Volume I: Main Report

Mid-Term Review

For the MENA Transition Fund

Final Report

November 2014

Proudly Incorporating HTSPE

Contents Abbreviations and Acronyms ....................................................................................................................... iv

Executive Summary ....................................................................................................................................... 1

1. Introduction .......................................................................................................................................... 3

2. The MENA Transition Fund ................................................................................................................... 4

3. The MENATF Project Portfolio .............................................................................................................. 7

3.1 Portfolio Alignment with Deauville Partnership, MENATF and TC Objectives ............................. 7

3.2 New Actors and an Agent for Change ........................................................................................... 9

3.3 Capacity Building ......................................................................................................................... 11

3.4 Project Progress .......................................................................................................................... 12

3.5 Sustainability ............................................................................................................................... 15

4. Overall Fund Performance .................................................................................................................. 15

4.1 Introduction ................................................................................................................................ 15

4.2 The MENATF’s role within the Deauville Partnership ................................................................. 15

4.3 The MENATF’s performance as a Financial Intermediary Fund (FIF) .......................................... 16

4.3.1 Fund Design ......................................................................................................................... 16

4.3.2 Governance ......................................................................................................................... 16

4.3.3 Resource Mobilisation, Allocation and Substitutability ...................................................... 18

4.3.4 Communications ................................................................................................................. 20

4.3.5 The Fund-level Results Framework ..................................................................................... 20

4.3.6 Risk Management ............................................................................................................... 20

4.3.7 Fund Efficiency .................................................................................................................... 21

5. Findings and Recommendations ......................................................................................................... 22

5.1 Findings ....................................................................................................................................... 22

5.1.1 MENATF as a Deauville Partnership Deliverable................................................................. 22

iii

5.1.2 MENATF Performance as a FIF ............................................................................................ 22

5.1.3 The MENATF Project Portfolio ............................................................................................ 23

5.2 Conclusions and Main Recommendations .................................................................................. 25

5.3 Other Recommendations ............................................................................................................ 26

Tables Table 2.1: Funding allocated by ISA .............................................................................................................. 6

Table 3.1: Approved MENATF Projects by Subsector ................................................................................... 7

Figures Figure 2.1: Percentage of funding allocated by country ............................................................................... 5

Disclaimer

This mid-term review of the Middle East and North Africa Transition Fund (MENATF) was prepared by

DAI Europe at the request of the MENATF Steering Committee. The views expressed in this report are

those of the consultants and do not necessarily reflect the opinions of the Steering Committee, the

Coordination Unit or of the many stakeholders who contributed their ideas to the consultants.

iv

Abbreviations and Acronyms

ACT Arab Countries in Transition

AfDB African Development Bank

ALMP Active Labor Market Program

AMF Arab Monetary Fund

AFESD Arab Fund for Economic and Social Development

CBJ Central Bank of Jordan

CETMO Centre for Transportation Studies for the Western Mediterranean

CMU Country Management Unit

CSO Civil Society Organisation

CU Coordination Unit

DAC Donor Assistance Committee

DFID Department for International Development (UK)

DFVP Development Finance Vice-Presidency

EBRD European Bank for Reconstruction and Development

EFSA Egyptian Financial Supervisory Authority

EIB European Investment Bank

EOI Expression of Interest

ESSN Energy and Social Safety Nets

E-TVET Employment, Technical and Vocational Education Training (Jordan)

FEMIP Facility for Euro-Mediterranean Investment and Partnership

FIF Financial Intermediary Fund

FIPA Foreign Investment Promotion Agency (Tunisia)

FRP II Fiscal Reform Project II (Jordan)

GCC Gulf Cooperation Council

IsDB Islamic Development Bank

IFC International Finance Corporation

IFI International Finance Institution

IMF International Monetary Fund

ISA Implementation Support Agency

ISTD Income and Sales Tax Department (Jordan)

ITC International Trade Centre

JCIP Jordan Competitiveness and Investment Project

JCP Jordan Competitiveness Program

JEDCO Jordan Enterprise Development Corporation

JSDF Japan Social Development Fund

LOGISMED Euro-Mediterranean Logistic Network

MENA Middle East and North Africa

MENATF MENA Transition Fund

MERE Ministry of Electricity and Renewable Energy (Egypt)

v

MNADE Middle East and North Africa Development Effectiveness (World Bank)

MOF Ministry of Finance

MOIC Ministry of International Cooperation (Egypt)

MOPIC Ministry of Planning and International Cooperation (Jordan)

MS Moderately Satisfactory

MU Moderately Unsatisfactory

MSME Micro, Small and Medium Enterprises

MTR Mid-Term Review

NGO Non-Governmental Organisation

NUR National Unified Registry (Jordan)

OECD Organisation for Economic Cooperation and Development

OFID OPEC Fund for International Development

P# Project number

PEV Plateforme Emplois Verts (Tunisia)

PORG Public Opinion Research Group

RE Recipient Entity

RFP Request for Proposal

ROE Roster of Experts

S Satisfactory

SC Steering Committee

SFD Social Fund for Development (Egypt)

SME Small and Medium Enterprises

STAR Stolen Asset Recovery

TA Technical Assistance

TC Transition Country

ToR Terms of Reference

TRANSTRAC Regional Integration through Trade and Transport Corridors

TUNEREP Tunisia Energy Reform Plan

U Unsatisfactory

UAE United Arab Emirates

UNEP United Nations Environment Program

UNIDO United Nations Industrial Development Organization

UNOPS United Nations Office for Project Services

USAID US Agency for International Development

USC Unité de Suivi des Concessions (Tunisia)

WB World Bank

1

Executive Summary

The Middle East and North Africa Transition Fund (MENATF) was established in 2012 as one of the

outcomes of the Deauville Partnership. The objective of the Fund is “…to improve the lives of citizens in

transition countries, and to support the transformation currently underway in several countries in the

region by providing grants for technical cooperation…”.

When the MENATF was established it was decided that a mid-term review would be commissioned after

18 months of operation. DAI Europe was contracted to carry out this mid-term review.

Results from the MENATF can be assessed at three levels: the Fund’s broad institutional and strategic

role in the context of the Deauville Partnership; MENATF performance as a multi-donor Financial

Intermediary Fund (FIF); and the performance of the 53 projects that have been approved so far using

MENATF resources.

MENATF as a Deauville Partnership Deliverable

The MENATF was referred to by a wide range of stakeholders interviewed as the only “concrete” result

of the Deauville Partnership. This judgment does not give adequate credit to the Partnership’s other

achievements, but it does reflect a wide perception amongst stakeholders. The MENATF appears to be

the primary ongoing activity keeping all the original partners together. In addition, it has provided

significant coordination benefits to the participating Implementation Support Agencies (ISAs) and

Recipient Entities (REs), and particularly to those who did not already have established relationships

with each other.

The MENATF will continue to play this significant role as long as there are additional funds to be

allocated to new project proposals. When this is not the case it is likely that participation in Steering

Committee (SC) meetings will decline and the MENATF’s role in keeping the Deauville Partners together

will lose impetus.

There is very strong support for the MENATF from all stakeholders. Many of the Deauville Partners are

currently providing large bilateral aid programmes to some of the Transition Countries and some are

also working together at substantial cost to halt undesirable trends of change in the region. By

comparison with these financial, humanitarian and other interventions the costs of the MENATF are

relatively small and the Fund is expected to provide very significant benefits in its role to support

peaceful economic and political transformation in the transition countries.

MENATF Performance as a FIF

The MENATF was established quickly, was well designed and has been very competently managed. Its

governance structure has performed well and communications between partners have generally been

excellent, although the Coordination Unit (CU) could have produced more material in Arabic and French.

The greatest weakness of the MENATF has been the unpredictability of funding. SC meetings have only

been called when it was certain that new resources would be available, and short notice was given for

2

submission of new proposals. This has meant that proposals have been produced too quickly, leading in

some cases to inadequate preparation and reducing the ability to be innovative or bring in external

partners.

The MENATF Project Portfolio

The MENATF project portfolio is diverse. Many of the projects are very closely linked to sensitive and

important social transition issues – combating corruption, strengthening parliaments, reinforcing social

safety nets, supporting subsidy and fiscal reform, building relationships between NGOs and government

– or to issues that are critical to economic change, such as tackling unemployment, promoting Micro,

Small and Medium Scale Enterprises (MSMEs) and strengthening investment promotion efforts.

In many of these cases the projects are at the heart of new approaches to the change process. In

countries where in the past decisions were taken at the top there are now better processes of

consultation with civil society, efforts to bring together different vested interests and find means of

consensus, real parliamentary discussion and transparent consultative reviews of policy options with

national stakeholders. The projects that are supporting these transformation efforts are some of the

most valuable of the MENATF interventions – but they are by their very nature the ones that will often

take the longest to mature.

