Document of The World Bank Report No: ICR00002576 IMPLEMENTATION COMPLETION AND RESULTS REPORT (P098639; TF56336 and TF097653) ON GRANTS IN THE AMOUNT OF US$16.4 MILLION TO GOVERNMENT OF SOUTH SUDAN (GoSS) FOR CORE FIDUCIARY SYSTEMS SUPPORT PROJECT (CFSSP) December 31, 2013 AFTME South Sudan Country Office Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective on March 07, 2008)** ** Please note, date of initial disbursement Currency Unit = SDG (Sudanese Pounds) US$ 1.00 = SDG2.02 FISCAL YEAR: Former: January 1 – December 31 Changed to: July 1 – June 30 (as from 2011) ABBREVIATIONS AND ACRONYMS AF Additional Financing CFSSP Core Fiduciary Systems Support Project CPA Comprehensive Peace Agreement DA Designated Account DG Director General DP Development Partner EAA External Audit Agent ESAF Environmental and Social Management Framework FM Financial Management FMS Financial Management Specialist FPP Final Project Paper FY Fiscal (Financial) Year GLA Grant Letter Agreement GoNU Government of National Unity GoSS Government of South Sudan GRSS Government of the Republic of South Sudan IA Implementing Agency ICR Implementation Completion and Results Report IDA International Development Association IFMIS Integrated Financial Management Information System IFR Interim Financial Report INTOSAI International Organization of Supreme Audit Institutions ISN Interim Strategy Note ISR Implementation Status and Results JAM Joint Assessment Mission JDT Joint Donor Team KPI Key Performance Indicator LICUS Low Income Countries Under Stress M&E Monitoring and Evaluation MA Monitoring Agent MDA Ministries, Departments and Agencies MDTF Multi-Donor Trust Fund MDTF-SS Multi-Donor Trust Fund for South Sudan MoFEP Ministry of Finance and Economic Planning MTR Mid-Term Review NAC National Audit Chamber NGOs Non-Governmental Organizations NLA National Legislative Assembly OC Oversight Committee OPCS Operations Policy and Country Services PAA Project Accounting Agent PAC Public Accounts Committee PAD Project Appraisal Document PDO Project Development Objective PFM Public Financial Management PFMU Project Financial Management Unit PIU Project Implementation Unit PMT Project Management Team IPPDAR Interim Public Procurement and Asset Disposal Regulations PPU Procurement Policy Unit PPU, MoFEP Planning and Policy Unit, MoFEP PRTF Procurement Reform Task Force PTF Project Task Force QCBS Quality and Cost-Based Selection RIEP Rapid Impact Emergency Project SAI Supreme Audit Institution SDG Sudanese Pound SDP Strategic Development Plan SPLA Sudan People’s Liberation Army SPLM Sudan People’s Liberation Movement SSP South Sudanese Pounds TA Technical Assistance TF Trust Fund UN United Nations USAID United States Agency for International Development USD United States Dollars VfM Value for Money WA Withdrawal Application WB World Bank Vice President: Makhtar Diop Country Director: Bella Bird Country Manager: Nicola Pontara Sector Director: Edward Olowo-Okere Sector Manager: Patricia Mc Kenzie Project Team Leader: Adenike Sherifat Oyeyiola ICR Team Leader: Adenike Sherifat Oyeyiola ICR Author: Udo Mba Kalu SOUTH SUDAN Core Fiduciary Systems Support Project CONTENTS Data Sheet A. Basic Information................................................................................................................................ i B. Key Dates ............................................................................................................................................ i C. Ratings Summary ................................................................................................................................ i D. Sector and Theme Codes.................................................................................................................... ii E. Bank Staff ........................................................................................................................................... ii F. Results Framework Analysis .............................................................................................................. ii G. Ratings of Project Performance in ISRs ............................................................................................ v H. Restructuring (if any) ........................................................................................................................ vi 1. Context, Development Objectives and Design .................................................................................... 1 2. Key Factors Affecting Implementation and Outcomes ....................................................................... 7 3. Assessment of Outcomes ................................................................................................................... 12 4. Assessment of Risk to Development Outcome ................................................................................. 15 5. Assessment of Bank and Borrower Performance .............................................................................. 16 6. Lessons Learned ................................................................................................................................ 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ................................... 20 Annex 1. Project Costs and Financing.............................................................................................. 22 Annex 2. Outputs by Component ..................................................................................................... 23 Annex 3. Economic and Financial Analysis (including assumptions in the analysis) ..................... 26 Annex 4. Economy, Efficiency and Effectiveness Related Analysis ............................................... 27 Annex 5. Bank Lending and Implementation Support/Supervision Processes ................................ 28 Annex 6. Beneficiary Survey Results (if any) .................................................................................. 30 Annex 7. Stakeholder Workshop Report and Results (if any) ......................................................... 31 Annex 8. Summary of Borrower’s Completion Report.................................................................... 32 Annex 9. Comments of Co-financiers and Other Partners/Stakeholders ......................................... 33 Annex 10. List of Supporting Documents .......................................................................................... 36 Map A. Basic Information Core Fiduciary Systems Country: South Sudan Project Name: Support Project (TF056336) Project ID: P098639 L/C/TF Number(s): TF-56336,TF-97653 ICR Date: 07/30/2013 ICR Type: Core ICR GOVT OF SOUTHERN Lending Instrument: ERL Grantee: SUDAN Original Total USD 3.0M Disbursed Amount: USD 13.45M Commitment: Revised Amount: USD 13.45M Environmental Category: C Implementing Agencies: Ministry of Finance and Economic Planning Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/05/2005 Effectiveness: 09/06/2006 Appraisal: Restructuring(s): Approval: 02/21/2006 Mid-term Review: Closing: 09/30/2008 03/31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Grantee Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at Yes Quality at Entry (QEA): None any time (Yes/No): Problem Project at any time Quality of Supervision No None (Yes/No): (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General public administration sector 100 100 Theme Code (as % of total Bank financing) Other accountability/anti-corruption 50 50 Public expenditure, financial management and procurement 50 50 E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Bella Deborah Mary Bird Ishac Diwan Sector Manager: Patricia Mc Kenzie Edward Olowo-Okere Project Team Leader: Adenike Sherifat Oyeyiola Parminder Brar ICR Team Leader: Adenike Sherifat Oyeyiola ICR Primary Author: Udo Mba Kalu F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project development objective as indicated in the Letter Agreement dated February 21, 2006 is to put in place a robust framework for channeling of MDTF and GoSS counterpart funds to provide reasonable assurance regarding the use of these funds. Revised Project Development Objectives (as approved by original approving authority) There were no changes to the PDO ii (a) PDO Indicator(s) Original Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target documents) Years monthly bank reconciliations conducted (one per MDTF-SS project) conducted Indicator 1 : according to established standards Value quantitative or 0 18 per month 18 per month Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % Target met achievement) Quarterly statements of Sources and Application of Funds prepared according to Indicator 2 : established standards (i.e. one per MDTF) Value quantitative or 0 18 per month 18 month Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % Target met achievement) Indicator 3 : Annual project audits completed Value quantitative or 0 18 per year 18 per year Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % Target met achievement) Indicator 4 : Annual audits of GoSS accounts completed Value quantitative or 0 6 6 Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments Target met. Audits for years 2005 to 2010 completed. 2005 to 2008 presented to (incl. % National Legislative Assembly. achievement) Indicator 5 : MDAs that comply with GoSS' procurement regulations Value quantitative or 0 6 6 Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments Original target was achieved. 6 MDAs complied with established procurement (incl. % guidelines and procurement plan. achievement) iii (b) Intermediate Outcome Indicator(s) Original Target Values (from Actual Value Achieved at Completion or Indicator Baseline Value approval Target Years documents) Indicator 1 : Project Accounting Agent/Project Financial Management Unit (PFMU) Appointed Value (quantitative No Yes Yes or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments 100% achieved. The PAA which was recruited under another project (RIEP) was used as an Interim (incl. % Project Accounting Agent until 2008. PFMU with individual consultants used thereafter. achievement) Indicator 2 : PFMU accounts for MDTF and GoSS counterpart funds Value (quantitative 0 18 per month 18 per month or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % 100% achieved. Accounting for all active projects each month. achievement) Indicator 3 : Preparation of Quarterly Interim Financial Reports Value (quantitative 0 18 per quarter 18 per quarter or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % 100% achieved. Quarter IFRs prepared for all active projects. achievement) Indicator 4 : External audit agent appointed Value (quantitative No Yes Yes or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % External Audit Agent appointed for all project implementation period. achievement) Indicator 5 : Draft audit legislation and code of conduct in place Value (quantitative No Yes Yes or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments (incl. % Original target achieved. Audit legislation and code of conduct prepared. achievement) iv Indicator 6 : Oversight of public procurement by MoFEP; MDAs accountable for procurement Value (quantitative No Yes Yes or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments Oversight of public procurement backed up by IPPDR. A draft Procurement law prepared. six MDAs (incl. % able to prepare procurement plan. achievement) Indicator 7 : Procurement agent is providing support to the Procurement Policy Unit in MoFEP Value (quantitative No Yes Yes or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments Procurement Agent supported until August 2011; then Procurement Advisor under similar Terms of (incl. % Reference. achievement) Indicator 8 : Training of key MDAs on contract monitoring and commitment control systems Value (quantitative 0 5 31 or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments Original target achieved. 31 MDAs were trained on procurement management including contract monitoring (incl. % and commitment control systems. achievement) Indicator 9 : MDAs with up-to-date procurement plans in place and implemented according to plan Value (quantitative 0 6 6 or Qualitative) Date achieved 02/21/2006 03/31/2013 03/31/2013 Comments Original target achieved. These are Ministries of Health; General Education and Instructions; Agriculture and (incl. % Forestry; Higher Education, Science and Technology; Water Resources and Irrigation; and Gender, Social achievement) Welfare and Religious Affairs. G. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No. DO IP Archived (USD millions) 1 06/30/2008 Moderately Satisfactory Moderately Satisfactory 1.30 2 12/31/2008 Moderately Satisfactory Moderately Satisfactory 1.65 3 06/30/2009 Satisfactory Satisfactory 1.97 4 12/22/2009 Satisfactory Satisfactory 2.85 5 06/30/2010 Satisfactory Satisfactory 4.28 6 01/31/2011 Satisfactory Satisfactory 7.45 7 10/03/2011 Satisfactory Satisfactory 9.10 8 04/10/2012 Satisfactory Satisfactory 11.15 9 11/18/2012 Satisfactory Satisfactory 13.32 v H. Restructuring (if any) Not Applicable I. Disbursement Profile vi 1. Context, Development Objectives and Design 1.1 Context at appraisal 1. The Republic of South Sudan (RoSS), formerly the territory of Southern Sudan, is located on the southern plain of the White Nile and its tributaries, bordering Sudan to the North, Ethiopia and Kenya to the East and South East, respectively, Uganda to the South, and the Democratic Republic of Congo and Central Africa Republic to the West. It has a population of about 8.26 million people, of whom 83 percent live in rural areas. About 51 percent of the population lives below the poverty line. 1 2. The twenty year-old civil war with the North ended in January 2005 with the signing of the Comprehensive Peace Agreement (CPA) by the Government of the Republic of the Sudan and the Sudan People’s Liberation Movement (SPLM). This was preceded by the signing of the Machakos Protocol in 2002; a Wealth Sharing Agreement in January 2004; a Power Sharing Agreement; and two significant protocols on key disputed areas in June 2004. The CPA created a basis for lasting peace and economic development, and called for a referendum on the political and economic future of Southern Sudan after a six-year interim period. During this period, Southern Sudan was governed by a Government of National Unity (GoNU), which included members of SPLM. A semi- autonomous provisional Government of Southern Sudan (GoSS) was established in October 2005 in parallel to oversee the territory under the control of SPLM, with its capital in Juba. The RoSS was established as an independent nation on July 9, 2011, following a peaceful referendum in January 2011. 2 3. Perhaps uniquely for a post-conflict government, GoSS in 2005 had immediate access to millions of dollars of domestic oil resources with which to fund its budget. Oil revenues comprised more than 95 percent of total domestic revenues during 2006-2011 and grew rapidly. 3 When the CPA was signed, the Department of Finance and Economic Development was based in Yei and handled, on average, monthly revenues of around $10,000 per month. The fund flows increased to about $360 million in 2005, escalating to around $800 million in 2006 and around $1.5 billion in subsequent years. It clearly did not have the capacity to handle these. A Joint Assessment Mission (JAM)4 carried out in March 2005 and comprising World Bank, UNDP, Government of the Republic of Sudan and SPLM, identified that governance systems, including Public Financial Management (PFM) systems, were not in place to make efficient and effective use of these funds. Such systems that had at one time been in place had become very run down. The Ministry of Finance and Economic Planning (MoFEP) had very few technical staff, and their skills were not suited to operating modern PFM systems. Additionally, office infrastructure, IT capacity and communications were poor. The situation at line ministry level was also poor. Meanwhile, as also identified by the JAM, Southern Sudan faced huge infrastructure and public service delivery gaps which needed to be addressed urgently. 1 Information from Statistical Yearbook for Southern Sudan, 2010, prepared by Southern Sudan Centre for Census, Statistics and Evaluation. The 2011 PEFA assessment of GoSS provides further background statistical information. 2 The acronym ‘GoSS’ is used in the context of events prior to July 9, 2011. The acronyms ‘RoSS’ or GRSS are used in the context of events since July 9, 2011. 3 Table 1 of Section 2 of the Bank-financed PEFA assessment of GoSS conducted in 2011 summarizes the structure of GoSS’ budget and budget performance during 2008-2011. Also see the subsequent Country Integrated Fiduciary Assessment (completed in 2012). 4 This was the only assessment that existed then on the PFM systems 1 4. The JAM report considered it essential to have core PFM functions as quickly as possible in order to support GoSS’ desire to address Southern Sudan’s urgent needs and to avoid the undesirable situation of donor agencies addressing all these needs directly, outside GoSS’ systems. The entire public service had to be built up virtually from scratch. As this would take a number of years, the JAM recommended that responsibility for implementing core PFM functions (accounting, procurement and auditing) should be contracted out to international firms for at least the first two years following the CPA. Beginning in 2008, the GoSS would start to take over the responsibility for the core PFM functions on the basis of capacity building that would be supported by donor agencies, for example, through the Capacity Building Trust Fund (CBTF), the Bank-funded ‘Low Income Countries Under Stress’ (LICUS), the CFSSP itself, UNDP, ODI and USAID. 5 5. The overall context in Southern Sudan was an environment of weak institutional arrangements, poor oversight over public finances and large-scale rent seeking. The fiduciary arrangements put in place were inadequate to handle the magnitude of financial flows that occurred. Given all these challenges on accountability, there was therefore, a strong need to have a platform to ensure that MDTF-SS funds would be used for the intended purposes. 6. The CPA called for the creation of two multi-donor Trust Funds (MDFT) to finance Sudan’s enormous development needs; the first, the MDTF-N for the GoNU, and the second, the MDTF-SS for the GoSS. The MDTF-SS was to be administered by the Bank from 2005 with a closing date of December 31, 2011. This was extended twice to December 2012 and June 30, 2013. Prior to the approval of the CFSSP, the Rapid Impact Emergency Project (RIEP) effective on March 2, 2006, was the first project to be financed from the MDTF-SS and included Procurement Agent (US$1.5 million) and Project Accounting firm (US$0.25 million) as two of its components. The Procurement Agent component supported the contracting of a consulting firm to establish a Procurement Division in MoFEP and support procurement activities of GoSS for a period of two years; while the Project Accounting Firm component supports the sole source contracting of a consulting firm (KPMG); who was already engaged as the Government Accounting Agent working with the GoSS (MOFEP) to establish the Project Disbursement Unit, for a period of 6 to 12 months until the long term project accounting agent is hired. The CFSSP became effective on September 6, 2006 and builds on this initial support by RIEP. It provided funding for recruiting a longer-term Project Accounting Agent (PAA) to support all MDTF-SS projects. Also, since GoSS did not have audit capacity, the CFSSP was to support in engaging an External Audit Agent (EAA) to work with the Audit Chamber and provide independent audit assurance on the MDTF-SS and GoSS funds. 7. The original cost of CFSSP was $6 million, of which $3 million each would be financed by MDTF- SS donors and GoSS. The total cost had increased to $16.447 million ($13.447 million from MDTF Donors and $3 million from GoSS) by project closure through various additional financing. The CFSSP would address the emergency needs of GoSS for establishing basic fiduciary systems to ensure accountability and transparency in the use of MDTF-SS resources for implementing development projects. An international accounting firm would be contracted as the PAA. The weak capacity of the Audit Chamber would be addressed through contracting an EAA, which would support the Audit Chamber in its role as both the external auditor of MDTF-financed projects and of GoSS, and would help to strengthening the capacity of the Audit Chamber. With the approval of the 5 (i) Framework for Sustained Peace, Development and Poverty Eradication, Joint Assessment Mission, March 2005; and (ii) Davies, F. (2009), ‘Contracting out Core Government Functions and Services in Southern Sudan’, Chapter 3 in: ‘Partnership for Democratic Governance Contracting Out Government Functions and Services, Emerging Lessons from Post-Conflict and Fragile Situations’, OECD: 2009. 2 Oversight Committee (OC) of the MDTF, a procurement component was added through additional financing in September 2010. 8. The project comprises of two Trust Funds(TF): TF56336 for a total cost of US$11.147 (including $3 million of GoSS contribution) and funding the Accounting firm and Auditing firm components; and TF97653 for $5.3 million (all MDTF donor funds) and funding all three components (Accounting firm, Auditing firm and Procurement components). 1.2 Original Project Development Objectives (PDO) and Key Indicators 9. The original PDO as indicated in the Letter Agreement dated February 21, 2006 is to put in place a robust framework for channeling of MDTF and GoSS counterpart funds to provide reasonable assurance regarding the use of these funds. The framework would provide reasonable assurance that the funds would be used for their intended purpose and that the provision of core PFM functions would be met. The framework would be ‘robust’ in the sense that the use of the funds would be fully controlled, accounted for and reported on. 10. At approval, the PDO’s key performance indicators (KPI) were: 1. Accountability and transparency in the use of MDTF-SS and GoSS counterpart funds; 2. Independent audit would be operational; and 3. Use of information technology to support the budget execution process would be established, leading to increased efficiency, transparency and accountability. 1.3 Revised PDO 11. There was no change to the PDO. However, as a result of the introduction of the procurement component in September 2010 and to ensure clearer and more robust indicators, the PDO indicators were revised (Table 1). Table 1: SUDAN: Original and Revised PDO and PDO Indicators Original PDO Revised PDO Rationale for Change To put in place a robust framework for channeling MDTF-SS and GoSS counterpart funds to provide reasonable assurance No change No change regarding the use of these funds. Original PDO indicators Revised PDO indicators November 2005 June 2011 18 monthly bank reconciliations The original indicators were conducted (one per MDTF-SS clarified by breaking them down project) conducted according to and quantifying them. Accountability and transparency in the use established standards of project funds 18 Quarterly statements of Sources and Application of Funds prepared according to established standards (i.e. one per MDTF) 18 Annual project audits Original indicators were clarified Independent audit would be operational completed by breaking them down and 6 Annual audits of GoSS quantifying them. accounts completed Use of IT to support budget execution would 5 MDAs that comply with GoSS’ Procurement component added to be established leading to increased procurement regulations CFSSP in 2010. efficiency, transparency and accountability 3 1.4 Main Beneficiaries 12. The main beneficiaries of this project were to include the following: a) Staff of the Accounts Directorate, and Procurement Policy Unit of MoFEP; b) Staff of the National Audit Chamber (NAC); c) Ministries, Departments and Agencies (MDAs) that were audited; d) All ten States that were audited; e) Participating MDAs in which MDTF projects were implemented; f) National Legislative Assembly, which used the audited reports as the basis for exercising its legislative oversight responsibilities; and g) The general public through the project’s support of the efficient and accountable use of government resources. 1.5 Original Components 6 (as approved) The project had two original components: Component 1: Project Accounting Firm (US$3 million of which $1.5 million is GoSS contribution) 13. Provision of consulting services to support the project accounting, internal audit and aid accounting, build up on processes established by the Interim Project Accounting Agent, including (i) establishing a Project Disbursement Unit within MoFEP; (ii) establishing and maintaining financial management systems at national and sub-national levels; (iii) reporting of transactions as per international accounting standards; (iv) providing capacity building for key staff at MoFEP; (v) providing limited internal audit services; and (vi) assuming fiduciary responsibility regarding the use of MDTF funds and counterpart funds for a period of two years. Component 2: Auditing Firm (US$3 million of which $1.5 million is GoSS contribution) 14. Provision of consulting services for providing external auditing services for all MDTF funded projects, and other selected projects, including (i) drafting legislation and regulations; (ii) undertaking external audit of MDTF projects and other selected projects; and (iii) providing capacity building support for a period of two years. 