document of the world bank for official use only report no...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 51611-ET

PROJECT PAPER

ON A

PROPOSED ADDITIONAL FINANCING CREDIT

IN THE AMOUNT OF SDR31.5 MILLION

(US$50 MILLION EQUIVALENT)

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR A

PUBLIC SECTOR CAPACITY BUILDING PROGRAM SUPPORT PROJECT

March 1, 2010

Public Sector Reform and Capacity Building Unit

Country Department 2

Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of

their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as February 19, 2009)

Currency Unit: = Ethiopian Birr

US$ 1.0 = ETB 13.34

FISCAL YEAR

July 8 – July 7

ABBREVIATIONS AND ACRONYMS

ASYCUDA++ Automated System for Customs Data(Software)

BCB Regional Bureau of Capacity Building

BDA Budget Disbursements and Accounts

BIS Budget Information System

BOFED Regional Bureau of Finance and Economic Development

BPR Business Process Reengineering

CAS Country Assistance Strategy

CBDSD Capacity Building for Decentralized Service Delivery Project

CIDA Canadian International Development Agency

CSRP Civil Service Reform Sub-program

DCA Development Credit Agreement

DIP Democratic Institutions Program

DfID Department for International Development

DLDP District Level Decentralization Sub-program

DRS Developing Regional States

EC European Commission

ECuA Ethiopian Customs Authority

EMCP Expenditure Management and Control Sub-program

EMI Ethiopian Management Institute

EPPC Ethiopian Electric Power Corporation

FIRA Federal Inland Revenue Authority

FMR Financial Monitoring Report

GDP Gross Domestic Product

GOE Government of Ethiopia

HoF House of Federation

HoPR House of People’s Representative

HRD Human Resource Development

HRM Human Resources Management

IBEX Integrated Budget and Expenditure Management System

ICB International Competitive Bidding

ICT Information and Communication Technologies

IDA International Development Association

IEC Information, Education and Communication

IFR Interim Financial Report

IT Information Technology

JLSRI Justice and Legal System Research Institute

JSM Joint Supervision Mission

JSRP Justice System Reform Sub-program

LAN Local Area Network

LIG Local Investment Grant Program

MAB Ministries, Agencies, and Bureaus

MARD Ministry of Agriculture and Rural Development

MCB Ministry of Capacity Building

M&E Monitoring and Evaluation

MFA Ministry of Federal Affairs

MOFED Ministry of Finance and Economic Development

MOJ Ministry of Justice

MOR Ministry of Revenue

MoWUD Ministry of Works and Urban Development

MTC Ministry of Transport and Communication

NCB National Competitive Bidding

NCBP National Capacity Building Program

NGOs Non-Governmental Organizations

OFAG Office of the Federal Auditor General

PASDEP Plan for Accelerated and Sustainable Development to End Poverty

PBS Protection of Basic Services

PDO Project Development Objective

PIP Program Implementation Plan

PPD Planning and Programming Directorate

PPR Post Procurement Review PSCAP Public Sector Capacity Building Program Support Project

ROPAS Result-Oriented Performance Appraisal System

SDR Special Drawing Rights

SIGTAS Standard Integrated Government Tax Administration System

SIL Sector Investment Loan

SNNPR Southern Nations, Nationalities and People’s Region

SOE Statements of Expenditures

SWAp Sector-Wide Approach

TA Technical Assistance

TIN Tax Identification Number

TOR Terms of Reference

TSRP Tax Systems Reform Sub-program

UDF Urban Development Fund

ULGDP Urban Local Government Development Program

UMCBP Urban Management Capacity Building Sub-Program

VAT Value-Added Tax

WAN Wide-Area Network

WCBS Woreda and City Benchmarking Survey

GLOSSARY OF ETHIOPIAN TERMS

Dagu is a traditional communication system of the Afar people which relies on passing on

relevant news by word of mouth

Kebele/Tabia is the smallest administrative unit of the Ethiopia government, similar to ward,

neighborhood. It is part of a woreda, or district itself part of a zone, grouped into regions that

comprise the Federal Democratic Republic of Ethiopia.

Shengo is a traditional means of dispute resolution at the kebele level

Woreda is a designation for an administrative ward or local government in Ethiopia, equivalent

to a district. Woredas are comprised of a number of kebeles, or neighborhood associations.

Vice President : Obiageli K. Ezekwesili

Country Director : Kenichi Ohashi

Sector Manager : Anand Rajaram

Task Team Leader : Melvyn Blunt

ETHIOPIA

PUBLIC SECTOR CAPACITY BUILDING PROGRAM SUPPORT PROJECT

CONTENTS

I. INTRODUCTION ..................................................................................................................... 4 II. BACKGROUND ....................................................................................................................... 2

Original Credit: ........................................................................................................... 4

Project Performance: ................................................................................................... 4 Fiduciary Performance: ............................................................................................... 6 Key Challenges: .......................................................................................................... 7 Procurement ................................................................................................................ 9 Risk Assessment: ...................................................................................................... 10

III. RATIONALE FOR ADDITIONAL FINANCING ................................................................. 10 IV. PROPOSED CHANGES ......................................................................................................... 12

Annex 1: Estimated Project Costs for the Additional Financing .................................. 13 Annex 2: Status of PSCAP’s Result Matrix As of April 2009 ..................................... 14 Annex 3: Detailed Project Description ......................................................................... 27 Annex 4: Risk Monitoring And Risk Mitigation Matrix .............................................. 35 Annex 5: Agreed Action Plan to Resolve Key Challenges ........................................... 40

Annex 6: Maps .............................................................................................................. 52

PROJECT PAPER DATA SHEET

Date: March 1, 2010

Country: Ethiopia Project Name: Public Sector Capacity

Building Program Support Project Project ID: P107217

Team Leader: Melvyn Blunt Sector Director/Manager: Anand Rajaram Country Director: Kenichi Ohashi Environmental Category: C

Borrower: Government of Ethiopia Responsible Agency: Ministry of Capacity Building Address: P.O. Box 1082, Addis Ababa, Ethiopia Contact Person: H. E. Ato Adamu Ayana, State Minister of Capacity Building Telephone: 251-11-239911 Fax: 251-11-239889 E-mail: [email protected]

Revised estimated disbursements for the Additional Financing (Bank FY/US$m) FY 2004-2009 2010 2011 2012 Annual 15 20 15 Cumulative 80 95 115 130

Current closing date: December 31, 2012

Does the restructured or scaled-up project require any exceptions from Bank

policies? Have these been approved by Bank management? Is approval for any policy exception sought from the Board?

○ Yes X No N/A N/A

Revised project development objectives/outcomes: The PSCAP development objective remains the same: ―To improve the scale, efficiency and responsiveness of public service delivery at the Federal,

Regional and local level; to empower citizens to participate more effectively in shaping their own

development; and to promote good governance and accountability in its public sector. Does the scaled-up or restructured project trigger any new safeguard policies? No.

For Additional Financing [ ] Loan [ X] Credit [ ] Grant For Loans/Credits/Grants:

Total Bank financing: US$50 Million Proposed terms: Standard IDA Credit

Financing Plan (US$m.) Source Local Foreign Total

Borrower IBRD/IDA

Total

55 15

70

- 35

35

55 50

105

1

INTRODUCTION

1. This Project Paper seeks the approval of the Executive Directors for Additional

Financing to the Federal Democratic Republic of Ethiopia in support of the Public

Sector Capacity Building Program Support Project (PSCAP) (ID: P074020 and

Credit number: 3899-ET) in an amount of SDR31.5 million (approximately

US$50.0 million equivalent) IDA credit. The project has already been extended

for three years to December 31, 2012. Currently, the government of Ethiopia

envisages that they will mainstream the public sector capacity building activities

at all levels of government beyond 2012 utilizing treasury funding. In this regard,

in 2002/03, prior to the PSCAP Support Project, Government of Ethiopia

mobilized ETB108.4 million and during the current project period approximately

US$55 million to support the PSCAP program. In addition, much of the

additional financing will be spent on activities to ensure sustainability of the gains

already made in PSCAP in past years.

2. The proposed Additional Financing will contribute to a pool of resources to cover

the financing gap in the original project. This Additional Financing will enable

the project to complete activities originally envisaged and appraised in the

original PSCAP, but not undertaken due to lack of resources. The project has a

financing gap of US$185 million from the originally estimated project cost of

US$398 million. The financing gap occurred due to the withdrawal of some

expected bi-lateral donors funds following the 2005 election and the

redeployment of US$20 million IDA from the project to fund the Ethiopia

Emergency Food Crisis Response Program in 2008 following the recent global

food crisis. In addition, there was a shortfall of the expected Government of

Ethiopia’s (GoE) contribution due to economic pressures (although Government

of Ethiopia has still contributed over US$55 million or 26% of total PSCAP funds

to the current project). The Additional Financing will continue to support the

ongoing institutional transformation and capacity building activities through two

components – one federal and the other regional. Activities under these two

components are drawn from a menu of eligible expenditures consisting of

PSCAP’s six sub-programs (civil service reform, district level decentralization,

urban management capacity building, tax system reform, and justice system

reform and information and communication technology) as well as a mandatory

program support. The Additional Financing will support new contracts under the

project. No changes are proposed to the project development objectives,

components, or implementation modalities including procurement and financial

management, except that the agreed scope and format for Financial Management

Reports is being modified in conformity with currently prevailing practice for

financial management in World Bank funded projects using interim financial

reports. The economic, financial and technical justifications remain unchanged.

Retroactive financing up to an aggregate amount not exceeding US$ 8.8 million

2

equivalent for expenditure starting August 1, 2009 is allowed under the

Additional Financing.

3. The likelihood of achieving the development objectives and the implementation

progress of the original project are both rated satisfactory, and the impact thus far

has been consistent with expectations given the financial shortfalls. The

Additional Financing is economically justified as per the requirement of

paragraph 2 of OP 13.20. The activities to be funded under the Additional

Financing will continue to support the achievement of the current development

objectives. These objectives are strategically aligned with the current Ethiopia

Country Assistance Strategy (CAS), which already envisaged the need for this

US$50 million additional financing for PSCAP.

II. BACKGROUND

Country Context

4. Strategic context: The Government of Ethiopia (GoE) is currently implementing

its second Poverty Reduction Strategy Paper (PRSP), ―the Plan for Accelerated

and Sustained Development to End Poverty‖ (PASDEP – 2005/06 – 2009/10

dated September 2006). One of the eight pillars highlighted in PASDEP is

building all-inclusive implementation capacity across sectors to address

systematic constraints in human and institutional capacity, inadequate

accountability and transparency that act as impediment to sustainable growth and

poverty reduction.

5. Government response: The Government of Ethiopia (GoE) launched a

comprehensive homegrown National Capacity Building Program (NCBP) as a

multi-sectoral, intergovernmental program response to the capacity building

demands of rapid transformation. The national capacity building framework

supports the comprehensive development of human resources, organizations,

systems and processes as a means of achieving the country's development goals.

The Ministry of Capacity Building (MCB) was established in 2001 to provide

policy direction, coordination amongst other partner institutions (for example, the

Ministries of Finance and Economic Development (MoFED), Revenue (MoR),

and Federal Affairs (MFA), as well as monitoring and oversight of capacity

building efforts. The Ministry, along with its counterpart regional bureaus and

woredas (designation for an administrative ward or local government in Ethiopia,

equivalent to a district) offices, is tasked with programming and financing fourteen

capacity building subprograms that support the dual PASDEP goals of state and

structural transformation.

3

Box 1: Ethiopia’s National Capacity Building Program (NCBP)

1. Civil service reform

2. Justice reform

3. Tax reform

4. District-level decentralization

5. Urban management

6. Information and communication technology

7. Cooperatives

8. Private sector

9. Textiles and garments

10. Construction sector

11. Agricultural training of vocational and technical levels

12. Industrial training of vocational and technical levels

13. Higher education

14. Civil Society

6. PSCAP: Six of these fourteen subprograms directly involving the public sector

were integrated to make the Ethiopia PSCAP and comprise (i) District Level

Decentralization Sub-program (DLDP) that rapidly transferred delivery

responsibilities with substantial fiscal and administrative authority to rural

jurisdictions; (ii) municipal reform efforts designed to restructure and empower

urban centers under the Urban Management Capacity Building Sub-program

(UMCBP); (iii) reformulated civil service reforms (CSRP) focused increasingly

on strengthening the public sector fiduciary framework and service delivery

results on the ground; (iv) bold nation-wide initiatives to enhance connectivity

and develop e-government applications such as the woreda and school-net

projects under the Information and Communication Technology Sub-program

(ICT); (v) efforts to strengthen formal checks and balances and accountability

mechanisms through the Justice System Reform Sub-Program (JSRP) including

the courts, law making and law enforcement institutions, as well as the legislative

process; and (vi) an ongoing tax systems reform program (TSRP) that continues

to align tax policy and administration at the federal and regional level with the

demands of Ethiopia’s evolving macro-fiscal policies. Since FY2002-03 the

Government—through its MCB, Regional Bureaus of Capacity Building (BCB),

and other lead institutions—advanced the implementation of all six subprograms.

Considerable domestic resources were mobilized through the federal budget to

carry out public sector capacity building activities.

7. Ethiopia CAS: The project is the main instrument for achieving one of the

strategic objectives of fostering improved governance in the current CAS. In

addition, the effectiveness of a number of IDA and other bi-lateral and multi-

lateral donor projects including the Protection of Basic Services (PBS), Local

Investment Grant Program (LIG), and Urban Local Government Development

Project (ULGDP) are dependent on the sustained program of capacity building

through PSCAP and it is the major mitigation measure of the risk of systemic

exclusion and corruption in these projects.