The portfolio includes many projects involving new relationships, between ISAs and between ISAs and

REs. Capacity building components are integrated into many of the projects, and are already generating

clear benefits as RE staff receive training inside and outside their own countries and capacity building,

for wider groups of beneficiaries, gets underway. The overall portfolio offers significant opportunities

for cross-learning between MENATF projects in different countries that are tackling similar issues with a

range of international partners, and a start has been made on exploiting these opportunities.

There is no ideal single method of monitoring the progress of MENATF funded projects, but the best

single source is the ratings provided by ISAs every six months. The great majority of projects are rated

as satisfactory or moderately satisfactory in their implementation and in their progress towards meeting

their objectives. The consultants have checked most of the project ratings in the three countries visited

and although some adjustments are suggested the great majority of projects are rated as satisfactory or

moderately satisfactory in their implementation and in their progress towards meeting their objectives.

Given the uneven nature of the political transition process in the six countries, this is a very encouraging

situation.

Although the process of transition has been uneven, the current form and scope of the Fund remain

relevant to the TCs, particularly because of the value added the Fund provides with technical assistance

supported by the specialised knowledge of the ISAs. In all three TCs visited stakeholders noted that they

had additional projects under preparation for MENATF funding, confirming their confidence that the

Fund remains relevant to their needs.

3

Main Recommendations

It is recommended that the donors make commitments to fund the MENATF for a three year period

from January 2015, pledging a flow of funds adequate to allow at least three annual calls for

proposals. ISAs and REs should be informed that future rounds are forthcoming, and that they can plan

projects over the period, taking as much time as is necessary to ensure there is adequate consultation

and quality project preparation (including the involvement of a more diverse range of partners) before

SC submission. This process should also allow a slightly longer period for expert reviews and would

allow better programming of SC meetings over the next three years.

If this key recommendation is accepted by the SC the resource mobilisation efforts for the Fund may

need to be temporarily reinforced. This could be done in two ways. A small group of donors might join

the co-chairs for a coordinated effort to reach an agreed target. In addition the six transition countries

might make a joint appeal to donors. These efforts would need to be supported by a strengthened

communications effort from the CU.

If the donors decide to add significant resources to the Fund it is recommended that the Deauville

Partners and the SC also review the possibility of expanding the geographical scope of the Fund within

the MENA region to other countries making a commitment to economic and political transformation.

Chapter 1:

Introduction

3

1. Introduction

The Middle East and North Africa Transition Fund (MENATF) was established in 2012 as one of the

outcomes of the Deauville Partnership. The objective of the Fund was “to improve the lives of citizens

in transition countries, and to support the transformation currently underway in several countries in

the region by providing grants for technical cooperation…”.

When the MENATF was established it was decided that a mid-term review would be commissioned after

18 months of operation (see Operations Manual, section 3.12: MENATF, 2013). The World Bank

contracted DAI Europe1 to carry out this mid-term review. The terms of reference, which also provide

background to the MENATF, are in Annex A.

The approach taken to the assignment has involved a combination of field visits to meet stakeholders in

Washington DC and in Egypt, Jordan, Tunisia and the United Kingdom, an on-line opinion survey to

gather views from a wide range of stakeholders, telephone interviews with donor representatives,

representatives of Implementation Support Agencies (ISAs) and project leaders from ISAs, review of a

wide range of documentation and analysis of assembled information.

The consultants are very grateful to the large number of stakeholders who have communicated with the

team in a variety of ways. Annex B lists all those who have been involved in face-to-face or telephone

interviews. In addition many anonymous respondents completed the on-line survey (details are in

Annex E), so the views of about 200 stakeholders are reflected in this review.

The major information source for this study was the MENATF website2, which provides a wealth of

material in the form of annual reports and six-monthly progress reports, all the documentation for each

approved project, financial information, the Operations Manual, legal agreements with donors and ISAs,

steering committee minutes and consultant reports. The consultants also were provided with the Public

Opinion Research Study (PORG, 2014) which researched the views of key stakeholders on the MENATF,

the comments made by members of the Roster of Experts (ROE) on project proposals (the CU provided

ROE reports on 42 projects to the consultants for review; ROE 2012, 2013, 2014) and during field visits

were also provided with progress reports and financial data by respondents. All documents and

websites explicitly referred to in this study are listed in Annex C.

This is the final report on the mid-term review. The report is presented in two volumes. This short main report summarises the progress of the MENATF since its origin in 2012 (Chapter 2), discusses the MENATF project portfolio and reviews project level progress (Chapter 3), examines Fund level performance (Chapter 4) and presents findings and recommendations (Chapter 5). The second volume includes ten annexes supporting the more summary information in the main volume. This report has been reviewed by the Steering Committee (SC), and their comments are reflected in this final report.

1 The DAI Europe team comprised Sarah Leigh-Hunt, David Potten (team leader) and Patricia Sturgess.

2 www.menatransitionfund.org

Chapter 2: The MENA

Transition Fund

4

2. The MENA Transition Fund

The Deauville Partnership was an outcome of the G8 summit held at Deauville in France on 26th and 27th

May 2011. The Partnership was launched as a response to the historical changes underway in several

countries in the Middle East and North Africa (MENA) region (Egypt, Jordan, Libya, Morocco, Tunisia,

and Yemen). It was planned to be a long-term, global initiative to provide Arab countries in transition

with a framework based on technical support to: (i) strengthen governance for transparent, accountable

governments; and (ii) provide an economic framework for sustainable and inclusive growth.3

Immediately following the G8 summit expectations for the Deauville Partnership were very high and

have subsequently only been partially satisfied. Major initiatives were launched in the areas of

economic stabilisation, employment creation and governance (see US Government website referred to

in Annex C). These include:

Four “Joint International Financial Institution (IFI) Assessments on Local Capital Market

Development” (Barnieh 2012, 2012a, 2013 and 2014);

Expansion of the activities of the European Bank for Reconstruction and Development (EBRD)

into four of the six MENA Transition Countries (TCs): Egypt, Jordan, Morocco and Tunisia;

Implementation of the Arab Forum on Asset Recovery, which has (inter alia) held annual

meetings each year since 2012 (see STAR website, Annex C);

Preparation of Small and Medium Enterprise (SME) Action Plans and Investment Action Plans,

with the support of the OECD, for each of the six TCs;

The UK supported FORSA initiative to foster mentoring of MENA entrepreneurs (see FORSA

website, Annex C);

Regular meetings of partners’ Ministers of Foreign Affairs and Ministers of Finance, often during

the semi-annual meetings of the World Bank and the IMF;

The establishment of the MENA Transition Fund.

The decision to set up the MENATF was taken in 2012, and over a six month period the Fund was

designed ready for launch at the first SC meeting in December 2012. The design process included

preparation of three key sets of documents: the Contribution Agreements between donors and the

Trustee, the Operations Manual and the Financial Procedures Agreements between the ISAs and the

Trustee. These three sets of documents are inter-linked, and the simultaneous drafting and agreement

on all the documents, although a demanding process, laid a firm foundation for the Fund’s operation.4

Most Financial Intermediary Funds (FIFs) have required much more than six months between

conception and launch. Only one other was developed as quickly as the MENATF. This was the Haiti

Reconstruction Fund, which was also up and running in about six months. However this fund had only

three implementing agencies and one recipient country, so the process was much easier than that

required for the MENATF.

3 There is no specific Deauville Partnership website, but for more information see the US Government and OECD

website references in Annex C. 4 All the documents are available on the MENATF website, see Annex C

5

The Fund’s governance structure was defined clearly in the Operations Manual (Section 5) where the

roles of the SC, the Trustee, the CU, the Implementation Support Agencies (ISAs), the members of the

Roster of Experts (ROE) and the Recipient Entities (REs) are clearly explained. Details are also included in

the Terms of Reference for this study (Annex A).

Since the launch of the MENATF $207.9 million5 has been pledged to the Fund by 13 donors (as of 1st

November 2014, as shown on the MENATF website) and $172.8m paid into the Fund (MENATF Trustee,

2014). There have been five SC meetings in 2012, 2013 and 2014 and the SC has approved 53 projects

(see Annex D, Table D1) involving ten ISAs. The International Monetary Fund (IMF) is the only ISA that

has not yet submitted a project for consideration by the SC.

The MENATF June 2014 Progress Report provides an excellent review of MENATF and project-level

progress to date. Figure 2.1 (based on MENATF, 2014 Figure 1.3) shows the allocation of funding by TC

as of June 2014. The allocations to Egypt, Jordan, Morocco and Tunisia are very similar, with significantly

smaller amounts allocated to Libya and Yemen.

