Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 66707-PK

PROJECT PAPER

ON A

PROPOSED ADDITIONAL CREDIT AND RESTRUCTURING

IN THE AMOUNT OF SDR 96.7 MILLION

(US$150 MILLION EQUIVALENT)

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR THE SCALE UP OF THE

SOCIAL SAFETY NET PROJECT

February 7, 2012

Human Development Unit

South Asia Region

This document is being made publicly available prior to Board consideration. This does

not imply a presumed outcome. This document may be updated following Board

consideration and the updated document will be made publicly available in accordance

with the Bank‘s policy on Access to Information.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective: November 30, 2011)

Currency Unit = Pakistan Rupees (PRs)

PRs88.71 = US$1

US$1.55156 = SDR 1

FISCAL YEAR

July 1 – June 30

ABBREVIATIONS AND ACRONYMS

AF Additional Financing

BISP Benazir Income Support Program

CAS Country Assistance Strategy

CCT Co-responsibility Cash Transfer

CNIC Computerized National Identification Card

CSP Child Support Program

DED District Education Department

DFID Dept. for International Development, UK

DG Director General

DLIs Disbursement Linked Indicators

DO Development Objective

EEP Eligible Expenditure Program

FM Financial Management

FSP Food Support Program

GDP Gross Domestic Product

GoP Government of Pakistan

IBRD Int. Bank for Reconstruction and Development

IDA International Development Association

ISR Implementation Status Report

M&E Monitoring and Evaluation

MIS Management Information System

MOU Memorandum of Understanding

NADRA National Database Registration Authority

NGO Non-Governmental Organization

NSPS National Social Protection Strategy

NSPP National Social Protection Policy

ORAF Operational Risk Assessment Framework

PBM Pakistan Bait-ul-Mal

PDO Project Development Objective

PRs Pakistan Rupees

PPAF Pakistan Poverty Alleviation Fund

PSC Poverty Score Card

RSPN Rural Support Program (National)

SIL Specific Investment Loan

SSN TA Social Safety Net Technical Assistance

TA Technical Assistance

TAL Technical Assistance Loan

Vice President: Isabel M. Guerrero

Country Director: Rachid Benmessaoud

Acting Sector Director: Amit Dar

Acting Sector Manager: Pablo Gottret

Task Team Leaders: Andrea Vermehren and Iftikhar Malik

PAKISTAN

ADDITONAL FINANCING FOR THE SOCIAL SAFETY NET PROJECT

CONTENTS

I. Introduction ......................................................................................................................... 1

II. Background and Rationale for Additional Financing .......................................................... 2

III. Proposed Changes ................................................................................................................ 6

IV. Appraisal Summary ........................................................................................................... 13

Annex 1: Results Framework and Monitoring............................................................................. 20

Annex 2: Operational Risk Assessment Framework (ORAF) ...................................................... 31

Annex 3: Detailed Description of Project Activities .................................................................... 34

Annex 4: Revised Estimate of Project Costs ............................................................................... 39

Annex 5: Revised Implementation Arrangements and Support ................................................... 40

Annex 6: Procurement Arrangements ........................................................................................... 48

Annex 7: Financial Management and Disbursement Arrangements ............................................ 54

PAKISTAN

SOCIAL SAFETY NET PROJECT

ADDITIONAL FINANCING DATA SHEET

Basic Information - Additional Financing (AF)

Country Director: Rachid Benmessaoud

Sector Manager/Director: Pablo Gottret/Amit Dar

Team Leaders: Andrea Vermehren and Iftikhar Malik

Project ID: P125793

Expected Effectiveness Date: May 15, 2012

Lending Instrument: Specific Investment Loan

Additional Financing Type: Scale-up and

Restructuring

Sectors: Social Protection (100%)

Themes: Social Safety Nets, Other Social

Protection and Risk Management

Environmental category: C

Expected Closing Date: June 30, 2016

Basic Information - Original Project

Project ID: P103160 Environmental category: C

Project Name: Social Safety Net Technical

Assistance Project

Expected Closing Date: June 30, 2016

Lending Instrument: Technical Assistance Loan

AF Project Financing Data

[ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other:

Proposed terms: Standard IDA terms (i.e. 25 year maturity with 5 year grace period and interest

rate of 1.25%).

AF Financing Plan (US$m)

Source Total Amount (US $m)

Total Project Cost:

Co-financing (DFID):

Borrower: Islamic Republic of Pakistan

Total Bank Financing:

IBRD

IDA

New

Recommitted

2255

105

2000

150

100

50

Client Information

Recipient: Islamic Republic of Pakistan

Responsible Agency: Benazir Income Support Program (BISP)

Contact Person: DG Operations, Mr. Ahsan Ali Mangi

F-Block, Pakistan Secretariat

Islamabad, Pakistan

Phone: +92 (51) 9246 416, Fax: +92 (51) 9246 417

Email: dg.ops@bisp.gov.pk

AF Estimated Disbursements (Bank FY/US$m)

FY 2012 2013 2014 2015 2016

Annual 27 30 26 35 32

Cumulative 27 57 83 118 150

Project Development Objective and Description

Original project development objective: To enhance the operation and management of a nationwide,

effective and transparent safety net system for the poor in Pakistan.

Revised project development objective: To support the expansion and strengthen the administration and

performance of the country‘s safety net with particular focus on the BISP program as the national

safety net platform.

Project description: The proposed Additional Financing would provide additional support to the

original project Components1, 2 and 3, as follows:

Component 1: Establishment of a National Targeting System (US$34.6 million + additional IDA Credit

of US$31.5 million and potential DFID co-financing of US$59 million): To be renamed: Establishment

of a National Targeting System and Expanding Coverage of the Basic Safety Net System, as the AF

will support the expanded coverage of BISP targeted cash transfers.

Component 2: Strengthening Safety Net Operations (US$12.9 million + additional IDA Credit of

US$97.5 million and potential DFID co-financing of US$37 million): The AF will support BISP in: (i)

strengthening BISP communications campaign including for the education linked co-responsibilities;

(ii) expanding the scope of the updates and grievance redressal system; (iii) supporting the social

mobilization of beneficiaries, and (iv) introducing and scaling up of cash transfers with primary

education co-responsibilities.

Component 3: Enhance Safety Net Program Management, Accountability, and Evaluation (US$10.8

million + additional IDA Credit of US$21 million and potential DFID co-financing of US$9 million):

The AF will support the (i) enhancement of the MIS including for the public domain, (ii) scale up of

technology-based payment mechanisms, and (iii) evaluation of the program.

Component 4: Developing the Social Protection Policy and Strategy Monitoring (US$1.7 million): No

changes envisaged.

Safeguard and Exception to Policies

Safeguard policies triggered:

Environmental Assessment (OP/BP 4.01)

Natural Habitats (OP/BP 4.04)

Forests (OP/BP 4.36)

Pest Management (OP 4.09)

Physical Cultural Resources (OP/BP 4.11)

Indigenous Peoples (OP/BP 4.10)

Involuntary Resettlement (OP/BP 4.12)

Safety of Dams (OP/BP 4.37)

Projects on International Waterways (OP/BP 7.50)

Projects in Disputed Areas (OP/BP 7.60)

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

[ ]Yes [X] No

Does the project require any waivers of Bank policies?

Have these been endorsed or approved by Bank management?

[ ]Yes [X] No

[ ]Yes [X] No

Conditions and Legal Covenants:

Financing/Project

Agreement Reference

Description of Condition/Covenant Date Due

Article 4.01 of the FA Pakistan shall not alter the BISP‘s legal framework in a manner

incompatible with the Project.

Additional Event

of Suspension

Section IV.B.1 (b) (i) of

Schedule 2 to the FA

The BISP management information system for the Basic Cash

Transfers has been established and is fully operational, in a

manner and substance acceptable to the Association. (Applicable

to DLIs A.1, A.2, A.3, A.4, C.2, D.1, D.2 and D.3).

Disbursement

Condition

Section IV.B.1 (c) (i) of

Schedule 2 to the FA

The BISP management information system for the Basic Cash

Transfer has been updated with a new module addressing the

requirements of the Co-responsibility Payments under the

Waseela-e-Taleem program, in a manner and substance

acceptable to the Association. (Applicable to DLIs B.1, B.2, B.3,

B.4, B.5, C.1, C.3, C.4).

Disbursement

Condition

Section IV.B.1 (b) (ii)

and (c) (ii) of Schedule

2 of the FA

Achievement of the Disbursement Linked Indicators, as verified

by the Association and submission of IFRs covering the Basic

Cash Transfers made from July 1, 2011 up to the date of the

withdrawal application

Disbursement

Condition

Section I.A.1 of the

Schedule to the PA

BISP shall maintain: (i) the BISP Management Board headed by

a Chairperson, with members from governmental and non-

governmental entities, including representatives from the MoF,

PC, social sectors and others relevant to the purpose of the safety

net program; (ii) a management body; (iii) a PMU headed by a

qualified Project Manager; (iv) a M&E Unit headed by a

experienced monitoring and evaluation officer; (v) an

independent consultant for conducting regular spot-checks

(operational audits) on the performance of BISP and all relevant

stakeholders; and (vi) contractual arrangements with data

processing agencies for the administration and management of

the database of beneficiaries, the carrying out targeting surveys

for the Basic Cash Transfers and the Co-responsibility Cash

Transfer under the Waseela e Taleem program, and the

generation of beneficiary lists for the issuance of payments.

Ongoing

Section I.A.2 of the

Schedule to the PA

BISP shall hire and/or appoint a Director (Procurement). 3 months after the

Effective Date

Section I.C.2 of

Schedule to the PA

BISP shall enter into a Memorandum of Understanding with each

such Province or Agency interested in participating in the

Waseela e Taleem program.

Prior to the roll

out of the

Waseela e Taleem

program in any of

the Provinces

and/or Regions of

Pakistan

Section I.D (a) of

Schedule to the PA

BISP shall maintain a nationwide easily accessible Update and

Grievance Redressal Mechanism.

Ongoing

Section I.D (b) of

Schedule to the PA

BISP shall automate the Update and Grievance Redressal

Mechanism‘s filing and processing in at least eighty percent

(80%) of the districts of Pakistan.

3 months after the

Effective Date

Section I.E of Schedule

to the PA

BISP shall prepare an annual implementation plan by July 31, of

each year (commencing on July 31, 2012).

July 31 of each

year

Section I.F of Schedule

to the PA

BISP shall adopt and thereafter apply a Staff Performance

Management System.

3 months after the

Effective Date

(for the adoption)

Section I.G of Schedule

to the PA

BISP shall ensure that the following documents, and/or any

amendments or corrections thereto, are made publicly available

and freely accessibly at BISP‘s website (www.bisp.gov.pk), in a

timely fashion and manner acceptable to the Association, namely:

(i) the BCT Operations Manual and the WeT Operations Manual;

(ii) the list of beneficiaries of BISP‘s Basic Cash Transfer and the

Co-responsibility Cash Transfers under the Waseela e Taleem

program; (iii) the Memorandum of Understanding entered into

between BISP and each Province or Agency interested in

participating in the Waseela e Taleem program; (v) the semi-

annual Project Reports; (vi) the impact evaluation reports; and

(vii) the audited Financial Statements.

Ongoing

Section II.A.1 of

Schedule to the PA

BISP shall establish and maintain a fully operational

Management Information System

Ongoing

Section II.A.3 of

Schedule to the PA

BISP shall adopt and implement in form and substance

satisfactory to the Association, the program management

measures recommended by any spot checks and/or process

evaluation carried out on BISP‘s implementation of the Basic

Cash Transfers and Waseela e Taleem program.

4 months after

reaching

agreement with

the Association

on the program

management

measures

Section II.A.4 of

Schedule to the PA

BISP shall prepare several impact evaluation reports, evaluating

the effects of the Basic Cash Transfers and the Co-responsibility

Cash Transfers on the human development and behaviors of

BISP‘s beneficiaries

Dec. 31, 2012 (for

the first report)

Dec. 31, 2013 (for

the second report)

Dec. 31, 2015 (for

the third report)

Section III.2 (a) of

Schedule to the PA

BISP shall maintain an operational procurement documentation

and record keeping system acceptable to the Association,

including a publicly accessible website with updated procurement

information regarding the Project.

Ongoing

Section III.2 (b) of

Schedule to the PA

BISP shall maintain a procurement complaints handling

mechanism acceptable to the Association.

Ongoing

1

I. INTRODUCTION

1. This Project Paper seeks the approval of the Executive Directors to provide an additional

credit and restructuring in an amount of US$150 million to the Pakistan Social Safety Net

Technical Assistance (SSN TA) Project (P103160). The IDA funding of US$150 million

includes US$50 million reserved from the cancelled funds from the Social Safety Nets

Development Policy Credit.

2. The proposed Additional Financing (AF) would support the evolution of Pakistan‘s

Benazir Income Support Program (BISP), through the expansion of program coverage and

broadening of objectives to promote access to educational services. This represents a shift from

building the basic blocks for a national safety net (under the initial SSN TA Project) towards

supporting an integrated safety net system, focused on results. In this context, the AF would

help finance costs associated with (i) increasing coverage of beneficiary families that are

identified through the Poverty Scorecard (PSC) through the delivery of cash grants in accordance

with the program‘s operational manual; (ii) introducing Co-responsibility Cash Transfers (CCT)

linked to beneficiaries‘ children primary education, and (iii) strengthening Operations,

Management and Governance, also taking into account the demands of increased program

coverage and expanded objectives.

3. The proposed AF and restructuring entail the following changes:

A. changes in the Project Development Objective (PDO) and the Results Framework;

B. changes in the Project Components, including a revision of the original SSN TA

component costs;

C. change of Lending Instrument from a Technical Assistance Loan (TAL) to a Specific

Investment Loan (SIL) to reflect the expanded scope of the project under the AF,

including the introduction of a results-based financing mechanism (Disbursement Linked

Indicators - DLIs);

D. an extension of the Closing Date until June 30, 2016 in order to implement the proposed

additional and restructured activities, and

E. a changed Project name to reflect the changes in the Project activities.

4. The proposed AF has strong Government ownership and donor support. The Government

of Pakistan has allocated a total of PRs. 180 billion (roughly US$2 billion) to BISP in its Mid-

Term Budgetary Framework for FY 2011/12 – 2013/14. The United Kingdom, through DFID,

remains heavily engaged through both its educational and social protection commitments for

Pakistan. Their indicative co-financing of this AF is £70 million (approximately US$105

million) to be paid against the same DLIs as agreed under the Bank-financed project. DFID has

also proposed the possibility of an additional US$100 million in years three and four in parallel

financing contingent on progress in BISP beneficiary families‘ primary school enrollment and

attendance incentivized through the proposed CCT under the AF.

2

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING

5. The Development Objective (DO) of the SSN TA Project is to ‘enhance the

operation and management of a nationwide, effective and transparent safety net system for

the poor in Pakistan’. The original Credit amount for the SSN TA Project is US$60 million.

The project was approved on May 8, 2009 and became effective on August 4, 2009. The

disbursement to date is SDR 24,321,166 or 61% of credit proceeds. The project has four main

components that contribute towards the achievement of the PDO 1) Establishment of a national

targeting system (US$34.6 million); 2) Strengthening safety net operations (US$12.9 million); 3)

Enhancing safety program management, accountability and evaluation (US$10.8 million); and 4)

Developing social protection policy and strategy monitoring (US$1.7 million).

6. The SSN TA Project was designed to strengthen and institutionalize the FY08/09

safety net reforms through BISP. The TA Project had a particular focus on objective targeting,

monitoring and evaluation, governance, and innovations in payments and graduation paths for

beneficiaries out of poverty. Under the TA, many of BISP‘s rapid achievements have been

supported, relying on cutting-edge technology, transparent procedures and high-level technical

expertise. Among others, the SSN TA project has supported the implementation of the Poverty

Score Card (PSC) survey, improving transparency of BISP‘s operations and establishing a

system that can be used as a national platform for coordination and targeting of social

expenditures. Furthermore, the project has supported BISP in establishing controls and

accountability through, inter alia, the contracting of independent institutions to carry out

Operational Audits, a Process Evaluation and an Impact Evaluation of the Program. The project

has also supported BISP in designing Cash Transfers with Co-responsibilities (CCTs), as well as

catastrophic health insurance for its beneficiaries. Parallel to the Bank-financed project, other

donors (USAID and ADB) have provided BISP with financial assistance for the benefit transfers

and have shown renewed interest to support BISP in the future. DFID financed a Bank-managed

Trust Fund linked to the SSN TA project through which much of the safety net work was

enhanced. To date, the project has made the following progress:

7. Under Component 1: Establishment of a national targeting system (US$34.6

million), the TA was used to develop a transparent targeting system to support nationwide

coverage of safety net beneficiaries. Since 2008, BISP has disbursed more than PRs. 85 billion

(US$1 billion) in cash grants to its female beneficiaries in all regions and areas of the country.

The beneficiaries identified during the first phase of BISP were replaced by PSC targeted

families in July 2011. To date, about 6 million families have satisfied the program‘s new

eligibility criteria, based on the PSC. Of those, 3.4 million families are being paid since the MIS

system has complete information on these families. The 2009 BISP beneficiary survey found

that beneficiaries used their payments for productive purposes with the primary expenditures

being: basic food, medical care, debt payments and livelihoods.

8. Support provided under Component 1 also resulted in the establishment of a National

Poverty Data Registry: PSC data from more than 20 million households has been processed

already. The information collated from the PSC can be of immense value to social protection

interventions in the country – both planned and those under implementation. BISP has already

developed data sharing protocols which were recently approved by its Management Board.

3

9. In addition, the BISP program also resulted in a large increase of national ID cards for

women. As a result of the possibility to participate in BISP, many women have applied and

received a Computerized National Identity Card (CNIC). Since the launch of BISP three years

ago, more than 15 million new female citizens have registered for CNICs, providing these

women the possibility to vote and to access banking and other services.

10. Under Component 2: Strengthening safety net operations (US$12.9 million), the TA

project supported the introduction of cutting edge technology in payment, as well as

updates and grievance redressal mechanisms. While to date the Pakistan Post remains the

main payment agency, both mobile phone and smart card based payments have been successfully

tested in several districts with support from the SSN TA project. The program has a manual

grievance redressal system currently that is functional at Head Office and the Divisional and

Regional offices of BISP (41 offices in total). The grievance redressal system has been

addressing complaints concerning targeting, payments, quality of service, and information

updates. To date, through resolution of targeting related grievances (primarily missing CNIC

information) with the support of NADRA, CNIC information of more than 584,000 beneficiaries

was updated and rendered eligible for payments. Further, active follow-up with other applicants

concerning emission CNIC data resulted in additional 185,636 beneficiaries. Grievance

Redressal concerning payments through smart cards or phone based mechanism has been fully

operational. However, grievance redressal of payments through Pakistan Post has been a trying

experience involving long delays and inconclusive results in many cases. This is one of the

reasons BISP Management has taken the decision to shift its payment mechanism to technology

based instruments.

11. Under Component 3: Enhancing safety net program management, accountability

and evaluation (US$10.8 million), the project supported the building of a comprehensive

M&E system. Third party monitoring and evaluation mechanisms including a process

evaluation, spot check evaluation, and impact evaluation have been launched to support a

comprehensive monitoring and evaluation (M&E) system for active management of targeting,

payments, and grievance redressal. The process evaluation and spot checks are underway and

the baseline survey for impact evaluation is completed. These elements are critical to understand

program effectiveness, improve accountability and assist with resource allocation.

12. To date, the SSN TA project has performed well… The PDO rating in the

Implementation Status Report (ISR) archived on October 24, 2011 was rated ‗satisfactory‘ while

Implementation Progress (IP) was rated ‗moderately satisfactory‘. Based on recent

improvements in a number of areas, the most recent ISR of January 23, 2012 has rated the PDO

and IP as ‗satisfactory‘. The ratings of Project Components are satisfactory, as follows:

Component 1 (establishing national targeting system), Component 2 (strengthening operations

and enhancing management) and Component 3 (accountability and evaluation) – satisfactory;

Component 4 (developing social protection policy and monitoring) – moderately satisfactory.