4

Original Credit:

8. The original IDA credit of US$100 million was approved by the Board of

Executive Directors on May 11, 2004 to support PSCAP and became effective on

November 23, 2004. The project current closing date is December 31, 2012

following approval of a second time extension. US$ 20 million was redeployed

to the Ethiopia Emergency Food Crisis Response Program in 2008/9 to respond to

the acute food crisis in Ethiopia which required immediate support. The current

project is also co-financed by the government of Ethiopia (US$55 million) and a

number of bilateral and multilateral donors (US$77 million) including CIDA,

DfID, Irish Aid, EC and Italy. With the exception of Irish Aid, all other existing

partners have signaled their willingness to continue to fund PSCAP during the

Additional Financing period. The project objectives were “to improve the scale,

efficiency and responsiveness of public service delivery at the federal, regional

and local level; to empower citizens to participate more effectively in shaping

their own development; and to promote good governance and accountability in its

public sector.” There have been no changes to the original objectives of the

project, its design or scope. 98% of the current project funds have already been

disbursed.

9. The project was designed as a SWAp and was implemented nationwide through 2

components – one at federal and the other at regional level. Activities under

these two components are drawn from a menu of eligible expenditures consisting

of PSCAP’s six sub-programs (civil service reform, district level decentralization,

urban management capacity building, tax system reform, and justice system

reform and information and communication technology) and a mandatory

program support to assist in the overall program administration, coordination,

supervision, as well as monitoring and evaluation. The project benefits citizens

and their communities (particularly the poor) as well as economic agents such as

farmers and the urban private sector through improved service delivery,

empowerment, and greater transparency and accountability of government

institutions. Intermediate beneficiaries include civil servants at the federal,

regional, and local levels; woreda and municipal officials; the judiciary and their

staff; staff involved in basic legislative processes; revenue and tax authorities;

public, private, and non-profit training institutions; the media; and service

providers.

Project Performance:

10. The likelihood of achieving the development objectives and the implementation

progress of the original project are both rated satisfactory, and the impact thus far

has been consistent with expectations given the financial shortfalls. In addition, a

number of independent evaluations as well as the Mid-Term Review (MTR) over

the past years have shown PSCAP to be meeting the majority of its performance

targets. PDO ratings for the project have shown consistent progress and are on

track to meeting its development objectives fully by the end of the extension

5

period. In addition, the legal covenants are also substantially met and the project

has no unresolved fiduciary, environmental, social or other safeguard problems at

present.

11. Key objectives of the PSCAP are summarized below. The detailed status of the

results matrix is attached as Annex 2.

i. Improved public service delivery: The scale, efficiency and responsiveness of

public service delivery at federal, regional and local levels have improved as a

result of the strengthened policy and legal framework; nation-wide restructuring

and performance improvement initiated through the business process

reengineering (BPR); increased predictability and adequacy of financial

resources for service delivery by doubling of tax effort at federal and regional

levels; skill development and automation in critical sectors. Particularly, the

BPR was instrumental in bringing about attitudinal change across the public

service, embedding a strong focus on client-orientation and simplifying service

processes. Service standards have been developed and dramatic reductions in

processing time have already been documented across sectors and at all levels of

government following the BPR implementation. A citizens report card

undertaken in 10,000 rural and urban household shows that 87% of those

surveyed are satisfied with the processing of tax related services, 82% are

satisfied with agriculture extension services, 56% with education, and 41% with

health services.

ii. Empowerment of citizens: Empowerment of citizens to participate more

effectively in shaping their own development was initiated mainly through the

Good Governance Package (GGP). GGP is a program launched to embed

participation, consensus building, responsiveness, transparency, accountability,

equity and fairness, rule of law, efficiency and effectiveness. These are expected

to be achieved through issuance of key directives and institutional formats for

service delivery and participation, establishment of focal points for participation

and redress, and training of officials and citizens on government policies and

strategies. The good governance package was instrumental in establishing

institutional focal points for participation, inclusion and accountability as well as

initiating the practice of participation. This is complemented by the

establishment of multi-purpose community tele-centers that provide access to

information and technology by communities.

iii. Good governance and accountability: Enhancing good governance and

accountability is promoted by establishing vertical and horizontal checks and

balances. Although citizens are far from making the officials and public servants

fully accountable, many regions, particularly the four relatively advanced regions

are already reporting significant increases in the number of people who are

demanding better service even at woreda and kebele (the smallest administrative

6

unit of the Ethiopia government, similar to ward or neighborhood) level.

Overall, access to government information has been enhanced through

establishment of institutional focal points where suggestions and complaints can

be made; increasingly opening up the Woreda Council meetings, use of websites,

posting of budgets and other important documents. This was also

complemented by improved independence of the courts.

Fiduciary Performance:

12. Fiduciary aspects of project performance are summarized in the sections below:

i. Procurement performance: Post Procurement Review (PPR) of all the

implementing agencies of the PSCAP in FY08 rated the procurement performance

marginally satisfactory. The review had followed the Mid-Term Review of the

project which had found procurement processing as the main constraint to project

implementation progress. Action taken to address the above assessments

included: (i) full decentralization of procurement to the implementing agencies

including preparation and submission of procurement plans to the Bank, and

procurement through International Competitive Bidding (ICB) procedures; (ii)

deploying Bank procurement consultants to provide hand-holding support to

project procurement staff; and (iii) increase of ICB and prior review thresholds.

As a result of the above actions, there was a marked improvement in the capacity

of the project to conduct procurement efficiently and ensure smooth

communications between the project and the Bank. Procurement under PSCAP

rapidly became a model for other projects in the Bank’s portfolio in Ethiopia, as

indeed should be the case. In FY09, the Bank conducted a very limited PPR on

PSCAP which found that there had been marked improvements in procurement

performance of the project. For contracts that are procured through International

Competitive Bidding (ICB) and consulting services that involve international

competition, the project procurement schedule was migrated to the ―Guidelines:

Procurement under IBRD Loans and IDA Credits‖ published by the Bank in May

2004 and revised in October 2006 (―Procurement Guideline) and the ―Guidelines:

Selection and Employment of Consultant by World Bank Borrowers‖ published

by the Bank in May 2004 and revised in October 2006 (―Consultant Guidelines‖).

For all contracts that will not be procured under ICB and consulting assignments

that will not involve international competition, executing agencies are using the

national procurement system as provided in the Proclamation 430/2005 of January

2005, the Federal Public Government Procurement Directive of July 2005; and

the national standard bidding document. Therefore, under the additional

financing, the PSCAP procurement arrangements will not change.

ii. The project submitted an action plan covering the whole program at the beginning

of the current project. To provide the government the needed flexibility, the

project team and government agreed to allow the preparation of the procurement

plan for the first 18 months of the additional financing which will be updated as

required.

7

iii. Financial management performance: The latest supervision mission rated the

financial management of the project as Moderately Satisfactory. The main reasons

for the rating were delayed submission of statements of expenditures (SOEs),

Financial Management Reports (FMRs) and audit reports. The project is now

showing good progress in submission of SOEs, FMRs and audit reports.

However, the overall inherent and control risks of the project, as determined

during project preparation, will remain the same in the additional financing. Thus,

the project has substantial risk in the area of FM. The key mitigating measures of

the identified risks are still being implemented within the context of public sector

reform. The project audit reports for the year ended July 7, 2007 and July 7, 2008

were qualified. In addition, the auditors raised a number of issues in the

management letter for both years. An appropriate management action plan

addressing the observed issues have been formulated, shared with the Bank team

and is currently under implementation. The July 7, 2007 audit reports were

received eight months after the due date whereas audit report for the year ended

July 7, 2008 was received within the due date. More recently, the project has

been submitting interim (semi-annual) financial reports within a few days of the

due dates.

iv. Disbursement performance: The project encountered slow disbursements during

the initial two years because the 2005 election created some distraction.

Disbursements have consistently improved in the last three years. 98% of the

current project funds have already been disbursed.

v. Environmental aspects: PSCAP is a category C project. There are no

environmental issues.

Key Challenges:

13. A number of studies conducted under the project identified key challenges that

will need to be addressed to ensure sustainability of project outcomes. The

Additional Financing will be instrumental in providing the funding to undertake

important activities towards tackling them. The government has submitted an

agreed action plan to resolve these key challenges and this is attached as Annex 5.

14. Human resources management and development systems: Business process

reengineering (BPR) is being conducted in all offices; has helped in developing

service standards and brought about dramatic reductions in processing time across

sectors and at all levels of government. However, in order to ensure the

sustainability of the progress made, additional progress needs to be made in

supplementing BPR with an effective human resources management and

development system that attracts, retains and motivates qualified professionals. In

particular, in relation to human resource development, the project needs to focus

on strengthening the civil service college, the management institutes, the urban

institute, tax institute, judicial training centers and other institutes that are

8

positioned in strategically important positions to ensure continuous provision of

training to upgrade skills and competencies of civil servants in a sustainable

manner.

15. Modalities of participation and weak capacity of the institutional focal

points: The good governance package was instrumental in establishing

institutional focal points for participation, inclusion and accountability as well as

initiating the practice of participation. Nevertheless, the modalities of

participation are still not clear and therefore lower level governments are using

ad-hoc arrangements to incorporate citizens’ concerns in their development plans.

Tools such as participatory budgeting need to be introduced across the levels of

government to ensure sustainable government-citizen interaction. There is also a

need to further develop the capacity of the new institutional focal points to

effectively address the public’s concerns. In addition, continuous efforts to build

the capacities of the judges and the executive authorities to understand and respect

the principles of judicial independence will be critical.

16. Developing regions (Afar, Somali, Gambella and Benshangul Gumuz): Although the four developing regions have made significant progress in almost all

areas under the program, the recent study undertaken on these regions show that

PSCAP needs to focus special efforts to make up for the historical marginalization

of these areas. Some of the recommendations are i) strengthening the Ministry of

Federal Affairs to effectively support these regions particularly by scaling up the

federal professional support to these regions; ii) strengthening inter-regional

cooperation through experience sharing and new partnerships; iii)

professionalization of civil servants and promoting women; iv) using the

traditional civil society organizations to enhance accountability of government

officials to the public in service delivery, v) improving the pace and amount of

cash transfers and advances; and vi) allowing purchase of vehicles when there is a

clear need to effectively manage the program.

17. Monitoring and evaluation (M&E): PSCAP has an M&E framework that was

developed in a participatory manner and several training sessions were conducted

for its users. However, the absence of designated M&E focal persons in

executing agencies, lack of institutional and individual incentives for reporting,

and lack of skills in reporting results has brought about reporting focused mainly

on inputs and outputs. The M&E system will be strengthened by i) building on

the recent results assessment matrix; ii) providing continuous training on results-

based reporting; iii) assigning / hiring an M&E focal person at the MCB; and iv)

providing Technical Assistance to the Ministry of Capacity Building on M&E and

information, education and communication (IEC) to effectively play its overall

coordinating role.

18. Procurement: Part of the Additional Financing will be used to fund the

implementation of the procurement capacity building strategy that has been

developed under the original project and CIDA and DfID support for the

9

analytical work. This will include support to professionalization of public

procurement nationally as well as the implementation of systematic procurement

training. The procurement training will be planned to enable young graduates

entering procurement practice to obtain skills incrementally until they attain

procurement accreditation. The demand for this professional development is

estimated for nearly 3,000 procurement positions in Ethiopia many of whom are

responsible for expending more than 60% of the public sector budget.

19. Coordination mechanisms: The federal and regional technical teams were

expected to bring together the various sub-program focal persons and were

expected to play a strategic role with respect to the overall coordination of

PSCAP. However, these two bodies were mostly ineffective and didn’t play the

leadership and coordinating role anticipated at the design stage. Similarly, the

coordination level between federal sub-program directors and regions varies

across sub-programs and it was found to be inadequate in programs such as

CSRP, DLDP and JSRP. Therefore, the system of coordination and support will

be strengthened with appropriate incentives to ensure the maximum level of

support.

20. Cross-Cutting Issues: Training on gender and HIV/AIDS was conducted in all

regions to increase the awareness of the top managers and civil servants on the

need to mainstream these cross-cutting issues in the development discourse.

Particularly worthy of note is the inclusion of gender-responsive recruitment

mechanisms in the revised civil servants proclamation that provides for

affirmative action for females to join the civil service. Recruitment of women in

the civil service has increased from 28% to 38% in Oromia, 32% to 36% in

Amhara and from 30% to 31% in Gambella between 2004 and 2007. Continuous

progress is needed to mainstream gender at all levels in a consistent manner.

21. Synergies between PSCAP and other IDA-financed projects: PBS, LIG, and

ULGDP are three large initiatives which provide recurrent and capital investment

to rural and urban local governments. The success of these programs is dependent

on adequate capacity for planning, service delivery, expenditure management, and

accountability which PSCAP is expected to deliver. Therefore, greater synergies

will be sought between these programs for maximum impact. The Ministry of

Capacity Building has agreed to initiate consultation between MCB, MoFED and

MoWUD.

Procurement

22. PSCAP executing agencies are using the country’s procurement system as

provided in the Proclamation 430/2005 of January 2005, the Federal Public

Government Procurement Directive of July 2005; and the national standard

bidding document for contracts that will not be procured under International

Competitive Bidding (ICB) and consulting assignments that will not involve

international competition with the following additional procedures: (i) the

10

Recipient’s standard bid documents for procurement of goods and works will be

used; (ii) if pre-qualification is used, the World Bank’s standard prequalification

document will be used; (iii) margin of preference will not be applicable; (iv)

bidders will be given a minimum of 30 days to submit bids from the date of

availability of the bidding documents; (v) use of merit points for evaluation of

bids will not be allowed; (vi) foreign bidders will not be excluded from

participation; and (vii) the results of evaluation and award of contract will be

made public.

23. A new procurement law: The Federal Government of Ethiopia Procurement and

Property Administration Proclamation No 649/2009 was enacted by parliament

on July 7, 2009 repealing the existing public procurement Proclamation No.

430/2005, ―Determining Procedures of Public Procurement and Establishing its

Supervisory Agency Proclamation of the Federal Democratic Republic

Government of Ethiopia‖, dated January 12, 2005. The World Bank has

committed to assessing the new procurement regime and based on the new

procurement proclamation making any necessary modifications, to the Recipient’s

competitive bidding procedures to make the procedures acceptable for use in

IDA-financed procurement. Therefore, for procurement under PSCAP Additional

Financing, the Recipient will continue to follow the procedures under the repealed

Proclamation 430/2005 with the agreed modifications. When the World Bank has

issued modifications, if any, to apply to the new procurement regime under

Proclamation 649/2009, these modifications would be incorporated into a revised

PIP for PSCAP Additional Financing and would become applicable to

procurement under the Additional Financing after the Bank’s approval of the

revised PSCAP PIP.