Figure 2.1: Percentage of funding allocated by country

Table 2.1 (based on MENATF, 2014 Table 1.4) summarises the allocation of funding by ISA. The World

Bank (WB) has by far the largest allocation, both in numbers of projects and in value. The AfDB and EIB

both have very substantial portfolios (over 12% of total allocations) and the OECD is involved in eight of

the 53 projects.

5 All values in this report are in US$ unless otherwise indicated

% of funding allocated by country

Egypt

Jordan

Libya

Morocco

Tunisia

Yemen

21% 14%

20%

19

7%

19%

6

Table 2.1: Funding allocated by ISA

ISA Number of Projects6 Allocation ($ million) Allocation (percent of total)

AfDB 9 21.5 12.7 AFESD 1 1.0 0.6 AMF 1 0.5 0.3 EBRD 3 8.3 4.9 EIB 11 25.2 14.9 IFC 3 5.3 3.2 IsDB 3 9.8 5.8 OECD 8 10.5 6.2 OFID 1 3.8 2.3 WB 22 83.5 49.3

The Operations Manual (MENATF, 2013, paragraph 11) noted that “...on an exceptional basis Transition

Countries may request that specific projects, or components thereof, be ISA-executed…”. In practice, of

the 53 approved projects only 18 are solely Recipient Entity (RE) executed. Eighteen projects are

jointly executed and 17 are solely ISA executed. However in financial terms the bulk of the approved

funds are for RE executed activities, with $101 million of direct project costs allocated for recipient

execution and $57 million for ISA execution.

6 The total number of projects exceeds 53 as some projects involve multiple ISAs. Regional projects are counted

once for each country in which there are activities.

Chapter 3: The

MENATF Project

Portfolio

7

3. The MENATF Project Portfolio

3.1 Portfolio Alignment with Deauville Partnership, MENATF and TC

Objectives The MENATF supports technical assistance projects across a broad range of topics linked to the three

Deauville Partnership pillars, finance, trade and governance. Four thematic areas (“pillars”) were

identified in the Operations Manual (MENATF, 2013, paragraph 8): Investing in Sustainable Growth;

Inclusive Development and Job Creation; Enhancing Economic Governance; and Competitiveness and

Integration. It was always appreciated that these are overlapping themes. Each project has been

allocated to a specific “primary pillar” but the allocations have not been very consistent and an analysis

of the portfolio by the pillars in the project proposals would not be very meaningful.

Following the field visits to Egypt, Jordan and Tunisia (see Annexes G, H and I), and discussions with

many RE and ISA Project staff, it is possible to identify some of the key areas in which the portfolio has

been focused, and the relevance of the portfolio to transition issues. In Table 3.1 each of the approved

projects has been allocated to a specific sub-sector, in order to allow a broad analysis of the overall

portfolio’s sectoral distribution.

Table 3.1: Approved MENATF Projects by Subsector

Subsector Number of projects

Total value (US $)

Percent of total

Anti-corruption 1 6,480,500 3.8

Banking and Finance (including Microfinance) 7 19,813,300 11.7

Judicial reform 2 7,121,000 4.2

Leadership 2 5,100,000 3.0

Local Government reform 2 9,545,000 5.6

Parliamentary reform 1 2,920,000 1.7

CSOs 1 1,718,700 1.0

Employment 1 5,000,000 2.9

Social Safety Nets and Subsidy reform 5 27,988,200 16.5

Youth Employment 3 11,032,000 6.5

Investment Policy and Business Environment 5 12,543,905 7.4

MSMEs 12 32,337,080 19.1

Infrastructure (Water Supply, Housing etc) 4 9,004,920 5.3

Logistics 3 4,695,806 2.8

Trade and Transport 4 14,210,000 8.4

TOTALS 53 169,510,411 100.0

Source: Annex D, Table D2

8

Five projects are addressing the critical issue of reducing subsidies to food or energy while protecting

the interests of the poor, with improved targeting of social safety nets. These projects are being

implemented in Egypt, Jordan, Libya and Tunisia, with the WB and OFID as supervising ISAs. The need to

reduce subsidies in order to reduce budget deficits and meet the requirements of IMF standby

arrangements while protecting the interests of the most vulnerable is a key policy challenge throughout

the region, and one whose successful management is vital to the success of economic transition. The

importance of these initiatives, and their linkage to national priorities in Egypt, Jordan and Tunisia, was

repeatedly stressed to the consultants. The five approved projects represent 16.5% of the portfolio

value, and those which were seen all appear to be making good progress.

However, they generally involve substantial processes of national consultation within government and

with civil society to build support for difficult policy choices, and these processes can be time

consuming. Because it is a politically sensitive area it is vulnerable to political change, and requires

patient and long term support. Although it is too early to see substantial progress from these initiatives,

they are targeted at the central objectives of the MENATF. The WB arranged a meeting in Jordan in

September 2014 to allow stakeholders in Egypt, Jordan, Morocco, Tunisia and Yemen to share their

experience. There were also participants from Djibouti and from developing countries with social safety

net expertise. This workshop was highly appreciated by participants in social safety nets projects

supported by MENATF, allowing them to share experience in tackling some of the region’s most

challenging issues.

The largest number of projects (12 out of the 53), and the largest proportion of allocated costs (19%)

relate to the promotion of Micro, Small and Medium Enterprises (MSMEs). In some cases (e.g. Libya and

Jordan) these were direct outcomes of the SME Action Plans produced under Deauville Partnership

auspices. In addition it should be noted that some of the projects listed under the banking and finance

category support microfinance activities, which again benefit MSMEs. The promotion of MSMEs is fully

consistent with the objectives of the MENATF, and with national policies in the TCs (which are cited in

the proposal submissions), both in terms of promoting small scale private sector entrepreneurship and

as a means to address severe unemployment challenges. It should be noted that many of the ISAs are

involved (as supervising and/or executing agencies) in projects to promote MSMEs – EBRD and AfDB in

Egypt, EIB and the WB in Jordan, OECD in Libya, WB in Morocco, AfDB, IsDB, OECD and the WB in

Tunisia, IFC and IsDB in Yemen. There should be considerable potential for shared learning between the

different initiatives in the six countries. It is recommended that one of the ISAs takes the lead in

ensuring that regional knowledge sharing activities are initiated and coordinated, involving all the

relevant projects supported by the different ISAs under the MENATF.

In addition to the MSME projects there are four projects specifically addressing employment issues – in

three cases focusing on youth employment. These four projects have received 9.4% of all resources

allocated, reflecting the importance of addressing employment issues effectively within the MENA

region. It is essential to reduce the high levels of youth unemployment in MENA countries both to meet

the needs of young people and to strengthen social stability. In addition success in this area should lead

to reduced legal and illegal migration.

9

The importance of finance in the Deauville Partnership and in the TCs’ transition processes is reflected in

the number of projects in the banking and finance category – seven projects with almost 12% of total

allocated resources. This partly reflects the value of the expertise in the IFIs to MENA region central

banks, and there are clear links between some of the MENATF projects and the local capital market

studies carried out under the umbrella of the Deauville Partnership. Two of the projects in this category

focus specifically on microfinance and link both to the efforts to support MSMEs and to the MENATF’s

own objectives of improving access to finance.

The significance of finance issues is also reflected in the number of projects supporting investment

policy and improving the business environment – five projects with 7.4% of total allocated resources.

These include several initiatives supporting investment policy reform, and these again may benefit from

knowledge sharing between MENA countries. In both Jordan and Tunisia new investment laws were

under consideration (the new law in Jordan was passed in October 2014) and the projects in these areas

are highly relevant to the policy initiatives. The five projects are all located in Jordan and Tunisia, and

four of them include the OECD as one of the ISAs. The OECD is considering the value of conducting a

specific MENATF knowledge sharing effort in this area.

Several of the MENATF projects are clearly directed at strengthening governance, and economic

governance in particular. There are two projects each addressing judicial reform, strengthening

leadership and local government reform, and three more addressing anti-corruption efforts, the role of

civil society organisations (CSOs) and parliamentary reform. These nine projects together represent

over 19% of total allocated resources. They are addressing some of the most sensitive and significant

aspects of the transition process in Egypt, Libya, Morocco, Tunisia and Yemen. Because of their political

sensitivity these are the projects that are most vulnerable to loss of ownership if there are changes at

the political level, and in fact, one of the projects is currently stalled because the initial champions are

no longer in positions of authority. Nevertheless most of these projects are currently making

satisfactory progress, and if this continues they will make an important contribution to the transition

process.

The last major area of focus is in infrastructure, transport and trade. There are 11 projects in these

areas, representing 16.5% of total allocated resources. Nine of these projects are regional projects

(three groups of projects on housing, transport and logistics). While these projects are not as closely

linked to core issues of political and economic transition, they are clearly well aligned with the

“Competitiveness and Integration” pillar of the MENATF, and in many cases they have exceptional

leverage potential – providing the necessary technical assistance for feasibility and design studies that

may lead to substantial subsequent investment.