13. … and remedial action is in place for areas that have demonstrated less than

satisfactory progress. The moderately satisfactory performance of Component 4, implemented

by the Planning Commission/Planning & Development Department, has largely been due to a

lack of clarity on responsibilities of the Planning Commission. Progress on this component has

also been hampered by the uncertainty related to the 18th

Constitutional Amendment of 2010

4

which devolved many federal functions to the provinces. While Social Protection has not been

affected, the discussions surrounding the 18th

Amendment dominated most of the policy

discussions recently. The performance of this Component has therefore been mixed. At the

request of the Deputy Chairman Planning Commission (DCPC) as well as the management of

BISP, the proposal is to continue the component under the restructured project and enhance it

with a newly constituted Technical Advisory Committee (comprising of renowned Economists

and sector experts), and facilitated by the staff hired by the Planning Division. This committee

will guide the Component‘s implementation plan, identify areas for analytical work, set up

requisite monitoring systems, and identify evidence-based themes which would feed into social

sector policies at the federal and provincial level.

14. Procurement rating of the project is rated ‘moderately satisfactory’. Required

procurement staff is in place. BISP has updated the procurement manual and also strengthened

its procurement related complaint management. The Procurement function of BISP will further

be strengthened by hiring a Director Procurement and efforts to enhance transparency through an

online grievance management system for procurement.

15. Financial Management of the SSN TA project is rated ‘moderately satisfactory’. The project has a new financial management team which has familiarized itself with the project

and program activities, and fund flow arrangements. Budget preparation and monitoring

arrangements are adequate. Security levels introduced in data entry into the computerized

accounting system were found adequate. The internal audit of the project has been completed.

The Designated Account has been duly reconciled; and reconciliation of the fixed assets

subsidiary record with the control accounts has also been completed. There are no overdue

financial reports in respect of the project. Finally, the Finance and Accounting Manual that

contains financial management has been approved by the BISP Board and is being used.

16. The BISP Management Board has been reconstituted in accordance with the BISP

Act (2010). Of the eleven members of the Board, five non-government members of high regard

have been nominated. The notification of the reconstitution of the BISP Board was issued on

October 13, 2011 and the list of the new BISP Board members has been posted on the BISP

website. The Rules and Regulations for the BISP Management Board have been developed and

expected to be approved by the Board shortly. With this important step, BISP can now be seen

as the country‘s formally established main safety net program.

Rationale for Additional Financing

17. The proposed AF supports the GoP in its efforts to establish an effective and

efficient national safety net for the poor and builds on lessons learnt from the existing SSN

TA project. The government established BISP in FY08/09 to provide basic income support for

the poor in response to the food, fuel and financial crises. Since then, there has been a threefold

increase in the GOP‘s safety net investments from 0.3% of GDP to 0.9% of GDP. At the same

time, the government has moved away from un-targeted, universal subsidies, notably the Food

Support Program. Given BISP‘s mandate and performance, Pakistan‘s Parliament unanimously

approved the BISP Act in 2010, endorsing the institution as the country‘s national safety net

authority under the Prime Minister‘s office. The nascent institution has adopted a public private

partnership approach, relying on a variety of agencies to operate the program including the

National Data Registry Authority (NADRA), the Post Office, commercial Banks, NGOs and

5

private sector institutions. This approach also separates the functions of surveying, data

processing and payments - thus strengthening governance. The proposed AF will build on the

considerable achievements of the Government in establishing a modern safety net system

through BISP that were supported by the TA project. Now that the system is in place and

sufficiently robust, the Bank is in a position to help the Government in expanding coverage of its

social safety net, introducing a scheme to improve human capital through education, and further

strengthen Pakistan‘s social safety net systems and institutions.

18. The expansion of program coverage has been recognized as a major priority, given

the recent harsh shocks (global financial crisis, food price increases, massive floods, etc.)

that are expected to have increased poverty levels. After the nationwide roll-out of the

Poverty Scorecard Survey (PSC), its data entry and the necessary grievance processing, it is

estimated that the total number of beneficiary families can increase to almost 7 million. This is

despite the fact that the original cut-off point of the PSC had been set to identify only 5 million

poorest families in the country. It is likely that the variation is due to increased numbers of poor

families (as a result of the above mentioned crises), as well as the possibility of an underestimate

of the total number of households in the country. In accordance with the original estimate, the

GoP approved the budget for BISP to be PRs. 50, 60 and 70 billion in the coming three FYs

(2011-12 to 2013-14) in the GoP Mid-Term Budgetary Framework (MTBF). This can cover

cash transfers to approximately 3.5, 4 and 4.5 million families, respectively each year. It seems

unlikely that the GoP will be able to provide additional funds and possibly leave millions of

eligible families without the income support. Therefore, donor support has been requested to

ensure that all eligible families can be provided with the basic income support. The AF, and the

tentative DFID financing, would contribute so that sufficient funds are available to cover all

poor, eligible families.

19. The need to improve access to educational services for beneficiary families has also

emerged as a priority during the initial phase of BISP. A 2009 Rapid Assessment of BISP

beneficiaries in the 16 pilot districts indicated that the PRs. 1000 benefit received by each target

family was used to meet to the most basic needs: 32% on food; 23% on medical expenses; 10%

on debt re-payments; and 7% on clothes – largely productive uses of the transfer. However, only

5% of the benefit amount was spent on children‘s education. The enrollment data for primary

school going children (5-12 years) among the BISP eligible households paints a disturbing

picture: only 27% of the BISP beneficiary children attend school; whereas a staggering 71% of

the beneficiary children are out of school. It was also observed that the enrollment statistics for

primary school-aged children (5-12 years) deteriorated as the household size increased (for more

information, see Appraisal Summary section of this document).

20. Evidence points to the potential of promoting human development for BISP

beneficiaries, by linking the basic cash transfers to primary education service delivery for

families with school-aged children. In many countries worldwide, such CCT investments have

helped to improve educational access and attendance of children. This in turn better prepares

poor families to take advantage of economic opportunities, and thereby improve the odds of

moving out of poverty in the longer term. In the local context, the impact evaluation of the Bank

supported Child Support Program implemented by the Pakistan Bait ul Mal (PBM) in 12 districts

of Pakistan shows that a CCT pilot, with a significantly lower monthly stipend, led to 11.7%

increase in the enrollment rates of children from the PBM beneficiary families. These findings

6

support linking the co-responsibility under the AF to education of primary school-age children in

the beneficiary households to further promote human development. It should also be noted that

neither the Federal Government nor the Provincial Governments are running or planning to run

any primary school stipend programs.

21. The proposed AF reflects the GoP’s expressed commitment to promote graduation

strategies to help the poorest move out of poverty, which also complements growth and

development priorities. The activities proposed under the AF will support expansion of the

basic safety net program to all eligible poor families and help poor families graduate out of the

program over time. The BISP graduation strategy, support for which is one of the foci of this AF,

notes that in order ‗to counter the long term poverty cycle and reduce beneficiary dependence on

the income support program, BISP must facilitate its beneficiaries to graduate out of poverty by

investment in human development, which will improve the economic opportunities available to

the target population‘. Support for the GoP‘s social protection agenda is included in the Bank‘s

Country Assistance Strategy.

22. The co-responsibility cash transfer program which BISP has named ‘Waseela-e-

Taleem’ (‘Source of Education’), will work at the primary school level across the country,

encouraging school admission (into public or private schools) and attendance for BISP

beneficiaries’ children (5-12 years). As such, it is mutually supportive and reinforcing of the

Bank‘s education sector projects in Pakistan. Waseela-e-Taleem will increase demand for

primary education in Pakistan while the education projects are supporting improved education

quality. The Punjab Education Sector Project and the Sindh Education Project support measures

to improve governance, access to quality schooling, learning and quality of teaching. Further,

improving access and quality of primary education is also the objective of the education sector

projects in the pipeline. In addition, the Waseela-e-Taleem program will have indirect positive

impacts on education quality through strengthened records management as under the proposed

project attendance compliance will be monitored through review of the children‘s admission

cards and attendance records.

III. PROPOSED CHANGES

A. Project Development Objectives and the Results Framework

23. Development Objective. To support BISP in these efforts, the SSN TA Project needs to

be restructured to reflect the following modified Development Objective: To support the

expansion and strengthen the administration and performance of the country’s safety net

with particular focus on the BISP program as the national safety net platform.

24. Results Framework. The Results Framework has been reviewed and revised to reflect

the expanded scope of the project (see Annex 1 for further details). The following would be the

revised outcome indicators for the project:

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Percentage of disbursed BISP cash transfers received by beneficiaries1 in the bottom

quintiles 1 and 2 (revised);

Number of households 2 to which the poverty scorecard has been applied (original);

Percentage of participating districts in which beneficiary lists are publicly available at the

respective BISP tehsil offices (revised);

Percentage of beneficiaries satisfied with program implementation (original);

Integrated Monitoring System for Federal and Provincial Social Protection Programs

established and used for policy dialogue (new);

Number of paid BISP beneficiaries eligible under the Poverty Score Card (new); and

Number of children by gender attending school under the Waseela-e-Taleem (new).

B. Project Components and Costs

25. To achieve the above objective, the project will retain the four original components,

but will now include revised and additional activities under Components 1, 2 and 3. The revised

component descriptions and costs are as follows:

26. Component 1: Establishment of a National Targeting System and Expanding

Coverage of Basic Safety Net System (Original US$34.6 million + additional IDA Credit of

US$31.5 million and potential DFID co-financing of US$59 million): This component is

renamed from ―Establishment of a National Targeting System‖ to the above suggested title. The

original Component 1 supported the finalization of targeting design and national roll out of the

targeting system. This was based on lessons learnt from the targeting test phase started in March

2009 under a DFID trust fund managed by the Bank. The component included the finalization of

the data collection with the poverty scorecard at the national level, the data processing and cross-

checking with existing data bases as needed, the administration of targeting appeals, as well as

the maintenance of the data base. To date, the targeting system has been largely completed, as

evidenced by the outsourcing of the national PSC survey and printing of the targeting materials.

27. The component will be restructured to add support for the expanded coverage of

BISP’s basic income support program in accordance with the program’s operational

manual. The PSC cut-off point was originally estimated to result in approximately 5 million

beneficiary families. However, completion of the surveying and targeting has found that there

are 7 million eligible families. This has presented the GoP with a fiscal constraint, given that

BISP allocations were based on lower estimated numbers. Tight fiscal space, combined with the

impacts of the food-fuel and financial crises and the recent flood disasters, makes the need for

external support all the more pressing. The additional TA provided for this component will

cover additional costs for data processing and analysis.

1 Beneficiaries are defined as families eligible to receive the cash transfers. The payment for the family is made to

the female head of the family (mother). 2 The Poverty Scorecard is applied to the household, not the family. There can be several families in a household.

8

The financing of cash transfers to eligible beneficiary families will be based on the achievement

of DLIs (see Annex 1) to ensure national coverage of BISP for all eligible beneficiaries as

follows:

A.1: BISP covers at least 3.5 million families eligible under the Poverty Scorecard (PSC)

A.2: BISP covers at least 4.3 million families eligible under the PSC

A.3: BISP covers at least 5.0 million families eligible under the PSC

A.4: BISP covers at least 5.5 million families eligible under the PSC

DLIs A are subject to the Disbursement Condition: Basic Cash Transfer MIS is fully functional.

28. Component 2: Strengthening Safety Net Operations (Original US$12.9 million +

additional IDA Credit of US$97.5 million and potential DFID co-financing of US$37 million).

The original Component 2 provided support for BISP to operate the program smoothly and

transparently at the central, provincial and local levels. This supported the development and the

implementation of a communications strategy and grievance redressal for cash transfers,

strengthening of mechanisms for payment and reconciliation, the establishment of field offices as

well as the implementation of monitoring and social accountability mechanisms. The project also

supported the engagement of technical support for design and documentation of the case

management and payment delivery systems, including support in developing alternative payment

mechanisms. The support under the component was also utilized in setting up and

operationalizing the BISP office.

29. Under the AF, this component will be expanded to build on progress made to date, and to

expand the focus of safety net operations towards the introduction of a CCT component3. BISP

intends to provide all beneficiary families with primary school children ages 5-12 years, a benefit

with two components: a base transfer of PRs. 1000 (US$12) and a conditional transfer of PRs.

200 (US$1.80) per month for each child attending primary school (public or private4), up to a

maximum of PRs. 600 for three or more children in the specified age range. The benefit per

child will accrue to a BISP beneficiary family for a maximum of 5 years; also an upper age limit

has been set at 8 years for admission in Grade 1 – in alignment with government policy on

admissions. The co-responsibility to receive the conditional transfer is that all children of the

specified age range of the family must be enrolled in school and attending at least 70% of school

days. If a child has completed five years of primary schooling they will no longer be considered

under Waseela-e-Taleem.

30. The additional activities to be covered under the revised component will include technical

support for the detailed design and implementation of the CCT program. These adjustments, a

continuation of the existing support, will require additional resources because of the scope of the

expansion. The component will also provide resources for designing, testing and rolling out

social mobilization activities for the BISP beneficiary families to establish a social network at the

grass root level. Furthermore, a critical part will be to enhance support for the implementation of

3 In the original TA Project Component 3 included provisions for pilot programs, including a possible CCT.

Evolving from these discussions, the proposed primary education co-responsibility cash transfer (CCT) has been

devised. 4 Private will also include NGO run/managed schools; only those private schools that are formally registered with

the government will be included in Waseela-e-Taleem.

9

a communications strategy focused on the requirements of the CCT program. It will be

integrated into the CCT operations cycle and customized to support the relevant implementation

stages for maximum results. This would entail public information campaigns for CCT, printing

of information materials for beneficiaries and other stakeholders involved in the implementation,

trainings to staff and implementation partners on communications, training of BISP beneficiaries

concerning compliance requirements of Waseela-e-Taleem etc. To further strengthen the quality

of BISP‘s service delivery, particularly at the local level, the project will also support BISP in

strengthening its tehsil offices.

31. The financing of co-responsibility cash transfers to eligible beneficiary families will

be based on the achievement of DLIs related to the testing and expansion of co-

responsibilities related to primary education for eligible families as follows:

B.1: At least 50% of CCT eligible beneficiaries in 4 districts are enrolled in Waseela-e-

Taleem;

B.2: At least 500,000 of existing BISP beneficiaries are enrolled and paid in accordance with

their co-responsibility;

B.3: At least 1 million of existing BISP beneficiaries are enrolled and paid in accordance

with their co-responsibility;

B.4: At least 1.5 million children of existing BISP beneficiary families are attending school,

are monitored, and the respective families are paid in accordance with their co-responsibility;

B.5: At least 3 million children of existing BISP beneficiary families are attending school,

are monitored, and paid in accordance with their co-responsibility.

DLIs B are subject to the Disbursement Condition: MIS for CCTs is fully functional.

32. The DLIs related to the strengthening of overall BISP social service delivery are:

C.1: A technology based grievance system for CCTs is functional and applied in at least 4

districts;

C.2: BISP CCT beneficiary social mobilization plan tested and national roll out plan agreed

on;

C.3: At any point after July 1, 2013, 50% of BISP beneficiaries understand the basic program

design (CT + CCT);

C.4: At any point after July 1, 2013, 70% of grievances and appeals attended and resolved

through technology based systems.

33. Dated Covenants: Technology based grievance system for basic cash transfer

implemented in at least 80% of the districts.

34. Component 3: Enhance Safety Net Program Management, Accountability, and

Evaluation (Original US$10.8 million + additional IDA Credit of US$21 million and potential

DFID co-financing of US$9 million). This component covered costs associated with technical

support required for the development of the MIS requirements and designing of MIS module.

The component also covered outsourcing the services for third party Spot Check and Process

Evaluation for the targeting, data processing, payment, and case management systems. The

component also assisted in the design of the Impact Evaluation and provided resources for

10

engagement of a firm for collecting the baseline for the program. Most of human resource costs

covered under the TA have been financed through this component.

35. The proposed AF will enhance management and governance of BISP by ensuring a fully

functional MIS down to the local office level that will facilitate local information sharing with

the public as well grievance management. While the program has a manual grievance redressal

system currently; the AF will support updating the program‘s grievance redressal system to

enable the BISP‘s local offices at the tehsil level to efficiently handle a variety of grievances

through a robust Management Information System (MIS). The grievance management module

of the MIS has already been tested and is ready for implementation. The technology-based

grievance redressal and electronic payments will be rolled-out to 80% of the districts nation-wide

with support of the AF. These elements play a critical role in advancing greater transparency

and accountability. The MIS will be significantly expanded to reflect the CCT cycle including

the additional modules and applications for enrollment, compliance monitoring, payments and

grievance redressal. The AF will also support BISP in taking the pilots of technology based

payments to scale for enhanced transparency and accountability. The cutting-edge use of IT in

the establishment of the PSC database promotes transparency, accountability and governance and

has created a robust source of information that can be used by other agencies in accordance with

the established data sharing protocols. The AF will help BISP in making this database user-

friendly.

36. In addition to the initial two rounds of measurements of the Impact Evaluation originally

envisaged, under this Component, the AF will cover the cost for an additional round of

measurement, as well as the revised scope of the evaluation to include CCTs and help to make

public the results of the BISP evaluation for both future policy making and to foster sustained

public support for the safety net program. Furthermore, Spot Checks and Process Evaluations

will be expanded over time and scope as well. The revised scope will specifically look into the

enrollment, compliance monitoring and related grievance systems designed for the CCT. The

component will continue to support the costs of BISP‘s additional human resource requirements

for the duration of the AF project including those after the review of the staffing needs (see

paragraph 41: Implementation Arrangements).

37. To strengthen transparency and accountability of the safety net system, the

following DLIs will be supported under this component:

D.1: BISP has publicized the PSC data sharing protocol and shared with at least 2 entities

accordingly;

D.2: 40% of payments to BISP beneficiaries are made through technology based

mechanisms;

D.3: 70% of payments to BISP beneficiaries are made through technology based

mechanisms.

Dated Covenants a) The BISP Board has approved and implemented a Staff Performance

Management System satisfactory to the Association; b) BISP has publicized on its website the

impact evaluation reports of the Basic Cash Transfer and the Waseela-e-Taleem program, within

four months of each survey.

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38. Component 4: Developing the Social Protection Policy and Strategy Monitoring

(US$1.7 million). As originally planned, this component would support the design of the

institutional and legal framework for the execution of the National Social Protection Policy

(NSPP) and design and implement a MIS based monitoring mechanism for Federal and

Provincial social protection programs. It would provide training and capacity building for policy

makers and implementing agencies in social protection policy and program implementation.

These planned activities will continue as envisioned, with an enhanced focus on collaboration

and harmonization of federal with provincial social safety net interventions in light of the

country‘s devolution of key sectors, including health and education. A Technical Advisory

Committee comprised of renowned economists/academics and GoP representatives will guide

the work and also facilitate the national policy dialogue.

C. Change of Lending Instrument

39. The lending instrument under the proposed AF will be an SIL and will use a results-

based financing mechanism – Disbursement Linked Indicators (DLIs). The areas covered

by the DLIs are listed in Annex 1 and noted in component descriptions above and in Annex 3. It

is important to note that the projected timing and the associated disbursement projections are

indicative. The DLIs have been defined and calibrated under target years, but some of them are

―floating‖ DLIs (i.e. their timing is not fixed) whereas others are expected to be achieved within

the nominated fiscal year (i.e. DLIs A related to the expansion of the cash transfers).

Disbursements would be made upon verified achievement of the specified DLIs during the

implementation period, with semi-annual reviews of progress. All DLIs can be achieved

independently of each other. The DLIs will be used to disburse the proposed DFID co-financing

of US$105 and US$140 million of Bank financing. The additional US$10 million of the Bank

financing alongside the remaining $25.2 million of the original SSN TA funding will be used for

additional activities needed by BISP during the project implementation period and be disbursed

using the traditional SIL disbursement mechanism.

40. With a results-based approach using DLIs, disbursements would be linked to

defined eligible expenditure line items comprising the Eligible Expenditure Programs

(EEPs) within the Government‘s Program. The EEP of the proposed AF would include two

targeted cash benefit programs: the eligible families covered by BISP basic cash transfer

program and CCT cash grants. The total amount of EEPs to be financed under the AF will be

US$140 million (IDA) and tentatively DFID US$ 105 million). The amounts to be disbursed per

DLI by IDA and tentatively by DFID are specified in the DLI matrix. The revised project costs

by component are detailed in Annex 4.

D. Extension of the Closing Date. In order to implement the proposed additional activities,

a two years and eleven months‘ extension of the closing date of the original project, until June

30th

, 2016 is required.

