf\. Also, NCPB's eventual role in the maize market was never clearly articulated in project design\. It was perhaps implied that the agency would only be responsible for managing the strategic reserve; it was never fully made clear whether the agency would ever have a commercial role\. In this context, a performance based contract has recently been signed with a firm to assist in the commercialization of NCPB's activities; under the new rules NCPB would also manage the strategic maize reserve on the Government's behalf for a fee\. 29\. The provision of audited project accounts has presented difficulty throughout the implementation period and led to suspension of disbursement in 1995\. Overall country non-compliance with audit covenants has been the focus of discussions between the Ministry of Finance and IDA under the 1994 Country Portfolio Performance Review, mini CPPR review of March 1995 and the Government's subsequent ongoing Action Plan\. 30\. Budget constraints of MOALDM, imposed by Treasury, resulted in problems with the continuation of consultancy services for developing system computerization, affecting the project's budgeting exercise, as well as the monitoring and evaluation programs\. G\. ASSESSMENT OF OUTCOME 31\. If the essential objective of an adjustment operation is to fundamentally change the approach of Government involvement in the sector, with the focus being on gradual public sector disengagement, then the ASAO II operation can probably be termed a success\. The Government's philosophy in the sector is now decidedly private sector oriented and the comrnitment to the liberalization process has deepened\. This  9 is evidenced by reforms being undertaken in others subsectors such as dairy, tea, and coffee and in fundamental realignment of the role of agricultural cooperatives\. ASAO II provided a framework for a dialogue which extended beyond the stated objectives of the project, and thus did indirectly play a role in improving the general policy environment as far as the sector is concemed\. With regard to maize marketing, the domestic market has been fully liberalized and private sector involvement is now substantial\. The short-term impact on smallholder farmers has been mixed with farmgate prices reflecting the size of the harvest dictated by rainfall\. However, farmers selling to private traders have unambiguously been able to receive prompt payment which was not the case with respect to deliveries made to NCPB\. Over the long- term, as smallholders gain increasing confidence in the market to supply their domestic maize requirements they will likely substitute higher income eaming crops for maize\. This shift in production pattems (some evidence of this happening has been documented in the high population density Kakamega district12 ) will have important positive implications for smallholder farmer incomes\. 32\. For fertilizers, the major objective was to promote its use by the smallholder farmers in a liberalized market environment\. The Government, in effect, entirely liberalized the fertilizer markets during 1991, and the private sector is now fully responsible for importation, packaging and marketing of fertilizers\. At present, the only administrative requirement is to register imports with the authorities both for statistical purposes and to assure minimum quantities of imported lots so as to benefit from economies in transport costs\. 33\. The market for fertilizers has thus been opened up to the private sector and fertilizer is generally available, even in smaller packed quantities (10 kg and 25 kg bags) in most of the agricultural production centers\. A recent study'3 has suggested that the objectives of fertilizer market liberalization have been largely achieved\. At the same time, MOALDM was, and remains responsible for action to (i) promote and monitor the safe use of fertilizers; (ii) develop private and co-operative dealers' marketing skills; (iii) improve soil testing facilities; and (vi) develop quality standards for fertilizers\. The Ministry was successful in organizing, at the district level, regular meetings between the extension service, traders/stockists and farmers to disseminate information on fertilizers \.14 Some training in fertilizer use has taken place, both for extension staff and private traders\. 34\. The outcome of the other components of the ASAO H operation is discussed below: (i) The Public Expenditure Management component has supported reform of financial management, including budget allocation, expenditure control and cost center budgeting through 12 Monitoring Farmer' Responses to Market Reform in Kakamega by Joseph 0\. Owour: Paper prepared for a conference on "Fine Tuning Market Reforms For Improved Agricultural Performance" - September 25, 1996\. 13 The Evolution of Fertilizer Marketing in Kenya by Gem Argwings-Kodhek; prepared for a conference on "Fine Tuning Market Reforms For Improved Agricultural Performance" - September 25, 1996\. 14 This included formation of a National Fertilizer Development Committee and District Fertilizer Committees (DFC) both with private sector representation\. The DFC appear to have been active at the start of ASAO II but now rarely meet and may have accomplished their purpose\.  10 improvements to the budgeting system (notably computerization) and an extensive program of training\. The services have been provided by technical assistance from the Harvard Institute for Intemational Development (HHID) as well as by local consultants\. A whole range of systems has been introduced, but only partly adopted for lack of adequate numbers of trained staff\. The local consultants were retained in order to provide technical back-up, continuity and training capacity to allow an adequate build up in numbers of staff to run the system\. (ii) The Performance Reporting System component to provide for monitoring and evaluation (M&E) has been largely implemented though its benefits are not yet apparent\. Its eventual utility will depend on the success of merging the two systems into one which can be used by the Ministry as a whole\. It appears that capacity exists both at ministry headquarters and in the districts to operationalize the system and this is to be supported under ASMP II\. (iii) The project's program of training has been generally satisfactorily completed\. Continued local training is required for staff in both budget management and Monitoring and Evaluation In- house training courses for staff to improve their policy analysis capability have been started\. It is intended to continue these courses under ASMP II\. (iv) Arrangements to set up a Management Information System (MIS) for fertilizers have been completed and the system is operational\. However, recommendations on establishment of a regulatory framework by MOALDM for fertilizer quality control have not yet been finalized\. (v) ASAO II financed useful studies on the impact of the policy changes on vulnerable groups\. It is proposed to carry out a follow-up survey to again examine the effect of policy changes on vulnerable groups as part of the National Welfare Monitoring Survey undertaken by the Central Bureau of Statistics (CBS)\. The project also financed the development of a Food Security Action Plan and a Drought Contingency Action Plan, which remain relevant to development of appropriate strategies in both areas\. The latter plan was in fact useful in the formulation of the IDA financed Arid Lands Resource Management Project (Credit 2797-KE) which became effective on July 12, 1996\. Studies and training proposed in land policy and administration have not so far been implemented\. H\. FUTURE OPERATIONS 35\. Following up with the ASAO II project, GOK and IDA have continued discussions on liberalization in the context of the dialogue on overall policy and economic issues\. Regarding technical assistance and studies aimed at the realization of the institutional development objectives, ASMP II is continuing assistance provided under ASAO IH after June 1996\. L KEY LESSONS LEARNED 36\. Key lessons leamed from project implementation are as follows:  11 (i) The sustained impact of policy and institutional changes which are supported by adjustment operations and capacity building programs may only become apparent in the longer term and should be assessed in that time frame\. (ii) Normal investment components should not be packaged with adjustment operations\. They tend to detract from the main focus of the adjustment operation and in the event of a cancellation of a policy based tranche, are left vulnerable to the overall lack of commitment to the project/program\. If such components are necessary then it would be better to finance such components through a parallel but separate investment operation\. (iii) A monopoly public sector agency's future role in a liberalized environment should be fully explored before the liberalization process embarks on assisting that agency to adjust to the liberalized environment\. (iv) Performance contracts between Governments and public sector agencies may be useful tools to clarify mutual obligations, but unless the Government (a) is willing to carry out its obligations and (b) sanctions the public sector agency for not carrying out its obligations, the contract will not have a positive impact in modifying the operating behavior of the targeted agency\. (v) When the Government disengages from controlling the purchase and distribution of commodities such as fertilizer, it does not mean that it abrogates its regulatory oversight role\. In the fertilizer sector the Government should introduce strong quality control regulations in parallel to liberalizing the trade\. (vi) The design of technical assistance packages should not be complex and ambiguous: The letter of invitation packages should clearly set out the scope of work expected by the bidding firm\. Also, Government institutional strengthening through technical assistance has to be a sustained undertaking, which therefore needs to be scheduled for the long term, generally exceeding the duration of a project or adjustment operation\. Fortunately, for this operation, the availability of funding under the ASMP II, and the future Sector Investment Project, will continue to support local capacity building for institutional strengthening\. (vii) Inclusion of covenants must receive more up-front thought during project design and negotiations to ensure that covenants relate to critical policy and institutional change issues and implementation actions\. Supervision and project implementation of ASAO II would have been helped by better focusing of the large number of covenants included in the Development Credit Agreement (DCA)\.  12 PART II: STATISTICAL TABLES TABLES 1\. Summary of Assessment 2\. Related Bank Loans/Credit 3\. Project Timetable 4\. Credit Disbursement: Cumulative Estimated and Actual 5\. Credit Indicators for Project Operations 6\. Key Indicators for Project Operations 7\. Studies Included in the Project 8A\. Project Costs 8B\. Project Financing 9\. Economic Costs and Benefits 10\. Status of Legal Covenants 11\. Compliance with Operational Manual Statements 12\. Bank Resources: Staff Inputs 13\. Bank Resources: Missions  13 Table 1: Summary of Assessments A\. Achievement of obiectives Substantial Partial Negligible Not Applicable el) Cl) Cl) Cl) Macro policies 7 N I Sector policies E 7 F O Financial objectives I- FT] Institutional development E] Physical objectives FT ] Poverty reduction FTl Gender issues El E E Other social objectives T ] E E Environmental objectives E E E E Public sector management El 0 El Private sector development l El E Other (specify) E E E [ B\. Project sustainabilitv Likely Unlikelv Uncertain (-) C (') El El E Hiehly C\. Bank Performance satisfactory Satisfactorv Deficient Identification El EL Preparation assistance El E E Appraisal E El El Supervision E El E  14 Hibhly D\. Borrower performance satisfactory Satisfactory Deficient v() (V) Preparation L J 4W Implementation O EC1 0 Covenant compliance F 7 EC Operation (if applicable) E Highly HigJly E\. Assessment of outcome satisfactory Satisfactorv Unsatisfactory unsatisfactory (4) (4) 4 i Table 2: Related Bank Loans/Credits I Lam/credit tile Purpose Year uf approval Status 1J Preceding operations 1\.Cr\.1717-KE\. Support for Policy and 1986 Completed 1988 Institutional Change in the Agricultural Sector 2\. Cr\. 2797 - KB Improve Arid Lands 1996 Ongoing Resource Management Project Following operations 1\. Cr\. 2445-KE Support for Institutional 1992 Ongoing Change and Capacity Building 2\. Cr\. 2884-KE Structural Adjustment 1996 Ongoing Credit  15 Table 3: Project Timetable Steps in project cycle T Ite planned Date actu 1 L\. - -- - - \.-\.tt j t ertimate Identification (Executive Project Summary) Draft 10/17/89 12/10/89 Preparation 1989 Appraisal (begin) 5/3/90 9/90 Negotiations 10/1/90 11/90 Letter of development policy 11/90 11/90 Board presentation 12/18/90 1/17/91 Signing 1/91 2/21/91 Effectiveness 3/91 5/21/91 First tranche release 2/91 5/91 Midterm review (if applicable) Second tranche release 3/92 - Project completion 12/31/95 6/30/96 Credit closing not specified 6/30/96 C Canceled December 22, 1992 due to non-fulfillment of all conditions for tranche release\. Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ Million) \. Bank/lDA FYIJI FY92 FY93 FY94 FY95 FY96 FY417 Appraisal estimate 34\.0 70\.0 72\.5 75\.0 - Formally Revised 17\.2 31\.4 31\.7 35\.5 39\.5 41\.5 Actual 4' 17\.2 31\.4 31\.7 32\.4 33\.1 33\.8 34\.1 Actualas%of appraisalestimate 505\.6 44\.8 43\.7 43\.2 44\.1 45\.1 45\.5 Actual as % of formally revised 100\.0 100\.0 100\.0 91\.2 83\.8 81\.4 82\.2 Date of final disbursement: December 6, 1996 W The second tranche of SDR 23\.3 million (US$33\.5 million) was canceled in December 1992\. Table 5: Key Indicators for Project Implementation The President's Report listed no performance indicators for implementation, beyond indicating that the component of the credit allocated for imports would be released in two tranches, the first upon credit effectiveness, expected in March  16 1991 and actually achieved in May 1991, and the second tranche released 12 months after the first (Table 3)\. Release of the credit was subject to compliance with covenants listed in Table 10\. Table 6: Key Indicators for Project Operation As of February 1995 _ _\._\.~_______ __________ ___ ' !j CwponeounL'ask Cempkdon Compledon Date | Date Maize Maize producer prices to be reviewed and re-adjusted using the new 2/91 1/94 (a) methodology (b) Maize movement controls to be relaxed further to permit transportation of 2/91 Decernber 1993 up to 8 tons (90 bags) of maize without a permit; a date during 1992 for removing all controls on domestic maize movement to be agreed with IDA; NCPB's guaranteed share of the secondary (sifted millers) demand for maize to be reduced to 60 %, beans to be rescheduled\. (c) The Performance Contract, acceptable to IDA to be financed for the years 11/92 Non 1992/93 to 1994/95 and signed for 1992/93 _ Compliance 1/ Fertilizer Selected institutional mechanism to lower the costs of fertilizer imports 11/91 N/A 2/ (a) and a timetable to make it operational to be agreed with IDA (b) The policy paper on donor "in-kind" fertilizer aid to be finalized, and an 11/91 7/93 exchange of views to take place with IDA on proposed measures\. (c) Action plans for soil testing, fertilizer promotion, and training to be 11/91 1/92 finalized for all Districts following review by the Fertilizer Development ________Committee (FDC) Public A project Performance Reporting System and a Project Review Committee 11/91 (a) 4/95 Expenditures in MOA and MOLD to be established (b) the MOA and MOLD core (b) 7/96 (a) investment program in the 1992/93 Annual Budget to be fully financed and l_____________ included in the estimates in the 1992/93-1994/95 Forward Budget (b) Staffing norms to be finalized, and implementation to be commenced on 11/91 during 1997 staaffing and non-salary operating expenditure norms in key activities, with 31 consequential adjustments to the intake of trainmg institutions\. (c) Implementation of an action plan to increase collection of user charges 11191 during 1995 3/ would be commenced (d) Performance of the improved budget and payment system would be 11/91 9/95 evaluated, and views exchanged with IDA on the findings Assistance to (a) Implementation of action plans to be commenced for: drought 11/91 (a) late 1995 4/ Vulnerable contingency, food/nutrition, (b) addressing possible adverse impacts of (b) variously Groups am marketing reforms, and household momtonng\. undertaken Capacity Recruitment of Technical Assistance Personnel 6/91 3/94 building in Agriculture 1/ PC was signed without IDA concurrence 2/ Given current situation, not applicable 3/ Implementation under ASMP 11 project 4/ Implementation under ALRMP  17 Table 7: Studies Included in Project Purpose as defined at Study appraisal/redefined Status Impact of study 1\. Ministry of To establish a staffing completed The study is being used in Agriculture Staffing structure and determine defining the 'new' Norms staffing inconsistencies structure of the combined Ministries of Agriculture, Livestock Development and Marketing supported under ASMP II\. 2\. Ministry of Livestock To establish a staffing completed The study is being used in Development Staffing structure and determine defining the 'new' Norms staffing inconsistencies structure of the combined Ministries of Agriculture, Livestock Development and Marketing supported under ASMP 11\. 3\. Impact of reforms on To formulate an action plan completed The initial survey found the vulnerable groups to address any adverse that the impact was effect on vulnerable groups positive\. This was as a result of the market expected to be followed up reforms\. by a systematic monitoring of impact which has not yet been done\. 4\. Fertilizer Quality Not defined at appraisal\. completed Government is considering Control in Kenya Was included as it became the recommendations of apparent that this was the study\. necessary as the market was liberalized\.  18 Table 8A: Project Costs Al Appraisal est;niate (USSM) Aualatest ea3mal (USSM) | Local Foreign Total Local Foreign Costs Costs Costs Costs Total 1\. Fertilizer - 24\.95 24\.95 - 16\.68 16\.68 - Pesticides; chemicals and seeds - 10\.00 10\.00 - 5\.72 5\.72 2\. Agricultural machinery, - 20\.00 20\.00 - 4\.28 4\.28 equipment and spare parts 3\. Veterinary Supplies - 2\.00 2\.00 - 0\.09 0\.09 4\. Petroleum products - 10\.00 10\.00 - 4\.09 4\.09 5\. Consultants' services 0\.60 1\.20 1\.80 0\.53 1\.06 1\.59 6\. Training 1\.10 3\.30 4\.40 0\.16 0\.49 0\.65 7\. Vehicles and equipment 0\.42 1\.26 1\.68 0\.14 0\.44 0\.58 8\. Incremental-non-salary operating costs 0\.17 - 0\.17 0\.08 - 0\.08 Total - \. \. \. \. \. _ 2\.29 72\.l\. 75\.00 0\.91 32\.85 33\.76w a/ Appraisal Estimates derived from the DCA and Actual/Latest Estimate from the WB Loan Disbursement System report on Cr\.2204-KE of August 25, 1996\. Fee % for consultant services assumed to be 66%, and for training and vehicles and equipment 75%\. bI The balance of Special Account Fund A has been fully recovered\. Special Account Fund B has a balance of US$147,204, which is in the process of being recovered\. The undisbursed credit balance is US$5\.02 million\.  19 Table 8B: Project Financing ~~~~~~\. \. \. \. \. \. '\. \. \._\. ___________________ Appraisl estiate (LSSM) ActuWA1les tia (SM Loral Foreign Total Local Foreign Total Source costs costs costs costs IDA 2\.29 72\.71 75\.00 0\.66 32\.25 32\.91 Co- or Parallel Financiers Netherlands Government - - - - - 8\.77 b/ AfDB - - - - - 33909 USAID - - - - - 70\.10d/ EU - - - - - 3\.66 e KfW 7 - - -7 GTZ - - 1\.77e Sub-Total I- 100\.00" - - 126\.18 TOTAL I- - 175\.00 _ - 159\.09 President's Report estimate of finance likely to be provided by other donors\. -i Netherlands Government Grant of NLG15 million transferred to IDA on 5 December 1991 and administered by IDA\. A second grant might have been made if the progress of ASAO II had been more satisfactory\. As reported by AfDB on 31 January 1996, 14\.12 million Units of Account (UA), or using the 1992 average conversion rate of I UA = USS1\.375, about US$19\.41 million were disbursed up to and including 1992, leaving an undisbursed balance of 13\.04 million UA, which assuming a conversion rate of I UA = US$1\.450 is equivalent to US$13\.04 million\. d1 USAID financed two projects whose objectives partially overlapped those of ASAO n\. These were the Kenya Market Development Program (KMDP) and the Fertilizer Pricing and Marketing Reform Program (FPMRP)\. KMDP was a five year program starting in 1990 and consisted of US$40 million in Title m Food Assistance, US$10 million in Non-Project Assistance (NPA) and USS5 million in Project Assistance\. In late 1995 USS20 million of the Food Assistance had been disbursed and US$2 million of the NPA\. Project Assistance expenditure is estimated at US$2 million, making a total disbursement for KMDP of US$24 million\. The FPMIRP was a five year program starting in 1989 and total USAID financing was US$46\.1 million\. EU financed the Cereals Sector Reform Program (CSRP) starting in April 1988\. Over the period 1988-1990 this disbursed ECU35\.92 million (US$40\.48 million)\. Over the period 1991-1995 CSRP disbursements were ECU2\.95 million (USS3\.66 million)\. f/ In 1991 KfW allocated DM29\.0 million (US$17\.48 million)\. Upon cancellation of the second tranche of the IDA credit KfW suspended DM16\.5 million (US$10\.6 million)\. Total disbursements to Novemaber 1995 are therefore DM12\.18 million (US$7\.98 million) and the undisbursed balance DM 16\.82 million (US$ 1 1\.88 million)\. ' For the GTZ supported Fertilizer Extension Project (FEP)\. Disbursements as reported by GTZ on 1 March 1996 were DM1\.043 million (US$0\.637 million) in FY 1994, DM0\.842 million (USS0\.55 rnillion) in FY 1995 and are estimated at DM0\. 831 million (US$0\.579 million) in FY 1996\. Table 9: Economic Costs and Benefits The President's Report made no estimate of economic costs and benefits of the operation\. In view of the sectoral nature of the operation and the much larger contributions made by the private sector, Government and other donors, it would be extremely difficult to identify economic costs and benefits attributable to ASAO 11 and the accuracy of any result would be highly questionable\.  20 Table 10: Status of Legal Covenants KENYA Second Agricultural Sector Adiustnent Operation (ASAO 11) (Credit 2204KE) DCA Covenant type Present Original Revised Description of covenant Comnments Section status fulfilment date fufilment date 2\.02 (a) CD 3/91 5/91 The Borrower shall, for the purposes of the Program, Two special accounts were opened- open and mamtain in dollars two special deposit accounts (Special Account A and Special Account B) in the Central Bank of Kenya on terms an conditions satisfactory to this Association, including appropriate protection against set-off, seizure or attachment\. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 4 to this Agreement CD The Borrower and the Association shall from time to The exchange of views was partially suspended 3\.01 (a) time at the request of either party exchange views on when GOK reintroduced movement controls on the progress achieved m carrying out the programme maize m late 1992\. and the actions specified m Schedule 3 release of the Second Tranche ofthe credit and were as follows)\. Schedule 3 I Maize (a) CD 2/92 12/93 The Borfowerhas: carried out inprovements ofthe maize pricing system taking into account parity prmciples, stock levels and anticipated production and impact on the Borrower's budget and has adjusted maize producer prices m accordance with such imnprovements; (b) CD 11/91 11/93 published regulations, satisfactory to the Association After some initial relaxation, the maize permitting the transportation of up to 8 tons of maize movements controls were re-inposed in without a permit; November 1992 with consequent cancellation of the Second Tranche of the credit (c) CD 11/91 11/93 established a date durig 1992 satisfactory to the  21 DCA Covenant type Present Original Revised Description of covenamt Comments Section status fulfilment date fulfilment date Association for the removal of all controls on the movement of maize within the country; (d) CD 11/91 11/93 takenstepstoreduceNCPB'sshareto600/oof the sited maize miller's intake of maize; (e) CP 11/92 entered into a Performance Contract, satisfactory to The Perfonnance Contract betwen GOK and the Association, with NCPB to regulate NCPB's NCPB was signed, but without IDA concurrmce\. activities for 1992/93-1994/95\. The Performance Contract shall include, inter alia the following elements the Borrower's policy statement on maize, NCPB's revised role and responsibilities, reserve stock target levels and guidelines for the management thereof decision rules for market stabiisation, the Bonower's budgetary allocations to compensate NCPB ftly for losses incurred on food security and market stabilisation operations, and monitorable performance targets for NCPB; and removed beans from NCPB's Scheduled List (1) CD 11/91 6/92 Schedule 3 Fetilisers 2 The Borrover has: (a) CD 11/91 7/93 finalised the policy paper to reduce distortions created by in-kind donor-sppLied fetiliser and has exchanged views with the Association on the proposed measures; (b) Not 11/91 - completed the study on mechanisms to lower the cost applicable of fertiliser imports in the private sector and has e 3exchanged view with the AssociatAon on tbe proposed measuresb (c) CD 11/91 1/92 finalised action plans, satisfactory to the Association for soil testing, tramnig of offices anal fertiliser promotion for all major fertiliser consummg districts in the country\._ Schedule 3 3 Public EV!!!ditures  22 DCA Covenant type Present Original Revised Description of covenant Comments Section status fulfilment date fulfihnent date The Borrower: has: (a) CD 11/91 4/95 funished to the Association a lst ofprojects for MOA and MOLD, satisfactory to the Association, for inclusion into the Borrower's core investment programnne; (b) CD 11/91 7/96 funished to the Association, evidence satisfactory to Progress was severely constrained by GOK the Association showing that the list of projects in the budget difficulties in 1992 and 1993\. core investmnent programme rderred to in (a) above has been included in the Borrower's Annual Estimates for 1992/93 and Fonrwd Budget for 1992/93-1994/95\. (c) SOON 11/91 - comnpleted a review of staffing norms and adopted and Proposals developed wider ASAO 11 are likely to started to implement an action plan, satisfactory to the be implemented wider the Second Agricultural Association on (i) achieving tevised staffing levels in Sector Management Project (ASMP I)\. MOA and MOLD, (ii) raising the ration ofnon-salary to salary operatmg expenditures m key agricultural activities, and (iii) regulating student enrolment in MOA and MOLD trainmg institutions;l (d) SOON 11/91 9//96 evaluated performance of improved budget and As part of the preparation of the proposed payment system as it relates to MOA and MOLD and Agricukural Sector Investment Program exchang view with the Association; and (e) SOON 11/91 adopted and implemented an action plan for improving To be implemented under ASMP 11\. the collection of user charges from farmers\. Schedule 3 Vulnerable Groups 4 (a) SOON 11/91 - The Borrower has finalised and started to implement To be iruplemeited under the And Land action plans, satisfactory to the Association, on (a) Resources Management Project (ALRMP)\. (b) SOON 11/91 - drought contigency measures, (b) food/nutrition, (c) possible negative impacts of the present grain (c) SOON 11/91 - marketing system, and (d) household welfare monitoring survey\. (d) SOON 11/91 3\.03 CP The Bofrower shall strnghen the capabilities of (a) Generally proceeded much slower than originally MOA, MOLD, MSM, MOF, MLHPP, CBS and anticipated, Many of the staff tramed have been NCPB in the areas of data collection and policy transferred to other departments or ministries\. analysis through the provision of technical assistance, Separate, but identical, contracts were let for shoit term training courses, advanced local and M&E development by MOA an MOLD and the  23 DCA Covean type Presat Original Revised Descripton of covaimt Comments Section stats fiulfilmnat date fiffilment date ovrsas tamin, veuicbs and equipmnt; (b) the system desiged for MOLD is now being Project Pefomance Rorting System of 1he Project modified to make it suitable for agcitural Development and Monitoring Division of MOA, PMU projects\. m MOLD and ovefal budget and financial mnagemaet pracices m MOA and MOLD throu&i On fatilishs, MOA has managed liltle on quality the provision of tewmnical assistance, training, vehicles control and soil testing suppost is below and equipmaet; and (c) MOA to promote and monitor requirennts\. Recnitmet of suitable cdlants safe ferbliser use, develop the private and co-operative for policy analysis strgthag was a major dealers, fatilisor markmting skills, improve soil testig difficulty and all acvtes suffaied from GOK flcilities and quality sandards offatilisms hrou& budgot constraints in 1992 and 1993\. As dtafted, provision oftechnial assistance, local and overses the covaant was unwieldy and proved inetive traimni vehicls and equipmait To that end the and difficult to monitor\. Borrower shaU employ consmltants whose qualifications, expaince, and terms and conditions of empboymeit shaUl be satisfictory to the AssociationL 3\.04 (a) C The Bonwoa shaU maintam or cause the Central Bk of Kenya to maintain records and accounts adequae to relect im acconce with csisttly maintaied sound acoounting practies, the epaditures financed out of the poceeds of the credit 3\.04 (b) SOON The Bonower shall: Provision of audit accouts was consistently a (i) have the records and accounts referred to in para\. problem for the ASAO IL GenaaUly, the (a) of this Section, including those for the Special problem seemed to be due to a delay m Accouaits for each fiscal year audited, in accordance submtting accounts for audit - tating more than with apprepriate auditing principles consistently 9 months after the year and wAien it was difficult applied, by mdependent auditors acceptable to the or impossible to find the necessary documentation Association and also the problem of District Accounants (respnsible to the Treasury) rainig vouches (ii) fiunish to the Association as soon as available, but wich could rot thafore be submitted with the m any case not later than six mnaths after the and of consolidated accouts As a result; audited each such year, with respect to Categories (1) and (2) accounts became tw years in afears and the and nime mths after the end of each such year with credit was suspended for the whole of 1995 unt respect to Categories (3) and (4) of the table in para \. 1 the reorts we retceived The rets for of Schedule 1 to the DCA, a cedtied copy ofthe FY94/95 are now overdue\. report of such dutail as the Assocation shall have reasonably requeted; and  24 DCA Covenant type Present Original Revised Description of covenant Comments Section status fullfilment date fulfilment date (ii) finmsh to the Association sud other information conceming said records and accounts and the audit thereof as the Association shall from time to tine reasonably request 3\.04 (c) C For all pendit with respect to whiuc withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained in accordance with pars\. (a) of this Section, records and accounts relectig such expenditures; (ii) rtain, unit at kast one year aRter the Association has received the audit repoft for the fiscal year m which the last withdrawal from the credit Account was made, all records (conrtacts, orders, invoices, bills, receipts and other documents) evidecing such mpenditus; (iii) enable the Association's representatives to examme such records; and (iv) ensure that such records and accounts are included im the annual audits i'ared to in para\. (b) of this Section and that the report of such audit contains a separate opiion by said audiors as to whtdher the statements of expeditue submitted during such fiscal year, togeher with the procedures and internal controls imvolved in their prepartin, can be relied ipon to support the related withdrawals 4\.01 Pursuant to Secimi 6\.02 (k) ofthe General As a result of GOK re-imposition on maize Condtions, the following additional even is specified, movement controls in November 1994, IDA namely, that a situstion has arisen which shall make cancelled the Second Tranche of the credit it improbable that the Programme, or a significant part thereof; will be carried out\. C = covenant complied with; CD = covenant complied with aRfer delay;  25 CP = complied with partially; NC = Not comphed with; SOON = compliance expected shortly  26 Table 11: Compliance with Operational Manual Statements : ¢ \. 90 iE:i0-E \.8#\. !\. 1\. OP 13\.40 Suspension of Disbursements Failure to comply with IDA conditions or auditing of project accounts led to suspension of disbursement for all of the 1995 calendar year\. Table 12: Bank Resources: Staff Inputs stage of' Panzid Revised Actual projec cycle Preparation to n\.a\. n\.a\. n\.a\. n\.a\. 227\.5 430\.1 appraisal Appraisal n\.a\. n\.a\. n\.a\. n\.a\. 54\.5 105\.3 Negotiationsthrough n\.a\. n\.a\. n\.a\. n\.a\. 9\.6 22\.5 Board approval Supervision n\. a\. n\. a\. n\. a\. n\. a\. 138\.6' 284\.6" Completion na n\.a\. n\.a n\.a\. 12\.02' 46\.8w' TOTAL n\.na am\.442\.3 SB9S L \. n \.W\.l\.l\.l\.UWEU I\.W\. I \.m\.e \.n I \. \. \. NOTE: n\.a = Not available\. ' Includes 18\.6 weeks (US$40,400) for Netherlands Trust Fund supervision\. b/ Estimate\.  27 Table 13: Bank Resources: Missions Performance rating k proj,ectcycle I eor _r fld represoted St&*$ objud pre Through appraisal d/ Appraisal through 6/90 5 na7 (18) SC,A,E,F,M - - Board approval \. Supervision 1 9/91 6 9 SC,E(2),F 2 2 F,M (2),M Supervision 2 10- 3 9 E(2),SC - 11/91 Supervision 3 1/92 2 3 E(2) C Supervision 4 10/92 1 5 DC - - C Supervision 3 5/92 4 na (8) SC,E,F,M 2 2 F,M Supervision 3 10/93 3 na (10) E(2),F 2 2 F,M,C Supervision 4 2/95 3 na (8) E,F,P S S C,F,M Supervision 5 10/95 5 na (6) E,F,P U S C,F,M Completion FAO/CP 10/95 2 1 3 AE,E \. L' A = agriculturist bI 1 = minor problems AE = agricultural economist 2 = moderate problems E = economist 3 = major problems F = financial specialist S = satisfactory M = management specialist P = procurement specialist 9/ C = legal covenants SC = Section Chief F = financial DC = Division Chief M = management d/ IDA assisted GOK in preparation of the project, through assistance with economic work providing as the basis for the sector adjustment operation\. This was provided by a number of visits by IDA Washington staff as well as continuing assistance from the Resident Mission in Nairobi\. As indicated in Table 12 above, this totaled around 228 staff weeks\. e/ na = not available, figures in brackets are mission estimates\.   KENYA: Second Agricultural Sector Adjusanent Operation (ASAO 11) Appendix A: Mission's Aide-Memoire 1\. A mission from the FAO/World Bank Cooperative Programnme (FAO/CP) consisting of Messrs\. J\. H\. Weatherhogg, Agricultural Economist and Mission Leader, and F\. M\. Stubenitsky, Economist Consultant, visited Kenya from 14-27 October to prepare the ICR on the above project\. The mission overlapped with the fmnal supervision mission, led by the World Bank (WB) Task Manager, Mr\. Gajan Pathmanathan\. 2\. The mission had discussions with concerned staff of the Ministry of Agriculture, Livestock Development and Marketing (MOALDM) and the National Cereals and Produce Board (NCPB), as well as with private sector millers, grain dealers, fertilizer suppliers and farmers\. Two short field visits were made to the Thika/Sagana area and to Nakuru\. The mission is most grateful for the assistance provided in arranging the programme of meetings and field visits\. 3\. The Aide-Memoire is based on a draft prepared by the mission as a basis for discussion at their final meeting\. This finalised version incorporates the comments and suggestions of the Government and of the WB\. MISSION'S FINDINGS Project Design 4\. The project supported Government's policies for liberalization of maize and fertilizer marketing and for strengthening and improving the efficiency of the agricultural ministries, including improved manpower and staffing norms, prioritisation of projects and streamlining of project activities, enhanced policy analysis and provision of assistance to vulnerable groups\. The choice of objectives was relevant to the Government's overall policies and strategy for development and a natural follow-up from the rather broader range of reforms supported under ASAO I, as well as the EU supported Cereals Sector Reform Programme (CSRP)\. However, with the benefit of hindsight, the mission believes that a project of this kind should have included agreements on putting in place adequate maize import/export control mechanisms, without which liberalization of the domestic market could result in considerable, unwelcome price fluctuation\. 5\. Also, the proposals as outlined in the President's Report appear to have underestimated the difficulties of transferring responsibility for handling grain from the NCPB to private traders in a "phased approach"\. Presentation of the particular covenants included in the project could also have been improved\. The number of covenants could have been reduced and the individual covenants made more clear cut and easier to monitor\. 1  KENYA: Second Agricultural Sector Adjustment Operation (ASAO 11) Appendix A: Mission's Aide-Memoire Implementation 6\. Credit effectiveness was three months later than planned due to a delay in meeting conditions and the credit became effective in May 1991\. Initial progress in implementation was reasonably successful with reduction of NCPB operations in minor crops, some relaxation of maize movement controls and dismantling of controls on fertilizer marketing\. 7\. The programme for preparation of studies, increased training, reorganizing the budgeting procedures of the Ministry of Agriculture (MOA) and Ministry of Livestock Development (MOLD) so as to concentrate on a smaller number of "core projects", as well as progress in assisting vulnerable groups, all moved much more slowly than anticipated at project appraisal\. 8\. The steady progress towards attaining the project's liberalization objectives was abruptly reversed when Government reimposed maize movement controls in November 1992\. IDA accordingly cancelled the second tranche of the Credit in December 1992\. Since then only the component for strengthening MOALDM has continued and even for this component disbursements have been suspended since provision of audited project accounts is more than two years in arrears\. Project Costs 9\. As appraised, it was estimated that in addition to the US$75 million IDA credit, other donors would contribute a further US$100 million to the project\. Discussions with some of the donors indicate that the allocation of funds to the project may well have exceeded this amount\. With the exception of the Netherlands, which entered into an agreement with IDA to administer their Development Grant, the other agencies, including USAID, EU, AfDB and KfW, provided parallel financing\. At the same time as IDA cancelled the second tranche of the credit, some of the other donors, notably the EU, also cancelled their funding\. Consequently, total disbursements by IDA up to early October 1995 are around US$33\.2 million, or about 44% of the estimated funding at project appraisal\. Of this, about half has been used for purchase of fertilizers and about 42% for import of pesticides, chemicals, seeds, agricultural machinery, equipment, spare parts and petroleum\. About SDR 3\.97 million, or 7\.6%, of the original credit amount, with a present value of about US$5\.9 million, remains undisbursed\. Actual disbursements by the other donors are probably of the order of an additional US$60 million and will be further detailed in the ICR\. 2  KENYA: Second Agricultural Sector Adjustment Operation (ASAO II) Appendix A: Mission's Aide-Memoire Project Performance 10\. Information on the project's achievements in studies financed and number of staff trained is being compiled to MOALDM and will be presented in the ICR\. 11\. Regarding both maize marketing and fertilizer supply liberalization, the present situation exceeds the targets set at project commencement\. Movement of maize within Kenya is now without any restriction and NCPB's future operations are expected to be largely directed at managing strategic reserves of maize, possibly combined with some support buying during periods of low prices\. 12\. Fertilizer importation and subsequent trading and supply of fertilizer to farmers are entirely without restriction\. However, use of fertilizers is still constrained by its high price relative to maize, also, the programme of soil testing with a view to formulating specific recommendations, has not been implemented\. 13\. The project can, therefore, be considered broadly successful in attaining its objectives\. In the maize market liberalisation and reduction of NCPB's role, the ASAO II objectives were to: (i) discontinue NCPB operations in numerous loss-making minor crops; (ii) allow a phased reduction in the proportion of maize that the larger (sifted flour) millers had to procure from NCPB to around 60%; and (iii) dispense with maize movement controls\. All three have been achieved - NCPB has ceased trading in minor crops, millers can buy freely from farmers, dealers or NCPB without restriction and maize movement controls have been completely abolished\. However, much still requires to be done before liberalization of the maize market can be considered satisfactory and the full benefits are felt by producers, consumers and the country's economy\. This would include the development of a vigorous network of private grain dealers, merchants and millers, operation of adequate storage owned by farmers, dealers, merchants and millers, as well as protecting the maize market from low priced and untimely imports of maize\. Government has recently announced further maize policy reforms, including steps to divest/privatise NCPB, as part of an overall operational plan to fully commercialise the maize sub-sector\. 14\. Performance of the institution strengthening components has been slower than anticipated in project design\. The Public Expenditure Management component has supported reform of MOALD financial management, including budget allocation, expenditure control and cost centre budgeting through improvements to the budgeting system (notably computerisation) and an extensive programme of training\. The work has been supported by technical assistance from the Harvard Institute for International Development (HIID) as well as local consultants\. A whole range of systems has been introduced but only partly adopted for lack of adequate numbers of trained 3  KENYA: Second Agricultural Sector Adjustment Operation (ASAO 11) Appendix A: Mission s Aide-Memoire staff\. The local consultants have been retained in order to provide technical back-up, continuity and training capacity to allow an adequate build up in numbers of staff competent to run the system\. Adequate funding to extend the contracts of the local consultants is not assured without the project's assistance (and with disbursements suspended) and this could reduce the chances of the project's sustainability\. Recommendations of studies financed by ASAO II to examine staffing levels and prioritisation of projects in MOALDM are expected to be useful in the further restructuring of MOALDM, which is being implemented under the Second Agricultural Sector Management Project (ASMP II)\. 15\. The Performance Reporting System component to provide for monitoring and evaluation (M&E) was financed by the project for the then existing Ministry of Agriculture (MOA) and Ministry of Livestock Development (MOLD) through two separate contracts\. Both consultants had virtually identical terms of reference but followed different approaches\. Now that each former ministry has become a department within MOALDM, work has been undertaken to merge the two systems and make them fully operational\. However, it now appears that MOALDM will standardise on the system originally developed for M&E of livestock projects and additional consultancy input is being used for this purpose\. At present, the M&E system for livestock projects has been tried in three districts\. Further implementation is delayed since operating a system for M&E for both agriculture and livestock projects will require increased computer memory, an extension of the local consultant contract for adapting the system to cover agriculture projects, and increased local training of staff to operate the system\. Difficulties have also been experienced in vehicles intended for M&E purposes being diverted for use by the agricultural extension service\. Additional support is likely to be required after end-December 1995 to finance further training and evaluation of the system and for provision of additional computer equipment\. As with the earlier component, the lack of assured financing for these activities required to make the component fully operational could seriously reduce the chances of the component's sustainabilty\. 16\. The programme of training, financed by the project, has been generally satisfactorily completed\. As already mentioned, local training is required for staff in both budget management and M&E\. Also, some training programmes for fertiliser dealers and traders have yet to be conducted\. Initial training courses for staff to improve their policy analysis capability have been started, but as yet no proposals have been formulated for continuation of this activity after closure of the credit\. 17\. Arrangements to set up a management information system (MIS) for fertilisers have been completed and the system is operational\. However, recommendations on establishment of a regulatory framework by MOALDM for fertiliser quality control have not yet been finalised\. 4  KENYA: Second Agricultural Sector Adjustment Operation (ASAO 11) Appendix A: Mission's Aide-Memoire 18\. ASAO II financed useful studies on the impact of the policy changes on vulnerable groups\. It is proposed to carry out a follow-up survey to again examine the effect of policy changes on vulnerable groups as part of the National Welfare Monitoring Survey undertaken by the Central Bureau of Statistics (CBS)\. The project also financed the development of a Food Security Action Plan and a Drought Contingency Action Plan, which remain relevant to development of appropriate strategies in both areas\. Studies and training proposed in land policy and administration have not so far been implemented\. 19\. The performance of the Borrower, Government of Kenya (GOK) has to be judged bearing in mind the highly sensitive political nature of the maize market, the difficulties of moving from a public sector monopoly to a free market situation, the pressure exerted by individuals and sections of the population and the destabilizing effect of sharp fluctuations in production as a result of changing weather conditions\. Ultimately GOK did have the political strength of will to carry through its policy of liberalization\. However, the reintroduction of controls in late 1992, undoubtedly had a negative effect in undermining the confidence of private sector maize dealers and millers that GOK was serious in its liberalization policy" \. Similarly, the poorly coordinated and uncontrolled imports of maize in 1994 depressed domestic prices and damaged farmers' confidence in maize as a profitable crop\. The subsequent entry of NCPB into the market, buying at well above the market price, but with inadequate finance to redeem its pledges for the 1994 season crop, created further difficulties\. The institution of an NCPB Performance Contract with the Ministry was supported by the project and appears to have been useful in clarifying NCPB responsibilities and the Ministry's expectations\. Direct Government instructions to NCPB by-passed the contract and provisions for adequate financing for NCPB were also not observed\. Provision of audited project accounts has presented difficulty throughout the project and has led to suspension of disbursement\. It also led to cancellation of the second tranche of the IDA credit as well as loss of substantial other donor funding\. 5  KCENYA: Second Agricultural Sector Adjustment Operation (ASAO 11) Appendix A: Mission's Aide-Memoire 20\. IDA performance has been satisfactory in supporting GOK in carrying through its policy for maize market liberalisation and in helping to obtain unified support for these policies amongst the other donors\. However, the project design omitted any reference to trade in cereals and therefore lacked actions to control imports, without which the stability of the domestic market cannot be assured\. Also, the project design laid stress on the need for a "phased approach"\. In the event, project progress was, perhaps inevitably, erratic as a result of the difficulty of the political decisions involved and the fluctuations in production\. IDA's main preoccupation and efforts therefore seem to have become helping GOK to push through privatisation of maize marketing with inadequate attention to the poorly developed trader and storage situation in the private sector\. With the benefit of hindsight, it might have been better to have sought to achieve the project's objectives by further additional means\. These could have included funding through the project to provide inducements over a transitional period of, say three years, for both NCPB and the millers/dealers to take over and operate part of the NCPB's storage capacity\. Finally, the Development Credit Agreement (DCA) includes a large number of covenants, these could have been better focused with a view to their subsequent easier monitoring\. Lessons Learned 21\. At this point in preparation of the ICR the main lessons learned appear to the mission to be as follows: (i) At the time of project design, all imports and exports of cereals were banned and it is, therefore, understandable that no mention was made regarding regulation of trade\. However, the experience of project implementation has shown the danger of not having satisfactory means for regulation of imports in a situation where the domestic market is being liberalised and changing from long established state operated procurement to as yet not fully developed private sector dealers and millers\. Future projects with similar aims of domestic market liberalisation need to also include introduction of adequate means to regulate imports and exports\. 6  KENYA: Second Agricultural Sector Adjustment Operation (ASAO 11) Appendix A: Mission's Aide-Memoire highly likely that this will become modified due to political pressure and events outside the control of government\. Emphasis appears required on other aspects which may assist the change in policy as well as to the policy change itself\. At the time of the design of ASAO II, it was expected that NCPB would continue to play a major role in maize marketing\. However, from the outset it was clear that the private sector was going to take a much larger share in maize trading\. From this it followed that the private sector would operate more storage capacity and NCPB need less\. The project could have helped this transition through financial inducements for a limited period for both private traders/millers and NCPB\. The lesson learned for any similar future project is that in addition to supporting government in undertaking such an adjustment programme, during the design aspects which are likely to be particular, critical, physical constraints should be identified and funding included to remove them or to mitigate their effects\. Follow-Up 22\. The mission will prepare a draft ICR for submission to WB\. The Planning Division of MOALDM will also prepare an evaluation of the project from government's perspective\. Suggestions for the scope and content of this are set out briefly in Attachment 1\. Rome, 17 November 1995\. 7  KENYA: Second Agricultural Sector Adjustment Operation (ASAO 11) Appendix A: Mission's Aide-Memoire Attachment 1 Guidance on Government's Contribution to the ICR Government's own final evaluation of the project implementation is an important part of an ICR\. It is attached, unedited, to the ICR sent to the WB Board\. It can be selective in its coverage and should address issues and lessons learned in project implementation from the Borrower's perspective\. Topics to be covered can be the same as in the ICR, namely project design, appraisal, implementation and project results\. At each stage of the project, the contribution should comment on both IDA and the implementing agencies' performances, with the observations, where possible, supported by evidence or reasoned argument\. For project design, the contribution could address such questions as the appropriateness of the project's objectives, the policy changes and supporting actions and scope of the investmnents proposed, aspects of design leading to easy (or difficult) implementation and the effect on government institutions\. For project appraisal, comments should concentrate on any significant changes in the objectives, size and scope of the project and whether these were appropriate\. Project implementation should be divided into an assessment of IDA performance in supporting and supervising the project and the performance of the implementing agencies\. Project results include an assessment of the direct benefits (or disbenefits) arising from the policy changes\. The contribution could most usefully comment on the effect of the policy changes from the Government's perspective\. Such an analysis would be a most useful contribution to the ICR\. Based on the foregoing sections the contribution should list the main lessonls learned from the implementation experience and arising from the above analysis\. WB suggest that if the contribution is more than ten pages, it should include a summary\. The latter is recommnended for all but the shortest contributions \. The mission will be happy to provide any further elaboration or clarification required to assist in preparation of the contribution\. 8  MAP SECTION   IBRD 26150 S U D A N To Kopoeto \. KENYA t , !t'L, XN,: ~~ ~ /, rikN \ To Addis Abab\. 4\. RIfT \. / -) VALLEY EASTERN N R K z / , J | ~~~~~~~~~~~~~~~~~~~NnRTI i-- z ~~W TERN KAKAMEGA ~~~~~~~~EASTERN j ToGi-a-on NYA ~ N R NAIROBI,$+ iA~~~V (EY LAMU{ 0 MAJOR TOWNS NATIONAL CAPITAL To A-h Oc MAIN ROADSLID ~+ NATIONAL AIRPORTS I~~ ~ ~~~~~ I T\.f /A-hO * , INTERNATIONAL AIRPORTS DISTRICT BOUNDARIES INTERNATIONAL BOUNDARIES 50S ZA5IREtiInet~>\. o 50 1MI 10 , 20Nil-t- The bound-res, colors, denominatons and any other infor-ation T\.TAZANIA |~ ~ ~~~~1 h D\., E,,) S,: \. Y\. AS sho\.n o th,s ap do ot impy, on t e port of The World Bank Group, any udgmen1 on the legal stat\.s of any territory, or ny e een o acceptance of sch bondarie,\. AUGUST 1994   i  IMAGING Report No\.: 16242 Type: ICR

REVIEW

P127837

Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004900 IMPLEMENTATION COMPLETION AND RESULTS REPORT IDA-54540 ON A CREDIT IN THE AMOUNT OF SDR32\.4 MILLION (US$ 50 MILLION EQUIVALENT) TO THE Plurinational State of Bolivia FOR THE Access and Renewable Energy Project October 28, 2019 Energy and Extractives Global Practice Latin America And Caribbean Region  CURRENCY EQUIVALENTS (Exchange Rate Effective Oct\. 28, 2019) Currency Unit = US$ BOL$6\.916 = US$1 US$1\.375 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Axel van Trotsenburg Country Director: Marianne Fay Regional Director: Franz R\. Drees-Gross Practice Manager: Stephanie Gil Task Team Leader(s): Lucia Spinelli ICR Main Contributor: Enrique Crousillat  ABBREVIATIONS AND ACRONYMS BOL$ Bolivian Boliviano CESSA Compañía Eléctrica Sucre S\.A\. COSERCA Cooperativa de Servicios Eléctricos de Camargo CPF Country Partnership Framework CPS Country Partnership Strategy DO Development Objective EA Environmental Assessment EIRR Economic Internal Rate of Return EMF Environmental Management Framework FM Financial management FY Fiscal year GoB Government of Bolivia GRM Grievance Redress Mechanism HH Household ICR Implementation Completion and Results Report IDA International Development Association IDB Inter-American Development Bank IDTR I Infraestructura Descentralizada para la Transformación Rural (Decentralized Infrastructure for Rural Transformation IDTR II Infraestructura Descentralizada para la Transformación Rural II (Access and Renewable Energy Project) IFR Financial monitoring report IP Implementation progress IPP Indigenous Peoples Plan IPPF Indigenous Peoples Planning Framework ISR Implementation Supervision Report km Kilometer kWh Kilowatt hour LT Long term LV Low voltage MEN Ministerio de Energías (Ministry of Energy) MEFP Ministerio de Economía y Finanzas Públicas (Ministry of Economy and Public Finances) MHE Ministerio de Hidrocarburos y Energía (Ministry of Hydrocarbons and Energy) MPD Ministerio de Planificación y Desarrollo (Ministry of Planning and Development) MV Medium voltage M&E Monitoring and evaluation NPV Net present value OM Operational Manual O&M Operation and maintenance PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objectives PEVD Programa de Electricidad para Vivir con Dignidad (Living with Dignity Electricity Program) PV Photovoltaic RAP Resettlement Action Plan RE Renewable energy RIOCP Registro de Inicio de Operaciones para Crédito Público RPF Resettlement Policy Framework SDR Special drawing rights SEPSA Servicios Eléctricos Potosí S\.A\. SE4All Sustainable Energy for All Initiative SHS Solar home systems STEP Systematic Tracking of Exchanges in Procurement US$M Million United States dollar US$/USD United States dollar VMEEA Ministerio de Energía, Vice Ministerio de Electricidad y Energías Alternativas WBG World Bank Group WTP Willingness to pay  TABLE OF CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 5 A\. CONTEXT AT APPRAISAL \.5 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \.8 II\. OUTCOME \. 9 A\. RELEVANCE OF PDOs \.9 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 10 C\. EFFICIENCY \. 12 D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 12 E\. OTHER OUTCOMES AND IMPACTS (IF ANY) \. 12 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 13 A\. KEY FACTORS DURING PREPARATION \. 13 B\. KEY FACTORS DURING IMPLEMENTATION \. 14 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 17 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 17 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 18 C\. BANK PERFORMANCE \. 20 D\. RISK TO DEVELOPMENT OUTCOME \. 21 V\. LESSONS AND RECOMMENDATIONS \. 21 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 23 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 29 ANNEX 3\. PROJECT COST BY COMPONENT \. 31 ANNEX 4\. ACHIEVEMENT OF PDOS (EFFICACY) – SPLIT RATING METHOD \. 32 ANNEX 5\. EFFICIENCY ANALYSIS \. 33 ANNEX 6\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 36 ANNEX 7\. SUPPORTING DOCUMENTS (IF ANY) \. 37  The World Bank Access and Renewable Energy Project (P127837) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P127837 Access and Renewable Energy Project Country Financing Instrument Bolivia Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Ministerio de Energia, Vice Ministerio de Electricidad y Ministry of Development Planning Energias Alternativas VMEEA Project Development Objective (PDO) Original PDO The proposed objective of the Project is to expand access to electricity in the Plurinational State of Bolivia&rsquo;s unserved areas under a model of electricity access expansion that supports the implementation of the national decentralized framework\. Page 1 of 37  The World Bank Access and Renewable Energy Project (P127837) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 50,000,000 15,314,089 10,420,765 IDA-54540 Total 50,000,000 15,314,089 10,420,765 Non-World Bank Financing 0 0 0 Borrower/Recipient 5,150,000 0 0 Local Beneficiaries 4,000,000 0 0 Total 9,150,000 0 0 Total Project Cost 59,150,000 15,314,089 10,420,765 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 27-May-2014 22-Sep-2015 01-Dec-2021 30-Apr-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 02-Sep-2015 0 Other Change(s) 26-Jun-2018 5\.53 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Cancellation of Financing Reallocation between Disbursement Categories Change in Legal Covenants Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Satisfactory Substantial Page 2 of 37  The World Bank Access and Renewable Energy Project (P127837) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 09-Mar-2015 Satisfactory Moderately Satisfactory 0 02 28-Dec-2015 Moderately Satisfactory Moderately Unsatisfactory 0 03 30-Jun-2016 Moderately Satisfactory Moderately Unsatisfactory \.40 04 06-Jan-2017 Moderately Satisfactory Moderately Unsatisfactory \.40 05 28-Jun-2017 Moderately Satisfactory Moderately Unsatisfactory \.67 06 16-Jan-2018 Moderately Satisfactory Moderately Unsatisfactory 2\.65 07 06-Sep-2018 Moderately Satisfactory Moderately Unsatisfactory 6\.81 Moderately 08 01-May-2019 Moderately Satisfactory 10\.29 Unsatisfactory SECTORS AND THEMES Sectors Major Sector/Sector (%) Energy and Extractives 100 Public Administration - Energy and Extractives 11 Energy Transmission and Distribution 61 Renewable Energy Solar 28 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Urban and Rural Development 100 Rural Development 100 Rural Infrastructure and service delivery 100 Environment and Natural Resource Management 50 Climate change 50 Mitigation 50 Page 3 of 37  The World Bank Access and Renewable Energy Project (P127837) ADM STAFF Role At Approval At ICR Regional Vice President: Hasan A\. Tuluy Axel van Trotsenburg Country Director: Livia M\. Benavides Marianne Fay Director: Ede Jorge Ijjasz-Vasquez Franz R\. Drees-Gross Practice Manager: Malcolm Cosgrove-Davies Stephanie Gil Task Team Leader(s): Lucia Spinelli Lucia Spinelli ICR Contributing Author: Enrique O\. Crousillat Page 4 of 37  The World Bank Access and Renewable Energy Project (P127837) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context At appraisal, Bolivia had a strong economic performance and had been able to substantially reduce both poverty and inequality; however, poverty remained high\. By 2013, poverty affected more than 61 percent of the rural population, almost twice the urban poverty rate, and the main constraint to opportunity access for children and youths was living in rural areas\. Poverty varied widely across regions, ranging from above 60 percent in the Departments of Potosí and Chuquisaca, to 20 percent in Tarija\. Coincidentally, a large share of the population with no access to electricity was concentrated in the poorest departments: 46,000 households (31 percent of total population) in Chuquisaca and 71,300 in Potosí (31 percent) according to the 2012 census\. Acknowledging that access to electricity and other basic services has a direct impact in alleviating poverty and enhancing social inclusion of the rural poor, the Government of Bolivia (GoB) aimed to eradicate extreme poverty by providing rural services, including access to electricity\. Accordingly, the GoB updated its Programa Electricidad para Vivir con Dignidad (PEVD – Living with Dignity Electricity Program) with the objective of achieving universal electricity access by 2025\. The Vice Ministry of Electricity and Alternative Energy (Vice-Ministerio de Electricidad y Energías Alternativas – VMEEA), under the Ministry of Hydrocarbons and Energy (Ministerio de Hidrocarburos y Energía, MHE),1 was in charge of implementing the PEVD within the context of the Rural Electrification Regulation (2005) that provided the legal framework to support renewable energy development\. The 2010 Autonomy Framework and Decentralization Law established the need to include other actors in the electrification agenda, granting the Autonomous Departmental Governments (Gobernaciones) and Municipalities new responsibilities for rural and peri-urban electrification, including design and implementation of investments, asset ownership and Operations and Maintenance (O&M)\. The World Bank has supported the GoB in pursuing its electrification agenda since 2003, including two lending operations for US$ 25\.17 million that benefited 42,000 households\. These projects supported an approach that focused on utility–owned grid extension, and user-owned off-grid systems\. The Access and Renewable Energy Project (also known as IDTR II), was aimed to be an important instrument towards achieving universal access to electricity\. It also aimed to assist in the deployment of the roles of Gobernaciones and Municipalities in meeting the challenges of expanding access, enhancing ownership and building capacity, as well as supporting the GoB’s decentralization objective\. The objectives of the Project were fully aligned with the Bolivia Country Partnership Strategy (CPS) for fiscal years 2012-2015 under the prioritized areas of “sustainable productive development” and “human development and access to basic services”\. The Project is aligned also to the Sustainable Energy for All Initiative (SE4All), especially to its objective of achieving universal energy access\. 1In early 2017, the Ministry of Energy (MEN) was created comprising the non-hydrocarbon side of the energy sector\. MEN took over all responsibilities related to rural electrification\. Page 5 of 37  The World Bank Access and Renewable Energy Project (P127837) Theory of Change (Results Chain) The Project Appraisal Document (PAD) did not articulate an explicit theory of change for the Project\. The theory of change, or results chain, behind the formulated objectives and components of the Project can be illustrated in the following manner; Activities Outputs PDOs/Outcomes LT Outcomes Grid Increase in densification, number of Achievement of extension of people provided universal access as LV and MV with access to part of the PEVD distribution, electricity off-grid PV through grid- Expand access to systems connections and electricity in renewable Bolivia’s unserved Outreach and energy sources areas Mainstreaming of training for renewable energy beneficiaries, access in Bolivia distribution Distribution lines Advance companies, constructed establishment of a contractors under the model of electricity Sustainable Project access expansion productive Strengthening that supports the development and project implementation of human management the national development Energy sector decentralized through access to studies framework basic services The PDOs are expected to contribute toward the fulfillment of Bolivia’s long-term objectives, as expressed by the country’s universal access targets (PEVD) and the prioritized development objectives agreed in the CPS\. Project activities were designed to help the achievement of the Project’s physical (infrastructure) and soft outputs which, in turn, are essential for the achievement of the PDOs\. The results chain proposed at appraisal considers also the following underlying assumptions: (i) that all stakeholders involved in Project implementation will have, or will build, the capacity to undertake their roles; (ii) that the complex implementation arrangements –particularly financial management and contract supervision– inherent to a decentralized model will be overcome through institutional strengthening and performance enhancement activities; (iii) a continuous commitment of the GoB to the electrification agenda, including its support in facilitating the decentralized arrangements; and (iv) that the Page 6 of 37  The World Bank Access and Renewable Energy Project (P127837) participation of Gobernaciones and Municipalities will contribute towards the sustainability of the Project’s investments\. Project Development Objectives (PDOs) To expand access to electricity in the Plurinational State of Bolivia’s unserved areas under a model of electricity access expansion that supports the implementation of the national decentralized framework\. Key Expected Outcomes and Outcome Indicators Progress towards achieving the Project Development Objective (PDO) was to be assessed through the following performance indicators: (a) People provided with access to electricity by household connections (grid, off-grid/mini-grid); (b) Community electricity connections constructed–Other RE [renewable energy]: Off-grid (c) Capacity building activities for subnational entities implemented under the Project Components The Project was designed comprising three components: Component 1: Electricity services for Unserved Areas (for an estimated cost of US$52\.45 million, of which US$43\.30 million would be financed by IDA)\. This component included subprojects to provide electricity services to households and social institutions in unserved rural areas and villages, through grid extensions or the installation of photovoltaic systems\. It includes the following sub-components: (a) Sub-component 1\.1 – Grid extension (US$39\.05 million, of which US$30\.00 million IDA)\. (b) Sub-component 1\.2 – Individual Solar Photovoltaic Systems (US$12\.70 million IDA)\. (c) Sub-component 1\.3 – Solar Photovoltaic Systems in Public Institutions (US$0\.70 million, of which US$0\.60 million IDA)\. Installation of solar photovoltaic systems in selected schools, health centers and other institutions\. (d) The Project was designed with view to have a broad national scope, with two regions initially involved: Chuquisaca and Potosí, that were selected based on their needs (high poverty level and low rural electricity coverage) and the fiscal space to assume the debt\. Component 2: Support to Access and Clean Energy Strategies (US$2\.00 million IDA)\. Provision of support to the Recipient’s strategies on energy access and clean energy through, inter alia: (i) Design, installation and evaluation of pilot energy access systems through new technologies, including Pico-PV systems; (ii) design and carrying out of training and capacity building activities addressed to all relevant stakeholders; (iii) development of indicators, baselines and methodologies for Project M&E; and periodic evaluation of progress toward achieving the Project’s result indicators; (iv) design and implementation of communication strategies and other dissemination tools to inform about the progress of Project implementation; (v) design and carrying out of studies to assess the Recipient’s progress in providing access to modern energy services, and studies on clean energy\. Component 3: Project Management (US$4\.70 million IDA)\. Provision of support to the MHE for the implementation, monitoring and evaluation of the Project, including Project audits\. Page 7 of 37  The World Bank Access and Renewable Energy Project (P127837) As shown in the following table, the actual allocation of resources (in US$ million) differed considerably from the original proposal –both for each component and the total Project– due to a major Project restructuring that is described in section B\. Components IDA GoB Local Total Beneficiaries Component 1: Electricity Services for PAD est\. 43\.300 5\.150 4\.000 52\.450 Unserved Areas Rev\. 2018 8\.980 0 0 8\.980 Actual 8\.221 0\.933 0\.382 9\.536 Component 2: Support to Access and PAD est\. 2\.000 0 0 2\.000 Clean Energy Strategies Rev\. 2018 0\.580 0 0 0\.580 Actual 0\.327 0\.033 0 0\.360 Component 3: Project Management PAD est\. 4\.700 0 0 4\.700 Rev\. 2018 1\.610 0 0 1\.610 Actual 1\.857 0 0 1\.857 Total Project Cost PAD est\. 50\.000 5\.150 4\.000 59\.150 Rev\. 2018 11\.170 0 0 11\.17 Actual 10\.405 0\.966 0\.382 11\.753 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets While the PDO did not change, the outcome targets were adjusted to accommodate the significant changes during the 2018 project restructuring in terms of a reduction in scale and scope due to the partial cancellation\. Revised PDO Indicators The partial cancellation of September 2018 implied a revision of the Project’s Results Framework, including PDO and Intermediate Results indicators\. Consequently, main PDO indicators for the number of people provided with a new or improved electricity service and the number of capacity building activities were reduced by 83\.4 percent and 77\.1 percent, respectively, while the indicator on community electricity connections was deleted\. The number of off-grid systems installed (an intermediate indicator) was also deleted\. Page 8 of 37  The World Bank Access and Renewable Energy Project (P127837) Revised Components The restructuring of June 2018 entailed significant changes in the Project’s scale and scope\. These included the cancellation of both renewable energy sub-components 1\.2: Individual Solar Photovoltaic Systems, and 1\.3: Solar Photovoltaic Systems in Public Institutions; as well as the reduction in IDA funding of sub-component 1\.2: Grid extension, from US$30 million to US$8\.98 million, and components 2: Support to Access and Clean Energy Strategies, and 3: Project Management, from US$2 million to US$0\.58 million, and from US$4\.70 million to US$ 1,61 million, respectively\. Other Changes The Project was approved on May 27, 2014 and became effective on September 22, 2015\. The Bank undertook two restructurings, an early restructuring on September 2, 2015, to amend the Financing Agreement and facilitate Project effectiveness; and a second and major restructuring (signed in September 10, 2018) as a response to a GoB partial cancellation request\. This was, in fact, a cancellation of all Project components that had not been committed contractually by that date\. Consequently, the second restructuring implied significant changes in the following areas: Project components and costs, results framework, cancellation of financing and the reallocation between disbursement categories, as well as changes in legal covenants and in the implementation schedule\. The partial cancellation of the Project meant also a drastic reduction in the implementation schedule (by 31 months), and the associated reallocation of funds between disbursement categories as well as changes in legal covenants\. Rationale for Changes and Their Implication on the Original Theory of Change The first restructuring (September 2015) responded to the need to adapt to new conditions and facilitate Project effectiveness since one Inter-Governmental Agreement (with Potosí) was delayed\. The second restructuring (September 2018) responded to a request of the GoB to cancel the Project, their formal justification being that implementation was too slow\. The World Bank proceeded to execute the partial cancellation, which coincided with the Bank’s interest in taking proactive measures to improve the overall performance of a weak country portfolio\. While the cancellation of different components did not affect the logic of the original theory of change nor eliminated a vital link in the results chain, it can be argued that the Project’s reduction in size and scope (cancellation of the energy renewable sub-components) limited the Project’s development objective and support the country’s PEVD objectives\. The impact of the Project’s early cancellation had diverse dimensions, such as the operation’s economics and the opportunity to achieve a more appropriate closure, that are discussed in the following sections\. II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating The relevance of the PDOs is rated Substantial\. The Project’s objective of expanding access to electricity in Bolivia’s unserved rural areas is consistent with the CPS for fiscal years 2012-2015, as rural electrification supports directly the strategy’s priority areas of: (a) sustainable productive development; and (b) human development and access to basic services\. Also, the Project’s objectives are consistent with the subsequent CPF for FY16-FY20, that aims to Page 9 of 37  The World Bank Access and Renewable Energy Project (P127837) increase access to selected quality basic services for the rural poor, improve opportunities for income generation and strengthen institutional capacity to improve public resource management, all objectives that are supported by Project components\. Furthermore, the expansion of electricity access under a model that supports the national decentralized framework remained relevant throughout the Project’s design and implementation in the light of the GoB’s constant commitment to the PEVD – which has as main objective the achievement of universal access to electricity by 2025– and its decentralization policy supported by the Autonomy Framework and Decentralization Law\. Following the positive experience of the IDTR I –and the lessons learned during its implementation – the Project was designed in harmony with its development objectives and, hence, it helped validating its relevance\. The Project included a delivery model that directly addressed the electricity access and sustainability objectives, and also incorporating the GoB’s decentralization objectives, i\.e\. the direct involvement of Gobernaciones and Municipalities\. The component aimed at providing technical assistance to all relevant stakeholders to complement this effort\. While the Project remained important in supporting CPS objectives, it cannot be overlooked that, in spite of the stated reasons, the GoB’s cancellation of an important portion of the Project was, to some extent, contrary to the PEVD objectives and could cast doubts on the Government’s priorities in this respect\. Therefore, the Project’s relevance is rated Substantial\. B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome The Project’s objective was to expand access to electricity in Bolivia’s unserved areas following a model of electricity expansion that supports the implementation of the national decentralized framework\. Compliance with the key performance indicators associated with the PDO and Project components is presented in Annex 1, that identifies two main outcomes: (i) people provided with access to electricity by household connections; and (ii) capacity building activities for subnational entities implemented under the Project\. The Project’s second restructuring implied a significant reduction in scale and, accordingly, a formal revision of outcome targets to values within the range of 16\.5 to 30\.8 parcent of the original targets\. The restructuring was agreed after an implementation period of four years that had achieved very modest progress\. Subsequently, the Project was quite effective in meeting the revised targets (shown in the table below) reaching levels of accomplishment between 90\.1 to 125 percent for the PDO indicators\. Project Development Objective Indicators Original Revised Actual % target target achieved (after restructuring) People provided with access to electricity 135,000 22,436 20,210 90\.1 by household connections People provided with access to electricity 72,500 22,436 20,210 90\.1 by household connections-Grid Page 10 of 37  The World Bank Access and Renewable Energy Project (P127837) Capacity building activities for 35 8 10 125\.0 subnational entities implemented under the Project Given the contrast, both in scale and performance, between the periods before and after restructuring, it is appropriate to apply a ‘split rating’ method in order to capture the Project’s achievements during a first, and lengthy, period and avoid the possible distortion of an adjustment that ‘lowered the bar’, as well as assessing objectively the Project’s role in supporting the country’s universal access to electricity objective and acknowledging the adaptation measures agreed between the GoB and the Bank\. To do so, the Project’s achievements during the period prior to restructuring are assessed against the targets established at appraisal for the fourth year (2017-2018) of implementation, according to the following table\. Project Development Objective Indicators Year 4 Achieved % target by Aug\. achieved (before restructuring) 2018 People provided with access to electricity by household 65,000 2,065 3\.15 connections People provided with access to electricity by household 33,000 2,065 6\.25 connections-Grid People provided with electricity by household connections- 32,500 0 0 Off-grid/mini-grid – only renewable sources Community electricity connections constructed – other 130 0 0 renewable energy: off-grid Capacity building activities for subnational entities 20 7 35\.0 implemented under the Project Prior to restructuring, the Project’s achievements in meeting its PDOs were Negligible, particularly for its main objective of expanding access to electricity which is assessed by the four indicators that measure the number of connections from 0 to 6\.25 percent)\. The causes of this poor performance are discussed in section III\. In contrast, after restructuring the Project’s achievements were Substantial when compared to the revised targets, as the Project was gaining momentum prior to its early closing\. Justification of Overall Efficacy Rating Taking into account the performance of the Project before and after restructuring, the overall efficacy rating is considered to be Modest\. This assessment is supported by the weighting criteria of the ‘split rating’ method that Page 11 of 37  The World Bank Access and Renewable Energy Project (P127837) proposes weights proportional to the share of actual credit disbursement made in both periods, which in this case were 53 percent and 47 percent for the ‘before and after’ implementation periods respectively\. Also, this assessment is justified by the acknowledgement of the Project’s poor performance during the first four years and major setback caused by the second restructuring vis-à-vis the country’s universal access to electricity objectives\. Details on the application of the split rating method are presented in Annex 4\. C\. EFFICIENCY Assessment of Efficiency and Rating The Project’s design and implementation paid special attention to an efficient use of resources\. To this end, it maintained the same PCU of the IDTR I project that had proven to work efficiently\. Taking advantage of the existing experience, the PCU took a leading role in the technical design, financial management and procurement of sub- projects (launching the bidding, signing contracts and monitoring their compliance), in transferring assets to the Gobernaciones, as well as taking overall responsibility in the Project’s M&E\. In addition to utilizing the capacity built in previous projects, the Project’s design incorporated a set of capacity building and outreach activities for subnational entities and other stakeholders, with view to cope with the challenge of a decentralized implementation model\. Nevertheless, implementation was slow, particularly during the first two years, as the challenges posed by a decentralized implementation were not fully overcomed\. There were, however, significant delays associated to a cumbersome implementation arrangement (discussed in Section III)\. The Project yielded positive economic returns, although somewhat lower than foreseen at appraisal\. The Project’s ex- post EIRR is estimated at 14\.4 percent, which compares to an expected return for the Project of 17\.7 percent and 19\.7 percent for the grid-extension component\. The lower economic return achieved is attributed to higher unit costs per connection caused by both, higher investment costs and a lower level of connections\. Since the second restructuring implied a considerable reduction in the Project’s scale, the net economic gains (NPV) fell to less than ten percent of the PAD’s estimate (details of the ex-post economic analysis, including assumptions are presented in Annex 5)\. While NPV is not strictly an indicator of economic efficiency, it reflects the Project’s limitation in achieving its main development objective: expanding access to electricity in unserved rural areas\. Taking into account that the Project’s economic performance was below expectations, and the significant implementation delays experienced, it is rated Modest for efficiency\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING A Moderately Unsatisfactory rating is assigned based on the shortcomings of the operation in partially achieving its development objectives, particularly due to the poor initial performance of the Project and the significant reduction of its targets, and in translating into results the economic resources that were made available to the operation\. E\. OTHER OUTCOMES AND IMPACTS (IF ANY) Page 12 of 37  The World Bank Access and Renewable Energy Project (P127837) Gender According to a survey carried out by VMEEA (MEN-VMEEA 2017), 48 percent of the Project beneficiaries are women (i\.e\. around 9,600)\. It is noted, however, that while this is a significant share of beneficiaries, it does not imply that the operation had an impact in closing a gender gap\. Institutional Strengthening The Project was implemented under a decentralized model that included a capacity building effort which is expected to have a long-term impact on the development of local institutions\. To this end, 73 workshops were carried out in 15 municipalities and implementing entities with the objective of informing all players on their role to be played in the Project and building the required capacity to do so, including strengthening the environmental and social management capacity at departmental and municipal levels, as well as training final users on their rights and obligations, and the efficient and safe use of electricity\. Also, the Project supported two studies that have made an important contribution to the energy sector, namely: (i) a study on PV systems in Bolivia aimed at establishing strategic guidelines for the sustainable development of third generation PV systems for all types of customers in rural areas; and (ii) a national survey on the population without access to electricity that focused on economic, social, gender, energy and production issues\. Poverty Reduction and Shared Prosperity The Project was an integral part of the PEVD, a GoB program aimed to provide universal access to electricity as an important component to eradicate poverty in rural areas\. Accordingly, it focused its operations in two Departments where poverty levels exceeded 60 percent\. The provision of a good quality electricity service through the implementation of eight sub-projects in Potosí and Chuquisaca, will have a positive impact in reducing poverty and improving the quality of life of around four thousand rural households, as they will no longer spend in traditional and less effective energy resources, have improved the quality of health and education, better security, and the potential of engaging in productive activities that would not have been possible otherwise\. Other Unintended Outcomes and Impacts The were no unintended outcomes or impacts\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION The Project was well aligned with the CPS for 2012-2015 and the universal access objectives of the Government’s PEVD\. Project design was based on the successful experience of the IDTR I\. Project objectives were realistic and its technical design was based on proven technologies that had been used successfully in the Bolivia and neighboring countries\. The implementation arrangement, however, faced a new challenge associated to Bolivia’s decentralization policy: the active participation of Gobernaciones and Municipalities, including day-to-day cooperation with the PCU as well as debt obligations for component 1 (assumed by Gobernaciones)\. To this end, MEN signed Inter-Governmental Agreements with Gobernaciones that established roles and responsibilities of all parties and delegated subnational competencies on electrification to MEN\. Accordingly, the PCU had overall responsibility for coordinating and implementing the Project, including all procurement, financial management and technical design\. The signing of the Page 13 of 37  The World Bank Access and Renewable Energy Project (P127837) Inter-Governmental Agreements with Chuquisaca and Potosi was a condition for effectiveness\. The PCU was based on the implementing unit of previous rural electrification projects, with the same organizational structure: three basic areas: technical; administrative, including financial and procurement; and M&E\. The successful completion of the IDTR I, plus the Bank’s experience in other countries offered the following lessons that were considered in the project’s design: (i) local commitment from the early stages is paramount in improving project design; (ii) adequate training of customers in the effective use of SHS is essential to fully achieve the benefits of electrification; (iii) flexible and adaptable design to the conditions found in each community helps to maximize the benefits of electrification; (iv) pico PV have the potential to address the electricity needs of the poorest rural households; (v) ensuring there is greater involvement of government institutions and other actors that can act as energy providers is essential to ensure sustainability; and (vi) acknowledging that rural infrastructure operations often face a slow start; Project design contemplated a seven-year implementation period\. However, the disbursement profile was not consistent with this period as it optimistically considered high disbursements during the initial years\.2 The Monitoring and Evaluation design was satisfactory\. Targets were realistic and consistent with the achievement of previous rural electrification efforts\. Indicators were measurable and captured well the different dimensions of the Project’s expected progress\. Important risks associated with institutional aspects were identified at the preparation stage\. Implementing agency risk was rated high on the grounds that the participation of Gobernaciones implied cumbersome arrangements from a financial management and contract supervision point of view\. Also, stakeholders’ risk was rated substantial due to numerous institutional challenges, including weak public sector capacity\. These concerns proved to be justified\. Acknowledging the complexities of a partially decentralized effort, the Project included a two-million-dollar component aimed at building capacity among the stakeholders involved in the implementation of the Project\. Also, numerous meetings and workshops were held with representatives of both Gobernaciones, as well as with Municipalities and distribution companies, to assess their interest and explain the implementation institutional arrangements\. Chuquisaca participated in the appraisal\. Readiness for implementation was confirmed by the Project’s thorough preparation and the advantage of using the experience and organizational arrangements of the former IDTR I Project\. Also, significant progress was made in the subproject’s pipeline with the direct participation of Municipalities in assessing the electricity coverage situation\. 3 Nevertheless, a better understanding of the Gobernaciones’ administrative processes and expectations as borrowers could have helped in facilitating a smoother effectiveness and implementation\. It should be noted, however, that the Project was breaking new grounds since this was the first time the Gobernaciones were assuming the debt obligation for a significant part of a loan or credit\. B\. KEY FACTORS DURING IMPLEMENTATION The implementation experience of Component 1: Electricity Services for Unserved Areas, i\.e\. the Project’s main infrastructures component, faced problems from the start; was slow throughout the whole implementation period and, ultimately, was partially cancelled\. Component 2 also faced delays, particularly in the review of deliverables\. 2 The disbursement profile proposed in the PAD utilized in ISRs contemplated that only 15 percent of the credit would be disbursed during the last two years of implementation\. This figure contrasts with the experience of rural electrification projects in the region –as great part of the investment is undertaken during the last years– and would appear to defeat the purpose of extending the implementation period to a more realistic seven year 3 Municipalities that had a better understanding of their coverage situation were incorporated into the Project\. Also, technical analyses on the best way to electrify (grid or PV) was developed for each municipality\. Page 14 of 37  The World Bank Access and Renewable Energy Project (P127837) Component 1 comprised the actual implementation of eight sub-projects in Chuquisaca and Potosí, instead of the around 30 sub-projects originally planned\. The PCU established the technical, social and environmental eligibility criteria for sub- projects, and prepared the final sub-projects portfolio\.4 Progress on this component was rated marginally unsatisfactory through the whole implementation period, except at closing when it was upgraded to marginally satisfactory upon its assessment against new and less ambitious targets\. The main factors of delay were: • Delays in Credit Effectiveness; the credit became effective on September 22, 2015, almost 16 months after approval and seven months after the due date\. This significant delay was caused by slow progress in two conditions for effectiveness: (i) the signing of the Inter-Governmental Agreement between MHE and the Gobernación of Potosí; and (ii) the preparation and approval of the Project’s Operational Manual (OM)\. While the OM was approved on September 2015, delays in the signing of the Inter-Governmental Agreement motivated a first Project restructuring whereby the said agreement was excluded from the conditions for effectiveness\. It appears evident that, by that time, Potosi’s willingness to participate in the Project was unclear\. • Appointment of authorities and Government restructuring; implementation delays continued after effectiveness\. These were caused, among other factors, by changes in authorities in early 2016 –new Vice Minister, new Renewable Energy Director and New PEVD coordinator, and new authorities at the departmental level as a result of subnational elections– and the lack of a PCU coordinator (and other staff members) which was appointed 15 months after effectiveness\. This situation continued in early 2017 upon the creation of the Ministry of Energy (MEN, separating it from the existing MHE)\. While this measure intended to give more attention to the non-hydrocarbon side of energy, the transition caused delays associated to the appointment of new authorities and the natural learning process of new entities\. • Cumbersome implementation arrangements associated to the decentralized model; besides the usual participation of MEN through its PCU, distribution companies and the supervision of MPD and MEFP, the decentralized model required the full participation of Gobernaciones and engage Municipalities in the implementation\. This involved coordinating with the PCU, contributing in the identification, design and certification of sub-projects, and a direct involvement in legal and financial management issues5 as Gobernaciones assumed the debt obligations of the main investment\. This proved to be an important factor of delay that was not overcome, as the Gobernaciones’ participation generated enormous administrative complexity –and reduced implementing flexibility– that had not been foreseen\. In fact, the complexity added by the partial decentralized model went beyond the nature and possibilities of a capacity building effort\. • Uncertain Government support; the sometimes slow appointment of PCU staff, including its coordinator, the GoB’s entertaining of implementation arrangements alternative to those agreed, and a reportedly discordant dialogue between MEN and the PCU, were all factors that raise doubts on the Government’s commitment to the Project as an integral part of the PEVD effort and, to some extent, had an adverse impact on a smooth implementation\. On April 2, 2018, the MPD requested a partial cancellation of the Project for the amount that had not been committed contractually by that date, on the grounds that implementation had been too slow\. At that time –more than 2 years after effectiveness– disbursements had amounted only 8 percent of the total credit amount and the Project was rated Moderately Unsatisfactory for implementation (IP) of all its components\. On June 1, 2018, the MPD sent a follow-up letter confirming the total amount to be executed under the revised Project (US$11\.17 million) and the new closing date: April 30, 2019\. This letter ignored a formal request of MEN to exclude from the proposed cancellation six additional sub-projects (for an amount of US$ 14\.9 million) that were ready for bidding, thus reducing significantly the Project’s 4 Sub-projects were initially prepared by Gobernaciones and Municipalities with participation of the Distribution Companies\. 5 Gobernaciones had to take care of the following steps for each subproject: (i) obtain a register for public borrowing (RIOCP) from MEFP prior to negotiations; and (ii) approval at the local assembly; two steps additional to a usual procurement process\. Page 15 of 37  The World Bank Access and Renewable Energy Project (P127837) outcome\.6 On June 15, 2018, the Bank agreed with MPD’s cancellation as proposed\. The Mid-Term Review (MTR), scheduled for the end of March 2018, was no longer carried out,7 nor a Bank due diligence that could have provided greater insight of the Project’s performance and alternative courses of action, and help minimizing the negative impact of the proposed cancellation\. It is worth noting that by mid 2018 the Project appeared to be taking off, as disbursements for the grid-extension sub-component had reached US$4\.16 million during the previous six months, much higher than the disbursement accumulated during the first three years of implementation\. The Project’s partial cancellation also had an adverse impact\. • The project restructuring/cancellation implied a significant reduction in the Project’s outcome, and a setback to PEVD objectives as the cancelled components have not been addressed by an alternative project or program\. While there were strong reasons to cancel the PV sub-components, considering that the original closing date was December 2021, it is likely that the grid-extension component could have achieved a much higher outcome\. • By mid 2018 Bolivia was no longer eligible for credits under IDA terms\. Therefore, although the amount cancelled (US$38\.8 million) was not lost in terms of WBG allocation to Bolivia, the benefit of the concession terms for that amount was lost\. • The Project no longer offered a renewable energy outcome as both PV sub-components were cancelled\. • The revised closing date did not allow time for carrying out the habitual households’ survey, thus forgoing an opportunity to draw useful lessons from the Project’s experience\. The table below summarizes the main factors that affected both, the Project’s design and implementation, identifying those that were subject to government or World Bank control, from those that were outside the control of any entity\. Factors That Affected Project Design and Implementation Key factor Subject to government and/or Subject to World Bank Outside the control of implementing entities control control the Project Project Design Complex • The Autonomy Framework and Implementation Decentralization Law requires Arrangement incorporating regional entities into the electrification agenda, granting Gobernaciones and Municipalities new responsibilities for rural electrification, including a role in design and implementation of sub-projects, FM, asset ownership and O&M\. Disbursement • Disbursement profile was Plan not consistent with the typical slow start of rural projects\. 6 MPD also decided to cancel the bidding process of a PV pilot for 2,100 SHS, and a cost of around US$1\.5 million, that had already been announced in the Bank’s webpage\. 7 It is noted that a Bank supervision mission had visited Bolivia one week before MPD’s request f or cancellation\. The mission had agreed to return in May 2018 with view to carry out the MTR\. Page 16 of 37  The World Bank Access and Renewable Energy Project (P127837) Project Implementation • Project first restructuring • Government Major delays in • Signing of inter-governmental paved the way for Project restructuring - creation Project agreements delayed Project effectiveness\. of MEN; while the Effectiveness effectiveness\. measure intended to and • Uneven GoB commitment to the give more attention to Implementation Project reflected in the slow the non-hydrocarbon during initial (4) appointment of PCU staff, discordant side of energy, the years\. dialogue and uncertain political transition caused delays support\. in management • Cumbersome implementation decisions, including the arrangement that involved a large appointment of staff, number of players proved to be a budgets, etc\. challenge that was not overcome\. • Bank management agreed Project • On April 2018, the GoB proposed the with the cancellation as Restructuring/ restructuring/cancellation of the Project proposed by the GoB, Cancellation on the grounds that implementation with no observations\. was slow\. The restructuring agreement • No MTR was undertaken was signed on September 2018\. (scheduled for March 30, • The cancellation proposal did not take 2018) nor a due diligence into account that the Project had gained to assess and minimize momentum during the previous months, the adverse impact of the nor accepted MEN’s proposal to exclude cancellation\. from the cancellation the six grid- extension sub-projects (for an additional amount of US$ 14\.9 million) that were ready for bidding, thus reducing considerably the Project’s outcome\. A PV pilot was also cancelled\. Poor • The GoB and the World Bank had the instruments to take proactive Performance of measures in improving the country portfolio, such as the restructuring the Country and cancellation of projects Portfolio IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design The M&E design was satisfactory\. At project appraisal, the number of indicators was limited to three PDO indicators plus six intermediate indicators that provided an adequate insight into the Project’s objectives and expected achievements\. The targets established by the M&E framework were realistic and measurable\. Page 17 of 37  The World Bank Access and Renewable Energy Project (P127837) Project design incorporated an important lesson from previous projects: that rural electrification is a complex operation that often faces a slow start, hence its design contemplated a seven-year implementation period\. However, the disbursement profile used in ISRs was optimistic for the initial years and not consistent with the said period\. M&E Implementation and Utilization Overall, the M&E framework provided a set of indicators suitable to measure the progress in achieving its DO; that is, it measured appropriately the theory of change inherent to the Project\. Responsibility for M&E relied on the PCU, that had experience in handling this function in previous rural electrification operations\. Under its guidance, Gobernaciones and Municipalities collected data on subprojects and from beneficiaries\. To ensure an effective M&E, the Project provided capacity building in this area for the PCU and other stakeholders\. The Operational Manual established the responsibilities of all parties in regard to M&E\. Accordingly, the PCU submitted quarterly progress reports to the PEVD and bi-annual reports to the Bank (though there were no submissions until September 2017), Gobernaciones and Municipalities\. The PCU had a monitoring unit that maintained adequate measures of the Project’s progress, including an update of its results framework indicators, as well as the monitoring of sub-projects’ progress, contracts and safeguards compliance, among others\. M&E data was regularly reflected in 8 ISRs produced by the Bank team during implementation and was used by the PCU and the Bank in monitoring the Project’s slow progress of the initial years\. M&E was rated moderately satisfactory through the whole implementation period on the grounds that the PCU unit was, for relatively short periods, not fully staffed\. Justification of Overall Rating of Quality of M&E Given its adequate design, systematic implementation and utilization, but some moderate shortcomings, the quality of the M&E is rated Substantial\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE a\. Social and Environmental Safeguards\. The Project triggered five World Bank safeguard policies as identified in the PAD\. These were: Environmental Assessment (OP/BP 4\.01); Natural Habitats (OP/BP 4\.04); Indigenous Peoples (OP/BP 4\.10); Physical Cultural Resources (OP/BP 4\.11) and Involuntary Resettlement (OP/BP 4\.12)\. The Project’s safeguards category was set as B\. Accordingly, environmental and social screening was required for all sub-projects prior to approval, and appropriate management plans were prepared and executed\. Environment\. Given that the location of the majority of sub-projects was not identified at appraisal, an Environmental Management Framework (EMF) was prepared, including documented evidence of informed and transparent consultations with stakeholders and a guideline to environmental supervision\. The PCU was responsible for compliance with the Bank’s environmental safeguards and national environmental regulations\. PCU staff included an environmental specialist\. Contractors were responsible for preparing and implementing Environmental Management Plans (EMP) for each sub-project, under the supervision of a separate company\. Environmental safeguards were implemented without any significant problems\. Accordingly, the performance of the corresponding safeguards was rated satisfactory throughout the entire implementation period\. The experience gained in previous rural electrification operations was effectively incorporated into the Project’s procedures and practices\. Social\. The Project triggered on Indigenous Peoples and Involuntary Resettlement safeguards\. Consequently, an Indigenous Peoples Planning Framework (IPPF) and a Resettlement Policy Framework (RPF) were prepared\. The IPPF Page 18 of 37  The World Bank Access and Renewable Energy Project (P127837) defined procedures and principles to ensure a process of free, prior, and informed consultation with the affected Indigenous Peoples' communities\. Based on the IPPF a specific Indigenous People Plan (IPP) for quechua indigenous beneficiaries was prepared and implemented by the PCU at the level of Municipalities\. As a preventive measure, the RPF defined procedures to ensure proper care is taken to avoid, minimize or mitigate involuntary resettlement and to develop plans for the establishment of easements for distribution lines\. A minimum content for Resettlement Action Plans (RAPs) was established by the Project’s Operational Manual, however, specific RAPs for the grid-extension sub-projects were not needed\. In fact, resettlement did not take place in the Project\. A Grievance Redress Mechanism (GRM) was established to provide remedies to parties who perceive that their rights have been adversely affected by the Project\. Two mechanisms were implemented: a complaints box and a Compliant and Suggestions Form\. A complaint form was used in only one case (impact on the roof of a house) that was resolved and documented\. During project supervision the Bank did not find evidence of any significant non-compliance\. Accordingly, the Project’s performance with regard to social safeguards was rated satisfactory throughout the implementation period\. b\. Financial Management and Audits\. A financial management (FM) assessment for the implementing entity was conducted at the time of appraisal\. To the extent possible, established FM arrangements were used, strengthening them as needed to ensure that Project funds were used economically and efficiently for their intended purposes\. FM arrangements were deemed acceptable, considering that their effective operation and maintenance throughout the Project’s life depended on the ability of the implementing entity to maintain qualified and experienced staff\. Centralization of project administration in the hands of qualified and experienced staff led to satisfactory FM during implementation\. The Project consistently provided timely and reliable financial information for monitoring purposes\. External audits did not identify reportable conditions nor qualified opinions\. Financial monitoring reports (IFRs) were delivered in timely fashion and recommendations were implemented on an ongoing basis\. The review of SOEs confirmed that expenses were supported by adequate documentation and an appropriate approval process\. In addition to its regular supervision missions that often included specialists in the subject, the Bank launched one mission to address specifically FM issues when activities started to speed up\. The mission concluded that arrangements adhered to the standards required and that there were no shortcomings in the Project’s capacity to provide timely and reliable information required to manage and monitor implementation\. FM was rated satisfactory during most of the implementation period and at the Project closing date\. c\. Procurement\. Procurement for the project was carried out in accordance with the provisions stipulated in the Financing Agreement, the World Bank “Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011, and the “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers” dated January 2011\. The PCU, using existing structure and confirmed capacity that were in place in the MHE, was responsible for the procurement activities and the contracting processes\. Representatives of Chuquisaca and Potosí took part in the processes since administrative/budget due diligence were required at the departmental level\. The PCU’s technical unit was in charge of defining technical specifications and terms of reference, they also participated in committees evaluating bids and proposals and managing each signed contract\. Overall, procurement responsibilities were handled in a satisfactory manner and ISRs ratings fluctuated from satisfactory to moderately satisfactory through the implementation period\. There were some delays on Procurement processes due to legal review requirements based on national procedures\. Other issue was the restricted capacity on contract management\. The Bank team made efforts to train PCU’s staff and Page 19 of 37  The World Bank Access and Renewable Energy Project (P127837) the capacity on procedures and the Systematic Tracking of Exchanges in Procurement (STEP) improved over the last period of project implementation\. The PCU Procurement team managed hard and digital document files, the contracts execution records were also concluded in the STEP\. A Procurement Post Review carried out during implementation found no ineligible contracts nor any serious issues that could be considered cases of fraud or corruption\. In total, eight sub-project contracts were signed and executed (six in Chuquisaca and two in Potosí)\. As noted in Section III, by the time of partial cancellation, six additional sub-projects were ready for bidding, including all corresponding technical approvals\. C\. BANK PERFORMANCE Quality at Entry Rating: Moderately Satisfactory • Project design involved a sound assessment and proposal of an approach that had been successful in the IDTR I, and modifications were consistent with the country’s decentralization policy\. Project objectives were consistent with the CPS and remained relevant during implementation\. • Preparatory work was characterized by a sound assessment of most aspects, including safeguards, the project’s economic viability, confirmation of the executing agency’s implementing capacity and fiduciary arrangements, and the incorporation of lessons learned in previous projects\. Also, the PCU was based on the implementing unit of previous successful rural electrification projects\. • Important risks associated with institutional aspects were identified at the preparation stage\. Implementing agency risk was rated high on the grounds that the participation of Gobernaciones implied a challenging task\. Also, substantial stakeholders’ risk was identified\. In response, the Project included a two-million-dollar component aimed at building capacity among the stakeholders involved in the implementation and involved Gobernaciones and Municipalities into the preparation phase\. • Implementing the Project under a decentralized model posed a set of complexities associated to the participation of Gobernaciones and Municipalities\. A large component aimed at building capacity among the stakeholders was a measure in the right direction\. However, a better understanding of the Gobernaciones’ administrative processes and expectations as borrowers –complex issues that went beyond the nature and possibilities of a capacity building effort– could have helped in facilitating a smoother effectiveness and implementation\. Quality of Supervision Rating: Moderately Satisfactory • The Bank actively supervised the Project, the frequency and composition of missions was adequate (two per year as an average; regular weekly meetings with team members; environmental, social and fiduciary workshops; as well as meetings to help solving specific implementation problems) and the Bank engaged with authorities from the early start, keeping the focus always on the Project’s achievement of its DO and the supervision of fiduciary and safeguard aspects\. • Major delays in the Project’s start and overall implementation were not attributable to the Bank’s supervision, but to delays within the Government processes (including the transition associated to a GoB restructuring), the complexity of the implementation arrangement and the uneven support of the GoB to the Project\. • Performance reporting was objective, timely and consistent throughout the entire period\. • The Bank’s dialogue with the Borrower and related agencies was constructive and useful in overcoming implementation obstacles\. The first restructuring was timely and helped paving the way for Project effectiveness\. Page 20 of 37  The World Bank Access and Renewable Energy Project (P127837) While the second restructuring (partial cancellation) responded to MPD’s request, the cancellation of an important part of the infrastructure component had a significant adverse impact on the Project’s outcome that could have been mitigated if the Bank would have carried on –and taken the time for– a due diligence to assess the best way to address the GoB’s concerns\. Justification of Overall Rating of Bank Performance Considering the preparation and supervision ratings, an overall rating of Moderately Satisfactory is assigned\. D\. RISK TO DEVELOPMENT OUTCOME The operation was designed to support a viable and sustainable model of electricity access that is consistent with the national decentralized framework\. Upon cancellation of the Photovoltaic subprojects, sustainability was reduced to a minor challenge since grid extension technologies have been fully proven worldwide and pose no technical nor commercial uncertainties\. However, given the limited experience of Gobernaciones in operating power systems, implementation arrangements included agreements with Distribution Companies (SEPSA in Potosí, and CESSA and COSERCA in Chuquisaca) to assume the responsibility for O&M of all sub-projects\. In fact, Project beneficiaries have become, for all purposes, regular customers of the distribution companies\. The overall technical sustainability of the Project is supported also by parallel power sector operations that focus on the construction of transmission lines (IDB-supported) and further grid extension that complement the IDTR II\. Risk to development outcome is rated Modest\. V\. LESSONS AND RECOMMENDATIONS Rural electrification projects are by nature complex ventures implemented in remote areas and under difficult physical conditions, that require a timely and effective coordination among a multiple number of parties and a design based on an objective assessment of strengths and weaknesses of institutions\. This challenge is greater the more decentralized the delivery mechanism is\. Although rural electrification justifies a significant degree of decentralization, the delivery mechanism should ensure the early participation (since the design phase) of all relevant players and, if possible, minimize the number of institutions involved, particularly if these do not have the necessary operational experience\. The leading implementing agency should be fully operational from the early stages of the project\. The lack of effective implementation arrangements from the very beginning might entail delays that could result in the materialization of unforeseen risks, such as the impact of sector reforms and the loss of political support\. Decentralized models for rural electrification require an efficient coordination between the national and subnational government levels\. Hybrid models whereby these two levels share executive and financial roles (particularly the ownership of assets and debt obligations) are not recommended since the executive, financial and overall procedures of both entities have to be satisfied, thus adding complexity to the implementation process\. The Bolivia experience suggests that upon the challenges of a decentralized policy it is preferably for projects to be executed and owned at one single level, either national or subnational\. Simplicity of design and implementing flexibility are paramount to successful rural projects\. Given their complex nature, rural projects should be carefully designed to minimize implementation difficulties and provide for a degree of flexibility and alternative options during their implementation\. To the extent that the capacity of implementing agencies –and other related institutions– and Bank procedures allow, the following lessons and recommendations are drawn from the Project: Page 21 of 37  The World Bank Access and Renewable Energy Project (P127837) • Engage all players from the early stages of the project, including distribution companies and local governments\. In particular, institutions that will bear a financial responsibility should participate in the negotiations of financial agreements\. • To the extent possible, adapt procurement procedures to the country’s practices, including options for procurement packaging and the use of simplified but sound project profiles for the bidding process\. • Define during project preparation which requirements should be met prior to board presentation and effectiveness; such as progress in the subprojects’ pipeline, operational manual, the signing of inter- governmental agreements, a fully functioning PCU\. • Grant the implementing agency a degree of operational autonomy to guarantee a smooth implementation and avoid unjustified delays\. • Design disbursement plans consistent with the nature of rural decentralized operations, i\.e\. contemplate a slow start typical\. • Good quality –rather than quantity– of supervision focusing principally on the most vulnerable implementation areas\. The rural electrification effort is a medium to long term task that addresses an important social objective and entails significant public resources, thus requiring a firm and unambiguous Government commitment\. Given their dependence on public resources and political support, a rural electrification project would not be likely to succeed without the backing of a government that guarantees a sound and stable rural electrification policy, provides adequate and timely resources to the implementing agency, maintains harmonious communications among all parties and ensures smooth approval processes\. The Project’s restructuring experience illustrates the typical economic question about the value of time in decision processes\. In particular, the potential benefits that can be achieved allowing more time into an important decision, such as the partial cancellation of a project\. A due diligence and, in particular, a well targeted economic analysis, are essential when the restructuring of a project implies a radical change in its outcome\. Ideally, such a restructuring should be supported by an economic analysis in compliance with appraisal guidelines, that could have helped in assessing the best way to address the borrower’s concerns while minimizing the adverse impact of the proposed measure\. \. Page 22 of 37  The World Bank Access and Renewable Energy Project (P127837) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: People provided with new or improved electricity service Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion People provided with access Number 0\.00 135000\.00 22436\.00 20210\.00 to electricity by household connections 25-Apr-2014 25-Apr-2014 30-Apr-2019 31-Aug-2019 People provided with access Number 0\.00 72500\.00 22436\.00 20210\.00 to electricity by hhold connections-Grid 25-Apr-2014 30-Apr-2019 30-Apr-2019 31-Aug-2019 Comments (achievements against targets): Objective/Outcome: Capacity building activities for subnational entities implemented under the Project Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Capacity building activities Number 0\.00 35\.00 8\.00 10\.00 for subnational entities implemented under the 25-Apr-2014 25-Apr-2014 30-Apr-2019 31-Aug-2019 Page 23 of 37  The World Bank Access and Renewable Energy Project (P127837) Project Comments (achievements against targets): A\.2 Intermediate Results Indicators Component: Electricity Services for Unserved Areas Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0\.00 160000\.00 26700\.00 24050\.00 01-Dec-2014 25-Apr-2014 30-Apr-2019 31-Aug-2019 Female beneficiaries Percentage 0\.00 50\.00 48\.00 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution lines constructed Kilometers 0\.00 800\.00 669\.00 756\.25 or rehabilitated under the project 31-Jul-2014 25-Apr-2014 30-Apr-2019 31-Aug-2019 Page 24 of 37  The World Bank Access and Renewable Energy Project (P127837) Distribution lines Kilometers 0\.00 800\.00 669\.00 756\.25 constructed under the project 01-Jul-2014 25-Apr-2014 30-Apr-2019 31-Aug-2019 Comments (achievements against targets): Component: Support to Access and Clean Energy Strategies Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of outreach and Number 0\.00 70\.00 41\.00 63\.00 training activities implemented (for 01-Dec-2014 25-Apr-2014 30-Apr-2019 31-Aug-2019 beneficiaries, Distribution Companies, contractors, and other relevant stakeholders) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of energy sector Number 0\.00 5\.00 2\.00 2\.00 studies supported 01-Dec-2014 25-Apr-2014 30-Apr-2019 29-Apr-2019 Comments (achievements against targets): Page 25 of 37  The World Bank Access and Renewable Energy Project (P127837) Component: N/A Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion No Indicators Years 0\.00 0\.00 0\.00 0\.00 25-Apr-2014 25-Apr-2014 29-Apr-2019 Comments (achievements against targets): Page 26 of 37  The World Bank Access and Renewable Energy Project (P127837) B\. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: People provided with access to electricity by household connections 1\. People provided with access to electricity by household connections Outcome Indicators 2\. People provided with access to electricity by household connections-Grid 1\. Direct project beneficiaries 2\. Female beneficiaries Intermediate Results Indicators 3\. Distribution lines constructed or rehabilitated under the project 4\. Distribution lines constructed under the project 1\. Eight subprojects to provide electricity services to households and social institutions in rural areas and villages\. Subprojects included the Key Outputs by Component extension of low and medium voltage distribution lines and grid (linked to the achievement of the Objective/Outcome 1) densification in Chuquisaca and Potosi\. Outputs were assessed against the outcome and intermediate indicators presented above\. Objective/Outcome 2: Capacity building activities for subnational entities implemented under the Project 1\. Capacity building activities for subnational entities implemented Outcome Indicators under the Project 1\. Number of outreach and training activities implemented (for beneficiaries, Distribution Companies, contractors, and other relevant Intermediate Results Indicators stakeholders) 2\. Number of energy sector studies supported Key Outputs by Component 1\. Design and carrying out training and capacity building activities (linked to the achievement of the Objective/Outcome 2) targeting Departments, participating Municipalities, qualified service Page 27 of 37 The World Bank Access and Renewable Energy Project (P127837) providers, selected households and public institutions and other stakeholders participating and/or benefitting under the Project’s infrastructure component\. 2\. Support the preparation of indicators, baselines and methodologies for Project M&E\. 3\. Design and carrying out communication strategies and other dissemination tools on the Project’s progress\. 4\. Studies on the sustainability of PV systems in rural areas; and survey on populations with no access to basic electricity services\. Page 28 of 37  The World Bank Access and Renewable Energy Project (P127837) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Lucia Spinelli Task Team Leader(s) Jose Yukio Rasmussen Kuroiwa Procurement Specialist(s) Patricia De la Fuente Hoyes Financial Management Specialist Noreen Beg Social Specialist Juan Carlos Enriquez Uria Social Specialist Adam John Behrendt Social Specialist Supervision/ICR Lucia Spinelli Task Team Leader(s) Julio Sanjines Gonzales Procurement Specialist(s) Juan Carlos Serrano-Machorro Financial Management Specialist Tatiana Perez Guerra Financial Management Specialist Vladimir Jadrijevic Cvitanic Team Member Juan Carlos Enriquez Uria Environmental Specialist Victoria Minoian Team Member Elena Segura Labadia Counsel Shirley Leigue Gutierrez Team Member Andrea Maria Castro Astudillo Team Member Wendy Claribel Guerra Navarro Team Member Angela Maria Caballero Espinoza Social Specialist Page 29 of 37  The World Bank Access and Renewable Energy Project (P127837) B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY12 3\.672 16,167\.83 FY13 11\.571 104,189\.33 FY14 18\.741 162,728\.75 FY15 5\.936 55,135\.64 FY16 0 42,016\.62 Total 39\.92 380,238\.17 Supervision/ICR FY14 0 7,720\.64 FY15 32\.460 109,398\.23 FY16 25\.845 86,348\.18 FY17 20\.585 93,840\.05 FY18 15\.883 87,831\.05 FY19 9\.837 63,239\.30 FY20 4\.560 14,993\.19 Total 109\.17 463,370\.64 Page 30 of 37  The World Bank Access and Renewable Energy Project (P127837) ANNEX 3\. PROJECT COST BY COMPONENT Components Amount at Revised Amount Actual at Project Percentage of Approval (US$M) - 2018 (US$M) Closing (US$M) Revised (%) 1 Electricity Services for 43\.30 8\.98 8\.221 91\.5 Unserved Areas 2 Support to Access and 2\.00 0\.58 0\.327 56\.4 Clean Energy Strategies 3 Project Management 4\.70 1\.61 1\.857 115\.3 Total 50\.00 11\.17 10\.405 93\.2 Page 31 of 37 The World Bank Access and Renewable Energy Project (P127837) ANNEX 4\. ACHIEVEMENT OF PDOs (EFFICACY) – SPLIT RATING METHOD Before Restructuring After Restructuring Relevance of Objective Substantial Efficacy (PDO) Negligible Substantial Efficiency Modest 1 Outcome ratings* Unsatisfactory Moderately Satisfactory 2 Numerical value of the outcome 2 4 ratings* 3 Disbursement $5\.53 $4\.89 4 Share of disbursement 0\.531 0\.469 (period disbursement / total disbursement) 5 Weighted value of the outcome rating 1\.062 1,876 (Row 2 x Row 4) 6 Final Outcome Rating Moderately Unsatisfactory (1\.062+1\.876=2\.938 rounding it to 3) *Note: Highly Unsatisfactory (1); Unsatisfactory (2); Moderately Unsatisfactory (3); Moderately Satisfactory (4); Satisfactory (5); Highly Satisfactory (6)\. Page 32 of 37 The World Bank Access and Renewable Energy Project (P127837) ANNEX 5\. EFFICIENCY ANALYSIS Economic Analysis Following the appraisal’s approach, the economic analysis focuses on the main infrastructure Component 1: Electricity services for Unserved Areas, that encompassed grid extension (sub-component 1\.1) and off- grid PV systems (sub-components 1\.2 and 1\.3)\. This component was expected originally to account for 88\.7 percent of the Project’s total cost and 86\.6 percent of IDA’s financing\. Upon the cancellation of the PV sub-components and part of the grid extension (restructuring of 2018), the Project’s capital cost was reduced to less than 20 percent\. This annex assesses the economic efficiency of the actual capital investment, which accounted for 79 percent of the Project’s total cost\. The economic internal rate of return (EIRR) of the Electricity services for Unserved Areas component is 14\.4 percent and its net present value (NPV) US$1\.95 million, based on a 10 percent discount rate that, as at appraisal, is considered to be the economic opportunity cost of capital in Bolivia\. These results compare to an EIRR of 19\.7 percent estimated at appraisal for the same grid extension component, and an EIRR of 17\.7 percent estimated for the Project as a whole\. Also, the ex-post NPV is considerable lower than the PAD’s estimate which reached US$17\.2 million\. The lower economic return achieved by the Project is attributed to higher unit costs per connection (US$2,034) caused by both, higher investment costs and a lower level of connections\. The much lower economic gain (NPV) is attributed to the cancellation of a significant part of the electrification sub-projects\. Nevertheless, the Project remained viable from an economic point of view\. - Grid extension sub-component Costs: The analysis includes the actual economic cost of US$7\.40 million for 4,042 connections to the grid (20,210 people served), which includes capital investment and connection costs, and excludes taxes and duties which are assumed, as in appraisal, to account for 10 percent of the capital cost\. It includes also annual O&M costs plus the cost of energy that are estimated following the appraisal assumptions, i\.e\. US$3\.20 per connection, per month, and a tariff (for generation and transmission) of US$0\.0651 per kWh, respectively\. Benefits: New users replace kerosene lamps or alternative forms of lighting and other uses of energy by electricity and, subsequently, increase their energy consumption given the lower price of the new service\. At appraisal, average consumption of newly connected customers was estimated at 18\.75 kWh per month, based on consumption patterns of rural households in Chuquisaca and Potosí\. This value is used in the ex- post analysis\. Further, it is assumed that electricity consumption will increase by 1\.5 percent per year during the 15 years of analysis\. Consumer’s willingness to pay (WTP) for electricity –i\.e\. the economic value, or the benefit, of consumption– is reflected by the savings in traditional energy resources plus the value of additional consumption\. This value is illustrated by the areas B+D and C+E in the demand curve shown below\. A straight line approximation to the demand curve is used given the lack of quantifiable information regarding consumers’ preferences\. Page 33 of 37 The World Bank Access and Renewable Energy Project (P127837) Following the appraisal’s approach, the demand of a typical household would be as follows QK: 5 kWh per month (equivalent consumption in traditional energy sources) Pk: US$2\.25 per kWh (cost of the traditional energy saved) QPV: 18\.75 kWh per month (total consumption once the household is connected to the grid) PPV: US$0\.0651 per kWh (tariff)\. Accordingly, the WTP of and average consumer would be US$1\.449/kWh and the overall annual benefits per household (savings in traditional energy plus the economic value of additional consumption), would be in the order of $325\. The table below presents the flow of costs and benefits for the Project’s infrastructure component\. Economic Analysis – Grid Extension Component (thousand US$) Year HHs Capital Cost of O&M Total Total Net Connected Cost Energy Cost Benefits 1/ Benefits 0 4,042 7,399 0\.0 0\.0 7,399 0 -7,399 1 0 0\.0 59\.2 155 214 1,318 1,103 2 0 0\.0 59\.2 155 214 1,338 1,123 3 0 0\.0 59\.2 155 214 1,358 1,143 4 0 0\.0 59\.2 155 214 1,378 1,164 5 0 0\.0 59\.2 155 214 1,399 1,184 6 0 0\.0 59\.2 155 214 1,420 1,205 7 0 0\.0 59\.2 155 214 1,441 1,227 8 0 0\.0 59\.2 155 214 1,463 1,248 9 0 0\.0 59\.2 155 214 1,484 1,270 10 0 0\.0 59\.2 155 214 1,507 1,292 11 0 0\.0 59\.2 155 214 1,529 1,315 12 0 0\.0 59\.2 155 214 1,552 1,338 Page 34 of 37 The World Bank Access and Renewable Energy Project (P127837) 13 0 0\.0 59\.2 155 214 1,576 1,361 14 0 0\.0 59\.2 155 214 1,599 1,385 15 0 0\.0 59\.2 155 214 1,623 1,409 16 0 0\.0 59\.2 155 214 1,648 1,433 NPV: 1,950\.4 IERR: 14\.39% 1/ Based on WTP of $1\.449/kWh Page 35 of 37 The World Bank Access and Renewable Energy Project (P127837) ANNEX 6\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Upon the Bank’s request, the GoB submitted the following comments on the draft ICR: • The completion report of the IDTR II Project prepared by the World Bank elaborates on events that were experienced during the implementation of the project, its content is responsibility of the financing organism\. • The Project’s closing date was April 30, 2019, plus a grace period until August 2019 with view to complete the payment for all the services provided\. All re-programmed activities were completed\. The data on costs presented by the ICR coincide with those of the GoB’s Informe Final (July 2019) and the external audit report\. • As indicated, all re-programmed activities were completed and the respective reports were issued within the established time frame\. The ICR makes reference to the difficulties encountered at the start of the Project’s implementation, such as: who would assume the debt repayment, extensive budget procedures with the Gobernaciones recruitment of the PCU’s staff and payments to contractors that required the validation of many players\. • With respect to the coordination between the Ministry of Energy and the PCU, the Bank’s appreciation is considered subjective\. The Project’s completion of the reformulated targets confirms that the coordination was done in an effective and dynamic manner\. • It is worth noting that with the efforts of different entities of the Bolivian State, the difficulties typical of this type of projects have been solved and executed according to what was planned\. The PCU prepared a completion report (Informe Final del Proyecto, 2019) that addresses the Project’s background, budgetary execution, restructuring, implementation performance and results, as well as lessons learned and conclusions\. The report’s quantitative conclusions coincide with the ICR’s\. Page 36 of 37 The World Bank Access and Renewable Energy Project (P127837) ANNEX 7\. SUPPORTING DOCUMENTS (IF ANY) Financing Agreement (Access and Renewable Energy Project) between the Plurinational State of Bolivia and the International Development Association, August 21, 2014\. IDTR II Proyecto de Acceso a Energía Eléctrica y Energía Renovable; Manual de Operaciones, 2014\. IDTR II Proyecto de Acceso a Energía Eléctrica y Energía Renovable; Informes de Gestión 2014-2018\. IDTR II – Fase II, Proyecto de Acceso a Energía Eléctrica y Energía Renovable; Informe Final a Banco Mundial, Julio 2019\. MEN-VMEEA Estudio Encuesta de Población sin cobertura eléctrica básica en Bolivia – Principales Características, 2017\. Ministerio de Planificación del Desarrollo; Comentarios al Informe de Revisión de Reporte de Término de Ejecución y Resultados (ICRR) del Convenio de Financiamiento 5454-BO - Proyecto de Acceso a Energía Eléctrica y Energía Renovable (IDTR II) – Ministerio de Energías\. 23 de octubre de 2019\. World Bank Aide Memoire for the Project’s Supervision Missions, 2014-2019\. World Bank Project Implementation Status Reports (ISRs), 2015-2019\. World Bank Bolivia - Country Partnership Strategy for FY12-FY15, 2011\. World Bank Bolivia - Country Partnership Framework for the period FY16-FY20, 2015\. World Bank Project Appraisal Document on a Proposed Credit in the Amount of SDR32\.40 Million (US$50 Million Equivalent) to the Plurinational State of Bolivia for a Access and renewable Energy Second Project, April 25, 2014\. World Bank Project Restructuring documentation issued from May 2014 to September 2018\. Page 37 of 37

REVIEW

P083533

 DocuiDent\.ef The WOrld Bant Repo\.rt No: ICROOOOtl74 IMPLEMENtATION COMJ>LJ;nON ANDRESlJI:rS REPORT (lBRl)\.72530) ONA' LOAN \.IN THE AMOUNT OF USSl2\.l2\.MlLLION \. ~nm FEDERATIVE REPUBLIC OF BRAZIL F9RA '\.' " - ' - ,\ - \. ' - , -,' \ \.' StJS'J'!JNABLE AND EQUITABLE GROWTH TECHNICAL ASSISTANCE , PROJECT IN Sl1PPt')RT OF THE FIRST PHASE OF THE SUSTAlNA8LE\.AND EQUITABLE GROWTH TECHNICAL\.ASSISTANCE \.- PROGRAM June 3, 2011 - , Finance and Private Sector Development ÂBrJzil\.Coontry Management Unit \. ~ Atnerica and the Caribbean Region •  "'~~cY~EQUwAtbtTs ~• • ~m~ti'~¢APnI~,\.20111 -\. I': t' ,curtencyUtU(";;'IkazitiariW ' BRLl,~~tJS$'O\.634' " USSI\.OO\.J\.'S7: BRL ',' ~_~I~XJAlt • y-'" , ",', \. - ,,,- "\.A8BUVlATIONSANDACRONYMS ANTAQ' National waterborntt~ R~ Apncy, AN'IT- ' NationaiLandTI'8IlSpOrt Regulatory Ageney \. \ ' ,\.APL Adaptalne }SrpgramLo8n"" J " CIiDE Economic Defense ~ii ' CAS Country'ASmstange StrateiY ' \.CDM' Clean Development M~stn CVM Securities and EXehangeCommissi()D UNIT Na$ional'\.~ forTJ1II)Spbrt ~ \.DPL\ ' Devel~Por ", ',Lending' ' "'1'_ " ICY\. , FM FinancialManagelllent, , " , ' " FFMTAL , 'Fiql~Finarici81 M~erttTecluiicalAssiStaneeLoaa ,'GDP ~' GrossÂ'~',Product,' ~ " '\" ' ,HR'I cHuman~", \.," ,Ieee brter\.in~ commissiOn for Climate Chailge leR ImPlemeDtation, COlnpleti~ anciRe$11lts'RepQrt lOis' 1n~"OutplltIndic8tors IRI , Jnvestme1lt Rateoflnterest ISR ImpJ~tation'Statusand R~Report KIRs, Key Implenientation Results MOle , Ministry ofDeyelopment, Jn4ustnr an<iExterhal Commerce MCT Mi,nistryQf Science and TeetuiOlogy ,, ,'" M&E MonitQ~and Evaluating , MoF 'Ministry ofF~' ) MPOO ,~ofP1aiming,BudgetandAdinini~on MSMEs Mici'o~'Sma11\. ~d Medium' Enterprises '", " ,OECD , OrgU@rtion for EcoriQmic'CoOperationandPevdopment PAD Project ApptmsaloOeument" " " ,PCS , ",Project COordinatOrs, PCU/ Project Coordination Unit ,POO' Project Development OOjCctiVes PPP Public-Private Partnership QAE Quality at Entry PREMEF Road Transport Project QAG Quality Assurance Group R&D Public Research and Development SDE Economic Law Secretariat SE Executive secretariat of the Science and Technology Ministry SEAE Economic Monitoring Secretariat SEGTAP Sustainable and Equitable Growth Technical Assistance SEP Secretariat for Ports SEPED Strategic Scientific Development Policies Secretariat SETEC Strategic Development Policy Secretariat SID Integrated Public Debt Management System SMEs Small and Medium Enterprise SPE Economic Policy Secretariat SPNT National Transport Policy Secretariat SRJ Judicial Reform Secretariat sm Treasury Secretariat SUSEP Insurance Supervisory Authority TAL Technical Assistance TORs Terms of Reference UNDP United National Development Program Vice President: Pamela Cox Country Director: Makhtar Diop Sector Manager: LiIyL\. Chu Project Team Leader: Rogelio Marchetti ICR Team Leader: Rogelio Marchetti  BRAZIL SUSTAINABLE AND EQUITABLE GROWTH TECHNICAL ASSISTANCE PROJECT IN SUPPORT OF THE FIRST PHASE OF THE SUSTAINABLE AND EQUITABLE GROWTH TECHNICAL ASSISTANCE PROGRAM CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph Table of Contents A\. Basic Information\. vi B\. Key Dates \. vi C\. Ratings Summary \. vii D\. Sector and Theme Codes \. vii E\. Bank Staff\. viii F\. Results Framework Analysis \. viii G\. Ratings of Project Performance in ISRs \. xii I\. Disbursement Profile \. xiv 1\. Project Context, Development Objectives and Design \. 1 1\.1 Context at Appraisal \. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators \. 4 1\.3 Revised PDO and Key Indicators, and reasons/justification \. 6 1\.4 Main Beneficiaries \. 6  1\.5 Original Components \. 7 1\.6 Revised Components \. 9 1\.7 -Other significant changes \. 10 2\. Key Factors Affecting Implementation and Outcomes \. Â10 2\.1 Project Preparation, Design and Quality at Entry - \. 10 2\.2 Implementation \. 11 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization \. 12 2\.4 Safeguard and Fiduciary Compliance \. 13 2\.5 Post-completion Operation/Next Phase \. 14 3\. Assessment of Outcomes \. 15 3\.1 Relevance of Objectives, Design and Implementation \. 15 3\.2 Achievement of Project Development Objectives \. 15 3\.3 Efficiency \. 19 3\.4 Justification of Overall Outcome Rating \. 19 3\.5 Overarching Themes, Other Outcomes and Impacts \. 20 3\.6 Summary of Findings QfBeneficiary Survey and/or Stakeholder Workshops \. 21 4\. Assessment of Risk to Development Outcome \. 21 5\. Assessment of Bank and Borrower Performance \. 21 5\.1 Bank Performance \. 21 5\.2 Borrower Performance \. 24 6\. Lessons Learned \. 26 7\. Comments on Issues Raised by BorrowerlImplementing AgencieslPartners \. 28 Annexes Annex 1\. Project Costs and Financing \. 29 Annex 2\. Component of DPL Loans 1 and 2, and SEGTAP Activities \. 30 Annex 3\. Economic and Financial Analysis \. 36 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 37 Annex 5\. Beneficiary Survey Results \. 40 Annex 6\. Stakeholder Workshop Report and Results \. 41 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 42 Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders \. 44 Annex 9\. List of Supporting Documents \. 45  ,sustainable and iEquitable Growth :Country: [Brazil 'Project Name: Technical Assistance \.iProgram Proje<;tID:P083533 !LICfTF Number(s): IBRD-72530 ICR Date: 06/08/20 11 'ICR Type: Core ICR FEDERATIVE lLending Instrument: APL Borrower: REPUBLIC OF ,BRAZIL IOriginal Total 'USD 12\.lM :Disbursed Amount: USD6\.2M !Commitment: !Revised Amount: "~~!~"~~Il\.~~~~t!L~~!\.~~!1:\.~ \. ilmplementing Agencies: Ministry of Finance Ministry of Justice Ministry of Transport f\1illistI}'orPl~nillg Cotinanciers and Other External Partners: ; Revised 1 Actual Process Date Process Original Date Date(s) \. Concept R\.:eview: 06119/2003 Effectiveness: 10/3112005 10/3112005 ~epr\.~isal: 04/15/2004 Restructuring(s): 12/15/2008 "\.~p\.eE~Y~!~_\._"~__ \. w •• 07 (~~(~~\.~~ \. Mid-term Review: 07/28/2010 C\.I Performanc(!~tillg~y}(;~ Outcomes: ModeratelySatisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: \. Moderately Satisfactory C\.2 \. \. ~~fJl!I~~~lIg~~(:lJIlIl[(IlIl~\.IJ{)rrower PerformllllC!~(byJ(;Jl) \. Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Moderately Satisfactory \. Unsatisfactory  , Q ua Itty 0 fS upervlslon: M'derate I S ' \.c\. " Implementing Moderately 0 y atlsJactoryAgency/Agencies: Unsatisfactory Overall Bank M d t I S f f: t ,Overall Borrower Moderately Satisfactory Performance: 0 era e y a IS ac oryPerformance: ;C\.~Qllality;l!J:_Il~ry;lIl~Ill1pl~ll1entation Performance Indicators Implementation Indicators QAG Assessments Rating Performance ,J!!'llIlY) Potential Problem ProjectNo Quality at Entry None ~~~~~_tim~JY_~~~2: __ ~___~_____~______ , \. ~___ ~ ___ \._,\._ Â(qEAJ:_,_ \. ,\. ______ \. __ __ Problem Project at any Quality of N Yes tiIIle (Y es~(»: Supervision(QSA): _ one -DO rating before iModerately Closin&fInactive status: :Satisfactory Original Actual Sector Co\.«l~Jll~o~ of total Bank financing) Centralg()vernment administration 50 50 General ind1:'stry and trade sector 10 10 General transportation sector 25 25 !:~"Y ll~~j~~!i~~ 15 15 :Theme Cod~Ja~"\.I0()~~otal Bank finan(!illg) : Infrastruc!1:'~tlseryi?tl~~()~pri\.,a!e sect()r~tl"tll(»)JIIlent 13 • !:eg~l institutions for\.a market economy \. 13 13 Other financial and private sector development 24 24 Regulation and competition\.policy 25 25 Trade facilitation and market access 25 25 -Vice President: :;,\.,\._~_~ ___ ~v_~_~ __ ipamela Cox ~_~"_,~,\.,,_~ ___ ""_y__ "'~«\.w_ _ \.~_~~~_,~~\.___u~~~~~_~_~~_"_~~~--'_---'_~'f, 'David de Ferranti __ '~\.~"~~~~V_<_ _ _ ~'W~'_~M ____ '~NÂ~'M_'M~'--"'"~~_~_ _~\."'~"'V~A_'_~~C-; : Country Director: '_~~'_~""' ___ iMakhtar Diop '~"""_~"'~"''-'_'"'~~W''C_'~''''''_~'r~''''~_''' \. ~""~"~,~,~\. ,_, ~~ ,-<__ ,~,'_"'~_A"Â,~,~\."_",_,_",\.",,,,_,",,~~,,,,~,"" 'y inod Thomas __ _'''~''_''\.'~'''_'''''_''''~''~,,>"~,-\.,, ~,~~,_ ' Susan G\. Goldmark ,!,,,,,,c,,,,,,,,,,,,~,"W'"" Pr()ject Team Leader: iRo~elio C\. Marchetti Aymeric-Albin Meyer ICR Team Leader: Rogelio C\. Marchetti I<:::,~\.,~riIIll:1ryJ\lIt~or: Eric Palladini 11 F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of this project was: to assist the Borrower in preparing and implementing the next phase of its national economic growth program\. This project was part of a technical assistance program, the overall objective of which was to assist the Government in implementing its economic growth program, as described in the Minister's of Finance development policy letter dated January 20, 2004 and in the Program Document for the First Programmatic Loan for Sustainable and Equitable Growth (Report n\. 27507-BR)\. The technical assistance program was intended to contribute to the objectives of a strategically selected sub-set of activities of the government's growth program, and thus to sustainable and equitable economic growth, and to poverty reduction\. This was to be achieved by (1) reducing logistic costs, (2) improving the business environment, (3) enhancing the efficiency and depth of the financial system, and (4) increasing innovation capacity\. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) \. Original Target \. Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Critical mass of results achieved\. Value quantitative or 0 'd' 14 o fI6 In lcators\.120f14 d' t 12 of 14 indicators In lca ors Qualitative) Date achieved 12/31/2005 12/31/2008 12/31/2008 12/20/20 I 0 The original success criteria called for satisfactory completion of 14 out of the Comments original 16 KIRs (87\.5%)\. At restructuring 5 were eliminated and 3 added\. Then, (incl\. % ,out of the remaining 14, 12 (86%) are successfully (see Annex 10 for detail achievement) re~ult~)\. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Revised Achieved at Indicator Baseline Value approval Completion or Target Values documents) Target Years Customs strategic plan and plan for re-engineering of Customs clearance Indicator 1 : proceduresliPproved and disclosed (2)\. Value KIR#1 (quantitative None Diagnostic of Brazil: or Qualitative) customs done Date achieved 12/3112008 12/20/2010 III  iSatisfactory Comments Diagnostic of Brazil customs done by World Organization of Customs\. (incl\. % Elaboration of a Customs \.achievement) Mode~i~~i()ll~lall\.~a~d ~p\.,?J1~ell~ve dillso:ostic' \. \. \. Customs strategic plan and plan for re-engineering of Customs clearance Indicator 2 : procedures approved lind ~isclosed (2)~ Value Diagnostic of Brazil: (quantitative None customs done ''?!\. Q~llli~ti,,~~ \. \. _ \. Date achieved 12/31/2008 12/20/2010 KIR#1 Comments Satisfactory (incl\. % Diagnostic of Brazil customs done by World Organization of Customs\. achievement) ;Elaboration of a Customs \.'M()dernization Plan ~1l~~uP'?J1 the above\.~illso:ostic \. \. Port reform plan, dock companies restructuring program, and structure of Indicator 3': ANTAQregulatory accounting system approved and \.disclose~(3)\. KIR#2 The Agencia Nacional de Transportes Aquaviluios (ANTAQ) developed 2 (ofthe Value 3) relevant studies: (quantitative None \.1) Evaluation of :or Qualitative) Port Management Performance; 2) Elaboration of guidelines for the Promotion and Defense of Competition in the ,Ports Subsector\. Date achieved 12/3112005 12/20/2010 Moderately Unsatisfactory\. Comments ANTAQ in the end achieved part of what was expected owing to the fact that it (incl\. % had no Agency Director for some time, which delayed reforms\. achievement) \. Indicator 4 \.: Highway strategic' plan and management reform program approved and disclosed \.<2)\. Value KIR#3 (quantitative None The study was or Qualitative) cO~p'Ic;,~~~~ \. Dat~'''ach-jev~~~f'''' "1"2/3"iI2005'- 12/20/2010 Moderately Satisfactory\. Comments Study done with funding from another Bank loan (PROGEM)\. (incl\. % Date Âachievement) 20-Dec-2010 IV  Action plan for MOT PPP capacity strengthening approved and disclosed, Indicator 5: ,structures of MoT M&E system established, and ANTI concession eva]l1ation models apPruved and disclosed (3)\. KIR#4 ANTI developed Value various important (quantitative None ,activities in 'or Qualitative) institutional \. _\.~~!l~~!l\.iIlg: Date achieved 12/311200S Â]2/20/2010 :Satisfactory\. Comments (incl\. % The ANTI component activities strengthened achievement) ANTI and operationalized norms fo~ oversight of fiduciary and regulatory responsibilities of services conceded\. Indicator 6 : Recommendations for improvement of anti-trust system processes \.__\.~Pp~()y~<!an<!Ai~~losed(l): \. \. \. \. \. KIR#S The Conselho Administrativo de Value Defesa Economica (quantitative None (CADE) , one of or Qualitative) the principal anti- trust \. :()rg~i!llt!()n\.s\. \. \. \. _ \. ,,"\." \. _\. Â12/31/2005 Date,,"\.achieved \. '"__ \." \. \.___\._\._\. __ \. __ \. "\. \. \.•\. _ \._\._" ",_\._v\.",_\. \. \. \. _\.~ ~ Â1212012010 ;Satisfactory\. 'Comments (incl\. % 'CADE strengthened its technical capacity and information systems requisites for achievement) managing anti-trust 1 competitiveness\. Anti-trust processes and systems were also strengthened\. G\. Ratings of Project Performance in ISRs Actual DateISR No\. DO IP Disbursements Archived _ _-_\.,\.- \.•\.•\. \. __ (l!~~~i~!!~Il~t \. J 11106/2004 \._ \. \. Sat~sf~ctory Sat\.isfactory 0\.00 \._\._2 \. _ \.•\.••\.• 04/2S/200S \. _ \._\.- _•\. \. \. \. \. __~~!!~fa~!()ry ~~t!~f~t()ty \. \. 0\.00 3 ]2/23/200S \. Satisfactory \. Moderately Satisfactory 0\.06 4 06/0112006 \. Satisfactory Moderately Satisfactory 0\.21 S 10/26/2006 Satisfactory Moderately Satisfactory 0\.73 6 05/08/2007 Satisfactory Moderately Satisfactory 1\.33 7 12/07/2007 Moderately Satisfactory Moderately Satisfactory 1\.98 Moderately Moderately 8 05/22/2008 2\.46 Unsatisfactory lJns~tisfa<:t()ry 9 12/09/2008 -\. \. \.-~()~~~~~!y\. \. -- ,--_\._,\._-, \. ,- ~"\. \. _\.___~~~rl!t\.~!y\. 2\.88 v  \." \. \. Ul!s\.~ttsfactory\. \. Unsatisfact()ry 10 03/03/2009 Mod\.~ratelyS\.atisfactory\. Mo~~t:atelySatisfactory \. 3\.17 11 \. U!\.!?!~~!>\.~ __ \._~~~~~~~y\.~~~~~fa~!~ \. ~()~~~t~lyS\.atisfac!()ry 3\.97 -",_\.- \. 12 \. \. !>_~~2_~!~~lQ \. ~\.~P~~~~t\.~lyS\.!l~~f\.~C::~~!Y\.:\.M~~~':l!~~Y\.s\.!l!~~f~ory \. \. \." \. _\. ,"\._ \. 4\.67 -, 13 \.Q~!!>~!~!> 1~_\._M~_~~)~ly_ s\.flti~X~(;tol}'\._M~~~~~~ly_S~t~sfa(;t()ry \. 4\.90 H\. Restructuring (if any) \. \. __ \. ISR Ratings at Amount Board }lestructuri!lg Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PD~ Change DO IP inUSD \. -\. millions \. \. "\. \._\. \. \. ,- ~ ~ 12/15/2008 MS MS 2\.88 I\. Disbursement Profile - Original ---- Formally Revised - - Aaual 10 lit C 0 Iii !i vt 5 !S vi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal This Implementation Completion Report (lCR) describes the results of the Sustainable and Equitable Growth Technical Assistance Project (SEGTAP) which supported a programmatic lending operation that was effective through most of President Lula's administration\. The main objective of the Development Policy Lending (DPL) series was to support sustainable and equitable growth in Brazil\. a\. Macro-economic situation at appraisal The Sustainable and Equitable Growth Technical Assistance Project (SEGTAP) was prepared when the Brazilian government had already launched its "Plano Real", and was addressing hyper-inflation and increased internal and external debt\. The "Plano Real", implemented during the Cardoso administration (1995-2003), included strict controls on spending, currency reform, the tightening of monetary policy, and openness to foreign investment\. By the end of the Cardoso administration, "Plano Real" had stabilized the economy, and the government was able to turn its attention to a new agenda that included poverty reduction and various sectoral issues related to economic growth\. I The growth agenda included institutional changes, such as judicial, transport, customs, and infrastructure reforms\. In 2003, the election of Luiz Ignacio Lula da Silva brought a new administration with strong support from social movements\. However the new administration faced low investor confidence, currency depreciation and inflation\. The administration introduced a number of reforms, increased interest rates and cut spending\. As a result, inflation and inflationary expectations were brought down\. The reform agenda focused on (i) changes to the public-sector social security system and the country's system of social assistance transfers, (ii) efforts to improve economic efficiency and (iii) increasing investment and savings\. The focus of the reform agenda were very much aligned with the Bank's Country Partnership Strategy\. The support of the Bank to the reform agenda at the time of transition in the administration was important to improve investor's confidence\. This continuity of fiscal and institutional reform contributed to an average growth rate of 4 percent, approximately, for the decade\. The sustained economic growth, the additional social programs, and general economic stability contributed to an impressive macroeconomic growth record and significant reductions in poverty levels\. By the end of the Lula administration, Brazil ranked seventh among the world's largest economies, government debt was rated investment grade, and the country had become an International Monitory Fung (IMF) creditor\. IWorld Bank\. Brazil; Forging a Strategic Partnership/or Results OED Evaluation\. Washington, DC\. 2004 b\. The Development Policy Lending loans I and II At the time of project design (2003), the Bank's practice was to provide targeted technical assistance to specific sectors with growth potential through programmatic Development Policy Lending (DPL) accompanied by technical assistance loans\. To that end, the Bank planned a series of three DPLs supported by an APL series of TA loans\. Two DPL loans (First and Second Programmatic Loan for Sustainable and Equitable Growth loans IBRD-72180 and IBRD-73860) were approved and implemented (see implementation completion ratings below)\. The third planned DPL was not pursued, since the country's fiscal position had improved considerably\. For the same reason, the second DPL was cancelled after partial disbursement and only one TA loan was approved to accompany the DPL series\. These two DPL projects targeted four topics: (i) logistics and transport, (ii) the business environment, (iii) the financial sector, and (iv) innovation\. The objectives of SEGTAP were determined by the objectives of the DPL series, which gave the reason of being for the loan\. The POOs of the DPLs were listed in" the respective document with identical wording to those of SEGTAP i\.e\. "support the sustainable and equitable economic growth potential"\. BlIZilrilst ~Lollifbr: isustaUable ud "----------------------""\.-\.~~~\.~~-\.---~ "" 1Cfr! ~Rb~,>,"" }~RD~ 12~8o__ CR Type ~ ______\.f:\.EN ICR ____,,_\. __~ _~_: GOVERNMENT or __________ B~~ ________\._\.__, IUSD516,2M """"'_< _ _""" __ N""' _ _ _ _' ; ~~----_r----~\.----~------------------~: Secaad Pmcrmmatic Sustaimble ud IE itabJe GroNth LOlli" IBRD-73850 CenICR IBRAZILIAN IFEDERAL GOVERNMENT--M!' IUSD 150\.CIvI 2  ~~\.~~~~\.~!Jr\.t\.J:":~~~\.~~~\.~:\.~~~\. \. \. \. ~!:~\.___\.___\.""~\. _\. _\."_\. __ \._\._\.__ \. \. de~1!~\.~_~~~~\.~\. __\. _ _\. \. \. \. \. _ \. ___ \. Risk~P~Io~!~_~~\. ____\.__\. __\._ \. \.___ \.~1!\. __ \._\._\." \.__ \.__ \. __ \. _ __\. ___"\._\. __ J ~mc Pe~~______~______ \.~ \.--\.-------~\.--\.----\.--------1 BCDM'er PeJf'armm:e atisiic!my l ~~~~~\.IiQw\.~~I:~===~:=~==~:= 0u1l:amas ' \. Risk to Develo ntOutao_ The Sustainable and Equitable Growth Technical Assistance Project (SEGTAP) was approved on July 8, 2004 and became effective on October 31, 2005 due to the lengthy Senate approval process\. SEGTAP's approval followed the first OPL loan as part of an effort to facilitate progress towards and compliance with indicators and programs targeted by the OPL loans\. The PAD further contemplated a second-phase Adaptable Program Loan (APL) to be triggered upon "satisfactory project implementation and satisfactory contribution of the project to the policy development and dialogue on the implementation of Brazil's economic growth program\." This ICR is set in the context of the overall program of loans, including the OPLs\. The two OPL-funded projects were rated moderately satisfactory because significant legal and institutional changes were implemented in the original four areas many of which had measurable development inputs\. However, because there were no follow-up activities from a third project, some of the initially planned reforms were not completed\. 2 Both OPLs were rated moderately satisfactory when considering outcomes\. c\. Rationale for Bank Assistance The Bank's Country Assistance Strategy (CAS) of Oecember 2003 saw a role for the Bank in supporting the government's growth agenda through a series of OPLs that would provide the Government with the funding needed to move forward\. As part of the engagement with the Government with the OPL a set of companion programmed loans that would provide the necessary technical assistance in key areas of the reform\. The CAS identified high logistics costs and inadequate transport infrastructure as having major negative impacts on Brazil's competitiveness\. In addition, the CAS identified a number of constraints affecting the country's business environment (administrative costs, regulations, anti-trust enforcement, and corporate insolvency) and financial system\. Finally, the CAS asserted that an improved innovation environment (such as links between universities and the private sector and an innovation law)\. would enhance Brazil's growth agenda\. The Bank's program, as described in the CAS, sought to address these and other challenges, beginning with the OPL loan series and related technical assistance \.loans\. 3 2 World Bank; Implementation, Completion, and Results Report for a Series of Programmatic Loans for Sustainable and Equitable Growth - Loans I and II, Report # ICR0000972, p\. 7\. \. 3 World Bank\. Country Assistance Strategy 2003-2007 for the Federative Republic of Brazil in Support of A More Equitable, Sustainable, and Competitive Brazil, 2003\. 3 The DPL series and the companion SEGTAP were then aligned with the vision of the CAS\. The two DPL loans (#71280-BR and #73860-BR) contributed to this progress in four areas: logistics and transport, the business environment, the financial system, and innovation\. In keeping with this line, SEGTAP's Project Appraisal Document (PAD) recognized Brazil's recent "deep macroeconomic reforms," but pointed out that these first-generation reforms were not enough, in the absence of other microeconomic and institutional reforms\. Brazil's unemployment rate was high and its growth lagged behind other Latin American economies\. Despite liberalization, trade remained low compared to other large economies\. Privatization in transport and electricity had not generated sufficient competition or expansion of service to support strong economic growth\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators The project's objective which was aligned with the DPLS was defined "to assist the Borrower in preparing and implementing its economic growth program\." The program called for an Adaptable Program Lending (APL) series of Technical Assistant loans to assist in implementing the program\. The main objective of the related programmatic DPL lending was to support sustainable and equitable growth in Brazil\. The program would raise Brazil's sustainable economic growth potential, thus increasing employment and reducing poverty\. The T A loans were designed to be flexible (PAD pages 7 - 8)\. New activities consistent with the growth agenda could substitute other activities that had been completed or were no longer needed\. The inclusion of new activities was to be subject to, among other considerations, an official request from the Borrower\. The activities consisted, among others, of the provision of technical assistance and training services, office equipment, and software to the project beneficiaries to carry out activities needed to achieve the project's objectives\. The technical assistance program was to help key Government entities in developing the capabilities needed for preparing and implementing its economic growth program of the Borrower, Additionally assist in moving forward micro-economic policy and institutional reforms, and be ready for the implementation of the next phase of the growth program\. Specifically, the TA program focused on the needs of four Ministries to move forward five secondary objectives key to sustainable and equitable growth: • Improve productivity and facilitate trade by reducing logistics costs, increasing the effectiveness of customs, reducing port costs and delays, reducing road transport costs, and promoting efficient multimodal transport options; • Improve the business environment, by strengthening the regulatory framework for infrastructure, anti-trust enforcement, corporate insolvency resolution, and by reducing administrative costs to\. businesses; • Enhance the efficiency and depth of the financial system, by increasing competition in the banking sector, fostering mobilization of long:-term capital through strengthened markets for risk and stronger institutional investors in the insurance sector, and improving access to financial services; • Increase Brazil's technological innovation capacity to transform knowledge into productivity gains, by increasing the effectiveness of public research and development (R&D), improving the incentive regime for private R&D, and structuring/managing the Clean Development Mechanism (CDM); and  • Support reforms and institutional measures to achieve other objectives of the Government's growth program, such as deepening trade integration, reducing tax distortions, and strengthening labor markets\. Within the first four secondary objectives, the PAD identified the following results: (i) Reduce logistics costs: • Strategic plan defined for Customs' modernization, clearance procedures reengineered (with time release measurement in place), automation of Customs' systems improved, and port and cargo security enhancement plan approved; • Port reform and dock companies restructuring plans prepared and approved; and • National Waterborne Transport Regulatory Agency (ANTAQ) regulatory accounting and performance monitoring systems established; • Highway strategic plan and management reform program prepared and approved; and • Public-private partnership capacity and program monitoring and evaluation system established in the Ministry of Transport; and National Land Transport Regulatory Agency (ANTT) concession evaluation models operational\. (ii) Improve the business environment: • Anti-trust system capacity strengthened through improved processes, systems, and training; • Bankruptcy framework strengthened through appropriate regulations and training of judges and court personnel; and • Performance assessment of judicial system in resolving economic disputes in public and private sectors completed\. (iii) Enhance efficiency and depth of the financial system: • Diagnostic studies and action plans prepared for reducing the cost of credit and reducing financial spreads through studies on fmancial system competition; • Regulations and procedures in place to ensure application of anti-trust law in the banking sector; • Studies undertaken on financial access for the poor which includes an evaluation of recent measures adopted; and • Action plan developed for strengthening insurance regulations and supervision\. (iv) Increase technological innovation capacity: • Ministry of Science and Technology's sector funds monitoring and evaluation system established and reform plan approved; • Capacity for appraising and certifying clean development mechanism projects in place; • Pilot internet technology/social inclusion project completed and evaluated; and • Ministry of Science and Technology's strategy to foster nanotechnology industry growth approved \. \. These intermediate results could be adjusted in the course of project implementation\. 5  1\.3 Revised PDO and Key Indicators, and reasons/justification The Project objectives were originally designed taking into consideration: (i) the high demand from several agencies of the Borrower involved in the execution of the Program; (ii) the limited fiscal space to accommodate a larger loan for technical assistance; (iii) an agreement reached between the Bank and the Borrower in relation to the importance of a long term relationship aimed at addressing key issues affecting Brazil's growth\. Therefore, the Project aimed at benefiting four ministries (Finance, Justice, Science and Technology and Transport)\. At mid-term, the supervision team reviewed the progress of the components and recommended a formal restructuring, which was approved in December of 2008\. The World BankÂand the government also agreed to a two-year extension of the closing date, but a fiscal constraint in 2009 (a two-year loan extension would have required a special budgetary approval) led to a one-year extension\. Subsequently, after the first year, the loan was extended an additional year, meeting the Borrower's request\. At the time of the restructuring the initial intention of additional Adaptable Program Lending (APL) was abandoned\. The restructuring sought to "strengthen implementation arrangements and facilitate timely disbursement" of funds\. It also: (i) added a new component on fiscal and public resource management; (ii) strengthened the financial component with new activities to be developed by the stock exchange regulator, the Securities and Exchange Commission (CVM); (iii) reassigned project implementation duties to the Treasury Secretariat, in the Finance Ministry; and (iv) eliminated: a component on innovation and technology 4 • These modifications did not change the environmental classification\. The three new indicators listed below were added to the existing indicatorss: • The development by the Ministry of Planning of a taxonomy of the existing models of public institutions inCluding, inter alia, their funding, financial and administrative internal controls, accountability, and labor regimes; • Preparation of an Operationalization for Economic Co-operation and Development (OECD) peer review on human resource issues in Brazil; and • Operationalization by the Treasury Secretariat of specific processes (risk assessment, planning, strategies, auctions, budgetary and financial programming) for public debt management completed\. 1\.4 Main Beneficiaries Direct beneficiaries were the four ministries, secretariats, agencies, and authorities involved in the project\. In the Finance Ministry, the beneficiaries included the Customs Administration (SRF), the Economic Policy Secretariat (SPE), the Insurance Supervisory Agency (SDSEP), the Economic- Monitoring Secretariat (SEAE), and the stock exchange regulatory agency, the Securities and Exchange Commission (CVM)\. In 4 Disbursement of the component for the Ministry of Science and Technology were stalled because of the Ministry's insistence on sole source procurement\. As this was not consistent with Bank's rules, the Ministry opted to drop out of the program\. S Due to the elimination of the Ministry of Science and Technology, the associated five indicators were not to be tracked, but were not eliminated from the ISR system\. 6 the Justice Ministry, the beneficiaries included the Economic Law Secretariat (SDE), the Judicial Refonn Secretariat (SRJ), and the Economic Defense Council (CADE)\. In the Transport Ministry, the beneficiaries included the National Transport Policies Secretariat (SPNT), the Transport Infrastructure Department (DNIT), the Land Transport Regulatory Agency (ANTI), and the Water Transport Regulatory Agency (ANTAQ)\. In the Science and the Technology Ministry (MCT), the beneficiaries were the Executive Secretariat (SE), the Strategic Scientific Development Policies Secretariat (SEPED), and the Strategic Development Policy Secretariat (SETEC)\. After restructuring, the Science and Technology Ministry was removed, while the Ministry of Planning (MPOG) and the Treasury Secretariat (STN) were added\. 1\.5 Original Components The project provided technical assistance, training services, office equipment and software to the four ministries, to carry out activities needed to achieve the project's objective: Below there is' a summary of the components\. Ministry of Finance Components (US$4\.3 million) a\. Customs Administration (US$2\.98 million) The component consists of the first set of activities needed to implement the recently approved customs modernization strategy: (i) Strategic plan for Customs' modernization (ii) Reengineering of Customs procedures and integration of systems (iii) 'Port security improvements b\. Secretary of Economic Policy (US$0\.42 million) The component consisted of studies for the efficient development of financial markets and the reduction of spreads arising from weak creditor rights\. c\. Secretariat for Economic Monitoring - SEAE (US$O\.3 million) The component sought to strengthen SEAE allowing a more efficient involvement of the Secretariat in the analysis of the economic impacts of anti-trust cases\. d\. Insurance Supervisory Authority - SUSEP (US$O\.6 million) The component was set to provide the platfonn for the institutional development of SUSEP and the continued improvement in the regulation, supervision and oversight of the insurance sector\. Ministry of Justice Component (US$ 1\.61 million) a\. Secretariat of Economy Law (US$O\.77 million) The component was designed to provide support to SDE prepare for the implementation and enforcement of the new bankruptcy law\. b\. Secretariat of Judicial Refonn (US$O\.24 million) The component was set to help design improvements to the judicial system to resolve economic disputes in the public and private sectors (e\.g\. to collect bad debts), and to 7 enforce propertyÂrights and contracts\. The aim was a more reliable judicial environment in which business would take place more efficiently\. c\. Anti - trust Council - CADE (US$O\.60 million) The component was devised to help strengthen the recently-created Economic Defense Council (CADE) efforts to improve the Brazilian anti-trust system\. Ministry of Transport Component (US$3\.14 million) a\. Secretariat for National Transport Policies (US$O\.36 million) The component was structured to support the development of the Transport Ministry's integrated, long term planning and project financing capacity\. b\. Administrative Secretariat (US$0\.36 million) The component was structured to support Government efforts aimed at improving the operational performance reducing the average cargo transit time through ports for both imports and exports\. c\. National Department for Transport Infrastructure - DNIT (US$0\.40 million) The component was developed to strengthen the DNIT's capacity to manage federal road network\. d\. National Land Transport Regulatory Agency - ANTI (US$I\.07 million) The component was arranged to help strengthen the recently-created agency and to improve the regulatory framework in the road, railways and interstate bus transportation sectors\. e\. National Water Transport Regulatory Agency - ANTAQ (US$O\.95 million) The component was designed to strengthen the recently-created agency, as well as improve regulatory framework for ports and water transportation\. Ministry ofScience and Technology Component (US$2\.49 million) a\. Executive Secretariat (US$O\.95 million) The component was devised to help the Ministry: (a) strengthen its capacity to improve the efficiency of public expenditures in the sector, and (b) strengthen Brazil's innovation framework\. b\. Secretariat of Strategic Scientific Development Policies (US$O\. 71 ) The component was arranged to support the strengthening of the Ministry's capacity to structure and manage the clean development mechanism in Brazil\. c\. Secretariat of Social Inclusion (US$O\.65 million) The component was structured to support Ministry's efforts in fostering development in poor communities, providing access to computers and Internet to groups of small producers for which such access would allow them to generate significant productivity gains\. d\. Secretariat for Strategic Development Policy (US$O\.18 million) 8 The component was devised to support the Ministry's efforts to foster the development of nanotechnology industry in Brazil\. 1\.6 Revised Components At restructuring, the supervision team worked extensively with the Borrower to define an updated set of activities that, while remaining within the original intent and scope of the Project, would improve disbursement and better meet the current needs of the Government\. New Intermediate Results Indicators (IRIs) and activities were added\. The new activities fit well into the broad PD~ and involved important previous Bank clients with relevant work programs - and with whom the Bank desired to maintain an active dialogue\. The new activities were: • Strengthening the regulation of the Securities and Exchange Commission (CVM, Brazilian SEC) to develop risk based supervision and strengthening management systems\. • Strengthening debt management and public resources management in the Ministry of Finance, through further development of the public debt information system\. This new component would contribute directly to the strengthening of the Borrower's public resource management and indirectly to improving the business environment\. • Strengthening human resource management and other administrative and budget reforms in the Ministry of Planning, Budget, and Management (MPOG), including support for budget reform and an assessment of the Government's human resources management system\. • Strengthening customs administration reform within the Ministry of Finance\. The following table shows 'by component (ministries), activities and the amount as they relate to each of the loan secondary objectives after the restructuring was implemented\. Table 2 Secondary objectives by Ministry Enlta1M Strengtben Reduce Improve Business \. \. \. Emci~~e~tlnd Public Ministr'! Logistics Costs \. \. \. \. Ibviromnept Dept~ Ple ~~~uree Fina m M\.ltilgement U$Stnillioo USSmmiOli US$mmion tmmfUion Finance 2\.98 0\.5 1\.82 2\.00 7\.30 Justice 1\.20 0\.15 1\.35 Transport 2\.24 0\.40 2\.64 Planning 0\.5 0\.71 0\.20 & Budget Total 5\.22 1\.70 2\.17 2\.50 12\.00 (*) The US$0\.45 million that was unallocated before the restructuring was used to absorb the amount spent by Ministry of Science and Technology and the rest was reallocated among components\. (*) IfUS$O, 12 million of front end fee is included the amount is US$12\.12 million, 9 1\.7 Other significant changes The second extension (December 2009) was intended to solve the budgetary time constraints the Government experienced in the first extension, when a longer time period could not be accommodated\. The extension also provided the time to complete procurement and project work\. An important change to improve project implementation and increase the pace of disbursements was to move the Project Coordination Unit (PCU) from the Ministry of Finance Economic Policy Secretariat (SPE) to its Treasury Secretariat (STN)\. Because participating agencies had no prior experience in Bank project implementation, the proactive role of the Project Coordination Unit (PCU) was critical\. The restructuring provided the opportunity to address this problem\. The sm was a good choice because it had recently completed a large debt management component in the Fiscal and Financial Management Technical Assistance Project (Loan 4604-BR) and it was a frequent interlocutor with the Bank\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry - The Project was designed to support the activities developed under the DPLs program\. As can be seen in Annex 2, the links among the two DPLS and SEGTAP were well aligned and structured\. Project design was based on previous Bank experience and given the complexity and broad scope of activities, a dual project coordinator responsibility together with project coordinators in each participating Ministry was recommend\. The design team recognized the complexity of the supervision and tried to systematize the monitoring process by tracking a composite PD~, reflecting accomplishments of the four ministries\. A\. Assessment of Project Design Implementation was the responsibility of two Project Coordination Units (PCUs), one in the Economic Policy Secretariat of the Finance Ministry and the other in the Executive Secretariat of the Ministry of Science and Technology\. There were also three project coordinators (PCs) in the National Department for Transport Infrastructure (DNIT), the National Agency for Land Transport (ANTI) and the National Agency for Waterborne Transport (ANTAQ)\. The Finance Ministry delegated procurement responsibilities to the United Nations Development Program (UNDP)\. The PAD advocated a decentralized implementation arrangement as "key to ensure satisfactory implementation performance\." However, this support for dissimilar activities across a large number of agencies in a decentralized management structure resulted in implementation problems for the project\. Few agencies had recent and relevant experience working with Bank-financed projects\. This, combined with the relatively small amounts of funds and relatively high transaction costs, led to low disbursement rates\. The PCU in the Economic Policy Secretariat was not able to manage the overall project, since it lacked the status and leverage to push the ministries and agencies to implement their programs efficiently\. Centralizing greater authority in the PCU or the ministries might have been viable alternatives\. However, to the credit of the Bank project team 10 this issue was recognized and actions were taken\. During the final two years, after the project's extension, the PCU was moved to the Treasury Secretariat in the Ministry of Finance\. B\. Ad~quacy of Government's Commitment The project was designed to support a government facing specific challenges\. However, by the time of effectiveness in 2005, the country had already shown signs of economic growth that were unprecedented and could not have been predicted\. By 2010, Brazil's economy had become the seventh largest in the world; its government debt had improved to investment grade quality; and it was an IMF creditor\. The budget support represented by the DPLs and the project was no longer as critical\. In this new scenario, the implementing agencies used USS2\.0 million of their own resources when they were not able to meet Bank procurement requirements\. This demonstrates the high degree of relevance of key activities supported by the project\. This also demonstrates adequate Government commitment\. C\. Assessment of Risks The PAD rated the project as "high-risk, high-reward\." The two main risks were insufficient budgetary allocations from the government and inadequate supervision from the Bank\. The PAD recognized that the project was complex, given the large number of beneficiaries and activities and the inclusion of diverse sectors\. The document stated that successful implementation would provide a "base for a continuous, extensive and integrated dialogue on economic growth" with key stakeholders within the Government\. To that end, the project would require a "strong commitment," "effective project supervision" and "adequate resources" from the government\. In response to this requirement, the project organized a ''joint coordination mechanism" to evaluate implementation progress, develop action plans to address major issues, and reallocate resources from weak to stronger government ministries and agencies\. Procurement arrangements were addressed in the Project Appraisal Document but, despite the "high risk" rating, there was no proposed action plan\. In 2003, it seemed reasonable to assign project management to the existing Project Coordination Units (PCUs) and project coordinators (PCs) in the participating ministries\. However, capacity in the ministries and agencies was weak, given a lack of experience with Bank procurement requirements and practices\. Project preparation did not fully recognize the degree of risk posed by working with multiple government ministries with little experience with procurement and project management and monitoring\. As such, training for the PCUs and PCs was not contemplated\. 2\.2 Implementation The project was declared effective on October 31, 2005\. There were early impressive successes in the areas of customs, transport and road networks that led to reductions in logistic costs\. The Units responsible for restructuring the administrative procedures and developing regulatory framework for railroads and buses as well as for the valuation models for the concession supervision system quickly hired the key consultants and began to implement activities\. The same can be said for those counterparts responsible 11 for improving business environment by strengthening infrastructure regulation reinforcing the legal and institutional framework for Private Public Partnerships (PPP)\. Implementation Status Reports (ISRs) in 2006 indicated the loan had a high likelihood of achieving development objectives given that (i) the Government growth agenda was on track, (ii) a number of project beneficiaries had undertaken most of the background work necessary for implementation of a first phase of project activities, and (iii) many of them were even utilizing significant amounts of their own resources to initiate activities\. Since the four-year project was only declared effective in October 2005, a midterm review was undertaken in November 2008, discussions were timely regarding the need to restructure and extend the project closing date, as some project activities were delayed and the Government indicated interest in additional activities\. The 2008 restructuring was significant, justified and fit in well with SEGTAP's PDO\. The demand-driven reallocation to align the activities of the loan with the new priorities of the Government was consistent with the flexible structure that was envisioned for the loan\. In addition, the supervision team worked with the Borrower to provide additional support to those ministries and agencies that had shown implementation capacity and could boost disbursements over the two year extension\. To facilitate SEGTAP implementation, an experienced consultant was retained in Brasilia\. The consultant was an important player in keeping the project moving forward and advising the new Bank task managers of political and operational matters\. The problems of slow disbursement and poor performance of some of the participating agencies might not have had ready solutions at the time, given the evolving political economy and project design\. Procurement was an issue requiring sustained attention\. Procurement was a major contributing factor in project delays due to coordination challenges\. For example, the Ministry of Science and Technology withdrew from the project over a single disagreement regarding a sole source contract\. The "Procuradoria Geraf' ruled against the Department of Transport Infrastructure for failure to follow the national Law #8666 on procurement\. Procurement problems also included difficulties working with UNDP, which complicated implementation of the new components following restructuring\. In several instances there was disagreement as to which procurement rules were to apply (UNDP or the Bank), for example with the purchase of computer equipment\. In the four-month grace period following loan closure, a case arose regarding information technology (IT) purchases and consultant contracts valued at around US$500,000, which had not followed proper Bank processes\. There were costs to the use of the "flexible design"\. Monitoring was difficult, with so many key implementation results and intermediate output indicators\. In addition, some were not adequately defined, making it difficult for the ISRs to provide adequate progress on all the indicators\. The ISRs focused heavily on implementation issues such as procurement and disbursement\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Project design was based on previous Bank knowledge and followed the experience available at the time for decentralization of implementation arrangements\. The PAD 12 recognized that past experience in Brazil and elsewhere with centralization of implementation arrangements had caused tensions between the government entity responsible for implementation and the other entities with lower accountability\. The design team recognized the complexity of the supervision of a decentralized arrangement, and tried to systematize the monitoring process by tracking a composite PD~\. The ISRs were structured to track a single composite PD~ over the life of the loan: "critical mass of 14 out of 16 Key Intermediate Results achieved\." Results Indicators were described as "(an unspecified) number of related activities funded under the project satisfactorily completed\." Results Indicators were described as "corrective measures during activities' implementation for quality assurance and timeliness of products to be delivered\." Further description included "Reallocation of funds from non-performing to performing activities / entities\." The activities aligned with the DPL series however, were not detailed in the Results Framework\. The original project target of achieving 14 KIRs was not adjusted during restructuring\. Five KIRs associated with the Ministry of Science and Technology activities were no longer relevant when the component was officially dropped at restructuring\. Three new indicators were added (regarding planning, human resources, and public debt management), resulting in 14 KIRs\. The original criterion for success called for the successful completion of 14 out of the original 16 KIRs\. As a result it was unclear how many KIRs would satisfy the equivalent of the original project compliance target of 14 out of 16\. Monitoring and Evaluation (M&E) and, subsequently, the ISRs process, were complicated due to the issues mentioned above\. The complexity of the project design, with four participating ministries, made tracking costs difficult\. The cost accounting system tracked costs by ministry and not by KIR or activity\. In some cases UNDP and non-UNDP transactions needed to be aggregated and reported\. The project had\. two distinct phases, including (i) the design and problematic first implementation stage, which also saw some impressive gains in customs, transport and logistics costs, followed by (ii) the phase of restructuring and smoother implementation\. Depending on the phase being evaluated, the outcomes and performance of key actors (the Borrower, the Bank and the implementing agencies) are very different\. These issues will be further reviewed in the respective Bank and Borrower performance\. Nonetheless, the relative success of the two DPLs supported by this TA Loan show the significant value added provided to the four ministries\. 2\.4 Safeguard and Fiduciary Compliance Safeguards\. There were no safeguard issues\. The project was categorized as a "C\." There were no direct environmental implications\. Fiduciary Compliance There was one covenant which required annual progress reviews and adjustments where needed\. The covenant was rated "in compliance" every year and the Progress Reports were useful\. 13 Financial Management (FM) was rated moderately unsatisfactory in implementation status reports (lSRs) from June 2006 to December 2007\. A June 2007 annual audit detected several errors and incorrect actions executed by the project\. Based upon this report, the task manager sent a letter to the project coordinator suggesting urgent measures to correct flaws\. The letter pointed out that the FM rating was unsatisfactory because: (i) an action plan was not observed; (ii) a supervision mission was postponed because of a lack of PCU structure at Treasury; (iii) staff were not formally assigned to the project; (iv) weak internal controls; (v) a need for an updated Operations Manual to reflect the new PCU; and (vi) the delay in replying to the Bank's review letter pertaining to the 2006 audit report\. After the Bank's audit review letter was sent, the project coordinator took corrective measures to solve the issues\. A financial management supervision mission in 2007 reviewed the situation and found that most issues were resolved and the remaining ones were in the process of being resolved\. From there on, FM arrangements were rated moderately satisfactory in all ISRs until the closure of the loan\. The involvement and experience of the Government Audit Department played an important role in keeping the project aligned\. The Audit Department was involved in many other activities related to the Bank and was quite knowledgeable about both Bank and Government procedures\. The approach utilized during the audits was very helpful in addressing the discrepancies between Bank's and Borrower's procedures\. 2\.5 Post-completion Operation/Next Phase There are no transition arrangements for a follow-up project\. Although the PAD had envisioned a possible APL series, significant changes in circumstances and the impressive rapid Brazilian economic growth made this less attractive and appropriate\. In fact, the issue was not included in the restructuring and there is no project under implementation or in the pipeline to carry on SEGTAP interventions\. Nevertheless, SEGTAP's work is very important for the government agencies, and they are using their own resources to advance the agenda and continue many of the activities that were initiated by the project\. These agencies include, inter alia (i) the Ministry of Planning on strategic planning and completion of studies relevant to its organization, (ii) the Securities and Exchange Commission (CVM) on deepening of capital markets, (iii) the Treasury Secretariat on the final phase of managing government debt and (iv) the Justice Ministry's Conselho Administrativo de Defesa Econ6mica (CADE) on refinement of the Insolvency Law\. Brazil's recent growing pains pose significant challenges and provide important opportunities for more lending and technical assistance\. Useful follow-up might begin with a dialogue with the new administration regarding useful public sector management reforms and how the Bank can help\. One option could be a large judicial sector loan to strengthen some reforms\. In addition, there is much more to be done in areas first developed by SEGTAP, such as debt management in the Finance Ministry and in the Planning Ministry\. Other significant opportunities include strengthening governance and public sector management, supervision of gov~rnment pensions, innovation, and sub-national fiscal management, to name a few\. 14 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation Rating: Moderately Unsatisfactory SEGTAP was developed to support and extend reforms begun under the first DPL project\. Its design faithfully reflected the DPL prior conditions and was aligned with the Brazil's growth agenda, as described in the Bank's Country Assistance Strategy (CAS) of December 2003\. The CAS called for a focus on creating a country that was "more equitable, sustainable, and competitive\." The CAS saw a role for the Bank in supporting the government's growth agenda through programmed loans that would provide the necessary technical assistance\. The initial DPL series and SEGTAP were designed together to reach those goals by supporting the government's "efforts toward higher productivity and investment\." The participation of four ministries\. the KIRs and 101 activities were driven by the DPL series\. The definition of the PD~ as facilitating the implementation of the DPL growth agenda resulted in the participation of four ministries and a high number of indicators to match identified prior actions in the DPLs\. The overall objectives remained relevant throughout the implementation period, and the DPLs and SEGTAP helped consolidate progress made by providing technical advice, training, and equipment to participating ministries and agencies\. Underlining the continued relevance of the SEGTAP objectives and the importance of the Bank's support, many of the project's activities, that had not been finalized utilizing Bank's funding, were concluded by the ministries utilizing their own resources\. The\. Bank's teams supervising the loan provided significant guidance and the local consultant in Brasilia provided essential continuity and assistance to beneficiary entities and made up, to some extent, for PCU weakness\. Also, transport and logistics activities were achieved fully within the original project schedule\. However, given the 51 percent disbursement rate, procurement problems overall implementation was not strong\. 3\.2 Achievement of Project Development Objectives PD~ Rating: Moderately Satisfactory The Project Development Objective was largely met\. Many of the objectives (KJRs) and activities were partially or fully met through efforts funded either by SEGTAP or the Borrnwer's own resources, or both\. These activities included a number of studies and reports, training and reorganization of agencies or processes, that improved existing capabilities\. With improved capabilities these agencies were able to carry out an important agenda that relates to the development objectives of the DPLs and SEGAP\. The list below describes the progress made by the different Ministries as they relate to the different secondary objectives\. 15 Reduce Logistics Costs - Satisfactory: • Customs strategic plan and plan for re-engineering Customs' procedures approved and cleared\. Port reform plan, dock companies restructuring program and the structure of the ANTAQ regulatory system approved and disclosed\. • Highway strategic plan and management reform approved and disclosed\. • Action plan for the MoT PPP capacity strengthening approved and disclosed, structures of MoT M&E system established, and ANTI concession evaluation models approved and disclosed\. Selected examples: • Customs Administration (SRF) completed reengineering of procedures, systems, risk management, bonded warehouses, and broker procedures\. The government simplified export procedures and reformed the clearing systems and the management and information systems of customs\. The expected outcome of reducing release times was achieved, which now can be done in 3 days (previously 5 days)\. An importer can clear customs in three days and an exporter can clear customs in about haIfa day (previously it took two days)\. According to Doing Business 2010, the time needed to complete an export decreased from 18 days in 2007, 14 days in 2009 to 13 days in 2010\. Similarly, the number of days to complete an import decreased from 24 days to 19 days and to 17 days during the same sequence of years\. • As part of the reform agenda, the government created the Secretariat for Ports (SEP) and defmed policies and guidelines for port development\. The Decree 6,620 issued in 2008 defines policies and guidelines for the development of the port sector are important steps setting up the stage for ports reform and infrastructure rehabilitation\. Three studies were conducted to support the reform\. Ports have improved their operations and port handling times have fallen from 13\.8 days to four days for imports and from 8\.4 days to three days for exports\. • The project completed an environmental diagnosis for complete port reform, with action plans and recommendations\. Port and cargo security improvements and compliance with international norms (ISPS) have also been completed\. The reform of ANTAQ was initiated but it is yet to be completed, turnover in management did not help in the consolidation of the ref~rm\. • The government reorganized the Federal Transport Administration and transferred the remaining trunk roads from the federal network to state management\. Transport times on roads have fallen and road conditions have improved\. The federal road network has passed the 30 percent target for output- based maintenance contracts\. • The Transport Ministry developed its capacity in long-term planning and project financing\. Developed system to manage road work: Sistema de Gestiio dos Servifos de Fiscalizafiio - SIGFIS\. • The Monitoring and Evaluation (M&E) system of transport projects and programs was completed\. It was designed to reduce transport costs on federal roads\. This included information technology and consolidation of policies and standards for road maintenance and rehab contracts\. 16  • The government restructured railways concessions and made progress in the regulation of the railways sector, although it has not yet made operational the Inter-Ministerial Committee for the Integration of Transport Policies\. The work on PPP was initiated, but it is yet to be finished with Units' other resources\. • The National Land Transport Regulatory Agency (ANTT) upgraded land valuation models and provided hardware and software\. It developed procedures and systems for efficient concessions supervision and trained agency staff in valuation models and strategies\. It also elaborated financial-economic equilibrium clause rules in concession contracts valuation models\. • The ANTI also completed the regulatory and normative framework for land transport including multimodal transport\. It also developed uniform rules for concessionaires and permit holders including information and data base upgrading\. Improve Business Environment - Moderately Satisfactory: • Recommendations for improvement of anti-trust system processes approved and disclosed\. • Action plan for strengthening of corporate insolvency law framework approved and disclosed\. • Recommendation for improved performance of judicial system in resolving economic disputes in public and private sectors approved and disclosed\. Selected examples: • The Anti-trust Council reformed the information system, reviewed procedures and training needs, and acquired hardWare and software expansion\. • The Economic Law Secretariat (SDE) implemented important training for judges and provided hardware and software\. A technical assistance program trained judges in bankruptcy court proceedings\. The two courses trained 80 judges, who transferred their knowledge to their respective courts and colleagues\. • The Judicial Reform Secretariat (SRJ) improved the courts system and conducted cost-benefit studies\. Approval of the guidelines to simplify and integrate the registry and legalization of firms and creation of the National Network for Simplifying Registry and Legalization of firms congruent with Law 11\.598/2007 • Two studies on ways to improve judicial actions in economic disputes were done and in addition a performance survey was prepared\. The survey is to include recommendations for improvement\. • The Economic Monitoring Secretariat (SEAE) modernized its procedures and strengthened capacity to review recommendations and resolve issues related to on-the-job training\. It also financed a study to upgrade procedures to open and close firms\. 6 Despite these successful refonns, Brazil is still among the countries with the most procedures and days required to start a business\. The Doing Business 2011 report, which used data from Sao Paulo, can be found at www\.doingbusiness\.org\. 17 Enhance Efficiency and Depth o/the Financial System - Moderately Satisfactory Action plans approved and disclosed for: • Promotion of compe~tive structures in banking sector • Facilitation of access to credit • Development of capital markets and institutional strengthening of SUSEP Selected examples: • The Economic Policy Secretariat (SPE) completed studies for the efficient development of financial markets and for improved enforcement of creditor rights\. One study was a judicial analysis of pUblic-private partnerships\. The other study focused on the micro-economy of social transfer programs\. • SPE developed regulation of payroll deduction for loans was introduqed to facilitate access to credit to low income groups\. • The Agency developed studies for improved financial sector competition, access to credit, and capital markets development\. • Securities and Exchange Commission - CVM (added at restructuring) developed a method to assess the costs and benefits of regulating capital market, and created training materials for basic education program aimed at increasing the level of financial education of Brazilian investors\. Initiated the move to Risk Based Supervision\. , • The Insurance Supervisory Authority (SUSEP) was strengthened with a development plan in regulation, supervision, human resources, and infrastructure\. It developed circulars, manual on procedures, training\. It also was supplied with hardware and software\. By the beginning of the second extension, SUSEP had already implemented the majority of the planned activities\. Due to changes in priorities, the strategic planning and neural networks studies were canceled\. Increase Innovation Capacity (removed at restructuring, 2008) Strengthen Public Resource Management (added at restructuring, 2008) - Moderately Satisfactory Included the following: • Development ofa taxonomy of the existing models of public institutions • Preparation of an OECD peer review on human resources issues in Brazil • Operational incorporation by the National Treasury Secretary of specific processes for debt management Selected examples: • The Planning Ministry developed the guidelines and TORs for the taxonomy studies using SEGTAP funds\. The Organization for Economic Co-operation and Development (OECD) was awarded the contract\. SEGTAP funds could not be 18  used to pay the OECD for the actual studies\. The government paid for the studies with its own resources\. • The Treasury Secretariat (SlN) completed the design for the Integrated Public Debt Management System (SID), which built capacity to forecast analyze growth and trajectory of government debt\. And built capacity through training for budget execution and public expenditure management\. • The Ministry of Planning\. Budget, and Administration (MPOG) completed assessments in the government's human resources management system, indirect administration and budget reform efforts\. Despite these accomplishments, the project faced some challenges, which slowed progress and resulted in a 51 percent disbursement rate\. • Procurement disagreements with the UNDP highlighted some of the problems that resulted in some of the activities being funded by the client's own resources\. The Science and Technology Ministry withdrew from the project in 2008 due to a disagreement over a single-source procurement contract for a web site\. However, these activities were part of the project's planning and implementation\. Some of the implementation problems were beyond the project's control\. • Beneficiary performance was uneven and many of the fifty-plus activities described in the PAD were only partially undertaken\. • The PCU never claimed the Bank-approved US$I\.2 million of retroactive expenqitures\. \. 3\.3 Efficiency Rating: Moderately Satisfactory The costs in achieving project objectives were reasonable in comparison with the benefits\. In the end, there was sufficient value for the US$6\.22 million disbursed to justify a moderately satisfactory rating\. The specific activities funded were significant, although, in some cases, the amount disbursed may have been insufficient to meet the KIR\. The activities that were undertaken were important and contributed to the objectives, and their cost was reasonable\. During the second extension year (final year of the loan), the project was on track to reach 86% of loan proceeds\. However, due to the restructuring process of UNDP, contracts were delayed and disbursement reached 51\.13%\. However, the clients were significantly committed with the process to the point of using their own funds to complete activities that were delayed by UNDP procurement process\. As such, and despite the low disbursement, much of what was funded by the client's own resources reflected SEGTAP's design and efforts\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory The rating of Moderately Satisfactory is justified because the project was able to meet a substantial portion of its objectives despite a low disbursement rate, an ambitious agenda and problematic monitoring\. SEGTAP made an important contribution to the Brazilian government's growth agenda by contributing to a pro-reform environment that will 19 continue to be felt well after project closing\. The beneficiary agencies did accomplish important reforms, and they are continuing many of the project's reform activities with their own resources on what was built with SEGTAP funding\. This is especially true in the areas of judicial reform, transport, and debt management\. The project's impact will surely be felt as the government continues its reform program despite the transitory disagreements over procurement\. 3\.5 Overarehing Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, aod Social Development - Moderately Satisfactory SEGTAP was a straightforward technical assistance operation whose impact on poverty, gender and social development aspects was almost entirely indirect\. A number of its activities supported the strengthening of SPE in its work to improve credit access for the poor, micro-credit and credit for small and medium enterprises (SMEs) during the project period\. (b) Institutional ChangelStrengthening - Satisfactory There were several important laws and decrees, prepared by agencies that benefited from SEGTAP that contributed to the PD~\. The following examples can be mentioned: insolvency law, bankruptcy procedures, regulations for opening and closing firms, credit access, and anti-trust, judicial system performance in economic cases, banking sector competitiveness, and capital market deepening\. There were important and sustainable gains in terms of institutional strengthening of the Customs Administration, the Insurance Supervisory Authority (SUSEP), and the Transport Ministry (ANTI)\. These changes were the result of a combination of project strengthening agencies capabilities and government funding and deserve a satisfactory rating\. (c) Other Unintended Outcomes and Impacts (positive) During the supervision missions that visited the Securities and Exchange Commission (CVM), the Bank project team came to learn about the pilot program on financial literacy being developed for high school students\. The pilot is part of the Brazilian Financial Education Strategy (Estrategia NacionaZÂde Educafiio Financeira), a national priority of the government\. 7 The strategy recognizes that financial education is a potential tool for social inclusion, improving the lives of citizens and promoting stability, competition and efficiency of the financial system\. The team identified implementation issues and the lack of impact evaluation of the program\. An impact evaluation mission was subsequently organized and the discussions led to a request for NLT A to design and conduct an impact evaluation of the pilot project\. As a direct result of this project, the Bank became a valued partner of the program that is reaching 24,000 students in 880 schools distributed in six states and the Federal District\. The impact evaluation program has successfully secured over a million dollars from international and local donors and has attracted interest from the OECD and other 7 See http://www\.vidaedinheiro\.gov\.br 20 countries in the region\. While not directly related to the original loan, these programs emerged from the discussion on financial access, which took place under this loan\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops N\.A\. 4\. Assessment of Risk to Development Outcome Rating: Moderate The question of "risk" refers to whether outcomes' sustainability was at risk at the time of the ICR\. In the case of SEGTAP the question is complicated because the PD~ was designed to support the facilitation of a series of DPLs and it was defined by ambiguously worded and unclear outcomes\. The SEGTAP successfully supported two DPLs, whose reforms have been sustainable and have been rated moderately satisfactory\. Even though it is\.hard to determine just how much SEGTAP contributed to institutional strengthening with its studies, training and processes review, almost all were very relevant for the units that undertook them\. This is highlighted by the fact that many units utilizing own resources continued and finalized the studies\. Sustainability risk "ambiguity" is made worse because the KIRs and the overall PDQ' were linked to the DPL series, which was truncated at 25 percent disbursement of the second DPL\. Nevertheless, Brazil today enjoys a much more favorable economic and judicial governance framework than at the time of loan preparation and has weathered the worldwide recession well in large measure because of interventions taken during the period of loan implementation\. Furthermore, the laws, decrees, and institutional strengthening activities completed by the beneficiary agencies using project and non- project resources are largely sustainable\. For example, the insurance supervisor SUSEP strengthened its capabilities (developing circulars, manuals on procedures, training and acquiring technological infrastructure - both hardware and software); the preparation work for CVM's studies (assessing the cost and benefits of regulating capital markets) and the studies done by the Economic Policy Secretariat (improved enforcement of creditor's rights)\. Also many of the activities that could not be funded with SEGTAP resources due to procurement issues, have been carried out with beneficiaries own resources\. On balance the risks to the development outcomes are perceived to be moderate\. s\. Assessment of Bank and Borrower Performance S\.l Bank Performance (a> Bank Performance in Ensuring Quality at Entry Rating: Moderately: Unsatisfactory The project objectives were strategically relevant\. The objectives were aligned with Government priorities and Bank strategies and the DPL loans it supported\. The loan was designed based on prior research that pointed to a broad decentralized cross-cutting approach combined with a flexible design that would allow the loan to accommodate changing priorities\. However, the design was overly complex with many activities and stakeholders, which led to some implementation challenges and also the achievement of the PD~ could not be easily measured\. Eight factors were used to assess quality at entry 21 and come to a holistic moderately unsatisfactory rating\. This reflects the lack of participation of the participating agencies in the four ministries at the design stage, the very broad project development objective, the choice of key performance indicators, and the overall complexity of the design of the technical assistance loan\. This rating recognizes that the technical assistance loan matched the programmatic focus of the two DPLs, and the choice of instrument allowed the project to respond to changing needs of the counterpart and complement the work of other Bank projects\. Quality at Entry: More thorough initial background analysis could have detected low level of preparedness of the units that were going to implement loan activities and prepare an action plan to tackle weaknesses\. Strategic: Relevance and Approach: Given the size of the DPLs and the strategic importance of the government's growth agenda, this TA loan was timely and relevant\. Political Ownership: Despite problems with disbursement, the Borrower showed continued interest in the project's reform agenda\. The continuation of the activities using government funds highlights the importance of the work\. Policy and Institutional Aspects: At the time of preparation the operation was well aligned with the government's growth agenda of the DPLs\. The project's reform agenda design remained unchanged throughout the life of the loan\. However, the institutional capacity was not well assessed\. Technical, Financial and Economic Aspects: Indicators were congruent with DPL and CAS objectives and remained so throughout the life of the operation\. However, some of the participating entities were ill-prepared to carry out a Bank loan\. Bank Inputs and Processes: There was sufficient knowledge of the components within the Bank's team, which included experts in most of the areas covered (transport, finance, insurance, environment, legal, etc\.) There were synergies in the supervision with the teams that managed the DPLs loans\. The interactive and open dialogue provided an opportunity to engage with the counterpart in other areas (such as financial literacy)\. Risk Assessment: There were gaps in the risk assessment specifically given the proliferation of beneficiary entities with little or no experience in Bank lending\. Preparedness of some of the units involved could have been better assessed so action plans to tackle the issue could have been prepared\. Implementation Arrangements: Bank efforts to keep the loan on track are commendable\. One of the PCU was moved to the Treasury for the final years of implementation\. Realizing that the additional project coordinators did not have sufficient knowledge of Bank procedures, the team retained an experienced external consultant through the life of the loan to provide guidance, continuity and consistency\. Procurement problems slowed progress and the lack of a properly specified results matrix did not provide the detail necessary for well dermed lOIs\. Monitoring and Evaluation Arrangements: The unwieldy number and specification of KlR and IRI activities and especially the specification issues of thePDO, KlR and IRI results made supervision difficult and subsequently led to a focus on procurement and disbursement\. Poverty, Gender and Social Development Aspects: See comments on 3\.5 a\. 22  Environmental Aspects: N\.A\. (b) Quality of Supervision Rating: Moderately Satisfactory Five factors were used to assess quality of supervision: adequacy of supervision, fiduciary safeguards, focus on development, candor and quality of reporting and adequate transition arrangements\. \. Adequacy of Supervision of Inputs and Processes: Given the project's complex design, the Bank had to provide close and intense supervision through the project's life\. Given the 'flexible' design the Bank was proactive and restructured at mid-term to meet the changing priorities of the Government\. After the restructuring implementation activity peaked\. During that period the Bank had daily communication with the PCU and implementing units and provided detailed feedback on a significant\. amount of "no objection" requests\. For activities where specific skills were needed, the team found an appropriate expert to review the issues before issuing the "no objection\." However, the supervision team could have been more skeptical about the government implementation schedules particularly when procurement problems continued surfacing\. Supervision of Fiduciary and Safeguard Aspects: The audit process was comprehensive and while there were no major issues, there were several qualified audit reports\. Adequate response was always provided\. There were also few processing issues in the beginning\. For example, Financial Management systems were slow to be put in place and their coverage was inadequate and staffing the original and new PCUs was delayed \. \. However, fiduciary management issues that surfaced in the early years of the loan were properly addressed by the counterpart and corrective measures were taken\. The financial management supervision that reviewed the situatjon after corrective measures were taken confirmed the reversal of the situation\. Focus on Development Impact: Many key outcomes were identified and achieved\. Additionally, the midterm review and resulting restructuring increased the development impact by providing resources to responsive ministries and agencies\. However, poor specification of the PDO and KIR did not contribute to efforts in this area\. Due to poor specification, too much emphasis had to be placed on procurement plans and disbursement and too little on results to ensure development impact\. Also at the time of restructuring, the team should have refocused the monitoring and evaluation framework\. Candor and Quality of Performance Reporting: ISRs lacked important detail reporting on KIRs and Component IRIs in the Results Framework and questionable loan design and risk analyses\. However, procurement and component progress reporting was moderately satisfactory\. Role of Ensuring Adequate Transition Arrangements: The APL series was not included in the restructuring, and no formal transition arrangements were left in the pipeline\. However, three ministries using their own resources continued follow-up work in these areas using TORs, action plans and technical work provided under the loan\. This was a strong indication of an appropriate transition, given the major unexpected changes in the macroeconomic situation\. 23 (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory The project had two stages of implementation\. Some of the activities were completed satisfactorily within the original project timeline (including transport, logistics and regulatory gains in railroads and buses and concession supervision)\. Significant effort and resources were spent on preparation, review, launch, implementation, supervision, and portfolio review\. The project was complex, with four components (run by four ministries), 16 KIRs, 5 IRIs, and a composite PDO\. The Bank project team proactively restructured the project to eliminate the slow disbursement components and supervision missions were conducted generally every three to four months\. The turnover of task team leaders affected the overall project supervision\. However, efforts were made to perform frequent supervision missions, track key indicators carefully,and hire a field- based experienced local consultant, who joined the team\. in early 2007 and remained until loan completion\. Counterbalancing this effort was the late restructuring, and the initial inability to force counterparts to improve slow disbursements and slow implementation\. Taking into account the positive and negative aspects of the Bank's performance, the rating has been set at Moderately Satisfactory\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory The Federal Government was directly responsible for the design, and there is little evidence that implementing agencies participated in a consultation process during design\. The Federal Government was the actor responsible for the reform framework that led to rapid economic growth during the life of the project\. In this regard a top-down approach with the Borrower's imposition of some parts of the growth agenda - supported by the loan - on some of the Ministries and implementing agencies was considered appropriate in times of transition to a new administration\. In addition to these considerations, nine factors were considered in assessing government performance\. Government ownership and commitment to development objectives: Borrower's commitment was reasonable, despite the departure of the Ministry of Science and Technology due to a procurement dispute\. In the other cases, the government was engaged and committed\. Several units used their own funding (in excess of US$2\.0 million) to continue the work related to SEGTAP after the loan was closed\. This includes: US$280,OOO for consulting on strategic planning and development of a taxonomy study of the public sector, US$400,000 for debt management system, US$75,000 for implementation of Risk Based Supervision approach in CVM, US$150,000 for research on effectiveness of Judicial System (more detail can be found in Annex 10)\. Enabling environment, supportive policies; The Government maintained its commitment to support the reforms developed in the original program\. In line with the objectives of 24 both DPLs and SEGTAP, the Government introduced significant pieces of legislation to support the program, inter alia a legal change to unifY tax collection at federal, state and municipal level for micro and small companies, new bankruptcy law and tax codes (passed by the lower house of Congress), introduction in Congress of a new law extending application of antitrust to banks, and completion of the geographical restructuring of the railways concession\. Adequacy of beneficiary/stakeholder consultations and involvement: Despite the top- down approach there was an intense dialogue with the executing units especially during and after the restructuring\. Representatives of the ministries consulted the Bank for advice on project management\. The most frequent topic was procurement requirements of the Bank\. After the restructuring, the new PCU took a leading role in seeking advice from the Bank on procurement issues related to UNDP systems\. Readiness for implementation: The initial PCU was not completely staffed; financial management and internal control needed strengthening and as late as March 2007 a Bank financial management specialist rated SEGTAP financial management as Moderately Unsatisfactory\. The four ministries were also not adequately trained and staffed, which contributed to the slow start, US$1\.2 million of retroactive expenditures that were approved before Effectiveness could have been claimed but due to lapses they were not\. Timely resolution of implementation issues: The restructuring was justified, but irregular performance across beneficiary entities and serious procurement disagreements with UNDP remained unresolved\. However, it is not clear that the client could have done anything more to resolve the latter issues\. Fiduciary Oversight: Despite some technical delays in submitting information to the Bank, in general most agencies acted diligently in handling the process\. One area that should be commended is the work of the Government external audit agency that oversaw the actions of the different units\. This unit is well prepared and versed in dealings with the Bank\. In several instances the audit agency raised questions about the eligibility of certain expenses and inadequate planning\. Adequacy of Monitoring and Evaluation Arrangements: Most reports, such as end-of- year reports and other ad-hoc responses to Bank questions, were provided on a timely basis, procurement tables were updated, and there was reasonable monitoring of progress on procurement plans\. However, the agencies were not focused in measuring impact\. Relationships and coordination with partners and stakeholders: The initial PCU's performance and leverage with the ministries were insufficient to allow progress to pro~eed at the projected pace Only when the Ministry of Finance Economic Policy Secretariat was replaced by the Ministry's Treasury Office did the situation improve\. The relationship with UNDP was a continuing stakeholder problem\. Adequacy of transition arrangements after loan closing: The APL series was not included in the restructuring, and the no formal transition arrangements were left in the pipeline\. However, several agencies using their own resources continued follow up work iIi specific areas utilizing work provided under the loan\. 25 (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory As mentioned before (in the Monitoring and Evaluation section), the project had two distinct phases, (i) the design and problematic first implementation stage followed by (ii) the phase of restructuring and smoother implementation\. This coincides with two levels of commitment and performance of the implementing agencies\. During the first phase, these agencies were given a new assignment and the funds provided offered no additionality\. This meant the participating agencies had to adjust their work plan to dedicate resources and staff to the activities included in the project\. After the restructuring, due to the preparation work done and the involvement of the supervisor team, participating agencies performance improved\. There was better coordination and buy-in from agencies However, UNDP's systems and procedures which in many cases diverged from Bank's procedure, materially affected the rate of implementation and disbursement under the project\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory The top-down approach from the new government which was undertaking a reform program was justified\. Despite shortcomings in the implementing agencies performance, the project achieved several important outcomes already discussed, justifying an overall moderately satisfactory rating\. The satisfactory rating granted to Borrowers Performance by the two DPLs also supports the conclusion\. Many of the ministries offices found important value on the activities and utilized their own resources to complete these activities when procurement issues prevented them from using SEGTAP funding\. 6\. Lessons Learned First and most important lesson keep the project structure simple\. An overly complex design with too many components and activities led to a project that was difficult to implement, supervise and evaluate\. Also, the project specifically tried to address the possibility of change in Government priorities with flexible architecture\. This flexibility comes with a price at the time of-evaluation when the original objectives had to be evaluated, although it was appreciated by the Government and matched changing conditions\. Strong involvement of participating agencies\. The big difference between the first phase and the restructured phase of implementation was a far greater understanding of the ways the technical assistance loan could reinforce reform efforts supported by the DPLs and the government's reform agenda\. This led to a greater buy-in and an improved rate of disbursements\. By giving the implementing ministries and agencies more of a voice in choosing specific activities, there was a greater response and appreciation for the reforms and for project support\. Third party procurement support can be useful or complicate project implementation\. The UNDP has been involved in a number of Bank operations in the 26 past\. It is still being used to reduce the risk of judicial complaints and to compensate for low capacity of some government counterparts\. If the SEGTAP experience is any indication, a third party whose ability and willingness to diligently and efficiently assist the Bank and the Brazilian Government to implement loans could be a questionable strategy\. In the case of SEGTAP the centralization of UNDP's operational structure did not help, with the management of many activities taken care of outside the country\. In addition, UNDP's insistence on applying its policies regarding procurement rules created serious delays\. To a certain degree, the UNDP's approach negatively impacted the overall disbursement of the loan, forcing some of the agencies to use their own resources to complete project activities\. If a stronger project implementing unit had been responsible for implementation in the early phase of the project, it may not have been necessary to rely on UNDP for this support and more efficient procurement systems using Bank practices might have increased project activity significantly\. Small T ALs can be useful to support DPLs\. Notwithstanding the design related problems with this TAL, it is generally useful to have such an operation in place to support programmatic DPLs and to maintain Bank involvement in reforms and a place at the table when issues are being sorted out\. If this is not possible, then a fee-for-service arrangement or other possibilities should be explored\. A changing political economic environment can challenge the relevance of a project's initial design\. Great care must be taken in designing projects that will span more than one government administration and in adapting loan design to changing environments\. Despite the flexible design there are few effective mitigation measures\. A smaller number of SUb-components and implementing agencies might have been a suitable response to the risks inherent in working on government reform in a changing political economy\. Also the willingness to consider cancelling the loan at an early stage should have been kept present in the realm of possible courses of action\. PD~, Results and Results Framework, below is a summary of issues related to the PDQs and results\. • There can be too many indicators as well as too few\. • PDQs should be well specified and measurable; a PD~ that facilitates an agenda is neither\. • PDQ indicators should be detailed and not indicated as a number or percentage of total indicators\. They should each be monitored and evaluated individually\. • PDQ indicators should be properly specified and protocols used to clarify their meaning\. • PDQ indicators' dimensioning should be commensurate and aligned with loan objectives\. Great care should be taken to align loan activities with the desired outcome\. • The Results Matrix should be thoroughly and comprehensively specified and then downloaded to the ISR\. • PD~ indicators need to be selected with care and to reflect important loan objectives\. They should also be reviewed and appropriately amended during any restructuring\. 27 Risk Analysis, this should be elaborated first around political economy, the Results Matrix and implementation arrangements\. Expenditures should reflect Results Matrix priorities\. Mitigating measures Ileed to be specific and useful, not generic\. Dedicated Staff in Country, any loan but especially complicated ones will benefit from having experienced staff or consultants on the ground, whose job descriptions and experience are adequate for supervising and supporting implementation is a good practice worthy of replication whenever warranted by circumstances\. 7\. Comments on Issues Raised by Borrowerllmplementhig Agencies/Partners (a) Borrower/implementing agencies \.(b) Co financiers There were no other co fmanciers (c) Other partners \.and stakeholders N\.A\. 28  Annex 1\. Project Costs and Financing (a) Project Cost by Component (in usn Million equivalent) Original \. Restructured World Bank World Bank Actual Percentage of Components Financing Financing (USn Appraisal (USn (USD millions) millions) millions) \. MINISTRY OF FINANCE 4\.30 7\.37 3\.38 45\.86 MINISTRY OF JUSTICE 1\.61 1\.35 0\.36 26\.67 MINISTRY OF TRANSPORT 3\.14 2\.64 2\.20 83\.34 MINISTRY OF SCIENCE AND 2\.50 0\.10 0\.04 TECHNOLOGY MINISTRY OF PLANNING (Component added at restructuring) 0\.00 0\.70 0\.18 25\.71 Unallocated 0\.45 0 0\.00 0\.00 Total Program Cost 12\.00 12\.06 6\.22 51\.1 Front-end Fee 0\.12 0\.06 0\.60 100\.00 Total Financing 12\.12 12\.12 6\.22 51\.13 (b) Financing Appraisal ActualILatest Type of Co Source of Funds \."st'Ima t e \. I'\.St'Ima t e \. PercentageIof '" \. '" financing (USD millions)(USD millions) ApprSlsa \. Borrower 2\.28 2\.28 100\.0 International Bank for 12\.12 6\.22 51\.13 Reconstruction and Development 29  Annex 2\. Component of DPL Loans 1 and 2, and SEGTAP Activities DPLl \. > DPLl ~ "-C;""!;'i-] \.•\. I Results Framework \. I~ lt~~,eeLogisticsC\. ' \.•\. , '\. \.•\. \.•\. •\. >\. ••\. \. \. •••••••••••••••• \.' \.' • I • \. \. Improve customs Improve customs effectiveness: Customs Administration: Customs modernization, reengineering procedures and effectiveness: custom selectivity levels reduced from 40% systems, risk management, bonded warehouses and broker procedures\. reform strategy approved to 30% and average net release tie reduced by 20% Reduce port costs and delays: Port and cargo security improvements and compliance with ISPS norms\. approval of Port agenda Diagnose environment for complete port reform~ do action plan and recommendations to address issues\. Reduce transport costs on Reduce Transport Costs on Federal Design system for M&E of transport projects and programs\. IT system and data federal Roads networks: Road Networks: bases~ Law reorganizing Federal Output based maintenance and Consolidate policies and standards for road maintenance and rehab activities\. Transport Administration rehabilitation contracts on 30% of approved and federal road network\. Streamline admin procedures for management of road maintenance and rehab implemented, transfer of contracts\. 9% of federal non-truck roads to state management\. Foster Multimodal Foster Multimodal Transport: See item above Transport: Geographic geographical restructuring of restructuring of railway railway concessions completed concessions underway\. H\. Improve Business Environment Strengthen Infrastructure Strengthen National Land Transport Regulatory Agency (ANTI) Regulation: Creation of Upgrade land valuation models; supply hardware and software\. land and water transport 30 regulatory agencies\. Develop procedures and system for efficient concessions supervision; Train agency staff in valuation models and strategies\. Complete regulatory and normative framework for land transport including multimodal transport\. Define uniform rules for concessionaires and permit holders including information and data base upgrading\. Elaborate financial-economic equilibrium clause rules in concession contracts valuation models\. Strengthen National Water Transport Regulatory Agency (ANTAQ) Strengthen organizational structure, management and supervision processes\. Complete normative framework for port administrations and integrate port information flows\. Complete regulatory framework including of ports for sub nationals; delegate inland water transport services Improve regulatory information and accounting system\. Develop regulatory information and accounting procedures and management system for supervision of concessions and permissions including competition, accounting rules and standards and performance indicators; hardware/software system\. Secretariat for Economic Monitoring to modernize procedures and strengthen capacity to review recommendations, resolve issues related to on-the-job training\. Enhance the Strengthen Infrastructure Strengthen Public-Private Partnership unit capabilities of Project identification, competitiveness Regulation: PPP Law and Law on Financing, and provide staff Training Environment: Public- Career Development Plan for Private Partnership (PPP) Regulators approved by Congress Law submitted to Congress and Amendment to antitrust law approved by the inter- ministerial committee 31 Simplify Entry and Simplify Entry and Business Study to upgrade procedures to open and close firms Business Operations: Operations: Constitutional amendment approved to tax regime to facilitate refund of unify tax collection at indirect taxes on acquisition or federal and state importation of capital goods by municipal levels for exporting firms\. micro and small companies, simplify procedures for companies' registration adopted in some cities, export norms simplified by the Ministry of Development, Industry and External Commerce (MOIC)\. Strengthen Corporate Facilitate Entry and Exit Ministry of Justice, Secretariat of Economic Lavv: Insolvency Framevvork: (Bankruptcy and Antitrust Regime): Improve judicial instruction, anti-competitive behavior ~n\.d proc~dures, nevv Bankruptcy lavv and Bankruptcy lavv enacted and hardvvare/softvvare, improve bankruptcy framevvork, trammg for Judges/court staff Tax Code Amendments training programs for courts started and procedures in bankruptcy cases; (ii) Secretariat of Judicial Ref~rm for passed by lovver house and Amendment to Tax Code improving courts system; cost benefit studies; (iii) Antitru~t Coun~tl to structure enacted information system, supply hardvvare and softvvare expanSIon, reVIevv procedures and training needs\. Improve Judicial Contract See above Enforcement: constitutional Amendment No\. 45 approved and Lavv No\. 11,187/2005 approved by Congress\. \. \.•\. \. \. \. \. Increase Financial Competition: Draft Complementary Lavv 32 extending application of Antitrust to banking submitted to congress\. Sound fundamental Sound fundamental legislation and legislation and systemic systemic risk control: evaluation of risk control: residual risk in the payments system Constitutional completed and blue print prepared amendment (Article 192) for second phase payments reform approved new large'value (retail payment)\. payments system installed and operating successfully\. Mobilize long term Mobilize long term resources in :stren~~tlum Insurance Supervisory Authority (SUSEP) for development plan: resources in insurance insurance sector\. Submit reform of regulatory, supervisory, HR, infrastructure; circulars, procedures manuals, training sector: regulation reinsurance market to Congress\. to implement; supply hardware and software\. strengthened on asset allocation, eligibility, registration, and custody and audit requirements enacted\. Improve efficient access Improve efficient access to financial Studies and TORs for improving financial sector competition, access to credit and to financial services to services to poor and SMEs: development of capital markets\. poor and SMEs: Regulation and enactment of Provisional law and payroll deduction loans resolutions passed to expand financial access to banks\. 33 and Development (R&D) Innovation law approved and legal Evaluate sector funds' design, management, perfonnance, recommendations\. effectiveness\. Innovation framework for direct subsidy to Evaluate and prepare recommendations to improve technological extension law sent to Congress\. private sector R&D established\. program\. Implement and disseminate current actions related to Bill of Law on Innovation including drafting regulations and norms\. Supply hardware and software\. Secretariat for Strategic Development Policy: Evaluate industry and prepare recommendations to foster R&D\. Do pilot project evaluation\. Secretariat for Social Inclusion: Define criteria to select groups of small producers, design evaluation methodology and participatory mechanisms to defme and support communities' hardware/software needs\. Design and implement pilot projects in 15 communities\. Supply hardware and software to communities and provide training\. Do pilot project evaluation\. Foster Private Innovation: Foster Private Innovation: refonn of See above Regulation of Fundo Fundos Setoriais and tax breaks and Verde-Amarelo and other tax incentives for private R&D mechanisms to support developed\. private R&D introduced\. Create Innovation in Secretariat for Strategic Scientific Development Policies Environmental Markets: Design processes, methodologies, criteria to evaluate, approve and certify COM Kyoto Protocol ratified, project proposals and M&E ICCC operational and Clean Development Implement processes above; supply hardware and software Mechanism (COM) Design COM outreach program project approval Strengthen Climate Change coordination Unit; office equipment mechanism published\. 34  Added Secretariat of the Treaswy (STN) Further develop the public debt information system Management Build capacity to forecast and analyze growth \. Build capacity through training for budget execution and public expenditure management\. Added Ministry of Planning, Budget and Administration (MPOG) Assess government's human resources management systems Assess indirect administration Assess budget reform efforts Expanded Improve Added Comissao de Va/ores Mobilitirios (CVM) Effectiveness and Depth Develop risk based supervision of the Financial Sector Develop institutional performance evaluations Strengthen management systems Expanded Reduce InCrec\.rse'lfljlJU1lrng: Customs Administration Secretaria da Receita Logistics Costs Reduce time and costs to clear customs (Phase IV of the HARPIA systemL (Improve Business Environment) \. Eliminated Increase Withdr'aw,a1ofMinistry of Science and Technology Innovation Capacity to Transform Knowledge into Productivity Growth Source for DPL I and DPL 2 columns: Implementation Completion and Results Report for a Series of Loans for Sustainable and Equitable Growth-Loans I and II\. World Bank Report No\. ICR0000972\. February 27, 2009\. 35  Annex 3\. Economic and Financial Analysis Most technical assistance loans linked to large DPLs are not expected to provide detailed economic and financial analysis, since they are catalysts linked intimately to the outcomes of the , DPLs\. This is the case for this project, which provided technical assistance to the following DPLs: ~i!R!!!l-~~~\.;---~~'--'-__r-_'_~'~_'_~_"~'~~'~'''''''''"''''_''''; 1 : BlaZil Filst :," : , _ \. \. \. \. : \. •• ip' Prog:tammatic Loan »r \.,\. r lDgraR! Name Sustamable am , : I~_==~~~~~~~t~~r ,~,RAZIL isbursed AnDUnt USD SI6,2M: ! Co6nimI:ien a:nd Other E:ri!mal PariJaw t~i"""",,~',:~,:,~,,' : ,' M', """""'"", j _ _" " " " " " " , Second Programmatic :\., __ r;675-~-:;~\.c~=fi~L~, __ ~"__ "___,,,_,,~~P2\._,,,,~_\.,,J£~I~~_,\.,\.,,,\.,,\. !=\.5!!!~! \. ,,,,,, BRAZILIAN FEDERAL GOVERNM\.~'I::;:,M:p':,~ lusD 6J1\.5M bisbursed AnDUnt USD ISO\.OM """"'" ,L, """,""""'" ~JJ~J'~~&:x-\.rSultainahJe8Jlll,Et\.1IibIbJeG:vwth- !V808%7 IOu U : o n e s d e l < l : t e l y S , \. l : t i s f a c k l r y '" ~~~~i=--- !S\. \._~ S\.Je\.a It 'UiubJe G1rowd\Loaa- "PO!Jm5 ' " """'"""""", • i " " " " " " " " '" """" '" """"""""\.,,,,, , ," " , , , I Ouu:ones __ fh-"''''~'" "'''''''"\.''''''''N<,,",'m~''''N''''''''\.~ """"'''"",,,-m\.'\._\.,,Â\._,<,,,",,\.,w>,,,,,",,>\.,,,,\. deRtelySatisfacby ",,','»,"<'''''m\.,,',-,''''''''''''''''''''''>'','''''''''' >\.w,"-',<"","kO'''''","-,,,,\.''"'''''''''''''''''''''''i'''' ~" In addition, this technical assistance loan strengthened four ministries, created action plans co- financed by the government, and contributed to transportation system improvements, judicial system reform and reliability, and customs efficiency\. It is difficult to use standard economic and financial analysis to calculate the value added of this loan\. 36  Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Aymeric-Albin Meyer Sr\. Transport Specialist LCSFT Task Team Leader Paulo Guilherme Correa Sr\. Economist LCSFR Team member Tulio Henrique Lima Correa Financial Sector Specialist LCOAA Financial Specialist Werner L\. Kornexl PSD Specialist LCSRF Carbon Emission Specialist Anjali Kumar Lead Financial Economist LCSFF Economist - Legal Sergio Margulis Lead Environmental Economist AFTESSO Environment Craig W\. Thorburn Sr\. Financial Sector Specialist OPO Insurance Jose Augusto Carvalho Lead Counsel LEGLA Legal Mariam Oayoub Junior Professional Associate LCSFF Research Solange P\. Van Veldhuizen Program Assistant LCSFT TTL assistant Cassia Coutinho Barreto Consultant Project analyst Maritza Castro Consultant Project analyst Cristina Oliveira Roriz Consultant Project analyst Jacques L Cellier Consultant Transport and Customs Roberto Mosse Consultant Financial Management Smriti Goyal Consultant Project analyst SupervisionllCR Senior Financial Sector Rogelio Marchetti LCSPF Task Team Leader Specialist Cassia Coutinho Barreto Consultant LCSTR Project Management Jose Augusto Carvalho Consultant LCSPT Legal Paulo Guilherme Correa Lead Economist ECSFI Team Member Financial Management Tulio Henrique Lima Correa LCSFM Financial Sector Specialist Mariam Oayoub Junior Professional Associate LCSPF Research Pablo Fajnzylber Sector Leader LCSPR Economist Carbon Emission Specialist Werner L\. Kornexl Sr\. Technical Spec\. ENVCF and innovation Anjali Kumar Lead Economist IEGPS Justice Eric R\. Lancelot Sr\. Transport\. Engr\. LCSTR Transport Patricia Rodrigues de Melo Language Program Assistant LCSPF Assistant Aymeric-Albin Meyer Senior Operations Officer OPCIL Transport 37 Monica Torrelio :Program Assistant LCSPF Assistant Craig W\. Thorburn Sr Financial Sector Spec\. GCMNBInsurance Luciano Wuerzius Procurement Specialist LCSPT Procurement Denise von Gersdorff Consultant LCSPF Project Management b) Staff Time and Cost \. \. \.~~~!f'!~~~I!~~!>\.s!\.(I:I~n~ ~tlcJg~t()l1ly) \. \. Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY04 25 224\.58 FY05 3 11\.'82 FY06 0\.00 FY07 0\.00 FY08 0\.00 Total: 28 236\.40 Supervision/l CR FY04 2\.79 FY05 17 106\.48 FY06 28 124\.01 FY07 17 91\.38 FY08 107\.54 FY09 0\.00 Total: 82 432\.20 38 Lending PE-P083533-LEN-BB (until 10104/2005) Fiscal Year Weeks Total 2004 24\.89 224,578\.02 2005 2\.73 11,823\.76 2006 0\.00 0\.00 2007 0\.00 0\.00 2008 0\.00 0\.00 2009 0\.00 0\.00 2010 0\.00 0\.00 2011 0\.00 0\.00 Supervision PE-P083533-SPN-BB (2005 -2011) Fiscal Year Weeks Total 2004 0\.58 2,793\.35 2005 2\.00 178\.14 2006 27\.62 124,008\.25 2007 16\.35 91,376\.24 2008 16\.06 107,537\.59 2009 10\.25 106,812\.85 2010 13\.12 103,962\.21 2011 3\.82 60,388\.78 39  Annex 5\. Beneficiary Survey Results NIA 40  Annex 6\. Stakeholder Workshop Report and Results N\.A\. 41  Annex 7\. Summary of Borrower's ICR aDd/or Comments on DraftICR The ICR report represents an overview of the entire project's progress and it shows its evolution reliably\. We concur with the contents and note that our suggestions have been incorporated\. The Borrower represented by Under Secretary of Corporate Affairs responded to the letter sent by the Bank responded on June 3 2011 in the attached, whose translation states the following: Ministry of Finance National Treasury Secretary Under Secretary of Corporate Affairs Reference: Administrative Affaires Other - Other PACE Project In reference to the letter dated May 24, 2011 sent by the Bank and the Final Report on the Implementation of the Loan 7253-BR; upon reviewing the analysis performed I concur that the report represents an accurate overview of the development and implementation of the PACE project\. In addition, I express agreement with the edits made to the preliminary text\. Best regards\. Undersecretary of Corporate Affairs\. 42  ~iinisl~rio da F:mmdu Seer ~'lilTia do Tcsouro Nacional Subseerelari3 de Assunllls ('(lrp~\.ralivo~ COllrdcna~ao Gcral de Dcscnvolvimcnto Instuuc:ional E~planada lIos I\.finistilios • ~Iinisl~rio da Fazendll' Ed\. Ancxo Bloco "P" •\.\ia ",," • Terre," Sala 27 • Esplanada dus Mini!l\cril\S 70048Â900 • 8rasilia - Df I{,l) 3412-3500 (61) 3412Â394$ 161) 3412-\.'96J ;'In\"fal\.endn\.gov\.hr Oliciu rl" ItJOf201IiCODIN/SLJCOP/STN/MF-DF Hrasilia OF\. 3 de jllnh~l de :!O) I\. A Sun Scnhoriu 0 Scnhor Rogelio Marchetti Especialisla Seni(lr para 0 Setor FimmC'eiro Hll n<\., I Mundial • Ed\. Corporure Financial Center SeN QD\. 02 81\. A 7" andur - Sctor ('ol1lcrcinl Nnrte 7()7 ) :!-900 - Rrasilia - OF A\.,sUllIo: Assuntot; Admini~trath'os - Outroll • Outroll • Projrto P\.<\CI'; Prczado Senhllr\. I\. Em refer~ncia a<'''U1u de 24 de mnio de 2011 encaminhada por VOS/ill Senhnria e que tratn du Relllt6rio Final de Implel11l,lnlafi:io do Acordo dl: Elllpl-estirno 725J-BR\. informo LlUC\. <1-\. unalise ~Ietuuda conclui-se que 0 C:lladu relat{'rto represema um8 \';sao glob<tl da cV(llw,:iio do \. Pn~iet() PACE e moslta a sua \!volu\"ikl de Ihrm\. Jidedignll\. ') OU\rossim\. cxprcsso a cOllCt\.,rdnncia com as alt"racoes et~rmtdas no texto prcliminar\. AIcnciosamcnle\. ,-;~~~~ L \. - : ' \', '/ Listi,) Fa 'j\., dc Hrilsil Camargo S\lbSeCrCTario de Assuntl'lS COl'porntivos 43  Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders There were no other co-financiers\. 44  Annex 9\. List of Supporting Documents World Bank\. Brazil: Forging a Strategic Partnership for Results OED Evaluation\. Washington, DC: World Bank Report\. 2004 World Bank\. Brazil: Project Appraisal pocuinent for a Sustainable and Equitable Growth Technical Assistance Project in Support of the First Phase of the Sustainable and Equitable Growth Technical Assistance Program\. Report No\. 27987-BR\. May 19,2004 World Bank\. Brazil: Loan Agreement (Sustainable and Equitable Growth Technical Assistance Project)\. Loan No 7253-BR\. October 4, 2005 World Bank\. Brazil: Country Partnership Strategy 2008-2011\. Report No\. 42677-BR\. May 6,2008 World Bank\. Project Paper on a Proposed Restructuring and Extension for the Sustainable and Equitable Growth Technical Assistance Project (Loan no\. 7253-Br)\. Report No\. 46487-BR\. November 13,2008 World Bank\. Brazil Sustainable and Equitable Growth Technical Assistance Project Proposal to Restructure\. R2008-1251\. December 3, 2008 World Bank\. Brazil:\.Implementation Completion and Results Report for a Series of Programmatic Loans for Sustainable and Equitable Growth-Loans I and II\. Report No\. ICR0000972\. February 27, 2009\. World Bank, Doing Business 2011: Making a Difference for Entrepreneurs, 2010\. Available online: http://www\.doingbusiness\.org/-/medialfpdkm/doing%20business/documents/annual- reports/english/db I1-fullreport\.pdf\. 45  Annex 10\. KIRs accomplishment Indicator Baseline End Target Comments Component One: Reducin! Lo!istic Indicator Name Value Value Satisfactory 1\. Customs strategic plan Diagnostic of Brazil customs done Diagnostic of None and plan for re- Brazil customs engineering of Customs Date done by World clearance procedures 20-Dec-2010 Organization of Date approved and disclosed (2)\. Customs\. 31-Dic-2005 Comment Elaboration of a KIR# 1 Customs Modernization Plan based upon the above diagnostic\. Date 20-Dec-2010 Indicator Name Value Value Moderately 2\. Port reform plan, dock None The Agenda Nacional de Unsatisfactory\. companies restructuring Transportes Aquaviarios (ANTAQ) program, and structure of developed 2 (of the 3) relevant ANTAQ in the end Date ANTAQ regulatory studies: achieved part of 31-Dic-2005 accounting system approved I) Evaluation of Port Management what was expected and disclosed (3)\. Performance; owing to the fact 2) Elaboration of guidelines for the that it had no Promotion and Defense of Agency Director Competition in the Ports Subsector\. for some time, which delayed Date reforms\. 20-Dec-2010 Date Comment 20-Dec-20 10 KIR#2 Indicator Name Value Value Moderately 3\. Highway strategic plan None The study was completed Satisfactory\. and management reform program approved and Date Date Study done with disclosed (2) 20-Dec-2010 funding from 31-Dic-2005 another Bank loan Comment (PROGEM)\. KIR# 3\. Date 20-Dec-2010 46 Indicator Name Value Value Satisfactory\. 4\. Action plan for MOT None ANTI developed various important PPP capacity activities in institutional The ANTI strengthening approlled Date strengthening including: component and disclosed, structures of 31-Dic-2005 I) Developed a system to manage activities MoT M&E system road work: Sistema de Gestao e strengthened established, and ANTT Fiscaliza~ao das Rod01lias Federais ANTTand concession naluadon (SIGFIS); operationalized models approved and 2) Evaluated railway freight norms for oversight disclosed (3) \. Demand; of fiduciary and 3) Produced materials for training regulatory new officials; responsibilities of 4) Mapped the ANTI services conceded\. responsibilities and competencies; 5) Developed procedures for Date Regulatory Accounting; 20-Dec-20 I0 6) Completed a study on how to improve efficiency and effectiveness of fiduciary and operational oversight; 7) Developed additional software to manage road system: Sistema de Gestao e Fiscaliza~ao das RodoviasFederais (SIGFIS 2); 8) Developed ANTI information security policy; 9) Developed strategic management website; 10) Completed a study of methodologies for evaluating concession contracts for Federal road; II) Completed a study for the concessionIPPP of highway BRI16/RJ/SP-NOVADUTRA\. Date 20-Dic-2010 Comment KIR#4 Component Two: ImJ!rovin tbe Business Environment Indicator Name Value Value Satisfactory\. 5\. Recommendations for None The Conselho Administrativo de i~rov~entofand-trust Defense Economica (CADE) , one CADE system processes Date of the principal anti-trust strengthened its approved and disclosed (1) 31-Dic-2005 organizations, did the following: technical capacity I) Structured process/protocols for and information data base maintenance and systems requisites updating; for managing anti- 2) Acquired IT equipment and trust / hardware to upgrade capacity in competitiveness\. order to carry out its mandate; Anti-trust 3) Created a unit and trained processes and officials in econometrics (course systems were also administered by_the London School strengthened\. 47  \. of Economics)\. To provide CADE with sophisticated tools and capable Date practitioners to perform anti-trust 20-Dec-2010 analyses; 4) Provided officers training in severalleading institutions such as: the Canadian Government Bureau of Competition in Ottawa, the International Fellows Program US Federal Trade Commission, and Government School in Australia and New Zealand (ANZSOG)\. The training covered administration, regulation, and implementation of competition/anti-trust; and 5) Provided technical training in budget, finance and accounting for the Executive Secretary of the Ministry of Justice\. Date 20-Dec-2010 Comment KIR#5 Indicator Name Value Value Satisfactory 6\. Action plan for None strengthening of corporate The Justice Ministry Secretaria de SDE trained 80 insolvency law framework Date Direito Econ6mico - SDE/MJ was judges in the new approved and disclosed (1)\. 31-Dk-2005 provided an intensive course in Bankruptcy Law Rehabilitation for Companies including in the Facing bankruptcy under role of the Bankruptcy Laws\. Government as a judicial litigant Date taking into account 20-Dec-2010 costs and benefits\. The 80 judges Comment acted as multipliers KIR#6 to spread knowledge about the insolvency law loan\. The activity did not strengthen the legal framework which is a \.,' misnomer; the indicator should have been about implementing the new framework which had just been approved\. Date 20-Dec-2010 48 Indicator Name Value Value Moderately hReconunendadonslor None The Secretaria da Reforma do Satisfactory improved perftimillnce 01 Judicial SRJIMJ developed The two studies Judicial system in resolving Date I) Studies regarding judicial role provided economic disputes in 31-Dic-2005 and perfonnance in economic background and public and private sectors dispute resolution; and reference material approved and disclosed\. 2) Study regarding judicial to improve SRJ mandate and role in class-action operations\. The (meta individual) judicial processes\. survey on 3) Survey on Judicial system performance of the performance judicial system could not initiated Date on time to be 20-Dec-2010 financed by the loan\. However SRJ Comment is allocating KIR#7\. $150,000 to conduct the survey utilizing TORs and material developed under the loan Date 20-Dec-2010 Component Three: Enhancinl Financial Efficiency and Depth Indicator Name Value Value Moderately 8\. Action plans approved None Secretaria de Politico Satisfactory\. and disclosedlor Economica (SPE) Studies and The studies are promotion 01 competitive Date training\. relevant for structures in the banking 31-Dic-2005 Completed two studies a) Efficient Secretaria de sector (1)\. development of financial markets PoUtica and b) improved enforcement of Econ6mica (SPE) creditors'rights\. to better Training done\. understand the dynamics of Date financial markets\. 20-Dec-20JO Much of the training was done Comment with own funds KIR#8 Date 20-Dec-20 10 Indicator Name Value Value Moderately 9\. Action plans approved None The Secretaria de Politico Satisfactory\. and disclosedlor Economico (SPE) conducted studies The studies are lacllitadon 01 access to Date and training relevant for The credit (1)\. 3 J-Dic-2005 1) Studies on a) Judicial Analysis of \. Secretaria de Viable Alternatives for Regulating PoUtica Law 11\.079/04 Art\. 25 having to do Econ6mica SPE\. with PPPs; and b) Study of Micro Better knowledge economy of Social Programs and trained its Transferring Income to Poor personnel Families; and improved its 2) Training in: a) Taxation of capabilities to Financial Markets; b) the perform its agriculture derivatives market; responsibilities\. 49 Indicator Name Value Date Dropped 14\. Desl,,, oftech"ologlctJl None 18-Dec-2008 pilot ITI\.oclall"cluslo" Comment project approved and Date KIR# 14 disclo\.ed\. 31-Dic-2005 Indicator Name Value Date Dropped 15\. Orga"izatio" for None I8-Dec-2008 appraisl", a"d certifying Comment CDM projects approved Date KIR# 15 a"d disclosed\. 31-Dic-2005 Indicator Name Value Date Dropped 16\. Ministry's strategy to None I8-Dee-2008 foster"a"oNch"ology Comment i"dustry growth approved Date KIR# 16 a"d disclosed\. 31-Dic-2005 Components included during tbe restructuring Indicator Name Value Value Satisfactory 17\. Developme"t by None Developed of Taxonomy study of The study provided Ministry ofPla""i"g ofa the existing models of public benchmarks to taxo"omy of the existing Date intuitions including\. assess and improve models ofpublic IS-Dic-2008 Date public sector institutio"s i"cludi"g i"ter 20-Dec-20l0 operational alia, their fu"di"" structures\. ji"a"cial a"d Comment administrative i"ternal KIR# 17 Date co"trOls, accou"tabllity, 20-Dec-2010 a"d labor reximes\. Indicator Name Value Value Moderately 18\. Prepill'atlo" of a" None Preparation of peer review on Satisfactory orga"izatio" of Eco"omic human resources issues in Brazil\. The Ministry of Cooperatio" and Date Partially done Planning prepared Developme"t (OECD) peer 18-Dic-2008 Date all the ground work review 0" huma" resource 20-Dee-2010 (TOR, procurement islIues i" BraziL process, etc\.) with Comment loan resources\. The KIR# 18 study will be carried together with a supplemental study on strategic planning\. The 52  Ministry of Planning has allocated $280,000 to fmalize this activity\. The study will provide guidance on how to improve HR management\. Dated 20-Dec-20 10 Indicator Name Value Value Moderately 19\. OperationaliZlltion by None Operationalization of National Satisfactory the National Treasure Treasure Secretariat's (STN) STNwith Secretariat (STN) of Date specific processes\. Partially done resources from the specljlc processes (rlsfc IS-Dic-200S loan prepared all assessment, planning, Date the definitions, strategies, auctions, 20-Dec-2010 action plans, TOR budgetary and financial to launch the programming) for public Comment procurement debt management KIR# 19 process to finalize completed\. The debt management system and the intranet system\. STN funding exceeding $1\.0 million has been allocated to fmalize this activity\. The result will be debt management system that will reduce the associated costs of managing the government debt\. The intranet system will also improve overall efficiency ofSTN\. Date 20-Dec-2010 53  50'W 40'W BRAZIL ATLANTIC OCEAN ® STATE CAPITALS ® NATIONAL CAPITAL O' ~ RIVERS - - MAIN ROADS - - RAILROADS - - STATE BOUNDARIES - •- INTERNATIONAL BOUNDARIES 10' S 20' S 20' S ATLANTIC OCEAN 0 200 400 600 Kilometers I I I I I I I 0 200 400 Mil\.s 40'W

REVIEW

P071207

 ICRR 13989 Report Number : ICRR13989 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/17/2013 Country : Cambodia Project ID : P071207 Appraisal Actual Project Name : Provincial And Rural US$M ): Project Costs (US$M): 23\.3 24\.4 Infrastructure Project L/C Number : C3822 Loan/ US$M ): Loan /Credit (US$M): 20\.0 17\.4 Sector Board : Transport US$M): Cofinancing (US$M ): 0 0 Cofinanciers : Board Approval Date : 09/11/2003 Closing Date : 09/30/2007 12/31/2011 Sector (s): Roads and highways (83%); Central government administration (9%); Sub-national government administration (8%) Theme (s): Rural services and infrastructure (25% - P); Conflict prevention and post -conflict reconstruction (25% - P); Other accountability/anti-corruption (24% - P); Injuries and non-communicable diseases (13% - S); HIV/AIDS (13% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Kavita Mathur Kristin Hallberg Soniya Carvalho IEGPS1 2\. Project Objectives and Components: a\. Objectives: According to the Project Appraisal Document (p\. 2) the objective of the project was to assist the Kingdom of Cambodia to enhance the livelihood of the peoples residing in the provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap by providing sustainable access to markets and essential services through (i) a program of road rehabilitation and maintenance; (ii) a program of capacity building and training; and (iii) development of improved public policies and strategies\. The objectives in the Project Appraisal Document and the Development Credit Agreement are the same\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives /key associated outcome targets? No c\. Components: The project comprised five components\. 1\. 1\. Maintenance management (appraisal estimate (US$1\.0 million, actual cost US$0\.1 million)\. This component would support: (a) installation and operation of road maintenance management systems at the national level in the Ministry of Public Works and Transport and Ministry of Rural Development\. At provincial level in Provincial Public Work Department for MPWT and Provincial Department Rural Development for MRD at the Kampong Thom province, Oddar Meanchey, PreahVihear and Siem Reap; and (b) annual programs of routine maintenance on all roads in good and fair condition  in the provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap\. The routine maintenance would be funded from the Government's annual budget allocations\. 2\. Rehabilitation and periodic maintenance of secondary-national, provincial and tertiary roads (appraisal estimate US$18\.65 million, actual cost US$19\.8 million)\. The component included a program of rehabilitation and periodic maintenance in the four provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap\. It covered: (a) approximately 300 km of strategic secondary-national and provincial roads under the Ministry of Public Works and Transport; and (b) approximately 300 km of tertiary roads under the Ministry of Rural Development\. The works were to be contracted out and a program to develop qualified private contractors was to be run concurrently, increasing private sector involvement in the road sector\. 3\. Capacity building program (appraisal estimate US$2\.60 million, actual cost US$4\.0 million)\. The project would support a program of institutional strengthening for the Ministry of Public Works and Transport and the Ministry of Rural Development\. 4\. Policy and strategy development (appraisal estimate US$0\.2 million, actual cost US$0\.07 million)\. This component would support a program to improve the Ministry of Public Works and Transport and the Ministry of Rural Development policy and strategy development in the areas of: (a) integrated planning and budgeting of roads; (b) least cost life-cycle standards; (c) use of appropriate technology; (d) mainstreaming of road maintenance; and (e) institutional reform\. This component would also support the on-going policy development in the transport sector, primarily supporting initiatives that are already underway\. 5\. Community awareness programs (appraisal estimate US$0\.55 million, actual cost US$0\.08 million)\. This component would support community awareness program aimed at increased awareness of road safety; HIV/AIDS; people’s participation in road planning, and access to public information; mine and Unexploded Ordnance Risks; and mine clearance programs\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost: The actual project cost was US$24\.4 million slightly higher than the appraisal estimate of US$23\.3 million\. Financing: The actual credit amount was US$ 17\.4 million\. A total of US$2\.29 million was cancelled\. Suspension: The project disbursements were suspended from June 5, 2006 to February 1, 2007, except for contracts associated with preparation of the financial audit and the construction of two essential bridges on a district road\. The project was suspended for 8 months due to the miss-procurement of six civil works contracts\. A good governance framework was developed for the project and an Action Plan was established\. An International Procurement Adviser (IPA) - Crown Agents - was recruited\. Responsibility for project procurement activities was taken away from the two implementing agencies and passed to the IPA\. A Contract Supervision Consultant was recruited to inspect the quality of the civil works and to approve payments\. This responsibility had previously been with the Ministry of Public Works and Transportation and the Ministry of Rural Development who had delegated this responsibility to their provincial offices\. In addition a Technical Audit was included in the project activities\. Borrower Contribution: The Borrower actual contribution was US$6\.9 million compared to the appraisal estimate of US$3\.3 million\. Dates: The project closed on December 31, 2001, more than four years after the closing date of September 30, 2007 for the following reasons: The project closing date was extended from September 30, 2007 to September 30, 2009 to make up  for time lost due to the suspension and slow start-up of the Independent Procurement Agent\. The closing date was further extended from September 30, 2009 to December 31, 2010 due to late procurement process by IPA and to complete the second annual work program and capacity building activities funded under the Policy and Human Resource Development Grant (TF56974)\. The closing date was further extended from December 31, 2010 to December 31, 2011, to complete a final six civil works packages that would provide basic all-weather access and connectivity to higher order roads for a number of poor rural communities\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Relevance of Objectives: high\. The project objectives remained consistent with the most recent Country Assistance Strategy (April 18 2005) which among other things focussed on improving rural livelihoods\. The project objectives were in line with the National Poverty Reduction Strategy (2003-2005)\. The Government and donor support was being directed towards the most basic needs at the village level through community driven development projects, and one of the project had reconstructed tertiary roads in six provinces located in the southeastern part of the country\. The project complemented these efforts as it focused on the road network’s “missing middleâ€?, that is, the part of the network between the national network and village access roads/tracks\. This part of the network was critical for the reintegration of severely war affected people and areas into the national economy, and for the creation of opportunities for employment in rural areas and sustained livelihoods\. b\. Relevance of Design: Relevance of Design: modest\. The activities included in the project components were designed to contribute to the achievement of the project objectives through transport-related access (rather than the availability of services or ability to pay)\. The project component focussing on the rehabilitation and periodic maintenance of secondary, provincial and tertiary roads was critical for improving access\. The project also supported the Ministry of Public Works and Transport and the Ministry of Rural Development in the areas of policy and strategy development\. The project adopted an inclusive participatory planning approach that was new to Cambodia\. This approach has been mainstreamed in the planning for roads\. The Project design had a number of shortcomings: the underestimation of costs; the failure to account for the severe capacity constraints in implementing agencies; the lack of an integrative framework for the policy and strategy development program; and the failure to recognize the imperfectly competitive market structure that led to collusion\. 4\. Achievement of Objectives (Efficacy): Assist the Borrower to enhance the livelihood of the peoples residing in the Project Provinces by providing sustainable access to markets and essential services: rated modest\. Outputs Physical The project assisted in the rehabilitation of 263\.4 km of strategic secondary-national and provincial roads compared to the revised target of 250 km\.  About 84 km of rural roads and two bridges were rehabilitated compared to the revised target of 80 km\. The project assisted in the maintenance of 738 km of secondary and provincial roads compared to the original target of 300 km (the target was not revised)\. The project also assisted in the maintenance of 602 km of tertiary roads compared to the original target of 300 km (the target was not revised)\. Institutional Capacity Building The project did not fully implement the policy and strategy development component\. The use of appropriate technology and institutional reform was not carried out\. Following outputs were partly achieved: A three-year rolling program for investment was developed, but at project closing was not fully operational\. Training was extended to national and provincial public works departments, and also to private contractors who were capable of carrying out civil works but lacked skills related to business processes\. About 450 staff from the Ministry of Public Works and Transport and 215 staff from the Ministry or Rural Development received training in project management, planning, road maintenance, road safety, etc\. The ICR reports that the link between the training and the sustainability of improved road services has been seriously compromised by the Government’s decision to terminate programs designed to adequately remunerate and thereby retain high caliber staff (ICR p\. 13)\. Furthermore, on the job knowledge transfer was also undercut after suspension when procurement and supervision authority was transferred from ministry staff to the IPA and Supervision Engineer\. A Roads Maintenance Management System was established for the Ministry of Public Works and Transport\. An inventory of all road assets was done and the Ministry staff were trained, but problems with data interpretation precludes the system's use to develop prioritized road maintenance plans\. A Roads Maintenance Management System was installed in two provinces but the Ministry of Rural Development lacked funds to pay the servicing fees\. It is in the process of developing its own system using Microsoft Access (Map Source and Arc GIS)\. A new Roads Law was approved\. According to the Government, after project closing, many staff at MRD-PRIP have become specialists in procurement, M&E, Environment and Safeguard Issues and a teacher at University (Community Development)\. Outcomes The project increased access to all weather roads\. Before the project only 708 out of 1932 villages (37%) in the project provinces were linked to secondary and provincial roads in good condition\. After project completion, 1059 out of 1932 villages (55%) had all weather access to the secondary and provincial road networks\. The ICR noted that these roads were selected in a participatory manner, i\.e\., the residents considered these roads most essential for access to markets and services, and for connecting to the national road network, and/or for linking provincial centers together (ICR p\. 12)\. Most of the project roads remained in good condition, despite the extraordinary weather conditions of 2009 and 2011 (extensive rains and severe flooding)\. The rehabilitation of roads resulted in reduction in travel time and costs of transportation (see table below)\.  Travel Time Cost (Riel) Before the Project After Road Before the Project After Road Rehabilitation Rehabilitation Angkor Chum to Five hours* 45 minutes* 50,000 12,000* Varin - Svar Sar Commune (travel to town) Angkor Chum to Three hours 25 minutes* 30,000* 8,000* Varin - Charchhouk Commune (travel to town) Road PR 213 - One hour Less than half hour 30,000 10,000 Reakreay Commune (comunie to village) Road NR 71 5,000 1,500 (transport to NR 6) Road PR 181 (travel The earth road was The final section of 20,000 2,000 to district) impassable even the road to the during the dry Commune Center, season\. which would serve Four hour walk\. about 10,000 people, is still not passable in the wet season\. * Based on figures provided by the Government\. Access to markets, health centers and schools was improved: Angkor Chum to Varin road - Svar Sar Commune\. Before the road was improved, rice growers had to bring rice to the market, at a cost of Riel 500/kg; now the rice broker comes to the village and pays Riel 1200/kg\. Before the project, the patients had to be transported to the hospital\. After the road was rehabilitated, ambulance service was possible\. Before, villagers could only travel in daylight; now that the mines have been cleared, it is safe to travel after dark\. Angkor Chum to Varin - Charchhouk Commune\. Travel time was reduced from three hours to twenty five minutes and the cost decreased from Riel 30,000 to Riel 8,000\. Despite the improvements in the road, there were drainage problems\. Road PR 213 - Reakreay Commune\. Before the road was improved, no middleman would come to the village to buy rice\. After road improvement , the middleman comes and pays R 1200/km\. Before the villagers relied on traditional medicine; now they can visit health clinics when sick\. Before the school drop-out rate was high after 4th grade (the village school only went to 4th grade); now they have a secondary school and school attendance is high\. Salavisai to Stoung road\. The road serves about 2000 people and passes through two communes\. Before improvement, only animal cart transport was possible\. After the road was improved, the cost to Kampong Thoms dropped from 35,000 to 2-3,000 Riel\. Access to markets, schools, clinics and the hospital improved, and traders and NGOs are coming into the area\. According to the the regions comments, the Bank’s EXT colleagues in Cambodia interviewed  beneficiaries and produced a video which was posted on the Bank website\. The people interviewed siad that through the project their revenues have increased because more buyers visit their villages, the project has reduced the travel distances and times on the roads, improved access to markets, health centers and schools, etc\. During the interview, a woman who lives in a village near one of the roads of the project said with tears in eyes: "I could not go to high school because there was no road to reach the high school from my village\. Today, thanks to the road rebuilt by the project, I am proud that my children can go to high school easily"\. Social development was promoted with the participation of about 15,000 people in preventive activities (HIV/AIDS awareness, road safety, unexploded ordnance awareness)\. The ICR reports that road safety became a problem with the improvement in roads\. There were some accidents - 12 in 2011 and 9 in 2010 on Angkor Chum to Varin road - Charchhouk Commune\. On PR 213 - Reakreay Commune, traffic accidents are a problem, due to high speeds and drunk driving\. In one month there were four accidents\. 5\. Efficiency: At appraisal the Economic rate of return was estimated at 35%\. The ex-post analysis used actual costs and traffic volumes\. The current (2011) traffic counts were available for only two of the Ministry of Public Works and Transport roads (NR 65 and NR 71)\. These counts showed traffic levels that were approximately equal or somewhat lower than those assumed at appraisal\. The ICR (p\. 28) reports that overall trends show substantial increases in traffic volumes throughout Cambodia, it is likely that the counts were incomplete and/or influenced by the count location\. For the Ministry of Rural Development roads, traffic counts were taken shortly after completion of each road\. These show levels of traffic growth that were higher than expected, with increases of 45% in Oddar Meanchey Province, 186% in Preah Vihear Province, 352% in Siem Reap Province and 358% in Kampong Thom Province\. The counts include non-motorized and motorized vehicles, with the highest growth in numbers of motor cycles\. As the roads were barely passable, if at all, prior to improvement, high levels of traffic growth are reasonable\. For Ministry of Public Works and Transport roads, six road links yielded a range of NPVs from US$0\.025 million to US$8\.8 million and ERRs ranging from 15 percent and 21 percent\. These fall within the same range as the original estimates for the same roads\. For Ministry of Rural Development, the ex-post ERRs range 19 percent and above 50 percent\. The project closed on December 31, 2011, more than four year after the closing date of September 30, 2007\. There were no major cost overruns\. Overall, efficiency is rated modest\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal Yes 35% 79\.5% ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The relevance of objectives is rated high, while that of design is assessed as modest\. Project efficacy and efficiency are assessed as modest\. The project outcome is moderately unsatisfactory\. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: The risk to development outcome is rated high for the following reasons: Inadequate funding for road maintenance\. While allocations from Treasury for road maintenance have steadily improved, total funding for roads is inadequate and the risk of inadequate, unpredictable and/or untimely funding remains\. Lack of a policy framework and strategy to guide the development of the roads and transport sector\. Ratification of the proposed Roads Law is expected soon, which will clarify roles and responsibilities (roads will be classified by function rather than traffic volumes), but questions remain over such issues as sources of funding for roads, commercialization of road services and the role of the private sector\. Inability to retain technically qualified staff\. Both the Ministry of Public Works and Transport and the Ministry of Rural Development are short of trained staff, and will continue to be until such staff can be adequately compensated\. This requires a civil service reform\. Civil service reforms related to conditions of service and remuneration have been rescinded but not replaced\. While the adoption of a Good Governance Framework is a good start, the risk of fraud and corruption remains\. Some progress has been made, as measures put in place by the two Ministries have contributed to more transparent processes and reporting, and the oversight role of civil society may develop over time\. a\. Risk to Development Outcome Rating : High 8\. Assessment of Bank Performance: a\. Quality at entry: Project preparation benefitted from analytical work carried out under the Road Rehabilitation Project (RRP, Cr\. 3181-KH, FY99) and a PHRD grant (TF26422)\. The former provided initial thinking on transport sector policy and strategy, including proposals for legislative and institutional reform\. The latter enabled a broader and more intensive analysis of rural access needs and solutions at the provincial and district levels\. Safeguards were appropriately identified\. However, there were a number of shortcomings: Some of the risks were underestimated\. The project was assigned an overall risk rating of substantial risk\. However the only risk rated high was that a road maintenance policy and maintenance financing mechanism would not be established within the three-year time frame of the project\. The risk associated with security and rule of law was rated modest, while the risk associated with transparent competitive tendering processes of public road works was rated substantial\. These risks should have been rated high\. Lack of due diligence in vetting technical designs and cost estimates\. The costs were underestimated and the quality of designs was poor (especially of the Ministry of Rural Development roads)\. The poor quality of the designs not only affected the quality and quantity of civil works that could be carried out, but also contributed to governance problems by opening the door to variation orders and cost overruns\. The project design failed to to account for the severe capacity constraints of the implementing agencies\. The Ministry of Rural Development was a relatively new ministry and inexperienced in  road planning and management, while the Ministry of Public Works and Transport was more experienced but under-resourced/under-staffed\. The policy and strategy development program lacked an integrative framework; the component simply comprised five practical areas intended to improve various aspects of decision-making and cost-effective implementation\. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: The Bank’s supervision from Board approval to the project suspension on June 6, 2006 was satisfactory\. Three supervision missions were carried out per year\. These were supplemented by procurement and environment/safeguards missions\. Problems were documented in mission reports\. The Bank was proactive in working with the implementing agencies to find solutions, but slow to downgrade the project, doing so only after the suspension had taken effect\. The decision to exempt from the suspension the construction of two critical bridges on the Salavisai Commune to Stoung District Road was appropriate as these bridges were critical for the beneficiaries\. The Bank’s performance during "from the suspension to the restructuring in September 2010" was moderately unsatisfactory\. The Bank agreed to lift the suspension, however, this required outsourcing of procurement and works supervision and thus undercut the use of government systems and procedures and “learning by doingâ€? that had been at the core of the project design\. Also, the appointment of the Independent Procurement Agent and Supervision Engineer took time and delayed project implementation\. The Bank missions were shorter and somewhat less frequent during this\. The mid-term review was postponed indefinitely, the project was not restructured beyond the conditions for lifting the suspension, and the performance indicators were not brought into alignment with the reduced available time and funding\. In mid-2010 the project was downgraded to unsatisfactory in recognition that the original outcomes and targets could not be achieved\. The project was restructured and extended for one final year on December 31, 2010\. The restructuring revised the targets downward and identified a set of activities that could realistically be completed within a one year time frame if the project were extended for a final 12 months\. The Bank's performance after restructuring i\.e\. from September 2010 to project closing was satisfactory\. All the activities agreed in the restructuring package were successfully implemented ahead of the project closing date\. The Bank closely monitored the project\. According to the region, the client acknowledged that the role of the Bank’s team was decisive for the good results\. Overall, the quality of supervision is moderately satisfactory\. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Government support for improving budgetary systems and providing adequate funding for road construction and maintenance were delayed\. The Government made counterpart funds available and the works were completed as planned\. Also, planning and budgeting improved in both MPWT and MRD; budget allocations for road maintenance rose steadily and in the later years exceeded the targets set under the project\. The finalization and endorsement of the Roads Act, which was needed to clarify the roles and responsibilities of the various ministries and agencies with respect to roads was also delayed\. In parallel to the project, the draft Road Law was recently endorsed by the Council of Ministers and is scheduled to be submitted to the National Assembly for approval by September 2012, and a Rural Roads Policy was submitted to the Council of Ministers for endorsement\. About 450 staff from MPWT and 215 staff from MRD received training in project management, planning, road maintenance, road safety, etc\. However the link between the training and the sustainability of improved road services has been seriously compromised by the Government’s decision to terminate programs designed to adequately remunerate and thereby retain high caliber staff\. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance: The Social and Environmental Unit was established within MPWT as planned; and a Financial Management Standard was prepared and implemented\. The first three audit reports were not delivered on time, and procurement irregularities resulted in mis-procurement of six contracts and cancellation of corresponding amounts from the Credit\. The suspension affected morale at all levels and undercut momentum in particular at the provincial level\. The imposition of parallel implementation arrangements complicated implementation, and project implementation stalled\. After the suspension was lifted and the implementation arrangements were clarified, the two implementing agencies, first MRD and then MPWT, resumed implementation of the project\. Fiduciary compliance improved, with audit reports produced on time and project progress reports prepared at least on an annual basis\. The mandated Good Governance Frameworks were implemented by the two ministries and a complaint handling mechanism was established\. The websites and related disclosure of the project information also improved\. While monitoring and evaluation data were collected on a more regular basis towards the end of the project, the use of such information as a project management tool has yet to gain traction\. Baseline data was not collected, and development of project websites was behind schedule\. Fiduciary compliance was poor throughout the first half of the project\. Implementing Agency Performance Rating : Moderately Unsatisfactory Overall Borrower Performance Rating : Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The key performance indicators were defined to measure broadly defined access, i\.e\. actual use of services\. These indicators included reduction in travel time and transport costs\. The M&E design should have included impact evaluation to determine the extent to which the project caused the final outcome i\.e enhance the livelihood of the people\. However, this outcome is likely to have been caused both by project-related and external factors\. The project included indicators such as increased use of health services, increased use of education services, increased volume and revenue of tourism, increased flow of information in rural areas, increased number of non-farm employment opportunities, and increased number of non-governmental organizations active in the project area\. Many of the indicators were not readily quantifiable, such as increased flow of information, and it was not clear how the indicators were intended to be measured as the “Data Collection Strategyâ€? column of the Project Design Summary was left blank\. Baseline data were not collected during project preparation\. b\. M&E Implementation: As mentioned above, there was no baseline data\. Data was first collected in 2007 three years after the project became effective\. Thereafter the Key Performance Indicator table was updated annually, although some of the data were unreliable or unavailable (ICR p\. 8)\. There was no beneficiary reassessment at project closure\. c\. M&E Utilization: The ICR reports (p\. 9) that there is no evidence to suggest that the data collected to populate the Monitoring and Evaluation framework was or will in the future be used for decision-making purposes\. M&E Quality Rating : Negligible 11\. Other Issues a\. Safeguards: Appraisal The project was rated Category "A" and following safeguards were applicable: Environmental Assessment (OP 4\.01), Natural Habitats (OP 4\.04), Cultural Property (OPN 11\.03), Indigenous Peoples (OP 4\.20) and Involuntary Resettlement (OP 4\.12)\. An Environmental Assessment was prepared in accordance with OP 4\.01 (PAD 22)\. The main findings were that, since the project would support rehabilitation of existing roads along their present alignments and within existing rights-of-way, any environmental impact of the project was expected to be limited to the construction effects associated with the rehabilitation and maintenance road works such as noise and dust, disposal of solid wastes, erosion, etc\. Some of the roads proposed for rehabilitation adjoin protected landscapes, national parks, or wildlife sanctuaries and are therefore subject to OP 4\.04 on Natural Habitats\. Three important protected areas were located within the four provinces: Beng Per Wildlife Sanctuary, Phnom Kulen National Park, and Kulen Promtep Wildlife Sanctuary\. Given the potential for cultural relics in the project area, particularly in Siem Reap province, OPN 11\.3 on Cultural Property became applicable\. At least one of the project provinces, Preah Vihear have some indigenous communities\. At appraisal, the Ministry of Public Works and Transport and the Ministry of Rural Development adopted an Indigenous Peoples' Development Framework (IPDF) (June 2003) in accordance with OD 4\.20, and guidelines for screening and implementation are included in the agreed Project Implementation Plan (July 2003) (PAD p\. 25)\. The project would support rehabilitation of existing roads\. There was expected to be limited acquisition of land and resettlement of people\. The Ministry of Public Works and Transport and the Ministry of Rural Development at appraisal adopted a Resettlement Policy Framework (June 2003) in accordance with OP 4\.12 and guidelines for screening and implementation are included in the agreed Project Implementation Plan (July 2003) (PAD p\. 25)\. In addition to consultations around environmental and social impacts, the project enlisted the support of NGOs to design and implement public awareness campaigns for road safety, HIV/AIDS, mine and unexploded ordnance security, and for monitoring of civil works on the ground\. Implementation A Coordination Committee on Social and Environmental Impacts and Work Quality was established in the project communes of MPWT (MRD used existing Road Maintenance Committees in the communes) to develop awareness campaigns which informed communities through the posting of information on signboards along the project roads\. This included project cost and time frame, applicable safeguard frameworks and grievance redress mechanisms (with contact information and comment/complaint boxes)\. This was also posted on MPWT and MRD websites\. The ICR reports (p\. 10) the environmental and social safeguard compliance was satisfactory or moderately satisfactory throughout most of project implementation\. Environmental management plans (EMPs) were included in works bidding documents, and social and environmental training of provincial offices was carried out\. Some problems occurred in areas affected by the routine maintenance activities and in the environmental management of road works on NR 64 (which traversed part of the Boeng Per Wildlife Sanctuary)\. A review mission in mid-2005 found that the contractor had failed to comply with environmental protection measures within the Wildlife Sanctuary\. This triggered a review of natural habitats by the Bank in the four project provinces\. In July 2007, the Social and Environmental Unit of MPWT began to take an active role in overseeing environmental and social issues under the project, starting with NR 64 and carrying on throughout the second works program\. Two publications – Final Standard Guidelines for Environmental Safeguards and Final Standard Guidelines for Implementation of Social Safeguards – were finalized in 2009-2010 and made publicly available in Khmer and English\. The ICR does not report on involuntary resettlement/land acquisition, Cultural Property or Indigenous Peoples safeguards\. b\. Fiduciary Compliance: Fiduciary Serious problems were encountered in financial management in the early years of project implementation (ICR p\. 9)\. Both Ministry of Public Works and Transport and the Ministry of Rural Development encountered difficulties in finding and retaining qualified financial management staff and the Financial Management Advisor position in each ministry remained vacant throughout much of the first two phases of project implementation (and again for Ministry of Rural Development before project close)\. Remedial actions were taken by the Project Implementation Unit\. This included preparation of a Financial Management Standard (2009)\. Audit compliance was especially poor in the early years\. The first three audit reports were "seriously overdue"(ICR p\. 9)\. Audit compliance improved and the audits were unqualified for later years (ICR p\. 9)\. The Bank's Institutional Integrity Department (INT) uncovered evidence of corruption, collusion and fraud in four ongoing Bank projects in Cambodia\. In case of this project, the investigation uncovered evidence of fraud and corruption in the procurement and/or administration of six contracts (two in Ministry of Public Works and four in Ministry of Rural Development )\. Procurement The project experienced problems with procurement\. For six contracts mis-procurement declared\. A further procurement problem arose in mid-2009, with evidence of collusion among bidders for construction of drainage structures on MRD and MPWT roads\. The Bank agreed for rebidding of two packages of civil works, as it found no evidence of government staff involvement (ICR p\.9)\. c\. Unintended Impacts (positive or negative): None reported in the ICR\. d\. Other: None reported in the ICR\. 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Unsatisfactory Unsatisfactory Risk to Development High High Outcome : Bank Performance : Moderately Moderately Unsatisfactory Unsatisfactory Borrower Performance : Moderately Moderately Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following lessons are adapted from the ICR (pp\. 21-23): A well formulated sector policy and strategy are essential if gains are to be sustained\. The Government of Cambodia and development partners have invested heavily in the rehabilitation and reconstruction of Cambodia’s roads at the national, provincial, district and local levels\. However, commensurate efforts to develop a sector-wide policy and strategy remain fragmented\. Questions as to how road services will be provided, managed and financed have yet to be fully resolved\. Moving from force account to the contracting out of maintenance works involves not only building the capacity of individual contractors but also the entire contracting environment i\.e\. a well-defined legal framework within which contractual processes would be carried out; and building the capacity of the government ministries and their provincial departments with contract management\. For M&E frameworks to be useful, they have to employ indicators that are relevant and useful to decision makers\. Data must be easy to collect and analyze, and progress on key indicators should  be reported on at regular intervals\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR is a bit long (22 pages)\. However, it is well written and is consistent with the ICR guidelines\. The discussion and analysis is evidence based and of good quality - although good outcome evidence is missing (a fault of the project's M&E systems)\. The lessons are thoughtful and based on project experience\. The ICR sometimes used the wrong ratings (e\.g\., “…achievement of the PDO and efficiency are moderately unsatisfactory and efficacy and efficiency are moderately unsatisfactory…â€? (para\. 49)\. Also, not all of the defined performance indicators were reported in the introductory datasheet\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P117377