1.6 Revised Components Procurement Component 15. An additional financing of US$ 3 million was approved in September 2010 for a procurement component to strengthen the capacity of the Procurement Policy Unit (PPU) of MoFEP and to enhance the procurement functions of key Ministries, Departments and Agencies (MDAs). It involved the recruitment of an international procurement firm with specialization in procurement. This was previously a component under the Rapid Impact Emergency Project (RIEP) project which funded similar activities for two years and the contract ended in December 2009. The services were still required to support MDAs; as a result, the Oversight Committee approved that the component be included in the CFSSP. This did not affect the development objective of the project. 6 Grant Agreement of February 21, 2006 4 1.7 Other Significant Changes 16. Additional Financing: There were five additional financing in the project. Two were under the original TF56336 while three were approved under a new TF97563. The details are in table 2 below. Table 2: Additional financing Date Amount Purpose of Additional financing ($m) December 4, 2.6 Additional costs on the External Auditing Firm Component under TF56336. The same 2007 amount was also provided as additional funds by the Recipient. September 2.6 Due to fiscal challenges, GoSS counterpart funds requirement (unpaid amounts) was 15, 2009 waived for all MDTF-SS projects and MDTF donors covered this additional cost with the AF. September 1, 3.0 This was under a new TF097653 in respect of AF to include the procurement 2010 component in the project to enhance and strengthen GoSS public procurement functions. March 2, 1.3 Second AF under TF097653 for extension of the services of the External Audit Agent 2012 by one year. August 2, Third AF under TF097653 to cover expenditure and other outstanding commitments 2012 1.0 related to the extension of the MDTF-SS and project closing date 17. Reallocation: There was a re-allocation between the three components. The Procurement Component’s allocation was reduced to $2 million while the Accounting and Auditing Components were allocated an additional US$ 1.5 million and $6.95 million respectively. Table 3 shows the revised costs of the Project by Component. Table 3: Revised Costs Component Original Cumulative Revised Amount at Allocation Reallocation closure (US$m) (US$m) (US$m) MDTF GoSS MDTF GoSS MDTF GoSS Project 1.5 1.5 1.5 - 3.0 1.5 Accounting Auditing 1.5 1.5 6.9 - 8.4 1.4 Procurement - - 2.0 - 2.0 - Total Budget 3.0 3.0 10.4 - 13.4 2.9 18. Amendment to Trust Funds. There were seven amendments to the Grant Agreements for the project; five amendments to TF56336 and two amendments to TF97653. These are in tables 4 and 5 below. 5 Table 4: Amendment to TF56336 (Original Agreement signed on February 21, 2006) Amendment Date Purpose # 1 May 18, To amend disbursement percentages as requested by government to reflect 50% up to March 2007 24, 2007; 100% for May 25 to September 30, 2007; and 50% thereafter 2 Dec 4, AF of $2.6 million for enhanced project size due to additional costs on the External Audit 2007 Component 3 Oct 28, To extend closing date from November 30, 2008 to June 30, 2011 and introduce additional 2008 procurement method which allows use of individual consultants under the Accounting component 4 Feb 9, Add operating costs in the category of eligible expenditures 2009 5 Sept 15, AF of $2.6 million to make up for waived GoSS counterpart funding as agreed for all MDTF- 2009 SS projects Table 5: Amendment to TF97653 (Main agreement signed on September 1, 2010) Amendment # Date Purpose 1 March 2, 2012 $1.3 million AF 2 August 2, 2012 $1 million AF and extension of closing date to March 31, 2013 19. Change to Project Accounting Firm Component. Prior to the effectiveness of the CFSSP, a project accounting firm was recruited in December 2005 under MDTF-SS first project, the RIEP, through sole source contracting as an interim arrangement (interim Project Accounting Agent - iPAA), to provide accounting and disbursement services to all MDTF funded projects and provide fiduciary responsibilities for release of GoSS and MDTF donors funds until an international accounting firm could be recruited under the CFSSP as the Project Accounting Agent (PAA). The same firm had previously operated as the CBTF Financial Management Agent and was operating as the Government Accounting Agent. This interim arrangement continued into 2008 as protracted attempts to negotiate a contract with an international accounting firm which started in March 2006 were unsuccessful. The top ranked firm in the procurement process was under investigation which prolonged decision making; thereafter the next ranked firm who was also the iPAA wanted changes in their proposal due to the prolonged period since the submission. Because of these difficulties, GoSS decided not to recruit a PAA, but to set up a Project Financial Management Unit (PFMU) within MoFEP, staffed by international and local individual consultants. The PFMU was approved by the Oversight Committee of the MDTF and took over from iPAA in January 2009. 7 20. Substitution of Procurement Agent with a Procurement Advisor. Until August 2010, procurement fiduciary functions were implemented by a Procurement Agent contracted under the RIEP. With RIEP due to close, GoSS and MDTF-donors agreed to bring the function under CFSSP. A procurement firm was recruited in 2010 as a procurement agent under a one-year contract to provide support to GoSS’ procurement system. This engagement faced several problems from the onset. First, it took over a year to contract the firm due to government indecision on the process. Second, the location of the firm’s office away from the Procurement Policy Unit (PPU) limited the required level of interaction with counterpart staff. The Terms of Reference indicated an on-the-job training but this could not be effectively carried out. The donor funded projects had contracted the services of 7 The situation regarding the procurement of an Accounting Agent was further complicated by KPMG bidding for the PAA contract when it already held the IPAA contract. Also, the top ranked firm bidding for the PAA contract was at that time under investigation for suspected fraudulent practices. 6 procurement specialists who provided support and hands-on training to the counterparts of the respective entities. At the end of the contract in August 2011, GoSS replaced the firm with the services of an individual consultant who was engaged as a Procurement and was located in the PPU which enhanced a direct support to the staff of the Unit. 21. Extension of Closing Date. The closing date was extended three times: from November 30, 2008 to June 30, 2011; September 30, 2012; and finally to March 31, 2013. The first extension is related to delays in recruiting of firms for the components as recommended by the JAM. Subsequently, since CFSSP provides fiduciary services support to all MDTF-SS projects, extensions of the MDTF-SS and the various projects under implementation also impacted on the CFSSP. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry 22. The conditions in South Sudan prior to the preparation of the CFSSP as noted in the JAM and articulated in the independent evaluation of MDTF-SS included almost complete lack of physical infrastructure and public services, and human development indicators that were among the lowest in the world. There was insecurity and other physical risks that made employment in the country unattractive to professionals and the likelihood of getting individuals as technical assistants was low. Given the need to quickly respond to the clients need, the JAM recommended the use of international firms to implement core PFM functions and the project was designed taking this into consideration. This was similar to the ongoing and established arrangements in government, other donor agencies and RIEP project. The lessons learnt from the challenges in preparing the RIEP including poor state of infrastructure and living conditions also informed the preparation and design of the CFSSP. The CFSSP focus on establishing a strong fiduciary system to reasonably assure stakeholders that funds provided by MDTF and GoSS for financing much needed infrastructure and public services would be utilized for the intended purposes with due regard to economy, efficiency and effectiveness. 23. Governance Structure for MDTF and CFSSP: The Bank’s role as the MDTF-SS administrator was approved by the Bank’s Executive Directors based on a Board paper on April 7, 2005. Similar to other MDTF-SS projects, the CFSSP was approved by the Oversight Committee (OC) and the Bank management at Regional Vice President Level. The OC provided overall strategic guidance and inter-ministerial and donor coordination and was chaired by the Minister of Finance and co-chaired by the Joint Donor Team (representing the EU, Germany and other donors). Membership of the OC also included representatives of the UN Office for the Coordination of Humanitarian Affairs (UNOCHA), and concerned implementing ministries/agencies. The OC was supported by a Technical Secretariat (TS), also administered by the Bank, which would review proposals and make recommendations to the OC regarding selection of projects to be funded by MDTF. The OC approved the work plan and budgets for the Technical Secretariat, and reviewed audit and quarterly progress reports prepared by it. The quality at entry was managed by the Technical Secretariat, the Sector and Country Management Units as well as the OC. 7 2.2 Implementation 24. The project was implemented by the GoSS through the Policy and Planning Unit in the MoFEP which had the overall responsibility for financial management, procurement and capacity building at all levels as well as coordinating and tracking project implementation activities. It was headed by the Project Coordinator with overall implementation responsibility. The auditing firm component was directly under the National Audit Chamber while the procurement component was under the Procurement Policy Unit (PPU) of MoFEP. The implementation timeline was initially set for two years, between December 2005 and June 2008, on the assumption that (i) it took about six months to complete the procurement process; and (ii) the firms recruited to provide core accounting and auditing functions would fulfill their contractual obligations over two years. 25. However, there were delays in starting project implementation. The project became effective September 2006; first withdrawal application for the initial deposit to the Designated Account was in March 2007 and the second withdrawal Application was in March 2008, three months to the end of the original closing date. The time taken for GoSS and its MDAs to become effectively operational after moving to Juba also delayed the start of project implementation. 26. The competitive process for recruiting the EAA was launched in March 2006, the same time as the PAA. However, most of the firms competing for the PAA also submitted proposals for the EAA; there was therefore need to sequence the two selections leading to delay of the EAA in order to finalize the PAA. Due to reasons explained in paragraph 19 above, the engagement of the PAA was suspended while the iPAA continued to render accounting services, as a result, the selection process for the EAA resumed and the contract was signed in December 2007, while the firm was mobilized in January 2008, almost two years from the launching of the procurement process. To further compound the delays in the Auditing component, in February 2008, a month after the mobilization of the EAA, the Auditor General and entire senior management of the Audit Chamber were suspended by presidential order while other staff were confined to the audit office. A new Deputy Auditor General was appointed in November 2008 as acting Auditor General, but with very limited resources to carry out the required functions. As a result, the EAA’s functions were limited to audits of the MDTF-SS projects until June 2010 when a new Auditor General was appointed. Despite these delays, the robustness of the TOR of the EAA which included enhanced capacity building elements, training needs assessment, support to recruitment and induction of Audit Chamber personnel played an important role in the success of this component. As at the time of this ICR, all MDTF-SS audits were fully completed and GoSS audits for years 2005 to 2010 have been completed and four of these (2005 to 2008) already presented to the NLA. The EAA’s contract was expected to be for three years (2008 to 2010), however, due to extension of the MDTF projects which this component supports; the contract was variously extended and finally ended on March 15, 2013. 