multinational regional institutional support project …€¦ · multinational regional...
TRANSCRIPT
AFRICAN DEVELOPMENT FUND
MULTINATIONAL
REGIONAL INSTITUTIONAL SUPPORT PROJECT ON
PUBLIC FINANCIAL GOVERNANCE
(RISPFG)
OSGE/GECL DEPARTMENTS
May 2016
Pu
bli
c D
iscl
osu
re A
uth
ori
zed
Pu
bli
c D
iscl
osu
re A
uth
ori
zed
TABLE OF CONTENTS
Acronyms and Abbreviations
Currency Equivalents, Fiscal Year, Weights and Measurement
Grant Information
Project Summary
Results-based Logical Framework
Project Timeframe
I - STRATEGIC THRUST & RATIONALE 1.1 Project Linkages with Country Strategy and Objectives
1.2 Rationale for Bank’s Involvement
1.3 Donors Coordination
II – PROJECT DESCRIPTION
2.1 Project Components
2.2 Technical Solution Retained and Other Alternatives Explored
2.3 Project Type
2.4 Project Cost and Financing Arrangements
2.5 Project’s Target Area and Population
2.6 Participatory Process for Project Identification, Design and Implementation
2.7 Bank Group Experience, Lessons Reflected in Project Design
2.8 Key Performance Indicators
III – PROJECT FEASIBILITY
3.1 Economic and Financial Performance
3.2 Environmental and Social Impacts
IV – IMPLEMENTATION
4.1 Implementation Arrangements
4.2 Financial Management, Disbursement and Audit
4.3 Procurement Arrangements
4.4 Monitoring and Evaluation
4.5 Governance
4.6 Sustainability
4.7 Risk Management
4.8 Knowledge Building
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1 Legal Instrument
5.2 Conditions Associated with Bank’s Intervention
5.3 Undertaking
5.4 Compliance with Bank Policies
VI – RECOMMENDATION
i
ii
iii
iv
v
vii
1
1
1
4
5
5
7
8
8
9
9
9
10
11
11
11
12
12
12
13
14
14
15
15
15
16
16
16
16
16
16
LIST OF TABLE
Table 2.1 Project Description 6
Table 2.2 Project Alternatives Considered and Reasons for Rejection 7
Table2.3 Project Cost Estimates by Component 8
Table 2.4 Sources of Financing 8
Table 2.5 Project Cost by Category of Expenditure USD’000 8
Table 2.6 Project Cost by Category of Expenditure UA’000 9
Table 2.7 Expenditure Schedule by Year 9
Table 2.8 Lessons Learned from Previous Operation 10
Table 4.1 Project Implementation Supervision 14
Table 4.2 Risk and Mitigation Measures 15
Annex
Annex I: Results and Lessons Learned from Past Regional ISPs
Annex 1I: List of Regional ISPs designed and implemented by OSGE (2002-2012)
i
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
ADF African Development Fund
AGI Africa Governance Institute
ANRC African Natural Resource Center
ATAF African Tax Administration Forum
BSI Budget Strengthening Initiative
CABRI Collaborative Africa Budget Reform Initiative
RISPG Collaborative African Budget Reform and Tax Administration Forum
CPIA Country Policy and Institutional Policy Assessment
CSP Country Strategy Paper
DFID UK Department for International Development
DRM Domestic Resource Mobilization
FRMB Partnerships and Financial Resource Mobilization Department
GECL General Counsel Department
GIZ German Agency for International Cooperation
IFMIS Integrated Financial Management System
ICT4 ICT for Development
IMF International Monetary Fund
ISP Institutional Support Project
JAS Joint Assistance Strategy
ODI Overseas Development Institute
OFSD Financial Sector Department
ONRI NEPAD and Regional Integration Department
OPSM Private Sector Department
ORVP Operational Vice Presidency
OSGE Governance, Economic and Financial Management Department
PCR Project Completion Report
PFM Public Financial Management
PRSP Poverty Reduction Strategy Paper
RAS Regional Assistance Strategy
RSA Republic of South Africa
SARC South Africa Regional Resource Center
SECO Switzerland’s State Secretariat for Economic Affairs
WB World Bank
ii
CURRENCY EQUIVALENTS
As of January 2016
1 UA = ZAR 21.54
1 USD = ZAR 15.55
1 € = ZAR 17.55
1 UA = USD 1.40
1 UA = € 1.27
1 € =USD 1.10
FISCAL YEAR
1st January -31st December ATAF
1st April -31st March CABRI
WEIGHTS AND MEASUREMENTS
1 METRIC TONNE = 2204 POUNDS (LBS)
1 KILOGRAMME (KG) = 2.200 IBS
1 MILIMTRE (MM) = 0.03937 INCH (“)
1 KILOMETRE (KM) = 0.62 MILE
1 HECTARE = 2.471 ACRES
iii
GRANT INFORMATION
Clients Information
RECIPIENTS : ATAF and CABRI
EXECUTING AGENCY: ATAF and CABRI (both based in South Africa)
Financing Plan
Source Amount (UA’000) Instrument
Regional Public Goods Component I (CABRI) 2.670 Grant
Regional Public Goods Component II (ATAF) 2.608 Grant
TOTAL COST 5.278 Grant
Timeframe-Main Milestones
Concept Note November 2015
Appraisal January 2016
Project Approval May 2016
Effectiveness June 2016
Mid-term-Review July 2017
Completion December 2018
Closing Date June 2019
iv
PROJECT SUMMARY Project
Overview
Project Name: Regional Institutional Support Project on Public Financial Governance (RISPFG) to
support ATAF and CABRI.
Geographical Area: African Continent
Implementation timeframe: 2016-2018
Project cost: UA 5.278 million (ATAF UA2.608 m and CABRI UA 2.670m)
Expected outputs and outcomes: Expected outputs under component I include: policy brief and reports
on budget reforms published, report on public investment management practice, peer learning and
exchange network for senior budget officials strengthened, PFM knowledge hub fully operational, report
on partnership for greater accountability published, research paper on use of country system to better
management of aid information and flow of funds; policy brief on agriculture financing, publication of
budget documents and calendar, and increased membership and network of budget experts.
Expected outputs under Component II include: tax payers education tools and materials developed, network
of policy advisers and tax administration officers established, improved tax regulatory framework
developed, informal sector taxations system guideline developed, and peer learning mechanisms for tax
administration agencies strengthened.
Expected outcomes includes effective contribution toward improved capacity of member countries for
domestic resource mobilization and budget management transparency and accountability.
Project Direct Beneficiaries: The project’s direct beneficiaries are ATAF and CABRI. ATAF will benefit
in the form of financial assistance to scale up and deliver its mandate for capacity building of the network
of senior tax administrators. CABRI will also benefit from the Bank’s financial assistance to strengthen its
work on budget transparency and accountability reforms. RMCs will benefit indirectly from technical
assistance and capacity building support provided by these two network of tax administration, and budget
practitioners.
Needs
Assessment
Governance and institutional capacity remains a priority in regional member countries. Africa
experienced impressive economic performance recently, but this growth has not been inclusive in part due
to governance shortcomings among other things. Inequality is still high. African women still have less
access to productive resources, youth unemployment remains high. More is needed to take Africa to the
middle income status that its people aspire to. The Sustainable Development Goals (SDGs), and the Third
International Conference on Financing for Development reaffirmed that there have to be significant
improvements in Domestic Resource Mobilization, and building effective, accountable and inclusive
institutions at all levels in order to promote inclusive growth and improve the quality of people's lives.
African countries and their development partners, including the African Development Bank have
prioritized governance and accountability as one of their strategic priorities. CABRI and ATAF in
collaboration with member states that endorsed the 2012 “Declaration on Good Financial Governance”,
are committed to promote good Public Finance Management (PFM) and Domestic Resource Mobilization
(DRM) practices. They have also developed a strategic plan which calls for increased investment to
strengthen institutional and human capacity to further improve public financial management and tax
administration in the continent.