3.2 New Actors and an Agent for Change The MENATF Operations Manual (paragraph 16) emphasises the importance of “…proposals that

leverage other supporting relationships…including in particular those involving bilateral donors,

academic… and policy research institutions, regional and international organizations, industry and labor

associations and other civil society organizations”. There was also a wide perception amongst

10

stakeholders that the MENATF emphasises the importance of innovative proposals, although that is not

explicitly referred to in the Operations Manual.7

Several stakeholders expressed regret that few MENATF proposals were innovative8 or involved

partnerships with organisations that were not ISAs or REs. The results from the consultants’ visits to

projects in Egypt, Jordan and Tunisia, and the information obtained from discussions with Project

Leaders of many of the projects in Libya, Morocco and Yemen do not strongly support these

reservations.

A recurring strength of MENATF projects has been the introduction of new knowledge or new

approaches to addressing challenges in the region, often based on the wider experience of the ISAs.

The WB’s introduction to the region of its wider experience in South East Asia and Latin America with

social safety nets and poverty targeting – for example, with Proxy Means Testing in Indonesia – is highly

appreciated. The EBRD has brought its experience with labour markets and MSMEs in Europe to the

region and the OECD has provided global benchmarking information and exposure to OECD’s broad

knowledge base to MENA countries that are not OECD members, including through its peer review

methodology and opening the way for other forms of international collaboration.

A second important area of innovation has been the increasing range of activities with non-traditional

REs – such as the Egyptian Parliament, Yemeni CSOs, and the judiciary in both Egypt and Yemen. In

addition some proposals are innovative in their very nature – for example the Virtual Market Place

projects in Jordan, Morocco and Tunisia, introducing SMEs to global virtual web-based markets.

The MENATF has fostered the development of many new institutional relationships. Several projects

represent the first relationship between the IFIs and REs involved – and in some cases the first venture

by an IFI into the country. While this has often meant that the project started with a time-consuming

learning process, as both partners built up the relationship and learnt about the other’s policies and

procedures, these projects have laid important foundations for future relationships.

Some of the projects also involve the first experience of joint operations between ISAs. There are

partnerships between OECD and AfDB, AFESD, IFC, IsDB and the WB, between the AMF and the WB, and

between IFC and IsDB. It is noticeable that in the later years of the MENATF more partnerships between

Gulf Cooperation Council (GCC) IFIs and G7 ISAs have developed.

Within the TCs some of the projects involve development of complex but essential partnerships

between different government agencies. These sometimes involve multiple recipients and therefore

additional challenges when more than one institution is involved, for example in procurement.

However, they reflect the need for a coordinated approach to complex issues. For example, in Egypt the

7 Apart from a reference to “monitoring and evaluation of innovative investment projects” in paragraph 15.

8 Some respondents used the words “innovative” and “transformational” (supporting the transition process)

interchangeably. In practice a project need not be innovative in content or design in order to support the process of transformation.

11

Energy and Social Safety Nets Project involves four official counterpart ministries: the Ministry of

Electricity & Renewable Energy, the Ministry of Petroleum, the Ministry of Finance and the Ministry of

Administrative Development, with a fifth ministry (Social Solidarity) also playing an important role.

Similarly in Jordan the National Unified Registry Project involves the Ministry of Planning & International

Cooperation and the Income and Sales Tax Department of the Ministry of Finance.

Involvement of other partners in initial project institutional arrangements (as opposed to their

recruitment as consultants following project approval) has been less evident, although there are some

examples. The International Trade Centre (ITC) was involved from the start in the development of the

regional Virtual Market Place Project. The Centre for Transportation Studies for the Western

Mediterranean (CETMO) was identified from the beginning as a key partner in the regional Euro-

Mediterranean Logistic Network (LOGISMED) projects. The UN Office for Project Services (UNOPS) was

anticipated in the project proposal to play a major role in the Tunisia Strengthening the Employability of

Youth Project, the UN Industrial Development Organization (UNIDO) was identified from the start as a

probable partner in the Egypt Green Growth Project as there is an existing UNIDO/UN Environment

Program (UNEP) Network of Cleaner Production Centers and the Saudi Fund for Development was

planned to be a partner in the proposal for the Egypt Inclusive Regulations for Microfinance project

During discussions with stakeholders it was frequently stressed that the short notice given for each

round of proposals, and the lack of any guarantee that there would be a further round, has made it

much more difficult to involve external partners in the preparation process, and to develop innovative

projects. Both these features require more time than has been available.

The short time available has also at times led to weaknesses in project preparation and ensuring

comprehensive TC ownership. This has been evident in the number of cases where it has been

necessary to change REs after project approval, or to significantly redefine project activities. On several

occasions Project Leaders said they would have delayed proposal submission in order to allow for much

better preparation if they had been confident that there was to be a further round of funding.

3.3 Capacity Building The majority of the projects visited by the consultants had significant capacity building components.

These took several forms:

Projects with large scale training or capacity development components targeted at project

beneficiaries such as micro, small or medium scale entrepreneurs, members of the judiciary,

parliamentary support staff, small scale entrepreneurs wishing to use virtual marketplaces and

unemployed young people.

Projects where capacity building was more focused on strengthening the technical capacity of

the recipient entity or entities – for example in introducing proxy means testing to better

identify poor households, in gaining greater understanding of international experience with

investment promotion, in developing mobile financial services or in integrating numerous

parallel business inspection services.

12

Strengthening the ability of Project Management Units (PMU) to handle their procurement and

financial management responsibilities in order to be able to work effectively with specific IFIs.

AfDB, EBRD and the WB all put significant emphasis on this aspect of capacity building, which

may in many cases lay a firm foundation for future lending operations, when the same PMU

staff may be handling much larger assignments.

Regional knowledge sharing activities. Given the number of common areas in which MENATF

supported projects are working, there is considerable potential for teams in different MENA

countries and working with a variety of ISAs to share their experience and for placements with

international institutions that are either ISAs or working on technical assistance activities with

ISAs (an approach which is being very successfully used by OECD). When these placements take

place during the preparation of research studies the staff from TC organisations can participate

in the work and ensure local relevance and accuracy – and their involvement in the studies

increases the chances of future ownership by the RE.

The many projects with one or more of the above capacity building components are likely to have

significant impact beyond the content of their technical assistance inputs.

3.4 Project Progress The ideal way to measure the performance of a development programme is to monitor progress against

an agreed results framework which provides quantified data on expected inputs, outputs, outcomes and

impact. This is rarely a simple task, and in the case of the MENATF as a whole it would be very

challenging. The portfolio is very diverse so adding together outputs or outcomes is difficult, unless they

are reduced to simplified parameters that can lose the reality of what is being measured.

The issues surrounding the results framework for the Fund have been discussed in detail by other

consultants (Baastel, 2014). The options for a future approach to a Fund level results framework were

discussed at a SC meeting in June 2014, where it was agreed to adopt the “Enhanced Status Quo

option”. Another consultant is drawing up a detailed approach to this in an exercise parallel to the

current mid-term review.

For the current review there were theoretically four possible ways of monitoring progress across the

portfolio, using:

project-by-project progress towards achievement of planned outputs and outcomes compared

to the project level results frameworks prepared for each project;

progress in disbursements across the portfolio;

progress in commitments across the portfolio;

qualitative progress ratings presented by the ISAs in their six monthly progress reports.

The first of these options is in practice not yet feasible. Very few projects recorded any progress against

their results frameworks targets in the June 2014 consolidated progress report (MENATF, 2014 – see the

annex to the main report with progress reports on each project), often because the projects have been

13

approved so recently that it is less than a year since activities started. The very limited information from

these progress reports does not yet provide a useful guide to overall MENATF progress.

Annex F discusses the other three potential sources of information on progress in detail. It is observed

that disbursements are not a very reliable guide to project progress, partly because different IFIs have

different approaches to disbursement so their figures are not comparable, and partly because at the

outset of a project many preparatory activities take place which are not reflected in disbursements.

Some stakeholders argued that the MENATF emphasis on recipient execution was misplaced and that

ISA execution leads to faster implementation and disbursement without loss of ownership, and that if

ISA executed activities are well designed they can make major contributions to capacity building. An

analysis of the current MENATF portfolio (see Annex F) did not convincingly demonstrate that ISA (or

jointly) executed projects are disbursing more quickly, and only weakly suggested they are making

better progress overall. It is accepted that well designed and implemented ISA-executed projects can

perform well (and some of the OECD executed activities under the MENATF seem to be demonstrating

this effectively) but there were also ISA executed projects where there was little evidence of recipient

ownership or capacity building and overall the consultants endorse the encouragement the MENATF

gives for recipient execution as the first choice approach.

