Document of The World Bank Report No: ICR00001313 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-90077) ON A GRANT IN THE AMOUNT OF SDR 6.6 MILLION (US$ 10 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR A MANAGEMENT CAPACITY PROGRAM June 12, 2012 Governance and Public Sector Afghanistan South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective June 04, 2012) Currency Unit = Afghani (AFN) US$ 1.00 = AFN 50 FISCAL YEAR: March 20-March 21 ABBREVIATIONS AND ACRONYMS AEP Afghan Expatriate Program MIP Management Internship Program ARTF Afghanistan Reconstruction Trust MoCI Ministry of Commerce and Fund Industries CDS Capacity Development Secretariat MoE Ministry of Education GDPD General Directorate of Program MoJ Ministry of Justice M Design and Management GoA Government of Afghanistan MoM Ministry of Mines HRM Human Resource Management MoWA Ministry of Women Affairs IARCS Independent Administration Reform PAR Public Administration Reform C and Civil Service Commission ITA International Technical Assistance PMU Program Management Unit LEP Lateral Entry Program PRR Priority Reform & Restructuring Program M&E Monitoring and Evaluation TAFSU Technical Assistance and Feasibility Support Unit MAIL Ministry of Agriculture and TER Technical Evaluation Report Livestock MCP Management Capacity Program Vice President: Isabel M. Guerrero, SARVP Country Director: Robert Saum, SACAF Sector Manager: Antonius Verheijen, SASGP Project Team Leader: Satyendra Prasad, SASGP ICR Team Leader: Richard Spencer Hogg, SASGP Afghanistan Management Capacity Program CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph A. Basic Information........................................................................................................ i B. Key Dates .................................................................................................................... i C. Ratings Summary ........................................................................................................ i D. Sector and Theme Codes ........................................................................................... ii E. Bank Staff ................................................................................................................... ii F. Results Framework Analysis ...................................................................................... ii G. Ratings of Project Performance in ISRs .................................................................... v H. Restructuring (if any) ................................................................................................. v I. Disbursement Profile .................................................................................................. v 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 3 3. Assessment of Outcomes ............................................................................................ 8 4. Assessment of Risk to Development Outcome......................................................... 13 5. Assessment of Bank and Borrower Performance ..................................................... 14 6. Lessons Learned ....................................................................................................... 17 7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors .............. 19 Annex 1. Project Costs and Financing .......................................................................... 20 Annex 2. Outputs by Component ................................................................................. 21 Annex 3. Grant Preparation and Implementation Support/Supervision Processes ....... 23 Annex 4. Summary of Grantee's ICR and/or Comments on Draft ICR ........................ 24 Annex 5. List of Supporting Documents and MCPs Interviewed ................................ 28 MAP A. Basic Information AF: Management Country: Afghanistan Project Name: Capacity Program Project ID: P106170 L/C/TF Number(s): TF-90077 ICR Date: 10/05/2009 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: TAL Grantee: AFGHANISTAN Original Total USD 10.00M Disbursed Amount: USD 11.05M Commitment: Revised Amount: USD 10.00M Environmental Category: C Implementing Agencies: Independent Administrative Reform & Civil Service Commission Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/27/2006 Effectiveness: 10/31/2007 10/17/2007 Appraisal: 12/27/2006 Restructuring(s): Approval: 02/13/2007 Mid-term Review: 09/29/2010 Closing: 03/31/2010 12/31/2011 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately satisfactory Grantee Performance: Moderately satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Moderately Quality at Entry: Government: unsatisfactory unsatisfactory Implementing Quality of Supervision: Moderately satisfactory Moderately satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately satisfactory Moderately satisfactory Performance: Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 50 General public administration sector 50 Theme Code (as % of total Bank financing) Poverty strategy, analysis and monitoring 100 E. Bank Staff Positions At ICR At Approval Vice President: Isabel.M.Guerrero Praful.C.Patel Country Director: Robert Saum Alastair.J.Mckechnie Sector Manager: Antonius Verheijen Ijaz Nabi Project Team Leader: Satyendra Prasad Anne Tully ICR Team Leader: Richard Spencer Hogg ICR Primary Author: Richard Spencer Hogg F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) To achieve sustained improved performance in the management capacity of key departments dealing with any or all of the common functions including financial management, human resource management, policy and regulatory design, and administration. This should ultimately result in improved utilization and cost effectiveness of budgetary resources and faster and better development results on the ground. ii Revised Project Development Objectives (as approved by original approving authority) Not Applicable (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Numbers of MCP's in key centre and sub-national positions Value quantitative or 0 175 161 Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments 161 appointments are made till date which includes resignations, terminations and end of (incl. % contract appointments. Current active number of MCPs is 95. achievement) Departments with MCPs achieving rating of satisfactory (or equivalent) following annual Indicator 2 : performance assessment Value quantitative or 0 70% 0 Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments Monitoring mechanism for measuring departmental outcomes is weak and was not (incl. % established properly. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Appointment of MCPs Value (quantitative 0 175 161 or Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments 161 appointments are made till date which includes resignations, terminations and end of (incl. % contract appointments. Current active number of MCPs is 95. achievement) Indicator 2 : Percentage of appointments at sub-national level Value 0 20 5 (quantitative or Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 iii Comments 9 MCP appointments made at sub-national level. 4 resigned due to various reasons. (incl. % achievement) Indicator 3 : Focus MCPs on 10 priority ministries Value 0 70% 54.2% (quantitative or Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments 54.2 % of MCPs are targeted at the priority ministries. (incl. % achievement) Indicator 4 : HR practices are merit based n/a Annual Audit of HR All appointments Practices conducted in accordance to the Civil Service Law, Value Civil Servants Law and other regulations (quantitative of the IARCSC. The or Qualitative) Audit department of IARCSC conducts review of HR activities of GDPDM annually. Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments (incl. % achievement) Indicator 5 : Percentage terminations following performance appraisal process Value 0 5 3.5 (quantitative or Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments 5 terminations carried out till date. (incl. % achievement) Departments with MCPs achieving rating of satisfactory (or equivalent) following annual Indicator 6 : performance assessment Value 0 70% 0 (quantitative or Qualitative) Date achieved 10/17/2007 12/31/2011 12/31/2011 Comments Monitoring mechanism for measuring departmental outcomes is weak and was not (incl. % established properly. achievement) iv G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/26/2008 Moderately Satisfactory Moderately Satisfactory 0.00 2 03/17/2009 Moderately Satisfactory Moderately Satisfactory 0.55 Moderately Moderately 3 03/09/2010 3.31 Unsatisfactory Unsatisfactory Moderately 4 12/28/2010 Moderately Satisfactory 6.47 Unsatisfactory 5 01/07/2012 Moderately Satisfactory Moderately Satisfactory 10.59 H. Restructuring (if any) Not Applicable I. Disbursement Profile v 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal By 2002, years of conflict had eroded Afghanistan‘s public sector. An administrative structure still existed in many parts of the country after the war, but few senior staff were left in Kabul to manage relations with the provinces, and even fewer resources remained to deliver any services. Given the low skills base and the need for an immediate impact on the ground, donors launched various initiatives to raise government capacity, but progress in building capacity in government institutions has been slow. Many efforts relied more on substituting for civil service capacity than strengthening it, and often included the following range of modalities: regular civil servants on standard government terms; civil servants receiving higher salaries or top-ups via government or donor-funded initiatives; contract positions in the civil service filled by national or international consultants; national staff in NGOs, the United Nations, and international agencies on secondment to the government; and contractors employed either directly or through donors to carry out development projects. Several civil service reform programs were implemented in the 2000s in order to strengthen public administration. The Independent Administration Reform and Civil Service Commission (IARCSC) was established in 2003 with a mandate to lead civil service reforms. The priority reform and restructuring program (PRR) was introduced to improve how critical departments in key ministries functioned and to enable these departments to recruit staff on merit, and at modestly better pay. Other activities included promulgating laws and regulations for the civil service. At the same time several programs were launched to build or inject capacity. The government initiated the Technical