73740 FY12 Ethiopia Country Portfolio Performance Review (CPPR) September 2012 List of Acronyms AAA Analytical and Advisory Activities ASC Audit Services Corporation BoFED Bureau of Finance and Economic Development BPR Business Process Re-engineering CAS Country Assistance Strategy CBDSD Capacity Building for Decentralized Service Delivery CMU Country Management Unit COPCU Channel One Project Coordinating Unit CPPR Country Portfolio Performance Review CT Country Team DA Designated Account EAREP Electricity Access (Rural) Expansion Program EEPCO Ethiopian Electric & Power Corporation EICTDA Ethiopian Information and Communication Technology Development Authority EMCP Expenditure Management & Control Sub Program ERA Ethiopian Roads Authority FCRP Food Crisis Response Program FM Financial Management FMR Financial Monitoring Reports FPPA Federal Public Procurement Agency FSP Food Security Program FTA Financial Transparency & Accountability GEQIP General Education Quality Improvement Program GFRP Global Food Crisis Response Program GPOBA Global Partnership on Output-Based Aid HAPCO HIV/AIDS Prevention Control Office IA Implementing Agency ICB International Competitive Bidding IDA International Development Agency IE Impact Evaluation IEG Independent Evaluation Group IFR Interim Financial Reports IPAM Institute of Procurement and Asset Managers ISR Implementation Status and Results LC Letter of Credit M&E Monitoring and Evaluation MAP II Multi-Country HIV/ AIDs Program MDG Millennium Development Goals MDTF Multi Donor Trust Fund MIS Monthly Information Summary MOE Ministry of Education MOFED Ministry of Finance and Economic Development MOH Ministry Of Health MS Moderately Satisfactory NLTA Non Lending Technical Assistance OFAGs Office of Federal Auditor General ORAGs Office of Regional Auditor General PAD Project Appraisal Document PBS Protection of Basic Services PCDP Pastoral Community Development Program PDO Project Development Objectives PIUs Project Implementation Units PMN PSCAP Managers Network PMTCT Prevention of Mother to Child Transmission PP Procurement Plan PPA Public Procurement Agency PPR Procurement Post Review PSCAP Public Sector Capacity Building PSE Procurement Services Enterprise PSNP Productive Safety Net Program RCBP Rural Capacity Building Project RF Results Framework RMS Results Measurements System RSDP Roads Sector Development Program SBD Standard Bidding Document SOE Statement of Expenditure SWAp Sector Wide Approach TA Technical Assistance TOR Terms of Reference TSWG Transport Sector Working Group TTLs Task Team Leaders ULGDP Urban Local Government Development Program UWSSP Urban Water Supply and Sanitation Program WA Withdrawal Application WaSH Water Supply, Sanitation, and Hygiene WSSP Water Supply and Sanitation Project Contents Executive Summary ......................................................................................................................... i Introduction ..................................................................................................................................... 1 I. PORTFOLIO VITAL STATISTICS ....................................................................................... 3 A. IDA Lending .................................................................................................................... 3 B. Core Knowledge Products (AAA Portfolio) .................................................................... 7 C. TF Portfolio ...................................................................................................................... 8 II. STATUS OF IMPLEMENTATION OF THE ISSUES AND RECOMMENDATIONS IDENTIFIED IN PREVIOUS CPPR FY09 .................................................................................... 9 A. Transparency and Accountability..................................................................................... 9 B. Turnover of Project Staff................................................................................................ 10 C. Financial Management and Procurement ....................................................................... 10 III. FINDINGS AND RECOMMENDATIONS OF THE FY12 CPPR .................................. 13 A. Cross-Cutting Issues ....................................................................................................... 13 B. Financial Management Issues ........................................................................................ 19 C. Procurement Issues ......................................................................................................... 21 D. Monitoring and Evaluation Concerns ............................................................................ 22 IV. NEXT STEPS .................................................................................................................... 22 ANNEX 1: ACTION PLAN TO ADDRESS BOTTLENECS IDENTIFIED BY THE FY12 CPPR ............................................................................................................................................. 24 ANNEX 2: M&E ANALYSIS...................................................................................................... 28 ANNEX 3: PROCUREMENT ANALYSIS ................................................................................. 31 ANNEX 3: NON-LENDING SERVICES AND ACTUAL DELIVERIES (FY10-12) ............... 36 ANNEX 4: ETHIOPIA TRUST FUND (TF) PORTFOLIO ........................................................ 37 ANNEX 5: LIST OF ACTIVE PROJECTS AS OF END-DECEMBER 2011 ........................... 41 ANNEX 6: PORTFOLIO INDICATORS – WORLD BANK ..................................................... 42 ANNEX 7: PREPARATION TIME ............................................................................................. 44 ANNEX 8: EXTENSION OF PROJECTS CLOSING DATE .................................................... 45 ANNEX 9: QUESTIONNAIRES TO REGIONS AND BANK TTLs ........................................ 46 ANNEX 10: BASIC PORTFOLIO DEFINITIONS ..................................................................... 60 Executive Summary 1. The FY12 CPPR was conducted as part of preparation of the new Ethiopia Country Partnership Strategy (CPS) FY13-FY16. The last CPPR had been completed in FY09 and country management considered this time to be an opportune moment to strategically reassess the critical risk factors of the portfolio, re-evaluate its development effectiveness and propose measures and actions that can be taken as a new IDA program is developed. The FY12 CPPR was undertaken as a joint exercise with the participation of the Country Team (CT), representatives of selected Project Implementation Units (PIUs), Government officials and, where relevant, development partners. 2. The objectives of the FY12 Ethiopia CPPR are three-fold: (i) help our partners to get more results on the ground; (ii) improve the quality and implementation performance of the Bank-assisted portfolio; and (iii) establish a more systematic follow-up mechanism for engagement on portfolio matters with the Government as well as within the Country Team (CT). The CPPR focus is on practical issues (“nuts and bolts�) of portfolio management and implementation; it covers IDA lending (grants and credits), Trust Funds and, to the extent possible, non-lending assistance (AAA and NLTA), including its alignment and use against the cost and timing of delivery. The FY12 CPPR covers the period from July 1, 2009 to December 31, 2011 (FY10 – mid FY12). 3. Ethiopia portfolio has been growing consistently during the FY10-mid FY12 adding additional US$800 million in net commitments. As of mid-FY12 (e.g., the end of December 2011), the total net commitments for Ethiopia were equivalent to US$4.3 billion, the second highest in the Africa Region, accounting for over 11 percent of total IDA commitments in the region with 26 active IDA projects. Twelve of these projects were co-financed with other development partners. Ethiopia Trust Funds (TFs) portfolio was also one of the largest in the Africa Region with US$642 million in commitments allocated in 68 TFs. While TFs were relatively well aligned with CPS objectives, there is still a need to shift towards a more programmatic and less fragmented trust fund portfolio. 4. Ethiopia portfolio has been performing relatively well despite substantial increase in size. The average disbursement ratio for all projects was 26 percent. There was only one problem project at mid- FY12 and two projects with three or more risk flags. Commitments at risk in Ethiopia were at 10 percent in FY11 down from 20 percent in FY10. Proactivity has increased but the IEG realism index remains low. On average it took 8.7 months to process the project from Concept Note to Negotiations, which is much shorter when compared to the Africa Region average of 26 months. However, there could also be some possible trade-off between fast processing and projects’ quality and their readiness for implementation as evidenced by many closing date extensions and lagging disbursements during the first three years of project implementation. Regarding the Bank’s analytical and advisory and technical assistance, the Bank needs to ramp-up its knowledge products especially in terms of its relevance and timeliness. 5. Despite these positive developments, the FY12 CPPR identified a number of constraints that should be addressed going forward so that good performance of Ethiopia portfolio is maintained. Many of the weaknesses are not new and have been acknowledged by FY09 CPPR. However, while some progress has been achieved, most of the same issues have continued to affect project implementation. The intent of this CPPR, therefore, is to recommend a few pragmatic and feasible solutions to address the top bottlenecks, with defined timeline and responsible entities. Accordingly, the table below lists key weaknesses grouped in three main categories: (i) cross-cutting issues; (ii) FM; and (iii) Procurement issues. The table also provides a concise summary of the proposed actions to address them. i Action Plan to Address Cross-Cutting Issues – Summary Issue Recommended Solutions Timeframe Risk Responsible Unit High & rapid Undertake a comprehensive civil service reform Medium to Long High MOFED staff turnover Undertake analysis to understand the cause and direction of staff movement Short Low WB w/MOFED Recruit of short term experts (including mobile experts) Ongoing Medium Relevant Sector Weak capacity at Establish professional associations in accounting and procurement, including: Medium to Long Medium WB, MoFED, PPA all levels of  Enhance the role of the Public Procurement Agency (PPA) in capacity building; government  Establish the Ethiopian Institution of Procurement & Asset Managers (EIPAM);  Build capacity of the Public Procurement and Property Services Agency (PPDS) as a center of excellence.  Accelerate adoption of accounting standards Capacity building through regular & specialized training: Ongoing Low WB, FM &  Design customized training plans Procurement Agencies,  Establishing a module of training PIUs  Support EMI and Regional Training Institutions to deliver standardized procurement courses Continue with FM and procurement reviews Ongoing Low WB, MOFED, PIUs Low ownership, Involve regional focal person throughout the project cycle; deploy incentives to encourage Medium to Short Medium MoFED, BOFEDs & slow follow-up from the regions. Fed. Ministries implementation Clarify MOFED’s role & responsibilities in resolving implementation constraints: Medium to Long High MoFED & BOFEDs and follow-up at  Establish a one-stop-shop within MOFED (with adequate M&E system); regional level  Replicate COPCU at regional level.  MOFED to undertake own project implementation review once a year. Insufficient Establish Managers Network, Sector Groups and Finance Managers Club; facilitate regular Short to Medium Low Bank and PIUs sharing of meetings knowledge & Start quarterly portfolio meetings chaired by MOFED and attended by representatives of the sector Short Low WB, MOFED, Fed. experience concerned, MoFED, Bank and participating donors Ministries Hold annual workshop to evaluate the actions recommended by the CPPR Short Low WB, MoFED Prepare a directory of project contacts & update regularly Short Low WB w/PIUs Weak Project Use readiness filters more systematically for all projects Short Low WB w/MOFED Management Develop clear steps and service standards for preparation and effectiveness process Short Low WB Start preparation of key project documents (e.g., procurement and financial manuals; feasibility Short Low/ WB, MOFED, PIUs studies, safeguards documents) and start procurement process during preparation; encourage using Medium PPFs Develop PIM template & update PIMs regularly Short Low WB, MOFED, Fed. Ministries Develop and implement service delivery standards, document quality assurance and Short Low MOFED, Fed. accountability systems Ministries, PPA ii Action Plan to Address FM Issues – Summary Issue Recommended Solutions Timeframe Risk Responsible Unit Cumbersome FM Standardize the FM Manuals for all donors and gradually for all Bank projects disbursing at federal, Medium to Long Medium WB, MoFED procedures regional and woreda level Simplify reporting at local level Medium to Short Low WB Involve ZOFEDs to verify FM data Medium to Long Medium MOFED, ZOFEDs Qualified and More frequent field visits and financial/procurement reviews; Short Low WB delayed Audit More active engagement from MOFED, including: Medium to Long High MoFED, BOFEDs Reports  Issue a circular stating that qualification issues should be resolved within 6 months period following an audit.  Communicate with Channel Two implementers to ensure that audit findings and agreed actions are being addressed.  Instruct auditors of projects to report on the status of implementation of previous years audit findings.  Use punitive measures where the recommendations have not implemented or are at less than satisfactory (e.g., reduction of block grants for regions and woredas). Outsource some of the audits to private sector away from Audit Services Corporation. Medium to Long High MoFED Develop its own mechanism of monitoring submission of the audit reports (could be done in a one- Medium to Long High MoFED stop-shop within MOFED supported by COPCU-like structures at regional level; also applies to monitoring dormat/inactive DAs). Continue with the existing practice of holding block grants if appropriate reports are not submitted Ongoing Low MoFED on time. Significant cash Increase use MFIs as an alternative mechanism to administer the cash at woreda level. Long Medium WB, MOFED and unsettled Establish a policy for implementers to make refunds to related DA if the funds are not accounted Medium Medium MOFED advances at for within three months regions and Conduct cash counts and verify supporting documentation where cash is more than four months Short Medium MOFED internal woredas unaccounted for. No further cash should be disbursed if previous advances are not accounted for. auditors On pilot basis, initiate joint preparation of Annual Work Plans, Annual budgets and Procurement Short to Medium Medium WB, MOFED, Sectoral Plans Ministries, PIUs Dormant/Inactive Capacity building (through training and hands-on assistance in preparing W/A) and regular reviews Short to Medium Low WB, MOFED, Sectoral Designated of project performance across all stakeholders (Bank, MoFED, Ministries). More broadly, Ministries, PIUs Accounts institutionalize of Bank project FM training at a reputed training institute in Addis (as has been done for procurement training at EMI). MoFed to designate staff per sector and within MoFED to monitor DA activities and ensure that a Medium to Long Medium MoFED WA is submitted once every month at the minimum. Ineffective/weak Introduce risk based internal audit Long High MOFED internal audit & Strengthen PFM reform on internal audit including professionalization of internal audit in Long High MOFED control functions government. Hire an international internal auditor to work with MOFED internal audit for a couple of years to Medium to Long High MOFED train staff in internal audit skills, which can later on be replicated in other sector ministries and regions subsequently. iii Action Plan to Address Procurement Issues – Summary Issue Recommended Solutions Timeframe Risk Responsible Unit Different regional Finalize and disseminate the public SBDs and procurement manuals Long High MOFED Proc. Standards Disconnect On pilot basis, initiate joint preparation of Annual Work Plans, Annual budgets and Procurement Short Low WB, MOFED, Sectoral between AWP & Plans Ministries, PIUs PPs Delays in Start advanced procurement while the WB loan is being prepared and processed for approval; Short Medium MOFED, WB Procurement Develop simple and easy to understand guidelines standardized manuals, SBDs and adequately Short Low WB Actions disseminate including in the local language; Conduct procurement clinics with woredas on a regular or need basis focused on simple Medium Low MoFED, BOFEDs, WB procurement procedures used at the local level Develop and implement service delivery standards, document quality assurance systems and Short Low MOFED, Fed. accountability systems to, inter alia, reduce delays in WB issuing “no objections.� Ministries Improve follow-up on contracts signing after the Bank no objection, including better back-up Short Low WB system when Bank staff on mission/leave. Action Plan to Address M&E Issues – Summary Issue Recommended Solutions Timeframe Risk Responsible Unit Weaknesses in Hire an M&E Specialist in CO Medium Medium/ WB using M&E as an High effective Ensure there is a designated M&E specialist for the projects as agreed in the PAD. Ongoing Low WB management tool Continuous training and capacity building in M&E areas for the Bank staff (TTLs) as well as GOE Ongoing Low WB implementers Integrate project M&E into GOE systems (including database); use local knowledge in developing Ongoing Low WB reporting formats. Use Ethiopia Data Quality Assessment Framework as a management tool not as an audit tool. Short Low WB TTLs to make more use of project restructuring if data is hard to obtain and/or indicators are Ongoing Low WB irrelevant. iv Ethiopia Country Portfolio Performance Review (CPPR) Introduction 1. The FY12 CPPR was conducted as part of preparation of the new Ethiopia Country Partnership Strategy (CPS) FY13-FY16. The last CPPR had been completed in FY09 and country management considered this time to be an opportune moment to strategically reassess the critical risk factors of the portfolio, re-evaluate its development effectiveness and propose measures and actions that can be taken as a new IDA program is developed. The CPPR provides a valuable retrospective that contributed lessons learned, as well as a forward-looking exercise that provides recommendations for future lending. 2. The objectives of the FY12 Ethiopia CPPR are three-fold: (i) help our partners to get more results on the ground; (ii) improve the quality and implementation performance of the Bank-assisted portfolio; and (iii) establish a more systematic follow-up mechanism for engagement on portfolio matters with the Government as well as within the Country Team (CT). The CPPR focus is on practical issues (“nuts and bolts�) of portfolio management and implementation;1 it covers IDA lending (grants and credits), Trust Funds and, to the extent possible, non-lending assistance (AAA and NLTA), including its alignment and use against the cost and timing of delivery. The FY12 CPPR covers the period from July 1, 2009 to December 31, 2011 (FY10 – mid FY12). 3. With these objectives, the FY12 CPPR started with reviewing the relevance of the FY09 CPPR recommendations three years later, examined the progress in implementation of the recommendations and their impact, as well as evaluated the follow-up mechanism that was put in place for the implementation of the previous CPPR’s recommendations. Key cross-cutting implementation and fiduciary issues were identified and recommended actions were proposed with special focus on systemic constraints. The quality of the project results frameworks, monitoring and evaluation (M&E) systems, and actual results reporting were also examined with regards to the progress made in achieving project results and the extent to which these results contribute to CAS outcomes. CPPR Process 4. The FY12 CPPR was undertaken as a joint exercise with the participation of the CT, representatives of selected Project Implementation Units (PIUs), Government officials and, where relevant, development partners. This is in line with the objective of closely collaborating with the relevant counterparts and promoting strong government ownership that is critical in building capacity as well as ensuring that the proposed measures and actions are implemented in the future. 5. The Core CPPR Team (comprising portfolio manager, fiduciary, safeguards and M&E staff had extensive and up-front engagement with operational staff in the CT. This was necessary in order to set up the appropriate analytical boundaries of the exercise and to help ensure that the findings and recommendations are useful for concerned parties. To this end, a Concept Note Review meeting was 1 As part of CPS preparation, a Country Assistance Strategy Completion Report (CAS CR) was also prepared. In this context, there was a clear distinction in scope between the CPPR and CAS CR, where the latter focused on results (CAS outcomes), relevance, alignment and contribution of the Bank instruments and activities to the Government’s poverty reduction strategy. 