27. Regarding the Procurement component, an important milestone was supporting MDAs in carrying out procurements in line with GoSS procurement regulations. The project worked with the PPU to prepare a Procurement Bill which would replace the Interim Public Procurement and Disposal of Assets Regulations (IPPDAR) established as a temporary measure in 2006. The Bill has been prepared and at the time of this ICR, was with the Council of Ministers for approval. Following approval, the Bill would be submitted to the NLA and passed to law. This will support in streamlining of GoSS’ procurement processes. Additionally, the project supported PPU in reviewing procurement requests and tender processes; and organizing several private sector awareness seminars. 8 It supported MDAs in preparing Procurement Plans; and both formal and on-the-job training for the PPU and MDA staff. 2.3 Achievement of Implementation Targets 28. All three components were effectively implemented and most of the targets achieved. At the closing of the first Trust Fund (TF56336) on September 30, 2012, all of the grant funds had been fully disbursed and fully documented; the Additional Grant (TF097653) which closed on March 31, 2013 was also fully disbursed and documented. 29. The Accounting and Auditing components achieved their respective targets satisfactorily within the revised time frame, while the Procurement component was rated moderately satisfactory due to the challenges in achieving the PDMIS activity which was dropped. Specifically, project achieved the key performance indicators as follows: 30. 18 monthly bank reconciliations conducted (one per MDTF-SS project) and 18 Quarterly statements of Sources and Application of Funds prepared according to established standards (one per MDTF-SS project): The project maintained accountability and transparency in the use of both donor and government funds through preparation of timely and robust monthly bank reconciliations statements, Quarterly statements of Sources and Application of Funds; annual financial statements and withdrawal applications for all eighteen MDTF-SS projects according to established international standards. In addition, the project maintained necessary designated and bank accounts and had all documents forwarded to both the government and Bank and the relevant donors. Two government accountants from MoFEP were seconded to the Unit for capacity building and benefitted from various trainings and on-the-job capacity building and are still part of the unit supporting on-going World Bank projects in similar capacity. 31. Annual project audits completed and 6 Annual audits of GoSS accounts completed: The project supported NAC to operationalize independent audit. Annual independent audits of all MDTF-SS projects were supported through each project implementation period and there was no overdue audit in any year and at the closure of all MDTF-SS projects. This supported in assuring independent opinion on the use of donor and government funds for all projects. In addition, the NAC was supported to carry out audit for government funds and clear back log for six years with four of these presented to the National Legislative Assembly and published on the public website of NAC. The project also supported the drafting and passing into law of the Audit Chamber Bill and regulations, code of conduct and strategic development plan to enhance the strengthening of the audit chamber and sustainability of the achievements of the project. This has promoted accountability and transparency. The project assisted in the process of recruiting government auditors and training in all seven years of the project implementation. The EAA complimented the work of the Auditor General who still retained the responsibility for assuring quality of all reports and signed all the reports while the EAA worked jointly with the staff of the NAC to carry out the audit thus enhancing on-the-job training and knowledge transfer. 32. Five MDAs that comply with GoSS procurement regulations. GOSS procurement regulations require the MDAs to carry out procurement functions including preparing procurement plans. To carry out this function effectively, the PPU needs to support the MDAs with necessary guidelines and training. The project supported the PPU in drafting the public procurement bill; preparing procurement plans, and various awareness seminars on institutionalizing public procurement. Six 9 ministries had procurement plans for the GRSS budget for the financial year 2012/2013. These are Ministries of Health; General Education and Instructions; Agriculture and Forestry; Higher Education, Science and Technology; Water Resources and Irrigation; and Gender, Social Welfare and Religious Affairs. The project dropped the installation of a Procurement Data Management System (PDMS) activity due to successive failures to hire a qualified expert to support the Procurement Policy Unit in installing the system. 2.4 Risks and Mitigation 33. The project proposal highlighted a number of potential risks that are common to all sectors of the government including delay in the implementation of the peace process; resurgence of civil unrest; longer lead time required for establishing the Government of South Sudan and the emergent ministries; delay in approving 2005 and 2006 budgets from GoSS that may reduce the amount of counterpart funding available; lack of experience in program implementation; time taken for GoSS to become effective after shifting to Juba; and difficulties in identifying qualified external technical assistance. The risk assessment at appraisal was therefore, adjudged as high. The high fiduciary risks were addressed by outlining and implementing a series of mitigating measures including (a) recruiting a Monitoring Agent for all MDTF-SS projects to ensure that funds were used only for the intended purposes; (b) establishing the PFMU to ensure that reliable accounting and financial management systems were in place and that expenditures were properly accounted for and reported timely; (c) retaining an External Audit Agent to provide assurance that the financial statements of MDTF and accounts of GoSS were reliable; (d) hiring a Procurement Agent to ensure that procurement was undertaken transparently and in an accountable manner and which would support the Procurement Policy Unit at MoFEP; and (e) establishing a Project Steering Committee, which included the Joint Donor Team. As at project closure, the fiduciary risk was rated as moderate. 34. The project provided a basis for attaining a sustainable system by government. Given that there was no capacity at the commencement of the project, it sets a framework that government can build on by addressing issues including human resource capacity, financial constraints and infrastructure acquisition which could lead to effective strengthening of the institutions and ensuring continuity and sustainability of the efforts under the project. On-going Bank programs and support by other development partners to some of these institutions would also ensure sustainability of the gains under the CFSSP. 2.5 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 35. Design. The Project proposal indicated that the performance of the PAA (which was replaced by the PFMU) will be monitored against key financial variables for each project, and the effectiveness of cash management and accounting including bank reconciliation statements for each bank account; monthly statement of cash position for project funds from all sources, taking into consideration significant reconciling items; monthly statement of expenditure and statement of sources and uses of funds. For the External Audit Agent, progress was to be monitored against key deliverables such as up to date audit reports for each project; progress in drafting audit law and regulations; and number of persons trained in basic auditing procedures. The additional financing of August 2010 and addition of the Procurement Component to the project included a results framework and monitoring, which indicated that the output monitoring for this component will be a functional procurement policy unit and an up-to-date and timely implemented procurement plan for MDAs. 10 36. Implementation and Utilization. The PDO indicators were revised in June 2011 as shown in Table 1. The revised indicators provided a better match for the project activities; were more measureable and attributable to the Project; and captured outputs which were related to the PDOs. The Monitoring and Evaluation (M&E) for the project was carried out by the Monitoring Agent (MA) engaged by the Technical Secretariat for all MDTF-SS. The responsibilities of the MA included monitoring the procurement of the goods, services and other items, screening and recommending withdrawal applications for Bank’s approval and payment, monitoring all expenditures financed under the Grant, and screening the financial management capacity of the Recipient so as to ensure that the proceeds of the Grant are disbursed only for the intended purposes and according to applicable Bank procedures. The MA team reviewed project activities and prepared quarterly reports which were shared with stakeholders including Development Partners, and presented and reviewed at the Oversight Committee meetings. The MA also carried out a Value for Money Performance review of the project which indicates an overall performance achievement of economy, efficiency and effectiveness parameters (Annex 4). Also, there were periodic monitoring and review of the Auditing Component by a Steering Committee which met quarterly and was made up of the MoFEP, NAC, World Bank and the Joint Donor Team. Quarterly IFRs and annual financial statements were also reviewed by the project financial management specialists and comments followed up with the implementing entities and borrower. 2.6 Safeguards and Fiduciary Compliance 37. Environmental Safeguards. The project was classified as Category C with no potential impact on the environment. 38. Financial Management Arrangements. The financial management (FM) risk assessment at appraisal was rated as high. The Financial Management of the Project was carried out first by the interim PAA (KPMG under RIEP) and later by the PFMU. With the various mitigating measures put in place, all Interim Financial Reports, financial statements and audits were timely prepared. As at project closing, all funds had been fully disbursed and documented; there were no outstanding reports and no major internal control issues were identified. The FM risk was moderate and FM performance was rated as satisfactory during supervision. 39. Procurement Arrangements. The procurement activities for the project were supported by the procurement agent and then the procurement advisor under the procurement component of the project. The procurement process for the Procurement Data Management System (PDMS) could not be completed due to successive failures to hire a qualified expert to do the job. Otherwise, procurement activities under the project were effectively carried out. The Project’s overall procurement performance is rated as moderately satisfactory during supervision. 2.7 Post-completion Operation/Next Phase 40. There is still need to support GoSS in various fiduciary aspects of PFM, including in accounting, auditing and procurement in order to sustain the ongoing fiduciary reforms and institutional capacity in MoFEP and NAC. With respect to the external audit function, the NAC is receiving significant attention from other Development Partners and discussions are ongoing on likely support to the Chamber, particularly in capacity building and institutional strengthening, as a follow up to the support rendered under CFSSP. With respect to Bank-financed projects, each project is supporting the NAC in financing the engagement of an Audit Agent that will work with the national staff in 11 carrying out the project audits in line with international standards. Similar support is required in aspects of accounting and procurement. 3. Assessment of Outcomes 3.1 Relevance of Objectives and Design – Satisfactory 41. Objectives. The relevance of the project’s objective is satisfactory. The project development objective was relevant to the government, Bank and donor priorities for the country. The South Sudan Core functions developed in 2011 focuses on having strong systems of accounting, financial control and oversight in place. Similar to this objective, one of the four pillars of the 2011- 2013 South Sudan Development Plan (SSDP) is governance with emphasis on strengthening the capacity of major accountability institutions to increase accountability and transparency. The project development objective which focuses on putting in place a robust framework for channeling funds is complementary to these government agenda. Also, the Bank Interim Strategy Note for FY 2013 – 2014 for the Republic of South Sudan has a strong focus on public financial management and improving accountability as one of its two clusters. 