E. Change in Project Name. Given the extended scope of the proposed activities under the

AF, the project name is revised from the Social Safety Net TA Project to the Social Safety Net

Project.

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F. Implementation Arrangements

41. The program will be implemented through the support of a Project Management Unit

(PMU) headed by a qualified Project Manager with adequate support in terms of resources

provided through the TA. The Project Manager shall report to the Secretary BISP and will have

qualified staff that will assist him in performing his responsibilities which will include, inter alia,

designing, monitoring and evaluating the Project, as well as facilitating the carrying out of

financial management, procurement and reporting activities of the Operations Wing. DG

Operations, as the Project Director, will be in charge for implementation of the Project and shall

be provided qualified technical staff to carry out his responsibilities. Project Manager shall

provide support to DG Operations through the PMU to ensure quality of implementation.

42. BISP‘s institutional structure for operating the cash transfers is currently being reviewed

by BISP management in light of shifting needs with the completion of the PSC survey and

emerging requirements for CCTs. This exercise will likely result in institutional changes of the

Operations Wing. The action plan for these changes will be agreed with the Bank, including the

AF project support to implement these changes. Implementation arrangements for Procurement

and Financial Management will largely remain, but capacity strengthening will be required in

these areas in the implementation of the cash transfer program. The AF will invest to set up a

staff performance management system in BISP and a complementary capacity building plan to

build staff capacity and performance to high standards – as recommended by an external

Institutional Assessment of BISP completed in January 2011. BISP tehsil level staff will be

trained to cater to communications, social mobilization and grievance management requirements

at the local level.

43. The implementation of the CT program is guided by the BISP Operational Manual

approved by the BISP Management Board. The additions needed for the CCT will also be

approved by the Board once they are finalized. Since the Operational Manual needs to be a

living document, it will be refined during implementation in accordance with program progress

and experience. The Operations Manual will cover the complete program cycle for the CCT

program, including: communications, enrollment, compliance monitoring, payments, social

mobilization, and grievance redressal. The role of communications in the CCT program is

closely integrated with every stage of the program cycle, and will initiate the project

implementation process for timely information to the BISP beneficiaries about the program and

compliance requirements to qualify for additional cash benefit of PRs. 200 per child up to PRs.

600 for three children or more ages 5-12 years. Communications will also contribute to the

enrollment process, and later in the compliance monitoring, payments and grievances.

Communications and Social Mobilization in many instances will target common issues, using

distinct media and approaches for maximum affect. For more details, see Annex 5.

44. Overall the implementation approach for the CCT program will be a combination of

centralized ownership and decentralized implementation. The core program design, key CCT

parameters and implementation processes and procedures will be determined by BISP. The

Provincial Education Departments will be responsible for the implementation, pertaining to

school admissions, compliance monitoring, verification and reporting of co-responsibility by

BISP beneficiaries. To ensure smooth roll-out of the program, implementing partner

organizations will support both BISP and Provincial Education Departments in the

13

implementation of dedicated processes of CCT operation cycles, especially in terms of social

mobilization and enrollment processes.

45. The semi-decentralized implementation approach has been especially adopted keeping in

view the post 18th

Amendment, to give more ownership of the program to the provincial

implementing partners. Provincial Education Departments are the main stakeholder of education

in the provinces. BISP will enter into formal agreements with the Provincial Education

Departments who will be responsible for issuing necessary guidelines to the District Education

Departments (DEDs) and to participating schools to carry out the activities needed for the

implementation of the program design that involve the Education Department in respective

districts. BISP and DEDs will undertake a supply capacity assessment in participating districts,

and based on the results of the assessment, ensure that the required facilities and capacity of the

education staff involved is in place. Moreover, the decentralized implementation approach

further involves the BISP tehsil offices to directly work with the DEDs to generate and finalize

compliance reports, and extend monitoring and implementation support.

IV. APPRAISAL SUMMARY

A. Economic and Financial Analysis

Fiscal implications of BISP expansion

46. The Government set the benefit amount for BISP at PRs. 1000 per month per family in

the second half of 2008, which corresponded to about US$12 at the time, with the ultimate

objective of covering 5 million families in the medium term - about 18.7% of the population.

The 2008/09 budget allocation of PRs. 34 billion to BISP doubled the federal Government‘s

social safety net spending from 0.3% in 2003/04 to 0.6 percent of GDP. The safety net spending

is expected to stabilize at around 1% of GDP in the medium term, which is roughly the average

amount that developing countries with similar GDP per capita as Pakistan allocate for safety

nets.

47. This coverage goal is also reflected in the DLI matrix in year 2, and with year 5 goal of

BISP coverage being at least 6 million families. To date, however, no adjustments have been

made to the per-family benefit amount even though the Federal Bureau of Statistics data reveal

that consumer price index increased by 13.6% in 2009 and a further 13.4% in 2010. This means

that the present Cash Transfer (CT) is worth only 75% of the original benefit amount in real

terms. With the introduction of the Co-responsibility Cash Transfer (CCT) benefit, the total

benefit amount per family could go up to PRs. 1600 for those BISP families who have more than

two children in the primary school age group that attend school regularly. The DLI matrix

envisages (at least) 500,000 BISP beneficiaries to be enrolled and paid in accordance with the

CCT co-responsibility by year 2. Even if we assume no further inflation until FY12/13 and that

all these 500,000 families were paid at the maximum amount of PRs. 1600 and 4.3 million

families paid at the PRs. 1000 level, the total expenditures would correspond to 74.5 percent of

the total transfer amount at real (2008) PRs. 1000 per family level. As a result, with the gradual

introduction of the CCT, the Government would - in real terms - keep the benefit amount only

slightly above the original (2008) program benefit amount for those families who comply with

their co-responsibilities, without increasing the program budget allocation.

14

48. Fiscal sustainability. The availability of the poverty scorecard database can potentially

lead to more efficient use of resources, to the extent that provincial government utilize this

information source to better target and coordinate their social programs (including those that

facilitate the poor households to graduate from poverty). The presence of a well-targeted,

administered and monitored safety net program would allow the Government to reduce price

subsidies on wheat, power etc., which in turn would assist with the safety-net funding

requirements in the future. Such price subsidies are significant, for example wheat price subsidy

alone made up 0.14 percent of GDP in 20065.

B. Technical

49. The Poverty Score Card (PSC) instrument for targeting of BISP beneficiaries that was

developed and applied at the national level, with the support of the original project, now exists in

the form of a database. Given the national and cross sectoral value of the PSC survey data base,

the AF will promote sharing of this information through defined protocols; and thereby conform

to the international best practice, and also inch closer to the government‘s social protection

reform agenda of adoption of a common targeting instrument. The original project has

facilitated the development of a grievance management system, which the AF will further

advance by introducing an MIS based grievance management system that will function up from

the tehsil level. Also, the technology based payment instruments tested under the SSN TA

Project will be taken to scale over the project period.

C. Financial Management

50. The project will be managed and implemented by BISP which is a statutory body with an

independent Management Board comprising equal representation from government and private

sector. BISP has independent financial management arrangements but is subject to government

budgetary systems controls and external audit oversight by the Auditor General of Pakistan.

BISP has been implementing the existing SSN TA project and its financial management

performance, including submission of financial reports and audit reports, has been moderately

satisfactory.

51. An assessment of BISP‘s financial management arrangements, funds flows and

disbursement arrangements has been completed for this proposed project. BISP is adequately

staffed and has well documented institutional arrangements and operational procedures. The

proposed budgeting, funds flow, accounting, internal control, and financial reporting systems and

audit arrangements, together with strengthening measures, are considered adequate for the

operation. Measures to enhance and strengthen the management information systems, key

internal payment controls and systems and internal audit scope have been discussed and agreed

with BISP.

52. A performance audit of BISP is being commissioned to review the economy, efficiency,

and effectiveness of BISP‘s internal processes and systems including financial management.

Implementation of the performance audit recommendations will be undertaken within six months

5 More recent estimates of price subsidies are unavailable.

15

of effectiveness of the project. A further performance audit will be carried out around mid-term

of the project.

53. The project will finance DLIs through reimbursing eligible expenditures of BISP as well

as financing goods, technical assistance services, training and incremental operating costs.

Disbursement will be made semi-annually against achievement and after verification of DLIs.

The DLI related reimbursements will be made to the Federal Consolidated Fund for transfer to

BISP‘s Assignment Account within ten working days. Bank guidelines on Investment Lending

require that disbursement take place against an activity that is eligible for Bank financing. The

EEPs (eligible expenditure programs) for this project will be the BISP Basic Cash Transfers and

the Co-responsibility Cash Transfer (―Waseela-e-Taleem‖) Program which the DLIs would fund.

EEP amounts would be reported in the audited financial statements of BISP. Retroactive

financing will be available for eligible expenditures under Category 1 and 3, incurred after July

1, 2011, to a maximum aggregate of 20% of the loan amount. For specific project inputs the

existing project disbursement arrangements will be used with reimbursement of eligible

expenditures on a semi-annual basis based on IFRs. Advances may be made to the Designated

Account if required.

54. BISP‘s annual financial statements will be audited by the Auditor General‘s Office and

the audit report will be submitted to the Bank. The annual audit will make use of internal and

performance audit reports to enhance the coverage and quality of the external audit. Further

information on the FM and Disbursement arrangements are in Annex 7.

D. Procurement

55. BISP is an evolving organization and the Bank‘s past experience with procurement under

SSN TA stresses the need to further strengthen BISP‘s procurement system to ensure it is robust

and transparent. There is also a need to standardize BISP internal operating procedures and to

ensure effective contract and complaint management. The placement of procurement functions

with adequate capacity and skills within overall organizational structure is also a vital element to

ensuring BISP develops an effective procurement system.

56. In order to strengthen the institution‘s procurement capacity and improve overall

procurement management, the Bank team is working with BISP to revise the procurement

manual. To verify and monitor the BISP procurement system according to the Standard

Operating Procedures (SOPs) defined in the procurement manual, the requirement of conducting

a periodic third party procurement performance review could be included as part of the overall

BISP performance audit presently under way.

57. Procurement under the proposed AF, e.g. for technical assistance, hiring of Services for

training, communications, development of MIS, spot check and process evaluation, impact

evaluation, social mobilization etc. and Goods like printing material, office equipment,

computers, photocopiers, printers, motorcycles for compliance monitoring and coordination, air-

conditioning etc., will be carried out in accordance with the World Bank‘s ―Guidelines:

Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA

Credits & Grants‖, dated January 2011 and ―Guidelines: Selection and Employment of

Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers‖, January

2011.

16

58. BISP has submitted a Procurement Plan for Goods and Services. No works are included.

E. Environmental and Social (including safeguards)

59. As the original project, the proposed AF operation is classified as a category ‘C’

project. The AF does not include any civil works since the BISP program is an income support

program through cash transfers. Hence, the project is not expected to have any negative

environmental effects.

60. The potential positive social effects of the project are expected to be significant. The

project design relies on international experience, as well as findings from various analytic

background papers prepared for the draft social safety net report under preparation by the World

Bank6 and results of the impact evaluation of a CCT pilot (the Child Support Program)

implemented by Pakistan Bait-ul-Mal under the Ministry of Social Welfare.

61. The Gender disparities in education start early. The gender gap in enrollment rates,

even after some recent decline, remains one of the largest in the developing world. For primary

school in Pakistan, the Net Attendance Ratio (NAR) is 66.2%, comprising 69.8% for boys and

62.2% for girls7. The linkage between school attendance and poverty is extremely strong, as is

the gender disparity, with the NAR for the lowest wealth quintile being 41.5% with boys 49.2%

and girls 32.2%. The Poverty Score Card survey data (2011) reports a worse situation: 71% of

the children aged 5-12 years from the BISP beneficiary households do not attend school; this

translates in to 67.4% for males and 74.5% for females. Further, the linkage between school

enrollments and poverty score is extremely strong. The 2007 Time Use Survey reveals that

many of the poorest children carry out some work at home (almost 90% of poorest girls and 20%

of the poorest boys helping with domestic work) or undertake market work (almost half of both

poorest boys and girls reporting some time spent on this activity), while child labor is basically

non-existent among higher income households.

62. These trends are consistent with the findings of the evaluation of Pakistan Bait-ul-

Mal’s pilot conditional cash transfer program8. A beneficiary survey inquiring about

difficulties in meeting Child Support Program (CSP) school attendance conditions revealed

―need child to help with work at home‖ as the number one reason for non-compliance (75% of

respondents). One of the remaining three most often mentioned reasons also had to do with child

labor. Over 36% of respondents indicated that they need the child to help on the farm during the

peak season. Finally, 66% of respondents expressed the need to escort their child to school (not

possible during peak agricultural season) and 38% complained about the distance to school.

6 Social Safety Nets in Pakistan. Protecting and Empowering Poor and Vulnerable Households. Manuscript, World

Bank, 2011. 7 Pakistan Demographic and Health Survey, 2006-07, National Institute of Population Studies, June 2008. The

Gross Attendance Rates (GAR) for primary school are male:106.3% and female:89.4%, while the figures for the

lowest wealth quintile are male:76.8% and female:49.9%. GAR is the total number of primary school students,

expressed as a percentage of the official primary-school-age population. 8 The Child Support Program (CSP) implementation started at 2007, aiming to increase the school enrollments of

poor children between the ages 5 to12 years old. The participating children would need to enroll in school and

maintain regular attendance. The benefit amount for the pilot program was small at Rs. 300 to Rs. 500 quarterly,

depending on the number of children in the relevant age group. The program was not explicitly poverty targeted.

Despite the small benefit amount, the CSP pilot led to 11.65 percentage points increase in school enrolments.

17

63. International experiences suggests that cash transfers have positive development

impacts leading to increased spending on health, education, food security, and economic

investment, as was the case in Ethiopia‘s PSNP APL III, and Argentina‘s Basic Social

Protection Project. Cash transfers maximize individual choice, maintain beneficiaries‘ dignity

and empower beneficiaries while reducing market distortions. Usually, beneficiaries are using

their grants for productive ends, for example to improve nutrition, for medical care, debt

payments, livelihoods etc. Furthermore, as entrance into BISP requires a CNIC card, more than

15 million women have registered and now have the potential to access important services such

as banking as well as the ability to vote. This is also considered a productive effect of the

program.

64. From the analytical work in Pakistan, several findings are imperative for discussing

potential social and economic effects of the project. First, poverty rates remain significant in

Pakistan and the BISP cash transfer provides significant relief to the poorest households. The

2009, the BISP survey reveals that the beneficiaries spent BISP assistance on the most basic and

pressing needs. About 32% of the beneficiaries report spending the cash transfers on basic food

items, followed by medical expenses (23%), debt payments (10%), and clothes (7%). Spending

on children's education accounts for only 5 percent of the transferred amount in the overall

sample, although urban households spend a greater proportion of their benefits on education than

rural households (9% versus 4%). About 3% of the transfers went to savings. Thus, while the

base transfer amount provides valuable support to poor households, its impact on the schooling

outcomes of children may be limited. Second, Pakistani households are also vulnerable to a

large range of shocks. An analysis of the 2008-2010 PSLM panel data sets reveal that 9.6% of

Pakistani households experienced at least one aggregate shock such as a drought, flood,

earthquake, landslide, crop disease, livestock epidemic, fire, and/or conflict/displacement.

Households which reported having experienced a health shock, such as illness or death of a

household member represent 18.7%. Another 6.1% of households reported having experienced at

least one idiosyncratic shock other than a health shock, such as theft, unemployment, divorce,

reduced remittances, and/or violence. The poor households are more likely to experience shocks

in general, and their recovery from a shock is slower than non-poor households. Also,

decreasing education related expenses is among the top five coping mechanisms in the face of

crisis, with switching to lower quality or cheaper food, reducing quantity of food intake,

decreasing non-food expenditures and spending savings.

65. Thus, the introduction of CCTs for the BISP beneficiaries is expected to sufficiently

incentivize poor families to send their children to primary school. The impact evaluation of

the CSP reported increase the enrollment rates of poor children between ages 5 and 12 resulted in

an 11.7 percentage point increase in enrollment.9 Even though the program did not distinguish

between male and female children, the program‘s impact was larger for female enrollment rates

at 13.7 percentage points when compared to the increase in males‘ enrollment rates at 9.1

percentage points.

66. Based on the experience of the PBM implemented pilot CCT program, the female

enrollment rates can be expected to increase more than males, although gender effects of the

9 Based on an analysis of impact evaluation survey data, implemented before and after program implementation in

intervention and control districts.

18

program would need to be monitored and based on the findings appropriate design adjustments

(such as providing larger cash transfers for the school attendance of female children) can be

considered. As the children spend more time in school they can also be expected to spend less

time working, either doing housework or participating in market work. However, the impact of

the program on poor children‘s labor would also need to be assessed, since the pilot CCT

evaluation results suggest that if the benefit amount is too small then the poorest households,

who rely significantly on their children‘s labor, may not participate in the program. Since the

overall BISP benefit package is significantly larger than that offered during the pilot CCT

evaluation, this issue is not expected to be as prevalent during the implementation of the new

program.

67. As a result, the proposed addition to the BISP cash transfer would provide invaluable

additional support to the poorest households since it complements the way the beneficiaries

spend the income support and it reduces detrimental effects of crisis/shocks on children‘s

schooling. The effectiveness of such CCTs is already demonstrated in Pakistan, including

positive effects to reduce gender gap in school enrollments. The collaboration between

schools/teachers, provincial as well as federal authorities may also have positive externalities in

the way the community functions, although it may be difficult to document such effects.

F. Monitoring and Evaluation

68. The BISP Program monitoring consists of a broad set of measures designed to provide

timely and accurate information on program implementation. The program will have robust

internal monitoring systems put in place to provide oversight to the CCT program as well as

external third party monitoring mechanisms.

69. For the internal monitoring systems being developed at BISP, to ensure effective and

efficient implementation, the most crucial element is a comprehensive Management Information

System (MIS) that is presently being updated by BISP to include the necessary modules for the

CCT. In addition, to having a strengthened MIS capacity, BISP will be establishing a dedicated

M&E unit to support the monitoring of its programs. This will be complemented by a

computerized appeals and complaints system and social accountability mechanisms. In terms of

monitoring for the CCT component, school admission‘s related information for the children of

CCT beneficiaries will be done on the basis of data entry admission cards, which will be verified

by the school staff and then handed over to BISP tehsil offices, via collection and delivery

agents. The BISP tehsil offices will also coordinate with the provincial education departments to

obtain the related co-responsibility monitoring data related to children‘s schooling. The BISP

tehsil offices will additionally monitor all processes of CCT program implementation and

provide this data to the BISP regional and national office teams. To enable BISP to undertake

this extensive monitoring role effectively, BISP shall strengthen its capacity at the national

offices to undertake field supervisory missions, enhance M&E reporting mechanisms and further

strengthen the MIS modules for efficient monitoring of enrollments, compliance, payments and

grievances.

70. As described in the original SSN TA project document, the monitoring system also

encompasses a number of third party assessments including Spot Checks and continuous Process

Evaluations. In addition, financed by DFID funds, the Bank is in the process of contracting a

19

BISP Performance Audit that would look at the efficiency and effectiveness of BISP institutional

processes and procedures including fiduciary aspects. Finally, several beneficiary assessments

(for example, related to their experience with electronic payments, communications, etc.) are

planned to be carried out to continuously learn how the program is working for the beneficiary

families.

71. An Impact Evaluation has been planned and the baseline survey already undertaken for

the BISP cash transfer program. It will assess the impact of transfers on the socio-economic

condition of the beneficiary families, and the allocation of the additional income among

education, food, health and other expenses. This study will be adapted (expanded and extended)

to also assess the impact of transfers on enrollment and school attendance of children between 5

and 12 years old supported under the CCT. A report on the impact evaluation findings is

expected to be available after each follow-up survey. This is a dated covenant.

G. Risks, Governance, and Accountability

72. The overall original risk for the SSN TA project was estimated as ‗Substantial‘ given the

volatile country context, the newly created implementing agency, the program‘s initial design

and potential resistance to the institutional changes proposed by the project. This risk rating is

likely to remain valid for AF. Some issues and risks have been identified and addressed during

the implementation, and the revised Operational Risk Assessment Framework (ORAF) has been

reviewed and agreed on with the GoP/BISP. The additional activities that will be supported by

the AF are essentially to take the safety net support into a second phase of implementation which

is critical for improving service quality and sustainability of BISP, while the benefits will largely

accrue over the medium term.