 Document of The World Bank Report No: ICR 89199-AR IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-78430) ON A LOAN IN THE AMOUNT OF US$229 MILLION TO THE ARGENTINE REPUBLIC FOR AN EMERGENCY PROJECT FOR THE PREVENTION AND MANAGEMENT OF INFLUENZA-TYPE ILLNESS AND STRENGTHENING OF ARGENTINA’S EPIDEMIOLOGICAL SYSTEM June 25, 2014 Human Development Department Argentina, Paraguay and Uruguay Country Management Unit Latin America and the Caribbean Region  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2013) Currency Unit = Argentine Peso (ARS) ARS$6\.4940 = US$1\.00 US$1\.00 = ARS$\.1535 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ARI Acute Respiratory Infection ARS Argentine Peso CDC Centers for Disease Control and Prevention COFESA Federal Health Council (Consejo Federal de Salud) CONAIN National Immunization Commission (Comisión Nacional de Inmunizaciones) CPS Country Partnership Strategy EA Environmental Assessment EPHF Essential Public Health Functions ERL Emergency Recovery Loan ETI Influenza type illness (Enfermedad tipo influenza) FESP I Essential Public Health Functions and Programs Project I (Funciones Esenciales y Programas Priorizados de Salud Publica) FESP II Essential Public Health Functions and Programs Project II (Funciones Esenciales y Programas Priorizados de Salud Publica) EPI Expanded Program on Immunization FHP Federal Health Plan FM Financial Management FY Fiscal Year GDP Gross Domestic Product GOA Government of Argentina HSR Health Situation Room ICB International Competitive Bidding ICR Implementation Completion Report ICU Intensive Care Unit ILI Influenza-like Illness IFR Interim Financial Reports IP Indigenous People IPP Indigenous People’s Plan IRAG Severe Acute Respiratory Infection (Infección Respiratoria Aguda Grave) ISR Implementation Status and Results Report ITA Independent Technical Audit (Auditoria Técnica Independiente) LAC Latin American and Caribbean Region M&E Monitoring and Evaluation ii MEFP Ministry of Economy and Public Finance MOCS Operational Modules of Social Communication (Módulos Operativos de Comunicación Social) MSN National Ministry of Health (Ministerio de Salud de la Nación) OPRC Operations Procurement Review Committee PAD Project Appraisal Document PDI Project Development Indicators PDO Project Development Objective PPHP Priority Public Health Programs PRONACEI National Program for the Control of Immunopreventable Diseases (Programa Nacional de Control de Enfermedades Inmunoprevenibles) RBF Result-Based Financing SARS Severe Acute Respiratory Syndrome SIVILA Laboratory Surveillance System (Sistema de Vigilancia de Laboratorios) SNVS National Health Surveillance System (Sistema Nacional de Vigilancia de Salud) UFI-S International Health Financing Unit (Unidad de Financiamiento Internacional de Salud) US United States WHO World Health Organization Vice President: Jorge Familiar alde n Country Director: Jesko Hentschel Sector Manager: Joana Godinho Project Team Leader: Vanina Camporeale ICR Team Leader: Claudia Macias ICR Primary Author: Natasha Zamecnik iii  ARGENTINA Emergency Project for the Prevention and Management of Influenza Type Illness and Strengthening of Argentina’s Epidemiological System TABLE OF CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Profile 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 6 3\. Assessment of Outcomes \. 11 4\. Assessment of Risk to Development Outcome\. 16 5\. Assessment of Bank and Borrower Performance \. 16 6\. Lessons Learned \. 18 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 19 Annex 1\. Project Costs and Financing \. 20 Annex 2\. Outputs by Component \. 21 Annex 3\. Economic and Financial Analysis \. 27 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 31 Annex 5\. Beneficiary Survey Results \. 33 Annex 6\. Stakeholder Workshop Report and Results\. 34 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 35 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 47 Annex 9\. List of Supporting Documents \. 48 Annex 10\. Map \. 50 iv  Data Sheet A\. Basic Information Prevention and Management of Influenza Type Illness Country: Argentina Project Name: and Strengthening of Argentina's Epidemiological System Project Project ID: P117377 L/C/TF Number(s): IBRD-78430 ICR Date: 06/25/2014 ICR Type: Core ICR REPUBLIC OF Lending Instrument: ERL Borrower: ARGENTINA Original Total USD 229\.00M Disbursed Amount: USD 141\.00M Commitment: Revised Amount: USD 141\.00M Environmental Category: B Implementing Agencies: National Ministry of Health Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/20/2009 Effectiveness: 04/30/2010 04/14/2010 05/12/2011 Appraisal: 10/21/2009 Restructuring(s): 03/19/2012 03/01/2013 Approval: 02/23/2010 Mid-term Review: 11/21/2011 11/21/2011 Closing: 03/31/2012 12/31/2013 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Satisfactory v C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Satisfactory Performance: Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Health 100 100 Theme Code (as % of total Bank financing) Health system performance 81 90 Other communicable diseases 19 10 E\. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Calderon Pamela Cox Country Director: Jesko S\. Hentschel Pedro Alba Sector Manager: Joana Godinho Keith E\. Hansen Project Team Leader: Vanina Camporeale Fernando Lavadenz ICR Team Leader: Claudia Macias ICR Primary Author: Natasha Zamecnik vi F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the Project is to strengthen the capacity of the Borrower's epidemiological health surveillance system: (a) to prevent, monitor and evaluate influenza activity; and (b) to control epidemic waves of the A/H1N1 influenza\. Revised Project Development Objectives (as approved by original approving authority) N/A (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Health Situation Rooms (HSR) Certified\. Value quantitative or 0 40 38 36 Qualitative) Date achieved 01/26/2010 03/31/2012 03/31/2013 11/14/2013 The PAD did not differentiate between PDO indicators and intermediate results Comments indicators\. Project results are measured by 14 intermediate indicators, out of (incl\. % which five were selected to measure the PDO\. This indicator is one and is achievement) included here for system purposes\. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Health Situation Rooms (HSR) Certified\. Value (quantitative 0 40 38 36 or Qualitative) Date achieved 01/26/2010 03/31/2012 03/31/2013 11/14/2013 Comments (incl\. % Target partially achieved\. achievement) Indicator 2 : Health Situation Rooms – Level II accredited\. Value (quantitative 0 16 28 or Qualitative) Date achieved 03/19/2012 12/31/2013 11/14/2013 Comments (incl\. % Target surpassed\. New indicator and target included through 2nd restructuring\. achievement) vii  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Operational Modules of Social Communication (MOCS) implemented Indicator 3 : (excluding indigenous people MOCS)\. Value (quantitative 1% 90% 90% or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments Target achieved as reported by MSN\. This is one of the five key indicators for (incl\. % purposes of measuring the PDO\. achievement) Operational modules of Social Communication (MOCS) for indigenous people Indicator 4 : implemented\. Value (quantitative 1% 90% 90% or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments (incl\. % Target achieved as reported by MSN\. achievement) Indicator 5 : Dose of A/H1N1 vaccine applied\. Value (quantitative 1% 90% 107\.8% or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2012 Target surpassed for 2011 vaccination campaign as reported to the National Comments Health Surveillance System (SNVS) as 4\.5 million doses were applied (above the (incl\. % 4\.2 million anticipated)\. Source: EPI achievement) This is one of the five key indicators for measuring PDO\. Indicator 6 : Dose of Pneumococcal vaccine applied\. Value (quantitative 0% 90% 85% 99\.3% or Qualitative) Date achieved 01/26/2010 03/31/2012 03/31/2012 11/14/2013 Comments Target surpassed in 2011 vaccination campaign\. Source: EPI (incl\. % This is one of the five key indicators for purposes of measuring the PDO\. achievement) Indicator 7 : Dose of A/H1N1 vaccine included in National Calendar applied\. Value (quantitative 0% 80% 87\.6% or Qualitative) Date achieved 03/19/2012 12/31/2013 11/14/2013 Comments Target surpassed\. Source: PRONACEI\. (incl\. % New indicator and target included through 2nd restructuring\. achievement) viii  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 8 : Dose of Pneumococcal vaccine included in National Calendar applied\. Value (quantitative 52% 80% 85% or Qualitative) Date achieved 03/19/2012 12/31/2013 11/14/2013 Comments Target surpassed\. Source: PRONACEI\. (incl\. % New indicator and target included through 2nd restructuring\. achievement) Indicator 9 : Outpatient treatment provided\. Value (quantitative 0% 90% 99% or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments (incl\. % Indicator achieved and target surpassed\. Source: EPI achievement) Indicator 10 : Inpatient treatment provided in hospitalization\. Value (quantitative 0 10,000 Not measured or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments (incl\. % Indicator not measured due to pandemic control\. achievement) Indicator 11 : Inpatient treatment provided in hospital due to Acute Respiratory Infection\. Value (quantitative 27,284 30,000 40,936 or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments (incl\. % Target surpassed\. Source: EPI achievement) Indicator 12 : Inpatient treatment provided in ICU\. Value (quantitative 0 1000 Not measured or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments (incl\. % Indicator not measured due to pandemic control\. achievement) Indicator 13 : Influenza diagnostic laboratory test carried out in 2010 and 2011\. Value 0 24,000 54,000 65,341 (quantitative ix  Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years or Qualitative) Date achieved 01/26/2010 03/31/2012 03/31/2012 12/31/2013 Comments Target surpassed\. This is one of the five key indicators for purposes of measuring (incl\. % the PDO\. achievement) Indicator 14 : Independent technical audits (ITA) performed\. Value (quantitative 0 8 8 or Qualitative) Date achieved 01/26/2010 03/31/2012 11/14/2013 Comments (incl\. % Target achieved\. achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 06/28/2010 Satisfactory Satisfactory 90\.00 2 02/23/2011 Satisfactory Satisfactory 129\.81 3 09/07/2011 Satisfactory Satisfactory 130\.57 4 03/21/2012 Satisfactory Satisfactory 132\.15 5 11/17/2012 Satisfactory Satisfactory 136\.15 6 07/09/2013 Satisfactory Satisfactory 139\.70 7 12/30/2013 Satisfactory Satisfactory 140\.43 H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Cancelation of US$88 million 05/12/2011 N S S 129\.81 of the Loan amount and reallocation of Loan proceeds\. Fi st extension of the P oject’s closing date by 12 months, 03/19/2012 S S 132\.15 modification of Project indicators and reallocation of loan proceeds\. x  ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Second extension of the closing 03/01/2013 S S 138\.98 date\. I\. Disbursement Profile xi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. Following the detection of A/H1N1 Influenza virus in Mexico in April 2009, the disease quickly spread and was declared a worldwide pandemic\. By May, widespread infection had occurred in North America and by June 73 countries had reported over 25,000 laboratory confirmed cases\.1 On June 11, 2009 the World Health Organization (WHO) declared the Influenza Outbreak a phase six pandemic, signaling that the virus had sustained community level outbreaks in at least one other country in a different WHO region and that a pandemic was underway\. 2\. Argentina was strongly impacted, resulting in high mortality and morbidy rates\. 2 On May 10, 2009 A gentina’s epidemiological su veillance system detected the first clinical case of A/H1N1 among passengers returning from Mexico\. Following the initial case, the virus spread quickly throughout the country, with peak transmission occurring during the winter months\. By January 2010, the death toll in Argentina had exceeded 600 people in 21 provinces, higher than in Mexico, while cases of influenza- like illness and hospitalizations numbered over 1\.2 million and 12,000, respectively\.3 4 3\. Starting in 2009, Argentina followed an integrated Response Plan for Influenza Pandemic and Severe Acute Respiratory Syndrome (SARS)\. A quick and harmonized response between national and provincial governments and an existing Response Plan regarding coordination, surveillance, vaccines and antiviral treatment, health services planning and communication contributed to the detection and containment of the outbreak\. The Government of Argentina (GOA) earmarked 1,000 million Argentine Pesos (about US$260 million) to fight the pandemic through the purchase of antiviral medication, equipment (respirators, oxygen equipment, and laboratory supplies) and to hire health staff to respond to increased health service demand\. 5 The National Ministry of Health (Ministerio de Salud de la Nación -- MSN) unified the count y’s treatment and diagnostic criteria for epidemic control and distributed health resources to both public and private health facilities, allowing the population to receive free treatment for A/H1N1 in all hospitals\. Through the Federal Health Council (Consejo Federal de Salud -- COFESA), the Ministers of Health of each province harmonized measures for 1 WHO, Evaluation of a Pandemic A(H1N1) 2009, April 2009-August 2010, pg\. 36\. 2 WHO, Global Alert and Response (GAR) - Pandemic (H1N1) 2009 update\. The impact of the pandemic on countries varied widely according to factors such as the season at the time of the outbreak, the extent of virus communicability, differences in health care practices and the capacity of the population for response\. (http://www\.who\.int/wer/2009/wer8422/en/index/html) 3 A striking difference between the A/H1N1 virus and seasonal influenza is that the former seemed to select people in a younger age cohort\. Pregnant women and individuals with underlying conditions were at higher risk for complications\. The true extent of death attributable to A/H1N1 is likely higher since many people died without being tested\. 4 MSN, Influenza Pandemica (H1N1) 2009, Informe Semana Epidemiologica No\. 52, January 6, 2010\. 5 The MSN deployed mobile units and hired extra health care workers to compensate and offset the increased demand\. 1 confronting the pandemic and agreed that funds would be utilized according to strict health criteria and the jurisdictional needs\. Five measures proved especially effective in the count y’s initial esponse: (i) advancing school ecess by fou weeks to all ow children to stay home during flu season; (ii) special leave at work for identified risk groups; (iii) ensuring availability of antiviral treatment to anyone who presented symptoms; (iv) intensifying a public awareness campaign; and (v) strengthening health care services for ambulatory and hospitalized patients\. In addition, local governments implemented social distancing measures, temporarily closing mass public activities, such as entertainment events to reduce viral circulation of the epidemic\. 4\. Despite the strengthening of Argentina’s primary health care (Atención Primaria de Salud) during the previous decade, the epidemic revealed weaknesses in the system\. An evaluation of the count y’s influenza pandemic preparedness revealed strains on the surveillance and laboratory systems during peak transmission\. The epidemiological surveillance and laboratory systems needed capacity strengthening to quickly gather data, generate an accurate diagnosis and respond effectively during a pandemic\. 5\. The World Bank collaborated with Argentina during the 2009 A/H1N1 outbreak through the rapid processing of approximately US$7\.5 million from the emergency component of the Essential Public Health Functions I Project (FESP- P090993, Loan 7412), which was specifically designed to address emergencies and epidemic outbreaks\. Initial technical evaluation of loan proceeds used for A/H1N1 showed the impact that timely funds had mitigating risks, with Argentina allocating the resources based on a pre-approved plan for Avian Flu\. The World Bank had extensive experience in supporting governments worldwide in preparing for and responding to influenza epidemics, controlling infectious diseases, and in strengthening national epidemiological surveillance systems\. This experience included that acquired through the Global Program on Avian Influenza, response to the SARS epidemic, HIV/AIDS pandemic and dengue epidemic\.6 6\. Following up on the emergency component under the FESP I operation, the GOA asked the World Bank for a new project to prepare for a possible second A/H1N1 wave\.7 Scientific studies and epidemiologists had predicted a second A/H1N1 wave in 2010 and A gentina’s National Immunization ommission (Comisión Nacional de Inmunizaciones -- CONAIN) recommended the strategic stockpiling of the vaccine as an element of the seasonal flu vaccine strategy (improving coverage)\. The Project was aligned with the World Bank Group’s ount y Pa tne ship St ategy (CPS) 2010-2012 (Report # 48476) discussed by the Executive Directors on May 6, 2009, in which one of the principal objectives was to consolidate improvements made to the health sector and complement ongoing activities of the FESP I Project, the Provincial Maternal-Child 6 In 2009, in addition to the influenza pandemic, Argentina suffered one of the worst dengue outbreaks since the reappearance of the disease in the country\. 7 Once a pandemic wave starts the possibility of a second or more waves (viral activity) is likely because the same virus remains circulating within the community\. 2 Health Investment Project (P071025, Loan 7225) and the Provincial Maternal-Child Health Investment Project Second Phase (P095515, Loan 7409) or Plan Nacer\. 8 The Project was closely aligned with three pillars of the CPS: sustainable growth with equity, social inclusion and improved governance, in which one of the principal objectives was to consolidate health improvements\. 7\. The Project adopted a Results-Based Financing (RBF) mechanism, considering the successful experience of this scheme in previous World Bank financed health operations and existing local RBF capacity\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators 8\. The PDO was to strengthen the capacity of Argentina’s epidemiological health surveillance system: (a) to prevent, monitor and evaluate influenza activity; and (b) to control epidemic waves of the A/H1N1 influenza\. The Project’s esults, as presented in the Project Appraisal Document (PAD), were to be measured through 14 intermediate outcome indicators\. The PAD indicates five out of the 14 intermediate outcome indicators to serve as key indicators for purposes of measuring the PDO, although not labeled as PDO-level indicators in the PAD results framework\.9 Nine of the intermediate outcome indicators were also output indicators for purposes of disbursement under the RBF scheme\.10 The P oject’s key indicators were: ï‚ Key Indicator 1: Health Situation Rooms (HSR) Certified ï‚ Key Indicator 3: Operational Modules of Social Communication (MOCS) implemented ï‚ Key Indicator 5: Dose of A/H1N1 vaccine applied ï‚ Key Indicator 6: Dose of Pneumococcal vaccine applied ï‚ Key Indicator 13: Influenza diagnostic laboratory test carried out in 2010 and 2011 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 9\. The original PDO remained valid and unchanged throughout Project implementation\. Two of the key indicators were revised to improve Project performance monitoring: ï‚ Key Indicator 1: The target for “HSRs Certifiedâ€?11 was revised from 40 to 38\. The target for this indicator was mistakenly stated at appraisal\. Instead of 40 situation rooms, the target should have been 38\. 8 The Project coordinated with Plan Nacer regarding immunization reports (EPI) data to identify the population to receive vaccination, treatment and education or preventive measures against A/H1N1\. 9 For more information regarding the monitoring framework see pages 62 and 63 of the PAD and Section 2\.3 of this ICR\. 10 See section 2\.3 for a list of the indicators under the RBF scheme\. 11 Health situation rooms are physical spaces where information is collected and analyzed in order to facilitate the identification of priority health programs and contribute to effective decision-making\. The 3 ï‚ Key Indicator 6: The target for the “Dose of Pneumococcal vaccine appliedâ€? indicator was revised downward from 90 percent to 85 percent\. According to the Government, an under-reporting of doses applied in the health facilities was the main reason the indicator remained below its target following the 2010 vaccination campaign\. The Government anticipated an improvement of results in 2011 by adding the vaccine to the Annual Calendar but nonetheless requested a target reduction given the recent introduction of the vaccine in the country\. 1\.4 Main Beneficiaries 10\. The Project’s direct beneficiaries included the over 13 million people that received vaccines, laboratory tests, and ambulatory and intensive care treatment\. A/H1N1 vaccines targeted those most vulnerable to the virus (7\.5 million in 2010 and 4\.6 million in 2011),12 and pneumococcal vaccines 830,801 high-risk individuals (135,308 in 2010 and 695,493 in 2011)\. Further, 65,341 (12,432 in 2010 and 52,909 in 2011) individuals exposed to influenza-like symptoms benefitted from early treatment through loan-financed lab tests, over two million received ambulatory treatment (2010 and 2011) and over 100,000 (2010-2012) were treated in hospitals, including those in intensive health care units\. Approximately 200 individuals received training in an epidemiology postgraduate course\. 1\.5 Original Components 11\. The Project consisted of the following three components (Annex 2): ï‚ Component 1: Strengthening the capacity of the Borrower’s epidemiological health system for surveillance and influenza case-finding (US$10\.2 million)\. The component included: (i) expansion and quality improvement of the epidemiological surveillance, (ii) activities aimed at coordinating human and animal health surveillance, (iii) carrying out of joint research with agencies, (iv) carrying out of prevention and vaccination promotion media campaigns at the provincial level, and (v) provision of training to health care service providers on the management of A/H1N1 influenza pandemic surveillance, hospital infections and control, promotion and prevention related aspects\. criteria for HSR certification was based on the following: (i) institutional mechanisms for the integration and diffusion of information; (ii) health quality improvements; (iii) improvements in the technical quality of produced analysis; and (iv) HSR functioning\. 12 The A/H1N1 epidemic had a different evolution than other influenza strains, therefore vaccines targeted the following high-risk groups (approximate numbers): (i) health professionals (1 million); (ii) community workers (1 million); (iii) pregnant women (700,000); (iv) the morbidly obese (400,000); (v) those older than six months of age with underlying diseases that affect the immune system (2 million); and (vi) children from six months to five years of age (3\.5 million)\. 4  ï‚ Component 2: Strengthening the Borrower’s health system response capacity to reduce the communicability of the influenza virus and improve medical care of those affected by influenza (US$217\.2 million)\. The component financed the application of A/H1N1 and pneumococcal vaccines, provision of outpatient treatment to symptomatic populations with respiratory conditions and treatment of patients with a respiratory condition\. ï‚ Component 3: Project Management and Monitoring, and Technical Audits (US$1\.6 million)\. 1\.6 Revised Components: 12\. The components were not revised during implementation\. 1\.7 Other significant changes 13\. The Project had three level II restructurings: ï‚ The first restructuring, approved on May 12, 2011, processed a partial cancellation of US$88 million in retroactive financing, reducing the financed amount to US$141 million, and reallocating loan proceeds\. the Wo ld Bank’s Ope ations P ocu ement Review Committee (OPRC), \. The restructuring reduced Category of disbursement 2 (goods) from US$181\.8 million to US$82\.8 million and increased Category 4 (outputs) from US$37\.5 million to US$50\.13 million\.13 ï‚ The second restructuring, approved on March 19, 2012, supported the attainment of Project targets by (i) extending the closing date by 12 months from March 31, 2012, to March 31, 2013, (ii) adjusting Project indicators, and (iii) reallocating loan proceeds\.14 The following indicators were added to the results framework: ï‚ The Borrower requested the introduction of more complex certification criteria for the HSR’s given that 19 out of 38 HSRs had in the first year of Project implementation achieved 100 percent accreditation according to key indicator 1 criteria\. Indicator 2 - Level II HSR accreditation was added to the results framework\. 13 To finance a second A/H1N1 vaccination (the 2011 National Free Vaccination Campaign against Influenza)\. 14 The reallocation of loan proceeds (i) increased Category 1 disbursements (non consultancy and consultancy services) from US$1\.8 to US$2\.4 million in order to finance additional years of training activities, consolidate strengthening of the epidemiological surveillance system and extend the Independent Technical Audit (Auditoria Técnica Independiente - ITA); (ii) reduced Category 2 (goods) from US$82\.8 to US$80\.51 million to reflect activities already initiated in the 2011-2012 Procurement Plan; (iii) increased Category 3 (outputs) from US$4\.9 to US$8\.25 to provide an additional year of financing for the situation rooms (which would now receive a level II certification), and consolidate epidemiological surveillance system achievements; and (iv) reduced Category 4 (outputs) and Category 5 (operating costs)\. 5  ï‚ The following indicators were added once key indicators 4 and 5 had been achieved and the A/H1N1 and pneumococcal vaccines were incorporated into the National Vaccine alenda : “Dose of A/H1N1 vaccine included in National Calenda appliedâ€? (indicator 7) and “Dose of Pneumococcal vaccine included in National alenda appliedâ€? (indicator 8)\. ï‚ The third restructuring, approved on March 1, 2013, extended for a second time the Project closing date from March 31, 2013 to December 31, 2013 to conclude Project activities\. The extension provided additional time to complete the third and last independent certification for the Level II HSR accreditation and complete operational research activities at the provincial level, the epidemiology postgraduate course, and the purchase of ambulances\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 14\. Project preparation and design were appropriately responsive to Government and health sector priorities\. The Project responded to the GOA’s request for assistance in the monitoring, prevention and control of the A/H1N1 influenza pandemic\. The Government demonstrated a high level of commitment to the Project with prompt preparation and processing of all steps necessary to ensure Project readiness\. The World Bank’s active and productive engagement with the GOA and long experience with A gentina’s health sector led to close cooperation in Project design and to a fast response through an Emergency Recovery Loan (ERL)\. An alternative instrument was not considered given the crisis nature of the situation and the fact that the Project met the criteria defined under emergency operations\. Weaknesses in the results framework design slightly impacted the ability to evaluate Project achievements (See section 2\.3)\. 15\. Project design was based on a detailed sector analysis, in line with the GOA’s Federal Health Plan (FHP), an economic analysis and incorporated lessons learned from other operations and international experience\. It also linked disbursements to the achievement of results (outputs), which has been shown to lead to improve performance and management\.15 Project design relied on the existing Integral Plan for the Prevention of an Influenza Pandemic (Unidad de Coordinación General del Plan Integral para la Prevención de Pandemia de Influenza), developed jointly between the MSN and the Ministry of the Interior in 2007, adapted to existing health conditions and utilized in the implementation of GOA measures against the A/H1N1\. An economic analysis conducted during preparation revealed that the benefit of strengthening epidemic mitigation capacity was greater than the (avoided) cost of an unmitigated A/H1N1 epidemic wave\. 15 IEG Wo king Pape 2009/4\. “Do Health Secto -Wide App oaches Achieve Results?â€? p xii\. 6 2\.2 Implementation 16\. Overall Project implementation was satisfactory\. The Project had satisfactory ratings throughout implementation and achieved four out of the five key indicators and seven out of the remaining nine indicators\. Of the three indicators that were not achieved, one achieved 95 percent of its target, and two were not measured due to pandemic control\. 17\. The RBF mechanism facilitated relations between the MSN and the provinces and enhanced performance incentives\. The RBF mechanism was initiated under the FESP and Provincial Maternal-Child Health Investment projects to improve the functioning of the health system via incremental incentive-based payments\. Since the RBF mechanism provided funds above those earmarked in the provincial budget, it generated an extra incentive for provincial and central government to comply with Project requirements\. Nine of the 14 indicators operated as result-based indicators receiving disbursements once the results were achieved and certified by an Independent Technical Audit (Auditoria Técnica Independiente)\. 18\. Project implementation benefitted from existing World Bank-financed health sector projects and was executed using existing structures\. The Project was implemented by the MSN with the International Health Financing Unit (Unidad de Financiamiento Internacional de Salud -- UFI-S) serving as coordinator of Project activities\. The signing of Performance Agreements formalized the engagement between the MSN and 23 provincial governments for A/H1N1 Project implementation\. Implementation was facilitated by the use of FESP’s existing social and environmental safeguard mechanisms\. 19\. Problems in utilizing retroactive financing prevented the GOA from taking advantage of the emergency instrument\. In line with OP/BP 8\.00, the Loan had provisions to reimburse the GOA for up to 40 percent of the loan amount (US$91\.6 million) for eligible expenditures incurred since the outbreak of the 2009 A/H1N1 influenza virus, as long as after April 30, 2009, under expedited World Bank procurement procedures\. The GOA obtained the first disbursement, an advance of US$90 million, on April 26 2011, 12 days after Project effectiveness\. Nevertheless, the World Bank did not authorize the use of Project funds to retro-finance the vaccines purchased prior to Loan Agreement signing (See Section 2\.4 Procurement)\. 20\. The GOA successfully realigned the Project focus\. With the denial of retroactive financing for the purchased vaccines (that represented such a large loan allocation), the GOA and the World Bank evaluated options for Project adjustments\. As a result, in addition to the cancellation of US$88 million, Project activities were revised, and the public health intelligence system and the health network were strengthened through the upgrading of equipment and mobile and urgency systems\. 7 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 21\. Design of the M&E framework was appropriate considering the relevance and quality of indicators\. Due to the difficulty in attributing outcomes in emergency response projects for influenza outbreaks, the World Bank team responsible for Project preparation decided to focus on intermediate outcomes to measure Project achievements\. The results framework did not formally differentiate between PDO-level indicators and intermediate-level indicators\. The five indicators defined in the PAD to measure Project results were labeled as “key indicatorsâ€? in this ICR\. The P oject’s first sub-objective - to prevent, monitor and evaluate influenza activity, was to be measured by two key indicators: (i) HSRs certified (key indicator 1), and (ii) Operational MOCS implemented (key indicator 3)\. The second sub-objective - to control epidemic waves of the A/H1N1 influenza, was measured by three key indicators: (i) dose of A/H1N1 vaccine applied (key indicator 5), (ii) dose of Pneumococcal vaccine applied (key indicator 6), and (iii) influenza diagnostic laboratory test carried out in 2010 and 2011 (key indicator 13)\. 22\. Despite some deficiencies, the M&E framework served to track progress towards the achievement of Project PDO and was used as an important management tool to inform decision making\. The PAD’s esults f amewo k and monitoring (Annex 2) had some inconsistencies regarding the roles and responsibilities for collecting, reporting, and analyzing data for some of the indicators\. Further, since most Project indicators operated as result-based disbursements they were monitored by two different verification sources (i) MSN (including Expanded Program on Immunization (EPI) for vaccination and treatment, and the Laboratory Surveillance System (Sistema de Vigilancia de Laboratorios – SIVILA) for the laboratory testing for the achievement of targets), and (ii) the ITA for the verification of outputs for disbursement purposes\. Project indicators linked to disbursements included: (i) HSR Certified (key indicator 1), (ii) operational MOCS implemented (key indicator 3), operational MOCS for indigenous people implemented (indicator 4), (iv) dose of A/H1N1 vaccine applied (key indicator 5), (v) dose of Pneumococcal vaccine applied (key indicator 6), (vi) outpatient treatment provided (indicator 9), (vii) inpatient treatment provided in hospitalization (indicator 10), (viii) inpatient treatment provided in ICU (indicator 12), and (ix) influenza diagnostic laboratory test carried out in 2010 and 2011 (key indicator 13)\. The dichotomy was not an issue except for key indicator 2, for which results differ by source – MSN or ITA\. The World Bank and GOA teams used ITA as the source of verification only for disbursement purposes\. 23\. The certification and compliance validation of results strengthened the MSN’s M&E capability at the national and provincial level\. The Project financed eight technical audits, which provided evidence for the reimbursement of expenses\. Since the Project was executed by different technical units at the provincial and national levels, the know-how involved in providing the information requested by the auditors as well as more general M&E knowledge was strengthened and sustained within each unit\. This was particularly true at the provincial level\. 8 2\.4 Safeguard and Fiduciary Compliance 24\. The Environmental Safeguard was triggered (OP4\.01) as a result of the increase in health care waste production due to the implementation of Component 2\. Environmental safeguards coincided with those within the FESP framework, generating synergies between both Projects\. The safeguard was based on environmental diagnostics realized in Argentine hospitals via FESP, for the control of health care waste in health establishments, including the disposal of vaccines\. Medical waste management demonstrated full compliance with environmental safeguard measures in participating hospitals, including bio-safety regulation compliance, use of disposable supplies, bio- contaminated product segregation, and use of approved medical waste containers\. Furthermore, the Project contributed to the development of a National Guide for the management and disposal of vaccines and segregation of bio-contaminated products, and supervised 30 provincial hospitals, surpassing the 21 hospitals initially considered, proving a satisfactory outcome, as rated in the last Implementation Status and Results Report (ISR)\. 25\. The Indigenous People (IP) Safeguard was triggered in 15 out of the 23 provinces in accordance with the Indigenous Peoples Plan (IPP)\. These provinces already counted with IPPs, prepared in consultation with the Indigenous Participation Council of the National Institute for Indigenous Affairs during FESP I Project preparation\.16 IPPs contained activities designed to make the delivery of Priority Public Health Programs (PPHPs) more culturally relevant and sensitive\. The Project disseminated locally-appropriate materials and in some cases indigenous language materials promoting vaccination against A/H1N1, and communication regarding self-care and early symptoms detection via the Social Communication Modules\. Achievement of the IP safeguard was rated highly satisfactory in the last ISR\. 26\. Financial Management (FM) arrangements in terms of accounting, budgeting, flow of funds; internal control, external audit and financial reporting were performed satisfactorily in accordance with the last ISR\. Overall Project FM ISR ratings ranged from moderately satisfactory to satisfactory during Project implementation\. The Project team had a constructive engagement with the World Bank on FM aspects throughout implementation\. FM advice was provided in a timely manner\. Minor FM shortcomings identified during supervision missions were properly addressed by the Project team and FM agreed actions were fully complied with\. As a result of this effort, the quality and timeliness of the Interim Financial Reports (IFRs) improved\. Financial statements audit reports were submitted to the World Bank with some delay; were reviewed and found acceptable\. The final audit report is expected to be submitted on June 30, 2014\. In addition to financial audits, the Project had independent technical audits (ITA) carried out by the private firm "Bértora y Asociados", whose objective was to audit the veracity and reliability of health intervention results linked to disbursements 16 The Project teams worked closely with the Provinces to prepare the plans, including holding several workshops and providing materials in the local languages\. All Provinces with indigenous populations except La Pampa prepared an IPP in 2008 in a participative approach involving social evaluations\. 9 (outputs)\. ITA reports were reviewed whenever outputs were documented with IFR submissions\. 27\. In May 2012 an Independent Procurement Review was conducted, which included a review of UFI-S capacity to handle procurement, and of a sample of contracts\. The findings showed significant efforts undertaken by the UFI-S to maintain and comply with procurement regulations, good internal control mechanisms and adequate procurement performance, while highlighting some procurement management weaknesses\. Despite risks and characteristics of the vaccine market included in the PAD, the World Bank decided not to finance (retroactively) the purchase of vaccines because the purchase process carried out by the GOA resulted in a single offer\. According to the Operations Procurement Review Committee (OPRC), the GOA should have used an international competitive bidding (ICB) method to attract more suppliers and obtain the best available market price\. According to the GOA, the use of an ICB could have compromised the ability of the country to obtain the necessary vaccines and/or to obtain them in a timely manner\. In addition, there was a Government's understanding that supply conditions were limited due to the high demand for vaccines from USA and European countries\. Procurement delays emerged with the purchase of other goods eligible under the Project, such as antiviral treatments (Oseltamivir and Zanamivir), oximeters and ambulances\.17 2\.5 Post-completion Operation/Next Phase 28\. The current administration continues to prioritize a reduction in acute respiratory infections (ARI) and sustain the advances achieved in the A/H1N1 vaccination campaign\. In 2011 the A/H1N1 vaccine for high-risk individuals and on January 1, 2012 the pneumococcal vaccine for children under two years of age were introduced into the National Calendar schedule\. According to the National Program for the Control of Inmunopreventable Diseases (Programa Nacional de Control de Enfermedades Inmunoprevenibles -- PRONACEI) reports, A/H1N1 and pneumococcal coverage remained high following Project completion, at 90 percent and 82\.4 percent in 2013, respectively\. The recent construction of an influenza vaccine plant in Buenos Aires province will allow the country to produce and export seasonal and pandemic influenza vaccines\. 29\. The World Bank continues to have a strong presence in the Argentine health sector\. The Essential Public Health Functions and Programs II Project (FESP II, Loan\. 7412-AR, P110599), in the amount of US$ 461 million was approved by the Board on December 20, 2010\. The five-year project has two PDOs: (i) improve the stewardship role of the federal public health system, through the strengthening of Essential Public Health Functions (EPHFs), and (ii) increase the coverage and clinical governance of priority public health programs (PPHPs)\. In addition to FESP II and Provincial Maternal- Child Health Investment Project, the World Bank is currently assisting the GOA to 17 Numerous procurement issues arose during the purchase of ambulances, which resulted in the rejection of the first bidding process and a two-year purchase delay, which was finally successfully achieved\. 10 prepare a project supporting the prevention and control of chronic conditions and illnesses, which would reproduce the Project’s execution mechanism\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 30\. Project objectives, design and implementation remain highly relevant\. The P oject’s objectives a e consistent with the GOA’s FHP 2011-2016 and with national health system strengthening\. The emphasis on surveillance and laboratory systems is important since they provide crucial input on seasonal virus fluctuations and on possible health epidemics\.18 31\. The Project produced concrete strategic and operational advances in the monitoring and control of the A/H1N1 flu epidemic in Argentina, transforming the crisis into an opportunity and contributing significantly to improvements in public health using a RBF approach\. Currently, all hospitalized individuals have samples taken (for clinical and epidemiological surveillance reasons), while random samples taken in ambulatory centers serve for epidemiological surveillance purposes\. Some of these samples are sent to the Centers for Disease Control and Prevention (CDC) in Atlanta, contributing to the formulation of the southe n hemisphe e’s flu vaccine\. The use of Argentine samples for the formulation of the vaccine has clear benefits for the population since the vaccine will more closely resemble the virus strains circulating in the country the prior year\. 32\. Strengthening the GOA’s health pandemic preparedness is a building block towards the establishment of a robust fiscal risk management strategy\. In addition to reducing morbidy and mortality, minimizing societal disruptions and therefore economic costs are worthwhile objectives of vaccination strategies\. 19 Support for zoonotic disease control within a comprehensive pandemic preparedness plan would bolster the risk management agenda, in particular due to the significant role of agriculture in Argentina\. This requires cooperation and coordination between animal and human health sectors, both at the strategic level and during pandemic preparedness implementation\. 3\.2 Achievement of Project Development Objective 33\. In general, the Project was successful in achieving expected results\. Four of the five key indicators were achieved\. The remaining indicator (key indicator 1) was 18 Good surveillance mechanisms allow governments to efficiently invest and distribute health care resources\. Due to influenza virus variability, the capacity to evaluate data quickly provides the foundation for an effective response\. 19 Schuchat, A\., B\. Bell, and S\. Redd, The Science Behind Preparing and Responding to Pandemic Influenza: the Lessons and Limits of Science, Oxford journal of Medicine: Clinical infectious Diseaseas, vol 52, issue Suplement 1, p\.1 and 2\. 11 largely achieved, with results substantially higher than the baseline and with the actual level of accomplishment at 95 percent of the expected target\. The following paragraphs analyze efficacy of each of the Project sub-objectives\. 34\. The Project’s efficacy was substantial in its objective to strengthen Argentina’s epidemiological health surveillance system to prevent, monitor and evaluate influenza activity\. Achievement of sub-objective 1 was to be evaluated through two key indicators, measuring the strengthening of epidemiological surveillance situation rooms in every province (key indicator 1), and implementation of social communication (MOCS) modules (key indicator 3)\. Although not included as part of the key indicators to measure this first sub-objective, indicator 2 – Health Situation Rooms (Level II accredited), is a natural continuation of key indicator 1 and even more complex, and as such could also be taken into account for that purpose\. 35\. By Project completion, 36 situation rooms in 22 national jurisdictions could generate health information at the provincial and departmental level in a systemic and timely manner\. Health related decision-making was strengthened and systematized by the situation rooms improved ability to collect and analyze information to describe health status and prioritize health problems\. 20 Surveillance capacity was strengthened through the reinforcement of human and capital resources in the HSRs\. During Project implementation, it was decided to extend the certification process for two additional years, and apply a more in depth and complex certification process in the third year to promote institutionalization and improve the quality of generated information\. Thirty- seven of the 38 HSRs were certified in 2010 and 2011 and 36 in 2012 by an ITA, almost achieving the target for key indicator 1\.21 The HSR certification criteria was based on the following: (i) institutional mechanisms for the integration and diffusion of information, (ii) health quality improvements, (iii) improvements in the technical quality of the analysis, and (iv) HSR functioning\. The target for the Level II accreditation (indicator 2) was surpassed, with 28 situation rooms (compared to a target of 16) reaching a very high level of certification\.22 Financing of the situation rooms was related with disbursements and the annual certification process\. 36\. Key indicator 3, implementation of the Operational Modules of Social Communication, was achieved\. The objective of the MOCS was to create local communication campaigns that increased public influenza awareness, encouraged prevention through vaccination, and promoted self-care against the transmission of infectious diseases, by focusing on prevention measures for respiratory diseases, and 20 The process includes registering, analyzing, and disseminating information on priority diseases, including the gathering of statistics from clinics all over the country; promoting research on prevalent, serious and preventable transmissible diseases; and analyzing, in an effective and timely manner, statistics on disease p evalence and othe data, to monito the count y’s public health status\. 21 The city of Buenos Aires did not join the Program, while the province of Formosa did not submit their situation room for certification in 2012, as the new health authorities did not support their implementation\. 22 The indicator was only applied in year three of Project implementation and involved more complex certification criteria, including the establishment of institutional mechanisms to integrate and diffuse information and the quality improvement of provincial health information\. 12 promotion of early doctor visits\.23 Achievement of indicators was measured according to MOCS reports approved by the MSN, although ITA validation was required for disbursements\. Ninety percent were implemented and approved by the MSN, and 83 percent were validated by ITA\. Likewise, 90 percent of the 45 MOCS adapted for indigenous populations were implemented (indicator 4), and 80 percent were validated by ITA\.24 A survey carried out in September 2011 to evaluate the experience of MOCS in terms of vaccine prevention promotion and improvement of inter institutional relations had positive results\.25 37\. The Project’s efficacy was high in its capacity to strengthen the response capacity of the health system to control epidemic waves of the A/H1N1 influenza\. This sub-objective was to be measured by three key indicators: Dose of A/H1N1 vaccine applied (key indicator 5), dose of pneumococcal vaccine applied (key indicator 6) and influenza diagnostic laboratory tests carried out in 2010 and 2011 (key indicator 13)\. Achievement of this sub-objective was high as reflected in high vaccination coverage rates and low mortality in 2010 and 2011\. Coordination between the National Government and the provinces for the control and prevention of influenza-like illnesses was highly effective\. The infection rate for all kinds of influenza was 49 percent lower in 2010 than in the same period in 2009, with only two deaths being attributed to A/H1N1 (neither a high-risk individual)\. Graph 1 displays the difference between 2009 and 2010 in weekly cases of individuals with influenza-like symptoms\.26 38\. Key indicator 5, dose of A/H1N1 vaccine applied was achieved\. The GOA began the A/H1N1 vaccination campaign in February 2010, and 14 days before the beginning of winter had reached 80 percent vaccination coverage\. Coverage was aimed at 23 One MOC per 72,000 inhabitants\. 24 Acording to Project design, each province with an IPP was to implement three MOCs, however three provinces failed to elaborate them\. Rio Negro decided that the indigenous population could be served with the provincial MOCs, while La Pampa and Salta found it difficult to establish IPP MOCs due to the lack of a communication unit within the provincial ministry of health\. 25 Informe de Gesti n Semest al de nidad oo dinado a del P oyecto y el ea de Monito eo y Evaluación UFI-s (Mayo 2012), Proyecto de Emergencia para la prevención, vigilancia control de Enfermedades Tipo Influenza H1N1 BIRF 7843-AR, Segundo Semestre 2011, p\. 8\. 26 Graph source: Sistema de Vigilancia de la Salud (SNVS-C2)\. 13 those most at risk, and reached 93 percent and 108 percent coverage, respectively in 2010 and 2011, surpassing the 90 percent Project target for each year\. This accounted for the highest eligible population coverage rate in Latin America for the winter season\. The vaccination campaigns in 2010 and 2011 offered free vaccination in all hospitals and vaccination centers to high-risk individuals\.27 Though the GOA covered the cost of the vaccines, the World Bank loan covered the costs associated with vaccine application, with the latter transferring to the provinces a set amount per vaccine applied\. Due to the success of the vaccination campaign, the GOA decided to include the vaccine in the national calendar vaccination schedule starting in 2011\. Indicator 7, dose of A/H1N1 vaccine included in the national calendar applied, surpassed the established target (80 percent) in 2011 and 2012\. Key indicator 6, dose of pneumococcal vaccine applied successfully reached its target in 2011\. Insufficient coverage in 2010 (36 percent coverage) likely resulted from an initial focus on the influenza campaign due to the fear of a subsequent A/H1N1 wave, an initial overestimation of the target, lack of registration and notification by health personnel of applied doses, and ambiguousness regarding the target population\. Once these factors were addressed, and information regarding applied doses was included in the National Health Surveillance System (Sistema Nacional de Vigilancia de Salud - SNVS), coverage climbed to 99\.3 percent by 2011\. Starting in January 2012, the vaccine was introduced in the national calendar vaccination schedule for children less than two years of age\. Indicator 8, dose of pneumococcal vaccine included in the national calendar applied surpassed the target (80 percent) in 2012\. 41\. In addition to prevention of influenza, the Project sought to improve health care in hospitals by financing the provision of antiviral treatments as well as hospital equipment and other inputs\. The targets for indicators 9 and 11 were achieved\. The target for indicator 9, outpatient treatment provided, was surpassed in both 2010 and 2011 as revealed in the SNVS\. Over 100 percent of the registered cases of influenza-type illnesses were treated in 2010, and 99 percent in 2011\. In addition to improving virus registration, this result also contributed to the strengthening and 27 During the first restructuring, funds allocated to Category of disbursement 4 (outputs) were increased to finance the 2011 National Free Vaccination Campaign against Influenza (second year) due to the successful reduction of virus communicability from the 2010 campaign\. 14 legitimization of the SNVS system\. Indicator 11, inpatient treatment provided in hospital due to ARI was achieved with 40,936 individuals receiving treatment (10,000 individuals over the target)\. 3\.3 Efficiency 42\. Project efficiency was substantial, with the social and economic benefits of the Project outweighing the costs\. Considering as a benefit the direct costs avoided (costs associated with the pandemic and infected people) one obtains a net cost benefit of US$ 535 million discounted at a rate of 3 percent and a reasonable cost benefit of 1\.7\. 28 However, the economic benefits of the adopted measures are likely underestimated by not considering social distancing measure effects in key sectors of the economy and the positive impact of reducing epidemic risks past the initial year\. 3\.4 Justification of Overall Outcome Rating 43\. The overall outcome rating is Satisfactory\. The rating is based on the following considerations: (i) objectives, design and implementation highly relevant to the Argentine country context, (ii) substantial and high efficacy ratings in achieving intended outcomes, as measured by both sub-objectives, and (iii) substantial efficiency\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 44\. The strengthening of the epidemiological system and health system’s capacity to respond to emergencies as well as the implementation of social communication campaigns likely benefitted the lower population deciles\. The experience of prior epidemics (such as the 1918 Spanish Flu) and the first wave of the A/H1N1 in Argentina indicate that poverty-linked factors, such as the lack of basic sanitation, poor access to health services, and reduced access to information, often enable the spread and compound the severity of influenza infections\. The Project addressed this challenge by strengthening the epidemiological surveillance system to better target interventions, improving the health system’s capacity to espond to eme gencies, and implementing MOCS targeted toward the poorest populations\. (b) Institutional Change/Strengthening 45\. The Project strengthened the long-term capacity and institutional development of the Argentine MSN\. Project execution through the different technical units resulted in the buildup of in-house capability, which remained in the MSN after Project completion\. This is especially relevant in a country with a relatively stable human resource capacity\. The new Remediar and Redes Inter-American Development Bank- 28 The costs may also be inflated as the costs of a second wave could have been lower than those of the first wave\. 15 financed Project is being executed utilizing the same framework\. This framework not only built up capacity but also facilitated relations between the provinces and the federal Government since the interlocutors remained the same\. A strengthening of the communication departments within the p ovincial level MSN’s (as well as at the national level) improved the credibility of the health sector in general\. (c) Other Unintended Outcomes and Impacts (positive or negative) N/A 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops N/A 4\. Assessment of Risk to Development Outcome Rating: Moderate 46\. One of the main risks to the development outcome regards the sustainability of the situation rooms\. Approximately half the HSRs have an official document or administrative act that establishes their institutional jurisdiction, activities and structure\. Though the HSRs will receive financing through the FESP II Project until 2015, their sustainability and institutionalization depends on their continued use and transformation into a strategic tool for the management of health decisions\. A number of provinces had established situation rooms previously, however incentives to sustain the rooms diminished once national level financing was discontinued\.29 47\. Sustaining high influenza vaccination coverage rates remains a risk to the Development Outcome\. Though Argentina maintains high coverage rates and the population generally views vaccination as a right and a responsibility, the demand for the Influenza vaccine may wane as the fear of another pandemic decreases\. The inclusion of the A/H1N1 vaccine for high-risk groups and pneumococcal vaccine for children into the National Vaccine Calendar mitigates this risk\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 48\. World Bank performance on ensuring Quality of Entry is rated Satisfactory\. The World Bank responded swiftly within a three month Project preparation period\. As noted in Section 2\.1, Project design was based on a detailed sector analysis in line with the GOA’s FHP and the PS, incorporated lessons learned from other operations and international experience, and introduced several innovative approaches\. In addition, an economic analysis conducted during preparation showed that 29 Some provinces, such as Santa Fe and Tucuman did maintain room functioning\. 16 Project benefits exceeded costs of a possible second wave\. Despite some deficiencies in the Project M&E framework, it was overall well designed, and allowed for the measurement of Project results\. It focused on intermediate outcomes considering the inherent evaluation challenges for Influenza type epidemics, as recently recommended by the World Bank Report on Controlling Avian Influenza\.30 (b) Quality of Supervision Rating: Moderately Satisfactory 49\. The Quality of Supervision is rated Moderately Satisfactory\. In addition to engaging in seven missions, the supervision team engaged in numerous video and audio discussions with the Project coordination unit and MSN officials over the Project life\. The team was particularly helpful in accompanying the MSN staff in documentation provision and mechanisms required for the successful execution of the result-based financing aspect of the Project (information needed for the audits)\. The fact that some of the technical staff was based in Argentina greatly enhanced dialogue, and allowed for continuous coordination and swifter problem resolution\. However, procurement difficulties did not support the use of the emergency instrument\. In addition, deficiencies in the results framework could have been addressed and recorded during the Project restructuring processes\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 50\. Given the Satisfactory Bank performance at Quality at Entry and the Moderately Satisfactory performance during Project supervision, the overall rating for Bank performance is Moderately Satisfactory\. 5\.2 Borrower Performance (a) Government Performance Rating: Satisfactory 51\. Government performance is rated Satisfactory\. The Ministry of Economy and Public Finance gave its full support to the Project\. The GOA moved forward with the World Bank during Project preparation and allocated funds to purchase the A/H1N1 vaccines\. Strong government commitment, experience with World Bank-financed projects and existing technical MSN capability supported the achievement of Project objectives despite the cancellation of the retroactive portion of the loan\. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 30 Controlling Avian Influenza: Learning from evaluation of the World Bank efforts 2006-2013\. 17 52\. Performance of the implementation Agency is rated Satisfactory\. The MSN was the P oject’s implementing agency\. The UFI-S was responsible for general Project coordination, including fiduciary aspects, component implementation and M&E\. Since the beginning of the Project, the MSN showed strong leadership and ownership of Project objectives\. UFI-S effective coordination between the different MSN areas and programs and between national and provincial programs was a key element for the success of the Project\. Project implementation was executed through the different technical units within the MSN, representing a new modus-operandi, which served to build up in-house capabilities\. Despite a steep learning curve in some areas, which resulted in technical audit delays at the beginning of Project implementation, the different execution units successfully supported Project implementation and PDO achievement\. Although the Project was designed in an emergency context, it shifted focus toward surveillance system strengthening through three restructuring processes and, in practice, became a regular operation\. The Project closing date was extended twice to conclude activities that were not included in the PAD, but inserted during the first two restructurings\. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 53\. Given the mino sho tcomings obse ved in the Bo owe ’s pe fo mance, its overall Performance is rated Satisfactory\. 6\. Lessons Learned 54\. Argentina’s adoption of a high-risk targeted vaccination strategy against A/H1N1 influenza was effective in containing the epidemic\. Assessments on the effects of potential vaccination strategies against pandemic influenza in terms of reducing morbidity and mortality based on priority age groups, transmissibility, timing of vaccination efforts, and number of years of life lost have shown that even limited vaccine supplies, if used optimally, can have an impact on mitigating disease burden in middle- income countries (G\. Chowell, C\. Vibourd, X Wang, S Bertozzi and M\. Miller)\. 55\. A comprehensive (human and animal) pandemic preparedness plan would benefit from moving from a response approach using emergency instruments to one that favors preventive risk reduction and risk management through regular country program and operations\. This would incorporate some of the objectives supported in the World Bank-financed avian flu portfolio, which generally ran into a number of obstacles due to the complicated inter-sectoral collaboration between health and agriculture\. Pandemic risk reduction is even in more need of global donor support than natural disaster risk reduction, as pandemic preparedness in one country provides positive spillovers to other while the benefits of disaster risk reduction are primarily local\. 56\. High-risk groups can only be reached through an intense communication effort\. A well-developed communication strategy in the country had a positive impact on social and behavior change, specifically among high risk population such as health workers, pregnant women, young children, etc\. 18 57\. Despite a short preparation period, it is important to avoid having tunnel vision and think broadly when designing emergency loans\. Though the Project focused on A/H1N1, it se ved to build up A gentina’s long-term preparedness and capacity to confront any epidemic, not just A/H1N1\. The strengthening of surveillance and laboratory systems, as well as health networks are often overlooked in favor of other priorities, however they are important components of national health systems\. 58\. The execution of projects within existing technical/administrative structures has significant positive externalities\. The mechanism not only built in-house sustainable capacity but also fostered greater cooperation among different health units and broke the vertical implementation framework often resulting from the establishment of stand-alone project coordinating units for externally funded projects\. 59\. A RBF model is a valuable strategy to influence subnational government policies in federal systems\. The effective implementation of the RBF financing scheme in Argentina enabled a successful reorientation of health care policies, as well as enhanced management capacity at the national and provincial level\. The framework allowed the Federal Government to influence subnational policy while building up skills of provincial counterparts\. Incremental financing incentives, even if they are small can be very powerful\. Financing incentives as a startup measure have proven to contribute to the willingness to comply\. On the other hand, the excessive costs involved with continuous audits raise the need to explore alternative auditing mechanisms\. 60\. The World Bank should re-evaluate the objective of the emergency recovery loan instrument and its consistency with other fiduciary policies\. Even though OP/BP 8\.0 operational guiding principles have been developed bearing in mind the need for a fast response, simplicity and flexibility in emergency situations, the policy is not fully aligned with other fiduciary policies and guidelines, such as procurement\. Therefore, policies may benefit from reassessment in terms of their compatibility; and task teams will benefit from more explicit guidance on the application of emergency policies, especially when dealing with health emergencies\. A previously streamlined or pre-approved set of guidelines for emergency situations or less rigid procurement rules for emergency situations could help borrowers and World Bank staff obtain a better notion about World Bank retroactive financing options\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies (b) Cofinanciers N/A (c) Other partners and stakeholders N/A 19  Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate (USD Estimate (USD Appraisal millions) millions) Component 1:Strengthening of the capacity of the Argentine 9\.0 11\.4 126\.6 Epidemiological health system for surveillance and influenza case-finding Component 2: Strengthening the Response Capacity of the Argentine 217\.5 127\.5 58\.6 health system Component 3: Project Management and Monitoring and Technical Audit of 2\.0 1\.6 80 Components 1 and 2 Total Baseline Cost 228\.5 140\.5 61\.5 Physical Contingencies 0 0 Price Contingencies 0 0 Total Project Costs 228\.5 140\.5 61\.5 Front-end fee PPF Front-end fee IBRD \.5 \.5 100 Total Financing Required 229\.0 141\.0 61\.6 (b) Financing Appraisal Actual/Late Type of Estimate st Estimate Percentage Source of Funds Cofinancing (USD (USD of Appraisal millions) millions) Borrower 0\.00 273\.631 \.00 International Bank for 229 141 61\.6% Reconstruction and Development 31 Includes MSN investments in 2010 and 2013 in vaccines, antivirals and tests\. It does not include other associated costs\. 20  Annex 2\. Outputs by Component 1\. In general, the Project was successful in achieving expected results\. Four of the five key indicators were achieved\. The remaining indicator (indicator 1) was largely achieved, with results substantially higher than the baseline and with the actual level of accomplishment 95 percent of the expected target\. The following paragraphs analyze efficacy of each of the Project sub-objectives\. 2\. The Project’s efficacy was substantial in its objective to strengthen Argentina’s epidemiological health surveillance system to prevent, monitor and evaluate influenza activity\. Achievement of sub-objective 1 was to be evaluated through two key indicators, measuring the strengthening of epidemiological surveillance situation rooms in every province (key indicator 1), and implementation of social communication (MOCS) modules (key indicator 3)\. Although not included as part of the key indicators to measure this first sub-objective, indicator 2 – Health Situation Rooms – Level II accredited, is a natural continuation of indicator 1 and since even more complex should also be taken into account for that purpose\. Table 1: Results Framework and Monitoring Description of Baseline End Final Indicators achievements with Value Target Value respect to end target 1\. Health Situation Rooms 0 38 36 Nearly achieved certified 2\. Health Situation Rooms 0 16 28 Surpassed Level II accreditation 3\. Operational Modules of 0% 90% 90% Achieved Social Communication (MOCS) implemented 4\. Operational modules of 0% 90% 90% Achieved social communication for indigenous peoples implemented 5\. Dose of A/H1N1 vaccine 1% 90% 100% Surpassed applied 6\. Dose of pneumococcal 1% 85% 99\.3% Surpassed vaccine applied 7\. Dose of A/H1N1 vaccine 0% 80% 91% Surpassed included in National Calendar applied 8\. Dose of pneumococcal 52% 80% 86% Surpassed vaccine included in National Calendar applied 9\. Outpatient treatment 0% 90% 99% Surpassed provided 11\. Inpatient treatment 27,284 30,000 40,936 Surpassed 21  Description of Baseline End Final Indicators achievements with Value Target Value respect to end target provided in ICU 13\. Influenza diagnostic 0 54,000 65,341 Surpassed laboratory test performed 14\. Independent technical 8 8 Achieved audits performed 3\. By Project completion, 36 situation rooms in 22 national jurisdictions could generate health information at the provincial and departmental level in a systemic and timely manner\. Health related decision-making was strengthened and systematized by the situation rooms improved ability to collect and analyze information to describe existing health situations and prioritize health problems\. 32 Surveillance capacity was strengthened through the reinforcement of human and capital resources in the HSRs\. During Project implementation it was decided to extend the certification process for two additional years, and apply a more in depth and complex certification process in the third year to promote institutionalization and improve the quality of generated information\. Thirty-seven of the 38 HSRs were certified in 2010 and 2011 and 36 in 2012 by an ITA, practically achieving the target (95 percent achieved) for key indicator 1\. 33 The HSR certification criteria were based on the following: (i) institutional mechanisms for the integration and diffusion of information, (ii) health quality improvements, (iii) improvements in the technical quality of the analysis, and (iv) HSR functioning\. The target for the Level II accreditation (indicator 2) was surpassed, with 28 situation rooms (compared to a target of 16) reaching a very high level of certification\.34 Financing of the situation rooms was related with disbursements and the annual certification process\. 4\. The Project supported the reinforcement of human and capital resources in the HSRs to strengthen surveillance capacity\. Each situation room contracted a minimum of two epidemiologists and an assistant, installed an internet connection, and covered office costs and a training module specialized for the hired personnel\. A shortage of epidemiologists, led the Project to finance a postgraduate course at the University of Cordoba specializing in epidemiology for more than 200 professionals in two cohorts, which were then staffed in the situation rooms or employed in the national and provincial Epidemiology offices\. An evaluation of the first cohort found that most students were satisfied with the course\. Fifty-eight percent of those surveyed stated that their expectations had been met, while 24 percent stated that their expectations had been 32 The process includes registering, analyzing, and disseminating information on priority diseases, including the gathering of statistics from clinics all over the country; promoting research on prevalent, serious and preventable transmissible diseases; and analyzing, in an effective and timely manner, statistics on disease p evalence and othe data, to monito the count y’s public health status\. 33 The city of Buenos Aires did not join the Program, while the province of Formosa did not submit their situation room for certification in 2012, as the new health authorities did not support their implementation\. 34 The indicator was only applied in year three of Project implementation and involved more complex certification criteria, including the establishment of institutional mechanisms to integrate and diffuse information and the improvement of health information quality in the provinces\. 22 surpassed\. The component financed workshops and training events for the strengthening of epidemiological vigilance, and completed a number of studies tied to A/H1N1\. 5\. Key indicator 3, implementation of the Operational Modules of Social Communication, was achieved\. The objective of the MOCS was to create local communication campaigns that increased public awareness of influenza, encouraged prevention through vaccination, and promoted self-care against the transmission of infectious diseases, by focusing on prevention measures for respiratory diseases, and promotion of early doctor visits\. 35 The MOCS designed, produced and disseminated audiovisual and graphic materials, to run integrated local culturally appropriate communication campaigns\. Indicator achievement for evaluation purposes was measured according to reports on MOCS activities approved by the MSN, however ITA validation was needed to receive outcome disbursements\. Ninety percent were implemented and approved by the MSN, and 83 percent were validated by ITA\. Likewise, 90 percent of the 45 MOCS adapted for indigenous populations were implemented (indicator 4), and 80 percent were validated by ITA\.36 A survey carried out in September 2011 to evaluate the experience of MOCS in terms of vaccine prevention promotion and improvement of inter institutional relations had positive results\.37 6\. The Project’s efficacy was high in its capacity to strengthen the response capacity of the health system to control a second A/H1N1 wave\. This sub-objective was measured by three key indicators: dose of A/H1N1 vaccine applied (key indicator 5), dose of pneumococcal vaccine applied (key indicator 6) and influenza diagnostic laboratory tests carried out in 2010 and 2011 (key indicator 13)\. Achievement of the sub-objective was substantial as reflected in high coverage levels and low mortality in 2010 and 2011\. Coordination between the National Government and the provinces for the control and prevention of influenza-like illnesses was highly effective\. The infection rate for all kinds of influenza was 49 percent lower in 2010 than in the same period in 2009, with only two deaths being attributed to A/H1N1 (neither a high-risk individual)\. Graph 1 displays the difference between 2009 and 2010 in weekly cases of individuals with Influenza-like symptoms\.38 35 One MOC per 72,000 inhabitants\. 36 Acording to Project design, each province with an IPP was to implement 3 MOCs, however three provinces failed to elaborate them\. Rio Negro decided that the indigenous population could be served with the provincial MOCs, while La Pampa and Salta found it difficult to establish IPP MOCs due to the lack of a communication unit within the provincial ministry of health\. 37 Info me de Gesti n Semest al de nidad oo dinado a del P oyecto y el e a de Monitoreo y Evaluación UFI-s (Mayo 2012), Proyecto de Emergencia para la prevención, vigilancia control de Enfermedades Tipo Influenza H1N1 BIRF 7843-AR, Segundo Semestre 2011, p\. 8 38 Graph source: Sistema de Vigilancia de la Salud (SNVS-C2)\. 23 7\. Key indicator 5, dose of A/H1N1 vaccine applied was achieved\. The GOA began the A/H1N1 vaccination campaign in February 2010 and 14 days before the beginning of winter had reached 80 percent coverage\. Coverage was aimed at those most at risk, and reached 93 percent and 108 percent coverage, respectively in 2010 and 2011, surpassing the 90 percent Project target\. 39 Though the MSN covered the cost of the vaccines, the World Bank loan covered the costs associated with vaccine injection, with the latter transferring to the provinces a set amount per vaccine applied\. During the first restructuring, funds allocated to category 4 (outputs) were increased to finance a second complimentary vaccination, namely the 2011 National Free Vaccination Campaign against Influenza\. This Campaign was a result of the positive impact on reducing virus communicability of the 2010 campaign, and with the objective of guaranteeing free vaccination and maximum coverage in the whole country for the defined risk population groups\. The Campaign also allowed the ministry to provide ambulatory attention to patients with symptoms compatible with Influenza\. Indicator 7, dose of A/H1N1 vaccine included in the national calendar applied, surpassed the established target (80 percent) in 2011 and 2012\. 8\. Positive externalities attributable to public health-related investments benefitted the whole population\. Vaccination of those most susceptible and vulnerable to the A/H1N1 virus reduced both mortality and communicability, while the reduction in transmission had national as well as international benefits\. Lastly, by strengthening the Gove nment’s capacity and capability to conf ont an influenza epidemic, the Project built the GOA’s capability to monitor and respond to a host of health priorities\. 9\. Key indicator 6, dose of pneumococcal vaccine applied successfully reached its target in 2011\. Insufficient coverage in 2010 (36 percent coverage) likely resulted from an initial focus on the influenza campaign due to the fear of a subsequent A/H1N1 wave, an overestimation of the target, lack of registration and notification by health personnel of applied doses, and ambiguousness regarding the target population\. Once these factors were addressed, and information regarding applied doses was included in the SNVS, coverage climbed to 99\.3 percent by 2011\. Starting in January 2012, the vaccine was introduced in the national calendar vaccination schedule for children less than two years of age\. Indicator 8, dose of pneumococcal vaccine included in the national calendar applied surpassed the target (80 percent) in 2012\. 39 This accounts for the highest coverage rate of the eligible population in the Latin America Region for the winter season\. The vaccination campaigns in 2010 and 2011 offered free vaccination in all hospitals and vaccination centers to high risk individuals\. 24 PRONACEI identified the following achievements from the 2010 and 2011 vaccination campaigns: (i) Adequate local demand for the vaccine (ii) Coordinated and harmonized message by the relevant actors (iii) Effective and safe vaccine (iv) Distribution of technical norms before the campaign (v) Adequate marketing diffusion (vi) Improvement in the registration of doses applied in the SNVS (vii) Introduction of the flu vaccine into the National Vaccination Calendar (viii) Execution of training workshops in the provinces 10\. Key indicator 13, influenza diagnostic laboratory tests carried out in 2010 and 2011, was surpassed\. Su veillance of ARI’s via labo ato y tests p ovides information regarding the frequency and distribution of the main respiratory viruses, the virus subtypes and characteristics of the affected population to adopt prevention measures and policies to control and manage public health\. Sixty-five thousand three hundred and forty one laboratory tests were performed in 2010 and 2011 surpassing the 54,000 target\. The number of influenza samples analyzed also increased annually, with an 11\.53 percent increase with respect to the average in 2010-2012\. In 2013 all the provinces submitted samples for respiratory viruses, with 111 laboratories providing samples of hospitalized patients and 45 of ambulatory patients 11\. In addition to prevention, the Project sought to improve attention in hospitals by financing the provision of antiviral treatments and the realization of laboratory tests, as well as the provision of inputs and hospital equipment\. The targets for indicators 9 and 11 were achieved\. The target for indicator 9, outpatient treatment provided, was surpassed in both 2010 and 2011 as revealed in the SNVS\. Over 100 percent of the registered cases of Influenza-type illnesses were treated in 2010, and 99 percent in 2011\. In addition to improving virus registration, this result also contributed to the strengthening and legitimization of the SNVS system\. Intermediate health outcome indicator 11, inpatient treatment provided in hospital due to ARI, was achieved with 40,936 individuals receiving treatment (10,000 individuals over the target)\. 12\. The purchase of medical equipment strengthened Argentina’s health care network\. In an effort to strengthen the quality of care and health network, 608 beds (37\.33 percent of those available) were equipped with a multi-parametric monitor, while 164 ambulances were purchased, providing an important tool to reduce mortality, improve rapid attention and increase social inclusion\. An additional 46 provincial neonatal ambulances improve the timely attention for neonates while they are transferred to hospitals, which in turn will likely reduce infant mortality, especially for those which travel long distances to specialized hospitals\. The Project also contributed to the strengthening of epidemiological vigilance through the purchase and distribution of IT equipment intended for the SNVS\. 25 13\. Project management was strengthened through the use of existing management units within the MSN at the national and provincial level for Project execution\. The use of existing units instead of the establishment of a Project coordinating unit meant that capacity was built within each unit and remained their once the Project was completed\. This was particularly true for the improvement of monitoring capacities required for the output-linked ITA’s\. Further, the RBF mechanism raised the provinces incentive to comply with Project requirements and strengthened the ability of the national Government to influence provincial health policy\. Table 2: Outputs and Source of Verification Outputs Component 1 Source of Verification Health Situation Rooms Certified MSN report verified by the Independent Technical Audit (ITA) Operational Modules of Social MSN report verified by the ITA Communication implemented (excluding indigenous peoples) Operational Modules of Social MSN report verified by the ITA Communication implemented for indigenous peoples Output Components 2 Source of verification Dose of A/H1N1 vaccine applied Report of applied vaccines issued by EPI and verified by ITA Dose of Pneumococcal vaccine applied Report of applied vaccines issued by EPI and verified by ITA Outpatient treatment provided SNVS-based report issued by MSN and verified by ITA Inpatient treatment provided in SNVS-based report issued by MSN and hospitalization verified by ITA Inpatient treatment provided in ICU SNVS-based report issued by MSN and verified by ITA Influenza diagnostic laboratory test carried Test beneficia ies listed in SIVILA’s out Nominal Registry, and verified by ITA 26  Annex 3\. Economic and Financial Analysis 1\. The present annex exhibits the results of the economic evaluation of the Project using information provided by the MSN on the impact of health measures against the A/H1N1 Influenza virus\. The analysis takes into account not just the health measures financed by the Project but also the entirety of health measures implemented by the MSN to combat A/H1N1\. 2\. In Argentina the Influenza A/H1N1 pandemic had a high impact in terms of morbidity and mortality\. The peak of the transmission occurred between epidemiological week 25 and 26 throughout the country\. According to SNVS in 2009 there were 1,590,660 cases of Influenza type illness (Enfermedad tipo influenza – ETI)\. In 2010 there were 1,321,248 registered cases of ETI with a peak of 51,337 registered cases in week 33\. Figure 1 reveals the evolution of ETI cases in 2009 y 2010\. In 2009 14,160 cases required hospitalization for ARI cases, representing a hospitalization rate of 34\.9 cases per 100,000 inhabitants\. The age groups most affected were those under 5 years old and between 45 and 64 years of age\. Confirmed deaths by influenza in the period of major circulation were 626, throughout the 21 provinces\. The age group with the highest morality rate was the 50 a 59 year olds\. Figure 1: Weekly Cases of Influenza Illness in Argentina, 2009 and 2010 200,000 180,000 160,000 140,000 120,000 2009 100,000 2010 80,000 60,000 40,000 20,000 0 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334353637383940414243444546474849505152 Source: Semana Epidemiológica Table 1: Health Impact of A/H1N1 Influenza in Argentina 2009 2010 Notified influenza-like illnesses 1,590,660 1,321,248 Number of hospitalizations ARI 14,160 132 Influenza confirmed cases 12,170 2,559 Number of confirmed deaths due to pandemic influenza 626 27 Source: SNVS 27 3\. The surveillance system likely underestimated the real health impact of the epidemic\. As a result and due to data revealed through the SNVS, MSN estimates a larger number of symptomatic cases of influenza A/H1N1, severe acute respiratory infections and deaths as exhibited in Table 2\. Table 2: Revised Health Impact of Influenza A/H1N1 in Argentina 2009 2010 Cases of influenza-like illnesses 3,098,864 6,591 Number of hospitalizations for serious IRA 5,619 132 Number of deaths due to pandemic influenza 2,155 58 Source: own estimates based on MSN information 4\. The deaths due to influenza A/H1N1 resulted in a loss of 44,265 years of life in 2009 and 1,115 years in 2010 and in terms of burden of disease 52,529 y 114 years lost for 2009 and 2010, respectively\. 5\. In addition to the loss of life and burden of disease, the epidemic resulted in a substantial increase in demand for health services in particular in the first level of attention\. During the peak of the pandemic the health system was over exerted due to the increase in demand for services, in particular in the metropolitan zones where the viral circulation was superior (Raffo, 2011)\. This resulted in an excess burden on emergency and hospitalization sectors, with a deficit for beds, in particular in intensive care units, and delays and suspensions of programed surgeries\. In addition the pandemic generated significant economic losses due to labor and school absenteeism and the fall in demand caused by the social distancing measures adopted, in particular the observed fall in tourism, purchases in commercial centers and tickets for sporting and cultural events\. Cost and economic impact of the pandemic 6\. The measures adopted to combat the influenza A (H1N1) had a direct health cost of US$628 million, including prevention costs (25 percent) and treatment costs (75 percent)\. Table 3: Health costs of interventions to combat Influenza A/H1N1 (In millions of dollars) 2009 2010 Total in % A) Prevention 0 155\.0 155\.0 24\.7 Vaccines 0 119\.3 119\.3 19\.0 Inputs 0 35\.7 35\.7 5\.7 B) Diagnostic and treatment 472\.4 0\.7 473\.1 75\.3 Diagnostic y treatment 472\.4 0\.7 473\.1 75\.3 Total 472\.4 155\.7 628\.2 100\.0 Source: Own estimates based on MSN information 28 7\. The economic impact was substantial though difficult to measure\. 40 In the case of Argentina, the MSN estimated the impact of the pandemic at US$2\.1 billion, of which 30 percent (US$628 million) correspond to the main health costs to address the emergency and 70 percent to economic losses attributable to the illness (US$1\.5 billion)\. Productivity losses are associated with the days of work or school lost for people who were directly affected by the illness, the years of life lost due to premature death and disability and the economic impact of social distancing measures (closing of schools and work absenteeism)\. If one considers the reduction in consumption caused by the pandemic in sectors like tourism, transportation and recreation, the global cost of influenza was over US$3 billion\. Table 4: Economic Impact of the A/H1N1 Influenza pandemic in Argentina (In millions of dollars) 2009 2010 Total amount in % amount in % amount in % 1\. Direct health cost 472\.4 24\.0 155\.7 96\.1 628\.2 29\.5 Prevention 0 0\.0 155\.1 95\.7 155\.0 7\.3 Diagnostic and treatment 472\.4 24\.0 0\.7 0\.4 473\.1 22\.2 2\. Costs due to productivity losses 1,494\.9 76\.0 6\.3 3\.9 1,501\.2 70\.5 Costs associated with the presence of 852\.4 43\.3 6\.3 3\.9 858\.7 40\.3 the disease Costs associated with social distancing measures (school closure 642\.5 32\.7 0 0\.0 642\.5 30\.2 and work absenteeism) Total cost 1,967\.4 100 162\.1 100\.0 2,129\.5 100 Source: Own estimates based on MSN information 8\. Finally this section reviews some of the economic indicators to analyze the efficacy of the health measures adopted by the GOA to combat Influenza A/H1N1, and in particular evaluate the efficiency of the interventions that were supported within the framework of the Project\. The analysis considered two basic indicators: the net benefit cost and the benefit cost ratio\. For the analysis we considered as benefit of all the public health interventions implemented the direct costs avoided (health costs due to the pandemic and costs associated due to the presence of disease in infected individuals) and as costs of the interventions the costs related to social distancing measures and prevention implemented during the emergency\. 9\. As exhibited in Table 4 the benefits calculated with a discount rate of 3 percent increase to US$1\.3billion and the NPV at US$797 million\. The net benefit cost discounted at a rate of 3 percent reaches US$534 million and the benefit cost ratio to 1\.7\. 40 In Mexico, for example, estimates indicate an economic impact of USD$9\.1 billion, approximately 1 percent of GDP\. 29  Table 5: Costs and Benefits of the measures adopted during the Emergency (In millions of dollars) 2009 2010 Total Benefits (avoided costs) 1,324\.9 7\.0 1,331\.9 Treatment costs 472\.5 0\.7 473\.2 Costs associated with the presence of the disease 852\.4 6\.3 858\.7 Costs of the measures against 642\.5 154\.6 797\.2 A/H1N1 Social distancing measures 642\.5 0 642\.5 Prevention costs 0 154\.6 154\.6 Net Benefit Cost 534\.7 Benefit-cost Ratio 1\.7 Source: Own estimates based on MSN information 10\. Taking into account that economic benefits of the adopted measures to combat the pandemic are underestimated due to the lack of consideration of the effects of social distancing measures in key sectors of the economy, the net benefit could be much higher\. 11\. Based on the analysis and on the epidemiological data, the adopted measures against the A/H1N1 and in particular the interventions that were financed via the Project have been effective (epidemiologic impact) and efficient (economic impact) in that they interrupted the pandemic at a reasonable cost\. 30 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members (b) Names Title Unit Lending: Fernando Lavadenz Task Team Leader LCSHH Ampere Gorilla -Tobar Co-Tak Team Leader LCSHH Vanina Camporeale Senior Operations Officer LCSHH Diomedes Berroa Senior Operations Officer OPSOR Luis Orlando Perez Senior Public Health Specialist LCSHH Reynaldo Pastor Senior Counsel LEGLE Marta Molares-Halberg Lead Counsel LEGLE Jose Janeiro Senior Finance Officer CTRLA Alejandro Roger Solanot Financial Management Analyst LCSFM Snezana Mitrovic Lead Procurement Specialist LCSPT Keisgner Alfaro Procurement Analyst LCSPT Francis Fragano Environmental Specialist SARDE Juan Martinez Social Specialist EASIS Isabel Tomadin Social Safeguards Consultant LCSOS Rocio Schmunis Health Consultant LCSHH Daniel Cotlear Peer Reviewer LCSHD Rafael Cortez Peer Reviewer LCSHH Gabriel Schmunis Peer Reviewer LCSHD Veronica Jarrin Senior Program Assistant LCSHH Julie Nannucci Program Assistant LCSHH Gabriela Moreno Program Assistant LCSHH Santiago Scialabba Program Assistant LCSHD Sarah Bailey Team Assistant LCSHD Rory Narvaez Consultant LCSHH Vanessa Victoria Consultant LCSHH Supervision: Fernando Lavadenz Task Team Leader - Senior Health Specialist LCSHH Task Team Leader - Senior Operations Vanina Camporeale LCSHH Officer Task Team Leader for ICR - Senior Claudia Macias LCSHH Operations Officer Natasha Zamecnik ICR Author LCSHH Luis Orlando Perez Senior Public Health Specialist LCSHH Amparo Gordillo-Tobar Senior Health Economist LCSHH Daniela Romero Operations Analyst LCSHH Snezana Mitrovic Manager LCSPT 31 Keisgner De Jesus Alfaro Senior Procurement Specialist LCSPT Alvaro Larrea Senior Procurement Specialist LCSPT Ana Maria Grofsmacht Procurement Specialist LCSPT Elizabeth Grandio Junior Professional Associate LCSPT Alejandro Roger Solanot Senior Financial Management Specialist LCSFM Luz Maria Meyer Financial Management Analyst LCSFM Alejandro Alcala Senior Counsel LEGES Maria Pia Cravero Junior Counsel LEGLE Isabel Tomadin Consultant, Indigenous People LCSSO Marcos Miranda Consultant LCSHH Rocio Schmunis Consultant EASHD Isabellla Bablumian Consultant LCSHH Julie Ruel Bergeron E T Consultant LCSHH Veronica Osorio Consultant LCSHH Sarah Bailey Junior Professional Associate LCSHD Santiago Scialabba Program Assistant LCC7C Gabriela Moreno Zevallos Program Assistant LCSHH Silvestre Rios Centeno Team Assistant LCSHD (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) USD Thousands Stage of Project Cycle No\. of staff weeks (including travel and consultant costs) Lending FY10 43\.38 229\.28 Sub-total: 43\.38 229\.28 Supervision/ICR FY10 11\.03 36\.33 FY11 11\.31 69\.27 FY12 14\.55 74\.52 FY13 11\.76 41\.37 FY14 7\.92 44\.78 Sub-total: 56\.57 266\.27 TOTAL 99\.95 495\.55 32  Annex 5\. Beneficiary Survey Results Not Applicable 33  Annex 6\. Stakeholder Workshop Report and Results Not Applicable 34 Annex 7\. Summary of Borrower's ICR and / or Comments on Draft ICR EMERGENCY PROJECT FOR THE PREVENTION, MONITORING AND CONTROL OF INFLUENZA H1N1 DISEASE TYPE IBRD 7843-AR Completion Report January, 2014 35 INTRODUCTION 1\. The purpose of this Closing and Results Report is to consolidate the most important information regarding the performance of the Emergency Project for the Prevention, Surveillance and Control of A/H1N1 Influenza Type Illnesses , indicating the primary actions carried out in the various project areas and the results achieved in terms of compliance with the objectives proposed in the project design\. CHAPTER 1: Description of the initial situation and the context in which the Project was formulated 1\.1 Background 2\. In 2009 the epidemic generated by the A/H1N1 virus caused in Argentina 14,000 cases of hospitalization due to severe Acute Respiratory Infection (ARI) and more than 600 deaths throughout the country\. In that same year, scientific and epidemiological studies predicted another wave of influenza caused by the A/H1N1 virus, expected to affect the Southern Cone in 2010\. Consequently, the Government of Argentina (GOA) requested a loan from the World Bank to help finance the costs associated with the efforts made by national authorities to prevent, monitor and control the A/H1N1 influenza epidemic, preparing an Emergency operation project under OP/BP 8\.00\. 3\. The p oject was app oved by the Wo ld Bank’s Boa d of Di ecto s on Feb ua y 21, 2010, and became effective in April 2010\. Nevertheless, the GOA initiated the planned actions in the originally-estimated time periods\. In particular the vaccination campaign was initiated in late February 2010\. This meant that the process of acquiring pandemic vaccines was carried out under national regulations, and acknowledgement of the process by the World Bank would be requested later\. 4\. With the project, the GOA was seeking—in addition to controlling a potential new pandemic wave—to st engthen the count y’s ove all epidemiological esponse system, and carry out actions for improving the surveillance system and contributing to the improvement of the network of hospitals for symptomatic patients throughout the country\. 1\.2 Health emergency setting (2009) 5\. In April 2009, after the outbreak of the new A/H1N1 Influenza in Mexico, the vi us sp ead apidly to othe count ies\. On June 11, 2009 the WHO’s decla ation of Phase 6 of the Pandemic Alert for A/H1N1 Influenza indicated that a world pandemic was in progress, and that it was necessary to move from preparations to response\. 6\. In Argentina the peak of contagion took place between June 20 and July 3, with the virus circulating throughout the entire country\. By December 4 the number of deaths had reached 613, above the number for Mexico, with Argentina ranking third among countries around the world at that time\. 36 7\. The number of cases of ILI (influenza-like illness) reported during 2009 was much higher than during previous epidemic years, reaching a level of 160,000 cases reported per week at the peak of viral circulation\. 8\. As for serious cases, a total of 14,160 cases requiring hospitalization due to severe Acute Respiratory Infection (ARI) were reported during 2009, representing a hospitalization rate of 34\.95 cases per 100,000 inhabitants\. 9\. The age groups most seriously affected were children under five years of age, with a rate of 76\.41 cases per 100,000 inhabitants, followed by the group of persons 45 to 64 years of age, with a rate of 26 cases per 100,000 inhabitants\. 10\. During 2009, 12,080 cases of Pandemic Influenza (H1N1) were confirmed by laboratory tests\. The 2009 Pandemic Influenza (H1N1) and unspecified Influenza A represented 83\.3% of the total respiratory viruses reported in patients fives year of age or older, and 22\.13% in children under the age of five\.41 In 2009 there were 626 confirmed patient deaths from the pandemic influenza, during the period of the greatest circulation\. 1\.3 GOA’s intervention strategy 11\. Argentina responded to the emergency by following the Integrated Response Plan fo the Influenza Pandemic and “SARS,â€? app oved by Dec ee 644/2007\. The Project was formulated in this context, with an immediate objective—controlling the pandemic—and another objective structural in nature—the comprehensive strengthening of the Argentine health system’s capacity fo esponding to potential epidemiological outb eaks\. 12\. Argentina was the first country in the region (in the Southern hemisphere) to begin an anti-influenza vaccination campaign, implementing a comprehensive vaccination strategy that also included the pneumococcal and pertussis vaccines\. The 2010 and 2011 vaccination campaigns were on a massive scale, offered free-of-charge in all of the count y’s hospitals and vaccination cente s fo the at-risk population\.42 Based on a decision by the GOA, the anti-flu vaccine was incorporated into the National Vaccination Calendar for the at-risk population during the second half of 2011\. CHAPTER 2: Results Achieved in the H1N1 Emergency Project and the Contribution to Strengthening Prioritized Actions 13\. In the following sections, the P oject’s cont ibutions and esults a e desc ibed in detail, by components, outputs, indicators and related actions\. 41 Source: http://municipios\.msal\.gov\.ar/h1n1/parte_influenza/parte-91-26-02-10\.pdf 42 Mothers of infants under 6 months of age, children from 6 to 24 months of age, pregnant women, post-partum women, health personnel, persons over 65 years of age, persons with chronic illnesses (respiratory, cardiac, renal, diabetic, weakened immunity and morbidly obese)\. 37 2\.1 Component 1: Strengthening epidemiological surveillance for preventing, monitoring and evaluating influenza activity 14\. With the objectives of expanding and improving the quality of the epidemiological surveillance system for timely detection of cases of respiratory illnesses, and promoting prevention and self-care measures, this component included the following actions: 2\.1\.1\. Provincial Health Situation Rooms The project proposed the implementation of Health Situation Rooms (HSRs) throughout the country, under Output 1 of Component 1\. The objective was to implement 38 HSRs (during a two-year period)\. 43 At the p ojects’ end, 36 Health Situation Rooms a e operating throughout the country\. 44 The implementation and strengthening of the provincial Health Situation Rooms, with human, physical and technological resources associated with their operations, and with a coordinated protocol for completing tasks, supervised by a national technical team, generated a platform for producing systematic, periodic information\. This led to improved contributions from the provinces to the National Health Surveillance System (SNVS) and promoted the assimilation of the Rooms by provincial health authorities, as an instrument for improvements in managing and making health decisions\. 15\. Of the 36 Rooms, 28 certified their activities in 2012 above 80% compliance with the certification protocol, indicating an optimal level of functioning\. 45 During the last year of certification (2012), the evaluation was particularly oriented toward the production of high-quality information in a systematic, timely manner, through contributions from the various areas, programs and projects\. This generates mechanisms for flows of information centralized in the Room, which also offers and produces information for provincial health authorities\. 2\.1\.1\.1 Degree of the Rooms’ institutionalization 16\. The degree of institutionalization in the HSRs at the end of the project can be summarized as follows: 33% of the provincial HSRs are formally established within the 43 One room for each of 20 provinces (Catamarca, Chaco, Chubut, Corrientes, Entre Ríos, Formosa, Jujuy, La Pampa, La Rioja, Mendoza, Misiones, Neuquén, Río Negro, Salta, San Juan, San Luis, Santa Cruz, Santiago del Estero, Tierra del Fuego and Tucumán); two rooms for Córdoba (Córdoba Capital and Río Cuarto) and Santa Fe (Santa Fe Capital and Rosario); one room for the city of Buenos Aires; 13 rooms for the Buenos Aires province (12 for the Health Regions and one central provincial room)\. 44 The city of Buenos Aires did not participate in the project, and the Formosa room did not certify its operations during 2012\. 45 Buenos Aires, 10 Rooms (Central, RS 1, RS II, RS IV, RS V, RS VI, RS VII, RS IX, RS XI, RS XII); Chaco, 1 Room; Chubut, 1 Room; Córdoba, 2 Rooms (Capital and Río Cuarto); Entre Ríos, 1 Room; La Pampa, 1 Room; La Rioja, 1 Room; Misiones, 1 Room; Neuquén, 1 Room; Río Negro, 1 Room; Salta, 1 Room; San Juan, 1 Room; San Luis, 1 Room; Santa Cruz, 1 Room; Santa Fe, 2 Rooms (Capital and Rosario), Santiago del Estero, 1 Room; and Tucumán, 1 Room\. 38 scheme of the Ministries of Health at the provincial level; 57% of the provincial HSRs are still in the process of becoming formalized; and 10% of the HSRs have not presented initiatives for their integral formalization\. 2\.1\.1\.2 Financing for Human Resources 17\. The work carried out in the provincial Situation Rooms and coordinated at the national level was possible due to financing for the hiring of Human Resources\. A small g oup of consultants in the Epidemiology Depa tment in A gentina’s Minist y of Health (MSAL) was hi ed acco ding to stipulations in the P oject’s Ope ations Manual, through a competition among groups of three, as was an extensive group of consultants from the provincial Situation Rooms, using the ROSTER method\. 18\. Three consultants, specifically two experts in epidemiology and one with a public health orientation were hired for the Epidemiology Department at MSAL\. They became pa t of the National HSR technical team du ing the P oject’s enti e execution\. The team’s performance, in terms of complying with all of the actions required for implementing the provincial Rooms, was excellent\. 19\. A fundamental facto in stimulating the Situation Rooms’ wo k was the establishment of an interdisciplinary technical team with the capacity to obtain data from various sources and provide tools for not only bringing together quantitative and qualitative methodologies but also different perspectives\.46 2\.1\.1\.3 Training 20\. Financing was provided for training activities ranging from graduate studies, to practical-theoretical courses, to workshops on specific topics related to processing health information\. Training was provided to over 200 professionals with the Graduate Course in Epidemiology given by the National University of Córdoba\. 2\.1\.1\.4 Publications 21\. Two publications were produced in the framework of the implementation of Situation Rooms, and they we e dist ibuted to health depa tments in all of the count y’s p ovinces: (i) “Salas de Situación de Salud en Argentina: Compartiendo el proceso de implementaciónâ€?, a p esentation of all the st ategic plans fo implementing HSRs in the 23 provincial jurisdictions, for the particular context in each province and (ii) 46 The required profile was the following: a university-educated professional with abilities in developing cross-cutting epidemiological studies\. Profiles with the required skills: health sciences (physicians, nutritionists, psychologists, biochemists, kinesiologists, obstetricians, odontologists, pharmacists, and university graduates in nursing or other health sciences), social sciences and humanities, statistics, social communication, social service, administration, health administration, as well as biological, natural and veterinary sciences; preferably with training in health and experience in epidemiological surveillance\. 39 “Experiencias Exitosas de Salas de Situación de Salud en Argentinaâ€?, a compilation of experiences in the Rooms in the Mendoza, Neuquén, Santa Fe and Tucumán provinces\. 2\.1\.1\.5 Computer Equipment 22\. The project also contributed to strengthening the epidemiological surveillance system through the purchase and distribution of computer equipment for the nodes in the National Health Surveillance System (Sistema Nacional de Vigilancia de Salud— SNVS)\. This system operates by promoting the flow of information for improving the coverage and quality of surveillance data that begins at the local level and expands to the provinces and the national government\. 2\.1\.2 Communication campaigns for prevention and self-care 23\. The project financed the Operational Modules of Social Communication (MOCS), with the objectives of promoting the dissemination of measures for preventing the spreading of respiratory illness, promoting early doctor visits, and adapting social communication policies to native communities, through communication campaigns directed at local communities\. The MOCS directed at the indigenous population facilitated a synergy of actions with the IPP in the FESP Project, through the promotion of actions aimed at coordination with indigenous health agents (workshops, groups, conferences, meetings, etc\.) The experience of systematizing the MOCS was considered by MSAL’s ommunications Depa tment as an expe ience to be eplicated in other programs\. 2\.2 Component 2: Strengthening the Argentine health system’s response capacity for reducing the virus’ transmissibility\. 2\.2\.1 Reducing the virus’ transmissibility 24\. In Argentina, the primary reason for doctor visits and inpatient services at all ages is respiratory illness\. Based on the data from the National Health Surveillance System (in the clinic and laboratory surveillance modalities) and from the National Reference Laboratory for Influenza and other respiratory viruses, the situation for the Influenza- Type Illness (ITI) is analyzed, together with the studied cases of respiratory viruses\. 2\.2\.1\.1\. Anti-flu Vaccination 25\. The GOA used funds from the National Treasury to purchase and distribute vaccines and antiviral t eatment du ing the P oject’s enti e implementation\. The P oject helped to generate the necessary synergies among the different levels of government in order to confront the pandemic and outline long-term intervention strategies\. Payment for results was a driving force that motivated authorities in the provinces to appropriately record and document information on the doses applied\. 40 26\. During the two years of output certification, coverage above 90% of the target population was established for the indicator “doses of A/H1N1 vaccines applied\.â€? At the end of the 2010 campaign, no deaths from H1N1 influenza had been reported within the prioritized at-risk groups, with two deaths from H1N1 outside these groups reported\. During 2011 no deaths from the H1N1 virus were reported from any groups\. In summary, if we compare the data on mortality from the virus in 2009 (626 deaths) with the data from 2010 and 2011, the success of the massive vaccination campaign conducted during those two years is clearly apparent\. 27\. In 2011 the anti-flu vaccine was incorporated into the national vaccination calendar, demonstrating the importance that the GOA placed on reducing the transmissibility of the influenza virus\. According to PRONACEI reports, coverage rates were as high as 87\.6% in 2012 and 89\.6% at SE 40 in 2013\. 2\.2\.1\.2\. Anti-pneumococcal Vaccination 28\. Illnesses caused by Streptococcus pneumoniae (Sp) continue to be a significant cause of morbidity and mortality around the world\. Rates of infection from Sp have been reported as high as 30-50% of Community-acquired pneumonia (CAP) cases, with mortality near 25%\. The illness occurs more frequently among older adults (>55 years), and individuals who are immunocompromised or who have chronic illnesses\. Sp can cause not only CAP, but also various serious systemic infections such as meningitis and bacteremia, with high rates of mortality\. 29\. In 2012 the pneumococcal conjugate vaccine was incorporated into the National Vaccination Calendar for children at two months (1 dose), four months (2 doses), and twelve months (1 booster)\. Coverage has been 85% in 2012 and 82\.4% in 2013, according to PRONACEI reports\. 2\.2\.2\. Improvement in services to affected individuals 30\. In relation to persons with influenza-like symptoms, the project carried out actions aimed at improving hospital services, financing antiviral treatments and laboratory tests as outputs, as well as the provision of hospital inputs and equipment\. 2\.2\.2\.1 Outpatient treatment provided 31\. In both 2010 and 2011 a high level of compliance was demonstrated in the p oject’s output 6, “outpatient treatments provided,â€? as measu ed by the numbe of cases of Influenza-Like Illness (ILI) reported to the SNVS, in relation to the number of treatments anticipated\. The p oject’s efforts to achieve certification in this indicator generated indirect positive effects, such as an improvement in the level of reporting in the provincial nodes in the SNVS, through the Complex Index for the Evaluation of the National Health Surveillance System (SNVS) – Module C by the National Directorate of Epidemiology (DE)\. This Index, developed in the p oject’s f amewo k, is designed to 41 measure the status of reporting on the basis of data regularity and opportunity, as well as reporting coverage and adequate use of the system\. 32\. Among the primary institutional achievements linked to the reporting of Influenza-Like Illnesses, the following a e wo th highlighting: (i) SNVS’s legitimacy as a single epo ting system; (ii) SNVS’s visibility in the national political agenda and the regional technical agenda; (iii) systematization of evaluation instruments; (iv) periodic p oduction of MSAL’s Integ ated Su veillance Newslette ; and (v) the integ ation of MSAL’s Su veillance A ea with othe p og ams\. 2\.2\.2\.2 Hospital treatment for Acute Respiratory Infections 33\. During the winter months, acute respiratory infections represent the primary reason for doctor visits and inpatient treatment\. While this indicator was not one of the p oject’s outputs, it indicates the increase in reported events of acute respiratory infections du ing the p oject’s implementation\. 2\.2\.2\.3 Laboratory tests conducted 34\. Among the main achievements identified by the Directorate of Epidemiology in relation to laboratory surveillance are the following: (i) active monitoring of respiratory viruses was maintained in Argentina since 2008, and was strengthened during and following the influenza pandemic; (ii) the influenza outbreaks in 2011 were detected early through SIVILA information and helped to characterize the increases in ILI cases, including those not occurring during the winter season; (iii) the system was consolidated as a communication tool through the use of virtual derivation; (iv) Argentina currently contributes the greatest volume of information on respiratory viruses in the region, used in the analysis and dissemination of information on the influenza situation; (v) information on the situation in the country is available weekly through the Integrated Surveillance Newsletter; (vi) information is analyzed and disseminated at provincial and local levels; and (vii) SIVILA was consolidated as the single source of information on the monitoring of respiratory viruses at the national level\. 2\.2\.2\.4 Inputs and Equipment 35\. With the acquisition of equipment, the network of 208 hospitals (with a total of 1,674 critical care hospital beds) was strengthened\. If we consider that the equipment for a critical care bed consists of a multiparametric monitor, infusion pump and oximeter, equipment was provided for a total of 625 beds (37\.33% of those available)\. 2\.3 Primary factors affecting the Project’s execution 36\. The risks identified in the PAD are presented below, together with the way in which the Project was able to mitigate them, and some results that indicate this\. 42 37\. Argentina could confront some challenges in order to acquire enough A/H1N1 vaccines necessary to vaccinate 8\.5 million persons\. 38\. The Pandemic Flu Vaccination Campaign was part of a comprehensive strategy for preventing illnesses from the A/H1N1 Influenza in Argentina\. The GOA acquired the pandemic and trivalent vaccines with the pandemic strain for the amount of US $88,000,000 through a bidding process carried out between November 2009 and January 2010 through what was known at that time as MSAL’s Expanded Immunizations Program (PAI)\. During preparations for the Project, in January to March 2010, consideration was given to the possibility of retroactive financing of this expenditure by the Bank, but the standards for acquisition were not compatible, and therefore the partial cancellation of the loan in this amount was requested in December 2010\. 39\. The A/H1N1 vaccine currently being developed may cause adverse affects to health with greater frequency and of a more serious nature than what was anticipated and deemed tolerable\. 40\. The risk-benefit assessment of the application of vaccines allows us to affirm that the available vaccines are safe\. The safety of vaccines and vaccination covers the p oducts’ cha acte istics as well as the ways in which they are applied\. 41\. In terms of the capacity for implementation, there are serious institutional limitations in responding quickly and effectively to a wave of the long-term, virulent A/H1N1 influenza epidemic\. 42\. The GOA’s capacity to conf ont the second pandemic wave expected in 2010 was proven to be effective\. The coordination between the national and provincial levels in the implementation of control and prevention actions was highly effective, as demonstrated by the indicators of coverage and mortality from the virus during that year\. 43\. Other factors not anticipated in the PAD that affected the project’s execution Incompatibility between national standards for acquisitions and those of the financing entity: 44\. The incompatibility between national standards for acquisitions and those of the p oject’s financing entity gene ated the need to equest the pa tial cancelation of the loan initially anticipated\. Of US $229,000,000, a total of US $88,000,000 was cancelled, with a loan of US $141,000,000 remaining\. It is important to emphasize that this unforeseen ci cumstance did not affect the p oject’s execution in any way, as acquisitions we e made with funds from the national treasury\. Provincial political-institutional contexts 45\. Output 1, “Health Situation Rooms,â€? was influenced by ju isdictions’ political decisions that had an impact on their implementation\. We might especially mention the case of the city of Buenos Aires which, by not signing on to Project FESP, could not participate in the P oject’s financing of Situation Rooms\. We would also mention the 43 case of the Formosa province, where the change in health authorities led to the suspension of activities in the Situation Room during the third year of implementation, as it was not considered to be a priority within its overall policies\. 46\. Outputs 2 and 3, “MO S fo the gene al population and fo the indigenous population,â€? also executed at the p ovincial level, we e affected by the lack of interinstitutional coordination among the various areas involved: health ministries, communication departments and offices for promoting and assisting native peoples\. This was the case in La Pampa and Salta\. CHAPTER 3: Final considerations 47\. An important result of timely actions in anti-flu vaccination is that the number of deaths from the A/H1N1 virus decreased from 626 in 2009, to 2 in 2010 (outside risk groups), to 0 in 2011, as reported to the intensified surveillance system implemented during the pandemic and in the years that followed\. 48\. Regarding the anti-pneumococcal vaccination, efforts have been made to intensify its application to the at-risk population\. During the 2010 campaign, it became clear that the eco ds of the vaccine’s application did not eflect the demand fo and application of doses in the provinces\. This led to the need for reinforcing the doses from the national level to the SNVS for the 2011 campaign\. That year the coverage achieved in terms of the doses dist ibuted in all the count y’s p ovinces was 93\.3%\. 49\. The anti-pneumococcal vaccine, like the anti-flu vaccine, was incorporated into the national vaccination calendar, beginning on January 1, 2012, for children under one year of age\. This was implemented together with strategies for diminishing morbimortality from respiratory illnesses, primarily from pneumonia in children, since pneumococcus may produce serious illness, with serious consequences and/or death\. 50\. The high coverage achieved during the pandemic, in terms of reporting ILI in the SNVS, was maintained with a high degree of compliance, and was used to evaluate the provision of outpatient treatments to symptomatic patients, with 105\.8% for 2010 and 99\.1% for 2011, in relation to the goals proposed for the project\. 51\. With regard to laboratory surveillance, the project consolidated the use of this surveillance tool, reporting a significant level of compliance\. In 2009 a total of 36,000 laboratory tests conducted (baseline) was reported to the SNVS, and between 2010 and 2011, a total of 65,341 tests for respiratory viruses were reported\. 52\. An important externality from the project has been the use of SNVS components as a single egist y system in all of the count y’s p ovinces\. This is because in o de to certify the application of vaccines (PRONACEI), the provision of outpatient treatments (Module C2) and the application of laboratory tests (SIVILA Module), it was necessary for the cases to be reported to the SNVS\. This led to an improvement in the quality and 44 timeliness of the information provided to the SNVS, in terms of obligatory reporting of events\. 53\. Although the project was designed in an emergency context, with the aim of controlling the pandemic in Argentina caused by the A/H1N1 virus during 2009, two of the main structural objectives were to strengthen surveillance systems and to improve access to timely info mation fo making health decisions\. Thus, one of the p oject’s important contributions to these objectives was the implementation of Health Situation Rooms (HSRs) in all of the count y’s p ovinces\. 54\. The project promoted the design and implementation of communication campaigns focused on prevention and self-care, directed at the general population and the indigenous population in particular\. The experience has been successful, since it permitted the provinces to define strategic actions, and to implement and document them\. From an institutional perspective, this is considered an action to be replicated by other programs in terms of interinstitutional management and coordination, with guidance from the national level and implemented with provinces and within them, among the various areas involved\. 55\. In general, the project management model has been considered to be successful, and has contributed to the optimization of resources, strengthening synergies among the various actors involved, minimizing operational costs and contributing to strengthening the count y’s Minist y of Health\. Actively involved in p oject coo dination by the International Financing Units were the technical teams from the Epidemiology Department, PRONACEI, Health Economy Department, Communications area and the FESP Project\. With this model it was possible to reprogram operational and administrative expenditures in line with technical components\. 56\. The results-based financing model promoted changes in guidelines for the management, evaluation and regulation of the organizations involved, facilitating improvements in strategic and operational planning actions and the re-engineering of processes and structures\. The Situation Rooms were developed with this model, under a scheme of incentives and the development of mechanisms for evaluating and controlling results\. 57\. The emergency context generated by the pandemic served to deepen the commitment assumed in the provinces, formalized through the signing of letters of adhe ence in the count y’s 23 ju isdictions\. The guiding ole of the National Minist y of Health with the Provincial Ministries of Health was strengthened in order to respond effectively to the emergency\. 58\. The study of the impact from health measures taken in Argentina to fight influenza offers an estimate of the significant magnitude of the economic impact generated by the Influenza A/H1N1 pandemic in the society during 2009 and 2010\. This impact was specifically in terms of direct costs for treatment and prevention, the loss of productivity due to school and work absences, and the loss of opportunities for society\. 45 Also offered is an estimate of the life years lost through premature death, adjusted by life quality and disability\. 59\. We can affirm that the implementation of the A/H1N1 Emergency Project not only fulfilled the proposed objectives in a satisfactory manner, but it also contributed to the development of institutional and management capacities at both national and provincial levels in the area of public health policy implementation\. 46  Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Not Applicable 47  Annex 9\. List of Supporting Documents CEPAL (2010): Evaluación Preliminar del Impacto en Mexico de la Influenza A H1N1\. Documento elaborado por el equipo conjunto CEPAL/OPS-OMS a solicitud y con el apoyo del Gobierno de México Chowell G\., Vibourd V, Wang X\., S Bertozzi, S\. and Miller, M\. Adaptive Vaccination Strategies to Mitigate Pandemic Influenza: Mexico as a Case Study (2009) Gentile A, J\. Baki , Russ, S\. Ruvinsky, G\. Ensinich, A\. Falaschi, A\. an , F\. Luci n, M\. Bruno, R\. Moreno and N\. Bidone, Estudio de las Enfermedades respirato ias po vi us Influenza AHINI (pH1N1) en ni os inte nados du ante el ano de la pandemia\. Expe iencia de 34 cent os en la A gentina, A chivos de Pediat a del uguay 2013, 4 (1)\.IEG Working Paper 2009/4\. “Do Health Secto -Wide Approaches Achieve Results?â€? Ministerio de Salud de la Nación (2013): Evaluación de Impacto de las Medidas Sanitarias contra la Influenza A (H1N1) en Argentina\. Informe Final Ampliado\. Ministerio de Salud (2014): Proyecto de Emergencia para la Prevención, Vigilancia y Control de Enfermedades Tipo Influenza H1N1- BIRF 7843-AR Documento de Cierre\. Enero de 2014 Raffo (2011) Epidemia de influenza A(H1N1) en la Argentina\. Experiencia del Hospital Nacional Profesor Alejandro Posadas Comisión para la Contingencia de Influenza A (H1N1), Hospital Nacional Profesor Alejandro Posadas\. Schuchat, A\., B\. Bell, and S\. Redd, The Science Behind Preparing and Responding to Pandemic Influenza: the Lessons and Limits of Science, Oxford journal of Medicine: Clinical infectious Diseaseas, vol 52, issue Suplement 1, p\.1 and 2\. Unidad de Financiamieneto Internacional de Salud, Ministerio de Salud, Proyecto de Eme gencia pa a la P evenci n Vigilancia y Control de Enfermedades Tipo Influenza H1N1, BIRF 7843-AR Unidad de Financiamiineto Internacional de Salud, Ministerio de Salud, Proyecto de Eme gencia pa a la P evenci n Vigilancia y Control de Enfermedades Tipo Influenza H1N1, BIRF 7843-AR, Segundo Semestre 2011 Unidad de Financiamieneto Internacional de Salud, Ministerio de Salud, Proyecto de Eme gencia pa a la P evenci n Vigilancia y Control de Enfermedades Tipo Influenza H1N1, BIRF 7843-AR, Primer Semestre 2012 Unidad de Financiamiento Internacional de Salud, Ministerio de Salud, Proyecto de Eme gencia pa a la P evenci n Vigilancia y Control de Enfermedades Tipo Influenza H1N1, BIRF 7843-AR, Segundo Semestre 2012 48 Unidad de Financiamieneto Internacional de Salud, Ministerio de Salud, Proyecto de Eme gencia pa a la P evenci n Vigilancia y Control de Enfermedades Tipo Influenza H1N1, BIRF 7843-AR, Primer Semestre 2013 Unidad de Financiamieneto Internacional de Salud, Ministerio de Salud, Proyecto de Eme gencia pa a la P evenci n Vigilancia y Control de Enfermedades Tipo Influenza H1N1, BIRF 7843-AR, Documento de Cierre, Enero 2014\. Unidad de Financiamieneto Internacional de Salud, Ministerio de Salud, Evaluacion de Impacto de las Medidad Sanitarias contra la Influenza A (H1N1) en Argentina\. Informe Final Ampliado Unidad de financiamieneto Internacional de Salud, Ministerio de Salud, Experiencias Exitosas de Sala de Situacion de Salud en Argentina, Programa de Emergencia para la Prevencion Vigilancia y Control de Enfermedades Tipo Influenza H1N1, 2013 Van Kerkhove, M\. and A\. Mounts (2011), 2009 versus 2010 comparison of influenza activity in southern hemisphere temperate countries\. World Bank- Independent Evaluation Group (2013) Responding to Global Public Bads Learning from Evaluation of the World Bank Experience with Avian influenza 2006- 2013 World Health Organization, Evaluation of a Pandemic A (H1N1) 2009, April 2009- August 2010 49 Annex 10\. Map 50

REVIEW

P070244

Document of The World Bank Report No: ICR00001165 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-7096, IDA-35920) ON A LOAN/CREDIT IN THE AMOUNT OF SDR 2\.2 MILLION (US$ 2\.6 MILLION EQUIVALENT) TO SAINT LUCIA FOR A WATER SECTOR REFORM TECHNICAL ASSISTANCE PROJECT June 26, 2009 Sustainable Development Department Caribbean Country Management Unit Latin America and the Caribbean Regional Office  CURRENCY EQUIVALENTS (Exchange Rate Effective June 22, 2009) Currency Unit = East Caribbean Dollars (XCD) 1\.00 = US$ 0\.372 US$ 1\.00 = 2\.685 XCD FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BOA Board of Directors CAS Country Assistance Strategy CDB Caribbean Development Bank CIDA Canadian International Development Agency GoSL Government of Saint Lucia GPOBA Global Partnership for Output Based Aid IFC International Finance Corporation NWSC National Water & Sewerage Commission OECS Organization of Eastern Caribbean States PMU Project Management Unit PSP Private Sector Participation PPP Public- Private Partnership SEA Sectoral Environmental Assessment TAL Technical Assistance Loan UFW Unaccounted for Water WASA Water & Sewerage Authority WASCO Water & Sewerage Company Inc\. WRMA Water Resources Management Agency WSS Water and Sanitation Sector Vice President: Pamela Cox Country Director: Yvonne M\. Tsikata Sector Manager: Guang Zhe Chen Project Team Leader: Patricia Lopez ICR Team Leader: Patricia Lopez  Saint Lucia Water Sector Reform Technical Assistance Project CONTENTS Datasheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring (if any) 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 4 3\. Assessment of Outcomes\. 7 4\. Assessment of Risk to Development Outcome \. 11 5\. Assessment of Bank and Borrower Performance\. 11 6\. Lessons Learned\. 15 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 16 Annex 1\. Project Costs and Financing \. 18 Annex 2\. Outputs by Component\. 20 Annex 3\. Context at Appraisal \. 26 Annex 4\. Bidding Process to select a private operator\. 32 Annex 5\. Bank Lending and Implementation Support/Supervision Processes \. 34 Annex 6\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 36 Annex 7\. List of Supporting Documents\. 44  A\. Basic Information Water Sector Reform Country: St\. Lucia Project Name: Technical Assistance Project IBRD-70960,IDA- Project ID: P070244 L/C/TF Number(s): 35920 ICR Date: 06/30/2009 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: TAL Borrower: ST\. LUCIA Original Total USD 2\.6M Disbursed Amount: USD 2\.3M Commitment: Environmental Category: B Implementing Agencies: Ministry of Physical Development, Environment & Housing Ministry of Finance Ministry of Economic Affairs, Economic Planning, Investment and National Development (MOEA) Cofinanciers and Other External Partners: Caribbean Development Bank B\. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 02/26/2001 Effectiveness: 05/15/2002 Appraisal: 10/26/2001 Restructuring(s): Approval: 12/20/2001 Mid-term Review: Closing: 12/31/2005 12/31/2008 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Moderately Unsatisfactory Government: Unsatisfactory Quality of Supervision: Moderately SatisfactoryImplementing Agency/Agencies: Moderately Satisfactory i  Overall Bank Overall Borrower Moderately Performance: Moderately SatisfactoryPerformance: Unsatisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project No Quality at Entry None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 40 50 Sewerage 30 20 Water supply 30 30 Theme Code (as % of total Bank financing) Environmental policies and institutions 25 25 Other financial and private sector development 25 40 Pollution management and environmental health 25 10 Regulation and competition policy 25 25 E\. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox David de Ferranti Country Director: Alan G\. Carroll Orsalia Kalantzopoulos Sector Manager: Guang Zhe Chen Danny M\. Leipziger Project Team Leader: Patricia Lopez Martinez Alexander E\. Bakalian ICR Team Leader: Patricia Lopez Martinez ICR Primary Author: Patricia Lopez Martinez F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) To prepare and transit the water company to private sector management within a sound legal and regulatory framework ii  Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Private sector operator in place WASCO operated and managed by a WASCO remains a Value private sector corporatized public quantitative orWASCO as a operator (newCo body\. Private Qualitative) corporatized public body established and shares suscribed operator not in and PPP place documents signed) Date achieved 12/31/2002 12/31/2005 12/31/2008 Comments (incl\. % PDO indicator was not achieved achievement) Indicator 2 : The timely preparation and promulgation of regulations The Water & Sewerage No\. 14 of 2006 was enacted Water and on 15 May 2006 Value Water and Sewerage Sewerage Supply quantitative orSupply Legislation and Legislation and The Regulations Qualitative) Regulations in need of review and approval Regulations were published in ratified the Official Gazette in Dec 2008\. Date achieved 12/31/2002 06/30/2003 12/31/2008 Comments (incl\. % This PDO component was achieved with considerable delays achievement) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years iii  G\. Ratings of Project Performance in ISRs Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 05/07/2002 Satisfactory Satisfactory 0\.00 2 11/27/2002 Satisfactory Satisfactory 0\.01 3 04/30/2003 Satisfactory Satisfactory 0\.37 4 05/29/2003 Satisfactory Satisfactory 0\.37 5 09/29/2003 Satisfactory Satisfactory 0\.46 6 12/04/2003 Satisfactory Satisfactory 0\.56 7 06/03/2004 Satisfactory Satisfactory 0\.76 8 11/29/2004 Unsatisfactory Unsatisfactory 0\.87 9 04/29/2005 Satisfactory Satisfactory 1\.32 10 05/03/2006 Satisfactory Satisfactory 1\.77 11 11/20/2006 Satisfactory Satisfactory 2\.00 12 03/16/2007 Satisfactory Satisfactory 2\.03 13 10/01/2007 Moderately Satisfactory Moderately Satisfactory 2\.11 14 06/02/2008 Moderately Satisfactory Moderately Satisfactory 2\.21 15 11/24/2008 Moderately Satisfactory Moderately Satisfactory 2\.30 H\. Restructuring (if any) Not Applicable I\. Disbursement Profile iv  v  1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. At the time of appraisal in the year 2001, despite years of efforts by the Government of Saint Lucia (GoSL) and many partners to improve the performance of the public water company through conventional institutional strengthening programs and twinning arrangements, the utility performed poorly, with unreliable supply of water, low coverage of sewerage, poor financial performance, and low levels of capital investment\. At the same time, the GoSL faced stringent fiscal constraints\. GoSL had since 1998 initiated a series of reforms to put the water company on a path that would ensure long-term reliability\. Among the actions taken were the transformation of the water utility from a state agency, the Water and Sewerage Authority (WASA) to a Government-owned corporation (Water and Sewerage Company Inc\., WASCO), the creation of a National Water and Sewerage Commission (NWSC) to regulate the sector and a Water Resources Management Agency (WRMA) to manage the natural resource, as well as introducing the "Water and Sewerage Act" to guide the reform process\. See Annex 3 for more details on other aspects covered by the reform in its early stages\. 2\. However, many institutional and legal issues remained to be clarified: The regulatory office (NWSC) was in charge of sector-wide policy making: While the new Water and Sewerage Act established the NWSC as a regulator, it also granted the NWSC an unusual and what was judged undesirable authority to set sector-wide policies\. Policy functions needed for full sector and corporate development needed to be allocated among the NWSC, the Ministry of Public Utilities, and other relevant government bodies\. In addition, the NWSC faced conflict of interest under the contemporary act between its mandate to regulate potable water and manage water resources for all water users\. The regulatory office should be independent of the Ministry of Public Utilities\. Contemporarily, the Ministry of Public Utilities was responsible for the nomination of the Commissioners on co-terminus terms with the Government\. Moreover, the Commissioners were selected to represent the various stakeholders and relevant Ministries\. Efforts were needed to make the Commission as independent as possible from the Ministry and minimize the political interference in its activities by extending and staggering the mandates of the Commissioners\. Lack of clarity about responsibilities in introducing private sector: The Water and Sewerage Act could be interpreted as allocating decision-making authority to the NWSC with regards to the introduction of private sector participation (PSP) in water supply and sewerage services, but this needed to be clarified specifying NWSC's roles in initiating private sector participation\. It also needed to be clarified with respect to WASCO's ability of involving the private sector in the form of sub-concessioning, sub-licensing, and other forms of PSP\. Lack of clarity regarding responsibilities in formulating and implementing tariff schemes: Specific rules and allocation of responsibilities for tariff setting, implementation and monitoring still needed to be defined\. A regulatory regime for tariff setting that includes appropriate incentives for improving operating efficiency of 1  WASCO (tariff setting regimes tied to specific performance targets) and for promoting consumption efficiency still needed to be developed\. The roles and responsibilities of the operator (WASCO) were not well defined in the Water and Sewerage Act\. Especially unclear were the responsibilities of WASCO regarding the scope of service provision, water conservation, and tariff setting were unclear\. 3\. It was against this backdrop that the project was formulated\. It was financed by the World Bank and the Caribbean Development Bank (CDB) on parallel financing basis\. The Bank- financed components aimed at transferring the management of WASCO to a private operator within a sound regulatory framework\. The objectives of the CDB-financed project were to ensure that the operational reliability of the water supply and sewerage networks did not deteriorate any further and that WASCO's staff skills were improved in the transition period for better integration in the new operational environment\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators 4\. The development objective of the project was two-fold: (i) transferring the national water company to private sector management, and (ii) establishing a sound legal and regulatory framework for the water sector\. The key performance indicators agreed with the GoSL to monitor the achievement of the development objective were: The timely preparation and promulgation of regulations; The favorable assessment from investment bank and financial consultants on WASCO; The outcome of the PSP transaction (i\.e\. a private operator in place); and The timely decision making of the regulatory agency with respect to service regulation\. 5\. The PAD also incorporated Key Performance Indicators for expected project Outputs, mainly referring to the timeliness of the regulations, capacity building of WASCO, the attractiveness of WASCO to the private sector, adequate project management and public information, and investment in key water infrastructure\. See section 3 and Annex 2 for a more detailed discussion on outcomes/outputs and indicators\. 1\.3 Revised PDO and Key Indicators, and reasons/justification N/A 1\.4 Main Beneficiaries 6\. The expected benefits of the project were continued and improved operating efficiency, quality and reliability of the water supply in the country with a private operator involved in the operations and during the transition phase, as well as increased access to the services and the mobilization of funding for the sector\. The population of Saint Lucia, as the universe covered by WASCO, would be the beneficiaries of the project\. 1\.5 Original Components 7\. The project financed the following three components (see more details on each component in Annex 2): 2  1) Technical assistance for strengthening the regulatory and environmental framework (estimated at US$0\.58 million)\. 2) Technical assistance for carrying out the private sector transaction (estimated at US$0\.88 million)\. 3) Project management and public information and dissemination campaign (estimated at US$0\.85 million)\. In parallel, the CDB approved a US$ 5\.27 million (the original CDB loan was for US$4\.54 and an additional US$0\.73 million were approved in October 2002 to facilitate GoSL's contribution) to finance the following: 1) Technical assistance for the strengthening of WASCO 's internal systems (estimated at US$0\.5 million)\. 2) Urgently needed investments and asset rehabilitation (estimated at US$4\.77million)\. 1\.6 Revised Components N/A 1\.7 Other significant changes 8\. The project had three minor Loan/Credit amendments in the course of its implementation and three extensions that widened its closing date by a total of thirty six months\. The first loan amendment, in May 2003, was made to reflect changes in the entity in charge of project implementation and advance the implementation of the feasibility study for PSP; a second one took place in July 2004 to re-allocate funds amongst categories of disbursements and a third one in May 2005 to establish the oversight of the project at the Ministry of Finance, extend the project closing date and include additional studies for financing under the project\. The last and most substantial of the changes introduced by the third credit amendments was the reduction of disbursement conditions for the procurement of a consultant firm to advise on the PSP transactions to one: the presentation to Parliament of new Water and Sewerage Legislation1\. 9\. None of the amendments implied a change in indicators/targets, components or institutional arrangements (other than changes in the Ministry responsible for oversight of the project as agreed with the Borrower)\. 10\. In light of delays in the bidding process to select the private operator (due to slow decision making given significant political changes during 2007/2008) the GoSL requested in October 2008, an additional extension of the project closing date\. The Bank decided not to extend the project a fourth time given its lengthened implementation (almost 8 years), the continued uncertainty on the outcome of the PSP transaction, and the small funds remaining uncommitted under the loan (US$255,000)\. 1The original PAD and Credit Agreement included a number of additional measures, including starting capacity building measures and formulation of operating license and a training program for the regulator, as disbursement conditions for this component\. 3  2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 11\. The high-level dialogue with sector authorities and the water utility during project preparation and appraisal, and the review of alternatives for improved operational efficiency and managerial capability in WASCO at the time of project design concluded that a deeper form of PSP, such as a concession/equity participation arrangement, was the best way to go to provide a sustainable and irreversible transformation of the sector (versus a management contract or direct technical assistance which was funded under the previous Bank loan with little results)\. This model was expected to address the issue of capital investment needs and reduce the risk of reverting to the "old ways of doing things"2, as was the case after the failed twinning experience in the 1980s with a foreign operator\. A number of actions undertaken by the GoSL (including the corporatization of WASA into WASCO) before project appraisal (see Annex 3) indicated its apparent commitment to improve sector performance by introducing a more solid legal and regulatory framework and PSP\. The project would finance the technical assistance required to make this happen and would in parallel provide funds to finance urgently needed works\. The project incorporated lessons learnt from relevant projects in the Caribbean and with PSP\. 2\.2 Implementation 12\. Three distinct phases can be identified during the implementation of this Technical Assistance Loan (TAL): 13\. From approval in December 2001 to mid- 2005: Low-level of GoSL involvement and shifting market forces: During the first year of project implementation, a Project Management Unit (PMU) was established under what was then the Ministry of Planning, Development, Environment & Housing, later called the Ministry of Physical Development, Environment & Housing as different functions were transferred to the Ministry of Finance ministries, and the PMU kept housed under the Ministry of Physical Development\. Project effectiveness was delayed until May 2002 and disbursement conditions were not met for almost until October 2002, given delays in enacting the Water Law and formalizing WASCo's operating license and the late submission of WASCO's audit to the Bank\. After effectiveness the project entered into a period of low government involvement, without much participation from high-level Government officials and Cabinet members as would be expected in a complex and deep reform such as the planned concessioning of the national water utility\. There appears to have been little involvement from the Minister of Public Utilities, the Prime Minister (who also serves as the Minister of Finance), the Minister of Planning or other senior cabinet officials during this period\. The inactivity and low involvement lasted three years, and by 2005, most of the preliminary studies on both the PSP side and the regulatory side were not completed, the sector law had not been presented to Parliament, and no decisions had been taken on the approach or timetable for the transaction\. 14\. Furthermore, the draft law and the PSP feasibility study emphasized a form of PSP ­namely a full concession ­ that was no longer of interest to major sector investors\. Project design assumed investor interest in ­ and GoSL commitment to ­ a reform strategy based on market 2Project Appraisal Document, December 2001 4  forces in play during the nineties, when privatization was sweeping the region as the answer to solve access and operational deficiencies in service provision as well as financing constraints in infrastructure investment\. These market forces changed considerably during the early years of the project's effectiveness3 and it took some time for both the Bank and the GoSL to adjust their thinking and expectations to this new reality\. 15\. 2005-2006: Re-engagement: A fresh dialogue was initiated between the Bank team and the authorities in 2005 to explore how the course of the reform TAL could be reversed\. It became clear that the GoSL was unable to focus on the politically complex task of passing a new sector law and engaging in a PSP for the national utility while the more pressing needs of water delivery were not being met\. If the Bank could help to find a short term solution to the water shortages and could adopt a more flexible approach to PSP under the project, the GoSL would be in a position to focus on the sustainability of the utility and move the reform agenda forward\. Between mid 2005-mid 2006, the Bank prepared and approved the Water Supply Infrastructure Improvement Project that has alleviated the water shortages that plagued the North of Saint Lucia\. The GoSL submitted to Parliament and passed the new Water Sector Law, completed its PSP strategy as a Public-Private Partnership (PPP), had the rules and regulations for the sector completed and approved by Cabinet, agreed upon the PSP structure and approach and drafted a new water license\. As it became increasingly clear by summer 2006 that elections would be close, progress in the last stages of the reform came to a halt, and after much deliberation and consultation with potential investors the Bank team agreed that it would be better to wait until after elections to carry out the PSP transaction\. 16\. 2006- to date: Second phase of the reform and failure to award private contract for the PPP: A new Government took office after the 2006 election\. Early attempts to re-establish communications regarding water sector policy failed, in part due to the internal re- organization and restructuring of government agencies, including the creation of a Ministry of Economic Affairs, Economic Planning, National Development and Public Service, which now coordinated many planning activities and donor relations previously spread across several public agencies\. The Bank was finally able to engage the new GoSL in discussions on the objectives of the reform and the status of the TAL\. The GoSL expressed its commitment to the reform and involving a private operator in the management and investment for the sector, and to implementing regulatory arrangements consistent with the objectives of the TAL reform program\. 17\. Since then, a series of events significantly affected the timely implementation of the bidding process to select a private operator for the PPP transaction\. The most significant perhaps is that in late 2007, the recently elected Prime Minister Sir John Compton suffered a series of strokes and subsequently died\. The GoSL tried to move forward with the water reform under the guidance of the Minister of Economy--the central actor in the Administration\. Subsequently the GoSL went through a protracted crisis of confidence with Cabinet members resigning from the party and reducing the majority in Parliament to one vote\. In May 2008, the Minister of Economy was forced to resign amidst strong political pressure\. A series of further resignations from key actors in the reform process and continued internal restructuring coupled with a growing opposition to the PPP transaction from civil society 3According to the PPI Database, private commitments to the Latin America and the Caribbean region dropped from US$6\.0 billion in 1999 to US$234 million in 2003\. However, the number of water PSP projects actually increased, reflecting a growing number of modest investments from regional operators willing to partner with public enterprises and agencies\. 5  groups meant further delays in decision making\. While the new GoSL was still committed to undertaking the reform, the apparent lack of political stability inevitably impacted the timeframe\. 18\. Meanwhile, the transaction advisor, Banco Santander (financed from this loan and contracted by the previous administration), renounced their contract in 2007, largely because of a realignment of their strategic priorities By a Cabinet decision of October 2007, the GoSL asked the International Finance Corporation Infrastructure Advisory Services (IFC) to replace Banco Santander\. IFC advised the GoSL in the final structuring of the transaction as a public-private partnership and managing of a bidding process to select a private operator, which started in April 2008\. The PSP structure was adjusted from the originally proposed concession to minimize equity requirement from a private operator in order to entice more local or regional investors, which had been a lesson learned from other projects in the region\. Despite many delays in the bidding process and last-minute changes to the structure, three technical bids4 were submitted on October 15, 2008, from international operators to enter into a PPP arrangement with the GoSL, of which two were considered responsive\. The agreed calendar for the transaction would have had the PPP established in the following two months and the new company was to start operations as early as January 2009\. 19\. After the opening of the financial bids in December 10, 2008, the process stalled\. One of the two evaluated bids had arrived after the time for presentation of the bids specified in the bidding documents, and the Central Tender Board had decided that this was a minor technical issue (which according to the legal opinion received by the GoSL from the legal transaction was within their jurisdiction to waive)\. The GoSL later considered5 that they could not be sure that GoSL would be completely safe on legal grounds from a challenge by the losing bidder, if the bid were awarded to the late (and winning) bidder and decided to abort the process altogether\. This crisis further revealed a more profound lack of consensus amongst key cabinet members regarding the PPP structure and a desire to further revisit some aspects of it (e\.g\. the assumption of WASCO's existing debt by the GoSL)\. After substantial internal consultations, the GoSL finally informed both bidders in the water privatization that they were terminating the process on March 13, 2009\. 20\. Project ratings in Bank ISRs were kept within the satisfactory range and downgraded toward the middle of its life when key decisions at the political level and steps in the PSP process were continuously being delayed\. The moderately satisfactory rating introduced in 2006 is considered more appropriate given the increased risks due to political instability\. It should be noted however that the moderately satisfactory ISR rating towards project closure (November 2008) reflected the expectation and highly likelihood (as per the successful bidding process underway) that the PSP transaction would reach closure 21\. Details on progress achieved under the CDB financed project can be found in Annex 2\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 22\. The PAD M&E framework is considered comprehensive and adequate overall in terms of allowing monitoring of progress towards achieving the PDO and other project outputs\. 4The bidders were Veolia, Suez and Cascal\. The bid submitted by Veolia was admittedly non-compliant with the bidding documents, but submitted as an alternative for consideration\. It was considered non- responsive and not evaluated by the Committee\. 5Upon advice given by Saint Lucia's Attorney General (AG)\. 6  Regarding the outputs per component, the framework includes a broad list of indicators to monitor progress and achievement\. 2\.4 Safeguard and Fiduciary Compliance 23\. As a TAL, the project was rated a category B project triggering only the environmental assessment safeguard policy\. The guidelines and impact assessment procedures were written into the private sector operation contract and they would have been monitored by the appropriate environmental agencies\. A sectoral environmental assessment (SEA) was also completed during project preparation which identified a number of legislative, institutional and environmental issues related to the water sector that would be addressed by the project\. For more detail on these issues see Annex 2\. 24\. A social assessment was also undertaken during project preparation\. In the study, surveys and focus groups were carried out\. All key stakeholders in the project were consulted: a) the residential water customers, b) the tourism industry (the hotel association), c) private sector, and d) associations, employees unions and community-based organizations representing the poor customers\. The PAD suggested the setting-up of a project steering committee with sector stakeholders to accompany the reform process and work with the transaction advisors to increase transparency and ownership of the reform and PSP process\. However this committee was not consistently supported by the authorities and has not really played a major role during project implementation\. 25\. The project closed with satisfactory ratings for financial management and fiduciary compliance as per a standalone supervision mission undertaken in November 2008\. No audits or FMRs were pending and audit reports were submitted to the Bank were found to be in compliance\. 2\.5 Post-completion Operation/Next Phase 26\. Following the failure to select a private operator from the recent bidding process, the GoSL has decided to set up a committee comprised of representatives from the Ministry of Finance (MoF) and Ministry of Communications, Works, Transport and Public Utilities (MoU) to look at the different options and potential service models for WASCO's management going forward, including any possible involvement of the private sector6\. The authorities have also indicated that they would like to involve the Bank and the IFC and other development partners in this assessment process\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 27\. The project has spanned two Country Assistance Strategies (CASs) periods since its approval in 2001, and its objectives have remained relevant to both Bank and country priorities\. See Annex 3 for more details on specific CAS objectives and consistency of the TAL with them\. 6Both of the operators that participated in the recent bidding process have expressed continued interest and commitment to entering in a public-private partnership with GoSL\. 7  3\.2 Achievement of Project Development Objectives 28\. The project's monitoring framework in the PAD included four key performance indicators to track achievement of the PDO\. The following table presents these and their status at the end of May 2009\. PDO Indicators (from PAD) PDO Indicator Achievement To prepare and Favorable assessment from It was achieved prior to launching the transit the investment bank and financial bidding process for selecting a private water company consultants on WASCO operator in April 2008 to private sector The outcome of the PSP transaction Not achieved management (ie a private operator in place) within a sound legal and The timely preparation and It was achieved within the extensions regulatory promulgation of regulations to the closing date granted to the framework project The timely decision making of the Not achieved\. Although the regulatory regulatory agency with respect to agency has been established and the service regulation commissioners appointed, they have only just very recently started meeting and require training to be able to effectively regulate the services 29\. The following table summarizes expected outputs for the three project components financed by the TAL and progress on all of the indicators included in the PAD\. The complete monitoring framework for both the CDB and Bank components is included in Annex 2\. Project Output and Indicators per component Component Main Output Indicator Date/Goals achieved by Comments/Remarks Expected Strengthening Regulatory Water Supply The Water & Sewerage This component of the the regulatory Commission Legislation and No\. 14 of 2006 was development objective and and its staff set regulations ratified enacted on 15 May 2006 was accomplished but environmental up and by 2003 with much delay framework functioning The Regulations were published in the Official Gazette in Dec 2008\. Support for the The Sound Divestiture Divestiture Plan This output was Private Sector attractiveness of Plan Developed by developed in 2005 and achieved but the Transaction WASCO to the 2003 updated in 2008; transaction did not private sector is reach completion made clear and the transaction is facilitated At least 3 private September 30, 2008: Ten sector companies private companies present bids purchased bidding 8  Component Main Output Indicator Date/Goals achieved by Comments/Remarks Expected documents\. Three companies submitted bids Procurement Bidding documents were process is efficient, clear and process was competitive and competitive\. Process was transparent stalled due to a late submission and differing opinions on the legal grounds to waive it\. Contract with PPP documents were not private sector signed operator signed Project The management 100% adherence to Achieved with variable management and of the project is procurement degrees of quality and public effective and the procedures timeliness information and public informed dissemination of the private No greater than 75 campaign sector days variance in Achieved participation planned vs actual transaction process Timely auditing of Achieved accounts 70% of the December 31, 2007: Exit survey to population informed Unknown determine percentage of benefits of was not conducted private sector participation in the water sector 3\.3 Efficiency 30\. A detailed cost benefit and financial analysis of the TAL components undertaken at appraisal indicated that the project was financially and economically viable, considering with and without project scenarios with the incremental costs and benefits associated with the rehabilitation investments, the improvement of WASCO's human resources and systems, and the strengthening of the sector regulatory framework\. The PAD also included a detailed financial assessment of WASCO projecting its financial situation with and without private sector management scenarios\. An updated cost-benefit analysis is not considered relevant for the WB financed components, which mainly financed technical assistance (studies, reports, and transaction advisory services) with difficult to measure and intangible benefits\. 9  3\.4 Justification of Overall Outcome Rating Overall Outcome Rating: Unsatisfactory 31\. The project arguably did not achieve its two-fold PDO objectives, the preparation of a sound legal and regulatory framework and the PSP transaction\. Whilst the promulgated legal and regulatory framework would contribute to the performance and sustainability of the water sector, facilitate future private sector involvement and attract potential investors, the new law was still not enforced by project closure, and further steps will need to be completed so the approved legal and regulatory frameworks can effectively be applied\. A lot of ground remains to be covered in terms of strengthening the capacity of the regulator to achieve impartial regulatory oversight and adequate performance and decision making\. 32\. With regards to the objective of preparing and transiting the company to private sector management, whilst WASCO did receive a favorable assessment from the transaction advisors, and the interest from operators confirmed the attractiveness of the operation, the effective transfer to the private sector did not materialize during the life of the project in spite of three extensions of the closing date, and WASCO's position has significantly deteriorated form the time of appraisal to date\. Furthermore, the ultimate lack of consensus within the current GoSL and other stakeholders in the country on the PPP as the management model for the sector questions the relevance of this PDO today\. Though the project did achieve the target value for some output indicators for the Bank financed components, and all critical capital works under the CDB project ­ with the exception of the Leak Detection Program - were completed, albeit with major delays, little progress was achieved in strengthening WASCO's internal systems and improving the skills of staff\. Given the major shortcomings described and the high risk to the development objective, the overall outcome rating is considered to be Unsatisfactory\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 33\. Based on affordability and willingness to pay for water and sewerage services of poor segments of the population, the project also sought to investigate how PSP would benefit the poor and to ensure that incentives for serving the poor can properly factored in the PSP contracts\. This was achieved during the TAL project implementation through extensive coordination with the Global Partnership on Output Based Aid (GPOBA) to secure a US$1\.6 million grant to be invested in connections of poor households to the water service\. Following a review of the project structure and implementation options undertaken during October 2008 ­ January 2009 in coordination with the GoSL, this grant was ready to be negotiated with the private operator once the PPP was established (which at project closure was expected for January 2009)\. (b) Other Unintended Outcomes and Impacts (positive or negative) 34\. The perception of a failed PSP transaction could affect the country's credibility in the market in terms of attracting local, regional and international investment\. It will also hamper the sustainability of the water sector and result in a deterioration of WASCO considering its present structure and financial and operational situation\. While the project was focused on St\. Lucia, it was intended to serve as a pilot for the water sector reform in the Organization of Eastern Caribbean States (OECS) region\. Many of the OECS countries face similar issues with regard to the performance of their water utilities\. It was also intended to provide a 10  platform for the possible preparation of a regional regulatory framework which could, over time, form the basis for folding many of the country-specific regulatory functions into a multi-sector and possibly a multi-country regulatory entity\. Though this high-level objective is still possible (the regulatory framework approved by Parliament is indeed very comprehensive and could serve as a good model), much remains to be done with regards to its practical implementation for these efforts to be consolidated\. The preparation for the PPP transaction, public outreach campaigns and discussions with WASCO's employees unions undertaken throughout the years have also raised expectations and uncertainties within the public and WASCO' staff about the future management of the sector that will need to be addressed by the GoSL\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 35\. A survey conducted among St\. Lucians in 2004, during project implementation, showed that 65% of the respondents expected service to improve with private sector participation in the sector\. The survey revealed that 85% of St\. Lucians preferred local private sector involvement over foreign private sector involvement\. The survey also revealed that 55% of respondents indicated that they were definitely not willing to pay more for water under a private sector modality which contrasted with only 15% indicating that they would definitely be willing to pay more, while 9% indicated that they would probably pay more for their water service\. No beneficiary surveys were conducted as part of this ICR preparation\. 4\. Assessment of Risk to Development Outcome Risk Rating: High 36\. The risk of the project not maintaining its only partially achieved development outcomes is considered high at the time of writing this ICR\. With regard to the legal and regulatory framework, financial and technical support to the NWSC and o the WRMA agencies must be secured for these bodies to become operational, apply the legislation, and be able to meaningfully contribute to sector development\. With regards to the failed PSP transaction and PPP structure, there is a risk of losing achieved momentum in structuring a viable operation and operator's interest if this model is finally confirmed as the desired option by the GoSL\. With regards to WASCO's situation and sustainability of service provision, a decision for strengthening current managerial and investment capability of WASCO is pressing\. Furthermore, the lack of focus on operational and financial improvements over the last few years has meant a deteriorating situation of the utility which puts at risk the sustainability of other investments and service provision overall\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 37\. The project objective was consistent with the Bank's assistance strategy, sector practice and GoSL objectives at the time of appraisal and approval\. During preparation, the Bank team took into account the adequacy of project design and applied good practices to all major relevant aspects, such as technical, financial, economic, institutional and safeguards and 11  fiduciary issues\. The design incorporated lessons learned from past operations supported by the Bank in Saint Lucia and in the sector and with PSP\. Sound implementation arrangements were proposed for the execution phase\. The project correctly diagnosed WASCO's operational and managerial deficiencies and proposed a viable way forward which reflected the thinking of the authorities and the Bank at the time\. 38\. However, with hindsight it is considered that the design was too optimistic in its assessments of risks and GoSL ownership and commitment\. It overestimated the level of support for a PSP that could be generated in the country within a broader spectrum of political and social stakeholders and therefore the implementation period required\. It underestimated the risk of a lack of political commitment to the PSP immediately after Project approval, once key actors within the GoSL changed, and later on with the new Administration when the opposition came to power\. It was also too ambitious in its initial expectations from the market of international operators, and did not address the risk of the lack of operator interest in the transaction under the terms initially expected by the Bank and the GoSL, which would affect the general expectations for service improvement and sector investments\. Given the impact that all these risks had in the implementation delays and in the ultimate unsatisfactory outcome, and the apparent reduced relevance of the PDO in the context of GoSL's priorities today, the quality at entry is rated moderately unsatisfactory\. (b) Quality of Supervision Rating: Moderately Satisfactory 39\. Bank's supervision went through different stages during the implementation\. For the first few years, the Bank was slow to respond to changes in the market and in taking early action with regards to the low involvement of the GoSL\. Perhaps because of the Bank's continued commitment to earlier approaches of PSP, it continued to assume that a large concessionaire could be found to assume all commercial risk of the utility and finance all of the investment needs\. Throughout, there was too much focus on the PSP, as it was expected that it would take care of many of the utility's problems, and less on progress on the institutional side\. 40\. After 2005, the Bank team at the time displayed proactivity in re-engaging the authorities in a meaningful dialogue, adapting the project to the changing environment and keeping the project objectives on track, first with the existing GoSL and then with the new administration after the 2006 elections\. The Bank team understood the new administration's needs and standpoints and proactively worked on engaging former and current authorities and other stakeholders in the reform process\. When it became clear that there were priorities for the GoSL in the sector, the Bank approved financing for targeted investments under a new project prepared in 1004/2005 and executed during 2006/2007 (the Water Supply Infrastructure Improvement Project) to meet service goals and re-engaged the GoSL in policy dialogue\. Supervision missions were consistently carried out at least twice a year and reporting was frequent and candid throughout\. Missions were well-staffed, and included fiduciary specialists\. 41\. The Bank team is commended for its work in generating strong support from stakeholders at WASCO ­ including management and unions\. The IFC team as transaction advisors managed the bidding process successfully to attract private operator interest in the midst of a global financial crisis and offers were received from two of the world's largest and most renowned water sector operators\. The transaction team accommodated the new GoSL's requests for changes in the PPP structure during the bidding process\. In the very final stages 12  of the transaction process, it is considered that both the Bank and IFC teams should have relied less on the signals of commitment given by the fulfilling of the different stages in the bidding process and other formal statements as showing full GoSL ownership for the PPP, and undertaken more thorough consultations within a broader group of high-level GoSL officials in Cabinet to ascertain the real level of consensus and commitment to enter into a PPP arrangement\. Though this would not have guaranteed a final award for a PPP, it would have contributed to better gauging the risks of a failed transaction at the last minute\. 42\. Despite the shortcomings in the Bank's identification of opportunities and resolution of threats during the early years of project implementation and in the final transaction process, a Moderately Satisfactory rating is considered appropriate given the proactive and successful role that the task team at the time played in engaging the former and new GoSL in the reform, and the support given to the process through frequent and thorough technical advice throughout project implementation\. (c) Justification of Rating for Overall Bank Performance 43\. Though, as discussed above, Bank Performance in supervision has been mixed throughout the project's life, in general it is considered that the Bank provided strong technical support and tried tirelessly to work with the GoSL towards the agreed goal of introducing PSP and regulation in the water sector, as a means to ultimately improve the water and sanitation services (WSS) and living conditions of the population of Saint Lucia\. Though the PSP goal arguably does not currently have full consensus and support from the GoSL, it is still considered to be a viable solution for the development of WSS and achieve a well performing sector, and the solid technical and financial bids received from two international operators indicate that the bidding confirm this\. Taking these factors into consideration, Bank performance overall is rated moderately satisfactory\. Rating: Moderately Satisfactory 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 44\. GoSL ownership and commitment to achieving the PDO wavered considerably throughout the project history and overall it is considered that it falls short on a number of criteria to rate it within the satisfactory range\. The resolution of implementation issues and establishing an enabling environment for a successful reform process were particularly untimely\. 45\. Within the last semester of 2008, the GoSL reached agreement about the minimum capitalization of NewCo (the potentially new national water company), launched a public communication campaign\. It also appointed key staff at the Water Resources Management Agency and Water Commission, it approved the amendment to the New Water Act and completed and published the Act regulations, amongst other key steps in the reform process\. Progress on the above was slow and somewhat cumbersome, and the process experienced 13  several delays and changes in the deadline for submission of bids\. Despite being promulgated, the new regulatory framework remained unenforced by the end of the project7\. 46\. Although the lack of focus in the reform process is partly explained by political uncertainties in the country during the period, several internal re-organizations, and a change of government in 2006, the GoSL could have shown more proactivity in committing to the reform by actively engaging and pursuing the transaction, or by making a timely proposal to the Bank/transaction advisors to reformulate project focus and structure\. A successful conclusion of the bidding process to select a private operator would have secured financing for the sector from different private sources estimated in the amount of US$15 million, including private international and local investment, a US$1\.5 million GPOBA grant and a US$3\.5 million IFC loan\. Given these significant shortcomings, GoSL performance is rated moderately unsatisfactory\. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 47\. Project oversight was led by four (4) different Ministries during project Implementation\. The implementing agency was initially the Ministry of Planning, Development, Environment & Housing, later called the Ministry of Physical Development, Environment & Housing as different functions were transferred to the Ministry of Finance\. Following years of slow progress, it was considered by the Bank and GoSL at the time that the project could progress at a faster rate if it were under the Ministry of Finance, since this Ministry comes under the purview of the Prime Minister\. With the new Administration in December 2006, the Implementing Agency became the Ministry of Economic Affairs, Economic Planning, Investment & National Development \. In 2007, an inter-ministerial Committee was 8 established by Cabinet resolution to oversee the implementation of the reform process, and it was agreed that the Minister of Communications, Works, Transport & Public Utilities would lead it\. 48\. These changes have obviously impacted the efficiency of the operation as it has frequently implied a duplication of efforts and repetition of tasks\. The creation of a strong PMU and the use of independent experts to support the implementation envisaged by the PAD was not fully implemented\. The project PMU set up within the Ministry of Planning in its early stages lacked the sufficient capacity and this brought delays in satisfying loan conditions and in adequately addressing the range of implementation issues in a timely and cost effective manner\. Although a qualified and dedicated Project Coordinator was hired, who provided professional project management and oversight through project closure and has provided valuable stability and institutional memory throughout, the lack of additional human resources and little involvement from WASCO on technical issues has hindered the timeliness in implementing activities under specific components and overall\. Given the mentioned shortcomings, performance is rated moderately satisfactory\. 7An example of it is the non adjustment of the tariffs from the 2001 levels by January 2009\. 8With Senator Ausbert d'Auvergne as the Minister, who became a central actor in the Administration after the death of the Prime Minister in 1997 and was ultimately forced to resign amidst strong political pressure in May 1998\. 14  (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 49\. As discussed GoSL's commitment has been uneven throughout project implementation, it is considered that the Government could have been more forthcoming in its communications with the Bank and transaction advisor with regards to any reservations over the PPP model, before or during the bidding process to select a private operator, and could have ensured more timely and transparent decision making\. Given the impact that these shortcomings ultimately had in the overall project outcome, overall performance is rated moderately unsatisfactory\. 6\. Lessons Learned The following are considered lessons learned which can be of use in the design and implementation of future projects: 50\. The project PDO was formulated at a time when PSP-oriented reform was considered the main tool for improving utility performance and sector reform\. At that time, many projects in the WSS sector included PSP as a development objective, with the ultimate involvement of the private sector as a key indicator for success\. This raises an issue with this particular generation of projects that can be considered in the future design of projects seeking to involve the private sector in its implementation, particularly in TALs: Government ownership and commitment to a specific service provision model ­ unless there is strong consensus and leadership from the onset- cannot be guaranteed during political changes within a reasonable project implementation period of 5 years, and experience shows that deep sector reforms can take much longer to mature (in this case, it took eight years to just reach the point of contract award, after many efforts and different stages of support)\. In this context, PDOs for Technical Assistance projects could be formulated more in line with achievable goals within the control of the project (fostering stakeholder support, providing solid analytical and technical tools and studies, and others), and a programmatic approach to support sector reform could also be considered\. 51\. At the point of writing this ICR, it is unclear whether to what extend the ultimate decision by the GoSL to abort the recent bidding process to select a private operator was more based in the fear of legal action from one of the bidders, or in a more fundamental lack of consensus and support for the PPP within the entire Cabinet\. With hindsight, in the very final stages of the transaction process, it is considered that both the Bank and IFC teams should have relied less on the signals of commitment given by the fulfilling of the different stages in the bidding process and other formal statements as showing full GoSL ownership for the PPP, and undertaken more thorough consultations within a broader group of high-level GoSL officials in Cabinet to ascertain the real level of consensus and commitment to enter into a PPP arrangement\. Though this would not have guaranteed a final award for a PPP, it would have contributed to better gauging the risks of a failed transaction at the last minute as well as understanding the ultimate reasons for the lack of support\. As for the GoSL, it could have ensured a more open and transparent communication with the Bank and transaction advisors regarding any reservations and need of advice regarding the PSP process, as the decision to abandon it has meant amongst others the loss of access to US$15 million investments for the development of sector from different sources, as well as jeopardized the sustainability of the services in the short-term\. 15  52\. Another lesson learned for future project design is to try to maximize the opportunity to influence sector reform by establishing meaningful links with investment projects\. Whilst in this case, the approval of the Bank's Water Sector Infrastructure Rehabilitation Project in 2005 initially fostered a re-engagement of the dialogue, it could be argued that it perhaps reduced the urgency for investments and thus the incentive for reforming the broader model for service provision, which would ultimately guarantee the sustainability of the sector\. 53\. The involvement of the private sector in the management and equity of WASCO required broad consensus among the ruling party, the opposition and representatives of civil society\. Without this broad agreement, a new administration could easily disagree with the policy\. Although the project managed to generate support in WASCO at the management and staff levels, including the unions, all policy related studies should have been discussed with the opposition and consulted with relevant stakeholders\. Although during the implementation both the Bank and the GoSL renewed efforts at different points to consult and involve sector stakeholders and key decision makers, this was done inconsistently throughout\. In addition, the project did not anticipate and prepare for the activities of vocal civil society groups that have been increasingly promoting an anti PSP debate, and public support was partially lost as a result toward the end of the project\. 54\. The TAL design incorporated important recommendations based on lessons learned from other projects: the need for operational improvements prior to the transfer to the private sector, strong political commitment from top levels of GoSL and wide support at the base and a strong PMU\. These lessons were integrated in the technical assistance component to strengthen the internal systems of WASCO financed by the CDB, and in component 5 of the Bank financed project, which included a communications and dissemination campaign\. However, these components did not achieve much progress during project implementation, perhaps due to the focus of efforts on the PSP transaction, but would have contributed to providing lasting benefits by ensuring necessary investments in managerial and institutional improvement as well as stakeholder support for the reform process\. 55\. Greater coordination or dialogue between the World Bank and the CDB during project supervision may have improved project outcomes and perhaps corrected to some degree implementation difficulties\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 56\. The ICR report has benefited from extensive input and comments from the Project Coordinator9 from January 2002 to Project Closure in December 2008, who has remained involved with the reform process thereafter and has led the preparation of a final report on the implementation of the Bank and CDB's projects for the GoSL\. An executive summary of this report is included in Annex 6 in agreement with the Ministry of Finance as the Borrower representative\. 9Mr\. Aloysious Barthelmy\. 16  (b) Other partners and stakeholders 57\. The ICR report was shared in draft with the Caribbean Development Bank through its current responsible officer\. The CDB appreciated the opportunity to provide comments as well as the candidness of the draft ICR report and provided useful remarks and clarifications that have been reflected in the document\. 17  Annex 1\. Project Costs and Financing Project Cost by Component (in USD Million equivalent) Category Category Allocation estimate Disbursed (USD Percentage of Description (USD millions) millions) Appraisal IBRD IDA Tot\. IBRD IDA Tot\. 10 1 Consultants' 0\.42 0\.803 1\.223 0\.314 0\.880 1\.194 97% studies and services in respect of parts A and E\.1 of the project 2A Consultants' 0\.3 0\.809 1\.109 0\.278 0\.737 1\.015 92% studies and services in respect of parts C\.1, C\.3 and E\.3 of the Project 2B Consultants' 0\.02 0\.046 0\.066 0\.045 0\.038 0\.083 126% services in respect of part E\.2 (external audits) of the project 2C Consultants' 0\.435 0 0\.435 0\.098 0 0\.098 23% studies and services in respect to part C\.2 of the project 3 Goods 0\.112 0\.037 0\.149 0 0\.035 0\.035 24% 4 Unallocated 0 0 0 0 0 0 N/A DA-A Designated 0 0 0 0\.01 0\.005 0\.015 N/A Account FEF Front End Fee 0\.013 0 0\.013 0\.013 0 0\.013 100% Total 1\.3 1\.696 2\.996 0\.76 1\.696 2\.456 82% Actual/Latest Components Appraisal Estimate Percentage of (USD millions) Estimate (USD millions) Appraisal Total IBRD IDA Tot\. % 1\. STRENGTHENING OF THE SECTOR REGULATORY AND ENVIRONMENTAL 0\.635 0\.116 0\.489 0\.635 100% FRAMEWORK (part A) 10Note that the original currency of the IDA funds was in SDR for an amount of 1\.1 million SDR, whereas the figures shown in the present tables illustrate their current USD equivalent 18  Actual/Latest Components Appraisal Estimate Percentage of (USD millions) Estimate (USD millions) Appraisal 2\. TA TO CARRY OUT STUDIES AND SUPPORT PSP 0\.964 0\.098 0\.459 0\.566 59% TRANSACTION (part C) 3\. PROJECT MANAGEMENT AND PUBLIC INFORMATION AND DISSEMINATION 0\.931 0\.530 0\.712 0\.802 86% CAMPAIGN (part E) Total Baseline Cost 2\.53 2\.404 95% Physical Contingencies 0\.00 0\.00 0\.00 Price Contingencies 0\.338 0\.00 0\.00 Total Project Costs 2\.868 2\.404 84% Front-end fee PPF 0\.0 0\.00 0\.00 Front-end fee IBRD 0\.013 0\.013 100% Total Financing Required 2\.881 2\.415 84% Note: This table was constructed from looking at all of the contracts under the IBRD and IDA grants and assigning them to parts A, C or E\. (b) Financing Appraisal Actual/Latest Source of Funds Estimate Estimate Percentage of (USD millions) May 31, 2009 Appraisal (USD millions) Borrower 1\.20 1\.22 110% and Development International Bank for Reconstruction1\.30 0\.758 58% International Development Association (IDA) 1\.665 1\.665 100% 19  Annex 2\. Outputs by Component World Bank Project The World Bank Project was comprised of the following 3 components: Project Component 1: Technical assistance for strengthening the regulatory and environmental framework (US$0\.58million) This component financed consulting services with the firms Hytsa from Argentina, Castalia from New Zealand and Environmental Resources Management (ERM) of the USA to: 1\. Prepare and establish the regulatory framework, including: Review the Water Act and other key legislation and suggest ways of improving it; Draft regulations for the Water Act; Recommend institutional set-up for the commission and its secretariat; Outline the new operating license; Define institutional responsibilities for environmental and water resource management; monitoring and enforcement and improve capacity; and Define training needs and organize workshops 2\. The scope of work for drafting the implementing rules and regulations for the new Water and Sewerage Act awarded to the firm Castalia involved: (a) review and adjust existing rules and regulations; (b) prepare implementing rules and regulations regarding the tariff scheme; (c) prepare implementing rules and regulations regarding the functioning of the National Water & Sewerage Commission (NWSC); and (d) through an increase in the original scope of work, the preparation of the service standards for the new Water and Sewerage Act\. An analysis of how the standards should be measured, definition of performance indicators/targets and reporting requirements\. 3\. Strengthen the environmental and water resource management framework, including: (a) preparing guidelines for environmental licensing; (b) guidelines for impact assessment of water and sewage projects; and (c) updating of the watershed management plan to provide good baseline data on water resources (this will serve as a planning tool for WASCO, as well as a basis for granting licenses for new or expansion of existing abstraction sites and effluent discharge sites)\. The Environmental Framework Study required the consultant to carry out the following: An Environmental Audit of WASCO's operations; Identify likely water resources management issues and constraints that a private operator will encounter during operation\. The report should identify the main constraints and prioritize the areas for intervention in a realistic manner; and An Environmental Impact Assessment and review procedures for future construction of water and sewerage facilities\. 4\. The completion of this study was delayed primarily because of the late delivery of the water resource component of the study\. In addition, local stakeholders opined that water resource management issues should be addressed by law\. Therefore, the water resource management regulations were prioritized over the Environmental Framework Study\. 20  5\. A National Water Policy was finally approved by Cabinet that looks at the policy for water from four different angles: water for health and sanitation, water for agriculture and food, water for industry and water for Environmental Sustainability\. It is envisaged that the NWSC and the WRMA will coordinate the implementation of the policy\. Project Component 2: Technical Assistance for carrying out the private sector transaction (US$ 0\.88 million) This component was implemented in two parts: 1\. A feasibility study for private sector participation (PSP) transaction was carried out in parallel with the regulatory work described above\. The contract was awarded to Stone & Webster Management Consultants of the USA in association with Atkins of the UK \.The study covered: Demand estimates; Expansion and rehabilitation investment needs assessment; Financial modeling; PSP structure (debt treatment, tariff levels and structure, ownership); Investor surveys; Environmental audit which will determine liabilities and explore options for achieving industry standards (IS09000/14000, etc\.); and Preparation of guidelines for private sector participation, containing comprehensive information on requirements such as licensing, operational guidelines, design standards and technical specifications, construction practices, monitoring and reporting requirements, protocol for future expansion, etc\. 2\. Transaction advice\. Under this part of the component, transaction advisors and legal services were hired to prepare legal documents (concession contract) and promote and supervise the PSP transaction\. A first contract was awarded to Santander Investment Services S\.A\. of Spain with a fixed fee and a success fee which would be paid upon the final financial and legal closure with a firm or consortium that met the financial and quality criteria agreed upon with GOSL, a successful transfer of shares to that firm, and the capitalization of the utility with the appropriate level of capital as defined in the purchase documents and as approved by GOSL\. After an engagement period lasting nineteen (19) months, Santander Investment confirmed their lack of interest with respect to a second extension to the contract mostly due to evolving strategic priorities for the Bank By Cabinet Conclusion No\. 887 of 2007 dated October 11, 2007, GoSL approved the engagement of the IFC, as the new Transaction Advisor\. The Financial Advisory Services Agreement with the IFC was dated February 1, 2008\. Project Component 3: Project management and public information and dissemination campaign (US$0\.85 million) This component financed part of the Project management unit (the project coordinator only as the other PMU staff including an engineer, an accountant and administrative assistant were funded by the GoSL) and a public information campaign, which included public consultations and workshops to disseminate and foster consensus on the PSP process and to educate the public on water scarcity issues\. This component also financed the procurement of office equipment, 21  financial audits of the project accounts and individual consultants to assist the PMU as needed\. This component envisaged a public information and dissemination campaign to provide information to key stakeholders and the public on the reform process, and educate the public on water scarcity issues\. The contract was awarded to Right Angle Imaging (RAI) of St\. Lucia in association with Saunders ­ Franklyn Associates Inc\. of Barbados, but progress achieved under the campaign was not monitored properly\. The last few months of project implementation proved challenging for the PPP Transaction, with influential civil society groups are opposing the transaction on the grounds that the private sector is no more competent than the public sector in improving the efficiency of water services and attracting investments\. Against this background, the GoSL reconsidered its public sensitization and outreach strategy and a consultant specialized in public relations consultant was hired to coordinate the external communication strategy and plan, in order to heighten public awareness of the transaction\. The degree of success of this recent PR campaign is yet unknown\. This component supported the creation of a website to provide information on the Public-public- private partnership transaction11, including an electronic data room and support from individual consultants for the regulatory framework\. Project Component 4: Unallocated (US$0\.25 million) An implementation fund totaling US$250,000\.00 was included in the original project financing plan to address any critical issues that may arise out of the policy related studies\. These funds were made available to be utilized primarily for training purposes (once the training needs for the regulators were identified)\. These funds could also be possibly allocated for severance payments, if GOSL so wishes as a result of the PSP feasibility study\. The implementation fund was subsequently re-allocated amongst different categories\. CDB Project Project Component 1: Technical assistance for the strengthening of WASCO's internal systems (US$0\.50 million) The scope of work for this component included the development of industry accepted technical, financial, accounting and commercial information systems and procedures and relevant staff training in key operation areas\. This component also sought to develop and implement an internal public awareness program to inform staff at WASCO of the transition to PSP\. Generally, this component sought to make WASCO more attractive to investors seeking to enter in the domestic market as well as to improve the skills of staff in the transition period for better integration in the new operating environment\. The contract was awarded to Severn Trent Water International of the UK\. Although relevant tools were developed, this contract had mixed results as the training program for WASCO staff was never completed\. 11http://www\.saintluciawaterppp\.org/background\.html 22  Project Component 2: Urgently needed investments and asset rehabilitation (US$4\.77 million) The rehabilitation works under this project were those urgently needed in the short term to enhance the reliability of the water and sewerage system so as to attract private sector capital to fund further expansion and upgrading of the system\. The Specific sub-components were: Supply of Domestic Potable Water Meters and Bulk Water Meters: This sub-component required the procurement of 17,000 consumer meters and 150 turbine bulk meters\. It should be noted that the estimate of meters required developed at appraisal exceeded the actual requirements\. Although there are a significant number of surplus meters (which will be available for future installation) a very large % of those that required installation were actually installed\. This activity also made significant progress in updating customer information\. The principal shortcoming in this activity was WASCO's failure to install the bulk meters\. Supply of Meter Accessories: This supply contract required the procurement of a comprehensive list of accessories for meter installation island-wide\. Supply of Leak Detection Equipment: This supply contract was intended to improve the financial viability of WASCO, through the procurement of relevant and appropriate technologically advanced leak detection equipment, which was intended to be used in reducing the level of wastage due to leaking pipes thus resulting in lowering Unaccounted for Water (UFW)\. It was anticipated that WASCO would have developed and implemented a leakage detection plan, however lack of capacity and staff turnover resulted in none being prepared\. Therefore the anticipated benefits of this subcomponent are unlikely to be fully realized\. Upgrading the water treatment facility at the Grace Plant in Vieux Fort: This supply and install contract required the use of immersed ultra filtration membrane filters, of total capacity 1\.5 MGD, to enhance the reliability and quality of the potable water supply, particularly in the rainy season, for an estimated 20,000 consumers\. At the time of completing this report, the treatment plant was not in operation\. A number of parts that are not in the spares list have gone faulty because of the length of time the Plant remained idle Rehabilitation of the Woodland Intake: The works entailed the upgrading of the water intake at Woodlands, Vieux Fort, in accordance with WASCO's design and standards\. This intake supplies raw water to the new water treatment facility at Grace, Vieux Fort\. This intake delivers between 1\.1 to 1\.7 MGD of raw water\. Some problems have been encountered so far in the operations: (i) the screen is too flat and the skeleton is too weak (ii) design constraints ­ the gradient of the screen is less than 1:5\. As a result, debris and silt reach the chamber and not much is carried over\. Upgrading of the existing Hill 20 Raw Water Transmission Pipe Line: The works entailed the procurement and installation of relevant pump sets and switch gear for the Talvern Pump station\. The system has the capacity of being monitored locally or by remote sensing and has full SCADA capabilities\. The works also included the procurement and installation of adequate sized raw water transmission mains to replace the existing deteriorating pipelines\. The system was completed with all necessary appurtenances to prevent damages from pressure transient and surges\. The system has been successfully upgraded with the water pumps operating as per design capacity\. Supply & Installation of Standby Generators and General Electrical Installation: This contract involved the Supply and Installation of standby generators and general electrical installation for the waste water pumping stations at Jeremie Street, Queens Lane, Sans Soucis, 23  Entrepot and Independent City\. Some Technical problems have been encountered with the standby generators at the Jeremie Street pumping station, but the operation of the generators is still within the defects liability period\. Supply & Installation of Sewer Pumps for the Castries Wastewater Pumping Stations & Supply and Installation of Raw Water Pumps for Talvern: In addition to the above, this contract involved the replacement of unreliable mechanical and electrical equipment within the system\. Installation of Consumer Meters: The works entailed the installation of 17,000 domestic potable water meters island wide, which currently accounts for roughly 40% of total active customers as at April 2009 (of a total active accounts of 43,000, not including 15,064 disconnected accounts, there were 36,210 metered invoice accounts by this date)\. Though some of the expected outcomes were not achieved, the CDB project has generated important benefits: Enhancement of the reliability and quality of the potable water supply, particular in the rainy season, for an estimated 20,000 persons by improving water treatment capacity at Grace in Vieux Fort and upgrading the intake at Woodlands in Vieux Fort; At least 86 % of WASCO's customers are now metered; The reduction of public health risks to the main commercial centre of Castries, by replacing unreliable mechanical and electrical equipment within the sewerage system; The reliability of the water supply has improved mainly through the implementation of the northern Water Supply Infrastructure Improvement Project funded by the World Bank and the upgrading of the raw water transmission pipeline at Hill 20 as well as the new pumping station at Talvern in Babonneau funded by CDB\. Output Indicators for CDB Project Main Output Indicator Date/Goals achieved by Comments/Remarks Expected Component 1: Technical Assistance for the strengthening of WASCO's systems12 Skills of staff improved Percent of staff June 15, 2009: - % The skill training passing skills tests in program was not their areas of work conducted Component 2: Urgently needed investments The deterioration of the Bacteriological May 31, 2009: 98 - 99% Samples taken from water network is Quality of water (North) the upgraded treatment controlled and water samples, percent of facility at Grace, Vieux quality is maintained samples meeting May 31, 2009: 96% (South) Fort, show that WHO standards bacteriological quality of water samples far 12Other indicators for progress under this component were: a leak detection program (that was not prepared), improvements in billing and collection (that were not achieved), and the adoption of 14 internal procedures for improving internal systems (which were not adopted) 24  Main Output Indicator Date/Goals achieved by Comments/Remarks Expected exceeds WHO standards, although there are question as to the sustainability of its operation Water availability: May 31, 2009: 90%, 24 average hours per hours/day (North); 50%, 24 day hours/day (South) Metering April 30, 2009: 84% 17,000 meters installed 25  Annex 3\. Context at Appraisal At the time of appraisal in 2001, following many years of efforts by the GoSL and its partners to improve the performance of the public water company through conventional institutional strengthening programs and twinning arrangements, the national water company performed poorly (low O&M efficiency and inability to internally generate investment funds), with unreliable supply of water, low coverage of sewerage, poor financial performance, and low levels of capital investment\. On the other hand, the GoSL faced stringent fiscal constraints\. The GoSL had since 1998 initiated a series of reforms to put the water company on a path that was expected to ensure long-term reliability\. Among the actions taken before appraisal were: The transformation of the water utility from a state agency (WASA) to a government-owned corporation (WASCO), formally announced during a ceremony on December 6th, 1999; The replacement of WASCO's board of directors with private sector representatives; The appointment of a new General Manager and a Managing Director which were expected to bring a greater business-like culture to the utility; A down-sizing effort, supported largely through voluntary retirements, that had decreased the permanent payroll from about 320 staff to about 260 staff; A 100% increase in the average water tariff, the first increase in nearly a decade (implemented since February 2000); and The creation of a National Water and Sewerage Commission (NWSC) to regulate the sector (as defined in the Act passed in March 1999) as well as the actual appointment of seven commissioners\. However, many institutional and legal issues remained to be clarified: The regulatory office (NWSC) was in charge of sector-wide policy making: While the new Water and Sewerage Act established the NWSC as a regulator, it also granted the NWSC an unusual and undesirable authority to set sector-wide policies\. Policy functions needed for full sector and corporate development needed to be allocated among the NWSC, the Ministry of Public Utilities, and other relevant government bodies\. This was clarified in the Water and Sewerage Act and other legislation in St\. Lucia\. The regulatory office should be independent of the Ministry of Public Utilities\. Under the contemporary Act the Ministry of Public Utilities was responsible for the nomination of the 7 Commissioners on terms co-terminus with the Government\. Moreover, the Commissioners were selected to represent the various stakeholders and relevant Ministries\. Efforts should have been made to make the Commission as indepencent as possible from the Ministry and minimize the political interference in its activities by extending and staggering the mandates of the Commissioners\. Lack of clarity about responsibilities in introducing private sector: The Act could be interpreted as allocating decision-making authority to the NWSC with regards to the introduction of private sector participation in water supply and sewerage services, but this needed to be clarified specifying NWSC's roles in initiating private sector participation\. It also needed to be clarified with respect to WASCOC's ability of involving PSP in the form of sub-concessioning, sub-licensing, and other forms of PSP\. Lack of clarity regarding responsibilities in formulating and implementing tariff schemes: Specific rules and allocation of responsibilities for tariff setting, implementation and 26  monitoring still needed to be defined\. A regulatory regime for tariff setting that included appropriate incentives for improving operating efficiency of WASCO (tariff setting regimes tied to specific performance targets) and for promoting consumption efficiency still needed to be developed\. Conflict of interest in NWSC's mandate of water resource management: Under the contemporary arrangement, the NWSC faced conflict of interest between its mandate to regulate potable water supply and manage water resources for all water users\. The roles and responsibilities of the operator (WASCO) were not well defined in the Water and Sewerage Act\. More specifically it was not clear what were the responsibilities of WASCO regarding the scope of service provision, water conservation, and tariff setting\. Relevance of Objectives and consistency with CAS The over-arching objective of the 2001 OECS CAS was to support poverty reduction in the OECS region through human and institutional development and reduced income insecurity\. Within that framework, the 2001 sector-related goal was the creation of an enabling environment including improved environmental and infrastructure regulation/management for continued or increased private investment in utilities (water, telecom and power) leading to growth\. The 2005 approved OECS CAS supported the sub-region's development agenda for the next four years (FY06-09) through two main pillars: (1) stimulating growth and improving competitiveness; and (2) reducing vulnerability, by promoting greater social inclusion and strengthening disaster risk management\. The TAL Project was expected to contribute to this goal by reduce the cost and improving services of public utilities for the consumers and businesses\. WASCO's Operations A\. Background The Water and Sewerage Authority (WASA) was established in 1984 as a statutory body headed by a Board of Directors (BOA) reporting to the Ministry of Communications, Transport and Public Utilities\. Rates were set by a GoSL-established Public Utilities Commission\. Under WASA, and with funding from CDB, WB and the Canadian International Development Agency (CIDA), a major project involving the construction of the John Compton Dam and accompanying pipelines, pumping stations and a water treatment plant was completed in 1996, primarily to serve the needs of the northern parts of the island\. Since its establishment, the service performance of WASA has been less than satisfactory\. Throughout its history, GoSL had made several changes to the institutional structure and senior management personnel over time in an effort to improve WASA's performance\. A major effort consisted in a twinning arrangement with the Wessex Water Authority of the UK which facilitated technology transfer and technical assistance in the 1980's\. Institutional strengthening and improvement of operational systems were also components of the CDB/WB/CIDA- funded water supply project\. Notwithstanding these interventions, WASA was unable to sustain improvements to its technical, financial and administrative performance\. In October 1999, GoSL restructured the sector by establishing a new entity, WASCO, and passing a new sector law\. WASCO was incorporated under the Companies Act and regulated in accordance with the provisions of the Water and Sewerage Act\. The Act established the National 27  Water and Sewerage Commission (NWSC) to regulate the granting of licenses, the development and control of water supply and sewerage facilities, and the regulation of all tariffs and related matters\. Pursuant to the provisions of the Act, the Minister of Communications Works Transport and Public Utilities recently appointed eight members to the NWSC\. B\. Water Supply Services There are four major water supply systems in the country: a) three in the North: Castries to Cap system, Hill 20, Mome-Fortune Bocage system and b) one in the South: the Vieux Fort system consisting of two plants, the Woodlands /Grace and the Beausejour plants\. The supply to the treatment plants is from water streams through both gravity and pumped conveyance systems\. All flows except the Woodlands/Grace supply in Vieux Fort are now treated in filtration plants and disinfected\. Delivery to customers is by gravity or pressure systems\. Reservoirs are used to provide emergency, peaking and fire protection storage\. Tanks are generally in ground concrete structures or above ground bolted steel tanks\. The age of the system components varies widely, with many facilities in the order of 50 years old\. Pipe networks contain old cast iron, some newer ductile iron, PVC from the mid 1980's and there is some asbestos cement piping in use\. The Theobalds treatment plant was constructed in the mid 1990's; the Hill 20 and Beausejour plants were built in the 1940's\. Service lines to customers are a mix of galvanized iron, copper and PVC piping\. WASCO is progressing with an extensive program of upgrading and adding to its customer meters\. 18,000 meters are being installed this year in the northern systems and WASCO intends to extend the program (12,000 meters) into the southern region later this year\. The majority of the water supply facilities in the south of the island are not adequately equipped to consistently treat the raw water to the desired standards, particularly during periods of intense rainfall when turbidity is high\. As a consequence, southern areas, including the town of Vieux Fort, suffer from frequent plant shutdowns during the rainy season when it is not possible to consistently deliver water that satisfies the guidelines recommended by the World Health Organization\. Customer Base: Growth in the total number of connections is directly proportional to size of population, average size of households and service coverage\. For the preparation of the TAL, the population of St\. Lucia was projected to increase by 2% p\.a\. with an average household size of three persons per household\. WASCO was expected to increase service coverage from an estimated 70% in 2000 to 85% in 2008\. By category, the breakdown of the active customer base shows 38,346 domestic, 3,565 commercial, government and industrial and 77 hotel connections\. Approximately, 12 ships call to port on an annual basis\. Projected growth in domestic connections were based on actual applications for new connections and the growth in the number of hotel rooms based on proposed new developments\. Operational aspects\. Some of the key factors affecting WASCO's performance, which were taken into account at the time of Project design and surely by the interested investors, include the following: 28  Population and Demand Estimates\. Population distribution and water flow and demand data are not available to the degree required to estimate flows in networks with confidence\. Population information is required to establish design flows for elements of systems and to predict when infrastructure will need to be upgraded or replaced\. Base Mapping of Network Piping\. WASCO does not have base mapping of its distribution networks\. WASCO should compile master record drawings of its networks for future planning and management\. This should include pipe diameters, materials and age, recording meter locations, pressure zone boundaries and zone isolation valves\. Population Demographics\. Information on community planning demographic and settlement strategies at a detailed level are not available, making prediction of future demands in networks difficult to assess\. Island Geography and Climate\. The island has been created by volcanic activity resulting in hydrogeological, terrain and soils conditions that adversely affect pipeline installations\. Existing mains traverse steep slopes and cross rivers, which turn into torrents under heavy rains, often causing pipeline washouts and failures\. Steep terrain has also influenced settlement patterns and the arrangement of water distribution networks\. Fragmented systems with many reservoirs and pumping stations are typical, giving rise to pockets of very high pipeline working pressures\. This makes rearrangement of systems into new pressure zones difficult to plan\. However, there are some systems which would clearly benefit from pressure zoning to reduce working pressures Moreover, climatic conditions take their toll on metals and other materials of construction and are particularly hard on electrical control and power installations\. Hurricanes and the resulting flooding and river torrents combine to threaten supply and treatment system components and power supplies\. This is a particular concern to the stability of supply from stream and river supply sources\. Electrical Power Costs\. The present cost to WASCO for electrical power is between EC$ 350,000 and EC$400,000 per month, largely consumed for water and sewage pumping\. St\. Lucia generates electricity by diesel fuelled generating stations, with an electrical power tariff for three phase power this year set at $0\.467/ kWh, plus a fuel surcharge of $0\.182/ kWh, for a combined unit cost of $0\.649/ kWh\. A typical 7\.5 kW pump running 16 hours/day will thus create an annual power cost of $28,500 / year\. The Choc booster used 384,664 kWh in 1999, which, at this year's tariff, would cost $250,000\. The soon-to-be-commissioned San Souci booster station will have a 75 hp motor running round the clock, adding a further annual power cost of approximately $400,000 / year\. These examples indicate the very high cost of pumping of water in St\. Lucia and the benefit of capital works, where practical, that can relieve friction losses and unnecessary energy use\. Water Quality\. Raw water quality data for the sources were reviewed during preparation\. The waters are surface waters from streams and are relatively soft with hardness 50 mg/L as CaCO3 or less, moderate alkalinity (35 mg/L or less) and variable turbidity and color\. The Vieux Fort supply from Beausejour has some iron (0\.26 mg/L) and the old plant had an aerator pre treatment element\. for oxidation of iron\. It is noted that the raw water data for the T\.R\. Theobalds plant do not define whether the water is from the Roseau Dam source or the Millet River or whether it represents a blend of the two sources\. The sample data did not report E-coli, or faecal and total coliforms in the raw water; however, it is expected that these would be present due to the extent of human settlement and agriculture in each of the catchments upstream from intakes\. The WHO guidelines require that E\.coli or thermo- tolerant coliform bacteria must not be detectable in any 100-mL sample of treated water in a distribution system\. In large supplies, with frequent sampling, 95% of samples in any 12- 29  month period this indicator must be at a non-detectable level\. WASCO monitors raw and treated water quality, including microbiological testing, at its Theobalds plant laboratory from monthly collections of samples island-wide\. Transmission and Distribution System\. In 1996, with the commissioning of the Dam and associated treatment plant and pumping facilities, there was a significant improvement in the water supply production capacity\. These developments represented the initial phase of a holistic plan for enhancing the delivery of potable water to consumers in the north\. It was envisaged that there would be further investment aimed at upgrading the capacity of the T&D systems to ensure that the water produced could be efficiently transported to the hydraulic extremities of the system\. Unfortunately, because of financial and institutional constraints, the then WASA had been unable to pursue these plans\. GoSL/WASCO has already taken steps to improve the transmission capacity with financial assistance from the French agency, Groupe Agence Francaise de Developpement\. The works involved the design and construction of a 20-inch transmission pipeline from Port Castries to Choc Estate in the north of the island, a distance of 6\.7 km\. WASCO has also just completed the cleaning, to remove encrustation, of the transmission pipeline from Choc to Cap\. These works will serve to more efficiently transmit water delivered from the Dam\. Storage\. The total storage capacity in St\. Lucia is approximately 27,000m3, with 16,000m3 installed in the north and 1 ,000m3 in the South\. This is equivalent to 11\.5 hours storage in the North and 12\.5 hours storage in the South\. Metering and Unaccounted for water\. WASCO has recently been upgrading its customer meter installations and is presently adding new meters and replacing old, unreliable meters in the Northern Region\. A total of 18,000 meters will be in service in the near future, allowing billing of all water delivered to residential and commercial customers\. Contractors, many of who are previous WASA employees, are making the meter plumbing installations\. The billing data systems are currently being created and WASCO will soon be able to quantify revenue water consumed in the north\. It is intended that the metering program will be extended into the Southern Region as a second phase of this program\. In the Castries and Castries to Cap distribution networks, metering data from 1996, together with flow measurements taken in the spring of 1999 suggest that the unaccounted for water amounted to about 55% of the total produced\. It is presently unclear if a reduction of this figure during project implementation was achieved\. Bulk Water Meters\. As indicated previously, there are a large number of bulk meters at strategic junctions, pump stations and reservoirs within the supply and distribution systems\. Unfortunately, the majority of these need repair and replacement of the internal meter elements\. In the northern region, 47 meters of 85 need repair\. Bringing these meters back into service is essential to future management of water systems to establish the real magnitude of Non Revenue water and UFW\. Bulk meters financed by the CDB project will allow system operators to react to changing flow conditions and observe the increases in flow which indicate major leaks or line breaks\. They will enable water audits to be performed on area sub-systems as the first step in a Leak Detection program\. Consumption\. A review of selected customer accounts in St\. Lucia revealed that per capita domestic consumption was about 75 gpcd (340 Ipcd) when meters were first installed\. This is an approximation of the consumption patterns for unmetered customers\. After six months this consumption steadily decreased to between 45 gpcd (200 Ipcd) and 50 gpcd (225 lpcd)\. Approximately 84% of the customer base are now fitted with working meters and WASCO is currently engaged in a program to install additional ones to achieve universal metering\. An 30  analysis of water usage in the hotel sector indicated that consumption is of the order of 290 gallons per room per day (1300 liters per room per day)\. With respect to commercial and industrial customers, the average water consumption per connection was found to be approximately 70 gpcd (320 lpcd)\. C\. Sewerage and Sanitation Services The development of the waste water collection, treatment and disposal systems has lagged behind the development of potable water systems\. The Castries sewerage system was developed in the early 1950s and services the business center and some 12,000 people in the surrounding residential areas\. The system is in a poor state of repair with frequent breakdowns of mechanical and electrical equipment at the lift stations creating overflows in the system\. In addition, untreated sewerage is discharged into Castries Inner Harbour where it is discharged without treatment\. In 1996, a new sewerage system was constructed at Rodney Bay and the Town of Gros Islet in the north, and the wastewater is treated in a complex of anaerobic and aerobic lagoons, prior to discharge to the sea, via natural drainage ways, at Rodney Bay\. There has been a reluctance of businesses and residents to connect to the system as this would increase their tariff, which for sewage is based on 100% of water consumed\. This system is therefore underutilized notwithstanding the provisions of the Public Health Act which makes connections within a sewered area mandatory\. 31  Annex 4\. Bidding Process to select a private operator Invitation for Bids The bidding process to select the successful bidder/investor to manage the water and wastewater services in St\. Lucia commenced on 25th April 2008, with IFC as the lead Advisor as per the Cabinet Conclusion\. The first order of business was the publication of the public tender announcement on the project website and on other media including the national press\. The following formed part of the tender announcement: The new Water and Sewerage Company ("NewCo") would be incorporated and be given a license for the provision of water and wastewater services throughout the island, under the Water and Sewerage Act No\.14 of 2005\. The existing fixed assets of WASCO would be leased to NewCo under an evergreen lease\. The GoSL would service WASCO's past debt and liabilities\. The NewCo would be de facto the dominant service provider of water and wastewater services for St\. Lucia\. The participation of the private sector in WASCO would proceed on the basis of a formula that would allocate forty percent (40%) of the shares of the new entity to an international private sector investor that would also exercise management control, and twenty percent (20%) of the shares each to GoSL, the National Insurance Corporation (NIC) and the public and local private sector (other CARICOM members included)\. The incorporation of the NewCo would be instrumented by way of a Subscription Agreement between the Private Investor, NIC and the GoSL\. Bidder Qualification The tender procedure excluded a pre-qualification phase in an attempt to expedite the bidding process\. The invitation for Bids was open to all Bidders, which met the minimum criteria of financial solidity and operational experience set by the Government\. In particular, the tender procedure was open to water sector bidders, non-water sector bidders13\. The proof of minimum operational experience would differ for Water Sector Bidders and Non- Water Sector Bidders, as explained in the table below which summarizes the minimum qualifications of Bidders\. Bidder Minimum Criteria Water Sector Bidders The Bidder or, if the Bidder is a Consortium at least the Technical Member, shall have experience in the provision of water and sewerage services for at least 5 years, with at least 2 years of successful management of water and sewerage utility providing potable water services to at least 500,000 customers\. 13Water Sector Bidders are Bidders in which the Bidder or, if the Bidder is a Consortium, at least the Lead Member is registered with the competent authority of its place of incorporation for the provision of water and sewerage services\. 32  Bidder Minimum Criteria Non-Water Sector Bidders The Bidder shall assemble a management team composed of a minimum of 3 members\. Each of the proposed managers should have at least 15 years experience in the provision of water and sewerage services, with at least 5 years of successful management of a water and sewerage utility, providing potable water services to at least 500,000 customers\. Water Sector Bidders and Annual Turnover of at least US$60 million or equivalent during Non-Water Sector Bidders each of the past 3 financial years\. If the Bidder is a Consortium, the Annual Turnover of its lead Member shall be at least US$60 million or equivalent during each of the past 3 financial years\. Net Worth of at least US$50 million or equivalent at the end of the last 3 financial years\. If the Bidder is a Consortium, the Net Worth of its Lead Member shall be at least US$50 million or equivalent at the end of the last 3 financial years\. The minimum capitalization of NewCo was set at EC$36,500,000\.00 in the bidding documents\. A total of ten (10) bidders purchased bidding documents\. The bidder's conference organized in May 2008 was well attended by representatives of international operators\. In October 2008, three bids were received by the Central Tenders Board including one bid received two hours after the stipulated deadline and one bid which was considered non compliant\. With respect to the strategy for wastewater services, it was considered that the expansion of the current sewerage system would require a magnitude of investment which may not be financeable exclusively through tariff increases in the future\. The funding of sewerage and wastewater treatment at a national level would require external contributions either through public grants or through concessional financing\. 33  Annex 5\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Alex Bakalian Lead Water Resource Specialist LCSFP Task Team Leader (TTL) Yoko Katatura Financial Analysis LCSFP Financial Analysis Luz Maria Gonzalez Consultant Economic Analysis Chiaki Yamamoto Monitoring & Evaluation Spec\. PSAPP Regulation Specialist Lorenzo Bertolini Regional Program Leader PSAPP Private Sector Specialist Stephen Myers Consultant Engineering/technical inputs Daniel Boyce Financial Management Specialist LCOAA Financial Management Vladimir Jadrijevic Consultant LCOPR Procurement Supervision/ICR Julieta Helena Abad-Oholeguy Consultant LCSTR Program assistant (2005-2007) Karla Chaman Sr Communications Officer EXTCD Communications Stakeholder outreach Alexander E\. Bakalian Lead Water Resource Specialist MNSSD TTL (2001-2003) Caroline Van den Berg Senior Economist ETWWA TTL (2003-2005) Errol George Graham Senior Economist AFTP4 Economic and financial aspects Svetlana V\. Klimenko Sr Financial Management LCSFM Financial Management Specialist Menahem Libhaber Lead Sanitary Engineer LCSUW Technical inputs Patricia Lopez Martinez Sr Financial Analyst LCSUW TTL (August- Dec 2008) ICR team leader Patricia E\. Macgowan Consultant LCSPT Procurement Navid Rahimi Junior Professional Associate LCSUW ICR team member Rachel McColgan-Arnold Communications/Country Officer LCC3C Communications, Stakeholder outreach Judith C\. Morroy Consultant LCSPT Procurement Nicola Ruggero Saporiti Investment Officer CIADR IFC team leader Jordan Z\. Schwartz Lead Economist LCSSD TTL (2006-2008) (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No\. of staff weeks USD Thousands (including travel and consultant costs) Lending FY00 7 20\.33 FY01 22 104\.53 FY02 10 37\.44 Total: 39 162\.68 34  Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No\. of staff weeks USD Thousands (including travel and consultant costs) Supervision/ICR FY02 1 7\.63 FY03 12 57\.22 FY04 15 71\.65 FY05 26 126\.91 FY06 14 74\.93 FY07 9 45\.04 FY08 11 51\.73 FY09 15 57\.80 Total: 103 492\.91 35  Annex 6\. Summary of Borrower's ICR and/or Comments on Draft ICR 1\. Background The Water and Sewerage Company Inc\. (WASCO), was established under the Company Act (1999) with responsibility for the provision of an adequate water service and removal of sewerage by means of the sewerage system\. The state owned company operates under a 25 year license for water and a 15 year license for sewerage which came into force and effect on 15th July, 1999\. It is estimated that 80% of the population of St\. Lucia have direct water service connections from WASCO into their homes and yards with the balance depending mainly on public standpipes\. The service coverage for sewerage is only about 15% in the North and negligible in the South\. Of those in the North who are internally serviced with water, about 90% are provided with a reliable 24-hour supply with 50% of the customer base in the south receiving a reliable 24-hour service\. With WASCO's customers expecting continuous and tangible improvements in the utility's performance, the Government of St\. Lucia (GOSL) as the only shareholder in WASCO took the policy decision to reform the sector\. GOSL sought to address a number of critical concerns, through policy related studies funded by the World Bank (WB) and through critical capital works and institutional strengthening (operational efficiency), funded by the Caribbean Development Bank (CDB)\. The critical capital works were short term measures, intended to have a measurable impact on the quality and reliability of the service\. A number of deficiencies were identified during an appraisal mission carried out by CDB in 2001, within the technical, commercial, financial and management information systems and procedures at WASCO\. Current tariffs which have been in place since January 2000, are not sufficient to cover WASCO's efficient operating and capital costs\. The newly established regulatory framework aims to improve the tariff regime\. The improved tariff regime as defined in the regulations, is important for ensuring the financial viability of the water utility\. In 2008, it costs WASCO EC$10\.73 per 1000 gallons to produce and distribute treated water, while the cost in 2007 was EC$12\.77 per 1000 gallons\. WASCO's domestic customers, by far the largest category of consumers, pay EC$7\.35 per 1000 gallons for consumption below 3000 gallons and EC$15 per 1000 gallons for consumption above 3000 gallons\. GOSL took the policy decision that there should be no increased tariffs until service improvements (or the path to service improvements) have been achieved\. Tangible improvements of service to customers are beginning to bear fruit\. Consequently, Government may well consider a small tariff increase to help WASCO meet its operating expenses\. The quantum increase for low income households was addressed in the ability and willingness to pay report submitted by the Consultants who carried out the Investment Feasibility and Financial Strategy for PSP in WASCO\. GOSL has already taken the policy decision to peg tariff increases with inflation\. 2\. Development Objective The underlying objective of the project was to prepare and transit WASCO to private sector management, within a sound legal and regulatory framework\. Under this arrangement, 60% of the shares of the publicly owned utility would be ceded to an international investor/operator and regional private investors\. With the change of administration in December 2006, the quantum of shares to the international investor/operator remained at 40% with GOSL, the local private sector, institutional investors and St\. Lucian citizens holding the remaining 60% of the shares\. 36  3\. Project Scope/Components The project included the following major elements: a) Technical Assistance for Strengthening the Regulatory and Environmental Framework (The Regulatory Study) The regulatory study sought to identify and address the deficiencies in the legal and regulatory framework governing the Sector\. It also sought to integrate the water supply services with water resource management so as to promote the sustainability of the water and sewerage sector\. The contract was awarded to HYTSA of Argentina in the sum of US$299,795\.00\. The duration of the contract was six (6) months\. The Environmental Framework Study required the Consultant to carry out the following: An Environmental Audit of WASCO's operations; The likely Water Resources Management issues and constraints that a private operator would encounter, with consultant's recommendations set out in order of priority and with due consideration given to the practicality of implementing the recommendations; An Environmental Impact Assessment and Review Procedures for future construction of water and sewerage facilities\. For the Environmental Framework Study, the contract was awarded to Environmental Resources Management (ERM) of the USA in the sum of US$168,855\.00\. The duration of this contract was five (5) months The scope of work for drafting the implementing rules and regulations for the new Water and Sewerage Act involved (a) review and adjust existing rules and regulations (b) prepare implementing rules and regulations regarding the tariff scheme and (c) prepare implementing rules and regulations regarding the functioning of the National Water & Sewerage Commission (NWSC)\. The contract was awarded to Castalia Strategic Advisors of France in the sum of US$124,956\.63\. Subsequently, an amendment to Castalia's contract was required for the preparation of the service standards for the new Water and Sewerage Act\. In addition to the levels of service standards, Castalia was required to indicate how the standards should be measured, the performance indicators/targets and the reporting requirements\. These standards would be adopted by the Ministry of Health and the Bureau of Standards\. With the amendment, the increase in the contract sum was US$41,500\.00\. b) Feasibility Study for Private Sector Participation in the Water Utility The Feasibility Study covered (i) demand estimates, (ii) expansion and rehabilitation investment needs assessment, (iii) financial modeling, (iv) PSP structure, debt treatment, tariff levels/tariff structure and ownership, (v) investor survey and (vi) poverty assessment/willingness and ability to pay\. The contract was awarded to Stone and Webster Management Consultants of the USA in the sum of US$413,699\.00 c) Transaction Support for the Public-Private Partnership Arrangement 37  This component was intended to finance consulting services to (a) prepare the transaction strategy plan b) carry out marketing and investor due diligence (c) execute the transaction and (d) close the transaction (share issue/share transfer) as necessary\. The contract was award to Santander Investment Services of Spain with a fixed fee and a success fee\. The fixed fee was US$270,000\.00 and the success fee was US$135,000\.00\. After an engagement period lasting nineteen (19) months, Santander informed the Government of St\. Lucia of its intention not to request an extension to its contract\. With a lull in the PSP transaction occasioned by the change in administration, the new Cabinet approved the engagement of the International Finance Corporation (IFC), a member of the World Bank Group as the new Transaction Advisor g) Technical Assistance to Improve WASCO's Operational Efficiency The scope of work for this component included the development of industry accepted technical, financial, accounting and commercial information systems and procedures and relevant staff training in key operation areas\. This component also sought to develop and implement an internal public awareness programme to inform staff at WASCO of the transition to PSP\. Generally, this component sought to make WASCO more attractive to investors seeking to enter in the domestic market as well as to improve the skills of staff in the transition period for better integration in the new operating environment\. This contract was awarded to Seven Trent Water International of the UK in the sum of US$245,675\.00\. The duration of the contract was six (6) months\. h) Project Management Unit and Public Relations This component included a public information and dissemination campaign, designed to explain to the various publics, namely consumers, the key stakeholder groups and civil society, the rationale of the reform in general and the benefits to be derived in choosing such a path, as well as water scarcity issues\. The contract was awarded to Right Angle Imaging (RAI) of St\. Lucia in association with Saunders ­ Franklyn Associates Inc\. of Barbados in the sum of EC$292,600\.00\. j) Urgently needed Investments and Asset Rehabilitation The rehabilitation works under this project were those urgently needed in the short term to enhance the reliability of the water and sewerage system so as to attract private sector capital to fund further expansion and upgrading of the system\. The sub-components of the critical capital works were as follows: Supply of Domestic Potable Water Meters and Bulk Water Meters This sub-component required the procurement of 17,000 consumer meters and 150 turbine bulk meters\. Supply of Meter Accessories This supply contract required the procurement of a comprehensive list of accessories for meter installation island wide\. 38  Supply of Leak Detection Equipment This supply contract was intended to improve the financial viability of WASCO, through the procurement of relevant and appropriate technologically advanced leak detection equipment, which was intended to be used in reducing the level of wastage due to leaking pipes thus resulting in lowering Unaccounted for Water (UFW)\. Upgrading the water treatment facility at the Grace Plant in Vieux Fort This supply and install contract required the use of immersed ultra filtration membrane filters, of total capacity 1\.5 MGD, to enhance the reliability and quality of the potable water supply, particularly in the rainy season, for an estimated 20,000 consumers\. Rehabilitation of the Woodland Intake The works entailed the upgrading of the water intake at Woodlands, Vieux Fort, in accordance with WASCO's design and standards\. This intake supplies raw water to the new water treatment facility at Grace, Vieux Fort\. Upgrading of the existing Hill 20 Raw Water Transmission Pipe Line The works entailed the procurement and installation of relevant pump sets and switch gear for the Talvern Pump station\. The system has the capacity of being monitored locally or by remote sensing and has full SCADA capabilities\. The works also included the procurement and installation of adequate sized raw water transmission mains to replace the existing deteriorating pipelines\. The system was completed with all necessary appurtenances to prevent damages from pressure transient and surges\. Supply & Installation of Standby Generators and General Electrical Installation This contract involved the Supply and Installation of standby generators and general electrical installation for the waste water pumping stations at Jeremie Street, Queens Lane, Sans Soucis, Entrepot and Independent City\. Supply & Installation of Sewer Pumps for the Castries Wastewater Pumping Stations & Supply and Installation of Raw Water Pumps for Talvern In addition to the above, this contract involved the replacement of unreliable mechanical and electrical equipment within the system\. Installation of Consumer Meters The works entailed the installation of 17,000 domestic potable water meters island wide\. 4\. Initial Project Operations/Problem Encountered Rehabilitation of the Woodlands Intake This intake delivers between 1\.1 to 1\.7 MGD of raw water\. The problems so far encountered are as follows: (i) the screen is too flat and the skeleton is too weak (ii) design constraints ­ the gradient of the screen is less than 1:5\. As a result, debris and silt reach the chamber and not much is carried over\. 39  Upgrading of the existing Hill 20 Raw Water Transmission Pipe Line The system has been successfully upgraded with the water pumps operating as per design capacity\. Supply & Installation of Standby Generators and General Electrical Installation Technical problems have been encountered with the standby generators at the Jeremie Street pumping station\. The operation of the generators is still within the defects liability period\. Supply & Installation of Sewer Pumps for the Castries Wastewater Pumping Stations & Supply and Installation of Raw Water Pumps for Talvern Problems have been encountered with the Sewer Pump at the Sans Soucis pumping station\. The operation of the pump is still within the defects liability period\. Upgrading the water treatment facility at the Grace Treatment Plant in Vieux Fort At the time of completing this report, the Treatment Plant was not in operation\. A number of parts that are not in the spares list have gone faulty because of the length of time the Plant remained idle Installation of Domestic Meters Out of a total of 43,160 active customers as at April 2009, exclusive of 15,064 disconnected accounts, there were 36,210 metered invoice accounts\. The latter is likely to include some non- functional meters, the quantity of which is unknown\. 5\. Project Benefits The principal benefits of the Project are: The development of an appropriate legal and regulatory framework to create the environment for the delivery of adequate, affordable, safe and reliable potable water and sewerage services to consumers; Enhancement of the reliability and quality of the potable water supply, particular in the rainy season, for an estimated 20,000 persons by improving water treatment capacity at Grace in Vieux Fort and upgrading the intake at Woodlands in Vieux Fort; At least 86% of WASCO's customers are now metered, although universal meeting was not achieved under the Fifth Water Supply Project; The reduction of public health risks to the main commercial centre of Castries, by replacing unreliable mechanical and electrical equipment within the sewerage system; The improved operating efficiency anticipated from the recommendations of the consultancy to improve WASCO's internal systems has not yet been achieved due to 40  technical and financial constraints as well as the impact of the escalating cost of electricity on WASCO's operations; The reliability of the water supply has improved mainly through the implementation of the northern Water Supply Infrastructure Improvement Project funded by the World Bank and the upgrading of the raw water transmission pipeline at Hill 20 as well as the new pumping station at Talvern funded by CDB; Reduction of Unaccounted for Water from 55% to 50% with the reduction in commercial losses and with the introduction of improved operational systems has not yet been achieved; Increased access to the services island wide has been achieved\. The Output Indicators below highlight the benefits achieved since the joint CDB and World Bank appraisal mission in January 2000\. Status of Output Indicators as at 31st May, 2009 Water Sector Reform/Fifth Water Supply Project Output Indicators Development Indicator Date/Goals Remarks Objective/Component Component 1 ­ Strengthening of the regulatory and environmental framework Regulatory Water Supply The Water & Sewerage No\. 14 This component of Commission Legislation enacted of 2006 was enacted on 15 May the development and its staff set 2006 objective was up and functioning The Regulations were published accomplished but in the Official Gazette in Dec with much delay 2008 Strengthening of WASCO's human resources and internal systems Skills of staff improved Percent of staff May 31, 2009: - % The skill training passing skills tests in programme was not their areas of work conducted Technical assistance to carry out the private sector participation transaction The attractiveness of Concession plan September 30, 2008: Ten WASCO has been WASCO to the private developed private companies purchased incurring net losses sector is made clear and bidding documents since the transaction is Contract with private 1993 facilitated sector operator December 31, 2008: No signed contract was signed GOSL aborted the bidding process Urgently needed investments The deterioration of the Bacteriological May 31, 2009: 98 - 99% Samples take from water network is Quality of water (North) the upgraded 41  Water Sector Reform/Fifth Water Supply Project Output Indicators Development Indicator Date/Goals Remarks Objective/Component controlled and water samples, percent of treatment facility at quality is maintained samples meeting May 31, 2009: 96% (South) Grace, Vieux Fort, WHO standards show that bacterio logical quality of Water availability: May 31, 2009: 90%, 24 water samples far average hours per hours/day (North); 50%, 24 exceeds WHO day hours/day (South) standards April 30, 2009: 86% 7,121 un-metered & Metering non-functional meters installed Public information and dissemination campaign The public informed of Percentage December 31, 2007: Unknown Exit survey to the private sector population informed determine participation transaction of benefits of percentage was not process private conducted sector participation in the water sector 6\. Lessons learned Lessons Learned which can be of use for future Projects Timeliness of disbursements by WASCO under counterpart expenditure and other disbursements reimbursable by CDB despite cash flow problems\. For future operations, CDB should consider opening an EC$ account at one of the commercial banks, for meeting the local cost of projects; The reduction of disbursement conditions by the World Bank for the engagement of the Transaction Advisor was an appropriate approach to remove bottlenecks in project implementation and to expedite the transaction\. This approach was an excellent method to help restore a situation to its original state Negative Lessons Limited Borrower capacity can prove difficult to adequately address the range of implementation issues in a timely and cost effective manner\. The responsible engineering staff from WASCO did not spend the time commensurate with the project's workload\. Given the nature and scope of the project, a dedicated Project Engineer funded under the project loan should have been assigned to the PMU\. Such an individual would have taken responsibility for the leak detection component of the project among his/her other responsibilities; The Membrane Filtration System may not have been the appropriate technology for water treatment in Vieux Fort, given that WASCO's expertise is in the operation and maintenance of this technology is limited\. There is also the issue of the higher operating cost, due to the high power consumption of the membrane system\. Where 42  life cycle cost is a factor in the selection of a new technology, WASCO's Finance Department should be involved in the selection process\. In retrospect, the evaluation of bids for the upgrading of the Vieux Fort treatment facility should have been on the basis of life cycle cost; Meter and meter accessories should have been packaged as one contract, or planned for delivery at Port Castries at the same time\. There was a disparity of eleven months in the signing of these two contracts; The privatization of WASCO (from the perception of the public) required consensus among the ruling party, the opposition and representatives of civil society, at the appraisal stage to minimize broad opposition; The oversight of the project by four (4) different Ministries, the Ministry of Physical Development, the Ministry of Finance, the Ministry of Economic Affairs and the Ministry of Communications, Works, Transport & Public Utilities was not the most effective and efficient way to implement the project\. This gives rise to duplication of efforts and repetition of tasks; A public relations strategy often requires an action in respect to the mental and social processes of the consumer (consumer behaviour) such as (i) plant an idea in the consumer's mind (ii) get the consumer to act (iii) or change the attitude of the consumer\. The public information and dissemination campaign was designed with this in mind, but in practice this was not accomplished\. Despite the level of resources expended, the majority of consumers appeared to be indifferent and not well informed, apart from those who vehemently opposed the PSP Transaction; Beyond GOSL's responsibility to ensure the financial viability of the water utility, there is also the responsibility to provide water to meet basic human needs and to safeguard the health of the nation\. Based on the poverty assessment study, 20 % of the population would require a subsidy\. Although various approaches were discussed, the public was not kept well informed of the various options and how PSP would benefit the poor\. 43  Annex 7\. List of Supporting Documents 1\. Water Sector Reform Technical Assistance Project Files in IRIS 2\. Implementation Status Reports (ISRs) and Aide Memoirs for the Water Sector Reform Technical Assistance Project for the period 2002-2008 3\. Water Sector Reform Technical Assistance Project Appraisal Document (PAD), Loan Agreement, Credit Agreements and Amendments 4\. OECS Country Assistance Strategy 2001 5\. OECS Country Assistance Strategy 2005 6\. Efficient, Sustainable Access for all? An OED review of the WB's assistance to water supply and sanitation, September 2003 7\. Documents included in PPP website/ virtual Dataroom: http://www\.saintluciawaterppp\.org/background\.html 44

REVIEW

P040659

Document of The World Bank Report No: 35176-GH IMPLEMENTATION COMPLETION REPORT (IDA-32370) ON A CREDIT IN THE AMOUNT OF US$5 MILLION TO THE REPUBLIC OF GHANA FOR A COMMUNITY-BASED POVERTY REDUCTION PROJECT (LIL) May 17, 2006  CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Cedi Cedi 1 million = US$ 140 US$ 1 = Cedi 7150 SDR I = US$1\.35 FISCAL YEAR ABBREVIATIONS AND ACRONYMS BMI Body Mass Index CAS Country Assistancee Strategy CG Consultative Group DACF District Assembly Common Fund FO Facilitating Organization GPN General Procurement GSS Ghana Statistical Service IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association IMCPR Inter-Ministerial Committee on Poverty Reduction KAP Knowledge, Attitude and Practice LACI Loan Administration Change Initiative LIL Learning and Innovation Loan MESW Ministry of Employment and Social Welfare MOH Ministry of Health NBF Not Bank Financed NCB National Competitve Bidding NDPC National Development Planning Commission NFS Nutritiion and Food Security NGO Non-government Organization NU Nutrition Unit PAD Project Appraisal Document PLU Project Liaison Unit PMM Poverty Monitoring and Measurement PRU Poverty Reduction Unit PSC Project Steering Committee QCBS Quality and Cost Based Selection SBP Selection Based on Qualification SC Street Children SOE Statement of Expense SPN Specific Procurement Notice SRFP Standard Request for Proposals TAC Technical Advisory Committee TCOP Technical Committee on Poverty Vice President: Gobind T\. Nankani Country Director: Mats Karlsson Sector Manager: Alexandre V\. Abrantes Task Team Leader/Task Manager: Moukim Temourov  GHANA Community-Based Poverty Reduction Project CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 8 6\. Sustainability 9 7\. Bank and Borrower Performance 10 8\. Lessons Learned 11 9\. Partner Comments 13 10\. Additional Information 13 Annex 1\. Key Performance Indicators/Log Frame Matrix 15 Annex 2\. Project Costs and Financing 16 Annex 3\. Economic Costs and Benefits 18 Annex 4\. Bank Inputs 19 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 22 Annex 6\. Ratings of Bank and Borrower Performance 23 Annex 7\. List of Supporting Documents 24 Annex 8\. Additional Project data 25 Annex 9\. Map IBRD No\. 33411 29  Project ID: P040659 Project Name: Community-based Poverty Reduction Project Team Leader: Moukim Temourov TL Unit: AFTH2 ICR Type: Core ICR Report Date: May 17, 2006 1\. Project Data Name: Community-based Poverty Reduction Project L/C/TF Number: IDA-32370 Country/Department: GHANA Region: Africa Regional Office Sector/subsector: Other social services (72%); Sub-national government administration (24%); Central government administration (4%) Theme: Poverty strategy, analysis and monitoring (P); Nutrition and food security (P); Participation and civic engagement (S); Social safety nets (S); Improving labor markets (S) KEY DATES Original Revised/Actual PCD: 01/25/1999 Effective: 09/15/1999 10/23/2001 Appraisal: 03/31/1999 MTR: 06/30/2001 09/08/2003 Approval: 06/09/1999 Closing: 12/31/2004 12/31/2005 Borrower/Implementing Agency: GOVERNMENT/NATIONAL DEVELOPMENT PLANNING COMMISSION Other Partners: STAFF Current At Appraisal Vice President: Gobind T\. Nankani Jean-Louis Sarbib Country Director: Mats Karlsson Peter Harrold Sector Manager: Alexandre V\. Abrantes Helena Ribe Team Leader at ICR: Moukim Temourov Josephine Woo ICR Primary Author: Moukim Temourov 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No No Quality at Entry review was done\.  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: Context: Despite Ghana's sustained economic growth in recent years, not everyone has benefited from it\. Driven by the strong performance of exports and supported by a stable macroeconomic environment, real GDP growth reached 5\.8 percent in 2004, up from 5\.2 percent in 2003\. Poverty in the country declined from 42 percent in 1997 to 37 percent in 2003, with the poverty reduction mostly occurring in rural areas, while urban poverty rates increased slightly\. Despite this mostly positive trend, several of Ghana's human development indicators, including the malnutrition level, especially rural, and the number of street children in large urban areas were on the rise\. To better serve the urgent needs of those groups excluded from the overall economic growth was one of the main objectives of the Ghana Community-Based Poverty Reduction (CBPR) project\. Approved by the Board on June 7, 1999, the CBPR project focused primarily on the issues of malnutrition amongst children under 5 in rural areas, the growing phenomenon of street children in urban areas, and creating a poverty monitoring capacity at the district level\. The project was designed mainly by the national team with limited assistance by the Bank\. As one of the first learning and innovation loans (LIL) approved by the Board, the CBPR project provided the Ghanian government with a new instrument to test its new and promising development hypotheses in the areas of malnutrition, street children and poverty monitoring\. The main objectives of the Ghana CBPR project were to: (a) test approaches and mechanisms for delivering, coordinating, monitoring and evaluating community-based poverty reduction actions through community nutrition and food security interventions and activities to assist street children, and (b) build capacity, at national and local levels, for designing, coordinating, monitoring and evaluating community-based poverty reduction programs\. These objectives were consistent with the Government's priorities in the areas of poverty reduction and social assistance, as reflected in the Government's policy framework for poverty reduction in Ghana over the medium term (1997-2000) and the Bank's Country Assistance Strategy\. The survey data for 1998 showed that 30 percent of children under 5 were stunted, and, given the limitations of the country's health care system, Ghana needed to develop complementary and more effective community-based nutrition monitoring and food security programs\. As for street children, with their number growing rapidly in large urban areas, the new project provided the Government with an opportunity to gain more experience in this area by piloting service delivery mechanisms and programs\. The objective of creating a local capacity to collect, analyze and use data for decision-making served the broader national agenda on decentralization and poverty monitoring\. 3\.2 Revised Objective: The objectives were not revised\. 3\.3 Original Components: The Ghana CBPR project had four components: (1) community-based nutrition and food security; (2) interventions to assist street children; (3) poverty measurement and monitoring, and (4) project management\. Component 1 - Community Based Nutrition and Food Security - US$1\.8 million\. This component aimed to test, in four target districts, a community-based strategy to strengthen the capacity of communities to achieve, on a sustainable basis, good nutrition and food security, especially for children under five and pregnant and lactating mothers\. The component's specific objectives were: (i) to reduce the number of underweight children under five and increase the number of women of reproductive age with a body mass index (BMI) between 18 and 25; (ii) to increase the awareness of communities about malnutrition and - 2 -  strengthen their capacity to identify and take appropriate action to address the determinants of malnutrition and to improve their food security; and (iii) to improve child care-giving practices, especially the quality and quantity of food intake of children at home\. This component included four sub-components: community-based nutrition program, food security, Local Initiative Fund (LIF), and small socioeconomic infrastructure\. Component 2 - Interventions to assist street children - US$ 1\.8 million\. The main objective of the second component was to assist the Government in the development of a national policy on street children, to deepen public awareness of the problem, and to assess the cost-effectiveness of street children interventions\. In four urban areas, the following activities were planned: (i) grants to service providers/NGOs to test a variety of services and delivery mechanisms to assist street children; (ii) policy formulation based on a program of research and consultation to determine best practices, and (iii) increasing awareness of the phenomenon of street children through advocacy programs and increased collaboration among relevant institutions, both governmental, nongovernmental and aid agencies\. Component 3 - Poverty measurement and monitoring (PMM) - US$ 1\.2 million\. This component was designed to address the lack of capacity for data collection and analysis at the district level\. The project aimed to support three districts, through their District Assemblies, to pilot poverty measurement and monitoring systems, aimed at monitoring individual/household as well community-level poverty\. More specifically, the support would include training in poverty measurement, information technology, facilities to enable the districts to store and analyze data, and a monitoring system to enhance leaning\. Component 4 - Project management - US$ 0\.2 million\. The Poverty Reduction Unit of the National Development Planning Commission (NPDC) had the overall responsibility for project management, while technical supervision of subcomponents were responsibilities of the Ministry of Health (Component 1), Ministry of Employment (Component 2) and NDPC (Component 3), respectively\. The project components were linked well to the objectives stated above\. The project provided an opportunity for the central and local governments to test new approaches in the provision of basic social services, test and build capacity at national and district levels for monitoring and evaluation, and strengthen collaboration between government and NGOs in targeted service delivery, with NGOs providing the actual services and the government providing supervision and support\. The project was designed to be implemented by existing government structures, which led to a strong national ownership of the project\. 3\.4 Revised Components: The project components were not revised\. 3\.5 Quality at Entry: Quality at Entry is rated moderately satisfactory, based on: (i) strong government ownership of the project's objectives and activities; (ii) consistency of project objectives with the government priorities on poverty reduction and decentralization, and (iii) the project implementation design, which was based entirely on the existing government structures (at central and district levels), NGOs, and community volunteers for growth promotion and nutrition monitoring\. The project design, however, was too complex for a LIL\. The project components were a set of challenging issues in three different sectors, and, given the limited time and resources allocated for such loans, the project faced a risk of not being able to go deep into issues and just touch the surface\. The project design also had a relatively complex management/supervision responsibilities, with three ministries involved in the implementation of separate components\. - 3 -  4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Achievement of objectives and outputs under the Ghana CBPR project is rated satisfactory\. Serving its learning and innovation objectives, right from the beginning the project established a solid M&E mechanism, which produced on a quarterly basis a range of useful data and information on the project\. As part of the M&E system, a separate entity was hired to conduct M&E of each component of the project\. (i) The nutrition component of the project tested the following innovative ways to improve the nutritional status of children in the beneficiary communities: (i) use of volunteers as community growth promoters to undertake growth monitoring sessions, which allowed to reach all households in the community; (ii) involvement of community leaders via the creation of Community Implementation Committees (CIC), which ensured support at the community level; (iii) fighting malnutrition using preventive and mitigating mechanisms, through addressing food security and provision of small loans for income-generating activities\. By the end of the project, the nutrition component increased awareness in all beneficiary communities about malnutrition as well as the importance of exclusive breast-feeding and nutrition-reach food products for the health of infants\. The project activities also contributed to better nutrition and health outcomes in the beneficiary communities, witnessed by declines in the share of underweight and the level of morbidity for children under five years old\. According to the project data (see Annex 8), the project achieved the following outcomes: (i) the share of women with children under two attending growth monitoring sessions almost doubled in all beneficiary districts; (ii) the share of women practicing exclusive breast feeding increased significantly in all four districts, with Sefwi Wiawso having the largest percentage increase at 325% (increases in the other districts went from 34% to 250%); the share of underweight children of 0-2 years old\. decreased by 34\.5% in KEEA, 17\.2% in Kadjebi, 54\.0% in Sefwi-Wiawso, and 77\.3% in Bongo, while for children of 2-5 years old, this incidence declined by 16\.5% in KEEA, 10\.7% in Kadjebi, 19\.8 in Sefwi-Wiawso, and 16\.5% in Bongo\. Analyses conducted by the ICR team of the methodology used to calculate the children's underweight rate showed some inconsistencies that may cast doubts on the accuracy of some figures, but that do not undermine the positive trends achieved by the project\. The component also achieved other positive results: as a complementary outcome of the project, all beneficiary children were fully immunized by the prescribed ages, exclusive breast-feeding for children 0-6 months increased to at least 80% in all the districts, and the occurrence of fever and diarrhea also declined\. The decline in the share of underweight children in the beneficiary communities is a positive contrast to the fact that nutritional indicators in Ghana worsened during the same period\. According to the 1998 and 2003 DHS data, the national rate of children under five who are stunted increased from 20 to 30 percent, while the proportions of children who are wasted or underweight decreased slightly\. (ii) Following its learning objective, the street children component tested a range of support and delivery mechanisms for street children interventions\. While other similar projects run by NGOs and other development partners focused mainly on one issue, such as literacy or health, the Ghana CBPR project piloted the delivery of a package of services - at least three - including formal education, employment skill training, counseling, and family/community reintegration\. The selection of service providers was based on their formal registration, location, demonstrated success or experience in similar projects, proven human/material capacity, the viability of their proposals and their overall credibility based on references on their past performance\. The project also tested a series of activities to strengthen the service delivery and monitoring and evaluation capacity of the service providers\. While the project made some progress on the delivery of combined social services to street children, as acknowledged in the evaluation report of the implementation agency, the pilot of activities under this component largely turned out to be the delivery of - 4 -  skills development training instead of exploring the effectiveness of service packages\. The tracking study carried out in October 2005 found out that most of the resettled children were likely to come back to the street because they could not practice in their home communities the skills acquired in the program\. The study revealed that over 70% of service providers did not have accurate information on the children they resettled\. The master craftsmen selected should have been better prepared as to the challenges of training street kids\. There were no linkage or collaboration arrangements established between the service providers and local authorities\. The study also found shortcomings on how children were selected for the project\. The study suggested that service providers should first check on where the children would be resettled before they are recruited and trained\. According to the study, most of the children trained by the project had difficulties coping with the challenges of continuing their economic activity\. While developing a tracking system could contribute to better outcomes, the study suggests that it would require a lot of resources, effort and coordination between different stakeholders\. Lessons learned from this and other similar projects are being used for the development of the national street children policy, one of the project's intended outcomes (Annex 1)\. The policy document, still under preparation, acknowledges the fact that the number of street children in Ghana is not known and any policy would have to be based on approximate estimates\. The analysis of socioeconomic characteristics of street children presented in the document is based on a small survey, and no references are made to national households surveys, poverty outcomes, etc\. The document needs further analyses of the reasons why children end up on the street, and provide recommendations not just on coping, but on prevention and mitigation of this phenomenon\. The document also falls short of placing the issue of street children as part of the Government's overall agenda on fighting poverty and proving safety nets to the most vulnerable\. In its current content, the document cannot be considered finalized\. However, the project should be commended for assisting the Government into taking the first steps in what is arguably a very challenging area, with no examples of street children strategy available elsewhere in Africa\. (iii) The poverty measurement and monitoring component contributed to building capacity, at national and district levels, for more effective data collection, analysis and use for decision-making at the District Assembly level\. The project designed and tested successfully poverty monitoring and service delivery systems in the three pilot districts\. The project was one of the first in Ghana to build local capacity to collect, analyze and utilize data for policy making at the district level\. Data collected and analyzed is being used for planning and resource allocation\. For instance, technical staff of the Health Department in the beneficiary districts have been trained to collect and analyze data on Out-Patient Department (OPD) clients, supervised deliveries etc\. The Education Department now uses the system to collect, store and analyze data on school enrolment, and teacher-pupil ratios\. In two of the three participating districts, the Department of Education has undertaken dissemination activities on the 2004 Basic Education Certificate Examinations (BECE) results and on how to make enrolment drives more effective at the district level\. Most of all, attitude to data and its management have changed with authorities and specialists at different levels who now demand and use data for planning and decision-making\. For the first time, the availability of local data has allowed district development plans to address real needs of the communities\. It is important to note that the project objectives remain highly relevant today\. As the data above show, malnutrition is still widespread in the country, with 30% of children under five stunted, 7% wasted, and 22% underweight\. The data also show that rural children are more likely to be stunted and underweight than urban children, while the proportion wasted is almost the same in both rural and urban areas\. Malnutrition is identified as one of the main causes of high child mortality rates in the country, with both the Ghana Poverty reduction Strategy (GPRS) and the Bank's CAS calling for targeted interventions, especially to deprived areas and to poor and vulnerable groups\. The issue of street children in large urban - 5 -  areas remains also prominent, and the national social protection strategy and Ghana PRSP call for development of better-targeted and more efficient interventions\. Strengthening the quality of data and building capacity at national and local levels to collect, analyze and use the poverty data for policy-making remains also vital\. 4\.2 Outputs by components: Community Based Nutrition and Food Security (US$1\.8m PAD US$1\.5 actual): This component is rated satisfactory\. The component was implemented in 40 communities of four focus districts of Ghana, namely Sefwi-Wiawso, Komenda Edina Eguafo Abirem (KEEA), Kadjebi and Bongo\. The project trained 400 community growth promotion volunteers to conduct the weight monitoring and nutrition counseling in their communities\. Growth promotion for children 0-2 years was conducted every month while that for children 2-5 years was conducted every three months\. By the end of the project, the nutrition and food security component had covered a total of 10,728 children of 0-5 years old (7,081 children under two years old and 3,647 children of 2-5 years old)\. This number of beneficiaries is more than twice than the set target of 4,000 children in the PAD\. The promotion of adequate weight Body Mass Index (BMI) for women in fertility age (WIFA) started in March 2005 and was conducted every six months\. A total of 4,466 women were covered by the project\. The growth promotion component was launched during the first year of implementation, and it was followed by the food security and LIF subcomponents\. This sequencing allowed the project to better understand the malnutrition situation in the selected communities and to identify best possible interventions through other subcomponents\. The food security subcomponent was implemented in collaboration with the Directorate of Women in Agricultural Development of Ministry of Food and Agriculture\. Under this subcomponent, the project provided the necessary training and materials for twenty households in each community for activities such as pineapple and vegetable gardening, fruit tree cultivation, small ruminants/snail rearing, poultry keeping and mushroom cultivation\. The Local Initiative Fund (LIF) subcomponent was implemented with the help of four facilitating organizations: Asawinso Rural Bank in Sefwi-Wiawso, Christian Rural Action Network (CRAN) in KEEA; Christian Rural Action Network (CRAN) in Kadjebi and Trade Aid Integrated (TAI) in the Bongo District\. the project provided small loans to individuals and groups of 4-6 people for income-generating activities, mainly in farming and small commerce\. Size of the loan varied between cedis 400,000 and 1 million (between 40 to 100 US dollars) , with repayments period up to 6 months (with three months grace) for traders, and of 9 months (grace period of 6 months) for farmers and an interest rates of 20% (market reference is 25-28%)\. Credit disbursement started in April 2004 and by December 2005 each district had completed two rounds of disbursements amounting to 500,000,000 cedis (about 50 thousand US dollars)\. A total of 3,349 beneficiaries (383 males and 2,966 females) were covered by the LIF\. A part of the LIF (about 12%) was allocated to community growth promoters and CIC members as a way of providing them with incentives for their voluntary services for the project\. At the time of the ICR mission, the loan repayment rates were reported to be about 40%, and it was expected to increase as longer terms loans reach maturity\. Upon repayments of the loan by the beneficiaries, a revolving fund was developed to finance small-scale socioeconomic infrastructure in the beneficiary communities\. Interventions to assist street children (US$1\.8m PAD US$ 2\.3 actual): This component is rated moderately unsatisfactory\.The street children component reached 2,797 children versus the PAD target of 1,500\. The beneficiaries were provided with different types of services: counselling, health services and vocational training\. About 1,700 children obtained employable, literacy and numeracy skills, and 475 children were placed in formal and non-formal schools\. The most common employment skills were dressmaking and hairdressing for girls and carpentry, welding, photography and masonry for boys\. The project also provided training and financial support to parents/guardians to improve their productive capacity, and it also carried out a series of activities to increase awareness and improve community - 6 -  responsibility towards street children\. A total of 336 parents/guardians benefited from business training and micro-grant support provided by the project\. There were, however, several shortcomings in the implementation of this component\. The project did not provide clear guidance to service providers on how to choose street children, and, as a result, just 165 of the project beneficiaries were so-called hard-core street children (identified as children of the street, involved in crime and without links to their families or a caretaker), while the rest of them had families or retained a sense of belonging to a family or household\. In line with type of intervention elsewhere in Africa, the project had a very high unit cost, with an average amount spent per child totaling about 6-8 million cedis (about $US 1,000)\. While the children who participated in the program received significant benefits (in addition to a one-year employment training, the graduates would also receive equipment and materials to continue their economic activities, and some of them were even provided with a paid rental workspace in a shop or at the market), the scaling up of such activity at the national level would require some hard choices for the use of scarce resources\. Poverty measurement and monitoring (PMM) (US$1\.2m PAD, US$ 0\.7 actual): This component is rated satisfactory\. Implemented in three pilot districts: Bawku East, Asunafo, and KEEA, the PMM component supported the district assemblies in the collection and analysis of poverty and sectoral data (health, education, and agriculture) for decision-making at the district level\. The project trained sectoral staff of the district assemblies in basic computer skills and in data collection, entry, and analysis\. In addition to the routine sectoral data, the project also conducted household surveys in the pilot districts to compile baseline data on welfare, employment, housing, household assets, and access to basic social services\. The project also carried out additional beneficiary assessments on access, use and satisfaction with service provision in the pilot districts\. A special database software - Automated Database System (ADS) was developed to store and analyze the data\. The support received by sector department at the district assemblies allowed them to significantly improve the quality of data and, most importantly, to analyze the data locally, which had not been done before\. Sector departments were also able to conduct specialized surveys to collect additional data\. Project management (US$0\.2m PAD, US$0\.7 actual): This component is rated satisfactory\. The project was managed by the NDPC and implemented by the Ministry of Health (Community nutrition) , Ministry of Employment (Street children) and NPDC (PMM)\. Project liaison units in each institution were staffed by existing employees of the concerned ministries\. At the district level implementation of project activities were coordinated by the district administration\. Each district had a focal person named by the district administration\. Project activities were overseen by district level committees, which included the focal person, representatives from local communities, NGOs, and district sectoral specialists\. 4\.3 Net Present Value/Economic rate of return: N/A 4\.4 Financial rate of return: N/A\. 4\.5 Institutional development impact: The project had a substantial impact on the Government's ability to prepare and implement developmental projects\. Prepared almost entirely by the national team and implemented by existing government structures, the project helped the concerned ministries build technical capacity and expertise in project design, preparation and implementation\. The project also allowed the sectoral ministries to test interventions in relatively new areas of community nutrition programs, street children, and local poverty - 7 -  monitoring\. The financial management of the project was carried out by the Accounting Unit of NDPC, which allowed this governmental agency to develop a sound financial management system for effective budgeting and monitoring of project activities\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: It took more than two years for the Parliament of Ghana to ratify the credit\. The delay was caused by the change of government after the parliamentary election in 2000\. The new Government, which opposed the project while in opposition, gave its support to the project when in power, but the new deputies requested further information on the project objectives and its components\. In particular, parliamentarians questioned the utility and practicality of the street children component arguing that the project activities would increase and not decrease the number of street children\. There were also questions about the nature of LILs, a new lending instrument of the Bank\. The "learning" nature of LILs was misinterpreted by some deputies as activities to carry out only analytical work, such as sector studies, assessments, etc, but upon receiving additional information and after a series of consultations with the project team, the Parliament approved unanimously the project on July 28, 2001\. 5\.2 Factors generally subject to government control: The Government provided continued support to project management to put in place relevant structures for project implementation\. It ensured that membership of the technical advisory committees (TAC) of the individual components of the project had the relevant technical expertise from all levels of government, NGOs, donors and civic society\. The Ministry of Finance and Economic Planning had representation in each of the three TACs, and its desk officers participated on regular basis in the implementation support missions conducted by the Bank\. 5\.3 Factors generally subject to implementing agency control: The project was managed by the NDPC\. The management team conducted monthly reviews of each component and project updates were discussed on regular basis with the NDPC leadership\. The project experienced some delays in the beginning due to the commitment of some of its staff at both project liaison units and district levels to other tasks\. This situation was significantly improved after the management team conducted a series of meetings with district chiefs, which were followed up with capacity building for the focal persons and service providers\. 5\.4 Costs and financing: The project was financed with an IDA credit of SDR 3\.7 million (USD 5\.2 million), contribution by the Government of Ghana (USD 0\.5 million) and in-kind contributions by the district assemblies (estimated at US$1\.3m)\. The actual total amount of loan exceeded the previously PAD-projected amount by US$ 0\.2 million due to foreign exchange gains\. The Government's funds were spent on the project management and PMM component, while the communities in-kind contributions were used mostly for growth promotion and street children components\. The closing date was initially set for June 30, 2003, but it had to be extended till December 31, 2005 due to the initial delay in launching the project (see Section 5\.1)\. The amount of actual funds allocated to street children component was US$ 0\.5 million (or 28 percent) more than the amount initially allocated in PAD due to additional service providers that were selected to target "core" street children (see Section 4\.2)\. It cost the Bank about US$ 450K, almost 10% of the total credit, to supervise the project\. This high cost of supervision was due to the delays with the start-up of the project and the project design, which being quite complex required participation of experts in three different fields\. - 8 -  6\. Sustainability 6\.1 Rationale for sustainability rating: Risk to Development Outcome\. Nutrition and food security\. Risk to Development Outcome of the community-based nutrition and food security component is rated negligible to low\. The Government is considering several possible ways of maintaining and expanding this component\. One of the possible scenarios would include securing funding for this component via the funds allocated to the Ministry of Health under the Bank-led budgetary support, i\.e\., PRSC, process\. The Nutrition unit of Ghana Health Service included in its 2006 budget request to the Ministry of Health additional funds to sustain the project activities in the four beneficiary districts and to expand these activities further to four more districts\. Another possibility is to use budget provisions for nutrition in the Bank-financed Ghana Community Based Rural Development project\. The national team is also exploring opportunities to collaborate with the Community Health Planning Services (CHPS) program at the Ministry of Health\. Following the nation-wide dissemination, some district assemblies, NGOs and donors have already adopted the community-based growth promotion approach developed by the CBPR project\. Plan International, an NGO, and the Ashanti Regional Health Directorate, for instance, are already implementing this approach, while the Otumfour Development Programme in the Ashanti region and the UNICEF in Ghana are also using the manuals and materials developed by the CBPR project\. Street children\. Risk to Development Outcome of the street children component is rated significant\. There are no immediate opportunities to sustain the street children component because of the high costs of its interventions\. Before expanding this component, the lessons that have been learned in this project should be taken into account\. The finalization of the national street children policy initiated by the project would help with this task\. It is also important to include the issue of street children in broader national discussions on social protection\. Poverty measurement and monitoring (PMM)\. Risk to Development Outcome of the PMM component is rated moderate\. Sector departments in the beneficiary districts intend to continue data collection and monitoring\. They have also developed a set of additional indicators and are monitoring them accordingly\. For instance, the Health Department has trained traditional birth attendants to collect non-routine data on maternal deliveries, while community surveillance volunteers were trained to collect specific non-routine data on diseases such as waist pains, which was not the case previously\. The NDPC has allocated funds in its 2006 budget for the expansion of the database software in 10 districts, one in each region of Ghana\. An automated data base system (ADS) user manual were also developed to train all staff involved in data collection and analysis at the district level\. The NDPC has allocated funds to national stakeholder discussions on this components with sectoral ministries and development partners\. In addition, the Beneficiary Assessment tool that was developed under the project has also been incorporated in the NDPC's District Medium Term Plan Preparation Guidelines for 2006-2009 for Ministries, Departments and Agencies and Districts\. It is important to note that the district authorities have expressed their strong willingness to allocate some resources to sustain the activities of all three components in the immediate future\. In addition to limited financial resources, local counterpart contributions will also include allocating necessary district staff to implement the project\. But given the limited local resources, it would be unrealistic to expect the project sustainability for long time without additional resources from the central government and development partners\. 6\.2 Transition arrangement to regular operations: The Ministry of Health's draft budget for 2006 included funds to support and expend the community - 9 -  nutrition programs initiated by the CBPR project, and the Ministry is also considering several other options to mainstream this approach into its regular programs (Section 6\.1)\. The issue of street children remains high in the Ministry of Manpower, Youth and Employment's agenda, and the ministry has allocated some funds in its 2006 budget to continue the policy dialogue on street children with the civic society and development partners\. The NDPC is working with sectoral ministries and district assemblies to include poverty monitoring in local development plans\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance at lending is rated moderately satisfactory\. While the project's overall objectives were consistent with the Government priorities and the Bank's assistance strategy, the range of specific issues to be dealt with in the project were too complex for a LIL\. This complexity caused delays in getting the project approved by the Parliament (see Section 5\.1) and led also to a slow start-up of the project activities\. This was especially true for the street children component, an area where the Government lacked adequate knowledge and expertise\. 7\.2 Supervision: The Bank's performance at supervision stage is rated satisfactory\. The Bank team excelled in providing the Government with necessary technical support to implement the project\. Supervision missions were carried out periodically, with Bank's leading accompanying the project team leader to assess progress on the project's specific components\. This was especially well-done for the community nutrition and poverty monitoring components\. A street children expert also participated in the project supervision and made recommendations to improve the project performance\. Conducting large missions, however, increased the cost of project supervision (see Section 5\.4)\. 7\.3 Overall Bank performance: In spite of some weaknesses identified in the project design, the overall Bank performance was satisfactory\. It identified and provided support to a creative and innovative project, which dealt with several challenging and previously untested issues\. Borrower 7\.4 Preparation: The Borrower's performance at preparation is rated satisfactory\. The Government was strongly committed to the project objectives, and the national team took a leading role in the project preparation and carried out most of the technical work for the PAD\. The national team took full responsibility in the identification of project components, which, it argued, were important to address most urgent needs of the poor\. The national team's strong beliefs in project objectives and its design were crucial in getting the project approved by the Parliament\. 7\.5 Government implementation performance: The overall implementation performance of the Government was satisfactory\. The Government kept its commitment to the project by allocating necessary human, physical and financial resources for project implementation\. The project was implemented entirely by the Government, and, despite the complexity of project implementation arrangements, the technical staff of the three sectoral ministries involved in the project worked well together towards achieving project objectives and outcomes\. 7\.6 Implementing Agency: The performance of the National Development Planning Commission is rated satisfactory\. The NDPC did - 10 -  an excellent job in coordinating project activities with sectoral ministries as well as district assemblies, NGOs, and local communities\. The NDPC also reached out to other development partners working on similar issues to share and benefit from common experiences\. 7\.7 Overall Borrower performance: Overall Borrower performance is rated satisfactory\. 8\. Lessons Learned Component 1\. Community-based nutrition and food security 1\. Within the limited fiscal space of developing countries, involvement of community volunteers provides a complementary and inexpensive method for delivery of social services\. Community volunteers were essential for the success of the nutrition component of Ghana CBPR project\. Trained and equipped by the project, community volunteers conducted every month growth promotion and malnutrition monitoring as well as assisted in the conduct of immunization by nurses\. Given the limited financial and human resources in social sectors, this effective and inexpensive method of service delivery could potentially be applied in other sectors\. 2\. Given the importance of health outcomes in early stages, if funds are limited, community nutrition programs should primarily target children below the age of two years old\. 3\. The project design needs to be flexible to adapt to local realities\. The initial criteria for selecting community growth promoters, for instance, required that all selected individuals could read and write, but not many members of some of the communities were literate\. The experience showed that the task of growth promotion could be carried out by an illiterate person as well as far as he/she could use the visual manuals developed by the project, and, therefore, the selection criteria was changed to take into account community situations\. 4\. Sensitization and capacity building at all levels are crucial for the project's success\. Continuous sensitization is one of the key strategies that need to be adopted to secure the commitment of all stakeholder groups at all levels, including district and community leaders, growth promoters, and the communities at large\. Regular meetings with districts, like monthly meetings in the Sefwi Wiawso and Bongo districts, proved to be very beneficial in providing direction and support to the focal points, growth promoters, and members of CICs\. The monthly meetings of the growth promoters with the health sector staff provided a unique learning opportunity for the former and helped in identifying and addressing capacity gaps\. 5\. Poor access to potable water hinders the project outcomes\. The poor access to potable water in some communities resulted in poor response of children to growth indicators, and the project experience showed, improvements in the health condition and weight gain of the children are very often negated by the unhygienic/untreated water that is used in the households\. Component 2\. Street children 1\. The issue of street children remains to be challenging for the Government and service providers, and Ghana is not an exception in that regard\. Street children programs could achieve better results if they are not limited just to basic assistance to children in the street, but rather include development-oriented activities through integration into the family, school and labor market\. The issue of street children cannot - 11 -  be solved separately without addressing the causes of this phenomenon, which in many cases are closely linked to well-being of households\. 2\. Street children interventions require particular knowledge and expertise\. Not every NGO has enough knowledge and expertise to deal with street children, and ,furthermore, NGO programs alone are not enough to significantly reduce the number of children in the street\. It is crucial that NGOs cooperate among themselves and with local governments to achieve long-term impact and sustainability of interventions in the area\. 3\. Family and community-level programs can play a significant role in reducing the number of children in the street\. Strengthening the capacity of the family and community to take care of their your members can increase the efficiency of street children programs\. Parent involvement can increase the chances of kids remaining in school, for instance, and family-level programs can also have a preventive function\. Community-level programs that focus on job creation, education, and advocacy among relevant stakeholders would increase awareness of the problems and risks faced by street children\. Component 3\. Poverty measurement and monitoring 1\. Strengthening the poverty monitoring capacity of district assemblies leads to their empowerment, increases accountability and informed decision making\. Equipped with appropriate and realistic poverty indicators, district assemblies are able to allocate more efficiently limited public resources to achieve better results\. Thus, poverty monitoring and overall statistics capacity building activities should not be limited just to the central government, but they should also include local governments\. 2\. Poverty monitoring capacity building for district assemblies needs to be harmonized and carried out within the PRSP poverty monitoring efforts\. Given the limited resources and in order to achieve better results, capacity building for district assemblies and their sectoral staff should be incorporated in similar activities carried out by the country's PRSP team and by sectoral ministries\. It would be also useful to coordinate this work with different donor-driven capacity building efforts\. General lessons 1\. Given the short time and limited resources allocated to LILs, such projects should not be complicated in design and implementation\. The Ghana CBPR project had three different components that were dealing with challenging issues (nutrition, street children, and poverty monitoring) in three different sectors (health, social protection, and poverty reduction)\. The project was also jointly implemented by three government institutions (Ministry of Health, Ministry of Employment, and NDPC)\. This complex design and implementation arrangements hindered the success of the project by slowing down the project's start-up, creating delays in the disbursement of funds, and increasing the cost of project management\. It also affected the cost of project supervision for the Bank because the supervision required the participation of different technical specialists for each component\. 2\. The Bank staff need to be more engaged in the preparation of LILs in order to explain the learning and innovation nature of this lending instrument\. One of the reasons for a long delay for approval of the Ghana CBPR project by the Parliament was misunderstanding by members of the Parliament about the nature of LILs, as a new instrument of the Bank at that time\. Some of the MPs were against borrowing money by the Government to carry out "a series of studies to test new approaches in poverty reduction" (See Section 5)\. In cases like this, a better engagement by the Bank team in policy and technical dialogue - 12 -  with the Government, members of legislature, civic society, and others would help ratification of the project as well as its national ownership\. It is especially true if the project in preparation is the first LIL in the given country\. 3\. The national team's lead on project design, preparation and implementation builds capacity and increases ownership of project objectives and outcomes\. The Ghana CBPR project was almost entirely prepared and implemented by the staff of sectoral ministries involved in the project\. This close engagement in the project design, preparation and implementation increased the sense of national ownership for the project objectives and outcome, and it also built capacity along the way\. Also, in light of the difficulties in the early period after Board approval, it is important to engage the political leadership as early as possible during the project preparation to ensure broad country ownership\. 9\. Partner Comments (a) Borrower/implementing agency: The following is an excerpt from the project evaluation report prepared by NPDC, the implementing agency: The NDPC facilitated the design of the CPRP to generate best practices and to document lessons to sustain the outcomes of poverty reduction interventions at the district and community levels\. As a learning project, the project design allowed for maximum flexibility to enable the communities and districts adopt the most responsive implementation procedures and systems peculiar to their needs and circumstances\. With sustainability issues at the background, the project was designed to use existing institutional structures for activity implementation\. The design provided for lessons learnt on the LIL to be used for the design of larger follow-up projects\. The design also ensured that the project implementation structures were in line with existing structures at the district level\. The project design was, however, complex\. It sought to operationalise activities for three different and independent sectors in one project\. Different approaches for the different sub-projects were all being tested in a single project\. There was no apparent relationship between the three components of the project\. In addition, the decentralization program in Ghana is yet to be fully operaitonalised\. Sectors at the district level continue to report to their regional and national authorities with little reference to the District Assembly\. Ownership of the project by the District Assemblies was therefore not fully realized\. The proper function of a LIL is more to facilitate innovation and lesson learning to guide replication and inform subsequent design\. Only a few stakeholders were meaningfully aware of the centrality of the learning objective of the project\. The opportunity to collaborate effectively with relevant institutions and other stakeholders was not fully explored\. The late start of the project also put pressure on some NGOs and other implementers to press for numerical targets at the expense of the learning objectives\. Factors such as change in government, ministerial appointments and transfers of members of staff of District Assemblies affected implementation and outcomes\. The project signed Memoranda of Understanding with the pilot district assemblies and this encouraged them to play their assigned roles more effectively\. (b) Cofinanciers: N/A\. (c) Other partners (NGOs/private sector): N/A\. 10\. Additional Information During 1999-2001, the Bank rated the CBPR project implementation status unsatisfactorydue to the delays - 13 -  with the project effectiveness (see Section 5\.1)\. - 14 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Pilot communities able to identify nutrition 50% 100% problems\. Nutrition Unit in Ghana Health Service /MOH 80% 100% has increased capacity to deliver proper targeted interventions Decrease in percentage of children 0-59 By 50% 50% mos\. with low weight for age in pilot communities Increased number of women in reproductive N/A 50% age with body mass index between 18 & 25 Increase in service coverage for street 70% 80% children - at least 3 basic services NDPC demonstrated capacity to coordinate, Strengthened and used to revise GPRS Capacity improved and NDPC takes a monitor and evaluate poverty reduction leading role in poverty monitoring for GPRS activities Poverty data used as input in district projects Used in district plans for 2005 Used for district plans for 2005 NDPC increases utilization of participatory To be used for GPRS review as well Currently used for GPRS review poverty reduction activities Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Increase capacity at community level to 40% 100% access and manage resources and monitor services Ministry of Manpower Development and Finalized policy available The draft is available, but the policy is not yet Employment prepares national policy on finalized street children Programs for helping street children to pilot in 4 urban areas Piloted in 4 urban areas designed, piloted evaluated in 4 urban areas Poverty monitoring system designed and in 3 districts Designed and tested in 3 districts tested Program to monitor poverty at the district in 3 districts Tested in 3 districts level designed, and tested in 3 selected districts Poverty data collected at the district level Yes Yes 1End of project Please note that the order of presentation of the project's KPIs in the tables above is different than in the PAD\. It was done to better distinguish the project's outcomes and outputs\. - 15 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Nutrition and Food Security 1\.80 1\.53 0\.85 Assistance to Street Children 1\.80 2\.30 1\.27 Poverty Measurement and Monitoring 1\.20 0\.70 0\.58 Project Management 0\.20 0\.67 3\.35 Total Baseline Cost 5\.00 5\.20 Total Project Costs 5\.00 5\.20 Total Financing Required 5\.00 5\.20 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 0\.50 0\.20 0\.10 0\.00 0\.80 (0\.50) (0\.20) (0\.10) (0\.00) (0\.80) 3\. Services 0\.00 0\.00 2\.20 0\.00 2\.20 (0\.00) (0\.00) (2\.20) (0\.00) (2\.20) 4\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Miscellaneous 0\.00 0\.00 2\.00 1\.80 3\.80 (0\.00) (0\.00) (2\.00) (0\.00) (2\.00) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 0\.50 0\.20 4\.30 1\.80 6\.80 (0\.50) (0\.20) (4\.30) (0\.00) (5\.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 0\.27 0\.30 0\.02 0\.00 0\.59 (0\.09) (0\.00) (0\.00) (0\.00) (0\.09) 3\. Services 0\.00 1\.95 0\.00 0\.00 1\.95 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 4\. Miscellaneous 0\.00 0\.51 0\.00 0\.00 0\.51 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) - 16 -  5\. Miscellaneous 0\.00 1\.78 0\.00 0\.00 1\.78 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 0\.27 4\.54 0\.02 0\.00 4\.83 (0\.09) (0\.00) (0\.00) (0\.00) (0\.09) Services include training and consultants cost\. Incremental - operations expenses - grant are included in the miscellaneous 1/Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Nutrition and Food 1\.80 0\.50 1\.53 0\.49 85\.0 98\.0 Security Assistance to Street 1\.80 0\.50 2\.30 0\.48 127\.8 96\.0 Children Poverty Measurement and 1\.20 0\.70 0\.70 0\.73 58\.3 104\.3 Monitoring Project Management 0\.20 0\.10 0\.67 0\.10 335\.0 100\.0 *Actual/Latest Estimate: Central Government plus Local Government - 17 -  Annex 3\. Economic Costs and Benefits N/A - 18 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 06/18/98 6 PROJECT OFFICER (1); POVERTY ECONOMIST (1); SOCIAL PROTECTION SECTOR MANAGER (1); SOCIOLOGIST (1); LIAISON OFFICER, NGOs (1); COMMUNITY DEVELOPMENT SPECIALIST (1) Appraisal/Negotiation 04/06/99 9 TASK TEAM LEADER (1);PROGRAM IMPLEMENTATION SPECIALIST (1); POVERTY MONITORING SPECIALIST (1); SOCIAL DEVELOPMENT SPECIALIST (1); HEALTH SPECIALIST (1); NOG LIAISON (1); FINANCIAL MANAGEMENT SPECIALIST (1); PROCUREMENT SPECIALIST (1); TEAM ASSISTANT (1) Supervision 07/07/1999 2 TASK TEAM LEADER (1); U U HEALTH SPECIALIST (1) 01/08/2003 6 FINANCIAL MANAGEMENT S S SPECIALIST (1) SR\. OPERATIONS OFFICER (1); PROCUREMENT SPECIALIST (1); TASK TEAM LEADER (1); TEAM ASSISTANT (1); WORLD BANK DESK, MINISTRY OF FINANCE (1) 02/22/2003 2 NUTRITION SPECIALIST (1); S S TASK TEAM LEADER (1) 03/28/2003 7 TASK TEAM LEADER (1); S S ECONOMIST (1); CON\., FIN\. MNGT\. SPEC\. (1); SENIOR OPERATIONS OFF\. (1); PROCUREMENT SPECIALIST (1); NUTRITION SPECIALIST (1); TEAM ASSISTANT (1) - 19 -  10/29/2003 8 IMPELMENTATION (1); S S PROCUREMENT SPECIALIST (1); CON\., FIN\. MNGT\. SPEC\. (1); PROGRAM ASSISTANT (1); SR\. NUTRITIONIST (1); STATISTICIAN (1); STATISTICS/ST\. CHILDRE (1); TASK TEAM LEADER (1) 05/14/2004 6 OPERATIONS OFFICER (1); S S TASK TEAM LEADER (1); PROCUREMENT SPECIALIST (1); FIN\. MNGT\. SPECIALIST (1); SENIOR ECONOMIST (1); PROGRAM ASSISTANT (1) 04/19/2005 6 TEAM LEADER (1); S S OPERATIONS OFFICER (1); PROCUREMENT SPECIALIST (1); FINANCIAL SR\. MANAGEMENT SPECIALIST (1); NUTRITION SPECIALIST (1); PROGRAM ASSISTANT (1) 12/09/2005 7 OPERATIONS OFFICER (1); S S SR\. OPERATIONS OFFICER (1); PROCUREMENT CONSULTANT (1); FINANCIAL MANAGEMENT CONSULTANT (1); TTL, HD ECONOMIST (1); LANGUAGE PROGRAM ASSISTANT (1); PROGRAM ASSISTANT (1) ICR 12/09/2005 7 OPERATIONS OFFICER S S (1); SR\. OPERATIONS OFFICER (1); PROCUREMENT CONSULTANT (1); FINANCIAL MANAGEMENT CONSULTANT (1); TTL, HD ECONOMIST (1); LANGUAGE PROGRAM ASSISTANT (1); PROGRAM ASSISTANT (1) (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) - 20 -  Identification/Preparation n\.a 146,880 Appraisal/Negotiation n\.a 61,824 Supervision 119\.69 187,031\.69 ICR 20\.55 59,193\.74 Total 140\.24 454,929\.43 data are unavailable for staff weeks on identification/preparation & Appraisal/Negotiation - 21 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 22 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 23 -  Annex 7\. List of Supporting Documents A\. Bank Staff Assessment Aide-Memoire for April 2005 Implementation Support Mission\. Aide-Memoire for May 2004 Implemetation Support Mission\. Aide-Memoire for March 2003 Implementation Support Mission\. Aide-Memoire for January 2003 Implementation Support Mission\. Aide-Memoire for February 2003 Implementation Support Mission\. Aide-Memoire for July 1998 Identification Mission\. Aide-Memoires and BTOs of World Bank mission on Ghana' s Community -Based Poverty Reducation Project B\. Other Studies and Assessment Baseline Survey - PMM Baseline Survey - N&FSP Beneficiary Assessment - PMM Beneficiary Assessment - Street Children Capacity Assessment Needs of participating districts -PMM Development of a Policy Document - Street Children Development of training manuals - N&FSP Development of manual for the Local Initiatice Fund - N&FSP Dissemination of Poverty Data/Information - PMM Evaluation of PMM 1 - PMM Evaluation of Project Implementation 2 - PMM Information, Education and Communication Programme - PMM Knowledge, Attitude & Practice Study - Street Children Literature Review and Situation Analysis - Street Children NDPC 2006\. Project Implementation Completion Report March 2006\. Process Monitoring & Assessment - Street Children Process Monitoring and Assessment - N&FSP Strenghening Community capacity for conflict management - Street Children - 24 -  Tracking Study on trained children - Street Children - 25 -  Additional Annex 8\. Additional project data BASELINE DATA FOR THE COMMUNITY-BASED NUTRITION PROGRAM 1\.1\. Growth Monitoring of Children 0-5 Years and Maternal BMI Number of Beneficiaries District Children 0-2 years Children 2-5 years Women BMI KEEA 1,243 560 800 Kadjebi 2,015 952 1,240 Sefwi Wiawso 1,918 991 1,617 Bongo 1,905 1,244 890 Total 7,081 3,747 4,547 Percentage Attendance at Growth Monitoring Sessions: Children 0-2 yrs District Baseline (March 2003) October (2005) KEEA 45% 71% Kadjebi 45\.5% 68% Sefwi Wiawso 42\.9% 70% Bongo 23\.2% 72% Exclusive Breast Feeding Mean Rates District Baseline Rates Mean Rate (March 2005) KEEA 35\.5 % 91% Kadjebi 63\.6% 86%% Sefwi Wiawso 22\.4% 70%% Bongo 49\.5% 70% Percentage of Children with Low Weight for Age (means) District Baseline Mean Performance (October 2005) KEEA 24\.9% 16\.3% Kadjebi 23\.8% 19\.7% Sefwi Wiawso 43\.5% 20\.0% Bongo 59\.7% 13\.6% 1\.2\. Food Security Sub-Component Number of Beneficiaries District Female Male Total KEEA 160 64 224 Kadjebi 159 41 200 Sefwi Wiawso 200 0 200 Bongo 389 87 476 Total 908 192 1,100 - 26 -  1\.3\. Local Initiative Fund (LIF) Number of Beneficiaries District Caregivers GP CICs Female Male Female Male Female Male Total KEEA 798 - 54 66 35 16 969 Kadjebi 337 40 62 57 40 27 563 Sefwi 454 - 62 72 40 25 653 Wiawso Bongo 1,011 - 38 65 35 15 1164 Total 2,600 40 216 260 150 83 3,349 NUTRITIONAL STATUS OF CHILDREN IN GHANA stunted wasted underweight Region 1998 2003 1998 2003 1998 2003 Volta 17\.7 23\.3 6\.2 13\.9 25\.9 25\.7 Upper West, East and Northern* 24\.2 31\.7 9\.5 12\.9 28\.9 32\.4 Central 25\.5 31\.6 9\.0 3\.0 27\.1 22\.0 Western 21\.3 28\.4 11\.2 5\.3 23\.0 16\.5 National 19\.8 29\.9 7\.5 7\.1 23\.6 22\.1 Source: Ghana DHS, 1998 and 2003 * 2003 data for Upper East only - 27 -  - 28 -  IBRD 33411 2°W 0° 2°E To Tenkodogo BURKINA FASO To Hamale Navrongo U P P E R E A S T Bobo- Diolasso WalewaleTumu Bolgatanga GHANA Nakpanduri U P P E R W E S T Walewale To Dapaong 10°N Black Volta Kolpawn Wa Wa 10°N Gushiegu White Volta To Djougou N O R T H E R N Yendi To Tamale Ferkéssédougou BENIN Sawla Fufulsu Bole Daka To Djougou CÔTE Nakpayili Oti TOGO D'IVOIRE To BlackVolta Salaga Bouna Makongo Yeji Kintampo Dambai 8°N 8°N Jema V O L T A B R O N G - A H A F O Atebubu Kwadwokurom Tain Techiman Pru Berekum To Sokodé Sunyani Mount Afadjato (880 m) K w Bia a h Afram u Lake Kpandu nges AgbovilleoT P Volta To l Agogo Ra Abomey Goaso a t e a u Kumasi Bibiani E A S T E R N -Togo Ho Krokosue A S H A N T I Anum im To Porto- no Obuasi Diaso Birim p Novo a aT Kade Koforidua kw Volta Aflao 6°N Oda W E S T E R N A 6°N Dunkwa Enchi GREATER 2°E ACCRA AbidjanoT Tema Twifo Praso ACCRA Prestea C E N T R A L GHANA Ankobra Pra Tarkwa Winneba SELECTED CITIES AND TOWNS Cape Coast REGION CAPITALS Newtown NATIONAL CAPITAL This map was produced by Sekondi the Map Design Unit of The Axim Takoradi RIVERS World Bank\. The boundaries, Gulf of G uinea colors, denominations and any other information shown MAIN ROADS on this map do not imply, on the part of The World Bank 0 20 40 60 80 Kilometers RAILROADS Group, any judgment on the legal status of any territory, REGION BOUNDARIES or any endorsement or 0 20 40 60 Miles a c c e p t a n c e o f s u c h boundaries\. 2°W 0° INTERNATIONAL BOUNDARIES SEPTEMBER 2004

REVIEW

P116088

 ICRR 13922 Report Number : ICRR13922 IEG ICR Review Independent Evaluation Group 1\. Project Data : Date Posted : 06/20/2012 Country : Colombia Is this Review for a Programmatic Series? Yes No Series ID : First Project ID : P116088 Appraisal Actual Project Name : Finance And Private US$M ): Project Costs (US$M): 300 300 Sector Development L/C Number : L7740 Loan /Credit (US$M): Loan/ US$M ): 300 300 Sector Board : US$M): Cofinancing (US$M): Cofinanciers : Board Approval Date : 08/04/2009 Closing Date : 09/30/2011 09/30/2011 Sector (s): Banking (60%); Capital markets (40%) Theme (s): Other financial and private sector development (100% - P) Evaluator : Panel Reviewer : ICR Review Group : Coordinator : Mariluz Cortes-Gorman Kris Hallberg Ismail Arslan IEGPS2 2\. Project Objectives and Components: a\. Objectives: The objective of the Finance and Private Sector Development Policy Loan (FPSDPL), as stated in the Loan and Program Summary (page 3) of the Program Document ( PD) was to “support sustainable growth and alleviation of poverty by : (i) strengthening the financial system to prevent disruptive and costly financial crises; and (ii) consolidating the securities markets as a pillar of economic growth to address the needs of individuals and the productive sector â€?\. This definition of objectives is similar to that in Section IV of the PD (page 33)\. The definition of objectives in page page 13 of the Loan Agreement (LA) is more concise, defining the “Programâ€? as the “program of actions, objectives and policies designed to strengthen the resilience of the Borrower’s financial sector and deepen securities markets to achieve sustainable growth â€?\. This review is based on the definition of objectives in the LA which is more achievable in the time frame of the project because it does not include poverty alleviation as an objective \. b\. If this is a single DPL operation (not part of a series), were the project objectives/ key associated outcome targets revised during implementation? c\. Policy Areas: A\. Prudential Regulation and Supervision \. The operation supported key measures undertaken by the Financial Superintendence of Colombia (SFC) to strengthen financial sector resilience in light of the 2008 global financial crisis\. (i)\. Capitalization of 2008 profits \. To improve the resilience of the Colombian credit institutions to withstand the headwinds of the global crisis, the SFC adopted a countercyclical policy by instructing credit institutions to capitalize profits obtained during the period June -December 2008 to constitute a capital reserve while complying with minimum capital requirements\. Credit institutions were to use the capital reserve to absorb eventual credit  losses during the following two years \. At end-2010, the unused part of the reserve could be used at the discretion of the institutions \. ii)\. Comprehensive liquidity regulation \. Financial institutions, except for insurance companies, were (ii)\. mandated to develop formal policies and procedures to deal with the liquidity risk, including the establishment of internal limits, remedial actions, and contingency plans \. They also had to formulate a framework to measure such risk\. To increase liquidity buffers and prevent reliance in short -term wholesale funding, credit institutions had to maintain enough liquid assets to cover liabilities potentially due within one week \. B\. Strengthening the Framework for the Intervention and Resolution of Unauthorized Financial Intermediation Activities \. The Banking Law provides the SFC with the authority to conduct on -site inspections on unregulated entities, to examine their records, and impose precautionary measures on entities that undertake financial activities without authorization \. However, a particular type of unauthorized financial intermediary, unregulated investment schemes (UIS), had grown quickly in Colombia through a system of referrals by existing members and offered unusually high returns \. UIS, even if not fraudulent like pyramid schemes, were prone to failure, and their collapse threatened to undermine the confidence in the regulated financial system with potential severe consequences \. This operation supported decrees that : (i) allowed the Superintendence of Companies (SS) to administratively intervene entities engaged in unauthorized collection of resources from the public, and (ii) provided the heads of local governments with the power to take preventive measures, including closing of premises, in connection with entities located in their jurisdictions presumed to be conducting unauthorized financial intermediation activities \. C\. Securities Market Reform \. The DPL supported the implementation of most of the remaining key aspects of securities market reform that had started with the enactment of the 2005 Securities Law\. Such reforms aimed at: (i) developing markets by improving market transparency, corporate governance, and professionalism among various actors operating in the capital markets; and (ii) reducing systemic risk, including through the use of efficient securities settlement systems (SSS)\. (i)\. Market Infrastructure \. Weaknesses in SSSs can be a source of systemic disturbances to securities markets and to other payment and settlement systems \. Previously the regulation of SSSs in Colombia did not address sources of systemic risks in securities settlement and absence of a central counterparty clearinghouse (CCCH) prevented trading of derivatives in the exchange \. The new regulation supported by the FPSDPL strengthens SSSs by: (i) providing legal certainty to traders using exchange -traded securities markets of the finality of the settlement process and the obligation to operate on a delivery -versus-payment (DvP) basis; (ii) the adoption of automatic trading systems; and (iii) regulation that allowed the new CCCH to operate smoothly and transform it into a mature platform for exchange -traded derivatives\. ii)\. Market Architecture and Operations \. Developing the securities markets requires appropriate regulation of (ii)\. intermediaries and the operations and transactions that can be negotiated and executed in the market \. Previous regulation on intermediation activities did not incorporate the stricter requirements for transparency, corporate governance and professionalism imposed by Law 964/2005 in order to protect investors rights \. Also, derivative products were not regulated\. The new regulation supported by the FPSDPL incorporates these requirements \. It supported decrees that: (i) defined what constituted securities intermediation and securities operations and who and how they could participate in the securities market; (ii) defined who and how could operate in over -the counter (OTC) markets and the types of operations that could be traded in such markets, requiring DvP settlement of OTC trades and mandatory reporting of all OTC transactions to a trading registry regulated by SFC; (iii) regulated risk hedging via the use of derivatives based on international standards and subject derivatives to new accounting and valuation criteria and rules, as well as new risk management requirements including treatment of counterparty risk; and (iv) improved market transparency and security by mandating strict separation of brokers’ proprietary investment portfolios from those held on behalf of their clients \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: This single-tranche US$300 million FPSDPL was requested by the Government of Colombia (GoC) as part of its strategy of increased funding from multilateral organizations in the face of a deterioration of the external environment\. The Bank responded by increasing its lending program to Colombia faster than anticipated \. In May 2009, Colombia obtained US$10\.5 billion as a one-year precautionary arrangement under the IMF ’s Flexible Credit Line (FCL) and the Inter-American Development Bank (IADB) also increased its lending to the country\. A US$300 million loan was considered appropriate in light of the financing needs of the authorities and the strength of the package of reforms \. However, this amount was relatively small compared to the US$ 2\.4 billion that the Government had indicated that they had planned to obtain from the multilaterals during calendar year 2009 to help cover that year's envisioned external financing need, and compared to the IMF precautionary  flexible credit line\. The loan became effective on October 19, 2009 and was subsequently fully disbursed \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: The objectives of this operation were highly relevant at the time of loan approval and remain relevant today, since strengthening the financial system and consolidating the securities market as a pillar of economic growth are still very much medium-term priority objectives of Colombian society \. The objectives of strengthening prudential regulation and supervision and deepen the securities markets were aligned with those identified by the 2006-10 National Development Plan (NDP)\. In particular, they were supportive of priorities in its High Sustainable Growth pillar \. They were also the appropriate objectives at a time of severe global financial distress \. The issues addressed in this operation and its outcomes remain relevant today and will be supportive of the objectives of the current version of the NDP ( Prosperidad para Todos ), which is a driving force behind the Bank ’s 2012-16 Country Partnership Strategy (CPS)\. The actions taken under this DPL and the outcomes of its implementation are providing a more solid foundation for the Colombian financial system, and this should contribute significantly to achieving the revised financial priorities included in the new Inclusive Growth with Enhanced Productivity pillar of the current 5-year NDP\. The current Roadmap of the SFC, which covers the period 2011-14, includes as two of its six strategic objectives the strengthening of prudential regulations and the deepening of the capital market\. This operation was complemented by technical assistance and advisory services provided by the Bank which are scheduled to persist for the duration of the 2012-2016 CPS, very likely resulting in synergies that will reinforce the objectives of the operation \. b\. Relevance of Design: The relevance of design of this operation is rated as highly relevant to the stated objectives of strengthening the financial system to prevent disruptive and costly financial crises and consolidating the securities markets as a pillar of economic growth to address the needs of individuals and the productive sector \. The DPL was an appropriate instrument to support the Government's objectives and priorities in terms of the provision of fast disbursing contingency funds at the time of reduced access to international financing, and in terms of the policy reforms that it supported\. Preparation of a new DPL had been agreed before the crisis as a follow up in a series of FSALs and DPLs supporting Colombia's program of financial sector reforms \. When the crisis erupted, the content of the DPL was modified to incorporate some relevant preventive measures to ensure the resilience of the banks by increasing capital buffers and enhancing the supervision of liquidity risks; as well as measures to give the authorities the tools to prevent unauthorized financial intermediaries from growing and becoming systemically important\. The securities market reforms supported by the FPSDPL were unrelated to the crisis, but part of the medium-term program of reforms already agreed with the Bank aimed at promoting savings, investment and finance to achieve sustainable growth \. These reforms were in line with the conclusions and recommendations of the 2005 FSAP Update, which identified the modernization of the regulatory framework for securities markets as key to increase liquidity, stimulate investment and promote economic growth \. The Policy Matrix was well designed with a clear and convincing causal chain between policy actions and expected results \. It could be argued that the policy actions supported by this operation aimed at strengthening prudential regulation could have been more far reaching \. Colombia's regulatory standards have yet to align to Basel rules, as Tier 1 capital is not measured on the basis of full deduction of intangibles, which could lead to an artificially overstated ratio\. Also, Colombia has important regulatory gaps with respect to consolidated regulation and supervision of financial conglomerates \. However, the adoption of a more stringent definition of the capital cushion of Colombian credit institutions during the global financial crisis could have shown capital deficiencies and precipitated the banking crisis that the DPL was trying to prevent \. Now that the peril is over, the SFC with the Ministry of support from the Ministry of Finance is reviewing the capital adequacy norm to Basel III rules regarding eligible capital items and other regulatory gaps \. 4\. Achievement of Objectives (Efficacy): The overall objective of achieving sustainable economic growth was met, In 2010 the economy grew in real terms at an estimated 4\.3 percent and accelerated even further in 2011 to over 6 percent\. Real GDP is expected to expand by 4\.7 percent in 2012 and by 4\.4 percent in 2013\. It would be difficult to attribute this growth performance to the policies implemented under this operation \. However, to the extent that strengthening financial sector regulations helped to avoid a banking crisis, this operation helped to avoid the negative impact in terms of output decline associated to this type of crisis \. First Objective : strengthening the financial system to prevent disruptive and costly financial crises \. The achievement of this objective is rated as high based on the achievement of all expected outcomes \. A\. Strengthen Prudential Regulation and Supervision \. All institutions voluntarily adopted the instruction to capitalize profits obtained during the period June -December 2008 to constitute a capital reserve \. As a result, the capital adequacy ratio (CAR) of the credit institutions increased to 15 percent in January 2009, up from 13\.4 percent at end-2008, while the CAR of the banks increased from 12\.7 percent to 14\.1 percent, well above the regulatory minimum of 9 percent\. The measure brought the Colombian banking system ’s capital level close to the level in other countries in the region and had an important countercyclical impact as the capital buffers accumulated in 2008 prevented a more severe credit contraction in 2009\. The expected outcome that no systemic instability arises in 2009-2010 was achieved\. There were no symptoms of systemic financial instability at the time of approval of the operation \. At end-2011, no systemic instability had been recorded in the Colombian financial system since loan approval \. For the system as a whole, the CAR of credit institutions remained well above the 10 percent minimum requirement\. The outcome that in case credit institutions incur in losses during the year it would be determined what percentage of those losses could be absorbed by the reserves constituted with the capitalized 2008 profits without compromising the CAR of the institution was also achieved \. By end-2011, no credit institution had experienced losses during the period \. The outcome that all financial institutions that collect resources from the public, with the exception of close -fund administrators, have adopted robust systems to monitor and administer liquidity risks and that all credit institutions have a positive indicator of liquidity risk as defined by the SFC, or are adopting remedial actions to ensure they will have it, was achieved \. Prior to 2008 there was not a comprehensive or standardized approach on liquidity risk management\. However, by end-2011 all credit institutions had in place systems to monitor liquidity in line with SFC regulations\. Based on weekly reports received by the SFC, negative values for the Liquidity Risk Indicator (ILR) in the period 2009-11 were reported in only 9 occasions, which were promptly corrected by the credit institutions in fault (by the next weekly report)\. B\. Strengthen the Framework for the Intervention and Resolution of unauthorized Financial Intermediation Activities\. Although the Banking Law provides the SFC with the authority to conduct on -site inspections on unregulated entities, as well as to examine their records, taking measures against UIS under the existing legal framework proved difficult\. The measures adopted by the Government in late 2008 and supported by this operation strengthened the framework for the intervention of UIS, allowing for swift action against existing pyramid schemes\. With these measures, the SS can intervene if there are “notorious and objective facts â€? that the SS considers proof of collection of resources from the public \. Administrative intervention allows the SS to take strategic and precautionary measures, including taking control of the entity and possession of all its assets, ordering the freeze of assets, and returning funds to the affected persons \. With the powers provided by these regulations several smaller UIS were intervened in the first half of 2009 sending a powerful signal on the consequences of such type of activities \. Both outcomes related to actions taken in this policy area were achieved \. The outcome that SS follows up on all requests from SFC to investigate unauthorized financial intermediation activities was achieved \. At end 2001 the SFC had sent 28 official resolutions to the SS requesting further inquiries in connection with unauthorized financial intermediation activities, of which 24 were acted upon and finalized by the SS \. Of the other 4 one resulted in a penalty fee for not providing adequate information \. Two others were incorporated into already pending processes of the SS and one (from 2011) was still pending a resolution by the SS on how to proceed \. The outcome that assets recovered from intervened pyramids have been valued and liquidated, and the proceeds distributed among investors according to their creditor status; that assets confiscated in relation to money laundering activities will have been transferred to the appropriate authorities; and that actions to recover assets located abroad have been initiated, was achieved \. The SS initiated 123 processes of intervention between 2009 and end-2011; 114 of those processes had been finalized while 9 others were still active\. Claims against these intermediaries added up to some US$ 4\.1 billion equivalent, of which US$2\.7 billion have been validated by the SS, involving some 625 thousand claims\. Recovered assets from these pyramids have amounted to some US$265\.4 million, of which 75\.8 percent has been returned to rightful claimants \. Also, there were 36 active processes pending resolution in courts since they involve criminal activity, such as money laundering, some of it with international ramifications \.  Second Objective : Consolidating the securities markets as a pillar of economic growth to address the needs of individuals and the productive sector \. The achievement of this objective is rated as substantial based on the following\. Of four outcome indicators for measures taken under the securities market reform policy area, one was partly achieved, two were fully achieved and one was not achieved \. In 2005 a Bank assessment of compliance with 19 CPSS-IOSCO principles for securities settlements systems had found several shortcomings \. By end-2011 the outcome that all shortcomings in core principles had been corrected by the closing date of the DPL had been partially achieved\. Review conducted during the ICR mission indicate that most if not all major issues identified as problematic were addressed with the passage of 2005 Securities Law and related regulation \. At appraisal, the information system for the newly established exchange - traded derivatives market were still in process of development and many large credit institutions were still missing the electronic platform to trade directly via CCCH\. The outcome that SFC has real time information on the transactions liquidated through the CCCH has been achieved\. The SFC has real time access directly from its offices over all derivate transactions carried out through the CCCH\. It also had the same access to all other securities trading platforms operating in Colombia today\. Active monitoring of such systems is carried out by a dedicated team at the SFC \. The outcome that the range of standardized derivative products traded in Colombia has expanded to include exchange rate futures, Colombian stock market futures, and commodities futures has been achieved \. At appraisal, the only standardized derivative traded at the CCCH was a contract to hedge the future price of a notional medium-term Colombian treasury bond (FTES)\. Currently, CCCH offers a number of standardized derivate instruments: two types of future exchange rate contracts, three types of future stock market -based contracts, a contract for future electricity prices, and three types of futures contracts for government bond prices \. However, the outcome that the market has developed, and trading volumes of standardized derivatives have increased their volume to represent at least a third of the traded volume in the spot market for equivalent securities has not been achieved \. In mid-2009 trading volumes of the 5 year FTES represented an insignificant portion (0\.1 percent) of spot trading in medium-term treasury bonds\. Although the volume of derivative contracts negotiated in the CCCH increased considerably in 2011 (176 percent), the notional value of such contracts still is far from reaching a third of the value of spot trades in equivalent instruments \. Macroeconomic framework \. Colombia has maintained a robust and stable macroeconomic framework, which rests on three mutually re-enforcing pillars: (a) a responsible fiscal policy based on a credible medium term fiscal framework, supported by the introduction of a new fiscal rule; (b) a monetary policy based on an inflation targeting regime complemented by a floating exchange rate with moderate interventions; and (c) sound macro and micro prudential policies combined with a solid financial system \. This framework provides a solid basis for the country’s future economic prospects \. 5\. Efficiency (not applicable to DPLs): 6\. Outcome: The FPSDPL allowed the GoC to pursue its long -term objectives of enhancing financial regulation /supervision and capital market reform, while alleviating the impact of the global economic crisis with the application of countercyclical fiscal and monetary policies \. In particular, the policy measures supported by the FPSDPL were able to improve the resilience of Colombian credit institutions at a time of economic uncertainty; intervene and return to investors funds obtained by fraudulent investment schemes; and reduce operational risks in trading systems by strengthening the securities settlement system and the real time monitoring of derivatives trading \. The project is rated as satisfactory because the relevance of objectives and design are both rated as high and the efficacy in meeting each of the two objectives are rated as high and substantial respectively \. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The risk that development outcomes will not be maintained is moderate \. The outcomes that the operation aimed to achieve were not over or under ambitious \. A major risk for the operation was that a protracted  economic slowdown could hamper financial sector stability and limit trading volumes in the securities markets, but it did not materialize as shown in Section 4\. The European financial crisis is far from over, so it is likely that the Colombian economy and its financial system will be tested again \. However, independently of these uncertain times, with its gained strength Colombia ’s financial sector is likely to be more resilient today to external shocks than in 2009\. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: a\. Quality at entry: The quality at entry was assured principally by the careful selection of a relatively small but relevant list of prior actions with lasting impact on Colombia ’s financial sector modernization \. These actions had a high degree of ownership and were of high priority for the GoC \. They also were fully in line with the sector work the Bank was carrying out and with the CPS \. This set of actions represented an appropriate balance between the need to strengthen the financial sector to improve the resilience of the Colombian credit institutions to withstand the headwinds of the global crisis, with reforms of a more structural nature having important policy and institution-building impact\. Moreover, the Bank team was right in designing the operation as DPL to provide fast disbursing contingency funds at the time of reduced access to international financing; and in working in coordination with the IMF and the IADB to address the challenges posed to the country by the global crisis \. Implementation arrangements and entry work was well coordinated with counterparts in Colombia, in part a reflection of years of productive country engagement on themes related to the financial sector\. The M&E design has the shortcoming that some of the expected outcomes are really objectives, not indicators with clearly specified targets \. at-Entry Rating : Quality -at- Highly Satisfactory b\. Quality of supervision: The supervisory work was adequate for the needs of this operation \. The quality of supervision, in particular M&E implementation, benefitted from having the Team Leader that worked in the design of this operation stay with the project until its closing \. This continuity plus the fluidity of the dialogue maintained with counterparts in Colombia by the Project Team on a whole range of financial sector issues created synergies which benefitted the implementation of this operation \. The collaboration and coordination between the GoC and the Bank on policy issues remains strong, which facilitated the preparation of the ICR \. Quality of Supervision Rating : Highly Satisfactory Overall Bank Performance Rating : Highly Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Government ownership over the prior policy actions supported by this operation was essential for its success\. Policy actions taken by the GoC were aligned with the NDP policy priorities \. They were taken after intense periods of consultations with key stakeholders in the financial sector, and many of them went to establish the proper regulatory framework to existing legislation (e\.g\., the 2005 Securities Market Law)\. Several new financial sector reform initiatives have been undertaken following the policy actions supported by this operation indicating that the drive to modernize the financial system remains as strong today as at the time of loan approval\.  Government Performance Rating : Highly Satisfactory b\. Implementing Agency Performance: The Ministry of Finance was responsible for the implementation of the FPSDPL as well as for coordinating actions among the concerned agencies including, in particular, the SFC the central bank and the SS \. These institutions were in charge of collecting the necessary data to assess implementation progress and report it to the Bank, taking into account both process advances and service statistics, surveys and other data that might be used to assess the achievement of the program ’s end outcomes\. These agencies deserve a great deal of credit for the timely and effective way in which this operation was implemented and the achievement of its various outcome indicators \. Implementing Agency Performance Rating : Highly Satisfactory Overall Borrower Performance Rating : Highly Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The results framework for the FPSDPL was well designed, with logical links between policy actions and expected results\. The medium-term outcome indicators included in the Policy Matrix were expected to achieve their target values by end-2011, about two years after loan approval, giving the Bank and the Borrower time to follow up on the effectiveness of the policy measures and take any necessary additional action \. However, some of the expected outcomes are really objectives, not indicators \. An effort should have been made to quantify the expected outcomes and establish some targets \. Also, there are no indicators to measure "addressing the needs of individuals and the productive sector " or any economic growth or poverty alleviation targets \. In addition, the indicators concerning the derivatives market penetration were too optimistic, given that these are complex financial instruments and were brand -new in the Colombian market, which required the introduction of a new and technically demanding trading platform (the CCCH)\. b\. M&E Implementation: The Financial Regulation division of MHCP was in charge of monitoring the progress in implementation of the operation and of preparing reports on the progress in achieving the operation's expected outcomes in the medium term defined\. By and large, tracking the chosen indicators was relatively easy since M&E relied mainly on publicly available information and financial statistics, which in the case of Colombia are generally accepted to be timely and of good quality\. Follow up for most outcome indicators was possible on line \. On occasions when more detailed information was not readily available or timely, as in the case of the data needed to evaluate progress with CPSS-IOSCO principles and other required for preparing the ICR, the Bank was able to rely on the good capacity and disposition of the implementing agencies and related private actors to supply the necessary information\. c\. M&E Utilization: Medium-term outcome indicators were monitored during four supervision missions, including the ICR mission, associated with this operation \. As recorded in the ISRs submitted following each supervision mission, no flags were raised during project implementation, when all ratings of implementation performance were satisfactory \. M&E Quality Rating : Substantial 11\. Other Issues a\. Safeguards: The operation did not trigger safeguards review \.' b\. Fiduciary Compliance: An IMF Central bank safeguards assessment of the Central bank (BdR) had found no systematic vulnerabilities as of 2003 and 2005\. Since nothing further came to the attention of the DPL preparation team that caused it to believe that the control environment into which the loan proceeds would flow was other than adequate, no additional fiduciary arrangements (e\.g\. dedicated accounts subject to audit) were deemed necessary for this DPL\. c\. Unintended Impacts (positive or negative): This operation supported policies that sought to alleviate poverty by strengthening the financial system and consolidating the securities market as a pillar of economic growth \. It also sought to avoid the high social cost of a financial crisis \. Financial sector strengthening supported prompt credit recovery and economic growth, which in turn contributes to reduce poverty \. Moreover, the prompt resolution of pyramids schemes and the liquidation of assets to repay claimants, many of them low income individuals, contributed to alleviate their situation \. There were at least two important institutional developments related to prior actions supported by this operation\. One was the important institutional strengthening of the SS in its capacity to intervene and resolve in cases involving unauthorized financial intermediation and investment schemes \. The other was the introduction of regulations that made possible the launching of standardized derivatives and structured products via the new clearing house CCCH \. d\. Other: 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Satisfactory Highly Satisfactory see section 8 Borrower Performance : Satisfactory Highly Satisfactory see Section 9 Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons:  The most important lesson of this operation is the importance of continuous Bank engagement in a country’s financial sector through knowledge services and lending operations \. Thanks to its continued engagement with Colombia’s financial sector, the Bank was able quickly to adapt an already programmed DPL in support of Colombia's capital markets development, to incorporate relevant preventive measures to ensure the resilience of the financial system in light of the 2008 global financial crisis, as well as to advance the medium -term reform program to develop the capital markets\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR follows the guidelines and is well written \. It describes clearly the policy actions and presents ample evidence of the achievement of objectives\. The ICR’s discussion of the Bank’s and Borrower’s performance is balanced, the ratings are consistent with the analysis and the lessons learned are insightful\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P001718