Risk Assessment:

24. Risk mitigation measures have made steady progress in tackling the risks

identified at the appraisal of the project. The overall risk is now adjusted from

high to moderate risk with few substantial risk elements. Two new risks have

been identified for the additional financing and the full list with risk mitigation

measures and status is attached as Annex 4.

RATIONALE FOR ADDITIONAL FINANCING

25. The project has a financing gap of US$185 million from the originally estimated

project cost of US$398 million. The financing gap occurred due to the

withdrawal of some expected bi-lateral donors funds following the 2005 election

and the redeployment of US$20million IDA from the project to fund the Ethiopia

Emergency Food Crisis Response Program in 2008 following the recent global

food crisis. In addition, there was a shortfall of the expected Government of

Ethiopia’s (GoE) contribution due to economic pressures (although Government

of Ethiopia has still contributed over US$55 million or 26% of total PSCAP funds

to the current project). There are considerable procedural and cost-effectiveness

11

gains for the borrower in proceeding with Additional Financing because it will

allow for the completion of project activities originally envisaged in the Project

Appraisal Document (PAD) but not undertaken due to lack of resources. The

project remains as originally designed and appraised. The proposed changes are

minor and consist primarily of extending the Bank’s financial contribution to the

project by US$50 million. There should be no problems of absorptive capacity as

PSCAP has already disbursed consistently between US$15-24 million of IDA’s

funds in the last three years after an initial lag immediately following the 2005

election. The project staff has gained a lot of experience in procurement and

financial management in the last four years which was demonstrated in IDA’s

agreement to decentralize administration of ICB from MCB to all the

implementing agencies. In addition, a number of major contracts are at advanced

stage of procurement which will require continuous disbursement of funds.

26. PSCAP is GoE’s major means of improving capacity for service delivery to the

citizens of Ethiopia and the economic sector. The Additional Financing is

therefore intended to widen the gains already made so far under the PSCAP in

improving the cost effectiveness of government and enhancing services to the

economic sector that are at the heart of continuing economic development in

Ethiopia. Successful implementation of the remaining activities ensures

sustainability of already initiated activities and reduces performance variance

between implementing agencies by focusing more on regions and sub-programs

that are found to be lagging.

27. GoE is committed to ensuring sustainability of the capacity development activities

because they comprise a primary means of ensuring continued social and

economic development as well as contributing to the continuing legitimacy of

Ethiopia as a Federal State through PSCAP’s concentration (80% of total funding)

on capacity building at regional level and below. PSCAP provides for

improvements in governance especially in the further development of

accountability of GoE to its citizens as well as improving public service delivery

which provides a basis for stable political, social and economic development,

including the private sector, that contributes to alleviating poverty and economic

development.

28. As mentioned in para. 21, the effectiveness of a number of IDA and other bi-

lateral and multi-lateral donor projects including the PBS, LIG, and ULGDP is

dependent on the sustained program of capacity building through PSCAP and it

serves as a major mitigation measure of the risk of systemic exclusion and

corruption in these projects.

29. The current project is a SWAp with a number of bi-lateral and multi-lateral donor

partners (currently DFID, CIDA, Irish Aid, EC and Italy). With the exception of

Irish Aid, all other partners have signaled their willingness to continue to fund

PSCAP during the Additional Financing period. GoE has also provided outline

commitment to contributing an additional US$55 million to the pooled fund. The

12

GoE has already proclaimed US$6 million treasury funding for 2009/10 budget

year.

PROPOSED CHANGES

30. Extension: The closing date of the Project has already been extended by 3 years

to December 31, 2012.

31. Performance-based reallocation: The provision in the current project design for

in-year and annual reallocations between sub-programs and regions based on

performance is now omitted. This was never put into practice as the system of

reallocations would create uncertainty regarding the medium term funding

envelope for any particular sub-program or region, and therefore cut across the

effort to establish a level of certainty and predictability in PSCAP finances. It

would also penalize underperformers, which are also the institutions with the least

capacity and which PSCAP is designed to assist.

32. Financial reports: An agreed format for interim Financial Reports will replace

the formerly agreed format for Financial Management Reports.

33. Effectiveness condition: The additional condition of effectiveness consists of

amending the Memorandum of Understanding between funding partners to reflect

the application of the World Bank Anti-corruption guidelines to the Project in a

manner satisfactory to IDA. The ―Guidelines on Preventing and Combating

Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and

Grants‖, dated October 15, 2006 will apply to the Additional Financing.

34. Estimated project cost: The costs and financing allocation, by component, for

the original operation and for the proposed Additional Financing are presented in

Annex 1. As previously noted, there is no change proposed with respect to the

project components or their implementation modalities.

13

ANNEX 1: ESTIMATED PROJECT COSTS FOR THE ADDITIONAL FINANCING

ETHIOPIA: Public Sector Capacity Building Program Support Project

1.1 Overall Project Cost

Program Components Original

Project

Financing

Cost

($ millions)

Financing Made

Available to

date

($millions)

Proposed

Additional

Financing

($ millions)

1 Federal PSCAP 80 43 37

2 Regional PSCAP 318 170 148

Total 398 213 185

1.2 Project Cost for the Additional Financing

Program Component Local

Foreign

Total

1. Federal PSCAP US$16 US$21 US$37

2. Regional PSCAP US$64 US$84 US$148

Total Project Cost US$80 US$105 US$185

Financing Sources Local Foreign Total

Borrower (US$)

IBRD/IDA (US$)

Total

55

15

70

35

35

55

50

105

Disbursement Categories % of Expenditures to be financed

1. Pooled Funds

Expenditures financed under Sub-program

activities, including goods, consultant services,

training and operating costs for

(a) Federal Program – US$10 million

(b) Regional Program US$40 million

The percentage of Pooled Fund

Expenditures will be determined each

fiscal year by IDA in consultation with the

government.

Note: Figures in total may not add up due to rounding.

ANNEX 2: STATUS OF PSCAP’S RESULT MATRIX AS OF APRIL 2009


PSCAP Overall Outputs

Output Indicators and Status

PSCAP Overall Outcomes

Outcome Indicators and Status

Output Number 1—Strengthened Legal and Policy Framework

OUTPUT INDICATORS

1. Law reform and revision undertaken and adopted at federal level

2. Number of regions adopting enabling legislation for local authorities

3. Number of regions adopting various tax proclamations (income, excise,

turnover tax)

CONTRIBUTION OF EACH SUB-PROGRAM TO OUTPUT NUMBER 1

Justice System Reform Sub-Program (JSRP)

A larger number of laws were drafted and enacted including i) regional

family laws adopted by Somali, Gambella, Benishangul-Gumuz,

Oromia and SNNPR.; ii) amendments to regional constitutions by

Amhara, Gambella, Benishangul-Gumuz and Oromia; iii) over 20

establishment or reestablishment of executive organs in all regions; iv)

over five proclamations on the establishment of urban and rural centers

and their powers in Amhara, Somali, Dire Dawa; v) over 10

establishment of judiciary administrations including kebele social

courts in Amhara, Somali, Dire Dawa, Gambella, Oromia and SNNPR;

vi) over 20 proclamations to define legislative procedures for the

legislative organs; vii) code of conduct for civil servants, prosecutors,

appointed officials or council members etc.

Outcome Number 1--Increased Predictability and Adequacy of

Financial Resource Flows (In-Year and Across Years)

OUTCOME INDICATORS

1. Reduced budget variance

2. Reduced federal-regional and regional-local fiscal gaps

CONTRIBUTING SUB-PROGRAMS— Civil Service Reform

Sub-Program (CSRP) and Tax System Reform Sub-Program

(TSRP)

The Woreda and City Benchmarking Supply Side Survey showed

that the best performer jurisdiction that was able to consume the

allocated resources increased from 62% in 2005 to 79% in 2008.

As a result, the jurisdictions that are best performers in having a

close match between the planned budget and actual expenditure

also increased from 55% in 2005 to 63% in 2008.

Federal-regional transfers increased by 2 billion ETB in

2005/2006 and 2006/2007, by 4.4 billion in 2007/2008 and by 3.2

billion in 2008/2009. The nation-wide TSRP has contributed by

increasing the predictability and adequacy of financial resources

for service delivery. Tax effort by federal and regional revenue

offices have almost doubled between the project’s first year and

the last project year.

15

Urban Management Capacity Building Sub-Program (UMCBP)

All 11 regions adopted the city/municipal proclamation from a baseline

of six regions at the beginning of the PSCAP.

Regulations were issued in land, finance, human resources, and a large

number of municipals services.

National and regional urban development strategy and housing policies

were developed by federal government and implemented in Amhara,

Oromia, SNNPR and Tigray.

District Level Decentralization Sub-Program (DLDP)

The model local government legislative framework was developed by

the Ministry of Capacity Building. However, only Tigray (Numbers

99/98 and 199/99) and Harari proclaimed the act that determines

powers and duties of woredas. Six regions (Amhara, Oromia,

Benishangul-Gumuz, SNNPR, Somali and Gambella) completed the

draft act and are awaiting approval of the regional council. Afar

prepared a manual to determine the functional assignment between

region and woredas.

Civil Service Reform Sub-Program (CSRP)

The revised civil service proclamation was enacted and adopted by all

regions. A gender-responsive recruitment mechanism is one of the

features included in the revised civil servants proclamation and

provides for affirmative action towards females to join the civil service.

The financial laws, regulations and manuals were rolled out at the

federal level and to all regions.

The cash management directive and procurement law were

implemented at all levels—federal, regional, zonal and woreda.

The business process reengineering (BPR) guideline was approved by

Outcome Number 2—Greater Inclusiveness and Transparency of

Planning and Prioritization Processes

OUTCOME INDICATORS

1. Established practice of participatory budgeting and public

reporting on budgets and performance at all levels

2. Regular involvement of civil society in planning and

policymaking, budgeting, and review processes

CONTRIBUTING SUB-PROGRAMS— District Level

Decentralization Sub-Program (DLDP), Civil Service Reform Sub-

Program (CSRP), Urban Management Capacity Building Sub-

Program (UMCBP), and Tax System Reform Sub-Program

(TSRP)

The Woreda and City Benchmarking Survey (Citizen’s Report

Card) showed that 61% of households responded that Woreda

Council meetings are open to the public. The highest score was

documented in Amhara and Tigray with 87% and 80%, while the

least was documented in Addis Ababa and Oromia with 21 and

31%. Similarly, 62% of households covered by the survey

responded that woreda level government officials and the

councilors sought the most important development needs of the

kebeles taking the view of the public in to account. However, the

focus group discussions showed that there was no regular and

sustainable mechanism for participation and the participants were

equally divided when it came to the results of the participation.

Half of them believed that benefits were reflected in the

constructions of dams, schools, clinics, etc. through citizens'

participation, and the other half said there are no tangible benefits

that they could count on and participation was encouraged only

when it served the agenda of the local administration or merely

16

the Council of Ministers and has become operational at all levels of

government to streamline work processes.

Tax System Reform Sub-Program (TSRP)

All regions adopted the federal income tax and turnover tax

proclamation.

Agricultural income tax was issued in 10 regions. Afar put land policy

as a pre-requisite because land is communal property and the draft land

policy was submitted to parliament.

A large number of tax laws were issued by both federal and regional

governments.

for saying that there was participation without bringing any

change on the ground.

Outcome Number 3—Enhanced Fiscal Autonomy and Improved

Revenue Administration at all Levels

OUTCOME INDICATORS

1. Increased own revenue and unconditional transfers as a share of

total expenditures at sub-national levels

2. Increased tax efforts at all levels

CONTRIBUTING SUB-PROGRAMS— District Level

Decentralization Sub-Program (DLDP), Urban Management

Capacity Building Sub-Program (UMCBP), Tax System Reform

Sub-Program (TSRP) and Information and Communication

Technology (ICT)

The tax effort by federal and regional revenue offices has almost

doubled between the project’s first year and the last project year.

However, the tax to GDP ratio has deteriorated to 10 % compared

to 13% at the beginning of the project.

Coordinator Total Actual in

2005

In Millions

Total Actual in 2008

In Millions

Federal 9,735.3 19,275.8

Amhara 424.2 589.5

Tigray 178.0 341

Benishangul 27.1 38.0

Harari 16.1 29.8

Afar 30.0 52.6

Oromia 663.0 1,157.7

Output Number 2—Restructuring and Performance Improvements

OUTPUT INDICATORS

1. Percentage of ministries, agencies and bureaus (MABs), at federal level

and in each region, initiating restructuring and performance improvement

2. Percentage of woredas and municipalities undergoing restructuring

3. Percentage of courts at each level initiating performance improvement

4. Number of regions adopting sector-specific automated IT solutions


Information and Communication Technology (ICT)

17

The biggest investment in local jurisdictions was Woreda-Net.

Woreda-Net, initiated by the government, is currently operational in

600 woredas and an additional 178 newly established woredas are

being supported by PSCAP to obtain the necessary infrastructure and

training to make them operational. The use of Woreda-Net has been

instrumental in tackling the problem of information exchange vertically

and horizontally throughout the different levels of administrative

structures. It is also serving as a video conferencing facility for public

institutions, a mechanism to conduct court proceedings, training centers

and sometimes as Internet cafés.

A number of information systems and application were developed.

Common administrative applications are also being developed for

human resources management information systems, property

management, records management, transport fleet management,

purchase management, digital documentation and payroll systems.


The Business process reengineering (BPR) guideline was approved by

the Council of Ministers. The BPR report from each institution

documents the service standard for each core service and shows

significant reduction in processing time. At the federal level more than

40 institutions have been implementing BPR and are at different stages

of adoption. 1) Seven institutions, namely, the Ministry of Agriculture

and Rural Development (MARD), Ministry of Transport and

Communication (MTC), Ministry of Capacity Building (MCB),

Ministry of Federal Affairs (MFA), Ethiopian Revenue and Customs

Authority (ERCA) , Commercial Bank of Ethiopia (CBE) and the

Ethiopian Electric Power Corporation (EEPC) are at full-scale

implementation of the newly created processes; 2) Six institutions,

namely, Addis Ababa University, the Ethiopia Management Institute,

the Federal Civil Service Agency, the Ethiopian Civil Service College,

Addis Ababa 1,910.0 2,879.4

Somali 55.3 84.0

Dire Dawa 42.5 68.0

Gambella 10.7 27.9

SNNPR 286.0 486.8

TOTAL 13,378.2 25,030.5

The Woreda and City Benchmarking Survey showed that

woredas and cities are not currently strong in mobilizing their

own revenue despite increased efforts to assess their tax base.