73. The administrative capacity of BISP is adequate to carry out the proposed activities, but

sustained collaboration and effort will be required from the Provincial Education Departments

which have the primary responsibility for education supply side service delivery and school

attendance monitoring, crucial for compliance monitoring of beneficiaries‘ co-responsibilities.

Managing this will require strong ex-ante communication and collaboration from BISP with the

provincial governments on the expected stream of benefits, and roles and responsibilities in the

implementation to the broad set of stakeholders – including the target beneficiaries. The Bank

therefore asked BISP management to enter into collaboration agreements with at least three

provinces/regions. By negotiations, BISP had already signed a Memorandum of Understanding

(MoU) with four provinces/regions. The MoUs provides the framework for collaboration and

define the roles and responsibilities of BISP and the provincial/regional Education Departments.

The remaining provinces/regions will be required to enter into similar MoUs during project

implementation prior to the disbursement of funds for Waseela-e-Taleem activities in these

provinces/regions.

ANNEX 1: RESULTS FRAMEWORK AND MONITORING

PAKISTAN: Additional Financing for the Social Safety Net Project

Revisions to the Results Framework Comments/

Rationale for Change

PDO

Current (PAD) Proposed change

Enhance the operation and

management of a nationwide

effective and transparent safety

net system for the poor in

Pakistan

Support the expansion and

strengthen the administration

and performance of the

country‘s safety net with

particular focus on the BISP

program as the national safety

net platform

PDO indicators

Current (PAD) Proposed change*

Percentage of disbursed BISP

cash transfers received by

beneficiaries in quintiles 1 and

2 (40 percent poorer

households)

Percentage of disbursed cash

transfers received by

beneficiaries in bottom

quintiles 1 and 2

Revised: Quintiles 1 and 2 are the poorest

40 percent of the population, as measured

by the household consumption. Therefore,

no need to mention the percentage in

indicator

Number of households to

which the poverty scorecard

has been applied

Continued.

Percentage of participating

districts in which beneficiary

lists are publicly available

Percentage of participating

tehsils in which beneficiary

lists are publicly available at

the respective BISP tehsil

offices.

Revised: For greater specificity the

location of tehsil Offices has been added

Percentage of beneficiaries

satisfied with program

implementation

Continued.

Sensitivity of selected safety

net programs to vulnerable

groups; NSPS reports that

include information on

vulnerable groups

Integrated Monitoring

Systems for Federal and

Provincial Social Protection

Programs established and

used for policy dialogue

Revised. The revised indicator reflects the

increasing importance of Provinces in the

provision of social protection mechanism,

as well as the need for greater dialogue

and collaboration between federal and

provincial agencies in light of the 18th

Amendment of the Constitution which

devolved many responsibilities to the

provinces.

Number of paid BISP

beneficiaries (Basic Cash

Transfer) eligible under the

Poverty Scorecard

New: Reflects the increase in national

coverage of BISP for all eligible

beneficiaries

Number of children attending

school under the Waseela-e-

Taleem program.

New: Reflects the remit of BISP to

promote educational access and

opportunities amongst eligible

beneficiaries.

21

Revisions to the Results Framework Comments/

Rationale for Change

Intermediate Results indicators

Current (PAD) Proposed change*

Component 1

Percentage of Districts covered

by targeting process

Continued.

Number of female beneficiaries

that receive payment

Continued.

Component 2

Number of Signed MOUs with

Provinces/Regions regarding

collaboration for Waseela-e-

Taleem

New: This indicator shows the

commitment and readiness of provinces

and regions to collaborate with BISP on

the Waseela-e-Taleem.

Percentage of grievance

redressal claims settled within

three months of application

Continued.

BISP stratified communication

campaign for Waseela-e-

Taleem is finalized and rolled

out

New: Timely and adequate

communication is crucial to the

implementation particularly of the CCTs.

This indicator provides information on its

progress of implementation.

Component 3

Percentage of BISP positions

that are filled with qualified

staff

Percentage of planned BISP

positions that are filled in

headquarters and tehsil offices

that are open.

Revised: This indicator clarifies that the

target pertains to offices that are open. .

Degree of dissemination of

BISP evaluations

Number of reports publicized

on BISP website which

disseminate the results of

impact, process and spot

check evaluations

Revised: This indicator provides

information as to what extent the results

and outcomes of BISP are shared with the

public as a measure for improved

transparency and accountability.

Number of pilots implemented

for exit strategies

Continued.

Regular operational audits and

follow up actions on the

findings

Regular spot checks and follow

up actions on the findings Revised: This indicator clarifies that spot

checks are the key operational audits

being performed semi-annually

Percentage of payments to

BISP beneficiaries made

through technology based

mechanisms

Continued

Component 4

Mapping of federal and

provincial social protection

programs completed.

New: This indicator tracks progress of

establishing the monitoring system as it

will provide the key information on

federal and provincial SP programs.

Revised NSPS approved by

Cabinet

Dropped.

Revised Project Results Framework

Project Development Objective (PDO): To strengthen the administration, performance and expansion of the country‘s safety net with particular focus on the BISP program as the national safety net platform.

PDO Level Results Indicators

Co

re

U

O

M10

Baseline

Original

Project

Start

(2009)

Progress

To Date

(June,

2011)11

Cumulative Target Values12

Frequency Data Source/

Methodology

Responsibility

for Data

Collection

Comments 2012/1

3

Year

213

2013/1

4

Year 3

2014/1

5

Year 4

2015/1

6

Year 5

Percentage of disbursed BISP cash

transfers received by beneficiaries

in quintiles 1 and 2

% 46 N/A 60 70 70 70

Annual Impact

Evaluation

reports

BISP No data yet, will be

known when baseline

survey results are

available in December

2011.

Number of households to which

the poverty scorecard has been

applied

Milli

on 0

18.3

(Original

target:

10)

22 25 26 27

Semi-

Annual

Project

Progress

Reports

BISP

Percentage of participating teshils

in which BISP beneficiary lists are

publicly available at the BISP

offices.

% 0 n/a 60 70 80 90

Semi-

Annual

Project

Progress

Reports, and

Spot Checks

BISP

Percentage of beneficiaries

satisfied with program

implementation

% n/a n/a 65 70 70 70

Bi-annual Beneficiary

Assessment

BISP

Integrated Monitoring System for

Federal and Provincial Social

Protection Programs established

and used for policy dialogue. n/a n/a

Mappi

ng of

SP

progra

ms

comple

ted

Monito

ring

system

develo

ped

and

popula

ted

Monito

ring

System

for

policy

dialog

ue

used.

Annual

Project

Progress

Reports

BISP/Planning

Commission

10

UOM = Unit of Measurement. 11

For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value. 12

Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values,

please indicate this in the indicator name and in the ―Comments‖ column. 13

Year 1 includes April 1, 2012 to June 30, 2012.

23

with

data

Number of paid BISP beneficiaries

(basic cash transfer) eligible under

the Poverty Scorecard.

Milli

on 2 3.2 4.3 5 5.5 5.5

Semi-

Annual

MIS,

Payments

Reports

BISP

Number of children by gender

attending school under the

Waseela-e-Taleem program.

Milli

on n/a n/a 1.5 3 3

Semi-

Annual MIS BISP

Beneficiaries14

: Program

beneficiaries (estimated number of

family members: 5)

Milli

on 10 16 21.5 26.5 30 30

Semi-

Annual

MIS,

Payments

Reports

BISP

Intermediate Results and Indicators

Intermediate Results Indicators

Co

re

Unit of

Measu

rement

Baseline

Original

Project

Start

(2009)

Progres

s To

Date

(2011)

Target Values

Frequency Data Source/

Methodology

Responsibility

for Data

Collection

Comments 2012/13

Year 2

2013/14

Year 3

2014/15

Year 4

2015/16

Year 5

Intermediate Result 1: Component One - Establishment of a National Targeting System and Expanding Coverage of Basic Safety-Net System

Percentage of Districts covered by

targeting process % 5 60 85 90 90 90

Semi-

Annual,

Project

Progress

Report

BISP

Number of female beneficiaries

that receive payment Millio

n 2 3.2 4.3 5 5.5 5.5

Semi-

Annual

Project

Progress

Reports

BISP

Intermediate Result 2: Component Two- Strengthening Safety Net Operations

Number of signed MOUs with

provinces/regions regarding

collaboration for Waseela-e-

Taleem

Numbe

r n/a n/a 3 4 5 6

Semi-

Annual

Project

Progress

Report

BISP

Percentage of grievance redressal

claims settled within three months

of application % n/a 30 40 50 60 70

Semi-

Annual

Project

Progress

Reports,

Spot Checks

BISP

BISP stratified communication

campaign for Waseela-e-Taleem is X n/a Communi

cations

Roll-

out

Campai

gn roll-

Campai

gn roll-

Campai

gn roll-

Semi-

Annual

Project

Progress

BISP

14

All projects are encouraged to identify and measure the number of project beneficiaries. The adoption and reporting on this indicator is required for investment projects which

have an approval date of July 1, 2009 or later (for additional guidance – please see http://coreindicators).

24

Intermediate Results and Indicators

Intermediate Results Indicators

Co

re

Unit of

Measu

rement

Baseline

Original

Project

Start

(2009)

Progres

s To

Date

(2011)

Target Values

Frequency Data Source/

Methodology

Responsibility

for Data

Collection

Comments 2012/13

Year 2

2013/14

Year 3

2014/15

Year 4

2015/16

Year 5

finalized and rolled out strategy

drafted

plan is

drafted

and

tested

out in

all

participa

ting

districts

out in

all

particip

ating

districts

out in

all

particip

ating

districts

Reports

Intermediate Result 3: Component Three- Enhance Safety Net Program Management, Accountability, and Evaluation

Percentage of planned BISP

positions that are filled in

headquarters and tehsil offices that

are open.

% n/a

80 (BISP

HQ,

Reg‘nal &

Division);

70 (tehsil)

75 80 80 80

Annual Progress

Monitoring

BISP

Number of reports published on

BISP website which disseminate

the results of impact, process and

spot check evaluations

Number n/a 4 6 8 10 12

Semi-

Annual

BISP

website

BISP

Number of pilots implemented for

exit strategies Number n/a 1 1 2 2 2

Annual Project

Progress

Reports

BISP

Regular spot checks and follow up

actions on the findings Number 1 2 2 2 2 2

Annual Project

Progress

Report

BISP Two spot checks per

year

Percentage of payments to BISP

beneficiaries made through

technology based mechanisms

% n/a 10 40 70 Semi-

Annual

MIS,

Payments

Reports

BISP,

Payment

Agencies

Intermediate Result 4: Component Four - Developing the Social Protection Policy and Strategy Monitoring

Mapping of federal and provincial

social protection programs

completed. X n/a

TOR for

Mappin

g report

develop

ed

Mappi

ng

Report

availab

le

Semi -

Annual

Project

Progress

Report

Planning

Commission/

BISP

25

Proposed Disbursement Linked Indicator (DLI) Matrix *The DFID amounts are indicative

RESULTS AREA OBJECTIVE INDICATOR

TOTAL

AMOUNT

(USD

MILLION)

TENTATIVE

DFID

AMOUNT

(USD

MILLION)

IDA AMOUNT

(USD MILLION)

(A) Increase

coverage of

national safety

net.

(Component 1)

Ensure national

coverage of

Basic Cash

Transfer for all

eligible

beneficiaries.

A.1. At any point in FY2011/12, BISP has enrolled and

paid the Basic Cash Transfer to at least 3.5 million

beneficiaries eligible under the Poverty Scorecard. 20 0 20

A.2. At any point in FY2012/13, BISP has enrolled and

paid the Basic Cash Transfer to at least 4.3 million

beneficiaries eligible under the Poverty Scorecard. 25 20 5

A.3. At any point in FY2013/14, BISP has enrolled and

paid the Basic Cash Transfer to at least 5. million

beneficiaries eligible under the Poverty Scorecard. 25 21 4

A.4. At any point in FY2014/15, BISP has enrolled and

paid the Basic Cash Transfer to at least 5.5 million

beneficiaries eligible under the Poverty Scorecard. 20 18 2

Total A: 90 59 31

(B) Introduction

of co-

responsibilitie

s for families

with primary

school-aged

children,

benefiting

from the BISP

Basic Cash

Transfer.

(Component 2)

Test and

expand a co-

responsibility

cash transfer

program

(―Waseela-e-

Taleem‖) to

promote

primary

education in

families

benefiting from

the Basic Cash

B.1. At least 50% of CCT eligible beneficiaries in 4

districts are enrolled in Waseela-e-Taleem. 15 5 10

26

RESULTS AREA OBJECTIVE INDICATOR

TOTAL

AMOUNT

(USD

MILLION)

TENTATIVE

DFID

AMOUNT

(USD

MILLION)

IDA AMOUNT

(USD MILLION)

Transfer

B.2. At least 500,000 of existing BISP beneficiaries are

enrolled and paid in accordance with their co-

responsibility. 20 12 8

B.3. At least 1 million of existing BISP beneficiaries are

enrolled and paid in accordance with their co-

responsibility. 20 12 8

B.4. At least 1.5 million children of existing BISP

beneficiary families are attending school, are monitored,

and the respective families are paid in accordance with

their co-responsibility.

30 0 30

B.5. At least 3 million children of existing BISP

beneficiary families are attending school, are monitored,

and paid in accordance with their co-responsibility. 25 0 25

Total B: 110 29 81

(C) Effective

targeting &

communicatio

ns and

outreach.

(Component 2)

Strengthen

quality of

social service

delivery

C.1.15

A technology based grievance system for CCTs is

functional and applied in at least 4 districts. 5 0 5

C.2. BISP has designed a pilot Social Mobilization Plan

for potential beneficiaries of the Waseela e Taleem

program and initiated the piloting of such Social

Mobilization Plan.

5 0 5

C.3. At any point in FY2013/14 after July 1, 2013, 50% of

BISP beneficiaries understand the basic program design

(CT + CCT) 5 4 1

15

Technology based grievance system for basic transfer in at least 80% of the districts will be a dated covenant.

27

RESULTS AREA OBJECTIVE INDICATOR

TOTAL

AMOUNT

(USD

MILLION)

TENTATIVE

DFID

AMOUNT

(USD

MILLION)

IDA AMOUNT

(USD MILLION)

C.4. At any point FY2013/14, 70% of the grievances and

appeals attended and resolved through technology based

systems

5 4 1

Total C 20 8 12

(D) Enhanced

governance &

management.

(Component 3)

Strengthen

transparency &

accountability

D.1. BISP has publicized the PSC data sharing protocol

and shared with at least 2 entities accordingly

5 0 5

D.2. 40% of payments to BISP beneficiaries (basic cash

transfers) are made through technology based mechanisms

10 3 7

D.3. 70% of payments to BISP beneficiaries (basic cash

transfers) are made through technology based

mechanisms16

10 6 4

Total D: 25 9 16

Total Amount

DLIs:

245 105 140

16

Technology based means smart card, debit card, and/or phone based payment instruments.

28

Protocol for the Proposed Disbursement Linked Indicators

Results Area DLI Target Indicator Baseline as of October

2011

Verification Protocol

DLI A:

Increased coverage of

national safety net

(Component 1)

Objective: Ensure

national coverage of Basic

Cash Transfer for all

eligible beneficiaries

A.1. At any point in FY2011/12,

BISP has enrolled and paid the

Basic Cash Transfer to at least 3.5

million beneficiaries eligible under

the Poverty Scorecard.

Payments to 3.3

million families

Definition: DLIs A1-A4 will be met when a full payment has been made

according to the operational guidelines for beneficiaries of the basic income

support program. The DLI will enable incremental increases in coverage to

a minimum of 6 million families by 2016 with information tracked

according to the payment records of the Management Information System.

Source: MIS Payments Module, Payment Record of Payment agencies.

Verification: MIS Payment Report and Payment Agency record sent to the

World Bank by BISP. A.2. At any point in FY2012/13,

BISP has enrolled and paid the

Basic Cash Transfer to at least 4.3

million beneficiaries eligible under

the Poverty Scorecard.

A.3. At any point in FY2013/14,

BISP has enrolled and paid the

Basic Cash Transfer to at least 5.0

million beneficiaries eligible under

the Poverty Scorecard.

A.4. At any point in FY2014/15,

BISP has enrolled and paid the

Basic Cash Transfer to at least 5.5

million beneficiaries eligible under

the Poverty Scorecard.

DLI B:

Introduction of Co-

responsibilities for

families with primary

school aged children,

benefiting from the BISP

Basic Cash Transfer

(Component 2)

Objective: Test and

expand a co-responsibility

cash transfer program

B.1. At least 50% of CCT eligible

beneficiaries in 4 districts are

enrolled in Waseela-e- Taleem.

0 Definition: The DLI will be met when in at least 4 districts at least 50% of

CCT eligible beneficiaries, as defined in the Operations Manual, are

enrolled (as defined in the Operations Manual) in the CCT program.

Source: MIS module capturing successful enrollment of CCT beneficiaries

Verification: MIS report sent from BISP to World Bank

B.2. At least 500,000 of existing

BISP beneficiaries are enrolled

and paid in accordance with their

co-responsibility.

0 Definition: The DLI will be met when the MIS confirms that at least

500,000 beneficiaries have received their first payment in accordance with

the enrollment protocol at any given point during FY12.

Source : MIS module capturing successful enrollment of CCT

beneficiaries. Payment agency records

Verification: MIS enrollment and payment reports and payment agency

record sent to the World Bank by BISP

B.3. At least 1 million of existing

BISP beneficiaries are enrolled

0% Definition: The DLI will be met when the MIS confirms that beneficiaries

have received 1st payment in accordance with the co-responsibility during a

29

(Waseela-e-Taleem) to

promote primary

education ineligible

families

and paid in accordance with their

co-responsibility.

given fiscal year.

Source : MIS module capturing successful enrollment of CCT

beneficiaries, Payment Record of Payment Agency. Spot check report.

Verification: MIS compliance report and Payment Record of payment

agency sent from BISP to World Bank. Spot check report.

B.4. At least 1.5 million children

of existing BISP beneficiary

families are attending school, are

monitored, and the respective

families are paid in accordance

with their co-responsibility.

0% Definition: The DLI will be met when the MIS confirms that at least at

least 1.5 million children are attending school and that the respective BISP

beneficiaries have received at least one payment in accordance with the co-

responsibility during a given fiscal year. This will require that compliance

monitoring is functioning successfully.

Source : MIS module capturing successful compliance of CCT

beneficiaries, Payment Record of Payment Agency. Third Party

Verification spot check report

Verification: MIS compliance report and Payment Record of payment

agency sent from BISP to World Bank. Spot check report

B.5. At least 3 million children of

existing BISP beneficiary families

are attending school, are

monitored, and paid in accordance

with their co-responsibility.

Definition: The DLI will be met when the MIS confirms that at least 3

million children are attending school and that the respective BISP

beneficiary families received at least one payment in accordance with the

co-responsibility during a given fiscal year. This will require that

compliance monitoring is functioning successfully.

Source : MIS module capturing successful compliance of CCT

beneficiaries, Payment Record of Payment Agency. Third Party

Verification spot check report

Verification: MIS compliance report and Payment Record of payment

agency sent from BISP to World Bank. Spot check report

DLI C: Effective

Targeting,

communications and

Outreach

(Component 2)

Results Objective: Strengthen quality of

social service delivery

C.1. A technology based grievance

system for CCTs is functional and

applied in at least 4 districts.

0 Definition: The DLI will be met when a functional, technology-based

grievance system for the CCT program is applied and functioning in at

least four districts where the CCT program is operating as defined in the

Waseela-e-Taleem operations manual.

Source: MIS Grievance Module

Verification: Process Evaluation report and/or Spot Check Report,

C.2. BISP has: (i) designed a pilot

Social Mobilization Plan for

potential beneficiaries of the

Waseela e Taleem program in a

form and substance satisfactory to

the Association; and (ii) has

initiated the piloting of such Social

Mobilization Plan

0% Definition: The DLI will be met when a BISP has developed a plan for

social mobilization for pilot of the CCT program, satisfactory to the Bank,

and its implementation has been initiated as evidenced by contracting an

entity to carry out at part of this activity.