Assistance and Feasibility Studies Unit in 2003, with support from the World Bank and Afghanistan Reconstruction Trust Fund (ARTF), to provide the civil service with skilled national and international expertise to carry out technical feasibility studies. But the unit provided mainly short-term inputs and did little to build longer term capacity. In 2002–04 the government, through the ARTF, approved the Afghan Expatriate Program and Lateral Entry Program. (These two programs were merged in 2005.) The former program sought to hire a small number of expatriate Afghans as senior advisers, while the latter aimed to address the widespread shortage of competent and experienced civil servants in upper- and middle- management positions in key ministries and agencies, offering ―lateral‖ entry to suitably qualified Afghans, many of them from the Diaspora. Both programs were succeeded by the Management Capacity Program (MCP) in 2007, which aimed primarily to develop a cadre of senior tashkeel civil servants in line ministries, who would undertake reform in departments such as finance, procurement, human resources, and policy and planning. The MCP provided line ministries with the resources and implementation structure to recruit highly qualified staff transparently through merit to fill key ―Tashkeel‖ positions, to create a management team accountable to the minister that provides a critical mass to implement ministry reforms through strengthening systems and enhancing standards. The 1 MCP focused primarily on supporting the execution of common functions at senior or managerial levels, including policy and strategy development, project management, financial management, procurement and human resource management. In addition, it also facilitated critical positions in the change management process in various ministries as well as senior key line management positions of core sector functionality in those ministries that contribute to economic development, such as education, health care, and infrastructure sectors. Rationale for Bank Assistance Building government capacity to deliver services was one of the primary areas of focus of the donor community after the conflict. Public administration reform was essential to rebuilding the state, institutionalizing improved governance and combating corruption. The Bank had extensive experience in promoting public administration reform in Afghanistan through a series of development policy credit/grants intended to bolster reforms. The MCP followed two previous capacity injection projects; Afghan Expatriate Program (AEP) and Lateral Entry Program (LEP) designed to attract expatriate and qualified Afghans from different backgrounds and areas of work to key ministries. Both programs were funded through the Afghanistan Reconstruction Trust Fund (ARTF). Considering the comparative advantage of ARTF with respect to the institutional knowledge and lessons learnt from these previous operations, there was strong rationale for the Bank‘s involvement in MCP. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The original project objective was ―To achieve sustained improved performance in the management capacity of key departments dealing with any or all of the common functions including financial management, human resource management, policy and regulatory design, and administration. This should ultimately result in improved utilization and cost effectiveness of budgetary resources and faster and better development results on the ground‖. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification Not Applicable. 1.4 Main Beneficiaries, All line ministries and agencies of the Government of Afghanistan (GoA) were the intended beneficiaries of the project. However positions in the judiciary, military, law and enforcement agencies or politically appointed positions were not eligible to receive funding. Through the MCP, line ministries and agencies are expected to receive support to strengthen one or several of the basic functions of public administration. The program was expected to primarily support common function senior management positions. Areas covered under common functions were financial management (budgeting and accounting), human resource management (recruiting, performance monitoring, benefits management, 2 career management and severance), policy and regulatory design, and general administration and procurement. 1.5 Original Components (as approved) Component One: Provision of Management Services on Demand. This component was designed to provide experienced managerial staff to line ministries/agencies to assume line management responsibility for executing common functions as well as key managerial responsibility in some sectoral ministries that contribute to key areas of economic development. Positions under civil service grades 1, 2 and 3 under the current eight-grade system received support through MCP funding. Positions filled through MCP were authorized under the ministry ―Tashkeel‖ or establishment structure. Under this component it was intended that MCP recruits would be provided with two year contracts at the beginning which could be renewed for a further one year. Assignment of newly recruited MCP experts into the line ministry positions was facilitated through a Memorandum of Understanding (MoU) signed between the Capacity Development Secretariat (CDS) also known as the General Directorate of Program Design and Management (GDPDM) of IARCSC and the line ministry. The ARTF Management Committee (MC) approved in principle an allocation of USD 30 million for three years with an initial allocation of USD 10 million to cover technical assistance requirements and the first year of program costs. Component Two: Program Management This component was aimed to strengthen the CDS of GDPDM within the IARCSC which was the implementing agency of the project. The CDS was responsible for the management of the program including outreach and communications with line ministries; screening and evaluating proposals; managing and overseeing recruitment of executives; managing the monitoring and evaluation of candidates‘ performance in the employing ministries; contract management and program financial management; and reporting on and accounting for program results. 1.6 Revised Components Not Applicable. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Since 2002, the government has used a variety of approaches and projects to acquire operational and advisory expertise under contractual arrangements including the Afghan Expatriate Program (AEP), the Lateral Entry Program (LEP), Technical Assistance and Feasibility Support Unit (TAFSU), the Priority Reform and Restructuring (PRR) ―Super Scale‖, and the hiring of numerous experts mobilized by donors in specific sector 3 contexts. These programs were introduced as part of an attempt to make the Government/Civil Service more competitive as an employer in the face of a limited pool of skilled Afghans and a labor market where NGOs and international organizations competed with government for the best qualified Afghans. The AEP was originally designed to finance the services of experienced Afghan professionals who were willing to return to the country to participate in the reconstruction effort as senior advisors. It was complemented in 2004 by the LEP which was designed to bring Afghan nationals working in-country or regionally, into line positions at senior and middle management levels on a contractual basis. Both programs were originally financed through the ‗third‘ window of the ARTF, which had been financed to bring qualified Afghans into government. In 2005 both schemes were merged and financed by the ARTF through its investment window as the Civil Service Capacity Building Project, TF053940. MCP was designed with a view to improve upon the shortcomings of AEP and LEP. From its inception, the AEP‘s operational objectives were intuitively defined, but there was ambiguity on what specific results to expect, making it difficult to measure effectiveness. LEP on the other hand, while it was successful in attracting some highly qualified Afghans from national and regional markets into line ministry positions (not advisory) had the unintended negative effect of encouraging line ministries to avoid the implementation of other on-going civil service reforms such as PRR. LEP was also undermined by capacity constraints on part of the Independent Appointments Board (IAB) of IARCSC which was tasked with the implementation of the new pay and grading reform. Both programs recruited relatively few staff: the Afghan Expatriate Program recruited only 95 Afghans into the government and the Lateral Entry Program some 138. In 2007 the Civil Service Capacity Building Project was re-designed as the MCP. Substantial risks were identified during the design phase which were expected to impede the achievement of MCP objectives. These included the risk of failing to attract sufficient skilled staff even with the improved MCP salary scales, considering the small size of the talent pool and competition from NGOs and donors. A second major risk identified was the expected resistance from within the civil service among other civil servants who remained on the normal civil service pay scale. This risk was expected to be partly mitigated by the establishment of a transparent process of recruitment, clarity about the roles and responsibilities of the MCP recruits and the temporary nature of their employment. A third risk was that the program would continue to support the appointment and retention of candidates who made little substantial contribution to the program‘s objectives. It was envisaged that an annual performance audit of the program would help mitigate this risk along with a continued emphasis on merit based appointments and transparency in appointments. The risks and the anticipated mitigation measures during the time of appraisal are set out in Table 1 below. The PDO of the project was ambitious. The ―demand driven‖ approach to provide managerial capacities to line ministries was largely ad-hoc and rarely part of a wider government or ministry wide capacity building strategy. Communication and outreach activities were inadequate to inform the line ministries of the purpose of the project. As a result, during the first two years of project implementation, a large number of positions 4 requested by the line ministries were not aligned to their strategic plans. Instead of following an ―across the board‖ approach to all ministries, it would have been useful to prioritize certain key service delivery ministries. This would have allowed the MCP to be used much more strategically to build the performance of critical