The percentage of jurisdictions that collect a greater share of their

block grant in the form of local taxes and service charges and

thus show greater self-sufficiency actually dropped from 12% in

2005 to 5% in 2008. Similarly, the indicator that tried to depict

the trend of the jurisdictions towards improving their own

revenue by comparing collection of taxes, fees and service

charges between the current and previous fiscal year showed no

change in the best performers between 2005 and 2008. Four

percent of jurisdictions are best performers in both surveys,

however, the middle performers decreased from 18% to 13% and

the worst performers have gone up from 78% in 2005 to 83% of

the surveyed jurisdictions in 2008.

Outcome Number 4—Enhanced Incentive Environment for Public

Servant

OUTCOME INDICATORS

1. The extent to which performance evaluation and reward has

been introduced across the civil service

2. A comparison between consolidated civil service employment

packages (pay, terms and conditions, leave entitlement,

allowances etc) and those in other sectors

18

and Development Bank are pilot testing the new processes; 3) Thirteen

different institutions are at the redesigning stage; and 4) Sixteen

institution are now considered for scaling up the BPR. Similarly, at the

regional level, Oromia, Tigray, Amhara, SNNPR and Addis Ababa are

implementing the newly created processed and the others are at

different stages of adoption.

All budgetary institutions, regions and city administrations have

adopted the integrated budget and expenditure management system

(IBEX). The baseline for adoption of IBEX was only one region

(Amhara) at the start of the project and now all regions adopted the

system. In the advanced regions (Amhara, Tigray, SNNPR and

Oromia), Addis Ababa, and Afar the system is in place at regional

levels, zonal levels and selected woredas. In the other three developing

regions (Somali, Gambella and Benshangul Gumuz), the system was

implemented only at the Bureau of Finance and Economic

Development Office. IBEX was preceded by Budget Information

System (BIS) and Budget, Disbursement and Accounts (BDA) in many

of the regions. The system has improved the preparation of accurate

and timely financial reports, enhanced the reliability of the financial

management, and minimized the manual work.


Business process reengineering (BPR) was conducted in all offices,

including in urban-related institutions at federal and regional levels.

BPR is followed by restructuring each office according to the business

need and the setting of service standards.

The urban land information system is used in many regions.


Business process reengineering (BPR) was conducted in all offices

including in woredas. BPR is followed by restructuring each office

3. Recruitment and retention of categories of staff with specific

skills and experience


Sub-Program (CSRP), District Level Decentralization Sub-

Program (DLDP), and Urban Management Capacity Building

Sub-Program (UMCBP)

Result-Oriented Performance Appraisal System (ROPAS) was

reported to be operational in Tigray and Amhara covering over

155,000 staff. In Oromia, SNNPR, Addis Ababa, Benishangul-

Gumuz, Gambella the system was not implemented although

preparatory activities including training were provided. Somali,

Harari, Afar, Dire Dawa haven’t developed it yet. At the federal

level, ROPAS is being piloted at MFA, MARD, MTC, EMI,

TELE AGENCY, and MCB.

The Woreda and City Benchmarking Survey showed that more

and more jurisdictions were abandoning the effort to modernize

their human resource management and that more than half of the

jurisdictions were either not issuing job descriptions or evaluating

the performance of their employees regularly. The results of 2005

and 2008 for this indicator are very close with 47% and 46% of

the jurisdictions still remaining as best performance, respectively.

However, the middle level performers have decreased from 32%

of the total jurisdictions in 2005 to 22% in 2008. The worst

performers have increased from 21% in 2005 to 32% in 2008.

Woredas are suffering from difficulty to recruit and retain skilled

staff. The Woreda and City Benchmarking Survey showed that

the percentage of jurisdictions not affected by vacant approved

posts declined from 26% in 2005 to 20% in 2008. On the other

hand, the percentage of jurisdictions affected by a high-level of

vacancies has grown from 46% in 2005 to 66% in 2008.

19

according to the business need and the setting of service standards.


The Ministry of Revenue, Federal Inland Revenue Authority (FIRA)

and the Ethiopia Customs Authority (ECUA) conducted a

comprehensive BPR that looked thoroughly at the three organizations

to create a seamless organization and bring about institutional

transformation. FIRA, ECUA and Ministry of Revenue were merged

into one office (Ethiopian Revenue and Customs Authority) in June

2008. Regional tax administration offices were separately organized to

incorporate nationally similar functions except in Tigray and Afar

regions where they still function under the Ministry of Finance and

Economic Development Bureaus. BPR has resulted in significant

reduction in processing of tax and customs-related services.

Computerized tax identification number (TIN) was implemented in all

regions. The Standard Integrated Government Tax Administration

System (SIGTAS) was implemented in all federal branches and is being

rolled out to regions. The tax file management system has been

completed in all advanced regions and the two city administrations,

ASYCUDA++ was implemented in 20 sites across the nation,

biometric and the fingerprint machine is under contract.


The court reform program was initiated to improve court performance,

and was rolled out to all the courts at all tiers of government.

The House of People’s Representatives adopted new parliamentary

procedures and code of conduct for its members. A revised

proclamation for law-making procedures, including the process of

three-step reading and public hearings, was introduced in Oromia,

Tigray, and Benishangul-Gumuz.

A modern case management system was introduced at all levels of

court (Supreme Court, high court and first instance court) at the federal

Outcome Number 5—Improved Quality and Efficiency of

Operations

OUTCOME INDICATORS

1. Improved service levels in terms of access, responsiveness and

cost efficiency in priority sectors

2. Reduced unit costs and processing time for essential rural,

urban, social, and legal services in priority sectors



Program (DLDP), Urban Management Capacity Building Sub-

Program (UMCBP), Tax System Reform Sub-Program (TSRP),

Justice System Reform Sub-Program (JSRP) and Information and

Communication Technology (ICT)

The Woreda and City Benchmarking Supply Side Survey

revealed that the level of access to basic services improved

immensely when compared to the survey done in 2005. The

jurisdictions that were graded as best performers in 2005 was

only 25% compared to 84% in 2008 and the overall results

suggest that in more and more jurisdictions the public is having

better access to services considered basic. In terms of availability

of a range of agricultural services (support to the farmers with

respect to cooperatives, technical assistance, direct marketing,

food processing facilities, micro-finance, gender specific training,

etc.), best performing woredas increased from 48% in 2005 to

85%, which shows improvement in responsiveness. The Citizen’s

Report Card shows the following:

87% of household are satisfied with the processing time of

tax-related services. Over three-quarters of households are

20

level, Dire Dawa, SNNPR, and Harari. Amhara, Oromia and

Benishangul-Gumuz introduced it at the regional Supreme Court and

all their high courts. Benishangul-Gumuz has also introduced it in most

of their first instance courts (14/20). Tigray has introduced it at the

regional Supreme Court. Gambella hasn’t introduced it and there is no

information on Addis Ababa. Somali reported improvement in the

justice organization’s filing and recording system for their personnel,

prisoner’s records and case flow. Afar put in place an information

management system for the justice/prosecutor’s office.

satisfied with tax information as well as the attitudes and

ethical behavior of tax officials.

82% of households were satisfied with agriculture extension

services. When asked about the extent of the satisfaction,

42% were completely satisfied and 58% expressed partial

satisfaction. Over three-quarters of households were

confident that the responsible body will take action on the

complaints, suggestions and recommendations given by the

public. Highest satisfaction was recorded in Tigray with

92% satisfaction and the lowest in Benishangul-Gumuz with

31%.

Fifty-six percent of households were satisfied with the

education service. When asked about the extent of

satisfaction, 99.9 were partially satisfied and only less than

1% of the households were completely satisfied. Highest

satisfaction was recorded in Tigray and SNNPR (63% and

62%) and the lowest was in Harari and Benishangul-Gumuz

with 21% and 22%.

Forty-one percent of households were satisfied with

government health facilities. When asked about the extent of

satisfaction, 84% were partially satisfied and 16% of

households were completely satisfied. The highest

satisfaction was documented in Afar with 63% of households

expressing complete satisfaction, and the lowest was in

Benishangul-Gumuz with only 15% satisfaction.

Thirty-nine percent of households believe that the quality of

water provision services improved over the last two years.

The highest improvement was shown in Harari (54%).

However, 38% of households believed that there was no

change in the quality of water provision and 17 % of states

Output Number 3—Reforms of Expenditure Management System

OUTPUT INDICATORS

1. Percentage of budgetary institutions at each level implementing medium-

term and strategic planning

2. Number of regions adopting new budget structure at all levels

3. Number of regions adopting double-entry, modified cash systems at all

levels

4. Percentage of budgetary institutions at each level adopting cash

management directives

5. Percentage of budgetary institutions at each level rolling out automated

financial systems

6. Procurement legislation adopted and directives issued

7. Accounts and audits backlog reduced at federal and regional levels

8. Percentage of budgetary institutions preparing standardized internal audit

reports



The budget reform, cash management directive and procurement law

was implemented at all levels—federal, regional, zonal and all woredas.

Accounts reform was implemented at all levels—federal, regional,

zonal, and all woredas of the four relatively advanced regions, Addis

21

Ababa, and Harari. The developing regions also implemented, at

regional and in a selected number of woredas, except Somali where the

accounts reform hasn’t started. The integrated budget and expenditure

management system (IBEX) was implemented in federal institutions

and selected woredas of the four relatively advanced regions, Addis

Ababa, Afar and Harari. The other three developing regions

implemented it only at regional Finance and Economic and

Development Bureaus. Currently, there is no accounts backlog

compared to at least 1-2 years backlog at the beginning of PSCAP. The

information on external and internal audit preparation is not complete.

Oromia has no audit backlog while federal MoFED, Addis Ababa,

SNNPR and Harari have a two-year backlog. Similarly, SNNPR,

Tigray and Benishangul-Gumuz reported preparation of the internal

audit report at all levels and Gambella in limited offices.

The Woreda and City Benchmarking Supply Side Survey also showed

significant improvement. In the survey conducted in 2005, only 30%

of jurisdictions were rated best performers while the results of the 2008

survey revealed that 83% of the jurisdictions have efficiency and

comprehensiveness in their accounting and auditing procedures.

According to the current benchmarking results, the mid-level and worst

performers in 2008 account for 9% and 8% of the jurisdictions,

respectively.

said that the service had deteriorated. In, Afar, Addis Ababa

and SNNPR the households responded that the quality of

services had declined from time to time.

The court reform program was rolled out to all the courts at all

tiers of government. As a result, the clearance rate of cases

continued to stay above 80% in federal and sub-national courts.

At the supreme court level, Harari, Gambella and Tigray have no

backlog; Amhara and Benishangul-Gumuz have only one case

pending. Oromia and the federal supreme court have still

backlogs. At the high court and first instance court level, Tigray,

Benishangul-Gumuz and Amhara had no cases pending for more

than one year. ―Real-time dispatch‖ has been put in place, thus

allowing the sentences to be taken within one day, in cases of

clear identification of the crime and culprit in petty crimes.

The introduction of one-step/one-counter to file a case and the

introduction of Web-based services for opening a file have

reduced the cost of litigation and improved access significantly.

Over 430 client information counters were established in all three

tiers of courts across the nation to make information available to

the public on both individual cases and the judiciary in general.

On the more sophisticated side, the introduction of touch-screens

and interactive voice response systems has made information on

pending files easily available to clients and significantly

contributed in reducing the cost to access information. The

federal supreme court received, on average, over 54,000 calls per

year.

To increase access to justice alternative dispute resolution

mechanisms are increasingly accepted and used. In addition, the

federal supreme court uses the video conference to hear over 500

sub-national cases a year.

Output Number 4—Improved Personnel Management Systems in Practice

OUTPUT INDICATORS

1. Medium-term remuneration policy developed and adopted at all levels

2. Results-Oriented Performance Appraisal System (ROPAS) rolled out at

all levels and human resource (HR) guidelines in woredas and

municipalities developed, adopted

3. Percentage of budgetary institutions at each level implementing IT based

human resource management (HRM) systems


22


There has been no progress in the development of a medium-term

remuneration policy.

ROPAS was reported to be operational in Tigray and Amhara covering

over 155,000 staff. In Oromia, SNNPR, Addis Ababa, Benishangul-

Gumuz, and Gambella the system was not implemented although

preparatory activities including training were provided. Somali, Harari,

Afar, Dire Dawa haven’t developed it yet. At the federal level, ROPAS

is being piloted at MFA, MARD, MTC, EMI, TELE AGENCY, and

MCB.

There was limited progress in implementing IT supported HR

information systems. Tigray, SNNPR, Benishangul-Gumuz and

Amhara are using IT-supported systems for managing HR information.

Information on the federal level intervention was not provided.

To improve responsiveness, court layouts have become more

client-friendly. This includes, among others, introduction of

victim-friendly benches which are staffed with judges with the

right experience, social workers and legal counselors for child

victims, space for breast-feeding mothers etc.

Outcome Number 6—Improved Transparency and Accountability

OUTCOME INDICATORS

1. Reduced incidence of corruption and arbitrariness in rule

enforcement (as judged by economic agents)

2. Increased access to justice, recourse and redress

3. Enhanced independence of the judiciary

4. Increased access to government information improved



Program (DLDP), Urban Management Capacity Building Sub-

Program (UMCBP), Tax System Reform Sub-Program (TSRP),

Justice System Reform Sub-Program (JSRP) and Information and

Communication Technology (ICT)

Over 3,104 information/case officers have been put in place in

woredas where the good governance package was implemented.