Bank’s Added
Value
The project builds upon Bank’s previous operation and support to PFM and tax administration reforms in
RMCs. It will scale up and complements other development partners’ interventions. The Bank, through
support to CABRI and ATAF, will leverage existing resources from the ADF regional public goods window
to promote knowledge management and advisory services to support public financial governance reforms
at country and regional levels. The project will bring synergy between the regional and country level
initiatives on tax administration and budget reforms.In addition, the Bank, ATAF and CABRI are seen by
RMCs as reliable and trusted partners for beneficial change.
Knowledge
Management
The Project will contribute to knowledge building through peer learnings, networking, skills and
knowledge transfer, and partnership among the tax and budget officials in the member countries. The
establishment of the PFM Knowledge Hub will play a critical role and serve as an effective platform to
share knowledge and centre for PFM knowledge and analysis. The Bank will capture and disseminate
knowledge and experience through sharing the findings of supervision missions, progress reports, and the
Project Completion Report. Lessons learned and experience gained will be available to inform future
operations.
v
Result-based Logical Framework
Country and project name: Regional Institutional Support Project on Public Financial Governance (RISPFG) for ATAF and CABRI.
Purpose of the project: To strengthening budget and tax management in regional member countries.
RESULTS CHAIN
PERFORMANCE INDICATORS MEANS OF
VERIFICATION
RISKS/MITIGA
TION
MEASURES Indicator
(including CSI) Baseline Target
IMP
AC
T
Impact
Contribute to
improved public
financial management
and governance
1. Open Budget
Index (continental
average)
2. Domestic tax
revenues as a
percentage of GDP
3. Ibrahim Index of
African
Governance
1. OBI improved
by 9.4% from
2012-2015
2. Low income
countries currently
mobilise about
17% of their GDP
in tax revenue
3. Overall
governance
average score was
50.1 in 2015
1. OBI to improve by 15% from
2016 to 2018
2. Low income countries to
mobilize about 20% of their
GDP in tax revenue by 2018
3. Overall governance average
score to reach 51 by 2018.
1.CABRI and ATAF
progress and status
reports
2. Reports from
Budget Directors and
Tax Commissioners
from Ministries of
Finance.
3. OBS and IIAG
report
Risk 1:
Implementation
capacity
constraints.
Mitigation:
Existing Project
management teams of each organization
will be in place to
manage and coordinate project
implementation.
The project will provide additional
capacity in the two
institutions to further enhance
project management
capacity
Risk 2:
Sustainability:
Mitigation: The
two institutions
are committed to
increasing their
membership to be
able to pay for
their operating
cost from
membership fees
and reduce donor
dependency
Risk 3: Fiduciary
risk. Mitigation: Project support
will improve
fiduciary
environment..
Compliance with
the Bank’s
procurement of
goods and
services, and
submission of
annual audit
reports.
OU
TC
OM
ES
Improved budget
credibility and
effectiveness in tax
administration
1. Aggregate
expenditure out-turn
compared to original
approved budget
2. Improved
comprehensiveness
and public access to
key fiscal
information
1 Policy proposals
are not linked to
fiscal strategy
2. Poor selection
and planning of
Investment
projects.
3. Aggregate out
turn varies widely
1. Fiscal impact of policy
proposals assessed in 2018.
2. Improved public investment
project selection framework
developed by CABR
3. % reduction of variance
between 2016 and 2018
1. AfDB CPIA
Scores and PEFA
reports (Cluster D
Indicator)
2. OBI Reports.
4. Effectiveness in
collection or tax
payments
4. 1.Weak revenue
administration
4.2. No tax payer
education
5. Lack of ICT
systems
especially at border
points.
.1Information on revenue
collections available in
Selected RMCs in 2018
4.2. Taxpayer education material tools
developed and distributed to all TAF
Members by 2018.
5. An integrated ICT
System developed and distributed to
member
States.
Progress reports
from ATAF and Tax
Commissioners.
Component 1: Support for strengthened budget reform
OU
TP
UT
S
Output 1.1. Improved
fiscal and budget
policy
Public investment
management
capacity developed.
Public investment
management
practice introduced
in member
countries
Report on public investment
management practice
published in 2017.
Blended training programme
for agriculture budget analysist
in fifteen African countries in
2018.
1.CABRI progress
and status reports
2. Supervision
mission reports
3. Workshop and
conference reports
Output 1.2: Enhanced
budget transparency
and accountability
Member countries
established
mechanisms for
fiscal transparency
and accountability
partnerships and use
of country systems
by donors.
NA Policy briefs on fiscal
transparency and
accountability developed in
2018 by member countries
2 Case studies and report on
partnerships for fiscal
transparency and
accountability published in
2018
Guideline and action plan
developed for use of country
systems in Senegal in 2016
vi
Output 1.3: Enhanced
institutional
capabilities in budget
management
Establishment of
PFM knowledge
hub
Knowledge sharing
events
CABRI annual
conference PFM Information Hub
functional and used by RMCs
# networking and peer learning
events
# PFM training for finance
ministers and budget/PFM
officials
CABRI conference
Component 2: Enhanced Capacity for Domestic Resource Mobilization
Output 2:
Improved Tax
administration systems
Research
publications on tax
administration
Knowledge sharing
events
NA
2.1. Informal sector taxation
system guideline developed by
2018
2.2 Network of policy advisers
and tax administration officers
established by 2018.
2.3Taxpayer education tools
distributed to all ATAF
Members by 2018
2.4 Report on effective and
efficient Tax systems
developed by ATAF and used
by RMCs
1. Progress reports
from ATAF
Component 3: Project Management Support
Output 3: Improved
project
implementation and
coordination
Periodic reports Audit report Annual audit report
Bi-annual progress report
Impact/result assessment report
by 2019
ATAF and CABRI
reports
KE
Y A
CT
IVIT
IES
COMPONENTS INPUTS
Component 1: Support for strengthened budget reform (UA 2.441 million) Activities:
Strengthening central public planning agencies
Dialogue on aide transparency and use of country systems
Twining two countries to learn from one another on transparency and accountability;
Creation of PFM knowledge Hub (Centers of excellence);
Institutional Capability building on budget credibility.
Networking and research
Component 2 : Enhanced Capacity for Domestic Resource Mobilization (UA2.379m) million
Activities:
Develop an effective taxation system for informal sector
Develop a network of policy advisors and tax administration officers
Develop tools on taxpayer education, advocacy and outreach and an Integrity Assurance
Programme
develop an African approach to implement efficient and effective revenue administration ICT
systems
Develop ICT guide for RMCs in 2017
Develop and operationalize integrity assurance programme for RMCs
Component 3: Project Management Support (ATAF & CABRI, UA 0.458 m): Activities: (i)
Recruitment of two finance officers and a procurement expert; M&E and result reporting; and impact
assessment.
ADF Grant (RPG Window)
= UA 5.278 million
vii
Table i: Project Implementation Schedule
Activities/Years 2016
2017 2018 Action By
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Project Processing
and Management
Grant Approval Bank
Signing Grant
Agreement ATAF/CABRI
and Bank
Project
Effectiveness ATAF/CABRI
Project Launching Bank
Project
Implementation ATAF/CABRI
Mid-term Review ATAF/CABRI
/BANK
Project Completion ATAF/CABRI
Audits ATAF/CABRI
/Bank
1
REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARD
OF DIRECTORS ON A PROPOSED GRANT TO THE REGIONAL INSTITUTIONAL
SUPPORT PROJECT ON PUBLIC FINANCIAL GOVERNANCE (IRSPFG)
Management submits the following Report and Recommendations on a proposed grant total of
UA 5.278 million to the Collaborative Africa Budget Reform Initiative (CABRI) and the
African Tax Administration Forum (ATAF) to finance the Regional Institutional Support
Project on Public Financial Governance (RISPFG).