1 organized on October 25, 2011 to discuss and seek guidance on: (i) proposed approach; (ii) key cross- cutting issues affecting portfolio performance; and (iii) proposals for projects’ PIUs to be interviewed by the consultants. Based on the agreed process a Desk Review of the portfolio (including lending and TFs) was undertaken covering FY09-FY11 (e.g., PADs, Aide Memoires, ICRs, relevant fiduciary project papers, financing grant agreements, ISRs, monthly portfolio reports and relevant IEG Evaluations). Attention was given to thematic and systemic implementation constraints as well as key strategic management issues. Examination of the scope of supervision reporting, including the quality of the MIS and ISRs was also done. 6. This was followed by two workshops in Addis Ababa in early February 2012. The workshops were attended by higher-level Government officials from key Ministries (e.g., Ministry of Finance and Economic Development, Agriculture, Water and Energy, Transport, Industry, Federal Affairs, etc.). This was important in the context of Ethiopia where the program delivery is highly decentralized. The workshops validated the findings of the desk review. Subsequently field visits were undertaken to ensure early-on engagement and discussions with the selected PIUs and regional/woreda-level Government officials for the purpose of: (i) consulting the project implementers on the constraints they are facing; and (ii) seeking their proposals for possible solutions and ways of addressing the issues. Structure of the FY12 CPPR Report 7. The document comprises the following main sections: • Chapter I: Portfolio Vital Statistics – Portfolio overview and analysis. • Chapter II: FY09 CPPR Findings and Recommendations – Status of the actions recommended by the previous CPPR. • Chapter III: FY12 CPPR Findings and Recommendations – Analysis of top cross-cutting, financial management (FM), procurement, and M&E issues and proposed solutions to address them. • Chapter IV: Next Steps • Annexes 2 I. PORTFOLIO VITAL STATISTICS2 A. IDA Lending 1. As of the end of December 2011, the total net commitment for Ethiopia was equivalent to US$4.26 billion, the second highest in the Africa Region, accounting for close to 11.3 percent of total IDA commitments in the region with 26 active IDA projects (Annex 5).3 Ethiopia Trust Funds (TFs) portfolio was also one of the largest in the Africa Region with US$642 million in commitments allocated in 68 TFs as of June 1, 2012 (Annex 4).4 Nine new projects were added to the portfolio between FY10- midFY12, of which one was a regional project and four were additional financing (Table 1). Out of the total of 26 active projects, 12 were co-financed with other development partners (DPs). 2. Out of the total IDA-only commitment of active projects in the portfolio, close to a half focused on infrastructure, about one-third supported basic social services (Productive Safety Net Project – PSNP and Protection of Basic Services – PBS) and the remainder was split among supporting agriculture, private and financial sectors and capacity building in the public sector. Chart 1: Sector Distribution of Ethiopia Portfolio (FY10-mid FY12) Tourism, 0.8% Urban, 6.6% Water, 7.5% Agric, 14.4% Social, 33.9% Education, 1.2% Energy, 10.8% Financial, 0.4% Health, 1.4% Roads, 19.2% Public, 3.4% Private, 0.4% 3. During the FY10-mid FY12, the number of projects in the Ethiopia portfolio has decreased from 31 to 26 despite net commitments growing by US$800 million. As a result, the size of the new projects approved during this period has increased reaching on average US$234 million. This trend is in line with the selectivity objective and strategic direction laid out in the FY09 CAS. 2 See Annex 10 for basic portfolio definitions. 3 Two of the projects (e.g., financial sector and HIV/AIDS closed on 30 September 2011, but they were still in grace period on 31 December 2011. 4 Calculations exclude HIPC TFs. 3 Table 1: Ethiopia Portfolio - Structure (FY10-midFY12) PORTFOLIO STRUCTURE FY10 FY11 Mid-FY12 Number of projects (at end-FY) 31 29 26 Net commitments (end-FY, in US$mln) 3,691 4,678 4,260 - Agriculture 551 599 451 - Governance/Public Sector 256 150 130 - HD (Health, Education) 135 150 105 - Infrastructure 1,514 2,035 2,047 - Private/Financial Sector 40 74 67 - Social 1,195 1,670 1,460 New projects in FY10 1) Productive Safety Nets III - PSNP New project in FY11 2) Agricultural Growth Program – AGP 3) Protective Basic Services II (PBS) Additional Financing New project in FY12 4) Urban Local Government Development (ULGDP) Additional Financing 5) PSNP (APL III) Additional Financing 6) Urban WSS Additional Financing 7) Women Entrepreneurship Development 8) Elect. Network Reinforcement & Expansion* 9) Regional Eastern Africa Power Pool Project (APL1)* (*) scheduled for Board presentation in Q2 and Q3 FY12 4. Portfolio Risk and Proactivity. In terms of problem projects, there was only one such project in Ethiopia portfolio at the end-December 2011 (e.g., Tourism project suspended since November, 2010) and two projects with three or more risk flags (e.g., Nile Basin Initiative: ET-SU Interconnection Project and Capacity Building for Agriculture Service Project).5 While these statistics compare relatively well with the Africa region averages, unfortunately, the Africa Region has also the highest number of problem projects across the Bank.6 Table 2: FY10-FY11 Comparison of Selected Risk and Proactivity Indicators FY11 Commit at Risk (percent) Realism (percent) Proactivity (percent) World Bank 14 54 60 Africa Region 20 34 76 Ethiopia 10 40 100 FY10 Commit at Risk (percent) Realism (percent) Proactivity (percent) World Bank 18 68 70 Africa Region 27 44 68 Ethiopia 20 31 67 FY09 Commit at Risk (percent) Realism (percent) Proactivity (percent) World Bank 16 72 72 Africa Region 26 55 73 Ethiopia 9 46 100 Commitment-at-Risk: The commitment value of a project that is at-risk of not meeting its development objectives. Includes commitments associated with both actual and potential problem projects. Realism Index: The ratio of actual problem projects to total projects-at-risk. Proactivity Index: The proportion of projects rated as actual problem projects twelve months earlier that have been upgraded, restructured, suspended, closed, partially or fully canceled. Source: http://intresources.worldbank.org/INTSARCOSUFM/1693579-1127403384839/20657237/Basicportfoliodefinitions.pdf 5. Commitments at risk in Ethiopia were at 10 percent in FY11 down from 20 percent in FY10 (Tables 2 and 3), which compares favorably with the AFR region performance. Proactivity has increased indicating that actions have been taken by the responsible Task Team Leaders (TTLs) to address the 5 The Bank uses a system of risk flags to identify potentially risky projects. Out of 12 total flags, five are assigned based on certain automatic criteria and seven are assigned by TTLs during the preparation of ISRs. 6 Out of 246 problem project Bank-wide in May 2012, Africa Region had 55, LAC had 51 and EAP had 45. Whilst the AFR problem projects number is largest, it represents 10.7 percent of the total projects, indicating the problem is wide-spread across the regions. 4 issues leading to upgrading the ratings of the projects. However, the Realism index for Ethiopia, as determined by the IEG, is well below that for the World Bank. Low realism index is corroborated by the fact that close to 55 percent of the projects in Ethiopia portfolio are rated as “Moderately Satisfactory� and projects rated MS have higher chance of being downgraded by IEG (according to the most recent presentation made by the Regional Operations Unit). There could be several explanations for low realism index and dominance of MS rating in Ethiopia portfolio, including unwillingness of the project TTLs to communicate tough messages to the Government, toning down the results of project evaluations and assessments, as well as strong pushback from the Government to downgrade the projects. Until project teams assess projects with candor and tough scrutiny and reflect this in ISRs, realism will remain low. Going forward, the Ethiopia CT will need to find a way to address this issue and the report will provide some recommendations. Table 3: Ethiopia Portfolio - Vital Statistics (FY10 – mid FY12) PROBLEM PROJECTS FY10 FY11 Mid FY12 Number of problem projects 3 0 1 Commitment at risk 9 percent 20 percent 10 percent # of projects with 3 or more risk flags 1 1 2 PREPARATION & IMPLEMENTATION CN to Signing Minutes of Negotiations (months) 8 6 12 Signing to Effectiveness (months) 3 2 n/a Average project age (years) 5.0 4.9 4.7 Average number of TTLs per active project 0.6 0.6 0.7 Average number of projects managed by Bank TTLs 1.6 1.6 1.4 OTHER DATA (as of Dec. 2011) Number of projects older than 5 years 7 Number of projects with extensions (as percent of total) 50 percent Average percent disbursed at time of extension 26 percent 6. Project processing. On average it took 8.7 months to process the project from Concept Note to Negotiations, which is relatively shorter when compared to the Africa Region average of 26 months.7 On the one hand, one might consider it to be a positive trend to bring projects to our clients faster. However, there could also be some risks in rushing through the preparatory process, especially for highly complex infrastructure projects that dominate Ethiopia portfolio. One should always be mindful about possible trade-off between fast processing and projects’ quality and their readiness for implementation. While this might not be the case for all the projects in Ethiopia portfolio and there might be some other elements at play (such as disbursement profiles for some sectors with slow disbursements in the initial stages of project implementation), it is worrisome to see that more than half of the Ethiopia projects had closing date extensions of the implementation period due mostly to slow start up and delayed actions in initiating various key procurement activities.8 This is further evidenced by the fact that disbursements lagged behind especially during the first three years of project implementation. Data compiled for the review period shows that for projects with extensions, the average disbursement level (amount disbursed divided by total commitment) at the time of extension was about 26 percent. Further, an average age of the project in Ethiopia portfolio is close to 5 years with seven projects with older than 5 years. 7. TTLs load-work and turnover. The ratio of TTLs per project ranged 0.6 to 0.7 during FY10- mid FY12, which is similar to the Africa Region ratio of 0.6 for FY11. Each TTL on average managed 7 The only project approved by the Board by end-Dec 2011, the Agricultural Growth Program, took about a year to prepare, which is much higher than other new projects approved in the previous two fiscal years. The analysis of the documents available on files indicated that the project was relatively high risk and complex. 8 Analysis shows that on average, projects in Ethiopia portfolio have a six-moth gap between effectiveness and first disbursement. This may indicate that projects are being approved and declared effective before they are ready to be implemented. 5 1.5 projects in the last two fiscal years and projects were mostly supervised by TTLs based in the country office with a few managed from Headquarters in Washington. This practice has helped improve client responsiveness and allowed local knowledge to be applied in project design and implementation support. Table 4: Disbursement rate and other statistics (in percent, FY10 to end-Dec. 2011) Sectors FY10 FY11 Mid FY12 Average Disbursement rate Agriculture 13.3 37.8 7.3 19.4 Agriculture 13.3 37.8 7.3 19.4 Gov/Public Sector 20.3 90.4 44.3 43.8 Gov/Public Sector 20.3 90.4 44.3 43.8 Health/Education 23.3 12.4 44.0 26.6 Education 2.4 20.8 11.6 Health 23.3 17.4 55.6 30.9 Infrastructure 17.2 31.9 13.6 21.2 Energy 13.6 33.8 13.5 20.3 Roads 27.1 40.2 23.5 30.9 Water 8.8 21.6 6.2 12.5 Private/Financial 15.7 47.0 9.1 23.9 Financial 1.9 55.7 0.4 22.8 Private 22.6 29.5 26.7 25.3 Social 71.9 45.6 24.7 47.6 Social 71.9 45.6 24.7 47.6 Overall Portfolio 23.0 36.0 34.0 (for FY12) 26.0 Channel 1 48.7 40.9 18.0 34.6 Channel 2 16.0 34.6 17.8 23.0 FY10 FY11 Mid FY12 Cumulative Disbursed (end FY, US$mln) 1,846 2,514 2,424 Cumulative Disbursed against Total Net Commitments (end FY):  Ethiopia 50% 54% 57%  Africa Region 40% 34% 38% 8. IDA Disbursements. The average disbursement ratio (i.e., total amount disbursed in the fiscal year divided by the undisbursed balance at the beginning of the fiscal year) for all projects from FY10- December 2011 was roughly 26 percent. Most projects in the active portfolio suffered from low disbursement levels during the first 3 years of implementation due to slow start up.9 Furthermore, the average disbursement ratio for all active projects has been relatively high in Ethiopia: 23 percent in FY10, 36 percent in FY11 and 34 percent in FY12. To further improve disbursement performance, Country Office has recently introduced regular portfolio review meetings to discuss problems affecting the portfolio, which should help address and resolve some of the disbursement bottlenecks going forward. 9. An important distinction in the context of Ethiopia portfolio is between Chanel 1 projects (i.e., disbursing through MoFED fully utilizing country systems) and Chanel 2 projects (i.e., disbursing outside of MOFED through other implementing agencies and designated accounts). Data shows (see Table 4) that Chanel 1 projects had higher disbursement ration than the Channel 2 projects in two out of the last three fiscal years. This is consistent with the fact that MoFED had been relatively better staffed and had closer interactions with the Bank when it comes to processing disbursement applications and requests. The CT and the government should consider moving projects currently disbursing through Chanel 2 to Chanel 1 modality (by using budget support or the newly approved P4R), which would help increase IDA disbursements as well as to increase the use of the country systems. 9 Projects that experienced slower-than-planned pace of disbursements during the first 3 years of implementation seem to be clustered in financial and private sector development; energy; and water (see Chart 2). 6 10. Finally, data compiled by the Africa Region and reported in the “Monthly Operational Summary� shows that projects in the Ethiopia portfolio performed better than the Africa Region average in terms of the level of funds disbursed against total commitments. While this is not a substitute to the disbursement ratio, it provides a different perspective of the portfolio performance. Chart 2: Disbursement Ratio in the first 3 years of implementation, by sector (FY10- Dec. 2011) 30% 25% 20% 15% IDA TF 10% IDA+TF 5% 0% B. Core Knowledge Products (AAA Portfolio) 11. A “Core Knowledge Products� evaluation FY08-FY11 for Ethiopia conducted by Africa Operations Services Department (AFTOS) revealed the following findings (see Annex 3 for a list of non- lending products in FY10-12):  US$ 5.2 million in was allocated for core knowledge products (for systematically recorded Economic Sector Work - ESW and Technical Assistance - TA) during the CAS period FY08-FY11. Of this, eighty percent (80 percent) of the budget allocated for ESW and 20 percent for TA.  46 percent of the AAA budget was linked to CAS Strategic Objective 1 (Fostering economic growth), of which the majority was linked to macroeconomic, growth, public finance and private sector related areas. These areas received much less financial support than others.  45 percent of the AAA budget was linked to CAS Strategic Objective 2 and 3 (Improving access and quality of basic services and reducing vulnerabilities), the majority of it linked to education and social services related areas.  The CAS Strategic Objective 4 (Fostering improved governance) was the one with less knowledge budget support (9 percent).  53 recorded non-core knowledge products produced during the CAS period FY08-11, including briefs and knowledge notes. Impact evaluations were also included here. Although impact evaluations were categorized as core knowledge products they were not systematically recorded in the monthly portfolio reports. 7 12. As clearly indicated by the CAS Completion Report (CAS CR), feedback from the Client Survey and multi-stakeholders consultations conducted as part of the CPS process, the Bank needs to ramp-up its knowledge products (including analytical, advisory and technical assistance) especially in terms of its relevance and timeliness. In determining the focus of future non-lending assistance priority should be given to Economic and Sector Work according to three criteria: (i) part of the core country diagnostics that needed regular updates; (ii) on-demand policy notes to aid the Government’s policy making discussions; and (iii) covering innovative or difficult areas of development. In addition, WBG should strive to engage more actively with the local think tanks and academia in the process of designing and conducting the analytical work. C. TF Portfolio 13. Ethiopia Trust Funds (TFs) portfolio is one of the largest in the Africa Region with US$642 million in commitments allocated in 68 TFs as of June 1, 2012.10 Recipient-executed TFs account for 38 percent of the total number of active TFs and 95 percent of the total commitments. Two donors, UK and EU, provide almost three quarters of total contributions (61 and 12 percent respectively). Ethiopia TF portfolio is well aligned with the WB program with a clear focus on social sectors. During the CAS period (FY08-12) the majority of the TFs (91 percent) have been co-financing IDA projects (mainly in education, health and social services). In terms of contribution to specific CAS strategic objectives, the TF portfolio during the CAS period (FY08-12) has been highly concentrated with approximately 83 percent of the TF financing being linked to strategic objective 2 (improving access and quality of basic services), 9 percent linked to strategic objective 1 (fostering economic growth), 7 percent linked to strategic objective 3 (reducing vulnerability), and only 1 percent linked to strategic objective 4 (fostering improved governance). 14. While TFs are relatively well aligned with CAS objectives, there is still a need to shift towards a more programmatic and less fragmented trust fund portfolio. On average, during FY10-FY12 Q3, programmatic TFs accounted for only 20 percent of all disbursements. The average size of a grant under a Bank-Executed trust fund was US$774,000; however close to a half of such grants were smaller than US$250,000. Recipient-Executed trust funds tend to be larger in size (US$24million on average) particularly those associated with the education, PBS and PSNP operations. Ethiopia also has a large portfolio of Financial Intermediary Funds (FIFs), where the Bank only acts as a trustee and transfers funds to implementing agencies outside the Bank. The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM)11, the largest FIF in the Bank, had Ethiopia as its largest beneficiary in FY10. 15. The size of Ethiopia’s TF portfolio has been growing. This is reflected in the BETF share of total Bank budget resources (Bank net administrative budget plus BETFs) in support of the Bank’s work program rising from 55 percent in FY08 to 66 percent in FY11. TF are increasingly being used to cover staffing costs and Ethiopia is with one of the countries in the Africa Region with one of the largest numbers of TF-funded coterminous staff. 10 Calculations exclude HIPC TFs. See Annex 4 for details. 11 In addition to the GFATM, Ethiopia is a major recipient of other FIFs such as the Consultative Group on International Agricultural (CGIAR), the Climate Investment Fund, the Global Alliance for Vaccines and Immunization (GAVI), the Global Agriculture & Food Security Program (GAFSP), the Global Fund to Fight AIDS, Tuberculosis and Malaria, the Global Environment Facility (GEF), the Special Climate Change Fund (SCCF), and the Least Developed Countries Fund for Climate Change (LDCF). 8 II. STATUS OF IMPLEMENTATION OF THE ISSUES AND RECOMMENDATIONS IDENTIFIED IN PREVIOUS CPPR FY09 16. The last CPPR for Ethiopia was prepared in February 2009. The objectives of the FY09 CPPR were to: (1) assess performance in implementing the portfolio and highlight emerging lessons; (2) identify project-specific and portfolio-wide systemic issues that adversely affect implementation progress and results; and (3) agree on a joint action plan for the Government of Ethiopia and the Bank to address risks to portfolio performance and outcomes. 17. The FY09 CPPR identified several portfolio-wide risks factors that were likely to have adverse impacts on implementation and results under the headings of four areas: (a) transparency and accountability, (b) financial management, (c) procurement, and (d) M&E. For each of these areas, a number of actions were agreed between the Bank and Government, including the implementation of training programs to address the capacity constraints in project implementation. This section will summarize the issues identified in the FY09 CPPR and review the implementation and relevance of key recommendations three years later. A. Transparency and Accountability 18. Weak transparency and accountability was identified in the FY09 CPPR as having adverse impacts on implementation and results. The current status of portfolio implementation, however, indicates that actions are now actively ongoing (mainly under PBS and Public Sector Capacity Building Project - PSCAP) with some, albeit limited, success to improve public sector accountability. Several activities are underway to: (a) help improve citizens’ transparency of budget and expenditure information at the national, regional and woreda levels, and improve citizens’ understanding of, and participation in , the planning and monitoring of service delivery; and (b) strengthen broader public sector accountability initiatives, including establishment and improvement of local institutional structures to encourage citizen participation in their local government processes. 19. As a result of these efforts, progress has been achieved in the “rules-based and transparent� approach that was adopted when allocating Federal Block Grants to regional governments and woredas. The allocations made recently were within 10 percent of the established levels in the proclaimed budget. Regional governments continue to use customized templates for their budgets and train citizens on budgeting including more specialized Budget Literacy Training. Active dissemination of budget information over various media (including radio) has also contributed to strengthened transparency.12 While some improvements have been reported in more effective and responsive planning to meet service delivery priorities identified by citizens,13 nonetheless the levels of knowledge differed dramatically between respondents in cities who knew their city administration budgets (37 percent) and rural respondents who knew their woreda budget (9 percent). Just under half reported that they feel powerless 12 According to the recent data from the Woreda and City Administrations Benchmarking Survey IV Citizens’ Report Card (November 2011), proportion of citizens who know what taxes and fees they are legally required to pay increased from 60 percent in 2008 to 81 percent in 2011; those who know their woreda budget and strategic plan increased from 13 percent and 17 percent in 2008 to 20 percent and 19 percent in 2011 respectively; citizens who know council meetings are open to the public increased from 11 percent in 2008 to 32 percent in 2011; and those who are personally consulted on development issues increased from 17 percent to 20 percent over the same period. 