Document of The World Bank Report No: ICR00001661 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-70450) ON A LOAN IN THE AMOUNT OF US$ 47.9 MILLION TO THE REPUBLIC OF PANAMA FOR A LAND ADMINISTRATION PROJECT March 4, 2010 Sustainable Development Department Central America Country Management Unit Latin America and the Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective October 26, 2010) Currency Unit = Balboa B/. 1.00 = US$ 1.00 US$ 1.00 = B/. 1.00 FISCAL YEAR ABBREVIATIONS AND ACRONYMS ANAM Autoridad Nacional del Ambiente (National Environmental Agency) Annex Areas Those areas belonging to a Comarca, which are not geographically adjacent to the Comarca, but rather dispersed throughout different provinces Carta Orgánica Charter Comarca Administrative division for an indigenous population created by a specific law CORS Continuously Operating Reference Stations Delimitation Mapping of an area Demarcation Physical placement of markers on the ground along an area’s boundary DNCBP National Directorate of Cadastre and Patrimonial Assets DINRA National Directorate of Agrarian Reform DNGL National Directorate of Local Governments IBRD International Bank for Reconstruction and Development IDB Inter-American Development Bank IGN Instituto Geográfico Nacional (National Geographic Institute) IPDP Indigenous Peoples Development Plan M&E Monitoring and Evaluation NGO Nongovernmental Organization PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objectives PRONAT Programa Nacional de Administración de Tierras (Panama Land Administration Program) SC Superior Council for Land Administration SIICAR Sistema Integrado de Catastro y Registro (Integrated Cadastre and Registry System) SINAP Sistema Nacional de �reas Protegidas (National System of Protected Areas) TCO Technical Operational Committee US$ United States Dollar UTO Operational Technical Units Vice President: Pamela Cox Country Director: Carlos Felipe Jaramillo Sector Manager: Ethel Sennhauser Project Team Leader: Jorge A. Muñoz ICR Team Leader: Jorge A. Muñoz ii PANAMA Land Administration Project 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 1. Project Context, Development Objectives and Design ................................................... 1 2. Key Factors Affecting Implementation and Outcomes .................................................. 8 3. Assessment of Outcomes .............................................................................................. 17 4. Assessment of Risk to Development Outcome ............................................................. 21 5. Assessment of Bank and Borrower Performance ......................................................... 22 6. Lessons Learned............................................................................................................ 24 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 26 Annex 1. Project Costs and Financing .............................................................................. 27 Annex 2. Outputs by Component...................................................................................... 28 Annex 3. Economic and Financial Analysis ..................................................................... 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes................. 36 Annex 5. Beneficiary Survey Results ............................................................................... 38 Annex 6. Stakeholder Workshop Report and Results ....................................................... 39 Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR ........................ 40 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders .......................... 48 Annex 9. List of Supporting Documents .......................................................................... 49 Map (IBRD 30835) - Panama Land Administration Project, Project Areas, Implementation Completion Report iii iv A. Basic Information Land Administration Country: Panama Project Name: Project Project ID: P050595 L/C/TF Number(s): IBRD-70450 ICR Date: 03/01/2011 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: PANAMA Original Total USD 47.9M Disbursed Amount: USD 45.8M Commitment: Revised Amount: USD 47.9M Environmental Category: B Implementing Agencies: Ministry of Economy and Finance Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 05/13/1999 Effectiveness: 07/19/2001 07/19/2001 04/11/2006 04/13/2009 Appraisal: 11/21/2000 Restructuring(s): 12/28/2009 05/25/2010 Approval: 01/16/2001 Mid-term Review: 07/30/2004 Closing: 09/30/2006 06/30/2010 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Moderately Quality at Entry: Government: Unsatisfactory Unsatisfactory Implementing Moderately Quality of Supervision: Moderately Satisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Unsatisfactory i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 79 79 Forestry 16 16 Other social services 3 3 Sub-national government administration 2 2 Theme Code (as % of total Bank financing) Administrative and civil service reform 22 22 Indigenous peoples 11 11 Land administration and management 23 23 Law reform 22 22 Personal and property rights 22 22 E. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox David de Ferranti Country Director: Carlos Felipe Jaramillo D-M Dowsett-Coirolo Sector Manager: Ethel Sennhauser John Redwood Project Team Leader: Jorge A. Munoz Isabel Lavadenz-Paccieri ICR Team Leader: Jorge A. Munoz ICR Primary Author: Jorge A. Munoz Anna Corsi ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objectives of the Project are: (a) to promote equitable access to land and improve land tenure security by providing Land Administration Services in the Project Area; and (b) to enhance natural resources conservation through the consolidation of SINAP and Indigenous Peoples Territories. Revised Project Development Objectives (as approved by original approving authority) The revised objective of the project is: To modernize the land administration system, including priority protected areas and indigenous territories. (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 : Time required and cost for titling and registering a land parcel Value 24 hours and 24 hours and US$2 quantitative or No precise measure. US$30 per per transaction Qualitative) transaction Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target partially achieved. In comparison to a internal costing study performed in (incl. % 2004, the time required to process transactions has been reduced from 72 to 24 achievement) hours but cost remains at US$30. Indicator 2 : Satisfaction of SIICAR's users Value quantitative or N/A 70% satisfied Not measured Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target not achieved. SIICAR has not been fully implemented, thus satisfaction (incl. % rate cannot be measured yet. However, an assessment conducted in July 2007 achievement) showed that community members had a positive perception of the Project. Existing land occupations in protected areas regularized (number of areas with Indicator 3 : stable number of inhabitants) Value quantitative or N/A 5 2 protected areas Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target partially achieved. 1,300 titles provided to landowners within Cerro Hoya (incl. % and Portobelo National Parks. achievement) Indicator 4 : Shared-administration plan implemented in the Ngobe-Bugle' area Value quantitative or N/A 1 1 Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 iii Target partially achieved. A co-management plan in a protected area overlapping Comments with an indigenous territory has been completed, but is not yet approved by (incl. % ANAM; however, ANAM has issued a resolution approving the use of co- achievement) management plans. (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 : Status of framework law for a modernized land administration system National Assembly Value approved the Law Old titling procedures; Law approved by (quantitative on Massive Land old law in force. Assembly or Qualitative) Titling on June 30, 2006. Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Status of regulations for simplifying regularization process and for massive land Indicator 2 : titling Regulations to the Law on Massive Titling approved in September 2006 Value (Decree 228); Old regularization Regulations (quantitative regulations for procedures approved or Qualitative) simplifying the establishment of ejidos approved in June 2007 (Decree 134). Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Establishment and Operation of Alternative Conflict Resolution Mechanisms Indicator 3 : (number of provinces) and resolution of conflicts (percentage) 490 conflicts resolved through Value alternative conflict (quantitative 0 3 provinces (80%) resolution or Qualitative) mechanisms in 3 provinces (% not yet determined) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target partially achieved. 283 conflicts in indigenous lands and 207 conflicts in iv (incl. % non-indigenous lands. achievement) Indicator 4 : Establishment of specialized land tribunals (number of provinces) Value (quantitative 0 4 4 or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Indicator 5 : Staff of implementing agencies trained in the use of SIICAR Value (quantitative 0 1,000 315 (32%) or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target partially achieved. The number of staff trained is only 32% of target (incl. % because SIICAR is not yet operational. This number of trained staff is expected achievement) to increase once SIICAR is fully functioning. Indicator 6 : CORS Stations Operating Value (quantitative 0 3 3 or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Indicator 7 : Basic geodetic network (20 points) available Value 1 network (20 1 network (20 (quantitative 0 points) points) or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Indicator 8 : Primary geodetic network (175 points) available Value 1 network (175 1 network (175 (quantitative 0 points) points) or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Indicator 9 : Portion of the national territory photographed with ortho-photos Value 50% (3,750,000 50% (37,759 ortho- (quantitative 0 km, 37,759 ortho- photos, equivalent or Qualitative) photos) to 100% of target) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target achieved. v (incl. % achievement) Rural parcels surveyed and titles issued in Chiriqui, Veraguas and Bocas del Indicator 10 : Toro (number) 49,079 parcels Value 75,000 parcels 50,000 parcels surveyed (98%) and (quantitative 0 surveyed (50,000 surveyed 13,190 titles issued or Qualitative) titled) (12,000 titled) (110%) Date achieved 12/31/2003 04/11/2006 06/30/2010 06/30/2010 Comments Target partiallya achieve. There was significant achievement in the number of (incl. % parcels surveyed, and target fully achieved in parcels titled. achievement) Indicator 11 : Urban parcels surveyed and titles issued (number) 60,000 31,935 parcels Value 80,000 (surveyed) (surveyed) and surveyed (53%) and (quantitative 0 and 54,000 (titles 15,000 (titles 3,354 titles issued or Qualitative) issued) issued) (22%) Date achieved 12/31/2003 04/11/2006 06/30/2010 06/30/2010 Comments Target partially achieved. This was mostly due to delays and long and (incl. % complicated procedures necessary for the demarcation of urban areas achievement) (particularly on municipal lands). SIICAR operating in 4 implementing agencies and 10,000 parcels incorporated Indicator 12 : into the system Value 4 agencies; 10,000 (quantitative 0 3,000 parcels (30%) parcels or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments Target not achieved. No agency has SIICAR fully operational yet. Number of (incl. % parcels will only be met when SIICAR is fully operational. achievement) Indicator 13 : Linear Km of Protected Areas demarcated Value (quantitative 0 700 km 281 km (40%) or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target partially achieved. Due mostly to operational delays. achievement) Indicator 14 : Number of Management Plans completed Value (quantitative 0 9 6 or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target partially achieved (66.7%). achievement) Number of indigenous territories consolidated (Kuna Yala, Ngobe Bugle and Indicator 15 : Naso Tjerdi) and administrative norm elaborated (Naso Tjerdi) vi One: Kuna: 13 km pending in the conflict area of Santa Isabel. (33%) Ngobe Comarca: Value 3 territories 95% demarcated (quantitative 0 consolidated and 1 Naso territory: 70% or Qualitative) norm elaborated delimited. A draft Naso Comarca law was submitted twice to the National Assembly but not approved. Date achieved 12/30/2003 06/30/2010 06/30/2010 Comments Target partially achieved. 100% of main area of Ngobe Bugle Comarca (incl. % demarcated, Annex Areas in Bocas del Toro still not demarcated. achievement) Indicator 16 : Linear Km of indigenous territories demarcated Value (quantitative 0 1,361 km 1,361 km or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved. achievement) Indicator 17 : Establishment of roundtables in indigenous territories Value (quantitative 0 3 16 or Qualitative) Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target achieved and exceeded. achievement) Indicator 18 : Portion of old cadastral registries updated Value 14,792 parcels 50% of cadastral (quantitative 0 (equivalent to 13% registries or Qualitative) of target). Date achieved 12/31/2003 06/30/2010 06/30/2010 Comments (incl. % Target partially achieved. Due mostly to operational delays. achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/19/2001 Satisfactory Satisfactory 0.00 vii 2 12/12/2001 Satisfactory Satisfactory 2.46 3 06/18/2002 Satisfactory Satisfactory 2.88 4 06/27/2002 Satisfactory Satisfactory 2.88 5 12/23/2002 Satisfactory Satisfactory 3.78 6 06/21/2003 Satisfactory Satisfactory 5.27 7 09/12/2003 Satisfactory Satisfactory 6.13 8 05/19/2004 Satisfactory Satisfactory 9.06 9 06/23/2004 Satisfactory Unsatisfactory 9.28 10 12/22/2004 Satisfactory Unsatisfactory 10.29 Moderately 11 04/29/2005 Unsatisfactory 10.82 Unsatisfactory 12 06/13/2005 Unsatisfactory Unsatisfactory 11.07 13 12/27/2005 Unsatisfactory Unsatisfactory 12.27 Moderately Moderately 14 05/20/2006 13.53 Unsatisfactory Unsatisfactory 15 08/23/2006 Moderately Satisfactory Moderately Satisfactory 14.22 16 01/23/2007 Moderately Satisfactory Moderately Satisfactory 16.96 17 09/05/2007 Moderately Satisfactory Moderately Satisfactory 21.12 18 04/11/2008 Moderately Satisfactory Moderately Satisfactory 26.02 19 09/03/2008 Moderately Satisfactory Moderately Satisfactory 30.80 20 02/04/2009 Moderately Satisfactory Moderately Satisfactory 36.01 Moderately Moderately 21 06/02/2009 39.62 Unsatisfactory Unsatisfactory Moderately Moderately 22 10/27/2009 41.20 Unsatisfactory Unsatisfactory Moderately 23 04/20/2010 Unsatisfactory 44.52 Unsatisfactory Moderately 24 07/30/2010 Unsatisfactory 45.43 Unsatisfactory H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions This restructuring included a simplification of the PDOs, revision (and reduction) of targets to better 04/11/2006 N U U 13.53 reflect the PDOs, and the creation of a new component to allow for better quality control and monitoring of progress. It also included viii ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions new expenditure categories, an increase in the size of the Authorized Allocation of the Special Account, and changes to the Financial Administrator and Procurement Agent for the Project, and an extension of the Closing Date. Clarification on inconsistencies between PAD and Loan 04/13/2009 N MS MS 38.97 Agreement on activities pertaining protected areas. 6-month extension of the 12/28/2009 N MU MU 42.04 Closing Date. Minor reallocation of 05/25/2010 N MU U 44.92 expenditure categories. I. Disbursement Profile The image cannot be display ed. Your computer may not hav e enough memory to open the image, or the image may hav e been corrupted. Restart y our computer, and then open the file again. If the red x still appears, y ou may hav e to delete the image and then insert it again. ix 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. Sector background and government strategy. At the time of Project preparation in the late 1990s, Panama’s income inequality was among the highest in the world, and the distribution of land holdings was one of the most skewed in the region. Panama’s poverty rate was estimated at 37 percent of the population; 21.6 percent of the population was extremely poor. 1 In 1999, the poor, who accounted for two-thirds of the rural population, owned only one-third of the land. In addition, only one-third of all owned agricultural land was fully titled, 84 percent of which was owned by non-poor. Land administration services in both rural and urban areas were under-funded, bureaucratic, and fragmented. In addition, registration, titling, cadastre, and information systems were poorly integrated and outdated. This situation was made more difficult by the existence of complicated land adjudication and titling procedures, as well as uneven and outdated land taxation values. 