42. Design. The relevance of project design is satisfactory. The project design sought to establish a fiduciary framework for public financial management for resource flows through the recruitment of various experts who would establish core PFM functions. Very weak PFM systems and severe capacity constraints in GoSS implied very high fiduciary risk to development partners and GoSS of spending excessive amounts of money on urgently needed infrastructure development and basic services delivery. Recruitment of the experts, as recommended by the JAM, would mitigate this risk. The PAA would manage disbursement, accounting and financial reporting. The EAA would audit projects funded by MDTF and GoSS counterpart funds. A procurement advisor (which was added later in the project) would support the Procurement Policy Unit in MoFEP and the procurement units of MDAs. A monitoring agent would ensure that disbursements were for project purposes. A Project Task Force (PTF) and an Oversight Committee made up of key stakeholders and experts from MDTF and the UN would be formed to monitor closely project implementation and fiduciary compliance. 43. An independent evaluation 8 concludes that the MDTF-SS was integrated into the CPA; aligned with the JAM framework; relevant to the goals and aspirations of stakeholders and continued to reflect government’s priority through its operational life. Similarly, the design of CFSSP was relevant to the government priorities both at the time of project preparation; effectiveness and even at this ICR and post completion stage. The project design was tailored along the JAM recommendation (which in itself was the basis of establishing the MDTF) that responsibility for implementing PFM functions should be contracted to international firms for at least two years of the CPA. Establishing a strong fiduciary framework is still very core to strengthening the PFM structure in the country and relevant to building the capacity of the PPU, NAC and the accounting functions. The project focus on this areas and the recruitment of the various Agents to help develop basic fiduciary systems has resulted in accountability and transparency in the use of MDTF and GoSS funds; independent external audits; and oversight of Procuring Entities (MDAs). It has supported development in the use of country systems, particularly with substantial capacity development at the NAC. The flexibility of the design which enabled a change from use of firms (as recommended by the JAM but which proved very 8 Independent final evaluation of the MDTF-SS; final report 7 July 2013 12 difficult and led to initial delays) to individual consultants was also very useful and relevant to the achievement of the project outcomes. 3.2 Achievement of Project Development Objectives - Satisfactory 44. The development objective of the project was achieved satisfactorily. Annex 2 provides details of the outputs achieved on each of the three components. In line with the PDO, the project put in place a robust framework for channeling over US$503 million MDTF-SS funds and US$159 million GoSS counterpart funds that was disbursed to eighteen projects over the seven years of project implementation. It supported accountability and transparency in use of project funds for all MDTF- SS projects and additionally, for seven World Bank grants through regular preparation of monthly bank reconciliation statements; quarterly statements of sources and application of funds; and annual financial statements. Also there were operational independent audits for all projects based on international standards of auditing and no back log or outstanding audits as of closure of the MDTF- SS. In addition, the project supported the audit of GoSS financial statements for six years. The project provided the framework for country ownership particularly in the auditing arrangements. 45. All three components were effectively implemented and targets achieved. At the closing of the first Trust Fund (TF56336) on September 30, 2012, all of the grant funds had been fully disbursed and fully documented; the Additional Grant (TF097653) which closed on March 31, 2013 was also fully disbursed and documented. 46. The project sets a base for putting up basic fiduciary arrangements which is now being built upon. The PFMU, an important part of the delivery and achievements of the project, is still existing and used for on-going Bank projects. Because of the success, government is also in the process of setting up similar unit as part of their Aid Coordination Unit to support all Donor projects. 18 monthly bank reconciliations were conducted monthly and 18 quarterly statements of sources and application of funds for all projects in accordance with established standards. 47. With respect to the auditing component, the EAA supported both institutional strengthening and capacity development. The EAA carried out joint audits with the staff of the Audit Chamber which supported on-the-job learning for these staff; the Auditor General performed his statutory responsibilities by reviewing and signing the audit reports; the Audit Chamber Bill, Code of Ethics, strategic plan and other working papers were developed and is still been used by NAC. Annual project audits were completed for all 18 projects for all their years of implementation and there are no due audits at the closure of the MDTF-SS. Additionally, 6 annual audits were completed for the GoSS accounts. 48. Additionally, Procurement Adviser worked closely with the staff of the Procurement Policy Unit and carried out on-the-job training which developed their procurement capacity. More than five MDAs were supported in developing their procurement plans and complying with GoSS procurement Regulations. These include Ministries of Health; General Education and Instructions; Agriculture and Forestry; Higher Education, Science and Technology; Water Resources and Irrigation; and Gender, Social Welfare and Religious Affairs. 3.3 Efficiency - Satisfactory 13 49. No economic analysis was undertaken for the Project during preparation due to the emergency nature of the operation and dearth of information. The Monitoring Agent engaged by the Technical Secretariat, conducted a Value for Money Assessment (VFM) of the Project and issued a draft report on October 31, 2012 to determine whether or not disbursements made for Consultants’ Services met the Bank’s basic tenets of economy, efficiency and effectiveness. The assessment confirmed that (i) the contracts were within the approved budget with payments being consistent with contract provisions, and procurement processes being transparent and competitive; (ii) actual outputs of budgeted activities matched the expected outputs; and (iii) activities contributed to the achievement of the project objective. Substantial cost savings were achieved through the move to the PFMU arrangement from the PAA arrangement and similarly to the use of individual procurement Advisor instead of the firm of Procurement Agent. 9 The assessment concluded that the overall VFM for the contracts was fully achieved. 50. Additionally, MDTF involvement was aimed at providing accountability regarding use of MDTF and GoSS counterpart funds; help to start building financial management capacity in GoSS; and strengthen the MDTF funds flow mechanism as well as improving government ownership and control over donor resources. The PFMU, EAA and Procurement consultant worked within the government agencies as core components of the funds flow process and provided reasonable assurance on the use of resources. The project provided the framework for country ownership particularly in the auditing arrangements. 51. Also, the project supported fiduciary arrangements for various projects. Despite the fact that this is a new country with significant governance issues and high cases of accountability and transparency challenges in government, all the project funds were properly spent and documented with no case of misappropriation of funds. The project succeeded in building some capacity in the implementing entities it supported and the structure is used for other funding mechanisms. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 52. The project development objective, design, implementation and outcomes were considered relevant to the building of the critical fiduciary systems of the country. It was consistent with the requests of the GoSS and the need of the implementing entities. The PFMU was established resulting in the maintaining of accounting records for all MDTF and Bank projects, and the preparation of unaudited interim financial reports (IFRs) as required by the Financing Agreement. The audits of all MDTF-SS projects have been finalized and GoSS financial statements for FYs 2005-2010 have been audited. The audited financial statements for 2005-2008 have been presented to NLA, while those for 2009- 2010 are in the process of being presented. 53. The project was effective and achieved its development objectives. It had major impact and achieved wider effects on the government activities particularly with the audit of government accounts and the accountability issues that were discovered. The achieved results are sustainable and government could build on the achieved results in the NAC and the PPU. 9 The paper prepared in 2009 by Fiona Davies, referred to above, also points out the high costs of contracting international companies: costs amounted to $20 million in Southern Sudan over 4 years. Costs of hiring individuals tend to be much lower as the overhead costs associated with companies are virtually eliminated. The paper also points out the difficulties in ensuring that the activities implemented by companies are well-aligned with government priorities; these difficulties were prominent in the case of the KPMG iPAA contract under RIEP. 14 3.5 Overarching Themes, Other Outcomes and Impacts Poverty Impacts, Gender Aspects, and Social Development 54. Poverty Impacts. The Project supported strengthening of governance arrangements; Good governance is a necessary condition for reducing poverty in any country. 55. Gender Aspects. Gender aspects were not reflected in the PDO and the project was not specifically focused on gender requirements. However, females also benefited in large numbers from the project output, particularly as part of the capacity building under the Auditing component. 56. Social Development. The Project had no specific social issues that needed to be directly addressed, though many social issues need addressing in South Sudan (e.g. lack of legally defined rights, continuing conflicts in some areas, and various grievances and inequities in society). 3.6 Institutional Change/Strengthening 57. The CFSSP, beyond its PDO, helped build institutional capacity in MoFEP and NAC. 58. Project Financial Management Unit (PFMU). The unit, located in MoFEP, trained three national staff who were seconded to the unit. However, capacity building in MoFEP is still required, and is being provided through various DP-financed projects (e.g. the multi-donor funded Capacity Building Trust Fund administered by the Joint Donor Team, the Bank LICUS, ODI, UNDP, and USAID- funded programs). 59. National Audit Chamber. The Project helped NAC to be transformed from near obscurity to a recognized Supreme Audit Institution (SAI). One hundred auditors were trained in the audit of financial statements and accounts of MDTF and GoSS. NAC staff carried out joint audits with the EAA and these helped them to develop their skills. The Project supported the drafting of an Audit Bill, which was enacted in 2011, and prepared an audit manual and strategic development plan. 60. MoFEP-PPU. The Procurement component supported the Procurement Policy Unit (PPU) of MoFEP and the procurement units in MDAs through on-the-job training in terms of understanding of the 2006 IPPDAR. Beyond its stated PDO, the Project also advised on the drafting of the Procurement Bill, which is awaiting the final endorsement of the Council of Ministers before being presented to NLA for approval. Thirty one MDAs were trained in procurement management including contract monitoring and commitment controls and six MDAs were trained and have up to date procurement plan. 61. These local capacities are still remaining in each of these entities and supporting them in the government functions as well as for on-going World Bank projects. 