Many stakeholders commented on the use of commitments as a measurement tool. It was pointed out

that this data can be extremely misleading. Some IFIs and REs do not use the term “commitments” in

their accounting systems, so they either cannot provide data or the figures they do provide cannot be

verified against any accounting information. Others use the term “commitments”, but only in a budget

control context. This data seems to bear no relationship to progress on the ground and it is

recommended that the monitoring of commitments data is not continued.

The June 2014 MENATF Progress Report (Main Report, Section B) analysed progress using the ISAs’

project performance ratings. These present a very favourable view of progress, with 36 out of 38

projects reporting making satisfactory (25) or moderately satisfactory (11) progress towards

achievement of objectives, and 36 out of 38 reporting as making satisfactory (21) or moderately

satisfactory (15) implementation progress.

During the missions to three MENA countries (see Annexes G, H and I) in September/October 2014 the

consultants made their own evaluations of the progress of projects where they were able to meet ISA

and/or RE project staff. Of the 32 projects underway in the three countries, the consultants were able to

make assessments on 27. These were then compared with the ISA ratings dated June 2014. In 21 out of

the 27 cases the consultants’ ratings were exactly the same as those recorded by the ISA. In six cases

the consultants rated at least one of the progress parameters one notch below the ISA rating. Overall

the consultants’ view is that the project performance ratings are not a perfect way of measuring

progress, but they are much more meaningful than the disbursement data, and the broadly positive

message from the ratings was strongly supported by the field visits.

Given the current security situation in Libya and Yemen, observers might be surprised that of the four

projects in these countries that were approved during the first three SC meetings two are ranked as

14

making satisfactory implementation progress, one as making moderately satisfactory progress and only

one as unsatisfactory. Discussions with ISAs indicate that so far they have been able to make progress

on any activities that do not require in-country visits by ISA staff. Analytical work can continue at ISA

headquarters, and counterparts from both countries are often able to attend external events. For

example, OECD staff members welcomed the high Libyan counterpart attendance at September 2014

SME workshops and regional working group meetings in Paris. However if the security situation in these

two countries does not improve some of the future scheduled in-country activities on these projects

may be seriously compromised.

The broadly satisfactory state of project progress in all six TCs should not however be interpreted as

meaning most projects are on schedule to complete their activities within the currently agreed

timeframe. The transition process in the MENA region since 2011 may be described as uneven. Libya

and Yemen continue to experience serious internal disruption, delaying activities and making it difficult

or impossible for ISA staff to visit the countries. Egypt has seen two major changes of government, and,

for a time, at least one ISA had to formally suspend new activities there. Tunisia, although following a

fairly consistent political and economic transition path, has seen three changes of government and

preparations for elections were underway at the time of the mid-term review missions. Jordan has

faced major challenges from conflict in Iraq and Syria, and a vast influx of refugees.

Where MENATF projects involve the preparation of studies and reports by external agencies, these

internal disruptions may have relatively little impact on progress. However, many of the MENATF

projects are focused on key areas of internal economic and political transition, as noted above (Section

3.1). These projects require political ownership, and each time there is a change in government or

senior personnel the project teams need to brief the new leaders, and ensure that they have buy-in for

their activities. The new leaders may have many other preoccupations, and at times there may be a

significant delay before the MENATF projects, and associated policy or law reforms, receive a green light

to continue development.

Many of the MENATF supported projects involve national consultation activities which are new to the

TCs and fundamental to the transition process. This is clearly very important for the subsidy reform and

social safety net projects, for new investment promotion laws, for developing new civil society

relationships with government, and for governance reforms. REs emphasised the value of these

consultations and the long term benefits of developing policies based on national consensus rather than

administrative fiat – but observed that these transition processes take time – and are at times

unpredictable.

At the project implementation level there are two reasons why projects have been slower to get off the

ground than may have been expected. The need for rapid proposal preparation noted above often

meant that projects were not “shovel-ready”, although this was supposed to be a qualifying

requirement. In practice the requirement was not very realistic, as many REs, and some ISAs, could not

devote substantial resources to in-depth preparation before a guarantee of funding. In addition many

of the projects (as noted above) involved new relationships between partners, and time was required to

gain an understanding of the other partners’ processes – for example, with regard to procurement.

15

Overall therefore, there are very good reasons why MENATF projects and particularly those that are

associated with the most important aspects of transition may take longer to deliver than the three years

usually allowed for in project proposals.

3.5 Sustainability No MENATF projects have been in operation for more than two years, and many have less than a year’s

experience in operation. It is therefore premature to forecast the sustainability of their achievements

with any confidence, although 87% of the respondents to the Stakeholder Survey (Annex E, answers to

question 3) considered benefits from the MENATF were likely or highly likely to be sustained. In practice

the greatest threat to sustainability is likely to be at the level of national stability and political continuity.

If the instability in Libya and Yemen can be reduced, and if the economic and political transition impetus

is maintained by the Egyptian, Jordanian, Moroccan and Tunisian authorities, then the project level

benefits that would be associated with successful transition achievements should be sustainable. Past

experience suggests that there will be challenges ahead and here the importance of sustained support

from all the Deauville Partnership members may also be important.

Chapter 4: Overall

Fund Performance

15

4. Overall Fund Performance

4.1 Introduction The following review of the MENATF’s performance as a Deauville Partnership output and as a FIF is

based on four main sources of information. These are the opinion survey carried out earlier in 2014 by

independent consultants through the World Bank’s Public Opinion Research Group (PORG, 2014), the

stakeholder survey carried out by the consultants (see Annex E), guided face-to-face and telephone

interviews with donors, ISA staff, TC Representatives, ISA and RE project leaders, the Trustee and the CU

(see Annex B for persons met) and a review of project documentation (see Annex C).

There was a remarkably high level of consistency between responses from the different stakeholders,

and between the different information sources (for example Annex E notes that responses from the

surveys by PORG and the consultants to similar questions were highly consistent).

4.2 The MENATF’s role within the Deauville Partnership Many stakeholders described the MENATF in terms such as “the only concrete outcome of the Deauville

Partnership”9. As noted in Section 2 above, this is not a very fair judgement, as there have been several

other clear results from the Partnership, and some are continuing in their activities. Nevertheless the

MENATF is the only outcome that has involved the contributions of substantial resources, albeit less

than some of the amounts anticipated after the Deauville meeting. The SC meetings of the MENATF

continue to bring the partners together regularly, and are probably a major means of continuing the

dialogue between G7, GCC and TC partners. They provide a unique forum for these consultations, and

facilitate wider discussion of issues beyond the operations of the MENATF. Within the MENATF

approved projects the Fund has facilitated the development of concrete new partnerships between G7

and GCC ISAs – and as noted above this process has seemed to accelerate as the MENATF has

progressed.

The MENATF also facilitated the operations of the IFI Coordination Platform which was established by

the Deauville Partnership. Representatives of all the IFIs involved in the MENATF meet at the time of

each SC meeting as well as on other occasions. The importance of this platform was emphasised to the

consultants by several of the IFIs. It has allowed the development of new relationships and actions that

are well beyond the scope of the MENATF, and is of particular value to the smaller IFIs which do not

have an established network of global or regional relationships.

There is considered to be a clear risk that once the MENATF SC meetings do not have additional funds to

allocate to new proposals the attendance at these meetings will decline and their broader impact will be

lost. As the MENATF is perceived to be the main activity keeping the Deauville Partners in regular

consultation, this could be a significant loss.

9 It was evident from the context of discussions with stakeholders that when they said the MENATF was the only

“concrete” outcome of the Deauville Partnership their views reflected not only the financial flows to the MENATF but also its broader role in sustaining the Partnership.

16

4.3 The MENATF’s performance as a Financial Intermediary Fund (FIF) The consultants found a remarkably consistent high level of praise for almost all aspects of the

operation of the MENATF as a regional FIF. Where stakeholders queried some aspects of fund design or

governance they invariably qualified their comments by observing that even if there were specific

aspects they would have liked to see changed they would not wish to see any changes that threatened

the Fund’s overall operations, and therefore accepted that aspects they did not particularly like were

well worth living with.

4.3.1 Fund Design The success of the MENATF lies partly with the original design of the Fund, and the effort that was made

in 2012 to develop all the relevant policies and procedures as a single inter-related package that both

reflected lessons of experience with other FIFs and involved all the stakeholders in discussions of the key

documents. The “upstream agreements” between the Trustee and Donors, the Operations Manual and

the “downstream agreements” between the Trustee and ISAs were discussed and negotiated as a

package, and accepted by all stakeholders. These documents have required only minor changes since

their original agreement, and no changes are recommended by this mid-term review. The design

process was rapid by FIF standards.

4.3.2 Governance Many FIFs and multi-donor trust funds have struggled with their approach to governance and had to

sometimes go through major restructuring following stakeholder dissatisfaction (CGIAR, the

Consultative Group on International Agricultural Research and EFA/FTI, the Education for All, Fast Track

Initiative are two examples). In contrast the MENATF has not experienced any significant dissatisfaction

with the originally designed governance structure.