13 Public participation in all cities has improved, starting with planning. Indeed, 16 cities have more than doubled the number of citizens groups participating in planning forums under the UGDP. Previously cities did not systematically consult with citizens in determining priorities. “This is the first project in our city for which city officials consulted with the people. In the past, officials made decisions of how to use our money without even informing us,� said a citizen of Adigrat. 9 in holding service providers to account. These results clearly indicate that a lot more needs to be done in this area going forward. 20. Similarly, progress achieved in improving overall accountability is mixed. For example, despite substantial financial involvement through PBS and PSCAP, the public perception of GOE performance in providing public services has not improved substantially and in some cases has declined. According to the latest data,14 share of population expressing total satisfaction with water supply has fallen from 61 percent in 2008 to 56 percent in 2010; citizens who were very confident of their local government's ability to address health facilities quality fell from 27 percent in 2008 to 14 percent in 2011; farmers that found extension service workers very useful has also fallen from 52 percent in 2008 to 35 percent in 2010. These results clearly require a shift from access to quality of public services. B. Turnover of Project Staff 21. The FY09 CPPR assessed that one of the top issues affecting implementation of GOE budget as well as donor-financed operations pertained to high and rapid turnover of project staff. PIUs affected mostly by this phenomenon included the Ethiopian Roads Authority (ERA), Ministry of Water Resources and Ministry of Agriculture and Rural Development. Staff turnover had to do with many factors including inappropriate monetary incentives (i.e., poor civil service salaries as well as low per diem rates), non-monetary incentives (i.e., merit-based employment; career development, etc.) as well as remoteness of woredas, which negatively affects quality of life of young aspiring graduates. Due to lack of a comprehensive civil sector reform to address the problem, some donors supplemented the salaries of project staff, which had resulted in negative outcomes since the higher salaries distorted pay scales and created negative behavior by staff that had not been afforded the same incentives. 22. Further, high and rapid staff turnover exacerbated the problem of already weak capacity. The government recommended addressing this issue with business process re-engineering (BPR) but it appeared that this has not solved the problem and anecdotal evidence suggest in might have actually worsened the situation. According to MOFED, a capacity review has already been undertaken and the process of assessing the recommendations is currently ongoing. These issues continue to affect project performance to date, which clearly calls for GOE to urgently implement a more comprehensive civil sector reform. C. Financial Management and Procurement 23. Absence of Readiness Filters. FY09 CPPR recommended a series of readiness filters for the various stages of the project. For the new projects approved during FY10-mid FY12 it appears that many of the filters were used during the preparation; however, the filter pertaining to “zero conditions for effectiveness� was not achieved, which in some cases is not without merit.15 Overall, while the filters were useful in terms of quality at entry, there is still work to be done especially in terms of strict and systematic application of the filters during project preparation. 14 Woreda and City Administrations Benchmarking Survey IV Citizens’ Report Card (November 2011). 15 Namely, the FY10 PSNP APL III had four effectiveness conditions: (a) establishment of regional information centers; (b) use of PASS in relevant regions and woredas; (c) adoption of revised implementation manual; and (d) consolidation of the PSNP work program and budget for EFY2002. The Agricultural Growth Program approved in FY11 had three effectiveness conditions, all of them relatively standard: (a) adoption of the implementation, procurement and FM manuals; (b) establishment of steering and technical committees at the federal level; and (c) establishment of a Federal Coordination Unit with core staff (Coordinator, FM and procurement). 10 24. Weak Fiduciary Capacity. Strengthening of the accounting profession in Ethiopia was considered as one solution to address the weak fiduciary capacity. Due to this weakness, bi-monthly video conferences with the Bank’s disbursement hub office in Johannesburg were conducted to discuss disbursement problems. Occasional training in Bank policies and procedures was also implemented, including quarterly IFR preparation clinics for projects especially with new FM staff at federal level and annual two-week FM and disbursement training. 25. To further mitigate this problem, the four FM specialists at the Country Office provided full FM support to government counterparts and worked with systems that were capable of tracking advances more accurately. The exercise resulted in having audit reports and IFRs submitted in a timelier manner. FM reviews were also conducted at the beginning of each fiscal year based on the risk level of each project (partial or full). The reviews were done by the FMS with the assistance of consultants through field visits to selected regions and a number of woredas. These visits helped partly strengthen capacity at the local level through knowledge sharing on best accounting practice. It also sensitized local staff on the need to follow agreed guidelines to minimize disbursement delays. These activities need to continue. 26. The establishment of a professional body of accountants that would monitor standards and training of qualified accountants in Ethiopia was also deemed necessary to strengthen fiduciary capacity. The initiative has been led by MOFED and has gained some momentum especially in FY11 and FY12. However, whilst the process of setting up the accounting body started well, the next stage of passing the draft laws leading to its creation has stalled. The establishment of an accounting profession will, in addition to producing well qualified staff, promote better understanding of basic bookkeeping and accounting concepts. Thus this task should be given priority by MOFED and collaboration between the Bank and the federal government should continue to address this matter and ensure that the laws are submitted to Council of Ministers and subsequently to House of Representatives for approval.16 27. With regards to procurement, the FY09 CPPR noted the need for strong project procurement management and effective oversight by the decentralized agencies at the federal and sub-national levels. It was noted, however, that the required actions for capacity building were lagging behind and that a Technical Working Group on procurement was necessary in order to support the procurement reforms on real time basis. The Public Procurement Agency (PPA) was envisaged as the entity that would regularly assess compliance by implementing agencies with the procurement rules and enforce the Bank’s recommendation of the Procurement Post Review (PPR). Unfortunately, the functioning of PPA remains relatively weak. In the meantime, the Bank Procurement team has been working closely with the PPA to pursue the procurement capacity enhancement measures, including more intensive procurement training. The Bank procurement team is also actively working with the PPA, MOFED and training institutions to implement the agreed recommendations to strengthen the procurement profession in Ethiopia by establishing the Ethiopian Institution of Procurement and Asset Managers (EIPAM) and strengthening the capacity of the Public Procurement and Disposal Service Agency (PPDS, which has replaced the Procurement Services Enterprise) as a potential center of excellence in Ethiopia and a national agent that would provide critical services needed during project preparation and implementation. 28. Need for Regular Review of Project Performance. Regular reviews were considered important in identifying fiduciary issues more promptly. It was noted that the issues identified in the reviews cannot be addressed by the sector alone and that it should be shared with MOFED who may be able to facilitate or resolve the problem. During FY12 CPPR regional consultations it has been noted that the problem has worsened and the regions have indicated that the lack of clarity of the role of MOFED when it comes to 16 In particular, the existing draft Financial Reporting Law and the draft law that creates the Institute of Certified Public Accountants of Ethiopia. 11 Channel Two projects made it difficult to seek their involvement. However, there were projects in the Ethiopia portfolio (e.g., PSCAP and transport) that managed to at least partially address this issue through more effective use of networks. For example, PSCAP has successfully established a relatively effective way of reviewing project performance and fiduciary issues across a wide range of stakeholders (Bank, government and donors) through the PSCAP Managers Network (PMN). The PMN resolved implementation issues collectively and this has helped improve government donor relations and promoted productive dialogue and mutual accountability. The transport sector also reviewed project performance using a similar forum through the DAG transport sub-groups. It was, therefore, suggested to replicate this type of interactions in other sectors. 29. Communications with the Country Office on FM and Procurement Issues and Actions. The FM and procurement teams have also encouraged beneficiaries to communicate problems or concerns to the Bank when they occur so that quicker resolution to the problem can be made. To facilitate communications, the Bank suggested for relevant government staff to get access to electronic means of communication, including access to Client connection by each project. The Bank country office should further maintain a data base of all project managers, financial accountants and procurement specialists working on projects to facilitate communication and also work with MOFED to re-establish vibrant managers, procurement and accountants clubs to share and exchange information 30. Revision of the Prior Review Thresholds and Thresholds for ICB. The Prior Review Thresholds (PRTs) and the thresholds for ICB procedures have been substantially increased to reflect the effects of increased prices in the world market, the dynamics in the local market conditions and increase in the procurement management capacity in the project implementing agencies. Appropriate revisions to the financing agreements and procurement plans have been made to reflect the new thresholds. This has helped address some of the delays previously experienced with the prior review of large numbers of procurement packages. 31. Advances and Project Closing. Significant advances at regional and woreda level were identified as one of the key weaknesses in ET portfolio. According to the FY09 CPPR, MOFED was to take the lead in addressing the situation by providing support to project staff in tracking advances made to regions and woredas and ensuring that such advances are accounted for timely. Similar action was to be taken by MOFED to ensure timely submission of audit reports and IFRs. However, three years later only the tracking aspect has somewhat improved, but the size and extend of the situation has not been enhanced markedly – many projects are still sitting on large advances especially at woreda level. This issue is further discussed in Chapter III, section B. 32. Weaknesses in project closing procedures have also been identified as a problem in the FY09 CPPR and one of the actions recommended was to clearly outline steps and procedures associated with project closure.17 To this end, the Disbursement Team from Johannesburg has run two trainings on the subject of closing issues; Addis-based FM team has worked with each TTL six months before project closure to facilitate the process. Detailed closing steps are normally outlined in the FM annex six months before closure of projects. As a result the three projects that closed between FY09 to FY11, the process went relatively smoothly except for a few minor issues.18 17 This would facilitate the recovery process of advances made, payment of final audit fees and retention money and minimize contract payment issues that may occur towards the end of the project. 18 Projects that closed in the said timeframe included: (a) the Global Food Crisis Response (closed on July 31, 2010); (b) the Multi-Sectoral HIV/AIDS II Project (September 30, 2011); (c) the Financial Sector Capacity Building Project (September 30, 2011). For the Global Food Crisis Response project, all of the documents were processed and finalized within the allowed period of six months after project closure. With respect to the Multi-Sectoral 12 33. Availability of Foreign Exchange. This issue has been addressed by both the Bank and the government and is, therefore, no longer considered an implementation constraint. 34. Monitoring and Evaluation. The FY09 CPPR stressed the need for more effective monitoring and evaluation process. The government and Bank teams are working to improve the results framework for several projects and greater focus is now being devoted by management to assess progress based on the information provided in the Implementation Status and Results Reports (ISRs). M&E clinics are also scheduled to be conducted in due course. III. FINDINGS AND RECOMMENDATIONS OF THE FY12 CPPR 35. As explained earlier, the FY12 Ethiopia CPPR focuses on practical issues of portfolio management and implementation. The desk review revealed that while some progress has been achieved since the last CPPR, most of the same issues have continued to affect project implementation. The intent of this CPPR, therefore, will be to address the top bottlenecks, recommend corrective actions with defined timeline and identify responsible entities. To ensure that appropriate follow-up will be taken, the implementation of the actions will be closely monitored and verified through formal mechanism within the Bank as well as with the Government. A. Cross-Cutting Issues 36. The top five cross-cutting priority issues that were identified and validated by the participants of the FY12 CPPR workshops include: • High and rapid staff turnover • Weak capacity at all levels of government. • Low ownership resulting in slow(er) implementation and weak follow-up; • Insufficient sharing of knowledge and experience; • Weak project management resulting in delays between project concept note to negotiations to effectiveness to disbursements (including behavioral issues). 37. By far, high and rapid staff turnover (including difficulties to attract adequately skilled staff as well as their retention) has been identified as the most critical cross-cutting issue affecting majority of projects in the Ethiopia portfolio and contributing to slower than optimal pace of implementation and disbursements.19 Consensus reached during the CPPR workshops in February 2012 was that the impact of this problem on projects has intensified over the past few years. However, while it is a well known phenomenon that project staff turnover is high and rapid, there is little knowledge related to where the people move to (e.g., other government posts or private sector). Therefore, some analysis of the issue might be useful. In the FY09 CPPR, government planned to address this issue with business process reengineering. However, there is no evidence to suggest that this solution has markedly improved the situation. Without fully addressing this issue, recruiting and retaining competent project staff will continue to be a problem. Furthermore, piece-meal project-by-project approach of addressing the pay issue cannot be sustained and could even worsen the problem since it distorts the salary structure. HIV/AIDS II project, there were some delays with submission of documents required for audit. There were no major issues on audit and all advances have been cleared for the closure of the Financial Sector Capacity Building project. 19 There is also little attention to proper hand-over of responsibilities when staff departs which further affects the capacity of the incoming staff to carry out the tasks that have been assumed. 13 38. High staff turnover exacerbates already weak capacity at all levels of Government and across all sectors, especially in the fiduciary areas of FM and procurement. For example, many project entities are unable to find relatively highly skilled accountants capable of undertaking the full range of FM responsibilities as the profession of certified accountants is still in early stages. As a result there is a mismatch between the educational background and the nature of the work required by the fiduciary project staff.20 It was also noted that training of finance officers outside the country is not encouraged. Finally, a sheer number of projects managed by one implementation agency further contribute to exacerbate the problem. For instance, the Ministry of Agriculture has about 140 projects and each project uses different financial manuals that cause weak FM and results in low disbursements level. 39. The same problem exists in the recruitment of procurement staff despite efforts by the government to capacitate civil servants on procurement skills.21 Furthermore, although procurement capacity building activities are carried out in several institutions,22 the PPA does not have the capacity to regulate, set standards and coordinate the provision of procurement training, which leads to overlaps and sometimes contradictions in the types of procurement training that is being offered. This situation is worsened by lack of information sharing between the government and the private training providers on the standards of training activities that should be provided in order to build procurement skills. 40. Recommendations. There was consensus in the CPPR discussions between the Bank and sector representatives including regional stakeholders that the issue of staff turnover needs a comprehensive approach at a higher level. The common view was that staff turnover can be addressed by civil service reform focusing on the pay and incentive structure as well as on other aspects of HR reform related to job recognition, promotion and other. In addition, there is an urgent need to establish professional associations in accounting and procurement (see paragraph 26), an option which is intensively pursued by the Bank (CMU, FM and Procurement teams) in consultation with MoFED, relevant ministries and agencies. 41. Since pay reform is a medium- to long-term process, more immediate solutions need to be implemented. Among them capacity building efforts should continue, both, on a project-by-project basis as well as through specialized training for PIUs and other government officials (including at regional level).23 In this context, the CMU plans to facilitate provision of regular (bi-annually) training for PIU staff in the areas of procurement, FM and safeguards that focuses more intensively on the use of case studies that are relevant and could easily be understood by the trainees. This process has already started with courses in basic procurement (March 2012), procurement in large and complex transactions (February 2012), social and environmental safeguards (May 2012). Going forward it is the intention that the training is provided in collaboration with local institutes, which in the long term can take over this function completely as part of their business.24 20 For example, educational background of current fiduciary staff varies and includes individuals with social science, accounting and management and administration background. 21 Procurement capacity issues are particularly critical at the subnational level. Regions and woredas have used high school graduates as “purchasers� who are now being designated as Procurement Officers. Where graduates are recruited as procurement staff they have come from educational backgrounds ranging from social science, accounting, management and administration to engineering. 22 For example, the Procurement Services Enterprise, Ethiopian Management Institute, Bridge International PLC and BCaD Consulting Management. 23 Each project should develop and budget for a focused annual training plan that has the vision of building capacity for each implementing entity. 24 For example, training in basic procurement was organized in March 2012 in collaboration with the Ethiopian Management Institute. 14 42. To ensure that proper training is given to staff that is actually performing the FM or procurement functions, the Bank TTL in collaboration with the FM and Procurement team should assist the government vetting the nominated trainees and in designing customized training plans and implementing the capacity building activities. This training can be offered selectively to regions experiencing more serious problems and be followed by mobilizing the regional training institutions to train local staff at the woreda level.25 This could be done through establishing a module of training at the regional training centers that all accountants and procurement specialists hired at woreda level undertake and pass when hired into civil service, and gradually over time move towards more advanced levels. In addition, GOE should consider making it a deliberate policy of encouraging sectors to develop sector-wide programs that are supported by donors through modalities of a SWAP to avoid fragmentation and duplication of efforts and prohibitively high transaction costs at sector level. Through SWAPs, the burden on GOE systems will be lessened and the modality of coordination can help manage donors and also promote harmonization. 