Source: BISP implementation plan for piloting of social mobilization and

BISP procurement plan

Verification: Presentation of Social Mobilization Plan for the pilot

satisfactory to the Bank, and contract signed with qualified entity with

demonstrated expertise in social mobilization

C.3. At any point after July 1,

2013, 50% of BISP beneficiaries

Communications

Strategy in Draft

Definition: The DLI will be met when beneficiary assessment reports

shows that at least 50% of surveyed beneficiaries have basic understanding

of their CCT related rights and responsibilities. The survey will adhere to

30

understand the basic program

design (CT + CCT)

the protocol outlined in the CCT Operations Manual.

Source : Beneficiary Assessment Report, Spot Checks report.

Verification: Beneficiary Assessment Report, designed satisfactory to the

Bank, and Spot Checks report sent from BISP to World Bank

C.4. At any point after July 1,

2013, 70% of the grievances and

appeals attended and resolved

through technology based systems

0% Definition: The DLI will be met when the MIS grievance module shows

that an average of 70% of grievances and appeals have been attended to

and resolved in districts where the Waseela-e-Taleem program is operating.

Source : MIS Grievance Module, Spot Checks report

Verification: MIS report on grievances, Spot Check report is sent from

BISP to the World Bank.

DLI D: Enhanced

Governance and

Management

(Component 3)

Objective: Strengthen

transparency and

accountability

D.1. BISP has publicized the PSC

data sharing protocol and shared

with at least 2 entities accordingly

0 Definition: DLI will be met when BISP website includes information on

PSC data sharing protocol and when a Memorandum of Understanding is

signed between the BISP and at least 2 public or private entities allowing

data sharing.

Source : BISP website, and signed MoU agreements between BISP and

cooperating entities

Verification: A copy of the signed MoU will be sent from BISP to the

World Bank, alongside hyperlink outlining data sharing protocol.

D.2. 40% of payments to BISP

beneficiaries (basic cash transfers)

are made through technology

based mechanisms

10 Definition: DLI will be met when at least 40% of BISP beneficiaries

receive at least one payment through technology based mechanisms

including smart card, debit card, or phone based payment instruments.

D.3. 70% of payments to BISP

beneficiaries (basic cash transfers)

are made through technology

based mechanisms.

Definition: DLI will be met when 70% of BISP beneficiaries receive

payments through technology based mechanisms, including smart card,

debit card, or phone based payment instruments, for two consecutive pay

periods.

Source: MIS Payments report, Payment Record of Payment Agency,

Operational Audit Report.

Verification: BISP MIS report on payments, payment reports from

participating Banks

31

ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)

PAKISTAN: Additional Financing for the Social Safety Net Project

Project Stakeholder Risks Rating Substantial

Description:

1. Pakistan will have federal elections during the project

duration. The results of the elections may have implications for

the institutionalization of the safety net and undermine its

sustainability.

2. Lack of information among the general public, such as

unfamiliarity of the new targeting system, size of payment, and

registration process, may lead to dissatisfaction with BISP,

which may pose perception risks for the Bank and contributing

donors.

3. Possible inclusion and exclusion errors in the targeting

process. Also, stakeholders could have concerns or grievances

about the payment calculation, application procedures and

payment mechanism.

Risk Management :

1.

BISP Act has been adopted by Parliament unanimously, endorsing the adoption of the poverty

scorecard as the country‘s main mechanism for targeting social safety net transfers.

The project includes support for policy dialogue on social protection to provide for a broad

consensus building mechanism for policy making across political lines.

The project provides TA for setting up a safety net system to ensure sustainability rather than

supporting just one program such as the development of data sharing protocols for the use of the PSC

database by provinces etc.

The project would provide the necessary technical underpinnings (such as MIS, evaluations, spot

checks etc.) to enhance transparency of BISP.

The findings from an impact evaluation of BISP will be publicized including its targeting accuracy

of the poverty scorecard to provide valuable information about the quality of BISP implementation

and also makes results comparable to other, existing safety net programs.

2.

Based on what the original project has achieved, the AF will enhance the PIC, which will

strategically address a wider audience in view of the CT program and implementation of Waseela-e-

Taleem to increase stakeholder awareness.

3.

Baseline survey is conducted to assess targeting efficiency in the field. Spot checks and impact

evaluation provide information on efficiency as well.

Grievance redressal system has been set up to capture and resolve complaints on inclusion and

exclusion errors. An MIS based grievance management system is also being set up at the tehsil office

level with detailed protocols covering exhaustive possibilities of appeals and grievances.

Resp: Client Stage: Prep Due Date : Dec 2012 Status: Not yet due

Implementing Agency Risks (including fiduciary)

Capacity Rating: Substantial

Description:

1. Sufficient technical and operational capacity of BISP for

implementation of the CCT program exists, though rapid scale-

up will be challenging. In addition, district-level enrollment and

social mobilization is a new area for BISP where BISP has no

previous experience which may complicate scale-up.

2. Persistent limited fiduciary capacity of BISP, especially in

procurement, resulting in irregularities and delays in the

procedure

Risk Management :

1.

The original BISP Operations Manual has successfully supported the national roll-out of the base

transfer. The CCT program will be an expansion of this and build upon these existing systems.

Technical assistance provides essential capacity building, sub-contracting and strategic staffing to

support scale-up local enrollment and social mobilization.

Inclusion of third party capacities (e.g., Partner Organizations, NADRA, etc.) help with rapid

implementation, piloting of various social mobilization strategies will be done to determine which are

the most effective for national-roll out.

32

2.

Strengthening of the FM and Procurement Department is already underway. FM is strengthened by

additional hiring of staff. Internal audit function is also being strengthened both in terms of control

processes and staff. Procurement is being strengthened into a Department by appointing a Senior

Executive to lead it and develop contract management and procurement processes. Procurement will

become an independent function by linking the reporting line directly to the Secretary.

Resp: Client Stage: Prep Due Date : Sept 2012 Status: Ongoing

Governance Rating: High

Description:

1. Possible challenge in engaging the provincial counterparts in

the implementation of Waseela-e-Taleem, which is federally

administered and funded. BISP institutional arrangements for

oversight are strongly centralized and require decentralization to

engage successfully with provinces

2. Possible leakage in the BISP payments

Risk Management :

1.

BISP had already signed a Memorandum of Understanding (MoU) with four provinces/regions .

A strong team will be established within BISP preparing the co-responsibility modalities. A vertical

monitoring system will be established with clear SOPs defining the areas of responsibility of the other

implementing partners.

BISP is strengthening its capacity to the tehsil level.

2.

The ongoing project has put a significant emphasis on strengthening of fiduciary controls within

BISP and has agreed with BISP a risk mitigation plan by: a) defining financial controls at various

levels; b) formulation of policy for pre audit by the finance department in respect of beneficiary

payments; and c) strengthening of internal auditing function looking into beneficiary payments

through payment agencies.

The AF supports the roll-out of technology based payment mechanisms through commercial banks

in almost 80% districts. Payment module of the MIS will enable the program auditors to track

adherence with the procedures and execute timely corrective measures.

The technology based case management system for updates and grievance redressal and monitoring

has been tested and will be ready for implementation effective early next year.

The ongoing, third party Spot Checks will include compliance monitoring, and so will the Process

Evaluation to ensure that all stakeholders are following the guidelines.

Resp: Client Stage: Prep Due Date : June

2012 Status: Ongoing

Project Risks

Design Rating: Substantial

Description:

1. Project foresees rapid scale-up and expansion of CCT

component.

2. Primary school enrollment may not be enhanced as expected,

possibly because (1) CCT benefit amount as calculated may be

likely to only partially offset costs of primary education, and (2)

the program does not address other potential barriers to

education.

Risk Management :

1.

Rapid scale-up of the CCT program will be supported through the following by the project: (1) an

effective and focused PIC, (2) enhanced BISP local capacity at tehsil level, and (3) social mobilization

to overcome social barriers to education.

2.

Benefits provided for secondary education under other Bank projects are slightly more than the

primary benefit, but have been found sufficient to increase enrollment and attendance. Project

monitoring and evaluation will examine appropriateness of amount. Social mobilization will also

support overcoming social barriers to education.

33

3. Possible supply-side constraints in primary education

3.

BISP had already signed a Memorandum of Understanding (MoU) with four provinces/regions .

Supply side capacity assessments to be carried out at District level.

Resp: Client Stage: Prep Due Date : June

2014 Status: Ongoing

Social & Environmental Rating: Low

Description: 1. No safeguard policy triggered.

2. Where there are multiple children of primary school age

families may prioritize education of boys over girls.

Risk Management :

1. None

2.

Given the lagging girls‘ enrollment rates, the team will closely monitor the impact of the CCT

program on girls‘ school enrollment and attendance throughout the compliance monitoring with

gender disaggregated data. Other CCT programs have resulted in a greater positive impact on girl‘s

education and the same is expected here.

The impact evaluation, among other aspects of the program, will also measure the impact on

enrollment and attendance of the girl child in the primary going age group.

Resp: Client Stage: Prep Due Date : Sept 2013 Status: Not yet due

Program & Donor Rating: Moderate

Description:

Other donors, such as USAID, and the ADB have shown

interest in support for BISP. Donor Coordination and differing

requirements could be a burden on BISP capacity.

Risk Management :

BISP as well as the Bank team ensure constant information to interested donors and encourage

discussions among all stakeholders.

Previous collaboration with donors in the realm of the Citizen‘s Damage Compensation Program

suggests that proper coordination can be achieved.

Resp: Bank Stage: Prep Due Date : April

2012 Status: Ongoing

Delivery Monitoring & Sustainability Rating: Moderate

Description:

Possible loss of the government‘s commitment and budgetary

support to BISP in the medium term

Risk Management :

The Government‘s medium-term commitment to program has been captured in current budget

allocation.

Established systems (e.g. targeting) could be continued for other safety net programs.

Introducing a new scheme that involves joint utilization of the poverty database between BISP and

the provinces would greatly mitigate the risk to sustainability of BISP.

Resp: Client Stage: Prep Due Date : July

2013 Status: Not yet due

Overall Risk Following Review

Implementation Risk Rating: Substantial

The overall risk for the AF is estimated as ‗Substantial‘, given (1) continued Pakistan‘s uncertainty in economic and fiscal status, volatile security, and political situation,

(2) BISP‘s limited governance and fiduciary capacity, which was identified during the implementation of the original project, and (3) initiation and fast roll-out of the

CCT program. The governance and fiduciary capacity will be further strengthened under the AF. In addition, the CCT program would be closely coordinated with the

Provincial Education Departments to ensure good governance. In the meantime, this AF will provide funds for BISP to convert from an income support program to a

Conditional Cash Transfer Program, thus manifesting the institution‘s long term approach to fight poverty and contribute to human development of the poorest families.

It will contribute to mitigating political and stakeholder risks perceived for BISP.

34

ANNEX 3: DETAILED DESCRIPTION OF PROJECT ACTIVITIES

PAKISTAN: Additional Financing for the Social Safety Net Project

Background and Achievements to Date

1. The government established BISP as its main safety net agency in FY08/09 to provide

basic income support for the poor to address chronic poverty. Since that time there has been a

threefold increase in the GOP‘s investment in safety nets - from 0.3% of GDP to 0.9% of GDP –

and a move away from un-targeted, universal subsidies. In 2010, Pakistan‘s Parliament

unanimously approved the BISP Act, endorsing the institution as the country‘s national safety

net authority under the Prime Minister‘s office. World Bank finance to date has enabled the

establishment of a national targeting system through a nationwide household poverty scorecard

(PSC) survey. The survey of 25 million households will be completed imminently, and is

already guiding the disbursement of monthly cash payments as basic income support for families

in chronic poverty. In July 2011, the beneficiaries identified by legislators during the first phase

of BISP, prior to the PSC survey, were phased out and replaced by PSC targeted families. To

date 3.4 million families are being paid. BISP has adopted a public private partnerships

approach working with a variety of agencies including National Data Registry Authority

(NADRA), the Post Office, commercial banks, NGOs and private sector institutions to operate

the program. This approach has the advantage of separating the functions of survey, data

processing, payments and monitoring, thus strengthening governance. BISP is now established

as the country‘s main safety net program.

2. A basic monthly cash transfer payment of PR 1,000 is paid to women in the identified

poor families, based on their Computerized National Identity Card (CNIC). Since the launch of

BISP three years ago, more than 15 million female citizens have registered for CNICs, largely

due to their interaction with BISP, providing these women the possibility to vote and access to

banking and other services.

Proposal for Additional Finance

3. Since 2008 there has been significant progress towards the GoP‘s objective to build a

transparent national safety net system to serve the poor of the country. This, combined with the

analytical work on the National Social Protection Strategy, NSPS, has brought BISP staff and

management‘s attention to promoting graduation of poor families out of poverty. The potential

impact of co-responsibilities linked to education is enormous with the PSC data indicating that

more than 70% of primary school age children of BISP beneficiaries are not in school, directly

perpetuating the families‘ poverty status. There is sufficient need, confidence and capacity for

BISP to move beyond the planned pilot graduation initiatives funded under the SSN TA

Component 3, to support with additional finance the phased rollout of CCTs over the project

period to at least 2 million BISP beneficiary families.

35

Project Activities

Component 1: Establishment of a National Targeting System and Expanding Coverage of

Basic Safety Net System (Original US$34.6 million + additional IDA Credit of US$31.5

million and DFID tentative co-financing of US$59 million):

4. The original Component 1 supported the finalization of targeting design and national roll

out of the targeting system. This was based on lessons learnt from the targeting test phase started

in March 2009 in fifteen Districts under a DFID trust fund managed by the Bank. The

component included the finalization of the data collection with the poverty scorecard at the

national level, the data processing and cross-checking with existing data bases as needed, the

administration of targeting appeals, as well as the maintenance of the data base. To date, the

targeting system has been largely completed, as evidenced by the outsourcing of the national

PSC survey and printing of the targeting materials.

5. To date, the PSC has identified 5.5 million families which satisfied the program‘s new

eligibility criteria (16.7 PSC score cut off) of which more than half (3.5 million families) have

complete information in the MIS and have consequently been paid. Under the SSN TA an

independent third party Spot Check of the household PSC survey is being undertaken. Initial

findings indicate that there is good accuracy of the PSC survey with only about 3% difference in

household PSC scores. However 10% households are found to have been missed in the survey.

BISP is withholding 20% of the payment to the partner organizations which carried out the

survey, to ensure that the missed households will be surveyed and included as appropriate. It is

anticipated that any other missed households and those in the Test Phase Districts will come

forward through the updates and grievance redressal procedures to request PSC survey when

BISP payments start locally and the enhanced public communications are mobilized (refer to

Component 2).

6. In the coming three FYs, the approved Government of Pakistan (GoP) budget for BISP is

PR 50, 60 and 70 billion (GoP Mid-Term Budgetary Framework, MTBF). This can cover cash

transfers to approximately 3.5, 4 and 4.5 million families, respectively each year. Based on Test

Phase PSC survey results, the cutoff point was designed to identify the 5 million poorest families

in the country. After the nationwide rollout of the survey, data entry and necessary grievance

processing, however, it is now estimated that the total beneficiary families will increase to almost

7 million. This has presented the GoP with a fiscal constraint, given that BISP allocations were

based on lower estimated numbers. Tight fiscal space, combined with the impacts of the food-

fuel and financial crises and the recent flood disasters, makes the need for external support all the

more pressing.

7. In this context, the revised component will include provision of cash grants to support the

expanded safety net program over the remaining years of the project. This will be the first time

that Bank has funded actual cash grants. Funding for Component 1 of the AF will be triggered

by DLIs A1- A4 as BISP increases nationwide coverage.

Component 2: Strengthening Safety Net Operations (Original US$10.8 million + additional

IDA Credit of US$97.5 million and DFID tentative co-financing of US$37 million):

8. This component builds directly on Component 2 of the SSN TA to ensure continued

support to the implementation of the safety net program beyond the targeting process. BISP‘s

success to date in expanding basic cash transfer coverage has encouraged the focus on

36

developing a nationwide graduation strategy. To date, two graduation interventions have been

designed with support from SSN TA Component 3: CCT for primary education (named

Waseela-e-Taleem) and Social Health Insurance. The bulk of funding and the focus of the AF

Component 2 will be the phased expansion of co-responsibilities for primary education for BISP

eligible families with the objective of rollout to include 3 million children (say around 2 million

families) over the project period. The Component will also strengthen the transparency and

social accountability of BISP‘s work.

9. BISP proposes additional cash transfers linked to co-responsibilities, to those BISP

eligible families that have primary school aged children, to send these children to school under

Waseela-e-Taleem. A key element of the detailed program design and implementation will be

close collaboration with the Provincial Education Departments as education is constitutionally a

Provincial subject. BISP has already signed MOUs for collaboration in the implementation of

Waseela-e-Taleem with two provincial governments and two regional governments.

10. BISP intends to provide all beneficiary families which have primary school children

between ages 5 to 12 years, a benefit with two components: a base transfer of PRs. 1000

(US$11.2) and a flexible transfer of PRs. 20017

(US$2.2) per month for each primary school

child in the family that is attending school, up to PRs. 600. Individual children will be covered

by Waseela-e-Taleem for a maximum of five years. To date, BISP has identified almost 6

million potentially eligible families. However, not all families will be able to benefit from this

additional amount. About 15% of families do not have primary school aged children. Others

might not have appropriate access to schools, and in some areas the monitoring of compliance

with families‘ co-responsibility might be impossible due to the security situation.

11. The CCT program is designed in such a way that no family would receive less than the

unconditional cash transfer benefit of PRs. 1000 per month and can receive up to PRs. 1600

(US$19) per month per family if they comply with educational co-responsibility to enroll

children in school and maintain 70% attendance. BISP beneficiary families with more than 3

children in primary school will receive the benefit for their youngest three children to ensure that

they are enrolled in school at the appropriate age. If other siblings subsequently join the

Waseela-e-Taleem age range (i.e. become 6 years old) they too will be expected to enroll in

school although no additional monthly allowance is paid beyond the PRs. 600. As well as

encouraging maximum impact on school attendance, this inclusive approach will reduce the

likelihood of gender discrimination within the family with regards schooling. The only

exceptions for children in the age range will be if parents can provide evidence that their child

has either already completed five years of primary education or has a disability that prevents him

or her from attending school (e.g. mental disability, etc).

12. Compliance will be monitored on a quarterly basis. If any child whose family has joined

Waseela-e-Taleem is found not in compliance with the required enrollment or attendance, then a

warning will be sent on the first non-compliance. If they continue to non-comply then another

warning will be sent on the second non-compliance and the family benefit will be withheld. The

fourth consecutive non-compliance will result in the family being withdrawn from the program,

and a deduction from the base amount (PRs.1000) may be considered. BISP is presently

17

BISP determined PRs 200 per child per month to provide a slightly lower benefit than secondary school children

receive (PRs 250) per month. This amount is expected to partially compensate families for the direct and indirect

costs of education, also taking into account the fiscal costs.

37

discussing the detailed modalities with the provincial governments whose education departments

will be in charge of monitoring compliance with the co-responsibility. Over the life of the

program, it is expected to cover 3 million children or approximately 2 million families with

children of primary school age (DLIs B1-5)18

.

13. In other areas of strengthening safety net operations significant progress has been made

under the SSN TA, but several areas need more focus and new areas of work are also required to

ensure, alongside the rapid expansion of BISP activities and the new CCT activities envisaged,

that both quality and outreach are enhanced.

14. An effective public information campaign (PIC) will be critical to the success of the

Waseela-e-Taleem program. The original project supported the development of a comprehensive

PIC and internal knowledge management. The AF will support expanding and re-tooling the PIC

to play an instrumental role in CCT awareness, mobilization and implementation. Findings from

a beneficiary attitude assessment survey will contribute towards fine-tuning the design of the PIC

to better respond to local perceptions. A targeted communications framework will be tailored to

a) external audiences: program beneficiaries (primarily mothers of the school-going children) the

local community, women cluster leaders, school management and parent teachers committees,

decision makers at all political levels from federal to provincial governments, academia, the

media, and civil society; and b) internal audiences: partner organizations, District Education

Department, community mobilizers, and program staff at all levels. DLI C3 focuses on the

outcomes of the PIC.

15. The AF will support a combination of strategic and tactical communication tools from the

outset to target the potential beneficiaries of the CCT program. Local communicators will have

an important role in the implementation of the social mobilization programs that target mothers

as primary decision-makers for children‘s education; encouraging a behavioral change and

reducing inter-generational transmission of vulnerability by investing in children‘s education.