ministries. During the later stages of implementation (2010-2011), this approach was eventually followed and ministries such as Ministry of Mines (MoM), Ministry of Commerce & Industries (MoCI), Ministry of Agriculture and Livestock (MAIL) and Ministry of Education (MoE) were supported with cohorts of experts to create a critical mass of MCPs to implement the ministry reform initiatives. However, this change of approach came too late in the project life time (December 2011) to adequately impact its objectives. Table 1: Risks and Mitigation Measures Risks Identified Mitigation Measures (At Appraisal) Unavailability of Skilled Candidates Competitive Salary scales, Senior Managerial Tashkeel Positions in Ministry and Better Communication and Outreach Measures Resistance from Existing Civil Servants Clear Definition of MCP Roles, Transparent Process of Recruitment and Temporary Nature of Appointments Appointment and Retention of Non-Performing Annual performance Audits Candidates Capacity Building of National Staff (Civil GoA to Train and Mentor the Next Generation Servants) and Knowledge Transfer of Managers. Beyond the Scope of MCP 2.2 Implementation Implementation of MCP has never been easy. A mid-term review (MTR) conducted in September 2010 and subsequent supervision missions repeatedly raised the following issues which were further explored during the ICR mission. Inadequate Funding: The initial funds committed to the project through the Afghanistan Reconstruction Trust Fund (ARTF) were inadequate to accommodate all the requests made by ministries/agencies for MCP appointees. This led to frustration on part of many Ministers. However, while additional finance was available from the approved ‗earmarked‘ ARTF funds, there was concern in the Bank to scale up too rapidly given capacity constraints in the implementing agency, the time it took to recruit and uncertainty about impact. 1 Salary Negotiations: MCP salaries were determined in an ad-hoc manner based on salary history, rather than salary scales. As a result some Director-Generals (grade 1) received near to the MCP ceiling of USD $7,000 while others received much less. The inequities in pay between comparable posts across the civil service that have been created due to MCP will need to be resolved under the follow-on CBR program. During 1 USD $35 million was originally approved by the ARTF Management Committee, but only USD $15 million was committed. 5 interviews with the MCP experts, the ICR mission noted that the salary negotiations between the MCP appointees and the Civil Service Commission have been unsatisfactory. A considerable number of MCPs had grievances about the salary packages offered to them, citing inequities with other MCPs. Low Quality of Applications: For many skilled posts, there were too few qualified applicants. This reflects the highly competitive labor market conditions, lack of skilled Afghan professionals, and perception that even high paying public sector jobs are not desirable when compared to donor financed jobs. Poor quality of the applicants has resulted in re-advertisements for many of these positions and the associated delays created a source of frustration for the MCP-receiving ministers. Capacity Development for MCP Recruits: In some ministries and agencies the MCP recruits have faced logistical problems for several months such as not having access to a dedicated computer or phone because of procurement delays and/or other reasons. Further, the Management Capacity Program itself had no dedicated resources to support MCPs once appointed to ministries, such as professional or job related development training. The CBR project will need to resolve both these issues for the different cadres of civil servants that it wishes to create for a well performing and structured Afghanistan Civil Service. Focus on Sub-National Positions: It was envisaged during the design of the program that 20 per cent of total MCP recruitments would be at the sub-national level. This objective has not been fulfilled. Only a total of 7 MCP appointments have been made at the sub-national level by December 2011. This was not entirely the fault of the implementing agency, which advertised for sub-national staff, but largely the result of combination of Ministry preferences to keep senior staff in Kabul, insecurity in some of the provinces and lack of a developed incentive structure to get staff to apply to hardship areas. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The results framework for the project was inadequate to assess the actual outcomes of the project activities. While there is anecdotal evidence that individual MCPs made a difference to department performance, too much reliance was placed on ‗inputs‘, such as the total number of recruitments and terminations rather than focusing on indicators pertaining to service delivery improvements and budget execution performance. Monitoring of line ministry departmental performance by IARCSC was weak and was not addressed properly under the project design. The PDO level indicator ―Departments with MCPs achieving rating of satisfactory (or equivalent) following annual performance assessment‖ is too broad and the project does not detail any underlying mechanism to measure performance of the line ministry departments under this indicator. Due to shortfall in original budget allocated adequate Technical Assistance (TA) support to strengthen the monitoring and evaluation unit of GDPDM could not be provided under the project. Further, there was no formal high level oversight of the MCP by either the IARCSC leadership or a more broadly based cross-ministerial committee. As a result 6 there was weak government oversight to determine if the program was achieving its objectives and no mechanism to achieve consensus on corrective actions to be taken in a timely manner to address implementation issues. The performance appraisal process for MCP recruits established at GDPDM was strong. All MCPs were appraised at the end of six months of their appointment, at the end of their first year and annually thereafter. The performance appraisal process is a 360° review involving the appointee, his/her supervisor and four subordinates selected by MCP program staff. The monitoring and evaluation of project activities also suffered from frequent changes of Bank Task Team Leaders (4 TTLs over the life of the project) and inadequate transfer of institutional memory during these changes. It is a recommendation of this ICR that to achieve effective results on the ground for all present and future projects of this nature in fragile institutional contexts such as Afghanistan, task-teams implementing such projects should be based in country with longer term tenures to work alongside the implementing partners. 2.4 Safeguard and Fiduciary Compliance Regular implementation support missions (ISM) by the Bank ensured fiduciary compliance during the life of the project. However the mid-term review (MTR) of the project highlighted weaknesses in the internal control system of the implementing agency (GDPDM) which included lack of monthly reconciliation of bank books and inadequate internal audit arrangements. The scope of the internal audit unit of IARCSC mandated to carry out internal audit of the project was only limited to checking compliance of the project with government rules and regulations to be followed for submission of payment request (form M16) to Ministry of Finance, and did not cover the activities of the project as prescribed in the agreed financial management arrangements. The MTR and the last implementation support mission Aide Memoire (AM) also noted a number of deficiencies in the procurement arrangements of the project. These include submission of incomplete procurement documents for prior review which caused significant delays, deficiencies in the selection process of individuals and re-opening of some vacancies without obtaining prior Bank approval. 2.5 Post-completion Operation/Next Phase A much larger project named Capacity Building for Results (CBR) Facility has been designed by the Bank as a successor to the MCP. Many of the lessons of the MCP have contributed to the design of the CBR:  As mentioned earlier, the approach towards implementation of the project changed from 2010 onwards. Instead of the ‗scattergun‘ approach of providing ―ad-hoc‖ MCP experts to large number of line ministries and agencies, it was considered that clustering of MCPs in critical line ministries in important common function positions such as HR, Procurement and Financial Management (FM) would lead to better results and improved service delivery. But this change 7 of strategy was effected too late during the project life time to impact project results and outcomes as set out in the PDO.  A major concern of the MCP has been the lack of skills and expertise of lower rank civil servants who were subordinate to the MCP experts. The MCP could only recruit staff to grades 1, 2 and 3 of the civil service and this became a serious bottleneck in many ministries which needed a second tier of managers under the MCP experts to execute the ministry mandates in Kabul as well as in the provinces. The new CBR initiative addresses this issue head on and focuses on the creation of different cadres of civil servants under Senior Management Group (SMG), Common Function (FM, Procurement, HR and Admin) and Professional Cadres (Health Specialists, Economists, Mining Engineers etc.) with definitive career development plans. This could pave the way for the third generation of civil service reforms and the genesis of an Afghanistan Civil Service (ACS) structure in line with more developed civil services such as in UK and New Zealand. At the end of the project in December 2011, contracts for more than 100 MCP experts were active. Based on discussions with the GDPDM/IARCSC these contracts were extended till July 31, 2012 with an understanding that all active positions will be re- advertised and recruited as part of the new CBR project. At the time of writing, the migration of MCP's into the CBR program was awaiting a formal decision by the Steering Committee (SC) of the CBR comprised of the Minister of Finance and the Chairman of the IARCSC. The technical recommendation being considered by the SC was that MCP contracts would be brought into the CBR framework for the period until the end of the MCP contract period. MCP's would retain their pay scales if this was higher than the CBR pay scales (for around 15 persons) until the end of their contracts. At the end of their contracts, individuals would need to reapply for their posts if they wished and if appointed their salaries would be consistent with the CBR pay scales. This formulation if accepted would ensure that there was a smooth transition between the two projects. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) Capacity building of the civil service has been a major concern of the donor community from 2002 to-date. But much of this capacity building effort has been to pay for externally funded staff outside the ‗tashkeel’ to carryout civil service functions. The MCP was different. It was designed to build capacity from within the civil service by recruiting qualified Afghans as contract civil servants to fill ‗tashkeel‘ positions. The objective was to transform government‘s capacity to deliver services from within. The project to some extent has been able to improve the utilization and cost effectiveness of donor resources flowing through the national budget and importantly contribute to the overall legitimacy of the state in the eyes of citizens. The Bank‘s new ISN (approved by the Board in April) 8 will maintain this objective for the Bank engagement in Afghanistan over the Transition Period through to 2014. Afghanistan‘s experience of capacity development over the last 10 years is far from unique. The immediate post-conflict experience of most low- and middle-income countries—such as Georgia, Liberia, Serbia, Sierra Leone, and Timor-Leste—has been similar to Afghanistan‘s, especially in their initial widespread dependency on mostly ad hoc, donor-driven technical assistance and salary supplementation schemes to fill the vacuum left by the lack of government capacity immediately after the conflict. During the immediate transition local consultants‘ salaries often increase sharply, as the best and brightest leave the civil service (if they had not already) to join donor-funded programs or NGOs on much higher wages. Rebuilding the civil service after such interventions is therefore extremely difficult without donor-supported salary-supplement schemes, as most skilled civil servants show little interest in working directly for the government. With regard to design and implementation, the main lessons from MCP (mentioned later) and other previous projects reflect the weak capacity of the IARCSC in implementing large and complex civil service capacity building projects, as well as the need to align the placement of appointees within a broader strategic framework. One MCP recruit will not change a Ministry, but a cluster of MCPs supported by a clear Ministry reform plan and with committed ministerial leadership might. 3.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2) The project development objective ―To achieve sustained improved performance in the management capacity of key departments dealing with any or all of the common functions including financial management, human resource management, policy and regulatory design, and administration. This should ultimately result in improved utilization and cost effectiveness of budgetary resources and faster and better development results on the ground‖ is considered ambitious by this ICR. The project was initially designed for 3 years and was extended for another year in 2010 after the MTR. Initial recruitments of MCP experts started much later than project effectiveness in October 2007. Part of this delay was caused by the protracted mobilization of International Technical Assistance (ITA) to assist GDPDM with Human Resource Management (HRM) issues, Monitoring and Evaluation (M&E) and Communication and Outreach. Procurement issues caused major delays throughout the project. During the first year of project implementation line ministries had little knowledge of MCP objectives which resulted in incomplete proposals and inadequate terms of References (ToR) for the requested positions causing delays in procurement and recruitment. This ICR also feels that the outputs and outcomes under the project were disconnected. The results framework of the project was flawed and did not reflect the actual intended outcomes of the project. The outputs as measured by the results indicators mentioned in the project documents are based on the performance of the project in terms of quantitative targets achieved such as total number recruited at center and sub-national positions, 9 percentage of terminations etc. On the other hand, the outcomes of the project as defined by the PDO should have been captured by improvement in business processes, budget execution and service delivery results accruing to the end user. Brief discussion of the project components is mentioned below: Provision of Management Services “On Demand� During the life of the project a total of 153 appointments were made by IARCSC across 28 ministries/agencies. During the first two years of project implementation, a number of positions requested by the line ministries were rejected by IARCSC due to their nature and incomplete terms of references (ToR). The first procurement plan under the project was approved by the Bank in August 2008. The following table represents the total number of positions requested by the ministries/agencies as well as the number of approved positions by end December 2011. Table 2: Positions by Ministries / Agencies Ministry Position Positions Applications proposal requested approved received received August 2008 – 7 174 83 924 July 2009 August 2009 – 37 373 74 1714 July 2010 August 2010 – 43 107 0 /a 1776 December 2011 Source: General Directorate of Program Design and Management (IARCSC) /a: recruitment continued under the previous procurement plan During four years of implementation, more than 650 positions were requested by the line ministries/agencies and approximately 4650 applications in total were received for the positions that were approved and advertised. A total of 34 MCP experts resigned during the life of the project and contracts ended for another 16 MCP recruits. The MTR and the last Supervision Mission Aide Memoire (December 2011) have discussed the advantages of recruiting cohorts or ―clusters‖ of MCP experts in line ministries/agencies which started from late 2009 under the project. The ministries which received clusters of MCP experts and improved their functions considerably relative to other ministries which received fewer experts include Ministry of Finance (MoF), Ministry of Commerce and Industry (MoCI), Ministry of Mines (MoM) and Ministry of Agriculture and Livestock (MAIL). The distribution of MCP experts in different line ministries/agencies is represented in the following graph. 10 12 10 8 6 4 2 0 MoE ANSA MoCI MoCIT MoIC HOO MoEW MoJ MoM MoPW MRRD MoWA OoP MoEc MoHE MoUA IARCSC MoPH MoF MoLSAMD MAIL MoCN MoTCA The project was unsuccessful in recruiting sufficient number of people in sub-national positions. Over the project implementation period of four years only 7 MCP appointments were made at sub-national level as against a target of 20 per cent of total appointments under the project. Recruitments of sub-national positions have suffered because of security reasons, lack of suitable incentives for such positions and insufficient infrastructure and logistical facilities in the provinces. These constraints are also likely to affect the Capacity Building for Results (CBR) program as well since a large number of positions to be funded by the CBR Facility will be targeted at the provinces. This ICR recommends the implementing partners for the CBR program and the Bank to work together towards devising suitable incentives for attracting qualified Afghan nationals for sub-national positions. Program Management This component was aimed at strengthening the capacity of the Capacity Development Secretariat which was later renamed as GDPDM. At the time of project effectiveness, this component was provided with a total of USD 5 million for overall program management including outreach and communication, technical evaluation of ministry proposals, recruitment and contract management. The program management unit at GDPDM also received International Technical Assistance (ITA) during the initial implementation period in terms of executive search/recruitment/HR management and M&E of the project under this component. However TA support was not successful in building capacity in GDPDM due to lack of proper co-ordination and engagement. A request for further technical assistance from GDPDM under this component could not be accommodated due to budget constraints and protracted administrative processes. The program management unit (PMU) at GDPDM had significant weaknesses in terms of staff strength and capacities. Attrition of staff from the MCP PMU made project implementation difficult considering the small size of talent pool and the competitive labor market in the country. The Human Resources (HR) and Monitoring and Evaluation (M&E) department of the GDPDM in particular were faced with severe staff shortages and lack of technical support. 11 There was no significant involvement of other departments of the IARCSC in management and oversight of the MCP. As a result GDPDM leadership exercised full control over program management. In the views of this ICR, this concentration of power and responsibilities in terms of managing the senior most civil servants of the Government in a standalone directorate of IARCSC was not beneficial to the project. Communication and information sharing with other departments would have provided more flexibility and strategic direction to the project. In spite of these difficulties, GDPDM managed to recruit some excellent MCPs, place them in ministries, monitor their individual performance and within the constraints of any operation in a fragile conflict affected environment such as Afghanistan, achieve a degree of success in terms of capacity development in some limited areas. This was not as much as the PDO required, and depended on the individual qualities of the MCPs recruited, but the PDO was always over-ambitious. 3.3 Efficiency This section is not applicable for this project. 3.