The PORG and stakeholder surveys illustrate the high levels of satisfaction with most aspects of MENATF

governance. The consultants’ interviews with stakeholders yielded an almost embarrassing chorus of

praise for the Trustee and the CU, with the first head of the CU (who retired during the mid-term

review) being frequently singled out for his efforts. The other CU staff members were frequently

mentioned by name as helpfully responsive, flexible and rapid in their replies to queries. The flexibility

of the CU, and of the MENATF more broadly were frequently noted as one of the Fund’s exceptional

strengths – showing clear recognition of the complexities of working in the context of political and

economic transformation, and the need to be able to respond pragmatically and quickly to changing

circumstances. Overall the unanimous endorsement of the Trustee and CU’s success emphasised that

this FIF stands out for its implementation performance.

The Steering Committee’s role was clear, but there were varying views on the effectiveness of SC

meetings. These invariably focused on the SC’s role in evaluating and approving projects. Some

stakeholders felt that there was too much focus on approval of projects rather than on wider transition

issues. Some felt that the process of determining which projects should be presented to the SC was less

than fully transparent, and were concerned that there was a parallel process of prioritisation that pre-

empted the SC’s role. It was felt that the perceived need to provide some balance between the

17

amounts allocated to projects for each country may have allowed some otherwise inferior projects to be

approved. Discussions with TC representatives and the SC indicated that there is certainly some

(encouraged) prioritisation at the TC level – but this seems reasonable as the TC representatives are

expected to present their proposals to the SC and they are more likely to own the proposed portfolio if

they have been substantively involved in its assembly.

The use of the ROE to provide reviews of project proposals of $2 million or more10 is clearly a logistical

challenge for the CU, which has little time to arrange for the reviews and does not know in advance

what types of projects are being submitted for funding. However there was strong support for this part

of the governance process from ISAs and TCs, who felt that the ROE comments, while variable in quality,

were often helpful and resulted in improved project design. Even Donors who carried out their own

independent technical proposal reviews considered that the ROE comments provided a useful additional

input. ROE comments are provided by the CU to the SC. Some of the REs met had seen and commented

on the ROE reviews, while others were sure they had not seen the reviews, and asked that they be made

available. This demonstrates some inconsistency in subsequent ISA practice of sharing ROE reviews with

REs. It is recommended that unless there are very good reasons for not sharing specific ROE reviews

ISAs should have a standard practice of copying the reviews to the REs and ensuring that both RE and

ISA comments are reflected in any response.

The performance of the ISAs was generally highly regarded. In many cases other stakeholders were very

strongly supportive of the ISAs they were working with, singling out (for example) the AfDB for its long

term partnerships and (in Tunisia) for its acceptance of country systems for procurement and financial

management; the IsDB and OFID for their efficient management of the projects where they are

supervising ISAs; the AFESD for their very effective launch in Kuwait of the Yemen Reinforcing the Rule

of Law Project; the EBRD for the relevance of its European experience and for its close support to

projects in Egypt and Jordan, in spite of its new entry to the region; and the OECD and the WB for their

contributions in bringing global knowledge to projects. Meetings with the ISAs confirmed their close

involvement with the projects and their dedicated efforts to facilitate effective implementation by REs.

ISA relationships with TCs and REs were sometimes difficult in the area of procurement. In some cases

substantial learning processes were needed to ensure mutual understanding of institutions’

procurement requirements (with TC requirements sometimes being more demanding than those of the

ISAs) and it was clear that in some cases the procurement relationships had been uncomfortable.

10

A note on the use of the ROE approved by the SC in December 2012 notes: “The CU will engage the expertise of

the ROE under the following circumstances: (1) For any projects requesting funding equal to or above $2 million;

(2) For any projects requesting funding of less than $2 million, at the specific request of the SC following their

initial review. Project proposals requesting $2 million or more would not be subject to a technical review by the

ROE if: (1) The request is for additional financing to address cost overrun for an already approved and on-going

project.

18

Nevertheless in every such case the informants were clear that these were problems that had to be

overcome, but would not jeopardise wider relationships – with REs sometimes going out of their way to

emphasise that the technical and knowledge benefits of working with the ISA far outweighed any

discomfort associated with procurement procedures.

One exception to the generally positive comments on ISAs should be noted. The consultants were

unable to have direct contact with any European Investment Bank (EIB) staff. In the countries visited

the consultants were only able to make contact with or obtain progress information on five of the eight

EIB supported projects, partly because EIB staff members were unable to provide local contact

coordinates. In three of the five projects visited the ISA’s rating seemed over-optimistic. TC

representatives noted that EIB did not keep them aware of project progress and that the post-approval

processes with EIB were exceptionally time-consuming. Overall the EIB’s June 2014 rating of seven of

its eight MENATF projects as making satisfactory progress cannot be validated by the consultants.

However it should be noted that during a visit to one of the EIB supported projects the Minister

responsible warmly praised the consultant provided by the EIB and powerfully endorsed the importance

of the feasibility studies that were being funded.

It will be noted from Annex E that some of the ISA Project Leaders do not rate the Recipient Entities’

performance highly. The consultants noted that where ISAs have local offices, relationships between

ISA and RE staff appeared to be excellent, with close and regular support being evident. Some of the

ISAs without local offices also appeared to be maintaining very good relations, with regular scheduled

telephone or video-conferences in addition to frequent field visits. However, some of the REs faced

substantial constraints on their capacity, including frequent changes in either their staff or the

leadership of their organisations (one ministry was reported to have had eight ministers in four years).

The constraints on RE performance illustrate the importance of the capacity building components that

are built into almost every project, are also to some extent a function of the transition process and

illustrate the importance of recipient execution as a means of capacity building.

4.3.3 Resource Mobilisation, Allocation and Substitutability Many stakeholders were disappointed that the MENATF has not yet fully mobilised its target of $250

million, and some had expected the Fund to mobilise substantially more than this. The Operations

Manual does not explicitly note where resource mobilisation responsibility lies, but in practice this has

been seen as the primary responsibility of the Co-Chairs of the SC and each of the successive pairs of Co-

Chairs have taken this seriously. However if the recommendations of this review are accepted by the SC

the resource mobilisation efforts for the Fund may need to be temporarily reinforced. This could be

done in at least two ways. A small group of donors might join the Co-Chairs for a joint coordinated

effort to reach an agreed target. In addition the six TCs might make a joint appeal to donors.11 These

efforts would need to be supported by a strengthened communications effort from the CU (see below).

11

A respondent to the Stakeholder Survey reported that this was proposed at the June 2014 SC meeting, but it does not appear to be recorded in the minutes.

19

As noted in Figure 2.1 there have been approximately equal funding allocations to four of the six

MENATF TCs (Egypt, Jordan, Morocco and Tunisia) and somewhat lower allocations to the two countries

where implementation constraints are very evident – Libya and Yemen. The consultants have noted

from discussions and reports from ISAs on their projects in Yemen and Libya that significant progress is

being made on at least some of the existing projects in spite of the restrictions on access to the

countries. In the circumstances if good additional projects are proposed for Yemen and Libya they

should not necessarily be rejected on security grounds.

During the consultants’ mission there were numerous discussions over the uniqueness of the MENATF

and, in particular, its dispensability. In some of the TCs (for example Egypt and Jordan) there have been

substantial financial inflows from elsewhere over recent years, although this is not as true in the other

countries. Some of the MENATF supported projects finance feasibility or design studies that are carried

out by consultants and would probably have found funding elsewhere in the absence of the MENATF,

although it might not have been on grant terms. However it was emphasised repeatedly that what

usually distinguishes MENATF support is the ISA specialist knowledge, experience and networks that

come with the funding. In some cases the projects could not have obtained funding from elsewhere,

but even where other donors might have stepped in if MENATF funding had not been available, the

quality and flexibility of MENATF support mechanisms makes the Fund a destination of choice. On many

occasions TC and RE stakeholders noted that they have further proposals under consideration for

submission to MENATF in the future.

The consultants were asked to identify the percentage that Fund contributions represented vis-à-vis

overall support to the transitions taking place. This is methodologically almost impossible to calculate.

As noted above there are very large inflows from GCC countries to some of the TCs, and at the same

time there are large bilateral aid programmes and multilateral lending operations. Some of these

inflows can be clearly linked to transition activities (e.g. lending from IFIs and IMF standby agreements

with conditionalities linked to economic transition progress) but others may be more geo-political in

origin, or would have been provided even in the absence of any transition processes. In the

circumstances the consultants have not attempted to put a figure on the requested percentage.