Similarly, the Justice System Reform Sub-Program supported the

establishment of over 430 client information counters in all three

tiers of courts across the nation to make information available to

the public on both individual cases and on the judiciary in

general. On the sophisticated side, the federal courts have made

use of touch screens and an interactive voice response system

(dial 992) to provide information on pending cases easily to

clients. The Woreda and City Benchmarking Demand Side

Output Number 5—Intergovernmental Fiscal and Revenue Mobilization

Mechanisms in Place

OUTPUT INDICATORS

1. Number of regions adopting fiscal decentralization strategies including

capital funding mechanisms

2. Number of regions implementing TIN

3. Guidelines developed and implemented for implementing withholding

taxes, assessing presumptive tax bases

4. Strengthening and performance improvement of Federal Inland Revenue

Authority (FIRA) and Customs



23

All regions are implementing computerized tax identification numbers

(TINs). Since its initiation in 2003 by the federal government and its

adoption starting in 2004/2005 by all regions, 434,551 (i.e. 407,584

individuals 13,611 businesses, and 13,356 unidentified) tax payers were

issued TIN certificates.

Presumptive taxation guidelines for implementing withholding taxes and

assessing presumptive tax bases were developed. A national profitability

rate was issued for all types of small businesses as a model for adaptation

by all regional states. The standard assessment replaced the estimated

assessment which was prone to corrupt practices.

The Ministry of Revenue, Federal Inland Revenue Authority (FIRA)

and the Ethiopia Customs Authority (ECUA) conducted a

comprehensive business process reengineering (BPR) that looked

thoroughly at the three organizations to create a seamless organization

and bring about institutional transformation. FIRA, ECUA and the

Ministry of Revenue were merged into one office (Customs and

Revenue Authority) in June 2008. Regional tax administration offices

were separately organized to incorporate nationally similar functions,

except in Tigray and Afar, where they still function under the Ministry

of Finance and Economic Development Bureaus. The BPR has

resulted in significant reduction in processing of tax and customs

related services. For instance, collection/receiving of taxes is now done

in less than half an hour compared to several hours before the BPR.


Five-year municipal capital investment plans were prepared with the

participation of stakeholders and are now being refined to produce a

three-year investment plan.


Survey (focus group discussion) confirmed the existence of

institutional focal points where suggestions and complaints can

be made. The extent to which citizens are listened to by local

administration was also perceived positively as many of the

participants agreed that it is improving. But they rated the

recourse and redress mechanism as inadequate because of the

delay in response.

The Woreda and City Benchmarking Supply Side Survey shows

that public access to basic information in written form such as

budgets, audit reports, strategic plans, tax assessment, and

services provided by the jurisdiction has improved significantly.

The best performer in local jurisdictions increased from 70% in

2005 to 95% in 2008. Similarly, the demand side citizen’s report

card showed that 61% of households responded that the woreda

council meeting is open to the public. The highest score was

documented in Amhara and Tigray with 87% and 80% while the

least was documented in Addis Ababa and Oromia with 21% and

31%.

However, in spite of the above positive findings, the awareness of

households on overall woreda activity was very low. 83-87% of

household have no information on the woreda level government

budget, strategic plan, or the local government agenda. Only 13-

17 % of households had information on budgeting, strategic plan,

and agenda of their respective woredas. The focus group

discussion also showed that the practice of sharing annual

budgets, audit reports or proceeding of council meeting was

absent.

The recent study on independence, transparency and

accountability in Ethiopian judiciary reports that the

independence of courts is adequately recognized and protected in

the Ethiopian Constitution and the various laws concerning the

24

Specific purpose grants for capital investments were introduced from

the federal level to the four relatively-advanced regions and

Benishangul–Gumuz and from these regions to 51 pilot woredas.

The model fiscal transfer formula for both sedentary and pastoral-based

regions was developed by the Ministry of Capacity Building. Six

regions (Amhara, SNNPR, Benishangul-Gumuz, Somali, Oromia and

Afar) are using the transfer formula developed by in-house experts.

judiciary. In practice, judicial independence has improved but

progress remains to be made in the understanding of, and respect

for, the principles of judicial independence both by all judges and

by executives.

The Woreda and City Benchmarking Survey (Citizen’s Report

Card) shows that only 4% of households reported making extra

payments outside the legal requirement for any government

services in the last year. The highest proportion of payments

reported were from Tigray and Amhara with 7% of households

making extra payments to government tax services while the least

was reported from Oromia and Afar at 2%. Similarly over three-

quarters of households believed that tax officials were honest and

dependable.

Output Number 6–Vertical Accountability Mechanisms Established

OUTPUT INDICATOR

1. Service standards for urban and other essential services developed and

established at all levels



The woreda minimum standard service indicators and reporting

mechanism was developed by the Ministry of Capacity Building for

adoption by regions. Tigray implemented at regional sector bureaus

and service institutions and SNNPR in 134 woredas and 13 zones.

Amhara, Somali and Oromia completed the study. The four relatively

advanced regions are using BPR to also set service standards.


25

BPR was conducted in all offices at the federal and regional levels.

BPR has been followed by restructuring each office according to the

business need and the setting of service standards.

Output Number 7–Horizontal Accountability Mechanisms (or Checks and

Balances) Established

OUTPUT INDICATORS

1. Number of regions implementing guidelines for citizen participation at

the woreda and municipal levels

2. Percentage of courts at each level undergoing performance improvement

3. Enhanced independence and efficiency of judiciary

4. Judges and lawyers trained



All regions except Somali have adopted the framework for grassroots

participation. Somali developed the manual but it is in draft form.

Regions, particularly the bigger regions, have strengthened

participation through the good governance package.


The framework for public participation was developed by the Ministry

of Urban Management and Works and is adopted by all regions.


At the federal level, a tax review committee was established within the

tax authority for redress. To avoid long delays in cases, separate

26

prosecutors and investigators were organized with regards to tax

offence. However, the Woreda and City Survey (Citizen’s Report

Card) showed that only 45% of households know where they have to go

to make complaints and suggestions in relation to tax.


The court reform program was initiated to improve court performance

and was rolled out to all the courts at all tiers of government.

The recent study on independence, transparency and accountability in

Ethiopian judiciary reports that the independence of courts is

adequately recognized and protected in the Ethiopian Constitution and

the various laws concerning the judiciary. In practice, judicial

independence has improved but progress remains to be made in the

understanding of, and respect for, the principles of judicial

independence both by judges and by executives.

The training aspect of the judicial reform has moved forward

significantly. Over 22,000 judges were trained on short and long-term

professional training and over 2,000 support staff were trained in

professional skill upgrading and on-the-job training.

ANNEX 3: DETAILED PROJECT DESCRIPTION


1.1 How PSCAP’s two components work

The Bank’s Support Project is fully aligned with the basic design of the Government’s PSCAP.

As such, it supports the scale-up of ongoing institutional transformation and capacity building

activities through two components—one federal, and the other regional. Activities planned

under these two components are drawn from a menu of eligible expenditures consisting of

PSCAP’s six subprograms and a mandatory program support activity.

Component 1—Federal PSCAP: This component supports federal level activities across

each of the six subprograms including those capacity building activities for which there are

scale and network economies including those activities that require national level

prototyping. The component is required to include basic program support activities to ensure

effective implementation.

Component 2—Regional PSCAP: This component constitutes the bulk of the Program and

is designed to empower regions to adapt and implement national reform and capacity

building priorities envisaged under PSCAP’s six subprograms in a manner that is efficient,

accountable, and sustainable. Synergies and trade-offs between key subprograms are fully

leveraged through this component. Regions can also shift resources year-to-year and in-year

from poor performing to higher performing subprogram activities. This component is also

required to include basic program support activities to ensure effective implementation.

1.2 Drawing down on activity menus within PSCAP Subprograms

The objectives and specific menu of activities that fall within each subprogram of PSCAP are

explained below. Selected and planned on an annual basis, these activities provide the building

blocks for the components described above.

Subprogram 1—Civil Service Reform (CSRP). The overall objective of the Civil Service

Reform Subprogram is to promote the development of an efficient, effective, transparent,

accountable, ethical and performance-oriented civil service at the federal, regional, and local

levels. Under this subprogram, beneficiaries draw down on support across the following seven

areas:

Strengthening the capacity of Civil Service Reform (CSR) Coordinating structures is

designed to enable CSR coordinating structures at federal, regional and local levels to more

effectively support target institutions in implementing reforms and performing at levels that

citizens require of them. Specifically, the following activities are envisaged: (1) review and

redesign of the organizational structures as well as roles and responsibilities of CSR

coordinating structures; (2) assessment and implementation of jobs and staffing requirements

for change management and results-oriented performance; (3) assessment, management, and

implementation of training requirements including preparation of materials, training of

trainers, packaging of generic training activities, and coordination of external training or

study tours; (4) design, development, and adoption of appropriate CSR change management

28

(including M&E) and coordination systems; and (5) strengthening of Information, Education,

and Communication activities including the provision of equipment and technical know-how.

Improving expenditure management and control activities seek to deepen implementation of

the Country Financial Accountability Assessment Report and Country Procurement

Assessment Report Action Plans, strengthen Ethiopia’s public sector fiduciary framework,

and in the process, improve the efficiency and effectiveness of public expenditure

management through the following capacity building activities: (1) development of a

comprehensive legal framework for public sector financial administration; (2) nation-wide

adoption of the new budget classification systems and related budget reforms; (3) roll-out of

the double entry accounting system; (4) development of medium-term planning systems

including the transition from the existing Public Investment Program into a Public

Expenditure Program or PEP system and its integration with strategic planning and

management initiatives; (5) implementation of procurement reforms; (6) strengthening of the

internal audit function including the introduction of systems audits; and (7) modernization of

cash and asset management. The roll-out of financial management information systems

(IBEX) that was included in the original action plan will now be undertaken by the

Protection of Basic Services.

Improving governance of human resources management and control aims to instill ethical,

merit- and performance-based personnel management practices in the Ethiopian civil service

through the following capacity building activities: (1) development and implementation of

the prototype rules, regulations, and policies for human resource development, time

management, promotion and transfer, as well as job grading and remuneration; (2) rollout of

the results-oriented performance evaluation system and related incentive measures; (3)

development and installation of payroll management as well as more comprehensive human

resource management information systems; (4) strengthening of human resources through

improved in-service training and sensitization of civil servants of key Government policies.

Improving performance and public service delivery is a spearhead of the overall Civil

Service Reform Program and aims to install a performance management system across

ministries, agencies, and bureaus (MABs) in a phased manner. Specifically, the following

activities are envisaged: (1) assessment of performance barriers through client surveys,

business process and functional reviews, and training assessments; (2) preparation of targeted

performance improvement plans and more comprehensive strategic plans; (3) retooling,

training, implementation support, and related technical assistance for implementation of

performance improvement initiatives.

Improving accountability and transparency activities include: (1) strengthening of external

audit and parliamentary oversight for economic governance; (2) technical assistance for

promotion of performance monitoring techniques including expenditure or input tracking

surveys, cost efficiency studies, and service delivery report cards; (3) development and

implementation of ethics management and anti-corruption policies; and (4) continuing

support for the development of accounting and auditing professions.

Strengthening top management systems through: (1) the development of new and improved

strategic planning and management systems, performance measurement techniques, and

29

decision-making methods to aid civil service management; (2) training of top managers in

strategic planning, performance measurement, top management decision-making, and value

for money management; (3) development and implementation of top management

development systems inter alia through leadership training and preparation of handbooks.

Building the policy and institutional capacities of emerging regions such as Afar, Somalia,

Benishangul-Gumuz and Gambella, through: (1) assessment of existing civil service

institutions including identification of capacity and infrastructure constraints as well as

performance barriers; (2) development, on a learning by doing basis, of alternative

techniques for implementing modern civil service management practices and reforms in

emerging regions; (3) development and implementation of basic or ―hybrid‖ legislation,

structures, and systems to support basic governance improvements in emerging regions.

SUBPROGRAM 2—DISTRICT-LEVEL DECENTRALIZATION (DLDP). The Subprogram seeks to

deepen the devolution of power to the lower tiers of regional government, to institutionalize

decision-making processes at the grassroots level with a view to enhancing democratic

participation, to promote good governance, and to improve decentralization service delivery.

Capacity building support under the subprogram covers the following seven areas:

Capacity building for manning and training activities support the following technical

assistance activities: (1) preparation of human resource plans for woredas including

aggregate projections of staffing requirements; (2) assessment of short-term training needs

for woredas; (3) development of modules for short-term in-service training for electorates,

administrators and civil servants in areas such as decentralization policy and strategy, local

governance and capacity building, democratization, grassroots participation, general

management, monitoring and evaluation, and local level planning; (4) development of

systems for provision and evaluation of in-service training; and (5) training of trainers in

facilitation techniques to support training of woreda level personnel.

Grassroots participation support activities for woredas includes technical assistance and

training activities for (1) further development of local grassroots participation framework

manual and related monitoring and reporting mechanisms; (2) promotion of participatory

techniques in woredas including the involvement of NGOs, civil society institutions, and

other donor agencies in the development process at the local level; (3) measurement of the

impact of participatory techniques and processes.

Capacity building for woreda institutions and organizations involves: (1) technical assistance

for gap analysis of functional assignments and remedial actions; (2) preparation of

restructuring guidelines based on the legal framework of the regional governments and

sample woredas; (3) implementation support for restructuring and performance improvement.

Capacity Building for Program Development includes technical assistance for the following:

(1) assessment and refinement of decentralization strategies and linkages among programs &

sectors; (2) assessment of the impact of decentralization policy; (3) conduct of policy

analysis on capacity building and decentralization; (4) development of benchmarks and

monitoring and evaluation system for implementation of DLDP and strengthen the capacity

of DLDP office; and (5) evaluation of PSCAP plans of woredas for nine regional

30

governments and evaluation of the overall performance of woredas for nine regional

governments.

Capacity building for woreda fiscal transfer and own revenue enhancement comprise the

following technical assistance activities: (1) studies, development, and adoption of model

formula and budget allocation system for region-woreda block grant; (2) studies on options

for capital investment and sector priority setting at woreda level; (3) identification of

institutional constraints on and remedial measures for own revenue collection, utilization,

and revenue sharing at the woreda level.