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Moderately unsatisfactory (MU) There is no doubt that the project has recruited many well qualified Afghans who, anecdotally, appear to have raised the standard of management in their Ministries. But this is extremely difficult to measure systematically as no baseline data was collected to allow for such measurement. The project M&E system could not capture very clearly ministry outcomes and the cause and effect linkages between MCP appointments and improvements in service delivery. To this extent the project falls short of its stated development objectives. The intention of the project was to significantly enhance budgetary performance and service delivery standards of the line ministries with which it worked. Strictly, this was not achieved, although towards the end of the project life a shift of approach towards the clustering of MCP experts in critical line ministries does appear to have made a significant difference. The project was unable to recruit sufficient number of MCP experts during its years of operation. Lack of qualified candidates was the major reason for this shortfall. But delays in No Objection (NOL) issuances by the World Bank for qualified candidates throughout the implementation period made the recruitment process lengthy and complicated which acted as a deterrent to the achievement of PDOs. Discussions with the Bank‘s Financial Management and Procurement units revealed that incomplete documentation and safeguards on the part of the implementing agency were the primary reason for these delays. Regular Bank supervision and guidance on financial management and procurement standards improved the quality of document submission and reporting which subsequently reduced the administrative delays during the later stages of the project. The project could not deliver on sub-national recruitments. In spite of the difficulties, only 7 MCP recruitments in provincial positions over a period of four years of project 12 implementation is poor, but this was not entirely in the hands of the GDPDM leadership to deliver, but depended on combination of factors, including lack of Ministry demand, lack of individual incentives, poor security, etc. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development None of the project development objective indicators directly dealt with poverty reduction and social development aspects. It is therefore impossible to say to what extent these benefitted from the project. The number of women inducted as MCPs under the project was too small to create a critical mass which would facilitate any cultural change in the civil service. Furthermore, no incentive mechanisms were designed under the project to make the civil service a more attractive environment for women. (b) Other Unintended Outcomes and Impacts (positive or negative) The strongest unintended outcome of MCP was that it helped expand the technocrat pool from which future leaders of Afghanistan would be drawn. For instance, the current Director General Budget in Ministry of Finance, the Deputy Ministers for Policy and Planning in Ministry of Commerce and Industry (MoCI) and Ministry of Mines (MoM) were all previously recruited through the MCP. 4. Assessment of Risk to Development Outcome Rating: High The outcomes of any project in a fragile and conflict affected context are associated with substantial risks. In Afghanistan civil service reform is one of the most delicate and politically sensitive areas because of political, economic and ethnic considerations. Technocratic approaches to state building in Afghanistan have historically had to contend with the nature of politics in the country, where formal office and position are used as resources to balance competing elite interests. The Afghan state—while having a highly centralized, unitary character as embodied in successive Constitutions—has always had weak central control and has needed to build coalitions of common interest with a strong periphery. The use of state position and office as bargaining tools in the wider political process has a long history, ensuring that attempts to introduce modern, merit-based public sector reforms face an uphill struggle. In hindsight the MCP recruitment and selection process should have been subject to more careful oversight from within government itself. To leave this process almost exclusively to a single unit within the IARSC was a high risk strategy, and put considerable burden on that department. The PDO of MCP was extremely ambitious to be achieved within a short period of 3 years. Better performance of line ministries in terms of service delivery to end users and efficient use of budgetary resources is a long term goal for the Government and the 13 donors. In a weak capacity environment like Afghanistan very little is likely to be achieved in just 3 years. But nevertheless MCP experts managed to improve capacities in key departments such as HR, Finance, Policy and Planning and Administration in a number of key ministries including Ministry of Finance (MoF), Ministry of Commerce and Industry (MoCI), Ministry of Education (MoE) and Ministry of Agriculture, Irrigation and Livestock (MAIL). The project could not deliver on the number of sub-national recruitments due to the absence of proper incentive measures for those positions. This poses a significant risk for the follow-on Capacity Building for Results (CBR) project. 5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately unsatisfactory (b) Quality of Supervision Rating: Moderately satisfactory (c) Overall Bank Performance Rating: Moderately satisfactory Quality at Entry The MCP was initiated at a time when there was considerable demand for capacity injection into the civil service. Its design drew on the lessons from the implementation of the Afghan Expatriates Program (AEP) and Lateral Entry Program (LEP). MCP satisfied the need for a unified program which followed a single set of criteria for identifying need, recruitment, remuneration and supervision. However it had two principal design weaknesses: firstly, it adopted a scattergun approach to providing capacity injection to ministries. It would have been far better to ensure a) that capacity injection was linked to a clear ministry reform plan, and b) provided a cluster of MCPs that could have operated at scale. Neither of these was achieved through the life of the project. Preparation and implementation of a ministry reform plan was never a condition of receiving MCP appointees, while, at the same time, too much faith was given to the transformative power of one or two qualified MCPs to change a ministry‘s culture and service delivery performance. Secondly, it was over-ambitious in terms of what it could achieve within three years. In a fragile and conflict affected environment like Afghanistan affecting long term institutional change requires a much longer time horizon. Given the delays in recruitment of MCP staff there was very little time for the project to make its mark. Thirdly, its results framework did not capture the necessary indicators to measure ministry outcomes. As a result it is difficult to measure its impact. There is some anecdotal evidence that 14 good MCPs made a difference to Ministry outputs and helped improve management performance, but there was never any systematic evidence collected that this actually led to improved outcomes. In terms of design, the project had only one major component dealing with the provision of management services. Interviews with various MCP experts during the ICR mission indicate that a separate component on training and capacity building of the MCP recruits would have delivered better results. Quality of Supervision Three major issues affected the implementation of the project. First, the Bank team had four task team leaders during the course of the project. This rapid turnover of TTLs was detrimental to effective and continuous supervision of the project. Secondly, the quality of some of the supervision was variable. As a result the project suffered from significant delays in NOL approvals issued by the Bank team. These delays were not entirely the fault of the Bank team but in part were caused by incomplete documentation provided to the Bank which included deficient terms of references (ToR) and technical evaluation reports (TER) for the recruitments, incomplete withdrawal applications and procurement plans. Thirdly, many of the MTR recommendations in late 2010 were never taken forward because the project was overtaken by planning for its successor the CBR, which took up large amount of Bank staff time. Rather than re-structure the project it was decided to incorporate many of the recommendations and lessons learnt from MCP into the new project. For the preparation of this ICR, a significant number of MCP experts were interviewed by the project team whose names are provided in annex 5. Interviews were designed to capture the advantages of recruiting clusters of MCPs to that of individual positioning of these experts. The ICR team interviewed cohorts of MCPs based in Ministry of Mines (MoM), Ministry of Education (MoE) and Ministry of Agriculture, Irrigation and Livestock (MAIL) to assess the performance of these ministries. Interviews were conducted with individual MCPs present in Ministry of Justice (MoJ) and Ministry of Women Affairs (MoWA) to ascertain the significance of the cluster approach. Focus group discussions were held with MCPs in specific common function positions such as HR, FM and Procurement to understand the shortcomings of the MCP and improve upon them while implementing CBR. In addition, the ICR team also benefitted from the views provided by the supervisors (Deputy Ministers) of the MCP experts. The ICR team also reviewed several policy notes prepared during the design of the CBR which contained valuable insights on issues such as civil service cadre development, training of potential CBR recruits and creation of a Management Internship Program (MIP). These topics were not included under the MCP structure and were developed after in-depth discussions with various stakeholders including the MCP experts. 