2. Initial discussions between the Government of Panama (GOP) and the Bank regarding land administration issues began during the preparation of the Rural Poverty and Natural Resources Project in 1996. Security of land tenure and efficient land administration services were identified as important aspects of poverty alleviation and sustainable use of natural resources and were placed by the GOP among the central elements of its Poverty Reduction Strategy (Nuevo Enfoque Estratégico Frente a la Pobreza, 1998). 3. The country further recognized the need for a holistic approach to land administration, one that would cover all types of lands and tenure regimes, including protected areas and Indigenous People’s territories. At the time of Project preparation, over half of the forests in Panama had disappeared and 25 percent of the land was considered either degraded or in the process of rapid degradation. In addition, 88 percent of Indigenous People, which according to the 1990 census totaled approximately 200,000, were extremely poor, and one-half of indigenous children were malnourished. 4. The National Land Administration Program (Programa Nacional de Administración de Tierras, PRONAT), officially launched in 2001, was conceived as an ambitious program to address long-term and far-reaching legal, institutional, and technological reforms needed to regularize land tenure country-wide, resolve land conflicts, facilitate access to land by the poor, reduce land transaction costs, and increase the transparency of land administration services. 5. PRONAT (the “Program�) was to be financed concurrently by the Inter-American Development Bank (IDB) and the World Bank. The World Bank and the IDB operations 1 According to the Living Standards Measurement Survey (LSMS, 1999), Government-World Bank Poverty Assessment. 1 were conceived as two separate, but complementary, projects. 2 This World Bank- financed Land Administration Project (the “Project�) was to create and establish the framework for the national Program, strengthen the institutions, develop the methodology, address critical policy and regulatory reforms, and implement a systematic regularization process in selected Provinces. As such, it was to provide the framework and the unified methods for IDB or other subsequent operations. In addition, the World Bank-financed Project was to embrace support for the strengthening and consolidation of the National System of Protected Areas (SINAP), though nation-wide identification, delineation and demarcation of protected areas, as well as support for actions to improve Indigenous Peoples’ access to land and other natural resources while promoting their participation in the process of recognition of rights and demarcation of lands. The IDB project was to focus on the Provinces where regularization activities were currently underway, with a possibility to expand to new areas in the future. 6. Rationale for Bank involvement. The Bank was well positioned to assist the GOP in addressing the land sector challenges, given its broad experience in land administration reform programs worldwide. The Bank was also a pioneer in supporting projects with area-based cadastre and registry components, as reflected in land-related projects in Bolivia, Colombia, El Salvador and Guatemala. As such, the Project, like similar projects in other countries in the region, was one where technical inputs were necessary but not sufficient to meet the stated objectives, given the complex political and socio-economic conditions surrounding this issue in the country. From the Project’s inception, the Bank was aware that this posed challenges for Project implementation, particularly as it related to law-making and interactions with critical stakeholders. Despite these challenges, the Bank considered that supporting the reforms proposed through PRONAT was a worthwhile development endeavor. In particular, unlike other donors, the Bank was willing to take on the risks involved in the consolidation of Indigenous Peoples territories, and play a leadership role in pursuing support for the regularization of their land rights. 7. Country Partnership Strategy. The Project was consistent with the Country Assistance Strategy (CAS) discussed on November 19, 1998, which supported strategies to reduce poverty and inequality in Panama and pointed out that sustainable development was constrained by: (a) distortions in land markets; (b) the lack of property titles; (c) the extreme concentration of land ownership; (d) an inappropriate property tax regime; (e) non-sustainable use and degradation of natural resources; and (f) ethnic disparities. To 2 The IDB engaged through two loans totaling almost US$60 million supporting: (i) the Land Administration and Regularization Project (signed in March 2003); and later (ii) the Metropolitan Region Cadastre and Land Administration Modernization Program (signed in October 2007). Although there was some overlap between the IDB and Bank projects (for example, one of the main products of the Bank- financed project—the SIICAR system—was considered as a counterpart contribution under the IDB project), the IDB-financed project had different components and objectives (i.e., it focused more on municipal development and land markets). Further, while not formally supporting PRONAT, the Danish Development Cooperation (DANIDA) provided analytical and technical support to land regularization efforts for Indigenous Peoples by supporting the Dobbo Yala Foundation, a nongovernmental indigenous organization. 2 address these constraints, the CAS gave priority to the reform of land administration and land tenure systems. 8. The Project was appraised in November 2000, approved on January 16, 2001 and became effective on July 19, 2001. It was implemented for nine years, closing on June 30, 2010. 1.2 Original Project Development Objectives (PDO) and Key Indicators 9. The original Project Development Objectives were: (a) to promote equitable access to land and improve land tenure security by providing land administration services in selected rural, peri-urban, and urban areas; and (b) to enhance natural resources conservation through the consolidation of SINAP and Indigenous Peoples Territories. 10. Land administration covered a range of land regularization activities, including legal rights recognition, titling, conflict resolution, legal cadastre and registry. The consolidation of SINAP and indigenous territories included mapping, field demarcation, buffer zone limits, determination of their legal status; and land management plans in selected areas through local and participatory consultation processes. 11. The original key performance indicators were:  The National Geodetic Network established and updated nationwide;  1,080,486 ha of land regularized;  75,000 properties incorporated into the cadastre and regularized in rural areas;  80,000 properties incorporated into the cadastre and regularized in urban areas (ejidos municipales);  45,000 properties incorporated into the cadastre and regularized in urban areas (big cities);  40,000 titles issued in rural areas;  40,000 titles issues in urban areas;  Demarcation of priority protected areas (approximately 600,000 hectares); and  Demarcation of two established Comarcas3 (Ngöbe-Buglé and Kuna Yala) and of the indigenous territory of the Teribe-Naso. 1.3 Revised PDO and Key Indicators, and Reasons/Justification 12. Due to significant implementation delays, which led to the unsatisfactory rating with respect to development objectives (described in Section 2.2 below), the Project was restructured in 2006. The overall goals of the Project remained the same, but simplification and better monitoring of indicators were needed. As part of the 3 In Panama the term Comarca refers to an administrative division for an indigenous population created by a specific law. There are five such regimes in the country: Kuna Yala (1938), Emberá-Wounan (1983), Madungandi (1996), Ngöbe-Buglé (1997) and Wargandi (2000). 3 restructuring, the two PDO objectives were simplified into a single objective. The revised PDO thus became: To modernize the land administration system, including priority protected areas and indigenous territories. 13. In the original design broad and un-quantified outcome indicators were mixed with output indicators. The revised outcome indicators better measured the efficiency and public benefit of a modernized land administration system in Panama. In the 2006 restructuring, the PDO indicators were thus revised as follows:  Twenty-four hours and US$2 per transaction required for titling and registering a land parcel;  Seventy percent of users of the Integrated Cadastre and Registry System (SIICAR) satisfied;  Existing land occupation in five protected areas regularized; and  Shared-administration plan implemented in the Ngöbe-Buglé area. 1.4 Main Beneficiaries 14. The Project aimed to promote more equitable land access and property rights regularization, with emphasis on rural areas, in particular for poor populations, peasant farmers, rural tenants, Indigenous Peoples and women. However, it was expected that the Project would also benefit urban and peri-urban dwellers (provincial capitals and ejidos municipales) where poor households would be given a priority. Most of the population targeted within the Project area was poor, and was expected to benefit from the increased security of land tenure that directly and indirectly benefits small producers in the agriculture sector, land owners in the peri-urban and urban areas, and Indigenous Peoples. An estimated 200,000 rural and urban properties were covered by the Project area. 1.5 Original Components Component 1 – Land Policy, Legal and Institutional Framework (US$17.20 million, or 23.7 percent of original total Project cost) 15. This component aimed at providing the policy, legal and institutional framework, as well as the capacity needed by the Project to deliver land administration services. The Project envisaged actions on three specific sets of activities: (a) introducing a series of land policy, legal/regulatory, and institutional reforms to simplify land titling, enable land sales and rentals, consolidate protected areas and indigenous territories, and serve as a basis for land valuation and taxation; (b) establishing inter-institutional co-management mechanisms at the national and local level; and (c) building capacity in local level NGOs and municipalities. 4 Component 2 - Land Regularization Services (US$45.77 million, 63.3 percent of total cost) 16. This component aimed at activities required for the massive land regularization process in Project areas. Three sets of activities were envisaged: (a) modernizing the geodetic network and generating maps and satellite images to identify parcels in rural and urban areas for regularization, and for demarcation of protected areas and indigenous territories; (b) carrying out cadastral surveys to ground truth the satellite imagery, resolve issues relating to property rights, and issue titles; and developing an integrated information system (SIICAR) and updating it with cadastral survey data; and (c) establishing alternative dispute resolution mechanisms. Component 3 - Consolidation of Protected Areas and Indigenous Territories (US$8.92 million, 12.3 percent of total cost) 17. This component aimed at: (a) the consolidation of SINAP; (b) the establishment and consolidation of protected areas within SINAP; and (c) the establishment and consolidation of indigenous territories, including support for the preparation of the draft law and charter required to establish and legally recognize the Naso Teribe Region, the updating of the charters of selected Comarcas and the demarcation of selected Indigenous Peoples’ territories. It also provided for technical and baseline studies, technical assistance for conflict resolution in indigenous territories, public information and promotion campaigns and strengthening of indigenous organizations and indigenous authorities. 18. The original total Project cost was US$72.36 million, with an IBRD loan amount of US$47.9 million. 19. Implementation arrangements. Although primary responsibility for Project implementation fell under the Ministry of the Economy and Finance, as a national program, the Project was implemented by multiple agencies: the National Directorate of Agrarian Reform (DINRA), the Public Registry, the National Directorate of Cadastre and Patrimonial Assets (DNCBP), the National Environmental Agency (ANAM), the National Directorate of Indigenous Affairs (DNPI); the National Geographic Institute (IGN), and the National Directorate of Local Governments (DNGL). Following Project restructuring in 2006, the Ministry of Housing was included as co-executing agency. Interagency coordination was promoted at the national level by two structures created specifically for the Project: the Superior Council (SC) for Land Administration and the Technical Operational Committee (TCO), respectively responsible for the policy and technical regulatory frameworks needed for Project implementation. All these entities were supported by a Project Coordination Unit (PCU), under the Ministry of the Economy and Finance, responsible for the day-to-day management of Project activities, coordination, financial transactions, procurement, and operational reporting to the Bank. At the same time, the PCU served as the main vehicle for coordinating Bank Project activities with those of the IDB project, also part of PRONAT. 5 1.6 Revised Components 20. Following a comprehensive Mid-Term Review in 2004, the Government requested a restructuring of the Project in 2006. The PDO was simplified into a single objective, as noted above. The substantive aspects of the three original components were maintained, but their scope and targets were revised to better reflect the PDO and were consequently reduced by 20 to 30 percent. As noted in Section 1.3 above, outcome indicators were revised to better measure the efficiency and public benefit of a modernized land administration system in Panama. In addition, a new component to provide for separate quality control and monitoring activities (Component 4: Project Administration and Monitoring) was added. As a result of the reduced scope of the operation, the total cost of the Project was also reduced by about 20 percent, for a new total cost of US$58.57 million. Due to the new financing parameters approved by the Bank’s Board for Panama on December 20, 2004, the Government’s counterpart contribution was reduced. All expenditure categories were to be financed up to 100 percent by Loan proceeds, except for operating costs which would be at 90 percent. The reduction of Project size affected solely the amount of Government counterpart funding, while the total loan amount remained unchanged (US$47.9 million). These changes, along with a three-year extension of the Project Closing Date, to December 31, 2009, were made to facilitate the Government’s ability to achieve the Project’s objectives and targets. In its comments to this ICR, the Government has noted that the 2006 restructuring failed to substantively change the Project’s implementation arrangements, which ultimately led to only partial achievement of results (see Annex 7). As noted in the section on lessons learned below, the Bank team agrees with this assessment. 