INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC6966 Date ISDS Prepared/Updated: 12/08/2013 I. BASIC INFORMATION A. Basic Project Data Country: Somalia Project ID: P146006 Project Name: Somalia PFM Capacity Strengthening Project Task Team Leader: Winston Percy Onipede Cole Estimated Appraisal Date: Estimated Board Date: November 15, 2013 Managing Unit: AFTME Lending Instrument: Investment Project Financing Sector: General public administration sector (100%) Theme: Public expenditure, financial management and procurement (90%);Other public sector governance (10%) SPF Amount (US$m.): 0 GEF Amount (US$m.): 0 PCF Amount (US$m.): 0 Other financing amounts by source: Borrower 0.00 State and Peace Building Fund 4.50 4.50 B. Project Objectives [from section 2 of PCN] The Project Development Objective (PDO) is "to establish systems for more transparent and accountable management and use of public funds". C. Project Description [from section 3 of PCN] The project will catalyze the PFM reform action plan with the objective of laying the foundation for longer-term reforms by strengthening controls around the basic Ministry of Finance and Planning functions. Component 1: Public Financial Management Reform Oversight The reform oversight and implementation structure will provide policy directions for strengthening the PFM systems, will take periodic stock of progress by ensuring that key milestones in the PFM reform strategy are on track, and will take concrete action where required. Annual public PFM Forums will be organized as part of the communication strategy. Pooling of all support within a unified PFM reform program will enhance coordination and provide a forum for structured dialogue with development partners. With the crisis over the past decade depleting PFM capacity; PFM Subject Matter Experts (SMEs) will provide technical assistance services with a clear capacity building and exit strategy, with skill transfer arrangements (hand-holding approach) embedded within government structures. Beyond the availability of good laws and institutional structures, PFM improvement requires capability at the level of individual PFM practitioners. The PFM Education and Training Program will build capacity at the individual level to obtain the required knowledge, skills, abilities and other characteristics. The main targeted participants are planning and budget officials, procurement officers, accountants and internal and external auditors. To ensure sustainability, the education program will be constituted as a PFM Academy within local universities. As reforms progress, and in anticipation of spending on social services, Public Expenditure Tracking Surveys (PETS) will be undertaken. Advocacy networks for the Campaign for Good Governance (CGG), comprised of relevant non-state actors, will be trained to undertake independent policy and budget analysis, revenue watch, and expenditure tracking. The results of the PETS will form part of the annual PFM forum and will form part of the information used to judge public perceptions about PFM performance. Component 2: Somalia Financial Management Information System (SFMIS) The SFMIS is computer based software that facilitates the management of financial information. It is operated from computer terminals (to be procured) that are connected to software and databases housed on a number of servers (to be procured). The system will be housed in the premises of Ministry of Finance and Planning where a building /floor/wing will be rehabilitated and equipped with the required infrastructure (cables, electricity, light, new windows) to accommodate the servers, and fitting of air conditioned, dust-free rooms with access control. The system will be user-friendly, robust and secured. It will focus on capturing budget, treasury functions, payroll, tax collection and financial reporting. This will be preceded by business process reviews and development and implementation will be through an inter-ministerial task force that will own the Statement of User Requirements (SOUR) including a Standard Chart of Accounts (SCoA). The SFMIS will provide a system with adequate audit trails to identify administrative accountability in processing transactions. Improved timeliness and accuracy of transaction processing together with comprehensiveness of financial reports with the adoption of Treasury Single Account will also improve management decision and make key fiscal data available to the public to hold government accountable for the use of public funds. Component 3: Expenditure Control, Procurement, Accounting and Reporting (ECPAR) Business processes will be re-engineered to strengthen existing processes such as requisitioning, purchase orders, invoicing, payment authorization/approval, accounting and reporting. Improved business processes could for example increase total tax revenue without necessarily increasing the tax rate by collecting actual tax payable efficiently. The evolving business processes for budgeting, commitment controls, procurement, internal controls, accounting and reporting will initially be issued as Treasury Circulars or Ministerial Orders and later codified in Financial Regulations (FR) and a Comprehensive Operating Procedures Manuals (COPM) to support the PFM Law. Establishing a Treasury Single Account (TSA) in the