16. With nationwide coverage and a growing range of BISP activities, enhanced technical

assistance under Component 2 will ensure that appropriate and effective updates and grievance

redressal systems are developed, operationalized and are effectively resolving beneficiary issues

in an appropriate and timely way. The new tehsil Offices, with adequate representation of

female staff, will play an important role in this. In addition to networked MIS systems

facilitating grievance case management and monitoring; staff training, effective staff

performance monitoring and a good public communications interface will be key dimensions of

the work. DLIs C1 and C4 will encourage continued focus on effective updates and grievance

redressal throughout the project‘s duration.

17. Through the CCT program there is the potential to develop a nationwide network of poor

women. This union of women could encourage peer pressure among beneficiaries to adhere to

the co-responsibilities and also potentially provide valuable routes for communication between

BISP and its beneficiaries. Under Component 2, the CCT beneficiary women will be activated

and mobilized to receive external support and training. Activities will be locally determined but

are anticipated to include social accountability, improving compliance to co-responsibilities, and

monitoring and reporting grievances. Mechanisms for this mobilization are under development

and will be piloted prior to national roll-out. DLI C2 encourages these activities.

18

DFID are proposing to contribute an additional USD100 million to the program from their education budget

against DLIs that directly reflect quality of compliance, i.e. increased school attendance.

38

Component 3: Enhancing Safety Net Program Management, Accountability and

Evaluation (Original US$10.8 million + additional IDA Credit of US$21 million and

potential DFID co-financing of US$9 million):

18. With World Bank support in 2010, BISP undertook an Institutional Assessment which

has produced important institutional development action plans to enhance BISP‘s institutional

capacity to match the growing scope and scale of their operations. Some institutional

strengthening initiatives have been undertaken to date but more action is needed which this

component will support.

19. For improved management and governance of BISP and better social accountability,

Component 3 will enhance transparency and accountability by funding the expansion of

technology based payment instruments. Localized trials of technology based beneficiary cash

transfer payments have been fielded under the SSN TA Component 2. The technologies are

being evaluated for ease of access and use, beneficiary satisfaction, enhanced transparency and

accountability. The AF will finance the expansion of technology based payments as appropriate

(DLI D2 and D3). A Process Evaluation is underway which will be expanded to include CCT

activities and there is to be a comprehensive impact evaluation of BISP‘s cash transfers, the base

line for which has been carried out. Design of the follow up rounds will be adjusted to

encapsulate the CCT impact, alongside that of the base transfers. BISP will make the results of

the impact evaluation public to inform future policy making and foster sustained public support

for the safety net program (Dated Covenant linked to DLI D).

20. The PSC database is potentially of immense value to social protection interventions of

other agencies throughout the country. In line with BISP‘s institutional objective of promoting

social protection, this Component 3 under the AF will promote the BISP national database as a

valuable resource for other social protection implementing agencies, especially Provincial-level

agencies. BISP has developed data sharing protocols, recently approved by its Management

Board. Linked with the enhanced communications strategy (see above), the AF will promote the

wider use of this valuable resource (DLI D1). When used by other entities including provincial

governments the BISP PSC database has the potential to be the foundation for a National Poverty

Data Registry and the national platform for targeting social assistance.

Component 4: Developing Social Protection Policy and Strategy Monitoring

21. Under the SSN TA there has been some progress in the design of the institutional and

legal framework for execution of the National Social Protection Policy (NSPP) and an integrated

monitoring system for social protection programs. However progress has been constrained by

both repeated key Government staff transfers and the uncertainty created with respect to social

protection by the 18th

Constitutional Amendment transferring numerous powers and

responsibilities to Provincial Authorities.

22. While the performance of this Component has been mostly unsatisfactory, it is being kept

under the restructured AF at the request of the Deputy Chairman Planning Commission (DCPC)

as well as the management of BISP. The DCPC has constituted a Technical Advisory Committee

(comprising of renowned Economists and sector experts), facilitated by the staff of Component 4

hired by the Planning Division. This committee will guide the component‘s implementation plan;

identify areas for analytical work; set up the requisite monitoring systems; and identify evidence

based themes which would feed into social sector policies at the federal and provincial level. No

additional finance is proposed for this component.

ANNEX 4: REVISED ESTIMATE OF PROJECT COSTS

PAKISTAN: Additional Financing for the Social Safety Net Project

Original

Estimated

Costs TA (US$

million)

Adjusted

Original TA

Cost (US$

million)

Disbursed and

Committed

Original TA

(US$ million)

New TA Costs

(US$ million)

Additional IL

Costs IDA (US$

million)

Total

Additional

Financing by

IDA

Indicative DFID

Co-financing

(US$ million)

Total Cost including

Additional IDA

Financing & Indicative

DFID Co Financing

(US$ million)

Total Project Cost

minus disbursed and

committed amounts

till date (US$ million)

A B C D E F = (D + E) G H = (B + F + G) I = (H - C)

Component 1: Establishment of a National

Targeting System re-named: Establishment

of a National Targeting System and

Expanding Coverage of Basic Safety-Net

34.60 29.64 30.14 0.50 31.00 31.50 59.00 120.14 90.00

Component 2: Strengthening Safety Net

Operation12.90 18.49 0.19 4.50 93.00 97.50 37.00 152.99 152.80

Component 3: Enhance Safety Net Program

Management, Accountability, and

Evaluation

10.80 10.18 4.41 5.00 16.00 21.00 9.00 40.18 35.77

Component 4: Developing the Social

Protection Policy and Strategy Monitoring1.70 1.70 0.03 1.70 1.67

Total: 60.00 60.01 34.77 10.00 140 150.00 105.00 315.01 280.24

Original Project (P103160) Additional Financing (P125793)

ANNEX 5: REVISED IMPLEMENTATION ARRANGEMENTS AND SUPPORT PAKISTAN: Additional Financing for the Social Safety Net Project

BISP Institutional Arrangements and Framework

1. BISP‘s operational structure for the cash transfers is currently being reviewed by BISP

management in light of shifting needs with the completion of the PSC survey and emerging

requirements for CCTs. This exercise will result in an institutional proposal and action plan for

implementation. The existing implementation arrangements for Procurement and Financial

Management will continue and will therefore require capacity strengthening as demonstrated by

weak performance in these areas in the implementation of the cash transfer program. The AF will

invest to set up a staff performance management system in BISP and a complementary capacity

building plan to build staff capacity and performance to high standards – as recommended by the

third party BISP Institutional Assessment exercise completed in January 2011. BISP tehsil level

staff will be trained to cater to communications, social mobilization and grievance management

requirements at the local level. Also to facilitate BISP‘s interaction with its beneficiaries, a

gender balanced staff will be ensured in the BISP the tehsil level offices.

BISP Governance Structure

2. The BISP governance structure will continue in its existing form. However, in line with

the BISP Act 2010 and the recent reconstitution of the BISP Management Board in accordance

with the Act, the BISP Board has equal public and private representation that will help add

diversity in the technical expertise available to BISP management and enhance private sector

involvement in BISP operations. In preparation of continued support to improving governance in

BISP under the proposed AF, a performance audit of BISP has been commissioned that will

review the efficiency and effectiveness of BISP‘s internal processes and systems.

BISP Partners in Program Administration

3. BISP has used the services of several Partner Organizations. For the national Poverty

Score Card survey, BISP has contracted NGOs as well as private firms19

. BISP has initiated a

partnership with NADRA to develop its MIS and create the national data base of the poverty

scorecard data. Finally, the institution has entered into contractual agreements with payment

agencies using three technologies: ‗money orders‘ through Pakistan Post, magstrip debit cards

and mobile banking through United Bank Limited (UBL), Bank Alfalah, Habib Bank, UBL,

Summit Bank, Tameer Bank, and Ufone, Telenor, Warid Telecom Pvt. Ltd. The existing

arrangements and partnerships in the sphere of beneficiary payments will extend to the CCT.

However, since the scale of the existing technology driven payment mechanisms employed by

BISP is being increased, BISP will enter into new partnerships with actors of the Banking and

Telecom sectors in order to reach the majority of its beneficiaries through technology driven

payment systems that have been found to be more efficient and reliable. Technology driven

payment features as a DLI in the AF to promote the shift to the new more transparent and more

efficient payment systems (DLIs D2 and 3).

4. The implementation of the CCTs will involve partnerships with the Provincial

Education Departments and District Education Offices in order to coordinate implementation

19

Rural Support Pakistan Network-RSPN, Pakistan Poverty Alleviation Fund-PPAF, and Awais Haider Liaquat Nauman-AHLN

41

and ensure delivery of primary education to BISP beneficiary children between the ages 5-12

years. The partnership agreement or Memorandum of Understanding (MOU) between BISP and

the Provincial Governments will define the roles and responsibilities of BISP and the Provincial

Education Department in the implementation of Waseela-e-Taleem. This will include project

implementation arrangements concerning enrolment, school admissions, compliance monitoring

and reporting, complaints management, MIS interfacing, and administrative expense

compensation. The MOU will also cover supply side issues that will influence project

implementation, specifically pertaining to functionality of primary schools and appropriate

measures by the Provincial Education Department and the District Education Offices to absorb

BISP beneficiary children in primary schools. Significant progress has been made by BISP in

this direction; BISP has already signed MOUs for collaboration in the implementation of

Waseela-e-Taleem with two provincial governments and two regional governments.

5. BISP will also partner with organizations with expertise in social outreach and

mobilization to create organized groups of BISP beneficiary women that will contribute through

mobilization and peer pressure to ensure compliance with co-responsibilities among BISP

beneficiaries. BISP will employ the services of short term consultants to facilitate enrollment of

beneficiaries (see below).

Implementation Arrangements for the CCT

6. Operational Manual for CCT. The overall implementation of the CT program is guided

by the BISP Operational Manual approved by the BISP Management Board. The additions

needed for the CCT will also be approved by the Board once they are finalized. Since the

operational manual needs to be a living document, it will be refined during implementation in

accordance with program progress and experience. The Operations Manual will cover the

complete program cycle for the CCT program, including: communications, social mobilization,

enrollment, compliance monitoring, payments, updates and grievance redressal, and monitoring

and evaluation.

7. Communications will be a vital part of the CCT program and will be closely

integrated with every stage of the program cycle. A Public Information Campaign (PIC) will

initiate the project implementation process to provide timely information to the BISP

beneficiaries about the program and compliance requirements to qualify for additional cash

benefits. Communications will also contribute to the enrollment process, and later in the

compliance monitoring, payments and grievances. Communications and Social Mobilization in

many instances will target common issues, using distinct mediums and approaches for maximum

affect.

8. Enrollment and Data Entry. Enrollment for the CCT be carried out at specifically

established Enrollment Centers/Camps staffed by teams from a short term consulting firm. BISP

will provide the eligible beneficiary lists, and ensure capacity building of the enrollment staff

and maintain an overall quality check on the enrollment process. The enrollment camps will be

set up in line with the enrollment drives of provincial education departments before the start of

the school session in that area, according to the seasonal schooling zone. The number of

Enrollment Centers in a tehsil will depend upon the beneficiary population density of that

particular tehsil. While the enrollment process will map the BISP beneficiary children to the

mothers, it will also be used to communicate co-responsibilities of school admission and

42

subsequent school attendance. The Enrollment Firm will ensure that BISP beneficiary women

understand the basic design features of Waseela-e-Taleem; through a detailed face-to-face

briefing, using innovative communications and awareness raising techniques, the women will

understand the co-responsibility requirements of child admission and attendance at school, and

will be motivated to comply. Enrollment Centers will be doing paper based enrollment and then

the completed enrollment forms will be delivered to BISP tehsil offices for data entry by BISP's

own hired staff/outsourcing partner.

9. Payments. The enrollment data from CCT‘s MIS interface will be used to generate the

first CCT payment lists. The first payment of CCT program will be delivered to the beneficiary

families on getting enrolled in the program. For second payment to the beneficiary families, the

CCT enrolled children will need to be admitted in the schools and once their admission data is

entered into the CCT‘s MIS, the payment lists of beneficiary families will be generated by the

MIS department of BISP. For third and subsequent payments, monthly entered compliance data

of CCT children will be used to evaluate the attendance compliance of CCT children and based

on agreed level of attendance (70%), the relevant payment amounts for all children will be

calculated by the payment module of CCT‘s MIS. Payments will be made quarterly. The amount

of benefit will be transferred to the accounts of Payment Agencies as per the established payment

procedures for the unconditional cash transfer program. Subsequent payments to BISP

beneficiaries will be made on submission of quarterly compliance reporting by the District

Education Offices and using the existing payment mechanism of the BISP Cash Transfer.

10. Compliance monitoring of enrolled children for school admissions and reporting of

results will be the responsibility of the Education Department, specifically the Education

Department Supervisors at the local level. The Supervisors will make sure that the school staff is

managing the admission of children of Waseela-e-Taleem beneficiary families as per the agreed

strategy and procedures without any delays. Apart from the education department, the detailed

briefing of beneficiaries during enrollment will also help ensure that the CCT beneficiary

families fully understand the admission and attendance compliance needs. The enrollment

organizations will continue to inform the beneficiary families of their co-responsibilities and

facilitate them in this regard.

11. Education department and the participating schools20

will receive the name wise

attendance compliance sheets for children of targeted children of BISP beneficiary families at the

end of every month through collection/delivery agent. These monthly sheets once filled by the

school staff will then be handed over to the collection/delivery agents for data entry at BISP‘s

tehsil offices. The education department supervisory staff will make sure that all of these forms

are filled by the school staff on time and are timely handed over to the BISP tehsil offices

through the collection/delivery agents. The education department staff at various levels will be

specifically trained for managing the attendance compliance monitoring of students. The

monthly attendance compliance sheets will form the basis for generation of quarterly compliance

reports of children of CCT beneficiary families.

12. Currently the Education Management Information Systems does not keep track of

attendance of students at each school individually. The type of information currently registered

20

The Waseela-e-Taleem beneficiaries will have the option to admit their children in public or private schools

(including NGO managed schools). However, only those private schools will be included in the program that are

formally registered with the government.

43

by these systems is only to generate global indicators of the sector. The goal is that in the

medium term, these information systems will be adapted so as to respond to the needs of both the

program and the Department of Education. Semi-annual third party spot checks and

implementation audits (process evaluation) will also be conducted to inform and verify project

implementation and to measure program results.

13. Through Social Mobilization, the CCT program has the potential to develop a

nationwide network of poor women. These women could encourage peer pressure among

beneficiaries to adhere to the co-responsibilities and also potentially provide valuable routes for

communication between BISP and its beneficiaries. BISP will contract resources for designing

and testing social mobilization to activate and mobilize the CCT beneficiary women to receive

external support and training. This will have the long term objective of to establish a social

network of BISP beneficiary families at the grass root level. Mechanisms for this social

mobilization are under development and will be piloted prior to national roll-out.

14. The Updates and Grievance Redressal Mechanism in use to date by BISP has been a

manual mechanism, pending the delivery by NADRA of the Grievance MIS21

. The system

addresses beneficiary complaints concerning targeting, payments, information updates, and

complaints on quality of service. BISP operates this system as per their Grievance Redressal

Manual, dated June 2009. Grievances can be submitted and followed up in person, by telephone,

online or by mail. Currently, grievances are accepted at BISP Divisional Offices (39 nr.), BISP

Regional Offices (6 nr.), and at the BISP Head Office in Islamabad where they also record and

monitor details of cases lodged, resolved cases, pending cases and action taken. When the MIS-

based system is expanded as planned in 2012, beneficiaries will be able to lodge and track

grievances locally, at the BISP tehsil level offices (500 planned, currently 328 functional). The

MIS will give BISP management complete oversight of the whole process withredressal

decisions taken at Divisional level, tracked and monitored by Regional and HQ offices.

15. CNICs are the means for verifying the beneficiary identity. After the nationwide

survey a significant number of the grievances concerned potential women beneficiaries who did

not have CNICs. For the cases where the CNIC was simply not recorded during the survey,

BISP used NADRA‘s data warehouse to extract the beneficiary women‘s CNIC. To date, more

than 584,000 beneficiaries have been included in this way, thereby immediately redressing the

grievances. For those without any CNIC record, BISP sent a letter to each ‗pending family‘ to

explain the need for the woman to obtain a CNIC. To date, 185,636 CNICs have been received

from these beneficiaries.

16. Household exclusion from the survey is a major cause of complaint, which are also in

the process of being resolved. Those missed during the national rollout have been picked up as

BISP required the survey firms to return and survey them. 414,146 beneficiaries have been

added in this way. ‗Missed out‘ complaints from Test Phase (16 Districts) and Baluchistan

districts (surveyed by PCO) will be resolved through case management, the exact mechanics of

which are being developed as the exact process will depend on the scale of household surveying

required.

21

Although there has been considerable delay, the MIS was prepared, tested and finally delivered to BISP by NADRA in

September 2011. BISP has trained its Master Trainers who will spearhead the capacity building of tehsil level staff on how the

Case Management and its MIS will be operated, prior to MIS roll out to the tehsil offices early 2012.

44

17. The number of complaints received concerning payments has varied significantly

with the mechanism of payment viz. Pakistan Post, Smart Card, Mobile phone banking. In the

case of Pakistan Post there has been an agreement to resolve cases within 15 working days. This

has been included in a new MOU between BISP and Pakistan Post requiring Pakistan Post to

compensate aggrieved beneficiaries. However, BISP has decided to accelerate the transfer to

debit card payments. After a trial of these cards, BISP now plans to expand the facility of

payments via debit cards to over 100 districts all across Pakistan by June 30, 2012. This will

minimize human interface and the accompanying chances of exploitation of BISP beneficiaries.

18. Grievances are expected to increase with the implementation of the CCT. A

supplementary module will be developed for the grievance management system to address new

issues related to Waseela-e-Taleem such as appeals by households not enrolled by the program;

complaints about penalties for noncompliance; school related issues; payments, and quality of

service. The enhanced PIC and beneficiary outreach mechanisms will ensure widespread

awareness of the mechanisms for lodging and tracking grievances or complaints. In the interest

of effective grievance management, the function will remain with BISP and it is a Disbursement

Condition for the AF that the grievance MIS, will be active at tehsil level prior to CCT

implementation.

19. Third Party Monitoring through the on-going Spot Check and Process Evaluations

include follow up on grievance redressal cases on a sample basis (quantitatively and

qualitatively, respectively). These two evaluations will be extended and expanded to cover cases

arising from Waseela-e-Taleem. Both studies will include a module that examines possible local

exclusion from the grievance system, as well as the management and monitoring of the grievance

redressal MIS.

20. Last resort for unanswered grievances or maladministration. The Federal and

Provincial Ombudsmen will be available to the public to settle disputes. Beneficiaries can also

access the World Bank‘s Institutional Integrity Unit (INT) hotline. As in most countries the

public can also go to the courts for re-dress. Pakistan‘s active legal system, for example,

recently referred for redress through the courts more than 13,000 complaints against the

Government‘s floods relief cash transfer program—the Citizens Damage Compensation Program

(CDCP). Out of these, a little over 6000 complainants were declared eligible and paid within 6

months.

21. Fraud and Corruption mechanisms are already in place to identify malpractice in

administrative and implementation processes. The Operations Manual for this project outlines

the criteria for independent operational audit and impact evaluation, the lessons from which will

be applied during project implementation allowing for fraud and corruption to be discovered and

addressed. Systemic fraud and corruption is also mitigated through the establishment of a system

of internal controls and accountability measures including MIS, Operational and Financial

Audits, Spot Checks, Impact Evaluation, and public information to inform all stakeholders of

program implementation and results. Fraud and corruption on payments is mitigated through an

agreement with Pakistan Post that defines measures to investigate allegations of fraud and

applicable penalties in the event of an affirmative conclusion of the joint investigation by BISP

and Pakistan Post. So far BISP has received around 4200 complaints and as s result of action

taken by the Pakistan Post 53 Pakistan Post officials have been removed from service against

evidence of fraud and corruption. Payments through the commercial banking sector are governed

45

by clear rules for transparency and accountability outlined in contracts signed with participating

banks. As BISP is shifting towards technology based payments, risk of payments related fraud

and corruption will be further mitigated, detection will be strengthened, and resolution much

faster.