21. Therefore, after Project restructuring, output indicators by Component were revised as follows: Component 1 – Land Policy, Legal and Institutional Framework (US$13.56 million, 23.2 percent of total Project cost)  Law proposal for a modernized land administration system presented to the Assembly;  Regulations for simplifying regularization process and for massive land titling approved;  Alternative conflict resolution mechanisms established in 3 provinces and 80 percent of conflicts resolved;  Specialized Land Tribunal established in 4 provinces; and  1,000 staff of executing agencies trained in the use of SIICAR. Component 2 – Land Regularization (US$28.99 million, 49.5 percent of total cost)  Three Continuously Operating Reference Stations (CORS) stations operating;  Basic geodetic network (20 location points) available;  Primary geodetic network (175 points) available;  50 percent of national territory photographed; 6  50 percent of old registries in the project area updated;  50,000 rural parcels surveyed and 12,000 titled issued;  60,000 urban parcels surveyed and 15,000 titles issued; and  SIICAR operating in 4 implementing agencies with no less than 10,000 parcels incorporated. Component 3 – Consolidation of Protected Areas and Indigenous Territories (US$7.97 million, 13.6 percent of total cost)  700 linear km of protected areas demarcated;  Nine management plans completed;  Three indigenous territories consolidated (Kuna Yala, Ngöbe-Buglé, and Naso Tjerdi) and 1 administrative norm elaborated;  1,361 km of indigenous territories demarcated; and  3 roundtables established (Kuna Yala, Ngöbe-Buglé, and Chimán). Component 4 – Project Administration and Monitoring (US$8.05 million, 13.7 percent of total cost)  Annual Operating Plan and procurement plan drafted every year on November 30;  Monitoring and Evaluation report issued every three months; and  Annual auditing carried out. 1.7 Other Significant Changes 22. Project restructuring in 2006 also involved a change in the financial administrator and procurement agent and the addition of the Ministry of Housing (MIVI) as a co- executing agency. Up to 2006, Government had been using the United Nations Development Program (UNDP) as a financial administrator and procurement agent for the Project (identified as such in the Loan Agreement), financed entirely with counterpart funds. Government dissatisfaction with this arrangement led to a revision in the Loan Agreement which allowed Government to choose a different financial administrator and/or procurement agent, under terms and conditions satisfactory to the Bank. Between 2006 and 2008, there was no external financial administrator, but since March 2008, the Government has employed the Centro del Agua del Trópico Húmedo para América Latina y El Caribe (CATHALAC) as the financial administrator for the Project. Although procurement thresholds remained the same after Project restructuring, at the Government’s request, the 2004 Procurement Guidelines became applicable. Also, to facilitate implementation, the Authorized Allocation of the Special Account was increased to US$4.79 million (equivalent to 10 percent of total loan amount). 23. As part of a Bank-wide initiative, a PAD review was carried out in early 2009 which identified some discrepancies between the Projects’s PAD and the provisions of the Loan Agreement. This review led to a minor second project restructuring in April 2009, which only related to changes to activities in protected areas and the elimination of activities related to land valuation which were going to be financed by an IDB project. 7 24. Finally, there were two reallocations of expenditure categories throughout the life of the Project. The first was done as part of Project restructuring in 2006, and a second minor reallocation was approved in May 2010. In December 2009, the Bank approved a second extension of the Project Closing Date to June 30, 2010. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 25. Soundness of background analysis. Project design built on technical studies and a consultation process carried out during preparation comprising: (a) a comprehensive environmental analysis of potential environmental impacts (positive or negative); (b) a comprehensive social assessment addressing issues of social diversity, resources, and conflict, including attention to Indigenous Peoples’ issues, and a public consultation based on field surveys and workshops; and (c) a cost-benefit analysis. The design further benefitted from preparatory work carried out under the Rural Poverty and Natural Resources Project in 1996. These studies contributed to ratification of the choice of sectors and areas to be covered by the Project. 26. Assessment of Project design. Overall Project design was considered sound at the time. It built on the existing experience and lessons learned from the Bank’s portfolio in land administration and international best practices, in particular with regards to the need to: (a) address land administration reform in a comprehensive manner, dealing with legal and policy reforms, institutional innovations, area-based surveying and land regularization, and conflict resolution: (b) integrate the cadastre and registry functions; (c) address multiple types of land tenure issues, including individual land titling, natural resources and protected areas management, recognition of Indigenous Peoples’ land claims, and promotion of property rights of women; (d) promote the participation of local and community stakeholders; and (e) work simultaneously in rural and urban areas. 27. However, with the benefit of hindsight, the approach followed by the Project resulted in an overly complex and ambitious design that suffered from several limitations, many of which have been noted in other similar operations from the same time period.4 Four key areas are worth noting. First, Project design did not take into account considerable institutional limitations, particularly the inability of multiple entities to work together to achieve Project objectives, which often competed with individual organizational aims and sector priorities. In its comments to this ICR, the Government has highlighted this as the single most important flaw in project design (see Annex 7). Second, the technical, operational and institutional requirements for regularizing and titling individual land rights are quite different from those applicable to the demarcation and regularization of protected areas, or the recognition of historical land claims of Indigenous Peoples. Project design should have identified specific measures aimed at 4 See, for example, “World Bank Support to Land Administration and Land Redistribution in Central America,� and Independent Evaluation Group (IEG) Performance Assessment of three Projects, June, 2010. 8 mitigating these potential conflicts. Third, although under Component 1 the Project established conflict resolution mechanisms to address specific land disputes, they were unable to address the broader political economy issues surrounding land policy, such as those encountered in the demarcation of indigenous territories and protected areas. And fourth, in the particular case of the demarcation of the Ngöbe-Buglé Comarca, background studies and consultations processes failed to identify the early controversies related to the Annex Areas in Bocas del Toro province. Moreover, lack of a stand-alone Indigenous Peoples Development Plan (IPDP) with adequate consultations hindered the ability of implementing agencies to respond to emerging critical issues in a timely fashion. 28. Adequacy of the Government’s commitment during preparation. Project design benefitted from high level commitment by the Government. Following negotiations for the Rural Poverty and Natural Resources Project in 1997, the Government prioritized the preparation of this Project (with support from a Japanese grant). The Government also formed an inter-ministerial working group and a Panamanian delegation visited Australia to study land administration services in that country. 29. Assessment of risks. Project appraisal identified sixteen critical risks, most of which were rated as modest. Some of these risks materialized during implementation, including: (a) insufficient participatory processes to provide sufficient mechanisms and incentives for both the Government and potential beneficiaries to participate effectively in Project activities and in mediated dispute resolution; (b) insufficient political commitment to promote policy, legal and institutional changes, and insufficient willingness to facilitate true participatory processes; and (c) use of different approaches to land regularization (under Components 2 and 3) that undermined expected Project results. 30. Some important risks that eventually materialized, however, were not identified during Project preparation and appraisal, including:  The risk that multiple implementing agencies would have persistent coordination problems that seriously delayed project implementation.  The risk that emerging conflicting interests, such as pressures to develop the hydroelectric and tourism potential in Project areas, particularly in Bocas del Toro province, would threaten implementation of key Project activities related to the recognition of Indigenous Peoples’ land rights;  The possibility that long delays in the development and rolling out of SIICAR, which in fact did occur, would threaten the overall sustainability of the investments made under regularization activities due to the inability to rapidly update land transactions in a reliable single system;  The fact that enactment of certain laws not envisioned at the Project design stage might pose either legal ambiguities or differences of interpretation that would 9 prevent the demarcation of certain Indigenous Peoples’ territories (as was the case of the Ngöbe Annex Areas, and the Naso territory, respectively); and  The possibility that despite frequent and highly participatory consultation processes and conflict resolution mechanisms for Indigenous Peoples, internal disputes would lead to paralysis of certain Project activities. 2.2 Implementation 31. Overall, the Project implemented a significant number of the activities envisioned at the design stage, but it took twice as long as planned, even taking into account the scaled-down version resulting from the 2006 restructuring. During the first four years, the Project suffered significant implementation delays, due mainly to limited disbursement of funds (both from the Loan and counterpart financing), weak operational leadership and ineffective inter-institutional coordination. The Project operated with an interim Technical Coordinator for almost 18 months (from September 2004 until early January 2006). The Government never allocated all the resources that it had committed to the Project. Initially, it was expected that the Project would disburse between US$8 and US$10 million per year, while, in practice, it only disbursed between US$1 and US$3 million per year. This excessive delay is what led the Mid-Term Review of mid-2004 to determine that the Project needed to be restructured. In June 2004, the Project started being rated Unsatisfactory in terms of implementation. By mid-2005, it became clear that the Project was not going to achieve its original PDO and output indicators by the original Closing Date of September 30, 2006, and the Project was then restructured (approved in January 2006, and effective six months later). 32. As noted above, the restructuring did not alter substantively the PDO or components, but rather focused on alleviating operational bottlenecks (i.e., reduced counterpart funding requirements, more flexibility in appointing a financial administrator and procurement agent, and a larger Authorized Allocation of the Special Account). In addition, the restructuring strengthened the monitoring functions within the Project, with a more robust Project logframe, clearer outcome and output indicators, and a separate component with earmarked resources for these functions. Following restructuring, the Project made substantial progress towards achievement of expected outcomes and development impact, and Project ratings consistently improved. Improvements after 2006 were attributable to the change in funding arrangements, with the Government having less counterpart funding requirements, as well as to improved, stable leadership. However, even after restructuring, limited resource allocations by the Government and persistent operational bottlenecks severely restricted achievement of Project objectives. 33. The problems encountered during implementation can be summarized under three broad categories: (a) institutional capacity limitations and weak coordination; (b) operational conflicts between different project components attempting to regularize different types of land tenure situations; and (c) difficulty in addressing complex issues related to the regularization of Indigenous Peoples’ territories, including consultations and legal issues. 10 34. Institutional limitations and weak coordination. As is fairly common in land administration projects in the Latin America Region, multiple Project goals required multiple agencies to implement activities that are typically mandated by law (i.e., titling of rural lands was the responsibility of the DINRA, surveying required IGN involvement, demarcation of Indigenous Peoples’ territories was the responsibility of a National Boundaries Commission composed of multiple agency representatives, etc.). To address this challenge, because there was no alternative at the time, the Project relied too heavily on a “supra� structure, the Superior Council, which was supposed to enforce institutional cooperation. In practice this proved to be a very difficult endeavor. The SC only met four times in nine years. This limitation was compounded by the fact that the PCU was starved of resources throughout most of the Project’s life (despite the fact that it was formally under the Ministry of the Economy and Finance) and it did not have sufficient authority or convening power to enforce inter-institutional cooperation. On the other hand, the TCO functioned fairly well, meeting frequently (almost monthly) and with sufficient quorum. TCO sessions were mainly used to discuss and approve technical issues and regulatory reforms. Over time some of these institutional limitations were gradually reduced, as a result of a more dynamic and autonomous PCU. However, in its comments to this ICR, the Government has noted that deficient institutional arrangements (since project design) and a weakly supervised PCU resulted in disproportionately high administrative costs and inefficient project implementation. Going forward, it is unclear how the Project’s implementation arrangements will adapt to the new institutional setting established on October 8, 2010 by the creation of a National Authority for Land Administration (ANATI), which integrates the DINRA, DNCBP, IGN, and PRONAT’s PCU, into one autonomous entity. 35. Competing Project component objectives and methods. A direct result of the Project’s complex design was the inherent conflict that emerged between two different components. On the one hand, activities under Component 2 attempted to regularize land rights under the operational procedures applicable to private rural and urban parcels, either with the direct involvement of private contractors or directly with PCU staff. On the other hand, activities under Sub-component 3.2 aimed at demarcating and regularizing lands for Indigenous Peoples using specific operational procedures applicable only to these lands, including the need for highly participatory consultation mechanisms. This proved to be a significant challenge for a couple of reasons. First, Project teams (at the central and local levels) working under the two components did not interact much with each other and thus were unaware of developments in the other component. As a result, staff working on rural lands regularization (Component 2) did not consider issues related to Indigenous Peoples lands regularization as carefully as was intended under Component 3. Bank supervision missions (including the results of technical and social audits) conducted in early 2010 determined that some of the titling processes carried out in 2008 fell outside the provisions of the Project and consequently, the Bank declared those activities as ineligible under the Loan Agreement. This also led to the Bank’s request to suspend titling activities in Bocas del Toro. And second, the supervision of private contractors responsible for regularization of private rural and urban parcels proved to be difficult given the lack of adequate quality control manuals. 