I STRATEGIC THRUST AND RATIONALE
1.1 Project Linkages with Regional Strategy and Objectives
1.1.1 The project is aligned with the Bank’s Regional Integration Policy and Strategy
(2014 – 2023). Specifically this operation will support the harmonization of financial
governance and standards by strengthening institutional capacity and leveraging partnership
with regional networks of public finance and tax administration practitioners and policy
makers. It is also aligned with Pillar 1 (Public Sector and Economic Management) of the Bank’s
Governance Strategic Framework and Action Plan (2014-2018) that focuses on enhancing
Public Finance Management (PFM) frameworks and support for domestic resource
mobilization in Regional Member Countries (RMCs). The proposed operation is consistent
with the Bank’s Framework for Enhanced Engagement with Civil Society Organizations
(2014-2018) which encourages deeper engagement with non-state actors to enhance policy
dialogue and achieve greater development impact. Consistent with the Bank’s operational
objectives, the project will strengthen capacity of RMCs to mobilize and better manage
domestic revenue to create fiscal space for greater investment in sectors critical to achieve the
Bank’s institutional priorities1.
1.1.2 The proposed project fits firmly within the strategic business plans of CABRI and
ATAF (Technical Annex I). CABRI identified four priorities in its comprehensive three-year
strategic plan for the period 2015/16-2017/18, namely: (i) Fiscal and budget policy; (ii)
Transparency and accountability; (iii) Institutional capabilities; and (iv) Network governance.
ATAF business plan (2016-2020) also identified four strategic priorities: (a) developing
institutional capability; (b) fostering efficient and effective tax administrations; (c) developing
knowledge hub on tax matters; and (d) advancing African voice in regional and global
discourses on tax matters. The proposed operation will help to deliver these priorities through
peer-learning and networking, knowledge and advisory services, technical assistance and
capacity building, collaboration and partnership at country and regional levels.
1.2 Rationale for Bank’s Involvement
1.2.1 Building governance and institutional capacity remains a priority in regional
member countries. Over the past decade, the African continent has experienced an impressive
economic performance, and this is set to continue with the rise of extractive industries
initiatives and expansion of the service sector. While growth has many causes, it could not have
happened without some improvements in governance. However, whatever impressive this
economic performance is, it is still below Africa’s needs, at least a growth of 7% for two
decades to eliminate poverty. Significantly too, this growth has not been inclusive in part due
to governance shortcomings. Inequality is still high. African women still have less access to
1 The new High-5 recently announced by the President of the Bank Group that will drive the Bank’s work as it implements its current ten
year strategy are: (a) Light up and Power Africa; (b) Feed Africa; (c) Integrate Africa; (d) Industrialize Africa, and (e) Improve quality of life
for the people of Africa
2
productive resources, youth unemployment remains high. More is needed to take Africa to the
middle income status that its people aspire to. The Sustainable Development Goals (SDGs),
and the Third International Conference on Financing for Development reaffirmed that there
have to be significant improvements in Domestic Resource Mobilization, and building
effective, accountable and inclusive institutions at all levels in order to improve the quality of
people's lives. The proposed operation will scale up the role of ATAF and CABRI in
strengthening domestic revenue mobilization and public financial management in member
countries.
1.2.2 The 2015 African Capacity Report, states that capacity, in its various dimensions,
remains a challenge across the continent (Box 1). The report reveals binding constraints
associated with domestic resources mobilization, including a very narrow tax base, high levels
of capital flight, tax evasion and avoidance, proliferation of tax exemptions, lack of legitimacy
of tax administrations, lack of human, technical, legal, and regulatory capacity to deal with
elicit financial flows. It is therefore a necessary requirement at national, regional and
continental level to develop policies and initiatives to address these constraints, as well as
simplify and rationalize tax systems. In addition, the Open Budget Survey 2015 reveal that the
vast majority of people live in countries that have inadequate systems for ensuring accountable
budgets. Most countries provide insufficient information for civil society and the public to
understand or monitor budgets, and only a small fraction of countries have appropriate
mechanisms for the public to participate in budget processes. Formal oversight institutions also
frequently face limitations in performing their function of holding governments to account.
Public finance management and tax administration reforms remains a priority to improve
transparency and accountability in the use of public resources.
1.2.3 The Bank is committed to support key regional or pan-African organizations to
improve governance and accountability as well as the quality of services that citizens of
Africa receive. CABRI and ATAF in collaboration with relevant RMCs endorsed the 2012
“Declaration on Good Financial Governance”, whose overarching objective is to promote good
Public Finance Management (PFM) and Domestic Resource Mobilization (DRM) practices.
Further CABRI and ATAF have developed into pan-African network organisations on tax and
budget reform initiatives by creating a platform for peer learning and capacity building support
to member countries. ATAF’s business plan (2016-2018) is geared towards improving the
capacity of African tax administration and tax reform programmes to contribute towards a more
inclusive economic growth. CABRI’s initiatives are also guided by a three-year strategic plan
(2015-2018) which focuses on strengthening budget transparency and accountability,
improving the quality of public spending and institutional capabilities through knowledge
management, networking and peer learning. Both organisations are creating knowledge hubs
to support networks of practitioners on tax and budget matters, and further the African voices
on domestic resource mobilisation and public finance transparency and accountability. The
Proposed Project will contribute to effectively deliver the three-years strategic plans of the two
organisations (Technical Annex I).
3
Box 1 : Capacity Challenges in Public Finance and Domestic Resource Mobilisation
Weak institutional/management capacity remains a persistent challenge across the continent in the RMCs and
RECs. The Africa Capacity Building Foundation (ACBF) has systematically assessed Africa’s capacity
development landscape in its Africa Capacity Index (ACI). Of the different clusters of the index, capacity
development outcomes have consistently remained the lowest. According to ACI 2015, 91% of African
countries are rated low or very low on this cluster pointing to capacity development as the most pressing
challenge. With respect to capacity, African countries have not been converging toward advanced country
levels of capacity.
According to ACI, the African continent has made much progress in increasing tax revenues, but a number of
countries lag behind. Compared with other regions of the world, tax collection systems in Africa remain
expensive and inefficient. Several countries need to hire more and better trained staff members, who must be
retained through financial and nonfinancial career-advancement incentives. Further, building capacity for
domestic resource mobilization is not merely about increasing tax revenue or savings. It also encompasses
promoting good democratic governance, financial inclusiveness, and social justice—and creating the
conditions and incentives for productive investments. The ACI report also highlighted the need to build
institutional and human capacity for scaling up domestic resource mobilization including the rules and
regulations must be in place to ensure sound public financial management so that domestic resources promote
inclusive and sustainable development.
In 2014, Afro barometer survey data, covering 29 countries in Sub-Saharan Africa revealed widespread citizen
commitment to the principle of taxation and to taking responsibility by paying their taxes for national
development. But taxation systems across the continent remain opaque to a large majority of people, perceived
corruption among tax authorities remains significant, and evidence suggests these perceptions undermine
public commitment to the integrity of the tax system and increase the likelihood of non-compliance. In line
with the above challenges, ATAF has done much over the past few years and its scope of activities has widened
with the aim to improve tax systems in Africa through exchanges, knowledge dissemination, capacity
development and active contribution to the regional and global tax agenda. The project will provide support to
ATAF to further promote and facilitate mutual cooperation among RMCs to improve efficacy of their tax
administration.
Over the past ten years, CABRI has deepened its understanding of public financial management through the
challenges and experiences shared by African finance ministries. It provides a platform for collaboration,
exchange and learning among peers, serve as a center of expertise and leadership on appropriate PFM policies,
procedures and practices. It does this by strengthening the organizational, implementation and analytical
capabilities of finance ministries, broadening and deepening of budget management reforms in RMCs.
CABRI's work focuses mainly on the following: accountability (good public financial governance),
transparency, strengthening PFM systems, value for money, institutional capability, information sharing
(budget management resource center) and facilitating professional networking.
1.2.4 Managing public finances in a transparent, accountable and effective manner is a
corner stone for good governance and sustainable economic and social development in
Africa. CABRI’s mission is to ensure that across Africa, public financial resources are
managed with integrity, transparency and accountability for efficient and effective service
delivery, sustainable economic growth and development. To this end, CABRI enhances public
finance management (PFM) in regional member countries through serving as a center of
expertise and leadership on appropriate PFM policies, procedures and practices. The CABRI
network is the only PFM peer-learning and exchange community, established and run by
practitioners for practitioners. Its membership base is composed of Senior Budget Officials
representing ministries of finance and planning across Africa. There are currently 13 official
member countries that have acceded to the CABRI’s international agreement2. However, as an
2 The six founding member countries - Ghana, Kenya, Mali, Rwanda, Senegal and South Africa – signed the legal
agreement in June 2007. In April 2010, Mauritius became an official member, followed by Central African
Republic (April 2011), the Kingdom of Lesotho (November 2011), Liberia and Burkina Faso (both in August
2013), The Gambia (December 2014), and Cote d’Ivoire (July 2015).
