The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) Public Financial Mgmt Enhancement Project (P152932) AFRICA | Zimbabwe | Governance Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2016 | Seq No: 7 | ARCHIVED on 10-Jun-2019 | ISR37388 | Implementing Agencies: Ministry of Finance and Econ Devt, Republic of Zimbabwe Key Dates Key Project Dates Bank Approval Date: 24-Mar-2016 Effectiveness Date: 24-Jun-2016 Planned Mid Term Review Date: 29-Jun-2018 Actual Mid-Term Review Date: 13-Apr-2018 Original Closing Date: 30-Jun-2019 Revised Closing Date: 30-Jun-2019 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project development objective (PDO) is to improve control, transparency and accountability, and oversight in the use of public resource in Zimbabwe. The Project will contribute to enhancing fiscal discipline, strategic allocation of resources, and service delivery efficiency, through strengthened systems, procedures and targeted capacity-building. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Financial Management and Accounting (including IFMIS):(Cost $5.30 M) Financial Reporting, Internal Controls and Internal Audit:(Cost $1.34 M) Enhanced Accountability through Strengthening of External Audit:(Cost $1.50 M) Strengthening the Demand Side of Transparency and Accountability:(Cost $0.86 M) PFMEP Management:(Cost $1.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The Public Financial Management Enhancement Project (PFMEP) was approved by the World Bank’s Africa Region Vice President on March 24, 2016 and became effective on June 24, 2016. To allow for successful implementation of the remaining project activities across all project components, the Zimbabwe Reconstruction Fund (ZIMREF) Donor Partners have agreed, in principle, to grant a no cost extension of the project closing date for nine months, from June 30, 6/10/2019 Page 1 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) 2019 to March 31, 2020. To this effect, the Government has submitted an official restructuring request, dated March 4, 2019. No changes to the existing project components and activities are envisaged at this stage. However, the restructuring proposes minor adjustments to the Results Framework to better clarify the context of the results indicators at PDO and intermediate level, align the values of the end targets with the recently changed country and sectoral circumstances, and ensure measurability and consistency in how progress against outputs and outcomes is measured at the end of the calendar year (A No Objection, by the Donor Partners, was granted on April 4, 2019). An implementation support mission was carried out from February 11 to 19, 2019 and on April 1 to 5, 2019, which resulted in the below findings and recommendations: As of March 25, 2019, expenditure and commitments on the project reached over 50 percent of the total budget of US$10 million through the ZIMREF Multi-donor Trust Fund (MDTF); while the project was originally appraised at US$20 million, only US$10 million materialized through the signed Grant Agreement; and contrary to initial expectations, no additional funds have been made available subsequently. The project is currently geared to improved disbursements, as several high value procurement packages are reaching signature and commitments are made for which payments will be due over the next few months. The overall progress towards achievement of the Project Development Objective (PDO) and Implementation Progress (IP) are rated Moderately Satisfactory. This is because project implementation had initially slowed down between December and January 2019 due to nationwide protests resulting from economic pressures, and the delay in hiring staff of the Project Management Unit (PMU) after the previous contracts expired on December 31, 2018. Furthermore, there are challenges in ensuring that existing systems and the expansions being supported are used effectively; with significant progress expected to materialize during the remainder of 2019. There is a shared understanding among the project partners that these are core issues that need to be addressed to demonstrate accelerated progress in implementation and impact during the next couple of months. Progress on Activities: The C1 team has been active and engaged in several challenging activities. Several procurement processes are under way and need to be completed as soon as possible to allow for enough implementation time. One of the most critical issues that requires MoFED’s immediate attention is the resolution regarding the payment of overdue SAP maintenance/recurrent fees, to enable the Government to re-gain access to SAP’s portal for downloading new modules and system updates. Once resolved, this will enable the implementation of the PFMS BPC module and of the web portal. The WB team has provided information to the Government on typical maintenance arrangements and fees from our global experience. Positively, the Data Centres (C1.7) the contract has been signed (this month) and the supplier is already working on an implementation schedule and is expected to complete by end of the year. 2019. Furthermore, the contract for 57 kiosks (C1.15) is currently at signing stage; it has been sent to winning bidder for signature. Under C2, there is commendable progress in preparing for and implementing the planned activities. The team hosted several workshops to prepare and finalize Terms of Reference (ToRs) and required supporting procurement documents: an approach which has enabled them to make progress. The Government agreed to accelerate the process of developing the Accounting Policies and Financial Reporting Manual, which will also feed into the planned implementation of IPSAS. The mission participated in the launching of the IPSAS Implementation Strategy Plan (ISP). The plan was launched by the Permanent Secretary of MoFED at the 3rd Zimbabwe IPSAS Working Group meeting, held on April 3, 2019, attended by more than 170 delegates, hosted by PAAB, IFAC, DFID and Government. The launch followed the announcement of adopting IPSAS accrual standards in the 2019 budget speech and the subsequent issuance of a Statutory Instrument