Capacity building for woreda planning and financial control aims to strengthen expenditure

management and related fiduciary aspects of woreda decentralization through: (1) the

development and implementation of a local (Woreda) multi-year planning system and fiscal

framework; (2) training and technical assistance for improving reporting and supervision

practices; and (3) the development and roll out of budget consultation systems to ensure

participatory woreda planning and budgeting. It is important to note that capacity building

activities related to financial management such as the roll-out of budgets and accounts

reforms are undertaken at the woreda level under the ―governance of financial resource

management‖ activities envisaged under the CSRP.

Minimum service standards for woredas helps establish minimum basic service levels in

priority sectors inter alia through: (1) technical assistance for refinement of minimum

standard service indicators; (2) the development of general guidelines for rural woredas; and

(3) assessment of the implementation of minimum service levels including through

performance benchmarking at the woreda level.

SUBPROGRAM 3—JUSTICE SYSTEM REFORM (JSRP). The Subprogram aims to promote the rule

of law as well as the efficient and effective functions of the justice system as part of Ethiopia’s

democratization and private sector development processes. The Bank assistance supports the

following activities:

Strengthening of the Justice Systems Reform Office involves (1) review of the organizational

structures as well as roles and responsibilities of Justice System Reform Office structures; (2)

assessment and implementation of jobs and staffing requirements for change management

and results-oriented performance; (3) assessment, management, and implementation of

training requirements including preparation of materials, training of trainers, packaging of

generic training activities, and coordination of external training or study tours; (4) design,

development, and adoption of appropriate change management (including M&E) and

coordination systems; and (5) strengthening of Information, Education, and Communication

activities including the provision of equipment and technical know-how.

Strengthening the judiciary comprises the following capacity building activities: (1) training

and professional development of judges and court clerks (with a special focus on the training

of female judges); (2) establishment of training institutes for the judiciary; (3) court

administration reform; (4) implementation of modern case load management systems within

federal and regional courts; and (5) identification of measures to enhance access to justice.

31

Law Revision and law reform initiatives include consultancy services for: (1) technical

analyses and studies on the establishment of systems and procedures for declaring income

and property; (2) reviews and analyses in new areas of law; (3) publication and distribution

of legal research materials; (4) compilation, consolidation and distribution of legislation and

regulations; (5) studies on procedural, commercial, and stock exchange draft laws.

Strengthening legislative processes is achieved through (1) training, technical advisory

services, and acquisition of equipment for staff of federal and regional standing committees

on legislative drafting and analysis of legislative process and management; and (2) training

for members of standing committees on principles of federal grant and intergovernmental

fiscal framework, monitoring and impact assessment, HIV/AIDS and gender issues,

accountability and participation.

SUBPROGRAM 4—URBAN MANAGEMENT CAPACITY BUILDING (UMCBP). The objective of

the Urban Management Reform Subprogram is to enhance the capacity of municipalities in the

delivery of services and enable urban centers to play a more effective role in social and economic

development. Three sets of activities, financed under PSCAP, are envisaged.

Federal and regional urban management policy involves technical assistance and support for

(1) preparation of a National Urban Development Policy; (2) preparation of a National Urban

Land and Housing Policy and Strategy; (3) preparation of a Model Municipality Act; (4)

establishment of the Urban Development Fund (UDF); and (5) establishment of the National

Association of Municipalities.

Deepening the process of decentralization covers support for (1) preparation of model

operating manuals and prototypes on financial management, procurement and contract

administration, solid waste management system, operations and maintenance of

infrastructure services, archive management, organizational structure and staffing plan,

personnel policies and incentive mechanisms, land information systems, model municipality

acts, model city court systems, municipality revenue and inter-governmental fiscal transfer

systems (including service charges), and urban planning systems; (2) strengthening of

relevant federal and regional institutions to provide technical support; (3) development of

efficient revenue mobilization and fiscal transfer mechanisms including analyses of revenue

potential of various urban centers; and (4) establishment of regional and town planning units.

Local government restructuring and capacity building involves technical assistance and

implementation support for the following municipal level activities: (1) the delivery of

sanitation services; (2) the supply of serviced of urban land; (3) restructuring of the

municipal financial system; (4) restructuring and preparation of staffing plans; (5)

introduction of land information systems; (6) restructuring of services delivery systems in the

areas of procurement and contract administration, operation and management of

infrastructure services, overall municipality service delivery system, revenue mobilization

and fiscal transfer; and (7) provision of "bulk" generic training to regional and municipality

staff.

SUBPROGRAM 5—TAX SYSTEMS REFORM (TSRP). The Subprogram aims to encourage capital

investment and development, increase tax revenues (through improved compliance and

32

efficiency of collection), and ensure equity and fairness in the tax system through a

comprehensive overall of the current legislation and tax administration system. These objectives

are to be achieved through the following subprogram activities:

Tax policy and legislation activities include technical assistance for (1) the amendment of the

current income tax legislation by reflecting the current tax business and investment

environment; (2) strengthening of the enforcement powers of the tax collection institutions;

(3) simplification of tax administration procedures and practices; (4) issuance and adoption

of proclamations, regulations & operational directives; (5) development and implementation

of regional revenue enhancement programs; (6) development of agricultural income tax and

land use fee proclamations and directives; (7) research and review of various proclamations

that need to be amended; and (8) analyses of revenue potential across regions.

Taxpayer Identification Number (TIN) system rollout activities aim to information sharing

between FIRA, ECuA, as well as regional and city administrations in order to control tax

evasion, create a dependable database on taxpayers, and forge efficient and effective tax

collection through inter alia: (1) installation of equipment at operational TIN sites; (2)

deployment of the TIN system at the national and regional levels; (3) training in the TIN

system of relevant staff and other users; (4) enhancement of MIS capacity including

procurement of hardware and software; (5) development, printing and publication of

certificates, forms and manuals; (6) public awareness campaigns for tax payer registration;

(7) monitoring and evaluation of the implementation activities; (8) establishment of links

between TIN system of customs and financial institutions; and (9) TIN implementation for

new tax payers.

Presumptive taxation implementation aims broaden the tax base through sensitization of the

hard-to-tax group, particularly the large informal sector and taxpayers who understate their

income, through: (1) review of the profitability rate; (2) surveys of annual turnover of

businesses; (3) IEC and other consultations with stakeholders prior to making amendments;

(4) development and implementation of profitability rate directive(s); (6) development of

relevant operating manuals and training for staff and taxpayers; (7) implementation of

standard assessments based on review of the profitability rate; (8) development and

implementation of accounting systems for revenue transfer payments refund; and (9) review

and implementation of the revised standard assessment scheme.

Value-Added Tax (VAT) implementation aims to ensure the appropriate balance between

income taxes and commodity/consumption taxes, enhance the competitiveness of the

Ethiopian business community internationally, and promote capital investment and

development through technical assistance and capacity building for: (1) migration from VAT

system to the main VAT system; (2) development and implementation of coherent

operational programs and procedures; (3) development and implementation of

comprehensive audit and enforcement programs; (4) organization of sustained staff training,

taxpayers education campaigns, registration and revenue collection activities; and (5) regular

monitoring and evaluation of the implementation progress.

Strengthening of organizational structures, operational programs, systems and procedures is

expected to foster voluntary compliance by taxpayers and ensure fairness and equity in tax

33

administration through support for: (1) the development and implementation of

comprehensive and accurate computerized accounting systems and operations; (2) training

of federal, regional and city administration tax officers on the usage of manuals and adoption

of various systems and procedures (3) review and evaluation of other relevant strategies,

systems and procedures; (4) identification of training needs and organizing training and study

tours; (5) customization & implementation of the integrated tax system; and (6) adoption of

an effective organizational structure with competent and skilled staff.

Reforming and modernizing customs aims to improve the efficiency, efficacy, and

transparency of customs services through (1) supporting the migration to an enhanced IT

system; (2) improving the management of the tariff classification through inter alia

establishment of a customs laboratory; (3) establishing a customs training school to develop

the knowledge and skills required by ECuA personnel to successfully implement new

programs and procedures; (4) strengthening enforcement to combat contraband trade and

international criminal activities; and (5) implementing all procedures consistent with sub-

regional, regional, and international agreements.

SUBPROGRAM 6—INFORMATION AND COMMUNICATIONS TECHNOLOGIES (ICT). The

objective of Subprogram is to harness ICTs for the development of human resources,

democratization, service delivery, and good governance. Several programs under PSCAP

including CSRP, DLDP, Urban Management, and Tax Sector Reform are seeking to use ICTs in

this manner. Successful implementation of ICT-based solutions across government will require

support for the procurement of hardware and software, establishment of enabling legislation and

regulations on the procurement and utilization of ICTs, development of human resources,

content, and applications relevant to service delivery; and promotion of community-based

information systems/services. The following areas are being addressed under this subprogram:

ICT human resource development for e-government initiative seeks to generate a critical

mass of ICT literate worker in government through the following activities: (1) provision of

ICT training for civil servants at all levels of profession; (2) establishment of ICT training

centers, where relevant and affordable; (3) development of ICT training materials in working

and local languages; and (4) provision of technical assistance to review human resource

requirements of rolling out Government systems and applications.

ICT for public service delivery and good governance through technical assistance and

capacity building for: (1) development of information systems strategies, system design

studies, and related analyses; (2) establishment of regional information centers, where

feasible and affordable; (3) implementation of WAN, LAN and other information systems at

the federal and regional levels; (4) procurement of appropriate hardware and software for

public service delivery systems; and (5) IEC and other awareness building activities.

ICT applications for sector development in health, education, agriculture, e-government, e-

commerce, and other priority sectors through technical assistance, procurement of

equipment, and training to support (1) customization of common administrative applications

to regional context; (2) development and implementation of sectoral information systems at

federal and regional levels; (3) coordination of different sector-specific information systems.

34

Community-based information systems and services that allow access to government data and

information and enable communities to become centers of indigenous knowledge and

contents. The latter is an important dimension of ICTs for development and a strong effort

must therefore be made to enable ICTs to operate at grass roots level and in all walks of life.

The empowerment of communities with information is essential to its pursuit of specific

developmental activities. These goals are expected to be achieved through: (1) development

of local language content; (2) repackaging of globally available information to local

community needs; (3) establishment of multi-purpose community centers; (4) broadcasting of

information through the local media; (5) procurement and distribution of appropriate

technology for information sharing; and (6) training of communities in ICT use.

Mandatory activity—Program support. A mandatory activity, program support, is designed

to ensure speedy implementation of the six subprograms under both the federal and regional

components. It finances incremental costs associated with operating requirements of Planning

and Programming Departments or equivalents in regions, the Budget and Finance Directorate in

the MCB, and related subprogram offices that serve members of the federal and regional

Technical Teams. Support activities also include the costs of program/project coordination and

planning, training management, IEC activities, monitoring and evaluation, training of staff in

program management, auditing, office supplies, equipment operation, transport, travel, and per

diems.

35

ANNEX 4: RISK MONITORING AND RISK MITIGATION MATRIX


Risk Rating at

Appraisal

Risk Mitigation Measure Agreed at

Appraisal Progress Over the last 5 years

Current

Rating

From Outputs to Objective

Insufficient expressed demand on the part of

citizens, civil society, and the private sector for

improved public sector performance in terms

of service delivery, empowerment, and good

governance

H IEC campaigns prior to implementation

continued; systematic disclosure of

findings of service delivery and related

assessment; regular workshops with

clients governed by institutional charters

across civil service institutions

Following the introduction of business process

reengineering and the good governance package,

service delivery standards are developed and

institutional focal points are established.

Although, encouraging signs are reported by

regions, the public is still not making the official

account based on the standards set. The efforts

government made in BPR and good governance

merit reduction in the risk rating but continued

effort on the government side is needed to

encourage citizens to participate in matters

affecting their lives. In addition, several programs

and implementing agencies such as the tax system

reform, court reform, and civil service reform are

using print and other media to create awareness

among the public.

S

Absence of or delay in woredas’ and

municipalities’ access to fiscal support for

investment and recurrent service delivery

needs, after receiving capacity building support

N Both budget and capital investment

support will provide fiscal additionality to

capacitated local jurisdictions to meet

recurrent and investment service delivery

needs

Short term infrastructure support was provided by

CBDSD followed by ULGDP a larger scale

program for urban local governments. Similarly,

the LIG is providing infrastructure support to pilot

rural districts.

N

Overemphasis on process rather than the

bottom-line of service delivery and

empowerment

S PSCAP outcomes are defined in terms of

service delivery impact rather than simply

triggers; over time, outcomes rather than

outputs provide basis for allocation and

reallocation decisions

Considerable progress has been made in rolling

out of Business Process Reengineering (BPR)

across tiers of government. High level political

support for BPR improvements in areas relevant

to investment climate (such as trade licensing,

customs, courts). Progress warrants a reduction in

the risk rating.

M

36

Lack of coordination between subprograms and

their outputs, or lack of consistency public

sector reform programs across regions

S The design empowers regions to prioritize

between subprograms, exploiting

synergies between them, and at the same

time, leveraging the expertise of federal

subprogram directors to ensure complies

with national policy directors and

standards for content and implementation

The financial and implementation autonomy

provided to regions under PSCAP is already

bearing fruit. However, the role of the Federal and

Regional Technical Teams in ensuring

coordination and quality assurance still need to be

strengthened considerably for the system to

function effectively.

S

Political commitment to institutional

transformation wavers, or Government is

unable to sustain focus on PSCAP because its

ambitious development agenda (including food

security, human development, rural

development, and private sector development)

M High level political involvement in

consensus building around PSCAP across

ministries, among regional leaders;

establishment of a nation-wide structure of

capacity building bureaus and offices with

budgetary responsibilities

Political commitment to public sector capacity

building has sustained. GoE is committed to

ensuring sustainability of the capacity

development activities because they comprise a

primary means of ensuring continued social and

economic development as well as contributing to

the continuing legitimacy of Ethiopia as a Federal

State through PSCAP’s concentration (80% of

total funding) on capacity building at regional

level and below.