4
inclusive network, other African countries and senior budget officials also benefit from
CABRI’s work, while engaging with them to accede to the agreement. The Proposed Operation
will scale up CABRI’s work by focusing on: enhancing public investment management
capacity and quality of public spending in infrastructure and agriculture; promoting budget
transparency and accountability and use of country systems in selected member countries; and
creating PFM knowledge hub to foster learning, experience and information sharing, and policy
space for budget reform.
1.2.5 Mobilising domestic resources continue to be a priority for member countries in
financing national development agendas including funding state expenditure on
infrastructure, economic and social development programs. In this regard, ATAF is
established with the aim to build effective and efficient tax administration in Africa, and
membership to ATAF is open to tax administrations of all African states who commit to
ATAF’s objectives and contribute towards the annual membership fee. There are currently 38
member countries3 but only 18 countries have ratified the international agreement. ATAF
provides a platform for sharing experiences and knowledge dissemination, peer learning,
conducting relevant research and technical assistance on tax administration systems and good
practice. The Proposed Operation will enhance ATAF’s work by focusing on knowledge and
tax research and technical assistance to member countries.
1.2.6 The proposed project complements the previous support to these organizations.
The Bank supported a flagship report on “Status Report on Good Financial Governance 2011”
which was prepared by CABRI and ATAF. The project will leverage existing resources from
the ADF regional public goods window to promote knowledge management and advisory
services to support public financial governance reforms at country and regional levels. This
project will complement Bank direct support to RMCs through projects and programs aimed
at improving public financial governance, as well as other regional projects aimed at improving
the lives of African people. The Bank also supported these initiatives on budget reforms and
transparency, tax administration reforms and domestic resource mobilization for development
finance in RMCs. The proposed operation will complement and build on these activities and
scale up Bank’s support to take forward good public financial governance and accountable
governance agenda.
1.3 Donors Coordination
1.3.1 Mechanisms are in place to better coordinate development partners’ support to
CABRI and ATAF. The main partners supporting ATAF include Switzerland (SECO),
Norway, Finland, Irish Aid, Netherlands, Denmark, European Union (EU) and the
Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ)
implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, and
the South African Revenue Service. CABRI receives bilateral support from SECO,
Development for International Development (DFID), EU and BMZ implemented by GIZ, and
the South Africa National Treasury, as well as three foundations, namely the William and Flora
Hewlett Foundation Fund, Bill and Melinda Gates Foundation and the Global Fund (Technical
Annex VI). There is common objective and strong relationship between the proposed operation
3 Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Comores, Cote ‘d’Ivoire, Egypt, Eritrea, Gabon, Gambia, Ghana, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Togo, Uganda, Zambia, Zimbabwe
5
and ongoing donors’ support to these two organization. The Bank will strengthen its
collaboration with the development partners with a view to providing a coordinated support to
regional initiatives on good public financial governance. At present, there are periodic program
implementation review and coordination meetings. The proposed operation will complement
the ongoing Development Partners technical assistance and project support to budget reforms,
fiscal transparency and accountability, and tax administration capacity building initiatives. The
project design has benefitted from the extensive consultation held with development partners
and participation at the quarterly review meeting held in February 2016.
II PROJECT DESCRIPTION
2.1 Project Components
2.1.1 Project Objective: The development objective of the proposed operation is to promote
efficiency, transparency and accountability in management of public resources. The project
specifically aims at stepping up Bank’s support to both ATAF and CABRI in strengthening
budget and tax administration reforms through technical assistance, knowledge and advisory
services and peer learning among community of tax and budget practitioners in RMCs.
2.1.2 Project Components: The proposed project has three components: (1) Improving
budget transparency and accountability; (2) Improving tax administration and domestic
resources mobilization capacity, and (3) project management support. The project will provide
financial assistance to CABRI and ATAF to scale up their technical assistance and knowledge
services to regional member countries in the areas of budget management and tax
administration systems. The major activities under each component are summarized in Table
2.1 below, while the detailed description of the project components and costs is presented in
Technical Annex II and III.
6
Table 2.1: Project components
Components & estimated cost UA’000
Policy Objectives
Programme Activities
Indicative targets by 2018 at output level
Gen
era
l
To strengthening budget and tax management, as well as transparency and accountability in RMCs
Co
mp
on
ent
1:
Su
pp
ort
fo
r st
ren
gth
ened
bud
get
ref
orm
U
A 2
,44
1 m
illi
on
1. Strengthen the institutional capacity for budget credibility, transparency and accountability
Subcomponent 1.1 Improving fiscal and budget
policy. Key activities will include:
Strengthening public investment management
in infrastructure
Blended training programme for agriculture
budget analysts.
Subcomponent 1.2: Enhancing budget
transparency and accountability. Key activities
will include:
Partnerships for greater accountability
Budget reform and accountability
Aide transparency and use of country systems
in Senegal
Subcomponent 1.3: Enhancing institutional
capabilities. Key activities will include:
Running PFM knowledge hub (Centre of
Excellence on PFM) including reports on
budget practices and procedures, leadership
stories
PFM training for finance ministries
Networking and peer learning
Report on public investment
management practice
Case studies and Peer learning on
country partnership for greater
accountability published
Policy briefs and reports on budget
reforms published
Improvements on some key dimensions
of the use of country system and aid
being better integrated to Senegal’s
budget process in 2018
Guideline and action plan develop for
increased use of country systems in
Senegal
# Workshops, seminars and peer learning
and knowledge dissemination events
organised.
# PFM training received by Finance
ministries including %age of women
benefitted from the training program
Improved mechanisms for peer learning
among RMCs in 2018.
PFM Information Hub functional and used by RMCs.
# CABRI conferences and knowledge products published.
Co
mp
on
ent
2:
En
han
ced
C
apac
ity
fo
r D
om
esti
c R
eso
urc
e M
ob
iliz
atio
n
UA
2,3
79
mil
lio
n
2. Improve
domestic
resource
mobilization
capacity.
Key activities will include:
Develop an approach or framework for
informal sector taxation
Develop a network of policy advisors and tax
administration officers
Develop tools on taxpayer education, advocacy
and outreach, and an Integrity Assurance
Programme
Develop a framework to implement efficient
and effective revenue administration systems
including taxation of the extractive industries
Improved African tax regulatory
framework in 2018
Informal sector taxation system
developed by 2018
Direct link between policy formulation
and tax administration established
Taxpayer education tools distributed to
all ATAF Members by 2018
Effective and efficient tax systems
developed by ATAF and used by RMCs
7
2.2 Technical Solution Retained and Other Alternative Explored
2.2.1 During project preparation and appraisal, the following technical issues were explored
regarding areas of intervention, the scope and focus, the scale of investments in each
component and subcomponent, the implementation modality and value for money. Based on
these considerations and lessons from the Bank’s and other DPs’ capacity-building operations,
it was agreed to support the two institutions under one project. It will be the first support to the
two institutions using a project financing instruments. The support will assist the two
institutions to deliver their mandate in the continent which involves research and knowledge,
peer learning and capacity building in budget and tax administration reforms. Central to the
project design and appraisal approach is: (a) readiness and absorption capacity to manage and
deliver the project objectives and results; (b) ownership and complementarity – the project will
help to finance priorities set out in the strategic plans of the two organisations and complement
the ongoing donors support to CABRI and ATAF; (c) focus on developing institutions and
partnership through peer learning and networking, experience and knowledge sharing, and
technical assistance in applying new and enhancing budget management and tax administration
systems and practices. A summary of the technical consideration and project design options is
presented in Table 2.2 below.
Table 2.2. Project Alternatives Considered and Reasons for Rejection
Alternative Brief Description Reasons for Rejection
Selection of
funding instrument
and/or
modality
ATAF receives support in the form of pool funding and technical
experts/secondment. While CABRI’s donors provides their support using mix of instruments – basket funding, project
specific funding, and technical assistance. The appraisal team
concluded project investment grant as preferred instrument rather than basket/pooled funding.