5.2 Borrower Performance (a) Government Performance Rating: Moderately unsatisfactory 15 (b) Implementing Agency or Agencies Performance Rating: Moderately satisfactory (c) Overall Borrower Performance Rating: Moderately satisfactory Government Performance Since 2002, civil service reform has been an important government priority. After implementing projects such as AEP and LEP, MCP was designed to build capacity within the civil service. A separate IDA financed project named Civil Service Reform Project (CSRP, P097030) was developed simultaneously to implement public administration reforms in five key ministries. While there were significant linkages between the MCP and CSRP as MCP provided the skilled managers to the ministries to carry out the planned activities under CSRP, the synergies between the two were never adequately exploited. The two programs were also implemented by two different departments within the IARSC which made coordination between them more difficult. At the same time other government capacity building initiatives such as the Civilian Technical Assistance Program, which provided non-tashkeel technical assistance to ministries at much higher wage rates than MCP, were never properly coordinated with the MCP. Nevertheless, it is important to recognize firstly, that there was considerable demand for MCPs on the part of government ministries that the project was unable to meet. Ministers valued the contribution of MCP appointees, and while the project could have been better embedded within an overall ministry led reform process, it was recognized across government as an important way to build capacity within the civil service rather than in project implementation unit enclaves. Secondly, given the nature of the overall reform environment with large numbers of externally funded staff implementing a series of often disconnected donor driven interventions, it was extremely difficult for government to harmonize capacity development approaches around the MCP alone. Implementing Agency Performance The implementing agency for MCP was the General Directorate of Programs Design and Management (GDPDM) unit of the IARCSC. According to the implementation arrangements stated in the PAD, oversight of the project was assigned to the Public Administration Reform (PAR) Steering Committee of the Government. However, in practice communication linkages between the MCP Project Management Unit (PMU) and the PAR Steering Committee were never established properly. As a result GDPDM functioned as a standalone department within IARCSC with no reporting obligation to the higher echelons of the Government. A majority of MCP experts interviewed during the ICR mission and preceding supervision missions have raised concerns on substantial delays in payment of salaries. One of the reasons for the delayed salary payments was the low special account ceiling approved for MCP expenses. Still, delays in payments in some cases for more than 6 months poses serious questions about the financial management and documentation 16 systems of the GDPDM. In addition, a considerable number of MCPs had grievances about the salary packages offered to them citing inequities with other MCPs in similar positions. The MCP salary scales were determined in an ad-hoc manner based on salary history rather than the salary scales approved for the project. In spite of this, it should be acknowledged that GDPDM had had to deal with a series of Bank TTLs who bought little consistency to the relationship. Project funding to finance international TA to support the department was inadequate and was quickly exhausted, and while discussions took place to recruit new international TA to support the project this was overtaken by planning for the new CBR follow-on project to the MCP. 6. Lessons Learned (both project-specific and of wide general application) There are both more general lessons of approach and specific lessons from implementation. Design On design the main lesson is that capacity injection schemes like MCP need to be aligned with a wider reform process. Unless they are it is difficult to see how injecting capacity alone in an unreformed ministry will make any difference to performance. The strength of MCP will only be fully realized when it is tied to a wider strategic reform pathway. To this extent capacity injection has to be part and parcel of a whole of ministry reform program, which includes MCP appointees as part of a package of wider ministry support. The second lesson is that capacity injection has to be at scale. Dropping one or two MCPs into a ministry and expecting them to make a difference is fanciful. The real effect and impact will only be achieved by ensuring a ‗cluster‘ approach to MCP placement. In this way a ministry gets the full benefit of the program at scale. The consequence of this is the approach has to be selective and phased. Not all of government can benefit at the same time. The third lesson is that the PDO needs to SMART (Specific, Measurable, Achievable, Realistic and Time bound). There is no point having a wonderful and smooth running capacity injection program if at the end of the day you do not know its impact on improving government services. Much more work therefore needs to go into understanding and measuring the linkages between capacity inputs and ministry outputs and this needs to be captured adequately in the results framework and identification and articulation of appropriate indicators. Implementation The following experiences from MCP bear special attention: Inclusion of Middle-management and Junior Professionals under MCP: The MCP only catered to the senior grades of the Afghan Civil Service (Grades 1 & 2). A common issue raised by a majority of the MCP experts was the deficient skill levels and lack of 17 support for lower grade staff in their ministries/agencies. Under future such programs, such as CBR, these issues need to be addressed through the creation of a Senior Management Group (SMG), Common Function and Professional Staff cadres. Recruitment under common function and professional staff cadres should be expanded to include lower grades of the civil service. Training and Capacity Building of Recruits: Many MCP experts expressed their need for on-the-job training and capacity building during the interviews. MCP had no training component to address these issues. A key lesson is that such programs require a dedicated project component on training and capacity building of recruits through specialized courses and exposure visits to other countries as part of the overall approach to capacity development. Sub-National Outreach: The civil service infrastructure at sub-national levels in Afghanistan is extremely weak. The MCP envisaged to build line ministry functioning in the provinces but failed to mobilize expert personnel at the relevant positions. Future programs (such as CBR) must develop appropriate measures to increase sub-national recruitments, including tackling the issue of appropriate hardship allowances, to bring about changes in provincial recruitment and service delivery across Afghanistan. Country Based Bank Task Team: MCP faced enormous amount of delays in NOL approvals and continuous change of Bank task team leaders (TTL) throughout the project period. A country based Bank task team with longer term continuity will significantly increase project performance in fragile contexts such as Afghanistan. Transparent Salary Negotiations: A majority of MCP experts expressed their grievances on the determination of salary scales which were largely based on their salary history. Salaries should be based on the skills, qualifications and experience required for the positions rather than personal salary history. This is a general lesson but has also been incorporated into the CBR which will emphasize the establishment of fixed salary scales for the different categories of civil servants it intends to support. Quality of Recruits: While it was sometimes difficult for the program to recruit good quality experts, when it did they made all the difference to the success of the program. This is an important lesson for the future and shows the importance of maintaining a high standard in terms of caliber of experts even at the risk of not recruiting at all. Discontinue/Merge other parallel capacity building initiatives: Interviews with several MCP recruits reflected that similar civil service capacity building programs such as Civilian Technical Assistance program (CTAP) are creating negative incentives for the MCP staff. CTAP supports advisory level positions which are not part of the Government Tashkeel (Establishment) and salary scales under CTAP are generally two to three times of MCP scales. Such proliferation of capacity development programs should be avoided as it undermines the overall reform effort. 18 7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors (a) Grantee/Implementing agencies The government‘s response lays particular stress on the fact that the MCP was never allowed to expand to its total allocation of $35 million, as it was overtaken by its successor program, the Capacity Building for Results initiative, so it could never achieve its planned recruitment of staff at sub-national level, that during individual ministry assessments all MCP teams displayed an increase in percentage of expenditures in critical ministries, and that far from lacking oversight from other departments, the GDPDM was fully embedded within the IARCSC. On the basis of the achievements of the MCP the IARCSC-GDPDM believe the project warrants an overall ―Highly satisfactory‖ rating. While we recognize the government‘s disappointment, we do not feel that such a rating would be warranted in the circumstances nor would it be supported by the evidence. The MCP had both design and implementation failings. As this ICR makes plain these were not necessarily the fault of the implementing agency, but often reflected the broader difficulties of operating in Afghanistan, and lack of an overall capacity development plan. Nevertheless, the project never collected the necessary evidence to indicate level of project achievement against PDO. While it is clear that some MCPs performed extremely well, there were significant weaknesses in the overall approach which were only addressed towards the end of the project lifetime. While it is true that failure to appoint MCPs at sub-national level was result of combination of factors, a more concentrated effort might have seen better results in this regard. At the same time, it is important to acknowledge that the GDPDM had to contend with a series of Bank TTLs over the life of the project. This inevitably caused some inconsistency in messaging and supervision of the project. (b) Cofinanciers/Donors Not applicable (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) Not applicable 19 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) provision of management 27.00 30.00 111 services (on demand) program management 3.00 5.00 166 Total Baseline Cost 30.00 35.00 116 Physical Contingencies Price Contingencies Total Project Costs 30.00 35.00 116 Project Preparation Costs Total Financing Required 30.00 35.00 116 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Trust Funds 0.00 0.00 Afghanistan Reconstruction Trust 10.00 15.00 150 Fund 20 Annex 2. Outputs by Component Provision of Management Services “On Demand� The project recruited a total of 161 MCP experts over a period of four years against a target of 175 over the same period. Recruitments under MCP started almost 10 months after the effectiveness of the project. Initially the line ministries were slow to grasp the objective of MCP and thus requested a variety of positions to be funded through MCP which were outside its mandate. Many of these positions were not aligned to the ministry strategic plans and reflected ad-hoc requirements. Performance of the communication and outreach activities of the GDPDM in informing the line ministries about the MCP approach and objectives