43. Another short-term solution (also currently at work) is to deploy short term experts especially for projects that experience frequent staff turnover. This should not be seen as replacing existing staff but merely aimed at increasing capacity at the front end through twinning and training consultants who provide short-term hands-on support during project preparation to assist in the drafting of procurement plans, work plans and budgets, etc. During implementation, short term and/or “mobile� experts can also be engaged to assist and train on as-needed basis in areas where capacity gaps exist or where critical fiduciary issues have been identified. The Bank undertakes periodic financial and procurement reviews through field visits and the findings of these visits should contribute to better targeting of the capacity building efforts. There are, however, possible roadblocks that may interfere with this proposed solution such as the apparent aversion by government in hiring consultants and the salary cap on consultants. Bank management should follow-up with senior officials regarding the status of the ongoing salary cap review so that this proposed short term solution can be pursued further. 44. Finally, continued enhancement of the role of dedicated institutions, such as the Public Procurement Agency (PPA) as the lead authority on procurement capacity building initiatives, is also necessary. In this context, the PPA could host annual “capacity building coordination and orientation meetings� with the aim of utilizing the strengths of training institutions and possibly to develop joint activities targeting uncovered aspects of procurement capacity in Ethiopia. The Procurement Team of the Bank will, therefore, continue to discuss the capacity building actions that were proposed to strengthen PPA’s capacity and to continue to implement the strategy that has been developed by the last CPPR. 45. Low ownership, slow implementation and weak follow-up at regional level due to limited early-on involvement of the regional counterparts in project preparation, implementation and monitoring.26 This issue was also raised in the FY09 CPPR and the proposed remedial action was for the region to keep MoFED in the loop on recurring implementation problems and to seek MOFED’s intervention when problems become more complicated. During regional consultations it became obvious that this solution has not been successful for the following two reasons: (i) it is a passive solution as regions wait for problems to get worse before raising them; and (ii) some regional stakeholders mentioned difficulties when approaching MoFED because of the lack of clarity of its role and responsibilities in project management. The CPPR workshops held in February 2012 suggested a more pro-active way of 25 Bank staff/TTLs involved in project procurement, management and processing should also be encouraged to undertake the Basic Procurement, FM and safeguards training. 26 Bank projects under preparation are often mostly discussed at the federal level with MOFED with limited or minimal upfront consultation with regional stakeholders. Such practice has created the perception that MOFED limits the role of regions and this has led to low ownership and affected their ability to effectively address project implementation concerns. The weak implementation follow-up also evolved around the same problem of weak up- front involvement by the region. 15 addressing the issue where MOFED is helping the regions in times of problems with sound advice and guidance. 46. Recommendations. The most practical action endorsed unilaterally by consulted stakeholders was to fully engage the regions in the entire project cycle, including project preparation and implementation. This would require a clear and unequivocal message and actions from MOFED regarding empowering focal persons at the regional level and monitoring their performance during project preparation and implementation.27 Since there may be some logistical constraints, participation can be facilitated through audio or video means. In addition, incentives can be built at project design and implementation to ensure adequate follow up and action. These could include reducing/withholding block grants depending on performance; close monitoring of individual staff responsible for project implementation and related incentives reflecting their performance. 47. It would also be helpful to clarify MOFED's role and responsibility in resolving implementation constraints.28 Establishing a one stop shop within MOFED that deals with all project implementation issues regardless of channel might be a solution worthwhile considering. This unit would need to develop its own government monitoring mechanisms so that implementation issues are identified early on and remedial actions can be undertaken immediately (rather than waiting for donors to bring the problems to its attention). GOE might also consider establishing a replica of the Channel One Program Coordinating Unit (COPCU) at regional level to coordinate all projects implemented in the region regardless of the financer. 48. Insufficient Sharing of Knowledge and Experience. There is continued concern regarding the limited scope in sharing of knowledge and experience within the Bank, between the Bank and GoE and between project implementation agencies. MOFED would need to enhance its capacity in carrying out its roles and responsibilities on project management so that they are better able to communicate, disseminate and/or share information on good practices with others during project implementation. 49. Another concern raised was lack of a systematic communication mechanism between the Bank and the government at the technical and high level to address systemic portfolio issues. There were concerns that information regarding the systemic portfolio issues was not being shared systematically by the Bank because portfolio review meetings are sometimes scheduled without providing appropriate advance notification to invited participants. 50. Recommendations. To address this issue, several actions should take place simultaneously. First, knowledge and information sharing should be facilitated through closer and more active consultation between a wider range of stakeholders during retreats or group meetings. As already noted, these types of interactions have been successfully implemented in PSCAP (PSCAP Managers Network) and Transport project (Transport Groups). There is urgent need to establish Finance Managers Club that would meet 27 Namely, MOFED would need to make it compulsory for regions’ representative to participate in key project discussions (i.e. project context, institutional structure, roles and responsibilities of project staff) at each stage of the preparation cycle (concept, appraisal, negotiations stage) and after project approval during the implementation stage. 28 MOFED current structure is such that from project identification until negotiations, the Bank deals with the Department of International Cooperation. If a project is following Channel 1 implementation, the Bank deals with COPCU on implementation issues (including FM and procurement). If the project is following Channel 2 implementation, the Bank deals with the sector ministry. When there is a dispute or a misunderstanding between the sector and the Bank, it is not clear who is the arbiter and what is the role of MOFED. In case of multi-sectoral projects, the role of MOFED becomes even more complicated. Further, the exact role of MOFED in receiving implementation reports, guiding matters on disbursements and inactive Designated Accounts, follow up of audit reports, resolution of qualified audit reports, advising projects on closure and coordination of preparation of annual work plans is also not clear. 16 quarterly with the aim to help resolve implementation problems, facilitate sharing of information and create peer pressure for those are not performing well and hence encourage improvement. 51. Second, quarterly portfolio meetings chaired by MOFED and attended by representatives of the sector concerned, MoFED, Bank and participating donors (if the project/program is pooled) need to become a permanent future of portfolio management. Sectors should prepare an agenda including an assessment of the systematic portfolio issues. The meeting should aim at resolving critical issues and developing an action plan with clear timelines of appropriate actions. The establishment of such groups can be facilitated and organized by the relevant Bank TTL. The proposed timing should be fully agreed with all concerned and the actual date of the meeting should be communicated well in advance to all participants. The agenda and other documents including the most up to date M&E report should be distributed to participants at least one week before the scheduled meeting. Ideally, the conclusions reached at the group meeting should form the basis in formulating the mission objectives of the Bank mission that are conducted after this meeting. 52. Third, the annual workshop that will evaluate the actions recommended by the CPPR can contribute to knowledge and experience sharing. This forum should be led by the Bank Country office operational team in close collaboration with MoFED. 53. Lastly, a good tool that could also help facilitate information sharing is a project staff directory that provides the full list of individuals or units involved in project implementation (list of staff from PCU, MoFED, Region and Woreda levels with contact information). This information must be compiled, updated regularly and distributed and circulated electronically by the respective PCUs to beneficiaries at all levels. The updated list should be distributed periodically (e.g., once a year). The list can also be circulated during the group meetings organized by the sectors. 54. Weak project management resulting in delays between Concept Note – Negotiations/Approval – Effectiveness – Disbursements. As discussed in Chapter I, in the past three years it took between 6 to 12 months to bring the project from concept note to negotiations and another 2-3 months to effectiveness. On average time elapsed between effectiveness to first disbursement was 6 months. Some sectors also suffered from low disbursements during the first 3 years of implementation. This is mostly due to the fact that by the time the project is approved staff recruitment is not completed, procurement and financial manuals are not ready, feasibility studies and safeguards documents are not completed, budget, and procurement plans are not ready, and steering committees are not established (see also paragraph 70). 55. Recommendation: In order to speed up the processing time and shorten the time between projects’ effectiveness and disbursements, it is of utmost importance that, both the Bank and the Government work together to ensure that all necessary actions are in place before projects are declared “ready for Board approval�. Bank’s readiness filters should be revisited and shared with GOE and both parties should share the responsibility of monitoring that each project that comes on stream has met all filters and that both parties are satisfied that the project can be presented for approval. 56. In addition, several other steps should also be implemented, namely: Accelerating project approval: • Take full advantage of the simplified Bank processing of project changes/adjustments; • Develop and communicate clear steps and service standard (time) in the preparation process including social and environmental standards/requirements. Accelerating project effectiveness: • ‘Effectiveness officials’ at all levels are involved early on and prior to the WB approval ; 17 • Clear service standard (time) and responsibility for monitoring and tracking the movement of documents related to effectiveness. Accelerating project disbursements: • Ensure that projects are ready-for-implementation (project readiness). As described earlier, as a result of FY09 CPPR readiness filters were developed. However, these need to be applied consistently across the entire portfolio. • Utilize Project Preparation Facility, which helps in ensuring project readiness; • Assign/recruit critical project staff early on/before appraisal; • Decide on and empower key implementing agency early on/before appraisal to prepare key project documents (e.g., procurement and financial manuals; feasibility studies and safeguards documents) and start procurement process; • Each project must undertake a launch workshop where all stakeholders are invited, various system procedures outlined and discussed and responsibilities clearly outlined. Often fiduciary guidelines and other implementation procedures are not fully understood by regional stakeholders. Accelerating project implementation: • No delays with ‘plumbing’ by approving project budget before new FY and link budget with work plan and preparation of procurement plan; • Good project M&E critical for identifying challenges early on; • Regular portfolio monitoring meetings within the Bank and with the Government which would set targets as well as monitor their achievement and hold managers and staff accountable to them. • Develop a standard template for the project implementation manual (PIM). Project-specific PIMs should also be reviewed periodically (at least annually) for possible updating. 29 57. Behavioral Issues. It was noted that some of the implementation issues may have evolved as a result of some behavioral issues from both the World Bank and Government. On the World Bank side the following behavioral issues were noted: (a) not communicating tough/difficult messages; (b) delivering ambiguous messages and/or toning down messages on subject areas; (c) not dealing with (“sitting on�) key issues when they arise; and (d) reaching an agreement internally within the Bank teams and communicating consistent message to GOE (e.g., disconnect between FM/Procurement Specialists and TTLs rating the project’s performance). On the Government side, the following behavioral issues were noted: (a) skepticism about any changes to Bank policies; (b) aversion to consultants (especially international) and capacity building; and (c) “There are no MU projects in Ethiopia� attitude – pressure on TTLs not to downgrade the project when necessary – low realism of project rating (40 percent in FY11). 58. While it is difficult to reach a final conclusion as to how to fully address these issues due to the complex nature of human behavior and personal differences, it seems that closer collaboration, information sharing and frequent interaction between those concerned could help improve the relationships and avoid wrong perceptions. 29 This is important especially if and when new guidelines or procedures are introduced at the federal level that may have an impact on the procedures used by the project. An outdated PIM could lead to uneven application of agreed procedures that can lead to unnecessary implementation delays. The updated or revised PIM should be fully disseminated and shared at the federal and local levels. The Bank TTL should, therefore, make this an agenda of the regular implementation support mission agenda. 18 B. Financial Management Issues 59. In addition to the cross-cutting issue of high staff turnover and weak implementation capacity, FM suffers from acute lack of highly skilled/senior accountants who have adequate experience to effectively run the FM. In the long-run, the issue needs to be tackled by a comprehensive civil sector reform. In the medium- to long-term, the GOE needs to accelerate adoption of Accounting Standards for the country and supporting accountancy profession to create a cadre of FM stream within government that specialize on generic project FM using the harmonized FM manual. Finally, in the short run, more intensive training, closer collaboration of FM staff with the client, engagement of short term experts could alleviate the problem. 60. Cumbersome FM procedures, different for every project, which make implementation more complex and result in lower level of compliance. To address this issue, it is proposed that: • The Bank takes the lead on the initiative to standardize the FM Manuals for all donors; • The Bank will propose ways to simplify reporting at local level; • MOFED will involve ZOFEDs (in zones) to verify FM data. 61. Vicious circle of qualified and delayed Audit Reports. Although action plans are being prepared, there is very limited implementation and follow-up of the action plan, resulting in qualified audit the following year with the same issues. It seems that the action plans are prepared mostly to satisfy donor requirements for continued funding, rather than to genuinely address the weaknesses identified. To address this problem the following actions are proposed: • The FM team needs to increase its collaboration with concerned parties through more frequent field visits and financial reviews; • MOFED should issue a circular stating that qualification issues should be resolved within a 6 months period following an audit. Communication between MOFED and Channel Two implementers needs to improve to ensure that audit findings and agreed actions are being addressed and are not repeated next time around. In this context, MoFED should conduct semi- annual round table discussions with projects and the Bank on audit issues-action taken on audit findings. • The auditors of projects should be instructed to report on the status of implementation of previous years audit findings. • MOFED should increase its interest in progress being made and in a systematic and comprehensive manner (employing a consultant or using own staff) identify findings of projects, identify action plans, follow up on implementation of action plans, conduct field trips to ensure the satisfactory implementation of action plans on audit findings, identify those implementers that are not taking satisfactory action on audit findings and take appropriate remedial action. Punitive measures should be implemented where the recommendations have not implemented or are at less than satisfactory (e.g., reduction of block grants for regions and woredas). 62. Although some improvements have been achieved in timeliness of audit reports submission, there is still room for improvement. The sector review meetings that have been proposed earlier could improve coordination between MoFED and line ministries and be used to highlight this issue if and when the problem continues to exist. In addition: • The government needs to outsource some of the audits rather than allocating close to 90 percent of all audits to Audit Services Corporation (ASC). This would not only help address limited capacity of ASC to perform a large number of audits, but also assist in building much needed capacity in the private sector. • MOFED should consider developing its own mechanism of monitoring submission of the audit reports so that action can be taken before the audit is delayed (this could be done in the context of 19 establishing a one-stop-shop within MOFED and supported by creation of COPCU-like institutions at regional level; see also paragraph 47).30 • MOFED should continue with the existing practice of holding block grants if appropriate reports are not submitted on time. 63. Significant cash and unsettled advances at regions and woredas. As discussed in Chapter II, section C, this issue has increased in severity, especially over the past 18 months.31 Among the key reasons are: ambitious planning that fails to take into account practical realities on the ground and thus produces excessive budgets; poor implementation including follow up, accountability and enforcement mechanism by the federal level to better incentivize the regions/woredas to act (i.e. report and settle advances). The persistent and increasing nature of this problem needs urgent attention, especially that there are some serious concerns related to significant cash present at woreda and regions (including releasing funds for purposes unrelated to the project objectives and/or activities). Three solutions are proposed: • Match cash requests to Annual Work Plan (AWP) and Procurement Plan (PP) (see paragraph 69 for proposed actions); • MOFED needs to establish a policy where implementers are asked to refund any amounts to related Designated Accounts if the funds are not accounted for within three months. Further, MOFED internal auditors should conduct cash counts and verify supporting documentation where cash is more than four months unaccounted for. No further cash should be disbursed if previous advances are not accounted for; • Explore the use MFIs as an alternative mechanism to administer the cash at woreda level. 64. Dormant/Inactive Designated Accounts (DAs) persist due to two reasons: (i) the sequencing of disbursements between WB and donors' funds, and (ii) delays in submission of withdrawal applications which were often poorly prepared. Capacity building (through training and hands-on assistance in preparing W/A) and regular reviews of project performance across all stakeholders (Bank, MoFED, Ministries) should help resolve this issue. In this context, is important that MoFED and implementing agencies monitor that projects submit at least one withdrawal application every month or at least a quarter. Further, since MOFED has no system of monitoring DA utilization, there is a need to designate staff per sector and within MOFED to monitor DA activities and ensure that a withdrawal application is submitted once every month at the minimum (again this could be done within the context of establishing a one-stop-shop within MOFED). 65. Ineffective and weak internal audit and control function at all levels of the government (e.g., federal, region and woreda) on cash management, property management and basic record keeping due to limitations in capacity/numbers/awareness/etc. Weak budget monitoring aspect due to lack of meaningful analysis of budgets and actual expenditures. Solutions could include: (i) introduction of risk based internal audit; (ii) strengthen PFM reform on internal audit including professionalization of internal audit in government; and (iii) hiring an international internal auditor to work with MOFED internal audit for a couple of years to train staff in internal audit skills, which can later on be replicated in other sector ministries and regions subsequently. 30 In this context, MOFED should write to all projects every year around May to remind all implementing entities to prepare their annual financial statements in time for July 7 audits. 31 For example, increasing number of projects request for cash which is later maintained in Designated Accounts (subject to Bank charges on a monthly basis) and not disbursed to regions and woredas. Some projects take between 6-12 months to account for funds while they continue to receive additional cash without meaningful accountability. 