Document de la Banque mondiale POUR USAGE OFFICIEL Rapport N' 19424 RAPPORT DE FIN D'ÉXÉCUTION RÉPUBLIQUE DU MALI PROJET DE CONSOLIDATION DE L'OFFICE DU NIGER (CRÉDITS 1906-MLI ET A0350) 14 juin 1999 Développement rural, Groupe III Département-pays 15 ~ Région Afique Le présent document fait l'objet d'une distribution restreinte\. Il ne peut être utilisé par ses destinataires que dans l'exercice de leurs fonctions officielles et sa teneur ne peut être divulguée sans l'autorisation de la Banque mondiale\. TAUX DE CHANGE Francs CFA (FCFA) pour un dollar 1988 = 314 1989 = 316 1990 = 319 1991 = 282 1992 = 264 1993 = 283 1994 = 547 1995 = 500 1996 = 511 1997 = 583 1998 = 590 POIDS ET MESURES Système métrique ABRÉVIATIONS ET SIGLES BNDA Banque nationale de développement agricole CCCE Caisse centrale de coopération économique CIDR Centre international de développement et de recherche FCFA Monnaie de l'Union monétaire ouest-africaine FDV Fonds de développement villageois FED Fonds européen de développement IER Institut d'économie rurale KfW Kreditanstaltfùr Wiederaufbau (Coopération allemande) MDRE Ministère du Développement rural et de l'Eau ODR Opération de développement rural ON Office du Niger ONG Organisation non gouvernementale ORM Opération Riz Mopti ORS Opération Riz Ségou PNVA Programme national de vulgarisation agricole RFE Rapport de fin d'exécution S&E Suivi et évaluation SAP Stratégie d'assistance au pays SDID Société de développement international Desjardins TRE Taux de rentabilité économique USAID United States Agency for International Development (Agence des États-Unis pour le développement international)\. EXERCICE BUDGÉTAIRE DU GOUVERNEMENT l'janvier - 31 décembre Vice-président Jean-Louis Sarbib, AFRVP Directeur des opérations Hasan Tuluy, AFC 15 Directeur sectoriel Jean-Paul Chausse/Isabelle Girardot-Berg, AFTR3 Chef de l'équipe du projet Eustacius Betubiza, AFTR3 RAPPORT DE FIN D'EXÉCUTION RÉPUBLIQUE DU MALI PROJET DE CONSOLIDATION DE L'OFFICE DU NIGER (CRÉDITS 1906-MLI ET A0350) Table des matières Préface R ésum é de l évaluation \. \. PARTIE 1: BILAN DE L'EXÉCUTION DU PROJET\. \. 1\. A \. E noncé et évaluation des objectifs\. A\.1 Enoncé des objectifs\.1 A\.2 Évaluation des objectifs\.2 B \. R éalisation des objectifs\._\. \. \. 2 B\.1 Niveau de réalisation des objectifs\. 2 B 1\.1\. Réformes sectorielles\. \.2\. B \.l\.2\. R éform es institutionnelles\.4\. 4 B\.1\.3\. Programme d'investissement\. \.7 B\.2\. Coûts, financement et évaluation économique du projet\.10 C\. Bilan de l'exécution et principaux facteurs ayant affecté le projet\.l\.1 C\. \. Facteurs ne dépendant pas du gouvernement\.1 C\.2\. Facteurs dépendant du gouvernement\. \. 1\.1 C\.3\. Facteurs dépendant de l'organisme d'exécution\. 1 D \. P érennité du p rojet\. \. 12 E\. Performance de la Banque\.-\.-\.12 F\. Performance de l'Empmnteur\. \.13 G \. Evaluation des résultats\. \. \. \. 13 H \. P ersp ectiv es \. \. \. \._\.13 1\. Enseignem ents\. \. \. 14 PARTIE Il: TABLEAUX STATISTIQUES\. \. \. \. 16 Tableau 1: Résum é des évaluations \. \. 16 Tableau 2: Crédits connexes de l'IDA \. \.1\. 18 Tableau 3: Calendrier du projet\. \. \. \. 19 Tableau 4: Décaissements du crédit: estimations et réalisations\.19 Tableau 5: Indicateurs clés de l'exécution du projet\.20 5A\. Libéralisation des prix et du commerce du paddy et du riz\.20 5B\. Différents types de droits d'occupation à l'ON\. 21 5C\. Évolution du nombre de femmes chefs d'exploitation à l'ON\.21 5D\. Nombre de caisses d'épargne et de crédit à l'ON \.21 5E\. Évolution des prêts de la BNDA aux exploitants de l'ON\. 21 5F\. Évolution des prêts du FDV aux exploitants de l'ON\. \.22 5G \. Perform ance financière de l'O N \. \. \.22 5H\. Montant et taux de recouvrement de la redevance d'eau\.23 51\. Financem ent du volet social de l'ON\. \. \. \. \. \. \.24 iv 5J\. Formations en services agricoles financées par l'IDA\.24 5K\. Formations en gestion financière et passation de marchés financées par l'IDA\.25 5L\. Dotation budgétaire de l'État à l'ON, 1990-199\.26 5M\. Propositions émanant de l'étude sur la taxation\. \.26 5N \. Production prévisionnelle et réelle\. \. \. \.2\.26 50\. Évolution du revenu net moyen par mén- : agricole\. 27 Tableau 6: Indicateurs clés de l'exploitation du projet\.27 Tableau 7: Etudes incluses dans le projet\.-\. 28 Tableau 8: Coûts et financement du projet\. \.29 8A\. Coûts du projet - IDA\. 29 8B\. Financement du projet\. \.29 Tableau 9: Coûts et avantages économiques\. \. \. -29 Tableau 10: A pplication des clauses de l'A ccord\. 30 Tableau 11: Respect des clauses du manuel d'exécution\.-\. 37 Tableau 12: Ressources de la Banque: Personnel\.37 Tableau 13: Ressources de la Banque: M issions\. 38 A N N E X E S \. \. \. \. \. \.3 9 Annexe 1 : Aide-mémoire de la mission\.39 Carte: BIRD n° 20622 RAPPORT DE FIN D'EXÉCUTION RÉPUBLIQUE DU MALI PROJET DE CONSOLIDATION DE L'OFFICE DU NIGER (CRÉDITS 1906-MLI ET A0350) Préface Ci-après est présenté le rapport de fin d'exécution (RFE) du Projet de consolidation de l'Office du Niger, qui a bénéficié d'un crédit de l'IDA(Cr\. 1906-MLI) d'un montant de 31,0millions de DTS (équivalant à 39,8 millions de dollars) et d'un crédit du Fonds d'aide à l'Afrique (Cr\. A0350) d'un montant de 7,1 millions de DTS (équivalant à 9,Omillions de dollars), tous deux approuvés le 17mai 1988\. Le crédit A0350 a été clos le 30juin 1992 comme prévu\. Le dernier décaissement a été effectué le 19 août 1993, date à laquelle un reliquat de 32420,03 DTS a été annulé\. On n'a pas établi de rapport de fin d'exécution séparé pour ce crédit, les activités du projet étant financées conjointement par les deux crédits\. La clôture du crédit 1906-MLI a eu lieu le 30novembre 1998, alors que la date initialement prévue était le 30 juin 1997\. Le crédit a été entièrement décaissé et le dernier décaissement a été effectué le L5vril 1999\. Ce rapport de fin d'exécution a été élaboré par une équipe dirigée par Eustacius Betubizh AFTR3, Région Afrique\., et revu par Jean-Paul Chausse, Directeur sectoriel, AFTR3, et Hasan Tuluy, Directeur des opérations, AFC15\. La préparation de ce rapport a commencé lors d'une mission organisée en mars1999\. Il repose également sur les informations contenues dans le dossier du projet\. L'Emprunteur a contribué à son élaboration en formulant des commentaires sur la version provisoire du rapport\. L'équipe était composée de MM\. Eustacius Betubiza, Agadiou Dama, François Gadelle, Abdoulaye Coulibaly et Youssouf Thiam, et de Mmes Alexandra Goffin et Lucie Tran\.  RAPPORT DE FIN D'EXÉCUTION RÉPUBLIQUE DU MALI PROJET DE CONSOLIDATION DE L'OFFICE DU NIGER (CRÉDITS 1906-MI ET A0350) Résumé de l'évaluation Introduction 1\. Dans un contexte marqué par la dégradation des infrastructures d'irrigation, la chute des rendements rizicoles à un niveau extrêmement bas de 1,6tonne/ha, le découragement des producteurs, le poids de plus en plus lourd des subventions et la nécessité d'améliorer la sécurité alimentaire et d'accroître l'autosuffisance alimentaire du pays à la suite de la sécheresse catastrophique de 1972-1974, l'État malien s'est engagé en 1982, avec l'aide de ses partenaires, dans un processus de réforme de l'Office du Niger (ON)\. Le présent projet, approuvé en juillet1988, avait pour but d'appuyer cet effort de réforme\. Objectifs du projet 2\. Le processus de réforme a consisté à: i) fournir aux paysans les incitations nécessaires pour augmenter la production agricole, en libéralisant les prix et le commerce du riz et en sécurisant les droits fonciers ; ii) donner à l'ON les moyens de gérer plus efficacement les infrastructures d'irrigation, grâce aux mesures suivantes: a) désengagement de l'ON de ses activités commerciales, sa mission se limitant désormais à la gestion de l'eau et des infrastructures et à la prestation de services agricoles, betablissement d'un partenariat plus solide entre l'ON, le gouvernement malien et les producteurs grâce à la négociation et à la signature de contrats-plans périodiques, c)renforcement des compétences des agents de l'ON et des producteurs par des actions de formation, d)amélioration de la gestion financière de l'ON; et iii) établir des mécanismes pour assurer un développement durable de l'irrigation, en réhabilitant des infrastructures essentielles et en associant les producteurs à la fixation de la redevance d'eau et à la gestion du programme d'entretien\. 3\. Évaluation des objectifs\. Dans l'ensemble, les objectifs du projet étaient réalistes, pertinents pour le secteur agricole et en harmonie avec la stratégie d'assistance au pays (SAP) de la Banque\. 1E était indispensable de libéraliser les prix et le commerce du riz pour stimuler la production, et de réorienter l'ON, alors organe à tout faire du gouvernement, vers des responsabilités clés\. Il importait également d'accompagner ces réformes par des investissements dans les infrastructures physiques et les services agricoles afin de maximiser la réaction attendue de l'offre\. Bilan de l'exécution et résultats 4\. Réalisation des objectifs du projet et pérennité\. La performance du projet a été globalement satisfaisante, dans la mesure où la plupart de ses objectifs ont été atteints\. Le commerce et les prix du riz ont été libéralisés, la restructuration de l'ON a étémenée à bien, sa mission redéfinie et sa situation financière redressée, tandis que le programme d'investissement a été mis en œuvre avec succès, la production rizicole dépassant de 37 % les prévisions\. Le désengagement de l'ON des opérations de battage et de décorticage du riz a permis d'économiser 800millions de francs CFA en subventions annuelles de l'État, tout en réduisant les prix que les producteurs ont à payer pour ces opérations d'usinage\. Au niveau actuel de la production ii rizicole, les économies ainsi réalisées par les producteurs et les consommateurs se chiffrent à 3,6nilliards de francs CFA (6 millions de dollars) par an\. Les rendements rizicoles moyens sont passés de 1,8tonne/ha à 5,5 tonnes/ha, soit une augmentation de 300% (et ils ont atteint jusqu'à 7,0tonnes/ha dans certains des périmètres réhabilités), la production rizicole totale a progressé de 98000 tonnes en 1987-1988 à 271 000 tonnes en 1997-1998, tandis que le taux de recouvrement de la redevance d'eau, destinée à assurer l'exploitation et l'entretien du réseau d'irrigation secondaire, est passé de 6(/0 à 97 % ('Etat finançant l'entretien du réseau primaire)\. Les cultures maraîchères, pratiquement inexistantes au moment de l'évaluation du projet, occupent aujourd'hui une place respectable dans le secteur agricole (la production de 1998 s'élevant à 71000 tonnes d'oignons, 2 700tonnes de tomates, 2800 tonnes de pommes de terre, 800 tonnes de maïs, 800 tonnes d'ail et 600 tonnes de poivrons)\. Les producteurs ont été responsabilisés et participent désormais à tous les processus de prise de décisions de l'ON (attribution des terres, programmation et gestion de l'entretien des infrastructures, représentation au sein du comité de suivi des contrats-plans signés entre l'ON, le gouvernement et les producteurs, et représentation au sein du conseil d'administration de l'ON)\. Entre 1988 et 1998, le revenu annuel net par ménage agricole a augmenté en moyenne de 480 000 francs CFA en termes réels, ce qui représente un accroissement de 36800 francs CFA du revenu réel par habitant pour une population de 182000 personnes\. Parmi les autres avantages non quantifiés dans le rapport de fin d'exécution du projet figure la création de nouveaux emplois- qu'une source chiffre à plus de 50000 - dans la transformation et la commercialisation du riz et des produits maraîchers, la distribution des intrants, les transports, le travail agricole et l'entretien du matériel et des infrastructures d'irrigation\. Cependant, bien que le projet ait permis une amélioration remarquable du taux de recouvrement de la redevance d'eau qui sert à financer l'exploitation et l'entretien des infrastructures d'irrigation, aucune mesure n'a été prise pour assurer le recouvrement des coûts d'investissement (alors que l'objectif était de 20 %) et une attention insuffisante a été prêtée à l'appui aux associations villageoises\. 5\. La pérennité du projet estprobable en raison des facteurs suivants: i) l'Emprunteur est résolu à mener à bien les réformes de la filière rizicole entreprises dans le cadre du projet et à renforcer l'efficacité de la gestion de l'ON; ii) la libéralisation totale du marché crée un environnement macroéconomique favorable ; iii) certaines des réformes mises en œuvre ont un caractère irréversible (désengagement de l'ON des activités commerciales, que le secteur privé assume désormais de manière plus efficace et au profit de toutes les parties concernées - gouvernement, producteurs et consommateurs); iv) l'augmentation de la productivité agricole permet de fixer le montant de la redevance d'eau à un niveau suffisant pour assurer l'entretien des infrastructures; v) la participation des producteurs à la fixation du montant de la redevance d'eau et à l'entretien des infrastructures a entraîné des taux record de recouvrement de la redevancç vi) le recours croissant à des entreprises privées pour assurer l'entretien des canaux se traduit par l'émergence d'une expertise locale et d'une concurrence qui devraient faire baisser les coûts d'entretier et vii) des projets relais (Projet d'appui au secteur rural, couvrant les services agricoles et le soutien aux organisations paysannes, et Projet national d'infrastructures rurales, couvrant l'irrigation, les routes rurales et l'alimentation en eau, dont l'entrée en vigueur est prévue pour l'exercice2000) permettront de consolider ces acquis\. 6\. Coûts etfinancement du projet\. Outre les crédits IDA/FAA, les activités du projet ont été financées par les gouvernements allemand, français, néerlandais, américain et malien, ainsi que par les bénéficiaires\. Le coût du projet s'est élevé à un total de 296,3millions de dollars (dont 48,8 millions de dollars pour l'IDA), contre une estimation de 83,6millions de dollars à l'évaluation\. Encouragés par: a) les réformes économiques radicales entreprises par le gouvernement malien pour améliorer la compétitivité de la production nationale de riz, b)l'engagement du gouvernement d'aller jusqu'au bout des réformes institutionnelles nécessaires à l'ON, c)la réponse rapide de l'offre grâce aux rendements élevés obtenus par les producteurs, d) l'excellente coordination de l'action des bailleurs de fonds, qui a permis de maximiser les synergies et les complémentarités, et e)la capacité de l'ON à gérer un vaste programme d'investissement après sa restructuration, la plupart des bailleurs de fonds ont accru leur contribution en finançant la réhabilitation par tranches successives d'un plus grand nombre de périmètres que ce qui était planifié à iii l'origine, ce qui explique que, sur la totalité de la période d'exécution, les coûts effectifs du projet ont été 3,5 fois plus élevés que prévu\. Des détails sur les coûts et le financement du projet sont présentés aux tableaux 8A et 8B\. Afin d'établir une comparaison, on a calculé le taux de rentabilité économique (TRE) du projet sur la base du programme d'activités plus modeste qui était initialement prévu\. 7\. Principaux facteurs ayant affecté le projet\. Outre la libéralisation des prix et du marché par le gouvernement, la dévaluation du franc CFA de janvier1994 a grandement contribué à améliorer la compétitivité du riz malien sur le marché intérieur\. Tandis que la hausse des coûts de production consécutive à cette dévaluation s'est limitée à 25%, les prix du paddy ont augmenté de plus de 50%, d'où un accroissement net des revenus agricoles réels\. La préparation tardive des dossiers d'appel d'offres pour la réhabilitation du barrage de Markala a retardé d'un an l'achèvement du projet\. 8\. Performance de la Banque et de l'Emprunteur\. Dans l'ensemble, laperfonnance de la Banque a été très satisfaisante au stade de la préparation et de l'évaluation: les activités du projet constituaient un ensemble équilibré de réformes sectorielles et institutionnelles, d'investissements en infrastructures physiques et services agricoles, et d'assistance technique ; la coordination entre les bailleurs de fonds a été excellente dès le départ, ce qui a aidé à établir et à maintenir un partenariat solide avec le gouvernement pour mener à bien des réformes institutionnelles particulièrement délicates (désengagement massif de l'État et compressions de personnel)\. Les moyens à employer pour atteindre les objectifs du projet étaient clairement énoncés dans le rapport d'évaluation, de même que les résultats attendus\. Les risques éventuels étaient précisément identifiés et des mesures ont été prises afin de les minimiser\. Si l'hypothèse d'un redressement financier rapide de l'ON était trop optimiste, la situation financière de l'Office a fmi par s'améliorer au bout d'un certain temps\. La performance de la Banque pendant la supervision a été globalement satisfaisante, tant en ce qui concerne l'appui apporté au gouvernement malien pour exécuter les réformes sectorielles et institutionnelles, que le suivi du programme d'investissement\. Cependant, il aurait fallu se soucier davantage d'apporter un soutien aux associations villageoises, qui ont un rôle important à jouer dans des domaines tels que l'achat des intrants agricoles, la gestion du crédit et la commercialisation des produits\. La perfonnance de l'Emprunteur pendant la préparation et l'exécution du projet a été satisfaisante, car il a fait preuve de beaucoup de détermination pour préparer et mettre en œuvre des réfonnes socialement difficiles,telles que le licenciement de 70% des agents de l'ON, et il a exécuté de manière satisfaisante les contrats-plans, en versant notamment régulièrement les fonds de contrepartie pour le programme d'investissement\. Toutefois, l'Emprunteur aurait pu faire davantage d'efforts pour assurer le recouvrement d'une partie des coûts d'investissement, qui était prévu dans le cadre du projet (en plus de la redevance d'eau destinée à financer l'entretien du réseau d'irrigation secondaire)\. La performance de l'ON, en tant que principal organisme d'exécution, a été généralement satisfaisante, en dépit de retards mineurs dans la préparation des dossiers d'appel d'offres pour le programme d'investissement, d'une attention sous- optimale pour certaines composantes (appui aux associations villageoises) et de retards fréquents dans la soumission des rapports d'audit à la Banque, s'expliquant en grande partie par les perturbations dues au processus de réforme institutionnelle\. 9\. Évaluation des résultats\. Le projet a donné des résultats globalementsatisfaisants, car il a atteint la plupart de ses objectifs en matière de réformes institutionnelles et d'accroissement de la production agricole\. L'instauration d'un environnement macroéconomique favorable, ainsi que la dévaluation du franc CFA en 1994, l'amélioration de la gestion de l'ON, l'augmentation de la productivité agricole grâce à la réhabilitation d'une partie des périmètres irrigués et l'amélioration des services agricoles, ont exercé un impact significatif sur le revenu annuel net des ménages agricoles et la sécurité alimentaire au plan national\. Lors de l'évaluation, le TRE avait été estimé à 16%\. Après achèvement du projet, une nouvelleestimation le situe à 30 %\. Ce chiffre devrait même être plus élevé si l'on tient compte des autres productions agricoles de la zone, et notamment des cultures maraîchères\. iv Perspectives et enseignements 10\. Perspectives\. L'ON, restructurée et renforcée, opère aujourd'hui en étroite collaboration avec les producteurs grâce à l'existence de comités de gestion conjoints, dont les attributions vont de l'entretien des réseaux d'irrigation au suivi de l'exécution des contrats-plans, et grâce à la représentation des agriculteurs au sein du conseil d'administration de l'ON\. Ce partage des responsabilités, s'ajoutant à l'efficacité des mécanismes de recouvrement de la redevance d'eau qui permet de financer l'entretien des infrastructures, devrait garantir la bonne exploitation future des investissements du projet\. Cependant, il faudra s'attacher à l'avenir à: i) accroître le taux de recouvrement des coûts afin d'assurer l'entretien de l'ensemble des infrastructures, y compris le réseau primaire (dont l'entretien est actuellement financé par l'État), et récupérer tout ou partie des coûts d'investissements, compte tenu de la rentabilité accrue des périmètres de l'ON ; ii) créer des mécanismes permettant l'octroi de financements à long terme aux agents économiques privés désireux d'investir dans la zone de l'ON ; iii)continuer d'investir dans l'aménagement de routes rurales afin de faciliter l'achat et la distribution des intrants, ainsi que l'évacuation de la production ; et iv) renforcer les organisations paysannesen les aidant à mieux maîtriser les stratégies d'achat des intrants et de commercialisation des produits agricoles\. Il\. Enseignements\. Aspects sectoriels: i)pour exercer un maximum d'impact, les réformes et investissements sectoriels doivent s'inscrire dans un cadre macroéconomique favorable, ce qui suppose que le taux de change de la monnaie nationale soit à son juste niveau et que l'inflation demeure faiblq ii) en outre, les réformes sectorielles ne peuvent avoir véritablement un impact que si elles s'accompagnent d'investissements sectoriels complémentaires\. Aspects institutionnels: i) les réformes institutionnelles difficiles, et en particulier celles qui dépassent la sphère d'action d'un seul ministère, doivent être pilotées par une entité indépendante des ministères et organismes publics concernés; ii) la responsabilisation des producteurs et la transparence sont indispensables pour améliorer le taux de recouvrement de la redevance d'eau et pérenniser les investissements réalisés dans l'irrigation; iii) une plus grande transparence de l'administration foncière permet de sécuriser les droits fonciers des producteurs, même si ceux-ci ne reçoivent pas de titres de propriété officiels; en l'absence de crédit à long terme et de technologies appropriées, la sécurité foncière est une condition nécessaire, mais pas suffisante, pour favoriser les investissements du secteur privé dans l'agriculture irriguée; iv) La fixation du montant de la redevance d'eau doit se faire par un mécanisme de négociation indépendant et transparent, sur la base d'une identification précise des besoins\.Exécution : un effort concerté des bailleurs de fonds, permettant de mettre à profit les synergies et les complémentarités, est essentiel pour maximiser l'impact des investissements sectoriels\. Aspects techniques: i) La conception des canaux doit être adaptée au système d'entretien; ii) si l'on veut faire appel aux producteurs pour creuser les canaux tertiaires, il importe de confier l'organisation et le suivi des travaux à une société d'ingénierie qui puisse en garantir la qualité\. RAPPORT DE FIN D'EXÉCUTION RÉPUBLIQUE DU MALI PROJET DE CONSOLIDATION DE L'OFFICE DU NIGER (CRÉDITS 1906-MLI ET A0350) PARTIE 1: BILAN DE L'EXÉCUTION DU PROJET Introduction 1\. Dans le but de parvenir à l'autosuffisance alimentaire après la sécheresse catastrophique de 1972- 1974, les pouvoirs publics ont considérablement investi dans le secteur de l'irrigation, principalement dans de petits périmètres rizicoles à maîtrise partielle de l'eau dont le coût était modeste\. Les opérations de développement rural (ODR), et plus particulièrement les trois grands organismes d'irrigation- l'Office du Niger (ON), l'Opération Riz Mopti (ORM) et l'Opération Riz Ségou (ORS)-, se sont vu confier de vastes responsabilités, et notamment l'exécution des politiques du gouvernement malien en matière de distribution d'intrants subventionnés et d'équipements, de contrôle des prix à la production et de commercialisation des produits de base\. Toutefois, ces politiques n'ont eu qu'une efficacité limitée, la productivité de ces périmètres irrigués demeurant à un bas niveau, et elles n'ont donc guère contribué à l'autosuffisance alimentaire\. Faute de fonds suffisants pour les dépenses récurrentes, les infrastructures ont été mal entretenues, tandis que les services d'irrigation, pléthoriques et inefficaces, faisaient peser une charge de plus en plus lourde sur le budget de l'État\. En 1981, le gouvernement a engagé des réformes en vue de réduire la dimension du secteur public, d'accroître son efficacité et de libéraliser le commerce et les prix\. Dans le cadre d'un projet d'assistance technique financé par l'IDA (1984-1985), une étude a été effectuée sur l'ensemble des ODR\. Les résultats de cette étude ont conduit à la préparation et à l'évaluation du présent projet (approuvé en juillet 1988)\. A\. Énoncé et évaluation des objectifs A\.1 Énoncé des objectifs 2\. Le projet avait pour objectif global de réduire la pauvreté (en particulier dans la zone d'intervention de l'ON), d'accroître le taux d'autosuffisance alimentaire du Mali et de réduire la charge pesant sur le budget de l'État, en mettant en place des mesures pour i) fournir aux paysans des incitations de nature à susciter une augmentation de la production agricole ; ii)donner à l'ON les moyens de gérer plus efficacement les infrastructures d'irrigation; et iii) établir des mécanismes permettant d'assurer un développement durable de l'irrigation\. Afin de réaliser cet objectif, le projet a appuyé un ensemble de réformes sectorielles et institutionnelles et d'investissements dans les infrastructures d'irrigation et les services agricoles qui sont décrits ci-dessous\. 3\. Les réformes sectorielles suivantes ont été mises en euvre en vue de créer un environnement favorable à l'accroissement de la productivité agricole et d'assurer la viabilité des réformes institutionnelles et du programme d'investissement: i) libéralisation des prix et du commerce du riz; et ii) sécurisation des droits fonciers des agriculteurs installés dans la zone de l'ON\. Lesréformes institutionnelles, destinées à optimiser l'exploitation des précieuses ressources confiées à l'ON et à améliorer l'entretien et la productivité des infrastructures physiques existantes, comprenaient: i) le désengagemnent progressif de l'ON de ses activités commerciales; ii) la simplification des relations entre l'ON et l'Etat par le biais de contrats-plans 2 iii) la réorganisation de l'ON, s'accompagnant d'un renforcement de ses moyens matériels et de ses ressources humaines; et iv) la restructuration des fmances de l'ON en vue de mettre fin à son déficit chronique\. Les investissements physiques suivants ont été réalisés: i) réhabilitation et modernisation d'une partie du réseau d'irrigation et des périmètres irrigués; et ii) mise en place d'une opération pilote afin de tester la capacité des producteurs à participer à la réhabilitation et au développement des aménagements\. Le projet devait également contribuer à améliorer la prestation desservices agricoles, en appuyant la recherche appliquée, l'amélioration de la gestion des ressources, la formation et la vulgarisation agricoles, ainsi que la promotion des associations villageoises\. Ces investissements étaient conçus comme la première phase d'un programme de réhabilitation et de développement à long terme des opérations de l'ON\. On estimait que, grâce à ces mesures, la production supplémentaire de paddy attribuable directement au projet serait de 40 000 tonnes et qu'elle se chiffrerait à 100000 tonnes pour l'ensemble du programme d'investissement des divers bailleurs de fonds en faveur de l'ON\. On s'attendait également à ce que les opérations de l'ON deviennent rentables au bout de quatre ans\. A\.2 Évaluation des objectifs 4\. Dans l'ensemble, les objectifs du projet étaient réalistes, pertinents pour le secteur agricole et en harmonie avec la stratégie d'assistance au pays (SAP) de la Banque\. Il était indispensable de libéraliser les prix et le commerce du riz afin de stimuler la production\. Il était tout aussi indispensable de réorienter l'ON, qui était alors l'organe à tout faire du gouvernement, vers des responsabilités clés, notamment l'entretien des infrastructures d'irrigation\. Il importait également d'accompagner ces réformes par des investissements dans les infrastructures physiques et les services agricoles afin de maximiser la réaction attendue de l'offre\. Les moyens à employer pour atteindre ces objectifs étaient clairement définis dans le rapport d'évaluation, et il en était de même des résultats escomptés du projet\. Les deux grands risques identifiés lors de l'évaluation, à savoir l'échec éventuel de la restructuration de l'ON et la possibilité que le gouvernement malien ne parvienne pas à honorer ses obligations financières dans le cadre des contrats-plans établis avec l'ON, ne se sont pas matérialisés\. B\. Réalisation des objectifs B\.1 Niveau de réalisation des objectifs 5\. La performance du projet a été globalement satisfaisante, dans la mesure où la plupart de ses objectifs ont été atteints\. Le commerce et les prix du riz ont été libéralisés, la restructuration de FON a été menée à bien et sa situation fmancière s'est redressée, tandis que le programme d'investissement a été mis en œuvre avec succès, la production rizicole dépassant de 37 % les prévisions\. Les résultats de chaque composante sont évalués ci-dessous\. B\.1\.1 Réformes sectorielles Libéralisation des prix et du commerce du riz 6\. Par plusieurs décrets successifs (1987, 1988, 1989 et 1997), le gouvernement malien a mis en euvre un programme de réforme des marchés céréaliers en levant tous les contrôles sur les prix et le commerce du riz, et en ramenant progressivement la taxe à l'importation de 49% à 11 % (voir tableau 5A en annexe)\. En 1992, le gouvernement a adopté un schéma directeur du développement rural qui a consacré sa volonté de se désengager de toutes les activités de commercialisation, ouvrant la voie à la restructuration de l'ON qui a été engagée en mars 1994 (voir plus bas)\. La dévaluation du franc CFA, en janvierl994, a contribué à accroître la compétitivité du riz malien sur le marché local\. En une seule année (de 1993-1994 à 1994-1995), les prix du riz ont augmenté de 70%, alors que l'inflation se limitait à 33,2%\. 3 Régime foncier 7\. Le statut légal des agriculteurs qui se sont installés dans la zone de l'ON n'avait jamais été clairement défini depuis la création de L'ON en 193Î\. Cependant, les décrets fonciers de mars1989 et juillet 1996 ont instauré un système de permis d'exploitation agricole donnant des droits d'occupation héréditaires (on trouvera des détails sur les divers types de droits d'occupation au tablea6B en annexe)\. Dans le même temps, les femmes se sont vu conférer les mêmes droits que les hommes en matière d'attribution de terres et d'octroi de permis d'exploitation, ce qui a entraîné une augmentation du nombre de femmes chefs d'exploitation, qui est passé de 20 à plus de 200 (le tableau5C en annexe indique l'évolution de leur nombre dans la zone de 'ON)\. Toutefois, la terre ne peut être vendue légalement ou servir de garantie pour un crédit, car elle demeure propriété de l'Etat\. Alors que plus de 12900 exploitants établis sur les périmètres de l'ON remplissent les conditions requises, seuls 840d'entre eux ont à ce jour obtenu un permis d'exploitation\. Il semble que l'octroi de ce pennis ne sécurise pas véritablement le titulaire, car celui- ci peut être expulsé tout aussi facilement qu'un agriculteur sans permis s'il ne respecte pas les termes et conditions d'installation, c'est-à-dire principalement s'il ne s'acquitte pas de la redevance d'eau, ce qui constitue un moyen efficace pour assurer le recouvrement de celle-ci\. En revanche, la participation des producteurs aux décisions d'attribution des terres et la transparence présidant aux procédures d'expulsion ont contribué à accroître la sécurité foncière, même pour ceux d'entre eux qui ne sont pas titulaires d'un permis, car les règles du jeu sont connues de tous\. En conséquence, les réformes foncières, ainsi que le surcroît de transparence et la participation des agriculteurs à l'attribution des terres, se traduisent par une certaine amélioration de la sécurité foncière\. Un débat est en cours sur les moyens de la renforcer encore davantage, l'une des solutions envisagées (mais pas nécessairement la seule) consistant à attribuer aux agriculteurs des titres de propriété en bonne et due forme\. Aucune décision n'a encore été prise à ce sujet et le gouvernement malien a engagé une étude pour examiner les différentes options et leurs implications\. 8\. Les décrets ont instauré deux autres types de bail destinés aux investisseurs privés qui s'établissent sur des terres non aménagées: le «bail ordinaire » (30 ans) et le «bail emphytéotique » (50 ans), tous deux renouvelables indéfiniment\. Pour l'instant, on n'a encore attribué que huit baux ordinaires et deux baux emphytéotiques, couvrant un total de 1120 ha\. Et sur les 10 terrains en question, seuls deux ont commencé à faire l'objet de travaux d'aménagement, d'ailleurs très limités\. En l'absence de financement à long terme (le coût d'aménagement d'un hectare se situant entre 2 et 3millions de francs CFA) et d'une maîtrise suffisante des technologies les plus appropriées pour les grands périmètres irrigués mécanisés, il est peu probable que de grandes superficies soient aménagées avec ces deux types de bail\. En conclusion, il apparaît que la sécurité foncière (en l'occurrence, l'attribution d'un bail à long terme) est une condition nécessaire, mais pas suffisante, pour attirer des investissements du secteur privé à l'ON\. D'autres contraintes, notamment l'accès au crédit à long terme et à des technologies appropriées, semblent tout aussi (sinon plus) limitantes\. 2 Un décret de 1935 stipulait que toutes les terres vacantes, y compris le delta central du Niger, appartenaient à l'Etat (français)\. En 1937, un décret conférait à l'ON la gestion des terres irrigables de la zone et stipulait que les exploitants pouvaient, après une période de 10 ans, obtenir un permis d'occupation\. Cependant, aucun permis n'a jamais été attribué\. A l'indépendance, on a établi un nouveau Code foncier affirmant la propriété del'État sur ces terres, dont la gestion demeurait confiée à l'ON\. 4 B\.1\.2 Réformes institutionnelles a) Programme de désengagement 9\. Usinage du riz\. Face à la forte concurrence des décortiqueuses mobiles du secteur privé (pratiquant des prix inférieurs de 56%), les rizeries industrielles de l'ON, dont les pertes annuelles se chiffraient à 800 millions de francs CFA, ont été privatisées en septembre1996, mais elles demeurent actuellement inactives, faute de disposer d'un budget de fonctionnement suffisant et d'être compétitives\. Au niveau actuel de la production de paddy, l'abandon des rizeries industrielles de l'ON en faveur des décortiqueuses privées se traduit, pour les producteurs et les consommateurs, par une économie nette de 2,3nilliards de francs CFA par an\. A cela s'ajoute le transfert des opérations de battage à de petites installations privées dont les prix sont inférieurs d'un tiers, soit un gain supplémentaire de 1,3milliard de francs CFA par an, ce qui porte le total des économies réalisées à 3,6milliards de francs CFA (équivalant à 6millions de dollars) par an\. 10\. Entretien des infrastructures et labour à façon\. L'Office du Niger assurait autrefois tout l'entretien des infrastructures d'irrigation en régie grâce à son unité de génie civil, le Centre des travaux (voir par\. 23)\. Depuis sa privatisation en 1996, ce centre, sous son nouveau nom de Société des travaux du Delta, est devenu rentable, à tel point qu'il a, en trois ans, versé à l'État un total de 32nillions de francs CFA (62 000 dollars) d'impôt sur les bénéfices\. De même, l'ON labourait les parcelles des exploitants à l'aide de ses tracteurs en échange d'une redevance, système qui était non seulement coûteux mais s'accompagnait de sérieux retards dans la préparation des terres, d'où de lourdes pertes pour les producteurs\. Aujourd'hui, grâce à des prêts financés par les crédits de l'IDA et de la Coopération néerlandaise et par d'autres sources, et avec leur propre épargne, les agriculteurs sont en mesure d'acheter du matériel -et des bœufs de trait, ce qui leur pennet de faire eux-mêmes leur labour, à moindre frais et plus rapidement\. Il\. Crédit agricole et distribution des intrants\. Face aux pertes persistantes de l'ON et du Fonds pour les intrants agricoles (sa filiale, rebaptisée ultérieurement Fonds de développement villageois, FDV), qui se chiffraient à 2milliards de francs CFA en 1990, le projet a facilité, par le biais d'études, le transfert-de la fonction de fourniture de crédit de l'ON à la BNDA\. De plus, celle-ci ne disposant pas à l'époque de suffisamment de fonds pour des prêts, une ligne de crédit d'un montant équivalent à 672,2millions de francs CFA a été mise à sa disposition afin de lui permettre d'accorder des crédits aux agriculteurs pour l'achat des intrants agricoles2\. Le taux de remboursement des prêts a été de 92% et le recouvrement des impayés est en cours\. Au 31 décembre 1998, la BNDA avait remboursé au gouvernement malien un montant de 369,7 millions de francs CFA, le solde devant s'échelonner sur les cinq années suivantes\. Outre la BNDA, un réseau de caisses d'épargne et de crédit offre actuellement des crédits dans la zone de l'ON, avec des taux de recouvrement variant de 93 % à près de 100%, ce qui montre qu'il s'agit là du mécanisme de prêt le plus approprié pour cette zone (voir tableaux5D, 5E et 5F en annexe)\. Actuellement, les agriculteurs qui honorent leurs dettes n'ont aucun problème réel à obtenir du crédit pour l'achat des intrants agricoles, bien qu'il leur soit encore pratiquement impossible d'avoir accès à des financements pour des investissements à long terme\. En revanche, les associations villageoises mal gérées ont des difficultés à obtenir du crédit institutionnel\. La composante crédit apleinement atteint ses objectifs, dans la mesure où elle a permis de transférer la responsabilité de l'administration du crédit de l'ON à d'autres agents économiques et d'apporter des ressources supplémentaires dans la zone de l'ON à un moment où le besoin s'en faisait particulièrement sentir\. Cependant, il demeure nécessaire d'aider à l'évolution de ce service si indispensable 3 Conditions du gouvemement pour la BNDA: taux d'intérêt de 3 %, différé d'amortissement de 5 ans, remboursement en 15 ans\. Conditions de la BNDA pour les agriculteurs : taux d'intérêt de 8 %, remboursement en 4 ans pour les prêts à moyen terme et en 18mois pour les prêts à court terme\. Après la première série de prêts aux agriculteurs, les montants remboursés sont inclus dans le pool général de fonds pour prêts de la BNDA et ne sont plus réservés aux exploitations de la zone de l'ON ni contrôlés séparément\. 5 à l'agriculture irriguée, notamment en apportant un appui aux associations villageoises qui assument aujourd'hui en grande partie cette fonction, ainsi qu'aux caisses locales d'épargne et de crédit (voir par30)\. 12\. Autres unités privatisées\. Le programme de désengagement incluait de petites unités, à savoir une ferme semencière, un atelier de fabrication de matériel agricole et plusieurs maisons d'accueil\. Toutes ces unités ont été privatisées ou opèrent sous contrat et leurs résultats sont très satisfaisants\. b) Simplification des relations entre le gouvernement malien et l'ON 13\. Dans le cadre du projet, les relations entre le gouvernement malien et l'ON devaient être régies par des contrats-plans; le premier contrat-plan, signé enjanvierl988 pour la période 1989-1991 (ultérieurement prolongée d'un an), contenait les plans de restructuration et de désengagement de l'ON, ainsi que les réfonnes devant être accomplies par le gouvernement\. Cependant, les mesures de réorganisation n'ont pas suffi à améliorer la performance financière de l'ON, dont ledéficit d'exploitation a continué de se creuseret s'est chiffré en moyenne à 1,4milliard de francs CFA pendant cette période (voir tableau 5G)\. En décembre 1992, le gouvernement a suspendu la préparation du deuxième contrat-plan et a créé une commission spéciale (la Délégation générale) rattachée au cabinet du Premier ministre, qui a été chargée d'achever les réformes dans un délai de trois ans,avant la signature de tout nouveau contrat-plan\. Quand le premier contrat-plan a été signé après la restructuration (pour la période 1996-1998), les producteurs ont été inclus parmi les signataires et au sein du comité de suivi\. Les dispositions de ce contrat-plan ont, dans l'ensemble, été respectées par tous les signataires et la situation financière de l'ON s'est considérablement améliorée après la restructuration de 1994\. Toutefois, le comité de suivi du contrat-plan s'est montré plutôt inefficace, dans la mesure où il ne s'est réuni qu'une fois au lieu de six\. Heureusement, cela n'a guère affecté l'exécution du contrat-plan, car les missions conjointes de supervision du projet régulièrement organisées (deux ou trois fois par an) par tous les bailleurs de fonds finançant des activités de l'Office du Niger se sont révélées être un instrument de suivi efficace\. Néanmoins, pour que le système de contrats-plans soit durable, le gouvernement malien devra remédier à cette faiblesse\. Le dernier en date des contrats-plans tripartites a été signé en décembre 1998 et couvre la période 1999-2001\. c) Réorganisation et renforcement de l'ON 14\. Réorganisation\. Bien que certaines réformes aient été engagées durant l'exécution du contrat-plan 1989-1991, les réformes majeures n'ont commencé qu'avec la déclaration de politique de développement de la filière rizicole de janvier1993, dans laquelle le gouvernement malien affirmait sa volonté de désengager l'ON de toutes les activités à caractère commercial et de créer un <nouvel » ON dont la mission principale se lImiterait à assurer la gestion de l'eau et des infrastructures d'irrigation, les services de vulgarisation, les études techniques et les travaux de réhabilitation\. L'organigramme adopté en mars1994 a mis en place une nouvelle structure, comportant des organes centraux de dimension fortement réduite et des zones semi- autonomes très décentralisées, assurant elles-mêmes la gestion de leur budget\. Les redevances d'eau perçues auprès des agriculteurs sont aujourd'hui entièrement gérées par les zones, qui doivent en consacrer au moins 50 % à l'entretien des canaux secondaires et n'en transfèrent que 10 à 12%o au siège pour alimenter le budget général\. En outre, les producteurs sont désormais représentés au sein des comités de gestion de la redevance d'eau (chargés d'identifier les travaux de réhabilitation à effectuer, d'attribuer les marchés, de réceptionner les travaux, etc\.), des comités d'attribution des terres et du conseil d'administration de l'ON\. Ils sont ainsi en mesure de vérifier l'utilisation faite de leur argent, ce qui a contribué au relèvement spectaculaire du taux de paiement de la redevance d'eau, qui atteint actuellement 97/o\. Ils participent également aux réunions de consultation entre les bailleurs de fonds, le gouvernement et l'ON\. Au total, plus de i 150 agents ont quitté l'ON, dont les effectifs se trouvent aujourd'hui réduits à 365agents; les indemnités de départ et les frais de formation de réinsertion ont été financés par d'autres bailleurs de fonds (voir tableau 5I)\. 6 15\. Renforcement des systèmes de gestion de l'ON\. Un système de comptabilité générale, budgétaire et analytique a été établi en 1988 avec l'aide de la Coopération française\. Dans le cadre de la restructuration de 1994, qui faisait de chaque zone une unité comptable autonome, l'IDA a financé la décentralisation du système comptable, ainsi que la formation des agents et l'élaboration d'un manuel de procédures (on trouvera des détails sur la fonnation au tableau5J en annexe)\. Malgré une amélioration sensible de son système comptable, 'ON a encore besoin d'aide pour renforcer ses capacités d'audit inerne et de comptabilité analytique, et pour remplacer un matériel informatique obsolète (la nécessité d'une aide extérieure dans ce dernier domaine s'expliquant en partie par le fait que l'ON n'a pas adopté au départ une politique d'amortissement appropriée)\. 16\. Renforcement de la gestion des ressources humaines de l'ON\. Les profils et les besoins en formation du personnel de l'ON ont été évalués avec l'aide financière de la Coopération française\. L'IDA a appuyé plusieurs programmes de formation en gestion financière, gestion de l'eau et methodes de vulgarisation (voir tableaux 5J et 5K en annexe)\. Bien que l'ON continue de financer chaque année des programmes de formation de courte durée qui couvrent, entre autres, la gestion de l'information et des données, la gestion de l'eau et les services de vulgarisation, il lui faut encore un soutien des bailleurs de fonds dans certains domaines comme le suivi environnemental, l'audit et les contrôles internes, et la comptabilité analytique\. L'ON devrait tenir compte de ses besoins en formation lors de la négociation du montant de la redevance d'eau avec les producteurs\. d) Restructuration financière de l'ON 17\. Clarification des responsabilités financières\. Autrefois, la totalité des infrastructures d'irrigation, des terres, des rizeries et des bâtiments appartenait à l'Etat, mais était gérée par l'ON, sans que les responsabilités financières de celui-ci soient clairement définies\. Dans le cadre des réformes institutionnelles de l'ON, la responsabilité de l'entretien du réseau primaire et de la prestation des services agricoles (vulgarisation et recherche) a été conférée au gouvernement, par le biais de paiements annuels versés à l'ON sur le budget de l'État\. Il revient à l'ON d'assurer l'entretien des canaux secondaires, grâce à la redevance d'eau versée par les producteurs, dont le montant est fixé de manière à couvrir les besoins dans ce domaine\. Quant aux canaux tertiaires, leur entretien incombe désormais aux producteurs\. Jusqu'à présent, le gouvernement a honoré toutes ses obligations financières (voir tableau5L)\. 18\. Amélioration du recouvrement des coûts\. Au moment de l'évaluation du projet, il avait été prévu d'établir une redevance de 28000 francs CFA (80 dollars) par hectare, soit l'équivalent de 400 kg de paddy ou 25 % du revenu agricole après paiement du crédit, pour tous les périmètres dans la première année suivant la réhabilitation\. Le montant de la redevance d'eau devait être ensuite augmenté proportionnellement à l'accroissement des rendements, estimé à 25% dans les trois premières années et à 70 % les trois années suivantes, de façon à atteindre 60000 francs CFA (175 dollars) par hectare au bout de six ans\. Cette redevance d'eau devait couvrir les coûts de fourniture d'eau de l'ON, y compris : i)a part des coûts d'exploitation du barrage de Markala attribuable aux périmètres réhabilités ii) l'entretien du réseau secondaire; et iii) une contribution de 20 % aux dépenses d'investissement réalisées pour la réhabilitation\. Ce niveau apparaissait justifié, compte tenu de l'énorme rentabilité potentielle des périmètres irrigués par rapport à l'agriculture pluviale\. Une autre part des dépenses d'investissement devait être recouvrée par le biais des taxes directes et indirectes imposées aux agriculteurs et autres acteurs bénéficiaires du surcroît d'activité économique suscité par le projet\. Les coûts récurrents d'entretien du barrage de Markala et du réseau primaire devaient être payés, dans un premier temps, sur le budget de l'État, et il était envisagé d'accroître le montant des coûts directs recouvrés auprès des producteurs une fois que l'étude sur la taxation serait achevée (voir par\.3 1)\. 7 19\. Cependant, la redevance d'eau sur les périmètres réhabilités est demeurée de 28)00 francs CFA/ha pendant six ans jusqu'en 1994-1995, date à laquelle elle a été portée à 32000 francs CFA/ha, puis progressivement à 43 000 francs CFA/ha (1997-1998), ce qui, en termes réels, représentait une diminution de 14 % sur une période de dix ans (voir tableau 5H)\. Cela s'est traduit par une réduction de 40(kg/ha à 374 kg/ha de la part de la production rizicole versée sous forme de redevance d'eau- soit, en pourcentage, un recul de 18 % à 6 % (c'est-à-dire qu'à la fin du projet, les producteurs ne payaient plus que &g de paddy pour 100 kg produits, contre 18kg dix ans auparavant)\. La marge brute d'autofinancement de l'ON a néanmoins été positive, en raison de la réduction des coûts d'exploitation liée à la compression de ses effectifs et au programme de privatisation\. Il convient de noter que, si l'intégration des producteurs dans le processus de décision à tous les niveaux de l'ON (voir par\. 14) représentait un progrès décisif, elle a aussi rendu beaucoup plus difficile la négociation des augmentations de la redevance de l'eau et, partant, le recouvrement des dépenses d'investissement\. D'autre part, si des taux indicatifs sont inscrits dans les contrats-plans, la redevance d'eau est négociée chaque année avec les producteurs (pour tenir compte de facteurs d'évolution antérieurs ou prévus) et son montant définitif est fixé par arrêté ministériel\. Pendant la campagne agricole 1997-1998, le gouvernement, cédant apparemment à des considérations d'ordre politique (on était en période d'élections), a refusé de majorer la redevance d'eau - contrairement aux clauses du contrat-plan (qui stipulaient que la redevance devait être portée de 43000 francs CFA/ha à 48 000 francs CFA/ha)\. Bien que cette situation ne se soit produite qu'une fois pendant la période d'exécution du projet, au grand mécontentement des partenaires financiers du gouvernement, le risque existe qu'elle se répète à l'avenir, ce qui remettrait en cause les efforts visant à améliorer le taux de recouvrement des coûts\. 20\. Restructuration de la dette\. La dette à long terme de l'ON vis-à-vis de la Caisse autonome d'amortissement a été renégociée et annulée dans le cadre d'une annulation croisée de dettes avec d'autres organismes publics\. 21\. Contrairement aux prévisions, l'ON n'a pas atteint le seuil de rentabilité au bout de trois ans (de 1986-1987 à 1988-1989) en raison de pertes persistantes sur ses activités commerciales et de la stagnation de la redevance de l'eau\. Ce n'est qu'en 1994-1995, c'est-à-dire après sa restructuration, que l'ON a réussi à équilibrer ses comptes d'exploitation\. B\.1\.3 Programme d'investissement 22\. Il est à noter que les investissements du projet financés par l'IDA et le FAA s'inscrivaient dans le cadre d'un programme d'investissement beaucoup plus large, bénéficiant de l'appui de plusieurs bailleurs de fonds (voir tableau 8B en annexe)\. a) Infrastructures d'irrigation 23\. Consolidation du programme d'entretien\. Étant donné qu'il n'existait aucune entreprise privée locale possédant l'expérience et le matériel spécial requis pour entretenir les structures d'irrigation et qu'il apparaissait difficile d'intéresser des entreprises étrangères à un prix raisonnable, le projet a opté pour la solution du moindre coût, en consolidant les unités d'entretien de l'ON, jusqu'alors mal équipées et dispersées\. L'unité de Niono a été renforcée et équipée (par la Coopération néerlandaise) pour assurer l'entretien des canaux primaires et secondaires dans toute la zone de l'ON\. L'unité de Markala a été fermée, tandis que les autres unités du Macina (financement FED), de Molodo et du Kouroumari (IDA) et de N'debougou (KfW) ont également été renforcées et chargées d'effectuer les petites réparations trop urgentes pour attendre la sélection d'un entrepreneur privé par appel d'offres\. Dans le cadre des réformes de 1994, l'unité de Niono, devenue le Centre des travaux, a été privatisée\. 8 24\. Réparations/réhabilitation\. Les sections les plus dégradées descanaux du Sahel et de Molodo ont été réparées comme prévu\. Les hausses dubarrage de Markala, qui avaient été réparées en aval en 1977 et 1982, ont été réparées en amont; les équipements électromécaniques, et notamment les générateurs, ont été révisés et/ou remplacés pour la première fois depuis 1948; on a réparé et rééquipé l'atelier d'entretien, mis à jour la documentation technique du matériel, établi un système d'exploitation et d'entretien, et donné au personnel la formation requise (cofinancée par la KfW) pour faire fonctionner ce système\. Afin d'assurer la sécurité des barrages, le gouvernement malien a signé des contrats avec des entreprises internationales qui sont chargées d'en effectuer l'inspection tous les deux ans\. Lescanaux Gruber-Nord (15,1 km) et de Siengo (13,9 km) et le drain principal de Siengo (28km) ont été réhabilités et modernisés, tandis que lecasier de Siengo (3 100 ha) a été réhabilité\. En outre, on a refait la route Niono-Ringandeh (14km) et aménagé des pistes le long des canaux réhabilités\. Dans l'ensemble, l'exécution de cette composante a étéentièrement satisfaisante\. 25\. Opération pilote de génie rural\. Dans les périmètres dont le projet ne prévoyait pas la réhabilitation, l'ON devait entreprendre des travaux de génie rural sur le réseau tertiaire/quaternaire et les diguettes périphériques, à un rythme de 500ha par an, de façon à réduire les coûts de réhabilitation ultérieurs\. Les producteurs devaient recevoir une formation et le matériel nécessaire pour assurer l'entretien des canaux et des drains\. Aucune activité de cette nature n'a été entreprise au titre du financement de l'IDA dans les périmètres existants, bien que la Coopération néerlandaise ait financé des travaux sur 1019 ha à Molodo\. A la place, l'IDA a financé une opération pilote sur 475ha de terres non aménagées à M'Bewani, qui visait à déterminer si les bénéficiaires étaient capables de creuser les canaux tertiaires et les drains correspondants, et de niveler le terrain manuellement, afin de réduire les coûts d'aménagement et de conférer davantage de responsabilités aux producteurs\. Les résultats ont montré qu'on pouvait ainsi diminuer les coûts d'aménagement d'environ 20%\. L'Office du Niger a adopté cette approche pour tous les nouveaux périmètres irrigués\. b) Services agricoles 26\. Recherche appliquée\. Dans le cadre du projet, l'IER devait effectuer sous contrat des essais de recherche appliquée sur plusieurs thèmes: variétés de riz précoces à paille courte, méthodes de fertilisation, pratiques culturales, mécanisation, diversification des cultures,techniques d'irrigation, régénération et développement des ressources pastorales\. Un protocole de collaboration (constituant l'une des conditions posées pour le décaissement) a été signé et un programme de recherche établi en 1990, mais aucune activité de recherche n'a été effectuée au titre du financement de l'IDA\. En revanche, des recherches financées par la Coopération néerlandaise et la Coopération française ont permis de mettre au point un certain nombre de technologies appropriées dont la large adoption a contribué à l'accroissement rapide des rendements rizicoles dans la zone de l'Office du Niger (techniques de repiquage du riz, nouvelle variété BG-90-2 à haut rendement, optimisation des dates de semis et de repiquage, optimisation des doses d'engrais organiques et chimiques, diversification principalement en direction des cultures maraîchères)\. Les recherches sur la régénération des ressources pastorales, prévues lors de l'évaluation, n'ont pas eu lieu\. Il demeure nécessaire de mener des recherches dans ce domaine ainsi que dans d'autres- variétés de riz résistantes aux virus, cultures d'arbres et espèces fourragères locaux, valorisation des résidus de culture (comme engrais organiques et aliments pour les animaux), mécanisation de l'agriculture (matériel moyen et, dans une moindre mesure, gros matériel), qualité de la nappe phréatique (salinité, pollution par les engrais) et utilisation de ses eaux, drainage et santé publique\. 27\. Amélioration de la gestion des ressources\. Afin d'améliorer lagestion des terroirs, les plans d'occupation des sols ont été actualisés à l'aide de photos aériennes\. Cependant, cette mise à jour n'a été effectuée que pour 36 300ha sur un total de 60 000 ha exploités dans la zone de l'ON\. Étant donné l'utilité de ces plans, il faudrait couvrir le reste de la zone au cours des opérations futures\. Un système deestion de 9 l'eau utilisant le logiciel EXCEL a été mis en place grâce à l'assistance financière de la Coopération française\. Ce système, s'ajoutant aux travaux de réhabilitation effectués, à la formation du personnel de l'ON et des producteurs, et à l'installation dans certains périmètres de vannes à modules à masque pemettant de mesurer les volumes d'eau, a contribué à améliorer la gestion de l'eau dans une certaine mesure\. Cependant, il faudrait vérifier la possibilité d'utiliser ce type de vannes non seulement pour réguler les flux d'eau, mais aussi pour établir un système de facturation sur la base des volumes consommés, à la place du système actuel de facturation forfaitaire qui n'incite pas les producteurs à économiser l'eau d'irrigation\. Dans le domaine de laprotection de l'environnement, le projet prévoyait la plantation d'arbres le long des canaux situés à proximité des villages et sur les parcelles non cultivables\. On a réalisé environ 21 ha de parcelles boisées collectives et individuelles dans la zone de Siengo\. En revanche, il n'y a eu aucune plantation le long des canaux\. La Coopération néerlandaise a financé l'acquisition de matériel pour contrôler la qualité de l'eau, et des analyses ont été faites pendant quelque temps\. Cependant, cette activité est aujourd'hui arrêtée, malgré la nécessité d'un contrôle régulier\. L'ON pourrait solliciter à l'avenir la contribution du Pôle régional de recherche sur les systèmes irrigués (PSI) et du centre de santé primaire de Niono pour mener à bien ses activités de protection de l'environnement\. En conséquence, l'exécution de cette composante n'a été quepartiellement satisfaisante\. 28\. Vulgarisation agricole et formation\. En 1992, l'approche mise en euvre par les différents projets de vulgarisation financés par les bailleurs de fonds dans la zone de l'ON a été harmonisée\. On a privilégié l'approche participative pour l'identification des thèmes techniques, consolidé les liens avec la recherche et spécialisé les agents - tout en s'attachant à renforcer la coordination entre eux, à leur donner une formation plus pertinente et plus concrète, à optimiser l'utilisation du suivi et de l'évaluation pour la définition des programmes de vulgarisation, et à évaluer régulièrement les thèmes et les méthodes de vulgarisation\. Bien que des accords de collaboration aient été signés entre l'ON et les Directions nationales de l'élevage et des eaux et forêts, comme cela avait été prévu au moment de l'évaluation, les programmes proposés par celles- ci n'ont pas bénéficié du financement du projet car ils n'ont jamais été approuvés par la direction de l'ON\. Le projet a financé la formation des agents de vulgarisation et des producteurs, ainsi que l'acquisition de matériel (motocyclettes) et une partie des coûts d'exploitation\. Il est à noter que des financements ont été également apportés par d'autres bailleurs de fonds et par le gouvernement (pour ce dernier dans le cadre des contrats -plans)\. 29\. Les services de vulgarisation ont obtenu d'excellents résultats, notamment en ce qui concerne le repiquage du riz - dont le taux d'adoption est passé de 4% en 1987-1988 à 97% en 1997-1998 -, la compartimentation des parcelles pour faciliter la lutte contre les adventices et la gestion de l'eau, ainsi que l'utilisation de semences améliorées, qui ont permis de presque tripler les rendements rizicoles, même dans les parcelles non réhabilitées, et d'accroître la production maraîchère\. Les efforts de vulgarisation doivent être poursuivis pour diffuser les techniques et technologies prometteuses suivantes: fertilisation chimique, variétés résistantes aux virus, amélioration de la gestion de l'eau, conservation et transformation des produits maraîchers, pisciculture, aviculture et diversification (maïs et pommes de terre)\. Cependant, les services de vulgarisation ont besoin d'un programme de formation plus cohérent et d'un plan de carrière\. 30\. Promotion des associations villageoises\. À la suite du désengagement de l'ON de toutes les activités à caractère commercial et industriel, les associations villageoises ont été amenées à assumer la responsabilité de l'achat des intrants, de l'obtention et de la gestion du crédit pour les intrants, et de la commercialisation des produits agricoles, ce qui impliquait de déployer beaucoup d'efforts pour renforcer leurs capacités\. Dans le cadre du projet, l'ON devait recevoir une aide des services d'alphabétisation de l'État ainsi que de consultants maliens expérimentés en promotion et en formation des associations villageoises\. Des protocoles de collaboration ont été signés entre l'ON et la Direction nationale de l'alphabétisation fonctionnelle et de la linguistique appliquée, et des programmes ont été élaborés mais jamais exécutés\. Bien que la Coopération néerlandaise ait financé le renforcement des associations 10 villageoises dans la zone de l'ON, celles-ci ont encore grand besoin d'une formation et d'un appui, notamment en ce qui concerne l'alphabétisation fonctionnelle, la comptabilité, l'achat des intrants et les stratégies de commercialisation des produits\. Le projet aurait pu faire davantage pour soutenir ces activités\. En conséquence, l'exécution de cette sous-composante a été insatisfaisante\. c) Études 31\. En 1996 a été effectuée une analyse de la filière rizicole à l'ON et des perspectives à moyen et à long terme, qui envisageait la possibilité de taxer les revenus supplémentaires engendrés dans cette zone\. On disposerait ainsi d'un moyen additionnel (bien qu'indirect) pour recouvrer les coûts d'investissement du projet auprès des bénéficiaires (en plus du prélèvement direct d'une contribution de 2/0o à ces dépenses d'investissement)\. Sur la base d'hypothèses très prudentes, cette étude a estimé qu'il était possible, à moyen terme, de collecter entre 436 et 736millions de francs CFA au travers des taxes, impôts et patentes (sur le bétail, les décortiqueuses et les activités commerciales, plus la taxe per capita)\. Bien qu'aucun des nouveaux prélèvements proposés par l'étude n'ait encore été instauré, cette option demeure valable, surtout dans le contexte de la décentralisation en cours, qui implique que les nouvelles administrations locales auront besoin de ressources pour assurer des services sociaux indispensables (écoles, centres de santé, routes, eau potable, etc\.)\. Des détails sur cette proposition de taxation sont présentés au tableau5M\. Les autres études planifiées, qui devaient porter sur les associations villageoises, le contexte socioéconomique de l'ON, la diversification des cultures et l'intervention du secteur privé, n'ont pas été entreprises (voir tableau7), car la restructuration de l'ON a monopolisé l'attention\. Cependant, ces études demeurent nécessaires, surtout en ce qui concerne les possibilités de diversification des cultures et les investissements potentiels du secteur privé à l'ON, et il faudrait donc les inclure dans les opérations futures\. A leur place, on a financé des études agronomiques et morphologiques, ainsi que des études sur la commercialisation et sur l'endettement des producteurs, qui ont été effectuées par lIER\. En conséquence, l'exécution de cette sous-composante n'a été que partiellement satisfaisante\. B\.2 Coûts, financement et évaluation économique du projet 32\. Outre les crédits IDA/FAA, les activités du projet ont été financées par le gouvernement allemand, la Coopération française, le gouvernement néerlandais, l'USAID (non mentionnée dans le rapport d'évaluation), le gouvernement malien et les bénéficiaires\. Au moment de l'évaluation, le coût total du projet avait été chiffré à 83,6millions de dollars\. Son coût effectif est estimé à 296,3millions de dollars et l'IDA a décaissé la totalité des 48,8millions de dollars prévus à l'évaluation\. Encouragés par: a) les réformes économiques radicales entreprises par le gouvernement malien pour améliorer la compétitivité de la production nationale de riz, b)l'engagement du gouvernement d'aller jusqu'au bout des réformes institutionnelles nécessaires à l'ON, c)la réponse rapide de l'offre grâce aux rendements élevés obtenus par les producteurs, d) l'excellente coordination de l'action des bailleurs de fonds, qui a permis de maximiser les synergies et les complémentarités, et e)la capacité de l'ON à gérer un vaste programme d'investissement après sa restructuration, la plupart des bailleurs de fonds ont accru leur contribution en finançant la réhabilitation par tranches successives d'un plus grand nombre de périmètres que ce qui était planifié à l'origine, ce qui explique que, sur la totalité de la période d'exécution, les coûts effectifs du projet ont été 3,5 fois plus élevés que prévu\. Des détails sur les coûts et le financement du projet sont présentés aux tableaux 8A et 8B\. Afin d'établir une comparaison, on a calculé le taux de rentabilité économique (TRE) du projet sur la base des coûts (effectifs) du programme d'activités plus modeste qui était initialement prévu\. Lors de l'évaluation, le TRE avait été estimé à 16%\. Après achèvement du projet, une nouvelle estimation le situe à 30 %\. Ce chiffre devrait même être plus élevé si l'on tient compte des autres productions agricoles de la zone, et notamment des cultures maraîchères\. Le rendement rizicole effectif a dépassé de 27/o les prévisions et la production rizicole a été de 37% plus élevée (voir tableau 5N)\. Il C\. Bilan de l'exécution et principaux facteurs ayant affecté le projet C\.1 Facteurs ne dépendant pas du gouvernement 33\. La dévaluation du franc CFA de janvier 1994 a aidé à améliorer la compétitivité du riz malien sur le marché intérieur\. Tandis que la hausse des coûts de production s'est limitée à 25%, les prix du paddy ont augmenté de plus de 50 %, d'où un accroissement net des revenus agricoles\. C\.2 Facteurs dépendant du gouvernement 34\. Premièrement, le comité de suivi du contrat-plan de 1996-1998 n'a guère fait preuve d'efficacité, dans la mesure où il ne s'est réuni qu'une fois au lieu de six\. Le responsable nommé à la tête de ce comité (conseiller auprès du ministre des Finances) assumait de trop lourdes tâches pour pouvoir s'occuper de ce pilier essentiel des réformes institutionnelles\.Deuxièmement, si la redevance d'eau est fixée à titre indicatif dans les contrats-plans et fait l'objet de négociations chaque année avec les producteurs (pour tenir compte des facteurs d'évolution antérieurs ou prévus), son montant définitif est fixé par arrêté ministériel\. Cependant, la publication de cet arrêté prend généralement un certain temps, ce qui retarde le cycle de facturation, perturbant la situation de trésorerie et les opérations comptables de l'ON\. Le gouvemement se doit d'accélérer la procédure ou de supprimer cette obligation\. En une occasion, le gouvernement n'a pas autorisé la majoration de la redevance d'eau, vraisemblablement pour des considérations électorales, jetant ainsi la suspicion sur la fermeté de sa volonté d'assurer la viabilité à long terme du système d'irrigation\. Troisièmement, il était prévu de recouvrer 20% du coût de la réhabilitation des périmètres (en plus de la redevance d'eau destinée à financer l'entretien des canaux secondaires), et cette mesure devait être mise en œuvre de manière progressive, proportionnellement à l'accroissement de la productivité et des revenus agricoles\. A l'achèvement du projet, le montant de la redevance d'eau était calculé de manière à couvrir l'entretien de l'ensemble des canaux secondaires, tandis que le gouvemement continuait de payer l'entretien du réseau primaire (ainsi que les services agricoles)\. En revanche, rien n'a été fait pour recouvrer les coûts d'investissement\. Or, si les rendements avaient progressé de manière constante dès avant la dévaluation du franc CFA en 1994, l'effet de celle-ci sur les prix a grandement contribué à une augmentation spectaculaire des revenus agricoles qui aurait permis d'introduire des mesures de recouvrement des coûts d'investissement à partir de cette période\. Cependant, cela a coïncidé avec la restructuration de l'ON en 1994, et le premier contrat-plan établi après cette restructuration, qui aurait dû être mis à profit pour commencer à recouvrer les coûts d'investissement, a été essentiellement axé sur la réalisation des réfonnes\. En outre, la redevance d'eau qui sert à entretenir le réseau secondaire venait tout juste d'être majorée substantiellement (71 % sur quatre ans) et il aurait été malaisé de faire accepter une nouvelle hausse\. Les revenus agricoles nets continuant d'augmenter, grâce au produit des cultures maraîchères de contre-saison, le gouvernement devrait envisager d'instaurer des mesures pour recouvrer au moins une partie des coûts d'investissement\. C\.3 Facteurs dépendant de l'organisme d'exécution 35\. Premièrement, la préparation tardive des dossiers d'appel d'offres pour la réhabilitation du barrage de Maikala a retardé d'un an l'achèvement du projet\.Deuxièmement, l'ON a soumis ses rapports d'audit systématiquement en retard, en invoquant pour justification le temps consacré à la restructuration et au renforcement des capacités\. Troisièmement, l'ON aurait pu mieux faire pour certaines composantes, à savoir en particulier les programmes d'alphabétisation fonctionnelle, le soutien aux associations villageoises, la plantation d'arbres et le suivi environnemental (qualité de l'eau)\. Néanmoins, il a généralement bien exécuté le suivi et l'évaluation, mais il faudrait renforcer ses capacités dans ce domaine pour lui permettre de produire des données consolidées et systématisées\. 12 D\. Pérennité du projet 36\. Les réformes sectorielles et institutionnelles sont durables\. Au bout de près de dix ans, la libéralisation du commerce est une réalité solide, de sorte qu'un retour à une politique de contrôle des prix et de réglementation du commerce du riz est hautement improbable\. Grâce à l'amélioration de la gestion de l'eau et à l'adoption de variétés à haut rendement et de pratiques culturales appropriées, la productivité rizicole a fait un bond en avant dans la zone de l'ON\. Dans ces conditions, et compte tenu du fait que le Mali est un pays enclavé, il serait inutile de vouloir protéger la production nationale de riz par des taxes à l'importation élevées (supérieures au niveau actuel de 1 1 %), car une telle politique risquerait de faire du Mali un producteur inefficace\. Cependant, le Mali se réserve le droit d'imposer des droits de compensation en cas de dumping international\. A la suite des réformes institutionnelles, l'ON, débarrassé de ses sureffectifs et doté d'une structure rationnelle, est aujourd'hui plus efficace et coûte moins cher à l'État et aux producteurs, et il est donc peu probable qu'il redevienne l'organe à tout faire du gouvernement\. En outre, la prise en charge des fonctions de transformation et de commercialisation par des entreprises privées apparaît irréversible et toute intervention injustifiée de l'ON se heurterait à la résistance du secteur privé et des producteurs\. La participation des agriculteurs aux décisions à tous les niveaux permettra d'assurer que l'ON ne s'engage pas dans des opérations coûteuses et infructueuses\. 37\. De même, les investissements physiques ont toutes les chances d'être durables\.Premièrement, grâce à l'amélioration de la productivité et de la rentabilité de l'agriculture irriguée dans les périmètres de l'ON, on peut aujourd'hui envisager de fixer la redevance d'eau à un niveau qui permette d'assurer l'entretien de l'ensemble des infrastructures, tout en laissant aux producteurs un revenu agricole net raisonnable\. Deuxièmement, le fait de participer à la fixation du montant de la redevance d'eau et à l'entretien du réseau d'irrigation a incité les agriculteurs à s'acquitter de leur dû, d'où des taux record de recouvrement de la redevance\. Troisièmement, le recours croissant à des entreprises privées pour assurer l'entretien des canaux se traduit par l'émergence d'une expertise locale et d'une concurrence qui entraînent une baisse des coûts d'entretien\. Les producteurs sont désormais chargés d'effectuer manuellement l'entretien du réseau tertiaire, qui représente environ 10% du total des travaux d'entretien des canaux\. Bien qu'ils n'accomplissent pas encore cette tâche parfaitement, leur performance va en s'améliorant, tant en ce qui concerne le respect des délais que la qualité des travaux\. En tout état de cause, il existe toujours l'option d'intégrer le réseau tertiaire dans le programme d'entretien global sous contrat, ce qui n'impliquerait que très peu de frais supplémentaires\. Bien que les problèmes d'alcalinité et de salinité ne se posent pas encore sérieusement dans les périmètres de l'ON, il importe de renforcer les capacités de suivi environnemental de l'Office, ainsi que ses programmes de protection de l'environnement\. L'ON a établi un compte d'amortissement en vue du remplacement futur du matériel acheté dans le cadre des projets et sur ses fonds propres (véhicules, ordinateurs, matériel de bureau)\. Cependant, la politique d'amortissement n'a pas été observée rigoureusement dans le passé\. La situation s'est quelque peu améliorée dernièrement, mais il faudrait que l'ON tienne davantage compte des nécessités de l'amortissement lors de la fixation du montant de la redevance d'eau\. E\. Performance de la Banque 38\. Dans l'ensemble, la performance de la Banque a ététrès satisfaisante au stade de la préparation et de l'évaluation: les activités du projet constituaient un ensemble équilibré de réformes sectorielles et institutionnelles, d'investissements en infrastructures physiques et services agricoles, et d'assistance technique ; la coordination entre les bailleurs de fonds a été excellente dès le départ, ce qui a aidé à établir et à maintenir un partenariat solide avec le gouvernement pour mener à bien des réformes institutionnelles particulièrement délicates (désengagement massif de l'État et compressions de personnel)\. Les moyens à employer pour atteindre les objectifs du projet étaient clairement énoncés dans le rapport d'évaluation, de même que les résultats attendus\. Les risques éventuels étaient précisément identifiés et des mesures ont été prises afm de les minimiser\. Si l'hypothèse d'un redressement financier rapide de l'ON était trop optimiste, la situation fmancière de l'Office a fini par s'améliorer au bout d'un certain temps\. 13 39\. La performance de la Banque pendant la supervision a été satisfaisante, tant en ce qui concerne l'appui apporté au gouvernement malien pour exécuter les réformes sectorielles et institutionnelles, que le suivi du programme d'investissement\. Les missions de supervision rassemblaient des expertises appropriées et ont passé suffisamment de temps sur le terrain, en particulier pendant la période cruciale des premières années de mise en œuvre du projet\. Les missions de supervision conjointes des bailleurs de fonds, organisées deux à trois fois par an, ont été particulièrement exemplaires car elles ont facilité la coordination étroite des différentes interventions et ont permis de mettre à profit les complémentarités\. Malgré tout, certains éléments des services agricoles (notamment l'appui aux associations villageoises) semblent avoir reçu une attention suboptimale, ce qui pourrait s'expliquer par le fait que les efforts ont été surtout axés sur la restructuration de l'ON\. F\. Performance de l'Emprunteur 40\. La performance de l'Emprunteur pendant la préparation et l'exécution du projet a étésatisfaisante\. Avec un grand esprit de responsabilité, il a préparé et mis en euvre des réformes socialement difficiles, telles que le licenciement de plus de 1000 agents et le transfert des activités commerciales de l'ON à d'autres agents économiques, et il a exécuté de manière satisfaisante les contrats-plans signés avec l'ON et les producteurs, en respectant en particulier ses obligations de paiement de l'entretien du réseau primaire, de la recherche et de la vulgarisation\. G\. Évaluation des résultats 41\. Le projet a donné des résultats globalement sat;faisants, car il a atteint la plupart de ses objectifs en matière de réformes institutionnelles et d'accroissement de la production agricole\. L'instauration d'un environnement macroéconomique favorable, ainsi que la dévaluation du franc CFA en 1994, l'amélioration de la gestion de l'ON, l'augmentation de la productivité agricole grâce à la réhabilitation d'une partie des périmètres irrigués et l'amélioration des services agricoles, ont exercé un impact significatif sur les revenus agricoles et la sécurité alimentaire au plan national\. Les rendements rizicoles moyens sont passés de 1,8 tonne/ha à 5,5 tonnes/ha, soit une augmentation de 300% (et ils ont atteint jusqu'à 7,0 tonnes/ha dans certains des périmètres réhabilités), tandis que le taux de recouvrement de la redevance d'eau est passé de 60 % à 97 %\. La production maraîchère, jusqu'alors négligeable, s'est chiffrée à plusieurs milliers de tonnes en 1998, prenant ainsi une place respectable dans le secteur agricole (71000 tonnes d'oignons, 2 700 tonnes de tomates, 2 800 tonnes de pommes de terre, 800 tonnes de maïs, 800tonnes d'ail, 600 tonnes de poivrons, etc\.)\. Entre 1988 et 1998, le revenu annuel net par ménage agricole a augmenté en moyenne de 480 000 francs CFA en termes réels, ce qui représente un accroissement de 36800 francs CFA du revenu réel par habitant pour une population de 182000 personnes\. Parmi les autres avantages non quantifiés dans le rapport de fin d'exécution du projet figure la création de nouveaux emplois- qu'une source chiffre à plus de 50 000 - dans la transformation et la commercialisation du riz et des produits maraîchers, la distribution des intrants, les transports, le travail agricole et l'entretien du matériel et des infrastructures d'irrigation\. H\. Perspectives 42\. L'ON, restructurée et renforcée, opère aujourd'hui en étroite collaboration avec les producteurs grâce à l'existence de comités de gestion conjoints, dont les attributions vont de l'entretien des réseaux d'irrigation au suivi de l'exécution des contrats-plans, et grâce à la représentation des agriculteurs au sein du conseil d'administration de l'ON\. Ce partage des responsabilités, s'ajoutant à l'efficacité des mécanismes de recouvrement de la redevance d'eau, devrait garantir la bonne exploitation future des investissements du projet\. Cependant, il faudra s'attacher à l'avenir à: i) accroître le taux de recouvrement des coûts afin d'assurer l'entretien de l'ensemble des infrastructures, y compris le réseau primaire, et récupérer tout ou partie des coûts d'investissements, compte tenu de la rentabilité accrue des périmètres de l'ON ii) créer des mécanismes permettant l'octroi de financements à long terme aux agents économiques privés désireux d'investir dans la zone de l'ON; iii) continuer d'investir dans l'aménagement de routes rurales afin de 14 faciliter l'achat et la distribution des intrants, ainsi que l'évacuation de la productioq et iv) renforcer les organisations paysannes en les aidant à mieux maîtriser les stratégies d'achat des intrants et de commercialisation des produits agricoles\. \. Enseignements Aspects sectoriels i) Les réformes sectorielles ne peuvent exercer véritablement un impact que si elles s'accompagnent d'investissements sectoriels complémentaires\. L'effet des mesures de libéralisation des prix et du commerce et des réformes institutionnelles de l'ON a été amplifié par les investissements réalisés dans les infrastructures d'irrigation et les services agricoles\. ii) Afin de maximiser cet impact, les réformes et investissements sectoriels doivent s'inscrire dans un cadre macroéconomique favorable, ce qui suppose que le taux de change de la monnaie nationale soit à son juste niveau et que l'inflation demeure faible\. La dévaluation de janvier1994 et la maîtrise de l'inflation consécutive à cette dévaluation ont grandement contribué au succès de la restructuration de l'ON\. Il est donc impératif de maintenir le franc CFA à sa juste valeur si l'on veut que l'agriculture malienne continue de croître et demeure compétitive et que les investissements, notamment ceux des projets financés par la Banque, portent leurs fruits\. Apects institutionnels iii) Les réformes institutionnelles dificiles, et en particulier celles qui dépassent la sphère d'action d'un seul ministère, doivent être pilotées par une entité indépendante des ministères et organismes publics concernés\. La création d'une commission spéciale (la Délégation générale), rattachée au cabinet du Premier ministre et dirigée par un cadre expérimenté, a facilité la mise en oeuvre du processus de réforme\. iv) La responsabilisation et la participation des producteurs constituent un moyen efficace pour pérenniser les investissements réalisés dans l'irrigation\. La représentation des producteurs à tous les niveaux de gestion de l'ON a grandement contribué à améliorer le taux de recouvrement de la redevance d'eau\. Pour que cette participation soit effective, elle doit s'accompagner de programmes d'alphabétisation fonctionnelle, qui permettent aux producteurs de devenir des partenaires dynamiques et capables de défendre leurs intérêts\. Il convient aussi de renforcer la transparence afin de faciliter l'information\. v) Une plus grande transparence de l'administration foncière permet de sécuriser les droits fonciers des producteurs, même si ceux-ci ne reçoivent pas de titres de propriété officiels; en l'absence de crédit à long terme et de technologies appropriées, la sécurité foncière est une condition nécessaire, mais pas suffisante, pour favoriser les investissements du secteur privé dans l'agriculture irriguée\. vi) La fixation du montant de la redevance d'eau doit se faire par un mécanisme de négociation indépendant et transparent, sur la base d'une identification précise des besoins et sans ingérence de l'État\. Dans le cas de l'ON, le montant de la redevance d'eau fait l'objet de négociations entre l'ON et les producteurs, sur la base d'une évaluation indépendante des besoins d'entretien et des dépenses d'exploitation\. Si le fait d'en référer à l'État pour la décision finale crée une sorte de légitimité, le retard avec lequel celui-ci procède à la ratification et le risque qu'il sursoie à des majorations indispensables pourraient mettre en cause la pérennité des infrastructures d'irrigation\. Une fois que 15 les deux parties se sont mises d'accord sur le montant de la redevance, celui-ci ne doit plus être modifié, si ce n'est dans le cadre du mécanisme de consultation entre l'ON et les producteurs\. Exécution vii) Un effort concerté des bailleurs de fonds, permettant de mettre à profit les synergies etles complémentarités, est essentiel pour maximiser l'impact des réformes et investissements sectoriels\. La coordination de l'action des bailleurs de fonds a été exemplaire, tant pour faciliter la réforme des marchés céréaliers et la restructuration de l'ON que pour financer les investissements physiques et le renforcement des capacités de l'ON\. Cette coordination a été favorisée par l'existence d'une stratégie sectorielle cohérente (schéma directeur du développement rural de 1992, plan d'action de 1993 et déclaration de politique sectorielle de 1993) et par la volonté du gouvernement de mener à bien les réformes sectorielles et institutionnelles\. Aspects techniques viii) La conception des canaux doit être adaptée au système d'entretien\. Les canaux dont l'entretien est effectué tous les cinq ans doivent être élargis, ce qui n'entraînera que peu de coûts supplémentaires et aura également pour avantage d'introduire davantage de souplesse dans la gestion de l'eau\. ix) Comme l'a démontré l'opération pilote de M'Bewani,si l'on veutfaire appel aux producteurs pour creuser les canaux tertiaires, il importe de confier l'organisation et le suivi des travaux à une société d'ingénierie qui puisse en garantir la qualité\. 16 RAPPORT DE FIN D'EXÉCUTION RÉPUBLIQUE DU MALI PROJET DE CONSOLIDATION DE L'OFFICE DU NIGER (CRDITS 1906-MLI ET A350) PARTIE Il: TABLEAUX STATISTIQUES Tableau 1 : Résumé des évaluations A\. Réalisations des objectifs Substantielle Partielle Négligeable Sans objet Politiques macroéconomiques W W W [7l Politiques sectorielles rT W W Objectifs financiers W W W Développement institutionnel W W W Objectifs physiques W W W Lutte contre la pauvreté Intégration des femmes dans le développement Autres objectifs sociaux Objectifs environnementaux Gestion du secteur public Gestion du secteur privé Autres (appui aux associations villageoises) W W W B\. Pérennité du projet Probable Improbable incertaine C\. Performance de la Banque mondiale Très satisfaisante Satisfaisante Insuffisante Identification Aide à la préparation Évaluation Supervision 17 D\. Performance de l'Emprnteur Très satisfaisante Satisfaisante Insuffisante Préparation Exécution W Respect des clauses de l'Accord 7 Exploitation (le cas échéant) E\. Évaluation des résultats Très satisfaisants Satisfaisants Insatisfaisants Très insatisfaisants 18 Tableau 2 : Crédits connexes de l'IDA Intitulé du prêt/crédit Objectif Année Situation d'approbation Opérations précédentes 1\. Mali-Sud Il Projet mixte d'ajustement sectoriel et d'investissement en 1984 Clos (Cr\. 1415-MLI) vue d'augmenter la production agricole et les revenus ruraux au moyen de la stabilisation et de l'accroissement de la production cotonnière\. 2\. Développement de la Augmenter la production par l'amélioration de la culture du 1985 Clos région de Mopti riz aquatique, ainsi que par l'accroissement du taux (Cr\. 1597-MLI) d'exploitation du bétail et par la protection des aires de pâturage dans les zones pastorales\. Opérations suivantes 1\. Investissement/ajustement Opération mixte d'ajustement et d'investissement visant 1990 Clos du secteur agricole pour la composante ajustement, à renforcer les mesures de (Cr\. 2163-ML) libéralisation entreprises en 1988 et à réformer le secteur du coton ; et, pour la composante investissement, à faciliter l'adaptation de l'appareil productif dans la région du Mali- Sud\. 2\. Projet de services Renforcer les activités de vulgarisation pour les secteurs de 1992 Clos agricoles (Cr\. 2235-MLI) l'agriculture et de l'élevage en vue d'accroître la productivité agricole\. 3\. Gestion des ressources Établir un système rationnel d'occupation des sols pour 1992 En cours; naturelles (Cr\. 2370-MLI) arrêter, puis renverser la tendance à la dégradation des clôture le ressources naturelles\. 30-6-2000 4\. Projet national de Rendre le système national de recherche agricole plus 1993 En cours recherche agricole performant en améliorant la cohérence des activités de clôture le (Cr\. 2557-MLI) recherche, leur qualité, leur pertinence et leur souci des 31-12-2001 résultats\. 5\. Agro-industrie S'attaquer aux principaux obstacles sectoriels à 1995 En cours; (Cr\. 2737-MLI) l'investissement privé dans la transformation et la clôture le commercialisation des produits agricoles, et donner la 30-6-2001 priorité au renforcement des capacités et au transfert de savoir-faire au secteur privé à travers des réseaux d'information, la formation, l'AT spécialisée et des visites d'étude\. 6\. Opération pilote Améliorer et encourager les investissements dans 1997 En cours; Promotion de l'irrigation l'irrigation à petite échelle, de façon à diversifier les clôture le privée investissements au niveau des exploitations et à accroître la 31-12-2001 (N021-MLI) productivité et la sécurité alimentaire\. 19 Tableau 3 : Calendrier du projet Étapes du cycle du projet Date prévue Date effective Identification (Résumé analytique du projet) 08/08/83 Préparation 1981-1986 Évaluation 06/86 Négociations 04/87 Déclaration de politique de développement (le cas s\.o\. s\.o\. échéant) Présentation au Conseil 17/05/88 Signature 11/07/88 Entrée en vigueur 09/10/88 03/03/89 Achèvement du projet 31/12/96' Clôture du crédit : FAA Cr\. 35-MLI 30/06/92 30/06/92 Cr\. 1906-MLI 30/06/97 30/11/98 Tableau 4 : Décaissements du crédit : Estimations et réalisations (montants cumulés)2 (en millions de dollars) EXSS EX89 EX90 EX91 EX92 EX93 EX94 EX95 EX96 EX97 EX98 EX99 Estimation à 0,8 9,8 16,4 22,6 30,4 37,8 43,2 46,6 47,7 48,7 48,7 48,7 l'évaluation Estimation 0,0 0,0 0,0 6,7 18,3 22,9 27,9 35,8 41,7 48,1 48,1 48,1 révisée Réalisation 0,0 1,0 3,7 6,8 18,3 24,2 31,9 41,2 47,0 50,5 52,4 52,9 Réalisation 0,0 8,5 22,6 30,1 60,2 64,0 73,8 88,4 98,5 103,7 107,6 108,6 en % de l'estimation initiale Date du dernier décaissement 15 avril 1999 Date d'achèvement estimée dans l'accord de crédit de développement 2 Les décaissements sont les montants totaux combinés des crédits de 'IDA et du Fonds d'aide à l'Afrique 20 Tableau 5 : Indicateurs clés de l'exécution du projet 5A\. Libéralisation des prix et du commerce du paddy et du riz Numéro du Date Description décret 319/PG-RM Novembre 1987 La commercialisation du riz et du paddy était libre sur tout le territoire, l'exportation du riz était soumise à autorisation préalable\. Le prix d'achat minimum de 70 FCFA/kg de paddy était garanti dans les zones de riziculture encadrée et les prix étaient libres ailleurs ; la fixation du prix du riz faisait l'objet d'un régime d'homologation souple avec une marge de distribution de 10 %\. 323/PG-RM Novembre 1988 Modification du régime de prix : la marge de distribution est de 15 % (dont 10 % pour les grossistes et 5 % pour les détaillants)\. 89/PG-RM Novembre 1989 L'exportation du riz était libre si les besoins nationaux étaient couverts\. 97-136 Juin 1996 La taxe à l'importation est réduite de 49 % à 22 %\. Mars 1997 La taxe à l'importation est réduite de 22 % à 11 %\. 5B\. Différents types de droits d'occupation à l'ON Contrat annuel Le contrat annuel est pour les nouveaux exploitants s'installant sur des terres irriguées aménagées\. Après 2 ans, les exploitants respectant les conditions d'installation, y compris l'intensification agricole, le paiement de la redevance et l'entretien des canaux tertiaires, sont éligibles pour obtenir le Permis d'exploitation agricole (PEA)\. Permis d'exploitation Le PEA confère aux exploitants le droit d'utiliser la terre pour une période agricole, PEA indéterminée tant que les termes et conditions d'installation sont respectés\. Bail ordinaire Le bail ordinaire est un contrat de 30 ans renouvelable entre l'ON et une personne physique ou morale à qui des terres non aménagées ont été allouées pour la production agricole, la transformation ou des activités de commercialisation\. Bail « emphytéotique » Le bail « emphytéotique » confère des droits et privilèges similaires à son titulaire, mais pour une période de 50 ans renouvelable\. Bail d'habitation Le bail d'habitation a un but résidentiel, et les titulaires ne peuvent être expulsés, même si leurs terres de culture leur sont retirées pour ne pas avoir respecté les termes et conditions du bail\. Cependant, le bail ne figure pas dans le code domanial et foncier et il y aurait lieu de le remplacer par le permis d'habitation\. 21 5C\. Évolution du nombre de femmes chefs d'exploitation à l'ON Zones/Années 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1\. Macina 10 13 14 16 19 21 29 35 59 62 2\. Niono 10 10 17 22 25 25 36 40 43 51 3\. Molodo 0 0 0 1 4 0 2 2 22 27 4\. N'Débougou 0 0 0 2 5 10 15 19 30 47 5\. Kouroumari 0 0 01 0 0 0 2 10 15 24 TOTAL 20 23 31 41 53 56 84 106 169 2111 Source : La restructuration de l'Office du Niger : Contribution de ARPON III, 1997 5D\. Nombre des caisses d'épargne et de crédit à l'ON, 1997/1998 Zone CIDR FDV SDID Total Macina 5 8 13 Niono 5 7 5 17 Molodo 2 2 4 N'Debougou 12 7 19 Kouroumari 8 10 18 Total 32 34 5 71 5E\. Évolution des prêts de la BNDA aux exploitants de l'ON (en millions de FCFA) Année Intrants Repiquage Avances Maraîchage Équipement Matériel Commercia- Divers Total Taux de agricoles sur récoltes collectif lisation du rembour- paddy et mil sement(%) 1989 15 2 16 1990 108 10 41 11 169 1991 280 32 5 12 51 379 93 1992 668 419 21 64 215 9 1 396 80 1993 249 162 19 3 12 75 175 27 722 70 1994 869 224 1 7 10 25 54 30 1219 67 1995 1 136 13 1 54 71 27 304 68 1996 1 59 12 12 12 26 33 156 94 1997 590 98 14 4 706 97 1998 835 93 2 8 938 98 22 5F\. Évolution des prêts du FDV aux exploitants de l'ON (en millions de FCFA) Année montant total des prêts Montant remboursé Taux de remboursement 1991/1992 1 158 826 71 1992/1993 788 538 68 1993/1994 914 693 76 1994/1995 1 132 1 043 92 1995/1996 1272 1 072 85 1996/1997 1 537 1402 91 1997/1998 1 176 1 094 93 1998/1999 876 5G\. Performance financière de l'ON, 1986/87 - 1997/98 (en millions de FCFA) 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 Redevance d'eau 1 098,6 1 143,4 1 120,5 1 115,3 1 011,4 1 127,8 1 071,6 1032,1 1 196,1 1 701,5 1 895,7 1 871,9 Gouvernement 0,0 828,9 828,9 788,2 788,2 909,8 784,8 1 009,1 758,9 758,9 531,3 548,9 malien Activités Comm\. -403,7 318,5 -1 145,4 -1 504,6 -1 289,6 -129,1 54,5 0,0 0,0 0,0 0,0 0,0 Revenu total 695,0 2 290,7 804,0 399,0 510,0 1 908,5 1 910,9 2 041,2 1 955,0 2 460,4 2 427,0 2 420,7 Entretien infras 141,1 74,7 71,9 125,8 16,9 138,2 819,3 1 250,0 1 036,8 1 423,2 1 356,3 1 266,5 Irrig\. Vulgarisation 309,7 256,8 256,8 241,3 234,7 234,7 574,0 208,8 238,8 174,7 185,6 192,4 Coûts 1 530,9 1 450,8 1 750,8 1 638,4 1 448,6 1 752,9 1 397,8 559,0 637,3 810,4 856,3 890,7 fonctionnement Total dépenses 1 981,7 1 782,3 2 079,4 2 005,5 1 700,1 2 125,8 2 791,2 2 017,8 1 913,0 2 408,2 2 398,2 2 349,6 Revenu net -1 286,7 508,5 -1 275,4 -1 606,6 -1 190,1 -217,2 -880,3 23,3 42,0 52,2 28,8 71,2 5H\. Montant et taux de recouvrement de la redevance d'eau, 1986/87 - 1997/98 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 Prévision de la redevance eau (FCFA/ha) -Classe 1 28 000 30 200 32 500 35 000 42 000 50 000 59 500 Taux réel (FCFA/ha) - Classe 1 28 000 28 000 28 000 28 000 28 000 28 000 28 000 28 000 32 000 40 000 43 000 43 000 Prix du paddy (FCFA/kg) 70 70 70 70 70 70 70 70 120 115 115 115 Taux réel, équiv\. paddy (kg/ha) 400 400 400 400 400 400 400 400 267 348 374 374 Production (kg/ha) 2 205 2 331 2 256 2 409 3 281 4071 4650 4899 4 700 4800 5800 5 800 Taux réel % de la production 0,18 0,17 0,18 0,17 0,12 0,10 0,09 0,08 0,06 0,07 0,06 0,06 Fluctuation en % du PIB défnaté 0,05 -0,01 0,02 0,03 0,02 0,03 0,33 0,12 0,06 0,02 0,03 Taux réels (FCFA/ha) - Prix en termes réels 28000 28354 27839 27 121 26615 25941 19475 19802 23285 24589 23989 (année de base = 1987/88) - Classe 1 Fluctuations réelles en % de la redevance eau 0,00 +0,01 -0,01 -0,03 -0,05 -0,07 -0,30 -0,29 -0,17 -0,12 -0,14 (année de base = 1987/88) Prévision des revenus provenant de la 1,00 1,10 1,27 1,54 1,97 2,24 2,41 2,51 2,61 2,61 2,61 2,61 redevance eau Revenus réels provenant de la redevance eau 1,10 1,14 1,12 1,12 1,01 1,13 1,07 1,03 1,20 1,70 1,90 1,87 Taux de recouvrement de la redevance eau 60 70 70 80 95 98 98 98 98 24 51\. Financement du volet social de 'ON (en millions de FCFA)' Agence Montant payé (FCFA millions) Coopération néerlandaise 623,8 Coopération française 602,1 CCCE 348,6 USAID 300,0 Total 1 874,5 En plus, les employés qui remplissaient les conditions d'installation et qui le souhaitaient ont eu la priorité dans l'allocation des terres irriguées -- une offre qui a été acceptée par 222anciens employés, les autres choisissant d'autres activités\. 5J\. Formations en services agricoles financées par l'IDA Bénéficiaires Thèmes Lieu Année Coût (FCFA) 1\. Agents de Vulgarisation agricole Centre de 1990 214 810 l'encadrement formation de agricole Niono 2\. Agents de Vulgarisation agricole Centre de 1990 1 534 650 l'encadrement formation de agricole Niono 3\. Cadres de Ateliers de mise en place du système Centre de 1990 5 690 465 l'encadrement de harmonisé de vulgarisation formation de l'ON Niono 4\. Cadres de Séminaire sur Centre de 1990 580 720 l'encadrement le sondage statistique formation de Niono 5\. Agents de Formation sur les schistosomiases Centre de 1990 874 420 l'encadrement de formation de base Niono 6\. Agents de Séminaire sur la politique semencière à l'ON Centre de 1991 1 749 460 l'encadrement de formation base Niono 7\. Cadres et agents a) Séminaire atelier d'orientation du Centre de 1991 3 797 020 du conseil rural programme de vulgarisation formation de b) Séminaire pour le lancement de la Niono campagne de repiquage 91/92 c) Séminaire sur l'élaboration de projets villageois et le renouvellement triennal des semences 8\. Agents de la Séminaire sur l'harmonisation des régimes de Centre de 1991 898 030 gestion eau redevance formation 9\. Agents conseil a) Séminaire liaison recherche-formation- Centre de 1991 4 817 555 rural, enquêteurs vulgarisation formation de et responsables b) Séminaire sur la diversification des cultures Niono suivi/évaluation c) Séminaire sur le suivi/évaluation 25 11\. Enquêteurs et Séminaire sur le suivi/évaluation Centre de 1992 1 207 900 responsables du formation de suivi/évaluation Niono 12\. Agro-irriguant et Stage en maîtrise de l'eau en agriculture et 1992 5 700 000 1 chef d'unité entretien réalités africaines 13\. Conseiller Séminaire sur les aspects juridiques de la Italie 1992 2 000 000 juridique gestion de l'environnement et des ressources naturelles dans les pays en voie de développement 14\. Cadres et agents a) Voyage d'étude à la vallée du Kou Centre de 1992 9 342 431 du conseil rural b) Séminaire sur les résultats de l'étude formation de paysans morphopédologique Niono c) Séminaire de programmation du PNVA d) Séminaire d'orientation du PNVA en 92/93 15\. Conseiller Séminaire sur la décentralisation USA 1992 2 826 500 juridique 16\. Technicien (1) du Stage de perfectionnement Burkina Faso 1992 825 000 Service des travaux Source: Office du Niger 5K\. Formations en gestion financière et passation de marchés financées par 'IDA Bénéficiaires Thèmes Lieu Année Coût (FCFA) 1\. Comptables (6) Gestion France 1990 19269000 des approvisionnements 2\. Cadres (13) Séminaire sur la passation des marchés Centre 1994 624 960 de formation 3\. Agents de l'ON Séminaire sur les décaissements CF Niono 1992 600 000 4\. Cadres (2) Séminaire sur la passation des marchés Dakar 1993 4 783 000 5\. PDG (1) Séminaire sur les procédures Abidjan 1994 1 017 500 6\. DAF (1) Séminaire sur les procédures Abidjan 1994 1 127 800 7\. Agent Séminaire sur le Top Management Cameroun 1994 1 423 300 comptable (1) 8\. Auditeur (1) Audit interne approfondi Côte d'Ivoire 1995 1 880 850 9\. DADR/SF Séminaire sur la passation des marchés Dakar 1996 3564000 10\. Ingénieurs (2) Séminaire sur la passation des marchés de Dakar 1997 5 523 600 travaux 11\. Comptables et Formation sur le SYSCOA Niono et Ségou 1998 12 100 900 financiers 12\. Cadres (15) Séminaire sur CF Niono 1991 216450 la reconversion 13\. Cadres DADR Stage de formation en outils informatiques 1991 1 835 000 avancés 14 Opérateur de Formation continue en informatique Burkina Faso 1992 2 030 000 saisie (1) 26 5L\. Dotation budgétaire de l'État à l'ON, 1990-1998 (en millions de FCFA) Coûts de fonctionnement Année (vulgarisation, études\. Entretien des réseaux Total gestion de la primaires d'irrigation réhabilitationi 1990 395 829 392 417 788 246 1991 395 829 392 417 788 246 1992 805931 478867 1284798 1993 667361 176621 843982 1994 274920 734193 1 009113 1995 197 230 561 670 758 900 1996 197 230 561 670 758 900 1997 246 582 284 706 531 288 1998 268817 280038 548855 5M\. Propositions émanant de l'étude sur la taxation Montant de la taxe Rubrique (FCFA) Relèvement de la taxe de développement régional et local (per capita) 2 500 Impôt sur les bovins (par tête) 500 Impôt sur les ovins (per tête) 100 Patente réajustée par décortiqueuse 150000 Taxe forfaitaire sur les bénéfices générés par les activités de commercialisation du riz (tonnes) 3 600 TVA sur les activités de transformation et commercialisation 10 % 5N\. Production prévisionnelle et réelle Prévisions Réalisations Année Production totale Superficies Production totale Rendement -_ _(tonnes) 1985/86 80 600 39 433 82 957 2,1 1986/87 86600 39910 88011 2,2 1987/88 90400 42125 98194 2,3 1988/89 95400 43352 97796 2,3 1989/90 115200 44251 106593 2,4 1990/91 136 200 43 872 143 938 3,3 1991/92 164800 44435 180909 4,1 1992/93 185 800 44843 208 541 4,7 1993/94 198 600 45 442 222 634 4,9 1994/95 198 600 44964 206 835 4,6 1995/96 198 600 46410 232 206 5,0 1996/97 198 600 47 984 253 835 5,3 1997/98 198 600 49 313 271 221 5,5 1 Les prévisions de la surface cultivée et du rendement n'étaient pas incluses dans les données du rapport d'évaluation du projet\. 27 50\. Évolution du revenu net moyen par ménage agricole Campagne 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/% 96/97 97/98 Déflateur PIB, base 88/89 100 100 103 105 107 126 155 170 177 181 Revenu nominal 83 937 110 800 146 259 193 067 286 317 325 933 445 417 586 200 773 803 1 021 445 Revenu réel 83937 110468 142683 184201 267 158 257 950 287062 345 175 437487 565 342 Évolution par rapport à -- 26 531 58 746 100 264 183 221 174 013 203 125 261 238 353 549 481 404 88/89 Évolution par Rapport à 88/89, % 0,32 0,70 1,19 2,18 2,07 2,42 3,11 4,21 5,74 Tableau 6 : Indicateurs clés de l'exploitation du projet Indicateurs clés contenus dans le Rapport du Président Estimations Réalisations Bien qu'aucun indicateur n'ait été explicitement identifiés dans le rapport - rendement (tonnes/ha) 4,5 5,5 - production supplémentaire pour l'ensemble de l'ON (tonnes) 100 000 172 000 - intensité agricole 1,20 1,06 - productivité des agents 10 % N'a pu être mesurée La productivité des agents n'a pu être mesurée, aucune méthodologie n'étant présentée dans le rapport d'évaluation\. 28 Tableau 7 : Études incluses dans le projet Étude Impact de l'étude Évolution des associations villageoises Non exécutée\. Il demeure nécessaire de faire une étude sur l'évolution future du rôle et des responsabilités des associations villageoises et sur les moyens de renforcer leurs capacités pour favoriser cette évolution\. Étude socioéconomique sur la répartition de la main- Non exécutée\. Cette étude était extrêmement d'œuvre au sein du système de production et sur la importante, mais la restructuration a monopolisé situation sanitaire et l'éducation, avec un accent l'attention et laissé peu de temps pour des études de particulier sur le rôle des femmes portée beaucoup plus large\. il demeure opportun de réaliser cette étude, qui pourrait être envisagée dans le cadre des prochaines opérations\. Étude sur les revenus agricoles et la taxation Exécutée\. Les résultats n'ont pas été mis en œuvre, mais devraient être utiles lorsque la décentralisation deviendra effective et que les administrations locales chercheront des moyens de mobiliser des ressources pour assurer les services sociaux indispensables\. Promotion de la diversification des cultures, en Non exécutée\. Cette étude demeure néanmoins utile identifiant des spéculations et des débouchés, ainsi surtout si l'on entend recouvrer tout ou partie des que des technologies de production et de coûts d'investissement des périmètres irrigués, ce qui transformation suppose une amélioration de la productivité agricole et une diversification des cultures pour créer les revenus supplémentaires nécessaires\. Consultation des- agents économiques privés Non exécutée\. Cette étude est plus nécessaire que susceptibles d'investir dans le développement de jamais, compte tenu de l'attention accrue prêtée à cet l'agriculture irriguée et l'agro-industrie, afin aspect\. d'identifier les contraintes, les moyens d'y remédier et les incitations à offrir aux investisseurs locaux et étrangers ; il s'agissait de mettre en place un ensemble de mesures pour encourager les investissements, qui devaient être suivis dans le cadre du projet Études de faisabilité sur les phases suivantes du Non exécutées dans le cadre du projet, mais ont été programme de réhabilitation et sur la possibilité financées par une avance PPF séparée\. d'investissements privés à l'Office du Niger et pour d'autres aménagements 29 Tableau 8 : Coûts et financement du projet 8A\. Coûts du projet - IDA (en millions de dollars) Estimation du Réalisation/dernière Rubrique rapport d'évaluation estimation 1\. Crédit agricole 2,3 9,0 2\. Entretien 9,4 35,4 3\. Réparations urgentes infrastructures irrig\. 2,9 147,4 4\. Réhabilitation du barrage de Markala 9,3 24,5 5\. Réhabilitation et modernisation des canaux Gruber/Siengo 11,7 1,8 6\. Réhabilitation du casier de Siengo 11,4 13,5 7\. Travaux de génie rural 4,1 37,8 8\. Appui à l'ON (recherche-développement, gestion de l'eau et 2,4 18,0 vulgarisation) 9\. Restructuration financière de l'ON 3,7 1,4 10\. Consultants, assistance technique et formation 4,3 3,6 11\. Études 0,5 0,5 12\. Travaux préparatoires 1,7 0,7 13\. Autres 1,8 Coûts de base 63,8 Provision pour aléas techniques 8,1 Provision pour imprévus financiers 11,7 Totai des coûts 83,6 295,6 8B\. Financement du projet Source Estimation du rapport d'évaluation Réalisation/dernière estimation (USD millions) (USD millions) IDA 48,8 48,8 Gouvernement allemand 19,0 28,9 FAC 2,0 1,7 CCCE 0,4 33,1 Gouvernement néerlandais 1,3 87,2 Gouvernement malien 4,1 16,1 Bénéficiaires 8,0 28,2 TOTAL 83,6 295,6 Tableau 9 : Coûts et avantages économiques Avantages Estimation RFE Production supplémentaire: tonnes de riz à partir de l'an 10 40000 48000 -\. valeur en millions de dollars 8,5 13,4 Augmentation du revenu agricole net (pourcentage) 45 Taux de rentabilité économique pour le canal Gruber (y compris certains 13-16 30 coûts d'autres projets et activités) Gain pour le budget de l'État, en millions de dollars (réduction des 0,7 subventions à la filière rizicole) Tableau 10 : Application des clauses de l'Accord Référence dans le Catégorie Situation Description de la clause Commentaires texte de l'Accord de Crédit (C19060) Section 3\.01 (a) 5, 10 R L'Emprunteur déclare qu'il souscrit pleinement aux Pas de commentaires\. objectifs du Projet, tels qu'ils sont décrits dans l'Annexe 2 au présent Accord, et, à cette fin, exécute la Partie A (1) du Projet, par l'intermédiaire de son Ministère de l'Agriculture, avec la diligence et l'efficacité voulues et selon des méthodes administratives, financières et techniques appropriées ; il fournit au fur et à mesure des besoins, les fonds, installations, services et autres ressources nécessaires au Projet\. Section 3\.01 (b) 5, 10 R Sans préjudice d'aucune des autres obligations lui Pas de commentaires, incombant en vertu de l'Accord de Crédit de Développement, l'Emprunteur veille à ce que l'ON et la BNDA exécutent, conformément aux dispositions de l'Accord de Projet, toutes les obligations de l'ON et de la BNDA stipulées dans ledit Accord, prend ou veille à ce que soient prises toutes mesures, y compris la fourniture de fonds, installations, services et autres ressources nécessaires ou appropriées pour permettre à l'IN et à la BNDA d'exécuter lesdites obligations, et ne prend ou ne permet que soient prises toutes mesures qui empêcheraient ou gêneraient ladite exécution\. Section 3\.01 (c)(i) 5, 10 R L'Emprunteur : i) rétrocède à l'ON les montants du Par lettre du 8 février 1996, le gouvernement a Crédit affectés aux catégories 1 a), 1 b), 2 c), 2 b), demandé que le prêt à l'ON soit converti en don en 3 c), 3 d) et 4 du tableau figurant à l'Annexe 1 au raison de la nouvelle mission à caractère non présent Accord en vertu d'un accord de prêt commercial de L'ON, ce que la Banque a accepté par subsidiaire devant être conclu entre l'Emprunteur et amendement en date du 15 avril 1997\. L'ON, à des conditions qui auront été approuvées par l'Association, notamment un intérêt au taux annuel de 3 % et une période de remboursement de 30 ans, y compris un différé d'amortissement de 10 ans ; Section 3\.01 c) ii) 5, 10 R ii) rétrocède à la BNDA les montants du Crédit Pas de commentaires\. affectés à la Catégorie 5 du tableau susmentionné en vertu d'un accord de prêt subsidiaire devant être conclu entre l'Emprunteur et la BNDA, à des conditions qui auront été approuvées par l'Association, notamment un intérêt au taux annuel de 3 % et une période de remboursement de 15 ans, y compris un différé d'amortissement de 5 ans ; Section 3\.01 c) iii) 5, 10 R et iii) met à la disposition de L'ON, sous forme de Pas de commentaires\. don, les montants du Crédit affectés aux, Catégories 1 c), 2 c), 3 a) et 3 b) du tableau susmentionné\. Section 3\.01 d) 5, 10 R L'Emprunteur exerce ses droits en vertu des Accords Par amendement en date du 15 avril 1997, le prêt de Prêt Subsidiaire de manière à protéger les intérêts rétrocédé à L'ON a été converti en don en raison de la de l'Emprunteur et de l'Association et à réaliser les nouvelle mission à caractère non commercial de objectifs du Crédit et, à moins que l'Association n'en l'ON\. convienne autrement, l'Emprunteur ne modifie, ni abroge les Accords de Prêt Subsidiaire ou toutes dispositions qu'ils contiennent, n'y fait aucune dérogation, ni n'aliène aucun des droits et obligations y afférents\. Section 3\.02 5, 9 R À moins que l'Association n'en convienne autrement, Pas de commentaires\. la passation des marchés de fournitures et de travaux et les services de consultants nécessaires au Projet et devant être financés sur le montant du Crédit sont régis par les dispositions de l'Annexe 1 à l'Accord de Projet\. Section 3\.02 a) i) ii) 9 PR L'Emprunteur prend toutes les mesures requises de sa 3\.02 a) i) ne relève plus de la responsabilité de l'ON iii) part pour : a) faire en sorte que l'ON : i) à tout 3\.02 a) ii) les rizeries ne sont pas sous le contrôle de moment achète le paddy et vende le riz selon les l'ON car elles ont été privatisées ; 3\.02 a) iii) - PR - provisions du Contrat-Plan ; ii) fasse payer à tout le montant de la redevance d'eau est révisé chaque moment les services de transformation du paddy au année de façon à couvrir les coûts d'entretien des prix coûtant ; iii) perçoive les redevances d'eau au canaux secondaires et les dépenses d'exploitation de tarif de 28 000 francs CFA l'hectare sur tous les l'ON\. périmètres réhabilités à compter de la première récolte faite sur lesdits périmètres après leur \. réhabilitation ; Section 3\.03 a) iv) 9 PR et iv) augmente chaque année les redevances d'eau Depuis 1991, le montant de la redevance d'eau est A) d'un pourcentage convenu avec l'Association de négocié avec les producteurs de l'ON ; les principes façon à atteindre : A) sur tout périmètre réhabilité, et actuels de la révision annuelle de la redevance d'eau 3 ans après sa réhabilitation, une augmentation de ont été convenus avec les producteurs dans le cadre 25 % par rapport au niveau des redevances en d'un contrat-plan couvrant une période de trois ans vigueur sur ce périmètre lors de la première année de (janvier 1996 - décembre 1998)\. sa réhabilitation, en sus du taux d'inflation alors en vigueur tel qu'il est reflété dans l'indice des prix à la consommation de l'Emprunteur, ou toute autre mesure de l'inflation jugée satisfaisante par l'Association; Section 3\.03 a) 9 PR et B) sur tout périmètre réhabilité, 7 ans après sa Depuis 1991, le montant de la redevance d'eau est iv)(B) réhabilitation, une augmentation de 70 % par rapport négocié avec les producteurs de l'ON ; les principes au niveau des redevances en vigueur sur ce périmètre actuels de la révision annuelle de la redevance d'eau lors de la première année de sa réhabilitation, en sus ont été convenus avec les producteurs dans le cadre de l'ajustement requis pour tenir compte de d'un contrat-plan couvrant une période de trois ans l'inflation, tel que prévu à l'alinéa (A) ; (janvier 1996 - décembre 1998)\. Section 3\.03 b) 2, 9 PR b) en sus des dispositions de l'alinéa a) iv) ci-dessus, Depuis 1991, le montant de la redevance d'eau est faire en sorte que l'ON augmente les redevances négocié avec les producteurs de l'ON ; les principes d'eau, au plus tard le 1er janvier de chaque année actuels de la révision annuelle de la redevance d'eau O suivante, afin de générer des fonds suffisants pour ont été convenus avec les producteurs dans le cadre couvrir les coûts de l'ON imputables aux opérations d'un contrat-plan couvrant une période de trois ans de distribution d'eau ; (janvier 19% - décembre 1998)\. Section 3\.03 c) 1 R c) conclure avec l'ON, le 30 septembre 1988 au plus Pas de commentaires\. tard, un accord jugé satisfaisant par l'Association pour déterminer le régime juridique, financier et comptable des immobilisations appartenant au domaine public mais dont l'exploitation et l'entretien sont confiés à l'ON\. L'accord visé ci-dessus contient un inventaire détaillé desdites immobilisations ; Section 3\.03 d) i) ii) 10, 9 R d) faire en sorte que l'ON : i) exécute le Contrat- 3\.03 d) i) - PR & ii) - R - une déclaration de politique e) Plan ; et ii) examine avec l'Emprunteur et a remplacé le deuxième contrat-plan au début de 1993 l'Association, le 30 novembre de chaque année au et les termes de cette déclaration ont été respectés\. plus tard, les progrès accomplis dans l'exécution Un nouveau contrat-plan entre l'ON (de dimension dudit Contrat-Plan; et e) sans préjudice des fortement réduite), le gouvernement malien et les dispositions du par\. a) i) ci-dessus, l'Emprunteur et producteurs de l'ON a été signé le 27/12/95 ; 3\.03 e) l'Association procèdent périodiquement, à la - R - des études importantes et des consultations ont demande de l'une ou l'autre partie, à des échanges de eu lieu\. vues concernant la politique de fixation des prix du riz de l'emprunteur et ses projets de développement global du sous-secteur du riz\. Section 3\.04 a) b) 9 R L'Emprunteur, le 30 septembre 1988 au plus tard, 3\.04 b) Officialisé en 1992\. Toutes les dettes croisées fait en sorte que • a) l'ON, la DNACOOP, la ON/gouvernement malien/CAA ont été réconciliées\. DNFLA et la DNE concluent un accord jugé satisfaisant par l'Association pour intégrer leurs activités de la Zone du Projet aux programmes de formation et de vulgarisation mis au point par l'ON ; et b) l'ON et la CAA concluent un accord jugé satisfaisant par l'Association pour restructurer la dette à long terme de l'ON due à l'Emprunteur ; Section 3\.05 a) b) 9, 10 R L'Emprunteur : a) au plus tard le 31 décembre 1988, 3\.05 a) - R - études exécutées ; 3\.05 b) - RR - toutes ou à toute autre date arrêtée d'un commun accord les rizeries ont été privatisées\. avec l'Association, examine avec l'Association les moyens appropriés de privatiser une ou plusieurs rizeries, sur la base d'un plan préparé par l'Emprunteur ; et b) prend toutes les mesures nécessaires pour mettre en oeuvre les résultats et recommandations issus de la concertation visée au par\. a) ci-dessus\. Section 3\.06 9, 10 R L'emprunteur et l'Association sont convenus que, Pas de commentaires\. conformément à la Section 2\.04 de l'Accord de Projet, l'ON et la BNDA s'acquittent respectivement des obligations stipulées dans les Sections 9,03, 9\.04, 9\.05, 9\.06, 9\.07 et 9\.08 des Conditions Générales (portant, respectivement, sur l'assurance, l'emploi des fournitures et services, les plans et calendriers, les écritures et rapports, l'entretien et l'acquisition de terrains), pour ce qui est des Parties A 2), B, C et D du Projet dans le cas de l'ON, et la partie E dans le cas de la BNDA\. Section 3\.07 9, 10 R Sans préjudice du caractère général de la Section 3\.06 Pas de commentaires\. ci-dessus, l'Emprunteur, dans le cadre de dispositions jugées satisfaisantes par l'Association, fait en sorte que les Barrages de Markala et de Sélingué et toutes les structures électromécaniques et de régulation desdits barrages soient inspectés périodiquement selon des méthodes techniques appropriées en vue de déceler toutes les imperfections desdites structures, ou de la qualité et du bien-fondé de l'entretien ou des méthodes d'exploitation desdites structures qui pourraient en menacer la sécurité\. Section 3\.07 (suite) 10, 9 R À cette fin, l'Emprunteur, le 31 décembre 1988 au Pas de commentaires\. plus tard, propose à l'examen de l'Association des arrangements appropriés\. Section 4\.01 a) 1 R l'ON et la BNDA tiennent, conformément à des Pas de commentaires\. pratiques comptables appropriées, les écritures et les comptes séparés nécessaires pour enregistrer leurs opérations et leur situation financière\. Section 4\.01 b) i) 1 A L'ON et la BNDA : i) font vérifier, conformément à Les audits de l'ON doivent être achevés le des principes d'audit appropriés et appliqués 30 juin 1999\. systématiquement, leurs écritures, comptes et états financiers (bilans, comptes de résultats et états y afférents) pour chaque exercice par des experts- comptables indépendants jugés acceptables par l'Association ; Section 4\.01 b) ii) 1 A ii) fournissent à l'Association dans les meilleurs Les audits de l'ON doivent être achevés le délais et, dans tous les cas quatre mois au plus tard 30 juin 1999\. après la clôture de l'exercice auquel ils se rapportent, (A) des copies certifiées pour ledit exercice et (B) les rapports d'audit desdits experts-comptables dont la portée et les détails ont été raisonnablement fixés par l'Association ; Section 4\.01 b) iii) 1 R iii) fournissent à l'Association tous autres Pas de commentaires\. renseignements concernant lesdits écritures, comptes et états financiers, et leur audit, que l'Association peut raisonnablement demander\. Section 4\.01 b) iv) 1 R iv) sans préjudice des dispositions de l'alinéa i) ci- Pas de commentaires\. dessus, l'ON, au cours des deux premières années d'exécution du Projet, fait vérifier semestriellement les comptes visés à l'alinéa i) et présente le rapport dudit audit intérimaire à l'Association un mois au plus tard après son achèvement\. Section 4\.01 c) i) 1 R c) Pour toutes les dépenses pour lesquelles des retraits Pas de commentaires\. du Compte de Crédit sont demandés sur la base de relevés de dépenses, l'ON : i) tient ou fait tenir, conformément au par\. a) de la présente Section, des écritures et comptes séparés pour enregistrer les dites dépenses ; Section 4\.01 c) ii) 1 R ii) conserve, pendant au moins un an après Pas de commentaires\. l'achèvement de l'audit de l'exercice au cours duquel le dernier retrait du Compte de Crédit a été effectué, toutes les écritures (contrats, commandes, factures, notes, reçus et autres pièces) justifiant lesdites dépenses\. Section 4\.01 c) iii) 1 R iii) permet aux représentants de l'Association Pas de commentaires\. d'inspecter les dites écritures ; et Section 4\.1 c) iv) 1 R iv) fait en sorte que lesdites écriture et lesdits Pas de commentaires\. comptes soient inclus dans l'audit annuel visé au par\. b) de la présente Section et que le rapport dudit audit contienne un avis distinct desdits experts-comptables indiquant s'il est possible de se fonder sur les relevés de dépenses présentés au cours dudit exercice, ainsi que sur les procédures et contrôles internes auxquels leur préparation a donné lieu, pour justifier les retraits correspondants\. Section 4\.02 a) 1 RR a) À moins que l'Association n'en convienne Cette clause a été appliquée par l'ON en 1994 après autrement, l'ON maintient pour chacun de ses sa restructuration\. exercices après son exercice se terminant au 30 avril 1990, un rapport des dépenses d'exploitation totales aux recettes d'exploitation totales ne dépassant pas 0,85:1\. Section 4\.02 b) 1 RR b) Avant le 1er mai durant chacun de ses exercices, Clause appliquée en 1994\. l'ON évalue, sur la base des prévisions qu'il aura établies de façon jugée satisfaisante par l'Association, s'il pourra respecter les conditions stipulées au par\. a) pour ledit exercice et l'exercice suivant, et fournit à l'Association les résultats de cette évaluation dès qu'elle est terminée\. Section 4\.02 c) 1 RR c) Si ladite évaluation révèle que l'ON ne respectera Pas de commentaires\. pas les conditions stipulées au par\. a) au cours des exercices de l'ON couverts par cette évaluation, l'ON prend dans les meilleurs délais toutes mesures nécessaires (y compris, notamment, des ajustements de la structure ou des niveaux de ses prix) de façon à pouvoir respecter lesdites conditions\. Section 4\.02 d) i) ii) 1 R d) Aux fins de la présente Section: i) l'expression « Pas de commentaires\. « dépenses d'exploitation totales » désigne la somme des dépenses liées à l'exploitation, y compris les frais administratifs, les dépenses liées à un entretien satisfaisant, les impôts et les versements en tenant lieu, et les provisions pour amortissement calculées sur une base jugée acceptable par l'Association, mais à l'exclusion des intérêts et autres charges afférentes à la dette\. li) L'expression « recettes d'exploitation totales » désigne les recettes de toutes provenances liées à l'exploitation\. Section 4\.03 a) 1 RR a) À moins que l'Association n'en dispose autrement, Cette clause a été appliquée par L'ON en 1994 après l'ON ne contracte aucune dette, sauf si ses recettes sa restructuration\. nettes pour l'exercice précédant immédiatement la date à laquelle la dette a été contractée ou pour une \.période ultérieure de 12mois précédant la date à laquelle la dette a été contractée, le montant de recettes le plus élevé étant retenu, ne soient au moins égales à une fois et demie le montant maximum nécessaire pour assurer le service de toutes ses dettes, y compris la dette devant être contractée, au cours de tout exercice suivant\. Catégories : Situation: 1 = Comptabilité/audits 8 = Populations autochtones 2 = Résultats financiers/ recettes 9 = Suivi, examen et rapports R = Remplie générées par les bénéficiaires 3 = Flux et utilisation des fonds du 10 = Exécution du projet : activités ne RR = Remplie avec retard projet relevant pas des catégories 1 à 9 4 = Fonds de contrepartie 11 = Affectation de crédits budgétaires PR = Partiellement remplie ou autres à un ou plusieurs secteurs 5 = Gestion du projet ou de 12 = Application de mesures NR = Non remplie l'organisme d'exécution sectorielles, réglementaires et/ou institutionnelles dans un ou plusieurs secteurs 6 = Clauses environnementales 13 = Autres A = Attendu 7 = Réinstallation involontaire 37 Tableau Il : Respect des clauses du manuel d'exécution Numéro et intitulé de la clause Si la clause n'a pas été respectée, expliquez et commentez Toutes les clauses applicables du manuel d'exécution ont été respectées\. Tableau 12 : Ressources de la Banque personnel Prévisions Révisions Réalisations Stade du cycle du Semaines USD Semaines USD Semaines USD (milliers) projet (milliers) (Milliers) De la préparation 267,6 349,62 à l'évaluation Évaluation 103,8 123,2 de l'évaluation à 27,0 46,8 l'approbation par le Conseil Supervision _ _ 237,0 557,2 Achèvement __14,0 30,0 TOTAL On ne dispose pas de données complètes sur le nombre de semaines de travail prévu ou révisé ni sur les budgets correspondants\. 38 Tableau 13 Ressources de la Banque missions Notation de la performance Stade du cycle du Mois/année Nombres de Jours Spécialités État Objectifs Types de projet personnes sur le représentées d'avan- de problèmes terrain cement dévelop- pement Évaluation De l'approbation par le Conseil à l'entrée en vigueur Supervision 1 10/88 4 10 CD, Econ, AF et 2 1 IH Supervision 2 05/89 2 5 Econ et IH 3 2 G Supervision 3 11/89 et 2 et 1 7 et 8 Econ, SSA, et IH 2 1 12/89 Supervision 4 03/90 2 6 AF et IH 2 1 Env Supervision 5 11/90 2 10 Econ et IH 2 2 GF Supervision 6 12/91 2 n\.c\. Econ et IH 2 2 RE Supervision 7 08/92 2 n\.c\. Econ et IH 3 2 GF\. G et FC Supervision 8 12/92 1 14 Econ 3 2 LC, GF, G et FC Supervision 9 04/93 1 n\.c\. Econ 3 2 LC, GF, G et FC Supervision 10 07/93 1 n\.c\. Econ 2 2 LC, FC et GF Supervision 11 12/93 1 n\.c\. Econ 2 1 Supervision 12 04/94 2 n\.c\. Econ et 1H 2 1 Supervision 13 07/94 1 n\.c\. Econ S S Supervision 14 11/94 1 n\.c\. Econ S S Supervision 15 03/95 2 n\.c\. AE et Econ S S Supervision 16 07/95 2 n\.c\. AE et Econ S S Supervision 17 11/95 1 n\.c\. Econ S S Supervision 18 03/96 1 n\.c\. Econ S TS Supervision 19 Supervision 20 Supervision 21 Supervision 22 Achèvement 02/99 Spécialités : AE = Agroéconomiste; AF = Analyste financier ; AO = Analyste opérationnel ; CD = Chef de division ; CO = Chargé des opérations ; CRSA = Conseiller régional, services agricoles ; Econ = Économiste; IH = Ingénieur hydraulicien ; Soc = Sociologue; SF = Spécialiste de la formation ; et SSA = Spécialiste des services agricoles Types de problèmes : Env = Aspects environnementaux ; FC = Fonds de contrepartie ; G = Gestion ; GF = Gestion financière ; P = Passation des marchés ; RE = Retard dans l'exécution des études Notation de la performance : 1 = Sans problèmes ; 2 = Quelques problèmes ; 3 = Problèmes d'exécution; TS = Très satisfaisant ; S = Satisfaisant ; I = Insatisfaisant ; TS = Très insatisfaisant ; NN = Non noté 39 Annexe 1 ANNEXES Annexe 1 : Aide-mémoire de la Mission RFE Consolidation de l'Office du Niger (Cr\. 1906-MLI) Mission d'Évaluation d'Achèvement du Projet (22 - 25 mars 1999) Aide-mémoire de la Mission 1\. Une mission de l'IDA comprenant MM\. Eustacius Betubiza (Chargé de projets), François Gadelle (Spécialiste principal en irrigation), Agadiou Dama (Spécialiste en services agricoles),Youssouf Thiam (Economiste), Abdoulaye Coulibaly (Spécialiste en gestion comptable) et Melle Alexandra Goffin (Assistante de programme) s'est penchée (du 22 au 25 mars 1999) sur l'évaluation à posteriori de la performance d'exécution du Projet de Consolidation de l'Office du Niger (Cr\. 1906-MLI), projet clos depuis le 31 novembre 1998\. La mission exprime ses plus vifs remerciements au gouvernement malien pour l'excellence de son accueil, et pour l'entière disponibilité et la totale coopération que les cadres du MDRE et à l'Office du Niger lui ont réservées\. Rappel des Objectifs du Projet 2\. L'objectif général du projet consistait à restructurer l'Office du Niger de manière à accroître la productivité et la production agricole, et à créer à long terme un système de production viable et durable\. Les objectifs à court terme portaient sur: i) le cnforcement de la capacité de gestion de l'Office du Niger ; ii) la restructuration de ses finances ; iii) l'amélioration de l'entretien et la productivité des infrastructures existantes, y compris les périmètres irrigués ; iv) la remise en état d'une partie du réseau et certains périmètres\. Le projet constituait la première phase d'un programme à long terme de réorganisation et d'aménagement de l'Office du Niger\. Description du Projet 3\. Le projet dont la mise en oeuvre s'est étendue sur dix ans, comprenait les éléments suivants a) Réformes Sectorielles\. La poursuite du processus de réforme sectorielle visant à assurer l'utilisation et le développement rationnels des ressources confiées à l'ON\. Ces réformes comprenaient: i) le désengagement progressif de l'ON des ses activités commerciales et le transfert de celles-ci à d'autres agents économiques ; ii) la promotion de politiques des prix et de commercialisation axées sur le marché, la création de droits fonciers sûrs ; et iii) la promotion de l'intermédiation financière\. b) Réformes Institutionnelles\. Les réformes institutionnelles comprenaient : i) la simplification des relations entre le Gouvernement et l'Office du Niger à travers des mécanismes de contrats-plans, ii) le renforcement de la direction et du personnel de l'Office du Niger, et iii) la promotion des associations villageoises\. c) Restructuration Financière de l'Office du Niger\. 4 Investissements\. Le projet a financé les investissements permettant d'entretenir et de remettre en état une partie du réseau et des périmètres d'irrigation, y compris: i) la réorganisation de l'unité d'entretien, ii) la remise en état du barrage de 40 Markala, iii) la réhabilitation et la modernisation des canaux Gruber Nord et Siengo ; iv) la réhabilitation du périmètre irrigué de Siengo, et iv) l'exécution d'un programme pilote des travaux ruraux\. e$ervices Agricoles, à savoir: i) la recherche appliquée, ii) amélioration de la gestion des ressources naturelles, iii) formation et vulgarisation agricole\. f) Consultants pour l'appui technique et études\. Exécution du Projet Réformes Sectorielles 4\. Abandon progressif de certaines des responsabilités de l'Office du Niger au profit d'autres agents économiques\. Toutes activités commerciales ont été transférées de l'Office du Niger aux autres intervenants : la commande des intrants est assurée par les associations villageoises, le labourage est assuré par les exploitants eux mêmes, le décorticage et la commercialisation sont présentement assurés par le secteur privé\. Promotion d'une politique de prix et de commercialisation liée au marché pour le paddy et le riz\. Les textes de base suivants, adoptés par le Gouvernement, ont servi à la formulation de la nouvelle politique de prix et commercialisation du paddy et du riz :a) les décrets No\. 319/PG-RM du 21 novembre 1987, No\. 323/PG-RM du 4 novembre 1988, et No\.89/PG-RM du 30 décembre 1989, qui ont progressivement libéralisé la commercialisation du riz; b) le Schéma Directeur du Développement du Secteur Agricole de 1992 qui a consacré la responsabilisation du paysans dans les processus de production et de commercialisation de ses produits, c)la Lettre de Politique de Développement de la Filière Rizicole Nationale de Janvier 1993 dans laquelle le Gouvernement a affirmé sa volonté de désengagement de l'Office du Niger de toutes les activités à caractère commercial; d) la Loi No 94-004 du 9 Mars 1994 portant Création du nouveau Office du Niger qui a fixé la principale mission de l'Office du Niger à savoir la gestion des eaux et la maintenance des aménagements; e) le Contrat Plan Etat-Office du Niger-Producteurs du 27 Décembre 1995 dont l'un des objectifs était la consolidation de la libéralisation de la filière rizicole à l'Office du Niger et un autre était l'engagement de l'Etat à garantir l'assurance de la compétitive de la production nationale par la mise au point d'un système tarifaire adéquat; f) le décret No 97-136/P-RM du 25 mars 1997 portant modification de la taxation du riz à l'importation (le taux à l'importation étant ramené de 22 % à 11 %)\. Le prix d'achat moyen annuel du paddy offert au producteur est passé de 70 FCFA/kg à 120 CFAF/kg\. Régime Foncier\. Un nouveau décret de gérance des terres à l'Office du Niger spécifiant i)es droits et les obligations du Gouvernement et de l'Office du Niger concemant les terres, bâtiments, et les installations, et ii) que les agriculteurs recevront un droit d'occupation permanent et héréditaire, après une période probatoire a été promulgué par le gouvernement le 11 juillet 1996\. Promotion de l'intermédiation financière\. Dans le processus de transfert de la responsabilité de l'administration du crédit rural de l'Office du Niger à la Banque nationale de développement agricole (BNDA), une étude à été menée pour faire le point de l'encours des prêts aux producteurs et établir des plans d'amortissement des dettes des agricultures\. Cette étude a été entreprise par l'Institut de l'économie rurale (IER)\. Néanmoins, les dettes n'ont pas été remboursées, ce qui a engendré des mauvaises habitudes de ne pas rembourser les dettes octroyées\. La ligne de crédit de 3 millions de dollars placée à la BNDA pour lui permettre d'augmenter les prêts aux agriculteurs à été entièrement mobilisée\. Sur cette ligne de crédit, 46nillions FCFA ont été octroyés à prêt de premier équipement (moyen terme de 4 ans, à 12%) de 1989 à 1991, et le reste en prêts intrants (à court terme, à 11 %)\. Le taux de recouvrement était de 92%\. Les recouvrements d'impayés sont en cours\. De nos jours, le besoin en crédit à court terme de la zone ON est couvert par les paysans, les réseaux de caisses mutuelles, certaines banques primaires organisées en centrale de risque et les fournisseurs d'intrants (dont le remboursement s'effectue en nature)\. Les besoins semblent couverts et ne nécessite pas la mise en place d'une ligne particulière de crédit\. Mais la gestion du crédit demeure en difficulté à cause de la mauvaise gestion de certaines des associations villageoises\. 41 Réformes Institutionnelles\. 5\. Les relations entre l'ON et le Gouvernement Ces relations sont réglées à travers des contrats- plans, dont les signataires sont l'Etat, l'ON et les producteurs\. En général, les dispositions des contrats- plans sont respectées par les signataires\. Mais il faut signaler que les comités de suivi des contrats-plans sont très faibles et ne jouent pas leur rôle\. Ils devraient donc être renforcés\. Mesures visant à l'organisation et au renforcement de la gestion et des systèmes opérationnels de l'ON\. Le nombre et la taille des organes administratifs ont été réduits et les organes fonctionnels regroupés ; la structure des zones de production rationalisée de façon à mettre l'accent sur l'entretien du réseaux d'irrigation, la vulgarisation, la formation et la promotion des associations villageoises ; et les systèmes de gestion fmancière ont été renforcés avec l'assistance technique financée par le FAC et l'IDA\. IDA a financé également l'achat d'ordinateurs et de la formation du personne\. Renforcement de la gestion des ressources humaines\. L'évaluation du profil et des besoins de formation du personnel existant en vue de lui permettre de remplir la nouvelle mission de l'ON a été réalisée et le personnel a été formé\. Promotion des associations villageoises (AV) Des protocoles de collaboration ont été établis entre l'ON et la direction nationale de l'action coopérative et la direction nationale de l'alphabétisation, et des programmes d'activités ont été élaborés mais non mise en ouvre sur le crédit 1906\. La coopération néerlandaise à soutenu les actions de l'ON en direction des AV\. Restructuration Financière de l'Office du Niger 6\. Les biens appartenant à l'Etat ont été soit intégrés dans les comptes de l'ON de façon à ce que l'Office du Niger puisse être entièrement responsable de leur gestion, de leur entretien et de leur utilisation, soit privatisés ; L'ON équilibre ses comptes d'exploitation grâce à la redevance payés par les producteurs et les paiements du budget d'État pour les missions de service public assurées par l'ON\. La dette à long terme de l'ON avec la Caisse autonome d'amortissement (CAA) a été annulée\. Investissements relatifs aux infrastructures et aux périmètres d'irrigation 7\. Consolidation du programme d'entretien Actuellement, l'entretien courant (réparation des brèches) est assuré au niveau des zones par les unités d'entretien dont la capacité a été assuré par ce projet et d'autres bailleurs de fonds\. L'entretien périodique simple (faucardage) est assuré par des tâcherons locaux après consultation\. L'entretien périodique, en principe tous les cinq ans, des réseaux secondaires et primaires est assuré par des entreprises, dont souvent la STD privée, après appel d'offres\. Ce système fonctionne bien sauf que l'entretien du réseau tertiaire à la charge des agriculteurs est souvent mal assuré\. Afm de promouvoir les petites entreprises locales, un système de contrats pluri-annuels de maintenance pourrait être envisagé, ce qui permettrait à des entreprises locales d'obtenir des crédits bancaires pour s'équiper en matériel\. Un autre point à signaler est que l'entretien périodique du réseau principal est effectué tous les cinq ans\. Cela entraîne que les canaux sont souvent enherbés, ce dont on n'a pas tenu compte dans les calculs hydrauliques récents\.Réparations urgentes d'infrastructures d'irrigation\. Les travaux concernaient des réparations aux canaux du Sahel et de Molodo\. Ces travaux, qui concernaient la consolidation des digues de berge et l'ouverture d'une piste de service le long du canal du Sahel, ont été exécutés correctement\. Il faut noter que l'AFD finance d'autres travaux confortatifs sur ces canaux ainsi que sur leurs ouvrages\. Réparation et entretien du barrage de Markala\. Les travaux de réparation du barrage de Markala ont été exécutés en deux phases : Dans la première, ont été révisés les équipements électro-mécaniques du barrage de Markala et de l'écluse de Thio\. Les travaux ont été exécutés et surveillés de manière satisfaisante\. Cependant, le magasin de pièces de rechange et la réparation de l'atelier de réparation n'ont pas été réalisés\. Dans la deuxième phase, la structure du barrage a été revue après une mission d'inspection\. Ont été ainsi réparées les 488 hausses du barrage, changé les équipements de l'écluse de Thio (portes, batardeaux, grilles) et réhabilité les structures de génie civil du barrage et de l'écluse\. Les travaux ont donné satisfaction\. Réhabilitation et modernisation des canaux Gruber-Nord 42 et de Siengo et du drain de Siengo\. Les travaux correspondants consistant à refaire les berges et mettre des vannes à niveau aval constant ou avec modules à masque aux ouvrages n'ont pas été très correctement réalisés\. Les remarques sur les résultats des travaux sont les suivantes : a) un contrôle visuel en 1997 a montré que le canal Gruber est sans doute trop petit (modules dénoyés)\. Cela s'explique sans doute par le mode d'entretien (cf plus haut) ; b) les vannes à modules à masque qui permettent de mesurer les volumes d'eau d'irrigation ne sont pas utilisées dans ce but ; le drain de Siengo ne débouche pas dans un drain relié au réseau d'évacuation du Kala inférieur\. Une partie des parcelles du périmètre reste donc noyee en saison des pluies\. Réhabilitation du casier deSiengo\. Les travaux de réhabilitation des 3000 ha du casier de Siengo ont été très correctement réalisés et les paysans en sont contents\. Les travaux qui posent de petits problèmes sont : les passages à bétail qui ne sont pas utilisés ; les 8 étangs piscicoles dont la gestion a finalement été confiée à des agriculteurs privés qui se plaignent de difficultés de vidange\. En supplément, le projet a financé la route en terre latéritée N'Debougou-S8 sur 14 km au droit du casier de Siengo\. La réalisation de cette route, partie de la route Niono-Dogofry, a été satisfaisante\. Cependant, comme elle est classée route nationale, son entretien doit être assuré par la Direction Nationale des Travaux Publics\. Aucun engagement n'a été obtenu de cette Direction avant les travaux\. Cependant, à l'occasion des travaux d'achèvement de la route, financés par les Pays Bas, cet engagement a été obtenu\. Travaux pilotes ruraux et aménagement deM'Bewani\. L'Office devait entreprendre, à raison de 500 ha/an, des travaux de réhabilitation à haute intensité de main d'oeuvre sur les casiers de Molodo et du Kouroumari\. Ce programme était trop ambitieux et n'a pas été mené à son terme (les reliquats de crédits sur ce volet ont servi à financer les travaux de M'Bewani)\. Quelques travaux ont cependant été exécutés avec une assistance technique hollandaise mais on n'en connaît pas les résultats en termes de production\. Il était prévu que ces travaux HIMO devraient former les agriculteurs à l'entretien mais il n'en a rien été\. Sur les reliquats financiers du projet, on a réalisé un périmètre irrigué de 460 ha à M'Bewani le long du canal Coste-Ongoïba\. L'exécution des travaux a introduit une innovation importante puisque les populations ont participé aux travaux pour environ 20 % de ceux-ci, diminuant ainsi fortement les coûts d'aménagement\. Une autre raison de la diminution des coûts a été la diminution de la qualité par rapport aux normes de l'ON (largeurs et revanches des canaux trop petites, absence de modules aux prises, absence de pistes parallèles aux canaux)\. Des travaux d'amélioration sont déjà prévus dans les prochains financement\. Impact environnemental\.Il était prévu que le projet aurait peu d'effets sur l'environnement, ce qui a été le cas\. En effet, la plupart des travaux, consistant en réhabilitations, ont eu un impact plutôt positif, même s'il a été faible : meilleur drainage, reboisements, construction de lavoirs près des villages, abreuvoirs pour animaux, réparation de l'échelle à poisson du barrage de Markala\. En revanche, l'envahissement des canaux par la jacinthe d'eau n'avait pas été envisagé\. Ce problème ne semble pas attirer suffisamment l'attention de l'ON et des bailleurs de fonds, la lutte étant menée de manière très artisanale\.Sécurité des barrages Après les réparations au barrage de Markala, l'ON a décidé de confier tous les deux ans une mission d'inspection sous-fluviale du barrage à une société\. Cela semble suffisant pour assurer la sécurité du barrage\. Il serait cependant préférable que cette pratique soit officialisée dans le contrat plan de l'ON\. La mission a reçu l'assurances semblable pour le barrage de Sélingué\. Cependant, celui-ci vient de faire l'objet d'une révision générale récente dans le cadre du projet IDA Services agricoles 8\. Recherche appliquée\. Le crédit à permis la conduite des tests de vulgarisation dans les secteurs de Ndebougou et de Molodo (travaux ruraux et réhabilitation des terres), la réflexion sur le système harmonisé de vulgarisation, la mise en place de ce système sur l'ensemble de l'ON\. Le crédit a financé des formations du personnel de vulgarisation et des paysans au centre de formation et à l'extérieur (pour plus de 15 millions), des équipements et une partie du fonctionnement \. Les techniques en vigueur à l'ON ont été diffusées : intensification de la riziculture (le rendement avant réhabilitation 92/93 est de 3 tonnes/ha dans la zone de Siengo, il est de 6, 4t/ha en 89/99) , gestion de l'eau, la culture attelée, la double riziculture (9 %), la diversification des cultures (cultures maraîchères 17 ha en 92/93 et 175 ha en 43 98/99, 7,5 ha d'étang piscicole)\. Malgré les accords de collaborations signés entre l'ON et les directions nationales de l'élevage et celles des Eaux et Forets, les deux domaines ont été complètement occultés par le système de vulgarisation, les programmes de travail proposés par ces directions n'ayant pas été approuvés ni financés par la Direction à travers le crédit\. Le plan de formation et le plan de carrière n'existent pas , les formations sont faites suivant les opportunités\. La majorité des organisations paysannes (60 %) sont satisfaits des services du système actuel, mais affirment (65 %) avoir d'autres besoins de formation (conseil agricole, auto-promotion, alphabétisation)\. Il est souhaitable de redynamiser le dispositif avec l'appui du programme national de vulgarisation\. Amélioration de la gestion des ressources\. Deux études ont été menées : celle qui a produit des cartes d'utilisation des sols au 1/10 000" et celle de la cartographie des sols au 1/ 10 000"\. Ces cartes existent mais sont peu utilisées\. Les plantations collectives de bois villageois se sont poursuivies (21 ha dans la zone de Siengo de bois collectif et individuel)\. Par contre dans la zone du projet il n'y a pas eu de plantation le long du réseau\. Les analyses de la qualité de l'eau pour contrôler la pollution par les engrais ne sont pas réalisées, mais le sujet reste important eu égard aux quantités d'engrais utilisées (200 kg DAP et 300 kg d'urée par culture de riz)\. La contribution du Pole de recherche des systèmes irrigues (PSI) pourrait être sollicitée et celle du projet santé primaire de Niono\. 9\. En conclusion, le Gouvernement a tenu à ses engagements\. La détermination des prix et la commercialisation du riz et des autres produits agricoles ont été entièrement libéralisés notamment dans le cadre du P\.RMC\. Ces mesures de libéralisation, l'adoption d'une fiscalité sur les importations de riz et la dévaluation du F CFA ont amélioré la compétitivité du riz malien tant à l'intérieur qu'à l'extérieur du Mali\. Ce faisant, elles ont concouru à l'augmentation des revenus des paysans et à l'amélioration de leurs conditions de vie\. Le programme d'investissement a été, en général, correctement exécuté\. Cependant, l'appui aux organisations des producteur aurait dû être plus fort\. En ce qui concerne la pérennisation des\. investissements, la redevance payée par les producteurs est suffisant pour l'entretien du réseau secondaire, l'entretien du primaire étant assuré par l'Etat\. Il est recommandé que, vu l'accroissement du revenu à l'Office du Niger grâce aux réhabilitations, aux reformes politiques et institutionnelles et aux services agricoles renforcés, les producteurs prennent en charge l'entretien du réseau primaire\. En plus, le mécanisme du contrat-plan, qui réunit les trois principaux partenaires (les producteurs, l'ON, et l'Etat), sert à garantir la pérennisation des infrastructures d'irrigation\. Néanmoins, il est vivement recommandé que le comité de son suivi soit renforcé pour mieux assurer ses fonctions\. Le projet a également fourni du matériel de petit entretien (4 tracteurs agrioles, 2 tracteurs polyvalents, 2 rouleaux ompacteurs, 4 groupes motopompes, 4 remorques simples, 2 remorques citernes) pour les centres de Molodo et Diabali\. Ce matériel devrait essentiellement être utilisé pour les travaux urgents (réparation de brèches) mais il a parfois été utilisé pour des travaux qui auraient dû être confiés à l'entreprise\. Qualitativement, il a donné satisfaction et son amortissement est effectué dans le ompte global d'amortissement de l'Office\.  ‘斗； 醫

REVIEW

P077306

 Document of The World Bank Report No: ICR00002147 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-72640 IDA-40070 TF-54392) ON A CREDIT IN THE AMOUNT OF SDR 53\.3 MILLION (US$78\.5 MILLION EQUIVALENT) A LOAN IN THE AMOUNT OF US$ 24\.4 MILLION AND A GRANT IN THE AMOUNT OF GBP 12\.152 MILLION TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A TAX ADMINISTRATION REFORM PROJECT June 25, 2012 Governance and Public Sector Management Unit South Asia Region  CURRENCY EQUIVALENTS Exchange Rate in original PAD Currency Unit = Pakistani Rupee (PKR) PKR 1\.00 = US$ 0\.016 US$ 1\.00 = PKR 61\.05 Exchange Rate Effective May 15, 2012 US$ 1\.00 = PKR 90\.87 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS ADR Alternate Dispute Resolution APL Adaptable Program Loan ATL Active Taxpayers List BS Basic-pay Scale CAS Country Assistance Strategy CBR Central Board of Revenue CCFR Cabinet Committee for Finance and Revenue CEG Customs and Excises Tax Group CPS Country Partnership Strategy DCA Development Credit Agreement DFID Department for International Development (UK) DLI Disbursement Linked Indicator DPL Development Policy Loan EAP East Asia and Pacific Region ECA Europe and Central Asia Region EMP Environmental Management Plan ERR Economic Rate of Return ERS Expeditious Refund System FATE Facilitation and Taxpayer Education FBR Federal Board of Revenue FM Financial Management FMR Financial Monitoring Report FRR Financial Rate of Return GDP Gross Domestic Product GoP Government of Pakistan GST General Sales Tax HQs Headquarters (FBR) HRIS Human Resource Information System HRM Human Resources Management IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICR Implementation Completion and Results Report ICT Information Communication Technology IDA International Development Association IMF International Monetary Fund IMS Information Management Systems IRS Inland Revenue Service ISR Implementation Status and Results Report IT Information Technology ITG Income Tax Group ITMS Integrated Tax Management System KPI Key Performance Indicator LAC Latin America and Caribbean Region LTU Large Taxpayer Unit MoF Ministry of Finance MCC Model Customs Collectorate MDGs Millennium Development Goals M&E Monitoring and Evaluation MTR Mid-term Review MTU Medium Taxpayer Unit OECD Organization for Economic Cooperation and Development PAD Project Appraisal Document PCR Project Completion Report PDO Project Development Objective PEA Political Economy Analysis PIFRA Project to Improve Financial Reporting and Auditing PIP Project Implementation Plan PKR Pakistani Rupee PMU Project Management Unit PPF Project Preparation Facility PRAL Pakistan Revenue Automation Ltd PRSC Poverty Reduction Structural Credit PRSP Poverty Reduction Strategy Paper PSDP Public Sector Development Program QCBS Quality and Cost Based Selection RFP Request for Proposal RGST Reformed General Sales Tax RMU Risk Management Unit Rs Rupees RTO Regional Taxpayer Office SAC Structural Adjustment Credit SBD Standard Bidding Document SDR Special Drawing Right SOE Statement of Expenditures SOP Standard Operating Procedures SP&S Strategic Planning and Statistics Wing (FBR) STARR Sales Tax Automated Refunds Repository System TA Technical Assistance TAMS Taxpayers Audit Management System TARP Tax Administration Reform Project TFC Taxpayer Facilitation Center TTL Task Team Leader UNDB United Nations Development Business VAT Value Added Tax Vice President: Isabel M\. Guerrero Country Director: Rachid Benmessaoud Sector Manager: Tony Verheijen Project Team Leader: Daniel Alvarez-Estrada ICR Team Co-leaders: M\. Taqi Sharif and William V\. Mayville  COUNTRY Islamic Republic of Pakistan CONTENTS Datasheet A\. Basic Information \. i B\. Key Dates \. i C\. Ratings Summary \. i D\. Sector and Theme Codes\. ii E\. Bank Staff \. ii F\. Results Framework Analysis \. iii G\. Ratings of Project Performance in ISRs \. v H\. Restructuring (if any) \. vi I\. Disbursement Profile \. vi 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 4 3\. Assessment of Outcomes \. 10 4\. Assessment of Risk to Development Outcome \. 15 5\. Assessment of Bank and Borrower Performance \. 16 6\. Lessons Learned\. 19 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 21 Annex 1\. Project Costs and Financing \. 23 Annex 2(A)\. Project Outcome Indicators \. 26 Annex 2(B)\. Intermediate Outcome Indicators \. 27 Annex 2(C)\. Assessment by Components \. 29 Annex 2(D)\. Link between Original and Revised Components \. 35 Annex 2(E)\. Activities Planned to be Financed by Components\. 37 Annex 3\. Economic and Financial Analysis \. 40 Annex 4(A)\. Bank Lending and Implementation Support/Supervision Processes \. 47 Annex 4(B)\. List of Key FBR Officials under TARP \. 50 Annex 4(C)\. List of Bank Task Team Leaders (TTLs) and co-TTLs \. 52 Annex 5\. Beneficiary Survey Results (Summary) \. 53 Annex 6\. Stakeholder Workshop Report and Results \. 55 Annex 7\. Summary of Borrower's PCR and/or Comments on Draft ICR \. 56 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 70 Annex 9\. List of Supporting Documents \. 72 Map \. 74 A\. Basic Information Pakistan Tax Country: Pakistan Project Name: Administration Reforms Project IBRD-72640,IDA- Project ID: P077306 L/C/TF Number(s): 40070,TF-54392 ICR Date: 06/26/2012 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: SIL Borrower: PAKISTAN Original Total USD 102\.90M Disbursed Amount: USD 48\.41M Commitment: Revised Amount: USD 46\.70M Environmental Category: B Implementing Agencies: Federal Board of Revenue Cofinanciers and Other External Partners: Department for International Development (DFID) B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/29/2003 Effectiveness: 04/07/2005 04/07/2005 09/01/2010 Appraisal: 05/19/2004 Restructuring(s): 12/15/2011 Approval: 12/07/2004 Mid-term Review: 09/15/2007 08/15/2007 Closing: 12/31/2009 12/31/2011 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Unsatisfactory Borrower Performance: Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Unsatisfactory Government: Unsatisfactory Implementing Moderately Quality of Supervision: Moderately Satisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Unsatisfactory i Performance: Unsatisfactory Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes Satisfactory at any time (Yes/No): (QEA): Problem Project at any Quality of Yes Moderately Satisfactory time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 95 100 Sub-national government administration 5 Theme Code (as % of total Bank financing) Administrative and civil service reform 20 30 Tax policy and administration 40 60 Trade facilitation and market access 40 10 E\. Bank Staff Positions At ICR At Approval Vice President: Isabel M\. Guerrero Praful C\. Patel Country Director: Rachid Benmessaoud John W\. Wall Sector Manager: Antonius Verheijen Simon C\. Bell Project Team Leader: Daniel Alvarez Estrada Mudassir Khan ICR Team Leader: Mohammed Taqi Sharif ICR Primary Author: Daniel Alvarez Estrada Mohammed Taqi Sharif William V\. Mayville ii F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) According to the DCA, the PDOs of the project were to: (i) improve the effectiveness, responsiveness, efficiency, integrity and fairness of tax administration; (ii) promote compliance with tax laws and broaden the tax base; and (iii) promote trade facilitation\. Revised Project Development Objectives (as approved by original approving authority) In August 19, 2010, the project was restructured and the PDOs were reformulated and streamlined\. The PDO became: "To improve the effectiveness of Pakistan's revenue administration"\. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years FBR gross and net revenue collection as a percentage of tax revenue targets Indicator 1 : (annual) Rs\. 1,558 bn\.(FY Value Rs 875 bn (FY Rs\. 1,327\.4 bn 2010/11), against a quantitative or Rs 517 bn (FY 2003/04) 2008/09) (FY 2009/10) (post-floods) target Qualitative) of Rs 1,604 bn\. Date achieved 06/30/2004 06/30/2009 06/30/2011 06/30/2011 Comments (incl\. % 97\.1% achievement achievement) Indicator 2 : FBR total tax collection/GDP (annual): increase Value quantitative or 11\.5% 12\.2% 9\.8% 8\.6% Qualitative) Date achieved 06/30/2004 06/30/2009 06/30/2011 06/30/2011 Comments (incl\. % GDP to Tax ratio at closing was 8\.6%\. achievement) Indicator 3 : Survey based ratings for the FBR: improved perception by stakeholders; 2011 survey showed improvements in overall level of Value transparency and quantitative or 2007 survey results N/A N/A LTU operations, Qualitative) and deterioration in tax filing procedures and disposal of appeals\. iii Date achieved 12/31/2007 12/30/2011 12/31/2011 12/31/2011 Comments (incl\. % As shown above\. achievement) Indicator 4 : Stop-filers as percentage of registered active taxpayers Value Stop-filers (FY 2008/09) : Income tax: 28%, quantitative or Income tax 67%; and N/A N/A and Sales Tax 8% Qualitative) Sales tax 4% (FY 2010-11) Date achieved 06/30/2009 12/31/2011 12/31/2011 06/30/2011 Comments (incl\. % Income tax: 28%, and Sales Tax 8%\. achievement) Additional tax paid after audit as percentage of total tax collection of domestic Indicator 5 : taxes: increase Value At restructuring (FY quantitative or 2009/10) N/A Rs\. 7,700m\. Rs 6,231m (0\.39%) Qualitative) :Rs\. 7,560m (0\.56%); Date achieved 06/30/2010 12/31/2011 06/30/2011 06/30/2011 Comments (incl\. % Revised target not achieved\. achievement) Indicator 6 : Modernized FBR organization structure Fully Moderate to functional significant Value Organization based on FBR shortcomings in quantitative or Same as above\. tax-type organization achieving full Qualitative) by the end of functional FBR the project\. organization\. Date achieved 12/31/2009 12/31/2009 12/31/2011 12/31/2011 Comments (incl\. % As above achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Administrative cost of collection as % of total revenues (annual) Value (quantitative At appraisal: 0\.60 % 0\.77% Under 1% 0\.87% or Qualitative) Date achieved 12/31/2004 12/31/2009 12/31/2011 12/31/2011 Comments (incl\. % Achieved\. achievement) Indicator 2 : No\. of staff trained iv Value (quantitative Unkown N/A 5,000 annual 2694 or Qualitative) Date achieved 12/31/2004 12/31/2011 12/31/2011 12/31/2011 Comments (incl\. % Target not achieved\. achievement) Indicator 3 : Percent of tax returns filed electronically 100% for sales tax Value and corporate (quantitative N/A N/A 36% income tax; 32% or Qualitative) for the rest of taxpayers\. Date achieved 12/31/2011 12/31/2011 12/31/2011 12/31/2011 Comments (incl\. % Target generally achieved\. achievement) Indicator 4 : Number of registered taxpayers Value At appraisal: 1\.683 (quantitative 2\.895 million 4\.047 million 3\.766 million million or Qualitative) Date achieved 12/31/2004 12/31/2009 12/31/2011 12/31/2011 Comments (incl\. % Target not achieved\. achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 06/03/2005 Satisfactory Satisfactory 3\.06 2 12/03/2005 Satisfactory Satisfactory 6\.81 3 05/18/2006 Satisfactory Satisfactory 8\.67 Moderately 4 12/27/2006 Moderately Satisfactory 10\.99 Unsatisfactory Moderately 5 06/15/2007 Moderately Satisfactory 12\.57 Unsatisfactory Moderately 6 12/17/2007 Moderately Satisfactory 15\.62 Unsatisfactory Moderately 7 06/25/2008 Moderately Satisfactory 18\.80 Unsatisfactory Moderately 8 12/27/2008 Moderately Satisfactory 22\.22 Unsatisfactory Moderately 9 06/29/2009 Moderately Satisfactory 24\.44 Unsatisfactory 10 12/29/2009 Moderately Satisfactory Moderately Satisfactory 25\.62 v  11 10/10/2010 Moderately Satisfactory Moderately Satisfactory 33\.80 Moderately 12 12/27/2011 Moderately Satisfactory 44\.49 Unsatisfactory H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Sharpen PDO, realign activities, cancel loan amounts, reclasify 09/01/2010 Y MS MS 32\.68 environmental category, extend closing date 12/15/2011 MS MS 44\.49 Amend DCA If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Moderately Unsatisfactory Against Formally Revised PDO/Targets Moderately Unsatisfactory Overall (weighted) rating Moderately Unsatisfactory I\. Disbursement Profile vi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. Country and sector background: Since the early 1990s, successive governments have tried to reform Pakistan‟s tax system\. Despite these attempts, the tax/GDP ratio has remained low (10 to 13 per cent)1\. This relatively low ratio in Pakistan is primarily due to inherent weaknesses in the tax system including: (i) inefficient tax administration (poor management, weak human resources, lack of adequate supporting systems, excessive scope for discretion and rent seeking behavior); (ii) a narrow tax base (of 39\.4 million employed persons, only 3\.9 percent pay tax); (iii) skewed tax structure (68% of tax revenue is from indirect taxes); (iv) a complex and non- transparent tax system; and, (v) corruption and tax evasion (low compensation of tax officials, informal structure of the economy)\. 2\. Government Strategy: Recognizing the critical need to increase tax revenue as paramount for fiscal stability, the Government of Pakistan (GoP) adopted a two-pronged strategy: tax policy change, to make the tax system more responsive to growth and easier to administer; and, tax administration improvements to enhance collection efficiency\. Based on the recommendations of a Task Force2, supported by the Bank, the Federal Board of Revenue (FBR)3 developed a broad strategy for reforms focusing on: (i) restructuring of FBR along functional lines and integration of income, sales and excise taxes; (ii) reengineering and automating business processes and workflows; (iii) establishing databases for reporting and audit purposes; (iv) introducing a self assessment system for filing tax returns; (v) improving services for taxpayers; and, (vi) strengthening the human resource base\. GoP also intended to improve its fiscal position by enhancing the tax/GDP ratio from its stagnant level\. Further, GoP made several tax policy reforms, which included change in the organizational structure of FBR, abolition of wealth tax, introduction of two-tier Agriculture Income Tax in all provinces, reduction in multiplicity of taxes at both federal and provincial levels, broadening the base of General Sales Tax (GST), lowering of income tax rate, and gradual withdrawal of Central Excise Duties\. 3\. Rationale for Bank assistance: Against this backdrop, and following a number of earlier interventions4, the Bank provided a Project Preparation Facility (PPF) of US$2\.9 million in 2002 to support implementation of GoP‟s tax reform initiatives and to prepare a comprehensive 1 The band of 10% -13% for Pakistan covers the period 1993-2003\. As per OECD, the tax/GDP ratio ranges between 30 to 50 per cent for developed countries, with an average of 38%, while for developing countries it is about 18% (PAD, page 5)\. However, an upward adjustment by GoP authorities to the GDP series data starting in 2000/01 affects tax/GDP data comparisons included in the PAD for the periods before 2000/01 and after 2010/11\. As a result of the recalculation of the GDP series, the tax/GDP was adjusted downwards by about 3% of GDP in the year 2000/01\. 2 Task Force report dated May 2001, which was approved by the President in November 2001\. 3 Until July 2007, the revenue agency was called the Central Board of Revenue (CBR)\. It then became the Federal Board of Revenue (FBR), which designation will be used throughout the ICR\. 4 These included lending (Institutional Development Fund Grant –IDF 2000; Second Structural Adjustment Credit – SAC 2, 2002; and the Poverty Reduction Structural Credit -PRSC I, 2004) and non-lending (Joint Bank/IMF technical report on Tax Administrations Reforms, 2001; Joint Bank/IMF recommendations on revenue administration reforms, 2003)\. 1 strategy with implementation timelines and costs for the medium/long term reform program5\. The PPF was intended to support the testing of pilot schemes including, inter alia, the setting up of Large Taxpayer Unit (LTU), Medium Taxpayer Unit (MTU), sales tax refund program, and human resource information management system\. In 2004, the Bank assisted FBR in the preparation of the Tax Administration Reform Project (TARP) to achieve significant progress in the GoP‟s reform program,6 on a phased basis\. TARP was prepared to: (i) restructure FBR along functional lines and have an integrated tax administration over the long term; (ii) strengthen FBR through organizational and management reforms, and provide it with necessary autonomy; (iii) improve the level of existing human resource capacity through streamlined training; (iv) re- engineer its operational processes and systems, and introduce modern and automated risk based tax systems that would reduce contact between taxpayers and tax officials, foster voluntary compliance, and strengthen the institutional framework for tax enforcement; and, (v) improve FBR‟s physical infrastructure\. 1\.2 Original Project Development Objectives (PDOs) and Key Indicators (as approved) 4\. The PDOs 7 of the project were to: (i) improve the effectiveness, responsiveness, efficiency, integrity and fairness of tax administration; (ii) promote compliance with tax laws and broaden the tax base; and (iii) promote trade facilitation\. 5\. Key Performance Indicators (KPIs): These were: ï‚ Macro indicators: (a) total tax revenues collected by tax/GDP ratio; (b) tax revenues collected by sector/GDP; and, (c) average time taken by new businesses to register with tax authorities\. ï‚ Organizational efficiency and effectiveness: amount of taxes collected/number of tax administration staff\. ï‚ Compliance management: (a) number of registered active taxpayers; (b) tax revenues paid on time/total revenues assessed; (c) ratio of additional taxes collected after tax audit/number of tax audits conducted; and, (d) stakeholder opinion on quality of services provided (collected through a structured survey conducted by an independent firm and through report cards introduced)\. ï‚ Trade facilitation: (a) reduction of the average customs clearance time to less than one day by the end of 2006, and (b) to under four hours by the end of the project at designated sites\. 5 This PPF followed a series of PRSCs / DPLs that were also aimed at tax reform\. 6 The reform program was further supported by: (i) Technical Assistance which included support to FBR and MoF on GST policy reform and support to TARP implementation starting in 2008; (ii) Analytical Work, for a comprehensive study on Pakistan‟s tax system, launched in January 2007 and concluded in July 2009; and, (iii) subsequent development policy credits supporting key policy and administrative reforms until 2010\. 7 According to Project‟s Development Credit Agreement (DCA), dated March 9, 2005\. 2  ï‚ Integrity and fairness: (a) public perception of revenue administration integrity as measured by periodic surveys; (b) staff perception of integrity as measured by periodic surveys; and, (c) average number of days to complete administrative appeals process\. 1\.3 Revised PDO and Key Indicators, and reasons/justification 6\. In August 2010, the project was restructured 8 and the PDOs were reformulated and streamlined\. The PDO became: To improve the effectiveness of Pakistan‟s revenue administration\. The reformulated outcome indicators were: ï‚ FBR gross and net revenue collection as a percentage of tax revenue target (total for each tax) (monthly, quarterly, annual): increase; ï‚ FBR total tax collection/GDP (annual): increase; ï‚ Survey based ratings for the FBR: improved perception by stakeholders; ï‚ Stop-filers as percentage of registered active taxpayers (total, type of tax, and taxpayer size): decreased percentage; ï‚ Additional tax paid after audit as percentage of total collection of domestic taxes: increase; and ï‚ Modernized FBR organization structure fully functional\. 7\. The 2010 project restructuring was intended to: (i) respond to GoP‟s renewed commitment to key revenue administration and policy reforms and more effective project implementation in the wake of Pakistan‟s macroeconomics challenges9; and (ii) produce a more focused project, with a clearer, results-oriented development objective and relevant results indicators in line with FBR‟s adopted 2008 Action Plan, based on Bank recommendations\. The indicators were similar to the original ones but consolidated to address outstanding organizational and implementation issues, including updated revenue targets, stakeholder perceptions (survey), and several efficiency and effectiveness measures\. 1\.4 Main Beneficiaries 8\. The intended beneficiaries under the original and restructured project were: (i) taxpayers at the household and corporate levels in Pakistan, through simplified tax regulations and reporting requirements allowing, among other objectives, a smoother transition from the informal to formal economic sectors; and, (ii) FBR‟s departments and collectorates10\. 1\.5 Original Components 9\. The TARP comprised seven components: (i) Management and Institutional Development; (ii) Improving Revenue Operations; (iii) Strengthening Revenue Services; (iv) Creating a Tax Compliant Culture; (v) Adopting Responsive IT Systems; (vi) Infrastructure Up- gradation and Development; and, (vii) Project Management and Implementation\. 8 The restructuring was approved by the Bank‟s Executive Directors on September 1, 2010\. 9 This relates to concerns about high current account deficit, the employment downturn, substantial external financing requirements and insufficient counterpart financing due to limited fiscal space\. 10 The FBR Customs field offices are known as Collectorates\. 3 1\.6 Revised Components 10\. After restructuring, the original components were reorganized into four components for simplification and more effective implementation and monitoring as follows: A\. Enforcement (including audit); B\. Organization and Management for increased efficiency; C\. Information Technology; and D\. Project Management and Implementation\. (Annex 2D shows the linkage between the original and the revised components, and Annex 2E shows the activities planned under various components)\. 1\.7 Other significant changes 11\. The 2010 restructured TARP emphasized: (i) actions to strengthen enforcement and resume audits; (ii) changes in FBR‟s organization and management to increase efficiency (functional organization); (iii) responsive IT systems; and, (iv) project and program management activities\. None of the changes altered the original economic, financial, technical, institutional or social aspects of the project as originally appraised\. The financial management and disbursement arrangements remained the same\. 12\. Other significant changes included: (i) Realignment of project activities to conform to the FBR Action Plan (including internal adjustments in activities), with revised project costs and an updated Procurement Plan; (ii) Reduction of the overall IBRD loan amount to reflect changes in the FBR‟s IT and automation strategy (basically handled internally by FBR without loan resources), and reallocation of loan, credit and grant funds to finance the revised project activities and costs; (iii) Classification of the project as environmental category “Bâ€?, to fully conform to OP/BP 4\.01 (Environmental Assessment), and inclusion of measures to ensure safeguard compliance; (iv) 100 percent financing of eligible expenditures from IDA Credit and the DFID Grant11; (v) a single disbursement category to simplify disbursements under previous expenditure categories within the overall amounts available under both the IDA Credit and the DFID Grant, to avoid further amendments in the legal agreement; and (vi) extension of the Closing Date of TARP to December 31, 2011\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 13\. Lessons from earlier operations: Lessons learned from Bank-supported tax administration reforms in LAC, EAP, ECA Regions, and previous efforts to improve tax administration in Pakistan were incorporated into the original project, including: high level political support and ownership of program; presence of “champions of changeâ€? within the tax department; special attention to taxpayer facilitation; reduction in the discretionary powers of tax officials; simplification of procedures for filing and processing of tax returns; and establishment of a consultative process\. 11 This was in recognition of the constraints posed by the prevailing fiscal challenges in Pakistan and the paucity of counterpart funds\. 4 14\. Project design: Original project design features that positively impacted project implementation and outcomes include: (i) adequate resource allocation for FBR‟s physical infrastructure upgrading and IT deployment required to support the implementation of the tax administration reform agenda, and (ii) significant emphasis on the development of taxpayer services for FBR to reduce taxpayer compliance costs, including the deployment of facilitation centers\. On the other hand, project implementation and outcomes were negatively impacted by factors related to project design, including: (a) over-optimistic assumptions about the implementation of legislative changes required to reform tax legislation and implement a functionally integrated FBR12, and (b) underestimation of internal resistance to FBR‟s integration initiatives by staff of the Customs and Excise Group (CEG) and the Income Tax Group (ITG)\. 15\. Quality at entry: Initial project implementation was negatively affected by lack of preparedness on key strategic choices on information technology (IT) strategy, fiduciary arrangements, and inadequate Bank technical support: ï‚ Policy uncertainty on an IT modernization strategy\. The decision to outsource customs automation as a public-private partnership activity instead of the investment planned under the project, took some US$28 million of intended disbursements out of the project\. In addition, FBR management and its internal IT group could not agree on whether an off-the-shelf integrated solution vs\. in-house development of an Integrated Tax Management System (ITMS) would be the right option\. In general, prolonged disagreements in the development of IT software and infrastructure led to a delay of more than two years in implementing the procurement plan\. 13 ï‚ Lack of policy dialogue on key policy and legislative reform measures needed to achieve project’s development objectives\. Excessive focus on the minutiae of project implementation in the initial years resulted in the Bank‟s team inattention to the importance of having regular high-level policy dialogue with GoP/FBR and providing TA to FBR to support tax administration reform efforts\. ï‚ Lack of Bank technical assistance to support initial stages of project implementation\. The depth and comprehensiveness of the proposed reform of tax and customs administration, combined with uneven technical and absorption capacity at FBR, required strong TA guidance at the outset to develop an action plan with breakdown of actions and tasks\. The PPF inputs and pilot results were not followed, leading to disconnected inputs and products and little or no institutionalization of assistance rendered in many key functionalities\. ï‚ Initial misclassification of project’s environment category\. Despite a large civil works component aimed at the refurbishment of several existing FBR buildings and facilities14, 12 For the integration of FBR into a full, function-based organization to be successful and sustainable, due diligence work was required at the outset to test the extent of reforms needed in key pieces of legislation and FBR‟s internal rulings, and its likelihood of success\. 13 IT strategy at entry was not implemented as planned, which left an undisbursed balance of nearly $51 million at the originally scheduled closing of the project (December 31, 2009)\. The procurement processes involved (single and two stage bidding) also proved to be a disruptive element at this stage\. 14 According to the project‟s PAD, the infrastructure up-grading component was estimated at US$24 million, which represented about 17 percent of total project cost\. 5  and the construction of some new facilities, the project was classified as “Câ€?, instead of “Bâ€?, leading to insufficient attention to full compliance with Bank OP/BP 4\.01 on environmental assessment\. 16\. Identification of risk factors and mitigation measures: The project was implemented within a more volatile and risky environment than originally estimated, due to a combination of factors, such as: adverse economic circumstances, a challenging political environment with frequent changes of political authorities and FBR staff at the senior levels, turnover on Bank supervision teams, strong internal resistance to change, adverse country security issues, and unstable infrastructure needs, such as power supply\. 17\. Most risk factors were adequately identified in the original project design, except for the following: ï‚ Lack of implementation of critical tax policy reforms\. The achievement of development objectives targeted at the outset in terms of revenue mobilization15required substantial and parallel efforts in both tax policy and tax administration\. Mutually supportive reforms in both are not only a desirable strategy aligned with best practice in tax reforms worldwide, but in the particular case of Pakistan, represented a key element for success\. Reform of FBR alone was insufficient to bring in expected collection targets operating within a narrow based, non-transparent, and complex tax legislation\. 16 In particular, the lack of approval of a broad-based VAT legislation, or reformed GST, proved a major constraint for the project to achieve PDOs\. ï‚ Needed reforms on legal framework\. Structural changes to FBR, as originally envisioned in the PAD, entailed the need to anticipate legal constraints embedded in different pieces of legislation and ordinances with the potential to reduce the scope of project implementation in key areas\. This was particularly critical for the integration of revenue administration structure to operate under functional lines, and for the harmonization of tax procedural rules required to administer different taxes under a common institutional platform\.17 The legal constraints imposed in the Tax Acts limited FBR‟s ability to reorganize and to take computerized actions or reallocate functions to different staff, as this could only be done through appropriate amendments in the legislation\. ï‚ A highly volatile political and security environment\. The project was implemented within an unstable and contentious political period, characterized by significant public activism, changes in government, and increasing insecurity in the country\. These unpredictable circumstances had severe consequences for project implementation, 15 Original project design estimated a buoyancy coefficient (ratio of percent change of tax revenue to GDP or other underlining tax base) of 1\.2, signaling an increase of 0\.20 percent of tax-GDP ratio for each one percent increase of GDP\. 16 A complete description of the tax policy role on the reform of the tax system in Pakistan is described in “Tax Policy Report, Tapping Tax Bases for Developmentâ€?, Report no\. 50078-PK, World Bank, 2009\. 17 For example, tax legislation in Pakistan empowers only specific FBR authorities (e\.g\. commissioners) to carry out key operational procedures (e\.g\. some refunds or enforcement actions), limiting the scope of the reform to reorganize and reallocate functions across the organization following cost-effective criteria\. 6  including recruitment of international consultants and travel to Pakistan by Bank missions\. 18\. Among the identified risk factors with insufficient identification of mitigation measures, stiff resistance from vested interests against restructuring of FBR resulted in slow progress on the functional integration of income, sales, and excise taxes\. Despite being recognized as a major risk factor at the outset, executive and staff resistance to restructuring proved to be a major disruptive element throughout implementation\. A change management workshop promoted by FBR authorities during project preparation was foreseen as a mitigation measure at entry point, while similar events were advised in future stages of reform implementation18\. However, the depth of the organizational reform embraced by the project, even if implemented gradually as advocated by the Bank, entailed a fundamental and complex change with highly unsettling potential consequences for an organization facing internal struggles to reform\. The litigation and the Inspection Panel review, initiated by groups of FBR staff associations, have highlighted that additional mitigation measures should have been proposed at the outset to ensure a gradual but effective management of organizational change, while providing safeguards for an equitable and fair treatment of all staff along the reorganization process\. 2\.2 Implementation 19\. Implementation was affected by the following factors: Positive Factors in Project Implementation ï‚ The Federal Board of Revenue Act, 2007 was approved by the Parliament, replacing the Central Board of Revenue with the new Federal Board of Revenue, in line with the tax administration reforms that had been agreed between GoP and the Bank, and set the stage for functional integration at FBR\. ï‚ The over four years‟ tenure of the first Chairman, FBR under TARP (March 12, 2004 to July 23, 2008) reflected GoP‟s strong commitment to tax administration reform and provided the continuity that had been envisaged at appraisal\. ï‚ Project restructuring, extension of the closing date, and the appointment of a committed PMU Chief/Project Director, helped the project to complete many critical activities related to physical and IT-related infrastructure\. Factors that Negatively Affected Project Implementation ï‚ Overall lack of reform ownership by FBR rank and file officers, frequent changes of FBR leadership after 2008, and delays in formation of the PMU and readying procurement 18 Also, original project design embraced a “co-locationâ€? strategy towards FBR integration along functional lines from tax-by-type bases\. According to this strategy, location of sales and income tax staff in the same physical space, without changing lines of authority, was expected to ease transition towards a new structure\. Without additional measures to accelerate the restructuring process, the strategy increased entrenchment to maintain the traditional modus operandi across field formations\. 7  packages before loan approval, undermined continuity of project management, weakened implementation monitoring, slowed procurement, and hindered financial management and disbursements\. ï‚ Inability of GoP to secure Parliamentary approval for the broad-based GST legislation - originally envisioned to be introduced by July 2010, but indefinitely postponed thereafter, limited the project‟s scope to achieve PDOs\. ï‚ Inspection Panel review, requested in January 2010 by officers of the Customs and Excise Association, slowed reform momentum, underlined divisions among staff from different service groups, delayed the restructuring process 19 , led to departures of key personnel from the PMU, and as a result further delayed processing of major IT procurement packages20\. ï‚ Unfavorable economic circumstances on account of a deteriorating security situation, and the massive floods in 2010 and 2011, further eroded tax bases and compliance levels\. ï‚ Slow responsiveness of World Bank supervision teams before project restructuring to resolving implementation bottlenecks, and insufficient pro-activity to suggest timely corrective actions, which was partly affected by changes in TTLs\. ï‚ Weak monitoring and evaluation arrangements (see 2\.3 below)\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 20\. FBR‟s PMU was initially responsible for establishing the M&E sub-component of TARP to monitor the original key performance indicators (KPIs)\. The project management team prepared a baseline scenario with qualitative and quantitative performance indicators\. Following the approval of the project restructuring, TARP‟s performance was assessed against the revised KPIs\. Especially since September 2008, FBR regularly provided data against the KPIs to Bank implementation review and TA missions\. 21 However, FBR did not set up a specific M&E/Coordination unit with oversight at a Member level, to adequately monitor progress of, and follow up on, the reform action plan, detect deviations and propose short-term responsive actions\. This shortcoming had been consistently flagged in the Bank‟s supervision documents since 2009 as a major constraint to project implementation and follow up of actions agreed during supervision missions\. The creation of an M&E/Coordination unit for TARP, with supervision at a Member level, remained an unfulfilled commitment by FBR management until the project‟s closing date\. 19 Source: Restructuring Paper – August 19, 2010\. 20 The Bank initially agreed on only a 3-month extension (up to March 31, 2010)\. The PMU was unable to start major procurement processes in light of prevailing uncertainty\. 21 Data on TARP performance was provided by various units of FBR to the Member for Strategic Planning and Statistics (SP&S), who was also the Project Director for TARP for most of 2009–2011\. The office of Member, SP&S, served as the focal point for Bank supervision missions\. 8 2\.4 Safeguards and Fiduciary Compliance 21\. Safeguards: At the restructuring, the project‟s environmental category was changed from “Câ€? to “Bâ€? and OP/BP 4\.01 (Environmental Assessment) was triggered owing to the construction of some housing facilities for FBR staff in different cities in Pakistan, financed by TARP 22\. GoP prepared an environmental management plan (EMP) with adequate institutional arrangements to address possible low-level, temporary environmental impacts\. The EMP compliance varied between different work sites, and is rated as moderately satisfactory\. One weak area was irregular preparation of the quarterly progress report - only three such reports for EMP compliance were prepared for six quarters\. One of the construction sites had some moderate level of environmental sensitivity related to the need to avoid the cutting of several mature trees in a hilly terrain, which the project complied with\. 22\. Financial Management: The PMU was responsible for financial management (FM) aspects of TARP\. The project had a disbursement flag (2008 and 2009) on account of long delays in implementation of large IT packages\.23 On account of delays in the hiring of FM specialists and the departure of the finance advisor from the PMU, the FM ratings in the ISRs were less than satisfactory until late 2009\. During this period, the external auditors also highlighted a number of observations on poor FM practices\. From 2010 onwards, a dedicated and strengthened team in the PMU was able to turn the performance around, address the pending audit queries, significantly increase the disbursement rate, and obtained a satisfactory FM rating from the Bank supervision mission in July 2011\. 23\. Procurement: The PMU handled the procurement function as well\. As in the case of the FM function, procurement was slow in the early years on account of PMU‟s weak procurement capacity and protracted delays in the decisions on the procurement of major IT packages and finalization of bidding documents (see footnote 19)\. On account of relatively steady progress on contracts relating to the procurement of civil works and goods, the procurement rating in ISRs was maintained at satisfactory until December 2007, when it was changed to moderately unsatisfactory due to delays in procurement of IT packages\. Again, because of new leadership at the PMU in early 2010 and intensive Bank supervision24, a remarkable turn-around also took place in PMU‟s procurement-related performance\. Between May 201025 and December 31, 2011, the PMU completed 8 ICBs, 13 NCBs, and 14 QCBS activities among a total of around 50 procurements for a total value of about US$41\.6 million\. 22 For future operations, it is important that the safeguards rating should be based on project content\. 23 In 2007, FBR decided to proceed with a national customs computerized system through a public-private partnership and not utilize US$28 million from TARP\. Similarly, in February 2008, FBR decided to go for in-house development of ITMS through PRAL, using outside experts as needed, under the guidance of the international program manager\. This was to be based on the Information Systems Plan, which was approved by FBR‟s Board and endorsed by the Bank\. 24 Starting from May 2010, the PMU developed an excellent working relationship with the Bank‟s core task team\. The Bank‟s procurement specialist, responsible for TARP, was also moved from New Delhi to Islamabad\. These developments had a very positive impact on project implementation in terms of matters relating to TARP‟s procurements, FM, disbursements, and safeguards\. 25 Date of TARP‟s restructuring mission\. 9 2\.5 Post-completion Operation/Next Phase 24\. A DLI-based “Revenue Mobilization Project"26 has been proposed by GoP as a follow-up operation to the TARP and is under preparation with a PPF advance (P128182)\. The objective is to consolidate the tax administration reform initiated under the TARP using a performance-based results framework\. Activities are aimed at improving FBR's effectiveness, accountability, and transparency of tax administration through a results-based approach\. The components/activities of the PPF will include (i) improving revenue forecasting; (ii) consolidating FBR tax administration functions (including HR, training, and strategic planning) supporting results-based management; (iii) enhancing the accountability of tax administration (M&E systems); and (iv) strengthening FBR automation to achieve a modern, performance-based (M&E oriented) tax administration\. Lessons learned from the TARP will be incorporated into the new DLI project\. In view of the fact that responsibility for administration of sales tax on services has been devolved to the provincial governments, the Sindh and Punjab Provinces have approached the Bank for technical assistance to set up provincial revenue authorities and support other capacity building measures for provincial tax administration\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 25\. Low revenue mobilization stands out as one of the long and most pressing development challenges in Pakistan27\. This is the result of a combination of factors, such as inefficient tax administration, narrow and skewed tax structure, complex and obsolete legislation, non-transparent tax system, rent-seeking behavior and rampant tax evasion\. As a consequence, the federal tax to GDP ratio has declined to 8\.6 percent of GDP in 2010/11 from 9\.3 percent of GDP a decade ago, with a steep drop during the last few years\. At current levels, the tax ratio is not only the lowest in Pakistan for the last 35 years, but also one of the lowest in the world\. 3\.2 Achievement of Project Development Objectives 26\. The underlining development objective in terms of FBR tax-GDP ratio was not achieved, despite progress in key intermediate outputs and substantial investments in IT, physical and human infrastructure at FBR\. Notwithstanding moderate gains during 2004/05 to 2008/09, FBR tax-GDP collection has dropped substantially to reach 8\.6 percent of GDP by the end of FY 2010/11, the lowest level in more than two decades\. 27\. During the first half of the 2000s, FBR‟s tax-GDP ratio followed a cyclical pattern within a narrow range of 9\.1 to 9\.4 percent of GDP (Graph 1)\. Despite sustained increases in economic growth, revenue collection from major taxes remained flat, reflecting low tax effort\. In fact, the tax buoyancy coefficient reached only 0\.93 during this period, meaning that revenue collection increased at a lower rate compared to overall economic growth\. However, after project implementation started in 2005, two different and even opposite patterns in FBR tax-GDP ratio 26 DLI stands for Disbursement Linked Indicator\. 27 According to the Country Partnership Strategy (CPS) for Pakistan for the period FY 2010-13, “Weak revenue mobilization is the key challenge for addressing Pakistan’s tight fiscal constraintsâ€? (para 39)\. 10 were observed: an expansion during 2005-08 and a steep decline in 2008-11 (see Annex 3 for details)\. Graph 1: FBR Tax Revenue / GDP Graph 2: Output and Outcomes 10\.0% (2008/09 = 100) 9\.8% 120 9\.6% 115 9\.4% 110 9\.2% 105 9\.0% 100 8\.8% 95 8\.6% 90 2008/09 2009/10 2010/11 8\.4% 8\.2% FBR Revenue Refunds 8\.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Filers Active taxpayers Source: FBR, State Bank of Pakistan\. Source: FBR\. 28\. The economic crisis in 2008 prompted GoP to take immediate measures to increase tax revenues as part of an own-designed stabilization program, which was supported by the IMF through a Stand-By Arrangement\. As a consequence, the reform program gained momentum and project implementation pace speeded up, allowing substantial investments in FBR‟s physical and IT infrastructure and renewed efforts on technical assistance to implement FBR‟s action plan\. As a result, FBR maintained progress against some key outcome indicators\. Positive results achieved from FY 2008/09 to FY 2010/11 included: (i) registered and active taxpayers increased by 12% from 3\.345 million to 3\.774 million; (ii) electronic return filers increased by 19% and 58% for sales tax and income tax filers, respectively; (iii) registered and active taxpayers for Income Tax and Sales Tax (e-enrolled, liable to e-file) increased by 29% and 13%, respectively, and (iv) the amounts of refunds to taxpayers as well as the efficiency for processing refunds increased substantially (Rs\. 33 bn to Rs\. 106 bn) as a result of efforts to clear the backlog of Sales Tax refunds pending for up to 10 years\. 29\. However, positive trends on some key outputs achieved during the final years of project implementation fell short of overcoming shrinking revenue performance (Graph 2)\. FBR‟s lower than expected overall performance by end of the project life cycle is associated with three major shortcomings: (a) Slow integration of FBR organization along functional lines, because of resistance from staff of the Customs and Excise Group (CEG) and the Income Tax Group (ITG), lack of effective monitoring and evaluation mechanisms, and an unstable tenure at mid-management levels undermining the efficiency and effectiveness of FBR to implement its reform action plan\. (b) Underutilization of IT-related systems due to poor integration of the new systems into re- engineered business processes, weak management follow up on implementation of systems, and opposition of FBR staff to adopt new business processes based on newly deployed systems at field formations; and (c) Continued weakness of the audit function, associated with lower than expected performance by the audit program delivered by private accounting firms during the outsourcing program, 11  lack of a centralized-based audit function in charge of planning, programming and monitoring of results, poor training, and unfavorable results to FBR on legal disputes from tax tribunals\. 30\. Break in the chain of reforms had consequences for the achievement of outcomes envisioned by the project\. Without the reorganization of the FBR along functional lines, the redefinition of business processes was left in limbo\. Without the implementation of new business processes, related IT investments were insufficiently incorporated into business routines\. Without the new IT systems, training and change management investments were delayed\. The shift from co-location of tax streams to actual functional integration of tax administration – along with the concomitant changes in business processes, IT systems and HR reforms – did not have consistent commitment and support from within the FBR\. At root of these problems was a lack of consistent political commitment to the major reorganization of tax administration initially envisioned in the GoP’s own strategy and supported by TARP (see Section 5\.2) 3\.3 Efficiency 31\. Productivity results from GST administration suggest an overall lackluster FBR performance under TARP implementation\. Notwithstanding the VAT productivity ratio is typically used in cross-sectional analysis to assess VAT efficiency, the construction of a time Graph 3 GST Productivity Index series for a given country also serves as a diagnostic (2004/05 = 100) tool to gauge tax administration performance through 110 time, when controlled for tax policy changes (see 105 100 Annex 3 for complete description of GST productivity 95 estimation methodology)\. During the economic crisis 90 period and subsequent years (2008-11), the GST 85 productivity index declined at a higher rate compared 80 to FBR tax-GDP ratio despite a swift turnaround on 75 project implementation and concomitant positive 70 2004/05 2005/06 trends on some outputs by the last two years of 2006/07 2007/08 2008/09 2009/10 2010/11 GST 100 105\.8 96\.8 99\.9 90\.7 90\.1 84\.3 FBR Tax Ratio 100 103\.0 project life (see Graph 3)\. Arguably, major external 107\.5 108\.3 100\.1 98\.6 95\.0 shocks experienced by the Pakistani economy during this period, with disrupting effects on economic activity - such as the floods during 2010/11 - further undermined weak compliance levels in Pakistan 28 beyond FBR capabilities to mitigate their effect\. Nevertheless, dismal results in reform implementation described in the preceding section, especially those related to short-term actions aimed at curbing evasion through more effective enforcement actions by the final year of project implementation, strongly suggests a weak FBR performance from 2008 onward, far from the project objectives envisioned at the outset\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 32\. From a thorough review of outcomes under each component by its closing date, the project only achieved moderately unsatisfactory (MU) achievements against the PDOs\. As 28 Economic downturns typically expose tax administrations to emerging challenges due to expected decline of tax file turnaround, increased accumulation of arrears stock, lower payment of withholding taxes, and increase in net operating losses\. 12 discussed in Bank quarterly supervision reports after the restructuring, achievements on intermediate outcome and output indicators, such as increase in taxpayer registration, reduction in stop-filing population, and increasing the number of e-tax filers, have not yet resulted in increased net revenue collection levels in real terms (see Annex 2 and Section 3\.3)\. 33\. Failure to fully achieve project’s development objectives is partially explained by the lack of comprehensive tax reforms in Pakistan – especially the introduction of a broad based GST- as well as other powerful external and internal factors negatively affecting FBR collection targets, such as the economic slowdown due to domestic and external shocks\. FBR management‟s lack of success in delivering decisive change as originally envisioned by TARP only worsened the outcome (see Section 3\.2)\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 34\. Exceptionally weak domestic resources mobilization in Pakistan reduce fiscal space to increase allocation of public expenditure on key social and physical infrastructure required to meet the Millennium Development Goals (MDGs), promote growth, and curb poverty levels\. (b) Institutional Change/Strengthening 35\. Despite falling short in fully achieving envisioned PDOs, TARP was instrumental in establishing needed building blocks in terms of human, physical, and IT investment with the potential to strengthen institutional capacity at FBR in the mid and long term\. Mostly during the second half of TARP, IDA and DFID financing facilitated massive improvements in FBR‟s physical29 and IT-related infrastructure30 enabling the improvement of taxpayer services through refurbished facilities and the successful implementation of e-based services 31 \. Also, FBR top management approved a new HRM policy framework in 2010, including guidelines for new job classifications, position descriptions, available training programs, compensation packages, and staff performance evaluation\. Detailed job descriptions for positions at field formations reflecting the integrated structures of RTOs/LTUs have been prepared, and new guidelines were approved for mobility, postings, transfers, and career path\. Finally, an intensive staff training program was supported by TARP during its final implementation leg, enabling a substantial investment in management and technical skills to a critical mass of FBR officers both at Headquarters (HQs) and field formations\. 29 Major refurbishments and development of: 21 Taxpayer Facilitation Centers (TFCs), 13 RTOs, 13 transit accommodations, 9 Model Customs Collectorates (MCCs), and one LTU were completed\. 30 Construction and configuration of two state-of-the-art data centers, installation of a video conferencing system linking FBR HQ and 28 other locations, procurement of licensed software, and investment in a critical mass of hardware equipment across field formations, were completed\. 31 FBR‟s website and e-portal currently allows for 100 percent e-filing and a substantial interaction between taxpayers and Facilitation and Tax payer Education (FATE) Wing\. 13 (c) Other Unintended Outcomes and Impacts (positive or negative) 36\. The process undertaken by FBR management to establish a new occupational group – the Inland Revenue Service (IRS) - resulted in bitter legal disputes by groups of staff who perceived that their career development had been adversely affected by the reform\. The GoP took a series of administrative measures during 2009 to reorganize FBR along functional lines for the achievement of its reform objectives (see Section 3) by merging the administration of sales, income and excise taxes at LTUs/RTOs and integrating functions for collection, enforcement, audit and legal\. FBR was, therefore, reorganized through the establishment of the IRS, allowing officers from the previously separated occupational groups – the Customs and Excise Group and the Income Tax Group - the option to transfer to the new service or remain in their existing groups\. 37\. Following allegations related to both substance and formal procedures, 32 groups of officers from the Customs and Excise Group Association opposed the reform through different domestic and international legal instruments, triggering among others a review by Pakistan‟s High Court and a request for investigation to the Bank‟s Inspection Panel, alleging undue pressure on the GoP by the Bank to undertake the career service reorganization reform\. While the Bank‟s Inspection Panel did not find sufficient grounds for an investigation based on an analysis of the facts presented by both inspection requesters and Bank‟s management 33 , multiple and ongoing legal disputes instituted by groups of officers at field formations have been continuously disrupting FBR operations at some locations since the establishment of the IRS\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 38\. Beneficiary surveys showed mixed results about the reform effectiveness with an overall moderate improvement in perceptions about FBR’s transparency, tax facilitation, and service delivery by the end of the project\.34 Concomitant with wide deployment of IT solutions in FBR‟s internal management systems and service delivery to taxpayers after project‟s restructuring, stakeholders held moderately satisfactory views on the overall automation initiatives carried out by the project\. Also, some improvements on stakeholders‟ perceptions about transparency in FBR operations were registered, mostly by legal experts, large taxpayers, and agents/intermediaries of FBR\. These and other favorable perceptions on some aspects of reform were not equally shared by other stakeholders such as trade bodies and the medium and small taxpayer population, signaling the overall mixed and rather insufficient achievement of TARP‟s outcomes35 (see Section 3\.2)\. 32 Groups of staff voiced their concerns about alleged insufficiencies on the consultation process followed by FBR top management towards the creation of the IRS (reportedly, only 15 days were allowed), as well as on the short timeline allowed for the staff to decide upon the options presented\. 33 Request for inspection filed by claimants, Bank‟s management response and the Inspection Panel‟s eligibility report are publicly available at the Bank‟s external website\. 34 By request from FBR, representative surveys were carried out in 2007 and 2011 to monitor the stakeholder‟s perception toward the reform initiatives supported by TARP in terms of service delivery and integrity of the tax system\. The surveys were financed by TARP and conducted by Gallup and Bearing Point Pakistan, respectively\. 35 Source: FBR-Stakeholders Perception Survey (TARP), BearingPoint, December 29, 2011\. 14 39\. From a brief snapshot of the Survey’s findings the following results are noteworthy: ï‚ Overall, a significant majority of stakeholders feel that FBR has facilitated taxpayers to a large extent\. ï‚ Majority of respondents share the view that the Expeditious Refund System (ERS) has achieved its target to a large extent by the end of TARP\. ï‚ The FBR website has been rated higher than other automation initiatives\. ï‚ Alternate Dispute Resolution (ADR) mechanisms have been deteriorating\. ï‚ Overall, awareness level of TARP initiatives among stakeholders has been low\. ï‚ Tax filing procedures should be simplified\. A graphic summary of the 2011 Survey results are presented in Annex 5\. 4\. Assessment of Risk to Development Outcome Rating: High 40\. FBR’s efficiency gains expected from TARP’s investment on technical assistance, staff training, IT and physical infrastructure, depend on future strong political support and management drive in the context of an overall challenging institutional and security environment\. Several of the reform actions achieved so far, such as the reorganization along functional lines, the reactivation of the audit function, and improvement on ITMS, are still faced by tangible opposition forces from within FBR, such as the partial reversal of the functional structure in February 2011\. 41\. A government dependent upon support from coalition partners in the context of a challenging external and internal environment, combined with an unstable tenure at top and mid-management levels at FBR36, also threatens to undermine continuity of reform efforts\. Full integration and utilization of IT systems require strong management drive to overcome lingering opposition of rank and file officers to adopt new business processes at field formations\. Emerging internal pressures to adopt a new IT strategy, rather than consolidate the current one, further threatens reform objectives 37 \. The maturity of key reform initiatives introduced through TARP on FBR‟s operations in terms of inter alia audit, enforcement, and the refund system; depend on a strong M&E system within FBR, which is yet to be consolidated\. Finally, the introduction of critical tax policy reforms aimed at increasing revenue collection and introducing fairness and efficiency in the tax system, are unlikely to be introduced in the near term given impending elections and political tension between the Federal Government and some Provinces to agree on a stable and efficient GST-service taxation framework\. 36 The last Chairman, FBR under TARP retired on January 2012\. Since then, two Chairmen have been appointed, with the one serving at the time of the completion of this evaluation retiring soon\. For a complete inventory of number of acting Chairmen, see Section 5\.2 (a) and Annex 4B\. 37 An external study conducted in 2011 recommended that FBR adopt a new IT strategy\. 15 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Unsatisfactory 42\. The quality at entry was affected by major shortcomings, such as insufficient identification of critical risk factors and mitigation measures, inadequate technical support on key reform areas, and misclassification of environmental category per OP/BP 4\.01 (see Section 2\.1 for details)\. In particular, failure in risk assessment by overestimating GoP‟s political will and institutional buy-in to the proposed reforms by relevant stakeholders within FBR, and inadequate provision for Bank technical assistance to support initial stages of project implementation (e\.g\. IT-related TA support), affected the quality at entry\. On the other hand, the Bank and FBR teams worked closely to develop a project that was in line with GoP‟s tax administration reform agenda\. Also, sufficient resources were provided for all the components at the design stage, particularly for information systems, physical infrastructure development, and for training/capacity building of staff\. (b) Quality of Supervision Rating: Moderately Satisfactory, based on MS during the beginning of the project, MU before project restructuring, and S after restructuring38\. 43\. Overall, the Bank’s supervision was undertaken by adequate technical and operational skills mix 39 , and Bank policies and procedures were properly applied and pursued, under a difficult implementation environment\. The supervision/TA missions identified proper implementation bottlenecks and provided detailed action plans in aide memoires/technical reports to address them, especially in the wake of project‟s restructuring by mid-2010\. Overall, during most of project life, the quality of Bank‟s supervision suffered on account of lack of coordination between the TA team (funded by a parallel grant) and the Task Team during 2008-09, as well as frequent changes in task team leaders (TTLs) and co-TTLs40 (see Annex 4C)\. The Bank‟s supervision can be divided into two distinct periods: (i) January 2005 to December 2009 (5 years), during which seven implementation reviews were conducted\. After moderately satisfactory supervision at the beginning of the project (2005-2006), the quality and intensity of Bank supervision wavered during 2007-2009, during which period TARP had become a problem project; and (ii) January 2010 to December 2011 (2 years) during which another seven implementation reviews were undertaken 41 \. The latter intensity of Bank supervision took place in light of the Bank and DFID managements‟ decision to provide sufficient resources for regular and integrated supervision to move the project out of its problem 38 According to the Borrower‟s assessment, Bank‟s quality of supervision after restructuring was rated as Highly Satisfactory (see Annex 7)\. 39 Except that environmental aspects were not regularly covered until around mid-2010\. This was essentially because the EMP was prepared only in April 2010, after the re-categorization of the project\. 40 TARP was approved by the Bank‟s Executive Directors on December 7, 2004\. Between the project approval and December 2009, there were three TTLs and two different co-TTLs\. From March 2010 onwards, the project was lead by one TTL responsible for both Bank‟s operational and TA teams\. 41 The above reviews exclude some TA missions which were generally conducted on a quarterly basis, starting with September 2008\. 16 status42\. While the supervision effort in some of the earlier years suffered on account of changes in TTLs and inadequate management oversight, it was satisfactory in the last about two years, a period during which two restructurings 43 were undertaken and, remarkably, procurements of about US$41\.6 million (58% of total disbursements under TARP) were completed during the last 18 months (July 2010 – December 2011)\. Also, during the last two years of project‟s implementation, sufficient attention was paid to fiduciary and safeguards issues\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 44\. Based on the Unsatisfactory rating under 5\.1 (a), and Moderately Satisfactory rating under 5\.1 (b), the overall Bank performance is rated as Moderately Unsatisfactory44\. 5\.2 Borrower Performance (a) Government Performance Rating: Unsatisfactory 45\. While recognizing the challenging country context prevailing during the TARP period, overall, GoP showed an inconsistent commitment to its own tax administration reform agenda, which significantly affected project’s implementation\. During the initial years of TARP45, GoP took several steps to show its strong commitment to the project, including: (a) establishment of LTUs/MTUs; (b) confirming the Chairman, FBR for three years and renewing the terms of the Members responsible for functional areas; (c) granting FBR greater autonomy under the oversight of the Cabinet Committee on Finance and Revenue (CCFR); and (d) preparation of a rationalization plan for FBR staff\. In line with GoP‟s commitment to the reform agenda, the FBR Act 2007 was enacted46\. The GoP also provided relatively adequate counterpart funds until the restructuring\. 46\. However, the Government‟s commitment to major tax policy and administration reforms wavered over time, especially during the boom years (2005-2008) when higher economic growth generated modest revenue gains, despite limited results on its tax administration reform program (see Sections 3\.2 and 3\.3)\. The security of tenure of key and senior FBR officials of at least three years was a desirable requirement to move the reform agenda forward\. Yet, during the nearly seven years of project life, four Chairmen were appointed, with some of them coming from outside the Income Tax and Customs services47 which did not go down well with some of FBR‟s 42 A technical assistance team on tax administration (referred to as the TA team in this report) started providing technical advice to FBR in September 2008\. One joint implementation/TA teams‟ review was conducted in April 2009, while starting with May 2010 (Restructuring mission) Bank management instructed both teams to undertake joint reviews\. 43 A second restructuring paper was prepared in November 2011to amend the DCA, based on a request from GoP\. 44 This rating is consistent with the MU rating for project outcome (see the Ratings Summary in the data sheet section)\. 45 Including the preparation and implementation of PPF activities\. 46 The Federal Board of Revenue Act, 2007 replaced CBR with FBR and established CCFR\. The CCFR was replaced with a Policy Board in the Federal Board of Revenue (Amendment) Act, 2011\. 47 Civil service in Pakistan includes several groups, such as: district management, foreign service, police service, customs, income tax, etc\. 17 staff\. FBR Board members and senior officials were transferred frequently\. The CCFR also did not meet regularly to provide necessary oversight and guidance\. Nor did GoP implement the plan for the rationalization of FBR staff (see Annex 4B)\. 47\. The above major shortcomings impaired the achievement of the tax administration reforms\. Subsequently, the GoP committed to a significant increase in tax revenues through inter alia: introduction of a broad-based Value Added Tax (VAT), or reformed General Sales Tax (RGST); reintroduction of tax audits; and strengthened enforcement measures\. However, despite the critical need to implement these tax policy and tax administration reforms, which were required to address the macroeconomic imbalances in 2009/10 and onwards, GoP was unable to secure political consensus on the passage of the proposed VAT or RGST bill by the TARP closing date\. (b) Implementing Agency’s Performance Rating: Moderately Unsatisfactory 48\. Given the country context during TARP implementation, FBR achieved several positive outcomes, but insufficient to be translated into higher tax/GDP ratio by project’s closing date (See Section 3\.2)\. Positive outcomes included inter alia: completion of several physical and IT infrastructure related sub-projects at several locations across Pakistan; introduction of the universal tax assessment scheme; significant increases in the number of registered and active taxpayers, electronic return filers for both income and sales taxes, and in the volume and timeliness of sales tax refunds, especially to exporters\. Notably, the PMU team showed a remarkable improvement in the last 18 months of project’s life under the leadership of a dedicated and committed manager resulting in completed procurements for about US$41\.6 million – 58% of total disbursements under TARP48\. 49\. However, FBR management contributed to the delays in TARP implementation and displayed an overall insufficient commitment to the reform agenda by not taking necessary decisions in its own domain in a timely manner\. Examples in this context include inter alia: i\. Long delay in, or inattention to, the implementation of Bank missions‟ recommendations relating to the strengthening of the PMU49, monitoring of the KPIs, ensuring coordination at FBR HQs and with field formations, and the enhancement of enforcement and audit actions; ii\. Indecision of over two years on the IT strategy to be followed to procure the tax management system between off-the-shelf solutions or own design of systems through the Pakistan Revenue Automation Ltd (PRAL50)\. Once a decision on the latter option was 48 The performance of the PMU during the last 18 months of project implementation is considered highly satisfactory\. 49 FBR‟s experience with the hiring of private sector consultants for the PMU, rather than building internal capacity, proved to be unsuccessful (see Annex 7, para 19)\. 50 PRAL is an FBR owned private limited company, set up in 1994, to provide IT services to FBR, empowered to hire competent and qualified IT professionals at market salaries\. 18  made, FBR failed to mobilize resources to adequately monitor the internal development of ITMS by PRAL, resulting in non integrated tax management systems; iii\. Failure to appoint a Member solely responsible for the coordination and monitoring function, both within FBR HQs Wings and between HQs and field offices, resulted in weak management of the reform action plan; iv\. FBR‟s inability to carry out agreed actions based on its own action plan51 such as FBR‟s reversal of decisions agreed with the Bank on moving to a functionally integrated organization, a key pillar of the overall TARP reform plan; v\. FBR‟s inability to provide security of tenure at mid-management level; and vi\. Delays in implementation of the training program until the last year resulted in under- utilization of the IT systems\. Because of the delays experienced in its early years of implementation, the project suffered from slow disbursements\. (c) Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory 50\. The overall rating is based on the ratings under 5\.2 (a) and 5\.2 (b), considering major shortcomings described above which hampered project implementation, such as Borrower’s inability to take decisive action on key tax policy reforms, frequent changes at senior management level at FBR HQs and PMU, and lack of adequate M&E arrangements\. 6\. Lessons Learned 51\. The major lessons learned from the implementation and outcome of TARP are summarized below\. i\. Substantial enhancement of tax administration effectiveness requires fundamental organizational change\. Revenue administration reforms entail the implementation of substantial organizational reforms with the potential to disrupt operations at field formations and inflame staff‟s stiff resistance to change\. Extensive consultations with stakeholders using a bottom-up participatory process, constructive dialogue, and adequate risk mitigation measures at the outset are needed\. Reorganization action plans need to be phased carefully over a realistic period, while adequate safeguards and ongoing monitoring to facilitate stakeholders buy-in and to address perceived or real inequalities among staff, need to be actively undertaken through an effective communications and outreach program\. ii\. Revenue targets could be an unsuitable performance outcome indicator for revenue administration reform projects\. The use of revenue targets as major development outcome KPI makes it difficult to track pure revenue administration performance, dislocates the input-output-outcome result chain, and could introduce wrong incentives for revenue agency‟s managers to engage in ad-hoc and short-term revenue measures, rather than mid- and long-term institutional building reforms\. Tax gap (difference 51 Serious ownership issues were detected among rank and file FBR‟s officers about the Action Plan agreed by the Bank‟s TA team and the FBR management team in September-October 2008\. 19  between potential and observed outcome, both at the overall tax system level or by type of functions, taxpayers or taxes) is a measure better suited to gauge a tax agency‟s performance\. iii\. Tax policy and other legal reforms must be identified and prepared in advance of project implementation if expected increases in tax administration effectiveness and tax collection are to be achieved\. In case tax policy reforms are not introduced in a timely and effective way, mitigating measures must be in place along with the needed political and institutional commitment to carry them out\. Tax policy and other legal changes need to be taken in parallel with institutional capacity development to achieve full benefits from planned reforms\. iv\. A broader and continued policy dialogue on tax reform is needed in parallel to increase likelihood of success of revenue administration reforms\. Supervision of investment projects can quickly get bogged down in the minutiae of implementation issues, diverting attention from a broader policy dialogue on fundamental tax reform that is critical to ensure that project outputs are converted into sustainable results\. v\. To be effective, newly deployed IT systems must be accompanied by requisite operating business procedures and continuous training, following a solid strategy set out at preparation stage with a holistic view on both operational and institutional reform\. There also needs to be sufficient incentives for staff to adopt new procedures, through the development and implementation of new business processes that the staff can be trained in and evaluated against\. As part of the project monitoring system, it is important to ensure that when new IT applications are introduced in the field: (a) they are field tested, (b) adequate training in new business processes is provided to users, (c) adopting the new procedures is identified in strategic plans, and (d) rewards or recognition of staff for adopting new processes are in place\. vi\. The continuity of the Bank’s Task Team, with the right mix of technical skills and Bank operational experience, is a necessary condition for successful supervision of revenue administration projects\. TARP implementation has demonstrated the need for Bank‟s Task Teams to maintain a continued, comprehensive and long term focus on the entire tax system with a strong operational support on Bank operations\. To be effective, Bank‟s support on revenue administration reform needs to address institutional building, tax policy analysis, political economy/governance considerations, and emerging operational issues in an integrated way\. vii\. Stand-alone investment loans may not be the most appropriate instrument for supporting major tax reform\. Effective support of high-risk/high return investment such as fundamental tax reform requires an array of Bank‟s instruments suited to tackle capacity building, tax policy, legislative reforms, and political economy analysis towards specific and long term maturing development objectives\. Flexible and results-oriented lending instruments supporting a tax reform strategy with sensible sequencing of actions, greater recognition of political economy factors and the governance context, robust TA support, and continued policy dialogue, are best suited to bring sustained development objective results compared to the traditional, stand-alone investment lending approach\. viii\. Technical assistance can be effective in supporting tax administration reform if the revenue agency has full ownership of the program, and the TA is well designed and provided in a timely manner\. Technical assistance support contributes to better dialog with counterparts, keeps track of project‟s ongoing activities, and helps in redirecting 20  assistance to meet capacity gaps and maintain commitment as needed, especially when implementation issues prove more challenging than anticipated\. However, all sources of TA, including those provided by parallel instruments, need to be fully integrated under a single operation with fully coordinated Bank supervision\. ix\. To increase likelihood of tax reform success, a thorough and systematic political economy analysis (PEA) should not only be seen as a desirable feature, but rather as a key component of project design and implementation\. As taxation proves to be a development area with increasing interaction between economics and politics, investment on PEA analytic work could result in a better design, timing, and sequencing of Bank supported reform plans\. PEA may also provide teams with a better understanding of the likely reform outcomes to be expected from the interaction of multiple stakeholders, within imperfect political markets, weak institutions, and uncertain economic conditions\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies: 52\. The Borrower noted in their Project Completion Report (PCR) that the Bank‟s supervision was strong at the beginning of the project but over time became weaker, suggesting that feedback and requests for clearances took longer, leading to many procurement delays\. However, it was stated that after TARP‟s restructuring, feedback and support was excellent\. The Borrower cites as evidence that 58 percent of expenditure occurred after restructuring; moreover, during the first five and a half years of the project, total expenditure was PKR 2\.1 billion (US$ 30\.8m), while after restructuring (18 months) it was PKR 3\.4 billion (US$41\.6m)\. The Bank‟s overall performance after restructuring was rated as “highly satisfactoryâ€? by the Borrower\. 53\. The Borrower‟s PCR has highlighted a number of lessons learned including: (i) the provision for technical assistance should be driven by the demand of the implementing agency (only 22% of funds allocated for TA-consultancies were used by FBR); (ii) business process reengineering and related automated applications must be fully integrated throughout the tax administration with appropriate management and training aspects; (iii) competent officials should be identified from within the organization, and adequately trained for positions within the PMU for the entire length of the project, is a better option than relying on private sector consultants; and, (iv) SOPs/Manuals should be prepared prior to commencement of the project to facilitate implementation\. Also, the Borrower made several suggestions for improving the Bank‟s procurement processes\. The above lessons have been reflected in the main section on lessons learned (see Section 6)\. 54\. The Borrower has observed that: (i) the overall rating was downgraded from moderately satisfactory to moderately unsatisfactory on account of non-implementation of 15 of the 22 priority measures agreed in April 2011, (ii) of the FBR‟s 2008 Action Plan, which was the blueprint for the restructuring, 100 activities and their subtasks were completely implemented, (iii) substantial improvements under the project have established the foundation of future and deeper reforms, and (iv) the full extent of the reforms cannot be fully captured quantitatively by the KPIs and that in that context, from the Borrower‟s perspective, the PDOs were basically achieved under the restructured TARP\. 55\. This difference in perception between the Bank and the Borrower on the achievement of project PDOs and impact of activities may be due to an emphasis on an array of quantitative indicators that the counterpart suggests do not accurately capture the overall benefits of the 21 project accruing to FBR\. This may be due to FBR‟s perception that the institution building that took place was not subject to equal weight in assessing project outcomes\. In the Bank‟s view, substantial investments under TARP have contributed to improvement in physical and IT related infrastructure, but these investments are yet to be translated into sustained outcomes to achieve the reform objectives (see Annex 7)\. 56\. The implementing agency‟s comments on the draft ICR have been included in Annex 7\. In terms of some of the comments raised on the number of staff trained, status of HRM policy and strengthening of appeals function, these have been reflected in the ICR\. (b) Cofinanciers: 57\. According to DFID‟s PCR, given that much of the progress achieved by TARP occurred during the last two years of implementation in the midst of an overall deteriorating political and macro-economic environment, it is important to have a thorough understanding of the political context when engaging in institutional reform\. Within a challenging implementation environment, DFID recognizes that a more active oversight was required to keep track on implementation progress and maintain a continued policy dialogue on issues affecting project‟s performance (see Annex 8 for a summary of DFID’s PCR)\. 58\. In hindsight, the Bank recognizes that for most part of project implementation, a more active and productive policy dialogue between the Bank and DFID with GoP, on fundamental decisions affecting revenue mobilization and institution building at FBR, was required to address timely implementation insufficiencies within a highly complex and changing environment\. Also, the Bank acknowledges the importance of conducting timely political economy analysis (PEA) and social /stakeholder assessments when engaged on institutional reform projects like TARP (see Section 6- ix)\. (c) Other partners and stakeholders N/A 22  Annex 1\. Project Costs and Financing (a) Revised Project Costs (USD million) Original Estimate at Revised Cost Estimate Appraisal IDA IBRD DFID Total IDA IBRD DFID Total Works 18\.00 - 18\.00 31\.04 - - 31\.04 IT Systems: Software and 41\.60 24\.40 10\.00 76\.00 6\.86 - 16\.85 23\.71 hardware Consultant Services 6\.10 8\.00 14\.10 5\.11 - 2\.16 7\.27 Training 5\.00 5\.00 10\.00 2\.37 - 3\.99 6\.36 Vehicles 2\.40 - - 2\.40 2\.11 - - 2\.11 Incremental Administrative 2\.50 - - 2\.50 3\.29 - 3\.29 and Operational Costs Front End Fee 0\.12 0\.12 Total 75\.60 24\.40 23\.00 123\.00 50\.78 0\.12 23\.00 73\.90 Notes: 1) The original estimate included the refund for the Project Preparation Advance of US$2\.9 million, bringing IDA financing to US$78\.5 million and donor funding to US$125\.9 million\. 2) The Front End Fee of US$0\.122 million, which has already been charged, has been included in the project cost above\. (b) As per TARP PC-I estimates and Restructuring Paper (excludes USD$0\.122m from IBRD) GOP Foreign Foreign Cost Estimates No\. Description Component Component Component (Rupees) (Rupees) (Rupees) (Equivalent US$) Technical Assistance 629,916,174 71,010,450 558,905,724 7,265,212 1 ICT- Software 312,370,000 6,247,400 306,122,600 3,826,533 2 ICT-Hardware 1,686,000,000 168,600,000 1,517,400,000 19,886,400 3 Infrastructure 2,880,648,216 687,220,174 2,193,428,042 31,036,510 4 Development Vehicles 178,864,000 35,772,800 143,091,200 2,113,600 5 Training 493,417,000 14,802,510 478,614,490 6,365,140 6 Program Management 291,601,974 55,404,375 236,197,599 3,289,941 7 Total 6,472,817,364 1,039,057,709 5,433,759,655 73,783,336 23 (c) Project Cost by Component (in US $ Million) prior to Restructuring Appraisal Actual Percentage of Components Estimate Expenditure Appraisal (US$ millions) (US$ millions) Management & Institutional 1 9\.29 1\.643 17\.68 Development 2 Improving Revenue Operation 93\.17 1\.569 1\.68 3 Strengthening Revenue Services 6\.62 1\.286 19\.42 4 Tax Compliance Culture 6\.27 0\.147 2\.34 5 Adopting Responsive IT System 3\.65 6\.284 172 6 Infrastructure Up-gradation 24\.00 18\.136 75\.56 7 Program Management 3\.10 1\.743 58\.26 Total Project Costs 149\.00 30\.813 1/ 20\.68 1/ PPF disbursement of US$1\.946m is not included\. (d) Project Cost by Component (in US $ Million) after Restructuring Components Expenditure (US $ millions)1/ 1 Enforcement Including Audit 3\.032 2 Organization & Management 20\.275 3 Information Technology 16\.671 4 Program Management & Implementation 1\.622 Total Project Costs 41\.600 Source: PMU 1/ These figures are still provisional because reconciliation with the World Bank, State Bank of Pakistan and National Bank of Pakistan remains to be done in due course of time\. 24 (e) Financing Appraisal Revised Cost Type of Co- Expenditure Source of Funds Estimate (US Estimate at financing 1/ (US$ million)2/ $ million) Restructuring 1 IDA Credit 75\.60 50\.78 45\.627 2 DFID Grant 23\.00 23\.00 18\.539 3 IBRD Loan 24\.40 0\.12 0\.122 4 Local Local 23\.10 0 8\.247 Total 146\.10 73\.90 72\.535 Source: PMU Note: Because of fluctuations of the SDR exchange rates against the US dollar and Pound Sterling during the implementation period, the DFID grant of GBP 12\.152m did not translate into US$23m\. It resulted in about US$18\.539m (as shown above) which was fully utilized\. The shortfall in the DFID grant was offset by the IDA Credit on account of the depreciation of the US dollar against the SDR\. 1/ Excludes IDA PPF amount of US$2\.9m\. 2/ Provisional figures as reconciliation with the World Bank, State Bank of Pakistan and National Bank of Pakistan remains to be done\. IDA amount excludes PPF disbursement of US$1\.946m, per Bank‟s client connection system\. The actual expenditure under IDA, DFID, and IBRD amounts to US$64\.288 million\. This is reflected in the ICR‟s Data Sheet\. 25 Annex 2(A): Project Outcome Indicators Indicator Outcome 1\. FBR gross and net revenue collection ï‚ FBR net revenue collection for FY as percentage of tax revenue target\.- 2010/11 was Rs 1,558 bn, against a (post- Baseline 2009/10 (net revenue collection) floods) target of Rs 1,604 bn, for an Rs\. 1,327\.4 bn\. achievement ratio of 97\.1%\. Hence, FY 2010/11 revenue collection felt slightly short of target\. ï‚ For the period July-December 2011 (end of project) FBR revenue collection was Rs\.840\.7 bn, slightly above the target of Rs\. 839\.7 bn\. 2\. FBR total tax collection/GDP (annual) - ï‚ FBR tax collection /GDP for FY 2010/11 Baseline 2009/10- 9\.4%; Est\. target end was 8\.6%\. Target was not achieved project- 9\.8%\. 3\. Survey-based user ratings for FBR- ï‚ CY 2011 Beneficiary survey showed Baseline survey conducted in 2007; Next mixed results about the reform survey planned in FY'11\. effectiveness with moderate improvements on perceptions about FBR‟s transparency, tax facilitation and service delivery (see section 3\.6 and Annex 5) 4\. Stop-filers as percentage of registered ï‚ By end of project, FBR reported filing active taxpayers (total, type of tax, figures by tax type only\. Stop-filers base taxpayer size)- Baseline 2008/09 - line for FY 2008/09 was: Income tax 67%; Companies 54%; Individuals 40%; end and Sales tax 4%\. By end of project life: project target - Companies 53%; Income tax: 28%, and Sales Tax 8%\. Individuals 39%\. Overall, the outcome achieved seems satisfactory as total stop-filers fell to 23% in FY 2011/12 from 47% in FY 2008/09\. 5\. Additional tax paid after audit as ï‚ By end of FY 2010/11, additional tax percentage of total collection of collected after audits is Rs 6,231m (0\.39% domestic taxes – Baseline 2009/10 Rs\. of total tax collection), hence the 7,560m (0\.56% of total tax collection); outcome was not achieved\. est\. target end project- Rs\. 7,700m\. 6\. Modernized FBR organizational structure ï‚ Moderately Satisfactory (see Appendix fully functional\. 2c below for details on implementation ratings for Component 2 – Organization and Management ) 26 Annex 2(B): Intermediate Outcome Indicators Outputs Intermediate Outcomes Intermediate Outcome Project Indicators Outcomes Organization and management: ï‚ FBR structure integrated and ï‚ Improved organizational ï‚ Administrative cost of By FY 10/11, the function based efficiency and effectiveness of collection as % of total tax figure was 0\.87%, ï‚ A new HRM policy and rules revenue administration revenues (annual) – maintain therefore the for staff evaluation and below 1% target was mobility based on merit achieved\. implemented ï‚ Training program for mid-level 2,694 officers were staff ï‚ A large number of mid-level trained; hence the staff trained target was not (annual) – estimate 5,000 p\.a\. achieved\. ï‚ An action plan to improve staff ï‚ User ratings for Taxpayer A beneficiary integrity implemented Facilitation Centers through survey was periodic taxpayer surveys conducted in 2011 (actual experience and (see section 3\.6 perceptions) (annual) and Annex 5 for results discussion) ï‚ A new set of performance ï‚ Per cent of tax returns filed e- filing for Sales indicators with specific electronically (by type of tax) Tax and Income benchmarks covering taxpayer (annual) – Tax (corporations) registration, filing, audit, Baseline 2008/09 - 36% reached 100% by enforcement of arrears the end of project\. payment, and appeals – e\.g\. e- End project target – 45% Yet, e- filing for filing and e-payment extended Income Tax (AOP, to most income tax taxpayers individual business ï‚ Periodic reports on FBR and salary) is 32% performance to the FBR on average management, Board, and the Overall, the public (annual) target was achieved\. Enforcement including audit: ï‚ Implementation of the new ï‚ Improved compliance and ï‚ Percentage reduction of tax No figures were taxpayer ledger enforcement, including audit arrears (annual) available by the 1\. Less than 6 months end of project to 2\. More than 6 months – assess the Baseline (2009/10) – less achievement of than 6 months – 73,335; this target\. more than 6 months – 35,164 ï‚ GST operations adapted to VAT/reformed GST52 FY‟11 stock of ï‚ VAT/reformed GST arrears increased enforcement and compliance 27  Outputs Intermediate Outcomes Intermediate Outcome Project Indicators Outcomes activities implemented1 by 15\.6% compared to FY‟ ï‚ Electronic Refund System ï‚ Reduction of stock of arrears as 10, hence the implemented percent of stock of arrears for previous year (annual) target was not achieved ï‚ Expanded use of third-party ï‚ Number of registered active FY‟10 – 3\.59 M information taxpayers (total and by type of FY‟11- 3\.77 M main taxes) (annual) – Annual increase ï‚ Enforcement programs using Baseline 2008/09 – 3\.34m; has been 7\.4% and single NTN as taxpayer 5\.1%, respectively, identification number and targeting taxpayers with high Target – 10% annual increase so the annual target was not revenue potential achieved by end ï‚ Improved taxpayer registration ï‚ Reduction in the percentage of of project\. non filers, tax arrears, and returns with errors (biannual) Stop filing outcome is reported in Annex 2(a), item 4\. No data was available for tax arrears and returns with errors by the end of the project\. ï‚ Risk-based audits conducted by ï‚ Reduction of the tax gap The evidence FBR staff (annual) available from tax gap studies is not conclusive to make an accurate assessment of this KPI\. ï‚ Action plan to strengthen the ï‚ Reduction on average number of First Appellate appeals function implemented days to complete administrative Stage – 120 days appeals process (annual) – allowed\. Most Baseline 2009/10 – 60 days cases are decided within 60 days\. Information Technology: ï‚ IT applications integrated ï‚ Improved integrity and ï‚ Strengthened FBR information See Annex 2(c) for under a single structure fairness of tax administration systems and their management a complete operational (by Dec\. 2011) assessment and ï‚ Action plan for IT systems in field offices implemented ï‚ Effective use of the IT systems rating of this by FBR field offices (by Dec\. component\. ï‚ An integrated taxpayer/tax type 2011) accounting adopted ï‚ ISP 2011-2012 prepared ï‚ Regular business process reviews and adjustments ï‚ A disaster recovery data center implemented Project Management: ï‚ Quarterly/Annual progress ï‚ Project management and ï‚ Timely project The outcome was reports implementation on track implementation, including fully satisfactory adherence to procurement (see sections 2\.4 schedules and 5\.2(b) for a complete discussion and assessment) 28 Annex 2 (C): Assessment by Components Revised Components Achievements/Outputs Not achieved IP Rating 1\. Enforcement (including audit) Carrying out measures to ensure Control of unregistered taxpayers MS compliance with registration, filing ï‚ Introduction of a single and payment requirements TRN i\. Registration/e-registration ï‚ Important increase in ii\. E-filing and e-payment registered taxpayers Control of non-filers ï‚ Introduction of e-filing ï‚ Improved control of non- filing ï‚ Introduction of the active taxpayer list (ATL) Implementation of the reformed Some zero rated and exempt items Implementation of a U GST /VAT were brought into the GST at reformed VAT/GST transitional rates (e\.g\.: tractors, system\. The authorities fertilizer, domestic sale of textiles) decided not to implement it for political reasons\. Extension of the automated refund Control of ST refund Only GST MS system to other LTUs/RTOs for ï‚ Implementation of a manufacturers cum GST, Income Tax and proposed modern refund system, exporters are VAT / reformed GST which has improved participating considerably the payment of refunds\. The system is implemented in all LTU/RTO for GST\. Carrying out of audits (post, Reduction of evasion/audit High occurrence of MU targeted, composite and desk) ï‚ Introduction of self- successful appeals by including annual audit plans; assessment particularly for taxpayers indicates poor third-party matching; risk-based income tax quality audits being prioritization of cases (e\.g\. audit, ï‚ Introduction of undertaken\. follow-up, compliance); detecting information crosschecking tax fraud with invoice data ï‚ Introduction of a risk management system Control of underground/cash economy ï‚ Requirement of payment by checks for amounts above a certain amount to qualify for ST input credit ï‚ Expansion of the withholding system Carrying out of a workflow FBR is starting to review the appeals Not achieved\. FBR is HU review and automation of the process focusing on appeals/disputes process\. enforcement, audit first\. Collection of arrears (outstanding Control of arrears It is necessary to MS debt) ï‚ Introduction of the proceed to populate the enforcement plan ledger with current ï‚ Prioritization of payments/charges as enforcement actions they occur\. Also it is (according to the arrears necessary to charge size) Core Business Domain ï‚ Introduction of e-payment Team and Enforcement staff to develop the 29  Revised Components Achievements/Outputs Not achieved IP Rating arrears recovery officer‟s application Carrying out of studies to A study was prepared for ST gap in No methodology was N/A determine the tax gap 2009 for tax year 2006-07\. designed or group established to measure the tax gap in a continuous way\. This is due to lack of resources and lack of management decision\. No funding was allocated for this activity\. Training staff on risk-based audits Currently FBR audit is based on risk No training specifically HU and skills update analysis\. The refund system is provided for risk based based on risk analysis as well auditing\. Carrying out of measures for Taxpayer service MS taxpayer facilitation and education ï‚ Development of a strong on fulfillment of tax obligations\. taxpayer service system ï‚ Creation of an online tax portal for e-filing and communicating with FBR Carrying out of business process Not completed yet\. HU review for the enforcement This is due to delays in function\. establishing a business owners group to conduct the review 2\. Organization and Management for Efficiency Implementation of organizational There are several critical problems U change management with management practices that are i\. Management practices negatively impacting FBR‟s effectiveness\. These are: Follow-up: There is limited active follow-up on important initiatives\. Coordination: Ineffective coordination among Operations, Enforcement, Audit, PRAL and RTOs/LTUs is seriously undermining the effective implementation of instructions from HQs by field formations resulting in ineffective operations\. Accountability: Relevant staff are not held accountable for implementing instructions from HQ, which in turn is not exercising effective sanctions against non- performance\. ii\. Structure-functional The FBR moved first into co- The list of actions MS integration location of staff as part of its taken is a reflection of strategy for integration\. Some of the the legal, measures to make integration administrative and possible were: judicial difficulties ï‚ In January 2009 an integrated found in putting in organizational structure was place an integrated approved, which eliminated organization\. Sales Tax and Income Tax 30  Revised Components Achievements/Outputs Not achieved IP Rating wings and included a single Partial Reversal: The operational Wing for new FBR organization, supervising the work of RTOs in place since March and LTUs This first approach 2011, appears to depart was insufficient given the legal from the model along limitations and the judicial functionally based and challenges against that model\. integrated organization ï‚ In May 2009 it was decided to supported by TARP by implement a new organization downgrading based on integration of core functional areas at field tax administration functions formations\. It is too and cross-delegation of power early to assess its by Commissioners/Collectors impact on in the regional offices\. effectiveness, and ï‚ On June 30, 2009 the additional time is authorities decided to establish needed before a revised functionally- assessing its real integrated organization at impact on overall FBR senior management level and performance\. A in RTOS and LTUs, and to holistic assessment at establish new occupational the national level based groups\. on KPIs is needed to ï‚ Legal complaints during 2009 gauge performance delayed substantially the progress of core implementation of the functions for tax organizational structure administration (audit, approved early that year\. enforcement and legal) ï‚ Once the judicial process is before reaching solid resolved, the integration conclusions\. process can be considered accomplished in terms of the basic structure of organization\. iii\. Planning and A formal planning process has not Coordination and U coordination been implemented in FBR\. monitoring at the However, since October 2008, FBR management level started to use a detailed Action Plan remains a problem\. An to serve as a monitoring framework initiative agreed to follow up progress in the reform between the FBR and process, including an enhanced the Bank to create a focus on the integrated Wing and appoint a administration of sales, income and member exclusively excise taxes\. This instrument has dedicated to been put in practice as a coordination and management tool by the Chairman monitoring of the and the Board to keep control on a Action Plan was not regular basis of the status of done\. implementation and identification of results for the mid-term management of FBR\. Upgrading of human resource In 2010, FBR approved a “Human S policies and management Resources Management Policy Paper\.‟ Job descriptions: Job descriptions MS for positions at field formations reflecting the integrated structure of RTOs/LTUs have been completed\. Mobility: New guidelines were Not completed yet\. MS approved in December 2010 for 31 Revised Components Achievements/Outputs Not achieved IP Rating internal job postings (IJP)\. These guidelines establish rules for the payment of a special allowance to employees that have been selected by the IJP process, including technical and computer proficiency requirements for grades BS5 to BS16\. A more comprehensive approach to establish competency requirements for all grades should be prepared after job descriptions are updated\. Implementation in progress\. Staff evaluation system: The The assignment of staff MU current system based on the to each position Establishment Division rules according to new job provides room to include specific descriptions is also a consideration of objective pending task\. The performance indicators as part of number of cases the annual evaluation exercise\. (taxpayers) assigned to The use of objective indicators to Zone Commissioners assess the employee‟s contribution vary considerably to achieve the annual targets among different RTOs\. established for his/her unit is being Even though five new considered for the future\. FBR RTOs have been requested the MoF authorization created in the last year for using a set of key performance (there are 18 in total), indicators (KPI) to monitor field there are significant units' performance linking both the differences in the individual and units performances\. workload that they The use of KPI for the carry\. To enhance the implementation of the efficiency of performance-based bonus that will RTOs/LTUs requires be paid in 2011-12 and for the that redeployment of annual performance evaluation staff be completed report will require training for supervisors to ensure that a homogeneous procedure is used\. Staff training: FBR is The original plan to MS implementing during the period train almost 5,000 September-December 2011 a very officers and officials at intensive program of staff training various levels in FBR for several groups of employees has been significantly focusing on distinct areas and reduced with the various modalities\. In addition to purpose of a substantial activities with TARP funding, there improvement in focus is also an ITMS training program with respect to the which started with a pilot program initial plan and to avoid in RTO Islamabad and is planned interference in FBR to extend to all field formations\. operations\. Training program focuses on management and technical issues that correspond to priorities of the FBR operations and have strategic relevance in the modernization of the agency\. Activities that will be conducted during the rest of the program are: 32  Revised Components Achievements/Outputs Not achieved IP Rating Events Participants Taxpayers Facilitation 500 Job-Related Management – Foreign 50 Job-Related Management - Local 250 Job-Related Technical – Local 200 Job-Related Technical Staff 800 Management Training for BS 19 350 The training offered on technical issues focused on two aspects: audit and information technology (IT)\. This allocation of effort reflects the importance of both dimensions for the work of FBR and the challenges for modernization of tax administration\. Upgrading infrastructure and Infrastructure (buildings and S adoption of responsive IT systems equipment) are significantly to improve efficiency improved; ITMS is operational and offering a suite of tools to allow staff to perform their job – training in use of the system is still in progress\. Diagnostic study and independent Study was not done as Unrated assessment of mid-term funding was not modernization requirements for allocated to it\. As a Customs, including IT systems\. result, this is not rated\. 3\. Information Technology Adopting responsive IT systems Partially done\. The Integrated Tax Debt collection MU Management System (ITMS) functions are not developed by FBR and PRAL has currently available in been made available to the field ITMS – their design is formations and is being rolled out being undertaken and with a training package\. The current this sub-system should ITMS provides the following core be available in early functions: taxpayer registration, tax FY2012\. Different obligation registration, return components of ITMS processing, automated sales tax are currently under refunds, enforcement of non-filing review in a process and of delinquent payments, carried out by the Core tracking for audits including Business Domain Team identifying the investigation areas and PRAL, to design a for the audit along with the auditors complete instruction assigned to the audit and its results, program for field bank payment reconciliation and a formation workforce data warehousing function for and to identify matching and detection of potential opportunities for a new taxpayers along with feeding better flow of the risk management profiling of information in support taxpayers\. Some components are in of tax administration national use (e\.g\.: the audit modules functions\. Training in 33  Revised Components Achievements/Outputs Not achieved IP Rating TAMS)\. New modules and the use of ITMS is refinement of functions are an ongoing in the field ongoing process\. formations\. New SOP‟s are being introduced along with the training\. 4\. Program Management and Implementation Change management, Based on a MU rating for the first 5 MU communications, outreach – years of project implementation and internal and external an S rating on the last about 2 years\. Surveys of taxpayers (companies The activity was completed\. MS and individuals) and publication/ dissemination of results 34 Annex 2(D): Link between Original and Revised Components Original Components Revised Components 1\. Management and Institutional 1\. Enforcement (including audit) Development  Carrying out measures to i\. Organization and ensure compliance with Policy registration, filing and ii\. Human Resource payment requirements Development i\. Registration/e- iii\. Internal Audit registration iv\. Internal Affairs and ii\. E-filing and e- Vigilance Units payment v\. Change Management  Implementation of the reformed GST /VAT 2\. Improving Revenue Operations  Extension of the automated i\. Direct Tax refund system to other ii\. Sales Tax and Central LTUs/RTOs for GST, Income Excise Tax and proposed VAT / iii\. Customs reformed GST  Carrying out of audits (post, 3\. Strengthening Revenue Services targeted, composite and desk) i\. Audit including annual audit plans; ii\. Voluntary and third-party matching; risk- Enforced Collection based prioritization of cases Appeals and Dispute (e\.g\. audit, follow-up, Resolution compliance); detecting tax iii\. National Intelligence fraud and Risk Management  Carrying out of a workflow iv\. Customs and Tax review and automation of the Frauds appeals/disputes process\.  Collection of arrears 4\. Creating a Tax Compliant Culture (outstanding debt) i\. Taxpayer Education  Carrying out of studies to and Facilitation determine the tax gap (communications,  Training staff on risk-based internet facilities, call audits and skills update centers)  Carrying out of measures for ii\. Taxpayer taxpayer facilitation and Identification and education on fulfillment of Registration tax obligations\. 5\. Adopting Responsive IT Systems\.  Carrying out of business (Note: This has been merged within process review for the the revised components)\. enforcement function\. 6\. Infrastructure Up-gradation and Development (Note: This has been 35  merged within the revised 2\. Organization and Management for components)\. Efficiency 7\. Program Management and - Implementation of organizational Implementation change management - Upgrading of human resource policies and management - Upgrading of infrastructure and adoption of responsive IT systems to improve efficiency - Diagnostic study and independent assessment of mid-term modernization requirements for Customs, including IT systems\. 3\. Information Technology - Adopting responsive IT systems 4\. Program Management and Implementation - Change management, communications, outreach – internal and external - Surveys of taxpayers (companies and individuals) and publication/ dissemination of results - Incremental operating costs 36 Annex 2(E): Activities Planned to be Financed by Components Components and sub-components Activities Planned 1\. Management and Institutional Development: - Organization and Policy Move from a tax-type to functional structure within FBR, consolidate field offices into 12 RTOs53, strengthen planning, legal framework for taxation and tax capacity, and design and implementation of an integrity strategy for FBR\. - Human Resource Development Workforce rationalization, new job descriptions, development of a human resource management policy framework, adoption of new pay and benefits regime, training, and development of a code of conduct and ethics\. - Internal Audit Establish an internal audit unit\. - Internal Affairs and Vigilance Units Establish an internal affairs and vigilance unit\. - Change Management Explain rationale and potential impact of planned changes to all FBR staff, taxpayers and other stakeholders\. 2\. Improving Revenue Operations - Direct Tax Improve the identification and registration process, create LTUs and 12 RTOs, establish a tax-payer self-assessment scheme, maintain a taxpayer database, establish capability to quickly detect taxpayer non-filing and non- payment, and finance development of supporting software systems\. - Sales Tax and Central Excise Broaden tax base, review number of goods and services that are exempt to bring ST in line with international practice, and streamline ST refunds system through use of supporting software\. - Customs Support long-term goal of modernizing import and export clearance procedures and related trade facilitation procedures to international standards, apply risk 53 The functional program areas to be carried out at each of 12 future RTOs were: taxpayer facilitation, taxpayer audit, collection and enforcement, investigation of tax fraud/evasion, information processing, human resources, information technology, and legal (Source: PAD)\. 37  management principles, and develop a system that enables electronic submission of declarations and assessments/release\. 3\. Strengthening Revenue Services - Audit Support establishment of a tax audit function as a separate functional stream, develop automated approach to audit case selection based on risk management and audit parameters imbedded in the information management system\. - Voluntary and Enforced Collection Establish an effective collection and Appeals and Dispute Resolution enforcement function at FBR head office together with a computer system and tax database that will facilitate collection of taxes; develop systems, procedures and processes to improve fairness and transparency in the resolution of appeals and disputes, initially through pilot efforts\. - National Intelligence and Risk Create a national intelligence-gathering unit Management to support all operational areas, co-located with a risk-management function to provide similar support to field operations\. - Customs and Tax Frauds Create an integrated tax and customs fraud function\. 4\. Creating a Tax Compliant Culture - Taxpayer Education and facilitation Strengthen tax facilitation and education (communications, internet facilities, through a well coordinated communication call centers) program (internet and call centers) promoting greater compliance and a user friendly, supportive interface between FBR and taxpayers; introduce easy forms for electronic filing, and have an accurate taxpayer registration system for all tax purposes and taxpayers\. - Taxpayer Identification and Registration 5\. Adopting Responsive IT Systems Formulate an IT strategy that will help transform FBR business processes from a highly manual to an automated environment, to improve management control and increase transparency of tax administration; strengthen data management, and create a central information depository system to provide easy online access to relevant acts, SROs, rules, etc\. 6\. Infrastructure Up-gradation and Support office modernization through a Development comprehensive accommodation modernization plan in line with roll-out of the 38  functional organization\. 7\. Program Management and Establish a project management unit (PMU) Implementation for the overall coordination of project activities including M&E, disbursement, procurement and financial management\. 39 Annex 3\. Economic and Financial Analysis Economic Analysis The main economic benefits identified at project appraisal were: “(i) increase in government revenues as a result of a widening of the tax base in terms of more taxpayers and transactions coming into the tax net; (ii) improvement in customs procedures aim to reduce the average time to clear customs; (iii) improvement in voluntary tax compliance rates implying early revenue generation for the government; (iv) reduction in taxpayers‟ costs associated with tax compliance; (v) economic-wide gains to the private sector as an increasing number of economic agents operate under the same set of rules and taxes; sate reduction in taxpayers‟ costs associated with tax compliance; and, (vi) greater predictability of tax liability and lower costs of doing business for the private sectorâ€?\. Acknowledging that not all economic benefits associated with tax administration performance are measurable, only economic benefits (i) to (iv) were estimated at appraisal\. Assuming a set of assumptions in terms of macroeconomic and financial variables, the relevant economic rate of return (ERR) for the project was 119\.7 %54\. A re-estimation of the ERR at completion was carried out under different variables and assumptions; hence the results are not comparable\. From the economic benefits identified at appraisal, the economic appraisal at completion dropped variables (i) to (iii) above on account of the following factors: (a) the flow of project‟s benefits in terms of government revenues is not considered as an economic benefit since taxes and subsidies are usually removed from project‟s appraisal from the economic point of view as they relate only to transfers between government and the private sector55; (b) there is no way to link savings in terms of administrative costs to FBR as a result of changes in compliance rates; and, (c) the restructured project dropped the trade facilitation component related to customs administration\. Therefore, the estimation of the ERR at completion included only the reduction in taxpayers‟ costs associated with tax compliance as the sole variable\. Considering its major contribution towards this end, the economic benefits associated with savings for taxpayers using FBR‟s e- filing capabilities deployed through TARP were estimated\. For this purpose, the ERR estimation was carried out under the following key information and assumptions: (a) On average, taxpayers in Pakistan took 599 hours per year to pay taxes in 200756; (b) e-filing contributes, on average, savings of up to 15 percent of total taxpayers time57; and (c) e-filers total population reached 366,159 to FY 2010/11; (d) opportunity costs associated with major tax filing in Pakistan, such as hiring of tax accountants, was estimated based in information from local sources\. Based on this, the ERR associated with the project is estimated to be 624%\.58 54 Variant 3 in PAD estimation\. 55 For a complete discussion on this topic see: Jenkins, G\. and A\.C\. Harberger, 1992, Manual: Cost Benefit Analysis of Investment Decisions, Harvard Institute for International Development (HIID), Harvard University, 1992\. 56 Source: Doing Business in Pakistan, IFC and World Bank, 2010\. 57 Savings are expected to increase through time as taxpayers become more familiar and confident with e filing procedures\. 58 While there is not yet much empirical evidence on similar estimations, savings associated with the use of e-filing and e-payment are expected to be substantial according to the Handbook for Tax Simplification, Investment Climate Advisory Services, World Bank Group, 2009\. 40 Financial Analysis At appraisal, the estimation of project‟s financial analysis was carried out under the assumption that the underlining financial benefits would be expected from increased federal tax receipts\. For this purpose, revenue collections were estimated through regression analysis by using the buoyancy coefficient of tax revenue with respect to GDP growth under different scenarios\. Assuming a buoyancy coefficient of 1\.2 and other macro variables projections (e\.g\. GDP growth, exchange rate, discount rate and inflation), a stream of financial benefits was estimated through the project life\. The estimated project cost at appraisal was also used as input in the financial analysis\. As a result of the financial analysis, the estimated financial rate of return (FRR) for the project at appraisal ranged from 302\.3% to 522%, depending on the assumptions used under different scenarios\. The FRR at completion was not re-estimated considering that the assumptions used to estimate the financial rate of return of the project at appraisal seem unsustainable in hindsight for the following reasons: (i) The very nature of tax administration reform projects makes it extremely difficult to quantify the change on revenue collection due to change in tax administration performance, so that it could be isolated from other variables affecting receipts, such as tax policy changes (e\.g\. reforms on GST, or income tax structure), and changing economic conditions on underlining variables affecting tax bases (e\.g\. nominal GDP growth, inflation, exchange rates)\. The association of total tax revenue to revenue administration performance could be assessed under stable economic conditions, different from the highly evolving economic conditions observed in Pakistan during the project‟s life\. (ii) The identification of financial benefits for project appraisal purposes in the case of on-going operations - such as FBR‟s - entails the need to identify the flow of marginal (rather than total) benefits and costs during project life\. At appraisal, the flow of estimated total federal revenue collection for the upcoming five years was assumed as project‟s financial benefits, notwithstanding the fact that most of this flow would have been received by FBR anyway had the project not been implemented\. The lack of use of alternative parameters to adequately gauge project‟s marginal benefits at the outset makes unviable the re-estimation of a comparable FRR at project‟s completion\. (iii) At appraisal, the buoyancy coefficient (defined as the ratio of change of federal tax revenue collection to change in GDP or other underlining macro variable) was used to estimate revenue collection, and hence project‟s financial benefits, through project life\. However, for an adequate revenue forecasting exercise, the tax elasticity coefficient (same as buoyancy, except that tax revenue series is adjusted to eliminate the impact of discretionary policy reforms introduced through time) represents a more accurate tool of analysis\. So even under the assumption of total identification of financial benefits to revenue collection, the replication of the FRR at completion using the tax buoyancy coefficient would have produced a rather distorted picture of project‟s outcomes from the financial point of view, especially considering the volatile economic conditions in Pakistan during the project life\. 41 Lack of adequate data 59 at project‟s completion severely constrains the elaboration of an alternative financial analysis set out for traditional Bank‟s economic and financial evaluation\. Nevertheless, an overview of FBR‟s tax collection, the expected impact of TARP‟s outcomes, and a discussion of GST productivity as a proxy of revenue administration performance is elaborated below (Section 3\.2 includes a summary of this analysis)\. Assessment of relevance and achievement of Project Development Outcomes Low revenue mobilization stands out as one of the long and most pressing development challenges in Pakistan\. This is the result of a combination of factors, such as inefficient tax administration, narrow and skewed tax structure, complex and obsolete legislation, non- transparent tax system, rent seeking behavior, and rampant tax evasion\. As a consequence, the federal tax to GDP ratio has declined to 8\.6 percent of GDP in 2010/11 from 9\.3 percent of GDP a decade ago (Table 1), after a steady decline during the last few years\. At current levels, the tax ratio is not only the lowest in Pakistan for the last 35 years, but also one of the lowest in the world\. Table 1: Pakistan Federal Tax Revenues 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 FBR Revenues Rs Billions 392\.3 404\.1 460\.6 520\.8 590\.4 713\.4 847\.2 1,007\.2 1,157\.0 1,328\.6 1,558\.0 % real growth 4\.7% 0\.5% 9\.2% 4\.9% 5\.9% 10\.6% 10\.2% 4\.7% -6\.0% 2\.2% -1\.4% as % of GDP 9\.3% 9\.1% 9\.4% 9\.2% 9\.1% 9\.4% 9\.8% 9\.8% 9\.1% 9\.0% 8\.6% Sources: FBR, National Bank of Pakistan and own calculations Exceptionally weak domestic sources of revenue in Pakistan reduce fiscal space to increase allocation of public expenditure on key social and physical infrastructure required to meet the MDGs, promote growth and curb poverty levels\. Also, the low and unstable source of revenues threatens macroeconomic stability, exposing Pakistan to higher levels of vulnerabilities during economic downturns\. Finally, insufficient domestic revenue mobilization strains debt sustainability (debt to GDP ratio currently reaches 60 percent of GDP, one of the highest in the region), increases dependency on foreign aid and inflationary sources of revenue, and promotes crowding out of private sector investment through higher public deficits\. As a result, revenue mobilization will continue to be a fundamental challenge to address fiscal constraints and core development objectives in the years to come\. The underlining development objective in terms of FBR tax-GDP ratio was not achieved, despite progress in key intermediate outputs and substantial investments in IT, physical and human infrastructure at FBR\. Notwithstanding moderate gains during 2004/05 to 2008/09, FBR tax-GDP collection has dropped substantially to reach 8\.6 percent of GDP by the end of FY 2010/11, the lowest level in more than two decades\. 59 Needed parameters not available at completion include, among others, estimation of tax gaps and a time series of the impact of discretionary changes introduced into tax legislation\. 42  During the first half of the 2000s, FBR‟s tax-GDP Graph 1: FBR Tax Revenue / GDP 10\.0% ratio followed a cyclical pattern within a narrow 9\.8% range of 9\.1 to 9\.4 percent of GDP (Graph 1)\. Despite 9\.6% sustained increases in economic growth, revenue 9\.4% collection from major taxes remained flat reflecting 9\.2% low tax effort\. In fact, the tax buoyancy coefficient 9\.0% reached only 0\.93 during this period, meaning that 8\.8% revenue collection increased at a lower rate compared to overall economic growth\. However, after project 8\.6% implementation in 2005, two different and even 8\.4% opposite patterns in FBR tax-GDP ratio were 8\.2% observed: an expansion during 2005-08 and a steep 8\.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 decline in 2008-11 ï‚ Period 2005-08: Economic boom, combined with slow implementation of TARP Overall economic performance maintained the expansionary trend started in 2001, mainly driven by external financial flows and loose monetary policy\. As a result, FBR tax-GDP ratio increased at a sustained pace reaching 9\.8 percent of GDP by 2007/08\. Notwithstanding TARP‟s effectiveness in early 2005, increased levels of tax collection are explained by modest improvements in income tax buoyancy, rather than enhanced operation efforts from FBR\. Project implementation delays during the first years of TARP restricted the scope for any substantial improvement in tax administration efficiency\. 60 In fact, the momentum for tax administration reform weakened during this economic expansion period, as modest increases in tax buoyancy reduced the urgency for fundamental changes in tax administration performance\. ï‚ Period 2008-11: Economic crisis and natural disasters, combined with turnaround of TARP implementation The steep decline in tax-GDP ratio during this period is partly explained by the negative effect on economic activity by natural disasters, and an overall unfavorable external and domestic environment, including deteriorating security situation\. Unparalleled devastation caused by two major floods during 2010-11 had a significant and long lasting effect on economic activity, further deteriorating eroded tax bases and tax compliance levels\. On the other hand, the lack of a diversified export base and the need to import oil and food induced the economy to increased vulnerability during a period of high fluctuations in international commodity prices\. Finally, an increasingly adverse political climate derailed the proposal to implement a new broad-based RGST – the cornerstone of the tax policy strategy to enhance revenue collection and support the tax administration reform program\. 60 According to a Quality Enhancement Review carried out in May 2008, despite an adequate design of project in terms of needs and activities, the results in terms of development objectives as well as on disbursements were perceived as weak\. 43  Graph 2: Output and Outcomes The economic crisis in 2008 urged GoP to take (2008/09 = 100) immediate measures to increase tax revenues as part of 120 a self-designed stabilization program, which was 115 supported by the IMF through a Stand-By 110 Arrangement\. As a consequence, the reform program 105 gained momentum and project implementation pace 100 95 speeded up, allowing substantial investments in FBR‟s 90 physical and ICT infrastructure and renewed efforts on 2008/09 2009/10 2010/11 technical assistance to implement FBR‟s action plan\. FBR Revenue Refunds As a result, FBR maintained progress against some key Filers Active taxpayers outcome indicators\. Positive results by 2010/11 included: (i) registered and active taxpayers increased by 6\.2% from 2\.984 million to 3\.167 million; (ii) electronic return filers increased by 6% for sales tax, with income tax filers registering a 27% increase in FY10 (FY11 returns have yet to be filed61); (iii) registered and active taxpayers for Income Tax and Sales Tax (e-enrolled, liable to e- file) increased by 29% and 13%, respectively, and (iv) the amounts of refunds to taxpayers as well as the efficiency for processing refunds increased substantially as a result of efforts to clear the backlog of Sales Tax refunds pending for up to 10 years\. However, positive trends in some key outputs achieved during the final years of project implementation fell short of overcoming shrinking revenue performance (Graph 2)\. FBR‟s lower than expected overall performance by end of project life is associated with three major shortcomings: (a) Slow integration of FBR organization along functional lines, because of resistance from staff of the Customs and Excise Group (CEG) and the Income Tax Group (ITG), lack of monitoring and evaluation mechanisms and an unstable tenure at mid-management levels undermining the efficiency and effectiveness of FBR to implement its reform action plan\. (b) Underutilization of IT-related systems due to poor integration of the new systems into re- engineered business processes, weak management follow up on implementation of systems, and opposition of FBR staff to adopt new business processes based on newly deployed systems at field formations; and (c) Continued weakness of the audit function, associated with lower than expected performance by the audit program delivered by private accounting firms during the outsourcing program, lack of a centralized-based audit function in charge of planning, programming and monitoring of results, poor training, and unfavorable results for FBR on legal disputes from tax tribunals\. Break in the chain of reforms had consequences for the achievement of outcomes envisioned by the project\. Without the reorganization of the FBR along functional lines, the redefinition of business processes was left in limbo\. Without the implementation of new business processes, related IT investments were insufficiently incorporated into business routines\. Without the new IT systems, training and change management investments were delayed\. The shift from co- location of tax streams to actual functional integration of tax administration – along with the concomitant changes in business processes, IT systems and HR reforms – did not have consistent commitment and support from within the FBR\. At root of the problems was a lack of consistent 61 Data from filing of income tax returns is not available until the first quarter of the following calendar year\. 44 political commitment to the major reorganization of tax administration initially envisioned in the GoP‟s own strategy and supported by TARP (see Section 5\.2)\. Productivity assessment The GST productivity ratio represents a useful diagnostic tool to assess revenue efficiency and FBR performance during project’s lifespan\. Defined as the ratio of VAT revenues to GDP divided by the statutory rate, productivity ratio approximates the ability of the tax system to raise revenues by each percentage point of standard rate under a given policy and enforcement environment\. Although the VAT productivity ratio is typically used in cross sectional analysis to assess VAT revenue performance worldwide, the construction of a time series for a given country also serves as a diagnostic tool to gauge tax administration performance through time, when controlled for tax policy changes\. In the case of Pakistan, the construction of a time series for the GST productivity ratio provides a useful insight of FBR‟s performance trends throughout the project‟s life\. In general, VAT/GST productivity depends on two factors: (i) structural features of tax design, such as the scope of the base, exemption threshold and number of tax rates; and (ii) level of compliance enforced by tax administration efforts\. By controlling the tax rate and the coverage of the tax base, GST productivity ratio gauges the extent to which FBR overall performs, considering the following factors: A\. GST structure in Pakistan has not suffered major changes during project‟s life other than the general statutory rate, which is inherently controlled by the computation of the productivity ratio\. Despite efforts to overhaul the indirect taxation structure by introducing a reformed GST featured with few exemptions and wide coverage of goods and services, the current narrow-based GST in Pakistan has remained almost entirely unchanged throughout 2005- 2012 yielding rather low buoyancy gains (tax buoyancy coefficient of only 0\.47)\. Therefore, lack of major policy changes allows the GST productivity index to isolate the pure FBR performance effort during the reform period\. B\. Different from other sources of tax revenue in Pakistan, administration of GST entails a full fledged operation of major FBR functionalities, including: registration, monthly tax return processing, collection, refunds, audit and enforcement\. GST operation also integrates joint effort from both internal revenue administration and customs since GST import tax is collected at the borders and zero-rating is targeted for export operations, besides other activities\. Hence, FBR‟s performance on GST administration represents a fair indicator to gauge its overall corporate effort during project‟s life\. To estimate GST performance for Pakistan, a time series was constructed using nominal GST collection, GDP and general GST tax rate\. As a result of this computation, GST productivity in Pakistan turns out to be only 23 percent, compared with an average ratio of 34 percent worldwide62\. 62 See “The Modern VATâ€?, Ebrill, Keen, Bodin and Summers, International Monetary Fund, 2001\. In the case of Pakistan, a one percent of GST standard rate is associated with a collection of only about 0\.23 percent of GDP in Pakistan, while the rest of the world raises an average of 0\.34 percent of GDP\. 45  Graph 3 GST Productivity Index In terms of GST productivity used as a proxy for (2004/05 = 100) FBR performance, the estimation covering the 110 105 project life reflects an overall decreasing trend 100 during 2005/06 – 2010/11 suggesting feeble tax 95 administration efforts throughout the reform period\. 90 Considering 2004/05 as the base year, a GST 85 productivity index was constructed and compared 80 with FBR‟s tax-GDP ratio behavior during the same 75 period to infer the extent to which tax administration 70 GST 2004/05 100 2005/06 105\.8 2006/07 96\.8 2007/08 99\.9 2008/09 90\.7 2009/10 90\.1 2010/11 84\.3 performance is associated with low tax ratio (Graph FBR Tax Ratio 100 103\.0 107\.5 108\.3 100\.1 98\.6 95\.0 3)\. Overall, FBR‟s tax-GDP ratio and GST productivity index followed a similar pattern throughout reform implementation, signaling declining performance in both tax policy and administration\. Nevertheless during the economic boom period (2005-08) GST productivity index showed a rather declining trend despite modest buoyancy gains in FBR revenue collection, signaling relatively poor tax administration performance amidst relatively favorable overall economic conditions\. This trend supports earlier assumptions described above related to low urgency for tax administration reform perceived by GoP/FBR during the economic boom period\. Slow implementation of TARP during this period, especially related to IT deployment and functional integration, isolates any association between tax administration performance and project implementation during this period\. During the economic crisis period and subsequent years (2008-11), GST productivity index declined at a higher rate compared to FBR tax-GDP despite a swift turnaround in project implementation and concomitant positive trends in some outputs by the last two years of project life (see section above)\. Arguably, major external shocks experienced by the Pakistani economy during this period with disrupting effects on economic activity - such as the major floods during 2010/11 - further undermined weak compliance levels in Pakistan63 beyond FBR capabilities to mitigate its effects\. Nevertheless, lackluster results in reform implementation described in the precedent section, especially those related to short term actions aimed at curbing evasion through more effective enforcement actions by the final year of project implementation, strongly suggests a weak FBR performance from 2008 onwards, far from the project‟s objectives envisioned at the outset\. 63 Economic downturns typically expose tax administrations to emerging challenges due to expected decline of tax file turnaround, increased accumulation of arrears stock, lower payment of withholding taxes, and increase in net operating losses\. 46 Annex 4(A)\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Mudassir Khan TTL at Appraisal SASFP Sr\. Private Sector Development Michael Engelschalk CICTI Specialist (Tax expert) William V\. Mayville Consultant/HR & Training SASGP Arturo A\. Jacobs Consultant/Tax expert SASFP Zubair Khan Tax Economist Erik Puskar Consultant/ Tax IT Systems CICTI Haseeb Ahmed Consultant/IT Systems SASFP Michel Zarnowiecki Consultant/Customs expert ECSP1 Amer Durrani Sr\. Transport Specialist SASDT Asya Akhlaque Senior Economist (PSD & Trade) AFTFE Senior Social Development Zia Al Jalaly SARDE Specialist Asif Ali Senior Procurement Specialist SARPS Martyn Gordon Ambury Consultant SASEP Anwar Ali Bhatti Financial Analyst SACPK Sr\. Private Sector Development Michael Engelschalk CICTI Specialist Carlos D\. C\. Ferreira Consultant ECSPE Shabana Khawar Senior Investment Officer CMEPI Riaz Mahmood FM Analyst SARFM Amir Munir Senior Business Partnership Officer ISGOS Akhtar Hamid Lead Counsel N/A Ali Awais Legal N/A Chau-Ching Shen Sr\. Finance Officer CTRLN Hasan Saqib Sr\. FM Specialist SARFM Rubina Geizla Quamber Program Assistant SASHD Kadija Jama Program Assistant ENVCF Supervision/ICR Senior Public Sector Specialist/Task Daniel Alvarez Estrada SASGP Team Leader Mohammed Taqi Sharif Consultant/Operations Specialist SASGP William V\. Mayville Consultant/Member ICR Team SASGP Consultant/Tax expert/TA team Carlos Silvani SASGP head Paulo dos Santos Consultant/Tax expert/Member TA SASGP 47  team Consultant/IT expert/Member TA Wyatt Grant SASGP team Consultant/HR specialist/Member Orlando Reos SASGP TA team C\. Janyna Rhor Sr\. Procurement Specialist SARPS Khalid Bin Anjum Procurement Specialist SARPS Rehan Hyder Sr\. Procurement Specialist SARPS S\. Waseem Abbas Kazmi Financial Management Specialist SARFM Saeeda Sabah Rashid Sr\. FM Specialist SARFM Javaid Afzal Sr\. Environment Specialist SASDI Mohammad Omar Khalid Consultant SASDI Amitabha Mukherjee Lead Public Sector Specialist ECSP4 Mudassir Khan Task Team Leader, SASFP N/A Erik Puskar Consultant/ Tax IT Systems CICTI Sr\. Financial Sector Specialist SASFP Shamsuddin Ahmad (former TTL) Esperanza Lasagabaster Service Line Manager (former TTL) FIEEI Anjum Ahmad Senior Energy Specialist SASDE Haseeb Ahmed Consultant SASFP Asya Akhlaque Senior Economist AFTFE Zia Al Jalaly Senior Social Development Spec SARDE Asif Ali Senior Procurement Specialist SARPS Martyn Gordon Ambury Consultant SASEP Anwar Ali Bhatti Financial Analyst SACPK Michael Engelschalk Senior Private Sector Development CICTI Carlos D\. C\. Ferreira Consultant ECSPE Arturo A\. Jacobs Consultant SASFP Shabana Khawar Senior Investment Officer CMEPI Amir Munir Senior Business Partnership Officer ISGOS Michel Zarnowiecki Consultant/Customs expert ECSP1 Kaspar Richter Senior Economist ECSP2 Sr\. Financial Management Furqan Ahmad Saleem AFTFM Specialist Hasan Saqib Sr Financial Management Specialist SARFM Imtiaz Ahmad Sheikh Program Assistant SASFP Shafqat M\. Mirza Program Assistant SASEP Shabnam Naz Program Assistant SASEP 48 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) USD Thousands Stage of Project Cycle No\. of staff weeks (including travel and consultant costs) Lending: FY02 3\.89 2\.82 FY03 11\.62 64\.36 FY04 25\.17 235\.45 FY05 10\.16 34\.47 FY06 0\.00 FY07 0\.00 FY08 0\.00 Total: 50\.84 337\.10 Supervision/ICR: FY02 0\.00 FY03 0\.04 FY04 0\.00 FY05 9\.83 29\.07 FY06 29\.61 245\.51 FY07 36\.33 143\.83 FY08 46\.24 127\.25 FY09 42\.90 158\.98 FY10 70\.99 453\.45 FY11 45\.46 240\.88 FY12 21\.39 121\.16 1 Total: 302\.75 1,520\.17 1/ As of March 31, 2012 49 Annex 4(B)– List of Key FBR Officials under TARP (as of April 30, 2012) No\. Designation/Name Tenure Remarks Chairman/Acting Chairman 1 Mr\. Mumtaz Haider Rizvi Feb\. 13, 2012 – to date Acting Chairman/Member Customs 2 Mr\. Mehmood Alam (Member SP&S) Jan\. 25 – Feb\. 13, 2012 Transferred 3 Mr\. Salman Siddique Dec\. 24, 2010 – Jan\. 21, Retired 2012 4 Mr\. Sohail Ahmad May 18, 2009 – Dec\. 24, Transferred 2010 5 Mr\. Ahmad Waqar July 23, 2008 – May 18, Retired 2009 6 Mr\. M\. Abdullah Yusuf March 12, 2004 – July 23, Retired 2008 Member (SP&S)/TP&R* 1 Mrs\. Azra Mujtaba Feb\. 17, 2012 – to date 2 Mr\. Mehmood Alam Jan\. 27, 2011 – Feb\. 13, Transferred 2012 3 Mr\. Abrar Ahmad Khan Sept\. 6, 2010 – Jan\. 26, Retired 2011 4 Mr\. Zafar-ul-Majeed June 27, 2009 – Aug\. 1, Retired 2009 5 Mr\. Afzal Naubahar Kayani* Aug\. 1, 2008 – June 26, Transferred 2009 6 Mr\. Habib Fakharuddin* Feb\. 23, 2007 – July 31, End of contract 2008 7 Mr\. Khwaja Tanvir Ahmad* May 15, 2005 – Jan\. 26, Transferred 2007 8 Mr\. M\.S\. Lal* July 31, 2001 – May 12, Resigned 2005 Member (Inland Revenue)/Direct Taxes* 1 Mr\. Shahid Hussain Asad Sept\. 9, 2011 – to date 2 Mr\. Khawar Khurshid Butt Feb\. 2 – Sept 9, 2011 Transferred 3 Mr\. Asrar Raouf* Aug\. 26, 2009 – Feb\. 1, Transferred 2011 4 Mr\. Khalid Aziz Banth* June 30 – Aug\. 26, 2008 Transferred 5 Mr\. Irfan Nadeem Sayeed July 29, 2008 – June 20, Transferred 2009 6 Mr\. Usman Khalid Mirza* Aug\. 30, 2007 – July 29, Transferred 2008 No\. Designation/Name Tenure Remarks 7 Mr\. Salman Nabi* June 24, 2004 – Aug\. 30, Transferred 2007 50  Project Director, TARP 1 Mr\. Muhammad Saleem Oct\. 15, 2011 – to date 2 Dr\. Amna Saeed Khalifa April 28 – Oct\. 15, 2011 Resigned 3 Mr\. Abrar Ahmad Khan* Sept\. 6, 2010 - Apr\. 27, Retired/end of 2011 Contract 4 Mr\. Zafar-ul-Majeed* June 27, 2009 – Aug\. 1, Retired 2010 5 Mr\. Afzal Naubahar Kayani* Aug\. 1, 2008 – June 26, Transferred 2009 6 Mr\. Habib Fakharuddin* Feb\. 23, 2007 – July 31, End of contract 2008 7 Mr\. Khwaja Tanvir Ahmad* May 15, 2005 – Jan\. 26, Transferred 2007 8 Mr\. M\.S\. Lal* July 31, 2001- May 12, Resigned 2005 Note: Project Directors marked with an asterisk (*) were at Member level\. 51 Annex 4(C): List of Bank Task Team Leaders (TTLs) and co-TTLs No\. Name of TTL Name of Co-TTL Period 1 Mudassir Khan, SASFP N/A July 2003 – Sept\. 2005 1/ 2 Ms\. Esperanza Lagabaster, Ms\. Shabana Khawar Oct\. 2005 – Sept\. SASFP 2006 Anjum Ahmad Sept\. 2006 – April 2007 3 Shamsuddin Ahmad, SASFP Anjum Ahmad May 2007/ mid- March 2010 4 Daniel Alvarez Estrada, 2/ N/A Mid-March 2010 – to SASGP date 1/ Based on the PCD review meeting held in August 2003\. 2/ Messrs\. Shamsuddin Ahmad and Daniel Alvarez Estrada overlapped during the period December 2009 to mid-March 2010\. Mr\. Alvarez Estrada was tasked with the responsibility of preparing TARP‟s Restructuring Paper from November 2009\. 52 Annex 5\. Beneficiary Survey Results64 (Summary) In order to monitor the Tax Administration Reform Program (TARP), stakeholders‟ perception periodic survey was an integral part of the reform initiatives\. The first round of a country wide stakeholders‟ perception survey was conducted in the year 2007\. FBR contracted M/S BearingPoint for second round of perception survey in 2011\. BearingPoint carried out a nationally representative survey of the stakeholders to determine the degree of improvements between the two surveys\. Following is a brief summary and a graph of the survey findings: i\. Overall, awareness level of TARP initiatives among stakeholders has been low\. However, it is on higher side for large taxpayers and legal experts\. ii\. Overall user ratings (scale 1-5); FBR Employees and Large Tax Payers assigned above 3\.0, while the user rating given by all other stakeholders is 2\.64\. iii\. Focusing on the aspect of whether FBR supports taxpayers who want to do the right things, the trend indicates that majority is in agreement\. iv\. The perception about transparency in FBR has also improved, as the current results indicate significant increase in high level of transparency in comparison to previous study\. v\. Higher level of transparency is observed by the legal experts, large tax payers and agents/intermediaries in FBR\. However, individuals, small businesses and opinion makers perceive low level of transparency\. vi\. There are more positive responses concerning understanding about functions of FBR and awareness of certain rights related to the tax system\. vii\. Tax filing procedures have become more complex for the stakeholders\. viii\. According to the satisfaction levels of all stakeholders, the overall automation initiatives of FBR are regarded as being moderately satisfactory\. ix\. The FBR website has been rated higher than other automation initiatives\. x\. Overall, a significant majority of stakeholders feel that e\.FBR has facilitated tax payers to a large extent\. xi\. Alternate Dispute Resolution (ADR) negative trend has been observed from the previous study\. xii\. Stakeholders are very positive about the objectives of Tax Administration Reform Project (TARP) for facilitating the Large Taxpayers and almost all the aspects of LTUs\. xiii\. Majority of respondents share the view that the Expeditious Refund System has achieved its target of quicker refund claim processing to a large extent\. xiv\. Most of the stakeholders perceive that RTO/Model Customs Collectorate (MCC) officials are performing their duties to a large extent, however opinion of trade bodies indicate a lower level of performance\. xv\. Tax audit is an important component of TARP\. Improvement in the tax audit system has been observed by large tax payers, tax authorities and trade bodies in most of the aspects during the past few years\. This positive perception, however, is not shared by small and medium businesses\. 64 Source: FBR-Stakeholders Perception Survey (TARP), BearingPoint, December 29, 2011 53 xvi\. Significant increase in positive perception has been observed in large tax payers about the overall objectives of the CARE-PACCS (Customs project)\. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Previous Findings 0% Current Findings 54 Annex 6\. Stakeholder Workshop Report and Results Not Applicable (N/A) 55 Annex 7\. Summary of Borrower's PCR and/or Comments on Draft ICR Summary of Borrower’s PCR Ground work for tax reforms in FBR occurred between 1999-2000\. First detailed report, commonly known as Shahid Hussain Report, was produced on April 14, 2001\. Pilots were run from 2002 – 2004\. Thus, extensive work was done prior to launching main TARP from January 2005\. Despite a pre-project preparation spread over five years, overall implementation performance remained just „moderately satisfactory‟\. This has necessitated identifying the lessons learned in this process, which include both successes and failures\. The risk classification for TARP was „substantial risk‟ and it has fully met that classification\. Suggested mitigation measures were largely unsuccessful in reducing the risk of the project\. The Bank performance was highly productive in the start, but with the passage of time the Bank supervision became weaker\. The performance of the Bank‟s team after TARP restructuring in 2010 was highly satisfactory\. Lessons learned have been classified under broad categories for convenience of consultation\. Ownership 1\. Reform can only succeed with strong ownership and commitment\. Importance of ownership, change management and incremental reforms in public sector institutional modernization need to be kept alive and consistent\. At the time of start of the project in January 2005, there was a vibrant ownership of the project which with the passage of time weakened due to multiple variables\. Momentum for tax administration reform could not be maintained during the economic „boom‟ years as increases in tax collections compromised the urgency for maintaining tempo in tax reforms\. By 2007, the project had landed into problem area\. 2\. Continuity in the leadership of the tax agency provides an important contribution to successful implementation of the reform process\. During TARP implementation command at Chairman FBR level was changed four (4) times\. During seven years‟ project life, seven (7) Project Directors had to step in and out\. 3\. Concerned wings of FBR rarely remained proactive in reform processes; therefore, this lacked ownership under a misconception that the same was a job of TARP Wing\. Whereas, the reforms were primarily their area for achieving results\. TARP wing was just an implementing arm\. In future there is a need to create a small and smart forum like reforms monitoring Steering Committee with representation of the concerned Wings\. 4\. Integration of different IT systems is a process, which involves a multitude of stakeholders\. It is important to involve these stakeholders actively in the design, monitoring and active management of the reform process\. There has to be an overall supervisory body to control the scattered development and introduction of different IT systems\. This has to be constant feature for ensuring ownership and success of reforms\. 5\. A lesson has been learned that complete caution should be exercised while identifying the activities to be included in the project\. In TARP, off the shelf procurement of IT systems for Customs, ITMS and HRIS were among major activities\. After launching the project, lot of efforts and resources were spent for acquisition of these systems but after wastage of more than two years this had to be scrapped\. Hence, for any related project an in-depth review/study may be required\. 56 6\. In revised PC-I, major consultancy activities like Organization and Management, Compliance Management, Adopting Responsive IT System, TARP Implementation could not be initiated because the concerned wings regretted to take their ownership\. It was experienced during project implementation that concerned Wings of the Board were reluctant to go for availing any consultancy service\. Technical Assistance (Consultancies) is the only major area under TARP where utilization remained extremely on lower side\. In PC-I an amount of Rs\.629\.9 million was earmarked which was equivalent to US$ 8\.188 million\. Against this allocation, total utilization at the end of the project was Rs\.142 million only equivalent to US$ 2\.728 million\. In percentage terms, utilization in Pak rupees was just 22\.5%\. For any future program, lessons already learned may be kept in view to ensure the ownership of the activity\. Human Resource (HR) 7\. Any change that affects field workers and the way they do their job has the potential to be disruptive\. There has to be a plan to ensure that all the staff is at least informed and understands as to what changes are being made and there is a mechanism to address the concerns of rank and seniority\. There should be an ongoing monitoring mechanism to ensure buy-in or to find a way to address perceived set-backs in the transition\. Corrective actions need senior management participation and a contingency plan should be in place if any resistance comes to the notice\. Requirement of Pragmatic Approach 8\. At one point of time, it was decided to go for a completely new VAT Law\. Lot of efforts and resources were spent for this purpose but ultimately it could not succeed\. A new service group was created in haste which delayed project implementation process\. There was a need for in-depth analysis of the related issues\. In both these cases, stakeholders were required to be taken on board to address the risk involved in the decisions\. Workable mitigating measures were to be put in place\. Design 9\. Project design is the basic building block for entire structure\. For successful completion of any project and to achieve the desired objectives, project identification/preparation plays an important role and contribute a lot\. This requires extra efforts at the time of identification and preparation of the project and its components\. At this stage, all stakeholders should be taken on board for ensuring ownership of the activity\. 10\. Design of the TARP project with an original cost estimate of US$ 149 million to be implemented in five years time span vis-à-vis capacity of the implementing agency was over ambitious\. Consequently, in pursuance of review of the implementation progress in 2008, an amount of US$ 49 million was determined to be surrendered to the World Bank\. At the end, another US$ 7 million plus will be surrendered\. This needs to be taken care of for any identical project\. Business Process Re-engineering (BPR) 11\. Business process re-engineering and related automated applications must be fully integrated throughout the tax administration with appropriate management of the organizational transition including human resource and training aspects as central part of the process\. 57 Information Technology (IT) 12\. Information Technology is the backbone of all the processes in reformed structure\. Entire structure of functional distribution of work is to be based on formidable ITMS\. Efforts for the purpose lacked direction\. IT systems including ITMS and TAMS, etc\. have been introduced\. New IT systems are ineffective unless they are complemented with new operating procedures and continued strength\. Changing old ways of doing business requires that the staff understands what is being changed and why in addition to being trained in the procedures\. Any new introduction of IT system should be through the development and implementation of new SOPs for the purpose\. 13\. During implementation, especially at the initial stage, FBR faced certain difficulties in IT related procurement especially for ITMS and HRIS\. In this process, more than two years were lost\. So it is always important to adopt the right path to achieve the desired objective\. All IT procurements are complex in nature which needs to be planned with caution\. These procurements are always time consuming\. 14\. Moving to an e-Tax system is an essential process for reducing the compliance and administrative burden and the risk of corruption\. Increasing the use of electronic tools, in particularly e-filing, by taxpayers therefore is important\. This requires in addition to providing incentives for e-filing to eliminate obstacles and create a workable platform for use of e-tax\. 15\. Different IT systems developed by the FBR‟s field formations required integration\. There was no integration management in place which could have catered for alignment of the components\. 16\. IT procurements and particularly procurement of software systems are highly complex in nature\. ICT Hardware was procured which required focus on „sizing‟ and „hardware optimization‟\. These activities were not dove tailed in a logical manner resulting in impediments to project execution within the procurement portfolio\. Project Management Unit (PMU) 17\. TARP typically consisted of new project designed towards the achievement of common PDOs\. It had all the enumerators of a complex program and therefore required, in totality, a well trained and focused management team to cover the entire ambit of the program\. There were unnecessary interruptions The Bank has commended the Project Management Unit (PMU) for having made extra ordinary efforts since restructuring in September, 2010 to put in place robust business processes and infrastructure related to enforcement, IT, organization and HR, laying down the foundation for future reforms\. It is pertinent to highlight that before restructuring (w\.e\.f 14\.9\.2010) TARP was only able to spend Rs\.2\.8 billion only in six (6) years, whereas after restructuring and during around one year, Rs\.2\.7 billion have been spent on procurement of works, goods, training and technical assistance\. Thus, at expenditure front, around 50% of the entire progress was achieved during ending year of the project\. Entire grant amount was exhausted\. Savings have mostly occurred on account of depreciation in rupee value vis-à-vis dollar and ensuring efficiency gains and transparency in procurements\. A great lesson was learned that once there is strong commitment, then unprecedented result become achievable\. 58 18\. In recent two years, highly useful lesson was learned that in case there is uniformity in approach between PMU/FBR and its counterpart team in the Bank then there can be wonderful results\. Both the teams had a strong intention to deliver and all delaying slip shots were addressed with focus, speed and success\. Response from the Bank‟s side was marvelously quick and productive\. Procurements starting from preparation of bidding documents, invitation for bids, evaluations, award of contracts and complete implementation and management thereof within 7 – 8 months was par excellent\. Once TARP (PMU) was working day in and day out then performance was overly visible\. Organization is the ultimate beneficiary\. 19\. Despite unprecedented performance of TARP (PMU) during recent two years, its previous performance has also suffered due to multiple vulnerabilities within the given environment\. PMU was constituted even prior to launch of TARP in January 2005 which was operating under a Member as Project Director (PD) reporting direct to the Chairman\. PMU was required, as given in the Project Appraisal Document (PAD) to hire full time outside consultants to assist in implementation of the respective project components\. In pursuance of advice given in PAD, consultants from private sector were hired as Procurement Specialist, Director (PMU) and Advisor on Finance, etc\. Almost all of them failed to deliver except one Director PMU\. Persons hired from private sector have competing priorities\. Whenever, they got better alternate options from any other source then they simply opt to move out\. In this case, ownership assumption in the project fades away\. During TARP implementation, it was also experienced that some of them were found interested in perpetuating their own stay rather than expediting the project work\. Consequently, contracts of two Financial Advisors were not renewed\. Contract of one Director (PMU) had to be terminated\. This cost a lot to the project\. 20\. TARP involved procurement of works, goods and services\. PMU with required level of competence, dedication and capacity to handle the gigantic task was required to be put in place right at the outset of the project\. Before start of implementation, a well trained team of officials particularly for procurement, financial management and project monitoring and evaluation had to be put in place\. The lesson learned is that instead of relying on hiring from private sector, competent officials may be identified from within the organization who should extensively be trained and posted in PMU\. 21\. During the execution of project PMU faced multiple administrative problems that badly affected the project progress\. These included frequent transfer of PDs (7 PDs changed hands), frequent changes in the PMU team, capacity building and training issues, lack of interest/involvement of major stake holders and end users, delay in completion of works and timely availability of funds, etc\. Persons posted in PMU should be kept there for entire life of the project\. This should be known to the concerned officials, who should be asked to opt for it so that there is no disruption during implementation phase\. 22\. Proper job description should be prepared for persons involved in procurements, monitoring & evaluation\. In TARP (PMU) this was lacking\. 23\. SOPs / Manuals should be prepared prior to introduction of the project\. Persons working in PMU should fully be aware of the procedures and processes for doing the related job\. This was not done for TARP (PMU)\. 59 24\. During project implementation it was required to appoint Project Directors (PDs) at respective site scattered throughout the country\. However, comprehensive training for PDs was not imparted to equip them as to what they were supposed to do\. They were almost unaware of required monitoring and evaluation mechanism\. Therefore, before posting of any PD for undertaking implementation of any sub-activity, his/her training should be ensured before expecting productive feedback/output\. 25\. Transparency, strict adherence to the rules, quick complaint redressal mechanism and meeting the deadlines are the great lessons learned during project implementation which may be replicated for future projects\. In such a voluminous work not a serious single complaint was lodged against tendering thereof\. 26\. An integral part of the PMU responsibilities was to establish `monitoring and evaluation‟ mechanism for the project\. It had to establish performance indicators as explained in the Project Implementation Plan (PIP) to monitor impact of the project and measure its success\. There was no effective monitoring & evaluation (M&E) framework based upon MIS for the project, so management could not get the real time progress of scores of projects spread throughout the country and was also unable to make mid-course corrections where required\. Policy assumptions should be carefully evaluated 27\. It should be ensured that policy assumptions worked out at the time of preparation of project are well documented and that effective mitigation strategies are in place to identify when one of these assumptions is proven incorrect\. Suggested corrective actions may be used to provide some guidance on how to minimize the impact of the change in the project‟s environment\. 28\. The project expected that as taxpayers became more compliant due to the changes in FBR as a result of TARP, revenue would increase\. However, the complexity of the tax system imposes severe restrictions on tax administration, which are a major obstacle to improve its effectiveness, e\.g\. the existence of widespread exemptions and zero rates in the ST complicates its administration\. Tax policy reforms are indispensable to increase tax administration effectiveness and tax revenue\. Training 29\. Major component of the project was procurement of hardware/software; it went fairly well and proved to be a success story in the entire project portfolio\. Nevertheless, soft side of the project which was a corner stone for building the individual‟s capacities remained at a slower pace which was accelerated in 2009-10\. Capacity Building Projects involve enhancement in capacity of institution, individuals through trainings, restructuring of organizations and business process re-engineering, hence, the capacity of FBR as revenue collecting agency remained deficient, and resultantly FBR relied much on presumptive taxation to make up the revenue losses, which created distortion in distribution of economic gains in the country\. Consultant (infrastructure) 30\. Services of M/s NESPAK were hired through QCBS procurement methodology\. This organization has scattered set ups located in Islamabad, Lahore and Karachi\. Its Electrical Division is based in Lahore and IT Division in Karachi\. NESPAK was also a Project Manager for FBR‟s infrastructure related activities\. At times, bidding documents prepared by NESPAK were found deficient in specifications, incorrect determination of Bill of Quantities 60  (BOQs), etc\. It could not even address construction related requirements of the concerned local governments/municipalities\. Timelines could not be followed\. It‟s monitoring & evaluation mechanism was not based on sound techniques covering design model, tracking tables and work breakdown structures (WBS), etc\. Many delays had occurred due to faulty feedback/preparation of NESPAK\. Thus, working experience with NESPAK was not a success story\. 31\. In case of any major project like TARP, instead of hiring services of external consultants like NESPAK for preparation of design layouts, procurement support and supervision of works at sites, organization should evaluate the possibility to engage their own engineers (civil/electrical), architect and quantity surveyors for the said jobs\. 32\. The decision to separate Public Works Department (PWD) from TARP refurbishment and construction activities was found to be a success\. This helped to complete the projects smoothly and within the given timelines\. Contract Management 33\. Before award of contracts for construction works/renovations, supply of goods and services, real ground checks regarding the capacity of the contractors/suppliers should also be evaluated\. In theory or on paper, profile of prospective suppliers/contractors may be attractive but market feedback from previous clients should be obtained\. Lessons were learned that some of the successful evaluated bidders were not able to abide by their commitments for contract executions\. 34\. Vendors who depend upon their financing sources through their head offices based in Middle East faced serious constraints\. Release of required financing was delayed unnecessarily, which made the local vendors unable to pay for even small activities\. During contract implementation, this results into avoidable complications\. Effective strings are required to be attached for this type of vendors/suppliers\. 35\. Performance Security should be 10% for entire warranty period and that should not be reduced to 2\.5% after operationalization\. Some vendors simply tend to forego 2\.5% Performance Security rather than abiding by 3 years warranty\. In any case, for foreign vendors warranty threshold should not be less than 10%\. 36\. Instead of planning complex procurements in one go, it would be advisable to breakdown these procurements into smaller chunks\. Proper sequencing is advisable\. 37\. Default penalty for delays, etc\. was normally prescribed to the extent of 10%\. In order to force the vendors/contractors to complete the project within the given timelines penalty threshold may be fixed at 20% of the contract value\. Bidders Qualifications Interior Development & Construction Works: 38\. Tender documents are required to be prepared with complete clarity\. Bid data, contract data sheet are required to be drafted with complete care and caution to avoid subsequent mis- 61  interpretations and litigations\. Likewise, each special condition of contract given in the tender document needs to be drafted with complete clarity\. 39\. In certain construction and refurbishment projects the qualifying firm, which emerged as the lowest evaluated responsive bidder, could not deliver the project on time\. A deeper analysis into the problem revealed that the firm had submitted satisfactory statistics information in terms of its past experience while qualifying technically but had subsequently/simultaneously involved in so many other projects that its cash flow went under pressure and stuck-up in other project(s)\. Hence, TARP activity badly suffered in terms of physical progress as adequate funds were not available with the firm for executing its activities on the Critical Path Method (CPM)\. This created difficult situation when TARP was nearing its closure and contract cancellation was not a viable option\. Even available penal provisions were not helpful in resolving the issue\. Bidding Documents prepared by NESPAK did not contain the Financial Capability Analysis Clause, which could have calculated the current financial strength of the firm, thereby alerting the Client of its weak financial position in terms of project execution\. 40\. The Client Risk Tolerance in terms of financial variation in project cost should have been incorporated at the very outset in the bidding documents through Special Conditions of Contract\. This Risk Tolerance typically prohibits the client to allow project scope creep and relating expenses to go beyond a certain percentage\. In some construction and interior development activities, the contract was awarded to the lowest evaluated responsive bidder at a project cost which escalated more than 50% of the original cost\. The lowest evaluated bidder won the contract but as he could not complete the project within the evaluated bid price, he resorted to cost variation claims, which if added originally, would have qualified the second or third lowest bidder\. This may sometimes create transparency issues for the client\. The Client therefore needs to establish a maximum and minimum threshold of Risk Tolerance in terms of contract price beyond which either the contract is not awarded or the contractor is not paid the variation in the activity closing phase\. Supply of Goods: 41\. L/C Clauses for supply of goods should have been clearly spelt-out in bid data sheet for both the foreign and local suppliers\. Absence of standard INCOTERM terminology for each category of supplier and its relation to the buyer resulted in audit objections which wasted lot of time and efforts for settlement thereof\. IT Goods Acquisition 42\. Certain IT firms submitted bids which, prima facie, at the time of bid opening looked as lowest bidders and their products duly conformed to the specifications but their bids contained avoidable infirmities which rendered them non-responsive during bid evaluation process\. These infirmities occurred due to incorrect filling of various bid forms in the tender documents by inexperienced managers who could not understand the sensitivity attached to it\. Project would have benefited from better prices, had the firms been educated\. Presence of IT Bid Managers should be made mandatory in the Pre-Bid Conference and it should be made part of evaluation process by assigning specified marks to it\. 62 Project Financing 43\. During execution of Project and especially during negotiations for extension from 5 to 7 years, DFID stopped its financing through freezing its accounts\. DFID was financing three (3) important components of TARP, namely; procurement of ICT hardware/software, training and technical assistance (consultancies)\. Due to this stoppage, no process relating to procurement for these activities could be started and consequently around a year was lost\. Hence, need for timely availability of financing is highly important\. In order to address this situation mitigating measures are required to be put in place\. 44\. It was experienced during implementation of the project that required PSDP allocation for the year was not timely available\. Besides this, timely release of counterpart financing also suffered delays\. Consequently, project activities suffered\. For any smooth implementation, timely PSDP allocation and release will render great help to the project\. Legal constraints 45\. Tax administration reform frequently requires changes in the legal framework\. These changes must be initiated as early as possible in order to ensure a clear and sufficient legal basis for the reform\. It is important to know ahead of time what constraints are in the law that would affect the anticipated changes\. Technical Assistance (TA) - Consultancy Services: 46\. The Expression of Interest (EOIs) submitted by the consulting firms generally do not furnish necessary data required for their preliminary evaluation leading to their short-listing\. The firms had to be contacted time and again to provide the missing information\. This resulted into undue delay\. Furthermore, the firms used to give requisite information in a jumbled-up manner\. The consulting firms should have been given the short-listing templates and evaluation benchmarks by providing them in the Request For Expression of Interest (REoI)\. Earlier this has not been included in the REoI approved by the World Bank\. 47\. The Request For Proposal (RFP) should have contained a clause showing contract price with and without taxes\. The contract price exclusive of taxes should be used for evaluation and the contract price inclusive of taxes should be got approved from the Contract Award Recommendation Committee (CARC)\. This would result in payment of consultancy fee which the consultant originally envisaged for his services\. Absence of this feature resulted in bickering by both the local and foreign consultants when the consultancy fee indicated by them in their RFP was taxed\. 48\. Quality & Cost Based Selection (QCBS) does not allow dissemination of information about the cost estimates of the activity\. Indication of base price should have been a regular feature in the Pre-Proposal Conference with the approval of the World Bank\. Many consultancy activities either had to be re-tendered or dropped altogether in the wake of exorbitant prices offered by the consultants\. This wasted valuable resources in terms of project time and effort consumed in evaluating their proposals\. 63 Assessment of Bank’s Performance: 49\. The Bank performance was highly productive in the start, but with the passage of time the Bank supervision became weaker\. The performance of the Bank‟s team after TARP restructuring in 2010 was highly satisfactory\. Comments on Draft ICR Quality at entry: 50\. Draft report has highlighted policy indecision on an IT modernization strategy (See first bullet of para 15)\. Two issues have been clubbed and focused, (a) out-sourcing of customs automation as a Public Private Partnership activity and resultant taking out of US$ 28 million which were intended to be disbursement on this count; and, (b) non-agreement of internal IT group to acquire-off-the-shelf integrated solution vs in-house development of an Integrated Tax Management System (ITMS) which led to a delay of more than two years\. This needs elaboration to see it in proper context\. Instead of policy indecision, there were other factors which cannot be overlooked\. In the project design, a decision was already there to go for off- the-shelf integrated ITMS, therefore, no new decision was needed\. In order to have a strengthened and working application of this solution, a team of FBR officials, on the suggestions of the World Bank, had visited identified developing as well as developed countries to see the actual implementation and operations of ITMS over there\. Initially, in pursuance of clearance of the Bank, procurement of ITMS under single stage bidding methodology was undertaken which could not succeed\. In view of this outcome, the Bank advised to go for two stage bidding process\. After completion of the related processes under two stage bidding methodology, RFPs were received which were found deficient on two counts; (i) the proposed solution/product did not serve ITMS purpose of the organization; and, (ii) financial quotes were in excess of the available envelope for the purpose\. This process right from single stage bidding to arrive at end of two stage bidding had taken around two and half years but without a success\. Per force, organization was left with no option but to go for an alternate venture for in-house development through PRAL which could perhaps provide required flexibility and convenience for getting the required solution\. Besides this, it will be more appropriate to say that IT procurement being complex in nature demanded proper expertise and capacity to do it which remained lacking both in the implementing agency as well as in the Bank during the relevant time period\. Just to pin down „indecision‟ may not be a true reflection of factual position\. Identification of risk factors and mitigation measures: 51\. The project was implemented in seven (7) years\. Most of the time, implementation environment was difficult\. Risk factors were said to be identified at project design stage along with mitigating measures (See paras 16 & 17)\. For success of any project, risk factors and mitigating measures are required to be continuously updated even risk register may be required to be updated on daily or weekly basis\. During the implementation, new risks crop up which are required to be addressed through adequate mitigating measures\. In case of TARP, this did not happen\. New risk factors were neither properly identified nor adequate mitigating measures were worked out and triggered, therefore, this resulted into avoidable wastage of time, resources and energies\. This remained one of the major infirmities in this project\. 64 52\. Draft report has talked about stiff resistance from vested interest groups against restructuring as well as reforms (See para 18)\. Instead of saying resistance from executive and staff, it will be more appropriate to say that they were less receptive to go for accelerated reforms\. Here, two issues may be seen separately, (i) creation of a new service group and (ii) adaption to reforms\. Legal and administrative problems had occurred after creation of a new service group\. The staff which had gone into litigation had clearly and unequivocally stated at each forum that they were not against reforms in the organization rather they were seeking protection of their rights/privileges as well as legitimate expectations for career progression\. Other than this, there was hardly any evidence where FBR staff was strongly resisting reforms\. This needed to be appreciated in a context where there was aging manpower (more than 80%) with hardly any previous exposure to reforms / computerization and automations, etc\., whose automated outcome was slashing of discretionary powers/authority\. Since 1994, all recruitments in the organization are banned, therefore, no fresh blood (excluding intake at BS-17 level where an annual batch of officials ranging 30 – 50) enters in service after qualifying through national competitive examination/selection process with latest IT/ management related education is available\. TARP reforms were designed and targeted for a manpower of around 12 – 13 thousands against a working strength of 25 thousands\. In the national context, it is highly difficult to bring down the level of manpower by around a 50% which has a direct relationship with creation of unemployment rather than providing jobs\. Politically, this hardly remained a viable option\. In the reform process, no effective mechanism could be adopted to address this volatile issue\. In such an environment to go for robust reforms will always be difficult\. An effective ownership of the program was not only required to be created rather that had to be kept alive\. Monitoring and Evaluation (M&E): 53\. Creation and putting in place of a dynamic monitoring and evaluation (M&E) system was required right from day one (See para 20)\. This remained lacking on the part of the implementing agency but at the same time this could not be effectively highlighted and focused on the part of the Bank as well\. Had there been an effective M&E mechanism in place right from the start, then many deviations from the original implementation plan could have been avoided\. This unit had to keep the project on track while monitoring the implementation plan and introduction of corrective measure as and when those were required\. Bank’s supervision technical and operational skills mix: 54\. It has been highlighted in the report that supervision/TA missions identified proper implementation bottlenecks and provided detailed action plans in Aide Memoires/ Technical Reports to address them (See para 43)\. It has also been pointed out that during most of project life, the quality of Bank‟s supervision suffered on account of lack of coordination between the TA team and the task team\. It may not be proper to doubt the technical knowledge and expertise of the TA team members but perhaps some of them were not fully conversant with the local operational, legal, economic and political environment, therefore, their technical advices could not yield the desired results rather at times those were found counter- productive\. Following can be quoted as examples:- 55\. An agreement was signed between the World Bank and FBR on Tax Administration Reforms on July 10, 2009 (see Appendix I – Follow up on Tax Administration Reform July 2009)\. This agreement vide para 8 prescribed certain timelines for creation of new occupational group with necessary changes in laws and rules, etc\. It was required under this agreement 65  that Revenue Division will move the Establishment Division to prepare a proposal for the creation of two new occupational groups\. The staff had to be given a two week period to decide whether to be transferred to a new occupational group\. As cited, agreement was signed on July 10 and all related actions were mandated to be completed by September 30, 2009\. This timeline was followed and the outcomes of these decisions have elaborately been highlighted in ICR at paras 14, 18, 19, 36, 37 and 51\. Before going for a major structural decision for creation of a new occupational group, it was required to undertake detailed discussions with all stakeholders to address their perceptions or concerns about new arrangement\. GOP had introduced occupation groups in 1973 and to make any structural change within 15 days and that too without addressing concerns of the concerned, its outcome could well be imagined\. This decision had far reaching implications for the staff who had put in decades of service\. In country like Pakistan, there is a different culture attached to permanence in job and any change in already laid down terms and conditions or withdrawal thereof is prone to be counter-productive\. At the moment, scores of litigation are pending at different forums filed both by Customs and IR officials relating to different service matters\. Customs has ended up with surplus officers\. Presently, total sanctioned cadre strength of Pakistan Customs from BS-17 - 22 is 379 and against this, working strength is 472\. This situation is leading to a kind of stalemate in the promotion prospects and de-motivated workforce which is not only counter- productive rather contrary and detrimental to reforms with inherent potential disruptions\. This shows the level of over-crowding and administrative problems for the organization\. FBR management is doing its best to address these administrative issues but there are hardly any short cuts and workable quick solutions\. 56\. Customs reforms were integral part of this project\. There was no customs expert in TA team\. An amount of US$ 28 million was earmarked for IT side of customs reforms\. In 2007, FBR had floated an idea of doing customs reforms on Public Private Partnership (PPP) basis instead of planned under the project\. This was the time where a forceful, correct and productive advice was required for the organization from customs expert in TA whether PPP was workable or not\. There was no mention of any best practice in the world where customs was being run on PPP basis\. The TA team simply agreed to the proposal/decision of FBR and reported in the Aide Memoire of Mid Term Review: August 20 – September 13, 2007 that in view of the PPP approach being adopted by CBR (now FBR) for Computerized Customs System, the funds earmarked should be surrendered by CBR\. This deviation from the strategic objectives resulted in non-realization of reform objectives envisaged for Customs\. Due to lack of focus on customs reforms, not only the strategic objectives were not achieved, the workforce of customs suffered badly because of lack of focus on their HR issues\. Now, it has been proved that FBR‟s PPP approach for customs was not a viable venture which ended in void\. The benefit from the available financial resources could not be availed which were surrendered to the Bank and simultaneously lot of precious time was wasted\. Practically, reforms in customs have fallen back by many years\. 57\. TARP was a `program‟ under `program and project management‟ definition\. Different activities under this program had to be done under project management methodology\. TA team members, though experts in their own fields, were not well versed with the requirements of program and project management\. Whenever, new proposals / advices were rendered which had important structural impacts, were not based upon program and project management methodologies\. For example, when it was advised to go for creation of a new service group, then the underlying risk factors were not identified and likewise required mitigating measures were neither identified nor put in place\. Almost same was the case when customs reforms were agreed to be run on PPP basis\. Procurement of certain training related sub-activities were also delayed in absence of clarity during discussions of TA members with 66  the concerned officials of the Board\. It will always be useful if procurement expert remains part of the discussions which involve any types of procurement being discussed with the TA team\. 58\. TA team had advised to go for complete redrafted VAT law, though, other proposals were also offered during discussions\. Lot of resources and energies were invested\. A new redrafted law was submitted before the Parliament but that could not be approved\. The TA team vide `Follow up on Tax Administration Reform – October, 2009‟ had suggested an alternate option for approval of set of legal instruments, that instead of sending the package of legal reforms to Parliament which may subject it to changes with undesirable consequences an `Ordinance‟ may be submitted for President‟s signatures and enforcement\. This advice was negatively flashed by the local media\. Title of one such press clipping on referred to suggestion of the TA team is quoted, “Bypass Parliament, World Bank advises Government of Pakistanâ€?\. This type of approach made the job of FBR/GOP more difficult for getting the law approved by the competent forum/authority\. 59\. At certain times, TA team adopted top-down approach while rendering advice on different issues which when subsequently came up for implementation then those were not found doable\. In reform related activities, where no policy decision is required, then bottom-up approach through discussions and agreements with the concerned functionaries will be more meaningful and result oriented (See para 3\.2 of PCR)\. Government’s performance: 60\. Government‟s performance rating has been determined in the report as `unsatisfactory‟ and rationale for this finding is explained at paras 45 – 47\. Government‟s commitment to Tax Policy Reforms could not bring intended results due to multiple vulnerabilities\. There were changes at top leadership level but most of these changes had resulted due to retirement of the officials after completing the prescribed tenure of service\. During this time period there were four Chairman FBR\. Three of them had retired after completion of their service tenure i\.e\. 60 years\. Besides this, out of eight PDs, four had again either retired or contract duration had ended\. After promulgation of FBR Act 2007, CCFR was replaced with the Board-in-Council consisting of Members of FBR\. Thus, meeting of CCFR after constitution of Board-in- Council was not required\. Chairman FBR has regularly been convening meetings of the Board-in-Council to take important decisions\. In the draft report, it has been highlighted that GOP had committed for increase in tax revenue through introduction of broad based value added tax (VAT) or reformed general sales tax (RGST), etc\. but the GOP was unable to secure political consensus on the passage of the proposed VAT or RGST bill by the TARP closing date\. Concerted efforts rendered by the GOP for introduction of VAT/RGST are needed to be acknowledged which is missing in the report\. Lot of efforts were invested for drafting of VAT/RGST law\. An international conference was convened in Islamabad in 2009, and later on, two workshops were convened in Dubai, UAE where international experts in the field had also participated for assistance in drafting the law\. After doing lot of work, draft law, after clearance by the Ministry of Law, was submitted before the Parliament for consideration and approval\. Here again, numerous meetings were held at Parliamentary Committees level where GOP officials appeared and made all out efforts to convince the parliamentarians for approving it\. Despite all these sincere efforts stretched over many months, the Parliament did not approve the law\. To say, the Government was unable to secure political consensus for approval of the law may not be a fair comment\. Government is subservient to the Parliament and if any law, in its wisdom is not approvable then the Government cannot be blamed for this happening because sovereign decision of the people‟s 67  representatives has to be respected by all, including the Government\. With this explanation, rating of the Government performance needs to be upgraded to `moderately satisfactory‟ rather than „moderately unsatisfactory‟\. Implementing agency’s performance: 61\. In the report, implementing agency‟s performance has been rated as „moderately unsatisfactory‟\. Justification for this rating has been summarized at paras 48 – 49\. Both positive as well as negative outcomes have been focused\. It has been highlighted that positive outcomes include completion of several physical and IT infrastructure related sub-projects at several locations across Pakistan, etc\. This is to be highlighted that not several rather all procurement related activities consisting of ICT hardware/software, refurbishment of existing infrastructure, construction of Transit Accommodations were completed with exception of only two activities; (i) TFC Guru Mandir –litigation issue, and (ii) FBR Call Center\. Hence, there could be no better performance than this one\. FBR recognizes that certain suggestions of the Bank could not be implemented as per given timelines but most of the recommendations were followed and implemented\. Position relating to indecision on IT strategy as discussed in para 49 has already been discussed in these comments\. Instead of indecision, there were certain factors which were beyond the control of both FBR and the World Bank and ultimately it had to be reconciled with the situation\. It was not in the domain of the FBR to provide security of tenure to the leadership because as explained at preceding paras, if an official had attained the age limit prescribed for retirement then that had to be followed\. This has happened in many cases\. There were many policy related decisions which had to be taken by the Government and FBR could only provide its input\. Example includes the creation of consensus with the Provincial Governments for levy of VAT/ Sales Tax on Services after passage of 18th Constitutional Amendment\. FBR‟s efforts were there but at times those could not yield the intended results due to inherent limitations\. While taking into account overall level of efforts made by the implementing agency for undertaking these reforms in an environment which was saddled with many vulnerabilities, the rating should not be less than „satisfactory‟\. Lessons learned: 62\. Lessons learned during implementation of TARP have been summarized at para 51 of the report\. FBR had also identified lessons learned during implementation of this program which are shown at Annex-7 to the draft ICR\. Another lesson has also been learned during this process that composition of the TA team is very important\. A TA team having complete professional competence, receptive in approach, accommodative to workable views and with a problem solving approach can be more productive and supportive to the project\. In the TA team for TARP, professional competence of IT expert was par excellent, likewise, there was no doubt about the competence of the HRM expert\. Other experts of TA team who had to address VAT/RGST drafting and implementation, etc\., or making changes /amendments in rules/regulations or administrative laws were required to be fully aware of the local dynamics\. For complete success of a program/project, it will be more appropriate that before making selection of a TA team member his/her extensive knowledge of that country/environment is evaluated objectively\. An example can be cited from the TARP procurement scenario where problem solving approach was overly visible\. There were difficult and complex procurements\. Most of the procurement processes were started during 2005 – 2009 but could not succeed due to multiple reasons\. There were delays both on the part of the implementing agency as well as delays in response from the Bank‟s side\. After TARP restructuring, both the teams i\.e\. TARP (PMU) and the Bank‟s TTL team sat together 68  and devised a strategy for a way forward\. Both the teams landed on the same page and remained there till completion of the job\. Bank‟s TTL team was found to be highly receptive, accommodative to any workable and convincing proposal and the TARP (PMU) team has always been addressing the observations /suggestions made from the Bank‟s side\. There were lot of meetings, face to face discussions as well as extensive telephonic discussions on the issues and both the teams agreed to implementable methodologies\. All types of differences were sorted out in productive manners\. The end result was that all procurements enlisted in TARP PC-I were completed in totality with exception of only two\. To say the least, problem solving approach and clarity in objectives while staying on the same page gave the dividend\. 63\. In Annex 2(B) Intermediate Outcome Indicators, under the “Project Outcomesâ€? heading it has been stated that 5,000 mid level officers were to be trained annually\. As against this 2,150 were trained so the target was not achieved\. This statement needs correction\. A total of 2,200 officers were trained in 2011 under different training activities undertaken through procurement and 494 officers were sent on short courses abroad on regularly offered courses in universities/institutions abroad\. Thus, a total of 2,694 officers were trained\. Further the number of officers to be trained was reduced after consultation with the Bank, with the purpose of substantial improvement in focus on technical and IT areas and to avoid disrupting revenue collection efforts\. 64\. In the same annexure under Organization and Management for Efficiency it has been mentioned regarding upgrading of human resource policies and management under the column “not achievedâ€? that implementation of several aspects of policy paper is still incomplete and some components have not evolved as desired\. The spade work at level of HRM in all areas of HRM policy has been done and solid proposals and concept papers with complete working have been submitted for final approvals of the competent authorities so nothing is pending at HRM Wing‟s end\. 65\. In Annex-2(B), it has been shown against the output „Action Plan to strengthen the appeals function implement‟ that no information was available by end of the Project\. The Legal Wing of the Board has explained that at the 1st Appellate Stage, time period to decide the appeal is 120 days\. However, in most of the cases, these appeals are decided within 60 days\. Reasonable time has been provided in the statutes to facilitate taxpayers and to improve fairness and transparency in the resolution of appeals\. 66\. In Annex 2(D), it has been pointed out against the original component „strengthening revenue services – voluntary and enforce collection appeals and dispute resolution to carry out workflow review and automation of the appeals/dispute processes\. The Legal Wing of the Board has explained the related position that at present, at 1st appellate stage Appeal Management and Processing System is in place and operational and similar kind of system needs to be implemented at the stage of both the Appellate Tribunals of Inland Revenue and Customs to enhance the collaboration and better representation of appeal cases\. 69 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Summary of DFID‟s PCR: TARP has made significant progress in some areas, but the nature of shortcomings limit the effectiveness to achieve final outcomes\. Major achievements include the reorganization of the Federal Bureau of Revenues (FBR) into an integrated functional organization, the reactivation of tax audits based on a risk-management system, improvement in enforcement and the Integrated Tax Management System (ITMS) developed by FBR and PRAL which is now available to field formations\. Project‟s implementation shortcomings have a common characteristic: the continuation of discretionary procedures at FBR\. Delays in the rolling out of the ITMS, staff training on its use, reorganization at zonal level which weakens monitoring of the audit at the field level, contributed to the continuation of traditional methods for tax assessment, collection, audit and enforcement\. In retrospect, it seems the donors were the most enthusiastic supporters of TARP although the benefits are clearly of national nature\. It is understandable that the implementation of a reform where accountability is poor and there is no culture to pay taxes, there would be resistance to make tax administration more efficient and effective\. A key question for DFID is whether it should have been prepared to walk away\. This is a difficult call\. The enabling environment for this project deteriorated in its last two years as the political and macroeconomic context evolved\. And yet, much of the progress achieved by TARP occurred during the last two years after project extension\. This underscores the importance of DFID maintaining a thorough understanding of the political context when engaging in institutional reform projects like TARP\. The analysis should be regularly updated as the project progresses, and DFID should stay actively engaged in maintaining its investments, tracking progress, and maintaining a policy dialogue on issues affecting implementation\. DFID‟s contributions to developing FBR‟s IT systems have been critical\. The effectiveness of the development and availability of ITMS throughout FBR has been reduced by delays in the training of staff to use the system pending validation from the Core Business Domain Team (CBDT) and PRAL\. The effectiveness of the development and availability of ITMS throughout FBR has been reduced by delays in the training of staff, with the result that field formations are using informal mechanisms to learn the new system\. Although the use of IT is pivotal to many components of TARP, the use of ITMS is still not universal in FBR seven years into the reforms\. The reluctance to fully operationalize ITMS could also reflect the unfamiliarity of senior management with the IT system\. Potential benefits could include higher government revenues for years to come which, if well targeted, could support poverty eradication programs many times over through multiplier effects\. But while all the key building blocks are in place, shortcomings in implementation, which still leave scope for discretion, mean these benefits are not yet secured\. The value for money of DFID‟s contribution may prove to be substantial if the outstanding steps are completed swiftly by the government, but this remains in doubt\. Renewed support to tax administration reform would help maintain momentum to complete the remaining components, especially as internal resistance continues and the government‟s attention is distracted by impending elections\. Donors should stay engaged in this crucial policy area\. DFID largely tracked TARP through World Bank missions, and its engagement with FBR was limited in between\. Management of TARP also changed hands within DFID several times during 70 the last few years of the programme, reducing the quality and consistency of DFID‟s oversight and leaving DFID a little over-reliant on the World Bank policy analysis\. Given the ambition of the programme, and the challenging context, a more active policy engagement from DFID may have been helpful, particularly as the World Bank was unable to deliver an Islamabad-based staffer to manage TARP\. However, this would have an investment of significant more DFID staff time, impacting other work areas\. Further donor support is likely to be critical to completing the parts which are institutionally and politically most difficult and where resistance is still tangible\. Time is of the essence; the reform efforts will come to naught if the remaining essential components are not completed soon\. Already major reversals have taken place; without further donor support (training or technical assistance) the whole process can be setback fatally\. The main benefits of TARP so far are not the hardware but the gradual built-up of momentum for change\. If support for the TARP does not continue, the non-tangible benefits will not take long to evaporate\. The lack of government focus on this vital reform, vital not just for better governance, but for revenues to stabilize the economy, reduce inflation, and finance a large development agenda, makes a strong case for donors to continue support for an important neglected reform\. 71 Annex 9\. List of Supporting Documents Preparation documents Project Concept Document and meeting minutes Preparation mission aide memoire PAD (November 5, 2004), appraisal meeting minutes, Appraisal mission aide memoire Development Credit Agreement Pakistan Country Assistance/Partnership Strategy Supervision documents All aide memoires and ISRs Mid term review aide memoire Project Implementation Plan Procurement Plans and Bank evaluations of post-procurement reviews FM review documents, including copies of TARP‟s audit reports TA team‟s quarterly mission reports (starting with Sept\. 2008) Progress Reports against FBR‟s Action Plan Restructuring mission aide memoire (May 2010) Main Restructuring Paper dated August 19, 2010 Amendment of DCA after Project Restructuring, including cancellation of IBRD and IDA funds, reallocation, and extension of Closing Date Second Restructuring Paper (December 2011) and related amendment of DCA Special reports “Pakistan‟s Tax Gap: Estimates by Tax Calculation and Methodologyâ€? - prepared jointly by the World Bank, the Pakistan Federal Board of Revenue, and Georgia State University, July 2008 (Robina Ather Ahmed & Mark Rider)\. Bank Management Response to the Request for Inspection Panel Review of the Islamic Republic of Pakistan Tax Administration Reform Project (IBRD Loan No\. 72640-PAK: IDA Credit No\. 4007-PAK), February 19, 2010\. “Revenue Analysis and Forecasting Sectoral and Tax-Gap Analyses\.â€? Ather Maqsood Ahmed in collabration with Robina A, Ahmed and Ashfaque H\. Khan - Pakistan Federal Board of Revenue, USAID, and CSF Tax Assistance Program, May-November 2011\. Federal Board of Revenue Stakeholders Perception Survey (BearingPoint), Dec\.29, 2011 FBR Automation Review by CEO, PRAL – April 9, 2012 Evaluations “Second Structural Adjustment Credit for the Islamic Republic of Pakistanâ€?, Implementation Completion Report (ICR), The World Bank, June 23, 2003\. 72 “Poverty Reduction Support Credit for the Islamic Republic of Pakistanâ€?, Simplified Implementation Completion Report (ICR), The World Bank, June 20, 2005\. Quality Enhancement Review: TARP IT Delays, CITE, 2007 DFID: TARP – Project Completion Report (January 31, 2012) Government of Pakistan - Revenue Division/FBR – Project Completion Report (PCR) on Tax Administration Reform Project (2005 – 2011) – March 2012 (updated June 22, 2012)\. 73  IBRD 39316 PAKISTAN TAX ADMINISTRATION REFORM PROJECT FBR OFFICES: CITIES AND TOWNS PROVINCE BOUNDARIES TAs PROVINCE CAPITALS INTERNATIONAL BOUNDARIES RTOs NATIONAL CAPITAL MCCs RIVERS TFCs LTUs 65E 70E 75E 65E 70E TAJIK\. 75E CHI N A CH I NA CHI N A Ka h ra K2 Kus NORTHERN k o r (Mt\. Godwin- Austen) a m (8,611 m) du ARE AS AREAS Ra i n Chitral In d us PAKISTAN H ng KHYBER e e 35N Approximate Line of Control PAKHTUNKHWA Saidu Abbottabad Muzaffarabad Peshawar Nowshera Mardan Jammu ISLAMABAD and Kashmir Rawalpindi Kahat FED\. CAPITAL TERRITORY AN IS AF G H ANI S TAN Bannu ISLAMABAD Jehlum lum Jhe Gujrat Sailkot Gujranwala To Mandi ab D\.I\. Khan n Che Zhob Lahore Faisalabad vi Chaman Zhob PUNJAB Ra vi Ra Sahiwal Sahlwal 30N Quetta D\.G\. Khan Multan tlej 30N Su us Ind Bahawalpur Nok Kundi B A L O C H I S TA N Surab Bahawal Nagar ISLAMIC Jacobabad REPUBLIC INDIA Larkana Sukkur OF ng e Panjgur IRAN a Khairpur nR i s hka kra Dadu l Ma Moro Ma Turbat C e ntr a Bela SINDH Gwadar Pasni Hyderabad 25N 25N Karachi Thatta Badin us Ind This map was produced by Rann of Kutch the Map Design Unit of The World Bank\. The boundaries, Arabian Sea colors, denominations and 0 50 100 150 200 Kilometers any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the 0 50 100 150 Miles legal status of any territory, or any endorsement or acceptance of such boundaries\. 65E 70E 75E MAY 2012