The reasons for not using the pool funding modality are as
follows: (i) there is no medium term (three year) comprehensive and costed work plan. Funds are released by donors based on
annual work plans. (ii) Donors are using different funding
modality including targeted / project specific funding, block grant, and support in kind/technical assistance. (iii) The procurement
rules and procedures of the two organisations were assessed and
found not fully compliant to the Bank procedures. (iii) Though there are opportunity for the Bank to consider pooled funding in
near future, it was agreed that the Bank’s support should be
focused on specific interventions that are not covered by other partners and complement the ongoing capacity building support at
country level. However, it was agreed to use a common project
coordination and management arrangements including review and reporting to reduce transaction cost.
Focus areas
of the operation
and project
that support several
institutions
Initially the support was to cover three institutions, ATAF,
CABRI and AGI, as well as other like-mined institutions but due to complexity of the implementation arrangements and
geographical location it was decided to focus on a project that
support ATAF and CABRI which are membership-based technical organisations based in South Africa. A second project
could be considered to support other institutions working on
governance and accountability (e.g. AGI, AFROSAI-E, Pan-African Parliament).
The recent OPEV evaluation and lessons from previous operation
suggest the need to avoid many beneficiary institutions, particularly where the overall funding envelop is limited. The
project is more focused and provide targeted support to two
institutions.
Co
mp
on
ent
3:
Pro
ject
M
anag
emen
t S
upp
ort
(A
TA
F &
CA
BR
I )
UA
45
8 3. Enhance
monitoring and
evaluation and
capacity building
Key Activities
Recruitment of two finance officers and
procurement expert
M&E and result reporting
Impact assessment
Work programme and budget
Procurement plan
Audit reports and progress reports
Additional staff in place by June 2016
M&E and impact assessment reports
8
2.3 Project Type
2.3.1 The proposed operation is a stand-alone Institutional Support Project designed to
support ATAF and CABRI to strengthen their work on budget management and tax
administration systems in member countries. It promotes peer learning, and exchange of
information and knowledge through networking, partnership, and collaboration and
partnerships. This type of operation was selected to address the critical capacity building needs
of RMCs to pave way for efficient and effective use of public resource and enhanced domestic
resource mobilization.
2.4 Project Cost and Financing Arrangements
2.4.1 The estimated total cost of the project, net of taxes and duties, is UA 5.278 million. A
price contingency of 5%, has been factored in the project cost. Tables (2.3a) and (2.3b) present
the estimated project cost by component and sources of finance, whereas Tables (2.3c) and
(2.3d) present the estimated project costs by Category of Expenditure. Details of the project
cost by component and expenditure category are also presented in Technical Annex III. The
Bank will finance the project with a sum of UA 5.278 million.
Table 2.3: Project Cost Estimate by Component
COMPONENT
Total Cost ‘000 UA % TOTAL
Foreign Local Total
Component I: Support for strengthened budget reform (CABRI) 2,325 0 2,325 44
Component II: Enhanced Capacity for Domestic Resource
Mobilization (ATAF) 2,266 0 2,266 43
Component III: Project Management Support (ATAF and
CABRI) 436 0 436 8
TOTAL BASE COST 5,027 0 5,027 95
Price contingency5% of base cost 251 0 251 5
TOTAL PROJECT COST 5,278 0 5,278 100
Table 2.4: Sources of Financing
Source of Funding Costs in Thousands UA’000 % TOTAL
AFDB Public Goods Window Foreign Local Total
Total Project Cost 5,278 0 5,278 100
Table 2.5: Project Cost by Category of Expenditure in USD’000 for each grant recipient
Expenditure ATAF CABRI
Local Foreign
Local
Local Foreign
Local
TOTAL % TOTAL
Services 0 3,173 0 3,255 6,428 87
Operating cost 0 306 0 306 612 8
TOTAL BASE COST 0 3,479 0 3,561 7,040 95
Price contingency 5% 0 174 0 178 352 5
TOTAL PROJECT
COST
0 3,653 0 3,739 7,392 100
9
Table 2.6: Project Cost by Category of Expenditure in UA’000 for each recipient
Expenditure Foreign % TOTAL
ATAF CABRI TOTAL
Services 2,266 2,325 4,591 87
Operating cost 218 218 436 8
TOTAL BASE COST 2,484 2,543 5,027 95
Price contingency 5% 124 127 251 5
TOTAL PROJECT COST 2,608 2,670 5,278 100
Table 2.7: Expenditure Schedule by Component in USD’000
Component 2016 2017 2018 Total
Support for strengthened budget reform (CABRI) 1,269 785 1,201 3,255
Enhanced Capacity for Domestic Resource
Mobilization (ATAF) 1,097 1,003
1,072 3,173
Project Management Support (ATAF and CABRI) 125 300 187 612
TOTAL(including 5% contingency) 2,616 2,192 2,583 7,392
2.5 Project’s Target Areas and beneficiaries
2.5.1 The project’s direct beneficiaries are ATAF and CABRI who will benefit from the
project resources to implement their strategic plans. The indirect beneficiaries are the member
countries who receive technical assistance and capacity building support from ATAF and
CABRI. The support will help to effectively implement budget and tax administration reforms
by drawing on experience and good practices from peer countries and policy advice and
knowledge services offered by the network of tax and budget practitioners through ATAF and
CABRI.
2.6 Participatory process for project identification, design and Implementation
2.6.1 During and prior to Project preparation, the Bank Group held discussion with CABRI
and ATAF with a view to strengthen collaborative efforts to strengthen economic governance
in Africa. The project design is also informed by the following reports which are products of
consultative processes: (1) CABRI Strategic Plan 2015/16-2017/18, and (2) ATAF 2015 Work
Plan as well as the Strategic Plan 2016-2020. During project design, development partners were
consulted to solicit their input on the scope of the operation to ensure synergy and further
consultation will be held with a view to ensure effective project implementation and
coordination.
2.7 Bank Group experience and lessons reflected in project design
2.7.1 The design of this operation is guided by various analytical reports as well as
consultation during the project preparation missions (Table 5). Between 2002 and 2012,
the Bank approved UA 64 million for 11 Regional ISPs, of which four are still ongoing:
AFRITAC III (UA 4.7 m); EAC Payment System (UA 15 m); COMESA Projet d’Appui au
Renforcement des Capacités (UA 7 m); and the Payments Systems Development Project in
WAMZ, including the Supplement (UA 19 m). The Bank also supported sub-regional
organisations like COMESA on procurement reforms which was successful. Lessons illustrates
that in aggregate, Regional ISPs tend to perform fairly better than standalone ISPs in low
income countries and fragile states. This is partly explained by the knowledge transfer benefits
channeled from the more developed and better performing middle income countries to fragile
states and low income countries with often weaker capacity. The evaluation found that higher
10
satisfactory scores were obtained for Regional ISPs in terms of outputs, outcomes, timeliness,
and performance in project management. The complete list of the 11 Regional ISPs designed
and implemented by OSGE between 2002 and 2012, including their outcome rating is
presented in Annex II.
Table 2.8 Lessons Learned from Previous Regional Operations
Lessons Learned Actions taken to integrate lessons into the PAR
(i)Understanding the institutional and political
economy context was highlighted as important in
terms of understanding both the context within and
beyond the institution. The successful ISPs tended to
be based on solid needs assessments, and the designs
took the political economy in which the institution
operated within.
This project supports regional institutions who operate
in the continent and understands both political and
economic context of Africa.
(ii)Country ownership and leadership are critical.
Political obstacles also hindered project
implementation. Hence ISPs aligned to broader
capacity building and/or sector strategies contributed
to facilitation of ownership.
The beneficiary institutions (ATAF & CABRI) enjoy
support from member states as all reform initiatives
are led by the budget and tax administration officials
of member states. The proposed operation is aligned
to the strategic plan of the two organisations which is
approved by Governing body who represents member
states.