It was noted that in many cases the resources provided through the MENATF are complemented by

additional resources, from the involved ISAs, from other aid agencies or from the recipient entity. Some

ISAs have a policy of requiring any agency they work with to make a cash contribution to project costs

and argued that this should be a MENATF requirement – or at least add strongly to the case for MENATF

support. Such a move could, however, make it more difficult for particularly cash-strapped REs (often

constrained by budget freezes which are part of the transition process), certain countries, or new

partners, to participate in MENATF supported activities, and might undermine the achievement of

broader MENATF objectives. Therefore while the ability to leverage additional resources for a project

is clearly a positive element, and RE contributions in kind or in cash are welcome, it is not

recommended that such contributions be an absolute necessity in future proposals.

20

4.3.4 Communications In general there is a high level of satisfaction with communications between the different stakeholders

in the MENATF. The website for the Fund is easy to use and provides an unusually comprehensive range

of information and documentation. Only two weaknesses in the Fund’s communication practices were

noted. Very little information is available in Arabic and French. It is recommended that annual reports

be produced in the three languages, and that calls for proposals also be translated into Arabic and

French. As was noted by respondents to the Stakeholder Survey, there is a need for more “public

relations” information on MENATF supported projects. This could take the form of information sheets,

of a regular bulletin covering both MENATF activities and broader aspects of transition experience, of

blogs, videos or other materials. Some other FIFs and World Bank managed multi-donor trust funds

have outstanding public relations communications materials, and the CU may wish to emulate best

practice elsewhere.

4.3.5 The Fund-level Results Framework Annex F discusses approaches to measuring results and notes that the SC has agreed to adopt the

“Enhanced Status Quo” approach to a fund level results framework. This is currently under preparation

by a separate consultant team, and does appear to be an appropriate response to the need for an

improved framework. However it should be emphasised that judging the impact of a programme such

as the MENATF, which is aimed at supporting a broad process of transformation, cannot be based solely

on counting measurable activities. The comment made by Andrew Naitsios, the former head of USAID,

is pertinent: ‘…those development programs that are most precisely and easily measured are the least

transformational, and those programs that are most transformational are the least measurable’12.

4.3.6 Risk Management IFIs are accustomed to managing risk. All the IFIs met confirmed that they have risk management

systems in place and that they treat risks associated with technical assistance grants in the same way as

they treat lending risk. These systems should be very adequate to manage the risks associated with

grants of up to $10 million. ISAs that are not involved in lending may not have such procedures in place,

and OECD in particular noted that while they consider risk on a project specific basis they do not have a

standard risk assessment framework. As experience since 2011 has shown, there are significant risks

facing project implementation in the MENA region. It is recommended that any ISAs that do not have

standard risk management frameworks in place should aim to introduce them for application to all

their activities.

Risk management is primarily an issue at the project level, and it is appropriate to follow the Operations

Manual guidance in supporting the use of ISA processes rather than imposing a Fund level risk

management procedure. At the Fund level the main risk is political (the possibility that the transition

process is reversed in one or more of the TCs) and this should be addressed at the level of the SC.

12

Quoted in Chambers, 2014.

21

4.3.7 Fund Efficiency The MENATF governance structure involves a range of institutions and some stakeholders queried the

cost-effectiveness of a Fund with separate Trustee, CU and ISAs, in addition to the wider governance

roles of the SC, the ROE and the TCs. In Annex J the costs of managing the MENATF are analysed. After

comparison with other similar funds the cost of operating the MENATF are found to be reasonable.

Even if estimated future costs of the Trustee and CU are taken into account, the SC, Trustee, CU and ISA

indirect costs are unlikely to exceed 10% of total project allocations. If the Fund expands in size this

percentage figure is likely to fall even if the CU’s responsibilities are slightly increased following

decisions taken on implementation of the Enhanced Status Quo Results Framework and the

recommendations in this mid-term review.

One area of risk is highlighted in Annex J. This is the availability of resources to pay for the future costs

of the Trustee and the CU. Although future contributions should be adequate to cover future costs, it is

recommended that in future an amount is set aside by the SC to cover minimum estimated future

costs in order to ensure that the Trustee and CU are never unfunded.

At this stage of the MENATF it is clearly too early to make definitive statements about future

achievement of the Fund’s development objectives – to improve the lives of citizens in transition

countries and support the transformation process. However the analysis in Chapter 3 indicates that

most MENATF projects are focused on sectors where success will mean improvements in citizens’ lives –

and in many cases on the lives of those most in need – the poor and the unemployed. Many of the

MENATF initiatives are directly linked to transition challenges and both at project level and at the

broader strategic and institutional level (ISAs, national institutions, G7 and GCC collaboration) the

programme is promoting the transformation process.

Chapter 5: Findings

and

Recommendations

22

5. Findings and Recommendations

5.1 Findings Results from the MENATF can be assessed at three levels: the Fund’s broad institutional and strategic

role in the context of the Deauville Partnership, MENATF performance as a multi-donor FIF and the

performance of the 53 projects that have been approved so far using MENATF resources.

5.1.1 MENATF as a Deauville Partnership Deliverable The MENATF is often referred to by stakeholders as the only “concrete” achievement of the Deauville

Partnership. This judgement does not give adequate credit to the Partnership’s other achievements, but

it does reflect a wide perception, and the MENATF appears to be the primary ongoing activity keeping all

the original partners together, meeting regularly, providing a forum for discussion of wider shared

concerns and bringing in new partners. It has provided significant benefits to the participating ISAs and

REs, and particularly to those who did not already have established relationships with each other.

The MENATF will continue to play this significant role as long as there are additional funds to allocate to

new project proposals, but when this is not the case it is likely that participation in SC meetings will

decline and the MENATF’s role in keeping the Deauville Partners together will lose impetus.

The Fund has a political element, and this is probably reflected in the fairly evenly balanced allocation of

resources between the TCs. The perceived need to allow a relatively equitable resource distribution may

have allowed some poorer quality projects to be approved – but this may also be a result of the short

notice given for project preparation, which is discussed further below.

There is very strong support for the MENATF from all stakeholders. Many of the Deauville Partners are

currently providing large bilateral aid programmes to some of the Transition Countries and some are

also working together at substantial cost to halt undesirable trends of change in the region. By

comparison with these financial, humanitarian and other interventions the costs of the MENATF are

relatively small and the Fund is expected to provide very significant benefits in its role to support

peaceful economic and political transformation in the transition countries.

5.1.2 MENATF Performance as a FIF The MENATF was established quickly and was well designed, benefitting from the lessons learnt from

previous FIFs. The Fund has been extremely well managed, and the quality of the performance of the

Trustee and CU has been widely praised.

The process of fund design was demanding but effective, and there have been no significant queries

about the design subsequently. In particular the decision to allow each ISA to use its own policies and

procedures rather than imposing a Fund wide standard process has clearly paid dividends. While a few

stakeholders might have preferred a different approach, such as direct access, the great majority

support the decision, and it has the added bonus of introducing REs to the processes that would be used

by new partner ISAs if there is any subsequent grant or loan funding.

23

The Fund’s governance structure has worked well, although some stakeholders feel that the SC focuses

too much of its time on review of proposals and could devote more attention to reviews of broader

transition progress in the six MENATF beneficiary countries. The ISAs have generally performed well,

implementing the projects allocated to them efficiently and providing good technical and operational

support in supervision of RE grant execution. There was strong evidence to support this for all the ISAs

with large portfolios, with the exception of the EIB, although one RE working with EIB strongly praised

the projects the EIB was supporting. The IFI coordination platform and the ROE both perform

appreciated roles, although there seems to be inconsistent practice in providing REs with details of ROE

comments.

Communications from the Trustee and the CU, and between MENATF partners have generally been

excellent, although ISAs have sometimes found capacity constrained REs slow to respond. However

there is very little information from the MENATF CU available in Arabic or French, and decisions taken by

the SC virtually do not appear to be evident on the MENATF website.

The greatest weakness of the MENATF has been the unpredictability of funding13. SC meetings have

been called only when it was certain that there would be resources for new proposals, and invitations to

submit proposals were then issued with fairly short deadlines. This has meant that:

Project teams had a relatively short time to prepare proposals.

There was no guarantee that there would be any subsequent calls so Project Leaders were given

a “now or never” impression, and not encouraged to delay proposal submission to a subsequent

round if they were not really ready.

The short notice undoubtedly has resulted in some sub-optimal proposal preparation and

consultation. This is evident in the number of proposals where subsequent revision has been

needed after approval, or there have been changes in the designated RE.

It also militates against involvement of new actors as REs or in the project preparation process

and against development of innovative proposals; these are both desirable but need more time.

And it means proposals are often not really ready for immediate implementation – although for

most REs and some IFIs it would in practice be impossible to go too far in preparation until funds

are guaranteed.