REVIEW

P155339

 Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005226 IMPLEMENTATION COMPLETION AND RESULTS REPORT TF0A4737 ON A SMALL GRANT FROM THE JAPAN SOCIAL DEVELOPMENT FUND IN THE AMOUNT OF US$2\.75 MILLION TO THE REPUBLIC OF SIERRA LEONE FOR STRENGTHENING COMMUNITY MOBILIZATION AND LOCAL COUNCIL SERVICE DELIVERY IN THE POST-EBOLA CONTEXT (P155339) JUNE 27, 2021 Social Protection and Jobs Global Practice Africa West Region  (Exchange Rate Effective June 14, 2021) Currency Unit = Sierra Leone Leones (Le) SLL 10,425\.35 = US$1 SDR 0\.69638368 = US$1 FISCAL YEAR January 1 - December 31 Regional Vice President: Ousmane Dione Country Director: Gayle Martin Regional Director: Dena Ringold Practice Manager: Iffath Anwar Sharif Task Team Leader(s): Randa G\. El-Rashidi ICR Main Contributor: Randa G\. El-Rashidi/Mohamed Bubaker Alsafi Almenfi  ABBREVIATIONS AND ACRONYMS A4P Agenda for Prosperity BA Beneficiary Assessment CAS Country Assistance Strategy CDC Center for Disease Control CLoGPAS Comprehensive Local Government Performance Assessment System CMG Community Monitoring Group CMI Community Monitoring Intervention CMU Country Management Unit CPF Country Partnership Framework CSOs Civil Society Organizations DecSec Decentralization Secretariat DSDP Decentralized Services Delivery Program EERP Ebola Emergency Response Plan ESMF Environmental and Social Management Framework EVD Ebola Virus Disease FCDO The Foreign Commonwealth Development Office FDD Fiscal Decentralization Department FM Financial Management GDP Gross Domestic Product GoSL Government of Sierra Leone GRM Grievance Redress Mechanism IDA International Development Association IE Impact Evaluation IEC Information, Education and Communication INPSS Integrated National Public Service Survey J-CAS Joint Country Assessment Strategy JICA Japan International Cooperation Agency JSDF Japan Social Development Fund Project LC Local Council LCSA Local Council Social Accountability LGA Local Government Act MDA Ministries, Departments, and Agencies MoSWGCA Ministry of Social Welfare, Gender, and Children's Affairs M&E Monitoring and Evaluation NSAP National Social Action Program PP Project Paper PB Participatory Budgeting PDO Project Development Objectives PERS Post-Ebola Recovery Strategy PFMU Projects Fiduciary Management Unit RTF Resident Technical Facilitator SCD Systematic Country Diagnostic SLNMTDP Sierra Leone National Medium-Term Development Plan (2019-2023) TPM Third-Party Monitoring WDC Ward Development Committees WHO World Health Organization  TABLE OF CONTENTS DATA SHEET \. ERROR! BOOKMARK NOT DEFINED\. I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 4 A\. CONTEXT\.4 B\. SECTORAL AND INSTITUTIONAL CONTEXT \.5 C\. PROJECT DEVELOPMENT OBJECTIVES (PDOS) \.8 D\. COMPONENTS\.8 E\. KEY EXPECTED OUTCOMES AND OUTCOME INDICATORS \.8 F\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \.9 II\. OUTCOME \. 10 A\. RELEVANCE OF PDOs \. 10 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 11 C\. EFFICIENCY \. 16 D\. OVERALL OUTCOME RATING \. 17 E\. OTHER OUTCOMES AND IMPACTS \. 18 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 21 KEY FACTORS DURING PREPARATION \. 21 KEY FACTORS DURING IMPLEMENTATION \. 22 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 23 V\. LESSONS LEARNED AND RECOMMENDATIONS \. 27 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 29 ANNEX 2\. PROJECT COST BY COMPONENT \. 37 ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 38 ANNEX 4\. SUPPORTING DOCUMENTS (IF ANY) \. 39  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name Strengthening Community Mobilization and Local P155339 Council Service Delivery in the Post-Ebola Context Country Financing Instrument Sierra Leone Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Decentralization Secretariat, Project Fiduciary Republic of Sierra Leone Management Unit, Local Government Finance Department Project Development Objective (PDO) Original PDO The Project Development Objective is to respond to the post-Ebola Virus Disease (EVD) needs at the local level in Sierra Leone by building community resilience through EVD sensitization efforts and social mobilization activities in the districts most affected by the disease\. Page 1 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) FINANCING FINANCE_TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) Donor Financing TF-A4737 2,750,000 2,746,253 2,746,253 Total 2,750,000 2,746,253 2,746,253 Total Project Cost 2,750,000 2,746,253 2,746,253 KEY DATES Approval Effectiveness Original Closing Actual Closing 06-Feb-2017 23-Jun-2017 27-Dec-2020 27-Dec-2020 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 28-Jan-2020 1\.78 Change in Implementing Agency Change in Components and Cost Reallocation between Disbursement Categories Change in Institutional Arrangements KEY RATINGS Outcome Bank Performance M&E Quality Highly Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 08-Dec-2017 Satisfactory Satisfactory 0\.00 02 28-Jun-2018 Moderately Satisfactory Moderately Satisfactory 0\.67 03 26-Jan-2019 Moderately Satisfactory Moderately Satisfactory 0\.67 Page 2 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) 04 10-Sep-2019 Moderately Satisfactory Moderately Satisfactory 1\.78 05 23-Apr-2020 Moderately Satisfactory Moderately Satisfactory 1\.78 06 24-Dec-2020 Satisfactory Moderately Satisfactory 2\.75 ADM STAFF Role At Approval At ICR Regional Vice President: Makhtar Diop Ousmane Dione Country Director: Henry G\. R\. Kerali Gayle Martin Director: Michal J\. Rutkowski Dena Ringold Practice Manager: Stefano Paternostro Iffath Anwar Sharif Task Team Leader(s): Randa G\. El-Rashidi Randa G\. El-Rashidi Mohamed Bubaker Alsafi ICR Contributing Author: Almenfi Page 3 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT 1\. During appraisal of the Japan Social Development Fund (JSDF) project, the total population of Sierra Leone was approximately 7\.5 million, with nearly 50 percent 0-18 years old\.1 The poverty headcount ratio was 56\.8 percent, with a concentration of 73\.9 percent in rural areas\.2 The country's gross domestic product (GDP) averaged 3\.8 percent annual growth in 2017, with an overall per capita GDP of US$498\.3 2\. The Ebola epidemic reversed the country's post-civil war macroeconomic stability and strained government capacity to deliver services\. There was a 50-60 percent disruption in agriculture, manufacturing, and private-sector employment, including a suspension of five new ventures valued at approx\. US$1\.2 billion\. Transport and cross-border trade came to a standstill\. GDP fell more than 21 percent, inflation hit double digits, and the currency depreciated more than 50 percent\.4 The education system closed, and schools were converted to treatment centers, as the health system collapsed with 23 percent fewer beneficiary services\. Water and sanitation projects were disrupted, experts fled the country, and public works were generally put on hold\. 3\. The Ebola epidemic spurred mistrust among neighbors, of official health information, and of formal institutions, disrupting social cohesion and stability\. Literature reviews of lessons learned from HIV/AIDS in Sub-Sahara Africa highlight that education and interpersonal relationships are prime factors in overcoming stigma\. Rapid sampling during the outbreak indicated that nearly a third of Ebola Virus Disease (EVD) survivors exhibited a mild mental disorder and nearly a third of survivors were stigmatized by their communities\.5 4\. The government of Sierra Leone (GoSL) is strongly committed to supporting EVD survivors, relatives of the deceased, and their communities\. The GoSL effectively stemmed the immediate spread of EVD,6 and with World Bank support, launched the Ebola Emergency Response Plan (EERP) to improve public health systems and economically revive communities\. In addition, the ministries, departments, and agencies provided EVD psycho-social services: the Ministry of Social Welfare, Gender, and Children's Affairs (MoSWGCA) mobilized resources with UNICEF and civil society organizations (CSO) to support children and families; and the Ministry of Health and Sanitation devolved staff to PHUs to better deliver psychological services\.7 In 2015, GoSL established the National Association of Ebola Survivors (NAES) as a community-based organization to map, locate, and sensitize EVD survivors and to advocate for their wellbeing\. At the community level, the devolution of government over the previous decade meant Local Councils (LCs) were well- positioned to reach the poor and vulnerable and to help rebuild societal wellbeing\. 1 https://data\.worldbank\.org/country/sierra-leone 2 https://data\.worldbank\.org/country/sierra-leone; https://www\.imf\.org/~/media/Files/Publications/CR/2020/English/1SLEEA2020001\.ashx 3 https://www\.imf\.org/~/media/Files/Publications/CR/2020/English/1SLEEA2020001\.ashx 4 Staff’s report for the third and fourth Reviews under Sierra Leone’s previous Extended Credit Facility Arrangement elaborates on the macroeconomic impact of the twin shocks (IMF Country Report No\. 15/323, November 2015)\. 5 The Kessler scale is based on a ten-item questionnaire that yields a global measure of distress based on questions about anxiety and depressive symptoms that a person has experienced in the most recent four-week period\. 6 In 2007, junior and senior secondary Gender Parity Indices based on GERs were 0\.78 and 0\.52 respectively, by 2010/11 they were 0\.80 and 0\.59\. 7 Each District has an average of 50 PHUs, under the the MoHS\. PHUs plan, organize, and monitor health provision, train staff, work with communities, and supply equipment and drugs\. PHUs are the delivery point for primary health care (a functional area devolved to LCs)\. There are three types of PHUs: Community Health Centers, Community Health Posts, and Maternal and Child Health Posts\. Page 4 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) B\. SECTORAL AND INSTITUTIONAL CONTEXT 5\. The donor community mobilized resources to halt the spread of EVD\. International CSOs and NGOs provided care and tracked infected individuals\. The most active of these were the: International Federation of Red Cross and Red Crescent Societies, International Medical Corps, International Rescue Committee, Doctors without Borders, Plan International, and Save the Children\. The most visible UN agencies included: UNICEF, UN Development Program, UN High Commissioner for Refugees, UN Office for the Coordination of Humanitarian Affairs, and World Food Program (WFP)\. Most carried out sensitization campaigns\. 6\. The JSDF project was designed to complement the above support and reestablish social cohesion, inclusion and trust by sensitizing communities on the causes of the disease—myth-busting—and by creating mechanisms for social deliberation and social accountability— mobilizing citizens by means of collective action mechanisms, such as citizen- centric monitoring and citizen feedback mechanisms and putting in place the first innovative public participatory budgeting measures in two pilot districts (Freetown City Council (FCC) and Port Loko)\. The participatory budgeting pilot was designed to reflect community demand-driven services bringing services closer to the citizens\. In 2017, the psycho- social impact of the disease on communities, for lack of surveys, was not well understood, but anecdotal information indicated a lack of trust in the government\. 7\. Engaging local leadership was a key element to rebuilding social cohesion\. Engaging local leaders was factored into project design given the country's historically complex State-society relation, marked by years of political instability, and the fragility of the civil war period\. The project focused on engaging the two key local authorities who play important roles in Sierra Leone: Chiefdoms and LCs by ensuring buy-in by both democratically elected leaders (LC councilors and Ward Development Committees (WDC) members) and traditional authorities (community and paramount chiefs)\. 8\. The project built on the Decentralized Service Delivery Program (DSDP2, P119355) (former Service Delivery Bank operation closed in June 2018) implementation structures which included the Project Management Fiduciary Unit (PFMU) formerly known as the Integrated Project Administrative Unit (IPAU) and the Decentralized Secretariat (DecSec)\. These are two key institutions who have been at the forefront of the GoSL's decentralization and service delivery engagement in Sierra Leone, along with the Fiscal Decentralization Department (FDD), formerly known as the Local Government Finance Department (LGFD)\. DecSec is a department of the Ministry of Local Government and Rural Development (MLGRD) and one of DSDP2's implementing agencies\. It is the GoSL department in charge of the decentralization process, providing capacity building and backstopping support to LCs, coordinating nationwide strategic discussions on devolution, and monitoring local level service delivery\. DecSec staff include one Resident Technical Facilitator (RTF) in each LC as DecSec's focal point\. RTFs provide feedback and report on local-level challenges/capacity gaps to DecSec for prompt intervention\. The PFMU, in the Ministry of Finance and Economic Development (MoFED), is the second implementing agency of DSDP2 and acts as a supervising entity at the project level\. The MoFED was the project fund recipient\. It supports capacity building to strengthen fiduciary management, intergovernmental coordination, monitoring, administration, supervision, and auditing\. The PFMU includes staff and expertise in the areas mentioned\. Lastly, FDD, allocated in MoFED, provides monitoring and mentoring support to LCs on financial matters and is in charge of central government funding of LCs\. Page 5 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Theory of Change (Results Chain) 9\. For this Implementation Completion and Results Report, the project's Theory of Change is constructed ex-post as a formal Theory of Change was not a requirement during preparation\. Nevertheless, the project implicitly followed the principles of the Theory of Change\. During project preparation, the government and Bank teams identified critical activities that would: (i) strengthen decentralized service delivery through a community demand-driven safety net approach and partnership with local government and provide a framework for an inclusive and transparent budgetary process supporting investments targeted at reducing vulnerability and improving access to basic service delivery and bringing services closer to end beneficiaries\. This, in turn, supported establishing a complementary safety net intervention for end beneficiaries and providing them with a minimum level of well-being; (ii) create a platform for communities to address and resolve stigma and discrimination and strengthen social cohesion and improve trust in local government, which was absent at the time of project design and appraisal; and (iii) support investments targeted at reducing vulnerability by increasing access to improved quality of basic services\. Consequently, the project's Results Framework (RF) articulated the project's path from planned interventions to intended outcomes\. The Theory of Change is retrofitted from the RF, as presented in the original Project Paper (Figure 1)\. Page 6 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Figure 1: Theory of Change Activities outputs Outcomes/PDOs LT Objectives Component 1 534 WDC members, LC Organization of community-wide councilors, traditional and sensitization meetings and forums religious healers trained on Training of WDC members, LC councilors trauma healing and officers, RTFs, and traditional healers and religious leaders on social cohesion, social sensitization and personal/household 38,249 beneficiaries hygiene reached through LC trauma and sensitization Organization of a nation-wide forum for interventions EVD survivors and their families A - and local governoments capacity to respond to shocks and dealt with their aftermath social tension at the local level Assessment of the relevant curricula for training and sensitization activities Communication means/tools linking Maintaining permanent communication Strengthen community participation and resilience DHMTs, CSOs, PERS, and with DHMTs, CSOs, and representatives for EERP, are maintained the PERS and EERP to ensure an integrated response to the EVD crisis Respond to the post-Ebola Virus Disease (EVD) needs at the local level in Sierra Leone by built community resilience through social-sensitization Component 2A efforts and social-mobilization activities in the districts most Training and workshops for citizens and affected by the disease CSOs, presenting local institutions and their services, and introducing opportunities for effective participation in community life Scaling-up the CMI in two new districts (Freetown and Port Loko) Special training to RTFs and LC officers on social accountability tools B 203 RTFs and LC officers received special training on Joint monitoring visits to LCs by relevant social accountability MDAs (especially by IPAU and DecSec) Promotion of IEC campaigns for the CMI in 20,234 citizens participated the two districts in social accountability Critical assumptions Component 2B initiatives in CMI piloted WDC meetings open to the public to discuss districts A\. Ensure LCs and communities participation and capacity are proposals for PB and the final proposals 9,834 beneficiaries enhanced, and awareness raised Voting process to select the projects that will be implemented in the locality participated in the participatory budgeting pilot B\. Community needs and priorities are identified and implemented IEC campaign to spread the word on the PB process, to make proposed projects known to community members, and to inform of the C at the local level 22 joint monitoring visits to results of the PB process LCs, conducted by relevant C\. Local contractors with sufficient capacity and community Capacity building training exercise with all MDAs WDC members before the start of the PB process engagement in social accountability interventions Page 7 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) C\. PROJECT DEVELOPMENT OBJECTIVES (PDOS) 10\. Under the Project Paper and the Grant Agreement, the objective of the project was to respond to the post-EVD needs at the local level in Sierra Leone by building community resilience through social-sensitization efforts and social- mobilization activities in the districts most affected by the disease\. While the post Ebola needs go beyond the scope of what the project could deliver, the project scope and design were prepared in line with the JSDF guidelines8 to support priority areas and gaps identified in consultation with the Client and to complement other ongoing interventions\. The project was designed to support two priority post Ebola needs (sub-objectives), namely, enhancing social harmonization/inclusion (social sensitization) and improving access to service delivery and making government accountable and transparent (social accountability)\. The two sub-objectives were designed to support the achievement of the PDO and to allow for a more targeted RF\. 11\. The PDO and the RF were not revised during implementation\. D\. COMPONENTS • The JSDF project had three components Component 1 – LC social-sensitization activities – sought to promote social cohesion and resilience by strengthening LC capacity and by implementing community-wide sensitization meetings, forums, and health talks in the Bombali, FCC /Western Area Urban, Port Loko, and Western Area Rural Districts, together representing 70 percent of all EVD cases in Sierra Leone, to diminish the negative effects of EBV on social trust and to provide much-needed support to the victims\. • Component 2 – Creating social-mobilization mechanisms to improve LC service delivery – focused on building community resilience in FCC/Western Area Urban and Port Loko Districts by: (i) creating social-accountability and community-monitoring mechanisms for the effective delivery of social services; (ii) promoting direct citizen engagement in the monitoring of LC services; and (iii) piloting participatory budgeting\. • Component 3 - Project management, M&E, and knowledge management – focused on operations support for project management, procurement, financial management, and monitoring and evaluation\. 12\. Project Location: Social sensitization activities under Component 1 were undertaken in the four (4) districts most affected by EVD judging by the total number of EVD laboratory-confirmed cases (these are Western Area Urban District / FCC LC, Port Loko District, Western Area Rural District, and Bombali District), which represented close to 70 percent of all EVD cases in the country\. A community monitoring intervention (CMI) and participatory budgeting were piloted in the two districts most affected by EVD, according to the total number of EVD laboratory-confirmed cases (these are Western Urban District / Freetown LC and Port Loko District)\. E\. KEY EXPECTED OUTCOMES AND OUTCOME INDICATORS 13\. At appraisal, the key outcome indicators for the project were: • Percentage of beneficiaries who affirm social sensitization activities have been positive toward bringing people together in the four (4) districts in which social sensitization activities are conducted\.9 8The JSDF had guidelines for priority activities they can finance\. For example, income generating activities (e\.g\., productive inclusion) were considered post Ebola need, however, it was not permissible to finance according to the JSDF guidelines\. 9 As measured by an additional question to be included in DSDP2’s Integrated National Public Services Survey (INPSS)\. INPSS is an annual survey that assesses Page 8 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) • Number of sectors in CMI piloting districts quarterly assessed and managed considering citizen feedback\.10 • Percentage of beneficiaries who affirm participatory budgeting processes generated a positive social mobilization effect in the two (2) districts in which participatory budgeting is conducted\.11 • Direct project beneficiaries - estimated to reach 50,000 direct beneficiaries, of which 50 percent women12 F\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) 14\. Despite progress made under component 1 and sub-component 2A, implementation had been slower than expected under sub-component 2B\. By November 30, 2019, the Bank had advanced to the GoSL US$1\.78 million (64\.7 percent of the total project allocation), of which the GoSL disbursed US$1\.35 million (49\.1 percent of total allocation)\. This was significantly lower than the expected disbursement estimates during the Mid-Term Review (May 28-June 11, 2019), which was US$2\.15 million (78\.2 percent of total allocation)\. 15\. A number of exogenous factors and administrative changes, listed below, slowed down implementation a) The Sierra Leone Presidential election held in March/ April 2018 resulted in a change of government, with the new government pursuing a different agenda and seeking to restructure functions and staff from line ministries, including the Ministry of Local Government, where DecSec sits\. b) Parallel to the Presidential election, the people of Sierra Leone voted for new local representatives\. The leadership of 3/4 LCs tasked with implementing the project changed as well as key staff\. This required orientation and training of new staff\. c) The new Minister of Local Government and Rural Development terminated the contracts of six out of nine staff at DecSec, including the Director of the Unit and key specialists, between the second and third quarters of 2018\. A new team was subsequently hired and 12 employees joined DecSec during the first quarter of 2019\. 16\. In order to resolve the implementation delays, an agreement was reached in June 2019 to undertake a Level 2 Restructuring to address: (a) slow disbursements; (b) depleted operational costs affecting the frequency of project supervision by the implementing agencies; and (c) the need to strengthen the institutional arrangements on the fiscal side for sub-component 2B\. Though not explicitly stated in the Restructuring paper, the Bank team worked with the GoSL to address the gap created by the departure of key staff at DecSec due to the administrative changes resulting from the April 2018 elections and the subsequent change in LCs leadership, both which drained the institutional memory and momentum13 of project implementation\. 17\. The restructuring addressed (a, b, and c) outlined above\. Jointly the Bank team and implementing agencies developed a revised disbursement plan, put in place a request for the reallocation of resources (see Table 1 below), and further clarified the institutional arrangements (adding the Local Government Finance Department, the name changed to the Fiscal Decentralization Division (FDD)) to accelerate the implementation of sub-component 2B (Participatory beneficiary perception of local public services and local institutions\. 10 As measured by a new variable to be included in DSDP2’s Comprehensive Local Government Performance Assessment System (CLoGPAS)\. CLoGPAS is an annual survey that monitors capacity developments at the LC level, assesses LC performances on a comparative basis, and identifies capacity needs\. 11 As measured by an additional question to be included in INPSS\. 12 Figures are calculated drawing from the estimated number of beneficiaries of other Decentralized Delivery Service Project Phase 2 activities which reflected a similar scope\. The JSDF project was piloted in a limited number of LCs\. The number of participants in the participatory budgeting pilot was estimated to be equivalent to the minimum participation threshold required under Component 2: at least 2,500 participants per LC\. Page 9 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Budgeting)\. The addition of FDD was a critical step in complementing DecSec technical capacity in budgeting and intergovernmental fiscal management\. Table 1\. Reallocation by expenditure category Current Reallocation Total with Expenditure category % change allocation amount reallocation (1) Consultant services US$ 118,500 -US$10,000 US$ 108,500 -8\.44% (2) Training and workshops US$ 776,500 - US$ 776,500 - (3) Goods US$ 581,000 -US$ 50,000 US$ 531,000 -8\.61% (4) Subgrants US$ 1,220,000 - US$ 1,220,000 - (5) Operating costs US$ 54,000 US$ 60,000 US$ 114,000 +111\.11% Source: table designed by Bank team (data from PFMU and Bank Project FM Specialist)\. II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 18\. The project sub-objectives remain relevant to Sierra Leone's development priorities\. The project continues to be relevant to the development priorities of Sierra Leone and consistent with the 2021-2026 Country Partnership Framework (CPF, Report No\. 148025-SL), which focuses on strengthening community engagement and social inclusion, maximizing the impact of service delivery, and building confidence in institutions under Focus Area 1\. Sustainable Growth and Accountable Governance; these three key objectives were addressed by the project activities\. The project is aligned with the CPF key outcomes for human capital acceleration by ensuring decentralized service delivery, leveraging additional resources, and anchoring sound public finance management\. Components 2 (A and B) were designed to reflect and respond to these sub-objectives\. 19\. The project also aligned with the 2012-2022 Africa Region Social Protection Strategy, which supports "increasing access to and improving the quality of basic services, protecting households, and guaranteeing a minimum level of wellbeing by reducing their vulnerability\. The project also supported the larger work of the Africa Emergency EVD Response Program\. 20\. Rating\. The scope, PDO, and objectives of the project remained the same and relevant to project design, during implementation, and at the time of project closing\. There were no shortcomings in the relevance of the operation to the Bank's Sierra Leone CPF, Country Assistance Strategy (CAS), Systematic Country Diagnostic (SCD), African Region Social Protection Strategy, or Africa Region Emergency EVD Response Program\. Country circumstances changed, particularly due to the COVID-19 Pandemic, but did not impact the higher-level outcomes\. The project design included a mechanism to allow for a shock responsive approach which was reflected in the project's response during the COVID-19 pandemic in the pilot districts\. The project is rated High in Relevance to the PDO\. Page 10 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) B\. ACHIEVEMENT OF PDOs (EFFICACY) Rating: High Assessment of Achievement of Each Objective 21\. The project responded to the post-EVD needs at the local level (PDO) through two sub-objectives\. As stated under the PDO section, the PDO was defined by two sub-objectives after consultation with the Client and in line with the JSDF financing guidelines\. Key PDO sub-objectives were: (a) enhancing social harmonization/inclusion (social sensitization); and (b) improving access to service delivery and making government accountable and transparent (social accountability)\. Developing two sub-objectives allowed for the design of a targeted RF with indicators clearly linked to the sub-objectives\. The two project components, social sensitization (component 1) and social accountability and social mobilization & participatory service delivery (component 2), both supported the priority post Ebola needs (PDO)\. The performance of the project can be judged by assessing the achievement of the two components 22\. The project was successful in achieving its PDO sub-objectives\. All outcome indicators were reached, if not exceeded\. All four core and seven intermediate PDO results indicators were met, and, in most cases, the end-line target was exceeded (see Table 2 below)\. Activities under the two project components were delivered in support of the PDO despite implementation challenges, such as the disruptions caused by the election in 2018 and its impact on some staff changes both at DecSec and at the LC level and the recent COVID-19 pandemic, which temporarily interrupted implementation in the first half of 2020\. These achievements were largely due as a result of working with staff14 and agencies who had the experience from previous Bank interventions in delivering decentralized services\. Table 2: JSDF Project Outcome Indicators Status Outcome Indicator Name Baseline Original Actual at Change (%) Target Completion Indicator 1: Beneficiaries who affirm social sensitization activities have 0 65 75\.3 116 been positive toward bringing people together in the four districts in which social sensitization activities are conducted (percentage) Indicator 2: Sectors in Community Monitoring Initiative pilot districts 0 10 10 100 assessed quarterly and managed considering citizen feedback (number) Indicator 3: Beneficiaries who affirm participatory budgeting processes 0 65 89\.5 138 generated a positive social mobilization effect in the two districts in which participatory budgeting is conducted (percentage) 15 Indicator 4: Direct project beneficiaries (number) 0 50,000 50,485 101 Women beneficiaries (percentage) (50) (50) (50\.5) Source: Indicators 1 and 3 are from December 2020 Beneficiaries Assessment; indicators 2 and 4 are from PFMU\. 23\. In addition, the project included different intermediate results that supported the achievement of the PDO sub- objectives as follows: 24\. Component 1 supported the PDO's emphasis on responding to the post- EVD needs at the local level in Sierra Leone through a series of awareness-raising interventions: (a) Social cohesion and sensitization training (Intermediate Result Indicator 1)\. The project reached 534 beneficiaries which surpassed the end-line target of 200 participants16 which included Local Councilors,17 WDC members,18 traditional healers,19 and religious leaders20\. These beneficiaries were Page 11 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) trained on social cohesion and social sensitization\. This achievement further supports the project PDO sub-objective by building local capacities and increased local ownership to respond to post-EVD needs; (b) Trauma and sensitization interventions (Intermediate Result Indicator 2)\. Reports from DecSec and PFMU indicate that 38,249 beneficiaries benefited from LC trauma and sensitization interventions (51% females), surpassing the end-line target of 25,000 beneficiaries21\. In addition, a two-day national forum was organized for the four beneficiary LCs, which created a platform for Ebola survivors to come together and discuss issues (problems and challenges) affecting their welfare and make recommendations\. This forum contributed to improving social cohesion in the pilot localities by raising awareness, myth- busting and improving community solidarity\. 25\. Prior to the project launch, the communities in the four project districts experienced conflicts due to the discrimination and stigma associated with Ebola survivors and their families, as noted by the Beneficiary Assessment (BA)\. Social sensitization activities focused on easing this challenge\. The BA provides additional evidence supporting this statement "at least 85 percent of the beneficiaries believe that they are now accepted and reintegrated in their community" (see Annex 4 Supporting document (B): Impact of sensitization activity)\. This can be attributed to the effectiveness and high attendance rate at sensitization meetings as the BA indicates that 87\.5 percent of project beneficiaries confirmed they attended capacity-building and community-sensitization meetings or activities organized by the project where Ebola and other health messages were discussed\. 22 26\. BA confirmed increased awareness of EVD-related issues\. According to the 2020 BA, 85\.5 percent of beneficiaries interviewed in all the four Councils believed that community sensitization activities in the capacity building component helped them better understand EVD-related issues and better prevent contracting future diseases of a similar nature\. The project's focus not only in bringing about reconciliation and healing but also increasing their knowledge and understanding on the prevention of EVD and other disasters and shocks in their communities and introducing them to community mobilization and sensitization skills\. It further strengthened local ownership in the process of bringing healing and reintegration to the affected groups\. 27\. Commemorating EVD victims\. For the first time in Sierra Leone, properly articulated and planned community-support initiatives were rolled out to foster grieving and mourning processes following a national disaster (EVD)\. Through the project, joint memorial services, memorial tree plantings, and dedication of community projects in honor of victims of EVD and mudslides (took place in August 2017, killing over 1,000 people)\. These initiatives were launched in 2018 in the four targeted LCs providing a platform for community-support initiatives to foster grieving and mourning processes\. According to the project's annual report, 2018 and 2019 (Component 1), a total of 3,000 people, of which 60 percent were women, attended these events\. The second set of memorial services were held in December 2019\. A total of 2,000 people 14 DecSec managed to retain key staff who had operational and technical experience and were able to roll out project implementation despite the departure of some of the DecSec staff\. 15 Indicator 3 benefited significantly from sensitization activities and positive spillovers to neighboring communities\. This in turn led to higher uptake which contributed to the significant achievement of this indicator\. 16 Given the importance of this activity more Local councilors and Ward community members attended these events\. 17 The Local Council (LC) constitute the political and development authority of the locality 18 The Ward Committee (WDC) is the lowest level of the decentralized structure responsible for monitoring development and governance at their level\. Each LC is constituted by WDC representatives 19 Traditional Healers have a history and influence their communities, culminating from the services they provide\. Their participation and support for the community mobilization and sensitization activities was valuable in ensuring success\. 20 The religious leaders are held at high esteem in the societies and also have large following\. 21 The Source of this figure is from Data Collected during implementation of Project Activities and reported to the team by the M&E specialist\. 22 Beneficiary Assessment Report, December 2020\. Page 12 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) attended, of which 70 percent were women\. Caps, T-shirts, banners, and wristbands for the official memorial service ceremony with council inscriptions were distributed to community members\. The activities supported the project PDO sub-objectives by helping communities to overcome the trauma of EVD and the difference between and among family members\. It also brought communities and families back together and created a conducive environment for social cohesion and reconciliation\. 28\. Communication tools between MDAs and CSOs were maintained (Intermediate Result Indicator 3) \. The full engagement of all MDAs and CSOs in project activities, through telephone calls, letters, emails, and WhatsApp messages, guaranteed communication and cross-fertilization since the onset of the project\. The communication tools resulted in effective coordination efforts to maintain the engagement of four CSOs to support the social sensitization and mobilization activities23\. These activities supported the PDO sub-objective by improving citizen engagement through engaging CSOs\. 29\. The CSOs worked in close collaboration with the LCs and DecSec to implement Components 1 and 2\. They specifically participated in the design of reporting mechanisms on community dialogue (facilitating sessions) and identifying village-level community structures to help resolve grievances identified during community dialogue\. In addition, CSOs also helped in the identification of community-based groups to undertake community-based monitoring and evaluation on grievance prevention, and the sensitization of the communities on the rationale of the project and their roles and responsibilities\. 30\. Sub-component 2A contributed towards responding to the post- EVD needs at the local level in Sierra Leone, particularly improving social accountability (PDO sub-objective), by supporting social mobilization through scaling up CMI activities\. The RTFs at the LC level and key officials of LCs and CSOs were trained on social accountability, the CMI, and Grievance Redress Mechanism (GRM) concepts\. Reports from the DecSec indicated that about 20,234 citizens participated in social accountability initiatives in the CMI in the pilot districts\. This surpassed the end-line value of 20,000 (Intermediate Result Indicator 5)\. The LC Social Accountability (LCSA) teams and facilitators established 15 Community Monitoring Groups (CMGs) in Port Loko District and 15 in FCC\. There were a total of 260 people in the CMGs representing both districts (with 64% female representation24)\. Each district was allocated SLL60,000,000 to start the intervention, and funds were delivered to the CMGs/LCSA Teams to monitor and review the proposals and compacts (an agreement between the community and service provides on how to improve on service delivery)\. The project recruited 16 facilitators for FCC and 15 for Port Loko District25 to work with LCSA teams to implement the project interventions\. This intervention supports the PDO sub-objective by strengthening the trust of the beneficiary community and created new opportunities for citizens to influence the direction of policy and led to increased participation (as indicated in the Results Framework) of beneficiaries in the LCs' annual development activities\. 31\. The CMI approach supported strengthening bottom-up accountability through facility scorecards and community monitoring of health facilities, taking inspiration in part from a groundbreaking study demonstrating a 30 percent drop in child mortality when this methodology was used\.26 CMI building on the model predicated under the DSDP2 project in two districts (Western Area and Port Loko) and strengthening monitoring and accountability to ensure effective service 23 The four CSOs are: Health Alert (FCC); the Women’s Network for Environmental Sustainability group (Western Area Rural District); the Sierra Leone Social Aid Volunteers (Port Loko District); the TINAP for Peace and Development Organization (Bombali District) 24 According to information from DecSec team on Dec 20th, 2020 25 Information is obtained from DecSec team (Community Monitoring Initiative (CMI) Update report) 26 M\. Bjorkman and J\. Svensson, “Power to the People: Evidence from a Randomized Experiment on Community-Based Monitoring in Uganda,â€? Quarterly Journal of Economics 124/2 (2009), pp\. 735–769\. Page 13 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) delivery in four sectors: health, water, solid waste management and education sectors\. Activities included the formation and training of 30 CMGs, 1027 refresher training of District Coordinators and CMI Facilitators and the provision of additional monitoring manuals\. In addition, the project strengthened WDC, who were instrumental in mediating between communities and LCs (an important aspect of social accountability)\. The project worked with stakeholders at the central and local levels to improve communication, information dissemination, and performance monitoring which enhanced the access of service delivery\. The component also facilitated the implementation of a GRM across the four LCs to help resolve grievances related to project implementation\.28 The GRM platform was set up to quickly respond to and resolve grievances emanating from the implementation of the project and provided an effective feedback loop\. The BA data indicates that 75 percent of beneficiaries interviewed were aware of GRM activities related to LC project activities\. According to a report from the DecSec team29 by the end of the project, 51 GRM cases were received from the four districts, all of the cases were resolved within an average of 9 days\. The speed in resolution can be attributed to the knowledge and experience gained under the DSDP2 by the project team which was applied to the JSDF GRM process\. The project contributed to respond to post-EVD needs at the local level by: (a) improving the trust between beneficiary communities and the LCs; (b) building state-citizen interfaces on public service delivery and community-based platform underpinned by structured social accountability mechanisms; and (c) facilitating knowledge and learning to enhance the effectiveness of project interventions\. 32\. The BA revealed high satisfaction with CMI monitored projects\. According to the assessment, 83\.3 percent of respondents reported improvement in the projects monitored by the CMGs\. This intervention created institutional structures such as the LCSA committee at the LC level and CMG at the community level\. These structures will serve as foundations for deepening transparency and social accountability in local governance and development, particularly in monitoring national service delivery programs being rolled out by the GoSL\. The CMI further supported the PDO sub- objectives by transforming the relationship between communities and public service duty-holders, allowing citizens to express their voice and agency and ensuring the services were demand-driven\. 33\. The PB contributed to the project development objective to respond to the post-EVD needs at the local level in Sierra Leone, particularly improving social accountability (PDO sub-objective), by enabling an increased number of citizens to fully participate in the decision-making processes of the target LCs by identifying and prioritizing their own needs in the LCs' annual development plans for the year 2020\. Monitoring the number of beneficiaries in the PB pilot is the main PB intermediate indictor\. The World Bank December 2020 virtual final implementation support mission and Third-party Monitoring (TPM) and implementing agency monitoring indicated that the end-line target of 5,000 beneficiaries participating in the PB was surpassed by 4,83430, reaching a total of 9,834 beneficiaries by the end of the project (Intermediate Result Indicator 6)\. This intermediate indicator highlighted that the component supported the PDO by increasing community engagement in service delivery\. 34\. However, this component 2B (PB) included several activities that were critical for achieving the PDO sub-objective\. By Project closure, the project financed 16 PB sub-projects by allocating resources reflecting demand-driven community priorities\. The PB sub-projects supported several sectors ranging from health (4 sub-projects), education (5 sub-projects) to water and sanitation (4 sub-projects) and food security (1 sub-project) (see Annex 4 Supporting document (D): PB 27 According to the activity sheet: component 2A 28 FCC, Ward C, Port Loko District Council and Bombali District Council 29 This information was obtained from communication with the M&E specialist (Collina) on April 28th 2021\. 30 The number was collected by M&E officers in the field sent to PFMU and verified through joint supervision missions Page 14 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) sectors distribution and Annex 4 (E) and (F): PB sub-projects in Port Loko and FCC)\. 35\. The PB initiative supported rehabilitation of existing facilities coupled with capacity building, information, communication and education (IEC)\. A five-day training was organized for WDCs in each pilot district on the PB process, information dissemination, community mobilization, conflict resolution report writing, and preparation of simple project budgets\. All CSOs were trained and supported in carrying out a need-assessments for the preparation of PB proposals\. A three-day training/workshop was conducted in each of the pilot councils to strengthen the capacity of WDC members in the five selected wards to help deliver high-level participation in the PB process\. Jingles, posters, and radio talks were prepared in Krio and the local languages of the target communities on the PB objective and process\. The WDCs were supported to screen and prepare sub-projects proposals and budgets and to prioritize sub-projects in line with the selection criteria in the project operational manual\. Culturally sensitive IEC materials were developed to raise community awareness, with the outbreak of COVID-19 in 2020, the materials were tailored to inform communities on COVID-19 protocols and help mitigate the outbreak\. This was done in the 10 selected Wards in FCC and Port Loko District\. The specific IEC materials produced included 10 roll-up banners with messages on PB and COVID-19 protocols; 10 flex banners with messages for the PB and COVID-19; 100 stickers with culturally sensitive messages on the PB and COVID-19; 7 audio Jingles in key local languages with messages on the PB and COVID-19; and 3 sensitization videos using local languages on the PB and COVID-19 (see Annex 4 Supporting document (H): Photos of PB, Communication materials)\. 36\. PB catalyzed a grassroots bottom-up approach\. The implementation of the PB in the two districts demonstrated that citizen engagement could effectively strengthen service delivery through a demand-driven bottom-up approach, build trust, transparency, and accountability while ensuring resources are utilized transparently for the intended purposes\. According to the BA, about 94\.3 percent of beneficiaries agreed that the PB processes generated positive social mobilization in the two districts in which it was implemented\. The IE indicated that over 84\.3 percent of beneficiaries in FCC and Port Loko District affirmed that PB processes positively impacted their ability to influence LC spending priorities\. The IE disclosed that participants at the Focused Group Discussions (FGDs) confirmed their LC development plans reflected community priorities since the onset of the JSDF-supported project\. They attributed this to WDC members, community service organizations, and community-based organization's participation in the finalization of the LC's development planning and budgeting processes which also strengthened trust between LCs, WDCs and their constituents\. The project prioritization process boosted the community ownership and in turn, the future sustainability of these investments\. An unintended outcome of the PB initiative was confirmation by civil society leaders namely that the PB processes led to their inclusion and acceptance within the communities as budget interlocutors\. 37\. Complementarity between PB, CMI and GRM interventions\. Through joint activities (sensitization, training, and monitoring), PB (16 projects), CMI (62 projects) and the GRM were complementary and served as a basis for increasing the inclusion of marginalized groups, especially women, youth, EVD survivors, people living with disabilities, and the elderly in monitoring LCs' development activities and in making decisions on critical interventions\. Component 2 activities supported the PDO by contributing to building trust and intra-communal cohesion where it had been compromised, increased social mobilization, and made local social services more responsive to citizen needs in the post-EVD environment\. The project facilitated knowledge and learning, which enhanced the effectiveness of interventions\. 38\. The JSDF activities did not overlap with ongoing donor/partner interventions in Port Loko District and Western Area Rural District with activities being implemented by: (1) the Japan International Cooperation Agency (JICA) Capacity Development for Comprehensive District Development Project; (2) and the Foreign Common Wealth Development Office (FCDO) Strengthening Community-Led Accountability to Improve Service Delivery in the Western Rural and Urban Areas Page 15 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Project\. From 2009 to 2018, the JICA project constructed one primary school and rehabilitated two primary schools in Wards 199 and 200 in Port Loko District\. The FCDO project focused on improving social accountability and better service delivery through citizen engagement from 2016 to March 2021\. 39\. Total number of beneficiaries benefiting from the project\. Approximately 50,485 beneficiaries benefited from the project31, which exceeds the end-line target of 50,000 beneficiaries\.32 The project created opportunities for stakeholders to benefit from the project directly, including training, coaching and mentoring, workshops/forums, direct funding for activity implementation, and distribution of materials and equipment\. All of these activities and achievements have supported the PDO sub-objectives by engaging a large share of the communities to respond to the post-EVD needs at the local level\. 40\. Establishing a responsive, inclusive and transparent citizen-centric mechanism\. The project demonstrated that decentralization, community participation in a community-driven social safety net project, and building local government capacity are integral to making service delivery responsive, inclusive, transparent and creates an avenue for gender participation (i\.e\., strengthening women's voice and agency) in prioritizing service delivery\. 41\. In conclusion, the project introduced a viable and effective community participatory service delivery safety net mechanism in Sierra Leone at a critical juncture\. This model is being anchored in various decentralization and service delivery interventions nationwide\. Justification of Overall Efficacy Rating 42\. Efficacy is rated High\. The project achieved the objective of responding to the post-EVD needs at the local level in Sierra Leone\. It did so through the two PDO sub-objectives (improving social sensitization and social accountability)\. The introduction of sensitization and awareness-raising activities, CMI, GRM and PB is rated High because of the innovation and improvements noted in community inclusion, participation, transparency and enhanced voice and agency of women in prioritizing service delivery\. These interventions responded to the post-EVD needs at the local level in Sierra Leone by enhancing LC capacity to deliver services to the target population, especially during the COVID-19 restrictions\. Taken together, the overall efficacy rating is High\. C\. EFFICIENCY Assessment of Efficiency and Rating 43\. The overall efficiency of the project is evaluated by: (i) cost-effectiveness of activities relative to alternatives; (ii) project administrative costs; and (iii) implementation efficiency\. 44\. Economic Analysis\. No ex-ante economic impact analysis was prepared for the JSDF and efficiency-related data are limited under the program, which makes it difficult to undertake a complete economic analysis\. Contracting processes took place in a timely manner and all sub-projects under participatory budgeting (16)33 involving civil works were completed\. The project did not experience any cost overruns in the initial contract amounts, as the implementing agency 31 According to the World Bank December 2020 virtual final implementation support mission and virtual monitoring of end of project closing 32 Data are obtained from the M&E officers in an internal communication on June 15th, 2021\. The breakdown of the 50,845 project beneficiaries is as follows: the project launching ceremonies (992 beneficiaries), Component 1 (18,659 beneficiaries), Component 2A (11,048 beneficiaries), and Component 2B (19,786 beneficiaries\.) Due to COVID and some of the limitations in conducting additional verification, there is a slight possibility of overcounting or undercounting number of beneficiaries benefiting from the project activities\. 33 Nine sub-projects in FCC and seven sub-projects in Port Loko District\. Page 16 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) incorporated lessons learned from DSDP2 to help mitigate cost overruns\. 45\. Cost-effectiveness\. Participatory decision-making at the local level ensured that scarce resources were applied efficiently in response to local priorities, promoted local ownership of sub-projects, which combined with other complementary JSDF activities (such as a capacity building), made the sub-projects more amenable to being sustainable (i\.e\. community monitoring and ownership in fostering operations and maintenance)\. It is also expected to extend the life of the investments' benefits\. The project consistently matched DSDP2 cost-efficiencies and outperformed the government funded projects (see Annex 4 Supporting documents (E &F): JSDF PB sub-projects in Port Loko and FCC, for a cost comparison\.) Its cost-efficiencies can be partly attributed to the participatory budgeting process for sub-projects (i\.e\., community labor, in-kind contributions, community monitoring, and GRM) and to economies of scale from simultaneously implementing multiple sub-projects as compared to single government implementation of sub-project which are more costly\. JSDF projects also completed activities 1\.5-3 times faster,34 with strong community participation and monitoring; support/monitoring by DecSec, FDD, PFMU, and a TPM consultant; and strong LC ownership\. 46\. Administrative Efficiency\. JSDF project management costs were lower than similar operations\. The administrative costs to manage the PFMU were US$205,371, representing 7\.5 percent of total disbursements (US$2,746,253)\. This is at the low end of the range for such projects and is attributed to: (i) the presence of an existing and operational PCU financed by GoSL; (ii) absence of procuring capital items such as vehicles; and (iii) no payroll cost to the project as this was covered by the GoSL\. An IFAD study comparing administrative costs of community service delivery projects found costs ranging from 10 to 24 percent, with average administrative costs of 16 percent\. 47\. Implementation Efficiency\. JSDF appraisal estimates were benchmarked against DSDP2, and its scope was aligned with existing national- and local-level capacities\. Despite delays resulting from elections in 2018, which led to staff changes at DecSec and LCs, and the outbreak of COVID-19 in 2020, the project was approved on February 6, 2017 and became effective on June 27, 2017\. All activities were completed by December 27, 2020 (project close) and completion certificates were awarded to the respective sub-project LCs in Port Loko District and FCC\. 48\. Overall efficiency rating\. Project activities were efficient\. The above findings revealed a lower cost in implementing JSDF sub-projects as compared to GoSL sub-projects\. The administrative cost was below the average cost of similar activities\. Despite exogenous events that led to delays (i\.e\., staff turnover, procurement delays and COVID-19 pandemic), all activities were completed by the original closing date\. For all these reasons, overall efficiency is rated Substantial\. D\. OVERALL OUTCOME RATING 49\. The overall outcome rating for the project is Satisfactory based on High Relevance of the PDO throughout implementation, the High rating under Efficacy demonstrated in the achievements attributable to project activities, innovations and responsiveness, and the Substantial rating for Efficiency as evidenced by the notable results achieved in the cost effectiveness, administrative, and implementation efficiency\. In combining these ratings, and in line with the ICR Guidelines, the overall outcome rating is Highly Satisfactory\. 34 This calculation is based on data provided by FDD and TPM findings\. Page 17 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) E\. OTHER OUTCOMES AND IMPACTS • The project highlighted the feasibility of creating partnerships between national, local and community groups in identifying and prioritizing their needs\. • The participatory budgeting pilot in FCC and Port Loko District created a demonstration effect\. It displayed citizen engagement in the service delivery decision-making process and supported CMIs being replicated in other LCs\. • Communities strengthened the citizen-government social contract through, for instance, contributing their human capital and local resources were needed for timely completion of works\. • Communities received short-term economic benefits through short-term employment and thorough procurement of local materials for PB sub-projects which stimulated the local economy\. • Despite the fact that the project did not focus on trauma healing, activities did contribute to reducing psychological stress by EVD survivors and their families\. Based on anecdotal information, the ICR team was informed that communities increased productivity and earnings, spawning inclusive development such as the rice-processing hubs in Marampa Chiefdom (Port Loko District) and Kambia Town (Kambia District), leading to improved income opportunities\. • Communities monitored 62 projects in FCC (22 projects) and Port Loko (40 projects)35 covering a range of sectors from health and education to water/sanitation and agriculture, this is a precursor to their engagement in setting up operations and monitoring committees thus creating a mechanism for sustainability36\. • Communities envisioned and implemented multi-faceted interventions, such as raising awareness of free GoSL healthcare services for EBV victims and their families at memorial services and alerting them to possible linkages with other relevant government programs\. • The project supported an adaptive response to service delivery during the COVID-19 response in the selected districts\. The adaptive framework allowed for partnerships with national, sub-national government agencies and communities to be strengthened as outlined in the 2017 Development Operational Guidelines of the Ministry of Local Government and Rural Development Local Council\. • The project also supported building the procurement capacity of communities and LCs by training 20 local government officials and 50 community members under the participatory budgeting activities\. This expedited implementation and led to improved transparency37\. • The lessons learned have been catalytic in rolling out the new GoSL decentralization policy\. Specifically, objective (e) of the policy, which supports the "promotion of the wellbeing of local citizens, especially of marginalized groups such as women, youth, and people living with disabilities, by giving them a greater role in participation in the planning, implementation, and evaluation of local development plans\." • COVID-19\. The positive spillover from the project's capacity-building efforts drawing on Ebola interventions proved to be instrumental in helping pilot communities respond to the COVID-19 pandemic\. Communities in the project districts responded proactively to prevent the pandemic from spreading in their localities\. In Port Loko and Bombali Districts, very few COVID-19 cases were reported as compared to the Western Area\. In the Western Area, the most populous region with a population of nearly 1\.5 million people, only 2,900 people (0\.19 percent) 35 Data obtained from internal communication with the client M&E specialist for component 2 on June 11th, 2021 36 Data are collected from reports from the District Coordinators in Freetown and Port Loko 2018-2020 37 Data obtained from the M&E team at DecSec in an internal communication on June 8th, 2021\. (the time stated that the data are from various training reports) Page 18 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) were infected as of May 30, 2021\.38 According to the 2020 BA, 85\.5 percent of beneficiaries interviewed in all the four Councils believed that community sensitization activities in the capacity building component helped them better understand EVD-related issues and better prevent contracting future diseases of a similar nature such as COVID-19\. The role of project interventions, inclusive of applying to Ebola response protocols, hygiene maintenance, and generating support from LCs, key national agencies and other stakeholders in combatting the pandemic, contributed to containing the disease in these districts\. Poverty and Shared Prosperity 50\. The JSDF project introduced a community participatory safety net approach to support EVD survivors and their families\. It helped asset creation through public works, skills development during COVID-19 under the PB sub-projects and improved access to services by the end-users in the pilot districts\. The implementation of 16 PB sub-projects created employment for 251 people in both FCC and Port Loko PB sub-projects, with females representing 35 percent of total employed (see Annex 4 Supporting document (G): Number of people employed in PB community sub-projects\.) It supported complementary interventions by GoSL, the Bank, and partners targeting improvements in human capital outcomes by: (i) allowing communities to prioritize their service delivery needs in health, education, etc\., improve access which in turn are crucial elements for closing the human capital gap; (ii) promoting behavioral change through behavioral sensitization, awareness-raising workshops which helped increase demand for health and education services under the participatory budgeting sub-component; (iii) building social accountability platforms to strengthen grievances; and (iv) improving crisis-response systems to mitigate the impact of shocks and disasters as seen during the recent COVID-19 pandemic and project response in the pilot districts building on the project's post-EVD sensitization efforts\. Gender 51\. The project supported the World Bank Gender Strategy objectives 1 "supporting human endowments (health, education and social protection" and objective 4 "enhancing women's voice and agency and engaging men and boys Project indicators were designed to capture gender-disaggregated data39)\. Fifty percent of beneficiaries were women, as reported in the baseline assessment, which aligned with the end of project target\. Seventy percent of the respondents in the IE survey40 confirmed that women were fully involved in the activities promoted by CSOs and the LCs under the project\.41 The project developed a gender-mainstreaming strategy and uniformly integrated, implemented, and monitored gender parity across project activities\. The strategy was transacted through training, operations manual, IEC and outreach materials, CMI, and GRM\. Officials of the four LCs and selected CSOs received training, mentoring, and coaching on the principles outlined in the gender strategy\. A three-day workshop was organized in November 2018 by the DecSec at the Port Loko District to anchor the guiding principles of the strategy and gender perspectives of the project in the implementation of project activities\. The operations manual clearly spelled out that women constitute at least half of the decision-making committee for identifying, planning/budgeting, and implementing activities\. The project empowered women to assume leadership positions with 79\.3%42 of women taking on key responsibilities in the CMG forums\. Communication outreach materials were socially and culturally appropriate, tailored to literacy levels, and timed for 38 Population numbers were obtained from Statistics Sierra Leone (https://www\.statistics\.sl/ )"2015 Population and Housing Census Final Results" and number of COVID cases are obtained from Directorate of Health Security and Emergencies Ministry of Health And Sanitation (https://dhse\.gov\.sl/) 39 World Bank Group Gender Strategy (FY16-23) 40 Difference in female percentage between the RF and IE can be attributed to the smaller sample size of the IE 41 For example, in December 2020, the JSDF project team interviewed officials of the Port Loko District CSO Collective Development Initiative and confirmed gender parity was observed in its activities\. 42 CMI District Coordinators Reports, January 2019 and January,2020: Women in Leadership Page 19 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) maximal access and inclusion\. The project executed gender parity in training, CMGs, and social-sensitization interventions\. By strengthening their voice and agency, women were empowered and were given the forum to express grievances\. 52\. High female participation in the CMGs\. Off the 260 people participating in the 30 CMGs in both FCC and Port Loko, 65 percent were females vis-à-vis 35 percent males\. About 70 percent of the respondents in the IE survey confirmed that women were fully involved in the activities promoted by CSOs and the LCs under the project\.43 In addition, PB sub-projects also benefited females, particularly in the education sector\. In the 5 rehabilitated schools in Port Loko, 51 percent of the student were girls (1,079 out of 2,116) (see Annex 4 Supporting document (E): JSDF PB Sub Projects in Port Loko\.) Sensitization activities under Component 1 also showed strong female participation\. Of the total 38,249 participants, 51% were female (19,368 females and 18,881 males\.) (see Annex 4 Supporting document (A): breakdown of beneficiaries reached through sensitization interventions, by gender\.) Finally, an auxiliary outcome of the project was creating short- term employment for women under the PB sub-projects\. Thirty-five percent of the beneficiaries employed under the PB sub-projects were women (see Annex 4 Supporting document (G): The Number of people employed in PB community sub- projects)\. Institutional Strengthening 53\. The JSDF project built on existing DSDP2 service delivery institutional arrangements\. The JSDF project provided resources to deepen DSDP2 demand-driven approaches to service delivery reflected by strong social accountability, community monitoring, GRM, and effective partnerships with CSOs and national and local government\. The project is built on the premise that strengthening institutions is key to laying the foundations for higher and more sustainable economic growth, which can help reduce the drivers and impact of fragility, conflict, and violence\. 54\. The project strengthened inter-ministerial coordination at the policy level and intergovernmental coordination\. Despite initial resistance, the ministers of Agriculture, Finance, Health, Local Government, and Social Welfare signed an inter-ministerial Memorandum of Understanding to strengthen information flows and preempt mitigating bottlenecks\. This inter-ministerial forum provided the necessary space to craft policy, streamline implementation, and build sustainability\. The project also deepened intergovernmental coordination setting a precedent for the operationalization of the new decentralization strategy\. 55\. The project scaled up key DSDP2 activities to consolidate gains made in service delivery by placing a premium on social accountability, in line with the Bank's CAS and SCD recommendations and GoSL country development agenda\. These activities included: (i) providing training to LCs, communities, and local leaders on resilience to shocks; (ii) launching citizen dialogue to strengthen inclusion and community resilience; (iii) organizing mourning ceremonies and memorial services in honor of Ebola victims bringing about reconciliation and mitigating stigma; (iv) creating over 30 CMGs in key Wards to supervise public services; and (v) instituting a two-tier grievances redress mechanism to provide a voice to citizens on local services delivery challenges\. 56\. The project designed an effective, replicable road map for sustainable community participation and responsive national and local government partnerships\. The project interventions were incorporated under Pillar 8 of the Sierra Leone Medium-Term National Development Plan 2019-2023\. This will continue to strengthen citizen engagement, social accountability, and transparency in service delivery and integrated community demands in LC development plans in turn 43 For example, in December 2020, the JSDF project team interviewed officials of the Port Loko District CSO Collective Development Initiative and confirmed gender parity was observed in its activities\. Page 20 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) bolstering the safety net dimension of community-led development\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME KEY FACTORS DURING PREPARATION 57\. Design of objectives and activities\. The PDO was aligned with the post-EVD context and the GoSL’s development agenda in Sierra Leone as were the components which were well structured, had clear operational logic, were relevant and drew on lessons learned from DSDP2 in designing social accountability platforms (GRM and CMI)\. During the design phase, the Bank team engaged extensively with partners, national, local, CSO, and community representatives to consult on the design and align the design with the local needs and priorities\. While the post Ebola needs are not limited to the PDO sub-objectives, the project activities were designed to respond to the post-EVD needs that were: (a) priorities for the Client; (b) fall within the parameters of the JSDF financing guidelines; and (c) complement other interventions\. The sequencing of tasks was also adequate, and implementing agencies had the capacity to manage project activities at appraisal, given their extensive engagement in the DSDP1 and 2 projects\. The project design included extensive training, inputs and logistics, financial support, and sensitization for communities and LCs to partner in project coordination\. An inter-agency committee developed at the LC level supported community interventions and coordinated CMI and GRM activities\. 58\. The project catalyzed community engagement in prioritizing service delivery under the participatory budgeting framework\. This innovation was well-received by all stakeholders; however, additional time should have been factored into project design to allow communities and local institutions to absorb and adapt to a demand- driven approach\. For instance, the PB launch was delayed and started around July 2020 due to procurement delays and COVID-19 restrictions\. In contrast, the GRM,44 CMI and other sensitization activities were rolled out and implemented early on during project implementation\. Nevertheless, all project activities were completed by project closing\. 59\. Results framework (RF)\. Indicators, baselines and targets for the RF benefitted from the institutional arrangements and lessons learned from the DSDP2 and were appropriate for the intended project objective and related outcomes\. The project put in place a structured monitoring plan to collect information on the project achievements\. At the preparation stage, an agreement was reached with the GoSL to continue with the implementation of the Integrated National Public Services Survey (INPSS)45 and Comprehensive Local Government Performance Assessment System (CLoGPAS)46 surveys developed under the DSDP1 and DSDP2 projects\. However, constrained resources precluded this approach\. The project team adopted the next-best alternative: a baseline and end-line BA complemented by an end-of-project impact evaluation\. On the other hand, the PDO was such that it needed to be defined by two sub-objectives which allowed for a more targeted RF\. 60\. Risks and mitigation measures\. The risks and mitigation measures identified during preparation were largely adequate\. Identifying risks of stakeholder over-expectation in the planning phase would have benefitted the 44 For instance, all 51 complaints reported under the JSDF GRM were addressed and closed by the project closure\. The 51 cases were resolved within the stipulated time frame of 22 days and 3 cases lasted for 30 days\. 45 INPSS was a nationally representative annual survey that tracked progress on the basic services that DSDP1 and 2 supported\. 46 CLoGPAS was a key survey used to measure improvements in the capacity of LCs\. Page 21 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) project\. The stakeholders expected remuneration for services provided under the project, such as offsetting the costs of fuel, transportation, and food to attend the meetings and remunerating attendance\. The EVD victims expected the project to provide direct income to support improvements in livelihoods, which was not part of the project design\. This risk was mitigated through follow-up sensitization sessions to address grievances where the implementing agencies engaged in consultations with communities and local leadership to clarify the intended scope and design of the project\. In addition, the Bank team reached out to FDD, PFMU, and complementary Bank projects (i\.e\. Social Safety Net) to identify potential linkages to support livelihood and other social services to EVD survivors and their families\. The FDD team were able to establish linkages for some of the EVD survivors and their families to key social service programs\. KEY FACTORS DURING IMPLEMENTATION Factors subject to government and/or implementing entities control 61\. Governance/Human Resources\. The project encountered staffing challenges at the local and national levels around the 2018 elections\. In the lead-up to elections, the project team partially implemented activities to ensure effective utilization of project resources and to achieve the intended results\. In the aftermath of the elections, Aide-Memoires indicate that four core DecSec staff were relieved; and LC leadership were changed\. The positions at DecSec were not replaced for six months\. This incurred significant institutional memory loss and increased costs for training and social-sensitization interventions for the new staff from the staff that were retained in DecSec\. The presence of the core and experienced DecSec staff was a key factor for catalyzing implementation after the impasse resulting from these institutional changes\. Future Bank engagement should ensure there are contingency clauses in contracts to manage these types of risks and that dedicated staff are retained under the project\. 62\. Intergovernmental ownership and coordination\. As mentioned above, the project was strategic in solidifying ownership of the activities through a Memorandum of Understanding among the five key public stakeholders\. This mechanism facilitated face-to-face discussions and vertical and horizontal data/information flows among ministries, departments, and agencies\. This proved to be key to furthering the implementation of innovative mechanisms such as participatory budgeting\. 63\. Procurement\. The PFMU had a designated procurement staff for the project who was also working on other projects\. The work overload on the procurement specialist lead to delays in procurement timelines and uploading requests into the Systematic Tracking of Exchanges in Procurement (STEP)\. Technical assistance from Procurement Bank specialists helped resolve and expedite procurement delays as well as the experience of the procurement specialist\. 64\. M&E\. The project maximized the human capital and infrastructure accumulations of DSDP2 for M&E, facilitating the collection, use, and reporting of data\. The project adopted the next-best alternatives to offset resource constraints to undertaking the INPSS and CLoGPAS survey, using baseline and end-line beneficiary surveys complemented by an end-of-project impact evaluation\. Factors subject to World Bank control 65\. Adequacy of supervision\. Bank task team leaders did not change\. The core Bank team and client at the PFMU, FDD and a segment of key DecSec staff working on DSDP2 were involved in supervision, which allowed for collective Page 22 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) resolution of problems in an expeditious manner\. In January 2020, the COVID-19 crisis curtailed in-person supervision by the Bank team and field visits by the implementing agencies\. The project redressed this exogenous factor through intensive virtual technical and supervision missions, hiring a TPM consultant, intensive LCs engagement in the pilot districts and spaced out in-country joint supervision missions by the implementing agencies\. In July/August 2020, field visits resumed and expedited the remaining activities, especially the PB pilots in FCC and Port Loko District\. 66\. Proactive response to align Annual Work Plans with component needs\. The project adjusted the Annual Work Plan to accommodate changing budget needs to facilitate project implementation\. 67\. Delay in funds disbursement\. Disbursements were initially slow\. The release of the first tranche of funds from the Bank to GoSL was delayed six months because of systemic technical glitches; this delay rippled into the project launch timeline\. An internal miscommunication between PFMU and DecSec staff in processing and clearing payments for the PB activities caused procurement delays; the Bank team intervened to resolve these issues, and as a result, significant procurement was completed in the last 18 months of the project\. 68\. Revising institutional arrangements and reallocating funds\. The project was restructured in January 2020 based on extensive consultations at the mid-term review\. The restructuring reallocated funds from sub-projects and training budgets to operating costs to supplement the implementing partner's supervision\. It also added the FDD as an implementing agency with the PFMU and DecSec, which constitutes a mixed team of economists and FM, procurement, and civil works experts, to accelerate the implementation of Component 2B\. The FDD's full engagement in project activities provided extensive technical and administrative capacity, filling gaps such gaps as FM and procurement\. The FDD's experience in managing the transfer of funds to LCs and in supervising LC projects led to the successful acceleration, completion, and handover of Sub-component 2B activities in FCC and Port Loko District\. Factors outside the control of government and or implementing entities 69\. COVID-19 crisis\. The pandemic caused delays in the implementation of program activities since the movement and gathering of people was restricted, and district, township, and offices had to close during the lockdowns\. The pandemic limited stakeholder engagement initially, including with LCs, WDCs, CSOs, MDAs, women, youth, EVD survivors, people living with disabilities, and other vulnerable and marginalized groups in the target LCs\. The pandemic also delayed the initial start timelines to implement PB sub-projects\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. BANK PERFORMANCE 70\. Quality at Entry\. The Task Team ensured quality at entry through a context-specific project design\. The Bank's performance in the identification, preparation and appraisal led to the development of a sound project design, with sufficient steps taken to strengthen project management developed under DSDP2 of the implementing agencies capacity in procurement, FM, and M&E capacity\. The project objectives reflected the findings, lessons learned, and recommendations emerging from lending operations and economic and sector work in Sierra Leone\. These included the "2008 IEG assessment of decentralization in client countries" and a "2009 joint report by the Page 23 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Bank and the government on decentralization in Sierra Leone" as well as "A Review of World Bank Support for Accountability Institutions in the Context of Governance and Anticorruption" and "Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict\." Finally, the project drew on lessons learned in-country and Bank-wide for community-driven development approaches to safety net programs, as well as for potential risks to mitigate\. 71\. The project was relevant to and consistent with GoSL policies/priorities and the Bank strategies47\. The project designed a highly replicable – and the country's first – participatory budgeting model, with a lens toward the National Decentralization Policy (2020) and Medium-Term National Development Plan (2019-2023)\. The project capitalized on the Bank's ongoing civil works for implementation, such as the DSDP2 (2012-2018), especially for its citizen engagement and social accountability mechanisms, and on the Bank's past civil works for broader institutional arrangements, such as the Capacity Building Project (2004-2008) and DSDP1 (2009-2011) and built upon the Bank's community-level engagement through the National Social Action Program (NSAP)\. In retrospect, the PDO could have been more narrowly defined to avoid the need for sub-objectives, however, the RF was developed to show progress towards the achievement of these sub-objectives and as such the overall PDO\. 72\. Quality of Supervision\. The project design was innovative, and the Bank team was agile\. The Bank's comparative advantage was displayed in the array of support to the project\. Bank fiduciary, procurement, and monitoring and evaluation teams redressed bottlenecks and streamlined operations\. Bank technical assistance devised good-fit solutions pre-pandemic (participatory budgeting, community monitoring initiative, and base/endline assessments) and post-pandemic (virtual technical assistance and supervision, TPM) and, here, reviewing/revising training schedules, monitoring funds expended under PB pilots, and periodically training facilitators for better beneficiary support to allow timely completion of activities\. Bank reporting reflected clear, cogent, and actionable supervision missions as seen through Aide Memoires and Regular Implementation Status Reports\. In sum, the Bank team identified issues proactively and worked closely with the implementing agencies and counterparts to resolve issues\. 73\. The project highlighted the importance of being adaptive and restructuring the project to accelerate implementation and improve institutional coordination\. According to the last Aide mémoire (Final Implementation Support Mission, November 30 – December 10, 2020), the JSDF restructuring led to strong teamwork and performance by the PFMU, DecSec and FDD teams in delivering results despite the constraints placed by COVID-19 and other challenges\. The overall Bank performance is Satisfactory\. B\. ENVIRONMENTAL, SOCIAL AND FIDUCIARY COMPLIANCE 74\. Safeguards\. The project retained its Category B environmental classification throughout implementation\. Environmental Assessment (OP 4\.01) was triggered at appraisal as a precaution due to participatory budgeting under Component 2\. An Environmental and Social Management Framework (ESMF) was prepared and disclosed on the World Bank website on September 26, 2016 and in Sierra Leone on September 24, 2016\. No major adverse environmental and social impacts were observed during project implementation\. The overall safeguards performance of the project was rated Satisfactory in Implementation Status and Results Reports (ISRs) submitted consecutively from December 2017 to April 2020 (December 8, 2017; June 28, 2018; January 26, 2019; September 10, 2019; April 23, 2020)\. In the ISR submitted at project closing (December 24, 2020), overall safeguards 47 Country Partnership Framework, Systematic Country Diagnostic, Africa Region Social Protection Strategy, and Africa Region Emergency Ebola Response Program\. Page 24 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) performance was downgraded to Moderately Satisfactory since no Environment and Social Management Plan (ESMP) had been prepared for site works under Component 2 due to the departure of the project safeguards specialist a gap in the transition with orienting the new project safeguards specialist on the remaining tasks\. Monitoring and reporting on environment and social safeguards (E&S) implementation and the project Grievance Redress Mechanism (GRM) were scaled up towards the end of the project implementation with support from the Bank safeguards specialists, with reports on E&S implementation and the GRM prepared by the project Implementing Unit in December 2020\. Component 2B activities did not cause any irreversible harm\. The safeguards rating at project closing is rated as Moderately Satisfactory\. Financial Management (FM) 75\. Over the lifetime of the JSDF project, FM was rated as Satisfactory\. FM reviews were conducted periodically\. In general, findings revealed that the proceeds were being used for their intended purposes and, accordingly, were compliant with FM covenants\. Interim financial reports (IFR) and audit reports were submitted in a timely manner and in accordance with established Bank procedures\. There were no fundamental internal control issues identified in financial statements or major audit observations\. Overall, funds flows, reporting, and accounting system(s) were deemed sound\. Fiduciary clinics were provided throughout project implementation\. Disbursement at the closing date of the project stood at US$2,746,253\.34 (99\.9 percent)\. The FM rating at project closing thus stands as Satisfactory\. Procurement 76\. Quality at Entry\. At entry, the procurement quality is rated Satisfactory\. In preparation, the procurement capacity assessment gave a Substantial risk rating, requiring the GoSL central fiduciary management unit to appoint a qualified focal procurement officer\. Overall, in terms of procurement, issues were identified, and steps were taken to ensure the efficiency and effectiveness of procurement toward the achievement of the project development objectives\. The Bank procurement team provided timely support to resolve procurement delays\. 77\. Quality of Implementation by the Borrower\. The quality of the Borrower during implementation is rated as Satisfactory\. The GoSL PFMU Unit was responsible for project administration, including procurement\. The PFMU performed well from beginning to closing\. The project team was able to process Bank “No Objectionsâ€? for prior - review contracts, including procurement plans, and to clear post-review contracts during Bank post-review missions\. Monitoring and Evaluation 78\. The overall monitoring and evaluation (M&E) rating for the project is Substantial\. The measures put in place to track and monitor project indicators were responsive to emerging challenges\. It built on the strong project monitoring platforms developed under DSDP2, which facilitated tracking progress, building transparency, detecting challenges, and adjusting interventions in a timely manner\. In the pilot districts, the project had a dedicated M&E team at the PFMU, DecSec, and LC level to effectively supervise and monitor progress\. These M&E specialists were key members of the DSDP2 project and their knowledge and experience in identifying risks and alerting management and the Bank team to emerging challenges were key to resolving issues\. During the course of implementation, the M&E specialists benefited from hands-on training and TA from a Bank M&E specialist\. The Page 25 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) project scaled up engagements with LCs, CSOs, and communities to resolve emerging challenges and benefited from hiring an independent TPM consultant to undertake spot checks and relay independent reporting\. Collectively, these approaches led to early detection and resolution of problems and allowed the Bank team to engage quickly, especially during the COVID-19 pandemic where there were no physical supervision missions\. 79\. The project also scaled up the GRM and CMI mechanisms to ensure inclusion and adoption of corrective actions and to respond to and resolve the concerns of beneficiaries\. There were 30 CMGs created to monitor 62 projects and the 51 complaints have been addressed through the GRM throughout project implementation\. For example, in Port Loko a fire broke out in the Ebola cemetery where new trees were planted that needed replacement\. This issue was escalated to the LCs through the GRM framework\. The LCs took action and resolved the issue within two weeks and planted new trees in commemoration of the Ebola victims\. The project also conducted baseline and end-line BAs and an impact evaluation to verify the project’s impact on beneficiaries in lieu of the absence of the two key surveys that were used under DSDP2 (INPSS and CLoGPAS)\. 80\. The project conducted regular technical review meetings, especially following the review of quarterly progress reports\. The meetings enabled the project to collectively address issues and challenges identified in the specified reporting period\. Compliance Issues Risk to Development Outcome The risk to development outcomes is rated Low\. 81\. Precedent-setting service delivery\. The JSDF was designed within the framework of a demonstrated government commitment to service delivery within a decentralization framework and the project was implemented through pre-existing, national structures\. The project contributed to consolidating elements of the DSDP1 and DSDP2 especially related to strengthening community engagement in the service delivery process\. The GoSL, in partnership with LCs, demonstrated its commitment to furthering community participation in service delivery and is scaling up demand-driven approaches\. The interventions continue to be relevant to the Sierra Leone Medium-Term National Development Plan (SLMTNDP) 2019-2023 and the Bank CPF\. In particular, the PB sub- component supports SLMTNDP Cluster 4 by providing opportunities to: (i) build trust in state institutions (Cluster 4\.6); (ii) strengthen public service delivery and decentralization (Cluster 4\.7); and (iii) solidify local governance and rural development (Cluster 4\.8)\. The PB sub-component also supports SLMTNDP Cluster 1 by supporting the development of human capital\. The framing of the JSDF within this context of ongoing government commitment helps mitigate the risk of a reversal of the outcomes\. 82\. Sustainability\. CMGs ensured operations and maintenance of the rehabilitated services financed under PB in FCC and Port Loko District were addressed and plans are in place for their continued involvement in anchoring sustainability of these assets beyond the life of the project\. FDD is preparing a revenue potential of local and chiefdom councils plan with a view to identifying their respective revenue potentials and strengthening their capacity to collect the revenues\. These resources will be applied towards the operations and maintenance of PB sub-projects and other related project activities\. In addition, FDD is preparing an asset management plan that lays out a schedule for operations and maintenance to operate and maintain the PB sub-project investments once the Page 26 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) local revenues have been mobilized\. The Bank’s recently approved “Accountable Governance for Basic Service Deliveryâ€? (to be launched in the fall of 2021) will build on the JSDF citizen engagement service delivery model\. V\. LESSONS LEARNED AND RECOMMENDATIONS 83\. The JSDF demonstrated the importance of coordinated action among multiple implementing agencies and using existing structures\. National and local stakeholders succeeded in implementing the JSDF project\. This platform demonstrated the importance of having a coordinated partnership in place to catalyze and foster partnerships between national government, LCs, and communities in responding to shocks, particularly during the Post-Ebola outbreak and COVID-19 pandemic\. These arrangements could serve as a replicable, social- accountability, and participatory-budgeting model for other projects and government interventions (i\.e\., the National Decentralization Plan (2020) and the Medium-Term National Development Plan (2019-2023 and the new Bank Governance and Accountability Project)\. 84\. Community engagement and shock-responsiveness\. The active involvement of the community committees in project activities, including monitoring were key to enhancing community mobilization, social accountability, improved governance and transparency under the PB sub-projects\. The project interventions helped build their resilience and built social cohesion\. 85\. Importance of using local structures\. The success of the project relied on working with facilitators from the target communities and organizing support activities in the communities where the beneficiaries resided\. The facilitators were selected from the same communities as the beneficiaries, and the community-based sensitization and capacity-building training made it possible for the facilitators to work closely with the beneficiaries and monitor progress, which strengthened community capacity and also bolstered social inclusion\. 86\. Gender inclusion\. The project demonstrated the importance of mainstreaming gender in decentralized service delivery which in turn led to strengthening social cohesion and elevating the role of women in the decision making process reflecting community priorities, and strengthening their role in the CMI which helped catalyze sub- project implementation which can generate a more viable platform for future sub-project sustainability\. 87\. Staff attrition and leadership commitment\. Proper modalities such as contingency clauses need to be included in contracts to manage risks of staff departure/attrition resulting from political transitions and draining institutional memory and implementation momentum\. 88\. Procurement\. Additional procurement staff need to be added to support urgent project requests to avoid procurement delays\. 89\. Strong teamwork\. The project highlighted the importance of using the restructuring process to improve institutional coordination\. The JSDF restructuring led to enhanced cooperation and a strong performance by the PFMU, DecSec, and FDD teams in delivering project activities despite the constraints imposed by COVID-19 and related challenges\. 90\. Synergies from anchoring participatory community service delivery approaches in safety net operations\. Projects Including communities in prioritizing, participating and monitoring service delivery is a key entry point in Page 27 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) leveraging and developing adaptive safety net programs in the FCV context\. These approaches have helped restore citizen-state trust and instituted measures to strengthen social cohesion and local development priorities\. In addition to Sierra Leone, this approach has been successfully implemented in other SPJ operations such as Yemen under the Emergency Crisis Response Project, Iraq Social Fund Project, Benin community-driven Development Project, Ethiopia Promoting Basic Services 3 Project, and the Northern Uganda Social Action Fund Project\. 91\. Projects and Bank engagement needs to be adaptive\. This is crucial given the global and climatic changes facing many countries\. During the COVID-19 pandemic, the Bank team engaged in frequent virtual supervision monthly meetings to follow up on project implementation and resolve issues\. The Bank team hired a TPM to independently monitor project implementation and report back to the Bank team on any risks\. This facilitated quick and timely responses\. The JSDF Post Ebola project interventions (communication, sensitization and provision of hygiene supplies) proved to be relevant and timely in helping address challenges emerging as a result of the COVID- 19 pandemic in the project districts\. 92\. Working with civil society organizations is critical to enhancing community participation\. The involvement of the CSOs in the PB has increased community participation not only in the PB, but also in the activities of the LCs\. Despite the delay in their recruitment, the CSOs were highly instrumental in the implementation of the PB\. Their familiarity with the communities and expertise in social mobilization led to increased participation of the communities especially in the PB process\. \. Page 28 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: The project was designed to respond to the post-EVD needs at the local level (PDO) through two sub-objectives\. Key PDO sub- objectives included: (a) enhancing social harmonization/inclusion (social sen Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage of beneficiaries Percentage 0\.00 0\.00 65\.00 75\.30 who affirm social sensitization activities have been positive 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 toward bringing people together in the four (4) districts in which sensitization activities are conducted Comments (achievements against targets): Exceeded target\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of sectors in CMI Number 0\.00 0\.00 10\.00 10\.00 piloting districts quarterly assessed and managed 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Page 29 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) considering citizen feedback Comments (achievements against targets): Achieved\. The CMI was carried out in two pilot LCs\. Projects monitored were in 5 sectors (Health, Education, Social Welfare, Rural Water, and Solid Waste Management) for each LC, resulting in 10 sectors in total\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage of beneficiaries Percentage 0\.00 0\.00 65\.00 94\.30 who affirm public budgeting processes generated a positive 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 social mobilization effect in the two (2) districts in which participatory budgeting is conducted Comments (achievements against targets): Exceeded target\. Data was received on 12/18/2020 from the endline beneficiary assessment\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Direct project beneficiaries Number 0\.00 50000\.00 50000\.00 50485\.00 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Female beneficiaries Percentage 0\.00 50\.00 50\.00 50\.00 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Page 30 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Comments (achievements against targets): Exceeded target\. A\.2 Intermediate Results Indicators Component: • Component 1 – LC social-sensitization activities – sought to promote social cohesion and resilience by strengthening LC capacity and by implementing community-wide sensitization meetings, forums, an Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of WDC members, LC Number 0\.00 200\.00 200\.00 534\.00 councilors, traditional and religious healers trained on 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 trauma healing (% of which are females) Comments (achievements against targets): Exceeded target\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of beneficiaries Number 0\.00 25000\.00 25000\.00 38249\.00 reached through LC trauma and sensitization interventions 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 (% of which are females) Page 31 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Comments (achievements against targets): Exceeded target\. Unlinked Indicators Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Communication means/tools Yes/No N Y Y Y linking DHMTs, CSOs, PERS, and EERP, are maintained 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Comments (achievements against targets): Achieved\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of RTFs and LC officers Number 0\.00 0\.00 200\.00 203\.00 received special training on social accountability 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Comments (achievements against targets): Exceeded target\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of citizens participated Number 0\.00 0\.00 20000\.00 20234\.00 Page 32 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) in social accountability 14-Nov-2016 23-Jun-2017 25-Dec-2020 27-Dec-2020 initiatives in CMI piloted districts (% of which are females) Comments (achievements against targets): Exceeded target\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of beneficiaries in the Number 0\.00 0\.00 5000\.00 9834\.00 participatory budgeting pilot (% of which are females) 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Comments (achievements against targets): Exceeded target\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of joint monitoring Number 0\.00 0\.00 20\.00 22\.00 visits to LCs, conducted by relevant MDAs 23-Jun-2017 23-Jun-2017 25-Dec-2020 27-Dec-2020 Comments (achievements against targets): Exceeded target\. Page 33 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Page 34 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) B\. ORGANIZATION OF THE ASSESSMENT OF THE PDO Objective/Outcome 1 To respond to the post-EVD needs at the local level in Sierra Leone by building community resilience through EVD sensitization efforts and Outcome Indicators social mobilization activities in the districts most affected by the disease 1\. Percentage of beneficiaries who affirm social sensitization activities have been positive toward bringing people together in the four (4) districts in which sensitization activities are conducted2\. Number of sectors in CMI piloting districts quarterly assessed and managed considering citizen feedback (Number, Custom) 3\. Percentage of beneficiaries who affirm public budgeting processes generated a positive social mobilization effect in the two (2) districts in which participatory budgeting is conducted 4\. Direct project beneficiaries 5\. Number of WDC members, LC councilors, traditional and religious healers trained on trauma healing Intermediate Results Indicators 6\. Number of beneficiaries reached through LC trauma and sensitization interventions 7\. Communication means/tools linking DHMTs, CSOs, PERS, and EERP, are maintained 8\. Number of RTFs and LC officers received special training on social accountability 9\. Number of citizens participated in social accountability initiatives in CMI piloted districts 10\. Number of beneficiaries in the participatory budgeting pilot 11\. Number of joint monitoring visits to LCs, conducted by relevant MDAs Page 35 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) 1\. 75\.3% (Exceeded target) 2\. 10 (Achieved target) 3\. 94\.30% (Exceeded target) 4\. 50,485 (Exceeded target) 5\. 534 (Exceeded target) Key Outputs by Component 6\. 38,249 (Exceeded target) (linked to the achievement of the Objective/Outcome 1) 7\. Yes (Achieved target) 8\. 203 (Exceeded target) 9\. 20,234 (Exceeded target) 10\. 9,834 (Exceeded target) 11\. 22 (Exceeded target) Page 36 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) \. ANNEX 2\. PROJECT COST BY COMPONENT Republic of Sierra Leone Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project United States Dollars (US$) Disbursement by Components Planned IDA Project Amount Actual Amount Percentage Approved Disbursed Disbursed US$ US$ % Component 1: Local Council Social Sensitization 980,000 976,743 99\.67 Component 2: Creating Social Mobilization Mechanisms That Improve Local Service Delivery 1,560,000 1,564,021 100\.26 Component 3: Project Management 210,000 205,371 97\.80 Total Expenditures 2,750,000 2,746,135 99\.86 Disbursements by Category Period End: April 30, Cumulative Disbursement 2021 Planned IDA Project Amount Actual Amount Percentage Approved Disbursed Disbursed Disbursement by Category US$ US$ % Consultant Services 108,500 110,331 101\.69 Training and Workshop 776,500 791,984 101\.99 Goods/Services 531,000 516,563 97\.28 Sub-Grants 1,220,000 1,214,511 99\.55 Operating Costs 114,000 112,747 98\.90 Total Expenditures 2,750,000 2,746,136 99\.86 Page 37 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS The ICR was shared and discussed with the Client, however, the Bank team has not received written comments from the Client\. Page 38 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) ANNEX 4\. SUPPORTING DOCUMENTS (IF ANY) A\. BREAKDOWN OF BENEFICIARIES REACHED THROUGH LC SENSITIZATION INTERVENTIONS, BY GENDER Participants in the LC sensitization interventions Male Female % of female Total no\. of Year participants participants participants beneficiaries Male Female participants 2018 920 1,080 54% 2,000 participants 49% 51% 2019 4,386 5,088 54% 9,474 2020 13,575 13,200 49% 26,775 Total 18,881 19,368 51% 38,249 Source: M&E specialist (the figures are from Data Collected during implementation of Project Activities) Page 39 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) B\. IMPACT OF SENSITIZATION ACTIVITY The positive impact of project sensitization on the social sohension and community reintegration 120\.0 100\.0 3\.1 5\.8 11\.4 18\.7 80\.0 PERCENT (%) 85\.5 60\.0 75\.3 40\.0 20\.0 0\.0 The project sensitization has positively impacted social I am now accepted in the community /family cohension in communities OPTIONS Yes No Dont know Source: Final BA assessment (2020) Page 40 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) C\. DESCRIPTION OF PARTICIPATORY BUDGETING PROCESS 1\. Through the decentralization reform in 2005, LCs assumed responsibility for development planning\. The Government of Sierra Leone rolled out the devolution process which involved the transfer of functions, power, authority and accompanying resources to the LCs\. The LCs assumed major responsibilities in the areas of Education (delivering primary and junior secondary school education), Health and Sanitation (delivering primary and secondary health care), Solid Waste Management, and Rural Water and Social Assistance Services\. Although the LCs had assumed responsibility for development planning, effective involvement of local communities/villages in problem identification, needs assessment and prioritization of Interventions to ensure that the LCs Development plans truly reflect the people's aspirations remained a key challenge\. The local level planning process lacked the feedback loop to ensure that the local communities were fully informed about the selection process of the planned interventions prioritized at the LC\. 2\. Participatory Budgeting (PB) under sub-component 2B under the Project was therefore designed to address this challenge\. This intervention was designed to increase deliberation processes within the communities, while guaranteeing effective participation of marginalized groups especially at the ward level\. PB involves citizens in the decision-making processes of the LCs by allocating resources to their preferred public sector activities/projects\. Through PB, service delivery is aligned with the priorities of the beneficiaries and the beneficiaries are instrumental in making the allocation of resources hence, making it more inclusive and equitable\. In March 2019, PB was piloted in two of the most severely EVD affected LCs, ie\. FCC and PortLoko District Council\. The PB process ensured that citizens (especially at ward level) in both FCC and Port Loko District Councils selected their preferred projects to be part of the budget of the two pilot councils for 2020\. 3\. A PB sub-grant with a total value of US$250,000 was allocated to each of the two LCs, with the selection of subprojects being determined by community participants according to a process that aims to empower citizens at ward and community levels to identify and develop their preferred projects\. The overall mechanism of PB was as follows: • The citizens were required to vote • The projects with the highest number of votes were prioritized for implementation by the LCs with the involvement of the Ward Committees in the various localities\. • Disbursements toward completion of sub-projects were done by the LCs and included in their Annual Work Plan\. • Sub-projects were to be accepted for the purchase of goods for the community, the payment of services, and rehabilitation works that do not require land acquisition\. • A minimum participation threshold of 2,500 votes cast in each LC was needed for the deliberation process to be considered valid • Due to COVID-19 and the restrictions the voting process targeted 100 participants from the wards\. (A total of 1000 (50% female) people voted across all wards)\. 4\. The PB was executed in several phases as outlined below: Page 41 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) • A public information campaign to promote PB in the district and wards48 • Ward deliberation processes to discuss proposals • Proposals were compared at the LC level and costs and options that were duplicated or not feasible eliminated • Public meetings at the ward level and a grassroots communication campaign were organized in order to inform citizens about proposed projects • Citizens voted for their preferred projects at the ward level • Projects with the highest number of votes were implemented by the LCs • Beneficiaries 9 PB wards (4 in Port Loko District Council (241, 247, 250, 252) and 5 in FCC (402, 403, 404, 408, and 410) 5\. Due to the weak capacity in FM and procurement matters and lack of political will, PB faced implementation delays\. The inclusion of FDD following the project restructuring in January 2020 accelerated implementation\. Despite this delay, CMGs were set up, deliberation and voting took place, and 16 subprojects in both LCs have been implemented\. However, PB was rated as Moderately Satisfactory in the last Aide Mémoire (November 30 – December 10, 2020) due to the delays encountered\. The remaining of annex 4 (D to I) has information on PB implementation, including the type of projects implemented, the number of beneficiaries, type of sectors, and pictures showing projects before and after PB interventions\. 6\. In conclusion, PB introduced a community participatory safety nets approach to better reach and support EVD survivors and their families through improving their access to better service\. By improving service delivery and bringing services closer to targeted communities, PB promoted opportunities to build human capital and assets to the poor while enhancing community resilience by empowering communities to have a voice and decide on their priorities\. 48 Two Civil Society Organizations (CSOs) were recruited and contracted to mobilize and animate communities to participate in the PB process\. These organizations are; (i) Sierra Leone Social-Aid Volunteers (for Port Loko District Council) and (ii) Health Alerts Sierra Leone (for FCC )\. Working with the CSOs has increased cooperation and participation of the communities not only in the PB activities, but in the activities of the LCs generally\. The CSOs are community based, have long standing relationship with the communities, knows the community and command the respect of the communities\. The presence of the CSOs in this intervention has instilled confidence in the people\. The people are turning out in their numbers and giving out their best with the aim to let the PB succeed\. Page 42 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) D\. PARTICIPATORY BUDGETING SUB-PROJECT SECTORS DISTRIBUTION Distribution of PB sub-projects sectors in both LCs FCC PL 6 5 5 Number of PB sub-projects 4 4 4 3 2 1 1 1 0 0 0 0 Health Water & Sanitation Education Food Security • PL refers to Port Loko\. • Food security project in PL was the rehabilitation of rice grain store • The data for this graph obtained from the PB technical status reports\. One project in FCC was not reflected in this graph because it supported the fabrication and erection of signposts Page 43 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) E\. JSDF PARTICIPATORY BUDGETING SUB PROJECTS IN PORT LOKO SCOPE OF WORK SITE LOCATION SECTOR ACHIEVED WORKED DIRECT No\. OF UNIT COST COST OF JSDF SUB- BENEFICIARIES INDIRECT (Sierra PROJECTS (Pupils) BENEFICIARIES Leonean) (Sierra Leonean) • Rehabilitation of Five Lot 2 - Ward Education • Completed Roofing for the school and toilet Boys= 265 14,228 352,625,640 318,140,900 Classroom block 247 • Doors & windows installed Girls = 203 • Rehabilitation of School Bundulia, • Screed of classroom finished -------------- toilet Kamasondo • Hard board ceiling finished and electrical installation Total= 468 • Rehabilitation of Chiefdom completed too borehole water well • Plastering finishing of the columns, beams, windows • Rehabilitation of 2x3 and doors completed Compartment School • Apron also has been constructed round the toilets perimeter of the school • Ramp has been completed • Windows glazing completed • Concreting the drainages walls and floor round the perimeter of the school • Painting of the school and toilet • Rehabilitation of hand pump well Rehabilitation of St\. Lot 3 - Ward Education • Completed roofing of the school Boys= 258 14,511 310,220,000 293,473,105 Joseph’s RC Primary 250 • Ceiling completed Girls = 259 School, including the Kagbantama • Completed installing windows & doors ------------- rehabilitation of 2x3 Kasseh • Floor screed finished for the classroom & corridor Total= 517 compartment school Chiefdom • Drainage work also completed\. toilet, the rehabilitation of • Existing structural ramp has been structurally hand pump well, and the reinforced for pupils with disability\. rehabilitation of School • Rehabilitation of school toilet finished\. toilet\. • Priming of classroom walls, columns, and beams\. • Windows glazing completed • Painting of the school and toilet • Rehabilitation of hand pump well Page 44 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) SCOPE OF WORK SITE LOCATION SECTOR ACHIEVED WORKED DIRECT No\. OF UNIT COST COST OF JSDF SUB- BENEFICIARIES INDIRECT (Sierra PROJECTS (Pupils) BENEFICIARIES Leonean) (Sierra Leonean) Rehabilitation of Saint Lot 3 - Ward Education •Completed Roofing for the school and toilet Boys= 164 14,511 Peters School, including 250 • Doors & windows installed Girls = 176 150,600,000 100,720,000 the rehabilitation of Romehni, • Screed of classroom finished ------------- School toilet Kasseh • Hard board ceiling finished and electrical installation Total= 340 Chiefdom completed too\. • Plastering finishing of the columns, beams, windows and doors completed\. • Apron also has been constructed round the perimeter of the school\. • Ramp has been completed • Rehabilitation of School toilet\. • Installation of windows glazing • Painting of the school and toile Rehabilitation of 6 Lot 1 - Ward Education • Roofing of the SLMB school completed Boys= 210 20,314 368,245,000 252,172,100 Classroom at SLMB 241 • Apron and drainages also constructed Girls = 241 Primary School, Gbaneh Gbaneh Bana, • Installation of classroom windows & doors frame ------------- Bana, including the Lokomasama finished Total= 451 rehabilitation of 2x3 Chiefdom • Hardboard Ceiling Completed Compartment VIP Latrine • Screed of classroom floors completed at SLMB Primary School, • Plastering finishing of the windows and doors edges Gbaneh Bana and the completed rehabilitation of Hand • Glazing of windows completed Pump Well at SLMB • Ramp also constructed Primary School, Gbaneh • Glazing of windows Bana • Priming of the school • Painting of the school Page 45 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) SCOPE OF WORK SITE LOCATION SECTOR ACHIEVED WORKED DIRECT No\. OF UNIT COST COST OF JSDF SUB- BENEFICIARIES INDIRECT (Sierra PROJECTS (Pupils) BENEFICIARIES Leonean) (Sierra Leonean) Rehabilitation of Marcus Lot 1 - Ward Education • Roofing of the Marcus Garvey JSS 3 school Boys= 140 20,314 222,145,000 116,017,000 Garvey JSS (3 Classroom 241 completed Girls = 200 Block) Gbaneh Bana Gbaneh Bana, • Apron and drainages also constructed ------------- Lokomasama • Installation of classroom windows & doors frame Total= 340 Chiefdom finished • Hardboard Ceiling Completed • Screed of classroom floors completed • Plastering finishing of the windows and doors edges completed • Ramp also constructed • Electrical installation • Apron and drainages Rehabilitation of rice grain Lot 4 - Ward Food • Sub-Structure/Foundation completed 17,498 360,913,900 236,453,900 store and the 252 Security • Plinth level/oversight completed rehabilitation of drying Komrabai, • Roof profile completed floor Marampa • Windows and doors installed Chiefdom • Installation of roofing sheet • Foundation of dry floor • Electrical installation • Oversight of drying floor • Painting of the rice grain store • Installation of hard board ceiling Rehabilitation of 4 Lot 4 - Ward Sanitation • Sub-structure completed for the toilet pit depth of 17,498 175,625,500 146,018,500 compartment VIP toilet 252 3m, and the rehabilitation of Komrabai, • installation of pit breathing pipe, and Tube/hand pump well Marampa • Concreting the well casing\. Chiefdom • Painting and tiling of the 4 compartment VIP toilet bathroom completed • Rehabilitation of hand pump well Page 46 of 61  The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) F\. JSDF PARTICIPATORY BUDGETING SUB PROJECTS IN FCC NO\. OF DIRECT AND UNIT COST COST OF JSDF SUB- SITE SCOPE OF WORK SECTOR ACHIEVED WORKED INDIRECT (Sierra PROJECTS LOCATION BENEFICIARIES Leonean) (Sierra Leonean) * Completion of Cemetery Perimeter Ward 402, Health & * Perimeter fence completed 38,000 650,000,000 452,799,000 fence and Rehabilitation of Security Robis Sanitation * Roofing of Security post completed Post * Construction of Cemetery Toilet Construction of MCHP Ward 403, Primary Roofing and plastering (inside and outside) completed 15,600 620,000,000 490,932,000 Bottom Oku Health Care Completion of CHC Ward 404, Primary Fitting of electrical cables completed\. Plumbering 25,000 500,000,000 450,325,000 Calabatown Health Care completed\. Painting of windows and doors completed\. Tiling of main offices, toliets and reception completed Construction of CHC Ward 408, Primary Roofing complete\. Installation of conduit pipes 15,000 650,000,000 450,028,000 Rokupa Health Care complete\. Plastering of inside and outside complete\. Wharf Fixing of internal and external doors completed\. Biofill toilet constructed * Construction of 150m Drainage Ward 410, Water & * 150m Storm Drain completed 20,000 450,000,000 454,139,000 * Construction of Culverts Kuntolloh Sanitation * Construction of 1\.5m box culvert completed * Drilling of Borehole * Completion of the drilling of bore hole well pipe at a depth of 155m\. Administrative Cost including\. Fabrication and erection of 6 signposts\. Stationery\. 201,777,000 Fabrication and erection of signposts Payment for EIA Report\. Redress Mechanism Boxes X5\. Monitoring and Supervision\. Launching of the Projects Page 47 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) G\. NUMBER OF PEOPLE EMPLOYED IN THE FREETOWN AND PORT LOKO PARTICIPATORY BUDGETING SUB-PROJECT Number of beneficiaries employed in the PB sub-project by LC (left table) and disaggregated by gender (right pie chat) Total No\. District Ward Male Female employed 1 FCC 402 14 6 20 2 FCC 403 20 10 30 3 FCC 404 20 8 28 Female 4 FCC 408 22 10 32 35% 5 FCC 410 19 6 25 6 Port Loko 252 18 12 30 7 Port Loko 241 12 8 20 Male 8 Port Loko 241 7 5 12 65% 9 Port Loko 247 8 10 18 10 Port Loko 250 12 6 18 11 Port Loko 250 12 6 18 164 87 251 Source: DecSec team Page 48 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) H\. PHOTOS OF PB (COMMUNICATION CAMPAIGN, CITIZEN VOTING AND SUB-PROJECTS IN FCC) PB communication materials Page 49 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Citizens vote for their preferred projects at the ward level Page 50 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Completion of Robis Cemetery Perimeter fence (FCC) Page 51 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Construction of Bottom Oku MCHP (FCC) Page 52 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Construction of 150m storm drain (FCC) Page 53 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Construction of 2x3 Compartment VIP Latrines at SLMB Primary (Port Loko) Page 54 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Rehabilitation of Hand Pump Well at DEC Primary School, Bundulia (Port Loko) Page 55 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Ward 247 Rehabilitation of DEC Primary School, Bundulia (Port Loko) Page 56 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) I\. MAP OF SIERRA LEONE (CLEARED BY THE BANK’S CARTOGRAPHY UNIT, APRIL 2020) Page 57 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) J\. REFERENCE LIST Decentralization Secretariat\. 2019\. Beneficiary Assessment Report for the Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project, December 2019\. Sierra Leone: Ministry of Local Government and Rural Development\. Decentralization Secretariat\. 2019\. Component (1) Implementation Updates\. Sierra Leone: Ministry of Local Government and Rural Development\. Decentralization Secretariat\. 2020\. Component (2) Progress Report 2019-2020\. Sierra Leone: Ministry of Local Government and Rural Development\. Decentralization Secretariat\. 2020\. Final Beneficiary Assessment Report for the Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project, December 2020\. Sierra Leone: Ministry of Local Government and Rural Development\. Government of Sierra Leone\. 2011\. National Decentralisation Policy\. Sierra Leone: Government of Sierra Leone\. Government of Sierra Leone\. 2015\. National Ebola Recovery Strategy for Sierra Leone 2015-2017\. Sierra Leone: Government of Sierra Leone\. Government of Sierra Leone\. 2020\. New National Decentralisation Policy\. Government of Sierra Leone\. Government of Sierra Leone\. Agenda for Prosperity: The Road to Middle Income Status 2013-2018\. Sierra Leone: Government of Sierra Leone\. Government of Sierra Leone\. Medium Term National Development Plan 2019-2023\. Sierra Leone: Government of Sierra Leone\. Governoment of Sierra Leone\. 2020\. Client Implementation Completion Report\. Sierra Leone: Governoment of Sierra Leone\. Integrated Project Administration Unit (IPAU)\. 2018\. Progress Report: Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project JSDF P155339 - JULY – DEC 2017\. Sierra Leone: Ministry of Finance\. Integrated Project Administration Unit (IPAU)\. 2019\. Progress Report: Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project JSDF P155339 - JAN – DEC 2018\. Sierra Leone: Ministry of Finance\. Integrated Project Administration Unit (IPAU)\. 2020\. Progress Report: Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project JSDF P155339 - JAN – DEC 2019\. Sierra Leone Ministry of Finance\. Integrated Project Administration Unit (IPAU)\. Participatory Budgeting in Freetown and PortLoko: Sierra Leone\. Government of Sierra Leone: Ministry of Finance\. Page 58 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Migliorisi, Stefano; Wescott, Clay\. 2011\. A Review of World Bank Support for Accountability Institutions in the Context of Governance and Anticorruption\. IEG Working Paper;2011/5\. World Bank, Washington, DC\. © World Bank\. https://documents\.worldbank\.org/en/publication/documents- reports/documentdetail/358571468337248805/a-review-of-world-bank-support-for-accountability- institutions-in-the-context-of-governance-and-anticorruption Project Fiduciary Management Unit\. 2020\. Final Impact Evaluation Report for the Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context Project, December 2020\. Sierra Leone: Ministry of Finance Sesay, Abdul Abraham Joshua\. 2020\. Freetown City Council Third Party Monitoring Final Report-7th December - 27th December 2020\. Freetown, Sierra Leone\. Sesay, Abdul Abraham Joshua\. 2020\. Port Loko Third Party Monitoring Final Report-7th December - 27th December 2020\. Port Loko, Sierra Leone\.World Bank Group\. 2012\. Sierra Leone - Country assistance strategy progress report for the period FY10-FY13 (English)\. Washington, D\.C\.: World Bank Group\. https://documents\.worldbank\.org/en/publication/documents reports/documentdetail/662541468104651836/sierra-leone-country-assistance-strategy-progress report-for-the-period-fy10-fy13 Srivastava, Vivek and Marco Larizza (2011)\. “Decentralization in Postconflict Sierra Leone: The Genie is Out of the Bottle\.â€? Yes, Africa Can: Success Stories from a Dynamic Continent, Punam Chuhan-Pole, Manka Angwafo, eds\. Washington, DC\. United Nations; World Bank\. 2018\. Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict\. Washington, DC: World Bank\. © World Bank\. https://openknowledge\.worldbank\.org/handle/10986/28337 World Bank, Independent Evaluation Group (2008)\. Decentralization in Client Countries: An Evaluation of World Bank Support, 1999-2007\. Washington, DC\. World Bank Group\. 2017\. Aide memoire Sierra Leone: Implementation Support Mission for the Japanese Development Fund strengthening Community Mobilization and Local Council Service Delivery in the Post- Ebola Context (JSDF: P155339): November 28 – December 9, 2017\. Sierra Leone: World Bank Group\. World Bank Group\. 2017\. Disclosable Version of the ISR - Local Council Service Delivery in the Post-Ebola Context - P155339 - Sequence No: 01 (English) Seq No: 1\. Sierra Leone: World Bank Group\. World Bank Group\. 2018\. Aide memoire Sierra Leone: Implementation Support Mission for the Japanese Development Fund strengthening Community Mobilization and Local Council Service Delivery in the Post- Ebola Context (JSDF: P155339): February 4-15, 2018 World Bank Group\. 2018\. Aide memoire Sierra Leone: Oversight Mission for the Japanese Development Fund strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (JSDF: P155339): Implementation Completion Report Mission for the Decentralized Service Delivery Program 2 (DSDP2: P119355); Grant IDA-H7390, TF – 12665; September 25 – October 2, 2018\. Sierra Page 59 of 61 The World Bank Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (P155339) Leone: World Bank Group\. World Bank Group\. 2018\. Disclosable Version of the ISR - Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context - P155339 - Sequence No: 02\. Sierra Leone: World Bank Group\. World Bank Group\. 2018\. Sierra Leone - Systematic Country Diagnostic: Priorities for Sustainable Growth and Poverty Reduction (English)\. Washington, D\.C\.: World Bank Group\. https://documents\.worldbank\.org/en/publication/documents- reports/documentdetail/152711522893772195/sierra-leone-systematic-country-diagnostic-priorities- for-sustainable-growth-and-poverty-reduction World Bank Group\. 2019\. Aide memoire Sierra Leone: Implementation Support Mission for the Japanese Development Fund strengthening Community Mobilization and Local Council Service Delivery in the Post- Ebola Context (JSDF: P155339): February 10-16, 2019\. Sierra Leone: World Bank Group\. World Bank Group\. 2019\. Aide memoire Sierra Leone: Mid-Term Review Mission for the Japanese Development Fund strengthening Community Mobilization and Local Council Service Delivery in the Post- Ebola Context (JSDF: P155339): May 28 – June 11, 2019\. Sierra Leone: World Bank Group\. World Bank Group\. 2019\. Disclosable Version of the ISR - Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context - P155339 - Sequence No: 03\. Sierra Leone: World Bank Group\. World Bank Group\. 2019\. Disclosable Version of the ISR - Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context - P155339 - Seq No: 4\. Sierra Leone: World Bank Group\. World Bank Group\. 2020\. Aide memoire Sierra Leone: Final Implementation Support Mission for the Japanese Development Fund strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context (JSDF: P155339): November 30 – December 10, 2020\. Sierra Leone: World Bank Group\. World Bank Group\. 2020\. Disclosable Version of the ISR - Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context - P155339 - Sequence No: 05\. Sierra Leone: World Bank Group\. World Bank Group\. 2020\. Disclosable Version of the ISR - Strengthening Community Mobilization and Local Council Service Delivery in the Post-Ebola Context - P155339 - Sequence No: 06\. Sierra Leone: World Bank Group\. World Bank Group\. 2020\. Sierra Leone - Country Partnership Framework for the Period FY21 - FY26 (English)\. Washington, D\.C\.: World Bank Group\. https://documents\.worldbank\.org/en/publication/documents- reports/documentdetail/851731590804122431/sierra-leone-country-partnership-framework-for-the- period-fy21-fy26 Page 60 of 61

REVIEW

P111667

 Document of The World Bank Report No: ICR2628 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H4190) ON A EMERGENCY RECOVERY GRANT IN THE AMOUNT OF SDR 1\.00 MILLION (US$1\.557 MILLION EQUIVALENT) TO THE REPUBLIC OF HAITI FOR AN AVIAN INFLUENZA CONTROL AND HUMAN PANDEMIC PREPAREDNESS AND RESPONSE PROJECT UNDER THE GLOBAL PROGRAM FOR AVIAN INFLUENZA AND HUMAN PANDEMIC PREPAREDNESS AND RESPONSE (GPAI) December 12, 2012 Sustainable Development Department Haiti Country Department Latin America and Caribbean Region  CURRENCY EQUIVALENTS (Exchange Rate Effective December 12, 2012) Currency Unit = Gourdes (HTG) HTG 40\.48 = US$1 US$ 0\.625 = SDR 1 FISCAL YEAR October 1 – September 30 ABBREVIATIONS AND ACRONYMS AHI Avian and Human Influenza AI Avian Influenza APL Adaptable Program Loan CCID Center for Control of Infectious Diseases CDC Centers for Disease and Control Prevention CNIAH National Commission on Avian and Human Influenza DDA Departmental Directorate for Agriculture DELR Department of Epidemiology, Laboratory and Research DPSA Directorate for Animal Production and Animal Health DR Dominican Republic EMP Environmental Management Plan FAO Food and Agriculture Organization GoH Government of Haiti GPAI Global Program for Avian Influenza Control and Human Pandemic Preparedness and Response GSB Gwoupman Sante Bèt HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome HPAI High Pathogenic Avian Influenza IADB Inter-American Development Bank ICR Implementation Completion and Results Report IDA International Development Association IICA Inter-American Institute for Cooperation in Agriculture ISO International Organization for Standardization LPAI Low Pathogenic Avian Influenza LVCQAT Tamarinier Veterinary and Food Quality Control Laboratory MARNDR Ministry of Agriculture, Natural Resources and Rural Development MEF Ministry of Economy and Finance MSPP Ministry of Public Health and Population MTR Mid-Term Review M&E Monitoring and Evaluation NGO Non-Governmental Organization OIE World Organization for Animal Health OP Operational Policy of the World Bank PAHO Pan-American Health Organization PCU Project Coordination Unit PDO Project Development Objectives PP Project Paper TCP Technical Cooperation Project UCS Health Units under MSPP UPS Sanitary Protection Unit of MARNDR USAID United States Agency for International Development WB World Bank WHO World Health Organization Vice President: Hassan Tuluy Country Director: Alexandre Abrantes Sector Manager: Laurent Msellati Project Team Leader: Diego Arias ICR Team Leader: Gabriela Vaz Rodrigues  REPUBLIC OF HAITI AVIAN INFLUENZA CONTROL AND HUMAN PANDEMIC PREPAREDNESS AND RESPONSE PROJECT CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 5 3\. Assessment of Outcomes \. 10 4\. Assessment of Risk to Development Outcome\. 17 5\. Assessment of Bank and Borrower Performance \. 18 6\. Lessons Learned \. 20 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 22 Annex 1\. Project Costs and Financing \. 23 Annex 2\. Outputs by Component \. 24 Annex 3\. Economic and Financial Analysis \. 26 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 36 Annex 5\. Beneficiary Survey Results \. 38 Annex 6\. Stakeholder Workshop Report and Results\. 39 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 40 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 42 Annex 9\. List of Supporting Documents \. 43 MAP A\. Basic Information AVIAN INFLUENZA CONTROL AND HUMAN INFLUENZA Country: Haiti Project Name: EMERGENCY PREPARDNESS AND CONTROL Project ID: P111667 L/C/TF Number(s): IDA-H4190 ICR Date: 12/12/2012 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: ERL Borrower: THE REPUBLIC OF HAITI Original Total XDR 1\.00M Disbursed Amount: XDR 0\.92M Commitment: Revised Amount: XDR 1\.00M Environmental Category: B Implementing Agencies: Ministry of Health and Population Ministry of Agriculture, Natural Resources and Rural Development Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 03/19/2008 Effectiveness: 04/06/2009 04/06/2009 Appraisal: 06/05/2008 Restructuring(s): 05/03/2010 Approval: 07/14/2008 Mid-term Review: 07/18/2011 07/18/2011 Closing: 01/15/2012 06/30/2012 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Not Applicable Unsatisfactory Implementing Quality of Supervision: Moderately Satisfactory Not Applicable Agency/Agencies: Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Unsatisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Agricultural extension and research 7 5 Animal production 5 20 Health 5 5 Public administration- Agriculture, fishing and forestry 63 60 Public administration- Health 20 10 Theme Code (as % of total Bank financing) Other communicable diseases 25 20 Rural policies and institutions 75 80 E\. Bank Staff Positions At ICR At Approval Vice President: Hasan A\. Tuluy Pamela Cox Country Director: Alexandre V\. Abrantes Yvonne M\. Tsikata Sector Manager: Laurent Msellati Ethel Sennhauser Project Team Leader: Diego Arias Carballo Jean-Claude Balcet ICR Team Leader: Diego Arias Carballo ICR Primary Author: Gabriela Vaz Rodrigues F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) To minimize the threat posed to humans by highly-pathogenic avian influenza (HPAI) infection and other zoonoses, and to prepare for, control, and respond to influenza pandemics and other infectious disease emergencies in humans\. Revised Project Development Objectives (as approved by original approving authority) No revision (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Communal sections remain free of AHI infection in poultry Value quantitative or 0 24 24 Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % 100% achievement) Indicator 2 : Communal sections that send weekly surveillance report on time Value quantitative or 2 25 20 Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % 80% achievement) Decrease in the time taken to report information on poultry diseases at local level Indicator 3 : (number of days it takes to report information) Value quantitative or 7 4 2 Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % 200% achievement) Backyard poultry farmers currently applying at least three prescriptions to protect Indicator 4 : their poultry and/or family Value 0 2800 Not Known quantitative or Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments The indicator likely intended to measure the individual contribution of the project (incl\. % to 2800 vaccinations following the training of farmers (impact of the training)\. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Laboratory staff trained in AHI diagnosis by the project Value (quantitative 0 12 6 or Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % 50% achievement) Indicator 2 : Communal sections adequately covered by trained staff Value (quantitative Not known 40 484 or Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % 1000%+ achievement) Indicator 3 : Development of communications strategy Value (quantitative None Approved Approved or Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % Accomplished achievement) Indicator 4 : Health Personnel receiving training under the project Value (quantitative 0 42 400 or Qualitative) Date achieved 02/04/2008 01/31/2012 06/29/2012 Comments (incl\. % 1000% achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 08/13/2008 Satisfactory Satisfactory 0\.00 2 02/20/2009 Moderately Satisfactory Moderately Satisfactory 0\.00 3 07/29/2009 Moderately Satisfactory Moderately Satisfactory 0\.00 4 11/17/2009 Moderately Satisfactory Moderately Satisfactory 0\.35 Moderately 5 05/07/2010 Moderately Satisfactory 0\.35 Unsatisfactory 6 12/02/2010 Moderately Satisfactory Moderately Satisfactory 0\.46 Moderately Moderately 7 06/29/2011 0\.46 Unsatisfactory Unsatisfactory Moderately Moderately 8 12/28/2011 0\.71 Unsatisfactory Unsatisfactory Moderately Moderately 9 06/29/2012 1\.41 Unsatisfactory Unsatisfactory H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Earthquake of 2010 resulted in 05/03/2010 N MS MS 0\.35 project extension and reallocation of expenditures\. I\. Disbursement Profile 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\.1\.1 The Global Program for Avian Influenza Control and Human Pandemic Preparedness and Response\. In 2005, the highly pathogenic avian influenza (HPAI) H5N1 virus emerged as a global threat\. On January 12, 2006 the Bank’s Board endorsed the Global Program for Avian Influenza Control and Human Pandemic Preparedness and Response (GPAI) as a horizontal, adaptable program providing up to US$500 million of immediate emergency assistance to countries seeking support to address this threat to public health and economic activity world-wide\. The GPAI was a Bank contribution to a broad international response launched at the ministerial conference in Beijing, China, in January 2006 with pledges of US$1\.9 billion from 35 donors\. Throughout 2006, the virus spread rapidly with additional countries reporting cases of HPAI; by the end of the year, 55 countries in Asia, Europe, Africa and the Middle East had reported cases in poultry or wild birds\. 1\.1\.2 Avian Influenza outbreak in Hispaniola: Following detection of the H5N2 subtype of Avian Influenza (AI) in the Dominican Republic (DR) in December 2007, the Bank started preparation of the Project as part of the global response effort\. In May 2008, the virus was detected at four locations in Haiti\. Suspected means of introduction of AI in Haiti were through its six ports and two main airports, trade along the Haitian-DR border and internal poultry movements (especially of fighting cocks), and through the migration of infected birds\. The H5N2 flu detected in DR and later in Haiti was Low Pathogenic Avian Influenza (LPAI) and thus did not represent a significant threat to animal or human health (i\.e\., low risk of severe illness and death)\. However, concern existed over the spread of H5N2 and possible mutation of the virus into a Highly Pathogenic Avian Influenza (HPAI) subtype, which can cause severe illness and death (such as H5N1, see Annex 1)\. 1\.1\.3 Country Context\. At the time of project appraisal, Haiti’s population was estimated at 9\.5 million, with an annual growth rate of 1\.6%\. Historically, Haiti was always the poorest country in the Western hemisphere and one of the most disadvantaged globally, with 78% of its population living below the poverty line (US$2\.00/day)\. It ranked 146th out of 177 countries in the 2007 Human Development Index\. Estimates put the number of poultry in Haiti at approximately 5 million of which only 10-20% were owned by commercial enterprises1\. However, when compared to the results of the 2008-2010 Agricultural Census these numbers turned out to be a significant under-estimation of the actual numbers of poultry (8\.9 million) and of the importance to livelihoods of traditional poultry farming (99\.5% of 775,704 farms were raising poultry nationwide) 2 , increasing the challenge of preventing, controlling and responding to potential outbreaks of AI\. Haiti was also exposed to the risk of infection by zoonoses3 through imports of around 2\.5 million chickens per month, including from the DR\. 4 The Human health situation also was also quite dire at time of project 1 Project Paper; Plan Haitien de Préparation a une Pandémie d’Influenza 2009\. Based on FAO estimates from 2005\. 2 See Annex 2 for the preliminary results of the 2008-2010 Agricultural Census, released in September 2012\. 3 Zoonoses are infectious diseases that can be transmitted between species, from animals to humans or vice versa\. Zoonoses now account for 75% of infectious diseases affecting humans 4 In addition to the AI detected in 2008, many diseases had historically affected livestock in Haiti including Newcastle disease, Classical Swine Fever, Porcine Encephalomyelitis (Teschen disease), anthrax, screw-worm, rabies, brucellosis, tuberculosis and varroasis\. Of these, only AI, rabies, anthrax, brucellosis and tuberculosis are potentially severe zoonoses\. 1 appraisal, with an infant mortality rate of 75 per 1000 births and the highest incidence of HIV/AIDS outside Sub-Saharan Africa\. 1\.1\.4 The National Commission, Steering Committee, and Plan for Avian Influenza\. The Haitian Government’s awareness of AHI started in 2003, following cases of human deaths from H5N1 in Asia\. A technical body, the National Commission on Avian and Human Influenza (CNIAH), under the Ministry for Public Health and Population (MSPP), was created in 2005 and institutionalized by decree in 2006\. Tasked with preparing an Avian Influenza and Human Pandemic Preparedness Plan, CNIAH’s life was short and its activities ceased with a change of Minister in 2006\. The follow-on National Steering Committee on Avian Influenza intended to raise resources for surveillance activities and information sharing, but was never institutionalized although it did prepare the National Program for the Epidemiologic Vigilance of Avian Influenza\. Under the Global Program for Avian Influenza (GPAI), the Government of Haiti (GoH) then prepared a National Avian Influenza Control and Pandemic Preparedness Plan (National Plan) covering the period 2006-2010, consistent with the global strategies developed by FAO/OIE and WHO-PAHO, and providing the basis for the Project and other donor support\. 1\.1\.5 Animal health sector in Haiti\. Key actors in animal health were and remain: (i) local voluntary Animal Health Groups (Gwoupman Sante Bèt or GSBs); (ii) the Animal and Plant Quarantine Service, legally responsible for surveillance and response at ports, airports, border posts, and internal posts; (iii) the Directorate for Animal Production and Animal Health (DPSA) responsible for coordinating and implementing policies on animal health and epidemiological surveillance; and (iv) the Tamarinier Veterinary and Food Quality Control Laboratory (LVCQAT, the National Laboratory), responsible for the diagnosis of animal diseases and food analysis\. The last three organizations are part of the Ministry of Agriculture, Natural Resources and Rural Development (MARNDR)\. Annex 3 summarizes the roles of these actors and their deficiencies at the time of appraisal\. 1\.1\.6 The Human health sector in Haiti\. Concerning human health, expenditures in Haiti were and are among the lowest Latin America, and the sector is characterized by insufficient health workers, essential drugs, and equipment\. Most hospitals have insufficient isolation rooms and equipment for patients with severe respiratory diseases\. The constraints in the health sector at time of appraisal were mirrored in the National Center for Laboratory and Epidemiology (NCLE), which lacked sufficient human and financial resources and operational facilities\. 1\.1\.7 Project appraisal\. At the time of appraisal, USAID support to the GoH to get the AHI program up and running had been completed (US$100,000 between 2006 and 2007)\. Six approved or ongoing projects were identified in the area of animal and human health (see Annex 3)\. Project appraisal was conducted in coordination with other donors\. The project was part of GPAI under which all projects are processed using OP/BP 8\.00 on Rapid Response to Crises and Emergencies\. Funding was sourced from cancelled undisbursed balances of operations financed from Haiti’s IDA-13 allocation, and was limited to the amount available from this source\. Based on the GPAI framework and on lessons from Latin America (e\.g\. Guatemala, Honduras, Mexico and Chile) and other Regions in the World, the project adopted a multi-pronged approach, including dissemination of AHI information to the public, strengthening the early detection and warning system at the field level, and improving the capacity for rapid and effective response to an outbreak\. At the time of appraisal, two complementary projects, supporting a regional approach for the whole island, had been signed 2 in March 2008 for Haiti and the Dominican Republic, the AHI Prevention and Control Program, a capacity building program financed by the AHI Facility (US$1\.0 million per country)5\. These projects would complement the IDA-financed project and were intended to improve national and bi-national communications and emergency activities not covered by it\. 1\.1\.8 Rationale for Bank involvement\. Bank involvement was justified on the following grounds: (i) the urgent need to reduce the threat of AHI and increase preparedness in Haiti; (ii) the regional and global public goods aspect of controlling AHI and other zoonoses; (iii) the need for countries to strengthen their veterinary services, disease surveillance, and the human health system; and (iv) the potential social and economic impacts of AHI on Haitian farmers and the Haitian population as a whole\. The latter was consistent with general objectives of poverty alleviation and economic growth contained in the 2006 Haiti Interim Poverty Reduction Strategy prepared by the government of Haiti\. 1\.1\.9 Implementation arrangements\. The project had a clear focus an animal health and as such a Project Coordination Unit (PCU) was established within the Directorate for Animal Production and Health (DPSA) and responsible for coordinating technical execution of the entire Project\. DPSA was responsible for the execution of Component 1, while MSPP was in charge of Component 2\. Communication activities were to be outsourced and coordinated by the Ministry of Communication\. Finally, Component 4, including the project’s financial administration and procurement, was outsourced to the Inter-American Institute for Cooperation on Agriculture (IICA), which acted as a fiduciary agent 6 \. The decision to choose to IICA was due in part to a preference expressed by MSPP in order to have a neutral management of funds, and in part to the Bank team’s assessment (see Annex 4)\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 1\.2\.1 Project Development Objective\. To minimize the threat posed to humans by highly- pathogenic avian influenza (HPAI) infection and other zoonoses, and to prepare for, control, and respond to influenza pandemics and other infectious disease emergencies in humans\. The PDO reflected exactly the GPAI development objective\. 1\.2\.2 PDO indicators\. The Results Matrix shows Key Indicators as: (i) the number of communal sections sending weekly reports on time; (ii) the number of days taken to report information on poultry diseases at the local level in a representative sample of communal sections; and (iii) the number of backyard poultry farmers applying at least three prescriptions to protect their poultry and/or family from AHI\. In the Main Text however, these indicators are shown as Intermediate Outcome with the Key Indicator being “the number of communal sections that remain free of AHI infection in poultryâ€?\. All four indicators are considered as Key Indicators in this ICR\. See Table 1, Section 3\.2 for the complete Results Matrix\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification N/A 5 The AHI Facility is a multi-donor grant-making mechanism supported by the European Commission and nine other donors, and administered by the World Bank\. 6 IICA is a multilateral agency of the Inter-American system specialized in agriculture\. It was contracted by the government as the project’s fiduciary agency, and remunerated with project funds\. The same arrangement was successfully implemented in the AHI project in DR\. 3 1\.4 Main Beneficiaries 1\.4\.1 The primary project beneficiaries were expected to be: (i) poultry farmers who would benefit from pilot community initiatives and from improved animal health; (ii) the Haitian population in general as potential beneficiaries of improved management of the threat of AHI; (iii) the Gwoupman Sante Bèt (GSBs) 7 ; (iv) professionals of the DPSA, including of the National Laboratory; (v) health care institutions and personnel; and (vi) other participants in the animal health and human health systems receiving strengthening, equipment, training or information through the project\. There were also (unquantified but likely substantial) cross- border benefits because by controlling disease outbreaks promptly and effectively, Haiti and the Dominican Republic could manage avian flu island-wide\. 1\.5 Original Components (as approved) 1\.5\.1 Component 1: Animal health (US$ 760,000), which represented approximately 50% of the Grant, financed support for prevention 8 , surveillance, and preparedness for any AI outbreak\. It included activities to provide knowledge on the status of AI in Haiti; to strengthen facilities for early detection and mitigation of the potential impacts of AI, predominantly quarantine facilities; and to test sanitary measures in the context of small farm poultry production\. It was designed to have national coverage and comprised three sub- components: (i) Pilot community actions through GSBs; (ii) Emergency actions (culling); and (iii) Sub-Institutional capacity building (MARNDR)\. 1\.5\.2 Component 2: Human health (US$ 212,500) financed support for AHI prevention and mitigation at the national level, through capacity building and epidemiologic surveillance in the human health sector, and the establishment of an outbreak response mechanism\. Activities included capacity building of health staff to improve the surveillance system and integration of routine surveillance systems and data; simulations to assess the state of implementation and effectiveness of public health measures; and information campaigns to increase the level of knowledge of public health staff and the population at large\. 1\.5\.3 Component 3: Communications (US$ 379,000) financed support for: (i) raising public awareness of AHI; (ii) securing political and civil society support; and (iii) preparing animal and human health institutions for increased demand for advice, products and services in case of an AHI outbreak\. It sought behavioral change to control the spread of the virus, prevent infection, strengthen surveillance, adopt biosafety procedures and reporting mechanisms, and highlight the required investments in infrastructure and institutional reforms\. 1\.5\.4 Component 4: Project administration (US$ 130,000) financed support for the administration of grant activities including procurement and disbursement services provided by the fiduciary agency\. It also covered project audits\. 1\.6 Revised Components 7 GSBs are independent, voluntary, local community structures responsible for the local planning and implementation of vaccination programs and for animal clinical surveillance, among other roles\. 8 Prevention can be interpreted as actions to avoid the occurrence of any disease (e\.g\. surveillance, quarantine, risk analysis, biosafety, vaccination, communication); surveillance, reporting and control correspond to the constant monitoring of animal (and human health) to detect virus outbreaks; and preparedness, mitigation and response refer to the readiness of the animal (and human health) systems to react or respond to an outbreak of the highly pathogenic virus, should it occur\. 4 N/A 1\.7 Other significant changes 1\.7\.1 Complementary funding and effectiveness\. The US$1\.0 million grant approved for Haiti from the AHI Facility was cancelled due to the GoH’s failure to meet effectiveness conditions by the three-month deadline and to request an extension of this deadline\. The Bank and GoH decided to continue with execution of the IDA project while GoH would continue to seek funds to fill the “financial gapâ€?\. IDA financing was reprioritized to achieve project objectives, focusing mainly on animal health capacity building activities and reducing the focus on emergency response actions\. The deadline for project effectiveness (August 18, 2008) was extended to April 2009 in January 2009 to provide more time for signature of the fiduciary agreement between IICA and MARNDR\. The project became effective on April 6, 2009\. 1\.7\.2 Extension of the closing date and reallocation of expenditures\. On May 3, 2010, the Financing Agreement was amended as following: (i) reallocated US$ 80,000 from Unallocated and US$ 80,000 from Category 1 (Compensation payments) to Category 2 (Goods, consultants’ services Training and Operating costs for Components 1, 2 and 3); and (ii) the original closing date (January 15, 2012) was extended to January 15, 2013\. This restructuring was decided in the aftermath of the January 2010 earthquake which caused implementation delays in addition to those already caused by poor fiduciary management of the Project\. 1\.7\.3 Early closing of the project\. A second change of the closing date (to advance the date) was decided following the Mid-Term Review (MTR) and formalized on July 18, 2011\. Despite accelerated implementation and improved fiduciary capacity, progress was not satisfactory at the time of the MTR\. The Bank recommended that GoH advance the closing date to June 30, 2012 and included still-pending activities in another Bank-financed operation under preparation with the MARNDR (RESEPAG II – P126744)\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 2\.1\.1 Rapid and Global Response\. The challenge posed by the H5N1 avian flu and pandemic threats necessitated a coordinated multisectoral response\. The GPAI framework set out how multiple sectors and actors would have to work together and provided a template for the design of country responses, based on guidance from WHO, FAO, and OIE\. The design built on relevant Bank operational experience, including in emergency responses to disasters, the global program to address HIV/AIDS, and other responses to outbreaks of animal-borne diseases\. Given the context of the global AHI response, the threat of AHI to Haiti, the detection of H5N2 in the neighboring Dominican Republic, and despite an absence of Bank engagement with Haiti in the agriculture sector, the Bank responded swiftly to Government’s request by launching project preparation and appraisal to prevent AHI – and particularly HPAI – from spreading into the country\. The project was prepared and approved under OP 8\.0 and was intended to be financed through several sources of funds including Government’s own resources, AHIF Trust Fundsand IDA Grant\. 5 2\.1\.2 Government Commitment\. The Government of Haiti took immediate measures - including closing the cross-border trade in livestock - and allocated their own budgetary resources to support the National Plan\. Despite tensions between the DR and Haiti, the Bank supported both Ministries of Agriculture in a technical dialogue to deal with the problem bilaterally (island-wide) in order to achieve the objectives in both countries\. With Bank support, both countries were able to maintain technical discussions on AI prevention and control\. However, on the human health agenda, MSPP was not actively involved in the design of the project, resulting in: (i) a low level of funding of Human Health activities (Component 2) which only received 14% of the IDA grant and of the AHI grant, and (ii) a lack of commitment from MSPP during project implementation\. 2\.1\.3 Project financing\. The project was designed and appraised with three sources of funding: IDA, AHIF and Government Resources (see Table below)\. This financing structure supported the same PDO and was allocated on a proportional basis per component\. In particular, the AHIF TF was central to the design of the project and its cancellation would have a huge impact\. Table 1 : Summary Project Costs (US$) Component / Sub-Component IDA Grant (P111667)9 AHIF TF (TF091637)10 Government Funds 760,000 800,000 1\. Animal Health 300,000 300,000 - 1\.1 Pilot community activities - 150,000 - 1\.2 Emergency actions 300,000 310,000 800,000 1\.3 Capacity building for prevention and response - 212,500 135,000 2\. Public health - 379,000 - 3\. Communication - 130,000 65,000 4\. Administration - 75,500 - 5\. Un-allocated - 1,557,000 1,000,000 TOTAL 300,000 2\.1\.4 Quality at entry\. Quality at entry is rated Moderately Unsatisfactory\. The Global response and the detection of avian flu in neighboring Dominican Republic created pressure to rapidly submit the Project for Board approval\. The Bank allocated a total of US$9,000 for project preparation\. The team was composed of agriculture and human health specialists\. The quality of Safeguards analysis was satisfactory, however design elements and conditions on the ground merited closer scrutiny, in particular borrower capacity and fiduciary arrangements\. Two agencies were identified for fiduciary management during preparation: IICA, and MARNDR\. The decision to use IICA was due in part to MSPP’s preference for the neutral management of funds, and in part to the Bank team’s assessment\. IICA’s fiduciary capacity was over-estimated (IICA had no experience in managing Bank projects), and with 9 This is the allocation as of project approval (not at restructuring)\. 10 This funding was approved but TF never became effective and was cancelled\. 6 hindsight MARNDR, which had experience in managing several Inter-American Development Bank (IADB) projects (loans), would have been a better choice\. 2\.1\.5 Project development objectives and key indicators\. The Project’s PDO and components were consistent with the GPAI and were consistent with respect to the overall financing plan (including IDA, AHIF, and Government resources)\. However, following the cancellation of the AHIF grant (35% of the overall financing plan), the PDO of the IDA Grant was ambitious with respect to the level of financing available\. The Project was aligned with the National Plan, and the IDA (and AHIF) funds were expected to provide flexible financing for filling the gaps throughout the course of its implementation\. The Project monitoring and evaluation (M&E) framework was relied on the government system for monitoring and reporting\. The project’s broad scope allowed the Borrower and the Bank to refocus project activities during implementation on a more holistic approach extending beyond AHI\. Finally, project indicators were appropriate, but over-estimated MARNDR’s M&E capacity to capture outcomes at the local and national levels, such as the use of secure and systematic reporting on the status of AHI at communal level\. 2\.1\.6 Risk assessment\. The major risks identified at appraisal included political commitment, institutional, fiduciary and technical capacity, and public criticism of social distancing during a pandemic\. These risks were relevant, reflecting an evolving disease threat in an environment of limited institutional capacity; however the mitigation measures were not appropriate for risks related to fiduciary capacity and political commitment\. The hiring of IICA as a fiduciary agency did not solve the fiduciary capacity problem and the measures for inter-institutional collaboration were not enough to engage MSPP in executing the human health activities\. 2\.2 Implementation 2\.2\.1 Overall Bank portfolio implementation\. Performance of the overall portfolio in Haiti is helpful in assessing the outcome of this project\. During the project period, the WB's portfolio was characterized by high risk and severe implementation challenges\. Very weak institutional capacity combined with limited IDA resources, led to unrealistic expectations with regard to Government leadership and diligence in implementing the bulk of IDA projects over this period\. In addition, Haiti was subject to several external shocks, including 4 severs storms which caused 15% of GDP in losses and the massive earthquake of 2010\. These shocks led to further inability on the part of the Government to exercise due diligence in implementation and created substantial obstacles in implementation\. 2\.2\.2 Impact of changes in the external and domestic environment\. Diminishing international attention to the risk of a pandemic over the project period (with a marked decline especially since 2009 when the H1N1 flu pandemic proved to be much less severe than feared) resulted in decreasing support for this kind of multisectoral activity and an increasing focus on animal health to control the disease at source\. In response, government and donor partners accorded progressively lower priority to implementation of the National Plan\. Furthermore, the earthquake that struck Port au Prince on January 12, 2010 affected implementation directly\. Obviously survival, relief, and recovery became the first priority in Haiti, but also it affected facilities, communication between agencies, and implied changes in personnel and shortages of equipment\. MSPP staff was displaced to a new location; DPSA was not in condition to receive materials to perform epidemiological tests\. Providers of goods and services were affected, resulting in a reduced offer from the local markets and procurement delays\. Finally, after the earthquake, in mid-2010, the cholera outbreak further 7 distracted MSPP’s attention from the project and its participation in project activities and follow up further declined\. 2\.2\.3 Government’s Capacity and Commitment\. In addition to the external and domestic environment factors (exogenous to the project) mentioned above, the following where some of the factors regarding capacity and commitment from the borrower that impacted implementation: a\. Ministry of Economy and Finance (MEF)\. The MEF provided initial funding for the emergency activities related to the project but was quickly disengaged from the avian and human influenza agenda, and did not follow up on ensuring that the AHIF TF became effective therefore loosing such funding by letting the effectiveness deadline elapsed\. b\. Ministry of Agriculture (MARNDR) The MARNDR was the main counterpart and champion of the AI agenda in the country, and even with the reduction on the Global and Domestic priority dedicated to Avian Flu, they saw the project as an opportunity to strengthen their animal health services\. Initially, MARNDR prioritized activities supporting the prevention and control of AI, launching a culling campaign in areas where AI was originally detected (with financing from public sector budget resources)\. Later, the MARNDR focused on broader capacity building on animal health, and quarantine and laboratory services, moving towards a programmatic (rather than project) approach to tackling diseases like AI\. This led to activities related to animal health to advance faster than other components\. c\. Ministry of Public Health (MSPP)\. The MARNDR made significant efforts and showed dynamism and leadership to reach to the MSPP and involve other actors and donors in addressing the problem early on\. However, although an inter-institutional agreement on AI was reached between MARNDR and MSPP for project execution, no MSPP staff were appointed to liaise with the project (with the exception of one consultant), despite MARNDR’s efforts to get a counterpart nominated\. Given the small amount of resources and the changes in health agenda priorities at the global and national level, MSPP disengaged from the project, resulting in health activities underperforming compared to other components\. 2\.2\.4 Poor performance of the fiduciary agency\. In the first year, technical and procurement documents held by IICA were not processed due to IICA’s ignorance of Bank procedures and lack of commitment to the project, creating serious implementation delays\. Procurement requests were frequently incomplete, incorrect or in the wrong format, creating long lead-times for procurement processes\. No fiduciary training was anticipated for IICA as the reason for hiring a fiduciary agent was to avoid having to spend resources and time in building fiduciary capacity\. Supervision actions helped address this problem (e\.g\. hiring of procurement specialists by the PCU and IICA respectively, and IICA dedicating a project coordination to follow up on project activities)\. IICA did improve procurement processes and quality, but only towards the end of the project\. 2\.2\.5 Mid-Term Review (MTR)\. Like for most of the Haiti portfolio the MTR was conducted 1 year later than originally planned (mid 2011 instead of mid 2010) because the closing date was pushed back by 1 year due to the earthquake and the Bank team didn’t consider appropriate conduct a MTR only months after the earthquake with a cholera outbreak in the country\. Recommendations by the Mid-term Review (MTR) helped narrow project activities down to a handful of key outcomes, focus on strengthening general disease surveillance capacity rather than on strengthening AHI surveillance alone (as the actual threat of HPAI proved to be very low during implementation), and improve fiduciary performance 8 by identifying problems and recommending measures to accelerate procurement\. IICA’s improved pro-activity in leading periodic reviews of procurement requests also helped accelerate procurement following the MTR\. 2\.2\.6 Evolution of approach to communications\. Initial work centered on the development of a national Avian Influenza Strategic Communications Plan, the development of conventional printed materials, targeted training of health and veterinary workers and market traders, and an avian influenza phone-in program on national radio\. During this phase, activities were principally driven by dedicated funding provided by the project\. By 2010, problems with the consultant and dwindling interest from MSPP, encouraged MARNDR to take the lead in concluding activities under the communications component, printing communications materials and distributing them throughout the country through GSBs and local MARNDR offices\. The Strategic Communications Plan is an important contribution in the case of a future outbreak, even if the general population campaigns were not executed\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 2\.3\.1 M&E design\. The Project used the National Plan indicators, which were developed in a collaborative manner, notwithstanding the fact that a number of the indicators related to activities for which financing did not materialize\. This was a deliberate choice to show support to the National Plan and lessen burden on government capacity to manage different sources of funding\. The choice of project indicators, which was not based on the GPAI, required a monitoring system that was not yet in place in Haiti\. The project lacked a clear M&E methodology, M&E capacity building activities, and clear responsibilities and procedures\. The results framework had a mixture of output and outcome indicators for each component\. In retrospect the Project might have only used indicators which related directly to what the IDA Grant financed, however given the emergency nature of the Project it is possible that pre-selected Project-specific indicators would have had to be revised during the implementation based on the support which the Project ultimately provided\. 2\.3\.2 M&E implementation and utilization\. MARNDR used their existing M&E system (based mainly on mobile phone communications with GSBs)\. Values were regularly reported by MARNDR (though sometimes with delay and only on request), but MSPP was absent from reporting on the human health indicators\. The MARNDR maintained the complete set of indicators throughout implementation of the Project and strengthened GSB’s reporting system\. The aide-mémoires of supervision missions captured all the indicators, but with some of them, it was difficult to verify independently given that most of the information was captured through phone conversations and with no written records\. Annex 3 provides a critical assessment of each indicator\. 2\.4 Safeguard and Fiduciary Compliance 2\.4\.1 Safeguard compliance\. The safeguard triggered by the Project was for the Environmental Assessment\. Requirements included the preparation of an Environmental Management Plan (EMP), which was drafted during preparation, and finalized within the 6 months after project effectiveness\. The EMP was disclosed in Haiti and by the Bank after consultation with key stakeholders\. The Project was required to comply with standards of the International Organization for Standardization (ISO) but standards achieved were considered modest, in part due to practical difficulties in complying with such standards in Haiti (limited capacity; lack of infrastructure; resistance to adopting new practices)\. Supervision at the sites of the quarantine posts revealed a lack of adherence to proper environmental construction 9 etiquette in one of them (Belladere Quarantine Facility)\. Although the site was not yet operational as of project closing, the issues were raised with MARNDR to be addressed expeditiously before the opening of the post\. 2\.4\.2 Financial management\. The Fiduciary Agency (IICA) had suitably qualified financial management staff to support implementation of the Project\. Hiring of the audit firm was delayed, but project compliance with the requirement to present Quarterly Intermediate Financial Reports, maintain the financial management system, and present annual financial audits was satisfactory\. 2\.4\.3 Procurement\. Procurement under the Project was managed by the Fiduciary Agency (IICA)\. As mentioned in Section 2\.2 above, during the first 2 years of project execution, procurement requests were frequently incomplete, incorrect or in the wrong format, creating long lead-times for procurement processes\. No fiduciary training had been anticipated for IICA as the reason for hiring a fiduciary agent was to avoid having to spend resources and time in building fiduciary capacity\. Supervision actions helped address this problem and IICA did improve procurement processes and quality, but only towards the end of the project\. 2\.5 Post-completion Operation/Next Phase 2\.5\.1 The Project was closed early, on June 30, 2012 with several activities still to be completed\. Implementation of the National Plan improved some core animal health and human health capacities and allowed for coordination between the two systems\. The achievements are, however, modest relative to the remaining capacity gaps\. The government will require substantial financial and technical assistance for further development of capacity and for operations and maintenance of the assets already acquired\. During project implementation, the Bank worked closely with DPSA and Development Partners to develop a programmatic approach to animal health, including pending AI activities within the animal health program of MARNDR (financed by various donors), including the RESEPAG II Project (P126744), to secure funding\. However, activities under the responsibility of MSPP were not included in RESEPAG II, and mobilization of such resources for human health systems is not a priority for donor financing, and investments in prevention tend to be grossly neglected\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 3\.1\.1 The Project objectives were relevant and important to the Haiti economy, public health, and poverty-reduction goals\. It was designed quickly as an emergency operation and as part of a financial package to meet the needs of the country for rapid support for its response to an emergency and for strengthening of the veterinary and public health systems, and their capacity to work together in detecting and controlling outbreaks of HPAI H5N1 and prepare to respond to pandemics and similar emergencies\. These capacities are dual-purpose, relevant to other disease outbreaks as well\. It also supported preparedness at the national and local levels to respond to pandemics and similar emergencies\. Relevance was maintained even though conditions on the ground (and thus the focus of human health and communications activities, for example) changed throughout implementation\. 10 3\.1\.2 The objectives remain highly relevant even now as outbreaks of HPAI H5N1 in poultry continue in more than 12 countries, including countries like Mexico\. The risk to economies and public health of outbreaks of zoonotic and other infectious diseases persists and represents a substantial contingent liability on the economy and the government’s budget\. In the future the government will need to resource and coordinate the veterinary and human public health services to respond rapidly to any HPAI H5N1 outbreaks in poultry, monitor for signs of transmission of the H5N1 virus to the human population, as well as detect and respond to other infectious disease outbreaks\. The Project’s lessons learnt in this regard are a precedent on which the government and its partners can build\. 3\.1\.3 The global risk of pandemics that originate in livestock or wildlife is rising; capacity for early detection and control of zoonotic pathogens at their animal source thus remains an important goal\. This goal is embodied in the International Health Regulations (IHR 2005), which have been adopted by all countries, including Haiti, and in a growing recognition of risks at the interfaces between animal, human, and the environmental health\. Concern with mitigation of these risks leads to acceptance of One Health approaches, which entail strengthening public health systems and animal health systems and enabling communication and collaboration at the interface\. 3\.1\.4 Pandemic preparedness remains relevant to Haiti as well since a pandemic could occur in the future\. This is all the more likely because prevention of pandemics through control of pathogens at their animal source is currently hindered by pervasive weaknesses of public veterinary health and human public health systems, in Haiti and in many other developing countries\. OIE’s assessment of Haiti’s veterinary services in 2011 found that capacities are extremely weak and preclude performance of nearly all essential functions; moreover, many government staff with veterinary training will be retiring in the next decade and there is no pipeline of replacements\. The Project’s objectives thus remain relevant from both country and regional/global perspectives\. 3\.2 Achievement of Project Development Objectives 3\.2\.1 The Project partially achieved its PDO, but there are problems of attribution (magnitude of the PDO indicators) and of the reliability of some values reported (see Annex 5)\. The objectives as stated can be divided into two: (i) minimization of the threat posed by HPAI and other zoonoses: and (ii) increasing prevention, control and preparedness\. Annex 6 contains the Results Matrix with achievements as of the closing date, and the overall achievements are measured in the four overarching outcome indicators (Table below)\. Indicator Baseline Target Achieved Outcome indicators (PDO) 24 communal sections remain free of AHI infection in poultry 0 24 24 Half of the 50 communal sections that send weekly surveillance 2 25 20 report on time Decrease in the time taken to report information on poultry 7 4 2 diseases at local level (days) 2800 of backyard poultry farmers currently applying at least three 0 2800 767* prescriptions to protect their poultry and/or family (*) Estimate based on pilot initiatives financed by the project\. (a) Minimizing the threat posed by HPAI and other zoonoses (partially achieved) 11 3\.2\.2 The 24 communal sections targeted by the PDO indicator are reported to remain free of AHI infection in poultry (these 24 communes are based on a domain of 50 communal sections11)\. At the National level, according to DPSA, all 570 communal sections of the country remain free of HPAI, and over 80% are free of LPAI\. Nevertheless, it is difficult to objectively state whether the threat of HPAI was minimized at the country level, as LPAI did spread beyond its source (border communal sections)12\. However, since: (i) it is difficult to know what would have occurred without the Project in terms of dissemination of LPAI within Haiti, (ii) the potential mutation of the virus is unknown, and (iii) given the increased number of reporting and capacity building of GSBs and human health agents; this objective is considered to be partially achieved\. (b) Increasing prevention, surveillance and preparedness (partially achieved) 3\.2\.3 Prevention measures (partially achieved)\. There was no estimate of how many farmers were applying prescriptions13, or how many prescriptions were applied and which kind, by closing\. However, it is estimated (through Census data) that 767 farmer were applying prescriptions by project closing, as they were benefiting from prevention and epidemiological surveillance promoted through the confinement of poultry (59 units of 150 hens in lay were financed across 9 departments14), a total 8,850 hens in lay\. This increase represents an 18% increase in the number of farms practicing modern poultry farming techniques in the country (4,172 farms raised poultry using modern techniques according to the agricultural census) and possibly applying prescriptions\. According to DPSA, an estimated 85% of communal sections (i\.e\. 484) had adequately trained GSBs (farmers and veterinarians) as of June 30, 2012\. The Project trained 5,000 farmers and 40 veterinary agents across 484 communal sections, and 400 health professionals\. These included 70 veterinarians and 330 human health professionals\. The Project also financed the preparation of a training manual on AHI and other acute respiratory infections which was distributed to public health professionals\. Limitations to decision-making on prevention and control of AI have been reduced by the strengthening of the GSBs and communications with MARNDR, however some still persist, such as: (i) the limited access to vaccines and medicines for logistical reasons or lack of resources; (ii) farmers’ knowledge that the sub-type of AI present in Haiti poses little risk to human health; and (iii) limited knowledge by MARNDR about the current distribution of AI in the country\. 3\.2\.4 The AHI communications strategy was finalized in November 2011 but the communication campaign while ready to launch in February 2012, was not fully implemented\. This was due to a delays in preparing the communications strategy document (consultant became ill), obtaining formal approval, and to a lack of coordination between the PCU, MSPP and IICA\. The Project conducted preventive communication campaigns at a smaller scale by distributing 5000 flyers and 1000 posters with basic information on AI to farmers and local MARNDR offices and GSBs\. 11 These corresponded to: (i) the 44 communal sections of the 16 communes having a border with the DR; plus (ii) the 6 communal sections of the 2 communes that were the original source of the infection (Miragoane and Limonade)\. Priority was given to these areas for monitoring because they appeared more vulnerable to an influenza outbreak 12 Although no mutation of the H1N2 virus was observed in Haiti, the threat from LPAI can be regarded as a potential source of HPAI threat, due to the possible mutation of the virus\. 13 Prescriptions are methods to prevent disease transmission among animals and from animals to humans\. 14 All departments except Grande Anse\. 12 3\.2\.5 Surveillance (partially achieved)\. Concerning clinical surveillance, DPSA reported that in 20 out of 25 communal sections reports were sent on time (reports provided by GSB veterinary agents via the DDAs15), thanks to the strengthening of GSBs\. These reports are based on information provided by DPSA, but no systematic recording, archiving or monitoring system for reports was in place as of project closing\. DPSA estimated that the time to report information on poultry diseases at the local level (by GSBs to DDAs) was reduced to two days due to the use of cellular phones\. \. Concerning active epidemiological surveillance, the number of laboratory-tested samples increased from 3,131 in 2009-2010, to 3,884 in 2010-2011, and 169 and 16 cases respectively were positive for LPAI, indicating a decrease in LPAI prevalence\. The National Laboratory underwent restructuring (IADB- financed) lasting 1\.5 years and was therefore non-operational for part of the Project (so there was an inability to process samples), but its virology section remained open\. Compared to the pre-project period, the number of laboratory-tested samples increased, but active epidemiological surveillance declined due to restructuring works and laboratory reorganization\. Despite these temporary issues, it is admitted that the Laboratory capacity to carry out tests was strengthened by the Project\. 3\.2\.6 The surveillance capacity of some 5,000 farmers, 40 veterinary agents, and 400 health professionals was strengthened by the Project\. No information was available to assess the effectiveness or impact of training\. The project also trained 6 laboratory staff in AHI diagnosis and 15 inspectors for animal quarantine\. However, the extent to which this contributed to improving disease control at the border and within the country is limited by the continued weakness of quarantine structures\. The Project also financed a taxonomic study on migratory birds, which identified the species of migratory birds in Haiti and collected updated data on their migratory patterns\. This study supports future assessments of AI risk in the island\. Project activities included a census of the poultry sector and the creation of a monitoring system\. Software was developed but the census coverage was smaller compared to what it could have been (190,000 questionnaires compared to an estimated potential of 400,000 based on interest expressed by GSBs), and as of project closing, the questionnaires were not fully digitized\. 3\.2\.7 Actual preparedness and response (partially achieved)\. Preparedness for an AI outbreak was integrated in the content of trainings for farmers, veterinarians, quarantine agents and public health professionals\. The indicator for the number of additional outbreaks responded to in a given period is difficult to measure, since the lack of an additional outbreak could be due to the Project or due to external factors (e\.g\., lack of global/regional outbreaks)\. However, the successful completion of a simulation exercise of HPAI outbreak and the farmer compensation mechanism put in place by the Government to undertake culling activities in 2 boarder areas to try to eradicate LPAI early on, is a notable achievement\. Implementation arrangements were efficient and rates were attractive enough to encourage farmers to report suspect events\. Prompt reporting is essential for preventing spread of the disease\. This success can be explained, in part, by the existence of a compensation scheme that the MARNDR had already put in place before the Project started\. However, an important project accomplishment that is key for preparedness and response, was the strengthening of the GSBs: 50 communal federations of GSBs were established by the Project out of a total 100\. In addition, two departmental federations were established (in the North-West and Center departments)\. Overall, in addition to helping reinforce the prevention, surveillance and 15 DDAs are MARNDRs offices at the department level 13 response system in the country, the strengthening of GSBs has helped improve cooperation and trust between government authorities and local communities\. Finally, the public health system did improve its core capacities through training of human health agents for: surveillance and response to infectious disease outbreaks\. 3\.3 Efficiency 3\.3\.1 The investments under the National Plan were worthwhile from an economic perspective\. The total financing package was US$ 2\.877 million, but only US$1\.4 million materialized and was spent\. The IDA grant disbursed US$1\.27 million of US$1\.56 million (81% of the Grant), while the US$ 1million AHIF TF never materialized\. Most resources were disbursed within the final year and months before project closing and have led to the strengthening of public services and GSBs\. The specific outcomes are described above and in the results framework indicators\. They show partial achievement in improved performance in response to outbreaks (resulting in their effective containment) and in core public health capacity related to AHI\. Today HPAI is spreading in a number of developing countries, including in the LAC region, but not in Haiti\. 3\.3\.2 The benefits of these partial achievements, in particular in animal health, are clear\. In the improvements in disease monitoring and control (i\.e\., early detection, correct diagnosis, and implementation of all necessary control measures), the poultry sector would have been less prepared in case of an outbreak, and controlling the disease would have become far more costly\. Plausible assumptions about disease spread yield a benefit from preventing such a spread of between US$50 and 60 million (80% of the value of poultry production are expected to be lost due to HPAI)\. The capacity for effective disease prevention and control that has been acquired for animal health will persist into the future as the GoH is committed to maintain the necessary budget allocation\. 3\.3\.3 As noted above, substantial additional investments are warranted to strengthen animal health systems, in particular, to enable control of zoonotic diseases at the animal source, where contagion can be stopped most cost-effectively\. Public health systems also need further investments\. If such investments are made in the coming decade then, using conservative assumptions, the expected annual costs of prevention would be 2\.14% of the overall value of the annual poultry production value\. These attractive rates of return reflect the very strong economic case for disease prevention\. However, some activities financed by the IDA Grant, such as ……\. did not produce sustainable outcomes as of project\. Others were not fully implemented as of project closing, but with a significant likelihood of being put in place by MARNDR under other programs such as RESEPAG II\. Such activities include: (i) the communications strategy; (ii) the survey of livestock producers; and (iii) the quarantine posts\. 3\.3\.4 Finally, efficiencies were achieved mainly by emphasizing coordination so as to avoid duplication and using common inputs (e\.g\., training materials and communication strategy) in activities financed by the project and Government\. More broadly, and especially during the later years of the National Plan, a shortage of donor financing and limited funding available from resources managed by the World Bank encouraged a focus on extracting the greatest impact from the resources available\. 3\.4 Justification of Overall Outcome Rating 14 Rating: Moderately Unsatisfactory 3\.4\.1 Justification of the overall outcome rating is as follows: (i) Relevance: Project objectives and activities, although ambitious, remain relevant to the animal and human health priorities of the country and the need for cross sector collaboration; (ii) Achievement of PDO: There were moderate shortcomings in the Project’s achievement of its stated development objectives and partial achievement of PDO indicators as measured by the executing agency; and (iii) Efficiency: If the fully funded project is considered, overall investment sustainability of project activities are questionable with 50% of the original financing package disbursed (81% of the IDA Grant), some activities (in particular the human health component) not completed, and the limited impact and benefits of the Project\. However, there are still large net benefits to be accounted for from the fact that no HPAI outbreak materialized in the country and that improvements in the public sector animal health framework and GSBs were achieved (see Section 3\.2 above for detailed justification)\. In terms of the Justification of the outcome rating by component: a\. Animal Health: The rating for outcomes on animal health is Moderately Satisfactory (MS) due to the commitment of MARNDR to use project activities and funding towards building capacity at the Government and GSB level on prevention, surveillance and response\. MARNDR was able to lead the inter-sectoral coordination on AI, as well as the bilateral collaboration with the Dominican Republic\. Given the sustainability of activities related to animal health provided by the preparation, approval and financing of a programmatic approach, an MS rating is appropriate\. b\. Human Health: The rating for outcomes on human health is Unsatisfactory (U) due to the lack of commitment and participation of MSPP in project activities, and the delays and lack of execution of planned activities under Component 2\. Furthermore, financing of activities human health activities related to AHI is uncertain as of project closing, and thus investments in capacity building and communications may not be able to be sustained and/or implemented going forward\. c\. Communications: The rating for outcomes on communications related to AHI is Moderately Unsatisfactory (MU) given that the strategic communication plan was indeed prepared and approved by MARNDR, MSPP, and endorsed by Donors; but it was done with significant delays and never fully implemented\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 3\.5\.1 Poverty impact and gender aspect\. H5N1 influenza outbreaks initially affect the poultry population, but, if not contained, they could directly and indirectly affect the majority of the human population of the country since most households raise poultry\. In particular, in Haiti, more than half of farming households have poultry living in, or within 5 meters of, their house\. Poultry keeping is widespread among family farms throughout Haiti, though with some concentration in the Centre Department\. It is estimated that over 90% of family farms keep some poultry, mostly chicken of local breed (poulet créole) usually with 3 to 18 head per farm (also, in some farms, 2 to 5 heads of turkeys, ducks or guinea fowls) including adults and young birds\. Traditional poultry production provides a major income-generating activity for farm households from the sale of birds and eggs and it represents one of the few opportunities for saving and investment by rural households\. Income generation is the primary goal of family poultry keeping\. Eggs can provide a regular, albeit small, income while the sale of live birds provides a flexible source of cash as and when needed, for instance 15 to pay school fees, for a wedding or unexpected expenses such as medicines\. Occasional consumption provides a valuable source of protein in the family diet\. Poultry also plays an important socio-cultural role in Haiti, including cock fights and religious practices\. Poultry is often raised by women and children in Haiti\. Spread of avian influenza in Haiti would thus have had a devastating impact on these vulnerable groups\. Since such disease outbreaks did not occur, the poor benefited\. If the capacity created under this Project is further developed, improved livestock health would reduce a major source of vulnerability of the poor and improve Haiti’s prosperity, food security, and nutrition\. The Project contributed through the strengthening of GSBs (20% of GSB composition are women) as well to prevention of pandemic influenza (to an unknowable extent) and to preparedness\. A pandemic would hit the poor the hardest, in Haiti and elsewhere\. Preparedness to mitigate the impact of this potentially catastrophic shock thus has an important pro-poor bias; this benefit will be realized when a pandemic occurs\. 3\.5\.2 Social development\. Without the Project in Haiti (and in neighboring Dominican Republic), the spread of HPAI would have been more likely in Hispaniola\. A severe pandemic could have occurred instead of, or in addition to, the 2009 H1N1 pandemic\. In those events, the entire Hispaniola population would have been affected, possibly with severe economic and social disruptions and increases in poverty, as mentioned above\. The project helped strengthen animal health capacity and developed a communication strategy that would help in the prevention of such potentially devastating impacts on the entire society\. However, the communications plans, and the inter-institutional collaboration and monitoring plan for AHI will need to be periodically exercised through simulations and updated as warranted for the expected benefits (mitigation of pandemic impact on society and the economy) to materialize\. (b) Institutional Change/Strengthening 3\.5\.3 Adoption of an integrated approach to disease control\. An important project outcome was the change of paradigm in animal disease management from one focusing on specific diseases, to a holistic approach focusing on all diseases\. Furthermore, the Bank and Development Partners, supported MARNDR’s adoption of a programmatic approach to animal health, developing a five-year investment plan, and identifying the different sources of financing\. This holistic and programmatic approach is expected to improve the efficiency in dealing with emerging infectious diseases and zoonoses in the future\. 3\.5\.4 Bi-national cooperation\. The DR and Haiti prepared a draft to expand a phyto- sanitary agreement signed by both countries in 1996, in particular to include other ministries\. This new draft is not yet signed, but the two governments have met annually to coordinate actions\. The DR also prepared a bi-national document to determine the perimeter of areas infected with H5N1\. Several training events are planned under the stewardship of WHO and PAHO or IICA, in the DR and in Haiti\. (c) Other Unintended Outcomes and Impacts (positive or negative) 3\.5\.5 Adoption of a policy strategy and draft legal code for animal health\. A policy strategy document on animal health covering the period from 2010 to 2014 was prepared by 16 MARNDR 16 \. It delineates the GoH’s specific strategy for animal production and health, which is estimated to require investments of US$20 million\. DPSA prepared a draft Code of Laws on Animal Health and Veterinary Public Health, which was reviewed with the assistance of a mission of the World Organization for Animal Health (OIE) in February 2012, and sent to the office of the Prime Minister for consideration\. This draft is preliminary and would require specific laws for its implementation; but it constitutes a first effort to institutionalize surveillance procedures in Haiti\. DPSA intends to continue improving this draft with the help of a legal specialist (financed by the IADB)\. Important changes proposed by this draft law include the legal status of GSBs, the transfer of food safety prerogatives from MSPP to MARNDR, and a system to identify livestock and regulate slaughter\. Though this was an intended outcome supported by the Bank during project implementation, it serves to illustrate how a program based on a single-disease impetus can generate wider and lasting policy and investment reform\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops N/A 4\. Assessment of Risk to Development Outcome Rating: Significant 4\.1\.1 On animal health and communications, the risk to development outcomes is moderate given the adoption of a programmatic approach to investments in animal health and the existence of a communications plan (with certain activities implemented)\. Progress was also made in improving the performance of veterinary services (GSB)\. It is likely that capacity strengthening and institutional integration will be maintained in the medium term as financing has been secured\. The outcomes of project-financed training are likely to be maintained over the next five years due to the identification of an animal health program financed by the Government and Donors, however the long-term remains uncertain if there is no follow-up on some of the basic reforms identified by the OIE\. 4\.1\.2 On human health, the risk to development outcomes is significant, as several outputs remain unachieved due to the early closing of the Project and the lack of commitment from MSPP during project implementation\. The national human health and animal health laboratories will need sufficient resources for their operations and maintenance\. There is a risk that these resources will not be provided on a regular, sustained basis, in particular on human health\. The animal health laboratory has secured financing through 2016\. As noted above, coordination across sectors of the multisectoral actions required for zoonotic disease control and prevention was a strong feature of the National Plan, but incentives for participation were not adequately design\. MSPP did not participate in regular meetings due to persistent weak capacity and shift in priorities\. Institutionalizing a One Health approach under the leadership of the Prime Minster or Minister of Planning could be an option that could support essential work on zoonotic disease control and prevention; this would mitigate an important risk to the sustainability of the partial outcomes of the Project\. 4\.1\.3 Coordination among partners worked well originally primarily because the World Bank, FAO, and USAID provided the necessary coordination services\. This has now 16 Grandes lignes d’action pour le développement de la santé animale en Haiti\. 2010-2014\. MARNDR\. 2010\. http://agriculture\.gouv\.ht/view/01/IMG/pdf/Texte_SanteAnimale_-_MARNDR_2010\.pdf 17 diminished, and partners have re-focused on other programs, in particular in human health\. On animal health, they did engage in the preparation of a 5 year investment program, which is now fully funded\. Also, OIE prepared the assessment of Performance of Veterinary Services (PVS) and Gap Analysis\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 5\.1\.1 Bank performance in ensuring quality at entry is rated Moderately Unsatisfactory because although the Bank responded in a timely fashion to a growing global and local threat of AHI, there were shortcomings in the Project’s design and preparation\. First, the Bank under-estimated the fiduciary capacity of MARNDR to manage project funds and procurement\. IICA’s capacity as fiduciary agency, in turn, was not adequately assessed\. Another shortcoming was the dependency of funding of activities on a full financial package that did not materialize with the cancelation of the AHIF grant, making the objectives of the IDA Grant too broad and unrealistic with respect to the funding available\. Indicators lacked a supporting M&E methodology, hindering the independent assessment of project outcomes\. Nevertheless, the Project and component’s objectives permitted flexibility in prioritizing activities and adapting to a changing AHI context, maintaining the Project’s relevance throughout implementation\. (b) Quality of Supervision Rating: Moderately Satisfactory 5\.1\.2 Bank supervision is rated Moderately Satisfactory given that it proactively addressed the main obstacles to implementation, conducting regular missions, candidly rating ISRs, and ultimately, closing the Project early due to systemic delays\. 5\.1\.3 Satisfactory identification, follow up, and action to confront the main threats to implementation\. The Bank was proactive in identifying and attempting early on and throughout implementation to resolve procurement delays, including considering the possibility of transferring procurement responsibilities to MARNDR (from February 2009), and by systematically evaluating IICA’s capacity, proposing actions and verifying progress (see Annex 6 for a description of Bank actions)\. It could be argued that the Bank should have closed the project even earlier, but it was not possible to predict how IICA would react to requests from both the GoH and the Bank to improve performance\. In sum, the approach undertaken by the Bank was risky but justifiable in view of Project objectives, the ownership and commitment demonstrated by MARNDR, and the lack of an alternative acceptable to the GoH\. The Bank also played an important role in stressing the importance of integrating all diseases into the GoH’s prevention, surveillance and control strategy, and to prepare a medium term program for all animal health activities; which represents an important paradigm shift for disease management in the country\. Finally, supervision missions were done regularly by both livestock and human health specialists, as well as by the environmental safeguards specialists\. 18 5\.1\.4 Project’s Indicators and M&E system\. The Bank had the opportunity to assess and improve the Project’s M&E methodology throughout implementation, but priority was placed in trying to get project activities to accelerate\. Nevertheless, the Bank did request frequent updates on progress of the indicators and received complete reports from DPSA\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 5\.1\.5 Overall Bank performance is rated Moderately Unsatisfactory due to the Bank’s under performance during project preparation and designed, tempered by an appropriate response to a potential crisis and an acceptable performance during supervision\. Main deficiencies include weak institutional arrangements and capacity (across ministries and in fiduciary matters), which could have been predicted or prevented with actions to promote efficiency and improved borrower capacity17\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 5\.2\.1 The National Steering Committee of Avian Influenza met infrequently and irregularly and was not reactivated as proposed in the National Plan\. The GoH acknowledged disbursement delays early in implementation, flagging the project as a risky operation, but was not proactive in proposing a solution\. It also allowed for the AHIF TF to expire and 35% of the overall financing package not to materialize\. However, it did work with the Bank to transfer pending animal health activities into RESEPAG II and requested the early closing of the project\. Finally, the lack of MSPP involvement in the Project did not produce a better integration between participants of the National Commission, which was an important aim of the National Plan\. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 5\.2\.2 MARNDR-DPSA\. The performance of MARNDR-DPSA is rated Satisfactory\. DPSA demonstrated strong project ownership and leadership, significant co-financing resources\. The DPSA was proactive in identifying, monitoring and seeking to resolve problems with a strong focus on delivering outcomes\. DPSA closely monitored procurement requests and approvals, sought improvements in performance from IICA (mostly unsuccessfully), sought other funds to implement project activities (e\.g\. resources from the Haitian public treasury during the first year of the project as well as IADB), and led the exercise to develop a programmatic approach to animal health investments in Haiti\. DPSA also tried to involve MSPP in the Project proactively\. Finally, it provided timely feedback on progress of project indicators\. Shortcomings included poor oversight of Safeguards in the construction of one of the Quarantine Posts (not yet operational) and the missed opportunity to strengthen their M&E system\. 5\.2\.3 MSPP\. The performance of MSPP was Unsatisfactory\. There was very little participation by MSPP in the Project\. MSPP relied almost exclusively on a consultant (hired 17 According to the latter, when the rating of quality at entry is in the unsatisfactory range and the rating of supervision is in the satisfactory range, the overall rating must be based on the Outcome rating\. 19 by the project) to liaise with DPSA and implement project activities\. The PCU met with MSPP several times to develop activities, but MSPP lacked adequate personnel involved in the Project to follow up on decisions\. Lack of prioritization of AHI within the national human health agenda was a key factor, as well as the reduced amount of resources allocated to human health within the project (14% of project costs)\. 5\.2\.4 IICA\. IICA performance as fiduciary agency is rated Unsatisfactory\. IICA’s lack of fiduciary capacity and poor performance caused continuous implementation delays\. As fiduciary agency, they did not provide a solution to its inability to handle procurement requests until very late in the Project, despite requests from the Bank and the GoH\. Ultimately, IICA hired a procurement specialist dedicated to the Project but very late in November 2011, following recommendations by the MTR\. Procurement processes did improve after the MTR and the hiring of a dedicated procurement specialist, but they did not accelerate implementation to execute all project activities before the closing date of the project\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 5\.2\.5 Overall Borrower Performance is rated Moderately Unsatisfactory on balance taking into account strengths and weakness of the various institutions (MSPP, MARNDR, IICA) measured against mitigating circumstances (earthquake, cholera outbreak, swine flu) which were beyond the control of the implementing agency and aggregate achievement of objectives\. The borrower achieved most of the targets in the results framework, but fell short in others, and sustainability of actions, in particular in human health, is not guaranteed\. 6\. Lessons Learned 6\.1\.1 The following lessons are among the most important: x Close coordination and cooperation between animal health and human health are key to successful implementation of investments\. The involvement of all concerned partners from the government (MARNDR, MSPP, MEF), with sound inputs from technical international agencies and vision from the donors’ community led initially to the design of a comprehensive plan, which prioritized activities, avoided overlaps and major gaps in the activities\. However, incentives for participating in the implementation of the plan were not thoroughly addressed in the plan, and MEF and MSPP did not follow up on the implementation phase, in particular as the sense of urgency diminished and the intensity of consultations decreased\. A minimum level of coordination was sustained thanks to the MARNDR’s and Bank’s persistent emphasis on the need for multi-sectorality\. The lesson for this project, and numerous GPAI projects world-wide, is that collaboration across sectors remains a challenge beyond the initial formulation of the strategic plan and requires substantial dedicated resources and strong Government Leadership above technical ministries (such as Prime Minister or MEF)\. x The establishment of a medium to long-term prevention and control program is required\. Transitioning from emergency response to medium-term system strengthening was envisaged in the design of the National Plan\. Emergency response mainly consisted of establishing a compensation mechanism, procuring materials, and active communications efforts\. The transition was successful in the area of animal health with the preparation and approval of a 5 year programmatic investment plan on 20  animal health, but not successful in the area of human health\. The lesson for this project and other animal health interventions is that even if responding to a disease- specific emergency, interventions also need to focus on systemic improvements and basic capacity building which are sustainable in the medium to long term\. x Mitigation measures to close a financing gap should be part of appraisal\. The PDO and indicators were established based on a financing plan that included other sources of funding aside from the IDA Grant (including AHIF TF and Government resources), so the objectives were broad and several activities were structured based on shared financing\. Although broad project objectives allowed for a single project being designed under several sources of financing as well as allowed flexibility during implementation to adjust activities as the emergency situation evolved, the lesson learnt from this project is that a balance must be found between allowing for such flexibility and structured financing, and introducing mitigation measures to ensure the achievement of results even when original financing sources do not come through\. One such mitigation measure could be a narrower definition of project objectives, in particular when operating in a country where institutional capacity is weak and policy strategies are still in the making\. x Institutional strengthening in project management is the pillar to success in fragile contexts, in particular for emergency operations\. As implementation capacity is sine qua non for the smooth implementation of any project, it is a crucial part of project appraisal, particularly in institutionally weak States and in emergency operations\. In the case of this project, the contracting of a fiduciary agency was seen as an alternative to be able to rapidly implement the project, but in hindsight, it was to the detriment of the project\. The lesson learnt is that for emergency projects in particular, an assessment of institutional needs (personnel, training, facilities, logistics and equipment), including the fiduciary agency, needs to be thoroughly carried out during project preparation to identify the most efficient implementation arrangements, and to provide for the strengthening of project management throughout the life of the Project\. x A flexible and timely response is critical\. In this project, as well as globally, there were high uncertainties and limited knowledge about the likelihood of a HPAI outbreak\. The preparation of a project in response to the request of the GoH was timely and the design of the project allowed for refocusing the project interventions during implementation, prioritizing the strengthening of animal health systems (over human health systems) in order to be able to detect and respond rapidly to any HPAI H5N1 outbreaks in poultry, monitor for signs of transmission of the virus to the human population, as well as detect and respond to other infectious disease outbreaks\. The achievement under the project demonstrated the importance of understanding the evolution of AI epidemiology so that control measures may be adapted to achieve the maximum sustainable impact\. The project also showed that strengthening local capacity for early detection and control of zoonotic pathogens at their animal source should be a priority for decision-makers to confront real and immediate threats to human and animal health\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 21 7\.1\.1 DPSA disagreed with the decision of the Bank and the MEF to close the project early, stressing that this decision was taken when implementation activities had finally taken off\. Bank’s response: This reaction is understandable considering the commitment of DPSA and efforts to accelerate the project\. However, the joint decision of the Bank and GoH came after several unsuccessful attempts to accelerate project implementation and was also motivated by the opportunity to group fiduciary management under RESEPAG II for higher efficiency\. 7\.1\.2 DPSA has also questioned the imposition of environmental precautions that are difficult to implement in Haiti\. Bank’s response: environmental management standards were clearly stated in the EMP submitted by the MARNDR and which underwent consultations\. 7\.1\.3 The Borrower was very satisfied with the ICR, saying it provided an exhaustive synthesis of Project activities and of the challenges it faced throughout implementation\. (b) Cofinanciers N/A (c) Other partners and stakeholders N/A 22 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 1\. Animal Health 0\.76 0\.66 87% 2\. Public health 0\.21 0\.17 80% 3\. Communication 0\.38 0\.34 89% 4\. Administration 0\.13 0\.11 85% 5\. Un-allocated 0\.07 0 - Total Project Costs 1\.56 1\.27 81% Total Financing Required 1\.56 1\.27 81% (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 0\.57 0\.3 52% AHIF TF 1\.00 0 0% IDA Grant 1\.56 1\.27 81% 23 Annex 2\. Outputs by Component The indicators related to Components were the following: Results Indicators (Component Level) Baseline Target Achieved At least two additional outbreaks responded in a given period 0 2 * 12 laboratory staff trained in AHI diagnosis by the project 0 12 6 40 communal sections adequately covered by trained staff Unknown 40 484 Development of communications strategy Draft Approved Approved Health Personnel receiving training under the project 0 42 400 * No outbreak was recorded during project implementation\. The main results per component are the following: Component 1: Animal health: financed support for prevention, surveillance, and preparedness for any AI outbreak\. It included activities to provide knowledge on the status of AI in Haiti; to strengthen facilities for early detection and mitigation of the potential impacts of AI, predominantly quarantine facilities; and to test sanitary measures in the context of small farm poultry production\. It had a national coverage and comprised three sub- components: (i) Pilot community actions through GSBs; (ii) Emergency actions; and (iii) Sub- Institutional capacity building (MARNDR)\. The outputs achieved were the following: a\. Taxonomic study of wild bird species in Haiti: This study identified the different migratory birds and collected information through 8 different areas in the country between 2010-2011\. b\. Laboratory testing of Samples: During 2009/2010 3131 samples were tested for Avian flu and 169 resulted positive; while during 2010/2011 3884 were tested and 16 resulted positive\. c\. Strengthening of the epidemiological surveillance network through the establishment of 2 GSB federations at the Departmental level (for 2 Departments bordering the Dominican Republic) and 50 at communal level\. d\. Avian flu simulation exercise: The MARNDR led a simulation exercise of the outbreak of HPAI in the country, with participation of GSBs and staff from the Ministry of Agriculture\. e\. Pilot initiatives for improved poultry management: 59 pilot initiatives in 9 Departments were implemented to train and provide materials to improve the animal health and productivity aspects of poultry production\. f\. Training: The following training activities were undertaken on animal health and avian flu by the project: i\. 5000 farmers ii\. 70 veterinary doctors iii\. 15 quarantine inspectors iv\. 6 laboratory technicians v\. 40 veterinary agents g\. Strengthening of quarantine posts: 2 quarantine posts were constructed at Belladere and Ounaminthe border crossing\. MARNDR hired 5 new inspectors and the project trained them\. h\. Improvement of internal management procedures at DPSA: A manual for administrative and financial procedures of DPSA was prepared in order for DPSA to be able to better administer government and donor funding going forward\. 24 Component 2: Human health: the project initially planned to financed support for AHI prevention and mitigation at the national level, through capacity building and epidemiologic surveillance in the human health sector, and the establishment of an outbreak response mechanism\. Activities planned included capacity building of health staff to improve the surveillance system and integration of routine surveillance systems and data; simulations to assess the state of implementation and effectiveness of public health measures; and information campaigns to increase the level of knowledge of public health staff and the population at large\. However, given the problems mentioned in this report, the only outputs achieved were the following: a\. Preparation and approval of a guide for training public health officials on avian flu and other severe influenza diseases\. b\. Training of 320 human health agents nation-wide on avian flu for improving surveillance and response\. Component 3: Communications: financed support for: (i) raising public awareness of AHI; (ii) securing political and civil society support; and (iii) preparing animal and human health institutions for increased demand for advice, products and services in case of an AHI outbreak\. It sought behavioral change to control the spread of the virus, prevent infection, strengthen surveillance, adopt biosafety procedures and reporting mechanisms, and highlight the required investments in infrastructure and institutional reforms\. a\. Strategic Communication Plan on Avian Flu: Although with delays, a strategic communications plan was prepared and approved by the Government and donors\. b\. Communications Campaign: Following the approved plan, 5000 flyers were distributed among poultry producers and 1000 posters were distributed at GSB sites and local MARNDR offices for public information\. c\. Workshops and conference: Several workshops and conferences were financed in Haiti, as well as the presentation of the avian flu situation in Haiti in international conferences on avian flu\. 25 Annex 3\. Economic and Financial Analysis The investments under the National Plan were worthwhile from an economic perspective\. The total financing package was US$ 2\.877 million, but only US$1\.4 million materialized and was spent\. The IDA grant disbursed US$1\.27 million of US$1\.56 million (81% of the Grant), while the US$ 1 million AHIF TF never materialized\. Most resources were disbursed within the final year and months before project closing and have led to the strengthening of public services and GSBs\. The specific outcomes show partial achievement in improved performance in response to outbreaks (resulting in their effective containment) and in core public health capacity related to AHI\. Today HPAI is spreading in a number of developing countries, including in the LAC region, but not in Haiti\. The benefits of these partial achievements, in particular in animal health, are clear\. In the improvements in disease monitoring and control (i\.e\., early detection, correct diagnosis, and implementation of all necessary control measures), the poultry sector would have been less prepared in case of an outbreak, and controlling the disease would have become far more costly\. Plausible assumptions about disease spread yield a benefit from preventing such a spread of between US$50 and 60 million (80% of the value of poultry production are expected to be lost due to HPAI)\. The capacity for effective disease prevention and control that has been acquired for animal health will persist into the future; however, on human health will depend on receiving adequate operating budget\. As noted above, substantial additional investments are warranted in the systems for animal health, in particular, to enable control of zoonotic diseases at the source, where contagion can be stopped most cost-effectively\. Public health systems also need further investments\. If such investments are made in the coming decade then, using conservative assumptions, the expected annual costs of prevention would be 2\.14% of the overall value of the annual poultry production value\. These attractive rates of return reflect the very strong economic case for disease prevention\. Here below are the details on the methodology and estimates of the economic analysis of the various potential avian flu control measures\. In general, the economic impacts of avian influenza include: x Direct costs arising from the losses of poultry and production due either to the disease itself and/or to control measures such as culling birds (stamping out)\. These economic impacts affect primarily the poultry producers and rural areas\. They also extend to upstream and downstream sectors such as poultry traders, feed mills, breeding farms etc\. x Indirect costs and impacts, especially in the case of H5N1 due to the fear of human transmission, arising from reduced demand from consumers, trading bans and/or a negative impact on activities such as tourism\. These indirect impacts, in turn, also affect the production sector through changes in demand and prices\. They are often magnified by uncoordinated efforts to avoid the disease and/or initial panic or confusion\. x The costs of prevention and control also need to be taken into account, including costs to the government of surveillance and diagnosis, hiring of transportation and workers for culling and disinfection, purchase of poultry vaccines or medications, etc\. Governments also face the need to pay compensation to poultry owners, which is important in inducing owners not to conceal that a bird flu outbreak has occurred\. 26  While such payment is in the nature of a transfer payment for the economy as a whole, it can impose a significant fiscal burden on the government\. The impacts on Haiti of the LPAI H5N2 outbreaks that occurred both in DR and Haiti are mostly indirect\. The cases that were confirmed did not show any clinical sign and, even in the event that LPAI H5N2 might be widespread or endemic in the island, its direct impact on production is thought to be small\. In this regard, the risk would come mainly from a possible mutation of the virus into a highly pathogenic strain\. Initial news on the first outbreaks in RD spread quickly and provoked major concern among the population, both in RD and in Haiti, as there were at first some uncertainties and confusion with HPAI H5N1 and fear of a possible risk of human transmission\. This reportedly led to a significant decrease in consumption of poultry and eggs, which affected rural as well as urban areas, but that did not last very long\. Poultry farmers met by the mission confirmed that they stopped eating poultry products for a while, until the matter was cleared and appropriate information disseminated in Haiti about the nature of LPAI H5N2\. At the same time, Haiti declared a ban on imports of poultry products from RD\. In RD, the combined effect of this ban together with the reduction in demand from domestic consumers was to create a short glut on the domestic market and downward pressure on prices\. In Haiti, since imports from RD account for a large share of domestic consumption, prices of poultry and eggs went up\. Immediate increases of egg prices by +25% are reported in the press following the announcement of the import ban by Haiti\. As the informal trade in poultry products is thought to have now been re-established, it is likely that this price hike was short- lived\. Nonetheless, the official import ban and partial substitution of imports from RD with other more expensive sources has certainly put some upwards pressure on domestic prices of poultry products in Haiti\. Methodology for economic assessment of options to deal with AI in Haiti In order to assess which measures or interventions are economically justified going forward for the prevention and control of avian influenza in Haiti, a simplified cost-benefit analysis has been developed and is presented below\. In this analysis, the costs of prevention and control measures are compared with the corresponding economic benefits, i\.e\. the reduction in economic losses from the disease that is achieved as a result of these measures\. A basic underlying assumption is that for any level or type of expenditure on disease prevention and control, that expenditure is undertaken in a way that maximizes economic benefits\. To ensure this, however, is not always an easy task\. For instance, the effectiveness and hence actual benefits of stamping out or a vaccination campaign depend on factors such as timeliness, acceptance or adoption by a sufficient number of farmers, etc\. This preliminary analysis or initial economic assessment considers only the direct impact of AI on poultry production, under different scenarios (e\.g\. HPAI, LPAI)\. As Haiti is an importing country for poultry products, it is considered that an avian influenza outbreak within the country, even if it would have a significant impact on domestic production (HPAI), would not have a significant impact on domestic prices of poultry products, since the country can continue importing from the rest of the world after the outbreak\. Price differences between different import sources on the world market are considered as negligible\. The impact on production and producers incomes would thus come only from a decrease in 27 volume (quantity) of production\.18 The indirect impacts on upstream and downstream sectors (e\.g\. poultry traders) are not considered\. The impact of an avian influenza outbreak on domestic consumers is not considered in this analysis\. Such impact would depend on the type of avian influenza, i\.e\. whether or not there is a risk of human transmission and casualties\. The avian influenza subtypes identified so far in the Latin America and Caribbean region are not known to create any human health hazards\. In other parts of the world, dissemination of the HPAI H5N1 virus has resulted in significant drops in consumers demand due to fear of human contamination\. This in turn may have an impact on domestic producers, although in an importing country like Haiti a reduced demand for poultry products would be expected to translate mainly into a reduction of imports (with no impact on domestic producer prices)\. Decrease in consumers’ welfare might nonetheless be substantial, especially as poultry products are a relatively cheap source of proteins which would have to be substituted by consumers with more expensive products\. This applies to urban consumers as well as self-consumption in rural areas\. Costs of Avian influenza prevention and control measures Costs estimates of various AI prevention and control measures are summarized in Table 3\. These estimates have been developed with the help of DPSA’s Service of Epidemiology and Veterinary Statistics\. They have been worked out on an average indicative basis\. These figures should be considered as a preliminary order of magnitude\. The costs of carrying out epidemiological surveillance and having an early warning system for avian influenza are estimated at a maximum average annual cost of about USD 500,000 per year (HTG 20 million)\. This estimate has been derived by confronting several sources including: (i) the budget allocation made by government to implement the program of epidemiological surveillance for AI; and (ii) actual expenditures on epidemiological surveillance in 2008 from various sources of funds\. The costs of stamping out or culling infected birds has been estimated on the basis of the actual costs of these emergency operations carried out by MARNDR, with an average cost of HTG 502 (about USD 12\.5) per bird stamped out\. In reality, these costs vary depending on the actual number of birds to be slaughtered at a given site as there are some economies of scale\. To this direct and immediate cost, the costs of monitoring agents after stamping out must also be added, as well as the costs of additional epidemiological surveillance after the outbreak (including sentinel birds), which brings the total to about HTG 894 (USD 22\.3) per bird stamped out\. The total costs of a national vaccination campaign for poultry is estimated at 1,25 million USD equivalent (HTG 50\.2 million)\. Details are given in Table 3\. Cost-benefit analysis of control measures for an HPAI outbreak HPAI such as the H5N1 subtype that spread over several countries since 2003 is highly contagious and leads to a mortality rate over 80% in affected poultry flocks\. Haiti is not 18 Poultry production is widespread in rural areas where it plays an important economic role in income generation, savings and nutrition\. Economic losses and impacts on the rural population of a major outbreak of HPAI and/or massive culling would therefore have a potentially devastating effect on rural areas, which might go much farther and deeper than the sole production losses\. 28 known so far to have experienced any HPAI outbreak of any subtype\. Such an outbreak could result from direct introduction through movements of birds or people, or from mutation of an existing LPAI virus (e\.g\. LPAI H5N2 into HPAI H5N2)\. In national animal disease control campaigns, the speed of detection and response is critical in stopping a highly contagious and severe disease such as HPAI from spreading\. Current FAO/OIE procedures for control of a HPAI outbreak call for immediate ‘stamping out’ operations as the most appropriate response, which necessitates destruction of all infected and ‘at high risk’ poultry in a defined radius around infected areas\. To be effective, stamping out must be accompanied by control of poultry movement, proper disposal of carcasses and infective material, and post-cull cleaning of affected farm structures\. The compensation offered to the producer/ farmers for culled poultry is a crucial aspect of the scheme in order to encourage early reporting of outbreaks, while also encouraging individual preventative measures at farm level\. Vaccination as a support strategy may be considered when the disease has spread to such an extent that it has overwhelmed the resources of disease control authorities or the economic cost of a widespread slaughter campaign cannot be borne\. It can also be considered at an earlier stage when veterinary service infrastructures and capacities prove to be very weak and insufficient to curb the spread of the disease\. Depending on the incidence and distribution of outbreaks, vaccination may be undertaken around outbreaks (ring vaccination) or throughout the poultry population (mass vaccination)\. Vaccination, when it is applied, must be done in combination with other disease control measures, including the slaughter of affected flocks, and should be accompanied with an exit strategy\. The high cost of vaccination compared to its perceived benefits, particularly for village producers, makes it difficult to sustain over a prolonged period\. According to current OIE recommendations, HPAI-vaccinated poultry are not excluded from international trade, although specific technical guidelines must be followed to ensure that the vaccine is being applied properly and monitored effectively\. However, a vaccination campaign which is not managed appropriately is likely to result in the virus becoming endemic\. Improperly vaccinated poultry flocks may perpetuate undetected virus circulation through partially protected birds and remain a source of infection for other birds\. The cost and logistic challenges of widespread vaccination, especially in backyard poultry, are major constraints on effective use of vaccines\. Total value of primary poultry production in Haiti is estimated at HTG 2,351 million (Table 4)\. The total costs of a national vaccination campaign (HTG 47\.5 million) represent less than 2% of this amount\. If it is assumed that an outbreak of HPAI, left uncontrolled, could potentially result in a production loss of up to 80% of the national flock, vaccination as a preventive measure might be an economically valid proposal if the probability of such HPAI outbreak is estimated to be at least once every 40 years\. In comparison, the Newcastle disease is estimated to kill some 20-30% of domestic poultry in Haiti every year\. However, implementation of an effective vaccination campaign for backyard poultry at the national level would be very difficult\. In case of an outbreak, stamping out would be a valid alternative to vaccination (break-even) if it can be limited to a maximum of about 55,000 head nationwide (i\.e\. 1% of the total national poultry flock at risk)\. In other words, stamping out is economically justified in comparison with vaccination if the destruction of one bird enables to 29 avoid the contamination of maximum 100 birds\. The total cost of stamping out per bird (HTG 891) is over twice higher than the average value of production per bird (HTG 428)\. Cost-benefit analysis of control measures for LPAI In contrast with HPAI H5N1, LPAI such as the H5N2 subtype detected in RD and Haiti does not cause significant mortality in poultry\. In most cases, clinical symptoms of are not perceptible, therefore diagnosis can be confirmed only by laboratory analysis\. The main problem with LPAI is the potential risk of mutation of the virus into HPAI\. However, unlike HPAI H5N1, HPAI H5N2 has not resulted so far in any human casualties elsewhere in the world\. The factors that bring about mutation from LPAI to HPAI are not known\. The probability is generally thought to be low, especially in traditional backyard poultry production systems which seem to be less conducive to virus mutation than intensive commercial production systems\. Decisions on appropriate control measures for LPAI H5N2 would require an improved knowledge of the present status of this disease in Haiti\. In case the disease would already be endemic in Haiti, stamping out measures are ineffective to eradicate the disease, unless they would be carried out on a large scale with costs largely exceeding the very uncertain benefit of ‘avoiding a virus mutation’\. In case the disease would be circumscribed to certain areas or production systems, a combination of stamping out and/or targeted vaccination might be envisaged\. Improving epidemiologic knowledge of LPAI H5N2 in Haiti has itself a cost which should be taken into account before deciding how to proceed, especially in comparison with the possibility to allocate corresponding funds to other animal diseases that are of more concrete and immediate concern to farm producers in Haiti\. This exercise is based on the assumption of taking actions at a binational level, breaking therefore the prisoner’s dilemma and moving towards a higher equilibrium where both parties benefit from a single approach to avian flu prevention and control\. 30 TABLE 1 SEROLOGICAL RESULTS FOR DETECTION OF AVIAN INFLUENZA Programme de Vigilance épidémiologique de la Grippe Aviaire Résultats des analyses de laboratoire Période Septembre 2006 - 2 Octobre 2007 1er test/ ELISA 2ème test H5N1 3ème test AGD Département Qté Pos Nég Pos Nég Pos Nég Nord Est 168 2 166 0 2 0 2 Ouest 236 10 226 0 10 0 10 Sud 240 16 224 0 16 0 16 Grand Anse 403 68 335 0 68 0 68 Centre 436 18 418 0 18 0 18 Artibonite 192 22 170 0 22 0 22 Nippes 88 4 84 0 4 0 4 Nord Ouest 117 2 115 0 2 0 2 Nord 482 11 471 0 11 0 11 Sud Est 173 2 171 0 2 0 2 TOTAL 2535 155 2380 0 155 0 155 6,1% Période Octobre 2007 - 7 Mars 2008 1er test 2ème test 3ème test Département Qté Pos Nég Pos Nég Pos Nég Nord Est 100 8 92 2 98 0 0 Centre 318 29 289 0 318 0 0 Nippes 18 1 17 0 18 0 0 Nord 149 10 139 3 146 0 0 Nord Ouest 70 5 65 0 70 0 0 Sud 21 2 19 0 21 0 0 Ouest 676 55 621 5 671 0 0 Grand Anse 0 0 0 0 0 0 0 Haut Artibonite 194 2 192 2 192 0 0 Sud Est (Thiotte) 254 0 254 0 254 0 0 TOTAL 1800 112 1688 12 1788 0 0 6,2% Période Janvier 2008 - Février 2009 Echantillons Elisa AGD Département Collectés Eliminés Pos Nég Pos Nég Nord Est 669 31 4 634 0 4 Ouest 1123 9 65 1049 1 64 Nord Ouest 229 24 6 199 0 6 Nord 447 10 2 435 0 2 Bas Artibonite 121 0 3 118 0 3 Sud Est 637 0 1 636 0 1 Nippes 226 0 3 223 0 3 Grand Anse 100 0 4 96 0 4 Haut Artibonite 194 0 2 192 0 2 Sud 210 0 3 207 0 3 Centre 1092 55 59 978 5 54 TOTAL 5048 129 152 4767 6 146 2,56% 3,1% Source: MARNDR, Direction Santé Animale (DSA) - Service Epidémiologie et Statistiques Vétérinaires 31 TABLE 2 EMERGENCY MEASURES IMPLEMENTED BY MARNDR TO CONTROL LPAI H5N2 OUTBREAKS Intervention d'Urgence contre l'Influenza aviaire MARNDR Volailles abattues par jour dans les différents Départements Poule Département TOTAL indigène Dinde Pintade Pigeon Canard Nippes - 1 foyer 213 179 13 0 6 15 Mercredi 5 août 190 156 13 0 6 15 Jeudi 6 août 23 23 0 0 0 0 Centre - 1 foyer Intervention retardée - en cours prochainement Nord - 2 foyers 519 426 13 0 5 75 Mercredi 5 août 519 426 13 0 5 75 Nord-Est - 2 foyers 172 0 0 0 0 0 Mercredi 5 août 172 0 0 0 0 0 GRAND TOTAL 904 605 26 0 11 90 ( 5 foyers traités) Coût des opérations par Département 40 1 Montant Equiv\. Département HTG per animal USD per animal Nippes - 1 foyer 67 325 316 1 683 7,9 Compensation des éleveurs 30 750 144 769 3,6 Primes et divers 36 575 172 914 4,3 Centre - 1 foyer Nord - 2 foyers 256 365 494 6 409 12,3 Compensation des éleveurs 182 475 352 4 562 8,8 Primes et divers 73 890 142 1 847 3,6 Nord-Est - 2 foyers 129 780 755 3 245 18,9 Compensation des éleveurs 60 525 352 1 513 8,8 Primes et divers 69 255 403 1 731 10,1 GRAND TOTAL 453 470 502 11 337 12,5 Compensation des éleveurs 273 750 303 6 844 7,6 Primes et divers 179 720 199 4 493 5,0 ( 5 foyers traités) Inclut seulement le coût immédiat des opérations - n'inclut pas le coût des agents de suivi (1 agent par foyer, 2500 HTG/mois par agent, 9 mois) Source: MARNDR, Filière de Protection Sanitaire/ Direction Santé Animale (DSA), Service de Prophylaxie - Rapport des Activités d'Opérations de Compensation et d'Elimination de volailles Infectées avec le virus d'Influenza aviaire faiblement pathogène 32 TABLE 3 COSTS OF PREVENTION AND CONTROL MEASURES FOR AVIAN INFLUENZA Mesures de prévention et de lutte contre l'influenza aviaire Estimations de coûts A\. Epidemiological surveillance average annual cost USD 500 000 HTG 20 000 000 B\. Stamping out of infected and susceptible birds direct cost per bird HTG 502 equivalent to USD 12,5 (details in Annex 2) monitoring costs * HTG 124 sentinellisation costs ** HTG 268 total cost per bird HTG 894 equivalent to USD 22,3 * based on 1 monitoring agents per outbreak site at a cost of HTG 2 500 per month for a duration of 9 months i\.e\. a cost of HTG 22 500 per outbreak site for an average of 181 birds stamped-out per outbreak site * * based on following parameters: 2 cages per outbreak site 7 000 HTG per cage 24 sentinel birds per cage 350 HTG per sentinel bird 8 feed bags per cage 1 100 HTG per feed bag total 48 400 HTG per outbreak site C\. Vaccination campaign number of units (poultry) to be vaccinated 5 500 000 cost of one dose of vaccine 5 HTG number of vaccination teams 6 000 daily cost of a vaccination team * 500 HTG number of days ** 4,58 subtotal HTG 41 250 000 equivalent to USD 1 031 250 ice HTG 300 000 syringes ** HTG 8 250 000 fuel for cars HTG 400 000 grand total HTG 50 200 000 equivalent to USD 1 255 000 * indemnities for the two members of a vaccination team * * based on estimate of 200 units (heads of poultry) vaccinated per day per team 1,50 HTG per syringe Source: MARNDR, Direction Santé Animale (DSA) - Service Epidémiologie et Statistiques Vétérinaires 33 TABLE 4 COST-BENEFIT ANALYSIS OF AI PREVENTION AND CONTROL MEASURES Control measures for an HPAI outbreak Annual Farmers annual production price value (no\. units) (HTG) (HTG million) chicken 8 900 000 250 2 225,0 eggs 21 000 000 6 126,0 total 2 351,0 average per head in national flock (HTG) 427,5 costs of national vaccination campaign 50,2 % of annual production value 2,14% stamping out no\. birds % total flock total costs (HTG million) 1 000 0,02% 0,9 5 000 0,09% 4,5 10 000 0,18% 8,9 20 000 0,36% 17,9 55 000 1,00% 49,2 100 000 1,82% 89,4 5 500 000 100,00% 4 915,7 cost per head (HTG) 894 percentage of average production per head 209% 35 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Solange A\. Alliali Senior Counsel LEGAM Jean-Claude Balcet Consultant LCSTR Mario E\. Bravo Sr Communications Officer EXTOC Peter Cohen Consultant AFTFW Indira Janaki Ekanayake Sr Agriculturist AFTA3 Beatriz Elena Franco Program Assistant LCC1A Ross Alexander Gartley Consultant LCSUW Joana Godinho Sector Manager LCSHH Marie Khoury Consultant CTRLA Harideep Singh Senior Rural Development Speci EASER Fily Sissoko Lead Financial Management Spec AFTMW Yao Wottor Senior Procurement Specialist LCSPT Supervision/ICR Christelle Bernardin Temporary LCCHT Ross Alexander Gartley Consultant LCSUW Joana Godinho Sector Manager LCSHH Natalia Gomez Senior Rural Development Speci LCSAR Fernando Montenegro Torres Sr Economist (Health) LCSHH Glenn S\. Morgan Regional Safeguards Adviser LCSDE Joseph Kizito Mubiru Sr Financial Management Specia LCSFM Rachel Hannah Nadelman Consultant LCSAR Alois Ndorere E T Consultant LCSPT Erika Eliana Salamanca Program Assistant LCSAR Duenas Maryanne Sharp Country Operations Adviser LCSOS Fily Sissoko Lead Financial Management Spec AFTMW Nko Etesin Umoren Resource Management Analyst AFTRM Christina Ariani Wartenberg Junior Professional Associate LCSAR Yao Wottor Senior Procurement Specialist LCSPT (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY09 4\.76 13\.23 Total: 13\.23 36 Supervision/ICR FY 10, 11, 12, 13 50\.53 253\.78 Total: 253\.78 37 Annex 5\. Beneficiary Survey Results N/A 38 Annex 6\. Stakeholder Workshop Report and Results N/A 39 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR At the end of the 1990s, the world faced a serious threat from Avian Influenza\. The H5N1 virus subtype was causing the death of several hundred million domestic poultry in Asia, then in Africa\. From 2003, human mortality cases were observed, which created the fear that a pandemic could surge at any moment if the virus was transmissible between humans\. The spectrum of the 1918 avian influenza pandemic reappeared and the different scenarios presented by international and competent institutions contributed to enhance the concern based on the estimation of loss of human life\. In the meanwhile, the Republic of Haiti was struggling with the with precarious veterinary and sanitary infrastructures\. But like other countries it took dispositions to protect the territory and prepare itself for an eventual contamination by highly pathogenic avian influenza\. In this context working groups on influenza were established in the Ministries of Agriculture and Public Health with the collaboration of international and regional institutions, especially WHO and PAHO, and with the participation of concerned public institutions and NGOs\. Training sessions and diagnostic activities had started for three sub-types, including H5N1\. Field investigations initiated in 2006 did not reveal the presence of any high pathogenic or low pathogenic sub-type in Haiti until 2008\. Veterinary services of the Dominican Republic discovered the H5N2 low pathogenic subtype by chance, during the carrying out of routine tests on mothers of fight cocks that were going to be exported to Colombia\. In Haiti, this sub-type was identified by MARNDR´s veterinary laboratory, from tests carried out by the DPSA on chicken living next to the Haitian-Dominican border or to public markets in the North department\. The Ames laboratory in Iowa, United States, which is the laboratory of reference for avian influenza, confirmed the diagnostic\. Despite some investment efforts in avian influenza prevention in Haiti, several structural weaknesses existed in veterinary matters\. The institutional capacity and know-how revealed to be inadequate to face a H5N1 epizootic associated with human cases\. Given the cosmopolitan character of the disease and its implications for trade, it became necessary to look at the avian influenza character with a regional or at least bi-national perspective\. The World Bank and the Government of Haiti agreed to start in October 2009 an Avian Influenza Prevention and Control Project (PRECONIA), in which key participating actors would be MARNDR and MSPP, in terms of interventions in the field\. A similar project was agreed with the Dominican Republic to allow the two countries of the Hispaniola Island to harmonize their actions in the fight against avian influenza and to better prepare themselves to face a pandemic threat\. The project was conceived to receive two grants with respective amounts of US$1 million and US$1\.5 million\. Due to administrative delays imputable to the World Bank, the first grant was cancelled before the project started\. The project had four components, which were : Animal Health, Public Health, Communication, and Management\. The objectives of component 1 were to have, at any moment, updated data on the avian influenza situation in the country, to equip the country 40 with an organizational structure able to provide early alerts in case of suspicion of high pathogenic avian influenza cases and to apply sanitary measures, to reinforce animal quarantine structures across the country, to have an operational and efficient notification system for morbidity cases, to eliminate the presence of any clinical case and the circulation of high pathogenic avian influenza sub-types or of sub-types subject to compulsory declaration to WHO\. The objectives of component 2 were to strengthen diagnostic and surveillance capacity in the human health sector, to establish an organizational system able to rapidly apply urgent sanitary and medial measures in the case of human diseases, as well as response mechanisms ; to train human health professionals on avian influenza and acute respiratory diseases, to carry out systematic avian influenza detection studies in sentinel sites on any person having a respiratory disease\. The objectives of component 3 were to develop the national capacity before ad during urgent situations on avian influenza to inform the public, to increase public awareness on differences between seasonal flu, avian flu, and a pandemic flu, to prepare the public on ways to prevent and reduce the incidence of pandemic flu, to strengthen capacity at the national level on epidemiological vigilance and alert triggering, to increase active epidemiological surveillance of acute respiratory infections, to carry out monitoring and evaluation of the implementation of the national plan on anti-pandemic preparation, and to develop the collaboration with the Dominican Republic\. Component four was to ensure project administration and implementation through the Project Coordination Unit\. DPSA, under MARNDR, was chosen to carry out animal health activities and to ensure project coordination\. MSPP was responsible for implementing prevention and surveillance activities in coordination with MARNDR\. IICA was chosen through an agreement with the World Bank, approved by MARNDR, for procurement and fiduciary management of the project\. The main project beneficiaries were the « Gwoupman Sante Bèt » (GSB), professionals of DPSA, NGOs and partner institution involved in poultry farming and health, the Direction of quarantine, under MARNDR, and public health service providers\. The main difficulties and obstacles encountered by the project were the lack of experience of institutions with the implementation and management of projects financed by the World Bank; the absence of a procurement specialist in the staff of DPSA, MSAPP, and IICA; the delays to prepare the bidding documents, the weakness of logistics (only one vehicle for MARNDR and MSPP), the fact that the veterinary laboratory was dysfunctional in 2012, the disbursement by tranches adopted by IICA and the need to justify all expenses requests before any new disbursement\. Several lessons can be extracted from the project´s implementation\. - The management of projects varies considerably between sources of financing - The knowledge of the administrative and fiduciary management procedures of the financing institution are an important determinant of project success - The institutional arrangements play an important role in the fluidity and frequency of actions that the Project must undertake in the field 41 - PRECONIA´s institutional arrangements revealed to be cumbersome and unpractical - The communication between the different participants in the project is fundamental for the smooth implementation of activities\. - Considerable delays were an important source of frustration for technicians responsible for management of this project, especially for those who think they provided their best efforts - The success of projects financed by the World Bank and the Inter-American Development Bank and implemented by MARNDR cannot be guaranteed with the remuneration policy of these agencies, which offers different salaries for technicians of equal competency - Minimum procurement knowledge is required for each person participating in project management to increase chances of project success - Project coordination has gained a better knowledge of procurement and Bank procedures\. 42 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders N/A 43 Annex 9\. List of Supporting Documents - Borrower Completion Report (BCR), October 2012 - Project ISRs, Aide Memoires, and Management Letters - Animal Health Programmatic Investment Plan 2012-2017, MARNDR 2012\. - Project Progress Reports 44

REVIEW

P089659

Document of The World Bank Report No\. ICR115771 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA GUARANTEE NO\. B0130) ON AN INTERNATIONAL DEVELOPMENT ASSOCIATION PARTIAL RISK GUARANTEE IN THE AMOUNT OF UP TO US$115 MILLION TO THE REPUBLIC OF UGANDA FOR A PRIVATE POWER GENERATION (BUJAGALI) PROJECT September 21, 2018 Energy and Extractives Global Practice Country Department AFCE2 Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective September 1, 2018) Currency Unit = Uganda Shilling (U Sh) US$1\.00 = U Sh 3,771 FISCAL YEAR July 1 - June 30 (Government of Uganda) January 1 - December 31 (Bujagali Energy Limited) ABBREVIATIONS AND ACRONYMS AfDB African Development Bank APRAP Assessment of Past Resettlement and Action Plan BEL Bujagali Energy Limited BEMC Bujagali Environment Monitoring Committee BP Bank Policy CDAP Community Development Action Plan CFR Central Forest Reserve DEG Deutsche Investitions und Entwicklungsgesellschaft (German Investment Corporation) DFI Development Finance Institution DSCR Debt Service Coverage Ratio EIB European Investment Bank EPC Equipment, Procurement, and Construction EIRR Economic Internal Rate of Return ERT III Energy for Rural Transformation Phase III Project ESIA Environmental and Social Impact Assessment GoU Government of Uganda GWh Gigawatt Hour HPP Hydropower Project IA Indemnity Agreement ICR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IPN Inspection Panel IPP Independent Power Producer ISR Implementation Status and Results Report JICA Japan International Cooperation Agency KFS Kalagala Falls Site KfW Kreditanstalt fur Wiederaufbau kW Kilowatt kWh Kilowatt Hour LCOE Levelized Cost of Electricity LTCOR Long Term Conservation Options Report MAP Management Action Plan MW Megawatt ii M&E Monitoring and Evaluation MIGA Multilateral Investment Guarantee Agency NEA National Environmental Act NEMA National Environmental Management Agency NPV Net Present Value O&M Operation and Maintenance OP Operational Policy PAD Project Appraisal Document PDO Project Development Objective PEAP Poverty Eradication Action Plan PoE Panel of Experts PPA Power Purchase Agreement PPP Public-Private Partnership PRG Partial Risk Guarantee Proparco Promotion et Participation pour la Coopération Economique REFIT Renewable Energy Feed in Tariff SEA Social and Environmental Assessment SMP Sustainable Management Plan SSEA Strategic/Sectoral Social and Environmental Assessment UEDCL Uganda Electricity Distribution Company Limited UETCL Uganda Electricity Transmission Company Limited Umeme Umeme Company Limited (Electricity Distribution Company in Uganda) UJAS Uganda Joint Assistance Strategy WACC Weighted Average Cost of Capital WMDP Water Management and Development Project WTP Willingness to Pay Vice President:Hafez M\. H\. Ghanem Riccardo Puliti Senior Global Practice Director: Lucio Monari Global Practice Director: Country Director:Carlos Felipe Jaramillo Practice Managers: Sudeshna Ghosh Banerjee, Sebnem Erol Madan Project Team Leader: Mitsunori Motohashi ICR Team Leader: Raihan Elahi ICR Primary Author: Enrique Crousillat, Kenta Usui iii  UGANDA Private Power Generation (Bujagali) Project (P089569) CONTENTS DATA SHEET A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring (if any) 1\. Project Context, Development Objectives, and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 5 3\. Assessment of Outcomes \. 21 4\. Assessment of Risk to Development Outcome\. 24 5\. Assessment of the Guarantee in support of the Project \. 26 6\. Assessment of Bank and Borrower Performance \. 27 7\. Lessons Learned \. 29 8\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 32 Annex 1\. Project Costs and Financing \. 33 Annex 2\. Outputs by Component \. 34 Annex 3\. Economic and Financial Analysis \. 36 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 40 Annex 5\. Beneficiary Survey Results \. 43 Annex 6\. Stakeholder Workshop Report and Results\. 44 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 45 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 46 Annex 9\. List of Supporting Documents \. 47 Map \. 49 iv DATA SHEET A\. Basic Information UG - Private Power Country: Republic of Uganda Project Name: Generation (Bujagali) Project Project ID: P089659 L/C/TF Number(s): n\.a\. ICR Date: September 20, 2018 Guarantee Number B0130 Lending Instrument: IDA Guarantee ICR Type: Core ICR Beneficiary of Bujagali Energy Limited Guarantee: Guarantee Type PRG Original Guarantee US$115 million Amount (US$ m): Guarantor: IDA Ministry of Energy and Responsible Agency: Mineral Development Revised Guarantee n\.a\. Amount: Outstanding Guarantee US$ 65\.998 million Environmental A – Full Assessment Amount: Category: Implementing Agency: BEL Project Sponsors - Industrial Promotion Services (Kenya) Ltd\., Sithe Global, and the Government US$199\.76 million of Uganda European Investment Bank (EIB) US$136\.00 million International Finance Corporation (IFC) US$128\.37 million Co-financiers and Other Commercial Banks (IDA guaranteed lenders) US$115\.00 million External Partners: African Development Bank (AfDB) US$111\.00 million Netherlands Development Finance Company US$82\.10 million (FMO) Proparco US$59\.18 million German Investment Corporation (DEG) US$59\.02 million French Development Agency (AFD) US$12\.80 million B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/18/2006 Restructuring(s): n\.a\. v Appraisal: 03/07/2007 Mid-term Review: 12/15/2009 n\.a\. Guarantee 04/26/2007 Project Closing: 06/30/2012 08/01/2012 Approval: Operation Committee 03/05/2007 Guarantee Expiry 11/30/2023 11/30/2023 Approval: Guarantee 06/22/2007 Effectiveness: C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at Quality at Entry No None any time (Yes/No): (QEA): Problem Project at any time Quality of Supervision No None (Yes/No): (QSA): DO rating before n\.a\. Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Power 100% 100% Theme Code (as % of total Bank financing) Infrastructure services for private sector development 100% 100% vi E\. Bank Staff Positions At ICR At Approval Vice President: Hafez M\. H\. Ghanem Hartwig Schafer (Acting) Country Director: Carlos Felipe Jaramillo Judy O’Connor Country Manager Antony Thompson Grace Yabrudy Sudeshna Ghosh Banerjee, Sebnem Practice Manager: S\. Vijay Iyer Erol-Madan Project Team Leader: Mitsunori Motohashi Malcolm Cosgrove-Davies ICR Team Leader: Raihan Elahi n\.a\. ICR Primary Author(s): Enrique Crousillat, Kenta Usui n\.a\. F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project’s main objective is to provide least-cost power generation capacity that will eliminate power shortages at the time of its commissioning\. The proposed project would represent an increase of 250 MW of least cost installed power generation capacity to the national grid\. Revised Project Development Objectives (as approved by original approving authority) None (a) PDO Indicators Baseline Original Target Values (from Actual Value Achieved at Indicator Value approval documents) Completion or Target Years Electricity generated (GWh) from the 1,165 1,352\.7 n\.a\. proposed 250 MW (first year of operation) (16 percent above the target) Bujagali HPP Levelized cost of 7\.69 for high hydrology–11\.37 for electricity (U\.S\. 5\.7 for high hydrology–9\.7 for n\.a\. low hydrology cents/kWh) from the low (base) hydrology 9\.47 for ICR “base case” hydropower plant Unmet electricity Load shedding eliminated upon the demand n\.a\. 0 commissioning of Bujagali (GWh/month) Hydropower Project (HPP) vii (b) Intermediate Outcome Indicators Original Target Actual Value Achieved at Indicator Baseline Value Values (from approval Completion or Target Years documents) All borrowers Financial closure and Achievement of and lenders first disbursement Achieved on December 21, 2007 financial closure indicated intent achieved in 2007 The plant started operation on Construction to be August 1, 2012, but was handed Plan construction n\.a\. completed in 44 months over on October 8, 2012, that is, a progress from financial closure delay of 13\.6 months from financial closure\. G\. Ratings of Project Performance in ISRs No\. Date ISR Archived DO IP 1 6/26/2007 Satisfactory Satisfactory 2 12/18/2007 Satisfactory Satisfactory 3 6/27/2008 Satisfactory Satisfactory 4 3/26/2009 Satisfactory Satisfactory 5 4/3/2010 Satisfactory Satisfactory 6 8/9/2010 Satisfactory Satisfactory 7 7/30/2014 Satisfactory Satisfactory 8 4/27/2016 Satisfactory Moderately Satisfactory H\. Restructuring (if any) None viii 1\. Project Context, Development Objectives, and Design 1\.1 Context at Appraisal Country and Sector Context 1\. At the time of the preparation of the Private Power Generation (Bujagali) Project in 2007, Uganda had experienced a robust macroeconomic performance, with growth averaging 6\.4 percent between 1990 and 2005\. However, despite a parallel progress in reducing the national poverty level from 56 percent in 1992 to 31 percent in 2006, the population in the rural areas remained vulnerable, with rural poverty accounting for 90 percent at the national level\. Although Uganda had made substantial progress toward achieving the Millennium Development Goals, there remained significant gaps in socio-economic outcomes\. 2\. Uganda’s demographic was characterized by a very high population growth (3\.5 percent in 2005), very high fertility, the world’s highest dependency ratio, and a low life expectancy (49 years at birth)\. Infrastructure was perceived to be a vital element to boost economic growth necessary to lift the people in the country out of poverty\. 3\. The power sector of Uganda was suffering from a major power shortage\. Uganda’s power generation was dependent on the 380 MW Nalubaale and Kiira dam complex\. Due to a severe drought in the region in 2004 output from the Nalubaale and Kiira dropped to 120 MW\. The crisis was aggravated by rapid increase of demand, as well as high level of technical and non-technical losses (estimated at 44 percent in 2005)\. Consequently, electricity supply was characterized by extensive load-shedding, and many large businesses had to rely on high-cost captive backup diesel generating units\. Manufacturing, high-value agriculture, and processing industries were the most affected by the electricity supply shortfall\. The cost of unserved energy was estimated at US$38\.9¢/kWh\. 4\. To address this urgent situation, the Government of Uganda (GoU) contracted three 50MW thermal generation plants running on costly Automotive Diesel Oils, as well as 10MW power import from Kenya on a non-firm basis\. The cost of electricity purchase from the thermal generation plants was approximately US¢20-25/kWh\. The incremental energy cost from these emergency thermal plants was subsidized by the Government rather than being recovered through tariff increases to consumers\. This resulted in macroeconomic consequences including a higher- than-expected inflation and a widening of the trade deficit due to high oil prices and increases in diesel fuel import for power generation\. The situation was not sustainable and further delays in augmenting the country’s power generating capacity through less expensive technologies threatened to undermine the economy\. 5\. The power crisis was aggravated by the failure of the first attempt to build the Bujagali Hydropower Project (HPP) through private investment (supported by the World Bank Group and other lenders) that collapsed in late 2003, thus exacerbating the urgency to commission emergency/high-cost power generation facilities\. 6\. The power sector strategy of the GoU was to (a) promote legal, regulatory, and structural sector reform, including leveraging private sector investment; (b) provide adequate, reliable, and least-cost power generation; and (c) scale up rural access, which was as low as 8 percent, to underpin broad-based development\. Considerable progress was made in the implementation of a comprehensive power sector reform with the support of the donor community, including the World Bank Group\. Such progress included the promulgation of a new Electricity Act in 1999, 1 establishing an independent Electricity Regulatory Authority in 2000 and unbundling the state- owned Uganda Electricity Board into separate entities responsible for generation, transmission, and distribution in 2001\. 7\. Uganda’s 2004 Poverty Eradication Action Plan (PEAP) states the country’s ambitions of eradicating mass poverty and of becoming a middle-income country in the next twenty years\. The PEAP presents specific policies and measures to achieve its objectives, grouped under five pillars: (a) economic management; (b) enhancing competitiveness, production and incomes; (c) security, conflict resolution, and disaster management; (d) governance; and (e) human resources development\. Energy sector development was included in the pillar (b) and focused on private sector-led investment in generation and increased rural electricity access\. Rationale for World Bank Assistance 8\. The World Bank participation in the project was justified by the following reasons: (a) electricity was a critical element of the GoU’s PEAP; (b) the combined financial resources of the World Bank Group and other international development finance institutions (DFIs) were essential to mobilize the substantial private funds and commercial lending for the project; and (c) to make private sector investment in Uganda power generation happen and remain effectively engaged in the overall power sector reform initiative\. 9\. The Bujagali HPP was a landmark engagement with many firsts to its name\. For the World Bank Group, the project represented a first hydropower project in Africa after a relatively long period of absence in the sector\. Therefore, it represented a test on its capability in helping mobilize the required financing and contributing toward the application of best practices on hydropower development\. For Sub-Saharan Africa, it was among the initial group of hydro independent power producer (IPP) project\. 10\. The Bank has been a reliable development partner in Uganda’s journey to reform its power sector and deliver electricity services to its citizens\. The Power Sector Development Operation (US$300 million, approved in 2007) combined Policy Support Program and Specific Investment Loan to contract 50MW thermal plant in Mutundwe, improve energy efficiency and partially cover the cost of emergency power supply\. The Energy for Rural Transformation Project Phase I (US$62 million, approved in 2001) increased access to electricity by expanding the distribution network and strengthening the regulatory agency\. The Privatization and Utility Sector Reform Project (US$48\.5 million, approved in 2000) was developed to improve quality, coverage and economic efficiency of commercial and utility services\. Higher Level Objectives to which the Project Contributes 11\. A key objective of the 2005-2009 Uganda Joint Assistance Strategy (UJAS) was to reduce poverty through rapid economic growth\. Reliable and affordable power is critical to attract investment and promote growth\. In this regard, the project constituted a major contribution in support of the GoU’s power sector strategy that aimed to improve service delivery and reliability of supply through private sector participation and to expand access to clean and reliable electricity for households, industries, and social infrastructure\. Achieving these goals would contribute toward poverty reduction through income and employment generation, thereby improving the quality of life in Uganda\. Also, in offering energy of lower cost, the project would free budgetary resources that the GoU could direct to health, education, and other activities benefiting the poor\. 2 Extended Monitoring Period Prior to the ICR 12\. The Uganda Private Power Generation (Bujagali) Project closed in August 1, 2012, following the commercial operation of the Bujagali HPP\. The power plant was however handed over to Bujagali Energy Limited (BEL) on October 8, 2012\. This ICR has been completed in August 2018 to address (i) the implementation of Management Action Plan (MAP) developed in response to the 2007 Inspection Panel Investigation Report, and (ii) the GoU request to BEL to refinance its outstanding debt to reduce electricity cost of Bujagali Power Plant\. The seventh and final progress report of the MAP implementation, dated February 2018, noted that the MAP has been fully implemented, following issuance of the two outstanding land titles that were indicated as pending in the sixth progress report (February 2017)\. On July 24, 2018 the Bank issued the Refinancing Time Notice to the GoU confirming that refinancing became effective of July 20, 2018\. Given the completion of the MAP implementation and the refinancing of the Bujagali Power Plant, the ICR has been prepared to fully take stock and evaluate the project\. Following a standard ICR practice of Guarantee operations, where the ICR is prepared within a year of project closure, the ratings of the project are based on events that took place during the standard ICR period\. However, to benefit from the long monitoring period of 6 years after the project close, the ICR is enriched with post-closure events, which did not affect the project ratings\. These issues are reflected in section 2\.5 (post completion/next phase), section 7 (lessons learned), and other non- rating sections\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 13\. The project’s main objective was to provide least-cost power generation that will eliminate power shortages\. The project’s outcome indicators were: • Electricity generated (GWh) from the proposed 250 MW Bujagali HPP; • Levelized cost of electricity (U\.S\. cents/kWh) from the hydropower plant; and • Unmet electricity demand (GWh/month)\. 14\. In addition, two intermediate milestones/outputs were set to monitor the project’s progress during implementation\. Table 1\. PDOs and Key Indicators PDO Project Outcome Indicators Target To provide least-cost power Electricity generated (GWh) from 1,165 the proposed 250 MW Bujagali HPP generation capacity that will (first year of operation) eliminate power shortages Levelized cost of electricity (U\.S\. 5\.7 for high hydrology–9\.7 for low cents/kWh) from the hydropower (base) hydrology plant Unmet electricity demand 0 (GWh/month) Intermediate Milestones/Outcomes Power plant is Achievement of financial closure Financial closure and first disbursement commissioned on time and achieved by 2007 budget Plant construction progress Construction to be completed in 44 months from financial closure 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 15\. No changes were made to the PDO or to the related key performance indicators\. 3 1\.4 Main Beneficiaries 16\. The project was a public-private partnership (PPP) between the private project sponsors (Industrial Promotion Services [Kenya] Ltd\. and Sithe Global), the GoU (including Uganda Electricity Transmission Company Limited [UETCL]), multilateral and bilateral development agencies (detailed below), and commercial lenders\. The commercial lenders, Absa Capital (South Africa) and Standard Chartered Bank (United Kingdom), were the beneficiaries of IDA’s Partial Risk Guarantee (PRG)\. 17\. In a broader sense, the project was aimed to benefit all electricity consumers—residential, commercial, and industrial—connected to Uganda’s power grid, as well as the Government, through the project’s contribution in eliminating power shortages and providing electricity service at lower cost and of better quality\. 1\.5 Original Components (as approved) 18\. The approved project included one component: an IDA PRG for the privately owned 250 MW run-of-the-river hydropower plant located at the Bujagali Falls, Victoria Nile River, approximately 8km downstream of the existing Nalubaale/ Kiira hydropower complex\. The design of the hydropower plant includes a reservoir with adequate capacity to run the plant for about 10 hours at peak output without any water inflow\. Its main structures are an intake powerhouse complex and a rock-filled dam with a height of about 30 meters, together with a spillway and associated works\. The project was structured as an IPP to be developed by an already selected sponsor (through its private project company Bujagali Energy Limited [BEL]) and to sell electricity to UETCL under a 30-year Power Purchase Agreement (PPA)\. The project’s financing plan was completed by loans from the European Investment Bank (EIB), the African Development Bank (AfDB), and a set of European DFIs1 for a total of US$382 million\. Annex 1 presents a summary of the project’s financing plan as foreseen during appraisal and the actual v alues at completion\. 19\. The IDA PRG of up to US$115 million was designed to support the abovementioned commercial lenders participating in the financing of the project\. The PRG covers commercial lenders against debt service default arising from the government’s failure to meet its payments obligations with respect to making a compensation or other payment upon termination of the Implementation Agreement or the PPA (or at any other time under) by reason of any of the following categories of events: (a) political force majeure, (b) changes in law and events making the project contractual agreements unenforceable or void, (c) Government-imposed restrictions on the ability of BEL to be paid or to receive foreign currency or transfer funds abroad, and (d) failure of the Government to fulfill its payment obligations relating to UETCL’s purchase of power and termination payments due by UETCL\. The PRG expires in November 2023, at the end of commercial debt repayment period\. 20\. The IDA PRG was complemented by two World Bank Group financial instruments included in the project’s financing plan, these were (a) two International Finance Corporation (IFC) loans, A and C, of up to US$100 million and US$30 million, respectively, and (b) a 1 French Development Agency, Promotion et Participation pour la Coopération Economique (Proparco), the Netherlands Development Finance Company, Kreditanstalt fur Wiederaufbau (KfW), and German Investment Corporation (Deutsche Investitions und Entwicklungsgesellschaft, DEG)\. 4 Multilateral Investment Guarantee Agency (MIGA) political risk insurance covering the risk of breach of contract for up to US$120\.3 million on the equity2 and US$9\.5 million on the interest rate swap entered by the lenders3\. Thus, the total World Bank Group exposure to the Bujagali HPP was of up to US$374\.8 million\. To ensure evacuation of power from Bujagali HPP to connect to the national grid, a set of transmission lines were constructed by UETCL as a separate project, funded by the AfDB and the Japan International Cooperation Agency (JICA)\. 1\.6 Revised Components 21\. There were no changes in the original project components or in the supporting World Bank Group’s financial instruments\. The total project financing requirement increased in the order of US$105 million compared to the appraisal estimate\.4 This additional cost was covered by increases in debt from European DFIs and equity from the project sponsors; however, the World Bank Group’s contribution to the financing of the project remained unchanged\. The MIGA coverage for breach of contract did increase from US$115 million to US$120\.3 million\. 1\.7 Other Significant Changes 22\. There were no significant changes in project design or in the implementation arrangements during the execution of the project\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design, and Quality at Entry Fit with UJAS and Government Priorities 23\. The project design was well aligned with the UJAS and the objectives and priorities of the GoU to promote private sector investment and provide adequate, reliable, and least-cost power generation\. The timely and efficient commissioning of the Bujagali HPP was a way to almost double the installed capacity; increase the availability of power supply; and lower the cost of electricity by moving away from emergency thermal power\. In doing so, it would contribute toward the achievement of PEAP Pillar 2, which has the specific objective to “strengthen infrastructure in support of increased production of goods and services\.” The project’s financing arrangements, which comprised many official lenders, were also aligned to the UJAS’s strategy of promoting strong collaboration and harmonization among development partners and the Government\. Soundness of the Background Analysis 24\. The background analysis benefitted from the preparatory work made during the first attempt to develop the Bujagali HPP that included an IDA PRG approved by the Board in late 2001\. The project sponsor later withdrew from the project, leading to a termination of the agreements by the GoU in September 2003\. Subsequently, the GoU initiated a bidding process in adherence with Government’s procurement guidelines to seek a new project sponsor to develop the Bujagali HPP\. 2 Equity guarantee issued to World Power Holdings Luxembourg S\.à\.r\.l\. (WPH), an affiliate of Sithe Global (USA) 3 Debt swap guarantee issued to Absa Bank Limited of South Africa and Standard Chartered Bank of the United Kingdom\. 4 Including the EPC contract, project development costs and financing (details in annex 1)\. 5 25\. The background analysis benefitted from the experience of an Inspection Panel (IPN) review (2002–2003)\. The 2002 Investigation Report of the IPN concluded that the project design did not comply with several safeguard policies, namely, there was no sectoral environmental assessment, there were no appropriate measures to protect the Kalagala Falls Site (KFS), the community development action plan (CDAP) was insufficient and the economic studies had not followed a transparent process\. Further, the IPN identified weaknesses in the cumulative effects analysis, compensation plans, as well as a few technical issues (gaps in risk and sensitivity analyses) associated with the project’s economic assessment\. 26\. This project contemplated developing a hydropower plant of very similar technical characteristics (that is, the same site, same generating capacity of 250 MW, and same basic layout) and had involved an advanced level of engineering design\. The scope of the environmental and social impact assessment that was carried out for the project benefitted from the 2002 IPN Investigation Report\. Accordingly, project preparation focused on improving the previous design, considering some important changes in the sector/business environment and drawing from the lessons learned during the first effort\. 27\. Specifically, the PAD mentions the following lessons learned from the previous attempt to develop the Bujagali HPP: • Having a strong project sponsor and a robust financing plan\. • Adopting a transparent and competitive process for the selection of the project sponsor and equipment, procurement, and construction (EPC) contractor to ensure sound governance practices\. • Ensuring measures are taken to support the efficient operation of the power distribution sector\. • Reflecting the findings of the IPN’s Report and the Management’s Response and Action Plan to address the safeguards non-compliance and weaknesses outlined above\. 28\. Other, more generic, lessons incorporated into project design were as follows: (a) initiating and implementing a comprehensive power sector reform in advance of major new investments can provide advantages; (b) the financial viability of the power sector can be enhanced by commercializing operations and through private participation in the ownership and management of distribution facilities; (c) World Bank Group support can help catalyze long-term private sector financing for capital intensive projects by mitigating some political risks; (d) investment decision should be based on their technical, economic, financial, social, and environmental merits; and (e) an equitable allocation of project risks is important to ensure the long-term sustainability of a project\. Project Design 29\. The PDO was an appropriate response to the country’s needs and, as mentioned, it was fully compatible with the emergency situation of the power sector and the GoU’s development priority of crowding-in private investment to generate economic growth and reduce poverty\. 30\. The collapse of the first attempt to develop the Bujagali HPP in 2001-2003 placed a high degree of pressure on the Government and donors alike, as there was an urgent need to commission additional generating capacity\. An obvious option was to resurrect the Bujagali HPP while fixing 6 the problems that had caused its failure\. It was identified that (i) the sponsor’s withdrawal from the project while was caused by the continuous deterioration of the sponsor’s own financial situation, this event was preceded by a set of investigations concerning allegations of corruption in the United States, Norway, the United Kingdom, and Uganda; and (ii) caution to address the IPN process within the World Bank Group considerably delayed the project preparation\. 31\. Consequently, two corrective measures that characterized the design of the project were (a) improving governance standards through the adoption of transparent and competitive processes for the selection of the project sponsor and the EPC contractor and (b) a more thorough effort in addressing social and environmental matters, including in-depth analyses and the formulation of effective compensation and mitigation measures\. Key features in this regard were as follows: • The GoU followed a transparent and competitive process in adherence with its procurement guidelines, and selected BEL as a new project sponsor to develop the Bujagali HPP\. The process included a prequalification stage that selected three qualified sponsors and, subsequently, assessed their proposals based on two attributes: project cost (including a proposed return on equity) and the financing plan\. By April 2005 the GoU made public the sponsor’s selection and invited BEL to negotiate\. Subsequently, the PPA and an Implementation Agreement were signed in December 2005 between BEL, UETCL and the GoU respectively\. Throughout this process, the GoU was assisted by expert advisers: Hunton & Williams LLP (legal) and Scott Wilson Piesold (engineering)\. • During project preparation, the sponsor BEL in July 2005 initiated the process to select the EPC contractor following a competitive bidding process as per EIB’s procurement rules\. While the Bank did not require a competitive selection process for EPC, the Bank reviewed the process and established that it was in accordance to the Bank guidelines\.5 • The EPC contractor was selected on a competitive basis\. Only two offers were received on October 26, 2006, and the lowest EPC bid price was 48 percent higher compared to the costs obtained six years earlier in 2001\. The higher bid price was due to the market at the time characterized by high prices for raw material worldwide, a tight market for qualified contractors and regional political turmoil\.6 A review of bid prices was conducted by BEL’s owners engineer, and the EPC price and contractual conditions were reviewed by the lender’s independent engineer; they concluded that prices were reasonable given the market conditions\. By the time of Board approval, EPC contract negotiations were still under way, including the definition of some risk allocation issues\. Hence, the final EPC price had yet to be agreed\. 5 Bank procedures in supporting private investments establish that if a sponsor has been selected through a competitive process, the subsequent selection of contractors is not subject to Bank procurement guideline s\. In this case, the Bank’s somewhat redundant review of the EPC selection process (i\.e\. a double scrutiny) coincided with EIB’s procurement requirements\. As discussed in sections 2\.2 (Implementation), 2\.4 (Safeguard and Fiduciary Compliance) and 3\.3 (Efficiency), the strict adherence to lenders’ procedures such as public reading of the bids prices proved to be costly\. 6 Unfortunately, the bidding and negotiations for the EPC contract coincided with a moment of great market uncertainty in the power industry, that is, the post Enron era\. 7  • The project design specifically improved on two aspects\. First, social and environmental – a comprehensive Strategic/Sectoral Social and Environmental Assessment (SSEA) and Cumulative Impact Assessment was undertaken, ensuring adequate stakeholder consultations\.7 Second, economic analysis and examination of alternative investments - additional studies8 concluded that, considering a wide range of options (including small and medium hydropower, other large hydropower projects, thermal generation options, geothermal and other renewable sources), the Bujagali HPP was the least-cost generation expansion option to meet Uganda’s power generation requirements\. • Adhering to OP 4\.04, it was agreed to protect the KFS in compensation for the loss of the Bujagali Falls, considering that it was an area ecologically similar to the area lost and, hence, an appropriate offset choice9\. Accordingly, IFC/IDA and the Government reached an agreement during project preparation10 for the protection of such area\. The Government’s commitment in this regard was formally confirmed in the Indemnity Agreement (IA) signed between the GoU and IDA in July 2007\. It is important to note that the IA was the sole legal instrument for protecting the KFS, i\.e\., such protection was not grounded in the national laws and was limited to the duration of the IA\. The IA in effect postponed resolving the question of the protection of the KFS beyond the IA to a later date, upon receiving the IDA’s notice of a termination (or prospective termination) of the IDA Guarantee Agreement\. 32\. The contractual structure of the project was consistent with the industry practice for limited recourse finance transactions\. Also, the two-step procurement process—selecting first the sponsor and then the EPC contractor—was consistent with the industry’s practice and suitable to the emergency situation faced by the power system\. Figure 1 provides an overview of the main project agreements and the links between the shareholders, which include the BEL, official and commercial lenders, the Government, the off-taker UETCL, and contractors (EPC and operation and maintenance [O&M])\. Upon Board approval, IDA proceeded to sign an Indemnity Agreement (IA) with the GoU, a Guarantee Agreement with commercial lenders, and a Project Agreement with the sponsor (BEL)\. These agreements established the obligations of the parties involved\. Among other things, the IA established the GoU’s obligation to repay IDA in the case that the PRG is called, as well as the GoU’s commitment to protect the KFS\. 33\. The interconnection infrastructure was designed and built as a separate project (with AfDB and JICA financing) and following an international competitive procurement process\. To ensure a suitable coordination with the power plant implementation, the procurement and construction process of the transmission lines was managed by BEL on behalf of UETCL\. 7 Environmental studies included an assessment of the upstream and downstream impact of Bujagali HPP operation patterns\. Studies concluded, inter alia, that the project will result in minor changes to the balance between populations of certain fish species upstream of the dam, and no noticeable change downstream of the dam\. No specific mitigation measures were proposed to address impacts on fish resources\. However, a monitoring program was implemented to confirm these predictions, and take remedial action if required\. 8 Power Planning Associates Ltd\. 2007\. Bujagali I – Economic and Financial Evaluation Study\. 9 Identification of KFS did not include a rigorous baseline assessment of natural habitat, environment and spiritual values\. 10 The PAD reports that the agreement ‘Proposed Bujagali Hydropower Project: World Bank Group’s Requirement of an Offset at Kalagala Falls’ was reached on April 25, 2001\. 8  Table 2\. Timeline of Bujagali HPP 2000 GoU’s initiation of planning Bujagali dam / Selected the project developer Bujagali I (P078024) approved by the Board / Inspection Panel received request for investigation 2001 (first IPN investigation) 2002 First IPN Investigation report issued Bujagali I suspended as the developer withdrew / Bujagali Energy Ltd\. (BEL) created by Sithe 2003 Global Power and Investment Promotion Services (IPS) 2005 30-year PPA signed between UETCL and BEL Bujagali II (P089659) approved by the Board / Guarantee agreement signed / Inspection Panel 2007 received Request for Investigation (second IPN investigation) / EPC contractor selected/ Bujagali Construction started Second IPN Investigation report issued / Management Action Plan (MAP) in response to IPN 2008 recommendations issued 2012 Bujagali II construction completed, project closed Adequacy of the Government’s Commitment 34\. The GoU was strongly committed to the project during preparation and design\. The failure of the first attempt to build the Bujagali HPP only heightened the urgency and commitment of the GoU to build new generation capacity to meet the needs of its growing economy\. The GoU firmly supported all aspects of the preparation phase including (a) construction and cost overrun risks, (b) adopting an open and transparent process for the selection of a new project sponsor; (c) ensuring the continuity of the resettlement process upon the collapse of the first attempt to build the plant; (d) facilitating the consultation process among stakeholders; (e) provisioning a US$75 million bridge loan to BEL during the final phase of negotiations of the EPC contract, with the aim of locking in the EPC contract price and starting construction before financial closure; (f) ensuring that the Interconnection Project—to be implemented in parallel to the Bujagali HPP—was procured following an international competitive process and ensured a suitable coordination arrangement to avoid any potential delays and/or technical inconsistencies; and (g) maintaining an environment of legal and regulatory stability and supporting the continued commercialization of power sector operations\. However, as noted above, Government’s commitment to a permanent protection of the KFS was to be discussed later, toward the end of the IA\. Clearly, this arrangement carried the risk to adequate protection of the KFS beyond the duration of the IA\. 9  Figure 1\. Bujagali HPP Contractual Agreements Source: World Bank\. 2007\. Project Appraisal Document for the Private Generation (Bujagali) Project in the Republic of Uganda \. Risks 35\. Hydropower projects are by nature risky ventures with hydrological uncertainty and the challenge of building a unique set of structures on ground conditions that, regardless of the level of ex ante investigations, are never fully known\. For Bujagali HPP, the risks were heightened by the logistical challenges of transporting large equipment in a land-locked country with infrastructure constraints\. The risk perception of the Bujagali HPP by private sector was further heightened by the failure of the first attempt to build Bujagali HPP, lack of Uganda’s experience in private-run power generation, and the major electricity supply crisis which the power sector was facing\. Consequently, the GoU agreed to take a significant risk in the Bujagali HPP to facilitate rapid execution of the project\. 36\. The PAD made a comprehensive assessment of critical risks that could affect the project’s performance (table 3)\. These risks encompassed technical (hydrology, delays, and cost overruns), market (demand growth), economic (macro stability), financing, and policy issues\. It is considered that the thorough preparatory work undertaken for the project, including project-specific issues as well as the GoU commitment to support the power sector reform, complemented by the guarantees and other financial instruments provided by the World Bank Group, constituted an adequate set of measures to manage and mitigate these risks\. 10  Table 3\. Risks Summary Risk Identified at Design Mitigation Measure (PAD) Outcome/Comment Inability to mobilize World Bank Group due diligence Risk did not materialize\. Project financing financing and multilateral and bilateral achieved according to the plan\. institutions financing plan, complemented by sponsors’ bid bond to confirm their financing commitment Demand growth for • Demand forecasts based on a Risk did not materialize\. The project’s capacity electricity lower than realistic range of outcomes was quickly absorbed by the power system, as expected (technical, commercial, it replaced existing thermal generation\. economic)\. • Export surplus energy in case of low demand growth\. A stable macroeconomic The project’s contribution in The crude oil price increased around 25 percent external environment is removing power shortages (and 2011-2013 as compared to 2006\. The maintained\. replace high-cost thermal commissioning of Bujagali HPP in 2012 generation) will help Uganda in reduced the fuel cost of the sector and handling any changes in the subsequently helped Uganda’s macroeconomic external environment\. performance\. Government commitment Government demonstrated Risk did not materialize\. The Government’s to power sector is not commitment to a comprehensive commitment to reform continues unchanged\. maintained\. power sector reform, including its support to the commercial viability of the sector\. Umeme Company Limited • Umeme’s agreement to invest The risk materialized\. IDA-funded (Electricity Distribution up to US$65 million during the Privatization and Utility Sector Reform Project Company in Uganda), the first five years of concession, backstopped a Letter of Credit Facility private distribution supported by IDA and MIGA11 established by Uganda Electricity Distribution concessionaire terminates coverage for regulatory, Company Limited (UEDCL) in favor of its concession\. nonpayment, and breach of Umeme\. The Facility protected Umeme from contract risks; the impact of power shortage and non-payment • Concession modified to protect by UEDCL\. Umeme from impact of power shortages Hydrology risk associated • World Bank Group due A long-term issue; the risk has not with water flows on the diligence\. materialized\. Nile River and water • Project confirmed as the least- levels at Lake Victoria cost expansion even under the low hydrology scenario\. • Project does not imply an incremental draw from Lake Victoria\. Hydropower plant and • Sponsors’ incentives to Hydropower plant experienced delays caused Interconnection Project minimize delays mostly by unexpected ground conditions (see encounter delays and cost • Fixed price EPC contract section 2\.2: Implementation)\. overruns; system not • BEL in charge of operated in line with interconnection procurement international standards\. and construction management 11 MIGA coverage only for breach of contract with a term of 20 years for the equity and 11 years for the debt interest rate swap\. 11  Risk Identified at Design Mitigation Measure (PAD) Outcome/Comment • Emergency plan to evacuate energy in case of interconnection delay Impact of the project on Power development oriented The Guarantee, backstopped by IDA, has not the Government’s toward PPPs, limiting the been called to date, and therefore the GoU’s contingent liabilities Government’s liabilities to its liabilities to Bujagali HPP project is minimal\. provision of guarantees (related to the GoU and public-sector performance) Increase in project costs • EPC contract to be a fixed This risk materialized, as the EPC contract price turnkey contract experienced an increase in cost of US$59\.5 • Changes in prices to be million above the contract price, in consistency allowed only under very with the risk allocation established in the specific circumstances contracts (section 2\.2: Implementation - Cost • PPA structure to provide increases and delays)\. incentive to BEL to minimize EPC cost increases 37\. The contractual structure and risk allocation of the Bujagali HPP transaction was designed along the industry standards of limited recourse financing; that is, risks should be allocated to the party best able to mitigate them and an equitable allocation of project risks between the various parties is an essential condition for long-term sustainability\. Hence, in principle, BEL was expected to bear the technical, commercial, and financing risks of the project, while the GoU’s obligations, and inherent risks, were established in the Implementation Agreement, including the terms of the guarantee to back UETCL’s payment obligations under the PPA\. In practice, however, the GoU faced a tradeoff between a suitable allocation of risks and the urgency to build the Bujagali HPP the earliest possible\. Moreover, the GoU’s ability to negotiate with potential EPC bidders was significantly constrained by the markets conditions, characterized by the rapid increase in the price of raw materials driven by high worldwide demand, and a tight market for qualified EPC contractors\. Facing the urgency to address the power shortage, the GoU allowed BEL to proceed with the EPC bidding before a full geotechnical assessment was completed\. Hence an important component of the project’s technical risks was borne by the Government which materialized as additional costs and further delays\. Also, the price of the turnkey EPC contract included a pass-through provision for a set of conditions previously established, and hence, the risk of cost increase was shared between BEL and the GoU\.12 In addition, the PPA (whereby the sponsor is to be paid upon proof capacity availability and not energy) established that hydrological risks were borne by the off-taker\. Consequently, the actual allocation of risks was not that of a typical project financing for an IPP, but rather that of a PPA arrangement where the public sector played a significant role and shared considerable risks, including construction delays and EPC contract pricing risks\. 12 The PPA established a pass-through for cost increases with a cap\. The capacity payment is aimed at securing an agreed return on equity for the sponsor, based on a base EPC cost\. If actual costs under the EPC contract are higher or lower than the base EPC cost, the capacity payment is adjusted upward or downward to offset 70 percent (only) of the cost difference between the actual costs under the EPC contract and the base EPC cost, provided that the capacity payment does not change by more than 10 percent as a result of such adjustment\. 12  Table 4\. Risk Allocation of Bujagali HPP Phase Risks/Obligations Sponsors Lenders GoU World Bank Group Risks Mitigation Package Pre-construction Project Design ■ ■ Debt and Equity Financing ■ ■ ■ Construction Cost Overruns ■ ■ ■ Construction delays ■ ■ ■ Implementation of Environmental ■ ■ ■ Management Plans and Resettlement Policy Frameworks Operation Operation and maintenance ■ ■ Output quality specifications ■ ■ Hydrology ■ Payments under the IA and PPA ■ ■ Concession term Currency devaluation ■ Currency convertibility/transferability ■ ■ ■ ■ Political Force Majeure ■ ■ Changes in Law ■ ■ Natural Force Majeure ■ ■ ■ Source: Project Appraisal Document 2\.2 Implementation 38\. The Bujagali HPP started commercial operation on August 1, 2012\. The power plant was however, handed over to BEL in full compliance with contractual agreements and international technical standards on October 8, 2012, after 13\.6 months beyond the original delivery date in August 2011\. Project implementation experienced significant cost overrun and implementation delays, but it has operated satisfactorily since completion\. Most important, the commissioning of the Bujagali HPP has contributed substantially to the installed generation capacity and energy to the national grid; reducing power shortages; and improving service reliability\. 39\. Main factors that contributed toward a satisfactory performance were (a) the suitability of the contractual arrangements consistent with the industry practice for limited recourse finance transactions; (b) the managerial and technical capacity of the entities involved, including competent sponsors and the EPC contractor; (c) the effective and independent support of technical experts throughout the implementation process, through the owners' and lenders’ engineers, as well as the Dam Safety Panel of Experts; (d) the Government’s commitment to the project that went beyond its formal obligations of providing a bridge loan to lock in the EPC contract price and start construction without delays and establishing and operating a Multi-stakeholder Bujagali Environmental Monitoring Committee; and (e) a well-coordinated supervision of lenders characterized by biannual joint lender missions\. 40\. The project’s good implementation performance was reflected in the Implementation Status and Results Reports (ISRs), which rated the project ‘Satisfactory’ for its development objectives and overall implementation progress throughout the implementation period\. However, the last ISR carried out more than three years after project commissioning (April 2016) downgraded the project’s implementation progress performance to ‘Moderately Satisfactory’ because of safeguards issues\. 13 41\. The salient implementation difficulties were the following: 42\. EPC contractor negotiations\. Two bidders competed for the EPC contract following EIB procurement procedures\. The winning EPC bidder offered a price of US$467\.2 million,13 while the other bid was approximately 43 percent higher\. Given the public opening of financial bids, the bid prices became public information\. Negotiations lasted around six months, ending in May 2007, that is, a few weeks after Board approval in April 2007\. Consequently, the PAD did not include the final EPC contract price since this was unknown\. The negotiated EPC price was US$557 million, (about 20 percent higher) and by the end of the project, with approved cost overruns, the actual EPC cost was US$616 million (about 32 percent higher from the bid price)\. Important aspects of the EPC bidding and negotiations were as follows: • Although comparing hydropower unit costs has inherent limitations (since all projects are different and prices may change considerably with market conditions), the offered EPC bid price in 2007 (US$467 million for 250 MW plant ~ US$1,869 per kW) was 48 percent higher than the EPC price of 2001 for the Bujagali project\. Hence, the lenders’ engineer, was engaged in a thorough review of the project costs and conditions of the winning proposal\. The lenders’ engineer concluded that, given the prevailing market conditions for hydropower, the 2007 EPC price was reasonable, though somewhat on the high side\. • When EPC bids are presented, there is typically a set of commercial terms that are yet to be defined (such as payment schedules, liquidated damages), and lenders’ terms get confirmed subject to credit approvals\. These factors of uncertainty are either resolved, or their risks are allocated among the parties, during negotiations\. In the Bujagali HPP’s case, EPC contractor proposed to shift the risks to the sponsor\. Neither BEL nor the lenders were prepared to take these additional risks; therefore, the EPC contractor negotiated a price increase to mitigate those risks\. In reality, the GoU mitigated the risk through higher price of power\. • Negotiations were particularly difficult for the sponsor since the market at the time were characterized by high prices for raw material worldwide and regional political turmoil\. The high price difference between the only two bidders was a significant advantage for the winning bidder during price negotiations\. 43\. Cost increases and delays\. The construction of the power plant encountered a few difficulties that are typical of hydropower projects\. The main problems were adverse ground (geological) conditions under a gated spillway structure, construction problems on the right embankment and a cofferdam, and delays in the delivery and commissioning of some equipment caused by several factors, including a ship hijacking incident and some electromechanical defects\. Overcoming the ground conditions problem implied a costly solution that required replacing a bed of low-quality rock by concrete and steel\. 44\. Agreements established that the construction of the power plant had to be completed in 44 months from financial closure (December 31, 2007)\. However, the plant was commissioned in August 1, 2012, and handed over on October 8, 2012, 13\.6 months behind schedule\. Delays were 13 Including direct and indirect costs, contingencies, risk allocation, and price escalation factors\. Project Review and Assessment Report for IFC\. July 2007\. 14 caused mostly by unexpected construction (mostly due to ground conditions) and equipment supply difficulties, as well as some repairs required in the electromechanical equipment at the handover stage\. According to the EPC contractual conditions, 14 a substantial part of the cost increase and delays were borne by the owner and passed on to the off-taker UETCL, through the PPA\. 45\. The GoU extended a bridge loan of US$75 million to BEL upon delays in the negotiation of the EPC contract, and the subsequent cost of a prolonged power crisis, in a clear demonstration of commitment to the project\. This loan allowed BEL to lock in the EPC contract price before the expiration of the bid validity, as well as starting construction before financial closure\. The loan was to be repaid from an equity injection at the time of the full notice to proceed\. 46\. IPN\. Following the first IPN case in 2002-3, the IPN received a second request in March 2007 from the National Association of Professional Environmentalists and other local organizations for Inspection for the project\. A similar request was also submitted to the Compliance Review and Mediation Unit of the AfDB\. The request addressed a broad range of issues on environmental, hydrological, social, cultural, economic, and financial matters\. It contended that a failure of the World Bank to follow its own operational policies and procedures in the design (appraisal) of the project would result in harm to the people living in the area and to the environment\. An Investigation Report issued by the IPN in August 2008 15 concluded that World Bank management was not in full compliance with five operational policies\.16 The report of the IPN and the management’s response were discussed by the Board on December 2008\. It was agreed that management was to report to the Board on the progress of the Management Action Plan (MAP) aimed at addressing all noncompliance issues, in particular those associated with institutional capacity, social and cultural aspects, and environmental mitigation measures of the project\. 47\. In the MAP, the World Bank committed to the following actions: i) follow up on National Environment Management Agencies’ (NEMA) establishment of a Project Monitoring Committee, and on strengthening of capacities of BEL’s environment and social unit; ii) follow up with BEL’s programs, with timetable and targeted activities, to address the needs of vulnerable groups; iii) follow up with the GoU to update the Cultural Property Management Plan, and its incorporation by BEL into the EPC contractor’s Code of Practice; and iv) work with BEL to review the Environment and Social Independent Panel of Experts (PoE) reports for disclosure\. The MAP stressed that in addition to the new actions listed above, ongoing supervision encompassed a set of complementary key actions including strengthening the GoU’s institutional capacity, remedial steps for updating and completion of baseline socio-economic information, monitoring afforestation activities, completion of Kalagala Offset SMP, and the GoU’s commitment to disclose the Lake Victoria hydrological information\. 48\. Since then, the implementation of the MAP has been monitored continuously through the (a) Quarterly Monitoring and Evaluation Reports prepared by BEL; (b) Reports of the Joint 14 The EPC contract established that ground conditions risks were mostly borne by the owner\. 15 World Bank Inspection Panel\. Investigation Report\. Uganda: Private Power Generation (Bujagali) Project \. Report No\. 44977-UG\. August 2008\. 16 OP/BP 4\.01 - Environmental Assessment and World Bank policy on Disclosure, OP/BP 4\.04 - Natural Habitats, OP/BP 4\.11 - Physical Cultural Resources, OP/BP 4\.12 - Involuntary Resettlement, and OP/BP 10\.04 - Economic Evaluation of Investment Operations\. 15 Lenders’ Supervision Missions (semiannual missions undertaken until commissioning of the plant in August 2012 and annual missions thereafter);17 (c) Annual Review by the Independent Panel of Experts; and (d) the National Multi-stakeholder Bujagali Environment Monitoring Committee (BEMC) Reports\. Seven comprehensive progress reports have been submitted to the Board, presenting a gradual process in solving each of the issues raised by the IPN\. 49\. The seventh and final report submitted in February 2018 confirms that all actions had been completed including the issuance of two outstanding land titles for resettled households, which were indicated as pending in the sixth progress report (February 2017)\. Given the completion of all outstanding actions of the MAP, this implementation completion report is prepared\. 50\. The IPN process has been useful in improving the design and implementation of the project\. The management always responded in a thorough and timely manner, thus contributing toward the resolution of the problems raised by the IPN\. Finally, in contrast to the first IPN of 2002–3, the process did not bring any significant delays to the project\. According to Government officials, the World Bank’s response in addressing the requirements of the IPN, while continuing the normal execution of the project, revealed that an important lesson had been learned\. 51\. Outstanding issues\. Despite an overall satisfactory performance, a few issues associated with environmental and social matters remained outstanding for a long period after project completion\. The delays in resolving these issues was the main reason for downgrading the project’s implementation performance in the last ISR, prepared in April 2016, about 44 months after the Project closing, as well as completing this ICR in August 2018\. Downgrades included a Marginally Satisfactory rating for overall implementation progress and Marginally Unsatisfactory rating for overall safeguards compliance\. The status of actions in last ISR identified the following issues, all pending actions in the MAP of the IPN case: • Implementation of SMP for the KFS by the Ministry of Water and Environment was satisfactory\. • Electrification of households in the Naminya Resettlement Area which affected nine villages as part of the CDAP was complete after suffering considerable delays\. • Issuance of three land titles for households in the Naminya Resettlement Area was still outstanding\.18 52\. On September 6, 2016, and September 20, 2016, the IPN registered a third and fourth request for inspection concerning this project, along with two other Bank financed projects: (i) Water Management and Development Project (WMDP); and Energy for Rural Transformation Phase III (ERT III) Project\. The requesters alleged that the construction of the Isimba HPP (funded by the GoU and China’s Exim Bank) will flood part of the KFS, an area set aside to protect its natural habitat, environmental, and spiritual values by the 2007 IA between the GoU and the World Bank\. Refer to para 68 for more information on this issue\. 17 All lenders, including the World Bank, continued launching supervision missions for four years after the plant was commissioned\. This joint effort to monitor the implementation of the MAP was also reflected in two ISRs filed in July 2014 and April 2016, after the project closed on August 1, 2012\. 18 The seventh Progress Report of the MAP noted that all three land titles have been issued\. 16 2\.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization 53\. M&E design\. The key outcome indicators to be monitored for IDA’s guarantee operation are presented in section 1\.2 and Annex 2\. The set of indicators chosen was limited to three targets that are simple and easy to quantify, as well as an objective measure of the project’s technical outputs and its impact on Uganda’s power system\. In this respect they are considered to be adequate for a private power project that has very specific objectives\. The set of outcome indicators was complemented by two intermediate milestones/indicators aimed at monitoring the project’s progress during project implementation\. The Results Framework also made reference to additional intermediate milestones/outcomes, such as plant construction costs and commission test results, but no targets were established\. 54\. Though the number of indicators for outcomes was limited, the set was consistent with the nature of a large private infrastructure project that has many other monitoring mechanisms (for example, the EPC contractor’s and sponsor’s standard engineering supervision methods; BEL’s quarterly construction reports and social and environment quarterly monitoring reports; and the independent lenders’ engineer reviews, POEs, and others)\. 55\. M&E implementation\. Data on the outcome indicators and intermediate milestones were collected in full through the monitoring mechanisms mentioned earlier\. Two important initiatives proved to be effective in monitoring the progress of the project in all its dimensions: • Joint lenders’ supervision mission\. The numerous lenders involved in the project required a special effort of coordination to monitor the project’s progress while minimizing the distracting impact of an excessive number of missions\. Joint lenders’ supervision missions, which were held on average every six months, were particularly useful in optimizing supervision resources, improving communications between all parties, and, to the extent possible, harmonizing criteria\. Alternating the missions’ lead was an important feature in guaranteeing a balanced participation of lenders\. • Bujagali Environment Monitoring Committee (BEMC)\. Chaired by an academic, this committee was established by the GoU to monitor safeguard issues in a comprehensive manner\. The BEMC had a broad representation, including members of Government institutions responsible for all aspects of the project (power, water, environment, trade, regulation) as well as representatives from local governments, nongovernmental organizations, and the private sector\. The committee met on a quarterly basis, engaged in site visits and provided recommendations, and became an important counterpart in dealing with lenders\. 56\. M&E utilization\. While project indicators were limited in number and scope (mainly oriented to measure the achievement of development objectives during project operation), the additional mechanisms mentioned earlier provided a broad frame for monitoring different aspects of the project’s progress and take corrective actions on the plant’s construction and its impact\. 2\.4 Safeguard and Fiduciary Compliance Safeguards 57\. The project triggered seven safeguards: Environmental Assessment (OP/BP 4\.01), Natural Habitats (OP/BP 4\.04), Physical Cultural Resources (OP/BP 4\.11), Involuntary Resettlement 17 (OP/BP 4\.12), Forests (OP/BP 4\.36), Safety of Dams (OP/BP 4\.37), and Projects on International Waterways (OP/BP 7\.50)\. 58\. Overall, safeguards performance was regarded as positive during the construction of the project\. Safeguards compliance was rated Satisfactory throughout the implementation period\. However, the last ISR of April 2016 (44 months after the plant’s commercial commissioning and project closure) downgraded overall safeguard compliance to Moderately Unsatisfactory\. Specific downgrades were Moderately Satisfactory for Environmental Assessment, Natural Habitats, and Forestry and Moderately Unsatisfactory for Involuntary Resettlement\. Ratings were downgraded because of some unresolved issues, namely delays in issuing land titles, and in the electrification of the households that had been resettled by the project\. 59\. The Bujagali HPP is a Category A project in accordance with the World Bank’s OP/BP 4\.01\. Therefore, BEL conducted a full Social and Environment Assessment (SEA) for the power plant and for the associated interconnection project (on behalf of UETCL)19 as part of the project’s preparatory work\. This effort was complemented by several assessments and action plans, including an Assessment of Past Resettlement and Action Plan (APRAP),20 a CDAP, and Public Consultation and Disclosure Plans\. The documentation was designed to fulfill regulatory and procedural requirements of the World Bank Group, AfDB, EIB, DEG, and GoU\. It is worth noting that to avoid any disruption in the ongoing resettlement process, the GoU proceeded to recruit the safeguards team of the former sponsor upon their withdrawal in 2003\. 60\. A comprehensive set of studies included (a) an ‘Economic and Financial Evaluation Study’ (commissioned by IFC) that assessed different hydrological scenarios and alternative power generation options; (b) a SSEA of Power Development Options in the Nile Region, which included consultation with other riparian stakeholders; and (c) an update of the cumulative impacts assessment\. Other measures included the establishment of a dam safety panel to provide advice on the adequacy of the civil works design and construction procedures\. 61\. Given its visibility as a complex hydropower plant supported by the World Bank and other DFIs, the project was designed and implemented under tight scrutiny of international and local civil society\. An investigation by the IPN commenced in 2007, a few months after construction started\. Despite the extensive preparatory work, the IPN identified noncompliance issues in four social and environmental safeguards, as well as in OP/BP 10\.04\. Consequently, World Bank management, sponsors, and the GoU responded to the IPN requirements in a timely and responsible manner\. As indicated in section 2\.2, the preparation, monitoring, and reporting of the MAP were useful in addressing in a gradual and satisfactory manner most of the issues raised\. 62\. Nevertheless, the project was never free of challenges\. Evidence of safeguard problems appears repeatedly in the joint lenders’ Aide Memoire and in the World Bank’s ISRs\. Issues that suffered delays and/or required special attention were the impact of construction blasting on nearby households, addressing the spiritual values of the Bujagali Falls, delays in the rural electrification component of the CDAP, and the land titling of resettled households, and the protection of the KFS\. 19 Because the Interconnection Project is not part of the IDA supported power generation project, BEL took care of the preparation of the two separate SEA reports\. 20 Since a Resettlement Action Plan had been formulated and partially implemented during the first attempt to build the Bujagali HPP\. In fact, most people living in the area near the power plant site had been resettled already\. The APRAP was therefore designed to ensure the continuity of the process as well as to correct its shortcomings\. 18 63\. In 2010 the EPC almost doubled its workforce to recover for technical delays\. Following 2 fatalities and incidents in Q1 of 2010, Lenders required BEL and the EPC to commission Operational Health and Safety audits\. Implementation of audit findings led to marked improvements and there were no further fatalities under the project\. 64\. Kalagala Falls Site\. The IA signed between IDA and the GoU in July 2007 incorporated a clause to protect the Kalagala Falls as an appropriate offset choice for the area lost in the Bujagali Falls\. Accordingly, the GoU made the formal commitment to set aside the KFS exclusively to protect its natural habitat, environmental, and spiritual values\. Further, the GoU also committed that it would not develop any power generation that could adversely affect Uganda’s ability to maintain the above stated protection of the KFS without prior agreement with IDA\. The GoU also committed to conserve through as sustainable management program and budget, the present ecosystem of Mabira Central Forest Reserve (CFR), Kalagala CFR, and Nile Bank CFR on the Banks of the Kalagala Falls\. 65\. The GoU has prepared an addendum to the Environmental and Social Impact Assessment (ESIA) of the Isimba hydropower project and identified potential impacts of the Isimba hydropower dam on the Kalagala Falls, including the corresponding mitigation measures\. Following public consultations and hearings, the ESIA Addendum was approved by the NEMA on November 30, 201721\. The GoU also prepared a separate Long-Term Conservation Options Report (LTCOR) to identify options for strengthening legal protection of the KFS and associated financing and institutional arrangements for the long-term sustainability of the KFS, beyond the expiry of the IA in 2023\. 66\. Based on the recommendation of the ESIA Addendum and LTCOR, the IA was amended on January 24, 2018 to include a new definition and demarcation of the KFS\. The new, extended KFS encompasses the stretch of Nile River approximately 15 kilometers long that begins upstream at 2\.5 kilometers below the Bujagali Dam wall and ends downstream at the envisaged tail end of the Isimba Dam reservoir (Maximum Pool Level of 1,055 meters above sea level)\. It includes the entire Nile River aquatic area and river islands within these limits; all land within 100 meters of both the left and right river banks from the annual maximum high-water line; and the entire area of the Namavundu, Kalagala Falls and Nile Bank Central Forest Reserves, except any of the portions inundated by the reservoir of the Isimba Dam\. 67\. The Government has committed to conserve the extended KFS by giving it a strong legal foundation under Ugandan law that will go beyond the expiry of the Indemnity Agreement in 2023\. This legal protection will be provided under the National Environmental Act (NEA), which has been submitted to Parliament for adoption\. In the interim, legal protection is to be provided through a statutory instrument that is being prepared under the Forestry and Tree Planting Act\. Ministry of Water and Environment issued, in December 2017, a public notice of intent to declare the extended KFS a CFR, initiating the 90-day public consultation process as mandated by Forestry and Tree Planting Act; the public comment period ended on March 8, 2018\. The statutory instrument was publicized for public comments in November 2017 and the period for public comments ended in 21 The report is available at http://nema\.go\.ug/sites/all/themes/nema/docs/UG-ISIMBA-ESIA%20Addendum- TRACKED%20WB\.%20June%2022%202017\.pdf\. 19 March 2018\. Further, the GoU has already shared with the Bank legal, institutional, and financing plans for the long-term sustainability of the extended KFS\. 68\. As mentioned (in section 2\.2), in relation to the KFS the IPN registered in September 2016 two requests for inspection of the following IDA-financed projects: (i) Private Power Generation (Bujagali) Project; (ii) Water Management and Development Project (WMDP), which is financing some components of the SMP for the KFS; and (iii) Energy for Rural Transformation Phase III Project (ERT III), which financed preparation of the ESIA Addendum and LTCOR\. In April 2017, the IDA Board ruled that the Bujagali Project was not eligible for inspection, as the project was closed in 2012\. The Board approved the IPN’s proposal to defer, for up to twelve months, the recommendation on whether or not to investigate the ERT III and WMDP\. Following the completion of the ESIA addendum in late 2017 and signing of IA addendum in January 2018, the IPN recommended an investigation of both WMDP and ERT III\. The Board is expected to discuss the IPN recommendation in late 2018\. Fiduciary and Procurement 69\. IDA’s PRG supports the loans of commercial lenders\. As such, there were no direct fiduciary issues, as the operation did not involve procurement or procurement-based disbursements under the project\. Should the PRG be called, IDA would disburse to the beneficiary (the commercial lenders) and the GoU would then be obligated to repay IDA in accordance with the terms of the IA\. 70\. The World Bank reviewed the selection process for the sponsor and the procurement process for the EPC contractor and established that the said processes were consistent with its principles\. This assessment was supported by the review by the lenders’ engineer of the EPC contractor’s proposal, including a technical assessment of the proposed price for the power plant\. It is worth noting that contrary to the industry’s practice—and in alignment with the EIB’s procedures—the EPC’s bid prices were made public at their opening\. In a process characterized by limited competition and a large difference in bidding prices, this practice proved to be counterproductive as it resulted in higher costs to the country\. Though it is not possible to define in a quantitative manner the impact of this shortcoming, the EPC bid price increased from US$467 million to US$557 million during negotiations\. 71\. The overall financial management of the project was undertaken by BEL in accordance with commercial practices acceptable to the lenders\. 2\.5 Post Completion Operation/Next Phase 72\. The Bujagali HPP has been operating since 2012 under commercial and technical conditions established by a 30-year PPA signed between BEL and UETCL (December 2005)\. Upon the commissioning of the plant, BEL engaged an experienced energy utility, Gas Natural Fenosa, to manage the plant’s O&M\. 73\. During the initial years of commercial operation, the hydropower plant has built a good track record as a reliable source of electricity that is surpassing the technical performance agreed in the PPA, while continuing to monitor the project’s environmental and social impact\. Reportedly, the availability of the plant’s contracted capacity of 250 MW is around 98\.6 percent, that is, above the targets established by the PPA (95 percent for the first year and 96 percent thereafter)\. Also, the plant’s annual production is 1,350 GWh, 16 percent higher than the estimates considered at appraisal for the base case, and it is expected to increase as the power market grows\. On the off- 20 taker’s side, UETCL has built a good track record as a punctual payer\. Furthermore, the state- owned distribution company, UEDCL has gone beyond expectations in scaling up household connections, thus expanding its market base considerably, increasing its collections, and benefiting a much larger population\. 74\. The long-term sustainability of the project will rely on (a) the financial health of the power sector and its ability to generate sufficient revenues to cover the capacity payments for the project and (b) the GoU’s continued commitment to support a commercially oriented power sector, including an economically efficient and equitable tariff policy\. The evolving positive performance of the state-owned power sector companies in recent years, as well as the continued engagement of the World Bank through its energy portfolio and policy dialogue, set favorable conditions for ensuring the long-term sustainability of the project\. 75\. While the levelized cost of electricity from the Bujagali HPP is about USȼ9\.47/kWh for base case hydrology, Bujagali HPP actual tariff is constrained by the term of the financing available\. As Bujagali HPP's economic life is significantly higher than the tenor of financing availed for the project, the GoU in 2017, requested BEL to refinance its outstanding debt with the aim to reduce electricity costs in Uganda, a high priority for the country\. The GoU has committed to fully pass on the refinancing cost savings to consumers, in support of their goals to reduce electricity costs, expand access to electricity, and spur economic growth\. 76\. BEL appointed IFC and AfDB as the Mandated Lead Arrangers of the refinancing in 2017\. The refinancing package will extend the tenor of outstanding DFI loans provided by DFIs in 2007 from the remaining 5 years to 15 years\. Within the IDA guaranteed loan facility, two commercial banks (Charter Bank and BNP Pariba) will be fully repaid as part of the refinancing while the other two (Absa and Netbank) will remain in place with their original loans22\. IFC’s Board of Directors approved IFC refinancing package on March 8, 2018\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design, and Implementation Rating: High 77\. The project’s objectives and design are consistent with a key past and present objective of the Government, which is to provide reliable and affordable power to attract private investment and reduce poverty through rapid economic growth\. 78\. The last decade’s power supply crisis was a serious obstacle to economic growth\.23 The situation was not sustainable and further delays in augmenting power generating capacity threatened to undermine the economy\. In this regard, revising the design and implementing a hydropower project that already had a highly advanced level of preparation was an obvious choice to solve the crisis\. Such a design has proved to be fully relevant nowadays, as the Bujagali HPP 22 The decision of the IDA guaranteed commercial lenders to exit or remain as Bujagali HPP lenders with the refinancing was a business decision\. 23 With a peak demand in the order of 380 MW, and growing at an annual rate above 30 MW, the country’s power system was suffering from a large capacity deficit in the range of 100 –120 MW\. Consequently, extensive load- shedding blackouts were causing a high cost to consumers (through unserved energy and/or high-cost backup generating units) and the GoU had to resort to emergency thermal generation using highly expensive imported fuel: two 50 MW thermal generation plants running on diesel oil were commissioned in 2005 and 2006\. 21 has helped eliminate severe power shortages and constitutes an efficient and key component of the country’s current power supply system\. 79\. The combined financial resources of the World Bank Group and other DFIs were essential in mobilizing the private funds and commercial lending for the project\. IDA’s PRG that covers commercial lenders from an eventual debt service default arising from specific country risk factors is, according to the sponsor, particularly useful in reducing country risks and has thus allowed a very competitive financing and helped reduce costs, as well as provide the sponsor an important degree of comfort\. The PRG has also proved to be a valuable instrument in a context where country risks are perceived to be higher by commercial lenders and investors\. The coverage of the PRG (and hence its relevance) extends till November 2023, at the completion of the debt service period\. 80\. In sum, the project’s objectives and design reflect a proper diagnosis of the country’s urgent needs, as well as past and present development priorities, and hence, they remain highly relevant\. 3\.2 Achievement of Project Development Objectives Rating: Moderate\. 81\. The Bujagali HPP in its first year of operation generated about 1353 GWh of electricity, which is about 16 percent higher than the target electricity generation\. The plant maintained 99 percent availability in first year and 96 percent thereafter against the PPA obligation of 95 percent\. The plant doubled the reliable capacity of the national power system, eliminated load shedding completely and allowed fuel savings in alternative thermal generation in the order of US$8 million per month\. 24 While the project complied with the financial closure target, there were some limitations in meeting the project’s development objective\. The plant construction experienced cost overruns of about 32 percent from the bid price and a construction delay of 13\.6 months caused mostly by unforeseen ground conditions\. Due to the delayed commissioning, the government had to bear the high cost of alternate generation\. The cost overrun also increased the tariff of the power plant from what was targeted during appraisal\. Detail project outcomes are provided in Table 5\. Table 5\. Project Outcomes Project Outcome PDO Target Actual Indicators To provide least-cost power Electricity generated 1,165 1,352\.7 generation capacity that will (GWh) from the (first year of operation) (16 percent above the eliminate power shortages proposed 250 MW target) Bujagali HPP Levelized cost of 5\.7 for high hydrology– 7\.69 for high hydrology– electricity (U\.S\. 9\.7 for low (base) 11\.37 for low hydrology cents/kWh) from the hydrology 9\.47 for ICR “base case”) hydropower plant Unmet electricity 0 Load shedding eliminated demand (GWh/month) upon the commissioning of Bujagali Hydropower Project (HPP) Intermediate Outcome Indicators/Milestones 24 Savings from the two 50 MW thermal generation plants, conservatively considering a capacity factor of 60 percent and a fuel price of US$800 per ton (US$106 per bbl of diesel in Uganda)\. 22  Project Outcome PDO Target Actual Indicators Power plant is commissioned Achievement of Financial closure and Achieved on December on time and budget financial closure first disbursement 21, 2007 achieved by 2007 Plant construction Construction to be The plant was handed over progress completed in 44 months on October 8, 2012, that from financial closure is, a delay of 13\.6 months\. 82\. The project’s final EPC unit cost, considering approved cost overruns was about US$616 million ~ US$2,466 per kW, a figure relatively high compared to the international experience for hydropower plants with no major technical complexities at the time of bidding\. The economic evaluation of the project, considering the actual cost information and construction delay still demonstrates acceptable result, but lower than what was anticipated at appraisal\. 83\. The Bujagali HPP is a well-built and maintained power plant – the robust design and construction resulted in the reliability of its technical performance\. The satisfactory level of plant availability during the last 6 years is a testament of its performance\. The guarantee coverage risk ratings are a gauge of such sustainability\. This perception is consistent with the business environment within which the project has operated during the last four years; that is, a scenario of political, legal, and regulatory stability, with no obstacles for foreign exchange convertibility and transferability\. The only risk factors considered to be moderate are associated with the GoU’s (or Government agency) payment and input supply obligations, areas that are supported indirectly by the project through the provision of a lower-cost bulk energy and the subsequent savings in high- cost fuel consumption that was borne by the GoU\. 3\.3 Efficiency Rating: Moderate\. 84\. This Project was a second attempt to build a 250 MW hydropower plant in Bujagali\. The first attempt to construct a similar power plant was initiated in 2000 and it was approved by the Bank Board in 2001\. As the sponsor withdrew from the project in 2003, the initiative failed and put the GoU under pressure to meet the growing electricity demand and credibly develop a power plant in near future following IPP model\. 85\. The GoU followed a transparent and competitive process in adherence with its procurement guidelines, and selected BEL in April 2005, as a new project sponsor to develop the Bujagali HPP\. BEL initiated the EPC selection process in July 2005 following a competitive bidding process\. The market at that time was characterized by high prices for raw material worldwide along with limited availability of qualified contractors due to regional political turmoil\. Against this backdrop, BEL selected the EPC contractor following a competitive process\. BEL received only two offers in October 26, 2006, and the lowest EPC bid price (US$467 million) was 48 percent higher compared to the costs obtained six years earlier in 2001\. The winning bidder further negotiated the award price at US$ 557 million and later with cost overruns the total EPC cost was about US$ 616 million – a total increase of US$ 149 million or about 32 percent\. 86\. An ex post economic evaluation of the project, using actual data on investment and O&M costs and on the power plant’s energy production for the first three years of operation, yielded the following results (details in Annex 3): an economic internal rate of return (EIRR) of 16\.7 percent and a net present value (NPV) of US$211 million\. These economic indicators are somewhat lower than the appraisal estimates (which gave an EIRR of 22 percent and an NPV of US$421\.7 million) 23 but still reveal a solid economic performance and confirm that, in spite of the project’s cost increases and delays, the Bujagali HPP was actually a central component of the system’s least-cost expansion and, hence, an efficient option to address the country’s power crisis and power expansion needs\. 87\. Adopting the industry practice for limited recourse financing transactions, the project was supported by independent engineers\. However, the project was suffered from suboptimal bidding process, resulting in cost overruns and construction delays\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory\. 88\. The project successfully constructed a 250 MW hydropower plant with cost overruns and construction delay\. The Bujagali HPP after commissioning eliminated all load shedding in Uganda and helped the government save about US$ 8 million in fuel cost of expensive thermal power plants\. However, the construction delay that commissioned the power plant after about a year of target date had also been expensive for the GoU\. Accordingly, a Moderately Satisfactory rating is assigned to the overall project outcome\. 3\.5 Overarching Themes, Other Outcomes and Impacts 89\. Institutional strengthening\. The project was one of the largest private ventures in the power sector in Sub-Saharan Africa\. All parties recognize that the experience in dealing with the complexities of limited recourse finance for the complete project cycle in a large infrastructure project, and with the availing of external technical and legal expertise, has contributed considerably in strengthening the capacity of many public institutions\. An important learning experience is reported in the application of social and environmental safeguards, as well as in the management of contracts and in civil works and electromechanical technical issues\. This capacity is being used in the development of new projects\. 90\. The Uganda power sector is characterized with a credible and independent regulatory authority\. The sector has been able to attract private investment in small scale power plants using renewable energy resources, mostly hydro and solar\. The sector has also attracted private investment in electricity distribution\. However, in recent times, the sector is moving ahead with development of large scale hydropower plants funded the Government of Uganda and with support from China’s Exim Bank\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 91\. No beneficiary survey was undertaken\. 4\. Assessment of Risk to Development Outcome Rating: Moderate\. 92\. As noted in section 2\.5, the project has been operating commercially since October 2012\. The power plant has performed above the expected technical standards during this period\. Such performance is consistent with the project’s sound engineering design and a construction process characterized by high technical and safety standards\. In fact, it could be argued that the design and construction of some structures were conservative (that is, high safety factors)\. While it is likely that this conservative approach contributed toward higher investment cost, it offers a facility of 24 high operating reliability\. Hence, it is considered that the risks associated with the operation of the power plant and the energy and capacity contribution to Uganda’s power system are negligible\. 93\. However, the long-term risk to the project development outcome relies not only in the plant remaining in satisfactory operating performance, but in remaining in the list of least cost plant to be dispatched\. Some of the IPPs commissioned under the Renewable Energy Feed in Tariff (REFIT) policy of the GoU have tariff below that of Bujagali HPP\. However, give the small size of those power plants, that had not impacted the dispatch level of the Bujagali HPP\. However, as the GoU is constructing two large hydropower plants (Isimba 183 MW and Karuma 600 MW) with the GoU’s financing and with support from China’s Exim Bank, there is a probability, that electricity for these plants would be cheaper to UETCL compared to Bujagali HPP\. Accordingly, the GoU has recently requested BEL to refinance it outstanding debt, to reduce the debt service requirement of the Bujagali tariff\. The Bujagali Refinancing has become effective from July 20, 2018 and this will reduce the tariff of Bujagali from 2018-2023 by about USc5\.5/kWh\. This reduction in tariff benefits from an additional tax holiday granted by the GoU to the Bujagali HPP sponsor\. Hence the risk to development outcome is considered as Moderate\. 25 5\. Assessment of the Guarantee in support of the Project 5\.1 Impact of the guarantee in mobilizing private sector financing 94\. The PRG was provided to protect commercial lenders from the risk of debt repayment failure from BEL arising from the government’s failure to meet certain payments obligations under the Implementation Agreement or PPA (see paragraph 19)\. The commercial lenders provided finance of US$115\.4 million, constituting 16\.4 percent of the debt finance, for the Project\. Given Uganda’s limited track record to attract private sector financing\. The provision of the PRG was instrumental in catalyzing long term commercial debt in Uganda and reducing the risk for commercial debt to an extent that commercial debt could match DFIs maturities\. Moreover, without the PRG coverage, the commercial lending needed to close the financing gap of the project would have not materialized\. Furthermore, it is considered that the involvement of the World Bank in the Project strengthened all parties’ commitment to abide by international standards and, hence, proved to be instrumental in providing commercial banks an indispensable degree of comfort\. 5\.2 Role and value of the guarantee in addressing critical risks and improving the overall sustainability of the transaction 95\. As mentioned (section 1\.5), the PRG covered guaranteed lenders from the risks arising from the government’s failure to meet its payments obligations with respect to making a compensation or other payment upon termination of the Implementation Agreement or the PPA (or at any other time under) by reason of any of: (a) political force majeure, (b) changes in law and events making the project contractual agreements unenforceable or void, (c) Government-imposed restrictions on the ability of BEL to be paid or to receive foreign currency or transfer funds abroad, and (d) failure of the Government to fulfill its payment obligations relating to UETCL purchase of power and termination payments due by UETCL\. Among these risks, the risks of political force majeure and changes in law were covered only by the PRG for commercial lenders; therefore, the PRG made a valuable contribution to the Project by addressing risks that were not covered by other parties and created a level of confidence to all parties involved\. 96\. In a broader perspective, the energy delivered by Bujagali HPP helped to practically eliminate the load-shedding prevailing in the power system and, hence, contributed substantially in improving the technical and financial performance of the power sector, as well as the sustainability of the transaction itself\. 5\.3 Key issues or events that may arise in the future that could lead to a potential call on the guarantee 97\. There are no significant risk factors that could lead to a call of the guarantee\. This perception is consistent with the ISR ratings of the Bank’s team that consider the overall guarantee risk to be negligible\. 98\. The Bujagali HPP is in commercial operation since October 2012 and the guarantee expires in November 2023\. Since its commissioning, the plant has performed above the expected technical standards and has operated within a business environment characterized by political, legal and regulatory stability, with no obstacles for foreign exchange convertibility and transferability\. The only event that could generate a situation of guarantee being called is the Government’s failure to fulfill its payment obligations\. Such a risk is mitigated by the stability of the business environment and by the Project’s positive impact on the power sector’s financial performance\. In addition, the 26 refinancing of the Bujagali HPP approved by the Board on March 8, 2018 and which became effective since July 20, 2018 will cause an average reduction of Bujagali HPP tariff of 2018-2023 by about USc5\.5/kWh\. This reduction in tariff benefits from an additional tax holiday granted by the GoU to the Bujagali HPP sponsor\. This will further benefit the financial performance of the Uganda Power sector, as this reduction in Bujagali HPP tariff will have an average reduction in Uganda Power Sector end user tariff by about USc2\.3/kWh\. 6\. Assessment of Bank and Borrower Performance 6\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory\. 99\. The World Bank’s performance during project design/preparation was Moderately Satisfactory\. The project’s development objective proposed by the World Bank was an appropriate response to country’s needs and was fully compatible with the emergency situation of the power sector and the GoU’s development priorities\. Upon the collapse of the first attempt to build the Bujagali HPP, the World Bank, in close and effective collaboration with IFC, other lenders and the GoU, did a proper due diligence and put together a new project that addressed the shortcomings of the previous design and incorporated the lessons of the first IPN process (2002-2003)\. This effort correctly included (a) improving governance standards through the introduction of competitive bidding and (b) a more thorough assessment and preparation of social and environmental matters\. 100\. At appraisal, the World Bank made an extensive and realistic assessment of critical risks that could affect the project’s performance\. Furthermore, the World Bank helped structure a comprehensive financing plan with adequate coverage to provide comfort to commercial lenders\. The key outcome indicators to be monitored were considered meaningful, simple, quantifiable, and adequate for a private project operation that also had its own monitoring mechanisms\. 101\. Large hydropower development is a complex and challenging venture that requires addressing potential problems in multiple dimensions: social, environmental, technical, economic, and financial\. As such, it is common to encounter problems of design that often affect project implementation\. In this regard, the Bujagali HPP was no exception\. The project experienced cost increases and completed construction with delays\. However, the project still met its development objectives\. 102\. Shortcomings in the design of the project (mostly on social and environmental matters) triggered an IPN process that concluded that the World Bank was not in full compliance with five operational policies\. Two new allegations were submitted to the IPN in September 2016 challenging the impending impacts on the KFS by the Isimba HPP under construction by the GoU\. However, this project was not eligible for investigation as it closed in 2012\. (b) Quality of Supervision Rating: Moderately Satisfactory\. 103\. World Bank supervision activities included monitoring the project’s implementation in all dimensions, continued reporting, assessment of the guarantee obligations, and coordinating activities with Government agencies and many lenders\. The World Bank conducted well-staffed periodic missions that were integrated into the joint lenders’ supervision missions\. The missions’ 27 Aide Memoire and ISRs reflect a thorough supervision effort in following the project’s construction progress, as well as its compliance with World Bank social and environmental safeguards\. A smooth coordination with other lenders helped harmonize criteria and minimize the cost to the GoU and sponsor\. 104\. Upon the issuance of the IPN Investigation Report (2008), World Bank management and staff worked diligently on preparing a MAP that directly addressed all noncompliance issues raised by the IPN\. The implementation of the MAP was monitored by several external entities and reported to the Board on a timely fashion\. This open and thorough process helped solve, though with some delays, all the issues raised by IPN\. 105\. Overall, the World Bank was a trusted and supportive partner that took a clear position on the many challenging issues that had to be addressed\. The constant presence in the field with biannual multi-lender missions plus the support of local staff, as well as the attention given to the project by World Bank management, secured high-quality supervision\. However, the monitoring of land title issue could have been stronger, as the issue remained outstanding for at least three years after the project commissioning\. Hence, the World Bank’s performance is considered Moderately Satisfactory\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory\. 106\. Considering preparation and supervision ratings, an overall rating of Moderately Satisfactory is assigned\. 6\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory\. 107\. The GoU was strongly committed to the project through all its phases\. This commitment was reflected in various manners, including the following: (a) providing a US$75 million bridge loan to BEL during the negotiations of the EPC contract, with the aim of locking in the EPC contract price and launching construction before financial closure; (b) establishing and ensuring the functioning of the BEMC with representation of all agencies involved in the project, to monitor safeguard issues in a comprehensive manner, report, and provide recommendations; (c) ensuring the continuity of the resettlement process upon the collapse of the first attempt to build the Bujagali HPP; (d) supporting the UETCL as a credible off-taker with timely payments to BEL; and (d) maintaining an environment of legal and regulatory stability and supporting the continued commercialization of power sector operations\. 108\. A key public sector player in the project has been the state-owned transmission company UETCL\. UETCL is the designated off-taker of the Bujagali HPP’s electricity production under a 30-year PPA, as well as the owner of the transmission infrastructure required to deliver the project’s energy to the national grid\. During the first years of project operation, UETCL has built a reputation of a good payer\. Other public institutions playing an important role in the project are the Ministry of Energy and Mineral Development, the main government counterpart for BEL and official lenders, and the NEMA, the agency responsible for licensing and supervision of environmental matters\. 28 109\. While the GoU was clearly supportive of the project, some of its agencies suffered from limited resources and hence had difficulty in complying with the project’s requirements on time\. The GoU’s performance revealed the following shortcomings: (a) delays in the implementation of the CDAP, in the rural electrification program; (b) considerable delays in providing land titles to households resettled by the project; and (c) authorizing the construction of the Isimba HPP without adequately determining the magnitude of impact and identifying appropriate mitigation measures for the KFS\. Consequently, the Government’s performance is rated Moderately Satisfactory\. (b) Implementing Agency Performance Rating: Moderately Satisfactory\. 110\. The sponsor’s power company BEL is the implementing entity of the project\. Before the project, BEL did not have much experience in hydropower\. Hence, BEL engaged the services of a well-known engineering firm to act as the owner’s engineer\. Upon its selection through a competitive process, BEL proceeded to select an international EPC contractor for the project on a turnkey basis\. Similarly, it has appointed an experienced power company to manage the plant’s O&M activities\. In agreement with the GoU and on behalf of the off-taker UETCL, BEL took care in an efficient manner the procurement and construction processes for the interconnection project required to deliver the Bujagali HPP’s energy to the power grid\. 111\. BEL has ensured that the plant’s technical performance adheres to international standards, surpassing the targets established by the PPA and IDA’s key monitoring indicators\. BEL’s reporting on the project’s construction and operation, costs, and social and environmental issues was highly useful for the GoU and lenders alike\. Overall, BEL proved to be a responsive, transparent, and very proactive implementing entity and was particularly helpful in addressing the demands of the tight scrutiny the project was subject to\. 112\. The shortcomings of BEL included suboptimal preparatory activities including conducting a bidding process which allowed about 20 percent increase in the bid price during post-award negotiations\. Furthermore, there were cost overruns during construction ending to about 32% increase in the EPC cost compared to bid opening price\. The construction of the project was also delayed by about 13\.6 months from the agreed delivery schedule\. 7\. Lessons Learned 113\. Coordinated World Bank Group (WBG) approach can deliver results in a complex project: The WBG’s return to hydropower in Africa through the Bujagali HPP confirmed its potential to contribute successfully in the development of complex infrastructure projects\. The harmonized participation of several WBG member institutions—IDA, IFC, and MIGA—was highly effective in all phases of the project cycle and contributed significantly toward the project’s success\. The complementarity of the WBG institutions’ financial instruments was pivotal in mobilizing the considerable level of private funds required for the project development\. Also, the WBG was able to optimize synergies among its institutions through a well-coordinated use of each institution’s resources and know-how during the due diligence process, country dialogue, and supervision\. In balance, these factors contributed toward a successful project outcome despite the multiple challenges (financial, technical, social, and environmental) inherent in HPPs\. 114\. Government commitment is crucial to successfully implement complex infrastructure projects: A consistent Government commitment is essential to ensure successful implementation of a large private infrastructure project\. Large projects, such as hydropower projects, are 29 particularly complex and often require the support of the Government to address challenges that the public sector is in a better position to tackle, such as a project’s licensing process, consultation with affected people, and some aspects of the compensation plan (for example, land titling)\. In fact, the participation of the Government in a large infrastructure project is vital to creating an enabling environment for private sector to participate and thrive in\. 115\. There is a tradeoff between upfront risk allocation and rapid execution of the project\. To start construction quickly, the GoU bid out the EPC contract before the geotechnical analysis was completed\. The geotechnical risk, which resulted in a significant cost increase during the construction was a tradeoff\. As waiting for the completion of the geotechnical study could have been even more costly, as it would have significantly delayed the commissioning of Bujagali HPP and use of emergency power supply would have continued\. The GoU and BEL made a sensible decision to take the geotechnical risk in the context of an emergency\. Such tradeoff between the upfront risk allocation and rapid execution of the project deserve a careful consideration and judgement\. Valuable lessons could be derived by analyzing why the post-award negotiations increased the EPC bid price by about 20 percent\. Understanding whether it was due to the procurement process followed or sub-optimal preparation of the bidding document, can provide valuable lessons for future projects\. The economic analysis of the project confirmed that even after accepting the cost overruns, the project had an actual EIRR of about 16\.7 percent\. 116\. An effective power sector reform can reduce off-taker risk: The Bujagali HPP’s experience confirms the view that undertaking a comprehensive power sector reform before a major private investment helps in reducing project risks and provide comfort to potential sponsors and lenders alike\. In the case of Uganda, private concession for electricity distribution to UMEME significantly improved the bill collection rate, strengthened financial viability of the sector and reduced off-taker risks\. 117\. Flexible procurement approach is needed in the context of limited competition\. Due to the high-risk perception in the electricity sector in Uganda, the Bujagali attracted only two EPC bidders, resulting in limited competition between the bidders\. Under such condition, following DFI’s practice of making public the financial bids gave an inadequate negotiating advantage to the winning bidder that resulted in an excessive EPC price increase that was ultimately borne by the Government and consumers\. A flexible procurement approach is needed when the project is high- risk by private sector and the competition is limited, including the avoidance of public reading of bid prices\. 118\. Coordination among financiers help lenders and clients alike\. The presence of many lenders poses a significant coordination challenge and the risk of having to deal with different procedures\. For example, BEL and the GoU had to cope with equivalents of Inspection Panel from multiple lenders (e\.g\. Independent Review Mechanism by AfDB), which has taken significant resources\. Addressing such a challenge requires a flexible approach from all parties\. The joint lenders’ mission approach practiced in the Bujagali HPP proved to be an effective way to harmonize criteria and minimize the distraction (of resources) to the sponsor and government agencies\. The joint lenders’ mission was led by a different lender each time, which ensured the involvement of all parties in a balanced manner\. 119\. Off-set arrangements require careful identification and implementation\. During the project preparation, the KFS was identified as the offset site in compensation for the loss of the Bujagali Falls, considering that it was an area ecologically similar to the area lost\. This decision 30 was made without rigorous identification of a baseline on the natural habitat, environmental, and spiritual values\. A clear demarcation of the off-set area was also missing\. It is also likely that the identification process did not consider the GoU’s hydropower development plans and other stakeholders’ interests in the KFS, such as the tourism and white-water rafting industries\. Careful assessment of these interests during project preparation would have identified potential risks to the long-term sustainability of the off-set and consistent mitigation measures would have been designed and put in place\. It is also worth noting that the SMP of the KFS was too broad, covering areas outside the KFS, to be actionable\. It would have been useful if the SMP was developed specifically for the KFS\. Also, an offset arrangement requires monitoring beyond a project’s implementation period, hence a legal recognition of the KFS within the Ugandan statutory framework could have been useful, right from the beginning, to strengthen the SMP and effective monitoring and enforcement of the KFS in the long-term\. Therefore, when offsets are involved, it is critical to have a comprehensive picture of development plans and assessments on the feasibility of concurrent development\. This is important for the government primarily but also for the Bank to ensure developments happen as per agreed plans\. 120\. Responding to the IPN’s findings can improve the project’s performance without causing major delay in implementation\. The Bujagali HPP, like other large infrastructure project, was implemented under the tight scrutiny of local and international civil society, including an eventual IPN investigation during the project implementation period\. While this process helps to increase the accountability of projects, it is important to avoid an adverse impact on the construction process, unless this is indispensable\. The Bujagali HPP’s experience in dealing with the IP N process was exemplary in this regard\. The findings of the IPN were used to improve the project’s safeguards compliance, without causing any significant delays in project works\. 121\. The project design should have been further strengthened based on first IPN findings\. The project design had shortcomings on social and environment aspect, which triggered an IPN investigation\. This investigation concluded that WB had not fully complied with five operational policies (see para 46 and para 102)\. This was after the first Bujagali project which found the project was lacking certain aspects of safeguard design and implementation\. A robust review of safeguard design and implementation against the backdrop of the findings from the first IPN investigation could have improved the project design and resulted in mitigation measures to prevent a recurrence of similar issues, as identified by the first IPN investigation\. Based on the IPN findings, a “checklist” of issues to be addressed could have been created to guide the design of the second Bujagali project and its implementation\. This project could have strengthened land acquisition management and safeguards issues in general\. 122\. Government’s commitment and engagement rapidly increased its capacity\. As the Bujagali was the first hydropower IPP in Uganda, it served as an important learning opportunity for the GoU\. The GoU benefited from external legal and technical experts that were involved in the design and construction of the Bujagali HPP\. Environmental and social safeguard practice of Bujagali became an important benchmark\. It was reported that the new hydropower plants currently under construction in Uganda are using the practice of Bujagali as a key reference\. 31 8\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing Agencies Main findings and conclusions of the sponsor’s completion report are presented in Annex 7\. (b) Co-financiers No comments received\. (c) Other Partners and Stakeholders No comments received\. 32  Annex 1\. Project Costs and Financing (a) Project Cost by Component (US$, thousands) Components Appraisal Actual Percentage of Estimate Appraisal Equipment Procurement and Construction - EPC (civil 520,064 616,452 +19 works, electromechanical equipment, and spares) Government Contributed Assets 20,000 20,000 0 Project Development Costs 26,838 30,322 +13 IDCa and Financing Fees 94,087 111,695 +19 Contingencies and DSRAb 82,082 46,003c –44 Initial Working Capital and Other Costs 55,509 67,027d +21 Total Project Costs 798,580 891,500 +12 Note: a\. Interest during construction; b\. Debt Service Reserve Account; c\. Debt service reserve only; d\. 19,112 for working capital and 47,915 for pass-through cost (‘other costs’)\. (b) Financing (US$, thousands) Source of Funds Appraisal Actual Percentage of Estimate Appraisal Equity Project sponsors 151,570 179,761 +19 Government 20,000 20,000 0 Total equity 171,570 199,761 +16 Debt IFC 130,000 128,366 -1 EIB 130,000 136,000 +5 Commercial banks (Guaranteed Lenders) 115,000 115,000 0 AfDB 110,000 111,000 +1 European DFIs 142,010 213,103 +50 Total debt 627,010 703,469 +12 Total debt and equity 798,580 903,230 a +13 Note: a\. The discrepancy between the actual cost of the project and the financing cost is explained by the fact that, in accordance to contractual agreements, two expenditure categories were disallowed and thus not considered as part of the project’s final cost for the purposes of the PPA\. Disallowed expenditures included US$0\.8 million for the EPC cost and US$10\.8 million that exceeded the permitted development costs\. 33  Annex 2\. Outputs by Component 1\. Table 2\.1 presents the project’s outputs, which evidence a satisfactory performance when compared to its outcome indicators’ targets\. The section below elaborates on the reassessment of a key indicator: the levelized cost of electricity\. Table 2\.1\. Project’s Outputs PDO Project Outcome Target Actual Indicators To provide least-cost Electricity 1,165 1,352\.7 power generation generated (GWh) (first year of (16 percent above the performance capacity that will from the proposed operation) target) eliminate power 250 MW Bujagali shortages HPP Levelized cost of 5\.7 for high 7\.69 for high hydrology–11\.37 for low electricity (U\.S\. hydrology–9\.7 for hydrology cents/kWh) from low (base) 9\.47 for ICR “base case” the hydropower hydrology plant Unmet electricity 0 Load shedding eliminated upon the demand commissioning of Bujagali Hydropower (GWh/month) Project (HPP) Intermediate Outcome Indicators/Milestones Power plant is Achievement of Financial closure Achieved on December 21, 2007 commissioned on time financial closure and first and budget disbursement achieved by 2007 Plant construction Construction to be The plant was handed over on October 8, progress completed in 44 2012, that is, a delay of 13\.6 months months from financial closure 2\. Estimation of the LCOE\. The project’s LCOE was reassessed on the basis of actual data on the project’s costs and electricity generation for 2013–2015 and used the same methodology of the PAD\. The computation covers 2013–2042\. • Capacity charge payment\. The figure of UETCL’s capacity payment is taken from BEL’s financial model of May 2016, which uses actual figures up to 2015 and projected figures from 2016 onward\. Payments vary year to year according to the schedule of debt repayment to lenders and dividend payment to project sponsors and the GoU\. • Electricity generation\. Actual generation figures are used for 2013 to 2015\. From 2016 to 2042, a capacity factor of 68 percent, or annual generation of 1,489\.2 GWh, was assumed\. This figure is based on consultation with BEL about the estimated capacity factor of the Bujagali HPP\. • Cost of capital\. The Weighted Average Cost of Capital (WACC, used for discounting) is based on the amount and estimated cost of debt and equity\. Based on the estimated data at project completion and assumptions outlined above, the LCOE is estimated to be USȼ9\.47 per kWh (2006 U\.S\. dollar) for the 30-year PPA period\. A sensitivity analysis for high and low hydrology was undertaken using the same hydrological scenarios of the PAD\. The result is shown in table 2\.2\. 34  Table 2\.2\. Project’s LCOE Base Case High Hydrology Low Hydrology LCOE (2006 U\.S\. cents/kWh) 9\.47 7\.69 11\.37 3\. In conclusion, on PDO performance indicators, the project: • performed above the performance target for electricity generated (GWh) (which may have been due to better-than-expected hydrology); • under-achieved the targets for the Levelized Cost of Electricity when compared against the PDO range of USȼ5\.7 (high hydrology – 9\.7 for low (base) hydrology; and • achieved the performance target for unmet load demand\. 4\. With respect to the intermediate indicators, the project: • achieved financial closure within 2007 (on December 21, 2007), as expected; and • experienced 13\.6 months of delay in construction completion\. 35  Annex 3\. Economic and Financial Analysis 1\. An economic analysis of the Bujagali HPP was conducted to assess the efficiency of the project’s outcome\. To ensure consistency with the appraisal’s analysis, the methodology employed in the PAD and the consultant’s report25 has been replicated as nearly possible\. (a) Economic Analysis at Appraisal 2\. During the preparation stage, a comprehensive economic and financial analysis was undertaken by a consulting firm\. The economic analysis included a least-cost analysis that assessed multiple expansion plans for Uganda’s power system with variations in demand forecast, hydrology, fuel prices, and investment costs of Bujagali HPP\. A summary of the original assumptions and approaches is presented in table 3\.1\. 3\. Costs\. These included direct costs associated with the Bujagali HPP and the expansion costs of transmission and distribution infrastructure necessary to deliver the electricity generated to end users\. The project’s capital investment costs were estimated based on the latest negotiation with the EPC contractor at the time of appraisal, including also the interconnection of the plant to the grid, environmental and social management costs, development costs and physical contingencies, but excluding financing costs\. Although the Bujagali Interconnection Project was dealt as a separate project, it was included in the economic analysis to capture the entire cost incurred to the power system\. O&M costs of generation, transmission, and distribution infrastructures were also included\. The details are provided in table 3\.1\. Table 3\.1\. Cost Estimates of the Bujagali HPP at Appraisal Item Cost at Appraisal Remarks (US$, thousand) System Expansion Cost Generation 520,616 Including interconnection, environmental, and social management costs Transmission 56,301 Assumed US$206\.2 per kW based on long-term average cost; incremental cost analysis on Umeme’s transmission expansion plan Distribution 175,747 O&M Cost Generation 3,000 per year US$1 per kW per month Transmission 563 per year 1 percent of cumulative investment cost Distribution 3,515 per year 2 percent of cumulative investment cost 4\. Benefits\. The project benefits consist of three components stemming from (a) incremental demand of electricity users, (b) displaced thermal generation costs, and (c) reduced cost of unserved energy demand\. The incremental demand is the additional electricity provided to users by the project, and its benefit was calculated based on the demand forecast and the willingness to pay (WTP) of various customer segments\. The WTP was derived from projected electricity tariffs, international oil price, and the cost of lighting fuels\. The benefit of displaced thermal generation was computed based on the cost of thermal (diesel and heavy fuel oil) generation displaced by the Bujagali HPP\. The cost of unserved energy is incurred when there is a supply deficit\. This cost was marginal in the base case scenario (US$36,000 from 2019 onwards)\. Total project benefits ranged between US$160 million and US$200 million per year, or US$0\.16–0\.18 per kWh\. These 25 Power Planning Associated Ltd\. Bujagali II—Economic and Financial Evaluation Study, final report\. February 2007\. Study commissioned by the IFC\. 36 figures exclude the benefit arising from greenhouse gas reduction\. Some of the key assumptions, such as the demand forecast figures and the quantity and per unit cost of displaced thermal energy, were not explicitly provided in the PAD or in the consultant firm’s report\. 5\. Economic efficiency\. The economic analysis at appraisal concluded that the EIRR of the Bujagali HPP under the most likely scenario (base case for demand, oil prices and investment cost; low hydrology) was 22\.0 percent\. This figure varied from 12\.4 percent to 25\.8 percent, depending on the scenarios considered\. The NPV for the base case was US$421\.7 million\. (b) Changes in Costs and Benefits since Appraisal 6\. Costs\. Actual project costs increased by 44\.68 percent compared to the appraisal estimates—about 46\.3 percent increase for the power plant and 26\.6 percent for the Bujagali Interconnection Project\. The breakdown is provided in table 3\.2\. Table 3\.2\. Change in Project Costs (US$ thousands) aa Appraisal Actual Change (percentage) Bujagali Hydropower Project 474,892 694,689 +46 EPC contract 441,355 616,452 +40 Environmental and social management 8,258 13,430 +63 Development costs 25,279 30,322 +20 Other pass-through costs 34,485 n\.a\. Bujagali Interconnection Project 45,724 57,888 +27% Interconnection 27,990 43,951 +57% Environmental and social management 17,734 13,937 -21% Project total cost 520,616 752,577 45% Note: aa\. The project cost estimate used for Economic and Financial Analysis differs with that provided in Annex 1 Project Cost and Financing\. a\. Other pass-through costs include legal and technical fees, license fees, IDA guarantee fee, and so on, among others\. Source: PPA (2007) Bujagali II-Economic and Financial Evaluation Study, UETCL (2016) Bujagali Interconnection Project Completion Report\. Ernst and Young (2013) Bujagali Energy Limited Final Costs Report\. 7\. The EPC contract of the Bujagali HPP is the largest driver of cost increase\. The estimated EPC cost in 2007 was around US$441 million\. When the PAD went to the Board in April 2007, the EPC cost had increased to US$520 million\. This last figure was not used in the PAD’s estimation of the EIRR and NPV, presumably because the adjustment came after the economic study’s completion\. At completion of the power plant, the final EPC cost was US$616 million\. This increase in an amount of US$94 million is attributed to multiple expenses incurred during construction: ground condition work (US$31 million), modifications required due to inaccuracy of previous studies provided to the EPC contractor (US$25 million), and others\. It is worth noting that, according to the negotiated agreements, geotechnical risks were borne by the GoU\. Hence, the EPC contractor claimed significant additional expenditures for ground conditions and other works which were not part of the original study and design\. 8\. Benefits\. The original plan of the project was to start electricity generation in 2011\. However, construction was delayed, and the plant was commissioned in August 2012\. This delay resulted in postponed project benefits\. However, project benefits were still positive due to the following factors: • More generation\. The assumption at the appraisal for the low-hydro scenario, 37  considered as the base case, was that the plant would generate 1,165GWh per year\. Actual hydrological conditions have so far been more favorable as the power plant is currently generating more than 1,350 GWh per year\. This has allowed electricity consumption to grow without facing generation constrains\. • Higher oil price\. The original economic analysis assumed crude oil price of US$68 per bbl in 2007, gradually dropping to US$32 per bbl in 2015 for the base case scenario\. Actual oil prices were higher and kept increasing to peak at US$91 per bbl in 2013 and dropped to US$47 per bbl in 2015\. The higher oil price increased the benefit of diesel fuel and heavy-fuel oil savings from thermal displacement\. Similarly, this increased the benefit for commercial and industrial electricity users, who saved diesel fuel for their self-generation, as well as newly connected customers who saved traditional lighting fuels such as kerosene\. • Higher retail electricity tariff\. The original analysis made a retail tariff assumption of US$20\.3 per kWh, which declined and stabilized at US$17\.2 per kWh with the commissioning of the Bujagali HPP in 2011\. In reality, retail tariffs in Uganda increased, rather than decreased, by approximately 30 percent in 2012 (year of Bujagali HPP commissioning)\. The demonstrated WTP of existing consumers for a higher tariff indicates a higher economic value of the electricity\. Hence, the unit benefit of incremental electricity consumption is higher than originally estimated\.26 • Increase in new connections\. The original analysis assumed an annual increase of 25,000 residential customers from 2011 to 2020\. In reality, the number of customer connections increased more rapidly than anticipated: an average of 100,000 residential customers per year since the project’s commissioning\. More connections to electricity grid translate into greater benefits of replacing traditional lighting fuels and candles with electricity\. (c) Actual Economic Performance 9\. Based on the actual parameters described above, the EIRR and NPV of the Bujagali HPP are estimated as shown in table 3\.3\. Table 3\.3\. Project’s Economic Indicators Appraisal Actual EIRR (percentage) 22\.0 16\.7 NPV (2006 US$, million) 421\.7 211 10\. It should be noted that the following methodological adjustments have been made: • The benefit arising from electricity export was not included in the recalculation\. This benefit was marginal in the appraisal analysis and Uganda is currently not exporting electricity\. • The cost arising from unserved energy was not included either because this cost was marginal at appraisal\. 26 The tariff charged by BEL to UETCL is set high in the first 11 years to repay the project debt, and it declines after the debt has been fully repaid\. The original economic analysis did not take into account this pattern and assumed immediate tariff decrease after Bujagali HPP’s commission\. 38  • The distribution expansion costs were kept as in the appraisal (US$176 million over seven years), assuming that the cost of distribution infrastructure did not significantly change with the number of new connections\. 11\. The EIRR and NPV of the project are lower than the appraisal estimates, but they still demonstrate a robust economic performance and confirm that the project was an important component of the power generation least-cost expansion\. The cost of the project increased significantly, primarily due to higher EPC costs, but project benefits also increased owing to greater electricity generation, higher oil price, higher electricity tariff and a rapid growth of new customer connections\. (d) Project Financial Performance 12\. The project’s financial performance has been reassessed using actual values\. Financial projections confirm that the project remains financially sound, with a minimum Debt Service Coverage Ratio (DSCR) of 1\.5 over the terms of the loans\. The project’s financial rate of return was re-estimated at 9\.3 percent, below the appraisal estimate of 11\.2 percent and slightly above the WACC\. The decline in the financial indicators is attributed to the considerable increase in the cost of the EPC contract and the delay in the plant’s commercial operation\. However, results remain positive because a great part of the cost increases were not borne by the sponsor BEL but passed through to the off-taker, UETCL\. Table 3\.4\. Project’s Debt Service Recovery Ratio (US$ thousands) 2013 2014 2015 2016 2017 2018 Operating income 152,982 135,944 146,034 153,221 157,377 198,250 Debt service 100,742 70,327 87,088 88,503 85,283 86,343 DSCR 1\.5 1\.9 1\.7 1\.7 1\.8 2\.3 39  Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Lending World Bank Names Title Unit Responsibility/Specialty Malcolm Cosgrove-Davies Team Leader and Sr\. Energy Specialist AFTEG Task Team Leader Suman Babbar Senior Advisor FEU Karen Rasmussen Lead Financial Analyst AFTEG Robert Schlotterer Financial Analyst AFTEG Gulam Dhalla Consultant (Finance) AFTEG Mark Segal Consultant (Economics) AFTEG Helena Kofi Procurement Analyst AFTEG Janine Speakman Operations Analyst AFTEG Raymond Bourdeaux Sr\. Infrastructure Specialist FEU Richard Olowo Senior Procurement Specialist ACTPC Patrick Piker Umah-Tete Sr\. Financial Management Specialist AFTFM Paul Baringanire Consultant AFTEG Regional Environmental and safeguard Warren Waters AFTQK advisor Robert Robelus Consultant AFTU2 Maria C\. J\. Cruz Senior Social Development Specialist SDV SDV Agnes Kaye Program Assistant AFMUG Tigest Tirfe Program Assistant AFTEG IFC Names Title Unit Responsibility Francisco Tourreilles Director CINDR Thierry Tanoh Director CAFDR Rachel Kyte Director CESDR Darius Lilaoonwala Senior Manager CININ Jean Philippe Prosper Senior Manager CAFE1 Patricia Miller Manager CESIG Adil Marghub Principal Investment Officer CININ Saleem Karimjee Principal Investment Officer CAFS 1 Belen Castuera Investment Officer CININ Dan Kasirye Investment Officer CAFE 1 Romani Curtis Investment Analyst CININ Carlos Algandona Principal Power Engineer CININ John C\. Kittridge Principal Environmental Specialist CESIG Nicholas E\. Flanders Senior Environmental Specialist CESIG Moez Cherif Economist CINDR 40  John R\. Coogan Manager CLEIP Yeages Cowan Counsel CLEDC Martha Yebra-Bryant Senior Insurance Officer CESIS Jill D\. Partington Insurance Analyst CESIS Ann Pasco Communications Officer CEXCM Lucie Cecile Giraud Communications Officer CESKI Sandra Estrada Team Assistant CININ MIGA Names Title Unit Responsibility Philippe Valahu Acting Director MIGOP Zhengrong Lu Sr\. Underwriter MIGOP Thomas Vis Sr\. Risk Management Officer MIGEP Srilal Perera Chief Counsel MIGLC Michael Silverman Lead Counsel MIGLC Robert McDonough Sr\. Environmental Specialist MIGEP Deniz Baharoglu Sr\. Social Sector Specialist MIGEP Angela Gentile Sr\. Communications Officer MIGEO Judith Pearce Lead Operations Officer MIGEO Lorie Henson Program Assistant MIGOP Supervision Malcolm Cosgrove-Davies Lead Energy Specialist GEEDR Task Team Leader Karen T\. Rasmussen Lead Financial Analyst n\.a\. Suman Babbar Consultant GWASP Janine A\. Speakman Operations Analyst GEEDR Maria Concepcion J\. Cruz Lead Social Development Special n\.a Kristine M\. Ivarsdotter Senior Social Development Spec n\.a\. Robert A\. Robelus Consultant GEN05 Raymond Bourdeaux Program Leader ECCU4 Robert Schlotterer Lead Infrastructure Finance Specialist GEEFS Paul Baringanire Senior Energy Specialist GEE05 Mary C\.K\. Bitekerezo Senior Social Development Spec GSU07 Martin Fodor Senior Environmental Specialist GEN2B Somin Mukherji Senior Financial Analyst n\.a\. Task Team Leader Howard Bariira Centenary Senior Procurement Specialist OPSPF Paul Kato Kamuchwezi Financial Management Specialist GGO31 Herbert Oule Environmental Specialist GEN01 Constance Nekessa-Ouma Social Development Specialist GSU07 Mbuso Gwafila Senior Energy Specialist GEE01 Mitsunori Motohashi Senior Energy Specialist GEE03 Task Team Leader 41  Vladislav Vucetic Lead Energy Specialist GEE01 ICR Raihan Elahi Lead Energy Specialist GEE01 Task Team Leader Enrique Crousillat Consultant, Lead ICR Author n\.a\. Kenta Usui Energy Specialist GEE01 Chita Obinwa Senior Program Assistant GEE01 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle US$, Thousands (including travel and No\. of Staff Weeks consultant costs) Lending FY2005 25\.7 202,418\.8 FY2006 32\.1 293,692\.3 FY2007 51\.7 407,677\.2 FY2008 22\.2 124,255\.0 Total 131\.62 1,028,043\.24 Supervision/ICR FY2008 35\.2 178,368\.5 FY2009 48\.6 291,904\.7 FY2010 19\.28 103,345\.1 FY2011 17\.14 79,898\.4 FY2012 16\.33 78,792\.0 FY2013 14\.41 106,282\.3 FY2014 9\.82 49,499\.1 FY2015 19\.76 112,264\.0 FY2016 15\.18 93,865\.0 Total 195\.64 1,094,218\.9 42  Annex 5\. Beneficiary Survey Results Not applicable\. 43  Annex 6\. Stakeholder Workshop Report and Results Not applicable\. Project stakeholders comprise a very broad group, from private sponsors, lenders and consumers, to local affected people\. There were consultation workshops for local stakeholders at the early stages of the project, focusing mainly on social and environmental issues, but, given the nature of the stakeholders’ universe, there was no workshop at the completion of the project\. 44 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR 1\. In August 2014, the sponsor, BEL, issued a Project Completion Report comprising the following main components: a technical description of the project, a review of the project’s time schedule and compliance with contractual conditions, project final costs, implementation of the Social and Environmental Action Plan, plant production data, an assessment of significant risks, and outstanding legal conditions concerning the project\. 2\. Main findings and conclusions of the report are summarized here: • Ground conditions required two significant construction changes: (a) an extension of the embankment grout curtain on both abutments of the dam that added a cost of US$7\.17 million to the onshore EPC contract and (b) a new reinforced concrete channel that extended 135 m beyond the original gated spillway structure\. This work implied an onshore cost of US$20\.5 million and 10 months’ time extension and an offshore cost of US$500,000\. • Changes in ground conditions, including time extensions totaling 12\.5 months, variances in the work from the tender, and some additional changes, led to an EPC cost increase of US$61\.4 million, that is, around 10 percent of the agreed price\. • At construction peak, over 3,000 people worked on the hydropower plant, both for the contractor and BEL\. • The report considered that there were no major issues with impact on the environment\. • Overall, the APRAP and CDAP were implemented as planned and largely achieved the intended objective of restoring and improving livelihoods of project-affected people\. • BEL fully complied with NEMA’s project social and environmental approval conditions\. Compliance was validated, among others, by annual environment audits and routine monitoring by the BEMC\. • By August 2014, the power plant’s operation was satisfactory, after overcoming a set of first-year issues and reaching a cumulative availability of over 98\.8 percent\. • The report did not identify any significant risk factors that could affect the project’s operation\. • The report makes reference to two outstanding legal actions concerning claims on damages and compensation sought by affected people\. 45 Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders No comments received\. 46 Annex 9\. List of Supporting Documents • African Development Bank\. Independent Review Panel, Compliance Review Report on the Bujagali Hydropower and Interconnection Projects\. 2008\. • Bujagali Energy Limited\. Annual Environmental Performance Report\. March 2016\. • Bujagali Energy Limited\. Project Completion Report\. August 2014\. • Bujagali Energy Limited\. Final Costs Report\. November 2013\. • Bujagali Energy Limited\. Quarterly Construction Reports\. • Bujagali Energy Limited Social and Environmental Monitoring Reports\. • Bujagali Energy Limited\. Operations Report in terms of Clause 20\.5\.5 of the Common Terms Agreement January 2015 to December 2015\. • Burnside International Limited\. Bujagali Hydropower Project – Social and Environmental Assessment\. December 2006\. • Colenco Power Engineering Ltd\. Bujagali Hydropower Development - Uganda\. Project Review and Assessment Report for the International Finance Corporation (IFC)\. July 2007\. • Electricity Regulatory Authority\. Annual Report, 2012–2013\. • Electricity Regulatory Authority, Statistics\. • Ernst and Young\. Bujagali Energy Limited Final Costs Report\. 2013\. • Guarantee Agreement\. December 21, 2007\. • Harvard Business School\. International Rivers Network and the Bujagali Dam Project (a)\. 9- 2-4-083\. April 2005\. • Implementation Agreement relating to the Bujagali Hydroelectric Project - Uganda\. December 2005\. • Indemnity Agreement\. July 18, 2007\. • Joint Lenders Bujagali Hydropower Project Aide Memoire of Supervision Missions 1 through 11\. 2008–2015\. • Power Planning Associated Ltd\. Bujagali II - Economic and Financial Evaluation Study\. February 2007\. • Power Purchase Agreement relating to the Bujagali Hydroelectric Project - Uganda\. December 2005\. • Project Agreement\. December 21, 2007\. • Mac Cosgrove-Davies Lessons from Bujagali on Risk Management\. 2013 • Uganda Electricity Transmission Company Limited\. Bujagali Interconnection Project\. Project Completion report\. March 2016\. Uganda Electricity Transmission Company Ltd\. Annual Report 2013\. 47 • World Bank Inspection Panel\. Investigation Report\. Uganda: Private Power Generation (Bujagali) Project\. Report No\. 44977-UG\. August 2008\. • World Bank Inspection Panel\. Investigation Report\. Uganda: Third Power Project, Fourth Power Project and Bujagali Hydropower Project\. Report No\. 23998\. May 2002\. • World Bank Aide Memoire for the Project’s Supervision Missions, 205, 2007, and 2015\. • World Bank\. IEG Review of the (Cancelled) Bujagali Hydropower Project\. Report No\. ICRR 12388\. February 2006\. • World Bank Management Report and Recommendation in Response to the Inspection Panel Investigation Report\. Uganda: Third Power Project, Fourth Power Project, and Bujagali Hydropower Project\. Report No\. 24272\. July 2002\. • World Bank Management Report and Recommendation in Response to the Inspection Panel Investigation Report\. Uganda-Private Power Generation (Bujagali) Project\. Report No\. IDA/R2008-02296\. November 2008\. • World Bank Project Appraisal Document (PAD) for the Private Generation (Bujagali) Project in the Republic of Uganda\. Report No\. 3821-UG\. April 2007\. • World Bank Project Implementation Status Reports (ISRs) 1 through 8\. 2007–2016\. • World Bank Estimation of the Levelized Cost of Electricity\. ICR team draft, September 2016\. • World Bank\. Ex-post Economic Analysis of the Bujagali Project\. ICR team draft, October 2016\. • World Bank: Seventh Progress Report on the Implementation of Management's Action Plan in Response to the Inspection Panel Investigation Report, Uganda Private Power Generation (Bujagali) Project, February 2018\. 48 Map 49