11 36. Difficulty in addressing Indigenous Peoples’ land issues. The Project faced several challenges in order to address the historical land claims of Indigenous Peoples, particularly in Bocas del Toro province. These challenges were the result of various factors, some exogenous and others endogenous to the Project. Some of these difficulties prompted two Requests for Inspection to the World Bank Inspection Panel by some members of the Naso and Ngöbe indigenous communities (on March 11 and March 20, 2009, respectively), which led to a full investigation by the Panel.5 The most important exogenous factors were: (a) the growing pressures on and competing interests from growth and economic development (tourism, environmental protection, hydropower, urban development) over lands in these regions. The territorial claims by Indigenous Peoples were thus part of a broader climate of conflict created by the inherent trade-offs among the alternative uses of land; (b) internal disputes within the Naso community that left the community deeply divided—with two groups each claiming legitimate representation—and consequent difficulties of engaging in dialogue with the two sides of the controversy; and (c) approval of laws which either created legal ambiguities or led to contradictory Government policy positions regarding Indigenous Peoples land rights. 37. Factors endogenous to the Project included: (a) lack of a stand-alone IPDP which could have better guided Project implementation in these areas; (b) weak consultations (in the case of Annex Areas, or on the approval of Law 72 of 2008, which led to a declaration of ineligible expenditures in April 2009); and (c) limited and erratic financial support to activities under Sub-component 3.2. However, it should be noted that the Project’s ability to respond to these challenges improved significantly in the last two years of Project implementation, as a result of enhanced Bank supervision efforts and increased Government commitment to address these issues. Further, the Bank took the opportunity of the 6-month extension of the Project’s Closing Date (to June 30, 2010) to impress upon the Government the need to address some unresolved issues, mostly related to the Indigenous Peoples’ subcomponent (including improved consultations in Naso and Ngöbe communities in Bocas del Toro). 38. Problems with SIICAR’s design and development. The design and development of the SIICAR system, the core of PRONAT, suffered from a number of shortcomings, including: (a) weak institutional capacity, especially at the DNCBP in the Ministry of Economy and Finance; (b) limited engagement on the part of the Public Registry; and (c) unsatisfactory interaction between the contractor in charge of the development of the system and the implementing entities. These shortcomings resulted in significant delays in carrying out the procurement processes, including one major technological false start, and delays in the elaboration of technical specifications. 5 The full texts of the Requests for Inspection, the corresponding Bank Management Response, and the Panel’s initial eligibility Report are available at the Panel’s website at www.worldbank.org/inspectionpanel (see under Cases 53 and 56). The full Investigation Report, completed on September 16, 2010, and the corresponding Management Report and Recommendation, submitted on October 28, 2010, will also be available on that website after both of these reports are discussed by the Bank’s Board in the near future. 12 39. Accordingly, building on a previous IDB project, a provisional solution for the integration and maintenance of the cadastral and recorded information was developed by the PCU and DNCBP (so called little SIICAR, or “SIICARito�). This temporary system consisted of a smaller database and software that would allow for the conservation and maintenance of the information to be collected in the field as a result of the regularization process until the final SIICAR was put in place. Currently, the SIICAR is not yet fully operational and the SIICARito continues to be used as a provisional mechanism to integrate cadastral and recorded information. 40. Lack of adequate budget allocation. Throughout the Project’s life, the Ministry of Economy and Finance allocated smaller budgets than those intended at Project design or those committed to at the 2006 restructuring (after a dramatic reduction in counterpart funding requirements), and the implementing units have often executed less than what was expected. The Project ran out of operating funds shortly before the new administration was inaugurated on July 1, 2009. The arrival of a new team and other transition issues in mid-2009 led to further Project implementation delays. In response to repeated Bank requests, including the possibility of suspension of loan disbursements, in October 2009 the new Government finally allocated sufficient resources to the Project to allow continuation of critical activities. 41. Weak coordination between the Project and the IDB projects. Coordination at the PCU and implementing agency level of Bank-financed and IDB-financed activities proved to be very difficult due to several factors: (a) different budgetary allocations led to different implementation timetables; (b) over-reliance on “consultants� for Project- specific tasks which severely weakened the ability of line agencies to respond to project demands effectively; (c) different fiduciary controls and operational modalities (e.g., the IDB project considered implementation of the Bank-financed SIICAR as a national “counterpart� contribution); and (d) different field offices and operational staff for each project, which often resulted in confusion among beneficiaries who did not know that there were in effect two different “PRONAT� projects operating simultaneously. This was particularly problematic in Bocas del Toro province. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 42. The Project did not have an effective Monitoring and Evaluation system during the first few years of implementation. Institutional coordination was very poor, with limited transfers of information between co-implementing agencies and the PCU. Although financial reports on the use of Project resources were generated periodically, the Project did not have a system for collecting, synthesizing and reporting Project results and linking these results to inputs (uses of financial resources). In late 2003, a series of recommendations was made to review the Project logframe and prepare periodic reports detailing Project input, output and outcome indicators. Progress was slow, but by 2006, when the restructuring was completed, the Project was generating standardized monitoring reports on key Project indicators. End-of-Project performance indicators, based on the 2006 revised logframe, are summarized in Annex 2. 13 43. Although reporting on performance indicators improved significantly after the 2006 restructuring, and the Government prepared a detailed report on PRONAT’s achievements from 2001 to 2009, a comprehensive end-of-Project evaluation (including an ex-post economic analysis) was not carried out, nor was a beneficiary assessment prepared. Therefore, the results and assessments presented in this Implementation and Completion Report (ICR) are based on the Government’s final report (summarized in Annex 7) and Bank supervision findings. 2.4 Safeguard and Fiduciary Compliance 44. Indigenous Peoples (OD 4.20). At Appraisal and during the early years of implementation, the Project was not fully in compliance with 4.20 because it did not have a stand-alone IPDP. However, a comprehensive social assessment, including attention to Indigenous Peoples’ issues, was carried out during Project preparation and an Indigenous Peoples’ strategy was prepared and was incorporated as an Annex to the PAD. The strategy was a useful tool for the Project to support the Government’s efforts in the drafting of the bill to create the Naso Comarca. However, it was not sufficient to guide fulfillment of the standards required by Bank safeguard policies to conduct consultations, nor to assess potential conflicts in Annex Areas of the Ngöbe Buglé Comarca. In the particular case of the Ngöbe people, the consultations needed to be substantially improved to meet the minimum requirement of Bank policies. With the incorporation of a social specialist in the Bank’s team in 2007, Bank supervision improved considerably and detailed recommendations were made to improve the quality of the Project’s consultations. The Bank team also provided continuous technical support to the Government in preparing an IPDP that could serve as model or guide for future initiatives involving Indigenous Peoples in Panama. The final rating in this regard is Unsatisfactory. 45. Environmental Assessment (OP 4.01) and Natural Habitats (OP 4.04). The Project was classified as Category B, and an Environmental Analysis was prepared along with an Environmental Management Plan that was mainstreamed within Components 1 and 3. Environmental specialists conducted regular supervision missions and did not find any large-scale, significant or irreversible environmental impacts related to the Project. The demarcation of protected areas (281 linear km) and Indigenous Peoples’ territories (1,361 linear km) as well as the preparation/updating of nine management plans is expected to support biodiversity conservation within these areas. Finally, there was compliance with the legal covenant in the Loan Agreement (Section 3.10) that prohibited the regularization of private titles or claims in areas within or adjacent to protected areas prior to their demarcation or in proposed protected areas prior to their official establishment and assessment. Considering the above factors, compliance with OP 4.01 (Environmental Assessment) and OP 4.04 (Natural Habitats) is rated Satisfactory. 46. Financial Management. There were no serious problems with financial management and, except for the change of financial administrator after Project restructuring in 2006, no major modifications to the financial management arrangements described in the PAD took place during Project implementation. Annual audited Project financial statements were submitted in a timely manner and found no major issues. Unaudited financial reports were also submitted in a timely manner in format and content 14 satisfactory to the Bank. Overall, the financial management arrangements for the Project were found satisfactory to moderately satisfactory throughout the life of the project. One lesson would be for the Ministry of Economy and Finance to exercise tighter controls with respect to payment approvals, as towards the end of the Project some payments were made on closed contracts which did not have approved amendments (and thus were declared by the Bank as ineligible for financing under the Loan). The 2009 external audit failed to identify the existence of some contractors which continued to work even after their terms had expired. In its comments to this ICR, the Government has noted that the Bank should have had stricter supervision of financial transactions. However, approval of budgets, contracts, and payments, which the Government points out ultimately resulted in inefficient use of resources, are the Borrower’s responsibility. Regarding compliance with Bank financial management and procurement policies, the Bank team exercised very detailed reviews, particularly over the last two years of implementation. The Bank refused to accept several payments for contracts that had expired and were ineligible for financing under the Loan. Strictly from a financial management standpoint, the final rating on these matters was Moderately Satisfactory. 47. Procurement. There were no major issues related to procurement throughout the Project’s life. This aspect of the Project was rated satisfactory for most of the implementation period. In the early years, until Project restructuring in 2006, the Government hired UNDP (with counterpart funds) to administer Project funds and make payments; this arrangement allowed the PCU to bypass national procurement laws and translated into a more efficient and effective procurement process. The PCU maintained streamlined procurement business processes, sound internal procurement controls, and qualified personnel. The procurement post-review mission of 2002 identified weak procurement capacity in the PCU and recommended improvements, which translated eventually into improved performance in the following years. The procurement processes implemented by the Project in 2007-2008 were also satisfactory, given the qualified procurement team then in place. The procurement plan for this period featured large packages for land titling services that were procured through International Competitive Bidding and awarded to the lowest price bidder, which resulted in significant savings compared to the PCU’s original estimates. As for smaller procurement, the Bank carried out two procurement post-reviews during the period 2007-2008 and found that the Project also was performing well overall in this regard. Three training sessions on Bank-financed procurement were offered in Panama and these were attended by Project officials. In 2009 and 2010, as a result of the lack of national budget allocation for the Project due to the change in Government administration, very few procurement processes, all of small value and subject to post-review, were implemented. During this period, the procurement team was changed and the head of the team left the PCU. The last procurement post- review carried out in 2010 concluded that the Project did not perform well during this period and unveiled substantial flaws on contract management processes, particularly in internal controls, in spite of the fact that such flaws were not raised by the external auditors. As noted above, these issues were highlighted during project supervision, but were not properly identified by the auditors or addressed by the Borrower. The final rating on procurement matters was Moderately Unsatisfactory. 15 2.5 Post-Completion Operation/Next Phase 48. In late 2008 the GOP requested from the Bank an Additional Financing loan in the amount of US$23 million to support the geographical extension of the Project’s activities. The proposed operation was to help finance the costs associated with the scale up of Project activities covering: (a) the Provinces of Panama and Colón for rural and urban lands; (b) additional urban lands in the Province of Chiriquí; (c) additional protected areas in the Provinces of Panama and Colón; and (d) lands of three Indigenous Peoples’ groups (Emberá, Wounan and Kunas). The Bank decided to pause the preparation of the Additional Financing operation in late 2008 because Project implementation was less than satisfactory and it was unclear at the time what priorities the new Government administration (to assume office on July 1, 2009) would have with regard to future Bank assistance. 49. While there has been a clear interest by the land sector agencies in a follow-up operation, in the Panama Country Partnership Strategy (CPS), prepared in late 2009 and early 2010 and approved on September 21, 2010, the Government of Panama did not identify a new land administration operation as a priority. Nevertheless, the PRONAT “Program� will continue. The majority of the staff previously financed by the Bank loan has been absorbed by the IDB project, providing for the continuation in program objectives. Moreover, the creation of ANATI in October 2010 holds significant promise because this may lead to the consolidation of many institutional and operational structures developed under the Project and provides a permanent structure to address land tenure issues in Panama. 