Central Bank through which all revenue collections and authorized payments are made with regular bank reconciliation will lend credibility to the completeness and accuracy of financial reports for decision making and accountability. The TSA will support the extent of consolidation of government cash balances (including those for extra-budgetary funds and external assistance controlled by third-parties) and this will further improve the predictability in the availability of funds for commitment of expenditures and general cash management by avoiding the situation of piling up debts or borrowing whilst there are idle cash balances. Cash handling which pose high risk of leakages will be avoided through direct 'bank' transactions. Stores Regulations are outdated with no well-functioning procurement system in place. The objective is to put in place a modern but appropriate institutional and legal framework based on the current Somalia context that will increase value for money in the use of public resources and allow broader participation of the private sector and transparency in the procurement process. Initially, emphasis will be placed on linking procurement plans with budget, work plans, and disbursement schedules to ensure availability of funds to support the award and payments of contracts in ensuring effective implementation of the budget. Good quality in-year financial reports and annual financial statements are not produced. The project will provide a system of accounting that reflects accurately and in accordance with internationally acceptable accounting standards, the flow of transactions and the year-end position of financial resources of the FGS in a timely manner. A simple accounting procedures manual will be prepared to guide the preparation of annual financial statements. Practical training will be conducted for recognition and measurement of elements of financial statements and preparation of prescribed financial statements and the relevant disclosure notes in accordance with International Public Sector Accounting Standards (IPSAS cash basis). Budget and commitment controls will be introduced to curb build-up of arrears through embedded system control features of the SFMIS. Also, strengthening controls, streamlining business processes and applying internationally acceptable standards and practices will improve fiscal discipline and promote transparency and accountability. D. Project location (if known) The project will be carried out with Somali counterpart institutions in the Capital Mogadishu. The only physical activities that are foreseen are the procurement of electronic hardware (computer terminals, serves) and small scale, indoor works to refurbish and retrofit office space and server rooms to accommodate the hardware. E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] TBD F. Environmental and Social Safeguards Specialists () II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X An environmental screening is carried out by default for every Bank financed project to determine the environmental category and design an adequate assessment and management response. The works that might be carried out under this project are expected to have no or negligible environmental or social implications and no negative impacts. They will be confined to existing structures, be simple and non-hazardous in nature, restricted to very basic, small scale refurbishment, painting, cabling and possibly the installation of new doors and windows in areas encompassing several rooms only, within existing buildings in the property of, and used by the Somali Government. No specific safeguards instruments would be required to manage or mitigate the anticipated impacts, but the team will proactively manage the small works by helping the Borrower to prepare a simple EMP. Natural Habitats (OP/BP 4.04) X The project will not be implemented in or near natural habitats. Forests (OP/BP 4.36) X The project does not involve forests. Pest Management (OP 4.09) X The project does not involve pest management. Physical Cultural Resources (OP/BP 4.11) X The project does not affect or involve physical cultural resources. Indigenous Peoples (OP/BP 4.10) X There are no Indigenous Peoples in the project area. Involuntary Resettlement (OP/BP 4.12) X The project does not involve land acquisition leading to involuntary resettlement and/or restrictions of access to resources or livelihoods. Safety of Dams (OP/BP 4.37) X N/A Projects on International Waterways (OP/BP 7.50) X N/A Projects in Disputed Areas (OP/BP 7.60) X The project will not be implemented in an area that is disputed between two or more Bank Safeguard Policies Triggered Yes No TBD members. Environmental Category: C - Not Required III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: N/A B. For projects that will not require a QER, the target date for preparing the PAD-stage ISDS: 08/15/2013 C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS. Not applicable IV. APPROVALS Signed and submitted by: Task Team Leader: Mr Winston Percy Onipede Cole 09/30/2013 Approved by: Regional Safeguards Coordinator: Ms Alexandra C. Bezeredi 11/19/2013 Comments: comments from Victor Bundi Mosoti (LEGEN)refers Sector Manager: Ms Patricia Mc Kenzie 12/04/2013 Comments: 1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.