REVIEW

P075163

 ICRR 14403 Report Number : ICRR14403 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/02/2014 Country : Romania Project ID : P075163 Appraisal Actual Project Name : Hazard Risk US$M ): Project Costs (US$M): 205\.15 174\.83 Mitigation & Emergency Preparedness Project L/C Number : L4736 Loan /Credit (US$M): Loan/ US$M ): 150\.00 138\.45 Sector Board : Urban Development US$M): Cofinancing (US$M ): 12\.48 10\.2 Cofinanciers : Global Environmental Board Approval Date : 05/20/2004 Facility Closing Date : 12/31/2009 06/30/2012 Sector (s): Flood protection (50%); Sub-national government administration (25%); Central government administration (20%); Mining and other extractive (5%) Theme (s): Water resource management (29% - P); Natural disaster management (29% - P); Pollution management and environmental health (14% - S); Rural services and infrastructure (14% - S); Other urban development (14% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Roy Gilbert Victoria Alexeeva Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: To assist the Borrower in reducing the environmental, social, and economic vulnerability to natural disasters and catastrophic mining accidental spills of pollutants through : (i) strengthening the institutional and technical capacity for disaster management and emergency response; (ii) implementing specific risk reduction investments for floods, landslides and earthquakes; (iii) improving the safety of selected water retention dams; and (iv) improving the management and safety of tailings dams and waste dump facilities \. (source: Loan Agreement - LA\. Schedule 2 p\.14)\. The Project Appraisal Document (PAD) reports the same objective, but with two additional details \. First, it adds "though upgrading communication systems " to the end of item (i) of the LA objective\. Second it inserts "on a pilot basis" as a qualifier to the improvement sought under item (ii) of the LA objective\. (source; PAD p\. 3) The project also supports a Global Environmental Facility (GEF) global environmental objective, namely, "To demonstrate and provide for replication for the reduction of catastrophic accidental spills of transboundary pollution loads from mine operations flowing into the Danube and Black Sea basins \." Following IEG norms, this ICR Review bases its assessment upon the project objective as formulated in the legal agreement, and the ICR Review does not rate the project performance in achieving GEF's global environmental objective\. Although the word "emergency" appears in both the project title and objective, this project was not an emergency operation and it was financed by a Specific Investment Loan (SIL)\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives /key associated outcome targets? No c\. Components: A\. Strengthening of emergency management and risk financing capacity (appraisal cost: US$10\.0 million; actual cost (incorporating an element of the actual project management costs ): US$14\.7 million) - Modernization of information technology and communications systems \. Activities would increase the planning and training efforts at all levels of government, public awareness and preparedness, and complete technical feasibility work and institutional framework for launching of the Romanian Catastrophe Insurance Program \. Includes the following sub-components: (i) Upgrading emergency communications at the national, regional and local level; (ii) Development of emergency management information system; (iii) Development of a Vrancea earthquake scenario; (iv) Public awareness program; and (v) Preparation of catastrophe insurance program \. B\. Earthquake risk reduction (appraisal cost: US$63\.1 million; actual cost (incorporating an element of the actual project management costs): US$56\.5 million) - by retrofitting key structures and institutional strengthening \. Includes: (i) high priority public facilities; (ii) design and supervision; (iii) energy sector risk assessment; (iv) building code review; and (v) professional training in cost-effective retrofitting methods\. C\. Flood and landslide risk reduction (appraisal cost: US$89\.2 million; actual cost (incorporating an element of the actual project management costs ): US$ 99\.3 million) - improving safety of large and small dams so that these structures can function as designed, and to map and model the risk of landslides in Romania in order to reduce losses and provide for better land use planning tools \. Includes:: (i) flood protection infrastructure; (ii) Danube River bank protection; (iii) large dams safety; (iv) small dams safety; and (v) landslide pilot area studies and monitoring manuals\. D\. Risk reduction of mining accidents in Tisza Basin (appraisal cost: US$13\.7 million; actual cost (incorporating an element of the actual project management costs ): US$4\.3 million) for two high-risk and high-priority sites, the Rosia Poieni and Baia Borsa mines, that have been identified for emergency hazard prevention interventions during the initial phase of the project\. Additional sites for intervention will be identified during project implementation \. To serve as a model for replication for reducing mining accident risks to human and aquatic ecosystem health throughout Romania and other parts of the Tisza and Danube basins \. Includes: (i) establishment of a baseline and an environmental monitoring system; (ii) hazard prevention and remediation interventions; (iii) engineering and environmental guidelines for tailings and waste facilities; (iv) regional mine spill disaster response system; and (v) promoting trans-boundary cooperation for integrated water resources management for the Tisza Basin \. E\. Project management (appraisal cost: US$5\.0 million; actual cost: unknown as its elements were incorporated in the reported actual cost of each component, as noted above ) to finance the costs of creating and maintaining the project management units (PMU) to be established in the ministries responsible for project components \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project cost : Actual project costs were 85-90% of those estimated at appraisal \. There were bigger differentials between appraisal and actual costs at the level of components, although exact comparisons are not possible as the actual figures include elements of the Project Management cost that was treated as a separate component of the project estimated to account for 2\.3% of total project costs\. The main shortfalls of actual over appraisal costs were US$14\.7 million for Component B Earthquake risk reduction and US$ 11\.0 million for Component D Mining accident risk reduction\. On the other hand, there was an overrun of US$ 3\.8 million for the emergency management and risk financing component\. Financing : The IBRD loan of US$150 million appraised was 92% disbursed by completion eight years later \. Cofinancing consisted of a US$ 12\.5 million GEF Grant, of which US$10\.2 million was disbursed by completion \. Borrower contribution : The appraisal saw a government counterpart funding commitment of US$ 46\.7 million, of which the government paid in US$35\.9 million by completion\. Dates; According to the ICR's Data Sheet, the project was restructured six times between July 2009 and April 2012 (ICR p\. xvi)\. On the other hand the main text of the ICR (ICR pp\. 4-5) reports that the project was restructured only three times, giving the following details : 1\. August 2010 (level 1): (i) applying OP 4/12 on Involuntary Resettlement to all project components; (ii) reducing scope of project components affected by increased construction costs; (iii) reducing relevant indicator targets accordingly; (iv) extending completion date from December 31, 2009 to December 20, 2011 to allow for completion of all project activities\. 2\. December 2010 (level 2): (i) reallocating Loan proceeds and part of GEF Grant for completion of activities under components B, C, and D\. 3\. December 2011 (level not specified by ICR): (i) increasing Loan and GEF Grant financing to 100% of all categories of expenditure; (ii) reallocation of US$3\.4 million of Loan proceeds mostly within existing component categories; (iii) cancellation of US$6\.7 million from outstanding Loan amount; (iv) extending closing date by six months from Dec 20, 2011 to June 30, 2011 to allow completion of ongoing project activities Making total extension of two and a half years)\. \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Rating : Substantial The ICR reports that project objective was consistent at the time of appraisal with the Country Assistance Strategy CAS 2001 priority for improving preparedness for disasters in Romania, a country prone to natural and man -made disasters (ICR p\. 2)\. Beyond this statement, the ICR does not assess of the current relevance of the project objective to Bank and Borrower priorities and strategies at the time of completion \. In the TTL meeting, the TTL informed IEG that primary relevance of the project objective now is to Romania's Partnership Agreement for the 2014-2020 period that requires disaster mitigation policies and measures as intended by the project \. Its importance to government, IEG learned from the TTL, is that responsibility of this in government has been elevated by the appointment of a deputy minister to be solely in charge of disaster risk management \. b\. Relevance of Design: Rating : Modest The ICR does not provide an assessment of the relevance of design \. Thus it does not include an assessment of the extent to which the project's design--its activities and components --is consistent with the stated objectives, as well as an assessment of the project's results framework \. IEG's assessment here is that project design included components that could contribute towards the achievement of the project objective \. Better emergency communications and information systems, and the introduction of catastrophe insurance could help reduce vulnerability to natural disaster risks by strengthening the capacity to manage such risks \. Retrofitting existing key structures could help protect them from disaster risks\. Project flood and landslide risk protection, the project's largest component accounting for more than half the total project costs, could reduce the vulnerability of the population exposed to these risks for lack of infrastructure\. The risk of mining accidents was to be reduced by developing a model approach in the vulnerable Tisza Basin\. While these activities were relevant to reducing current vulnerabilities, there was little in the project for reducing additional vulnerabilities that can arise from the inadequate implementation of disaster risk management \. Without containment, the creation of additional vulnerabilities through allowing new developments in flood prone areas or not strictly observing building codes, can rapidly outpace the reduction of the existing ones, leading to a net increase of vulnerabilities overall instead of the reduction intended \. By proposing disaster risk mapping in the vulnerable area of Vrarncea and reviewing one chapter of Romania's building code that dealt with the retrofitting of buildings for seismic protection (ICR p\. 22) the project recognized these risks, but the project design was not focused primarily upon them\. Mainstreaming disaster risk reduction in this way is the principal activity of the Global Facility for Disaster Risk Reduction and Recovery (GFDRR), the flagship global program through which much Bank assistance in this area has been channelled in many countries \. During the meeting with IEG, the project TTL explained that this project design did not need to focus on reducing vulnerabilities through urban planning and land use controls since Romania's existing Law on National Planning Territorial Management was considered to be adequate in this respect \. 4\. Achievement of Objectives (Efficacy): Throughout the implementation of a project that was restructured three to six times, the project objective remained unchanged as follows: To assist the Borrower in reducing the environmental, social, and economic vulnerability to natural disasters and catastrophic mining accidental spills of pollutants through : (i ( i) strengthening the institutional and technical capacity for disaster management and emergency response; (ii) ii) implementing specific risk reduction investments for floods, landslides and earthquakes; (iii) iii ) improving the safety of selected water retention dams; and (iv) iv ) improving the management and safety of tailings dams and waste dump facilities (i) Strengthening the institutional and technical capacity for disaster response - rated Modest : Evidence of achieving this part of the objective is weak \. The project's emergency management information system (EMIS) was to be installed in 23 central administration institutions and 42 county based inspectorates \. The ICR reported that EMIS will be operational in 48 sites from October 2012 after subsequent "operational acceptance", but there was not a an update to confirm what had actually happened by that date \. Technical work to support draft legislation for a new Romanian catastrophe insurance program was completed, but evidence of its enactment and application is wanting \.  ii) Risk reduction for floods, landslides and earthquakes - rated Substantial : Actual project investments were made (ii) in 44 buildings, against pre- and post-restructuring targets of 50 and 40 buildings respectively\. The ICR informed that 23,350 people working in the buildings were thus protected \. Flood and landslide protection was completed in 10 critical locations, almost reaching the original pre-restructuring target of 11, while matching the post- restructuring target of 10\. The project works provided effective protection to over 43,500 people during flood events of the past three years, according to the ICR \. A new EU compliant building code for seismic retrofitting of buildings has been completed\. iii ) Improving the safety of water retention dams - rated Modest : Project works removed the risk of failure in seven (iii) critical dams against a pre-restructuring target of 13, while matching the post-restructuring target of seven \. All seven dams received National Commission of Dam Safety licenses certifying their safety \. According to the ICR, about 222,700 people are now protected against their possible failure \. iv ) Better management of tailing dams and waste dump facilities - rated Substantial : Through the project, (iv) remediation works were completed at six sites meeting the pre- and post restructuring targets \. Since project implementation no major accidents have been reported \. The baseline figures of accidents prior to the project were not reported by the ICR, however \. 5\. Efficiency: Rated Modest \. Project implementation was slow\. By the original project closing date of December 31, 2009, only 58% of the Loan had been disbursed\. Had the demand for the project facilities been as strong as anticipated and implementation gone according to plan, the US$150 million Loan would have been fully disbursed by December 2009, eight months prior to restructuring, and two-and-half years before the actual completion \. The ICR gives as one of the reasons for the slow start up the consequences of Romania's accession to the EU in 2007 that imposed new EU compatible regulations on many project components (ICR p\. 7)\. Another reason for ongoing delays was that the government in Romania changed seven times during the eight years of the implementation of the project \. Whatever the causes of the delays, the October 2010 restructuring made sense after it was evident that the demand for the project was much weaker than expected\. Together with the extended implementation period, project restructuring was also an acknowledgement that the resources originally committed to the project could not be used as efficiently as intended \. This is illustrated by the actual spending on the project's largest component, Flood and Landslide Risk Reduction, exceeding the appraisal estimate even though some key output targets were reined in during restructuring \. The ICR reports that the completion ERR of investments in the flood component that accounted for 56\.8% of total costs was 19\.4%, well below the appraisal ERR estimate of 28\.4% because of rising costs, but still demonstrating that it was a feasible investment\. For the dam safety investments the completion ERR was 22\.4%, somewhat below the appraisal ERR of 26\.5% for the same reasons\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal Yes 28\.4% 49\.5% ICR estimate Yes 19\.4% 56\.8% * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The relevance of the project's objectives was rated Substantial while the relevance of design was Modest \. While it left the objective unchanged, the August 2010 restructuring of the project lowered key performance targets in response to the lower than expected spending on this operation \. This assessment takes into account the achievements according to both the pre-restructuring targets and the post-restructuring targets\. The relative weights given to each set, 0\.717 and 0\.282 respectively, correspond to the share of total loan disbursements made under each set\. Thus, efficacy varied across sub -objectives from Substantial to Modest and efficiency was Modest \. In this way, the project achieved its relevant objectives with moderate shortcomings \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating:  Beyond noting a "clear interest" in maintaining the EMIS the ICR is short on key information about it \. As noted by this ICR Review, the ICR does not provide convincing evidence that the EMIS is indeed operational --the ICR "expected' it to be so in October 2012, but does not report that it actually was \. The ICR also does not tell us about the expected useful life of the EMIS \. The ICR itself correctly notes another risk associated with the uncertain future financial viability of the project supported National Catastrophe Insurance Pool (PAID) that has been undermined by recent changes to legislation (ICR p\. 16)\. The ICR reports confidently, however, that important project mitigation measures will be maintained into the future -- retrofitted buildings by their owners, and flood protection works by the National Administration of Romanian Waters (ANAR)--but without evidence of ANAR's willingness and ability to do so (ICR p\. 16)\. Perhaps the highest risk to development outcome derives from the weakness of the project design in omitting actions to prevent new risky developments and investments in Romania that might increase the environmental, social, and economic vulnerability to natural disasters and catastrophic mining accidental spills of pollutants, at the same time as the project itself has been achieving some reductions as far as old risks of existing assets are concerned \. Without an effective nationwide system of disaster risk management and prevention down to the local level to control such developments, the creation of new risks can outpace the containment of old ones, leading overall to a net increase in the vulnerability that the project hoped to reduce\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: As already noted earlier in this review, the project design gave too little attention to reducing additional vulnerabilities arising from the location of new developments in flood prone areas or in non -compliance with building codes\. If left unchecked, additional vulnerabilities can grow more rapidly than existing vulnerabilities can be tackled, resulting in a net increase of vulnerabilities, contrary to the reduction sought by the project \. The project treated vulnerable assets as if they were a fixed stock, instead of recognizing the dynamics behind the creation of additional new vulnerabilities and the reduction of existing ones \. While the PAD (p\. 5 and p\. 7) recognized that restructuring Romania's institutional set up would be necessary for the country's accession to the European Union (EU), the project design itself did not explicitly factor in the Romania accession\. Beyond the many explicit institutional standards to be met, the accession had important economic consequences for the country and the project, such as inflation of local prices of construction material that rose to the levels of Germany's \. Among the components of this US$ 205 million project, only the small (US$0\.25 million) Building Code Review sub-component explicitly referred to harmonization with international standards and EU practice (PAD p\. 54)\. The ICR candidly acknowledges the shortcomings of project design, but does not point clearly to their causes \. On the contrary, it highlights the positive conditions that would have favored a better design, such as : (i) adequate inputs by specialists (in number and skill mix); (ii) consideration of alternatives for project design; (iii) adequate budget resources and staff time; (iv) consistency with CAS and government priorities at the time; and (iv) good Bank working relationship with government \. In the meeting with IEG, the project TTL informed that the expectations of what the project might achieve were unduly optimistic \. Perhaps the causes derive from Bank teams being in a state of flux \. Assembled on a sectoral basis, they would typically go from country to country, trying to adapt their sectoral model to local conditions \. This made it difficult for them to be familiar with particular country conditions, such as the capacity constraints that Romania faced \. This may help explain the lack of detailed project designs at appraisal that the Bank may have been misled into believing existed\. Had the partner government been more familiar itself with the Bank and the Bank's approach to development, project design would have been easier \. It takes time to build trust between partners, that can help build confidence in proposed engineering solutions for instance and the ability to apply them effectively, especially if the Bank had been able to rely with more confidence of the quality of local engineering designs \. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: Supervision was intense, with two to three missions fielded each year during the eight years of implementation\. An adequate budget together with the availability of staff made this possible \. Initially during the first two years of implementation, all supervision mission ratings were Satisfactory , inconsistent with only US$6\.1 million of a US$150 million Loan having been disbursed during that period \. Supervision reporting and ratings improved thereafter with missions' correct recognition of Moderately Satisfactory and Moderately Unsatisfactory ratings thereafter\. The ICR notes that supervision missions gave regular attention to monitoring compliance with safeguards and fiduciary requirements \. It is also evident, that the weak performance of the project still evident by the original June 2009 closing date prompted supervision missions to successfully engineer project restructuring several times in order try to get the project back on track \. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Government support for the project was strong during preparation, but it weakened during implementation, a serious constraint as government ministries themselves were directly responsible for implementing the whole project (see 2b below)\. The government as a whole became more interested in European Union (EU) financed projects\. The shift of interest confirms that government did not treat the project as an instrument for helping Romania itself to meet EU requirements, an appropriate stance given the weak linkages of the project design to Romania's EU accession noted earlier in this review \. This resulted in insufficient funding, support and attention by Government officials to the project (ICR pp\. 1-2)\. One illustration of this is that actual government counterpart funding of US$35\.9 million fell short of the US$46\.7 million commitment made at appraisal\. In local currency, the shortfall would have been even greater \. The legislative branch of government, Romania's Chamber of Deputies, changed Law 260/2008 in ways that undermined the financial feasibility of some project supported actions \. Provisions of that law that required actuarially sound premiums for catastrophe insurance were dropped \. Another change to that law meant that households and businesses that already had private insurance were no longer required to take out insurance with the National Catastrophe Insurance Pool (PAID) that had previously been mandatory under that law \. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance: There were four separate implementing agencies, one for each component of the project \. Performance across the four was varied\. All were departments of government\. Key elements of the performance of each one (elaborated by the TTL during meeting with IEG ); The Ministry of Administration and Interior responsible for the component for strengthening emergency management and risk financing capacity was undermined by the repeated turnover of management during project implementation\. The project TTL told IEG that frequent changes of leadership at the deputy minister level left the Bank teams not knowing who to talk to \. The changes also meant slow decision taking as the project had to be explained all over again to new leaders who may not have known who was responsible for what\. Throughout project implementation there was a state of limbo \. It was not that each new leader deliberately wanted to bring in a new policy or a new set of ideas \. The Ministry of Transport, Construction and Tourism responsible for the earthquake risk reduction component performed better (although the ICR provides no details ) in spite of high staff turnover in the project teams\. The project TTL told IEG that the PMU coordinator was the Minister himself, who was very active and knowledgeable about the project\. He remained in that position for most of project implementation conferring stability on the PMU leadership as well as bringing stability to the cadre of core staff\. They constituted a high quality professional team dedicated exclusively to the project\. The Ministry of Environment and Water Management responsible for the flood and landslide risk component, the project's largest, was deficient, although the ICR provides no details about this apart from noting that this delayed decision making\. The project TTL told IEG that weak and slow communication between the PMU and local project operational staff meant that relations were often tense, yet PMU oversight was poor \. Out of a total of 8 consulting contracts let by PMU for detailed designs for project investments, for instance, 6 had expired before the work was finished \. As a result, there was no output from the contracts \. PMU had not warned consultants of impending expiry or proposed extending the contracts \. In this case, the Minister was not on board\. Another example of poor management was when the PMU approved a complete change of the  technical solution to retrofit a dam, as the contractor had proposed \. the PMU made the changes without consulting anybody else or seeking necessary approvals \. There was no formal allegation of corruption, however\. The National Agency for Mineral Resources responsible the disaster risk reduction in mining component performed better according to the ICR, although again with no details \. The TTL told IEG that the agency kept a close eye on what became a very sensitive component after a serious cyanide spill in the north -west of the country\. They also kept a very close eye on the site itself in order to ensure that costs did not get out of control\. From the above, we may conclude that implementing agencies responsible for 35% of the project investment performed while, while implementing agencies responsible for 65% of project investment performed poorly \. PMU performance in each of these ministries did not get off to a good start \. The ICR informs (ICR p\. 1) that reports by the implementation agencies of the existence of detailed designs ready to incorporate into bidding documents were not correct\. This meant that the project was not ready for implementation at approval as claimed\. Detailed designs were ready for one building only \. Implementing Agency Performance Rating : Moderately Unsatisfactory Overall Borrower Performance Rating : Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The project's M&E system included five outcome indicators for the PDO, two outcome indicators for GEF global objective, as well as ten intermediate outcome indicators \. As the ICR correctly notes, these indicators were developed to monitor the implementation progress of each component (ICR p\. 8)\. They did not measure progress, however, in achieving the project objective of reducing the environmental, social, and economic vulnerability to natural disasters and catastrophic mining accidental spills of pollutants \. Targets were not set for the numbers of people expected to benefit from the project interventions \. As well as reporting the retrofitting and protection of existing structures\. a more comprehensive set of indicators would have to include changes in these risks if new structures do not meet the standards that make them resistant to the disasters that the project sought to mitigate \. All four project management units (PMUs) were responsible for data collection for M&E \. b\. M&E Implementation: The ICR informs that monitoring data was collected regularly by the ministries' four PMUs \. The report's reference to monthly verification done on works implies that the monitoring was implemented principally to follow up on the delivery of the project components \. This is an important aspect of M&E implementation but will not necessarily monitor progress in achieving the project objectives \. c\. M&E Utilization: The ICR reports that feedback from M&E technical data was used to "resolve" (unspecified) site problems, and for the reassessment of priority sites and the selection of new ones \. Again these examples stress important aspects of project implementation, but do not address feedback that might help achieve the project objectives \. In relation to this, the ICR does not report that M&E monitored, for instance, the adaptation to EU standards necessary to reduce vulnerability as the project intended, or that the M&E provided any feedback to improve Romania's adaptation \. Had it done so, project implementation might have been more agile \. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: Environmental : As a category B operation, the project triggered OP 4\.01 compliance with Environmental Assessment\. It also triggered OPN 11\.03 (Cultural Property) with respect to the preservation of historic monuments retrofitted by the project\. Because of the project's flood protection improvements on international waterways, the project triggered OP 7\.50 (Projects in International Waters )\. The project relied upon a "panel of highly skilled experts " to ensure that all dam safety requirements were met, including compliance with OP 4\.37 (Safety of Dams)\. With respect to the four safeguards noted here, the ICR reports that the project was implemented in compliance with all applicable safeguard standards, albeit without providing any details (ICR p\. 9)\. Social : The ICR reports that the project was in full compliance with a policy framework and action plan developed in 2010 to deal with project land acquisition \. The ICR is not explicit about this, but IEG presumes that this framework and action plan were in compliance with Bank OP 4\.12 (Involuntary Resettlement (ICR p\. 9) safeguards\. The ICR does not provide details of this result however, Information about the places affected, the area of land acquired, the number of people affected and the financial conditions of the compensation would be necessary to support the ICR's conclusion\. Similarly without providing any details, the ICR reports that no other social issues arose (ICR p\. 9) b\. Fiduciary Compliance: The only comment made by the ICR is: "There were no significant deviations from or waiver to the Bank's fiduciary policies and procedures during the implementation of the project " (ICR p\. 9)\. The report provides no more information under its safeguards section \. Under Borrower performance, however, the ICR provides some information about financial reporting and procurement in its assessment of Borrower Performance section \. In that section of the report, the ICR notes that the project PMUs were in compliances with the project's financial reporting and auditing requirements (ICR p\. 18)\. There is no mention of qualifications in the audit reports \. On procurement, the ICR reported a varied performance across PMUs, being very strong by the PMU responsible for component D [NAME OF COMPONENT] while there was little understanding of procurement matters by the PMU responsible for component B and poor contract management by the PMU responsible for component C \. General progress reporting was presented in a timely manner, according to the ICR (ICR p\. 18) \. c\. Unintended Impacts (positive or negative): \. d\. Other: 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately \. Satisfactory Satisfactory Risk to Development Moderate Significant Reducing vulnerabilities into the future Outcome : can only be assured by preventing the creation of new vulnerabilities, a very important aspect given little attention by a project focused primarily on fixing the old vulnerabilities of existing assets \. Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Poor performance by implementing Satisfactory Unsatisfactory agencies responsible for 65% of the project, as well as dwindling government support for the operation \. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: Any project aiming to reduce vulnerabilities to calamities and misfortunes should give as much if not more attention to preventing additional vulnerabilities arising as to containing existing ones\. Focusing primarily upon existing risks, as this project did, could result in an overall increase in vulnerabilities if new ones continue to arise through insufficient attention paid to preventing them \. Preventing the location of new assets and additional populations in areas prone to flooding, earthquakes and contamination from mine waste could have been a stronger focus of this project \. Assigning project implementation to a Government team exclusively dedicated to the task, working within the structure of the implementing agency, ideally from the advanced preparation stage, would be highly desirable, provided that the team is not affected by changes in Government \. The team’s responsibilities should be clear, well defined and well known within the agency \. Previous experience in managing investment programs should be a core requirement for selecting the team ’s technical staff and managers \. As the Loan was denominated in US Dollars, it was exposed to significant foreign exchange fluctuation, particularly during the economic and financial crisis (2008-2009)\. Projects denominated in Euros did not suffer the same impact\. Looking forward, loans to EU member countries might be better served if denominated in Euros\. This was not common practice at the time the project was negotiated, but Euro -denominated loans may become more important in the future \. (On EMIS) Because of the complexity of the software and the limited capacity of the local provider, it would have been preferable to adapt an off -the-shelf IT system to the needs of the EMIS than to develop a unique system\. The Bank should avoid being a minority sources of funds should be avoided lest it lose control over implementation\. When other stakeholders contribute more than the Bank, as happened under Earthquake Risk Reduction component of this project, they may take it as their right to make changes in design unilaterally without consulting the Bank or other partners, a potentially dangerous move when seismic safety standards of construction are involved \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR provides a fair account of the project experience and is quite candid in documenting the shortcomings faced by this project, although nor always translating these into appropriate performance ratings \. Some important information and analysis is missing from the report, including : (i) data of the actual costs of the Project Management component; (ii) assessment of relevance without references to current strategies and priorities; (iii) little explanation of the causes for the weakness of the project design \. The ICR's Annex 1 cost and financing table has some errors \. It reports a US$143\.32 million Loan commitment, against the US$150 million correctly reported by the PAD and the Bank's Client Connection database \. It also shows a total baseline cost at appraisal of US$ 180\.98 million that is more the sum of the line items in the table \. Project Management costs at appraisal of US$ 4\.99 million are omitted from the table, yet they are counted in the total baseline cost figure \. The ICR is not consistent in reporting how many times the project was restructured--six times on p\. xvi against three times on pp\. 4-5\. As some of these shortcomings are relatively minor, the overall quality of the ICR can still be rated as Satisfactory \. _________________________________________________________________________________________ a\.Quality of ICR Rating : Satisfactory

REVIEW

P089898

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) Report Number : ICRR0020357 1\. Project Data Project ID Project Name P089898 GT (CRL1) Education Quality and Sec\. Edu Country Practice Area(Lead) Guatemala Education L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IBRD-74300 31-Dec-2013 100,000,000\.00 Bank Approval Date Closing Date (Actual) 06-Mar-2007 30-Nov-2015 IBRD/IDA (USD) Grants (USD) Original Commitment 80,000,000\.00 0\.00 Revised Commitment 80,000,000\.00 0\.00 Actual 80,000,000\.00 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Susan Ann Caceres Judyth L\. Twigg Joy Behrens IEGHC (Unit 2) 2\. Project Objectives and Components a\. Objectives The project development objective was "to improve access to a quality lower secondary education for low income students, especially indigenous communities, through improved primary education completion rates for overage students, strengthened flexible lower secondary education modalities and school management" (Project Appraisal Document [PAD], p\. 10; Lending Agreement, p\. 5)\. Over the course of the operation, there were five restructurings\. The objectives were not revised, but key outcome indicators and their targets were revised at the second (January 2010) and final (November 2013) restructurings (ICR p\. vii)\. Consistent with IEG/OPCS harmonized criteria, this review will assess Page 1 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) achievement under the original and both sets of revised outcome targets and weight overall outcome based on disbursement at the time of restructuring\. The ICR (p\. 23) indicates that 7% of Bank funds were disbursed prior to the second restructuring, 51% between the second and fifth restructuring, and 42% between the fifth restructuring and project closure\. b\. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? --- d\. Components There were three components: • Primary Education Completion and Quality (appraisal, US$ 7\.7 million; closure, US$ 8\.8 million) was to support the primary and lower secondary levels through: (1) the Ministry of Education's (MINEDUC's) reform of the pre-service teacher training program (i\.e\. curricular improvement for training and assessment for admission and graduation); and (2) an accelerated overage program (targeted to youth at risk of dropping out of primary education)\. Five regional training centers (Escuela Normal Modelo) were to be supported, including the teacher trainers in these centers\. The overage program was to be implemented in 350 schools\. • Access and Quality of Lower Secondary Education (appraisal, US$ 51\.2 million; closure, US$ 67\.5 million) was to finance: (1) curricular reform of secondary education; (2) expansion of existing lower secondary education modalities such as Telesecondarias (video-teaching) and Alternancias (semi-distance model) through feasibility and cost-effectiveness studies; and (3) scholarships and subsidies for 5,500 low income students to complete three years of lower secondary education\. Existing models were expected to be expanded to serve 90,000 students, and an additional 36,000 new places were to be created and financed through a subsidy to support partial per-student incremental costs based on a financing formula\. • School Management in Support of Education Quality (appraisal, US$ 21\.0 million; closure, US$ 3\.5 million) was to finance: (1) school-based management improvements, such as supporting school boards to develop plans and decide how to use school grants (approximately US$ 680 each) for 1,500 schools (both Integrated Basic Education Centers and cooperative schools providing lower secondary education); and (2) strengthening of the capacity of ten department and district offices to better supervise the pedagogical process in the classroom and to improve school management\. School boards were to receive training on planning and fiduciary management\. An impact evaluation was to evaluate project interventions (i\.e\. the Integrated Basic Education Centers that support overage students, and school management's impact on student learning) as well as the cost-effectiveness of the secondary education modalities\. These Page 2 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) evaluations were expected to track project implementation and thus were also to serve as the monitoring system for the project\. Project components were significantly revised during the first two project restructurings at the request of newly-elected President Colom\. The changes affected the scope and size of the activities\. While the Government's long-term vision was unchanged, the new administration prioritized different means to achieve the goals\. The quality improvement program was targeted to regular primary schools rather than schools with primary and lower secondary education\. The existing pre-service reform was redirected to support drafting a new pre-service teacher training reform and developing in-service training for existing teaching staff, including bilingual modalities\. The impact evaluation and feasibility studies were eliminated\. The operation focused on scaling up access through two modalities: Telesecondarias and NUFED (Nucleic Family Education for Development, a rural school model where schools are administered, and classes sometimes taught, by parents)\. Other originally envisaged modalities were eliminated because the Government was not able to absorb the planned number of new teachers\. All lower secondary education schools were targeted for education councils, rather than the 1,500 originally planned\. Strengthening of the central level (MINEDUC) was also added to improve its capacity to plan and manage\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: While total costs were as expected (US$ 80 million), spending by component deviated from appraisal estimates considerably\. Spending on the second component (Access and Quality of Lower Secondary Education) was about one-third higher than planned, while spending on the third component (School Management in Support of Education Quality) was significantly less than originally planned (17%)\. The project's five restructurings changed the distribution of funds between components and allowed funds to be used for teacher salaries\. This was done in light of the significant fiscal shortfall affecting the country after the global financial crisis in 2008 and resulted in approximately 37% of the loan financing teacher salaries (ICR, p\. 7)- in comparison to planning that salaries would amount to 10% (PAD p\. 83)\. Financing: Costs were financed exclusively by an IBRD loan\. Borrower Contribution: The Borrower was expected to provide US$ 20 million in financing for this operation\. Actual spending is unknown (ICR, p\. 29)\. However, the Government paid for teacher salaries, which exceeded the planned amount\. Dates: The project was expected to close on December 31, 2013 and actually closed on November 30, 2015\. The project undertook five restructurings (June 2009, January 2010, June 2011, April 2012, and November 2013) that made several changes to outcome indicators/targets and extended the project closing date\. The first two restructurings occurred (as a two-phased approach over seven months between June 2009 and January 2010) when a new Administration was elected\. During the period between the first two restructurings, there was no disbursement of funds\. The second restructuring (January 2010) amended key outcome indicators and targets\. The third and fourth restructurings Page 3 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) provided additional flexibility in how the financing was used by shifting more to teachers’ salaries and scholarships for low-income students, given continued fiscal shortfalls and other exogenous shocks such as Hurricane Agath and a two-month teacher strike\. The final restructuring (November 2013) again amended key outcome indicators and targets, and extended the project closing date by 23 months to allow for completion of activities\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives Relevance of objectives under the original targets is rated Substantial\. At appraisal, poverty and inequality of educational attainment in Guatemala were disproportionately concentrated in rural areas and among indigenous peoples\. For example, at the lower secondary education level (grades 7-9), 74% of non-indigenous students but only 26% of indigenous students were enrolled\. Progress had been made in terms of near universal access to primary education (grades 1-6), but there was inefficiency in the sector as only 22% of enrolled cohorts graduated on time\. Inefficiencies stemmed from late entry, high repetition in lower grades, and high dropout rates (after 3rd grade)\. Many students were overage and therefore at risk of dropping out before reaching the lower secondary level\. Additional issues included access at the lower secondary level and quality at all levels\. The Government's education-focused goals included universal education at the pre-primary, primary, and lower secondary levels, strengthening student standards and improving education quality, improving participation in the teaching profession, and improving the participation of citizens in decision-making in schools (ICR, p\. 3)\. The project's objectives were substantially aligned with the goals stemming from the country's 1996 Peace Accords and its Poverty Reduction Strategy (2004-2007)\. The objectives were also aligned with the Bank's Country Strategy at the time of preparation (FY 2005-2008) and continued to be substantially relevant to the Strategy at project closure (FY13-16), focusing on improving the effectiveness of social expenditures and their results\. Thus, the project development objective remained substantially relevant over the course of the operation\. Relevance of objectives under both sets of revised outcome targets is also rated Substantial\. The project development objective was unchanged, and only key outcome targets were revised\. The above narrative and ratings therefore apply throughout the operation\. Rating Revised Rating Substantial Substantial b\. Relevance of Design Page 4 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) Relevance of design under the original targets is rated Modest\. There was a logical relationship between the access objective and planned activities, but there was insufficient focus on conditions to ensure a quality learning environment, which was implicit in the quality aspect of the objective\. Project design addressed access to lower secondary education by improving retention and completion of primary education via programs to address overage students; however, it did not support other measures dealing with retention and drop-out issues such as mother tongue instruction or early remediation instruction\. The project also addressed access by providing partial subsidies to existing modalities such as video or semi-distance learning to create additional spots for students, and by supporting demand-side interventions such as scholarships for low-income students\. Given the large inequities in access to lower secondary education, project design targeted efforts towards rural schools and indigenous students\. School management support-- such as training for school councils, giving these councils legal status, and providing them with grants-- indirectly addressed access and quality objectives through parental participation to motivate children to remain in school and hold schools accountable for learning\. Efforts to ensure provision of quality lower secondary education focused on supporting regional school officials' ability to supervise schools and improving pre-service teacher training, but no attention was given to in-service teachers or other quality improvement interventions that would directly facilitate higher-quality learning\. Relevance of design under the first set of revised targets is rated Substantial\. Design shifted at the first and second restructurings, when a new administration began to prioritize both access issues (additional financing of teacher salaries as a means to support expansion of the Telesecondarias and NUFED modalities of lower secondary education) and quality issues (the existing pre- service reform, including curricula and training centers, was redirected to support drafting a new pre-service teacher training reform and developing in-service training for existing teaching staff, including bilingual modalities)\. Other modalities originally envisaged were eliminated because the Government was not able to absorb the required number of new teachers\. The overage program was targeted to regular primary schools rather than schools with primary and lower secondary education\. The impact evaluation and feasibility studies were eliminated\. Overall, the revised design at the first/second restructurings provided more appropriate focus on provision of a quality learning environment to the target population through in- service teacher training and provision of bilingual instruction\. Relevance of design under the second set of revised targets is also rated Substantial\. Changes made during the final restructuring were appropriate for the objective, amending primarily only the scope of activities\. Given the global financial crisis and its impact on fiscal shortfalls, the revisions provided flexibility for the Government to prioritize the immediate needs of teacher salaries and scholarships for low- income students, and to move away from support for school-based management\. Strengthening of the Central level (MINEDUC) was also added to improve its capacity to plan and manage, which is tangentially related to the objective\. Inputs such as textbooks and reading books were provided\. The scope of the scholarship program was expanded\. Some of the revisions to the project's design, at both of the points key outcome targets were revised, were aimed at improving conditions to ensure a quality learning environment (i\.e\. teacher training, textbooks, Page 5 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) literacy program, bilingual instruction), resulting in Substantial ratings for design relevance\. Rating Revised Rating Modest Substantial 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective Improve access to lower secondary education for low income students, especially indigenous communities (ACCESS) Rationale An exogenous climate shock (tropical cyclone Agatha in May 2010) had unknown consequences on school attendance\. The ICR (p\. 10) noted that many households enlisted children to help in the economic reconstruction of crops, which likely decreased enrollment\. Outputs: Two flexible modalities (Telesecondaria and NUFED) resulted in school enrollment for approximately 140,000 students at all levels from low income communities who otherwise would not have attended school (ICR, p\. 20), with NUFED schools in particular targeting student populations who otherwise were unlikely to have completed secondary education\. Almost 55,000 additional students enrolled in lower secondary education via the flexible modalities, predominantly Telesecondaria (ICR, p\. ix)\. The number of Telesecondaria schools tripled over the life of the project, with project support for teacher salaries and education materials\. This lower secondary enrollment achievement did not meet the original target (103,500 students for this modality and others) but achieved the first revised target (52,000) (this indicator was dropped at the second revision)\. 37,847 scholarships (of approximately $350 per student) were financed by the project\. These were provided in targeted municipalities and conditioned on compliance with attendance\. The ICR's analysis estimates that the scholarships assisted 2,465 students to graduate from lower secondary education\. Recipients of scholarships were more likely than non-recipients to be promoted to the next grade level (90% in comparison to 80%) and to graduate (72% in comparison to 51%) (ICR, p\. 38)\. A clear targeting approach (i\.e\. local poverty rates and selection by teachers and committees) was used for the scholarship program beginning in 2012\. 22,100 students graduated from an Accelerated Primary Education Program (ICR, p\. xiii)\. This program operated in more than 250 classrooms and resulted in 2,433 fewer students repeating grades (ICR, p\. 30)\. Page 6 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) The completion report provides minimal description of capacity development provided to the central Ministry of Education (and its five directorates) and regional offices\. It notes that one directorate developed a database to track student-level information, while another unit developed training materials, but it does not discuss the impact of this strengthening (ICR, pp\. 32-33)\. Outcomes: Over the project's lifetime, the national lower secondary (grades 7-9) gross enrollment rate increased from 61% (2007) to 69% (2015)\. This exceeded the original target (65%) but not the first revised target (71\.5%); the national-level indicator was dropped at the second revision of targets\. The completion report notes that population growth was high over the project period, and therefore enrollment expansion would have had to increase by 4\.5% to keep pace with targets; in fact, expansion averaged 4\.0% annually over the project's lifetime (ICR, p\. 17)\. In municipalities targeted by the project, the lower secondary gross enrollment rate increased from 42% to 51%, not meeting the original target of 58%, essentially reaching the first revised target of 52%, and not meeting the second revised target of 56%\. Nationally, the completion rate for ninth grade students increased from 50% to 55%, which exceeded the original target (53%) and first revised target (53%); the national-level indicator was dropped at the second revision of targets\. In municipalities targeted by the project, the ninth-grade completion rate increased from 31% to 41%, meeting the original and first revised target (both 40%) but not the second revised target (47%)\. The completion report (p\. 18) indicates that progression was higher in Telesecondarias than in traditional schools (p\. 18)\. The project financed one-third of the cost of the two flexible modalities, which was likely to have led to an expansion of 91,060 students graduating from Telesecondaria and an additional 15,053 students graduating from NUFED schools\. Nationally, the primary education completion rate increased from 76% to 84%, which met the original (72%) and revised first targets (84%); the national-level indicator was dropped at the second revision of targets\. In municipalities targeted by the project, the primary completion rate increased from 78% to 87%; this indicator was added at the first revision of targets, and achievement exceeded the first revised target (82%) and met the second revised target (87%)\. The proportion of overage students completing primary education decreased over the course of the project, from 52% to 45%\. The completion report also notes that the Accelerated program reduced repetition rates\. It is unclear to what extent the changes in primary completion rate are attributable to project interventions (ICR, p\. 20), as primary education was not a focus of the project except through overage programs (which was a small driver of the national completion rate) and teacher in-service training, which had an unknown impact\. The original targets for lower secondary enrollment and completion were largely met or exceeded, and therefore achievement of the objective under the original targets is rated Substantial\. Rating Substantial PHREVDELTBL Page 7 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) PHEFFICACYTBL Objective 2 Objective Improve access to a QUALITY lower secondary education for low income students, especially indigenous communities (QUALITY) Rationale Outputs: Training was provided to 1,489 parent councils (or school governments) in how to monitor, manage, and lead their schools, nearly meeting the original and first revised target of 1,500 school councils, and exceeding the second revised target of 1,350\. Tools and report cards were developed, but according to the ICR (p\. 20), this did not lead to the desired outcome of devolving substantial school decision-making to the local level\. School grants were provided to 158 councils (much fewer than the 1,489 trained), as the new administration did not give councils the opportunity to apply for funds, instead redirecting resources to the central Ministry office\. Once it became clear that funding would not be provided, school councils stopped trying to legally form (ICR, p\. 24)\. 13,661 pre-primary and primary teachers received training in student-centered learning techniques\. This was not an original target, but achievement exceeded the first target (2,126) and second revised target (13,237)\. An evaluation found that teachers were satisfied with the training, but there was no systematic assessment of its effectiveness\. The completion report notes that teachers thought they would receive credits to apply to a tertiary degree, which would increase their salaries, but this did not take place\. It is also unclear how training of pre-primary and primary teachers was intended to achieve the objective of improving the quality of lower secondary education\. Flexible modalities were equipped with computers and instructional and multi-cultural materials (such as books for teachers and students) in every classroom in the two supported modalities\. Furniture was provided for 1,700 Telesecondaria classrooms and 600 NUFED classrooms\. The Borrower reports that the curriculum for Telesecondarias was reviewed and aligned with the National Curriculum in areas such as biology, physics, chemistry, social studies, foreign language, communication, and math\. More than 5,000 documents and manuals were distributed, including 26,500 learning guides (ICR, pp\. 51-52)\. Acquisition of 400 reading books was supported under the National Reading Program launched in 2013\. No data is provided in the completion report indicating where the books were sent or the number of classrooms benefitting from them\. Outcomes: The retention rate of students who persisted from 7th to 9th grade in 2015 was 71% in Telesecondarias and 68% in NUFEDs\. Retention can be considered a proxy indicator for improved quality, considering that appropriate instruction can be a factor in encouraging retention\. No baseline information is provided\. Page 8 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) The ICR (p\. 18) indicates that learning outcomes in the two non-traditional modalities were lower than in traditional schools, with declining performance across the board (see Table 1)\. The percentage of students passing in Math and Reading has declined in each type of modality\. The ICR (pp\. 18-19) notes the challenge inherent in improving quality and learning while at the same time expanding access, especially if the influx of new students has lower academic abilities\. The ICR suggests that the project was able to minimize the decline in quality as measured by pass rates, but it does not explain how this was achieved, considering decreasing trends in quality and increasing enrollments prior to the project\. Table 1 Lower Secondary Exam Pass Rate (%) by Subject, Year, and School Program Type Reading Reading Reading Math Math Math 2006 2009 2013 2006 2009 2013 Regular 32 23 14 24 19 18 Telesecondaria 11 8 5 15 14 10 NUFED 7 5 3 15 10 7 Rating Modest PHREVDELTBL PHREVISEDTBL 5\. Efficiency The economic analysis undertaken at the appraisal stage benefited from extensive sector work previously conducted by the Bank and other agencies\. The cost-benefit analysis took into account both increased coverage and qualitative interventions\. The computation produced an internal rate of return of 31%, based on a 10% discount rate and appropriate assumptions\. The ICR updates the economic analysis and estimates a rate of return of 21%\. This estimate revises the discount rate and extends the time to implement the project\. This rate is based on the future income benefits expected for individuals with a complete secondary education using average earning data from 2014\. Additional analyses suggest value for money from the project-supported interventions\. For example, the accelerated primary program reduced inefficiencies due to grade repetition\. The completion rate was slightly higher for overage students in school with accelerated primary classrooms (ICR, p\. 22)\. The two lower secondary flexible modalities supported students who may not otherwise have graduated\. The estimated rates of return for these two interventions were 48% and 42% (net present value of US$ 868 million)\. Scholarship students were 40% more likely to graduate than comparable non-scholarship students\. Qualitative efficiencies enhanced the cost-effectiveness of implementation\. Targeting of scholarship Page 9 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) recipients was carried out through an efficient mix of quantitative stratification (local poverty rates) and human interaction (local teachers and committees selected individual candidates)\. Procurement and financial management were relatively smooth (see Section 11b), with initial problems resolved through rapid corrective measures\. Two research departments in the MINEDUC improved their monitoring and evaluation skills through the production of multiple reports and analysis, likely enhancing efficiency of project implementation\. There were also minor shortcomings in efficiency stemming from personnel turnover, a lag between increased access and adequate supplying of schools, and a missed opportunity due to the late timing of the mid-term review (ICR, p\. 10)\. On balance, the operation had Substantial efficiency\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 100\.00 Appraisal  31\.00 Not Applicable 100\.00 ICR Estimate  21\.00 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome Outcome under the original targets: Relevance of objectives is rated Substantial, while relevance of design is rated Modest\. The objective to improve access was Substantially achieved, while the objective to improve quality was Modestly achieved\. Efficiency is rated Substantial\. These ratings are indicative of moderate shortcomings, and therefore an outcome rating under the original targets of Moderately Satisfactory\. Outcome under the first revised targets: Relevance of objectives and design are rated Substantial\. The objective to improve access was Substantially achieved, while the objective to improve quality was Modestly achieved\. Efficiency is rated Substantial\. These ratings are indicative of moderate shortcomings, and therefore an outcome rating under the first revised targets of Moderately Satisfactory\. Outcome under the second revised targets: Relevance of objectives and design are rated Substantial\. Achievement of the objectives to improve access and quality is rated Modest in both cases\. Efficiency was rated Substantial\. These ratings are indicative of significant shortcomings, and therefore an outcome rating under the second revised targets of Moderately Unsatisfactory\. Page 10 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) Following IEG/OPCS harmonized guidelines, the project's overall Outcome is determined by weighting the outcomes under each set of outcome targets according to the percentage of Bank funds that were disbursed under those targets\. Outcome (original targets) = Moderately Satisfactory (4) x \.07 = 0\.28 Outcome (first set of revised targets) = Moderately Satisfactory (4) x \.51 = 2\.04 Outcome (second set of revised targets) = Moderately Unsatisfactory (3) x \.42 = 1\.26 Total: 3\.58, which rounds to 4, or Moderately Satisfactory\. Outcome is therefore rated Moderately Satisfactory, indicative of moderate shortcomings in the project's preparation and implementation\. a\. Outcome Rating Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating There is no planned follow-up operation\. However, the Bank remains engaged with the Government through the upcoming systematic country diagnostics and Country Partnership Strategy, and so there may be opportunity for the Bank to support sustained achievements in the future\. The current President has prioritized education as one of the three pillars in the Government's strategic plan, and the Government has fully absorbed the cost for the two flexible modalities for lower secondary education into the Ministry of Education’s budget\. However, the effectiveness of these programs was not fully examined during the course of the operation due to the cancellation of planned impact evaluations\. It is too early to know whether in-service teacher training or scholarships will be continue to be financed by the Government\. There have been significant delays in paying for the teacher training program, with Government funding delayed by one year for the last cohort\. School councils have not been revitalized, with the program still not receiving Government funding\. Given these factors, the risk to the development outcome is rated Substantial\. a\. Risk to Development Outcome Rating Substantial 8\. Assessment of Bank Performance Page 11 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) a\. Quality-at-Entry Preparation drew upon analytical work of the Bank and other agencies\. The analysis conducted at preparation was particularly useful in relation to fiscal sustainability, targeting strategy, and quantitative indicators\. The Bank staff draw upon key lessons learned in other countries and prior operations in Guatemala\. A thorough analysis of education inefficiencies and the particular needs of the indigenous population was conducted at preparation, as well as studies of environmental impacts and budgetary impact\. The Bank’s fiduciary team assessed the Ministry of Education's fiduciary capacity and provided technical assistance to attend to identified risks, concluding that the Ministry had appropriate capacity to manage the operation\. Despite the extended time frame to prepare the operation, however, some key aspects of the project were not fully developed\. There was insufficient analysis and planning of the expansion for new rural lower secondary students via other modalities, and of the Government's fiscal capacity to absorb these costs\. Preparation took over two years, and a new Presidential administration came to office as the project was beginning; this resulted in multiple restructurings to align with the direction of the new administration\. While risks were identified, some of them were not appropriately understood or were underestimated\. For example, there was inadequate understanding of parental incentives to participate in school councils\. Political risks were inadequately considered\. The Results Framework was overly complex (see Section 10)\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision The Bank team was responsive to Government priorities (at the start of the operation with the first administration, and then working with the new administration)\. It demonstrated flexibility through five project restructurings to address the shifting priorities of the new administration\. Over the course of implementation, twenty supervision missions occurred, helping to resolve issues that were delaying implementation\. The Bank focused consistently on financial and procurement management and on the Indigenous Peoples Plan\. However, there were significant shortcomings\. There was frequent turnover of task team leaders (TTLs, six times), resulting in repeatedly having to rebuild relationships with the Borrower\. All of the transitions between TTLs were not smooth, with some experiencing insufficient overlap with their predecessors and steep learning curves\. As the Borrower points out, Bank management could have planned better for the transitions with joint missions between incoming and outgoing task team leaders (ICR, p\. 28)\. In addition, the fourth project restructuring took on the shifting priorities of a new education minister, and delayed conducting of the mid-term review represented a missed opportunity to focus this discussion earlier (ICR, p\. 11)\. While the focus of the project changed at that point, its objectives were not revised\. Significant changes occurred to the Results Framework as late as the final restructuring, indicating that monitoring and evaluation issues were not resolved in a timely manner\. Page 12 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) Quality of Supervision Rating Moderately Unsatisfactory Overall Bank Performance Rating Moderately Unsatisfactory 9\. Assessment of Borrower Performance a\. Government Performance Government reporting of its own financial support for the project is not available, but teacher salaries financed by the Government (ICR, p\. 25) exceeded planned contributions\. Consistent with the Peace Accords, the Government implemented the Indigenous Peoples Plan and integrated these issues into project implementation\. However, there were shortcomings in the enabling environment\. There was a delay in getting Congressional approval for the loan due to upcoming national elections\. Once the new administration was elected, the new Congress subsequently approved the loan within a month\. There were four different Presidents over the course of the project, impacting implementation and project focus\. There were also six changes in Ministers of Education, with significant continuity challenges (ICR, p\. 26)\. Information and records were not always passed on internally in the MINEDUC, and implementation arrangements and performance in some directorates were inadequate\. There were delays in paying for the teacher training program, though the reason for these delays is not provided in the ICR\. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance A Project Implementation Unit (PIU) embedded within the MINEDUC was the implementing agency\. Different directorates in the Ministry had responsibility for overseeing implementation of various activities\. Fiduciary and safeguard performance were rated as Moderately Satisfactory or Satisfactory throughout the life of the operation, and implementation was smooth (see Section 11b)\. Project monitoring was adequate, and reports were sent to the Bank on time, including required semi-annual implementation progress reports\. Implementation delays were largely the result of the changes in Government, outside the control of the PIU, which managed the transitions effectively despite challenges\. There was a two-month teachers strike\. During this time, teachers occupied the Ministry’s headquarters and prevented staff from entering their offices\. The ICR does not detail how the strike impacted implementation or monitoring of the operation\. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Page 13 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The monitoring and evaluation framework was overly complex (with approximately 50 indicators) and reliant upon planned impact evaluations to measure achievement\. The impact evaluations were designed to test the effectiveness of project-supported interventions\. When the impact evaluation plan was cancelled by the Government, the results framework had to be completely re-worked\. Moreover, the original results framework set ambitious targets, considering the need to address quality while expanding access\. The Government had not previously tracked these types of indicators\. Previous data from the Ministry was of questionable quality, making the Results Framework complex relative to existing capacity\. Many of the indicators lacked baseline data\. b\. M&E Implementation The Results Framework changed five times (with each project restructuring)\. The second and fifth restructurings produced the most significant changes to the Results Framework\. The second restructuring re- aligned indicators to the priorities of the new administration, while the last one simplified indicators and lowered targets in accordance with implementation progress\. The Ministry of Education’s research arm completed several studies related to high-performing lower secondary schools, education modalities, teachers' professional development, teacher credentials, assessment of teachers, and the overage student program, as well as collecting baseline data\. The Ministry’s Strategic Planning Department received funding from the operation for capacity-building, and it produced the cost-benefit analysis for the completion report\. During implementation, targets were revised repeatedly, in some cases upward and others downwards, and for some indicators in divergent directions (initially down then up), over the course of implementation\. The completion report does not explain why the targets were moved in multiple directions\. In addition, there were multiple indicators for which the Government could not have reasonably collected data; these were eliminated at the various restructurings\. c\. M&E Utilization The evaluations completed by the Ministry’s research arm helped improve understanding of the implemented programs\. While the completion report does not describe how these findings were utilized by the Government, it draws upon findings from those evaluations\. Page 14 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) M&E Quality Rating Modest 11\. Other Issues a\. Safeguards The project was rated Environmental Assessment Category C\. The only safeguard triggered by the operation was Indigenous Peoples (OP/BP 4\.10), and an Indigenous Peoples Plan was prepared\. The project emphasized multicultural and bilingual education\. Content from the Indigenous Peoples Plan was mainstreamed into implementation and resulted in greater focused attention to this subpopulation, and is reported to have produced positive spillover effects and long-term benefit (ICR, Annex 12, pp\. 69-70)\. b\. Fiduciary Compliance Compliance with financial management was adequate, based on procurement reviews\. While one audit was qualified, the Implementing Agency rectified the action by implementing stronger internal controls to address the situation\. Performance in fiduciary management improved rapidly\. There were occasional delays in procurement, but these did not negatively impact performance\. c\. Unintended impacts (Positive or Negative) None reported\. d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Moderately Outcome --- Satisfactory Satisfactory Risk to Development Substantial Substantial --- Outcome Moderately Moderately Bank Performance --- Unsatisfactory Unsatisfactory Moderately Moderately Borrower Performance --- Satisfactory Satisfactory Page 15 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons IEG restates the lessons presented in the ICR (pp\. 26-27) as follows: • Well-designed safeguard systems can create lasting institutional change\. The Indigenous Peoples Plan served a broader purpose within the Government\. It helped the Government develop its own plan for Indigenous Peoples and helped bring stakeholders into the Ministry’s decision-making process, increasing mainstream attention to Indigenous Peoples in project-supported activities\. • Internal consistency is important in restructuring\. The PDO, results framework, and interventions must align with one other\. In this case, when project financing was shifted to pay for teacher salaries, the focus of the operation changed, yet the restructuring did not align all these aspects\. The results framework was not adequately revised, resulting in repeated changes in indicators throughout the five restructurings\. • Small, highly targeted programs can prove to be very good investments\. Later in the operation, the Government developed a dual approach to targeting scholarship recipients, taking into account both the local poverty rate and the decisions of local committees to select beneficiaries\. Scholarship recipients had a 40 percent higher likelihood of graduating than non-recipients, and the savings accrued from lower repetition rates and higher completion rates offset the cost of the scholarships\. • Scaling up should proceed only when based on systematic analysis of data\. In this operation, two flexible modalities were increased in the absence of research indicating whether they were worthy investments\. When the impact evaluation plan was eliminated, other systematic analyses of enrollment and learning data could have been more effectively utilized, but they were not\. 14\. Assessment Recommended? No 15\. Comments on Quality of ICR The ICR provides a concise description of the project, its activities, and the factors affecting implementation\. It contains candid analysis of shortcomings in design, preparation, and Bank and Borrower performance\. While the project's formal Results Framework included no measures of learning or indicators to demonstrate Page 16 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review GT (CRL1) Education Quality and Sec\. Edu (P089898) education quality, the ICR provides passing rates in reading and math and draws upon findings from the Ministry's evaluations to augment project indicators and provide a complete assessment of results that could be plausibly attributed to the project\. The annexes provide additional useful details to assess performance of the operation and achievement of objectives\. In some instances, there is inconsistency in the data reported in the ICR's Data Sheet, annexes, and main text\. This ICR Review also draws on the Borrower's well-done completion report\. a\. Quality of ICR Rating Substantial Page 17 of 17

REVIEW

P160552

 Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005520 IMPLEMENTATION COMPLETION AND RESULTS REPORT TF B0017 ON A SMALL GRANT IN THE AMOUNT OF USD US$1\.8 MILLION TO THE Democratic Socialist Republic of Sri Lanka FOR THE Climate Mitigation Action Support (P160552) June 29, 2021 Urban, Resilience And Land Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. Official Use Regional Vice President: Hartwig Schafer Country Director: Faris H\. Hadad-Zervos Regional Director: John A\. Roome Practice Manager: Abhas Kumar Jha Keisuke Iyadomi, Udage Arachchige, Priyanka Kumari Task Team Leaders: Dissanayake ICR Main Contributor: Mohammad Rafiqul Islam Official Use  ABBREVIATIONS AND ACRONYMS BAU Business As Usual BE Bank-Executed CDM Clean Development Mechanism CPI Carbon Pricing Instruments CPF Country Partnership Framework DA Designated Account ETS Emissions Trading Scheme FM Financial Management FY Fiscal Year GDP Gross Domestic Product GHG Greenhouse Gas GoSL Government of Sri Lanka GRS Grievance Redress Service IUFR Interim Unaudited Financial Reports MMDE Ministry of Mahaweli Development and Environment MoE Ministry of Environment MRP Market Readiness Proposal MRV Monitoring, Reporting, and Verification NAMA Nationally Appropriate Mitigation Activity NCCP National Climate Change Policy NDC Nationally Determined Contribution NGO Non-Governmental Organization NPD National Project Director PA Partnership Assembly PMR Partnership for Market Readiness PMU Project Management Unit PSC Project Steering Committee RE Recipient-Executed SCD Systematic Country Diagnostics SLCCS Sri Lanka Carbon Crediting Scheme SLCF Sri Lanka Climate Fund SNC Second National Communications TAC Technical Advisory Committee UNFCCC United Nations Framework Convention on Climate Change Official Use  TABLE OF CONTENTS DATA SHEET \. ERROR! BOOKMARK NOT DEFINED\. I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 4 II\. OUTCOME \. 12 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 17 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 19 V\. LESSONS LEARNED AND RECOMMENDATIONS \. 23 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 25 ANNEX 2\. PROJECT COST BY COMPONENT \. 30 ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 31 ANNEX 4\. SUPPORTING DOCUMENTS \. 35 ANNEX 5\. LIST OF PROJECT DELIVERABLES/OUTPUTS AND DELIVERABLE APPROVAL PROCESS36 Official Use  The World Bank Climate Mitigation Action Support (P160552) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P160552 Climate Mitigation Action Support Country Financing Instrument Sri Lanka Investment Project Financing Original EA Category Revised EA Category Not Required (C) Organizations Borrower Implementing Agency Democratic Socialist Republic of Sri Lanka The Ministry of Environment Project Development Objective (PDO) Original PDO To strengthen Sri Lanka's capacities and systems to: (a) implement national climate change policies, strategies and actions; and (b) design or strengthen market/non-market mitigation instruments\. FINANCING FINANCE_TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) Donor Financing TF-B0017 1,800,000 781,816 781,816 Total 1,800,000 781,816 781,816 Total Project Cost 1,800,000 781,816 781,816 Page 1 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) KEY DATES Approval Effectiveness Original Closing Actual Closing 05-Apr-2019 11-Apr-2019 28-Feb-2021 28-Feb-2021 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 27-Jun-2019 Satisfactory Satisfactory 0\.00 Moderately 02 13-Apr-2020 Moderately Unsatisfactory 0\.02 Unsatisfactory Moderately 03 15-Dec-2020 Moderately Unsatisfactory 0\.22 Unsatisfactory ADM STAFF Role At Approval At ICR Regional Vice President: Hartwig Schafer Hartwig Schafer Country Director: Idah Z\. Pswarayi-Riddihough Faris H\. Hadad-Zervos Director: Ede Jorge Ijjasz-Vasquez John A\. Roome Practice Manager: Christoph Pusch Abhas Kumar Jha Keisuke Iyadomi, Udage Task Team Leader(s): Keisuke Iyadomi Arachchige Priyanka Kuma Dissanayake Page 2 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) ICR Contributing Author: Mohammad Rafiqul Islam Page 3 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES Country and Sectoral Context at Appraisal 1\. Sri Lanka is highly vulnerable to climate change impacts and recurring natural disasters like floods, landslides, and droughts, which were estimated to cause damages of US$7 billion between 1990-2018\.1 Despite the damages, Sri Lanka’s economy had grown at an average of 5\.6 percent during the period of 2010-2018, even following 30 years of civil war which ended in 2009\. With a 21\.7 million population and 65,610 square kilometer land area, this middle-income country had US$4,102 Gross Domestic Product (GDP) per capita in 2018\. Under a worst-case climate change scenario, it was predicted that GDP could decline by 7\.7 percent, and 90 percent of the country’s population could be at medium to high risk of climate impacts by 2050\.2 2\. Sri Lanka launched its National Climate Change Policy (NCCP) in 2012 with seven objectives, including mitigating greenhouse gas (GHG) emissions in the path of sustainable development and mainstreaming and integrating climate change issues in the national development process\. The policy statements included promoting market and non-market-based mechanisms for reducing GHG emissions and improving adaptation measures as well as continuing appropriate existing mechanisms\. At appraisal, Sri Lanka had already experimented with economic instruments for regulating the energy sector with a relatively small impact in comparison to the future needs of Sri Lanka\. Further, even though climate change was identified in a number of cross-cutting policy documents, they were not backed by well-defined institutional arrangements or legal instruments\. 3\. The country had seen a steady growth in GHG emissions in several sectors\. According to Sri Lanka’s Second National Communication on Climate Change (SNC) submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in 2011, out of total aggregate emission of 18,843 Gg CO2eq, the energy sector represented the largest share of total national GHG emissions - 61\.4 percent in 2000\. The agriculture sector was the second highest GHG emitter, representing 25 percent of the total emissions\. This was followed by the waste sector (10\.8 percent) and the industry sector (2\.6 percent)\. 4\. The country’s Nationally Determined Contribution (NDC, 2016) for mitigation intended to reduce GHG emissions against the Business as Usual (BAU) scenario by 20 percent in the energy sector (4 percent unconditionally and 16 percent conditionally) and by 10 percent in other sectors (transport, industry, forests, and waste by 3 percent unconditionally and 7 percent conditionally) by 2030\. Sri Lanka had identified 2017- 2020 as the preparation phase and 2021-2030 as the implementation phase of its NDC\. The country also aimed to submit the next round of NDC (updated NDC) to the UNFCCC Secretariat with more analyzed data exploring the mitigation potential of the sectors and subsectors and the means of implementing mitigation mechanisms in 2021\. 5\. The Government of Sri Lanka (GoSL) was aware that quantifying GHG emission reductions through a robust Monitoring, Reporting and Verification (MRV) framework was an indispensable prerequisite to the monetization of carbon assets and participation in carbon markets; and that in addition to supporting Carbon Pricing Instruments (CPIs), it had the benefits of reporting and tracking progress towards NDC goals\. In 2016, 1 Sri Lanka, SCD Concept Review Documents, 2021\. 2 https://blogs\.worldbank\.org/endpovertyinsouthasia/act-carefully-or-drown-3-lessons-new-orleans-sri-lanka\. Page 4 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) Sri Lanka launched the Sri Lanka Carbon Crediting Scheme (SLCCS) - a national voluntary carbon offset scheme that followed the requirements of a Clean Development Mechanism (CDM)\.3 However, most of Sri Lanka’s 20 registered CDM projects were in the power sector and there was a need to explore the suitability and effectiveness of new market and non-market-based instruments that covered other emitting sectors\. In addition, the data collection process for the national GHG inventory was not robust and automatic and relied on a need basis, and the existence and effectiveness of climate-related data sharing policies were unclear\. Higher Level Objectives to which the Project contributes 6\. The project activities were fully aligned with the GoSL’s national development priorities, in particular the eight-year economic development plan ‘Vision 2025’ (2017), which aimed to follow the Blue Green Initiative to encourage low emission economic development\. The project also supported the NCCP (2012) of Sri Lanka and its objective to mitigate GHG emissions as part of a national path of sustainable development\. 7\. The project was also fully aligned with the World Bank Group Country Partnership Framework (CPF) for FY17– FY20 (Report No\. 104606-LK) that underscored expansion of clean energy generation, climate change mitigation, and green growth as key development priorities\. The project contributed toward achieving the CPF Objective 3\.3: Enhancing mitigation and adaptation potential through renewable energy development and natural resource management\. 8\. The project was to inform the GoSL’s NDC implementation and its updating, as well as the analysis of GHG emission trends in NDC priority sectors (energy, industry, transport, and waste) and sub-sectors\. The project was also to assess the mitigation potential of the initiatives and measures listed in the NDC and develop potential measures not listed in the NDC to achieve the NDC targets and long-term targets in these sectors\. Bank Rationale for Engagement 9\. In 2016, the World Bank began to strengthen its climate change mitigation support in Sri Lanka by providing the country access to climate finance from a Partnership for Market Readiness (PMR) preparation grant\. The GoSL recognized the importance of increasing the country’s readiness and taking early actions to attract international climate finance, given that the country did not benefit fully from the CDM under the Kyoto Protocol\. From a technical point of view, the World Bank had a comparative advantage in working and strengthening the capacities of the counterpart for developing domestic market-based mechanisms for climate change mitigation because of its previous and ongoing involvement in similar projects in China, Chile, Thailand, India, Turkey, and other countries\. The World Bank also had a strong advantage in carbon pricing with its active involvement as a delivery partner and a strategic partner in several carbon initiatives, such as the PMR, the Carbon Pricing Leadership Coalition (CPLC), and the Networked Carbon Market (NCM)\. The World Bank had also developed expertise in assessment and development of economic and market-based instruments through various technical and knowledge products prepared and constantly updated by the PMR 3 The Clean Development Mechanism (CDM), defined in Article 12 of the Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries\. It is the first global environmental investment and credit scheme of its kind, providing a standardized emission offset instrument, Certified Emission Reductions (CERs)\. The CDM allows emission reduction projects in developing countries to earn CER credits, which can be traded and used by industrialized countries to meet part of their emission reduction targets under the Kyoto Protocol\. Page 5 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) and extended to support policy development and reform on climate change through Development Policy Financing in several countries, such as Cote d’Ivoire\.4 Project Theory of Change 10\. The project was financed through a US$1\.8 million recipient-executed (RE) grant and a US$1\.2 million Bank- executed (BE) grant from the PMR Trust Fund (see Box 1), following PMR’s Partnership Assembly’s (PA’s) endorsement of Sri Lanka’s US$3 million grant proposal in January 2018\. This financing structure was put in place at the request of the GoSL to overcome time and capacity limitations\.5 The ICR covers both the RE and BE portion even though the ICR’s datasheet contains only RE information due to system settings\. The RE portion was to finance an optimal policy package (OPP) by developing a roadmap for a new CPI; developing a national climate change data management system and IT infrastructure; developing and piloting integrated MRV and registry system; developing and piloting an enhanced SLCCS; and training government staff on the use of the systems\. The BE portion was to assess the mitigation potential of the sectors and sub-sectors; assess needs in the existing systems, mechanisms, and institutions for deploying the new MRV and registry systems; assess the institutional, legal, and methodological framework for enhanced SLCCS; and assess potential provincial and national demand for the SLCCS\. Combined, these actions were to strengthen national systems and policies to implement a market-based instrument for GHG reduction and ensure that the market was informed to comply with the new framework and systems\. All these were to strengthen the systems and capacities of the GoSL to ultimately reduce GHG emissions\. Figure 1: Timeline of Sri Lanka Joining the PMR •Sri Lanka becomes an Implementing Country Partner of PMR\. 2016 •Sri Lanka accesses the PMR preparation grant\. •Sri Lanka submits the initial draft MRP to PMR in August 2017\. 2017 • Sri Lanka submits the final MRP to PMR in December 2017\. •PMR accepts the MRP submitted by Sri Lanka\. 2018 •Sri Lanka requests the World Bank to assist in executing the MRP jointly\. •Bank and MMDE (for Sri Lanka) prepare the project details in consultation with stakeholders\. 2019 •The Climate Mitigation Action Support (CMAS) project is approved in April 2019\. 4Cote d’Ivoire PMR-CPLC Project (P168001)\. 5Sri Lanka joined the PMR in April 2016\. The Market Readiness Proposal (MRP) was prepared with support from the World Bank team which was accepted and the grant of US$3 million was approved on January 18, 2018\. The parent MDTF closing date was June 2021, which restricted the project closing time to February 2021\. Considering the time required for the preparatory work and approval formalities for the RE segment and the government’s unfamiliarity with the fiduciary systems of the World Bank, the initial a ssessment and design work was agreed to be carried out by the BE portion of the TF, thus ensuring maximum utilization of the available time and resources\. The risk of not having the ownership of the BE activities was minimized through rigorous consultation process and acknowledgement of the counterpart of every deliverable\. Page 6 of 37 Official Use The World Bank Climate Mitigation Action Support (P160552) Box 1\. The Partnership for Market Readiness\. The PMR is a grant-based, capacity building trust fund that provides funding and technical assistance for the collective innovation and piloting of carbon-pricing instruments (CPIs) that reduce GHG emissions\. The objectives are to a) build countries’ capacity to develop and implement carbon pricing instruments needed for GHG mitigation and (intended) NDC implementation through grant funding; b) create a knowledge base on carbon pricing instruments and facilitate information exchange through technical discussion of knowledge products; c) help countries to identify and implement best practice approaches and, where relevant, achieve compatibility in design to support the development of carbon markets; and d) inform the national and international policy discussions on GHG mitigation by sharing lessons learned and providing a platform for collective innovation on carbon pricing instruments\. The 19 Implementing Country Participants are middle-income countries that receive funding and technical support from the PMR\. Thirteen Contributing Participants contribute funding and share relevant experience\. Together, these two groups make up the PA, the PMR's decision-making body\. Sri Lanka became an Implementing County Partner of the PMR in April 2016\. Page 7 of 37 Official Use The World Bank Climate Mitigation Action Support (P160552) Figure 2: Project Theory of Change Page 8 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) Project Development Objectives (PDOs) 11\. The objective of the project, as stated in the Financing Agreement (PMR Grant Number TF0B0017), was to strengthen Sri Lanka’s capacities and systems to: (a) implement national climate change policies, strategies and actions; and (b) design or strengthen market/non-market mitigation instruments\. Key Expected Outcomes and Outcome Indicators 12\. The achievement of the PDO was to be measured by the following PDO-level Indicator: ‘National system to implement market-based instruments for Greenhouse gas reductions developed’\. 13\. The term ‘national system’ was defined in the Project Paper (Report No\. PP2167) as national MRV and registry systems for GHGs, and the term ‘developed’ was defined as established and piloted\. Components 14\. The project consisted of the following four components: A\. Component 1: Mitigation Policy Objectives, Landscape and Options Analysis (cost at approval: US$0\.225 M RE and US$0\.340 M BE; actual cost: US$0\.076 M RE and US$0\.041 M BE) This component aimed to develop an OPP that would indicate the potential role of a new CPI and how that could further support and enhance the existing domestic CPI, such as the SLCCS, to support NDC implementation\. The key RE activity was to review the overall policy’s coherence and provide recommendations on the design and implementation of an OPP\. The key BE activities were to assess the mitigation potential in different sectors and identify suitable CPI(s) for them\. B\. Component 2: Technical and Institutional/Regulatory Readiness Components to Support Implementation of CPIs (cost at approval: US$0\.545 M RE and US$0\.430 M BE; actual cost: US$0\.236 M RE and US$0\.409 M BE) The objectives of this component were to (a) enhance the data collection systems, particularly for facility-level data related to GHG emissions and emission reductions; (b) establish an integrated national MRV system; (c) develop a registry for data management and/or transactions; and (d) develop an institutional and regulatory framework to support, inter alia, regulations on emission reporting\. Key RE activities were to deploy and pilot the MRV and registry systems, assess gaps, and deliver sector-wise training on the MRV framework, national registry, and/or transaction registry\. The key BE activities were to determine the needs for resources and capacity building to fully assess a new MRV and registry systems; design the MRV and registry systems; and carry out a market needs analysis as well as develop a 5-year business plan for the sustainable use of the systems\. C\. Component 3: Framework for Enhancing and Scaling Up the Domestic CPIs (cost at approval: US$0\.715 M RE and US$0\.395 M BE; actual cost: US$0\.117 M RE and US$0\.228 M BE) Page 9 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) This component aimed to further strengthen the SLCCS and develop a roadmap for a new CPI as informed by Component 1\. Key RE activities were to establish the institutional, legal, and methodological framework for an enhanced SLCCS; pilot the enhanced SLCCS; and develop a roadmap for the new CPI\. The key BE activities were to assess the supply and demand potential for the implementation of the enhanced SLCCS and assess the existing institutional, legal, and technical framework for the implementation of an enhanced SLCCS\. D\. Component 4: Organization, Communication, Consultation and Capacity Building (cost at approval: US$0\.315 M RE and US$0\.035 M BE; actual cost: US$0\.353 M RE and US$0\.0835 M BE) The component supported activities related to consultation and coordination among various relevant agencies and key stakeholders along with capacity building workshops and events for these stakeholders\. Figure 2 explains the inter-relation between the Project’s four component\. Figure 3: Linkage among the Project Components Significant Changes during the implementation 15\. The project was not restructured; however, several changes were made to the RE and BE activities as follows: (i) the MRV and registry systems’ deployment under Component 2 was carried out not by the RE but by the BE with additional support from the PMR Secretariat; (ii) a consultancy service for MRV and registry training under Component 2 was dropped from the RE and introductory trainings were carried out Page 10 of 37 Official Use The World Bank Climate Mitigation Action Support (P160552) by the BE while the scope of work was reduced by using some standard materials readily available from other PMR countries; (iii) the piloting of the MRV and registry systems under Component 2 was dropped; and (iv) the implementation/establishment and piloting of the enhanced SLCCS activity under Component 3 was dropped\. 16\. A new activity was added to the RE part of Component 2, namely the development and implantation of a national climate change data sharing network, considering the needs for a nation-wide data collection and management system that would allow the country to meet its reporting requirements to the UNFCCC\. This activity was also identified by the needs assessment study as a prerequisite for a robust MRV framework\. The piloting of several systems and associated training was dropped/reduced in scope due to delays in system establishment and a delay in completing the pre-requisite activities\. 17\. These changes facilitated the adjustment of project priorities more towards making sure that the capacity of the GoSL was sufficiently increased and the awareness of the relevant stakeholders was raised before piloting the MRV and registry systems as well as the SLCCS\. These changes resulted in the removal of system piloting, which was one of the expected results as measured by the PDO indicator\. Instead, training activities were partially supplemented with awareness creation\. On the other hand, the changes enhanced Sri Lanka’s capacities and systems in terms of data sharing, which is a key element for national system to implement market-based instruments\. 18\. The changes are summarized in Table 1\. Table 1: Summary of Project Changes Component Activities Financing Change Made Instrument Component 1 Assessment of mitigation potential in different BETF Reduced allocation sectors and identification of suitable CPI(s) for potential sectors Evaluation of overall policy coherence and RETF Reduced allocation recommendation on designing and implementing policy package for MRV, registry and SLCCS implementation Component 2 Needs Assessment and MRV and Registry Design BETF Reduced allocation Deployment of IT infrastructure for MRV and RETF Reduced allocation registry Development and implementation of a national RETF Added activity climate change data sharing network Deliver sector wise training for MRV framework, RETF Dropped from the RETF and national registry, and/or transaction registry moved at a reduced scope to the BETF Piloting the MRV and national registry system RETF Dropped Component 3 SLCCC strategy and design study (assessment of BETF Reduced allocation the supply and demand and the existing institutional, legal and technical framework for Page 11 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) implementation of an enhanced SLCCS) Design and Implementation of the institutional, RETF Dropped from the RETF and legal and methodological framework for SLCCS moved at a reduced scope to the BETF Piloting the enhanced SLCCS RETF Dropped Developing a road map for new CPI RETF Reduced allocation II\. OUTCOME Relevance of the PDOs Rating: High 19\. The PDO remains highly relevant to the World Bank Group Country Partnership Framework (CPF) for Sri Lanka for FY17-20 (extended till June 2021 during a Performance and Learning Review) that underscores expansion of clean energy generation, climate change mitigation, and green growth as key development priorities for Sri Lanka\. The PDO is particularly relevant to the CPF Objective 3\.3: Enhancing mitigation and adaptation potential through renewable energy development and natural resource management\. The project ensured the compliance of mitigation policies and sectoral mitigation plans in the selected sectors to further promote renewable energy and reduce the environmental impacts on natural resources by strengthening capacity and systems\. This will help to progressively move towards efficient and low emission systems by means of the MRV and registry systems and developing a comprehensive CPI to ensure the reduction of the GHG emissions\. Sri Lanka’s draft Systematic Country Diagnostic (SCD) identifies ‘’addressing economic, social, and environmental risks to sustainability’’ as one of the country’s four main challenges\. One of the guiding statements to overcome these risks is “Implementation of climate commitments, as specified in key climate strategies and policiesâ€? and the project directly contributed to this through transparently monitoring and verifying emissions, ensuring proper reporting, and analyzing systematic data for decision makers to ensure compliance with the commitments as specified in Sri Lanka’s climate strategies and policies\. 20\. The PDO is also relevant to Sri Lanka’s effort to deliver on its NDC (2016) to reduce GHG emissions against a BAU scenario by 20 percent in the energy sector and 10 percent in other sectors (transport, industry, forests, and waste) by rolling out the MRV and registry systems and developing a new CPI to include more potential sectors and to complement the current SLCCS for which a roadmap has been prepared\. The PDO continues to be highly relevant to the Government’s national development priorities, in particular ‘Vision 2025’, which encourages low emission economic development by promoting clean energy, an environment friendly transport sector, and green financing\. The comprehensive new CPI, with a proposed roadmap for implementing it, covers the energy and transportation sectors and provides a solid foundation to move towards developing the market for competitive growth while ensuring reduced GHG emissions\. 21\. The project is aligned with the overall objectives of the PMR to build countries’ capacity to develop and implement carbon pricing instruments needed for GHG mitigation and implementation of NDCs\. The project is also consistent with the PMR’s aim to help countries identify and implement best practice approaches and, where relevant, achieve compatibility in design to support the development of carbon markets\. In particular, Sri Lanka demonstrated compatibility of the MRV and registry systems across different jurisdictions and Page 12 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) sectors by learning and applying the systems used in other PMR countries\. It also contributed to the dissemination of the best practices and helped to increase the leverage of the global carbon markets by further standardizing the required infrastructures of the CPIs\. Achievement of the PDOs (Efficacy) Rating: Substantial 22\. The efficacy section evaluates the level of PDO achievement using the PDO indicator, intermediate results indicators (IRIs), and other, non-measured, results which are attributed to the project\. Both RE and BE activities are considered in the evaluation, given the integral role of BE activities in the project as described in the Theory of Change\. The two types of capacities and systems that the project was to strengthen as stated in the PDO (to implement national climate change policies, strategies and actions; and to design or strengthen market/non- market mitigation instruments) are evaluated together because the requirements to strengthen the institutional capacities and systems were assessed and embedded into the comprehensive needs and market assessment, the system design, and the roadmap\. Assessment of Achievement of Each Objective/Outcome 23\. Table 2 summarizes the level of outcome and result achievement as measured by the project’s results framework (see more details in Annex 1): Table 2: Achieved Project Results as Measured by the PDO and Intermediate Result Indicators PDO Indicator/IRI Target Actual Details PDO-level Indicator: National system to 1 0 National MRV and registry systems for GHGs implement market-based instruments for were established but not piloted\. Greenhouse gas reductions developed IRI 1: An optimal policy package for 1 1 An OPP for climate change mitigation with the climate change mitigation developed use of market/non-market-based instruments was developed\. IRI 2: A national Monitoring, Reporting, 1 1 New national MRV framework and registry and Verification (MRV) framework systems were developed\. developed IRI 3: A national registry system for 1 1 Greenhouse gases developed IRI 4: A framework to enhance domestic 1 1 The framework was developed through updating market-based instruments developed the institutional, legal, and methodological framework to enhance the SLCCS and designing a roadmap to develop new CPI\. 24\. A national system to implement market-based instruments for GHG reductions (a national MRV framework and a registry system) was established (systems developed) but was not piloted by project closing\. Although the BETF financed the completion of needed assessments and the preliminary works to establish the systems, including an assessment of the different approaches of system development, technical and functional Page 13 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) specification designs, market analysis, and a 5-year business plan, the Client eventually decided to adopt the MRV and registry systems of Jordan – systems that were developed with the support of the PMR and the World Bank in 2019 and 2020, respectively\. Jordan’s systems are considered first-of-their kind that can be readily adopted by other PMR countries, thereby ensuring transparency and standardization of the necessary functions to communicate across countries and respond to the reporting requirements to the Paris Agreement\. The GoSL appreciated the value of using these standardized and transparent systems to not only fulfill the country’s NDC but also to contribute to a uniform global system of GHG emission reductions\. The hardware and software needed to run the systems were procured under the RETF with the use of a source code shared by the World Bank through the PMR Secretariat\. A project-funded comprehensive assessment of the use of MRV and registry systems and consultations on data mapping and functionality of the systems made sure that stakeholders were aware of the need for, and functional requirements of the systems, which served the purpose of the PDO even though the systems were eventually adopted from another country\. 25\. An OPP for climate change mitigation was developed\. This final output was achieved by assessing the mitigation potential of NDC priority sectors, studying potential CPIs in the energy and transport sector, and recommending an OPP to support SLCCS, CPI, MRV, and registry implementation\. Every study provided an in-depth analysis of the sectors, their sociopolitical condition, and their possible alignment path with the NDC goals, thereby providing a solid foundation for the next steps of assessment, design, and implantation of the CPI and relevant policies\. The mitigation study assessed the GHG emissions’ trends and trajectories of the different NDC priority sectors, estimated the mitigation potential of the listed and non-listed initiatives and measures in the NDC, identified low-carbon growth scenarios based on the sector policies and domestic and international mitigation targets and plans, identified key sources of GHG emissions, and provided recommendations to improve and refine the modeling work during the PMR implementation phase, including the estimated costs and time required for implementation\. The recommendations of the CPI study were based on macro-economic modeling as well as policy and legal analysis in six different scenarios for the energy and transport sectors\. The optimal policy study recommended policy measures for developing an OPP that would enhance the implementation of the MRV, the Sri Lanka Certified Emission Reduction (SLCR), the SLCCS, and CPIs in each priority sector, and outlined a roadmap for implementing the OPP\. 26\. A framework to enhance domestic market-based instruments was developed\. An SLCCS supply and demand analysis was conducted at the national and provincial levels, setting criteria for prioritizing projects in the respective NDC sectors, mostly energy and transportation\. Institutional analyses were also prepared by the BE activities in 2020-2021 with a detailed assessment of the existing structure, functionalities, and composition of different bodies and their qualification; recommendations on the composition, qualification, mandate, and authority of an executive body; assessments of the role and support of the provincial government in implementing an enhanced SLCCS; description of methodologies and linkages among the related systems; and an outline of sustainability measures for the framework\. While the implementation and piloting of the framework were not stated targets of the project, they were to be supported by RE activities; however, this did not happen as there was insufficient time to complete them before project closing\. Specific recommendations to strengthen the SLCCS governance and functions of different players are currently being discussed by the MoE to ensure alignment with the government’s aim to have the SLCCS recognized at the international level with potential international support such as the Partnership for Market Implementation (PMI) - a successor program launched by the World Bank this year\. A roadmap for the development of a new CPI was developed\. The RE supported the selection of the CPI among two proposed options (Carbon Tax and Emission Trading Scheme) and developed a roadmap for implementing it, including by defining its main Page 14 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) components; setting a baseline and targets for emission; developing the legal, institutional, operational, and technical frameworks for its establishment; and identifying options for linking it with the SLCCS and creating demand for the SLCCS\. 27\. While not measured by the results framework, the project also supported the development of a comprehensive GHG emission data sharing system to fulfill the data needs of policymakers, actuarial analysts, government agencies, private sector, international donors, researchers, etc\. The system is presently anchored in the Lanka Government Clouds (LGC) and hosted by the Information and Communication Technology Agency (ICTA) of Sri Lanka in a staging server to facilitate security audits, to be done by Sri Lanka Computer Emergency Readiness Team (SLCERT) to ensure that the software solution confirms with information security standards prior to deploying it in the LGC 2\.0\. The firm that designed and deployed the data-sharing system will be responsible for operating and maintaining it in the next three years\. 28\. The counterparts in Sri Lanka made substantial progress through the activities of the PMR in defining policies and institutional arrangements for implementing market-based instruments\. This was made possible because of the strong ownership demonstrated by the government throughout the project, being heavily involved in technical discussions and workshops under both BE and RE activities\. The technical advisory committee, which consisted of various ministries and national experts and led by the Climate Change Secretariat, was involved in the technical review of all the outputs produced by both BE and RE activities\. The capacity of GoSL was also strengthened through training and knowledge products and currently through training on the systems with the help of the PMR Secretariat\. The ownership by the government as demonstrated by its leadership throughout the review process of the outputs also continued with a commitment to invest and engage in learning throughout the PMR implementation\. 29\. Various outreach and nearly 37 stakeholder workshops were carried out by the Project Management Unit (PMU) with support from the MoE during the preparation and internal testing of the system to increase stakeholders’ awareness of climate change and carbon pricing instruments and infrastructures such as MRV and registry\. Various stakeholders were involved in the workshops, including the line ministries and agencies responsible for mitigation priority sectors under the NDC, private sector representatives, central bank, academia, and NGOs\. General outreach, videos, and infographics were produced for stakeholders, and technical documents on the basics for CPIs, MRV, and registry systems were produced, translated to local languages, and posted on the PMR webpage in the MoE website\. 30\. In summary, while all the IRIs were achieved, the PDO as measured by the PDO-level indicator was partially achieved as the establishment of the MRV and registry systems were accomplished by closing but they were not piloted\. Nonetheless, the studies and preparatory work financed by the RE and BE TFs created a solid foundation on which the MRV and registry systems can be rolled out in the near future, significantly increasing Sri Lanka’s capacities and systems to implement national climate change policies, strategies and actions; and design or strengthen market/non-market mitigation instruments\. Efficiency Rating: Modest Page 15 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) 31\. The total project cost was US$1\.54 million which is 51\.5 percent of the total RE and BE grant amounts combined\. The BETF cost was US$0\.76 million (64 percent of the total allocated US$1\.2 million) and the RETF cost was US$0\.78 million (44 percent of the total allocated US$1\.8 million)\. The total 48\.5 percent undisbursed amount reflects both efficiency and non-efficiency factors\. The allocated amount for the establishment of the SLCCS and the piloting of the MRV and Registry systems was 28 percent (among the unspent 56 percent) of the RE grant, and the remaining portion was either from savings from using the Jordan system (around 11 percent) or reduced scopes of the RE activities\. These partially affected the PDO achievement related to piloting the systems but did not affect the establishment of the systems and the achievement of the outputs and objectives related to their establishment\. 32\. All the planned BE activities and some of the shifted RE activities (mentioned in changes during implementation, paragraphs 15-16) were completed within the project period and substantially saving 46 percent of the allocated BE amount\. Most of the activities and assessments were completed before initiating the RE activities, which confirms the efficient utilization of resources and time\. However, the BE-funded assessments and deliverables related to the enhanced SLCCS framework were completed in the latter part of the project, resulting from the need for an additional assessment of the SCCLS institutional arrangement funded by the BE, and dropping of the piloting activities from the RE, which negatively affected the project’s efficiency\. Given the slow start of the RE activities caused by procurement delays, the project utilized BE resources to supplement technical assistance to the PMU management, such as facilitation of the technical advisory committee and enhancing quality control of project deliverables, while maintaining the ownership by the MoE\. Efficiency was lower in the RE portion of the project, where several planned activities were not completed by closing, including the piloting of the MRV and registry systems and the implementation/establishment of the enhanced SLCCS framework\. 33\. Other noted efficiency weaknesses were the late onboarding of several PMU staff (see more below), which caused delays to project procurement and progress\. However, the three consultancy services that were completed under the RE activities were initiated and completed within the last eight months of the project, demonstrating good efficiency once all the staff were on board\. Compared to other countries implementing the PMR program, Sri Lanka achieved better outcomes with lower resource burn rates in a shorter implementation period\. 34\. Finally, Jordan’s systems are considered the first-of-their-kind in that they can be readily adopted by other PMR countries, thereby ensuring transparency and standardization of the necessary systems for CPIs across countries\. Another key benefit of this approach is cost savings for the countries\. The client’s decision to adopt Jordan’s MRV and registry systems resulted in savings of 11 percent of total RE allocation (US$0\.195 million) compared to the cost of setting of new systems\. The initial assessment of the different approaches for system development, functional and technical specifications design, and market analysis were essential and cost effective as they helped the client to make an informed decision on the selection of the systems\. Moreover, the consultations and workshops with the stakeholders confirmed the understanding of the functionality of the national MRV and registry systems\. Page 16 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) Overall Outcome Rating 35\. The outcome rating is Moderately Satisfactory based on the High relevance of the PDO, the project’s Substantial efficacy, and its Modest efficiency\. The PDO remains highly relevant to the World Bank CPF Objectives and the new SCD guiding statements as well as to the GoSL’s Vision 2025\. The project also supported the GoSL’s NDC commitments and the PMR’s goal of reducing GHG emissions\. The project demonstrated Substantial efficacy in completing the OPP, new CPI roadmap, enhanced SLCCS framework, climate change data-sharing network, the MRV and registry system establishment despite not being able to pilot these systems and substantially train people\. The modest efficiency of the project was due to the incompletion of several RE activities on the one hand, and the costs savings incurred due to the adoption of the already developed systems on the other hand\. The achievement of the output of the intermediate indicators and objectives were completed in the latter part of the project and after archiving the last ISR in December 2020, which explains the different in the ratings between the last ISR and ICR\.6 Other Outcomes and Impacts 36\. Sri Lanka is the second South Asian country after India to join the PMR\. As a result, and by actively participating in all PMR PA meetings, PMR-related events, and international flagship events such as Innote4Climate between 2016 and 2020, MoE as the focal ministry has demonstrated its leadership in the region’s carbon markets and in the discussion on market-based mechanisms\. Recognizing this important status, Sri Lanka planned to host the PMR PA meeting and high-level ministerial events inviting senior government officials in April 2019; however, these were canceled due to the Easter bombings that occurred two weeks before the events were to take place\. Nevertheless, the project assisted Sri Lanka to participate in this global community and to demonstrate its presence and opinions in the international debate and discussion around evolving carbon markets and CPIs\. Gender 37\. This project did not aim to close gender gaps and intended results/outcomes were gender neutral\. However, the World Bank worked closely with its counterparts to balance the participation of male and female stakeholders in the consultation workshops and the inclusion of the perspectives of both men and women on climate change and needed mitigation actions in awareness and knowledge products financed under Component 4\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME Key Factors During Preparation 38\. Project Objective: As per the objectives set out in the Market Readiness Proposal (MRP) prepared by the GoSL, the project’s objective was ambitious, especially considering the project’s implementation period of around twenty-two months, the unfamiliarity of the counterpart with the World Bank's fiduciary process and 6Both PDO and Overall Implementation Progress ratings were Moderately Unsatisfactory in the last ISR archived in December 2020\. Page 17 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) procedures, and capacity constraints in utilizing technical resources due to the limited manpower in the Climate Change Secretariat (CCS) at MoE\. The PDO could have been simplified by focusing on the strengthening of the systems and developing roadmaps/frameworks for the implementation of climate change policies, strategies, and actions\. Similarly, the PDO indicators could have only considered the establishment of the system given the time constraints to pilot the systems\. The capacity strengthening outcome could have been embedded into the systems’ definition instead\. 39\. Project Design: Sri Lanka expressed interest in participating in the PMR very late in the Trust Fund’s lifetime compared to other participating countries – less than 4 years before its official closing\. This left the country with limited time to prepare an MRP to obtain funding from the PA of the PMR, and then to design and execute the MRP’s activities\. Nevertheless, the preparation of an MRP helped Sri Lanka to coordinate with the relevant stakeholders before project implementation, as it involved a comprehensive analysis of readiness needs and consultation with stakeholders, which helped Sri Lanka to formulate a well-designed project\. Considering also capacity constraints, a decision was made to split the US$3 million grant between RE and BE activities\. Accordingly, in May 2018, the BE activities, which supported the assessment and design part of the MRP activities, were launched, followed by the signing of the RE grant on April 11, 2019\. Considering the weak technical capacities and limited experience of the client in World Bank and other foreign-funded projects and the requirement for in-depth consultations with different stakeholders during the project’s limited timeframe, the RE activities were simplified and organized in a manner that allowed the GoSL to use BE activities as inputs\. This sequential design helped to achieve a significant number of outputs despite the capacity constraints and limited timeframe\. Still, the project could not fully achieve the ambitious PDO\. At the same time, there could have been consideration of adjusting existing systems instead of newly establishing MRV and registry systems as was later the case\. 40\. Readiness for Implementation: The project was successful in providing an opportunity for Sri Lanka to be part of one of the biggest communities of carbon pricing agenda in the world because of the PMR and accessing needed technical knowledge and products, resources, and network needed to develop a domestic carbon market to help GHG reduction\. The World Bank set several conditions for setting the RE trust fund’s transfer that included signing of several consultancy services, to make sure that RE activities were timey implemented to follow the outputs of the BE activities\. However, the fulfillment of key PMU positions should have been set as legal covenants or disbursement condition of the RE grant to avoid start-up delays\. 41\. Risk Assessment: The overall project risk was considered as Substantial because of risks associated with institutional capacity, sectoral coordination, and time constraints\. The analysis, however, did not identify the risk of delays due to political shifts as was the case during the Presidential Elections in 2019 and the General Elections in 2020\. These two events had great impact on the recruitment of PMU members (nearly six months had elapsed) due to restrictions on any recruitment and procurement processes as stated by the Election Commission\. Though this risk was beyond the control of the project, its identification may have reduced the scope of the project’s objectives/scope\. Key Factors During Implementation 42\. Coordination and Engagement: Due to the multi-sectoral nature of the project, financed activities required timely and proper coordination among different stakeholders, including the ministries, public sector agencies, provincial governments, project developers, and civil society organizations\. Further, deliverables Page 18 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) of the BE and RE consultancies (each with 3-6 deliverables) required extensive consultations with competent experts from the relevant ministries, agencies, organizations, academia, civil society, etc\. The PMU with the guidance of the CCS did that successfully, including after the onset of the pandemic by using online platforms\. The MoE also established a technical advisory committee with members of relevant government ministries to help to formulate activities\. Nonetheless, the overall management of the RE grant experienced some coordination challenges, reflected in the delayed establishment of a budget line and a Rupee account – opened seven months after project effectiveness\. There were also coordination-related delays in the submission of the first withdrawal application (3\.5 months from effectiveness) due to a lack of good communication between Treasury, Department of External Resources (ERD), and MoE\. These delays significantly hampered the initial implementation period because they delayed the PMU recruitment process (see next point) and the launch of key project activities – delays which were mitigated to a certain extent by the allocation of BE resources by the World Bank\. 43\. Late Recruitment of Key Functions: Although the PMU was established within two months of signing (by approval of the MoE), the appointment of the Project Director and Finance Officer took five months to complete because of the unavailability of RE resources, and a cumbersome appointment approval process at MoE\. In July 2020, 15 months after signing, the MoE appointed a Project Coordinator and two additional PMU officers to increase both management and technical oversight of consultant services and outreach activities led by the PMU – a process which took a considerable amount of time because of the delayed procurement process\. 44\. Weak Fiduciary Capacities: One of the key challenges during implementation was the CCS’ unfamiliarity with World Bank fiduciary procedures and systems\. During alterations within the ministry in 2019, the ministry neither had a procurement section nor dedicated staff authorized to clear procurement activities, which delayed the entire approval needed for procurement and other associated PMU activities\. As a result, almost no progress was made until September 2020 when the consultant for the Optimal Policy Package signed the agreement and initiated the first consultation workshop\. 45\. External Factors: Implementation was affected by unexpected events occurring in the country right from the beginning of the project, which had substantial impacts on the overall country situation, governance, economic activities, health, movement, and work situation\. On April 21, 2019, the country experienced attacks on three Catholic churches and three hotels across Sri Lanka, killing 270 people and injuring 500 more\. These resulted in startup delays and eventually slowed down the initial implementation pace\. The COVID-19 pandemic, which was first identified in Sri Lanka in March 2020 and continued till the end of the project, restricted the PMU’s regular working hours and the movement of consultants and resources, causing further delays to implementation\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. Quality of Monitoring and Evaluation Ratings: Substantial 46\. M&E Design: The results framework, consisting of a PDO indicator and IRIs, was relatively simple, with clear baselines and end targets which were binary in nature\. This helped to understand and evaluate the Page 19 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) achievement of outputs and the PDO\. However, IRI1 (“An optimal policy package for climate change mitigationâ€? measured through “An optimal policy package for climate change mitigation are designed with the use of market/non-market-based instrumentsâ€?) and IRI4 ( “A framework to enhance domestic market- based instruments developedâ€? measured through “An institutional, legal, and methodological framework to enhance the Sri Lanka Carbon Crediting Scheme is updated and a roadmap to develop new Carbon Pricing Instruments is designedâ€?) had common areas which could have been avoided, namely by making sure that results related to domestic market instruments from IRI4 are timely and clearly reflected in achieving IRI1\. Also, there were no indicators to measure the progress of Component 4 outreach and workshop activities, which played an integral role in the efforts to achieve the PDO\. M&E arrangements were clearly defined with the responsibility for the monitoring of progress lying with the PMU under the guidance of the CCS of MoE\. The PMU was to submit quarterly progress reports to the World Bank after the end of each calendar quarter as well as annual updates to the PMR\. 47\. M&E Implementation and Utilization: Though the achievement of set targets was expected in the latter part of the project, updates on results as measured by the results framework were not included in the quarterly progress reports; these were rather discussed during regular consultation between the World Bank Task Team and the PMU and during World Bank supervision missions\. The reporting to the PMR was done yearly as planned\. M&E information was used by the Client and the World Bank to discuss the progress of activities, plan procurement activities, design work plans, and agree on necessary design changes to enhance the project’s ability to reach its objectives\. 48\. Justification of M&E Rating: There were minor shortcomings in the M&E system’s design and implementation and the results framework overall facilitated M&E and reporting to the World Bank and the PMR\. B\. Environmental, Social and Fiduciary Compliance Environmental and Social 49\. The Environmental Assessment category of the project was defined as C (Not Required), since the project did not finance any on the ground activities\. There were also no triggered social safeguards policies\. Fiduciary Compliance Procurement 50\. Project-financed activities followed the ‘World Bank Procurement Regulations for IPF Borrowers’ (July 2016- revised November 2017 and August 2018) (‘Procurement Regulations’)\. The World Bank’s Systematic Tracking and Exchanges in Procurement (STEP) system was used to prepare, clear, and update the project’s Procurement Plan and to conduct all procurement transactions of the project in line with the provisions stipulated in the Grant Agreement\. All contracts were subject to post-review with regards to procurement in accordance with the procedures set forth in paragraph 4 of the World Bank Procurement Regulations for IPF Borrowers\. The temporary lack of Project Director, and the lengthy procurement process involved in the hiring of the remaining PMU staff delayed activities and ultimately affected the efficacy of the project in achieving its PDO\. Close follow-up and assistance from the World Bank’s procurement team were provided to address procurement issues and reduce delays and address what seems to be have been an Page 20 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) underestimation of the procurement weaknesses of the client at appraisal\. The procurement arrangements followed by the PMU were generally in compliance with World Bank procedures\. However, delays were observed in the revision and update of the procurement plan as well as uploading the mandatory documents into STEP by the PMU\. The Bank Team provided hands-on support to enter necessary information into STEP\. Financial Management 51\. The project was in compliance with the Grant Agreement covenants on financial management\. The interim unaudited financial reports were submitted in a satisfactory format and content\. The auditors did not identify any findings that could have financial implications on the project and issued a clean audit opinion on the project’s financial statements\. The PMU completed all the processes to refund the unaccounted balance of US$46,004\.7 The PMU still needs to submit the audit report for the period January 2020 to April 2021 by June 30, 2021\. C\. Bank Performance Quality at Entry 52\. The Bank team that supervised the implementation of the RE activities also assisted the Ministry of Mahaweli Development and Environment (MMDE, the present MoE) to prepare the MRP\. The engagement of the World Bank ensured significant project scoping, helped to develop a solid understanding of the national context, and facilitated the communication between the PMR and the CCS at MoE\. The project’s design closely met the country’s national development and climate objectives and the World Bank team provided convening power in bridging the gap between international experience and local context at the preparation stage\. 53\. Weaknesses at entry were an ambitious PDO, overestimation of the client’s project management and procurement capacity, some duplication in the IRIs, and an unidentified governance risk as noted\. When the PMR preparation stage is considered, project preparation took two and half years (from concept to approval) to complete due to the additional time needed to reach national consensus and to formulate a market readiness proposal as required by the PMR\. This compares well with other PMR countries, which took about 2 years on average to prepare such a comprehensive proposal and additional average period for of 11 months8 for developing similar projects\. Quality of Supervision 54\. The task team presented an adequate mix of technical skills to properly supervise and support the PMU during project implementation, including specialists in climate change, disaster risk management, legal, financial management, procurement, environment, and social development\. The Task Team submitted three Implementation Status Reports (ISRs) that reported on progress in detail, provided fair ratings, and adequately articulated the issues for management attention\. Supervision missions assisted the PMU in 7 The refund amount US$0\.046 million is the difference between the total advance (US$0\.83 million) received by the PMU and the total cost (US$0\.78 million) as mentioned in the latest IUFR\. Refunding of the unaccounted balance is being processed by PMU at the time of ICR preparation\. 8 Considering similar programs in China, South Arica, India, Thailand, and Turkey\. Page 21 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) identifying implementation challenges and offering possible solutions, including for procurement delays, especially during the COVID-19 pandemic response\. In addition to semi-annual supervision missions, the World Bank team was in frequent communication with the CCS and PMU team to provide just-in-time advice and guidance on key issues\. The World Bank team continuously monitored compliance with the World Bank’s policies, and reviewed procurement and disbursement procedures and financial audit reports\. The World Bank’s financial management team provided timely support to the CCS and the PMU during the implementation of the project regarding financial management issues\. 55\. The World Bank team regularly coordinated with the PMR Secretariat to obtain technical support and additional quality control in a timely manner\. The team provided close and timely follow-up and support in preparing RE-financed terms of reference, expressions of interest, requests for proposals, and technical documents; reviewing project deliverables; and preparing financial reports\. In addition, the World Bank task team helped to mitigate some of the procurement delays by hiring procurement experts using BE resources\. 56\. When significant delays in implementation were observed during the first year of the project, the World Bank team discussed extensively with the client and Country Management the option of restructuring the project, but it was decided not to restructure the project\. The decision was on the basis of i) limited time remaining after a restructuring; ii) strong commitment in FY 2021 by the client to speed up implementation; and iii) uncertainty about the ability to obtain the approval of the PA of the PMR given the PMR was in its final stage of operation, closing all country programs by December 2020\. Accordingly, instead of restructuring and in agreement with the client, the project took advantage of utilizing the BE resources for some activities originally planned under RE resources\. The project also reallocated resources to support the PMU’s capacity to expedite procurement processes and provide technical oversight\. Justification of overall rating of Bank Performance 57\. The World Bank’s overall performance is rated Moderately Satisfactory\. The World Bank implementation team was closely and effectively engaged with the Client, consultants, and other stakeholders during project preparation as well as project implementation9, however there were several weaknesses in the project design that later affected implementation, including the level of PDO ambitiousness and an overestimation of procurement capacities\. D\. Risk to Development Outcome 58\. The GoSL is currently considering applying to the PMI, a successor program focusing on the actual implementation of CPIs to support World Bank client countries\. The three major results of the project (the MRV system, the registry system, and the data sharing network) require continuous technical support as well as operation and maintenance (O&M) support which the PMI could support\. In the next three years, the technical and O&M of the data-sharing network will be the responsibility of the consulting firm, but the mechanism for the O&M of the MRV and registry systems is not fully developed as of now\. A data-sharing agreement between MoE and the related government ministries and departments was made through Memorandum of Understanding (MoU) to ensure the proper functioning of data flows\. While this is a solution for the short-medium term, there is a need to establish a legal and institutional commitment to continue sharing/improving the data sharing mechanisms in the long term\. 9 The PMU and CCS rated the Bank Performance as Satisfactory during project closing discussions\. Page 22 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) 59\. A roadmap for a clear political mandate and legal basis, together with inter-ministerial coordination, will be critical for the implementation of a CPI\. The project has already produced the OPP, a roadmap for designing and implementing the new CPI, and identified next steps\. The project also introduced more inclusive dialogues and consultation at the inter-ministerial level on the agenda of CPIs as part of an overall discussion on climate change and NDC implementation by providing both quantitative and qualitative results of different options with specific recommendations\. These outputs will be at risk if the next steps (i\.e\., designing and implementing the new CPI and implementing the enhanced SLCCS and OPP) are not actively initiated by the MoE with frequent communication with other ministries in the NDC sectors\. 60\. The COVID-19 pandemic has imposed challenges to the global economy, restricting economic activities all over the world, including in Sri Lanka\. The project-financed assessments and the recommendations made through the consultancies did not consider the COVID-19 pandemic and its economic impact, meaning that the priorities and weightage of considerations, for example, ambitions of the GHG reductions and choice of carbon pricing instruments, might not fully reflect the changed economic situation, and the growth in demand for domestic carbon credits from SLCCS may not reach the target for growing and sustaining the scheme itself in the next couple of years\. This could affect the different financial models that were generated for different instruments\. The post-pandemic economic situation may also have a cascade effect on the implementation of the CPI as the GoSL may decide to prioritize and focus on instantaneous economic actions while neglecting the long-term goal and potential of the proposed systems\. V\. LESSONS LEARNED AND RECOMMENDATIONS 61\. Joint World Bank-Client execution and flexible approach provide higher leverage when there is suboptimal capacities and implementation time\. The design of the PMR program in Sri Lanka built on early lessons from other country engagements and included both BE and RE activities\. The joint execution of the project was beneficial to overcome the delays in RE implementation and the weak capacity of the GoSL not only to carry out the activities originally envisaged under the MRP with minimum delays but also to increase the capacity of the GoSL for understanding both grant management and new subjects and requirements of carbon markets under the Paris Agreement\. When RE activities built national capacity and enhanced the ownership of the PMR activities within Sri Lanka, the BE activities focused on moving forward with the analytical pieces of the PMR program\. This allowed Sri Lanka to make progress with the PMR resources in a relatively short period of time\. For relatively newer and countries with lesser capacities, the Partnership for Market Implementation may also follow the joint execution and flexible approach to optimize results, resources, and time\. 62\. Implementation of CPIs and their necessary infrastructures should be owned by the entire government and capacities should be built in order to ensure their effective implementation\. If Sri Lanka is fully committed to further pursuing the outputs of the project and implementing new CPIs in the future, strong leadership of the MoE is essential for getting necessary cooperation from other line ministries and agencies and even attracting additional international support to implement a CPI in the future\. While the MoE has been demonstrating its strong capability to implement climate change policy in the country and coordinate with other stakeholders, capacity to implement a future CPI requires further commitment and a strategic plan to equip the GoSL with the necessary mandate, skills, human and financial resources as it will take a significant amount of time to consider, design, pilot, and implement actual CPIs learning from other PMR Page 23 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) countries and countries that have implemented CPIs\. 63\. Agreement should be reached with the PMR PA on streamlined procedures for project restructuring\. The project did not undergo restructuring which would have adjusted its targets to more realistic terms and facilitated the changes in activities because of the need to have consensus from all the PA members, including PMR implementing countries, in addition to the World Bank procedures for restructuring\. Under the Partnership for Market Implementation, decision-making processes and reporting for country programs should take into account the need for changes in scope, activities, institutional arrangements, and implementation plans in a streamlined manner to allow such changes when needed and facilitate implementation and achievement of results\. 64\. A standardized framework to build necessary infrastructure for implementing CPIs should be further demonstrated under the Partnership for Market Implementation\. The project showed that by adopting already developed MRV and registry systems, deployment processes can be simplified with cost, time, and resource savings\. This would also allow the country to focus more on the necessary customization and capacity building for users with available technical guides, training materials, and advice from experienced staffs who regularly use the systems in other countries\. Finally, it is important to note that standardization of system across countries could help leverage the global carbon market by reducing system failure or connectivity issues\. \. Page 24 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: To strengthen Sri Lanka's capacities and systems to: (a) implement national climate change policies, strategies and actions; and (b) design or strengthen market/non-market mitigation instruments\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion National system to implement Number 0\.00 1\.00 0\.00 market-based instruments for Greenhouse gas reductions 29-Mar-2019 28-Feb-2021 28-Feb-2021 developed Comments (achievements against targets): Partially achieved\. The term ‘national system’ was defined in the Project Paper (Report No\. PP2167) as national MRV and registry systems for GHGs, and the term ‘developed’ was defined as established and piloted\. National MRV and registry systems for GHGs were established but not piloted\. A\.2 Intermediate Results Indicators Component: Mitigation Policy Objectives, Landscape and Options Analysis Page 25 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion An optimal policy package for Number 0\.00 1\.00 1\.00 climate change mitigation developed 29-Mar-2019 28-Feb-2021 28-Feb-2021 Comments (achievements against targets): Achieved\. An optimal policy package for climate change mitigation with the use of market/non-market-based instruments was developed\. Component: Technical and Institutional/Regulatory Readiness Components to Support Implementation of CPIs Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion A national Monitoring, Number 0\.00 1\.00 1\.00 Reporting, and Verification (MRV) framework developed 29-Mar-2019 28-Feb-2021 28-Feb-2021 Comments (achievements against targets): Achieved\. New national MRV framework system was developed\. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion A national registry system for Number 0\.00 1\.00 1\.00 Greenhouse gases developed 29-Mar-2019 28-Feb-2021 28-Feb-2021 Page 26 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) Comments (achievements against targets): Achieved\. New national registry system was developed\. Component: Framework for Enhancing and Scaling Up the Domestic CPIs Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion A framework to enhance Number 0\.00 1\.00 1\.00 domestic market based instruments developed 29-Mar-2019 28-Feb-2021 28-Feb-2021 Comments (achievements against targets): Achieved\. The framework was developed through updating the institutional, legal, and methodological framework to enhance the SLCCS and designing a roadmap to develop new CPI\. Page 27 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) B\. ORGANIZATION OF THE ASSESSMENT OF THE PDO Objective/Outcome 1: To strengthen Sri Lanka's capacities and systems to: (a) implement national climate change policies, strategies and actions; and (b) design or strengthen market/non-market mitigation instruments\. 1\. National system to implement market-based instruments for Outcome Indicators Greenhouse gas reductions developed 1\. An optimal policy package for climate change mitigation developed 2\. A national Monitoring, Reporting, and Verification (MRV) framework developed Intermediate Results Indicators 3\. A national registry system for Greenhouse gases developed 4\. A framework to enhance domestic market-based instruments developed Component 1: Key output of this component was the development of OPP, and development and implantation of a national climate change data sharing network\. The OPP was developed through successful completion of the following inter-related assessments: • Assessment of mitigation potential in different sectors and sub- sectors, Key Outputs by Component • Identification of suitable CPIs for the major sectors of (linked to the achievement of the Objective/Outcome 1) mitigation potential (Energy and Transport), • Feasibility assessment of the identified CPIs and recommendation for selecting one\. Component 2: Key output of this component was the needs assessment and MRV and Registry Design\. These also followed several assessments: Page 28 of 37 Official Use The World Bank Climate Mitigation Action Support (P160552) • Determination of the needs for resources and capacity building of the involved agencies to fully assess the new MRV and Registry systems at national level, • MRV and Registry system design, • Development of the market mechanism and 5-year business plan for the systems, • Selection of MRV and Registry systems based on the above assessments\. Component 3: Key output of this component was the development of a framework to enhance domestic market-based instruments which was also achieved through the successful completion of the following assessments: • Assessment of supply and demand of SLCCS at provincial and national level, • Assessment of existing institutional, legal and technical framework for implementation of an enhanced SLCCS, • Development of a roadmap for new CPI\. Component 4: Key output of this component was engagement with stakeholders and development of knowledge products\. This component was cross-cutting and integral for all project activities and contributed to achievement of the outcome objective\. Page 29 of 37 Official Use  The World Bank Climate Mitigation Action Support (P160552) \. ANNEX 2\. PROJECT COST BY COMPONENT Amount at Actual at Project Percentage of Components Approval (US$M) Closing (US$M) Approval (US$M) RE BE RE BE RE BE Component 1: Mitigation Policy Objectives, Landscape and Options 0\.225 0\.340 0\.076 0\.041 33\.64% 11\.99% Analysis Component 2: Technical and Institutional/ Regulatory Readiness 0\.545 0\.430 0\.236 0\.409 43\.37% 95\.05% Components to Support Implementation of CPIs Component 3: Framework for Enhancing and Scaling Up the 0\.715 0\.395 0\.117 0\.228 16\.32% 57\.84% Domestic CPIs Component 4: Organization, Communication, Consultation and 0\.315 0\.035 0\.353 0\.083 112\.08% 238\.48% Capacity Building Total 1\.80 1\.20 0\.782 0\.761 43\.43% 63\.45% Page 30 of 37 The World Bank Climate Mitigation Action Support (P160552) ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS The comments were provided by MoE to the World Bank in an email dated June 7, 2021\. All the direct comments are provided below\. There were reflected in the ICR\. Comments and Recommendations Country and Sectoral Context at Appraisal Indicating only percentages of GHG emission by sectors provide a mis-guide for the readers without indicating total GHG emission of the country\. Therefore, suggest to add total GHG emission quantity before indicating %\. At present, here is no climate change -related data sharing policies in the country except ‘Right to Information Act’\. Theory of Change ‘National Climate Change Data Management System’ need to be corrected as ‘National Climate Change Data Sharing Network’ Activity of the consultancy on Optimal Policy Package was not listed under the Activities\. Significant Changes during the implementation It is fair if you mention the reasons for dropping some components\. The MRV training was a subsequent activity of MRV and Registry deployment\. Since the MRV deployment was not carried out during the project period, the Training activity was dropped\. In the 1st EoI, no suitable candidate was identified\. MCPC decided to recall it\. However, due to the time limitation then RE reduced the scope and proposed to recall but world Bank refused and undertook as BE\. RE was ready to carry out this activity\. However, BE components related to SLCCS were completed and submitted to RE at the latter part of the project period (Those components were essential for RE to implement and pilot the enhanced SLCCS) and RE could not have sufficient time to complete the activity\. Assessing the Institutional, Legal and Methodological Requirements for an Enhanced SLCCS were carried out as BETF activities\. These should be reflected in this ICR None of the elements under the National Climate Change Data Sharing Network were dropped/reduced due to delays in system establishment\. This statement is not relevant to National Climate Change Data Sharing Network\. What are these changes? Above mentioned changes? Not clear\. Please mention specifically\. This statement is not clear\. Appreciate if you can clarify “training activities were partially supplemented with awareness creation and facilitating the use of the systems in the futureâ€? This should be corrected as ‘reduced’ Reduced from $ 225,000 to $ 85,000 lease correct as “Designing and implementing the institutional, legal and methodological framework for SLCCSâ€? Page 31 of 37 The World Bank Climate Mitigation Action Support (P160552) This assessment was carried out as a BE Component\. It was delayed and RETF could not have time for implementation\. Outcome Efficacy This section is not relevant to Data Sharing Network\. This is about CPIs\. Apparently, this part is included here mistakenly\. Please correct revise this section as below\. “The system is presently anchored in a staging server hosted by the ICTA to facilitate security audit which will be done by Sri Lanka Computer Emergency Readiness Team (SLCERT)\. The security certification will be completed to ensure that the software solution confirms to meet the information security standard prior to deploy it in the LGC 2\.0 (Lanka Government Cloud)\.â€? In the outreach component, RE managed to produce some outreach materials which are useful for increasing the awareness of the stakeholders, data providers, young professionals, graduates, undergraduates, school children and general public\. 1\. Four technical documentaries on MRV, CPIs, National Climate Change Data Sharing Network and Sri Lanka Carbon Crediting Scheme (SLCCS) 2\. Fifteen 3 min\. videos on professional thoughts on climate change mitigation in various sectors 3\. A climate change documentary video focusing on school children and other interested groups\. 4\. A 3D animated model on climate smart cities 5\. 30 15-seconds 3D animated videos on climate change mitigation options 6\. Five 30-seconds TV commercial videos on climate change mitigation 7\. Two 2-minutes videos on climate change mitigation thoughts 8\. Five 60-seconds videos on climate change mitigation targeting general public (post on youtube channel and social media 9\. Two Sponsored Professional discussions on leading television channel Those products were telecasted on Television channels, CCS and some other YouTube channels and social media\. Efficiency It is not fair to mention that ‘efficiency was lower in the RE portion of the projectâ€?\. Some of the delays were beyond the control of RE (i\.e\. PMU, CCS and MoE) and those were unavoidable (Eg: procurement delays due to 1st and 2nd waves of Covid Pandemic, Presidential election, general election and poor response for some EoI)\. Key Factors that affected implementation and outcome Actually, political shift was directly affected to the delay\. Prior to the Presidential election, the Ministry was as Ministry of Mahaweli Development and Environment (Combined as Min\. of Mahaweli Development and Min\. of Environment)\. After the Presidential Election, Mini\. of Environment (MoE) separated and the MoE could not have its own procurement unit (earlier used the Min\. of Mahaweli Procurement unit)\. Page 32 of 37 The World Bank Climate Mitigation Action Support (P160552) It was a major drawback to the project procurement activities and PMU, CCS and MoE had to start procurement activities from the beginning\. With the support from the BE, RE carried out procurement, however, it took more than the usual time\. Further delays occurred due to following reason\. At the beginning all the procurements were followed the CQS with cabinet appointed procurement committees\. Identifying the risk (delay due to general election, changes of ministries and secretaries) prior to the general election, RE managed to split the consultancies, reduce the budget of each consultancy and bring to level which could be managed with Ministry Consultancy Procurement Committee (MCPC)\. It was a strategic decision took by RE to minimize the delay which could have occurred\. This was the 1st WB granted project for CCS and CCS staff took time to adapt and familiarize to the computerized system, especially procurement and STEP updates\. What is this? It is not very clear! MoE follows the government Procurement Guidelines a Procedures\. Please refer reasons for delays mentioned in # 41\. Infact, this delay is not due to the procurement process, there were several external factors for this delay\. I suggest to add those external factors\. It is not fair to mention that “ almost no progress was made until Sep\. 2020â€?\. Actually, RE carried out all the staff recruitment activities of the PMU and initial preparation activities of procurement process (please refer the comments given in the #41) Bank Performance Please note that The World Bank took about a year to finalize the agreements and sign the agreements after accepting the EoI\. If this indicates, Bank side’s delays also should be indicated! MRP was developed by The World Bank\. The proposal preparatory grant was taken by the Bank\. Once the EoI approved in PA 16, preparatory grant was used by the bank and it took about a year to sign the agreement\. Lessons Learned and Recommendations It is not fair simply say that “…\.delays in RE implementation and the weak capacity of the GoSL not only to carry out the activities originally envisaged under the MRP with minimum delays but also to increase the capacity of the GoSL for understanding both grant management and new subjects and requirements…\.â€? Even thought the RE had limited time and limited resources and unavoidable external disturbances, RE try its best to carry out the assigned components\. Since some subject elements are new to Sri Lanka, it was difficult to find experts in relevant fields\. However, during the project period RE tried its best to improve the knowledge of its team and carry out project implementation activities\. BE was given initial tasks until RE managed its initial preparation activities\. Page 33 of 37 The World Bank Climate Mitigation Action Support (P160552) It is important to include the implementation of SLCCS, further improvement or upscale of Data Sharing Network and MRV system …\. An overall comment: it had been recognized the WB team effort to reach this project completion\. However, RE team who made a big effort to reach this project completion specially officials of the CCS and the Ministry under a very difficult situation, should be given a due recognition under the ICR\. Note: The Client’s completion report was submitted to the World Bank via an e-mail dated April 7, 2021\. The report is available in WBDoc\. Page 34 of 37  The World Bank Climate Mitigation Action Support (P160552) ANNEX 4\. SUPPORTING DOCUMENTS S\.I\. Documents Name Document Number/ Date of Finalization 1\. Aide Memoire 2018: July 2-6 2\. Aide Memoire 2019: February 18-28 3\. Aide Memoire 2019: July 22-31 4\. Aide Memoire 2019: October 28-November 1 5\. Aide Memoire 2020: March 3-13 6\. Aide Memoire 2020: October 26- November 10 7\. Climate Mitigation Action Support Project IUFRs 8\. Climate Mitigation Action Support Project Procurement Plans 9\. GFR-Sri Lanka Implementation Grant-BETF GFR ID: 0000028251 10\. GFR-Sri Lanka Implementation Grant-RETF GFR ID :0000029970 11\. GoSL request for assistance for Preparation Phase through 5 April 2017 Bank Executed Mode 12\. Grant Agreement PMR Grant Number TF0B0017 13\. Implementation Status and Results Report 1: ISR 36725 (Archived on 27 June 2019) 14\. Implementation Status and Results Report 2: ISR 41182 (Archived on 13 April 2020) 15\. Implementation Status and Results Report 3: ISR 44133 (Archived on 15 December 2020) 16\. Integrated Safeguards Data Sheet ISDSC18709 17\. Management Letter to ERD 2018: July 2-6 18\. Management Letter to MMDE 2018: July 2-6 19\. Management Letter to MMDE 2019: February 18-28 20\. Management Letter to ERD 2019: July 22-31 21\. Management Letter to MMDE 2019: July 22-31 22\. Management Letter to ERD 2019: October 28-November 1 23\. Management Letter to MEWR 2019: October 28-November 1 24\. Management Letter to MEWR 2020: March 3-13 25\. Management Letter to MoE 2020: October 26- November 10 26\. Project Information Document PIDC72794 27\. Project Paper Report No\. PP2167 28\. Sri Lanka Market Readiness Proposal December 2017 Page 35 of 37 The World Bank Climate Mitigation Action Support (P160552) ANNEX 5\. LIST OF PROJECT DELIVERABLES/OUTPUTS AND DELIVERABLE APPROVAL PROCESS Component Deliverables/Output Executed by Component 1 GHG mitigation assessment for different sectors BE Identify suitable CPIs to decarbonize the power and transport BE sector (including scoping, legal, policy and economic analysis) Comparative analysis report on the selected CPI options; RE Roadmap for designing, piloting and implementation of new CPIs, RE including possible link to the enhanced SLCCS and NDCs Evaluation of overall policy coherence and recommendations for RE designing and implementing an optimal Policy Package for MRV, SLCR and SLCCS Component 2 Designing an integrated national Monitoring, Reporting and BE Verifying (MRV) system (including needs assessment, technical and functional specifications, roadmap for piloting the framework) Design of a National Registry System (including needs BE assessment, technical and functional specifications) Development and implantation of a national climate change data RE sharing network Establishment of MRV and Registry System RE Component 3 Assessment of the institutional, legal and methodological BE requirements for an enhanced Sri Lanka Carbon Crediting Scheme (SLCCS) Provincial and City Level Assessment for the Implementation of BE the Sri Lanka Carbon Crediting Scheme (SLCCS) Supply and Demand Assessment for the Implementation of the BE Sri Lanka Carbon Crediting Scheme (SLCCS) Component 4 Capacity Building Workshop BE and RE Outreach Activities and Knowledge Products RE Under Outreach Activities and Knowledge products, the RE portion of the grant financed some outreach materials which were useful for increasing the awareness of the stakeholders, data providers, young professionals, graduates, undergraduates, school children, and the public\. These are: 1\. Four technical documentaries on MRV, CPIs, National Climate Change Data Sharing Network, and Sri Lanka Carbon Crediting Scheme (SLCCS)\. 2\. Fifteen 3-minute videos on professional thoughts on climate change mitigation in various sectors\. 3\. A climate change documentary video focusing on school children and other interested groups\. 4\. A 3D animated model on climate smart cities\. 5\. 30 15-second 3D animated videos on climate change mitigation options\. 6\. Five 30-second TV commercial videos on climate change mitigation\. 7\. Two 2-minutes videos on climate change mitigation thoughts\. Page 36 of 37 The World Bank Climate Mitigation Action Support (P160552) 8\. Five 60-second videos on climate change mitigation targeting the general public (post on YouTube channel and social media)\. 9\. Two sponsored professional discussions on leading television channel\. These products were telecasted on Television channels, CCS, and some other YouTube channels and social media\. Figure 4: Deliverable Approval Process Page 37 of 37

REVIEW

P008803

 ICRR 11626 Report Number : ICRR11626 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/23/2003 PROJ ID : P008803 Appraisal Actual Project Name : Russia Energy Efficiency Project Costs 131\.4 30\.1 US$M ) (US$M) Country : Russian Federation Loan /Credit (US$M) Loan/ US$M ) 106\.5 22\.5 Sector (s): Board: EMT - District Cofinancing 3\.2 3\.2 heating and energy US$M ) (US$M) efficiency services (48%), Power (27%), Oil and gas (25%) L/C Number : L3876 Board Approval 95 FY ) (FY) Partners involved : GEF Closing Date 06/30/2001 01/31/2003 Prepared by : Reviewed by : Group Manager : Group : Richard L\. Berney George T\. K\. Pitman Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives (i) To increase the efficiency of energy use by supporting investments in more efficient equipment and increasing the use of customer metering; (ii) to reduce gas distribution network costs and maintain distribution system capacity, integrity and safety through network rehabilitation; and (ii) to support the government's gas sector reform program through technical assistance\. b\. Components 1\. Gas distribution system rehabilitation and upgrading, including installation of corrosion protection systems, installation of residential and commercial gas meters, and replacement of improving leak detections programs and replacement of older leaky pipes for Volgograd ($36\.5 million)\. This component was subsequently dropped in a restructuring that took place before loan signing\. 2\. Energy efficiency investments: replaceable model investment programs to improve energy efficiency of district heating and combined heat and power utilities ($58 million) 3\. Technical assistance and studies to support gas sector reform ($12 million)\. 4\. The GEF assistance will be used to develop investment components for the project, all of which will lead to reduced Greenhouse Gas (GHG) emissions ($3\.2 million)\. c\. Comments on Project Cost, Financing and Dates Project costs were based on city specific investment requirements based in turn on detailed technical and economic analysis\. Cities were required to repay the loans they received\. They had to pay local costs, including import duties\. All of the sub-components were preappraised, so the timing was appropriate\. 3\. Achievement of Relevant Objectives: Effectiveness, which was to take place 6 months after approval, was delayed by over a year (11/02/95 to 12/26/96) due, primarily to complications related to the establishment of regulations related to on-lending of Bank loan proceeds to regional sub-borrowers\. Frequent changes in the Ministry of Finance further complicated this process\. In the process of qualifying the sub-borrowers under the newly designed onlending agreements (before loan effectiveness), the $36\.5 million Volgograd gas distribution project component was dropped\. The energy efficiency component originally included ten cities\. Two of these were dropped and replaced by other cities in 1997\. After the financial crisis and subsequent massive devaluation in mid-1998, the financial condition of six of the remaining ten cities deteriorated to the point where they had to drop out of the project\. As a result, only four of twelve regional subprojects were implemented, and even for these, the project scope was significantly smaller than originally expected\. Only four of the ten gas sector studies were implemented\. Gasprom failed to support the remaining studies, and they were eventually dropped\. GEF funds were used to identify and appraise additional energy saving investments ($0\.8 million)\. The other components, which were to identify ways to mitigate the release of methane in the production and transportation, distribution and utilization of natural gas were not implemented\. 4\. Significant Outcomes/Impacts: In total, only $16\.6 million was invested in energy efficiency sub-projects of four cities\. All of these subprojects were completed successfully, with highly satisfactory results\. Financial rates of return ranged from $19% to 83%, with economic returns ranging from 31% to over 200%\. Annual economic benefits from these investments are estimated to exceed $10\.7 million, which includes $7\.7 million in financial savings, 56 thousand tons fuel savings, and a reduction of 105 thousand tons in CO2 emissions\. Even more importantly, the sub-projects improved the living conditions of more than 160,000 people\. In Archangelsk and Semenov winter apartment temperatures increased from a 12-16 degree C range to a stable 20 degrees C\. Financial savings on heat supply has allowed municipal governments to finance other priority projects to assist the poor\. The success of the implemented investment components proved a model for further energy savings projects\. The Bank financed a $85 million dollar follow-up Municipal Heating Project in FY01\. The project has had a strong demonstration impact and has triggered energy efficiency programs in the non-project areas\. Many heating authorities acquired their own cost monitoring, metering, and control equipment to improve the operation of their heating services\. In Nizhny Novgorot 9 projects with a total investment of 35 million were launched using domestic funds\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Efforts to work with Gasprom proved futile\. They would not support the Volgograd gas distribution rehabilitation program or the methane gas release reduction study\. They stymied the efforts to implement gas sector policy studies that they thought might lead to recommendations against their basic interests\. While the TA component contributed to legislative and regulatory capacity-building, the institutional development impact has been relatively modest compared with what was expected under the project\. Study recommendations are being used in an ad-hoc fashion\. Most sector reform issues identified during appraisal have not been addressed\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Moderately The investment funds that were used Unsatisfactory produced highly satisfactory results \. Expectations to reform the gas sector with this type of a mixed project were unrealistic\. Institutional Dev \.: Modest Modest  Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: The Bank should continue to strongly support the rehabilitation of district heating infrastructure\. It should be considered an essential service needed for reducing real poverty, and it is generally an economically and financially attractive investment, with additional GHG reduction benefits\. Investment loans are not effective vehicles for sector reform when the institutions that need to be reformed are not direct beneficiaries of the investment program\. In this case the municipal heating authorities, which purchased gas, were the beneficiaries, while Gasprom, the supplier of gas, was the object of the reform\. There was no incentive for Gasprom to support the investment program or the reform program\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR was exceptionally detailed and complete\. Its judgements were well substantiated\. It would have been useful to have explained why the large Volgograd component was dropped before loan signing, as this might have provided some insight into the problems with lending to regional bodies\.

REVIEW

P108368

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) Report Number : ICRR0020568 1\. Project Data Project ID Project Name P108368 AFR:Central African Backbone - APL1A Country Practice Area(Lead) Western Africa Transport & ICT L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-46470,IDA-H5150,IDA-H5160 15-Mar-2016 26,730,000\.00 Bank Approval Date Closing Date (Actual) 24-Sep-2009 15-Mar-2016 IBRD/IDA (USD) Grants (USD) Original Commitment 26,200,000\.00 0\.00 Revised Commitment 26,200,000\.00 0\.00 Actual 24,219,514\.96 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Ranga Rajan J\. W\. van Holst Christopher David Nelson IEGSD (Unit 4) Krishnamani Pellekaan 2\. Project Objectives and Components a\. Objectives The Project Development Objective (PDO) for the Central Africa Backbone (CAB1A) Program as stated in the Financing Agreements for Cameroon (Schedule 1, page 6), Chad (Schedule 1, page 4), Central African Republic (Schedule 1, page 6) and the Project Appraisal Document (PAD, page 14) was: "To contribute to increase the geographical reach and usage of regional broadband network services and reduce their prices"\. Page 1 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) b\. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? Yes d\. Components This project in Cameroon, Chad and the Central African Republic (CAR) was part of the Central African Backbone (CAB) regional program\. The program aimed at providing broadband connectivity to all capital and main secondary cities in Central African countries\. Specifically, the program aimed at establishing new regional telecom operators for reselling international, regional and national capacity to national operators and service providers at discounted rates and establishing a regional Public-Private Partnership (PPP) entity to manage the CAB infrastructure\. The CAB program was structured as a Vertical Adaptable Program Loan meaning that technical assistance activities to countries were to be phased out as needed prior to mobilizing the required financing for investments in the regional Information and Communication Technology (ICT) sector infrastructure\. However, on April 23, 2009 the Africa Regional Operations Committee in the World Bank decided to split the CAB program into two phases\. The first phase aimed at creating an enabling environment for developing the ICT sector in the project countries\. The second phase, to be triggered once the effectiveness conditions were met, envisaged regional investments in connectivity infrastructure\. The effectiveness conditions included: (i) the establishment of a legal structure by countries for managing the regional ICT network PPP arrangements and ensuring an open access regime to regional connectivity infrastructure (meaning that all operators and service providers would have access to regional infrastructure under similar terms and conditions)\. and, (ii) the CAB legal structure had received the legal rights to operate the CAB network on the recipient's territory\. Both Cameroon and Chad took actions that eventually resulted in the cancellation of the second phase\. Cameroon withdrew from participation in the second phase in November 2010 and decided to have its national backbone built under a separate contract, as it characterized the regional PPP structure as an imposition on its national sovereignty\. Chad created a separate company in early 2012 to manage its fiber optic network, in direct contradiction with the foreseen regional PPP\. The envisaged second phase of this project was cancelled on December 15, 2012 due to the failure to meet the effectiveness deadline by the participating countries\. As envisioned at appraisal, the project had the following components\. Component One\. Enabling environment [appraisal cost estimate US$19\.98 million (US$6\.90 million for Cameroon, US$5\.68 million for CAR and US$7\.40 million for Chad); actual cost US$18\.57 million (US$6\.50 million for Cameroon, US$5\.19 million for Chad and US$6\.88 million for CAR)]\. This component financed technical assistance activities associated with providing an enabling environment for developing the ICT sector in the respective countries\. Activities included: (i) modernizing and harmonizing the policy, legal, regulatory and institutional framework; (ii) strengthening the capacity of key public stakeholders; (iii) promoting a competitive environment and restructuring of incumbent operators\. Another activity in this component (included in Schedule 1 of the Financing Agreement), was the structuring and start-up activities required for establishing regional networks interconnected to the existing fiber-optic cable Page 2 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) laid along the Chad-Cameroon oil pipeline, including environmental and social management assessment and plans\. As explained above, this activity associated with regional investments in the ICT sector was cancelled when the conditions of effectiveness for CAB1B were not met by Cameroon and Chad\. Component Two: eGovernment and Flagship ICT Applications (appraisal cost estimate US$1\.20 million; actual cost US$1\.16 million)\. This activity was intended for Cameroon as the only country with a core broadband network in its capital city\. This component aimed at improving government efficiency through supporting the roll-out of selected egovernment applications\. Activities included: (i) selecting major government services for transition to egovernment; (ii) flagship ICT applications; and (iii) establishment of government web portals\. Component Three: Project Management Component [appraisal cost estimate US$5\.02 million (US$1\.80 million for Cameroon, US$1\.62 million for CAR and US$1\.60 million for Chad); actual cost US$4\.49 million (US$1\.78 for Cameroon, US$1\.58 million for CAR and US$1\.13 million for Chad)]\. This component financed project management-related activities\. Activities included: (i) staffing the Project Coordination Unit (PCU); (ii) financing a financial management system; (iii) technical assistance activities; (iv) small works: (v)\. Training; and (vi) financing the operating expenses\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost\. Estimated cost at appraisal was US$26\.20 million (US$9\.90 million for Cameroon, US$7\.30 million for CAR and US$9\.00 million for Chad)\. Actual project cost was 92% of the appraisal estimate at US$24\.22 million (US$9\.44 million for Cameroon, US$6\.77 million for CAR and US$8\.01 million for Chad)\. Project Financing\. The project was financed by an IDA loan to Cameroon and IDA grants to CAR and Chad\. Appraisal estimate US$26\.20 million (US$9\.90 for Cameroon, US$7\.30 million for CAR and US$9\.00 million for Chad)\. According to the information provided to IEG by the project team, the total amount disbursed to date was 96% of the estimate at US$25\.00 million (100% of the loan for Cameroon and 100% of the grant for CAR was disbursed and the IDA grant disbursed for Chad was 89% of the appraisal estimate)\. There was parallel financing for complementary ICT sector-related activities for the CAB1A program from the African Development Bank (AfDB)\. Borrower Contribution\. The appraisal estimate for the contribution from Cameroon was US$0\.53 million\. Cameroon's contribution at project closure was 4% more than planned at US$0\.55 million\. No contributions by way of counterpart funding were envisaged from CAR and Chad\. Dates\. There was one Level 2 restructuring on April 14, 2014 following the cancellation of funds for activities associated with regional ICT investments on December 15, 2012\. The project closed as per schedule on March 15, 2016\. Restructuring and Split Rating\. The following changes were made through the Level 2 restructuring\. (a) Funds allocated for the cancelled activities and uncommitted funds were utilized for financing activities in each country that had regional implications\. These included (i) financing the establishment of a regional e waste center in Yaoundé in Cameroon; (ii) capacity building in the Ministry of Posts and Telecommunications, the regulatory agencies and relevant stakeholders for addressing interconnection regimes in CAR; and (iii) financing the purchase of quality control equipment to improve service delivery of mobile phone operators and Internet Service Providers (ISPs) in Chad\. and, (b) The results framework and outcome indicators were revised as the original framework and indicators Page 3 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) mainly reflected the regional dimension of the project, which was cancelled\. Although the PDO was unchanged in the level 2 restructuring, there were material differences in the project scope associated with the cancellation of the regional connectivity activity\. Therefore the assessment of the project's outcome in this Review will be based on a split rating of achievements before restructuring when 55% of the loan and grant was disbursed and after restructuring when the balance was disbursed\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives Before appraisal, the economies of Cameroon, CAR and Chad were constrained by the lack of access, limited coverage, and high prices of ICT services\. Fixed teledensity (defined as the number of fixed telephone lines per 100 inhabitants) in the countries was on average 1\.24 lines as compared to the Sub- Saharan Africa (SSA) average of 1\.82\. Mobile density (defined as the no of mobile subscriptions per 100 inhabitants) varied widely among the project countries - 24\.48 in Cameroon, 2\.29 in CAR and 8\.53 in Chad - as compared to the SSA average of 22\.79 and world average of 49\.79\. International tariffs for landlocked countries like CAR and Chad which were exclusively using satellites was about 50 times higher than in countries with connections to competitive fiber-optic submarine cables\. The low coverage and high prices for ICT services were due to a combination of factors including, isolation of the countries and incomplete market liberalization that allowed the incumbent operators to restrict coverage and keep prices artificially high\. The PDO was aligned with the targets of the Millennium Development Goals (MDGs)\. While goal one of the MDG, highlighted the need for eradicating poverty and hunger, goal eight of the MDG reaffirmed the need to support the special needs of landlocked countries (MDG target 14) and the need for cooperating with the private sector to make available the benefits of new technologies in the ICT sector to the population (MDG target 18)\. In the regional context, the PDO was consistent with the declaration adopted by the Central African Economic and Monetary Committee (CEMAC) calling for the establishment of a regional Central African Backbone under open access and PPP principles\. The PDO continued to remain relevant for the participating countries until after the project closed as evidenced by the recent adoption of the national ICT strategy in Cameroon and Chad's inclusion of the ICT sector as one of the eight priority objectives in its recent National Development Plan\. The PDO was aligned with the World Bank's strategy for the project countries and for the Bank's Regional Integration Assistance Strategy for Africa (RIAS) at appraisal\. Theme One of the Country Assistance Strategy (CAS) for the 2010-2013 period highlighted the need for increasing Cameroon's competitiveness through among other things, increased infrastructure investments in the telecommunication sectors\. The second axis of the Bank's Country Partnership Strategy (CPS) for the 2009-2012 period for CAR underscored the need for rehabilitating and developing socio-economic infrastructure through, among other things, easing the infrastructure bottlenecks that were hindering the development of key sectors and improving infrastructure for regional economic integration\. The Poverty Reduction Strategy Paper (PRSP) for the 2008-2015 period for Chad specifically identified the need for integrating Chad into the integrated fiber- optic communications network\. The Bank's Regional Integration Assistance Strategy for Africa (discussed by the Board in April 2004) identified ICT as an emerging positive trend in the 21st century for Africa Page 4 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) and highlighted the Central African Backbone's (CAB's) role for the regional connectivity objective\. The PDOs were aligned with the most recent Bank strategy documents for the participating countries: [World Bank: World Development Report 2016 - Digital Dividends; Cameroon Systematic Country Diagnostic, June 20, 2016; Recovery and Peacebuilding Assessment for CAR jointly prepared by the World Bank, United Nations (UN) and the European Union (EU); IDA Turnaround Eligibility Note for the Central African Republic, September 27, 2016; and Chad Country Partnership Framework for the 2016-2020 period]\. These documents emphasized the importance of the ICT sector for strengthening competitiveness, creating jobs, improving service delivery and accelerating economic growth in the respective countries\. In summary, the relevance of the objective to the national development strategies of the respective countries, the World Bank’s regional strategy and its assistance strategy for Cameroon, CAR and Chad was rated as High before and after restructuring\. Rating Revised Rating High High b\. Relevance of Design The statement of the PDO was clear and the links between project activities, outputs and their outcomes was logical\. The intended outcomes were in principle, measurable\. Component One activities aimed at providing technical assistance for the development of the ICT sector in conjunction with a regional network were expected to contribute to improving ICT services\. Component two activities aimed at selecting major government services for transition to egovernment were expected to improve government efficiency\. The combination of these activities was expected to respond to the PDO of contributing to increasing the geographical reach and usage of regional broadband network services and reduce their prices to users\. The original design was ambitious - covering three countries each with its ICT sector issues and capacities, implementing agencies and creation of a regional PPP\. The ICR does not clarify whether the decision by the Africa Regional Operations Committee to split the project into two phases was taken in consultation with the respective participating countries, given that the second phase of the project had to be cancelled on account of the refusal of Cameroon and Chad to accede to the project effectiveness conditions\. It is also not clear if there was a thorough assessment of the results framework at design, given that the original outcome indicators were focused on activities associated with investments in the regional ICT infrastructure and hence inappropriate for monitoring the technical assistance activities eventually financed by the project\. The revised design had a narrower scope and was confined to technical assistance activities aimed at creating an environment conducive for the development of the ICT sector in the project countries\. The revised design also utilized the funds resulting from the cancellation of the regional PPP activities for activities with regional implications in conjunction with the original activities, could be expected to contribute to the PDO and to the higher level objective of aiding regional economic integration\. In summary, the relevance of the original design before restructuring was rated as Modest and the relevance of design after restructuring was rated as Substantial\. Page 5 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) Rating Revised Rating Modest Substantial 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective To contribute to increase the geographical reach and usage of regional broadband network services\. Rationale Although the PDO remained unchanged, given the change in project scope and changes in outcome targets, a split rating is conducted in this Review through assessing the efficacy of outcomes before restructuring when 55% of the loan and grant was disbursed and after restructuring when the balance 45% was disbursed\. Before Restructuring\. (a) Outputs\. The technical assistance activities for the three countries were completed as targeted\. For Cameroon the outputs included : • Various studies, reports and documents on telecommunications and internet issues: (i) a policy note on the regulatory bottlenecks impeding the development of the broadband market; (ii) a policy note on the general and specific obligations for the set-up and operation of transport infrastructure for electronic communications; (iii) the publication of the new legal and regulatory framework and secondary legislation for the ICT sector; (iv) completion of a report on the strategic repositioning of the incumbent operator; (v) the telecommunication sector tax and tariff study was completed; (ii) completion of feasibility studies for the use of solar energy for network transmission and for establishing a technology innovation center in Cameroon: (iii) the white paper on operational procedures for submarine cables was completed; (vi) the study for defining procedures for digitization of documents and content was completed; (v) Completion of a study summarizing all public services available on the government website\. (vi) The government website was completed: (vii) the studies on electronic filing system, establishing a hybrid mailing service and reviewing the spectrum management framework were completed (ICR, paragraph 75, Annex 2 page 44- 46)\. • Technical assistance provided for improving the regulatory framework\. Cameroon awarded the third license to Vietnam's Viettel in December 2012 and Viettel started operations in September 2014\. In September 2014, the Government awarded a fourth license to Cameroon Telecommunications (CAMTEL) and at project closure, all four mobile operators offered 3G services in major cities and towns and 4G services were launched in December 2015 (ICR, page 24)\. Page 6 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) • Equipment and Systems: The project provided equipment for spectrum management and monitoring, and information systems\. • Workshops and training: Capacity building for stakeholders in the telecommunications sector on the implementation of the new laws on electronic communications, cybersecurity and cybercrime, electronic transactions, and consumer protection as well as communication strategy for the project and training for designing and setting up the regulatory tools for spectrum management (ICR, paragraph 56, Annex 2)\. )\. For CAR activities included: • Various studies, reports and documents on telecommunications and internet issues: (i) adoption of the draft law on electronic communications by the government; (ii) the fiscal study on open access was completed and the recommendations of the study was adopted by the government; (iii) the study on management and financing mechanisms for setting up the universal service fund was completed; (iv) the report with recommendations was completed; (v) the technical study for implementing digital community centers was completed; (vi) CAB related environmental and resettlement plans were completed; (vi) technical assistance was provided to promote PPP to the CAB program; (vii) the studies associated with the auditing of the Central African Telecommunication Company (SOCATEL) and the incumbent operator and a strategy for the structuring of SOCATEL were completed; and (viii) the study on the design of frequency spectrum management regulatory tools was completed (ICR pages 47-48)\. • Information technology and internet connections: These were established for the Ministry of Telecommunications and Information Technology and radio equipment was procured for the High Council of Communications\. • Equipment and systems: Spectrum management and monitoring systems were installed\. • Workshops and training sessions: The staff of ART were trained on spectrum management and monitoring\. For Chad activities included: • Legal and regulatory framework and studies: (I) the new legal and regulatory framework and secondary legislation for the ICT sector was completed and nine new laws were adopted by the government; (ii) the studies on regulatory tools, regional interconnection and design of frequency spectrum management regulatory tools were completed (ICR page 49)\. • Equipment for Information Technology: Spectrum management and monitoring systems were purchased\. • Workshops and training sessions: Workshops were held for mobile quality of service and training was provided for procurement\. • Technical assistance: This assistance was provided for the building two fiber optic links infrastructure and extending the national backbone for interconnection with Cameroon and Sudan\. Activities included training for the staff of the ministry and The Telecommunication Company for Chad (the French acronym - Page 7 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) SOTEL) on fiber optic backbone and interconnection and a survey study on technical specifications used for the Chad-Sudan fiber link\. The two links broke Chad's landlocked status and constituted the first cross-Africa fiber link (ICR, page 26)\. Technical assistance was also provided for a new legal framework and this contributed to setting of two new modernized regulatory agencies - The Regulatory Authority for Electronic Communications and Posts (the French acronym - ARCEP) and the Agency for Development of ICT (the French acronym - ADETIC)\. ARCP started licenses for Third and Fourth Generation wireless mobile communications technology (3G and 4G) and this contributed to increasing competition (ICR, page 27)\. (b) Outcomes\. • Activities before restructuring in the three countries were all output-oriented\. • Activities pertaining to regional ICT investments for improving connectivity were cancelled\. Rating Modest PHREVDELTBL PHINNERREVISEDTBL Objective 1 Revision 1 Revised Objective The objective remains unchanged: To contribute to increase the geographical reach and usage of regional broadband network services\. Revised Rationale After Restructuring\. (a) Outputs\. In addition to the outputs discussed above which were all relevant after restructuring, the following outputs were produced\. Cameroon; Feasibility study was prepared and Terms of Reference drafted for operationalizing the regional e-Waste center and practical guide was prepared for the Digital Switchover (DSO) process\. CAR: The study for establishing a national and regional Internet Exchange Point (IXP) was completed\. Chad: (I) The feasibility study on establishing a national IXP was completed: (ii) The study on regional interconnection was completed: (iii)\. Three Memorandum of Understanding (MoU) were signed by Chad - with Cameroon, CAR and Sudan: and, (iii) Survey studies were completed and social and environmental impact assessment of the fiber optic network from N'Djamena to Sudan border was completed\. (b) Outcomes\. Cameroon\. • 92\.5% of the population had mobile coverage compared to 35% at the baseline\. This exceeded the original target of 70% (ICR, Data Sheet, PDO Indicator 24)\. • The number of beneficiaries (defined as any individual covered by the wireless network of a mobile Page 8 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) operator or Internet Service Provider) increased from 6,849,646 at the baseline to 21,593,366 at project closure\. This represented a 315% increase\. No targets were set for this indicator (ICR, Data Sheet, PDO Indicator 16)\. • 68 private and public stakeholders benefitted from the project and more than 4,166,000 new people used Internet at project closure\. No target values were set for this indicator (ICR, Data Sheet, PDO Indicator 19)\. CAR\. • 59% of the population had mobile coverage compared to 19\.3% at the baseline\. This exceeded the original target of 47\.5% (ICR, Data Sheet, PDO Indicator 25)\. • The number of beneficiaries (defined as above) increased from 826,118 at the baseline to 2,891,162\. This represented a 350% increase\. No targets were set for this indicator (ICR, Data Sheet, PDO Indicator 17)\. • 10 direct project beneficiaries were identified at closure\. This included: The Ministry of Post and Telecommunications in charge of New Technologies, CAR (MPTNT), The High Council of Communications (HCC), The Telecommunications Regulatory Agency (ART), and three Internet Service Providers\. 182,000 new people used Internet at project closure (ICR, Data Sheet, PDO Indicator 20)\. Chad\. • 83% of the population had mobile coverage compared to 24% at the baseline\. This exceeded the original target of 50% (ICR, Data Sheet, PDO Indicator 26)\. • The number of beneficiaries (defined as any individual covered by the wireless network of a mobile operator or Internet Service Provider) increased from 2,673,538 at the baseline to 11,651,102\. This represented a 436% increase\. No targets were set for this indicator\. (ICR, Data Sheet, PDO Indicator 18)\. • 11 direct project beneficiaries were identified at closure\. This included: The Ministry of Posts and New Information and Communication Technologies, The Regulatory Authority for Electronic Communications and Posts, The Central African Telecommunications Company, three mobile private operators and five internet service providers\. 863,000 new people used Internet at project closure\. No targets were set for this indicator (ICR, Data Sheet, PDO Indicator 21)\. Summary\. Not all of the outcomes could be attributed to the project activities given that outcomes could also have been influenced by exogenous factors such as the rapid growth of ICT globally, whose adoption tends to be faster especially in the urban context and the rapid evolution of the sector in general, including the introduction of third and fourth generation (3G and 4G) mobile broadband technologies, which help to make more broadband accessible\. While it is difficult to assess the extent to which the project contributed to this objective, there is considerable evidence to indicate that the project made a substantial contribution after restructuring to increasing the geographical reach and usage of regional broadband network services\. Revised Rating Substantial Page 9 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) PHEFFICACYTBL Objective 2 Objective To reduce the prices of regional broadband network services\. Rationale Before Restructuring\. (a) Outputs The outputs listed above for Objective 1 were also relevant for this objective\. Many of them contributed to reduced prices for regional broadband network services and for individual consumers\. (b) Outcomes\. Activities before restructuring in the three countries were all output-oriented\. Rating Modest PHREVDELTBL PHINNERREVISEDTBL Objective 2 Revision 1 Revised Objective The objective remains unchanged\. To reduce the prices of regional broadband network services\. Revised Rationale After Restructuring\. (a) Outputs\. The outputs listed above were also relevant after restructuring\. (b) Outcomes\. Cameroon\. • Average monthly price of wholesale international capacity link from Yaoundé (Cameroon) to European Hub (E1) dropped from US$6,000 at the baseline to US$920 at project closure\. This exceeded the original target of US$1,200\. (ICR, Data Sheet, PDO Indicator 10)\. • Retail prices of Internet Services (Mbit/s per month) dropped to US$200 as per the original target and as compared to US$660 at the baseline (ICR, Data Sheet, PDO Indicator 27)\. • According to the Global System for Mobile Communication Association (GSMA), the Herfindahl- Hirschman (HH) Index - a commonly accepted measure of market concentration - dropped from 5,309 in December 2008 to 3,784 for Cameroon\. This is indicative of increasing competition in the ICT sector (ICR, page 27)\. Page 10 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) CAR\. • Average monthly price of wholesale international capacity link from Bangui (CAR) to European Hub (E1) dropped from US$7,000 at the baseline to US$3,200 at project closure\. This was short of the target of US$2,500\. (ICR, Data Sheet, PDO Indicator 11)\. • Retail prices of Internet Services (Mbit/s per month) dropped from US$1,700 at the baseline to US$1,000 at project closure\. However, this was well short of the target of US$400\.(ICR, Data Sheet, Indicator 28)\. • According to GSMA, the HH Index dropped from 3,996 in December 2008 to 3,130 in March 2016 for CAR (ICR, page 27)\. Chad\. • Average monthly price of wholesale international capacity link from N'Djamena (Chad) to European Hub (E1) dropped from US$7000 at the baseline to US$108\.76 at project closure and as compared to the target of US2000 (ICR, Data Sheet, PDO Indicator 12)\. • Retail prices of Internet Services (Mbit/s per month) dropped from US$2,120 at the baseline to US$1080 at project closure\. This was short of the target of US$320 (ICR, Data Sheet, Indicator 29)\. • According to GSMA, the HH Index dropped from 5,389 in December 2008 to 4,704 in March 2016 for Chad (ICR, page 28)\. Not all of the outcomes could be attributed to the project activities given that outcomes could also have been influenced by exogenous factors such as the rapid growth of ICTs globally, whose adoption tends to be faster especially in the urban context and the rapid evolution of the sector in general, including the introduction of third and fourth generation (3G and 4G) mobile broadband technologies\. While it is difficult to assess the extent to which the project contributed to this objective, there is considerable evidence that the project made a substantial contribution after restructuring to increasing competition in the ICT sector in the respective countries and thereby to reduced wholesale and retail prices in the three countries\. Revised Rating Substantial PHREVISEDTBL 5\. Efficiency At appraisal, an economic and financial analysis for each country was carried out based on the assumption that investment in fiber-optic infrastructure would be supported through a PPP in the second phase\. As explained above, CAB1B (activities proposed for the second phase of CAB1) was cancelled\. The project eventually financed mainly technical assistance activities which are not amenable to a formal cost- benefit analysis because of the difficulties of measuring benefits\. Administrative and Operational Costs\. There were no cost overruns\. The funds resulting from cancelled activities were used to finance activities with regional implications as requested by the governments\. The Page 11 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) costs of technical assistance activities associated with regulatory framework and draft legal frameworks were comparable to technical assistance costs of Bank projects in its West Africa Regional Communication Network Program (WARCIP) that financed similar activities\. Although it took ten months between approval and effectiveness due to capacity constraints in Chad and the disbursement rate was 31% for Cameroon and 26% for Chad (55% for Cameroon) prior to the Mid Term Review in May 2013, these were rectified and all planned activities were completed at project closure with a disbursement of 96% as of March 14, 2016\. There were no time overruns\. Despite the outbreak of conflict in CAR in 2012-2014, which resulted in suspension of project disbursements from March 2013 to April 2014, all planned activities were completed by the scheduled project closing date\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0 Not Applicable 0 ICR Estimate 0 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The project development objectives were highly relevant to the priorities of the participating countries in the Central Africa region and to the Bank’s strategy for the participating countries and in the regional context before and after the project’s restructuring\. Relevance of design before structuring was rated as Modest and relevance of design after restructuring was rated as Substantial\. Efficacy of the two objectives - to contribute to increasing the geographical reach and usage of regional broadband network services and to reduce the prices of regional broadband services - was rated as Modest before restructuring when 55% was disbursed and Substantial after restructuring when the balance 45% was disbursed\. Efficiency was rated as Substantial before and after restructuring\. Hence outcomes before and after restructuring were, respectively, Moderately Satisfactory and Satisfactory\. Assigning numbers to these outcome ratings based on a six point scale (i\.e\. 4 and 5) with the shares of total disbursements before and after restructuring (i\.e\. 55% and 45%), the overall rating is based on the following formula (O\.55*4+0\.45*5)= 4\.45 which indicates that the overall outcome rating was Moderately Satisfactory\. a\. Outcome Rating Page 12 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating Government Ownership/ Commitment\. In the three participating countries, the governments’ ownership of the project remained strong as outcome was the result of the enactment of a telecommunications law and secondary legislation (discussed in Section 9a)\. Also the three countries had also launched additional service providers to enhance competition in the ICT sector and this could be expected to increase usage and lower prices for ICT services\. However, this Review concluded that there is a moderate risk to development outcome from this process could be delayed or even halted due to the delays associated with restructuring of the incumbent operators in each country\. a\. Risk to Development Outcome Rating Modest 8\. Assessment of Bank Performance a\. Quality-at-Entry The regional program was based on lessons from regional operations in Africa such as the Regional Communications Infrastructure Program (RCIP) operations in Kenya, Burundi and Madagascar and the Southern Africa Power Market Program\. Lessons from these projects that were incorporated included, emphasizing the need for a proper enabling environment for development of the ICT sector in each country and mobilizing resources to strengthen the implementation capacity prior to approval, given that weak implementation capacity across participating countries had been identified in the RCIP project as a key constraint for accelerating the implementation of the project\. Given the differences among regional countries in terms of the sector structure, the level of development and access, the operational and financial situation of the respective State-Owned Enterprises (SOEs) in the respective countries, the design arrangements in terms of ownership and management were appropriately defined at the country-level\. The preparation team played an important convening role by bringing together different partners [the African Development Bank (AfDB), the Central African Economic and the Central African Economic and Monetary Community (CEMAC) and the African Union (AU)] who made financial resources available through the Project Preparation Facility (PPF) for helping the countries to be ready to move quickly on implementation after project effectiveness\. During preparation, the project team mobilized a grant from the Institutional Development Fund (IDF) for strengthening the CEMAC's capacity to monitor performance at the regional level through establishing a regional telecom and IT monitoring system and installing new datasets and M&E systems at the member-state levels (ICR, page 12)\. Despite these positive aspects to project preparation there were significant shortcomings in the project’s Quality-at-Entry\. As discussed in Section 3b of this Review, the original design was ambitious - covering three countries each with their own sector issues and capacities, implementing agencies and with different views on Page 13 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) the creation of a regional PPP\. The original proposed Central African Backbone (CAB1) project was split into two phases, with the first phase (CAB1A) focusing on the technical assistance activities for the respective countries and the second phase (CAB1B) on the investments in regional ICT connectivity infrastructure through PPP arrangements\. This was motivated partly so that the first phase could be included in the FY2009 allocation of IDA-15 commitments (ICR, page 37)\. Further, it is not clear if the decision to split the project into two phases was taken in consultation with the stakeholders namely the respective governments\. This lack of consultation appears to have been conformed by the rejection by Cameroon and Chad of the regional PPP option - as discussed in Section 2b of this Review\. The rejection resulted in a failure to meet the effectiveness conditions for CAB1B and the eventual cancellation of the project and activities associated with the regional PPP\. There were shortcomings in M&E design\. It is not clear if there was a thorough assessment of the results framework at design, given that the original outcome indicators were focused on activities associated with investments in the regional ICT infrastructure and hence less appropriate for monitoring the technical assistance activities eventually financed by the project\. Appropriate arrangements were, however, made for compliance with safeguards\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision Eight Implementation Supervision Reports (ISRs) were filed over a six-year period\. The Task Team Leader (TTL) was based in Yaonde (Cameroon) and the proximity to Chad and CAR aided in communication with the counterpart agencies in the project countries, and also contributed to resolving issues and providing support for procurement throughout the life of the project (Borrower's ICR, page 62,63 and 66)\. The supervision team appropriately revised project activities during restructuring to better respond to the needs and objectives of the countries\. The supervision team in undertaking a restructuring that included dropping activities that were no longer feasible and utilizing the funds saved to set up activities that were identified as priorities by the Governments and that would also have a regional focus\. Bank Supervision missions conducted in the field on a regular basis helped in constant monitoring of activities during project implementation (Borrower's ICR, page 66)\. The supervision team also addressed issues faced by the project, such as governance issues in Chad and security threats in CAR and this in conjunction with working extensively with the national project teams contributed to ensuring that activities were completed in a timely fashion\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9\. Assessment of Borrower Performance Page 14 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) a\. Government Performance The commitment by the three governments to the PDO was high as evidenced by the enactment of legislation associated with telecommunication sector reforms in the years before appraisal\. This included, enactment of a telecommunications law in 1998 followed by secondary legislation and launch of two operators in both the fixed and mobile telephone segments in Cameroon, enactment of a new telecommunications law in 2007 followed by secondary legislation and launch of four mobile operators in CAR, and legislation establishing a sector regulatory agency in Chad in 2008 and launch of three mobile operators in 2009 in Chad\. The PDOs had the endorsement of the Central African Economic and Monetary Community (CEMAC) heads of state\. Specific challenges and support from each government could be summarized as follows\. Cameroon\. The Government was slow in remedying the lack of ownership of the various government agencies involved in implementing the project and the creation of the Ministry of Public Procurement in 2012 contributed to delays\. These issues were eventually resolved\. CAR\. The Government provided strong support throughout the project\. Chad\. The Government commitment remained strong following the enactment of nine laws related to electronic communications\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance The relevant Ministry of Telecommunications was in overall charge of implementing the project in each country (the Ministry of Posts and Telecommunications (MINPOSTEL) in Cameroon, the Ministry of Posts, Telecommunications and New Technologies (MPTNT) in CAR and the Ministry of Post Telecom and ICT (MPTIC) in Chad\. The Project Coordination Unit (PCU) was adequately staffed and this aided project implementation (ICR, page 64)\. Cameroon\. As indicated above, there was lack of ownership on the part of various government agencies implementing this project in the initial years of the project\. Nevertheless, the PCU was proactive and held meetings every two months with the main government stakeholders and this helped alleviate procurement delays\. The PCU also helped in facilitating agreement between the Government and the Bank on procedures to be followed with the Ministry of Public Procurement and its management of financial aspects of the project was deemed to be satisfactory (ICR, page 39)\. CAR\. The large turnover of ministers at the Ministry of Posts, Telecom and ICT and delays by other implementing agencies contributed to delays during implementation\. The PCU was able to carry out its functions despite the political conflict in the country in 2012-2014\. Chad\. The PCU in Chad had frequent staff turnover and this in conjunction with the Government's cumbersome national and administrative procedures (for instance, national procurement practices such as all contracts above US100,000 needed to be cleared by the President) contributed to procurement delays\. There were ineligible expenses; seven Project Coordination Units were found to have been engaged in fraud and misuse of project funds and the staff were dismissed\. According to the information provided to IEG by the project team, the Government has cleared all ineligible expenses that were identified in the Bank portfolio\. Page 15 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The key outcome indicators for this project were the same as the outcome indicators for the regional program and were standard quantitative ones that covered geographic reach, usage and price of ICT services\. The three key outcome indicators at the country level (volume of international communication traffic, volume of national communication traffic and the average price of international communications) were in principle, measurable\. The indicators were originally designed to reflect improvements in telecommunications at the regional level when the project was designed\. However, once the project was split into two projects by the Bank’s Regional Operations Committee, the indicators were not revised or updated to reflect the change in the scope of project activities\. The data for monitoring were to be collected by the sector ministry and the telecom regulatory authority\. The Central African Economic and Monetary Community (CEMAC’s) ICT unit was responsible for data analysis for M&E activities across the three countries, although the respective countries were responsible for collecting data (ICR, para 42)\. CEMAC was also to develop a common M&E system to be shared by all CEMAC members for monitoring regional technology and Information Technology (IT) activities at the regional level\. b\. M&E Implementation After the Mid-Term Review and project restructuring, key indicators were changed to ensure alignment with the nature of the project activities (both new and old) to better capture the expected outcomes\. However, given that revised indicators were designed to keep track of the outcome of technical assistance activities, there were fewer standard quantitative indicators for monitoring progress\. Although the new M&E systems were installed and operational in the member states and CEMAC Commission as envisaged, ongoing capacity constraints - with no dedicated M&E specialists appointed in either the ministries or regulatory agencies - and a lack of follow up training, complicated the task of implementing the M&E systems in the individual countries\. Ultimately the Information and Communication Technology (ICT) unit of the Central African Economic and Monetary Community (CEMAC) collected the data and performed the M&E around once per year from project approval until late 2012\. Following this, the conflict in Chad during 2013 and 2014 resulted in the destruction of computers at the CEMAC ICT Unit and this seriously undermined the performance of M&E related activities\. Page 16 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) c\. M&E Utilization The indicators were used for monitoring project progress\. However, it is not clear whether the data collected were used to inform decision-making and resource allocation (ICR, page 13)\. M&E Quality Rating Modest 11\. Other Issues a\. Safeguards The project was classified as a category A project for environmental purposes\. Other than environmental assessment (OP/BP 4\.01), the social safeguard for Involuntary Resettlement (OP/BP 4\.12) was triggered\. Environmental Assessment\. At appraisal the negative environmental effects were expected to come from the infrastructure/backbone and rural Information Communication Technology (ICT) components of the project under the second phase of the project\. The impacts included temporary local disruptions due to the construction of ducts for laying the fiber optic networks or from the construction of ancillary infrastructure (notably access roads associated with towers for microwave links and rural wireless systems) and the deployment of regional and national backbone infrastructure to link all capital and central cities in Central Africa (PAD, page 39)\. The PAD (page 39) notes that an Environmental and Social Management Framework (ESMF) was prepared that was in compliance with both the respective countries' environmental policies and the World Bank's safeguard policies and it was publicly disclosed as required\. The ESMF outlined in detail the environmental and screening process for sub-projects\. Since Cameroon, Chad and CAR's environmental procedures did not include a screening process for sub-projects, the ESMF was prepared in screening form in compliance with OP 4\.01 Environmental Assessment (PAD, page 40)\. As noted already in this Review the second phase of the project was cancelled and the project eventually financed only technical assistance activities\. The Bank Task Team Leader clarified that there were no environmental issues and the compliance with safeguards was deemed to be satisfactory because no construction works were undertaken\. Involuntary Resettlement\. At appraisal, it was anticipated that the project activity associated with the construction of telecommunication and ancillary infrastructure could entail land acquisition and thereby necessitate involuntary resettlement of the affected population (PAD, page 40)\. A Resettlement Policy Framework (RPF) was prepared at appraisal for the overall program taking into consideration the specificity of each country in the program, including in Cameroon, Chad and CAR)\. The RPF was publicly disclosed in all the countries participating in the program and in the Bank's Info shop as required (PAD, page 40)\. Specific costed Environmental Management Plans (EMPs) and RAPs were to be prepared as necessary for the terrestrial facilities during project implementation, in line with the ESMF and RPF, once the exact locations of those facilities were identified (PAD, page 40)\. The Task Team Leader clarified that there was no involuntary resettlement as no construction activities were undertaken during implementation\. Hence compliance was not an issue\. Page 17 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) b\. Fiduciary Compliance Financial Management\. Financial assessments were carried out for the project countries at appraisal (PAD page 25)\. The ICR (page 14) notes that financial management was deemed to be satisfactory during implementation\. Interim Financial Reports and internal and external audit reports were submitted in a timely fashion in CAR and Cameroon (ICR page 14)\. Regarding Chad, there were some problems with the budgeting systems and audits were often submitted late and “on August 22, 2013 the team came across ineligible expenses arising from perceived fraudulent activities carried out by the Project accountant\. Seven Project Coordination staff were found to have engaged in fraud and misuse of project funds and were dismissed (ICR, page 15)\. The Task Team Leader clarified that this issue has now been resolved and on January 10, 2017, the Government cleared all ineligible expenses and lapsed loans identified by the team on the World Bank Portfolio\. Procurement\. Procurement assessment was carried out for the project countries at appraisal (PAD, page 25)\. The ICR (page 14) notes that there were procurement delays in the initial years of the project due to lack of coordination between the implementing agencies in Cameroon\. Also, there were procurement issues and delays in 2012 due to a major institutional change associated with the creation in Cameroon of the Ministry of Public Procurement\. These were eventually rectified and the procurement management was deemed to be satisfactory at the project's close (ICR, page 14)\. In CAR, despite some initial delays in signing contracts because of political issues, procurement was deemed to be satisfactory despite the conflict in CAR which resulted in destruction of equipment at the Project Coordination Unit and temporary suspension of disbursements (ICR, page 14)\. There were procurement delays in Chad and national procurement procedures (all contracts above US$100,000 needed to be approved by the President) and although procurement management improved, the filing and archiving system still remained inadequate at project closure (ICR, page 15)\. c\. Unintended impacts (Positive or Negative) --- d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Moderately Outcome --- Satisfactory Satisfactory Risk to Development Modest Modest --- Outcome Bank Performance Moderately Moderately --- Page 18 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) Satisfactory Satisfactory Moderately Moderately Borrower Performance --- Satisfactory Satisfactory Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons Of the seven lessons provided in the ICR (page 40-42), the following four lessons are deemed to be the most important from the experience of implementing this project and have broader application beyond this project \. (1) Projects should not move forward to Board approval if the project team and client countries are not truly committed and ready to implement the project\. In the case of this project, a deadline for IDA commitments was used as the justification for moving to project approval\. This led to the splitting the project activities in two phases - with the second phase focusing on the regional PPP dimension\. The project countries perceived the regional PPP option as a top down option imposed by the Bank and considered this as an infringement on their sovereignty\. Consequently they took actions in direct contradiction with the regional PPP proposed for the second phase\. This eventually resulted in cancellation of activities associated with this component\. (2)\. A thorough political assessment of high-level national commitment to regional commitment coupled with communication campaign is required for regional projects\. While support from the heads of state of a regional body such as CEMAC can provide important political backing for a regional project, general political economy challenges at the national level such as the interest of incumbent operators need to be addressed before designing a regional project\. For regional projects such as this, a communications strategy and implementing agencies is necessary to ensure that all stakeholders understand the objectives and desired results of the project\. (3) For some difficult reforms in the ICT sector such as awarding a new license, privatization of an incumbent operator, passing a PPP law, a Development Policy Operations (DPO) may be a viable option\. A DPO or series of DPOs at the national or regional level undertaken in partnership and agreement with the country or countries that include these reforms as conditions or triggered may be a more appropriate instrument to use, in combination with Adaptable Program Loans (APLs)\. (4) This project demonstrated how a regional project's performance can be monitored at the country level since all results indicators were country-focused\. Incorporation of country-based M&E in regional projects can be helpful in identifying the best performing and less performing countries within a regional project in order to better target project issues\. This can also help in streamlining regional projects into country programs\. 14\. Assessment Recommended? Page 19 of 20  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AFR:Central African Backbone - APL1A (P108368) No 15\. Comments on Quality of ICR The ICR is reasonably well-written\. It reports both outputs and outcomes of the project and its assessment of the project is evidence-based\. It is candid in providing reasons for splitting the project in two phases and also candidly discusses the attribution issues associated with ICT projects\. Given the number of ICT terms, it would have helped if the ICR had listed a glossary of ICT terms in an Annex\. There is a discrepancy in the ICR\. While the body of text rates the risk to development outcome as Low (ICR, page 36), the risk to development outcome is rated as Moderate in the Datasheet\. a\. Quality of ICR Rating Substantial Page 20 of 20

REVIEW

P070552

 ICRR 13285 Report Number : ICRR13285 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 04/13/2010 PROJ ID : P070552 Appraisal Actual Project Name : Parana Biodiversity US$M ): Project Costs (US$M): 32\.86 m 28\.59 m Project (gef) Country : Brazil Loan/ US$M ): Loan /Credit (US$M): 8\.0 m 7\.5 m Sector Board : ENV Cofinancing (US$M ): US$M): 10\.0 m 4\.86 m Sector (s): Agricultural extension and research (70%) Sub-national government administration (18%) General agriculture fishing and forestry sector (9%) Central government administration (3%) Theme (s): Environmental policies and institutions (25% - P) Biodiversity (25% - P) Participation and civic engagement (24% - P) Export development and competitiveness (13% - S) Law reform (13% - S) L/C Number : Board Approval Date : 05/21/2002 Partners involved : Closing Date : 01/31/2007 01/31/2009 Evaluator : Panel Reviewer : Group Manager : Group : Lauren Kelly Roy Gilbert IEGSE ICR Reviews IEGSE 2\. Project Objectives and Components: a\. Objectives: The objective of project as stated in the PAD and repeated in the ICR is to : (1) Support biodiversity conservation and natural resource management in two highly threatened ecosystems in the state of Parana, the Brazilian Inland Atlantic Rainforest and Araucaria Forest and (2) Design and implement a model for improving biodiversity conservation in Parana\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives /key associated outcome targets? Yes Date of Board Approval: 02/02/2007 c\. Components (or Key Conditions in the case of DPLs, as appropriate): Component 1: Education and Capacity Building (US$1 US$ 1\.58 m at Appraisal including US$ 1\.21 m GEF and 0\.37 m State; Actual GEF contribution was US$ 1\.75 m\. The ICR does not provide the actual State contribution )\. This component supported two types of activities : (1) Training of the project,implementing agent, Conservation Unit, and local government staff on selected biodiversity and environmental topics associated with the project including protected area management (including supervision and fiscal responsibilities at the Municipal level ) and land-use and enforcement regulations associated with the creation of the corridors and; (2) Training of beneficiaries on alternative technologies for environmentally friendly agricultural production (e\.g\. fish farming, organic agriculture, palmito production, eco-tourism, medicinal plant and flower production etc )\. This latter activity involved a training of trainers approach so that teachers and community leaders would be taught the importance of biodiversity conservation and the technologies associated with the agro -ecological subprojects that would be implemented through the project \. Component 2: Biodiversity Management (US$26 26 \.74 m at Appraisal including US$ 4\.93 m GEF and US$ 21\. US$ 26\. 21 \.81 m State ; Actual GEF contribution was US$ 4\.87 m\. The ICR does not provide actual State contribution )\. This component aimed to enhance the natural resource management and biodiversity content of the privately held lands of some 1500 rural producers located in the conservation corridors \. It supported the state extension service and Conservation Unit officials who worked with the rural producers to identify priority micro -catchments surrounding the seven protected areas that are the geographic core of the corridors targeted by the project \. The project sought to increase connectivity of existing fragments and protected areas through micro -catchment management\. This component worked with rural producers to incorporate fragments of natural vegetation into the corridors and to rehabilitate degraded areas through the establishment of voluntary Privately Owned Protected Areas recognized by the Government or through enhanced support to the already existing protected areas \. It helped to develop management plans and it financed the implementation of these plans through microproject investment schemes that introduced more environmentally benign production systems in interstitial areas \. These schemes included: (1) an agro-ecological investment scheme in the micro -catchments located in the biodiversity corridors (agro-ecological subprojects, including forest management, organic agriculture, eco -tourism, medicinal crops, etc\.); (2) investments in natural resource management in the micro -catchments in the corridors (water pollution control measures, soil improvement inputs, conservation \.and or establishment of permanent vegetation on fragile lands, collective land management such as vegetative contours and terracing, supply of conservation farm equipment to undertake reduced tillage and other land management practices ); (3) agricultural modernization investments (crop diversification, post-harvest technologies, small agro -industries, feasibility and marketing studies, market development) and (4) rehabilitation of rural feeder roads, within the beneficiary micro -catchment areas, aimed at reducing water run-off and soil erosion\. Additionally, on February 2, 2007 the Trust Fund Grant Agreement was amended so that a portion of the finance from Component 2 would be redirected towards a Biodiversity Subproject Scheme that would fund research, environmental education, biodiversity conservation infrastructure, and creation of private protected areas \. Component 3: Control and Protection (US$2US$ 2\.49 m at Appraisal including US$ 1\.16 m GEF and US$ 1\.33 m State \. Actual GEF contribution was US$ 0\.72 m\. The ICR does not provide actual State contribution )\. This component would help support the regional offices of the Environmental Institute of Parana through the provision of vehicles, global positioning equipment etc \. It would support training and equipment for municipal officials to be able to monitor the biodiversity corridors and enforce environmental regulations \. It would support the wildlife management capacity (such as veterinary services and breeding ) of the Environmental Institute of Parana through the construction of a wildlife management center and associated regional facilities \. Component 4: Project Administration (US$2 US$ 2\.05 m at Appraisal including $ 0\.71 m GEF and US$ 1\.34 m State \. Actual GEF contribution was US$ 0\.46 m\. The ICR does not provide actual State contribution )\. This component would fund the basic project structure and organization, based on the establishment of a PMU headed by the Planning Secretariat, and staffed with representatives of the main implementing agencies and supporting State model that ensures project coordination by forming central, regional and municipal management committees comprising relevant state officials whose secretariats and agencies were also organized according to the three government tiers\. This component would also finance strategic studies (Environmental legislation, Environmental Certification, Prioritization of conservation areas, Cost -Benefit Analysis, VAT analysis )\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Although the actual GEF contribution amounts are provided in the ICR, actual overall component costs are not, making it difficult to assess the relative contribution of the activities of the project to the overall outcome \. Actual component costs were likely to have changed significantly from the appraised costs since activities that were not envisioned at appraisal were conducted after mid -term- such as the technical audit and the sub -project scheme that was added to the project vis a vis the grant amendment \. Overall actual project costs were less than the appraised amount since the full amount of co -financing envisioned at appraisal did not materialize \. Actual co-financing derived from the Parana Rural Poverty Alleviation and Natural Resource management project was less than half of the appraised amount (US$10 m appraised versus US$4\.86 m actual) due to procurement issues that arose between the World Bank and the State Administration (see Borrower performance section )\. The project closing date was extended for a period of 24 months from 1/31/07 to 1/31/09 due to the inspection panel request lodged after mid-term, the subsequent decision to conduct a technical audit in 2006, and the resulting action of amending the grant agreement amendment in 2007 in order to reallocate some finance towards a sub -project component that required additional time for implementation\. 3\. Relevance of Objectives & Design: The Relevance of the project is rated Substantia l since the objectives were Highly Relevant at the time of project appraisal but only Substantially Relevant during the project period due to the change in Administration and its policies early in the project implementation period in 2002\. At appraisal\. the objective of the project was in line with the March 2000 CAS that listed environmental management, and in particular, ecosystem protection , as one of Brazil’s development challenges\. "In the core environmental areas where benefits are more diffuse or long term, and political support more uneven, the Bank's program has two objectives : (i) to increase the strategic focus of ongoing environmental activities, especially in the area of ecosystem protection, and (ii) to assist Government to decentralize environmental management and support emerging environmental constituencies \.â€? Regarding the latter priority, one of the innovative approaches employed through this project was support for the creation of Municipal Biodiversity Chambers and Regional councils to assist with decentralized environmental monitoring \. At the time of project approval, the project objectives were also very much in line with the progressive environmental programs that had been put in place in the state of Parana (during the 1990s), such as the integration of environmental incentives into the VAT, or the Tax on the Circulation of Merchandise and Services (ICMS-Ecologico), the introduction of tradeable development rights as part of the State System for Conservation and Recuperation of Legal Reserves and Permanent Preservation Areas (SISLEG), and the Rede de Bioversidade program, or the Biodiversity Network Program\. However after 2002, the change of State authorities in Parana affected the effective implementation of some of the project activities, particularly related to the Control and Enforcement activities \. The Relevance of project design was and remains Substantial \. The GEF funds were utilized to pay the incremental costs for the supply of environmental goods within the State's ongoing program of rural development and natural resource management\. The Bank had supported the agricultural extension services of the State of Parana through two prior rural and natural resource management projects; the Parana Biodiversity Conservation Project built on the relationships developed by these projects between the state extension services and local rural producers \. The design of this project added an eco -agricultural component to the traditional agricultural extension services provided \. Conservation friendly agriculture (reduced or zero tillage) and other land management techniques (such as the creation of contours and terracing ) had already been extended to many farmers in the project area with the assistance of these prior Bank projects \. The GEF financing supplemented this investment in natural resource management at the farm level by overlaying a landscape level mapping and planning approach across what was identified as critical ecological corridors in two globally important but severely fragmented eco -regions (Inland Atlantic Forest eco-region and the Araucaria eco -region)\. Planning was conducted across three operational units - the corridor, the micro-catchment within the corridor, and at the level of the private land holder \. Parana has four important eco-regions: the two eco-regions in which the project worked were chosen based on an assessment of operational feasibility, threat, and species uniqueness \. However the threats facing the two eco -regions varied: whereas the biodiversity within and around the Inland Atlantic Forest eco -region is mainly threatened by fragmentation, the main threat to the Araucaria eco -region is illegal deforestation\. And in the case of the latter eco-region, project design over-relied on the will of the State Administration and the capacity of the implementing agencies to effectively address and enforce the issue of illegal deforestation \. This issue was central the to the request for inspection that was lodged by an NGO network after mid -term\. However, the approach taken to restore corridor connectivity - the stepping stone approach involving mainly reforestation -- was a relevant approach to restoring the conditions for the future recuperation of biodiversity in the Araucaria region \. Biodiversity planning was conducted across three operational units - the corridor, the micro-catchment within the corridor, and at the level of the private land holder \. The project extended most of its finance through the delivery of 67 agro-ecological investments to approximately 1,434 rural producers\. As recognized by the ICR, during the initial phases of the project, there was a disconnect between the proposed activities and the primary objective of restoring and integrating degraded forest fragments into functional corridors \. The program was not targeted to ensure the continuity of suitable habitat fragments that allow dispersal of biodiversity between protected areas \. Rather, the projects were conceived as demonstration projects of environmentally benign production systems \. In hindsight, the project recognized that an initial diagnostic evaluation of the real conservation status and threats would have been useful in establishing project priorities \. 4\. Achievement of Objectives (Efficacy):  Efficacy is rated Substantial \. The project supported biodiversity conservation and natural resource management in two highly threatened ecosystems in the state of Parana through three main activities : conservation of existing native forests and expansion of native forest areas through a landscape level /corridor planning approach; the mainstreaming of environmentally benign technologies in production systems within the designated corridors; and capacity building and environmental education\. The project increased native forest cover by 70,000 ha, including 35,000 hectares of recovered areas in legal reserves\. It provided the means to develop planning and regulations for the thirty -two Privately Owned Protected Areas protected by the Government (RPPNs) that were created during the implementation of the project \. These thirty-two privately owned protected areas covered a total of 14,520 hectares\. The project helped to prepare management plans, eight of which were approved by IAP \. It also provided support to an NGO to help create 51 additional Privately Owned Protected Areas covering an additional area of 8,293 hectares, however at the time of project close, only one had been fully created \. The ICR provides data on the number of hectares affected by the project, both in terms of restoration and conservation efforts, however it does not provide data on species health or the resulting total forest cover \. Satellite images included in the ICR provide some evidence of recovery of fragment connectivity due mostly to the restoration of riparian vegetation, and also to the addition of the new private reserves \. As noted in the ICR, recovery is particularly visible along the Igua çu- Paraná e Caiuá-Ilha Grande corridors, and to a lesser extent in the Araucaria corridor \. The project further supported biodiversity conservation and natural resource management by instituting a landscape level planning approach with a focus on the micro -catchments\. Landscape level planning was conducted across 1\.2m hectares targeting 296 micro-catchments in which to work\. These 296 micro-catchments then received biodiversity related assistance \. The assistance was delivered to rural producers in the form of 67 agro-ecological modules, or demonstration projects, that were implemented by EMATER and Codapar in the two designated corridors\. Table 1 (p\. 30) of the ICR provides a list of the modules, the number of persons that benefitted, and the number of hectares affected by the interventions \. A total of 1,434 persons were affected by this project intervention \. However the ICR does not provide data on the individual outcomes (economic, environmental) of the modules extended to the rural producers in the field \. Also, as noted in the ICR there was a disconnect between the proposed activities and the primary objective of restoring and integrating degraded forest fragments into functional corridors \. This approach changed in the second phase of the project however, as a result of the Mid Term Review following the request for inspection\. Specifically, the project added another sub -project component, that supported 41 conservation and research sub -projects\. However, the ICR does not provide information related to the implementation of these activities \. The project strengthened the environmental capacity of the two main implementing agencies (IAP and EMATER)\. With project support, IAP's Biodiversity department developed a significant capacity for conservation planning and Emater was equipped with a central planning unit and six satellite centers \. About 100 Emater professional and technical staff were trained in remote sensing and geographic information system techniques \. As a result, the State of Parana has in place a regional planning system devoted to land -use planning, biodiversity conservation, and catchment conservation\. Emater extensionists, specialized in agriculture, were trained to add environmental matters in their work\. The project also promoted and supported institutional capacity building at the state level, by helping Instituto Ambiental do Paraná (IAP) to strengthen and expand its operational capacity, particularly in terms of remote sensing and land-use planning area\. The project also benefited IAP by supporting activities at the state level, beyond the corridor areas\. Of particular relevance is the support provided to IAP to better implement and enforce the new federal legislation on Mata Atlantica protection at the Parana state level \. The project supported the development of a state biodiversity monitoring system, including the selection of 71 species for baseline observations and training to 150 field monitors\. 5\. Efficiency (not applicable to DPLs): The project's efficiency rating is Modest \. The project conducted an incremental costs analysis at appraisal as opposed to an ERR/FRR\. There was an 18 month delay in the GEF financed activities because of disagreement about procurement procedures between the new state administration of Parana and the Bank \. As discussed in the ICR, the impact of the implementation delays was significant - due to the slow implementation of the GEF financed portions of the project, the project team downgraded project ratings beginning in June 2005\. In addition to the disbursement lag, the project also had to be extended by two years due to the need to address concerns that arose through the Inspection Panel process \. And, co-financing from the IBRD loan P arana Rural Poverty Alleviation and Natural Resources Management Project (Parana 12 Meses) was less than half of the appraisal target \. The project supported the implementation of two types of small grant programs : agro-ecological modules and conservation subprojects \. The project supported 67 agro-ecological modules benefiting 1,434 producers with total investments of $2,322,511 m\. According to the ICR “this level of direct support though small grants is considered both acceptable and efficient \.â€? However, no formal economic analysis was conducted during implementation \. The project did conduct a survey through Emater that found that there was on average an increase in productivity across all subprojects by about 15 percent, but at least in the ICR, this figure is unsubstantiated \. Overall, there was a lack of economic analysis in this project related to the modeling and application of environmentally benign production methods on the rural producers' estates \. As stated in the PAD, "except where legal reserves and other laws can be enforced, the interstitial program depends upon proof of superior, alternative economic activities and production methodologies through demonstration projects \." The need for economic analysis of the models supported by the project was also raised by the Scientific and Technical Advisory Panel comments (see Annex 76 of the PAD)\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The outcome of the Parana Biodiversity project is rated Moderately Satisfactory \. The project is rated substantially (not highly) relevant -- the change in state administration two years into implementation was less supportive of the project concept than at appraisal and since the design, while well modeled against a landscape level planning approach, lacked an initial mechanism to target activities towards the project's primary objective of restoring and integrating degraded forest fragments into functional corridors \. Efficiency is rated modest due to project delays, a significant shortfall in parallel finance, and the subsequent incompletion of some activities such as the Wildlife Management Center\. The project nonetheless substantially achieved its objectives of biodiversity conservation and natural resource management through significant reforestation and conservation efforts, including the creation of new protected areas and the restoration of native habitats in legal reserves, as well as through biodiversity conservation mainstreaming through the extension of 67 environmentally benign modules throughout the corridors \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The ICR does not provide enough data to report on the risk to development outcome \. Although the ICR reports on the number of hectares covered in relation to its reforestation and restoration efforts, as well as the creation of private reserves, it does not report on survival rates or actual tree cover \. Likewise, although the ICR reports on the delivery of 67 agro-ecological modules to some 1,434 rural producers, the ICR lacks data related to the outcomes of the application of the modules on the ground \. a\. Risk to Development Outcome Rating : Non-evaluable 8\. Assessment of Bank Performance: World Bank performance is rated Moderately Satisfactory \. Quality at Entry is rated Moderately Satisfactory \. The project was designed in a manner that attempted to integrate its conservation focus into the overall rural development program in Parana - support by the state, the Bank and other donors\. The project was designed to be aligned with Parana's Rural Poverty Alleviation and Natural Resource Management Project \. It was also alined with the State's municipal forest program that provided the seedlings to the Parana Biodiversity project for reforestation efforts on degraded lands \. However this review finds that economic analysis was lacking - of the agro-ecological models and their application at the farm level \. It also found that baseline information was lacking related to the two main indices that the program was designed to measure - the index of vegetation coverage of natural environments and other classes of land use and an index of the relative abundance of species \. As noted in the relevance of design section, the design of the grants program that supplied the agro-ecological models to farmers also lacked targeting that could have achieved greater connectivity gains \. Implementation support is rated Moderately Satisfactory \. Implementation support was generally strong with some 17 supervision missions over the project period, with more support being lent during the period wherein there was a delay in disbursement due to a disagreement between the State administration and the Bank \. The task team was highly responsive to concerns lodged by local NGOs through the Bank's inspection panel process \. As a result of the inspection panel request, the Bank's task team agreed to carry out a comprehensive Technical Audit as part of the Mid-term Review\. The Technical Audit led to the grant agreement being amended and a reallocation of funds towards the establishment of a small grant program -- that resulted in the extension of the project by two years\. As a result, implementation of the project was continued and according to the ICR, the Inspection Panel did not recommend further action \. However, as noted in the ICR, implementation support could have been more effective in terms of reprogramming expected project outcomes when the full amount of co-financing from a parallel Bank project (12 Meses) did not come through\. This ICR review finds however that implementation support was lacking for monitoring and evaluation overall - including in the design of measurable and timely indicators and the development of adequate capacity to monitor them \. Implementation support was also lacking participation from designated environmental and social safeguard specialists \. It is often the case that environment projects, since they have strong technical support from senior environmental and biodiversity specialists, forego the inclusion of environmental specialists on supervision missions - however the independence of these specialists and the arm's length that they bring to the table from project design are as important in environment projects as they are in other sectors \. The Inspection Panel case was related to the project's upkeep of the Bank's safeguard policy on Natural Habitats \. Neither an environment or social safeguard specialist is listed as having participated in supervision missions \. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Satisfactory c\. Overall Bank Performance :Moderately Satisfactory 9\. Assessment of Borrower Performance: Government performance is rated Moderately Satisfactory \. The Parana State Government showed strong ownership and commitment to achieve project objectives since the inception of the project \. The ICR notes that “the Government used its own funds to support project preparation and established a strong and well funded project preparation unit in the Planning Secretariat “ (ICR, 1)\. However, some shortcomings in the Government ’s performance were observed during project implementation, especially after the new state administration in Parana took office in January 2004\. These shortcomings include : procurement delays caused by disagreements over procurement procedures between the new state administration in Parana and the Bank and the fact that the Government did not mobilize alternative sources of co -financing once it was evident that the full amount of co-financing from the Parana 12 Meses project would not be made available \. Implementing Agency performance is rated Satisfactory \. There were three main implementing agencies : The Technical Assistance and Rural Extension Company of Parana (EMATER), The Environmental Institute of Parana (IAP) and the Secretariat of Planning (SEPLAN)\. The inter-institutional arrangement involved : The State Secretary of Planning (SEPL), the Secretariat of Agriculture (SEAB), the State Secretariat of Environment (SEMA), The Environmental Institute of Parana (IAP), and the Technical Assistance and Rural Extension Company of Parana (EMATER)\. This project was characterized by a complex institutional structure with several implementing agencies that, according to the ICR “functioned well for the implementation of the project and consequently for the achievement of the project objectives \.â€? The State agencies also together reacted effectively to the Inspection Panel case by holding consultations with NGOs and presenting the Action Plan \. This resulted in the Panel’s decision not to recommend an investigation on whether the Bank had complied with its operational policies and procedures\. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: M&E Design is rated Modest \. The intent of the project's monitoring and evaluation system was sound : to collect quantitative and qualitative data on a sample of 10 percent of all investment subprojects and to conduct impact evaluations based on data collected for two impact indicators (index of vegetation coverage of natural environments and other classes of land use and an index of the relative abundance of species )\. But beyond this intent, Table 1 (PAD p\.68) then proceeds to put in place an overly list of indicators (27 input indicators, 33 output indicators, and 20 outcome indicators, 10 "continuous indicators" and five impact indicators) that are not connected in a logical framework\. The PAD (p\.70) indicates that reference values should be established by the baselines assessment but this assessment had not been conducted by the time the project was approved and the PAD gave no indication as to when this activity would occur \. M&E Implementation is rated Modes t\. M&E implementation did not proceed in accordance with the APD description above\. The two impact indicators were not systematically tracked and the ICR provides no evidence that a sample of 10 percent of all investment subprojects were monitored and evaluated \. Rather, monitoring was mainly limited to the monitoring of forest cover (mainly derived from SPOT images) between 2005-2006 coupled with some multi-temporal monitoring of forest cover of the corridors using aerial mapping \. While the project supported the development of a methodology for defining bio-indicators to monitor fauna, this methodology was published by IAP but not applied as a monitoring tool in time for project reporting \. Likewise, the project supported the development of a biodiversity database, but by project end, information still needed to be gathered and updated \. M&E Utilization is rated Negligible \. Changes to project implementation were more affected by the Inspection Panel request and the technical audit that was conducted in response to the request, as opposed to M&E \. In fact, as noted by the ICR, the NGOs initiative had a strong influence on project outcomes during the last two years of the project \. The second phase of the project (2007-2009) incorporated comments and suggestions of the Technical Audit particularly by increasing support to the existing State protected areas, promotion of the private reserve system (RRPN), a more focused emphasis of the agro -ecological models on forest restoration and forest corridor continuity, and a small-grant program, aimed at financing NGO-proposed conservation and research projects aiming at improving biodiversity conservation and sustainable management in the State of Parana, particularly in the corridors \. a\. M&E Quality Rating : Modest 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Two safeguards were triggered: Environmental Assessment (OP 4\.01) and Natural Habitats (OP 4\.04)\. Although OP4\.36 on Forestry was not triggered at appraisal, the ICR indicates that the project applied the "spirit" of the safeguard\. Environmental Assessment (OP 4\.01)\. 01 )\. The following information is provided by the ICR in relation to compliance with OP/BP 4\.01: (1) An in-depth consultation was held on August 24, 2000 with the State of Parana Association of Environmental NGOs (UNIAP), additional four NGOs, and eight different governmental institutions involved in biodiversity conservation issues; (2) the final draft of the EA was received by the Bank and disclosed in the InfoShop on April 8, 2002; (3)the EA was widely disseminated among stakeholders and project beneficiaries in local language via the project website and four meetings in the project corridors (April-June, 2002); and (4) An EA summarized the procedures for subproject eligibility and screening \. The EA found positive effects of the projects on the environment, noting in particular the institutional factors that allow for efficient application of enforcement through various incentive schemes\. As indicated in the PAD, there were no significant infrastructure investments in the targeted interstitial areas\. Although the PAD indicated that the primary social outcome of this project has to do with the success of the alternative production systems - with the result that their incomes and quality of life improves - the ICR does not provide sufficient information to account for the welfare of the targeted beneficiary population \. Natural Habitats (OP 4\.04) 04 ) Part of the rationale for engaging in biodiversity conservation projects in the state of Parana was the strong commitment by the state to undertake significant environmental reforms, including regulation of the cutting of natural stan ds of Araucaria, and certification of Araucaria and non-timber forest products\. The PAD (p\.31) recognized that the regulation of cutting of threatened Araucaria is a long overdue step, albeit one that is still contentious owing to vested lumber interests \. It noted that the Government is ready to take this step in light of the devastation that has been wrought on the few remaining forested areas and that negotiations were proceeding regarding the opening of other areas to compensate lumber interests for losses suffered \. In relation to the introduction of certification to address illegal harvesting of heart of palm, the PAD noted that the certification process would keep harvesters from invading and depredating private property and protected areas \. The project indicated that it would be a catalyst in designing and implementing a number of important reforms including certification of Araucaria and heart of palm\. Component IV of the project would specifically advance certification and refine the general legal and regulatory framework governing biodiversity conservation \. Key policy and institutional reforms supported by the project would include certification of forest products starting with heart of palm and Araucaria (PAD p\.18)\. Yet as indicated in the ICR, progress was limited to the completion of studies on certification models and no information was provided in the ICR in relation to the development of policy and regulatory reform concerning the illegal harvesting of Araucaria and palmito \. However, it is worth noting that the request for inspection was based on claims for [forested] areas systematically destroyed, some of them under licenses issued by the state environmental agency\. So whereas the project did not specifically "do harm" since none of its interventions caused a loss of habitat, it did not "do good" by achieving greater success in working with the state to enforce environmental regulations governing the illegal destruction of the natural forested areas \. 36 ) It is acceptable that OP 4\.36 was not triggered at appraisal since the project did not fund any Forestry (OP 4\.36) logging or deforestation activities, it did not support tree planting for commercial use, it reforested areas with a mix of more than 20 local species and created permanent forest areas in which no harvesting was permitted etc \. Inspection Panel : It should be noted that a request for inspection of this project was submitted in 2006 by a local NGO on behalf of a network criticizing the way the project was being implemented \. Given the fact that a number of actions were taken by the Bank and the state of Parana following the request for inspection (including an independent technical audit and an action plan ) the Panel did not recommend an investigation on whether the Bank had complied with its operational policies and procedures \. 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development Moderate Non-evaluable Outcome : Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: Monitoring and Evaluation is a critical element of all projects, especially those designed as pilots \. For projects that are designed to have demonstration affects, it is essential that activities, such as the agro -ecological modules launched in this project, are clearly described in project documentation, including the assumptions present that link the implementation of these activities to the overarching objective of the project, in this case, biodiversity conservation \. Baseline data and information collected throughout the project implementation period should focus both on the economic feasibility of the activity for the farmer and the interim conservation outcomes\. A certain percentage of pilot activities can be expected to fail : learning is derived as much from failed experimentation as it is from success \. Sub-project data collection and accurate reporting is critical for lessons sharing and decision -making related to scaling up the more successful activities \. There are hidden lessons in this project related to the communication between the extension agents trained in agro-ecological extension services and their interactions with the rural producers on whose land several private reserves were established \. Under what conditions and through the use of what type of incentives will rural producers choose to adopt environmentally benign technologies? How do land use conditions and choices affect farmers' decisions to mainstream biodiversity on private lands? What positive incentives concerning forest cover should be put in place to encourage native forest reforestation or restoration on private lands as part of a landscape level planning approach? This project, alongside others, such as the Cape Peninsula Biodiversity Conservation Project in South Africa worked for over a decade with local level governments, conservation officials, and land owners to combat ecosystem fragmentation and restore  biodiversity connectivity\. Lessons generated from these projects in the Bank's middle income countries on the methods employed to work across private lands to restore connectivity should be collated and disseminated \. Landscape level planning for biodiversity conservation must invest in an initial diagnostic evaluation of the real conservation status, threats, livelihoods and status of land holdings of the corridor areas targeted \. This diagnostic can enable an ordering of conservation priorities that can inform a sub -project planning approach\. Incentives based solely on a voluntary schemes may garner a high level of participation but may not target conservation priorities\. 14\. Assessment Recommended? Yes No Why? This is a pilot project that, if successful, was intended to be rolled out to other critical eco -regions\. The ICR, however, lacks the necessary data to determine whether the project should be replicated; an inspection panel request highlighted issues that are germane for IEG's upcoming review on Forests \. A field assessment could better assess, though site visits, the outcomes of the agro -ecological modules and other subprojects, and efficiency in achieving them\. 15\. Comments on Quality of ICR: The quality of the ICR is rated Satisfactory, but barely so \. The ICR was candid in its assessment about the project challenges - the disbursement lag, the lack of achievement of some of its objectives, and the Inspection Panel process\. Ratings were realistic and all mandatory evaluative sections were covered, including a thorough review of safeguards\. However, the ICR could have better dealt with the issue of monitoring and evaluation \. No attempt was made to reconstruct the log-frame or to provide a more thorough explanation about why the log -frame was not utilized\. Efficacy is reported against the two main objectives but data was not collected to enable reporting on the two main impact indicators developed at design : index of vegetation coverage of natural environments and other classes of land use and an index of the relative abundance of species \. There is a lack of outcome information provided on the application of the agro-ecological modules and the subprojects, And, the ICR did not report on the actual component costs, apart from the GEF contribution \. Information was lacking on how funds were switched after mid -term\. There is also no cost data on the 41 biodiversity conservation subprojects \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P082998

 Document of The World Bank Report No: ICR2386 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-39890 IDA-39891 IDA-47180) ON A CREDIT IN THE AMOUNT OF SDR, 235\.1 MILLION (US$348\.2 MILLION EQUIVALENT) TO THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA FOR A ROAD SECTOR DEVELOPMENT PHASE II PROJECT (APL2) December 12, 2012 Transport Sector Country Department AFCE3 Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2012) Currency Unit = Ethiopian Birr SDR 1\.00 = US$1\.52 US$1\.00 = 17\.82 Birr FISCAL YEAR July 8 – July 7 ABBREVIATIONS AND ACRONYMS AC Asphalt Concrete APL Adaptable Program Lending DBST Double Bituminous Surface Treatment DMOs District Maintenance Organizations ERA Ethiopian Roads Authority ERTTP Ethiopia Rural Travel and Transport Program GoE Government of Ethiopia HDM4 Highway Development and Management Model ICR Implementation Completion and Results IDA International Development Association M&E Monitoring and Evaluation MIS Management Information System NPV Net Present Value PAD Project Appraisal Document PDO Project Development Objectives PSNP Productive Safety Nets Programme RSDP Road Sector Development Program SDPRP Sustainable Development and Poverty Reduction Program SDR Special Drawing Rights VOCs Vehicle Operating Costs WIDP Wereda Integrated Development Plans Vice President: Makhtar Diop Country Director: Guang Zhe Chen Sector Director: Jamal Saghir Sector Manager: Supee Teravaninthorn Project Team Leader: Fiona J\. Collin ICR Team Leader: Bernard Aritua  FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA ROAD SECTOR DEVELOPMENT PHASE II PROJECT (APL2) CONTENTS A\. Basic Information\. i B\. Key Dates \. i C\. Ratings Summary \. i D\. Sector and Theme Codes\. ii E\. Bank Staff \. ii F\. Results Framework Analysis \. ii G\. Ratings of Project Performance in ISRs \. vi H\. Restructuring (if any) \. vi I\. Disbursement Profile \. vi 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 4 3\. Assessment of Outcomes \. 11 4\. Assessment of Risk to Development Outcome\. \. 14 5\. Assessment of Bank and Borrower Performance \. 15 6\. Lessons Learned\. 17 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 18 Annex 2\. Outputs by Component\. 21 Annex 3\. Economic and Financial Analysis \. 36 Annex 4 - Bank Lending and Implementation Support/Supervision Processes \. 40 Annex 5\. Summary of Borrower’s ICR and/or Comments on Draft ICR \. 42 Annex 6\. Comments of Co financiers and Other Partners/Stakeholders \. 43 Annex 7\. List of Supporting Documents \. 45 Annex 8\. Map Showing Project Roads under APL2 \. 46 A\. Basic Information ET-Road Sector Project Country: Ethiopia Project Name: (APL2) to support the Government's RSDP IDA-39890,IDA- Project ID: P082998 L/C/TF Number(s): 39891,IDA-47180 ICR Date: 08/30/2012 ICR Type: Core ICR Lending Instrument: APL Borrower: GOE Original Total XDR 110\.00M Disbursed Amount: XDR 235\.09M Commitment: Revised Amount: XDR 235\.10M Environmental Category: A Implementing Agencies: Ethiopian Roads Authority Co-financiers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/04/2001 Effectiveness: 06/08/2005 06/08/2005 Appraisal: 05/25/2004 Restructuring(s): 06/04/2010 Approval: 09/22/2004 Mid-term Review: 03/31/2007 11/01/2007 Closing: 06/30/2010 06/30/2012 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Moderately Satisfactory Unsatisfactory Implementing Moderately Quality of Supervision: Moderately Satisfactory Agency/Agencies: Unsatisfactory Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No Satisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as percent of total Bank financing) Central government administration 9 9 Roads and highways 90 90 Sub-national government administration 1 1 Theme Code (as percent of total Bank financing) Infrastructure services for private sector development 50 50 Other financial and private sector development 25 25 Rural services and infrastructure 25 25 E\. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Callisto E\. Madavo Country Director: Guang Zhe Chen Ishac Diwan Sector Manager: Supee Teravaninthorn C\. Sanjivi Rajasingham Project Team Leader: Fiona J Collin John D\. Riverson ICR Team Leader: Bernard Aritua ICR Primary Author: Bernard Aritua F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objectives of the RSDP 2 Stage 2 (the Project) is to support the increase in road transport infrastructure and improve its reliability, strengthen the capacity for road construction, management and maintenance, and create conditions conducive to private sector participation in the road transport sector\. ii Revised Project Development Objectives (as approved by original approving authority) The original PDOs and indicators were not revised (a) PDO Indicator(s) Original Target Actual Value Achieved Baseline Formally Revised Indicator Values (from approval at Completion or Target Value Target Values documents) Years 2 Indicator 1 : Increase road density (km/1000 km ) Value quantitative or 30\.80 36\.24 45\.7 48\.10 Qualitative) Date achieved 12/31/2003 6/30/2009 4/28/2010 6/30/2012 Comments Road density across the Ethiopia classified network increased by 56 percent during the (incl\. percent period of APL2 achievement) Indicator 2 : Increase proportion of roads in good condition (percentage) Value quantitative or 32 50 83 88 Qualitative) Date achieved 12/31/2003 6/30/2009 4/28/2010 6/30/2012 Comments The proportion of roads in good condition across the classified network of Ethiopia (incl\. percent increased by 175percent over the life of APL2 achievement) Social, environmental, economic and planning management capacity of the clients Indicator 3 : improved Related activities under Value APL2 completed and quantitative or N/A YES N/A taken over by APL3 & Qualitative) 4 Date achieved 12/31/2003 6/30/2009 4/28/2010 6/30/2012 Comments The management of social and environmental issues has improved during the life of (incl\. percent APL2\. ERA has set-up a unit to deal with Environment and social issues and at the achievement) time of the ICR mission was carrying out industry wide training\. ERA District Maintenance Organizations as profit centers by July 2005 and Indicator 4 : commercial center by July 2006 Value quantitative or N/A YES Indicator changed Qualitative) Date achieved 12/31/2003 7/31/2006 4/28/2010 6/30/2012 Comments At the time of second additional financing (AF) this indicator was changed as per (incl\. percent indicator 5 achievement) iii  ERA unbundled into ERA regulatory entity, and District Road Maintenance Indicator 5 : Contractors commercial enterprise Value quantitative or N/A YES N/A Qualitative) Date achieved 4/28/2010 7/31/2011 6/30/2012 Comments (incl\. percent This indicator was introduced at the time of the second additional financing achievement) Share (percent) of periodic maintenance (in value terms) contracted on a competitive Indicator 6 : basis to domestic contractors Value Replaced by quantitative or 40 90 Indicator 5 Qualitative) Date achieved 12/31/2003 6/30/2009 4/28/2010 6/30/2012 Comments (incl\. percent This indicator was removed at the time of second additional financing achievement) Share (percent) of routine maintenance (in value terms) contracted on a competitive Indicator 7 : basis to domestic contractors\. Value Replaced by quantitative or 0 90 Indicator 5 Qualitative) Date achieved 12/31/2003 6/30/2009 4/28/2010 6/30/2012 Comments (incl\. percent This indicator was removed at the time of second additional financing achievement) (b) Intermediate Outcome Indicator(s) Actual Value Original Target Formally Revised Achieved at Indicator Baseline Value* Values (from Target Values Completion or approval documents) Target Years Indicator 1 : Roads upgraded/rehabilitated (non-rural) Value (quantitative 253 km 604 km 534 km 534km or Qualitative) Date achieved 4/28/2010 6/30/2009 4/28/2010 6/30/2012 This indictor was revised at second Additional Financing as the 70 km section of Comments Shashemene-Dodola road was dropped from IDA financing and taken over by (incl\. percent Government of Ethiopia\. It was completed in 2009\. Consequently, the formally revised achievement) target is 534Km Indicator 2 : Road constructed (non-rural) – federal link and regional roads Value Federal link 119 Federal link 79 km Federal link 119 km Federal link 119 km (quantitative km Regional Regional roads 53 km Regional roads 173 km Regional roads 137 km or Qualitative) roads 137 km Date achieved 4/28/2010 6/30/2009 4/28/2010 6/30/2012 Comments This indicator was revised at second Additional Financing (incl\. percent iv achievement) 10 construction supervision contracts efficiently performing supervision of the above Indicator 3 : works contracts\. Value (quantitative 8 10 8 Achieved or Qualitative) Date achieved 4/28/2010 6/30/2009 4/28/2010 6/30/2011 Comments (incl\. percent This indicator was revised at second additional financing achievement) No of Wereda Travel and Transport Plans and Wereda Integrated Development Plans Indicator 4 : completed Value (quantitative 24 40 45 or Qualitative) Date achieved 4/28/2010 6/30/2009 6/30/2012 Comments The 45 Wereda plans financed by APL2 were completed\. The Government of Ethiopia (incl\. percent is in the process of implementation alongside 600 other Wereda plans\. achievement) Indicator 5 : Financial Management System updated Value (quantitative N/A YES N/A Achieved or Qualitative) Date achieved 12/31/2003 7/31/2007 6/30/2012 Comments (incl\. percent Installed, now part of the ERA systems achievement) Indicator 6 : Pavement Management System updated Value (quantitative N/A YES N/A Achieved or Qualitative) Date achieved 12/31/2003 7/31/2007 6/30/2012 Comments (incl\. percent New system installed under remit of the Asset Management directorate achievement) Indicator 7 : ERA employees trained Value (quantitative N/A 60 N/A Achieved or Qualitative) Date achieved 12/31/2003 6/30/2009 6/30/2012 Comments Training undertaken as part of a wider effort within ERA to improve capability and (incl\. percent capacity across the organization\. achievement) * Target value at time of second additional financing appraisal became the revised baseline\. v G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 12/15/2004 Satisfactory Satisfactory 0\.00 2 05/03/2005 Satisfactory Satisfactory 0\.00 3 12/16/2005 Satisfactory Satisfactory 8\.00 4 06/26/2006 Satisfactory Moderately Satisfactory 8\.00 5 12/26/2006 Satisfactory Moderately Satisfactory 32\.42 6 06/27/2007 Satisfactory Moderately Satisfactory 34\.53 7 12/11/2007 Satisfactory Satisfactory 60\.67 8 06/02/2008 Satisfactory Satisfactory 78\.59 9 12/20/2008 Satisfactory Satisfactory 101\.85 10 06/10/2009 Satisfactory Satisfactory 130\.14 11 11/30/2009 Satisfactory Satisfactory 162\.70 12 06/10/2010 Satisfactory Satisfactory 195\.23 13 01/04/2011 Satisfactory Moderately Satisfactory 243\.05 14 06/27/2011 Satisfactory Satisfactory 294\.93 15 01/09/2012 Satisfactory Satisfactory 332\.18 16 07/07/2012 Satisfactory Satisfactory 360\.61 H\. Restructuring (if any) The project was restructured once to extend the closing date from June 30, 2010 to June 30, 2012\. I\. Disbursement Profile vi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. The Government of Ethiopia (GoE) prepared the Sustainable Development and Poverty Reduction Program-2002 (SDPRP) to address the development challenges facing Ethiopia at the turn of the twenty first century\. This plan, along with subsequent policy documents, 1 underscores the need to make substantial investments in infrastructure as a means to create opportunities for diversified and inclusive growth\. 2\. Transport infrastructure plays a vital role in facilitating economic development in Ethiopia\. In particular, road transport provides the predominant means for movement of people, utilization of land and natural resources, improved agricultural production and marketing, access to social services, and opportunities for sustainable growth\. Road transport accounts for 95 percent of the country’s passenger and freight traffic and is the only means of access to rural communities\. In spite of the relative importance of road transport, the condition of the infrastructure at appraisal was poor\. Therefore, improving the quality and extent of road infrastructure was rightly considered a priority for the GoE\. By the end of the twentieth century, Ethiopia’s classified road network as measured by density and quality was severely inadequate to meet the growth aspirations of the country 2\. 3\. To address the constraints in the road sector the GoE formulated the Road Sector Development Program (RSDP) in 1997\. RSDP is a multi-phased program 3 supported by contributions from various development partners\. The overall aim of RSDP is to restore the essential road network and create adequate capacity in the road sector 4\. 4\. The World Bank support to RSDP was designed as a four stage Adaptable Program Loan (APL 1-4)\. The goal of the APL stages was to provide sustained support to the RSDP\. APL1 which started in June 2003 was a US$126\.8million IDA Grant designed to assist the GoE in improving the quality of priority federal roads, strengthen road sector reforms and enable private sector participation in the road sector\. APL2 (US$160\.9 million IDA Credit) was designed to build on APL1\. 5\. The rationale for World Bank’s involvement in APL2 was the continuation of support provided through APL1 and the subsequent stages (i\.e\. APL 3 and APL 4)\. The World Bank also had the potential to add value to RSDP by drawing on international/regional experience in similar programs\. At the time of preparation for APL2, the World Bank was also providing road sector reform assistance in the region and 1 The subsequent plans include the Plan for Accelerated and Sustained Development to End Poverty – 2005 (PASDEP) and Growth and Transformation Plan (GTP) 2010-2015 2 At appraisal the road network was estimated to include 33,000 km - 16,000 km classified as federal and 17,000 km as regional roads\. Only 12 percent of the road network was paved 3 The first RSDP was officially launched in September 1997 and ended in 2002\. RSDP II started in 2002 and ended in 2007\. The third phase (RSDP III) commenced in July 2007 and ended in June 2010\. The fourth phase (RSDP IV) commenced in July 2010 and will end in 2015 4 Assessment of 14 Years Performance of the Road Sector Development Program, ERA Nov 2011 1 could therefore create an appropriate framework to shape the implementation and monitoring\. The World Bank’s participation could therefore support long term road development in Ethiopia and contribute to economic growth aspirations of the GoE\. 1\.2 Original Program Objectives 6\. The primary objective of the Adaptable Program Loan (APL) 5 is to provide support to restore and expand Ethiopia’s road network in order to reduce poverty and increase employment through promoting growth and access in a socially and environmentally sustainable manner\. Original Project Development Objectives (PDOs) of APL2 and Key Indicators 7\. The objectives of APL2 (the project) 6 as outlined in the Project Appraisal Document were to increase the road transport infrastructure and improve its reliability; strengthen the capacity for road construction, management and maintenance; and create conditions conducive to private sector participation in the road transport sector\. These objectives were to be achieved through: (a) construction, rehabilitation, upgrading and preserving the priority federal and regional road network; (b) strengthening of Ethiopia Road Authority (ERA) reform program; (c) developing the capacity in program implementation; and (d) improving rural travel and transport services\. 8\. According to the Project Appraisal Document (PAD), the key project indicators against which the project was to be measured were:  Increase road density from 30\.8 km/1000 sq\. km in 2003 to 36\.24 km/1000 sq\. km by 2009\.  Increase proportion of roads in good condition from 32 percent in 2003 to 50 percent by 2009\.  Improve the social, environmental, economic and planning management capacity of the clients\.  Enable ERA District Maintenance Organizations (DMOs) to operate as profit centers by July 2005 and commercial centers by July 2006\.  Increase the share (percentage) of periodic maintenance (in value terms) contracted on a competitive basis to domestic contractors\. 5 Project Appraisal Document (PAD), Federal Democratic Republic of Ethiopia, Road Sector Development Phase I Project (APL2), May 19, 2003 6 Project Appraisal Document (PAD), Federal Democratic Republic of Ethiopia, Road Sector Development Phase II Project (APL2), August 23, 2004 2  Increase the share (percentage) of routine maintenance (in value terms) contracted on a competitive basis to domestic contractors\. 1\.3 Revised PDO and Key Indicators, and Reasons/Justification 9\. The indicators relating to enabling the operation of ERA DMOs as profit centers and increasing the share of domestic contractors in road maintenance were revised in April 2010 at the time of the second additional financing\. It was clear that since the scope of APL2 did not include periodic and routine maintenance and ERA was already reforming its approach to road maintenance these indicators could be dropped\. 1\.4 Main Beneficiaries 10\. The main beneficiaries are not explicitly identified in the PAD for APL2\. It may however be inferred from the PDOs and key indicators that APL2 was expected to benefit the general population and ERA\. Successful implementation of APL2 would also benefit local consultants and contractors who would be targeted for increased participation\. 1\.5 Original Components 11\. The original components as presented in the Project Appraisal Document for APL2 are:  Component 1 - The upgrading of Federal Trunk and Link Roads which consists of: (a) Assela-Dodola-Goba and Shashemene - Dodola section (316 km) of the Nazareth-Dodola/Shashemene-Goba federal trunk road; (b) GobGob-Weldiya section (194 km) of the Woreta-Weldiya federal link road; (c) Shire-Adwa- Adiabun section (83 km) of the Adigrat- Shire federal link road, and (d) consultancy services for construction supervision of the road works, and implementation of the associated environmental, safety, and resettlement plans and adverse social impact mitigation\.  Component 2 - Construction of Federal Link and Regional Rural Roads which consists of: (a) the construction of Magna-Mechara section (119 km) of the Dera- Mechara federal link road to a high standard gravel road; (b) The upgrading of existing and construction of new sections of the Assosa/Sherkole-Guba regional road to a gravel road surface standard (137 km); and (c) consultancy services for construction supervision of the road works, and implementation of the associated environmental, safety, and resettlement plans and adverse social impact mitigation\.  Component 3 - continued support to the Ethiopia Rural Travel and Transport Program (ERTTP) focused on preparation of additional Wereda studies and augmentation of existing TA support\. 3   Component 4 - continued support to ERA (ERA) to enhance its capacity to plan road network maintenance and improvements; (a) by integrating Pavement Management System with Highway Development and Management Model 4 (HDM4); (b) refining ERA’s financial management and management information (MIS) systems; and (c) technology transfer to and training of ERA staff in the relevant fields to further enhance ERA’s capacity\.  Component 5 - preparation of follow up operations in APL Stages 3 or 4, including feasibility of private sector participation in financing and implementation of road programs nationally as well as in Addis Ababa\. 1\.6 Revised Components 12\. The original components were not officially revised\. However, the GoE took over funding and delivery of the Shashemene-Dodola section which was constructed by domestic contractors and supervised by domestic consultants\. It was completed in 2009\. 1\.7 Other Significant Changes 13\. In September 2004 the Bank approved an IDA credit of US$160\.9 million to support the RSDP II\. The IDA Board approved two packages of additional financing during the life of APL2\. 14\. The first additional financing was approved on June 22, 2006\. Additional credit of US$87\.3 million was approved to address financing shortfalls between the estimates for civil works at appraisal and contract bids 7\. 15\. The second additional financing of US$100 million was approved on May 27, 2010\. This additional financing was due to design changes and increases in quantities of various works items 8 ; principally change of pavement designs for Assela-Goba and Gobgob-Gheshena roads from Double Surface Treatment to Asphalt Concrete\. 16\. The scope of APL2 was also changed when the GoE took over financing of the 70 km Shashemene-Dodola road\. This was eventually completed by domestic contractors in 2009\. 2\. Key Factors Affecting Implementation and Outcomes 17\. APL2 contributed to enabling the RSDP to achieve its overall objectives\. The road projects constructed under APL2 are critical to the development priorities of the GoE and the objectives of the RSDP\. However, APL2 experienced significant cost increases\. The project had two separate cases of additional financings - US$87\.3 million in June 2006 and US$100 million in April 2010 respectively\. The initial cost of APL2 at 7 Project Paper – Proposed Additional Financing in the Amount of US$87\.3million, APL2, May 23, 2006 8 Project Paper – Proposed Second Additional Financing in the Amount of US$100 million, APL2, April 28, 2010 4 project appraisal was US$255\.9 million\. This increased to US$603\.23 million at project close in June 2012\. 18\. In brief, the cost increases were largely associated with the engineering designs at project preparation\. In some instances the designs were incomplete, and in others the initial designs did not fully take account of realities on ground\. Consequently, changes had to be made during implementation leading to cost increases\. Subsequent paragraphs highlight how these factors affected project implementation and outcomes\. A discussion of the reasons for the cost increases is given in Annex 2\. 2\.1 Project Preparation, Design and Quality at Entry 19\. APL2 was responsive to the needs of the GoE to significantly increase investment in road infrastructure as a means to create conditions conducive to economic growth\. The drive to improve road infrastructure was steered by the GoE and hinged on the RSDP\. As a result there was a strong commitment from the GoE from the start of APL2\. 20\. The focus of RSDP was on improving the quality and extent of road infrastructure in Ethiopia\. Given the policy directions and the financing shortfalls needed to achieve road network targets, APL2 was therefore well placed to support the GoE in its growth aspirations\. 21\. The final packaging of APL2 resulted from changes in World Bank support to RSDP\. Initially, World Bank support to RSDP was designed as a three stage Adaptable Program Loan (APL)\. However, the funding ceiling for stage one (APL1) could not accommodate the identified scope\. As a result, stage one was divided into two phases - a grant and loan portion respectively\. This led to a four stage APL with APL2 covering the five roads that could not be funded under APL1\. The engineering design and feasibility studies for the respective roads had been undertaken as part of APL1\. Hence in preparation for APL2, the projects prepared in June 2003 under APL1 were simply carried forward to APL2 in August 2004\. 22\. The cost increases in APL2 and the need for additional financing can be traced to project preparation, quality of engineering design and construction risk management at project preparation stage\. Although a Quality at Entry review carried out in July 2003 9 (as part of APL1) rated the project’s technical soundness as Satisfactory, it became clear during implementation that the project costs in APL2 could have been controlled if the engineering designs had been advanced to a point where reliable cost estimates were obtained\. 9 Projects in APL2 were originally designed as part of APL1\. Due to funding constraints in APL1, some of the project roads were eventually packaged as APL2 which was appraised soon after APL1 commenced\. Hence a separate Quality at Entry review was considered unnecessary\. 5 2\.2 Implementation 23\. The principal factors that affected implementation are related to impact of pre- construction decisions, and project management and supervision of contracts\. Impact of Pre-construction Decisions 24\. The project got off to a challenging start with high bids relative to the Engineer’s estimate 10 (with bids up to 200 percent higher than the Engineer’s cost estimate)\. Moreover, four contracts received single bids at high prices – 150 percent more\. These bids were re-tendered but three of them were awarded to one contractor\. To address the shortfall resulting from the disparity between the engineer’s estimate and the bids, additional financing of US$87\.3 million was needed 11\. It was asserted in the additional financing project paper that the disparity between engineer’s estimate and the bids was related to increased prices of fuel and bitumen between project conception and project effectiveness 12\. While this explanation may have some merit, the lack of realism of the Engineer’s estimate cannot be explained simply by changes in commodity prices\. Best practice shows that realism of prices usually results from complete designs and accurate information for developing cost estimates 13\. Lack of realism in cost estimates can also result from limited understanding of construction processes 14 \. The differences in the Engineer’s cost estimate and bids received from contractors may have been averted with rigorous project risk management and value engineering to get a better understanding of potential sources of cost increase and contingency requirements\. Such a course of action would have led to review and updating of the Client’s cost and budget estimates in line with optimal engineering designs and prevailing market rates for key construction materials\. Project Management and Supervision of Contracts 25\. By Mid Term Review in October 2007, most contracts were underway and the first additional financing had covered the differences between the engineer’s estimate and the bids received\. The main emerging project challenge was that several of the contracts were substantially delayed due to incomplete designs and bidding documents, and issues with project supervision consultants 15\. Annex 2 summarizes the specific issues with respective projects and contains a detailed case study to elaborate on the highlighted issues\. 26\. In April 2010, a request was made for a second additional financing of US$100 million to cater for design changes in road pavement from double bituminous surface treatment (DBST) to Asphalt Concrete (AC)\. It was explained that the design changes were necessary to take account of increased traffic; more than was anticipated during the 10 ISR#4 11 Additional financing project paper, May 23, 2006 (Report No\.36265-ET) 12 Confirmed from commodity price indices for the period 2003-2005 13 Smith N J Managing Risk in Construction Projects Blackwell Publishing 2006 14 Kerzner, H Project Management – A Systems Approach to Planning, Scheduling and Controlling, John Wiley &Sons 2009 15 Mid-term Review Aide Memoire, APL2, November 2007 (key issues in progress of civil works, page 3) 6 design stage of the Assela-Dodola-Goba and Gob Gob-Gashena road projects\. In addition, increased quantities of various work items (such as changes in urban and town sections) were alleged to have contributed to the cost increases\. The need for this second additional financing could have been avoided with better project management\. Experience from several projects demonstrates the value of completing much of the technical engineering design and agreeing on a project execution plan before commitment to construction 16\. Moreover, the details of traffic growth and its impact on design of the project roads should have been taken into consideration and concluded during project appraisal 17\. 27\. In order to get to the root causes of the cost increases relative to project award, a detailed analysis of all the projects was carried out during the ICR mission\. The reasons for cost increase in APL2 are summarized in Annex 2\. In brief, the cost increases resulted from variation orders and changes in design/correction of design errors and the associated impact on price adjustments 18 \. The variation orders resulting from design changes amounted to US$87\.78 million across the road projects and led to project delays of 2-3 years on several projects\. Concomitant price adjustments and extension of time amounted to US$168\.5 million19\. For example in the case of Shire-Adiabun which is detailed in Annex 2, the contract award price of US$48\.52 million increased to US$108\.85 million\. This increase was principally due to changes in design of town sections and a by-pass round the UNESCO world heritage site in Axum\. The changes in design resulted in 682 days extension time and an associated price adjustment of US$36\.4 million\. In the case of Dodola-Goba the contract price of US$33\.28 million increased to US$116\.82 million due to a change from DBST to AC worth US$9\.38 million and price adjustment of US$41\.7 million (other design changes included widening in town sections, and new access culverts)\. In both cases such design changes should have been taken care of as part of the pre-construction engineering design and management\. Similar observations can be made for Megna-Mechara, Geshena-Woldiya and Assela-Dodola all of which were characterized by significant cost overruns\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E Design 28\. The project indicators were agreed upon during project preparation\. The expectation was that ERA would provide a point of contact for monitoring the outcomes and providing data for the World Bank team to monitor project progress\. However two fundamental aspects of the M&E design were not well articulated or missed altogether\. First, the design of the capacity building component could have been more thorough\. 16 Halpin, D and Senior, B, Construction Management, Hamilton Publishing , 2010 17 C\.A\. O’Flaherty, Highways – The Location, Design, Construction & Maintenance of Pavements, Butterworth Heinmann, 2005 18 Price adjustments are contractual provisions to respond to price volatility of construction materials and supplies such as asphalt, fuel, cement and steel\. In many cases, prospective bidders cannot obtain firm price quotes from material suppliers for the duration of the project\. This leads to price speculation and inflated bid prices to protect against possible price increases\. Price adjustment allows the contracting agency (the Client) to take on a portion of these risks and in return get lower bids\. 19 According to the price adjustment formula used for APL2 contracts, adjustments have to made for the cost of foreign labor, equipment, fuel, bitumen and steel\. The formula and indices were agreed at contract award\. Any delays in project or client initiated changes in scope would have the effect of increasing the value of price adjustment and hence cost of the project\. 7 Genuine capacity building is supposed to enable the institution to diagnose the shortfalls in capacity and capability and to map-out a growth and maturity path\. Second, the project indicators should have been more specific, relevant and measurable\. Due to the weaknesses in M&E design, it is difficult to relate the key indicators to APL2\. For example, the first and second indicators focused on increasing road density and percentage of roads in good condition across the entire 54,000 km of classified road network under ERA\. This indicator is useful for measuring the progress of the entire RSDP\. However, it is difficult to attribute improvements in such indicators to APL2 which is less than one percent of Ethiopia’s classified road network\. ERA has an annual road budget of US$1\.5 billion whereas the average annual disbursement for APL2 was US$50-70 million\. Consequently, while it is possible to argue that APL2 contributed towards improvement in overall road density and condition of ERA’s classified network, it is not realistic to attribute such improvements to APL2\. The same can be said of the indicators related to participation of domestic contractors in routine and periodic maintenance as APL2 never had any maintenance or indeed participation of domestic contractors\. 29\. In summary, it is obvious that the indicators chosen for M&E in APL2 would not be used for similar projects today\. With the benefit of hindsight and improvements in Bank wide design of results indicators, it now seems that more pragmatic measures of impact such as reduction in travel time, improvement in riding quality of project roads and savings in vehicle operating costs could have been used at the program level, while measuring the delivery of physical infrastructure i\.e\. kilometers constructed at the project level\. These would have provided measurable indicators that could be directly attributed to the investments in APL2\. M&E Implementation 30\. For the chosen indicators, a baseline was established for APL2 based on the RSDP\. ERA supplied the relevant data and Bank followed through on the progress through regular supervision missions\. M&E Utilization 31\. The data required to produce the indicators was readily available\. At the start of the project, the baseline for chosen indicators was established and the indicators were tracked throughout the project\. Of course as noted above, the M&E could have been better designed\. 2\.4 Safeguards and Fiduciary Compliance 32\. At appraisal, the project triggered a category A rating as safeguards were identified in two areas: Environmental and Involuntary Resettlement\. 33\. Environment and Social safeguards compliance - For the most part, overall safeguards compliance and compliance with environmental safeguards was rated Satisfactory\. However in June 2008, a number of issues relating to workers health and 8 safety, and environmental protection begun to be highlighted in the implementation status and results report 20 \. It was only in October 2009 21 that safeguards compliance issues were reflected in the respective ISR ratings\. The environment compliance was downgraded to Moderately Satisfactory\. The same rating was maintained till the end of the project\. Several environmental and social safeguards issues persisted till the end of APL2 22 \. Nonetheless, it was evident during the ICR mission that the implementing agency had started taking steps to address these issues\. These included reinforcing of the Environment Monitoring Unit and more recently an industry wide training on environmental and social issues\. These efforts are commendable and need to be supported\. 34\. Procurement and Financial Management – In April 2004, the World Bank carried out a procurement assessment of the capacity of the implementing agency to carryout procurement actions in compliance with World Bank requirements\. As a result of this assessment, additional staff was recruited to support the procurement function and several training sessions were held to address the shortfalls\. However as noted earlier in section 2\.2, the quality of the client’s engineering designs affected the cost estimates and procurement of the projects\. Moreover, the bid evaluation and contracts award stage were faced with challenges of limited competition\. The lowest evaluated bids were much higher than the engineer’s cost estimates and the client eventually rejected four of the bids and chose to retender the contracts as the received bids were much higher than both the budget and the Engineer’s cost estimates\. As highlighted earlier these procurement challenges relate to project preparation decisions and the fact that the client’s cost estimates had not been updated to reflect realistic market prices\. 35\. During project implementation, one of the contractors, as well as a shareholder of a second contractor were debarred\. These decisions did not influence the completion of the works\. However, the final variation orders for both contracts were not cleared for Bank-financing\. At the time some funds associated with these variation orders were already disbursed\. Government of Ethiopia will be required to refund the ineligible payments associated with contract amendments that were not approved by the Bank\. 36\. ERA received support from several donor organizations to implement financial management improvement in various areas such as internal controls, auditing, accounting, flow of funds, reporting and monitoring\. The project seems to have benefitted from these efforts in addition to the country’s discipline in executing budget and compliance with the government’s regulations for projects\. To a large extent, ERA has complied with the financial management covenants with the exception of the delays in submission of the entity audit reports\. 20 ISR series #9 21 ISR series #10 22 The final ISR series #16 draws attention to protection of cut slopes and safety measures at work\. However, overall safeguards compliance is rated Moderately Satisfactory 9 2\.5 Post-completion Operation/Next Phase 37\. APL2 was part of a four stage program with specific triggers\. As a result APL3 was triggered after overall average disbursement of 30 percent of on-going civil works in APL2\. As the APL program comes to an end, the post completion phase needs to refocus on areas which have exposed weaknesses in APL1 and APL2\. Any future engagement of the World Bank to support the sustainability of the APLs and the RSDP needs to focus on: a) Strengthening the focus on technical engineering design in the early stages of each new project and contract management during implementation - most of the cost increases across APL2 can be traced to inadequate or flawed engineering designs\. It was evident from the Implementation Completion Results (ICR) mission that ERA has several competent and dedicated technical staff\. The experience of APL2 should therefore trigger a mechanism for consolidating various competencies to scrutinize individual projects and identify/mitigate risks resulting from inadequacies in engineering designs\. In addition, emphasis needs to be placed on contract administration and engineering project management during implementation\. Both are operational responsibilities that focus on achieving time, cost and quality objectives of selected projects\. A central part of the client capacity and capability building has got to tackle the weaknesses exposed in delivery of APL2\. Such efforts should necessarily seek to introduce best practice in risk management, design management, value analysis and engineering, cost control and contract management\. It may even be possible to develop a specific engineering project management framework such as is common in many international public sector client organizations\. b) Road asset management- In order to support the sustainability of the investments made through the APL (and more broadly the RSDP), the pavement management and asset decision support systems need to be exploited more fully\. This means that use of software (such as HDM4) should be part of a broader context addressing processes, procedures, culture, values and technological enablers\. All other aspects of improving overall road asset management should receive equal focus so that the system may be used for making decisions about prioritizing new road construction or rehabilitation efforts\. Such an approach would influence policy decisions about contract strategy and asset management such Design & Build contracting or performance based maintenance contracts which have been piloted as part of APL3\. ERA has recently introduced the new directorate of asset management which has the mandate of looking after the road assets\. For the long term sustainability of RSDP, this new directorate needs to be supported and strengthened by adopting best practice from other countries that have been successful in asset management\. Moreover, the three directorates (planning, operations and asset management) need to have a mechanism for integrating activities and focusing on the whole life cycle of individual projects\. 38\. A road map articulating how the above areas will be addressed would go a long way in supporting the next phase of World Bank engagement and the future of the RSDP after 2015\. 10 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 39\. APL2 contributed to enabling the RSDP to achieve its overall objectives\. The road projects constructed under APL2 are critical to the development priorities of the GoE and the objectives of the RSDP\. Support to the RSDP continues to remain a priority for the partnership between the World Bank and the GoE 23\. 3\.2 Achievement of Project Development Objectives 40\. The objectives of APL2 24 (the project) were identified in the Project Appraisal Documents\. The following paragraphs assess achievement of these objectives\.  Achievement of objective 1 - increase the road transport infrastructure and improve its reliability\. The investment in physical infrastructure under APL2 contributed to increasing the road density and condition of good roads under ERA\. By the end of APL2 the eight critical road construction projects were completed; adding 790 km of upgraded roads to the classified road network\. However, as discussed in section 2\.3, it is difficult to attribute achievements in road density and condition across the entire classified road network under ERA to APL2\.  Achievement of objective 2 - create conditions conducive to private sector participation in the road transport sector\. Similar to several of the road projects under ERA, domestic consultants participated in joint venture partnerships with international consultants in APL2\. However, achievement of this objective cannot be attributed to APL2\. There was no participation of local contractors on any of the road projects financed under APL2 (except the 70 km Shashemene-Dodola road section which was eventually financed by the GoE)\. Furthermore, the project indicators for percentage of domestic contractor participation were dropped at the time of second additional financing as there was no road maintenance in APL2\.  Achievement of objective 3 - strengthen the capacity for road construction, management and maintenance\. This objective was partially achieved\. The investments in pavement management systems, financial management systems and management information systems have provided needed support towards efforts to reform ERA\. Interviewees in the ICR mission also observed that Bank processes and the experience of APL2 contributed towards the current program by ERA to improve awareness of environmental and social safeguards among ERA staff and in the wider industry\. However, the time delays and project cost overruns under APL2 indicate that there is still some way to go in fully achieving this objective\. Specific 23 Identified in both the Ethiopia Growth and Transformation Plan (GTP – 2010/2015) and the draft World Bank Country Partnership Strategy FY13-16 24 Project Appraisal Document, APL2, August 23, 2004 11  strengthening is needed in areas such as engineering design, value engineering, risk management and contract administration\. This will become especially critical if ERA moves towards performance based contracts and design & build type procurement strategies which require adequate knowledge of assets and more sophisticated client skills to productively engage with the private sector and to obtain value for money\. 3\.3 Efficiency Efficiency measured from Outcomes 41\. At project appraisal, an economic analysis was conducted for the civil works components of the project which constitute 90 percent of the total project financing\. HDM3 analysis was carried out against a ‘do minimum’ case and +/- 20 percent sensitivity to cost increases\. All project roads were reported in the PAD to have positive Net Present Values (NPV) and Economic Internal Rates of Return (EIRR) of more than 10\.23 percent 25\. Table 1 below shows the appraisal costs and Economic Rate of Return (ERR) for the roads for which an ex-post economic evaluation was done 26\. Table 1 - Comparison of Costs and Economic Indicators for Project Roads under APL2 1\. Road Link Length Actual Project Costs Economic Indicators (km) (ETB million) Appraisal ERR Ex-Post ERR Appraisal Contract Final (percent) (percent) Assela-Goba/ Shashemene-Dodola 318 879 949 2,068 26\.7 15\.7 Gobgob-Weldiya 194 498 598 1,131 23\.8 17\.2 Shire-adiabun 83 283 429 962 30\.2 27\.8 42\. For comparison purposes, the original project roads evaluated at appraisal and associated assumptions have been applied to project close\. The ex-post economic evaluation was done for rehabilitation and upgrading of three feeder roads for which actual traffic data was available at appraisal and end of project\. Of course, as earlier indicated the final project construction packages differed from the appraisal packages\. Shashemene-Dodola was funded and delivered by the GoE, Gobgob-Weldiya was delivered as two projects, Assela-Dodola and Dodola-Goba were also packaged as separate projects\. Nevertheless, in order to make comparison possible, the original appraisal packaging has been maintained\. The costs are given in ETB 2004 prices\. Annex 3 provides details of the economic and financial analysis\. 43\. To compare the appraisal and final actual costs, 2011 prices were discounted using the Ethiopian price index\. The ex-post evaluation was done by first replicating the 25 A discount rate of 10\.23 percent is used to evaluate all infrastructure projects in Ethiopia 26 As per terms of the M&E the input data was obtained from ERA\. HDM4 analysis was carried out by ERA and verified by World Bank Expert 12 appraisal economic evaluation results and then updating the project costs with the actual upgrading costs\. The ex-post ERR for the first two roads declined relative to appraisal ERR, but are still above the threshold of 10\.23 percent\. The decline may be attributed to the cost increases and delays in completion\. The ex-post ERR of the third road (Shire- Adiabun) decreased to 24\.3 percent from the 30\.2 percent estimated at appraisal, due to the higher upgrading costs\. In sum, it is evident that while the project experienced significant cost increases, the economic indicators seem to show that the benefits are greater than the final costs\. Most of the benefits relate to savings in travel time and vehicle operating costs\. Efficiency measured at Performance 44\. The performance of APL2 was affected by pre-construction decisions related to engineering design of the project roads\. The initial bids were much higher than the estimates on which project appraisal was based\. As a result the project required additional financing\. During implementation, the cost of civil works increased considerably due to changes in design and /or incomplete designs\. 3\.4 Justification of Overall Outcome\. Rating – Moderately Satisfactory 45\. APL2 contributed to increasing the essential road transport infrastructure in Ethiopia\. During the project life of APL2 the road density increased from 30\.8 km/1000 sq\. km in 2003 to 48\.10 km/1000 sq km in 2012\. APL2 also contributed to the increase in proportion of roads in good condition from 32 percent in 2003 to 88 percent in 2012\. However, as earlier discussed GoE has been investing approximately US$1\.5 billion per year in upgrading the road infrastructure\. While the improvements in road density and condition cannot be attributed to APL2, the investment certainly contributed to the achievements of the RSDP\. APL2 could have made a more significant impact on RSDP and the development objectives of Ethiopia if the project costs were better managed at project preparation\. 3\.5 Overarching Themes, Other Outcomes and Impacts 46\. Gender aspects and social development – APL2 and the associated investments in road infrastructure will have a significant impact on the affected populations\. The project roads will contribute to opening up potential opportunities for the local population to access the main urban centers as RSDP reaches the goal of connecting every citizen within 2 km of an all-weather road by 2015\. This may have both economic and social benefits as improvement in transport will enable youth and women to have better access to social services such as hospitals and schools\. Moreover, as the GoE prioritizes modernization of agriculture, good roads will be the back bone\. The Transport and Poverty Observatory Studies 27 show that access to roads directly affects the activities of 27 Commissioned by the GoE to monitor poverty impacts of road project investment at local community and at household level and to assess the development impact of road infrastructure and transport operations in terms of accessibility, mobility and income 13 women - for example, by easing access to healthcare and business opportunities\. The new roads were also observed to encourage production and use of intermediate modes of transport for rural to urban travel\. Implementation of the Wereda Integrated Development plans will benefit from investment in roads by enabling easier access to services for women (water, grinding mills, schools, health care facilities etc\.)\. 47\. Institutional change - The overall responsibility for RSDP lies with ERA which is the implementing agency\. ERA also manages and administers the Trunk and Major Link Roads Program\. ERA was initially organized into three departments – Regulatory and Engineering Services, Planning & Operations and Human Resources & Financial Management\. During the life of APL2, a new Asset Management directorate was created as part of the ERA modernization agenda\. As a result of the various efforts under the RSDP and support from donors, ERA has evolved and attracted relatively competent staff\. However, the remuneration of the staff has not kept pace with investments in physical infrastructure and growth in the economy and the domestic construction sector\. The organization has therefore experienced high staff turn-over; especially at mid-level and among technical staff\. Several of these individuals have been attracted to the private sector which has more competitive wages\. This is an issue which will have to be addressed as the long term sustainability of investments in the road infrastructure hinge on the availability and continuity of competent staff in ERA and other public agencies\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops N/A 4\. Assessment of Risk to Development Outcome\. Rating – Moderate 48\. Given that ERA and the Road Fund are fully operational and have registered improvements in project delivery, the risks to development outcome is considered moderate\. The GoE and associated development partners are committed to the growth of the road sector\. APL2 has provided much needed funding for improving the road infrastructure\. The main challenge in the future will be provision of funding to maintain the condition of the infrastructure and the management ability of ERA in Road Asset Management, Engineering Project Management and extracting value for money from engagements with the private sector\. Addressing the future challenges hinges on ERA being able to attract, train and retain high quality staff with the relevant informed client competencies\. 49\. Overall at the time of ICR review, it is considered unlikely that the roads constructed under APL2 will receive less attention from the Borrower and implementing agency\. The main risk to sustainability of the outcomes relates to the institutional issues\. 14 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance a) Ensuring Quality at Entry\. Rating – Moderately Unsatisfactory 50\. The rating at entry is based on the fact that APL2 as a source of funding for the road infrastructure was responsive to the needs of the GoE to improve the extent and quality of the road network\. In this sense the project was therefore timely and relevant\. However, as noted earlier, most of the cost overruns can be traced to project preparation\. Insufficient engineering design led to costly changes and modifications during construction\. Several of the interviews during the ICR mission observed that while the Bank provided ample advice on addressing environmental, social, procurement and financial management safeguards, there was limited engineering advice during project preparation\. Part of the value-added by the World Bank should have been the potential to draw on global experience in best practice of engineering design and project management\. This would have led to more robust engineering designs and hence avoided the cost overruns\. 51\. Moreover, there was sufficient experience from the region to design the capacity building and technical support components to enable institutional growth while filling the competency gaps that led to cost overruns\. b) Quality of Supervision\. Rating – Moderately Satisfactory 52\. The rating is given because the Bank supervision was regular\. The interviews during the ICR mission also confirmed that towards the latter part of the project, the Bank provided support in procurement and technical engineering aspects of the project due to new recruitment of appropriate Bank staff\. This also led to improved response times for issues relating to the second additional financing and requirements for ‘no objection’\. c) Justification of Rating for Overall Bank Performance\. Rating - Moderately Satisfactory 53\. The Bank team exercised good judgment in capturing the needs and potential impact of APL2 on development agenda of Ethiopia\. However, project development objectives were not properly designed, hence complicating M&E of the project\. Also many of the critical problems experienced during implementation have their origin in pre- construction decisions over which the Bank had much influence\. 5\.2 Borrower Performance\. Rating - Moderately Satisfactory a) Government Performance\. Rating – Moderately Satisfactory 54\. The provision of adequate road infrastructure is seen as central to the development ambitions of Ethiopia and as such the various phases of the RSDP have continued to receive increasing support from the GoE\. This commitment has given the 15 development partners an anchor to provide support when needed\. However, the GoE remains the greatest contributor to the road infrastructure development program (70 percent of the road budget was funded by the GoE between 1997 and 2011)\. The Government was responsive to project needs and fulfilled their obligations relating to covenants and agreements\. This included provision of extra funding to cover the cost overruns (150 percent more than was anticipated at appraisal)\. The GoE also ended up funding the 70 km Shashemene-Dodola road\. It is therefore evident that the GoE supported the project\. To derive the maximum benefits from the investment in the sector, the Government needs to continue the same commitment towards maintenance of the road assets and strengthening ERA and providing competitive remuneration to attract and retain high caliber staff\. b) Implementing Agency performance\. Rating – Moderately Unsatisfactory 55\. ERA was the executing agency for APL2\. The institution has developed considerably since the formulation of the RSDP\. However, the experience in both APL1 and APL2 demonstrate the need to strengthen technical and managerial capability of ERA (see section 2)\. Of course, building capacity must be seen in a wider context of the original base and it must be acknowledged that improving the capacity of public institutions is a long term undertaking which could not be addressed within the limited scope and timeframe of APL2\. The relative improvements must be noted\. 56\. At an operational level, ERA was ultimately responsible for supervision of the road projects\. In general, all projects in APL2 were characterized by cost overruns, costly design changes, delays in schedule, issues with quality of work and engagement with consultants and contractors\. The experience demonstrates that there is still scope for ERA to improve in areas of project and design management, construction risk management, value engineering and asset management\. While addressing the challenges of high staff turn-over, a more holistic approach to institutional maturity has to be developed; perhaps initially alongside Technical Assistance in specific areas\. c) Justification of Rating of overall Borrower Performance Rating – Moderately Satisfactory 57\. The overall performance of the Borrower is rated Moderately Satisfactory principally because the targeted roads are essential to the development of Ethiopia\. All the roads in APL2 were eventually built\. However this was achieved at considerably higher cost than anticipated, with major issues of quality and long after the anticipated time schedule\. It may be argued that some of the factors that contributed to these challenges were beyond the scope of ERA (such as the volatile cost of materials)\. Nonetheless, the most significant factors were within the control of ERA as a client\. One of the main reasons for the incomplete designs seems to have been the pressure from the Government to speed up preparation of projects\. This may have affected the quality of designs which would have benefitted from more time for preparation\. 16 6\. Lessons Learned 58\. Through the experience of APL2 several project-specific and more general lessons for similar undertakings may be learned: 59\. Technical engineering input during project preparation – the main factors affecting implementation and outcomes in APL2 are rooted in the early project stages\. Ultimately, the responsibility for this stage rests with the implementing agency\. ERA has many competent staff and the reform program has adapted to the increased budget received by the road sector\. Nevertheless, the experience of APL2 shows that it may be helpful to create a client hub made up of individuals from ERA (or bought in as required from external sources) to support project preparation\. The ICR therefore proposes that ERA set-up a Technical Panel to focus on risk management and value engineering of projects during preparation\. This panel would carry out detailed review of engineering designs for new projects and cost estimates\. This would also provide an anchor for skills in areas such as: contract management, contract negotiations, risk management, value engineering and design management\. Recent Bank funded projects in Ethiopia have started to support ERA in shifting their focus on technical input in the project preparation process by allocating more resources for technical design review\. 60\. Strategically driven and holistic capacity building, and competitive remuneration to attract and retain the best staff in ERA - It is widely accepted that an organization’s performance is closely linked to the people working within it\. Hence the success or otherwise of the public sector client in delivering infrastructure necessary for supporting economic growth is closely linked to identifying, attracting, training and retaining the right individuals\. Unfortunately in the case of ERA the growth in the economy has contributed to a high staff turn-over as many are attracted to better remunerated opportunities in the private sector\. Organizational reforms that reflect the roles of key staff alongside market competitive salaries are needed\. Perhaps even more important is the need to align the needed skills sets to the evolving role of ERA through a top-down and holistic approach to capacity building rather through ad hoc training\. Ideally, an institutional maturity approach which allows the organization to diagnose competency needs alongside enablers such as processes, systems, procedures and goals would be a better approach\. It would then be possible for the organization to map-out a maturity strategy aligned with current and future needs\. 61\. Project management and thorough investigation of the reasons for cost increase across the entire ERA portfolio of projects – at the operational level, the project management skills needed to control time, cost and quality need to be addressed\. The cost overruns in APL2 and issues with delays and quality could have been alleviated\. For the future, ERA needs to focus on improving cost effectiveness by better analysis of the reasons for high costs, understanding the reasons for cost variations and working collaboratively with contractors to reduce costs across the entire project portfolio\. The need for this kind of approach should have been highlighted in earlier projects and included in the design of APL2\. 17 62\. Results chain and design of measurable M&E framework – APL2 delivered on the main project components; albeit at a higher cost\. The challenge during the ICR review was attributing achievements in the results indicators to the project\. In the future design of similar projects should enable the design of indicators for which direct attribution is possible\. Following the results chain, indicators for the project should have included such attributes such as rate of delivery of physical infrastructure for the outputs and intermediate indicators of progress in key activities\. The outcome indicators could have been factors such as the riding quality of the constructed roads, savings in travel time and reduction in vehicle operating costs\. These are results oriented indicators which are specific, measurable and perhaps more importantly can be attributed to the project\. 63\. Need for strategic focus on infrastructure asset management – the new asset management directorate needs to work closely with the planning directorate\. In order to support the sustainability of the investments made through the APL (and more broadly the RSDP), the pavement management and asset decision support systems need to be exploited more fully to support maintenance management of the entire road network\. This means that use of software (such as HDM4) should be part of a broader context addressing processes, procedures, culture, values and technological enablers\. Such an approach would influence policy decisions about contract strategy and asset management through performance based contracts which have been piloted as part of APL3\. ERA needs to reconcile short-term priorities focused on upgrading roads and the long-term plans for whole life asset management\. For this to be possible ERA needs clear focused asset management plans and better inventory of road assets\. Also as part of the strategy for better asset management, the pilot projects utilizing the performance based approach to contracting and design & build contract strategies need to be expanded while taking into account the skills sets needed to make them successful\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners a) Borrower/Implementing Agency 64\. The official comments of the Government are in Annex 5\. Most of the observations and analysis in the ICR was discussed with the implementing agency during the ICR mission\. In the comments received, the implementing agency raised two issues: (i) Reasons for the cost increase – ERA observes that in addition to design changes the high cost of projects could be attributed to turbulence in commodity prices, the global recession, high inflation and shortage of construction materials\. As part of the ICR mission, each project was analyzed in detail\. Annex 2 of the ICR summarizes the sources of cost increase\. It is obvious from figures 2\.1 and 2\.2 and table 2\.1 that price adjustment which made the greatest contribution to cost increases is affected by the issues highlighted by ERA\. However, the need for price adjustment which contributed to the cost increase is rooted in design changes and associated delays\. These issues are discussed in section 2 of the main report\. 18 (ii) Reasons for ERR of project roads – ERA notes that decrease in ERR for Assela- Goba/Shashemene-Dodola and Gobgob-Weldiya is not due to low traffic but rather cost increases\. As shown in Annex 3, the traffic on the two roads actually declined relative to appraisal\. Nonetheless, the discussion of table 1 acknowledges the dual impact of traffic and cost of construction\. b) Cofinanciers 65\. Comments were received from the European Union (EU) and Department for international Development, UK (DfID)\. Both organizations contributed to the Ethiopia Rural Travel and Transport Programme (ERTTP) and the Wereda studies\. The studies were successfully implemented and pilot implementation is complete\. The following observations were made about points raised in the report\. (i) Cost overruns – It was noted that the report highlighted a long standing shortfall of ERA\. The cost overruns and delays in project schedule are wider issues\. The performance appraisal mechanism of contractors and consultants and its effectiveness to date should offer great insight into the problems of cost overruns\. While the impact and role of contractors and consultants cannot be underestimated, in the specific experience on APL2, the cost increases relate to preconstruction inadequacies and incomplete engineering designs\. The reasons for this conclusion are discussed in section 2 and annex 2\. (ii) Competition in the Sector – It was observed that market is dominated by a limited number of contractors potentially resulting in collusion\. As noted in section 2\.2 APL2 had limited number of contractors\. This can reasonably be expected to affect competition\. However, the ICR preparation did not find evidence of collusion\. (iii) Capacity of ERA and high Staff turn-over - it was noted that ERA has limited capacity to supervise technical designs and that the issue of high staff turn-over due to disparities in remuneration relative to the private sector has been highlighted on several occasions\. The ICR fully concurs with the observation\. The evidence from this ICR should add to the calls for the Government of Ethiopia to revisit this issue which is central to obtaining value for money and the long term sustainability of significant investments being made by development partners and the GoE\. 19  Annex 1\. Project Costs and Financing a) Project Costs by Component Project Cost by Component Project Costs (USD$ million) Percent Appraisal Completion of Appraisal 1\. Upgrading of Federal Trunk and Link Roads Assela-Dodola 30\.00 79\.70 266% Dodola-Goba 32\.04 116\.83 365% Shashemene-Dodola* 17\.44 - Gobgob-Gashena 20\.00 48\.69 243% Gashena-Woldiya 25\.02 79\.18 316% Shire-adiabun 25\.46 108\.85 428% 2\. Upgrading of Federal Trunk and Link Roads Magna-Mechara 29\.16 77\.48 266% Sherkole-Assosa 10\.00 36\.30 363% Assosa-Guba 7\.87 34\.30 436% 3\. Construction Supervision 13\.79 16\.5 120% 4\. Rural Travel and Transport program 2\.05 2\.99 146% 5\. TA support services for ERA 1\.60 1\.61 101% 6\. Preparatory Activities 0\.69 0\.8 116% Physical Contingencies 20\.60 Price Contingencies** 20\.18 Total project Costs 255\.90 603\.23 236% *Project fully financed by GoE at a cost of US$47 million **Total price adjustments at completion - USD$ 168\.5 million b) Financing Sources of Funds Appraisal Actual Cost Percent of Estimate (USD$ millions) Appraisal (USD$ millions) International Development Association (IDA) 160\.9 348\.2 216% Borrower 95\.00 255\.03 268% Total Financing 255\.90 603\.23 236% 20  Annex 2\. Outputs by Component 1\. The objectives of the APL2 (the Project) were to increase the road transport infrastructure and improve its reliability, strengthen the capacity for road construction, management and maintenance, and create conditions conducive to private sector participation in the road transport sector\. These objectives were to be achieved through: (a) construction, rehabilitation, upgrading and preserving the priority federal and regional road network; (b) strengthened ERA reform program; (c) developing the capacity in program implementation; and (d) improving rural travel and transport services\. The project had five components\. Component 1 - Upgrading of Federal Trunk and Link Roads 28 2\. The roads under this component of APL2 were originally earmarked for rehabilitation and/or upgrading under APL1 (IDA Grant H049-ET)\. Hence, the feasibility studies, environmental impact assessments, and engineering designs for all road projects were carried out as part of preparation of seven road projects financed under APL1\. Component 1 originally involved upgrading of 593 km of Federal trunk and link roads from gravel to bituminous paved road surface standard\. • Upgrading of the Assela-Dodola & Shashemene-Goba road (246 km)\. The project road lies entirely in Oromiya Region in the South Eastern part of Ethiopia and begins at Assela town, which is situated about 170 km away from Addis Ababa\. The original scope consisted of the upgrading of the Assela-Dodola & Shashemene-Goba section of the Nazareth-Dodola/Shashemene-Goba gravel road to a double bituminous surface treated standard\. At appraisal, the overall road condition was classified as poor\. The road is classified as a trunk road and was targeted for upgrade from gravel to double bituminous surface treated road with a 7\.0 m width carriageway and 1\.5 m wide shoulders\. At appraisal, this project was anticipated to cost US$79\.48 million\. • Upgrading of Shashemene-Dodola Junction (70 km)\. This road is classified as a trunk road and was to be upgraded from gravel to double surface dressing with a 7\.0 m carriageway and 1\.5 m wide shoulders\. The works were expected to be packaged as 5 lots and contracted to enable increased domestic contractor participation\. This project was anticipated to cost US$17\.44 million\. Actual achieved at completion – 70 km at a cost of US$47 million, financed by GoE\. • Upgrading of the Gob Gob-Gashena -Woldiya road (194 km)\. Involves upgrading of (i) the Gob Gob-Gashena (86 km) section of the Woreta-Weldiya road from gravel to a double bituminous surface treated road, and (ii) the Gashena– Woldiya (108 km) section of the Woreta-Weldiya road from gravel to an asphalt concrete surface with carriageway width of 7\.0 m and 1\.5 m wide shoulders\. The 28 Figure 2\.1 shows the cost profile of the individual roads under component 1 and component 2 at contract award and completion\. It is evident that most projects were characterized by significant cost increases\. Figure 2\.2 and Table 2\.1 outline the reasons for cost increases\. The reasons for changes in cost profile for each road are subsequently discussed\. 21  Woreta-Weldiya road covering a total length of about 293 km lies entirely in the Amhara Region\. It is of high socio-economic importance and serves as a major traffic collector, traversing mostly difficult terrain to connect the Wollo and Gondar sub- regions\. At appraisal, the road was reported to be fully engineered with a gravel- surfaced road first constructed between the 1977 and 1983\. As a result of a major maintenance program, re-gravelling of this road was done under ERRP\. The mountainous nature of the area traversed by the road had become a cause for erosion and surface wear; hence, its recommendation for upgrading\. This project was anticipated to cost US$45\.02 million\. • Upgrading of the Adwa-Shire road (83 km)\. The road is part of the Adigrat- Axum-Shire road that provides an important east-west link between the two primary North-South trunk roads in the northern region of Tigray\. The mountainous terrain, which the road traverses, makes transportation difficult during the wet season\. The existing road at project appraisal was a fully engineered gravel surface road with carriageway width of 7\.0 m covering an underlying Telford base\. The Telford base was exposed over some sections of the road in spite of being re-graveled under the ERRP\. This road classified as a major link road and the upgrading was expected to improve it to an asphalt concrete surface\. This project was anticipated to cost US$25\.46 million\. Actual achieved at completion – 83 km at a cost of US$79\.18 million\. Upgraded to an asphalt concrete surface\. Component 2- Construction of Federal/Link and Regional Rural Roads 3\. The priority under the RSDP I was focused on the rehabilitation and strengthening of the highest priority trunk roads that were found in a dilapidated condition\. The RSDP II focused on improving road density by opening up new potential development areas and increasing connectivity, along with completion of the rehabilitation and upgrading requirements of the road network\. As a result, IDA’s support to the RSDPII also involved the construction of Federal/Link and Rural Roads namely the Magna-Mechara (119 km), and the Assosa/Sherkole-Guba (137 km) roads, respectively, • The construction of the Magna-Mechara road (119 km)\. This road section is part of the Dera-Mechara road (239\.10 km) project, which is located in the central part of Ethiopia in the Oromiya region\. The road starts at Magna and connects to the Dera- Mechara (119 km) section financed as part of APL1\. Project works on the proposed federal road link were foreseen to be constructed to a 6\.0 m wide carriageway with 1\.5 m shoulders and a gravel surface pavement\. The Dera-Mechara road branches off at Dera town from the Nazareth-Assela trunk road 24 km from Addis Ababa, and runs in a northeasterly direction towards Mechara from where it connects to the Addis Ababa – Dire/Dawa trunk road\. The population and economy of the area traversed by the road is almost totally dependent upon agriculture and livestock\. The sector employs more than 90 percent of the economically active population in the project area\. The construction of the road was expected to make a significant contribution to improving some of the constraints on agricultural and livestock development in the project area\. This project was anticipated to cost US$29\.16 million\. 22 • The construction of the Assossa/Sherkole-Guba road (137 km) to gravel standard\. The road is located in the western part of Ethiopia and the Benishangul Gumuz Region, interconnecting two of the most isolated zones of the Benishangul- Gumuz Region\. Improving the road would provide a north-south transport backbone that is crucial for effective integration of the region\. The proposed direct route was expected to reduce travel time and generate significant economic interaction between the regions\. At the time of appraisal the section from Sherkole to the Abay River was impassable for motor vehicles and other sections of the road were routinely closed in the wet season\. This project was anticipated to cost US$17\.87 million\. • Construction Supervision\. - This involved the provision of consultancy services for the supervision of civil works and the implementation of associated environmental, safety, and resettlement plans and adverse social impact mitigation\. The cost of supervision of the road projects in component 1 and 2 was estimated at US$13\.79 million\. Eight supervision contracts were signed for the above civil works\. Actual cost at completion – US$16\.5 million Component 3 - Support to the Rural Travel and Transport Program (US$2\.05 million) 4\. This component was expected to support the implementation of the ERTTP by financing (i) the preparation of 60 Wereda development plans for future implementation under APL3, other IDA programs and or other source of funding; and (ii) institutional strengthening of ERA in its role as the lead agency for the implementation of the ERTTP and Secretariat of the Central Program Coordinating Board\. • Preparation of 40 Wereda Integrated Development Plans – WIDP\. This sub- component was to assist with the preparation of the Wereda Integrated Development plans as part of the planned expansion of the pilot implementation of the ERTTP concept and approaches in eight Weredas under joint funding with Ireland Aid and Department for International Development, UK during APL1\. The plans were to be prepared using the methodologies and frameworks contained in the 'Guidelines for Preparing Wereda Plans’\. The WIDPs were expected to contain interventions for (a) improvement of community/wereda road networks including mechanisms for their sustainable maintenance; (b) promotion of the use of IMTs; (c) provision of small scale infrastructure facilities (e\.g\., water wells, health clinics, etc\.) which contribute to reducing the travel and time burdens of the community; and (d) improving the institutional and financing frameworks for sustainable service delivery\. • Support to establishment of ERTTP institutional\. The ERTTP embodies many ideas and concepts, the successful implementation of which required ERA to be able to discharge its mandate as the lead agency for the implementation of the ERTTP and 23  Secretariat of the Central Program Coordinating Board\. This sub-component was expected to assist in financing expansion of the ERTTP Unit within ERA so that it would eventually be able to provide technical guidance to implementers, undertake studies into specific issues arising during ERTTP implementation and the distillation of the lessons and experience emerging\. Component 4 - Institutional Strengthening of ERA (US$1\.60 million) 5\. The focus of this component was on supporting (i) updating the Pavement Management System and calibrating it with HDM4 for Ethiopia to enable more effective network planning and management, (ii) refining ERA’s financial management system and interface with Management Information System (MIS) at head office to effectively support, administer and manage the process of commercialization of some functions of ERA’s DMOs and head office; and (iii) organizing technology transfer and training activities with regard to the effective implementation of the above two updated systems\. Component 5 - Support to Accomplishment of Program Objectives 6\. The purpose of this component was to provide consultancy services to carry out feasibility studies, and ESIA studies, as well as, design and design review for road projects to be included under follow-on operations\. The possible projects were those that were planned to be executed under the APL3, 4 and thereafter\. This component was anticipated to cost US$0\.8 million\. 24  Figure 2\.1 - Cost Profile for APL2 Projects (US$ Million) 116\.83 Dodola-Goba 33\.28 108\.85 Shire-adiabun 48\.52 48\.69 Gobgob-Gashena 25\.68 79\.18 Gashena-Woldiya 41\.93 79\.70 Assela-Dodola 45\.12 36\.30 Assosa/Sherkole-Blue Nile 22\.62 77\.48 Magna-Mechara 52\.95 34\.30 Blue Nile-Guba 27\.41 - 20\.00 40\.00 60\.00 80\.00 100\.00 120\.00 140\.00 Completion Contract award 25  Figure 2\.2 - Reasons for Increase in Costs Others 11% Changes in Design Claims 30% 2% Legislation and policy changes 2% Price adjustment 55% 26  Table 2\.1 - Summary Analysis of Reasons for Cost Increase Percent of Total Reason for Cost Increase Amount (US$ Million) Contract price* Changes in Design 87\.78 29\.5 Widening in town sections 26\.97 9\.06 culvert redesign & associated costs of replacement 6\.18 2\.08 Resurvey due to wrong survey data 0\.18 0\.06 Realignment of road geometry (7\.54) -2\.54 Changes in quantity due to inaccurate estimate 36\.72 12\.34 Change of pavement design from DBST to AC 23\.05 7\.7 Bridge re-design 0\.19 0\.07 Walkways, central islands and pedestrian safety provisions 1\.60 0\.54 Other Design modifications - embankment protection etc 0\.43 0\.15 Legislation and policy changes 5\.39 1\.81 Tax Law changes 4\.70 1\.58 Interest on late payment 0\.70 0\.23 Price adjustment 168\.51 56\.64 Claims 7\.36 2\.4 Extension of time 5\.39 1\.81 Dispute resolution costs 1\.39 0\.47 Rebate for discount 0\.81 0\.27 Other minor claims - overtime, advance, interest rates etc (0\.43) -0\.14 Additional costs awarded after dispute resolution 0\.20 0\.07 *Total Contract Price for construction works US$ 297\.51 million 27 Reasons for Cost Increase on Project Roads 7\. Overall, the changes in design associated with widening town sections and the change in pavement structure from double surface treatment to asphalt concrete had a significant impact on the cost of the roads under APL2\. Moreover these changes also affected the progress of site activities with associated impact on price adjustment for the main imported materials (fuel, bitumen and steel) and cost of construction equipment\. Other modifications in the original design also led to increases in quantities of materials\. For example on the Assosa-Sherkole (Blue Nile) the original cost of the contract went from US$22\.62 to US$36\.30\. A total of US$16 million was the result of increased quantities beyond the original estimates\. 8\. FIDIC conditions of contract in keeping with most other conditions of contract allow for price adjustment at the time of tender\. Price volatility of construction materials and supplies such as asphalt, fuel, cement and steel can often result in significant problems for contractors in preparing realistic bids\. Prospective bidders may find it difficult to obtain firm price quotes from material suppliers for the duration of projects which are typically two to three years long\. To hedge these risks prospective bidders may be forced into price speculation and inflated bid prices to protect against possible price increases\. Price adjustment provisions allow clients to take on some of these risks associated with price volatility of major materials often resulting in lower bids\. 9\. In the case of APL2 most projects experienced major changes in design and delays of up to three years\. Hence the impact of price adjustment was significant and greatly contributed to the cost increases\. A total of US$168 million of the final cost of APL2 (57 percent of the original contract price) was the result of price adjustments on the various contracts\. These are legitimate payments to contractors which are included in contract documentation\. The only way to alleviate the impact of price adjustment is to control the number of client initiated changes to the original scope of the project and control the schedule parameters to ensure project delays are not significant\. Uncharacteristically, the claims associated with extension of time as a result of the design changes were not significant (less than 2 percent)\. 10\. A detailed case study of the Shire-Adiabun road which was visited during the ICR mission provides further details to elaborate on the reasons for the cost increases on a specific project to illustrate the issues highlighted above\. 28  Detailed Case Study - Shire-Adiabun Project Summary Project Description 11\. The Shire – Adiabun road is located in the northwestern part of Ethiopia and is one of the oldest trunk roads in the Country\. It is part of the Adigrat – Adwa – Shire road that connects the regional states of Amharic and Tigray\. It also provides access to Ethiopia’s neighbors\. The mountainous terrain, which the road traverses, makes transportation difficult during the wet season\. The project objective was to upgrade the existing gravel road to an asphalt concrete surface\. 12\. At project appraisal the road consisted of gravel base 5\.0 - 7\.0 m wide and approximately 150 mm thick, with 0\.5 m to 1\.0 m earthen shoulder\. The project road was designed as an upgraded 7\.0 m carriage way asphalt concrete (AC) surface with 1\.5 m gravel shoulder in plain and 0\.5 m to 1\.0 m shoulder in hilly terrain\. The project preparation was based on an old design which was reviewed by another design consultant in January 1998 as part of APL1\. The project package was eventually funded under APL2\. As shown in Table 2\.3 below, the project experienced cost overruns and variations\. The cost at appraisal was 91 percent lower than the final contract award price and final project cost as at June 30, 2012 was 124 percent more than the contract price\. Moreover the project was delivered 2 years later than anticipated\. The aim of this case study is to provide in-depth consideration of the reasons for this outcome and to illustrate the challenges experienced by all the projects under APL2\. Table 2\.3 - Basic Project Data Project Cost At appraisal (US$ Million) 25\.46 Project Cost at Contract award (US$ Million) 48\.52 Project Cost at Completion (US$ Million) 108\.85 Type of Contract Unit Rate Contract/Re-measurement type ETB – 30 percent [covered by GOE] Currencies & Proportion of Payment EURO – 70 percent [Covered by IDA] Length of Project Road 91\.8 km Date of Commencement 20th August 2007 Original Contract Period 1,095 calendar days Original completion date 19th August 2010 Extension of Time 682 calendar days Final Completion date 30th June 2012 Reasons for Variation Orders and Cost Overruns • Design and construction of the Axum By-pass - The project road traverses a region with the historical town of Axum which is a registered UNESCO World Heritage site due to its archeological and historical value\. The design review included an outline 29  description for protecting the archeologically sensitive areas from possible damages during construction\. The decision to introduce a by-pass to the town was made at the procurement stage of the works, and it was indicated that design and construction of the bypass for Axum town would be undertaken during the construction phase\. This was also indicated in the Contract Documents (addendum-2 of the bid documents and Volume-IV: cross section drawings); it was stipulated that the detail design of the alignment on the bypass would be carried out by the Supervision Consultant\. Although the contract agreement states that provisional quantities are included for Axum by pass in the original design, it was noted during implementation that no quantities for the bypass were actually included in the original Bills of Quantities\. Consequently, the Supervising Engineer had to quantify the works and estimate the costs\. In the end 6\.59 km long bypass with 7 m wide double carriageway (2 m wide Central Island and 4 m walkway on both sides) and pipe side drains were designed\. The cost of civil works on this bypass is US$11\.86 million\. • Widening of carriageway in town sections – During construction local residents in 5 towns along the project roads and their respective administrations requested for town sections to be widened in Shire, Selklaka, Wukromaray, Adiabun and Axum\. The supervising consultant therefore recommended variation orders\. See summary in Table 2\.4 below\. Of course the obvious question is why this was not carried out during project design\. Consultation with local residents and completed engineering designs would have captured the need for widening in town sections and the extent of such widening\. Thus averting the need for variation orders and associated disruptions to project schedule\. Table 2\.4 – Summary of Variation Orders for widening carriageway in town sections along Shire-Adiabun Road Cost of Town Description variation (US$) Provision of 4\.7 km long and 10\.5 m wide double Shire carriageway with 2 m central island and 4 m wide walkway 6\.77 million on both side and provision of pipe side drains Provision of 2\.8 km long 14 m wide double carriageway Adiabun 2\.73 million with 2 m wide median and 4 m wide walkway on both sides Provision of 1\.92 km long and 12 m wide carriageway with Seleklaka 1\.5 m wide walkway on both sides and provision of 1\.92 million masonry U-drains Provision of 2\.0 km long and 12 m wide carriageway with Wukromaray 1\.5 m wide walkway on both sides and provision of 2\.31 million masonry U-drains 30  Figure 2\.3 - Widened Town Section in Seleklaka New Side walk Central Island Wide Carriageway • Other changes in engineering designs - From the start of the project, the dated designs resulted in various changes and modifications that affected the progress of work and had direct and indirect impacts on project costs (see figure below)\. These include:  Wrong survey data and non-existent bench marks\. The entire project road had to be re-surveyed since many of the benchmarks in project documents were either erroneous or non-existent\. This affected the contractors progress and added to project costs\.  Drainage structures – several culverts and bridges had to be redesigned as the engineering designs supplied to the contractor missed out over 100 culverts and 18 bridges\.  Wrong alignments – in several locations the horizontal and vertical road geometry had to be redesigned with impacts on quantities on cuts and fill sections and hard/soft excavations\.  Treatment of road bed – further investigations were needed to establish accurate extents and treatment of areas with expansive soils\.  Extent of right of way in road alignment\.  Design for safety in accident black spots and mountainous road sections\. 31  Figure 2\.4 – Realignment for safety More cutting of slope than anticipated Figure 2\.5 – Wrong alignment in project design drawings that had to be changed during construction Old New alignment alignment Stone pitching in newly Figure 2\.6 – constructed drains washed by Drainage problems rain due to inadequate design require long term solutions based on detailed hydrological analysis and design 32 Impact of changes on project costs Table 2\.5 – Summary of Project Costs BILL NO DETAILS ETB US$ General Provisions 40,725,154\.32 1 4,605,771\.68 Earthworks, Subbase, Base and Shoulders 161,965,743\.00 2 18,317,358\.01 Bituminous Construction 120,988,192\.00 3 13,683,041\.78 Concrete, Steel and Structures 30,859,110\.84 4 3,489,981\.10 Ancillary Works 26,773,722\.43 5 3,027,948\.07 6 Environmental Works 4,091,697\.58 462,746\.55 7 Labor 322,400\.00 36,461\.51 8 Materials 3,609,606\.00 408,224\.88 9 Equipment 753,800\.00 85,250\.28 Contingency 38,898,942\.62 4,399,238\.04 Contract Price 428,988,368\.79 48,516,021\.89 Variation Orders 226,653,976\.80 25,633,210\.83 Reconciliation after Remeasurement (65,672,209\.59) (7,427,134\.60) Total works 589,970,136\.00 66,722,098\.12 Total Price Adjustment 321,808,871\.51 36,394,661\.00 Change in Legislation after Contract 13,727,372\.25 1,552,483\.80 Interest on Late Payment 3,209,823\.14 363,011\.82 Material Advance 9,101,834\.25 1,029,363\.08 Deduction in Overtime (356,775\.81) (40,349\.21) Total current project cost 937,461,261\.34 106,021,268\.61 Other Quantities Estimated in Final Certificate 25,000,000\.00 2,827,350\.66 Current Project Cost 962,461,261\.34 108,848,619\.27 33 Status of the Project at ICR Mission 13\. Following the issuance of the variation order No\. 1 (modification of the town section design of Shire, Seleklaka, Wukromaray, Adiabun and construction of Axum by pass) the Contractor has been granted an additional extension of time (682 Calendar days) which revised the contract completion date of the project to June 30, 2012\. The contractor has now been awarded certificate of substantial completion\. In accordance with the Contract Agreement, the Contractor has provided assurance to finalize outstanding project works before December 30, 2012\. The Outstanding works include:  Rectification of defective asphalt works  Junction road construction in Seleklaka and Wukromaray towns  Protection Works installation  Remaining type A and B side ditches construction  Road Marking and guardrail installation  Additional culvert provision at two locations  Shoulder treatment Critical Review of Lessons from the Shire-Adiabun Case Study 14\. The detailed case study of Shire-Adiabun highlights the impact of decisions at the early stages of project preparation on the final outcome of a project\. The need to upgrade this vital link was indisputable from the start of the RSDP\. The Shire Adigrat Federal road is vital for the economy of the region and the Nation as it provides connections for the regions of Tigray and Amhara\. It also completes the North-South circle to the Capital Addis Ababa from both the Eastern and Western parts of the country\. The roads along this circle are a priority for the GoE and the final sections are under construction\. Hence it was fitting for the Shire-Adiabun road to be included as part of World Bank support to the RSDP\. The project is substantially completed and will serve the national interest and the aspirations of the GoE\. Nevertheless, the road has been delivered at a high cost\. Some of the reasons for the cost increase can be attributed to factors outside the control of any party that participated in the identification, conception and implementation of the project\. However, a significant portion of these costs could have been averted by better engineering design and project management\. In this respect Shire-Adiabun road project provides vital lessons for future schemes\. • Realistic/market based cost estimates at appraisal and the tender process – the estimated cost of the Shire-Adiabun road at appraisal was US$25\.46 million\. A review of project documentation reveals that the estimate was based on designs carried out in 1997 – approximately 10 years before the project went out to tender\. A design review was carried out in 2003, but the terms of reference where limited\. As a result no investigations were carried out with regards to road geometry, hydrology, survey data, soil investigations, drainage structures, etc\. Unsurprisingly, bids from contractors were 90-200 percent higher than the client’s cost estimate\. This should have been a warning signal that the client’s cost estimates were grossly inadequate and should have prompted cancellation of the tender process and redesign of the 34  entire project; in spite of the political pressures to deliver the project\. In the end the lowest bid was US$48\.52 million\. • Detailed Engineering design and the construction phase – fundamentally the root cause of the unrealistic estimates would have a more significant impact during the construction phase\. As illustrated above the flawed designs had a detrimental impact on the project – it was delayed by 2 years and the final cost is approximately US$108\.85 million\. This translates to more than 300 percent above the original estimate\. The variation orders worth US$25 million could have been avoided if the design involved proper consultation with the towns and synchronization with the urban master plans which were already in the preliminary stages of development\. It was known from the start that a bypass round the heritage sites and town of Axum would have to be designed but this was not undertaken\. Moreover, during tender, contractors were not even asked to offer a priced bid for the by-pass\. Many of the other design changes were avoidable\. The changes and associated delays attracted price adjustments worth US$36\.4 million\. It was fortunate that the contractor was not overly claims oriented and in the end withdrew several claims in exchange for extension of time\. The basic lesson here is that having the engineering design advanced to a point were limited changes are required and information supplied to contractors is reliable is core to the projects outcome\. More complete and reliable engineering designs also reduce the risk of disputes and claims during the construction phase\. • Whole life performance of road infrastructure – From the site visit it was also evident that many of the solutions proposed during construction did not benefit from design based on analysis of whole life considerations\. For example, the drains in the urban sections which were part of the variation orders have been completed covered with prefabricated slabs\. Some of them have already been filled with debris from recent rains\. It is unclear how these drains will be desilted and maintained after demobilization of the contractor\. In several sections of the road, the choices of drainage design and road furniture also leaves questions about long term maintenance\. 35  Annex 3\. Economic and Financial Analysis Economic and Financial Analysis at Appraisal a) Economic Analysis 1\. For the identified national and regional road projects, the PAD explains that specific traffic counts and projections, as well as preliminary engineering designs were prepared to appraise their economic feasibility\. The feasibility studies of the four main roads were undertaken in November 1999 as part of the first phase of RSDP\. The feasibility studies for the rural roads under component 2 were carried out in September 2001\. These studies on the economic viability of the roads were updated in December 2003\. A discount rate of 10\.23 percent has been used throughout the analysis\. Assumptions, Input Data and Methodology 2\. Traffic Levels: Table 3\.1 below shows the Average Annual Daily Traffic for the base year, for the project roads\. Table 3\.1 - Average Annual Daily Traffic in PAD –Base year (2002) Road link Length Car L/R S/Bus L/Bus S/T M/T H/T T/T Total (km) Assela-Dodola/ 316 2 229 150 148 193 163 197 150 1252 Shashemene-Goba GobGob-Woldiya 194 0 180 32 57 91 80 174 222 836 Adwa/Adiabun-Shire 83 0 58 40 30 29 54 41 69 303 3\. Traffic Projections: According to the Appraisal documentation, traffic projections on project roads took into account past and future trends in GDP growth, population increase, agricultural activities, tourism, average annual daily traffic, vehicle fleet and fuel consumption\. These are among the major factors influencing traffic growth rates\. Two sets of growth rates were estimated for 2003-2013 and 2014-2024\. 4\. It was assumed that the base traffic would grow at fairly high rates but eventually tapper off as the economy stabilizes to steady growth\. 5\. Costs: Construction was assumed to start in 2005 and last for three years, thus the roads would be open to traffic in 2008\. An analysis period of 20 years was assumed\. 6\. Methodology: The HDM 3 model (in HDM Manager) was used for the analysis\. The proposed option was compared with a “do minimumâ€? case\. The “do minimum caseâ€? assumes that a minimum amount of maintenance of the existing road will be carried out\. The economic analysis is based on benefits to road traffic (in terms of savings in VOCs & road maintenance costs) compared with the costs of rehabilitation/upgrading and 36 maintenance\. Discounted benefits are then compared to discounted costs to produce measures of worth\. Sensitivity analysis was done taking into account three scenarios namely a 20 percent increase in costs, a 20 percent decrease in benefits and the worst case (costs +20 percent & benefits -20 percent)\. 7\. Benefits: The proposed road rehabilitation/upgrading would have essential benefits to the nation’s economy as well as to the environment including: • Reduced vehicle operating cost (e\.g\. fuel consumption, maintenance cost) • Reduced travel time • Increased road safety • Reduced noise and air pollution and • Area development\. b) Financial Analysis 8\. The financial costs of construction and maintenance were estimated based on the engineer’s client estimates and converted to economic costs by applying a conversion factor of 0\.83\. Economic and Financial Analysis at End of project 9\. During the ICR mission preliminary economic and financial analysis was carried out in accordance with the framework established for M&E\. The Borrower provided input data for economic and financial analysis\. Further analysis was undertaken by the World Bank expert\. Normal traffic was based on ERAs most recent classified traffic count carried out at the end of 2011\. 10\. The appraisal evaluation was done for rehabilitation and upgrading of four feeder roads: (i) Magna-Mechara, (ii) Gob Gob–Weldiya (iii) Adwa/Adiabun-Shire, and (iv) Assela-Goba/Shashemene-Dodola, and the construction of the Assosa-Sherkole-Goba road to gravel standard\. The ex-post economic evaluation was done for the rehabilitation and upgrading of three feeder roads for which actual traffic data is available\. Table 3\.2 below shows the appraisal costs and Economic Rate of Return (ERR) for the roads for which an ex-post economic evaluation was done\. The costs are given on ETB 2004 prices\. Table 3\.2 - Appraisal Estimated Costs and Economic Rate of Return Appraisal Appraisal Appraisal Length Cost Cost ERR Road (km) (ETB million) (ETB million/km) (%) Assela-Dodola-Goba, Shasemene- Dodola 318 879\.2 2\.765 26\.7 Gobgob-Weldiya 194 498\.1 2\.568 23\.8 Shire-Adiabun 83 282\.7 3\.406 30\.2 2004 Prices 37 11\. According to the PAD, the three project roads were 6\.0 meter width gravel roads in poor condition with daily traffic ranging from 303 to 1,252 vehicles per day in 2002\. Table 3\.3 below shows the project roads characteristics before the improvement works\. The roads were upgraded to an asphalt concrete standard with a 50 mm asphalt concrete surface layer over a 25 mm base and 200 mm sub-base with a width of 7\.0 meters\. Table 3\.3 - Project Roads Characteristics 2002 Width Surface Roughness Traffic Road (m) Type (IRI, m/km) (AADT) Assela-Dodola-Goba, Shasemene-Dodola 6 Gravel 17 1,252 Gobgob-Weldiya 6 Gravel 20 836 Shire-Adiabun 6 Gravel 18 303 12\. Table 3\.4 below shows the current daily traffic on the project roads and the traffic composition\. The roads carry a high percentage of buses and trucks, with around 85 percent of the total traffic being composed of buses and trucks\. During the period 2002- 2012, the daily traffic on the first two roads decreased 54 and 24 percent respectively, while the daily traffic on the Shire-Adiabun road increased 109 percent\. Table 3\.4 - 2012 Daily Traffic and Traffic Composition 2012 Small Large Small Medium Heavy Articulated Traffic Cars Pickups Bus Bus Truck Truck Truck Truck Road (AADT) (%) (%) (%) (%) (%) (%) (%) (%) Assela-Dodola- 581 1% 15% 19% 9% 14% 17% 16% 8% Goba, Shasemene- Dodola Gobgob-Weldiya 632 0% 17% 24% 6% 9% 14% 12% 17% Shire-Adiabun 633 0% 14% 27% 9% 15% 17% 15% 3% 13\. Table 3\.5 below shows the contract costs and the actual costs, in current prices\. The contracts were signed during the 2006 to 2007 period and the road works were executed during the 2006 to 2012 period\. Table 3\.5 - Contract and Actual Costs Contract Contract Actual Actual Cost Year Cost Cost Period Road (ETB million) (year) (ETB million) (years) Assela-Dodola-Goba, 949 2006 2068 2006-2012 Shasemene-Dodola Gobgob-Weldiya 598 2006 1131 2006-2012 Shire-Adiabun 429 2007 962 2007-2012 38 14\. To compare the appraisal, contract and actual costs, table 3\.6 below shows these costs in 2011 prices, computed using the Ethiopian price index\. The actual costs for the first two roads are similar than the appraisal estimates, but the actual cost for the Shire- Adiabun road is 36 higher than the appraisal estimate\. Table 3\.6 - Appraisal, Contract and Actual Costs Appraisal Contract Actual Actual per Cost Cost Cost Appraisal Road (ETB million) (ETB million) (ETB million) (ratio) Assela-Dodola-Goba, 2,919 2,516 2,978 1\.02 Shasemene-Dodola Gobgob-Weldiya 1,654 1,584 1,628 0\.98 Shire-Adiabun 939 1,137 1,280 1\.36 2011 Prices 15\. The ex-post evaluation was done first by replicating the appraisal economic evaluation results using the Roads Economic Decision Model (RED) and then updating the evaluation with: (i) actual upgrading costs and (i) actual annual traffic growth from 2002 to 2012\. Table 3\.7 below shows the ex-post Economic Rate of Return (ERR) for each road and the appraisal estimates\. The ex-post ERR for the first two roads decreased to 15\.7 and 17\.2 percent respectively due to the lower actual traffic growth rate and relatively high construction costs\. The ex-post ERR of the Shire-Adiabun road decreased to 27\.8 percent because the increase in the upgrading costs was not compensated by the increase in the annual traffic growth rate\. All roads have an ex-post ERR above 10\.23 percent threshold for infrastructure projects in Ethiopia\. Table 3\.7 - Ex-Post Economic Evaluation Results Appraisal Ex-Post ERR ERR Road (%) (%) Assela-Dodola-Goba, Shasemene-Dodola 26\.7 15\.7 Gobgob-Weldiya 23\.8 17\.2 Shire-Adiabun 30\.2 27\.8 39  Annex 4 - Bank Lending and Implementation Support/Supervision Processes a) Task Team Members Names Title Unit Bernard Aritua Transport Specialist (ICR TTL) AFTTR Petrus Benjamin Gericke Lead Transport Specialist AFTTR Haileyesus Adamtei Highway Engineer AFTTR Fiona J Collin Senior Transport Engineer AFTTR Tesfamichael Nahusenay Mitiku Senior Transport Engineer AFTTR Farida Khan Operations Analyst AFTTR Yoshimichi Kawasumi Consultant AFTTR Shalonda Robinson Program Assistant AFTTR Lemlem Workalemahu Program Assistant AFCE3 Asferachew Abate Abebe Environment Specialist AFTEN Tesfaye Ayele Senior Procurement Specialist AFTPE Lillian Namutebi Financial Management ETC AFTME Yasmin Tayyab Senior Social Development Specialist AFTCS Yeshi Gizaw Program Assistant AFCE3 Negede Lewi Senior Highway Engineer AFTTR Mesfin Wodajo Jijo Senior Transport Specialist SASDT Richard Martin Humphreys Senior Transport Economist AFTTR Antoine Lema Senior Social Development Specialist AFTCS Desta Solomon ET Consultant AFTCS 40 b) Staff Time and Costs Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No\. of Staff Weeks US$ Lending (P082998) FY03 0\.65 1,390\.34 FY04 25\.99 125,553\.46 FY05 5\.81 15,812\.74 Lending (P117644) FY10 17\.12 81,971\.32 Total Lending 49\.57 224,727\.86 Supervision/ICR FY05 14\.55 36,096\.50 FY06* 31\.28 67,611\.28 FY07 32\.86 99,333\.80 FY08 32\.90 146,275\.92 FY09 20\.45 67,360\.00 FY10 32\.84 154,228\.37 FY11 24\.17 92,186\.88 FY12 24\.10 80,044\.08 FY13 0\.63 2,823\.00 Total Supervision/ICR 213\.78 745,959\.83 *Includes time spent in preparing the First Additional Financing\. 41  Annex 5\. Summary of Borrower’s ICR and/or Comments on Draft ICR Page 16, b) 1\. It is known that APL2 road projects were completed with considerably higher cost than anticipated\. Other than the changes in Design, this high costs were mainly due to the turbulent of external environment with commodity price surges, global recession, relatively high inflation, shortage of construction materials which forced to import from outside\. 2\. Given the above situation, it is not clear how the report concluded that the most significant factors for high cost were within the control of ERA as a client\. Page 39, paragraph 15 3\. The report concluded that the decrease in ERR for Assela-Dodola-Goba, Shashamane-Dodola and Gobgob-Gashena to 15\.7 percent and 17\.2 percent respectively are due to lower actual traffic growth rate and high construction cost\. However, the Bank knows that because of the low traffic forecast assumed in previous studies for these road projects, a change in the pavement wearing course from DBST to AC were proposed\. Therefore, the main reason for decrease in ERR values from appraisal estimates are mainly due to the increase in costs and not low actual traffic growth rate\. 42  Annex 6\. Comments of Co financiers and Other Partners/Stakeholders 1) Comments from EU 1\. Thank you for consulting the European Union on the Implementation Completion and Results Report (your letter WB/CD/330/11/08/2012)\. 2\. We found many interesting information and we'll take in account the main conclusions in the formulation of our Third Road Sector Policy Support Program (SPSP 3); we would like also to discuss about it in the next Transport Sector Working Group, which should take place at the end of November\. 3\. I would like to add some specific comments on some points raised in your report: Design and cost estimation Versus Works Contracts 4\. This has been an issue since a long time\. Almost each and every contract have had a cost and time overrun mainly because of design issues and associated claims (cost and time)\. ERA had started some time ago a performance appraisal mechanism of both Consultants and Contractors for its government financed projects so as to enable itself devise/formulate ways in decision making during tendering and implementation phases\. But this was limited to local contractors and consultants\. And its effectiveness to date is not known\. So it is good to know how far this mechanism is adopted in the Bank's or other donor's procedures as there are obviously limitations to do that\. 5\. Moreover, it appears that since a couple years back the market is dominated by a limited number of contractors (mainly Chinese) who are well established here in the country and mainly government controlled corporations with subsidies from their government (financial support) and with high comparative advantage in tendering\. There is also the issue of collusion on offers to influence/control tenders\. Capacity of ERA in Design and tendering 6\. Since recent years ERA follows a procedure where by designs are checked and verified on site by its own staff but the capacity to mobilise its resources to each and every design contract is limited\. High turnover of staff 7\. This has been an issue raised by most donors for decades in almost every annual stakeholder's meeting but ERA's hand is tied due to the government regulations; no matter how much it tried to improve its salaries to its staff and organisational structure it is very clear that it could not reach at a comparable level/pace as the private sector\. This issue will definitely persist for some time to come\. In one of the stakeholders meeting ERA director General has clearly stated that they have no other choice but simply continue recruiting new engineers when the experienced ones leave\. 43 2) Comments from DfID A\. On the Relevance of the Adaptable Programme Loan (APL2) Project 1\. We believe that supporting the road sector is key to growth and poverty reduction in Ethiopia and the Adaptable Programme Loan (APL2) of the World Bank has been contributing towards this end\. B\. The ERTTP Project and its completion scoring 2\. As highlighted in the APL2 Implementation Completion and Results report, DFID has been supporting the Ethiopian Rural Travel and Transport Programme (ERTTP) – component 3 under the APL2 programme\. 3\. The project was very instrumental in successfully demonstrating the impacts that could be achieved by combining road provision with non-transport projects to improve access and mobility\. It has also enabled the development and dissemination of Low Volume Roads Design Manual which would be useful for road works financed by other interventions such as the Productive Safety Nets Programme (PSNP)\. 4\. The project was successfully completed and project completion report was prepared by independent Consultants (see the attached)\. 5\. ERA has demonstrated commitment and leadership for the effective implementation of the programme\. 6\. So, based on the above considerations the consultancy team put the overall rating of the project as “satisfactoryâ€?\. C\. On the APL2 Implementation Completion and Results Report (ICR) 7\. The report has clearly documented the project development objectives, key factors affecting implementation, assessment at outcome level, etc\. That is appreciated\. 8\. It would have been great if the section analyzing the performance of the project component by component clearly detailed the current status of the projects (what has been achieved) compared to what is planned\. For example, for the ERTTP component, the report indicated what is expected under this project and does not show what has been achieved\. This would help enhance our understanding on which component work better than others and what should be done to enhance performance in less performing components\. 9\. We found the lesson learning a bit thin and could be expanded\. It might be good if the lesson learning include some aspect of project design, planning, construction, maintenance, monitoring and reporting, etc\. 44  Annex 7\. List of Supporting Documents Bank Documents  Project Appraisal Document – APL2 Aug 2004  Project Appraisal Document – APL3 May 2007  Assessment of 14 years Performance Road Sector Development Program, Nov 2011  ICR Road Sector Development Phase 1 Project (APL1), Jun 2010  APL2 Implementation Status and Results Reports – ISR Series 2-16  APL2 proposed Additional Financing Project Paper – US$87\.3 million  APL2 second Additional Financing Project Paper – US$100 million  Minutes of Decision meeting for APL2 May 2004 and Comments from Reviewers  Ethiopia - Country Assistance Strategy, 2008 – 2011  Interim Country Assistance Strategy for Ethiopia, 2006 - 2007  Country Assistance Strategy (CAS) for Ethiopia, 2003 - 2005  Quarterly progress report on APL2 submitted by ERA, Jan 2012 Other  Growth and Transformation Plan (2010/2015) – Federal Democratic Republic of Ethiopia, Sep 2010  Joint IDA-IMF Staff Advisory Note on the Growth and Transformation Plan, Jul 2011  Sustainable Development and Poverty Reduction Program (SDPRP)  Plan for Accelerated and Sustained Development to End Poverty (PASDEP)  Morris, P\. W\. G\. & Jamieson, A\., \. (2006) Linking Corporate Strategy to Project Strategy via Portfolio and Program Management\. International Journal of Project Management, 25, 57-65\.  Smith N J Managing Risk in Construction Projects Blackwell Publishing 2006  Pellegrinelli, S (2010) What’s in a name: Project or Programme? International Journal of Project Management, 29, 232-240\.  Winter, M\. & Szczepanek, T\. (2008) Projects and programmes as value creation processes: A new perspective and some practical implications\. International Journal of Project Management, 26, 95-103\.  Reiss, G\. (1996) Programme management demystified : managing multiple projects successfully, London ; New York, E & FN Spon,\. 45  32°E 36°E 40°E 42°E 44°E To ETHIOPIA ERITREA Keren R SUDAN REP\. ROAD SECTOR DEVELOPMENT PHASE II e OF PROJECT (APL2) IN SUPPORT OF THE d ETHIOPIA To Humera Adiabun Adigrat YEMEN SECOND PHASE OF THE ROAD SECTOR S Gedaref ek Shire Adwa eze T 14°N Axum 14°N DEVELOPMENT PROGRAM D e T I G R AY Shire-Adiabun en a Mekele ak Ras Dashen Terara (4620 m) PROJECT ROADS Atb il ara CITIES AND TOWNS Gonder REGION CAPITALS De AMHARA A FA R NATIONAL CAPITAL Lake se Dinder Tana 12°N 12°N RIVERS Gobgob Weldiya rt Bahir Dar Debra Tabor DJIB DJIBOUTI Gulf MAIN ROADS Geshena Asayita REGION BOUNDARIES ue of Bl Guba Nile Dese Aden INTERNATIONAL BOUNDARIES Abay Asosa-Sherkole-Guba Gobgob-Geshena-Weldiya Awa Debre BENSHANGUL Markos 46°E 48°E er sh ng Ethiopian Ha Asosa 10°N 10°N Plateau DIRE DAWA Dire Dawa Didesa To Harer Hargeysa Gimbi Nekemte ADDIS ABABA ADDIS HARARI Jijiga ABABA Awash Magna-Mechara SOMALIA Mechara Nazret R Baro Magna Aware am Welkite Degeh Bur Gore O R O M I YA is Gambela 8°N Domo 8°N GAMBELA Asela-Dodola y Asela e Ak SOUTH abe Shebele l l o Jima Hosaina O g a d e n W bo a Bonga SUDAN SOMALI V Shashemene Goba Warder Sodo Awasa Dodola Kebri Dehar f t Wendo Dodola-Goba W Imi R i SOUTHERN NATIONS, ab e Ge t 6°N NATIONALITES sr o Wa be Shebe 6°N t le AND PEOPLES e a 0 50 100 150 200 Kilometers Genale G r Negele 0 50 100 150 Miles Ferfer To Yavello Dawa Mogadishu Dolo Odo This map was produced by the Map Design Unit of The World Bank\. 4°N Lake Mega The boundaries, colors, denominations and any other information 4°N shown on this map do not imply, on the part of The World Bank Turkana AUGUST 2012 Group, any judgment on the legal status of any territory, or any IBRD 39502 endorsement or acceptance of such boundaries\. INDIAN UGANDA KENYA To Moyale To To OCEAN 32°E 34°E 36°E 38°E 40°E Wajir 42°E 44°E 46°E 48°E Marsabit Mogadishu