50. Over the past few weeks, the Bank has made several specific recommendations to the Government related to the Project’s most important achievements and pending challenges. In particular, the Bank recommended that the Government (through ANATI and other agencies) prioritize the following:  Full implementation of SIICAR among all land administration entities;  Systematic adoption of improved land regularization and quality control manuals based on the lessons learned from the Project;  Completion of the land regularization (and particularly titling) efforts in Project areas ensuring full compliance with the appropriate legal, technical, social and environmental requirements;  Validation and adoption of an updated Indigenous Peoples Participatory Plan (IPDP), to be used as a model for future Government initiatives related to Indigenous Peoples’ land rights; the Bank has offered continued technical assistance in this regard and will organize in Panama in the coming months a training workshop on best consultation practices; some specific recommendations the Bank has made on the IPDP document include: (a) emphasizing future actions for the development of Indigenous Peoples, (b) proposing possible actions for the protection of Indigenous Peoples territories, (c) addressing existing institutional 16 weaknesses to effectively implement an IPDP, (d) outlining possible actions for strengthening Indigenous Peoples’ community organizations, (e) including a more in-depth analysis of the legal procedures required in order to address the issues related to Ngöbe Annex Areas in Bocas del Toro, (f) including maps, (g) establishing a monitoring and evaluation framework, and (h) identifying lessons learned and ensuring the implementation of these lessons;  Resolution of pending issues regarding the Naso territory and its eventual demarcation;  Proactive engagement in seeking a resolution by the proper judicial or legislative instances to the legal ambiguities related to the impact of Law 18 of 20096 and Law 10 of 1997 (creating the Ngöbe-Buglé Comarca) which is preventing the demarcation of certain Ngöbe Annex Areas;  Demarcation of all remaining Ngöbe Annex Areas; and  Finding a solution to the current dissatisfaction expressed by the community of Norteño with the boundaries of the Ngöbe Comarca to which they belong. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 51. The PDO was highly relevant for Panama at the time of appraisal. The GOP’s ambitious program of legal, institutional and technological reforms to regularize land tenure country-wide; resolve land conflicts; facilitate access to land by the poor; reduce land transaction costs; and increase the transparency of land administration services was well conceived and constituted an important element of the country’s overall development strategy. Project objectives were also consistent with the Bank’s CAS at the time (discussed on November 18, 1998). The Project, like similar projects in other countries in the region, also reflected the Bank’s increased involvement in the land sector in the late 1990s. Bank engagement in Panama in this sector was instrumental in moving the agenda forward, particularly with regard to the recognition of land rights of Indigenous Peoples. 52. PRONAT’s overall objectives continue to be of high relevance today, perhaps even more so than a decade ago, as Panama’s land resources have enormous development potential and have attracted much international and national interest. 53. In terms of implementation, the Project’s mixed record of accomplishments and shortcomings also provides many relevant lessons for Panama, for other countries facing 6 Law 18 of 2009 establishes new corregimientos (administrative jurisdictions) and lists all the existing ones in the district of Changuinola, Bocas del Toro province. 17 similar challenges, as well as for the Bank’s engagement in the sector (see Section 6 below). 3.2 Achievement of Project Development Objectives 54. The Project partially achieved its PDO. Although the centerpiece (at least from a technological standpoint) of a “modernized land administration system,� the Integrated Cadastre and Registry System (SIICAR) was completed, it is not yet fully operational. As a result, the outcome indicator related to the time required and cost for titling and registering a land parcel cannot be precisely measured. An internal cost study carried out at Project closing estimates the time and cost required to register a land parcel to be 24 hours and US$30, respectively. This would indicate that the target value of 24 hours per transaction has been achieved, but not the target of US$2 per transaction (which continues to be administratively determined). Similarly, the level of satisfaction of SIICAR users, another outcome indicator, cannot be measured until the system is fully rolled out to the relevant land administration institutions and is operational. The other two PDO outcome indicators were also only partially met. Land occupations were regularized in two protected areas (Portobelo and Cerro Hoya), out of a target of five; and the co- management plan for the area overlapping the Ngöbe-Buglé Comarca and the La Amistad International Park has been prepared but not yet approved by ANAM. 55. The Project achieved some important intermediate outcomes, which can be considered as implicit and/or inferred outcomes rather than simply outputs, and which play a key role in achievement of the overall PDO:  The Project was instrumental in sponsoring Law 24 of 2006 (that allows mass land titling) and subsequent regulations, a key legal reform and contribution towards the modernization of the Panama land administration system. This reform had a significant impact on the achievement of specific outcomes and outputs from Component 2, surveying and titling of urban and rural land parcels;  The rural target of 12,000 issued titles was met and surpassed (13,190 titles issued);  The Project sponsored the elaboration of a draft law for the establishment of the Naso Comarca and its presentation to the Legislative Assembly (in 2004 and again in 2005). This achievement was directly linked to the delimitation of about 70 percent of the Naso territory;  The consolidation and demarcation of Indigenous Peoples’ territories was achieved to a large extent. In particular, 100 percent of the main area and the Annex Areas in Chiriquí and Veraguas of the Ngöbe-Buglé Comarca (over 1,300 km) was demarcated (only the Annex Areas in Bocas del Toro remain non- demarcated); 18  Sixteen roundtables (against a target of 3) and alternative conflict resolution mechanisms were established in the three provinces where the Project operated (Veraguas, Chiriquí and Bocas del Toro) and these resolved 490 land conflicts;  The target of establishing four land tribunals was also met. This is also a key contribution towards the goal of establishing a modernized land administration system, through a more expedited resolution of land-related disputes;  Another major achievement was the completion of six protected areas management plans, the approval of three new protected areas, as well as demarcation works in six protected areas; and  Targets for modernizing the geodetic network were met, which resulted in mapping half of the country’s territory. 56. The sustainability of some the above outcomes is a matter of concern, given that SIICAR has not been fully rolled out yet and there is at present no system in place to systematically and promptly record land transactions, so the risk that changes in land tenure (sales, divisions, inheritances) will not be captured is considerable (see section 4. Assessment of Risk to Development Outcome). 57. A detailed discussion of all output indicators by component (and their individual ratings) is presented in Annex 2. 3.3 Efficiency 58. Given the lack of a comprehensive evaluation of the Project, it is not possible to assess its overall efficiency. The Government’s Final Report does not provide sufficient information to assess the Project’s cost effectiveness, or its economic or financial rates of return. Moreover, the Project’s inability to reliably estimate current times and costs of registering titles prevents comparisons with other similar projects in the region. Further, using the PAD methodology for calculating ERR/cost-benefit ratio is not possible because of lack of information. The alternative approach, that is one based on cost/time for registering the titles, is also not possible given that the SIICAR system is not operational yet. However, as noted in the Government’s comment to this ICR, the program’s overall efficiency is questionable given the high administrative costs associated with the Project Coordination Unit (see Annex 7). 3.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 59. The relevance of Project objectives was and remains very high. The full achievement of one key PDO outcome (passage of Law 24 of 2006), the partial achievement of another (design of SIICAR), and the partial achievement of several intermediate outcomes are also somewhat high. However, there were many important shortcomings. Project implementation was extremely slow—PRONAT lasted twice as 19 long as originally intended, despite a 25 percent reduction in scope. Many Project activities fell far short of their target (surveying and tilting of urban land parcels, non- demarcation of the Ngöbe Annex Areas, etc.). There were also some significant operational shortcomings (unreliable and erratic counterpart funding, weak inter- institutional collaboration, non-compliance on certain safeguard and fiduciary matters), and the Project had weak M&E mechanisms. The lack of a comprehensive evaluation prevents an assessment of the Project’s overall efficiency. Consequently, the overall outcome rating is rated Moderately Unsatisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 60. Poverty Impacts. The majority of Project beneficiaries have been poor urban and rural dwellers in the provinces where the Project operated (Chiriquí, Veraguas and Bocas del Toro). However, given that a full impact evaluation was not carried out, it is not possible to assess quantitatively the extent to which Project activities benefit the poor and how access to legal title to their land parcels may have increased their welfare. 61. Gender Aspects. Given the lack of a comprehensive gender and poverty impact analysis at the end of the Project, it is not possible to make overall conclusions on this issue. However, a gender analysis was carried out as part of the Mid-Term Review in June 2004. This review concluded that during Project implementation, gender issues were incorporated into Project documents such as Terms of Reference for key operations, Project manuals, and knowledge dissemination activities. In addition, Project staff in the UTOs received training on this subject prior to beginning work with the Project. 62. National Dialogue on Indigenous Peoples’ Land Rights. The Project played an important role in facilitating dialogue and advancing the concerns of Indigenous Peoples at official levels and within civil society. By preparing the Law for the Creation of the Naso Comarca, the Project engaged the National Assembly and the Executive Branch in a dialogue concerning the rights of Indigenous Peoples to own their ancestral land. In addition, by working with all co-implementing agencies, the Project contributed to building national capacity to address Indigenous Peoples’ land rights. The Project also facilitated the dialogue between the two Naso factions regarding legal recognition of their territory. In addition, PRONAT promoted encounters among different indigenous groups through seminars and workshops organized to discuss common socio-economic issues and actions. The Project was instrumental in establishing channels of communication between Indigenous Peoples and government institutions which were somehow absent before the Project. (b) Institutional Change/Strengthening 63. Capacity Building. Working with a wide range of co-implementing agencies, the Project contributed to building institutional capacity to address technical and social issues tied to land rights, such as recognition of Indigenous Peoples’ rights, incorporation of 20 land tenure studies for the conservation of natural resources, and application of alternate mechanisms for conflict resolution. 64. Also, as noted above, the creation of ANATI in October 2010 holds significant promise because this may lead to the consolidation of many institutional and operational structures developed under the Project and provides a permanent structure to address land tenure issues in Panama. (c) Other Unintended Outcomes and Impacts (positive or negative) 65. The Project intended to support the establishment and consolidation of indigenous territories within the Project areas, as well as to support broader land policies and accompanying legal reforms to address indigenous territories and Comarcas. Passage of Law 72 of 2008 (for the titling of collective lands on indigenous territories) was supported by several Indigenous Peoples groups. However, passage of this Law had the unintended consequence of exacerbating the divisions among the Naso, as one faction believes that this law undermines their territorial aspirations. 4. Assessment of Risk to Development Outcome Rating: Significant 66. The sustainability of Project outcomes appears fragile. On the one hand, passage of the Law on Massive Land Titling (Law 24 of 2006) has greatly facilitated the Government’s ability to survey, title and regularize urban and rural lands. Creation of ANATI in October 2010 is also an important post-Project achievement that will enhance the Government’s capacity to “modernize� the land administration system. However, there are three factors that threaten the sustainability of Project outcomes. First, SIICAR has not been fully rolled out after nine years since the Project launched this initiative; this raises the specter that the geographical and legal components of each land title regularized by the Project may become dated over time. At present, only 30,000 parcels have been incorporated into SIICAR (30 percent of target). Second, the pace of economic development in certain regions of the country is such that ANATI, and other land administration entities such as municipalities and land tribunals, may not be able to keep pace with the inevitable challenges that competing uses of land create. Third, if the existing legal ambiguities (in the case of the Ngöbe Annex Areas) and the lack of Government clarity on how to address the Naso territorial claims are not solved, current tensions are likely to grow and reverse some of the Project’s achievements (such as the demarcation of 70 percent of the Naso territory). 21 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 67. Although the design of the Project was considered sound at the time, considering that it built on the experiences and lessons available then, with the benefit of hindsight it is clear that the Project suffered from significant design flaws. Bank internal reviews should have flagged the extreme complexity of Project design. Similarly, the Bank failed to properly identify likely risks and some potential conflicting situations (such as the emerging issues in Ngöbe Annex Areas). The Bank’s overly optimistic appraisal of the Project’s likely pace of implementation seems to have been driven more by the Government commitment at the time than by more realistic institutional assessments. The eventual slow pace of Project implementation and the numerous problems encountered suggest that Bank performance in ensuring quality at entry was moderately unsatisfactory. (b) Quality of Supervision Rating: Moderately Satisfactory 68. The quality of Bank supervision was uneven. The Bank’s weak engagement in Panama during the Project’s early years was not conducive to intensive supervision. With the change of Government administration in 2004, the intensity of supervision increased. However, given the semi-paralyzed state of the Project (there was no permanent Project Coordinator, funding was limited and erratic), supervision focused more on basic operational matters and missed some broader emerging issues, such as the growing land conflicts in Bocas del Toro province. The quality and intensity of Project supervision increased significantly in late 2007 and early 2008. As Project implementation accelerated, the Bank’s responsiveness to evolving events was adequate. In particular, the permanent inclusion of a social scientist in all supervision missions proved instrumental in addressing Indigenous Peoples’ issues. Similarly, increased attention during project supervision to financial and procurement fiduciary matters in the last two years resulted in the identification of several weaknesses related to incomplete audits, contract management and internal controls. Considering that these increased supervision efforts in the past two and half years to some extent compensated for the earlier lapses, the overall quality of Bank supervision is rated moderately satisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 69. Some aspects of the Bank’s performance are rated moderately satisfactory, while others are rated moderately unsatisfactory. Given that the overall outcome rating for the 22 Project is moderately unsatisfactory and the risk to development outcome is significant, overall Bank performance is rated moderately unsatisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 70. The Project enjoyed strong political commitment during design, but this significantly dropped during the first four to five years of Project implementation. Some renewed commitment took place around the time of Project restructuring in 2006 and with the arrival of a new Government administration in mid-2009. However, the limited and erratic availability of funds for Project activities remained a permanent problem throughout the Project’s life. Even after the restructuring of 2006 which drastically reduced the requirements for counterpart funding, the amounts and timeliness of disbursements to Project implementing agencies remained less than satisfactory. Further, the final Project administration and M&E cost (close to US$15 million or about 25 percent of total project cost) was 230 percent over the revised estimate at the time of the first restructuring, despite less than full achievement of the downgraded PDOs and targets. This overrun also occurred while data gaps prevented a full evaluation, including financial and economic analyses, comparisons to baseline measures and beneficiary assessments. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory Implementing Agency Performance Ministry of the Economy and Finance Moderately Unsatisfactory Project Coordination Unit Moderately Satisfactory Public Registry Moderately Unsatisfactory National Environmental Agency Unsatisfactory National Geographic Institute Moderately Satisfactory Directorate of Cadastre and Patrimony Moderately Unsatisfactory Directorate of Agrarian Reform Moderately Unsatisfactory Directorate of Local Government Moderately Unsatisfactory Directorate of Indigenous Affairs Unsatisfactory Ministry of Housing Moderately Unsatisfactory Superior Council Moderately Unsatisfactory Technical Operation Committee Moderately Satisfactory 23 (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 71. Most implementing agencies performed rather poorly and this became reflected in the extremely slow pace of Project implementation. Efforts by the PCU to bring about institutional cooperation were often ineffective. The largely technical functions, such as surveying and registration of clean titles, under the responsibility of IGN and the Public Registry, respectively, were carried out without much problem. But those Project activities that demanded important political and institutional commitments, such as titling by the Directorate of Agrarian Reform or environmental endorsement by ANAM, encountered multiple obstacles. Consequently, overall Borrower performance is rated moderately unsatisfactory. 6. Lessons Learned 72. This Project provides important lessons for future engagement on land administration issues in the Latin America Region and elsewhere.  Donor-funded “projects� can be very effective in implementing reforms and introducing technological or operational innovations, but have severe limitations in initiating profound legal reforms. Land administration reforms take decades to implement, even after significant legal changes. The classic 5- year project is not well suited to be the main or only instrument to implement a 20-year national reform. In this case, this Project lasted twice as long as envisioned; it achieved important results but left a significant unfinished agenda of further reforms (e.g., full integration of the registry and cadastre, passage of legislation to create a Naso Comarca), regularization and titling of lands, and demarcation of indigenous territories and protected areas.  Strong political commitment for policy, legal, and institutional reforms in the land sector is a necessary but not sufficient condition for success. First, this commitment needs to be ongoing, which clearly did not materialize in this Project. Second, conflicting political objectives within the same Government administration can have a direct negative impact on project activities. Third, the ability of a “project� to overcome institutional turf-battles is often overestimated. Institutional capacity constraints and myopic perspectives on complex issues beyond their immediate mandates are hard to overcome, even with strong political support. As noted by the Government’s comments to this ICR, rigid institutional mandates prevented effective operational coordination which led to an over- reaching Project Coordination Unit and weak effective control by a central authority, such as the Ministry of the Economy and Finance.  In this kind of project, with complex institutional arrangements, it is a challenge to rigorously maintain the line separating Project-specific activities and broader policy initiatives undertaken by Project staff. This limited the 24 Bank’s ability to monitor all the activities or actions which may have been associated with the Project or indirectly with the Bank.  Single operations are inadequate tools to address land administration reform in a comprehensive manner. Sequencing of reforms, with initial efforts focusing on the technical reforms and related legal and institutional changes, has shown to be a more effective approach towards modernization and sustainability of land administration systems.  Addressing the political and institutional aspects of land tenure issues, particularly as they relate to Indigenous Peoples, is complex. Operations for consolidation of indigenous lands should be embedded in – and ideally preceded by – a robust policy dialogue related to Indigenous Peoples’ land rights’ regularization. The Project attempted and to some extent succeeded in opening up such dialogue, but was an insufficient instrument to do so in a comprehensive way.  As exemplified in this and other recent land administration projects in the region, the effective integration of the cadastre and registry functions and data into a common technical platform (even without requiring a single agency) is extremely difficult. This institutional rivalry tends to be very entrenched and there is very little external pressure to overcome it.  Although land administration projects have the potential to yield considerable benefits to the poor, through more secure land tenure, this Project has not been able to show that these benefits necessarily translate into poverty reduction. This kind of project needs to be evaluated more in terms of its impact on public governance (and possibly decentralization) issues.  Land administration projects, even under more simplified designs, require intensive and specialized supervision. This Project shows that the range of challenges that emerge during implementation is very broad indeed. For Bank supervision to be effective, land administration project teams must include land policy and technical experts, lawyers, social scientists, institutional specialists, environmental specialists, and possibly others.  Beyond external pressures and conflicts, issues related to land use, tenure and decision making processes are frequently exacerbated by internal divisions. In addition to sustained participatory consultations with different indigenous groups, projects that attempt to address land claims of Indigenous Peoples need to monitor closely the potential for intra-group factional splits, particularly in the context of rapidly changing economic conditions, which may threaten achievement of project objectives. Because the Bank does not attempt to assign representativeness to any particular group, reaching agreement on issues among indigenous groups in the context of a Bank-financed operation can be a lengthy process. 25 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower / implementing agencies 73. The Borrower’s Final Report highlights several of the Project’s main achievements, including: the Project’s effective recovery from an unsatisfactory rating in 2004 following a restructuring and renewed Government commitment in 2006; the creation of an adequate legal and institutional framework for land administration through the Project; the completion of 80 agreements and more than 120 TCO meetings throughout the life of the Project; and the establishment of effective procurement, financial management, and M&E systems. Regarding the Project’s results, the Borrower’s Report highlighted the completion of the demarcation of the Ngöbe-Buglé Comarca, the approval of 10 new laws related to land administration, the completion of 96 percent of the land regularization target, the demarcation of 1,361 km of indigenous territory, and the completion of numerous mesas de diálogo (conflict resolution sessions) between 2001 and 2005. 74. The Report also highlights weaknesses that affected implementation, including several legal bottlenecks resulting in a slower achievement of targets, a delay in activities caused by the use of an ineffective financial management and procurement agent during the first years of the project, the lack of Superior Council meetings throughout the life of the project (4 meetings in 8 years), and the complexity of the decision-making process resulting from the participation of multiple implementing agencies. In terms of achievement of targets, the Report points out the Project’s failure to make the SIICAR fully operational, the delay in the demarcation of the Ngöbe-Buglé Comarca as a result of delays in receiving the National Limits Commission’s reports, and the Project’s failure to reduce the time required in order to obtain a title to less than 12 to 18 months. However, as part of the Project’s sustainability plan, the ANATI was created in October 2010. This new institution will be responsible for the regularization of all Panamanian territory, and will administer the country’s geographic information system moving forward. In addition, under new Inter-American Development Bank funding, ANATI will complete the regularization process for approximately 23,000 records that were not able to be completed with World Bank financing. 26 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Restructured Actual/Latest Percentage of Components Estimate (USD Estimate (USD Estimate (USD Restructured millions) millions) millions) 16.79 13.56 6.44 47.5 Land Policy, Legal And Institutional Framework Land Regularization 43.11 28.99 27.20 93.8 Services 8.57 7.97 5.74 72.0 Consolidation Of Protected Areas And Indigenous Territories Project Administration 0.00 6.46 15.14 234.4 And M&E Total Baseline Cost 68.47 56.98 55.22 96.9 Physical 2.29 Contingencies Price Contingencies 1.13 Total Project Costs 71.89 56.98 55.22 96.9 Front-end fee IBRD 0.47 1.59 0.48 30.2 Total Financing 72.36 58.57 54.99 93.9 Required (b) Financing Appraisal Restructured Actual/Latest Percentage of Source of Funds Estimate Estimate (USD Estimate Restructured (USD millions) millions) (USD millions) Borrower 24.46 10.67 9.32 87.3 International Bank for Reconstruction and 47.90 47.90 45.67 95.3 Development 27 Annex 2. Outputs by Component Component 1. Land Policy, Legal and Institutional Framework (US$7.29 million actual cost) Rating: Moderately Satisfactory This component aims to provide the policy, legal and institutional framework required to address Project objectives as well as the capacity needed by relevant entities and organizations in order to deliver land administration services and implement Project activities. In the original Project design, there were six sub-components: (1) Land policy, legal and institutional reforms, through which a series of land policy and accompanying legal reforms addressing simplification of land titling procedures, sales and rental markets, protected areas and other conservation units, indigenous comarcas and territories, and land valuation and taxations systems, would eliminate contradictory incentive structures and overlapping jurisdictional responsibilities. Activities in this sub- component included policy formulation through the Superior Council, development of proposals, studies and participatory workshops for legal and regulatory reforms, and support for the development of institutional reforms within the governmental entities working in land administration in both rural and urban areas. (2) Institutional Strengthening. This sub-component would provide support for activities aimed at institutional strengthening (including focus on human resources, organizational and technological needs) of national and local entities involved in land administration and for the development of co-management mechanisms at the local level. Activities included the establishment and maintenance of an Integrated System of Cadastre and Registry Information (SIICAR), targeted human resources development, support for the decentralization of national entities, and support for studies, modeling and analysis to establish sound and equitable cost recovery mechanisms through land valuation schemes. (3) Establishment of inter-institutional co-management mechanisms. This sub-component would support the necessary activities to establish and operate co-management mechanisms both at the central and local level, with civil society. (4) Local capacity building. This sub-component would seek the engagement of local stakeholders and municipalities together with their strengthening for better participation in project activities. (5) Monitoring and Evaluation. This sub-component would establish an information management system to monitor the management and efficiency of Project execution, as well as a second system geared towards evaluation the economic, social and environmental impact of the Project. (6) Project administration. Under this sub-component, the PCU, under the Superior Council (SC), would constitute a co-management mechanism in order to facilitate project 28 planning and implementation. PCU functions include financial management and reporting, entering operating agreements with the implementing agencies, overall Project coordination, establishment of the Operational Technical Units (UTOS), implementing standard management information systems in relation to the quantitative indicators of the Project, quality control in land regularization activities, support for the administrative, technical and financial capacity of the implementing entities, and ensuring civil society information and participation in Project activities. Following the Project restructuring, developing an integrated information system (SIICAR) became the main focus of Component 2, and Project Administration and M&E activities, which were previously under Component 1, were divided into a separate component. In addition, regarding component targets, in the original Project design, broad and un-quantified outcome indicators were mixed with output indicators. The revised outcome indicators for all three components better measure the efficiency and public benefit of a modernized land administration system in Panama. In terms of component outputs, the indicator related to the establishment of alternative conflict resolution mechanisms was reclassified as an output indicator of Component 1. Original Output Indicators Revised Output Indicators Final Output Indicators Component 1 – Land Policy, Legal and Institutional Framework - Necessary legal reforms identified Law proposal for a modernized Law on Massive Land Titling - Legal, institutional and land land administration system was approved on June 30, policy framework agreed upon presented to Assembly 2006 by Assembly - Legal, institutional and policy Regulations for simplifying Regulations of the Law on reforms implemented and regularization process and for Massive Titling approved by disseminated massive land titling Decree 228 in September - 21 workshops and participatory 2006; regulation for meetings held at local and simplifying the establishment national levels of ejidos approved by Decree - SIICAR developed, implemented 134 in June 2007 and functioning in priority Alternative Conflict Resolution 490 conflicts resolved through decentralized Registry and Mechanisms established in 3 alternative conflict resolution Cadastre offices in priority provinces and 80 percent of mechanisms in 3 provinces provinces conflicts resolved (percentage not yet - Inter-institutional and inter- determined) sectoral coordinating and co- Specialized Land Tribunals 100% (Tribunals established managing mechanisms identified, established in 4 provinces in 4 provinces) developed and functioning 1,000 staff of executing 200 staff (20%) of executing - Technical personnel trained and agencies trained in the use of agencies trained in the use of remaining stable SIICAR SIICAR - Systems developed and required equipment purchased - M&E System established and operational Component 1 outputs were partially implemented by the Project. One