20 C. Procurement Issues32 66. In addition to the cross-cutting issue of high staff turnover and weak implementation capacity, procurement suffers from acute shortage of skilled procurement staff at all levels. This is exacerbated by lack of adequate recognition for procurement function as a strategic project implementation activity by Implementing Agencies. Until a comprehensive civil sector reform is instituted, the Bank is deploying procurement consultants to provide hands-on support to prepare documents and follow up. While this “middle man/mobile expert� approach is rather expensive, it eventually improves performance and in time capacity transfer takes place. The Bank should continue providing the hands-on procurement support by consultants as needed. The 2009 CPPR required that all staff involved in project procurement processing should, as a minimum, undertake the Basic Procurement Training offered at ESAMI or GIMPA. While this had been difficult to achieve due to the prohibitive cost of travel abroad, the introduction of similar courses at EMI should help resolved it. 67. There are also serious weaknesses in contract management capacity. The problem is mostly associated with the lack of adequate technical and procurement capacity in the infrastructure sector (i.e., roads, power and water). For example, monitoring of large value contracts was not effectively carried out due to inadequate procurement planning (bid preparation weaknesses) that subsequently resulted in weaknesses in contract administration. Price escalation was also indicated as affecting the mobilization of contracts. The proposed solution of engaging short-term support and the longer-term strategy on pay reform could help address this issue. The price escalation problem has been already been partly addressed by the revision of the “prior review� thresholds for procurement using International Competitive Bidding (ICB) procedures. Also, minimizing contract implementation period and provision of proper price adjustment clauses in the contracts should help. 68. Different and Inconsistent Procurement Standards at the Regions. In 2009 GOE introduced new Procurement Proclamation and Directives. However, the development and dissemination of the accompanying standard bidding documents (SBD) and manuals has taken a considerable time. The absence of a comprehensive national procurement system and standard guidelines resulted in the inability of the regions/woredas in determining which procedures to use – that of the Government or the Bank. Therefore, procuring entities are applying the outdated SBD's from PPA, others apply SBDs updated on ad hoc basis or other donor documents. As a result, the Bank recommended the project entities to use the standard SBD issued by the Bank. The only possible solution to address this issue is for the Government to expedite the dissemination of new public procurement manuals and SBDs. 69. Disconnect between the Work Plans and Procurement Plans. The disconnect between the Work Plans and Procurement Plans results in ineffective procurement practices during implementation particularly at the Regional and Woreda levels. A mismatch between the budget indicated in the work plan and the proposed value of procurement contracts is an indication of poor planning and could delay the procurement process. The early and full engagement of regional counterparts in project preparation, regular monitoring of the PIM (including the procurement plan) and effective collaboration with MoFED could help mitigate this problem. It is therefore recommended that the portfolio manager together with the fiduciary team and TTLs, on pilot basis, initiates joint preparation of Annual Work Plans, Annual budgets and Procurement Plan. 70. Delays in Procurement Actions. This issue is closely linked to the above problem related to the annual work plans/procurement plans disconnect. While some government staff indicated that the Bank has caused some of the delays (by delaying clearance of the procurement documents for prior review contract cases), the problem is mostly due to relatively inadequate procurement planning, lack of 32 A detailed analysis of the procurement issues is presented in Annex 3. 21 standardized manuals and weak contract administration and monitoring. This issue is being actively addressed by the procurement team and the use of PROCYS (electronic procurement Cycle Tracking system) is gradually improving the ability of all concerned in monitoring the process and to identify more effectively possible bottlenecks in each stage of the procurement cycle. However, to alleviate delays in the procurement process the following recommendations are put forward: • Agree with MoFED and implementing agencies to start advanced procurement while the WB loan is being prepared and processed for approval; • Develop simple and easy to understand procurement guidelines standardized manuals and check lists, and adequately disseminate including in the local language; • Develop service delivery standards, including document quality assurance and accountability systems; • Agree with MOFED for BoFEDs to conduct procurement clinics with woredas on a regular or need basis focused on simple procurement procedures used at the local level; • During implementation support missions, candidly discuss procurement and contract management issues, and agree on practicable and monitorable actions; • Improve follow-up on contracts signing after the Bank no objection, including better back-up system when Bank staff on mission/leave. D. Monitoring and Evaluation Concerns 71. The overall, quality of M&E in the Ethiopia portfolio is satisfactory. Approximately 85 percent of the projects were rated Moderately Satisfactory (MS) or higher M&E performance. However, most projects (55 percent) have some shortcomings and were rated Moderately Satisfactory (MS). 72. Recommendations.33 The Bank needs to start using quality data as a learning and management tool for portfolio and projects. • Hire an M&E Specialist in the country office. Ensure that a designated M&E specialist is on the project team (budgeted for) as agreed in the PAD. • Provide continuous training and capacity building in M&E areas for the Bank staff (TTLs) as well as GOE implementers (e.g., M&E clinics). • Make efforts to integrate project M&E into GOE systems (including database). Use local knowledge in developing reporting formats. • Use Ethiopia Data Quality Assessment Framework as a management tool not as an audit tool. • TTLs need to make more use of project restructuring if data is hard to obtain and/or indicators are irrelevant. IV. NEXT STEPS 73. The WB Portfolio Team will be responsible for monitoring the progress and pace of the implementation of the Action Plan summarized in a tabular form in Annex 1. It is proposed that a CPPR team made up of government representatives (from sectoral ministries and MOFED) and some selected Bank staff that directly work on portfolio issues will meet quarterly to discuss progress and agree on next steps. To facilitate monitoring and evaluation of these issues, pertinent information related to the cross- cutting issues should be highlighted in the fiduciary section of the aide memoire especially for projects experiencing implementation difficulties. Every quarter, an updated CPPR follow up team will update the 33 In addition to these broad recommendations, a number of specific issues were identified across projects and detailed recommendations are provided to the project teams in Annex 2 on how to address them to strengthen project M&E systems and increase the likelihood of achieving satisfactory outcomes at the closing date. 22 CPPR action plan and circulate the same to all stakeholders including the regions. Assessment of the status of the actions will be based on the ratings of the fiduciary areas in the ISRs at the end of each fiscal year. For example, projects with ratings of “moderately satisfactory� and below in any of the fiduciary (project implementation, FM, procurement, M&E) areas will be more closely evaluated and assessed at Portfolio Review meetings during the year. 74. Towards the end of each FY, a half-day Annual Portfolio Review, attended by a representatives from federal and regional government and PIUs; the Bank and possibly other DPs, will be organized by the Bank to discuss the progress in addressing the “nuts and bolts� issues presented in this document. A short report will be prepared summarizing the status of the actions and remedial measures if actions are lagging behind and new issues, if any, and proposed remedies. This process will continue until the next formal CPPR is prepared. 23 ANNEX 1: ACTION PLAN TO ADDRESS BOTTLENECS IDENTIFIED BY THE FY12 CPPR Table 1: Action Plan to Address Cross-Cutting Issues – Summary Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document High & rapid Undertake a comprehensive civil service reform Medium to Long High MOFED CPPR MTR staff turnover Undertake analysis to understand the cause and direction of staff Short Low WB w/MOFED Report movement Recruit of short term experts (including mobile experts) Ongoing Medium Relevant Sector Aide Memoire/ISR Weak capacity at Establish professional associations in accounting and procurement, Medium to Long Medium WB, MoFED, PPA Financial all levels of including: Reviews and government  Enhance the role of the Public Procurement Agency (PPA) in PPR capacity building;  Establish the Ethiopian Institution of Procurement & Asset Managers (EIPAM);  Build capacity of the Public Procurement and Property Services Agency (PPDS) as a center of excellence.  Accelerate adoption of accounting standards Capacity building through regular & specialized training: Ongoing Low WB, FM & Aide  Design customized training plans Procurement Agencies, Memoire/ISR  Establishing a module of training PIUs CPPR MTR  Support EMI and Regional Training Institutions to deliver standardized procurement courses Continue with FM and procurement reviews Ongoing Low WB, MOFED, PIUs Reports Low ownership, Involve regional focal person throughout the project cycle; deploy Medium to Short Medium MoFED, BOFEDs & Appraisal slow incentives to encourage follow-up from the regions. Fed. Ministries document implementation Clarify MOFED’s role & responsibilities in resolving implementation Medium to Long High MoFED & BOFEDs and follow-up at constraints: regional level  Establish a one-stop-shop within MOFED (with adequate M&E system);  Replicate COPCU at regional level.  MOFED to undertake own project implementation review once a year. Insufficient Establish Managers Network, Sector Groups and Finance Managers Short to Medium Low Bank and PIUs Aide sharing of Club; facilitate regular meetings Memoire/ISR; knowledge & CPPR MTR experience Start quarterly portfolio meetings chaired by MOFED and attended by Short Low WB, MOFED, Fed. 24 Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document representatives of the sector concerned, MoFED, Bank and Ministries participating donors Hold annual workshop to evaluate the actions recommended by the Short Low WB, MoFED Meeting CPPR Proceedings Prepare a directory of project contacts & update regularly Short Low WB w/PIUs Weak Project Use readiness filters more systematically for all projects Short Low WB w/MOFED Management Develop clear steps and service standards for preparation and Short Low WB effectiveness process Start preparation of key project documents (e.g., procurement and Short Low/ WB, MOFED, PIUs financial manuals; feasibility studies, safeguards documents) and start Medium procurement process during preparation; encourage using PPFs Develop PIM template & update PIMs regularly Short Low WB, MOFED, Fed. Ministries Develop and implement service delivery standards, document quality Short Low MOFED, Fed. Aide assurance and accountability systems Ministries, PPA Memoire/ISR Table 2: Action Plan to Address FM Issues – Summary Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document Cumbersome FM Standardize the FM Manuals for all donors and gradually for all Bank Medium to Long Medium WB, MoFED procedures projects disbursing at federal, regional and woreda level Simplify reporting at local level Medium to Short Low WB Involve ZOFEDs to verify FM data Medium to Long Medium MOFED, ZOFEDs Qualified and More frequent field visits and financial/procurement reviews; Short Low WB ISRs delayed Audit More active engagement from MOFED, including: Medium to Long High MoFED, BOFEDs Aide Reports  Issue a circular stating that qualification issues should be Memoire/ISR; resolved within 6 months period following an audit. CPPR MTR  Communicate with Channel Two implementers to ensure that audit findings and agreed actions are being addressed.  Instruct auditors of projects to report on the status of implementation of previous years audit findings.  Use punitive measures where the recommendations have not implemented or are at less than satisfactory (e.g., reduction of block grants for regions and woredas). Outsource some of the audits to private sector away from Audit Medium to Long High MoFED Services Corporation (ASC). Develop its own mechanism of monitoring submission of the audit Medium to Long High MoFED reports (could be done in a one-stop-shop within MOFED supported by COPCU-like structures at regional level; also applies to monitoring 25 Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document dormat/inactive DAs). Continue with the existing practice of holding block grants if Ongoing Low MoFED appropriate reports are not submitted on time. Significant cash Increase use MFIs as an alternative mechanism to administer the cash Long Medium WB, MOFED and unsettled at woreda level. advances at Establish a policy for implementers to make refunds to related DA if Medium Medium MOFED regions and the funds are not accounted for within three months woredas Conduct cash counts and verify supporting documentation where cash Short Medium MOFED internal is more than four months unaccounted for. No further cash should be auditors disbursed if previous advances are not accounted for. On pilot basis, initiate joint preparation of Annual Work Plans, Annual Short to Medium Medium WB, MOFED, Sectoral budgets and Procurement Plans Ministries, PIUs Dormant/Inactive Capacity building (through training and hands-on assistance in Short to Medium Low WB, MOFED, Sectoral Designated preparing W/A) and regular reviews of project performance across all Ministries, PIUs Accounts stakeholders (Bank, MoFED, Ministries). More broadly, institutionalize of Bank project FM training at a reputed training institute in Addis (as has been done for procurement training at EMI). MoFed to designate staff per sector and within MoFED to monitor DA Medium to Long Medium MoFED activities and ensure that a WA is submitted once every month at the minimum. Ineffective/weak Introduce risk based internal audit Long High MOFED internal audit & Strengthen PFM reform on internal audit including professionalization Long High MOFED control functions of internal audit in government. Hire an international internal auditor to work with MOFED internal Medium to Long High MOFED audit for a couple of years to train staff in internal audit skills, which can later on be replicated in other sector ministries and regions subsequently. Table 3: Action Plan to Address Procurement Issues – Summary Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document Different regional Finalize and disseminate the public SBDs and procurement manuals Long High MOFED Proc. Standards Disconnect On pilot basis, initiate joint preparation of Annual Work Plans, Annual Short Low WB, MOFED, between AWP & budgets and Procurement Plans Sectoral Ministries, PPs PIUs Delays in Start advanced procurement while the WB loan is being prepared and Short Medium MOFED, WB Procurement processed for approval; Actions Develop simple and easy to understand guidelines standardized Short Low WB manuals, SBDs and adequately disseminate including in the local 26 Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document language; Conduct procurement clinics with woredas on a regular or need basis Medium Low MoFED, BOFEDs, focused on simple procurement procedures used at the local level WB Develop and implement service delivery standards, document quality Short Low MOFED, Fed. Aide Memoire assurance systems and accountability systems to, inter alia, reduce Ministries delays in WB issuing “no objections.� Improve follow-up on contracts signing after the Bank no objection, Short Low WB including better back-up system when Bank staff on mission/leave. Table 4: Action Plan to Address M&E Issues – Summary Verification Issue Recommended Solutions Timeframe Risk Responsible Unit Document Weaknesses in Hire an M&E Specialist in CO Medium Medium/ WB using M&E as an High effective Ensure there is a designated M&E specialist for the projects as agreed Ongoing Low WB management tool in the PAD. Continuous training and capacity building in M&E areas for the Bank Ongoing Low WB staff (TTLs) as well as GOE implementers Integrate project M&E into GOE systems (including database); use Ongoing Low WB local knowledge in developing reporting formats. Use Ethiopia Data Quality Assessment Framework as a management Short Low WB tool not as an audit tool. TTLs to make more use of project restructuring if data is hard to obtain Ongoing Low WB and/or indicators are irrelevant. 27 ANNEX 2: M&E ANALYSIS Issues and constraints identified: 1. Project development objectives: the majority of PDO statements were clear (67 percent of total projects). However, for a few projects, the following issues were identified:  PDO is broad or stated at high level. Some PDO statements are formulated with ambiguity or pitched at a high level.  PDO statements complex. Some PDO statements include complexity in terms of targeting several elements at different levels of the results chain. 2. Results Indicators: most results indicators in the PADs were clear and appropriate to measure the PDO (67 percent of total projects). Three main issues related to PDO indicators were observed for a number of projects:  Indicators are not tracked. Some PDO indicators are rarely tracked in a systematic manner in ISR. This happens either when the indicators are difficult to measure in the project lifetime or the indicator wordings were vague and therefore challenging to measure.  Indicators are not in alignment with PDO. In a few cases there was weak alignment between the PDO indicators and the PDO. For some projects, indicators do not measure all aspects of PDO. For others, indicators measure high level outcomes (higher than what is stated in the PDO).  Results framework includes too many indicators. A few projects include too many indicators in their results framework, which usually makes monitoring and reporting on all of them in the ISR challenging. Teams need to select only a few key indicators to measure progress and not track all project activities. 3. M&E Arrangement: while there is evidence of frequent supervisory missions and mid-term reviews, updated reporting in the ISR on results indicators is not frequent, thereby challenging results and performance assessment efforts. Issues identified include the following:  Missing baselines and/or progress information. There are several cases of baseline and/or progress information still lacking several years into project implementation. Only 33 percent of projects had appropriate data collection with all the necessary information reported. This is due in part to the lack of sustained attention to M&E at the initial project start-up period.  Inadequate use of M&E information for project management. The systematic use of quality M&E information to report on results ISR and to substantiate PDO rating is not adequate for most of the projects reviewed. The PDO ratings appear to be given on basis of TTL subjective judgment, rather than on using M&E evidence. Progress data is not well documented or additional information is needed to explain the achievement. Only a few projects had clearly stated the source of their data for indicators in the ISR. Supervision reports generally place emphasis on project implementation processes, rather than progress towards achievement of PDO.  PDO and indicators worded differently in PAD and ISR. Some projects have PDO and/or indicators in the ISR worded differently from the PAD. This may impact the way the project will be assessed at the closing date. Wordings of PDO and indicators should be consistent with the PAD. Any change of the PDO or PDO indictors should be formalized through restructuring (level I or II restructuring). 28 4. Implementation Progress: even though the majority of implementation issues were being addressed by project teams during supervision missions or during mid-term reviews, a few projects are still experiencing implementation delays of certain components. This may affect achievement of the PDO at the closing date. Recommendations General recommendations are provided here for project teams to take into consideration during different phases of project cycles to develop effective M&E systems. 1. During Preparation  Define clear and realistic PDO. For new projects, or in case of restructuring, select project objectives that are relevant, outcome oriented, and realistic. Teams should avoid defining overly broad or too ambitious PDO. A clear PDO statement will help the team to focus project interventions and develop adequate results framework.  Develop an adequate Results Framework. A well defined results framework is essential to the development of effective project M&E to assess implementation progress and development impact. Results framework should include only specific and measurable indicators that are linked to the different aspects of the PDO. Institutional arrangements for M&E should be established for each indicator, including precise technical definition, data sources, reporting frequency and monitoring responsibility. The establishment of baseline and target values should be undertaken prior to Board approval. Data collection mechanisms should be kept realistic and simple. 2. During Implementation  Review PDO and indicators. Where there is weakness in terms of PDO statement or indicator definitions, restructuring can be used as an opportunity to redefine clear PDO and/or develop measurable indicators. The team should only consider indicators that are essential for tracking progress toward all aspects of the PDO and for which data is available or can be collected in a cost-effective way.  Update data collection plan. Where there is a weakness in terms of data collection, it is important to review the existing institutional arrangement for project M&E. An M&E plan should be developed or updated to include for each indicator: (i) precise technical definition, (ii) clear data collection method, and (iii) reporting frequency. Roles and responsibilities for data collection and reporting among the implementing agencies should be clarified.  