N

From Components to Outputs

Vested interests at regional and federal levels

hamper various reforms including

restructuring, accountability, and systems

modernization efforts

S At the regional level, allow for

prioritization and reallocation from

subprograms that are stalled towards those

proceeding rapidly

Reallocation between sub-programs is allowed and

has enabled regions to strategically choose

depending on their situation. Following the

extensive restructuring effort across federal and

regional offices and a healthy competition and

mutual learning between regions merits adjustment

of the risk downward.

M

Lack of coordination among donors supporting

the Sector Wide Approach

M Establishment of a Joint Government-

Donor PSCAP Working Group to

facilitate joint quarterly review meetings,

semi-annual supervision, and annual

review missions; increased supervision

intensity for Bank and donor team

including measures to better meet due

diligence requirements in regions,

woredas, and municipalities

Considerable progress has been made in the

formal adoption of the TOR for the Joint

Government-Donors PSCAP Working Group and

the signing of the MOU for pooling donors under

the PSCAP SWAp. A total of US$77 million in

bilateral and multi-lateral assistance was

leveraged to match IDA’s US$80 million

contribution to the pool. The joint working group

conducted all implementation support missions

together. In addition, a multi-donor trust fund is

established and managed by the Bank to

effectively support government in tacking

implementation issues and coordinate inputs.

The progress warrants a reduction in the risk

rating.

N

Constraints on the cost, innovation, quality, H Assessment of the supply-side of training Pre-qualification of training supplier by the M

37

timeliness, and efficiency of the supply

response of purely public sector supply of

training and capacity building in Ethiopia

and capacity building across Ethiopia’s

public, private, and non-profit sectors;

pre-qualification of training suppliers for

―generic training‖ activities; and

strengthening of public sector training

institutions to carry out ―in house‖ training

activities

Ministry of Capacity Building was delayed

significantly and the joint government –donor

working group decided that it should be delegated

to the implementing agencies. Both federal and

regional implementing agencies are now using

both the public and the private sector for

providing some of the generic training therefore

the progress warrants a reduction in the risk

rating.

Weak institutional capacity at the regional and

federal levels to carry out core financial,

procurement, program management, and M&E

activities, particularly in emerging regions

H Establishment of well-staffed Planning

and Programming Directorates (PPDs) and

subprogram offices or equivalents;

contracting in skills through local

consultants to support various aspects of

program management; preparation of

sample Terms of Reference and

procurement materials; intensive training

of Government officials; preparation of

M&E Action Plan as part of PIP/OM;

incorporation of semi-annual and annual

output commitment into participation and

performance agreements

The Planning and Programming office at MCB

and its equivalents at regional level have been

established and were relatively well-staffed at the

beginning of the project, but suffered high

turnover of staff over the years which constrained

MCB’s capacity to provide the overall

coordination and support. Despite the above,

implementing agencies gained a lot of experience

in project management, procurement and financial

management mainly through doing the job.

Similarly, the M&E framework was developed in

a most consultative manner but implementing

agencies reports mainly focused on inputs and

outputs which neglect results. Although, the risk

is adjusted downward from appraisal, it still

requires continuous follow-up.

S

38

Severe constraints on absorptive capacity in

emerging regions

H Strong program support prior to project

effectiveness with the assistance of the

Ministry of Federal Affairs; offering

premia on fees for consulting assignments

in remote regions; establishment of

―minimum mandatory‖ amount of

capacity building and a floor on

reallocation of drawing rights from any

given region

Although the support anticipated by the MFA has

never materialized so far, the regions made their

own efforts to make-up for the constraints in

capacity and were able to implement project

activities although with some delays. The risk is

therefore adjusted from H to M by taking into

account the efforts the regions are making.

However, these regions have to be supported

effectively to make up for the historical

marginalization. Therefore, MFA should be

given the necessary budget to support them

effectively.

M

Arbitrariness in resource allocation across

federal institutions and to regions, and weak

capacity to effect mid-year and annual

reallocation of drawing rights against plans

S Formula-driven drawing rights with clear

decision rules for performance-based

reallocation; strengthening of the network

of PPDs to support planning and M&E

The PSCAP budgeting process is generally robust.

The vertical division between regional and federal

resources is largely consistent with the agreed 80-

20 split. The Government used the chart of

accounts to annualize budgets across subprograms

and regions in line with the PIP’s rules. Although,

the main potential risk for arbitrariness, the mid-

year and annual reallocation, was never put in

practice, some arbitrariness is reported by sub-

programs in regions in terms of Bureaus of

Capacity Building / Finance and Economic

Development not disseminating full information

to each sub-program at regional level which may

lead to arbitrary reallocation between sub-

programs without proper consultation and

discussion in the regional technical team.

M

NEW: Potential disruption caused by

predictable factors such as the upcoming 2010

election, could cause some disruption to

project activity. A change in the political

complexion of government could also

potentially change aspects of the PSCAP

program of GoE.

M Project annual planning and procurement

planning will be undertaken in sufficient

time to avoid decision making during the

run up to the election. Officials undertaking

PSCAP activity are unlikely to be

significantly involved in election

procedures. Given the objectives of

PSCAP, these are unlikely to be

significantly changed by a new incoming

government.

39

NEW: The past five years have been hectic in

bringing about change and capacity

development in the public sector in Ethiopia.

Continued pressure has been exerted on civil

servants to implement the changes required.

This could bring about change fatigue, limiting

the efficiency and effectiveness of PSCAP

inputs.

S PSCAP is undertaken by a well functioning

system of Capacity Building Bureaus

(CBB) at federal and regional levels.

Whilst these are small in numbers for the

task to be undertaken, they nevertheless

provide for a separate implementation

capacity for PSCAP. Efforts will be made

to encourage GoE at the federal and

regional levels to supplement the staffing

of CBB’s, upgrade their skills and offer

further incentives for performance.

Overall Risk Rating H M

Risk Rating H (High Risk); S (Substantial Risk); M (Modest Risk); N(Negligible or Low Risk)

ANNEX 5: AGREED ACTION PLAN TO RESOLVE KEY CHALLENGES


1. Background

The Ethiopia Public Sector Capacity Building Program (PSCAP) Support Project is

designed to support the scaling up of state transformation within the six core public

sector reform sub-programs. It aims at improving the scale, efficiency, and

responsiveness of public service delivery at the federal, regional, and local levels;

empowering citizens to participate more effectively in shaping their own

development; and promoting good governance and accountability in its public sector.

The PSCAP support project has been under implementation since November 2004

and is expected to be completed in December 2012. The support project is funded

from different sources including government treasury, IDA credit and other

multilateral and bilateral donors including DFID, CIDA, EU, Irish Aid and Italian

Development Cooperation. Out of the total original estimated fund requirement of

about 400 million USD, the disbursement effected so far is around 212 million.

The government recognized the need for extending the support project to complete

activities envisaged in the current project and has approached the IDA and other

donors for additional financing in order to be able to ensure sustainability of the

reform initiatives and achieve the desired project development objectives. The IDA

and all other donors indicated above except the Irish Aid have shown interest and

commitment to support the project.

The additional financing of the project was expected to go to the World Bank Board

on December 22 and we were informed that the Board submission was delayed. We

also learned that the cause of delay relates to the challenges identified during the JSM

workshop in March-April 2009 and prior interactions with PSCAP stakeholders. The

purpose of this document is therefore to summarize key challenges identified by the

joint supervision mission and suggest a course of action to initiate the process of

resolving them. For some, the solutions are rather easy and for others it will require

time and continuous dialogue to come-up with workable solution. In the following

paragraphs of this paper, overview of results, major challenges, and proposals for

action are briefly described followed by detailed action plan in a table.

2. A Brief Overview of PSCAP Results

The fourth joint supervision mission (JSM) of the current PSCAP support project was

conducted in March - April 2009 and reviewed the PSCAP implementation progress

to date. The JSM deliberated on the achievements, lessons learnt, and challenges as

well as on the way forward. The JSM meeting was chaired by H.E. Ato Adamu

Ayana, State Minister of MCB and was attended by about 150 participants coming

from all PSCAP implementing regional and federal agencies. The World Bank

Country Director, Mr. Kenichi Ohashi, delivered a key note speech at the opening

session.

41

It was noted that the project has documented remarkable results across the sub-

programs. The legal and policy framework, across all sectors at the federal and

regional level, has been substantially strengthened through enactment of

proclamations in tax, finance, civil service, business process, civil, criminal as well as

laws that determine the powers and responsibilities of the three branches of

government. Restructuring and service delivery improvements are taking place at all

levels of government through the business process reengineering (BPR). The system

of vertical accountability is now initiated through the development of minimum

service standards. The prototype district level minimum standard service indicators

and reporting mechanism were also developed by the district level decentralization

program of MCB for adoption by regions.

Following the introduction of BPR, a significant number of service delivery

institutions at federal and sub-national levels automated essential processes to

improve service efficiency. The investment in IT was critical in operationalizing the

systems such as the integrated budget and expenditure management system, tax

identification numbers, integrated government tax administration system, automated

system for customs data (ASYCUDA++), case flow management for the judiciary etc.

Similarly, skills development through short and long-term training, on-the job training

and study tours progressed very well across sub-programs. The nation-wide Tax

System Reform sub-program has made significant contribution in increasing the

predictability and adequacy of financial resources for service delivery. Tax collection

by federal and regional revenue offices has almost doubled between the project’s first

year and the last project year. Horizontal accountability mechanisms or checks and

balances are being enhanced through establishing participatory practices and

improved performance and independence of the judiciary.

3. Key Challenges and way forward

The challenges and problems encountered in the process of implementation were

identified and discussed at the last JSM with the objective of improving

implementation of PSCAP in the coming years. The major key issues and challenges

include leadership and coordination of the program implementation, monitoring and

evaluation, human resource management, procurement capacity, need for extra

support to developing regional states, coordination of the justice system reform

program, mass training, cross-cutting issues and synergies between PSCAP and other

related programs like DIP, PBS, LIG and ULGDP. Following the joint supervision

mission, studies were undertaken in six specific areas and recommendations were

made. The Government has agreed to tackle the key challenges during the additional

financing period and these were included in the main body of the Additional

Financing Project Paper. The main PSCAP project and the PSCAP Facility are

expected to complement each other in funding key activities to address

implementation hurdles under the program as they did in the past.

3.1 Leadership and Coordination

i) PSCAP is the main medium through which the government is making endeavors to

build all-inclusive capacity in public organizations. Various reports of PSCAP

implementation including the mid-term review and other studies showed that there

was maintained sense of ownership and effective implementation in federal and

42

regional subprograms where the political leadership was closely engaged in the

support project. The MCB has now appointed State Minister to be in charge of

political and administrative leadership as well as for the overall coordination of the

support project. Steering committees comprising heads of agencies at both federal and

regional levels will be strengthened to provide support and oversight at the highest

level.

ii) In the meantime, the federal technical team and regional technical teams will be

revitalized with focused roles and responsibilities. Some federal subprogram offices

have already established and maintained strong coordination with their regional

counterparts and have been assisting them to implement the subprogram. All federal

subprogram offices will be made to establish strong coordination in order to be able to

provide effective support. Furthermore, joint government and donor working group

will have significant role to play in supporting the coordination among various

stakeholders of PSCAP.

iii) MCB has already committed to reviewing and renewing the existing PSCAP

coordination machinery and following that to review and amend as necessary the

existing terms of reference for its constituent groups. There will be a meeting of the

Heads of Federal and Regional Agencies during the third week of February at which

the coordination machinery of PSCAP will be discussed and changes outlined.

Revised Terms of Reference for PSCAP support project focused leadership and

coordination is expected to be produced by the first week of April. And MCB will be

seeking to renew the commitment of the leadership at both the federal and regional

levels through various consultative mechanisms and improved communications from

February 2010 onwards. Specific actions are appended as annex.

3.2 Monitoring and Evaluation

i) The PSCAP support project has a comprehensive M&E framework that was

developed in a participatory manner with a support of an international consultant and

several training sessions were conducted for its users during the implementation of the

project. In addition, the project has made significant investment in M&E through the

Woreda and City Benchmarking Survey which provides an independent evaluation on

the impact of PSCAP and other big programs in improving service delivery,

enhancing accountability, transparency and empowerment. The recently completed

Results Analysis of PSCAP also complemented the Woreda and City Benchmarking

Survey by providing detailed information on activities, inputs, outputs and outcome of

each sub-program as well as its baseline on each of the indicators for future

comparison.

ii) Albeit all the efforts made, monitoring and evaluation activities remained at low

level of performance. The consultants’ report on monitoring and evaluation states that

the absence of designated M&E focal persons in executing agencies, lack of

institutional and individual incentives for reporting, and lack of skills in results

reporting has resulted in less attention to M&E and progress reports of the project to

focus mainly on inputs and outputs. MCB will take all the necessary measures to

change this scenario in the upcoming support project.

43

iii) Therefore MCB is now committed to filling all 5 vacant posts in the PPD through

open recruitment or transfer from other departments or regions. These posts are

expected to be filled by June 2010. As part of this process, at least two dedicated

M&E staff will be recruited and trained for PPD. In addition, by first week of June

2010, MCB will require the identification of a named individual dedicated to M&E in

each Federal Sub-Program and Regional BCBs and named (at least part-time) M&E

staff in each sub-program within Regions. These staffs will be trained in M&E

techniques with the assistance of PSCAP partners.

iv) The further Strategic Plan of Government for the next five year period is currently

being produced. This requires all agencies to establish a baseline of their current

activity against which progress may be measured in the future. PSCAP is a critical

part of this process and will provide the basis for an ongoing M&E system in

conjunction with the existing PSCAP Support Project M&E framework and the

Woreda-City Benchmarking Survey. Details are annexed

3.3 Reforms under the CSRP

i) The challenges under the CSRP relate to the coordinating structure and staffing,

delayed implementation of some HRM reforms, coordination of sub-components and

consistency of reform initiatives under the CSRP as well as communication strategy

of the program. It is important to clarify how the CSRP is intended to move forward.

ii) The GoE believes that the BPR designed and implemented so far at different tiers

of government has laid basis for the intended HRM reforms. BPR has brought about

job enrichment and the identification of skills to undertake the new jobs. New

institutions have been established and old one’s merged or their functions devolved.

BPR is now in its full implementation phase in a majority of federal and regional

public institutions and is being followed by balanced scorecard performance

management system currently underway in 10 federal ministries and 5 Regions,

including Addis Ababa. During 2010 another 5 institutions will begin implementation.