22. In the interest of increasing transparency in procurement and to deter corruption,

procurement plans of the project are up loaded on the BISP‘s website. Also, a procurement

related complaint redressal mechanism has been uploaded to provide guidance on the registration

and follow up processes concerning complaints. BISP will also be maintaining an online

Complaint Management Database for public disclosure of procurement related complaints and

their resolution. In order to provide the complainants an independent avenue for appeals, a Third

Party Second Tier Appeal system is being notified by BISP. This procurement related complaint

system is completely independent of the regular case management system of the program.

Further details on procurement controls are given in Annex 6.

23. The internal controls will be complemented with an external control system in the form

of an independent audit firm. The firm will be contracted by the Bank on a retainer basis through

the DFID Trust Fund to investigate allegations of corruption pertaining to operations and

fiduciary management as they occur. The relevant findings will be reported to the World Bank

task team, which will follow up with the Bank's Integrity Vice Presidency as necessary. This

external control system will provide a completely independent and transparent perspective on

cases of fraud and corruption. This will be in addition to the existing system of annual audit

conducted by the Office of the Auditor General of Pakistan, which operates independent of the

internal audit function of public entities.

24. Monitoring and Evaluation will be an essential component of the BISP implementation.

The BISP Program monitoring consists of a broad set of measures designed to provide timely

and accurate information on program implementation. The program will have robust internal

monitoring systems put in place to provide oversight to the CCT program as well as external

third party monitoring mechanism.

25. For the internal monitoring systems being developed at BISP to ensure effective and

efficient implementation, the most crucial element is a comprehensive Management Information

System (MIS) that is presently being updated by BISP to include the necessary modules for the

CCT. In addition to having a strengthened MIS capacity, BISP will also be establishing a

dedicated M&E unit to support the monitoring of its programs. This will be complemented by a

computerized appeals and complaint system and social accountability mechanisms. In terms of

monitoring for the CCT component, admission‘s related and enrollment information for the

children of CCT beneficiaries will be done on the basis of data entry admission cards, which will

be verified by the school staff and then handed over to BISP tehsil offices, via collection and

delivery agents. The BISP tehsil offices will also coordinate with the provincial education

departments to obtain the related co-responsibility monitoring data related to children‘s

schooling. The BISP tehsil offices will additionally monitor all processes of CCT program

implementation and provide this data to the BISP regional and national office teams. To enable

BISP to undertake this extensive monitoring role effectively, BISP shall strengthen its‘ capacity

at the national offices to undertake field supervisory missions, enhance M&E reporting

mechanisms and further strengthen the MIS modules for efficient monitoring of enrollments,

payments and grievances

46

26. While BISP will manage the systemic monitoring and MIS systems for the programs,

much of the evaluation work will be commissioned from third parties to ensure independent and

professional processes. There will also be a third party Operational Audit.

27. Learning from the Impact Evaluation of the cash transfers is an integral part of the

program design. An evaluation sample of 8,675 households has been created; this sample

includes beneficiary and non-beneficiary households. This sample is designed to utilize non-

experimental methods (regression discontinuity and propensity score matching) to measure

impacts of the cash transfers on households‘ outcomes. The evaluation sample covers the four

provinces and is representative at the province level enabling results to be estimated at the

provincial level. The first round or ―baseline‖ was fielded April-June 2011, prior to the rollout

of payments to beneficiaries eligible on the basis of the poverty score card. Three follow-up

surveys of this evaluation sample will be conducted at annual intervals (between April and June).

The CCT program is expected to be rolled out between the first and second follow-up surveys.

At first follow-up survey, scheduled for April–June 2012, the evaluation sample will be

expanded to include more households (ensuring sufficient coverage of CCT beneficiaries in the

evaluation sample) or a separate baseline survey for CCT will be fielded. In this round,

additional data will also be collected from all in the evaluation sample, particularly data related

to children‘s school attendance and availability and quality of schools in the communities. These

four rounds of data collection from the evaluation sample will yield impact of the cash transfers

(conditional and unconditional) on families‘ welfare (measured by consumption expenditure),

children‘s human development outcomes (schooling and nutritional status), and other outcomes

such as impact on households‘ ability to cope with shocks, child and adult employment, and the

impact of transfers on women‘s decision making. A report on the Impact Evaluation findings is

expected to be available after each follow-up survey.

Monitoring by

BISP‘s tehsil,

Divisional, Regional,

Secretariat Offices

Spot checked by a

third party consultant

firm

Observed by a third

party Process

Evaluation

Consultant firm

Community Based

Spot Checks

CCT Process Flow

Targeted PIC for CCT

beneficiary families of an area to

Enroll at CCT Enrolment Center

Families get enrolled at enrolment

centers and get admission cards for

their children

Families admit their children in

schools; school retains a copy of

admission card and gives one to the

family

School supervisors collects

admission cards from schools and

delivers them to BISP tehsil office every month

Data of admission cards entered into

CCT‘s MIS at BISP tehsil office

Grade and school wise lists of admitted children are generated for

schools to mark attendance of

children

School supervisors collect attendance

lists from BISP tehsil office and

deliver them to schools

BISP‘s MIS department generates

payment lists on the basis of quarterly attendance compliance

reporting

Data of marked attendance lists

entered into CCT‘s MIS at BISP

tehsil office in a month

School supervisors collects marked

attendance lists from schools and deliver them to BISP tehsil office

quarterly

Schools mark attendance of CCT children on the provided attendance

lists on daily basis

Payment lists and payment amount

shared with Payment agency by

BISP

CCT payments are delivered to families by the payment agency

BISP an payment agency reconcile

payments

Need

based

gen

eral PIC

for C

CT

awaren

ess in a d

istrict

Targ

eted S

ocial M

ob

ilization

for C

CT

ben

eficiary fam

ilies of an

area to E

nro

ll at CC

T E

nro

lmen

t Cen

tre

Case m

anag

emen

t do

ne b

y B

ISP

staff at its tehsil o

ffice

ANNEX 6: PROCUREMENT ARRANGEMENTS

PAKISTAN: Additional Financing for the Social Safety Net Project

1. Procurement under the project would be carried out in accordance with the World Bank‘s

―Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans

and IDA Credits & Grants January 2011‖ and Guidelines: Selection and Employment of

Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers January

2011.

2. The Bank‘s standard bidding documents for procurement under International Competitive

Bidding (ICB), and sample bidding documents for procurement under National Competitive

Bidding (NCB) which are already being used on other Bank financed projects in Pakistan, will

be used for procurement of Goods under the project. The Bank‘s Standard Request for Proposal

document will be used in the selection of Consulting firms. The BISP shall ensure that the

Project is carried out in accordance with the provisions of the Anti-Corruption Guidelines.

3. All expected procurement of goods and consultants‘ services under international

competitive bidding will be listed in the project‘s General Procurement Notice (GPN). Specific

Procurement Notice (SPN) shall be published for all ICBs for goods and Consultancy

assignments estimated to cost more than US$200,000.

4. Actions under this project will also serve as an instrument to improve the procurement

management and institutional strengthening at BISP.

Procurement of Works

No Works envisaged at present.

Procurement of Goods

5. Goods to be procured under this project will be Video Conferencing System, 60

Motorcycles for compliance monitoring and coordination, Printing of Communication Material,

Printing of Training Material, Office Furniture, Office Equipment like Computers, Printers,

Photocopiers, and Air conditioners.

6. International Competitive Bidding (ICB) procedure would be used for all contracts

estimated to cost more than US$300,000 equivalent, using Bank‘s standard bidding documents.

Goods contracts costing more than US$50,000 would be procured through NCB, using the

bidding documents acceptable to the Bank and contracts costing upto US$50,000 may be

procured through shopping procedures.

Improvement of Bidding Procedures under National Competitive Bidding

7. The following improvements in bidding procedures will apply to all procurements of

Goods and Works under National Competitive Bidding, in order to ensure economy, efficiency,

transparency and broad consistency with the provisions of Section 1 of the Guidelines:

i. Invitation to bid shall be advertised in at least one national newspaper with a wide

circulation, at least 30 days prior to the deadline for the submission of bids;

ii. bid documents shall be made available, by mail or in person, to all who are

willing to pay the required fee;

49

iii. foreign bidders shall not be precluded from bidding and no preference of any kind

shall be given to national bidders in the bidding process;

iv. bidding shall not be restricted to pre-registered firms;

v. qualification criteria shall be stated in the bidding documents;

vi. bids shall be opened in public, immediately after the deadline for submission of

bids;

vii. bids shall not be rejected merely on the basis of a comparison with an official

estimate without the prior concurrence of the Association;

viii. before rejecting all bids and soliciting new bids, the Association‘s prior

concurrence shall be obtained;

ix. bids shall be solicited and works contracts shall be awarded on the basis of unit

prices and not on the basis of a composite schedule of rates;

x. contracts shall not be awarded on the basis of nationally negotiated rates;

xi. single bid shall also be considered for award;

xii. contracts shall be awarded to the lowest evaluated and qualified bidder;

xiii. post-bidding negotiations shall not be allowed with the lowest evaluated or any

other bidders;

xiv. draft NCB contract would be reviewed by the Bank in accordance with the prior

review procedures;

xv. A firm declared ineligible by the Association, based on a determination by the

Association that the firm has engaged in corrupt, fraudulent, collusive, coercive or

obstructive practices in competing for or in executing an Association-financed

contract, shall be ineligible to be awarded an Association-financed contract during

the period of time determined by the Association.

xvi. Each contract financed from the proceeds of a Credit shall provide that the

suppliers, contractors and subcontractors shall permit the Association, at its

request, to inspect their accounts and records relating to the performance of the

contract and to have said accounts and records audited by auditors appointed by

the Association. The deliberate and material violation by the supplier, contractor

or subcontractor of such provision may amount to obstructive practice.

8. Procurement of Consultants: Consultancies to be hired are hiring of Services of firms for

Communication, Training, Enrollment of CCT, Development of MIS for CCT, Spot Check and

Process Evaluation for CCT test phase, Baseline and Impact Evaluation, Social Mobilization for

CCT Contracts with the consulting firms will be procured in accordance with Quality and Cost

Based Selection procedures or other methods given in Section III of the Consultant‘s Guidelines.

Consulting services selection would be carried out through Quality and Cost Based Selection

(QCBS) for contract with consulting firms with costing more than US$200,000 equivalent, and

through Consultants Qualification (CQ) for contracts costing up to US$200,000. Other methods

as mentioned in Section III of Consultants Guidelines shall be used as required.

50

Selection of Individual Consultants

9. Services for assignments that meet the requirements set forth in paragraph 5.1 of the

Consultant Guidelines may be procured under contracts awarded to individual consultants in

accordance with the provisions of paragraphs 5.2 through 5.3 of the Consultant Guidelines.

Under the circumstances described in paragraph 5.4 of the Consultant Guidelines, such contracts

may be awarded to individual consultants on a sole-source basis

Assessment of Agency’s Capacity to Implement Procurement

10. Procurement activities will be carried out by Benazir Income Support Program (BISP)

which is a Federal Government entity. This assessment is based on the previous performance of

implementing agency under SSN TA project. Procurement capacity at BISP had fully depleted in

previous quarter as there was no Procurement Staff. During the execution of SSN TA

(specifically the Procurement Post Review Report for 2010-11) there were some instances which

require transparency and accountability to be substantially strengthened at the organization level.

The Auditor General of Pakistan has also raised one of the same concerns that was identified in

Post Review Report 2010-11. There are instances of weak contract management at the

organization which requires adequate focus and strengthening of the system. There is also a lack

of clarity in internal standard operating procedures, which need to be standardized and followed

closely. Handling of procurement related complaints at BISP is unsatisfactory. Complaints

received by BISP are not forwarded for Bank‘s review in a timely manner; and significant delays

are experienced in reaching a complaint resolution, for instance a complaint is pending in the

Bank's Procurement complaint database for more than 140 days. The Bank has reminded BISP in

various communications to expedite the process of complaint resolution and forward the

complaints to Bank as soon as it arrives.

11. In order to ensure efficiency and transparency in procurement, the following measure

would be taken for implementation of the project:

(i) Develop an Online Complaint Management Database. There should be an interface in the

database which provides access to complainants to submit complaints electronically through a

publically available online webpage (link to be given on BISP main page). For increasing

transparency in the process, there should be a complaint status window in the database which can

provide the number of complaints (with complainant name, nature of complaint – predefined in

system, stage of procurement, status (closed/pending), date of submission of complaint, date of

closure/ number of days it is pending). All complaints received by BISP in hard copy format

should also be posted in the database and made visible on the complaint status window

(accessible to public). These complaints should be periodically monitored by Secretary BISP,

and BISP should update the system on a real-time basis. The system is now fully functional.

(ii) Procurement Manual has been finalized prior to Negotiations.

(iii) Procurement Training sessions will be held for all implementing agencies to ensure that

the requirements and timelines of the Bank financed procurements are clearly understood at the

very commencement of the project. The Bank has conducted training of the two new

Procurement Specialists on Nov 23, 2011. Bank will conducted further training for BISP

procurement staff improving and maintaining the capacity. (v) Independent Third Party has been

added as a second tier appeal system for complaints in the complaint redressal mechanism.

51

(iv) Procurement Plan will be prepared by BISP to ensure adequate timelines and packaging.

ICBs shall be processed if the local markets are found deficient/limited for certain specialized

areas of expertise. Packaging shall be done in a cost effective manner optimizing economies of

scale. No procurements shall be processed unless included in the procurement plan and

approved by the Bank. Procurement Plan updates shall be included in the quarterly progress

reports. Procurement Plans approved by the Bank should be posted at BISP website (without

estimated cost).

Table 1: Procurement Actions

Action Responsibility Date Status

i. Online Complaint

Management Database

BISP December 14, 2011 Done

ii. Hiring of Procurement

Staff

BISP Three months after

effectiveness

Procurement Specialists

(Services and Goods) are

on board. Whereas,

Director Procurement is

to be hired within three

months of effectiveness

iii. Procurement Manual BISP December 15, 2011 The Procurement Manual

has been submitted to the

Bank.

iv. Procurement Training Bank December 15, 2011 Procurement training of

the Procurement

Specialists (Goods and

Services) was undertaken

on November 23, 2011.

v. Independent second

tier appeal system

BISP December 15, 2011 BISP has notified the

independent third party

second tier appeal system

vi. Procurement Plan BISP Nov 28, 2011 Procurement Plan

submitted to Bank

12. With these above arrangements, the procurement under the project is likely to be

effective and transparent resulting in smooth implementation of the project leading to

achievement of the project development objectives. At this stage procurement risk rating of the

project is kept ―High‖.

Procurement Planning

13. The Borrower is developing a Procurement Plan for project implementation which

provides the basis for the procurement methods. This plan has been agreed between the

Borrower and the Project Team before negotiations, and will be available on the borrower‘s

website. It will also be available in the Project‘s database and on the Bank‘s external website.

The Procurement Plan will be updated in agreement with the Project Team annually or as

52

required to reflect the actual project implementation needs and improvements in institutional

capacity.

Review of Procurement by the Bank

14. Thresholds for prior review of contracts under eligible expenditures are given below.

These thresholds would be reviewed in 18 months and adjustments upwards or downwards

would be made in the Procurement Plan based on implementation experience.

(i). All ICB contracts for Goods;

(ii) All single source selections or direct contracts;

(iii) First NCB contract for Goods, irrespective of value; and thereafter each contract for

Goods estimated to cost US$300,000 equivalent or more;

(v) First contract procured through shopping, for goods;

(vi) The first Consultants‘ Services contract with consulting firms, irrespective of value,

awarded by each implementing agency, and thereafter all contracts with firms estimated

to cost US$200,000 equivalent or more;

(vii) First consulting services contract with individual consultants, irrespective of value,

awarded by each implementing agency, and thereafter all contracts with individuals

estimated to cost US$100,000 equivalent or more.

15. All other contracts will be subject to Post-Review by the Bank. Each implementing

agency will send to the Bank a list of all contracts for post-review on a quarterly basis. Post

reviews as well as the implementation reviews would be done six monthly. Such review of

contracts below threshold will constitute a sample of about 10-15 percent of the contracts.

Procurement Information and Documentation – Filing and Database

16. Procurement information will be recorded and reported as follows:

(a) Complete procurement documentation for each contract, including bidding documents,

advertisements, bids received, bid evaluations, letters of acceptance, contract agreements,

securities, related correspondence etc., will be maintained by the implementing agencies

in an orderly manner, readily available for audit.

(b) Contract award information will be promptly recorded and contract rosters as agreed will

be maintained by each implementing agency.

Frequency of Procurement Supervision

17. Bank Review Missions would be carried out every six months, with the participation of

the Procurement Specialist. However, the Review Missions will be more frequently in the early

stages of the project. In addition to the prior review, Bank supervision missions would be carried

out for post review of procurement actions. The Bank‘s Procurement Specialist based in the

Country office in Pakistan will be available to discuss procurement issues with the implementing

agencies and also provide training as and when needed.

53

Details of the Procurement Arrangements

Consulting Services

Ref.

No.

Description of Assignment

Estimated

Cost

(US$)

Number

of

Contracts

Selection

Method

Review

by Bank

(Prior/

Post)

Expected

Proposals

Submission

Date

1 Hiring of Communication Firm

for Implementation of

Communication Action Plan

(Including communication for

CCT Test Phase )

500,000 1 QCBS Prior

Review Mar 2012

2 Hiring of Training Firm for

Designing Training Contents,

Material, Manuals and

conduction of trainings for CCT

test phase staff & Stakeholders

370,000 1 QCBS Prior

Review Mar 2012

3 Hiring of Implementation

Partner for Enrollment for CCT 1,500,000 1 QCBS

Prior

Review Mar 2012

4. Hiring of Firm for Development

of MIS for CCT 300,000 1 QCBS

Prior

Review Mar 2012

5. Hiring of Firm for Spot Check

and Process Evaluation on CCT

test phase Implementation

1,000,000 1 QCBS Prior

Review Mar 2012

6. Hiring of Firm for Baseline and

Impact Evaluation of CCT 1,000,000 1 QCBS

Prior

Review Mar 2012

7. Hiring of Firm for Social

Mobilization for CCT 500,000 1 QCBS

Prior

Review Mar 2012

Goods

Ref.

No.

Description of Assignment Estimated

Cost

(US$)

Number

of

Contracts

Selection

Method

Review

By Bank

(Prior/Post)

Expected

Proposal

Submission

Date

1. Printing of Communication

Material

(Brochure, Poster, Flyer, Leaflet

etc.)

1,500,000 1 ICB Prior

Review

Mar-2012

2. Printing of Training Material

(Manuals, Handbooks etc.)

120,000 1 NCB Post Review Mar-2012

3. Purchase of Equipment for 60

BISP tehsil Office

250,000 1 NCB Post Review Feb-2012

4. Electronic Devices for

Compliance Monitoring

70,000 1 NCB Post Review Feb-2012

5. Equipment Support for 16

District Education Offices & 3

Regional Office

156,000 1 NCB Post Review Feb-2012

6. Motorcycles for compliance

monitoring & coordination for

60 tehsil Offices

48,276 1 Shopping Post Review Jan-2012

54

ANNEX 7: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS

PAKISTAN: Additional Financing for the Social Safety Net Project

Summary

1. The project will be managed and implemented by BISP, an entity established by Law as a

statutory body with an independent Management Board. The Board comprises an equal number

of representatives from the Government and non-governmental organizations. The Board is

mandated to meet at least four times in a year. BISP has independent financial management

arrangements lying outside the domain of the mainstream Government PFM systems. However,

it is subject to the budgetary systems of Government and external audit oversight by the Auditor

General of Pakistan.

2. BISP has been responsible for implementing the existing SSN TA project which is being

restructured. The fiduciary arrangements for project implementation would remain the same as

under the original project but will require further strengthening given the significant increase in

the scope of the operation and the implementation of the results based (i.e. Disbursement Linked

Indicators or DLIs) disbursement approach. The financial management performance rating of the

existing TA project is Moderately Satisfactory. There were some financial management issues

including ineligible expenditure that have been subsequently resolved. Measures have been taken

to ensure that such issues do not arise again. There is currently full compliance with the external

audit and reporting requirements of the Bank.

3. An assessment of the financial management arrangements, funds flows and disbursement

arrangements have been completed and the proposed budgeting, funds flow, accounting, internal

control, and financial reporting systems and audit arrangements together with strengthening

measures are considered adequate for the proposed operation. BISP is adequately staffed and has

well documented institutional arrangements and operational procedures.