5.1.3 The MENATF Project Portfolio The MENATF project portfolio is diverse, but is focused on six broad sub-sectors: (a) reducing subsidies

to food or energy while protecting the interests of the poor, with improved targeting of social safety

nets; (b) promotion of MSMEs; (c) banking and finance; (d) investment promotion and strengthening the

business environment; (e) strengthening economic and political governance; and (f) infrastructure, trade

and transport.

13

This it should be noted relates to the timing of pledges, not to the payment to the Trustee of pledged amounts. These payments have generally been made on time.

24

Many of the projects in the first five categories are very closely linked to sensitive and important social

transition issues – combating corruption, strengthening parliaments, reinforcing social safety nets,

supporting subsidy and fiscal reform, building relationships between NGOs and government and/or to

issues that are critical to economic change, such as tackling unemployment (especially youth

unemployment), promoting MSMEs and strengthening investment promotion efforts.

In many of these cases the projects are at the heart of new approaches to the change process – in

countries where in the past decisions were taken at the top there are now processes of consultation

with civil society, efforts to bring together different vested interests and find means of consensus, real

parliamentary discussion and transparent consultative reviews of policy options with national

stakeholders. The projects supporting these efforts are some of the most valuable of the MENATF

supported interventions – but they are by their very nature the ones that will often take longest to

mature.

The portfolio includes many projects involving new relationships, between ISAs and between ISAs and

REs. Although these new relationships have usually required a significant initial period during which the

partners built the relationship foundation most approved projects are now past this stage. In some

cases the new relationships have already led to other joint activities and in many cases more

collaboration is likely in the future. The MENATF has been less successful in bringing other partners into

project design and implementation, partly (as noted above) because of the short lead time available for

project preparation.

Capacity building components are integrated into many of the projects, and are already generating clear

benefits. The overall portfolio offers significant opportunities for cross-learning between MENATF

projects in different countries that are tackling similar issues with a range of international partners, and

a start has been made to exploiting these opportunities.

There is no ideal single method of monitoring the progress of MENATF funded projects, but the best

single source is the ratings provided by ISAs every six months. The consultants cross checked these for

about half of the projects in the portfolio, and in most cases endorsed the ISAs’ ratings. Many of the

projects are still at an early stage of implementation, but so far the great majority of projects are rated

as satisfactory or moderately satisfactory in their implementation and in their progress towards meeting

their objectives. Given the unevenness of the political transition process in the six countries, this is a

very encouraging situation.

Nevertheless the consultants found that many of the projects visited are likely to take longer to

complete than was originally anticipated. Some of the donor stakeholders have been concerned about

the perceived slowness of MENATF projects to deliver results. If projects are ISA executed, producing

reports rather than involving participative consultative processes and focused in sectors that are unlikely

to be affected by political change or controversy then they have a good chance of being implemented

quickly and delivering results on schedule. However, these are not the kind of projects that will really

25

contribute to the transition process – and ISA execution is less likely to be associated with TC ownership

or capacity building.

5.2 Conclusions and Main Recommendations The MENATF is a well-managed fund that is making a major and important contribution at the

international institutional level, maintaining the integrity of the Deauville Partnership. The Fund has

facilitated many new institutional partnerships in the MENA region, between ISAs and international

agencies that had not previously worked together and between ISAs and new implementing partners.

The projects it is supporting are variable in their relevance to the core features of the transition process

in the six MENA countries, but the portfolio includes many projects that are of great importance to the

process and are helping to address some of the most important aspects of political and economic

transition. The majority of the projects approved before June 2014 are making satisfactory progress and

very few are considered to be unsatisfactory or moderately unsatisfactory. Although the process of

transition has been uneven the current form and scope of the Fund remain relevant to the TCs,

particularly because of the value added the Fund provides with technical assistance supported by the

specialised knowledge of the ISAs. In all three TCs visited stakeholders noted that they had additional

projects under preparation for MENATF funding, confirming their confidence that the Fund remains

relevant to their needs.

It is recommended that the donors make commitments to fund the MENATF for a three year period

from January 2015 (i.e. an additional two years added to the three year period currently agreed),

pledging a flow of funds adequate to allow three to six annual or six-monthly calls for proposals (say

$30m to $60m a year, or a total of $90m to $180 million). ISAs and REs should be informed that these

rounds are forthcoming, and that they can plan projects over the period, taking as much time as is

necessary to ensure that there is adequate consultation and quality project preparation (including the

involvement of a more diverse range of partners) before SC submission. This process should also allow

a slightly longer period for ROE reviews and consideration by ISAs and REs of ROE comments before

finalisation of submissions to the SC. In addition this would allow better programming of SC meetings

over the next three years.

If this proposal is accepted the SC would need to amend the “End Approval Date” (see Operations

Manual, paragraph 12) to “five years after the date of first project approval” (which was December

2012). It would also be necessary to amend the “End Transfer Date” (see Operations Manual, paragraph

12). The possibility of such changes is allowed for in paragraph 12 of the Operations Manual.

In addition, if the recommendations of this review are accepted by the SC the resource mobilisation

efforts for the Fund may need to be temporarily reinforced. This could be done in at least two ways. A

small group of donors might join the co-chairs for a coordinated effort to reach an agreed target. In

26

addition the six TCs might make a joint appeal to donors.14 These efforts would need to be supported by

a strengthened communications effort from the CU.

If the donors decide to add significant resources to the Fund it is recommended that the Deauville

Partners and the SC review the possibility of expanding the geographical scope of the Fund within the

MENA region. Possible additional TC partners might include Lebanon, and even Syria or Iraq if political

change in these countries leads to a commitment towards political and economic transition. Any such

additions would be dependent on the adoption by the countries of a commitment towards economic

and political transition that was endorsed by the SC. There might also be other possible donor partners

such as Algeria which could be approached by the fund-raising group.

5.3 Other Recommendations The following relatively minor recommendations have also emerged from the mid-term review:

(a) If and when TCs decide to withdraw approved projects (as allowed for in the decisions of the June

2014 SC meeting) the SC should allow the TCs, within the agreed six month period, to either submit

new proposals or to request funding of additional components for ongoing well performing projects.

(b) Virtual decisions taken by the SC (e.g. on approved extensions to closing dates) should be more

clearly recorded on the MENATF website.15

(c) When projects are presented at SC meetings every effort should be made to allow representatives

of the team that has actually prepared the project to make a brief presentation, even if this requires

some “rotation of seats”.

(d) The CU should produce more documentation in three official languages. Priority should be given to

translating proposal submission guidance in time for the next round of proposals and to annual

reports.

(e) The CU should also produce more “public relations” information on MENATF supported projects.

This could take the form of information sheets, of a regular bulletin covering both MENATF activities

and broader aspects of transition experience, of blogs, videos or other materials. This will be

particularly important if the main mid-term review recommendations are accepted, as the fund-

raising effort will need to be complemented by good communications materials.

(f) Six monthly progress reports should include updated details of the RE (which has sometimes

changed since project approval) and of at least one key contact in the RE. Where there are multiple

REs this should be noted, and a contact in each RE provided.

(g) Monitoring of commitments data should not continue as this data bears no relationship to real

progress.

(h) ISAs should improve country-level coordination activities. There should be regular meetings

between all ISAs working on MENATF activities with each country (with virtual participation by those

that do not have in-country presence), and special country level meetings should be organised

14

A respondent to the Stakeholder Survey reported that this was proposed at the June 2014 SC meeting, but it does not appear to be recorded in the minutes. 15

Virtually approved changes to project closing dates are recorded in the six monthly project progress reports and decisions taken virtually will be recorded in the minutes of the subsequent SC meeting.

27

during project preparation rounds to ensure that all ISAs are aware of the portfolio that is under

preparation. These meetings might be facilitated by the IFI Coordination Platform.

(i) Wherever there are multiple TCs working in similar sub-sectors (often with a varying range of ISAs)

there should be an effort to arrange regional meetings to exchange experience and learn both from

each other and from broader international experience. It is recommended that for each identified

sub-sector a specific ISA be designated with “lead” responsibility to facilitate such activities.

(j) Most ISAs have well established risk management frameworks. It is recommended that any ISAs

that do not have standard risk management frameworks against which all new proposed activities

(whether grant or loan funded) are assessed, take steps to introduce such a framework and use it

(inter alia) during the preparation of MENATF project proposals. All ISAs should be asked to confirm

to the SC that they either have established risk frameworks in place or are in the process of

establishing such a framework.

(k) The analysis in Annex J showed that there is a small but real risk that in the future there could be

inadequate funds for the operations of the Trustee and the CU. It is recommended that in future an

amount is set aside by the SC to cover minimum estimated future costs for the Trustee and the CU

before allocating funds to new proposals in order to ensure that the Trustee and CU are never

unfunded. Actual allocations of these funds to the Trustee and the CU should continue to require

approved annual budget submissions.