Report on PDO results indicators. Teams need to make sure that all the key indicators are being included in the ISR and progress data is updated periodically (at least once a year). Wordings of PDO and indicators in the ISR should be consistent with the PAD or Restructuring Paper. Any change should be formalized through restructuring.  Use M&E information. Teams are encouraged to use M&E information as a tool to improve project planning and management decision making, including the PDO rating. Data reported should be analyzed further and disaggregated when it is possible to provide clearer information on progress and trends in results achievement.  Develop M&E capacity for project staff. Training and advisory services are needed at the project start-up phase and during implementation to develop an M&E system that is tailored to the reality on the ground. Most project staff is aware of the importance of M&E, but need help in putting it to work. Project teams are encouraged to consider organizing systematic training and technical support on M&E and data collection to project and field staff (some action has already been taken in this direction by a few project, for example PSCAP and PBS projects). 29 3. During Completion  Collect adequate information to support substantial achievement of the PDO. For projects closing, teams should make an effort to collect reliable data on all indicators to show progress achieved on all aspects of the PDO. This is required to prepare the Implementation Completion Report (ICR) and to improve the likelihood of satisfactory outcome ratings. Having an operational M&E system would help a lot in this process.  Provide justification for any change in the original result framework. Indicators introduced in the ISR which were not part of the original results framework should be justified, in terms of their relevance and direct linkage to the measurement of the PDO.  Complete all project activities. Teams should make sure that all key project activities are completed before the closing date. They should consider extending the project closing date to complete ongoing activities to achieve the PDO. 30 ANNEX 3: PROCUREMENT ANALYSIS 1. The procurement analysis of twenty selected contracts on the basis of data from procurement plans has been made to evaluate the efficiency of implementing agencies/Project Implementing Units in planning and implementing procurement activities as well as the Bank’s efficiency in terms of providing timely “no objections�. The procurement activities of selected contacts representing different sectors, regions, categories (goods, works and consultants), procurement methods and the size of contract amounts were reviewed so as to give highlights about the performance of procurement at the portfolio level for the World Bank financed projects in Ethiopia. Accordingly, plans and actual deliverables of the procurement activities under review and plans and actual deliverables of the preceding procurement activities as well as the expected and actual durations of the World Bank “no objections� for the specific activities in the procurement process were analyzed. 2. The analysis is made for prior review contract cases by taking into account three parameters: deviation of actual procurement activities from plans, time elapsed between the preceding and succeeding activities, and the World Bank expected and actual duration for providing “no objection�. 3. Deviation of actual procurement activities from plans. Procurement activities of eighteen contracts out of twenty were lagging behind the plans. That means 90 percent of the procurement activities were not implemented according to plans. The average lag time was about five month and in one case there was an extreme delay for more than a year.34 Only two procurement activities (10 percent out of reviewed contracts) were implemented according to plans. It was also noted that either plan or actual procurement activity is completely missing on the procurement plans. Some procurement plans were not timely revised in accordance to corresponding changes in projects implementation schedules. Hence, overall poor procurement performance indicates important capacity constraints at the Project Implementation Units/Agencies. 4. Time elapsed between the preceding and succeeding procurement activities . The procurement plans show standard duration of procurement activities in each step. This standard duration is compared with actual duration of preceding activity and succeeding procurement activity to calculate time elapsed from the standard which means expected duration of the procurement activity. Under this parameter, procurement activities of thirteen contracts out of twenty were lagging behind. That means 65 percent of procurement activities took more time than expected durations in the procurement process. The average lag time was 1.9 month with maximum lag time of 4.5 month for purchase of hardware and software for Base Map preparation for 150 towns under Urban Local Government Development Project. Procurement activities of three contracts (15 percent) were performed in accordance with the expected duration while procurement activities of four contracts (20 percent) were achieved ahead of time. 5. Expected and actual duration of the World Bank “no objections�. Lead and lag times were also calculated to evaluate how efficiently the World Bank was providing clearance in the procurement process of projects under the portfolio. The procurement plans also show standard duration for the World Bank “no objections�. This standard duration is compared with duration between actual procurement activity under review and the date of the World Bank “no objection� assuming that PIUs request for “no objection� upon actual procurement activity for example, upon submission of bid/technical evaluation reports. 34 Urban Local Government Development for purchase of different trucks (8Vacuum trucks /liquid waste/4 Abattoir services, and 10Solid waste tractors). It was explained that the procurement process that included advertisement, preparation of bid documents was not well understood by the Executing Agency. Bid evaluation took about eight month partially because the recruitment of an external consultant to assist the PIU team with bid evaluation took a considerable time. 31 6. Procurement activities of eight contracts out of twenty were lagging behind the expected duration in terms of providing the World Bank “no objections�. T hat means the clearance processes of 40 percent contracts were delayed. Requests for “no objection� of four contracts (20 percent) were timely cleared while “no objections� were not applicable for the rest of procurement activities in this review. 7. The analysis revealed that the clearance process (i.e., providing the World Bank “no objection�) contributed to the overall delays (see table below). It shows that during the clearance process there are many resubmissions between the World Bank and the clients. The introduction of PROCYS for tracking activities in the procurement system since 2009 by the World Bank has provided a good basis for identifying areas of delay resulting in a significant improvement in the procurement processing times in general. However, there is still room for improvement especially in the area of quality of submissions and instituting business standards. PROCYS Reports Summary for selected contracts Process in days Process in days Resubmission Total process by the client Number of by WB days Specific procurement Project Name Contract activity Study to establish road Clearance for short RSDP Stage IV APL (FY09) research center (Consultant, listing assessment 37 106 143 2 P106872 Amhara region) report Electricity Access Rural Bidding Document Procurement of vehicles 48 77 125 3 Expansion Phase II P101556 clearance process PBS Phase II P103022 Essential health Bid evaluation report commodities 17 8 25 2 clearance process (Pharmaceuticals) Procurement of different ULGDP P101474 trucks Bid evaluation report 100 212 312 (8Vacuum trucks /liquid 13 clearance process waste/4 Abattoir services, and 10Solid waste tractors) 32 Ethiopia Country Portfolio Performance Review 2012 (Small below 5 million, Medium 5-10 million, Large above 10 million) Actual duration from date World Bank No objection actual -expected duration date of preceding activity lead (lag) time in months Time elapsed in months, Expected duration from Deviation from plan in Expected Duration for Clearance in months of preceding activity WB Clearance Date Actual time for WB months - lead (lag) date of preceding Size of Contract WB clearance Procurement Project Title Sub Sector Project ID lead (lag) Category Contract Method activity Region Sector/ Actual (max) stage Plan # 1 Agri Federal Consul Agricultural TA for Soil Laboratory IC Small Short 0.5 0.25 0.25 (0.7) NA NA NA P113032 27/5/11 13/6/11 tant Growth Program (Study listing 7/6/11 NA to Identify Specific Regional Soil Lab Needs) 2 Road SNNPR Consul Road Sector Construction supervision QCBS Small Technical 0.75 2.25 (1.5) (4.5) 0.5 12 (11.5) tant Development of Aposto-Wondo-Negele evaluation P091077 13/11/07 31/03/08 22/1/08 5/2/09 Stage III Road Upgrading Project: Project (APL 3) Contract 1: Aposto-Irba Moda road project 3 Road Oromia Works Road Sector Construction Works of ICB Big Bid 3 3 - (7) 0.75 3 (2.3) P091077 23/6/09 Development Gedo- Nekemet Contract evaluation 3/9/08 6/4/09 8/1/09 Stage III 2: Bako-Nekemet road (submission Project (APL 3) project date) 4 Road Amhara Consul RSDP Stage IV Study to establish road QCBS Small Short 1 2.25 (1.25) (9) 0.5 4.5 (4.0) P106872 31/3/09 28/6/10 tant APL (FY09) research center listing 9/9/09 9/6/10 5 Energy Federal Goods Elect. Access Procurement of vehicles NCB Small Bidding 0.75 1 (0.25) (0.50) 0.75 4 (3.3) P101556 Rural II SIL document 21/6/11 21/9/11 7/7/11 7/6/11 (FY07) submission 6 Touris Tigray Consul Tourism Develop. Preparation of QCBS Small Technical 0.75 1.25 (0.5) (2) NA NA NA m tant Project SIL development evaluation P098132 20/10/10 17/12/10 8/11/10 NA proposal and design for old houses of Axum for adaptive reuse 7 Urban Addis Goods Urban Local Govt Procurement of different ICB Small Bid 0.75 7.75 (7) (26) 0.5 10 (9.50) Dev. Ababa Development trucks evaluation P101474 24/11/08 31/10/11 25/1/11 30/5/10 (FY08) (8Vacuum trucks /liquid waste/4 Abattoir services, and 10Solid waste tractors) 8 Basic Federal Goods Protect. Basic Essential health ICB Mediu Bid 0.75 1.75 (1) (1) 0.5 0.7 (0.25) P103022 20/4/10 19/5/10 30/3/10 28/6/10 Serv. Serv. Phase II commodities m evaluation 5 (FY09) (Pharmaceuticals) 33 Actual duration from date World Bank No objection actual -expected duration date of preceding activity lead (lag) time in months Time elapsed in months, Expected duration from Deviation from plan in Expected Duration for Clearance in months of preceding activity WB Clearance Date Actual time for WB months - lead (lag) date of preceding Size of Contract WB clearance Procurement Project Title Sub Sector Project ID lead (lag) Category Contract Method activity Region Sector/ Actual (max) stage Plan # 9 Educat Federal Goods General Educ Grades 9-12 Mathematics, ICB Big Bid 0.75 3 (2.25) - 0.5 1 (0.5) ion Quality Improv. Biology, Chemistry, evaluation P106855 12/10/09 12/10/09 12/11/09 20/7/09 (FY09) Physics. Procurement of Textbooks & Teacher Guides. (Adaptation, printing & distribution) - MoE 10 Basic Federal Goods Protect. Basic Procurement of NCB Small Bid 0.75 1 (0.25) (1) 0.5 0.5 - P103022 11/2/10 12/3/10 31/3/10 Serv. Serv. Phase II Computers and evaluation 8/2/10 (FY09) Network Materials for Central Statistical Agency 11 Basic Federal Consul Protect. Basic MIS design, specification, QCBS Small Issuance of 0.5 0.5 - (0.5) NA NA NA P103022 14/10/11 13/10/11 Serv. tant Serv. Phase II and EOI 1/11/11 NA (FY09) specialized software development for the Rural Roads Sector (COPCU) 12 Capaci Federal Consul Public Sector Consultant to conduct QCBS Small Short 0.5 1.5 (1) (7) 0.5 0.5 - P07402 19/6/08 26/7/08 20/1/09 9/1/09 ty tant Capacity Building second corruption survey listing 0 Buildi Project (FY04) in Ethiopia (FEAC)( ng Ongoing Activity) 13 Food Federal Goods Productive Safety Procurement of 35 units ICB Small Bid 0.75 1.75 (1) (1) 0.5 0.5 - P113220 15/5/10 16/6/10 20/4/10 24/6/10 securit Nets (APL III) of evaluation y Rub Halls 14 Capaci Federal Goods Cap. Building for Laboratory Supplies & NCB Small Bid 0.75 4.5 (3.75) (7) NA NA P079275 ty Agric. Serv Lab. Chemicals evaluation 10/1/10 24/3/10 7/8/10 NA Buildi (FY06) ng 15 Urban SNNPR- Works Urban Local Govt 3 km Gravel Road and NCB Small Bid 0.75 0.25 0.5 (4) NA NA NA P101474 29/1/10 25/5/10 17/5/10 Dev. Shashe Development Masonry evaluation NA mene (FY08) drain (under construction) of arada and stadium routes 16 Urban SNNPR- Works Urban Local Govt Cultural Centre NCB Small Bid 0.75 0.5 0.25 (1.75) NA NA NA P101474 22/3/11 17/5/11 Dev. Hawassa Development Construction evaluation 6/5/11 NA (FY08) 17 Urban SNNPR- Consul Urban Local Govt Design/Supervision of QCBS Small Short 0.5 1 (0.5) - NA NA NA P101474 10/12/09 10/1/09 10/1/09 Dev. Jimma tant Development Masonry Drains listing NA (FY08) 34 20 19 18 # Sector/ Dev. Dev. Sub Sector Urban Urban Energy Region Federal Tigray- Adigrat UDCBO Federal - Category Goods Goods P097271 P101474 P101474 Works Project ID (FY08) (FY08) Project Title Development Development Electricity Access Urban Local Govt Urban Local Govt (Rural) Expansion towns) and soft Contract ware for Base Map preparation (for 150 Supply of Conductors Purchase of hard ware Drainage (in rolling) Lot 1 ICB ICB Method NCB m Size of Contract Small Small Mediu Bid Bid Bid Procurement 35 stage invitation evaluation evaluation 22/7/11 18/3/08 8/2/11 Plan 6/9/11 24/4/09 4/4/11 Actual 19/8/11 18/11/08 18/3/11 date of preceding activity Expected duration from date of preceding activity 0.5 0.75 0.75 (max) Actual duration from date 0.5 0.5 5.25 of preceding activity Time elapsed in months, - actual -expected duration 0.25 (4.5) lead (lag) Deviation from plan in (2) (1.5) months - lead (lag) (13.25) NA 11/6/09 19/4/11 WB Clearance Date Expected Duration for 0.5 0.5 NA WB clearance Actual time for WB 1.5 0.5 NA Clearance in months World Bank No objection - (1) NA lead (lag) time in months ANNEX 3: NON-LENDING SERVICES AND ACTUAL DELIVERIES (FY10-12) CAS Plans Status at Completion 2010 Eastern Nile Strategic Basin Assessment (Planned FY10) Completed FY11 Land Administration Note Completed FY11 Urban Poverty (Urban Vulnerability Note) Completed Urban Safety Net TA (Urban Vulnerability Note) Completed Design & Implement. a Rural Safety Net Completed Capacity Building TA Completed Financial Sector Review Completed Portfolio FM Arrangement Sty: CIFA/PEF Completed Procurement Reforms (included in CASPR) Completed FY10/11 Development Policy Review (DPR) Now a joint donor TF with DFID, CIDA and RNE Joint Governance Assessment and Measurement (JGAM) Planned or underway (FY12) Country Integrated Fiduciary Assessment (CIFA) Completed CAS Progress Report Plans Status at Completion 2011 Public Expenditure Review 2011 Completed Roads Rural Access Development Completed Climate Change Completed Innovation for Development Planned or underway Land Administration Note Completed (from FY10) Health Systems for Outcomes TA Completed Mining Sector Support and EITI (TA) Completed Economics of Adaptation to Climate Change Completed FY11 2012 ICT for Transformation (TA) Planned or underway Tourism Sector Competitiveness Planned or underway Service Trade and Growth Planned or underway Rural Access to Solve Development Constraints Planned or underway A&A ROSC follow up (TA) Planned or underway Decentralized Service Delivery Planned or underway Secondary Education Review Planned or underway Health System Strengthening and Dialog (TA) Planned or underway Poverty and Migration (TA) Planned or underway Public Sector Capacity Building Planned or underway ARD Public Expenditure Review Planned or underway Professional Services Planned or underway Land Administration (TA) Planned or underway Macroeconomic Scenario Analysis Note Produced as monthly updates AAA produced for ILs and Quarterly Economic Monitoring Report Produced as monthly updates Value Chain Analysis Notes Conducted for the AGP and RCBP ongoing activities Rural Economy Survey Conducted for the AGP and RCBP Service Delivery Quality and Decentralization Conducted through PBS 2 PSNP Graduation Strategy Note Conducted as part of PSNP TA for SLM Platform During CASPR scope changed to Climate Change and Climate Change Adaptation AAA Policy dialog using FY07 Part of an engagement on health issues and Analysis of the Nature of Corruption Note demographic transformation Coordination through DAG and Sector Working Groups Part of JGAM trust fund Energy Strategy Ongoing activity 36 ANNEX 4: ETHIOPIA TRUST FUND (TF) PORTFOLIO ETHIOPIA TRUST FUND PORTFOLIO (as of July 1, 2012, in US$’000) TF # Trust Fund Name Closing Net Grant Disbursed Available BANK EXECUTED TRUST FUNDS TF094286 ETHIOPIA: JOINT GOVERNANCE AS 6/30/2014 1,772 1,328 251 TF011988 The Statistics for Results Facility 6/30/2014 100 9 76 TF090731 ETHIOPIAN PUBLIC SECTOR CAPACI 8/31/2012 3,540 2,674 760 TF010498 GPOBA (W3 SPN): Ethiopia Elect 4/30/2014 466 46 81 TF010499 GPOBA (W3 SPN): Ethiopia Elect 6/30/2013 90 67 22 TF011718 Ethiopia #10108 Regulatory and 11/30/2012 227 22 185 TF093597 ETHIOPIA GENERAL EDUCATION QUA 6/30/2013 587 402 151 TF094648 ETHIOPIA EFA/FTI GENERAL EDUCA 6/30/2013 298 207 80 TF011147 READ II - Ethiopia 6/30/2013 800 13 701 TF012443 Trust Fund Management and Administration 6/30/2013 166 - - TF010724 Strengthening the Nutrition In 9/30/2012 99 12 87 TF093958 Piloting Community-Based Management 8/14/2013 85 82 3 TF095046 Reducing Malnutrition Caused b 6/30/2013 180 131 49 TF098859 Strengthening the Early Warning 9/30/2012 300 141 154 TF055684 PSNP 6/30/2015 2,744 2,705 39 TF055879 PSNP Partnership 6/30/2015 6,476 4,800 1,294 TF056333 PSNP Partnership 6/30/2015 87 87 - TF091470 PSNP - MDTF Partnership 6/30/2015 583 553 29 TF058321 ETHIOPIA PROTECTION OF BASIC S 2/28/2013 1,754 1,732 (3) TF095900 ETHIOPIA PBS PHASE 2-BASIC SER 2/28/2013 2,041 2,008 33 TF095901 ETHIOPIA PBS PHASE 2-ENHANCED 8/31/2012 134 69 66 TF099449 PSNP APLIII: Enhanced Supervision 2/28/2015 591 336 204 TF011830 Protection of Basic Services S 12/31/2016 188 49 1 TF011240 Ethiopia: DRM Specialist (GFDR 6/30/2013 55 24 8 TF012677 Ethiopia: Capacity Building in 9/28/2012 82 17 64 TF095889 Ethiopia - PBS Phase II -Basic 2/28/2013 90 44 46 TF091564 WATER SUPPLY AND SANITATION CO 12/31/2012 625 569 56 TF099708 Ethiopian Diaspora Health and 8/31/2012 320 155 115 TF010984 ET Sustainable Support for Rural 6/30/2013 50 - 50 TF094239 RED&FS CHILD TF 2/28/2013 2,499 1,924 569 TF099038 LEN&SPN for GASFP Co-financing 3/31/2016 1,070 277 61 TF010180 Agriculture Finance Support Farmers 9/30/2012 60 56 4 TF094826 Piloting an Indemnity Livestock 8/15/2012 225 152 48 TF099524 AF/ETH Scaling Up Rural Sanitation 6/30/2013 1,999 511 912 TF095587 Ethiopia: EITI Implementation 12/21/2012 255 94 54 TF099753 ROUND 29 ETHIOPIA: SUPPORT TO 11/4/2015 135 30 92 TF095395 Access to Finance for Producer 6/30/2013 250 165 51 TF096344 Access to Finance for Producer 12/31/2013 500 259 241 TF096528 Access to Finance for Producer 12/31/2013 500 53 270 TF011838 Ethiopia Climate Innovation Center 8/1/2016 900 22 870 TF099688 Ethiopia CIC Project 3/31/2013 150 150 0 TF097095 Access to Finance for Producer 6/30/2013 120 73 47 TF011647 Ethiopia Investment Climate 2/28/2013 100 79 6 Sub-Total 33,292 22,127 7,829 RECEIPIENT EXECUTED TRUST FUNDS TF092600 Ethiopia Electricity Access Rural Expansion 6/30/2013 6,200 44 6,156 TF092601 Ethiopia Electricity Access Rural Expansion 6/30/2013 1,800 13 1,787 TF096664 Promotion of Ethanol Micro- Distillers 9/30/2012 148 22 126 TF098157 Support to Accountancy Profess 3/14/2014 500 200 300 TF092320 GEF FSP - Sustainable Land Management Project 9/30/2013 9,000 6,265 2,735 TF095045 Co-financing of the Tana and Beles 9/30/2013 3,485 2,364 - TF093227 EFA FTI Catalytic Fun 7/7/2013 70,000 67,879 2,121 TF094224 GEQIP 6/13/2013 164,730 96,717 68,001 TF097263 Catalytic Fund Grant II for Ethiopia 6/30/2013 98,000 87,512 10,488 TF010247 Strengthening the Nutrition Information 9/30/2012 650 200 450 TF093946 Piloting Community-Based Management 8/14/2013 1,810 716 1,095 TF097830 PBS 12/31/2012 359 - 359 TF097831 PBS 12/31/2012 2,606 - - TF099450 PSNP 12/31/2014 56,385 56,385 - 37 ETHIOPIA TRUST FUND PORTFOLIO (as of July 1, 2012, in US$’000) TF # Trust Fund Name Closing Net Grant Disbursed Available TF011209 Ethiopia:(RETF) Disaster Risk 6/30/2013 1,275 - 1,275 TF099878 PBS 11/30/2013 7,500 - 7,500 TF091704 Water Supply And Sanitation 12/31/2012 111,676 80,642 27,257 TF099283 Ethiopian Diaspora Education 8/31/2012 640 170 470 TF098159 Strengthening Capacity for Mobilization 3/29/2014 486 126 359 TF099729 Grant for Co-financing of the 9/30/2015 15,480 11,298 4,182 TF011306 GAFSP Grant for the Co-financing 9/30/2015 50,000 1,842 13,158 TF098979 Ethiopia: Improving the Quality 6/30/2015 1,832 716 517 TF090962 Ethiopia Humbo Assisted Regeneration 12/31/2018 726 149 7 TF098807 ROUND 29 ETHIOPIA: SUPPORT TO 11/4/2015 2,865 200 2,665 TF096713 DM09-3959 Adaptation to climate 12/31/2012 200 200 - Sub-total 608,353 413,660 151,007 TFs TOTAL PORTFOLIO 641,644 435,787 158,836 38 CONTRIBUTION OF ACTIVE TRUST FUNDS TO PROGRAMS/PROJECTS (as of July 1, 2012, in US$’000) Disbu- Closing IDA Project Trust Fund # Trust Fund Name Net Grant Available Exec. By Major donors rsed Date TF010984 ET Sustainable Support for Rural Poor Women Ent. 50 - 50 6/30/2013 Bank Australia, Gates Agricultural TF094239 RED&FS CHILD TF 2,499 1,924 569 2/28/2013 Bank Foundation, Ireland, Growth Program TF099038 LEN&SPN for GASFP Co-financing of Ethiopia 1,070 277 61 3/31/2016 Bank Korea, UK, Japan, (P113032, TF099729 Grant for Co-financing of the AGP 15,480 11,298 4,182 9/30/2015 Recipient CIDA, USAID, Spain, P127507) TF011306 GAFSP Grant for the Co-financing of Agric. Growth 50,000 1,842 13,158 9/30/2015 Recipient Netherlands Sub Total 69,099 15,340 18,021 % of total TF Active Portfolio 10.8% 3.5% 11.3% General Educ. TF011147 READ II – Ethiopia 800 13 701 6/30/2013 Bank Quality Impr. TF012443 TF Mgmt & Admin for Co-financing of GEQIP 166 - - 6/30/2013 Bank Global Partnership for Project - APL 1 TF093597 GEQIP 587 402 151 6/30/2013 Bank Education, DFID, (GEQIP) TF094648 Ethiopia EFA/FTI General Education 298 207 80 6/30/2013 Bank Finland, Italian (P106855, TF093227 Ethiopia EFA FTI Catalytic Fund Grant 1 70,000 67,879 