for IPSAS implementation in March 2019. The ISP provides the road map for implementation of IPSAS over a period of seven years. The C3 team has made commendable progress in implementing all activities except for 3.1 on conducting job evaluation, grading and career path development, which requires acceleration, which is currently being prepared. The OAG team agreed to involve the PMU’s procurement specialist to guide and support them on the procurement process to deliver this activity within the remaining timeline. As for C4, on January 19, 2019, the PBO published its analysis of the Auditor General’s report on Appropriations on the Parliament’s Website as part of Parliament openness. In February 2019, the PBO completed the production of the first ever Citizen’s Budget Guide in Zimbabwe. Citizen’s Budget is an illustrative guide to the Budget of the country. From February 14-18, 2019, Public Accounts Committee conducted Capacity Building Workshop on the Analysis of 2017 Auditor General’s Reports on Appropriation Accounts, Local Authorities and State Enterprises and Parastatals. From February to March 2019, PAC conducted Oral Evidence Sessions on compliance issues with the Permanent Secretary of Finance, The Reserve Bank Governor, and ZINARA on the Accounts and Forensic Audit report. From March 18-22, 2019, PAC conducted a Benchmarking visit to Zambia. Objectives of the Benchmarking visit were to observe how Parliament of Zambia conducts public hearing and how to ensure implementation of PAC recommendations. From March 28 -April 2, 2019, PAC conducted the second workshop on the Analysis of the Auditor General's Reports Achievement of results: With support from the project, the GoZ finalized the annual financial accounts for 2018 substantially faster than had been the case for the 2017 accounts (4 vs 12 months). This is a major achievement towards regularizing PFM; and the achievement follows intensive discussions about this issue at the PFM workshop in February. A key result in the making relates to Statutory Funds (C1.19) where 8 funds went live between January and March 2019, against a target of 15 for the year 2019. The 6 pilot kiosks (C1.6) are functioning, but usage is still low due to delays in the change management processes as well as in the budget releases to districts which have so far only covered less than 5 major MDAs. More Internal Audit Committees (C.2.2) were appointed, while the Chief Internal Auditor (CIAU) still needs to work closely with MDAs to ensure that they meet and begin to influence and affect the internal control environment at MDAs. Change management: The team would like to encourage the GoZ to take the lead on various change management aspects. These are needed to ensure that line Ministries, Departments and Agencies (MDAs) and sub-national government entities are fully aware of the new tools, systems and processes being introduced, encourage these stakeholders to actively participate and to become able to utilize them appropriately. To the extent possible, such efforts are being supported through the project. 10.To ensure effective use of new PFMS modules (BPC, BI, web portal) and district Kiosks (to support PFM operations) starting from mid-2019, change management activities will be important. The C1 team capacity is not adequate to manage the expansion of PFMS and change management activities. PFMS team currently has 14 staff (and 12 vacant positions) and the MoICT is supporting the C1 activities with 24 specialists (4 actively involved; 20 specialists available for the rollout). A change management and communications consultant will be selected to support the update and implementation of change management program developed earlier. The Bank team is also expecting the submission of the AGD’s and MoICT’s technical staff and skill needs for the PFMS rollout, as well as a proposal for the 6/10/2019 Page 2 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) establishment of a dedicated unit to manage new integrated system. The recruitment of PFMS staff to fill the vacant positions is important in line with this proposal. Public Expenditure and Financial Accountability (PEFA): The 2017 PEFA report has been made publicly disclosable, following the GoZ’s authorization to do so received on November 2, 2018. To follow through on the findings and recommendations arising from the PEFA assessment, a two-day workshop (February 18 and 19, 2019) was organized to discuss the way forward with government counterparts and donor partners key areas in which improvements appear to be needed, current government efforts and the importance of developing a roadmap for the next steps on PFM reforms for the coming years. The workshop was attended by various government officials and representatives from MoFED, line ministries, government agencies, and donor partners, and induced rich discussion with regards to the timeliness of government financial reporting, Public Financial Management System (PFMS) expansion and improvements, strengthening the internal audit function, addressing arrears, program budgeting, transition to IPSAS, etc. It was agreed that Government will initiate the development of a PFM reform roadmap. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance High High High Macroeconomic Substantial High High Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Substantial Substantial Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary Substantial Substantial Substantial Environment and Social Low Low Low Stakeholders Moderate Moderate Moderate Other -- Low Low Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes Improved Financial Management and Accounting IN00710256 ►C1: Timely preparation and reporting of annual Consolidated Revenue Fund (CRF) financial statements based on PFMS data and reporting tools, after end of financial year. (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 9.00 10.00 12.00 6.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Improved Financial Reporting, Internal Controls and Internal Audit 6/10/2019 Page 3 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) IN00710257 ►C2: Coverage of internal audit (as percentage of functional internal audit units within Central Government). (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 100.00 100.00 100.00 100.