4. Assessment of Risk to Development Outcome Overall Rating: Moderate 62. The changes in the project which allowed the use of individual consultants instead of firms in the Accounting and Procurement components were very important milestones that helped to address the 15 likely risk to achievement of the development outcome. Also, the engagement of a very active and versatile Auditor General in June 2010 who took a strong lead in the Auditing component and worked very closely with the External Audit Agent engaged by the project led to a major turn around and achievement of all the agreed milestones in the component. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 63. The project responded to the recommendations of the JAM carried out in March 2005 by the World Bank, UNDP, Government of Republic of Sudan and the SPLM. The report identified lack of governance systems, including PFM, to make efficient use of funds. The project therefore, sought to put in place such systems that are necessary to ensure reasonable assurance regarding the use of MDTF and GoSS counterpart funds. 64. The CFSSP builds on the initial support by RIEP, the first MDTF-SS project by funding longer term Project Accounting Agents and Procurement Agents which were previously funded as an interim arrangement under the RIEP project. The OC recognized the need to continue to fund these two activities under a project that is focused on putting in place a robust fiduciary framework such as the CFSSP. 65. Also, given the low capacity of the government staff and country physical condition at preparation stage, lessons learnt from similar countries like Afghanistan in a post conflict situation and with very low capacity informed the design of the project and supports the use of firms as the best scenario during the preparation stage of the project. 66. The Bank, as the administrators of the MDTF-SS also provided necessary management support including preparation and prompt approval of the project. The Bank worked with the government team in MoFEP to prepare the project and consulted with other stakeholders including the National Audit Chamber. The preparation team also ensured simplicity and clarity of the PDO and its focus on the main issue of importance at that period which was delivery of the MDTF-SS activities as well as ensuring use of the funds for the purpose intended. Also the flexibility of the project design allowed an additional component to be included without need for a change in PDO and allowed for additional financing as the need arose. (b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Satisfactory 67. The country-based task team provided adequate supervision support to the MDTF projects and GoSS counterpart fund. The composition (see Annex 5) of the project team was well balanced with a mix of operations, financial management, and procurement specialists and staff. The government Project Management Team had low capacity and, in response to this condition, the Bank provided direct supervision, advice and guidance in project implementation. Bank supervision intensity was commensurate with the level of assessed risk. In addition to supervision missions mounted twice 16 annually, which prepared aide memoires highlighting key implementation issues observed, a continuous hands-on support was provided by the resident Bank Task Team. Action plans were developed with milestone dates to ensure that the issues were promptly addressed by Implementing Agencies. 68. As noted in the review of the MDTF-SS and the ICRs for many MDTF projects, the dedication of Bank field staff to sustain uncommon adversity of living and working conditions and other implementation challenges contributed immensely to the satisfactory outcome of the project. The staff initially lived and worked in tents without air conditioning in 100+F. degree heat with minimal office equipment and only graduated to shipping containers after six months in the country and in an insecure environment. Other challenges facing Bank staff were the severe capacity constraints in GoSS, represented by lack of basic office technology, weak fiduciary systems, lack of government structures (at best, slowly evolving structures and institutional arrangements) all providing opportunities for corruption and likely ineffective use of MDTF and GoSS funds. 69. There were initial delays experienced in procuring the PAA and EAA, due to protracted contract negotiations. The PAA contract arrangements turned out to be unsatisfactory, as indicated elsewhere in this ICR, and, as a result, GoSS established the PFMU in 2008 to implement the responsibilities envisaged for the PAA. Similarly, the contract negotiations for the EAA took a while to conclude; the vacant position of a substantive Auditor General compounded the delay in providing auditing services to the GoSS 10 and audit was limited to the MDTF projects. The Bank’s supervision addressed these issues by proactively working with GoSS to change the procurement requirement for the use of firms to individual consultants to ensure effective implementation. 70. There were no Bank safeguard policies triggered by the implementation of this project. (c) Justification of Rating for Overall Bank Performance: Rating: Satisfactory 71. The overall performance rating for the Bank was Satisfactory due to the hands-on approach used to provide support and services both at entry and supervision during the implementation of this project. Some of the hands-on approach by the Bank included direct supervision, advice and guidance in project implementation and on-the-job training of some procurement officers in MoFEP. The support was provided by international staff resident in the country office, responding promptly to project issues and providing timely implementation support. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 10 One reason for the delay in recruiting the EAA was that firms bidding for the contract were also bidding for the PAA contract. A decision was therefore made to delay the tendering for the EAA contract. After the EAA tendering process started, one of the competing firms complained that its financial proposal had been tampered with, leading to further delays as the complaint was investigated by the Bank. 17 72. The Government performance in relation to the Project can be said to be moderately satisfactory. Specific project objectives and activities have been achieved with the support of the government. Due to lack of existing fiduciary systems and the urgent need to ensure accountability and transparency, the GoSS devised a strategic objective for this project to establish, at a minimum, a fiduciary structure that would provide assurance to the government and MDTF donors regarding the use of donor and GoSS counterpart funds. Building of such fiduciary structures, however, had been fraught with challenges posed by lack of institutional capacity in the country. 73. Disbursement did not commence until March 2008 when the first Withdrawal Application was prepared. There were indecision and some disagreement among the decision makers in government which led to delays in procuring the Agents. For instance, there was disagreement in MoFEP on the need for a Procurement Agent. The government informed a Bank mission that the hiring of a Procurement Agent was discontinued and subsequently, sent a letter, requesting that procurement agency services were still needed by MOFEP. Also, there were various changes in government which affected implementation. The Director General for Procurement who was leading the Procurement Agent selection process was suspended and for a long time, there was no substantive counterpart to champion the completion of the contracting process. Similarly, the activities on the external audit component were slowed down because there was no Auditor General between February 2008 and June 2010. In addition, while the project supported in drafting the Procurement Bill, the review process was delayed at various levels of government. 74. External Agents were recruited to help establish fiduciary structures. The Agents were charged with the responsibilities for maintaining adequate financial management systems, producing a Project Implementation Manual; conducting audits of MDTF projects and GoSS financial statements and accounts, strengthening the capacity of the NAC exercising oversight and regulatory responsibilities for the procurement process, and advising MoFEP on complaints received from bidders. The government worked effectively with these Agents and consultants and this impacted on the success of the project implementation. (b) Implementing Agencies Performance Rating: Satisfactory 75. The Implementing Agencies were MoFEP and NAC. The PFMU took over the financial management responsibilities of the PAA in 2008, with similar terms of reference. Payments have been made on time and reports produced and submitted to various stakeholders on specified due dates. At the time of the closure of the Project there were no outstanding financial management issues. In fact, apart from FM responsibilities for MDTF and GoSS funds, the PFMU also took responsibilities for seven 11 World Bank assisted projects which was outside their TOR. 76. The Procurement Agent and subsequently the Advisor that supported the Procurement Policy Unit (PPU) in MoFEP improved the procurement process by providing training on contract management to both PPU and MDA personnel. The component supported the process of drafting the Procurement Bill which is before the parliament for enactment into law. Additionally, it supported MDAs in preparing procurement plans, tender documents and forms. The Advisor worked closely with the PPU 11 GAC Initiatives Development, LICUS PFM, Emergency Food Crisis, Rural Roads, Rapid Health, Private Sector Development and Local Governance and Services Delivery Projects 18 to review procurement request from MDAs, developing a matrix to monitor performance and compliance and compliance of the MDAs with the IPPDAR 2006 and on-the job training for staff of both the PPU and the MDAs. 77. The NAC has in general been an effective implementing agency, which has contributed to the relative success of the EAA in terms of performing audits and building capacity. Despite initial delays in recruiting the EAA and appointing a substantive Auditor General (not firmly in place until 2010) which were addressed partly with the various extensions, the EAA delivered on all the activities under its TOR and under this component. Also, apart from the audit of MDTF and GoSS accounts which in itself was an expanded scope, the NAC and EAA also audited three 12 Bank Assisted projects for all their years of implementation. GoSS and State audits have been carried out for six years ended December 31, 2005 to 2010. Four of these have been presented to the president and the National Legislative Assembly and publicly disclosed. The Auditor General was very proactive and made significant contributions that led to the success of the component. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 78. The overall performance of the Borrower was assessed as Satisfactory due to the factors noted above. 6. Lessons Learned 79. With the benefit of hindsight, there are important lessons to be drawn from the project for the Bank’s engagement in building capacity in post-conflict countries with extremely weak capacity as well as for practitioners in similar situations in the future. 80. External agents, particularly for audit and procurement could contribute significantly to institutional strengthening priorities, but this should be accompanied by the transfer of skills in order to facilitate longer term capacity building. The work of the external agents (Project Accounting Agent/PFMU, External Audit Agent and Procurement Advisor) contributed to the institutional strengthening of the MoFEP, the PPU in MoFEP, procurement units in MDA and the NAC. The Agents and consultants supported in drafting various laws, guidelines, working documents and some other ad-hoc work that supported the institutional strengthening. It could be argued that capacity building should have been included in all the External Agents’ terms of reference to allow for proper transfer of the much needed financial management and procurement knowledge to counterpart staff. This, however, is easier said than done. The first priority of the External Agents was to get core PFM functions up and running, itself a time-consuming task and the Project was originally supposed to end in 2008. The severity of the capacity constraints, including the limited skill sets of counterpart staff, meant that transfer of FM and procurement knowledge to these staff would probably be difficult and time consuming. Moreover, other DP-supported projects/programs specifically focused on PFM capacity development (as referred to above) were being prepared and implemented, including in MoFEP. 