2,121 7/7/2013 Recipient Cooperation, P116863, TF094224 GEQIP 164,730 96,717 68,001 6/13/2013 Recipient Netherlands, Russia P118700) TF097263 Catalytic Fund Grant II for GEQIP 98,000 87,512 10,488 6/30/2013 Recipient Sub Total 334,581 252,731 81,541 % of total TF Active Portfolio 52.1% 58.0% 51.3% TF011830 PBS Social Accountability Prog. Mgmt & TF Admin 188 49 1 12/31/2016 Bank TF058321 PBS Secretariat 1,754 1,732 (3) 2/28/2013 Bank PBS Phase II - Basic Services Block Grant & TF TF095889 Admin 90 44 46 2/28/2013 Bank Ethiopia Protection PBS Phase 2-Basic Service Block Grants of Basic Services EU, DFID, Ireland, TF095900 (Subprogram A) Enhanced PBS Supervision 2,041 2,008 33 2/28/2013 Bank (P124475, Spain, Italy, KfW, PBS Phase 2-Enhanced Program Supervision For P103022, CIDA and Netherlands TF095901 Subprogram B (Health Component) 134 69 66 8/31/2012 Bank P129534) PBS Phase II Project - Subprogram C Part 1 TF097831 Accountability in Decentralized Finances & Services 2,606 - - 12/31/2012 Recipient TF097830 PBS Phase II Support to Subprogram D M&E 359 - 359 12/31/2012 Recipient TF099878 PBS Accountability Program Project 7,500 - 7,500 11/30/2013 Recipient Sub Total 14,672 3,901 8,003 % of total TF Active Portfolio 2.3% 0.9% 5.0% Water Supply & Sanitation (WSS) TF091564 WSS Co-Financing Management And Supervision 625 569 56 12/31/2012 Bank DFID (P076735) TF091704 WSS Co-Financing Management And Supervision 111,676 80,642 27,257 12/31/2012 Recipient Sub Total 112,301 81,211 27,313 Percentage of total TF Portfolio 17.5% 18.6% 17.2% TF011240 Ethiopia: DRM Specialist (GFDRR: Track II TA) 55 24 8 6/30/2013 Bank Productive Safety TF055684 PSNP 2,744 2,705 39 6/30/2015 Bank CIDA, SIDA, US, Nets Project TF055879 PSNP Partnership 6,476 4,800 1,294 6/30/2015 Bank WFP, Irish Aid, (P087707, TF056333 PSNP Partnership 87 87 - 6/30/2015 Bank DIFID, Denmark, P129151, TF091470 PSNP - MDTF Partnership 583 553 29 6/30/2015 Bank Netherlands, EU P113220) TF099449 PSNP APLIII: Enhanced Supervision 591 336 204 2/28/2015 Bank TF099450 Ethiopia Productive Safety Net Program (APLIII) 56,385 56,385 - 12/31/2014 Recipient Sub Total 66,920 64,890 1,575 39 CONTRIBUTION OF ACTIVE TRUST FUNDS TO PROGRAMS/PROJECTS (as of July 1, 2012, in US$’000) Disbu- Closing IDA Project Trust Fund # Trust Fund Name Net Grant Available Exec. By Major donors rsed Date % of total TF Active Portfolio 10.4% 14.9% 1.0% TF010724 Strengthening the Nutrition 99 12 87 9/30/2012 Bank TF093958 Piloting Community-Based Mgmt 85 82 3 8/14/2013 Bank Nutrition TF095046 Reducing Malnutrition Caused 180 131 49 6/30/2013 Bank (P106228) Multi-donors; Japan TF098859 Strengthening the Early Warning 300 141 154 9/30/2012 Bank TF010247 Strengthening the Nutrition 650 200 450 9/30/2012 Recipient TF093946 Piloting Community-Based Mgmt 1,810 716 1,095 8/14/2013 Recipient Sub Total 3,124 1,282 1,838 % of total TF Active Portfolio 0.5% 0.3% 1.2% 40 ANNEX 5: LIST OF ACTIVE PROJECTS AS OF END-DECEMBER 2011 Project Net Cumulative Disbursement Date Date, Age Latest Latest Project Name number Commitment Disbursement Ratio Effectiveness Closing yrs ISR DO ISR IP P079275 Cap. Building for Agric. Serv (FY06) 41.00 43.07 19.06 12/28/06 06/30/12 5.5 MS MS P092353 Irrigation & Drainage SIL (FY07) 150.00 22.81 2.27 01/24/08 10/31/17 4.5 MS MS P108932 Pastoral Community Develpt II (FY08) 80.00 40.86 10.04 10/09/08 12/31/13 3.6 S S P113032 Agricultural Growth Program 150.00 15.72 4.19 02/16/11 09/30/15 1.3 S S P112688 Eastern African Agricultural Productivity (Reg) 30.00 3.50 1.05 03/16/10 2/27/15 1.7 MS MS P106855 General Educ Quality Improv. (FY09) 50.00 32.85 20.84 06/10/09 07/07/13 3.0 S MS P049395 Energy Access SIL (FY03) 312.70 134.59 6.62 04/09/03 06/30/13 9.3 MS MS P074011 Nile Basin Initiative:SU Interconnector 41.05 35.02 29.01 07/31/08 06/30/12 4.0 MS MS P097271 Electricity Access (Rural) Expansion 133.40 89.41 14.41 01/19/07 12/31/12 5.5 MS MS P101556 Elect. Access Rural II SIL (FY07) 130.00 16.77 3.83 03/31/08 11/30/13 4.4 MS MS P107139 Sustainable Land Mngt SIL (FY08) 20.00 12.71 33.06 10/10/08 09/30/13 3.7 MS MS P050272 Priv Sec Dev CB 17.00 15.03 26.66 07/15/05 07/31/12 7.0 S S P094704 Financial Sector Cap. Bldg. Project 15.00 9.20 0.00 12/09/06 9/30/11 P098132 Tourism Develop. Project SIL 35.00 4.48 0.77 02/25/10 12/30/14 2.5 MU MU P098031 Multi-Sectoral HIV/AIDS II (FY07) 25.00 26.00 100.00 9/30/11 9/30/11 P106228 Nutrition SIL (FY08) 30.00 11.04 11.19 09/10/08 01/07/14 3.7 S S P074020 Public Secor Cap Bldg Project (FY04) 130.00 113.34 44.30 11/22/04 12/31/12 7.6 S S P103022 Protect. Basic Serv. Phase II (FY09) 960.00 738.52 0.93 05/22/09 01/07/13 2.6 S S P113220 Productive Safety Nets (APL III) 480.00 321.44 40.07 01/18/10 06/30/15 2.2 MS MS P082998 Road Sector Dev APL2 under RSDP 348.20 332.18 51.04 06/08/05 06/30/12 7.3 S S P091077 APL3-RSDP Stage III Proj (FY07) 225.00 98.05 7.74 08/21/07 06/30/15 4.6 S MS P106872 RSDP Stage IV APL (FY09) 245.00 47.38 11.82 09/14/09 06/30/16 2.6 S S P076735 Water Sply & Sanitation SIL (FY04) 167.00 90.41 8.29 11/22/04 03/31/13 7.6 S MS P101473 Urban WSS SIL FY07) 100.00 42.77 7.99 09/07/07 12/31/12 4.7 S MS P101474 Urban Local Govt Development (FY08) 300.00 118.74 3.68 11/10/08 12/31/14 3.6 S S P096323 Tana &Beles Int. Wat Res Dev Project 45.00 7.68 4.72 10/08/08 09/30/13 3.6 MS MS TOTAL 4,260.35 2,423.56 12.93 41 ANNEX 6: PORTFOLIO INDICATORS – WORLD BANK Net Commit Commit Problem Problem Potential Potential At Risk At Risk Realism Proactivity Regions # Proj Commit at Risk at Risk (#) (percent) (#) (percent) (#) percent (percent (percent) ($m) ($m) (percent) FY11 (as of November 2011) OTH 4 37 0 0 0 0 0 0 0 0 100 AFR 503 38,270 58 12 64 13 122 24 7,478 20 34 76 EAP 282 29,208 42 15 16 6 58 21 3,481 12 100 43 SAR 212 39,500 30 14 13 6 43 20 5,790 15 57 76 ECA 256 21,385 35 14 2 1 37 14 1,406 7 75 65 MNA 124 8,250 34 27 14 11 48 39 1,724 21 80 67 LCR 297 32,517 37 12 21 7 58 20 4,419 14 63 74 Overall Result 1,678 169,167 236 14 130 8 366 22 24,297 14 59 68 FY12 (as of January 2012) OTH 4 37 1 25 0 0 1 25 5 13 100 AFR 473 37,281 51 11 55 12 106 22 6,547 18 32 82 EAP 264 27,054 36 14 12 5 48 18 3,262 12 92 51 SAR 198 38,155 22 11 15 8 37 19 5,772 15 48 80 ECA 235 20,980 28 12 3 1 31 13 1,301 6 67 72 MNA 114 7,942 35 31 10 9 45 39 1,714 22 91 63 LCR 286 30,495 34 12 25 9 59 21 3,425 11 60 72 Overall Result 1,574 161,944 207 13 120 8 327 21 22,025 14 56 72 42 Average Number of Risk Flags (FY10 – mid FY12) Years Average PID Project Name Active Risk Flags AFTAR P079275 6.0 Cap. Building for Agric. Serv (FY06) 3 AFTWR P096323 3.6 Tana &Beles Int. Wat Res Dev Project (FY08) 3 AFTEG P097271 6.5 Electricity Access (Rural) Expansion (FY06) 3 AFTAR P113032 1.3 ET: Agricultural Growth Program (FY11) 2 AFTEG P049395 10.8 Energy Access SIL (FY03) 2 AFTU1 P101473 4.7 Urban WSS SIL (FY07) 2 AFTFE P050272 7.0 Priv Sec Dev CB (FY05) 2 AFTH3 P103022 2.6 ET-Protect. Basic Serv. Phase II (FY09) 2 AFTPR P074020 8.6 Pub Sec Cap Bldg Prj (FY04) 2 AFTSP P113220 2.2 ET Productive Safety Nets (APL III) (FY10) 2 AFTU1 P101474 3.6 Urban Local Govt Development (FY08) 2 AFTAR P092353 4.5 Irrigation & Drainage SIL (FY07) 1 AFTFP P098132 3.6 Tourism Develop. Project SIL (FY09) 1 AFTAR P108932 3.6 Pastoral Community Develpt II (FY08) 1 AFTH3 P106855 3.0 ET-General Educ Quality Improv. (FY09) 1 AFTTR P082998 7.3 Road Sec Dev Prgm Ph 2 Supl 2 (FY05) 1 AFTTR P091077 4.6 APL3-RSDP Stage III Proj (FY07) 1 AFTTR P106872 2.6 ET-RSDP Stage IV APL (FY09) 1 AFTUW P076735 8.9 Water Sply & Sanitation SIL (FY04) 1 43 ANNEX 7: PREPARATION TIME Sector Project Name Months Concept Note to Signing of Minutes of Negotiations AFTEG Energy Access SIL (FY03) 105.27 AFTUW Water Sply & Sanitation SIL (FY04) 14.73 AFTPR Pub Sec Cap Bldg Prj (FY04) 22.00 AFTTR Road Sec Dev Prgm Ph 2 Supl 2 (FY05) 30.90 AFTEG Electricity Access (Rural) Expansion (FY06) 5.77 AFTAR Cap. Building for Agric. Serv (FY06) 28.67 AFTU1 Urban WSS SIL (FY07) 5.93 AFTEG Elect. Access Rural II SIL (FY07) 6.07 AFTTR APL3-RSDP Stage III Proj (FY07) 65.30 AFTAR Pastoral Community Develpt II (FY08) 2.97 AFTU1 Urban Local Govt Development (FY08) 11.70 AFTWR Tana &Beles Int. Wat Res Dev Project (FY08) 22.17 AFTAR ET GLOBAL FOOD CRISIS RESPONSE PRO (FY09) 2.10 AFTTR ET-RSDP Stage IV APL (FY09) 4.00 AFTH3 ET-General Educ Quality Improv. (FY09) 12.37 AFTH3 ET-Protect. Basic Serv. Phase II (FY09) 13.77 AFTSP ET Productive Safety Nets (APL III) (FY10) 6.07 Signing to Effectiveness AFTEG Energy Access SIL (FY03) 6.50 AFTPR Pub Sec Cap Bldg Prj (FY04) 3.03 AFTUW Water Sply & Sanitation SIL (FY04) 3.03 AFTTR Road Sec Dev Prgm Ph 2 Supl 2 (FY05) 3.00 AFTFE Priv Sec Dev CB (FY05) 4.23 AFTAR Cap. Building for Agric. Serv (FY06) 4.77 AFTEG Electricity Access (Rural) Expansion (FY06) 5.50 AFTTR APL3-RSDP Stage III Proj (FY07) 2.47 AFTU1 Urban WSS SIL (FY07) 3.80 AFTAR Irrigation & Drainage SIL (FY07) 6.50 AFTEG Elect. Access Rural II SIL (FY07) 8.73 AFTWR Tana &Beles Int. Wat Res Dev Project (FY08) 3.90 AFTAR Pastoral Community Develpt II (FY08) 3.93 AFTU1 Urban Local Govt Development (FY08) 5.00 AFTEG Nile Basin Initiative:SU Interconn (FY08) 6.53 AFTH3 ET-Protect. Basic Serv. Phase II (FY09) 0.20 AFTAR ET GLOBAL FOOD CRISIS RESPONSE PRO (FY09) 0.37 AFTTR ET-RSDP Stage IV APL (FY09) 3.37 AFTFP ET-General Educ Quality Improv. (FY09) 5.43 AFTH3 Tourism Develop. Project SIL (FY09) 5.43 AFTSP ET Productive Safety Nets (APL III) (FY10) 1.63 44 ANNEX 8: EXTENSION OF PROJECTS CLOSING DATE Cumulative Disbursement Disbursed Years Active at Ratio at Amount at Original Revised Years Original Original Net Original Sector Project Name Closing Date Closing Date Active Closing Date Closing Date Commitment Closing Date Agric Cap. Building for Agric. Serv (FY06) 31-Oct-11 30-Jun-12 6.0 5.4 76 percent 37.00 28.07 Energy Electricity Access (Rural) Expansion (FY06) 31-Dec-09 31-Dec-12 6.5 3.5 33 percent 92.80 30.48 Energy Energy Access SIL (FY03) 30-Jun-09 30-Jun-13 10.8 6.8 18 percent 224.10 40.34 Private Priv Sec Dev CB (FY05) 30-Jun-11 31-Jul-12 7.0 6.5 50 percent 12.70 6.32 Public Pub Sec Cap Bldg Prj (FY04) 7-Jul-09 31-Dec-12 8.6 5.2 48 percent 98.40 47.16 Roads Road Sec Dev Prgm Ph 2 Supl 2 (FY05) 30-Jun-10 30-Jun-12 7.3 5.8 54 percent 235.10 127.44 Tourism Tourism Develop. Project SIL (FY09) 30-Jun-13 30-Dec-14 3.6 5.1 0 percent 23.60 - Water Water Sply & Sanitation SIL (FY04) 31-Mar-10 31-Mar-13 8.9 5.9 29 percent 102.20 29.57 45 ANNEX 9: QUESTIONNAIRES TO REGIONS AND BANK TTLs Country Portfolio Performance Review for World-Bank Financed Projects February 2012 This questionnaire has been developed for the CPPR Ethiopia. The overarching objective of the CPPR is to help the Government of Ethiopia (GOE) deliver more and better quality results on the ground. The CPPR will contribute to this goal by providing recommendations regarding: (i) improving quality and implementation performance of the Bank-assisted portfolio; and (ii) establishing a more systematic follow-up mechanism for engagement. The CPPR seeks to discuss most of the projects in the portfolio over the period 2009 to 2011. Please consider the following questions as a way to ensure that the CPPR process is done through a consultative process. The following pages will give you a set of broad issues that have been identified with regards to project implementation across various sectors. These issues were compiled on the basis of the assessment of the information that have been provided and reported by various Task Team Leaders of the World Bank during the last three years (FY09-11). Further, the issues have been validated through initial consultations with relevant government officials and other stakeholders. The process is still ongoing and the objective of the questionnaire is to present to you the common set of issues that were confronted by projects funded by the World Bank in the last three years. Possible ways to address these weaknesses are also being provided. The objective of this document is to seek your comments with respect to the following questions: 1. Constraints identified – are we missing anything? 2. What are the possible ways to address some of the constraints?  What do we need to do?  Who should do what?  What’s the timeframe? To simplify your response, the attached table has identified several constraints in the project implementation, M&E, FM and procurement areas. We have also indicated some possible measures to address these constraints. Please let us know whether there are any other ways/measures that should be undertaken to address and/or minimize the problems. Please indicate other problems that are not mentioned and are important in your view. Please also indicate whether the actions are of high, medium or low priority, who should take the lead in resolving the issue. Finally, please share with us any additional comments you may have. 46 Priority (High, Responsible CONSTRAINTSIDENTIFIED POSSIBLE ACTIONS TO ADDRESS ABOVE ISSUES Comments36 Medium, Agency Low)35 IMPLEMENTATION CONTRAINTS IDENTIFIED High staff turnover due to inadequate incentive Need for a comprehensive pay reform/review as discrepancies/low salaries make it mechanism and not conducive work environment. High difficult to recruit and retain good quality staff; staff turnover also makes capacity building through training less effective. Review current per diem policy; they should be implemented according to specific regional conditions Higher involvement of regions is needed in project design/preparation as well as implementation and monitoring Low ownership and implementation/follow-up at Intensify the communication line between MoFED and project implementing regional level. agencies(line ministries, BoFEDs, Woredas) through regular consultation and/or forums to discuss progress and address issues (i.e. monthly, quarterly, etc.) Need to clarify MoFED's role/responsibility in resolving implementation constraints. Possible venues: retreats, Managers Club (quarterly, chaired by State Minister), Better knowledge and experience sharing is required involve MOFED &COPCUHeadin SPN missions not only wrap-ups. within the Bank, between the Bank and GOE, and among the implementing agencies. Need to establish a systematic communication mechanism (e.g., regular meetings) with GOE at technical and high level to address systemic portfolio issues. Target staff of BoFEDs shouldbe trained on focus areas (Proj Mgt/FM/Proc) to serve as the trainers at the Woreda level. Their training should be carried out Increased capacity building efforts at all levels. through more intensive use of case studies (more customized hands-on and less classroom type approach). Design & implement training to fit local needs (Regions, woredas, zones) Other Constraints (pls add) Other Actions (pls. add) FM CONTRAINTS IDENTIFIED Need for standardization of FM Manuals for all donors Cumbersome FM procedures, different for every project Adopt the appropriate guidelines for the local level. These should be translated in the local language and effectively disseminated by fully trained BoFED staff. 35 Please indicate whether High, Medium or Low Priority. 36 Provide additional comments, if any. 47 Priority (High, Responsible CONSTRAINTSIDENTIFIED POSSIBLE ACTIONS TO ADDRESS ABOVE ISSUES Comments36 Medium, Agency Low)35 Vicious circle of qualified Audit Reports – although action plans are prepared, there is limited implementation and follow-up, resulting in qualified audit the following year with the same issues. Weak internal controls and poor quality of internal auditat all levels – federal, region and woreda. Significant cash and unsettled advances at regions and Use MFIs as an alternative mechanism to administer the cash at woreda level. woreda-level. Delays in submission of audit reports within the due date Continue with the existing practice of holding block grants if appropriate reports are (although recent improvements noted). not submitted on time. Dormant/Inactive Designated Accounts due to delays and low quality of submitting the withdrawal applications. Most projects lack senior accountants that have adequate experience to effectively run the FM. Other Constraints (pls add) Other Actions (pls. add) PROCUREMENT CONTRAINTS IDENTIFIED To address it, the Bank is deploying procurement consultants to provide hands-on support to prepare documents and follow up. This approach eventually improves Lack and/or weak key procurement staff at all levels: performance, and in time capacity transfer takes place. Should this “middle man� federal, regional and woreda. Problems with attracting and approach be adopted portfolio wide? keeping good quality staff. Require all staff involved in project procurement processing to, as a minimum, undertake the Basic Procurement Training offered at EMI in collaboration with the Bank Serious weakness in contract management capacity, Recruitment and deployment of qualified staff, Regular training and experience especially for large and complex transactions. sharing forums, and Standardized procurement manuals. A separate operation is needed to address all the capacity issues together Disconnect between the Annual Work Plans and Procurement Plans – lack of realism and connection to PP should both be done by the AWP team facilitated by Procurement Staff due procurement processes. Delays in procurement actions due to no advanced procurement action before the project’s approval by WB Agree with MOFED and implementing agencies on starting the procurement Board. process while the WB loan is being prepared/processed for approval. 48 Priority (High, Responsible CONSTRAINTSIDENTIFIED POSSIBLE ACTIONS TO ADDRESS ABOVE ISSUES Comments36 Medium, Agency Low)35 Harmonize, standardized and adequately disseminate procurement documents. This should be accompanied by simple and easy to understand guidelines in the local language. BoFEDs should also conduct procurement clinics with Woredas on a Delays in procurement actions due to lack of regular or need basis. This should be focused on simple procurement procedures standardized manuals used at the local level. The goal is to ensure compliance through effective dissemination of the required information (avoiding use of jargons and complex procedures that may not be applicable at the community level) Delays in procurement actions due to lack of action on Adapt and/or Intensify the use of procurement service standards (compliance contracts signing after the Bank no objection. enforcement and adequate follow-up). Different procurement standards in regions. In 2009 GOE introduced a new Proc. Proclamation and Directives. But standard bidding docs and manuals have not been Finalize and disseminate the public procurement manuals disseminated. Hence, in absence of a comprehensive national proc. system and guidance, there is an issue which systems to use: regional/woreda or the Bank's? Other Constraints (pls add) Other Actions (pls. add) M&E CONTRAINTS IDENTIFIED Following up on the PAD agreement to recruit an M&E specialist in PCUs. For some projects outcome indicators are not tracked during project implementation and/or are not aligned with Continuous training and capacity building in M&E areas for the Bank staff (TTLs) project objectives; as well as GOE implementers. Baselines and targets, as well as progress data are missing and project objectives rating provided is not supported by Make more use of project restructuring if data is hard to obtain and/or indicators are information from the project M&E system irrelevant. Weak M&E reports particularly in woredas and regions mainly due to: (i) poor or lack of baseline data; and (ii) Make efforts to integrate project M&E into GOE systems (including database). Use limited systematic recording of good practices. Hence, local knowledge in developing reporting formats. measurement of achievements through evidence-based analysis remains limited. Delays in collecting and analyzing the reports from regions and institutions responsible for aggregating data. Other Constraints (pls add) Other Actions (pls. add) 49 Number of questionnaires distributed. Questionnaires were distributed to 168 individuals as follows: Delivered questionnaire BoFED and PIUs (from the WB contact list) 107  Addis Ababa regional workshop 8  Oromia, EPCO, ERA, City Admin 20  Amhara 16  Tigray 8  Afar 9 Regional workshops and AA meetings participants 61 Total 168 Methodology Used. Of the 168 blank questionnaires, only 20 responses were received or about 12 percent response ratio. Therefore, the results compiled may not be fully representative of the views of the entire universe of stakeholders targeted by this survey. However, the following charts present some interesting trends that may help rationalize the level of importance placed by respondents on each issue. The respondents were requested to rate the issue in terms of its importance (i.e. high, medium, low). When a recommendation is ranked, this is counted as one occurrence. This means that the length of the bars represents the number of times that a response or rating was made. Consequently, the higher the number of occurrence the longer the bar is. The colors in each bar represent the ratio or proportion of each rating for a particular recommendation. 