REVIEW

P003305

 ICRR 10097 Report Number : ICRR10097 ICR Review Operations Evaluation Department 1\. Project Data : OEDID: OEDID : L3063 Project ID : P003305 Project Name : Agricultural Credit and Export Promotion Project Country : Zimbabwe Sector : Agricultural Credit L/C Number : L3063-ZW Partners involved : IFAD, BADEA, Japan Prepared by : Madhur Gautam, OEDST Reviewed by : Jock Anderson Group Manager : Roger Slade Date Posted : 06/28/1998 2\. Project Objectives, Financing, Costs and Components : Objectives : To increase the production of food, cash and export crops among smallholders and, through diversification, increase the output of export and import substitution products by commercial farmers \. Components : (i) agricultural credit for smallholders and commercial farmers; (ii) institutional development of the Agricultural Finance Corporation (AFC); (iii) pilot a group lending scheme; (iv) expansion and improvement of the cotton processing and storage facilities; (v) strengthening of horticultural post -harvest research; (vi) sub-sector studies on horticultural export marketing and cotton \. During implementation, a further component was added, the cotton input credit scheme\. Project costs and financing : Appraisal estimate US$116\.9 million; actual US$ 100\.3 million; IBRD loan US$ 35\.9 million\. 3\. Achievement of Relevant Objectives : The project failed to reach its major objectives of increasing access to credit for smallholders or to make AFC sustainable\. AFC's portfolio quality deteriorated, largely as a result of government interference in AFC operations, despite assurances given at appraisal to follow sound policies \. The project, however, did help in AFC's institutional development efforts through staff training and upgrading its management information systems \. Towards the end, the project provided support to the restructuring of AFC in an effort to convert it into a viable commercial bank \. The group lending pilot scheme experienced the same problems as AFC's credit operations, with a declining portfolio and high arrears\. On the other hand, the autonomously run cotton inputs credit scheme fared much better \. Following the structural adjustment program, the project helped in the development of the cotton sub -sector\. It assisted the Cotton Marketing Board transform into a commercial company and helped improve market access (and incomes) for smallholder farmers\. The outcome of the horticultural component cannot be assessed as the physical facilities provided by the project are not operational as yet \. The project did provide critical technical assistance and staff training, and successfully piloted a field trials program with smallholder farmers \. 4\. Significant Achievements : The project played a significant role in the liberalization of the cotton sub -sector, ending the monopoly of the Cotton Marketing Board and commercializing its activities \. The developments have stimulated cotton production by smallholders as the large farmers have diversified out of cotton into higher value export crops, both of which were assisted by the project\. On the credit front, the project contributed to AFC's institutional development and restructuring plans\. 5\. Significant Shortcomings : The project failed to encourage financial discipline among smallholder borrowers and it failed to reverse, or even stop, the decline in AFC's outreach and increasing smallholder access to formal credit, a major project objective \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Marginally The ICR rates outcome as marginally Unsatisfactory unsatisfactory\. Institutional Dev \.: Partial Modest Same rating\. Sustainability : Uncertain Uncertain Bank Performance : Satisfactory Satisfactory The ICR rating is marginally satisfactory \. OED agrees, but does not have the option of a marginal qualifier\. Borrower Perf \.: Satisfactory Unsatisfactory The ICR rating is marginally satisfactory \. OED disagrees on the grounds that borrower policies and actions adversely affected the main component of the project - credit operations of AFC - despite assurances given by the government to the contrary at appraisal \. Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : 1\. The need to appropriately sequence project interventions, particularly in relation to policy reforms and institutional capacity building before implementing major expansion programs \. 2\. Familiar lessons on agricultural credit : need to ensure autonomy of financial institutions to create a sustainable financial institution; diversification of client base; and the need for cautious expansion of group lending programs if they are to succeed\. 8\. Audit Recommended? Yes No Why? The project offers potentially important lessons for rural finance operations by identifying the factors that led the government to realize the failure of its past credit policies, as well as lessons from the transition of an unsustainable traditional credit institution towards a viable commercial entity \. 9\. Comments on Quality of ICR :

REVIEW

P096711

 ICRR 13693 Report Number : ICRR13693 IEG ICR Review Independent Evaluation Group 1\. Project Data : Date Posted : 12/22/2011 Country : Serbia Is this Review for a Programmatic Series? Yes No How many operations were planned for the 3 series? How many were approved? 2 Series ID : S115958 First Project ID : P096711 Appraisal Actual Project Name : Programmatic Private US$M ): Project Costs (US$M): 50 50 Financial Sector Development L/C Number : L7651 Loan/ Loan US$M): /Credit (US$M ): 50 50 Sector Board : Financial and Private US$M): Cofinancing (US$M ): Sector Development Cofinanciers : Board Approval Date : 03/05/2009 Closing Date : 03/31/2010 03/31/2010 Sector (s): General industry and trade sector (63%); Banking (13%); Central government administration (12%); Non-compulsory pensions insurance and contractual savings (12%) Theme (s): State enterprise/bank restructuring and privatization (63% - P); Regulation and competition policy (25%); Public expenditure; financial management and procurement (12%) Second Project ID :P115958 Appraisal Actual Project Name : Programmatic Private Project Costs (US$M): US$M ): 100 100 Financial Development Policy Loan 2 L/C Number : Loan/ Loan US$M): /Credit (US$M ): 100 100 Sector Board : Financial and Private US$M): Cofinancing (US$M ): Sector Development Board Approval Date : 11/17/2009 Cofinancers : Closing Date : 12/31/2010 12/31/2010 Sector (s): General finance sector (30%), General industry and trade sector (30%), Central government administration (20%), Capital markets (10%), General energy sector (10%) Theme (s): State enterprise/bank restructuring and privatization (34% - P), Other financial and private sector development (33% - P), Regulation and competition policy (33% - P) Evaluator : Panel Reviewer : ICR Review Group : Coordinator : Michael R\. Lav Kris Hallberg Ismail Arslan IEGPS2 2\. Project Objectives and Components: a\. Objectives: The program document (PD) for Private and Financial Development Policy Loan (PFDPL) I (see Section IV, paragraph 59) cites the following objectives : "to enhance the business environment, continue strengthening fiscal discipline in the enterprise and energy sectors and build a more efficient and stable financial sector by putting in place a well- targeted set of key irreversible structural reform measures through the above three pillars"\.  The PD For PFDPL II maintains almost all of these objectives except for the third pillar, where it focusses on stability in the financial sector but does not mention efficiency, and, under which, enhancing crisis preparedness is an added objective\. See the PD for PFDPL II, Section V, paragraph 77, with more detail in paragraph 78\. The PD for the PFSPBG presents the objectives (see paragraph 120) as" to improve the business environment, strengthen financial discipline in the non -private enterprise sector, and build a stable and more efficient financial sector", The Loan Agreement for PFDPL I specifies the objectives as : (i) enhance the business enabling environment to encourage new private sector investments; (ii) strengthen financial discipline by enforcing hard budget constraints and continued reform of enterprise sector and public utilities; (iii) build a more efficient and stable financial sector through continued restructuring of state holdings in banking and insurance sectors, enhancing crisis preparedness, and encouraging development of the capital markets; and (iv) promote growth and achieve sustainable reductions in poverty \. There is considerable overlap between these objectives and the ones specified in the PDs, except for the addition of a fourth pillar to address growth and poverty reduction as additional objectives\. The Loan Agreement for PFDPL II does not specify the project's objectives but refers to the Government's letter, which includes all of the above -stated objectives\. The mention of growth and poverty reduction in the PFDPL I Loan Agreement's version of the project's objectives is interpreted by this review as a general statement of desired outcomes rather than a specific objective, as neither targets nor monitoring programs for such objectives are specified in the project documents \. Rather, it is a longer-term, CAS-type objective, but is included here to be consistent with the requirement that DPLs be implemented within a satisfactory macro -economic framework\. Therefore, this ICR Review takes the objectives as those stated in the PD for PFDPL I with the modifications introduced for PFDPL II\. b\. If this is a single DPL operation (not part of a series), were the project objectives/ key associated outcome targets revised during implementation? No c\. Policy Areas: Pillar I - Enhancing business environment (i) Further simplification of business entry through the implementation of the single agency approach for business registration (ii) Improving the legal framework for strengthening corporate governance and facilitating business entry and operations (iii) Streamlining regulations of business operations and reducing business compliance costs (iv) Improving the legal and institutional framework for competition (v) Simplifying the process of obtaining construction permits (vi) Improving effectiveness of contracts enforcement Pillar II -- Strengthening Financial Discipline (i) Reduction in direct and indirect subsidies to State -Owned Enterprises, but replaced in PFSPBG by "Improving Financial Discipline" (ii) Privatization, restructuring, and bankruptcy of Socially -Owned Enterprises (iii) Energy Sector Reform (not specified in PGSPBG) (iv) State Audit Institution Pillar III -- Building a more efficient and stable financial system (i) Resolution of state-owned banks (SOBs) and the divestment of financial assets (non-performing loans and equities) and deposit insurance capitalization (ii) Strengthening the insurance sector regulation and resolution regime (iii) Enhancing prudential supervision of the banking sector (I) (iv) Developing Capital Markets (v) Strengthening crisis preparedness, including development of liquidity framework, capital adequacy assessment, bank resolution framework enhancement, and strengthening deposit insurance payout functions d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:  PFDPL I cost US$50 million, and PFDPL II cost US$100 million, financed by IBRD loans in those amounts \. PFDPL I was appraised in September, 2008, approved by the Board on March 5, 2009, became effective and was disbursed on June 24, 2009, and closed on schedule on March 31, 2010\. PFDPL II was appraised in July, 2009, approved by the Board on November 17, 2009, became effective on January 15, 2010, disbursed on January 26, 2010, and closed on schedule on December 31, 2010\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: The Objectives of PFDPLs and PFSPBG were highly relevant \. The objectives addressed major issues faced by the Serb economy in its transition to a well -functioning market economy\. This involved further diminishing the role of state -owned enterprises and banks, reducing subsidies which had favored them and enabled them to compete, despite inefficiencies and at great cost to the economy, in national and world markets, and reducing the business costs of the private sector enterprises by removing state-imposed regulations and requirements that did not meet market needs \. These were all fully consistent with priorities of the Serbia Country Partnership Strategy 2008-2011:"Dynamic Private Sector Led Growth to Ensure Incomes Converge with Europe"\. These reforms, along with the sought -for normalization of relations with creditors, were seen as essential for the broader objective of integration with regional, EU and world markets \. Support for Serbian reforms extended by SIDA, DFID, and other agencies was also important \. Finally, the added emphasis to banking sector and related reforms in the wake of the crisis as reflected in PFDPL II and PFSPBG were entirely appropriate to further insulate Serbia from the ill effects of the world financial crisis \. b\. Relevance of Design: The Design of PFDPL I and II and of the PFSPBG was highly relevant \. A back-loaded programmatic series of loans was a pragmatic way to support implementation of a wide -ranging reform program\. The prior conditions of each loan addressed major reforms in a coherent and well -sequenced series of measures\. The truncation of the series at two rather than three loans, and substituting a guarantee for PFDPL III was highly relevant in addressing the headroom limitation on lending to Serbia, in introducing Serbia to international financial markets as a qualified borrower, and in providing training and technical assistance to Serbia to upgrade its capacity to operate in international capital markets \. 4\. Achievement of Objectives (Efficacy): All of the prior actions, enumerated by pillar below, were completed \. Pillar I - Enhancing business environment - substantial achievement Government programs to date have focused on privatization of state and socially -owned enterprises and strengthening fiscal discipline, but future job creation will depend on the emergence and successful development of a dynamic private sector \. Reforms Supported by Prior Actions: (i) Government of Serbia (GoS) adopted principles for consolidating business registration procedures related to issuance of tax, pension, and social security numbers, (ii) GoS approved strategy for implementation of comprehensive regulatory reviews, (iii) GoS approved new Competition Law and submitted it to Parliament for adoption \. (iv) GoS approved the draft Law on Business Entities, and submitted it to its Parliament (v) GoS has completed a comprehensive review of regulations of business activities and approved the recommendations of that review - 192 out of 196 regulations recommended for abolition were abolished \. (vi) The Registry of Regional Development Measures and Incentives has been established within the Serbian Business Registers Agency These prior actions were coherent and targeted key issues \. They were well-focussed in addressing key objectives of the DPL series\. Performance indicators: Seven of the nine performance indicators were fully achieved : time needed to register a business was reduced from 23 days to 5 days, meeting the target, a unique business identification number was introduced an enhanced legal framework for improved corporate governance was introduced the authority of the Commission for the Protection of Competition was enhanced priorities for regulatory reforms were established as were mechanisms for their implementation, the regulatory compliance costs of doing business were reduced (although the BEEPs indicator specified as a performance indicator was not available and an alternative indicator was used ), and unnecessary regulations were eliminated \. Two performance indicators were not achieved \. Although measures have been implemented which should increase the Doing Business Investor Protection Index (from 5\.3 in 2007 to exceed the OECD average of 6\.0 in 2010) and should decrease the time needed to obtain planning and construction permits (from 635 days in 2008 to the regional average of 425 days), the data do not yet show improvement \. It is uncertain whether more time is needed for improvements to be reflected in the data, or whether the measures were ineffective and, therefore, whether a new approach needs to be devised \. Given the prior measures and the generally satisfactory performance in achieving targets, a rating of substantial achievement is appropriate for this pillar \. Pillar II -- Strengthening Financial Discipline -- modest achievement Reforms supported as prior actions included (i) GoS to offer for sale, or to initiate a search for a strategic partner for the core assets of the two largest recipients of state subsidies, (ii) State Audit Institution (SAI) -- a prior action (bolded in the Policy Matrix) concerning the establishment and development of the State Audit Institution, under which the Budget of the Republic of Serbia has been enacted including a budget allocation for its SAI as a separate line item \. (iii) approval by GoS of new Law on State Aid and its submission to Parliament for adoption, (iv) approval by GoS of new Bankruptcy Law and its submission to Parliament for adoption, and (v) Sale of shares of socially owned enterprises in the Privatization Registry (PR) conducted in accordance with procedures established by the Ministry of Economy and Regional Development (MOERD) (vi) The National Bank of Serbia has completed a diagnostic assessment of all banks operating in Serbia in accordance with the methodology adopted under the Second PFDPL and enforced recapitalization to a capital adequacy ratio of at least 12 percent\. (vii) Parliament has enacted amendments satisfactory to the Bank on the Law on Banks, Law on Bankruptcy and Liquidation of Banks and Insurance Companies, Law on Deposit Insurance and the Law on the Deposit Insurance Agency, and enacted the Law on Budget for 2011 which contains a provision satisfactory to the Bank on the State Guarantee to the Deposit Insurance Agency \. These prior actions were ambitious and wide ranging, but addressed important issues for which progress needed to be made\. Their successful implementation was an important factor in maintaining a rating of "modest achievement" for this pillar\. Performance indicators The record on achieving performance indicators is somewhat weaker for this pillar : • Direct and indirect subsidies (to many of the state-owned enterprises) were not reduced, although with contraction of GDP and the global financial crisis, government was faced with a difficult political situation not foreseen at appraisal\. Under PFSPBG this indicator was changed to establishment of a comprehensive record of state supported measures, including subsidies and grants, which has been done \. Achieved • Privatization, Restructuring and Bankruptcy of socially -owned enterprises: The private sector share in GDP increased to 60 percent, meeting the target, although private sector share in employment only increased to 56 percent, short of the target of 65 percent\. All of the PGSPBG targets for this objective were fully achieved : (i) an improved bankruptcy framework was achieved, leading to an increase in initiation of bankruptcy cases, higher recovery rates, and lower costs and shorter resolution times, (ii) the number of entities with accounts which have been blocked for over 3 years was reduced by 6,600 by the end of 2010, and (iii) the portfolio of companies in the PA restructuring, auctions, and tenders is reduced as bankruptcy procedures were undertaken, all of which were achieved\. Taking these results together, this target was partly achieved \. • There has been no increase in private investment in power generation assets \. While some initiatives are underway, there has been no increase to date \. Not achieved, • Full competition in petroleum products or Government commitment made to a date for full competition \. (This indicator was unusual for its lack of specificity \.) Government has introduced full competition except for one particular type of fuel of lower quality which still enjoys a lower excise tax than any other fuel \. GoS has committed to EC to resolve this issue by May, 2011\. Achieved • Power and gas tariffs were to have increased from covering about 89 percent of costs in 2006 to 100 percent of costs in 2010\. While the target has not been achieved, information received subsequent to the ICR indicates progress with some tariff adjustments and an increased likelihood of achieving the target in the future with pricing decisions now vested in a regulator \. Partly achieved\. • EPS (Serbia's national electric power utility ) and Serbigas were to have improved financially and to be on a path to eliminating fiscal and quasi -fiscal deficits\. The ICR provides Insufficient information, so in keeping with IEG methodology, this is judged "Not Achieved"\. • EPS is operationally more efficient and has been restructured to facilitate private sector participation in the power sector\. Achieved • Establishment and development of the State Audit Institution, the target being that the state audit institution would reach sufficient capacity and be fully operational, and audits of Government accounts for 2007, 2008, and 2009 completed and submitted to Parliament \. This objective is not addressed in the ICR, but is being pursued under the Public Expenditure DPL series and the targets are being achieved \. Achievement under pillar two is notably weaker than achievement under pillars 1 and 3\. The energy sector, and, especially, failure to meet cost recovery targets is important in this consideration \. The failure to reduce direct and indirect subsidies is also a substantial shortfall, though somewhat understandable in view of the global financial crisis and the desire not to reduce government deficits too quickly in these circumstances \. Similarly, the failure to meet the privatization objective was related to the global financial crises \. However, with 2 targets not met, 4 met, and two partially met, a rating of modest achievement under this pillar is appropriate \. Pillar III -- Building a more efficient and stable financial sector - high achievement Reforms supported as prior actions included : (i) approval by GoS of a strategy for banks and insurance companies with Republic of Serbia ownership, and (ii) GoS transference of funds for initial capitalization of the Deposit Insurance Scheme (DIS) (iii) launching of a diagnostic process, including approval of : (1) satisfactory methodology; and (ii) decision tree that takes into account capital, earnings and liquidity, (iv) adoption of a liquidity framework, including : (i) approval of rules regulating lender of last resort function and other liquidity lending, and (ii) legal authority to permit GoS to guarantee Lender of Last Resort financing from NBS to solvent banks, (v) approval by GoS of a strategy for banks with RoS ownership, including the decision on merger of RoS majority owned banks or other alternatives, and (vi) approval by GoS of Motor Third Party Liability Law and submission to Parliament for adoption \. (vii) Banks with Borrower majority ownership have been merged, privatized or restructured in accordance with the strategy adopted under PFDPL II -- The majority of Credy Bank was sold to Nova KBM from Slovenia, Postanska Stedionica and Privredna Banka Pancevo were legally merged, with restructuring planned for 2012\. These prior actions represented important steps forward in strengthening the banking sector and helping insulate Serbia from possible adverse affects from the world financial crisis \. Performance indicators Twelve performance indicators were achieved : • Capital Adequacy Ratio of the banking system was maintained at the level of at least 12 percent, • Legal and implementation framework for crisis preparedness was fully operational and banking system resilience to shocks strengthened \. • Deposit insurance scheme that fulfilled the following conditions : (i) fast payout and (ii) availability of extra funding if needed • Increased efficiency of the bank resolution system, with bridge bank resolution on a closed bank basis for systemic banks, and financial assistance in the form of grants, loans, or guarantees based on a least cost test performed by DIA and emergency funding arrangements for DIA • Deposit insurance scheme has fast payout system and availability of extra funding, facilitated by payout software and payout procedures and implementation of the MOU with NBS \. • Banks with majority RoS ownership fully capitalized with a CAR of 12 percent\. • A new MTPL regime has been introduced to resolve existing legitimate claims \. • Resolution of failed insurers complies with EU insurer wind -up requirements\. • Decrease of the state share in the insurance sector from 67 percent in insurance premiums written in 2006 to 35 percent in 2010\. While the target in insurance premiums written by the state was below 30 percent by 2010 (according to the PD), IEG takes the target as essentially met • Life and non-life insurance business lines are separated by 2011 -- Recorded in the ICR as partly achieved, but information received subsequent to the ICR confirms that amendments to the Law on Insurance requiring separation of life and non-life insurance by the end of 2011 have been enacted and is a provision of the current law\. Some companies have already complied, others are in the process, and the National Bank of Serbia (the regulator) stated that there is no reason not to expect full compliance by year end \. • Adequate regulatory framework facilitates more rapid capital market development - target achieved with parliamentary passage of new securities law \. Two targets were partly achieved : • The GoS' ownership stake in the banking sector and its holdings in financial assets was reduced from 24 percent to 15 percent by 2010\. In the PD, the target was to go below 10 percent in 2010\. Consolidation of RoS holdings in banking sector, Banks with majority RoS ownership reduced from 4 to 2 by 2010, which was achieved • Dunav Insurance Company: The target outcome for PFDPL I was that preparation for the sale of an equity stake in Dunav to strategic investor has been initiated, but this was restated in the PD for PFSPBG as : Government approves and submits to Parliament amendments to the Law on Insurance converting Dunav's social ownership structure to state -owned, paving the way for privatization \. This is recorded in the ICR as "not achieved", but information received subsequent to the ICR from the TTL confirmed that amendments were prepared and submitted to Parliament, but have not yet been adopted, possibly because a new Law on insurance is being prepared and the Ministry of Finance may fold these amendments into the new Law \. One target was not achieved: • Increased mobilization of capital by providing more options to investors and longer term funding for the GoS in local currency, A reference point /benchmark for issuance of municipal, corporate and infrastructure bonds was not provided, and no municipal bonds have been issued \. Not Achieved\. With 11 targets achieved, 1 not achieved, and 2 partly achieved, the outcome rating for this pillar is high achievement, bolstered by the importance of the targets which were achieved, Notably, Serbia now has a fully functioning Bank resolution framework, which is unusual in the European context, but which should Serbia well as and when it faces future crises in the banking sector \. Especially given the relative importance of the targets which were achieved, an achievement rating of "high" is appropriate for this pillar\. Overall, 17 of 27 performance targets were achieved in PFDPL 1 and 2, and 14 of eighteen in PFSPBG\. However, the global financial crisis was largely responsible for 3 of these shortfalls\. Macro Overview Real GDP growth of 3\.8 percent in 2008 gave way to a decline of 3\.5 percent in 2009, before recovering to 1\.0 percent in 2010 and a projected 2\.0 percent in 2010\. While fiscal revenue declined by about 2 percentage points of GDP from 2008 to 2010, expenditure remained constant, so that the deficit increased from 2\.7 per cent of GDP to 4\.6 percent during those years \. Per Capita income in terms of US dollars shrank from $ 6,616 to $5,233\. Serbia has requested a Precautionary Stand -By Arrangement with the IMF and a Staff Report was issued in September, 2011, which notes that Serbia's foreign exchange reserves are comfortable, the banking sector has large liquidity and capital buffers, and the real exchange rate seems fairly valued \. However, with global and regional growth slowing, there is concern that Serbia's recovery is likely to pause, and that with forthcoming elections, the fledgling fiscal responsibility framework is under stress \. Even so, the main elements of Serbia's reform program remain appropriate\. 5\. Efficiency (not applicable to DPLs): 6\. Outcome: The objectives and design of these operations were highly relevant \. They addressed important reforms needed to continue the transformation of the Serb economy \. The choice of a guarantee was an innovative way to address the headroom issue, and the funding provided through the guarantee very valuable in its own right but also as a way to improve Serbia's access to the international capital markets \. The outcome rating of the first and third pillars confirms substantial and high achievement, respectively, in those areas \. However, there were a number of shortcomings in the implementation of reforms under the second pillar, particularly in energy sector reform\. Within that pillar, the objective of reducing direct and indirect subsidies was not met and was replaced by the objective of simply tallying these transfers \. However, pressures on the government to maintain subsidies in the face of the world financial crisis are understandable, even if the change in policy might not have been desirable\. Serbia's banking and financial systems were substantially strengthened by reforms supported by these operations\. This outcome rating is consistent with the ICR for PFDPL I and II which estimates that about 70 percent of the intended outcomes were achieved, and the ICR for the PFSPBS which estimated that 87\.5 of the total number of outcomes were achieved, although the inconsistency between the two arises because the ICR for the PFSPBG does not look at outcome for the whole program, despite the PD's assertion that PFSPBG continues the same policy framework as contained in the PD for the PFDPLs \. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: As the major reforms have already been introduced, the government's commitment to the reform program with a reasonable degree of support from the public, bolstered by the realization that such reforms strengthen the path the EU membership which remains a very popular objective, and support from the IMF and other donors such as SIDA and DFID, the risk to development outcome rating is moderate \. Continuing support from the donor community and the Bank and IMF are also positive factors in reducing risk \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: a\. Quality at entry: The Bank's support for these reforms was carefully based on the lessons from other transition economies and previous private sector and financial sector operations \. Careful attention was paid to sequencing and a measured approach to reform of the state -owned enterprises, with more rapid reforms when needed for the banking sector\. at -Entry Rating : Quality -at- Satisfactory b\. Quality of supervision: Supervision was carefully coordinated with counterparts, with a good working relationship maintained through the Ministry of Economy in its role as coordinator of the reform program \. The active participation on a continuing basis of locally based staff contributed to the quality of supervision and implementation \. Quality of Supervision Rating : Satisfactory  Overall Bank Performance Rating : Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Government's ownership of the program is clear from the completion of all prior actions and most of the non-core benchmarks, and close cooperation with Bank staff \. The government's request to replace PFDPL III with a guarantee showed a keen awareness of accessing support where it was available to appropriately finance its need and support its reform program \. Government Performance Rating : Satisfactory b\. Implementing Agency Performance: Implementing agencies played an important role in these operations, from the Privatization Agency through banking sector institutions and others \. These generally performed well, though the failure of some of the energy sector reforms, especially cost recovery, requires a rating of less than fully satisfactory \. For example, the failure to achieve better progress on cost recovery was a specific shortfall in performance of the implementing agency\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: M&E design focussed on the Ministry of Finance which was responsible for the overall implementation of the program\. A number of agencies/Ministries were engaged in data collection and providing other information, including the Ministry of Economy and Regional Development, the Ministry of Justice, the Privatization Agency, the National Bank of Serbia, the Deposit Insurance Agency,and the Serbian Business Registers Agency \. The policy matrix formed a coherent framework in which to organize information and assess progress \. The monitoring indicators were generally realistic and appropriate, except for the BEEPs indicator for which no data was available for 2010 and so this achievement of this performance indicator could not be evaluated \. b\. M&E Implementation: Assessments of progress, and identification of needed changes, appear to have been appropriate \. There are two major indications of this positive assessment \. First,the program supported by PFSPDL II was modified to better equip Serbia to face the world financial crisis by enhancing the reform program for the banking sector \. Second the financing needs of Serbia were well identified leading to the replacement of PFSPDL III with a guarantee\. c\. M&E Utilization: As noted above, the strengthening of the reform program supported by PFSPDL II to place the banking and financial sector on a sounder footing in the face of the world financial crisis, and the replacement of PFSPDL III with a guarantee, indicates that M&E utilization was highly satisfactory \. Had the ICRs provided more information on M&E utilization, this might have translated into an overall M&E quality rating of high \.  M&E Quality Rating : Substantial 11\. Other Issues a\. Safeguards: There were no safeguard issues identified \. b\. Fiduciary Compliance: There were no issues of fiduciary compliance \. c\. Unintended Impacts (positive or negative): None\. d\. Other: 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: 1\. Some flexibility in implementing programmatic lending is important if the Bank is to be able to adjust programs to meet needs as they appear, this case, due to changing world market conditions \. PFSPDL II, in this case, was productively modified to help Serbia pro -actively reform its banking and financial sectors to address problems that could have arisen from the world financial crisis \. 2\. Good coordination remains an imperative \. In this case, close coordination with the IMF and EU donors were key to insuring the resources needed for reform, as well as the incentive of EU membership \. 14\. Assessment Recommended? Yes No Why? This series marks an important point in the transition of the Serb economy \. The guarantee used to support the program in place of PFDPL III was innovative and appears to have been very productive, with important benefits, but should not be assessed in isolation from PFDPL I and PFDPL II \. 15\. Comments on Quality of ICR: The ICR it should have looked at the outcomes for the entire program as set out in the PD for PFPDL I, which would have entailed incorporating information now only found in the ICR for the PFSPBG \. Another important shortcoming of the ICR is that there is no separate section on monitoring and evaluation (information on Monitoring and Evaluation for this ICR Review is taken from comments in other sections of the ICR, as well as the Monitoring and Evaluation section (2\.3) of the ICR for the PFSPBG\. Despite these serious shortcomings, the ICR is rated satisfactory because it handles material covering much of the program quite well, and draws important lessons for the future \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P046045

 Document of The World Bank Report No: ICR0000874 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46090 TF-56801) ON A LOAN IN THE AMOUNT OF US$ 64\.50 MILLION TO THE REPUBLIC OF KAZAKHSTAN FOR A SYR DARYA CONTROL AND NORTHERN ARAL SEA PHASE-1 PROJECT June 21, 2011 Sustainable Development Department Central Asia Country Unit Europe Central Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective June 21, 2011) Currency Unit = Kazakhstan Tenge (KZT) KZT 1\.00 = US$0\.0070 US$1\.00 = KZT 145\.57 FISCAL YEAR ABBREVIATIONS AND ACRONYMS ASBP Aral Sea Basin Program M&E Monitoring and Evaluation BCG Basin Consultative Group MOA Ministry of Agriculture BVO Basin Water Authority MNREP Ministry of Natural Resources and Environmental Protection CAS Country Assistance Strategy MTR Mid Term Review CPAR Country Procurement Assessment Report NAS Northern Aral Sea CWR Committee for Water Resources of MOA NGO Non Governmental Organization EA Environmental Assessment O&M Operations and Maintenance EC-IFAS Executive Committee of the Interstate PAD Project Appraisal Report Fund on the Aral Sea EMP Environmental Management Plan PDO Project Development Objective FM Financial Management PHRD Japan Policy and Human Resources Development GIS Geographic Information Systems PIU Project Implementation Unit GOK Government of Kazakhstan PMU Project Management Unit ICC Inter-ministerial Coordinating Committee PPF Project Preparation Facility ICR Implementation Completion Report PSC Project Steering Committee ICWC Interstate Commission for Water SA Social Assessment Coordination IP Implementation Progress SCO Shanghai Cooperation Organization IPOE Independent Panel of Experts SEA Social and Economic Assessment ISR Implementation Status and Results Report SYNAS Darya Control and Northern Aral Syr Sea JSDF Japan Social Development Fund UNDP United Nations Development Program LAS Larger Southern Aral Sea UNEP United Nations Environment Program Vice President: Philippe LeHouerou Country Director: Motoo Konishi Sector Manager: Dina Umali-Deininger Project Team Leader: Ahmed Shawky ICR Team Leader: Ahmed Shawky  REPUBLIC OF KAZAKHSTAN SYR DARYA CONTROL AND NORTHERN ARAL SEA PHASE-1 PROJECT CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design\. 1 2\. Key Factors Affecting Implementation and Outcomes……………………………\.6 3\. Assessment of Outcomes \. 13 4\. Assessment of Risk to Development Outcome\. 16 5\. Assessment of Bank and Borrower Performance \. 18 6\. Lessons Learned\. 21 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 22 Annex 1\. Project Costs and Financing\. 23 Annex 2\. Outputs by Component\. 24 Annex 3\. Economic and Financial Analysis \. 32 Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 36 Annex 5\. Beneficiary Survey Results \. 38 Annex 6\. Stakeholder Workshop Report and Results\. 41 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 42 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 51 Annex 9\. List of Supporting Documents \. 52 MAP No\. IBRD 312428 A\. Basic Information Syr Darya Control & Country: Kazakhstan Project Name: Northern Aral Sea Phase I Project Project ID: P046045 L/C/TF Number(s): IBRD-46090,TF-56801 ICR Date: 06/29/2011 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: KAZAKHSTAN Original Total USD 64\.5M Disbursed Amount: USD 62\.4M Commitment: Revised Amount: USD 62\.4M Environmental Category: A Implementing Agencies: Ministry of Agriculture Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/27/1996 Effectiveness: 04/08/2002 Appraisal: 01/29/2001 Restructuring(s): Approval: 06/05/2001 Mid-term Review: 10/15/2005 07/31/2004 Closing: 02/28/2007 12/31/2010 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Animal production 1 32 Central government administration 4 4 Flood protection 29 29 Irrigation and drainage 66 35 Theme Code (as % of total Bank financing) Biodiversity 17 17 Infrastructure services for private sector development 17 17 Rural services and infrastructure 33 33 Water resource management 33 33 E\. Bank Staff Positions At ICR At Approval Vice President: Philippe H\. Le Houerou Johannes F\. Linn Country Director: Motoo Konishi Dennis N\. de Tray Sector Manager: Dina Umali-Deininger Joseph R\. Goldberg Project Team Leader: Ahmed Shawky M\. Abdel Ghany Masood Ahmad ICR Team Leader: Ahmed Shawky M\. Abdel Ghany ICR Primary Author: Michael J\. Sandoz F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) 1\. Sustaining and increasing agriculture (and livestock) and increasing fisheries production in the Syr Darya basin; and ii  2\. Securing the existence of Northern Aral Sea and improving the ecological/environmental conditions in the delta area and around the sea leading to improved human and animal health and biodiversity\. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Sustaining and increasing agriculture (and livestock) and increasing fisheries Indicator 1 : production in Syr Darya basin\. 2650 tons of fish caught in the NAS Insignificant amount of in 2009 (excluding freshwater fish Production of informal catch); production and no fresh water fish Value water supply to sturgeon and caviar about 700 tons per quantitative or irrigated and production\. Depressed year, 100 tons of Qualitative) livestock areas crop production in sturgeon and 10 reestablished; irrigated lands and low tons of caviar\. livestock crop yields\. production increased by 40% Date achieved 03/05/2001 08/31/2017 11/19/2010 Rice area went from 58,500 ha 2001 to 73,300 ha in 2009, but this cannot be Comments attributed only to SYNAS\. Crop production depends not only on water (incl\. % availability but also on irrigation, agronomic and marketing systems (hence achievement) requiring projects like IDIP2)\. Securing the existence of Northern Aral Sea and improving the Indicator 2 : ecological/environmental conditions in the delta area and around the sea leading to improved human and animal health and biodiversity\. Target met and often exceeded\. Water salinity in NAS Salinity levels was about 25 g/l\. Air and throughout the soil salinity was high, Water salinity NAS have dropped Value negatively impacting reduced to 15 g/l, to 10g/l in 2010 quantitative or population and animal improvements in (about half of 2001 Qualitative) health and negatively air and soil value) thanks to 4 impacting the natural salinity\. billion m3 of water\. environment and Reported improved biodiversity\. fauna and flora by local residents Date achieved 03/05/2001 08/31/2011 11/19/2010 Comments There are many media reports that describe the dramatic impact on people, flora iii (incl\. % and fauna\. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Major bottlenecks in Syr Darya's carrying capacity removed (e\.g\. at Chardara Indicator 1 : dam, Aitek, Kyzylorda, and Aklak); Target met\. Aitek weir and rehab of other structures increased winter Syr Darya capacity carrying capacity of A number of bottlenecks increased during Syr Darya to Value severely decreasing the winter to 700 cms, 700m3/sec, (quantitative carrying capacity of Syr and spells to reducing losses or Qualitative) Darya within the Arnasai reduced into desert sinks to Kazakhstan territory\. from 3 Bcm to 1 1 BCM/year, Bcm/yr\. compared to 5 BCM/year in 2003\. Aklak diverts 0\.075BMC/year to delta Date achieved 03/05/2001 08/31/2007 11/19/2010 Comments (incl\. % Although not all works are completed at Aklak, the structure is now operational achievement) Indicator 2 : Completion of dike enabling filling of the NAS\. Target met ahead of schedule\. By april 2009, water level reached full supply level of 42m for the fourth year in a Water level Value row\. NAS area Reduced area of the stabilized between (quantitative increased from Northern Aral Sea\. 39 - 42 m in Yr 10 or Qualitative) 2400km2 in 2001 to of the project\. 3300km2 in 2009\. In August 2010 NAS was 35Km from Aralsk harbor compared to 75km in 2001 Date achieved 03/05/2001 08/31/2007 11/19/2010 Comments (incl\. % iv achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 06/28/2001 Satisfactory Satisfactory 0\.00 2 12/11/2001 Satisfactory Satisfactory 0\.00 3 04/30/2002 Satisfactory Satisfactory 0\.65 4 11/07/2002 Satisfactory Satisfactory 2\.24 5 06/16/2003 Satisfactory Satisfactory 5\.44 6 12/31/2003 Satisfactory Satisfactory 10\.78 7 01/29/2004 Satisfactory Satisfactory 13\.07 8 06/15/2004 Satisfactory Satisfactory 17\.37 9 11/01/2004 Satisfactory Satisfactory 29\.56 10 04/03/2005 Satisfactory Satisfactory 34\.41 11 11/11/2005 Satisfactory Satisfactory 46\.86 12 03/23/2006 Satisfactory Satisfactory 52\.04 13 11/21/2006 Satisfactory Satisfactory 56\.63 14 11/15/2007 Satisfactory Satisfactory 57\.70 15 05/02/2008 Satisfactory Moderately Satisfactory 59\.46 16 08/07/2008 Satisfactory Satisfactory 59\.46 17 04/23/2009 Satisfactory Moderately Satisfactory 59\.58 18 01/28/2010 Satisfactory Moderately Satisfactory 60\.71 19 12/20/2010 Satisfactory Moderately Satisfactory 60\.71 H\. Restructuring (if any) Not Applicable v I\. Disbursement Profile vi 1\. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e\.g\., PAD/ISR, not evaluative) The project is the first phase of the rehabilitation of the Syr Darya basin identified under the Aral Sea Basin Program (ASBP) approved by heads of the five Central Asian States in 1994\. The project was considered of strategic importance in addressing the environmental issues of the Aral Sea basin\. 1\.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance) The desiccation of the Aral Sea over a period of forty years, caused by major diversions from the Amu Darya and Syr Darya rivers to serve extensive developments for irrigated agriculture in Kazakhstan and Uzbekistan, had resulted in serious economic, social, and environmental damage in and around the Aral Sea\. This has often been described as “the worst environmental disaster in recent historyâ€?\. More recently, over the last two decades, major increases in hydroelectric power generation along upper river reaches in Kyrgyzstan, notably at the Toktogul dam on the Syr Darya River, have taken place during winter, releasing water from reservoir storage that would previously have been retained for release during summer for irrigation purposes\. Water released into the river during winter has had little productive impact downstream, since most irrigation demands occur in summer\. It had also not represented much environmental benefit to the Aral Sea and adjacent river delta areas\. This was because of flow capacity constraints along key reaches of the Syr Darya River in Kazakhstan, caused by bottlenecks including under-designed weirs, pontoon bridges, low flood protection dikes, and other channel and infrastructure maintenance and safety deficiencies, all made worse in winter due to ice formation\. Much of the water arriving into Kazakhstan has had to be spilled from the Chardara reservoir on the border with Uzbekistan and diverted into desert sinks including the Arnasai-Aydarkul depression in Uzbekistan, and into irrigation and drainage canals and channels, where it has caused flooding problems and has been eventually lost to evaporation1\. Basin-Wide International Context In order to address the Aral Sea crisis, the five Aral Sea Basin states requested assistance from the international community\. After diagnostic investigations in 1992, an Aral Sea Basin Program (ASBP) was prepared in 1993 by the World Bank in coordination with UNEP and UNDP, and was approved by the five Heads of State in January 1994\. The ASBP has four major objectives: (i) to stabilize the environment of the Aral Sea; (ii) to rehabilitate the ecological disaster zone around the Aral Sea; (iii) to improve and integrate the management of the international waters of the Aral Sea Basin; and (iv) to 1 Even more recently, following filling and development of the Arnasai depression and the construction in Uzbekistan of two new earth dams on the Arnasai flow channel, the Chardara reservoir spilling capacity has been severely reduced\. As a result, the safety of Chardara dam has been compromised\. 1 build the capacity of the regional institutions to plan and implement the corresponding projects\. Seven priority programs, comprising a total of 19 projects, were identified for implementation during the first phase of the ASBP\. The Syr Darya Control and Northern Aral Sea phase I (SYNAS-I) project formed part of the ASBP Programme 4, which deals with environmental issues in and around the Aral Sea\. Starting in 1992, the Interstate Commission for Water Coordination (ICWC) of the five Central Asian States developed a common strategy for trans-boundary water management in the Aral Sea Basin, determining water allocations and reservoir operations in the Amu Darya and Syr Darya river basins\. Declarations on water sharing were signed in 1995 (Nukus) and in 1997 (Almaty)\. In March 1998 a long-term water and energy agreement, covering the sharing of hydro-power benefits from Kyrgyzstan, was signed between the three Syr Darya River riparian countries (Kazakhstan, Uzbekistan and Kyrgyzstan)\. In August 2007, at the Shanghai Cooperation Organization (SCO) summit, the heads of several of the SCO member states proposed a new policy of utilization of hydroelectric energy resources, and a new agreement on utilization of transboundary water resources within this framework is being considered\. Meanwhile an International Fund for the Aral Sea (IFAS) was established in 1993, and an Interstate Council was created to coordinate and manage financial resources and programs in the field of ecological and socio- economic development in the Aral Sea region\. In the Ashgabat declaration of April 1999, the five Heads of State expressed once more their concern about the quality of life in the Aral Sea region and acknowledged the need for an integrated and joint regional strategy based on an ecosystem approach and integrated water resources management\. However, in spite of all of these initiatives, key issues such as the mode of operation of the Toktogul reservoir remained unresolved\. National River Basin and Project Context Of the newly-formed states Kazakhstan is the Syr Darya River tail-ender\. As such it suffers the most from the effects of inadequate integrated international river basin management, including those outlined above\. The environmental degradation of the Aral Sea region and the inefficient use of water resources are among the serious threats affecting the social, environmental and economic development and wellbeing in the country\. The Government of Kazakhstan (GOK) recognized early that non-sustainable developments upstream of the Northern Aral Sea (NAS) would continue to limit the country’s growth potential\. In addition to its participation in regional multi-country agreements concerning the water management and environmental rehabilitation in the Aral Sea basin, the GOK decided to work with the international donor community to initiate direct resolution of the situation through the SYNAS-I project, targeting environmental restoration, infrastructure rehabilitation, intersectoral water use conflict reduction and institutional capacity strengthening\. For the GOK, the SYNAS project is a priority project in the water resources sector\. It is managed by the Committee for Water Resources (CWR), which coordinates with the Syr Darya Basin Water Authority (BVO) and with the ICWC\. At regional (oblast) level the 2 project is strongly supported by the regional authorities in Kyzylorda oblast and the local district (raion) administrations of Kazalinsk and Aralsk raions, which have been the areas most affected by the environmental catastrophe\. Preparation of the World Bank supported SYNAS-I project was completed in 2001, and implementation was completed in 2010; key dates were (i) approval, 05 June 2001, (ii) effectiveness, 08 April 2002, and (iii) closing, 31 December 2010\. The project value was US$86 million, of which US$61 million was provided from a World Bank loan\. Parallel development grant financing of US$1\.9 million was provided from the Japan Social Development Fund (JSDF) for the Kazakhstan Community-Based Aral Sea Fisheries Management and Sustainable Livelihoods Project (closing in March 2012)\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 1 As presented in the Project Appraisal Document (PAD), the PDOs were (i) sustaining and increasing agriculture (including livestock) and fish production in the Syr Darya basin; and (ii) securing the existence of the NAS and improving the ecological/environmental conditions in the delta and around the NAS leading to improved human and animal health and biodiversity\. Corresponding key indicators to be used in assessing achievement of these objectives were as summarized below: Key Indicators Target Outcomes/Impacts Indicator for both PDO(i) and PDO(ii): • Increased water levels and reduction • [Target outputs only] in salinity levels in the NAS Indicators for PDO(i): • Increase in yields of freshwater fish, • Yields increased to about 2,000 t/yr for sturgeon and caviar\. freshwater fish and to 500 t/yr and 30/t/yr for sturgeon and caviar by Project Year 16 • Increase in water supply to irrigated • Sustained crop production on about 150,000 lands at Kazalinsk, Aitek and ha of irrigated lands and yields increased by Kyzylorda and increase in crop 20% production from irrigated lands Indicators for PDO(ii): • Improvement in air, soil and water • Decline of the natural environment near the qualities, biodiversity and state of NAS and in the delta reversed by Project flora/fauna Year 6; air, soil and water qualities and state of flora and fauna improved to acceptable • Improvement in general health of levels by Project Year 15 population in Kazalinsk/Araslk • Health of population in Kazalinsk/Aralsk improved (incidence of diseases reduced) to • Improved water supply to lakes and national average by Project Year 10\. hayfields around Aklak and Kazalinsk • [Target output only] 3 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification There were no formal revision to the PDO, and project activities remained substantially the same as designed albeit with some additions and some omission of contracts justified as part of implementation\. 1\.4 Main Beneficiaries The total number of direct and indirect beneficiaries is about 1 million people, mainly in Kyzylorda oblast, the poorest region of the country\. The project directly improves the well being of 150,000 to 200,000 people in Aralsk and Kazalinsk raions of this oblast (an internationally recognized area affected by the Aral Sea environmental catastrophe)\. 1\.5 Original Components (as approved) The project was the first one of a series of investments that would reduce the risks posed by the Chardara dam and improve water delivery, distribution, and basin wide water use efficiency\. The project’s components were: (a) Rehabilitation of Northern Aral Sea (Component A), comprising construction of a dike across the Berg strait, including spillways, to allow for recovery and stabilization of NAS levels and salinity separate from those of the southern Larger Aral Sea (LAS); (b) Improving the Hydraulic Control of the Syr Darya (Component B), comprising rehabilitation and construction of various hydraulic structures to allow for improved regulation and management of river flows and controlling of water allocations to various users including increased inflows to the NAS, the hydraulic structure interventions being (i) reconstruction of the Aklak weir and related works, (ii) reconstruction of the Aitek and Karaozek water control structures, (iii) rehabilitation and construction of low height dikes at key locations along the river for improved flood protection and increased channel flow capacity, and (iv) repairs to the Kazalinsk headworks and Kyzylorda barrage; (c) Rehabilitation of Chardara Dam (Component C), covering various first phase priority safety and water control improvement works; (d) Aquatic Resources Restoration and Fisheries Development (Component D), covering development interventions to maximize benefits from additional fisheries resulting from stabilization of the NAS level and salinity and improved flows to the delta lakes; (e) Monitoring and Evaluation (Component E), covering monitoring and evaluation (M&E) activities aimed at evaluating the success in meeting the project's goals and assessing the project's physical, environmental/ecological, social, agricultural and economic impacts; and (f) Project Management and Institutional Development (Component F), supporting operation of the CWR's Project Management Unit (PMU) and financing overall project management and technical assistance during 4  implementation, as well as providing for institutional capacity building in river basin management\. The estimated project costs were as summarized in the table below\. Breakdowns of project and component costs by works categories and financing entities are provided in Annex 1, while further details of the interventions realized, outputs achieved and next follow-up activities required are provided in Annex 2\. Estimated Project Cost by Component (including contingency allowances) Component/Sub-Component Costs (USD millions) Sub-Total Total A Restoration of Northern Aral Sea 23\.19 B Improving Hydraulic Control of the Syr Darya 40\.95 B1 - Aklak Complex 17\.58 B2 - Aitek Complex 15\.25 B3 - Flood Protection Dikes 3\.72 B4 - Kyzylorda and Kazalinsk Barrages 4\.40 C Rehabilitation of Chardara Dam 14\.10 Sub-Total Major Works 78\.24 D Aquatic Resources Restoration and Fisheries Development 2\.00 E Monitoring and Evaluation 1\.50 F Project Management and Institutional Development 1\.60 F1 - Project Management 1\.00 F2 - Institutional Development 0\.60 Refinancing of PPF 1\.80 Front end Fee 0\.645 Total 85\.79 1\.6 Revised Components Overall there were no major changes made to the project components affecting the target PDOs\. However, Component D had to be significantly revised, as summarized in Section 1\.7 (and explained in details in Annex 2)\. 1\.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) While no major changes were made to the project components, a number of reallocations between activities for additional auxiliary works such as access roads and other necessary but not initially scheduled works were added while other activities such as works on weir the Karaozek branch and structures along the Aitek complex were dropped from financing\. Some of these works were later funded through the Ministry of Emergency Situation of the Republic of Kazakhstan, thus only minimally affecting the impact of the project\. A number of flood protection dikes (Component B) were dropped from project financing due to cost overruns and budgetary constraints\. In addition, under Component D, cost savings/reductions were agreed as some activities where financed by other financiers whereas other activities were deferred to SYNAS-2 (see Annex 2 for further 5 details)\. These cost savings were used to meet the additional cost of project-wide supervision and management due to extending the project implementation period\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy of participatory processes, as applicable) Conformity with country and sector policies and strategies\. The project formulation conformed well to the Bank’s Country Assistance Strategy (CAS), primarily through its strong provisions for (i) reversing environmental degradation caused by the decline of the Aral Sea and (ii) improving Syr Darya river basin water management for increased agricultural (including livestock) and fisheries production, all to the benefit of the population of the poorest and most adversely affected region of the country\. It similarly addressed well the key GOK policies and priorities relating to environmental restoration, rehabilitation of deteriorated hydraulic infrastructure, reducing intersectoral water use conflicts and strengthening institutional capacity for river basin water management\. Relevance and appropriateness of project objectives, components and design\. The project’s two PDOs presented at Section 1\.2 reflect well the development policies and priorities indicated above\. The six project components likewise corresponded to the six essential and minimum interventions needed to secure a substantial integrated and sustainable improvement in the region's economic and environmental situation\. The overall project design seemingly achieved a well considered and appropriate balance between cost and benefit effectiveness, given the very much larger potentially suitable alternative investments for NAS restoration, river flow capacity increases, and dam and water control structures rehabilitation, some of which at the end of the project have become high priority items for subsequent intervention\. Nevertheless, there was a minor design shortcoming (probably avoidable at preparation) that led to partial bank erosion downstream of the Aklak weir, which is discussed below under Section 2\.4\. Soundness of institutional and implementation arrangements\. The formulated primary institutional arrangements for project implementation under the CWR, through the PMU headed by a National Project Coordinator (NPC), were put in place and would appear to have been both simple and effective\. Overall management and interagency coordination was assigned to and undertaken by the CWR, and although an inter-ministry transfer of this entity took place during the course of the project (from the Ministry of Natural Resources and Environmental Protection (MNREP) to the Ministry of Agriculture (MOA) this seemingly had minimal impact on project implementation\. The PMU, based initially in Almaty but then in Astana, had responsibility for the day-to-day project management and administration, assisted by a Consultants Group (CG) based in Kyzylorda for technical design, contracts preparation, construction supervision, M&E and project management tasks\. Strong and often but not always entirely effective support was provided by international and national consultant firms and individuals in these areas\. Other envisaged institutional arrangements included establishment and operation of (i) an Inter-ministerial Coordinating Committee (ICC), (ii) a Project Steering 6 Committee (PSC), (iii) a Basin Consultative Group (BCG), and (iv) an Independent Panel of Experts (IPOE) for dam safety works at Chardara Dam\. The first and fourth of these entities contributed timely and meaningful inputs into the project\. Application of previous lessons learned\. Previous lessons learned as identified at the time of project formulation related to (i) applying economic and environmental criteria, (ii) accounting for difficulties in interagency coordination, (iii) providing for competent and efficient national management staff, (iv) ensuring timely provision of adequate counterpart funding, (v) providing appropriate technical assistance, (vi) emphasizing procurement, financial management and construction quality control aspects, and (vii) involving local institutions in project design and preparation\. All of these were to greater or lesser extent addressed by the project preparation analyses and assessments, the formulated institutional arrangements, the management structure and staff specifications, the technical assistance arrangements and the institutional strengthening provisions\. Identification and mitigation of risks\. Risks relating to marketing constraints, institutional and funding shortfalls, water balance deficiencies, consultant staff insufficiencies, and procurement and construction delays, were identified and addressed as part of project formulation\. Concerning the underlying government commitment to the project, this was indicated to be strong at the time of project preparation, and it seemingly remained so throughout the course of project implementation\. 2\.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, and actions taken, as applicable) In many respects, although not in all, the project was implemented much as envisaged at appraisal\. There were a total of 7 major infrastructure works contracts (compared to the originally envisaged total of 11), as summarized below: Major Infrastructure Works Contracts Contract Number and Name Relevant Project Components 001 Northern Aral Sea Dike and Aklak Control Structure A and B1 002 Aitek Weir B2 003 Rehabilitation of Chardara Dam C 005 Syr Darya Protection Dikes B3 (part) 006 Straightening of Syr Darya River Bed B3 (part) 009 Rehabilitation of Kazalinsk Headworks B4 (part) 011 Rehabilitation of Kyzylorda Headworks B4 (part) Works implementation was hampered by a number of constraints, the ultimate effects of which included (i) non-execution of some of the needed project works due to increased costs and budget limitations, (ii) conversely, execution of previously unidentified but needed and beneficial works, and (iii) an eventual total extension of the project implementation period from 5 years to just under 9 years\. With regard to non-execution of needed project works, some of these were transferred out of the project and were executed under non-project contracts funded by GOK (e\.g\. Karaozek weir, part of the Aitek structures complex), while others remain to be executed under the project’s prospective second phase or other projects (e\.g\. further river flood protection works)\. Concerning the project period extensions, it is noted that these were needed only for a 7 relatively small portion of the overall project infrastructure items; substantial completion of most items, and corresponding disbursements, were seemingly achieved in a generally timely manner\. Some of the specific key factors impacting implementation included (i) differences between Kazakh and international practices and requirements for detail design studies, cost estimating, pre-tender approvals, bid evaluations and contract award approvals, leading to early disputes and delays; (ii) long periods of abnormally high river flows and water levels over several years, leading to delays and additional needs for site protection works and water control, with corresponding increased costs; (iii) an underestimated need for major supporting infrastructure (roads, power lines, camps, etc) that had to be provided for isolated and remote construction site and community locations; (iv) a general construction boom over several years, leading to high cost escalation and key material shortages and delivery delays; (v) some substantial design underestimation of works volumes, some post-award identification of high priority requirements not originally considered, and some contractor inadequacy in implementing needed activities, leading to delays, budget reallocations, and non-execution of important works items due to financing limitations; and (vi), primarily for one contract, some poor contractor performance, organization, staffing, financing and legal aspects\. It needs to be noted however, that some of these changes that resulted in increased costs were also in part the result of the opportunity presented from having large contractors on site to help local authorities repairing roads and rehabilitate electric lines that followed the path of the canal, but also to reconnected remote towns and settlements\. While the benefits to water and irrigation management directly may have been minimal from these ancillary works, they were of crucial importance to local administrators and residents\. Some further detail on these issues and items is provided in the Borrower’s draft ICR report\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Given that some key project target outcomes were not expected to be realized within the life of the project and its M&E program, the focus in establishing the M&E system was on enabling the assessment of interim outcomes and the development of likely future projections of these\. In designing it, appropriate indicators were defined, and data bases and Geographic Information Systems (GIS) were set up to record and present historical, initial (baseline) and developing conditions in the project area\. During early implementation, the systems were populated to some extent with data from hydrological (quantity and quality), environmental (land and water), ecology/biodiversity and socioeconomic field surveys and studies, and this led also to analyses, forecasts and recommendations relating to restoration of ecosystems, notably for biodiversity, bird habitats and fisheries\. For further use of the systems it was reported that efforts to collect data from and through government agencies, and to transfer M&E systems and train government agency staff in their continued use and application, were not successful\. Completion of the formal M&E program occurred about half way through the extended project period, and there was seemingly little if any subsequent routine M&E activity\. However, some notable positive impacts had already become evident by that time, as evidenced by the findings from the household surveys and structured interviews of the social and economic assessment (SEA)\. A more recent end-of-project 2009-2010 M&E information has been obtained through self efforts from the PMU staff (including the Borrower version of the ICR Report)\. It is also worth noting that the M&E should have 8 comprised a full-fledged incremental impact evaluation approach (including baselines and tools), that enables separating the non project/water related “compoundingâ€? variables/externalities which can influence the target indicators (listed below under Section 3\.2) 2\. Due to these shortcomings the M&E activity is deemed only partially satisfactory, and due deligence has to be taken while preparing SYNAS-II to avoid such shortcomings\. However, an overall incremental improvement of the key SYNAS-I impact indicators has been recorded as summarized in this table; and the M&E shortcomings do not detract from evidenting that the project has successfully met its key target objectives\. Changes in Key Indicators at the North Aral Sea (NAS) Key parameters Unit Before Changes project After SYNAS-I Increase (+) or decrease (-) Water level M BS 38,0 42,0 +4 Water surface area km2 2 414 3 288 +874 Water volume km3 15,6 27,1 +11,5 Water salinity g/l 23 9\.5 -13\.5 Industrial fish catch ‘000 tons 0,4 2,0 +1,6 Distance to Aralsk city Km 75\.0 18\.0 - 57\.0 (harbor) Also Annex 7 discusses the employment created (salary increases) and other social benefits which are indirectly attributed to the SYNAS-I (from the Borrower’s ICR)\. 2\.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as applicable) Safeguard Policies\. The safeguard policies determined at appraisal to be applicable were those for (i) environmental assessment (OP 4\.01, BP 4\.01, GP 4\.01), (ii) safety of dams (OP 4\.37, BP 4\.37), and (iii) projects in international waters (OP 7\.50, BP 7\.50, GP 7\.50)\. Comments for each of these are as follows: (a) Since the project involved construction of some major new hydraulic infrastructure and expected substantial land and water management changes, it was classified as an Environmental Category "A" project\. A full Environmental Assessment (EA) complemented by a Social Assessment (SA), including formulation of an Environmental Management Plan (EMP), was undertaken 2 As regards the sea-water salinity, crop and cattle production, and since the years 2000 and 2001 were extremely dry years, the Bank ICR team notes that a better approach for the incremental impact evaluation would warrant comparing the post-project results on these indicators with their pre-construction average annual results from 1995 to 2005 (rather than comparing with the early 2000s baselines)\. Similarly, as regards the fish catch and crop/cattle production, a full-fledged incremental impact evaluation would warrant separating the non-water-related “compoundingâ€? variables/externalities that may have influenced these indicators (for instance, increasing the number of fishing boats in 2007 may have contributed to the catch peak in that year)\. Such a full-fledged impact evaluation needs to be followed under the forthcoming phase 2 (SYNAS-2)\. 9  before project appraisal\. Comments on implementation of the EMP are provided in the next sub-section below\. (b) Interventions under the project for dam safety were formulated for the Chardara dam, which is the key water storage and flow regulation structure for the Syr Darya river in Kazakhstan\. Some parts of the needed works were undertaken under the project, while others remain to be implemented under one or more future projects\. As mentioned at Section 2\.1 above, an IPOE for dam safety works at Chardara dam, comprising international and national experts, was constituted and provided expert advice, reviewed the designs and oversaw the works\. (c) The project dealt with developments involving international waters (the Syr Darya River and the Aral Sea) and was therefore subject to requirements relating to notification, disclosure and dissemination of information to riparian states, procedures for which were duly followed\. The status of the project as a component of the ASBP as indicated at Section 1\.1 above meant that all riparian states were in accordance with its implementation\. EMP Implementation Results\. Implementation of the EMP was effected through environmental audits comprising systematic independent reviews of works construction sites and camps\. The reviews included inspection of sites, consultations and interviews with clients, consultants and contractors, and examination of relevant supporting documentation\. The audits ensured that the appropriate environmental impact prevention and mitigation measures were applied and that the works and outcomes were in accordance with the environmental and socioeconomic enhancement and improvement plans and expectations\. Some further detail on this topic is included in the Borrower’s draft ICR report\. Procurement\. A procurement Capacity Assessment had been undertaken and was reflected in the PAD\. Reflecting the pre-project (pre-2000) era, this assessment highlighted a relatively weak legal and regulatory framework and project cycle management and provided a high risk rating, thus recommending by-yearly procurement supervision and regular post–review audits\. The 2000 Country Procurement Assessment Report (CPAR) classified the public procurement system as a medium risk system, in spite of high prevalence of transparency/competitiveness issues that would justify a medium-high risk rating\. Due to a relatively good experience with project implementation in the water/agricultural sector, the project was classified as a medium risk from a procurement perspective\. The procurement planning was adequate for the project\. The bidding processes for all contracts have been successfully completed on time\. The procurement processes including the prequalification have been implemented with an assistance of international consultancy company\. However, the project faced significant contractual issues during implementing contract SYNAS #001 (construction of the NAS and nearby Aklak Control Structure)\. Significant delays occurred in construction due to technical and financial constraints by the Contractor\. As a result of the delays in completing this contract, services for construction supervision by the Engineer (client) Companies were extended several times with an increased contract value\. Overall, the procurement performance is rated as Moderately Satisfactory\. 10 Financial Management and Disbursement\. The PMU had already acquired financial management experience during the implementation of the preparation PHRD grant that received clean unqualified audit reports\. PMU financial management capability and practices were reviewed by the Bank at the time of appraisal and regularly throughout implementation and found acceptable\. Overall, it has maintained acceptable financial management arrangements meeting the Bank requirements in respect to the quality of accounting, reporting, internal controls, staffing as well as in respect to the audit arrangements\. During project implementation, there were no major issues or problems in conducting financial management by the PMU\. The only issue that resulted in downgrading of the FM rating to moderately satisfactory in the last year of implementation is deterioration of the automated accounting software\. The problem could not be fixed due to the fact that funds had not been allocated for the software maintenance during the last year\. Audit reports for FY 2009 and final quarterly reports for the fourth quarter of 2010 were received by the Bank and found to be satisfactory\. The final audit report for the Project is expected to be received by the Bank before June 30, 2011\. The latest ISR ratings were still valid by the ICR time and can be summarized as follows: • Implementation progress (IP) was provisionally rated as "Moderately Satisfactory" for the end of December 2010, due to the need to complete a few remaining contract works at the Aklak structure site\. The client and Bank teams followed up to ensure that there would be minimal works to be completed and financed solely by GOK beyond the closing date, and hence to leave no significant risks after project closure on December 31, 2010\. Financial management (FM) was rated as "Moderately Satisfactory"\. Project management (PMU and PIU) was rated as "Moderately Satisfactory", given the "Moderately Satisfactory" ratings for both IP and FM\. • Ratings given for compliance with applicable safeguards (EA (OP 4\.01), safety of dams (OP 4\.37) and projects in international waters (OP 7\.50)) are discussed below: - The EA safeguard compliance rating is "Satisfactory" due to the successful preparation and adoption of the EA and EMP\. - In the case of compliance with the dam safety safeguard, until November 2010 this had been rated as "Satisfactory" in all Implementation Status and Results (ISR) reports\. This reflected that a dam safety review had been prepared for the Chardara dam, and that a properly constituted IPOE had reviewed the design and overseen the implementation of dam safety measures (further Chardara dam safety work is to be carried out under the prospective SYNAS-2 project, for which an IPOE is also expected to be in place)\. However, in the last ISR report of November 2010 (and provisionally in this ICR report), the rating was reduced to "Moderately Satisfactory"\. This was due to the status of pending contract works at the Aklak control structure\. The Bank team urged CWR to ensure that the recently occurred erosion of river banks on both sides of the river bed downstream of the Aklak structure (and to a lesser extent downstream of the Aitek weir) is of a localized nature and will be adequately addressed by the contractors\. In accordance with the Bank’s 11  dam safety policy (OP/BP 4\.37), the Bank ISR mission of November 2010 suggested that the erosion problem may result from either a stilling basin under-design or an implementation shortcoming\. The Bank as part of its due diligence and assisted by FAO undertook to review the design to determine whether the problem arose from a design issue or an implementation issue\. The preliminary results, obtained by February 2011, suggested that there might be a minor design issue3, which can be tackled\. - The international waters safeguard compliance rating is "Satisfactory" due to the successful notification of project details to the upstream riparian countries (Kyrgyz Republic, Uzbekistan and Tajikistan)\. - The overall combined safeguards compliance provisional rating is "Moderately Satisfactory" (equivalent to the lowest individual rating, that for safety of dams)\. 2\.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by present operation, Operation & Maintenance arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation, if applicable) The SYNAS-I project has been successfully implemented and, as discussed further in Section 3 below, has been instrumental in the achievement of target outcomes and generation of expected benefits\. There are indications that both operation and maintenance services for system infrastructure are being provided by CWR, although few shortfalls in this area are identified as a moderate risk to sustainability (see risk matrix on page 18)\. Also, during site visits to substantially completed and operating project infrastructure works, effected a month before project closure, few hydraulic performance issues were observed that seemed to warrant early attention and subsequent follow up, as discussed further in Annex 2 below\. Furthermore, as indicated previously above, execution of a few works remain pending, and in particular Chardara dam longer-term safety, although now partially addressed, remains a concern\. These issues can be well addressed by the follow-on SYNAS-II project, which will build on 10-year lessons from SYNAS-I to ensure the sustainability of works introduced along the River and at NAS\. Finally, beyond consolidation of achieved benefits, there are identified substantial additional potential environmental and socioeconomic benefits to be realized through further cost-effective investments in and around the Syr Darya river and NAS\. The SYNAS-II project has been formulated to carry the regional development forward accordingly\. 3 The fast-track analysis suggested that the design of the stilling basin was acceptable but that the whole Aklak structure was probably situated too high in the landscape, giving a steep downstream riverbed slope and a low tailwater depth, leading to occurrence of the hydraulic jump outside of rather than inside of the stilling basin\. To obtain a revised riverbed slope of say 0\.001, a possible remedy would be for CWR to construct a sill of 2 to 3 m height about 200 m downstream of the weir (for example by dumping boulders into the river at that location)\. There would most likely be bank erosion again downstream of this new sill, but this might not be as worrisome as regards safety of the structure\. Nevertheless, awaiting additional data/drawings, the Bank/FAO team could not provide full evidence that the low tailwater level is causing the turbulence and consequently the erosion\. The Bank/FAO team hence advised CWR that: (1) if erosion is still ongoing/progressing, then all required data/drawings should be made available immediately for further detailed analysis; (2) if observed erosion has subsided, then no immediate action is required, but regular monitoring once a week recommended\. In May 2011 CWR implied that the latter applies\. 12 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) Both of the PDOs (PDO(i), the production improvement objective, and PDO(ii), the environmental improvement objective) continued to have a high relevance throughout the duration of the project\. Design and implementation priorities remained unchanged, although some changes in actual works implemented and/or transferred or postponed to other or subsequent projects did occur as noted above\. It must be said that the abnormally high flows experienced over an extended portion of the project period led to some modification of development need perspectives away from low flow mitigation and towards flood protection and control (including dam safety), and they also had the effect of shortening the expected time frame for achievement of the target outcomes discussed in the following section\. 3\.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2) In general, the target outcomes are considered to have been achieved, as conveyed by several media reports noted in the past few years\. The following is a summary of incremental outcomes achieved, based on comparisons between the pre-project 2001- 2004 baseline data and the post-project 2009-2010 M&E data\. Further details are provided in Annex 2 (outputs) and Annex 7 (employment and other social benefits)\. (a) For PDOs (i) and (ii)\. NAS water levels above Baltic Sea Level (BSL) increased from a pre-project low of 38 m to the desired design level of 42 m\. In 2006 and 2007 the NAS reached full capacity\. Annual inflows into the NAS were 7 and 4 billion m3 in 2007 and 2009 respectively\. The water surface area increased by 37% from 2,400 km2 in 2001 to 3,300 km2 in 2009 (50% greater than at the historical lowest water level)\. The distance from Aralsk harbor to the NAS decreased from 75 km in 2001 to 40 km in 2009 and 35 km in August 2010\. Following the closure of the Aklak control structure on 21 November 2009, the upstream water level reached 53 m above BSL as per design, allowing 75 million m3 of water to be diverted into the delta lakes\. (b) For PDOs (i) and (ii)\. Construction of the new Aitek structure and rehabilitation of other Syr Darya river infrastructure works provided an overall carrying capacity of the river of 700 m3/sec and increased the carrying capacity in winter from 300 m3/s in 2001 to 425 m3/sec in 2007\. As a result of these interventions and those at Chardara dam and reservoir, annual losses into desert sinks (the Arnasai depression) reduced from 5 billion m3 in 2003 to 0\.4, 0\.8, 1\.0 and 0\.2 billion m3 in 2006, 2007, 2008 and 2009 respectively (the target outcome value was 1 billion m3)\. (c) For PDOs (i) and (ii)\. The increased freshwater inflow to the NAS more than halved the salinity levels in the sea, from more than 20 g/l in 2001 to less than 10 g/l in 2010\. (d) For PDO(i)\. Areas planted to rice increased from 58,500 ha in 2001 to 73,300 ha in 2009\. More generally, water supply for sustained cropping on all irrigated lands (in the order of 150,000 ha) has been secured\. However, there was as yet 13  no solid trend helping to directly attribute4 the increased crop production/yield to the SYNAS\. Agricultural development is dependent on not only water availability but also workable and effective irrigation systems, agricultural extension, marketing, etc\.; further support will be needed to realize the agricultural benefits of secure irrigation water supplies (e\.g\. through the prospective Irrigation and Drainage Improvement Project - Phase 2 (IDIP-2))\. (e) For PDO(i)\. Cattle numbers increased from 185,000 heads in 2001 to 260,000 heads in 2009, and there were similar levels of increase in other livestock numbers\. Livestock raising expanded due to increased availability of potable water for livestock watering and (possibly) of irrigation water for livestock fodder production\. (f) For PDO(i)\. Fish catches in the region increased from 52 t in 2004 to 2,834 t in 2007, 2,320 t in 2008, and 2,650 t in 2009 (of which 2,000 t in 2007 and 1,885 t in 2009 were from the NAS itself)\. The production from fish processing plants in the region reached 770 t in 2009 (of which 466 t were exported)\. Fishermen informed the visiting ICR mission that the informal volumes of fish catches far exceed the formally-declared catch volumes\. (g) For PDO(ii)\. Flora and fauna, and in particular birdlife, around the NAS have much improved\. Also, local people have reported better health and wellbeing (due to the improved micro-climate and other conditions such as air, soil and water quality and biodiversity), and have indicated a return of hope for the future\. The previous trend of mass migration from the area has been reversed, with people returning, building or improving their houses, and reengaging in income generating activities, primarily fishing and livestock raising\. The ICR mission of November 2010, during field visits to SYNAS project sites to see the works and appreciate their actual and potential social and environmental impacts, qualitatively validated the above noted outcomes\. As a form of end-of-project beneficiary survey (see Section 3\.6 below), the mission met with local project officials, fishermen from the NAS area, and representatives from the local NGO Aral Tenizi based in Aralsk, to obtain information and perspectives on relevant social and environmental indicators (e\.g\. changes in health of the local population, fish catches and production, and birdlife and biodiversity in the region)\. The NAS fishermen acknowledged the benefits that they have received from the SYNAS project in terms of greater fish catches, much more variety of fresh-water fish species, improved environmental and health conditions, etc\. The mission also met with the PMU’s ecologist to discuss these impacts and review the types of indicators to be used for the GOK’s own ICR report (see Annex 7)\. 3\.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e\.g\., unit rate norms, least cost, and comparisons; and Financial Rate of Return) The project demonstrated good economic viability, as it resulted in several multi-sectoral types of benefits\. The viability of the capital investments has been demonstrated by a 4 The economic analysis in Annex 3 attributed only a portion of the value of increased crop and livestock production, to the improved water quantity and quality resulting from SYNAS\. 14 simplified, indicative and likely conservative estimation of the annualized monetary gains attributable to the project’s water sector investments and achieved to date in the five key areas of (i) fisheries, (ii) crop production, (iii) livestock, (iv) flood protection and reduced water losses, and (v) ecology, public health and the environment\. Details are provided in Annex 3\. The ratio of the capital costs to the annualized benefits is used as an indicator of economic viability\. A ratio value of less than 10 is deemed to demonstrate economic viability, and the actual value obtained of 6\.4 is therefore considered to be a good result\. As previously reflected cost overruns were significant primarily due to auxiliary works that had not be properly identified at design, but also due to inevitable delays and difficulties in applying international standards for management of procurement and management of contracts for works and installations and the related learning curve as well as a relatively weak US$ relative to local currency\. In spite of these elements overall unit costs remained within acceptable ranges for such works in the region\. 3\.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Satisfactory The project outcome is considered to be clearly satisfactory from the perspectives of relevance of objectives, achievement of objectives, and economic efficiency, with only minor shortcomings noted\. 3\.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development From the indications at Section 3\.2 above it must be concluded that the remarkable advances achieved in the securing and enhancing of the land and water resources of the Syr Darya river basin and the NAS for production from fisheries, livestock and agriculture should lead to equally significant income improvements for the local population\. This assumes that proper attention is given to the removal as necessary of other constraints to production, processing and marketing, for example as is intended for fisheries with the ongoing parallel JSDF initiative and for agriculture with the prospective IDIP-2\. Beyond this, the improvements in biodiversity, environmental and human health, and transportation and power infrastructure and services, should prove highly conducive to further social and economic development and quality-of-life enhancement in the region\. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) Strong technical and project management assistance was provided under the project to the PMU and implementing agencies, through a mix of international and national consultant firms and individuals\. The institutional strengthening benefit that accrued as a result has been acknowledged in the Borrower’s draft ICR report\. (c) Other Unintended Outcomes and Impacts (positive or negative) Construction of the NAS dike and Aklak control structure, the sites of which were at very isolated locations, required a substantive investment to be made for the provision of 15 supporting infrastructure (e\.g\. roads)\. During implementation this was increased to an even higher level, at the request of local authorities and communities, to provide extra road and power line connections to isolated communities in the area\. It is understood that these have had a substantial positive impact on the development of these communities\. Somewhat similarly, at the Chardara dam and reservoir, where revised safety concerns led to unplanned interventions to secure the Arnasai side dam and spillway (and contributed to postponement of some main dam site works), an unintended outcome was the securing of local district power supply through stabilization of a high voltage transmission line\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes) As mentioned at Section 3\.2 above, ICR mission meetings with local project officials, fishermen from the NAS area and representatives of a local NGO were held as a form of end-of-project beneficiary survey\. Details of the findings from these meetings, together with a relevant media report extract, are provided in Annex 5\. There was also a public- hearing stakeholders workshop carried out in Kyzylorda with the participation of local government authorities and community water-user group members\. Findings from this workshop are presented in Annex 6\. In summary it can be said that there has been widespread public satisfaction with the project results and impacts\. Particular emphasis was given to the remarkable improvements in NAS fisheries, birdlife and other wildlife in the adjacent areas, the health of the population, and the potential for social and economic advancement and standards of living\. Also expressed was strong positive support for proposed SYNAS-II project interventions\. 4\. Assessment of Risk to Development Outcome Rating: Moderate To assist with the assessment of risk to development outcomes, a risk matrix as shown on the following page was developed\. This summarizes the perceived risks in the envisaged progression from achieved outputs through intermediate results to final results, together with risk mitigation requirements\. It is judged that the risks arose more from externalities than from project design or implementation shortcomings\. While the perceived levels of the output to intermediate result risks are low to medium, the importance of some of them leads to an overall rating of the risk to moderate\. 16  Risk Matrix Key outputs Risks from outputs Risks Intermediate results Risks from Risks Development results to intermediate Mitigation intermediate results Mitigation results to development results 1) NAS dike Too low/high water SYNAS-2 Fish and fingerlings Install fish and spillway inflow to NAS: Low pass through NAS net, electric developed risk\. 1) (From outputs 1, 2 spillway to big Aral shock, or fish & 4): More water Sea where they can’t ladder at 1) Fish, livestock and retained in NAS, survive\. NAS crop production 2) River Lack of O&M and Follow up increasing its volume spillway\. increased\. hydraulic increased erosion by CWR and surface area and structures downstream of Aklak reducing its salinity\. Crop production (as rehabilitated and others: Medium opposed to fish Improve and developed risk\. catching and irrigation and 2) Biodiversity in and 2) (From outputs 2, 3 livestock raising) drainage (e\.g\. around NAS & 4): Less water lost depends on other IDIP-2), improved\. 3) Chardara Lack of O&M: Low Follow up to sinks or causing non-SYNAS inputs\. extension and dam and its risk\. by CWR hazardous floods\. marketing\. auxiliary works rehabilitated Too high flood: 3) Human health and Medium risk\. SYNAS-2 3) (From outputs 3 & safety improved\. 4): Dam safety 4) CWR improved\. strengthened PMU and M&E through the discontinued after SYNAS-2 PMU and M&E SYNAS closing: components Medium risk 17 5\. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i\.e\., performance through lending phase) Rating: Satisfactory There has been no indication from either the Borrower’s draft ICR report or from the ICR mission reviews that Bank performance and support during project preparation was anything less than satisfactory\. High quality inputs from both the Bank and project preparation consultants seemingly ensured that project concepts and formulations, emerging as they did from the broader regional context of the ASBP, were sound, relevant, effective and practical\. Also noteworthy were the early (pre-effectiveness) arrangements and inputs for timely preparation of detail designs and tender documents for the project’s main infrastructure works\. It is deduced that perhaps one area of possible shortcoming was in the prioritization and definition of first phase Chardara dam and reservoir safety interventions, given the changes to these that had to be made during project implementation, and given the perception also that some important items were postponed for later attention more for cost than for technical reasons\. However, it needs to be noted that this project covers structures over a stretch of thousands of kilometers in fairly difficult terrain\. Working to a large part on blue prints that were several decades old, oversight of some, and reprioritization of other works that only became noticeable during implementation would have to be expected\. This is particularly the case since this project is part of an overall program of sequenced investments\. (b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Moderately Satisfactory From the Borrower’s perspective, the Borrower's ICR report has indicated nothing but satisfaction with the Bank's efforts, inputs and support in the supervision of project implementation\. Also of note however is the indication and acknowledgement of persistent differences between GOK and Bank perspectives, rules and requirements in the formulating, securing and administering contracts and in other project (including financial) management aspects\. These differences seem to have been important (though certainly not exclusive) factors in the long delay in project completion and possibly indirectly in the non-execution of some project works due to cost increases and budget limitations\. GOK policies, priorities and practices in these procurement, financial and contract management areas are not perceived to be on par with international standards, guidelines and proscriptions relating to competitiveness, transparency and a focus on outputs, development goals and sustainable benefits\. In this situation it is felt that greater Bank advocacy and a more proactive approach to influence change, not only at CWR/PMU level but also and probably more importantly at higher government/ministerial levels, could have been applied\. In support of its supervision, the Bank team was in constant contact with the client/PMU and its design/supervision consultants to expedite the design/implementation progress 18 and to address emerging design/technical issues\. The Bank team responded proactively with timely approval of justified contract variation orders and with guidance to the PMU on the needed M&E and supervision activities to reach the PDO objectives\. Finally, the Bank follow-up undertook an in-depth Mid-Term Review in 2005 that was used to reorient some of the priorities to improve performance\. In addition, the Bank’s procurement team kept a close watch to ensure that the client maintains transparent and efficient tendering and contract-management procedures, built capacity by organizing seminars on procurement and FM including sending PMU staff for training in Italy\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory The above overall rating results from the combining of the two previous separate ratings in accordance with the ICR report guidelines\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory As mentioned above, GOK policies, priorities and practices in procurement and project, financial and contracts management areas are not perceived to be on a par with international standards, guidelines and proscriptions relating to competitiveness, transparency and a focus on outputs, development goals and sustainable benefits\. This is a common situation in Central Asian and other ex-Soviet countries that often constrains and impedes international assistance efforts to help provide meaningful and effective developments with equitable and maximal long-term benefits and positive impacts for a target disadvantaged population\. In the present case, also as mentioned above, it seems that it could have contributed to the long delay in project completion and the non- execution of some project works due to cost increases and budget limitations\. One example would be contracting system disincentives for contractors to bid on project works contracts, as evidenced by often very poor responses to tender calls; further examples would be the major constraints on contract management options for resolving issues relating to needed work variations and to poor contractor performance\. Government performance is therefore deemed to have had moderate shortcomings\. (b) Implementing Agency or Agencies Performance Rating: Satisfactory Judging by outputs/outcomes that are within the mandate/control of CWR, the acceptable quality of construction/operation of SYNAS subprojects suggests that CWR’s performance is satisfactory\. The works introduced/rehabilitated are functional and improved the operation and safety of the structures, thus benefiting many water users along the Syr Darya river and around the NAS, and mitigating the flooding risks\. Judging by activities/procedures and implementation progress, there were many delays and problems, such as the small design issues causing tail-water erosion at Aklak and Aitek weirs, few pending works under the Aklak-Structure contract that slipped beyond the closing date,5 and dropping few flood protection works\. But much of these issues can be attributed to externalities or to deeply rooted nation-wide procedures\. 5 The causes of the contract management problems and delays in Contract#001 (NAS Dike and Aklak Control Structure) are twofold: 19 (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory The above overall rating for Borrower performance results from combining the two previous separate ratings in accordance with the ICR report guidelines\. From the above considerations, overall Borrower performance could be reasonably assessed as having had moderate shortcomings, as indeed is indicated by the rating presented above\. However, as may be deduced from earlier comments above, it is thought that most of these shortcomings arose substantially from policy, priority and practice restrictions and demands imposed on the implementing agencies from higher levels of government\. The CWR/PMU/PIU is thought to have normally demonstrated willingness and desire to subsume and apply sound procurement, supervision and management standards and practices during project implementation (with the support of generally strong consultancy services), but to have been restrained in this by external GOK constraints\. From this perspective the implementing agencies could be considered as having performed with only minor shortcomings\. 6\. Lessons Learned (both project-specific and of wide general application) • Force Majeure causes (that were difficult to foresee during SYNAS preparation): (1) Severe weather conditions (e\.g\. floods to NAS in 2003-2005 were double of their annual norms); and (2) the country’s construction boom in 2004-2006 which led to a sharp escalation in project costs and shortage of construction materials (contractor encountered difficulty in providing timely supply of materials/equipment)\. These events often affected work at its mobilization and during its progress, and caused an accumulated delay of at least 2 years\. • Man-caused issues (partially avoidable during preparation/implementation): (1) The supporting infrastructure in project area was lacking at project onset\. Upon the suggestion from the regional governors, the contract was amended to build village roads to improve transportation between remote settlements and to supply the site with materials/equipment from relatively remote railway stations; (2) Delayed production of the hydromechanical equipment by the local manufacturer; and (3) Poor contactor/subcontractor staffing and headquarter-to-site financing policy throughout the construction period particularly its initial stage, and again during 2007-2010\. This included the selling of the main contractor’s construction machines, vehicles and dump trucks following the law suit filed by its local subcontractor during working on sealing the river bed, which deterred completing the work on the main structure and the dam in 2008\. Until the closing date, the CWR and Bank teams undertook arrangements to resolve the issues between the main contractor and its national subcontractor, in order to leave only minimal works to be completed and financed solely by GOK beyond the closing date\. These arrangements aimed to hedge any significant risks after the project closes\. • 20 The project provided a number of lessons that should prove relevant in the preparation and implementation of subsequent similar development projects in Kazakhstan and the Central Asia region\. These are summarized below\. Lesson 1\. While dam safety was not a PDO of SYNAS-I, in water management developments where dam and reservoir safety is identified as an item in need of attention, due prioritization should be given to execution and completion of the needed amelioration measures\. It is recognized that this is most likely to require substantial financial resources and that, if these are directed towards comprehensively resolving dam safety issues in the first instance, the overall project objectives and desired outcomes may not be fully attained in a limited budget situation\. Under SYNAS-I , Chardara dam and reservoir safety was addressed through urgent but relatively low cost interventions, while important but relatively high cost interventions (e\.g\. to enable passage of an appropriate design flood) were left for a subsequent project\. The successful process of improvements to the NAS and river delta lake water levels and quality, to the Syr Darya river flood control and conveyance capacity, and to overall basin water management, as well as to Chardara dam and reservoir safety, would be continued under the proposed SYNAS-II project\. It is suggested that consideration be given in SYNAS-II to affording priority to dam safety in terms of both funding and scheduling, and if this purpose detracts from the main PDOs of SYNAS-II, a separate project may be formulated with the aim of addressing dam safety/operation issues\. Lesson 2\. For development effectiveness reasons, both technical and economic/financial, there is a strong need for international river basin water management developments to be formulated and implemented in a joint and integrated manner within and between all of the riparian countries\. In the case of the Central Asian and Aral Sea countries it is known that great efforts were made previously to seek agreements and cooperation for much needed joint regional/international water management improvement projects, to no avail\. As a consequence, basin water resources development to date has proceeded on an individual country basis, and there is now a history of relatively successful completed and ongoing individual country projects (e\.g\. the Ferghana valley and other projects)\. Within this history there are various instances where unilateral development decisions and actions have led to counter investments that were (from a basin-wide perspective) costly, avoidable, or at best sub-optimal\. Examples in the case of the Syr Darya river basin in Kazakhstan would include the SYNAS-I repair works on the Chardara reservoir Arnasai side dam and the GOK’s separate Koksarai flood diversion and retention complex\. These efforts could be further optimized if a win-win transboundary approach is jointly taken with Uzbekistan\. There is every prospect for further such â€?useful-but-only-sub-optimalâ€? water developments to take place in the Central Asian countries until such time as international joint water resources planning and management can be agreed to and implemented\. A renewal of efforts to achieve this as part of individual country follow-on projects is suggested\. Some potential initiatives that have been proposed for consideration include (i) holding trust-building regional workshops involving the five Central Asia countries, (ii) development of national development databases and management information systems (MISs) with standardized designs and tools, covering all water balance variables, from which countries could selectively extract and share key data with other countries with a view to identifying and sharing/trading development 21 benefits, and (iii) formulating and undertaking coordinated and/or joint development projects with similar and/or mutually beneficial outcomes in two or more countries\.6 Lesson 3\. Based on comments at Section 5 above relating to procurement and other project management aspects, further efforts and attention are needed to bring about some modernization of the development approach in the Bank-supported operations, aiming at establishing international standards and practices relating to competitiveness, transparency and management flexibility with a focus on outputs, goals and sustainability\. Lesson 4\. Specific attention is needed to improve the management/administration of the procurement contracts\. For any similar follow-on projects the borrower should acquire adequate knowledge and improve capacity in contract management/administration\. Lesson 5\. For the follow-on operations such as SYNAS-2, it is recommended that the Bank and client teams fully utilize Bank instruments such as the “Additional Financingâ€? and “Restructuringâ€?, in order to revisit project design, scale up the project, or make major changes to its key/sizable procurement contracts\. Use of such instruments is envisaged to avoid the delays and cost overruns and tackle the procedural/contractual problems encountered during SYNAS-I\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The comments received from the borrower/implementing agency on this ICR have been positive overall, reiterating the important project impacts despite encountering minor deficiencies\. The implementing agency has however expressed some reservation against the ICR sections which judged the project-preparation and contract-management approaches, while the comments have also recognized that in the past years there were discrepancies between government and international practices in project preparation (i\.e\. feasibility studies)\. The comments also implied that SYNAS-II can work on addressing these discrepancies in order to continue developing the region, through an integrated river basin management approach\. (b) Cofinanciers (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society) 6 Examples could include modernization of irrigation and drainage systems, and rationalization of conjunctive water use, in the Ferghana valley for overall basin water savings and Aral Sea replenishment, and downstream to upstream energy transfers/substitutions (fossil fuel for hydroelectric) to allow winter flows to be retained for summer use\. 22 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) REHABILITATION OF 23\.19 23\.19 NORTHERN ARAL SEA IMPROVING THE HYDRAULIC CONTROL OF 40\.95 40\.95 THE SYR DARYA REHABILITATION OF 14\.10 14\.10 CHARDARA DAM RESTORATION OF AQUATIC 2\.00 2\.00 RESOURCES MONITORING AND 1\.50 1\.50 EVALUATION PROJECT MANAGEMENT 1\.60 1\.60 Total Baseline Cost 0\.00 83\.34 Refinancing of PPF 1\.80 0\.00 0\.00 Front end fee 0\.65 0\.00 0\.00 Total Project Costs 0\.00 83\.34 0\.00 0\.00 \.00 0\.00 0\.00 \.00 Total Financing Required 85\.79 83\.34 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 21\.29 International Bank for Reconstruction 64\.50 and Development Local Govts\. (Prov\., District, City) of 0\.00 0\.00 \.00 Borrowing Country 23 Annex 2\. Outputs by Component Components A, B and C Report on Assessment of Completed Hydraulic Structures (Field Visit of November 2010)7 Summary Six major hydraulic structures were visited during the Bank’s first ICR mission (field visit in November 2010), over a distance of some 2,000 km by road\. Most structures were found to be of good quality ensuring in principle their designed function\. However, as with any such large hydraulic structures, the Bank team emphasized that CWR should ensure the typical post-project follow up actions, particularly for the structures rehabilitated “as designedâ€?\. An additional assessment through comparing the design drawings with the “as-built-drawingsâ€? including a verification of the handover documents is typically required\. The most notable follow-up actions are the function of the stilling basins of Aklak and Aitek regulation weirs, both of which encounter a minor energy dissipation shortcoming (attributed to a minor design issue) which eventually causes erosion of the banks of the tailwater channel\. This needs to be addressed by the CWR (per the recommendations from the WB/FAO team) to avoid any further erosion damages and additional costs\. The Bank suggested that the CWR recruits a specialist who would assist the CWR to identify, and then carry out, the recommended actions, particularly if the bank erosion continues or even escalates (see details below)\. The action matrix below presents a summary of the recommended CWR follow-up actions post SYNAS, following visit assessments of each of the five structures completed under the SYNAS-I project\. Follow-up Recommended CWR Follow-up Structure Timeline requirement Actions Drainage monitoring and Analyze monthly drainage data, and 2011/2012 Chardara Dam discharge verify the hydraulic modeling results onwards capacity of of GRG operations GRG* Analyze and interpret NAS outflow 2011/2012 Kok-Aral Dam None data (2005-2010) onwards Verify “as builtâ€? drawings, the Verification and Aklak Bank erosion in hydraulic calculations and the design implementation: Regulation tailwater channel of the stilling basin, and implement During Weir erosion protection measures 2011/2012 7 Including a visit to Koksarai reservoir and diversion structures which are, however, not part of SYNAS-I implementation, but are integrated with project design\. 24  Instable vortex Investigate cause of vortex and hence Kazalinsk in headwater of (if needed) implement mitigation 2011/2012 Headworks left gate measures Verify “as builtâ€? drawings, the Verification and Aitek Bank erosion in hydraulic calculations and the design implementation: Regulation tailwater channel of the stilling basin, and implement During Weir erosion protection measures 2011/2012 * GRG = Ground Release Gates Individual Structure Details 1\. CHARDARA Dam8 Situation before SYNAS-I implementation\. Based on information provided by dam operation staff, the four turbines may discharge a maximum of 200 m³/s each, the two ground releases (bottom outlets) a maximum of 300 m³/s each, and the Kyzylkum canal outlet 200 m³/s, altogether 1,600 m³/s\. Major problems included the vibration of the ground release gates which could not discharge more than about 40% of their design capacity, the occurrence of sink holes in the dam body at the Kyzylkum Canal outlet, and increased seepage along the toe of the dam\. Because of these reasons, the Chardara Dam was considered to be unsafe\. Objective of rehabilitation works\. To improve safety conditions of the dam, ensure design discharge capacity of the ground releases, restore the drainage system including renewal of piezometers, and operate and maintain the dam in a satisfactory manner\. Outcome of rehabilitation works\. Following hydraulic modeling, the ground releases have been amended; however, maximum safe discharge capacity of each bottom outlet is about 250 m3/s instead of 300 m3/s\. The Kyzylkum Canal outlet structure was renewed, 8 Chardara Dam (Contract SYNAS #003)\. The contract was signed with China Geo-Engineering (CGE) on September 1, 2004 with an originally scheduled completion date of September 21, 2007, but substantial completion was expected by the end of November, 2007\. The main rehabilitation works are: (i) Construction of toe drainage system, including 183 pressure relief wells and 3\.73 km drainage channel, lined with concrete slabs; (ii) Concrete protection of the downstream face of Arnasai Dam; (iii) Installation of 30 new piezometers and cleaning of 23 existing ones; (iv) Rehabilitation of Chardara Dam’s upstream face concrete protection, including repair of joints; (v) Rehabilitation of Kyzylkum Outlet (200 m3/sec capacity), mainly focusing on cavity grouting and compaction grouting; (vi) Reconstruction of Chardara’s spillway’s two bottom outlets to avoid excess vibration of the gates and allow the design flood to pass\. Main works comprise reshaping of spillway floors, with the right outlet tunnel completed in 2006 and the works on the left outlet tunnel ongoing; (vii) Renewal of all hydro-mechanical works (gates, hoisting mechanisms, and stoplogs) at Chardara Spillway and Kyzylkum Outlet; (viii) Electrical works for Chardara and Kyzylkum gates and gantries; and (ix) Investigations for Chardara Dam, including CCTV survey of buried drainage pipes, liquefaction investigations (trial pits, boreholes and CPT), bathymetric survey of the reservoir, and underwater surveys by divers\. (x) 25 all piezometers replaced, and the drainage system improved\. Total drainage along the dam toe was reported to be 5 m3/s which is a significant and unusually great discharge\. Present operation & maintenance\. Though the safety of the dam has been significantly improved, the full discharge capacity of the ground releases cannot be achieved without considerable vibrations\. This reduces usage of the Syr Darya flow capacity below Chardara Dam by 100 m3/s or about 8%\. Though drainage was said to be recorded, no information was available about drainage fluctuations and/or method of recording\. Recommended follow-up actions by CWR\. Drainage data should be analyzed and interpreted monthly, the hydraulic modeling results should be verified, and the cause for continuous vibration of the bottom outlet gates identified and possibly mitigated\. 2\. KOK-ARAL Dam Situation before SYNAS-I implementation\. In 2001, further desiccation of the Large Aral Sea (LAS, the Southern part of the Aral Sea) led to a separation of the LAS and the NAS, increasing the mineralization level of the latter to up to 100 g/l and thus making it impossible for fish to survive\. Objective of rehabilitation works\. To prevent further desiccation of the NAS and enhance its partial restoration including decreasing the high mineralization level\. Outcome of rehabilitation works\. Contrary to an expected NAS filling time of some 10 years, the NAS was brought to the designed maximum water level at 42 m above Baltic Sea Level (a BSL) already two years after the completion of the Kok-Aral Dam\. Since then, NAS operation level remained steady at around 42 m a BSL (or slightly higher) which was due to favorable climatic conditions as well as the increased discharge capacity of the lower Syr Darya following interventions under SYNAS-I, such as the construction of new regulation weirs, river training works, increase of Chardara dam discharge capacity, etc\. Additionally, mineralization decreased in a large part of NAS from some 70 g/l to as little as 10 g/l\. Present operation & maintenance\. The spillway is fully functioning but the crane for lifting the stoplogs is not yet installed\. The dam body is maintained well; minor seepage of different intensity is visible along the dam\. The “newâ€? Syr Darya delta is developing only a few kilometers upstream of the dam\. Recommended follow-up actions by CWR\. NAS outflow data (2005-2010) should be analyzed to better understand the reason for the rapid filling of the NAS during 2005 to 2007\. A recent study about the variability of mineralization in the NAS should be evaluated, and means to ensure a better mixing of fresh Syr Darya water with impounded NAS water should be identified\. Additionally, it might be worthwhile to anticipate the future development of the “newâ€? Syr Darya delta since this may cause increased siltation upstream of the dam’s spillway and a possible reduction of the spillway capacity in the long-term\. 26 3\. AKLAK Regulation Weir Including Fish Ladder Situation before SYNAS-I implementation\. Following the recession of the Aral Sea, erosion of the Syr Darya riverbed brought the existing regulation weir close to collapse and interrupted adequate water supply to the Syr Darya delta lakes\. Objective of rehabilitation works\. To prevent further erosion of the Syr Darya riverbed, regulate NAS inflow, and ensure fish migration and water supply for the Syr Darya delta lakes\. Outcome of rehabilitation works\. The Aklak Regulation Weir including a fish ladder is completed and fulfills its purposes\. Some minor works are left to be implemented by a new sub-contractor\. Present operation & maintenance\. The weir has been tested at the maximum discharge capacity of 500 m3/s and found to be functional as designed\. At the time of the visit, some 400 m3/s were discharging and turbulence in the stilling basin was significant, causing supercritical tailwater flow (estimated Froude number greater than 9) and some erosion damages in the weir’s tailwater channel\. The latter is such that common maintenance works might not mitigate the problem; a comprehensive solution is needed\. As the erosion was significant, the Bank team questioned if this might sooner or later endanger the stability of the structure including the outlet of the fish ladder\. Additionally, there is a need to eliminate any future erosion that could jeopardize the stability of the hydropower plant planned to be build on the right abutment (possibly in SYNAS-II)\. Recommended follow-up actions by CWR\. Following the actions agreed per the Bank supervision Aide Memoires of April and August 2010, the General Contractor finalized a deal with a Subcontractor to complete the remaining works under the Aklak contract, and as much as possible/realistic, before the SYNAS-1 closing date (December 2010)\. These remaining works were mainly for (i) backfilling of the old river bed; (ii) installing a 35/10 kW transformer to secure permanent electricity supply for the structure, and (iii), most importantly, to fix the bank scouring (erosion) downstream of the structure on both sides of the river bed (particularly at the end of the fish ladder), which occurred after the successful testing/receipt of the structure by the CWR engineers\. Other than these 3 subcontracted works (which are not major, compared to the main works achieved), the Bank and CWR teams urged the General Contractor to complete (as fast as possible) any other pending/site-clearing works as per the contact\. During the November 2010 mission, the Bank team advised CWR to ensure that the Aklak recent bank erosion on both sides of the river bed (and to a lesser extent, downstream of the Aitek weir), are of a localized nature hence do not affect the structures stability\. The Bank mission suggested that this erosion may correspond either to an under-design of the stilling basin or to an implementation shortcoming\. The Bank team advised CWR to, for example, advertise for a “turnkeyâ€? (design and build) contract in order to secure a permanent solution\. The CWR's local designer formulated a temporary technical solution, and a corresponding Variation Order (VO) has been submitted by the CWR to the Bank for no-objection\. This would allow the Subcontractor to (at least 27 temporarily) fix this scouring as well as complete the key remaining works under the Aklak contract\. The Bank mission helped in reaching this subcontracting deal (including explaining to all three parties how the VO can be consistent with the Bank’s Procurement Guidelines)\. The VO includes authorizing the Subcontractor to receive its related (IBRD & GOK) payments directly in its bank account (while the separate subcontract between the General Contractor and its Subcontractor will fairly share the liability periods relating to the works undertaken by each)\. The CWR team implied that the erosion would be adequately/temporarily tackled by the contractor\. Meanwhile (from December 2010 to March 2011, although SYNAS closed in December 2010), as part of the Bank’s due diligence in observing the Dam Safety OP/BP4\.37, the Bank team (assisted by FAO) undertook to review the design to figure out whether the scouring problem is a design issue or an implementation issue\. Part of the “as-built- drawingsâ€? related to the ogee crest of the weir, the stilling basin and the tailwater channel protection were verified, and preliminary hydraulic calculations and the design of the stilling basin were checked, to help CWR propose corrective measures\. The preliminary analysis suggested that the structure is generally safe but there may have been a minor design issue with the stilling basin due to selecting the weir location at a relatively high altitude, hence the Bank/FAO team advised the CWR to monitor the erosion status\. If erosion escalates/continues, CWR should immediately engage a Hydraulic Structures specialist to review the detailed design drawings/calculations, hence help CWR analyze further the erosion cause/status and propose a feasible mitigation/protection, and also to advise CWR on any follow-up activities at other SYNAS-I structures, including Aitek Weir where milder erosion occurred\. In late May 2011, CWR/PMU has implied that the Aklak erosion has stabilized\. 4\. KAZALINSK Headworks Situation before SYNAS-I implementation\. The old mechanical and electrical equipment installed in 1970 was worn out and did not fulfill any longer its required functions\. Objective of rehabilitation works\. To replace/modernize all mechanical and electrical equipment and to repair the stilling basins and downstream aprons of the diversion structures\. Outcome of rehabilitation works\. According to information provided by headworks operation staff, all replaced mechanical and electrical parts are functioning well\. However, no structural rehabilitation works were executed\. Present operation & maintenance\. Headworks operation is said to be smooth, and there are no maintenance issues\. However, an unstable vortex, whose cause is not well understood, was observed in the headwater of the left gate\. It may be occurring in the context of (possibly damaged) submerged guiding walls for keeping the left bank intake free from bedload material\. 28 Recommended follow-up actions by CWR\. As in the case of all rehabilitation activities of big hydraulic structures , due diligence would require preparation of a list of executed rehabilitation works, their detailed specifications, and test results including final handover comments, and to compare these with those specified in the respective rehabilitation/construction contracts\. In this particular case, the cause of the vortex activity should be investigated and mitigation measures should be implemented if found necessary\. However, the vortex size/location does not seem to pose any worrisome safety risks\. 5\. AITEK Regulation Weir Situation before SYNAS-I implementation\. The Aitek weir, characterized by a limited flow capacity of 400 m3/s in summer and a reduced flow capacity of 200 m3/s due to ice formation in winter, was in danger of collapse\. The destruction of the regulation weir would have led to crop failure on an irrigated area of 16,700 ha\. Objective of rehabilitation works\. To construct a new weir with a maximum design flow capacity of 700 m3/s in summer and 425 m3/s in winter\. Outcome of rehabilitation works\. The new Aitek regulation weir fulfills its purpose\. The Syr Darya discharge capacity below the weir is significantly increased and water availability for irrigation purposes is ensured\. Present operation & maintenance\. There are specific operation rules for the weir gates due to the particular flow conditions in winter which lead to higher tailwater levels than for the same discharges in summer\. When the weir was visited some 430 m3/s were being discharged\. Turbulence in the stilling basin as well as in the tailwater channel was stronger than expected, and was causing some erosion along the left and right tailwater channel banks\. The latter is such that common maintenance works may most probably not mitigate the problem, leading to a need for a comprehensive solution (similar to the Aklak weir situation, albeit with a lesser extent )\. Recommended follow-up actions by CWR\. As is the case of the Aklak weir, the “as- built-drawingsâ€? related to the ogee crest, the stilling basin and the tailwater protection should be verified, the hydraulic calculations and designs for the stilling basin should be checked, and erosion protection/mitigation measures should be designed and implemented as soon as feasible\. For these purposes, the same Hydraulic Structure Specialist who would be recruited to address the erosion at the Aklak weir, and help CWR to follow up the other structures built under the SYNAS-I(e\.g\. appraise the completed works and design any required follow up or O&M measures)\. Component D: Aquatic Resources and Fisheries Development The project aimed to improve conditions of lakes in the Syr Darya delta and the NAS by reducing salinity through more supply of freshwater\. This was to help in increasing production of fish in these water bodies, and in improving ecology and biodiversity\. The project initially included US$2\.0 million for improving aquatic life in the rehabilitated water bodies, including US$1\.5 million for technical assistance and consulting services 29 and US$0\.5 for works\. However, since the start of the project, the GOK has been emphasizing the need to use grant funds as much as possible for implementation of this component\. Among the many ideas/activities for inclusion into this component, rehabilitation of two existing hatcheries in the delta area next to the NAS, at Koszher/Kamyshlybash (for Cyprinid and other forms of freshwater aquaculture) and Tastak (for sturgeon), were considered to be the most essential\. At the start of the project, USAID assisted with rehabilitation of these hatcheries, providing equipment such as incubators, technical assistance and training\. With this work done by USAID, by the time of the SYNAS-I project mid-term review (MTR) in 2005, the PMU presumed that the project funds for rehabilitation of hatcheries would not be required and decided to reallocate the civil works funds (US$0\.5 million) for rehabilitation of hydraulic structures and canals supplying water to Kamyshlybash lake\. However, despite repeated efforts/reminders during World Bank missions, no progress was made in preparing designs for these works\. During preparation of the SYNAS-II project, a superior solution for restoring fresh water flows to the system of lakes in the delta, including Kamyshlybash lake, was identified and adopted\. The PMU thus felt (and the Bank’s MTR mission agreed) that the utility of the works for restoring flows to the lake as conceptualized, using limited SYNAS-I project funds, was very low, and that the works should therefore not be undertaken in this way\. It was deemed that a better resolution of the issue would be obtained under the SYNAS-II project (and by 2010 the CWR had decided to undertake the Kamyshlybash lake works, together with other proposed works on the Akshatau and Aksai-Kuandarya lake systems, under the SYNAS-II project)\. Meanwhile, more resources to complete rehabilitation of ponds for fish stock, pumps and power lines were needed at the two above mentioned hatcheries\. It was therefore agreed that the funds for civil works would be used to carry out some rehabilitation of the ponds and associated works at the two hatcheries\. In parallel, the Bank mobilized the JSDF grant (see below) to provide technical assistance to develop fisheries in the project area through a community-based development approach\. There have been savings out of the remaining US$1\.5 million allocated to this component (and provided from the GOK budget) for technical assistance/consulting services; only a small part of these funds was required for designing and supervising rehabilitation works for ponds at the two hatcheries\. The savings have been used to meet the additional cost of project supervision and management due to extension of the project implementation period\. Community-Based Aral Sea Fisheries Management and Sustainable Livelihoods Project (JSDF Grant of US$1\.9 million, approved on March 27, 2008) The JSDF-supported Kazakhstan Community-Based Aral Sea Fisheries Management and Sustainable Livelihoods Project, which supports the fishing communities around the NAS as a supplement to the SYNAS-1 project, is ongoing\. The objectives of this capacity-building project are to improve living conditions for vulnerable, marginalized fishing communities in the NAS region by developing local capacity for improved and sustainable management of the resource base, enhancing income generating opportunities, and 30 supporting access to basic social infrastructure and services\. The SYNAS PMU is managing the implementation of the grant, for which certain funds are available under the grant\. Aral Tenizi is the implementing NGO that was identified during grant preparation since it had been working with fishing communities around the NAS for over ten years and was well-qualified for the work under the grant\. It was foreseen that the PMU would have procurement expertise but would need to hire technical expertise to assist with the development of detailed technical proposals ready for procurement\. The NGO was hired to carry out many of the implementation tasks\. The above arrangement has already been tested through completion of two procurements, namely (i) procurement of furniture and toys for kindergartens/baby nurseries in Aralsk and (ii) procurement of vehicle and ambulance for the remote fishing villages\. Also, by the end of December 2010, a water truck was to be procured for the communities\. The SYNAS PIU in Kyzylorda facilitates the implementation of the grant, and the Bank team therefore recommended extension of the contracts of the PIU core staff until the start of the SYNAS-II project\. It needed to be strengthened with a few short-term technical consultants, to be hired for the NGO Aral Tenizi\. Grant implementation has been slow (disbursements were only at US$407,000 or 22% of the target by June 2011)\. The Bank mission met with PMU staff in Astana and the representative of the NGO “Aral Teniziâ€? in Karateren who administrates the JSDF grant, to discuss the status of implementation and pending issues\. According to the procurement plan activities are significantly behind schedule\. The NGO representatives reported that a Grant Coordinator had been hired in November 2010 and that she would start in December 2010 to conduct training on project design (proposal writing) for fishermen in 15 villages\. The mission informed the PMU staff that most construction works should be started no later than March 2011, failing which the Grant funds would be returned\. The mission also emphasized the need for a Building Engineer/Architect to be in place this year, so that key civil works could be prepared and implemented from the spring of 2011 onwards\. At least one year will be needed for implementing the works and supplying the goods (before the grant closes on 27 March 2012), and therefore, if by mid of 2011 the contract documents for these works/goods are not prepared, the Bank and the CWR will consider canceling the related portion/categories of the JSDF grant\. The Bank mission encouraged the CWR to mobilize the eligible consultants category of the JSDF grant for extending the contracts of the core staff of the PIU of SYNAS (who have accumulated good experience over the 8\.5 years of the SYNAS-I project) at least until the start of the SYNAS-II project\. The extension of the contracts has been important for several reasons, namely (i) to keep the PIU operational to properly complete the SYNAS-I project, including completion of the Aklak structure works by GOK beyond the project closing date, (ii) to manage the 4-month grace period of the project as well as the defect liability period for its key works contracts, (iii) to support the ICR missions to be undertaken by the Bank; (iv) to continue managing the JSDF grant project, and (v) to help CWR finalize the preparation and processing of the proposed SYNAS-II project\. 31 Annex 3\. Economic and Financial Analysis (including assumptions in the analysis) At project evaluation (2010) the realized benefits, particularly those related to incremental agricultural production, are at best only at partial or interim levels, and are not readily definable\. However, viability of the capital investments has been demonstrated by a simplified, indicative and likely conservative estimation of the annualized monetary gains attributable to the project’s water sector investments and achieved to date in the five key areas of (i) fisheries, (ii) crop production, (iii) livestock, (iv) flood protection and reduced water losses, and (v) ecology and the environment\. The ratio of the capital costs to the annualized benefits is used as an indicator of economic viability\. A ratio value of less than 10 is deemed to demonstrate economic viability, and the actual value obtained of 6\.4 is therefore considered to be a good result\. Type of benefits Incremental Monetized unit benefit (modest Total annual population served estimates used) (annualized) (or incremental benefits units gained) Fisheries 3,000 ton/year US$1,000/ton\. Most of it US$3 (formal catches plus attributed to the increased NAS million/year a modest estimate of volume informal catches) Crop production At least 15,000 ha Gross US$500/ton or US$3 (mainly rice) US$700/ha/year (yield is 1\.4 million/year ton/ha/year)\. Net income is US$400/ha/year\. Attribute only half of this value to the increased water; hence US$200/ha\. Livestock 70,000 cattle and Attribute US$20/head/year to the US$1\.5 6,000 camels increased water supply million/year Flood control, increased 60,0009 capita avail US$50/capita/year (a much higher US$3 river winter capacity, from flood value will be obtained if the inter- million/year reduced water losses to protection and sectoral shadow value of the saved sinks reduced losses (by 4 water is taken US$0\.01/m3)\. to 5 Billion m3/year) Flora and fauna10, human 100,000 capita; avail US$20/capita/year (a much higher US$2 health (respiratory), from the increase in value will be obtained if the inter- million/year recreation and aesthetic NAS surface area by sectoral shadow value of the saved plight, intrinsic values 40%\. water is taken US$0\.01/m3)\. (vicarious consumption, existence value) Total US$13\.5 million/year 9 This is a modest estimate of the number of direct beneficiaries\. The total direct and indirect beneficiaries are about 1 million people, mainly in Kyzylorda oblast, the poorest region of the country\. The project has directly improved the wellbeing of 150,000 to 200,000 people in Aralsk and Kazalinsk raions of this oblast (an internationally recognized area affected by the Aral Sea environmental catastrophe)\. 10 These types of benefits are mainly attributed to the increase in NAS surface area, leading to less eutrophication, less dusty wind storms, and better recreation\. 32 C/O Ratio (economically viable if lower than 10): Ratio between capital cost ($86m) and annualized benefits ($13\.5m) = 6\.4 Total Economic Value: Water Resources Current-User Values Personal Use Value Intrinsic Values Direct Use Indirect Use Option V alues Non-use Values (Near-term & Long-term Near Potential use) Ecological Function stream value Stewardship Instream Bequest Withdrawal Future Direct and Vicarious value Indirect use values Consumption And pure e\.g\.Recreational, Existence value e\.g\. Navigation, Relaxation & Aesthetic Recreational, Commercial & e\.g\. Flood Control, Nutrients hydropower Cycles, Waste Assimilation e\.g\. Municipal, Agriculture, Industrial & Commercial Figure A – Total Economic Value: Water (adapter from Munasinghe 1992 and Bateman 1995) Regional outlook: Kyzylorda oblast is a desert region with highly unfavorable climate, but with vast mineral resources\. The region is also characterized by deteriorated and rudimentary infrastructure\. Rural settlements are predominant, and economy is heavily dependent on agriculture production\. Another salient feature of the local economy is its reliance on the national budget; over 90% of the regional expenditures are subsidized by Astana\. Positive outcome for the social environment: Interviews and statistical data show social environment has benefited significantly from improvement in performance of various agricultural sectors\. Increase in amount and quality of water, crop and livestock has not only produced a direct poverty-reduction effect, but also created a long-term investment into health and nutrition of the Aral Sea community\. For instance, introduction of fish into the ration of the population resulted in a rapid decline in maternal mortality rates, as well as iron and iodine deficiency disorders\. Prevalence of water- and airborne diseases was also reduced due to the drop in salinity and occurrence of dust winds\. Moreover, economic growth has facilitated population return flow, especially into the seashore areas and the Syr Darya basin\. Considerable increase in fishery production, as well as urban wages, has positively influenced migration balance in the region\. 33 Threats to sustainability: Several challenges to the economic and social well-being of the region’s population remain and need to be addressed: malnutrition, drug and alcohol consumption and inadequate public health infrastructure\. It is also advisable to promote better engagement of business and community in the fish production\. The diagrams below were created based on data from the Agency of Statistics of the Republic of Kazakhstan ( http://www\.eng\.stat\.kz/regions/kzlrd/Pages/default\.aspx ) Real income rate 140 120 in % to previous year 100 Republic of Kazakhstan 80 Kyzylordinskaya 60 Astana city Almaty city 40 20 0 2003 2004 2005 2006 2007 2008 2009** Agriculture production and fishery in Kyzylorda oblast millions KZT 2003 2004 2005 2006 2007 2008 2009 fishery 2687 131 975 86 200 116 940 149 724 153 844 225868 Stock raising 4912,6 5612,6 6540,2 7520,7 8659,8 11021,2 11 033,9 Plant raising 8383,9 10494,9 10308,5 10855,4 15486,3 18697,2 23 177,7 34  Kzylorda cereal planting 165,0 160,0 160,9 h 156,1 u 155,0 à à à 153,3 153,7 q 151,6 Â? h 150,0 149,4 † ˆ 145,9 146,1 ‚ u 145,0 ‡ 140,0 135,0 2003 2004 2005 2006 2007 2008 2009 2010* Livestock in Kzylorda 900,0 800,0 780,5 783,4 743,5 700,0 679,3 702,0 637,5 thousands 600,0 585,8 Cattle 500,0 Horses 400,0 300,0 Small cattle 216,2 230,8 240,1 245,4 245,6 200,0 178,6 199,5 100,0 48,9 50,4 51,1 54,2 57,5 60,9 61,7 0,0 2003 2004 2005 2006 2007 2008 2009 35 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Masood Ahmad Mahwash Wasiq Bulat Utkelov Supervision/ICR Lynette Alemar Senior Program Assistant ECSSD Bakyt Arystanov E T Consultant ECSS3 Ohn Myint Consultant SASDT Ahmed Shawky TTL ECSS1 Bulat Utkelov Operations Officer ECSS1 Mahwash Wasiq Senior Operations Officer SASDA Rural Development Specialist (ICR Daniel Gerber ECSS1 reviewer) Janna Ryssakova Social Development Specialist ECSSD David Colbert Environmental Specialist FAO Walter Klemm Hydraulic Structures Specialist FAO Michael Sandoz Irrigation and Drainage Specialist FAO Coral Bird Program Assistant ECSSD 36 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY97 46\.00 FY98 13\.69 FY99 199\.66 FY00 33 160\.22 FY01 33 142\.94 FY02 0\.27 FY03 0\.24 FY04 0\.00 FY05 0\.00 FY06 0\.00 FY07 0\.00 FY08 0\.00 Total: 66 563\.02 Supervision/ICR FY97 0\.00 FY98 0\.00 FY99 0\.00 FY00 0\.01 FY01 1\.25 FY02 20 74\.22 FY03 20 85\.26 FY04 24 103\.67 FY05 25 90\.12 FY06 27 164\.50 FY07 6 76\.07 FY08 6 63\.75 FY09 1 0\.00 Total: 129 658\.85 37 Annex 5\. Beneficiary Survey Results (if any) Meetings with Beneficiaries in Karateren during ICR mission November 2010 During its field trip to the Aral Sea region, the ICR mission met in Karateren village with a number of fishermen and representatives from the NGO Aral Tenizi\. Findings are presented below Fisheries\. In responding to the questions posed by the mission team, the fishermen ran through the history of the Aral Sea’s decline, from its near death in the 1980s to its more recent return with construction of the Aralsk dam in 1996 and the Kokaral dike in 2002\. They said that fishing in the NAS had been reduced to basically one species (flounder) at its lowest point, but they said they now catch a variety of species (including roach, bream, perch, carp, catfish, and pike) in greater numbers than ever before\. The fishermen indicated that the fish catch had increased from around 500 tons in the mid-1990s to about 3,000 tons in 2009 (this figure more or less confirmed by the PMU data, but may not reflect unreported catches)\. The fishermen believe that the informal/unreported catches definitely far exceed the formally-declared catches\. They indicated that the quality of fish has improved and their size has increased\. The NAS fishermen also explained that they work in two seasons, spring and autumn, and work one of the ten designated fishing sites on the NAS that are owned by local fishermen who pay for a license to fish the site\. A small percentage of the catch (roughly 30 percent) goes to the local market, with the bulk of the catch (roughly 70 percent) going either to the big cities in Kazakhstan or to export markets in Russia or Europe\. They said the pike perch is the best fish to catch because it is best suited for export\. In order to improve their situation, the fishermen indicated that they need improved infrastructure in order to reach the fishing camps (this is what limits them to only two seasons) and coolers and refrigeration for summer fishing\. They also said that they want to organize into a cooperative in order to improve their economic situation\. Nevertheless, as the catch has peaked in 2007, the Bank task team would advise the local authorities to analyze the tradeoffs of extending the fishing season, as this may compromise the renewal of stocks\. Biodiversity and Environment\. When asked about the wildlife (biodiversity) in the NAS region, the fishermen said that the numbers of birds and other animals in the area are definitely increasing\. They specifically mentioned migratory species (ducks, swans) that pass through the NAS during their annual migration south\. They also mentioned increasing numbers of wild pigs, jackals, antelopes, etc, many of which they hunt\. When asked about the health of the local population, the fishermen indicated that there were no major problems with health in the community now\. They said that the number of sand and dust storms originating from the Aral Sea bed had decreased in recent years, so the traditional health problems associated with those events (respiratory problems) were declining\. The fishermen also indicated that there were no water-related health problems in the community to speak of\. The fishermen were not in a position to answer questions about crop or livestock production\. 38 Future Projects\. Unprompted, the fishermen did not hesitate to say that they were in favor of the GOK’s proposed 50-meter NAS dike SYNAS-II project option\. They also would like to stop the loss of fish and fingerlings that now pass through the NAS spillway to the LAS\. They say that these fish have no chance of survival there and hence should be kept in the NAS\. They proposed a fish ladder to allow the fish to return to the NAS, but they admitted that a fish net or electric shock mechanism might be more effective\. Media report from Karateren Village (adjacent to NAS): 06 April 2006 Previously Mr\. Zhaisanbayev, a compact, athletic man, worked at a fish-processing plant\. But that plant closed in 2001, and to support his three young children he took a job working at a social club in a larger town\. "When the sea came back I knew I must fish," he said\. On a good day now, fishing for carp and flounder, he can earn US$85, an astronomical sum in a region where many people survive on a few dollars a day\. Mr\. Zhaisanbayev unfurled long hand-woven carpets across his large living room to make his visitors welcome while his wife prepared piles of dried apricots, horse sausages and brick-red pistachios in a kitchen sparkling with new appliances imported from Korea\. With the disappearance of the sea, fish and the ecologically interconnected freshwater lakes that supported livestock, many people in the region migrated to larger cities\. Mr\. Zhaisanbayev said many are now returning\. His village’s population has more than doubled, to more than 1,700, in the past two years\. For many in the Aral region, the new water is confirmation that the Aral's past is prologue\. Kudaibergen Sarzhanov, a spry former Soviet minister of fisheries for Kazakhstan in the Gorbachev years, plans a 2009 release of 30,000 fish native to the Aral, that he has been incubating at home, financing his project from a small United Nations grant and money from his local government\. At the Komushbosh Fishing Hatchery, a modern fish incubator paid for with a US$143,000 grant from Israel, the plan is to release as many as 30 million young sturgeon, carp, and flounder into the Aral and its many nearby lakes when water levels are at full level\. This translates into a potential catch of 10,000 to 12,000 tons a year, compared with 20,000 in the Aral’s heyday and the current 1,000\. Some in the Kazakhstan government warn of a long road ahead\. "It's going to take decades to solve this problem," said Murat Abenov, the akim, or deputy mayor, of the large Kizbilordinsk region abutting much of the Aral\. He said the fishing should be encouraged "even if it's really only going to be in five years that they see results, even if it no longer matters to the government's budget\." Kazakhstan has huge oil reserves, and oil revenues now provide 90 percent of local government budgets, he said\. 39 Many still predict that the big Aral will disappear\. "We tried but failed to work with the Uzbeks," said Ikram Adirbekov, the akim for the Kyzylorda region\. "The rescue of the Aral Sea is now our problem alone\." News of the Aral’s return has ignited the hope of many, even in villages not yet affected\. "The fishermen are getting rich," said Guljanat Karashalan, a 19-year-old English- speaker who studies at a university by correspondence from her village\. She says half her friends have left the region but will come back\. "They say the jobs will return\." 40 Annex 6\. Stakeholder Workshop Report and Results (if any) A public hearing workshop was conducted in Kyzylorda City with participation from the local government entities as well as community water-user groups\. The public hearing praised the results of the SYNAS-I project and recommended going for the second phase (SYNAS-II) project, with the preferred option of raising the water level in "Saryshiganak" bay to 46m (by building a new 10-km long cutoff dike in addition to a 45-km long adduction canal with sufficient gradient to take flows from the Syr Darya river), as opposed to the less-feasible option of trying to restore further the entire NAS by raising the existing “Kokaralâ€? dike built under the SYNAS-I project\. The GOK is currently comparing these two options with support from the World Bank team\. 41 Annex 7\. Summary of Borrower’s ICR and/or Comments on Draft ICR The Borrower’s draft ICR report of 30 November 2010 is a 50-page document\. It is therefore not attached in this Annex\. A brief outline is provided below together with a copy of the conclusion section of the report\. Outline of Borrower’s Draft ICR Report Section Sub-Sections Content Summary / Comments Table of Contents See note at end of table Background Introductory remarks 1\. Project History 1\.1\. Historical Prerequisites Description of pre-project 1\.2\. Condition of Water Management history and conditions Infrastructure 1\.3\. Interregional Water Use Problems 1\.4\. Actions by Kazakhstan 1\.5\. Assistance of the Global Community 1\.6\. Joint Efforts of the Central Asian Countries 2\. Project Rationale Rationale for selection of interventions 3\. Project Project preparation history Preparation Stages and consultant contributions 4\. Project Nature and source of project Implementation implementation financing Financing 5\. Project Presentation of objectives Implementation and corresponding key Objectives and Key indicators Indicators 6\. Project Component \. Restoration of the North Description of project Components Aral Sea Area components and of scope Component \. Improving the Hydraulic reductions relating to Control of the Syr Darya Karaozek weir and Syr Component \. Rehabilitation of Chardara Darya flood protection dikes Dam Component D\. Aquatic Resources Restoration and Fisheries Development Component \. Monitoring and Evaluation Component F\. Project Management and Institutional Development Revised Components 42 Section Sub-Sections Content Summary / Comments 7\. Project 7\.1\. Implementing Agency and Description of project Overview Implementation Arrangements implementation institutional, 7\.2\. Construction Supervision managerial, supervision and 7\.3\. Project Monitoring and Evaluation overview arrangements with 7\.4\. Project Management Unit Consultants particular focus on 7\.5\. Inter-ministerial Coordination consultant contributions Committee 7\.6\. Independent Panel of Expert for Chardara Dam Safety Works 8\. SYNAS Project 8\.1\. Preparation of Projects Description of project Preparation and 8\.2\. Bidding implementation activities Implementation 8\.3\. Implementation of Civil Works and issues relating to Contracts preparation of detail designs - 8\.3\.1\. Contract 001 North Aral Sea and tender documents, Dike and Aklak Control Structure procurement of contracts - 8\.3\.2\. Contract 002 Aitek Weir and execution of works, - 8\.3\.3\. Contract 003 Rehabilitation of including details for each Chardara Dam works contract covering - 8\.3\.4\. Contract 005 Protection Dikes on technical and contractual the Syr Darya River aspects, difficulties and - 8\.3\.5\. Contract 006 Straightening of the exceptionalities Syr Darya River Bed - 8\.3\.6\. Contract 009 Rehabilitation of Kazalinsk Headworks - 8\.3\.7\. Contract 011 Rehabilitation of Kyzylorda Headworks 9\. Tentative 9\.1\. Key Activities and Results Description of M&E Results of Project 9\.2\. Results of Social and Economic consultant activities, Monitoring and Assessment achievements and findings Evaluation\. 9\.3\. Environmental Audits of Construction Sites and Camps 10\. Financing of 10\.1\. Financing of Construction Works Description of financing, Construction of 10\.3\. Audit accounting and auditing Works and aspects Consulting Service and Audit 11\. Key Results of 11\.1\. Improvement of Condition of Extensive description of SYNAS Project Chardara Dam project results and impacts Implementation 11\.2\. Carrying Capacity of the River Bed contrasted to pre-project 11\.3\. Preservation of the North Aral Sea status and conditions 11\.4\. Workforce Supply 11\.5\. Improvement of Infrastructure in Sub- Aral Area 11\.6\. Key Social and Economic Project Indicators - 11\.6\.1\. Project Impact on Social Aspects in the Region - 11\.6\.2\. Irrigated Farming - 11\.6\.3\. Livestock Breeding - 11\.6\.4\. Fisheries 43 Section Sub-Sections Content Summary / Comments 12\. Evaluation of 12\.1\. The World Bank Comments on project Participation of the 12\.2\. Borrower implementation World Bank, 12\.3\. Consultants contributions from the Borrower and - 12\.3\.1\. PMU World Bank, the Borrower Construction - 12\.3\.2\. Supervision Consultants and the consultants Supervision - 12\.3\.3\. Monitoring and Evaluation Consultants Consultants Conclusion See report extract below Annexes Annex 1\. Interaction Arrangements No content presented between Ministries and Departments during Project Implementation Annex 2\. Key Project Indicators Outcomes by key indicators (as included at Annex 2 above) Annex 3\. SYNAS-1 Sites Map Site map with photographs of key project structures Note\. Section and sub-section titles in this table differ from those of the presented Table of Contents and reflect actual report content\. Extract from Borrower’s Draft ICR Report - Conclusion As a result of SYNAS project implementation, the following key interim project objectives were achieved: 1\. Carrying capacity of the Syr Darya river bed increased from 350 to 700 m3 / sec at Kyzylorda-Kazalinsk control structure, which removed threat of flooding Kyzylorda city, Zhalagash, Karmakshi and Kazalinsk raions of Kyzylorda oblast with population over 400,000 people, as well as prevented significant damage to irrigation systems and existing infrastructure\. 2\. Preservation of the NAS as a geographical and climate-forming site reduced salt and dust pollution from the dry sea bed, which led to improvement of health, restoration of biodiversity of the sea and flora and fauna of Sub-Aral area, and mitigation of impact of the Aral Sea drying on environment\. 3\. Improvement of water supply of irrigation systems on area of over 70,000 hectares and coastal lake system, nature complexes and hayfields on area of over 65,000 hectares in the Syr Darya river delta, which is expected to result in sustainable improvement of crop yields and development of livestock breeding and fisheries\. 4\. Safe operation of Chardara dam and stabilization of operation mode of Chardara hydropower plant will lead to higher generation of power in winter time\. 5\. Improvement of environmental, social and economic situation in the region and Sub- Aral area: • Development of local fish species and creation of favorable conditions for breeding of sturgeon; • Fish catch increased from 400 to 2,000 tons in is expected to increase in future to 11,000 tons\. 6\. Reliability of existing hydraulic structures on the river, increase of their operating life, and improvement of operational features of Kazalinsk and Kyzylorda headworks\. 44 Project Social Impacts in the Region During execution of works in the first phase, around 2,000 local people were directly engaged in construction works for 3-4 years\. Dozens of companies in Kyzylorda and South-Kazakhstan oblasts had business with the construction companies; quarries of various construction materials supplied rock mass, quarry stone, aggregate and sand\. Local plants in difficult economic times of their operation were engaged in manufacturing of hydraulic and other equipment for hydraulic structures\. Local power companies designed and built power transmission lines for Aitek weir and Aklak control structure\. Over 70 km of roads built during implementation of the NAS Dam and Aklak Control Structure contract allowed organizing regular passenger and cargo transportation to formerly hard-to-access villages at both sides of the Smaller Aral Sea\. Life is reviving in formerly abandoned fishing auls Karateren, Karashalan, and Bugun\. Dozens of new houses are being built, those who left come back to their home land\. During the reporting period, significant increase of salaries of employed population was observed; this situation in Aral and Kazalinsk rayons is indirectly associated with project implementation\. Project implementation resulted in creation of new jobs, new fish processing plants and workshops were built, and new service and other enterprises were opened\. Average monthly salary per employee 70 000 60 000 50 000 Tenge 40 000 30 000 20 000 10 000 0 2005 2006 2007 2008 2009 Kyzylorda oblast Aral rayon Kazalinsk rayon Completion of Aklak control structure will enable the local population to develop fishing, and to significantly increase livestock, because the new control structure will allow increasing areas of hayfields and pastures\. Population in the region believed in project results – many fishermen, who had left earlier, started coming back and engage in their traditional occupations, fishing at the NAS and delta lakes\. Well-being of population is improving, and as a result new houses are built every year, people buy vehicles and every family has domestic appliances\. 45  Commissioning of Individual Residential Houses 14000 12000 10000 sq\.m\. 8000 6000 4000 2000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Aral rayon Kazalinsk rayon BORROWER’S COMMENTS ON THE DRAFT ICR RECEIVED ON 6/ 9/ 2011 MINISTRY OF AGRICULTURE REPUBLIC OF KAZAKHSTAN World Bank Country Office in Kazakhstan June 9, 2011 Re: Your letter from May 25, 2011 The Ministry of Agriculture of the Republic of Kazakhstan (the Ministry) would like to share its comments to the World Bank SYNAS-1 Project Completion Report\. Report No ICR0000874 on implementation completion and results of the Loan in the amount of US$64\.5 mln for the SYNAS-Phase I Project dated May 12, 2011 is a detailed analysis of the implemented activities, as well as evaluation of the environmental and social-economic impacts on the living conditions of the Aral Sea population from the project implementation\. The Ministry assumes that number of shortcomings indicated in the SYNAS-1 Implementation Progress Report will be taken into account by the Project Administrator in preparing to the SYNAS-2\. Please see our comments to the SYNAS-1 Project Completion Report attached\. Attachment of 3 pages\. 46 Vice Minister M\. Orazayev Conclusion to the Report 1ICR0000874 for completion and implementation and results for the loan in amount US$64\.5 mln in Republic of Kazakhstan of the project “Syrdarya river bed control and preservation of north part of Aral seaâ€? phase-1 from May 12, 2011 Implementation completion report for the project “Syrdarya river bed regulation and preservation of north part of Aral seaâ€?-phase-1 (further SYNAS-1) performed by Department of Sustainable Development, Europe and Central Asia region includes following main sections and issues: (i) Project context, development aims and design; (ii) Key factors, affecting on implementation and results; (iii) Assesment of results, risks affecting on results and also works of Borrower and Bank; (iv) Lessons learned\. SYNAS-1 project is first phase of rehabilitation of Syrdarya river basin in terms of program of Aral sea basin (PASB), confirmed by heads of Central Asia goverments in 1994\. The report provides a summary of the assumptions leading to the shrinkage of the Aral Sea as a consequence of the extensive development of agriculture in Central Asia during the four-decade period\. This has led to serious economic, social and environmental damage in the Aral Sea and around the so-called "the most serious environmental disaster in modern history\." The report rightly pointed out that the project SYNAS-1 is a priority in the water sector in Kazakhstan\. Preparation of the SYNAS-1 was completed in 2001 with support of World Bank, and its implementation was completed in 2010\. The project cost was US$86 million, of which 61 million U\.S\. dollars of World Bank loans\. In the report the main objectives of the project identified on the basis of the Project Appraisal Document: (i) support and increase in agricultural (including livestock) and fishery production in the Syr Darya River basin; (ii) improving public and animal health, as well as restoration of biological diversity by ensuring that preserve the Northern Aral Sea (NAS) and improve environmental conditions and environment in the delta and around the NAS\. Also, for the appropriate key performance indicators that were used to measure the achievement of these goals\. The total number of direct and indirect beneficiaries is about 1 million people, mainly in the Kyzyl-Orda region\. The project directly improves the welfare of 150 000 to 200 000 people in the Aral and Kazaly areas of this region (recognized by the international community, the region of ecological disaster of the Aral Sea)\. 47  The Project was the first in a series of investment operations that will reduce the risks caused in Shardara dam, and will improve the efficiency of water supply, water distribution and use around the basin\. The report shows the description of all components of the project according to their main goals and objectives, as well as a breakdown of project costs and components, work categories and funding sources\. There were no significant changes in the components of the project affecting the results of the project, in general\. Although there was a reallocation of funds between activities to finance additional works such as roads and other necessary activities, which were not planned initially\. Management and interagency coordination of the project was carried out by the Committee of water resources, and although during project implementation there was a transfer of the Committee from one agency to another (from the Ministry of Natural Resources and Environment to the Ministry of Agriculture), it had a minimal impact on the project\. Project Management Unit, initially based at Almaty, and then in Astana, was responsible for the daily management and administration of the project, and a group of consultants, located in Kyzylorda assisted in the technical design, preparation of contracts, supervision of construction work, monitoring and evaluation and tasks in project management\. Also, there was not always a completely effective support provided by international and local consulting firms and individual consultants in these areas\. Other institutional measures envisaged include the creation and operation of (i) inter-agency Coordinating Committee (ICC), (ii) the Supervisory Committee of the project (NPC), (iii) Basin Advisory Group (BCG), and (iv) an independent panel of experts (IPPs) to work on dam safety for Shardara dam\. The first and fourth of these institutions have carried out the work and made a timely and significant contribution to the successful implementation of the project\. In general, the project SYNAS-1 has been implemented as it was envisaged during appraisal\. In the framework of the project it was implemented seven major contracts for construction of new or reconstruction of existing water facilities on the SyrDarya river and the Aral Sea: (1) construction of a dam on the northern part of the Aral Sea (through the Strait of Berg) with the spillway structure in order to restore and stabilize the water level and salinity of the NAS; (2) construction of Aklak weir hydraulic structures; (3) the construction of Aitek weir and reconstruction of head structures in the channel Karaozek, (4) rehabilitation of existing and construction of new protection dams at key points along the river for flood protection and improve the channel capacity Syr Darya; (5) and (6) repair and Kazaly Kyzylorda headworks; (7) Shardara rehabilitation of the dam in order to improve dam safety and increase carrying capacity\. The report stated that to perform the work in whole scope prevented a number of problems, which include (i) the failure to perform the necessary design work because of increasing costs and limited budget, (ii) and vice versa, the implementation has not previously provided, but necessary and beneficial work, and (iii) the general extension of the project from 5 to 9 years\. 48  According to the Bank’s opinion the following factors influenced to the implementation: (i) the differences between Kazakhstan and international standards and requirements for detailed design, cost estimating, pre-bid approval, evaluation of tenders and approve the award of contracts; (ii) coming n of high-water period for a few years, which led to delays and additional needs for protective works and control of water with a corresponding increase in costs; (iii) the need to build infrastructure facilities (roads, power lines, camps, etc\.), etc\. Implementation of the project SYNAS-1 as a whole, comply with the applicable measures of security policy of the Bank, which were identified during the assessment phase of the project: (i) Environmental Assessment (OP 4\.01, BP 4\.01, GP 4\.01), (ii) Dam Safety (OP 4\.37, BP 4\.37) and (iii) Projects on International Waters (OP 7\.50, BP 7\.50, GP 7\.50)\. The report noted the estimated risks in procurement and financial management of the project of PMU consultants, and in general, the course of project implementation and financial management of the project to assess the Bank corresponds to "moderately satisfactory"\. SYNAS-I project has been successfully implemented as a tool for achieving targeted results and the expected benefits\. During a visit to virtually completed and exploited sites were marked by minor deficiencies associated with the erosion of the downstream slopes and facilities Aklak and Aitek (in a less degree), which must be eliminated\. Finally, in addition to the benefits achieved, revealed significant additional potential environmental and socio-economic benefits to be realized through further cost- effective investments\. SYNAS-2 project is formulated in such a way as to further promote regional development\. The report provides a brief assessment of the achievement of project objectives, the economic viability of the key areas of economic development in the Syrdarya basin, and, according to the Bank’s opinion in terms of the relevance of the objectives, goals and economic efficiency, the project results are satisfactory, with only one minor deficiencies noted\. In general, the Committee on Water Resources, Ministry of Agriculture of Kazakhstan agrees submitted Report on the completion and implementation and results of the loan in the amount of 64\.5 million dollars the Republic of Kazakhstan as of 1st phase of the project on Regulation of the Syrdarya river bed and the preservation of the northern Aral Sea from May 12, 2011 with the following comments: 1\. Procurement of consulting services, works and goods were carried out in accordance with the "Guidelines for Procurement under IBRD Loans and IDA Credits" as stated in Annex 4 to the Loan Agreement between Kazakhstan and IBRD (loan number 4609 KZ), therefore, must be excluded from the evaluation report for state procurements in Kazakhstan\. 2\. Committee cannot agree with the conclusion of the Bank that the regulatory requirements in Kazakhstan to the depth development of a Feasibility study and 49  detailed design have led to delays and disputes, although they are much different from international\. 3\. This comment includes only the main part of the Report, due to the absence in submitted document applications 1-9 in accordance with the contents of the Report\. Deputy Chairman \. Zhienkulov Made by Smailov S\. tel\. 8 727 2792305 50 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders None 51 Annex 9\. List of Supporting Documents Monitoring and Evaluation Interim Report (by Scott Wilson, GOK project consultants, 2007) Project Completion and Results Report by the GOK (CWR, December, 2010) World Bank Implementation Status and Results Reports (May and December 2010)\. Supervision Mission Aide Memoires (April, August, November 2010)\. Munasinghe, M\., Water Supply and Environmental Management: Developing World Applications\. Boulder, Westview Press (1992)\. Bateman, Ian, “Environmental and Economic Appraisal\.â€? In Environmental Science for Environmental Management, edited by Timothy O’Riordan\. Longman Scientific and Technical, Harlow, UK (1995)\. 52 53  IBRD 31242R 60° 65° KAZAKHSTAN Koposor CHELKAR Kompolo Zhylon SYR DARYA CONTROL AND Shendy Togyz NORTHERN ARAL SEA PROJECT Baykodam Koroshokot Sozdy Zhiger 0 50 100 150 Shokysy Imeni Kuybysheva Imeni Vasmogo Marto SAKSAULSKIY KILOMETERS Akmorka Taymak This map was produced by the Map Design Unit of The World Bank\. Akespe Kontu Shizhago The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any Shomyshkol ARALSK ARALSULFAT judgment on the legal status of any territory, or any endorsement or Sarybosat Koktem Sopok K A Z A K H S T A N acceptance of such boundaries\. Kokorol Shomish Zaliv Akbosty Komyshlybosh Tushchybas Bugun Kulandy Mys Karasholon Korotobe Imeni Orozhonikidze NOVOKAZALINSK Northern Aral Sea Dike (new) Tastak Zaliv Izendy Moylibash Chernysheva Completion 04/06 Oktyabr KAZALINSK Dyurmentyube Zhonotal Avongord Karaozek Ostrov Barsakelmes Baikazho LENINSK Imeni Zhdonova Branch Lokoly Kentogay DZHUSALY Aklak Outfall Structure (to be replaced) Flood Protection Dikes Aitek Headworks Zhorogash Completion 10/06 Kazalinsk Headworks Completion 05/05 (to be replaced) (to be rehabilitated) Completion 11/04 Ostrov Imeni Tretiy Internotsional Vozrovdenye Voroshilovo Completion 05/06 Dzhalagash TERENOZEK River Straightening 1 Koraozek 45° 45° Completion 09/06 Aksay Internotsional Zhanorolop Chogon KZYL ORDA Large Aral Sea Ostrov Zhamandarya Tasbuget Sulutobe Uyaly Flood Protection Dikes Branch Completion 05/05 Imeni Pervago Moya 2003 level of Mys Aktumsyk Aydorly Tortogoy Aral Sea Kyzlorda Headworks Boygakum Zhulek (to be rehabilitated) Zhidelioryk Kyzyldikon 1990 level of Completion 09/05 SHIELY Karokur Suzak Zhonoturmys Tumen- Aral Sea Avangorck Aryk Imeni Lenina Karotou 1960 level of Aral Sea Tostop DZHANAKOGAN Mys Akkalo Koroson Ataboy KENTAU Novvy Shornok Ikon Teke TURKESTAN Koktube Storyy Ikan WATER CONTROL STRUCTURES Timur Tortkol Mayokum DEVELOPED/REHABILITATED BY Bugun Shaulder U Z B E K I S TA N THE PROJECT: Koksoroy STRUCTURES TO BE REHABILITATED ARYS STRUCTURES TO BE REPLACED PROPOSED STRUCTURES (NEW) Montoytas RUSSIAN F E D E R AT I O N SYR DARYA RIVER Syutwent RIVER BASIN BOUNDARIES Shardara Dam LAKES Astana (to be rehabilitated) IRRIGATED AREAS K A Z A K H S TA N Aboy Area of map Lake Balkhash DESERT CHARDARA Aral Sea MAIN ROADS Arnasa C i Dep REGIONAL AND LOCAL ROADS res as sion pia RAILROADS n S UZBEKISTAN ILICH KYRGYZ (Aydar CHINAZ T U R K M E N I S TA N ea REP\. AZERBAIJAN REGION BOUNDARIES kul L DZHETYSAY SYRDARYA ake TURKMENISTAN TAJIKISTAN CHINA INTERNATIONAL BOUNDARIES ) Gogorin Verkmene- 60° 65° Zulumsary Uzunkuduk volynskoye Gulistan ISLAMIC REPUBLIC OF IRAN AFGHANISTAN MARCH 2011

REVIEW

P088116

 ICRR 13419 Report Number : ICRR13419 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 01/28/2011 PROJ ID : P088116 Appraisal Actual Project Name : Pro-poor Rural Water Project Costs (US$M): US$M ): 22\.20 26\.76 Reform Project Country : China Loan /Credit (US$M Loan/ ): US$M): 12\.47 10\.17 Sector Board : ARD US$M ): Cofinancing (US$M): 0 0 Sector (s): Irrigation and drainage (100%) Theme (s): Water resource management (67% - P) Participation and civic engagement (33% - S) L/C Number : Board Approval Date : 03/19/2004 Partners involved : British Department for Closing Date : 12/31/2008 12/31/2009 Institutional Development (DFID) Trust Fund Evaluator : Panel Reviewer : Group Manager : Group : Peter Nigel Freeman George T\. K\. Pitman IEG ICR Review 1 IEGPS1 2\. Project Objectives and Components: a\. Objectives: The Pro-Poor Water Reform Project (PPRWRP) was financed by DFID, and no Bank PAD was prepared to provide background, context and details of the project \. To compensate, the Implementation Completion Report (ICR) provides much more detail concerning preparation than is normally found in a standard ICR \. In addition, PPRWRP included a Bank-executed Trust Fund which provided specialized technical assistance and support for Water User Association (WUA) development under the project; results from that Trust Fund are referred to as "output 5" in the Implementation Completion Memorandum for the Trust Fund \. The project development objective (PDO) as stated in the Trust Fund Grant Agreement is "to assist the Government of China in reforms in the management of small -scale rural water facilities through the establishment of farmer Water User Associations (WUAs), based on a participatory approach and with special focus on optimizing benefits to poor farmers, women, and disadvantaged groups "\. According to the World Bank's Initiating Brief for a Trust Fund (IBTF) and the ICR, the objective of the project was also to be achieved through the World Bank's sector working program on WUAs \. They further state that the project aimed to support a participatory form of irrigation management which is socially equitable and environmentally sustainable\. The reforms were to be supported and carried out in large, medium and small scale irrigation schemes \. While there are small nuances between the PDOs, IEG has taken the Trust Fund Grant Agreement as the basis for this review\. Key Performance Indicators (KPIs) were as follows: Extension of improved WUAs in seven provinces in phase 1 and seven provinces in phase 2 by the end of the  project (12/31/2008); Improvement of security and equity of water supply for poor farmers and for women and disadvantaged groups; Establishment of WUAs that are participatory, socially equitable and environmentally sustainable; Adoption of a National Policy for WUAs \. Intermediate indicators included the number of participatory demonstration and extension WUAs, participation of women in WUAs, benefits of participatory irrigation management under WUAs, benefits of WUAs, and national and lower level policy documents issued and adopted which supported improved participatory WUA development \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The project had the following five components : (i) Policy Support and Guidance - (planned US$0\.75 million; actual US$0\.66 million) to prepare guidelines, regulations, and research issued by the national, provincial, and local levels to provide policy support for establishing participatory, equitable, and sustainable WUAs consistent with overall policy and reforms in water resources management and poverty reduction \. (ii) Capacity Building and Training - (planned US$0\.32 million; actual US$0,99 million) to strengthen the capacity of (a) agencies to support WUAs, (b) farmers to manage WUAs, (c) women and the poor to participate in WUAs and their management\. This includes support for the development and production of WUA training materials, dissemination through media and other channels, WUA training workshops, and specific training programs \. In addition, lessons learned would help enable WUAs to be extended throughout China \. (iii) WUA Development - (planned US$1\.10 million; actual US$1\.47 million) to establish (a) demonstration WUAs that would enable lessons to be learned and best practices to be identified, tested, and implemented for WUA development based on participatory, equitable, and sustainable management of small -scale rural water facilities, and (b) extension WUAs that would be used to spread and extend WUAs based on those lessons and practices \. (iv) Monitoring and Evaluation - (planned US$1\.07; actual US$0\.95 million) to develop innovative, computerized systems for the project Management Information System (MIS) and WUA - Monitoring and Evaluation (M&E)s and to establish them at all project counties /sites, used for both reporting and project management purposes during implementation, and for evaluating the quality, impact, and benefits of project WUAs during and after their establishment\. Specialized training and technical support in particular on M&E using "control groups" would also be provided\. (v) World Bank Sector Work Program on WUAs - to provide specialized technical assistance and support for WUA development in China, including long term WUA strategy development, WUA training, promotion of participation by women and the poor in WUAs, lesson learning, MIS, and WUA -M&E system design, livelihood studies, and promotion of institutional capacity building for future WUA development, WUA and M&E training assistance to other provinces and projects, dissemination of lessons learned, and other topics as needed \. The last component on the World Bank Sector Work Program on WUAs was not included in the Grant agreement as it was executed by the World Bank \. However, it was included in the ICR because it was considered linked to the project co-financed by DFID and the Government, and administered by the World Bank \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost : As indicated above the total project cost was $ 26\.8 million including the borrower contribution, but the ICR cost table only accounted for the expenditures incurred under the DFID trust funds \. The estimated project costs were indicated in the IBTF \. However, these were specified according to the category of expenditures and the breakdown into components was only done for the consultancies \. The remaining costs for inception, MTR, ICR, and management ($0\.58 million), goods ($1\.0 million), works ($0\.27 million), and other e\.g\. workshops and dissemination activities ($2\.6 million) were not divided according to component \. The total unallocated amount was $1\.4 million\. The World Bank executed component totalled $ 2\.6 million and the World Bank grant administration fee totalled $0\.62 million, according to the ICR (Annex 1 p\. 28)\. The total project costs under DFID trust funds including the Bank executed account at project closure was $ 13\.4 million, which was seven percent higher than the originally estimated amount in the Project Implementation Plan \. The total project cost excluding the Bank executed account was $ 10\.2 million which was 11 percent higher than the originally estimated amount\. Capacity building and training under Component 2 and the costs for inception, mid term review, ICR, and management exceeded its original cost estimates by three times, because as the project developed the crucial role of training was better understood, and this being a pilot, the allocation for this component was increased substantially\. This was possible because of a favorable shift in the dollar /yuan exchange rate\. Financing : The project was funded by China's Free Standing Trust Fund Program - DFID grants in the amount of $12\.5 million estimated at approval included the Recipient executed account of $ 9\.5 million and the Bank executed account of $3\.0 million\. At project completion, total project cost was estimated at $ 13\.4 million including the Recipient executed account of $10\.2 million and the Bank executed account of $ 3\.2 million\. In the project data sheet, the project cost and Credit/Loan amount are specified as $ 9\.5 million at approval and $10\.2 million at completion, reflecting the Recipient administered portion only \. Borrower Contribution: With the Borrower contribution in the amount of $ 13\.4 million (including labor), the total project size at project completion was $ 26\.8 million\. This was 120 percent of the estimate at approval because of exchange rate fluctuations\. Actual Government contribution at the end of the project was 40 percent higher than originally planned\. Dates: The project was first extended by six months to June 30, 2009 at Mid-term Review to carry out additional WUA dissemination activities including an International South -South Conference on WUAs using the Global Distance Learning Network\. A further six months extension to December 31, 2009 was agreed to allow time for full completion of additional technical assistance activities, including training, and final reimbursement of project costs \. 3\. Relevance of Objectives & Design: Relevance of objectives: Substantial The Country Assistance Strategy (CAS) of January 2003 focused on addressing the needs of the poorer and more disadvantaged people as well as those regions in China that were lagging economically \. This was to be achieved through investment lending in the rural development, infrastructure and social sectors, as well as through analytical and advisory assistance and training \. The CAS also supported water resource management reform by building this need into water resource projects and by supporting strategic studies, improved water pricing, participatory irrigation management, self-financing water enterprises, and irrigation rehabilitation etc \. The Country Partnership Strategy covering the period 2006-2010 envisaged aiming for better approaches to improve rural public services and enhanced land and water resource management, including improved water pricing \. The Government of China was also fully committed to the poverty -targeted reform project as evidenced by the high level support it received and subsequent changes it made to fill gaps it perceived in its national water and irrigation policies \. Relevance of design: Substantial The project scope and design were consistent with the CAS elements noted above as well as the principles promoted by the financiers, based on their previous involvement in the water resources sector in earlier projects; the design was also customized to meet the needs of China \. Since the project was primarily financed through DFID the Bank had only an advisory role in the framing of the objectives and the design \. A PAD was not required, and therefore a results framework was not prepared \. Performance targets and indicators were specified at the beginning of the project, but they were mostly output indicators focusing on the number of provinces covered or the number of policy documents and guidelines issued etc \. While these outputs were relevant for the intended objectives, it would have been more useful for the purpose of evaluating the impact on the ground to assess the effects of the projects on the poor farmers, women, and disadvantaged groups, but this is admittedly very difficult \. The project was specifically designed as a "pro-poor" project and targeted benefits for the poor and women \. Project areas were selected to cover relatively poor areas and were located in poverty regions based on national and provincial classifications\. During phase 2 the project particularly focused on absolutely poor regions in Western China (ICR p\. 21)\. The results were based on a "with" and "without" comparison of WUAs with control group areas to take out the effects of other factors such as the quality of irrigation facilities, prices and general economic progress \. The beneficiary survey, which was conducted at the end of the project by the Chinese Academy of Agricultural Sciences supported by the Bank and DFID, showed good results \. While it could have demonstrated the impacts on the ground more effectively if the objectives and the project indicators had been better designed to reflect them, it was still a very valuable piece of analysis \. The study utilized a number of methodologies to analyze the impacts of the project including the Sustainable Livelihoods Framework, Participatory Rural Appraisal and econometric models \. 4\. Achievement of Objectives (Efficacy): The objective to assist the Government of China in reforms in the management of small -scale rural water facilities was achieved \. Overall, efficacy is rated High \. This objective was expected to be achieved through; (i) establishment of farmer WUAs based on democratic participatory irrigation management, to help maximize benefits to poor farmers, women, and disadvantaged groups; and (ii) through the World Bank's sector work program on WUAs \. According to the ICR, all PDO and outcome indicators exceeded the target values; had there been a comparison framework at the time of approval it would have been easier to assess the accuracy of this achievements, but even so the results are far better than anticipated \. Possibly some of the indicators in retrospect were on the conservative side given the institutional capability in China, but many of the activities were completely new and relatively difficult to accomplish (ICR para 3\.2\.6)\. The following Outcomes were achieved by project closure : The targets for extending rural water reform program in seven provinces in Phase I and seven provinces in Phase II were both achieved \. Eight national policy documents promoting various aspects of reform of small-scale water facilities were issued for WUAs, exceeding the target of two, and 62 provincial policy documents were issued for WUAs, substantially exceeding the target of 23\. A gender strategy was completed and fully integrated into the revised WUA charter \. According to the ICR (p\. 21) the establishment of farmer WUAs was based on transparent and democratic participatory irrigation management, to help maximize benefits to poor farmers, women, and disadvantaged groups\. Democratic water management under the WUAs provided the poor and women with equal access to water regardless of their status, economic condition or physical strength (ICR p\. 21)\. The project provided about 295,000 days of training for women and the poor, over and above the 505,000 days of training for all WUA farmers\. With this support participation by women in WUAs grew steadily and by 2008 they accounted for 28 percent of WUA members and 22 percent of WUA leaders\. Compared to the control groups, WUAs under the project saved substantial amounts of water at a relatively low cost due mainly to volumetric water charges, reduced water conflict, and generally better local water management which is reliable, flexible and timely (ICR p\. 26)\. As a result of the better water management introduced by the adoption of WUAs the time waiting for and monitoring irrigation water reduced from 5\.6 hours a day to 4\.5\. (ICR p\. 40)\. For project WUAs compared with control groups, for 2008 alone, food production increased by nearly 238,000 tons, household income by Y 1,846 million and water savings were about 198 million cu\.m\. Overall, some 17,400 people were lifted out of poverty under project WUAs, and the poverty rate in WUA areas fell from 18 percent to 11 percent during the project period (ICR p\. 18)\. In addition, the beneficiary survey (ICR page 40) showed positive impacts on the income of the ethnic minority groups\. For example, in Xinjiang the per capita income of WUA households increased from Y 4,240 in 2004 to Y5,653 in 2007, up 40\.9 percent\. \. Farmers needed to spend less time on agricultural production and could thus afford to spend time (up to two hours a day) on activities such as animal husbandry and on maintenance activities\. According to the ICR (p\. 3 ) the successful roll out of the project pilots has led to a huge surge in the number of WUAs established, which now number tens of thousands across China \. Outputs: The total number of WUAs established under the project was 497 compared to the target of 447\. The total number of special training sessions for women and poor persons has exceeded the target of 51,829 by almost six times, with 295,464 persons trained\. Dissemination of the merits of WUAs was expanded considerably both through the Global Distance Learning Network and through other fora \. CDs were produced in English and Chinese with short video presentations of the merits of setting up WUAs\. There was also an effort to demonstrate through these presentations how to calculate the water charges \. 5\. Efficiency (not applicable to DPLs): While the project was a technical assistance and did not require an economic analysis for justification, the major economic benefits from WUAs and the costs incurred for WUAs were calculated at the time the ICR was prepared \. According to this analysis, in year 2008 alone, the value of incremental food production and water saved by improved, standardized WUAs under the project was Y 470\.5 million, more than double the total project cost of Y203\.6 million\. These incremental benefits were derived from comparison with control groups where infrastructure and other conditions were the same as for WUAs, so it is clear that the benefits were due to WUAs and their operation rather than the irrigation infrastructure investments or other factors \. Compared to the direct costs incurred for WUA establishment under the project of only Y 11\.2 million, the benefits are highly significant \. The ICR states that these benefits relative to the costs may appear implausibly high, but this is because in all the project WUAs the irrigation facilities were reasonably adequate and did not involve any physical investments \. With adequate infrastructure in place, the potential for very high returns exists from relatively small investments through good management and O&M, and inclusive, pro -poor project design\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re-estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Performance targets and indicators were specified, but they were mostly output indicators focusing on the number of provinces covered or the number of policy documents and guidelines issued etc \. Possibly some of the indicators in retrospect may also have been on the conservative side given the institutional capability in China \. Based on the information presented in the ICR, which does not include sufficient evidence about the impact on groups specifically targeted by the PDO, a highly satisfactory outcome is not proven \. Taking these factors into account the overall outcome rating is satisfactory \. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The risks identified in the ICR included the withdrawal of policy support from the Government, discontinuation of institutional support for WUAs, and inadequate capacity for future WUA development \. However, these risks have been either mitigated or addressed through the issuance of high level formal national policy statements on WUAs, plans for the establishment of a specific legal basis for WUAs in national legislation or regulations, wider circulation of the policy notes, establishment of "WUA Technical Services Center" for WUA development support, improved monitoring system, and the availability of training and capacity building materials available for replication \. The fundamental institutional shift from total government and /or village controlled operation to participatory management and O&M by farmers based on democratic principles, adoption of formal and standardized policies, and provision of proper training and capacity building activities are likely to ensure sustainability of project impacts \. The issue related to the financial sustainability of the WUAs was raised during project implementation, and a national agricultural water pricing reform program has been proposed to tackle this issue \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: Quality at entry The project incorporated the key elements of the CAS and supported the Government's reform program in the irrigation and water resource management \. While the objective could have been more comprehensive, the project design did incorporate the relevant lessons and experience from other World Bank funded projects in the sector\. Although there was only one short preparation mission by DFID, this was supplemented by three very intensive Bank preparation missions \. The Bank carried out proper due diligence during preparation, demonstrated by the up-front policy and institutional requirements that were spelled out as conditions for the grant, and through three strong technical assistance missions comprising international and local experts on WUAs, water law, anthropology, women in rural development, poverty and social issues, irrigation engineering, institutional development, water resources reform, and related fields \. This was only possible because the Bank had access to substantial TA funding; the level of preparation could not have been achieved under a Bank project with a normal preparation budget\. A project launch workshop was held at the start of the project which also confirmed the quality at entry\. Quality of supervision During project implementation, regular supervision missions were held with highly experienced and qualified domestic and international experts \. This contributed to identifying and resolving key issues that are critical for project performance and success \. While the ICR acknowledges that the stronger task team focus during Phase two on establishment of permanent arrangements for comprehensive WUA support would likely have enhanced future prospects for improved, sustainable WUA development, the results have achieved or exceeded what the project initially envisaged\. Only two ISRs were filed as the project did not enter the Bank's supervision portfolio until 2008, but satisfactory supervision aide memoires were prepared over the project implementation period \. at -Entry :Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Satisfactory 9\. Assessment of Borrower Performance: Government There was a clear commitment and ownership by the Government to implement this project and then roll it out nationally, as demonstrated in the issuance of the national policy for the standardization and scaling up of the use of WUAs for the farmers in the irrigation and water resource management sector \. Circular 502, which was a National Water Policy Statement, was issued and endorsed by three powerful Ministries \. Furthermore, the Government provided 40 percent more counterpart funding than it originally planned \. Performance was highly satisfactory\. Implementing agencies China Irrigation and Drainage Development Center (CIDDC) under Ministry of Water Resources (MWR) and the State Office for Comprehensive Agricultural Development (SOCAD) under Ministry of Finance (MOF), the CPMOs and PPMOs, and the lower level PMOs all demonstrated exceptional commitment to the projects and to WUAs and overachieved on their performance targets \. The implementing agencies also made substantial efforts to be innovative in developing new approaches and in solving problems as they arose \. This was consistent with the strong support from their leaders \. Rating: highly satisfactory\. Although the project required a one year extension it enabled widespread dissemination of the findings of the technical assistance funded through savings generated by favorable exchange rates \. a\. Government Performance :Highly Satisfactory b\. Implementing Agency Performance :Highly Satisfactory c\. Overall Borrower Performance :Highly Satisfactory 10\. M&E Design, Implementation, & Utilization: Design Performance targets and indicators were specified, but they were mostly output indicators focusing on the number of provinces covered or the number of policy documents and guidelines issued etc \. While these outputs were relevant for the intended objectives, it would have been more useful for the purpose of evaluating the impact on the ground to better assess the effects of the projects on the poor farmers, women, and disadvantaged groups and give a fuller socio-economic profile of the beneficiaries \. Possibly some of the indicators in retrospect were on the conservative side given the institutional capability in China \. Nevertheless, the M&E system was designed to identify the impacts and benefits of WUAs quickly and it included the comparison with "control group" areas so that incremental benefits and the problems of WUAs could be clearly identified \. Early detection of problems has ensured that the WUA standards are actually implemented resulting in quick resolutions, higher quality, and more sustainable WUAs \. Implementation Unlike most Bank-funded projects, M&E was an actual component in its own right and thus received considerable attention during implementation including monitoring and evaluation aspects \. A computerized system was developed and linked through the internet, providing full and rapid information and analysis on both project implementation progress and project impacts to PMUs at all levels \. This MIS was an integral part of project management, handling procurement, financial management, and grant reimbursements, as well as standard progress monitoring and reporting\. Utilization The ICR is relatively lightweight in its coverage of M&E utilization, but discussions with the TTL revealed that the usage by the farmers, local government and irrigation companies was substantial \. The information has also been used by the financiers to further promote the concept and application of WUAs \. The beneficiary survey findings were useful\. a\. M&E Quality Rating : Substantial 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Safeguards : Although it was technical assistance, the project was rated as a safeguard category B project due to environmental, dam safety, and social safeguards that might be triggered according to the ICR (p16)\. During implementation, suitable measures were taken where necessary to mitigate these safeguards issues \. For example, the improvement of WUA facilities was undertaken in the off -season to avoid crop losses, and WUA offices were generally housed in existing buildings to avoid unnecessary land acquisition \. Fiduciary : According to the ICR (p\. 16), the project complied fully with Bank fiduciary requirements for financial management and procurement\. The MIS developed under the project became an effective tool for monitoring project procurement and financial management\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Highly Satisfactory Satisfactory Performance targets and indicators were specified, but they were mostly output indicators focusing on the number of provinces covered or the number of policy documents and guidelines issued etc\. While these outputs were relevant for the intended objectives, they did not allow to specifically measure impact of the project on target groups specifically identified in the PDOs (e\.g\. poor farmers, women, and disadvantaged groups) Risk to Development Moderate Moderate Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Highly Satisfactory Highly Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: The project demonstrates that properly designed and implemented WUAs customized to meet the needs of a particular country can provide substantial economic, social, and environmental benefits and that with strong government support these benefits can be scaled up over wide areas under diverse conditions \. In a project involving several ministries and implementing agencies, strong cooperative partnership and  mutual support during project implementation can help maintain the focus on the principles and standardization of the WUAs\. A sufficient allocation of funds and a wide focus on policy, training, capacity building, and M&E, as well as effective and comprehensive support from the Government at all levels were identified as the key success factors for ensuring efficient and sustainable WUAs \. The project further demonstrates that improved WUAs based on democratic water management are pro -poor and provide an effective and low cost means to benefit disadvantaged groups including the poor and women \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The quality of the ICR is generally satisfactory \. Since the project was financed primarily by DFID trust funds, it did not require a PAD and therefore the ICR provided additional background information and the context of the project \. This made it slightly longer than is the norm \. While the results framework and the baseline were not available at the start of the project, reasonable evidence and analysis were provided in the ICR to facilitate the assessment of project performance \. Some of the outcomes were essentially output driven, but there was consistency in assessing the outputs throughout the ICR \. The report followed the guidelines and drew appropriate lessons from its analysis \. Nevertheless, it would have been useful if the cost table 1-1 given in the ICR (Annex 1) reflected the total project expenditures and not just those incurred under the trust funds \. The ICR is also inconsistent in its ratings \. While the summary table rates Borrower performance as highly satisfactory, the text in the ICR at one point describes Borrower performance as satisfactory \. The coverage of M&E utilization was inferred rather than stated \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P047582

 ICRR 10637 Report Number : ICRR10637 ICR Review Operations Evaluation Department 1\. Project Data : Date Posted : 06/16/2000 PROJ ID : P047582 OEDID: OEDID : L4340 Appraisal Actual Project Name : Contractual savings US$M ) Project Costs (US$M) 235 279\.5 development program Country : Morocco Loan/ US$M ) Loan /Credit (US$M) 100 100 Sector, Major Sect \.: Other Finance , US$M ) Cofinancing (US$M) 135 179\.5 Finance L/C Number : L4340 FY ) Board Approval (FY) 98 Partners involved : African Development Closing Date 12/31/1998 12/31/1998 Bank Prepared by : Reviewed by : Group Manager : Group : Michael R\. Lav Alice Galenson Ruben Lamdany OEDCR 2\. Project Objectives and Components a\. Objectives The project's main objectives were to improve the accumulation and allocation of long -term savings and improve the allocation of savings to private productive investment by reforming the contractual savings institutions, including insurance companies, savings banks and the pension system, and to guarantee the long-term sustainability of the country's pension system\. b\. Components Specific policy measures supported by the project included : (a) completing the financial restructuring of the insurance sector, and improving its financial soundness and attractiveness to the public; (b) laying the basis for the improved efficiency, transparency, and financial viability of the existing pension system and for the development of capitalized pension funds; (c) changing the role of the Caisse de Depot et de Gestion (CDG) in the collection, administration and allocation of the financial resources of the pension system and savings banks; and (d) further improving capital market infrastructure and the range of instruments available to institutional investors \. c\. Comments on Project Cost, Financing and Dates The project comprised one tranche for US$ 100 million equivalent, divided between US$ 50 million and FRF295\.1 million, along with parallel financing from the African Development Bank for US$ 179\.5 million equivalent\. The project was approved in June, 1998 and closed on December 31, 1998\. 3\. Achievement of Relevant Objectives : Two out of the three main performance indicators of the project (improvement in the ratio of contractual savings to GDP and decreased role of Treasury financing in contractual savings ) were achieved, and the short -term components of the project were largely implemented \. By contrast, many of the medium-term project components have not yet been achieved \. The main performance indicators were: (a) an improved ratio of contractual savings to GDP (the ratio increased from 2\.9% in 1997 to 3\.1% in 1998 which exceeded the estimated "target" of 3\.0% in 1998, and the estimated ratio of 1999 is 3\.5%); (b) decreased role of Treasury financing in contractual savings from 93\.5% in 1997 to 49\.4% in 1998; and (c) an increase in the ratio of equities and securities to bank credit, which was not achieved as the ratio declined from 59\.2% in 1997 to 40\.3% in 1998\. Short term policy reforms which were implemented included: (a) Insurance sector reforms (introduction of solvency monitoring criteria for insurance companies, first settlement of outstanding claims against liquidated insurance companies, liberalization of insurance premiums, privatization of the state -controlled insurance company CNIA, restructuring of the public transport insurance company was begun, and increased tax -exempt annual ceiling on life insurance companies ) (b) pension reform (independent management of reserves of the pension fund (CMR) was formalized, and a monitoring committee responsible for assessing pension systems was created, and actuarial and other studies begun ); (c) actions were taken to transform the Caisse d'Epargne into an active funds manager including setting up of a mutual funds from CEN and CNSS funds deposited with the Caisse d'Epargne; and (d) reforms to improve the legal and regulatory structure of financial markets including presentation to the Council of Government of legislation governing the securitization and mortgage market \. By contrast, few of the medium term components of this one-tranche project were implemented: (a) settlement of claims on liquidated insurance companies was not completed, (b) insurance premiums were not completely liberalized, (c) actuarial studies and financial audits of pension schemes were not completed and a consolidated report on implications of various reform scenarios was not completed, (d) promotional campaign to inform the public of benefits and possible problems with reforms was not launched (e) the sale of CDG assets in the hotel sector were disappointing \. One of the few medium reforms to be implemented was the publication of the draft law on securitization in the Official Bulletin in 1999\. 4\. Significant Outcomes /Impacts : Insurance companies' reforms to move them towards market -based operations and privatizing the state -controlled insurance company (CNIA), independent management of pension fund reserves, and moving the Caisse d'Epargne towards being an active funds manager should all have important efficiency gains for the economy over time \. 5\. Significant Shortcomings (including non -compliance with safeguard policies ): The pace of implementation of reforms slowed considerably after the release of funds of this one -tranche operation\. While progress was made in the financial restructuring of the insurance sector, this was by no means completed \. Claims against liquidated insurance companies remained unsettled and insurance premiums have not been liberalized\. Studies and audits needed as a basis for formulating the pension fund reform program have not yet been completed, while one of the project's objectives was to implement a reform program \. Sales of CDG assets in the hotel sector have been disappointing \. Financial market reforms to allow portfolio management by third parties have not been implemented, nor has a law on third -party management to facilitate development of money market mutual fund\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Marginally Satisfactory Only two of the project's three main performance indicators were achieved \. Performance was stronger in terms of implementing a number of short term policy reforms, but there were many shortfalls in implementing medium term reforms\. Institutional Dev \.: Substantial Modest The ICR states that the main institutional impact of the program was to change the CDG from a deposit taker to an active funds manager\. Many of the proposed medium term reforms in the pension schemes, insurance companies, financial markets and the Caisse d'Epargne were not implemented\. Since many of the medium term reforms dedicated to institutional development have not yet been implemented, a rating of "modest" institutional development is more appropriate than a rating of "substantial"\. Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : There is a strong contrast between the generally good implementation of the short term reforms, prior to tranche release, and the uneven implementation of the medium term reforms subsequent to tranche release \. Perhaps there should have been a better matching of the time frame of the instrument and its objectives \. For example, floating tranches might have been used to better match financial support with policy implementation \. Alternatively, a stronger assessment of ownership of the reforms, including popular support which would endure possible changes in government, could have resulted in a better formulation of the project's policy agenda \. These considerations are even more important with changes in government as with this project \. 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : The ICR is of satisfactory quality, and presented relevant information clearly and in a user -friendly fashion\.

REVIEW

P002245

 ICRR 10633 Report Number : ICRR10633 ICR Review Operations Evaluation Department 1\. Project Data : Date Posted : 06/29/2000 PROJ ID : P002245 OEDID: OEDID : C2189 Appraisal Actual Project Name : Second US$M ) Project Costs (US$M) 16\.7 11\.2 communications project Country : Rwanda Loan/ US$M ) Loan /Credit (US$M) 12\.8 10\.1 Sector, Major Sect \.: Telecommunications US$M ) Cofinancing (US$M) & Informatics , Telecommunications L/C Number : C2189 FY ) Board Approval (FY) 91 Partners involved : Closing Date 12/31/1995 06/30/1999 Prepared by : Reviewed by : Group Manager : Group : Alain A\. Barbu John R\. Heath Ridley Nelson OEDST 2\. Project Objectives and Components a\. Objectives Primary project objective was to promote efficient communications in support of economic growth through : (i) creation of autonomous and commercially -oriented entities for telecommunications and posts, paving the way for private sector participation; (ii) design and implementation of a coherent investment program in both sub -sectors; (iii) maintaining quality and improving efficiency of telecom services; and (iv) ensuring adequate coverage and service improvement in the postal sector \. Secondary objective was to demonstrate the feasibility of public enterprise reform in the country\. b\. Components Project was restructured in 1995, in the aftermath of the 1994 genocide\. Original components included: (i) consultant services towards institution -building and institutional reform, and training (US$4\.8 million projected); (ii) telecom investments (US$4\.8 million projected) incl\. digital microwave links and 300 public phones; and (iii) postal investments (US$3\.2 million) incl\. a sorting center, rehabilitation of Kigali' s main post office, construction of 8 new post offices and vehicles \. Following the disruption and destruction caused by the genocide, the project was restructured with a greater emphasis on support for sector reform, rehabilitation of facilities, and postal investments \. Final components included: (i) training and TA for telecom and postal staff, consultant services to recompile accounts and records destroyed in 1994; and studies to update sector policy and legislation, outline regulatory options and prepare privatization strategy (US$4\.0 million actual); (ii) rehabilitation of destroyed telecom facilities (US$2\.0 million actual); and (iii) rehabilitation of destroyed postal facilities, construction of sorting center and acquisition of vehicles (US$4\.0 million actual) c\. Comments on Project Cost, Financing and Dates Actual project cost was 33% below original estimates due to the scaling down of the telecom component \. Project was delayed by more than 4 years (requiring three closing date extensions ) mostly due to the 1994 genocide but also to weak project management during initial years \. 3\. Achievement of Relevant Objectives : In spite of the major disruption and delays suffered by the project, most of its main stated objectives were ultimately achieved, although the actual privatization of telecom (an implicit and undated goal) is still pending\. The revised telecom investment component was fully implemented and the number of working lines was brought back to over and above the pre-conflict level\. The postal sorting center was satisfactorily completed \. Training, TA and studies contributed to strengthen both telecom and postal sector capacity 4\. Significant Outcomes /Impacts : On the physical front, the restructured project contributed to restore facilities to their pre -conflict level (and eventually expand them), following the widespread destruction which took place in 1994\. On the institutional front, posts and telecom were separated as early as 1992 with the creation of RWANDATEL (a limited liability company) and Office National des Postes (ONP)\. The process of privatizing RWANDATEL was well on its way when it was interrupted by the 1994 genocide\. The impetus for reform was subsequently regained with the issuance of a private license for cellular service in 1998 and the recent preparation work on the creation of a multi -sector regulatory agency and on the privatization strategy for RWANDATEL \. Follow-up Bank support is considered under a forthcoming PSD loan \. 5\. Significant Shortcomings (including non -compliance with safeguard policies ): The project had to be scaled down with the elimination of some investment components (payphones and rural post offices)\. And the process of privatizing RWANDATEL has taken longer than expected --although the lower priority given by the Government to this process in the immediate aftermath of the genocide was probably justified \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Generally satisfactory, although the Bank's initial insistence on the Government completing RWANDATEL's aborted privatization in the months immediately following the genocide, is hard to understand (the Bank subsequently showed more flexibility in its approach to sector reform given very special country circumstances ) Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : Post-conflict situations require extra flexibility on the Bank's part, particularly when it comes to restructuring the physical components of existing projects and reflecting special country circumstances in its policy advice (e\.g\. on utility privatization) 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : The ICR is of generally satisfactory quality --although there are some small data inconsistencies within the report (e\.g\. number of DELs in Annex 1 versus para\. 4\.1\.2; and total Bank loan disbursements in last table of Annex 2 versus para\. 3\.3\.7)\. The Borrower's contribution is quite thorough \.

REVIEW

P034491

Document of The World Bank Report No: 25646 IMPLEMENTATION COMPLETION REPORT (IDA-28260) ON A CREDIT IN THE AMOUNT OF US$29\.5 MILLION TO ALBANIA FOR A POWER TRANSMISSION AND DISTRIBUTION PROJECT July 21, 2003 Infrastructure and Energy Sector Unit South East Europe Country Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS (Exchange Rate Effective January 31, 2003) Currency Unit = Lek Lek 1\.00 = US$ 0\.0077 US$ 1\.00 = Lek 129\.7 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS EBRD European Bank for Reconstruction and Development ECSPS Europe and Central Asia Operations Policies and Services Sector Unit EIB European Investment Bank ENEL Italian Power Company ERE Electricity Regulatory Agency EU European Union KESH Albanian Power Corporation ICB International Competitive Bidding ICR Implementation Completion Report JBIC Japan Bank for International Cooperation LIB Limited International Bidding MME Ministry of Mineral and Energy Resources PMU Project Management Unit QAG Quality Assurance Group SECO State Secretariat for Economic Affairs (Swiss Government) UNDP United Nations Development Program USAID United States Agency for International Development Vice President: Johannes F\. Linn Country Director: Orsalia Kalantzopoulos Sector Manager: Henk Busz Task Team Leader: Iftikhar Khalil  ALBANIA POWER TRANSMISSION AND DISTRIBUTION PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 8 5\. Major Factors Affecting Implementation and Outcome 15 6\. Sustainability 17 7\. Bank and Borrower Performance 18 8\. Lessons Learned 21 9\. Partner Comments 21 10\. Additional Information 23 Annex 1\. Key Performance Indicators/Log Frame Matrix 24 Annex 2\. Project Costs and Financing 26 Annex 3\. Economic Costs and Benefits 28 Annex 4\. Bank Inputs 29 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 32 Annex 6\. Ratings of Bank and Borrower Performance 33 Annex 7\. List of Supporting Documents 34 Map - IBRD 27100  Project ID: P034491 Project Name: Power Transmission & Distribution Team Leader: Iftikhar Khalil TL Unit: ECSIE ICR Type: Core ICR Report Date: July 21, 2003 1\. Project Data Name: Power Transmission & Distribution L/C/TF Number: IDA-28260 Country/Department: ALBANIA Region: Europe and Central Asia Region Sector/subsector: Power (93%); Central government administration (7%) Theme: Access to urban services for the poor (P); Infrastructure services for private sector development (P); Rural services and infrastructure (S); State enterprise/bank restructuring and privatization (S); Regulation and competition policy (S) KEY DATES Original Revised/Actual PCD: 10/12/1994 Effective: 06/24/1996 06/24/1996 Appraisal: 07/04/1995 MTR: Approval: 03/05/1996 Closing: 06/30/2001 01/31/2003 Borrower/Implementing Agency: REPUBLIC OF ALBANIA/ALBANIAN POWER CORPORATION (KESH); POWER CORPORATIONS OF ELBASAN; SHKODER & VLORE Other Partners: European Bank for Reconstruction and Development, Government of Italy, Government of Switzerland, Japan Bank for International Cooperation STAFF Current At Appraisal Vice President: Johannes F\. Linn Johannes F\. Linn Country Director: Orsalia Kalantzopoulos Kemal Dervis Sector Manager: Henk Busz Hans Apitz Team Leader at ICR: Iftikhar Khalil Richard Hamilton ICR Primary Author: Iftikhar Khalil; Sati Achath; Richard Hamilton 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:U Sustainability:L Institutional Development Impact:M Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes  3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The original objectives of the US$116\.6 million project (IDA Credit US$29\.5 million) were to: (i) improve the overall standard, reliability and efficiency of electric power supply and enhance the efficiency of electricity interchanges with neighboring countries; (ii) reduce unbilled electricity consumption; (iii) establish a regulatory framework for the power sector; (iv) begin the process of privatizing the Albanian Power Corporation (KESH) in an efficient and nondisruptive way; (v) ensure the financial viability and institutional strength of KESH and the pilot power companies of Elbasan, Shkoder and Vlore; and (vi) encourage energy conservation and efficiency in electric appliances and buildings\. The objectives were clear and important to the country's economic development\. The investments were timely and appropriate to the needs of the Borrower for two reasons: (i) the transmission and distribution systems were badly run down because of previous neglect of maintenance; and (ii) the distribution system and some transmission facilities were overloaded causing frequent outages\. The emphasis on reducing unpaid consumption was justified both in order to improve financial performance of the sector and, just as importantly, to reduce and eventually eliminate the uneconomic demand for electricity resulting from households and commercial enterprises being able to get electricity for free by stealing it or by not paying for it\. The objectives to establish a regulatory framework and begin the process of privatization were desirable in order to improve efficiency in the power sector and find new sources of finance to initially augment and eventually substitute for donor assistance\. As detailed in Section 5, the achievement of these objectives was greatly influenced by a series of adverse developments, which could not have been predicted and which were largely outside the control of the Government\. These included the collapse of the financial pyramid schemes that culminated in a major upheaval and armed civil strife in early 1997, and the Kosovo crisis in 1999 that resulted in the influx of a large number of refugees into Albania\. These two major crises had a dual impact on power sector performance\. The first was the direct impact: widespread damage to the electricity infrastructure during the civil strife in 1997 and an upsurge in unpaid for electricity consumption as a consequence of both crises\. The second impact was indirect, but possibly even greater\. The preoccupation of successive Governments in dealing with these crises, and their aftermath, during the period from 1996 to 1999 precluded their devoting adequate attention to the deteriorating situation in the power sector\. Political instability, partly a consequence of these crises, resulted in frequent Government changes as well as rapid changes in the top management of KESH, and these changes in turn again adversely affected sector performance during this period\. To achieve the project objectives, a number of covenants had been agreed to with the Government and KESH\. A QAG review of supervision of the project carried out in 2002 suggested that the original targets for the financial covenants might have been too optimistic in light of the instability of country conditions\. Although a review of subsequent performance would seem to justify this comment for the numerical power loss reduction and financial receivables targets, it is worth noting that the ambitious targets were set in an attempt to avoid the very crisis that was faced subsequently\. Furthermore, these targets were based on the performance improvements already recorded during the project preparation period and before the crisis related to the financial pyramid schemes\. Distribution losses had fallen from 49% of electricity entering the distribution network during the months of June to November 1994 to 44% during the same period in 1995\. At the time of project appraisal, it was therefore reasonable to fix targets of 42% for 1996 and 34% for 1997 on the basis of the data for late 1995 and the measures being taken under the detailed action plan being implemented under the Power Loss Reduction Project (Credit No\. 2677-ALB), which became effective in June 1995\. In actual fact, losses - 2 -  rose to 56% in 1998\. However, it is to be noted that, after KESH and the Government took decisive measures to deal with the problem in 2001, the losses fell within two years to less than 36%\. In retrospect, the financial target of limiting receivables to two months of billings was probably unrealistic\. Among the considerations taken into account when it was set were that: (i) the arrears to KESH for electricity bills of Government budgetary and non-budgetary entities had been cancelled along with KESH's arrears to the Government with respect to taxes; and (ii) households and other private consumers were paying their electricity bills fairly promptly\. In addition, such a covenant was quite common in Bank power projects in other countries at that time and setting a less ambitious target for Albania would have encountered stiff resistance within the Bank\. However, such a target required maintaining a near 100% rate of collection and a target of 90% might have been more appropriate\. The 40% self-financing covenant and the debt-service coverage ratio covenant (2\.0 times the annual debt service) were realistic given that KESH's operating expenses were very low as nearly all its electricity generation was from hydropower plants having low operating costs, and debt service for loans for previous investments was negligible\. The corresponding covenants for the pilot companies were also reasonable since they received electricity from KESH at a sufficiently low cost to allow them to have a satisfactory financial performance unless they fell far short of meeting the loss reduction targets and the receivables covenant\. Though ambitious, the power sector restructuring objectives may be viewed as realistic on the basis of the information available at the time of project preparation, considering that, prior to Board presentation and as part of project preparation, an Electricity Law and a Regulatory Law had been adopted, KESH and the three pilot companies had been incorporated, and 30% of the shares in the pilots had been sold under a mass privatization program\. The serious civil unrest which occurred in 1997 following the collapse of several large pyramid schemes adversely affected the investment climate in Albania\. This led to the Government deciding, with the Bank's agreement, to defer attempts to sell majority shares in the pilot companies and the rest of the distribution sector to strategic investors, and instead to opt for a management contract for the whole of KESH for an interim period of at least three years\. The project was consistent with the Bank's strategy for Albania\. This strategy placed large emphasis on overcoming infrastructure constraints\. In addition, the project fitted into the Government's mass privatization program being initiated with Bank support at the same time, since 30% of the shares of the pilots were sold for vouchers\. The Bank's involvement in the project was important because of: (i) its experience with other projects in the power sector in Albania since 1992; (ii) its experience with similar power sector issues in other countries; (iii) the technical advice it could provide in areas such as investment planning, project management, procurement and financial management; and (iv) continuation of its leadership role among the other donors\. 3\.2 Revised Objective: There was no formal revision of the development objective although this was given serious consideration when suspension was lifted in June 2001 (see Section 4)\. - 3 -  3\.3 Original Components: The project consisted of the following three components: (a) power sector regulatory reform and actions leading to privatization and institutional strengthening; (b) technical assistance; and (c) investments\. The proposed financing by IDA, OECF (now JBIC), EBRD, Italy and Switzerland of about US$ 87 million equivalent was to finance the following components: IDA (i) rehabilitation of the Shkoder, Durres, Elbasan, Vlore, Fieri, Berati, Lac and Saranda distribution networks; (ii) technical assistance for environmental management and to strengthen KESH's finance department, including training; and (iii) technical assistance to the Ministry of Mineral and Energy Resources for privatization, and staff training for the Regulatory Agency\. EBRD (i) Elbasan-Cerrik-Korce and Elbasan 1 - Elbasan 2 transmission lines; (ii) Tirana-Selite-Traktori ring connection; (iii) engineering services for transmission facilities design; and (iv) spare parts\. Italy (i) system control facilities (including a national dispatch center and remote terminal units); and (ii) engineering services for system control facilities and supervision of construction\. JBIC (i) Tirana distribution network rehabilitation; (ii) expansion of transformer capacity for existing major primary substations; and (iii) replacement of obsolete switchgear and line protection for existing major primary substations\. Switzerland (i) Durres substation; (ii) engineering services for the Durres substation design and supervision of construction; and (iii) consultant services for project management, including training\. The components were related to achieving the project's objectives and were chosen on the basis of a detailed feasibility study carried out by consultants financed by an Italian Trust Fund managed by the Bank\. The benefits envisaged were as follows: - 4 -  Institutional Components (i) reduction in nontechnical losses resulting in increased electricity revenue and reduced uneconomic electricity use; (ii) improved electricity bill collection; (iii) improved financial performance of KESH and the pilot distribution companies; (iv) a regulatory framework that would provide a welcoming environment for private investors and operators; and (v) energy conservation and efficiency improvements in electrical appliances and buildings\. Physical Components (i) reduction in technical transmission and distribution losses; (ii) enhanced reliability through reduction in power outages and improvement in voltage stability; (iii) increase in capacity to transmit and distribute electricity; (iv) improved assurance of safe transfers of energy through the Albania-Greece interconnection; (v) reduction in operating costs and maintenance because of reduced need to repair damaged equipment; and (vi) environmental benefits resulting from a reduced need for power produced by existing thermal plants using high-sulfur heavy fuel oil\. 3\.4 Revised Components: After effectiveness, at the request of the Borrower, there were two sets of reallocation of IDA financing of distribution investments, the first for meters and accessories and the second for emergency repairs of damages to pilot company distribution facilities caused during the breakdown of public order in 1997\. These reallocation did not require changes to the project description in the Development Credit Agreement since the new uses came under the existing heading of "rehabilitation and upgrading" of distribution systems\. The reallocation of US$ 1\.6 million to finance meters and accessories was made as a result of a decision taken by KESH at about the time the project became effective to put meters for apartments in locked collective boxes at the entrances to the apartment buildings, and to connect meters for detached dwelling units to the grid using tamper-resistant coaxial cable\. The decision to adopt collective boxes and coaxial cable was taken in order to reduce illegal use of electricity, and IDA accepted KESH's justification for this approach along with KESH's rationale for requesting additional meters\. A portion of the Credit was therefore reallocated to finance new meters and accessories\. IDA also reallocated US$ 0\.9 million to repair damages caused by the 1997 civil unrest\. An amount of US$ 0\.02 million was allocated from within the technical assistance category to evaluate the risk of power system interruptions attributable to possible computer problems occurring at the start of calendar year 2000 (Y2K issues)\. As explained in Section 4\.1, disbursement under the project were suspended on November 24, 1998\. However, following the successful initial implementation by the Government and KESH of an Action Plan to tackle the critical issues of the sector, the suspension was lifted as of June 13, 2001\. Funds under the project were reallocated to permit partial utilization of the balance in the Credit for financing the following two essential inputs: § Meters: US$ 8\.7 million for the purchase of meters and related accessories\. Reallocation of the - 5 -  amount to meters and accessories was justified by the urgent need to reduce nontechnical electricity losses and improve revenue collection, and thereby reduce electricity demand and electricity imports\. The financing was based on an assessment of the essential needs for meters that could be procured and installed in the period before the next operation became effective\. It covered the provision of 3,300 collective boxes (with an average of 14 meters per box) and 30,000 individual boxes with meters\. § Technical Assistance: US$1\.8 for a comprehensive study to define future investment needs and future reforms of the energy sector in Albania\. The technical assistance was justified by the need to formulate new optimal investment programs in the sector\. The study included preparation of: (i) electricity demand projections to 2015; (ii) a least-cost power generation investment program covering the same period; (iii) a power transmission master plan; (iv) a plan for reduction of technical and nontechnical power losses in transmission and distribution; (v) a power dispatch plan; (vi) a power distribution master plan; (vii) an evaluation of the best means to supply energy for space heating, water heating, and cooking; (viii) an evaluation of the technical and economic feasibility of importing natural gas; (ix) a petroleum strategy; (x) an overall energy sector investment plan, including a review of possible financing options; (xi) electricity tariff reform taking into account long run marginal cost estimates, ensuring satisfactory financial performance, and protection of vulnerable household consumers; and (xii) recommendations for energy sector restructuring\. During the project implementation period, the following reallocation were made to investments financed by the cofinanciers: European Bank for Reconstruction and Development (EBRD): The Elbasan-Cerrik-Korce transmission line and the Tirana-Selite-Traktori ring connection were replaced by: (a) bus bar differential protection at the 400/220 kV Elbasan 2 sub-station; and (b) supply and installation of the 400/110 kV Zemblak sub-station and the 110 kV Zemblak-Korce transmission line\. The financing for technical assistance was extended to cover preparation of an environmental action plan for KESH\. Italy: Following preparation of a detailed feasibility study of a new dispatch center and remote terminal units by the consultants financed by the Italian Trust Fund managed by the Bank, it was decided through mutual agreement between KESH and Italy to construct larger and more extensive system control facilities\. These are expected to be consistent with the dispatching system recommendations of the Energy Sector Study and to be financed by Italy\. European Investment Bank (EIB): EIB is providing financing of US$15\.74 million equivalent for a set of complementary investments, although it joined the project too late to be formally included as a cofinancier\. Its components were as follows: (a) 110 kV Elbasan 1- Cerrik transmission line with two 110 kV line bays; (b) reinforcement of the 110/20 kV Vlore sub-station; (c) Elbasan and Shkoder MV/LV - underground power cables and accessories, 20/0\.4 kV transformation stations; (d) electricity meters and LV concentric cables; and (e) Vlore - MV/LV underground power cables and accessories, and 20/0\.4 kV transmission points\. 3\.5 Quality at Entry: There was no official assessment of quality at entry by the Quality Assurance Group (QAG)\. Nevertheless, the quality at entry is considered to have been largely satisfactory and the project to have been well conceived\. As mentioned in Section 3\.1, the project objectives were consistent with the Bank's activities in Albania, and most of the objectives were considered realistic at the time of project preparation given the improvement already achieved in sector performance, although the covenant concerning financial - 6 -  receivables was probably too ambitious\. The project closely followed and reinforced the objectives of the Power Loss Reduction Project\. The design of the investment components was based on a detailed feasibility study, and it was generally adequate to meet the project's objectives\. The experiment with partially privatizing three urban distribution enterprises of Elbasan, Shkoder and Vlore in advance of majority privatization of the whole distribution system (one of the objectives of which was to see whether this would have an impact on reducing distribution losses) carried some risks since these enterprises were probably too small to be of interest to foreign strategic investors (although at least one foreign investor expressed interest at the time) and the minority private shareholders were unlikely to have much influence over the operation of these enterprises\. However, provision was made under the project for studying alternative options for privatization of the distribution system, including an option to absorb the three pilots back into the rest of the distribution system and to divide the system into a small number of relatively larger enterprises in preparation for their privatization\. During preparation of the project, other appropriate major risk factors were also considered and measures to address them were incorporated into the project design\. These factors included: § Delays in project implementation that could arise due to inadequate availability of counterpart funds when needed\. This risk was addressed through abolition of the excise tax, adherence to agreed financial covenants, and also the establishment of an escrow account for payment of taxes and import duties, debt service, and local costs of investments\. § Delays or changes in project scope which could result from failure to mobilize the expected cofinancing on time, or to obtain on time the rights-of-way for three transmission lines\. These risks were addressed through provision for resort to the Bank's remedies, but even with delays, the project investments were expected to be viable\. In addition, since the cofinancing was parallel financing, delay in parallel-financed components did not affect the timing or viability of Bank-financed components\. § Continued increase of unpaid electricity consumption that could jeopardize the project\. This risk was to be reduced by implementation of the Power Loss Reduction Project, by strengthened law enforcement and by privatization\. § Problems arising from delays during the transition from public to private ownership\. These were to be minimized by joint procurement of equipment items by KESH\. The project design was also in compliance with all environmental policies and procedures of the Bank and the Borrower\. The Bank's resettlement policy was triggered by resettlement issues related to the Swiss and EBRD project components (the need for acquisition of a small amount of land for the Durres substation and for towers of transmission lines, and resettlement of one family from the substation site)\. There was close coordination among the cofinanciers during project preparation\. Extensive stakeholder consultations during project preparation substantially contributed to the quality and readiness at entry\. The Government showed its commitment by undertaking a number of significant institutional and sector reforms before Board presentation (See Section 3\.1)\. KESH had a satisfactory capacity for implementation of the investments but, due to steady outflow of its key managers, it lacked administrative capacity\. KESH's financial management capacity was also weak\. The Project Management Unit (PMU), which had already been established for the under-implementation Power Loss Reduction Project (Credit No\. 2677-ALB), had adequate capacity and had performed well\. - 7 -  4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: A major development during the implementation of the project was the suspension of the Credit from November 1998 to June 2001, which had a significant impact on the achievement of the project objectives and outputs\. The background to the suspension is provided hereunder\. From project effectiveness to 1998, the performance of KESH in reducing losses, increasing collections and improving the financial performance was unsatisfactory\. Distribution losses increased from 49% in 1996 to 56% in 1998, against targets of 42% for 1996 and 34% for 1997\. Collections fell from 75% in 1996 to 64% in 1998, with accounts receivables increasing to 14 months in 1998 against a target of 2 months\. The performance of the three pilot companies of Elbasan, Shkoder and Vlore during this period was also very poor, with distribution losses varying between 52% and 63%\. Through intensive supervision missions, dialogue, and correspondence, the Bank repeatedly drew the attention of the Government, KESH and the three pilot companies to these deficiencies and to the failure to comply with a number of the provisions of the Credit and Project Agreements\. In early 1998, the Bank informed the Government, KESH and the three pilot companies that it would have no option but to suspend the Credit for the project if specified targets related to power distribution losses and to collection of billed amounts for the period up to August 1998 were not achieved by KESH\. During the Bank's supervision mission to Albania in October 1998, it was found that the target related to power distribution losses had been achieved (47\.2% against the target of 48%), but that the collection target had not been met (83% of the amount billed against a target of 105%)\. In view of the above, and pursuant to Section 5\.01 of the Development Credit Agreement, together with Section 6\.02 of the General Conditions applicable to Credit Agreements, the Credit for the project was suspended with effect from November 24, 1998\. However, the suspension did not apply to a technical assistance contract covering the establishment of a new financial and accounting system\. Other cofinanciers of the project also suspended their disbursements, either formally or informally\. Conditions in the power sector continued to deteriorate and a severe electricity shortage started in the summer of 2000\. The crisis was the result of excessive demand caused largely by the chronic failure to curb illegal use and nonpayment, and the impact of a less-favorable hydrology in 2000 than in the two previous years on the largely hydropower-based system\. The excessive demand necessitated increasing imports of electricity, but these were partly constrained by limitations of the transmission network, thereby necessitating extensive load shedding\. Recognizing the magnitude of the crisis in this important sector and its significant macroeconomic impact, the Government developed a two-year Action Plan at the end of 2000 to reduce electricity losses, improve collections and reduce demand, as well as other wide-ranging measures to urgently improve the performance of the sector\. Specific targets for each quarter were defined\. Concurrently, a management assistance contract was awarded to ENEL, the main Italian power utility, to provide advice to senior KESH management on a day-to-day basis\. The scope of the contract was jointly developed by the Bank and EBRD, and the contract was awarded after a competitive process with financing from an Italian Trust Fund administered by EBRD\. It included an incentive mechanism linked to reduction in electricity losses and improvement in collection in bills\. ENEL commenced work in September 2000 and has continued to provide assistance thereafter\. By May 2001, as a result of increased efforts by the Government and KESH, significant progress had been made in the implementation of the Action Plan, with values for both the losses and collection performances - 8 -  exceeding the targets for the first quarter of 2001\. Progress on other major targets was as follows: § Disconnections of illegal connections and conversions to legal connections both exceeded the first quarter targets\. There were about 15,400 disconnections of which about 2,800 were converted to legal connections, compared to the respective targets of 7,500 and 2,500\. § Recommendations on revising the flat-rate bill for consumers without meters to reflect the seasonal variation in household electricity consumption were approved for the 2001 summer\. § An action plan for improving the performance of the power companies of Elbasan, Shkoder and Vlore, including a decision on their future status as separate entities, was prepared\. § Revisions were made in the criminal code to include stiff penalties (up to two years of imprisonment) for theft of electricity\. These achievements were the result of a wide range of actions undertaken by the Government and KESH, including: § Establishment of an inter-ministerial coordination committee, headed by the Prime Minister, which convened weekly to deal with electricity sector problems; § Appointment of a new General Director of KESH, initiation of a major reorganization of KESH, including grouping of the 38 distribution enterprises into regional distribution profit centers, and improving various internal procedures and controls; § Undertaking an aggressive media campaign to inform the public of the extent of the crisis, its causes, its potential repercussions, and the need for the measures being taken; § Initiating the installation of more than 100,000 meters purchased with financing from Japan and Norway; § Implementation of a pilot computerized billing system, which is being extended to the whole country; § Establishment of new procedures for bill collection in villages, making use of local institutions such as Communes and Post Offices; § Institutionalization of relations between KESH and the electrical police and ensuring that the electrical police carry out specified numbers of verifications of connections, disconnections of illegal electricity connections, and impositions of penalties; § Prosecution of delinquent debtors through the courts making use of a government decision to treat electricity bills as executive title (which makes possible seizure of property in the event of default) and establishment of procedures through the Ministry of Justice to facilitate and motivate the courts to deal promptly with delinquent debtors; in the first quarter of 2001, more than 2,200 cases were sent to the courts, 566 were judged, 268 paid their debts and the property of 26 bad debtors was seized; § Linkage of duration and frequency of load-shedding in each area to the level of illegal usage and nonpayment in that area; § Instructions from the Ministry of Finance to budgetary institutions to pay KESH bills prior to undertaking other expenditures; § Encouraging the use of alternative fuels particularly for space heating; - 9 -  § Establishment of an incentive scheme for KESH employees linked to achievement of the targets of the action plan; § Firing of staff, with about 250 people fired from the company for violations of rules and practices as well as poor performance; the main department directors in the central administration and many local distribution directors were removed from their positions\. Considering the above actions and achievements, the suspension was lifted on June 13, 2001\. Prior to lifting suspension, the option of a formal restructuring of the project, including modifying the project objectives, was explicitly considered but not adopted\. It was assessed that this would have involved a major effort, including not only changes in objectives, components, conditionalities and monitoring indicators, but also in the beneficiaries\. The Europe and Central Asia Operations Policies and Services Unit (ECSPS) opined that this was likely to be even more time-consuming and difficult than starting a new project from scratch\. Moreover, given that the existing closing date was June 30, 2001, there would have been relatively little time to implement the restructured project, even if the closing date was extended by up to two years\. After a thorough discussion among the Country Unit, the Sector Unit and ECSPS, a consensus emerged to opt for a partial reallocation of funds together with lifting of suspension, so that funding could be immediately made available for priority needs, and concurrently start preparation of a new operation\. The downside was that the existing project would continue to be rated unsatisfactory in terms of its development objective\. The upside was that the Bank would be able to strongly demonstrate its support for the efforts to address the crisis in the sector, and to provide `encouragement' to the Government to sustain these efforts\. As stated in Section 3\.4, funds under the project were reallocated to permit partial utilization of the balance in the Credit for financing two essential inputs\. The closing date of the IDA component of the project was extended from June 30, 2001 to September 30, 2002 to provide adequate time to complete the proposed new expenditures\. Subsequently, the closing date was extended to January 31, 2003 to take into account delays in the award of the contract for the energy sector study and to provide more time for discussion of the recommendations of the study with stakeholders prior to finalization of the study\. KESH continued to meet the electricity losses and collection targets through the rest of 2001\. Electricity losses were reduced from 43\.4% in year 2000 to 38\.2% in 2001\. The billed collections were increased from 61\.5% in year 2000 to 84\.5% in 2001\. During 2002, despite some variation in performance during the third quarter, the entire year losses for KESH were 35\.3% compared to the target of 35\.5% and collections were 89\.5%, equal to the target\. Compared to 2000, losses for KESH were reduced by 8 percentage points and collected revenue more than doubled from Lek 8\.0 billion (about US$ 59 million) to Lek 16\.8 billion (about US$ 124 million)\. The loss percentages given above for the years 2000, 2001 and 2002 are for distribution plus transmission losses as a percent of transmitted electricity\. The covenanted targets in KESH's Project Agreement were defined in terms of distribution losses as a percentage of electricity entering KESH's distribution system\. Using this measure, it is noteworthy that in 2002 KESH's distribution losses were less than 36%, compared with the actual level of 56% in 1998 and the covenanted target of 34% for 1997\. The performance of the pilots has also improved as far as reduction of electricity losses are concerned\. Elbasan's losses reduced from 58% in 1998 to 37% in 2002; Shkoder's from 56% to 45%; and Vlore's from 63% to 39%\. Elbasan's performance in collections is also good but collections remain very poor for Shkoder and Vlore\. In 2002, Elbasan collected 93%, Shkoder 24% and Vlore 35%\. The suspension of the project by IDA and the cofinanciers postponed the implementation of the investments\. Most of the cofinanced components are still to be completed\. In addition, IDA's own contribution to distribution system strengthening both before and after suspension was much less than - 10 -  anticipated at the time of appraisal because of reallocation of much of the Credit to emergency damage repairs, meters and technical assistance\. Some of the distribution investments to have been financed by IDA are now being financed by the European Investment Bank\. For these reasons, achievement of the first development objective (to improve the overall standard, reliability and efficiency of electricity supply) has been delayed\. The eventual contribution is likely to be substantial since the power transmission and distribution systems still need major rehabilitation and strengthening, but, since the cofinanced investments are still to be completed, the rating for achievement of the project's physical objectives is shown as "modest" in Annex 5\. The number and duration of transmission and distribution system interruptions has already been reduced significantly since 1995 (Annex 1), but the current situation is still unsatisfactory\. The reduction achieved up to now is largely the result of improved maintenance by KESH and investments outside the project by KESH and other donors\. As stated above, there was a long delay in making progress with respect to the key second development objective (to reduce unbilled and unpaid electricity consumption)\. These shortcomings led to the suspension of the project, and suspension was lifted only after successful initial implementation of an Action Plan by KESH and the Government focusing on reducing losses and improving collections\. Improvements continued steadily through project closing, meeting the targets agreed with IDA and the other cofinanciers at the time of and after waiving of the suspension\. However, these targets were somewhat below the original targets for 1997 and were achieved several years after 1997\. The Association recognized and accepted at the time the suspension was lifted that the project would receive an unsatisfactory rating with respect to the loss reduction and bill collection objective\. Nevertheless, it is noteworthy that performance after lifting of suspension met expectations\. These shortcomings contributed directly to financial difficulties for KESH and the pilot companies, as well as indirectly by increasing the growth in demand for electricity\. The difficulties were not serious in the early years of the project because domestic electricity production was high due to the impact of a wet hydrological cycle on the predominantly hydropower system, KESH's operating costs were low since the hydroelectric plants had very low operating costs, and KESH had negligible debt service obligations\. They became serious from 2000 onwards when KESH had to incur large costs for imported electricity, partly due to the increase in demand and partly due to the impact of a dry hydrological cycle\. The extra import costs were so significant that KESH required an operating subsidy from the Government\. Nevertheless, KESH's financial performance was improving consistently during 2001 and 2002 as a result of the reduction in losses, improvement in collections and tariff adjustments\. KESH has succeeded in more than doubling collected electricity revenue from 2000 to 2002\. Efforts to control costs continue, with significant reductions in staff strength\. Under normal hydrological conditions, and with continued progress in reducing distribution losses and improving collections, KESH is expected to be able to do without the import subsidy from 2005 onwards and also show a profit\. Therefore, the rating for financial achievement is given as "Substantial" in Annex 5\. The project met the objective of establishing a regulatory framework, although, because of limited resources, the Electricity Regulatory Authority (ERE) was ineffectual until 2002-2003\. At that time its staff was raised to 20, it received a large amount of technical assistance from USAID, and legislation was approved by Parliament increasing its powers and eliminating the right of the Government to fix a ceiling on electricity prices\. The process of privatizing KESH was started to the extent that 30% of the shares of the three pilot companies (Elbasan, Shkoder, and Vlore) were sold under the mass privatization program\. As stated earlier, the civil disturbances in 1997 adversely affected the investment climate in Albania\. This led to the Government deciding, with the Bank's agreement, to defer attempts to sell majority shares in the pilot companies and the rest of the distribution sector to strategic investors\. It then turned its attention to the competitive selection of a foreign utility to take over temporary management of KESH through a - 11 -  management contract\. However, this initiative did not gain the support of all the donors\. Eventually it was agreed to have a more limited management assistance contract and this contract was awarded to ENEL, the main Italian power utility, in 2001\. Because of poor financial performance by two of the three pilot companies, the Government transferred its 70% shares in all three pilots to KESH, and KESH began a process of taking over the distribution activities of the pilots\. This process is time-consuming as it involves assessing the value of the distribution business in order to provide a basis for compensating the private shareholders, and is expected to be completed in 2003, thereby ending the pilot privatization experiment\. In April 2002, the Government adopted a detailed policy statement that provides for a resumption of power sector restructuring leading to a competitive electricity market consistent with European Union (EU) guidelines and eventual privatization\. The reforms envisaged in this Policy Statement are being implemented\. The rating for private sector development is given in Annex 5 as "Negligible", but the rating for institutional development is "Modest" and that for sector policies is "Substantial"\. The energy conservation and efficiency objective depended on carrying out UNDP-financed studies on appliance efficiency and energy conservation in buildings and on implementation of the recommendations of those studies\. The study on energy conservation in buildings was completed and a law was passed in early 2002 to prescribe insulation standards in buildings\. The study on appliance efficiency was not done\. There was no explicit environmental objective under the project\. The environmental category was "B" and the environmental aspects of the project were confined to ensuring that the Bank's guidelines were adhered to\. For these reasons, the environmental rating in Annex 5 is given as "Negligible"\. 4\.2 Outputs by components: Before the project was suspended, an amount of US$ 7\.2 million was disbursed from the IDA Credit to finance: meters; emergency repairs of distribution facilities; distribution system strengthening; technical assistance for a financial management system, preparation of a management contract for KESH, and a study to determine whether PCBs were present; and training for the Project Management Unit (PMU) and ERE personnel (the financial breakdown is given in Section 5\.4)\. Meters (June 2001 reallocation): As of February 2003, KESH had installed all of the 3,300 collective meter boxes and 30,000 individual meter boxes financed by the IDA Credit\. Energy sector study: The study was successfully completed, a widely-attended workshop was held to present and discuss its findings, and its recommendations are expected to be incorporated into the Energy Strategy being prepared by the Ministry of Energy, with approval by the Government being expected in July 2003\. Status of Cofinanced Components: EBRD\. The 220 kV Elbasan 1 - Elbasan 2 transmission line was put into operation on August 25, 2002\. The contract for the 400/110 kV Zemblak substation and the 110 kV Zemblak - Korca transmission line became effective on June 5, 2002, and construction started on October 15, 2002\. EIB\. Contracts have been awarded for the MV/LV underground power cables and accessories and the 20/0\.4 kV transformation points for the Elbasan, Shkoder and Vlore distribution systems; and for electricity meters and LV concentric cables\. The bidding documents for the 110 kV Elbasan-Cerrik transmission line and for the reinforcement of the Vlore substation were issued in April 2003\. The bids were received on June 16, 2003\. Italy\. The Italian Government is having a feasibility study prepared for the system control facilities to be cofinanced by it under the Project\. The study is covered by the current financing of Euro 42\.5 million for - 12 -  the power sector, most of it for the transmission and distribution networks\. JBIC\. The contracts for the MV/LV underground power cables and accessories, the 20/0\.4 kV transformation points as well as for the substation reinforcement have been awarded\. Switzerland\. The contract for the Durres substation became effective on July 1, 2002, and site works started on October 25, 2002\. 4\.3 Net Present Value/Economic rate of return: The SAR gave an estimate of 24% for the internal economic rate of return for the project\. The measured benefits were: (i) reductions in technical transmission losses attributable to the project valued at the long-run marginal cost of generation; (ii) reductions in technical distribution losses attributable to the project valued at the long-run marginal cost of generation plus transmission; and (iii) reductions in outages attributable to the project valued at the cost of unserved energy, which was estimated to be US$ 0\.25 per kWh\. Since nearly all of the investments for strengthening of the transmission and distribution networks under the project remain to be completed by the cofinanciers, it was not possible to do an ex-post estimate of the rate of return for the ICR\. After the investments are completed, it is likely that the rate of return will be high since both the technical losses and the outages of the unstrengthened networks are very large\. 4\.4 Financial rate of return: See Section 4\.3\. 4\.5 Institutional development impact: Modest\. The project resulted in a modest institutional development impact as demonstrated by the following developments: § Electricity Regulatory Authority (ERE)\. See Section 4\.1\. § Tariff Reform\. In early 1996, the average price of electricity was US$ 0\.047\. In 2002, it was US$ 0\.038\. The fall is due to a decline in the exchange rate from Lek 90 per dollar in 1996 to Lek 140 in 2002 combined with relatively small tariff increases\. The Bank did not recommend substantial increases largely out of a concern that higher prices would increase incentives to steal electricity and avoid paying bills and partly because only modest price increases were needed to ensure a satisfactory financial performance of KESH and the pilots, provided losses and collections improved as projected\. The Action Plan for 2003 projects that KESH and the pilot companies will have a significant positive net income after taxes by the year 2005 with tariff increases of 10% per year for household customers and 5% for non-household customers, assuming normal hydrological conditions\. KESH would have no further need for a Government subsidy\. In 1996, the household tariff rate was Lek 4\.5 per kWh (US$ 0\.05 per kWh), having been raised to that level on April 1, 1994, at which time the Government implemented a scheme to compensate households for an estimated 75% of the price increase by means of increases in wages, pensions, unemployment benefits and welfare payments\. The tariff structure was distorted with respect to economic costs, with the main distortion being lower prices for government budgetary and non-budgetary entities than for private commercial and industrial customers\. There was a covenant under the project to adjust tariffs in line with recommendations of an Electricity Tariff Study carried out by consultants with EBRD financing\. By the time the project closed, the price gap between Government and private commercial and industrial consumers had been largely closed\. The household tariff rate in Lek was still at about the 1994 level, for the first 300 kWh of consumption per month, while the - 13 -  rate doubled on all additional consumption\. The higher rate for the second block was introduced on January 1, 2002 in order to encourage consumers to shift from electricity to LPG for space heating\. New measures to alleviate the burden of electricity costs on vulnerable households are to be adopted under the Power Sector Rehabilitation and Restructuring Project based on recommendations made by the Energy Sector Study\. § Corporatization of KESH\. KESH was converted to a corporation before Board presentation, but it has continued to be subject to day-to-day controls by its parent ministry\. An internal reorganization has been carried out with assistance from ENEL\. The headquarters has been reorganized into a finance department, a personnel department, a generation and transmission department, a distribution department, an investment department (which incorporates the previously independent Energy Institute) and dispatching center\. The peripheral units have been reorganized into eight generation zones, eight transmission zones, and eight distribution entities (down from 38 entities before), including the distribution systems previously under the pilots, but excluding the Bistrica region where a separate supply and distribution system is being established with assistance from KfW (Germany)\. The Bistrica region will become the ninth distribution entity\. § Management Assistance Contract\. KESH is also being assisted by a team of officials from ENEL, through a management assistance contract\. The consultant is providing advice on measures to reduce power losses and improve collections, with part of its compensation being linked to success in achieving improvements in these areas\. It is also assisting KESH to design and implement improvements in internal organization\. § Financial Performance\. Despite high power distribution losses and poor collection rates, KESH was able to avoid serious financial difficulties from 1996 though 1999, and was able to finance the local costs of investments under the project\. The company's operating costs were low since nearly all electricity supply came from hydropower, and it had negligible debt service\. However, in the crisis years 2000, 2001 and 2002, KESH incurred costs for imported electricity of Lek 4\.6 billion, Lek 8\.0 billion and Lek 10\.7 billion respectively, compared to total revenues of Lek 11\.7 billion, Lek 14\.0 billion and Lek 16\.5 billion respectively\. The import costs were only partially offset by import subsidies provided by the Government of Lek 3\.5 billion, Lek 4\.1 billion and Lek 3\.2 billion respectively\. KESH's after-tax profit was only Lek 0\.04 billion in 2000, and the company had losses of Lek 0\.02 billion in 2001 and Lek 1\.05 billion in 2002\. Nevertheless, KESH had a self-financing ratio of 56% in 2001 and 42% in 2002\. KESH met both the self-financing and debt service coverage covenants in those years\. The receivables to revenue ratio declined from 6\.1 months in 2000 to 6\.0 months in 2001 and 5\.6 months in 2002, compared to the original covenanted level of 2\.0 months\. The three pilot companies incurred a loss after tax of Lek 0\.1 billion in 2001, but realized a profit after tax of Lek 0\.2 billion (preliminary estimate) in 2002\. § Financial Management System\. A computerized financial management system was installed in KESH and the pilot companies, financial data have been transferred to the new system, and it will soon become fully operational\. § Creation of the Pilots and their subsequent return to KESH\. In October 1995, the municipal power distribution enterprises of Elbasan, Shkoder and Vlore were separated from KESH and converted to joint stock companies in accordance with the Law on the Transformation of State Enterprises into Joint-Stock Companies (effective May 15, 1995)\. The objective was to privatize these companies quickly as a pilot experiment and then to privatize the rest of distribution\. However, the process for privatization was suspended in 1997 following large-scale civil disturbances triggered by the collapse of several pyramid schemes, and subsequently, a management assistance contract was awarded to ENEL\. In 2000, ownership of the Government's - 14 -  shares in the pilot power companies was transferred to KESH as the first step towards reabsorbing the pilots into KESH\. Their re-incorporation into KESH is expected to be completed in 2003\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Pyramid Schemes\. There was widespread civil unrest in Albania in early 1997 resulting from the collapse of several pyramid schemes\. The resulting damages from vandalism to the transmission and distribution facilities of KESH and the pilot companies amounted to about US$ 5 million\. Vlore had its head office destroyed and records were lost\. Both Shkoder and Vlore had great difficulty restoring billing and collections, partly because of unsafe conditions for meter readers and managers, which continued for several years after the start of the unrest\. Some meter readers were threatened with guns and, even recently, a manager at Vlore was physically manhandled\. Kosovo Crisis\. There was an influx of a large number of refugees as a consequence of the Kosovo crisis in 1999\. This resulted in an upsurge in unpaid bills for electricity consumption\. However, since most of the refugees left Albania after a relatively brief stay, there were no significant long-term consequences for the power sector\. Disagreement among the Donors on a Management Contract\. Although there was close coordination among the donors throughout the project implementation period, a serious disagreement developed unexpectedly in mid-1998 between the bilateral and multilateral donors to the project over the desirability of having a management contract or any other form of early privatization for KESH\. The issue was eventually resolved after about two years through an agreement to have a management assistance contract, which started in September 2000\. Adverse Hydrological Conditions\. Because of adverse hydrological conditions caused by drought beginning in the second half of 2000, there was a substantial decrease in hydropower generation\. Hydropower production was 3,547 GWh in 2001 and 3,070 GWh in 2002, both of which were much lower than the 4,600 GWh generated in 2000 and the 5,000 to 5,300 GWh generated in 1998 and 1999\. Consequently, KESH had to import over 40% of its electricity\. There was also frequent and prolonged load shedding\. KESH experienced financial difficulties and required subsidies from the Government\. The crisis threatened Albania's macroeconomic performance\. However, by doing so it led the Government and KESH, with the active support of the donors, to develop an Action Plan and implement it successfully\. 5\.2 Factors generally subject to government control: Government's Lack of Adequate Appreciation of the Seriousness of the Energy Problem Prior to 2000\. One of the major contributing factors which adversely affected project implementation was the lack of adequate appreciation on the part of successive Governments of the seriousness of the problems facing the electricity sector, despite the `warnings' repeatedly conveyed by the Bank and other donors and the evidence provided to them\. This stemmed partly from their preoccupation with other crises, but partly also from the fact that Albania had a relatively abundant supply of cheap hydropower\. Thus, even with the excessive demand growth, Albania was a net exporter of electricity until 1997 and KESH was not facing significant financial difficulties despite the high electricity losses and low collections\. Had the Governments been more committed, they would have provided more assistance to KESH to reduce nontechnical losses and improve collections, as they subsequently did\. Shortfalls in Payment of Electricity Bills by Government Budgetary and Non-budgetary Entities\. Public sector consumers had difficulty paying their electricity bills\. The water supply companies paid for very - 15 -  little of their electricity consumption, since water prices do not cover costs and these companies have poor collection rates\. Several large state-owned industrial companies also had difficulties paying KESH because of their own poor commercial performance\. Prior to 2001, the Government did not provide specific funding to budgetary and non-budgetary entities to pay their electricity bills\. Frequent Changes in Government\. During the implementation period, the Prime Minister changed five times and the Director General of KESH changed six times\. These frequent changes adversely affected the pace of implementation\. 5\.3 Factors generally subject to implementing agency control: Unbilled Consumption of Electricity and Nonpayment of Bills\. Unbilled consumption of electricity (illegal use due to tampering with meters or bypassing them, and consumption by customers without meters in excess of billed levels) and nonpayment of electricity bills grew rapidly during the 1990s through the year 2000\. During 2000, KESH's power transmission and distribution losses were 43\.4% of electricity supplied to the grid, of which about 20 percentage points were estimated to be "nontechnical losses," and collections were 61\.5% of billings\. The excessive demand caused largely by the chronic failure to curb illegal use and nonpayment necessitated increasing import of electricity and caused overloading of the transmission and distribution systems\. The amount of electricity that could be imported was constrained by limitations of the transmission network, thereby necessitating extensive load shedding\. The unbilled consumption and nonpayment of electricity bills caused financial difficulties for KESH and the pilots\. The latter themselves were delinquent in their payments to KESH for electricity purchases\. In 2001, Elbasan paid 81% of the amount billed to it by KESH, Shkoder only 2% and Vlore 25%\. Computerized Financial Management System for KESH\. Progress on the installation and operation of an entity-wide financial management system was seriously delayed due to problems in launching the tenders for hardware and software, difficulties in customization of the selected software, frequent changes in key staff, and insufficient involvement by KESH management\. Procurement\. The contract for the energy sector study was awarded with some delays due to prolonged bid evaluation processes\. This necessitated an extension of the closing date\. 5\.4 Costs and financing: The total expected cost of the project is US$ 92\.4 million\. Out of this cost, the IDA Credit financed US$ 17\.7 million, and the expected cost of the activities to be completed with the assistance from the cofinanciers (including the financing from EIB) is US$ 74\.7 million\. The distribution of the IDA Credit among the executing agencies was as follows: KESH - US$ 14\.2 million; the Government - US$ 0\.1 million; Elbasan - US$ 1\.0 million; Shkoder - US$ 1\.2 million; and Vlore - US$ 1\.2 million\. The IDA Credit financed various categories of investment as follows: distribution system strengthening - US$ 1\.8 million; repairs of damages caused during the civil unrest in 1997 - US$ 0\.9 million; meters and accessories - US$ 10\.3 million; financial management system - US$ 2\.7 million; energy sector study - US$ 1\.8 million; and other technical assistance and training - US$ 0\.2 million\. Before the project was suspended, an amount of US$ 7\.2 million was used from the IDA Credit to finance meters and accessories, emergency repairs in Elbasan, Shkoder and Vlore's distribution facilities, distribution system strengthening, and technical assistance\. After the lifting of suspension on June 13, 2001, US$ 10\.5 million under the project was reallocated to permit partial utilization of the balance in the Credit for financing the purchase of meters and related accessories; and for a comprehensive study to define future investment needs of the energy sector in Albania\. - 16 -  An amount of US$ 4\.5 million was cancelled at the time of lifting suspension for two reasons: (a) the desire to see further progress in implementation of the power sector action plan before committing additional resources beyond the US$ 10\.5 million reallocated for meters and the energy sector study; and (b) the need to base further funding (through a new operation) on priority requirements identified by a new study\. On completion of the project, a further amount of US$ 4\.0 million that was unutilized was also cancelled\. 6\. Sustainability 6\.1 Rationale for sustainability rating: Likely\. The project's sustainability is likely, considering the following factors: § The Government has realized that failure to address and resolve the root causes of the energy crisis would have unacceptable political, economic and social repercussions\. § The Government has approved an update of the Action Plan prepared by KESH that covers the period 2003-2004\. The updated Plan contains enhanced targets for tariff increases, and revenue and collection performance\. The Plan also includes payments by the Government to: (i) compensate KESH for the difference between the cost of electricity imports and the average tariff; and (ii) cover the arrears from state and budgetary entities\. The target is to complete payment of all their arrears by 2005\. § An inter-ministerial committee headed by the Prime Minister meets frequently to oversee implementation of the Action Plan\. A Power Sector Policy Statement that sets out the main elements of the power sector reform program was adopted by the Government in May 2002\. § The power sector reform law has been approved by the Parliament\. Draft regulations have been prepared by ERE, with the assistance of USAID-financed consultants, covering rules of practice and procedure, rules to govern rate filing and processing, consumer complaint procedures and customer service standards\. Work is on-going on the preparation of draft regulations relating to licensing and approval of investments in small indigenous hydropower plants and cogeneration thermal power plants, and to a uniform system of regulatory accounting and reporting for the electricity sector\. § The National Power Strategy was approved by the Government on June 26, 2003\. The Strategy incorporates the findings and recommendations of the Energy Sector Study, and include a comprehensive energy conservation plan\. § As a result of an extensive media campaign, there is widespread public awareness about the extent of the crisis, its causes and it simplifications,\. This has resulted in a greater acceptance of the need for the tough measures that have been initiated by the Government and KESH, and this in turn has made the task of implementing these measures easier\. § There is a coordinated donor approach to the energy sector, and the donors have repeatedly stated that future donor assistance would be jeopardized if there are slippages in meeting the agreed performance targets\. § Sustained reductions in losses and improved collections would improve KESH's financial performance, making it easier for the company to make necessary expenditures to reduce, and eventually, overcome the electricity shortage\. Improved financial performance would also enhance the attractiveness of the power sector to foreign investors and improve the prospects for successful sector restructuring and eventual privatization\. - 17 -  6\.2 Transition arrangement to regular operations: The cofinanced parts of the project are still being completed\. The Action Plan is revised at the end of each year to cover the following two years\. The Power Sector Rehabilitation and Restructuring Project currently under implementation and the proposed Power Sector Generation and Restructuring Project would ensure continuity of the achievements of the project\. Processing of each of these projects has been dependent on continued success in meeting the quarterly targets of the Action Plan\. Both of these projects are also linked to implementation of the detailed Power Sector Policy Statement adopted in 2002\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Satisfactory\. The Bank's performance in the identification, preparation and appraisal of the project was satisfactory\. At an early stage, the Bank arranged for preparation of the feasibility study on which the project investments were based, with financing from the Italian Trust Fund managed by the Bank\. The identification of institutional requirements, especially the need for a new financial system for KESH and the pilots, focused on recommendations of an Energy Strategy for Albania prepared by the Bank itself, a Power Sector Organization Study prepared by Swiss Consultants with financing from the Swiss Trust Fund managed by the Bank, and on the work done during preparation of the Power Loss Reduction Project and the earlier Critical Imports Project\. The project design ensured the consistency of its objectives with the Government's reform priorities and the Bank's country strategy, especially with respect to the mass privatization program\. With a well-coordinated team having a good skill mix, the Bank was able to bring appropriate expertise into project design, providing flexibility and responsiveness to local needs\. The Bank provided legal assistance to the Borrower to prepare the electricity and regulatory laws, the initial licenses, and the contracts between the pilots and KESH\. It contacted potential donors in order to raise the needed amount for cofinancing, and it took the lead in coordinating the activities of donors\. In addition, the Bank assessed the project's risks and benefits\. The Bank had a consistently good working relationship with the Borrower and implementing agencies during identification, preparation and appraisal\. 7\.2 Supervision: Satisfactory\. The Bank's performance during the implementation of the project was satisfactory\. Sufficient budget and staff resources were allocated, and the project was adequately supervised and closely monitored\. Over the five years of project implementation, there were 20 supervision missions, with an average of about four missions per year\. The Bank's client relationship was very cordial and productive\. Review teams included energy specialists, power engineers, an energy economist, financial analysts, and specialists in procurement and disbursement\. At an early stage of project implementation, Bank missions alerted the Borrower and implementing agencies to the possibility that the distribution loss and financial receivables targets would not be met and made various suggestions for improvements\. The Bank also requested KESH and the Government to prepare their own action plan to remedy the situation\. In addition, the Bank helped the Government to resolve a dispute between the newly established Ministry of Economy and Privatization and the Ministry of Energy and Mineral Resources over their relative responsibilities for privatizing KESH, since this dispute was causing a delay in concluding a contract with the consultants selected to assist in privatizing the distribution companies\. The Bank showed flexibility in responding to a request by KESH to reallocate a portion of the IDA Credit to finance meters in support of a new KESH initiative\. The Bank also showed - 18 -  flexibility during 1997 by accepting that KESH would not be able to meet the loss and receivables targets temporarily because of the civic unrest and the resulting changes in Government, by agreeing to reallocate part of the IDA Credit to finance damages to electricity facilities caused during the unrest, and by agreeing with the Government to postpone further privatization of the distribution entities and instead to arrange for a management contract for KESH\. In 1998, when performance in reducing losses and improving bill collection showed insufficient improvement over the poor 1997 results, the Bank gave warning well in advance that it would be constrained to suspend the project if performance did not sufficiently improve by enough to meet carefully specified and realistic targets\. After disagreement among the cofinanciers over the proposed management contract emerged at a cofinanciers' meeting in May 1998 to consider the draft contract, the Bank made concerted efforts to try to resolve the problem\. The Bank subsequently coordinated with EBRD and the other donors on arrangements for a management assistance contract, which was awarded to ENEL after a competitive process\. Prior to resuming implementation after the lengthy suspension, the Bank arranged for technical assistance to assess how the transmission and distribution investment program should be changed to cope with intervening developments, including the impact of the large numbers of refugees that had entered Albania as a consequence of the Kosovo conflict\. The resulting study recommended several amendments to the overall transmission and distribution program to reflect changes in the growth and spatial allocation of electricity demand since the project was prepared\. These changes were subsequently accommodated by the project cofinanciers, by donors outside the project and by KESH itself\. During 2000, the Bank played a key role by recommending the preparation of an Action Plan by the Government and KESH to address the sector's most critical problems, and in reviewing various drafts of the Action Plan\. Successful initial implementation of this Action Plan provided the basis for lifting the suspension of the project\. The QAG evaluation of supervision during 2001 and 2002 considered the project's focus on development effectiveness and supervision inputs and processes as best practice and rated them as "Highly Satisfactory"; it considered the supervision of fiduciary/safeguards as "Satisfactory", but found the realism of project performance ratings to be "Marginal"\. The QAG team found it confusing to carry the project to closing with an unsatisfactory development outcome rating, as opposed to having a formal restructuring of the project, while at the same time providing new lending to the same borrower under revised conditionality\. This approach led to what it called "incomplete and confusing reporting in the PSR\." Justification for not having a formal restructuring of the project has been provided in Section 4\.1\. The QAG review noted that the appropriate and effective supervision efforts included: "(i) coordinated action by donors; (ii) launch of management assistance inputs to help KESH develop and implement its own Action Plan with carefully designed implementation arrangements to provide appropriate incentives to both those offering and those receiving the advice: (iii) suspension lifted only after the Albanian authorities themselves put together (and began implementing) an acceptable Action Plan to restore financial viability to KESH\." The review also noted the Bank's close coordination with IMF concerning power sector issues\. Aide-Memoires throughout the supervision period were regularly prepared and transmitted, flagging outstanding issues and underscoring benchmarks for actions\. These alerted the Government and the implementing agency to problems with project execution and facilitated remedies in a timely manner, in conformity with Bank procedures\. Whenever delays in implementation occurred, the Bank task team was able to define concrete steps and timetable for putting the project back on track and pace\. The Bank paid sufficient attention to the project's likely development impact\. The quality of advice, and the follow-up on agreed actions were adequate\. Loan covenants and remedies were enforced effectively\. The Bank also took initiative in holding several donors' meetings during implementation to develop a coordinated approach to the problems facing the Albania power sector\. - 19 -  7\.3 Overall Bank performance: Satisfactory\. Overall, as explained above, the Bank performance was satisfactory during project preparation, appraisal and implementation\. The role played by the Bank in assisting the Government and KESH in dealing with the electricity crisis has been appreciated by the Government, KESH and the other donors\. Borrower 7\.4 Preparation: Satisfactory\. The Borrower's performance in the preparation of the project was satisfactory\. The Borrower displayed the required level of commitment to the objectives of the project and covered the adequacy of design and all major aspects, such as technical, financial, economic, institutional, environmental and sociological factors, including stakeholder commitment\. For example, as mentioned in Section 3\.1, even before Board presentation, the Borrower passed an Electricity Law, a Regulatory Law, incorporated KESH and the pilots, and canceled KESH's tax arrears to the Government as well as the financial arrears of budgetary and non-budgetary entities with respect to electricity purchases\. In addition, as part of its privatization program, the Government sold 30% of the shares of the pilots for vouchers\. Officials of the Government and KESH worked closely with the Bank's project team on a continual basis throughout the project life\. 7\.5 Government implementation performance: Satisfactory\. Overall, the Government's implementation performance is considered satisfactory\. It was unsatisfactory during the initial phases, and this led to the project being suspended\. The main shortcomings consisted of: (i) inadequate support to KESH to reduce nontechnical power distribution losses; (ii) failure to ensure that budgetary and non-budgetary entities paid their electricity bills; (iii) failure to ensure that the ERE had adequate staffing and other resources to become effective; and (iv) failure to grant early approval of rights of way for transmission lines to be constructed under the project\. From the end of 2000, the Government performance improved significantly and this led to the lifting of suspension\. Realizing the full significance of the power crisis, the Government made a determined effort to reverse deterioration in the performance of the electricity sector\. This was evident from the wide range of measures adopted in the Action Plan, and in the progress made in its implementation\. 7\.6 Implementing Agency: Satisfactory\. As in the case of the Government, the performance of KESH was unsatisfactory before project suspension\. The shortcomings were mainly failures to: (i) deal effectively with the nontechnical power distribution losses; and (ii) prevent deterioration in bill collection from households and improve collection from budgetary and non-budgetary entities; and (iii) give adequate attention to financial performance and organization\. However, KESH worked in a very difficult (and sometimes dangerous) environment\. It deserves credit for initiating and implementing a program to install apartment meters in collective boxes and connect meters in detached dwellings to the grid using coaxial cable\. Its performance improved significantly after lifting of suspension through successful implementation of its components of the Action Plan, and thus the overall performance is considered satisfactory\. - 20 -  The performance of the Shkoder and Vlore companies prior to suspension was unsatisfactory because of their failure to: (i) prevent deterioration in nontechnical losses; (ii) prevent deterioration in bill collection; and (iii) pay more than small proportions of their bills to KESH for purchased electricity\. After lifting of suspension, their performance improved but still fell below that of KESH\. Elbasan's performance was significantly better than that of the other two pilots and about the same as that of KESH throughout the project implementation period\. The performance of the PMU was generally good\. The PMU was well organized and effective in dealing with procurement for KESH and the pilot companies, disbursement, progress reports, and in maintaining proper records of the project\. It was responsive to Bank advice, and collaborated fully towards meeting demanding benchmarks and deadlines\. 7\.7 Overall Borrower performance: Satisfactory \. The overall performance of the Borrower, KESH and Elbasan was satisfactory\. While the overall performance of Shkoder and Vlore was not satisfactory, it is recognized that these companies operated in more difficult and often unsafe conditions\. 8\. Lessons Learned The following are the main lessons learned: § In order to deal with the problems of nontechnical losses and collection, a strong level of sustained Government commitment and support is critical\. § It is often much more effective to insist that Borrowers work their own way through to solutions (with appropriate assistance and guidance), rather than imposing them from the outside\. This approach has been successful in this project, as also noted by the QAG supervision review\. § A well-coordinated stand by the donors on important issues can have a significant impact on a project's success\. § Implementing sector reforms is a slow process and it is unrealistic to expect rapid progress\. Furthermore, privatization requires careful preparation taking into account the country-specific requirements and establishing in advance the appropriate legislative basis and an effectively functioning regulatory framework\. Flexibility has to be adopted in choosing an appropriate form of privatization (sale of assets, concessions, management contracts) depending on internal and external factors\. 9\. Partner Comments (a) Borrower/implementing agency: Ministry of Finance We have carefully reviewed the draft Implementation Completion Report (ICR), which we found extremely exhaustive and accurate in depicting the project data, objectives and achievements\. With regards to the Bank and Borrower performance, we fully agree with the report, although it should be said that the supervision of the Bank during project implementation was more than satisfactory\. In fact, achievements by the Government and KESH were the result of a wide range of actions for which the Bank - 21 -  supervision played a key role with their competence, flexibility and comprehensive understanding of the country's problems\. Moreover, the full understanding of the Bank of the project implementation context in Albania, which would play an important role in the country's future development, is revealed in the section on lessons learned during this project's implementation\. Ministry of Industry and Energy In this report, the World Bank provides a detailed analysis of the implementation of the Power Transmission & Distribution Project, putting it in the real social and economic background that Albania and KESH have gone through during the implementation of this project\. We thank the World Bank for its continuous support for the restructuring and development of the power sector, and consider the report very realistic and encouraging\. Note: 1\. The comments from KESH were similar to those from the Ministry of Finance\. 2\. Other comments from the Ministry of Finance, Ministry of Industry and Energy and KESH have been incorporated into the text of the ICR\. (b) Cofinanciers: Japan Bank for International Cooperation (JBIC) In general terms, JBIC shares the views expressed in the report on the performance of the Power Transmission and Distribution Project, though the Project was delayed for a certain time period and the portion which we have been financing is still in the early stage of procurement procedure\. We would especially like to comment that we are in general satisfied with the performance of KESH PIU after the restart of the Project\. JBIC agrees to the fact that the project has faced unforeseen difficulties in the past, i\.e\. pyramid schemes, Kosovo crisis, disagreement between the donors on a management contract and adverse hydrological conditions, etc\. JBIC recognizes that the delay of the project was caused by these issues which were out of control of KESH, the line Ministry and the donors\. We have no doubt of the effect of the suspension which has significantly improved the situation of the project\. Nevertheless, JBIC - we did not suspend our financing at any stage of the Project - regretfully recognizes that the delayed time period could have been shortened, or perhaps might have been avoided if all the donors tried to sustain their financing for the Project, though each donor may have had its institutional difficulties to do so\. Government of Switzerland This ICR is a very comprehensive report; we fully agree with the description/analysis of the project and the lessons learnt\. The support from the World Bank's side was highly professional, and the cooperation between the World Bank and other donors/lenders generally smooth and efficient; in particular, we appreciated very much the World Bank's leading role in the sector policy dialogue and its proactive attitude regarding donors coordination; the periodical energy sector meetings (organized by the World Bank) between the donor community and the Government/KESH were extremely useful for maintaining pressure on the Government for achievement of project goals\. The difficult time through which Albania and KESH were going from 1997-2001 probably underlines the need for grant financing, as offered by the Swiss Government (total 13 million CHF in PTDP); therefore, - 22 -  the World Bank's role for poor countries can also be mobilizing such grant financing, as it was the case here\. The difficult process of privatization respectively choosing the right privatization option must go on for KESH; we hope to continue work with the World Bank group in this field in Albania\. European Bank for Reconstruction and Development (EBRD) EBRD is in agreement with the content and findings of the ICR\. We would particularly support Section 5 - Major Factors Affecting Implementation and Outcome\. EBRD suspended its two operations with KESH in April 1997 on the following grounds: (i) weaknesses of the project implementation teams, (ii) weaknesses of KESH management, and (iii) KESH financial situation, which was put under threat by the "pyramid scheme" crisis, the increasing level of power theft and low collection\. The prerequisite for lifting suspension was, in-line with the ICR, agreement with the Albanian Authorities on the need for the Government to take urgent action for reducing losses, increasing collection and as part of these measures to have a management assistance contract\. EBRD restructured its two operations and signed a new loan in December 1999\. (c) Other partners (NGOs/private sector): None\. 10\. Additional Information A\. The Bank's ICR Team consisted of the following members: Iftikhar Khalil (Task Team Leader) Sati Achath (Consultant) Richard Hamilton (Consultant) Yolanda Gedse (Team Assistant) B\. List of Task Team Leaders of the project in chronological order: Richard Hamilton Iftikhar Khalil - 23 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate NOTE: At the time of preparation of the DATA AT PROJECT PREPARATION\. DATA FOR 2002\. SAR, there was no log frame matrix\. A large number of proposed performance indicators were given but there was no direct linkage between these indicators and anticipated outcomes\. Selected indicators are given below to indicate how performance has evolved\. Consequently, the data given in the second column relates to performance at the time of project preparation (1994/1995) and that in the third column relates to 2002\. Ratio of nontechnical electricity distribution 28\.2% 17\.1% losses to electricity entering distribution network for KESH and three pilot companies re-incorporated\. Ratios of technical electricity distribution 14\.0% 19\.3% losses to electricity entering the distribution network for KESH and the three pilot companies re-incorporated\. Ratio of accounts receivable to annual electricity bills for KESH and the three pilot companies separately: KESH 6\.6 months 4\.6 months Elbasan 11\.8 months 12\.4 months Vlore 16\.3 months 33\.3 months Shkoder 11\.3 months 42\.0 months Self-financing ratio\. KESH: -24% KESH: 42% Number of interruptions per 100 circuit km\. MV Line LV Line MV Line LV Line Distribution Line 595 512 375 290 KESH 590 580 390 295 Elbasan 610 545 435 406 Vlore 603 567 405 432 Shkoder Transmission Line 400kV 3\.3 3\.3 220kV 8\.1 12\.4 110kV 16\.6 11\.7 35kV 6\.7 3\.7 Average duration of distribution line interruptions (hours) MV Line LV Line MV Line LV Line KESH 3\.2 1\.9 1\.9 1\.2 Elbasan 3\.2 2\.3 2\.0 1\.3 Vlore 3\.4 2\.0 2\.5 1\.7 Shkoder 3\.4 2\.2 2\.5 1\.7 Ratio of transmission losses to net 11\.6% 10\.9% generation, with pilots re-incorporated\. Establishment of effective regulatory agency\. ERE was established in 1996 but was not an ERE greatly strengthened in 2003\. effective organization\. Degree of privatization of power distribution 30% of the shares of Elbasan, Shkoder and Distribution activities of pilots being taken companies\. Vlore\. over fully by KESH\. - 24 -  Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate The distinction between output and outcome was not made in the SAR\. 1End of project - 25 -  Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Civil works 2\.20 0\.00 Transmission facilities 46\.30 42\.00 90\.7 Distribution facilities 55\.60 43\.50 78\.2 Spare parts 2\.40 0\.00 0 Project management 5\.20 2\.20 42\.3 Technical assistance 4\.90 4\.70 95\.9 Total Baseline Cost 116\.60 92\.40 Total Project Costs 116\.60 92\.40 Total Financing Required 116\.60 92\.40 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 2\.20 2\.20 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 21\.10 0\.00 3\.50 79\.70 104\.30 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 3\. Services 0\.00 0\.00 4\.90 5\.20 10\.10 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 21\.10 0\.00 8\.40 87\.10 116\.60 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 11\.90 0\.00 1\.20 72\.34 85\.44 () (0\.00) () (0\.00) (0\.00) 3\. Services 0\.00 0\.00 4\.67 2\.29 6\.96 (0\.00) (0\.00) () (0\.00) (0\.00) Total 11\.90 0\.00 5\.87 74\.63 92\.40 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 1/Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff - 26 -  of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Civil works 2\.20 0\.0 Transmission facilities* 46\.30 42\.00 90\.7 Distribution facilities 24\.60 31\.00 13\.00 30\.50 52\.8 98\.4 Spare parts 2\.40 0\.0 Project management 5\.20 2\.20 42\.3 Technical assistance 4\.90 4\.70 95\.9 * Transmission facilities financed by co-financiers includes TA\. - 27 -  Annex 3\. Economic Costs and Benefits As mentioned in Section 4\.3, this section is not applicable\. - 28 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 1/12/1994 4 ENERGY ECONOMIST (I); POWER ENGINEER (1); ENVIRONMENTAL ECONOMIST (1); CONSULTANT (1) 09/04/1994 4 ENERGY ECONOMIST (I); POWER ENGINEER (1); ENVIRONMENTAL ECONOMIST (1); CONSULTANT (1) 1/29/1995 6 ENERGY ECONOMIST (I); POWER ENGINEER (1); ENVIRONMENTAL ECONOMIST (1); FINANCIAL ANALYST (I) CONSULTANTS (2) Appraisal/Negotiation 04/19/1995 8 APPRAISAL MISSION LEADER (I); TASK MANAGER - ENERGY ECONOMIST (I); POWER ENGINEER (1); ENVIRONMENTAL ECONOMIST (1); FINANCIAL ANALYST (I); PRIVATE SECTOR SPECIALIST (I); CONSULTANTS (2) 07/23/1995 2 ENERGY ECONOMIST (I); CONSULTANT (1) 09/20/1995 2 POWER ENGINEER (1); CONSULTANTS (1) 12/12/1995 3 POWER ENGINEER (1); CONSULTANTS (2) Supervision 06/19/1996 2 ENERGY ECONOMIST (1); S S PROJECT OFFICER (1) 09/06/1996 3 DIVISION CHIEF (1); ENERGY ECONOMIST (1); PROJECT OFFICER (1) 11/05/1996 3 ENERGY ECONOMIST (1); U U POWER ENGINEER (1); PROJECT OFFICER (1) 05/17/1997 3 ACTING DIVISION CHIEF (1); - 29 -  ENERGY ECONOMIST (1); POWER ENGINEER (1) 09/05/1997 2 ENERGY ECONOMIST (1); POWER ENGINEER (1) 10/10/1997 1 FINANCIAL ANALYST (1) 12/20/1997 2 ENERGY ECONOMIST (1); U U PROJECT OFFICER (1) 03/31/1998 2 ENERGY ECONOMIST (1); U U PROJECT OFFICER (1) 06/05/1998 4 ENERGY ECONOMIST (1); U U PROJECT OFFICER (1); FINANCIAL ANALYST (1); POWER ENGINEER (1) 10/12/1998 4 ENERGY SPECIALIST (1); U HU PROJECT OFFICER (1); INFRASTRUCTURE SPECIALIST (1); ENERGY ECONOMIST (1) 01/28/1999 2 ENERGY SPECIALIST (1); U HU PROJECT OFFICER (1); 06/05/1999 2 ENERGY SPECIALIST (1); U HU PROJECT OFFICER (1); 10/11/1999 2 ENERGY SPECIALIST (1); PROJECT OFFICER (1); 08/21/2000 2 ENERGY SPECIALIST (1); U HU PROJECT OFFICER (1) 04/22/2001 3 ENERGY SPECIALIST (1); PROJECT OFFICER (1) 08/13/2001 3 ENERGY SPECIALIST (1); S U PROJECT OFFICER (1); ENERGY SPECIALIST (1) 12/03/2001 4 ENERGY SPECIALIST (1); S U PROCUREMENT ANALYST (1); FINANCIAL ANALYST (1); ENERGY ECONOMIST (1) 02/26/2002 3 ENERGY SPECIALIST (1); S U FINANCIAL ANALYST (1); ENERGY ECONOMIST (1) 08/13/2002 3 ENERGY SPECIALIST (1); S U PROJECT OFFICER (1); ENERGY ECONOMIST (1) 10/17/2002 2 ENERGY SPECIALIST (1); S U PROJECT OFFICER (1); ICR 03/10/2003 4 ENERGY SPECIALIST (1); PROJECT OFFICER (1); FINANCIAL ANALYST (1); ENERGY ECONOMIST (1) - 30 -  (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 30\.3 121\.2 Appraisal/Negotiation 97\.5 390\.0 Supervision 215\.2 861\.5 ICR 9\.0 27\.5 Total 342\.0 1400\.2 - 31 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 32 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 33 -  Annex 7\. List of Supporting Documents 1\. Aide-Memoires, Back-to-Office Reports, and Project Status Reports\. 2\. Project Progress Reports\. 3\. Staff Appraisal Report for the Albania Power Transmission and Distribution Project, January 17, 1996 (Report No\. 14532-ALB)\. 4\. QAG, Quality of Supervision Assessment (QSA5) of the Albania Power Transmission and Distribution Project, December 10, 2002\. 5\. Deloitte Touche Tohmatsu Emerging Markets, "Situation Review, Verification of Management Contract Approach", December 8, 1997\. 6\. Deloitte Touche Tohmatsu Emerging Markets, "Management Contract for Operation of KESH, Draft Bid Package", July 20, 1998\. 7\. EDF, "Technical Review of the Albanian Electricity Networks - Final Report", July 16, 1999\. 9\. KPMG, EDF, "Financial Management of KESH - Final Report", June 21, 2002\. 10\. Decon, EDF, LDK, Lahmeyer International and GEI - ENERGY, "Albania Energy Sector Study", January 2003\. 11\. KESH, Power Sector Action Plan 2001-2003\. 12\. KESH, Second Power Sector Action Plan 2002-2004\. 13\. KESH, Third Power Sector Action Plan 2003-2005\. 14\. "Power Sector Policy Statement of Government of Albania", April 2002\. 15\. Government of Albania, "National Strategy of Energy", June 2003\. - 34 -  - 35 -

REVIEW

P009550

 ICRR 11858 Report Number : ICRR11858 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/17/2004 PROJ ID : P009550 Appraisal Actual Project Name : Primary Education Project Costs 2039\.5 Development Project US$M ) (US$M) Country : Bangladesh Loan/ Loan US$M ) 150\.0 /Credit (US$M) 90\.1 Sector (s): Board: ED - Primary Cofinancing 220\.8 - education (82%), Tertiary US$M ) (US$M) education (9%), Central government administration (3%), Sub-national government administration (3%), Other social services (3%) L/C Number : CN038 Board Approval 98 FY ) (FY) Partners involved : ADB, IDB, DFID, UNICEF, Closing Date 12/30/2003 12/30/2003 UNFPA, KfW, Norway, Sweden Prepared by : Reviewed by : Group Manager : Group : Elaine Wee-Ling Ooi H\. Dean Nielsen Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives The credit supported a slice of the government ’s Primary Education Development Program (PEDP) which comprised a total of 9 major and discrete donor funded projects and 18 Government of Bangladesh (GOB) projects, bound by a common policy framework \. The objectives of the project (as per the loan agreement) were to: a) improve school quality and system efficiency; b ) establish a sustainable, cost effective and better managed education system; and c) ensure universal coverage and equitable access to quality primary schooling \. b\. Components There were 3 components to this project as follows (funding levels are estimated PEDP totals ) : i) Improving school quality and system efficiency ($293\.9m) ii) Strengthening institutional capacity and management ($53\.7m) iii) Increasing equitable access to quality education ($370\.6m) c\. Comments on Project Cost, Financing and Dates The ICR did not provide actual costs for the entire Primary Education Development Program ($2039\.5 m), but only on the IDA credit\. For this $90\.1m was disbursed against $ 150 m committed at appraisal\. The lower actual costs were a result of significantly lower construction costs, devaluation of the Taka, and exchange rate fluctuations of SDR/USD\. For the overall PEDP the government committed $ 1668\.7 towards the total costs of $ 2039\.5 at appraisal (including $1297\.8 in recurrent costs), but only the direct spending for activities covered in the IDA credit -- $39 m spent compared to $33\.8 m estimated at appraisal -- were accounted for in the ICR\. The project closed on schedule on 12/30/2003\. 3\. Achievement of Relevant Objectives: Originally conceived as a subsector wide program, many of the qualitative /quantitative targets planned were ambitious\. While we have little information in the ICR about the achievements of the overall program (that included other donor sponsored and GOB projects ), available information mostly on the credit, indicated that the overall objectives were partially achieved as follows : i) Improve school quality and system efficiency -- A National assessment on the learning achievements of children was carried out only once (against three planned) and indicated only about 25% of children had achieved "near mastery" of basic items in language (Bangla), mathematics, science and social studies, against the 85% planned on roughly comparable measures\. Completion rates of the poorest children deteriorated to 56% against the targeted 72%, and there was little change in the primary cycle cost, with a child taking an average of 7\.5 years to complete primary school\. Forty seven percent of teachers from both government and private schools were trained and certified versus only 10% at project start\. ii) ii) Sustainable, cost effective and better managed education system -- capacity building of education personnel at the national level in monitoring and evaluation, management and analysis had suboptimal results due to the mismatch of training content, trainees and functional responsibilities \. The education management information system (EMIS) was considerably improved (by DFID) with better quality data and collection practices, which unfortunately have not yet led to effective planning and management of the primary education subsector \. iii ) Universal coverage and equitable access to quality primary schooling -- The targeted net enrolment ratio of 95% iii) was almost met (national and IDA supported areas achieved 85%) with gender parity maintained\. Project supported physical works (including tube wells and toilets for girls ), block grants to schools and social mobilization helped generate the increased demand for schooling \. 4\. Significant Outcomes/Impacts: Several policy actions were implemented by the project resulting in : Training and certification of teachers from registered nongovernmental schools and subventions to such schools for teacher salaries (40% of primary schools in Bangladesh are nongovernmental )\. Increased instructional time (doubled in grades 3-5) and improved teacher student ratios from 1:60 to 1:40\. More efficient allocation of education resources, i \.e\., textbook reuse policy, school construction based on needs, targeted subsidies to underserved rural communities (e\.g\., 1\.5 m poorest children received free stationery ) to increase enrolment\. Institution of a national curriculum in all primary schools \. Project design used student learning achievement as indicator of school quality and one national assessment was undertaken\. Modest degree of capacity building achieved at district and subdistrict levels in planning, budgeting and implementation of education activities \. The physical works ably carried out by the Local Government Engineering Department (160 new schools, 6000 new classrooms, 3500 schools repaired, and 10,000 toilets and 4800 tube wells installed) contributed much to the improvement of the learning environment, and demand for schooling \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Project design was still overly ambitious even with scaled down targets after GOB rejected the original programmatic approach\. This was despite the known poor implementation capacity of GOB, identified as a risk in the PAD\. Not only was the design complex with GOB having to coordinate and sequence a total of 27 discrete projects with activities interdependent on one another, many of the physical targets in learning achievements and education efficiency were clearly unachievable \. Frequent changes of key personnel in Ministry of Primary and Mass Education (MOPME), including 4 different secretaries and 5 different project directors negatively affected project implementation \. Project management, procurement and financial management remained weak despite training efforts due to staff turnovers\. Highly centralized and inordinate delays in decision making delayed all aspects of project implementation (most importantly, the nonrecruitment of teacher training instructors for 2 years)\. Only one of the planned three national assessments was undertaken and its results were not easily comparable to project indicators\. Little GOB commitment to this undertaking is evident, since no follow -up work is scheduled and the assessment team has been disbanded \. The improved EMIS system did not lead to timely analysis of data /information nor corrective management action\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory There was only partial achievement of major project objectives and a number of significant shortcomings, as noted in Section 5\. This warrants a "Moderately Satisfactory" rating (which does not exist under the ICR's 4-point scale) Institutional Dev \.: Modest Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: A programmatic approach should ensure that there is sufficient political committment by the borrower to this  modality and a clear agreement on development objectives \. Likelihood of succes is enhanced when there is adequate institutional capacity, clear agreement among the development partners and between the government and development partners on objectives and intervention modalities, and a strong M&E system \. Government commitment to systematic data collection and utilization of this data for timely policy and corrective intervention is fundamental to the success of any project \. High transaction costs associated with coordination of many discrete but interdependent projects cannot be underestimated\. 8\. Assessment Recommended? Yes No Why? This is a good example of a subsector -wide project with multiple donors than can provide many important lessons about the challenges of such strategies \. It would be useful to frame the lessons not only from the Bank's perspective but from that of the many partners as well \. 9\. Comments on Quality of ICR: The ICR is of overall satisfactory quality \. However it could have gone beyond its assessment of the sole IDA credit, given the project was designed to be subsector wide, and the interdependency of the activities among the different discrete projects\. More information (beyond annexes) could have been provided on the outcomes of the other projects (and their financial disbursements ) as they cumulatively determined the success of the government's Primary Education Development Program\. Inclusion of comments from other key donors would also have been appropriate\.