12 GAC Initiatives Development, LICUS PFM and Emergency Food Crisis project. 19 81. Implementation efficiency could be enhanced through flexibility on procurement procedures, and by focusing external agents on salient, project-related tasks rather than assisting on broader government functions. Many of the tasks of the Procurement Advisor were bogged down in government bureaucratic processes which led to unnecessary delays. It is pertinent that government should separate project work from bureaucratic set up in order to achieve efficiency. Additionally, the procurement process for the contracting of the firms was ICB/QCBS and this took inordinately long time. Given the country situation, with limited number of accounting and auditing firms (which is still the case now seven years into project effectiveness), it might have been more efficient to start with a short list for the contracting process. In fact, an interim sole source contract of the PAA provided essential fiduciary coverage during the time taken to conduct a competitive process which eventually was unsuccessful. Procurement delays were also experienced in most of the MDTF-SS projects. As noted in the MDTF-SS evaluation report, procurement policies need to be flexible in response to institutional capacity constraints, local market conditions and other risks. 82. Depending on the core function/s involved, individual consultants could provide more efficient and cost-effective services compared to firms, and may result in quicker transfer of knowledge. The project design took into consideration, the recommendation of the JAM for use of international firms to implement core PFM functions. However, it was impossible to hire a firm for the Accounting component while a firm was used for the procurement component for only a year. Subsequently, the Oversight Committee approved the use of individual consultants. The experience shows that is more cost effective and efficient to hire the services of individual consultants than firms. Much time was lost in procuring the services of firms. The PAA was eventually replaced by the PFMU made up of individual consultants, while the Procurement Agent was replaced by an individual Procurement Advisor. Moreover, it is probably easier for Government personnel to engage with individual consultants than with the staff of a firm and the process of transferring knowledge is quicker. Also, the difficulties and adjustments in procuring firms and agents suggest the need to review the adequacy of some procurement requirements with respect to similar fragile country situations. 83. The timely appointment of Government counterparts is essential for efficient and successful implementation. A major issue that could determine the success of implementation of a project is availability of government counterparts to actively participate and support implementation. Substantial delays in implementation were due to the delay in the appointment of the Auditor General and a proactive Director General of procurement to lead the implementation of these components. Also, the most effective period of implementation of the procurement component was when the Bank had a Technical Assistant sitting with the PPU in MoFEP and working closely with the Director General and the PPU staff. 84. At entry, it is important to clarify objectives to stakeholders to avoid unrealistic expectations from the project. As was the case with the MDTF-SS and as noted in the independent final evaluation report for the MDTF-SS, inflated expectations can leave MDTF and the projects being held accountable for events beyond its scope and create unrealistic benchmark for assessing performance. While the main focus of the CFSSP was putting in place a framework for channeling MDTF and GoSS funds to provide reasonable assurance regarding the use of funds, many stakeholders believe the project should do more in capacity building for national staff. Clarity of objectives and goals are very pertinent to avoid similar situation in future. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 20 Borrower/Implementing Agencies 85. The draft Bank ICR was sent for review to the PFMU, Project Coordination in MoFEP, PPU, Procurement Advisor, NAC and EAA Team Leader. Their review shows general agreement on the report particularly the implementation and impact of the project. Major comments include concerns on continuity and sustainability of the engagements under the three components and the likely gap due to project closure. There is general agreement on the ratings for the project. Co-financiers None Other partners and stakeholders None 21 ANNEXES Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$ million equivalent) Appraisal Estimate Actual Project Percentage of Components (US$ million) Cost Appraisal (US$ million) Accounting Component 3.0 4.5 150 Auditing Component 3.0 9.8 327 Procurement 0.0 2.0 200 Component Total Baseline Cost 6.0 16.3 272 Physical Contingencies 0.0 0.0 0 Price Contingencies 0.0 0.0 0 Total Project Costs 6.0 16.3 272 *There was a savings of US$0.09million on the contract of the External Audit Agent (b) Financing Appraisal Estimate Actual Project Percentage of Source of Funds (US$ million) Cost Appraisal (US$ million) Counterpart Funds - 3.0 2.9 97 GoSS Multi-donor Trust Fund 3.0 13.4 447 22 Annex 2. Outputs by Component The outputs achieved by each of the three components are as follows: The Accounting Component 1. The accounting component provided support to GoSS in project financial management and disbursements for all MDTF and World Bank projects. It funded the establishment of the Project Financial Management Unit (PFMU) as Accounting Agents. The component supported eighteen (18) and seven (7) MDTF and Bank projects respectively with a total disbursement of US$718 million as at closing date of March 31, 2013. In addition to Head of the PFMU, the Deputy Head and the Assistant Accountant who were regional specialists, the PFMU staff included five South Sudanese, two of whom were seconded to the Unit by government for training in Bank financial management and disbursement procedures. Other outputs of this component are as follows: i. Preparation of twenty five monthly bank reconciliation statements for each of the eighteen MDTF and seven Bank projects supported for the project duration; ii. preparation of quarterly unaudited Interim Financial Reports for 16 quarters for each of the twenty five projects for submission to government and the Bank; iii. preparation of annual financial statements for the twenty five participating projects for the years ended December 31, 2008 to 2012 and facilitating the audit and follow up of management issues identified in the audit; iv. Preparation and follow up of Withdrawal Application for all MDTF and Bank projects; v. Maintaining the Designated Accounts, bank accounts and relationship with government and implementing entities; vi. Processing payments and review of transactions and invoices for all MDTF and Bank projects; vii. Providing training to staff of implementing entities; and viii. Computerized financial management systems of the PFMU using the Navision software as a database. The Auditing component 2. The component provided support to the National Audit Chamber (NAC) in institutional strengthening and audit of GoSS, MDTF projects’ and World Bank projects’ financial statements. The outputs of the component includes the following: i. Audit of GoSS financial statements for six (6) years from 2005 to 2010. The audit reports for 2005 to 2008 have been presented to the President and the National Legislative Assembly while the reports for 2009 and 2010 are in the process of being printed and presented; ii. Audit of all fifteen MDTF and seven Bank projects for the years ended December 31, 2008 to 2013; iii. Support GoSS in preparation and review of the legislation enabling the NAC.; iv. Preparation of auditing policies and procedures; v. Development of audit manual, standardized working paper, Code of Conduct and Ethics, and Strategic Development Plan; vi. Capacity building of the staff of the NAC, including classroom training for old staff and one hundred (100) newly recruited staff. 23 The Procurement Component 3. The Procurement Component which was first managed by a Procurement Agent and subsequently by an individual consultant recruited as a Technical Advisor supported the Procurement Policy Unit in the Ministry of Finance and Economic Planning. The outputs of the component include the following: i. Support in drafting the public procurement bill; ii. Support to MDAs and MDTF projects in preparing Procurement Plans; iii. Leading and guiding staff of the Procurement Policy Unit in MoFEP to review procurement requests and processes of MDAs/ spending agencies; iv. Preparation of sample tender documents and forms to guide the spending agencies in conducting tender processes; v. Developed a monitoring matrix to monitor performance and compliance of spending agencies with the IPPDAR, 2006. vi. Private sector awareness seminars on institutionalizing public procurement; vii. Building capacity of spending agencies through training workshops based on the IPPDAR, 2006 and sample tender documents and forms; viii. On-the job training for procurement officers in PPU and spending agencies. MDAs Trained in Procurement Management in 2011/12 S/No ORGANISATION 1 Ministry of Youth & Sports 2 National Legislative Assembly 3 Ministry of Internal Affairs (Fire Brigade) 4 South Sudan Prison Services 5 Ministry of Wildlife Conservation & Tourism 6 Ministry of Animal Resources & Fisheries 7 South Sudan HIV/Aids Commission 8 South Sudan Audit Chamber 9 South Sudan Electricity Corporation 10 Ministry of Roads & Bridges 11 Ministry of Commerce & Industry 12 Ministry of Transport 13 Ministry of Water Resources & Irrigation 14 South Sudan Urban Water Cooperation 15 Office of the President 16 South Sudan Relief & Rehabilitation Commission 17 LOCAL GOVERNMENT BOARD 18 Ministry of Housing & Physical Planning 19 South Sudan Anti-Corruption Commission 20 Ministry of Agriculture & Forestry 21 South Sudan Human Rights Commission. 22 Ministry of Petroleum & Mining 23 PPU - Ministry of Finance & Economic Planning 24 Ministry of Defence & Veterans Affairs 25 Ministry of Telecommunication & Postal Services 26 Ministry of Environment 27 South Sudan Land Commission 28 Ministry of General Education & Instruction 29 Ministry of Gender, Social Welfare & Religious Affairs 30 Ministry of Health 31 Ministry of Higher Education, Science & Technology 24 MDAs with Procurement Plans (FY 2012/13) # List of MDAs Status of Plans 1. Ministry of Health GRSS budget 2. Ministry of Roads & Bridges Limited to donor projects 3 Ministry of General Education & Instruction GRSS budget 4 Ministry of Gender, Social Welfare & Religious Affairs GRSS budget 5 Ministry of Agriculture & Forestry GRSS budget & donor projects 6 Ministry of Higher Education, Science & Technology GRSS budget 7 Ministry of Water Resources & Irrigation GRSS budget & donor projects 25 Annex 3. Economic and Financial Analysis (including assumptions in the analysis) An Economic and Financial Analysis is not required for this MDTF per OP 8.50 – Emergency Recovery Assistance. 26 Annex 4. Economy, Efficiency and Effectiveness Related Analysis Value for Money Performance of Sampled Project Activities The supply of Consultancy services achieved VfM as presented below: VfM performance rating – Core Fiduciary System Support Project VfM assessment Assessment finding VfM performance parameter rating Economy The Contract signed was within the approved budget 2.0 for the activity and sampled salary payment requests were consistent with the contract. The procurement process was in accordance with the selection procedure for individual constants though from the procurement documents reviewed it was not clear how the list of candidates was obtained. Efficiency Activity included in the procurement plan, budgeted 1.0 for and actual outputs matched expected outputs. Effectiveness The procurement consultant was performing envisaged 1.0 tasks, and has assisted MDAs to prepare, update and implement their procurement plans. Overall VfM performance 1.3 1= full achievement, 2= partial achievement, 3=non-achievement Source: Value for Money Assessment Report, October 31, 2012, page 15. 27 Annex 5. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending (from Task Team in PAD Data Sheet) Parminder Brar TTL, Lead Financial Management AFTME Financial Specialist Management Vivek Srivastava TTL, Sr. Public Sector Specialist PRMPS Public Sector Supervision (from Task Team Members in all archived ISRs) Vivek Srivastava TTL, Sr. Public Sector Specialist PRMPS Public Sector Frederick Yankey TTL, Senior Financial Management AFTMW Financial Specialist Management Adenike Sherifat Oyeyiola TTL, Senior Financial Management AFTME Financial Specialist Management Hellen Mbao Chilupe Senior Operations Officer AFMJB Operations Mohamed Yahia Ahmed Financial Management Specialist AFTME Financial Said Abd El Karim Management Rupert Blandon Senior Public Sector Specialist AFTP2 Financial Management Prosper Nindorera Senior Procurement Specialist LCSPT Procurement Pascal Tegwa Senior Procurement Specialist AFTPE Procurement Anjani Kumar Senior Procurement Specialist AFTPE Procurement Diego Garrido Martin Monitoring & Evaluation Specialist AFTDE Monitoring & Evaluation Juvenal Nzambimana Operations Officer AFTAI Operations Oumou Gado Oumarou H D Program Assistant AFTMW Program Assistant Grace Tabu Felix Team Assistant AFMJB Assistant 28 (b) Staff Time and Cost (from SAP) Staff Time and Cost (Bank Budget Only) Stage of Project Cycle Number of US$ Staff Weeks (including travel and consultant costs) Lending FY2006 2.50 22,823 FY2007 1.25 17,264 TOTAL 3.75 40,087 Supervision/ICR FY2007 6.98 48,743 FY2008 14.74 76,633 FY2009 9.94 48,154 FY2010 13.54 77,114 FY2011 3.95 25,147 FY2012 1.70 62,283 FY2013 0.78 73,506 TOTAL 51.63 411,580 Note: The project incurred only Trust Fund Costs and no Bank Budget costs. The costs do not reflect total costs for the project because some of the costs including Bank staff weeks were charged to a general program administration cost for the MDTF. 29 Annex 6. Beneficiary Survey Results (if any) Not Applicable 30 Annex 7. Stakeholder Workshop Report and Results (if any) Not Applicable 31 Annex 8. Summary of Borrower’s Completion Report February 2013 1. This report contains findings of an end of project evaluation for the Core Fiduciary Systems Support Project (CFSSP) conducted by a consultant on behalf of the government, as the recipient of the grant. This evaluation was conducted between 16 January 2013 and 10 February 2013 to assess the impact of the project and its attainment of the development objective, pick lessons to be learnt for future projects of a similar nature and assess the level of sustainability for the activities supported by the project. 2. CFSSP was established in February 2006 following approval of a grant from the MDTF-S. The project development objective was to establish a robust framework for channeling of MDTF-S and government counterpart funds and to provide reasonable assurance regarding the use of those funds. The project which is due to close on 31 March 2013 has received total funding of US$16.447m including a government counterpart contribution of US$3.0m. The project has supported core fiduciary services of Project Accounting through the Project Accounting Agent (KPMG East Africa) and later the Project Financial Management Unit, External Audit Agents through PKF (UK) LLP as well as procurement function support services to MoFEP. 3. With the MDTF-S drawing to closure having disbursed over US$718 million through various projects, overall the CFSSP has strongly delivered on providing a robust framework for disbursing the funds as well as providing assurance, through regular financial and audit reports, on the use of these funds. There have been implementation challenges such as delayed procurements and slow progress for some activities, switch over from firms to individual consultants for Accounting and Procurement components but these have not derailed the project from achieving the development objective. 4. Sustainability of the activities supported by the project remains the biggest challenge. Whereas, the External Audit Agent has closely worked with the National Audit Chamber in terms of building capacity, there are institutional challenges including human resource capacity, financial constraints and infrastructure acquisition that require to be addressed before effective strengthening of the institution. The PFMU has largely been resourced by consultants and project staff and there has not been strong evidence of ownership or of attempts by the Treasury/Directorate of Accounts to mainstream the unit’s activities. Strengthening of the procurement function in government has been significantly affected by the delayed finalization of the procurement bill. The procurement regulations and the accompanying manuals and forms have to be in line with the procurement law which is currently still in draft form. 5. Among the key lessons learned from this project include: i. The need to have deeper counterpart involvement in the design, execution and supervision of activities to engender ownership. ii. The need for capacity development plans to be specific to the operating environment for better capacity/knowledge transfer. iii. For sustainability and effectiveness in capacity transfer, technical assistance/support during the life of a project, should be designed in such a way that it gradually reduces from being of an executive nature to being largely advisory. 6. Key recommendations include: i. The need to mainstream project/aid accounting into the Directorate of Accounts for sustainability – possibly with appropriate initial support. ii. The government continues to make positive steps towards institutional building and future support in areas of deficiency should have strong emphasis on sustainability of the reforms or of the activities being supported. 32 Annex 9. Comments of Co-financiers and Other Partners/Stakeholders Extracts from the Monitoring Agent’s Completion report April 11, 2013 Core Fiduciary System Support Project (CFSSP) Project accounting agent, Procurement agent and External Audit Agent At the start of the MDTF-SS in 2005, the accounting capacity within the MoFEP of the GoSS was weak and it needed substantial strengthening. The MoFEP engaged an Interim Project Accounting Agent (IPAA) to provide accounting services and fiduciary assurance for projects funded through MDTF-SS resources. The IPAA formed part of the Project Disbursement Unit of the Treasury of the GoSS, and was responsible for preparing and issuing the Project Implementation Guidelines and accounting for all projects related expenditures. In addition, the IPAA was responsible for ensuring that all project accounting activities were in strict compliance with: the requirements of the GAs; and the Project Implementation Manuals. In December 2008, the IPAA was replaced by the Project Financial Management Unit (PFMU) which was also based in the MoFEP. The MoFEP contracted a Procurement Agent to carry out procurement tasks for programs that were financed by MDTF-SS resources. The Procurement Agent had the responsibility of building procurement capacity within government and providing the GoSS, donors and the bidding community with assurance that procurement was carried out in a sound (responsible, accountable and transparent) manner. The Procurement Agent was responsible for supporting all procurement functions for all MDTF-SS projects/programs. Projects/programs financed through the MDTF-SS were subject to a financial audit on an annual basis. The MoFEP contracted an External Audit Agent to carry out the functions of an external auditor of the MDTF-SS projects. Minimum fiduciary systems established in the RSS MDTF-SS ensured that annual MDTF-SS portfolio and RSS audits were completed, MDAs followed procurement guidelines in their procurement processes and the MDTF-SS project were supported to ensure proper financial accounting. The overall task of CFSSP was to address the emergency needs of the GoSS in establishing minimum fiduciary systems for channeling fund flows from the donors as well as for counterpart funds. This project supported the recruitment of a Project Accounting Agent (PAA) to provide accounting services as per World Bank Financial Management Guidelines and international standards. However, in December 2008 the PAA was replaced by PFMU which was based in the MoFEP. The Project also supported an External Audit Agent (EAA) to provide auditing services in accordance with International Standards on Auditing, and a Procurement Agent to ensure MDAs’ procurement plans were prepared, implemented on time and their capacity in undertaking procurement for the Government was enhanced. The Project, which was implemented by MoFEP and NAC, achieved the following results. 33 Summary of CFSSP results Specific MDTF-SS milestones and outputs realized toward the achievement of the minimum fiduciary systems in the RSS are presented in Table 3.2 below. Table 3.2: Results on establishment of minimum fiduciary systems Indicator Baseline Target End of MDTF-SS result • Draft Audit Legislation and Codes of Conduct in No Yes Yes place. • Financial systems established. No Yes Yes • Oversight of public procurement by MoFEP; and No Yes Yes MDAs accountable for their procurement. • MDAs with-up-to-date Procurement Plans in 0 6 6 place and implemented according to plan. • Procurement legislation and regulation No Yes Yes established. Impact of MDTF-SS (extract) Culture of accountability in the public service 34 The RIEP and CFSSP supported establishment of minimum fiduciary systems in the MDAs to provide assurance in the use of funds by RSS. MDTF-SS projects used accounting, auditing and procurement guidelines that promoted a culture of accountability regarding the use of donor and RSS funds. Considering that Ministries were prime recipients of MDTF-SS funding, their compliance with grant agreement covenants (on fiduciary functions) inculcated a culture of accountability in the public service. Challenges (extract) a. Lack of counterpart staff to understudy consultants hired by MDTF-SS projects Consultants working in the MDTF-SS projects were expected to transfer their skills, knowledge and experience in financial management, procurement, and M&E, to local counterpart staff. However, there was lack of counterpart staff to be attached to the consultants hired by MDTF-SS projects. As a result, the consultants were not able to build capacity of national staff in financial management, procurement and M&E. Recommendation: RSS to develop Technical Assistance guidelines, including mandatory twinning of consultants with counterpart staff. b. Delay in enacting draft bills and regulations into legislation All the projects had components of developing relevant draft bills and draft policies. MDTF-SS projects supported the development of relevant draft bills and regulations. The legislative process was slow and beyond the control of MDTF-SS. At the end of MDTF-SS, the procurement draft bill and regulations had not been enacted into laws. Recommendation: RSS to establish a Taskforce on pending Bills and legislation. 35 Annex 10. List of Supporting Documents 1. Auditing Component Steering Committee Meeting Reports Nos. 1 to 15 2. Capacity Development for Public Procurement, 2013 – 2016 3. Case Study on Contracting Out Core Government Functions and Services in Southern Sudan; Prepared for the joint ABD-OECD Conference on contracting out core Government functions and services in post-conflict and fragile situations; Tunis 8-9, 2009 by Fiona Davies 4. Comprehensive Peace Agreement between Government of Sudan and the Sudan People’s Liberation Movement, January 2005 5. Final Report of Procurement Advisor March 2013 6. Final Report of Procurement Agent 7. Final Report of Project Financial Management Unit March 2013 8. Government Completion Report Feb 2013 9. Grant Reporting and Monitoring Reports 10. Implementation Status and Results, Core Fiduciary Systems Support Project October 2011 11. Implementation Status and Results, Core Fiduciary Systems Support Project November 2012 12. Implementation Support Mission Core Fiduciary Systems Support Project Aide Memoire, November 24 to December 8, 2012 13. Inception Report of Procurement Agent 14. Joint Assessment Mission (JAM) – Volume I, Synthesis, March 2005 15. Joint Assessment Mission (JAM) – Volume III, Cluster Reports, March 2005 16. Joint Implementation Support Mission to Southern Sudan, Draft Aide Memoire, Juba, May 7 – 18, 2007 17. Memorandum of the President of the International Bank for Reconstruction and Development to the Executive Directors on a proposal for the World Bank to administer two Multi-Donor Trust Funds for Sudan, March 17, 2005 18. MoFEP-PPU: 2-Year Program of Activities, November 2011 – December 2013 19. Multi Donor Trust Fund Project Paper – Core Fiduciary Systems Support Project November 27, 2005 20. Multi Donor Trust Fund Project Paper – Core Fiduciary Systems Support Project August 2010 21. Multi Donor Trust Fund Project Paper – Core Fiduciary Systems Support Project February 2012 22. Multi Donor Trust Fund Project Paper – Rapid Impact Emergency Project November 2005 23. Progress Report of Procurement Agent 24. Progress Report, December 2012 25. Value for Money Assessment Report by Monitoring Agent – draft, October 2012 36 37