The remainder of the federal institutions and the developing regional states will be

implementing in the period 2010/13. The BPR and Balanced Scorecard lay the

groundwork for pay reform to be undertaken incorporating performance elements.

Therefore BPR required a new HRD strategy which is being developed through the

DFID support and will be implemented through PSCAP support project. A TOR has

been prepared and recruitment started of a consultant to undertake this work. The

Federal and Regional governments will decide upon the implementation of the

designed system during the current year (2010) and it is expected to be implemented

from 2011 onwards.

iii) HRD has been identified as one of the key thematic areas by the government in the

coming five years strategic development plan and will continue to be top priority. In

HRD, the PSCAP support project will also focus on strengthening federal and

regional management institutes, judicial training centers, the Ethiopian Civil Service

College and its specialized departments like urban and tax institutes and other

learning and consultancy institutions that are well positioned strategically to ensure

continuous provision of training to upgrade skills and competences of civil servants in

a sustainable manner. Other actions under HRD component include:

44

The Human Resource Management Information System (HRMIS) and Job Evaluation

and Grading (JEG) components of the HRM reform are in agreed procurement plans

for 2010 and already have agreed TOR’s. A team of experts formed from Civil

Service Agency, Ethiopian Management Institute and Civil Service College is

developing a detail plan for the JEG. However, procurement process for HRMIS has

currently ceased due to a lack of available resources.

The Fast Stream proposals have already been approved by the government and are

expected to figure in the 2011 plans although some regions have already shown an

interest in beginning implementation starting from 2010.

The Leadership Development Scheme has been approved by the government and is

already underway through the Civil Service College and expected to be fully launched

during 2010/2011.

iv) The CSRP components envisaged to be implemented under the Civil Service

Agency and Civil Service College encountered delays partially due to the lack of

access to the PSCAP resources and procurement administration. Now streamlining of

the arrangement for procurement administration and access to funds of PSCAP

support project is being worked out. The MCB will take all the necessary measures to

finalize this process in consultation with the beneficiary institutions by third week of

May 2010.

v) In addition to the above, consultants are now undertaking the assessment on the

civil service reform program and this is expected to inform future courses of action.

This assessment is expected to be completed in March 2010 and will be rounded off

by a presentation workshop for key stakeholders including PSCAP partners. An

implementation plan will be developed following the assessment report based upon

recommendations agreed by the government. This implementation plan is expected to

be finalized by May 2010.

vi) Six vacant posts in the CSRP Office will be filled with professional staff by May

2010 through combination of recruitment and transfer from other federal or regional

agencies.

3.4 Justice System Reform Program

i) The Justice System Reform Program is probably the biggest reform program in

terms of issues covered and number of beneficiary institutions expected to benefit

from the program coordination. It covers executive, legislative and judiciary organs. It

also deals with the most complex and sensitive governance issues. As such, it requires

strong and capable management to coordinate the diversity of stakeholders and related

issues. All the beneficiary institutions at the federal level are expected to work very

closely with the JLSRI to access the PSCAP resources and implement their plan.

Many beneficiary institutions under this program expressed their dissatisfaction with

the coordination (planning, budget disbursement, procurement processes and

interaction required for the project monitoring) of this program. Furthermore, donor

partners with a special interest to support this sector like CIDA and EU expressed

their concern on the coordination of the Justice System Reform Program. The JSM

recommended a review of the program coordination in the upcoming support project

45

in order to improve the implementation of the program components carried out under

different institutions.

ii) The consultants’ study report on the JSRP showed that those challenges and

problems related to coordination, planning process, resource allocation, professional

focal persons, monitoring and procurement are prevalent almost at all levels of

government though at varying degrees of intensity. The study report recommended

various options including decentralization of responsibilities and removing the role of

JLSRI as a coordinating body at federal level. The government has taken note of all

the assessments mentioned above and is now ready to take all necessary actions.

iii) Though one of the five components of the JSRP, the Court Reform

implementation management at the federal level was put under the federal Supreme

Court and was given direct access to the PSCAP resources during the life of current

project. The federal court reform was one of the best performing and currently has

established well focused management and staff to sustain and enhance the

implementation process of the reform initiatives. Therefore the weaknesses we are

referring to here do not include the Court Reform. Streamlining of the arrangement of

fund disbursement and procurement administration for 3Ps is being considered and

expected to be finalized after consultation with the executing agencies. This is

expected to be finalized by the third week of May 2010 and is believed to improve the

performance of 3Ps.

iv) MCB has given its commitment to examining the overlap between PSCAP and

DIP programs regarding support to the capacity development of the legislative organs

like HoF, HoPR, OFAG, HR and Ombudsman institutions. As part of this process,

MCB will include the PSCAP partners’ proposal to review and exclude the legislative

organs from PSCAP Support Project if necessary as DIP is already committed to

supporting these institutions and as this would also ease the burden of administration

of JSRP coordination. This examination will be completed and final agreement will

be concluded by the third week of May 2010.

v) MCB has already given its commitment to filling current vacancies in the JLSRI

concerned with PSCAP management and administration and requiring the provision

of a named focal person for continuing PSCAP work associated with components

retained under the JLSRI. These improvements are expected to be in place by June

2010.

3.5 Supports to Developing Regional States

i) The recent study on the developing regions reported that PSCAP has made a

positive impact on the development of the four DRS by ways of strengthening

federalism, stabilizing the border regions, improving public service delivery and state

transformation. With all these positive contributions, the study has also shown that

there have been uneven impacts of PSCAP due to lack of capacities to utilize the

PSCAP resources in the DRS resulting in delay of reform processes. The study also

recommended special support to these DRS with PSCAP resources to make up for the

historical marginality. Specific recommendations include strengthening of the MFA

to effectively support these regions, strengthening inter-regional cooperation and

professionalization of civil servants. Those recommendations have already become

46

priority areas of intervention and the government has taken various measures

particularly in this budget year. The MFA is finalizing a strategic plan with the

objective of enhancing the overall capacity development and transformation in those

regional states. PSCAP will complement these initiatives and continue to scale up

through technical and financial assistance.

ii) MCB is committed to developing, in line with the emerging MFA strategy, tailored

capacity building strategies for each individual DRS. The synergy of government and

partner inputs to the DRS is the responsibility of and organized by MFA. The

timescales of the above efforts are for MFA to make; however MCB undertakes to

assign a MCB officer on an ongoing basis to liaise and follow up on issues related to

the DRS.

3.6 Gender

i) The consultant’s report on gender documented various achievements of PSCAP

implementation including general awareness and knowledge about gender issues and

HIV/AIDS, the inclusion of gender equality issues in some guidelines prepared by

regional bureaus, the openness of planners and implementers to address gender

concerns in their programs and activities. Particularly worthy of note is the inclusion

of gender-responsive recruitment mechanisms in the revised civil servants

proclamation that provides for affirmative action for females to join the civil service.

The report has also identified various weaknesses along with these achievements and

recommended an enormous number of measures. The weaknesses mentioned in this

report are more or less similar to those reported in other consultants’ study reports and

expected to be jointly addressed with other recommendations.

ii) Government is already committed by policy to gender mainstreaming. The issue is

now how to implement it in a practical and effective way. The MCB proposes to

continue to dialogue on this issue with PSCAP partners and engage expert support in

an effort to operationalise the gender mainstreaming policy and the relevant

recommendations made by the PSCAP gender consultancy. An immediate suggestion

is to make a few critical recommendations into PSCAP mandatory actions for

completion by all beneficiary institutions in the next PSCAP funding phase. MCB

will raise the issue for discussion and agreement at the Joint Working Group meeting

in March 2010.

3.7 Training

i) The implementation report of PSCAP support project so far shows that about 65

percent of the total expenditure went to training programs mainly to mass training on

government’s policies and strategies. Issues related to training can be limited to the

following: the mass training consumed too much money; this was not well captured in

the annual action plans; and the results of mass training were not tracked and

measured systematically to show value for money (economy, efficiency,

effectiveness). Queries related to huge amount of money used for this training and

result tracking of the training programs were recurring several times even before the

JSM on various occasions.

47

ii) The study report on the training has identified some shortcomings and suggested

recommendations the consultants thought would be helpful. Some of the

recommendations were well in line with the government strategy and have already

been underway. These include strengthening the training institutions like Civil

Service College, Ethiopian Management Institute, and their regional counterparts. The

need for skill development programs suggested by consultants will also be pursued in

the upcoming PSCAP support project.

iii) Government is committed to a training system which is initiated by individual

governmental institutions based upon needs identified through training needs analysis

and monitored and evaluated by formal systems. Thus, training will be provided

according to the need of individual institutions and tailored to their needs instead of

mass training efforts. Institutions will submit their training needs on an annual basis in

their annual action plans. Given the ongoing implementation of BPR, the

identification of training needs has been enhanced and this will become more evident

as time goes forward. The development of systems to monitor and evaluate training

will be developed by the M&E focal persons at federal and regional levels once they

are in post (see M&E section).

3.8 Communications

i) The MCB is now committed to improving communications and the flow of

information to all PSCAP stakeholders. Towards this end, an international consultant

is already working to update the PSCAP communications strategy and improve the

capacity of the MCB Communications Unit (Public Relations Department). The

consultant’s final report and further recommendations will be made available to

PSCAP participating partners in June 2010, whereas the consultant will be making a

presentation and discussion of findings to date at the March meeting of the PSCAP

Joint Working Group.

ii) Dialogue between PSCAP stakeholders will be enhanced through the inauguration

of regular quarterly meetings of the Joint Working Group as well as the existing bi-

annual Joint Supervision Missions. Further ad-hoc meetings of the Joint Working

Group may also be undertaken when necessary. Following inaugural meetings in

December and February, a further Joint Working Group meeting will be held in

March 2010.

iii) Lack of information breeds suspicion and ignorance of the progress being made

and challenges being overcome in PSCAP. The MCB is already in the process of

improving its website by uploading the PSCAP results analysis and success stories.

Despite current limitations in server capacity, MCB will strive to provide further

policy and monitoring documents on the website and provide PSCAP stakeholders

with public information.

48

3.9 Synergies with other programs

Interdependence of various programs like DIP, PSCAP, PBS, LIG and ULGDP is

well understood by the government. A joint review of the programs was suggested on

various occasions though not yet effected. MoFED has already given commitment (at

the PSCAP Joint Working Group Meeting on Friday 5 February) to undertake

analysis to identify the synergies between PSCAP and other programs and will

dialogue with development partners on the subject by June 2010.

3.10 Technical Assistance

The government recognizes its limitations in technical capacity to implement its own

strategies efficiently and effectively and therefore welcomes technical support from

PSCAP partners specifically in M&E, result measurement, procurement

administration and financial management.

Detailed Action Plan

Recommendation Actions Time Frame

(deadline) in 2010

Responsible

body

1. Strengthened Leadership and

Coordination.

Consultative meeting with heads

of federal and regional agencies to

agree on strengthening the PSCAP

support project management

Reinstating the steering

committees at both federal and

regional levels as well as federal

technical team and regional

technical teams

Develop TOR to facilitate the

leadership and coordination roles

and agree with stakeholders

including PSCAP partners

Third week of

February

First week of

April

First week of

April

State Minister of

MCB, Heads of

BCBs

2. Strengthened Monitoring and

Evaluation

Fill the 5 vacant posts in PPD of

MCB through recruitment or

transfer from other federal

agencies or regions

Each federal and regional

subprogram name and notify an

M&E focal person

Provide training for M&E focal

persons at federal and regional

levels

First week of

June

First week of

June

Third week of

June

State Minister of

MCB, Heads of

BCBs

3. Strengthened CSRP Office with

the necessary staff and, clear and

coherent plan of action

Fill the 6 vacant posts in CSRP

Office through recruitment or

transfer from other federal

agencies or regions

Revise the existing CSRP action

First week of

June

First week of

State Minister of

MCB, Heads of

BCBs

50

plan/procurement plan following

the expected recommendation of

the undergoing consultancy result

and agreement by the GOE

Finalize agreement between the

relevant stakeholders how to

streamline and expedite

procurement process and fund

disbursement to Federal Civil

Service Agency and Civil Service

College.

June

First week of

June

4. Streamlined and strengthened

JSRP management

Finalize agreement providing easy

access to budget resource and

procurement administration for

3Ps

Obtain/name the focal person in

the JLSRI for day to day

interaction with PSCAP

stakeholders

Final agreement to avoid

overlapping of PSCAP and DIP

resources in legislative organs

capacity development

First week of

May

First week of

June

First week of

May

State Minister of

MCB, Heads of

BCBs

5. Concerted support to DRS Consultation with the MFA

leadership and technical staff to

map out the strategy on how best

to support the developing regional

states

The tailored intervention strategy

for each DRS will be finalized and

shared with PSCAP partners

A focal person will be assigned to

follow-up on this particular issue

of DRS

Third week of

March

First week of June

Third Week of

March

State Minister of

MCB

51

6. Gender mainstreaming to focus on

a certain mandatory activities

Joint working group will identify a

few critical minimum mandatory

activities that will be implemented

in PSCAP

All implementing agencies will

include these in their annual action

plan and periodic reporting

Third week of

March

In the course of

action

State Minister of

MCB, Heads of

BCBs

7. Moving from mass training to

institutional development training

Identify priority areas through

needs analysis or BPR and include

in annual action plans

Measure the results progressively

after implementation

In the course of

action

State Minister of

MCB, Heads of

BCBs

8. Strengthen communication with

PSCAP stakeholders

Organize a JWG meeting to

identify priority issues for action

(like BPR and HRM reform,

gender, baseline, etc.)

Action plan to implement

recommendations of the consultant

as agreed by the government

Agree on dialogue process and

follow up of issues arising in the

course of implementation

Third week of

March

First Week of

April

On quarterly and

ad-hoc basis

State Minister of

MCB

9. Maximum synergies with other

programs including DIP, PBS, LIG

and ULGDP

Consultation meeting with MoFED

and other relevant lead agencies

First week of June

State Minister of

MCB and

MoFED

Multilateral

department head

ANNEX 6: MAPS

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