REVIEW

P006046

 ICRR 12815 Report Number : ICRR12815 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 12/21/2007 PROJ ID : P006046 Appraisal Actual Project Name : Water Sector Reform US$M ): Project Costs (US$M): 46\.80 33\.34 Project Country : Argentina Loan/ US$M ): Loan /Credit (US$M): 30\.00 24\.53 Sector Board : WS US$M): Cofinancing (US$M ): Sector (s): Water supply (39%) Sewerage (39%) Central government administration (22%) Theme (s): Regulation and competition policy (20% - P) Pollution management and environmental health (20% - P) Environmental policies and institutions (20% - P) Other urban development (20% - P) Access to urban services and housing (20% - P) L/C Number : L4484 Board Approval Date : 06/01/1999 Partners involved : Closing Date : 07/31/2002 03/31/2007 Evaluator : Panel Reviewer : Group Manager : Group : Kristin S\. Little Ronald S\. Parker Alain A\. Barbu IEGSG 2\. Project Objectives and Components: a\. Objectives: The project aimed to improve the quality and efficiency of water and sanitation services in urban and rural areas in Argentina by supporting private sector participation \. The original objective was to support the reform process in about five medium-size municipal and provincial utilities while addressing the pending issues of existing private utilities, regulatory frameworks, and regulatory agencies \. The project aimed to achieve four specific outcomes : (i) efficiently run utilities under private management; (ii) private utilities with a clear strategy to expand services to the poor; (iii) cost-effective regulatory practices; and (iv) reliable financial and operational information on utilities \. The objectives were revised in 2004: (a) to support the reform of the water and sanitation sector in Argentina through the promotion of efficiency in the operation and financing of water utilities; (b) to support the establishment of sound regulatory frameworks for the water sector; and (c) to address universal service and environmental issues pertaining to said sector\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives /key associated outcome targets? Yes Date of Board Approval: 06/01/2004 c\. Components (or Key Conditions in the case of DPLs, as appropriate): A\. Investment component (US$23\.5 million at appraisal; US$21\.7 million after restructuring; US$23\.95 at closing)\. Investments to restore the capacity of existing systems : rehabilitation and replacement of pipes, revamping and improvement of water treatment plants and intake facilities, upgrading substandard connections, supply and installation of water meters, repair and replacement of pumping and control equipment, supply of emergency and maintenance equipment, improvement and extension of water and sewerage services to the poor \. B\. Institutional Component (US$5\.2 million at appraisal; US$2\.8 million after restructuring; US$\.34 at closing) Project management, training of regulators, technical assistance to continue advancing the reform of the sector, establishment of a sectoral information system, and development and implementation of environmental regulations \. C\. Environmental Component (US$1\.0 million [p 10, ICR, p 35, PAD] at appraisal, [though the ICR states on p 50, that the component was new after project restructuring, and that it was US$ 0\.8 million]; US$0\.2 million after restructuring; US$0\.0 at closing) This component consisted of two parts : (i) updating of key environmental standards, preparation of guidelines for environmental impact assessment, environmental auditing of selected subprojects, and a prototype water quality management diagnostic study for the Salidulce river basin \. (ii) emergency actions to mitigate negative environmental impacts related to water infrastructure \. It included, inter alia: environmental clean-up services, removal of hazardous wastes, and equipment to address environmental damage \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The project was originally estimated to cost $ 47\.1 million, with $17\.1 coming from the borrower and $30\.0 coming from the Bank\. In the end, just over half of this was invested by the Borrower (51\.8 percent), and 81\.7 percent from the Bank\. Project revision came late\. The government had moved away from PSP -led reform by 2000, yet a restructuring proposal was not submitted until 2002\. The amendment to the loan was signed by the Government of Argentina in July 2005--three years after the original closing date, 6 years into the 8 year loan period\. 3\. Relevance of Objectives & Design: Both the initial and revised project objectives were relevant to the current CAS as they focused on improving the quality and efficiency of water and sanitation services, which are important to supporting economic growth, expanding access to the services for the poor, and strengthening regulatory capacity at the provincial level \. The project’s emphasis on working closely with the provinces and local utilities to improve local regulatory capacity and financial self-sufficiency at the utility level also remains in line with the approach recommended in the current CAS \. However, a major focus of the initial and revised objectives (although slightly less so in the revised objectives ) is PSP, which is at odds with the more neutral approach reflected in the current CAS \. Furthermore, the performance monitoring and evaluation system did not fully reflect project objectives as it was not geared to effectively consult the poor and monitor impacts on the poor \. The decision to have the PMU staffed by permanent national water and sanitation agency personnel is in line with current thinking at the Bank, in order to mainstream the improved technical capacity and to protect the institutional memory of a project rather than have it rest with independent consultants \. However, the strategy proved susceptible to insufficient allocation of personnel to the PMU, due to the government ’s change in strategic direction since the preparation of the project\. 4\. Achievement of Objectives (Efficacy): Negligible\. After revision, the project was intended to promote the efficient operation and financing of water utilities in Argentina, establish sound regulatory frameworks, and address service and environmental issues, none of which was satisfactorily achieved \. Objective (a), to support the reform of the water and sanitation sector in Argentina through the promotion of efficiency in the operation and financing of water utilities, was not fully achieved as EIRRs reveal that for the bulk of the investment, the targets were not met \. Achievement: modest\. Objective (b), to support the establishment of sound regulatory frameworks for the water sector, was not achieved, as none of the provinces received technical assistance to strengthen their regulatory frameworks \. Achievement: Negligible\. Objective (c), to address universal service and environmental issues pertaining to the sector, was not achieved as none of the utilities received technical assistance relating to tariff policies or to investment alternatives to better reach the poor\. Further, none of the funds in the environmental component (c) were disbursed\. Achievement: Negligible\. Three out of five utilities were ultimately supported through project -financed investments, only two of these had undergone a reform process, which had already occurred under the previous project (Ln\. 3281-AR)\. As a result, none of the initial project development objectives can be considered to have been met \. 5\. Efficiency (not applicable to DPLs): Economic analyses in the PAD and ICR were in -depth and sophisticated\. However, the questions posed by each differed\. From an ex-post perspective, the question posed was no longer "to reform or not to reform\." The relevant question had become: "Were these investments worthwhile? " This implies that the figures below for appraisal and ICR need to be considered on their own \. The economic analysis at appraisal did not demonstrate (1) why it made sense to direct funds to PSP -reformed utilities only, as opposed to a larger selection of utilities fulfilling desired efficiency criteria; or (2) whether the investment of these funds would lead to economically and financially viable benefits\. Additionally, the appraisal analysis did not reflect the high internal plumbing costs that households face if they choose to connect to new sewerage disposal services \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal Yes 12% 50% ICR estimate Yes 4% 54% * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Assessing the outcome against both the original and revised objectives, rating each and weighting them according to their share of disbursements, the outcome rating is Unsatisfactory \. While the revised project development objectives focus less on PSP by opening up investments in public utilities, the desired results were not achieved \. Investment subprojects, (component 1) suffered from slow procurement (because of inadequate evaluation of consumer demand for sewerage connections )\. Service improvements for the urban poor showed almost no activity \. There were, however, some positive environmental impacts from the rehabilitation and expansion of the wastewater treatment facility in Olavarria\. Rating: Unsatisfactory\. Institutional strengthening (component 2) saw virtually no progress as the government had shifted away from PSP \. The government also frowned on using consultants, as was planned in the project originally, favoring in -house capacity (see section 9)\. There were no national budget allocations made to these activities, except for the national WSS information system (SPIDES), which is currently not being supported\. Rating: Unsatisfactory\. Funds for the environmental actions component (component 3) were never disbursed\. The government never took interest in this component \. Rating: Highly Unsatisfactory\. a\. Outcome Rating : Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: The realization of the full benefits of the project will depend on several variables : (i) the financial sustainability and efficient operation of each utility; (ii) government ownership and commitment at the provincial and federal level to make connections to new sewerage services possible for all households for whom the connection has been made technically possible, through appropriate, well -targeted and coherent subsidy policies; and (iii) a renewed commitment from provincial and federal government entities to support institutional strengthening in the sector, especially with regard to regulatory activities and productive partnerships between the operating utilities and the overseeing authorities\. Thus far, progress in these areas is weak \. The investment in utilities shows weak returns, government ownership continues to lag, and a renewed commitment to support institutional strengthening is absent \. Overall, the government’s ownership and commitment to devise appropriate, well -targeted and coherent subsidy policies in order to increase connection rates to newly available sewerage networks is unclear \. There is an awareness of the problem, but there is no concerted federal strategy to strengthen regulatory capacity at the provincial level\. In addition to the above risk considerations, appropriate measures will be necessary to ensure that the increased capacity for wastewater disposal generated under the project is accompanied by the appropriate capacity for wastewater treatment to avoid further environmental contamination \. Finally, there are serious concerns about the sustainability of the WSS information system since there is no team in place to maintain the database or the website now that the project is closed, and no replacement funding has been allocated to this activity by the national agency for water and sanitation works (ENOHSA)\.  a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: Quality at entry: The risk of a changing macroeconomic environment was not considered in project design, even though the country was entering a recession at the time of approval \. Likewise, the risk of a change in the government’s PSP-focused strategy or commitment to the project strategy was not fully considered, despite clear signals of mounting public opposition to PSP \. Project design did not fully take into account the risk that tariffs would not be adequately adjusted to changing costs during project execution, despite the lack of experience in Argentina with tariffs closely following operational costs and the admitted infancy of the regulatory systems to be established\. Quality of Supervision: The Quality of Supervision Assessment (September 2002) judged the project reporting to be weak and observed that there was no evidence that the M&E system described in the project ’s operational manual was being used by the project team, on either the Bank ’s or the borrower’s side\. The report also noted that the project restructuring was conducted without an in -depth review of needs, and pointed out that the Bank should have focused more on addressing the emerging issues of PSP -oriented reform, such as social and poverty issues and regulatory issues, in addition to convincing the government of the project's objectives \. Procurement processes were reportedly slow on the Bank side as well as the borrower ’s\. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Unsatisfactory c\. Overall Bank Performance :Moderately Unsatisfactory 9\. Assessment of Borrower Performance: Initially, government ownership and commitment to achieving the project ’s objectives was high\. But with the change in government, support was entirely lacking \. Willingness to appoint new staff was absent \. The government staffed the PMU with one person \. The PMU was meant to be staffed with a coordinator backed up by team of eight consultants, however \. Funds for this were provided for under the loan, but never used \. It was subsequently decided that it would be better to staff it from within, but then this was never done \. Following project completion, no arrangements were made to maintain the The SPIDES database \. The PMU produced punctual and well -prepared semi-annual report to the Bank, but these reports did not systematically track progress on project performance indicators \. a\. Government Performance :Moderately Unsatisfactory b\. Implementing Agency Performance :Moderately Unsatisfactory c\. Overall Borrower Performance :Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: Design: The national water and sanitation agency, through the PMU, was charged with supervising and controlling the compliance of sub-project executors with the operational and financial performance indicators detailed for the project, verifying their progress towards improved efficiency, and monitoring the progress of the poverty pilot sub-component and regulatory strengthening component \. The M&E system as designed, however, was not geared to effectively consult the poor and monitor impacts on the poor, nor did the project ’s supervision budget allow sufficient resources to focus on this (Quality of Supervision Assessment [September 2002]) Implementation: Implementation of the M&E system was difficult because of serious understaffing (see section 9, Assessment of Borrower Performance )\. While the PMU prepared reports to the World Bank on the status of the project, these reports did not systematically track progress on performance indicators for the project \. Utilization: There was insufficient use of the monitoring and evaluation system \. The Quality of Supervision Assessment (September 2002) judged the project reporting to be weak and observed that there was no evidence that the M&E system described in the project ’s operational manual was being used by the project team, on either the Bank’s or the borrower’s side\. The M&E system was not used to monitor impacts on the poor, nor were resources ever made available for this purpose \. The ICR noted that the project restructuring might have been an opportunity to strengthen M&E design and practice \. a\. M&E Quality Rating : Modest  11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Originally most investments were to be rehabilitative, and the project was classified Environmental Category B \. In the end, a substantial portion of the works actually financed consisted of new sewerage collection infrastructure and of the expansion of existing sewerage treatment capacity \. Net environmental benefits were observed in one sub-project, and expected in another \. On the fiduciary side, an unsatisfactory first round of bids in Tucuman was appropriately thrown out and the process started anew \. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory Risk to Development Significant Significant Outcome : Bank Performance : Moderately Moderately Unsatisfactory Unsatisfactory Borrower Performance : Moderately Moderately Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: The tool that is used to achieve project objectives should not be used as the objective itself \. Focusing on PSP as an objective meant that the project missed the opportunity to generate greater demand for sub -projects by including public utilities, and in turn improve achievement of the goal of enhanced efficiency and improved service quality and sustainability\. Continuing open and candid dialogue with the Borrower about changing sector priorities can save a project \. The dampening of government commitment toward PSP -oriented reform before loan effectiveness should have been an early indication of the need to revise the project components \. Making the terms of sub-borrowing more flexible, without sacrificing efficiency objectives, could have helped to support utilities showing progress toward efficiency goals (not only privately managed utilities ) or addressing urgent needs for the poor \. Evaluating the actual demand for services, and anticipated cost and affordability to consumers is important to help ensure that investments will be worthwhile \. This project highlights the importance of assessing beneficiary demand and likelihood of connections to new services \. The existence of a partially viable substitute for the new service offered (septic tank disposal) and high connection costs led to much lower than expected rates of connection to newly expanded sewerage networks in at least two of the three sub -projects\. As a result, realized benefits are also much lower than expected\. Using socio-economic assessment tools such as stakeholder consultations and surveys, combined with refined assumptions in the ex -ante economic analysis can help address this issue \. 14\. Assessment Recommended? Yes No Why? To learn more about the communication between the Bank and borrower, and to inform an upcoming IEG water study, which will include PSP in its analysis \. 15\. Comments on Quality of ICR: This is an well-written ICR that adds much value to an otherwise unsatisfactory experience \. It demonstrates a keen understanding of the issues and difficulties, and lays out the experience in a clear thorough manner, closely following ICR guidelines\. It candidly reports shortcomings along with insightful explanations \. The economic analysis was thorough and well written\. There were inconsistencies in the numbering of paragraphs making the reading a bit confusing at times, but overall it is an impressive ICR \. a\.Quality of ICR Rating : Satisfactory

REVIEW

P072030

Document of The World Bank Report No: ICR00003583 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2770, IDA-H6880, IDA-49520) ON A GRANT IN THE AMOUNT OF SDR 10 MILLION (US$15\.00 MILLION EQUIVALENT), AN ADDITIONAL GRANT IN THE AMOUNT OF SDR 7\.8 MILLION (US$12\.30 MILLION EQUIVALENT) AND AN ADDITIONAL CREDIT IN THE AMOUNT OF SDR 9\.6 MILLION (US$15\.10 MILLION EQUIVALENT) TO THE REPUBLIC OF CHAD FOR AN URBAN DEVELOPMENT PROJECT April 28, 2016 Water Global Practice Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective as of 01/06/2016) Currency Unit = CFA Francs CFAF1\.00 = US$0\.00165 US$1 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD French Development Agency (Agence Française de Développement) CBA Cost-benefit Analysis CFAF African Franc ERR Economic Rate of Return FM Financial Management GoC Government of Chad ICR Implementation Completion and Results Report ISR Implementation Status and Results Report M&E Monitoring and Evaluation Ministry of Land Planning, Urbanism and Housing (Ministère de MATUH l’Aménagement du Territoire, de l’Urbanisme et de l’Habitat) MTR Midterm Review PAD Project Appraisal Document Urban Development Project (Projet d’Appui au Développement PADUR Urbain) PCU Project Coordination Unit PDO Project Development Objective PPIAF Public Private Infrastructure Advisory Facility Chad Critical Electricity and Water Services Rehabilitation Project PRSEEE (Projet de Réhabilitation des Services Essentiels Eau et Electricité) RF Results Framework STE Chad Water Utility (Société Tchadienne des Eaux) Chad Water and Electricity Company (Société Tchadienne d’Eau et STEE d’Electricité) TA Technical Assistance Senior Global Practice Director: Jennifer J\. Sara Practice Manager: Alexander E\. Bakalian Project Team Leader: Madio Fall ICR Team Leader: Madio Fall  REPUBLIC OF CHAD Urban Development Project and its Additional Financing CONTENTS ICR Datasheet \. i A\. Basic Information \. i B\. Key Dates \. i C\. Ratings Summary \. i D\. Sector and Theme Codes\. ii E\. Bank Staff \. ii F\. Results Framework Analysis \. ii G\. Ratings of Project Performance in ISRs \. viii H\. Restructuring (if any) \. viii 1\. Project Context, Development Objectives and Design \. 1 1\.1 Context at Appraisal \. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators \. 2 1\.3 Revised PDO and Key Indicators, and Reasons/Justification \. 2 1\.4 Main Beneficiaries \. 3 1\.5 Original Components \. 3 1\.6 Revised Components \. 4 1\.7 Other significant changes \. 5 2\. Key Factors Affecting Implementation and Outcomes \. 5 2\.1 Project Preparation, Design and Quality at Entry \. 5 2\.2 Implementation \. 7 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization \. 10 2\.4 Safeguard and Fiduciary Compliance \. 11 2\.5 Post-completion Operation/Next Phase \. 13 3\. Assessment of Outcomes \. 13 3\.1 Relevance of Objectives, Design and Implementation \. 13 3\.2 Achievement of Project Development Objectives \. 14 3\.3 Efficiency \. 17 3\.4 Justification of Overall Outcome Rating\. 18 3\.5 Overarching Themes, Other Outcomes and Impacts \. 18  3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops \. 19 4\. Assessment of Risk to Development Outcome \. 19 5\. Assessment of Bank and Borrower Performance \. 20 5\.1 Bank Performance \. 20 5\.2 Borrower Performance \. 21 6\. Lessons Learned\. 23 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 24 Annex 1\. Project Costs and Financing \. 25 Annex 2: Outputs per component \. 27 Annex 3\. Economic and Financial Analysis \. 34 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 38 Annex 5\. Beneficiary Survey Results \. 40 Annex 6\. Stakeholder Workshop Report and Results \. 40 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 40 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 41 Annex 9\. List of Supporting Documents\. 42 MAP IBRD-34221 \. 45  REPUBLIC OF CHAD Urban Development Project and its Additional Financing ICR Datasheet A\. Basic Information Urban Development Country: Chad Project Name: Project IDA-49520, IDA- Project ID: P072030 L/C/TF Number(s): H2770, IDA-H6880 ICR Date: 03/29/2016 ICR Type: Core ICR Specific Investment Lending Instrument: Borrower: Government of Chad Loan Original Total SDR 10\.00 million Disbursed Amount: SDR 16\.67 million Commitment: Revised Amount: SDR 17\.25 million Environmental Category: B Implementing Agencies: Cellule de Coordination du PADUR Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/28/2004 Effectiveness: 05/01/2007 05/01/2007 04/08/2011 Appraisal: 10/30/2006 Restructuring(s): – 06/07/2011 04/14/2015 Midterm Review Approval: 03/06/2007 09/16/2013 12/03/2013 (MTR): Closing: 10/30/2011 06/30/2015 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Moderately Satisfactory Government: Unsatisfactory Quality of Moderately Implementing Moderately Supervision: Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Unsatisfactory i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project at Quality at Entry Yes None any time (Yes/No): (QEA): Problem Project at any time Quality of Yes None (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Flood protection 36 27 General public administration sector 40 30 Other social services 1 1 Rural and Inter-Urban Roads and Highways 9 7 Water supply 14 35 Theme Code (as % of total Bank financing) City-wide Infrastructure and Service Delivery 13 40 Municipal finance 24 15 Municipal governance and institution building 25 15 Other human development 13 1 Urban services and housing for the poor 25 29 E\. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Hartwig Schafer Country Director: Paul Noumba Um Marie Francoise Marie-Nelly Practice Manager: Alexander E\. Bakalian Eustache Ouayoro Project Team Leader: Madio Fall Franck Bousquet ICR Team Leader: Madio Fall ICR Primary Author: Veronique Verdeil Joseph W\. B\. Bredie F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) In the Financing Agreement, the project development objective (PDO) is to increase sustainable access to municipal services for residents in beneficiary cities\. The Project Appraisal Document specifies '\. residents in targeted project cities (N'Djamena, Moundou, Sarh, Abéché, and Doba)\.' ii Revised Project Development Objectives (as approved by original approving authority) n\.a\. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1: Number of people in targeted cities protected from periodic flooding Value quantitative or 203,878 275,974 366,850 470,826 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Achieved at 370 percent of the original target (164 percent of the revised Comments target): 266,948 additional people benefited from drainage works (Moundou, (including % Sarh, Abéché) for an initial target of 72,096 (revised at 162,972) in addition to achievement) the baseline situation\. Number of people in urban areas provided with access to all-season roads within Indicator 2: a 500 meter range under the project (Core) Value quantitative or 0 10,056 10,056 23,428 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 233 percent of the original target: 23,428 people for a target of (including % 10,056 benefited from all-season roads in Doba\. achievement) Number of people in urban areas provided with access to Improved Water Indicator 3: Sources under the project (Core) Value quantitative or 0 63,500 216,240 72,648 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 34 percent overall: 72,648 people got access to water for the (including % revised target of 216,240\. achievement) Achieved at 114 percent of the original target (people served by standpipes)\. Indicator 4: Direct project beneficiaries (Core) Value quantitative or 298,398 593,146 – 566,902 qualitative) Date achieved 05/11/2011 06/30/2015 – 05/20/2015 Comments Achieved at 93 percent: 363,024 people benefited from the project outcomes (including % (drainage, water, roads) during 2007–2015, for a target of 389,268 (on top of the achievement) 2007 baseline)\. Indicator 5: Female beneficiaries (%, Core Supplement) Value quantitative or 51 51 – 51 qualitative) Date achieved 05/11/2011 06/30/2015 – 05/20/2015 iii Comments (including % Achieved\. achievement) Indicator 6: Annual increase in municipalities' own revenue (CFAF million) N'Djamena: N'Djamena: not N'Djamena: 983 1,147 available Value Moundou: 42 10 percent Moundou: 49 Moundou: 1,245 quantitative or Sarh: 35 increase per year Sarh: 41 Sarh: 481 qualitative) Abéché: 57 Abéché: 66 Abéché: 398 Doba: 23 Doba: 28 Doba: 64 Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved\. Data cleared by Ministry of Land Administration, municipal budget (including % division, for the 2013 fiscal year (not available for N'Djamena for administrative achievement) reasons)\. Performance targets being achieved by the private operator under the service Indicator 7: contract (%) Value quantitative or 0 85 – not measurable qualitative) Date achieved 05/11/2011 06/30/2015 – 05/20/2015 Comments Not achieved\. 2 products out of 11 included in the service contract were fully (including % delivered at completion; other products in progress at completion; no indicator achievement) was set to measure management support to the water utility\. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1: Kilometers of newly constructed/rehabilitated drainage works (km) Value quantitative or 0 16\.9 15 14\.6 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 97 percent: works were completed in Moundou and Sarh, and only (including % a small portion in Abéché could not be completed for technical reasons\. achievement) Indicator 2: Roads rehabilitated, Non-rural (Km, Core) Value quantitative or 0 6\.5 6\.5 4\.9 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 75 percent: nominally, 4\.9 km were constructed for a target of 6\.5 (including % in the RF\. However, the works contract targeting 4\.9 km was completed at 100 achievement) percent (contractual objective revised to take into account higher unit costs)\. Indicator 3: Slaughterhouse rehabilitated in Abéché Value 0 1 1 1 quantitative or iv qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments (including % Achieved at 100 percent: works were fully completed\. achievement) Budget Management and Administrative Procedures Manual developed and Indicator 4: adopted by municipalities in targeted cities Value quantitative or 0 5 5 5 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 100 percent: each target city adopted a manual on budget (including % management and administrative procedures\. achievement) Urban Development and Investment Plans developed and adopted by key local Indicator 5: stakeholders in targeted cities Value quantitative or 0 16 16 15 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 94 percent: 15 cities adopted their urban development and (including % investments plans; except the city of Faya that does not exist anymore\. achievement) Indicator 6: Service satisfaction surveys carried out and published in targeted cities Value quantitative or 0 10 10 8 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 80 percent: 2 surveys were carried out in Moundou, Sarh, Abéché, (including % and Doba and the reports issued in 2012 and 2014\. 2 other surveys were planned achievement) in N'Djamena\. Annual budget allocation and expenditure on routine road and drainage Indicator 7: maintenance within appropriate range (% of total annual budget) N'Djamena: 5\.80% (FY12) Sarh: 5\.89% (FY12), 4\.67% (FY13) N'Djamena: 3% Moundou: 5\.23% Value Sarh: below 2% (FY12), 5\.75% quantitative or Moundou: below 2% Range 3–5% Range 3–5% (FY13) qualitative) Abéché: below 2% Abéché: 4\.63% Doba: below 2% (FY12), 5\.33% (FY13) Doba: 5\.56% (FY12), 5\.37% (FY13) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 v Comments Achieved\. Data cleared by Ministry of Land Administration, municipal budget (including % division, for the 2012 and 2013 fiscal years (not available in 2013 for N'Djamena achievement) for administrative reasons)\. Indicator 8: Kilometers of newly constructed/rehabilitated water supply network (km) Value quantitative or 0 38\.9 80 24\.6 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 31 percent overall\. (including % Achieved at 63 percent of the original target: works under the original project achievement) fully achieved in Moundou and Sarh and partially in Abéché\. Improved community water points constructed or rehabilitated under the project Indicator 9: (Core) Value quantitative or 0 127 127 102 qualitative) Date achieved 01/03/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 80 percent of the original target\. 64 standpipes constructed in (including % Moundou (100 percent), 38 standpipes constructed in Sarh (97 percent); no achievement) standpipe constructed (24 planned) in Abéché (0 percent)\. New piped household water connections that are resulting from the project Indicator 10: intervention (Core) Value quantitative or 0 13,600 – 0 qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Comments Not achieved\. Works under the Additional Financing (AF) were cancelled (including % (indicator added at the AF appraisal)\. achievement) Indicator 11: Man-days of work cumulated Value quantitative or 0 610,000 1,135,000 613,000 qualitative) Date achieved 03/01/2007 10/30/2011 06/30/2015 05/20/2015 Comments Achieved at 54 percent: only minor works generating local opportunities took (including % place during the project's second period (AF)\. achievement) Investment Plan for the 9 Chad Water Utility (Société Tchadienne des Eaux, Indicator 12: STE) water supply systems approved by the STE (Yes/No) Value quantitative or No Yes – No qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Comments Not achieved: procurement delays prevented from launching the study before (including % project closing\. achievement) Indicator 13: Meters replaced under the project (Number) Value 0 24,000 – 0 vi quantitative or qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Comments Not achieved: procurement was delayed and meters could not be acquired and (including % installed before project closing - funds were cancelled (service contract achievement) deliverable)\. Indicator 14: Households visited under customer census (Number, Custom) Value quantitative or 0 70,000 – 51,540 qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Comments Partially achieved (74 percent): census initiated in N'Djamena by the water (including % utility; census by the private operator was ongoing in other cities at project achievement) closing (service contract deliverable)\. Mechanism for the payment of the water bills from public institutions established Indicator 15: (Yes/No) Value quantitative or No Yes – No qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Partially achieved: 2 studies provided recommendations that were discussed Comments between the water utility and the Ministry of Finance and other entities; a (including % mechanism for automatic payment of public customer bills is yet to be developed achievement) and implemented\. Study on water tariff and connection fee completed and results of the study Indicator 16: implemented (Yes/No) Value quantitative or No Yes – No qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Comments Partially achieved: a study on water tariff and connection fee was completed; (including % some recommendations on the tariff structure were discussed with the Ministry achievement) of Water, and are yet to be promoted and implemented\. Indicator 17: Report card published and discussed at the Board of STE (number) Value quantitative or 0 4 – 0 qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 Comments Not achieved: no report card was published as the two initial customer (including % satisfaction surveys (service contract deliverable) were cancelled due to delays\. achievement) The other surveys were planned in the last year of the project\. Audited annual performance data published and disseminated within four months Indicator 18: after the end of the calendar year in the local press to the customers and line ministries Value quantitative or 0 4 – 0 qualitative) Date achieved 05/01/2011 06/30/2015 – 05/20/2015 vii Comments Not achieved: performance baseline and objectives (service contract deliverable) (including % were established with delays and no audit was undertaken before project closing\. achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (US$, million) 1 05/31/2007 Satisfactory Satisfactory 0\.00 2 11/20/2007 Satisfactory Satisfactory 1\.03 3 05/15/2008 Moderately Satisfactory Satisfactory 1\.23 4 05/22/2008 Moderately Satisfactory Satisfactory 1\.23 5 11/22/2008 Moderately Satisfactory Moderately Satisfactory 1\.36 6 05/22/2009 Moderately Satisfactory Moderately Satisfactory 1\.73 7 11/30/2009 Moderately Satisfactory Moderately Unsatisfactory 3\.25 8 06/12/2010 Moderately Satisfactory Moderately Satisfactory 4\.91 9 12/17/2010 Moderately Satisfactory Moderately Satisfactory 7\.54 10 07/13/2011 Moderately Satisfactory Moderately Satisfactory 10\.75 11 03/13/2012 Satisfactory Satisfactory 13\.61 12 09/24/2012 Satisfactory Satisfactory 18\.68 13 04/24/2013 Moderately Unsatisfactory Moderately Unsatisfactory 19\.29 14 11/16/2013 Moderately Satisfactory Moderately Satisfactory 20\.23 15 06/15/2014 Moderately Unsatisfactory Moderately Unsatisfactory 22\.94 16 12/31/2014 Moderately Unsatisfactory Moderately Unsatisfactory 24\.46 17 06/14/2015 Moderately Unsatisfactory Moderately Unsatisfactory 25\.27 H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Approved Date(s) Restructuring Key Changes Made PDO Change DO IP (US$ million) Extension of closing date (+12 04/08/2011 MS MS 9\.02 months); Reallocation of funds Additional financing; 06/07/2011 MS MS 10\.29 Extension of closing date (+32 months) Early, partial cancellation of 04/14/2015 N MU MU 24\.91 funds; Reallocation of funds viii I\. Disbursement Profile ix x 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. In 2005, Chad was one of the poorest countries in the world with 80 percent of the population of about 9\.7 million living on less than US$1 a day and a gross national income per capita estimated at US$400\.1 It faced enormous development challenges and was off track for the Millennium Development Goals\. The capacity to plan, finance, and implement development efforts was lacking at all levels of the administration, and growing urban centers were lacking basic infrastructure and services\. 2\. Chad’s Poverty Reduction Strategy Paper of June 2003 aimed at halving the number of people living in poverty by 2015\. It focused on promoting good governance, ensuring strong and sustainable growth, improving human capital and the living conditions of vulnerable groups, and safeguarding ecosystems\. The Government of Chad (GoC) wanted to foster decentralization in implementing the 1996 Constitution provisions in this matter and invest in human capital in the private and public sectors\. Increased public investment in infrastructure and basic services was expected to boost growth\. 3\. Because oil production started in 2003 in the Doba basin, oil revenues became a major source of funding\. By 2006, net oil revenues had grown steadily, representing over 73 percent of total revenues in the national budget, excluding foreign financing\. After a difficult dialog with the World Bank, the GoC agreed to spend 70 percent of its 2007 budget on priority poverty-reduction programs and increase non-oil revenues for development priorities\. The GoC also agreed with donors on steps to strengthen budget management within a comprehensive plan for the modernization of public finances\. 4\. The Chadian cities concentrated 25 percent of the population and struggled to provide them with adequate services\. In 2007, 2\.4 million people or one in four Chadians lived in urban centers and the urban population growth rate had been 4\.5 percent annually since 1990\. Cities had to accommodate over 100,000 new residents every year\. Living conditions were distressing\. Only 41 percent of the urban population had access to improved water sources and 30 percent to improved sanitation, much below other Sub- Saharan African urban areas at that time\. Drainage of storm water and sewage and waste collection were a problem in most cities\. While cities contributed substantially to economic growth, the donor community financed 95 percent of the investment projects in the urban sector, and the needs far outstripped available resources\. 5\. The political and fiscal decentralization process aimed to strengthen the subnational levels of government and better share the dividends of the oil boom\. Municipal finance was a key issue as municipalities suffered from low and unpredictable resources, hindering the development of basic services and infrastructure\. State transfers of taxes and fees were limited and often delayed\. Collection effort by municipalities of their own revenues was far below resource potential\. Moreover, high administrative expenses weighed on resources available for productive purposes\. 1 2005 Human Development Report, 2006 World Development Indicators\. 1 6\. Rationale for Bank involvement\. Since the early 2000s while engaging in the oil pipeline project, the Bank had strongly advocated that countries develop their natural resources to fight poverty\. In line with the 2003 Poverty Reduction Strategy Paper, the Country Assistance Strategy for FY2004–2006 aimed to help Chad make the best use of revenues as it strived to attain the Millennium Development Goals, by strengthening governance, public resource management, and service delivery and by enhancing non-oil economic opportunities for inclusive growth\. In this context, the proposed operation was supporting the 2006 Letter of Urban Sector Policy: the sector would benefit from the oil revenues and external donor contributions would help foster more discipline and efficiency in municipal finance and urban management\. The Bank’s reengagement in the urban sector was relevant considering the depth of urban poverty and the risk of social unrest that it created\. In addition to financing infrastructure, the project proposed technical assistance (TA) to build capacity and practical guidance in mobilizing resources and managing urban development\. The project would complement other projects financed by IDA on related topics (see section 2\.1)\.2 It would build on the Bank’s regional expertise and coordination with other donors involved in the sector, in particular, the French Development Agency (Agence Française de Développement, AFD) in drainage and water provision\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators 7\. The project development objective (PDO) was to increase sustainable access to municipal services for residents in the beneficiary cities\. As detailed in the Project Appraisal Document, the target cities were N'Djamena, Moundou, Sarh, Abéché, and Doba\. 8\. The results for the project were (PDO1) strengthened capacity of the local governments in N’Djamena, Moundou, Sarh, Abéché, and Doba to plan and manage the development and delivery of infrastructure and urban services and increase their financial resources to maintain existing and new infrastructure and (PDO2) increased availability of urban infrastructure\. 9\. The key indicators for monitoring progress toward the PDO were (a) the number of people in targeted cities protected from periodic flooding, (b) number of people having access to drinking water, (c) number of people having access to the city center via roads that are usable all year, and (d) the annual increase in municipalities’ own revenues\. 1\.3 Revised PDO and Key Indicators, and Reasons/Justification 10\. The PDO was not revised when an Additional Financing (AF) was approved in June 2011 (see sections 1\.6 and 1\.7)\. The outcome indicators were aligned with the Bank’s 2 Local Development Program Support Project (Projet d’Appui au Développement Local, PROADEL) was supporting decentralization in rural areas, Capacity Building for Modernization of Public Financial Management Project (Projet d’Appui au Management des Finances Publiques, PAMFIP) aimed at improving public finance and Chad Critical Electricity and Water Services Rehabilitation Project (Projet de Réhabilitation des Services Essentiels Eau et Electricité, PRSEEE) was supporting the water and electricity sectors (Chad Critical Electricity and Water Services Rehabilitation Project, Projet de Réhabilitation des Services Essentiels Eau et Electricité)\. 2 core indicators\. Indicators were added to reflect the performance of the private operator and the water reform under the new component (see Datasheet)\. 1\.4 Main Beneficiaries 11\. An estimated 145,000 people living in poor areas in N’Djamena, Abéché, Sarh, Moundou, and Doba would benefit from the project investments that would protect them from flooding and improve their water supply and roads to access markets\. The project would develop the capacity of the municipal governments to deliver and maintain these services\. It also intended to strengthen the local steering committees, neighborhood committees, standpipe managers, and local construction companies that would benefit from works contracts, as well as the central administration and their deconcentrated services in charge of assisting municipalities\. The AF intended to benefit another 150,000 people and strengthen the new Chad Water Utility (Société Tchadienne des Eaux, STE)\. 1\.5 Original Components 12\. Component A: Strengthening Municipal and Urban Management Capacities (estimated cost: US$4\.96 million, funded by IDA) was intended to support the local governments in the beneficiary cities to plan and manage the development and delivery of infrastructure and urban services and increase their financial resources to maintain existing and new infrastructure\. 13\. Subcomponent A\.1: Strengthening urban and municipal management capacities would finance workshops, TA, studies, training, and provision of equipment to improve (a) the internal functioning and organization of municipalities; (b) resource mobilization and financial management (FM); (c) urban management and planning; (d) transparency and accountability of city managers to urban residents; and to provide (e) support for community integration and awareness on socio-environmental aspects\. 14\. Subcomponent A\.2: Strengthening the capacity of the central and deconcentrated administration would support the Ministry of Land Planning, Urban Development, and Housing (Ministère de l’Aménagement du Territoire, de l’Urbanisme et de l’Habitat, MATUH), the Ministry of Finance, Economy and Planning (Ministère des Finances, de l’Economie et de la Planification), the Ministry of Land Administration (Ministère de l’Administration du Territoire), and the ministry in charge of Decentralization (Ministère en charge de la décentralisation) to provide technical support to the municipalities to manage their new responsibilities\. Budget was allocated under this subcomponent for the Project Coordination Unit’s (PCU’s) operating costs\. 15\. Component B: Provision of Basic Urban Infrastructure and Services (estimated cost: US$18\.42 million, works co-funded at 60 percent by counterpart funds) was intended to increase access to urban infrastructure, including (a) drainage, sanitation, and rehabilitation of roads; (b) rehabilitation and extension of the potable water distribution network; and (c) provision of economic infrastructure such as markets and slaughterhouses\. 3 16\. Subcomponent B\.1: For the City of N’Djamena would finance drainage works for commercial areas in the areas surrounding the Mil Market that would complement works financed by AFD (€25\.8 million under its 2006 urban project)\. 17\. Subcomponent B\.2: For the City of Moundou would finance works for: (a) the extension of the water supply network and rehabilitation of pipelines; (b) the construction of equipped boreholes and the installation of standpipes in densely populated neighborhoods; and (c) the second phase of drainage works (AFD funded the first phase)\. 18\. Subcomponent B\.3: For the City of Sarh would finance: (a) the acquisition and installation of water network extension and standpipes, and construction of new equipped boreholes; and (b) the second phase of the drainage works\. 19\. Subcomponent B\.4: For the City of Abéché would finance: (a) the construction of new equipped boreholes and extension of the water network to new outlying districts and the installation of standpipes on the network; (b) drainage works; and (c) construction of a slaughterhouse with sanitation facilities and waste management\. 20\. Subcomponent B\.5: For the City of Doba would finance the construction of earth roads and the associated drainage to provide access to dense neighborhoods in Doba\. 21\. Subcomponent B\.6 would finance technical and financial assistance and studies for: (a) monitoring and evaluation (M&E); (b) environmental and social studies; (c) supervision of works; (d) periodic technical audits for works and contract management procedures; (e) project financial audits; and (f) training activities for the local private enterprises\. 1\.6 Revised Components 22\. The AF in 2011 expanded Component B and added a new Component C that focused on urban water services and sector reform (see section 1\.7)\. 23\. Subcomponent A\.2 was granted an additional US$0\.90 million to finance the PCU’s operating costs (management and monitoring) for three additional years\. 24\. Component B was granted an additional US$15\.25 million to finance (a) priority investments in water supply infrastructure to increase access to water services under Subcomponent B\.1: for the City of N’Djamena (36 percent of AF); (b) the completion of drainage and water infrastructure funded under the original project, but facing cost overruns under Subcomponents B\.2, B\.3, and B\.4: for the cities of Moundou, Sarh, and Abéché (16 percent of AF); and (c) technical and financial assistance for (i) engineering studies, bidding documents, and environmental and social studies related to the new works and the supervision of their execution in N’Djamena; (ii) a medium-term Investment Plan covering the cities within the water utility’s service area and the update of the N’Djamena Water Supply Master Plan; and (iii) financial audits of the project under Subcomponent B\.6\. 25\. Component C: Strengthening Sustainable Access to Urban Water Services (US$11\.25 million, funded by IDA, 45 percent of AF) was intended to finance (a) TA by 4 a private operator under a service contract to support the new water utility STE; (b) operations improvement and rehabilitation activities for STE; (c) TA for the recruitment and supervision of the private operator; and (d) TA to improve financial sustainability and to complete the legal, financial, and organizational formation of STE\. 1\.7 Other significant changes 26\. AF and change in scope\. An AF of US$27\.40 million to the initial grant of US$15 million, comprising a grant (US$12\.30 million) and a credit (US$15\.10 million), was approved by the Board of Executive Directors on June 7, 2011\. The rationale for the AF was to: (a) cover unanticipated cost overruns for the initial infrastructure works, and (b) scale up the impact of the project, with a stronger focus on sustainable access to water services, including large investments in rehabilitation and new infrastructure in N’Djamena and TA through a service contract to the newly established water utility to improve its performance and governance and enhance its social accountability\. This change in scope and focus was critical for project implementation and performance (see section 2\.2)\. Because the outcome targets for water services were significantly revised, the project outcomes will be assessed using a split rating approach\. 27\. Extensions of the project closing date\. The project was designed for five years\. The closing date was first extended in April 2011 through a Level 2 restructuring by 12 months, from October 31, 2011 to October 31, 2012\. It was extended a second time by 32 months with the AF, up to June 30, 2015, to provide sufficient time to implement all the project activities and achieve the PDO (see section 2\.2)\. 28\. Restructuring and partial cancellation of funds\. In a letter dated December 13, 2014, the Government requested to cancel the project’s uncommitted funds before the closing date of June 30, 2015\. The restructuring and cancellation of US$15 million equivalent was effective on April 14, 2015\. Both the 2011 and the 2015 restructurings included funds reallocations (see annex 1)\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 29\. The preparation and design of the original project built on experience and lessons from Bank-financed urban development projects in West Africa, such as the Benin and Mali urban development in decentralized cities, and from the Chad Urban Sector Strategy\. During preparation, from the Concept Note review in October 2004 to the Board approval in March 2007, the team undertook a thorough analysis of the country’s development priorities and the governance and financing of urban services and infrastructure and a detailed assessment of the five project cities’ needs and economic potential\. The lessons focused on project sustainability, such as the project should (a) be simple and easily manageable, especially in an environment with weak institutions; (b) have well-defined objectives; (c) be owned by the local governments and the stakeholders; (d) ensure capacity to maintain works; and (e) have good coordination with interventions financed by other donors\. 5 30\. The design of the original project was simple and consistent with the PDO\. Conceived as a municipal development project, it included a large component (Component A accounted for one-fifth of the project costs) focusing on strengthening municipal and urban management capacities\. Part of it (45 percent of the component costs) would build the five municipalities’ skills in resource mobilization, planning, and procurement, directly in relation with the infrastructure financed under Component B\. Another part (55 percent of the component costs) would support the administration in charge of decentralization and urban development, mostly MATUH, including broader urban studies and tools to manage urban development\. In hindsight, the results framework (RF) could have better reflected this intent with indicators more directly linked to this improved capacity at both local and central levels and measuring the sustainable access to well-maintained works beyond the ‘availability of urban infrastructure\.’ 31\. In a context of political instability and weak capacity, the Implementing Unit was set up within the line ministry in charge of Urban Development\. The 1994 Public Works and Capacity Building Project, an urban project that was suspended in 1997 and eventually closed in 1999 due to poor performance, showed that an external public works executing agency needed close supervision to ensure competitive and transparent processes for construction contracts\. It was also not adapted to support institutional development\. The decision was to set up a PCU with skilled consultants within MATUH as a means to transfer knowledge and build its internal capacity\. In addition, contractual arrangements between the PCU and the beneficiary cities would help engage with citizens and local stakeholders (Conventions de Maîtrise d’Ouvrage Déléguée, comités d’assainissement)\. 32\. The team worked closely with local stakeholders to increase ownership, and with other donors to avoid duplication and maximize aid impact\. The projects financed by AFD, then the main actor in the sector, were instrumental in scoping the project\. The Bank updated existing feasibility studies and complemented them through a preparation grant\. Consultations with the Government, cities, and the population were key to collect feedback on the proposed works (February 2005) and to validate the design (November 2006)\. The GoC committed US$12 million in counterpart funding for a project that (a) focused on the immediate needs of the urban population, particularly the poor, and (b) built the foundation for longer-term local development and improved service delivery\. 33\. Overall, the risk was rated High, even though some of the above design features were shaped to mitigate them\. The highest risks related to the Government’s commitment and the use of oil revenue as counterpart funding\. The risk of not engaging was considered higher than other risks, given the current socio-economic conditions and country needs\. An Adaptable Program Loan was not considered appropriate due to the Bank’s recent re-engagement in the sector\. A regular investment lending was selected to balance infrastructure investments and support to institutional capacities\. There was no quality at entry assessment conducted at that time\. 34\. The preparation and design of the AF are discussed in section 2\.2 and other sections of this Implementation Completion and Results Report (ICR)\. 6 2\.2 Implementation 35\. The Urban Development Project (Projet d’Appui au Développement Urbain, PADUR) performed relatively well in a fragile context\. Its performance took a downturn from which it did not recover during the implementation of its AF focused on the urban water sector\. Rated as Moderately Satisfactory or Satisfactory until 2012, the project was then downgraded to Moderately Unsatisfactory due to the increasing risks of not achieving the PDO, the deterioration of the PCU project management, and the limited performance of the water component\. About 55 percent of the AF (35 percent of the IDA allocation) was cancelled before closing\. At completion, the lack of responsiveness from the borrower, incomplete fiduciary diligence, and limited evidence to confirm some of the achievements affected the performance assessment (see section 3\.2)\. 36\. The original project progressed well despite internal and external difficulties\. The project became effective two months after approval\. It was formally launched during a workshop in June 2007\. The first bidding documents and TA recruitment were under way\. In February 2008, less than a year after effectiveness, a rebel attack on the capital city led to the closing of the Bank office in N’Djamena\. The suspension of supervision missions slowed down implementation in 2008 and 2009, although supervision through audio conferencing enabled some activities to continue, including the awarding of contracts for water supply in Sarh, Moundou, and Abéché\. During that time, the PCU was confronted with the resignation of the administrative and financial officer and a fraud by the accountant, which later proved insignificant\. Despite procurement delays, all works contracts were awarded in 2009, except roads in Doba\. After start-up delays, capacity strengthening activities progressed with the preparation of urban plans for 16 cities, the acquisition of satellite image and plans for 22 cities, and services to update the Drainage Master Plan for N'Djamena\. In parallel to a study on municipal resource mobilization, local governments benefited from numerous trainings and TA activities on FM and accounting, collection of municipal taxes, and transfer of competences aimed to increase their own revenues\. MATUH staff were trained in public investment planning and a software was developed to help prepare a programmatic budget\. 37\. The project restructuring and consecutive AF in 2011 were intended to scale up PADUR\. The change in scope and increased focus on water, however, made the project more complex and more difficult to manage\. As discussed below, on the one hand, the PCU had to pursue the implementation of the original project, but was relatively short of funds and human resources to do so in a proactive manner\. On the other hand, the new activities were challenging in relation to procurement, expertise needed, and involvement of new stakeholders\. The story behind the AF (see box 1) sheds some light on the difficulties experienced by PADUR, the PCU, and STE during the post-AF period\. Box 1\. From the Chad Critical Electricity and Water Services Rehabilitation Project to the Urban Development Project The IDA-funded PRSEEE started in 2003 and aimed to support the Chad Water and Electricity Company (Société Tchadienne d’Eau et d’Electricité, STEE)\. Basic electricity and water supply services in N’Djamena and the main cities were collapsing and the utility’s technical, financial, and environmental performance was very poor\. The STEE was already under a concession contract since 7  2000 with a private consortium\. During PADUR appraisal in 2006, the performance of the PRSEEE was unsatisfactory because of a persistent sector crisis, unsuccessful attempts to restructure the STEE, and the departure of the private operator in 2004\. That is why PADUR included some water works to expand access to standpipes in secondary cities\. When the PRSEEE closed on March 31, 2007, the Bank left the door open to a retroactive extension and restructuring, should the Government of Chad settle pending actions, including paying outstanding bills to providers of goods and services rendered before the closing date and refunding ineligible expenses\. A restructuring package was initiated in September 2007 that included the proposal to discontinue IDA support to the electricity sector and to reallocate 100 percent of the project balance to the water sector\. In May 2010, the government as the sole shareholder dissolved the STEE and established two separate corporatized utilities, one for electricity and one for water, the STE\. The government reiterated its request to restructure the PRSEEE and reallocate all funds to the water sector\. In the context of its re- engagement in Chad after the 2008 war and the dialog on the use of oil revenues, the Bank agreed to move in that direction as confirmed in the 2010–2012 Interim Strategy Note\. In December 2010, it authorized a three-year retroactive extension of the PRSEEE based on exceptional country circumstances in application of OP 13\.30\. The remaining funds were canceled and recommitted as AF to the water component of the ongoing PADUR\. The Bank confirmed this arrangement to the government in February 2011\. Sources: PRSEEE ICR June 2011 and project files\. 38\. The AF changed the focus of project implementation from urban development to increasing urban water services and strengthening the water utility\. In mid-2010, the GoC started updating various laws and regulations to set up the new water utility STE and requested the Bank’s assistance through a grant from the Public Private Infrastructure Advisory Facility (PPIAF), to identify the best strategy for private sector participation in the reform of the water sector\. The PPIAF study (2011) stood as the scoping study of the AF\. It identified the service contract as the lightest form of private sector participation, and the less risky and most attractive for potential bidders given the recent experience with the private sector\. The study proposed: (a) an action plan for the institutional, legal, commercial, social, and financial strengthening of the water utility and a draft for the delegation and performance contract between the Government and STE, (b) an updated investment plan for N’Djamena emergency works, and (c) the detailed scope of works and cost estimates of the proposed service contract to STE, including management services and specific deliverables (for staff training, communication plan, upgrading of the commercial system and so on, see annex 2)\. The service contract was the backbone of the AF\. The AF paper acknowledged the serious challenges faced by STE, which had inherited the debts of the former utility and its operational, commercial, and financial inefficiencies\. International expertise was deemed necessary to help STE build its management and operational capacity while undertaking major investment works to restore the quality of water services and expand access to piped water\. 39\. Post-AF, the PCU’s attention and resources were diverted from the original project\. The initial grant was disbursed at 60 percent at AF approval and fully disbursed by the Midterm Review (MTR) in December 2013\. The capacity-building activities for the municipalities were completed in 2012\. In a context of instability and turnover of municipal staff, the MTR urged the government to take action to operationalize the decentralization decrees that would further consolidate the municipalities’ capacity to improve service delivery\. The urban studies under MATUH’s oversight progressed\. The urban planning and investment studies for 15 cities were endorsed in April 2013 while the organizational 8 audits and administrative and accounting manuals for the project cities were finalized\. A workshop was organized in June 2014 to disseminate these results\. All infrastructure works were handed over to the municipalities in 2012, except in Abéché\. Additional rehabilitation works were undertaken at the slaughterhouse, but the water works were stopped since 2011 (30 percent executed) due to the dispute between the authorities and the water works contractor\. This issue was settled only in 2015 with the termination of the contract and the recruitment of another contractor to finalize the boreholes already drilled in Bithea\. Investments to extend the water network could not be made\. The satisfaction surveys in 2012 and early 2014 highlighted the overall satisfaction of beneficiaries and the need to monitor carefully how the works were used and maintained, for instance in optimizing the management of standpipes in Moundou and Sarh\. 40\. In addition, the coordination arrangements did not sufficiently reflect the new focus on water and the need to build ownership of the water stakeholders\. Maintaining the existing PCU within MATUH was considered the best option during AF, given the weak capacity of STE in Bank procedures\. STE and the private operator would however be involved in defining and reviewing the technical specifications for the large water works and services to be procured under the AF\. The Ministries in Charge of Water and of Environment would join the Steering Committee\. In reality, as noted by the supervision missions in 2012 and later by the MTR, the communication and sharing of information and responsibility between STE and the PCU was difficult, which added delays to the already slow processes under the Chadian procurement rules\. The inter-ministerial Steering Committee did not meet regularly enough to provide the project with strong guidance\. In addition, from mid-2013, the PCU suffered from the departure of the project coordinator\. MATUH appointed one of the PCU staff to replace him, which was not compliant with the Financing Agreements\. He acted for more than a year, but could not demonstrate the same expertise and leadership in this critical period of the project and the change did not yield acceleration in procurement and disbursement over the course of a year\. A new coordinator was finally recruited to manage the project closing\. 41\. The delayed recruitment of the private operator weighed heavily on the feasibility and achievement of the water works\. The AF included about US$14 million of water works and goods\. Preparing the feasibility studies and bidding documents and implementing those AF works in a period of 40 months (after AF effectiveness) proved challenging\. The consultant to design the new water works in N’Djamena was recruited in March 2013\. The selection of the private firm for the service contract, which included the design of over US$3 million of rehabilitation works, proved more challenging due to the complaints from two competing firms and lengthy national clearances\. The contract was signed in May 2013, 15 months after effectiveness, for 36 months when the remaining project duration was only 24 months\. The Minutes of Negotiations mentioned this issue, as did the subsequent Implementation Status and Results Reports (ISRs) and Aide Memoires, hinting at a potential restructuring to reduce the scope of the contract or extend the project duration\. The independent auditor of the service contract should have been recruited simultaneously, but it took service only 18 months later in September 2014\. During this period, various issues resulting from diverging interpretation of the contract provisions slowed down the effectiveness of management services\. It also slowed the deliverables expected from the private operator, including several bidding documents to 9 launch the related works or activities (see section 3\.2 and annex 2)\. STE was also under pressure to deliver tangible outputs (Chad intended to host an African Union Summit in N’Djamena in 2015) and pushed for ambitious investments that were beyond PADUR’s scope and resources\. 42\. The water reform needed a more conducive environment and suffered from the prevailing institutional instability\. A series of legal covenants were introduced in the AF Financing Agreements to ensure that the GoC would support STE to become a legal and financially viable utility\. At closing, 6 of the 11 covenants were fully complied with\. The ministers changed frequently, as did the perimeters of the ministries, and STE experienced several managerial changes in a few years\. There was no champion to speak for the water reform\. Several studies were funded by the project to support the reform, but STE did not have the resources or the political support to translate them into actionable decisions\. The delegation and performance contracts between the Government and STE, for instance, were signed much after the dated covenants and lacked important contractual annexes such as STE’s business plan\. Despite two studies, it was not possible to set up a mechanism for the automatic payment of the public customers’ bills to STE while the public arrears represented an estimated one-third of its potential revenues\. The tariff study initiated a discussion about tariff, but implementing a tariff reform was premature before any tangible progress in the quality of service delivered\. Contrary to the assumptions of the AF paper, it proved difficult to make progress in the sector’s reform while STE was not yet skilled and ‘equipped’ to better measure its operational and commercial losses\. 43\. The project was rated Moderately Unsatisfactory from the MTR to closing due to the backlog in activities and disbursement\. An early cancellation of funds enabled the Chadian authorities to secure those funds\. Despite increased implementation support by the Bank after the MTR and several management letters, implementation progress under the AF exhibited severe shortcomings\. The Bank finally received most bidding documents for the service contract products (training of STE staff, communication plan) and for works in December 2014 before the last supervision mission, six months before closing\. Given the timeline and status of the project, the Bank could not grant them a ‘no objection’\. After 34 months of implementation of the AF, it would still have required at least 27 months to complete both the procurement and execution of those large water works\. Only one-third of the AF was disbursed and most of the uncommitted funds could not be spent before the closing date of June 30, 2015, and was about to be lost for Chad\. The Government requested the Bank to cancel the uncommitted funds for both PADUR and another project in a similar situation and to recommit them to urgent budgetary needs\. The cancellation of US$15 million of PADUR funds was effective on April 14, 2015\. The PCU managed to finalize the pending works to operationalize two boreholes in Abéché before closing; all other activities were put on hold\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 44\. M&E design\. The M&E framework was designed to capture progress toward the PDO and to reinforce the capacity strengthening activities of both the PCU and the municipalities\. The data collection methodology was based on simple, on-site, and citizens’ satisfaction surveys and review of municipal regular operating budgets, combined with 10 semi-annual technical audits of the infrastructure financed under the project, building on baselines established at appraisal\. The PCU’s social and environmental specialist was responsible for data collection and reporting\. The Project Implementation Manual provided additional procurement and disbursement performance indicators to the M&E framework\. The RF was modified at AF to include indicators for the new Component C, which relied on data to be provided by the STE, the private operator, or the independent auditor of the service contract\. 45\. M&E implementation\. The PCU’s annual reports until 2013 presented progress made for the different activities, providing details on works contracts and consultant services\. They did not include, however, separate sections on M&E or updated RFs\. Beneficiary satisfaction surveys were undertaken as planned in 2011–12 and 2013–14 to assess the works funded by the original project\. However, no progress report was completed for the rest of the project duration and the AF activities\. While the Bank’s ISRs regularly updated the RF, several of them pointed out M&E issues\. It remains unclear how some of the indicators were assessed and to what extent they are reliable\. Despite several requests, the PCU did not prepare the borrower’s Completion Report that would have enabled a fair review of the project’s achievements and costs\. 46\. M&E utilization\. The 2011 restructuring and subsequent AF were partly based on the PCU’s 2010 report that provided estimates of the additional resources needed to cover cost overruns, complete works, and catch up with implementation delays\. The M&E weaknesses noted during the MTR could have triggered a more in-depth review of actual achievements, but at that time most of the attention was put on the water component\. Delays did not allow the water utility to upgrade its commercial and operational systems during the project’s life\. The STE’s performance indicators and monitoring framework (baselines, methodology) were finalized a few months before the project closing\. 2\.4 Safeguard and Fiduciary Compliance Safeguards Compliance 47\. The project was approved as a Category B, with limited and site-specific adverse environmental and social impacts\. The Operational Policies and Bank Procedures (OP/BP) 4\.01 on Environmental Assessment and OP/BP 4\.12 on Involuntary Resettlement were triggered\. An Environmental and Social Management Framework and a Resettlement Policy Framework were prepared and published in 2006\. Public information meetings were held in Doba, Moundou, Abéché, and Sarh\. The Environmental Impact Assessments and brief Resettlement Action Plans confirmed in 2010 the limited environmental impacts of the project and the compensation measures for a few households affected by the works\. The safeguards instruments were duly revised before the AF approval, leading to maintaining a Satisfactory rating\. A Resettlement Action Plan was prepared for the water works planned in N’Djamena under the AF and received the Bank’s ‘no objection’ in December 2014, just before the decision to cancel those works\. 11 Fiduciary Compliance 48\. The 2006 Country Financial Accountability Assessment highlighted numerous gaps in Chad’s public FM systems and recommended actions to address fiduciary risks associated with budget preparation, formulation, and execution; weak capacities in auditing; inadequacies of some of the country procurement code’s provisions against Bank guidelines and procedures; and experience of lengthy procurement processes\. To mitigate such risks at the project level, a fiduciary team comprising an FM specialist and a procurement specialist trained in IDA procedures were recruited and a computerized accounting system software tailored to the project needs was developed at appraisal\. The General Inspectorate of Finance of MATUH was appointed as the internal auditor of the project as a condition for negotiations\. The project procedures and implementation manuals were completed and considered satisfactory by the Bank, allowing the project to become effective only two months after approval\. 49\. Procurement\. The procurement risk was rated High at appraisal, for the reasons explained above\. Specific training of the procurement specialist to operate the new monitoring and contract management software, reduced value thresholds for prior review contracts, and close follow-up from the Bank proved efficient\. Despite initial delays, procurement was rated as Satisfactory until 2013\. It was then downgraded to Moderately Satisfactory\. Although a new procurement specialist was hired after nine months of vacancy, the PCU had difficulties properly updating the Procurement Plan and following- up on ongoing procurement processes\. Slow progress of the bidding documents expected for many AF activities led to the decision to cancel the funds allocated for them, because their procurement and execution would have required an additional project extension of more than two years\. Procurement was rated as Moderately Unsatisfactory at completion\. 50\. Financial management\. At appraisal, FM arrangements were considered Satisfactory\. However, FM performance suffered several setbacks during implementation\. In 2008, the PCU’s administrative and financial officer resigned and the accountant was fired after a fraud was discovered\. A qualified audit triggered a Moderately Unsatisfactory FM rating, but the funds were refunded and the case was closed\. At AF, the FM risk level was reduced to ‘Medium – Low Impact, High Likelihood’\. The rating was kept Moderately Satisfactory until the project closing, despite some months without an administrative and financial specialist in 2013; 14 months of vacancy for the internal auditor position; and recurrent issues identified in the annual audits\. Many of them surfaced again in the final audit report issued in December 2015\. The report was qualified, noting that the financial accounts did not give a faithful picture of the financial situation of the project\. It pointed out various practices not compliant with international accounting standards or Bank requirements\. The lack of accurate financial information and data on the actual project costs, including counterpart funding, affected the preparation of this ICR (see annex 1)\. 51\. Disbursement\. After a slow start, the original project progressed steadily, with no issues reported in mobilizing the counterpart financing\. In contrast, six months before the project closing, the additional grant and credit disbursement rates amounted only to 33 percent and 35 percent, respectively\. The early cancellation of US$15 million of uncommitted funds enabled a final disbursement rate of 91\.5 percent or SDR 16\.67 million 12 disbursed out of the revised SDR 17\.25 million allocation (61 percent of the SDR 27\.4 million before cancellation)\. ISRs noted delays in submitting disbursement requests in 2013 and issues in providing adequate documentation\. The final audit reported mistakes in charging expenses to the adequate disbursement categories or to the correct financing source and unjustified transactions between the project’s bank accounts\. Despite close follow-up from the Bank team before and after closing, the project did not complete its due diligence\. Some funds are yet to be refunded to the Bank at the time of writing this ICR, which has negative impacts on the Chad portfolio\. 2\.5 Post-completion Operation/Next Phase 52\. The PCU team was reduced at project closing and disbanded after the grace period\. No follow-up operation could be envisaged before solving pending fiduciary issues\. In addition, the perspective of another operation remains subject to the evolution of the overall situation in Chad (insecurity, budgetary constraints due to the oil crisis, economic difficulties and social unrest) and the limitations of the IDA allocation for Chad\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation Relevance of Objectives: Substantial 53\. The project objective has remained relevant throughout implementation in the context of rapid urbanization, demand for improved urban services, and poor access to water supply\. The World Bank Group Systematic Country Diagnostic for Chad (2015) acknowledged the low access to basic services, including water, sanitation and drainage as a constraint to poverty reduction and the inefficiencies of the water and electricity utilities as bottlenecks for economic growth\. Given the incidence and depth of rural poverty, the Bank Group’s FY2016–20 Country Partnership Framework for Chad did not prioritize support to urban services\. However, the project objective was aligned with the Government’s goals to improve governance and productivity, build human capital, and reduce inequality (National Development Plan 2013–15); it supported the Country Partnership Framework’s pillars on strengthening management of public resources and reducing vulnerability\. In addition, the GoC has provided signals, in the local press and budget discussions, that improving access to water remains a priority\. Needs for quality water supply services remain immense and a matter of public health in the Chadian cities, and STE still needs to build its capacity to fulfil its mandate\. Relevance of Design and Implementation 54\. Pre-AF (Substantial)\. The sound design of the original project resulted in smooth implementation\. The original project built on lessons learned and on a thorough risk assessment that helped address fiduciary and capacity risks\. It proposed a simple design that adequately balanced institutional strengthening and infrastructure development, targeting the cities with the highest potential in relation to economic and social impact, and involving stakeholders at all central and local levels\. The implementation and financial arrangements, including counterpart funding through the oil revenues and a PCU with 13 strong leadership, enabled the progressive implementation of most planned activities despite initial disruptions due to the country context and staffing issues\. 55\. Post-AF (Modest)\. In contrast, the AF design underestimated the risks associated with challenging objectives in a low-capacity environment, which hindered implementation progress\. The project risk at AF was decreased from High to ‘Medium, High Impact, Low Likelihood’ based on the experience of the PCU and the low level of risk of a service contract to support a small water utility\. This assessment was optimistic\. First, the PRSEEE ICR was completed the same month as the AF approval, but the AF paper barely discussed the lessons learned from this project, the early departure of the previous operator, and the Government’s insistence to pursue the water reform through another form of private participation\. Second, the new activities were presented as a scaling-up of the original project\. That was relevant when considering the outcomes of rehabilitated and new water works that would eventually increase access to improved water sources\. It was also overly optimistic, given the difficult implementation environment in Chad, the project period, and the serious shortcomings of STE acknowledged in the AF paper, to assume that such improvements could materialize within the additional project duration\. In this respect, while the PPIAF study was a comprehensive and solid assessment of the building blocks and incremental steps needed to improve water services and support the reform, the proposed activities needed more focused preparation to ensure project readiness—it took months after AF approval to prepare the bidding documents and launch the key activities, including the service contract\. Third, the operating and governance arrangements proved inadequate to ensure the political support and expertise needed to support the water reform, balance the respective roles of STE and the PCU, and mitigate increased fiduciary risks due to the volume of works and services to procure under the AF\. 56\. In addition, the AF shift could have justified revisiting the original PDO to highlight the new focus on ‘strengthening sustainable access to urban water services\.’ The new focus could have been warranted the PDO for a new, stand-alone project or an addition to the original PDO\. STE, a corporatized utility, was indeed mandated by law to provide water services in 10 urban centers, including the five project cities\. The PDO to increase ‘access to municipal services’ partly lost its accuracy\. This undermined the logical chain, despite new indicators that intended to monitor the performance of the service contract and STE strengthening\. 3\.2 Achievement of Project Development Objectives 57\. PDO1 - Strengthened capacity of the local governments in N’Djamena, Moundou, Sarh, Abéché, and Doba\. All five cities have largely increased their own revenues over the years, far above the targets set for the project\. Other indicators supporting this part of the PDO were fully or almost achieved, and remained unchanged after the AF\. Therefore, this part of the PDO is considered Substantial\. 58\. Cities have benefited from the oil economy, an increased population, and more taxpayers contributing to local taxes\. In this favorable context, the trainings and TA (see annex 2) focusing on procurement, FM, accounting, and fiscal issues provided by the project helped the municipalities develop their capacity to collect local taxes and manage 14 their budgets, including expanding provisions for maintenance as part of their operational expenses\. It has become easier to access municipal budget data from the competent units within the Ministry of Finance, although sometimes after delays from compiling data collected from municipalities\. The standardized budget nomenclature developed under the project provides a key tool to improve budget management and transparency on the use of funds\. Together with the recommendations of the organizational audits and budget manuals also supported by the project, they deserve to be further implemented in other cities to contribute to the Government’s objective to improve public finance management\. In addition, the project enabled the update or the preparation of urban studies: the 15 Urban and Investments Plans and the updated Drainage Master Plan for N’Djamena in particular provide a strategic framework for future investments in the main urban centers in Chad\. Despite the institutional instability in central and local administrations, the project was well known and appreciated by the urban stakeholders and authorities\. It has built important foundations for the urban sector in Chad\. 59\. PDO2 - Increased availability of urban infrastructure\. The project has increased access to municipal services for an estimated 363,000 beneficiaries (achievement: 93 percent)\. Given the new focus area introduced by the AF, which substantially changed the scope of PDO2, the outcomes are assessed separately\. The outcomes resulting from the activities of the original project are assessed against their original targets (drainage, roads, water supply/standpipes), and considered Substantial\. The outcomes of the new water activities (under the AF) are assessed as Modest\. 60\. Drainage works to protect people from flooding: High (pre- and post-AF)\. Drainage works in Moundou, Sarh, and Abéché have benefited 266,948 additional people, far above the original target of 72,096 (achievement: 370 percent)\. The achievement is still high when considering the target revised at AF (+162,972 beneficiaries), which took into account the annual population growth of 4–6 percent in the beneficiary cities\. The project was strategic in constructing 14\.6 km of primary and secondary drains in dense settlements with no other pre-existing drainage channels, where the impact of the works on the surrounding areas would be maximized\. As confirmed in the 2014 survey undertaken by the project, people expressed their satisfaction in being less affected by flooding thanks to PADUR\. In Sarh and Moundou, they noted that the works were of good quality and functioning properly\. They appreciated that most of the drains were covered and had adequate depth and size to collect and evacuate storm water during the rainy season\. Many walkways and small bridges allowed residents and vehicles to cross over the drains\. The neighboring population was well informed about the project and maintenance issues\. In Abéché, they noted some design issues in one area, but otherwise praised the drains and the gabions that prevented erosion along the water runs\. 61\. Urban roads: High (pre- and post-AF)\. The road sections constructed in Doba have benefited 23,428 people, which is far above the target of 10,056 (achievement: 233 percent)\. Thanks to the 5 km of laterite roads provided by the project, several poor communities now have better access to the rest of the city, including the market and the bus station\. They are the only non-asphalted streets to be accessible all-year round\. In the survey, the dissatisfaction came from other neighborhoods not included in the project that wanted to receive similar roads\. People also noted that an effort was needed to maintain 15 the secondary drains along the roads to ensure that potential overflows during the rain or garbage would not affect the quality of the roads\. 62\. Water supply (original project): Substantial\. About 72,648 people have gained access to improved water sources, above the original target of 63,500 (achievement: 114 percent)\. This outcome builds on the construction of almost 25 km of new water networks (63 percent of the target, limited by the unachieved works in Abéché); the installation of boreholes and pumping stations; and the construction of 102 standpipes (80 percent of the target, again limited by the contractual problem in Abéché that prevented the construction of 24 standpipes)\. However, there have been some issues with water reliability and quality aspects\. For instance, the surveys reported some delays in operationalizing the standpipes constructed in Moundou and Sarh\. The project delivered trainings to future standpipe managers; however, it took time after the construction to form the committees and sometimes the incentives for managers to remain in their jobs were insufficient\. Electricity shortages have also affected the reliability of water supply\. To address these issues of sustainability, the municipalities worked with the STE to improve the modalities of standpipe management and prioritize investments that could be financed under the AF\. In Abéché, two boreholes drilled in 2011 were finally tested; they became operational before project closing, adding significant volumes of water to the supply system\. 63\. Water supply (AF): Modest\. The substantial increase in access expected from the AF for an estimated 150,000 beneficiaries did not occur as all works and goods supporting this objective were cancelled before closing (additional production capacity and storage; over 50 km of water networks in N’Djamena, rehabilitation investments in secondary centers including the iron removal plant in Sarh; and acquisition of connection fittings and meters and so on for an amount close to US$14 million)\. 64\. However, it is fair to score that some progress was made toward the objective of strengthening the water utility STE and the water reform\. The central outcome of the AF was to establish, with the support of a private operator, a viable water utility capable of restoring a good quality of service and expanding access to piped water within the 10 cities under the delegation perimeter\. The operator initiated the various deliverables of its contract (see annex 2) and STE benefited from its expert management services for almost two years\. At project completion, this enabled STE to have a Manual of Procedures and a framework to start monitoring its performance indicators\. After a census of customers was piloted in N’Djamena, at completion the census was deployed in secondary centers and the commercial software was being upgraded; this is likely to lead to a consolidated customer database, which is a foundation to improve the billing and collection mechanisms and the commercial performance of the utility\. The private operator also established technical diagnoses with a view to better identify the operational losses, rehabilitation or metering needs, and the subsequent modules of the training program for STE staff\. It prepared bidding documents for this large training program, STE’s communication plan, as well as for the rehabilitation works (the other consultant also delivered the bidding documents for the new investments in N’Djamena)\. Other studies prepared by different consultants to support the water reform (see section 2\.2) are also available for further consideration by both the Government and the STE\. 16 3\.3 Efficiency 65\. At appraisal, the Cost-benefit Analysis (CBA) concluded that all sub-projects had positive results and that the overall program was expected to be economically viable\. Given the diversity of proposed investments and target areas in all five cities, no overall economic rate of return (ERR) and net present value (NPV) were calculated\. Instead, separate economic analyses were undertaken for the different sub-projects (see annex 3)\. Benefits would primarily stem from reduced loss of income and medical expenses for drainage works; health benefits, time saved, additional consumption, and lower expenses for the water works; and reduced vehicle-operating costs for the roads in Doba\. In addition, most of the investments would bring economic advantages consisting of social and environmental benefits that could not be quantified\. 66\. The AF appraisal concluded that the efficiency for the sub-projects was Substantial\. The CBA at AF took into account the cost overruns faced by the sub-project and benefits were augmented to reflect the population growth\. The revised ERRs for the drainage sub-projects in Abéché, Sarh, and Moundou were slightly lower than ex ante, but still above the opportunity cost of investments at a 12 percent discount\. The economic analysis for water supply investments in N’Djamena, based on the expected additional production capacity and consumer surplus benefits, estimated the ERR to be 19\.2 percent\. 67\. At completion, the assessment of the economic efficiency or cost effectiveness is limited\. In the difficult country conditions, supervision missions to Chad have been severely restricted since spring 2015, before project closing, preventing the team to do a formal ICR preparation mission\. In addition, the client did not submit its Completion Report and did not share the final project costs detailed by sub-project and city and updated information such as population growth\. Some qualitative assumptions can be made based on the existing information\. (a) For the drainage and road works, it is likely that the ex post ERRs remain in the same range as the ones estimated at AF\. Despite the cost overruns, the drainage works positively affect a much higher number of beneficiaries than expected, adding to the benefit stream and increasing the cost effectiveness\. In addition, it is known that improved flood management generates a large spectrum of environmental, economic, and social benefits that are difficult to quantify but should be factored in the economic assessment\. The same reasoning applies in Doba where the roads constructed by the project have enabled more traffic and mobility in an expanding city\. (b) For the water works in Moundou, Sarh, and Abéché, the ex post ERRs are likely to be lower than the ones estimated at AF\. In addition to cost overruns, the benefits stream is likely to be affected by the lack of extensions and standpipes in Abéché, and to a lesser extent by the delayed operationalization of standpipes in Moundou and Sarh\. However, with no data to confirm these assumptions, the economic efficiency pre-AF is considered Modest\. 68\. The economic assessment of AF activities is also rated as Modest\. All physical investments for water were cancelled: at completion, the situation should be compared to the ‘without project’ scenario of the CBA at AF\. The people already connected to STE water may be more affected by the deterioration of the quality of service, including the water quality that the investments were intended to mitigate\. The people without access to STE connections will continue to rely on alternative solutions, potentially expensive and 17 risky with regard to water quality\. In addition, the service contract did actually cost an amount close to the initial allocation for only two-third of the 36-month duration of the contract and all products were initiated, but only a limited number was completed\. 69\. In addition, the administrative efficiency of the project was reduced by its implementation issues\. Despite reallocations of funds for project management, the PCU had to overdraw from other disbursement categories to cover its operating costs\. The increased implementation period also increased the Bank’s supervision expenses\. 3\.4 Justification of Overall Outcome Rating 70\. Project Outcomes: Moderately Unsatisfactory\. Given the substantial changes in the PDO targets on water (PDO2) introduced by the AF, a split evaluation was undertaken, leading to a Moderately Satisfactory rating for the original project (pre-AF period) and an Unsatisfactory rating post-AF\. When weighted by the total amount of IDA funds disbursed over the two periods, the overall rating is Moderately Unsatisfactory\. Performance Dimensions and Ratings Pre-AF Period Post-AF Period Objectives Substantial Substantial Relevance Design and implementation Substantial Modest PDO1 Substantial Substantial Efficacy PDO2 Substantial Modest Efficiency Modest Modest Rating Moderately Satisfactory Unsatisfactory Weight 4 2 Amount disbursed (%) 36 64 1\.4 1\.3 Weighted rating: 2\.7 (rounded = 3) Moderately Unsatisfactory 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 71\. Poverty reduction was one of the overarching objectives of PADUR\. Infrastructure works targeted extension areas, sometimes isolated due to the lack of access roads and water extension networks\. Recent studies 3 confirmed that 47 percent of the population lives below the poverty line in Chad (US$1\.4 per day) and that the decline in poverty rates has been slightly higher in urban areas since 2003\. It is possible that the demand for unskilled labor in construction, trade, and transport services, fueled by oil rents, created income opportunities for poor households migrating to cities\. While PADUR’s contribution to this trend is likely limited, this kind of project interventions including small- scale works, local materials, and intensive labor (613,000 person-days reported in PADUR), may have played a role\. Beneficiaries during supervision missions and the field visit during the ICR preparation in Sarh, Moundou, and Doba were satisfied because the project 3 INSEED (National Institute of Statistics, and Economic and Demographic Studies, Institut National de la Statistique, des Etudes Economiques et Démographiques), 2013, Profil de pauvreté au Tchad en 2011, ECOSIT3; World Bank Group, 2015, Systematic Country Diagnostic for Chad\. 18 improved the living conditions in their neighborhood, particularly in protecting them from flooding\. 72\. Social development gains are limited\. The local steering and neighborhood committees were established but their involvement remained modest when the works were handed over to the municipalities\. As for gender, the municipalities of Moundou and Sarh adopted a gender approach for standpipe management\. In Moundou, the local authorities mandated a network of women’s groups (Cellule de liaison des associations féminines) to undertake the management of standpipes\. Despite trainings, women in charge did not always feel responsible and this resulted in turnover of standpipe managers\. In Sarh, the municipality and the STE opened standpipes management to individuals willing to take the job\. This has proved more sustainable with regard to quality of service provided\. (b) Institutional Change/Strengthening 73\. Overall, equipment and training has had some impact, given the initial low level of capacity and expertise\. The institutional changes at the central and local/municipal levels were slow, however, given institutional instability, delays in the effective transfers of competencies and resources from the state, and the continuous pressure of population growth at a pace higher than investments for services and infrastructure and far beyond the limited inputs provided by the project\. The institutional change in the water sector was initiated through the service contract, but the STE will need more support and a conducive environment to move forward and consolidate the urban water reform\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 74\. In the context of worsening security conditions, operational travels were severely restricted beginning in the last months of the project implementation and during the completion phase\. No beneficiary survey could be undertaken to prepare this Core ICR\. 4\. Assessment of Risk to Development Outcome Rating: High 75\. Country risks, both political and economic, are posing a high risk to the development outcomes of the project\. In recent years, Chad has strongly increased its military and security expenses and taken a lead role in the sub-region to protect its frontiers from neighboring conflicts (Boko Haram, Central Africa Republic, and so on)\. This has caused an influx of refugees and increased humanitarian needs\. In addition, the drastic drop in oil prices had led to severe budgetary constraints and an economic crisis\. Oil revenues have been the major source of revenues for municipalities, and they are likely to face competing needs and increasing challenges in keeping services going and maintaining infrastructure\. 76\. In N’Djamena, the very poor situation of water supply services could add to the current social unrest fueled by the economic crisis\. The ambitious investment plan to improve and expand water services in the capital city has come to a standstill\. Investments under the Ministry of Infrastructure are largely on hold and the cancellation 19 of PADUR funds has been a major setback for the STE, postponing the likelihood of rapid improvement in water service delivery\. 77\. In addition to the country situation, repeated difficulties in project implementation, including procurement and fiduciary risks and low capacity, have also been a major concern for the Bank Group and other donors’ portfolios\. This may lead to new approaches to support the Government through budgetary support, focus on building public capacity, and for some time, on human development rather than infrastructure operations\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 78\. The task team that designed and appraised the original project ensured that the project component activities were relevant to the objective as well as feasible in the face of the limited capacity to implement development investments, while addressing both immediate needs of the population and longer-term capacity that would create a conducive environment to support the sustainability of municipal services\. The team worked closely with other donors in the sector to build on other operations, strategically leveraging existing studies and using preparatory funds to ensure readiness\. Consultations with local stakeholders and decision makers were key to build ownership, as was the counterpart funding to channel oil revenues for infrastructure targeting poverty reduction, in accordance with the Bank engagement\. Minor shortcomings are the relative underestimation of costs for the infrastructure works that led to cost overruns and the RF that could have better reflected the objective of strengthening capacities\. Overall, the quality at entry placed the original project on a good track to progress\. (b) Quality of Supervision Rating: Moderately Unsatisfactory 79\. Despite the difficult conditions on the ground, supervision missions and internal reporting took place consistently twice a year\. While supervision inputs were appropriate in the early years of the project, including when the Bank office closed, the project suffered from a lack of continuity of implementation task teams\. Five different task team leaders managed the project over nine years, sometimes for relatively short periods and limited handover arrangements\. 80\. In 2011, the restructuring and AF substantially changed the implementation focus and activities\. The 2013 MTR raised important issues but did not trigger specific corrective actions when the PCU was left without a coordinator and the STE needed support to fast track the ongoing service contract\. The supervision efforts significantly increased through additional missions and audio- and video-conferences in the final period of implementation\. However, they proved insufficient to turnaround the critical situation of the project\. 20 81\. ISRs and Aide Memoires described the implementation issues in some detail, clearly revealing the difficult implementation environment, and suggested ways to address them\. Yet several of these issues such as the sustainability of the investments under the original project or the inadequacy between the project period and the service contract duration to ensure positive outcomes of the AF, remained unresolved\. More candid ratings on some performance dimensions would have been appropriate\. For instance, the FM rating was Moderately Satisfactory in the last years of the project, which contrasts with the fiduciary situation at completion\. 82\. The AF was insufficiently prepared and proved too ambitious compared to the original project\. While the extension of the project duration was appropriate to support the achievement of the original project, the AF appears in hindsight as an easy way to respond to the Government’s willingness to continue the water sector reform\. The original project was progressing, but would have needed more resources to ensure stronger outcomes\. Supporting the water reform, strengthening the STE, and undertaking large investments in water would have deserved a separate operation including dedicated preparation, a duration consistent with the sector challenges, a clearer M&E framework, and implementing arrangements directly involving water stakeholders\. 83\. Since the Bank re-engagement in Chad in 2010, the Bank management tried to balance the need to maintain the dialog with the GoC while encouraging attention be given to challenging operations\. After several management letters urging the borrower to take action when the project was in a critical situation, a restructuring was agreed to with the GoC six months before the project closing date\. While cancelling funds was not an easy decision for the Government and the Bank, it was timely given the rising financial difficulties linked to the oil crisis and to ensure the cancelled funds could be maintained in the Chad IDA envelop and recommitted for budget support\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 84\. The quality at entry is considered Moderately Satisfactory and the quality of supervision, Moderately Unsatisfactory\. As the project outcomes are on the negative range of rating, the overall Bank performance is rated Moderately Unsatisfactory\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 85\. The Government was very committed to improving urban services when the project became effective in 2007 and supported this commitment through a large amount of counterpart funds to complement the IDA grant, consistently with the agreement to channel oil revenues to poverty reduction programs\. It spent its share in financing 60 percent of the original project’s works through annual allocations that helped implementation and enhanced the disbursement of IDA funds\. 21 86\. In a context of worsening security conditions that became a major source of concern, mobilizing the Government’s attention and resources for military and humanitarian needs, decentralization reform did not progress as expected\. It would have helped consolidate the municipal strengthening activities under the project\. Nonetheless, under the strong leadership of MATUH as the line ministry in charge of PADUR implementation, the concerned bodies of the Government endorsed the main products developed by the original project, including a standardized budget nomenclature and the urban and investment plans for the largest 15 cities in the country\. 87\. The GoC was also committed to pursue the water reform despite the failure of the private sector participation and difficult experience with the previous water and electricity project\. The decision to dissolve the underperforming water and electricity company was a positive step to secure the AF to support the water reform\. However, the political and institutional instability was a serious constraint when more proactivity and political support would have been needed after the divestiture of the STEE to build a conducive environment and consolidate the legal and financial basis of the new water utility\. In particular, while the Government payed its equity contribution, the STE faced important arrears from public customers that severely limited its cash flow for the basic operation and maintenance\. The concession and performance contracts between the Government and the STE were signed much after the period agreed with the Bank, while other covenants of the project, if implemented, would have helped the project to progress\. The STE and PADUR implementation would also have benefited from more coordination between the Ministries of Infrastructure and Water to lead the infrastructure and water agenda\. Finally, at the date of the writing of this report, some project proceeds remain to be refunded to the Bank\. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 88\. The PCU demonstrated its dedication to the project success during the implementation of the original project and the aftermath of its extension and AF\. The initial coordinator in place from 2007 to mid of 2013 ensured continuity and adequate management of staffing and fiduciary issues\. Implementation of the capacity-building program and infrastructure works progressed until 2012\. Despite weaknesses in the M&E framework, the PCU team complied with safeguards requirements, organized information and communication activities in the target cities, and maintained an active relation with the Bank team\. Nevertheless, the AF added new challenges for the PCU, but only limited additional support or qualified staff to address them\. 89\. Some problems were not within the PCU’s control, such as lengthy procurement processes under the national regulation, the political turnover, or the more recent degradation of the country situation and diluted attention from the borrower to resolve project-specific issues\. However, the situation deteriorated when the coordinator was appointed to a senior position within a Ministry and had to leave PADUR in November 2013, after the Bank intervened, to comply with the Bank’s requirements\. Implementation delays became critical with an interim coordinator and a weakened team in command, while more leadership and communication efforts were needed to finalize all activities of the initial project and work with the STE to speed up the activities of the AF\. The project 22 could not demonstrate any progress that could have supported the Government’s request for an additional extension, including the recruitment of an internal auditor, updates of the Procurement Plan, progress reports, and a realistic action plan to advance the water reform and the implementation of the service contract\. The lack of responsiveness from the borrower, the PCU, and the STE and incomplete fiduciary diligence at completion and weaknesses in M&E, including the absence of a Completion Report, are significant shortcomings that affect performance and negatively affects the Bank portfolio in Chad\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 90\. The overall borrower performance is rated Moderately Unsatisfactory, which is also the rating for both the Government and the implementing agency’s performance\. 6\. Lessons Learned 91\. Learning from previous operations is key to design stronger projects and sustainable outcomes\. The original project built on lessons learned from Bank operations in Chad and other countries, and from other donors\. It proposed a simple and manageable design and mitigation measures to address major risks that could stem from the country environment\. In contrast, the AF paper did not reflect much on the lessons learned from the previous Critical Electricity and Water Services Rehabilitation Project and the failed attempt to reform the sector\. It incorporated the recommendations from a sector study to improve water services and strengthen the nascent utility, but did not pay enough attention to the implementation context and risks (low capacity, lengthy procedures, and institutional instability)\. Instead, it packaged a very ambitious scope of work that made the project more complex and more difficult to manage in the context prevailing in Chad\. 92\. Additional financing is most appropriate to scale up a project’s development impact rather than support a new and different objective\. In view of the STE’s situation in 2010 and recent experience of failed private sector participation, the aim of the AF in supporting the urban water reform was a significant undertaking\. It needed a realistic implementation period, incremental steps to address both the institutional part of the reform and the urgent operational investments to restore water services, and appropriate expertise and capacity to manage the project\. Another more realistic approach could have been a ‘start small’ design in the framework of the existing operation with sufficient time built in to thoroughly prepare a dedicated operation\. 93\. Sound institutional and implementation arrangements are needed to clarify responsibilities and build ownership of a project—especially in environments with low capacity\. In the case of PADUR, the existing PCU performed well during the initial project, within the direct scope of its line ministry\. The scope of work for the AF required strong cooperation between the PCU and the STE and effective use of their complementary skills and expertise, and balanced roles for MATUH and for the ministry in charge of Water\. A clear plan for implementation and statement of roles and responsibilities, accountabilities, and incentives to boost the delivery of project activities would have strengthened project management and execution\. 23 94\. A robust results framework helps the implementing agency continuously monitor a project’s progress and evaluate its results\. Monitoring and reporting results are an integral part of project management\. Meaningful indicators, well focused on the direct outcomes and attributable to the project, enable effective implementation\. Indicators need clear definitions and realistic horizons\. The M&E framework needs to include appropriate mechanisms (tools, funding, and methodology) to monitor them consistently throughout the project life to ensure that final values are comparable with baselines\. 95\. Water sector reform is a long-term process that require a conducive environment and clear incentives for partners to engage and perform\. In Senegal, Niger, or Burkina Faso, successful water reforms have enabled the development of performing utilities and improved the quality of water services, resulting in high rates of access and financially viable sectors\. The Bank has supported these processes for 10 or 20 years\. In Chad, the Government initiated the reform in the 2000s\. The sector dialog with the Government and water stakeholders may help revisit the previous experiences in Chad and the ongoing experiences in neighboring countries, to identify tailored mechanisms to advance sector reform\. 96\. Operations in fragile, low-capacity contexts need tailored implementation support from the Bank team including specific remedies to address critical issues\. When the leadership and composition of a Bank project team changes, effective handover arrangements are needed to ensure new team members are brought up-to-date\. Continuity is key in supervision effectiveness and builds on trust with the implementation unit and regular communication\. Customized, just-in-time assistance to a project could take several forms, such as a dedicated position within the country office or a staff member on development assignment to facilitate close support in cases of critical deficiencies\. In addition, remedy actions should be clearly spelled out, both internally and with the client, as administrative measures to salvage difficult operations, and they should be proactively identified to address critical challenges in implementation or breaches in the contract set forth in the Financing Agreement\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 97\. The borrower did not submit a Completion Report\. The borrower thanked the Bank for sharing its draft Completion Report, but did not provide substantial comments on it (see annex 7)\. (b) Cofinanciers Not applicable\. 24  Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD, millions) Percentage Revised Percentage Appraisal Estimate Actual / of Estimate of Revised Latest Appraisal Original Original + After Estimate Original + After Components project AF cancellation AF cancellation Component I\. Strengthening municipal and urban management capacities 4\.96 5\.86 6\.04 6\.49 110\.8% 107\.5% Component II\. Providing basic urban infrastructure and services 18\.42 33\.67 23\.62 21\.57 64\.1% 91\.3% Component III\. Strengthening sustainable access to urban water services - 11\.25 6\.12 4\.67 41\.5% 76\.3% Baseline Costs 23\.38 50\.78 35\.78 32\.73 91\.5% Physical contingencies 1\.80 1\.80 - - Price contingencies 1\.82 1\.82 - - Total Costs 27\.00 54\.40 35\.78 32\.73 60\.2% 91\.5% (b) Financing (in USD, millions equivalent) Percentage Revised Percentage Appraisal Estimate Actual / of Estimate of Revised Latest Appraisal Original Original + After Estimate Original + After Source of funds project AF cancellation AF cancellation Borrower 12\.00 12\.00 11\.70 9\.47 78\.9% 80\.9% International Development 15\.00 42\.40 24\.08 23\.27 54\.9% 96\.6% Association (IDA) Grant – initial financing 15\.00 15\.00 13\.96 13\.96 93\.1% 100% Grant – additional fin\. 12\.30 4\.47 4\.06 33\.0% 90\.6% Credit – additional fin\. 15\.10 5\.65 5\.25 34\.8% 93\.0% Total Costs 27\.00 54\.40 35\.78 32\.73 60\.2% 91\.5% Notes for Tables (a) and (b): (1) The latest estimates and percentages are based on World Bank project data (Client Connection), at the exchange rate prevailing during the preparation of the ICR\. Exchange rate variations over the 25  course of the project were important, which allowed the PCU, for instance, to overdraw funds from the initial IDA grant (in African Francs, CFAF) while it was 100 percent disbursed in SDR\. (2) In the absence of actual financial data on the project costs from the Borrower at completion, - The amounts per component are derived from the disbursement categories, which differed between the original grant and the additional grant and credit, and do not fully overlap with the project components; as noted in the FY15 final audit, some disbursements were charged to the wrong categories, and sometimes to the wrong IDA financing source\. - The counterpart funding was supposed to be 100 percent disbursed (in FCAF) before the project closing\. The amount estimated here (in US$) is based on the amount disbursed by IDA for works under the original grant (works for Component B were financed by the Disbursement Category 1; 40% of the investments were eligible to IDA financing while 60% were to be financing by the Borrower)\. (c) Reallocation of the disbursement categories (SDR) - 2011 Grant IDA H2770 Amount (expressed in SDR) Category Current Disbursed Increase/ New allocation amount Decrease Allocation Works (component B) 4,460,000 2,424,325 640,000 5,100,000 Goods and equipment 310,000 389,216 270,000 580,000 Consultant services and training 3,300,000 1,785,442 120,000 3,420,000 Operating costs under A\.2 (a)(vii) 800,000 582,428 30,000 830,000 Unallocated 1,130,000 -1,060,000 70,000 Designated Account 666,844 TOTAL 10,000,000 5,848,255 0 10,000,000 Restructuring Paper of April 1, 2011\. (d) Reallocation of the AF disbursement categories (SDR) – 2015 Credit IDA-49520 Grant IDA-H6880 Current New Current New Category allocation Allocation allocation Allocation OPERATING COSTS PART A 320,000\.00 391,725\.00 260,000\.00 318,276\.00 GOODS PART B, C\.3, C\.4 140,000\.00 1,355\.00 110,000\.00 1,101\.00 WORKS PART B, C\.3, C\.4 4,380,000\.00 934,631\.00 3,540,000\.00 730,968\.00 SERVICES PART B, C\.3, C\.4 1,120,000\.00 709,541\.00 910,000\.00 460,763\.00 GOODS PART C\.1, C\.2 270,000\.00 0\.00 220,000\.00 0\.00 WORKS PART C\.1, C\.2 1,420,000\.00 225,428\.00 1,160,000\.00 183,178\.00 SERVICES PART C\.1, C\.2 1,950,000\.00 1,783,094\.00 1,600,000\.00 1,511,655\.00 Cancelled (5,554,226\.00) (4,594,059\.00) TOTAL 9,600,000\.00 4,045,774\.00 7,800,000\.00 3,205,941\.00 Restructuring Paper of April 14, 2015 26  Annex 2: Outputs per component Component A: Strengthening municipal and urban management capacities Initial financing: US$4\.96 million; Additional financing: US$0\.90 million (100% IDA) Subcomponent activities Outputs Subcomponent A\.1: Strengthening urban and municipal management capacities (US$2\.28 million) (a) Improving the internal functioning and organization of municipalities (i) organizational audit for local (i) Organizational audits for the 5 target cities completed\. Municipal municipalities and adoption of a management manual produced in 2013 and validated after a municipal management manual workshop with the Ministry of Land Administration, MATUH, municipal staff including 10 councils in Ndjamena + representatives from 42 other municipalities through the National Association of Municipalities, held in Ndjamena in June 2014\. \. (ii) Municipal staff trained in procurement, delegation of public (ii) strengthening municipal technical services and private sector participation, urban planning, IT, services (training and equipment) topography, cartography and GIS systems, and environmental monitoring\. (iii) provision of office equipment and (iii) Desks, chairs, filing cabinets, and computers were supplied to the logistics 5 municipalities, but not all software were installed\. (b) Improving resource mobilization and financial management (i) improving resource mobilization Overall, the municipalities benefited from oil revenues over the leveraging the actions previously course of the project; municipal budgets increased significantly; this carried out in N’Djamena under AFD enabled an increased provision for maintenance on operational financing budgets\. (ii) improving management and yield i and ii) A study on ‘municipal resource mobilization’ was completed of municipal/property taxes in 2012\. The CPU recruited a specialist in fiscal management to provide a technical assistance to the municipalities and trainings in fiscal matters (2012)\. In Sarh, this training led to the creation in 2014 of a specific unit in charge of local taxes, which has helped since them to raise more own funds\. (iii) standardizing the budget iii) A standardized budget nomenclature was developed as part of this nomenclature study\. However, due to a change of Minister, there was no official act to make the nomenclature mandatory in all cities nation-wide\. (iv) modernizing the accounting and iv) The accounting nomenclature was developed but remains financial management incomplete\. More technical assistance to the municipalities would be required, in addition to updated computers and budget, accounting and FM software (c) Improving urban management and planning (i) strengthening technical services in (i) See (a\.ii) above\. 35 municipal staff of the 5 target cities were management and planning (training, trained in 2012 in management and planning\. Few have stayed in equipment) their posts since then\. (ii) The studies to prepare a Sanitation Master Plan for N’Djamena (storm drainage) were completed; they include the initial (2012) and 27 (ii) preparation of a sanitation masterthe detailed technical feasibility studies (2013) as well as bidding plan for N’Djamena documents ready to use (2014)\. The purpose of the study is to enable the Municipality of Ndjamena to program investments in flood protection\. (d) Improving transparency and accountability of city managers to urban residents (i) public reporting of municipalities’ (i) Annual budgets including provisions for road and drainage financial performance maintenance were prepared and executed; however, municipalities (ii) progress reports on the project and did not engage much in public reporting of their performance\. identifying bottlenecks and actions to (ii) The municipalities organized public events for the launch of the be taken at national and local levels for newly constructed works (2012) but did not produce specific reports delivery of urban services on the project outputs\. (iii) publication of cities’ project (iii) and (iv) Municipal authorities, technical staff and the population performance indicators (this will done participated in the project’s surveys carried out in 2011 and 2013 in a simplified manner and using the (reports in 2012 and 2014) and interviewed on various items most appropriate means of local (satisfaction on ‘technical’ criteria, socio-economic and communication) environmental impacts, ownership and maintenance effort by various (iv) surveys on satisfaction of the stakeholders, etc\., see Annex 5)\. The 2014 survey report suggested urban population to ensure that that these items could serve metrics to pursue the monitor and municipalities take into account evaluation of works and services provided by the municipalities\. specific needs expressed by urban residents; (e) Providing support to community integration and awareness on socio-environmental aspects (i) support to sanitation committees; (i) Sanitation committees received some tools and materials for maintenance\. (ii) support to the management of (ii) Standpipe operators were trained in basic organizational and public standpipes (sanitation financial operations\. committees or private structures); (iii) Community representatives have been sensitized in sanitation (iii) information, education, and and maintenance through radio messages, signs and some 2,000 fliers communication (IEC) activities in the in local languages\. They included messages on the need to protect the area of environmental protection and environment and health – some of them are still visible at completion health; and (not throwing garbage in the drainage systems, washing hands, etc\.)\. However, the surveys also report that some communities were educated about the project once works were almost completed\. (iv) training for municipalities and key(iv) Central and municipal staff as well as the local drainage ministries including deconcentrated committees were sensitized in environmental monitoring, social services in environment and social marketing and social and environmental assessment between 2010 aspects\. (public consultations in the 4 cities) and 2012, when the PADUR consultant produced 4 environmental and social monitoring reports that were discussed and shared with these stakeholders\. Subcomponent A\.2: Strengthening the capacity of the central administration and deconcentrated ministries to support the municipalities (US$2\.68 million) (a) Ministry of Land Planning, Urban Development, and Housing (MATUH) and its deconcentrated services (i) updating of urban development (i) and (ii) 15 urban development and investment plans have been plans for Moundou, Sarh, Abéché, and developed and adopted by the National Committee of Urban Planning Doba; 28 (ii) preparation of urban development during a workshop held in April 2013\. The plans provide options for plans for 12 other selected secondary priority investments for 5 years\. cities; The project also funded the acquisition of satellite images for 22 (iii) training and technical assistance to cities\. MATUH to complement actions (iii) and (vii) Some managers and staff from MATUH were trained already financed by the French between 2008 and 2012; the project funded desks and computers, Cooperation and AFD; particularly for the regional offices based in the four cities\. (iv) project launch and mid-term (iv) Project launch workshop was conducted in June 2007; a review workshops; workshop was planned but could not be organized for the mid-term (v) information, education, and review in Dec\. 2013\. communication (IEC) activities for the (v) IEC activities: see above A\.2\.(e\.iii) and Annex 5 (beneficiary project; surveys) (vi) functioning of the Implementation(vi) The Implementation Unit staff have been trained in urban planning, project management, IT and procurement, as has the staff Unit and transfer of knowledge to staff of the Urban Department (*); and of the Urban Department where the unit was housed – 2 staff from MATUH were appointed as PADUR focal points (monitoring, (vii) strengthening regional engineer) and worked closely with the PIU, hence benefiting from the departments of the Ministry\. transfer of knowledge on various aspects of project management\. This budget line also funded the operating and training costs of the PCU (*)\. (*) Subcomponent A\.2 – Additional Financing US$0\.90 million: Operating costs of the PADUR The additional operating costs enabled the PCU to function until the Implementing Agency for three closing date of 6/30/15\. additional years\. (b) Ministry of Finance, Economy and Planning (MFEP)\. (i) support to the deconcentrated (i) and (ii) The two Departments of the Ministry of Finance in charge departments of MFEP General of supporting municipalities with fiscal management received office Directorate of Taxes and the furniture and computers and staff training in revenue mobilization Decentralized Territorial Government from consultants specialized in public finance recruited by PADUR\. Division to improve tax collection and transfer of resources; and (ii) support to the Ministry’s local entities in charge of financial management in the municipalities\. (c) Ministry of Land Administration (MAT) (i) training of staff involved with (i) and (ii) MAT received office equipment and computers, and Project implementation; and participated in PADUR workshops\. (ii) support to the Regulatory Directorate of the Ministry to improve budget supervision; (d) Ministry in Charge of Decentralization (MCD) Studies for preparation of decrees to The project funded fliers and brochures on the decentralization law support the on-going decentralization and a guide to inform the population about decentralization\. process, in collaboration with other However, the workshop dedicated to the Act 33 on Decentralization key Ministries\. could not be held\. 29 Component B: Provision of basic urban infrastructure and services Initial financing: US$18\.42 million (works financed by IDA at 40%, by the Borrower at 60%); + Additional Financing (AF): US$15\.25 million (100% IDA) Subcomponent B\.1: For the City of N’Djamena (i) Marché à mil (US$0\.62 million); Mainly drainage (i) 75% of the drainage work around the commercial works for commercial areas, specifically in the main area Marché à Mil was financed under another market to allow the extension of the market to national project by the Ministry of Infrastructure\. The accommodate new canteens and better access by the other 25% were completed by PADUR\. neighboring populations, to complement €6\.5 million of works financed by AFD + AF (US$8\.57 million): water works in Palais du 15 area: (i) and (ii) These funds and related activities were (i) construction of new storage tanks (4,500 m3) and cancelled: see B\.6: The feasibility studies for these pumping stations, construction and equipment of new water works and goods were prepared and are boreholes, expansion of the water primary, secondary available for STE; the related bidding documents and tertiary distribution network (53 km) were submitted to the Bank in December 2014\. (ii) procurement of connection fittings to expand piped At this time, STE serves mostly citizens in the central water services to the districts of Diguel and Ndjari area of the city, where networks and water located in the Eastern part of the city\. infrastructure are old and poorly performing\. About 60% of the citizens live in extension areas that have very limited distribution networks and rely on private vendors selling groundwater of very low quality\. Subcomponent B\.2: For the City of Moundou\. Original: US$3\.74 million + AF (cost overruns): US$1\.33 million: (i) Two equipped boreholes were drilled\. About 9\.5 (i) extension of the water supply network and km of newly constructed or rehabilitated water rehabilitation of water pipelines; construction of two supply network were constructed as well as 64 equipped boreholes and installation of 64 standpipes in standpipes\. densely populated neighborhoods (ii) second phase of drainage works (1st phase in 2002- (ii) 5 km of drainage work completed as well as foot 2003 under AFD financing) bridges and vehicle passages Subcomponent B\.3: For the City of Sarh Original: US$5\.16 million + AF (cost overruns): US$1\.60 million: (i) Three equipped boreholes were drilled\. 15\.2 km of (i) acquisition and installation of 7\.4 km of network newly constructed or rehabilitated water supply extension, installation of 39 standpipes and network were constructed as well as 38 standpipes construction of three new equipped boreholes; were constructed\. (ii) second phase of the drainage works (1st phase (ii) 5 km of drainage work completed as well as foot carried out in 2002-2003 under AFD financing) bridges and vehicle passages 30 Subcomponent B\.4: For the City of Abéché Original: US$5\.31 million + AF (cost overruns): (i) Two equipped boreholes were drilled in 2011 and US$1\.37 million: equipped and connected to the network in 2015\. Only 30% of the water network extensions was completed\. (i) construction of two new equipped boreholes and The 24 standpipes could not be constructed due to a extension on 18,500 meters of the water network to problem with the contractor\. new outlying districts, reinforcement of the water pipeline in the extension zones and installation of 24 (ii) 4\.3 km of drains completed as well as footbridges standpipes on the network; and vehicle passages and 12,000 m2 of erosion protection\. (ii) drainage works; and (iii) The expansion and rehabilitation of the (iii) construction of a slaughterhouse with sanitation slaughterhouse was completed in 2015\. facilities and waste management\. Subcomponent B\.5: For the City of Doba Original: US$1\.95 million Construction of earth roads and the associated drainage About 4\.9 km of the targeted 6\.5 km of road to provide access to dense neighborhoods in Doba: rehabilitation/construction have been completed construction of 5\.4 km of primary urban roads, 1\.1 km including drains\. of secondary urban roads, and 7\.5 km of drains\. Subcomponent B\.6: M&E, Studies, Supervision of Works, and Audits Original: US$1\.64 million (i) monitoring and evaluation activities; (i) the PCU produced semi-annual progress reports with assessments of component activities and action (ii) environmental and social impact studies that may plans until 2013\. be required during implementation of project component B; (ii) environmental impact studies were produced and received by the ministry and municipalities\. (iii) supervision of works; (iii) and (iv) the PCU supervised works regularly and (iv) periodic technical audits for works and contract technical audits were produced\. management procedures; (v) Annual financial audit were produced\. (v) project financial audits; and (vi) Small trainings were provided as part as (vi) training activities for the local private sector Component A, with limited targeting to the local (SMEs) to strengthen their capacities in works private sector\. management\. AF: US$2\.38 million (i) The feasibility studies for the water works in N’Djamena (Palais du 15) were prepared; the bidding > For additional works – component B documents were submitted to the Bank for no- (i) preparation of engineering studies and bidding objection in December 2014; documents; (ii) The environmental and social study was (ii) preparation of environmental / social studies; submitted to the Bank; the RAP was approved by the (iii) supervision of the works; Bank in Dec\. 2014\. > For Component C and project management (iii) the funds for these works were cancelled, so the supervision did not happen\. (iv) the preparation of a medium-term investment plan covering the provincial cities where the STE operates; (iv) The recruitment of the firm in charge of preparing the medium term investment plan for 31 (v) the update of the Master Plan for N’Djamena water provincial cities where STE operates in addition to supply; and N’Djamena, was delayed and the contract was therefore not awarded after the decision to cancel the (vi) financial audit of the project\. uncommitted funds\. (v) The Master Plan for N’Djamena water supply was updated (based on the 2006 version) and approved by STE in 2014\. (vi) The annual financial audits 2013-2015 were completed\. Component C: Strengthening sustainable access to urban water services Additional Financing: US$11\.25 million Subcomponent activities Outputs Subcomponent C\.1: Service Contract (US$5\.00 million)\. Under this component, the project will The service contract with an international firm was signed in May finance a 3-year performance-based 2013 for a duration of 36 months\. Service Contract with a private operator 2 full-time resident experts started working in July 2013 (Deputy to improve the technical, commercial, Commercial Director and Deputy Technical Director)\. Several financial performance and accountability short-term missions took place, involving experts specialized in the of the STE and build capacity of the new different areas covered by the 11 products to deliver or management public utility\. services\. The 11 products were defined in the Service Contract\. Some would be financed under the operations fund under Component C2, some would be financed directly by the operator through its fee, some would be a mix of both (see list below)\. Component C\.2 – Operations improvement and rehabilitation (US$5\.45 million)\. Under this component, the project will The operator visited STE water installations in N’Djamena and other finance: cities, drafted a diagnostic report and initiated the various products\. the procurement and replacement of - Diagnostic established\. Meters not procured (Product 5b)\. meters, - Technical studies completed, bidding documents approved by STE the rehabilitation of networks, submitted to the Bank in Dec\. 2014 (Product 2: rehabilitation of connections and boreholes, boreholes and production metering; Product 3: rehabilitation of distribution networks; Product 5a: rehabilitation of domestic a customer census and update of the connections and metering\. customer database, - Customer census and customer database (Product 4): pilot the set-up of a Geographical Information developed and tested by STE in N’Djamena; methodology fine-tuned System, and improved customer service and deployed by the private operator in the other centers – was and consumer accountability tools\. ongoing at completion\. Update of the customer database: diagnostic established to ensure a consistent system between N’Djamena and the centers and renewed commercial practices (billing, collecting); system not yet integrated at completion\. 32  - GIS system in N’Djamena (Product 9): diagnostic initiated\. - Call center and integrated system for complaint management (Product 6): diagnostic initiated\. Other products included in the Service Contract: - Training of STE staff (Product 1): detailed diagnostic and framework of proposed modules established; bidding documents for consultant services submitted to the Bank in Dec\. 2014\. - STE Communication Plan (Product 7): bidding documents for consultant services submitted to the Bank in Dec\. 2014\. - 2 Customer Satisfaction Surveys (Product 8): surveys were supposed to be implemented once the works had started\. Bidding documents for consultant services submitted to the Bank in Dec\. 2014\. - Establishment and publication of STE’s performance indicators (Product 10): list, baselines, objectives and methodology of calculation and monitoring agreed with STE in early 2015; due to the late date, STE could not publish any of the indicators during the project duration\. - Production of a Manual of Procedures (Product 11): the Manual was completed and approved by STE in early 2015\. Component C\.3 – Technical assistance for the recruitment and supervision of the private operator (US$0\.30 million)\. Under this component, the project will TA supported STE to prepare the bidding documents and data room fund technical assistance for the for the service contract, and to manage the recruitment process\. preparation of bidding documents and Bidding to recruit the private operator was completed in 2012; data room for the service contract, for negotiations took place in December 2012; the contract with the the management of the recruitment private operator was signed in May 2013\. process of the private operator and for The contract for the independent auditor of the service contract was the technical audit of the performance of signed in August 2014\. the private operator\. Component C\.4 – Technical assistance for the financial sustainability and formation of the STE (US$0\.50 million)\. Under this component, the project will fund TA for (i) a comprehensive study on water (i) A tariff study focused on N’Djamena, including discussions on consumption tariff and connection fees; connection fees, was completed and approved by STE\. (ii) the design and implementation of a (ii) Two studies on payment of bills from public institutions were mechanism of payment of public prepared; the second one was approved by STE\. institutions bills; and (iii) The delegation contract between STE and the Government was (iii) the completion of the legal, signed in 2014; some STE staff benefited from training in Bank financial and organizational formation procurement procedures\. of the STE\. 33 Annex 3\. Economic and Financial Analysis At appraisal (2006), given the diversity of proposed investments and target areas in all five cities, no overall economic rate of return (ERR) and net present value (NPV) were calculated\. Instead, separate economic analyses were undertaken for the different sub- projects\. Costs included capital costs, operation and maintenance costs, and rehabilitation costs\. Benefits would stem primarily from: - reduced loss of income and medical expenses for drainage works protecting from flooding; - health benefits (water quality), time saved (water accessibility), additional consumption (water quantity) and lower expenses (affordability) for the water works; and - reduced vehicle operating costs for the roads in Doba\. Cash flows were discounted using a discount rate of 12 percent\. The Project Appraisal Document (PAD) noted that most of the investments (drainage works, road works to improve access to poor neighborhoods, slaughterhouse, water provision, etc\.) included in the project would bring economic advantages consisting of social and environmental benefits that could not be quantified\. Project investment costs (CFAF, millions) and corresponding ERR at appraisal (PAD) Abéché Sarh Moundou Doba N’Djamena Total cost Drainage 1,800 1,950 1,450 315 5,515 ERR 15\.60% 12\.10% 26\.10% 21\.30% Water supply 725 681 460 1,866 ERR 12\.60% 13\.30% 12\.20% Roads 994 994 ERR 13\.60% Slaughterhouse 182 182 ERR 14\.50% Total 2,707 2,631 1,910 994 315 8,557 The ex-ante Cost Benefit Analysis (CBA) concluded that all sub-projects had positive results and that the overall program was therefore expected to be economically viable\. In addition, at a more macro level, the project would enhance economic growth in the target cities and generate a large amount of short-term employment for unskilled labor\. The PAD noted that the ERRs for two potential sub-projects, for a market in Moundou and another one in Sarh, were too low (respectively 5 and 6 percent) and would therefore not be financed by IDA under PADUR\. It also noted for the other sub-projects that the ERRs were very sensitive to cost variations, and much less to benefits\. 34 The AF paper (2011) included an economic appraisal summary\. It included an update of the economic efficiency of the drainage sub-projects, and the results of the CBA prepared for the additional water activities\. The updated assessment for drainage works was based on (a) the increased costs of each drainage sub-project, due to cost overruns (variations in the exchange rate and evolution of unit costs between the feasibility studies in 2005 and the actual implementation time from 2010 on); (b) a revised cash flow stream over an investment period increased by one year and benefits also postponed by one year (one year delay was a minimum given the reality of works on the ground; in fact, contracts had been awarded in the end of 2009, two years after effectiveness); (c) estimated benefits augmented to take into account the increase of population overtime\. Given the pace of population growth in the target areas, this was a relatively important distortion compared to the ex-ante analysis, which was likely to be balance the increased costs of the projects\. However, and similar to the ex-ante analysis, the lack of calculation spreadsheets made it difficult for the ICR team to review the assumptions and sensitivity to the different factors affecting the ERRs\. In fine, the revised ERRs for the drainage sub-projects in Abéché, Sarh and Moundou were slightly lower than the ex-ante ERRs, but still above the opportunity cost of investments at a 12 percent discount\. Project drainage costs (CFAF, millions) and corresponding ERR at AF Drainage Abéché Sarh Moundou N’Djamena Updated cost 2,373 2,403 1,903 (design was downsized as ¾ of the works were financed by (% increase) (+31%) (+23%) (+31%) the Ministry of Infrastructure) ERR 13\.30% 11\.90% 16\.10% The economic analysis for water supply investments focused on the physical investments financed under the AF, mainly in N’Djamena\. They were expected to increase treated water production by approximately 21,000 m3/day\. Assuming an average household consumption of 6 m3/month, this was expected to serve approximately 100,000 households\. Total capital investments proposed for N’Djamena were approximately US$12\.9 million (CFAF 5\.9 billion equivalent)\. Taking into account an economic benefit to consumers of approximately CFAF 630 per m3, which was based on an average price consumers were willing to pay for tanked water, the ERR is estimated to be 19\.2 percent (at a 12 percent discount rate)\. Ex-post (2015/16), the assessment of the economic efficiency or cost effectiveness is limited\. It was not possible to conduct a sound CBA and calculate the ERRs/NPVs of the sub-projects during the preparation of the ICR\. In the difficult country conditions, supervision missions to Chad have been severely restricted since spring 2015, before project closing, preventing the team to do a formal ICR preparation mission\. In addition, the client did not submit its Completion Report and did not share the final project costs 35 detailed by sub-project and city and updated information such as population growth\. Some qualitative assumptions, however, can be made based on the existing information\. Drainage and road works in Moundou, Sarh, Abéché\. It is likely that at completion, the ERRs remain in the same range as the one estimated at AF appraisal\. Despite the cost overruns, the drainage works positively affect a much higher number of beneficiaries than expected, adding to the benefit stream and increasing the cost effectiveness\. In addition, it is known that improved flood management generates a large spectrum of environmental, economic, and social benefits that are difficult to quantify but should be factored in the economic assessment\. The same reasoning applies in Doba where the roads constructed by the project have enabled more traffic and mobility in an expanding city\. Water supply in Moundou, Sarh, Abéché\. It is likely that at completion, the ex post ERRs are lower than the ones estimated at AF\. In addition to cost overruns, the benefits stream is likely to be affected by the lack of extensions and standpipes in Abéché, and to a lesser extent by the delayed operationalization of standpipes in Moundou and Sarh\. However, with no data to confirm these assumptions, the economic efficiency pre-AF is considered Modest\. Water supply in N’Djamena and service contract\. The economic assessment at AF focused on the physical water investments\. All the physical investments were cancelled in April 2015 before the planned closing date: - The contractor in charge of designing the new (emergency) water works in N’Djamena in the ‘Palais du 15’ area took service in March 2013 and the Bank received the final version of the bidding documents in November 2015, for works that would take an additional 27 months to complete; - Similarly, the private operator who was tasked to design a series of rehabilitation works (in N’Djamena and other centers) was recruited in May 2013, started working in July 2013, and 15 months after AF effectiveness, and the Bank received the final version of the bidding documents in December 2015; - In total, most of those works would have needed a duration to procure and execute the works from 12 months to 27 months, in the best scenarios\. The situation at completion should therefore be compared to the ‘without project’ scenario of the CBA at AF\. In this “without project” scenario, all the expected benefits have not / will not materialize until another financier decides to use the existing bidding documents to relaunch the investments\. The situation could possibly worsen for the targeted beneficiaries\. On the one hand, people already connected to STE water may be more affected by the deterioration of the quality of service, including the water quality that the investments were intended to mitigate\. The quality of service of existing customers was very poor and even degrading in recent years\. On the other hand, people without access to STE connections will continue to rely on alternative solutions, potentially expensive and risky with regard to water quality\. The water coverage remains very unbalanced in the 36 capital city, in many un- or underserved areas (districts 7 to 10), the population is increasingly relying on private vendors selling water from their motorized boreholes\. The quality of water is poor and degrading, according to health data\. Some people used to give water from their well or borehole, or to sell it at very low cost; in view of the ‘market’ and acute needs, some have increased their tariffs; in some cases, households also decide to pay an additional fee to have their buckets delivered at home and eventually pay relatively high expenses for water\. The ERR at AF was only including the physical investments\. As regards the cost of the service contract, It should be noted that: - The budget allocation was of US$5 million - The contract was signed in May 2013 for 36 months for an equivalent of US$7\.35 million (+47%) - Management services was charged on experts’ time and mission during; deliverables had different milestones for progress and payment; taking into account the contractual milestones and payment schedule, it is estimated that overall, the service contract did cost 65% of the signed amount (under IDA financing, ie for services rendered before the closing date of June 30, 2015) or close to the initial envelop of US$5 million; Overall, the non-physical investments of Component C under the AF were only modestly efficient\. At completion, STE had: - Received bidding documents for the physical investments (rehabilitation of boreholes and production metering; network rehabilitation; rehabilitation of domestic connections and distribution metering) – instead of the expected works; - Agreed with the private operator on a methodology for a census of all customers throughout the concession area – the census itself was just initiated in secondary centers before completion – and still needed to upgrade its commercial system; - Received bidding documents for the Communication Plan, for the Training of STE staff and for the Customer Satisfaction Surveys to be undertaken; - Agreed on the list of performance indicators, the baselines and methodology to collect the data – only once, in some cases, the upfront requirements would be completed (for instance, buy and install production meters to better measure production losses); - Agreed on a Manual of Procedures; - Received 22 months of expert management support from the private operator resident experts and other experts\. 37  Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Hugues Agossou Sr Financial Management Spec GGODR FM Franck Bousquet Regional Programs and Partners MNARS TTL – urban Alison C\. N\. Cave Manager HRDDI Mahine Diop Senior Municipal Engineer GSURR Urban Ningayo Charles Donang Senior Procurement Spec GGODR Procurement Christian Vang Eghoff Consultant GSURR Urban Martha Jarosewich-Holder Consultant GWA03 Social Sung Heng C\. Kok Shun Senior Program Assistant GSURR Africa Eshogba Olojoba Lead Environmental Specialist GENDR Safeguards Fridolin Ondobo Financial Management Spec AFTME - HIS FM Abdoul Wahabi Seini Senior Social Development Spec GSURR Safeguards Supervision/ICR Franck Bousquet Regional Programs and Partners MNARS TTL – urban Mahine Diop Senior Municipal Engineer GSURR Urban Chantal Reliquet Sr Urban Spec\. GSURR TTL - urban Ningayo Charles Donang Senior Procurement Spec GGODR Procurement Lancine Dosso Financial Management Spec AFTME - HIS FM Jan Drozdz Sr Water & Sanitation Spec\. AFTU2 - HIS TTL - water Charles Delfieux Sr Water & Sanitation Spec\. GWA04 Water Christian Vang Eghoff Consultant GSURR Urban Sekou Keita E T Consultant AFTME - HIS Sung Heng C\. Kok Shun Senior Program Assistant GSURR Lucienne M\. M'Baipor Senior Social Development Spec GSURR Safeguards Nathalie S\. Munzberg Senior Counsel LEGEN Legal Etienne NKoa Sr Financial Management Spec AFTME - HIS FM Paulette C\.E\. Aida Thioun Zoua Program Assistant AFMTD Berthe Tayelim Program Assistant AFMTD Edmond Badge Dingamhoudou Communications Spec AFREC 38 Miguel Vargas-Ramirez Sr Water & Sanitation Spec\. GWASL TTL - water Emeran Serge M\. Menang Evouna Sr Environmental Spec GEN07 Safeguards Beth Wanjeri Mwangi Resource Management Analyst BPSGP FM Josua Akre Financial Management Spec GGO13 FM Water, Veronique Verdeil Water & Sanitation Spec\. GWA07 ICR co-author Jean Koua Program Assistant GWA07 Madio Fall Sr Water & Sanitation Spec\. GWA07 TTL – water Joseph Bredie ICR Consultant ICR co-author Aboudaye Younous ICR Consultant (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No\. of staff weeks and consultant costs) Lending 138\.74 616\.84 FY01 6\.71 37\.96 FY02 0\.2 0\.60 FY03 1\.4 4\.55 FY04 8\.35 51\.73 FY05 44\.68 181\.51 FY06 27\.63 125\.03 FY07 38\.19 176\.39 FY08 11\.58 39\.09 Supervision/ICR 148\.62 770\.34 FY07 0 15\.81 FY08 4\.97 8\.09 FY09 23\.46 101\.99 FY10 14\.45 96\.75 FY11 25\.03 132\.01 FY12 33\.86 163\.10 FY13 19\.03 103\.31 FY14 16\.74 78\.36 FY15 9\.28 54\.25 FY16 1\.8 16\.76 39 Annex 5\. Beneficiary Survey Results Not applicable Annex 6\. Stakeholder Workshop Report and Results Not applicable Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR In the message copied below, dated May 16, 2016, the General Secretariat of MATUH indicated that, after internal review, MATUH did not have any substantial comments on the Bank’s draft Completion Report on the PADUR project\. The Ministry, however, said it took good note of the shortcomings that appeared during project implementation, on both the borrower’s and the Bank’s sides\. Lessons learned from the Completion Report would benefit positively to other operations\. In addition, the Ministry wanted to thank the World Bank for its support in the implementation of PADUR and in potential future operations\. The Ministry underscored in particular the ‘last mile’ efforts provided by the Bank team to ensure the completion of the water works in Abéché, Bithéa, initiated in the first part of PADUR and completed just before its closing date, which enabled the population in this city to have better water services\. 16 mai 2016 Cher Monsieur, Après revue interne, le Ministère de l'Aménagement du Territoire, de l'Urbanisme et de l'Habitat n'a pas de commentaires substantiels sur le Rapport d'Achèvement du PADUR\. Nous prenons bonne note des insuffisances notées de part et d'autre dans la mise en oeuvre de ce projet et espérons que toutes les leçons seront tirées de manière positive pour bénéficier à d'autres opérations\. Nous tenons à remercier la Banque Mondiale pour son soutien apporté dans la mise en oeuvre du PADUR et comptons sur son assistance pour des opérations à venir\. Nous ne pourrons terminer sans exprimer notre reconnaissance particulière à l'équipe que vous dirigez qui est allée au-delà de la mission habituelle et fait "l'extra mile" pour 40 permettre aux populations d'Abéché et de Biteha d'avoir des adductions d'eau fonctionnelles\. Nos sincères considérations\. ----------------------------------- Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 41 Annex 9\. List of Supporting Documents World Bank, 2002 – Project Appraisal Document on a proposed Credit to the Republic of Chad for a Critical Electricity and Water Services Rehabilitation Project, August, 2002\. Report No: 24112-CD\. World Bank Group, 2003 – Country Assistance Strategy for the Republic of Chad for the period FY04-06, November 12, 2003\. Report N0: 26938-CD World Bank, 2007 - Project Appraisal Document on a proposed Grant to the Republic of Chad for an Urban Development Project, January 3, 2007\. Report No: 33534-TD\. World Bank, 2007 - Financing Agreement (Urban Development Project) between Republic of Chad and International Development Association, Dated April 7, 2007, Grant Number H277-CD\. World Bank, 2010 – Interim Strategy Note for the Republic of Chad for the period June 2010 to June 2012, May 25, 2010\. Report N0: 54335-TD World Bank, 2011 - Restructuring Paper on a Proposed Project Restructuring of Urban Development Project Grant H 277-CD, to the Republic of Chad, April 1, 2011\. Report No: 60302-TD World Bank, 2011 - Project Paper on a proposed Additional Credit and Grant to the Republic of Chad for an Urban Development Project, May 11, 2011\. Report No: 60589- TD World Bank, 2011 – Implementation Completion and Results Report for the Critical Electricity and Water Services Rehabilitation Project, June 28, 2011\. Report No: ICR00001891\. World Bank, 2011 - Financing Agreement (Additional Financing for Urban Development Project) between Republic of Chad and International Development Association, Dated July 15, 2011, Grant Number H668-CD and Credit Number IDA H4952-CD World Bank, 2015 - Restructuring Paper, Urban Development Project to the Republic of Chad, April 14, 2011\. Report No: RES17838 World Bank, 2015 – Implementation Completion and Results Report for the Local Development Program Support Project 2, December 20, 2015\. Report No: ICR00003623\. World Bank Group, 2015 – Republic of Chad: Priorities for ending poverty and boosting shared prosperity, Systematic Country Diagnostic, September 2, 2015\. Report No: 96537- TD\. World Bank Group, 2015 – Country Partnership Framework for the Republic of Chad for the period FY16-20, November 3, 2015\. Report N0: 95277-TD République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 02/22/2005 – 03/01/2005, AIDE-MÉMOIRE 42 République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 06/12/2007 – 06/20/2007, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 27/10/2008 – 07/11/2008, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 10/20/2009 – 10/28/2009 AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 04/22/2010 – 04/28/2010, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 09/13/2010 – 09/18/2010, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 11/22/2010 – 11/26/2010, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 03/13/2012 – 03/16/2012, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 11/04/2012 – 11/14/2012, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 03/22/2013 – 03/26/2013, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – Revue à mi-parcours, 4 – 13 décembre 2013, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 02/02/2014 – 02/09/2014, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 03/24/2014 – 04/01/2014, AIDE-MÉMOIRE République du Tchad - Projet d’Appui au Développement Urbain (PADUR) Mission de Supervision – 05/26/2014 – 06/04/2014, AIDE-MÉMOIRE Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 1, Archived 05/31/2007\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 2, Archived 11/20/2007\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 3, Archived 05/15/2008\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 4, Archived 05/22/2008\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 5, Archived 11/22/2008\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 6, Archived 05/22/2009\. 43 Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 7, Archived 11/30/2009\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 8, Archived 06/12/2010\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 9, Archived 06/12/2010\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 10, Archived 06/30/2011\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 11, Archived 02/14/2012\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 12, Archived 05/09/2012\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 13, Archived 04/04/2013\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 14, Archived 16/11/2013\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 15, Archived 06/14/2014\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 16, Archived 29/12/2014\. Implementation Status & Results Report – Chad – Urban Development Project (P072030)\. Seq\. No: 17, Archived 06/14/2015\. INSEED, 2011, Profil de pauvreté au Tchad en 2011, ECOSIT3 (Troisième enquête sur la consommation et le secteur informel au Tchad) République du Tchad, Ministère de l’Aménagement du Territoire, de l’Urbanisme et de l’Habitat, Secrétariat D’Etat, Secrétariat Général, Direction de L’Urbanisme, Projet d’Appui au Développement Urbain (PADUR), Cellule de Coordination, Rapport D’Avancement, février 2011\. République du Tchad, Ministère de l’Aménagement du Territoire, de l’Urbanisme et de l’Habitat, Secrétariat Général, Direction de L’Urbanisme, Projet d’Appui au Développement Urbain (PADUR), Rapport D’Avancement des Activités, Cellule de Coordination, 31 octobre 2013\. 44 MAP IBRD-34221 45

REVIEW

P117662

Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) Report Number : ICRR0020867 1\. Project Data Project ID Project Name P117662 LR - Education GPE Program (FY11) Country Practice Area(Lead) Liberia Education L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) TF-97456 30-Jun-2013 40,000,000\.00 Bank Approval Date Closing Date (Actual) 27-Aug-2010 31-Oct-2016 IBRD/IDA (USD) Grants (USD) Original Commitment 40,000,000\.00 40,000,000\.00 Revised Commitment 40,000,000\.00 40,000,000\.00 Actual 40,000,000\.00 40,000,000\.00 Prepared by Reviewed by ICR Review Coordinator Group Judith Hahn Gaubatz John R\. Eriksson Joy Behrens IEGHC (Unit 2) 2\. Project Objectives and Components a\. Objectives According to the Grant Agreement (page 5) and the Project Appraisal Document (PAD, para\. 49), the original project objectives were as follows: • To increase access to basic education with a particular focus on poor areas; • To improve conditions of teaching and learning; and • To improve school management and accountability\. Page 1 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) In September 2012, the project objectives were revised as follows (Project Paper, 2012, page 6): •To improve management capacity and accountability at the central and school levels for school construction in rural areas, procurement and distribution of teaching and learning materials, and school based management\. b\. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval 06-Sep-2012 PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? Yes d\. Components The original project components were as follows: 1\. Increasing Access and Equity in Rural Areas (Appraisal: US$ 15\.5 million); This component aimed to increase enrollment in primary education by constructing and/or rehabilitating classrooms, with a focus on underserved areas\. Activities included: construction of 24 primary schools comprised of six classrooms each and auxiliary facilities; construction of up to 20 junior secondary schools; and construction of up to 16 primary schools using a community driven development approach in particularly hard-to-reach areas\. Given the lack of local construction management capacity within the country, a qualified firm of civil works consultants was to be contracted to manage and supervise this component\. 2\. Improving the Conditions of Teaching and Learning (Appraisal: US$ 14\.0 million); This component aimed to ensure the availability of learning materials and supportive services for school children to address poor health, the lack of academic preparedness of children, and the lack of finances for operating expenses\. Activities included: provision of textbooks and teaching guides; implementation of an early childhood development model; de-worming activities; and provision of small grants to schools to help cover operating costs\. Teacher training had also been considered under this component, but was not included, owing to support from other donors (PAD, p\. 27, ICR p\.55)\. 3\. Strengthening Central and Local Levels to Operate in a Decentralized Education System by Development Management, Monitoring and Evaluation Capacities (Appraisal: US$ 10\.5 million): This component aimed to develop institutional capacity of the central Ministry of Education (MOE) personnel as well as district-level education officers\. Activities included: establishment of a project support team in the MOE to assist with fiduciary management; development of a school-level assessment tool; development of a national student assessment test; and support to studies to improve personnel and payroll management\. The components were revised in September 2012 as follows: 1\. Improving Management Capacity and Accountability at the Central and School Levels (Appraisal: US$ 40\.0 million; Actual: US$ 40\.0 million): This single project component was divided into four sub- Page 2 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) components, encompassing several of the activities listed above\. 1\.1\. Strengthened institutional management capacity and accountability at the central and school levels (Appraisal: US$ 5\.5 million; Actual: US$5\.5 million)\. 1\.2 School construction in rural areas (Appraisal: US$ 16\.2 million; Actual: US$ 18\.8 million)\. 1\.3 Procurement and distribution of teaching and learning materials (Appraisal: US$ 11\.0 million; Actual: US$ 13\.2 million)\. 1\.4 School-based management through school grants (Appraisal: US$ 7\.3 million; Actual: US$ 2\.4 million)\. The following activities were dropped, due to weak capacity: • Early childhood development centers • School de-worming • Learning assessment tools • Education monitoring and evaluation system • Personnel and payroll management e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost • The appraised and actual project cost was US$ 40\.0 million\. Financing • The project was financed entirely by a Global Partnership for Education grant of US$ 40\.0 million, also referred to as a “Catalytic Fund” in the PAD (p\.24) and ICR (p\.65) Borrower Contribution • There was no planned Borrower contribution\. Dates • November 2011: A Level II restructuring took place, to include the construction of early childhood learning centers, in addition to renovation of existing buildings, to serve as such\. This change was due to the lack of existing buildings that could be used for that purpose\. • September 2012: The project was restructured due to significant capacity weaknesses and implementation challenges\. The project objectives and results framework were modified\. The scope of project components was also significantly reduced\. • February 2013: The project closing date was extended from June 2013 to June 2015, to allow completion of activities\. • August 2014: The country is hit by the Ebola virus outbreak\. The President declares a three-month Page 3 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) state of emergency that includes a curfew, school closures, and restrictions on movement and gathering of people\. • June 2015: Due to the outbreak of the Ebola virus and the impact on project implementation, the project closing date was extended from June 2015 to June 2016\. US$ 2\.7 million was also reallocated from school grants component to school construction component due to cost overruns (general cost escalation due to the outbreak)\. • June 2016: The project closing date was extended from June 2016 to October 2016, to allow completion of activities, particularly school construction\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives Following the end of a 14-year civil war in 2003, Liberia made progress on multiple fronts to restore political stability and basic services for its population\. A 2007 Demographic and Health Survey indicated that one- third of the population had no formal education and that 31\.8% had only a primary level education, conditions which posed significant constraints on the country's overall productivity and economic growth potential\. The main challenges to the primary education sector included: a shortage of qualified and trained teachers; inadequate payroll management, teacher management and deployment; low quality of education; significant above-age student population; inequitable access; high household costs for education; and weak sector monitoring capacity (PAD, paras\. 18-35)\. These factors contributed to an overall gross enrollment rate (GER) of 94% and net enrollment rate (NER) of only 35% (2010)\. The project objectives respond to these long-term challenges as well as the immediate needs of the education sector, as the sector transitions from emergency service provision to strengthened quality services within a more robust education system\. The original and revised objectives are consistent with the government's ten-year Education Sector Plan (2010-2020), which includes an objective to provide quality basic education\. The Bank's Country Partnership Strategy for FY2013-17 more explicitly identifies improved conditions for learning and management capacity in basic education as a key outcome\. The revised objective remains highly relevant albeit notably less ambitious and less focused on a development outcome (increased access to education) compared to the more intermediate outcome focused on improved management and accountability\. Rating Revised Rating High High b\. Relevance of Design The original project design was somewhat ambitious, although the results chain was logical, with key project outputs likely to lead to the intended outcomes\. Construction of classrooms and provision of educational Page 4 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) materials were likely to increase access to primary education, given the significant number of destroyed school facilities and the high pupil-classroom ratio\. Other outputs including school grants, early childhood education programs, and school health programs were also likely to improve learning conditions and enable increased access\. However, the relevance of the original project design is rated Modest due to significant changes in the institutional and political environment soon after project was approved (2011)\. The government passed a new Education Reform Act which "substantially altered the institutional structure of the basic education system by decentralizing many functions" and therefore there existed a significant disconnect between the original project design and the MOE's reform priorities (Project Paper, page 5)\. The likelihood of achieving outcomes in such an institutional environment was modest\. In addition, the lack of selectivity in the project design contributed to complexity and low feasibility of being completed within the project time frame\. The relevance of the project design increased for the revised design, taking into account the new decentralized system as well as the low implementation capacity\. The project's scope was narrowed to focus on capacity building in the central Ministry of Education and at the school level\. Key intervention areas that were retained from the original design included management capacity and accountability mechanisms, school construction in rural areas, procurement and distribution of teaching and learning materials, and school grants\. As noted in the Project Paper (page 7), while the project design remained somewhat ambitious, this was in response to the need to retain policy focus on high priority activities\. Rating Revised Rating Modest Substantial 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective To increase access to basic education with a particular focus on poor areas Rationale Outputs • Construction and/or rehabilitation of 303 primary classrooms (original target: 108)\. There is no information on whether these were constructed in "poor" areas, only that they were constructed in rural areas\. Outcomes • According to the education management information system for the school year 2015/16, the schools were staffed with 273 teachers and enrolled nearly 11,000 students, of which 4,591 were in early Page 5 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) childhood education, 5,349 were in primary school, and 875 were in junior high school\. There were no accurate baseline figures available for number of students and number of teachers prior to the project interventions, according to the project team (some schools existed but were dilapidated, some were non- functional, some had students but the number was unclear), nor were any targets set for enrollment\. • The indicator measuring the basic education completion rate was dropped, as the project period was deemed too short for this outcome to materialize\. Achievement is rated Modest\. Although there is data reflecting increased enrollment, there is no evidence provided that this took place in poor areas\. Rating Modest PHREVDELTBL PHEFFICACYTBL Objective 2 Objective To improve conditions of teaching and learning Rationale Outputs • Provision of one million textbooks, 20,000 teacher guides for grades 5-9, one million supplementary readers for grades 1-4, and other instructional materials, as planned\. However, • Development of an early childhood development model was dropped\. • De-worming activities for school children was dropped\. Outcomes • The indicator measuring the textbook:student ratio at the basic education level was dropped, due to the poor quality of data on student enrollment\. • The indicator measuring whether teachers had at least one teaching guide was dropped and instead, replaced by indicators on the procurement and distribution process\. Achievement is rated Modest due to significant shortcomings in implementation\. While teaching and learning materials were procured and distributed as planned, other key activities related to early childhood Page 6 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) development and school health were not implemented\. Rating Modest PHREVDELTBL PHEFFICACYTBL Objective 3 Objective To improve school management and accountability Rationale Outputs • Development of school grant guidelines, followed by the provision of school grants to 2,579 schools (based on a process of developing grant utilization plans and opening school bank accounts) (target: 1,000 schools)\. • Construction of a new Ministry of Education (MOE) building to consolidate all central MOE staff in one location\. As noted in the ICR (page 21), in the long term, the building is expected to enable the "creation of a conducive working environment for MOE staff, with positive implications for improved synergy and efficiency\." • Conducting of two cycles of a Rapid Results Approach to increase implementation capacity of MOE staff\. However, the following outputs were not implemented due to weak capacity; • Development of a unified Human Resources database with other sector Ministries\. • Development of a pay and grade scale for teachers\. • Publication of annual sector statistics\. • Development of a learning assessment system at primary school level\. Outcomes • 72% of school grants were implemented in accordance with guidelines\. This surpassed the target of 30%\. • The indicator measuring schools managed by a school management committee or parent-teacher association was dropped, due to lack of measurements available for this indicator\. Achievement is rated Modest due to significant shortcomings in implementation\. While there was evidence of achievement in implementing the school grants program in support of improved school management, Page 7 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) other key activities were dropped\. Rating Modest PHREVDELTBL PHINNERREVISEDTBL Objective 3 Revision 1 Revised Objective To improve management capacity and accountability at the central and school levels for school construction in rural areas, procurement and distribution of teaching and learning materials, and school based management Revised Rationale Outputs School construction • Construction/rehabilitation of 303 primary classrooms (revised target: 272) in 41 schools in rural areas\. • Development of standardized school construction guidelines for site selection, design, contract management and construction quality, as well as a school construction database and school maintenance guidelines\. Teaching and learning materials • Provision of one million textbooks, 20,000 teacher guides for grades 5-9, one million supplementary readers for grades 1-4, and other instructional materials, as planned\. • Updating of national curriculum to align with West African Senior School Certificate exam\. • Support to distribution chain, and development of social accountability framework for distribution of teaching/learning materials\. School-based management • Development of school grant guidelines, followed by the provision of school grants to 2,579 schools (target: 1,000)\. • Development of social accountability framework for the school sub-grants programs\. Also, • Training of MOE staff on M&E, procurement, education planning and management\. • Conducting of annual Joint Education Sector reviews each year (except the year of the Ebola epidemic in 2014)\. • Conducting of functional review of MOE's strategic alignment, work structure, administrative efficiency, and resource utilization, which identified gaps in capacity\. Page 8 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) However, • A teaching and learning materials utilization assessment was not completed as planned, although at the time of ICR preparation, fieldwork for the assessment had taken place using alternate sources of funding\. • The transfer of financial management capacity from the project's financial management unit to the MOE did not take place, due to continued weak capacity\. The ICR (page 22) does report that measures to support knowledge transfer from project staff to MOE staff were included in terms of reference for international consultants; for example, as a condition for the Bank extending a no-objection to the international procurement specialist's contract extension, the specialist was required to prepare training materials and a lesson plan and hold regular training sessions with MOE procurement staff\. • The Center for Education Management, which was to absorb project staff (and help retain capacity) was not established due to lack of funding\. Outcomes • 100% of schools were constructed according to standardized school construction guidelines under the project\. This surpassed the target of 75%\. • Procurement of textbooks and teacher guides for grades 5-9 was verified at 100%\. This achieved the target of 100%\. Of these, 98% were also verified as having been distributed\. This surpassed the target of 85%\. • 72% of school grants were implemented in accordance with guidelines\. This surpassed the target of 30%\. 92% of sampled schools in the beneficiary survey confirmed they had received the school grants, and schools were "largely satisfied" with the grants although there were widespread concerns regarding delayed disbursement and the lack of continuity in the school grants program\. • 2,579 schools were signatories to their own bank accounts, signifying increased capacity\. This surpassed the target of 1,000\. Achievement is rated Substantial due to evidence of increased capacity, including implementation of measures to increase accountability that achieved targets, at both the central MOE level and at the school level\. Revised Rating Substantial PHREVISEDTBL 5\. Efficiency The PAD (Annex 9) provides a discussion of economic issues in the education sector, including the impact of Page 9 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) schooling on children's health and nutrition outcomes, the distribution of public spending on education, and household spending on education\. However, the discussion is primarily focused on sector-wide issues, rather than a project-specific analysis of efficiency in the use of project resources\. The ICR (Annex 3) provides more project-specific data analysis, including a comparison of the cost of the key project outputs (school construction, textbook procurement, and school grants) versus the cost of similar outputs for other donor projects within the country\. For school construction, the project adopted the high-quality standard for school design set by the government for the entire country; this standard had been set in response to previous experience in which lower-cost schools using local materials did not meet quality standards and were found to have incurred high maintenance costs\. The per-classroom unit cost was US$ 37,166 under the project, compared to US$ 40,000 for schools constructed under the government's Education Pooled Fund\. However, again, due to the higher school design quality standards, this per-classroom unit cost was higher than the US$ 20,000 to US$ 25,000 reported for similar low-capacity, fragile countries including Benin, Burundi, Cote d'Ivoire, and northern Uganda\. More detailed information to verify comparability of outputs is not provided\. Similarly, textbooks procured for this project were of relatively high quality (color printing, better paper quality)\. The per-textbook unit cost was US$ 4 under the project, which was similar to the US$ 4\.58 reported for other government-procured textbooks, but higher than the per-textbook unit cost reported for similar efforts in other sub-Saharan countries: Sierra Leone (US$ 0\.97 - 1\.66), Niger (US$ 1\.10 - 1\.40), Eritrea (US$ 0\.60) and Mauritania (US$ 0\.73)\. The ICR also suggests efficiency in implementation due to the textbook distribution system that distributed materials directly to schools (hence bringing down the unit cost of learning materials and lessening risk of illicit sales), although no specific data are provided\. However, in light of the overall context of a significantly reduced project scope despite the same project funding envelope, in addition to a project period extension of more than two years beyond the original project period, overall project efficiency is rated Modest\. Efficiency Rating Modest a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal 0 Not Applicable 0 ICR Estimate 0 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome Page 10 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) Project under original objectives - Unsatisfactory The outcome is rated overall Unsatisfactory due to significant shortcomings in the relevance of project design and in the achievement of the three project objectives\. The relevance of the project objectives is High while the relevance of the project design is rated Modest due to the significantly changed policy environment and the complex design that made it unlikely to be achieved within the project time frame\. Achievement of the objective to increase access to basic education with a focus on poor areas is rated Modest due to lack of sufficient evidence particularly with regard to reaching the poor\. Achievement of the objective to improve conditions of teaching and learning is rated Modest due to significant shortcomings in implementation of key outputs\. Achievement of the objective to improve school management and accountability is also rated Modest due to significant shortcomings in implementation of key outputs\. Project under revised objectives - Moderately Satisfactory The relevance of the project objectives is High while the relevance of the project design is rated Substantial\. Achievement of the objective to improve management capacity and accountability at the central and school levels is rated Substantial due to evidence of increased capacity to ensure provision of education materials, provide financing at the school level, and the completion of key outputs that likely contributed to improved management and accountability\. Efficiency over the entire project period is rated Modest\. Although unit costs for key outputs were comparable to other government-funded outputs, the overall context of a significantly reduced project scope despite using the same amount of project resources and over a longer project period indicate Modest efficiency in the use of resources\. Overall outcome - Moderately Satisfactory According to harmonized OPCS/IEG guidelines, the outcome of a restructured project is assessed according to the amount of the grant that disbursed before and after the restructuring\. In the case of this project, US$ 7\.26 million, or 18\.2%, of the grant had disbursed t the time of restructuring in September 2012\. The Unsatisfactory rating has a weighted value of \.364 while the Moderately Satisfactory rating has a weighted value of 3\.272\. Therefore, the combined outcome rating has a value of 3\.636, or Moderately Satisfactory\. a\. Outcome Rating Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating The government remains strongly committed to the objectives presented in the project, as reflected in its updated sector strategy and the increased share of education recurrent expenditure as a share of the overall recurrent expenditure\. The latter included funding to the MOE for a second tranche of school grants, although the amount provided was less than anticipated due to the Ebola virus epidemic\. A new Global Partnership for Education grant is being prepared that will continue the school grants and MOE capacity building activities, while also addressing the teacher and personnel management issues\. However, fiscal constraints are likely to continue due to the overall weak macroeconomic situation\. There is limited, or no, budgetary allocation for Page 11 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) maintenance of schools and limited human resource capacity to maintain schools\. Supervision visits also revealed that some schools lacked qualified teachers, in part due to lack of resources\. a\. Risk to Development Outcome Rating Substantial 8\. Assessment of Bank Performance a\. Quality-at-Entry The project design built upon comprehensive analysis from the country sector report (2010) as well as experience from the donor-supported Education Pooled Fund (of which, the latter addressed poor accountability and management of the textbook distribution chain)\. The project design was also highly consistent with the government's medium-term education sector plan\. The weak human resource capacity was recognized as a significant risk factor and was to be addressed with institutional capacity building activities; however, capacity was even weaker than expected and led to the first year of the project period being focused on staffing the Project Support Team (PST) and not on project implementation\. The feasibility of contracting NGOs, which were to be used for community-driven school construction and textbook distribution, was not identified as a risk factor\. The ICR (page 5) notes other shortcomings in project preparation which were detrimental to the project's implementation: for example, the ICR (page 4) notes that with the multiplicity of activities, "the PST, and those responsible for the implementation of subcomponents, were not always aware of their responsibilities"; also, there was substantial overlap in donor-supported projects including in the areas of early childhood development, school health, systems development for M&E, and payroll/personnel management\. The results framework and M&E arrangements were overall adequate\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision The Bank provided intensive supervision support (with twelve supervision reports prepared over the project period and weekly/bi-weekly conference calls with the Project Support Team during the Ebola crisis period) in response to the numerous implementation challenges arising from the project\. Implementation support was provided primarily through supervision missions (staffed by education, fiduciary, safeguards, and architect specialists), rather than through field-based staff, due to the minimal Bank presence in the country for certain portions of the project period\. The mid-term review meeting was moved up from the original date due to implementation concerns; and the Level I restructuring paper (Project Paper, 2012) provided an extensive description of implementation status and risks for the revised project\. Fiduciary matters as well as safeguards were managed effectively\. However, while the results framework was revised in accordance with the project restructuring, including dropping of indicators that were no longer relevant, the ICR (page 15) notes that the revised key indicators were more focused on measuring completion of outputs rather than capturing outcomes in the form of actual improvements in capacity, which the ICR suggests could have been measured via Page 12 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) qualitative surveys\. Quality of Supervision Rating Moderately Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9\. Assessment of Borrower Performance a\. Government Performance Given the long preceding period of civil war, the project period was marked by relative stability in the political environment\. Presidential elections took place in October 2011, which led to political transitions in key Ministry positions and, as noted in the ICR (page 12), "multiple reshuffling of political appointees in government disrupted project implementation\." The ICR (page 11) notes that the lack of selectivity in the project design - which also led to complexity in implementation- may have been a reflection of the less conducive political environment: the country had been previously rejected as a Education For All grant recipient and was therefore under pressure to present a wide-ranging and ambitious program to leverage further donor support\. Also, the tightened fiscal context brought on by the Ebola crisis led to less financial support for the school grants program\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance The Project Support Team within the Ministry of Education was the primary implementing agency\. This project represented the first operation in the education sector since the end of the civil war that would be financially and operationally managed by the government\. However, there was weak implementation capacity that, while fully recognized as a project risk, was "even weaker than initially assessed at appraisal " (ICR, page 4) and therefore the first year after project effectiveness focused primarily on capacity building while project disbursements remained low\. Although implementation performance improved with the reduced project scope and efforts were made to ensure skills development and knowledge transfer from international consultants to local MOE staff, there remained some shortcomings in achieving capacity improvements (i\.e\. establishing of Center for Educational Management)\. Fiduciary and safeguard responsibilities were overall satisfactorily conducted\. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Page 13 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The project results framework was extensive, having been directly derived from the broader education sector plan\. Indicators were overall measurable and relevant, including identified baseline and target figures, but were numerous given the capacity constraints\. An existing education management information system (EMIS) was expected to be able to provide data, and the project design included development of a school construction database and various studies planned to provide additional data and qualitative evidence\. b\. M&E Implementation The ICR (page 15) reports that up-to-date EMIS data was not available as expected at the project start, thereby complicating planning for key outputs and leading to implementation delays\. The results framework and key project indicators were modified during project restructuring, although the ICR (page 15) suggests that the revised key indicators were focused more on measuring completion of outputs than on capturing actual improvements in capacity, which might have been measured through qualitative surveys\. c\. M&E Utilization Data from the school construction database was utilized to track progress and in some cases, amend or cancel contracts\. Textbook procurement and distribution was regularly reported on and monitored\. However, several end-of-project studies to measure project impact, for example, textbook utilization, were not completed in time to inform the ICR\. M&E is rated Modest overall due to shortcomings in choice of revised indicators (i\.e\. more output- rather than outcome-oriented), lack of up-to-date data, and shortfalls in implementing evaluative studies\. M&E Quality Rating Modest 11\. Other Issues a\. Safeguards The project was classified as a Category "B" project due to potential negative impacts from school construction\. Safeguard policies on Environmental Assessment (OP/BP 4\.01) and Involuntary Resettlement (OP/BP 4\.12) were triggered\. An Environmental and Social Management Framework as well as a Resettlement Framework were prepared as part of project appraisal\. Recommendations included capacity Page 14 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) building activities and consultations with potentially affected persons\. When the construction of early childhood centers was added to the Grant Agreement, the Frameworks were also amended correspondingly\. According to the ICR (page 17), the MOE obtained official land deeds and tribal certificates for all construction sites\. The supervision team confirmed in a November 2013 mission that construction activities were in compliance with safeguard policies\. No further safeguard problems were reported thereafter\. b\. Fiduciary Compliance Financial management: The ICR (page 17) reports that the government was in full compliance with all financial covenants, and audits were submitted regularly and in a timely manner\. However, auditors noted in the post- audit report that the fixed assets register had not been adequately maintained and updated and that reconciliation items identified in bank account reconciliation statements had not been resolved in time\. There was also one allegation of misuse of funds in October 2014, involving fraudulent and corrupt practices by the Project Support Team's junior project accountant\. The Bank team reported the incident and also took measures to strengthen controls over such activity\. The amount in question, US$ 34,810, was returned to the Bank, while the staff member was dismissed from the project and as of the time of the ICR the case was pending judgment from the government courts\. Procurement: The ICR (page 18) reports that procurement at the central level was adequately implemented and documented, although there were significant delays in filling the procurement staff positions in the Project Support Team and in hiring a management firm to oversee school construction\. Bank supervision visits confirmed that school grants were largely in compliance with guidelines, although record keeping was not comprehensive\. c\. Unintended impacts (Positive or Negative) None noted\. d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Moderately Outcome --- Satisfactory Satisfactory Page 15 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) Risk to Development Substantial Substantial --- Outcome Moderately Moderately Bank Performance --- Satisfactory Satisfactory Moderately Moderately Borrower Performance --- Satisfactory Satisfactory Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons Lessons drawn from the ICR: • Direct distribution of education materials to schools can enhance accountability and effectiveness (and perhaps efficiency) of the delivery chain but can also be hindered by lack of timely access to EMIS data\. In the case of this project, decentralized education officers and school principals were mobilized to participate in textbook distribution; however, there were discrepancies in the number of schools and enrollment data which led to inaccuracies in delivery of materials\. • School construction outputs are less likely to lead to sustained education outcomes (i\.e increased enrollment) without a corresponding maintenance plan\. In the case of this project, the lack of budget allocated to school maintenance and the lack of human resource capacity to maintain schools is contributing to significant risk in the development outcomes\. 14\. Assessment Recommended? No 15\. Comments on Quality of ICR The quality of the evidence is overall satisfactory (for the revised objective)\. Given the challenge in measuring improvements in "management capacity" and "accountability", the ICR provides both quantitative data from the project indicators and qualitative information in the narrative to supplement the evidence\. There is also extensive discussion of implementation challenges, which is useful for similar fragile contexts\. There was some inconsistency in the assessment of government's impact on project achievements/shortcomings, for example with regard to the political environment (stable macro-political environment (ICR, page 12) vs\. lack of enabling environment for selectivity in project design (ICR, page 11) and fiscal support (the government took Page 16 of 17  Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review LR - Education GPE Program (FY11) (P117662) over full financial responsibility of the school grants program a year ahead of planned (ICR, page 14) vs\. due to fiscal constraints, the government could not support the school grants program without external financial assistance (ICR, page 19)\. a\. Quality of ICR Rating Substantial Page 17 of 17

REVIEW

P045303

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24426 IMPLEMENTATION COMPLETION REPORT (TF-25239; CPL-41290) ON A LOAN IN THE AMOUNT OF US$7\.0 MILLION TO THE REPUBLIC OF KAZAKHSTAN FOR A PILOT WATER SUPPLY PROJECT June 28, 2002 Infrastructure and Energy Services Department Central Asia Country Unit Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS (Exchange Rate Effective June 5, 2001) Currency Unit = Kazakhstan Tenge (KZT) KZT 1 = US$ 0\.006831 US$ 1 = 146\.39 KZT FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ASWSS Atyrau Water Supply & Sanitation CWR Committee Water Resources ICR Implementation Completion Report IERR Internal Economic Rate of Return IFI International Financial Institute KfW Kuwait Fund MOF Ministry of Finance NEAP National Environmental Action Plan O&M Operation & Maintenance PHRD Policy & Human Resources Development Fund PIU Project Implementation Unit PPF Project Preparation Facility PS Pumping Station SAR Staff Appraisal Report SDI State Design Institute SWK Scott Wilson Kirkpatrik Consultant Firm USAID United States Agency for International Development VAT Value-Added Tax Vice President: Johannes Linn, ECAVP Country Manager/Director: Dennis de Tray, ECCO8 Sector Manager/Director: Motoo Konishi/Hossein Razavi, ECSIE Task Team Leader/Task Manager: Ede Ijjasz, ECSIE  KAZAKHSTAN PILOT WATER SUPPLY CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings I 3\. Assessment of Development Objective and Design, and of Qualiy at Entry 1 4\. Achievement of Objective and Outputs 7 5\. Major Factors Affecting Implementation and Outcome 11 6\. Sustainability 13 7\. Bank and Borrower Performance 14 8\. Lessons Learned 16 9\. Partner Comments 17 10\. Additional Information 17 Annex 1\. Key Performance Indicators/Log Frame Matnx 18 Annex 2\. Project Costs and Financing 19 Annex 3\. Economic Costs and Benefits 21 Annex 4\. Bank Inputs 22 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 24 Annex 6\. Ratings of Bank and Borrower Performance 25 Annex 7\. List of Supporting Documents 26  Project ID: P045303 Project Nvame: PILOT WATER SUPPLY Team Leader: Ede Jorge Ijjasz-Vasquez l TL Unit: ECSIE ICR Type: Core ICR Report Date: June 28, 2002 1\. Project Data Name: PILOT WATER SUPPLY L/C/TFNunber: TF-25239; CPL-41290 Countny/Department: KAZAKHSTAN Region: Europe and Central Asia Region Sector/subsecror: WU - Urban Water Supply KEY DATES Original Revised/Actual PCD\. 11/10/95 Effective: 09/09/97 Appraisal: 07/15/96 MTR: Approval: 12/23/96 Closing: 12/31/2001 Borrower/Implententing Agency: GOVT\. OF KAZAKSTAN/STATE COMMITTEE FOR WATER RESOURCES Other Partners: Water utilities of Aralsk and Kazalinsk STAFF Current At Appraisal Vice President: Johannes Linn Johannes Linn Country Manager: Dennis de Tray Yukon Huang Sector Mlanager: Motoo Konishi Jonathan Brown Team Leader at ICR: Ede ijasz Piotr Kryzanowski ICR Prima;y Author: Nirmala Sarawat; Sanyu Lutalo; Ede Ijiasz 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, H1,=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Bonrower Performance: S QAG (if available) ICR Quality at Entrv: S Project at Risk at Any Time: No formal QAG review was done for this project\. 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: In the late 1980s, in response to the Aral Sea environmental disaster, the Govemrnment developed a long-term strategy and plan to improve the water supply in the regions of Aralsk and Kazalinsk\. During the conference of Central Asian heads of state on January 11, 1994, the Kazakhstan Aral Sea Community  Rehabilitation Project was included as part of the "Action plan for the Improvement of the Ecology of the Aral Sea"\. The proposed project was divided in two parts: a pilot project (reviewed under this ICR) and a full-scale project\. The pilot project was primarily aimed at providing short-terrn solutions to the water, sanitation, and health conditions in the project area\. The pilot project was not designed to address sector-wide policies and issues at the national level, but to: (i) gain experience in developing operational methodologies and capabilities in all aspects of project processing, international procurement and contracting, and in project implementation under the same conditions as the full-scale project through certain small scale investments which need urgent attention; and (ii) speed up implementation of the full-scale project through early completion of detailed engineering design and preparation of bidding documents\. The institutional, management, and organization deficiencies identified at the time of project preparation were purposely left to be addressed by the development of an institutional reform action plan (including a particular emphasis on cost recovery and improving the collection of water charges) under the full-scale project\. The objectives of the pilot project were clearly defined in the Staff Appraisal Report (SAR), and were in line with the Country Assistance Strategy (CAS) and objectives of the Aral Sea Basin Program\. The pilot project was the first Bank operation in the water sector in Kazakhstan, and it became apparent during preparation that delivering a full-scale project would require much more time given Borrower capacity and level of understanding of Bank operations, as well as Bank's knowledge of the water supply situation in the region\. The main benefit and reason for implementing the pilot project was to "learn-by-doing" while providing for immediate and visible relief to the disaster affected areas by the Aral Sea disaster\. An additional direct and immediate benefit of the pilot project was identified as the provision of employment for locally unemployed construction workers in the project area\. The performance monitoring indicators to measure achievement of the project objectives, as identified in the SAR, were: * Counterpart funding of $388,000 from the Government\. * Bank loan funds of US$7\.0 million\. * A water supply pumping station and reservoirs and partial rehabilitation of pipeline and secondary distribution networks\. * Improved piped water supply for about 30,000 people living in the project area\. * Improved health and economic conditions for 30,000 people in the pilot project area\. * Facilitating the implementation of the full-scale project, thereby benefiting people living in the Aral Sea disaster area of Kazakhstan\. The SAR also defines as a direct and immediate benefit of the project, the employment for locally unemployed construction workers in the project area\. The overall strategy selected to divide the project into pilot and full-scale phases, with emphasis on learning and rapid demonstration of benefits, is considered adequate\. The SAR recognizes and identifies the numerous institutional, financial and technical constraints but defines a limited set of well-defined objectives for the pilot project as a first step to facilitate the preparation and to improve the design of the full-scale project\. At the time of preparation of the SAR, the Bank had not yet adopted the logframe methodology which could have provided a clearer perspective on the development objective, outcomes and outputs of the project\. The monitoring indicators could also have benefited from the logframe approach, in particular their relation to the stated learning objectives of the project\. - 2 -  While some of the paragraphs in the SAR (e\.g\., 25 and 33) indicate that the pilot project would improve the management and operation and financial viability of the regional enterprises responsible for delivering water and wastewater services, gain experience in cost recovery aspects, and assess the communities' willingness and ability to pay for improved social infrastructure, these statements are not consistent with the rest of the document where clear piloting objectives on a well-defined set of activities were presented\. For purposes of this ICR, these inconsistencies in the text are assumed not to be part of the project objectives and strategy\. 3\.2 Revised Objective: The original project objectives were not revised\. 3\.3 Original Components: The project consisted of two components: (i) a small scale investment component to finance a water supply and distribution pilot project in the Aralsk and Kazalinsk Rayons of the Kzyl-Orda Oblast; and (ii) a technical assistance component for the review of engineering designs, preparation of bid packages, and for the supervision of the pilot project\. The specific activities financed under each of the components is presented below\. A\. Small-Scale Pilot Water Supply Component (estimated US$6\.66 million - estimated base Bank financing - excluding contingencies - USS5\.9 million) This component was designed to finance the following civil works under a single contract: (a) Rehabilitation of the Aralsk-Sarbulak pipeline (estimated US$4\.2 million), involving replacement of damaged concrete pressure pipes of approximately 10 km in length and 800-1000 mm in diameter, which are a part of the main pipeline from Aralsk to Novokazalinsk; (b) Completion of the construction of pumping station No\. 7a in Novokazalinsk (estimated US$1\.61 million), including: (i) construction of two storage reservoirs; (ii) provision and installation of equipment in the main pumping station, chlorination facility, warehouse/garage, power substation and water control laboratory; and (iii) lining of the adjoining canal over a section of about 500 m along its boundary to prevent seepage, and increasing the wall height over this section to prevent overtopping; and (c) Rehabilitation of the most corroded sections of the 60 km and 70 km distribution networks in the cities of Novokazalinsk and Aralsk respectively (estimated US$0\.85 million), through the replacement with new PVC piping of approximately 6 km in length in each city, ranging in diameter from 200 to 300 mm\. As part of the component, it was proposed to provide emergency assistance to upgrade part of the water utilities' maintenance equipment\. B: Technical Assistance Component (estimated US$0\.73 million - estimated base Bank financing - excluding contingencies - US$0\.65 million) This component was designed to financed the following consulting services: (a) Pilot Project Design and Supervision (estimated US$0\.37 million), including review and revision of detailed engineering designs for the full-scale project; preparation of tender documents for the procurement of goods and works; procurement assistance; construction supervision; and project management and supervision; and -3 -  (b) Strengthening of the Project Implementation Unit (PIU) under the State Committee for Water Resources for effective implementation of the Project (estimated US$0\.31 million), including providing technical assistance in the preparation of the detailed engineering design and procurement packages, communications system, and vehicles\. The PIU was to receive on-the-job training in Bank procurement, disbursement and contracting procedures\. The project components were designed to meet the stated objectives in the SAR\. The civil works component focused on rehabilitation instead of expansion activities as it was expected to be the case in the full scale project, and the works included activities in transmission pipelines, pumping stations, and distribution networks, which are key components of the system\. Although a training component for PIU staff on Bank procurement, disbursement and financial management guidelines could have strengthened further the learning aspects of the pilot project, component B was designed to provide a hands-on learning experience for the PIU staff\. It is important to note that many aspects of the full-scale project that required leaming and testing (such as sectoral reforms, financial and commercial management of the water utilities, involvement of communities, and hygiene and sanitation activities) were not included in the pilot project because they were analyzed and in some cases tested through activities financed by other donors as part of a coordinated assistance strategy, as presented in the following section\. 3\.4 Revised Components: There no major revisions to the project components\. However, the actual costs of the various components were different from the estimated values\. The scope of work had to be adjusted in line with the learning and testing nature of this pilot project\. For example, the engineering design activities required additional funding\. The bids received for the Civil Works contract (component A) were all above the estimated budget and the Borrower opted to reduce and focus the scope of work on some of the most critical parts of the systems to be rehabilitated rather than increase the project cost\. This was also done in the interest of ensuring completion of the pilot project on schedule\. Since the pilot project was designed mainly to gain experience for the implementation of the full-scale project, while demonstrating results on the ground, these objectives could still be achieved despite the modifications to the scope of work\. The revisions also benefited from the inforrnation from the feasibility study that was available at the time of review of the scope of work\. The components were revised as follows: A\. Small-Scale Pilot Water Supplv Component (revised US$6\.92 million - revised Bank financing US$5\.77 million) This component was revised in two respects: (i) the pipe sections selected for rehabilitation were between the Berdykol wells (the water supply source for the main pipeline) and the city of Aralsk, and not between Aralsk and Novokazalinsk as originally intended\. The feasibility study for the full scale project indicated that supplying water to Novokazalinsk from the main pipeline was not a cost-effective option, and a better altemative would be intake from the Syr Darya River\. The main pipeline between Aralsk and Novokazalinsk was therefore not rehabilitated\. (ii) 7\.2 km of the main pipeline sections of 1000 mm diameter were replaced and provided with cathodic protection, as opposed to the original plan to rehabilitate 10 km of the main pipeline sections of 800-1000 mm diameter\. The main reason for reducing the length, as earlier mentioned, was to stay within the original estimated budget for the works\. Revisions in diameter of rehabilitated pipes, to include only 1000 mm - 4 -  pipes, were made because the implementing agency initially found difficulty locating the 800 mm pipeline, although it was later found to be located within the wellfield between Kosaman and Berdykol\. Nevertheless only sections from the main transmission pipeline were replaced\. The construction works for the rehabilitation of reservoirs, filters, and garage were excluded frorm the Bank financed activities as the Oblast administration with resources from the Central Government completed the construction of two of the four reservoirs in the original design\. Consequently construction of the two remaining reservoirs to be financed through the World Bank loan could be postponed without adversely affecting the project\. Construction of the filters, which was associated with the reservoirs, was also postponed\. Works for the garage were proposed in order to accommodate vehicles and related equipment, and postponement of this facility did not adversely affect the pilot project, since the existing facilities, though inadequate, could continue to be used\. The distribution network rehabilitation component was also reduced by about 15% because of cost considerations\. In Aralsk and Novokazalinsk, 4\.7 and 4\.4 km respectively of distribution system pipes were rehabilitated, as opposed to the original estimnated 6 kn in each town\. PE pipes were used instead of the originally planned PVC pipes\. To some extent, costs had increased because the original cost estimates did not allow for dewatering\. Considerations for reducing this component focused on selection of strategic portions of the distribution system for replacement, while smaller, isolated segments were dropped so as not to impact significantly on the overall efficiency of the water supply network\. B: Technical Assistance Component (revised US$0\.71 million - revised base Bank financina US$0\.71 million) (a) Pilot Project Design and Supervision (revised US$0\.64 million)\. The estimated cost of these consulting activities was much higher than originally estimated most probably due to the broad scope of work in the Terms of Reference\. At the time of Negotiations the Borrower confirmed their interest to keep the detailed engineering activities for the future full scale project as part of the technical assistance component of the Project\. However, they proposed that these activities were financed from grant resources, instead of from the Bank's loan\. It was agreed that if such external grant funding was not secured by the Borrower by July 1, 1997, the Borrower would be required to secure funding for this component from other sources such a PPF\. Donor financing was provided for this activity\. The detailed engineering for part of the full-scale project (Aralsk water supply component) was financed by the Kuwait Fund, and the Novokazalinsk water supply component was appraised by KfW, albeit in a smaller scale then originally envisaged under the feasibility study\. Overall, the entire initial scope of work for this subcomponent was completed satisfactorily\. (b) Strengthening of the PIU (revised US$0\.07 million)\. There were no revisions made to the component regarding Strengthening of the PIU although there were substantial cost savings\. As grant funds were secured for some of the technical assistance activities, the unused funds at the end of the project (US$0\.52 million) was cancelled by the Borrower in June 2001 after completion of all project activities\. 3\.5 Qualitv at Entry: The Quality at Entry of this project is considered as satisfactory\. There has been no formal quality review for this project\. -5-  The evaluation of the quality at entry of this operation has to consider the context in which this operation was prepared\. The Bank had a very visible presence in the preparation of the Action Plan for the Improvement of the Ecology of the Aral Sea and made significant commitmnents in terms of lending to various countries affected by this crisis\. These high-visibility projects in Turkmenistan, Uzbekistan and Kazakhstan were prepared in a very short time frame\. The latter two projects used a pilot/full-scale strategy\. The approach to "learn by doing" imbedded in the design of the pilot project implied that the quality at entry was not ideal in many areas\. However, this was a clear choice made by the Bank at the time of project preparation and approval and it was made clear in the SAR\. Some of the positive quality aspects of the project at the entry point include: (i) recognition of the limited Bank knowledge of the country and the sector and appropriate design of activities with good potential for early demonstration; (ii) appropriate partnership arrangements and coordination with other donors (including USAID, JNDP, Dutch Government, Kuwait Fund, KfW); (iii) technical focus on rehabilitation activities; (iv) strong terms of reference for the consulting activities (although somewhat broad in scope for the resources available); (v) adequate procurement, disbursement and financial arrangements in accordance with the Bank guidelines at the time of project approval; (vi) sufficient support for project implementation; and (vii) adequate borrower support and commitment to the project\. The social, financial and economic evaluations were adequate given the choice made for project design\. Technical and economic aspects of project design could have been improved, had it been done after completion of the feasibility study for the full scale project\. The pilot project design for instance, was too specific on some of the technical aspects (e\.g\. pipe size and materials), although the detailed engineering and tender documents had not yet been completed\. Some of the assumptions in the economic analyses were affected by the lack of technical data and sufficient studies that could predict with greater certainty the type and degree of operational improvements for the water supply utilities associated with the proposed investments\. The economics of supplying water to Novokalinsk from the Aralsk-Serbulak pipeline was also overlooked during the design of the pilot\. As a result, the project proposed to rehabilitate both the pipeline between Aralsk and Novokazalinsk and the pumping station that was supplying the city with water from this pipeline, although this was not the most economical option\. Fortunately this did not affect the project outcome, as the rehabilitation of the main pipeline to Aralsk was equally effective and changes were introduced such that Pumping Station (PS) 7a could also supply water to Novokazalinsk from the water treatment plant on the Syr Darya River intake\. A thorough social assessment was carried out and the stakeholder consultation aspects were fully satisfactory\. The social assessment referred to the full-scale project and resulted in many significant findings\. One of the key findings was that although water was important, it was not a top priority for the stakeholders\. Their greater concerns were food, employment and income\. To complement the project, therefore, a separate income-generation project was executed by the United Nations Development Program (UNDP) with Dutch Trust Funds made available by the Bank\. - 6 -  On the institutional side, the focus was entirely on building the capacity of the Water Commnittee and the PIU in Bank procedures and project management, and not so much on building the capacity of the concemed water utilities in the operation and management of the water supply systems which was planned for the full-scale project\. This issue was discussed at the time of the decision meeting, but given the weak capacity of the implementing agency and the Bank little knowledge of the sector at the time, the project went forward with the piloting approach leaving the issue of utility reform for later\. The Bank did however carry out an institutional and financial analysis of the vodokanals during supervision, as a separate activity, in preparation for the full-scale project\. This approach prevented the recommendation of inadequate reforms and provided the sufficient time to build trust with the Borrower which was key in the later reform of the sector not only in the project area but at a national level\. The project was classified as environmental category C and accordingly no separate environmental assessment or mitigation plan were prepared\. Although the construction activities could cause some environmental impacts, the Terms of Reference of the pilot project engineering consultants did include the obligation to prepare an environmental management plan for all construction activities and to supervise the implementation of all safety and environmental protection measures\. Readiness for implementation was satisfactory given the project design and implementation strategy\. The project hinged very much on the establishment of the PIU, and a govemrnmental decree to legalize the creation of the PIU was issued by the Water Committee before Board presentation\. However, the project effectiveness was delayed by about five months due to the lack of available initial counterpart funds\. As discussed in Section 3\. 1, the project design could have benefited from a better definition of indicators, tools to monitor progress towards achievement of the project objectives and outcomes, and a mechanism to ensure monitoring and adjustment of the leaming process\. As a pilot project, the risks were indicated to be minimal, although the potential for delays was identified at the time of the SAR\. Although the risk of errors in the cost estimation of the various components was not identified in the SAR, it was adequately resolved during project implementation as discussed in Section 3\.4\. The sustainability of the project, however, could not be assured at the time of preparation of the pilot project as this would need significant reforms in the water utilities\. This risk was recognized in the SAR\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The project's outcome was satisfactory\. All works in respect of physical improvements to the water supply were completed successfully by the beginning of 1999\. The works contributed to achieving urgently needed improvements of the water supply system in the project areas\. The technical assistance components were also completed successfully, and facilitated preparation for the full-scale project\. The capacity of the Borrower and of the PIU staff to handle Bank financed projects was substantially strengthened\. A detailed description of the strengthened capacity of the Borrower is presented in Section 4\.5\. Although the full-scale project was not financed by the Bank, the lessons leamed through the pilot project were incorporated in the follow-up activities that have been supported by other donors\. Socioeconomic data for the project area in general shows improvement, in that employment rate has increased and out-migration has decreased, even among the younger generation\. Health indicators, on the other hand, have become worse, although this cannot be attributed in any way to the project\. About 360 construction workers were employed in the civil works activities fnanced by the pilot project\. -7-  The potential risk of project implementation delays identified in the SAR actually occurred but the final objective of the project was achieved\. Section 5\.2 presents in more details the factors that caused these delays\. The lessons leamed from these delays were incorporated in the design of other water projects in the country\. 4\.2 Outputs by components: The outputs expected from each component as described in the SAR were basically achieved, although reductions in scope were needed in some cases due to actual costs exceeding the engineering estimates (a key lesson from the pilot project)\. Despite the reduction in scope, the project objectives were achieved\. A\. Small-Scale Pilot Water Supply Component\. (a) Rehabilitation of the Aralsk-Sarbulak pipeline: Outputs relating to this sub-component were reduced by about 28%, as 7\.2 km of 1000 mm diameter pipeline was replaced and provided with cathodic protection, compared to the 10 km estimated at Appraisal, due to the higher than estimated bid prices\. The sub-component was reduced by focusing on the worst sections of the pipeline\. The replaced section of the main pipeline is functioning without any problems or breaks at the time of preparation of this ICR\. The replacement has reduced the risk of breaks and leaks and somewhat improved the reliability of the system\. However, considering that the total length of the pipeline between the welifield and the city of Aralsk is 112 km, the improvement of the rehabilitated sector has not improved the water transmission to the city of Aralsk significantly but this was not the expected outcome of this component\. Bursts and losses along the rest of the pipeline to Aralsk and the 113 km section between Aralsk and Novokazalinsk are still severe\. The worst parts of these pipeline (about 21 km) will be repaired under the projects financed by the Kuwait Fund and KfW which are soon to be initiated, in a strategy to gradually increase the reliability of the system by focusing on the worst sections given the limited funds available\. (b) Completion of pumping station No\.7a in Novokazalinsk: Outputs with respect to this sub-component included: (i) Expansion of capacity - a supplementary pump house was constructed with four additional pumps; (ii) construction of laboratory with equipment and pumping station amenities; (iii) power line reconstruction - 6\.7 km; (iv) construction of storage for materials, store-canopy for machines, paving of courtyard with asphalt layer; and (v) completion of two reservoirs with capacity of 3,600 cubic meters\. The works at the pumping station in Novokazalinsk have resulted in better conditions for the pump operators and administrative staff\. Machines, vehicles, and materials are now lodged in a covered space and repair work is safe\. The laboratory is in operation and the pumping station can be used to pump water both from the main pipeline as well as the Syr Darya river\. Energy consumption at the pumping station has also decreased by 13%\. This component was closely coordinated with a USAID project that reconstructed some of the remaining pumping stations\. (c) Rehabilitation of distribution networks: Regarding this sub-component, the following output was achieved: (i) rehabilitation of 4\.7 km of distribution system in Aralsk (out of 79\.2 km); and (ii) rehabilitation of 4\.4 km of distribution network in Novokazalinsk (out of 130 km)\. The scope of this component was reduced about 25% from the Appraisal estimate of 6 km of distribution networks rehabilitation in each city\. In Aralsk, the distribution network repair focused on the district where the medical institutions are located\. This has improved significantly the supply to these facilities and their operation\. Due to better water supply all intemal sanitary and hygiene units in the hospital are now operating\. The water at the source is reported to be within the stipulated norms of bacteriological and physical/chemical indicators\. The number of pipe - 8 -  breaks per year has reduced from 220 to 114 after project completion due to the elimination of breaks in the rehabilitated section\. A proposed follow-up project to be financed by the Kuwait Fund will repair an additional 50 km of the distribution network\. Distribution network repair in Novokazalinsk has improved the water supply in the rehabilitated sector and resulted in 285 additional consumer connections\. A continuous water supply is assured 24 hours a day, without any pipe breaks in the rehabilitated portion, and the quality of water supplied has improved in terms of turbidity which was often encountered with the old corroded pipes\. The number of pipe breaks per year has reduced from 116 to 83 after the project\. The proposed follow-up project to be financed by KfW will rehabilitate an additional 60\.4 km of the network\. Overall, the rehabilitation activities generally reduced the vulnerability of the water systems, and therefore improved the situation when compared to the no project situation for the 35,000 people served by the Aralsk water utility and for the 28,000 people served by the Novokazalinsk utility\. However, there are specific segments of the population that have perceived actual improvements in the quality of service\. Of particular importance are the medical facilities of Aralsk and about 2,500 inhabitants living in the areas of Novokazalinsk with rehabilitated distribution network\. B: Technical Assistance Component The objective of gaining experience in project management and implementation, including specific aspects such as international procurement and contracting for the Borrower, was achieved through the Technical Assistance to the PIU\. Completion of the detailed engineering designs and bidding documents for the full scale project was also achieved\. Thus the Technical Assistance component under the pilot project is rated satisfactory, as it did facilitate the implementation of the full-scale project\. Details of the Technical assistance components' outputs are outlined below\. (a) Pilot Project Design and Supervision: Project design and supervision was done by the consultants Scott Wilson Kirkpatrick (SWK), whose Terms of Reference included review of existing engineering designs prepared earlier by the State Design Institute (Kazgiprovodkhoz)\. During the review, the consultants found that the designs needed a substantial upgrade in two respects\. Firstly, to ensure that ground and local conditions within the project area were unchanged since the time that the original designs were carried out, prior to 1989; and secondly, to obtain new information on groundwater conditions and aggressively, in order to ensure that the contractor would not claim for unknown ground conditions, thereby increasing costs and delaying the pilot project construction program\. The contract for SWK was amended to cover the additional work and additional US$0\. 11 million was provided, paid for from the unallocated loan funds\.The preparation of tender documents and procurement of communication system and vehicles was completed successfully\. Tendering for the construction bids was also carried out\. (b) Strengthening of Project Implementation Unit: Project management and supervision were done by the PIU with technical assistance from the Project Management consultants (Scott Wilson Kirkpatrick - SWK)\. There was a substantial strengthening of the PIU's capacity as a result of the experience gained in working with the SWK, which contributed to achievement of the project objective\. 4\.3 Net Present Value/Economic rate oj\.return: The Appraisal projection for the Internal Economic Rate of Return (IERR) of the overall project was 15\.9%\. The economic viability of each component was assessed separately and IERR estimated as 17% for -9-  the rehabilitation of the transmission pipeline, 13\.3% for the rehabilitation of the distribution networks, and 14\.1% for the completion of the Novokazalinsk pumping station\. However, the ERR calculations were based on gross assumptions of water losses before and after the project\. For example, the main benefits of the rehabilitation of the Aralsk-Sarbulak pipeline were linked to an estimated reduction in losses from 45% to 30% through the rehabilitation of the worst sections, as opposed to an increase to 50% in the no project scenario\. Similarly, the network rehabilitation component was assumed to reduce the losses from 40% to 20%, as opposed to an increase to 45% in the no project scenario\. Unfortunately the metering of water production and consumption in the water utilities involved in the project is minimal and the calculation of losses are highly speculative\. For example, the managers of the utilities indicate that the current level of losses is about 10% for the pipeline and 22% for the distribution network which is a clear underestimate given the poor state of repair of large portions of the infrastructure\. Therefore, a traditional calculation of the ERR given the lack of adequate metering information is not feasible\. Furthermore, the main objective of the project was to gain experience through the implementation of the pilot project and facilitate the preparation of the full-scale project\. The full benefits of the pilot project would need to be evaluated in the context of its success to facilitate the follow-on activities about to be initiated with donor support and the outcomes of these activities\. Within the context of the specific small-scale investments financed by the pilot project there are two considerations at the time of analyzing their benefits from the economic point of view\. First, these investments were selected to rehabilitate parts of the system that were about to collapse with dire consequences for the provision of water supply to the entire population\. Second, the activities were selected to take the first steps towards the solution of the most critical problem faced by the water utilities, namely the water losses in the system\. The review of the scope of work of the various activities, forced by the higher than expected bid prices, resulted in increased cost-effectiveness of the investments as the rehabilitation focused on the truly critical portions of the water systems\. Apart from the benefits to the population as a whole associated with the increase in reliability of the system when compared to the no-project scenario, a portion of the population received direct benefits from the project, including: (i) highly reliable water supply to medical facilities that allowed continuous operation and re-opening of services; (ii) improved services to 2,500 inhabitants of Novokazalinsk that are expected to result in lower coping costs to deal with the low quality of service (intermittency and insufficient pressure)\. Finally, the significant institutional development impact of the Borrower, which is reviewed in Section 4\.5, is not amenable to an economic rate of return analysis\. 4\.4 Financial rare of return: The financial rate of return was not calculated at appraisal\. This was partly due to the fact that the project was intended more to provide immediate relief to the water supply situation for the people of the Aral Sea basin, and achievement of financial returns was not considered a primary concern\. Consequently, no specific activities aimed at directly improving financial viability of the water utilities were included in the scope\. Improvement of financial performance was to be addressed under the full scale project\. During implementation of the pilot project, the financial situation of the water utilities was reviewed, as well as during the preparation of the ICR\. The current financial situation of both water utilities is extremely difficult and it is affecting the quality of service and the safety of the drinking water, particularly in Aralsk\. Unless the underlying factors of the financial crisis that the water utilities face are solved, the sustainability of the investments financed by the pilot project will be in jeopardy\. The follow-on activities and the national-level policies to support the water utilities in its financial recovery are expected to provide the basic environment to change the situation\. -1 0 -  4\.5 Institutional development impact: At the national level, the project played a significant role in empowering the State Comnittee for Water Resources (CWR) and promoting inter-agency coordination between the Water Committee, the Ministry of Finance (MOF), the regional administration in Kzylorda and the city authorities and vodocanals in Aralsk and Novokazalinsk\. At the time of project preparation, the Committee for Water Resources was politically and organizationally a very weak agency, both at the Central and Oblast level, and it had little coordination or leverage as far as the MOF was concerned\. In fact late into project preparation, the Water Committee was under the impression that Kazakhstan would obtain grant financing from donors to finance the proposed project\. Therefore, when the Water Committee was informed that the Bank was considering a loan, the Committee expressed considerable reluctance and reservations about their ability to discuss project financing matters with the MOF\. However, administration of this small first loan not only strengthened the CWR but also opened the door for many follow-on activities\. The PIU under the Water Committee has subsequently served as the PIU for five Bank projects (Atyrau Pilot Water Supply, Nura River Clean Up, Northeast Vodocanal, Irrigation and Drainage, and Syr Darya Control and Northern Aral Sea)\. While the implementation of the pilot project was on-going, the Bank also supported in Kazakhstan preparation of a highly participatory National Environment Action Plan (NEAP) and the Water Committee was actively drawn into the discussions on water resources and supply issues in the country\. This led to the transfer of the Water Committee from the Ministry of Agriculture to the Ministry of Environment, where it has continued to play a strong role in water management and supply issues\. As the implementing agency for several World Bank projects and coordinator for donor activities in the water sector, the CWR today has a significantly stronger position and larger mandate than five years ago\. The project has also generated a new, although small, cadre of water sector professionals\. The water sector in Kazakhstan has been characterized by a relatively older generation of professionals, with many of the younger people opting to go for finance and banking\. Flow of international funds to support activities in the water sector provided career opportunities for some young engineers, and the pilot project is one of the first that contributed to this development\. At the level of the water utilities and as far as functioning of the regional institutions involved with water supply are concerned, the project has not had much impact, since it did not include any institutional reform component in the pilot phase\. During implementation, and as part of preparation of the full-scale project, the Bank did undertake financial and institutional analysis of the Aralsk and Novokazalinsk vodocanals and facilitated conversion of their accounting systems to intemational standards\. The Bank also disseminated basic concepts and directions for water sector reform, which has laid the early foundation and capacity for improved management of the sector\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control ofgovernnient or implementing agency: The most important factor affecting the pilot project implementation and outcome outside the control of the government or the implementing agency was the lack of knowledge of the Kazakhstan water supply sector by the Bank\. This was the first operation in the country and it required substantial learning in a country that was in the initial stages of the transition to a market economy and that was unfamiliar with Bank - 11 -  objectives, procedures and water of doing business\. Other areas of Bank performance that affected the implementation of the project are discussed in Sections 7\.1 and 7\.2\. Despite the difficult climatic conditions in the project area and its very severe winter weather conditions that usually cause delays in construction activities, the implementation of the project was completed within the planned timeframe (about three years from effectiveness in September 1997 to last disbursement in December 2000\. The construction activities did take longer than originally estimated in the Project Implementation Schedule of the SAR but they were finalized before the planned project completion\. 5\.2 Factors generally subject to governnment control: The main factor for the successful implementation of the project was the continued support of the Govermnent\. Although this was the first Bank operation and the learning curve was steep, the dedication of the government officials involved was a key factor to implement a project under Bank guidelines and initiate a working relation with the IFIs and donors\. This section reviews the factors that generated difficulties during project implementation and that were subject to government control\. Most of these factors were closely related to the learning process that took place for a new borrower and they provide valuable lessons for future projects in the water sector in Kazakhstan\. One of the first difficulties faced by the project was the deposit of counterpart funds, a condition for loan effectiveness\. Fulfillment of this condition took about five months most probably due to lack of experience with the counterpart funding mechanism and the appropriate allocation of budgetary resources and their timely transfer\. This condition was later fulfilled, and the loan became effective in September 1997\. Given the relatively long implementation time available for the project to account for the expected difficulties of a leaming process, this delay did not affect the overall project outcome\. The speed of project preparation implied that reaching agreement on some of the specific details of the components required additional time\. In particular, there was lack of consensus among various government agencies on the recommendations of the feasibility study, and the scope of the full scale project\. The feasibility study for the full scale project was carried out between 1996-97 by the intemational consulting firm, Gibb (UK), and financed by the Kuwait Fund\. The study presented various scenarios with respect to the future water supply strategy for the region\. The main issue concerned the Aral-Serbulak main pipeline which transports groundwater from the Kosaman-Berdykol wellfields to Aralsk and Novokazalinsk, over a distance of 240 Km\. The cities of Novokazalinsk and Kazalinsk are located about 10 km from the Syr Darya River and were relying partly on the river, and mainly on the pipeline for their water supply\. The observed trends in quantity and quality of water in the Syr Darya River indicated that, given the unreliability of the main pipeline, the former presented a much better primary source for water supply to Novokzalinsk\. According to the feasibility study, complete rehabilitation of the pipeline between Aralsk and Novokazalinsk was not an economic long term option\. The issue was further complicated by the fact that just before the feasibility study was carried out, rehabilitation of seven pumping stations along the pipeline between Aralsk and Novokazalinsk had been carried out with USAID financing amounting to US$22 million\. Due to lack of consensus with the regional authorities, the Water Committee, and other government agencies however, the option of foregoing the use of the main pipeline for water supply to Novokalinsk was not considered\. The delay in reaching a consensus on the above issue delayed completion of the feasibility study\. However, this consensus was fundamental to have a solid agreement on the follow-up activities\. Furthermore, the need for these kind of studies was highlighted and currently the Bank is supporting the Government of Kazakhstan to prepare these analyses for all basins in the country to reach consensus on regional optimal use of water resources for drinking water before any investment operations are prepared\. - 12-  During this period, the Kuwait Fund and the German Government (through KfW) expressed interest in the project, but the government took a long time to reach an agreement on the project scope and the components to be financed by the three cofmanciers (including the Bank)\. The German Government then financed a study on the condition of the pipeline and based on its findings, it was agreed that the project would include two water supply components - water supply to Aralsk from the main pipeline (to be fnanced by Kuwait Fund) and water supply to Novokazalinsk/Kazalinsk from the Syr Darya River (to be financed by KfW)\. The delays were linked to the difficulties associated with multi-donor coordination, a skill that the government learned during project implementation\. The project was also affected by the relocation of the Water Committee to Astana\. In October 1998, there was a governmental decision to move the capital from Almaty to Astana\. As a result, many line ministries (including Finance and Agriculture) and several government agencies were relocated to Astana\. The Water Committee, which at the time was under the Ministry of Agriculture, also moved to Astana around that time\. Given the uncertainty surrounding the move, the PIU remained in Almaty, as did the State Design Institute (SDI) which was working with the international consultants on the preparation of the tender documents for the project\. This significantly affected the ease of communication, and the approval processes which typically involved the MOF, the Water Committee and the PIU\. The implementation was even more drastically affected when the Water Committee was transferred to the Ministry of Environment, which was still in Almaty, and moved later to Kokshetau\. Finally, the project was implemented and completed with the involvement of the Ministry of Environment in Kokshetau, the Water Committee and MOF in Astana, the PIU in Almaty, and the regional authorities and water utilities in Kzylorda\. The main effect of these factors was that much more time had to be spent on coordination and Bank supervision\. At this point, the changes in location of the various government agencies appear to have concluded and there is a more stable flow of communication among all participating agencies involved in the water sector in Kazakhstan\. 5\.3 Factors generally subject to implementing agency control: The time and costs involved in preparing an addendum to the contract with the intemational technical, assistant consultant could have been saved if the implementing agency had recognized the need for review and upgrading of the available engineering designs, which were already several years old\. As this was not done, substantial upgrading based on additional field surveys and other associated activities, resulted in increased costs\. The award of the works contract to China Geoengineering, the lowest bidder took some time, partly because the price was above the estimated costs, and partly due to the set up of a mechanism to finance the counterpart contribution to the project\. 5\.4 Costs andfinancing: The final project cost was US$7\.93 million in different categories as shown in Appendix 2\. The changes in the costs of the various components and categories have been explained in previous sections of this report\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The strategic choice to prepare a pilot project focused only on the first steps of the institutional change of the two water utilities to leam key lessons and demonstrate some initial activities in a short time, while - 13 -  leaving the more difficult sectoral and institutional reforms for the full-scale project\. Therefore, the sustainability of the pilot project investments is directly linked to the implementation of the follow-up project\. The SAR for the pilot project identifies key areas to strengthen the institutional capacity for the management, operation and financial performance of the regional water supply and sanitation utilities\. Some of the key challenges faced by the utilities and that would affect the sustainability of the investments include: (i) poor financial viability of the water utilities; (ii) lack of an appropriate institutional and regulatory framework; (iii) weak staff capacity in modem utility management\. Although these issues were beyond the objectives of the pilot project, the project created some desirable conditions for the next phase\. The Bank carried out both a financial and an institutional analysis of the Aralsk and Novokazalinsk vodocanals, and facilitated conversion of their accounting systems to intemational standards\. The Bank also disseminated basic concepts and directions for a water sector reform, which has laid the early foundation and capacity for improved management of the sector\. As preparations for the full-scale project are going on with the support of donors, Sustainability is rated as Likely\. The Bank should continue to review progress of preparation and implementation of the full-scale project as part of its involvement in the water supply sector in Kazakhstan\. 6\.2 Transition arrangement to regular operations: All the project activities have been fully integrated into the operational structures of the two water utilities and the arrangements for incorporation into their regular operations have been completed\. Previous sections of this report present information on the current status of operations and benefits to the water users\. Preparation of the full-scale project is on-going\. KfW and the Kuwait Fund have offered financing for a total amount of about US$30 million with much better financial terms than those of the Bank\. At the same time, the Government as well as the two donors have requested the Bank, at the time of project closing, to maintain its presence in the full scale project specifically to assist in the institutional and financial policy changes that are required to make the vodocanals more financially independent\. Given that the required financing for such activity is very small, the Bank project team has recommended to the Country Director to finance these two activities through various Trust Funds (in particular German and Dutch)\. This approach was accepted and the planned full-scale project has been dropped from the lending program\. Nevertheless, the Bank's support to the pilot project was kept open for one additional year (i\.e\. until end FY 2001) to allow the Bank to provide additional support\. Kuwait Fund has approved the financing for the Aralsk water supply component, and they have tendered for construction bids\. KfW, which will finance the Novokazalinsk water supply component, has appraised the project, but in a somewhat smaller scale than originally envisaged under the feasibility study\. The TOR for two key institutional studies are: (i) options for institutional structure to improve the management and operation of the water supply systems in Kzylorda region; (ii) financial assessment of the water utility and recommendations on a tariff setting policy are currently being reviewed by the Government (MOF, CWR and Kzylorda Regional Authorities)\. 7\. Bank and Borrower Performance Bank 7\. 1 Lending: Project identification, preparation and appraisal were carried out by the Bank in accordance with the Government's strategy and priorities for the sector and the Aral Sea region\. The Kazakhstan Aral Sea Community Rehabilitation Project was included as a part of Aral Sea Action Program\. The Bank's - 14 -  visibility in the Aral Sea Program was very high and this project in Kazakhstan received high priority\. Project identification, however, took a long time (over 2 years), during which the project concept as well as the responsible Task Managers from the Bank were changed several times\. Initially the project was designed as a two phase project with both urban and rural water components\. The Bank missions found that due to inadequate funding, deficient construction standards and materials, and harsh climatic conditions, the construction activities implemented earlier in the project area were in a highly deteriorated condition with high levels of leakage and water losses\. The idea behind the two-phase project was to finance the high priority components of the existing water supply scheme in the first phase, including coverage of villages without altemative water supplies, pilot programs focusing on upgrading and expansion of urban distribution systems, and rehabilitation and completion of pumping stations\. Phase II would expand the geographic scope of the project and would focus on institutional strengthening and cost recovery aspects\. As project preparation continued, several other components were proposed, such as sanitation, hygiene and public awareness, income-generating activities, and capacity building\. The project design became more complicated and the needs were critical for portions of the population\. In order to provide immediate relief to some of the most adversely affected communities, it was decided to accelerate the investment program by means of a fast processing engineering loan to implement several pilot water supply projects\. The main shortcoming of the Bank's project preparation process was that it relied on the Government's existing masterplan for water supply to the region, and looked for which parts of the system to invest in, rather than assessing the soundness of the overall regional water supply strategy\. In addition, as intemational attention focused on the Aral Sea disaster and agriculture declined in the post independence period, large scale diversions of Syr Darya River water for cotton production were cut down significantly, resulting in recovery of flows and water quality in the river\. This presented a totally different scenario with respect to water supply to the two main cities\. A comprehensive review of the overall system from the beginning may have resulted in different solutions\. In summary, Bank performance during lending is rated as marginally satisfactory\. 7\.2 Supervision: Bank performance during supervision is rated as satisfactory\. A greater degree of supervision was needed from the Bank side for several reasons: (i) this was the first project in the sector, (ii) the implementing agency was not experienced in Bank procedures; (iii) there were many govenmmental changes, the national capital was relocated, and the Water Committee was relocated and transferred to another Ministry, and this required renewed dialogue with the new partners and more intensive coordination; and (iv) there were lengthy negotiations on the scope and financing of the full scale project\. Combining the preparation and supervision missions for severai projects, more frequent missions, and a consistent team from project effectiveness to closing enabled the Bank to meet the project's supervision needs and achieve satisfactory outputs\. 7\.3 Overall Bank performance: Overall Bank performance is rated as satisfactory\. - 15 -  Borrower 7\.4 Preparation: Borrower performance during preparation is rated as satisfactory\. Coming from the Former Soviet Unit mind set, devising a huge gigantic water supply scheme without consideration of the economics was not unusual for the Borrower and it could not be expected that the Water Committee or the regional authorities would question the existing water supply strategy\. Despite their lack of experience working with the Bank, the Borrower performed very well in terms of involving different stakeholders in the project design and preparation process\. The SDI which had prepared the masterplan for the region, the regional authorities and the concemed water utilities were involved in the project from the beginning\. However, the concept of a participatory process was totally new for the Borrower and a highly effective social assessment was carried out during project preparation which allowed the local communities to participate and contribute significantly to project development\. In a sense, the Borrower welcomed very much the Bank investment which came after several missions and studies by different donors on the problems of the Aral Sea\. 7\.5 Government iniplementation performance: Government implementation performance was satisfactory\. The Governmental decree giving legal status to the PIU was issued in time so that the project could go to the Board\. After some initial delays, the Government deposited in the Special Account the counterpart funds of USS20,000, which was a condition of Loan effectiveness\. The Government also waived the VAT on the works contract in lieu of its 20% contribution\. According to the SAR, the project was expected to be disbursed within a period of four years, with a project completion date of June 30, 2001, and a loan closing date of December 31, 2001\. The project has been completed on time\. 7\.6 Implementing Agency: Performance of the Water Committee and the PIU during the implementation of the project is rated as satisfactory\. The works involved were quite simple and straightforward, and support was available from the project management and design consultant\. PIUs were set up both in Almaty and Kzylorda to oversee the implementation of the project\. Both PIUs were adequately staffed and implemented the project satisfactorily, while going through a significant learning curve as each contract was prepared and executed\. The international consultants assisted the PIUs with preparation of tender documents and construction supervision\. 7\.7 Overall Borrower performance: Overall Borrower performance was fully satisfactory\. Preparation and implementation of the investment component was highly satisfactory\. Exclusion of the Aral-Novokazalinsk main pipeline from the full scale project was a difficult issue on which the Borrower was successful in bringing about an agreement amongst all of the stakeholders and carrying the project forward\. 8\. Lessons Learned The main lessons leamed from the design and implementation of the project are the following: 8\.1 Benefits from piloting done over a relatively long implementation period, with the objective of gaining experience in operational methodologies, may be marginal, particularly where Bank supervision and support by project management are adequate\. Although the Borrower did not have any experience with Bank procedures, implementation of the pilot did not constitute a significant problem since Bank - 16-  supervision and support provided by the project management and design consultant were quite adequate\. If the project preparation process had included a clear regional water strategy, perhaps a larger project could have been implemented in this time frame\. 8\.2 Where a pilot is to be implemented as a first phase, it is important to focus it on activities that would be indispensable under a variety of future conditions\. The feasibility study for the full scale project brought out many issues with respect to economic feasibility of the ASWSS, the water supply and health situation in the rural areas, and the state of the Syr Darya River, that had significant implications to project design\. It was also later apparent that in terms of benefits to the population, the investments under the pilot could have been better designed to bring about maximum gains and benefit the worst affected population\. 8\.3 Implementation of investments under the pilot, without sufficient consideration of financial issues such as cost recovery, and associated institutional issues, can affect the sustainability of the investments\. Although the project objectives include gaining experience on cost recovery aspects, the delays in initiation of the full scale project mean that the financial situation continues for the water utilities continues to be very difficult\. On the institutional side, the focus was entirely on building the capacity of the Water Committee and the PIU in Bank procedures and project management, and not so much on building the capacity of the concemed water utilities in Operation and Management (O&M) of the water supply systems\. Although this issue was raised at the time of the decision meeting, given the capacity of the implementing agency and the Bank knowledge of the sector at the time, the project went forward with the piloting approach leaving the issue of utility reform for later\. 8\.4 Where project components or designs are to be based on existing masterplans or studies, especially where there is a significant time lag, it is important to allow for the possibility of significant modifications to the designs, in view of changing conditions\. This would require appropriate increases in terms of both time required and cost estimates\. The project relied on designs that had been prepared by the SDI in 1989\. Although an international consultant was brought in to review these designs, there was no provision made in their contract for what should be done in case the review process brought out the need for some changes\. As it happened, it was found that the ground conditions in the field had changed since the designs were prepared and additional surveys were needed before the designs would be updated\. 9\. Partner Comments (a) Borrower/implementing agency: The Committee for Water Resources provided comments on the ICR on June 26, 2002 (a copy of the comments is in the Project Files)\. In the comments, the Borrower agrees with the evaluation of implementation of project activities\. The Borrower considers that the ICR has detailed description of all activities related to preparation and implementation of the given project, and therefore, this document is very valuable as informational and analytical material\. In spite of some insignificant changes, in general, all project components were accomplished in the course of project implementation based on the earlier agreed work schedule\. The Borrower shares the Bank's opinion that the experience gained while implementing Pilot Water Supply Project in Kyzylorda Oblast enhanced the capacities of the CWR with regard to management and coordination of 5 projects for Kazakhstan water sector financed by the World Bank\. Currently the Committee launched implementation of the 1st phase of full-scaled water supply project in Kyzylorda oblast out of loan provided by Kuwait Fund and grant funds of KfW (German Bank)\. As noticed by the ICR, regardless of the delays during the preparation period, the Pilot Project was implemented in time and was awarded a positive evaluation from the State Acceptance Commission\. (b) Cofinanciers: - 17-  (c) Other partners (NGOs/private sector): 10\. Additional Information A\. Sanitation and Health Pilot: A sanitation and health pilot project financed by PHRD grant funds was also implemented in the project area as part of preparation of the full scale project\. The project included health and hygiene awareness programs, and construction of a limited number of latrines in schools and private homes for demonstration purposes\. The stakeholder seminars to discuss the results were organized in Aralsk, Novokazalisk, Kzylorda, and Almaty during August and September 2000\. - 18 -  Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: lr;, - at'x \. n ioec, ae- inlasP SR ' , ' \.9 -,-JActuaULatestZsrtimate\. 1\. Counterpart funding equivalent to 20% of Not mentioned in PSRs VAT was waived in lieu of counterpart funds - the works contract\. outcome achieved 2\. Bank loan funds of US$7\.0 million\. Not mentioned in PSRs Outcome achieved 3\. A water supply pumping station and Not mentioned in PSRs Outcome achieved reservoirs and partial rehabilitation of pipeline and secondary distribution networks\. 4\. Improved piped water supply for about Not mentioned in PSRs No real estimates of affected population 30,000 people living in the project area\. available 5\. Improved health and economic conditions Not mentioned in PSRs No real estimate of affected population for 30,000 people in the project area\. available Output Indicators: Indic-atorlMatrix: - Projected,inllastPSIR Li AtalLteit tifmate\. - No indicators proposed End of project - 19 -  Annex 2\. Project Costs and Financing Project Cost by Component (in USS million equivalent) \.,Appraisal Actual/Latest Percentage of ,,, , ,, v __________ _,-__,,,__!"__ §' *,E\., ' - , -,- ,, ,stimate- - - isiimate -Apraisal Piroject Cost'By Component- U -S$-li6n US$-n i7lion - , Water Supply Investment Costs 7\.99 7\.22 Technical Assistance: 0\.37 0\.60 Pilot Project Engineering Project Implementation Unit 0\.36 0\.11 Total Baseline Cost 8\.72 7\.93 Total Project Costs 8\.72 7\.93 Total Financing Required 8\.72 7\.93 This table corrects some arithmetic errors presented in the SAR and includes all taxes for consistency of presentation\. Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) - - ~~~~Procurement--Method Expenditure Category ICB C ' - the N\.B\.F\. Total Cost 1\. Works 7\.99 0\.00 0\.00 0\.00 7\.99 (6\.27) (0\.00) (0\.00) (0\.00) (6\.27) 2\. Goods 0\.00 0\.00 0\.05 0\.00 0\.05 (0\.00) (0\.00) (0\.05) (0\.00) (0\.05) 3\. Services 0\.00 0\.00 0\.68 0\.00 0\.68 (0\.00) (0\.00) (0\.68) (0\.00) (0\.68) Total 7\.99 0\.00 0\.73 0\.00 8\.72 (6\.27) (0\.00) (0\.73) (0\.00) (7\.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) , z -- ; ' , ' ~~~~ Procurement,- Meitfio-d'- - :>- Expenditure Categor - -;-- , B P - N-\.B\.F\. - Total Cost - , ;\. ,, ,, L --,, , '- ', - Other, -- 1\. Works 7\.22 0\.00 0\.00 0\.00 7\.22 \._______________________ (5\.77) (0\.00) (0\.00) (0\.00) (5\.77) 2\. Goods 0\.00 0\.00 0\.04 0\.00 0\.04 (0\.00) (0\.00) (0\.04) (0\.00) (0\.04) 3\. Services 0\.00 0\.00 0\.67 0\.00 0\.67 (0\.00) (0\.00) (0\.67) (0\.00) (0\.67) Total 7\.22 0\.00 0\.71 0\.00 7\.93 (5\.77) (0\.00) (0\.71) (0\.00) (6\.48) 'Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2' Includes civil works and goods to be procured through national shopping\. consulting services, services of contracted staff of the project management office, training\. technical assistance services, and incremental operating costs related to (i) 20 -  managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) - - -~r: - K\.>s ~r-~ Pe~ |'rcentage of Appraisal\. C-omnponent: I =? > ' 'c\.LA,pprais ti , -- ateit'Esb a - -- - BanY, *v\.7 C\.>\. Bank ,~a 61F\. Bank Go t\. 6B' Works 6\.27 1\.72 0\.00 5\.77 1\.44 0\.00 92\.0 83\.7 0\.0 Goods 0\.05 0\.00 0\.04 0\.00 80\.0 0\.0 Services 0\.68 0\.00 0\.67 0\.00 98\.5 0\.0 Total 7\.00 1\.72 6\.48 1\.44 92\.6 83\.7 Cancellations 0\.52 -21 -  Annex 3\. Economic Costs and Benefits An economic analysis was not done for the ICR due to several reasons, including lack of adequate monitoring and field data to measures project outcomes before and after completion\. For further details, see Sections 4\.3 and 4\.4 in the main text\. - 22 -  Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 11/10/95 Appraisal/Negotiation 07/15/96 Supervision 12/15/97 4 1 Sr\. Water & Sanitation S S Specialist, I Environmental Specialist, I Technical Consultant, I Procurement Specialist 2/23/98 7 1 Sr\. Water & Sanitation S S Specialist, I Environmental Specialist, I Technical Consultant, I Procurement Specialist, I [Wilczynsji], I [Ruslan Manishev], 1 [Serikjan Manbetain] 9/21/98 9 1 Sr\. Water & Sanitation Specialist, I Environmental Specialist, I Technical Consultant, I Procurement Specialist, I Urban Specialist, 2 Consultants, I [Ruslan Manishev], I [Serikjan Manbetain] 2/16/99 4 1 Sr\. Water & Sanitation S S Specialist, I Environmental Specialist, I Technical Consultant, I Procurement Specialist 5/10/00 2 1 Economist, I Engineer S S 11/28/00 4 2 Sr\. Water & Sanitation S S Specialist, I Environmental Specialist, I Technical Consultant ICR (b) Staff: Stage of Project Cycle ! Actual/Latest Estimate - 23  ____ __ _ No\. Staff weeks US$ ('000) Identification/Preparation Appraisal/Negotiation 134\.1 Supervision 22\.89 199\.0 ICR Total 22\.89 353\.1 - 24 -  Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating [ Macro policies O H OSUOM O N * NA LI Sector Policies O H OSUOM O N * NA * Physical O H *SUOM O N O NA O Financial O H OSUOM ON * NA O Institutional Development 0 H O SU *M 0 N 0 NA O Environmental O H *SUOM O N O NA Social O Poverty Reduction O H OSUOM O N * NA LIi Gender O H OSUOM O N * NA O7 Other (Please specify) 0 H OSUOM O N * NA O Private sector development 0 H O SU O M 0 N * NA Ol Public sector management 0 H O SU O M 0 N * NA LO1 Other (Please specify) O H OSUOM O N * NA - 25 -  Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating • Lending OHS*S OU OHU • Supervision OHS OS O U O HU I Overall OHS OS 0 U O HU 6\.2 Borrower performance Rating J Preparation OHS OS O U O HU ? Government implementation performance O HS O S O U 0 HU J Implementation agency performance OHS OS OU O HU 0 Overall OHS OS OU O HU - 26 -  Annex 7\. List of Supporting Documents 1\. Memorandum & Recommendation of the President No\. P6968 2\. Staff Appraisal Report (Report No\. 15867-KZ) 3\. Loan Agreement No 4129-KZ 4\. Supervision Reports 5\. Project Audits 6\. Feasibility Study for Aral Sea Program 5, Project 3, Final Report, December 1997 (Gibb) - 27 -    IMAGING Report No\.: 24426 Type: ICR

REVIEW

P036087

 ICRR 11376 Report Number : ICRR11376 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 08/19/2002 PROJ ID : P036087 Appraisal Actual Project Name : Lb-power Sect\. Restruct Project Costs 445 407 US$M ) (US$M) Country : Lebanon Loan /Credit (US$M) Loan/ US$M ) 65 54 Sector (s): Board: EMT - Power (98%), Cofinancing 430 391 Central government US$M ) (US$M) administration (2%) L/C Number : L4112; LB109 Board Approval 96 FY ) (FY) Partners involved : European Investment Closing Date 06/30/2003 01/09/2002 Bank, Islamic Development Bank, French Protocol, Commercial Banks Prepared by : Reviewed by : Group Manager : Group : Robert C\. Varley Fernando Manibog Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The objectives in the Loan Agreement were to : - 1\. Expand the high voltage transmission system; and 2\. Establish an enabling environment for private sector involvement in the power sector including the institutional restructuring of the sector \. b\. Components At closure the project had not been physically completed and the total project costs (excluding interest during construction) of $ 407 million comprised: - 1\. Transmission Lines (22%) 2\. Underground Cables (27%) 3\. Substations (48%) 4\. Technical Assistance (3%) c\. Comments on Project Cost, Financing and Dates The project implementing agency was Electricit é du Liban (EdL\.) Project financing included a Bank guaranteed $100 million bond issue\. In addition to funding from other donors, including Islamic Development Bank, European Investment Bank and French Protocol, buyer's credits were provided by the transmission line contractor for $ 130 million, and the government was to provide $ 56 million equivalent for rights-of-way acquisition\. The loan was closed in January 2002, with $11 million undisbursed\. 3\. Achievement of Relevant Objectives: 1\. Since all components must be completed for it to be fully functional this objective has not been achieved \. Of the physical components the high voltage transmission system was 80% physically completed and unlikely to be fully completed until 2005\. Portions of the overhead transmission lines were not completed due to delays in the acquisition of rights-of-way\. Contracts for the two substations, which are not likely to be completed until 2005, had not been awarded\. 2\. None of the project's agreed institutional reforms, which were considered essential for the achievement of the project's development objectives, have been implemented \. EdL remains institutionally and financially weak, physical losses have increased and financial performance deteriorated \. None of the financial covenants have been met\. Progress at involving the private sector has been negligible \. Since 1997 both implementation performance and development objectives were rated as unsatisfactory \. The estimated ERR at appraisal, based on a time slice of a complete investment program was 17%\. No estimate could be given in the ICR as the idealized program has not been implemented \. The failure of the project has led to losses of 300MW of power that could have been produced by combined cycle power plants at no additional fuel or capital costs\. The ERR is almost certainly highly negative \. 4\. Significant Outcomes/Impacts: If and when they are completed, the lines and substations could marginally improve the efficiency and power transfer capability, but full benefits will only be achieved if it is integrated with the rest of the power system, and complementary investments are made in medium and low voltage networks \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): 1\. The Bank should have insisted on upfront actions on restructuring the power sector \. The timing of project preparation and approval seems to have been driven by the requirements of the bond issue \. The Bank is still legally responsible for ensuring that the undisbursed bond balance is used in a financially prudent manner \. 2\. Sectoral reform went nowhere and none of the agreed actions were implemented by Government and the EdL \. No progress was ever made on critical financial issues including those related to billings, collections and electricity loss reductions \. 3\. Although the issue of cancellation in view of the poor prospects of achieving project objectives had been cited by QAG in 1998, and subsequently repeated by the task team, no management action was taken for the next 3 years\. 4\. The financial management performance of EdL was abysmal - the Finance Department was not even able to reconcile its account balances in the forty or so banks in which it held cash accounts \. Edl is still unable to close its books in a reasonable time period, and the Auditors have been unable to provide an opinion on the validity of the accounts\. 5\. Little account was taken of the difficulties of land acquisition - landowners were not informed and compensation was unsatisfactory\. This had bad reputational effects on EdL, the Government and the Bank, and the process was not managed competently by any of these implementing parties \. 6\. Attempts at internal reform through use of consultants in a Co -Management Team were delayed and when implemented the consultants were not given the power or access to information necessary for their effectiveness\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Highly Unsatisfactory Highly Unsatisfactory Institutional Dev \.: Negligible Negligible Sustainability : Highly Unlikely Highly Unlikely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Highly Unsatisfactory Highly Unsatisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: The project confirmed lessons that have already been learned from experience in other client countries : - 1\. Hard political decisions, tariff increases and enabling legislation need to be implemented before the Bank commits substantial funds for infrastructure upgrading \. 2\. Technology issues need to be reviewed and resolved before Board presentation \. 3\. Sustained attention needs to be paid to resolving systemic institutional financial accounting problems when these problems impact the integrity of the financial auditing process \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: Satisfactory\. This was an intensive learning ICR \.

REVIEW

P001776

 ICRR 10515 Report Number : ICRR10515 ICR Review Operations Evaluation Department 1\. Project Data : OEDID : OEDID: C2200 Project ID : P001776 Project Name : Second Education Project Country : Mozambique Sector : Primary Education L/C Number : C2200 Partners involved : UNDP Prepared by : Helen Abadzi, OEDST Reviewed by : George T\. K\. Pitman Group Manager : Gregory Ingram Date Posted : 08/19/1999 2\. Project Objectives, Financing, Costs and Components : Objectives were to: (a) improve the quality and efficiency of primary education through financing of pre-service and in-service training of teachers; providing them with pedagogical support; introduction of distance education as a future means of teacher training; rehabilitation and expansion of schools in Maputo, Dondo, Beria and Nacala; and introduction of five new initiatives to enhance effective learning such as local language instruction, student achievement testing, support for flooding classrooms with reading materials, testing extramural programs, and student health interventions; (b) improve the quality and efficiency of the University Eduardo Mondlan e to address critical areas of manpower shortage in Mozambique, especially in enhancing the university's capacity for strategic management and long-range planning, and strengthening the teaching of physical sciences, engineering and economics; (c) strengthen the management of the education sector, particularly the Ministry of Education's ability to address financial monitoring and contro l, school construction and maintenance capacity \. The credit was restructured mid-way and amended to include teacher training and technical training for demobilized soldiers \. Financing : The project financed civil works, training, technical assistance, equipment, and educational materials at a time the country was recovering from a civil war \. Total project cost was US$58\.9 million, and UNDP cofinancing was US$4\.7 The project was approved in 1990 and closed in December 1998; a balance of US$1\.3 million was cancelled\. 3\. Achievement of Relevant Objectives : Despite some delays and problems, overall objectives were achieved \. Several teacher training activities were carried out, which were to help improve the quality and efficiency of instructional delivery in schools \. A distance education program for teachers was launched, and the primary school network was completely rebuilt and rehabilitated to pre-war levels\. Most quality initiatives were also completed, albeit with delays; 4\.3 million textbooks were procured for grades 3-7, though procurement disputes delayed delivery \. The quality of the learning environment at the university improved through the rehabilitation an d refurbishing of basic science, engineering, and economics faculties\. 4\. Significant Achievements : The project helped meet the chnages in the demand for education and need for access to schools during the post-war period, when there were many displaced families, returning refugees and demobilized soldiers, and a lack of teachers and usable buildings \. The project also significantly contributed to an improved donor coordination by helping the government launch its 10-year educaiton development plan and strategic programs in 1999-2000\. A pilot on school health was successfully implemented through a national NGO \. An educational statistics system was developed for the Ministry of education \. 5\. Significant Shortcomings : Appraisal did not take into account the lack of implementation capacity and coordination among implementing agencies\. There was limited political commitment to the project at times, which created extra difficulties in the post-war implementation environment\. Bank conditionalities also exacerbated delays \. Though the Bank supervised the project intensely, it did not provide timely advice on important procurement matters, which created lengthy delays\. The Ministry of Education was not strengthened institutionally, as envisaged \. Staff shortages and lack of familiarity with IDA procurement rules critically impeded implementation \. Government will continue to rely on external financing to support its educaitonal system \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Partial Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : - To ensure impact on learning outcomes, project activities should be implemented through line Ministries rather than independent project implementation units \. - The Bank must be responsive and flexible in changing project design and allocation of funds according to the evolving needs of a country \. Implementation capacity must often be reassessed when political conditions are difficult\. - Cross conditionalities used in projects are difficult to manage if the Bnak is not a party to an agreement or in the absence of sector-wide agreements and plans with partners \. 8\. Audit Recommended? Yes No Why? The project did better than expected under difficult circumstances \. 9\. Comments on Quality of ICR : It was clear and described project issues in detail \.

REVIEW

P072394

 ICRR 13185 Report Number : ICRR13185 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 03/04/2010 PROJ ID : P072394 Appraisal Actual Project Name : Energy Transit US$M ): Project Costs (US$M): 12\.3 13\.1 Institution Building Project Country : Georgia Loan/ US$M): Loan /Credit (US$M): 9\.6 11\.4 Sector Board : EMT Cofinancing (US$M): US$M ): Sector (s): Central government administration (62%) Oil and gas (29%) Law and justice (9%) Theme (s): Pollution management and environmental health (29% - P) Environmental policies and institutions (29% - P) Other trade and integration (28% - P) Other rule of law (14% - S) L/C Number : C3473 Board Approval Date : 03/13/2001 Partners involved : Closing Date : 07/31/2005 08/31/2008 Evaluator : Panel Reviewer : Group Manager : Group : Robert Mark Lacey Fernando Manibog IEGSE ICR Reviews IEGSE 2\. Project Objectives and Components: a\. Objectives: The project development objective, according to the Development Credit Agreement (DCA), was to enhance Georgia's capacity to negotiate and implement oil and gas agreements in a manner that maximizes economic benefits, and minimizes social and environmental costs \. The wording in the PAD is identical\. The agreements would concern principally hydrocarbon transit by pipeline, benefiting from Georgia's geographic situation \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The project had five components : (a) Environmental and Technical Advice for Pipeline Implementation (US$8\.4 million at appraisal, US$10\.2 million at closure) to finance consultancy services for reviewing environmental and social impacts, permits, compliance monitoring and public outreach, as well as capacity building and the provision of advisers for negotiations \. (b) Legal Advice for Pipeline Implementation (US$1\.0 million at appraisal, US$0\.2 million at closure) to finance specialized legal services to advise on issues arising during pipeline construction and operation, including the revision, where appropriate, of Georgian legislation \. (c) Annual Company Audits at international standards for the Georgian Gas International Corporation (GIC) and Georgian International Oil Corporation (GIOC) (US$0\.2 million at appraisal, US$0\.1 million at closure); the credit would finance part of the cost of the audits in the first year of the project only (in March 2006, GIC and GIOC, together with the oil exploration company Saqnavtobi, were merged into the Georgia Oil and Gas Corporation (GOGC) which became their legal successor )\. (d) Non-pipeline Oil Spill Prevention and Mitigation (US$1\.1 million at appraisal, US$1\.8 million at closure) to finance specialist equipment, consultancy services and training to facilitate spill response, monitoring and enforcement by the Ministry of the Environment\. (e) Project implementation (US$0\.5 million at appraisal, US$0\.7 million at closure) to fund operations and capacity building in the already existing Project Implementation Unit (PIU), which was also responsible for managing the implementation of other ongoing Bank -supported projects (Structural reform and Judicial Reform)\. The main beneficiaries of the project are the public entities involved in gas and oil transit and in related environmental protection\. They include notably the Ministry of the Environment, GIOC, and GIC (later merged into GOGC)\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The depreciation of the US dollar against the SDR enabled savings of about US$ 4 million (SDR 2\.5 million)\. These were used to finance an additional environmental adviser and to procure gas flow monitoring equipment \. The closing date was extended three times : first, to allow use of undisbursed funds and continuation of environmental advisory services; second, to complete the mapping of the gas pipeline and procure spill response equipment; and third, to procure gas flow monitoring equipment \. The expenditure of only 20% of the appraisal estimate for the legal advice component, often a key element of the Bank's value added, was caused by the cancelation of one of the two legal expert's input since the Bank and the Borrower could not agree on the scope and duration of the work, and a reduction in the other's contribution due to suspension of negotiations between the two interested parties\. 3\. Relevance of Objectives & Design: The project's development objectives are highly relevant\. They respond directly to the Government's policy priority to maximize the benefits accruing to Georgia from oil and gas transit \. The income generated from this transit, and from related activities, is the main source of government revenue \. The objectives are also relevant to the Bank's strategy for Georgia as expressed in the 1998, 2001 and current CASs with their respective emphases on strengthening public finance, protection of natural resources and the environment, building capacity to manage transit as one the country's major assets, and generation of growth and employment \. Project design drew on the lessons from earlier operations in Georgia, including in the oil and gas sector \. Through extensive consultations with potential beneficiary organizations, the design team attempted to ensure that the essential preconditions were present to enable Georgia to benefit from the technical assistance on offer through the project\. Major institutional risks that could have undermined project benefits were, thanks to previous experience in the country, correctly identified and mitigated \. These included in particular the danger of disputes and lack of adequate coordination among the considerable number of entities involved in oil and gas transit in Georgia, some of which were to share the same consultancy services \. Rather than relying on the PIU to engage with these highly political problems, the Bank proposed, at the design stage, the establishment of a high -level Steering Committee (SC) headed by the Minister of Finance, to facilitate coordination \. This was appropriate and accepted by the Authorities\. However, issues arose during implementation regarding the respective roles of the PIU and SC, and from the high-level composition of the latter (for example, scheduling meetings proved difficult since all participants had to be personally present; also, each time a new Minister was appointed, her /his membership of the SC had to be approved by Presidential decree )\. Some of these problems could have been foreseen at the design stage \. The relevance of project design is rated as substantial , and the relevance rating for objectives and design taken together is substantial \. 4\. Achievement of Objectives (Efficacy): The project's development objective -- enhancement of Georgia's capacity to negotiate and implement oil and gas agreements in a manner that maximizes economic benefits, and minimizes social and environmental costs -- has been modestly achieved\. On the positive side, important progress has been made in strengthening the Government ’ s capacity to monitor pipeline construction and post -construction operations, and to implement Host Government Agreements (HGAs) that were already in existence for oil, and under negotiation for gas, before the project began \. The project also helped to ensure appropriate construction standards for pipelines and related facilities and a redefinition of Georgia's role, both as a transit country and as a buyer of transited gas at favorable prices \. Project pipeline construction is governed by the Environmental and Social Impact Assessments financed by the project \. There were, nonetheless, two important areas where project achievement by closure was less than had been anticipated\. First, GOGC has still not been successfully audited to international standards \. An audit was carried out of GIC and GIOC in 2006, prior to the merger of the two companies into GOGC \. GIC received an auditor's disclaimer since its assets were not properly inventoried or valued according to international standards \. The company made some progress in addressing this issue and in moving towards international accounting standards \. This was, however, insufficient, and, following the merger, GOGC contracted international consultants to inventory and value assets according to international standards \. The completion of this task, expected in 2009, has been delayed, apparently because of complexities arising from the merger \. The failure, to date, to achieve international auditing standards could well militate against Georgia ’s ability to negotiate international transit agreements that optimize the benefits to its economy\. Second, although a national marine and land -based Oil Spill Response Plan (OSRP) has been finalized at the technical level with the help of project -financed advisors, and adequately equipped organizations established for spill response management, the Plan has still not been approved or formally adopted by the Government\. This was explained by constant changes in government structure and in the agencies responsible for oil spill, which required frequent amendments to the OSRP \. Although the Bank continued financing oil spill equipment in order to ensure at least a basic level of readiness to deal with a spill should it occur, the absence of a formally approved plan carries risks and could undermine the achievement of the objective of minimizing environmental costs\. 5\. Efficiency (not applicable to DPLs): As this was a technical assistance operation, there was no rate of return calculation, and insufficient information was provided in the ICR to enable an assessment of efficiency according to other criteria \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: With relevance substantial and efficacy modest, the IEG rating for project outcome is moderately satisfactory \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: There are three significant risks to development outcome \. The first and main one stems from regional instability \. The armed conflict of August 2008 caused no direct damage to pipeline or other transit infrastructure, but operations by both pipeline and rail had to be suspended \. The second -- that of inability to respond adequately to oil spills -- remains active so long as the Government fails to adopt formally and regularly update an OSRP \. The third -- doubts arising from the lack of an unqualified audit of GOGC -- may undermine Georgia’s negotiating capacity\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: Design was technically sound, the level and extent of consultation appropriate and the lessons from previous institution-building operations in Georgia were learnt and applied \. A number of risks were identified and mitigated; the three that materialized -- armed conflict, inability to achieve international accounting standards, and the failure to adopt formally an OSR -- were not foreseen, but they would have been very difficult to predict at the time of preparation\. Although the idea of the SC as a coordinating body was a good one, more careful preparation could have alleviated some of the difficulties that arose from the SC ’s composition and its working relationship with the PIU\. The project came too late to influence some significant decisions -- in particular the routing of the main transit pipeline had already been determined by the Georgian Government and Parliament early in 1999\. M&E design was modest (see Section 10 below)\. Quality at entry was moderately satisfactory \. This was a difficult project to supervise \. Considerable uncertainty always accompanies oil and gas pipeline projects, and in this case they were compounded by the large number of affected institutions, political turbulence both nationally and regionally, and frequent absence of consent and even trust among the beneficiaries \. Despite these challenges, the Bank team maintained cordial and productive relations with the beneficiaries and with the numerous other government institutions involved, and sometimes acted as an "honest broker\." The team was pro-active in resolving difficult issues in a timely manner \. Resources for supervision were adequate -- 15 missions took place over the seven year implementation period, and efficiency was enhanced by combining some of them with preparation of the Methane Leak Reduction project \. In addition, there were numerous informal contacts which resolved pending issues \. Task management was eventually delegated to the country office which enhanced interaction\. Although there were four task team leaders, continuity was assured by sector experts and the involvement of the country office \. Supervision was satisfactory \. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Moderately Satisfactory 9\. Assessment of Borrower Performance: The intensity of government interest in the project varied both in accordance with the level of the officials concerned, and over time\. During preparation, the Government was enthusiastic, pro -active and keen to receive technical assistance to bolster its negotiating capacity \. The first two years of implementation were the last two years before the "Rose Revolution" of 2003\. During this period, the Government largely maintained its commitment at a senior level, but progress was impeded by lack of ownership, experience and capacity among the lower ranks and by rivalry and weak coordination among the beneficiary institutions (see Section 3 above)\. Following the "Rose Revolution," the interest of senior officials waned as the need for technical assistance declined, but at the level of the directly benefiting institutions -- notably the Environment Ministry and the oil and gas companies -- enthusiasm and engagement grew along with their capacity \. The political changes associated with the "Rose Revolution" nevertheless caused serious delays during the project's later years \. Government performance is rated as moderately satisfactory \. Implementation was adversely affected in the initial stages by the refusal of the PIU to become pro -actively engaged with the project in view of the rivalries and poor coordination among the different entities involved \. Moreover, although the PIU had experience of previous Bank -financed projects, it did not possess all the expertise necessary for the oil and gas sectors The SC therefore became involved in operational decisions for which it was totally unsuited\. As implementation progressed, and the PIU's capacity increased, so did its confidence and active commitment \. Although the unit suffered from several changes of management, it succeeded in retaining its enhanced technical and administrative capacity, and in the later stages was performing satisfactorily\. Implementing agency performance is rated as moderately satisfactory , and IEG's rating for borrower performance as a whole is moderately satisfactory \. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Moderately Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: Annex 1 of the PAD contains a long list of performance indicators to monitor progress in project implementation \. However, these were not satisfactorily developed into a systematic set of measurable or quantifiable goals \. Output indicators, for instance, include "fulfillment of legal obligations" and "benefits realized and legislative amendments adopted\." The final column of the Annex table, initially called "critical assumptions" and then "from components to outputs," has indicators such as "good coordination between agencies " and "consultants are well managed\." The text of the PAD is better -- there it is stated that the project's success will be assessed with regard to five key performance indicators (expected benefits from transit agreements actually realized; compliance with legal agreements and Georgian legislation; audit reports published; actual examples of enforcement of liability legislation; and respect of inter-agency agreements), though even here it is unclear how all of these would be measured \. No specific institutional arrangements were made for M&E in the PAD, and no agency was given responsibility for it \. M&E design is rated as modest \. M&E implementation took place during supervision missions, through sector policy dialogue, and during supervision/preparation of other sector operations \. Key performance indicators were refined during implementation, and progress in achieving them was adequately monitored in mission aide -memoires and implementation status reports\. The situation at closure was also clearly set out in the ICR \. M&E implementation is rated as substantial \. While measuring progress in achieving project targets was largely the work of Bank staff, the capacity of Georgian institutions to monitor the construction and operation of oil and gas transit facilities, including their environmental and social impact, has been considerably enhanced as a result of the project \. M&E utilization is rated as substantial , and IEG's rating for overall M&E quality is also substantial \. a\. M&E Quality Rating : Substantial  11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): The project was classified as category C for the purposes of OP 4\.01; as it was a technical assistance operation funding principally advisory services, no environmental or social safeguards were triggered \. Financial monitoring was conducted in a complete and timely manner \. Annual project audits were issued mostly on time and were unqualified except for a relatively minor tax issue in 2006 which was addressed\. Procurement compliance was satisfactory \. 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately There are two unresolved issues – the Satisfactory GOGC has still not been successfully audited to international standards and the Oil Spill Response Plan has not been formally approved (please see Section 4)\. Risk to Development Moderate Significant Risks from armed conflict in the region, Outcome : as well as from the unresolved issues mentioned above, are significant \. Bank Performance : Satisfactory Moderately There were moderate design Satisfactory shortcomings (please see Sections 3 and 8 above)\. Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: While it is appropriate to establish a high level SC to facilitate coordination, especially where several institutions, among which there is a history of conflict, are involved, careful attention should be paid to the SC's internal working arrangements and its relationship to other implementing agencies \. Operational decisions should not be the job of the SC\. It is moreover, important to have a system of delegation in place should Ministerial level participants be unable always to attend, without thereby undermining the SC's authority \. Project preparation and appraisal should be timed in accordance with the client's requirements \. While the project was prepared with alacrity, the process was begun too late to advise on the critical issue of transit route selection\. Financing advisory services for negotiation of contracts in sectors such as oil and gas is delicate, since it is likely that experts will be well acquainted with each other and with members of the negotiating party on the industry side\. It is essential to build up a level of trust on the part of the Borrower that such acquaintanceships do not necessarily involve corruption nor undermine the objectivity of the advice given \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR contains the elements necessary to evaluate the project \. There are, nonetheless, four observations \. First, the relationship between this project and its predecessors (notably the Oil Institution Building Project ) is not adequately explained -- in particular, it should have been clearly pointed out that HGAs were either already in place or close to completion, and that the role of this project was to assist with their implementation \. In this sense, the statement in the Data Sheet that "no legal agreements dealing with transit issues existed [before the project]" is especially misleading\. Second, the discussion of relevance covers only objectives and not design and implementation\. Third, the reader is not provided with any information on the important issue of the project's timing with regard to route selection until the section on lessons learned \. Fourth, the Bank task team members for project preparation and appraisal are not listed in Annex 4\. a\.Quality of ICR Rating : Satisfactory