(iii) The realism of the time period. Institutions often
tend to be unrealistic about the time it takes to develop
institutional capacity. They often want to demonstrate
results quickly, and while outputs may be delivered
quickly, capacity development is a longer term
process and this was taken in to account in the design
and implementation of this operation
Capacity of the two institutions and their annual work
plans as well as Strategic plans have been taken into
account. The two institutions are aware of the reform
challenges and time it takes hence the results at RMCs
level are long term.
(iv) Clarity of objectives and implementation
flexibility both in the design and approaches used
during implementation. IDEV’s evaluation revealed
that opportunities to enhance project performance
were missed because of limited flexibility in the
implementation phase of some of the ISPs.
The design accommodated practices and capacities of
the two institutions. The objectives are aligned with
the Strategic Plans of the beneficiary institutions.
Supervision will be undertaken to improve
performance of the project.
v) Sound monitoring and evaluation where log
frames were found to be weak, the planned activities
and outputs did not directly lead to the desired
outcomes. Hence, it is critical to ensure that outputs
and outcomes are directly linked and are based on the
theory of change
Linkages between outputs and outcomes have been
strengthened and aligned to activities of the
institutions. Monitoring and evaluation will be
undertaken during implementation and appropriate
actions taken to improve project performance.
2.8 Key performance indicators
2.8.1 The key performance indicators identified, and the expected outcomes on project
completion, are set out in the Logical Framework. The expected outcomes includes effective
contribution toward improved capacity of member countries for domestic resource
mobilization and budget management transparency and accountability Expected outputs under
component I include: policy brief and reports on budget reforms published, report on public
investment management practice, peer learning and exchange network for senior budget
officials strengthened, PFM knowledge hub fully operational, report on partnership for greater
accountability published, research paper on use of country system to better management of aid
information and flow of funds; policy brief on agriculture financing, publication of budget
documents and calendar, and increased membership and network of budget experts. Expected
outputs under Component II include: tax payers education tools and materials developed,
11
network of policy advisers and tax administration officers established, improved tax regulatory
framework developed, informal sector taxations system guideline developed, and peer learning
mechanisms for tax administration agencies strengthened.
III PROJECT FEASIBILITY
3.1 Economic and Financial Performance
3.1.1 The economic and financial benefits from the project will be much higher than UA
5.278 million. The costs are quantifiable (section 2.4), the benefits are both direct and indirect,
ultimately delivered in improved capacity and performance in public finance, and tax
administration. The economic justification of the proposed project is its contribution to a better
functioning of government through improved transparency and accountability, which are key
pillars of good governance. Overall, the benefits of the project will be much higher than the
UA 5.2m and the benefit will derive from: (a) improved budget transparency and
accountability; (b) improved knowledge and capability in budget analysis and quality of public
investment; and (c) enhanced capacity in domestic resource mobilization which will provide
fiscal space to invest in critical sectors that drive potential growth over the medium term
leading to poverty reduction and improvement of people’s lives. The project will also support
the development of sustainable human resource capacity in budget and tax administration,
thereby ensuring that the benefits will be sustained over time.
3.2 Environment and Social Impacts
3.2.1 Environment and Climate Change: The proposed project is environmentally classified
as Category 3 by ORQR. The project will not have a negative impact on the environment as its
activities are limited to research and knowledge management, peer learning and networking,
technical assistance, and capacity building in fiscal transparency and accountability and tax
administration. Project activities that are focused on human and institutional capacity building
have no negative impact on the climate (Technical Annex II).
3.2.2 Social: The project is intended to contribute to improved economic governance through
improved budget transparency and accountability and capacity of key institutions responsible
for tax administrations. The project will contribute to strengthening transparency and
competency in fiscal policy and budget, public investment management, partnership for greater
accountability, and tax administration including taxation of extractive industries. Transparent
and accountable management of resources will lead to improved quality of governance and civic
confidence in government. This will enhance and leverage the impact of the national
development strategy on poverty reduction and job creation No negative social impacts are
expected from the project implementation (Technical Annex II).
3.2.3 Gender: ATAF and CABRI are committed to the promotion of gender equality to
ensure that all gender groups are able to fully contribute to the country’s development and
benefit from it. Some of CABRI’s work will provides budget officials with tools to measure
how budget impacts the vulnerable groups in society including women. Improved budget and
tax policy and administration will have impacts to different groups in society. CABRI will
undertake value for money work in health, water, sanitation and hygiene, with a view to
demonstrate to governments how monitoring and evaluating the links between spending,
service delivery outputs and outcomes for different segments of society can influence policy
formulation. Through these research activities, CABRI will demonstrate to RMCs how to
include different segments of the society in planning and budgeting and address issues of
12
gender disparity and inclusiveness. In last year’s events 41% of all CABRI’s activities
participants were women. The project will support CABRI and ATAF plans to further
implement gender mainstreaming policy in their operation/activities.
IV IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1 The project will be implemented over a period of three years between May 2016 and
December 2018. The CABRI and ATAF Secretariats will be the Executing Agencies. The
project will be implemented through the existing CABRI and ATAF governance arrangements
and project administration teams (PAT). The Executive and Steering Committees of CABRI
and ATAF, will have oversight over the PAT. The Secretariats will provide reports to the Bank
and will be accountable for all the resources disbursed to them. Capacity of the Secretariats
have been assessed and appropriate mitigation measures put in place including recruitment of
additional finance officers and a procurement specialist.
4.2 Financial Management, disbursement and audit
4.2.1 Financial Management: The RISPFG project’s financial management will be handled
by the respective Executing Agencies (CABRI and ATAF) who will separately implement their
specific components under the project within their existing set-up for project implementation
and under the overall management of the respective Management Committee/Council and
General Assembly. The CABRI Secretariat will be responsible for the financial management
of Component 1 (Support for Strengthened Budget Reform) whereas the ATAF Secretariat will
be responsible for Component 2 (Enhanced Capacity for Domestic Resource Mobilisation). An
assessment of CABRI’s and ATAF’s financial management arrangements for the
implementation of the project (that included a review of the budgeting, accounting, internal
controls, flow of funds, financial reporting and auditing arrangements) indicates that they
satisfy Bank minimum requirements to ensure that the funds made available for the financing
of the project are used economically and efficiently and for the purpose intended (Technical
Annex IV). However, the assessment highlighted a need to augment the current finance staff
already in place in each agency, to effectively manage the increased activities going forward
for both CABRI and ATAF. In this regard, there is provision for capacity building support
through the provision of finance staff. The financial accountants to be financed from the project
(one each for CABRI and ATAF) will form part of the finance team in addition to the current
existing staff for the financial management of this and other projects being implemented by the
respective agencies.
4.2.2 The overall, governance, accountability and oversight arrangements in place together
with effective management for CABRI and ATAF are adequate to ensure proper financial
management of the project. In addition, external audit requirements already in place are further
measures towards effective corporate governance. Both agencies are currently implementing a
number of donor financed initiatives and are familiar with donor financial management
requirements. Training will also be given on the Bank’s specific financial management
requirements including for reporting and auditing during the launch of the project for adoption
in their existing systems.
4.2.3 In accordance with the Bank’s reporting and auditing requirements, CABRI and ATAF
will each be required to submit separate financial statements (within 45 days after the end of
each quarter) showing receipts by all sources and the expenditures by main project expenditure
classifications for their respective components. Physical Progress Reports linking financial
information with physical progress and highlighting issues that require attention will be
submitted bi-annually. In addition, both CABRI and ATAF will be required to submit their
13
respective annual entity audit reports as currently prepared including specific financial
information for the Project (with all Bank and other donor financing separately disclosed)
within six (6) months of the end of the respective fiscal year aimed at facilitating harmonised
reporting. The audit will be done by the respective Executing Agencies external auditors in
accordance with an audit terms of reference that includes the project.
4.2.4 Disbursement Arrangements: The disbursement method that will be used under the
Grant for each agency (CABRI and ATAF) is primarily the Special Account method with
separate bank accounts to be opened (one in foreign currency and in local currency) given the
nature of activities (that include Training and Workshops) to be financed. The opening of the
Special Accounts by the respective agencies will be conditions precedent to first disbursement
However, the Direct Payment and Reimbursement methods are also available for use with the
agreement of the Bank. In accordance with Bank procedures, disbursements under the Grant
would be made on submission of the proper documents by each of the implementing agency in
accordance with the Bank’s rules and procedures as laid out in the Disbursement Handbook as
applicable that can be accessed from the Bank’s website. In addition, the Bank will issue a
Disbursement Letter of which the content will be discussed and agreed during negotiations.