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 To make it more relevant to the support provided for the internal audit function, this indicator will be Comments: changed to read: ”% of completed internal audit work plan”, with the upcoming project restructuring. Enhanced Accountability through Strengthening of External Audit IN00710258 ►C3: Timely completion and submission of annual audit reports to the Parliament. (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 6.00 6.00 6.00 6.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Strengthened the Demand Side of Transparency and Accountability IN00710259 ►C4: PAC recommendations implemented by the MoFED (per received Treasury Minutes). (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 90.00 90.00 90.00 90.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Intermediate Results Indicators by Components Financial Management and Accounting (including IFMIS) IN00710260 ►C1.1: Statutory Funds Accounts collecting revenues are captured in PFMS for financial reporting (share of total flow of 90 statutory funds) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 10.00 10.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 41 out of the 90 statutory funds have been entered into the system. Recruitment of a consultant to provide TA to conclude configuration and provide support to go live is now at an advanced stage - contract Comments: negotiation. Five funds have been earmarked to go live by end 2018. IN00710264 ►C1.2: PFMS Grant Management module is configured to capture relevant donor funded projects. (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/10/2019 Page 4 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) Value 2.00 3.00 7.00 10.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Global Fund (HIV, TB & Malaria Grants), PFMEP and SADC EU Grant are live in the system. Two more UNICEF grants under Ministry of Education are expected to go live in November, as their budgets have Comments: been approved and loaded into the system. IN00710268 ►C1.3: District level entities are using PFMS Kiosks for daily operations (procurement, payments and revenue transactions) and reporting. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 50% District level The 6 pilot kiosks are The 6 pilot kiosks are entities are using 30 now live on PFMS. now live on PFMS. PFMS Kiosks for daily These are: Murewa, These are: Murewa, operations Value 0.00 Rusape, Chiredzi, Rusape, Chiredzi, (procurement, Kadoma, Esigodini and Kadoma, Esigodini payments and revenue Gwanda and Gwanda transactions) and reporting. Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 District level MDAs are yet to perform their daily operations on the PFMS as they have not yet undergone training on use of the system. Effective rollout of the Change Management Plan, which includes creation Comments: of user profiles in the system and PFMS end user training at district level needs to be expedited immediately in the pilot districts. IN00710272 ►C1.4: BPC and BI modules are fully operational and are used to prepare and consolidate budget and monitor the performance providing access to all MDAs through new web portal. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target New BPC and BI modules and web portal are fully Contract with TTCS to Contract with TTCS to Requirements identified operational to the supply and install BPC supply and install BPC Value and procurement satisfaction of MoFED and BI modules is under and BI modules is process initiated. and key users (health, implementation. under implementation. agriculture), and 2020 budget prepared using PFMS. Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Implementation of the BI, BPC and Web-portal is in progress and now in the realization/configuration phase. BPC is expected to go-live by end of January 2019. The 2019 budget will be uploaded after go-live and will be used for all test runs and for the monitoring of budget implementation. It is expected that Comments: budget preparation for 2020 will be done on the new BPC module. BI is expected to go live on December 1, 2018. IN00710275 ►C1.5: PFMS web portal is being used to upload financial statements of local authorities (28 urban councils + 63 rural district councils) for quarterly consolidation. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 10% of local Contract with TTCS to Contract with TTCS to authorities using the Requirements identified develop PFMS web develop PFMS web PFMS web portal to Value and procurement portal is under portal is under upload their financial process initiated. implementation. implementation. statements for consolidation. Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 6/10/2019 Page 5 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) Comments: Co nfig urat ion of the we b port al, whi ch will ser ve for upl oad ing of fina nci al stat em ent s for sub seq uen t coll atio n, star ted in Au gus t and is still in pro gre ss. The We b Por tal is exp ect 6/10/2019 Page 6 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) ed to go live on De ce mb er 1, 201 8. Financial Reporting, Internal Controls and Internal Audit IN00710261 ►C2.1: PFMS internal audit report issued. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Procurement of IDEA software was concluded and Software is being installation is at an procured. A local SAP advanced stage. training firm will be Recruitment of an engaged to train internal PFMS internal audit Value No individual consultant to auditors. A consultancy report issued. configure the system, firm will assist the train internal auditors internal audit unit on the and assist them on the maiden PFMS audit. maiden PFMS audit is at contract signing stage. Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Procurement of IDEA has been recently completed and implementation of activities is yet to commence. Comments: IN00710265 ►C2.2: Audit committees’ meetings held bi-annually to review internal audit reports (across the 22 line Ministries). (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 25.00 25.00 80.