of the main achievements of this component was the support it gave to the approval of several legislative and regulatory measures aimed at improving Panama’s land administration system (even if most of the laws passed were not directly promoted by the Project). Preparation and validation of these laws was completed through approximately 80 29 meetings of the Technical Operational Committee (TCO) during the life of the Project. These laws contributed to strengthening regional land administration capacity. Component 2. Land Regularization Services (US$27.39 million actual cost) Rating: Moderately Unsatisfactory This component provided the necessary support to execute the technical and legal field work required to contribute to the massive land regularization process within Project areas. The transparent and participatory manner in which land regularization services would be provided was considered critical to achieving consensus on land issues. In terms of technology development and adoption, this component incorporated lessons learned in other countries and facilitates the transfer of knowledge and capacity to local service providers. The following sub-components provided the structure for delivering land regularization services throughout the Project area: (1) Geodesy and mapping. This sub-component includes modernizing the national geodetic network as well as providing base maps necessary to conduct cadastral field surveys. Activities related with this component include the update and densification of the national geodetic network, the establishment of two CORS stations for geodetic control through the continuous GPS city data registry, and the production of base maps. In protected areas and indigenous territories within PRONAT areas, the activities included mapping with aerial photographs or satellite images. (2) Cadastral field surveys and titling process. In order to gather technical and legal parcel-based information to complement the mapping activities, cadastral field surveys would be executed. Cadastral surveys would be systematically carried out in the urban (pueblos rurales, ejidos municipales, grandes ciudades) and rural areas subject to regularization. The main activities of this component included: declaration of “cadastral area� and public door-to-door campaigns; field surveys, legal cadastre and demarcation; digitalization of geographic information; technical and juridical analyses; public viewing of survey results; certification, titling, and registration; and integration of data into SIICAR. (3) Conflict resolution mechanisms. The success of the regularization process would depend in many cases on the ability to resolve minor and major conflicts, or informational discrepancies in the field. To facilitate resolution of land-related conflicts, the Project would support the following activities: using juridical, administrative, and alternative dispute resolution (ADR) mechanisms; establishing conflict resolution teams; carrying out dissemination campaigns; and providing training on the alternative dispute resolution mechanism. Following the Project restructuring output indicators for Component 2 were revised based on the new Project scope. Specifically, land regularization targets in rural areas were reduced by 30 percent, while in urban areas they were reduced by 25 percent. Following the restructuring, the land regularization component would benefit 50,000 rural parcels 30 (issuance of 12,000 titles), and approximately 60,000 urban parcels (issuance of 15,000 titles), as opposed to 75,000 rural parcels (issuance of 50,000 titles) and about 80,000 urban parcels (issuance of 54,000 titles) in the original estimates. Original Output Indicators Revised Output Indicators Final Output Indicators Component 2 – Land Regularization Services - Approximately 75,000 rural 3 CORS stations operating 3 CORS stations operating properties and (100%) approximately 80,000 ejido Basic geodetic network (20 Basic geodetic network (20 properties in 21 points) available points) available (100%) municipalities included in Primary geodetic network (175 Primary geodetic network the cadastre and are points) available (175 points) available legalized (100%) - 50% of the old registries 50 percent of national territory 50 percent of national have been updated, and land photographed territory (37,759 km) tenure conveyances have photographed (100%) increased by 100% 50 percent of old registries in 13 percent (14,792) of old - The National Geodetic the Project area updated registries in the Project area Network has been updated established and updated, and 50,000 rural parcels surveyed 49,079 (98%) rural parcels 50% of national territory and 12,000 titles issued surveyed and 13,190 mapped (110%) titles issued - Alternative conflict 60,000 urban parcels surveyed 31,935 (53%) urban parcels resolution mechanisms are and 15,000 titles issued surveyed and 3,354 (22%) established in priority titles issued provinces SIICAR operating in 4 3,000 incorporated into implementing agencies with no SIICAR (30%) less than 10,000 parcels incorporated As a result of Component 2 activities, 74 percent of the total 110,000 parcels (urban and rural) were surveyed, and a total of 16,544 titles out of a target of 27,000 were issued (61 percent of total target). Regarding urban vs. rural titling targets, the rural target of 12,000 issued titles was met, while the target for 15,000 urban titles issued was far from being met. This result in urban areas was mostly due to delays and long and complicated procedures necessary for the demarcation of urban areas (particularly ejidos municipales). The demarcation process in urban areas requires the participation of a number of institutions, while the same process in rural areas only involved two institutions. With respect to the development of SIICAR, the system was completed by the end of the Project; however, it is not yet fully operational. In addition, there are still some minor processes which remain in a manual format, and the Ministry of Housing (MIVI) is not yet incorporated into the system. Component 3. Consolidation of Protected Areas and Indigenous Territories (US$5.65 million actual cost) Rating: Moderately Satisfactory The objective of this component was to demarcate and consolidate protected areas and allow the legal recognition and demarcation of indigenous lands, along with the 31 establishment of several new protected areas and pending indigenous territories. The following were the three sub-components: (1) Consolidation of SINAP. This sub-component would promote the development of additional information, delineate and demarcate boundaries, ensure the appropriate use of existing protected areas within the Project area, and carry out support for the establishment and demarcation of several technical studies for new protected areas. For the 25 already existing protected areas, the Project would obtain preliminary information, execute technical studies such as management plans, socio-economic and tenure studies and ecological assessments, complete boundary demarcation, develop management plans, carry out the regularization of internal tenure within protected areas, pilot approaches to co-management in protected areas, and contribute to operational strengthening of protected areas. For the 5 proposed new protected areas, the Project would complete technical studies (tenure, social, and ecological assessments), set up the appropriate legal foundations and draft decrees to establish the new protected areas, complete demarcation and regularization activities, and develop management plans. (2) Establishment and consolidation of protected areas. In indigenous areas already legally established, activities would address the specific needs of the areas and would include legalization, demarcation, regularization, base-line socio-economic studies and management plans. For those indigenous areas that had yet to be established, the activities financed by this component would include the execution of socio-economic and tenure studies that would form the basis for agreement of consolidation measures among the indigenous groups, third parties, and the state. Activities under this sub-component included: completing technical studies to provide the foundation for regularization, the legalization of the Comarca or Naso Teribe Territory, and review of the Carta Organica of the Kuna Yala and/or Ngöbe-Buglé, the demarcation of indigenous territories (Kuna- Yala, Ngöbe-Buglé, and Teribe), technical assistance for conflict resolution in indigenous territories, public information and promotion of campaigns, and strengthening of indigenous organizations and indigenous authorities. (3) Establishment and consolidation of indigenous territories. The indigenous land sub- component would address issues of both established and unestablished indigenous reserves within the Project area, including: carrying out technical and baseline studies, preparation of draft law and charter required to establish the Naso Teribe region; carrying out the physical demarcation and ADR mechanisms of selected Comarcas; carrying out public information campaigns among Indigenous Peoples regarding the land demarcation and regularization process; and strengthening of the institutional capacity of indigenous organizations. Following the restructuring, Component 3 indicators were clarified, namely stating that nine management plans for the other protected areas were to be completed. Original Output Indicators Revised Output Indicators Final Output Indicators Component 3 – Consolidation of Protected Areas and Indigenous Territories - 600,000 ha. of existing 700 linear km of protected areas 281 km (40%) of protected areas protected areas demarcated demarcated 32 demarcated 9 management plans completed 6 (66.7%) management plans - Strategy for buffer and completed neighboring zones 3 indigenous territories 1 (Kuna Yala) indigenous territory defined with the support consolidated (Kuna Yala, Ngöbe- consolidated (13 km or 33% of other institutions and Buglé, and Naso Tjerdi) and 1 pending in the conflict area of sectors involved, based administrative norm elaborated Santa Isabel); 100% of Ngöbe on the National Comarca completed (main area and Environmental Plan Annex Areas in Chiriqui and - 3 Indigenous comarcas Veraguas; Annex Areas in Bocas or territories demarcated del Toro still pending); 70% of Naso territory delimited (a draft Naso Comarca Law was submitted twice to the National Assembly but was not approved) 1,361 km of indigenous territories 1,361 km (100%) of indigenous demarcated territories demarcated 3 roundtables established (Kuna 16 (533%) roundtables established Yala, Ngöbe-Buglé, and Chimán) The main achievement of this component was completion of the demarcation of the Ngöbe-Buglé Comarca. The co-management plan between the Ngöbe-Buglé territory and the La Amistad International Park (PILA) protected area was completed but has not yet been approved by ANAM. Another important partial achievement was the preparation of a bill to create the Naso Comarca and its submission (twice) to the National Assembly. Unfortunately, the bill was not approved by the Assembly. The Assembly passed Law 72 of 2008 which establishes a framework for regularization of Indigenous territories generally and this was widely supported by most Indigenous Peoples groups. Also, under this component, some 16 roundtables were established for conflict resolution, particularly between 2001 and 2005. Another important partial achievement was the establishment of 6 management plans, approval of 3 new protected areas (Chogoró Palo Blanco, Escudo de Veraguas, and Isla Caña/Isla Iguana), and demarcation works in 6 protected areas (Portobelo National Park, Cerro Hoya National Park, Volcán Baru National Park/La Amistad Pacifico International Park, Cerro Gaital Monument, Cerro Guacamaya, and Cerro Cerrezuela). Component 4. Project Administration and Monitoring (US$14.89 million actual cost) Rating: Moderately Unsatisfactory The main activities of this component, which was separated from Component 1 during the Project restructuring, were the following: (1) capacity building of land administration entities, including strengthening them to provide land administration services on a decentralized basis; (2) development of a M&E system; and (3) strengthening the capacity of the PCU. The main indicators for this component were: (1) Annual Operating Plan and procurement plan drafted every year on November 30; (2) M&E report issued every three months; (3) Annual Auditing carried out. 33 Although submissions of reports was fairly consistent after the 2006 Project restructuring, the main factors affecting the rating of this component were Project management suffered from significant short-comings due to weak leadership at times, lack of continuous and predictable budgetary allocations, and some internal control weaknesses that led to poor management of contracts and resources. Original Output Indicators Revised Output Indicators Final Output Indicators Component 4 – Project Administration and Monitoring Annual Operating Plan and 70% approx. N/A procurement plan drafted every year on November 30 Monitoring and Evaluation Report 100% issued every three months Annual Auditing carried out. 100% 34 Annex 3. Economic and Financial Analysis Not available due to lack of data and comprehensive Project evaluation by the time of Project Closing in June, 2010. 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Isabel Lavadenz-Paccieri Senior Land Resources Specialist SASRD Task Manager Senior Land Administration Frederic de Dinechin LCSER Former TTL Specialist George Campos Ledec Lead Ecologist AFTEN Safeguards/Env. Procurement Analyst and Cost Teresa Roncal LCSAR Operations support Tables Specialist Enzo de Laurentis Procurement Specialist Procurement Roque Ardon Financial Management Specialist IADVP Financial Mgmt. Veena Mayani Consultant Reynaldo Pastor Counsel LEGLA Legal Martin Raine RUTA Director Economist Marcel Franssen Consultant Cadastre Specialist Dino Francescutti FAO Staff Econ. Analysis Thomas Korczousky Consultant Inst. Development Mark Austin Project Management Specialist LCSAR Judith Lisansky Anthropologist/Social Specialist LCSSO Safeguards/Social Glenn Pearce-Oroz Consultant TWILC Maria Clara Mejia Consultant/Social Specialist Safeguards/Social Estanislao Gacitua-Mario Social Scientist LCSSO Safeguards/Social Klaus Deininger Peer Reviewer DEC Isabelle Girardot-Berg Peer Reviewer Lynn Holstein Peer Reviewer Mariana Montiel Counsel LEGLA Legal George Aguilar Consultant Anna Bran Team Assistant Supervision / ICR Jorge A. Muñoz Lead Rural Development Specialist LCSAR TTL Senior Land Administration Frederic de Dinechin LCCPA Former TTL Specialist Anna Corsi Land Administration Specialist LCSAR Former Co- TTL Mary Lisbeth Gonzalez Senior Social Development Spec LCSSO Safeguards/Social Ann Jeannette Glauber Sr Natural Resources Mgmt. Spe AFTEN Safeguards/Env. Fabienne Mroczka Financial Management Specialis LCSFM Financial Mgmt. Alexandre Borges de Oliveira Senior Procurement Specialist LCSPT Procurement Monica Salazar-Greenwood Junior Professional Associate LCSAR Operations Support Gabriela Vaz Rodrigues Junior Professional Associate LCSAR Operations Support George Campos Ledec Lead Ecologist LCSER Safeguards/Env. 36 Reidar Kvam Safeguards Adviser LCSDE Safeguards Rajeev Kumar Swami Sr Financial Management Specialist ECSO3 Financial Mgmt. Luis Tineo Senior Infrastructure Specialist GPOBA Procurement Diomedes Berroa Senior Operations Officer LCSPT Operations Support Malcolm D. Childress Sr Land Administration Special LCSAR Land Specialist Meilyn Gem Operations Analyst LCCPA Operations Support Ketty Morales Language Program Assistant LCSAR Processing Fernando Galeana Consultant LCSAR Operations Support Carlos Castro Consultant LCSAR Cadastre Specialist Silvel Elias Consultant LCSAR Social Specialist Tulio Barbosa Consultant LCSAR M&E Adriana Herrera Consultant LCSAR Social Specialist Zhong Tong Consultant LCSAR Agr. Economist Rosa G. Valencia De Estrada Consultant LCSPT Procurement (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY98 125.33 FY99 403.87 FY00 452.84 FY01 185.49 FY02 9.96 Total: 1,177.49 Supervision/ICR FY01 0.12 FY02 62.91 FY03 85.27 FY04 76.48 FY05 81.81 FY06 116.44 FY07 109.81 FY08 192.42 FY09 393.98 FY10 510.79 FY11 200.00 est. Total: 1,830.03 37 Annex 5. Beneficiary Survey Results Not available. 38 Annex 6. Stakeholder Workshop Report and Results Not available. 