4.3 Procurement arrangements
4.3.1 CABRI and ATAF will be responsible for procurement actions under their respective
components. Main activities to be implemented within the two components of the project fall
under consulting services, non-consulting services, workshops/conferences and training. An
assessment of procurement policy and procedures of CABRI and ATAF was carried out to
ascertain their suitability in the procurement of goods and consultancy services under the
project. The assessment was done through interview of key staff as well as review of available
documentations presented to the Bank team. The documents reviewed include summary of
assessment report on ATAF systems conducted by DFID, sample of contracts, procurement
policy and procedures of CABRI, and template of bidding documents.
4.3.2 Outcome of the assessment revealed that both CABRI and ATAF have extensive
experiences in undertaking procurement using their policies and procedures with financing
from bi-lateral donors and global funds. Such procurements involve recruitment of consultants
(individual and firms), non-consulting services, and miscellaneous goods whose value are
within shopping threshold. As most of the activities under the components consist of
recruitment of individual consultants with low contract values, procurement policies and
procedures of both CABRI and ATAF could be used in implementing some of the activities.
Activities relating to travels, organising conferences / workshops, training and supply of
miscellaneous goods will be implemented using procurement policies and procedures of
CABRI and ATAF. Individual consultant’s recruitment with contract value less than UA50,
000 will also be carried out in accordance with procurement policies and procedures of both
CABRI and ATAF, using their simple templates. However, Bank’s standard provision
regarding Fraud & Corruption, and complaint handling mechanism to be included in the
bidding documents. Individual consultant’s recruitment with contract value greater than UA50,
000 will be carried out in accordance with Bank’s Rules and Procedures for the Use of
Consultants, May 2008 edition, revised in July 2012. Detailed procurement arrangement
including procurement plan for the first year of implementation are contained in Technical
Annex V.
4.3.3 Organizational capacity and staffing in both organizations were assessed, and observed
that capacity strengthening is required to ensure efficiency and effectiveness of procurement
transactions. In view of the low value of contracts, where it was established that both CABRI
14
and ATAF have experiences in procuring similar activities under this project, the overall risk
is found to be low. However, the risk in the procurement of consultancy services using Bank’s
Procurement Rules and Procedures and standard bidding documents appear to be high due to
lack of sufficient knowledge. Risk mitigation measures are proposed as contained in Technical
Annex III, which includes recruitment of experienced procurement specialist to serve both
components, and inclusion of standard Bank’s provisions in bidding documents of CABRI and
ATAF where their respective procurement policies and procedures are used.
4.4 Monitoring and Evaluation
4.4.1 The Bank will undertake supervision missions, at least, bi-annually. As per the Bank’s
general conditions, CABRI and ATAF will submit six monthly progress reports in line with a
harmonized reporting template agreed with development partners. The reports will review
progress made in light of the Project’s Results-Based Logical Framework and include a clear
presentation of activities undertaken during the period under review. The reports will also
analyze to what extent the activities undertaken have contributed to the realization of the
anticipated results/outputs and project objectives. The reports will offer recommendations to
address any issues encountered and present “time-bound” actions/work plans for the following
quarter. CABRI and ATAF will be required to prepare and submit, to the Bank, a Project
Completion Report within three months of the final disbursement, in accordance with the
Bank’s General Rules and Procedures. A project completion report will be undertaken to
evaluate progress against outputs and outcomes and draw lessons for possible follow-up
operation. Table 7 presents project implementation and monitoring schedule.
Table 4.1: Project Implementation Schedule Task / Milestone Responsible Party Time Frame
Grant Approval AfDB May 2016
Grant Effectiveness AfDB/CABRI/ATAF May 2016
Project Launching AfDB/CABRI/ATAF June 2016
First disbursement AfDB June 2016
Project Implementation CABRI/ATAF June 2016 – December 2018
Annual Audit Report CABRI/ATAF June 2017, 2018, and 2019
Supervision Mission AfDB in collaboration with
development partners
June/December 2016, 2017 & 2018
Mid-term Review AfDB June 2017
Project Completion Report AfDB/CABRI/ATAF December 2019
4.5 Governance
4.5.1 Robust governance arrangements have been put in place to manage the implementation,
monitoring, review and audit of this project, as outlined in sections 4.1, 4.2 and 4.2 above. The
implementing entities have been assessed as having enough capacity to implement the project,
utilizing the existing project management arrangements. The proposed project will contribute
towards strengthening capacity in financial and procurement management. The risks to project
governance arise in procurement and this will be mitigated through the preparation of a detailed
procurement plan, robust processes for contractors and recruitment of a procurement specialists
to strengthen the system and capacity of both organisations. Further training will be provided
to project secretariat to ensure that they are fully aware of the Bank’s procurement and financial
management requirements and regulations during the launching mission. An independent audit
of project financial accounts and procurement reviews will be undertaken every year.
15
4.6 Sustainability
4.6.1 CABRI aims to enhance its independence and sustainability by increasingly utilizing
membership fees for its operational costs. In this regard it is committed to growing its
membership base which currently is 13 to 20 by end of 2017/18. The strong commitment by
countries to improve policy reforms ensure longevity of the programmes, however CABRI will
continue to work hard and grow the membership and contribution to its budget with a view to
sustain it when donor funding dries up. ATAF’s membership was 36 by December 2014 and
intends to grow its support base. Membership contributions is not enough, around 16% of the
total revenue and there is need to increase the contribution to be able to sustain itself when
donor funding dries up. CABRI’s strategic objective is to enhance its independence by
increasingly utilising membership fees for its operational costs, while ATAF also aims to cover
its operational costs through membership fees in the medium term. A participatory approach
by both ATAF and CABRI will encourage RMCs’ willingness and commitment to become
members and contribute the total budget of their current strategies. All countries are potential
beneficiaries of the project and contribute to the operational priorities of ATAF and CABRI
programmes through membership fees, cost-sharing arrangements and hosting events.
4.7 Risk Management
The potential risks and mitigation measures for the project are summarized Table 4.2 below.
Table 4.2: Risk and Mitigation
Risks Probability/Impact Mitigation measures
Implementation capacity
constraints
Low probability and
impact
Project management team will be in place to manage and
coordinate project implementation. The project will provide
additional capacity in the two institutions to further enhance
project management capacity.
Sustainability of the project Medium probability
and impact
The two institutions are committed to increase
membership and collect membership fees to finance
operating cost and reduce donor dependency in the
medium to longer term.
Fiduciary risk Low probability, low
impact
Project support will improve fiduciary environment.
Compliance with Bank’s procurement of goods and
services, annual audit reports and training will also
mitigate the risk.
4.8 Knowledge building
4.8.1 The project will build knowledge and develop skills of budget and tax administration
officials in member states through research, peer learning and developing knowledge
management hub on budget and tax administration. The project through ATAF will promote
and facilitate mutual cooperation among Africa Tax Administrations with a view to improve
efficacy of their tax legislation and administration. It will also enhance capacity for Domestic
Resource Mobilization. The project will support CABRI Secretariat to train senior officials of
budget offices on fiscal transparency and accountability, public investment management and
public finance reforms. It will also support ATAF on providing training to RMCs on tax
administration. The joint supervision and result reporting and project completion report will
contribute towards knowledge management and lessons learnt to inform future interventions.
16
V LEGAL INSTRUMENTS AND AUTHORITY
5.1 Legal Instrument
5.1.1 The Bank will sign two Protocols of Agreements with each beneficiary institution
CABRI and ATAF for their respective grants financed from the Regional Public Goods
window.
5.2 Conditions associated with Bank’s intervention
5.2.1 Conditions Precedent to Entry into Force: The Protocols of Agreements shall enter
into force on the dates of their signatures by the respective Beneficiaries (Collaborative Africa
Budget Reform Initiative and African Tax Administrators Forum) and the African
Development Fund.