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 25 percent (five) of the committees have sat once and submitted the minutes of their meetings. A circular minute has been issued by the Accountant General to ministries, giving the committees an ultimatum to sit Comments: and provide minutes by end of November 2018. IN00710269 ►C2.3: Revised Accounting Procedures Manual is in place. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target It was agreed that a Revised Accounting Existing Accounting Review and updating of consultant would be Procedures Manual is Procedures Manual is Value Accounting Procedures engaged to develop available for the use of outdated and requires Manual in progress. the Accounting all MDAs (at central review. Procedures Manual and local level). 6/10/2019 Page 7 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) and Accounting policy based on IPSAS accrual. Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 A concept note to develop the manual will be prepared and submitted to the WB for No Objection by Comments: November 30, 2018. IN00710273 ►C2.4: A limited PEFA assessment on indicator PI 29 (Annual Financial Reports) conducted finding at least initial improvement (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 13-Apr-2018 05-Nov-2018 31-May-2019 30-Jun-2019 The indicator will be measured according to the PEFA methodology, and at least two of the three sub- Comments: indicators improve by a half-increment (e.g. from D to D+ or D+ to C) Enhanced Accountability through Strengthening of External Audit IN00710262 ►C3.1: Audit recommendations implemented by MDAs (per the Audit Report on Appropriation Accounts, Finance and Revenue Statements) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 48.00 48.00 69.00 55.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 To be assessed when the Audit reports FY2017 have been tabled before Parliament. Comments: IN00710266 ►C3.2: Performance audit reports presented to Parliament (annually). (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 3.00 3.00 4.00 Date 23-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Two reports have already been tabled in 2018. One report was submitted for tabling, but Parliament was adjourned before tabling it. Two reports are at OAG management review stage. (Four reports sponsored Comments: under PFMEP will be completed by December 2018 and tabled in 2019.) IN00710270 ►C3.3: Audit quality and checklist procedures in place for outsourced audits to private firms. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Audit quality and checklist procedures are in place and used A consultant was A consultant was Audit quality and for at least 40% of the recruited to develop the recruited to develop Value checklist procedures are audited financial audit quality and the audit quality and not in place. statements by private checklist procedures. checklist procedures. sector auditing subjected to quality checks. 6/10/2019 Page 8 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Development of audit quality and checklist procedures expected to be completed by the end of the year. Comments: Strengthening the Demand Side of Transparency and Accountability IN00710263 ►C4.1: Number of Treasury Minutes received from the MoFED (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2.00 1.00 3.00 4.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 One Treasury Minute for the Ministry of Justice was issued in in April. Work on five others is in progress. Comments: IN00710267 ►C4.2: Time taken by Parliament to analyze the Government audited financial statements. (Months, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 9.00 8.00 8.00 7.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 PAC concluded analysis of audit reports FY 2016 in March 2018, eight months after the reports were Comments: tabled in Parliament in June 2017. IN00710271 ►C.4.3: Pre-budget and post-budget consultative meetings conducted by the Portfolio Committees (cumulative, supported by the project) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 18.00 18.00 19.00 38.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Pre-budget consultations scheduled for Q4. The indicator will be slightly revised to specify the 'budget Comments: season', which runs between November and February, capturing the pre and post budget consultations. IN00710274 ►C4.4: Recommendations from pre-budget consultations taken up by the MoFED. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 64.00 0.00 56.00 50.00 Date 22-Nov-2017 05-Nov-2018 31-May-2019 30-Jun-2019 Pre-budget consultations scheduled for Q4 2018. The actual number for the budget season 2018 will be Comments: provided at the stage of the next ISR, when the pre and post budget consultations conclude. IN00710825 ►C4.5: Citizens participating in the pre-budget and post-budget consultations conducted by Parliament Committees (supported by the project) (disaggregated by gender) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 1285 citizens (623 1380 (of which 32.5% 680 (of which 30% Value -- female - 48%) female) (cumulative for female). participated in the pre- meetings held for the 6/10/2019 Page 9 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) budget consultations 2018 and 2019 from the 17 meetings budgets) conducted Date 22-Nov-2017 -- 31-May-2019 30-Jun-2019 Pre-budget consultations scheduled for Q4 2018. The actual number for the budget season 2018 will be Comments: provided at the stage of the next ISR, when the pre and post budget consultations conclude. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P152932 TF-A1783 Effective USD 10.00 10.00 0.00 5.00 5.00 50% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P152932 TF-A1783 Effective 24-Mar-2016 04-May-2016 24-Jun-2016 30-Jun-2019 30-Jun-2019 Cumulative Disbursements 6/10/2019 Page 10 of 11 The World Bank Implementation Status & Results Report Public Financial Mgmt Enhancement Project (P152932) Restructuring History Level 2 Approved on 01-Aug-2018 Related Project(s) There are no related projects. 6/10/2019 Page 11 of 11