could be termed as unsatisfactory in this regard. This is also supported by the information provided in table 2 above. The number of positions approved is considerably lower than the requested number of positions throughout the project period. The MCP was able to attract talented and qualified Afghan nationals from the Diaspora and other private and donor-funded positions into the core Civil Service. The program was able to create a critical mass of champions in ministries such as Ministry of Finance (MoF), Ministry of Commerce and Industries (MoCI), Ministry of Agriculture, Irrigation and Livestock (MAIL) and Ministry of Mines (MoM) who led their ministry-wide reform processes. The majority of the MCP recruits possessed at least an undergraduate degree. About 25 per cent of the MCP experts obtained a post graduate qualification or a Master‘s in Business Administration (MBA). The ICR mission noted that administrative procedures associated with the verification of educational documents caused major delays in postings and salary payments of the selected individuals. Sub-national recruitments needed more attention under the program. GDPDM failed to achieve significant numbers for sub-national positions during the project life-time. It is important that under CBR, the IARCSC needs to prepare a well-designed strategy for provincial recruitments given the enormous responsibility it bears with respect to the Transition period and beyond. A snapshot of challenges faced by some of the regional offices of Ministry of Agriculture, Irrigation and Livestock (MAIL), Ministry of Public Health (MoPH) and IARCSC is provided in Table 3 below. Table 3: Sub-national Challenges Ministry/Agency Department/Directorate Challenges Helmand Provincial Office (i)Lack of Infrastructure (ii)Vacant positions and lack of skilled staff. (iii)Lack of Tashkeel (Establishment) for certain areas such as forestry and research. MAIL Nangarhar Valley Development (i)Shortage of budget under operations and development component (ii)Inadequate office facilities (iii)Shortage of managerial and technically skilled staff (iv)Lack of training facilities for staff MoPH Farah Provincial Office (i)Security Condition 21 (ii)Lack of female doctors (iii)Low salaries for P&G staff IARCSC Kandahar Regional Office (i)Lack of professional cadres at provincial levels (ii)Educational and training programs for the P&G staff (iii)Inadequate office Infrastructure (iv)Lack of a comprehensive capacity development plan Some Achievements under the “Cluster� Approach During late 2009/early 2010, the program started recruiting batches or ―clusters‖ of MCPs for key ministries. A brief account of the achievements of this approach for some of the ministries is mentioned below.  Ministry of Commerce & Industries (MoCI): The MCP expert for International Trade department facilitated the World Trade Organization (WTO) accession process and the South Asian Free Trade Agreement (SAFTA) has been signed. The MCP expert for the Business Licensing Department conducted a capacity needs assessment and has prepared a Capacity Development Plan. Six zonal offices are now connected to the online database. The MCP expert has also modified the legal framework for licensing.  Ministry of Finance (MoF): The MCP expert for State Owned Enterprises (SoE) has led the liquidation of a number of government establishments according to the Privatization Policy of the government. The MCP appointee for the large taxpayers office have simplified the tax filing procedures as a result of which taxpayers compliance have increased from 60% to 90%. An Aid Effectiveness Policy Unit under the Aid Management Directorate has been established and a capacity development plan has been prepared.  Ministry of Communication and Information Technology (MoCIT): MoCIT has three MCPs currently, Director General of Information and Communication Technology, Director General of Planning and International Relations and the Head of the National Data Center. Specific achievements include designing of eighty government websites under the E-Government Interoperability Framework Standards and collection of statistical data for telecommunications, postal and IT services from 34 provinces. Overseas training for 32 staff members of MoCIT has been facilitated through the Ministry of Foreign Affairs. 22 Annex 3. Grant Preparation and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Anne Tully Senior Operations Officer OPCFC Public Sector Management, TTL Nigel Peter Coulson Senior Public Sector Specialist SASGP TTL Ranjana Mukherjee Senior Public Sector Specialist SASGP Public Sector Management Hossai Mahak Aliffi Team Assistant SASPF Program Assistance Vidya Kamath Program Assistant SASGP Program Assistance Supervision/ICR Satyendra Prasad Senior Governance Specialist SASGP TTL Richard Spencer Hogg Governance Adviser SASGP TTL (ICRR) Deepal Fernando Senior Procurement Specialist ECSO2 Procurement Monali Chowdhurie -Aziz Senior Public Sector Specialist WBIOG Public Sector Management Asif Ali Senior Procurement Specialist SARPS Procurement Kenneth O. Okpara Sr Financial Management Specialist SARFM Financial Management Asha Narayan Financial Management Specialist SARFM Financial Management Zohra Farooq Financial Management Specialist SARFM Financial Management Rahimullah Wardak Procurement Specialist SARPS Procurement Vishal Gandhi Consultant SASGP Public Sector Management Public Sector ; Monitoring and Maha Ahmed Consultant SASGP Evaluation Jalpa Patel Consultant SASGP Public Sector Management Vidya Kamath Program Assistant SASGP Program Assistance Mohammed Edreess Sahak Team Assistant SASEP Program Assistance Kaushik Sarkar Consultant SASGP Public Sector Management (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No. of staff weeks and consultant costs) Lending FY07 0 0 Total: 0 0 Supervision/ICR FY07 BB – 4.83 20,971.38 FY08 BB – 9.13 55,971.42 FY09 BB – 22.02 113,313.36 FY10 BBTF – 28.70 125,743.69 FY11 BBTF – 15.35 106,206.11 FY12 BBTF – 4.10 31,039.89 Total: 453,245.85 23 Annex 4. Summary of Grantee's ICR and/or Comments on Draft ICR BORROWER’S EVALUATION Implementation Completion and Results Report ARTF funded Management Capacity Program (MCP) The Independent Administrative Reform and Civil Service Commission (IARCSC) of the Government of Islamic Republic of Afghanistan (GoIRA) implemented the ARTF (Afghanistan Reconstruction Trust Fund) funded Management Capacity Program (MCP) to achieve sustained improved performance in the management capacity of key departments of GoIRA ministries dealing with any or all of the common functions, including financial management, policy and regulatory design, and administration. The implementation was spread over 4 & ½ years from 2007 to 2011. Within IARCSC, the General Directorate of Programs‘ Design and Management (GDPDM), formerly Capacity Development Secretariat (CDS) was responsible for the implementation of MCP. The GDPDM is the lead IARCSC general directorate on institutional capacity development, project design and management, and donor relation and coordination. The mandate of GDPDM includes development, review, and coordination of strategic options for delivering development programs as part of Public Administration Reform (PAR) in the context of Afghan National Development Strategy (ANDS). The MCP was a successor to a series of earlier operations of World Bank to support civil service reform in Afghanistan. The two interventions envisaged in MCP were:  Provision of executive services ―on demand‖ and to provide experienced managerial level staff to ministries; and,  To put in place an establishment for the efficient management of the program that evolves into a permanent service of the IARCSC. These interventions had the objective of improving performance of management capacity of key departments of GoIRA ministries and thereby contributing to enhanced and cost effective utilization of budgetary resources and better delivery of public services. 24 During the lifetime of the project, a total of 193 positions were processed under the MCP. The MCP appointees were placed across 28 ministries / agencies of GoIRA including provinces. During the initial years, the implementation of the program was supported by a consulting firm (Adam Smith International) which helped to improve the foundations of a robust and transparent recruitment process as well as a sound monitoring & evaluation (M&E) system. GDPDM has used lessons learnt from other projects to improve the management of MCP, increase the number of MCP applicants and the number of MCP support requests from Ministries, improve the MCP Appointee selection process for more transparency, and adopt a clustering approach for a more holistic support through MCP. The GDPDM has strived hard to ensure transparency in the MCP recruitment process. The recruitment was fully aligned with the principles of merit based recruitment process under the civil servants‘ law. The decision making process had involvement of beneficiary ministries / agencies at all stages of recruitment. Commissioners of IARCSC‘s Boards chaired the panels and external experts such as university professors and sector specialists were invited to assist and observe the MCP interviews and provide their inputs in the recruitment process. The salary scale which is approved by steering committee where the World Bank was the observer has always been the base for any salary determinations. The confusion has mostly been arisen due to different understanding of three different task team lead for the MCP. The recommended revisions in using the scale have always been adapted by the IARCSC. Referring to past salary history of candidates was one of recommendations made by previous WB task team who was clearing the NoLs. The market distortion caused by donor salary top ups has always been a challenge in determining salary for a candidate under the MCP. The M&E section of GDPDM developed a standardized M&E system inclusive of comprehensive tools to assess departmental performance of MCP experts at regular intervals (baseline, six months, annual, two years and on ad-hoc basis). The assessment reports / feedback were regularly shared with respective departments including MCP experts and other stakeholders to portray the ratio of change in the aforementioned intervals within the departments under the support of MCP. While the system served very well for performance assessment of individual MCP experts, at the systems level, measuring change for broader objectives of improved service delivery proved to be challenging. Frequent communication regarding the requirement of system modification took place with the Bank Task Team. However, on account of