5.2.2 Conditions precedent to first disbursement: The obligation for the Fund to make first
disbursements of the Grant to CABRI and ATAF shall be conditional upon the entry into force
of the Protocols of Agreement and the fulfilment of the beneficiaries of the following condition,
in a form and substance acceptable the Fund:
(i) The opening of a US Dollar denominated Special Account and a local currency denominated
Special Account by each beneficiary in a bank acceptable to the Fund in which the proceeds of
the Grant will be deposited.
5.3 Undertaking
Within three (3) months of signing of the Protocol of Agreement, ATAF and CABRI, will sign
Memorandum of Understanding which sets out the functions, qualification, line management
and reporting arrangement of the procurement specialist which will be hired under the project
to provide procurement services to both organisations.
5.4 Compliance with Bank policies
This project complies with all applicable Bank policies.
VI RECOMMENDATIONS
6.1 Management recommends that the Board of Directors approve a total grant not
exceeding UA 5.278 million from the Regional Public Goods window, to the Collaborative
Africa Budget Reform Initiative, and African Tax Administrations Forum for the purposes of,
and subject to, the conditions stipulated in this report.
I
ANNEX I : Results and Lessons Learned from Past Regional ISPs
The Bank’s Independent Evaluation of ISPs provided the results and lessons learned for ISPs,
based on ISPs designed and implemented between 2002 and 2012 and these are presented
below.
I. Summary of Satisfactory ISP Results
Between 2002 and 2012, the Bank approved UA 64 million for 11 Regional ISPs, of which
four are still ongoing: AfriTAC III (UA 4.7 m); EAC Payment System (UA 15 m); COMESA
Projet d’Appui au Renforcement des Capacités (UA 7 m); and the Payments Systems
Development Project in WAMZ, including the Supplement (UA 19 m). The table below
illustrates that in aggregate, Regional ISPs tend to perform fairly better than standalone ISPs
in low income countries and fragile states. This is partly explained by the knowledge transfer
benefits channeled from the more developed and better performing middle income countries to
fragile states and low income countries with often weaker capacity. The evaluation found that
higher satisfactory scores were obtained for Regional ISPs in terms of outputs, outcomes,
timeliness, Bank and borrower performance. The complete list of the 11 Regional ISPs
designed and implemented by OSGE between 2002 and 2012, including their latest outcome
rating is presented in the Annex.
Table 1. Percentage of ISPs receiving satisfactory PCR ratings (2000-2012)
II. Lessons Learned from Past Regional ISPs
The IDEV evaluation also identified several lessons used to inform the design of this
operation:
(i)Understand the institutional and political economy context
Understanding the institutional and political economy context was highlighted as important in
terms of understanding both the context within and beyond the institution. The successful ISPs
tended to be based on solid needs assessments, and the designs took the political economy in
which the institution operated into account.
(ii)Country ownership and leadership
High level ownership and leadership are critical. Political obstacles also hindered project
implementation. Hence ISPs aligned to broader capacity building and/or sector strategies
contributed to facilitation of ownership.
Country category Relevance Outputs Outcomes Timeliness Bank
performance
Borrower
performance
Fragile states 82 53 41 59 47 44
Low income countries 81 69 38 63 88 69
Middle income countries
100 100 100 - 100 100
Regional Operations 80 80 60 80 80 75
Total 82 64 44 62 69 59
II
(iii)The realism of the time period
Institutions often tend to be unrealistic about the time it takes to develop institutional capacity.
They often want to demonstrate results quickly, and while outputs may be delivered quickly,
capacity development is a longer term process and this was taken in to account in the design
and implementation of this operation.
(iv) Clarity of objectives and implementation flexibility
The successful ISPs were those with a certain level of flexibility both in the design and
approaches used during implementation. IDEV’s evaluation revealed that opportunities to
enhance project performance were missed because of limited flexibility in the implementation
phase of some of the ISPs.
(v) Sound monitoring and evaluation
For past ISPs where log frames were found to be weak, the planned activities and outputs did
not directly lead to the desired outcomes. Hence, it is critical to ensure that outputs and
outcomes are directly linked and are based on the theory of change.
The IDEV evaluation also identified several factors that contributed to enhanced capacity and
performance:
Table 1: Factors affecting ISP results
Factors affecting activities and
outputs
Factors affecting contribution to
enhanced
capacity and performance
Factors
related to the
ISP context
Government commitment and
domestic policies
Familiarity with Bank
procedures in beneficiary
institutions
Capacity and availability of local
providers
Use of multi-donor PIUs within
host institution
Balanced relationship with host
and user institutions involved in
implementation.
Leadership
Staffing
Role of the human resources team
Government commitment to support
beneficiary institutions
Coordinated donor support
State of partnerships between key
institutions
Improvements or delays elsewhere in
the system
Demand for project benefits
Pace of wider public service reforms
Factors
related to ISP
design and
management
Knowledge of Bank procedures
in PIU or coordinating body
Size or capacity of the PIU team
Choice of conditions prior to
disbursement
Support from ADB HQ and
presence of field offices
Procurement procedures
Breadth of projects
Project duration
Flexibility in use of funds
Inclusion of project beneficiaries in
design and management
Good quality of consultancy output
Sustainable training and equipment
Monitoring soft outputs
Length of the Bank engagement
Multi-stakeholder approach
Effective use of conditions to address
contextual constraints.
III
Other critical factors affecting past ISPs’ implementation arrangements, procurement and
disbursement procedures, and design features are below
Implementation arrangements
For most of the ISPs included as part of the evaluation, the PIU teams were small. In most
cases, a new PIU was established each time a project started, and dissolved when projects were
completed. The recruitment processes took time and training in use of Bank procedures often
had to start afresh, hence getting new PIUs ready to implement project activities was found to
be time consuming. The poor sustainability of the standalone PIU model most often used by
the Bank was a concern. Conversely, while it is important to ensure that integrated units are
not overstretched, stakeholders agreed that this approach is preferable to the plethora of
standalone PIUs.
Understanding and appropriateness of Bank procedures and conditions
Bank procedures were also associated with many of the delays suffered by ISPs, and these
delays were found to be damaging for projects seeking to support governance institutions. In
particular, understanding of procurement and disbursement procedures was crucial not only on
the RMC side, but also for staff within the PIUs and PATs.
Trade-off between responding to complexity and spreading support too thinly
The evaluation also found that more focused projects perform better. For implementation, the
number of institutions supported proved to be challenging to manage both for the Bank and for
the PIUs. In terms of achieving outcomes, fragmentation of projects into small parts meant that
numerous institutions received small inputs, as opposed to one or two institutions receiving a
more comprehensive package of support. Hence, while three beneficiary institutions are
involved in this project, concerted effort will be made to ensure that the project remains
focused, while ensuring that the designated activities are aligned with the intended outcomes.
IV
ANNEX II: LIST OF REGIONAL ISPS DESIGNED AND IMPLEMENTED BY
OSGE (2002-2012)
No. Project Description Status Approval
Year
Region Window
Approval Amount
(in UA’000)
1 OHADA Registre de commerce et de Crédit Mobilier
COMP 2002 West ADF 150
2 Appui Institutionnel à la Cour Commune de justice et d'arbitrage
CLSD 2003 West ADF 795.7
3 Proposition Contribution AFRITAC - I CLSD 2003 Regional ADF 2,095.30
4 Projet de Renforcement des Capacités de la CEEAC
CLSD 2004 Center ADF 2,590.00
5 Enhancing Procurement Reforms - COMESA
CLSD 2006 South East
ADF 5,660.00
6 WAEMU Support of Public Procurement Systems Reform Phase II
COMP 2006 West ADF 4,000.00
7 African Regional Technical Assistance Centers AFRITAC-II
CLSD 2006 Regional ADF 3,020.00
8 Payments Systems Development Project in WAMZ + Supplementary
OnGo 2008 West ADF 19,000.00
9 AFRITAC III OnGo 2010 Regional ADB 4,700.00
10 East African Community (EAC) - Payments OnGo 2012 East FSF 15,000.00
11 Projet d’Appui au Renforcement des Capacités (CEEAC)
OnGo 2012 Regional ADF 7,000.00
Grand Total
64,011.00