50 Project Implementation Efficiency Measures Ranking Design & implement training to fit local needs Target staff of BoFEDs should be trained on focus areas Systematic communication mechanism Retreats, Managers Club High Need to clarify MoFED's role/responsibility Medium Intensify communication line between MoFED & PIUs Low Higher involvement of regions Review current per diem policy Need for a comprehensive pay reform FM Efficiency Measures Ranking Recruit/Depoloy qualified senior accountants Reduce/eliminate dormant/Inactive DAs Continue existing practice of holding block grants Use MFIs as option to administer the cash at High woreda level Medium Strengthen capacity dev at lower levels Low Auditors should report on prior year recommendations Adopt FM guidelines in local language Standardized FM Manuals for all donors 51 Procurement Efficiency Improvement Measures Ranking Finalize and disseminate the public procurement manuals Accelerate procurement actions so that contracts be signed quickly after WB clearance Standardized procurement manuals Advance procurement action prior to WB Board High approval Medium Collaboration between AWP team & Proc staff in procurement planning Low More Intensive training on Contract Mgt for large value procurement Intensify Basic Procurement Training (i.e. EMI) Recruit/deploy skilled procurement staff M&E Efficiency Improvement Measures Ranking Mainstream M&E tasks Integrate project M&E into GOE systems & use local knowledge when designing reports High Pursue project restructuring if data is hard to Medium obtain and/or indicators are irrelevant Low Continuous training /capacity bldg in M&E areas for WB TTLs/GOE implementers Recruit an M&E specialist in PCUs 52 Project Management Issues – Summary of Response to Questionnaire Project Management Issues Possible Actions Responsible Agencies Comments  Incentives like project allowances are required for staffs that work on projects from project funds for smooth implementation of the projects;  No commitment as per the PAD particularly salaries; WB/Gov,  The issue of pay reform is not project or donor specific but should be seen in the Federal/Regions, WB, wider context of the country; High staff turnover due to Need for a comprehensive MoFED/Line  Cannot and should not be addressed by the key implementing agency (IA), i.e., inadequate incentive mechanism pay reform/review as Ministries, CSC, MOA, or any of the many other IA of this project; (4) Regional condition; and not conducive work environment. High staff turnover discrepancies/low salaries GoE/WB, IPs,  The fundamental reason behind high turnover of qualified personnel inadequate make it difficult to recruit Stakeholders of the incentive and low payment not corresponding with escalating price and inflations, also makes capacity building and retain good quality staff; Project, there should be special incentive for experts working on projects funded by World through training less effective. Federal/Respective Bank; Sectors  Not sure we can or should influence this. Note that those staff that leave Go are going to private enterprise and their skills still of use to the sector as a whole. Perhaps better to promote increased out-sourcing of GoE functions;  Government and World Bank should take the issue seriously.  The issue of pay reform is not project or donor specific but should be seen in the High staff turnover due to Federal/Regions, WB, wider context of the country; inadequate incentive mechanism Review current per diem MoFED/Line  Cannot and should not be addressed by the key implementing agency (IA), i.e., and not conducive work policy; they should be Ministries, CSC, MOA, or any of the many other IA; environment. High staff turnover implemented according to GoE/WB, IPs,  Interference and fixing of per diem should be there from the side of World Bank, also makes capacity building specific regional conditions WB/Regional Sectors regional sectoral institutions may have possibility of distorting the rate; through training less effective.  This may not have much relation to retaining qualified staff; Federal/Regions,  Identification of the responsibility of each organ of the project during project Higher involvement of MoFED/BoFED/Sector preparation and Regular evaluation of the project; Low ownership and regions is needed in project al Ministries, Client,  Strengthen implementation support, particularly oversight on the fiduciary aspects of implementation/follow-up at design/preparation as well as BoFED/Line Ministries, projects & strengthening M&E systems; regional level. implementation and PIUs/MoFED, Regions,  Regions have strong ownership; monitoring IPs, Respective Sectoral Institutions/ Regions  Participation from community up to federal level is important. Intensify the communication  Establish time framed Monitoring, communication and evaluation systems and act line between MoFED and All parties, accordingly; project implementing MoFED/BoFED/Minist  Sector ministries/bureaus should take the lead in improving this communication at all Low ownership and agencies(line ministries, ries, BoFED/Line levels; implementation/follow-up at BoFEDs, Woredas) through Bureau/WB,  MoFED has extremely limited role in AGP and much stronger guidance and regional level. regular consultation and/or PIUs/MoFED, oversight by MoFED vis-à-vis MOA for AGP and other MOA-implemented projects forums to discuss progress MoFED/WB, IPs, is required; and address issues (i.e. PIUs/BoFED/WB  Regular and continuous communication and consultation among actors are key monthly, quarterly, etc.) factor for the success of projects implementation and monitoring; 53 Project Management Issues Possible Actions Responsible Agencies Comments  Continuous follow up of the projects; Need to clarify MoFED's MoFED/Ministries, Low ownership and  MoFED should make its role stronger and clearer; role/responsibility in MoFED, MoFED/Line implementation/follow-up at resolving implementation Ministries, MoFED,  Regular and continuous training both short and long terms as well as awareness regional level. creations and consultation helpful to upgrade regional states and implementing constraints. WB, Ips, Regions sectors capacity need attention at the level of world bank country office; Possible venues: retreats, Better knowledge and experience Managers Club (quarterly, Bank/GoE, sharing is required within the  Low priority as long as MoFED’s capacity remains limited; chaired by State Minister), MoFED/Line Bank, between the Bank and  To a certain degree this is already done thru DAG transport sub-groups (TSWG, involve MOFED Ministries, WB, IPs, GOE, and among the RAMSG and RSSG). &COPCUHeadin SPN WB implementing agencies. missions not only wrap-ups. Need to establish a GoE, WB/Client, Better knowledge and experience systematic communication  It is important that each responsible stakeholder pre-informed on the upcoming MoFED/Line sharing is required within the mechanism (e.g., regular portfolio meetings; Ministries/BoFED/Line Bank, between the Bank and meetings) with GOE at  In case of pooled programs/projects, DPS should be involved; Bureaus, WB/MoFED, GOE, and among the technical and high level to  Bank should not do this in isolation but with other DPs; RED/FS (DAG), IPs, implementing agencies. address systemic portfolio WB  This is already done at the technical level of the Transport Sector. issues. Target staff of BoFEDs Donor, should be trained on focus Coodinators/Implement areas (Proj Mgt/FM/Proc) to ers, Bank/GoE,  Training should be given regularly (e.g. once a year) to address staff turnover; serve as the trainers at the WB/Client,  At least once in six month if training is conducted; Increased capacity building Woreda level. Their training BoFED/Line  The training should include all project implementing sectors for effective and efforts at all levels. should be carried out through Bureaus/WB, efficient implementation and monitoring of the project; more intensive use of case studies (more customized PIUs/MoFED w/ WB-  Short term trainings on development issues, M&E, Livelihood is essential. DP support, WB, IPs, hands-on and less classroom WB type approach). Design & implement training MoFED/BoFED,  The training and capacity at woreda and zones should be jointly run by BOFED and Increased capacity building to fit local needs (Regions, BoFED/Line Bureaus, respective project implementing agencies; efforts at all levels. woredas, zones) IPs, WB  Trainings on analytical issues like different statistical methods is vital. 54 Other Project Management Issues noted by respondents Responsible Agencies Possible Actions Increased capacity building efforts at all levels. Bank/MoFED Training of local staff at the early stages of the project Increased capacity building efforts at all levels. BoFED/Line Target staff of water and health bureaus should be trained on focus areas (Proj Bureaus/WB Mgt/FM/Proc) to serve as the trainers at the Woreda level. Their training should be carried out through more intensive use of case studies (more customized hands-on and less classroom type approach). Work load Recruit additional staff & give work diversification. Different office between the finance and implementation agency at Should be integrated. Woreda level. Lack of belonginness Building sense of ownership at all levels. Equal opportunities to all key stakeholders. There is no right person at the right position to do things with Put the right person at the right position. knowledge FM Issues – Summary of Response to Questionnaire FM Issues Possible Actions Responsible Agencies Comments MoFED/Donors, MoFED/Line  It would be more effective if the FM Manuals are prepared to Cumbersome FM procedures, Need for standardization of FM Manuals Ministries, PIUs/oFED/DPs, fit the local situation of Ethiopia; different for every project for all donors MoFE/WB, DPs, BoFED  Some donors use own FM procedures because of internal rules. Adopt the appropriate guidelines for the Regions, MoFED/BoFED, local level. These should be translated in MoFED/Line inistries/BoFED/Line the local language and effectively Bureaus, PIUs, Regions, IPs, disseminated by fully trained BoFED BoFED staff. Request auditors to report back on Vicious circle of qualified Audit previous years recommendations: Project Reports – although action plans should ensure that audit reports include a are prepared, there is limited MoFED/Line report on action taken on prior years audit  Detailed and quality report from auditors is vital to take implementation and follow-up, Ministries/BoFED/Line Bureaus, findings corrective action at all levels. resulting in qualified audit the PIUs/MoFED/DPs, IPs, BoFED MoFED will follow up of outstanding following year with the same audit issues and take appropriate action issues. 55 FM Issues Possible Actions Responsible Agencies Comments Capacity enhancement at lower levels  Report documentation in the region specifically to sanitation (e.g. posting additional accountants). and hygiene is poor; Weak internal controls and poor Regular training at all levels. Close and MoFED/Line  Taking actions on irregularities is critical; quality of internal auditat all regular implementation support by Ministries/BoFED/Line Bureaus,  In every level of public sector the internal audit should be levels – federal, region and MoFED to Ministries/PIUs and Regions.. PIUs/MoFED, MoFED/BoFED, strengthened and highly qualified professionals must be woreda. Strengthen Internal Auditors with IPs, BoFED/PIUs assigned; providing short term training & materials.  Auditors at woreda level are good to prevent miss (New) procurement procedures beforehand.  There should be contract accountant for WB budget Significant cash and unsettled management; Use MFIs as an alternative mechanism to BoFED/Line Bureaus , advances at regions and woreda-  How will this be practical? administer the cash at woreda level. PIUs/MoFED, IPs, BoFED/PIUs level.  Fax and other communication facilities at woreda region and Federal level will facilitate SOE sending.  Can the Office of Auditor General be encouraged to Delays in submission of audit MoFED/Line increasingly use private audit firms? Continue with the existing practice of reports within the due date Ministries/BoFED/Line Bureaus,  Holding block grant is not the means, because the action will holding block grants if appropriate (although recent improvements MoFED/OAG/DPs, MoFED/WB, slow down the performance and utilization of the fund at the reports are not submitted on time. noted). IPs, BoFED/PIUs given time;  Difficult to apply. Dormant/Inactive Designated Reduction or elimination of MoFED/Line Accounts due to delays and low domant/Inactive Das Ministries/BoFED/Line Bureaus,  At the time of recruiting, quality staffs should be employed. quality of submitting the IPs, BoFED/PIUs withdrawal applications. Recruitment/Deployment of senior accountants For decentralized projects, recruitment of Most projects lack senior sufficient number of mobile accountants  Can MoFED hire or deploy mobile experienced accountants to MoFED/Line Ministries, accountants that have adequate with a main task of would be to help projects which have issues? PIUs/MoFED, MoFED/BoFED, experience to effectively run the supporting woredas (especially when  As long as attractive payment is available, capable accountants IPs, BoFED/PIUs FM. gaps are observed ) can be deployed. Review incentive mechanisms of accountants to ensure recurring issues are dealt with appropriately Other FM Issues noted by respondents Responsible Agencies Possible Actions WASH budget is allocated to water resource and energy minister and bureau and water activities are dominant on sanitation and Budget allocation problem for Line Ministries. MoFED/Line Ministries/WB hygiene. Thus budget for at scale sanitation and hygiene needs to be allocated to MOH, regional health bureau and woreda health offices. 56 FM Issues Possible Actions Responsible Agencies Comments Untimely disbursement of budget. MoFED/Line Ministries/WB  Placement of a verification mechanism by preparing clear Threatening of hired employees under Temporary contract not to perform their rules and regulations of contract /temporary workers best for duties according the protocol and responsibilities because it is open for the IPs the employees and the host organization and the government bosses to terminate the agreement contract for baseless reasons . where the employees are housed. Different regulation on the financial agreement for instance Tax is illegible Establish standard financial agreement regulation for the entire expenditure for one project but not the other project. project Procurement Issues – Summary of Response to Questionnaire Procurement Issues Possible Actions Responsible Agencies Comments  Practical hands on training are very important in addition to To address it, the Bank is deploying other theoretical short term trainings on procurement; procurement consultants to provide  There is lack of qualified procurement specialist; Lack and/or weak key hands-on support to prepare documents Donors/Ministries, WB, WB,  Like FM staff, there is also a high staff turnover in procurement staff at all levels: and follow up. This approach eventually MoFED/Line procurement. Regular training to fill gaps might partially federal, regional and woreda. improves performance, and in time Ministries/BoFED/Line Bureaus, address the issue; Problems with attracting and keeping good quality staff. capacity transfer takes place. Should this WB/PIUs, WB, IPs, BoFED/PIUs  Training and upgrading of skills need to be done more “middle man� approach be adopted regularly; portfolio wide?  Procuring is not a complex task. Rather it requires committed and honest staff. Lack and/or weak key Require all staff involved in project procurement staff at all levels: procurement processing to, as a federal, regional and woreda. minimum, undertake the Basic WB, IPs, BoFED/PIUs Problems with attracting and Procurement Training offered at EMI in keeping good quality staff. collaboration with the Bank  Establish mechanisms to retain staff; Recruitment and deployment of qualified  Lack of qualified staff is a critical problem; Serious weakness in contract staff, Regular training and experience MoFED/WB, WB/Client,  Most of the time, it is the lack of or delay in decision making management capacity, especially sharing forums, and Standardized MoFED/Line Ministries, that result in weakness in contract management. There must be for large and complex procurement manuals. A separate PIUs/MoFED, WB, IPs, a clear accountability system and service delivery standards. transactions. operation is needed to address all the BoFED/PIUs Those who are responsible for project and contract capacity issues together management must be transparent and accountable for what they do and don’t do; 57 Procurement Issues Possible Actions Responsible Agencies Comments Disconnect between the Annual MoFED/Line Ministries,  It should be based on GOE procurement regulation for the Work Plans and Procurement PP should both be done by the AWP MoFED/Line control of unwanted gap; Plans – lack of realism and team facilitated by Procurement Staff Ministries/BoFED/Line Bureaus,  The bank should revise the procedures from approving the PP connection to due procurement PIUs/WB, IPs, BoFED/PIUs up to the end. processes.  Lack of awareness;  In the absence of approved budget it may difficult to start Delays in procurement actions Agree with MOFED and implementing GoE, MoFED/Line procurement process; due to no advanced procurement agencies on starting the procurement Ministries/BoFED/Line Bureaus,  This is being undertaken in the new transport project; action before the project’s process while the WB loan is being W/MoFED/PIUs, IPs, approval by WB Board. prepared/processed for approval. BoFED/PIUs  Slow implementation is mainly due to long and complicated procurement procedures. Therefore, procurement procedures should be shortened. Harmonize, standardized and adequately disseminate procurement documents. This should be accompanied by simple and easy to understand guidelines in the local language. BoFEDs should also conduct procurement clinics with WB/MoFED/BoFED, GoE, Delays in procurement actions Woredas on a regular or need basis. This MoFED/Line due to lack of standardized should be focused on simple procurement Ministries/BoFED/Line Bureaus, manuals procedures used at the local level. The MoFED/PIUs, IPs goal is to ensure compliance through effective dissemination of the required information (avoiding use of jargons and complex procedures that may not be applicable at the community level). Delays in procurement actions Adapt and/or Intensify the use of MoFED/Bank/PIU, GoE,  Establish a monitoring scheme where people would be due to lack of action on contracts procurement service standards MoFED/Line accountable for what they are doing; signing after the Bank no (compliance enforcement and adequate Ministries/BoFED/Line Bureaus,  Government bureaucrat causes some of the bottlenecks; objection. follow-up). PIUs, IPs, BoFED/PIUs  WB often delays clearance of the PP. Different procurement standards in regions. In 2009 GOE introduced a new Proc. Proclamation and Directives. But  Disseminate the required documents and provide standard bidding docs and training/workshop on the proclamations and directives; Finalize and disseminate the public MoFED, GoE, MoFED, IPs, manuals have not been  Adoption of standardized procurement standards for similar procurement manuals BoFED/PIUs disseminated. Hence, in absence projects is important to have a common understanding of of a comprehensive national proc. procedures at all level. system and guidance, there is an issue which systems to use: regional/woreda or the Bank's? 58 Monitoring & Evaluation Issues – Summary of Response to Questionnaire M&E Issues Possible Actions Responsible Agencies Comments For some projects outcome MoFED/Bank/PIU, WB/Client, indicators are not tracked during MoFED/Line  Outcome indicators for any project performance should be Following up on the PAD agreement project implementation and/or are Ministries/BoFED/Line based on more on objective indicators rather than subjective to recruit an M&E specialist in PCUs. not aligned with project Bureaus/WB, PIUs, Sector indicators. objectives; Bureaus, IPs, BoFED/PIUs Baselines and targets, as well as MoFED/Bank/PIU, WB/Client, Continuous training and capacity progress data are missing and MoFED/Line building in M&E areas for the Bank project objectives rating provided Ministries/BoFED/Line staff (TTLs) as well as GOE is not supported by information Bureaus/WB, PIUs, Sector implementers. from the project M&E system Bureaus, IPs, BoFED/PIUs Baselines and targets, as well as MoFED/Bank/PIU, WB/Client, progress data are missing and Make more use of project restructuring MoFED/Line project objectives rating provided if data is hard to obtain and/or Ministries/BoFED/Line is not supported by information indicators are irrelevant. Bureaus/WB, PIUs, Sector from the project M&E system Bureaus, IPs, BoFED/PIUs Weak M&E reports particularly in woredas and regions mainly due Donors/Regions, GoE, to: (i) poor or lack of baseline Make efforts to integrate project M&E MoFED/Line  Regular training; data; and (ii) limited systematic into GOE systems (including Ministries/BoFED/Line Bureaus,  M&E reports should translate the row data into analytical recording of good practices. database). Use local knowledge in PIUs w/ support from WB, Sector figures. Hence, measurement of developing reporting formats. Bureaus, IPs, BoFED/PIUs achievements through evidence- based analysis remains limited. Delays in collecting and analyzing the reports from regions and Post an expert for M&E at all PIUs. BoFED/Line Bureaus, PIUs,  Communication facilities should be installed at all levels (e.g. institutions responsible for (New) Federal/Regions, IPs, BoFED/PIUs CDMA, Fax and others facilities) to facilitate data sharing aggregating data. Other M&E Issues noted by respondents Responsible Agencies Possible Actions Lack of review meeting of project implementation and weak follow up MoFED/Line procedures at different levels Ministries/BoFED/Line Bureaus The data and reports that are collected sometimes for the M&E are not reliable and also sometimes it is not reliable data that could lead to wrong Data used for M&E should be reliable and real data. conclusions. 59 ANNEX 10: BASIC PORTFOLIO DEFINITIONS Actual Problem Project: A project for which Development Objectives (DO) or Implementation Progress (IP) are self-reported as Unsatisfactory or worse on the latest Implementation Status Report (ISR). Potential Problem Projects: Projects which are rated as satisfactory for both DO and IP, but are affected by factors likely to bring about an eventual unsatisfactory outcome. These projects are identified by criteria (“flags�) that take into account not only various aspects of actual implementation experience, but also other relevant factors such as economic management and past portfolio performance in the country. Specifically, potential problem projects are identified as projects exhibiting 3 or more risk flags. Projects-at-Risk: This term is used for all projects judged to be “at-risk� of not meeting their development objectives and is the sum of actual problem projects and potential problem project. Commitment-at-Risk: The commitment value of a project that is at-risk of not meeting its development objectives. Includes commitments associated with both actual and potential problem projects. Realism Index: The ratio of actual problem projects to total projects-at-risk. Proactivity Index: The proportion of projects rated as actual problem projects twelve months earlier that have been upgraded, restructured, suspended, closed, partially or fully canceled. Disbursement Ratio: The ratio of disbursements during the fiscal year to the undisbursed balance at the beginning of the fiscal year, investment loans only. Net Disconnect: The difference between the percentage of projects rated as unsatisfactory by OED and the percentage rated by the regions in the final PSR/ISR as unsatisfactory for achieving their development objectives. 60