39 Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR Summary of the Borrower’s Final Report Project Context. In 1967, with support from the US-sponsored Alliance for Progress, Panama made its first effort towards building a cadastral registry for land and water resources known as CATAPAN (Catastro de Tierra y Aguas de Panama). This initiative covered 52 percent of Panama, mostly areas on the Pacific coast and on the Panama Canal and Colon. Later in 1996, the Inter-American Development Bank supported a Program to promote the modernization of agricultural services (PROMOSA) through which 7 pilot districts were regularized in the Province of Veraguas. These pilot efforts resulted in issuing 11,845 property titles; however, 70 percent of land parcels in Panama still remained untitled. In this context, the Government of Panama approved the Panama Land Administration Project, funded by World Bank Loan 7045-PAN, through Executive Decree 124 of September 12, 2001. This Project designed a coordination agency (PRONAT), and integrated six implementing institutions led by the Ministry of Economy and Finance (MEF). In addition, the Project also integrated an additional Inter-American Development Bank Loan of B/27.3 million. Implementation. In October 2004, the World Bank’s Mid-Term Evaluation graded the Project as Unsatisfactory; however, a new administration in Panama which took office in September 2004 requested a restructuring and extension of the Project closing date from December 2006 to December 2009. During the restructuring, discussions were held in the Superior Council as the maximum authority of the Project, through which a restructuring of the Project objectives and targets was approved, as well as a reduction in the amount of counterpart funding. The narrowing of Project scope included a reduction in the initial targets particularly in the areas of regularization and titling (the target was reduced from 80,000 issued titles to 27,000 and from 255,000 to 110,000 regularized parcels). In addition, the restructuring focused on improving the M&E system, and most importantly, named the Integrated Cadastre and Registry System (SIICAR) as the most important goal of the Project. By 2007, the Project had achieved a significant improvement resulting from new technical tools such as the Annual Operational Plans (Planes Operativos Anuales), the frequent Technical Operational Committee (TCO) meetings, improved M&E reports, and increased World Bank supervision. It is important to highlight that there were several legal bottlenecks faced by the Project during implementation, which resulted in a slower achievement of targets. Among the most important were: the concept of Shared Management of Indigenous Territories (Administración Compartida), which contradicted the legal authority of ANAM to administer indigenous territories (Law 41 of 1998); the legal discrepancies between the MEF and the Ministry of Agricultural Development (MIDA) on Law 37 of 1962; the disagreement on the procedures for titling coastal areas; the lack of clarity on the borders of the Comarca Ngöbe-Buglé Annex Areas; and the failure of the National Assembly to approve the Law for the creation of the Naso Comarca. 40 Regarding safeguard compliance, both Component 3.1 (Protected Areas) and Component 3.2 (Indigenous Territories) were implemented with the direct participation of Project beneficiaries, as well as in compliance with the principle of free, prior, and informed consultations. At the time that the Naso and Ngöbe-Buglé requests for inspection were submitted to the Inspection Panel, 80 percent of the Project’s main targets for Components 3.1 and 3.2 had already been completed and PRONAT no longer had any operations in the conflict areas pointed out by the requesters. Although Components 3.1 and 3.2 were carried out in compliance with the Project’s implementation plan, the Government agreed to implement specific corrective actions during the 6-month extension period from December 2009 to June 2010. Regarding the demarcation of protected areas, the Project took into consideration populations already living in these areas and promoted conflict resolution mechanisms and zoning in Cerra Hoya National Park and Portobelo National Park. In protected areas bordering with indigenous territory, the Project promoted the co-management administrative model which was initially proposed by the consulting firm Consultores Ecologicos de Panama (CEPSA). Achievements and Shortcomings. The Project’s main achievements were:  The creation of an adequate legal and institutional framework;  The promotion of conservation of protected areas and the consolidation of indigenous territories;  Updating national cartographic information;  Complementarities between the World Bank and the Inter-American Development Bank Projects;  Greater citizen participation achieved through the Superior Council;  80 agreements and more than 120 Technical Operational Committee (TCO) meetings held during the life of the Project;  Effective land regularization through contracts with large multinational firms;  The use of mesas de diálogo (conflict resolution sessions) as a mechanism for reaching consensus among indigenous and non-indigenous beneficiaries;  Training indigenous leaders and organizations as a way to promote consensus (more than 200 training sessions throughout the life of the Project);  The demarcation of the Ngöbe-Buglé Comarca; and  Effective procurement, financial management, and monitoring and evaluation systems. The Project’s main shortcomings and difficulties were:  The use of an ineffective financial management and procurement agent during the first years of the Project, which resulted in the delay of up to one year of Project activities.  The Superior Council, which only met 4 times in 8 years of implementation;  A weak implementation strategy for the SIICAR, which led to the Project’s failure to achieve an operational system by the end of the Project;  The participation of multiple implementing agencies, which made the decision- making process more complex, thus delaying the achievement of Project targets; 41  Failure to reduce the time required in order to obtain a title to less than 12 to 18 months;  Failure to incorporate the Ministry of Housing (integrated into the Project during the restructuring) into the SIICAR.  The delay in receiving reports from the National Limits Commission, which resulted in further delays in the demarcation of the Ngöbe-Buglé Annex Areas. Results. The main achievement of Component 1 (Land Policy, Legal and Institutional Framework) was the creation of new policies, the approval of 10 new laws related to the land administration process, and the completion of 80 TCO meetings, which contributed to the improvement of the land administration legal framework in Panama. Component 2 (Land Regularization) covered a total of 500,000 Ha, and achieved 96 percent of its target with 106,000 regularized parcels, and 15,971 issued titles. The target for rural areas (12,000 issued titles), was exceeded (12,411 issued titles), while the target for urban areas (15,000 issued titles), was not met (3,204 issued titles). This result in urban areas was mostly due to delays and long and complicated procedures for the demarcation of urban areas (particularly ejidos municipales). The demarcation process in urban areas requires the participation of a number of institutions, while the same process in rural areas only involved two institutions. With respect to the development of SIICAR, the system was completed by the end of the Project; however, it is not yet fully operational. In addition, there are still some minor processes which remain in a manual format, and the Ministry of Housing (MIVI) is not yet incorporated into the system. The main achievement of Component 3 (Consolidation of Protected Areas and Indigenous Territory) was the number of Mesas de Dialogo (conflict resolution sessions) carried out efficiently between 2001 and 2005. In addition, 1,361 km of indigenous territory were demarcated, 100 percent of the target value. Another main achievement was the submission of the draft law for the creation of the Naso Comarca to the National Assembly. Unfortunately, the Assembly did not approve the law and instead approved Law 72 of 2008 recognizing the Naso Corregimiento. The Project also failed to achieve the demarcation of the 13 km of Kuna Yala territory, mostly due to Government and Kuna Congress opposition. Concerning protected areas, the Project achieved the establishment of 9 management plans, and the demarcation of 281 km out of the 700 km target value. The co-management area between the Ngöbe-Buglé and the La Amistad National Park (PILA) protected area was not established due to opposition from ANAM. Within Component 4 (Project Administration and Monitoring), operational costs exceeded the budgeted amount; however, this Component provided the necessary monitoring of field activities and budget in order to achieve the Project objectives. Achievements during the extension period (January to June 2010) and Sustainability Plan. In order to complete pending technical and administrative activities, the World Bank approved a 6 month extension period from December 2009 to June 2010. During this period, the Project completed specific corrective actions, particularly related to regularization processes carried out during the life of the Project. In addition, the Project also updated and revised the Indigenous Peoples Development Plan (IPDP) through eight rounds of consultations. The Project also completed consultations on 14 of the 15 Annex 42 Areas as part of the process to complete the demarcation of the Ngöbe-Buglé Annex Areas. Concerning the Ngöbe-Buglé Comarca, the Project completed the 67 km pending demarcation. The Project also achieved an agreement between the two Naso kings for the demarcation of the Naso Comarca. On September 21 2010, Law 219 was approved creating the National Authority for Land Administration (Autoridad National de Tierra – ANATI), which will be part of the Ministry of Housing and Territorial Development (MIVIOT) and will absorb the responsibilities of the Tommy Guardia Geographic Institute, the National Directorate of Agrarian Reform, and the National Directorate of Cadastre. This new institution will be the main implementing agency for all titling and land administration processes, will achieve the regularization of all Panamanian territory, and will administer the country’s geographic information system moving forward. In addition, under new Inter-American Development Bank financing, ANATI will complete the regularization process for approximately 23,000 records that were not able to be completed with World Bank financing. The World Bank Project officially closed with 16,544 issued titles and 14,792 updated cadastral records. 43 Borrower’s Comments to Draft ICR 44 45 (Unofficial translation) Republic of Panama Ministry of the Economy and Finance Office of the Viceminister of Finance February 16, 2011 Note No. DPI-D-011 Mr. Carlos Felipe Jaramillo Country Director, Central America Latin America and the Caribbean Region World Bank 1818 H Street NW Washington D.C., 20433 U.S.A. Ref: Response to the Implementation Completion Report (ICR), Loan Agreement 7045-PAN Dear Mr. Jaramillo: This letter is in reference to the Implementation Completion Report for the Project under Loan 7045-PAN signed by the World Bank and the Ministry of Economy and Finance of the Government of Panama to finance the National Land Administration Program (PRONAT). We would like to submit our comments in relation to the rating given to the borrower in the above mentioned report, which are submitted in the following order: Project Design It is important to highlight that the design framework established during the preparation stage of this operation complicated the achievement of the project’s general and more specific objectives during implementation. We think that this flaw is the result of implementation arrangements which were not in accordance with the reality of institutional service needs. Evidence for this lies in the challenges faced during implementation with respect to the definition of the Program’s implementing agencies, starting from adequate coordination for decision making and including compliance with both internal and external controls related to project implementation. We find an example of this in the mechanisms used for operating the technical operation units whose structural and functional designs were not compatible with the functions of implementing agencies (DINRA, Cadastre, MIVI, ANAM, Tommy Guardia, etc.). 46 With respect to the above mentioned points, the Bank should have adopted mechanisms for reevaluating the proposed design. To this end, the National Government requested to the Bank a restructuring of the program in 2006; however, this restructuring focused on cosmetic rather than substantive issues. Project Supervision With respect to this topic, our main comment is regarding the lack of an adequate Bank supervision strategy focused on preventive policies that would result in greater efficiency and effectiveness, both in terms of the Project’s financial management as well as adequate monitoring of the proposed activities. An example of this is the application and compliance of the controls established in the loan agreement and the various policy manuals of the Bank which borrowers are required to abide by. The proper attention related to the objective recognition of the contracts and its financial outlays in several instances, the Bank did not confront them with the essence of its operational manuals which resulted in the Project Coordination Unit disproportionately increasing its administrative expenditures to 230% of the expected level, which goes against the principle of adequate performance (sic). Best regards, Dulcidio de la Guardia Viceminister of Finance and General Coordinator of PRONAT 47 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders Not available. 48 Annex 9. List of Supporting Documents 1. Project Appraisal Document, Report No. 21444 PAN (December 14, 2000). 2. Final Report, “Consultas Comunitarias y Estudios Tenenciales en Areas de Conflicto en Limites Propuestos para el Territorio y Pueblo Naso�, Dobbo Yala Foundation (2003). 3. Mid-Term Evaluation (June 2004). 4. Project Restructuring Paper for the Panama Land Administration Program, Report No. 35690 (March 2006). 5. Borrower’s Final Report, “Informe Final de Gestión 2001-2009�, Ministry of Economy and Finance, Programa Nacional de Administración de Tierras - PRONAT (December 2009). 49 IBRD 30835R 83° 82° 81° 80° 79° 78° 77° Portobelo National Park CARIBBEAN Rio El Porvenir PANAMA SEA CANAL Six ao la C O M A R Bocas del Toro Colón C A C O S TA Naso N Territory D RICA Ó E partially Gatun S delimited Escudo de Veraguas L Lake Madden Lake Río A Protected Area N A Che po Lake Bayano N Laguna de O M B O Chiriquí Ch R í o B epo 9° C A Golfo de los C A PANAM� � L 9° S D E Mosquitos PA A CA NA B ay o f L N MA Pan ama T O P S S A L R O Omar Torrijos National Park Ngobe-Bugle Comarca D D D C H COCLE Cerro El Gaital S I R I Cerro Penonomé Protected Area A A A A David Q Guacamaya U U Protected Area La Palma � G R Isla Iguana Río Tu A ira Río Santa Mar R ie I Santiago V E Golfo de Chiriquí G u l f o f P a n a m a É É É 8° 8° A Chitré R RE N N N HER Las Tablas LOS • 37,759 km2 photographed (50% of national territory) SANTOS • 49,079 rural parcels surveyed Cerro Hoya • 31,935 urban parcels surveyed COLOMBIA National Park Isla Cana Protected Area • 281 km of protected areas demarcated PA C I F I C OCEAN • 1,361 km of indigenous territory demarcated 83° 82° 81° 80° 79° 78° 77° UNITED STATES OF AMERICA P A N A M A AT L A N T I C LAND ADMINISTRATION PROJECT Gulf THE BAHAMAS OCEAN of PROJECT AREAS Mexico IMPLEMENTATION COMPLETION REPORT CUBA DOMINICAN REP. HAITI RURAL LANDS URBAN LANDS MEXICO BELIZE JAMAICA HONDURAS Caribbean Sea INDIGENOUS TERRITORIES DEMARCATED PROVINCE CAPITALS GUATEMALA 0 20 40 60 80 100 KILOMETERS EL SALVADOR NICARAGUA NATIONAL CAPITAL NASO TERRITORY PARTIALLY DELIMITED COSTA RICA R.B. de This map was produced by the Map Design Unit of The World Bank. RIVERS VENEZUELA PROTECTED AREAS, REGULARIZED GUY 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 PROVINCE BOUNDARIES PA C I F I C PANAMA ANA territory, or any endorsement or acceptance of such boundaries. PROTECTED AREA MANAGEMENT PLANS COMPLETED COLOMBIA INTERNATONAL BOUNDARIES OCEAN BRAZIL DECEMBER 2010