limited timeframe of the program and preoccupation of both Bank Task Team and GDPDM with designing a follow on operations of MCP namely, the Capacity Building for Results (CBR) Facility, further enhancement to the MCP M&E tools could not be taken up. Service delivery and budget execution performance are two long term indicators which were difficult to be achieved over the life cycle of the MCP. However, despite such constraints, the GDPDM provided the Bank with data indicating the extent to which MCP experts had been effective in improving the delivery of services and executing their departments‘ budgets. For example, during the individual Ministry assessments, all MCP teams displayed an increase in percentage of expenditure in critical Ministries, e.g. Ministry of Finance, 25 Agriculture, Health and etc. As a result of this impact, the procurement process and contract management systems also improved and most of these Ministries qualified for Direct Funding by donors and direct procurement authority. The overall goal of the government is to improve the delivery of public services which primarily takes place at sub-national level. Capacity for service delivery needs to improve dramatically at sub-national level to ensure on-going legitimacy of the state and the peace and stability of Afghanistan. MCP had a target of allocating twenty percent of the appointments for sub-national level positions. This could not become feasible primarily on account of the preferences of ministries/ agencies to prioritize for their immediate needs of strengthening management capacity at central level. Secondly, the program as envisaged intended to expand to a total allocation of USD 35 million which would have supported 240 positions. However, within the available resources, only 153 appointments could be supported under the program, limiting the planned subsequent expansion to sub- national level. The follow-on program namely the CBR Facility, with its revamped approach and enhanced allocation is likely to respond to the requirement of expanding the program to sub-national level. Further, the MCP could only recruit staff to grades 1, 2 and 3 of the civil service and this became a serious bottleneck in many ministries which needed a second tier of managers under the MCP experts to execute the ministry mandates in Kabul as well as in the provinces. Considering the lessons learnt from the implementation of MCP, GDPDM has emphasized on the expansion of the scope of the project to support the second and third tier managers under the follow-on CBR Facility. Also, GDPDM initiated injecting clusters into the line ministries during the last year of MCP implementation which led not only to the recognition of MCP at the country level but also increased the productivity of the respective government ministries. The MCP experts contributions in their respective areas of work was endorsed and felicitated by the President and their respective supervisors (mostly deputy ministers) and three of them have been promoted to the positions of deputy ministers (Ministry of Commerce and Industries, Ministry of Mines and Ministry of Labor, Social Affairs Martyred and Disabled). The program assumed that MCP appointees do not need any additional capacity development and that the ministries / agencies to which they are appointed will provide them office facilities, etc., for their effective functioning. The IARCSC signed MoUs with respective ministries / agencies and the responsibility of providing MCP experts with necessary office supplies, such as computer, phone etc., rested with respective ministry / agency. There was no provision in the program to step in and provide an alternative in cases where the ministries / agencies failed to respond to the needs of MCP appointees in a timely manner. The GDPDM continued with its promotional activities to sensitize the ministries / agencies in this regard. Further, in coordination with other capacity development programs, implemented by IARCSC, the MCP appointees were included in the exposure visits to other countries (Korea, Italy, India) to widen their knowledge and upgrade their skills. 26 MCP implementation was fully embedded in IARCSC and its relevant departments played crucial roles in the management of MCP. For example, Appointments Boards‘ Commissioners chaired and led the recruitment process. All cases of grievances / complaints regarding MCP recruitment process were processed by the IARCSC Appeals Board. The MCP expert‘s performance evaluation forms were attested by the Chairman. All financial arrangements of MCP were coordinated with the Finance department of the Commission. GDPDM also coordinated and communicated MCP‘s provincial related agendas with the IARCSC Provincial Affairs Directorate (PAD). GDPDM‘s communication and outreach department frequently shared the MCP progress reports with IARCSC‘s Communication and Media Relations Directorate. It is therefore not a correct conclusion that there was no significant involvement of other departments of the IARCSC in management and oversight of the MCP and GDPDM leadership exercised full control over program management. In fact, the foremost and significant achievement of MCP was to mainstream the CDS, an erstwhile PMU of IARCSC responsible for MCP implementation into GDPDM, a full-fledged general directorate of IARCSC with a defined mandate such that the processes of GDPDM were fully embedded with the processes of other directorates of IARCSC. Under a visionary leadership accompanied by competent staff, the IARCSC-GDPDM has been able to transform MCP into a well-known project at country level, signified in Kabul Conference and acknowledged by the President indicating the impact it made in the government. The overall implementation progress of the project is strongly believed to be “Highly satisfactory� and not “Moderately satisfactory�. The Kabul Conference marked a new phase in the partnership with donor community namely, the Kabul Process. The Afghan Government‘s program has been defined by measurable benchmarks contained in National Priority Programs (NPPs) that represent the prioritized requirements of the ANDS. The hallmark of the Kabul Process is Afghan leadership and ownership. Earlier, the Consultative Peace Jirga of June 2010 was an expression of national consensus and gave a mandate to adopt a ―whole of the state‖ approach and ―whole of government‖ path to national renewal. The essence of the ―whole of the state‖ is constitutionalism and the essence of the ―whole of government‖ approach is structural reform to create an effective, accountable and transparent government that can deliver services to the population and safeguard national interests. The IARCSC is implementing the NPP3 for ―efficient and effective government‖ following the ―whole of government‖ approach and has now taken lead in implementing Capacity Development programs for Afghan Civil service under the overall Public Administration Reform agenda that follows a ―whole of ministry‖ approach. The cluster approach promoted by MCP towards later part of its implementation lays the foundations of a ―whole of ministry‖ approach which has now been fully embedded in the MCP follow-on program – ―Capacity Building for Results (CBR) Facility‖. 27 Annex 5. List of Supporting Documents and MCPs Interviewed World Bank: Management Capacity Program (MCP) Documents (P106170) MCP Implementation Support Mission Aide Memoire (February, 2009) Implementation Status and Results (March 2010) Implementation Status and Results (November 2010) Mid-Term Review (October-November 2010) Implementation Status and Results (December 2011) MCP Technical Annex Implementation Completion Report for AEP and LEP, IARCSC (August 2010) Assessment of the TAFSU, AEP and LEP Review of the Lateral Entry Program (LEP), NORAD (May, 2006) Interviews Mr. Rohullah Osmani, Director General, GDPDM Mr.A.Foshanji, Director (Operations), GDPDM Mr.Faizan Ahmad, Director (Human Resources), Ministry of Women‘s Affairs Mr.A.W.Arian, General Director for Policy and Planning, Ministry of Education Mr.Khair Mohammad ―Niru‖, Director General, Manpower & Labor Affairs Regulations, Ministry of Labor, Social Affairs, Martyrs and Disabled (MoLSAMD) Mr.J.H.Samadey, Director (HR), MoLSAMD Dr.Q.Qaeym, Director General, Directorate of Oil & Gas Survey, Ministry of Mines (MoM) Ms.G.Habibyar, Director (Policy), MoM Mr.M.W.Etabar, Director (Finance & Accounts), Ministry of Agriculture, Irrigation and Livestock (MAIL) Mr.M.Y.Hotak, Director (Human Resources & Capacity Development), MAIL Prof.S.W.Ataye, Director (Policy, Planning and Foreign Affairs), Ministry of Justice (MoJ) Mr.A.N.Baizayee, Director General (HR), Ministry of Education (MoE) Mr.M.Ebrahim, Director (Finance), MoM Ms.M.Akbari, Director (Investment Promotion), MoM Mr.S.Z.Hashemi, Director (Legal), MoM Mr.M.Aqa, Director General (Treasury), Ministry of Finance (MoF) Mr.H.Jalil, Director of Aid Management Directorate, MoF 28 60°E 65°E 70°E 75°E To U Z B E K I STA N Dushanbe hob Am uD ar y Murg a TA J I K I STAN To Chardzhev To TAJ IK IS TA N To ˘ Kulob To Shazud Dushanbe To ˘ Qurghonteppa AFGHANISTAN TUR KM E N I S TA N Faisabad h ¯ ¯ JAWZJAN ndz Pya BALKH ¯ KUNDUZ mi r Taloqan ¯ ¯ Pa Kunduz Kondoz ¯ h Sheberghan ¯ Mazar-e ¯ Sharıf ¯ TAKHAR ¯ s BADAKHSHAN Saripul u Tirich Mir (7690 m) To Samangan ¯ Baghlan ¯ K Meymaneh Mary ¯ SAMANGAN ¯ BAGHLAN ¯ ¯ F A R YA B u ndu z I R d To SH ¯o eQ J Chitral To SAR IP SARIP UL y n 35°N Mashad Mor gh¯ Da ¯ ry a- Bazarak H PAiN ¯ ¯¯ NURISTAN ab P ¯ B A D G H ¯S I ¸ ¯ Mahmud-e Raqı ¯¯ ¯ ¯ ¯ KAPISA Nuristan ¯ ¯ ¯ 35°N a Bamyan ¯ ¯¯ ¯ PARWAN Asadabad ¯ ¯ r o Qal‘eh-ye Now ¯ Charıkar LAGHMAN ¯¯ ¯ KUNAR To p a e ¯ R a n g ¯ ¯ m i s u s Mehtarlam Mardan Chaghcharan ¯ B A M YA N KABUL KABUL ¯ ¯ Herat ¯ ır¯d Har¯ u Jalalabad ¯¯ ¯ PAK IS TAN WA R D A K Meydan Shahr ¯ INDIA ¯ Khyber Pass ¯ LOGAR NANGARHAR H E R AT GHOR To Peshawar DAY KUNDI Pol-e ‘Alam Nili PAKTIA Ghaznı ¯ Gardız ¯ us d an G H A Z N¯ Ind ISLAMIC He lm I KOWST To Kowst Kohat 0 50 100 150 Kilometers REPUBLIC Sharan rah ¯ ¯ OF IRAN Fa ¯ URUZGAN 0 50 100 Miles FA R A H Tarın Kowt ¯ ut ¯r Ha ¯ Farah ¯ I ¯ P A K T¯K A ¯ ZABUL Qalat ¯ h Kh¯ s a ak rn¯ Ta Hamun-e ¯ ¯ Saberı ˛¯ ¯ Lashkar Gah ¯ Arghandab Kandahar ¯ To AFG H ANISTAN Zhob Dasht-I Margo PROVINCE CAPITALS Zaranj NATIONAL CAPITAL N ¯M R O Z I ¯ HILMAND ¯ KANDAHAR RIVERS Helm To and Quetta MAIN ROADS 30°N Gowd-e RAILROADS Zereh IBRD 33358R1 30°N OCTOBER 2011 This map was produced by the Map Design Unit of The World Bank. PROVINCE BOUNDARIES The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any INTERNATIONAL BOUNDARIES 60°E PA KI S TA N 65°E endorsement or acceptance of such boundaries. 70°E