REVIEW

P111470

Document of The World Bank Report No: ICR00003509 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-92364) ON A GRANT IN THE AMOUNT OF US$40 MILLION TO THE REPUBLIC OF GUINEA FOR AN EDUCATION FOR ALL-FAST TRACK INITIATIVE PROJECT (FC-PSE) September 30, 2015 AFRICA Education Global Practice  CURRENCY EQUIVALENTS (Exchange Rate Effective September 29, 2015) Currency Unit =GNF (Guinean Franc) 1\.00 = US$ \.0001378 US$ 1\.00 = 7257\.45 GNF FISCAL YEAR ABBREVIATIONS AND ACRONYMS AFD French Development Agency (Agence Française de Développement) AfDB African Development Bank APL Adaptable Program Lending CAS Country Assistance Strategy CN/PSE National Coordination of the ESP (Coordination Nationale du PSE) DP Development Partner DRE Délégation Régionale de l’Education DSEE Pedagogic Delegate for Primary Education (Délégation Scolaire de l´Enseigement Elementaire) ECE Early Childhood Education EFA-FTI Education for All-Fast Track Initiative EMIS Education Management Information System ENI Teacher Training College (Ecole Normale des Instituteurs) ERRTF Ebola Recovery and Reconstruction Trust Fund ESA Annual Statistical Survey (Enquete Statistique Annuel) ESIA Environmental and Social Impact Assessment ESP Education Sector Plan (Programme sectoriel de l’éducation – PSE) EVD Ebola Virus Disease FC-PSE Pooled Fund (Fonds communautaire – Plan Sectoriel de l’éducation) FM Financial Management GDP Gross Domestic Product GER Gross Enrollment rate GIZ German Agency for International Development (Gesellschaft fur International Zusammernarbeit) formerly GTZ GPE Global Partnership for Education HR Human Resources ICR Implementation Completion and Results Report IDA International Development Association IRE Inspecteur régionale de l’éducation (Regional Education Inspectorate) ISR Implementation Status Report KfW Kreditanstalt für Wiederaufbau i KPI Key Performance Indicator M&E Monitoring and Evaluation MEPU-EC Ministry of Pre-University Education and Civic Education (Ministère de l’Enseignement Pré-Universitaire et de l’Education Civique) MOF Ministry of Finance MS Moderately Satisfactory MTEF Medium-Term Expenditure Framework MTR Mid-Term Review MU Moderately Unsatisfactory N/A Not Applicable NGO Non-Governmental Organization PAAB Annual budgetized action plans (Plans annuels d’activités budgétisés) PACV Programme d’Appui aux Communautés Villageoises PAD Project Appraisal Document PAREEG Program of Support to Primary School Improvement in Guinea (Projet d’Appui à la Rénovation Educative des Ecoles de Guinée) PCR Primary Completion Rate PCU Project Coordination Unit PDO Project Development Objective PEPT Education for All Program (Programme education pour tous) PRSP Poverty Reduction Strategy Paper QER Quality Enhancement Review QSA Quality of Supervision Assessment RF Results Framework SSA Sub-Saharan Africa TA Technical Assistance TTL Task Team Leader TVET Technical and Vocational Education and Training UNICEF United Nations Children’s Education Fund USAID United States Agency for International Development Regional Vice President: Makhtar Diop Senior Global Practice Director: Claudia Maria Costin Practice Manager: Peter Nicolas Materu Project Team Leader: Nathalie Lahire ICR Team Leader: Shobhana Sosale ii  REPUBLIC OF GUINEA EDUCATION FOR ALL-FAST TRACK INITIATIVE PROJECT (FC-PSE) CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 10 3\. Assessment of Outcomes \. 19 4\. Assessment of Risk to Development Outcome \. 29 5\. Assessment of Bank and Borrower Performance\. 29 6\. Lessons Learned\. 31 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 32 Annex 1\. Project Costs and Financing \. 33 Annex 2\. Outputs by Component \. 34 Annex 3\. Economic and Financial Analysis \. 45 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 51 Annex 5\. Beneficiary Survey Results \. 52 Annex 6\. Stakeholder Workshop Report and Results \. 53 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 54 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 71 Annex 9\. List of Supporting Documents \. 72 Annex 10\. Project Indicators\. 73 MAP iii A\. Basic Information Education For All-Fast Country: Guinea Project Name: Track Initiative Program Project ID: P111470 L/C/TF Number(s): TF-92364 ICR Date: 09/30/2015 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Grantee: GUINEA Original Total USD 117\.80M Disbursed Amount: USD 40\.00M Commitment: Revised Amount: USD 40\.00M Environmental Category: B Implementing Agencies: Ministry of Pre-University Education and Civic Education Cofinanciers and Other External Partners: Global Partnership for Education (GPE) Kreditanstalt für Wiederaufbau (KfW) Agence Française de Développement (AFD) B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 04/15/2008 Effectiveness: 08/15/2008 9/22/2011 08/25/2011 Appraisal: 04/25/2008 Restructuring(s): 12/11/2012 12/26//2013 Approval: 07/30/2008 Mid-term Review: 10/18/2012 11/15/2012 Closing: 08/31/2011 12/31/2014 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Grantee Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Moderately Satisfactory Unsatisfactory iv  Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Adult literacy/non-formal education 6 0 Primary education 38 75 Public administration- Education 18 10 Secondary education 26 5 Vocational training 12 10 Theme Code (as % of total Bank financing) Education for all 100 100 E\. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Ousmane Diagana Ishac Diwan Practice Peter Nicolas Materu Eva Jarawan Manager/Manager: Project Team Leader: Nathalie Lahire Michael Drabble ICR Team Leader: Shobhana Sosale ICR Primary Author: Shobhana Sosale Laura McDonald ICR Secondary Authors: Bernardo da Cruz Vasconcellos v F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the FC-PSE is to contribute to enhancing equitable access to and quality in education at all levels - with focus on primary education – and literacy training, while also strengthening central and de-concentrated management of the education system\.1 Revised Project Development Objectives (as approved by original approving authority) The objective of the Project, which is part of the Program, is to enhance equitable access to and quality of basic education, while also strengthening decentralized management of the education system, in the Recipient's territory\.2 This datasheet reports on all performance indicators included at the beginning of the Project and added under each of the Project restructurings\. See Annex 10 for a detailed and comprehensive overview of indicators and targets as well as their level of achievement over the life of the Project\. (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1: Access rate in first grade (girls) Value 77% 88% 84% 86\.1% quantitative or (TBD) (TBD) (40%) (81\.2%) Qualitative) Date achieved 05/31/2007 8/31/2011 12/31/2013 12/31/2014 Comments (incl\. % Target exceeded\. Under 2011 restructuring changed to intermediate-level\. achievement) Indicator 2: Gross enrollment rate (girls) in 9 targeted prefectures Value 47% 55% 51% 57% quantitative or (43%) (51%) (46%) (53%) Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Original indicator was “Gross Enrollment Rate (girls)” and (incl\. % was revised under 2011 restructuring to include only the nine targeted achievement) prefectures\. Indicator 3: Direct Project Beneficiaries (% female) Value 1,819,763 quantitative or 0 1,584,282 (48%) 1,870,408 (48%) (48%) Qualitative) Date achieved 7/22/2008 1/15/2013 12/26/2013 12/31/2014 1 According to the Grant Agreement, “The Project is part of the Recipient’s Program, which contributes to enhancing equitable access to and quality in education at all levels, with focus on primary education and literacy training, while also strengthening central and deconcentrated management of the education system\. 2 Grant Agreement (reinstated)\. September 22, 2011\. vi Comments Target exceeded\. A breakdown of beneficiaries by type can be found in Annex (incl\. % 10\. achievement) Girls’ success rate at the examination for entrance to 7th grade in 100 targeted Indicator 4: schools Value quantitative or 49% 63% 55% 71\.33% Qualitative) Date achieved 05/31/2009 01/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Original indicator was modified under 2011 restructuring from (incl\. % “Transition rate to lower secondary”\. achievement) Indicator 5: Students with a passing grade in French (grade 3) Value quantitative or 14\.25 Not specified 15\.5 15\.36 Qualitative) Date achieved 6/30/2012 1/31/2013 12/31/2014 12/31/2014 Target not achieved in full though significant progress was made under the Comments Project\. Original indicator was “Percent of students with a passing grade in (incl\. % French and Math (grade 4)” and was replaced in 2013 restructuring to allow for achievement) comparability over time\. Implementation of Annual Budgeted Action Plans (PAAB) at all decentralized Indicator 6: levels\. Value quantitative or 0% 90% 95% 100% Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Indicator added under 2011 restructuring\. (incl\. % achievement) Indicator 7: Ratio girls: boys in primary Value quantitative or 0\.83 0\.92 Dropped Dropped Qualitative) Date achieved 05/31/2007 8/31/2011 Comments Indicator dropped under 2011 restructuring\. Emphasis was given to lagging (incl\. % regions and, therefore, replaced by Gross enrollment rate (girls) in 9 targeted achievement) prefectures\. Indicator 8: Primary Completion Rate (girls) Value quantitative or 59% (TBD) 71% (TBD) Dropped Dropped Qualitative) Date achieved 05/31/2007 8/31/2011 Comments Indicator dropped under 2011 restructuring\. Could not expect an impact given (incl\. % the short implementation period of 3 years\. achievement) Indicator 9: Primary Repetition Rate Value 9% 9% Dropped Dropped vii quantitative or Qualitative) Date achieved 05/31/2007 8/31/2011 Comments Indicator dropped under 2011 restructuring\. Policy was to prohibit repetition in (incl\. % between school cycles thus artificially lowering the repetition rate\. This would achievement) not, therefore, necessarily reflect an improvement in quality\. Indicator 10: Portion of recurrent state expenditures for education Value quantitative or 13\.7% 18\.1% Dropped Dropped Qualitative) Date achieved 05/31/2007 8/31/2011 Comments Indicator dropped under 2011 restructuring as this outcome went beyond the (incl\. % Project’s objectives, i\.e\., the project could not influence this outcome\. achievement) Indicator 11: Portion of education expenditures for primary Value quantitative or 33% 42% Dropped Dropped Qualitative) Date achieved 05/31/2007 8/31/2011 Comments Indicator dropped under 2011 restructuring as this outcome went beyond the (incl\. % Project’s objectives, i\.e\., the project could not influence this outcome\. achievement) *Baseline values for PDO-level indicators in PAD from 2007; Baseline values in 2011 restructuring paper from 2009\. (b) Intermediate Outcome Indicator(s) Actual Value Formally Achieved at Revised Completion or Target Values Target Years Number of additional classrooms built or rehabilitated at the primary level Indicator 1: resulting from project intervention Value (quantitative 0 1,900 1,660 1,698 or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Indicator exceeded\. This Bank core indicator added under 2011 restructuring Comments replaced two indicators from the original design, “number of new primary (incl\. % classrooms constructed and furnished” and “number of new primary classrooms achievement) rehabilitated”\. Indicator 2: System for Learning assessment at the Primary Level Value (quantitative No Yes Yes (2) Yes (1) or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 viii Comments Indicator partially achieved with system established, however, with a lower (incl\. % utility score than the target\. This sector core indicator added under the 2011 achievement) restructuring replaced the indicator “National student evaluations take place”\. Indicator 3: Schools implementing reading assessment Value (quantitative 0 500 60 79 or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Indicators was added under 2011 restructuring\. Further (incl\. % specified to focus on early grade reading and reformulated as a pilot to build the achievement) evidence first\. Indicator 4: Textbooks purchased and distributed Value (quantitative 0 1,500,000 6,726,933 7,162,393 or Qualitative) Date achieved 07/22/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Indicators was added under 2011 restructuring\. (incl\. % achievement) Indicator 5: Allocation of textbooks by number of students Value (quantitative 54 80 70 77 or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Indicator was added under 2011 restructuring and replaced (incl\. % indicators on ratio of textbooks per student in grades 1-4, grades 5-6 and upper achievement) secondary\. Percent of teachers benefitting from training have improved their results Indicator 6: compared to baseline Value (quantitative NA 90 65 80 or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target exceeded\. Indicator added under 2011 restructuring and replaced (incl\. % indicator “number of primary teachers benefitting from in-service training”\. achievement) Yearly education statistics data availability before the start of the subsequent Indicator 7: school year Value (quantitative No Yes Yes or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2014 Comments Target achieved\. Indicator added under 2011 restructuring and replaced (incl\. % “Ministry’s annual statistical report published”\. achievement) Teacher management as defined by allocation of teachers by number of students Indicator 8: (Conakry only) Value 70 75 80 76\.7 ix (quantitative or Qualitative) Date achieved 05/31/2009 1/15/2013 12/31/2013 12/31/2014 Comments Target not achieved in full but progress made under the Project\. (incl\. % achievement) Indicator 9: Number of new preschool classrooms constructed and furnished Value (quantitative 0 140 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as the Pooled Fund no longer (incl\. % supported activities at the pre-school level\. Support to pre-school was provided achievement) by UNICEF (GPE Portion)\. Number of new additional secondary (colleges) classrooms built/constructed and Indicator 10: furnished Value (quantitative 0 629 72 Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 12/31/2013 Comments Indicator dropped under 2013 restructuring as their construction would no longer (incl\. % be supported under the Project\. achievement) Number of adults benefitting from 9-months of NGO literacy training (non- Indicator 11: formal Value (quantitative 0 100,000 Dropped Dropped or Qualitative) Date achieved 05/31/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as this activity would no longer be (incl\. % supported given the reduced financing available for the Project\. Support to achievement) literacy training was taken over by UNICEF (GPE Portion)\. Number of students with special needs enrolled in primary schools that Indicator 12: benefitted from specific special needs support (training materials) Value (quantitative 0 1500 Dropped Dropped or Qualitative) Date achieved 05/31/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as these activities would be (incl\. % supported under a PHRD-funded Project prepared and supervised by the same achievement) World Bank team\. Indicator 13: Number of professional integration centers built Value (quantitative 0 20 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as this activity would no longer be (incl\. % supported given the reduced financing available for the Project\. x achievement) Number of primary and secondary leavers enrolled in new professional Indicator 14: integration courses Value (quantitative 0 5,800 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as this activity would no longer be (incl\. % supported given the reduced financing available for the Project\. achievement) Indicator 15: Number of new pre-school teachers trained Value (quantitative 0 140 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as the Pooled Fund no longer (incl\. % supported activities at the pre-school level\. Support to pre-school was provided achievement) by UNICEF (GPE Portion)\. Indicator 16: Number of preschool classrooms receiving learning materials and supplies Value (quantitative 0 140 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring as the Pooled Fund no longer (incl\. % supported activities at the pre-school level\. Support to pre-school was provided achievement) by UNICEF (GPE Portion)\. Indicator 17: Number of primary teacher educators trained in ENI (8 modules) Value (quantitative 0 45 Dropped Dropped or Qualitative) Date achieved 07/22/2008 12/31/2008 Comments Indicator dropped under 2011 restructuring\. With the reduction in financing, the (incl\. % emphasis was on provision of TA to reform the curriculum and programs\. achievement) Indicator 18: Number of teachers benefiting from pre-service training Value (quantitative 0 6,000 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring since this activity was supported by (incl\. % the IDA-funded EFA Project achievement) Indicator 19: Number of prefectural in-service primary teacher training plans developed Value (quantitative 0 38 Dropped Dropped or Qualitative) Date achieved 07/22/2008 12/31/2008 xi Comments Indicator dropped under 2011 restructuring\. The in-service training program (incl\. % took place at the national level and not prefecture level given the scale of the achievement) issue\. Indicator 20: Number of school improvement plans developed Value (quantitative 0 3,600 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Indicator dropped under 2011 restructuring\. School grants were financed based Comments on these plans\. The indicator was deemed too simple and emphasis was given on (incl\. % the school grants which was a higher level outcome\. An evaluation of school achievement) grants was completed\. Indicator 21: Number of secondary teachers benefiting from pre-service training Value (quantitative 0 2,400 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring\. With the reduction in financing, this (incl\. % activity was dropped\. achievement) Indicator 22: Number of secondary teachers benefiting from in-service training Value (quantitative 0 34,500 Dropped Dropped or Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring\. With the reduction in financing, this (incl\. % activity was dropped\. In 2013, an additional 1,000 secondary teachers did, achievement) however, receive some training\. Indicator 23: Number of primary school director benefiting from in-service training Value quantitative or 0 14,250 Dropped Dropped Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring\. Activity dropped with the reduction (incl\. % in financing and emphasis placed on teacher training\. achievement) Indicator 24: Number of DSEE running teacher training programs (with grants) Value quantitative or 0 1,215 Dropped Dropped Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring\. Activity dropped with the reduction (incl\. % in financing and emphasis placed on teacher training and on provision of school achievement) grants\. Indicator 25: Number of DPE and IRE rehabilitated Value quantitative or 0 1 IRE, 6 DPE Dropped Dropped Qualitative) xii Date achieved 07/22/2008 12/31/2008 Comments Indicator dropped under 2011 restructuring\. Activity dropped with the reduction (incl\. % in financing and emphasis given to school construction\. achievement) Indicator 26: Internal audit of DPE and IRE carried out Value quantitative or 1 5 Dropped Dropped Qualitative) Date achieved 07/22/2008 8/31/2011 Comments Indicator dropped under 2011 restructuring\. Captured under the school grant (incl\. % evaluation\. achievement) Indicator 27: Human Resources department restructured Value quantitative or No Yes Dropped Dropped Qualitative) Date achieved 07/22/2008 12/31/2009 Comments Indicator dropped under 2011 restructuring as this was supported under the IDA- (incl\. % funded EFA project\. achievement) Indicator 28: Education Sector Plan (ESP) capacity building plan implemented Value quantitative or 0 1 Dropped Dropped Qualitative) Date achieved 07/22/2008 12/31/2008 Comments Indicator dropped under 2011 restructuring\. 1 indicating that the plan is being (incl\. % implemented\. Capacity building took place but not at the scale of the originally achievement) planned project\. *Baseline values for PDO-level indicators in PAD from 2007; Baseline values in 2011 restructuring paper from 2009\. G\. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No\. DO IP Archived (USD millions) 1 12/19/2008 Satisfactory Moderately Satisfactory 0\.00 2 06/12/2009 Moderately Unsatisfactory Moderately Unsatisfactory 0\.00 3 12/08/2009 Moderately Unsatisfactory Moderately Unsatisfactory 0\.00 4 06/08/2010 Moderately Unsatisfactory Moderately Unsatisfactory 0\.00 5 03/26/2011 Moderately Unsatisfactory Moderately Unsatisfactory 0\.00 6 11/20/2011 Moderately Satisfactory Moderately Satisfactory 0\.00 7 06/16/2012 Moderately Satisfactory Moderately Satisfactory 17\.05 8 12/23/2012 Moderately Satisfactory Satisfactory 29\.20 9 06/20/2013 Moderately Satisfactory Moderately Satisfactory 33\.84 10 12/30/2013 Satisfactory Moderately Satisfactory 38\.67 11 06/23/2014 Moderately Satisfactory Moderately Satisfactory 40\.00 12 12/25/2014 Moderately Satisfactory Moderately Satisfactory 40\.00 xiii H\. Restructuring (if any) ISR Ratings at Amount Country Director Restructuring Restructuring Disbursed at Reason for Restructuring & Approved PDO Date(s) Restructuring in Key Changes Made Change DO IP USD millions EFA-FTI Grant agreement reinstated following re- engagement of the Bank with the country reduced FTI financing from US$117\.8 million to US$64 million with World Bank administering US$40 million as the Supervising Entity and with UNICEF implementing entity for US$40 million as it was able to operate in the country during the period of the Bank’s 08/25/2011 N MU MU 0\.00 disengagement\. The scope of project activities was reduced and reoriented; indicators and targets revised; and the project closing date was extended from August 31, 2011 to January 15, 2013\. The restructuring was approved by the RVP on August 25, 2011 and the Grant Agreement (GA) was reinstated and signed on September 22, 2011\. This restructuring was undertaken to reflect the withdrawal of KfW from the pooled fund since legislative elections did not take place as anticipated\. 12/11/2012 N MS MS 25\.56 The scope of activities supported was reduced, indicators and targets were revised and the project closing date was extended by one year from January 15, 2013 to December 31, 2013\. This restructured introduced a reallocation of funding from Component 1 to Component 2, to provide additional support to quality inputs, introduced 12/26/2013 N MS MS 38\.67 revisions to the Results Framework (indicators and targets) and extended the Project closing date by one year form December 31, 2013 to December 31, 2014\. Note: Disbursements of US$40\.0 million EFA-FTI Catalytic Fund (CF) only\. I\. Disbursement Profile xiv 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Country Context 1\. Guinea, a country of 11\.78 million, is located on the west coast of Africa, bordered by Guinea Bissau, Senegal, Mali, Ivory Coast, Sierra Leone and Liberia\. Guinea is a constitutional republic with a presidency that governs with an appointed council of ministers\. Since its independence from France in 1958, Guinea has experienced a number of autocratic regimes characterized by limited political and economic freedom\. It has experienced periods of macroeconomic instability and the economy, highly dependent on mineral exports, remains highly vulnerable to external shocks\. 2\. When the Pooled Fund Program (or FC-PSE3) was appraised in 2008, Guinea was considered both a low-income country and a fragile state\. Real gross domestic product (GDP) growth had stagnated at the low level of 2\.2 percent on average over the previous five years which was, in turn, jeopardizing the social and economic improvements observed during the 1990’s when structural reforms were undertaken\. Per capita income averaged US$370 and an estimated 50 percent of the population was living below the poverty line\. Human development indicators were also low with Guinea ranking 156 out of 177 countries on the Human Development Index (HDI)\. This was, in large part, a result of consistently low level of spending on social sectors at 3\.5 percent of GDP (with only one-third of this going towards investment)\. 3\. The period prior to project appraisal was characterized by political and social unrest\. Though the Government had taken important steps towards reform, the worsening social, economic and governance conditions had resulted in widespread strikes in 2006 and later in 2007, which transitioned into widespread political unrest and growing pressure for political change, improved governance and delivery of public services\. After an eight-week period of strife and conflict which resulted in 100 deaths, an agreement was reached to establish a government on the basis of a national consensus\. A Presidential decree in late 2007 introduced a reorganization of Government with a diminished role for the Prime Minister and a restoration of the constitutionally guarded presidential privileges\. Though political unrest did flare to some degree following this period, general strikes were avoided by, among other things, the Government assuring unions of more political transparency and progress on economic conditions\. Despite the establishment of the new reform-minded Government in 2007, there was a coup d’état in 2008 which suspended the country’s constitution and all political and union activity\. This was coupled with fiscal instability given the loss of control over government revenue and spending which led to rising inflation and spiraling debt\. Although the FC-PSE was appraised in 2008, as a result of these difficult circumstances, implementation could not begin until 2011 when the level of political stability improved\. 3 This report evaluates the Pooled Fund (FC-PSE) which was funded by a number of DPs, and was in support of the Government’s ESP\. The PAD refers to this support or operation as the “Education Sector Development Program” or “FC-PSE Program”\. For simplicity, since the pooled fund was in support of the Government’s Program (ESP), the operation being reviewed will be referred to as the Pooled Fund (FC-PSE)\. 1 Sector Context 4\. At the time of project appraisal, some of the key challenges facing the education sector included: (i) low access to education at early childhood education (ECE) in rural areas among the poor and particularly among girls; (ii) high dropout rates in rural areas as many schools did not offer the complete six-grade primary cycle (though multi-grade schooling had been encouraged in less densely populated areas, it had not been largely successful); (iii) low retention rates at secondary level given limited spaces and growing demand; (iv) low quality of education despite investment in this area (particularly in primary education); (v) inefficient management procedures and an administration which was highly reliant on donor funding; and (vi) limited domestic funding for the sector\. 5\. Although a number of development partners (DPs), including the World Bank, had been providing support to the Government since 2002 in the sector, coordination among them had been limited\. At this time, it was agreed that a sector-wide approach (SWAp) to support an EFA strategy would be important in strengthening coordination among the various DPs and the activities supported\. Support to the Education Sector Plan (ESP) would be provided through two modalities: (i) the International Development Association (IDA)-financed Education for All Project (under implementation since 2001); and (ii) a pooled fund (with contributions from EFA-FTI 4 , German Development Cooperation (Kreditanstalt fur Wiederaufbau – KfW) and the French Development Agency (Agence Francaise de developpement – AFD))\. The IDA-Financed project would be a three-phase Adaptable Program Loan (APL) while the Pooled Fund (FC-PSE) would finance a share of the Government’s ESP activities\. 6\. In addition to an EFA Project supported by IDA5, there were a number of other projects supported by various DPs\.6 The new approach aimed to lead to coordination and synergies of DPs’ efforts with those of the Government to ensure consistency, harmonization of activities and, in turn, sustainable improvements in access to and quality of basic education\. The Pooled Fund (FC-PSE or Pooled Fund Program) supported the Government’s Education Sector Plan (ESP) for 2008-2015\. The overarching objectives of the ESP were to improve the country’s education system in line with the education Millennium Development Goals (MDGs) and the EFA-FTI Indicative Framework\. By supporting and strengthening the development of human capital, these efforts would be contributing to economic growth and poverty reduction\. The rationale behind pooled funding was that it provided the opportunity to improve the efficiency of support for the ESP while also reducing transaction costs for the Government in line with the 2005 Paris Declaration on Aid Effectiveness\. As the ESP and the Poverty Reduction Strategy Paper II (PRSP II) were developed at around the same time, there was a strong degree of alignment between them (including some of the key program and performance indicators)\. Project Context 7\. The Pooled Fund (FC-PSE)7 was approved on July 30, 2008\. Its planned effectiveness date was January 1, 2009\. It was expected to close on August 31, 2011\. The total amount of the Pooled Fund was US$160 million and had three contributing partners: EFA-FTI Catalytic Fund Grant (No\.TF092364; 4 Later referred to as the GPE CF\. 5 The IDA-financed Guinea Education for All (EFA) Project (P050046) was designed to provide financing for the first phase of the Government’s EFA Program (2001-2013)\. 6 There were projects financed by the African Development Bank (AfDB), Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), United Nations Children’s Fund (UNICEF), the United States Agency for International Development (USAID) that were being implemented\. 7 As mentioned earlier, this was referred to as the Education Sector Development Program and the FC-PSE Program in the PAD\. For clarity, this operation is referred to in this report as the Pooled Fund (FC-PSE)\. 2 US$117\.8 million); AFD (US$15\.2 million) and KfW (US$27 million)\. Although the Government had met conditions of effectiveness, the 2008 coup d’état prevented the FC-PSE from becoming effective\.8 The Bank’s Operational Policy [OP 7\.30] "Dealings with De Facto Governments" was triggered and in mid- 2009, the country fell into arrears which led to the suspension of the Bank and EFA-FTI support\. At the time of this suspension, a portion of funding from AFD to the Pooled Fund had been disbursed which, in turn, provided sufficient funding for the already established Project Coordination Unit (PCU) to remain intact and operational\. In addition to this support, AFD funded the evaluation of teachers in preparation for in-service training and commenced construction of 99 classrooms\. In addition, since UNICEF was able to maintain its presence on the ground and support activities in the sector during this period, US$24 million of the FTI financing was allocated to UNICEF\. OP7\.30 restriction was lifted on January 19, 2011, and the country came out of arrears on April 21, 2011\. As such, the Bank was able to reengage with the country\. On June 6, 2011 the waiver to World Bank OP13\.00 "Signing of Legal documents and effectiveness of loans and credits" was granted\. The FTI reduced the allocation for the Pooled Fund from US$117\.8 million to US$64 million of which US$40 million would be managed by the Bank as SE while the remaining US$24 million was being managed by UNICEF as Implementing Entity\. The decision to allocate this financing to UNICEF as IE was made given the organization’s ability to continue its activities during the period in which the Bank had formally disengaged from the country\. The Project was restructured on August 25, 2011 and the Pooled Fund became effective on September 22, 2011 when the Grant Agreement (GA) was reinstated\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 8\. According to the Project Appraisal Document (PAD), “the objective of the FC-PSE is to contribute to enhancing equitable access to and quality in education at all levels - with focus on primary education – and literacy training, while also strengthening central and de-concentrated management of the education system\.” According to the original GA, “The Project is part of the Recipient’s Program, which contributes to enhancing equitable access to and quality in education at all levels, with focus on primary education and literacy training, while also strengthening central and de-concentrated management of the education system\. 9\. Reflecting the strong alignment of the FC-PSE with the larger ESP, the Pooled Fund utilized several of the ESP indicators as its key performance indicators (KPIs) (or PDO-level indicators), with the intermediate-level indicators designed to measure the specific outputs of the FC-PSE Project\. The adoption of indicators directly from the Government’s sector matrix was common practice at the time for FTI-funded Projects and reflects the view of the Pooled-Fund’s objectives as supportive of the Government’s overall education sector program\. The PDO-level indicators are presented by objective in Table 1 below\. A detailed list of intermediate-level indicators can be found in Annex 10\. 8 Although the GA was countersigned on August 13, 2008, it was subsequently legally terminated as the Project did not become effective within 90 days of its signing, as was stipulated in Article V (5\.03) of the GA\. The revised GA, reflecting the restructured design, was reinstated in September of 2011\. 3  Table 1: Original PDO-level Indicators by Objective Objective Key Performance Indicator Access rate in first grade (total/girls) to increase from 77 percent/TBD9 in 2007 to 88 percent/TBD in 2010 Gross enrollment rate (GER) primary to increase from 79 percent in 2007 to 90 percent in 2010 Improving Equitable Ratio girls: boys in primary to increase from 0\.83 in 2007 to 0\.92 in 2010 Access Completion rate in primary (total/girls) to increase from 59 percent/TBD in 2007 to 71 percent/TBD in 2010 Transition rate to lower secondary to decline from 73 percent10 in 2007 to 65 percent in 2010 Percentage of students with a passing grade in French (year 4) to increase from 50 percent (2005 data) in 2007 to 55 percent in 2009 Improving Quality Percentage of students with a passing grade in Math (year 4) to increase from 51 percent (2005 data) in 2007 to 57 percent in 2009 Repetition rate in primary to remain stable at 9 percent from 2007 to 2010 Portion of recurrent State expenditures for education to increase from 13\.7 Improving Management percent in 2007 to 18\.1 percent in 2010 of the Educational System Portion of education expenditures for primary to increase from 33 percent in 2007 to 42 percent in 2010 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 10\. The PDO was revised under the 2011 restructuring to the following: “The objective of the Project, which is part of the Program, is to enhance equitable access to and quality of basic education, while also strengthening decentralized management of the education system, in the Recipient's territory\.” 11 The revisions to the PDO introduced in the 2011 restructuring narrowed the scope of the original PDO by focusing specifically on supporting improved access, quality, and management within the basic education sub-sector\. Though the PDO’s mention of the Recipient’s territory was omitted under the 2012 restructuring in 2012, both the objectives and intent of the Project remained unchanged\.12 See Table 2 for modifications to the PDO\. 11\. During the project life, modifications were introduced to the FC-PSE Results Framework (RF) to PDO- and intermediate-level indicators\. Under the original design the RF included 10 PDO-level indicators and 29 intermediate-level indicators\. Under the first restructuring in 2011, a number of modifications were introduced to the Project’s RF\. While a large number of indicators were dropped, others were revised and some new performance measures were added\. Under the second restructuring in 2012, additional modifications were introduced to the Project’s RF, including most notably, adjustments to the end-of- project targets due to the withdrawal of KFW from the Pooled Fund\. Under the restructuring in 2013, indicators and/or associated end-of-project targets were revised to reflect changes in the project’s scope as 9 To be determined (or TBD) was indicated in the PAD\. 10 An ISR later indicated that the baseline value was 65 percent\. 11 Grant Agreement (reinstated)\. September 22, 2011\. 12 2012 Restructuring Paper\. (November, 2012) 4 well as to account for the additional time which had been allotted under this restructuring\. All of the changes introduced to the RF during the Project life are detailed in Annex 10 of this report\. Annex 10 also documents the level of achievement for all of the PDO- and intermediate-level indicators\. 1\.4 Main Beneficiaries 12\. The main beneficiaries of the Pooled Fund (FC-PSE) were primary school-aged children nationwide, teachers, central and de-concentrated level education administrators, illiterate adults, and the poorest prefectures and populations\. The number of beneficiaries targeted by the FC-PSE was not specified in the original project documents\. However, the 2011 Restructuring Paper lists the beneficiaries as those individuals benefitting from school construction, teacher training and textbooks and estimates the total number of project beneficiaries to be 1,584,282 (of which 48 percent would be female)\. 1\.5 Original Components 13\. The FC-PSE was comprised of three Components, as follows: Component 1: Improving Equitable Access to Basic and Non-Formal Education [Appraisal: US$119 million; Original FTI Financing: US$90\.9 million; Revised FTI Financing13: US$23\.7 million; Actual Expenditure: US$22\.7 million]\.14 This component aimed to promote equitable and regulated access to basic and non-formal education, to increase enrollment rates in pre-school, and primary and lower secondary education, support specific measures for mentally and/or physically handicapped children, expand access to literacy training, support the creation of professional integration courses for primary and lower secondary leavers, and professional training specifically oriented toward the mining sector\. Component 1 included the following five sub-components: (i) Improving pre-school, primary, and secondary level educational infrastructure; (ii) expanding educational access of primary-level students with special needs; (iii) expanding access to literacy training; (iv) establishing professional integration courses for primary and lower secondary leavers; and (v) increasing availability of skilled labor for the mining sector\.     Component 2: Improving Quality of Basic and Non-Formal Education [Appraisal: US$26 million; Original FTI Financing: US$20\.1 million; Revised FTI Financing: US$11\.8 million; Actual Expenditure: US$12\.6 million\.]15 The objective was to improve the quality and relevance of basic and non- formal education, with particular focus on the acquisition of pedagogical materials, provide initial and continued teacher training, provide block grants to Primary Education Delegations (Délégation Scolaire de l’Enseignement Élementaire – DSEE), the MEPU-EC administrative level below the prefecture, and student evaluations\. The following six sub-components were supported under Component 2: (i) Acquiring and supplying free textbooks and teachers’ guides for public and private primary and secondary schools; (ii) supporting initial training for primary and secondary teachers; (iii) Supporting continued training for primary and secondary teachers; (iv) Providing block grants to schools and DSEE; (v) Conducting nation- wide student learning assessments at primary level (year 4—2008; year 6—2009; and year 2—2010) and lower secondary level (2009); and (vi) Implementing curriculum reform in higher education\. 13 These are the values for the 2011 Restructuring Project which included revised financial figures based on the revised FTI allocation\. 14 Actual expenditure for the components reflect spending under the Project supported by the EFA-FTI CF Grant\. 15 Ibid\. 5 Component 3: Improving Management of the Educational System [Appraisal: US$9 million; Original FTI Financing: US$6\.8 million; Revised FTI Financing: US$4\.5 million; Actual Expenditure: US$4\.7 million]\. 16 The objective was to strengthen the central and de-concentrated management of the sector, including its infrastructure services\. Component 3 was comprised of the following four sub-components: (i) Enhancing the National Service for Educational Infrastructure and Equipment (Service National des Infrastructures et Équipements Scolaires—SNIES) capacity to monitor civil works; (ii) Construction and rehabilitation of regional and prefectural administrative education offices by financing civil works on one Inspection Regionale de l’Education (IRE) and six DPE that had sustained serious physical damage during the January-February 2007 civil strife; (iii) Strengthening planning and monitoring capacity at the regional and prefectural level; and (iv) Strengthening the MEPU-EC at the central level\. 14\. A detailed overview of the three components can be found in Annex 2 of this report\. Of the total funding for the FC-PSE under the original design, 96 percent was allocated to the three components listed above while 4 percent (about US$6 million) was unallocated\. 1\.6 Revised Components 15\. The overarching aims of the three project components remained relatively consistent throughout the project life\. However, activities to be supported under Components 1 and 2 were modified as follows\. Under the first restructuring in 2011, Components 1 and 2 were modified to focus only on “basic education”\. 17 In terms of activities, under this restructuring, some activities were modified given the substantial reduction in FTI funding from US$117\.8 million to US$40 million, a few new activities were added and one activity was dropped\. Under this restructuring, the scope and number of activities to be supported under the Pooled Fund were reduced in light of the reduced financial support for the FC-PSE\.18 The modifications to Components 1 and 2 were also reflected in adjustments to various indicators and targets in the RF under these restructurings\. 19 In terms of Component 3 20 , the activity to support construction of administrative offices was dropped and increased emphasis was placed on strengthening human resources (HR) management\. The revisions introduced within each component of the Project are detailed in Table 2 below (as described in the revisions to the GA)\. Under the third restructuring, the construction of lower secondary schools (planned under Component 1) was cancelled as there was insufficient time to complete this activity\. Additionally, under the third restructuring, funding was reallocated to Component 2 to support the provision of school grants for in-service teacher training for an additional year and two new activities: (i) in-service teacher training was provided to 1,000 lower secondary school teachers; and (ii) 67,313 French textbooks were provided to 10th grade students\.  16 Ibid\. 17 The Original Program specified Component 1 as “Improving equitable access to basic and non-formal education”, whereas during the first restructuring, the revised articulation was “Improving equitable access to basic education”; and specified Component 2 as “Improving quality of basic and non-formal education”, whereas during the first restructuring, the revised articulation was “Improving quality of basic education”\. 18 Funding changes included: (i) the reduction in GPE financing from US$117\.8 million to US$64 million in 2011; and (ii) the withdrawal of KfW financing in 2012\. 19 Refer to Section 2\.3 on M&E under the Project as well as Annex 10 which provides details on all PDO- and intermediate-level indicators over the life of the Project\. 20 The title of Component 3 was revised to “Strengthening the Management of the Educational System”\. 6  Table 2: Revisions to PDO and Components during the Project Life Second Restructuring Third Restructuring Original Design First Restructuring (2011) (2012) (2013) COMPONENT 1 Improving Equitable Access to Improving Equitable Access basic and non-formal education to basic education (i) Improving pre-school, primary (i) Improving primary and (i) Improving primary and secondary level educational secondary level educational educational infrastructure by constructing or infrastructure by constructing or infrastructure by rehabilitating and furnishing of rehabilitating and furnishing constructing or unchanged primary classrooms and primary classrooms and rehabilitating and secondary classrooms, as well as secondary classrooms in furnishing primary classroom pre-schools in targeted targeted areas\. classrooms in targeted areas\. areas (ii) Expanding educational access (ii) Expanding educational of primary-level students with access of primary-level students special needs by providing with special needs by providing unchanged unchanged additional training for teachers, additional training for teachers provision of special education and provision of special materials and minor civil works\. education materials (iii) Expanding access to literacy training by financing literacy courses, providing professional development for literacy trainers Dropped and supervisors responsible for monitoring and evaluation, and supporting the National Literacy Secretariat\. (iv) Establishing professional (iii) (a) Developing strategies integration courses for primary and establishing partnerships and lower secondary leavers by with the private sector as well as constructing and equipping identifying sectors of growth professional integration centers through the provision of throughout the country, preparing technical assistance (including unchanged unchanged teaching materials, and training the carrying out of surveys and teachers studies); and (b) constructing, rehabilitating and furnishing professional integration centers at selected sites\. (v) Increasing availability of skilled labor for the mining sector Dropped by creating short-term professional training courses\. 7  Second Restructuring Third Restructuring Original Design First Restructuring (2011) (2012) (2013) (iv) Promoting school demand through (a) providing private courses to girls to keep them in school; (b) provision of school kits to children in the targeted poorest prefectures; (c) — carrying-out social mobilization unchanged unchanged in selected sub-prefectures through sensitization campaigns; and (d) provision of teaching aids to, and training of, targeted teachers in multigrade classrooms\. COMPONENT 2 Improving Quality of Basic and Improving Quality of Basic Non Formal Education Education (i) Provision of textbooks for (i) Provision of textbooks for (i) Provision of textbooks (i) Provision of public and private primary and public primary and secondary for public primary schools textbooks for public secondary schools as well as basic schools as well as carrying out a primary and secondary learning supplies for pre-schools technical and financial audit on schools such provision (ii) Construction of 8 teacher (ii) (a) Rehabilitating selected (ii) Strengthening teacher colleges (Ecole Normale teacher colleges; (b) training curriculum through d’Instituteurs) and provision of strengthening teacher training technical assistance\. subsidies to said colleges and curriculum through technical financial incentives to teachers assistance; (c) assisting with the development of Performance unchanged Contracts with the Teacher Training Institutes; and (d) supporting teacher training pursuant to Performance Contracts\. (iii) Supporting continued (iii) Supporting in-service (iii) Supporting in-service (iii) Supporting in- training for primary and training for primary and training for primary and service training for secondary teachers, and school secondary teachers, and primary primary school directors primary and lower directors at the regional and local school directors secondary teachers levels and primary school and lower secondary directors (iv) Provision of Block Grants to (iv) Provision of Block Grants schools and DSEE to primary schools and DSEE in unchanged unchanged support of their school improvement projects\. (v) Conducting nation-wide unchanged unchanged unchanged student learning assessments (vi) Implementing curriculum (vi) Supporting reform in higher reform in higher education education and carrying-out unchanged unchanged studies on higher education 8  Second Restructuring Third Restructuring Original Design First Restructuring (2011) (2012) (2013) (vii) Supporting the piloting of (vii) Supporting the piloting early literacy assessment, of early literacy assessment, including a study tour, training including a study tour, of teachers in the use of training of teachers in the assessment instruments, use of assessment — unchanged production of teaching instruments, production of materials, interactive radio teaching materials, programs, the development of interactive radio programs training modules, and the and monitoring-evaluation training of trainers by the DSEE (viii) Supporting the reform of the Recipient’s Higher Institute of Education including through — the review of programs, the Dropped development of training modules, and the training of trainers\. (ix) Supporting newly certified — teachers through Provisional Dropped Stipends\. COMPONENT 3 Improving Management of the Strengthening Management — — Educational System of the Education Sector (i) Enhancing the capacity of the (i) Strengthening the CN-PSE’s National Service for Educational capacity at the central and Infrastructure and Equipment deconcentrated levels to unchanged unchanged (SNIES) to monitor civil works monitor civil works through through technical advisory technical advisory services, services, equipment and training equipment and training (ii) Construction and rehabilitation of regional and Dropped prefectural administrative education office (iii) Strengthening planning and (ii) Strengthening the MEPU- monitoring capacity at the EC’s planning and monitoring unchanged unchanged regional prefectural level capacity at the central, regional and prefectural levels (iii) Strengthening the MEPU- EC’s human resources management through the — provision of computer software unchanged unchanged and technical assistance for the improvement of human resource procedures (iv) Strengthening the MEPU-EC (iv) Strengthening the overall by providing training for management and coordination management and coordination of capacity of the MEPU-EC by unchanged unchanged the Program, equipment, providing, inter alia, training, development of intranet, and equipment and internet operating costs 9 1\.7 Other significant changes 16\. The amount of the original grant was US$117\.8 million with the World Bank acting as Supervising Entity (SE)\.21 In 2011, when the Grant was reinstated, the FTI Board requested that the funding amount allocated to Guinea be reduced\. Together, the DPs and Government agreed to reduce the funding for the Pooled Fund to US$64 million with the World Bank serving as SE for US$40 million with the remaining US$24 million being administered by UNICEF as Implementing Entity (IE)\. This shared responsibility between the Bank and UNICEF had been agreed and suggested by the DPs and the Government\. It was the first time that an FTI grant had followed such an arrangement\. 17\. During the Project life, the Project was restructured three times as follows: 18\. First restructuring: The level 1 restructuring was approved on August 25, 2011 in response to the FTI Board request to reduce the FTI amount from US$117\.8 million to US$64 million, with the World Bank managing US$40 million as the SE and UNICEF responsible for US$24 million as the IE\. The project scope of activities was narrowed and reoriented as evidenced in changes to the PDO and the RF\. The amended GA was reinstated on September 22, 2011\. The project closing date was extended from August 31, 2011 to January 15, 2013 was stipulated by FTI\.   19\. Second restructuring: On May 15, 2012, a second restructuring was undertaken in response to the decision of KfW to withdraw from the Pooled Fund\. 22 In addition to narrowing the scope of project activities, the restructuring extended the closing date by approximately one year from January 15, 2013 to December 31, 2013\. This restructuring provided additional time to ensure completion of project activities and achievement of the PDO by project closing\. 20\. Third restructuring: The last restructuring of the project was approved on November 12, 2013 in response to a Government request\. Under this restructuring, (i) funding was reallocated from the construction of middle schools (which could not be completed by the project closing date) to in-service teacher training, provision of learning materials for early grades and textbooks benefiting secondary schools, and continued TA; (ii) the closing date was extended again by one year from December 31, 2013 to December 31, 2014 to provide additional time for completion of project activities and further progress towards achievement of the PDO; and (iii) the RF was modified to reflect changes in the scope of the project and the additional allotted time\.  2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry Project Preparation and Design   21\. The Pooled Fund’s objectives were directly aligned with the Government’s objectives for the sector and with the aims of the PRSP II, the Letter of Sector Policy and the Government’s National Development 21 The total amount of the Grant from the FTI was based on the financing gap in the sector\. 22 KfW’s decision to withdraw was based on the fact that legislative elections in the country did not take place as anticipated\. 10 Strategy which was developed at around the same time\.23 The project’s original design was also informed by a number of analytical studies including a recently completed education Country Status Report (CSR)24 (2005 - 2006) and a medium-term expenditure framework (MTEF)\. Moreover, the design of the Pooled Fund also drew on lessons learned from other investments adopting a SWAp in other relevant settings (e\.g\., Zambia, Kenya and Bangladesh) and other operations in Guinea, including the ongoing IDA-funded operation\. The decision to use a SWAp was guided by the implementation of the IDA-funded EFA Project (P050046) and a strong commitment among DPs to uphold the principles of the 2005 Paris Declaration\. Since it was designed in the framework of the ESP, the operation’s development benefitted from wide consultations with various stakeholders across all levels of the education system\. Further, it capitalized on the FTI Board’s growing support of the new and ambitious pooled fund approach to support the Government’s ESP\. The Bank was able to use its experience in project design in and implementation in the Guinean context as the Bank had been very active in the sector since 2002\. A select number of activities to be supported under the FC-PSE had been piloted and, in many cases, implemented during the previous Government-supported Education Sector Program which had been prepared in 2001 for the period spanning from 2002 to 2006\.  22\. Despite the operation’s strong alignment with Government strategy and strong analytical underpinnings, the original design was overly complex and ambitious given the fragile political environment prevailing in Guinea at the time of project preparation\. In order to better account for these challenges to project implementation, the original design needed to be modified to enhance its overall development impact\. Quality of Entry 23\. The Bank team possessed the necessary and relevant expertise to prepare and appraise the Pooled Fund and drew on relevant analytical work\. The team was well-positioned to lead preparation of the Pooled Fund and to take on the role of SE, as it was able to build on the existing working relationship with the Government and other DPs which had been developed over the course of previous and on-going Bank- supported operations\. As described above, the Pooled Fund was very well-aligned with Government objectives and aimed to address those issues which had been identified as central to the Government’s own strategic agenda\. The Pooled Fund did not benefit from either a Quality at Entry Review (QER) or a Quality of Supervision Assessment (QSA)\. The risk related to effectively implementing a project of this size and complexity within such a fragile context was, however, somewhat underestimated\. Although the Pooled Fund was designed to provide a much larger amount of financing to an array of activities, the Bank and Government assumed that the sector had sufficient absorptive capacity\. However, it is important to highlight that the initial amount to be provided was determined on the basis of an assessment of the financing gap of the national education sector plan in basic education (this was the funding criteria under the FTI initiative at the time)\. 23 The Government had begun to carry out fundamental reforms in April 2007 to restore good governance, stabilize the economy, and promote sustainable growth, employment and poverty reduction based on a short economic rehabilitation emergency program (July 2007) and a second generation Poverty Reduction Strategy Paper (PRSP II), which was completed in August 2007\. The PRSP II had aimed to capture the ground lost over the previous five years, so that the MDGs could be reached\. The PRSP II had three pillars: (i) improving governance (ii) accelerating growth and increasing employment opportunities; and (iii) improving access to basic services\. 24 This analysis provided some evidence that although government financing allocated to the education sector had been limited, access to education had improved in the 15 years prior to this due to private provision of education and improved internal efficiency of the sector\. At the same time, despite investments targeting quality improvements in education little improvement had been observed and some management methods had been slow to take root without support from the donor community\. In addition, regional and gender disparities were of concern as was the lack of regular and rigorous student learning assessments\. 11 24\. Specifically, the FC-PSE design presented a number of specific challenges to Government capacity including, most notably: (i) a high level of multi-ministerial coordination in an environment where ministries had little history of cross-collaboration; (ii) increased sharing of responsibilities in terms of implementation across many actors and levels (for example, Government institutions, NGOs, schools); and (iii) a high degree of coordination with DPs\. Many of these also posed challenges to the ongoing IDA- funded Project\. Further, a significant amount of time was needed in order to prepare for implementation of activities\. Although the FC-PSE was innovative by scaling up pilots and testing new strategies, often simultaneously, this placed additional pressure on an already limited institutional capacity, particularly in the areas of planning and M&E\. At the same time, key aspects of project design (including the reliance on three different methods for school construction activities (NGO, community-based support and small and medium enterprises) were highly appropriate for the context\. Based on the information above Quality at Entry is rated Moderately Unsatisfactory\. Revised Design 25\. The 2011 Restructuring introduced significant changes to the Project design including: (i) sharpening the focus of the PDO; (ii) support to select activities to buttress achievement of the revised PDO and with consideration for existing capacity and comparative advantage among DPs (particularly the case in terms of the redistribution of civil works among DPs); (iii) increased focus on human resources management; and (iv) modifications to the RF to better capture project-related results and outcomes\. The revised design was less complex and more narrowly focused on providing support to basic education\. A number of activities were cancelled and/or scaled down, including for example the provision of textbooks for senior secondary schools\. The 2012 Restructuring, was necessitated by KfW’s decision to withdraw its resources (the total contribution to the Pooled Fund was US$27 million) from the Pooled Fund\. Though the 2012 Restructuring did not change the overarching objectives and intent of the operation, it did narrow its scope (i\.e\., reducing the number of primary schools to be constructed under the project) in order to account for the reduction in available funding\. Under the 2013 restructuring, funding was reallocated from the construction of secondary schools to the provision of quality inputs (textbooks and teacher training) as it was unlikely that the secondary schools could be completed even within the extended project period\. This activity was taken on by other DPs\. The various extensions of the closing date, provided the necessary time for the Government to achieve its goals of expanding access, addressing equity, improving quality and strengthening management capacity in the sector\. 2\.2 Implementation 26\. The implementation arrangements were complex25, relying on a number of different levels and entities for managing different aspects of the Pooled Fund and the implementation of the larger ESP\. The National Coordination of the ESP (CN/PSE), as responsible for operational coordination of the ESP, was the primary management center for the majority of the Pooled Fund resources, including financial 25 Detailed Program implementation arrangements were specified in 13 documents including the: (i) PSE Execution Manual; (ii) FC-PSE Administrative, Financial, and Accounting Manual; (iii) Guidelines for the Management of Grants to Schools and DSEE; (iv) Guidelines for textbooks; (v) Operations Manual for Functional Literacy and NAFA Centers; (vi) Operations Manual for School Construction by Contract Management Delegated to NGOs; (vii) Operations Manual for School Construction by Community Delegation; (viii) Operations Manual for Research and Innovation Funds; (ix) PSE Monitoring and Evaluation Guide; (x) Manual for the Development of Prefectural Education Development Plans; (xi) Manual for Continued Training of Primary-School Teachers; (xii) Manual for Continued Training for Secondary-School Teachers; and (xiii) the various execution manuals of sectoral investment projects that were underway and contributed to the ESP\. 12 management (FM) and procurement\. As the central operational coordination unit for the IDA-financed project, the CN/PSE and the Bank had already developed a solid working relationship with this unit\. The Strategic National Committee (SNC), led by the Secretary General of the MEPU-EC, coordinated discussions around budget, announced annual budgetized action plans (Plans annuels d’activités budgétisés –PAAB) adoption and supervised preparation of key documents for sector reviews as well as audit, M&E and progress reports\. In addition, it coordinated capacity-building and institutional reform activities supported under the Project\. The National Education Steering Committee, led by the Minister of MEPU- EC and with wide representation from a variety of stakeholders, was responsible for ensuring continued strategic alignment of the Pooled Fund, as well as any other parallel DP-supported activities within the education sector\. Finally, regional and prefecture steering committees were responsible for ensuring consistency between local plans and the ESP and for leading policy dialogue at the deconcentrated levels\. 27\. Implementation can be described in four distinct phases\. Overview of implementation by phase 28\. Phase I: July 2008 – August 24, 2011\. Though the Pooled Fund was approved in 2008, it did not become effective until 2011 as a result of the coup d’état and the non-payment of arrears which required the Bank to formally disengage from the country\. During this period, however, funding from the AFD within the pooled fund allowed the previously established PCU to remain operational\.26 Further, though the Bank had formally disengaged with the country, the Bank team maintained dialogue with the project and technical teams during this period through videoconferences (VCs) and missions (in Dakar)\. The implementation status reports (ISRs) completed during this period pointed to a deterioration in key sector indicators including repetition and primary completion rates, although limited data were provided on the level of achievements observed across the various PDO- or intermediate-level indicators\. Following the presidential elections in January 2011, the previously tenuous macroeconomic, political and social context improved considerably and a joint review mission was undertaken in the Spring (May/June) of 2011\. With the clearance of arrears in April 2011, the Bank was able to re-engage in the country\. The lack of implementation during the two-year period due to the country context led to the decision by the FTI Secretariat to reduce financing from the FTI Catalytic Fund to the Pooled Fund from US$117\.8 to US$64 million\. As UNICEF had a strong presence on the ground and had been able to continue its activities during this period when the Bank was not allowed to formally engage in the country, it took on the role of IE for US$24 million while the Bank would be SE for the remaining US$40 million\. The Bank worked closely with other partners to recalibrate the scope of activities to be supported by the FC-PSE to make it commensurate with reduced funding and agreed on a realistic implementation timeframe\. As the PCU had remained functional, once the Bank was allowed to officially reengage with the Government, changes introduced under the first restructuring on August 25, 2011 were carried out in a timely manner\. Indeed, this operation was one of the first to be reactivated after this period of disengagement which was largely possible given the efforts to maintain continued dialogue described above\. Although no disbursements were made during this period from the FTI portion of the funding managed by the Bank, the AFD had disbursed during this period\. 29\. Phase 2: August 25, 2011 - December 10, 2012\. This first restructuring introduced important modifications to the Project as described earlier\. As a result of the significant reduction in funding, the PDO, RF and project timeframe were revised\. In December 2011, the first supervision mission following project effectiveness was held which revealed project implementation was progressing well in the initial 26 In addition, AFD funded the evaluation of teachers in preparation for in-service teacher training and the launch of the construction of 99 classrooms\. AFD funding during this period totaled US$2\.3 million\. 13 phases in spite of the difficult context and the changes in senior management within the MEPU-EC\. The strong level of collaboration among DPs and continued supervision (by VCs on a monthly basis) played an important role in the uptake of the Project during this time\. However, during this time, KfW made the decision to withdraw its funding from the Pooled Fund as the legislative elections had not taken place which was a condition for their disbursement\. This decision was not based on any issues with the pooled fund arrangement, but was politically motivated (their funding was ultimately channeled and implemented through an international NGO and not directly executed by the Government as was the Pooled Fund)\. This led to the decision to further narrow the scope of the Project and these changes would be formally introduced under the 2012 restructuring\. Significant progress across many activities – including construction, textbooks, provision of school grants, and recruitment of teacher trainees, private tutoring and technical capacity-building – was observed during this phase\. Given the progress made in terms of construction (and this activity receiving the largest allocation of funding of around 70 percent), disbursement during this period reached US$25\.56 (around 64 percent of the total funding amount of US$40 million)\. Joint sector reviews were also carried out during this time while aspects of project implementation were effectively carried out (i\.e\., procurement, FM, etc\.) Despite the progress made, some key activities were delayed including the assessment of learning outcomes and construction was behind schedule\. Furthermore, KfW decided to withdraw from the Pooled Fund as a condition for its funding had not been met (related to legislative elections)\. On the basis of these factors, it was agreed that the Project would again be restructured\. 30\. Phase 3: December 11, 2012 – December 25, 2013\. The second restructuring, approved on December 11, 2012 introduced some modifications to the project scope, evidenced in the scaling back of a number of end-of-project targets, and an extension in the closing date (also reflected in a scaling up of some end-of-project targets, i\.e\., number of project beneficiaries)\. Specifically, with the withdrawal of KfW from the Pooled fund, targets for the number of primary and lower secondary classrooms were reduced\. This restructuring, which required a thorough assessment of project achievements to date and critical review of key aspects of the project, replaced the mid-term review (MTR)\. The pace of implementation was maintained with the Project having disbursed 84 percent of total grant funding by May 2013, less than six months after the restructuring\. Progress continued on key activities – including the implementation of PAABs, continuing delivery of textbooks and a rigorous monitoring system for their delivery, training of teachers, private tutoring for girls, learning assessment for fourth grade, the development of an MTEF, and continued construction of classrooms\. Further, grants to schools were being managed directly, for the first time, by the DNEE and the most recent statistical data for all sub-sectors from 2012 were analyzed\. Supervision of construction was strengthened to ensure improved quality of civil works and some steps were taken to improve adherence to safeguards procedures\. It was agreed near the end of this year that the Project would need to be restructured in response to a Government request\. Specifically, this restructuring would reallocate funding from the construction of middle schools (which would no longer be supported under the Pooled Fund), to activities designed to improve quality and it would extend the project closing date by one year\. In addition to providing more time for completion of project activities, this would allow a bridge between this funding and the preparation of an upcoming GPE-funded project\. By the end of this phase, US$38\.67 million had been disbursed, representing 97 percent of total net grant funding\. 31\. Phase 4: December 26, 2013 - December 31, 2014\. The last restructuring was approved on December 26, 2013 and introduced only marginal changes to the Project, as described earlier\. As a result of strong implementation progress in the previous period, most of the project activities were completed, including 96 percent of the planned primary school construction with significant improvements observed in terms of quality\. Given the reallocation of funding, and in order to fully complete activities planned under the Project, select activities to support improvements in quality were scaled up (including provision of additional textbooks, supporting training of lower secondary school teachers) while other activities were continued – including assessment activities (learning outcomes and a tracer study), primary school construction, private tutoring for girls, and the provision of grants to schools\. On average, two joint 14 supervision missions were also carried out during this period\. By the time of Project closing, most project activities had been implemented\. By project closing on December 31, 2014, 100 percent of the revised (net) grant amount had been disbursed\.    Table 3: Implementation Phases and Corresponding Disbursement Phase Restructuring Dates Amount Total % of net % Date Disbursed Grant credit during (cumul\.) Amount (cumul\.) period 1 July 2008-August 24, 2011 0 117\.8 0 0 2 Aug\. 25, 2011 August 25, 2011-Dec\. 10, 2012 25\.56 40 64 64 3 Dec\. 11, 2012 Dec\. 11, 2012–Dec\. 25, 2013 38\.67 40 97 33 4 Dec\. 26, 2013 Dec\. 26, 2013-Dec\. 31, 2014 40 40 100 3 32\. Implementation was characterized by a high level of coordination among Government, development partners, and other stakeholders and supportive and intense and continued supervision was provided by the Bank, both in-country and through widely-attended VCs\. The Bank’s strong engagement with the Government and other DPs was also useful in effectively undertaking semi-annual joint reviews\. This high level of engagement allowed the Bank, along with the various DPs, to identify and address bottlenecks in a timely manner\. Further, despite reduced funding and contribution to the Pooled Fund, coordination and policy dialogue needed to be maintained to ensure that the operation would still be capable of achieving the PDO\. During implementation, the FC-PSE adopted innovative approaches from the IDA- financed project including, for example, the three method approach to school construction\. Continued attention was also focused on strengthening the supervision capacity of the implementing ministry and of those entities responsible for specific activities (data collection and analysis, school construction, etc\.) central to the Project’s success\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 33\. M&E Design\. The original Program included a comprehensive RF with ten PDO- and 29 intermediate-level indicators\. The ten PDO-level indicators are mapped according to each sub-objective of the project\. These objectives were, in turn, logically linked to the three components of the Pooled Fund\. The performance measures used to evaluate the Pooled Fund’s performance were taken directly from the ESP M&E Matrix and focused on measuring sector-wide results\. The intermediate-level indicators, by contrast, focused on specific outputs and included targets which were the focus of activities supported under the FC-PSE\. This approach was common at the time – in the context of sector-wide approaches which aimed to provide direct support to the Government’s own ESP\. 34\. At the national level, the M&E unit in the CN/PSE was responsible for M&E under the ESP and would be responsible for producing regular reports on implementation of the ESP as well as reports specifically pertaining to the FC-PSE (use of funds, implementation progress) as well as organizing annual joint sector reviews\. An M&E manual had been developed during ESP preparation and the Government and DPs had agreed to set up a more sophisticated and reliable M&E system\. The Government planned to establish a single database to capture all information relevant to different levels of Government and DPs (including for the FC-PSE)\. Data would be collected from the annual statistical survey (Enquete Statistique Annuel – ESA, which the MEPU-EC was already using) and an additional survey that was under development by the M&E unit of the CN/PSE\. The latter would aim to capture data which were not collected as part of the ESA\. The data for the ESA was collected by the schools themselves – and then aggregated at the DSEE, DPE, IRE and national levels (with MEPU-EC staff in the DPE, IRE and central levels heavily involved in analysis and synthesis of information collected)\. A table on ESP output and results indicators (tableau de bord) was maintained at all levels making it possible to track PAAB activities 15 and outcomes\. On this basis, annual reports were produced to show progress made under the Pooled Fund as well as the sector as whole\. Finally, an inter-sectoral M&E commission was to be established that would be in charged with monitoring the implementation of the capacity-building information, validating M&E reports, and facilitating information-sharing among stakeholders\. 35\. Revised M&E Design\. As described earlier, a number of important changes were introduced under the 2011 restructuring\. Given the more narrowed focus of the Project, and growing attention at a corporate level to ensuring the inclusion of SMART indicators in operations, the RF was significantly modified and recalibrated\. A number of performance measures no longer relevant to the restructured operation or which could not feasibly be impacted by FC-PSE supported interventions were omitted, a number of measures were fine-tuned and an additional number of indicators were added to the RF to ensure progress under the Project could be adequately captured\. For example, under the 2011 restructuring, the indicator measuring changes in the GER, was narrowed to focus only on the GER in the nine targeted prefectures and the measure of access rate in first grade (described as gross intake rate) was moved to the intermediate-level\. In 2013, the indicator to measure learning assessment was modified to allow for comparability of figures over time\. At the same time, however, end-of-project targets for the unchanged indicators were not significantly modified until the second restructuring in 2012 and again in 2013 when a few activities were modified (cancellation of construction of secondary schools and increased funding was provided to support quality inputs, i\.e\. in-service teacher training, additional textbooks, etc\.)27 Adjustments made to the RF, including baseline values and end-of-project targets as well as a brief description of the level of achievement for each of the PDO- and intermediate-level indicators is provided in Annex 10\.    36\. M&E Implementation\. As envisaged, an organized M&E system was established under the Project\. At the national level, the CN/PSE was responsible for M&E\. An inter-sectoral M&E commission was also successfully established and met regularly to monitor capacity-building activities in this area\. The MEPU- EC established a single database to capture all information relevant to the Government (at central and deconcentrated levels) including information on the Pooled Fund and each of the DPs’ investment projects (central EMIS)\. Data were collected using the EMS and the newly developed survey\. This database and the collection, transfer and analysis of data at various levels were strengthened under the FC-PSE\. Further, this allowed entities to track PAAB activities and outcomes\. In addition, a learning assessment was also established under the FC-PSE (with a lot of support by the Bank) which helped monitor student learning achievement and tracking progress over time by equating the assessments\. Notable support was provided by the Bank and other DPs in terms of capacity strengthened with a number of DPs requiring use of results- based management approaches\. 37\. As a result of the restructurings, the number of PDO-level and intermediate-level indicators was reduced over time\. This pattern also characterized the indicators reported in this ISRs, the first status report (PSR) presented 10 PDO-level and 29 intermediate-level indicators while the last ISR had 6 PDO-level and 11 intermediate-level indicators\. Further, though the RPs provide an overview of changes in indicators (and targets) under the Project, as was common practice at the time, project teams had discretion to include and/or exclude indicators in these reports without seeking formal clearance (through a restructuring)\. The established M&E framework indicators (outputs and outcomes) were reported on in joint sector reviews and supervision reports (ISRs and aide-memoires) and again presented in each of the restructuring papers\. 38\. M&E Utilization\. Data collection and analysis were particularly useful in light of the fragile and tenuous political and macroeconomic context which characterized Guinea at the time\. M&E reporting in 27 The number of indicators reported in the ISRs varied across the life of the project from ten (10) PDO-level and twenty-nine (29) intermediate-level in the first project status report (PSR) to six (6) PDO-level and eleven (11) intermediate-level indicators\. 16 status reports were generally adequate and data were well-documented to the extent to which information was available\. Available and reported data were used to inform decision-making and for assessing and guiding policy efforts during the annual joint reviews\. For instance, teacher deployment was proven to be inequitable (favoring Conakry) which led to the development of a human resource (HR) management strategy\. In addition, the finding that learning outcomes in reading performance were low led to the introduction of the early grade reading assessment (EGRA) and training of teachers in reading methods\. On the basis of the information above, M&E design and utilization is rated Substantial during the pre- restructuring period and Substantial during the post-restructuring period\. 2\.4 Safeguard and Fiduciary Compliance Safeguards Compliance 39\. Taking into account the construction and/or rehabilitation of schools, latrines and water points planned under the Project design, the ongoing FC-PSE triggered the Environmental Assessment OP (OP4\.01) and the Involuntary Resettlement OP (OP4\.12) resulting in a Category B rating\. An Environmental and Social Impact Assessment (ESIA) was carried out to assess the Project’s environmental and social risks and impacts\. During the first phase of the Project, no issues were reported\. However, following the 2012 restructuring, it was noted that the provisions and guidelines of the Environmental and Social Impact Framework (ESMF) and Resettlement Policy Framework (RPF)28 had not been fully adhered to\. Since there were no safeguard focal points in the SNIES, PCU or within contractors’ teams, no one was responsible for ensuring that these frameworks had been followed and that safeguard requirements were observed under the Project\. Additional efforts were undertaken to address the shortcomings including the hiring of a safeguards specialist to provide guidance and raise awareness through workshops and a team was formed at the MOE and CN-PSE level to oversee compliance with safeguards\. A stronger relationship between the Ministry of Education and the Ministry of the Environment was also established\. 40\. An Environmental and Social safeguards audit conducted in January 2014 did find there were some areas where environmental and social clauses were not fully adhered to, though these deficiencies were deemed to be rather minor as they did not lead to environmental and safeguard breaches\. Indeed, the audit which was undertaken under the Pooled Fund concluded that the size and nature of infrastructure works carried out under the Project did not have any significant negative biophysical or socioeconomic impacts and did not result in the relocation of populations, loss of livelihood, or access to economic assets of populations\. Additionally, there were no objections or counterclaims pertaining to the allocation of land for schools during the life of the Project\. On the basis of the information above, overall safeguards compliance is rated Moderately Satisfactory\. 28 These delineated the step-by-step procedure for sub-projects screening, review, implementation and monitoring\. 17 Fiduciary Compliance 41\. Financial management\. An assessment undertaken during preparation concluded that the public FM systems and processes were not adequate for use in managing the FC-PSE\. However, the CN/PSE financial and accounting unit was deemed to have adequate capacity to manage FM and disbursement activities as this entity was also responsible for fiduciary management under the IDA-funded project\. Reviews of CN/PSE up until that point had found that this unit had adequately managed the IDA-funded project and its staff had been trained in World Bank fiduciary procedures\. At the time of preparation of the FC-PSE, the FM risk was Moderate and with some prescribed actions (in an FM action plan), the FM system would be further strengthened\. An updated FM assessment in 2011 found that the FM arrangements were still adequate for the purposes of the FC-PSE\. 42\. Staffing remained adequate and proper accounting procedures were followed throughout project implementation with all supporting documents maintained for FC-PSE expenditures\. Interim Unaudited Financial Reports (IFRs), which assessed finances for both the FC-PSE and the IDA-funded project, were prepared and submitted in a timely manner and were consistently deemed satisfactory\.29 All of the audit reports for the FC-PSE were unqualified\. Further, regular internal audits were carried out by the MEPU- EC Internal Audit Office\. An FM manual, approved prior to Project effectiveness guided FM procedures while additional manuals were useful in guiding certain activities (i\.e\., provision of school grants and block grants to DSEE)\. The Bank also provided continued support in its supervision missions\. FM was consistently rated Satisfactory under the Project\. 43\. Procurement\. A participatory procurement capacity assessment during project preparation had revealed that the procurement specialist and three analysts working within the CN/PSE had adequate experience to fulfill their roles and to carry out procurement activities under the Project\. In addition, the project procurement team for the IDA-funded Project was able to provide additional guidance and support to procurement activities under the Pooled Fund\. Each of the DPs had authorized the World Bank to review procurement documents for no-objections on their behalf\. The procurement activities and practices under the Project were adequate and undertaken in a timely manner and bidding documents were generally of good quality\. The Bank team provided consistent guidance and follow-up on procurement activities and procurement capacity was further strengthened with support from a procurement analyst financed by the FC-PSE\. 44\. Though there were some limitations in fiduciary capacity, there were no major issues relating to the use of accounting systems, preparation of financial statements, adherence to auditing requirements, and qualifications of accounting and procurement personnel\. Overall fiduciary compliance is, therefore, rated Satisfactory\. 2\.5 Post-completion Operation/Next Phase 45\. The Government and DPs through the Pooled Fund together with the IDA-funded EFA Project established a good foundation for continued collaboration and partnership today\. It also set the stage for continued support to a sector-wide approach to improving the education system in Guinea\. In addition to the ongoing IDA-funded Stepping up Skills Project which aims to address the growing needs of youth as they transition through the education system and in search of employment opportunities, a US$38 million Pooled Fund Project for which the Bank is the SE was approved by the Regional Vice President in July 2015\. The new Pooled Fund operation is funded by GPE, Ebola Recovery and Reconstruction Trust Fund 29 IFRs were even completed during the period of Bank disengagement when only AFD contributions continued to be provided within the Pooled Fund arrangement\. 18 (ERRTF), AFD and UNICEF and is expected to become effective in the fall of 2015\. The new Pooled Fund operation has incorporated many of the lessons acquired in the context of the FC-PSE and builds on and expands many of the activities supported by this operation (e\.g\., school grants and block grants) while also piloting some innovative approaches\. The Government remains committed to maintaining important gains in the sector while continuing to make progress in terms of building capacity of the system while increasing access to and quality of education in the country\. The recent Ebola Virus Disease (EVD) outbreak, however, has had, and is expected to continue to have an impact on the country’s ability to sustain the gains made and to devote the necessary financial and human resources to each of the social sectors\. Recently, Guinea was one of three countries to receive World Bank support through the ERRTF which intends to maintain, as possible, continued provision of key social services including education\. Given the recently approved funding to address EVD as well as the current GPE-funded operation, the prospect for maintaining and scaling up the gains made under the Project are good\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 46\. The original PDO was relevant to the Guinean context at the time as it focused on supporting the objectives as articulated by the Government in its ESP which had also been widely endorsed by other DPs working in the sector\. It also adhered to the principles of the 2005 Paris Declaration on Aid Effectiveness which guided approaches to development that emphasized ownership, alignment, and harmonization\. In addition to directly supporting the Government objectives and harmonization with other DPs, it also capitalized on the growing support within the EFA-FTI for using a Pooled Fund mechanism\. Moreover, the objectives were aligned with the aims of the PRSP II which had been developed around the same time and complemented the ongoing IDA-funded operation in the sector\.30 Finally, it was well-aligned with the EFA FTI strategy and the Bank strategy for support to Africa\. Following reductions in the financial resources available for the Pooled Fund and the growing needs for support to basic education, the PDO was appropriately revised\. The new ESP approved in 2014 for the period of 2015 to 2017 aims to support increasing equitable access to quality education while also strengthening overall governance of the sector through capacity-building\. This document is serving as the foundation for the development of the Government’s ten year sector development plan (Plan de Developpement decennal de l’éducation et de l’alphabétisation - PDDEA) which was endorsed in September 2014\. The relevance of the original and revised PDO is rated High\. 47\. The original design was consistent with the country’s development priorities\. The design of the original Program and the subsequent restructurings were appropriately situated within the broader aims of the Government’s 2008-2015 education strategy\. The FCPSE and the Government’s strategy both aimed to improve the education system in line with: (i) the Millennium Development Goals (E-MDGs); (ii) the newly articulated sustainable development goals (SDGs); and (iii) the targets of the EFA-FTI Indicative Framework\. The scope of the original Program and the restructurings are also in sync with the primary education sub-sector strategy of the Government\. The PDO-level indicators captured the main areas for intervention: (i) improving access; (ii) improving quality; and (iii) improving management\. Project preparation took into account lessons learned from previous projects and international good practice in the sector\. However, the far-reaching aims of the Project and reliance on institutional capacity which was limited at the time, the original design was overly ambitious\. In light of the information described above, the relevance of the original design is rated Modest\. 30 The IDA-funded Project supported a number of activities including, among others: revision to the national education policy, preparation of an education sector MTEF, comprehensive student testing in Math and French, TA and block grants to schools, empowering school management committees and DP coordination\. 19 48\. The revised design was focused on a select number of critical activities which were needed in order to achieve the overarching objectives of the Pooled Fund and were guided by a more accurate assessment of what could be feasibly achieved and implemented given the fragile context, limited institutional capacity, and significant reduction in available resources\. Indeed, the reduced levels of pooled funding reflected, to some extent, the DPs’ re-assessment of implementation and absorptive capacity of the education sector\. Appropriately, this was reflected in diminished scope of activities under the first restructuring, including the redistribution of civil works activities among different actors (based on their comparative advantages in specific areas) as well as adaption of modified activities to the existing capacity and implementation mechanisms\. Further, the decision to focus on human resource management in the revised design reflected an increased emphasis on strengthening management within the Ministry\. Modifications to indicators’ targets were scaled down under the second restructuring to reflect the withdrawal of KfW from the Pooled Fund\. The advantage of the restructurings was that learning from previous years and from the IDA-funded operation resulted in the adoption of more effective methods in managing and implementing project activities\. The consecutive restructurings helped with the continual stocktaking of capacity and progress, and under the second and third restructurings the end-of-project targets were recalibrated\. The results chain was well-defined and continued to be strengthened under each restructuring with each activity logically linked to achievement of the PDO and based on a more realistic plan for implementation\. The implementation design and institutions were continually reviewed throughout the Project’s implementation period\. The project restructurings reflected the task team’s responsiveness to needed adjustments as implementation progressed, thereby maintaining their relevance\. The methods continue to be relevant and are prioritized by the Government and development partners evidenced in the decision of the GPE-financed project to build on many of the approaches supported under the FC-PSE\. The relevance of the revised design is rated Substantial\. 3\.2 Achievement of Project Development Objectives 49\. The achievements of the FC-PSE are analyzed in relation to each of the sub-objectives of the Project\. The overall outcome rating is weighted based on the portion of the total net grant amount disbursed during each of the project phases as presented in Table 2\. Though the PDO was revised under the first restructuring to narrow its focus to basic education the three sub-objective of the PDO (in each iteration) were: (i) enhancing equitable access; (ii) enhancing quality; and (iii) strengthening decentralized management of the education system\. 20 Phase I: July 2008 – August 24, 2011 50\. Though the Project was not made effective until October 2011, it is useful to explore this period as a distinct phase of the Project given the unique circumstances\. Deterioration on a number of other key sector indicators was observed including decreases in the primary completion rate from 59 percent to 57 percent and increases in the primary repetition rate from 9 percent to 16 percent\. The difficult political and economic context prevented adequate Government and DP support that would have been necessary to make progress on each of the key sector indicators some of which were monitored under the FC-PSE\. The impact on learning outcomes could not be determined as the last national assessment prior to that time had been undertaken in 2007\. As AFD and UNICEF were able to continue to operate in Guinea during this period of non-engagement on the part of the Bank, the PCU was able to remain functional and it was able to launch the construction of 99 primary classrooms planned under the Project\. During this period, a baseline assessment of teachers’ competencies and knowledge was undertaken which informed the design of the in- service training program that was subsequently developed\. As a result of lack of formal involvement and limited information on most of the performance measures, it is difficult to evaluate the level of progress towards achievement of the PDO during this period\. Further, the Government’s contribution to the sector budget remained low during this phase with a peak in 2009\. In light of the above, the rating for progress towards achievement of the PDO during this phase is rated Modest\. Phase 2: August 25, 2011 - December 10, 2012 51\. Objective 1: Enhancing Equitable Access to Basic Education\. Following the restructuring of the Project in 2011, the FC-PSE aimed to increase equitable access to basic education\. As the Project had only began implementation after the first restructuring, in order to undertake a civil works program of this size, significant preparatory activities were necessary in order to successfully roll out the civil works program nationwide\. During this period, most procurement documents were reviewed and contracts signed related to construction\. This included the signing of contracts with NGOs to construct classrooms using a community-based approach\. A contract with the Bureau d’Ingenieur (BIC) was entered into in order to provide systematic technical support to the Ministry’s department of infrastructure (SNIES) while the study office (bureau d’etudes) had been tasked with conducting regular visits of the construction sites\. In order to ensure quality of infrastructure, monitoring and supervision of school construction was supported by the project through workshops for construction supervisors and also by supporting SNIES in the development of a user friendly and pedagogic manual as a useful resource for site supervisors\. In addition, during this roll out phase, targeted rural communities had developed their annual investment plans on which they were to financing for school construction\. These preparatory activities laid the foundation for improvements in equitable access throughout the country while also strengthening capacity to manage a large school construction program\. During this initial phase of implementation, the following trends were observed: GER (total/girls) in the nine target prefectures increased from 47 to 49\.6 percent (and from 43 to 45\.7 percent for girls); gross intake rate among girls increased slightly (from 77\.7 percent to 78 percent); and the number of direct project beneficiaries reached 767,559\.31 In terms of intermediate-level indicators, in addition to the 99 primary classrooms whose construction was being funded by the AFD, an additional 1,545 were under construction\. Based on the evidence presented above, the rating for this objective within Phase 2 is Substantial\. 52\. Objective 2: Improving Quality of Basic Education\. Following the 2011 restructuring, the FC- PSE aimed to improve the quality of basic education\. Some of the key activities undertaken during this 31 It would not be appropriate to discuss achievements during this period relative to end-of-project targets as the restructuring was undertaken in 2012 (and reporting most recent available data at the time) and the project was scheduled to close in January 2013\. 21 period included: a study tour of Ministry officials to learn from experience in the Gambia in carrying out the EGRA and efforts commenced to support the Government in undertaking the EGRA\. The Project took steps to strengthen the project approach to the grants activity – with revision to the manual of procedures for school grants and the provision of training to local entities\. The teacher trainee recruitment process was modified to ensure greater rigor in their selection which resulted in a reduced number of teacher trainees\. To this end, the Government agreed to provide scholarships to incentivize individuals to improve their qualifications in order to qualify to become teacher trainees\. A sensitization campaign was launched to increase the number of teacher trainee applicants\. In addition, ENI processes were harmonized and similar methodologies for training adopted while the roles and responsibilities for administrative posts in the institutes were developed\. With regards to girls’ education, 125 schools were selected for participation and 250 teachers from these schools were trained in French, reading and student-centered pedagogy\. In addition, 3,750 girls were provided supplementary private tutoring in French, math and sexual education and learning materials were also provided to them\. A TVET strategy was also supported and TA provided to introduce market driven programs in TVET skills centers linked to employment opportunities\. The TVET teacher training school was also reopened\. 53\. Trends observed during this period were the following: girls’ success rate on the examination for entrance to 7th grade in 100 targeted schools increased from 49 to 53 percent; a student learning assessment system at the primary level had been partially established, 2,895,400 textbooks had been purchased and distributed to schools\. The Bank and the Government had also developed an M&E system capable of tracking the delivery of textbooks up to the school level\. This rigorous system provided incentives as it held local structures accountable for their delivery\. In addition, 11,000 primary teachers were assessed in French and Math of which 3,000 were selected to benefit from in-service training\. Based on the information above, the rating for this objective within Phase 2 is Substantial\. 54\. Objective 3: Strengthening Central and Deconcentrated Management of the Education System\. Under the 2011 restructuring, the FC-PSE also aimed to strengthen management of the education system more generally, with an emphasis on strengthening human resource management\. During this period, an inter-ministerial MTEF team was established with an accompanying methodology and action plan\. The sector policy letter and sectoral analyses were being revised and expanded for the 2013-2015 period\. An MTEF was achieved (leading the effort amongst all sectors) which benefited from the participation of Ministry officials in a South-South learning exchange with Senegal to learn from its experience in carrying out an MTEF\. The statistical campaign for 2011 had been carried out with school level data made available and data for all subsectors was analyzed\. Improvements in annual statistical data were noted with comprehensive and regular data available for the entire sector and teacher management as measured by the allocation of teachers (deployment index) was maintained at 0\.70\. Further, responsibility for budget management and execution (of resources provided by the FC-PSE) was transferred to the decentralized levels\. Based on the above information, the rating for this objective within Phase 2 is Substantial\. 55\. In sum, given this was the first year of implementation, most activities commenced during this time frame\. Though indicators had been established, the targets of a number of these measures could not have feasibly registered progress within a one-year time frame though the large majority of these targets were achieved or exceed by the end of the project\.32 32 For example, implementation of annual budgeted action plans (PAAB) at the decentralized levels could also not be verified since funds had been transferred only in October 2012 in time for the beginning of the school year and implementation commenced only in 2012\. And annual reading assessments planned under the Project had not yet been undertaken as the assessment tools were under development during this period\. 22 Phase 3: December 11, 2012 – December 25, 2013 56\. Objective 1: Enhancing Equitable Access to Basic Education\. Achievements during this period point to improvements in equitable access to basic education\. During the third phase, construction of primary classrooms continued using the three selected approaches and concrete steps had been taken to address some of the issues identified related to monitoring and supervision of construction sites, including the establishment of a small committee to ensure regular follow up and reporting to donors on the status of the program\. During this period, the following trends were observed: GER for the nine targeted prefectures increased from 49\.6 percent to 53 percent (45\.7 percent to 47\.8 percent for girls); the number of direct project beneficiaries had more than doubled, increasing from 757,550 to 1,750,150; the gross intake rate also increased from 82 to 85 percent (and from 78 to 80 percent among girls); and construction and furnishing of 1,644 classrooms was underway with 615 of these having been fully completed\. An estimated 73 percent of planned construction had been completed by this time with the remaining primary classrooms expected to be completed by September 2013\. Based on the evidence presented above, the rating for this objective within Phase 3 is Substantial\. 57\. Objective 2: Improving Quality of Basic Education\. Efforts supported under the Project to enhance the quality of basic education also continued\. The procurement and delivery of textbooks increased significantly with the number of textbooks procured and delivered reaching 6,695,080 and continued to be monitored closely using local structures\. Almost all public primary schools received grants which created a positive dynamic within the schools and a number of individuals benefited from training provided relate to their delivery\. The 3,016 teachers that had been selected to benefit from in-service training participated in a 25-day training which took place in September of 2012\. This training, which covered both academic and pedagogical skills, was supplemented with a five-day training in December as well as a number of other activities\. Some of the supplemental activities supported included classroom observations, regional workshops, and training of school directors in learning assessment\. It was found that 54 percent of teachers benefiting from this training had improved results compared to baseline\. The sensitization campaign organized by the MEPU-EC continued to boost recruitment of qualified candidates and to ensure continuous monitoring of teacher trainees’ progress throughout the training\. As a result, 1,321 high school graduates were elected to enter ENI compared to only 71 two years prior to this\. Activities aimed at promoting girls’ education under the Project also contributed to the positive trends in their participation and performance on the 7th grade entrance exam\. Approximately 75\.4 percent of girls participating in the program passed the exam to enter 7th grade\. In terms of learning assessments, 60 schools were implementing early grade reading assessments (EGRA); learning assessments was carried out in grade 4 and a tracer study of tertiary and TVET was ongoing\. TA was ongoing to support the TVET teacher training school and to design new skills training programs linked to employment opportunities\. Based on the evidence presented above, the rating for this objective within Phase 3 is Substantial\. 58\. Objective 3: Strengthening Central and Deconcentrated Management of the Education System\. Important gains were observed in terms of strengthening management at the central and de- concentrated levels, where by this time all decentralized levels were implementing annual budgeted action plans\. Sector directorates were made responsible for executing their own budget rather than the relying on the financial controller within the Ministry of Finance (MOF), marking a major shift from the arrangements prevailing prior to the Project’s launch\. Annual education statistics data were made available at the beginning of the school year and teacher management had improved (with the deployment index, for Conakry only, reaching 76\.6 (R-Squared))\. With the support of TA from the Bank, training modules for the newly appointed management analysts (assistants gestionnaires) had been developed and the manual of procedures had been further expanded to spell out the government execution of the budget within a MTEF approach\. In addition to the launch of a diagnostic study within the PER (related to the function of 23 the DAFs), a review of the project management system was also under preparation\. Based on the evidence presented above, the rating for this objective within Phase 3 is Substantial\. Phase 4: December 26, 2013 - December 31, 2014 59\. Objective 1: Enhancing Equitable Access to Basic Education\. During the last period of the Project, planned activities to support an increase in equitable access to basic education under the operation were in their final stages of implementation\. Although construction was initially behind schedule, by the end of the Project, 1698 classrooms had been constructed and furnished\. As a result of efforts to strengthen supervision and control of the school construction program, the quality of the structures had improved significantly (regular supervision visits were conducted by a World Bank consultant)\. By the time of Project closing, GER for the nine targeted prefectures had reached 57 percent (and 53 among girls), a significant increase from just one year prior from 51 percent (and 46 percent among girls); the number of project beneficiaries reached 1,870,408 (an increase of more than 120,000 since the previous phase); and the gross intake rate had reached continued to increase from 86\.1 percent (and 81\.2 percent among girls) up from 85 percent (and 80 percent among girls) from just one year prior\. Based on the evidence presented above, the rating for this objective within Phase 4 is Substantial\. 60\. Objective 2: Improving Quality of Basic Education\. Improvements to quality continued through Project support to this area, particularly given the additional support to this area under the 2013 restructuring (with a reallocation of funding towards quality inputs)\. The number of textbooks provided by the end of project reached 7,162,393 increasing the number of textbooks available to students throughout the country and the textbook: student ratio\. An additional 1,000 teachers benefitted from in-service teacher training as a result of the reallocation under the restructuring and an estimated 80 percent of teachers who had benefitted from this training showed improved results from baseline (a significant increase from 54 percent just one year prior)\. The Government provided rewards to 554 teachers to incentivize improvements to the quality of teaching practices\. The Pooled Fund had also provided school grants to almost all primary public schools based on their school improvement plans\. The learning assessment system which had been established had been improved upon and 79 schools were implementing annual reading assessments\. Support to girls’ education initiatives continued with the provision of private tutoring and participation in the FIERE program (though the success rate dropped from 75 to 71 percent yet was significantly higher than the national average)\. Further, the percentage of students with a passing grade in French (grade 3) reached 15\.36, which was an increase from baseline\. More than 20 new programs catering to primary school drop-outs ( as well) were set up in four skills centers that use a competency-based approach with skills training linked to labor market demand\. Further, a cohort of TVET teacher trainers completed their training in the TVET teacher training institute\. Based on the evidence presented above, the rating for this objective within Phase 4 is Substantial\. 61\. An evaluation of school grants was also completed which found that the grants were disbursed in accordance with the procedures manual specifically developed for the purpose\. The media campaign to sensitize beneficiaries proved to be effective introducing the necessary transparency for managing the fund\. The evaluation found the following: (i) although the results cannot be solely attributed to the school grants, nevertheless, by the end of the Project, the grants had helped to reduce repetition rate and it had contributed to improved school participation rate and completion rate at grade 6 level, and an increased success rate at the grade 7 entrance examination; (ii) parents, the local administrations, and the local communities were heavily involved in monitoring the flow of the grants\. Parents confirmed improved motivation and attributed their children’s success to the school grants\. They voluntarily contributed to housing and supporting teachers, especially the community teachers; (iii) with the support of parents, new competencies were developed especially in the management of school assets and the mediation of conflicts; and (iv) 24 community artisans and workmen volunteered their professional services to building school desks and chairs, classrooms and sports fields\. 62\. Objective 3: Strengthening Central and Deconcentrated Management of the Education System\. The achievements were maintained and further scaled up during this last phase of the Project with all decentralized levels implementing annual budgeted action plans (PAABs)\. Annual sector statistics were again made available for the start of the school year and teacher management (as described using the deployment index, in Conakry only) had improved reaching 76\.7 (R-Squared)\. The findings of the project management assessment were used by the Government during this phase to develop a proposal for the new GPE project which was submitted to DPs for their feedback/assessment and the findings from the PER and were disseminated in the fall of 2014\. Significant capacity was built in the MEPU-EC toward programmatic budgeting and deconcentrating the budget execution to the MEPU-EC\. This was a significant public financial management (PFM) reform supported by the Project and contributed to stronger linkages with the Ministry of Finance (MOF)\. Based on the evidence presented above, the rating for this objective within Phase 4 is Substantial\. 3\.3 Efficiency Implementation efficiency 63\. Although the majority of the envisioned outputs and outcomes under the restructured design were effectively achieved by the project closing date, the efficiency of implementation was Modest given the initial lag in launching project-supported activities due to the political situation in addition to the need to extend the project closing date three different times in order to provide adequate time to complete activities which were essential for the achievement of the PDO\. However, it is worth highlighting that the actual implementation period of the project was only three years\. Cost-effectiveness 64\. Primary school construction\. The construction of primary classrooms under the Pooled Fund was relatively cost-effective when analyzed against other relevant comparators\. The average cost per classroom built under the Pooled Fund ranged from US$13,104 to US$17,136 with a large portion of schools constructed under the Project built using the lower cost approaches (see table below)\. The average cost of a primary classroom in Ghana is estimated to be US$16,65133\. In Sudan, an example of a post-conflict environment, the average cost of a primary classroom is estimated to be as high as US$30,00034\. By the end of the project, the construction of the 1,644 had been completed using the three different approaches— community-based, NGOs, and through small and medium enterprises\. The following table provides the comparisons: 33 Ghana Education Sector Project (EdSeP) Implementation Completion and Results Report, 2012\. The average cost of a 6-classroom school constructed with EdSeP financing was estimated to be US$99,909\. The unit cost a classroom (simple average of $99,909/6) is estimated to be US$16,651\. 34 Republic of Congo, Support to Basic Education Project (PRAEBASE), Implementation Completion Report, 2014\. 25  Table 4\. Guinea: Classroom Unit Costs by Provider Method of Construction Cost (US$) Pooled Funding Modalities PACV (community based) – GPE 13,104 Medium and Small Enterprises (rural) – GPE 13,734 Non-Government Organizations (NGOs) – GPE 14,490 Medium and Small Enterprises (urban) – GPE 17,136 Comparator UNICEF – GPE 17,577 Source: Guinea: Public Expenditure Review: Volume 1\. June 2015\. 65\. Textbooks\. The Project financed the procurement and delivery of textbooks at an average unit cost ranging from US$0\.65 and US$1\.4 for primary school core subjects\. The unit cost is in line with other projects implemented during the same time period in the Ivory Coast, Niger and Burundi where primary school textbooks were acquired for unit costs ranging between US$1\.1 and US$1\.4\. The procurement of textbooks was successfully completed and the contracts were signed with savings of GNF 3 million (about US$399)\. This helped with the procurement of additional textbooks\. Efficiency gains (or savings) were realized due to lower unit costs as a result of the volume of textbooks that were procured\.35 and also due to gains in the exchange rate differential between the US dollar and the GNF making it possible to procure a larger than estimated number of textbooks\. 66\. Girls academic achievement: although the scale of the intervention was small (about 4000 girls), specifically taylored tutoring in math and french for girls in 6th grade contributed to producing higher learning achievement and higher level of success in end of the primary examination to transition to secondary school\. 67\. The economic rationale for investing in basic education remains strong in Guinea\. According to recent PREM estimates (2014), the estimated marginal returns to education (baseline – no education) are 64 percent for an individual who has completed primary schooling and 89 percent for an individual who has completed lower secondary schooling\. Sustainability 68\. The Project contributed to complementing and sustaining reforms that were already underway since the early-2000s\. The Project financed the purchase of textbooks on the basis of experience gathered from implementing the IDA project\. Consequently, the cycle for replacing textbooks was adopted\. The approach to civil works through the use of multiple agents helped to address key constraints and put in place viable options for effective construction, making it possible to replicate the approach for the follow-on project36\. 35 Gains in the exchange rate differential between the USD and the GNF also made it possible to procure a larger number of textbooks than had originally envisaged\. 36 See the recently approved Project Appraisal Document for the “Pooled-Fund for Basic Education” Project dated July 9, 2015 in the amount of US$37\.8 million from GPE and US$1 million from the Ebola Recovery and Reconstruction Trust Fund\. Report No\.PAD1085\. 26 3\.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory 69\. The table below summarizes the ratings for relevance of objectives/design, efficacy and efficiency\. The combined overall outcome rating for the Project is Moderately Satisfactory\. Table 5\. Overall Outcome Rating First Phase (July 30, 2008 – August 24, 2011) By First Restructuring on August 25, US$0 Million Disbursed 0 percent of grant amount (0 percent of net grant amount – cumulative) Relevance of Achievement of PDO Efficiency Overall Rating Objectives and Design (Efficacy) High/Modest (Substantial) Modest Modest Moderately Unsatisfactory Second Phase (August 25, 2011 - December 10, 2012) By Second Restructuring on December 11, 2012, US$25\.56 Million Disbursed 64 percent of grant amount (64 percent of net grant amount -- cumulative) Relevance of Achievement of PDO Efficiency Overall Rating Objectives and Design (Efficacy) High/Substantial Substantial Modest Moderately Satisfactory Third Phase (December 11, 2012 – December 25, 2013) By Third Restructuring on December 26, 2013, US$38\.76 Million Disbursed 33 percent of grant amount (97 percent of net grant amount – cumulative) Relevance of Achievement of PDO Efficiency Overall Rating Objectives and Design (Efficacy) High/Substantial Substantial Modest Moderately Satisfactory Fourth Phase (December 26, 2013 - December 31, 2014) By Project Closing (December 31, 2014), US$40\.0 Million Disbursed 3\.3 percent of grant amount (100 percent of net grant amount -- cumulative) Relevance of Achievement of PDO Efficiency Overall Rating Objectives and Design (Efficacy) High/Substantial Substantial Modest Moderately Satisfactory OVERALL OUTCOME RATING Relevance of Achievement of PDO Efficiency Overall Rating Objectives and Design (Efficacy) High/Substantial Substantial Modest Moderately Satisfactory 27 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 80\. The Project contributed positively by adopting a clear pro-poor investment strategy, in that the districts with the largest levels of either absolute or relative need received a great proportion of financial assistance to improve access\. This determination is based on the fact that the Project specifically targeted prefectures with the greatest need\. As the ESP and PRSP II were developed at around the same time, they are strictly aligned\. The project’s focus on promoting equitable access was a pro-poor strategy, promoting the inclusion of underserved populations, including populations living in rural areas as well as girls\. The poverty impact of the Project was primarily in increasing access for the poorest to primary education, requiring greater budgetary allocation for education from Government\. The Project also contributed to shifting the benefit incidence of public education expenditure in favor of the poorest quintile\. 81\. Approximately 48 percent of project beneficiaries were female\. The Project provided specific incentives for girls’ education to meet education demand\. A large number of schools benefited from interventions based on the FIERE approach (strategy to keep young girls in school) and 250 teachers were trained in French, reading and student-centered pedagogy\. Approximately 3,750 grade 6 female students benefited from private tutoring in Mathematics and French\. This was intended to increase their chances of successfully completing primary school\. The expansion of the program showed encouraging results with 71\.3 percent of girls participating in the program passing the exam to enter grade 7 compared to 63 percent of girls at the national (public and private) and 58 percent for public only\. The social development benefits of greater numbers of females completing primary education is directly linked to reduced fertility, improved healthcare, and schooling for girls\. (b) Institutional Change/Strengthening 82\. There was strong institutional and political will to improve access and quality of education\. MEPU- EC received targeted support for institutional capacity strengthening\. School grants created a positive dynamic within the school, between the schools and communities\. In addition, the deconcentrated levels also received support to catalyze intended partnerships\. Sensitization campaigns with respect to teacher training helped to raise awareness about the importance of investing in teacher qualifications\. Donor collaboration within the pooled fund setting was strong and there was positive complementarities between the AFD and the Bank as the SE of the FTI CF for the Pooled Fund\. The successive restructurings strengthened the focus on institutional development at central and decentralized levels\. This helped to institute the implementation of PAABs at decentralized levels\. System oversight was progressively strengthened for the activities that were retained\. (c) Other Unintended Outcomes and Impacts Not Applicable\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 85\. A summary of the Government’s ICR can be found in Annex 7 of this report\. The full report can be found in WBdocs\. Due to the Ebola virus disease (EVD) outbreak, neither a beneficiary survey nor a stakeholder workshop could be undertaken\. 28 4\. Assessment of Risk to Development Outcome Rating: Moderate 70\. The Risk to Development Outcome following the end of the Project is rated Moderate\. Institutional capacity was strengthened as a result of the training provided under the Project, specifically with regards to FM, procurement and overall project management\. This was further complemented by support of the sector provided through the 12-year IDA-funded Project\. Capacity in these areas will be further strengthened under the new Pooled Fund operation in order to successfully manage activities in the sector and to implement large-scale reform initiatives\. Specifically, the Pooled Fund aims to strengthen overall governance of the sector through interventions to build capacity for effective management and coordination of the system, improved efficiency and consolidation and acceleration of interventions promoting decentralization\. The Pooled Fund is supportive of the current ESP (2015-2017) and aims to maintain gains observed under this Project and to make more progress in terms of increasing equitable access to quality education and in terms of strengthening overall management of the sector\. The Pooled Fund also supports a number of activities which were successfully implemented under this operation including, among others: the provision of school grants; construction of classrooms using a variety of implementation modalities; and training of teachers and provision of pedagogical support\. 71\. In 2014, the Government pledged to increase public funding for education to 19\.2 percent of the national budget by 2017, corresponding to 4\.6 percent of GDP, and increase the primary education allocation to 46\.3 percent of the education budget also by 2017\. It has also pledged to accelerate public financial management (PFM reforms)\. Despite the Government’s commitment, the country is facing some fiscal constraints which could pose some challenges to scaling up some of the project activities and continuing to ensure positive sector wide gains\. In particular, the recurrent costs associated with the newly constructed classrooms will require financial support in terms of upkeep and proper maintenance\. This issue is of particular concern in light of the recent EVD outbreak with Guinea being one of the most significantly affected countries in the region\. The longer-term development impact of this project may be more limited than initially anticipated as the Government tries to contain and put a stop to the EVD epidemic\. In an effort to control the outbreak, it was necessary to close schools for several months in turn limiting the instructional time of children\. Though efforts are being made to recapture this time, this lapse can have a negative impact on learning outcomes\. However, within the new GPE project, funding from the Ebola Recovery and Reconstruction Trust Fund37 is providing support to measures to limit its impact on the education sector\. Further, a number of DPs have committed support to education for this upcoming period including AFD and UNICEF as well as IDA which is currently providing support to skills training for youth, many of whom are unemployed, which is critical in light of the growing pressure at the secondary level\. In light of the above, the Risk to Development Outcome is rated Moderate\.  5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 72\. The original FC-PSE was prepared in an environment of political and economic uncertainty\. The design and scope of the program was based on the adoption of pooled funding mechanism as an overt expression of donor harmonization consistent with the 2005 Paris Declaration\. The FC-PSE design was innovative, ambitious and aimed to support a wide variety of activities across the entire education sector\. 37 Republic of Guinea\. July 9, 2015\. Pooled-Fund for Basic Education (FoCEB)\. Report No\. PAD1085\. 29 The operation’s design was informed by lessons learned from similar operations and drew on the Bank’s experience within the education sector in Guinea\. Despite the strong alignment of the Project’s objectives with the Government’s own strategic agenda and sector program, the FC-PSE’s original design was overly ambitious in terms of its scope and its estimation of the institutional and operational capacity of the Government to implement and monitor such a large operation\. 73\. Following the reduction in financing from the FTI and the reengagement of the Bank with the country, the FC-PSE was reviewed and restructured collaboratively with the Government and DPs to ensure that the design appropriately reflected the difficult country context at the time while also ensuring that adequate financing would be available to support the implementation of a select number of strategic interventions aimed at increasing equitable access to quality education and strengthening management in basic education\. On the basis of the above, Quality at Entry is rated Moderately Unsatisfactory\. (b) Quality of Supervision Rating: Satisfactory 74\. Throughout the implementation period of the Pooled Fund, the Bank responded appropriately at each juncture to adjust the operation’s design in order to increase the likelihood of attaining the envisioned outputs and outcomes of the Project\. Given the Bank’s long-standing support to the sector and a proactive task team, the operation was able to be restructured and the GA reinstated shortly after the Bank was officially allowed to reengage with the Government\. It was one of the first DPs to reengage in the sector which was largely possible as a result of the efforts put forth to maintain continued dialogue with the technical teams in the country\. The Bank provided both the much needed technical support and guidance in order to swiftly launch large scale project activities including construction of primary classrooms\. In addition to participating in joint supervision missions, the Bank team held periodic meetings with the Government and DPs to discuss progress of the Pooled Fund, and more generally, progress within the sector and strategy development\. This proactivity was particularly useful as neither an HD or education-tasked staff was in the country office at the time\. The task team responded in a timely manner to requests to restructure the FC-PSE\. Though the restructuring papers clearly show changes in the RF and in planned activities, the inclusion and exclusion of indicators in ISRs made it more difficult to systematically track achievements during the initial phase of the Project, though M&E design and utilization improved significantly during the course of the operation’s implementation\. Supervision was carried out diligently for the portion of the funding that was administered by the Bank, the fiduciary due diligence was executed in a timely manner, the proceeds of the Grant were reallocated as necessary, and adherence to safeguards’ policies was monitored\. 75\. As the SE, the Bank played an important role in supporting donor coordination\. In addition to joint supervision missions, the Bank ensured that M&E of the ESP was carried out and that budget planning and expenditure analysis were carried out in a timely manner\. These aspects showed the Bank’s commitment to shared objectives with the Government and DPs active in the sector\. One limitation of the Bank’s performance during supervision was the decision not to formally track and report on all funding committed to the Pooled Fund but rather to focus mostly on the portion for which it was legally mandated to supervise\. Based on the above, Quality of Supervision is rated Satisfactory\.     (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 76\. Overall Bank Performance is rated Moderately Satisfactory\. This rating is based on the combined rating of Quality at Entry (MU), Quality of Supervision (S), and Overall Outcome Rating (MS)\. 30 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 77\. Although the operation was strongly aligned with the Government’s strategy it was originally overambitious and did not account for the capacities of the various institutions on which it relied for its effective implementation\. The difficult political and economic environment which culminated in the coup d’etat in 2008 also undermined the Government’s ability to initially commit the resources required to implement the activities to be supported under the Pooled Fund\. The GPE Grant was reinstated in 2011 following re-engagement of the Bank with a new Government\. Though the Government’s capacity to provide support to the sector improved following the Bank’s formal reengagement, the level of resources made available to the sector did not remain consistent\. Despite the difficulties and the challenges, the Government was proactive in its participation in supervision missions and joint annual sector reviews, preparing all of the necessary documentation required to evaluate progress and to ensure continued improvements\. The Government also effectively carried out its fiduciary functions in particular submitting annual financial audits and detailed procurements plans\. Efforts were also made to strengthen its support to supervision of construction activities and to strengthen adherence to safeguards requirements\. Overall Government performance is rated Moderately Satisfactory due to the strong performance notwithstanding the challenging and shifting context in which the Project was implemented\. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 78\. Despite the challenges, the technical teams in the ministries of education continued to function throughout the period from 2009 to 2011 when the Bank had formally disengaged with the country\. During this period, as a result of the support of AFD and UNICEF, the PCU was able to remain intact and functional\. Soon after the Bank’s formal re-engagement, the Ministry was able to quickly refocus its attention towards the Project and ensured its timely start up\. Since many of the activities required support and input from decentralized levels, this operation required continued support from the central ministry\. The Ministry also maintained strong dialogue with the Bank and worked collaboratively with the project team to adjust the project design in light of financial support available and the necessary refocusing of priorities\. Once the groundwork for project activities was prepared in the Project’s initial phase, the project momentum remained high throughout the project life\. Based on the above, the implementing agencies’ performance is rated Moderately Satisfactory\. (c) Justification of Rating for Overall Grantee Performance Rating: Moderately Satisfactory 79\. Overall Grantee Performance is rated Moderately Satisfactory\. This rating is based on the combined rating of Government Performance (MS), Implementing Agency Performance (MS) and the Overall Outcome Rating (MS)\. 6\. Lessons Learned 80\. Project design should consider the fragility of the economic and political environment\. The FC-PSE was designed in a politically, socially and institutionally fragile setting\. The Pooled Fund approach to supporting the Government in achieving its sector objectives was appropriate in light of the 2005 Paris Declaration and efforts to promote sustainability of investments in the sector\. The complex design of the FC-PSE which supported activities across the sector was reliant on strong institutional capacity and inter- ministerial coordination was ambitious\. Though the project was significantly reduced in terms of scope and implementation needs in response to reduced funding in 2011 and 2012, it may have been useful at 31 either of these times to reduce the scope even further in order to better ensure the timely and effective implementation of project-supported activities and effective M&E\. 81\. Pooled funding can be an effective mechanism for providing support to achievement of the Government’s strategic objectives in the education sector\. This project’s strong alignment with the Government strategies and support from other DPs active in the sector including AFD, KfW and UNICEF promoted harmonization of efforts, reduced duplication of activities, and promoted continued support to the education sector during a period in which the Bank was only able to provide informal technical support to the Government\. 82\. The Bank’s swift engagement following periods of crisis can be instrumental in ensuring that Governments have the necessary financial and technical support to continue to implement their sector strategies and to provide services at a time when its own resources and capacity are more limited\. The timely reengagement of the Bank under this Project was possible, in large part, due to the proactivity demonstrated by the Project team in maintaining technical dialogue with the Project team and with the DPs that were active on the ground throughout the period following the coup d’etat\. 83\. Building on the strengths of complementary projects and helps to avoid duplication, cumulatively reinforce institutional capacity, and strengthen national capacity\. The FC-PSE design and implementation was able to benefit from the ongoing IDA-funded Project\. In addition to ensuring complementary in activities, it laid the foundation for strong cooperation and coordination within the sector and a good working relationship with the Government\. As a result of the Bank’s long-standing support to Guinea, the FC-PSE was able to re-engage in the sector and begin implementation shortly after the Bank’s formal reengagement\. 84\. The establishment of a robust M&E system is instrumental in ensuring that the outputs and outcomes of an operation are properly documented\. Though the M&E system established and used in the context of the Project required input from various decentralized levels, the information provided by this system was critical for undertaking joint annual sector reviews and for adequately documenting and reporting on achievements observed under this operation\. 7\. Comments on Issues Raised by Grantee/Implementing Agencies/Donors Not Applicable\. (a) Grantee/Implementing agencies (b) Cofinanciers/Donors (c) Other partners and stakeholders 32 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Components Pooled Fund EFA-FTI Appraisal Appraisal Appraisal Estimate for Estimate for Actual Percentage of Estimate* EFA FTI reduced EFA-FTI* Appraisal (only)** EFA FTI** 1\. Improving equitable access to basic [and non- 119\.0 90\.9 23\.7 22\.7 96 formal] education 2\. Improving quality of basic [and non-formal] 26\.0 20\.1 11\.8 12\.6 107 education 3\. Strengthen the management of the 9\.0 6\.8 4\.5 4\.7 104 education sector*** 4\. Unallocated 6\.0 Total Baseline Cost 160 40\.0 100\.0 Physical Contingencies 0\.0 0\.0 Price Contingencies 0\.0 0\.0 Total Project Costs 160 40\.0 100\.0 Total Financing Required 160 117\.8 40\.0 40\.0 100\.0 * Of the US$117\.8 million, US$77\.8 million was canceled, bringing the total financing from EFA-FTI Catalytic Fund to US$40 million **These values are taken from the 2011 Restructuring Paper\. ***Improving Management of the Educational System was the original title of Component 3 [denotes original Component title] (b) Financing Type of Appraisal Estimate Actual/Latest Estimate Cofinancing (USD millions) (USD millions) EFA-FTI Pooled 117\.8 40\.0 Other (AFD & KFW) Pooled 42\.2 AFD Pooled 27\.0 KfW Pooled 15\.2 Total Financing 160\.0* Note: *Figure does not add up due to rounding\. 33 Annex 2\. Outputs by Component 1\. The original PDO of the Pooled Fund (FC-PSE) or Education Sector Development Program was “part of the Recipient’s Program, which contributes to enhancing equitable access to and quality in education at all levels, with focus on primary education and literacy training, while also strengthening central and deconcentrated management of the education system\.” 38 In the main text of the Project Appraisal Document (PAD), ten project development objective (PDO)-level indicators39 are listed in the three key areas (also aligned with Components 1 through 3 of the FC-PSE design): (i) Improving Equitable Access: (a) access rate in first grade (total/girls) to increase from 77 percent (to be determined) in 2007 to 88 percent (to be determined) in 2010; (b) primary GER to increase from 79 percent in 2007 to 90 percent in 2010; (c) ratio girls: boys in primary to increase from 0\.83 in 2007 to 0\.92 in 2010; (d) completion rate in primary (total/girls) to increase from 59 percent (to be determined) in 2007 to 71 percent (to be determined) in 2010; and (e) transition rate to lower secondary to decline from 73 percent40 in 2007 to 65 percent in 2010\. (ii) Improving Quality: (a) percentage of students with a passing grade in French (year 4) to increase from 50 percent (2005 data) in 2007 to 55 percent (2009 data) in 2010; (b) percentage of students with a passing grade in Math (year 4) to increase from 51 percent (2005 data) in 2007 to 57 percent (2009 data) in 2010; and (c) repetition rate in primary to remain stable at 9 percent from 2007 to 2010\. (iii) Improving Management of the Educational System: (a) portion of recurrent State expenditures for education to increase from 13\.7 percent in 2007 to 18\.1 percent in 2010; and (b) portion of education expenditures for primary to increase from 33 percent in 2007 to 42 percent in 2010\. 2\. The GA dated July 30, 2008 only specifies that the Recipient shall monitor and evaluate the progress of the Program and the Project and prepare Program and Project Reports\. 3\. This Program was designed in the broader context of the Government’s ESP (2008-2015)41 which aimed to: improve the country’s education system in line with the education MDGs (E-MDGs) and the targets of the EFA-FTI Indicative Framework support the development of human capital as well as economic growth; and in turn contribute to poverty reduction in the country\. The education strategy was also detailed in the sector policy letter\. Support to the Government in achievement of its sector objectives would be provided through the Pooled Fund (FC-PSE) with contributions from EFA-FTI Catalytic Fund, KfW and AFD\. In addition, IDA support to the ESP and the Government’s reform program was provided through the EFA Project which was under implementation at the time that the Pooled Fund was being prepared (this operation was designed as a three-phase Adaptable Program Loan (APL) for the period 2001- 2013)\. 38 In the main text of the PAD, this is worded a little bit differently with the objective of the FC-PSE being to enhancing equitable access to and quality in education at all levels – with focus on primary education – and literacy training, while also strengthening central and deconcentrated management of the education system\. 39 The GA does not make any references to the KPIs\. 40 In a subsequent implementation status report (ISR) this figure was described as an accurate with the accurate baseline value listed as 65 percent\. 41 Guinée Description du Programme Sectoriel de l’Education 2008-2015 (PSE)—version octobre 2007 is available in electronic and print format from the National Coordination of the PSE in Guinea and by request to the World Bank\. 34 4\. The rationale behind the Pooled Fund approach was that it would promote harmonization of donors’ support of Government efforts, improve efficiency of efforts to support the ESP while also reducing transaction costs for Government in line with the 2005 Paris Declaration on Aid Effectiveness\. The Pooled Fund (FC-PSE) supported a sub-set of the ESP referred to as the ‘FC-PSE’ program\. The ESP and Guinea’s PRSP II were elaborated at the same time and as a result were strongly aligned\. Further, the FC-PSE indicators in the original design were taken directly from the ESP Matrix\. 5\. The FC-PSE aimed to address a number of challenges including: (i) low access to education for the poor (particularly in rural areas and among girls); (ii) high dropout rates, in part a result of a large number of schools not providing the complete six-grade primary cycle\. Though multigrade schooling had been encouraged in sparsely populated areas, it had been implemented with only varying levels of success; (iii) increase in number of students in secondary education leading to overcrowded classrooms (necessitating improved retention at this level); (iv) limited quality of education despite investments to improve teaching and learning, especially in primary education, to date; (v) and management methods in education administration which were inefficiency and not likely to be sustainable without continued support from DPs; and (vi) insufficient allocations for the sector and allocations within the sector\. 6\. As described earlier, the Project was approved in 2008 and was scheduled to close on August 31, 2011\. Though it was scheduled to become effective in January 2009, it did not become effective until October of 2011\. In 2008, there was a coup d’etat in Guinea which prevented the FTI Grant from becoming effective, although project effectiveness conditions had been met\. The World Bank Policy [OP7\.30] "Dealings with De Facto Governments" had been triggered and several months later, in September 30, 2009 the country fell into arrears\. This led to the suspension of the Bank’s formal engagement in the country and the sector, for the FC-PSE this meant that the Bank had not legally entered into its role as SE\.42 In 2011 when the arrears were cleared, the Bank formally reengaged with the country On June 6, 2011 the waiver to World Bank OP13\.00 "Signing of Legal documents and effectiveness of loans and credits" was issued and approximately three months later on September 22, 2011, the EFA-FTI Grant agreement was reinstated and the Pooled Fund (with Bank as SE) became effective on October 20, 2011\. 7\. The Project was restructured three separate times, as follows: 8\. Just prior to the reinstatement of the GA, the project was restructured (level 1)\. The FTI amount for the Pooled Fund was reduced from US$117\.8 million to US$64 million, with the World Bank assigned to manage US$40 million as the SE and UNICEF had been made responsible for US$24 million as Implementing Entity (IE) as it was able to continue its activities in the sector during the period of disengagement\. The PDO was revised to focus only on providing support to basic education, and the scope of activities was reduced and reoriented\. Finally, the project closing date was extended from the original date of August 31, 2011 to January 15, 2013 as this extension was stipulated by FTI\. 9\. The Project was restructured again (level 1) in 2012 in response to the withdrawal of KfW from the pooled fund since legislative elections did not take place as anticipated\. The Project activities and relevant targets were reduced (though the PDO was not revised) and a more realistic timeframe was introduced allowing for additional time to complete project activities) with a one year extension of the project closing date from January 15, 2013 to December 31, 2013\. The additional time was particularly critical for the school construction activities – as it would require more than one year of implementation 42 However, the first disbursement by the French Agency for Development AFD within the pooled fund, provided sufficient funding to ensure that the Project Coordination Unit (PCU) could remain operational\. The AFD also funded the evaluation of teachers (to prepare for in-service training) and the launch of the construction of 99 primary classrooms\. Providing a total amount of funding during this period of US$2\.3 million\. 35 (and accounted for a large portion of the grant funding) although the design comprising three modalities of construction [NGOs, Memorandum of Understanding with the Programme d’Appui aux Communautés Villageoises Program in support of village communities (Community Driven Development Project supported by the World Bank)], and Small and Medium Enterprises, remained fully appropriate\. 10\. The last restructuring (level one) was approved on December 26, 2013\. Under this restructuring, financing from the Pooled Fund was reallocated from the construction of middle schools which could not be completed by the project closing date to quality inputs including in-service teacher training, the provision of learning materials for early grades and textbooks benefiting secondary schools, and for continued technical assistance\. In addition, the closing date was extended by one year from December 31, 2013 to December 31, 2014 and indicators and targets were adjusted accordingly\. 11\. Most of the FC-PSE activities were piloted or even implemented nationwide during the previous Government-supported Education for All Program (Programme Education Pour Tous43--PEPT), and were amended to reflect the results of various PEPT evaluations\. Further, specific operational guidelines had been developed for certain broad categories of activities, such as teacher training, school construction, and grant-supported school improvement projects\. These manuals were included in the suite of guidelines that comprised the Operational Manual of the Education Sector Program—OM-PSE, endorsed by the Government and donors\. The original FC-PSE program comprised three main components: (i) improving equitable access to basic and non-formal education; (ii) improving quality of basic and non-formal education; and (iii) strengthening management of the education sector\. 12\. The program and project scope of activities were amended during the first project restructuring in 2011, with some activities being retained with amendments, some new, and one activity that was dropped\. The following table highlights the changes to the Project design (as reflected in the GAs over the Project life)\. Table 1\. FC-PSE Project--Scope of Activities Original Program First Project Second Project Third Project Restructuring Restructuring Restructuring (2011) (2012) (2013) Part A: Improving Part A: Improving Part A: Improving Part A: Improving Equitable Access to basic Equitable Access to basic Equitable Access to basic Equitable Access to basic and non-formal education [no non-formal education education education education] [amended] (i) Improving pre-school, (i) Improving [no pre- (i) Reduction of primary (i) construction of primary and secondary school] primary and school construction by 240 secondary schools was level educational secondary level educational classrooms from 1,900 to cancelled infrastructure by infrastructure by 1,660; constructing or constructing or Reduction of secondary rehabilitating and rehabilitating and school level construction 43 PEPT was the Government’s education sector program prepared in 2001\. It aimed to support the achievement of the EFA goals for the period 2002-06\. It was a first effort to unite all donors around a common framework in support of the Government-led education sector program\. However, it was short lived, in part, because there was no common framework to finance the PEPT and donors continued to implement their activities independently\. Under the PSE, some donors decided to use a common funding mechanism and all donors had agreed to sign a Partnership Agreement committing them to align their interventions in the education sector with the Government-led PSE\. 36 furnishing of primary furnishing primary from 200 to 72 lower classrooms and classrooms [no classroom secondary classrooms\. secondary classrooms, as pre-schools] and secondary [targets revised] well as classroom pre- classrooms in targeted schools in targeted areas\. areas\. [amended] (ii) Expanding (ii) Expanding educational (ii) Cancelation of (ii) Unchanged educational access of access of primary-level partnership agreement with primary-level students students with special needs specialized organizations with special needs by by providing additional for inclusive education and providing additional training for teachers and 50 percent reduction in training for teachers, provision of special materials to be acquired\. provision of special education materials [no [targets revised] education materials and minor civil works]\. minor civil works\. [amended] (iii) Expanding access to (iii) (a) Developing (iii) Validation of sectors of (iii) Unchanged literacy training by strategies and establishing growth has been finalized, financing literacy partnerships with the the partnership with courses, providing private sector as well as international institutions professional identifying sectors of and private sector remains\. development for literacy growth through the Cancelation of construction trainers and supervisors provision of technical and rehabilitation of responsible for assistance (including the professional integration monitoring and carrying out of surveys and centers, and a new strategy evaluation, and studies); and (b) of vocational training supporting the National constructing, rehabilitating linked to mining sector is Literacy Secretariat and furnishing professional being introduced (technical (Secrétariat National de integration (TVET) centers assistance and l’Alphabétisation)\. at selected sites\. [new] construction/rehabilitation of technical training centers)\. A detailed action plan developed with the recruitment of the new technical assistance\. [amended] (iv) Establishing (iv) Promoting school (iv) Sensitization campaign (iv) Unchanged professional integration demand through (a) private for the demand of schools courses for primary and courses to girls to keep for one year instead of two lower secondary leavers them in school; (b) and an increase in the by constructing and provision of school kits to provision of private equipping professional children in the targeted tutoring for girls to keep integration centers poorest prefectures; (c) them in school\. [amended] throughout the country, carrying-out social preparing teaching mobilization in selected materials, and training sub-prefectures through teachers\. sensitization campaigns; and (d) provision of teaching aids to, and training of, targeted teachers in multigrade classrooms\. [new] 37 (v) Increasing availability of skilled [dropped] labor for the mining sector by creating short- term professional training courses\. Part B\. Improving Part B\. Improving Quality Part B\. Improving Quality Part B\. Improving Quality Quality of Basic and of Basic [dropped Non- of Basic Education of Basic Education Non-formal Education formal]Education [amended] (i) Provision of textbooks (i) Provision of textbooks (i) Cancelation of (i) Unchanged for public and private for public primary and acquisition of storage space primary and secondary secondary schools as well for the textbooks and schools as well as basic as carrying out a technical cancelation of secondary learning supplies for pre- and financial audit on such level textbooks; due to the schools provision [amended] open and competitive process, the number of textbooks for primary have been increased\. [amended] (ii) Construction of 8 (ii) (a) Rehabilitating (iii) Modification of pre- (iii) Unchanged teacher colleges (Ecole selected teacher colleges; service teacher training Normale d’Instituteurs) (b) strengthening teacher activities through and provision of training curriculum through cancelation of subsidies to said colleges technical assistance; (c) supplemental extension and financial incentives assisting with the civil works at the Teacher to teachers development of Training Institutions (ENIs Performance Contracts and removal of with the Teacher Training performance contracts)\. Institutes; and (d) [amended; target revised] supporting teacher training pursuant to Performance Contracts\. [new] (iii) Supporting (iii) Supporting in-service (ii) Reduction of in-service (ii) An additional 1,000 continued training for training for primary and teachers trained from 5,000 secondary teachers were primary and secondary secondary teachers, and to 3,000\. [target revised] provided training teachers, and school primary school directors directors at the regional [amended] and local levels (iv) Provision of Block (iv) Provision of Block (v) Cancelation of (v) Unchanged Grants to schools and Grants to primary schools provisional stipends for DSEE and DSEE in support of newly certified teachers\. their school improvement Block grants to primary projects\. [amended] schools and School Delegations for Elementary Education DSEE in support of their school improvement project remains unchanged\. [amended; target revised] 38 (v) Conducting nation- (v) Conducting nation-wide (vi) Nation-wide student (vi) Indicator for learning wide student learning student learning learning assessment in 4th assessment was changed assessments assessments grade remains unchanged; to allow for comparability Support to piloting of Early over time\. Grade Reading Assessment (EGRA) remains unchanged with teacher training decreased by one year, and cancelation of in- service teacher training for secondary teachers\. [slightly amended] (vi) Implementing (vi) Supporting reform in (iv) Completion of the (iv) PER was a full curriculum reform in higher education and public expenditure review education sector PER but a higher education carrying-out [amended] of higher education is the study of higher education only study remaining in this scholarships and transfers sub-sector\. was financed to supplement the PER\. Part C: Strengthening Part C: Strengthening Part C: Strengthening Part C: Strengthening Management of the Management of the Management of the Management of the Education Sector Education Sector * Education Sector Education Sector (i) Enhancing the (i) Strengthening the CN- (i) Unchanged (i) Unchanged capacity of the National PSE’s capacity at the Service for Educational central and deconcentrated Infrastructure and levels to monitor civil Equipment (SNIES) to works through technical monitor civil works advisory services, through technical equipment and training advisory services, [new] equipment and training (ii) Construction and (ii) Strengthening the (ii) Unchanged (ii) Unchanged rehabilitation of regional MEPU-EC’s planning and and prefectural monitoring capacity at the administrative education central, regional and office prefectural levels [amended] (iii) Strengthening (iii) Strengthening the (iii) Unchanged except for (iii) Unchanged planning and monitoring MEPU-EC’s human those linked to human capacity at the regional resources management resource management, prefectural level through the provision of which will be supported computer software and under the International technical assistance for the Development Association improvement of human (IDA) Education for All resource procedures [new] project\. (iv) Strengthening the (iv) Strengthening the (iv) Unchanged (iv) Unchanged MEPU-EC by providing overall management and training for management coordination capacity of the and coordination of the MEPU-EC by providing, Program, equipment, inter alia, training, 39  development of intranet, equipment and internet and operating costs [amended] 13\. Under each of the restructurings, the RF was modified with indicators re-aligned to be re-oriented from a Program perspective to a Project level reporting format through the project restructurings to make them manageable\. Further, they were calibrated (including PSRs and ISRs44) to available levels of partner funds (especially FTI or GPE and KfW) and reduced scope of the project\. Changes introduced to the Results Framework (revised, new and dropped indicators) under the Project can be found in Annex 10\. This annex describes adjustments made to baseline values and end-of-project targets and provides a brief description of the level of achievement for each PDO- and intermediate-level indicator\. 14\. Progress made under each Project Component is described below\. Overview of Achievements by Component Component 1: Improving Equitable Access to Basic and Non-Formal Education [Appraisal: US$119 million; Original FTI Financing: US$90\.9 million; Revised FTI Financing45: US$23\.7 million; Actual Expenditure: US$22\.7 million]\.46 15\. Objective: This Component aimed to support equitable and regulated access to basic education and non-formal education\. It aimed to increase enrollment rates in pre-school, and primary and lower secondary education, support specific measures for disabled children, and expand access to literacy training\. In addition, this component was intended to support the creation of professional integration courses for primary and lower secondary leavers, as well as professional training specifically oriented towards the mining sector\. Sub-components included: (a) improving pre-school, primary, and secondary level educational infrastructure by constructing/rehabilitating and furnishing primary and secondary classrooms; (b) expanding educational access of primary-level students with special needs, additional training for teachers, provision of special education materials, and, in some cases, minor civil works, additional pedagogical support, including in monitoring and evaluation, to teachers at the schools; (c) expanding access to literacy training; (d) establishing professional integration courses for primary and lower secondary leavers; and (e) increasing availability of skills labor for the mining sector\. Over the course of the Project, 1,698 primary school classrooms were constructed\. Revisions to Component 1 during the life of the Project is presented in Table 1 below\. During the first restructuring, Component 1 was revised to focus only on basic education with a few activities including those supporting pre-school and provision of literacy training being taken over by UNICEF and skills availability for the mining sector also no longer supported under the revised design\. Under the third restructuring, the construction of lower secondary schools was no longer included as a Project-supported activity under this Component\. 44 The number of indicators reported in the ISRs varied across the life of the project from ten (10) PDO-level and twenty-nine (29) intermediate-level in the first project status report (PSR) to six (6) PDO-level and eleven (11) intermediate-level indicators\. 45 These are the values for the 2011 Restructuring Project which included revised financial figures based on the revised FTI allocation\. 46 Actual expenditure for the components reflect spending under the Project supported by the EFA-FTI Catalytic Grant\. 40 Achievements 16\. During the first phase of the Project, AFD was able to fund the launch of construction of 99 primary classrooms planned under the Project\. Following the restructuring of the Project and its effectiveness in 2011, the FC-PSE aimed to increase equitable access to basic education\. As the Project had only began implementation after the first restructuring, in order to undertake a civil works program of this size, significant preparatory activities were necessary in order to successfully roll out the civil works program nationwide\. During this period, most procurement documents were reviewed and contracts signed related to construction\. This included the signing of contracts with NGOs to construct classrooms using a community-based approach\. A contract with the Bureau d’Ingenieur (BIC) was entered into in order to provide systematic technical support to the Ministry’s department of infrastructure (SNIES) while the study office (bureau d’etudes) had been tasked with conducting regular visits of the construction sites\. In order to ensure quality of infrastructure, monitoring and supervision of school construction was supported by the project through workshops for construction supervisors and also by supporting SNIES in the development of a user friendly and pedagogic manual as a useful resource for site supervisors\. In addition, during this roll out phase, targeted rural communities had developed their annual investment plans on which they were to financing for school construction\. These preparatory activities laid the foundation for improvements in equitable access throughout the country while also strengthening capacity to manage a large school construction program\. During this initial phase of implementation, the following trends were observed: GER (total/girls) in the nine target prefectures increased from 47 to 49\.6 percent (and from 43 to 45\.7 percent for girls); gross intake rate among girls increased slightly (from 77\.7 percent to 78 percent); and the number of direct project beneficiaries reached 767,559\.47 In terms of intermediate-level indicators, in addition to the 99 primary classrooms whose construction was being funded by the AFD, an additional 1,545 were under construction\. 17\. During the third phase, construction of primary classrooms continued using the three selected approaches and concrete steps had been taken to address some of the issues identified related to monitoring and supervision of construction sites, including the establishment of a small committee to ensure regular follow up and reporting to donors on the status of the program\. During this period, the following trends were observed: GER for the nine targeted prefectures increased from 49\.6 percent to 53 percent (45\.7 percent to 47\.8 percent for girls); the number of direct project beneficiaries had more than doubled, increasing from 757,550 to 1,750,150; the gross intake rate also increased from 82 to 85 percent (and from 78 to 80 percent among girls); and construction and furnishing of 1,644 classrooms was underway with 615 of these having been fully completed\. An estimated 73 percent of planned construction had been completed by this time with the remaining primary classrooms expected to be completed by September 2013\. 18\. During the last period of the Project, planned activities to support an increase in equitable access to basic education under the operation were in their final stages of implementation\. Although construction was initially behind schedule, by the end of the Project, 1698 classrooms had been constructed and furnished\. As a result of efforts to strengthen supervision and control of the school construction program, the quality of the structures had improved significantly\. By the time of Project closing, GER for the nine targeted prefectures had reached 57 percent (and 53 among girls), a significant increase from just one year prior from 51 percent (and 46 percent among girls); the number of project beneficiaries reached 1,870,408 (an increase of more than 120,000 since the previous phase); and the gross intake rate had reached continued to increase from 86\.1 percent (and 81\.2 percent among girls) up from 85 percent (and 80 percent among girls) from just one year prior\. 47 It would not be appropriate to discuss achievements during this period relative to end-of-project targets as the restructuring was undertaken in 2012 (and reporting most recent available data at the time) and the project was scheduled to close in January 2013\. 41 Component 2: Improving Quality of Basic and Non-Formal Education [Appraisal: US$26 million; Original FTI Financing: US$20\.1 million; Revised FTI Financing: US$11\.8 million; Actual Expenditure: US$12\.6 million\.]48 19\. Objective: The objective of this Component was to improve the quality and relevance of basic and non-formal education, with particular focus on the acquisition of pedagogical materials, provide initial and continued teacher training, provide block grants to Primary Education Delegations (Délégation Scolaire de l’Enseignement Élementaire--DSEE), the MEDPU-EC administrative level below the prefecture, and student evaluations\. The following six sub-components were supported under Component 2: (i) Acquiring and supplying free textbooks and teachers’ guides for public and private primary and secondary schools; (ii) supporting initial training for primary and secondary teachers; (iii) Supporting continued training for primary and secondary teachers; (iv) Providing block grants to schools and DSEE; (v) Conducting nation- wide student learning assessments at primary level (year 4—2008; year 6—2009; and year 2—2010) and lower secondary level (2009); and (vi) Implementing curriculum reform in higher education\. Revisions to Component 2 during the life of the Project, can be found in Table 1 above\. Under the first restructuring in 2011, the Component description was revised to focus only on basic education with adjustments to activities and introduction of a few new activities\. Under the third restructuring, additional funding was reallocated to this Component for a number of activities including the provision of additional textbooks and training of lower secondary school teachers\. Achievements 20\. During the first phase, AFD was able to support the evaluation of teachers\. Following the 2011 restructuring, the FC-PSE aimed to improve the quality of basic education\. Some of the key activities undertaken during this period included: a study tour of Ministry officials to learn from experience in the Gambia in carrying out the EGRA and efforts commenced to support the Government in undertaking the EGRA\. The Project took steps to strengthen the project approach to the grants activity – with revision to the manual of procedures for school grants and the provision of training to local entities\. The teacher trainee recruitment process was modified to ensure greater rigor in their selection which resulted in a reduced number of teacher trainees\. To this end, the Government agreed to provide scholarships to incentivize individuals to improve their qualifications in order to qualify to become teacher trainees\. In addition, a sensitization campaign was launched to increase the number of teacher trainee applicants\. In addition, ENI processes were harmonized and similar methodologies for training adopted while the roles and responsibilities for administrative posts in the institutes were developed\. With regards to girls’ education, 125 schools were selected for participation and 250 teachers from these schools were trained in French, reading and student-centered pedagogy\. In addition, 3,750 girls were provided supplementary private tutoring in French, math and sexual education and learning materials were also provided to them\. 21\. During the third phase of the Project, efforts supported under the Project to enhance the quality of basic education also continued\. The procurement and delivery of textbooks increased significantly with the number of textbooks procured and delivered reaching 6,695,080 and continued to be monitored closely using local structures\. Almost all public primary schools received grants which created a positive dynamic within the schools and a number of individuals benefited from training provided relate to their delivery\. The 3,016 teachers that had been selected to benefit from in-service training participated in a 25-day training which took place in September of 2012\. This training, which covered both academic and pedagogical skills, was supplemented with a five-day training in December as well as a number of other activities\. Some of the supplemental activities supported included classroom observations, regional workshops, and training of 48 Ibid\. 42 school directors in learning assessment\. It was found that 54 percent of teachers benefiting from this training had improved results compared to baseline\. The sensitization campaign organized by the MEPU- EC continued to boost recruitment of qualified candidates and to ensure continuous monitoring of teacher trainees’ progress throughout the training\. As a result, 1,321 high school graduates were elected to enter ENI compared to only 71 two years prior to this\. Activities aimed at promoting girls’ education under the Project also contributed to the positive trends in their participation and performance on the 7th grade entrance exam\. Approximately 75\.4 percent of girls participating in the program passed the exam to enter 7th grade\. In terms of learning assessments, 60 schools were implementing early grade reading assessments (EGRA); learning assessments was carried out in grade 4 and a tracer study of tertiary and TVET was ongoing\. 22\. Improvements to quality continued through Project support to this area, particularly given the additional support to this area under the 2013 restructuring (with a reallocation of funding towards quality inputs)\. The number of textbooks provided by the end of project reached 7,162,393 increasing the number of textbooks available to students throughout the country and the textbook: student ratio\. An additional 1,000 teachers benefitted from in-service teacher training as a result of the reallocation under the restructuring and an estimated 80 percent of teachers who had benefitted from this training showed improved results from baseline (a significant increase from 54 percent just one year prior)\. The Government provided rewards to 554 teachers to incentivize improvements to the quality of teaching practices\. The Pooled Fund had also provided school grants to almost all primary public schools\. The learning assessment system which had been established had been improved upon and 79 schools were implementing annual reading assessments\. Support to girls’ education initiatives continued with the provision of private tutoring and participation in the FIERE program (though the success rate dropped from 75 to 71 percent yet was significantly higher than the national average)\. Further, the percentage of students with a passing grade in French (grade 3) reached 15\.36, which was an increase from baseline\. Component 3: Improving Management of the Educational System [Appraisal: US$9 million (6 percent of pool-funded program); Original FTI Financing: US$6\.8 million; Revised FTI Financing: US$4\.5 million; Actual Expenditure: US$4\.7 million]\.49 23\. Objective: The objective of this component was to strengthen the central and deconcentrated management of the sector, including its infrastructure services, by supporting four sub-components were: (i) enhancing the SNIES capacity to monitor civil works; (ii) constructing and rehabilitating regional and prefectural administrative education offices; (iii) strengthening planning and monitoring capacity at the regional and prefectural level; and (iv) strengthening the MEPU-EC at the central level by supporting a number of its functions\. In the Government ICR the objective is articulated as follows: to improve the capacity for mobilizing, programming, allocating and management of resources by developing appropriate management procedures for programming and following up on implementation\. Revisions to Component 3 during the life of the Project can be found in Table 1 above\. Under the 2011 restructuring, the construction of administrative offices was dropped from this Component and increased emphasis was placed on human resources management\. Achievements 24\. Under the 2011 restructuring, the FC-PSE also aimed to strengthen management of the education system more generally, with an emphasis on strengthening human resource management\. During this period, an inter-ministerial MTEF team was established with an accompanying methodology and action plan\. The sector policy letter and sectoral analyses were being revised and expanded for the 2013-2015 49 Actual expenditure for the components reflect spending under the Project supported by the EFA-FTI Catalytic Grant\. 43 period\. An MTEF was achieved (leading the effort amongst all sectors) which benefited from the participation of Ministry officials in a South-South learning exchange with Senegal to learn from its experience in carrying out an MTEF\. The statistical campaign for 2011 had been carried out with school level data made available and data for all subsectors was analyzed\. Improvements in annual statistical data were noted and teacher management as measured by the allocation of teachers (deployment index) was maintained at 0\.70\. Further, responsibility for budget management and execution (of resources provided by the FC-PSE) was transferred to the decentralized levels\. 25\. Important gains were observed in terms of strengthening management at the central and de- concentrated levels during the third phase of the Project, where by this time all decentralized levels were implementing annual budgeted action plans\. Sector directorates were made responsible for executing their own budget rather than the relying on the financial controller within the Ministry of Finance (MOF), marking a major shift from the arrangements prevailing prior to the Project’s launch\. Annual education statistics data were made available at the beginning of the school year and teacher management had improved (with the deployment index, for Conakry only, reaching 76\.6 (R-Squared))\. With the support of TA from the Bank, training modules for the newly appointed management analysts (assistants gestionnaires) had been developed and the manual of procedures had been further expanded to spell out the government execution of the budget within a MTEF approach\. In addition to the launch of a diagnostic study within the PER (related to the function of the DAFs), a review of the project management system was also under preparation\. 26\. 27\. The achievements were maintained and further scaled up during this last phase of the project with all decentralized levels implementing annual budgeted action plans (PAABs)\. Annual sector statistics were again made available for the start of the school year and teacher management (as described using the deployment index, in Conakry only) had improved reaching 76\.7 (R-Squared)\. The findings of the project management assessment were used by the Government during this phase to develop a proposal for the new GPE project which was submitted to DPs for their feedback/assessment and the findings from the PER and were disseminated in the fall of 2014\. 44 Annex 3\. Economic and Financial Analysis Context50 1\. The main goals of the Government of Guinea as articulated in the Education Sector Plan (ESP) for 2008-2015 are to achieve universal primary access to primary education and full gender parity and to make progress in terms of the primary completion rate and gender parity at the secondary education level\. In addition, it aims to increase the GER at the pre-primary and lower secondary levels\. Achieving both 100 percent access to grade 1 and gender parity in primary education would entail annual rate increases of 2\.9 percent and 2\.1 percent, respectively\. The pace of improvement in other indicators would need to be greater (between 3 percent and 7 percent annually)\. Table 1\. Education Sector Plan 2008-2015: Annual Targets % Annual Indicator 2005 2010 2012 2015 improvement GER for pre-primary education (%) 15\.4 22\.9 26\.1 30\.6 7\.1 Access rate to primary education (%) 75\.0 88\.0 93\.0 100\.0 2\.9 Completion rate for primary education (%) 55\.0 71\.0 77\.0 88\.0 4\.8 GER for lower secondary education (%) 38\.0 44\.0 45\.0 51\.0 3\.0 Gender parity (primary) (girls/boys) 0\.81 0\.92 0\.97 1\.00 2\.1 Gender parity (secondary) (girls/boys) 0\.50 0\.66 0\.74 0\.84 5\.3 Source: Team elaboration on the basis of the ESP 2008-2015\. (PAD, p\. 70)\. 2\. Analysis of implementation efficiency requires an understanding of the funding provided under the Project\. As described in the main text, the Pooled/Common Fund (FC-PSE) established by AFD, KfW, and GPE to help finance those activities within the ESP that were most directly related to achieving the education MDGs related to the attainment of UPE by 2015\. The amount initially committed to the Pooled Fund was US$160\.2 million, of which US$117\.8 million (or 74 percent) was to be provided by the Fast Track Initiative (FTI) global program through the Catalytic Fund\. The remaining funding was to be provided by AFD (in the amount of Euros 12 million or about 9\.5 percent of total funding), and the German Development Cooperation through KfW and GTZ (in an amount of US$27 million or about 17 percent of the total funding)\. During the period from 2008 (following approval of the Pooled Fund) to 2011, the coup d’etat and subsequent fragility and difficult political environment, GPE and IDA funding was frozen while funding from AFD was able to continue\. In 2011, following a decision by the FTI Secretariat the total envelope of funding available for the restructured project was significantly reduced from 117\.8 million to 64 million (with the cancellation of US$77\.8 million) with the Bank responsible for implementing US$40 million with UNICEF responsible for the remaining US$24 million\. During the 2011-2014 period, a number of activities were implemented and achievements observed\. Further, the complementary infusion of IDA funding (through the ongoing project) also provided support to the Government in the implementation of its ESP\. 50 In order to place the economic and financial analysis in the context in which the Original Program and subsequent restructurings were prepared, the information for this sub-section is drawn from the PAD\. 45  Table 2\. Financing for the Education Sector (2008-2014) 2002-2005 2008-2014 Phase 3 EFA Program--Actual Data 2006-2007 Phase 1 Financie r Phase 1 EFA Disburse me nt EFA 2008 2009 2010 2011 2012 2013 2014 % Program (2008-2014) Program US$ millions GoG (en milliards 789 1,402 569 723 1,181 1,022 1,004 1,334 1,546 7,379 GNF) IDA* EFA Project 38\.95 31\.80 16\.51 0,00 0,00 0,70 1,84 2\.30 89\.56 100% Pooled Funding--Actual Data Pe riod 1 Pe riod 2 Pe riod 3 Pe riod 4 EFA-FT I Catalytic Funding Grant/IDA 11\.85 17\.35 9\.47 1\.33 40\.00 100% Supervision AFD 0,00 2\.12 3\.17 5\.57 3\.80 0\.00 0\.54 15\.2 100% KfW ** 27\.00 EFA-FT I Catalytic Funding 24\.00 Grant/UNICEF *** Footnotes: Financing through pooled funding for the Guinea: EFA-FT I Project\. Government fiscal year: January 1 to December 31\. * IDA Financing outside the pooled funding mechanism\. ** KfW withdrew from the Pooled Fund\. T his resulted in the second project restructuring\. *** Following the first project restructuring, UNICEF received US$24 million and served as Implementing Entity\. 3\. The project was implemented over a period of three years (as it did not become effective until 2011)\. The majority of project activities were implemented in full (considering the reduced scope introduced under the various restructurings) with disbursements reaching 100 percent by project closing\. Under each of the Project restructurings, the activities, indicators and targets were appropriately calibrated to reflect available funding, implementation capacity and available timeframe\. With regards to civil works, for example, planned activities were redistributed among different actors who had comparative advantages in specific areas\. The Project added to its design a focus on improving human resource management procedures as well as introducing innovative approaches (focused on demand-side interventions) in targeted “prefectures” with low GERs (including among girls) and with the highest poverty rates\. The revisions of indicators (outcome and output) and targets were continually reviewed and readjusted\. Each of these modifications injected some level of realism in the overall project design\. Project management might have been more efficient if responsibilities had been assigned gradually to different entities\. Notwithstanding these limitations, implementation progress could be measured for the Project’s three years (2012 - 2014)\. A large number of outputs were achieved which contributed to maintaining or to improving key outcome indicators of the original project design\. 4\. Over the life of the Program overall implementation was rated Moderately Unsatisfactory during phase 1, Moderately Satisfactory and Satisfactory during phase 2, and Moderately Satisfactory during phases 3 and 4 (depending on the political context and counterparts’ involvement/financing)\. During the first phase, project implementation stalled as some activities were suspended due to the political situation (and suspension of GPE and IDA funding) while others were continued with funding from AFD and KfW\. During Phase 2, the GPE funding (Pooled Fund) became effective but during this period KfW decided to withdraw its support (one of the reasons for the 2012 restructuring)\. During this period, project implementation picked up with the full commitment of the Government team and the resumption of the World Bank’s close supervision\. In addition, program coordination was streamlined and the RF was reduced accordingly\. In the next two phases (phases 3 and 4), implementation momentum gathered\. Any construction issues that had been encountered during the second phase were addressed and infrastructure- related safeguards were closely monitored\. 46 5\. The Pooled Fund and the IDA-funded Project, shared the same implementing unit and arrangements, thereby assuring some level of efficiency and efficacy with implementation\. The functioning National Coordination of the Government’s ESP (CN/ESP) which was the central operational coordination unit for the IDA-financed education Project was also responsible for the operational coordination of the ESP and the Pooled Fund\.  The  CN/ESP was also required to serve as the primary management center for the majority of the pooled financing (FC-PSE) including procurement and financial management activities\. The detailed guidance on implementation arrangements were articulated in 13 documents\. These manuals helped foster a common understanding of project implementation and harmonize efforts\. 6\. Project interventions bolstered the sector\. The school system was augmented with the construction of more classrooms, and the rehabilitation of schools with latrines and water points\. The quality of education received a boost with the additional infusion of teaching and learning materials, the strengthening of decentralized management, and learning assessments\. The absence of timely data/annual statistics prior to the academic year posed some challenges\. But overall, many activities under the quality component contributed to pushing up the quality of education\. The first restructuring in 2011 is an example of how strong leadership is a precursor to critical reforms such as personnel management\. Additionally, implementation also showed that the use of existing structures instead of setting up parallel implementation units (as was the case in the early years of 2000) helps to reinforce, build and increase critical institutional capacities\. Cost-effectiveness Analysis Implementation efficiency 7\. Although the majority of the envisioned outputs and outcomes under the restructured design were effectively achieved by the project closing date, the efficiency of implementation was Modest given the initial lag in launching project-supported activities in addition to the need to extend the project closing date three different times in order to provide adequate time to complete activities which were essential for the achievement of the PDO\. 8\. The FC-PSE financed activities under three components: (i) improving equitable access to basic and non-formal education; (ii) improving quality of basic and non-formal education; and (iii) improving management of the education system\. Table 2 provides the allocation by activities\. The bulk of the financing (80 percent) of the FC-PSE was earmarked for infrastructure activities (construction and rehabilitation) under the first component, 18 percent for the second component (teacher training, production and distribution of textbooks and instructional materials, and small grants for seriously deteriorated public schools, and the remaining two (2) percent for the third component\. The FC-PSE was intended to prepare the ground for a smoother transition into further levels of education by allocating a small fraction of the pooled funds for non-primary education levels\. The following table outlines the planned sending (by sub- sector and activity) under the original design and the actual amount spent under the Project (phases 2 – 4)\. 47  Table 3\. Activities Planned and Actually Financed by the Pooled/Common Fund (2008-2014), by level of education Period 1: Original Program Actual Financing Total to be Period 2: Period 3: Period 4: Third % of total % of total Level of education Activities Component financed First Second and Final financed by for specific (2008-2010) Restructuring Restructuring Restructuring the project level (US$ million) Pre-primary Infrastructure Access 2\.53 1\.57 82\.46 0\.00 0\.00 0\.00 Textbooks/Materials Quality 0\.17 0\.11 5\.59 0\.00 0\.00 0\.00 Teacher Training Quality 0\.30 0\.19 9\.74 0\.00 0\.00 0\.00 Supervision Quality 0\.01 0\.01 0\.46 0\.00 0\.00 0\.00 Learning Assessment Quality 0\.05 0\.03 1\.74 0\.00 0\.00 0\.00 Total pre-primary 3\.06 1\.91 100\.00 0\.00 0\.00 0\.00 Primary Infrastructure Access 102\.31 63\.85 82\.0 40\.85 33\.64 35\.59 Textbooks/Materials Quality 7\.13 4\.45 5\.71 9\.54 6\.43 6\.65 Teacher Training Quality 7\.66 4\.78 6\.14 5\.74 2\.87 2\.36 School subsidies Quality 5\.54 3\.46 4\.44 1\.66 1\.87 2\.02 Learning Assessment Quality 0\.51 0\.32 0\.41 0\.89 0\.40 0\.45 Capacity Building Management 1\.62 1\.01 1\.30 1\.40 1\.08 1\.04 Total Primary 124\.77 77\.87 100\.00 60\.08 46\.29 48\.11 Lower Secondary Infrastructure Access 7\.30 4\.55 79\.68 4\.60 2\.07 0\.61 Teacher Training Quality 1\.76 1\.10 19\.19 0\.90 0\.39 0\.55 Learning Assessment Quality 0\.10 0\.06 1\.13 0\.10 0\.00 0\.00 Textbooks/Materials Quality 0\.00 0\.00 0\.00 0\.00 0\.00 0\.36 Total Lower Secondary 9\.16 5\.72 100\.00 5\.60 2\.46 1\.52 Upper Secondary Infrastructure Access 3\.89 2\.43 59\.52 4\.43 0\.00 0\.00 Teacher Training Quality 0\.45 0\.28 6\.85 0\.33 0\.02 0\.02 Textbooks/Materials Quality 2\.20 1\.37 33\.64 2\.12 0\.00 0\.00 Total Upper Secondary 6\.53 4\.08 100\.00 6\.89 0\.02 0\.02 Technical and Vocational Infrastructure Access 4\.14 0\.50 0\.50 9\.82 6\.13 93\.70 Education (TVE) Capacity Building Quality 0\.66 0\.41 6\.30 0\.91 2\.05 1\.68 Total TVE 10\.48 6\.54 100\.00 5\.04 2\.55 2\.18 Higher Education Capacity Building Quality 0\.36 0\.22 100\.00 0\.28 0\.08 0\.08 Total Higher Education 0\.36 0\.22 100\.00 0\.28 0\.08 0\.08 Adult Education Teacher Training Quality 1\.45 0\.90 93\.31 0\.00 0\.00 0\.00 Learning Assessment Quality 0\.10 0\.06 6\.69 0\.00 0\.00 0\.00 Total Adult Education 1\.55 0\.97 100\.00 0\.00 0\.00 0\.00 General Administration Capacity Building Management 4\.31 2\.69 100\.00 5\.39 4\.22 4\.02 Total General Administration 4\.31 2\.69 100\.00 5\.39 4\.22 4\.02 Total financing by the Common Fund (US$ million) 160\.22 83\.29 55\.62 55\.93 Source: Project Appraisal Document, 2008; Project Restructuring Papers; Implementation Status Reports (ISRs)\. 9\. Cost efficiencies are specified for two key components: construction of classrooms and the procurement and delivery of textbooks and described below\. 10\. Primary school construction\. The construction of primary classrooms under the Pooled Fund was relatively cost-effective when analyzed against other relevant comparators\. The average cost per classroom built ranged from US$13,104 to US$17, 136 with a large portion of schools constructed under the Project built using the lower cost approaches (see table below)\. The average cost of a primary classroom in Ghana is estimated to be US$16,65151\. In Sudan, the average cost of a primary classroom is estimated to be as high as US$30,00052\. By the end of the project, the construction of the 1,644 had been completed using the three different approaches—community-based, NGOs, and through small and medium enterprises\. Table 4 which follows provides the comparisons\. 51 Ghana Education Sector Project (EdSeP) Implementation Completion Report, 2012\. The average cost of a 6- classroom school constructed with EdSeP financing was estimated to be US$99,909\. The unit cost a classroom (simple average of $99,909/6) is estimated to be US$16,651\. 52 Republic of Congo, Support to Basic Education Project (PRAEBASE), Implementation Completion Report, 2014\. 48  Table 4\. Guinea: Classroom Unit Costs by Provider Method of Construction Cost (US$) Pooled Funding Modalities PACV (community based) 13,104 Medium and Small Enterprises (rural) 13,734 Non-Government Organizations (NGOs) 14,490 Medium and Small Enterprises (urban) 17,136 Comparator UNICEF 17,577 Source: Guinea: Public Expenditure Review: Volume 1\. June 2015\. 11\. Textbooks\. The Project financed the procurement and delivery of textbooks at an average unit cost ranging from US$0\.65 and US$1\.4 for primary school core subjects\. The unit cost is in line with other projects implemented during the same time period in the Ivory Coast, Niger and Burundi where primary school textbooks were acquired for unit costs ranging between US$1\.1 and US$1\.4\. The procurement of textbooks was successfully completed and the contracts were signed with savings of GNF 3 million (about US$399)\. This helped with the procurement of additional textbooks\. Efficiency gains (or savings) were realized due to lower unit costs as a result of the volume of textbooks that were procured and also due to gains in the exchange rate differential between the US dollar and the GNF making it possible to procure a larger than estimated number of textbooks\. At project closing, more than seven million had been delivered\. The reported quantities, contract values, and computed unit price of textbooks purchased under the Project are shown in Table 4 below\. 12\. Support to girls’ education\. Through the FIERE initiative under this Project, around 9,000 girls received support from 2011 to 2013\. The Pooled Fund provided US$260,600 to finance this support amounting to approximately US$28\.90 per participant, which is a reasonable cost given the evidence pointing to the positive association between girls’ participation in education and other development outcomes (i\.e\., health, employment, etc\.) Benefit Incidence 13\. The analysis of the project benefits takes into account both individuals (private benefits) and society at large (social benefits)\. According to the final ISR Project investments supported an estimated 1\.87 million direct beneficiaries\. This was slightly over the third and final restructuring revised target of 1\.82 million, which was slightly above the second restructuring of 1\.73 million\. Beneficiaries comprised school students and graduates at primary education level, teachers, school administrators, and decentralized and centralized ministerial administrators\. This had a spillover benefit at secondary education level both with respect to intake rate and graduation rate\. The future for the project primary is promising\. A detailed age-earnings profile for Guinea is presented in the PAD\. Project interventions also helped to improve the quality of primary education in terms of improving the educational environment with additional classrooms reducing crowding, improved sanitation facilities with the rehabilitation of schools to include latrines and water points, and a more conducive learning environment in the classroom with textbooks and trained teachers\. Without the project, fewer primary school students would have graduated, and few teachers would have benefited from pre- and in-service training\. 14\. The cumulative effects of the project inputs over time show positive social benefits for society at large\. Due to the Project longer-term health benefits are anticipated for those with literacy and numeracy\. Better health outcomes means lower duration of unemployment spells, a higher degree of civil participation, a decrease in the crime statistics, and others\. The health index for women with primary education compared to those without is significant: a 19 percent reduction in problems related to pregnancy, including the usage 49 of contraceptive methods\. Completing primary schooling and moving to secondary education extends the health improvements a little further for women by about four percentage points\. Project benefits accrued in the domain of institutional development as well\. Management, financial and procurement systems were strengthened through capacity development and experience accrued through learning-by-doing\. Individual and group learning was fostered through collective action and commitment to goals and objectives\. Table 5: Benefits of the Pooled Funding (2008-2014) for Individuals Main expected 2014 outcomes of the 2008 2009 2010 2011 2012 2013 Total Actual Project Direct project beneficiaries 1,584,282 1,727,700 1,729,670 1,870,408 1,870,408 Increase in graduates from primary education (Percentage) 82\.4% 84% Access rate in first grade 85% 85\.5% 85\.5% 77% (77\.7%) (80%) (total/girls) (80%) (80\.4%) (80\.4%) (2009) (Percentage) 78\.3% 49\.6% 53\.0% 57\.0% 57\.0% 79% GER primary (girls) (70\.2%) (45\.7%) (47\.8%) (53\.0%) (53\.0%)   14\. In light of the information provided above, efficiency during each of the project phases is rated Modest\. 50 Annex 4\. Grant Preparation and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending/Grant Preparation Supervision/ICR Norosoa Andrianaivo Senior Program Assistant GHNDR Operations Alpha Mamoudou Bah Senior Procurement Specialist GGODR Procurement Bella Lelouma Diallo Sr Financial Management Special GGODR FM Thierno Hamidou Diallo Disbursement Asst\. AFMGN FM Michael Drabble Senior Education Specialist GEDDR Education Salimatou Drame-Bah Program Assistant AFMGN Operations Daniele A-G\. P\. Jaekel Operations Officer GHNDR Operations Mamady Koulibaly Economist AFTP4 - HIS Economics Kolie Ousmane Maurice Megnan Sr Financial Management Specialist GGODR FM Tshela Rose-Claire Pakabomba Program Assistant GEDDR Operations Marietou Toure Diack Senior Human Resources Assistant HRDEX Human Resources Nathalie Lahire TTL and Senior Economist GEDDR Education Shobhana Sosale Senior Operations Officer GEDDR Education Laura McDonald ET Consultant GEDDR Operations Bernardo da Cruz Vasconcellos Consultant GEDDR Operations (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending Total: 0\.00 Supervision/ICR Total: 9\.16 46712\.21 *Lending and additional supervision costs were paid for by separate TFs 51 Annex 5\. Beneficiary Survey Results Not Applicable\. 52 Annex 6\. Stakeholder Workshop Report and Results Not Applicable\. 53 Annex 7\. Summary of Grantee's ICR and/or Comments on Draft ICR RAPPORT D’ACHEVEMENT DU PROGRAMME SECTORIEL DE L’ÉDUCATION (FC-PSE) (version allégée) Le Gouvernement Guinéen a entamé en 2008, avec l’appui de ses partenaires au développement, la mise en œuvre d’un programme sectoriel d’éducation, dont la vision s’inscrit dans le cadre des Objectifs du Millénaire pour le Développement (OMD), de l’Éducation Pour Tous (EPT) et la Stratégie de Réduction de la Pauvreté (SRP)\. L'Accord de don du Fonds Catalytique (FTI) date de 2008\. Le versement des fonds dépendait à partir de cette date de conditions suspensives qui n'ont pu être remplies qu'à la fin de l'année\. La création du Fonds Commun nécessitait la ratification du cadre partenarial par l’Assemblée Nationale guinéenne après avis de la Cour Suprême\. La mise en place de ce cadre de partenariat illustré par la lettre d’entente a entraîné des démarches longues et lourdes\. Les conditions suspensives ont été levées au moment du coup d'Etat militaire de décembre 2008 qui a entraîné le gel des opérations de la Banque Mondiale sur les projets en cours\. Par ailleurs, en octobre 2009, toutes les opérations de la Banque ont été suspendues en raison de retards supérieurs à 60 jours dans le remboursement de dettes à son égard\. En novembre 2009, le Comité du Fonds Catalytique, constatant ces retards, a demandé aux PTF de lui transmettre une proposition de restructuration, fondée sur un réexamen des capacités d'exécution du pays\. Ainsi, en 2010, un plan restructuré a été soumis au comité du Fonds Catalytique dont le montant est passé de 117,8 millions de dollars à 64 millions\. Sur ce montant, 24 millions de dollars ont été confiés à l’UNICEF comme opérateur\. Après la restructuration du programme, la KFW s’est retirée du fonds commun pour des raisons de non tenue d’élections législatives\. Cette restructuration a passé en revue chacune des activités du PSE initial et a retenu les décisions ci-dessous: - reporter à des plans ultérieurs toutes les activités pour lesquelles la procédure d'exécution n'était pas encore clairement identifiée (par exemple, l'entretien courant des bâtiments scolaires pour 1 % de leur coût de construction, les classes inclusives, les centres d'insertion professionnelle…\.); - réduire les quantités des intrants nécessaires aux activités en les ajustant aux capacités effectives d'exécution\. C'est le cas essentiellement des constructions de salles de classe du primaire, mais aussi d’autres activités connexes ; - revoir la ventilation initiale de la maîtrise d'ouvrage du génie civil entre les différents opérateurs (ONG, PME, Communautés) conformément aux objectifs quantitatifs retenus\. C’est dans ce contexte que le PSE a été mis en œuvre pour la période 2008-2012, puis prorogé jusqu’en Décembre 2014 pour le temps nécessaire à l’achèvement des constructions scolaires\. I- OBJECTIFS ET COMPOSANTES Objectif général : L’objectif du programme est (i) d’améliorer l’accès équitable à l’éducation de base, (ii) d’améliorer la qualité de l’éducation de base et (iii) de renforcer la gestion décentralisée du système éducatif\. 54 Composantes du programme : Composante 1 : ACCES\. Les objectifs de la composante étaient (i) d’accroître les taux d’inscription aux niveaux de l’enseignement préscolaire, primaire et du premier cycle de l'enseignement secondaire et à soutenir des mesures spécifiques pour les filles; (ii) de favoriser l’accès à l’éducation des enfants porteurs de handicaps en vue d’atteindre les objectifs du millénaire pour le développement (iii) de contribuer à l’atteinte de la scolarisation primaire universelle de qualité à l’horizon 2015 à travers la construction/réhabilitation d’infrastructures permettant l’augmentation du TBS au primaire, la réduction de la taille des groupes pédagogiques au secondaire et la création de filières de formation courte d’insertion professionnelle; (iv) de réduire le taux d’analphabétisme au sein de la population adulte, notamment chez les femmes\. Composante 2 : QUALITE\. L’objectif de ce volet est d’améliorer la qualité et la pertinence de l’enseignement fondamental et non formel, en portant une attention particulière à l’acquisition de matériel pédagogique, à la formation initiale et continue des enseignants, et à l’attribution de subventions globales aux Délégation scolaire de l’enseignement élémentaire (DSEE)(PAD 2008)\. Composante 3 : GESTION\. Les objectifs de la composante étaient : (i) d’améliorer les capacités de mobilisation, de programmation, d’allocation et de gestion des ressources à travers le développement de procédures de gestion et la formation du personnel administratif, l’équipement des structures et le suivi de la mise en œuvre des plans et programmes ; (ii) de mettre en place, dans le cadre de la préparation du PSE, un système de suivi et évaluation opérationnel et fiable par le gouvernement et les partenaires\. Ce système intègre le dispositif de collecte de données statistiques existant afin d’assurer une meilleure fiabilité des informations sur le secteur, et comporte un manuel de référence pour le suivi évaluation, des outils de collecte de données et un cadre de concertation (commission nationale de suivi et évaluation)\. II- REALISATIONS PAR COMPOSANTE Composante 1 : ACCES La mise en œuvre des différentes actions de la composante accès et équité du programme sectoriel de l’éducation (2008-2014) a permis d’obtenir les résultats suivants: Pour le primaire : Sur 3000 salles de classe prévues par le FC-PSE, 2791 sont achevées (93,03% de réalisation) et les résultats obtenus par approche de construction se présentent comme suit : 1164 salles de classes par l’approche PME; 195 SDC par l’approche ONG ; 441 SDC par le PACV ; 991 SDC avec UNICEF comme operateur et Plan Guinée comme sous-traitant\. Pour le 1er cycle du secondaire : Dans le cadre du FC-PSE et après les études, un appel d’offres d’entreprises a été lancé en janvier 2013, à l’issue duquel les procédures ont été suspendues à cause du montant élevé des offres par rapport au budget\. Finalement, le montant destiné à cette action a été réorienté vers la formation continue des enseignants du secondaire 1 et l’acquisition de manuels de français pour la 10ème A\. Composante 2 : QUALITE Manuels scolaires : La réalisation des activités a permis d’acquérir et de distribuer 6 695 080 manuels scolaires du primaire dans les disciplines (Calcul de la 1ère à la 5ème , Français de la 1ère à la 6ème, Sciences d’observation de la 1ère à la 6ème , Instruction Civique et morale de la 3ème à la 6ème , d’Histoire- Géographie de la 3ème à la 6ème , Kits scolaires, Dictionnaires de langue française\. Pour le collège, il a été acquis et distribué des manuels scolaires de Français pour la 10ème A\. 55 Formation initiale des enseignants : Education préscolaire : (i) 84 Programmes Intégré Standard de la Petite Enfance (PISPE) ; 3\.360 cahiers de graphisme ; 84 guide pédagogique du PISPE, 3\.360 Cahiers d'évaluation et 2188 Boites à images ont été produits et distribués aux apprenants et encadreurs des CEC construits dans le cadre du programme ; (ii) 2 kits de matériels ludiques ont été produits localement et remis aux CEC ; (iii) 90 éducatrices/teurs des 30 CEC construits sur 120, 20 animatrices d’écoles maternelles publiques, 18 superviseurs/inspectrices du Préscolaire et 24 DSEE ont été formés par les cadres de la DNEPPE et le cabinet ID2S ; (iv) deux missions conjointes d'encadrement rapproché des éducateurs/rices des 30 CEC ont été effectuées\. Au cours de ces missions, l'opérationnalisation effective de 27 sur 30 CEC visités a été confirmée, avec 2\.778 enfants (1,359 filles) bénéficiant d’un encadrement ; (v) définition des spécifications des matériels des aires de jeux; (vi) mise en place Cadre de Concertation (Groupe Thématique) du Préscolaire ; (vii) évaluation des apprentissages et des enseignements\. Formation Initiale des maîtres de l’élémentaire: suite au retrait de la KFW du FC, seule la première activité a été réalisée\. Il s’agit du partenariat institutionnel d’accompagnement du CEPC international de Lyon qui visait à accompagner les Écoles Normales d’Instituteurs (ENI) en vue d’une amélioration de la qualité de la formation initiale des enseignants\. Réforme de la formation initiale des enseignants du secondaire: des modules de formation ont été élaborés, validés et reproduits\. Des mallettes pédagogiques ont été acquises et distribuées aux élèves-professeurs et 80 APES formateurs d’enseignants du secondaire ont été préparés\. Il faut souligner que le projet de recrutement de diplômés d’universités (ceux ayant achevé au moins 3 années d’étude) pour une formation académique et professionnelle d’un an, suivi d’un stage pratique pour en faire des professeurs de collège n’a pas abouti\. Dans la même dynamique, la deuxième école de formation n’a pas été mise en place pour une formation des professeurs polyvalents de collège\. La principale raison est un problème institutionnel lié au statut des sortants (reclassement à quelle hiérarchie de la fonction publique?)\. Composante 3 : GESTION Le secteur de l’éducation a bénéficié de nombreuses interventions du Gouvernement et des bailleurs de fonds visant à renforcer les capacités de gestion de l’éducation dans les domaines de la gestion des ressources matérielles et financières, de la gestion des ressources humaines et du suivi et évaluation\. Grâce à ces interventions, la qualité des statistiques s’est améliorée mais leur exploitation dans la prise de décision est à renforcer\. Il en est de même qu’en matière de renforcement de la stratégie de gestion des ressources humaines\. Par contre, les progrès enregistrés dans la gestion des ressources matérielles et financières tant au niveau central que déconcentré restent mitigés notamment la lenteur dans la mise en œuvre effective de la déconcentration budgétaire\. Gestion des ressources humaines matérielles et financières :  21 membres de l’équipe CDMT se sont appropriés de la méthode de programmation et budgétisation selon l’approche CDMT ;  Les cadres de la cellule CDMT ont été formés en Access et Excel avancé ;  290 assistants gestionnaires de ressources des services centraux et déconcentrés du système éducatif ont été formés sur les procédures de préparation et d’exécution du budget de l’Etat ;  Les cadres du SNIES et de ses Antennes et du SNIEM ont bénéficié de session de formation en logiciels de dessin assisté par ordinateur ;  Un manuel de procédures de gestion budgétaire et un Document de base des PAE ont été élaborés et diffusés ;  Les membres de l’équipe CDMT ont été dotés en matériels et équipements informatiques ; 56   La préparation, la mise en œuvre et le suivi des PAAB au niveau des IRE et DPE/DCE, ainsi que des PAE et des plans de formation des DSEE ont été effectifs\. Au total, le programme a déboursé 4 601 547 195 GNF pour l’appui au fonctionnement des IRE et DPE/DCE et 12 078 777 173 GNF au titre des subventions aux écoles et aux DSEE sur la période 2012-2013\. En raison du gel du financement du PSE, l’UNICEF en tant qu’Opérateur du programme a payé entre 2010 et 2011 les subventions des DSEE et Ecoles pour les montants de 3 262 688 000 et 6 303 657 955 GNF respectivement ;  Le SNIES et ses Antennes régionales ont été dotés en matériel et équipement ;  Les gestionnaires de ressources au niveau déconcentré ont été formés sur un logiciel de gestion et de calcul automatisé des indicateurs des PAAB conçu à cet effet ;  Les subventions destinées au fonctionnement des structures déconcentrées (IRE, DPE/DCE, DSEE et Ecoles) ont été octroyées ;  Des assistants gestionnaires (AG) ont été nommés pour appuyer les chefs de services centraux - administrateurs de crédits dans la préparation, l’exécution de leurs crédits sur le BND\. Avec l’expertise des cadres du service informatique du Ministère chargé du budget, ces AG nommés au niveau central ont été formés à l’utilisation du logiciel de gestion de la chaîne des dépenses ;  Le recrutement de spécialistes pour appuyer les services en charge de la programmation budgétaire, de la statistique et des infrastructures est effectué;  Dans le cadre de l'amélioration de la gestion des ressources humaines dans le secteur de l’éducation, des équipements informatiques et bureautiques ont acquis en faveur de la Division des ressources humaines\. Suivi-évaluation et de la production de statistiques: (i) des bases de données et annuaires statistiques du secteur ont été mises à jour annuellement; (ii) des indicateurs de résultats et des rapports d’analyses ainsi que des tableaux de bord du système ont été régulièrement produits; (iii) des plans de renforcement de capacités des acteurs ont été élaborés et exécutés\. III- ANALYSE DES RESULTATS Composante 1 : ACCES Efficacité : Les objectifs quantitatifs ont été atteints\. En dépit de cette performance, les délais, la qualité et les coûts ont été en deçà des attentes\. A titre illustratif, 99 salles de classe prévues dans un cadre expérimental pour un délai de 6 mois n’ont été achevées qu’en 33 mois\. La tranche principale des constructions sur FC/PSE (1062 salles de classe) n’ont été réalisées qu’en 24 mois environ (de Février 2012 et Décembre 2013) au lieu des 6 mois contractuels\. Le non-respect des délais concerne également l’approche ONG et PACV où il a été enregistré des retards de plus de 12 mois par rapport au délai contractuel\. Le volet UNICEF opérateur du FC/PSE a connu la même situation de dépassement des délais impartis\. De surcroit, des cas de défaillances techniques (implantation, stabilité, et finition des bâtiments et ouvrages connexes) ont été nombreuses, entrainant quelques fois des démolitions et des reprises voire des résiliations de certains contrats, notamment pour l’approche PME\. Ce qui a eu pour effets l’aggravation des retards et le rehaussement des coûts des prestations (supervision et travaux)\. Des avenants ont été fréquents et relativement couteux\. Une réduction du nombre de classes à construire en a découlée, notamment au niveau de l’approche PME et le volet UNICEF\. Plusieurs facteurs ont contribué au retard et au surcoût dans l’exécution des chantiers:  La lenteur dans l’application des procédures d’approbation et de légalisation des contrats ; 57   La succession logique des opérations prévues sur les plans d’action et autres plannings n’a pas été respectée;  La mobilisation tardive du dispositif de supervision (Superviseurs, BET-Zone et BIIC) a entrainé par exemple le fait que les entreprises ont été chargées d’adapter elles-mêmes les plans des infrastructures aux terrains;  Plusieurs prestataires n’ont pas respecté les cahiers de charges relatives aux qualifications requises de leurs personnels de chantier ;  La non prise en compte de la dispersion et de l’accessibilité des sites en termes de cout et de délai,  Les changements fréquents de sites après signature des contrats ont entrainé des charges supplémentaires et des retards Pertinence : Les projets de construction d’infrastructures scolaires concourant à l’accroissement des capacités d’accueil et par ricochet à l’amélioration de l’accès sont en parfaite adéquation avec les objectifs du secteur\. Les stratégies de mise en œuvre de ces projets à travers le recours aux différentes approches (PME, ONG, PACV) répondent aux besoins de renforcement des capacités endogènes et à la lutte contre la pauvreté\. En effet, environ 75 % du financement du FC/PSE ont été alloué au volet infrastructures et équipements scolaires\. Cette proportion est aussi valable pour la plupart des projets\. L’objectif et le moyen idoine de tout développement étant la décentralisation, la délégation de la maitrise d’ouvrage aux ONG (plus proches des communautés) et aux communautés elles-mêmes par l’entremise du PACV, était pertinente de ce point de vue\. En termes d’équité et conformément aux objectifs des DSRP, les constructions scolaires ont été réalisées prioritairement dans les zones rurales défavorisées et dans les préfectures à faible taux de scolarisation et à taux élevé de pauvreté\. Le renforcement des capacités des parties prenantes (les services pérennes, les entreprises et les ONG) constitue un acquis du programme et pour les actions futures, à travers les formations d’une part et l’acquisition d’équipements et de moyens logistiques pour le niveau central et les antennes régionales d’autre part\. Face à l’ampleur des travaux, la mobilisation des bureaux d’études techniques (BET) pour le suivi rapproché et d’un bureau international d’ingénierie et de contrôle (BIIC) au niveau central était justifiée pour compenser les insuffisances liées au plan de charges des services pérennes\. Aussi, la délégation de maitrise d’ouvrage à L’UNICEF, ainsi que l’implication de Plan Guinée au processus de mise en œuvre du volet infrastructures du FC/PSE se sont-elles avérées concluantes pour les mêmes raisons\. Viabilité : De manière générale, la qualité des infrastructures respecte les normes ; ce qui favorise leur durabilité sous réserve que l’entretien et la maintenance soient réguliers\. En outre, l’insertion des latrines et des points d’eau dans les établissements construits améliore le cadre d’apprentissage des élèves en général et favorise la scolarisation et la rétention des filles en particulier\. L’entretien de ces infrastructures est à la portée des bénéficiaires\. Cependant, force est de reconnaitre que des manquements par rapport au respect des cahiers de charges ont été observés dans l’exécution de certains ouvrages qui risquent d’entacher la durabilité par endroit\. Par ailleurs, la disponibilité d’une documentation fournie et accessible (Plans, pièces techniques, manuels et guides divers) est un acquis pour le secteur dans le domaine de la réalisation des infrastructures\. L’exécution du projet a été confrontée à plusieurs difficultés qui n’avaient pas été envisagées au moment de la conception et de la planification\. Les augmentations fréquentes et imprévisibles des prix des matériaux et matériels essentiels que le plafonnement des soumissions ne prévoyait pas a entrainé la lenteur voire l’arrêt de certains chantiers\. Il en a résulté la résiliation de contrats et la reprise des travaux par d’autres entreprises moyennant une majoration des montants initiaux\. 58 L’identification et l’allotissement des sites effectués 3 ans au préalable n’ont pas été actualisés avant le lancement des appels d’offres en raison du manque de financement des missions de confirmation des sites pourtant indispensables pour la rationalisation des lots et l’adaptation des plans aux terrains\. Ce qui a engendré la dispersion des sites de certains lots et le changement fréquent d’autres sites ayant bénéficié entretemps de l’implantation d’infrastructures et contribuant ainsi aux retards enregistrés et à l’augmentation des coûts\. L’inaccessibilité de bon nombre de sites, notamment en saison pluvieuse a occasionné des difficultés d’approvisionnement des chantiers à cause des coûts du transport plus élevé et même, le refus des transporteurs à exposer leurs véhicules aux risques des mauvaises pistes\. Des arrêts fréquents de ce fait, entrainent la désertion des personnels de chantier ou leur démobilisation volontaire par l’entrepreneur\. Le choix des moins-disants dans l’évaluation des offres d’entreprises sans tenir compte de la structure des prix aboutissant des fois à la sélection d’entreprises qui ont sous-estimé les coûts et ne pouvant pas achever les travaux, appelle la révision de la procédure d’évaluation des offres financières\. Les expériences vécues et les leçons tirées de la mise en œuvre du volet infrastructure amènent à faire des recommandations suivantes dont la prise en compte permettra l’atteinte des objectifs visés dans le respect de la qualité, des délais et des coûts : ï‚ Respecter les procédures visant l’identification et l’allotissement, le cas échéant, la confirmation des sites à prendre en compte dans les DAO ; ï‚ Mettre en place le dispositif d’études et de suivi-évaluation avant les appels d’offres ; ï‚ Analyser en détail la structure des prix, pas seulement les montants des offres (cf\. bordereaux inclus dans les DAO) à l’évaluation des offres ; ï‚ Veiller au respect strict des cahiers de charges et des clauses de contrats ; ï‚ Prendre en compte les recommandations pertinentes de l’étude sur les approches de construction d’infrastructures scolaires\. Composante 2 : QUALITE Manuels scolaires : Pertinence : En raison de l’importance reconnue des manuels dans la réussite scolaire, les objectifs fixés visent à maintenir les quotas du primaire et du premier cycle du secondaire et d'atteindre un niveau susceptible de contribuer à l’amélioration de la qualité des enseignements apprentissages\. Si au niveau quantitatif l’acquisition des manuels et leur distribution gratuite ont permis l’atteinte des quotas prévus au primaire, l’impact dans la salle de classe n’est pas encore très évident comme le montrent les résultats de l’évaluation des apprentissages en lecture et en calcul des élèves de CE2 (rapport CNCESE 2013) et l’évaluation précoce des apprentissages de la lecture dans les premières années du primaire - EGRA (rapport bureau d’études School to school 2013)\. Efficacité : Les résultats obtenus ont permis d’atteindre les objectifs initialement fixés, voire même les dépasser par endroit en termes de ratios manuels/élève (cinq manuels par élève du CE1 au CM1)\. L’acquisition d’un cinquième titre au primaire (instruction civique et morale) a été rendue possible grâce aux économies réalisées sur la commande des quatre premiers titres\. Viabilité : Des campagnes de sensibilisation des communautés sur la nécessité d’utiliser les manuels avec grand soin ont été menées et leur estampillage pour une meilleure sécurisation a été effectué au niveau des structures déconcentrées et des établissements scolaires\. Ce qui a permis d’assurer la sécurisation des manuels distribués aux élèves\. Pour contribuer à la qualification des enseignements apprentissages, des efforts conjugués pour la possession et utilisation effective du manuel par l’élève, sa conservation et sa sécurisation par rapport à l’agressivité du marché illicite de manuels doivent être soutenus à travers la poursuite des campagnes de sensibilisation des acteurs et partenaires, la disponibilité de statistiques fiables notamment sur les effectifs, le renouvèlement des manuels usés et des acquisitions nouvelles\. 59 Pour mieux sécuriser les manuels scolaires distribués dans les écoles publiques et apporter une contribution à l’amélioration de la qualité pour tous les élèves, tous statuts confondus, il y a lieu de prévoir établissements privés dans les futurs commandés de livres scolaires\. Il en est de même des institutions de formation initiale afin de familiariser les futurs maîtres à leur utilisation : reconduire pour le prochain PSE la commande de manuels du Lycée avec réactualisation du nombre de manuels en fonction des nouveaux effectifs, et compléter les titres et le nombre de manuels pour les élèves du collège publics et privés\. Formation initiale des enseignants : Education préscolaire : En ce qui concerne la Pertinence des interventions, bien que, l’objectif d’aller à 30 % d’ici 2015 parait lointain, le taux brut de préscolarisation a connu une augmentation sensible allant de 6, 10% en 2007 à 10, 7% en 2012\. Aussi les enfants encadrés au nombre de2776 de 3 à 6 ans, sont issus des familles pauvres très marginalisées avec un nombre de jeune fille qui avoisine la moyenne\. Ce résultat serait un peu plus significatif si le nombre de CEC initialement prévu avait été réalisé avec 3 salles d’activités au lieu de 2\. En matière de Viabilité, le CEC, est un type préscolaire reposant essentiellement sur une participation communautaire\. Dans notre cas, les communautés ont bel et bien accueilli cette initiative, cependant elles n’ont pas bénéficié de mesures d’accompagnement par des subventions publiques nécessaires pour combler la pénurie des ressources\. Pour pérenniser l’expérience du CEC, certaines mesures méritent d’être prises notamment: (i) le renforcement des capacités de mobilisation et de gestion des ressources par les communautés au bénéfice des CEC, (ii) la construction des infrastructures et leurs équipements dans toutes les communautés villageoises et urbaines à faible revenu et (iii) la formation et l’affectation aux CEC du personnel d’encadrement de qualité et en nombre suffisant\. Recommandations : (i) le choix judicieux PME et des ONG chargés des travaux de construction des CEC, (ii) la dynamisation des actions /programmes d’éducation parentale et d’appui aux AGR pour mieux promouvoir l’implication des familles et communautés, (iii) fournir des subventions aux communautés bénéficiaires pour soutenir les CEC\. Formation initiale des enseignants - Formation Initiale des maîtres de l’élémentaire : Force est de reconnaitre qu’en terme de qualité et de pertinence l’accompagnement institutionnel du CEPEC international de Lyon a marqué une réelle évolution des ENI vers l’amélioration de la formation initiale des Enseignants à travers l’établissement d’un diagnostic participatif précis mais aussi et surtout la disponibilité de différents outils et méthodologies utiles pour les ENI en vue d’une formation professionnalisante\. Désormais il est question de réussir leur mise en œuvre qui devrait s’appuyer sur les compétences des divers acteurs\. A cet égard, des actions futures, pouvant favoriser une pérennisation dans la mise en œuvre du nouveau dispositif, ont été identifiées à l’effet de qualifier la formation de l’élève-maître à l’ENI et l’enseignement-apprentissage des élèves du primaire, entre autres :  la formation des divers acteurs dans les principales didactiques et aux différentes méthodologies indispensables à la mise en œuvre des outils ;  l’organisation de missions de suivi et de supervision de terrain pour l’implantation des référentiels et des divers outils ;  la mise à disposition de la logistique nécessaire au suivi régulier de la mise en œuvre du modèle réajusté (moyens roulants et fournitures) ;  organisation des sessions de formation et d’instrumentation sur le nouveau dispositif à l’intention des partenaires (DNEE, IRE, DPE, DSEE, DEA, MA) pour leur participation de qualité dans l’encadrement des élèves-maîtres ;  relance du trimestriel pédagogique « MA CLASSE » comme espace d’échange et moyen de documentation et de vulgarisation du modèle d’une part et d’autre part support pédagogique pour les élèves-maîtres en stage\.  mise en place des projets d’établissement et contrat de performance ;  initiation des gestionnaires et formateurs des ENI à la recherche pédagogique 60  o la poursuite du partenariat institutionnel et la mise en place d’un système de suivi des ENI sur une année d’ENI qui aurait pour fonction de (i) superviser l’implantation du référentiel dans les ENI pour une première promotion avec l’accompagnement du CEPEC international et de (ii) porter un regard extérieur tout en aidant à la mise en place du modèle rénové de formation initiale dans les ENI\. Malgré les mesures incitatives introduites par l’octroi de bourses, on a constaté une baisse du nombre des candidatures de bacheliers pour les ENI, 929 en 2013 contre 2308 candidats l’année précédente\. Cette chute serait due aux effets pervers du concours de recrutement à la Fonction Publique ouverts aux personnes n’ayant pas fréquenté les ENI et aux échecs massifs des diplômés des ENI au dit concours\. Pour corriger ce dysfonctionnement, il convient de développer des modalités de couplage des évaluations certificatives des ENI et de l’ISSEG avec le concours de recrutement de la Fonction Publique\. Réforme de la formation initiale des enseignants du secondaire : le projet de recrutement de diplômés d’universités (ceux ayant achevé au moins 3 années d’étude) pour une formation académique et professionnelle d’un an, suivi d’un stage pratique pour en faire des professeurs de collège n’a pas abouti\. Dans la même dynamique, la deuxième école de formation n’a pas été mise en place pour une formation des professeurs polyvalents de collège\. La principale raison est un problème institutionnel lié au statut des sortants (reclassement à quelle hiérarchie de la fonction publique?)\. Formation initiale des formateurs du technique & professionnel (VOLET FORMINE) : La formation des formateurs est une préoccupation majeure du système de formation professionnelle et technique qui fait face à un problème récurrent de personnel dont le nombre est insuffisant et surtout vieillissant\. Une bonne frange du personnel existant a besoin d’une remise à niveau technologique\. Ce qui dénote suffisamment de la Pertinence de la relance de la formation des formateurs au niveau de l’ENPETP\. Le projet FORMINE qui appuie cette initiative permet de réactiver la formation initiale des formateurs à l’ENPETP et au CFP de Matoto\. Il s’agit de mettre à niveau les programmes et les enseignants, et de rénover l’approche et les outils pédagogiques aussi bien à l’ENPETP (site de la formation pour la première année) qu’au CFP de Matoto (site pour l’année de formation technologique et pratique dispensée en stage)\. Les résultats obtenus sont entre autres :  La rénovation pédagogique de la filière de chaudronnerie du CFP de Matoto;  L’organisation de voyage d’étude à l’AFPA pour 2 formateurs de la filière chaudronnerie :  La fourniture d’équipement informatique et l’installation de la connexion WiFi du centre de ressources de l’ENPETP;  La fourniture d’ouvrages pédagogiques et techniques à l’ENPETP  L’organisation d’un voyage d’études en Tunisie pour des gestionnaires pédagogiques de l’ENPETP ayant abouti à une convention de partenariat;  La formation des formateurs en : o Didactique professionnelle o Pédagogie de la médiation o Pédagogie active La Pérennisation de ces acquis appelle à renforcer les actions menées et à poursuivre dans une dynamique complémentarité et de couvertures de tous les volets prenant en compte : (i) l’implantation de nouveaux programmes porteurs selon l’APC; (ii) une plus grande implication des grandes entreprises et autres partenaires; (iii) la dynamisation du Partenariat Public Privé\. 61 Alphabétisation et de l’éducation non formelle : Ce volet restructuré (financement FTI/UNICEF/PSE de 2008 à 2013) a visé 25000 personnes de différentes catégories socioprofessionnelles pour une durée de 9 mois d’alphabétisation\. Ce volet mis en œuvre de 2011 à 2012 selon l’approche ‘’Faire-Faire’’, a couvert 16 Préfectures où le taux brut de scolarisation et d’alphabétisation sont les plus bas et constituent des poches de pauvreté\. Les évaluations ont démontré des résultats positifs de 27929 alphabétisés sur 25000 apprenants prévus pour un taux de réussite de 85,5%\. Pour atteindre cet objectif, des activités de formation, de production de matériel didactique, de supervision et d’évaluation ont été mises en œuvre\. L’analyse de ces résultats fait ressortir des points forts et des points faibles, des leçons apprises qui permettent de formuler des recommandations pour le prochain PSE\. En termes de Pertinence, ce sont les préfectures les plus nécessiteuses qui ont été couvertes en priorité\. Malgré les bons résultats obtenus au niveau de ces cibles, il est nécessaire d’élargir l’intervention aux autres préfectures\. S’agissant de l’Efficacité, ce volet a atteint voire dépasser ses objectifs de 112%\. Pour une prévision de 25 000 apprenants, 27 929 apprenants ont été alphabétisés\. Sur cet effectif, on dénombre : 18 042 femmes de 25 ans et plus (72%), 2 704 jeunes de 15 à 25 ans des CAP (11%), 2 594 élus locaux et APEAE (10%), 2 375 membres de comités de gestion(9,5%) et 2 214 d’autres catégories socioprofessionnelles (9%)\. Cela dénote la diversité des cibles visées même si la prise en compte de certaines a été de faible proportion\. Pour atteindre ces résultats, 76 superviseurs et 640 alphabétiseurs ont été formés, certifiés et déployés dans les centres sur la base d’un superviseur pour 5 à 10 centres d’alphabétisation\. Cette approche d’encadrement est à améliorer pour un rapprochement des superviseurs des centres et une meilleure définition de mécanisme de certification et de reconnaissance des acquis\. Par ailleurs, 85% des bénéficiaires utilisent couramment des compétences en lecture-écriture et calcul, 13% appliquent des compétences en santé-hygiène et 5% suivent les apprentissages des enfants à l’école\. Outre ces compétences instrumentales de base (Lecture, écriture et calcul) sur le plan personnel, 34,4% des bénéficiaires affirment utiliser des compétences dans la vie courante et 38,3% attestent que cette formation leur a permis de changer leur comportement dans la vie en société\. La stratégie ‘’faire faire’’ utilisée dans la mise en œuvre du volet a permis d’atteindre ces objectifs\. Deux ONG recrutées pour l’encadrement de 595 centres d’alphabétisation ont mené des activités de sensibilisation, d’information et d’accompagnement des communautés\. Concernant la viabilité, l’utilisation des ONG pour l’exécution des activités sur le terrain à travers la stratégie « faire faire » a permis d’être plus proche des communautés bénéficiaires et de mieux les accompagner dans l’appropriation du projet\. Cela se démontre dans l’appui organisationnel et la capitalisation des acquis au niveau communautaire\. Chez les apprenants, des cotisations volontaires ont été instaurées dans certains centres et aussi des pénalités de retard et d’absence des apprenants ont été instituées par endroit pour remplir les caisses des COGES\. Tout ceci a été ajouté aux ressources provenant des AGR53 initiées par les communautés pour la prise en charge des frais d’entretien des centres d’alphabétisation, l’achat de lampes et des boîtes de craie\. 53 Les missions de suivi ont enregistré plus de douze millions (12 000 000 FG) de francs guinéens issus des AGR\. 62 Par ailleurs, la disponibilité d’un personnel de supervision et d’animation certifié permet la poursuite et le renforcement du prochain PSE ainsi que la valorisation des meilleures pratiques\. Au niveau des collectivités, la reconnaissance des communautés pour les services rendus par certains néo-alphabètes dans la vie des populations\. L’utilisation de plusieurs néo-alphabètes à titre de personnes-ressources dans la mise en œuvre de certaines activités communautaires (tenue des registres de micro finances pour certaines institutions de crédits, appui organisationnel pour les groupements féminins, respect de l’hygiène du milieu et des aliments); la tenue de la petite comptabilité des groupements féminins qui encadrent les centres d’alphabétisation par des apprenants sont autant d’éléments de pérennisation du projet\. Les AGR ont été développées par l’initiative des groupements féminins bénéficiaires dont les produits ont servi à soutenir certaines charges, à améliorer les conditions de vie des membres et à favoriser le maintien des apprenants\. Cette activité intégrée aux actions d’alphabétisation est un facteur de pérennisation qui favorise la participation communautaire\. Des progrès ont été réalisés, cependant il n’en demeure pas moins de constater des besoins de qualification au niveau des structures étatiques y compris celles des ONG et au niveau communautaire et la production suffisante de matériel pédagogique adéquat\. Le redressement de cette situation serait un facteur de réussite\. Les Difficultés rencontrées au niveau de ce volet sont entre autres  Sous financement des activités d’AENF  Insuffisance de qualification des acteurs de mise en œuvre du projet ;  Faible implication des partenaires dans le financement de l’AENF ;  Faible capacité institutionnelle et humaine des structures centrales, déconcentrées, celles des ONG et des communautés ainsi que le manque de logistique pour la supervision  Manque de base de données actuelle ;  Manque du personnel enseignant en AENF\. Les leçons apprises  Une bonne sensibilisation/information des communautés et des autorités locales est un facteur de mobilisation de celles-ci pour la mise en œuvre des projets ;  Un accompagnement organisationnel et technique aux communautés par des ONG compétentes et une bonne collaboration entre les différents acteurs (ONG, Structures étatiques, autorités locales communautés) dans la mise en œuvre des projets est un facteur de réussite et de pérennisation des projets ;  La sélection d’ONG performantes pour la mise en œuvre des activités d’AENF permet l’atteinte des résultats\.  Recommandations Pour le futur projet, il est fondamental de tenir compte de toutes les phases de l’alphabétisation à savoir : la pré-alphabétisation, l’alpha initiale, le post-alpha et l’environnement lettré en y intégrant les AGR et les activités de gestion (coordination, supervision et encadrement)\. Ce qui suppose l’étalement de l’alphabétisation sur une durée de 15 mois au lieu de 9 mois pour atteindre les résultats escomptés\. Une telle planification entrainera le rehaussement du coût de l’alphabétisé\. En plus de l’appui aux NAFA et aux CAP, une diversification d’approches et de partenaires est nécessaire\. Cette situation démontre le sous- financement du sous-secteur\. Spécifiquement il convient de:  Créer une ligne budgétaire d’investissement pour l’Alphabétisation et l’Education Non Formelle ;  Mettre en contact les institutions d’aide à la réduction de la pauvreté avec les ONG partenaires en vue d’une coopération élargie et renforcée en matière d’alphabétisation et d’éducation non formelle (AENF) ;  Diversifier les partenaires pour la mobilisation des ressources ; 63   Prendre en compte intégralement les cibles de l’AENF dans les 3 composantes (accès, qualité et gestion) du nouveau PSE ;  Intégrer des modules en AENF dans les programmes de formation à l’ENI, à l’ISSEG et dans d’autres institutions d’enseignement supérieur;  Recruter et former le personnel enseignant en AENF  Renforcer les capacités institutionnelles et humaines (dotation en matériels logistiques roulants, d’informatique, de reprographie et formation des personnels) ;  Mettre en place un dispositif de suivi/évaluation pour assurer une bonne exécution des actions ;  Mettre en place un mécanisme de certification pour les personnels d’encadrement, de supervision, d’animation et des apprenants\.  Mettre en place une base de données\. Formation continue des enseignants du primaire et du secondaire : L’importance et la nécessité de la formation continue pour l’amélioration des services rendus à l’élève et au système éducatif en général sont deux principes qui sont aujourd’hui largement acceptés par tous\. Du point de vue de la Pertinence, les résultats atteints sont en adéquation avec l’objectif d’améliorer les compétences des enseignants en vue de qualifier leurs pratiques de classe et de favoriser la réussite scolaire des élèves\. Les formations délivrées répondent aux besoins de développement professionnels des enseignants préalablement identifiés\. Les missions de suivi et de supervision ont observé que les enseignants investissent les connaissances acquises dans leurs pratiques de classe\. Ce qui montre que les sessions de formation ont eu une valeur ajoutée dans la qualification des formateurs\. Sur le plan de l’efficacité, l’utilisation rationnelle des ressources allouées à l’activité a permis d’atteindre les objectifs assignés sauf dans le cas du secondaire où le processus s’est arrêté après la rédaction des modules et l’élaboration des plans de formation\. Aussi, l’existence d’un cadre d’harmonisation de la formation continue permet d’éviter des duplications dans les interventions des partenaires\. S’agissant de la Viabilité, il convient de mentionner parmi les éléments favorables à la poursuite et l’amplification de la formation continue : (i) les compétences acquises en matière de conception, l’exécution et le suivi-évaluation par les cadres nationaux; (ii) l’existence de modules de formation adaptés aux besoins et (iii) la disponibilité des partenaires à accompagner les activités de perfectionnement des enseignants\. Volet : FIERE- Filles Éduquées Réussissent : La Vision de FIERE est « Les filles de 5ème et 6ème années en difficultés d’apprentissage sont mieux formées et réussissent dans leur vie future\. FIERE repose sur trois postulats qui sont : (i) les filles éduquées réussissent mieux dans leur vie personnelle, leur future vie familiale; (ii) l’éducation des filles profite aux parents et aux familles ; (iii) l’éducation des filles profite à toute la communauté\. A ce jour, 33 préfectures sont impliquées dans la mise en œuvre des activités FIERE\. Pertinence Les disciplines identifiées dans le cadre de FIERE pour faire l’objet de cours de rattrapage ont été reconnues comme celles dans lesquelles les filles éprouvaient le plus de difficultés\. Il s’agit des cours de français et de mathématique\. Il est vrai qu’en tant que disciplines instrumentales, leur maîtrise détermine le succès scolaire des élèves\. Quant aux thèmes de formation des enseignantes et des formatrices en français, calcul et en pratique professionnelle eux, obéissent aux besoins de formation identifiés pendant les précédents suivis effectués et aux contenus des fascicules 1, 2,3 et 4 en usage dans les écoles FIERE\. Par rapport aux activités para scolaires, développées dans l’approche FIERE, elles rencontrent l’adhésion totale des parents, des cadres de l’éducation et des élèves, bien qu’elles ne soient pas poursuivies dans le cadre de l’extension\. 64 Efficacité Au regard des résultats de l’approche FIERE énumérés plus haut, on peut affirmer que l’approche a apporté une valeur ajoutée au système éducatif\. Il s’agit de la récupération des filles en difficultés scolaires à travers des cours de renforcement en français et calcul qui permet de rattraper un investissement sur l’éducation qui était destiné à une perte sûre\. On note également l’accroissement des indicateurs d’accès et de réussite dans les zones touchées dans un contexte de stagnation des indicateurs nationaux\. Pérennisation La conscientisation des parties prenantes notamment des mères et des enseignantes, ainsi que l’ancrage de l’approche au sein des structures centrales et déconcentrées est un atout de pérennisation du projet dans la durée\. La poursuite des programmes de motivation (octroi de prix, nomination d’enseignantes et de formatrices FIERE à des postes de responsabilité) constitue un levier important pour la pérennisation de l’approche\. Viabilité La formation dispensée aux filles deux fois par semaine sur l’approche et la formation continue des enseignantes dans les CAPE, permettent des échanges fructueux et une amélioration nette de la rentabilité des enseignantes\. Les effets de cette formation commence à faire tâche d’huile au niveau des autres enseignants non FIERE\. Des filles sélectionnées et admises dans les classes FIERE depuis l’expérimentation sont à présent en voie d’achèvement ou ont achevé leurs études universitaires\. Efficience Il est clair que pour obtenir des résultats aussi probants, un investissement financier, humain et matériel important a été opéré dans la mise en œuvre et le suivi de FIERE\. Ce coût est supporté aussi bien par SFF/FIERE/GIZ, l’État guinéen, que par les communautés bénéficiaires\. A titre indicatif, ces dépenses sur chaque fille FIERE revient à cent quatre-vingt-seize mille neuf cent soixante-deux (196 962) GNF en 2011 au PROPEB (rapport évaluation)\. En considération de tous ces coûts, et des résultats de FIERE en matière de Taux de scolarisation des filles, de taux d’achèvement des filles, d’apprentissages pour la vie et de satisfaction morale des parents et des élèves, on peut affirmer que l’approche est efficiente\. Les résultats atteints sont considérables au regard des coûts investis\. Difficultés - Mutation des enseignantes FIERE sans prise de dispositions préalable pour le remplacement ; - Mauvais choix des filles, des écoles et des enseignantes FIERE par endroit suite à l’incompréhension ou à la mauvaise application des critères de sélection ; - Irrégularité de certaines enseignantes aux cours de renforcement\. Leçons apprises La formation continue des enseignantes Elle a eu pour effet l’amélioration de leur prestation pour l’application d’une méthode active d’enseignement\. Les enseignantes ne cessent d’améliorer leurs compétences et de partager avec les autres leurs connaissances au cours des CAPE\. La formation continue doit donc se poursuivre car elle n’est jamais de trop, bien au contraire, il faut cultiver et entretenir les connaissances acquises en vue leur capitalisation\. La fierté des enseignantes FIERE réside dans le fait qu’elles ont une pratique de classe très efficace\. Elles lient très souvent cette efficacité au matériel confectionné localement qui sert de motivation pour les enfants\. En plus de l’efficacité pédagogique, les enseignantes FIERE sont conscientisées sur la nécessité de la réussite scolaire des filles, du rôle essentiel que jouent la méthode d’enseignement et les paramètres sociaux et familiaux dans la survie scolaire d’une fille\. Elles s’engagent, s’épaulent, et se déploient pour soutenir les filles et les amener à poursuivre leurs études\. 65 Les enseignantes FIERE, pour être performantes, ont besoin de renforcement de leurs compétences en Français, en Mathématiques, en Pédagogie active, en confection et utilisation du matériel didactique, en genre et équité et en droit de l’enfant\. Les cours d’éducation sexuelle ou comportementale et de prévention du VIH Longtemps resté tabou, la communication sur la santé sexuelle et reproductive et sur la prévention du VIH commence à s’installer dans les habitudes des populations grâce aux cours reçus dans ces domaines mais aussi grâce à la formation des mères\. Toutefois, les résistances persistent pour la communication entre filles et mères\. Les parents sont conscients que le thème est important pour un développement sain de leurs filles dans une société en pleine dégradation de mœurs, mais ils comptent sur les enseignantes pour le faire\. Une certaine gêne, due à la culture en présence et aux différences d’éducation entre générations empêche bien de parents d’en parler\. Cela revêt le caractère important de cet axe, afin que les enseignantes puissent constituer de véritables éducatrices au-delà des cours académiques, et aider les filles dans leur développement physique, moral, pour une réussite de leur vie de femmes\. Recommandations - Poursuite du renforcement des compétences professionnelles des enseignantes ; - Poursuite des cours de rattrapage en faveur des filles FIERE ; - Révision des documents de base FIERE en tenant compte des réalités du terrain et des nouvelles stratégies de mise en œuvre du programme ; - Poursuite de la sensibilisation des communautés ; - Mise en place d’un système de communication interne et externe efficace basé sur une diversification des canaux de diffusion ; - Meilleure coordination des activités relatives à la scolarisation des filles pour capitaliser les acquis de chaque approche ; - Stabilisation des enseignantes en milieu rural par l’application de mesures visant l’amélioration des conditions de vie dans les écoles, le suivi rapproché des enseignantes, le paiement de la prime d’éloignement etc\. - Intensification du système de suivi avec implication des IRE, DPE, DSEE ; - Augmentation du nombre de filles dans les classes FIERE pour limiter l’exclusion ; - Transparence dans le choix des filles, des enseignantes et formatrices ; - Mobilisation de ressources humaines qualifiées et engagées ; - Prise en charge par le budget de l’éducation des plans d’actions pour la mise en œuvre de l’approche FIERE\. Pour réussir la réduction des inégalités de genre dans l’éducation et promouvoir la scolarisation saine des filles, l’approche FIERE est une référence incontournable aussi bien pour la Guinée que pour bien de pays en Afrique subsaharienne\. Sa pertinence prouvée à travers les disciplines et activités ciblées, son efficacité sur l’amélioration de la performance scolaire des filles et partant de la qualité de l’éducation, son originalité au regard de ses cibles d’intervention qui sont les filles en difficultés scolaires font la fierté de ses initiateurs et de ses bénéficiaires\. Ces mêmes éléments de satisfaction contribuent à la réalisation des objectifs du millénaire et ceux du PSE\. Évaluation des apprentissages des élèves du primaire à l'échelle nationale (CNCESE) : Pertinence : La réalisation de l’étude a permis d’atteindre les objectifs fixés\. En outre elle a généré des connaissances utiles à la compréhension des différences de résultats observées entre élèves ainsi que les facteurs influents en montrant clairement que « l’effet école » est à la base des inégalités entre les élèves\. Elle a aussi établi que le niveau moyen des élèves connait une baisse considérable des résultats en partie attribuable aux difficultés de tous ordres auxquelles le pays a été confronté entre 2008 et 2011\. 66 L’évaluation a donné des éclairages sur la persistance des disparités entre les filles et les garçons en faveur des garçons, et de révéler l des différences assez significatives selon la zone, la région, le statut et le type d’école (publiques/privées, franco-arabes ou non) et un pourcentage élevé de redoublants : 27,2% des élèves de l’échantillon, les garçons redoublent moins que les filles (26,4% vs 28,2%)\. Le redoublement affecte beaucoup plus les écoles publiques que celles privées\. Cette évaluation renoue avec le rythme des tests standardisés prévus aux niveaux CP2, CE2 et CM2 permettant ainsi d’avoir une vue globale des acquis des élèves du primaire à l’échelle nationale, donc de disposer à temps d’indicateurs de pilotage fiables\. Efficacité : Les outils utilisés et la méthodologie adoptée pour le test de niveau des élèves ont permis d’obtenir des informations escomptées telles que planifiées\. Viabilité : Pour des fins de pilotage efficace, les évaluations des acquis des élèves du CP2, CE2 et CM2 méritent d’être systématisées et effectuées à temps\. La conduite à terme de ces évaluations par la structure nationale en l’occurrence la CNCESE, a démontré l’existence de compétences nationales capables de mener ce genre d’exercice complexe\. Autant dire que les formations reçues et les appuis techniques apportés ont produits leurs effets\. Si les moyens sont disponibles, la réalisation des évaluations ne souffrirait d’aucune entrave\. Evaluation précoce et apprentissage de la lecture (EGRA – INRAP) : Efficacité : il faut noter que la facilitation des partenaires, la disponibilité de l’équipe chargée de la mise en œuvre, les stratégies et l’utilisation rationnelle des ressources allouées à l’activité ont permis d’atteindre 90 % des objectifs assignés sauf pour le cas du suivi qui doit être réalisé durant l’année scolaire 2013-2014\. Et on peut constater aussi, que les résultats atteints sont en adéquation avec l’objectif fixé\. Viabilité: s’agissant de la viabilité, il convient de mentionner l’existence d’éléments favorables à la poursuite et l’application des activités EGRA : (i) les compétences acquises en matière de conception, d’exécution et de suivi évaluation en lecture par les cadres nationaux ; (ii) l’existence d’un instrument d’évaluation standardisé en lecture au CP ; (iii) l’existence d’un module de formation adapté aux besoins des enseignants du CP (iv) la disponibilité des émissions sur la problématique de la lecture (v) la disponibilité des partenaires à accompagner les activités d’amélioration des compétences en lecture des élèves du CP\. La pérennisation des acquis appelle à (i) revoir à la hausse le budget pour assurer les évaluations en lecture dans toutes les régions ; (ii) prévoir des mesures d’accompagnement permettant aux cadres et aux encadreurs pédagogiques d’assurer avec efficacité le suivi des activités dans les écoles ; (iii) mobiliser les ressources nécessaires pour la poursuite du processus de formation de tous les enseignants du CP en lecture ; (iv) intégrer dans le budget de l’éducation le volet amélioration de la lecture précoce\. Point faibles : (i) le calendrier d’exécution des activités n’a pas été respecté à cause du retard dans le recrutement du consultant, (ii) le Gouvernement n’a pas intégré le financement des activités de la lecture dans les dépenses budgétaires de l’éducation\. Ce qui engendre une dépendance par rapport aux contributions des bailleurs de fonds, (iii) la faiblesse du suivi des activités sur le terrain\. Point forts: (i) l’existence d’une expertise nationale capable de mener les activités EGRA; (ii) la disponibilité d’un instrument d’évaluation standardisé en lecture au CP ; (iii) la disponibilité d’un rapport d’évaluation des compétences en lecture des élèves du CP qui pourrait servir d’intrant pour éclairer et orienter la prise de décision en matière de remédiation\. Recommandations  Assurer la mise en œuvre régulière (ex, chaque année) d’une évaluation standardisée telle que l’EGRA, pour mesurer les acquisitions des élèves en lecture-écriture, de manière scientifique :  Respecter les calendriers établis pour les évaluations  Assurer la maitrise des compétences fondamentales : conscience phonémique, correspondance graphème phonème, vocabulaire, fluidité (précision et rapidité) et compréhension\. 67   Étudier les causes des difficultés des enfants en lecture-écriture\.  Préserver l’approche partenariale entre les différentes équipes impliquées dans le projet (Ministère, INRAP, équipes techniques, partenaires personnes ressources) pour assurer une continuité efficace des actions en cours\.  Fournir aux enseignants en charge des enfants des formations adéquates  Explorer des mesures d’appui des élèves à la maison afin d’augmenter le nombre de manuels et autres matériels disponibles à lire ainsi que des moyens pour assurer l’augmentation des devoirs à la maison  Renforcer le système de suivi rapproché des enseignants  Doter le volet EGRA en équipement et en moyens logistiques  Mobiliser les acteurs, partenaires et les décideurs autour de la lecture précoce\. Composante 3 : GESTION Gestion des ressources humaines matérielles et financières : Efficacité : la quasi-totalité des activités programmées ont été réalisées même avec la restructuration du programme\. Les acquisitions de matériels et équipements, le développement de procédures de gestion et la formation du personnel ont permis de renforcer les capacités de programmation et de gestion des ressources matérielles et financières sur financement extérieur\. Si auparavant les budgets du secteur étaient préparés sous la forme classique, depuis 2012 la préparation des budgets des ministères se fait selon l’approche CDMT et la déconcentration budgétaire a été relancée\. Par contre, une des faiblesses majeure qui a atténué l’efficacité est le sous financement du secteur en général et de certains niveaux d’enseignement en particulier, notamment l’enseignement technique, l’alphabétisation et l’enseignement primaire dû à la faiblesse de l’arbitrage intra sectoriel\. Le retard dans la mise à disposition des subventions entraine parfois la non-réalisation de certaines activités programmées dans les plans d’action des services déconcentrés, notamment celles liées à l’encadrement rapproché des enseignants en situation de classe\. Par ailleurs, le système de communication n’a pas fonctionné même si des missions d’information et de vulgarisation du PSE ont été assurées\. Le processus de mise à jour et de publication du site web n’a pas été poursuivi\. Pertinence : les activités réalisées notamment la programmation selon l’approche CDMT, la déconcentration budgétaire et le renforcement des capacités des gestionnaires des services centraux et déconcentrés sont effectivement en phase avec la réforme des finances publiques de l’État\. C’est dans ce cas que l’Éducation a été prise comme secteur pilote\. Viabilité : la maîtrise des outils et de la méthodologie de programmation budgétaire par les cadres aux niveaux central et déconcentré est un des éléments permettant d’assurer continuité de la déconcentration budgétaire et de mieux aligner les allocations par rapport aux priorités\. La publication des allocations budgétaires, le caractère participatif de préparation des budgets et le respect des procédures du manuel élaborés sont aussi des facteurs favorisant la gestion déconcentrée des ressources publiques et l’efficacité de la dépense publique\. Les problèmes récurrents de maintenance des matériels et équipements informatiques posent la question de leur viabilité\. La mise en place de contrats de performance incitant tous les bénéficiaires à utiliser les moyens mis à leur disposition peut être une solution adéquate\. Leçons apprises : dans la mise en œuvre du PSE, il ressort que l’accent a été porté sur la traçabilité et le suivi du respect des procédures de gestion des ressources extérieures\. Par contre, il y’a un déficit d’information dans la gestion des ressources intérieures et une lenteur dans l’application des procédures visant à l’amélioration de l’efficacité de la dépense publique\. Pour surmonter ces insuffisances, il est indispensable d’appliquer la même rigueur dans la gestion des ressources publiques que celle observée pour les financements extérieurs\. Pour faire évoluer la gestion des ressources financières vers l’approche programme, il importe de renforcer les capacités institutionnelles, organisationnelles et humaines des Divisions des Affaires Financières\. Pour améliorer la programmation et la budgétisation axée sur les résultats, la poursuite du dialogue avec le ministère en charge des finances en vue de la prise en compte de tous les aspects du CDMT du Secteur est nécessaire\. 68 Suivi-évaluation et de la production de statistiques : Efficacité : les données statistiques et les rapports de suivi-évaluation ont été régulièrement produits et ont servi à mesurer les performances du secteur et à relever les écarts par rapport aux objectifs, contribuant ainsi à améliorer le pilotage du programme\. Pertinence : les statistiques scolaires constituent de nos jours un outil indispensable pour la gestion du système éducatif\. C’est pourquoi, elles méritent une attention toute particulière\. Ainsi, la mise à disposition de données statistiques fiables montre une adéquation entre la production de ces données et les besoins de pilotage du système éducatif\. Viabilité : sur le plan structurel, le dispositif de suivi-évaluation mis en place est incorporé aux systèmes d’informations statistiques existant, ce qui du coup assure sa pérennisation\. Toutefois, le suivi-évaluation devra aller au-delà de la simple production/diffusion d’indicateurs pour déboucher sur des recommandations aux décideurs et partenaires pour une gestion durable et efficiente du système éducatif\. Ce qui nécessite un choix judicieux du nombre et de la qualité des indicateurs\. Le financement public des activités de production des statistiques doit être suffisant et mis à disposition à temps pour en assurer la régularité\. En outre, la préservation et l’utilisation rationnelle des équipements (informatiques, bureautiques et énergétiques) engagent les ministères à mettre en place un système de contrôle et de sécurisation\. Le manque d’informations des structures déconcentrées sur les activités de construction et d’équipements planifiées dans le programme en leur faveur constitue un handicap pour leur intervention efficace dans le suivi-évaluation des réalisations d’infrastructures\. Par ailleurs, les organes de pilotage et de coordination du programme aux différents niveaux (CNE, CRPE et CPPE) à l’exception du CSN et de quelques CPPE n’ont pas fonctionné tel que prévu par défaut de programmation\. Ceci mérite d’être corrigé par les responsables concernés dans le prochain PSE\. Recommandations : l’amélioration de la circulation de l’information intersectorielle et intra sectorielle ne devrait pas se limiter qu’à sa planification dans les PAAB, mais plutôt être traduite en action concrète pour permettre d’éliminer les goulots d’étranglement qui persistent\. La réactivation du site Web du PSE et la publication régulière d’un bulletin d’informations s’inscrivent dans cette perspective\. IV- ANALYSE DES PERFORMANCES PERFORMANCE DE L’EMPRUNTEUR Sur le plan de la performance des acteurs, la réalisation d’un programme complexe et nécessitant des changements de comportements aura été un résultat majeur dénotant aussi d’une capacité d’adaptation et d’apprentissage dans un processus contraignant sur le plan de la durée de l’exécution et de la simultanéité des actions\. La mise en œuvre des stratégies innovantes en pédagogie et en multi gradation a été une preuve positive de rehausser le niveau de scolarisation\. Ces stratégies sont désormais inscrites en bonne position parmi les bonnes pratiques d’amélioration de l’éducation même si elles sont à perfectionner\. Cependant, malgré les multiples efforts consentis par les acteurs et partenaires, l’amélioration de la qualité des apprentissages des élèves demeure peu satisfaisante parce que de nombreux élèves n’ont pas les compétences de base en lecture, communication orale et écrite ou en calcul\. Un certain nombre de raisons expliquent la faible performance du système éducatif dans ce domaine entre autres : (i) la difficulté de vulgariser les pédagogies adéquates à cause de l’émiettement des interventions des services pérennes et des projets sur apports extérieurs ; (ii) la lenteur de la revitalisation des inspections et suivi rapproché des enseignants et au niveau de la classe ; la persistance de la difficulté à utiliser efficacement les manuels scolaires par les maîtres en dispensant les cours ; (iv) l’absence de définition claire et précise des niveaux 69 acceptables de lecture, de l’écriture et de calcul en particulier et des critère d’école de qualité de l’école en général\. En matière de financement public en faveur de l’éducation, le diagnostic du système éducatif effectué, montre que les moyens financiers sont insuffisantes ou diminuent d’année à alors que la population scolaire croît à un rythme soutenu (13,35 % en 2014, 17,23 % en 2005, 12,25 % en 2006 et 13,14 % en 2007)\. La nécessité d’inverser cette tendance s’impose\. D’une façon général, on note : (i) des inadéquations entre différents ordres d’enseignement ; (ii) la ventilation non optimale entre les catégories des dépenses ; (iii) la forte centralisation de la gestion des ressources financières et matérielles au niveau des services financiers centraux ; et (iv) la rareté des ressources au niveau des services déconcentrés\. Il a été envisagé de mener des réformes politiques et institutionnelles pour créer un cadre favorable à l’accélération de la scolarisation, à l’amélioration de la qualité et au renforcement de la gouvernance du système éducatif\. La mise en œuvre de ces reformés exigeait une volonté politique, un leadership et des stratégies de sensibilisation, de persuasion et de mobilisation sociale, des attitudes et activités pas qui n’ont pas été uniformément effectives dans tous les domaines\. Dans le cas de l’abolition des frais de scolaires dans les écoles primaires, des mesures d’interdiction des prélèvements directs ont été prises avec plus ou moins de succès\. Car, les coûts directs et indirects de la scolarité ont continué de peser sur les familles pauvres\. La gratuité des manuels scolaires a allégé les charges des parents\. La privatisation de certaines fonctions de l’INRAP par rapport aux manuels scolaires (impression, réimpression achat et distribution) a été un autre élément de réussite\. PERFORMANCE DE LA BANQUE MONDIALE Le FC-PSE s’inscrit dans la continuité de la coopération entre la Guinée et la Banque Mondiale en tant qu’agence de supervision du FTI dans le secteur de l’éducation\. Dans l’ensemble, la qualité de la supervision par l’IDA a été satisfaisante à cause de son timing, de sa pertinence et de sa contribution à la résolution des difficultés rencontrées\. Les appuis conseils prodigués dans le cadre du partenariat technique ont permis de corriger des lacunes, d’impulser le processus et d’encourager la prise de décisions sur les questions de reformes 70 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Not Applicable\. 71 Annex 9\. List of Supporting Documents Aide-Mémoires Financial Management and Procurement Assessments ESMP and Social Safeguards Government Annual Review Reports Guinea\. October 3, 2011\. Education for All - Fast Track Initiative Catalytic Trust Fund\. Education for All Project - Grant No\. TF092364\. Reinstated Agreement and Disbursement Letter\. _____\. December 26, 2013\. Education for All-Fast Track Initiative Catalytic Trust Fund\. Education for All Project\. Grant No\.TF092364\. Amendment to Grant Agreement\. Joint mission aide-mémoires\. 2014 Audit report preparation for the MEPU-EC\. World Bank\. December 26, 2013\. Restructuring Paper for the Education for All Fast Track Initiative Project\. Report No: RES12672, Washington, D\.C\. __________\. August 30, 2011\. Restructuring Paper for the Education for All Fast Track Initiative Project\. Report No: 56567-GN, Washington, D\.C\. __________\. March 24, 2011\. Republic of Guinea: Interim Strategy Note for FY11-12\. Report No\. 59671-GN\. _________\. 2013\. Republic of Guinea: Country Partnership Strategy for FY14-17\. Report No\.76230-GN\. _________\. June 12, 2015\. Republic of Guinea: Public Expenditure Review: Volume I— Education\. Report No\.97282-GN\. _________\. Catalytic Fund Program Document on an Education for All-Fast Track Initiative in the amount of USD117\.8 million to the Republic of Guinea for an Education Sector Development Program\. _________\. July 9, 2015\. Republic of Guinea: Pooled-Fund for Basic Education (FoCEB)\. Report No\.PAD1085\. 72 Annex 10\. Project Indicators Table 1A: Component 1 - PDO-Level Indicators (FC-PSE) Indicator Original (2008) First Restructuring (2011) Second Restructuring (2012) Third and Final Restructuring (2013) Project Closing Revised Comments Revised Revised Original End Target Achieve Target for Target for target for Achievement Indicat for new Achievement Indicat ment as Original new closing Indicator new closing Achieve- August 31, as of 2011 or closing as of 2012 or of 2013 Baseline date change date ment 2011 Closing restructuring change date restructuring change restructu (December (December date (January ring 31, 2013) 31, 2014) 15, 2013) Target exceeded\. 82\.4% Indicator included in PAD\. This Access rate in first 77% 88% 85% 82% 84% 85% 86\.1% (77\.7%) was also an ESP indicator\. In 2011 grade (total/girls) (TBD) (TBD) (82%) (78%) (80%) (80%) (81\.2%) (2009) RP changed to intermediate-level indicator (and modified to “gross intake rate”)\. Target exceeded\. Indicator included in PAD\. This was also an ESP indicator\. Though it was still tracked for the ESP, it Gross was modified under the 2011 enrollm restructuring (for the FC-PSE) to ent rate focus only on 9 prefectures Gross enrollment 47% (43%) for nine 49\.6 51% 53 57 79% 90% 55(51) (Gueckedou, Gaoual, Macenta, rate (girls) (in 9 prefects) targeted (45\.7) (46%) (47\.8) (53) Youmou, Forecariah, Telimélé, prefectu Kerouane, Madiana, and res Dinguiraye) which were the poorest (girls) with the lowest enrollment rates in Guinea and required focused interventions\. It was also disaggregated by gender\. GER by end-of-project was 82\.1% (74\.6%) Indicator included in PAD\. This was also an ESP indicator but Ratio girls: boys in 0\.82 dropped under 2011 restructuring, 0\.83 0\.92 Dropped primary (2010) by end of project the ratio was 0\.89\. It was consider somewhat redundant with GER and intake rate indicators\. Target exceeded\. Indicator introduced under 2011 Direct project restructuring, as a core Bank beneficiaries 0 New 1,584,282 767,550 1,727,700 1,729,670 1,819,763 1,870,408 indicator\. This value refers to: (number) students who benefited from new classrooms, textbooks, trained teachers through in service teacher training Target achieved\. Female 0 Indicator introduced under 2011 beneficiaries New 48 48 48 (2009) restructuring\. Disaggregated under (Percentage) 2011 and 2012 RPs (see indicators below) (i) School 0 New 80,000 40,700 74,700 76,410 construction ** (2009) (ii) Teacher 0 New 4,282 3,000 3,000 3,400 training (2009) (iii) Textbooks *** 0 New 1,500,000 723,000 1,650,000 1,790,598 (2009) ** Number of classes average of 45 children in one class\. *** 6,600,000 textbooks benefiting 1\.65 million children (textbook: pupil ratio of 4)\. 73  Table 1B: Component 1 - Intermediate-level Indicators (FC-PSE) Indicator Original (2008) First Restructuring (2011) Second Restructuring (2012) Third and Final Restructuring (2013) Project Closing Origina Revised Comments l End Target Revised Revised target Achieveme for new Achieve Achieve Target for Target for for nt as of closing ment as Indicat ment as Original Indicator new closing Indicator new closing Achieve- August 2011 date of 2012 or of 2013 Baseline change date change date ment 31, restructuri (January restructu change restructu (December (December 2011 ng 15, 2013) ring ring 31, 2013) 31, 2014) Closing date Indicator included in PAD\. All preschools/ECD activities were transferred to UNICEF/GPE Number of new In Government’s ICR, preschool classrooms 0 140 50 Dropped target was 20 public constructed and classrooms and 120 furnished community classrooms; RT target was 60 classrooms\. Achievement was 40 public classrooms (UNICEF/GPE) and 10 community classrooms Number of Target exceeded\. additional classrooms Indicator included in PAD\. built or Indicator replaced by core rehabilitate indicator in 2011\. Number of new d at the 1644 primary classrooms 99 primary (under 1,644 End-of-project 0 5,698 1,900 1,660 1,660 1,698 constructed and (ongoing) level constructi underway achievement is 2,994 if furnished resulting on) including also those from supported by project UNICEF/GPE financing intervention s Indicator from PAD\. Number of new In 2011 RP, this indicator primary classrooms 0 1,341 Dropped was replaced with new rehabilitated core indicator below\. Indicator value in 2012 was “0” This indicator was included in the PAD and measured lower secondary Number of classrooms\. additional Number of new classrooms Indicator dropped under additional secondary built and/or 2013 restructuring as (collèges) classrooms 0 629 0 200 0 72 0 Dropped rehabilitate secondary classrooms built/constructed and d at the would not be supported furnished secondary under the project (canceled level due to high prices in relation to the budget)\. Funds were redirected to quality inputs (which 74  could also be realistically completed during the project period) In-service training of teachers at secondary education level and for the procurement of textbooks 72 secondary classrooms were built by another DP\. Number of adults Literacy training benefiting from 9- interverntions were months of NGO transferred to literacy training 0 100,000 Dropped UNICEF/GPE\. This (non-formal) indicator was dropped under the 2011 restructuring Number of students Indicator included in the with special needs PAD\. enrolled in primary schools that have Activity was supported by 0 1500 Dropped benefited from a PHRD grant for inclusive specific special education\. needs support (training/materials) Number of Indicator included in the professional PAD\. integration centers built Indicator dropped under 0 20 Dropped 2011 restructuring\. With the reduction in funding, there were insufficient funds for this activity\. Number of primary Indicator included in the and secondary PAD\. Indicator dropped leavers enrolled in under 2011 restructuring\. new professional 5,800 Dropped With the reduction in integration courses funding, there were insufficient funds for this activity 75  Table 2A: Component 2 - PDO-Level Indicators (FC-PSE) Indicator Original (2008) First Restructuring (2011) Second Restructuring (2012) Third and Final Restructuring (2013) Project Closing Revised Comments Target Original Revised Revised for new Achieve Achieve End target Target for Target for Achievement Indicat closing ment as ment as Original for August Indicator new closing Indicator new closing Achieve- as of 2011 or date of 2012 of 2013 Baseline 31, 2011 change date change date ment restructuring change (January restructu restructu Closing (December (December 15, 2013) ring ring date 31, 2013) 31, 2014) Indicator included in the PAD\. This was also an ESP indicator\. Dropped under 2011 restructuring as it was Completion rate in 59% 71%/ considered unrealistic to 59 Dropped primary (total/girls) (TBD) (TBD) have an impact on a cohort during the three year implementation period By end of project, completion rate was: 58\.7% (51\.2%) Girls’ Target exceeded success rate at Indicator included in the the PAD\. This was also an examina ESP indicator\. tion for Transition rate to entrance Replaced under 2011 65% 65% 49% 63 53 55 75\.40 71\.33 lower secondary to 7th restructuring (Baseline grade in value at that time was 49) 100 targeted schools (percent age) Students with a Indicator included in the No further passing grade in Indicator PAD\. This was also an grade 4 French and math 50% 55% (Fr) replaced with ESP indicator\. - 55 53 53 assessmen (grade 4) (2005) 58% (M) indicator t carried (percentage) below In 2011 RP, merged as one out indicator Target not achieved\. Students with a 14\.25 This indicator was selected passing grade in (June New 15\.5 15\.36 to allow for comparability French (grade 3) 2012) at two different points in time points in time\. Repetition rate in Indicator included in the primary PAD\. This was also an ESP indicator\. By end of project, rate was 12\.8 9% 9% 17% Dropped Outcome based on administrative decision not to allow repetition within cycles, and therefore not an actual quality outcome\. 76  Table 2B: Component 2 - Intermediate-level Indicators (FC-PSE) Indicator Original (2008) First Restructuring (2011) Second Restructuring (2012) Third and Final Restructuring (2013) Project Closing Revised Comments Original Target Revised Revised for new Achieve Achieve End target Target for Target for Achievement Indicat closing ment as ment as Original for August Indicator new closing Indicator new closing Achieve- as of 2011 or date of 2012 of 2013 Baseline 31, 2011 change date change date ment restructuring change (January restructu restructu Closing (December (December 15, 2013) ring ring date 31, 2013) 31, 2014) Included in the PAD Number of new pre- With the reduction in school teachers 0 140 Dropped financing, all ECD trained interventions transferred to UNICEF/GPE Included in the PAD Number of preschool classrooms receiving With the reduction in 0 140 Dropped learning materials financing, all ECD and supplies interventions transferred to UNICEF/GPE Target partially achieved\. Included in the PAD\. Indicator was replaced with Bank core indicator under 2011 restructuring System for Assessment system was learning established but the utility assessm rating was lower than the National student ent at target\. 2nd, 4th and evaluations take the Yes Partially Yes (2) Yes (1) Yes (1) 6th grade place primary 2012: Assessment level carried out for grades 2 (supple and 3 mental number) 2013: Assessment carried out in grades 2, 3, and 4 In the 2013 RP, this was presented as two separate indicators Schools Target exceeded implementing reading assessment New 500 0 60 60 79 (Number, Custom) Target exceeded Textbooks purchased and distributed 0 New 1,500,000 2,895,400 6,600,000 6,695,080 6,726,933 7,162,393 This was added as a core (Number) indicator under 2011 Restructuring Ratio of textbooks per student in upper 6 Dropped secondary 77 Number of primary Included in the PAD Not teacher educators 0 specified; Dropped trained in ENI (8 Not included in 2012 and 45 for 2008 modules) 2013 RPs as an indicator Number of primary Included in the PAD teachers benefiting 0 6,000 Dropped 9209 from pre-service training Number of Included in the PAD prefectural in-service Not primary teacher specified; Dropped 38 training plans 38 for 2008 developed Number of school Included in PAD improvement plans 0 3,600 Dropped 8024 developed Number of Included in the PAD secondary teachers 0 2,400 Dropped 2980 benefiting from pre- service training Number of Included in the PAD secondary teachers 0 34,500 Dropped 1000 benefiting from in- service training Ratio of textbooks Included in the PAD per student in grades 3 3 Dropped 1-4 Ratio of textbooks Included in the PAD per student in grades 4 4 Dropped 5-6 Target exceeded\. The decrease observed in 2012 was due to the fact that textbooks had not yet been delivered (and Allocation of were scheduled to be textbooks by number 54 New 80 52 70 77 delivered at the of students enrolled beginning of the SY)\. (percentage) This indicator replaced indicators measuring ratio of textbooks: students listed above, Replace Target exceeded\. d by: % Included in the PAD of teachers 2012 RP: 3,000 teachers benefitti have been selected to Number ng from participate in in-service of primary teachers training training\. This number 18,500 90 0 65 54 80 benefiting from in- have was increased in 2013 service training improve with the cancelation of d their the funds geared for results secondary school compar construction\. ed to baseline Number of primary Included in the PAD school directors 0 14,250 Dropped benefiting from in- service training Number of DSEE Included in the PAD running teacher 0 1,215 Dropped training programs (with grants) 78  Table 3A: Component 3 PDO-Level Indicators (FC-PSE) Indicator Original (2008) First Restructuring (2011) Second Restructuring (2012) Third and Final Restructuring (2013) Project Closing Original Revised Comments Revised Revised End Target Achieve Achieve Target for Target for target for Achievement Indicat for new ment as ment as Original Indicator new closing Indicator new closing Achieve- August as of 2011 or closing of 2012 of 2013 Baseline change date change date ment 31, 2011 restructuring change date restructu restruc- (December (December Closing (January ring turing 31, 2013) 31, 2014) date 15, 2013) Target exceeded\. Indicator introduced under 2011 restructuring though had been informally Implementation of tracked in ISRs following Annual Budgeted the 2011 restructuring (the Action Plans RP lists it as a “revised” 0 New 90 0 95 100 100 (PAAB) at all indicator with a baseline decentralized levels value of “0”) (Percentage) On October 10, 2012 – funds were transferred for beginning of school year\. Implementation commenced only in 2012\. Indicator included in the PAD\. This was also an ESP indicator\. Indicator dropped under Portion of recurrent 16 2011 restructuring – State expenditures 13\.7% 18\.1% Dropped (2010) because it was not for education expected that project could have an impact\. Note that achievement by end-of-project was 18\.1% Indicator included in the PAD\. This was also an ESP indicator\. Indicator dropped under Portion of education 46 2011 restructuring – expenditures for 33% 42% Dropped (2010) because it was not primary expected that project could have an impact\. Note that achievement by end of project was 52\.3% 79  Table 3B: Component 3 Outputs (FC-PSE Intermediate-level Indicators) Indicator Original (2008) First Restructuring (2011) Second Restructuring (2012) Third and Final Restructuring (2013) Project Closing Original Revised Comments Revised Revised End Target Achieve Achieveme Target for Target for target for Achievement for new ment as Indicat nt as of Indicat Original Indicator new closing new closing Achieve- August as of 2011 closing of 2012 or 2013 or Baseline change date date ment 31, 2011 restructuring date restructu change restructuri change (December (December Closing (January ring ng 31, 2013) 31, 2014) date 15, 2013) Number of DPE and Included in the PAD 1 IRE, 6 1 IRE, IRE buildings Dropped DPE 0DPE rehabilitated Internal audit of DPE Included in the PAD 1 5 Dropped 0 and IRE carried out Number of DPE/IRE Included in the PAD benefiting from staff 114/24 Dropped 38/8 training Human Resources Included in the PAD department No Yes Dropped Yes restructured ESP capacity Included in the PAD building plan 0 1 Dropped 1 implemented Ministry’s annual Yearly Target achieved\. statistical report education No published statistics Included in the PAD\. (only data Revised under the 2011 available availabilit restructuring\. data 0 3 No y before Yes Yes Yes Yes Yes 2009- the start 2010) for of MEPU- subsequen EC t school year54 Teacher management Target not achieved in full, as defined by the though progress was made allocation of teachers under the project\. This is by number of an R2 value\. Indicator students (Conakry 70 New 75 70 80 76\.60 76\.70 added under the 2011 only) restructuring\. (Percentage) Note that the current value is 80\.8 54 The annual education statistics was to report on standard education indicators nationwide, such as primary completion rate, drop-out rate, etc\. 80 81

REVIEW

P007253

Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 16199-GUA IMPLEMENTATION COMPLETION REPORT GUYANA TECHNICAL ASSISTANCE CREDIT (CREDIT No\. 2169-GUA) December 30, 1996 Public Sector Modernization Country Department III Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.  CURRENCY EQUIVALENTS Currency Unit = Guyana Dollar (G$) The Guyana dollar floated with the pound sterling from July 1972 to October 1975, when the Government announced its linkage to the US dollar at G$2\.55 - US$1\.00\. A new rate of G$3\.00 - US$ 1\.00 was established on June 1, 1981\. On January 11, 1984, it was adjusted to G$3\.75 - US$1\.00\. The average rates for the period 1984-89 are set out below: Annual Average 1984 US$1\.00 = G$ 3\.8 G$1\.00 = US$0\.261 1985 US$1\.00 = G$ 4\.2 G$1\.00 = US$0\.235 1986 US$1\.00 = G$ 4\.2 G$1\.00 = US$0\.235 1987 US$1\.00 = G$ 9\.7 G$1\.00 = US$0\.103 1988 US$1\.00 = G$ 10\.0 G$1\.00 = US$0\.100 1989 US$1\.00 = G$ 27\.2 G$1\.00 = US$0\.367 1990 US$1\.00 = G$ 39\.5 G$1\.00 = US$0\.253 1991 US$1\.00=G$118\.8 G$1\.00=US$0\.841 1992 US$1\.00 = G$125\.0 G$1\.00 = US$0\.800 1993 US$1\.00 = G$126\.7 G$1\.00 = US$0\.789 1994 US$1\.00 = G$138\.3 G$1\.00 = US$0\.723 1995 US$1\.00 = G$142\.0 G$1\.00 = US$0\.704 1996 January - July US$ 1\.00 = G$140\.25 G$1\.00 = US$0\.713 FISCAL YEAR January 1 - December 31 Vice President:- Shahid Javed Burki Director: Paul Isenman Division Chief: Krishna Challa Responsible Staff: Sr\. Public Sector Mgmt Specialist: Rita Parrilli ITask Manager: Jit Gill  ABBREVIATIONS AND ACRONYMS FOR OFFICIAL USE ONLY BEEP - USAID's Building Equity and Economic Participation Project BOG - Bank of Guyana BOS - Bureau of Statistics CARICOM - Caribbean Community CAS - Country Assistance Strategy CDB - Caribbean Development Bank CFTC - Commonwealth Fund for Technical Corporation DDSMS - UN Department for Development Support and Management Services (Statistics) DIEC - Department of International Economic Cooperation DMD - Debt Management Division DSI - Department of Social Infrastructure EC - European Community EMD - Enterprise Monitoring Division ERP - Economic Recovery Program ESAF - Enhanced Structural Adjustment Facility FISBEC - Financial Sector Business Environment Credit GDP - Gross Domestic Product GOG - Government of Guyana HIES - Household Income and Expenditure Survey ICR - Implementation Completion Report IDA - International Development Association IFI - International Financial Institution IMF - International Monetary Fund LSMS - Living Standards Measurement Survey MCA - Monitoring and Coordinating Agency MCSD - Ministry of Culture and Social Development MFI - Department of Multilateral Financial Institutions MOF - Ministry of Finance ODA - British Overseas Development Agency OPS - UN Office for Project Services PAP - Public Administration Project PCS - Public Corporation Secretariat PFP - Policy Framework Paper PRKS - Personal Records Keeping System PSDAC - Private Sector Development Adjustment Credit PSIP - Public Sector Investment Program PSM - Public Sector Management PSR - Public Sector Review SAC - Structural Adjustment Credit SDR - Special Drawing Rights SIMAP - Social Impact Amelioration Program SOE - State-Owned Enterprise SPS - State Planning Secretariat TAC - Technical Assistance Credit TOR - Terms of Reference UK/ODA - United Kingdom Office of Development Assistance UNDP - United Nations Development Program UNIDO - United Nations Industrial Development Organization UNVs - United Nations Volunteers This document has a restricted distribution and may be used by recipients only in the performance of their Iofriciai duties\. Its contents may not otheruise be disclosed vithout World Bank authorization\.   IMPLEMENTATION COMPLETION REPORT GUYANA TECHNICAL ASSISTANCE PROJECT (CREDIT 2169-GUA) TABLE OF CONTENTS PFEFACE \.1i EVALUATION SUMMARY \. ii PART I: PROJECT IMPLEMENTATION ASSESSMENT \.1 A\. Introduction/Background \.1 B\. Statement/Evaluation Objectives \.2 C\. Achievement of Objectives \.3 D\. Major Factors affecting the Project \.4 E\. Project Sustainaility \.5 F\. IDA Performance \.6 G\. Borrower Performance \.7 H\. Assessment of Outcome \.9 I\. Future Operations \. 10 J\. Key Lessons Leamed/Reconfirmed \.1\.1 PART II: STATISTICAL TABLES \. 14 Table 1: Summary of Assessment \. 14 Table 2: Related Bank Loans/Credits \. 16 Table 3: Project Timetable \. 17 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual \. 18 Table 5: Key Indicators for Project Implementation \. 19 Table 6: Key Indicators for Project Operation \. 20 Table 7: Studies Included in Project \. 27 Table 8A: Project Costs \. 28 Table 8B: Project Financing \. 29 Table 9: Economic Costs and Benefits \. 30 Table 10: Status of Legal Covenants \. 31 Table 11: Compliance with Operational Manual Statements \. \. 33  Table 12: Bank Resources: Staff Inputs \. 34 Table 13: Bank Resources: Missions \. 35 APPENDIX A: AIDE MEMOIRE \. 36 APPENDIX B: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE \. 42 A\. Introduction/Background \. 42 B\. Project Objectives \. 42 C\. Implementation \. 43 D\. Assessment of Credit \. 44 APPENDIX C: DESCRIPTION OF SUBPROJECTS \. 51 I\. Improving the Incentive Framework \. 51 II\. Public Sector Reform \. 52 III\. Improving Public Sector Investment \. 54 IV\. Social Sector Reform \. 56 V\. Improving \. 58 VI\. Central Bank Supervision \. 60 VII\. Long Term Development Strategy \. 62 APPENDIX D: SAC/TAC MATRIX \. 63  i IMPLEMENTATION COMPLETION REPORT GUYANA TECHNICAL ASSISTANCE CREDIT 2169-GUA PREFACE This is the Implementation Completion Report (ICR) for the Technical Assistance Project in Guyana, for which Credit 2169-GUA in the amount of SDR 2\.3 million (equivalent to about US$3\.0 million at the time of approval on June 28, 1990) was made effective on August 29, 1990\. The credit was closed on the original closing date of June 30, 1996\. As of October 31, 1996 the value of the loan was equivalent to US$3,308,895\.00 million of which US$2,859,283\.51 equivalent had been disbursed\. Preparation of this ICR was begun during the Bank's final supervision/ICR mission, which took place August 1 to 9, 1996\. It is also based on material in the project file and discussions with staff who participated in the development and supervision of the project as well as discussions with UJNDP, the Government, and some TAC financed consultants\. The borrower contributed to preparation of the ICR by submitting its evaluation of the project's execution and achievements, which is included as Appendix B\.   ii IMPLEMENTATION COMPLETION REPORT GUYANA TECHNICAL ASSISTANCE PROJECT (CREDIT 2169-GUA) Evaluation Summary Introduction 1\. One of the direct consequences of the continuous negative real GDP growth which characterized two decades of severe decline in Guyana's socio-economic situation (in the 1 970s and 1 980s) was the sharp decline in living standards\. This led to a large scale migration of qualified and experienced personnel both from the public and private sectors in search of better opportunities principally in Canada, the UK and US\. The loss of skilled and experienced personnel was particularly acute in the Central Government as the financial position of the Government made it impossible to improve salary and other benefits of civil servants\. Senior positions had to be filled by junior personnel or had to be left vacant, affecting the delivery of basic public services\. 2\. The shortage of skilled personnel was particularly severe in the ministries and agencies with responsibility for the management of the economy\. At the time of the launching of the ERP in 1989, GOG and the donor community had realized the paucity of the national capacity to manage and carry out the reform program\. Effective implementation of the ERP and IDA's SAC, through which critical imports needed to restore economic growth were financed, was essential\. The Government, therefore, sought and obtained TA to bring in outside skill to fill positions critical for the success of the reform program and to strengthen core macroeconomic units\. These entities were: the Statistical Bureau, the Bank of Guyana (Central Bank), the Debt Management Division of the Ministry of Finance, the Office of Coordinator to the ERP, the State Planning Secretariat and the Public Corporation Secretariat\. Project Objectives 3\. The project's objective was to assist the Borrower to implement its medium-term adjustment program, including the SAC, and improve macroeconomic management so that the objectives of the adjustment program could be achieved\. The TAC was intended to assist in strengthening the public sector agencies responsible for implementing the adjustment program by financing expert advice, staff training and equipment to improve management and analytic capacity and strengthen the borrower's capacity to analyze the social costs of adjustment and the efficiency of social sector programs\. The institutional strengthening activities were intended to lay the basis for transition to local management at the project's end\.  ill Implementation Experience, Results, and Outcome 4\. Guyana has taken far reaching reforms bringing about a fundamental shif't in economic policies towards a market oriented economy\. Real growth averaged about 8 percent per year during 1991-94\. The incentive framework for the private sector has improved, while state intervention in agriculture, industr-y and commercial activities has declined\. Progress has been made in restructuring and reducing the size of the public sector, including through privatization of SOEs\. The SAC ICR notes that the social impact amelioration program (SIMAP) mitigated the most adverse effects of the adjustment\. 5\. Sustainability of TAC funded activities is\. however, largely uncertain\. The project substantially achieve its major development objective in the short term and successfully supported measures required to secure release of the second and third tranches of the SAC (Appendix C)\. These included: (i) completion of a study on consumption taxes to address deficiencies in the application and administration of consumption taxes as part of the trade policy provisions of the SAC; (ii) favorable Bank assessment of the macroeconomic framework\. TAC financed consultancy services assisted in coordinating the adjustment program and improving GOG's analytical and management capacity at that time; (iii) commencement of a program to eliminate over]apping functions and identify non-critical vacancies in the public service (PRKS) as part of central government reform; (iv) establishment of a rolling PSIP; and (v) improvement in targeting the poor under SIMAP\. 6\. In its final three years the TAC supported the institutionalization of many of those measures\. Two institutional development activities have been self-sustaining: the BOG in banking supervision and computerization of the BOS to enable construction of national accounts and the carrying out of basic surveys\. Both agencies are semi-autonomous with somewhat higher pay than the central civil service\. Assistance to SIMAP and the PRKS has been sustained through follow-on IDA and IDB projects\. 7\. The PSIP assistance, which fell into disuse following the departure of the TAC consultants and trained personnel, has been resuscitated through the return of the same consultant under the auspices of USAID\. TAC Procurement, aide coordination and macro-economic, and public enterprise monitoring assistance was helpful at the time, but was not sustained following the departure of the consultants\. USAID and UNDP are again supporting strengthening in these areas, except PE monitoring\. 8\. The outcome of the TAC, therefore, is moderately satisfactory\. The dearth of professional and skilled personnel in the public sector has been identified as a major constraint to Guyana's development efforts\. A sustained effort is being made to implement IDA's PAP, the main elements of which are: (i) reforming the public sector salary and employment structure; (ii) public sector management strengthening; and (iii) an improved recruitment program\. Revenue increases from continuing growth and persistence with rationalization of the public service are means which could ensure the  iv maintenance of reasonable levels of salary\. While important first steps have been taken under the PAP to streamline the salary structure and improve the staffing of the public services (paras\. 41-44)\. without additional significant public sector reforms, the success of other efforts at development will be compromised and the crisis of implementation will make sustainable change difficult\. Lessons Learned/Reconfirmed 9\. "Substitution TA"', which fills gaps when local capabilities are insufficient, can be an acceptable short term remiiedy tor a staffing crisis\. flowever in order for substitution I'A to become TA for institutional development, a combination of institutional factors (adequate pay and employment policies) and qualities of TA personnel must be present\. With respect to the latter, consultanits tend to be most effective when they have had actual hands-on work expcrience (as opposed to solely advisory or academic experience) as well as talent as mentors\. trainers and problem-solvers in difficult institutional environments\. 10\. 'I'he greatest impediment to long-term institutional strengthening in Guyana is the inability to attract and retain qualified Guyanese staff due to inadequate civil service salaries\. This was the single most serious obstacle to the successful outcome of TAC financed activities\. While non-monetary incentives are important, they are not sufficient to retain public servants if public sector pay scales fall seriously short of private sector comparators\. 11\. Several counterparts should be assigned to each consultant when turn-over is high to increase the prospects of at least one staying\. This might be accomplished, even in environments where it may be difficult to identify even one counterpart, by reviewing the organizational structure and combining related work units to create a larger critical mass and, thus, bigger pool from which counterparts may be drawn\. 12\. When there is an absolute shortage of personnel to serve as counterparts to internationals, local consultants or even UNVs may be engaged to carry out line functions, work with international consultants, and transfer knowledge as counterparts become available\. Also, UJNVs tend to incur less resentment than international consultants over issues of pay differences when salaries are extremely low\. 13\. Counterparts should know from the outset that they are not merely assistants or helpers to the international consultants, but rather that they have prospects (if performance warrants) to assume the consultant's line responsibilities upon completion of the consultant's assignment\. 14\. In countries with weak project evaluation capacity, evaluation training should be built into TACs, TAL\. and PSMLs, including assistance in preparation of the Government's portion of ICRs, to ensure that the lessons of experience -- successes and weakness -- are understood and taken into account in future project design\.  I  PART I: PROJECT IMPLEMENTATION ASSESSMENT A\. Introduction/Background 1\. The SDR 2\.3 million credit (equivalent to about US$3\.0 million at the time of approval on June 28, 1990) assisted in the financing of studies and technical assistance related to policy areas included in IDA's second Structural Adjustment Credit (SAC)\. By 1988 Guyana's economy had been in a state of decline for over a decade\. The development model of "co-operative socialism" pursued after independence in 1966 had led the state to dominate the economy, through state-owned enterprises (SOEs) and direct control\. Traditional exports of bauxite, sugar and rice had fallen sharply, causing the real Gross Domestic Product (GDP) to decline by about one-third\. Repeated efforts to adjust the economy during the 1 980s did not succeed\. Guyana's overwhelming debt was in arrears resulting in cutting off of assistance by international financial institutions (IFIs) and other donors\. 2\. In 1988, the Government launched comprehensive economic reforms under the Economic Recovery Program (ERP)\. The ERP consisted of broad adjustment measures and structural reforms to realign relative prices, dismantle state controls, and establish a market oriented economy\. The SAC was part of the donor community's support for the ERP through which critical imports needed to restore economic growth were financed\. The SAC supported reforms in (i) improvement of the incentive framework through reforms in domestic pricing, trade policies, and private investment procedures; (ii) improvement of public sector finances through elimination oi' central government transfers to public enterprises, streamlining the civil service, increasing revenue transferred by public enterprises to the Central Government and divestment for selected public enterprises; (iii) formulation of a realistic public sector investment program; (iv) better targeting of the poor in social programs; and (v) commencement of a program to reform the public service by eliminating overlapping functions and non-critical vacancies\. 3\. Implementation of SAC measures was supported by the IDB, ODA, CDB, UNDP, EC and by this Technical Assistance Credit (TAC)\. The Government and donors developed a comprehensive set of technical assistance packages to improve public sector management (PSM) since it was recognized that the quality of PSM would play a critical role in determining the success of the adjustment program\. PSM had deteriorated over the decade prior to approval of the SAC resulting in deficiencies in qualified personnel and equipment\. Low public sector wages and a high rate of professional emigration from the country contributed to the problem\. Staff in place frequently lacked experience and relevant training\. Computer equipment and software, which could increase productivity of scarce professional labor, was largely nonexistent\. 4\. The shortage of professional and technical manpower impeded the operational as well as the developmental activities of the public sector\. Even basic information for macroeconomic management crucial to the success of the ERP, such as the national  -2- accounting data, was extremely weak, in large part owing to the lack of personnel to collect, compile and analyze key economic data\. The national statistical system fell casualty to the adverse effects of the contraction in the economy with the departure of trained staff at all levels to the point that, by the end of 1990, there had been an almost total collapse of the statistical force, with the professional staff reduced to two persons\. The Bureau of Statistics stopped publication of its reports\. 5\. Social and economic infrastructure also deteriorated due to the prolonged period of under-investment\. The commitment of the government to maintaining free public health and education facilities was not matched by its ability to meet these commitments\. Inadequate allocations of basic materials and supplies was aggravated by an exodus of teachers and health personnel, resulting in declining quality of service\. Social data and indicators were inadequate to facilitate appropriate social policy interventions\. This was essential given the need for sensitive and targeted attention to adversely affected groups whose condition might have further deteriorated as a consequence of the structural adjustment element of the ERP\. 6\. The lack of professional manpower also adversely affected the formulation of effective economic policies and the development and monitoring of the PSIP\. Guyana's ERP would crucially depend upon developing a "critical mass" of higher level manpower through increased incentives, training, and technical assistance, attracting Guyanese professionals from abroad, albeit for short periods\. IDA was to help address these issues through the TAC\. 7\. The TAC was appraised in May 1989 together with the SAC and was approved on June 28, 1990\. The Development Credit Agreement was signed on July 13, 1990 and became effective on August 29, 1990 with a closing date of June 30, 1996\. The TAC was amended once on June 26, 1992 to reflect the financing of two new activities: the Advisor on Banking Supervision to the Bank of Guyana, which was important to the preparation of IDA's Private Sector Development Adjustment Credit (PSDAC), and the establishment of a personnel record-keeping system (PRKS) which facilitated compliance with SAC measures to eliminate overlapping functions and non-critical vacancies\. B\. Statement/Evaluation Objectives 8\. The project's objective was to assist the Borrower to implement its medium-term adjustment program and improve macroeconomic management so that the objectives of the adjustment program could be achieved\. The project was intended to assist in strengthening the public sector agencies responsible for implementing the adjustment program by financing expert advice, staff training and equipment to improve management and analytic capacity and strengthen the borrower's capacity to analyze the social costs of adjustment and the efficiency of social sector programs\. The TAC did not aim to strengthen all functions of these primary agencies, but rather to strengthen those units essential to implementing structural adjustment\. The institutional strengthening activities were intended to lay the basis for transition to local management at the project's end\.  -3- 9\. These limited objectives were appropriate given the absorptive capacity of the government and the priority of the program of structural adjustment program\. They were clear and realistic, although some of the institutional strengthening activities assumed a faster turn around than proved feasible in improving conditions of employment in the public sector, and thus sustainability\. Many of the project's objectives and activities were mutually reinforcing, supported jointly with other donors, and directly underpinned policy measures supported uLnder the SAC (Appendix C)\. They were essential for economic recovery and continue to be important elements of the CAS and the Guyana Policy Framework Paper, 1996-98 presented to the Bank's Board of Directors in May 1996\. 10\. There were no significant modifications to the project's objectives during implementation\. The two activities added under the 1992 project amendment were directly related to the SAC or other aspects of the adjustment program\. Because the hiring of a relatively large number of consultants, purchase of related equipment and training were demanding for the under-staffed project executing agency, the MOF's Monitoring and Coordinating Agency (MCA), implementation and coordination assistance was provided by UNDP\. C\. Achievement of Objectives 11\. The project substantially achieved it's major development objectives in the short term and facilitated SAC tranche releases required to finance critical imports needed to help restore economic growth\. However, the extent to which the project has been able to build sustainable domestic capacity is mixed\. Achievement of long term institutional development objectives for policy analysis and economic decision making, public sector investment planning, public enterprise monitoring, and aide coordination is negligible, although other donors continue to support most of these efforts (Appendix B)\. Assistance to the Bureau of Statistics (BOS) and Bank of Guyana (BOG) have been sustained largely due to the relative adequacy of salaries and training and promotion opportunities compared to other TAC beneficiary agencies\. Assistance for the Social Impact Amelioration Program (SIMAP) and PRKS have been sustained through direct follow-on IDA and IDB projects\. 12\. The project's immediate objective of assisting GOG implement its medium-term adjustment program and comply with SAC conditionality were largely met per Appendix C\. The outcome of the longer-term institutional strengthening activities is mixed due mainly to inadequate public sector salaries and conditions of service to attract staff to serve as counterparts and to retain staff who served as counterparts or were trained under the TAC\. 13\. The President's Report correctly pointed out the risk of the benefits of assistance not being sustained after the project's completion due to staffing deficiencies\. It was thought that the risk would be reduced through training under the TAC to increase the analytic and management skills of staff and, later, through pay and employment policy changes initiated under the SAC and continued under IDA's Public Administration Project (PAP)\. These changes have taken longer to realize than expected\.  -4- 14\. Performance Indicators\. The TAC's President's Report included a SAC/TAC matrix with clear qualitative indications of the policy areas to be supported by the TAC prior to Board presentation and second and third tranche release\. This matrix is reprinted as Appendix C along with the results and outcome of the related TAC assistance\. Neither the President's Report nor TAC supervision reports provided quantitative indicators for assessing achievement of objectives, as is currently required\. D\. Major Factors Affecting the Project 15\. GOG's commitment to policy changes related to the ERP and SAC enabled substantial achievement of the TAC's SAC-related short term objectives\. Achievement of the longer-term institutional development objectives, however, was impeded mainly by inadequate public sector salaries, and partially impeded by staffing and organizational changes resulting from the change of government, and less than optimum management of technical assistance\. 16\. Salaries\. The project was plagued from the start by a shortage of professional and skilled personnel to serve as effective counterparts for advisors under the TAC due mainly to inadequate levels of remuneration\. An important objective under the TAC was that skills provided by the long-term and short-term advisors were to be transmitted to Government officials and thus provide the domestic capacity for continuity of these specialized and vital skills beyond the life of the project\. Almost all advisers financed under the TAC expressed concern and frustration regarding the counterpart situation1\. Recurrent problems included: (i) absence of any counterparts; (ii) excessive delays in appointing and replacing counterpart staff; and (iii) assignment of higher level staff to work with the consultants who, on account of their work responsibilities, were unable to serve as full or even part-time counterparts\. As a consequence, the transfer of skills did not always take place upon completion of the advisor's assignment\. 17\. Change of Administration\. With the arrival of the new Government in Guyana in 1992 came the restructuring of the central administration\. As a consequence, the Public Corporations Secretariat (PCS) was dissolved and the State Planning Secretariat (SPS) became the State Planning Unit in the Ministry of Finance\. One negative feature of this restructuring has been the loss of trained staff in these agencies (e\.g\. Public Enterprise and PSIP sub-projects) who left the public sector to take higher paying jobs in the private sector or abroad\. Similarly, the Project Executing Agency, the MCA, was dissolved and responsibility for the TAC was placed with the MOF's under-staffed Project Cycle Management Unit\. 18\. Management of TA\. Even given the problems described above, it may have been possible for the borrower to have derived greater benefit from the TAC consultancies through Report to Carl G\. Greenidge, Minister of Finance by Alwyn B\. Taylor, Macroeconomic Adviser and TAC Chief Technical Adviser, The Problem of Counterparts, September 27, 1991\.  -5- better management of the technical assistance\. Ways in which this might be achieved in future TA projects are addressed in the Lessons Learned section of this ICR\. 19\. UNDP\. At the design stage it became clear that the MCA did not have the capacity to implement the TAC and coordinate related assistance from other donors\. While the UNDP/OPS arrangement did not provide the expected substantive backstopping support (paras\. 33 and 34), the UNDP field office did provide essential administrative and logistical support for the project activities, as well as bridge financing for SAC related technical assistance required prior to TAC effectiveness (PEs and Aide Coordination)\. 20\. United Nations Volunteers (UNVs) played a valuable role in the BOS, BOG, and Social Indicators components\. They incurred less resentment over pay differences than international consultants, brought to bear valuable technical knowledge to several components, filled in as counterparts to internationals, and carried out line functions when necessary\. While this is far from an ideal solution, it proved to be an effective low cost way of dealing with an absolute paucity of local talent\. E\. Project Sustainability 21\. Sustainability of TAC funded activities is largely uncertain\. During the TAC's first three years of operation it mainly supported measures required to secure release of the second and third tranches of the SAC\. These included: (i) completion of a study on consumption lax to address deficiencies in the application and administration of consumption taxes as part of the trade policy provisions of the SAC; (ii) favorable Bank assessment of the mroenicfrawk, TAC financed consultancy services assisted in coordinating the adjustment program and improving GOG's analytical and management capacity at that time; (iii) commencement of a program to eliminate overlapping functions and identify non-critical vacancies in the public service (PER) as part of central government reform; (iv) establishment of a rolling PSIP; and (v) improvement in targeting the poor under SIMAP\. 22\. In its final three years it supported the institutionalization of those measures\. The SAC related TA successes were sustainable in the short-term, but only two TAC supported longer term institutional development activities have been self-sustaining in the longer term: assistance to the BOG in establishing banking supervision and computerization of the BQS to enable construction of national accounts and the carrying out of basic surveys, such as those for Household Income Expenditures (HIES), the Labor Force, and Living Standards Measurement (LSMS)\. Both agencies are semi-autonomous with somewhat higher pay than the central civil service\. Assistance to SIMAP and the PRKS has been sustained through follow-on IDA and IDB projects\. 23\. The PSIP assistance, which fell into disuse following the departure of the TAC consultants and trained personnel, has been resuscitated through the return of the same consultant under the auspices of USAID\. Procurement and aide coordination and macro- economic assistance was helpful at the time, but was not sustained following the departure of the consultants\. USAID and UNDP are again supporting strengthening in these areas\.  -6- 24\. Perhaps the least sustainable TAC activity was assistance in monitoring the financial and operational performance of public enterprises\. The main agency receiving that assistance, the PCS, was disbanded with the change of government, its staff were dismissed, and systems were not transferred to the MOF, where the function currently resides\. Strengthening capacity to monitor the remaining 20 SOEs does not appear to be an area of Government priority in view of plans to privatize/liquidate most companies before the year 2000\. Other TAC activities, such as external aide coordination assistance and macro- economic analysis strengthening\. were not sustained in part because consultants devoted much time to carrying out line functions or filled line positions -- including Budget Director - - for which counterparts were not available\. That position is currently filled by an IDB funded consultant\. 25\. The most recent activity to be supported by the TAC, preparation of a National Development Strategy\. was completed in November 1996\. Guyana has not had a comprehensive policy framework to underpin policies and priorities\. It is expected that much of the strategy, which was developed in consultation with NGOs, universities, labor unions, public and private sectors, and international organizations, will complement and reinforce many completed TAC activities and PAP supported initiatives\. This is likely to include recommendations that growing government revenue2 be directed toward improving public sector salaries (see also para\. 44), wage decompression, improved performance evaluation and merit based increases\. Government has not yet sought funding for the implementation phase, although assistance may be needed if the Strategy is to have an impact\. 26\. TAC supervision missions were informed in 1994 that the assigned counterpart staff to the PSIP and Public Enterprise Advisors had left to take on high paying jobs in the private sector or abroad\. The mission noted that the continuing counterpart problem had significant implications for the sustainability of the technical assistance program\. The SAC ICR noted that unless Guyana's serious constraints in terms of human capital are overcome, Guyana would continue to be a "gap-filling dependency" with little prospect of attaining self- sustaining development\. This issue is being addressed under the PAP where some progress has been made (paras\. 41-44)\. However, unless salaries are increased to levels at least approaching those of the private sector, TAC follow-up assistance will continue to be ''substitution TA" and real institutional strengthening will not have been achieved\. F\. IDA Performance 27\. The overall IDA performance was satisfactory\. Project components were appropriate for removing binding constraints to the success of the ERP and SAC\. The TA program was appropriately identified, prepared, appraised and supervised in close collaboration with the borrower, other donors, and the SAC\. The project's objectives remained valid throughout 2The Guyana Policy Framework Paper, 1996-98 records that real GDP growth averaged nearly 8% per year for 1990-94, inflation fell from 100% to 16% and international reserves increased\. Additional revenue is also expected from financial management reform and PAP support tax reform to increase the tax base\.  -7- implementation and continue to be so\. The design was flexible enough to allow for inclusion of three priority activities during implementation: banking supervision, PRKS, and preparation of the National Development Strategy\. Implementation was closely linked to other projects in the IDA portfolio (PAP, SIMAP, PSDAC/FISBEC)\. 28\. Care was taken at the design stage to ensure that the project was not overly complex\. Only the most pressing SAC and ERP related needs not covered by other donors were addressed\. Also, expectations about the prospects for institutional development were tempered by a realistic assessment of the absorptive capacity\. It was understood that "substitution" TA was essential in an environment where the public service was as debilitated as Guyana's in the early 1990s\. With 20/20 hindsight it can now be seen that it may have been somewhat optimistic to assume that salary increases would make public sector pay competitive prior to conclusion of the TAC\. Lessons of operational experience with TACs/TALs from the 1980s were taken into account: unallocated funds were kept to a minimum and project activities were well-targeted toward the government's adjustment program, thus avoiding the "Christmas tree" approach to TA design\. 29\. IDA carried out nine supervision missions for a total of about 48 staff weeks\. Considerable technical support was given by IDA staff during supervision of the SAC and TAC and contacts were intensive with TAC beneficiary agencies from Washington\. Project problems, especially counterparts, were discussed at every implementation review\. Implementation progress and problems were correctly identified and reported\. The project, however, might have benefited from (i) more frequent TAC supervision missions coinciding with SAC missions (resources were available for only one supervision mission per year); (ii) more guidance on the management of TA; (iii) and quantitative performance indicators\. With respect to the latter the SAC/TAC Matrix (Appendix C) shows the clarity of direction of the project\. G\. Borrower Performance 30\. Borrower performance was satisfactory in respect of the SAC measures supported by the TAC and deficient with respect to fulfillment of its long-term institutional strengthening objectives in terms of provision of counterparts\. The Government that initiated the ERP had strong commitment to and ownership of the program\. It fully participated in the preparation and implementation\. The weakness in MCA's implementation capacity was correctly identified at an early stage and UNDP was engaged under OPS execution to compensate\. When the MCA was dissolved as a result of the 1992 government reorganization, the successor project executing agency had difficulty in providing substantive follow-up\. 31\. Compliance with loan covenants was generally satisfactory, except for provision "promptly as needed, [of] adequate facilities and qualified staff in adequate numbers as counterparts for the consultants to be employed under the project\." The borrower was unable to pay wages sufficient to attract and retain qualified counterparts, in part due to fiscal constraints\. The priority of this problem and the likely consequences in terms of sustainability were repeatedly bought to the borrower's attention by Bank supervision  -8- missions and by the consultants themselves from the inception of project activities\. Special audit arrangements had to be developed between IDA and UN/OPS since neither the existing arrangements for UNDP CSAs nor for UN/OPS MSAs apply in situations where OPS acts as executing agency for UNDP projects\. 32\. Although the quality of the consultant services was generally high, maximum benefit was not derived, even within the constraints of the counterpart problem, due to less than adequate management of technical assistance\. The nature of the problem and ways in which this problem might be addressed are covered in the Lessons Learned section of this ICR\. For example, the organizational structure of the beneficiary agency might be reviewed and related organizational units merged to take advantage of natural synergies and create a larger critical pool of staff from which several counterparts (rather than just one) might have been drawn\. In addition, although consultants were paid reasonable market rates, many of the local staff with whom they worked resented their fees\. This morale problem was made more acute by the fact that most of the consultants assumed line functions similar to those of the poorly paid local staff\. This problem might have been mitigated if counterparts could have been assured that, if their performance warranted, the responsibilities of the consultants would have diminished as responsibilities of local staff and prospects for promotion increased\. It should be noted, however, that UNVs were used effectively (per para\. 20) and might have been used more extensively together with local consultants as a transitional measure until local staff could be hired\. 33\. UNDP\. At the TAC design stage, IDA and the borrower determined that the under- staffed MCA would have difficulty in executing the project\. It was decided, therefore, that US$2\.8 million of the (then) $3\.0 million TAC would be implemented under a series of seven TAC financed UNDP projects (the remaining funds were used for preparation of the National Development Strategy)\. Five were executed by the UN/OPS at 11% overhead, one by the UN Department for Development Support and Management Services (DDSMS) at 13%, and one by the Government at 3%\. All seven projects received valuable logistical support from the UNDP Field Office\. A total of $285,000 in overhead was transferred to UNDP\. 34\. UN executing agencies normally take substantive and administrative responsibility for the project output, monitoring, and evaluation under the modality of UN agency execution\. However, a terminal tri-partite review and evaluation was prepared only for the DDSMS executed project\. There is no record of substantive OPS intervention beyond what would have normally been provided under a Management Services Agreement (MSAs), which is a procurement agent type arrangement for which considerably less overhead is usually charged\. Supervision reports record instances of delays in procurement, due to lengthy OPS procedures\. OPS took no substantive responsibility for the output of the five TAC financed projects it executed nor did the borrower receive value for money\. MCA, and later the Project Cycle Management Unit, were not in a position to compensate for this lack of substantive involvement for which OPS had been engaged\. r  -9- H\. Assessment of Outcome 35\. The project outcome is moderately satisfactory\. The project satisfactorily achieved its major SAC related objectives per Appendix C\. Guyana has taken far reaching reforms bringing about a fundamental shift in economic policies towards a market oriented economy\. Recovery has been accomplished, with real growth averaging about 8 percent per year during 1991-94\. The incentive framework for the private sector has improved, while state intervention in agriculture, industry and commercial activities has declined\. Progress has been made in restructuring and reducing the size of the public sector through tax reform, strengthening expenditure controls and privatization of SOEs\. The social impact amelioration program (SIMAP) mitigated the most adverse effects of the adjustment\. 36\. Supervision missions recorded impressive progress on the SAC related analytical work carried out by most TAC funded individual consultants\. The skills provided by these advisers were vital since they substituted for skills not available locally\. Many of the recommendations and observations incorporated in the consultant's reports were used by the Government in formulating major policy decisions in the area of Macroeconomic Management, Public Sector Investment, Public Sector Reform (PRKS and strengthening public enterprise performance); Incentive Framework (improving the consumption tax structure); and Banking Supervision (establishing an operational banking supervision function at the Central Bank)\. In addition, the TA to SIMAP and BOS in preparation and implementation of the LSMS and the HIES yielded important data on the location and extent of poverty in Guyana essential for and targeting of social programs\. This information was also important for the Bank's 1994 Poverty Study\.3 37\. However, the outcome of TAC supported long-term institutional development efforts is unsatisfactory, except for the PRKS and SIMAP which were follow-up directly by additional assistance from other Bank operations, and assistance to the BOS and BOG, which are autonomous bodies and benefit from higher pay than the central civil service\. They were able, therefore, to retain a greater number of counterparts and trainees\. A PE Performance Monitoring System was developed but never installed in successor units to the disbanded PCS, and trained staff departed\. A computerized data base on external financial inflows (volume, type and conditionality of external resources) fell into disuse upon departure of the consultants, as did the system of quarterly macroeconomic reports which provided decision- makers with an assessment of progress under the ERP\. As with most TAC assistance, the principal macro-economic adviser provided valuable data and advice at the time on issues that would have an adverse effect on the economy if not addressed, such as debt\. But no skills or knowledge was ultimately transferred either because no counterparts were assigned or the counterparts left and systems developed were discontinued\. 38\. Further, for all the strong policy progress made and recovery achieved so far, Guyana's economic position remains precarious, given the: (i) heavy debt burden; (ii) dilapidated economic and social infrastructure due to widespread decay; (iii) acute shortages Guyana: Strategies for Reducing Poverty, Report No\. 1286 1-GUA, May 6, 1994\. 1  -10- of skilled personnel in public service; and (iv) widespread poverty\. While the Government remains committed to deepen the reforms, it will need adequate strategies (e\.g\. the TAC financed National Development Strategy) to deal with these issues or they will prevent achievement of sustained growth\. I\. Future Operation 39\. The objectives of the adjustment program, which the TAC supported, remain highly relevant, as set forth in the CAS and Government's Policy Framework Paper for Guyana (March 1996)\. The TAC contributed to the formulation of several ongoing IDA operations: The PRKS is being completed with assistance provided under the PAP (2480-GUA); the SIMAP/Health Nutrition and Water Credit (2358-GUA) benefited from the TAC's SIMAP design assistance; and IDB's proposed SIMAP project will also benefit from a second round of the LSMS proposed for 1997, which will help better target social interventions\. The PSDAC (2746-GUA) and FISBEC (2669-GUA) are providing follow-up assistance to the Consumption Tax Study to broaden the tax base and remove disincentives to long-term investment in the economy\. They also provide continuing support for banking supervision in the BOG\. 40\. USAID's BEEP project is reviving TAC work to strengthen the PSIP and MOF's Macro-economic Division to undertake quantitative analysis of economic issues\. IDA's IDF Grant (No\. 28581) for debt management is providing consultant services\. These interventions are essentially "substitution TA" given the continued lack of counterparts\. A proposed ODA grant will upgrade the computer equipment purchased in the early 1990's for the Statistics Bureau\. External Aid Coordination remains weak, but is being addressed in the context of the latest (August 1996) CPPR, as is management of TA, for which an EDI seminar is under consideration\. 41\. The PAP is addressing the single most important issue affecting the sustainability of the TAC -- pay and employment policies\. Substantial advances have been made in reforming the public service salary and employment structure\. A new 14 band salary structure was introduced in May 1994\. Top band salary had increased by about 184% in real terms as of January 1996\. Eleven senior expatriate Guyanese have been recruited to key and critical positions under the PAP's Recruitment Program and GOG intends to use the incentives under the Program to fill about 90 key and critical positions at the middle level before the PAP's close at the end of 1997\. 42\. In December 1995 GOG announced guidelines for Public Service Wages Policy which aims to bring public service pay levels to 10% of the market lower quartile, in the medium-term, and to within the market median quartile in the long-term\. The policy would also introduce a performance evaluation system, regular salary reviews and an improved job evaluation procedures\. GOG is taking a variety of additional initiatives to improve the staffing of the public service\. These include: (i) giving salary supplements of 15% to 20% to about 1,850 key and critical positions; (ii) converting certain agencies into semi-autonomous agencies so that better remuneration could be given to their employees outside the confines of -7-  -11- the public service pay structure; and (iii) developing a new staff appraisal system and linking annual appraisal to monetary and non-monetary rewards\. 43\. These are important first steps in streamlining the salary structure and improving the staffing of the public services\. However, considering the poor initial conditions and the fiscal constraints that limited the amount of salary increases granted, much remains to be done to enable the GOG to attract and retain high quality skilled employees on a sustainable basis\. In the period 1993-1996 about 400 employees at the middle levels (14\.5% of 1993 strength) left\. This is bound to have adversely affected GOG's institutional capacity\. The number of vacancies at the middle and higher levels continues to be high, about 45%\. Thus, in spite of the assistance provided by the PAP in streamlining the salary structure and improving in salaries in absolute terms, the public sector is still not able to attract (high vacancy rates) or retain (continued attrition, especially at the middle levels)\. Real salaries in the public sector have fallen so low that only a three to fourfold increase would have an impact on recruitment and retention\. 44\. Since the lack of adequate human resources will continue to keep public sector performance at a low level, a concrete strategy to reach the goals set by the Public Services Wage Policy announced in December 1995 needs to be developed\. GOG has to find additional resources to raise pubic service salaries further\. Several options were recommended during the PAP Mid-term Review in August 1996, including moving forward with the PAP's modernization of the revenue administration component to enable it to collect high revenues, a part of which could be used to improve public service salaries\. The National Development Strategy is likely to provide other options, per para\. 25\. J\. Key Lessons Learned/Reconfirmed 45\. The most pressing sustainability issue in Guyana, as in many countries, is attracting and retaining qualified counterparts given the very low public salaries ((a) to (c) below)\. Low salaries exacerbate a common TA problem of staff resentment arising from disparities between public sector salaries and consultant fees (G) and (k))\. Also, Guyana has one of the weakest institutional structures in the western hemisphere\. Different approaches to TA, therefore, may need to be taken ((e) to (m) below)\. What matters most for TA to be successful is the combination of institutional environment factors (a) - (c) and qualities of TA personnel (d)\. Salaries/Counterparts (a) The greatest impediment to long-term institutional strengthening in Guyana is the inability to attract and retain qualified staff due to inadequate civil service salaries\. This was the single most serious obstacle to the successful outcome of TAC financed activities\. While non-monetary incentives are important, including some mentioned below, they are not sufficient to retain public servants if public sector pay scales fall seriously short of private sector comparators\. 1  -12- (b) If fiscal constraints imposed by the IMF impede increasing salaries and thus jeopardize sustainability of Bank operations, this should be identified at the design stage and taken up jointly by IDA and the borrower with the IMF\. (c) The TAC beneficiary agencies that were most successful in retaining counterparts were semi-autonomous government entities not subject to the same severely inadequate pay as the central government (BOG)\. Management of Technical Assistance (d) Consultants tend to be most effective when they have had actual hands-on work experience (as opposed to solely advisory or academic experience) in the field in which they are consulting (e\.g\. Banking Supervision Adviser)\. They also need talent as mentors, trainers and problem-solvers in difficult institutional environments\. Better use might be made of Senior Executive Service Corps type volunteers\. (e) Several counterparts should be assigned to each consultant when turn-over is high to increase the prospects of at least one staying\. This might be accomplished in environments where it may be difficult to identify even one counterpart, by reviewing the organizational structure, and combining related work units to create a larger critical mass and thus bigger pool from which counterparts may be drawn\. (f) Recognizing that international consultants are likely to be called upon to assume line functions when the public service is severely depleted, the consultant's TOR should ensure that their operational workload is diminished over time as counterparts assume increasing responsibility\. (g) Counterparts should know from the outset that they are not merely assistants or helpers to the international consultants, but rather that they have prospects (if performance warrants) to assume the consultant's line responsibilities upon completion of the consultant's assignment\. (h) The consultants should return for brief periods internittently following completion of their assignment to see their work through and adjust, support, and revise their recommendations\. (i) When there is an absolute shortage of personnel to serve as counterparts to internationals, local consultants or even UNVs may be engaged to carry out line functions, work with international consultants, and transfer knowledge as counterparts become available\. (j) UNVs tend to incur less resentment than local or international consultants over issues of pay differences when salaries are extremely low\.  -13- (k) National and regional consultants may also be more acceptable than internationals when resentment runs high over pay differences\. International consultants should be hired only as a last resort and for as short periods as possible when resentments are strong\. (1) High level public servants should not be appointed as counterparts if they do not have time to work with the consultants\. (m) The "top down" approach of some Bank financed consultancies may not always be the most appropriate\. In some cases interactive sessions, led by skilled facilitators with staff at all levels, may be a more effective way of revealing problems and possible solutions that may not be apparent to outside consultants (e\.g\. computerization BOG)\. Project Implementation/Administration (n) Implementation Timetables should take into account that even the most dedicated and skilled consultants and counterparts may not enjoy the confidence of new administrations and may be replaced resulting in implementation delays and setbacks\. (o) A strong Project Implementation Unit (PIU) is needed for continuity and follow-up even when UTNDP provides implementation assistance\. (p) OPS executed UNDP projects do not provide value for money in terms of implementation assistance\. Borrowers should seek out UNDP cost sharing arrangements (CSAs) for which less overhead is charged and the role and responsibilities of UNDP is clear\. Lessons for the Bank (q) Monitorable, time bound, qualitative and quantitative performance indicators and decision points are useful from the outset to facilitate mid-course corrections and project evaluation\. (r) SACs and supporting TACs should be supervised simultaneously, where possible, with a single aide memoire recording the findings and recommendations\. Similarly, ICRs for each should cross reference activities supported by the other\. (s) In countries with weak project evaluation capacity, evaluation training should be built into TACs, TALs, and PSMLS, including assistance in preparation of the Government's portion of ICRs, to ensure that the lessons of experience -- successes and weaknesses -- are understood and taken into account in future project design\. --T  -14- PART II: STATISTICAL TABLES Table 1: Summary of Assessments A\. Achievement of Objectives Substantial Partial Negligible Not applicable Macro Policies 2 2 2 Sector Policies 2 2 2 Financial Objectives 2 2 E3 Institutional Development L 1=1 Physical Objectives 2 2 2 Poverty Reduction 2 2 2 Gender Issues i 2 2 l Other Social Objectives 2 2 2 Environmental Objectives 2 2 a Public Sector Management n 2 C Private Sector Development a 2 2 E3 Other (specify) 2 2 2 2 (Continued) B\. Project Sustainability Likely Unlikely Uncertain (/) (/) (/) 2 2  -15- Highly C\. Bank Performance satisfactory Satisfactorv Deficient (1) (/) (/) Identification LI Preparation Assistance E izzi Appraisal E3 Supervision n III Highly D\. Borrower Performance satisfactory Satisfactorv Deficient Preparation II] Implementation a [j] Covenant Compliance E E0 Operation (if applicable) E3 Highly Moderately Highly E\. Assessment of Outcome satisfactory Satisfactory Unsatisfactory unsatisfactory L (L) (E () T ~  Table 2: Related Bank Loans/Credits Guyana - T\.A\. Credit No\. 2169 Loan/Credit Title Year of Proceeding Operations Purpose Approval Status 2168-GUA Second Structual To create a viable and stable economic conditions conducive to restoring a 1990 Closed Adjustment higher and sustained rate of economic growth; improvement of the incentive 12/31/93 framework, public sec finances, and formulation of realistic pub sec inv prog\. Following Operations 2358-GUA SIMAP/Health Assist the gov\. in cushioning the social costs of the adj\. process through the 1992 Closing Date Nutrition & Water establishment of an effective mechanism aimed at addressing basic needs 6/30/97 of the population: in a decentralized manner, through groups, like NGOs\. 2480-GUA Public Administration Facilitate adequate staffing of the public service, and eliminate staffing 1993 Closing Date redundancies; and create conditions for accountability in financial and 12/31/97 personnel mgmt; and preparation of long term strategy and public sec reform\. 2669-GUA Financial Sector To implement sustainable institution building mechanisms supporting the 1994 Closing Date Business Environment financial and private sector, and to facilitate the effective implementation of 6/30/98 policy measures supported by private sector development adjustment credit\. 2746-GUA Private Sector Dev Improve the environment for the private sector and thereby 1995 Closing Date Adjustment stimulate economic growth\. 12/31/97  -17- Table 3: Project Timetable Guyana - T\.A\. Credit No\. 2169 Steps in Project Cycle Date Planned Date Actual/ latest est Identification (Exec Project Summary) n\.a\. February 23, 1989 Preparation n\.a\. March 21, 1989 Appraisal Mission March 1989 May 8,1989 Negotiation April 1990 May 7,1990 Board Presentation n\.a\. June 28, 1990 Signing n\.a\. July 13, 1990 Effectiveness August 1990 August 29, 1990 Project Completion December 1996 December 30, 1996 Loan Closing June 1996 June 30, 1996 n\.a\.: not available  -1 Table 4: Loan Disbursements: Cumulative Estimated and Actual (US$ million) GUYANA - T\.A\. Credit No\. 2169 FY 91 92 93 94 95 96 97 Appraisal Estimate 1\.2 2\.5 2\.8 2\.9 3\.0 3\.0 3\.0 (Cumulative) Actual (Yearly) 0\.9 0\.0 1\.4 0\.0 0\.4 0\.1 0\.0 Actual (Cumulative) 0\.9 0\.9 2\.3 2\.3 2\.7 2\.8 2\.9 Actual as % of Est\. 71% 34% 80% 78% 89% 93% 93%  Table 5: Key Indicators for Project Implementation I\. Key Implementation Indicators in SAR/ President's Report Estimated Actual N/A II\. Modified Indicators (if applicable) N/A III\. Other Indicators (if applicable) See the SAC/TAC Matrix (Appendix C) and the Outcome sections of the Description of Subprojects (Appendix B)  Page I of 7 -20- Table 61 Key Indicators for Project Operation Key Implementation indicators in the SAR/President's Estimated Actual Remarks Report 1\. Macro-Economic Framework: a) Consultancy Services in the Government's structural 24 m/m 2 Consultants adjustment programme appointed b) Consultancy Services to the Bank of Guyana 6 m/m c) Computer equipment to the Bureau of Statistics 2\. Incentive Framework: a) Consultancy Services to the Monitoring & 6 m/m 2 Consultants Coordinating Agency appointed 3\. Public Sector Reforn: a) Technical Assistance to the Public Service CONSAD management at the office of the President (PRKS) Cargentine Firm Personnel Rec\. Keep\. Sys\. Local Finn 4\. Public Sector Investment Programme a) Consultancy services, equipment and supplies 36 rn/m 3 Consultants including a vehicle and training to the State appointed Planning Secretariat b) Consultancy Services, equipment and supplies and 24 rn/m 3 Consultants issued training to the Ministry of Finance, Bank of Guyana and the Ministry of Trade and Tourism 5\. Social Sector Programme: a) Consultancy Services equipment, supplies and 12 m/m 2 Consultants training to the State Planning Secretariat and the appointed Ministry of Education, Culture and Social Development to improve targeting to the poor of SIMAP programmes 6\. Public Enterprise Management & Monitoring Systems 'Prepared by the UNDP Office, Georgetown, Guyana\. lp  Page 2 of 7 -21- Project Estimated Actual Remarks Consultants: GUY/89/003: Macro-Economic & Financial Management a) Procurement Adviser, Bank of Guyana (Crown Funded by WB Agents) & MONITEC b) Banking Supervisor, Bank of Guyana 12 m/m 36 m/m Funded by WB 12/04/91 for 12 months c) Adviser, Macro-Economic Trends, Ministry of 24 m/m 24 m/m Funded by WB Finance 14/03/92- for 12 months 13/03/94 d) Public Enterprise Adviser Funded in part by WB e) Public Enterprise Adviser 12 m/m Transferred to GUY/89/006 GUY/89/006: Public Enterprise Monitoring a) Public Enterprise Adviser 12 m/m 9 m/m Resigned Post Nov\. '91- 21/08/92 b) Public Enterprise Adviser 24 m/m 45 m/m Extended with funds 18/12/90- from the previous 17/12/93 Public Enterprise Adviser GUY/89/007: Macro-Economic Management System a) Adviser to Minister of Finance 24 m/m 24 m/m 28/06/91- 22/06/93 b) Adviser, Extemal Finance inflows 24 m/m 12 m/m Was not renewed by 14/08/91- GOG 12/08/92 c) Adviser, Consumption Tax 6 m/m 12 m/m Extended a request GOG Adviser, Consumption Tax (2) 0\.5 m/m 0\.5 m/m  Page 3 of 7 -22- Project Estimated Actual Remarks d) Document Management UNV Specialist- 24 m/m 24 m/m Includes $30,020 & Bank of Guyana 10/03/95- $7,020 1996 & 1997 09/03/97 Projected Expenditure GUY/89/008: PSIP a) PSIP Adviser 24 m/m 3 m/m Adviser resigned State Planning 12/04/91 Secretariat 17 m/m Feb\. '92 b) Adviser, Economic Cost Analysis 12 m/m 12 m/m 14/08/91- 12/08/92 c) BEEP (IGI) Adviser hired & resigned 5 months into 2nd year GUY/89/009: Construction Social Indicators a) Social Indicator Systems 6 m/m 6 m/m Consultant (State Planning) 07/02/92- 06/08/92 b) UNV PC Specialist 24 m/m 12 m/m 16/10/93- 15/10/94 c) LSMS GUY/90/00L a) Bureau of Statistics Equipment only GUY/93/001: Public Service Management T7  Page 4 of 7 -23- Project Estimated Actual Remarks Consultants: a) Systems Analyst Programmer 6 m/M 6 m/m 6 rn/m June-Nov\. b) CONSAD c) Strategic Info\. Systems d) Data Encoders Equipments GUY/89/006: - PEMGT a) PCs (2 in SPS and 1 in PCS) 2 3 3 All arrived b) Generator 3 1 All arrived c) Vehicle GUY/89/007: - Macro-Info & Management System a) PCs (3 in MCA & 2 in MOF) 5 5 All arrived b) Fax Machines (1 in MCA & 1 in MOF) c) Photocopiers (1 in MCA & 1 in MOF) d) Vehicles (1 in MCA & 2 in MOF) 3 3 e) Typewriters (3 in MCA & 2 in MOF) 5 l\.)Y/89/008: - PSIP a) PCs 2 2 All arrived b) Photocopier 1 1 All arrived c) Vehicles 1 1 All arrived GUY/89/009L : - Construction Social Data a) PC 1 1 Arrived b) Video Camera I I c) TV Monitor & VCR Colour 1 1 d) Slide Projector- A Carousel loading I e) Tripod Projector 1 1 f) PA System 1 1 g) 1 AST Premium Notebook Computer 1 GUY/90/00f1: -BOS a) PCs 17 17 All arrived b) Laptop Computers 3 2 1 Stolen  -24- Page 5 of 7 Project Estimated Actual Remark c) Vehicles 5 5 d) Photocopier e) Stencil Duplicator f) Electronic Scanner g) Generator GUY/93/0011: - PSM Computer Equipment Training: a) Training Programme in Comm\. Development - Organised by SIMAP Agency b) Training Course in Applied Econometrics, Macro-Economic Theory & Macro-Economic Modelling of Resource Availabilities GUY/89/008 - June 2-30, 1993 GUY/89/003: a) Rose Marie Alaso provided on the job training to 8 assigned consultants in all aspects of Banking SPN GULY/89/006 a) Ms\. Evelyn Wayne b) Mr\. Keith N\. Gittens "Analysis & Negotiation of BOO and BOT Projects: Alternative Strategies for Infrastructure Development"\. June 17-18, 1991 Washington DC\. c) Mr\. Godfrey Frank "Commercialization & Privatization of Public Enterprises"\. October 7-18, 1991 Surrey, UK\. GUY/89/008: a) Mr\. Samsundar Ketwaru "Regional Development Planning"\. April 1 - May 2, 1992 Nagoya, Japan\.  Page 6 of 7 -25- Project Estimated Actual Remarks b) Ms\. Donna Abrams "Project Management/ Project Analysis: Arthur D\. Little Management Education Institute May 26- August 7, 1992 c) Mr\. Lennox Adams "Restructuring Industrial Enterprises"\. March 2-13, 1992 Washington, DC USA GUY/891009\. -Social Data a) Dr\. Lloyd Roopchand 24th Session of ECLA Santiago, Chile April 8-15, 1992 b) The bank agreed to finance 3 W/shops GUY/89/009- The LSMS Consultant conducted Workshops for Living Std\. Measurement Survey (LSMS) Enumerators & S/visors (55) Anthrometorists Students from the G/town School of Nursing (65) Data Entry Managers (3) & a Policy Analysis (1) GUY/90/001: -BOS a) Mr\. L\. Benjamin Mr\. Bristol Mr\. Manifold 'Workshop on Labour Force Statistics" St\. Lucia, Sept\. 12-18, 1993 b) "Conference on Population and Development for Latin America and the Caribbean", Mexico, April-May 1993\. c) "Seminar on Statistics of Tourism & National Incomes", OECS, Antigua, 1993 d) Paul Austin attended IMF Course on Balance of Payments Statistics, Washington, 1993 I  Page 7 of 7 -26- Project Estimated Actual Remarks e) Part-Time in-house training of 25 Junior Staff in Mathematics, Statistics & Economics, August 9, 1993- January 1994 f) The Chief Statistician attended training course at the Bureau of Census, Washington in 1991\. g) The Senior Statistician attended study tour in National Accounts at Central Statistical Office\. Barbados in November, 1991\. h) Mrs\. P\. Roberts attended study tour in foreign trade at Central Statistical Office, Trinidad & Tobago, in 1992\. i) Mr\. L\. Benjamin attended study tour at Jamaica Statistical Institute in November, 1992\. j) Mr\. P\. Austin attended study tour on Balance of Payments at Central Bank of Trinidad & Tobago in 1992\. k) Mr\. L\. Benjamin attended a workshop on microcomputers at Bureau of Census, Washington in 1992\. 1) Mr\. G\. Persaud attended a workshop on computer technology in Barbados in 1993\.  -27- Table 7: Studies Included in Project Purpose as Defined Study at Appraisal/Redefined Status Impact of Study l\.Consumption Tax Address deficiencies in Completed Substantial the application and administration of consumption taxes with a view to simplifying the tax, reducing rates and broadening the base by improving compliance\.  Table 8A: Project Costs Guyana - T\.A\. Credit No\. 2169 Appraisal estimate (US$M) Actual/Latest estimate (US$M) Consultant Services Local Foreign Total Local Foreign Total Costs Costs Costs Costs Implementation Unit 0\.00 0\.50 0\.50 n\.a\. 0\.2 a/ 0\.2 Incentive Framework 0\.01 0\.09 0\.10 n\.a\. 0\.1 0\.1 Public Sector Reform 0\.02 0\.60 0\.62 n\.a\. 0\.6 0\.6 Public Sector Investment 0\.05 0\.75 0\.80 n\.a\. 0\.5 0\.5 Social Sector Programs 0\.01 0\.18 0\.19 n\.a\. 0\.1 0\.1 Macro-Economic Managemnt 0\.06 0\.41 0\.46 n\.a\. 0\.9 0\.9 Sub-total 0\.15 2\.53 2\.67 n\.a\. 2\.3 2\.3 Training and Equipment 0\.00 0\.48 0\.48 n\.a\. 0\.5 0\.5 Total 0\.15 3\.00 3\.15 n\.a\. 2\.8 2\.8 n\.a\.: Not available\. Local costs actuals as services provided in kind from Government\. a/ Overhead paid to UNDP  Table 8B: Project Financing Guyana - T\.A\. Credit No\. 2169 Appraisal estimate (US$M) Actual/Latest estimate (US$M) Local Foreign Total Local Foreign Total Costs Costs Costs Costs IDA 3\.0 3\.0 2\.8 2\.8 Government 0\.1 a/ 0\.1 a/ n\.a\. a/ n\.a\. a/ Total Project Costs 0\.1 3\.0 3\.1 n\.a\. 2\.8 2\.8 a/ government services in kind n\.a\.: not available K\.Wai September 24, 1996  -30- Table 9: Economic Costs and Benefits For all projects, this table identifies the major costs and/or benefits that enter into the calculation of a re-estimated net present value (or economic rate of return) or, where the net present value (or economic rate of return) was not estimated, of cost-effectiveness in achieving project objectives\. N/A  Table 10: STATUS OF LEGAL COVENANTS GUYANA TECHNICAL ASSISTANCE CREDIT (CR 2169-GUA) Comnments Agreement Section Type of Status Original Revised Description of Covenant Covenant Date Date Credit 2169- 3\.01 13 C The Borrower shall carry out all studies included in the Project under terms of GUA reference satisfactory to the Association, which, unless the borrower and the Association shall otherwise agree, shall include the preparation of specific l____________ ___________ ________ __________ programs or plans of action to meet the objectives of the project\. meet_the_objectives_of_the_project 3\.01 13 C Promptly after the completion on each such study, the Borrower shall furnish l___________ ________ _________ to the Association a copy of its findings and recommendations\. 3\.01 13 C The Borrower shall afford the Association a reasonable opportunity to comment on such findings and recommendations and on any plans or programs l_______ _______ ________ included therein\. 3\.01 13 C Taking into account the Association's comments thereon, the Borrower shall prepare programs or plans of action, satisfactory to the Association, to carry out the recommendations of each of such studies\. 3\.01 5 CP The Borrower shall, through the Executing Entities provide, promptly as Success of some TA was needed, adequate facilities and qualified staff in adequate numbers as compromised due to lack of counterparts for the consultants to be employed under the Project\. counterparts\. 3\.02 9 CP The Borrower shall coordinate and monitor the progress of Project None received in CY95/CY96 implementation and submit to the Bank (a) quarterly reports on such progress Borrower ICR expected in beginning three months after the effective date; and (b) annual Project September, 1996\. evaluation reports not later than March 30 of each year\. 3\.03 5 C The procurement of goods and consultants' services required for the project and to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to the Credit Agreement\. 3\.04 5 C In the carrying out of the training programs included under the Project, the Complied, but many trainees left Borrower shall: (a) fumish to IDA for approval, the content of each of such due to poor salaries\. programs as well as the schedule for its implementation; (b) select the beneficiaries of such training programs; (c) not later than Sept\. 30 of each year, exchange views with IDA on the training programs to be carried out for the following calendar year\. 3\.05 9 C The Borrower and IDA agree to undertake, at the request of either party, at a Borrower has appointed staff and date not later than the first anniversary of the Effective Date, and has sought UINDP's assistance to approximately every nine months thereafter, a review of the performance of the undertake a final project review in Borrower and each Executing Entity in respect of the execution of the project\. connection with the ICR 4\.01 1 CD The Borrower shall fumish to IDA not later than six months after the end of Special arrangements acceptable to each fiscal year a certified copy of the audit report by said auditors\. the Bank have been reached with UNDP to provide a letter annually confirming that audits of the l ___________ \._________ ______________________________________________________________________ project funds have been carried out\.  Type of Covenant Sau 1: Accounting; -C :Covenant Complied with\. 2: Financial Performance/revenue generation; CD :Complied with after delay 3: Flow Utilization of Project funds; NC :Not complied with 4: Counterpart funding; SOON :Compliance expected in reasonably short time\. 5: Management aspects of the project or executing agency; CP :Complied with partially\. 6: Enviromental covenants; NYD :Not yet due\. 7: Involutary resettlement; 8: Indigenous people; Covenenat Effectivness 9: Monitoring, review, and reporting; 10: Project Implementation not covered by categories 1-9; 1\. Is the Selection of covenants appropriate? Have any proved to be ineffective or superfluous? I1: Sectoral or cross-sectoral budgetary or other resource allocation; Selection appropriate\. No covenenat has proved to be ineffective or superfluous\. 12: Sectoral or cross-sectoral policy/regulatory/institutional action; 2\. Are there general problems or issues relating to compliance with covenants under the project? 13: Other No Date: August 20,1996  -33- Table 11: Compliance with Operational Manual Statements Statement Number and Title I Describe and comment on lack of compliance No known lack of compliance 1~~~~~~~~~  Table 12: Bank Resources: Staff Inputs (SWS, Actual) GUYANA T\.A\. Credit No\. 2169 FY Stage 89 90 91 92 93 95 96 97 Total Preparation 32\.7 32\.7 Appraisal 15\.5 15\.5 Negotiations 9\.2 9\.2 Supervision 12\.6 12\.0 11\.2 2\.9 3\.3 7\.8 49\.8 Project Completion (PCR/ICR) 0\.1 2\.9 3\.0 TOTALS 32\.71 24\.7 12\.6 12\.0 11\.2 2\.9 3\.4 10\.7 106\.2 n\.a\.: final figures not available 1 These figures do not reflect the full supervision of the TAC, much of which was carried out in connection witht the SAC\.  Table 13: Bank Resources: Missions Guyana - T\.A\. Credit No\. 2169 Performance Ratings Stage of Project Month/ No\. of Days in Specialized staff Impl\. Dev\. Cycle Year Persons Field skills represented * Status Objectives Types of Problems ** Identification Preparation Appraisal May 1989 3 17 PF Post Appraisal Sept\. 1989 n\.a\. n\.a\. PF Supervision Oct\. 1990 2 8 PF 1 1 Jan\./Feb\. 1991 1 5 PF 1 1 B, D, E, J III June 1991 1 6 PF 1 1 B, E, J IV Oct\. 1991 1 5 PF 1 2 B, E, J V May 1992 1 5 PF 1 1 B,J J VI Nov\.1992 1 5 PF 1 1 B, J VIl Jan\.1994 1 7 PF S S A\. B, J Vill Jan\. 1996 2 3 PF S S A\. B, J Completion Aug\. 1996 3 5 PF S S A\. B, J * PF: Public Finance Spec ** Types of Problems: a/ compliance with legal covenants e/ training progress i/ financial performance: not applicable b/ project management performance f/ tech\. asst\. progress j/ monitoring and evaluation c/ availability of funds g/ studies progress d/ procurement progress h/ environmental aspects: not applicable October 23, 1996  APPENDIX A -36- Page 1 of 6 AUGUST 7, 1996 AIDE MEMOIR GUYANA: IDA TECHNICAL ASSISTANCE CREDIT (TAC) (2169-GU) Introduction 1\. A World Bank Mission consisting of Mr\. Jit Gill, Task Manager, Mrs\. Rita Parrilli, Senior Pubic Administration Specialist, and Kyaw Wai, Budget and Administration Specialist, visited Georgetown, Guyana from August I to August 8, 1996 for the final supervision of the TAC and discussion of the Implementation Completion Report (ICR) to be prepared by the Ministry of Finance and the Bank\. 2\. The mission had fruitful discussions with the staff of the TAC beneficiary agencies as well as donors involved in TAC implementation\. The mission met with Mr\. Tarachand Balgobin, TAC Project Coordinator and Head of the Project Cycle Management Ministry of Finance (MOF); Mr\. Robin Sivanand, Permanent Secretary Ministry of Public Service Management, Mr\. Colby Frimpong, Chief of Party, Building Equity and Economic Participation (BEEP) Project MOF; Miss Denise deSouza, Division Head, Enterprise Monitoring and Private Sector Development MOF; Miss Deborah George, Macro- Economic Planning (MOF); Mr\. Donald Declou, Head Multilateral Funding (MOF); Miss Carmencita Santos, Bank Supervision Advisor and Miss Wendy Hazel, Director Information Services Bank of Guyana; Mr\. Harrinarine Nowbat, Director and Mr\. Persaud, SIMAP; Mr\. Lennox Benjamnin, Chief Statistician, Bureau of Statistics; Mr\. Andrea Tamagnini, Acting Resident Representative, Mr\. Thomas Gittens, Senior National Program Officer, Miss Patsy Ross, Operations Assistant, and Mr\. Mohammed Kanneh, Program Officer, UNDP; Mr\. Charles Greenwood, IDB Representative; Mr\. David John Johnson, British High Commissioner; Mr\. Ian Stuart, First Secretary, British High Commission; Mr\. Wendell Lawrence, Deputy Director, CDB; Mr\. Edward Cummnings, Project Officer, CDB; Mr\. David Ross, First Secretary (Development) Canadian High Commission; and Mr\. Rayman Mohamed, Carter Center\. 3\. The Mission wishes to thank the Government of Guyana, the TAC Project Coordination Unit, and the UNDP for their kind cooperation\. 4\. This Aide Memoir has been prepared in the field\. It records the views of the Ministry of Finance, the TAC beneficiary agencies, and IDA on the project design and implementation\. It will be attached in its final form to the ICR\. Agreements reached during the mission and reflected in this aide memoir are subject to confirmation by IDA management\. 5\. The Proiect\. The US$3\.0 million (equivalent in SDRs) TAC was approved June 28, 1990 and closed June 30, 1996\. Due to exchange rate changes in favor of GOG, the totAl current value of the credit is about US$3,360,000\. Approximately US$2,816,000 (equivalent) has been disbursed to date\. The undisbursed balance of approximately 1-~  APPENDIX A -37- Page 2 of 6 US$545,000 will be canceled on October 31, 1996 if not drawn upon to pay final bills for services rendered or equipment purchased prior to June 30, 1996\. 6\. Proiect Objectives\. The objectives of the project were to assist GOG in implementing its medium-term adjustment program, improving its macroeconomic management capacity and strengthening its capacity to analyze the social costs of adjustment\. 7\. Project Activities and Post-Project FOllow-UD\. The TAC financed consultant services (including UNVs), training and equipment: (a) Improving Macroeconomic Management - assistance in coordinating and implementing the adjustment program, including capacity to monitor and analyze macroeconomic data; assistance to the Statistical Bureau to increase capacity to collect, process, and report macroeconomic data (services of Alwyn Taylor, Desiree Field-Ridley, Samuel Bekele, Rose Marie Olaso, Kathleen Gordon, Crown Agents, computer equipment for the SB); USAID's Building Equity and Economic Participation Project (BEEP) will build on TAC assistance in strengthening the capacity of MOF's Macroeconomic Management Division to conduct macroeconomic analysis and planning; The IMF is providing continuing support to the Banking Supervision Department of the Bank of Guyana; The BEEP and ODA will provide additional assistance to BS in the construction of national accounts and other surveys\. (b) Assistance in formulating and monitoring the PSIP and assuring its consistency in terms of size and composition in relation to the macroeconomic framework and objectives and available funding (services of Colby Frimpong, Zenon Garcia); The BEEP project and IDF grant will provide continued strengthening of the PSIP\. (c) Public Sector Reform - Strengthening the PCS and SPS to monitor financial and operational perforrnance of public enterprises and assistance to the Public Service Management Ministry in development of the PRKS (Basil Hinds, V\. Paramanathan, CONSAD (Argentina); The PRKS has been implemented with assistance from ODA and IDA's Public Administration Project (PAP)\. l*  APPENDIX A -38- Page 3 of 6 (d) Improving the Incentive Framework through a study to identify deficiencies in the application and administration of the consumption tax (Frederick Crittle/Mark Gersovitz) This work laid the foundation for subsequent measures (banking legislation and regulation) supported under IDA's Private Sector Development Adjustment Credit (PSDAC)\. (e) Social Sector Reform - improving targeting of the poor in the SIIMAP (Katherine Anne Webb, Judy Baker) Basic operating/appraisal manual developed by Webb in 1991 was revised and updated under the IDB SIMAP project; LSMS to be updated in early- 1997 with IDA assistance; IDB's proposed second SIMAP project is likely to use data from the updated LSMS as the basis for selecting projects\. (f) Preparation of a long term development strategy (Carter Center) The World Bank View of the Proiect Implementation 8\. - The project partly achieved the major objectives as set forth in the IDA Credit Agreement\. It is doubtful that the GOG could have fulfilled the SAC related measures without the assistance provided under the TAC\. The short-term SAC related assistance (e\.g\., consumption tax work) was particularly effective\. While some longer-term institutional development assistance was sustained (e\.g\. Banking supervision), the sustainability of other TAC related assistance (e\.g\. to Public Enterprise monitoring and PSIP) suffered due to the departure from the public service of many counterparts and trained staff\. 9\. The review of implementation of TAC components with the MOF, TAC beneficiary agencies and donors, reveals that the single most pervasive problem limiting the productive use of TAC funds was inadequate public sector salaries to retain qualified staff\. Related to this was the use of consultants in line operating positions to compensate for the lack of qualified technical staff either without having counterparts assigned or without having clear instructions to turn over responsibilities to counterparts\. 10\. Proiect Administration\. It was recognized during the project design that GOG needed technical support as well as assistance with the timely contracting and procurement to support the adjustment program\. Therefore, with the exception of the Carter Center Contract ($200,000), the TAC was implemented through a series of 7 UNDP projects\. The UN Office for Project Services (OPS) served as executing agency for 5 of those 7 totaling $ 2,450,000 including 11% overhead\. UN executing agencies normnally provide technical backstopping and substantive supervision\. Essential assistance was rendered in identification of consultants, contract administration, and procurement\. However,  APPENDIX A -39- Page 4 of 4 substantive assistance was not forthcoming, nor, according to OPS, was it understood to be their responsibility\. In addition, OPS declined to provide final support for the Government's ICR preparation in lieu of the usual final tripartite review and project evaluation carried out under UNDP projects\. The UNDP Field Office has, however, offered such support\. 11\. Some aspects of TAC implementation might have benefited from substantive UNDP/OPS involvement and follow-up\. IDA is of the view that, while the logistical and administrative assistance of the UNDP Field Office was vital to the project implementation, the GOG did not get value for money from this arrangement\. It is recommended that future project implementation assistance from UNDP be carried out under "government executed" UNDP cost sharing arrangements for which the Bank and UNDP have established clear guidelines and for which the overhead is significantly less\. This mode of collaboration has worked successfully in other countries\. The Ministry of Finance's View as Project Coordinator 12\. The Ministry of Finance expressed its satisfaction with the project's overall implementation\. It agrees that the TAC provided readily available funding for SAC related measures, and other assistance related to the adjustment program\. The MOF is aware of obstacles to sustainability mentioned above\. The Minister of Finance endorsed the proposal discussed at the Country Project Performance Review (CPPR), which was held concurrently with the TAC ICR mission, that the assistance of EDI be sought in developing training on the Management of Technical Assistance to enhance benefits from donor financed TA\. The salary issue will not be resolved quickly, especially in light of fiscal constraints, but it is being addressed under the Public Administration Project supported by IDA\. Proiect ImDlementine Aeencies' View 13\. The mission was able to meet with all TAC beneficiary agencies or their successor entities\. In general, the beneficiary agencies expressed their satisfaction with assistance provided under the TAC\. In many cases, transfer of technology and know-how from the consultants helped to strengthen local capacity during critical periods in the adjustment\. The sustainability in some cases is, however, questionable as noted above\. Most agencies expressed their satisfaction with the consultants' work\. The satisfaction stemmed from: (i) the quality of the services rendered; (ii) the transfer of knowledge, albeit temporary in some cases; and (iii) the basis it formed for future activities\. The section below on lessons learned incorporated many to the insights of the MOF and TAC beneficiary agencies\. 14\. Some Lessons Learned: l*  APPENDIX A -40- Page 5 of 6 (a) Public sector salaries sufficient to attract and retain adequate staff is the essential perquisite for sustainability of TA; (b) Non-monetary incentives can also contribute to an improved work environment and thus sustainability: (i) delegation of authority; (ii) the prospect of gradual assumption of increasing levels of responsibility from consultants serving in line positions; (iii) prospects for promotion for good performance, including assuming the line function filled temporarily by the consultant; (iv) training on a regular basis to maintain skills; and (v) encouraging a work environment where information sharing and backstopping for colleagues is the norm (c) Organizational structures of beneficiary agencies should be reviewed at the design stage with a view to consolidating units, if needed, to create a critical mass of staff and thus increase prospects for identifying more than one counterpart (to increase prospects of at least some staying); (d) Additional UNVs and their bilateral equivalents sh,ould be used to continue or complement work of the consultants and enhance sustainability\. PreDaration of the ImDlementation Comoletion Report (ICR) 15\. Additional copies of Bank Guidelines for the preparation of ICRs, disbursement information, and sample ICRs from other countries were left with staff responsible for ICR\. The retrospective as well as prospective approach to the ICR were reviewed\. The mission and the MOF agreed to take the following steps in preparing the ICR: (a) The MOF has appointed two staff to complete the borrower's portion of the ICR during the remainder of the month of August and send it to the Bank in early September; (b) The MOF will seek UNDP's assistance for background information and other support, as needed; (c) The Bank will prepare a draft ICR and send it to MOF by mid-September for comment;  APPENDIX A -41- Page 6 of 6 (d) The final version of the ICR will be ready by end-September 1996 16\. Last Steps (a) GOG will submit by October 31, 1996 any final withdrawal requests for expenditures incurred prior to June 30; (b) UNDP will reconcile its final expenditures against advances of about US$2,655,185 and return to the credit account in Washington any undisbursed balance or request a final TAC disbursement as the case may be; (c) The project account closes on October 31, 1996\. -M-\. 7arachand Balgobin / Mrs\. RitaParlli Division Head, Project Cycle Management Pubic Admirnistration Specialist Ministry of Finance World Bank ,i  -42- APPENDIX B Page 1 of 9 PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A\. Introduction/Background 1\. This Implementation Completion Report (ICR) is an evaluation of the Guyana Technical Assistance Credit (TAC)\. The SDR 2\.3 million credit, which was approved by IDA on June 28, 1990, provided technical assistance to the Government to undertake studies in support of meeting SAC conditionalities and also lay the basis for capacity building and institutional strengthening of selected agencies and ministries within the public sector\. 2\. In order to reverse Guyana's economic decline and create the basis for sustained economic growth and a viable external position, the Government of Guyana designed a medium-term Economic Recovery Program (ERP) in June, 1988\. This involved a fundamental change of economic policy and shift towards a market-oriented economy\. The key elements of the ERP were the unification of the exchange rate system, liberalization of the external trade, increase in the primary current account surplus of the public sector, tightening of credit policy, pursuit of a flexible interest rate policy, and major structural reforms, including the divestment of a number of public enterprises\. Also important in the viewpoint of restoring growth was the improvement in power supply\. 3\. Decades of long neglect of the economy and poor public sector wages, however, had resulted in emigration of a large number of technical and professional staff to North America and the Caribbean in search of better employment opportunities\. Technical staff in the public service at the time of the ERP, therefore, lacked experience and relevant training to undertake analytical work; where technical skills were available, staff was stretched very thinly\. In addition, infonnation and capacity for policy formulation and analysis were almost non-existent, there was little capacity for development and implementation of the public sector investment program, and, by end 1990, the Statistics Bureau had stopped the publication of statistical reports and computer equipment and software were largely not available for key ministries and agencies\. B\. Project Objectives 4\. To alleviate this situation and also assist in implementing the SAC measures, the Government and the donor community developed a comprehensive set of technical assistance packages to improve public sector management\. The TAC, which was appraised in May 1989 and approved in June 1990, set out to (i) improve the incentive framework by carrying out a study to identify the deficiencies in the application and administration of consumption taxes; (ii) strengthening the capacities of PCS and SPS; (iii) improve the public sector investment framework; (iv) improve the analytical capacity  -43- APPENDIX B Page 2 of 9 of macroeconomic management; and (v) the capacity of analyzing the distributional effects of the adjustment program and developing procedures for assessing the efficiency of social sector projects\. These activities were intended to lay the basis for transition to local management at the end of the project\. C\. Implementation 5\. The following consultants were recruited under the TAC to assist in studies critical to tranche disbursement under the SAC, and also to provide institutional strengthening to several areas of the public service\. PROJECT SUB-COMPONENT ASSIGNMENT DURATION Improving the Incentives Framework 2 Consultants 6 months Consumption Tax Study 3 months Public Sector Reform (i) Public Enterprise Monitoring 3 Consultants 45 months (ii) Personnel Management Record- 9 months Keeping System (PRKS) 12 months Improving Public Sector Investment PSIP 2 Consultants 17 months 12 months External Aid Coordination (i) External Financial In-flows 1 Consultant 12 months (ii) Procurement Assistance 2 Firms Social Sector Reform Social Program 3 Consultants 6 months Social Indicators 6 months LSMS 6 weeks Improving Macroeconomic Management Macroeconomic Advisor 2 Consultants 24 months Bureau of Statistics 24 months 3 UNVs 12 months Central Bank Supervision 1 Consultant 24 months Several other consultants were recruited by other agencies to help coordinate and implement some TAC-supported interventions\. In the Statistics Bureau, for example, the CDB and UNDP/UN Statistics Department provided long-term technical assistance to assist the construction of national accounts and national income estimates\. Technical assistance other than the TAC was also provided to enable the Bureau to resume publication of quarterly reports, improve survey design and, implementation, and enhance data processing\. T1  -44- APPENDIX B Page 3 of 9 D\. Assessment of Credit Overview 6\. The project had two main objectives\. The short-term objective was to assist the Government implement its medium-term adjustment program and comply with SAC conditionality, while the longer-term objectives was to build and strengthen capacity in public sector management\. The short-term objectives were largely met as the Government complied with all conditionalities envisaged in the SAC\. As shown below, attainment of the long-term objectives was mixed\. Improving the incentives framework 7\. The key element of this sub-component was the consumption tax study\. Implementation of the recommendations of this study led to the simplification of the tax code, elimination of discretionary exemptions, and the adoption of a program to address deficiencies in the administration of consumption taxes required prior to release of the third tranche of the SAC\. The progress made in this area formed the basis for policy dialogue and follow-up of another intervention in fiscal reform under the IDA-funded PSDAC\. Assessment 8\. Even so, little skills transfer took place in the capacity of the Public Service to undertake fiscal analysis\. This was so because the counterpart assigned to the consultants was thinly stretched\. The USAID-funded BEEP project is following up in developing an investment guide and code so as to enhance the investment framework\. The Government will seek further assistance in the future to review its tax structure in order to provide an enabling environment for the private sector development\. Public Sector Reform 9\. The purpose of this intervention was to generate more timely and better monitoring and financial analysis and to assist in developing investment programs for public corporations\. Improvement in the performance of PEs was intended to reduce transfers from the Central Government\. In addition, systems were developed at PCS and SPS to improve oversight, supervision and management\. Also, a computerized information system for measurement and assessment of performance of individual enterprises and their impact on overall performance of the economy\. Staff from SPS and PCS were trained in financial analysis and forecasting techniques\. Overseas training was also provided to some staff of the SPS and PCS on public enterprise restructuring\. Assessment 10\. In spite of the longevity of this assignment, little or no progress was made in capacity building\. The computer information system designed to monitor and evaluate  -45- APPENDIX B Page 4 of 9 performance of public enterprise never became operational as a result of (i) incomplete and untimely data; (ii) the closure of PCS; and (iii) change in computer systems\. In addition, the training offered in financial ratio analysis and forecasting techniques were not utilized in work of the Enterprise Monitoring Division\. Also, the recommendations provided in the study of the performance of the four poorly performing enterprises were not implemented in part because it did not provide any new insights into how to turn these public enterprises around\. 11\. Several factors are responsible for the poor outcome of this activity\. First, counterpart staff did not stay long on the job and some staff were transferred to other ministries/agencies in the public sector\. Second, the change in Administration in 1992 also led to the dissolution of the PCS and the merger of SPS to the Ministry of Finance\. The dissolution of PCS resulted in the loss of trained staff who left the public sector to take up higher-paying jobs in the private sector\. Personal Management Record Keeping System (PRKS) 12\. This activity, a requirement for third tranche disbursement under the SAC, was expected to eliminate overlapping functions and identify non-critical vacancies in the public service\. The establishment of a PRKS and job classification system to achieve transparency in evaluating, selecting, and monitoring the filling of public service post was also a condition of negotiations of the Public Administration Project\. Assessment 13\. This sub-component of the project achieved most of its objectives\. First, the development of management information system was useful in storing and managing basic data\. Second, this intervention also assisted in developing an operational database that includes all positions in the public service is in place\. 14\. The key factor responsible for the relative success was the smooth coordination between IDA and the UK/ODA in the various aspects of this sub-component\. The ODA carried out an institutional analysis of the Public Service Ministry (PSM) and provided substantial technical assistance to strengthen MSD\. This was followed up with more support from IDA for the development of a computer-based personnel records system to provide access to information\. 15\. Despite the relative success, some problems remain\. The PRKS is still not an active personnel management system\. As a result, the Government will seek additional assistance to make the current system more functional\. This will assist personnel units in each ministry to efficiently carry out its personnel management functions\. Further strengthening of personnel infornation system is planned under the Public Administration Project\. The main personnel records system will be linked to line ministries\. Already ten additional computers and related equipment has been procured for this purpose and staff from line ministries will be trained to utilize the equipment\.  -46- APPENDIX B Page 5 of 9 Improving Public Sector Investment 16\. Two consultants were recruited to strengthen the technical capacity of SPS in the preparation of the PSIP\. As a result of this intervention, a rolling four-year PSIP was put in place, guidelines were developed and staff were trained in fulfillment of the SAC's second and third tranche release conditionality\. In addition, the size and composition of the investment program was brought in line with economic priorities and available financing\. A quantitative basis for the establishment of selection criteria and guidelines to improve the system for project formulation and appraisal were developed\. Further, the technical capacity to carry out economic evaluation and cost analysis of proposed investment projects within the Project Cycle Unit at the State Planning Secretariat was strengthened\. 17\. In spite of the progress made in several areas, little institutional strengthening remains, In part, this is attributable to the reorganization of the SPS and staff turnover after the 1992 elections, and in other part, the demanding day-to-day work program of staff minimized skills transfer\. Through technical assistance from USAID and IDA, the Government has initiated steps to strengthen the Project Cycle Division\. External Aid Coordination 18\. The objective of this component of the project was to assist the Government to coordinate and facilitate the procurement and disbursement of external funds and to train staff of multilateral financial institutions, the Bank of Guyana, and the Ministry of Trade, 'T'ourism and Industry (MTTI) in international procurement of goods and disbursement procedures\. Procurement assistance was also provided through Crown Agents and MONITEC Consultants to assist the Government identify eligible imports and documentation, and conduct procurement review to provide assistance for third tranche disbursement\. Assessment 19\. The consultants developed a quarterly report to keep management abreast of external financial inflow\. A review of aid coordination and management system was also undertaken\. This resulted in the establishment of a database on the volume, type and conditionality related to external resources\. Nevertheless, these activities of the consultant could not be sustained\. The computerized database on external financial inflows is no longer in use and donor coordination still remains a major problem\. The Government, in January, 1996, set up a coordinating committee in the Ministry of Finance to coordinate donor efforts so as to avoid duplication in donor activities\. This committee will be strengthened to allow it to play a crucial role in coordinating donor support during the implementation of the National Development Strategy\. 20\. The procurement assistance was only short-term and the work in this area only facilitated the tranche releases under SAC II\. The Government is currently revamping the procurement and tender process with assistance from USAID and UNDP\. A consultant's  -47- APPENDIX B Page 6 of 9 report on the review of the tender and procurement process has been completed and Government is presently reviewing the recommendations of the report\. It is expected that once these reforms are completed, sufficient capacity would have been created for improving procurement and tendering process\. Social Sector Reform 21\. Consultants were recruited to analyze the distributional effects of the Government's adjustment program and were required to develop procedures to assess the efficiency of social sector projects, including those of SIMAP\. Under the services of three consultancies, (i) an evaluator's manual was developed for SIMAP project officers and training provided for project appraisal; (ii) manual of social indicators was developed and on-the-job training conducted for central and line ministries in using the indicators to conduct policy analysis, sectoral planning and project preparation; (iii) LSMS questionnaire, detailed budget for survey and logistical arrangements and timetable for implementation of field operations was developed for the Bureau of Statistics, and the Ministries of Health and Education\. Assessment 22\. The work of the consultants resulted in the formulation of IDB (US$13\.5 million) and IDA (US$10\.3 million) credits to SIMAP, a pre-test of the LSMS which yielded important information on the location and extent of poverty in Guyana\. In the case of social indicators, no counterpart was assigned and many of the staff trained in development and analysis of social indicators left SPS and the other agencies\. As a result, capacity-building process initiated could not be sustained\. Nevertheless, the manual and computer systems developed under the TAC have been updated\. Improving Macroeconomic Management 23\. Two advisors were recruited over a period of four years to provide analytical support and management capacity, including training to staff of MCA\. In the first consultancy, a system was established to provide quarterly macroeconomic reports and timely information, including progress of implementation of the ERP to decision makers\., Studies were also carried out on some aspects of macroeconomic policy, including debL issues, operation of cambios, and the impact of adjustment program on income\. Due to the seriousness of staffing at the Ministry, the second consultant undertook more line assignments, including serving as Director in the Office of the Budget and Acting H lead of the Department of International Economic Cooperation (DIEC )\. Assessment 24\. Although the assistance of the consultants helped in facilitating compliance with second and third tranche disbursement, they were not sustainable\. In part\. this was the result of the absence of staff to continue, for example, the publication of quarterly reports and other analysis of macroeconomic issues pertinent to the Government and in other part  -48- APPENDIX B Page 7 of 9 because of the fire fighting nature of the second consultant's assignment\. In recognition of improving the macro-analytical framework, the Government, through the assistance of USAID and IMF, is putting in place a Policy Analysis Division to undertake the analysis of policy issues and resume publication of quarterly economic review and monthly economic bulletin\. The Bureau of Statistics 25\. Through the assistance of this TAC intervention, the Bureau of Statistics was computerized\. Long-term technical assistance provided by CBD, UNDP/UNV Statistics Department enabled the Statistics Bureau to resume publication of quarterly reports and facilitated marked improvement in survey design, and data processing\. This intervention also assisted the Bureau to improve its national income and balance of payments accounting and laid the basis for developing capabilities to evaluate the impact of economic reforms on standards of living\. Assessment 26\. Through TAC and other donor intervention, the Bureau of Statistics is again functional\. Over the last four years, its major accomplishments include Household Income and Expenditure Survey and analysis, Living Standards Measurement Survey and Labor Force Survey\. Through the procurement of informatics, a large number of staff have become computer literate\. The procurement of vehicles through TAC assistance in part continue to facilitate field work and in other part has markedly improved the capacity of the Bureau to carry out surveys and data collection\. The Bureau in 1997, will conduct a Labour Force Survey and update the 1992 LSMS\. Nonetheless, the capacity of BOS to carry out analytic and forecasting remains weak\. Staffing is still a problem\. Power outages also continue to hamper the activities of the Bureau\. The Government will be seeking additional assistance from donors to follow up on the work undertaken by the TAC and UNDP consultants and also deal with some of the problems that are facing the Bureau at present\. Central Bank Supervision 27\. The objective of this intervention was to strengthen and modernize the regulatory and supervisory framework for commercial banks and other financial institutions in Guyana\. Sustainable systems and procedures were developed for on-site examination of credit portfolios, off site performance and industry tracking sheets were established and maintained regularly, laws and prudential regulations were reviewed and assistance was given in the preparations of banking legislation\. 28\. Among the major accomplishments of this intervention was the establishment of the Department of Banking Supervision\. This Department has 11 technical staff and 3 support staff\. Over the last few years, it has implemented periodic inspections to enforce compliance with banking regulations\. Support is also being given to complete work on on-site inspection training and guidelines for the implementation of the Financial l  -49- APPENDIX B Page 8 of 9 Institutions Act are being developed\. Under the Financial Sector Business Environment Credit (FISBEC), IDA will support the Bank of Guyana with computer and other equipment so as to strengthen the Banking Supervision Department\. Computer Information System 29\. Needs assessment of management information system was undertaken for the Bank of Guyana\. However, the recommendations of developing a fully-integrated system was not implemented\. Follow-up to the consultancy report on MIS will be provided under the IDA-funded FISBEC project\. The UNDP is assisting the central bank to develop computerized retrieval systems for its library\. Lessons Learned and Recommendations for Future Assistance 30\. Although some sustainability in capacity building was built over the project life, the difficulty in attracting and retaining professional technical staff was perhaps the most serious constraint in capacity building\. In part, this was due to low and inadequate civil service remuneration\. Given the tight budgetary constraints facing the Government over the medium term, it does not appear that this situation could be overcome in the short term\. The Government is therefore considering granting contracts to technical and professional staff at higher salaries so as to attract and retain technical personnel in the civil service\. 31\. Given the shortage of staff in the public service, the second serious obstacle to capacity building was the notion of counterparts that became the main vehicle for skills transfer\. The volatility in the civil service and the frequency of emigration meant that the model where a main counterpart was attached to work with consultants was not far reaching\. This is so, because whenever a counterpart staff left, the investment put in training and skills transfer were lost\. Perhaps, in the future, the model for technical assistance should be first recruiting consultants for line positions and requiring them to train all staff under their responsibility\. Second, consultants at the end of their assignment should have transferred to staff skills sufficient to allow them to generate division/department output\. 32\. Thirdly, oftentimes donor intervention lacked proper coordination and, in some cases, became counter-productive in dealing with issues of sustainability\. For example, the inability to pay adequate salaries was, in part, the result of fiscal constraints imposed on the Government by the IMF\. Perhaps, in the future, the Bank and the IMF should carefully review their programs and ensure that they are internally coherent and consistent\. Government's View of the Project This IDA intervention provided critical assistance necessary to implement measures related to the SAC and provided expertise whose work in a number of areas laid the ground work for capacity building and institutional strengthening\. Nevertheless, in the  -50- APPENDIX B Page 9 of 9 future, the Government, in consultation with the Bank, will seek assistance from EDI in developing training programs on the Management of Technical Assistance so as to enhance benefits from donor-financed technical assistance\. The project was executed largely by the UN Office for Project Services (OPS)\. Except for the identification of consultants, contract administration, and procurement, OPS did not provide the technical backstopping supervision, nor did it provide final support in the preparation of the Government's ICR\. The UNDP Field Office in Guyana, however, was supportive\. It provided logistic support to consultants, coordinated tripartite meetings, and provided comments on technical reports\. December 9, 1996  -51- APPENDIX C Page 1 of 12 GUYANA TECHNICAL ASSISTANCE CREDIT (TAC) (CREDIT 2169-GUA) DESCRIPTION OF SUBPROJECTS I\. IMPROVING THE INCENTIVE FRAMEWORK IDA CREDITAGREEMENTPARTA: Carrying out a study to identif the deficiencies in the application and administration of consumption taxes and make recommendations to address such deficiencies\. 1\. Consumption Tax Study\. With respect to trade policy the Program of Structural Adjustment envisaged a reduction in the list of prohibited imports, changes in procedures for issuing import licenses, and a study of trade taxes and ensuring agreement on a program to rationalize trade taxes\. The TAC provided a short-term consultants to work with the Monitoring and Coordinating Agency (MCA) on a consumption tax study\. They reviewed both policy and administration and developed options for improving the efficiency of the Consumption Tax\. The Principal Consultant built up a data base on trade and carried out a survey of sample manufacturers to look at the impact of the tax\. He examined the implications of simplifying the tax, reducing rates and broadening the base\. He concluded that maintenance of the status quo would mean the continued multiple level consumption tax rate structure with its associated administrative complexity, inherent distortion of production and consumption choices, and significant inherent inducements to abuse the system\. His findings revealed a high level of corruption, tax evasion and lack of compliance with tax obligations\. 2\. Outcome\. Although his designated counterpart, the Assistant Comptroller of Customs and Excise Department, was fully occupied with daily duties, and, therefore, little skill transfer took place, his work contributed to the simplification of the tax code and elimination of discretionary exemptions and the adoption of a program to address deficiencies in the administration of consumption taxes required prior to release of the third tranche of the SAC\. This work also formed the basis for policy dialog, was used by the borrower in budget speeches, and was consistent with later Bank work in implementing a reform of the consumption tax (together with other indirect taxes, direct corporate taxes, and tariffs) under the PSDAC\. The Private Sector Development Adjustment Credit (PSDAC) and Financial Sector and Business Environment Credit (FISBEC) include follow-on assistance to support adoption of tax policy reforms that broaden the tax base and remove disincentives to long-term investment in the economy\.  -52- APPENDIX C Page 2 of 12 II\. PUBLIC SECTOR REFORM IDA CREDITAGREEMEN5TPARTB\. Strengthening the capacities of Public Corporations Secretariat (PCS) and the Enterprise Monitoring Division (EMD) in the State Planning Secretariat (SPS) to monitor the financial and operational performance of public enterprises, including training of the staff of PCS and SPS\. 3\. Public Enterprise Monitoring\. The TAC assistance was intended to generate more timely and better monitoring and analysis of the financial performance and development and investment plans of public corporations with a view to reducing transfers from the central government to PEs\. A performance monitoring system along the lines of those functioning in selected Asian countries was to have been introduced\. A TAC financed consultant (45 months) developed systems in PCS' and SPS to improve government oversight, supervision and management of PEs\. He developed a computerized information system for measurement and assessment of performance of individual enterprises and assessment of their impact on the overall performance of the economy\. His work was highly regarded by the government and extension to his contract were requested even following the change of Administration in 1992\. 4\. The consultant trained SPS and PCS staff in financial ratio analysis and forecasting techniques and financial management and prepared several studies on public enterprise finances aimed at improving efficiency\. The TAC financed overseas training of SPS and PCS staff in Commercialization and Privatization of PEs and Restructuring of Industrial Enterprises in Washington and the UK\. 5\. A second TAC financed Public Enterprise Advisor (9 months) to the PCS completed in-depth analyses of the financial performance of four poorly performing public corporations: the Guyana National Engineering Corporation (GUYNEC), SANATA Textiles Limited, Guyana Airways Corporation, and Guyana Pharmaceutical Corporation\. Recommendations were formulated for their improvement or divestment\. Bank supervision reports record that the PCS was of the view that the consultant's contribution provided no new findings and no action was taken based on his recommendations\. He developed a training program for PCS staff, including overseas training in accounting, econometrics and financial modeling\. 6\. Outcome\. GUYNEC has been divested and SONATA closed\. In 1992 the PCS was dissolved\. The computer information system created for the PCS to monitor and evaluate performance of public enterprises was to be transferred to SPS\. However, the systems in the SPS and PCS never became operational due in part to the incomplete and untimely data produced by the PEs to be fed into the system, partly to the closure of the PCS, and partly to a change in computer systems\. PCS was later dissolved, some functions divided up among other agencies, and trained staff left or were dismissed without handover of systems developed\.  -53- APPENDIX C Page 3 of 12 7\. A 1994 Bank supervision mission aide memoir further records that the assigned counterpart staff to the PSIP and PE Advisors had all left to take on higher paying jobs in the private sector or abroad\. Current staff of the MOF's Enterprise Monitoring Division are of the view that this TAC assistance may have been more valuable if more emphasis had been placed on improving the quality, timeliness, and format of the data submitted by the PEs themselves\. 8\. The MOF continues to suffer from an inadequate PE monitoring system, lack of timely and reliable data from PEs, and antiquated computer equipment\. As a consequence about 20 enterprises continue to be inadequately monitored (including GUYSUCO) and policy decisions are made on a piecemeal and inconsistent basis\. However, since a significant portion of PEs have been divested or closed, and additional divestments are slated before the year 2,000, follow-up assistance in this area does not seem to be of priority to the government\. The training financed under the TAC, while not sustained, was useful at the time\. IDA CREDITAGREEMENT P\.4RT G (added by amendment in June 1992): Development of a computer based personnel records system that will provide rapid access to information on individual staff at each of the Borrower 's ministries and other relevant agencies and aggregate information on stafffor overall personnel management purposes\. 9\. Commencement of work on a Personnel Management Record Keeping System (PRKS) to eliminate overlapping functions and identify non-critical vacancies in the public service was an action required prior to third tranche release of the SAC\. Establishment of a PRKS and job classification system to achieve transparency in evaluating, selecting, and monitoring the filling of public service posts was also a condition of negotiations of the Public Administration Project (PAP)\. The UK/ODA carried out an institutional analysis of the Public Service Ministry (PSM) and provided substantial technical assistance to strengthen the MSD\. The TAC funded follow-up support for the development of a computer based personnel records system to provide rapid access to information on individual staff at each ministry and regional administration and aggregate information on staff for overall management purposes, including those related to salaries administration\. The TAC financed an international Argentine and local consultants to develop the system, ensure effective transfer from manual to computerized methods, and advise on the selection and assist with the procurement and installation of suitable software and hardware\. A UN ASSOCIATE EXPERT (Systems Analyst) was recruited in January 1993 for one year to help implement the basic personnel records keeping system, its maintenance and data entry and processing\. 10\. Outcome\. The SAC and PAP conditionality was fulfilled\. An ODA commissioned review of the PRKS indicated that the first phase of the development of the system (under the TAC) was useful in gathering the required manual data and creating  -54- APPENDIX C Page 4 of 12 a basic system\. The six TAC financed PCs and fileserver and software are in place in the Public Service Management Ministry in the Office of the President\. Despite initial 2 difficulties , an operational database was set up providing information used in the salary restructuring exercise\. The database that includes all positions in the public service, the particulars of the incumbents and details of their salaries and allowances\. This is a major advance from the situation existing before the project when reliable establishment and wages information was not available to GOG\. The system is now being installed in 27 locations\. The PRKS is, however, still not an active personnel management system\. It is necessary to build additional functionality in the system so that it can assist persoinnel units in each ministry in actually carrying out personnel management functions, such a issuing appointment letters, keeping record of leave and transfers, matching employee skills to job requirements to fill vacancies, analyzing skills gaps and organizing staff training, etc\. The next phase under the PAP will link the system to line ministries and departments and introduce personnel information into the system to make it operational\. The PAP financed equipment (40 additional computers and related equipment) has arrived and is awaiting installation\. The same local consultant who trained Ministry of Public Service staff under the TAC has been retained to train line ministry staff under the PAP\. -II\. IMPROVING PUBLIC SECTOR INVESTMENT IDA CREDITAGREEMENTPART C\. Services of consultants to assist SPS in formulating and monitoring the PSIP and assuring its consistency in terms of size and composition in relation to the Borrower 's macroeconomic framework and objectives and available funding, including training of the staff of SPS in, inter-alia, project evaluation and management and resource management\. 11\. PSIP\. The TAC provided funding for an Economic Advisor to the SPS (17 months) and experienced Project Cost Analyst (12 months) and short term training of staff in project evaluation and resource management and computing equipment\. The objective of the Economic Advisor's assignment was to strengthen the technical capacity of SPS (now the Planning Unit in MOF) in the preparation of the PSIP, including preparation of guidelines on project preparation for SPS and line ministry staff and training of staff to evaluate and monitor projects included in the PSIP\. 12\. Training\. Coordination was established with SIMAP (see below) to host a series of community training workshops to assist community leaders define useful and well organized projects\. The PSIP Advisor carried out a six week training program which included computer training in econometrics, applied macroeconomic theory, and 2 Some members of the Argentine firm were not fluent enough in English to communicate sufficiently\. UNDP procedures to pay the consultants were confusing and time consuming for the PS, Ministry of Public Service  -55- APPENDIX C Page 5 of 12 computer modeling of the Guyanese economy which benefited twenty five participants form SPS, the Ministry of Finance, the Bank of Guyana, the Statistics Bureau, the Ministry of Foreign Affairs, the Ministry of Education and the Ministry of Health\. 13\. Outcome\. A rolling four-year PSIP was put into place, guidelines were developed and staff were trained in fulfillment of the SAC's second and third tranche release conditionality\. The ability of the Government to bring the size and composition of the PSIP in line with economic priorities and projected domestic and foreign funding availability was also improved\. A quantitative basis for the establishment of selection criteria for investment projects was developed and guidelines to improve the system for project formulation and appraisal were developed\. The Project Cost Analyst strengthened technical capacity within the Project Cycle Unit in the SPS to carry out economic evaluation and cost analysis of proposed investment projects\. The work undertaken by the consultants was of considerable help in the preparation of the Bank's Public Sector Review\. 14\. Although counterparts were assigned to the consultants, one Bank supervision mission was informed that counterparts were not able to spend adequate time working with the consultants due to the demanding daily responsibilities imposed on them\. In addition, trained staff were dismissed or move during the SPS reorganization\. The principal PSIP consultant, however, recently returned under the USAID funded Building Equity and Economic Participation Project (BEEP)\. The systems developed under the TAC have been resuscitated and new staff have been trained in the project cycle through evaluation\. An IDF grant is providing additional institutional support\. IDA CREDITAGREEMENT PART C: Services of consultants to assist Division of Multilateral Financial Institutions of the MOF (DMFI), the Bank of Guyana and Ministry of Trade and Tourism (MOTT), in coordinating andfacilitating the procurement and disbursement of externalfunds, including training of the staff of DMFI, the Bank of Guyana, and MOTT, in inter-alia, international procurement of goods and disbursement procedures\. 15\. External Aid Coordination\. SAC actions prior to Board Presentation included improvement of external aid coordination though the services of an Advisor to the MOF to maintain continuous contact with donors and facilitate procurement and disbursement of funds provided by bilateral and multilateral donors\. The Advisor on External Financial In-flows (12 months) provided advice to government agencies on draw down procedures for several lines of credit: the Canadian Industrial Line of Credit, the Italian Rice Grant Aid, the Italian Commodity Grant, the US PL-480, the Indian Industrial Development Line of Credit and the SAC\. He established a quarterly report to keep management abreast of external financial inflow developments and considered his main output to be facilitating the procurement and disbursement of funds\.  -56- APPENDIX C Page 6 of 12 16\. The Advisor also carried out a review of the aide coordination and management system with the aim of identifying constraints and proposing solutions\. He recommended an integrated system of aid coordination management and established a database on the volume, type and conditionality related to external resources\. He monitored the use of aide and examined causes of delays in disbursements and proposed actions to accelerate them\. His objective was to facilitate inflows of external capital to provide support to the balance of payments and the PSIP\. 17\. Outcome\. The computerized database on external financial inflows that he established fell into disuse upon his departure\. Donor coordination remains an issue taken up at the 8/96 CPPR where agreement was reached to improve coordination though semi- annual donor meetings to discuss implementation questions and problem areas\. The Project Cycle Management Division in MOF is to coordinate donors and the next meeting planned for January 1997\. 18\. Procurement Assistance\. Two procurement agents/firms were financed under the TAC to serve as procurement advisors to the Bank of Guyana for drawdown of the first and second tranches of the SAC\. The objective of the first agent was to identify eligible imports supported by the necessary documentation included in the statements of expenditure prepared with the assistance of the agent (invoices, shipping documents, and evidence of payment to support disbursement)\. The second agent conducted a procurement review to provide assistance related to release of the third tranche of the SAC, mainly focusing on the Guyana Manufacturing and Industrial Development Agency (GUYMINE)\. 19\. Training\. The consultant organized in-house training for the MFI on macroeconomics and policy tools, management of aid mobilization, loan administration procedures and credit negotiations\. 20\. Outcome\. The work of the two procurement agents was short-term and successful\. The USAID/BEEP project together with UNDP is currently providing assistance to strengthen the Central Tenders Board and simplify and accelerate procurement including completion of a new tendering law and publication of regulations\. IV\. SOCIAL SECTOR REFORM CREDITAGREEMENTPARTD\. Services of consultants to assist Department of Social Infrastructure (DSI) in the SPS and Ministry of Culture and Social Development (MCSD) in analyzing the distributional effects of the Borrower's adjustment program and developing procedures and assessing the efficiency of social sector projects, including those of the Social Impact Amelioration Program (SIMAP) in correctly identifying target population\.  -57- APPENDIX C Page 7 of 12 21\. The TAC financed three consultancies under this component\. The Social Programme Consultant (6 months) developed the Evaluator's Manual to be used by SIMAP Project Officers for technical appraisal of projects\. It included eligibility conditions, technical evaluation procedures, evaluation criteria, and report formats\. The manual was based in part on the successful experience of the Bolivian Emergency Social Fund\. The consultant also trained staff in appraisal, and developed promotional activities with potential user organizations including NGOs, private sector and local organizations across the country to generate support and project proposals\. She also developed a community participation methodology and a financial/accounting system\. 22\. Outcome\. This work contributed to the formulation of a $13\.5 million IDB loan to SIMAP (mainly for schools, roads, agriculture, irrigation) and a $10\.3 million IDA Credit which focuses on water and sanitation, drainage, nutrition and rehabilitation of health centers\. The Manual and computer systems developed by the TAC consultant have been updated under both operations\. 23\. A Consultant in Social Indicators (6 months) worked in the Social Planning/Manpower Development section of SPS together with a UNV (10/93 - 10/94) in developing a "Manual of Social Indicators" and conducted on-the-job training for central and line ministry social planners in the use of the indicators for policy analysis, sectorial planning and project preparation with a view to creating capacity to continue production of social indicators after the conclusion of the TA\. Areas of focus included education, health, water supply and sanitation\. 24\. Outcome\. No counterpart was assigned and many of those trained in development and analysis of social indicators left the SPS and other agencies\. UNDP referred this lack of follow-up to the Chief Planning Officer but no action was taken\. 25\. A short-term Living Standard Measurement Survey (LSMS) Specialist (6 weeks intermittently) worked primarily with the Bureau of Statistics as well as with SIMAP, Health and Education in development of: (i) the LSMS questionnaire; (ii) detailed budget for survey implementation by the BOS; and (iii) logistical arrangements and timetable for implementation of field operations (including anthrometric component), data processing and training (with the BOS)\. IDA itself finance the consultant's time for training and managing the survey\. The consultant conducted workshops for enumerators and supervisors, anthropometrists (65 students format he Georgetown School of Nursing), and data entry managers\. A policy analyst form the University of Guyana was also trained\. The LSMS pre-test was conducted in tandem with the UNDP/CDB assisted Household Income and Expenditure Survey (HIES)\. 26\. Outcome\. The TAC financed pre-test of the LSMS was later implemented under the IDA's SIMAP Credit\. It yielded important information on the location and extent of poverty in Guyana\. It was used by the IDB to construct a poverty map\. An update of the LSMS is planned for 1997 with direct assistance from the Bank and other donors\. It will provide essential information to a proposed $17\.0 million IDB SIMAP II project\. It was  -58- APPENDIX C Page 8 of 12 noted, however, that the Institute of Development Studies (IDS) of the University of Guyana prepared work similar to the LSMS which produced different (higher) projections on the poverty levels in Guyana\. IDA considered the IDS work to have had methodological blows\. Initially, there was a tendency to use the IDS data, particularly in dealings with donors\. V\. IMPROVING MACROECONOMIC MANAGEMENT CREDITAGREEMENTPARTE\. Services of consultants to assist the Monitoring and Coordination Agency in the MOF (MCA) in coordinating and implementing the Borrower's adjustment program and improving its analytical and management capacity, including training of the staff of MCA\. 27\. The Macroeconomic Advisor (24 months) established a system of quarterly macroeconomic reports to provide up-to-date information, including assessment of the progress of implementation of the ERP, to decision makers\. He also carried out studies on various aspects of macroeconomic policy such as on the debt problem, the operation of cambios, and the impact of the adjustment program on income\. 28\. While he successfully brought to the attention of the Minister issues which could have an adverse impact on the economy if not addressed, such as external financial flows (1992) and the problem of the lack of counterparts for TAC consultants, the system he developed was not continued after his assignment was completed\. 29\. A second Macroeconomic Adviser (24 months), who was to have succeeded the first Macroeconomic Adviser, noted in her final report that the major part of her time dealing with issues on which the Minister required assistance\. "In fact, the last item in my TOR - executing special projects as agreed between the Minister and the Adviser -- was invoked more than any other"\. The MOF was seriously under-staffed , especially with respect to technical staff, and the Adviser served as Acting Coordinator of the Budget Division for most of her two year contract under the TAC, and later acted as Head of the Department of International Economic Cooperation (DIEC) and served as Chief Adviser to the MOF inter-alia on debt negotiations\. 30\. Outcome\. The assistance of the first Macro Economic Advisor was useful at the time particularly in facilitating compliance with second and third tranche SAC conditionality of a favorable Bank assessment of the macroeconomic framework\. He assisted the Government in meeting macroeconomic targets under the ERP and the SAC\. In doing this the consultant succeeded in getting the Statistics Bureau and Central Bank to use for the first time common statistical formats in areas such as debt\. The quarterly system of macroeconomic reports was however, discontinued following the departure of the consultant\. An ongoing $400,000 IDF Grant (No\. 28581) is providing consultant services to assist with debt negotiations with creditors and work on set up a long-term debt management program for Guyana\. The Grant will also finance computers and -T  -59- APPENDIX C Page 9 of 12 accessories for the MOF's Debt Management Division\. USAID's current BEEP project aims to: (i) Design and install an MIS for the MOF for data management and analysis; (ii) Develop a fully functioning Macroeconomic Division, and train staff to undertake quantitative analysis of economic issues; and (iii) Identify, recruit, and train counterparts for the Macroeconomic Division and train them to replace the long term TA\. 31\. The second Macroeconomic adviser carried out much needed "fire fighting" and liasing with IMF and IDA\. Given Guyana's institutional weakness, her services for "special assignments" were valuable for the Government and donors\. Her work was understood to be substitution TA\. 32\. The Public Enterprise Consultant also developed a macroeconomic model of the Guyanese economy used by planners at SPS (Macroeconomic Policy Division) to evaluate how various economic policies, reforms, and development initiatives affect the performance of PEs and the economy\. This work is being continued by USAID's BEEP Project\. 33\. Training\. SPS and PCS staff were trained in: (i) financial ratio analysis, forecasting techniques and financial management; and (ii) sector analysis, identification and appraisal of projects, the carrying out of macroeconomic policy analysis and forecasting and cost benefit analysis\. Mr\. Hinds also taught a three week course in macroeconomics\. In addition, staff of the Macroeconomic Analysis and Policy Division in MOF attended the IMF course in Techniques of Financial Analysis and Programming\. USAID's BEEP project is providing follow-up assistance in developing a capacity for macro-economic analysis with the return of the consultant originally financed under the TAC\. 34\. The Bureau of Statistics was computerized for the first time under the TAC\. Parallel assistance was provided by the CDB and UNDP/UN Statistics Department in the form of long-term consultants to assist in the construction of national accounts and national income estimates to enable the Bureau to resume publication of quarterly reports and other information, and in survey design, implementation, and data processing\. This assistance enabled the preparation of current macroeconomic data essential to macroeconomic management and, thus important to the success of the Government's structural adjustment program\. It also developed statistical capabilities sufficient to assess the results and evaluate the impact and consequences of implementing the ERP on the standard of living\. Seventeen computers, five vehicles, a scanner, and a generator were purchased with TAC funds\. In addition, three UNVs supported the institutional strengthening (Balance of Payments,Current Enterprise Statistics, and Data Processing)\. An Associate UN Expert in Data Processing financed by the Netherlands also supported the operation\. Due to lack of counterparts at the time of implementation, most UNVs were engaged directly in line activities\. 35\. Outcome\. The project succeeded in making functional the BOS which had been defunct\. The BOS was transformed from a manual to a computerized office, in large part  -60- APPENDIX C Page 10 of 12 through the micro computers, office equipment, and vehicles (critical to the HIES) procured under the TAC\. A large number of staff are now computer literate and have enlarged their skills\. In a relatively short time the combined efforts of the CDB, UNDP and TAC overcame a two decade lapse and through the carrying out and analysis of the results of a Household Income and Expenditure Survey (HIES), Living Standards Measurement Survey (LSMS) and Labor Force Survey in 1993\. These were essential inputs to the Bank's Poverty Seminar and Poverty Report in 1994\. As of December 1994 the BOS had 10 senior staff and a total of 65 staff out of an approved number of 120\. 36\. Most of the staff trained under the TAC have remained on board due to the somewhat better pay available at the BOS compared to the regular civil service\. Younger staff continue to be attracted by prospects for training, including in-house short term training sponsored by USAID (computer and survey related) and UNDP (national accounts)\. BOS facilities, however, continue to be dilapidated, the analytic and forecasting capacity remains weak and the generator purchased with TAC funds has been lent for an extended period to the election commission resulting in about 10 hours per week of "down time" in the Bureau\. These problems will be addressed under a proposed ODA $2\.0 million grant likely to be approved before end CY96\. A Labor Force Survey of about 8200 households is likely to be carried out during the first half of 1997 together with an LSMS update which will underpin the poverty focus of the Bank's CEM, if it is carried out on time\. VI\. CENTRAL BANK SUPERVISION IDA CREDITAGREEMENTPARTF (added by amendment in June 1992): Strengthening and modernizing the regulatory and supervisory frameworkfor commercial banks and other financial institutions in Guyana\. 37\. An Adviser to the Central Bank in Banking Supervision (24 months) also filled a line function -- Head of the Bank Supervision Department\. She was successful, nevertheless, in establishing sustainable systems and procedures for on-site examination of credit portfolios and recommended a framework and system for off site monitoring, supervision and financial analysis of the quality of credit portfolios of commercial banks\. Performance tracking sheets and industry tracking sheets have been established and are being maintained regularly\. She also reviewed laws and prudential regulations and assisted in the preparation of amendments to banking legislation and recommended measures to implement regulations\. She advised on the organization of a Banking Supervision Department and the need for additional TA\. The contract of the consultant was originally financed by UNDP and subsequently financed by the IMF\. One year of her services were added to the loan (February 1992-February 1994) to ensure continuity in the strengthening and modernizing of the regulatory and supervisory framework for commercial banks and other financial institutions within the context of the Government's move toward a more market-based financial system\.  -61- APPENDIX C Page 11 of 12 38\. Outcome\. The consultant succeeded in establishing a Department of Banking Supervision where none existed previously\. The Department now has 11 technical staff and 3 support staff\. The Banking Supervision Department has implemented periodic inspections which will help cement the institutional mechanisms required to monitor future compliance once the Financial Institutions Act (FIA) regulations are implemented\. The consultant championed the promotion of staff already within the organization, including those who had received training abroad under the TAC at FDIC and the Examiner Training School of the Federal Reserve System\. Her work on banking legislation contributed to compliance with the Private Sector Development Adjustment Credit's (PSDAC) measures on promulgation of the Financial Institutions Act which took effect in May 1995\. A successor Consultant financed by the IMF is completing work begun on on-site inspection training (credit evaluation, qualitative appraisal of loan portfolios) and on developing guidelines for implementing the regulations of the Financial Institutions Act\. A counterpart has been assigned to work with the consultant\. The Financial Sector Business Environment Credit (FISBEC) is to finance computer and other equipment to further strengthen the Banking Supervision Department\. Both the PSDAC and the FISBEC aim to improve the regulation and supervision of the financial system and restructure key financial institutions and the FISBEC includes funding to support preparation of laws governing bank supervision and regulation\. 39\. A Computer Information Systems Consultant to the Bank of Guyana (6 months) was to have: (a) assessed the overall computerization requirements of the BOG; (b) advised on the optimal configuration of the computer facilities with a view to ensuring linkages between the main frame and personal computers and (c) advised on the appropriate equipment and systems and future computerization program and training\. She recommended development of a fully integrated information system and produced recommendations on architectures for applications and technology, policies and outlined critical success factors and action items\. 40\. Outcome\. The usefulness of the consultant's work was limited by the lack of an identified source of funding for the computer equipment\. Little of her work was put into effect\. The Head of BOG's Information Services Dept\. was not aware that TAC funds could have been accessed for the purchase of the needed equipment\. Lack of a viable Project Implementation Unit and/or a clear agreement for UNDP to serve that function resulted in this type of confusion and delay\. Funding for equipment is now available under the FISBAC; and the TAC financed consultancy is being followed by a UNV Specialist in Document Management (October 1995 - June 1996 and continuing under UNDP for an additional 12 months) with considerable experience in developing computerized retrieval systems for libraries\. He is building a computerized data base to enable immediate retrieval of active files\. A counterpart is being recruited to work with him and his contract will continue through mid-1997 under a UNDP project\.  -62- APPENDIX C Page 12 of 12 VII\. LONG-TERM DEVELOPMENT STRATEGY 41\. Guyana has not had a comprehensive development strategy underpin policies and priorities and as a basis for negotiating with donors\. The GOG, with the Carter Center (June 1995 - June 1996) financed under the TAC as facilitators, are providing the background work for a national development strategy\. A participatory approach was used to coordinate with public and private sectors, international agencies, NGOs, universities, labor unions and other interested groups to sound out their assessments of constraints to Guyana's development and their opinions on overcoming them\. Time series data are being put together by the BOS and the Debt Management Department of the MOF (both of which received assistance under the TAC)\. The Strategy, which was nearing completion at the time of the final TAC supervision mission in August 1996, is expected to make a clear statement about the respective roles of the private and public sectors\. It will contain 42 chapters, including recommendations on issues addressed in the TAC such as: (i) macro-economic policy, including chapters on fiscal policy and the public sector, and providing projections over the next 10 years on money supply, balance of payments, etc\.; (ii) the social sectors; (iii) the productive sectors, including chapters on labor and employment policies; (iv) infrastructure; (v) summary chapters on policy changes, legislation and the investment program needed to put into effect the recommendations\. 42\. Outcome\. It is now expected that final work on the strategy will be completed by end- 1996 in time for the 1997 budget preparation\. However, the 42 chapters may need to be synthesized and prioritized further before they can be useful as a government policy document that is implementable\. In addition, the document will be distributed for public discussion before finalization\. The public sector modernization chapter of the report includes recommendations consistent with the PAP: improving public sector salaries, wage decompression, improved performance evaluations and merit based increases\. Finally, implementation of the strategy will require staff not currently available in most sectors\. The extent of commitment of the present government, including to salary increases which seems to be the linchpin in attracting and retaining qualified staff, is uncertain\.  GUYANA THIRD TECHNICAL ASSISTANCE CREDIT (TAC) (2169-GUA) SAC1/TAC MATRIX2 SAC Actions Taken Actions to be Taken Actions to be Implementation of SAC Assisted by TAC Assistance/Outcome Policy Areas Prior to Board Prior to Second Taken Prior to TAC Presentation Tranche Release Third Tranche Release A\. Macroeconomic Framework Guyana continue to face (a) Favorable Bank (a) Favorable Bank (a) Favorable (a) Consultancy services (24 M/M), The Consultants helped develop a major macroeconomic assessment of the assessment of the Bank assessment equipment and supplies including a quarterly system of imbalances\. These stem macroeconomic macroeconomic of the vehicle, and training to improve the macroeconomic reports, provided largely from an framework framework including macroeconomic Monitoring and Coordinating Agency's valuable advice in various aspects inappropriate mix of competitiveness\. international framework, (MOF) capacity to monitor and analyze of macroeconomic policy\. The exchange rate fiscal, competitiveness\. including macroeconomic data and prepare reports assistance was useful at the time monetary and wage international on progress in the Government but lack of counterparts inhibited policies\. competitiveness\. structural adjustment program\. transfer of skills\. The system of macroeconomic reports developed by the consultants was discontinued following the departure of the consultant\. b) Computer equipment to the Statistical The combined TAC, UNDP and Bureau to increase capacity to collect, CDB assistance computerized the process, and report macroeconomic data SB for the first time, made it essential for monitoring and analyzing functional and enabled completion the Government's structural adjustment of current macroeconomic data program\. essential to the SAC\. Assistance mostly sustained\. Proposed ODA assistance will further strengthen national accounts and analytical capability\. > (D m Structural Adjustment Credit (2168-GUA)\. 2 This Matrix is taken from the TAC President's Report (P-5127-GUY) of March 23, 1990\. o>  SAC Actions Taken Actions to be Taken Actions to be Implementation of SAC Assisted by TAC Assistance/Outcome Policy Areas Prior to Board Prior to Second Taken Prior to TAC Presentation Tranche Release Third Tranche Release (c) Consultancy services (6 M/M) to Assistance successfully completed\. Bank of Guyana to provide a qualified procurement agent to ensure compliance with Bank Group guidelines and preparation of needed documentation for draw down of the SAC\. B\. Incentive Framework 1\. Domestic N/A Pricing 2\. Trade Policy N/A 3\. Other Incentives (a) Complete a (a) Consultancy services (6M/M) to the Study satisfactorily completed and std o Monitoring and Coordinating Agency to SAC conditionality met\. Consumption identify deficiencies in the application PSDAC/FISBEC include follow- taxes in and administration of consumption taxes up assistance to broaden tax base accordance with identified in such study including and remove disincentives to long terms of provision of a vehicle term investment in the economy\. reference satisfactory to the Association, and adopt a program satisfactory to the IDA to address deficiencies in the application and administration of consumption taxes identified in such study\. ow e ° X Ofr  SAC Actions Taken Actions to be Taken Actions to be Implementation of SAC Assisted by TAC Assistance/Outcome Policy Areas Prior to Board Prior to Second Taken Prior to TAC Presentation Tranche Release Third Tranche Release C\. Public Sector 1\. Central (a) Begin (a)Technical assistance to the Public Program satisfactorily initiated\. Reform Government implementing a Service Management Ministry in the SAC conditionality met\. Follow- program Office of the President in the on PAP assistance is completing Guyana's economic satisfactory to preparatory activities relating to the training and system and problems also stem the Association, development of Phase I of the Personnel equipment installation throughout largely from an over- to eliminate any Records Keeping Systems (PRKS)\. This central government\. extended and inefficient overlapping activity is contributing to the creation of public sector responsible functions and a unified and computerized PRKS within for a significant noncritical the pubic service as a precondition for deterioration of public vacancies the implementation of the next phase finances\. identified in the (Reform of Public Service Salary and management Employment Structure) of the Public audits\. Administration Reform Project (PAP) financed by IDA\. The purpose of establishing PRKS and a job classification system is to achieve a transparent system for evaluating, selecting, and monitoring the filling of public service posts\. The Central (a) Agreement on (a) End all central UNDP Consultant assistance, Government deficit ending all Central government current financed retroactively under the stood at an unsustainable Government transfers to public TAC, facilitated compliance with level of 27% of GDP in transfers to public enterprises from the actions required prior to Board 1988\. This is enterprises from 1990 budget onwards presentation\. attributable partly to \. the 1990 budget except for the TAC Assistance to strengthen the current transfer to onwards, except Guyana Electricity capacity of the PCS and SPS to public enterprises\. for the Guyana Corporation and for develop systems to monitor the Electricity maintenance financial and operational Corporation and expenditures of performance of public enterprises for maintenance public enterprises to was related to but not directly on expenditures of be fully divested\. the critical path of the SAC's public enterprises second tranche release\. The to be fully (b) PCS: Put into assistance was completed but not w 3 divested\. effect an action sustained\. o x  SAC Actions Taken Actions to be Taken Actions to be Implementation of SAC Assisted by TAC Assistance/Outcome Policy Areas Prior to Board Prior to Second Taken Prior to TAC Presentation Tranche Release Third Tranche Release (b) PCS: Agree on program and a corporate schedule for carrying strategy for the out the corporate PCS group with a strategy for the PCS view to group\. determining which enterprises should (c) Operating be kept within the procedures and Government's auditing systems control to meet satisfactory to IDA strategic/social to be established to objectives and monitor the financial which should be performance of offered for joint GUYMINE, ventures or for GUYSUCO, PCS, outright sale to the and transfers of 0' private sector\. targeted amounts from these enterprises to the Central Government\. D\. Public Sector Investment Program (PSIP) The long period of (a) Agreement on (a) Review rolling (a) Review of (a) Consultancy services (36 M/M), SAC conditionality met\. A rolling economic decline and Institutional PSIP satisfactory to rolling PSIP equipment and supplies including a four-year PSIP was put into place consequently inadequate arrangements IDA satisfactory to vehicle, and training to the State and guidelines prepared and asset maintenance has principally the IDA Planning Secretariat to improve PSIP training carried out in project resulted in poor staffing in the formulation and monitoring\. formulation, selection, appraisal, condition in the staffing in the monitoring and evaluation\. infrastructure services\. State Planning Assistance not sustained due to zD Therefore, the major Secretariat --for departure of trained staff focus of the PSIP will providing following change of 0 x a'  SAC Actions Taken Actions to be Taken Actions to be Implementation of SAC Assisted by TAC Assistance/Outcome Policy Areas Prior to Board Prior to Second Taken Prior to TAC Presentation Tranche Release Third Tranche Release be the rehabilitation of guidelines on government/public sector basic infrastructure that project preparation reorganization\. USAID assistance is critical for supporting to line ministries currently resuscitating TAC the program's objectives and government financed work\. of increasing exports agencies and for and private investment\. evaluation and The most urgent tasks is monitoring of to restore electricity projects\. supply to required levels\. (b) Improvement of external aid (b) Consultancy services (24 M/M), UNDP Consultant assistance, coordination equipment and supplies and training to finance retroactively under the through the the Ministry of Finance, Bank of TAC, facilitated compliance with services of and Guyana and the Ministry of Trade and actions required prior to Board advisor to the Tourism (MDIT) to facilitate presentation\. O Ministry of procurement procedures and Finance to disbursement of external aid\. The advisor to the MOF in maintain External Financial Inflows was continuous contact retained\. The computerized data with donors and to base on external financial inflows facilitate established by the Advisor fell into procurement and disuse upon his departure\. (Aid disbursement of coordination continues to be a funds provided by significant problem and was bilateral and addressed in a recent Bank multilateral CPPR)\. donors\. Economic decline has (a) SIMAP (a) Consultancy services (12M/M), SIMAP mitigated the most led to substantial equipment, supplies and training to the adverse effective of the reductions in living State Planning Secretariat and the adjustment\. TAC financed standards and the Ministry of Culture and Social consultants analyzed the (D provision of social Development (MCSD) to improve distributional effects of the v services\. Although targeting to the poor of SIMAP adjustment program, developed o successful programs\. procedures for assessing social  SAC Actions Taken Actions to be Taken Actions to be Implementation of SAC Assisted by TAC Assistance/Outcome Policy Areas Prior to Board Prior to Second Taken Prior to TAC Presentation Tranche Release Third Tranche Release implementation of the sector projects, including those of adjustment program SIMAP, and developed objective should help reverse this means to identify the target decline in the long run, population (LSMS)\. A follow-up some aspects of the IDB/SIMAP operation is likely to program could impose use the results of a second round additional stress on of the LSMS (1997) in its project certain segments of the selection criteria\. population\. In order to protect groups which are particularly vulnerable during the adjustment process, and engender public support for the program, a social amelioration program (SIMAP) has been developed\. "> 0 x  I  4   I MA T N :N i\., e : U! , J E t N I , \. I : I 9 \.3

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