4. However, given the reliance on BISP‘s management information system and related

payment mechanisms for the management, control and oversight of cash transfers to

beneficiaries and the increase in scope of the operation, including the need for partnerships with

provincial Departments of Education and Local Governments, the MIS system, controls over the

payments, and the internal audit function will need to be strengthened. BISP is moving towards

automated/electronic forms of verification, payment and reconciliation which will greatly

strengthen accounting, recording and controls over the cash transfer programs. The scope of

internal audit will be expanded to provide greater and more in-depth coverage of the cash

transfers programs and in particular in verification of evidence pertaining to beneficiary

payments. Measures to enhance and strengthen the management information systems, key

internal payment controls and systems and internal audit scope have been discussed and agreed

with BISP.

5. In preparation for continued support to improving governance in BISP under the

proposed AF, a performance audit of BISP is being commissioned to review the economy,

efficiency, and effectiveness of BISP‘s internal processes and systems including financial

management. Implementation of the action plan drawn from these performance audit

recommendations will form the basis for an ongoing process of improvement. Performance

audits of BISP‘s operations will be carried out at mid-term of the project. The results of such

55

audits will provide information to enhance the efficiency and controls over BISP‘s operations

and the safety net programs it administers.

Staffing

6. BISP‘s current staffing structure is adequate for the scale of operations. The Finance

Department is headed by Director General Finance and Accounts who is on deputation from the

Office of Auditor General of Pakistan. He has a team that has been scaled up with two Directors

and two Deputy Directors each supported by an Accounts Officer, Assistant Accounts Officers

and support staff.

7. To assist with the financial management of the project, two professionally qualified

Financial Management Specialists have been hired. These are assisted by an Analyst, four

Accounts Payable Assistants and an Assistant. Adequately qualified and experienced financial

management staff is in place at the BISP head office, regional and divisional offices. Training

and capacity building activities will be provided under the Project for the Finance and Accounts

staff as required.

Budgeting

8. The Government will continue to budget annually for the BISP programs and operations

as part of the annual budget which is approved by the Parliament. The Bank will provide a share

of the financing of the BISP Cash transfer program and Co-responsibility Cash Transfer program

and fund related technical assistance activities. Government budget rules and procedures will

apply. BISP‘s annual budgets would include the amount expected to be received from the Bank

based on achieving DLIs and carrying out the related technical assistance activities.

Accounting

9. Accounting will be done on a cash basis using the BISP‘s systems; expenditures will be

recorded in the BISP accounts using the Chart of Accounts under the New Accounting Model

and the expenditures will be recorded at the time of payment for goods/services and

disbursement of cash transfers as reconciled to the payment agencies. Currently BISP is using

Quick Books for accounting and reporting. Books of account are up to date and reconciled. The

project FM staff has completed Quick Books training. An accounting and financial reporting

module will form part of the entity‘s management information system (MIS). Full automation of

accounting and reporting integrated with the BISP MIS is expected to be completed by

December 2012.

10. Accounting and Finance guidelines, which have been developed and approved by the

BISP Board, provide guidance on all aspects of financial management, including the accounting

and reporting. The guidelines are currently under improvement. BISP maintains the following

books of account: Cash Book, Cheque Book Register, Cheque Register, Invoice Register, Stock

Register, Contracts Register, Budget Control Register, Disbursement Register and Register of

Staff Advances. Records to be kept for cash funds transferred to Pakistan Post and other

disbursing agencies for distribution include: Statement of Releases, Monthly Statement of

Expenses, and Monthly Funds Reconciliations. Reconciliations for funds transferred to Pakistan

Post are yet to be brought fully up-to-date. The reconciliation has been done up to 30 June, 2011

and is in the progress for the quarter to September, 2011. Reconciliations with the two

commercial banks have been completed up to September, 2011. A key control will be the

56

maintenance of up-to-date accounts and reconciliations. Automation of the accounts and

reconciliations with the introduction of the accounting and financial reporting module in the

BISP MIS will enhance the system controls.

Beneficiary Payment System

11. BISP effects the payment of cash transfers to beneficiaries through using payment

agencies. Payments to payment agencies (post offices and banks) are made on the basis of the

beneficiary lists generated by the MIS that is in process of being enhanced to cater for CCT

related data input, processing parameters and enrollment of CCT beneficiaries and production of

related payment lists. The beneficiary list is sent with the cheque to the payment agency and the

agency makes the payment to beneficiaries. Details of the process are as follows:

12. Once the request for beneficiary payments is received from the DG Operations along

with beneficiary payment list after the approval of Secretary BISP, Finance Department

(Director Policy & Accounts) verifies/pre-audits and prepares the cheques signed by the two

authorized signatories of BISP i.e., Deputy Director Accounts and the Accounts Officer.

13. Currently, payments are being made to beneficiaries through Pakistan Post in more than

90% of the districts and through technology based mechanisms in 12 districts. BISP is in the

process of entering into a contract with commercial banks for making payments through debit

cards in up to 109 districts which will increase technology based payments.

14. For Pakistan Post, the beneficiary payment process is as follows: Once Pakistan Post

receives the beneficiary list, they assign a money order number against each beneficiary payment

and send back the updated report to the Director Payments BISP who forwards it to the MIS

section for updating the database. Through the system, the MIS database beneficiary list is

matched to the list from Pakistan Post and exceptions are reported (key control). The MIS Dept

seeks rectification from the Pakistan Post. Subsequently, BISP uploads the payment list (money

orders assigned) on its website and also displays the list at its regional offices (key control). The

post offices have also been asked to display the lists at their local offices. The post offices deliver

the money orders to beneficiaries and compile a report of delivered and undelivered money

orders with reasons on the approved payment list. This report (payment list) is received by BISP,

and the MIS department again uploads the list in their database for reconciliation/matching of the

particulars of beneficiaries and related payment details with their own data (key control). The

undistributed amount is adjusted for the next installment to be paid to the beneficiaries. The

Director payment also directs the BISP field staff to obtain confirmation of payment receipt from

the beneficiary on sample basis i.e. 100 beneficiaries per district per month (key control).

15. Two forms of technology based payments through commercial banks are being used in

12 districts i.e. smart card and mobile phone. These mechanisms achieve better results than the

Pakistani post manual payments method both in terms of beneficiary complaints and easier

reconciliation. The payment process is the same as in case of Pakistan Post except that the

beneficiary is issued a smart card or mobile phone (with SIM and assigned account #) after due

verification by NADRA at the BISP center (key control). The beneficiary obtains their benefit

from the bank upon verification of the smart card through electronic means. For mobile phone

banking, the beneficiary receives an SMS containing a 14 digit code for receipt of payment. The

beneficiary receives payment upon verification of this code along with the CNIC by the Bank

franchisee. The payment agency sends a payment report to the BISP within fifteen days of the

57

month closure/payment cycle for reconciliation (key control) which is done by the MIS

department through matching the report with its own database.

16. A recent monitoring and assessment exercise BISP payments financed by USAID under

its Budget Support Monitoring Program found that 98.69% of the beneficiaries have received the

cash payment from BISP. A bit over 50% of the beneficiaries knew the amount and frequency of

payment. 96% of the beneficiaries knew when their family first started receiving the cash

payments from BISP. 60% of the cash grant use was decided by the senior female member of the

house and 33% of the cash grant use was decided by the beneficiary jointly with

husband/father/son.

17. While these results show that the BISP payment system is functioning well, it also

indicates that there is room for improvement when it comes to payments through the Pakistan

Post system. BISP is therefore in the process of finalizing contracts with the commercial banks

for payments through electronic means, mostly debit cards. These cards would be used through

ATM and Point of Service (POS) machines drawing money from their own virtual bank

accounts. The funds transferred by the BISP to the bank for beneficiary payments would be

credited to the beneficiary account. The bank would send a quarterly report to BISP detailing the

amount credited in each account, amount drawn and the balance. This would be reconciled with

the BISP MIS.

18. Payment agencies would retain the proof of payments made/evidence for verification by

the BISP internal and external audit functions. The BISP Operations and Finance wings review

the payments/reconciliations (key control). Currently, the beneficiary payments documentation/

evidence verification is not under the scope of the internal audit but the scope of internal audit is

being enhanced to provide such review coverage (key control).

19. The beneficiary payment system is backed up by a complaint system and the case

management/ monitoring system which is being developed by NADRA.

Internal Control and Internal Auditing

20. The FM arrangements will include the following internal controls: (a) processing of all

receipts and payments in accordance with the approved BISP Board approved Accounting and

Finance guidelines, (b) monthly reconciliation of the Cash Transfers accounts with approval by

the Director Finance, (c) monitoring of the invoice register for track efficiency in payment of

invoices, (e) maintenance of records of assets, (f) periodic financial reporting and (g) regular

internal audit. The BISP Internal Audit department is headed by a Director who reports to the

Board. The IA Director and his team comprising two Audit Officers, four Assistant Audit

Officers, five Senior Auditors and two Assistants are in place. The incumbent Director Internal

Audit has more than twenty five years of experience and comes from Auditor General‘s office on

deputation. The scope of internal audit is defined, however, the function will be strengthened as

the increase in scope of the project will require partnerships with provincial Departments of

Education and District Authorities. The TORs/scope of internal audit will be subject to review

by the Bank. The results of the regular internal audits will form the basis for management action.

Action taken by the management will be reviewed by the Bank during regular project

supervision.

58

Funds Flow and Disbursement Arrangements

21. The project will be implemented over five years-2011/12 to 2015/16-through an IDA

Credit of US$150 million equivalent. DFID co-financing of approximately US$100 million may

be provided in parallel. The project would finance DLIs through reimbursing eligible

expenditures of BISP which are funded from the state budget as well as financing goods,

technical assistance services, training and incremental operating costs. This includes funding

under the DLIs of US$140 million for Expenditure Categories 1 and 2, and US$ 10 million for

Expenditure Category 3.

22. The project would consist of four components: Component 1: Establishment of a

National Targeting System re-named: Establishment of a National Targeting System and

Expanding Coverage of Basic Safety-Net System; Component 2: Strengthening Safety Net

Operation; Component 3: Enhance Safety Net Program Management, Accountability, and

Evaluation; and Component 4: Developing the Social Protection Policy and Strategy Monitoring.

23. Each component would support financing of both specific inputs which for

implementation of agreed activities, and also results using disbursement linked indicators (DLI).

The project financing will disburse against DLIs linked to Components 1, 2 and 3 of the project

to achieve the agreed results. Financing for specific inputs for agreed activities will be provided

under components 1, 2 and 3. Thus, the total financing for components 1, 2 and 3 consists of

financing for specific inputs as well as the financing which will disburse against DLIs results.

DLI Linked Disbursements

24. The disbursement against DLIs would be on achievement of agreed indicators and targets

as given in Annex 1 of the Project Paper in the ―DLI Matrix‖. There will be nine rounds of semi-

annual disbursement, if and when DLIs are met, one in2011/12, two in 2012/13, two in 2013/14

and two in 2014/15 and two in 2015/16. Each DLI target will have a separate value as set out in

DLI Matrix totaling US$140 million over the project period.

25. Each DLI is independent of each other, i.e., non- achievement of some DLI targets for a

year will not hold up disbursement against other DLI targets that have been achieved for that

year. Some DLIs are time bound and will not be available for disbursement until the nominated

financial period (for example, DLIs A1 to A5 nominate the financial year within which the

achievement of the DLI targets will be measured and the related funds will be available for

disbursement).). DLIs without a time window would be ―floating‖ where non-achievement of a

DLI target can be carried over forward to future periods until the DLI is achieved or the amount

of disbursement in a year may be adjusted based on the Bank‘s assessment of progress in

achieving the DLI (disbursement of the DLI allocated funds against full achievement of the DLI

would remain). Some DLIs targets are cumulative, i.e. achievement of a DLI targets subsequent

years are dependent on the previous year‘s targets being achieved and a higher target level being

achieved in the following year. The achievement of DLIs will be verified by the Bank as

explained in the PAD section on Results Monitoring and Evaluation. Verification of achievement

of DLIs will be carried out semi-annually by the Bank and funds will be disbursed based on the

DLIs achieved following each verification assessment.

26. Bank guidelines on Investment Lending require that disbursement take place against an

activity that is eligible for Bank financing. For this project, the EEPs that will be considered for

this purpose is the BISP Basic Cash Transfers and Co-responsibility Cash Transfer (CCT =

59

―Waseela-e-Taleem‖) Programs which the DLIs would fund. Expenditure on the EEPs would be

shown in the audited financial statements of BISP; the Auditor General of Pakistan is the auditor

for BISP. The AG‘s audit report will be reviewed to confirm actual expenditure on the EEPs

which should be greater than the DLI disbursements made in the related financial year.

Disbursement (on achievement of agreed DLIs) and subsequent confirmation (by audit) of the

eligible expenditure for which it was made, will be repeated each year.

Retroactive financing

27. Retroactive financing will be permitted for Category 1 and Category 3 expenditures

under the following conditions: (a) the activities financed are included in the project description;

(b) the payments are for items procured in accordance with applicable Bank procurement

procedures; (c) such payments do not exceed 20 percent of the loan amount; and (d) the

payments were made by the borrower not more than 12 months before the expected date of

Financing Agreement signing. The date after which payments may be made is July 1, 2011.

Specific Project Inputs

28. The project components will have specific project inputs that will be financed by the

project in addition to the DLIs. The same disbursement methods as for the SSN TA Project will

be used. Disbursement methods for these expenses will include advances and reimbursement on

quarterly. Reimbursement is the preferred method of disbursement based on IFRs. Report based

disbursement will be used. If advances are required, the BISP will submit a forecast of

expenditures for the six month period together with the IFRs and the forecast will form the basis

for the advance (after taking into account the balance of the DA).

Funds Flow and Disbursement Table

29. Funds will be disbursed on a reimbursement basis on a semi-annual basis for DLIs. The

funds will flow from the Bank in the Federal Consolidated Fund to reimburse eligible cash

transfers (Expenditure Category 1 and 2) made by BISP. The amounts for Expenditure Category

1 and 2 to be transferred into the Federal Consolidated Fund should be transferred into BISP‘s

Assignment Account within 10 working days. This amount shall be in addition to BISP‘s normal

budget allocation.

30. Since the project is being restructured, the existing designated account would be used for

purposes of Category 3 (i.e. the TA part), and the ceiling of advances to the designated account

will be based on 6 months‘ forecast of project expenditures to be financed by this category.

However, the use of designated account and Advance method will be available only when the

current issue of lapsed loans in the Pakistan portfolio is fully resolved.

Disbursement

Category

Category 1 Category 2 Category 3

Basis of

Disbursement

DLI based

Disbursement -

reimbursement

DLI based

Disbursement -

reimbursement

Traditional IFR based

Disbursement –

advance and

reimbursement

Bank credit US$ 52 million US$ 88 million US$ 10 million

60

allocation equivalent equivalent equivalent

Eligible

expenditure

Basic Cash Transfers

Program

Basic Cash Transfers

and Cash Co-

responsibility Cash

Transfer (CCT =

―Waseela-e-Taleem‖)

Program

Goods, non-consulting

services, and

consultants‘ services,

training and operating

costs under the Project

Disbursement

method/ cycle

100% upon

achievement of DLI as

per independent

verification and audits

100% upon

achievement of DLI as

per independent

verification and audits

100% of eligible

expenditure based on

IFRs/ quarterly

Linked with DLIs linked with

Component 1, 2 and 3

DLIs linked with

Component 1, 2 and 3

Specific project inputs

under Component 1, 2,

3 and 4

Disbursement

condition

MIS operational CCT component of

MIS operational

None

Allocation of Credit Proceeds

Category Amount of the

Financing Allocated

(expressed in USD)

Percentage of

Expenditures to be

Financed (inclusive of Taxes)

(1) Basic Cash Transfers:

(a) Upon completion of DLI A.1 of

Annex 1 to the Project Paper.

(b) Upon completion of DLI A.2 of

Annex 1 to the Project Paper.

(c) Upon completion of DLI A.3 of

Annex 1 to the Project Paper.

(d) Upon completion of DLI A.4 of

Annex 1 to the Project Paper

(e) Upon completion of DLI C.2 of

Annex 1 to the Project Paper.

(f) Upon completion of DLI D.1 of

Annex 1 to the Project Paper.

(g) Upon completion of DLI D.2 of

Annex 1 to the Project Paper.

(h) Upon completion of DLI D.3 of

Annex 1 to the Project Paper.

[20,000,000]

[5,000,000]

[4,000,000]

[2,000,000]

[5,000,000]

[5,000,000]

[7,000,000]

[4,000,000]

100%

61

Category Amount of the

Financing Allocated

(expressed in USD)

Percentage of

Expenditures to be

Financed (inclusive of Taxes)

(2) Basic Cash Transfers and Co-

responsibility Payments under the

Waseela e Taleem program

(a) Upon completion of DLI B.1 of

Annex 1 to the Project Paper.

(b) Upon completion of DLI B.2 of

Annex 1 to the Project Paper.

(c) Upon completion of DLI B.3 of

Annex 1 to the Project Paper.

(d) Upon completion of DLI B.4 of

Annex 1 to the Project Paper.

(e) Upon completion of DLI B.5 of

Annex 1 to the Project Paper.

(f) Upon completion of DLI C.1 of

Annex 1 to the Project Paper.

(g) Upon completion of DLI C.3 of

Annex 1 to the Project Paper.

(h) Upon completion of DLI C.4 of

Annex 1 to the Project Paper.

[10,000,000]

[8,000,000]

[8,000,000]

[30,000,000]

[25,000,000]

[5,000,000]

[1,000,000]

[1,000,000]

100%

(3) Goods, non-consulting services,

consultants‘ services. Training and

Workshops and Incremental Operating

Costs under Parts 1, 2 & 3 of the

Project .

[10,000,000] 100%

TOTAL AMOUNT [150,000,000]

31. When DLIs as mentioned above are not achieved by the due dates or not achievable

before the closing date, the Bank may authorize partial disbursements for i) the non-fulfillment is

due to an event of force majeure and/or ii) BISP has made reasonable efforts to rectify the

situation. Otherwise, the Bank may cancel or reallocate the corresponding amounts.

32. Disbursements against category 1 and 2 will be only on reimbursement basis, while

disbursements against category 3 may be on a reimbursement or replenishment basis. When

62

replenishment is used for category 3, i.e. disbursements into the designated account, separate

withdrawal applications will need to be prepared.

33. The break-up of estimates of the restructured project (including additional financing) are

provided in Annex 4 of this Report.

Financial Reporting

34. The project will submit semi-annual IFRs for categories 1 and 2 which will provide

information on eligible expenditures (EEPs and specific input expenditures) made in the previous

semester. Quarterly IFRs would be submitted in respect of category 3. IFRs will be submitted to

the Bank within forty five days of the end of each quarter. The format and content of the IFRs

was confirmed during negotiations. There are no overdue financial reports for the existing TA

project.

Auditing

35. BISP‘s audited financial statements for BISP would be required to be submitted to the

Bank within six months of the close of each financial year (i.e. 30 June). Project sources and uses

of funds would be shown by way of notes to accounts. Acceptable audited financial statements

for BISP that would show the DLI related EEPs and operational expenditures. External audit will

be conducted by the Supreme Audit Institution, i.e., the Office of the Auditor General of

Pakistan, which is acceptable to the Bank. The Auditors would make use of the internal audit,

performance audit and reports on verification of DLIs.

36. There are no overdue audit reports in respect of the existing SSN TA project as of date.

FY‘11 audit report of the existing project would fall due on 31 December and is expected by the

due date.

37. A performance audit of BISP has been carried out for the period up to March, 2010 and

the auditors have raised some issues. BISP has been requested to share with the Bank their

replies there to. BISP will provide to the Bank the performance audit report by February 28,

2012. Weaknesses in internal controls (e.g. in internal audit) have been reported in the audit

reports and these have been taken into account in designing the financial management

arrangements for the project. The following audit reports will be monitored in ARCS (Audit

Report Compliance System) of the Bank.

Audit Report Type Due Date

Entity financial statements December 31 each year

BISP shall ensure throughout the life of the project that its audited financial statements are made

publically available at BISP‘s website.

Supervision Plan

38. The FM risk is assessed as High and a range of mitigation measures are proposed.

Accordingly intensive FM supervision will be required in the initial period of project

implementation. FM Supervision will encompass reviewing the operations of the relevant

financial and related receipt and payments systems, reviewing internal controls, review of

financial reports and review of internal and external audit reports and management responses.